Engineering the Future… …Today

ANNUAL REVIEW 2013

ENGINEERING THE FUTURE… …TODAY

We aim to become the ﬁ rst choice engineering and construction partner for clients

Laing O’Rourke is a globally diverse engineering enterprise with a commitment to delivering Excellence Plus performance, founded on 165 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 offering we are delivering single-source solutions across the client value chain for some of the world’s 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 complete projects successfully and achieve greatest value for all stakeholders – employees, customers, communities and shareholders. We are enabling the organisation to be leaner and more agile, and are creating long-term, collaborative relationships through signiﬁ cant investment in our Unique Business Offering. Through our long-term strategy we aim to create sustainable growth by meeting the economic, social and environmental challenges of our rapidly changing world.

Cover image: concept to reality Laing O’Rourke’s in-house digital engineering and visualisation capabilities are fundamental to the delivery of the Leadenhall Building in the heart of the City of London. By digitally engineering and constructing the entire structure virtually, the intelligent integration of innovations in the structural frame, envelope, mechanical and electrical and plant installations could be interrogated and tested to an unprecedented level of detail prior to deployment onsite. This approach, and the level of technical understanding generated, enabled the team to develop a robust construction programme and logistics plan which is delivering signiﬁ cant time and related cost reductions in the overall delivery schedule, while enhancing build quality. Image created by Symmetry, Laing O’Rourke’s in-house digital visualisation capability.

SEE OVERLEAF FOR LAING O’ROURKE AT A GLANCE LAING O’ROURKE AT A GLANCE

WORLD-CLASS CAPABILITIES SPANNING THE CLIENT VALUE CHAIN

PROJECT ENGINEERING DIGITAL DESIGN FOR SELECT PLANT EXPANDED CROWN HOUSE CONSTRUCTION INFRASTRUCTURE FACILITIES INVESTMENT EXCELLENCE ENGINEERING MANUFACTURE AND AND LOGISTICS TECHNOLOGIES SERVICES SERVICES MANAGEMENT SERVICES GROUP (EnEx.G) ASSEMBLY (DfMA) MANAGEMENT

DELIVERED ACROSS TWO MAJOR GEOGRAPHIC HUBS

EUROPE HUB AUSTRALIA HUB • Canada • Australia • Saudi Arabia • Hong Kong • United Arab Emirates • New Zealand • United Kingdom

FOR MORE DETAIL FOR MORE DETAIL SEE PAGE 32 SEE PAGE 44

COMMERCIAL RESIDENTIAL SOCIAL ECONOMIC FOCUSED ON INFRASTRUCTURE INFRASTRUCTURE DYNAMIC GROWTH SECTORS • Commercial Ofﬁ ces • High-rise • Defence TRANSPORT POWER WATER & UTILITIES MINING & NATURAL OIL & GAS • Retail & Mixed-use • Single-unit • Education NETWORKS RESOURCES • Aviation • Generation • Labour Accommodation • Data Centres residential • Healthcare • Highways • Networks • Coal & Minerals • LNG & CSG Terminals • Industrial • Multi-unit residential • Law & Order • Utility Networks • Marine • New Nuclear Processing • Pipelines & Pump • Science & Research • Social Housing • Waste Treatment • Commuter Rail • Renewables • Heavy-haul Rail Stations • Sport & Leisure • Water Treatment • Labour Accommodation • Processing Plants − Hotels • Industrial Equipment • Storage − Stadia Installation • Water Treatment − Leisure Complexes • Minerals-handling • Civil Infrastructure OVERVIEW CONTENTS

OVERVIEW SUSTAINABILITY Laing O’Rourke at a glance ifc Safety and sustainability review 60 Chairman’s statement 2 Health and safety 64 Performance highlights 4 Environment 68 Our capabilities 6 People 72 Our unique approach 8 Marketplace 76 Project case studies 12 Engineering Excellence Group 80

STRATEGY GOVERNANCE Group Chief Executive’s review 18 Corporate governance 82 Our strategy 21 Board of Directors 87 Key performance indicators 26 Senior leadership team 88

PERFORMANCE FINANCIALS Operating overview 30 Group fi nancial review 90 Europe Hub 32 Directors, offi cers and advisers 92 Australia Hub 44 Directors’ report 93 Risk management 54 Independent auditors’ report 95 Summary of principal risks 57 Consolidated income statement 96 Consolidated statement of comprehensive income 97 Consolidated statement of fi nancial position 98 Consolidated statement of cash fl ows 99 Consolidated statement of changes in equity 100 Notes to the fi nancial statements 101 Contacts 136

VIEW OUR ANNUAL REVIEW ONLINE A full version of our Annual Review is available online at: annualreview2013.laingorourke.com For more information visit: www.laingorourke.com For the latest news visit: www.infoworks.laingorourke.com

Laing O’Rourke | Annual Review 2013 1 CHAIRMAN’S STATEMENT

RAY O’ROURKE KBE CHAIRMAN

This is my ﬁ rst message as Chairman, having handed over operational responsibilities associated with the role of Chief CHALLENGE Executive to Anna Stewart following her succession. I have taken time to reﬂ ect on the achievements of our people since we commenced trading in June 1978 and, although this is a AND CHANGE period of transition for the Group, I know that our business direction remains focused and compelling.

Safety and sustainability We continue to place great emphasis on our Mission Zero strategy to eradicate all injuries in the Laing O’Rourke workplace by 2020. Our commitment to embed health and safety in our culture and leadership style to positively impact performance has once again proved valuable. We ended the year with an Thank you for taking the time Accident Frequency Rate (AFR) of 0.21, down from 0.24 in 2011/12. This gives me conﬁ dence that our 2020 Mission Zero to read Laing O’Rourke’s 2013 target is achievable, if we continue to deploy our Unique Business Annual Review – ‘Engineering Offering and deliver projects in a radically different way. the Future Today’. Together with the safety and wellbeing of employees, our primary sustainability issues are reducing our carbon footprint by minimising waste, optimising energy and materials usage, and positively engaging with the communities where we work. During the year, we made good progress on all fronts and it was pleasing to be awarded a platinum rating in the 2013 Business in the Community CR Index, the UK’s leading benchmark of corporate responsibility.

2 Laing O’Rourke | Annual Review 2013 OVERVIEW

Performance Our core values – safety, integrity, teamwork, collaboration, Laing O’Rourke has delivered another creditable performance, innovation and quality – seek to ensure that we are respected generating strong cash fl ows, earnings and forward orders. by clients wherever we work and underpin the delivery of our We also made good progress against our strategic mission vision to be the company of fi rst choice for all our stakeholders. to become an enduring engineering enterprise that delivers Excellence Plus performance for clients, and on the key Governance and effectiveness actions we are taking to deliver strong, stable and sustainable The primary role of Laing O’Rourke’s Board of Directors, returns over time. During the year, we announced our new Group Executive Committee and its subcommittees is to senior leadership of the organisation, presented our refreshed lead succession planning and provide oversight of strategy Group Strategic Roadmap (pages 21 to 26), and made development and execution, while maintaining the highest signifi cant progress in streamlining our unique engineering-led standards of corporate governance. I would like to record my business offering for clients. We also delivered a robust personal appreciation for the unstinting support provided by operating performance in our international construction and the directors in the effective fulfi lment of their responsibility. infrastructure businesses, and continued to improve our agility and effi ciency, realising cost savings which we will invest to Over the past few years, we have taken signifi cant steps to enhance our service to clients. strengthen the senior decision-making forums within the company by bringing together members with a range of skill-sets and experiences that can add real value and maintain Engineering excellence our fi nancial discipline. The biggest change during the year We acknowledge that our success depends on the creativity, was the succession of Anna Stewart as Group Chief Executive. insight and integrity of the engineering expertise we offer our Anna was the unanimous choice and brings seamless continuity clients. Our collective passion for engineering creates an to the day-to-day management of the Group. She has already environment for innovation and a belief that there is a solution implemented a number of changes to the structure of the for every engineering challenge. management team, including the formation of the Group During the year, we continued to build the Engineering Management Committee to ensure that the most important Excellence Group (EnEx.G) to meet the huge demand from aspects of our business are prioritised with accountabilities our clients for smarter, quicker, more effi cient and more set at the right level. It is extremely rewarding to me that economical ways of delivering their projects. We accelerated Laing O’Rourke has a real depth of senior talent internally to the deployment of our Design for Manufacture and Assembly ensure a smooth transition to the next phase of our development. (DfMA) approach, increased investments in step-change digital We also announced David Stewart as the new Chief Executive engineering and pricing technologies and continued to recruit Offi cer of the Australia Hub in August 2012. His background in talented professionals to increase our bench strength. managing large international contracting operations throughout That said, the industry must be incentivised to innovate Australia, South East Asia and the Middle East directly supports through greater consolidation of opportunities around common our strategy. He brings global market knowledge in mining, procurement and delivery models, which will in my view create power and transportation at a time of signifi cant growth in the a more sustainable industry-wide approach that moves away economic infrastructure sectors. from the transactional ‘lowest cost’ model that holds us back Notwithstanding the undoubted challenges the future holds, today. With my new-found freedom from operational duties, I believe Laing O’Rourke is a well-managed, strong and I intend to devote a greater proportion of my time advancing successful company that is operating to high standards this agenda with key decision makers in government, fi nance of governance. and research institutions. The future Human capital We expect market dynamics to remain challenging throughout Laing O’Rourke’s integrated delivery model is extensive 2013 and into 2014. As the world economy gradually returns and complex, but its culture is simple and straightforward. to growth, rising incomes and increased prosperity – with It is built on the ingenuity, professionalism and commitment associated industrialisation and urbanisation – will continue of great people and determines the way in which results are to drive demand for innovative engineering and construction achieved. Our commitment to Excellence Plus performance services. and adherence to the highest standards of business conduct are at the heart of what we do. The Group is well positioned to achieve its goals in the period to 2015 – increase fi nancial returns, deliver for clients, develop It is pleasing to report that Laing O’Rourke colleagues have and grow our people, and act responsibly. Our engineering once more performed well in a year which was characterised enterprise is taking shape. The market is responding positively by challenging circumstances and transformation. In our to our DfMA agenda and, from my perspective, I believe we annual employee engagement survey, we once again posted are leading the way in our sector by exploiting the available a strong performance with a global score of 64 per cent. This technology that will make our industry world-class. sustained Laing O’Rourke’s position as a high-performing company relative to its peer group. On behalf of the Board, Thank you for your continued support. I thank all employees for their continued dedication and sense of purpose.

Clients and partners Laing O’Rourke’s growth and performance are directly attributable to the quality of our client and supply chain RAY O’ROURKE KBE relationships. I would like to thank our supply chain partners for CHAIRMAN their continued support and trust in our strategy and approach.

Laing O’Rourke | Annual Review 2013 3 PERFORMANCE HIGHLIGHTS

FINANCIAL HIGHLIGHTS

MANAGED REVENUE1 EARNINGS BEFORE GROSS MARGIN3 CASH BALANCES INTEREST AND TAX2 (£billion) (£million) (%) (£million)

5 120 12 800 5.0 115 4.4 100 110 10 716 4 4.3 4.3 10.1 10.2 684 4.1 4.0 98 600 9.1 9.3 614 619 601 3.5 3.5 3.6 80 8 3 3.3 78 7.4 60 67 6 400 58 410 2 51 54 40 4 321 283 40 200 270 1 34 20 2 174

0 0 0 0 ’13’12’11’10’09 ’13’12’11’10’09 ’13’12’11’10’09 ’13’12’11’10’09 Managed revenue EBIT pre-exceptional items Gross cash Total revenue EBIT post-exceptional items Net funds

FINANCIAL PERFORMANCE: In 2012, we established our Resilient trading performance Group Strategic Roadmap, in line with Group expectations putting in place the right foundations to deliver on our 2020 objectives over the next three to fi ve years. We delivered £4.4bn £410m another resilient performance Managed revenue increased to Improvement in net cash £4.4 billion position of £89 million to and made strong progress £410 million against the key elements of our strategic plan to become £78m £8.2bn the fi rst choice engineering Pre-exceptional earnings High-quality order book of and construction partner before tax and interest up £8.2 billion creating good 45.2 per cent to £78 million medium-term earnings for clients.” visibility ANNA STEWART GROUP CHIEF EXECUTIVE 9.3 % 91% Gross margin, pre-exceptional 91 per cent of revenue secured items at 9.3 per cent refl ecting for 2013/14 performance period project portfolio quality and cost control

1. Managed revenue includes share of joint ventures’ and associates’ revenue, inter-segment revenue and revenue from managed operations. m 2. EBIT includes proﬁ t from operations, net non-operating £684 income/expense and excludes joint venture interest and tax. Maintained strong gross cash position of £684 million 3. Gross margin percentage is stated pre-exceptional items. 4. Financial capacity includes gross cash and undrawn committed facilities.

4 Laing O’Rourke | Annual Review 2013 OVERVIEW

SAFETY AND SUSTAINABILITY

ORDER BOOK FINANCIAL CAPACITY4 EMPLOYEE ACCIDENT FREQUENCY ENGAGEMENT1 RATE (AFR)2 (£billion) (£million) (%)

10 1,000 80 0.4 10.0 905 73 74 73 8 800 843 8.2 8.1 8.2 8.2 793 60 64 0.3 751 762 6 600 0.24 40 0.2 0.23 0.21 4 400 0.18

20 0.1 0.12 2 200

0 0 0 0.0 ’13’12’11’10’09 ’13’12’11’10’09 ’13’12’11’10 ’13’12’11’10’09

OPERATIONAL PERFORMANCE: OUTLOOK: Drive the competitive Good progress against strategy advantage of our Unique Business creating new opportunities for Offering despite continuation of enhancing value creation challenging market conditions

Strategy execution gathering pace across Europe and Moderate growth in managed revenue and pre-tax earnings Australia Hubs. can be expected for the Group through to 2015, given the prevailing market conditions. Group well positioned to achieve • Prestigious project wins from new clients in key sectors its medium-term goals in the period to 2015. and markets. • Good future revenue visibility and an attractive pipeline of • Increasing repeat orders and contract extensions from contract opportunities in key sectors, including nuclear, existing clients. mining, rail, and oil and gas. • Commercial discipline converting opportunity pipeline into • A higher rate of return on equity is planned for the Group higher-value project portfolio. with the anticipated benefi t of delivery effi ciencies derived • Mission Zero health and safety campaign now fi rmly from the widespread deployment of Design for Manufacture embedded globally, following successful roll-out across and Assembly (DfMA), plus greater cost effi ciencies in the Australia Hub. Group overheads. • Digital engineering and Design for Manufacture and • Laing O’Rourke remains on track to deliver its 2013/14 Assembly (DfMA) methodology creating effi ciencies in project fi nancial targets and, beyond these, is well positioned to delivery and operational performance. achieve its strategic objectives over the medium to long-term. • Continued focus on human capital agenda, with substantial commitment to enhancing engineering capability and education partnerships. • Strengthened corporate governance framework through better integration of core processes, senior appointments and creation of Group Management Committee.

1. Our independent 2013 employee engagement survey score, an aggregate measure of employees’ conﬁ dence and belief in: our future direction, personal career growth opportunities, safe and responsible working practices, reward and recognition systems, and quality of management. 2. Number of reportable incidents resulting in more than three days’ absence per 100,000 working hours.

Laing O’Rourke | Annual Review 2013 5 OUR CAPABILITIES

DESIGN FOR MANUFACTURE AND WORLD-CLASS ASSEMBLY (DfMA) Explore Manufacturing and modular solutions comprise offsite factory CAPABILITIES operations combining lean automation processes and quality assurance systems, transforming traditional SPANNING construction methodologies into a modern process of component-based assembly. Product sets include precast concrete building components, modular THE CLIENT mechanical and electrical installations, minerals-handling conveyor systems, rail sleepers and completed internal VALUE CHAIN room ‘pods’, and are marketed through a number of industry-leading brands including Austrak, Bison, Modulor and Redispan.

DIGITAL ENGINEERING Information modelling, visualisation, pricing and benchmarking capabilities – digital engineering generates additional value through the intelligent application of best-practice thinking and technologies much earlier in the design process. Our detailed database of previous projects and Design for Manufacture and Assembly (DfMA) component libraries allows us to set design parameters before concept design. This drives efﬁ ciencies from day one, reduces capital and whole-life running costs and enables us to develop accurate milestones for the build programme to ensure greater predictability and assurance of the outcome.

PROJECT INVESTMENT SELECT PLANT AND LOGISTICS SERVICES MANAGEMENT The Group’s global project development, Integrated construction plant and structured property and infrastructure equipment services support project ﬁ nancing activities cover the full range delivery, underpinned by risk-based of preconstruction services including processes and systems. Made up feasibility studies, investment appraisals, exclusively of leading brands, our lifecycle costs and management. ﬂ eet of lifting solutions, vehicles and Expertise includes complex Private construction-related equipment and Finance Initiative (PFI) and Public services meet the unique demands of Private Partnership (PPP) investment a project, from congested high-rise arrangements and management. construction to mega-scale groundworks and civil engineering packages on economic infrastructure projects. ENGINEERING EXCELLENCE We are one of the largest providers of GROUP (EnEx.G) mining and minerals-handling industrial Our internal advisory taskforce provides plant services in Australia, offering research, innovation, expertise, advice full-service installation, maintenance and direction. The group is responsible and reliability checks. We work in close for driving Design for Manufacture and partnership with some of the world’s Assembly (DfMA), collaborating with leading heavy industrial equipment and technology, supply chain and educational machinery manufacturers as an accredited partners to support clients’ needs. installation and maintenance provider. Capabilities include civil, structural, materials, mechanical, electrical, chemical and process engineering.

6 Laing O’Rourke | Annual Review 2013 OVERVIEW

EXPANDED INFRASTRUCTURE SERVICES We offer an end-to-end capability in the Infrastructure services comprise the geotechnical, environmental, structural full range of civil engineering and and civil engineering construction programme management expertise on phases of major projects. Backed by a major economic infrastructure projects. central technical design and engineering Expertise covers oil and gas exploration, resource, we can deliver the full range processing and transportation, commuter of demolition, site remediation, piling, and heavy-haul rail, power generation tunnelling, precast concrete, post- and distribution, water and utilities tensioning, component assembly networks, mining and natural resources and structures delivery techniques. across the lifecycle of capital assets. This diverse capability streamlines Services span the lifecycle of capital the delivery process by enabling us to assets, from feasibility through undertake works directly – reducing the planning, design and delivery to time and cost implications associated operational maintenance. with multiple interfaces.

CONSTRUCTION SERVICES Our full range of building and refurbishment activities provide a complete project delivery solution. Capabilities include ‘buildability’ studies, Design for Manufacture and Assembly (DfMA), remediation and enabling works, logistics management, integrated construction delivery, building technologies installation and testing and commissioning of major building projects.

CROWN HOUSE TECHNOLOGIES FACILITIES MANAGEMENT Crown House Technologies (CHt) is one The fully populated asset information of the industry’s leading building and management system derived from the infrastructure technology services digitally engineered model proactively providers. The company is redeﬁ ning supports efﬁ cient operation and the value of asset services as a major maintenance. This ensures that the systems integrator on complex building remains sustainable and construction programmes, utilising cost-effective at all times. Advanced digital engineering and standardised animated visualisation technologies components to meet the increasingly are integral to this approach, allowing challenging requirements of clients and facilities management and maintenance end-users for future-proofed buildings teams to maximise the value of the and infrastructure that meet the most asset over its operational life through exacting environmental and economic re-purposing and continually improving performance standards. its operational effectiveness.

Laing O’Rourke | Annual Review 2013 7 OUR UNIQUE APPROACH

INNOVATIVE ENGINEERING AND CONSTRUCTION EXPERTISE

The world is rapidly changing. The way we live, conception to completion. Each link in the value chain is critical to the work and play is being transformed by technology. realisation of our vision to be a globally In business, this is creating a new challenge as focused and enduring engineering enterprise delivering sustainable value clients now expect better and faster delivery, though for clients through our commitment to in the current economic climate often they have Excellence Plus performance. We’ve invested over three decades of less money to invest. Never have things been more knowledge and expertise into creating competitive. Innovation is the key to staying ahead a better way – one that puts us at the leading edge. We call this unique of the game. approach ‘Design for Manufacture and Assembly’ and it means we can now build things quicker, safer, more sustainably, Today, even the simplest items are unpredictable, unsafe, unskilled and more cost-effectively, to a higher quality, designed and tested virtually before time-consuming; in ways that are and with greater predictability of the being manufactured ready for use. unprofi table and unreliable? Why can’t fi nal outcome. Heavy industries such as automotive construction embrace and benefi t from The huge potential to save time and and aerospace have pioneered these technological progress too? At Laing money comes from re-defi ning the smarter processes using components O’Rourke, we’re doing precisely that. phases of a project. This means manufactured remotely and then agreeing and locking down the design brought together for fi nal assembly. Innovative engineering and phase much earlier to allow the This saves time and money, reduces construction expertise manufacturing, assembly, completion, risk and increases quality. Laing O’Rourke’s Unique Business and commissioning phases to be So why does the construction industry Offering and integrated delivery approach compressed and run in parallel, rather still create the built environment plays a fundamental role in every aspect than in one long linear sequence, in the same way as it always has, of major building and infrastructure driving greater effi ciencies in how using techniques that are too often capital investment projects from resources are deployed.

8 Laing O’Rourke | Annual Review 2013 OVERVIEW 9 Completion % 30 time saving Testing & Testing Commissioning Fit-out & Finishing % Completion labour reduction 60 Construction Site Preparation % Fit-out & Finishing Assembly DfMA 70 Manufacture & Commissioning Testing Site Preparation Design & Engineering Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke Funding Funding Design & Engineering Feasibility Feasibility Target Concept Concept Time Laing O’Rourke’s Unique Business Offering Traditional Construction OUR UNIQUE APPROACH

2. WE INNOVATE, DESIGN HOW WE AND PROTOTYPE We collaborate with clients, architects and designers at the earliest stages of GO TO a project, improving ‘buildability’ through the application of innovative engineering solutions. WORK… At the heart of our approach is the Engineering Excellence Group (EnEx.G), an internal advisory body providing research, innovation, expertise, advice and direction individually and as a taskforce. Augmented by our extensive ‘fi eld’ engineering capability, this multinational, multidisciplinary group is responsible for driving innovative solutions, collaborating with technology, design and educational partners to help clients consumption metrics and 1. WE DEFINE, VALIDATE right at the front-end of a project to maintenance projections. This is AND FUND get more value from their investment, enabled by INSITE, our knowledge encouraging designers to push the management database housing We help clients defi ne and validate boundaries, and embedding more years of accumulated information. their capital investment plans effi cient and effective delivery This provides a rich data source through a detailed appraisal of the techniques onsite. to drive effi ciencies in the project fi nancial risks that major public schedule, build costs and the and private sector projects carry. Digital engineering is a key enabler eventual lifecycle running costs. Our early involvement reduces risk of this approach through the exposure and helps to maximise the production of a 6D model, which We can use this model to calculate rate of return. In all our activities we includes a 3D geometric visualisation the total cost of the project under bring a commercial perspective and of a project, to an unparalleled level any procurement approach, integrated way of working based on of detail. These models incorporate allowing us to price projects to an collaboration, delivery excellence the technical specifi cation and cost unprecedented level of accuracy and sustainability. of every component, detailed energy much earlier in the process, providing clients and investors with the cost predictability they need to justify their investment decisions. As all projects share common elements, major benefi ts come from using standardised components. But this doesn’t mean compromising the architectural intent of the agreed design. Our extensive virtual component library contains the full range of intelligent building products that can be technically confi gured to suit any project type. For example, there are up to 2,000 possible variations in a manufactured column – a degree of fl exibility that ensures the intended design integrity on every project. A number of leading design consultants are using our digital engineering object library to design projects with ever greater predictability of outcome.

10 Laing O’Rourke | Annual Review 2013 OVERVIEW

3. WE MANUFACTURE, DELIVER AND ASSEMBLE Once a design is completed, the specifi cations for the preassembled components are then fed directly to our Explore Manufacturing facilities where both standardised structural and modular mechanical and electrical components are manufactured and preassembled in a controlled factory environment, protected from the elements. This assures much higher quality, greater design integrity and more reliable and resource-effi cient delivery. Our signifi cant investment in offsite manufacturing means that we have, in-house, some of the most advanced facilities in the world. Our own Select Plant division 4. WE COMPLETE, TEST handles the complex logistics AND COMMISSION involved in scheduling delivery of, Laing O’Rourke’s construction and and then transporting, irregular infrastructure services teams then loads. This approach minimises complete delivery of the project site traffi c volumes and general in parallel with the testing and disruption to the surrounding commissioning phases with the communities, reducing pollution client. Because so much is and waste levels. Once onsite, preassembled, the onsite programme the team provides the unique skills can be completed much quicker and precision needed to manoeuvre, and with fewer onsite workers. lift and position the components This means a safer, more rewarding ready for fi nal fi xing. working environment with less waste Laing O’Rourke’s Expanded division and lower costs. It also creates the will complete the groundworks, opportunity to deploy highly skilled and deliver the civil and structural and productive teams to work on new engineering knowhow to assemble projects much sooner. the major components optimally DfMA components are delivered to for a Design for Manufacture and site ready to ‘plug and play’, allowing 5. WE OPERATE, REFURBISH Assembly (DfMA) project, like our the testing and commissioning AND MAINTAIN patented E:6 structural fl ooring phases to commence at the point of solution for example. Following this, As a natural extension of our manufacture. Therefore, they are our in-house specialist business, relationship with clients, we provide fi nalised much sooner, once again Crown House Technologies, will integrated operational management, reducing time, and handing control commence work on the modular refurbishment and maintenance of the asset to the client much mechanical, electrical and services. The extensive knowledge earlier than traditional construction process-handling installations. we acquire designing and delivering can achieve. buildings and infrastructure provides a unique insight into how capital assets can be more effi ciently managed and maintained. The 6D digital model transforms into the facilities management system SEE OVERLEAF FOR for the entire asset over its lifespan. AN OVERVIEW OF OUR SECTORS This unique source of technical data creates smarter buildings and infrastructure by increasing the operating effi ciency while reducing the running and maintenance costs for the client.

Laing O’Rourke | Annual Review 2013 11 …across leisure complexes Coal & minerals Education Oil & GAS Commercial offices Marine Sport & Leisure Manufacturing Commercial ofFices Education Aviation healthcare international Atlantis, The Palm, Newcastle Coal Blavatnik School Wheatstone Project, ALDAR headquarters, London Gateway Port, London 2012 Olympic Explore The Leadenhall Dagenham Park Terminal 2a Centre Hospitalier Dubai, UAE Infrastructure of Government, Western Australia Al Raha Beach, London, UK and Paralympic Park, Manufacturing, Building, London, UK Church of England Heathrow, UK de L’Université de Group wharves, University of Oxford, Abu Dhabi, UAE UK Explore School, London, UK Montreal, Canada New South Wales, UK Industrial Park, markets and Australia Nottinghamshire, UK growth sectors

We are delivering a built environment that meets the economic, social and environmental challenges of a rapidly water treatment Po wer generation Commuter rail Heavy-haul rail changing world, targeting high-growth Northern Water D arling Downs Power Admiralty Station, Pilbara Region Treatment Plant, Station, Queensland, MTR, Hong Kong Heavy-Haul rail, markets and sectors that complement our queensland, Australia Western Australia values, capabilities and delivery discipline. Australia

Composite image created by Symmetry RE-ENGINEERING THE FUTURE OF HEALTHCARE TUNBRIDGE WELLS HOSPITAL, PEMBURY, KENT, UK

E:6 structural ﬂ oor solution facilitates quicker, safer, higher quality delivery.

Tunbridge Wells Hospital is one of 70% 60% 30% 1. STRUCTURAL SYSTEM Laing O’Rourke’s most successful Proportion Labour Programme Utilising the patented E:6 structural social infrastructure projects to of asset reduction reduction fl oor system, precast columns, walls date. This radical new hospital delivered onsite in areas and load-bearing façades combined with was the fi rst in the UK boasting via DfMA of control 513 single occupancy rooms, all a ‘just-in-time’ delivery strategy, fl oors with en-suite bathrooms, plus can be completed quicker and safer with extensive surgery and care Our vision to challenge and change the columns erected in 10 minutes and the industry means constantly adopting facilities. The Group was appointed exterior wall panels in just 15 minutes innovative technologies and processes to by a team of four people applying this in 2008 and completed delivery in push the limits. By totally re-engineering methodology. The system eliminates January 2012. It was delivered the project virtually using our advanced the need for extensive onsite shuttering, ahead of programme and within Design for Manufacture and Assembly back-propping and time-consuming budget, and has gone on to receive (DfMA) approach, we are able to rebar fi xing. Taken together, these acclaim from the client, staff and demonstrate the additional value our achieve a faster, safer weather-proofed patients for the quality of care Unique Business Offering would bring building which generates less waste and it provides. if we were designing and constructing allows early start for the MEP installation, the hospital today. fi t-out and medical equipment installation and commissioning. We have strictly adhered to the original functional brief and analysed the With a major reduction in labour- building structure, mechanical and intensive site works such as formwork, electrical, building management falsework, and rebar fi xing, DfMA systems and energy strategy to see dramatically reduces the number of days where we can improve on what was lost to adverse weather conditions and already a successful project. The results other site-based disruptions associated of the exercise speak for themselves. with traditional construction.

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Frame Internal partitions 2. MECHANICAL AND Target 70 60 30 ELECTRICAL INSTALLATION Target 70 60 30 Achievable 90 66 50 Achievable 80 80 33 Whole interior sections, including bathroom pods and partition walls, can Façades be assembled and integrated offsite, Bathroom pods The E:6 structural façade system incorporating the latest advances in Installation of fully factory-completed contributes to the structural integrity, but component technology and services, bathroom pods could commence 67 also lends itself to the fenestration of the fi ttings and fi nishes – creating a ‘plug weeks ahead of the original programme, hospital by incorporating the structural and play’ solution. allowing much earlier testing and integrity of the building into the external commissioning of all services, including sandwich panels. The offsite manufacture Internal partition walls water supply and medical gases, of the façades assures accurate Laing O’Rourke’s E:6 SmartWall system attaining the quality of building and interpretation of the architectural intent is built to exacting standards and fi nishes demanded in high-performing to an unparalleled level of quality. incorporates all wall-mounted and asset classes such as hospitals. Additionally, incorporating the service Elimination of expensive and intrusive integral services such as power supply, risers and bed-head distribution into exterior ventilation louvers and pipe-work and cabling. Finished with the bathroom pods would radically replacement with intelligent ventilation bespoke fi ttings prior to dispatch, savings reduce commissioning time as testing and heating controls, allowing an are substantial with over 100,000 fewer is performed in the factory prior to increase in the window size by man-hours required onsite, allowing onsite assembly. 20 per cent, further enhances the this phase to be completed one year patient recovery experience. ahead of the original programme, with Pods a corresponding 50 per cent reduction This ‘fabric fi rst’ approach to the in generated waste. To achieve these Target 70 60 30 hospital’s thermal and energy effi ciencies, a comprehensive and Achievable 95 95 33 performance enables outstanding levels complete digital design model, of airtightness, passively reducing the incorporating all design disciplines, Operating theatres energy required to condition the building. is required early in the project Operating theatre dimensions vary by External elevations development cycle, prior to function, and therefore in many cases construction commencement. Target 70 60 30 exceed road transportation limits, Achievable 90 80 43

More efﬁ cient reorientation of building services distribution.

Laing O’Rourke | Annual Review 2013 13 RE-ENGINEERING THE FUTURE OF HEALTHCARE

thereby constraining potential for ‘pod’ 3. THE ENERGY CENTRE Earlier handover type factory assembly of entire operating theatre rooms. Hospital facilities are, by their very and a higher nature, large consumers of energy, with However, by adapting the E:6 SmartWall performance a need for a reliable, economic supply of and structural fl ooring solutions, sustainable energy to support constant specifi cation complex system-critical operating patient care. The high-availability energy theatre services can be integrated centre has been re-designed to be more equates to a more offsite, including testing of the fi re fl exible and responsive in operation, separation measures. This would attractive return adapting to the volatile near-term and facilitate earlier palletised deliveries of unpredictable long-term source energy on investment theatre equipment and internal fi nishes costs, unpredictable seasonal climatic prior to the installation of the E:6 fl ooring for clients and variations and continually varying solution above the theatre, reducing occupant loads, allowing surplus investors.” the lead time for fi t-out and assisting electricity to be exported back to the fi nal commissioning and subsequent grid during non-peak times. staff orientation. Locating the energy centre remotely from Building services distribution the main hospital building would remove Reorienting the building services it from the critical path of the ward distribution in the wards from the and clinical areas of the development, spatially ineffi cient horizontal to the thereby allowing the energy centre to vertical risers in the bathroom pods be constructed and commissioned in would reduce the fl oor-to-fl oor heights parallel with the other building areas, by half a metre, which in turn would compressing the overall programme by optimise energy performance while dramatically reducing commissioning reducing capital and operating costs. and handover phases. Combined heat Combined with the use of precast pad and power gas boilers generate energy foundations and ground beams, these power, and absorption chillers convert innovations represent a material saving excess for use in the cooling systems. in site labour, capital expenditure Natural gas and bio-fuel sources would and waste. provide a resilient and sustainable electricity supply, helping to achieve an 80 per cent carbon reduction and a 25 per cent energy saving with whole-life running costs cut by 50 per cent, based on current source energy kWh prices.

14 Laing O’Rourke | Annual Review 2013 OVERVIEW 15 m % % Room controller the over saving Total of the hospital life 30 Reduction in preliminaries Reduction in onsite waste £61.8 50 ciency targets* ciency % % % approach, the technical specifi cations under which specifi the technical approach, need to be revised. would today constructed hospitals are THE RESULTS 33 Reduction in from programme years to two three * ts outlined in our of benefi the full level achieve To Laing O’Rourke’s Unique Business Unique Business Laing O’Rourke’s a £10.8 million achieve would Offering a costs, saving in construction and maintenance £30 million energy of the life the 30-year saving over cost operating hospital and a £21 million the same period. saving over cost saving of This equates to a total of the hospital. the life £61.8 million over effi Achievable Offsite manufactured 45 Reduction in site labour 70 • Access point • Access • light switch Wireless thermostat • User ers a high-quality ers Wireless gateway Wireless or concrete pumps. or concrete xing. nish, quicker and safer, requiring requiring and safer, nish, quicker Energy monitor Energy ebar fi equirements. Reduced formwork, falsework and falsework formwork, Reduced r community. disruption to the local Less Reduced site accommodation site accommodation Reduced r Optimised site logistics. Optimised shorter units over Lighter hoist time periods. and not required are climbers Mast limited need f factory fi factory the time onsite and it reduces less weather to adverse number of days lost and other site-based conditions traditional with disruptions associated delivering while construction, savings. cost considerable • • Building this way deliv • 5. ADDITIONAL BENEFITS ADDITIONAL 5. • • • Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke Wireless blind Wireless control 4. SMART BUILDING SYSTEM SYSTEM SMART BUILDING 4. Designing intelligent buildings with intelligent buildings with Designing advanced technologically the latest into the structure integrated systems maintenance predictive provide would conservation. energy and effective Asset engineered The digitally user- offers Management System and energy integrated fully friendly, building controls management facilities time. in real future-proofed Because it features sensor and data management the building and clinical technologies, to constantly be able would operators and adjust monitor its performance and physical natural to the current – devices demands using wireless and cabling, installation reducing time and resources. commissioning ENGINEERING THE FUTURE OF OIL AND GAS Working for client Bechtel, Laing O’Rourke is providing over WHEATSTONE PROJECT, AUD$500 million in civil and structural engineering and construction on the Chevron- PILBARA REGION, operated Wheatstone Project.

WESTERN AUSTRALIA PROJECT SCOPE The contract includes: The concrete and civil works for two The Chevron-operated Wheatstone Project is identical 450x250 metre LNG process trains within the LNG plant facility, one of Australia’s largest energy facilities. referred to as inside battery limits (ISBL): Located in the resource-rich Pilbara region, • Cranes, structures and foundations to it will consist of an onshore facility with two LNG support large equipment modules and trains, with a combined capacity of 8.9 million compression machinery. • 127,000 cubic metres of concrete tonnes per annum, and a domestic gas plant. and paving. • 194,000 cubic metres of earthworks.

16 Laing O’Rourke | Annual Review 2013 OVERVIEW

The concrete and civil works for the By building twice – once virtually – we The Wheatstone Project reinforces our areas defi ned as outside battery are able to utilise a data-rich, multi- position as a leading provider of self- limits (OSBL): dimensional model to enable our project delivered, multidisciplinary construction team to better understand and deliver and engineering services at every link • A utilities plant (power generation and this complex project with confi dence. of the oil and gas export chain. distribution, water treatment, air and nitrogen systems), gas inlet facilities In carrying out these works, Laing Furthermore, its adds to Laing O’Rourke’s with environmental protections, tanks, O’Rourke will directly employ up to 700 undisputed Western Australian heritage, fl are and a domestic gas plant. people. We are committed to working and in particular our connection to the with the communities in which we Pilbara region – where we have decades • Foundations and structures over operate and wherever possible are of experience in rail, mining and marine 375 hectares to support the tanks, employing local workers and partnering projects backed by a skilled workforce large equipment and modules. with local suppliers and subcontractors. and heavy plant that is ready to mobilise. • 93,000 cubic metres of concrete Laing O’Rourke‘s health-and-safety-fi rst and paving. culture is one we share with both client • 600,000 cubic metres of earthworks. Bechtel and operator Chevron. For this reason, Wheatstone has been selected as a fl agship Mission Zero project – with DELIVERY APPROACH the most exacting standards embedded right from the very outset. The lessons To deliver the ISBL and OSBL, Laing learned as part of this process will be O’Rourke is using digital engineering captured and applied elsewhere across to provide a smarter, safer and more the business. effi cient construction solution.

Laing O’Rourke | Annual Review 2013 17 GROUP CHIEF EXECUTIVE’S REVIEW

ANNA STEWART GROUP CHIEF EXECUTIVE

Safety and sustainability I will start with the result that is most important to us: DEVELOPING health and safety. Our ambitious Mission Zero campaign, to eliminate all accidents from our operations by 2020, has secured amazing support right across the business this year. OUR UNIQUE A common approach is now embedded enterprise-wide with successful integration of a behaviourally based culture. We continue to invest in safety training and development, BUSINESS spending £8.9 million in the FY13 period. The one-to-one safety interviews with new starters on site have had a markedly positive impact on behaviour and the credibility OFFERING of the programme. We are working to two key targets. The ﬁ rst is a 0.1 Disabling Incident Frequency Rate (DIFR) by 2015. If we are successful, we will have reduced to one in ten the number of people who These results validate the over an entire career sustain an injury resulting in an absence of one or more days. The second, by 2020, is to have reduced strength of our reputation, the number of accidents overall, including the most minor the clear direction of the incidents, to 0.1. As of today, the achievement of this latter target is aspirational; however, if we are serious about Group and the sustainable challenging and changing the poor image of our industry, this cash-generating abilities of will be a real and important demonstration of that change. our underlying businesses.

18 Laing O’Rourke | Annual Review 2013 STRATEGY

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I r m p Our strategy is supported by four pillars around which our which around pillars is supported by four Our strategy Human Capital Management; conceived: being are action plans and Supply Improvement Business Excellence; Engineering through and Financial Performance Chain Frameworks; capital structures. and complementary returns appropriate People took in rightsizing the actions we of the decisive As a result substantial enjoyed have back in 2009/10, we organisation and profi in our revenue improvement secured reduction together with the overhead This, ratios. has meant ciencies programme, effi our operational through fi our business to keep been able have that we commercially clients more the same time offering at while propositions. attractive our industry 1980s and 1990s, the early of In the downturns in which resulted recruits, its entry-level reduced dramatically gaps within specifi serious talent within the recovered has never This shortfall the industry. on to pursue moved people talented because the most industry to our profession. lost and were elsewhere their careers and throughout that experience from learn tried to have We entry-level to recruit continued 2009 have the period since are we alone, This year and engineering talent. construction scholars, of graduates, in a combination employing, directly Hub and in the Europe 136 people cadets and apprentices, industry to the general In contrast Hub. 45 in the Australia chain by our supply employed do not include trainees norm, we provide we to ensure in these numbers partner organisations to this challenge. contribution of our direct view an accurate development leadership with our continuing are We is in its run annually, Guns, which we Young programmes. across members and many of the new in Europe tenth year participation experienced teams have our senior leadership in this programme. by a years in recent Our human capital discipline has been led and supported by human capital professionals. leader business was our Hub Chief until recently Hollingshead, who Steve responsibility assumed has recently in Australia, Executive level. Group our Human Capital discipline at for cult ows ows t for any company any company for t Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke cult to draw comparisons comparisons cult to draw tability. This has allowed us to remain to remain us has allowed This tability. t before tax of £57 million. These results validate validate tax of £57 million. These results t before ne our Unique Business Offering in a compelling way in a compelling Offering ne our Unique Business ned strategy. We are clear on the activities we will pursue will pursue on the activities we clear are We ned strategy. We have refreshed our business strategy during the period by strategy our business refreshed have We in the Group across from set of people ed a diversifi involving Our Europe Roadmap (GSR). Strategic our Group developing been formulating since aligned and have Hubs are and Australia of the GSR. their action plans to support delivery in the our competitors from diverging increasingly are We diffi it more which makes market, Strategy tools. It is incumbent on us therefore using traditional easily to defi Group digital engineering, the Engineering Excellence through with relationships in collaborative and DfMA and to work by its delivery, for the organisation and enable partners and and the performance ensuring the quality of our people of our products. affordability and equally with those we will not. In the case of our banks with those we and equally we of capital, although and bondsmen, as major providers on their will rely debt, we our drawn to reduce will continue security support on our major programmes goodwill to provide ourselves to differentiate intend to continue We of work. in the support they secure feel such that they competitively and maintain business built a resilient have to us. We give promised have We all eventualities. of liquidity for levels ample intend to deliver. no surprises and that is what we Performance overview Performance by limited economic characterised period was The review our in many of conditions trading and challenging progress in a diffi again resulted which once international markets, of the direction the clear of our reputation, the strength abilities of our cash-generating and the sustainable Group businesses. underlying following of liquidity also improved level general The Group’s with net cash balances cash performance, another strong £89 million to £410 million, bucking the current increasing continued We of declining cash balances. trend industry sheet with the aim of balance to a strong our commitment investors. with our primary credentials strong sustaining in the way that we exibility discipline and fl By exercising a build we will ensure capital, we manage and allocate term. the long over business performing and strongly robust us to use their those who allow and respect appreciate We returns good and sustainable is providing capital. The Group clearly and to a consistent by sticking its shareholders for defi year for the engineering and construction industry as a whole. as a whole. industry the engineering and construction for year has delivered Laing O’Rourke volatility, continuing this Amidst cash fl strong generating performance, another resilient and profi We respect the value of all resources, both tangible and both tangible of all resources, the value respect We and complete less to use possible and try wherever intangible, benefi An intrinsic without mistakes. quicker, improving its sustainability credentials is that it is good for is that it is good for credentials its sustainability improving selling to reduce the opportunity because it creates business profi improve and price competitive in the predominantly price-driven environments environments price-driven in the predominantly competitive downturn. by the sustained induced help address (DfMA) will and Assembly Manufacture Design for It can offer careers. sustainable the skills gap and build exportable in more trained people for careers longer-term in smarter, deployed are skill-sets who and sophisticated environments. working and safer cleaner GROUP CHIEF EXECUTIVE’S REVIEW

We are investing in additional management technologies to Succeeding Ray O’Rourke this year as Chief Executive has better understand the depth and experience of our talent given me the opportunity to refresh our senior team. I am and to improve their succession and deployment to the right conﬁ dent we have a good mix of experience and youth with opportunities, including those that require cross-business unit strong optionality for succession to the senior roles in and cross-border mobility. the future.

Market dynamics Innovation Europe Hub We have made positive strides this year in the development of The construction sector in the UK continues to decline in terms our products and solutions. Our Engineering Excellence Group of market volume and, although there has been a shift from is enjoying high demand, as are our manufacturing facilities. building to infrastructure, spend overall is down. We do not We can see a very positive impact in the quality of our bid expect this trend to change materially and foresee few signs submissions and in our project outcomes. Some of the projects of signifi cant stimulus prior to the 2015 general election. currently in construction will pay long-term testament to the progress being made. We will continue to reinforce our prudent practices of recent years while focusing on offering innovative engineering It is not just about the benefi ts in construction delivery quality solutions as the best opportunity for an acceptable return and experience, but also the ‘cost in use’ of the products during at an affordable sales price for our clients. their lives in operation through the material reduction in energy consumption and maintenance. We are making progress on all We are comfortable working in the Middle East at our current fronts in this regard. scale but will only grow volume if we see a relaxation in the contracting and payment practices in some of the more traditional territories. We can see the obvious demand from Outlook fi xed-date event commitments, as well as the international We are an ambitious organisation with passionate people. supply chain capability which has swarmed into the region. Our character is to leave no stone unturned in our pursuit of Excellence Plus performance. That does not however translate We have been following a focused approach in Canada which to forcing one solution irrespective of client need. DfMA is generated early profi tability for that business. a fl exible set of solutions that can be tailored to specifi c We will selectively consider opportunities to work with existing requirements, and the degree to which it will be applied will customers in new territories, should the combination provide a be determined by what offers the best outcome for the clients sensible proposition with low barriers to entry. against their investment objectives. Additionally, we will exit businesses if the dynamics are such Earliest possible mobilisation of an integrated design and that we cannot operate them profi tably. To this end, we disposed delivery team presents the best opportunity to optimise the of our stone quarrying operations in Germany during the year. offering for long-term value. The PPP/PF2 procurement methodologies in the UK, Canada and Australia, where the Australia Hub industry is asked to respond to the end-user’s performance Although a slowdown in infrastructure opportunities in specifi cation, fi t the bill perfectly. We hope to see a recovery Australia is expected as a result of global miners, and oil and in the number of these schemes coming to market, alongside gas providers slowing their capital expenditure, the existing other clients challenging us to respond to their performance multi-year, multi-billion dollar project commitments in delivery and aesthetic requirements. are challenging available resources. We expect Australia to be a rich market of opportunity for the Group over the next few years Private ownership affords us the opportunity to make and believe that our offering, which reduces the need for onsite investments for the long-term good of the business. We have workers, could be particularly attractive for the remote, fl y-in, a positive programme of investments for the year ahead fl y-out locations where many of these projects are based. in equipment, people, engineering, accommodation and technology. Our directly employed workforce and our self- In Hong Kong, we have several projects in delivery for the owned fl eet of construction plant and equipment are examples Mass Transit Railway of a sophisticated engineering nature of these ongoing investments. and in this arena we can be competitive and successful. Elsewhere in Asia, we are keeping a watching brief but We are delighted with the recovery enjoyed by our Australian currently cannot see anything aligned to our capability over business this year and are confi dent that we now have a and above the opportunities we are pursuing in Australia. consistent platform across the Group from which to respond to attractive opportunities. Larger, more challenging projects are Governance where we can be most successful and retain appropriate spans of control. We do not therefore intend to pursue lots of smaller Although we enjoy private ownership, we govern the Group projects to maintain volume in subdued locations. in every practical way as if we were publicly listed on the stock market. We work very hard to ensure deep and I am excited and confi dent about our future. We are a business enduring relationships with our fi nancial stakeholders, with people who can be trusted and will deliver. We want to the tax authorities, our auditors and our advisers, with a make the experience of engaging with us as enjoyable and highly transparent regime facilitated through constant rewarding as possible. Thank you. communication. We exercise great caution in selecting the clients with whom we wish to trade and those in the supply chain who support us in delivery. In expecting to be rewarded fairly and properly for our efforts, we are proud to ensure that the parties in our ANNA STEWART supply chain are similarly rewarded, fairly and promptly. GROUP CHIEF EXECUTIVE

20 Laing O’Rourke | Annual Review 2013 STRATEGY 21 Management Human Capital • Deliver on our promises, aim to exceed our promises, on • Deliver with clients and partners • Collaborate Improve business performance via strong cost cost via strong performance business Improve and knowledge-sharing governance control, Advance safety and sustainability and sustainability safety Advance Zero Mission to achieve performance We will enable the organisation by the organisation will enable We and agile being lean focus human capital through Grow on capability development Enabling the Organisation Financial Performance rst choice choice rst LAING O’ROURKE VISION • Work as one team, listen to everyone as one team, listen • Work a better way • Find or follow We will build collaborative will build collaborative We a – becoming relationships choice partner of first Optimise work-winning and delivery and delivery Optimise work-winning strategies sector using bespoke partnerships on preferred Focus markets in higher-growth to expand Clients, Markets and Sectors Clients, Markets Advance key client relationships client relationships key Advance risk framework robust applying Excellence Engineering of processes to compete with world-leading businesses with world-leading to compete of processes Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke To be the company of first choice for all stakeholders. To challenge To all stakeholders. for choice of first be the company To and change construction worldwide. To be lean and agile in the adoption and agile be lean To worldwide. and change construction delivering a Unique delivering Business Business Improvement To become a globally focused and enduring engineering enterprise through our commitment to a culture of to a culture our commitment engineering enterprise through and enduring focused a globally become To Plus performance Excellence We will challenge and change will challenge We by the market Offering Business Progress DfMA through sector DfMA through Progress agendas and market-specific Increase EnEx.G activity to positively EnEx.G activity to positively Increase earlier major client projects influence digital engineering Deploy enterprise-wide STRATEGIC ACTION AREAS ACTION STRATEGIC Unique Business Offering Unique Business GROUP STRATEGIC ROADMAP TO 2015 TO ROADMAP GROUP STRATEGIC MISSION TO 2020 TO MISSION OUR VALUES responsibly and work personal safety • Make • Lead by example nancial resources and human capital in attractive in attractive and human capital resources nancial OUR STRATEGY OUR Laing O’Rourke aims to become the fi to become aims Laing O’Rourke engineering and construction partner for clients through through clients partner for and construction engineering assets, of its operational excellence the performance fi times maintaining a at all while and sectors, markets of safe standards to the highest commitment resolute delivery. and sustainable OUR STRATEGY

A STRATEGY LAING O’ROURKE VISION MISSION TO 2020 THAT DELIVERS GSR to 2015 Our strategy deﬁ nes the direction, shape and culture of the Group over the long term as a globally focused engineering enterprise. Unique Clients, Business Markets Offering and Sectors

Enabling the Organisation Laing O’Rourke is now an internationalised business operating successfully in a rapidly evolving world – a world in which volatile conditions and the changing structure of markets are creating signifi cant new challenges and very substantial new opportunities. In parallel, environmental issues and the sustainable limits of human activity have become ever more pressing. ‘Engineering the Future Today’ has never been more relevant or urgent. The Laing O’Rourke Group’s activities are underpinned by our unique character. This is described in our vision, mission and strategy. Together they form a compelling guide to what our MISSION goals are and how we will achieve them. They continue to unite The mission describes the overall goal and philosophy that us in pointing the way towards achieving future success that is underpins our activities, and is key to the achievement of in the common interest. our vision. We pride ourselves on having a straightforward vision and A globally focused and enduring engineering enterprise applies purpose. Based on the values of the founding shareholders, the knowledge and methods of an integrated set of disciplines it is clear, powerful and relevant to the business challenges to the design and construction of the built environment. It of today and tomorrow. utilises the application of automated processes, intellectual Our mission and strategy focus on specifi c high-value sectors capital and fi t-for-purpose organisational resources to create and markets. We employ our vertically integrated business sustainable value. The goal is a human-technological alliance model to deliver directly for clients and, behind this approach, in which learning takes place at every level. we procure competitively to connect and integrate the Excellence Plus performance is verifi ed in every aspect of the supply chain. way the Group does business – engineering excellence, human We combine a deep understanding of global building and capital management, fi nancial performance and business infrastructure markets with a proven track record in improvement. By consistently applying the four key elements engineering and constructing high-performing capital assets. of Excellence Plus performance in all our operations globally, We have the people and skills to capture value at any point we will achieve our vision to be the company of fi rst choice in the client value chain – from development feasibility to for all stakeholders, able to challenge and change the poor operational management. practices synonymous with construction and compete alongside world-leading businesses. VISION Laing O’Rourke’s well-established vision provides a clear STRATEGY defi nition of the future state we wish to achieve. As a result of The Group strategy creates the framework which defi nes the the signifi cant changes in our core construction markets, we direction and shape we will pursue over the medium to long have undertaken a review of our strategic options to ensure term. This provides a clear mechanism to enable the Board and they continue to align with the vision. Whilst the vision defi nes Group Executive Committee to fully understand the operating the destination, our commitment to engineering our future environment and prevailing market forces, prioritise objectives through Excellence Plus performance guides all our decisions and then allocate the necessary fi nancial and non-fi nancial and actions, and is embedded in the Group’s mission statement. resources to achieve the required state.

22 Laing O’Rourke | Annual Review 2013 STRATEGY 23 cient operation. cient cellence Group with client organisations with client organisations Group cellence uctuations than the traditional contracting model. contracting uctuations than the traditional e maximum return on project investments. on project e maximum return velop innovative product sets for all sectors. sets for product innovative velop and the wider business. of digital engineering to and deployment The development ensur activity of Group the pipeline of DfMA across The extension to de The further engagement and integration of the and integration The further engagement Engineering Ex • • will embed DfMA as our we sector strategies, bespoke Through of solutions enabling the provision methodology, delivery core chain. of the client value proportion a greater over that extend secure, provides services set of lifecycle a broader Offering affected on an ongoing basis and is less income higher-margin fl by cyclical the types of relationships and nurture will establish The Group this Unique that will enable arrangements and the commercial at increasing to the market to be delivered Offering Business to the attainment of will lead time, this approach Over scale. delivery ‘trusted to cultivate aspiration long-held the Group’s and public. private clients, both with key partner’ status its exemplary will continue the Group this outcome, assure To with of working many years over achieved of delivery record the period to further support this goal, over clients. To key into the territory of more will move 2020, Laing O’Rourke of and delivery the creation through provision whole-life and the systems infrastructure built assets, intelligently that management systems technology-driven associated underpin their effi delivery, ensuring greater predictability of the time, cost, of the time, cost, predictability greater ensuring delivery, cater To clients. for outcomes and sustainability safety quality, will create we assets, intelligent demanding more clients for focus with a constructed solutions, engineering-led smarter, performance. controlled and long-term value on whole-life that will be initiatives reinforcing mutually key, The three together brought when to deliver, in combination progressed – our of the Group base and knowhow with the industrial – include: Offering Unique Business • Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke table engineering enterprise, committed to engineering enterprise, committed table oactively deploy new skills and systems ensuring that skills and systems new deploy oactively GROUP STRATEGIC GROUP STRATEGIC ROADMAP ROADMAP Laing O’Rourke’s new strategy strategy new Laing O’Rourke’s the period to 2015, setting covers its path towards out the company’s globally vision to be a long-term engineering enterprise. recognised policy core on three It is centred supported by settings, which are and planned tasks, action areas values as leadership as well and that will engage employees implementation. drive Unique Business Offering; Unique Business and Sectors; Clients, Markets Enabling the Organisation. Unique Business Offering Unique Business complex projects are ‘built’ twice – once virtually in a digital virtually – once ‘built’ twice are projects complex at the point of and then environment engineering enabled Group Strategic Roadmap Strategic Group Roadmap are: Strategic of our Group elements The key • • • 2020 vision, we of Laing O’Rourke’s this element realise To will pr Refreshing our 2020 Strategy Refreshing in radically work and live that we recognising year, During the Executive and the Group the shareholders changing times, to refresh review a wide-ranging Committee commissioned of this exercise The purpose 2020 strategy. the company’s creating towards on our journey steps was to clarify the next an enduring, profi Excellence Plus performance – one of considerable scale with scale – one of considerable Plus performance Excellence reach. global analysis business research, on market was based The process with key dialogue and an extended performance of our past (GSR) Roadmap Strategic is a Group The result stakeholders. sets to 2015 and near-term approach which articulates our activity. of our future the development for parameters clear with, the programmes allied to, and consistent It is closely digital Group, under the Engineering Excellence being pursued (DfMA) and and Assembly Manufacture engineering, Design for the human capital agenda. to Engineering dynamic approach As part of Laing O’Rourke’s for steer a strategic the GSR both provides Today, the Future via to growth a route and creates planning near-term business the by management across be pursued action to coordinated on The GSR is refreshed term. medium to long the over Group Committee ahead of the Executive an annual basis by the Group planning process. business detailed OUR STRATEGY

Clients, Markets and Sectors In the future, we will seek to Over the coming years, we will boost our share of available further reinforce and expand the business by targeting long-term strategic client relationships by gaining detailed insight into requirements in each of our core integration between businesses markets, recognising that those can and will change over time. and countries by identifying our While offering competitive client propositions, we will develop enterprise-wide value from the cross-selling effects that clients’ vital needs, prioritising result from cooperation between closely linked Laing O’Rourke our capabilities, and creating businesses. In the future, we will seek to further reinforce and expand the integration between businesses and countries by long-term demand for our identifying our clients’ vital needs, prioritising our capabilities, products and services.” and creating long-term demand for our products and services. The three key, mutually reinforcing initiatives that will be progressed in combination to deliver on this ambition include: • Advance key client relationships applying a robust risk framework. • Optimise work-winning and delivery using bespoke sector strategies. Enabling the Organisation • Focus on preferred partnerships to expand in The current economic environment is driving up levels of higher-growth markets. competition and therefore the Group will increase its focus on generating improved fi nancial returns by focusing on effi ciency This approach will also allow us to better anticipate and and cash generation across all its business activities. respond to global trends in areas such as demographic developments and climate change, deploying our talent Under the umbrella of business improvement, our where it generates greatest value. organisational effectiveness programmes and cost reduction initiatives aim to ensure that our management operations The degree of globalisation in our business operations will remain effi cient and effective, improving the competitiveness create a broader business base to shield us from economic of the Group and thereby enhancing its ability to win fl uctuations in, or an over-reliance on, any one market. future business. We will seek continually to expand our businesses, The three key, mutually reinforcing initiatives that will be concentrating exclusively on countries with high growth rates progressed in combination to deliver on this ambition and socioeconomic environments that align with our company will include: values and operating approach. Accordingly, our efforts are targeted at various regions that meet our criteria for growth • Grow human capital through focus on capability development. and where we are able to mobilise effi ciently and effectively. • Improve business performance via strong cost control, We will extend our footprint in Australia where substantial governance and knowledge-sharing. investments are planned in mining and transport infrastructure. • Advance safety and sustainability performance to achieve We will also seek to grow our presence in Canada, where Mission Zero. markets are benefi ting from a number of economic, social and environmental factors. All the Group’s business units and functional disciplines will strive to eliminate non-value-adding activities through the In the future, we will continue to differentiate ourselves from eradication of duplication and disposal of non-core activities. the competition on the basis of our technical capabilities in This must be achieved whilst concurrently maintaining the engineering and construction – offering our clients total commitment to Excellence Plus performance in terms of solutions. We will look to develop a ‘licence to operate’ in engineering excellence, human capital management and selective infrastructure sectors on a global basis, for example fi nancial performance. in rail and increasingly in oil and gas, and power generation. The Group will procure a wide range of major equipment, The action plans to achieve this will differ for each sector, services, materials and components that positively enhance leveraging the experience of our industry talent, plus the products and services it provides to clients. We will be signifi cant in-house resources in plant and equipment. highly selective in working with supply chain partners who The strategic focus is not based on the sole pursuit of support our Unique Business Offering and can help deliver opportunities in one particular type of sector, but on a varied it on time and to a high quality by providing innovative, building and infrastructure portfolio spanning both public cost-effective solutions. and private sectors. This allows us to be more resilient in The Group will ensure all suppliers work to the same or overcoming challenges in the future as a result of changing equivalent standards as our own on issues ranging from market dynamics. responsible trading and ethical conduct to health and safety, and will encourage them to adopt and comply with sustainable environmental best practices.

24 Laing O’Rourke | Annual Review 2013 STRATEGY 25 rst nancial nes our success nes our success nancial performance performance nancial Our health and cance. ow. nancial returns and complementary capital and complementary nancial returns dence, employee engagement, revenue levels, levels, engagement, revenue employee dence, ning our business systems and processes to and processes systems ning our business Business improvement; Business Engineering excellence; Financial performance; Human capital management. Laing O’Rourke is committed to the development of a to the development is committed Laing O’Rourke four The Plus performance. based on Excellence culture are: of this approach cornerstones • • • • 2. Engineering excellence the needs of understand priority is to fully The Group’s the life throughout on its promises its clients and deliver provided. services of the engineering and construction is fundamental to our strategy Engineering excellence Offering, of our Unique Business deployment extensive through Group, Engineering Excellence innovative the embracing Manufacture Design for digital engineering technologies, self-delivery and integrated methodologies and Assembly and markets. sectors all our key capabilities, across on projects means delivering Plus in execution Excellence performance time and cost of quality, within tight tolerances manner. and repeatable predictable in a reliable, the fi our aim of becoming towards progress measure To at the aggregate partner, engineering and construction choice metrics to gauge the enduring business use repeat we level, client also use qualitative We of client relationships. nature of our engineering indicators as key results survey satisfaction performance. and delivery 3. Financial performance fi but achievable sets stretching The Group to improve as part of its annual budget planning process targets to drive perspective and sales both a cost from performance fi appropriate fi our consolidated from derived These are structures. earnings book, managed revenue, and include order statements cash fl tax and operating before 1. Business improvement 1. Business refi are We By working capabilities and risk appetite. optimise our assets, with complying and framework to our governance according Code of Conduct, set out in our Global the high standards success. business long-term will sustain the Group is an our business from The elimination of all accidents signifi strategic the highest of objective safety performance determines our strength as a business. as a business. determines our strength performance safety but one that defi It is not an isolated measure it is central this reason, For of our operations. in all other areas of our continued a precondition improvement, to business such as client satisfaction, indicators Performance growth. confi investor to linked all, in one way or another, are rates retention staff objectives. safety Zero as our Mission the same trajectory nancial and nancial and the nancial plans, Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke The Group continues to continues The Group in progress strong make an Excellence establishing all our across Plus culture activities. By doing business is building so, Laing O’Rourke on its position as one of the owned privately largest world’s diverse and geographically engineering and construction on focused companies, growth.” sustainable delivering nancial goals. nancial DELIVERY CULTURE INTEGRATED BUSINESS UNIT DELIVERY PLANS BUSINESS INTEGRATED GSR ACTION AREAS GSR ACTION With a long history of offering innovative engineering and innovative of offering history With a long is an international solutions, Laing O’Rourke construction and of assets a wide range delivering provider service to provide able are chain. We the client value across services of the the lifecycle in stage at every capabilities integrated built environment. tactical execution of them. The Group’s corporate governance governance corporate of them. The Group’s tactical execution to overall ensuring adherence tool for is an integral framework of resolution rapid the mechanism for It provides strategy. plans the agreed from deviation caused by unforeseen issues or off-plan opportunities arising. due to non-performance Integrated business unit delivery planning is a quarterly process process planning is a quarterly unit delivery business Integrated line a clear to ensure matrix that includes a policy deployment Executive and Group Board Laing O’Rourke the of sight between and fi strategic Committee approved The Group’s strategic framework contains a series of key action a series of key contains framework strategic The Group’s Committee objectives. Executive the Group that form areas and and strategy, our vision, mission These emanate from to shape the actions required the short-term constitute to 2015 and drive in line with our GSR portfolio business term. the medium to long over Plus performance Excellence intent into strategic the overarching translate These objectives units. business by the then delivered plans that are operational To achieve this in 2013/14 and beyond, we will recruit, retain retain recruit, will we and beyond, this in 2013/14 achieve To will embed best-in-class We talent. best very the and develop including in areas methodologies and systems processes, DfMA, capital allocation, and risk management, governance technology, and sustainability, safety and marketing, branding These are and human capital management. reporting corporate of our fi delivery that underpin the enablers the key non-fi OUR STRATEGY KEY PERFORMANCE INDICATORS

4. Human capital management The Group’s pursuit of Excellence Plus fi nancial and operational performance is dependent on the quality and commitment MEASURING 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 STRATEGY and sustainability required by clients. The key indicator of performance in this regard, beyond fi nancial metrics, is the level of enterprise-wide employee engagement. It is an EXECUTION all-encompassing metric which determines the degree of understanding and commitment of the Group’s employee base to our strategic goals, and hence provides a direct correlation to service levels, client satisfaction, responsible The Board uses a range of fi nancial behaviour and fi nancial performance. and non-fi nancial indicators across OUR APPROACH TO INTERNAL AUDIT AND CONTROL our business units to monitor the Our internal control processes, including internal audit, ensure Group’s aggregated performance that key issues are escalated through the management team, ultimately to the Board if appropriate. They provide a common against its Excellence Plus targets framework across the Group for operational and fi nancial and key Group Strategic Roadmap controls, and are reviewed on a regular basis by the Board. The business policies and processes detailed within Our Global objectives. Code of Conduct and The LOR Way draw on global best practice, and their application is mandated across the organisation. Our Group Strategic Roadmap (GSR) Laing O’Rourke’s 2020 vision and longer-term mission of Core and Enabling Processes are two such examples, and building an enduring engineering enterprise of considerable promote the application of best practice in the tendering, scale committed to Excellence Plus performance remains procurement and delivery phases of projects, facilitating in place as the long-term driver of all our strategic plans. continuous improvement across the Group. It considers the The GSR’s role is to better articulate and guide the immediate whole-life implications of project execution from inception to next steps along this journey. delivery into service and eventual decommissioning, and its application is critical to our capability in delivering projects to Our strategy is predicated on becoming the fi rst choice schedule, cost and quality. engineering and construction partner for clients in our chosen markets and creating value by investing in areas that make a The Group’s Quality Management System is set out in the materially positive difference to our clients’ businesses as well Corporate Governance section on page 86. as our own. Engineering and construction leadership driven by superior digital engineering insight, Design for Manufacture OUR APPROACH TO RISK MANAGEMENT and Assembly quality and greater focus on service levels, relationship management and fi nancial discipline will be the The effective management of risks and opportunities is overriding priorities. This level of focus will create greater value fundamental to the delivery of the Group’s objectives, for clients and enable delivery of stable and sustainable returns achievement of sustainable growth, protection and for stakeholders over time. enhancement of its reputation and upholding the required standards of corporate governance. The Group’s risk We have a prestigious client portfolio, high-quality resources management framework, including principal fi nancial and a talented and committed workforce. We are seeking and operational risks, is set out on pages 54 to 59. to develop a leaner, more agile, effi cient and responsive organisation with a real focus on delivering a Unique Business Offering that creates long-term collaborative relationships. With a primary focus on core construction markets in the UK and Australia which offer good returns and attractive growth opportunities, we will maintain our prudent approach to risk to further strengthen the Group’s balance sheet. Our strategy is enabled through our commitment to Excellence Plus performance. Excellence Plus performance encompasses four pillars around which our action plans are being aligned: • Business improvement; • Engineering excellence; • Financial performance; • Human capital management.

26 Laing O’Rourke | Annual Review 2013 STRATEGY 27 ’13’12’11’10’09 410 ecting 321 283 Net funds position at 270 174 nition: 0 NET FUNDS POSITION (£million) Defi in factor is a key the year-end cash and the Group’s evaluating liquidity position. The Group’s net positive capacity to generate is an important cash balances of its ability to invest measure and growth, in business attractor as a strong serves to outside investment. The Group ended The Group Performance: with gross nancial year the fi cash of £684 million, refl our continued focus on strong on strong focus our continued cash management which saw our net funds position increase end at the year by 28 per cent to £410 million – the best to date by the performance excellent The Group’s Group. has been cash performance maintaining while achieved alignment to the UK Government’s Code. Payment Prompt 400 300 200 100 78 58 ’13’12’11’10’09 54 34 ciency, ciency, 51 40 67 110 Earnings before Earnings before EBIT pre-exceptional items EBIT pre-exceptional items EBIT post-exceptional 98 115 tability of all revenue- nition: nancial statements. nancial 0 80 60 40 20 EARNINGS BEFORE EARNINGS BEFORE INTEREST AND TAX (£million) 120 100 Defi interest and taxes is a key is a key and taxes interest of the operating measure profi units. business generating Earnings before Earnings before Performance: prior to and taxes, interest items, increased exceptional to £78.4 million by 45 per cent (2011/12: £54.0 million), the restoration ting from benefi in our Australian of performance commercial through operations bid criteria discipline, strict effi process and delivery performance a resilient alongside units our UK businesses from in securing and our selectivity higher-margin complex, more engineering contracts. ’13’12’11’10’09 4.4 3.6 4.3 3.5 3.3 4.0 nancial returns and complementary capital and complementary nancial returns 3.5 4.3 Managed revenue revenue Total 5.0 4.1 Managed revenue nition: Managed revenue 5 4 3 2 1 0 MANAGED REVENUE MANAGED (£billion) Defi the amount of sales represents of the provision from generated engineering and construction- including services, related of joint share the Group’s and associates ventures, inter-segment sales. Managed revenue, Managed revenue, Performance: in by 2 per cent increased 2012/13 to £4.4 billion (2011/12: due to £4.3 billion), primarily in our growth the continued and the business Australian our integrated of resilience model, despite business challenging the continually in the UK and Middle conditions markets. construction East Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke ’13’12’11’10’09 8.2 8.2 8.1 8.2 Order book represents book represents Order 10.0 nition: 8 6 4 2 0 (£billion) ORDER BOOK FINANCIAL PERFORMANCE FINANCIAL Defi structures. These are derived from the Group’s consolidated fi consolidated the Group’s from derived are These structures. The Group sets stretching but achievable fi nancial performance targets as part of as part targets nancial performance fi but achievable sets stretching The Group and a cost both from performance to improve process its annual budget planning fi appropriate to drive perspective sales the amount of outstanding the amount of outstanding contracts. on secured work of our measure It is a key work in winning new success visibility of and also provides earnings. future The Group The Group Performance: at book was maintained order £8.2 billion (2011/12: £8.2 billion) our to replenish continued as we pipeline with high-quality contract like wins in prioritised sectors and oil and gas exploration and in Australia, processing engineering in the UK. rail 10 FOR MORE DETAIL MORE DETAIL FOR 91 SEE 90 TO PAGES KEY PERFORMANCE INDICATORS

BUSINESS IMPROVEMENT HUMAN CAPITAL MANAGEMENT

We are refi ning our business systems and processes to optimise our assets, The Group’s pursuit of Excellence capabilities and risk appetite. By working according to our governance Plus fi nancial and operational framework and complying with the high standards set out in our Global performance is dependent on the Code of Conduct, the Group will sustain long-term business success. quality and commitment of its people. It is critical that the Group The elimination of all accidents from our business is an objective of the highest strategic attracts, develops and retains the signifi cance. Our health and safety performance determines our strength as a business. It is not an isolated measure but one that defi nes our success in all other areas of our best talent in the marketplace to operations. For this reason, it is central to business improvement – a precondition ensure project delivery within the of our continued growth. Performance indicators such as client satisfaction, investor tight tolerances of quality, time, confi dence, employee engagement, revenue levels, staff retention rates are all, in one cost, safety and sustainability way or another, linked to the same trajectory as our Mission Zero safety objectives. required by clients.

ACCIDENT FREQUENCY RATE PROFIT PER HEAD EMPLOYEE ENGAGEMENT

0.3

0.2 0.24 0.23 0.21 0.18 £12,800 64% 0.1 0.12 0.0 ’13’12’11’10’09

Defi nition: Accident Frequency Rate (AFR) is Defi nition: Profi t per head is earnings before Defi nition: Employee engagement is an an industry-standard measurement equivalent interest and tax divided by the average number all-encompassing metric which determines to one reportable lost-time incident resulting of salaried staff, and is a key measure of the level of understanding and commitment in more than three working days’ absence per operating effi ciency. of the Group’s employee base to our strategic 100,000 hours worked, which equates to goals, and hence provides a direct correlation approximately one working lifetime. to service levels, client satisfaction, business growth and fi nancial performance. The Group’s health and safety approach is aligned globally. We increasingly use our employee engagement survey – Shape – to assess individual motivation and organisational processes in this regard.

Performance: AFR improved to 0.21 in the Performance: Profi t per head increased Performance: Employee engagement was year, with no fatalities. This result refl ects an to £12,800 as a continued result of the decisive 64 per cent, compared to a global norm of industry-leading performance relative to our actions we took in rightsizing the organisation 57 per cent. This once again placed us in peers, validating the investment in leadership in 2009/10. This, together with the overhead the top quartile of global high-performing time and resources given to all aspects of reduction secured through our operational companies for the motivation and commitment safety management. Health and safety is the effi ciencies programme, has meant that we of the workforce. Group’s number-one priority, constituting have been able to keep our business fi nancially our licence to do business. We lead the sound while at the same time being able to construction sector in the implementation offer clients more commercially attractive of a behaviourally based approach to safety propositions through increased productivity. to ensure all our activities are managed and controlled in a safe and responsible way.

28 Laing O’Rourke | Annual Review 2013 STRATEGY 29 nition: Digital engineering DIGITAL ENGINEERING DIGITAL Defi set an integrated (DE) delivers of geometric models, data and documentation that builds over all to capture of a project the life to that project. related knowledge gained Utilising our experience DE will give projects, many over in our dence our clients confi our abilities by demonstrating of the complexity understanding risks, process, of the construction thereby and programme, logistics safe for enhancing our reputation on time and to cost. delivery Our deployment Performance: of digital engineering has and execution. in pace accelerated now In our tendering activity we of DE on all projects a level deploy DE during applying actively and are 50 live phase in over the delivery A recent the Group. across projects (part of our in-house survey organisational to increase strategy 50 per cent over capability) showed ‘gaining are of our UK staff with or above’, dence confi a model in accessing 25 per cent delivered have month. We the last since training 1,200 days’ over January 2012, and the capability of all disciplines is increasing on year. year go the ‘way we DE has become will steps and the following to work’ capability the overall be to increase next organisation of the global of level a greater providing year, of and predictability assurance to our clients. outcome 1,245 days training

ts % The proportion of a nition: The proportion ossrail Projects (UK), and Projects ossrail DfMA Cape Lambert Port B (Australia). Cape Lambert Port Deﬁ To assess progress towards our aim of achieving engineering engineering our aim of achieving towards progress assess To monitoring the use of DfMA and digital are we excellence, business also use repeat We our projects. engineering across as key results survey client satisfaction and qualitative performance delivery of our engineering and indicators on client projects. 70 target minimum deployment suitable project designed and project suitable DfMA using the Group’s delivered currently are We methodology. ‘preassembly a prototype testing to systematically calculator’ across DfMA content measure of our projects. all elements seek to expand We Performance: the use of DfMA in an innovative to appropriate, whenever way, of our targets towards drive onsite labour and reducing savings programme achieving of outcome certainty with greater beneﬁ will drive that ultimately to our clients. Products suitable suitable to our clients. Products the application of our DfMA for constantly are methodologies the with being developed support of our Engineering Group. Excellence year during the projects Notable include William St Quarter (UK), (UK), Crick Institute the Francis Cr c Client satisfaction Client satisfaction

nition: CLIENT SATISFACTION ON TARGET Deﬁ client on key data is collected to the Group’s opinions relating on performance operational Process. as part of Core projects clients with an This provides their views opportunity to share in and weaknesses on strengths approach, delivery the Group’s and supports our continuous process. improvement goal The Group’s Performance: year-on-year is an overall in client satisfaction improvement and on its major construction These contracts. infrastructure contract-speciﬁ metrics are and subject to variations inand subject to variations therefore interpretation, data is not presented. aggregated Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke

% cant and cant

Hub Australia 66

Repeat business* ratio ratio Repeat business* %

nition: whom we have a previous relationship, relationship, a previous have whom we than one project. more having delivered and education projects All healthcare under been aggregated in the UK have (NHS) and National Health Service Education respectively. Department for ENGINEERING EXCELLENCE ENGINEERING REPEAT BUSINESS REPEAT * clients with represents ‘Repeat clients’

Defi Hub Europe The Group’s priority is to fully understand the needs understand priority is to fully The Group’s throughout on its promises of its clients and deliver services of the engineering and construction the life is fundamental to excellence Engineering provided. of our deployment extensive through our strategy the innovative embracing Offering Unique Business digital engineering Group, Engineering Excellence and Assembly Manufacture for Design technologies, self-delivery and integrated (DfMA) methodologies and markets. sectors all our key capabilities, across Repeat business Repeat business Performance: of our 71 per cent represented ts of our as the benefi revenue, and Offering Unique Business converted quality of our delivery of our client base to ‘trusted more The ratio partner’ status. delivery is diluted by a number of new wins in signifi contract is the value of external contracting contracting of external is the value generated the year in turnover clients as proportion repeat from contracting of total external It is a key the year. in turnover and earnings of revenue driver an drives as retention growth of a value in the lifetime increase costs, marketing client, reduced insights into key and provides which drives client behaviour, in the improvements continuous offering. business growing sectors such as oil sectors growing and rail and gas in Australia engineering in the UK. 76 OPERATING OVERVIEW

EUROPE HUB

Our Europe Hub comprises The Group is one of the leading engineering and construction solution providers in its chosen sectors. Our aim is to leverage Laing O’Rourke’s the scale and effi ciencies of our Unique Business Offering operations in key building and vertically integrated delivery model to generate profi table revenues in our core markets, collaborating with like-minded and infrastructure sectors partners. We will complement this approach by building leading positions in selective growth-oriented sectors and territories and construction markets with the right strategic and cultural fi t. covering principal markets in Canada, Saudi Arabia, the United Arab Emirates and the United Kingdom.

HIGHLIGHTS 0.14 Accident Frequency Rate

65% Employee engagement

9 11,208 Number of employees

7 6 £2.6bn 8 Managed revenue

£49.0m 5 EBIT (pre-exceptional items) 4 3 1 2 £5.6bn Order book

10.7% Gross margin

UNITED KINGDOM UNITED ARAB EMIRATES CANADA 1. CARDIFF 6. ABU DHABI 9. TORONTO 2. DARTFORD 7. DUBAI 3. EXPLORE INDUSTRIAL PARK SAUDI ARABIA 4. MANCHESTER 5. MOTHERWELL 8. RIYADH

30 Laing O’Rourke | Annual Review 2013 AUSTRALIA HUB

Our Australia Hub Laing O’Rourke is now integrating the global capabilities of the wider Group in Australia to provide a distinctive comprises a diversiﬁ ed and proposition based on superior quality of design and delivery. It is increasingly taking leading positions in carefully targeted expanding infrastructure PERFORMANCE sectors and markets, predominantly in building and social project portfolio through infrastructure, mining and minerals-handling, oil and gas, rail and power, where demand is being driven by the emerging principal operations in world economic superpowers in and around the region. Australia, Hong Kong and New Zealand.

HIGHLIGHTS 0.40 Accident Frequency Rate

60% 6 Employee engagement 4,143 Number of employees

£1.8bn Managed revenue 2

4 £29.4m EBIT (pre-exceptional items) 1 3 5 £2.6bn 7 Order book

7.7% Gross margin

AUSTRALIA SOUTH EAST ASIA 1. BRISBANE 6. HONG KONG 2. DARWIN 3. PERTH NEW ZEALAND 4. PORT HEDLAND 5. SYDNEY 7. AUCKLAND

Laing O’Rourke | Annual Review 2013 31 HUB PERFORMANCE

EUROPE HUB We have continued to increase the quality and diversity of our project portfolio by focusing our attention on opportunities Canada with a high likelihood that our Saudi Arabia engineering, manufacturing United Arab Emirates and direct delivery skills United Kingdom will create value beyond that offered by the competition.”

ROGER ROBINSON CHIEF EXECUTIVE OFFICER, EUROPE HUB

32 Laing O’Rourke | Annual Review 2013 PERFORMANCE 33 dence dence scal ve years, years, ve SENIOR MANAGEMENT CHAIRMAN, EUROPE HUB CHAIRMAN, CHIEF EXECUTIVE OFFICER, EUROPE HUB FINANCE DIRECTOR, EUROPE HUB (from left to right) left (from GEORGE ROSE 1. ROGER ROBINSON 2. COLLINS PAUL 3. the cant pipeline of opportunity for ce and mixed-use sector continued to show to show continued sector and mixed-use ce cant strength, allowing us to better optimise allowing cant strength, uncertainties in the Eurozone adversely affecting confi affecting adversely in the Eurozone uncertainties Union. This has of the European the rest across levels of activity in levels a major slowdown to create continued Despite these health and education. like in sectors in ongoing investment was there issues, macroeconomic schemes, such as Crossrail, infrastructure economic large new-build the nuclear optimism surrounding and continuing of sources attractive both of which constitute programme, Autumn The UK Chancellor’s the Group. for income future signs that public-sector Statement did bring some positive with the will recommence, programmes capital investment (PFI) Initiative Finance to the £2 billion Private commitment (PSBP) and High Building Programme Priority School backed HM Treasury’s signs following also positive were Speed 2. There Guarantees 2012 of the UK Infrastructure in July announcement up to £40 billion of critical schemes aiming to kick-start because of stalled that may have projects infrastructure these welcomed Laing O’Rourke conditions. credit adverse National announced the previously alongside initiatives with 500 potential projects Plan, detailing over Infrastructure fi of £250 billion over in excess value an estimated a signifi representing the medium-term. over industry construction operational the Group’s environment, In this type of market is a signifi diversity mobilisation into higher-performing through our assets protection revenue time, this provides At the same markets. or sector. on any one market an over-concentration from carried environment investment The subdued private-sector in the UK, although particularly year, the previous from over offi the commercial of England, with a within the southeast some signs of recovery in the period. to market schemes coming number of prestigious in building and strength unparalleled This plays to the Group’s engineering capabilities. structural Marketplace UK contraction was an overall there guidance, In line with previous during markets and infrastructure UK construction in core available of volumes with lower period, the 2012/13 review the UK Coalition Government’s anticipated following work fi and the continuing spending review comprehensive performance performance t. nancial Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke ts of our Unique Business Offering and Offering ts of our Unique Business easingly complex client demands. complex easingly ets with the right strategic fi ets with the right strategic to industry-leading levels. to industry-leading agenda. and safety health Zero our Mission Drive integrated delivery model with key clients. model with key delivery integrated into sectors our international coverage extend Selectively and mark and fi operational business Improve Leverage the benefi the benefi Leverage Enhance technical and digital engineering capabilities Enhance to meet incr CROSSRAIL, CANARY CANARY CROSSRAIL, WHARF, LONDON, LONDON, WHARF, ENGLAND GROUP STRATEGIC ROADMAP PRIORITIES ROADMAP GROUP STRATEGIC • • • Laing O’Rourke is playing a is playing Laing O’Rourke on Europe’s role major delivery infrastructure rail largest Extensive – Crossrail. project application of the Group’s and Manufacture Design for is shaping approach Assembly stations of new construction in London at Canary Wharf Street, Liverpool (pictured), Court Road and Tottenham House. Custom • • HUB PERFORMANCE: EUROPE

International and social infrastructure and development projects over Canada the next decade to expand and modernise the country’s In Canada, the Alternative Financing Procurement (AFP) infrastructure to place it on a par with the most advanced market, which shares many characteristics with the Public countries worldwide, ahead of them hosting the FIFA World Private Partnership (PPP) approach in the UK, continued to Cup in 2022. The enduring attractiveness of the Qatar market be an important driver of growth, particularly in Ontario and to the Group will, however, be determined by the adoption of Quebec, where both state governments have announced equitable procurement routes. comprehensive plans to invest heavily in long-term programmes for social infrastructure, oil, shale gas and rail Strategic priorities in particular, which play well to the Group’s core strengths. The Group is one of the leading engineering and construction Following our successful market entry in a joint venture solution providers in its chosen sectors. In line with the partnership, the Group believes it can further build on refreshed Group Strategic Roadmap, our aim is to leverage its position by targeting growth in core construction and the scale and effi ciencies of our vertically integrated delivery infrastructure sectors, using our balance sheet to support businesses and the competitive advantage inherent in our bids on a number of key projects. approach to engineering innovation, digital engineering and Middle East Design for Manufacture and Assembly (DfMA), while optimising In the Middle East, the United Arab Emirates market the value of our supply chain relationships to deliver projects remained subdued, particularly in Dubai. We are optimistic on time, on budget and to an unrivalled level of quality, safety that our long-term presence, coupled with the goodwill that and sustainability. We will complement this approach by has been generated by our public statements of commitment building leading positions in selective growth-oriented sectors to the region, will ensure it remains an attractive market, and territories with the right strategic and cultural fi t. benefi ting the Group when the upturn gains real momentum. We will increasingly pursue multidisciplinary projects which Growth opportunities exist in Qatar, as the country continues to encompass the full range of our Unique Business Offering from stimulate broader trade links with the international community programme management, civil and structural engineering, and diversify its economic growth. The Qatari Government has manufacturing and construction services, to mechanical published plans to invest US$170 billion in various economic and electrical engineering and operational maintenance.

STAFFORD AREA IMPROVEMENT, STAFFORDSHIRE, ENGLAND Work commenced on the ﬁ rst phase of a £250 million programme to improve performance and capacity on the Stafford section of the UK’s West Coast Main Line. The Staffordshire Alliance – a partnership of Laing O’Rourke, Atkins, Network Rail and VolkerRail – is part of a new collaborative contract built upon common principles, shared values and behaviours that will help transform the delivery of rail infrastructure projects in Britain.

WILLIAM STREET QUARTER, LONDON, ENGLAND Laing O’Rourke is delivering an innovative solution, working with the London Borough of Barking and Dagenham, Long Harbour and associated partners under a unique PPP funding model to deliver a high-quality product quicker than comparable schemes. The project is embracing DfMA and is the ﬁ rst project to employ SmartWall – a modular internal walling system manufactured offsite and delivered with fully integrated mechanical and electrical services, saving over half the time of traditional in situ construction.

34 Laing O’Rourke | Annual Review 2013 TRINITY LEEDS, ENGLAND Laing O’Rourke helped breathe life back into Leeds city centre, with the opening of western Europe’s biggest retail scheme for 2013. Drawing on the expertise of the Group’s integrated delivery model, PERFORMANCE including Explore Manufacturing, Expanded, Vetter and Crown House Technologies, combined with regular, proactive engagement with the local community, meant that the project was completed on time and to budget for client (and the UK’s largest commercial landlord) Land Securities.

Image courtesy of Giles Rocholl Photography

These increasingly large and complex infrastructure-based successful programme management of the London 2012 projects offer greater revenue and profi t retention across a Olympic and Paralympic stadia and park infrastructure. greater proportion of the client value chain, enhancing our Year on year, excluding those one-off benefi ts in 2011/12, prospects for growth in the medium to long term. pre-exceptional operating profi t increased slightly. There was good growth in Infrastructure and Select Plant, partially offset We will continue to develop our business where growth by reductions in Construction and Crown House Technologies. opportunities exist and where we believe we can positively differentiate relative to domestic incumbents or international The deployment of our Unique Business Offering has also competitors. Therefore, the Group’s focus will remain in helped us maintain operating margin at the project level Canada and selected regions in the Middle East, where the which would have otherwise come under pressure from complementary sectors, pipeline of opportunities, preferred supply chain impacts. This has allowed us to maintain procurement routes and working practices all play to our core selectivity and avoid bidding for lower-margin work at a time strengths as an integrated engineering enterprise. when competition in the market remains intense. We further tightened our ‘permission to bid’ criteria, basing our UK Financial performance activities progressively on our digital engineering and DfMA The Hub sustained a resilient managed revenue performance methodologies and integrated delivery model. of £2.6 billion (including share of joint ventures and associates), The performance was also helped by a continued focus on down 8 per cent on the previous year (2011/12: £2.8 billion), controllable cost reduction as we rescaled areas of the delivery with pre-exceptional earnings before interest and tax of business units to remove duplication and take advantage of £49.0 million (2011/12: £82.8 million). As previously noted, technologies, in line with the prevailing market demand, helping 2011/12 profi ts benefi ted from a number of contracts in the to reduce overhead strain. During the year, we concluded the fi nal stages or completing that year, with favourable outturns sale of our German fi nished stone products business assets, triggering bonus incentives, the most notable being the following a strategic review which identifi ed it as non-core to our longer-term goals. Our Infrastructure business had a solid EUROPE 2013 ORDER BOOK BY SECTOR performance overall, although a small number of projects did experience productivity issues which affected profi tability during Commercial 13% the period. Notably, these contracts had been secured prior to Residential 2% the full deployment of Core Process across the business. Social Infrastructure 38% Transport 17% At the year-end, the Hub order book totalled £5.6 billion, with Utilities and Waste 4% £2.6 billion of new work won during the period, maintaining Power 26% long-term revenue visibility of 91 per cent for 2014, 50 per cent for 2015 and 27 per cent for 2016. We have stepped up our efforts to rebuild future workload beyond 2014 and, encouragingly, our medium-term pipeline of higher-certainty opportunities is in excess of £25 billion, which includes signifi cant opportunities in

Laing O’Rourke | Annual Review 2013 35 HUB PERFORMANCE: EUROPE

MERTHYR TYDFIL HEALTH PARK, WALES Laing O’Rourke completed Merthyr Tydﬁ l’s new ‘Health Park’ – incorporating shared health and social care services provided by a range of professionals in a single location – ahead of schedule. It is the ﬁ rst community health facility of its kind in Wales, and the design and delivery teams worked collaboratively to erect the DfMA-enabled frame in just 15 weeks, despite a particularly severe winter in the Welsh valleys.

Canada, the Middle East and the UK. In addition, at the year-end, corresponding improvement in labour effi ciency, as clients we had a pipeline of ‘in-bid’ opportunities worth approximately increasingly recognise the incremental value offered by our £6.2 billion. DfMA proposition. We still have a long way to go to achieve the full potential of its widescale adoption, but the direction of travel Operational performance remains positive. Safety is the Group’s number-one priority. During the year, We have also added to our capabilities in complex geotechnical the Hub maintained an industry-leading record, posting a and civil engineering solutions through our Expanded division, rolling Accident Frequency Rate (AFR) of 0.14. to support project delivery activities and provide competitive This excellent performance is one of many benefi ts we derive advantage in bidding for new opportunities. directly from DfMA and our integrated business model. By Our approach to business development and work-winning controlling delivery of the major work packages on a project has once again served us well in the year. We have remained through the use of in-house resources and offsite techniques, disciplined in our selective sales strategy over the period. our construction leaders directly infl uence the outcomes The further strengthening and mandating of our Core Process ‘on the ground’, mitigating many of the risks associated with governance procedures in the tendering stages is proving subcontracting through the supply chain, where there are wide highly effective in securing profi table work that fi ts our strategic variations in standards and practices. growth criteria, as the continuing strength in our order book A range of new initiatives were launched to support our has clearly demonstrated. This strategy was accelerated by Mission Zero objective to eradicate all accidents from our the further integration of our in-house cost planning activities business by 2020. A number of our clients are also seeing the to maximise the return on the investment we are making in direct benefi t of adopting our approach in their own business state-of-the-art digital engineering technologies, moving activities, and we are beginning to see tangible examples of us beyond the limitations of Building Information Modelling this behaviourally based methodology being applied more to provide clients with a more holistic asset information widely across the industry. management resource tool. Our core UK-based engineering and construction businesses We are committed to our human capital agenda, and continue all performed in line with expectations, continuing to deliver to invest in the development of our people. During the year, profi t-generating revenues despite the ongoing market we continued to focus on the recruitment and training of young diffi culties. The 2012/13 reporting period has been another year talent, with 136 people placed on our entry-level programmes of productivity improvement across our manufacturing facilities, from trade apprentices to graduate engineers. Our recently with a concerted focus on the effi ciency, quality and safety published employee engagement score marks Laing O’Rourke of our operations. We increased production volumes with a out as one of the highest-performing companies globally for the

36 Laing O’Rourke | Annual Review 2013 PERFORMANCE 37 table revenues from framework framework from revenues table cant milestone was reached in the development of in the development was reached cant milestone CENTRE FOR VIRUS RESEARCH, VIRUS RESEARCH, CENTRE FOR UNIVERSITY OF GLASGOW, SCOTLAND SCOTLAND UNIVERSITY OF GLASGOW, Secured during the year, the project will create a high- will create the project during the year, Secured for environment research and sustainable safe quality, funding is dependent on the facility The research Scotland. with the partner so a reliable on schedule, being completed and capability was extremely resources right experience, capability integrated important to the client. The Group’s in the tendering process. differentiator a key was therefore We continued to generate profi to generate continued We as the UK’s enhancing our position year, during the agreements infrastructure. of healthcare provider leading on the ‘Designed cant milestones signifi reached we the year, Over a scheme framework, healthcare Wales’ for Building Life: for its lifetime. visibility over good revenue the Group which offers in Merthyr ‘Health Park’ rst of the fi handover included Successes will facility This impressive ahead of schedule. weeks l two Tydfi in this delivered are social care the way health and transform one roof. under service patients an integrated offering area, and the day centre care emergency new the also completed We of a second Hospital in the Charles at the Prince unit surgery heart of Merthyr in the programme refurbishment three-phase l. A signifi Tydfi in Stoke-on-Trent, Hospital of North Staffordshire the University of the new and handover commissioning with the completion, of buildings. complex commenced we sector, in the healthcare Elsewhere client, a long-term for mental health facility of a delivery Trust. NHS Foundation and Wear the Northumberland, Tyne wins during the period in this sector included North Notable to us the contract awarding NHS Trust Cumbria University and St Thomas’ Cumberland Hospital. Guy’s West redevelop its new also appointed us to construct Trust NHS Foundation based in the in London. Finally, centre Treatment Cancer – an area Campus in Glasgow Science Garscube expanding cant business business cant Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke nancial close and commenced onsite during March onsite during March and commenced nancial close THE FRANCIS CRICK INSTITUTE, LONDON, LONDON, THE FRANCIS CRICK INSTITUTE, ENGLAND Designed for success from the outset, the rapid delivery of delivery the outset, the rapid from success Designed for of the Group’s demonstration positive is a highly this project Digital engineering and DfMA Offering. Unique Business time of the the installation reducing radically techniques are with high-quality modules, 4,500 mechanical and electrical House’s in Crown designed and manufactured components delivery the Midlands, for in Oldbury, facility manufacturing London. in central and onsite assembly 2013. We have a 40 per cent equity interest in the scheme and equity interest a 40 per cent have 2013. We and build phases on the project, the design for responsible are solution. DfMA preferred the client’s deploying Social infrastructure Healthcare to deliver continued we business, Construction In our core the health and to transform social infrastructure essential across many communities for footprint education services of and completion the UK. This included the commencement hospital, healthcare phases of complex major construction the UK, including the across facilities and medical research PFI Hospital Healthcare Children’s Alder Hey future-proofed appointed preferred formally were which we for in Liverpool in May 2012. We consortium, of the ACORN as part bidder, fi reached loyalty and dedication of its people – once again demonstrating again demonstrating – once of its people and dedication loyalty Group. the across that exists and motivation the resilience by recruiting Hub the Australia to support also continued We to seize the signifi sector expertise and exporting development opportunities in this part of the business. opportunities development been synonymous with has always brand Laing O’Rourke’s in review the year and during quality and certainty, delivery client world-class for our reputation further enhanced we quality, budget and to the exacting solutions – on time, on demanded. standards and sustainability safety HUB PERFORMANCE: EUROPE

expected to receive up to £200 million of investment over the next ten years – the University of Glasgow and Medical Research Council jointly awarded Laing O’Rourke the contract to design and construct a centre for virus research. Education 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, in Salford, Barnsley, Newham and Barking and Dagenham. A particularly noteworthy performance was the completion of the Oasis Academy, the third and fi nal school within phase one of the Salford BSF framework, which set new benchmarks in quality and energy effi ciency, opening ahead of the original programme schedule to coincide with the new academic year. We further developed our market-leading sustainable schools proposition based on the UK Department for Education’s challenge to build schools faster, better and for considerably less than the previous scheme cost. The solution will leverage the Group’s unique in-house manufacturing capability to deliver school facilities that are predominantly constructed offsite for rapid onsite assembly, achieving a minimum 30 per cent saving in unit cost, with greater savings achievable for large multi- school build programmes. The unprecedented air tightness of these structures makes them incredibly energy effi cient and we are now actively marketing this value proposition with local and central government departments, and are confi dent that it will lead to a wider recognition of the fl exible application of DfMA techniques to a range of public-sector construction Grade I-listed Central Library and Town Hall, a complex requirements. For these reasons, we are confi dent in our combination of refurbishment, restoration and signifi cant ability to secure work on large parts of the Department contemporary enhancements to a 1930s landmark. Once for Education’s £2 billion PFI-backed Priority School Building complete, the complex will have been transformed into an Programme, with the recent release of the fi rst tranche of open, multi-functional library, new exhibition and entertainment prioritised schools. space and council chambers, while protecting an important part In the further education sector, we were awarded the of the city’s heritage. This sustainable form of contract is also prestigious contract to build Europe’s fi rst School of achieving economic benefi ts to the surrounding communities, Government. With a partnership of achievement spanning including the creation of project-initiated apprenticeships and over a decade, it was a natural choice for the University of a procurement model that directly boosts local businesses. Oxford to award the contract to design and construct the Blavatnik School of Government to Laing O’Rourke, having Residential experienced the benefi ts of our DfMA delivery approach on Social housing previous campus projects. We commenced work on the William Street Quarter housing development in the London Borough of Barking and Dagenham Local authority services in the year. The scheme will provide 477 high-quality affordable During the year, working closely with English Heritage, residential units in two locations in Barking town centre and we continued the transformation of Manchester’s iconic

FARRINGDON STATION, LONDON, ENGLAND The Costain/Laing O’Rourke joint venture (CoLOR) team delivering major Crossrail advance works at Farringdon in central London won Network Rail’s ‘Best Large Project’ accolade at its 2012 Partnership Awards ceremony. Regarded by many as the ‘blue riband’ honour, the event is open to Network Rail’s partners and suppliers to reward and recognise excellence and best practice across the country.

38 Laing O’Rourke | Annual Review 2013 ALDER HEY CHILDREN’S HEALTHCARE HOSPITAL, LIVERPOOL, ENGLAND As part of the ACORN consortium, Laing O’Rourke was formally conﬁ rmed as the preferred bidder for the Alder Hey Children’s Hospital Project in Liverpool PERFORMANCE during the year. The winning bid drew upon the Group’s extensive healthcare sector knowledge, with support from the Engineering Excellence Group. Utilising digital engineering from an early stage illustrated programme savings through a DfMA delivery approach.

the eastern end of the Thames View on the edge of Barking Economic infrastructure Riverside. Utilising our DfMA residential solution, the project Through our Infrastructure business we continued to take is being funded through an innovative private partnership advantage of the pipeline of opportunities in the key sectors arrangement in which we are an equity participant – the fi rst of power, transport and utility networks in particular. totally privately funded affordable social housing scheme in the UK. Aviation We underlined our expertise for working in live air environments by meeting and, in some cases, exceeding Commercial signifi cant delivery milestones at Heathrow Terminal 2A, We continued to see fragile signs of recovery in the UK despite the challenge of keeping the adjacent air infrastructure commercial property sector, particularly in central London operational throughout the project. Integrating the expertise during the year. Following the original contract award to of Laing O’Rourke’s delivery businesses and using innovative construct the shell and core for the Francis Crick Institute in design techniques that maximise the use of standardised and the heart of London, the Group was awarded the remaining modular components, this ‘new breed’ of passenger terminal mechanical and electrical work packages to complete the is being constructed at one of the world’s busiest airports advanced biomedical research facility, recognising our without any interruption to movements of people or aircraft. groundbreaking collaborative methodology to date. The The fi rst retail areas were successfully completed and handed Chancellor of the Exchequer, George Osborne, visited the over on schedule. We were subsequently recognised for our site of this iconic project during the year as part of the performance with three wins in the annual Heathrow Health government’s efforts to stimulate PPP investment activity and Safety Awards for the work we have carried out on the in the construction sector. terminal and the multi-storey car park developments. Following the award of the prestigious contract to build the Rail iconic Leadenhall Building in the City of London for clients We continue to be engaged on the UK’s largest commuter rail British Land and Oxford Properties, the extensive application of projects for Network Rail, Crossrail, Manchester Metrolink preassembly techniques to signifi cantly enhance programme and Edinburgh Trams. We have established strong working effi ciency through a material reduction in the delivery schedule relationships with these client organisations which proved and waste volumes, saw the main structure quickly become a invaluable in securing new work during the year. We completed feature of the UK capital’s skyline. a hat-trick of contract wins on Crossrail with the awards of In the retail sector, Laing O’Rourke helped breathe new life Liverpool Street, Tottenham Court Road and Custom House into Leeds city centre with the completion of western Europe’s stations, with intensive construction already well progressed biggest retail scheme in 2013 – Trinity Leeds – for a major on the station box in Canary Wharf. Key to securing these Group client, Land Securities. projects was the Group’s ability to demonstrate its extensive rail infrastructure capabilities across its internal supply chain from the design and digital engineering team into Explore Manufacturing and Expanded for civil engineering and station assembly.

Laing O’Rourke | Annual Review 2013 39 HUB PERFORMANCE: EUROPE

During the year, we also secured a major project with Network Rail as part of the UK’s fi rst ‘pure construction alliance’ FLEXIBLE, QUALITY SOLUTIONS between Laing O’Rourke, VolkerRail, Atkins and Network Laing O’Rourke’s response to the Priority School Building Rail to deliver the £250 million Stafford Area Improvement Programme (PSBP) uses its in-house capability to Programme on the West Coast Main Line. The team will work manufacture a wide catalogue of standard solutions – collaboratively under one unifi ed agreement where all parties such as modular MEP units and walls complete with share benefi ts and risks. The alliance model, developed in windows, solar control and ventilation – which come together Australia, is a move away from the more traditional ‘hub and to form smart, predefi ned environments for classrooms. spoke’ style of contracting towards a completely integrated These can then be combined in any number of bespoke ‘one team’ structure. arrangements and layouts, creating individual but functional Laing O’Rourke also received peer group recognition during and affordable schools. the year for its achievements in the rail sector. Working in a joint venture to deliver the major advance works at Farringdon Station in central London, the project team won Network Rail’s ‘Best Large Project’ at its annual Partnership Awards ceremony. The award recognised the engineering challenges on this complex project, including working in a live railway environment, within very close proximity to London Underground tunnel structures. The team delivering Greater Manchester’s Metrolink network also celebrated major success during the year with fi ve accolades, including ‘Project of the Year’, at the National Light Rail Awards. Water and utility networks The UK water and utilities market is also strategically important to Laing O’Rourke, with £25 billion of investment planned by water companies between 2015 and 2020. We are currently completing delivery of the complex sewage treatment infrastructure at Beckton and Crossness for Thames Water, and remain confi dent in our ability to secure major works packages on future Thames Water utility infrastructure projects. Regulated markets are less cyclical and the margin potential less volatile and we have made senior leadership appointments to access these markets. We are formalising our delivery business capability in utility networks, such as power distribution, where we already possess signifi cant expertise backed up by the technology platforms, specialist plant and equipment needed to effi ciently deploy and manage resources on the multidisciplinary programmes of work typical of these markets. These capabilities earned the Group a place on National Grid’s £650 million electrical substation framework, utilising our expertise in design and manufacturing to offer the client a fully DfMA-enabled structural solution for the delivery of its extensive network of substations. Highways In road infrastructure, the Highways Agency gave Laing O’Rourke notice to proceed with the A453 widening work near Nottingham to alleviate one of the UK’s most congested roads. This is the fi rst of the six growth road schemes announced in the UK Government’s 2011 Autumn Statement with construction getting under way in January 2013. The overall scheme, worth £150 million, will see a seven-mile stretch of the A453 widened – boosting a major route for road users travelling to Nottingham, the M1 and East Midlands Airport. With a mixture of 11 structures (bridges and underpasses), conventional highways construction techniques FOR MORE INFORMATION would cause a lot of disruption to both road and public transport users. To minimise congestion and speed up the Watch a 3D fi lm showing how Laing delivery of the project, a DfMA solution has been utilised early O’Rourke’s standardised model for schools in the design of the structures and other elements. This has can be re-imagined into an almost limitless generated considerable time savings and wider risk mitigation number of bespoke arrangements. Scan on the scheme. the QR code (left) using your smartphone or visit bit.ly/infoworks4

40 Laing O’Rourke | Annual Review 2013 PERFORMANCE 41 ce ciency credentials credentials ciency ciencies that derive from ‘just in time’ ‘just from ciencies that derive CHt also worked with the Engineering Excellence Group Group with the Engineering Excellence CHt also worked solution to its modular plantroom to develop during the year its over asset of an and performance installation revolutionise with particular application in the social infrastructure lifespan, consumption scrutiny of building power increasing where sectors, on the energy-effi focus to a greater is leading providers. of major mechanical and electrical assessment environmental foremost BREEAM, the world’s buildings, named NHS for system method and ratings Health at the Foresterhill facility energy new Grampian’s winner. category Award Campus as its 2012 Industrial the ensured by CHt, the solution Designed and delivered an industry- achieved methodologies environmental innovative score. BREEAM design stage leading management Plant and logistics providing year also had a successful Plant business Our Select heavy plant and lifting solutions, of innovative a range facilitating that is eet and expertise fl crane including the tower the structure, tallest of the City of London’s construction a lift and Plant has developed Leadenhall Building. Select Terex, manufacturer, crane tower with the climbing strategy the build heavier lift capabilities throughout to deliver via the extensive the schedule to help reduce programme adoption of DfMA components. management of its logistics development It also continued DfMA agenda. broader capabilities to support the Group’s hub to support London-based projects, a logistics It created effi greater to drive is also being planned to support A similar approach delivery. in Liverpool. hospital build programme the Alder Hey its modular building solutions Plant progressed Select of offi with the delivery during the year offering business in Middlesex. BP at its Sunbury facilities for accommodation primary school solution has also proved exible the fl Similarly, with London secured with a number of contracts successful education authorities and a further pipeline of opportunities being pursued. currently Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke rmed as preferred bidder with our rmed as preferred cially confi cially cant offsite manufacturing capacity during the year as capacity during the year cant offsite manufacturing BLAVATNIK SCHOOL OF SCHOOL OF BLAVATNIK eet of new nuclear plants provides high earnings potential. plants provides nuclear eet of new rst School of Government to School of Government rst GOVERNMENT, UNIVERSITY UNIVERSITY GOVERNMENT, ENGLAND OF OXFORD, partner Bouygues TP for the main civil engineering works engineering works the main civil partner Bouygues TP for that time, we C in June 2012. Since Point package at Hinkley Contractor with the client under an Early been working have case for to support the business (ECI) agreement Involvement can that we build and ensure new in nuclear the investment light the green once phases rapidly mobilise into the delivery has been given. Building technologies unit added (CHt) business House Technologies Our Crown signifi at Oldbury in the Midlands. of its facility part of an upgrade in the involvement it has had early on-stream, coming Since the mechanical and electrical phase to deliver preconstruction major building and on a number of the Group’s infrastructure including the Leadenhall Building projects, social infrastructure and Heathrow’s Crick Institute in the City of London, the Francis 2A. Terminal Marine our engineering to increase, port capacity continues As the UK’s and newest of Europe’s the construction leading skills are with Port, at London Gateway development deep-water biggest largest as the world’s in the year achieved a major milestone part of the 2.7 kilometre- along installed were cranes container Expanded civil by Laing O’Rourke’s quay wall constructed long engineering division. Power on predicated plans are growth strategic The Group’s in the buoyant presence cant delivery a signifi establishing plans investment the UK’s Therefore, sector. energy global with a infrastructure ageing power-generation to replace fl with the engineering UK contractors a few one of only are We for capabilities and reputation delivery specialist knowhow, of the standards to the exacting quality needed to perform industry. and storage processing generation, nuclear offi were We Laing O’Rourke. The iconic new The iconic Laing O’Rourke. in the Radcliffe building, situated in central Quarter Observatory outstanding will nurture Oxford, the world across from graduates in the skills and responsibilities of government. With a 12-year track record of record track With a 12-year high- delivering achievement, onquality buildings on time, reportable budget and without a choice it was a natural accident, to of Oxford, University the for Europe’s for the contract award fi Programme management evident in Abu Dhabi, Sharjah, Qatar and Oman. This is As a leading infl uence in the CLM consortium, the exemplary supported by resurgent oil and gas prices, continued record of achievements over the life of the programme to investment and increased output from the region’s LNG deliver the park infrastructure for the London 2012 Olympic and producers. Qatar in particular represents new growth prospects Paralympic Games provided a global showcase of the British for Laing O’Rourke, with a major programme of development construction industry. We have been leveraging the experience ahead of the 2022 FIFA World Cup, including economic, social and reputation gained on this scheme by actively marketing our and sporting infrastructure, where the Group has a signifi cant programme management services to support growth in new track record of delivery. markets, including Canada. Despite the general excitement surrounding the attractiveness Facilities management of the Qatar construction market, the Group will not lose sight We also developed our targeted offer in ‘hard’ facilities of the United Arab Emirates. Although quieter than in the boom management during the year and commenced our fi rst contract years, we remain confi dent there will be suffi cient volume to with Barking and Dagenham Schools, utilising the expertise maintain a sustainable, profi t-generating business, especially gained in advanced delivery techniques, visualisations and with high-end clients who value our quality and reliability. commercial and technical data derived through the design During the year, we were named a preferred contractor by and construction phases of a project to provide the client Majid Al Futtaim, a developer of world-class retail centres, for with a whole-life asset management solution. consideration to deliver future shopping mall projects based on our past performance in Sharjah, putting us in a favourable The Middle East position to secure a regular fl ow of future work. We also Outside the UK, we are still active, following a rescaling of our secured work packages on the Emirate Aluminium Smelter business activities in Dubai and Abu Dhabi. We will continue Complex Expansion Project, leveraging our heavy industry with our cautious approach to opportunities that meet our experience developed in the Australian market. rigorous fi nancial requirements. Dubai remains heavily During the year, Austrak, the Group’s modular rail track constrained by continued debt-restructuring and the negative business, continued to grow volumes in the design and impact of a stagnant global economy. While Dubai’s well- manufacture of concrete sleeper track panels for export to publicised property collapse has had wider growth implications Australia from its manufacturing facility in Dubai, supporting across the region, a more measured development approach is our commuter and heavy-haul rail delivery businesses.

CENTRE HOSPITALIER DE L’UNIVERSITÉ DE MONTRÉAL (CHUM), QUEBEC, CANADA As the Group’s anchor project in Canada, the CHUM is important to our future growth plans in the region. It is providing invaluable experience, earning the Group respect and generating positive interest in the Laing O’Rourke brand amongst potential clients.

YORK UNIVERSITY, TORONTO, CANADA Selected from among 16 bidders, Laing O’Rourke secured its ﬁ rst Canadian project without a joint venture partner: the new home of York University’s Lassonde School of Engineering. Laing O’Rourke’s digital engineering capability impressed at tender stage, with the client also citing the Group’s engineering excellence capabilities, fast-track DfMA-led approach to scheduling and broad experience of university campus construction.

42 Laing O’Rourke | Annual Review 2013 A453 WIDENING, NOTTINGHAMSHIRE, ENGLAND The Highways Agency gave Laing O’Rourke the ﬁ nal notice to proceed with the A453 widening work near Nottingham during the year. The project is utilising a DfMA solution for the bridges, underpasses and other structures, minimising the levels of travel disruption that would otherwise have been caused by more conventional construction methods, providing considerable time savings and risk mitigation on PERFORMANCE the scheme.

Our pod manufacturing subsidiary, Modulor, also continues to model and regulatory framework, as well as the sheer size of supply preassembled kitchen and bathroom units to the region contracts that are awarded, highlight the growing attractiveness from its Dubai factory. of the Canadian construction market to progressively minded international infrastructure investors and providers like Elsewhere in the region, the economic situation has now Laing O’Rourke. stabilised with signs of recovery. There is emerging visibility of opportunities, although they are fewer and smaller than As an integral part of the international consortium, CHUM previously seen, as client confi dence slowly returns. We have Collectif, Laing O’Rourke made signifi cant progress during the established a joint venture partnership with a leading Qatar year in the delivery of Canada’s largest PPP healthcare scheme infrastructure solutions provider and a developer to ensure and the world’s second largest hospital – the Centre Hospitalier we have the right sponsorship arrangements in place for de l’Université de Montréal. successful market entry. Since the year-end, the Group has extended its reach in The longer-term prospects for the Middle East remain broadly Canada following notifi cation in May 2013 that it had been positive with global demand for the region’s natural oil and appointed preferred bidder for the contract to construct the gas reserves remaining buoyant. Laing O’Rourke has an new home of York University’s Lassonde School of Engineering, outstanding track record of delivering high-quality projects in 10 kilometres outside Toronto. The project will be delivered the region, including the Atlantis Hotel, Dubai Airport’s third without a joint venture partner for an enlightened client who terminal, Aldar headquarters and the Al Zeina and Al Bandar understands the benefi ts-driven approach of our digital residential and mixed-use developments on Al Raha Beach engineering capabilities, utilising offsite construction in Abu Dhabi. techniques and an integrated delivery programme. Therefore, as global confi dence returns, we believe the number of planned projects expected to come to market will Outlook increase, with the most active market being Qatar, where we During the 2012/13 review period, we accelerated Laing are focusing our attention. With our strong brand recognition O’Rourke’s strategy to differentiate its offering as an integrated and track record spanning over three decades in the region, engineering and construction provider through effective the Group is well positioned to benefi t when the upturn begins. deployment of the Engineering Excellence Group, our digital We have maintained our core construction, manufacturing engineering suite of services and DfMA delivery approach. and specialist services capabilities in the region under We will continue to progress this strategy in 2013/14 – refocused leadership to bring greater market knowledge prioritising opportunities that maximise the client benefi ts to our opportunity-selection process. of our integrated business model and engineering expertise. In parallel, we will continue to serve our existing clients Canada effectively through Excellence Plus performance on their projects. We remain confi dent in our ability to establish a strong business in Canada that, over time, could contribute a material The UK public sector will remain challenging, although we proportion of the Europe Hub’s revenue and earnings volumes. are confi dent that a number of investment programmes will The construction sector continues to grow, supported by strong commence over the next 12 months to meet the country’s political belief in the strength and viability of the Alternative growing infrastructure needs and act as a stimulus to economic Financing Procurement (AFP) market. We expect the Canadian development in the lead-up to the next general election. construction market to maintain year-on-year growth of over Priority sectors will remain power, transport, education, 4 per cent for the next four-year period. healthcare, utilities and commercial buildings, where we have signifi cant competitive advantage over both our domestic and AFPs, particularly in Canada’s healthcare sector, play to one international competitors. of the Group’s major strengths in complex PPP procurement. Continual improvements being made to the country’s AFP

Laing O’Rourke | Annual Review 2013 43 HUB PERFORMANCE

AUSTRALIA HUB Our valued clients respect the genuine commitments we’ve made to delivering a world-class safety culture and improving quality and Australia efﬁ ciency through DfMA and digital Hong Kong engineering. We’ll continue to build New Zealand on these strengths as key delivery Southeast Asia partner on some of the region’s most complex and exciting projects.”

DAVID STEWART CHIEF EXECUTIVE OFFICER, AUSTRALIA HUB

GORGON LNG, WESTERN AUSTRALIA As the only contractor in the Australian oil and gas sector with a multidisciplined, self-delivery offering, Laing O’Rourke is delivering the general utilities package on Barrow Island, including construction of a reverse osmosis plant, wastewater treatment plant, a 25 MW power station, diesel storage and dispensing facilities.

44 Laing O’Rourke | Annual Review 2013 PERFORMANCE 45 nancial nancial scal cliff’ and dence in Japan’s in Japan’s dence cial interest rates are at are rates cial interest SENIOR MANAGEMENT EXECUTIVE CHAIRMAN, EXECUTIVE CHAIRMAN, AUSTRALIA HUB CHIEF EXECUTIVE OFFICER, AUSTRALIA HUB FINANCE DIRECTOR, AUSTRALIA HUB (from left to right) left (from JIM SLOMAN 1. STEWART DAVID 2. MARK WILSON 3. nancial crises, the market remains attractive to attractive remains the market nancial crises, Marketplace Australia the publicised talk of major downturns, Despite widely in performance its strong continued economy Australian than pace a slower nations, albeit at to comparable relation 21 years. for recession has not experienced in 2012. Australia offi at 2.5 per cent, ation stands Infl to be is predicted and growth of 2.75 per cent low a record has said, in 2013. The International Monetary Fund 3 per cent the nation will dollar, despite the impact of the high Australian period, in the current c region the wider Asia-Pacifi outperform year. and pick up further next to worldwide eight countries one of only remains Australia ratings main all three from debt ratings hold AAA sovereign the US ‘fi over concerns agencies. Amid global fi Eurozone are and prospects and major capital programmes investors outside the investment in business increases rming for fi much on to drive which has been relied industry, resources year. of the activity in the past to leading again increasing, materials are Exports of raw major infrastructure. for programmes capacity-enhancement been assisted some of which have These developments, the past over rates to interest reductions by successive longer-term for forecasts delivering now 18 months, are growth. sustainable with pipeline has been inconsistent, the project However, by the potential impact of external unnerved investors some key as instability as well shocks on neighbouring Asian economies, contentious political disputes over caused by domestic and the royalties resources schemes, new infrastructure tax. carbon emissions new partners, trading top two With China and Japan as Australia’s of confi a loss on watch for remains the region efforts to restore economic health, or any unexpected slowdown slowdown health, or any unexpected economic to restore efforts it remains has improved, outlook overall China’s in China. While by fi dip, triggered economic to a secondary vulnerable fi in alternative growth its rapid from resulting stress as it has over to Australia, again transmit This would products. commodities of key 12 months, in plunges in the value the past – major exports four Australia’s and coal. ore such as iron ove safety, quality, quality, safety, ove ects key sectors of sectors ects key

Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke ciency and integration of core of core ciency and integration uence. xt stage of the Mission Zero leadership leadership Zero of the Mission xt stage ail and mining infrastructure, whilst whilst ail and mining infrastructure, estment in learning and development at all levels of at all levels and development in learning estment ollaboration with our clients through our unique investment our unique investment with our clients through ollaboration in research and development, and the pioneering work of the and the pioneering work and development, in research Group. Engineering Excellence – with unprecedented our people and value Support, grow inv out of our operations. all accidents to drive pledge the organisation. as we leadership, in safety Champion a further step-change embark on the ne ensuring our client-focused approach recognises emerging emerging recognises approach ensuring our client-focused of infl areas and sectors technical capability in our industry-leading develop Further digital engineering and DfMA, which impr security at all our projects, delivery and money for value of the approach and change the traditional and challenge industry. construction in innovation and construction technology advanced Rollout c delivery businesses. delivery including sectors specialist in key our investment Leverage oil and gas and r competitive strength, with long-term, blue-chip clients. with long-term, strength, competitive the effi Continue to strengthen Drive growth in the order book that refl order in the growth Drive NEAR-TERM PRIORITIES • • • • • • • HUB PERFORMANCE: AUSTRALIA

iron ore (25 per cent), coal (15 per cent), gold (7 per cent) and procurement phases that have created some of the nation’s natural gas (6 per cent) – have risen fi ve-fold since late 2003 largest ever projects will slow, to be replaced by new rounds due to Chinese infl uence. of exploration and viability studies in the sector, and a focus on successful delivery to meet future export commitments. Public-sector investment has been the subject of great scrutiny over the period, as post-global fi nancial crisis economic Key projects continue to emerge in the transport sector, stimulus plans closed out, new conservative governments including heavy-haul rail and freight networks, passenger established themselves in key state jurisdictions, and system upgrades, port infrastructure and increasingly reprioritisation of some health and transport investment took airport-related services to support regional growth centres. place. This has seen a number of key new social infrastructure The changing demand patterns and work types in the Australian schemes emerge during the period. Federally, the national construction industry continue to have a substantial impact government has focused on telecommunications spending on construction industry employment, with growing needs and, recently, longer-term commitments to capital-city road for tradespeople and low-skilled workers. The type of work networks. While key transformational infrastructure proposals available, with the majority required for regional engineering such as high-speed rail or a second airport for Sydney are construction rather than urban residential and commercial still unresolved, public-sector interest remains strong in PPP building, has seen an overall increase in the costs of labour and schemes to spur infrastructure projects with several multi- a reduction in the number of apprenticeships available, which billion dollar schemes proposed, launched or concluded in the will have long-term impacts on the sustainability and skills of past 12 months. A new round of state asset sales, especially in the industry. New South Wales and Queensland, has also allowed increased investment to be slated for future works. These economic impacts directly align to the Australia Hub’s delivery of the Group Strategic Roadmap initiatives, in particular In the private market, residential building is staggered but the focus on key, long-term clients interested in more direct beginning to recover, driven by demographic trends, the existing engagement to solve their complex infrastructure needs, housing shortfall, and low interest rates. Non-residential further refi nement of the engineering excellence agenda and building is relatively fl at in real terms but is improving over innovation delivery through the Engineering Excellence Group, previous forecasts. Engineering construction will maintain at a ongoing investment in the key sectors of oil and gas and rail relatively high level – although mining construction is at a peak, and mining materials-handling and a detailed learning and and well-publicised project deferrals are fl attening that activity. development strategy to ensure a business that distinguishes The coal seam gas (CSG) and liquefi ed natural gas (LNG) itself from competitors based on the quality of our people.

MTR COMMUTER RAIL, HONG KONG Laing O’Rourke is a trusted delivery partner to the MTR Corporation, delivering three major contracts ranging from a ‘cut and cover’ tunnel, to a major rail terminus and station. Through a value- engineering approach, a number of alternative solutions have been adopted, including increased use of precast rather than in situ concrete components, and a top-down conﬁ guration for station construction which eliminates project risks in the early civil engineering phases.

46 Laing O’Rourke | Annual Review 2013 BRISBANE AIRPORT, PERFORMANCE QUEENSLAND, AUSTRALIA Continuing a long and successful relationship with the Brisbane Airport Corporation, the Group completed the domestic terminal precinct upgrade project, including the common-user satellite terminal upgrade, as well as the skybridge linking the car park, Airtrain and terminal. The Group also ﬁ nalised work on the long-term car park extension during the year.

AUSTRALIA 2013 ORDER BOOK BY SECTOR China – as it seeks to revive its economy in a more sustainable manner – will infl uence the timing and order of the region’s Commercial 1% largest projects. As a result, the Group will continue to view Social Infrastructure 3% pipeline projects and upcoming partnerships selectively, based Transport 24% on where the greatest mutual value can be delivered for our Oil & Gas 60% select group of prestige clients. Mining & Natural Resources 12% Strategic priorities Laing O’Rourke’s Australian business is now more than three times larger than Barclay Mowlem, the construction contractor acquired in 2006 to grow local capability. As an established tier-one engineering and construction group providing design, delivery, operation and maintenance services to the building, International rail, infrastructure and resources markets, the Hub business Hong Kong is one of the only privately owned fi rms of this scale in the Seamless project delivery continues to be the focus in Hong local sector, delivering a leanness and agility not present in Kong, a market where the Group is delivering a trio of major regional competitors. The Hub has focused on local delivery underground upgrades for transport operator MTR, as well requirements whilst ensuring cross-pollination of global as further extending maintenance contracts for the metro infrastructure best practice – in particular around safety, rail provider. While economic growth in the province remains technology and innovation, whilst adopting the local expertise subdued, the outlook for new infrastructure projects has gained developed in oil and gas projects, rail systems and mining and some momentum with plans for the airport, further rail links materials-handling as Group capability. into mainland China, and a major new public infrastructure and We continue to grow a diversifi ed project portfolio in carefully development precinct in West Kowloon. targeted geographies and sectors, now with a refi ned set of Hong Kong’s gross domestic product is growing at a steady repeat, prestigious clients in our key sectors, who share our pace, despite its heavy reliance on other, underperforming vision for early engagement and engineering innovation – to economies – particularly mainland China and Europe – while deliver safer, faster and more sustainable projects, that are unemployment rates of 3.4 per cent are comfortably below more cost-effective for investors and more harmonious for ten-year averages. The infrastructure spending priorities of local communities.

Laing O’Rourke | Annual Review 2013 47 HUB PERFORMANCE: EUROPE

We have successfully built an experienced and diverse engaged on every major gas scheme in the region bar one, with leadership team within the Australia Hub, delivering both a number of additional contracts under negotiation. This heavy local market intelligence and expertise, and long-term infrastructure capability extends across the entire oil and gas Laing O’Rourke cultural alignment – embracing the value chain: from accommodation villages to support massive commitment to challenge and change the local industry. LNG schemes in the Northern Territory, to water treatment We are attracting and retaining the very best people by support for coal-seam production sites, and the civil, structural, encouraging and rewarding high achievement. Our Excellence mechanical and piping work underpinning processing plants off Plus performance standards will become our trademark in the the Western Australia coast. Australian and Asian operating sphere, where the business is Our industry-leading capability to integrate our services in this determined that our engineering thought-leadership, project sector complements the established skills and experience delivery discipline, client engagement and the skills and values the Hub has long offered the rail, infrastructure and building of our people be regarded as second to none. industries, giving Laing O’Rourke a diverse construction and engineering offering that can respond to any changes Financial performance in the marketplace. The 2013 year-end result for the Australia Hub was a pleasing improvement in fi nancial performance on the back of two While the Australian target markets remained uneven in their challenging years. Those poor results – spurred largely by project development and emerging opportunities over the problematic legacy projects, industrial disputes and extreme period, with marked differences between the building and weather events, as well as the market downturn – were the infrastructure pipelines, all sectors still offer strong profi tability subject of intense executive focus and resulted in key changes on the back of good performance. Unfortunately, all markets to the operating structure of the Hub. Beginning in 2011, are still beset by industrial concerns which have affected costs greater discipline linked to the introduction of our unique and effective deployment of regional workforces. Group-wide and unique governance tools, Core and Enabling Managed turnover in the year increased 20 per cent to Processes, more targeted project procurement, more £1.8 billion (2011/12: £1.5 billion) – a new record for the constructive client engagement, and more active functional Australia Hub. Gross margin derived from projects increased support for our projects have seen a strong turnaround in the signifi cantly, while at the same time resilience within our current-year fi gures. business strengthened to new benchmarks. At the same time, Early investment in the oil and gas sector continues to pay a concentrated focus on cost management saw overheads drop dividends, with the Australia Hub recording an increasing share by around 15 per cent across the board – part of a programme of revenue generated by this sector, and the business is now of resilience initiatives foreshadowed in our 2012 Annual Review.

48 Laing O’Rourke | Annual Review 2013 PERFORMANCE 49 nancial year year nancial tability, with major project with major project tability, elationships in what remains a challenging marketplace marketplace a challenging in what remains elationships commitments to build on the strength of our supplier of our on the strength to build commitments r for some of our providers. of our providers. some for positioned to deliver to 2014, the Hub is well Looking forward in profi improvements continued performance Operational earlier t of the benefi period has reaped The operating and enhanced discipline on greater and a focus restructures in the 2013 fi with the business processes, – and bucking result target below year’s the previous reversing and EBIT growth revenue strong – to record trends market on units to focus of our business The integration delivery. recognition greater is providing and areas regions geographic the across environments of operating range to the diverse to our clients and and bringing us closer continent Australian projects legacy chain. A small number of problematic supply with during the period and replaced de-risked effectively were bid scrutinised subjected to highly book prospects, order strong discipline from and delivery processes review and commercial day one. Hub was appointed Australia 2013, David Stewart In early Asian construction and of Australian CEO, bringing a wealth at the top of With decades of experience knowledge. market as CEO of Leighton Holdings – recently – most the industry the Group plan for implementation he set about the local Hollingshead, whose Steve David replaced Roadmap. Strategic as Human Capital Director Team Executive to the Group return at the experience years’ his two leverage him to directly allows policy decisions to ensure business helm of the Australian the needs of both – take – our people asset our key around deployed the right skills are and ensure Hubs into account, clients. our valued to the right jobs, at the right time for on building in has also been focus team’s The executive Not level. and senior management project at both a resilience, any Hub against the Australian will this help to safeguard only its slow continues shocks as the market economic unforeseen planning is in place succession ensured have but we recovery, – health to operate our licence that underpin roles the key for and leadership engineering, regional environment, and safety, work-winning. engagement underpinning a solid order book and strengthened book and strengthened a solid order engagement underpinning of to the development clients leading engagement with key additional opportunity. Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke M&A, BRISBANE, BRISBANE, M&A, AUSTRALIA Laing O’Rourke achieved achieved Laing O’Rourke of completion practical phase of the rst the fi McLachlan and Ann (M&A) – the redevelopment new contemporary and commercial residential, set in the heart precinct retail Brisbane. Valley, of Fortitude The building also became the new Queensland Laing for headquarters largest Australia’s O’Rourke, owned engineering privately company. and construction tability for the Hub and substantially in excess of budget. in excess the Hub and substantially tability for NEWCASTLE COAL INFRASTRUCTURE GROUP INFRASTRUCTURE COAL NEWCASTLE WHARVES, NEWCASTLE, NSW, AUSTRALIA NSW, NEWCASTLE, WHARVES, With practical completion achieved two months ahead of months ahead two achieved completion With practical falsework use of a modular temporary the innovative schedule, cult geotechnical conditions in diffi piles to install system at the same time as the to continue works dredging allowed has time. The upgrade saving valuable wharf construction, NCIG terminal from the output of the existing increased per year. 30 million to 53 million tonnes of coal Overall, the result was pleasing with a pre-exceptional EBIT with a pre-exceptional was pleasing the result Overall, to sustainable return a strong of £29.4 million, performance profi with cash at a also ended the year business The Australia of £293.9 million. level record to drive made, the Hub continues Building on the improvements rationalisation through effectiveness of operating levels new and functional support, units of the business and integration chain to improve with the supply closely and is working ordering of electronic ciencies, including the introduction effi and wider suppliers with some of our largest and processing HUB PERFORMANCE: AUSTRALIA

We are determined to deliver industry-leading platforms consultants, approval agencies and stakeholders, detect stemming from our global investment in Design for clashes in design, materials or programme, and build whole- Manufacture and Assembly and digital engineering, to create life data management and cost savings into the project. On our real competitive advantage through the project delivery phases, Wheatstone deployment for Chevron in Western Australia, not where time, cost and quality are the key determinants of repeat only has our digital engineering team helped plan, bid and win client business. Both our Austrak and Redispan manufacturing the job but they’ll give the onsite teams access to live modelling subsidiaries are actively engaged in the DfMA agenda, through mobile tablets, providing additional delivery impetus. producing precast or prefabricated units for installation in The Australia Hub’s endorsement of the Group-wide major projects. Already our DfMA work has paid dividends for behavioural safety initiative Mission Zero continues at pace. our clients in the delivery of projects including K10 Berth in This has led to massive reductions in the Disabling Incident Newcastle, the Howard Springs Accommodation Village in Frequency Rate (DIFR) and, while such strong progress has Darwin, Kenya and Northern water treatment plants for been made, the momentum developed around this training, QGC and the Ichthys Cryogenic Tanks. Our commercial education and cultural-change programme is only set to build development proposal in North Sydney will likewise be a further in the coming years. project that showcases the full value of offsite manufacture of components when it commences shortly. Mount Street is also an ambitious design project that has been made possible Infrastructure through the application of advanced digital engineering by our The oil and gas boom in Australia has dominated additions to in-house teams. the order book throughout FY12 and FY13, with the award of the civils component of the Wheatstone project by Chevron Digital engineering is providing the Australian business with and Bechtel the latest in a string of major contract wins. a major competitive differentiator across the full spectrum Wheatstone will consist of two LNG trains with a combined of project delivery – bidding, estimating, design, planning, capacity of 8.9 million tonnes per annum, to be developed procurement, delivery and commissioning – bringing our near the town of Onslow in Western Australia’s Pilbara clients’ ideas to life and allowing them to walk the site ‘virtually’ region. Wheatstone joins the Gorgon project – also for before the fi rst works have even commenced. We are committed Chevron – as well as work for APLNG, Inpex/TOTAL/JKC to building every project twice, once on computer and then and QGC, confi rming Laing O’Rourke as the region’s only fl awlessly in the fi eld, confi dent we’ve used our investment multidisciplinary, self-delivery construction provider in people and software to collaborate with our partners, engaged at every level of the oil and gas value chain.

CAPE LAMBERT PORT B, WESTERN AUSTRALIA Part of a major expansion of Rio Tinto’s Cape Lambert facility, which will increase the client’s export capacity from its Pilbara operations to 330 million tonnes of iron ore annually by 2016. Laing O’Rourke is engaged in the design and delivery of nine transfer stations and 13 conveyors (totalling 10 kilometres). The project, which includes structural and mechanical works, will involve the installation of 6,000 tonnes of steel. The team has developed a DfMA-led solution, with modules fabricated in Thailand and shipped direct to the port. This has taken 30,000 hours of high-risk activity off the site, with works taking place in factory-controlled conditions.

50 Laing O’Rourke | Annual Review 2013 ICHTHYS LNG,

WESTERN AUSTRALIA PERFORMANCE As the single point of contact onsite, Laing O’Rourke is able to manage the interfaces efﬁ ciently, streamline the construction programme and mitigate potential safety risks. The tanks include an inner tank, a prestressed concrete outer wall, a reinforced concrete roof and foundation, and associated piping, instrumentation and electrical works.

While coal prices remained low during the operating year, A number of Australian jurisdictions continue to work up network we completed the K10 Berth project for client Newcastle Coal brownfi elds expansion, underground metro or city-centre light rail Infrastructure Group – marking the delivery of the fourth proposals – all areas where Laing O’Rourke possesses global, consecutive wharf project in the world’s largest coal export local, supply chain and investment expertise. terminal. While the commodity price has seen other coal-related We continue to deliver large packages of work to grow projects stall, iron ore values rebounded and project delivery Australia’s most developed urban rail network, the Cityrail continued, particularly in our key region of the Pilbara – in service in greater metropolitan Sydney, as a partner in the Western Australia’s rugged north-west – where we have focused Novorail Alliance, as well as delivering the Auburn Stabling area management resources, integrated rail and infrastructure Project in the city’s west – a key piece of infrastructure to teams, Select Plant and our Austrak railway sleeper house the next generation of rolling stock that will deliver manufacturing subsidiary to provide a full-service offering to the safety, comfort, reliability and effi ciency to the network. materials-handling, processing, transport and export industries. We closed out projects for BHP Billiton and Fortescue Metals Group in the period, and are engaged in the delivery of more Building work for Rio Tinto in the region. A number of new projects for Our work as managing contractor commenced on the these mining companies are under development. Moorebank Units Relocation project during 2012, the largest defence capital works project undertaken in Australia Complementing the completion of the K10 Berth in Newcastle, since World War II. The AUD$870 million task entails the our marine expertise was again showcased in 2012 with the demobilisation of the Department of Defence’s long-term site award of the contract to deliver Port Botany Terminal 3 in Sydney, at Moorebank in the city’s southwest and the relocation Australia’s second largest container port, for the world’s largest of 13 defence units and four military facilities to nearby freight-handling corporation Hutchison Port Holdings. This new Holsworthy. The project involves the planning and delivery container terminal, being constructed on a 46 hectare reclaimed of more than 100 hectares of defence infrastructure. It will area in Botany Bay, will include 100,000 cubic metres of concrete create 2,000 jobs for the local and national economies and and 200,000 square metres of rigid pavement, high-voltage showcase our programme management capabilities. substations to power the facility, structural and rail siding works and 11 kilometres of deep drainage. Such public infrastructure work is an area of signifi cant strength and focus for the business. Our global schools In rail infrastructure, growth continued as predicted and our and hospitals experience is being effectively deployed in dedicated urban rail specialists were deployed across the Sydney, the Australia Hub, where in 2013 we will commence the Melbourne, Adelaide and Auckland networks, while we also AUD$145 million construction of a new clinical services building delivered regional services and bid for new work in rural New for Blacktown Hospital, part of a wider AUD$350 million South Wales and Queensland. Our electrifi cation services in programme. This project for the New South Wales Government particular remain in high demand from key, long-term clients and follows on our recent delivery of the Nepean Hospital upgrade, we will continue to invest in expanding our offering in this area. also in western Sydney. In Queensland, too, private and public

Laing O’Rourke | Annual Review 2013 51 HUB PERFORMANCE: EUROPE

PORT BOTANY TERMINAL 3, SYDNEY, AUSTRALIA Laing O’Rourke is delivering the civil and rail infrastructure works as part of the ﬁ rst phase of the newly reclaimed Botany Bay expansion. The project draws extensively on the Group’s specialist marine infrastructure expertise and proven track record in civil works, berth design and construction, land reclamation and the erecting and commissioning of ship-loading facilities.

52 Laing O’Rourke | Annual Review 2013 PERFORMANCE 53 c strategy is now being is now c strategy fth anniversary in Australia, in Australia, fth anniversary cation packages for MTR are MTR are for cation packages rst early works construction contract to begin contract construction works early rst Village for the Inpex/Total Ichthys scheme, a 3,500-bed centre a 3,500-bed centre Ichthys scheme, the Inpex/Total Village for chain to supply and prefabrication DfMA experience utilising our to the modules of the delivery and reliable smooth, safe ensure of Australia. north tropical its fi Plant celebrated In 2012, Select our widening to support its operations to expand continuing oil and gas regional – especially projects of major portfolio to start-up from has grown Select such as Wheatstone. works supporting while million annual revenues than AUD$200 more capital a new and deploying priorities, delivery and our safety that support assets strategic to acquire programme investment sectors. our targeted Outlook and and discipline, delivery on process focus A sustained has seen the regional Hub operations into building resilience of below-target years two from strongly rebound business be also to appears at a time when the market performance, Roadmap initiatives Strategic gaining momentum. The Group are and we Hub business the Australia timed for also well are of a number of implementation on the way to successful well and growth sustainable that will underpin long-term reforms differentiation. market in oil and gas capability has paid strong investment The early book order and dominates current the Group, dividends for The same sector-specifi performance. to ensure other priority industries the Hub’s applied against in the and opportunities converted, can be targeted, they same manner. – in engineering excellence At the same time, our investment Manufacturing positions on Design for including market-leading to the Group and digital engineering – will allow and Assembly in the Hub, and programmes work future agenda for set its own clients. with high-value partnerships build enduring delivery and the approach rst our safety-fi At the base of all operations, transformed campaign have Zero Mission embraced universally that will see us a challenge Hub business, the Australia in ambitious progress more even and drive efforts redouble period. the coming Hong Kong in MTR are for projects infrastructure transport critical Three in Hong Kong. The projects, full swing, dominating our work and C901 at Admiralty, Kowloon C810B and C811A at West patronage for services metro the underground prepare links into mainland China. and high-speed expansion growth, on the focus our safety for to be recognised continue We and, on the back of this Kong infrastructure of Hong delivery to its an extension secured business the local performance, Kwan O line. the Tseung for contract maintenance long-term and electrifi construction Further period. the coming for on the radar development Kowloon, at West works to our transport Close is gaining precinct and cultural of a major arts, recreation HK$21.6 billion momentum. The Hong Kong Authority’s of planning, design and the capital costs will cover investment zone. In 2013, Laing O’Rourke of the 40 hectare construction the fi secured to examine and will engage with the client site preparations, social to support this striking packages of work upcoming most one of Hong Kong’s for makeover infrastructure districts. vibrant cant tability Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke DAVID STEWART DAVID AUSTRALIA HUB CHIEF EXECUTIVE OFFICER, Looking forward to 2014, Looking forward positioned the Hub is well continued to deliver in profi improvements and profi with t performance, and profi engagement major project underpinning a solid order book and strengthened clients engagement with key of to the development leading additional opportunity.” hospital projects are on the agenda, whilst the government is government the whilst on the agenda, are hospital projects (PPP) to Partnership Private an education Public also bringing global unrivalled, of our may suit the deployment which market and advisers investment in-house education PPP experience, major schools on gained locally and experience facilitators, the Building the Education Revolution such as projects delivery Queensland. In Queensland, we packages in NSW and as Car Park University the Gold Coast delivered successfully scheme, of a wider PPP component a design-and-construct completion practical and achieved ahead of time and budget, a signifi Health Centre, th University on the nearby Griffi addition to the campus. addition to the campus. signs of shown sector has property commercial Australia’s central and Brisbane Sydney although the key recovery, by the uenced both being infl are markets district business precincts, mixed-use major waterfront of new, development tenancies. During the key or will incorporate which either have in tower on the commercial work completed the Group year, in Brisbane’s development the McLachlan and Ann Street million AUD$250 – part of our overall Valley Fortitude Macquarie Energy, Ergon 2013, tenants In March development. headquarters northern region Bank and Laing O’Rourke’s continues building, as work into the state-of-the-art moved zones. and retail residential on the adjacent at Brisbane Airport projects Also in Brisbane, the expansion of the client’s the centrepiece forming completed, were including the southern The projects, strategy. growth passenger single-structure advanced and most largest hemisphere’s with bridge’ and integration ‘sky car park, a terminal access on an improved the earlier works complement the Airtrain Tiger. and Virgin Jetstar, carriers satellite for common-user Airways on the Qantas is concluding Also at the airport, work automation, which – with sophisticated ‘Q-Catering’ facility, – will provide installed technology packaging and refrigeration and the airline ight meals for of thousands of in-fl hundreds other partner services. our building capability to our integrated to apply continued We accommodation models, providing oil and gas sector delivery in central gas (CSG) projects coal-seam villages for in Darwin. (LNG) projects gas ed natural Queensland and liquifi Springs Accommodation these is the Howard Chief amongst RISK MANAGEMENT

EFFECTIVELY MANAGING RISK

GROUP RISK MANAGEMENT

The effective management of risks and opportunities is fundamental to the delivery of the Group’s objectives, achievement of sustainable growth, protection and enhancement of its reputation, and upholding the required standards of corporate governance.

How Laing O’Rourke manages risk Risk reporting at the operational business unit level is The Group’s structured approach to risk management is based structured so that key issues can be escalated rapidly through on the principle of prevention through early identifi cation. the management team, and ultimately to the Board where Detailed analysis and decisive action planning are carried out necessary. The individual businesses are able to tailor and to remove or mitigate the potential for and impact of key risks adapt standard risk management processes to suit the specifi c before they actually occur. As risks and uncertainties do circumstances of their respective operating environments. materialise, this structured approach also ensures actual In doing so, they must always adhere to the underlying issues are effectively dealt with. principles of the Group’s risk management policies which are to continuously identify, analyse, plan and provide for, The Board and senior management are committed to the report and monitor the principal risks through established proactive protection and optimisation of its assets, which control procedures. include human, fi nancial and strategic resources, through the consistent application of an effective risk management process, Project risks are monitored and reported in the controlled augmented where necessary by insurance. Equally, the Group Project Delivery Review Boards, which are reviewed by business is also committed to the effective management of material unit operational management at quarterly contract reviews. operational risks, covering important non-fi nancial and This process covers the fi nancial performance of projects and reputational issues arising in connection with health and is overseen by the Commercial function. Reporting structures safety, environmental impact and business conduct. and mechanisms ensure that project risks are continually monitored and signifi cant exposures can be escalated from The Board and Group Executive Committee have overall project level to business unit level and ultimately to the Group responsibility for ensuring that risk is effectively managed Executive Committee and the Board. All project-owning across the Group to guarantee full compliance with the business units must have assurance mechanisms to assess appropriate legislative and regulatory jurisdictions where it the likelihood and potential impact of risks and to ensure operates. The Board delegates certain risk management actions can be taken to mitigate and eliminate risks, while activities to designated subcommittees. Risk is a regular strengthening our internal controls and systems to manage agenda item at these senior management forums and an the recurrence of such risks at any point in the future. integral component of the Group’s periodic strategy review process. This ensures the Board has a full appreciation of the principal risks affecting business operations as well as Internal controls a comprehensive oversight of how they are being managed. This system of internal risk control is designed to manage Further information on the activities of these committees, rather than eliminate the risk of detrimental business impact together with the Group’s core business processes and to achieve business objectives, and therefore can only ever mandated policies, can be found on pages 55 to 59. provide reasonable assurance against the possibilities of material fi nancial loss or organisational damage. The Audit Committee reviews the effectiveness of the Group’s risk management systems and reports regularly to the Board directors on the key sources of risk, the monitoring of their status and the corresponding mitigation plans.

54 Laing O’Rourke | Annual Review 2013 PERFORMANCE 55 FOR MORE DETAIL MORE DETAIL FOR 57 SEE PAGE 2. ANALYSING RISKS 2. ANALYSING MANAGE AND CONTROLS TO IDENTIFIED RISKS risks identified evaluates The process of financial the degree to ascertain and non-financial impact on the causes together with the root Group, Consideration of occurrence. and level to required controls of the appropriate risks is also mitigate the successfully identified which enables undertaken, action. risks to be prioritised for 3. DETERMINING MANAGEMENT 3. DETERMINING MANAGEMENT REQUIRED ACTIONS and additional risk Existing and will be agreed controls to assigned responsibilities ‘risk-owning’ appropriate for management forums implementation.

BOARD SUBCOMMITTEES LAING O’ROURKE’S AND PROJECT RISKS AND PROJECT FINANCIAL, OPERATIONAL of strategic, ﬁnancial, of strategic, GROUP EXECUTIVE COMMITTEE GROUP EXECUTIVE ASSESSMENT OF STRATEGIC, ASSESSMENT operational and project risks and project operational Laing O’Rourke’s assessment Laing O’Rourke’s Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke

1. IDENTIFYING RISKS and project identiﬁed at a corporate Risks are as their impact regularly and monitored level time. may change over and probability into a consolidated Material risks are by which is reviewed material risk register, to the the Audit Committee and reported Committee and the Board. Executive Group This type of robust mitigation strategy is mitigation strategy This type of robust by and ongoing review subject to rigorous management, and is supported accountable internal audit processes. the Group’s through the effectiveness The Audit Committee evaluates its ﬁndings and reports deployed of risk controls Committee and the Board Executive to the Group basis. on a regular 4. REPORTING AND MONITORING THE PROCESS RISK MANAGEMENT

OPERATIONAL RISK MANAGEMENT

CORE PROCESS ENABLING PROCESS A standard approach to the key business decisions and Best-in-class project delivery to assure greater activities, delivering effective governance, organisational predictability in operational and ﬁnancial performance diligence and consistency for ﬁnding, winning and delivering projects

Salesforce CRM System Enabling Process • Opportunity pipeline tracking • Required minimum standards and skill-sets • Key contacts management • Best practice procedures – functional toolkits • Process gateway governance – ‘permission to bid’ • Continuous improvement – formal feedback process

securing a project, and the formal governance approach which OPERATIONAL GOVERNANCE must be observed to secure optimum performance. It is also a Global Code of Conduct vital tool for establishing accurate and reliable assessments Laing O’Rourke believes laws and regulations act as our of risk and opportunity in commercial, design, health, safety minimum integrity standards, and we constantly seek to go and environment, and Design for Manufacture and Assembly beyond this level. The Global Code of Conduct articulates our activities. Core Process is mandatory across all of our projects approved set of ethical principles covering key business issues and compliance is monitored by our internal audit function. that we expect every employee and contracted supply chain partner to uphold in every activity, every day, wherever we A key element of Core Process is our centrally managed and operate. By setting the expected minimum standards of governed client relationship management system – Salesforce business conduct in different areas of our work, the Code is – which captures key information in relation to the opportunities integral to the way we do business at Laing O’Rourke and is the Group is pursuing, and also acts as a repository for key underpinned by our Group vision and values (see page 21). documentation. Information captured in Salesforce is used Compliance with the Code provides heightened assurance of across the business to aid collaboration and provide reporting our business affairs, which in turn supports the long-term at all governance levels. Opportunity pipeline information to sustainability of the Group by encouraging more ethical and this level of quality and detail helps ensure all bidding-related effective relationships and stimulating deeper economic, decisions are fact-based and fully informed, heightening the social and environmental contributions where we work. Group’s chance of success in the tendering phases. The Code applies globally and its development and application Enabling Process are the responsibility of the Group Executive Committee. Enabling Process helps accountable project leaders to fully understand the minimum requirements, in terms of Group Policies operational procedures, for assuring success in project design Our Group Policies underpin the Global Code of Conduct and and delivery. It also supports project leaders to ensure that are based on government laws and regulations that impact upon their teams have the necessary skill-sets to meet these every Laing O’Rourke business and every employee. The policies minimum requirements, allowing them to allocate clear establish and defi ne the internal rules that everyone must responsibilities to team members. Adherence to Enabling comply with to conduct business effectively. As the Group expands Process is also mandatory, and it is only permissible to omit globally, we are subject to a growing number of regulations elements in clearly defi ned circumstances, and by specifi c in the jurisdictions where we operate. This environment demands dispensation from an accountable director. that every employee be aware of, knowledgeable about and committed to excellence in the application of clear, global and Key elements of Enabling Process are the functional toolkits, mandatory Laing O’Rourke policies. which enable accountable functional leaders and their teams to deploy current best practice procedures consistently, executing Project Quality Management System project-specifi c plans in an integrated and disciplined manner. The LOR Way is a Group-wide project quality management At the end of a project, a formal feedback process is designed system. It comprises the Core and Enabling Processes and to capture key information to enable us continually to assimilate functional toolkits – a set of standards and procedures that the best and most current ways of working. guide and direct The LOR Way for fi nding, winning and delivering projects. This proven quality assurance framework Business Unit/Function Guidelines and Procedures enables us to connect and direct all of the different decisions Business Unit and Function-specifi c Guidelines ensure that and activities necessary, through a series of mandated process the different operating hubs and their constituent parts can gateways, to achieve maximum performance and control across effectively adapt their business practices and processes to the entire lifecycle of a project. suit the markets and sectors in which they operate. They are designed to align with, and complement, Group Policies and Core Process stem directly from The LOR Way. In addition, they remain true Core Process enables accountable business leaders to fully to both the spirit and the letter of the Global Code of Conduct, understand the critical sign-off procedures in bidding for and and comply with applicable laws and regulations.

56 Laing O’Rourke | Annual Review 2013 PERFORMANCE 57 nancing nancial performance, performance, nancial cient cash reserves and available and available cient cash reserves on page 126. nancial statements Mitigation: of level at every Mitigation of this risk occurs The Safety framework. governance the Group’s Committee Development and Sustainable policy and develop to review meets periodically and to health, safety approach a consistent practice. best environmental System Management Our documented Safety details of organisational (SMS), containing and training behavioural procedural, compulsory and updated reviewed is continually requirements, the Group years two In the last when required. campaign – an safety Zero its Mission globalised all accidents to eradicate programme integrated by 2020. our business from our operational covers roadmap Our sustainability to 2020 and is aligned with and mutually approach Roadmap in Strategic of our Group supportive fi terms of sustainable limits. support and environmental community Safety in the Group details can be found Further on pages 60 to 81 of Review and Sustainability this document. Mitigation: in-house treasury With an experienced a prudent takes management team, the Group and monitors to liquidity and constantly approach maintains suffi to meet liabilities and fi bank facilities in place are due. Procedures fall needs as they cash usage and other to monitor and forecast This, together with assets. liquid current highly that we ensures facilities, credit committed of cash when required. availability adequate have had cash and undrawn the Group At year-end, of £843 million. facilities c to the Group have not been listed as key risks. as key not been listed have c to the Group ed nes and nes ows and future growth. and future ows Impact: the to maintain Failure and of safety levels highest management environmental to injuries, long- lead could fi term health issues, penalties, and impact on the and ability reputation Group’s and work or deliver to secure people. skilled attract Impact: funding Lack of investment a project to either realise l an acquisition fulfi opportunity, or meet its ongoing target adversely nancial needs could fi earnings, impact revenues, cash fl could Lack of bonding facilities ability to limit the Group’s work. secure Lack of cash or funding could ability to service limit the Group’s its obligations. Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke fi in note 31 to the nancial risks can be found t, nances and nances cant harm to employees, employees, cant harm to in risk during 2012/13 Increase in risk during 2012/13 Decrease No change in risk during 2012/13 HEALTH, SAFETY AND SUSTAINABILITY RISK SAFETY AND SUSTAINABILITY HEALTH, CREDIT AND LIQUIDITY RISK CREDIT AND LIQUIDITY contractors, members of the members contractors, public or the environment. Description: our activities, there Through cause could is a risk that we signifi existing cash balances and cash balances existing funding in the form third-party bonds or of debt facilities, is a risk There guarantees. may not that these facilities on terms or are be available to the Group. unacceptable Description: fi The Group a supports its activities through profi of retained combination SUMMARY OF PRINCIPAL RISKS OF PRINCIPAL SUMMARY over the following pages, together with pages, together the following over them. mitigate we of how a description Further information on our fi information Further The Group’s principal risks are identifi risks are principal The Group’s Risks and uncertainties which affect or are likely to affect businesses in general – such as business integrity – such as business in general businesses to affect likely or are which affect Risks and uncertainties specifi not therefore security risk – and are and information to manage these risks. in place and systems controls established have we However, Key: SUMMARY OF PRINCIPAL RISKS

POLITICAL, ECONOMIC AND REGULATORY RISK

Description: Impact: Mitigation: The continuing effects of the While the construction industry The Group seeks to maintain a diverse portfolio global economic crisis can by its nature lags the economic of projects for both private and public clients lead to clients re-appraising cycle, there can be a high degree and a broad exposure to a number of resilient investment plans and of variability between different and stable sectors and geographic markets. subsequently postponing or publicly funded markets. The Group maintains sustainable relationships reducing current or existing Potential impacts include with key government departments and related projects. The Group’s businesses termination of existing contracts regulatory authorities. are directly impacted by and impact on the future government policy or regulatory order book, deterioration in developments in any of the government relationships, countries and jurisdictions in a corresponding reduction in which it operates, especially with contract awards, restriction regard to public infrastructure of operations, imposition of investment programmes. special taxes or requirements for local ownership. Political and economic instability can also result in restrictions on available funding as lenders withdraw from the construction sector.

TALENT AND CAPABILITY RISK

Description: Impact: Mitigation: The Group is subject to Failure to attract, develop As a primary component of Laing O’Rourke’s competition from national and retain the right skills strategy, a comprehensive human capital agenda and multinational fi rms could signifi cantly impair has been devised, focused on attraction, retention with substantial resources. the Group’s ability to meet and development of the industry’s most talented Therefore the Group’s ability to current commitments, people, and their effective deployment across compete is based on its ability to deliver projects and grow the Group. The Group Executive Committee is recruit, develop and retain the the business as planned. responsible for ensuring an appropriate suite of appropriate skills. The locations reward, development and succession planning of the Group’s operations can structures is in place for all employee groups. also be in remote regions Innovative partnerships with universities and a or in countries where it is range of benefi t schemes help position Laing increasingly diffi cult to recruit O’Rourke as a progressive employer of choice. suitably qualifi ed people.

PROJECT SELECTION AND EXECUTION RISK

Description: Impact: Mitigation: Selecting and securing projects High bid costs and/or the Group The Group’s approach to project selection is with an attractive risk and reward taking on onerous contract guided by a detailed set of protocols known profi le is a key determinant of the conditions could result in as Core Process and an associated project Group’s fi nancial performance. increased project costs and management approach – Enabling Process. reduced profi tability. These have defi ned delegated authority levels, for approving all tenders, depending on the size Failure to meet delivery and complexity of the project under consideration. timetables, quality levels and The mandatory application of Core and Enabling budgets may impact cash fl ows Processes, the DfMA methodology and our and reduce profi tability, and integrated delivery capabilities will result in impact the Group’s ability to greater surety of delivery. Building Information deliver projects as well as Modelling (BIM) and digital engineering harming its reputation. technologies are used to achieve time and cost-certainty through a full 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.

58 Laing O’Rourke | Annual Review 2013 PERFORMANCE 59 ts. c delivery delivery c nancial agenda – ned sustainability cant proportion of projects are self- are of projects cant proportion l client expectations, accelerate its strategic its strategic accelerate l client expectations, nancial, operational and reputational integrity and reputational nancial, operational Mitigation: is environment internal control The Group’s and policy adherence designed to promote unlawful activities. Continuous awareness prevent of understanding high levels ensure programmes and each individual’s expectations of the Group’s of use a range obligations. In addition, we our and enhance to protect advisers strategic business of key in the eyes and reputation brand also The Group and opinion formers. uencers infl a defi implements on pages 60 can be found further information (Core Way The LOR level to 81. At an operational has been mandated and Enabling Processes) a sites to ensure project all global across based delivery to project approach standardised improvement and a continuous controls on project with the risks associated helping to reduce loop, also has a well The Group poor or non-delivery. articulated and embedded Communication Policy the management of reputation which controls parties. with external Mitigation: wherever independently to work seeks The Group to participate in joint ventures only and possible fulfi benefi project or meet expected objectives in established only are partnerships Joint venture to complementary are interests which the Group’s undertakes Laing O’Rourke those of its partners. the to determine process evaluation a thorough fi committing before partners of the joint venture established, Once arrangement. to any formal procedures governance of robust implementation with all contractual full compliance ensures within the joint venture. terms and practices Mitigation: A signifi the reducing companies, by Group delivered providers. service on third-party reliance engineering and specialist Occasionally used on a number are contractors construction to meet specifi projects of the Group’s a robust needs. This risk is mitigated through which process, selection audit-trailed and fully of the fi analysis includes fact-based supply viability of preferred and operational suppliers of preferred The list chain partners. all supply to ensure reviewed is also regularly with Group fully complying are chain partners standards, and operating procurement regulations. laws and industry applicable planning is also undertaken. contingency Full to that it adheres also ensures The Group payment terms to avoid agreed contractually heightening this risk. nancial failure failure nancial nancial Impact: delays, poor asset Delivery post-handover, performance or accidents industrial dissatisfaction, stakeholder acts of to prevent failure or corruption bribery, fraud, behaviour anticompetitive impact can all adversely reputation. corporate Impact: by the supply Non-delivery non- chain – either through or fi performance ability impact the Group’s – could on time, projects to deliver budget and to the right quality. Impact: to implement Failure and standards consistent can in joint ventures processes lower to higher costs, lead and health, safety productivity, which failures, environmental bearing a negative can have operational on the Group’s fi performance, and reputation. condition Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke and c sectors REPUTATIONAL RISK REPUTATIONAL SUPPLY CHAIN RISK SUPPLY JOINT VENTURE RISK JOINT VENTURE markets to secure a future a future to secure markets projects pipeline of prestigious It has and client relationships. governing principles clear very the way in which it conducts all and expects its business to and partners employees with its act in accordance Code of published Global Conduct and established and processes. systems Description: of and enhancement Protection with reputation brand the Group’s directly clients and stakeholders its ability to tender for affects in specifi projects Description: is dependent upon The Group of materials and the delivery of engineering the provision by services and construction and chain in a timely its supply and in full manner, satisfactory contractual with compliance terms and conditions. Description: activities are Some of the Group’s joint venture through undertaken with arrangements partnership to organisations third-party the funding and better facilitate on projects of complex delivery Risks are an international basis. controlled any jointly in inherent party has no single entity where majority control. SAFETY AND SUSTAINABILITY REVIEW

SAFETY AND PERFORMANCE HIGHLIGHTS • Strong health and safety performance maintained, resulting SUSTAINABILITY in a year-end Accident Frequency Rate (AFR) of 0.21. • Global alignment of health, safety and human capital approach now established. • Europe Hub endorses extensive sustainability targets for 2015 and 2020. Based on this, Australia Hub will agree a similar framework in the coming year. • UK business awarded platinum status in the Business in the Community (BiTC) CR Index. • Potential for innovation enhanced through the expansion of Engineering Excellence Group, with new appointments in the Europe and Australia Hubs. • £49 million invested in research and development, education and Design for Manufacture and Assembly (DfMA).

60 Laing O’Rourke | Annual Review 2013 In recent decades, our industry has seen a transformation in attitudes to health and safety. The most visible results of this can of course be seen in our workplaces – and through the behaviours of our people. But in striving to eliminate accidents, we have been compelled to rethink every facet of our operations.

This remains a powerful impetus for innovation, demanding

ever smarter ways of working. Likewise, it continues to SUSTAINABILITY strengthen our management culture, encouraging a more enlightened generation of leaders. In the same way, we believe there is enormous opportunity in the social, economic and environmental challenges we face today. As providers of the buildings and infrastructure upon which people across the world depend, the role construction and engineering have to play cannot be underestimated. With fewer natural resources to support a growing population, we must all do more with less. In this market, decisions are based as much on long-term value as upfront cost. This opens up the scope for creativity, encouraging all parties – clients, contractors and communities – to adopt a more far-sighted view. By aligning our strategic objectives accordingly, we not only become a more responsible business, but a more successful one. During the year, we formalised our approach through the creation of a wide-ranging sustainability framework. The comprehensive set of objectives deﬁ nes how we will minimise our impact on the environment, engage with clients and communities, and provide our people with high-quality careers that enable them to achieve their potential. The targets, which take us up to 2020, encompass carbon, water and waste, development and diversity, staff retention and succession planning, client satisfaction and ethical business, responsible sourcing, and research and development. We have already begun working towards these goals in our Europe Hub KENYA WATER TREATMENT PLANT, and, over the coming year, the framework will be reﬁ ned in line QUEENSLAND, AUSTRALIA with local requirements and implemented in our Australia Hub. In Australia, our behaviour-based approach to health and safety sets us apart in the market – and has been welcomed both by our workforce and clients. In September 2012, the team at the Kenya Water Treatment Plant in Queensland celebrated two years without a lost-time incident, equating to 1.5 million hours. By year-end this exceptional performance remained unbroken. The facility is one of three for client QGC. In April 2013, the largest of the trio, Northern WTP, marked a year without a single incident resulting in the loss of one or more shifts. These complex facilities will house the infrastructure needed to process and purify water released during coal-seam gas extraction.

Laing O’Rourke | Annual Review 2013 61 SAFETY AND SUSTAINABILITY REVIEW

Driving performance The management of key sustainability issues is monitored at every level of the business through the governance framework outlined below. Specifi c targets relating to health and safety and human capital (employee engagement) are included within the performance contracts used to determine the remuneration levels of our 200 most senior employees. As part of our annual appraisal process, all staff receive a formal performance rating – 10 per cent of which is determined by the Accident Frequency Rate within their business unit. 40 per cent is based on personal objectives – and from next year at least one of these must be sustainability related. A further 50 per cent is based on a defi ned set of behaviours (including Business unit safety and sustainability leadership forums are engagement in and understanding of our sustainability agenda). 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 Governance accountable for safety and sustainability. We operate a comprehensive governance framework to ensure issues impacting on our sustainability are appropriately In Europe, we have established a hub-level Sustainability addressed. This is managed through a network of boards, Steering Committee to enhance engagement in our all ultimately accountable to the Board and Group Executive sustainability agenda by bringing greater levels of coordination Committee (GEC). to our activities. The committee is made up of individuals from a wide range of disciplines and supported by a number of The GEC sets the strategic direction of our activities, allocates regional forums, who are tasked with validating its proposals. investment and oversees delivery. As a subcommittee of the GEC, our Safety and Sustainable Development Committee In Australia, the EPIC (Environment, People, Industry and ensures risks and opportunities associated with health, Community) Senior Executive Standing Committee is safety and sustainability are given the highest priority across chaired by the Hub CEO. The committee oversees strategy the Group. development for each of the core components of our sustainability agenda, sanctions investment and monitors Co-chaired by the Group Chairman and Group Chief Executive, performance. Specifi c actions are delegated to panels the Human Capital Committee leads the formulation of our accountable for each of the above areas. people and organisation agendas. Its main priority is to mitigate capability risk through targeted attraction, development and retention of a highly skilled, globally mobile workforce. About this report This report describes our activities for the 2012/13 fi nancial Primary authority for the day-to-day execution of business year. Specifi cally, it addresses the issues we regard as having strategy is assumed by our Europe and Australia Hub Executive the greatest material impact on the sustainability of our Committees, which are responsible for implementing the GEC’s business. We have grouped these under four key headings: objectives in their respective jurisdictions. This includes targets health and safety, people, environment and marketplace. relating to health and safety, human capital and other key performance indicators. The fi gures published within these sections are sourced from centralised and hub-specifi c databases, and unless otherwise The explicit management of health, safety and sustainability stated represent the consolidated global operations of the is delegated to hub-level safety and sustainability leadership Laing O’Rourke Group. forums. Chaired by the Hub CEO, the forums are made up of the leaders of each of the relevant business units. 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 O’Rourke 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 defi nition and measurement of performance data can, in some instances, make the task of reconciling fi gures complex. However, every effort has been made to overcome this.

Audit and assurance This 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, ofﬁ ces and other facilities.

62 Laing O’Rourke | Annual Review 2013 HEALTH AND SAFETY ENVIRONMENT Our goal is to protect the health Our goal is to minimise the negative and safety of everyone involved impacts of our operations and in or affected by our operations, maximise the quality of the built eliminating all accidents by 2020. environment for future generations. SUSTAINABILITY m % % £8.9 0.212 44 96.5 Investment in health Group AFR Reduction in construction Non-hazardous waste and safety training1 waste against 2009/10 diverted from landﬁ ll baseline

0.353 3.194 Group DIFR Group AAFR 1. This ﬁ gure includes direct costs (venue hire, tuition fees, travel expenses, etc) and opportunity costs (employee salaries). Figures stated last year (with the exception of IIF training) do not incorporate opportunity 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 or more shifts. 4. AAFR (ALL Accident Frequency Rate): any accident at all, from serious injuries to minor incidents.

PEOPLE MARKETPLACE Our goal is to attract, develop and Our goal is to grow our business by retain world-class talent, creating an delivering superior engineering environment that inspires our people strategies that meet the needs of to give their best and makes human individual clients, while responding to capital one of our greatest strengths. the wider challenges facing our industry. £19.1m 669 £30m 11 Investment in training Employees on Investment in R&D Sponsored PhDs and development1 development programmes and DfMA1 64% 96% £429k 39 Employee engagement score Employees receiving Corporate charitable Laing O’Rourke sponsored performance appraisals donations masters students2

1. This fi gure includes direct costs (venue hire, tuition fees, travel expenses, etc) 1. In 2011/12, we reported a £7 million investment (relating to UK operations only). and opportunity costs (employee salaries). Figures stated last year (with the This year’s fi gure represents total investment across the Group. exception of IIF training) do not incorporate opportunity costs. 2. This fi gure includes our own people and employees from other organisations across the industry.

Laing O’Rourke | Annual Review 2013 63 SAFETY AND SUSTAINABILITY REVIEW

HEALTH & SAFETY

The elimination of all accidents from PERFORMANCE INDICATORS our operations is an objective of the highest strategic importance. Our health and safety performance deﬁ nes m £8.9 0.212 Investment in health Group AFR our strength as a business – and and safety training1 determines our success in all other areas. For this reason, it is central to our sustainability, a precondition

0.353 3.194 of our continued growth. But, most Group DIFR Group AAFR importantly, it is a measure of the 1. This fi gure includes direct costs (venue hire, tuition fees, travel expenses, etc) and opportunity costs (employee salaries). Figures stated last year (with the value we place on our people. exception of IIF training) do not incorporate opportunity costs. 2. AFR (Accident Frequency Rate): an accident resulting in more than three days’ absence from work. In 2010, we launched Mission Zero, and with it our vision of a 3. DIFR (Disabling Incident Frequency Rate): an accident resulting in the loss of one or future where everyone goes home safe and well every single more shifts. 4. AAFR (ALL Accident Frequency Rate): any accident at all, from serious injuries to day. There are two key targets attached to this agenda. minor incidents. The fi rst is a 0.1 DIFR (Disabling Incident Frequency Rate) by 2015. This will mean reducing to one in ten the number of We have launched enhanced safety management systems in people who, over an entire career, sustain an injury resulting both Hubs, supported by more robust auditing and assurance in an absence of one or more days. procedures. In the UK, a new online knowledge-sharing portal is being developed, while a ‘major projects forum’ has been The second is a 0.1 AAFR (All Accident Frequency Rate) by 2020. established to exchange learning and ideas. In Australia, This includes even the most minor incidents. Today, this goal we have rolled out a refreshed communications campaign: remains aspirational. But targets drive actions and attitudes ‘there’s always a reason to stay safe’. – and we believe its very existence will help create the conditions for its achievement. Our approach to health and safety is based on a culture of collective responsibility and individual empowerment. To this During the year, we realigned our Mission Zero strategy under end, we have introduced a number of initiatives to strengthen fi ve key pillars: consistency, learning, radical new thinking, relationships between employees at all levels, encouraging a empowerment and a just culture. At the heart of these, binding spirit of cooperation and mutual respect. them together, is ‘leadership that values people’. These are the qualities we believe are necessary to realise our ambitions – In the UK, quarterly operational reviews will be carried out and this mindset will guide our activities. on each project by a senior member of the organisation (independent of the site team), with a strong emphasis on The year in review workforce interaction. Similarly, in the Australia Hub, our new We concluded the year in review with an overall Accident engagement tours are designed to encourage leaders to Frequency Rate (AFR) of 0.21. In our Australia Hub, our AFR demonstrate their commitment – and include work-planning decreased from 0.73 in March 2012 to 0.4 in March 2013. and discussion sessions with the site team. This is part of During the same period, rates in the Europe Hub remained a wider programme to ensure managers fully understand steady, rising marginally from 0.12 to 0.14. While this is a their accountabilities. strong performance, we will nevertheless need to deliver Working with leading Australian contractors and universities, a three-fold improvement to meet our 2015 target. we have formed a group called ‘Safety Differently’ to investigate Over the past 12 months, we have seen some notable successes fresh, alternative approaches. Here, we delivered our second around the business, with a number of projects recording round of supply chain health and safety forums, attended by exceptional results. In the Middle East, for example, we more than 200 of our key partners. achieved an AFR of 0.02. Meanwhile, a substantial amount In November, we celebrated our second annual global health of work has been undertaken to refi ne the thinking behind our and safety awareness day – with the focus this year on approach and the processes that underpin it. ‘consistency and compliance’.

64 Laing O’Rourke | Annual Review 2013 SUSTAINABILITY 65 c action plan. Audit and assurance more to measure processes our assurance enhanced have We In contrast the business. across of compliance levels accurately protocols the new inspection-based approach, to the traditional – while performance us to benchmark overall will allow improvement. for c areas identifying specifi at audits will be carried out annually assurance Zero Mission This detailed function. by the health and safety all workplaces Based on the days to complete. several will take process a specifi team will develop the project results, auditor. by the lead this will be monitored against Progress assurance a new trialled successfully have we In Australia, the for of audits has been produced A schedule programme. Hub, which will begin in June. c sections, along with c sections, along cident ect our development as a ect our development Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke ompasses all accidents, all accidents, ompasses from serious injuries to minor incidents. serious from resulting in the loss of one or more shifts. of one or more the loss in resulting Rate) Frequency A 0.1 AAFR (All Accident by 2020. This enc A 0.1 DIFR (Disabling Incident Frequency Incident Frequency A 0.1 DIFR (Disabling any ac Rate) by 2015. This includes MISSION ZERO MISSION • Mission Zero is our global campaign to campaign is our global Zero Mission our operations from eliminate all accidents attached targets key two are by 2020. There to this agenda: • Consistency and compliance Consistency many spanning and complex, diverse are Our operations processes This means our and geographies. sectors different enabling us to while of requirements, to a range respond must do. we in everything the same high standards achieve of review an extensive conducted have With this in mind, we refl they to ensure our procedures business – both in terms of where we work and how we work. work. we and how work we – both in terms of where business (SMS) Management System Safety safety launched new have Hubs, we and Australia In our Europe of each has and structure The content management systems. have We and relevant. accessible it more to make been revised sector-specifi a number of new introduced on the application of offsite manufacturing guidance enhanced is also greater There methodologies. and onsite assembly disciplines in eliminating of non-delivery emphasis on the role and greater better planning and coordination, risk through of innovation. levels an completed have 400 employees Hub, around In the Australia with another 500 scheduled. SMS course, two-day interactive aimed at is being developed, module a web-based In Europe, using the system. are employees effectively how understanding SAFETY AND SUSTAINABILITY REVIEW

Competence and commitment In Australia, we are piloting a relationship-based programme, Our systems and processes are robust. But they are only as as the natural progression from our behavioural approach. effective as the people who apply them. Every day, we rely on The aim is to create an interdependent culture where thousands of individuals around the world to make the right individuals come together to devise solutions to issues as decisions. It is for this reason that we remain committed to our they arise in the workplace. The programme also encourages direct employment model as the best means of ensuring the employees to participate in wider discussions on more correct levels of competency and commitment on our sites. intractable challenges. We invest heavily in training and development so that our people Health and safety commitment interviews have the skills to carry out their duties safely and responsibly Last year, we introduced compulsory ‘one-to-one health and – and we expect everyone in our workplaces to actively support safety commitment interviews’ for all new-hires and transfers, our Mission Zero vision. including subcontractors. In 2012/13, we conducted 15,580 interviews in the UK, with 25 failures. Training During the year, we invested £8.9 million in health and safety The aim of these sessions is to ensure everyone on our projects training. A range of programmes was delivered – to our own understands our approach to health and safety. As part of the people as well as colleagues from client organisations, process, individuals must conﬁ rm their commitment to our consultancies and our supply chain. Mission Zero vision. Anyone failing to do so will be refused entry to the site. Particular attention has been paid to the development of our senior staff to make certain they have the capabilities and Delivered wherever possible by the project leader, the interviews qualities to support our aspirations. In Europe, a refreshed are also designed to open up lines of communication between safety leadership programme will be launched in June. The management and the workforce, promoting greater levels of overarching objective is to encourage a more enlightened engagement on both sides. leadership culture, ensuring our people feel engaged, The scheme has been welcomed by both staff and operatives, committed and, most importantly, valued. and received praise from clients and subcontractors. It is now We have developed a bespoke behavioural safety programme being piloted on an oil and gas project in Australia, ahead of a to be rolled out across the Europe Hub in April. The half-day wider roll-out across the Hub. workshop is tailored speciﬁ cally to our business – and will examine in depth the ‘evolution’ of risk, demonstrating for Health and wellbeing example how decisions made at planning stage can have an We continue to broaden our occupational health provision, impact during the delivery phase. moving towards a more holistic approach. The prevention of work-related illness remains our most immediate priority,

SEVERN TRENT WATER FRAMEWORK, UK In the UK, the 250 employees engaged on our Severn Trent Water Framework have completed over one million hours without a reportable injury. The application of innovative technology has ensured the ﬂ ow of two-way communication between workers based remotely across a range of locations. This, coupled with regular audits, has helped enable the team to go home safely every day.

PUBLIC SAFETY To minimise the chance of injury to drivers, pedestrians and cyclists, our vehicles are ﬁ tted with the latest safety features. These include tracking devices and video cameras to ensure our employees are observing the road rules at all times. Where required, we can set up a ‘geo fence’ to alert us when drivers deviate from authorised routes. Larger vehicles are installed with sensors linked to a ‘proximity alarm’ in the cab, left-turn beepers, cyclist warning stickers and side under-run bars.

66 Laing O’Rourke | Annual Review 2013 along with the management of safety risks associated with poor health in the workplace. But beyond this we have a responsibility to protect the welfare of our people in a much wider sense. The proportion of older workers in our industry is lower than in many other sectors. This is in part due to the physically demanding nature of traditional construction methods – and can in part be addressed through improved practices. But it is true to say that we, as an industry, have not done enough to safeguard the wellbeing of many now in or During the year, we developed an online ‘job dictionary’ in our approaching retirement. Historical exposure to hazardous Australia business, which captures in precise detail the physical materials continues to take a toll on the health of many impact of almost 500 manual handling tasks. The database former construction workers. will enable us to better understand and manage the risks While we may not see measurable benefi ts for some time to associated with particular activities. It will also be used in come, it is incumbent upon us to take steps now to reverse this pre-employment assessments, as well as rehabilitation and return-to-work programmes. In the UK, we offer a dedicated trend by promoting better health through stricter monitoring SUSTAINABILITY regimes and awareness campaigns. training programme to educate employees on safe manual handling practices. Health screenings During the year, 3,316 health screenings were carried out Awareness programmes across our UK projects and offi ces. These ranged from In the UK, we have engaged an external supplier to deliver a mandatory medicals for safety-critical workers to voluntary new healthy eating programme. Topics covered will include lifestyle check-ups. No employees were found to be understanding blood pressure and managing stress through permanently unfi t for work. Twenty-six were considered better nutrition. The content will be delivered onsite through temporarily unfi t and 168 individuals were referred to our weekly toolbox talks and made available to staff on our intranet. occupational health service for assistance to stay at or return to In 2012/13, we rolled out a range of wellbeing initiatives in our work. We have now set ourselves the target of providing health Australia Hub, including men’s health seminars and lifestyle surveillance to at least 90 per cent of our directly employed assessments, with more to follow in the coming year. workforce over the coming year. Drug and alcohol testing In the Middle East, 110 employees in high-risk roles were Laing O’Rourke operates a zero tolerance approach to drug randomly selected for medical screenings. Additionally, there and alcohol misuse. This is enforced through random and were 8,000 visits to our health clinic for complaints including with-cause testing, along with pre-employment checks. dermatitis, hypertension and back-ache. In Hong Kong, 5,160 Disciplinary action – up to and including dismissal – will health screenings were conducted. Eighty-eight people were be taken against anyone found in breach of our drugs and advised to seek treatment for high blood pressure. Following alcohol policy. consultation, 36 were confi rmed as fi t to work. During the year in review, 3,806 tests were carried out in the In Australia, we have established a medical review team to UK, with 60 positive results (1.58 per cent). The main cause bring greater consistency to our approach. To support this, a was cannabis (40 cases). central database is being developed which will enable us to The cultural and religious demographics of our Middle East identify trends in employee wellbeing. This is being trialled in workforce mean drug and alcohol use is exceptionally rare. the business’ western region and will be rolled out nationally in For this reason, we do not conduct random screenings. the coming year. However, anyone suspected of being under the infl uence To ensure all of our people are being assessed to the same would be subject to removal and investigation. standards, we have appointed a single service provider to work In Australia, due to the stringent regulatory requirements with us across the country – replacing a larger number of associated with our core sectors (rail and resources), our regionally based agencies. This mirrors our existing approach employees are subject to routine checks. During the year, in the UK. 394,311 tests were carried out. There were 188 failures – There were no RIDDOR-reportable health issues identifi ed a rate of 0.048 per cent. Alcohol was the cause in 150 cases. anywhere in the Group. In Hong Kong, 186 people were tested for alcohol, with Manual handling zero failures. We are currently sourcing a specialist drug Manual handling injuries and musculoskeletal disorders screening provider. remain one of the industry’s most prevalent health and We are committed to supporting any employee voluntarily safety risks. These conditions can, in the worst cases, be seeking help for substance abuse. Assistance is delivered permanently impairing. Yet they often develop over a number through independent rehabilitation services, backed by a of years, making them entirely preventable. programme of regular testing. Counselling Confi dential counselling is available to all staff. The service can also help employees with the practical requirements associated with relocation between regions.

Laing O’Rourke | Annual Review 2013 67 SAFETY AND SUSTAINABILITY REVIEW

ENVIRONMENT

Our planet is experiencing PERFORMANCE INDICATORS unprecedented pressures, driven by a growing population whose demands on its natural resources 44% 96.5% Reduction in construction Non-hazardous waste diverted cannot be sustained. waste against 2009/10 baseline from landﬁ ll

As societies in developing nations increasingly gravitate towards In 2011/12, we set ourselves the challenge of cutting energy, expanding urban centres, they will require new housing, water and waste by 10 per cent against the previous year’s schools, hospitals, transport systems and power networks. output. By March, we had recorded a 10.4 per cent decrease, Meanwhile, in places such as Europe, North America and saving the UK business £4.7 million. Over the next 12 months, Australia, much of the existing stock is ageing and ineffi cient. we aim to reduce waste by a further 10 per cent, extending our energy target to 15 per cent. But the built environment is already our single biggest source of greenhouse gas emissions – and its construction accounts for around a third of the raw materials consumed annually. Carbon So our industry fi nds itself in a paradox: as both problem and Since 2011, Laing O’Rourke has been registered under the solution. The need for our services will inevitably grow, but Australian Government’s National Greenhouse and Energy while addressing one issue we risk exacerbating the other. Reporting Act. During the year, we commissioned an audit of our recording system to ensure full compliance. The fi ndings With these challenges, though, come opportunities. By taking did not identify any signifi cant non-conformances, and were the long view, putting the performance of the fi nished product submitted along with our annual emissions statement as at the centre of all our design and delivery strategies, we can verifi cation. become powerful enablers of the low-carbon economy. In July, the Australian Government’s carbon tax came into The year in review effect. While we do not exceed the threshold for liability (25,000 tCO e per year), we are exposed to price increases In February, the senior executive formally endorsed a wide- 2 through our supply chain. ranging suite of sustainability objectives for the Europe Hub. The new framework includes stretching targets to mitigate the Meanwhile, the scope of the UK Government’s low-carbon environmental impact of our activities. Pending appropriate buildings agenda remains uncertain. While we can expect adjustments – in line with specifi c regional requirements – regulations to tighten, the extent of these changes and the we hope to replicate this approach in our Australia Hub. rate of implementation are yet to be fully resolved. The targets take us up to 2020 and include: a 30 per cent What is clear is that, irrespective of the legislative landscape, reduction in carbon emissions (against 2008/9 levels), a 44 per a sustained reduction in CO2 emissions must remain a core cent reduction in construction waste (against 2009/10 levels) environmental objective. This necessarily means driving down and the establishment of a water consumption baseline and the embodied carbon associated with our delivery activities. improvement strategy. Beyond this, we are working towards However, it is in the performance of the fi nished product where an 80 per cent reduction in CO2 by 2050. we can make the most enduring impact. We have begun to see the benefi ts of our investment in a more fuel-effi cient plant and vehicle fl eet. This has been strengthened by consistent efforts to limit site CO2. In recognition of these ongoing performance improvements, our UK business has been accredited for a third time under the Certifi ed Emissions Measurement and Reduction Scheme (CEMARS).

68 Laing O’Rourke | Annual Review 2013 SUSTAINABILITY 69 ciently as predicted. as predicted. ciently /hr compared with the average with the average /hr compared 2 /m 3 TERMINAL 2A HEATHROW, TERMINAL 2A HEATHROW, ENGLAND LONDON, Laing O’Rourke has joined the BAA Laing O’Rourke Partnership, Sustainability Heathrow vision to supporting the organisation’s in among its peers a leader become social and environmental world-class 2A Terminal Our Heathrow performance. both received and Leadenhall projects in recognition Awards Apple Green environmental of their strong of and high levels performance engagement. community ciently and return would-be waste back waste would-be and return ciently /hr achieved in most buildings. in most /hr achieved 2 /m 3 Manufacture components to manufacture By using automated processes to manage resources able are we environment, in a controlled effi much more into production. Industrial at our Explore nish achieved The superior quality of fi does not need to be rendered. means our concrete facility Park Both of these factors It is also denser than its in situ equivalent. the also reduced have heat. We its ability to store enhance vastly at heated are during which curing chambers number of hours quality or throughput. without compromising stage, production systems, to building services DfMA principles By applying of reliability. a much higher degree to achieve able are we ahead of installation units can be tested These preassembled as effi will operate they to ensure to minimise the carbon working are At the same time, we better design and lower- through of our products footprint our ‘component through impact materials. This is monitored the embodied carbon of all our which catalogues library’ products. standard 3-5 m The standards achieved through design-led offsite construction offsite construction design-led through achieved The standards airtight. more therefore and exact more that joints are ensure an achieved School project our Dagenham Park Recently, of 1.44m rating airtightness nal ts of our Unique ts further downstream. ts further downstream. Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke cial temperature control. control. cial temperature ts to local air quality. ts to local rst step in the DfMA process, design is all-important. in the DfMA process, step rst cant benefi cant ow and the use of exposed concrete, we are able to regulate to regulate able are we concrete, and the use of exposed ow SELECT FLEET RENEWAL SELECT design must be substantially complete before work begins. work before complete be substantially design must with of collaboration levels greater this requires Naturally, But bringing the design clients and other stakeholders. benefi us to unlock also allows upfront the most can make we early, performance By modelling energy management of internal careful Through itself. of the asset airfl the building fabric, of heat from the absorption and release artifi the need for reducing Unlike traditional methods, much of the delivery takes place place takes methods, much of the delivery traditional Unlike ahead of in our facilities manufactured offsite, with components motion, fi in of events set this sequence To onsite assembly. Our success depends on our ability to deliver something that depends on our ability to deliver Our success a and meets the demand for us in the market differentiates believe we In this regard, built environment. sustainable more (DfMA) approach and Assembly Manufacture our Design for sets us apart. Design As the fi Business Offering. Offering. Business and collaboration Innovation Increasingly, our clients are seeking assurances on the ‘real’ on the ‘real’ seeking assurances our clients are Increasingly, the ‘modelled’ not simply ciency of their assets, effi operational as an opportunity to this challenge welcome We projections. – the benefi develop – and further demonstrate We have made a substantial investment investment made a substantial have We with plant and machinery, in cleaner and cranes piling rigs excavators, new emissions limiting diesel-particulate delivering low, to an industry-leading signifi SAFETY AND SUSTAINABILITY REVIEW

DAGENHAM PARK SCHOOL, LONDON, ENGLAND Our DfMA approach offers a range of environmental beneﬁ ts. By using automated processes to manufacture components in a controlled environment we can manage materials much more efﬁ ciently. Careful design helps maximise natural heat and light, and regulate internal ventilation. Likewise the standards achieved through this methodology ensure joints are more airtight. Recently, our Dagenham Park School project received an airtightness rating of 1.44m3/m2/hr compared with the average 3-5 m3/m2/hr for most buildings.

Figures compare well with the standard output for precast We operate strict environmental protocols on all our sites, concrete (0.215kg CO2/kg): columns (0.113kg CO2/kg); including mandatory recycling quotas. In the UK, we diverted twin wall (0.129kg CO2/kg); lattice plank (0.138kg CO2/kg); 96.5 per cent of non-hazardous waste from landfi ll during the and sandwich panels (0.146kg CO2/kg). year, 1.7 per cent up on 2011/12. This puts us on track to meet our target of 100 per cent by 2020. This information can be used in the commercial quantifi cation process and – when integrated with our digital engineering We have standardised our approach to data capture in technologies – enables us to analyse with greater accuracy Australia with the introduction of our ‘waste tracker’ system. the CO2 associated with a specifi c structure. The web-based tool, which is already used in the UK and Middle East, replaces numerous individual site registers, Assembly bringing our information on to a central platform giving us As we move from manufacture to assembly, the benefi ts an up-to-date view of performance. follow. To put these to the test, we have established a set of environmental indicators. Evidence collected shows carbon and The system was rolled out as part of a campaign aimed at waste reductions of up to 75 per cent can be achieved at any reducing waste to landfi ll. This included the implementation given point in the construction process. Water consumption of a waste management policy. All projects, facilities and decreases by almost a third and the risk of pollution incidents offi ces were asked to conduct a review of their practices and diminishes. Additionally, there are fewer vehicle movements develop specifi c improvement strategies. Our objective now is around our sites, resulting in less noise and congestion. to establish a baseline against which meaningful targets can be set. Operation The advantages of DfMA are reinforced through the application In partnership with Community Wood Recycling (CWR), we of our digital engineering capability, enabling us to predict have put more than 1,000 tonnes of waste timber back into operational performance with much greater certainty. By use, helping to fund permanent jobs in the process. CWR is exploiting the latest prototyping technologies, we can create a network of UK-based social enterprises that provides a multifaceted models that integrate data about a structure’s wood collection service, while giving disadvantaged people design, construction and function. employment and training opportunities. This information can be incorporated into facilities management systems to streamline building services. As part of a robust Water aftercare strategy, it can substantially mitigate the ‘human In Europe, signifi cant variations in rainfall – combined with the factor’ – ensuring occupants understand how to use their pressures of a large population on often-ageing infrastructure assets effi ciently. – have brought the subject of water into sharper focus over recent years. Likewise, in the more arid regions of Australia Through Crown House Technologies, we have established and across the Middle East, it remains a rare commodity. an ‘Energy Bureau Platform’ which remotely monitors Even where reserves are in abundance, the environmental performance, diagnosing consumption patterns that deviate impact associated with its treatment and transportation makes from modelled expectations. careful management key.

Waste We have developed a suite of best practice guidelines to support our projects – and encourage the use of ‘grey’ water wherever We continue to focus on eliminating construction waste from possible. We are now working to establish a baseline, with our activities, progressing successfully towards a 50 per cent reduction targets in place by 2015. reduction by 2020. In 2012/13, our UK operations generated 144,645 cubic metres of construction waste – a 44 per cent At the same time, we are exploring smarter ways to minimise improvement on our 2009/10 baseline. waste. In Australia, we have successfully implemented efﬁ ciency strategies on many projects. This includes the This is supported by the application of DfMA. In particular, collection of rainwater from site accommodation for use in the development of our SmartWall product range has the a range of processes where potable water is not required. potential to eradicate the use of plasterboard on our projects – Projects applying these measures have reported a signiﬁ cant our biggest source of construction waste. reduction in consumption.

70 Laing O’Rourke | Annual Review 2013 On our Leadenhall project, in the City of London, we have The accreditation recognises best practice in the sustainable piloted a new minimal-discharge system for fl ushing pipework procurement and production of construction materials. To prior to commissioning. The process uses around 95 per cent qualify, manufacturers must demonstrate that their products less water than conventional methods, which in this instance are made from responsibly sourced materials, while providing alone would have required around seven million litres – roughly detailed evidence of the way in which social, environmental, enough to fi ll three Olympic-sized swimming pools. It also uses health and safety, and other ethical issues are managed – fewer chemicals, generating minimal effl uent, and is much within the business and across the supply chain. quicker and therefore less energy-intensive. While we do not routinely monitor the use of recycled content, we expect to achieve a minimum of 20 per cent across the Assurance and accreditation board – and can increase this where required. We are committed to the highest standards of environmental compliance and management. All Laing O’Rourke Group Certifi ed Emissions Measurement and Reduction Scheme businesses operate to ISO 14001-accredited environmental (CEMARS) management systems. For the third successive year, our UK business has received CEMARS accreditation, demonstrating a commitment to reduce In our Australia Hub, we have comprehensively revised our our greenhouse gas emissions. As part of this process, environmental management system (EMS), with increased companies must open up their carbon management and focus on managing risks and resources at an operational level measurement processes to external scrutiny. This, in turn, SUSTAINABILITY through better application of control measures. The system has provides us with increased assurance on the accuracy of our also been reconfi gured to improve its usability. CO2 data. Responsible sourcing Environmental incidents Our approach to responsible sourcing is outlined in our During the year, our Hong Kong business was prosecuted for Global Code of Conduct, which mandates the selection of breach of a construction noise permit. Corrective action has products and services with the lowest environmental impact. been taken, and all activity planned during restricted hours This includes the use of non-hazardous and/or re-usable must be reviewed and approved by senior management. materials wherever practical. There were no other prosecutions anywhere in the Group. We require our timber suppliers to provide 100 per cent FSC Two environmental notices were served in the Australia Hub. (Forest Stewardship Council) or PEFC (Programme for the A notice was received from the Queensland Department Endorsement of Forest Certifi cation) accredited materials of Environment and Heritage Protection, relating to the and collect chain of custody information, as required, on each submission of a number of incomplete waste transport project. This is verifi ed through environmental audits and other certifi cates. This has now been rectifi ed. We have also assessment standards, including BREEAM. There were no undertaken an audit of our systems and processes. non-conformances identifi ed during the year. A second notice was issued under the National Industrial For the second year in a row, our Explore Manufacturing Chemicals Notifi cation and Assessment Scheme, which business has been awarded ‘good’ status under BRE’s requires companies to register for the importation of industrial responsible sourcing standard, BES 6001. Ours are the fi rst chemicals. We have now registered under the scheme. composite precast concrete components to be certifi ed under the scheme – and will mean automatic BREEAM points for There were no Category 1 environmental incidents anywhere projects using these products. We are now working to increase in the Group. There were 25 Category 2 incidents and our rating to ‘very good’ by 2015 and ‘excellent’ by 2020. 374 Category 3. 750 environmental hazards and near-misses were reported. In 2012/13, we conducted 158 internal audits.

Summary of carbon emissions1 UK2 Australia3 2008/9 2012/131 2011/12 (Baseline) 2010/11 2011/12 (provisional) 2010/11 (baseline) Scope 1 80,833 47,931 53,525 46,230 19,159 19,828 Scope 2 17,600 16,057 11,509 14,037 6,538 6,711 Total (Scope 1 & 2) 98,433 63,988 65,034 60,267 25,697 26,539 Scope 3 (Excl. waste) 8,230 4,573 4,335 4,213 N/A N/A Total (Scope 1, 2 & 3) 106,663 68,561 69,369 64,480 25,697 26,539 Waste (Scope 3 – excluded from baseline) 5,150 4,432 4,350 N/A N/A

1. All fi gures are absolute. 2. All fi gures up to and including 2011/12 CEMARS accredited. 2012/13 to be verifi ed through CEMARS accreditation process in July. The UK is working to reduction targets of 20 per cent by 2015 and 30 per cent by 2020 (taking into account changes in work volume, measured by turnover). We are currently on track to meet the fi rst of these targets. 3. 2010/11 and 2011/12 (baseline) fi gures verifi ed under the NGER Act; 2012/13 will be verifi ed and available in October.

Laing O’Rourke | Annual Review 2013 71 SAFETY AND SUSTAINABILITY REVIEW

PEOPLE

The capacity to attract, develop PERFORMANCE INDICATORS and retain the correct capabilities is fundamental to the success of any organisation. In this regard, £19.1m 64% Investment in training Employee however, our sector faces a number and development1 engagement score of distinct challenges.

The proportion of young people entering construction and 669 21 % engineering is in decline, putting our sustainability at Employees on Laing O’Rourke 96 Employees receiving development considerable risk. In certain regions, the shortage of masters students performance appraisals adequately qualiﬁ ed individuals is near-critical, jeopardising programmes the development of the wider economy. 1. This ﬁ gure includes direct costs (venue hire, tuition fees, travel expenses, etc) and opportunity costs (employee salaries). Figures stated last year (with the At the same time, the increasing complexity of our delivery exception of IIF training) do not incorporate opportunity costs. methods raises the threshold for entry, with the balance tipping towards higher-skilled, higher-value roles. This, in the long term, should prove an attractor, challenging certain perceptions generally raises the status of our sector – this alone does not of our industry. But, for now, creating the requisite pipeline of address future resourcing issues. Here, more inspired talent will demand a far-reaching set of solutions. intervention is necessary. Our ability to expand into new markets relies on robust human If we are to compete for the best, we must work harder to claim capital processes that allow us to monitor skills levels our place among the great global industries. This will require a objectively, anticipate potential gaps and take pre-emptive sustained and explicit commitment to innovation and education. action to mitigate them. While the development of our people For this reason, we continue to invest in research, development directly supports the development of our business – and more and learning though our partnerships with leading universities.

Total employees Employees on development programmes Staff Workforce Total 2013 2012 Europe 3,858 7,350 11,208 Apprentices 265 207 Australia 2,117 2,026 4,143 Graduates 186 135 Total 5,975 9,376 15,351 Scholars and Cadets 135 140 Young Guns 32 43 Employees: staff to workforce ratio Guns 30 29 2013 2012 Masters students 21 8 Staff 39% 36% Total 669 562 Workforce 61% 64% Staff length of service Workforce age proﬁ le 2013 2012 2013 2012 Less than 6 months 7% 6% 25 and under 10% 11% 6 months to 1 year 10% 13% 26-35 31% 33% 1-2 years 15% 12% 36-45 29% 28% 2-3 years 8% 5% 46-55 20% 18% 3-5 years 14% 20% Over 55 10% 10% 5 years+ 46% 44%

Staff: male to female ratio Staff age proﬁ le 2013 2012 2013 2012 Male 81% 81% 25 and under 8% 8% Female 19% 19% 26-35 30% 31% 36-45 29% 28% 46-55 22% 21% Over 55 11% 12%

72 Laing O’Rourke | Annual Review 2013 SUSTAINABILITY 73 rst doctoral doctoral rst If we are to compete for the for to compete are If we harder work must we best, among to claim our place industries. global the great a sustained This will require to commitment and explicit and education.” innovation LAING O’ROURKE DOCTORAL CONFERENCE LAING O’ROURKE DOCTORAL conference, hosted by our sponsored PhD students PhD students by our sponsored hosted conference, was The event and their academic supervisors. of our awareness employees’ designed to enhance activities. research In January Laing O’Rourke held its ﬁ In January Laing O’Rourke Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke DARTFORD GRAMMAR SCHOOL, ENGLAND SCHOOL, GRAMMAR DARTFORD Sponsored by Laing O’Rourke, a team from Dartford Dartford a team from by Laing O’Rourke, Sponsored of in the southeast School beat off ten others Grammar is The award of the year. project’ England to win ‘best run by the Engineering part of an annual competition to devise students challenges Education Scheme, which Will Lyu, to technical problems. solutions innovative with Casselton George and Connor Felstead Dan Hyett, a developed (all pictured) teacher Martin Pentecost sensors distance using lift anti-crush device’ ‘scissor individuals to prevent box control to the apparatus’ linked using was created A prototype and injured. being trapped model. and a scaled digital visualisation software The year in review The year Chief Executive as Group The appointment of Anna Stewart of our succession- the strength validates during the year of our selection the subsequent Likewise, planning strategy. our leaders rms our ability to grow team conﬁ senior executive who employees long-serving within – many of whom are from positions. with us in entry-level began their careers deeper across is to embed this process Our priority now on identifying short, with immediate focus the organisation, roles, all high-ranking for successors medium and long-term continuity. critical to business as those considered as well which includes approach, on our current This expands emerging planning to address contingency comprehensive skills requirements. our own is to promote possible, wherever Our preference, to ensuring those with committed remain – and we people structured through the right opportunities potential receive This is augmented programmes. and development review talent of specialist recruitment the targeted through as required with our aspirations, pace us to keep capabilities that enable base. employee of our existing building the expertise while Beyond this, we are engaging schools and colleges to help engaging schools and colleges are this, we Beyond by demonstrating choices career informed make students to them. of opportunities available the quality and variety SAFETY AND SUSTAINABILITY REVIEW

One such example is our Engineering Excellence Group In essence, it is a measure of how satisfi ed our people are in (EnEx.G), which brings together leading fi gures from their roles and how connected they feel to our aspirations. industry and academia. During the year, the EnEx.G was There is, therefore, a direct correlation between employee substantially enlarged through a combination of internal engagement and other key performance indicators such as and external resourcing. client satisfaction, revenue levels and retention rates. For this reason, we have formally linked senior executive remuneration While its primary purpose is to drive our innovation agenda, the to this fi gure. EnEx.G also functions as an educational resource for the wider business. To exploit these benefi ts to the full, professionals at In 2013, we recorded an overall score of 64 per cent, against all levels will rotate through the group, exposing experienced a global average of 57 per cent1. This is a strong result, but personnel and junior entrants alike to new ways of thinking. nonetheless 5 per cent down on 2012. In response, a working group has been established and detailed analysis undertaken, Attraction and retention with a number of key themes identifi ed. Our capacity to attract and retain the best talent relies Particular attention will be paid to our performance ultimately on our ability to provide high-quality careers that management processes to help individuals better understand allow our people to achieve their ambitions. But, beyond this, how their activities support our success – and ensure they feel there are many different factors that together determine the recognised for their contribution. At the same time, the team day-to-day experiences of our employees and defi ne our will examine ways to empower employees to achieve their standing in the marketplace. For this reason, we continually career aspirations by taking advantage of development and review all aspects of our offering. progression opportunities. Employee engagement The anonymous survey is delivered on our behalf by leading An important component of this is our annual ‘Shape’ survey, independent research specialists, Ipsos MORI. In the interests which provides all members of staff with a platform to share of open and transparent communication, we publish the results their opinions on the issues that have the greatest impact on in full on our intranet. their working lives. This allows us to identify areas in need of improvement and take steps to address them. Subjects covered Reward and recognition include career development and line management, safety and Our sustained success in what remains a challenging sustainability, communication and corporate strategy. economic environment is a tribute to the perseverance and professionalism of our people. Likewise, our ongoing Of particular signifi cance is our ‘employee engagement’ score investment in our employees is borne out in the high degree of – which is based on responses to a defi ned set of questions productivity we see across our business – as demonstrated relating to personal fulfi lment and motivation, pride in the through the 8 per cent increase in turnover per head achieved company and confi dence in its management. during the year.

ENGINEERING EDUCATION We continue to promote engineering education, working across the academic spectrum from local schools to world-renowned institutions. Through our partnerships with the University of Cambridge and Imperial College London (pictured), we have developed two unique masters degrees. We currently support 39 students on these courses – including our own people and others from organisations across the sector.

74 Laing O’Rourke | Annual Review 2013 The combination of these factors makes retention a priority. For this reason, we align our reward levels to the upper quartile of the markets where we operate – and regularly benchmark ourselves against our competitors. During the year, we began a comprehensive review of staff remuneration to satisfy ourselves that we are meeting this commitment. Development In 2012/13, we invested £19.1 million in training and Diversity development to meet the full spectrum of professional Laing O’Rourke is committed to providing a supportive working and trades-based capability requirements. We have a environment in which diversity is valued and respected. Our well-established suite of programmes, designed to provide approach is outlined in our Global Code of Conduct, which our high-potential employees with a structured route into mandates the fair and impartial treatment of all individuals in senior roles and create a continued fl ow of talent from relation to selection, promotion and development. We also entry-level upwards. operate strict policies against bullying, harassment and discrimination. We currently support 669 employees on development programmes, ranging from apprenticeships to our sponsored There is signifi cant evidence to validate the view that masters courses. organisations with greater diversity, particularly at leadership level, perform better fi nancially. In 2012, we began monitoring To ensure we are meeting our objectives, we regularly monitor SUSTAINABILITY ethnic diversity through our employee profi ling system. the development of past and present participants. During the year, we conducted an extensive review of our graduate In 2012/13, we reviewed the salaries of our female staff to programme, which concluded that average progression and ensure reward levels were correct. As part of this process we retention rates for alumni were below expectation. grouped all employees by job grade, job family and discipline, and compared the salaries of our female staff with their male In addressing these interrelated issues, a number of changes equivalents. Any differential was fl agged and investigated. have been proposed. So that we are attracting the right people This process will now take place on a quarterly basis. in the fi rst place, consideration will be given to our selection procedures, with more rigorous analysis of candidates’ We also conducted an analysis of gender ratios across the long-term capacity for growth. Likewise, closer attention business. The results showed that women were signifi cantly must be paid to supporting those who have completed under-represented – particularly in leadership roles and on the programme. our high-potential programmes. Performance management It will take time – and considerable effort – to reverse this It is essential that each of our employees is working trend, not least because our industry is still regarded as demonstrably towards our business objectives. For this reason, a predominantly male domain. But we are committed to we operate a stringent goal-setting and appraisal process. In addressing this issue by building gender equality into our 2012/13, 96 per cent of staff completed a year-end performance talent management practices and removing all barriers to review, globally. entry. This must include a review of our operational culture – in particular, our approach to fl exible working – as well as These two-way feedback sessions are designed to promote routine assessments of our policies and procedures. constructive communication between employees and managers, giving both parties a chance to discuss strengths In response, our Australia business has developed a detailed and weaknesses. As part of this process, we actively encourage gender equality strategy, while in Europe we have set long-term our staff to create personal development plans. targets to deliver a year-on-year increase in the percentage of female employees at all levels. To ensure our people better understand what they need to do to progress, we have created a suite of career toolkits for project Additionally, by 2015 all UK projects will be required to have delivery disciplines and supporting functions. These contain diversity action plans in place. These tailored strategies will detailed information of the capabilities and qualifi cations outline how, through local recruitment and engagement required at each level – and have now been integrated into activities, our workplaces can better refl ect the socioeconomic our performance management system. and cultural demographics of the communities in which we work. We have also introduced a new ‘potential rating’ to our mid- year review process, through which managers can evaluate employees’ readiness for promotion or transfer. This will Our sustained success in allow us to identify suitable candidates rapidly from within the what remains a challenging business, where vacancies or new roles arise. It will also be used to support our long-term succession-planning strategy. economic environment is a In both cases, the aim is to ensure we are deploying our tribute to the perseverance resources effectively, while developing our people appropriately. and professionalism of Education Through our partnerships with the University of Cambridge our people.” and Imperial College London, we have developed two unique masters degrees. Open to applicants around the world, the programmes seek to develop the next generation of industry innovators, challenging candidates to rethink current 1. Ipsos MORI’s average global engagement score is based on interviews conducted with over 50,000 employees (working in companies of more than 100 people) across practices. We currently support 39 students on these courses. 36 countries. Results are weighted against International Labour Organization/Eurostat These include our own people and others from organisations offi cial data (with criteria based on: industry, occupation, age, gender) which guarantees representativeness of the results in each country. across the sector.

Laing O’Rourke | Annual Review 2013 75 SAFETY AND SUSTAINABILITY REVIEW

MARKETPLACE

As an industry whose practices have PERFORMANCE INDICATORS altered little over the past century, we fi nd ourselves today on the threshold of transformation. The way buildings £30m 11 Investment in R&D Sponsored PhDs and infrastructure are designed, and DfMA1 procured and delivered is changing – swiftly and substantially. £429k 39 Corporate charitable donations Laing O’Rourke sponsored masters students2 This is being driven by a range of interconnected social, economic and environmental factors. Our growing global population needs a more sustainable built environment – and the resulting pressure on natural resources is forcing the issue to the fore. Quite simply, clients and communities want durable £256k £65k assets that are cost-effective to construct and operate, and Employee charitable donations Value of materials donated can stand the test of time in the face of rising energy prices. 1. In 2011/12, we reported a £7 million investment (relating to UK operations only). In this market, those who can deliver the greatest long-term This year’s fi gure represents total investment across the Group. value will achieve the competitive advantage. Innovation is 2. This fi gure includes our own people and employees from other organisations across certainly essential to creating the necessary effi ciencies. But the industry. collaboration is critical to ensuring clients are better able to evaluate the benefi ts of one solution against another. Members of our Engineering Excellence Group delivered a New technology makes it easy for contractors to reconfi gure series of ‘lunchtime lectures’ – broadcast via our intranet. proposed designs, meaning clients may receive a range of Topics included: ‘how to build a 75-storey tower in 30 days’ options at tender stage. While cost is one measure of value, and ‘the future of megacities’. it is often diffi cult to quantify the advantages of a shorter programme or compare the performance of different products. In July, Laing O’Rourke attended the UK’s fi rst Government Construction Summit, where Chairman Ray O’Rourke and This will require different skills-sets, of all parties. For us, it Europe Hub CEO Roger Robinson both delivered keynote demands a new breed of professional, one who is prepared to speeches calling for greater collaboration. The aim of the challenge conventional thinking and embrace collaboration as event was to provide a platform to discuss the industry’s role fundamental to his or her practice. in driving economic growth, outline investment plans and To develop this kind of talent, we will need to invest in all types explore ways to create sustainable momentum. The second of learning, internally and externally. We will also need to of these takes place in July 2013. demonstrate in a more compelling way the opportunities our Our integrated procurement approach has been recognised industry offers – through our interactions with the communities as the highest-performing across the portfolio of 20 projects around us. Only this way can we compete for the best and engaged in the delivery of Europe’s largest engineering scheme, brightest, and rise to the challenges ahead. Crossrail. Based on this, suggestions will be taken to Crossrail’s innovation workshops from which best practice models will be The year in review developed and rolled out to other contractors. Our innovation agenda remains at the centre of our strategic Additionally, our Farringdon advanced works became the growth plans. During the year, we committed £30 million to the fi rst to be awarded under Crossrail’s Greenline Recognition research and development of new products and processes. Scheme, also topping its Supplier League for Environment. We continue to promote world-class engineering education, Liverpool Street became the fi rst station to receive the award. working in partnership with leading academic institutions. This was due in large part to our investment in cleaner plant We currently support 39 masters students through our centres and machinery, which exceeds the client’s emissions control at the University of Cambridge and Imperial College London. requirements. The adoption of these standards across the These include our own people and others from organisations entire programme of works is now being considered. across the sector. External recognition In January, we held our fi rst doctoral conference, hosted by In November, Ferndene Hospital in Northumberland received our sponsored PhD students and their academic supervisors. the National Constructing Excellence Award for Integration and The event was designed to enhance employees’ awareness of Collaborative Working. Judges noted that a ‘common purpose’ our research activities. and ‘long-established relationship’ had enabled the project team to deliver real value for the end-user.

76 Laing O’Rourke | Annual Review 2013 SUPPORTING LOCAL COMMUNITIES Laing O’Rourke employees on our Strategic Indigenous Housing and Infrastructure Program in Australia’s Northern Territory. Here, and in other remote and regional areas, we are working with local indigenous communities to support economic development through employment and business opportunities. SUSTAINABILITY

The Institute of Structural Engineers named Tunbridge Wells Data on key client opinions is also collected through Hospital in Kent best education/healthcare building of 2012. stakeholder surveys. These are conducted during and on The project, which commenced in 2008, was acknowledged completion of the relevant project, and provide an opportunity as ‘one of the earliest uses of BIM in building design’. to share views on our strengths and weaknesses. At the 2012 British Precast Awards, Manchester Metrolink won Quality the prestigious ‘Project Award’. The scheme is being delivered In an increasingly value-conscious market, quality is what sets by M-Pact Thales (a consortium which includes Laing O’Rourke) successful brands apart. Laing O’Rourke operates robust and is based around a modular solution developed with our processes to ensure predictable outcomes that satisfy our Explore Manufacturing business. clients and drive ongoing improvement. We are continually refi ning our ISO 9001-certifi ed quality management system Clients to ensure our standards keep pace with expectations. Our clients create the pipeline of work that keeps us in business – and are without doubt our most important Innovation stakeholder group. For this reason, we consider client The primary objective of our innovation agenda is to grow our satisfaction a key indicator of our sustainability. business by delivering superior engineering strategies that meet the needs of individual clients, while responding to the To achieve the competitive advantage, we must ensure our wider challenges facing our industry. offering is consistently the most attractive. In this regard, we believe collaboration and innovation are central to our success. Through our Engineering Excellence Group (EnEx.G), we are First we must understand what ‘best value’ means to our engaged in a range of collaborative research and development clients, then we must create it. projects with our partner universities. We currently sponsor 11 PhD projects at the University of Cambridge, Imperial College The degree to which we deliver against these expectations is London, University College London and the University of Oxford. ultimately borne out in our order book – and in particular the proportion of clients who return to us as partner of fi rst choice. Areas of study include the use of fi bre-optics in underground construction, wireless sensors for systems commissioning, We continually monitor levels of repeat business, which is phase-change materials for heat storage, smart ventilation measured as the proportion of managed revenue generated for low-energy buildings, emerging technologies in digital by clients with whom we have had a previous commercial fabrication, and bio safety and security. relationship. In 2012/13, repeat business accounted for 76 and 66 per cent of managed revenue in the Europe and Australia This is complemented by our in-house research and Hubs respectively. development capability, which centres on devising product and process innovations for direct application on our projects. We believe long-term relationships benefi t both sides and are While much of this activity is driven in response to specifi c committed to achieving ongoing improvement – both in the ratio technical issues, ‘repeatability’ is key to its commercial viability. of repeat business and the duration of individual partnerships. By working closely with a client over many years, we gain valuable insights into their organisational culture, objectives and aspirations, enabling us to deliver informed solutions that consistently meet their needs. This in turn changes the dynamic of clients’ buying decisions, reducing the importance of price as a sole factor. In its place, ‘proven value’ becomes a key consideration. In the long run, this enables us to enhance our delivery practices by giving us the scope to explore innovations whose true benefi ts may not emerge until further downstream.

Laing O’Rourke | Annual Review 2013 77 SAFETY AND SUSTAINABILITY REVIEW

To this end, we are developing a range of fl exible products Commitment to our own health, safety, environmental and based on a confi gurable set of components that can be adapted people development objectives is an important factor in the to meet the needs of individual projects. Examples include: selection process and key trades must agree to work to strict a precast water-retaining tank system (Beckton and Crossness targets. We continually monitor the performance of our Water Treatment Plant); modular railway platform solution suppliers, applying the same rigorous criteria to all. (Manchester Metrolink); SmartWall internal walling system In this regard, we believe in supporting our partners by sharing (Bristol Royal Infi rmary); modular M&E assemblies (Heathrow knowledge and best practice. During the year, we held four T2A and other projects); award-winning schools solution; regional supply chain forums in Australia and one in Hong structural facade system (for faster delivery of lower-energy Kong. In the UK, there was one national and two regional buildings); our E:6 structural fl ooring solution; and a set of events. In July, we hosted our fi rst ‘innovation day’ in the UK. standardised precast bridges, underpasses and other structural Representatives from our own in-house businesses, along elements for the Highways Agency. with members of our supply chain, were invited to showcase products designed to maximise health and safety. Suppliers The role our suppliers play in supporting our delivery activities Respectful relationships is central to our standing in the marketplace. For this reason, We are committed to maintaining the highest ethical we work closely with our trading partners to ensure they share standards in all our commercial interactions – and our our dedication to excellence. supplier relationships are founded, fi rst and foremost, on respect. Only by acting in a way that is at all times honest We operate a dynamic procurement approach that harnesses and considerate can we attract the best partners and make the benefi ts of long-term partnerships, while encouraging the most of their valuable contribution. competition. Depending on the scale of our investment (and the nature of individual relationships), we categorise our suppliers We regard prompt payment as a matter of both good as ‘strategic’, ‘preferred’ or ‘transactional’. As circumstances conduct and business resilience. Timely reimbursement change, businesses may move up and down this framework. enables suppliers to make the necessary investments in their This fl exibility incentivises high levels of productivity and opens businesses and, in doing so, mitigates customers’ exposure up opportunities for new entrants. to risk. In 2013, we signed up to the UK Government-backed ‘prompt payment code’. Signatories to the code commit to As a condition of engagement, we expect our suppliers paying their suppliers within clearly defi ned terms and ensuring to comply with all applicable national and international correct processes are in place for addressing any issues. regulations. This includes legislation relating to working hours, wages, welfare and human rights – along with the principles Communities outlined through the International Labour Organization’s With operations around the world, Laing O’Rourke plays a role Core Conventions. in many different communities. In each of these interactions, we strive to create a positive impression of our industry – as one that is compassionate, enlightened and welcoming to all. E:6 STRUCTURAL As good neighbours, we actively encourage our employees to FLOORING SOLUTION understand the needs of those they work alongside and do what they can to make a difference. During the year, individuals from This lightweight concrete plank every part of the business lent their time to local initiatives. system has many advantages over In total, we recorded 2,849 volunteer days (up from 1,507 in conventional construction techniques: 2011/12). Additionally, £256,940 was raised for charitable • Quicker to erect; • Enhanced quality causes, with £65,252 worth of materials donated. control; • Removal of multiple In the UK, we have established a fund to help our people interfaces; • Faster follow-on continue their good work. Known as ‘transforming the future’, trades; the aim of the programme is to support projects that have a • Reduction in waste; long-term impact on individual prospects, equipping people • Early client access. • Improved safety;

78 Laing O’Rourke | Annual Review 2013 from all backgrounds with the confi dence and capabilities required for successful lives. As such, our key areas of focus will be education, employability and engagement. This builds on our existing approach and will include working with schools to encourage more young people to study science and maths related subjects, and helping So far, 362 young people have benefi ted from work experience, individuals prepare for their careers through enterprise events, pre-employment courses and taster days at our national work experience and other programmes. construction college. In recognition of its engagement with Through our recently developed sustainability framework, we the community, the project received a Green Apple Award. have set a number of targets to ensure we are appropriately Through the redevelopment of its town hall complex, Laing meeting the socioeconomic needs of communities – with O’Rourke has collaborated with Manchester City Council on 50 per cent and 100 per cent of workplaces creating tailored its ‘regeneration, employment and skills plan’ – which aims action plans by 2015 and 2020 respectively. to bring new jobs and specialist skills to the area. The project Over the same period, 50 per cent of projects (rising to 100 per team has already employed 61 apprentices, with a further cent) will be working to deliver employability activities to intake in progress. In addition, it has delivered 91 work experience placements and 34 school engagement events. marginalised groups, while 40 per cent (rising to 100 per cent) SUSTAINABILITY will engage with at least one social enterprise. To support this, Also with Manchester City Council, we have assisted in the we are training social enterprise mentors across the business. establishment of the South Manchester Enterprise Network. In Australia, seven community grants totalling £22,876 were The 20-member organisation – made up largely of small- awarded to a variety of not-for-profi t groups. The funds were to-medium businesses and social enterprises – aims to used to support a range of initiatives, including a careers expo encourage the growth of local commerce through networking for secondary school students in the Hunter region north of opportunities, seminars and mentoring. Sydney, indigenous industry traineeships and a gym for young In Australia, we are working in regional and remote areas to people in the remote Port Hedland area. Additionally, £28,105 support the economic development of indigenous communities was invested through our projects in local charities. – in line with the objectives set out through our ‘reconciliation Building skills action plan’ (RAP). Laing O’Rourke is a member of Supply Our long-term objective is to promote a sustainable pipeline Nation which encourages and supports indigenous businesses. of skills through the creation of high-value employment and In November, Laing O’Rourke employee Patrick Sanchez was learning opportunities. By demonstrating the contribution named Indigenous Apprentice of the Year at the Australian construction and engineering make to the world around us, Industry Trade College Awards. we also seek to enthuse young people as they begin to make the decisions that will shape their working lives. Through a joint initiative with the local indigenous community of Port Hedland in Western Australia, we have delivered a In partnership with CITB-ConstructionSkills, we have ten-week training programme in rail infrastructure. As a result, established national skills academies on a number of different eight participants graduated with recognised qualifi cations projects. In Q3, our Leadenhall skills academy was the highest and are now employees. On many of our projects in this region, performing in the UK, with Salford Building Schools for the the workforce is up to 50 per cent Aboriginal and Torres Future (BSF) topping the list in Q4. Strait Islander. In October, our Barnsley BSF programme received a ‘highly Following an intensive four-week pre-employment course, commended’ at the Barnsley and Rotherham Chamber of ten indigenous students were hired on our Ichthys LNG project Commerce Awards. The project, which achieved skills academy in the Northern Territory. Here, around ten per cent of our status, created 46 apprenticeships. workforce is Aboriginal and Torres Strait Islander. To engage At the Leadenhall Building, in the City of London, we are more locals of all backgrounds – and support our RAP targets – supporting 26 new apprenticeships, 123 new NVQs and we will continue to run similar initiatives across this and 87 ongoing NVQs. We have also opened up 40 new positions. other sites.

Laing O’Rourke | Annual Review 2013 79 SAFETY AND SUSTAINABILITY REVIEW

Considerate construction As a benchmark of good practice, we actively participate in the ENGINEERING UK’s Considerate Constructors Scheme (CCS). This year, 25 of our projects were recognised with CCS awards: ﬁ ve gold, eight silver and 12 bronze. Three were named national runners-up for EXCELLENCE GROUP ‘Most Considerate Site’. The average score achieved across the 90 sites registered was 35.7/40, representing standards that are (EnEx.G) consistently ‘high level above compliance’. Corporate charities In 2012/13, we donated a total £429,437 to a range of causes. The challenges that face our industry In March, we became an ofﬁ cial patron of RedR – an international engineering charity that provides expert training will require a collaborative and and technical advice to help rebuild the lives of people affected multidisciplinary approach if we are by natural and man-made disasters. As passionate believers in the transformational power of learning, we continue to to resolve them – and the EnEx.G’s support the work of Cancer Research UK and the Integrated mandate is to be a catalyst for this. Education Fund in Northern Ireland. In Australia, we have engaged with MATES in Construction, which seeks to raise awareness of mental health and wellbeing issues within our Bringing together some of industry’s and academia’s most industry. The charity is facilitating a series of workshops respected authorities, its principal role is to drive our innovation across our projects. agenda, creating competitive advantage through the delivery of superior engineering strategies. Ethical business conduct This unique in-house consultancy integrates seamlessly with Ethical business is the foundation of sustainable commercial clients, partners and project teams, examining challenges success. Laing O’Rourke expects every employee to behave from new angles and seeking out transferable solutions from at all times in a way that is honest, lawful, transparent other sectors. It also participates in collaborative research and respectful. and development projects through the Laing O’Rourke centres This is mandated through our Global Code of Conduct, which sited at our partnering universities. 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 Int understand their responsibilities, the document provides ry ern iso a practical guidance on issues such as bribery and corruption, v En l c d ers gin o equal opportunities and human rights, safety and security. a tn ee n l r engineering r pa hief adv in s a C ise g u s r c Compliance with the Code (and all applicable criminal and civil n ie o l r g n t o e l s a legislation) is monitored through the activities of our Group t o l u n n a lt x h ic S a c security and business resilience function – working closely with t n c m r y E e e u t T h c s our legal and internal audit teams. Anyone found in breach of c t / u s r these expectations will be subject to disciplinary action, up to s a e l

o and including dismissal. r

U The Code is available in hardcopy and online. As part of our

i v induction process, all new-starters must confi rm their n e s o r r i t t commitment to uphold its principles. s e c s d n i l t C u i y a r v iv i e r t o p il An independent ethics helpline is available for anyone wishing s te s r a a n p r m M o s to raise a concern. During the year, 14 cases of misconduct t c n n p e l E a io o were reported. None represent signifi cant material risk to r b t d s u l h lo l u i G o e the business. p El l s v c s ect nica a rical and mecha e The UK Government’s Bribery Act 2010 imposes wide-ranging ti d o R ns d requirements on companies to actively prevent corruption, n esear itutio n ch inst h a both in the UK and internationally. Laing O’Rourke has an arc established framework for ensuring full compliance across Rese the Group. This includes an anti-bribery and corruption policy, ‘gifts and hospitality’ and ‘confl ict of interest’ registers, and compulsory training for all staff.

80 Laing O’Rourke | Annual Review 2013 SUSTAINABILITY 81 8 3 DIRECTOR, MECHANICAL MECHANICAL DIRECTOR, ENGINEERING ARCHITECTURE DIRECTOR, 7. DR GAVIN DAVIES GAVIN DR 7. GRAY DANIEL 8. 7 DIRECTOR, CHEMICAL AND CHEMICAL DIRECTOR, ENGINEERING PROCESS ELECTRICAL DIRECTOR, ENGINEERING Innovation: research and development research Innovation: research the EnEx.G manages Laing O’Rourke’s Internally, our across agenda, spearheading our ambition to innovate our This includes expanding and markets. sectors target (DfMA) capabilities. and Assembly Manufacture Design for programmes and development It also participates in research academic institutions. with leading our partnerships through commercially conventional by our more This is complemented capability. and development in-house research focused in other engages with universities also Laing O’Rourke of the EnEx.G is to The role operate. we where countries and support research with these institutions interact to our activities, value adding are ensuring they projects, and of sophisticated enabling the development while professionals. enlightened industry Education education existing The EnEx.G participates in Laing O’Rourke’s relationships. of new the development and leads networks of it supports the creation Acting as thought leaders, and to inspire programmes education and training stimulating our in advancing radical to be more generation equip the next that builds on the platforms approach agenda. This innovation with our partner universities. has established Laing O’Rourke development with internal talent The EnEx.G is also involved Guns and Guns, building skills such as Young programmes, leaders. tomorrow’s that will develop 5. DR ANDREW HARRIS 5. 6. DRCARTWRIGHT PHILLIP 2 6 c challenges. challenges. c DIRECTOR, BUSINESS BUSINESS DIRECTOR, DEVELOPMENT ENGINEERING CIVIL DIRECTOR, 3. PAUL HOHNSBEEN PAUL 3. JEREMY COOPER 4. Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke 5 t organisations. It also allows us to seek out some It also allows t organisations. 1 4 CHAIR, EnEx.G CHAIR, STRUCTURAL DIRECTOR, ENGINEERING Internal consultancy Laing O’Rourke’s for resource The EnEx.G is an intellectual benchmark covers expertise Its businesses. design and delivery and processes and construction design, manufacturing thought It provides issues. operational troubleshooting alternative through projects to help win major new leadership that arise to technical issues It also responds approaches. engineering knowledge bringing the best projects, on existing them. In all cases, the emphasis is to bear in solving on innovation. As trusted engineering advisers, the EnEx.G offers existing and existing the EnEx.G offers engineering advisers, As trusted solutions to speciﬁ clients innovative prospective External advisory It generates service. and complementary This is a collaborative chain, delivery our supply customers, from goodwill and loyalty including charities and and others, governments partners, not-for-proﬁ and bring our industry facing matters pressing of the most them. to solve together teams of collaborators 1. PROFESSOR ROBERT MAIR PROFESSOR 1. SCOTT DAVID 2. To drive ongoing development, key staff rotate through the through rotate staff key ongoing development, drive To insight, with specialist engineers young EnEx.G. This provides the opportunity to personnel project experienced giving while innovation. into future knowledge their site-acquired convert including engineering disciplines key from Led by experts electronic, mechanical, electrical, heavy civils, structural, the EnEx.G has four and manufacturing, chemical process internal consultancy, advisory, external primary roles: and education. and development, research CORPORATE GOVERNANCE

Laing O’Rourke is committed to COMMITTED achieving corporate governance standards that meet the highest possible TO GOOD levels of integrity and compliance for a privately owned enterprise. We evaluate GOVERNANCE 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.

CORPORATE GOVERNANCE FRAMEWORK Independent Assurance

1. BOARD OF DIRECTORS

2. AUDIT COMMITTEE 3. GROUP EXECUTIVE COMMITTEE

5. SAFETY AND SUSTAINABLE 4. GROUP MANAGEMENT COMMITTEE DEVELOPMENT COMMITTEE

6. HUMAN CAPITAL COMMITTEE 10. EUROPE HUB EXECUTIVE COMMITTEE

7. STRATEGY COMMITTEE 12. BUSINESS UNIT FUNCTIONAL COMMITTEES

8. INVESTMENT COMMITTEE 11. AUSTRALIA HUB EXECUTIVE COMMITTEE

9. ENGINEERING EXCELLENCE GROUP 12. BUSINESS UNIT FUNCTIONAL COMMITTEES

13. PROJECT GOVERNANCE Group Hub Business Unit Project

The company’s governance framework is based on the • Code of Conduct – setting standards and values to guide the leadership principles outlined in the UK Corporate Governance affairs of the Group. Code. The core activities of the Board and its committees are • Oversight – ensuring an effective system of internal controls documented and planned on an annual basis, and this forms is in place, ensuring that the Board and its nominated the basic structure within which the Board operates. subcommittees receive timely and accurate information on The Board has clear terms of reference that reﬂ ect principles the performance of the Group and the proper delegation contained in the Code, and cover the following: of authority. • Strategy – reviewing and agreeing strategy. • People – ensuring the Group is managed by individuals with the necessary skills and experience, and that senior • Performance – monitoring the performance of the Group appointments are managed effectively. and also evaluating its own performance.

82 Laing O’Rourke | Annual Review 2013 Good corporate governance is integral to the and mitigation of operational and fi nancial risks. At every shareholders’ and Board’s objective to sustain an governance level, we ensure the necessary committee organisational culture based on the Group’s vision processes are functioning correctly, in line with developments and values, placing strong emphasis on upholding in company laws, corporate governance and best practice. the highest standards of business conduct, ethics The recent separation of roles of Group Chairman and CEO, and integrity amongst the Group’s employees, supply with the appointment of Anna Stewart as Group Chief Executive, chain and other business partners. This approach is has been an occasion to review the Group’s corporate encompassed in our Global Code of Conduct, which governance arrangements and their appropriateness to support provides detailed guidance on a range of standards, the Group in achieving long-term growth. This has led to a including compliance with the UK Bribery Act 2010. number of adjustments being made to our existing corporate governance framework, with some additions and some further Corporate governance framework clarifi cations. Thus, in addition to the statement of matters As a large privately owned, internationally focused engineering reserved for the Board, the Board has adopted a formal and construction Group, Laing O’Rourke aspires to the statement clearly defi ning the roles of the Group Chairman highest standards of governance. For that reason, the Board and the Group Chief Executive. The terms of reference of the seeks to ensure that the Group’s corporate governance Board’s various committees and subcommittees (see below) arrangements align with those principles set out in the have also been reviewed and refreshed where necessary, UK Corporate Governance Code which are deemed to be as has been the scheme of delegation of authority thus applicable and appropriate given the private ownership of the strengthening the Board’s ability to discharge its duties Group. The Group’s businesses operate within an established both of stewardship and supervision of the Group’s affairs. and externally benchmarked corporate governance framework Alongside this review of our governance arrangements, that is underpinned by the Group’s vision and values (see a performance review is currently under way, overseen page 21). A key function of Laing O’Rourke’s corporate by the Chairman of the Audit Committee, to ensure the governance framework is the identifi cation, management effectiveness of the various committees. GOVERNANCE

1. BOARD OF DIRECTORS (‘BOARD’) 2. AUDIT COMMITTEE The Board is primarily responsible for ensuring that the The Audit Committee provides an element of independent Group’s accounts give a true and fair view of the business assurance to the Board regarding the management of the using suitable accounting standards and judgements, ensuring Group’s affairs and oversees the Group’s fi nancial reporting, internal controls are adequate and determining whether the risk management and internal controls and provides a formal Group is a going concern. It also has responsibility for approving reporting link with the external auditors. The Group’s external the Annual Review and ensuring compliance with Cyprus auditors are PricewaterhouseCoopers. company law (where the company is registered) and other Main responsibilities: applicable legislation. • Monitoring the integrity of the fi nancial statements and An effective Board and its associated committees are central formal communications relating to the Group’s fi nancial in providing the necessary checks and balances required to performance. operate the Group’s corporate governance regime. They consist of directors with an appropriate balance of skills, experience, • Reviewing signifi cant fi nancial reporting issues and independence and diverse backgrounds to enable them to accounting policies and disclosures in fi nancial reports. discharge their duties and responsibilities effectively. • Reviewing the effectiveness of the Group’s internal control Authority for the day-to-day running of the Group is delegated procedures and risk management systems. to the Group Executive Committee. In addition to Ray O’Rourke, • Considering how the Group’s internal audit requirements the current members of the Board are Christakis Klerides, shall be satisfi ed and making recommendations to the Board. Victor Papadopoulos, Stelios Anastasiades and Anna Stewart (with effect from 1 April 2013). • Making recommendations to the Board on the appointment or reappointment of the Group’s external auditors. • Ensuring that an effective whistle-blowing procedure is in place.

Laing O’Rourke | Annual Review 2013 83 CORPORATE GOVERNANCE

3. GROUP EXECUTIVE COMMITTEE (GEC) 5. SAFETY AND SUSTAINABLE DEVELOPMENT The GEC is responsible to the Board for creating sustainable COMMITTEE shareholder value through the management by the Hub A subcommittee of the GEC, this forum ensures risks and Executive Committees (see page 85) of the constituent opportunities associated with safety and sustainability are given businesses within the governance framework. Its role includes the highest priority within the Group. It also directly supports recommending to the Board the Group’s overall business the delivery of business strategy through the management of strategy and driving its implementation, driving the Group’s sustainable development issues covering social, economic and human capital agenda, driving safety and sustainable environmental matters. development performance across the Group, reviewing and Main responsibilities: monitoring the performance of management, ensuring the integrity of the Group’s ﬁ nancial information, and setting, and • Reviewing the development of policies and guidelines for ensuring compliance with, the Group’s internal controls and managing safety and sustainable development (SD) issues. risk management procedures. The internal risk assurance • Reviewing the implementation and performance of the function reports to the GEC through the Chairman of the Audit Group with regard to these policies. Committee on a regular basis. The members of the GEC are set out on pages 88 and 89. • Monitoring reports covering matters relating to material safety and SD risks and liabilities. The GEC has further delegated authority to a series of subcommittees which focus on particular Group-wide • Monitoring incidents, including key impacts and mitigation functions and business units. actions and, where appropriate, ensuring these are communicated Group-wide. Main responsibilities: • Considering domestic and international regulatory and • Recommending the Group’s overall strategy to the Board. technical developments affecting safety and SD management. • Approving material acquisitions and disposals, material contracts, major capital expenditure projects and budgets. • Setting and monitoring the Group’s risk management procedures and internal controls. • Overseeing the Group’s succession planning. • Overseeing the Group’s corporate governance and compliance arrangements. • Recommending the Group’s corporate policies to the Board for approval.

4. GROUP MANAGEMENT COMMITTEE (GMC) 6. HUMAN CAPITAL COMMITTEE A subcommittee of the GEC, the newly created GMC has The committee is co-chaired by the Group Chairman and the operational responsibility for coordinating preparation of the Group Chief Executive, with members drawn from the GEC and Group strategy and Group Budget and Business Plan. It also relevant business units and functional disciplines. The main has accountability for the day-to-day implementation of the purpose of the committee is to lead the formulation and Group’s strategy and associated plans as approved by the endorsement of the Group’s people and organisation agenda, GEC and the Board. Its remit further includes recommending and ensure total alignment with Group business strategy. the prioritisation of projects and business development Main responsibilities: opportunities, and determining the appropriate allocation of capital within the limits of the Board-approved Group Budget • Setting guidelines for the types of skills, experience and and Business Plan. diversity of human capital necessary to achieve the Group’s strategic goals. Main responsibilities: • Ensuring the human resources function regularly reviews • Coordinating the development and implementation and updates talent and succession plans. of the Group’s strategy and monitoring Excellence Plus performance. • Ensuring the necessary investment in development and education activities, including the Guns programmes and • Coordinating the Group’s Budget and Business Plan process. education networks to meet current and future talent • Allocating capital across the Group within Board and requirements. GEC-approved limits. • Overseeing the Group’s recruitment and resource • Coordinating the development of Group Policies mobilisation plans to meet operational demands in the ﬁ eld. and Standards. • Establishing and developing the Group’s general policy on • Maximising Group synergies, including practices, resources employee remuneration. and procurement. • Determining speciﬁ c remuneration packages for • Driving senior talent management and development (in specialist disciplines. liaison with the GEC and the Human Capital Committee). • Considering legal and regulatory developments affecting human capital management.

84 Laing O’Rourke | Annual Review 2013 GOVERNANCE 85 ganisations (including charities and esearch agenda, complemented by our agenda, complemented esearch t entities) to generate goodwill, loyalty and goodwill, loyalty generate t entities) to e engineering excellence can add value to existing to existing can add value e engineering excellence ersities to support mentoring of graduate engineers, engineers, mentoring of graduate to support ersities get sectors and markets, including extending DfMA extending including and markets, get sectors EUROPE HUB EXECUTIVE COMMITTEE AUSTRALIA HUB EXECUTIVE COMMITTEE projects, new bids and opportunities. new projects, government chain partners, with clients, supply Collaborating bodies and other or not-for-proﬁ opportunities. new the Group’s across to innovate agenda Leading the research tar areas. product capabilities into new providers and research universities leading with Partnering to support our r R&D capability. in-house commercialised partner and new utilising existing programmes Overseeing univ technical and construction junior and senior engineers, and management across managers project specialists, the business. Identifying, proposing, prioritising and monitoring areas prioritising and monitoring areas Identifying, proposing, wher • • • • 10. primary authority for has committee executive This hub-level across operations the day-to-day management of business limits set by the GEC. territories within agreed the constituent senior management in our from drawn are Its members businesses services and specialist infrastructure construction, is also supporting functions. The committee and key of health, safety driving the implementation for responsible policies and monitoring the development and sustainable activities. of related performance 11. has primary authority for committee executive This hub-level across operations the day-to-day management of business limits set by the GEC. territories within agreed the constituent senior management in its various from drawn are Members is also supporting functions. The committee and key regions of health, safety driving the implementation for responsible policies and monitoring the development and sustainable activities. of related performance 9. ENGINEERING EXCELLENCE GROUP (EnEx.G) GROUP EXCELLENCE ENGINEERING 9. by the Chairman and led by the Group is chaired The EnEx.G Mair. Robert Professor Chief Engineering Adviser, Group’s the EnEx.G technical engineering comprises Its membership the development leading for It is responsible specialists. agenda by devising innovation of the Group’s and execution and, advantage us competitive to give engineering strategies transformation. industry-wide drive ultimately, Main responsibilities: • cer, Investments Investments cer, Laing O’Rourke | Annual Review 2013 | Annual Review Laing O’Rourke ementation of the investment policy ementation of the investment xternal investment advisers, managers of managers advisers, xternal investment ong-term business strategy, having regard to having regard strategy, ong-term business d. We continue to evolve our to evolve continue We in arrangements governance line with the changing needs strategy of our business of pursuit and the constant practice.” best ecting the Group’s investment activities. investment ecting the Group’s ansactions. Considering and recommending to the GEC for approval the approval to the GEC for Considering and recommending appointment of e including and/or custodians, investments the company’s engagement terms, and approving remuneration, agreeing monitoring performance. proposals. and divestment Considering all investment to investment relating internal processes Approving tr and procedures. and regulations rules with legislation, Monitoring compliance aff the interests of its shareholders, customers, employees employees customers, of its shareholders, the interests approval for its submission before and other stakeholders to the Board. cycle. annual strategy the Group-wide Coordinating approved of the strategy Monitoring the implementation by the Boar Proposing the Group’s investment strategy to the GEC and strategy investment the Group’s Proposing monitoring the impl Developing, reviewing, assessing and advising on the Group’s Group’s and advising on the assessing reviewing, Developing, medium and l • • • • • • and Corporate Finance, and is responsible for investment investment for and is responsible Finance, and Corporate the commercial policy decisions. It oversees and treasury Initiative Finance and Private prioritisation of development opportunities (PPP) investment Partnership (PFI)/Public Private sanction for programme capital expenditure and the Group’s acquisition, disposal, funding for by the GEC. Investment and related transactions, partnering and joint venturing also managed by this committee. decisions are commercial Main responsibilities: • 8. INVESTMENT COMMITTEE 8. by the Chief Ofﬁ is chaired The committee 7. STRATEGY COMMITTEE STRATEGY 7. senior from membership its draws Committee The Strategy Group Hubs and the main the two representing management the monitors and has an advisory role functions. The committee on behalf of strategy of the Group-wide implementation the GMC. Main responsibilities: • CORPORATE GOVERNANCE

12. BUSINESS UNIT/FUNCTIONAL COMMITTEES We are committed to ensuring As subcommittees of the main hub-level executive committees that effi cient and effective (10 and 11), these forums have delegated authority for the day-to-day management of individual business unit operations, control processes are in place ensuring the alignment of business plans with strategic targets to identify, manage and, to and that operational performance is in line with, or ahead of, approved budget plans. the greatest extent possible, mitigate business risk across 13. PROJECT GOVERNANCE the Group’s operations.” Tender and post-tender review boards 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 fi nance, commercial typically visit the Group’s principal operations in order to meet and supporting functions. employees and gain an understanding of the Group’s projects The review boards are responsible for ensuring the fi nancial and services. Ongoing training is provided for individual integrity of the project pre-delivery phase and are supported directors as required. The Group Chairman, with the by appropriate project controls to assure the achievement of assistance of our newly appointed Group Company Secretary, pre-agreed fi nancial targets during all stages of construction. is responsible for ensuring that directors are supplied with iPad-based information in a timely manner that is in a form and of a quality appropriate to enable directors to discharge Project delivery review boards their duties. In the normal course of business, such information Project boards are governed by the standardised processes is provided in a regular report to the GEC and the Board and practices of ‘The LOR Way’ – a systematic approach to that includes information on operational matters, strategic risk management and quality assurance in the tendering developments, reports on the performance of Group and delivery stages of all projects, whatever their scale operations, fi nancial performance relative to the business and complexity. plan, business development, corporate responsibility and Through the Core and Enabling Processes (Laing O’Rourke’s client/stakeholder relations. approved business quality management system), the project boards ensure project activities are performed in line with Independent assurance legislation, regulations, codes of practice and the requirements The Group Company Secretary is responsible for ensuring of BS EN ISO 9001:2008 quality management assurance the effectiveness and integrity of the Group’s governance accreditations. framework. The fi nancial statements are independently assured Continual improvement is achieved through the implementation by external auditors PricewaterhouseCoopers. The Group’s of business objectives, audits, data analysis, corrective and internal risk and audit function provides assurance to the Audit preventive actions and management reviews. Committee and, through it, the Board of the adequacy of the internal control environment across all of Laing O’Rourke’s operations. This includes ensuring that effi cient and effective Effectiveness control processes are in place to identify, manage and, to the All directors are advised regularly of likely time commitments greatest extent possible, mitigate business risk across the and are asked to seek approval from the Board if they wish Group’s operations. to take on additional external appointments. The ability of individual directors to allocate suffi cient time to the discharge The independent external auditors report to the members of of their responsibilities is considered as part of the directors’ Laing O’Rourke Corporation Limited and the Board of Directors, annual performance review process overseen by the Group on the fi nancial position of the Group. Their audit opinion Chairman. Any issues concerning the Group Chairman’s time on the fi nancial statements is set out on page 95 of this commitments are dealt with by the Board. Annual Review. An induction programme is agreed for all new directors aimed Additional independent assurance and accreditation is at ensuring that they are able to develop an understanding and also carried out on the Group’s position and statements awareness of the company’s governance structure and Core pertaining to business risk and its health, safety and and Enabling Processes, its people and businesses. In addition sustainable development performance. to the above, as part of the induction process, new directors will

86 Laing O’Rourke | Annual Review 2013 BOARD OF DIRECTORS

In addition to the Group Chairman, Ray O’Rourke, and Group Chief Executive, Anna Stewart (with effect from 1 April 2013), the current members of the Board are:

1. CHRISTAKIS KLERIDES 2. VICTOR PAPADOPOULOS 3. STELIOS S ANASTASIADES

DIRECTOR DIRECTOR DIRECTOR GOVERNANCE GOVERNANCE Age 62. Joined the Board Age 60. Joined the Board Age 59. Joined the Board in September 2007, when in September 2007, when in September 2007, when Laing O’Rourke Corporation Laing O’Rourke Corporation Laing O’Rourke Corporation was incorporated in Cyprus. was incorporated in Cyprus. was incorporated in Cyprus. Fellow of the UK Chartered He is an experienced senior He is a qualifi ed mechanical Association of Certifi ed banking executive, founding engineer with a fi rst-class Accountants. As a senior member of the London honours BSc (Eng) from partner of KPMG, he Forfaiting Company and Queen Mary College, and specialised in banking, fi nance previously Chief Executive of MSc and DIC from Imperial and insurance. In 1999, he was LFC Cyprus, spearheading College London. He is appointed by the President of the Group’s trade fi nance currently Managing Director the Republic of Cyprus to the and capital market operations of KONE Elevators Cyprus post of Minister of Finance in the Middle East and Asia, Ltd and is President of the (until 2003). During his term developing a substantial Cyprus Lifts Association. as a Minister, he introduced a network of operations He is also Vice President major tax reform and oversaw involving offi ces in Moscow, of the Nicosia Chamber of the harmonisation with EU Mumbai, Bangkok and Hong Commerce and Industry, and laws of the taxation, shipping Kong. In more recent times, is a member of the Cyprus and competition laws of he has served on the boards Technical Chamber and the Cyprus. Since 2003, he has of several international Labour Court. been involved in a number fi nancial institutions and of directorships in quoted private equity groups. companies in London, Oslo and Cyprus in fi nancial, shipping, property and IT sectors as well as participating in corporate governance committees.

Laing O’Rourke | Annual Review 2013 87 CORPORATE GOVERNANCE

SENIOR LEADERSHIP TEAM

The senior team has the breadth of expertise and depth of experience necessary to maintain our strategic focus. Despite continuing difﬁ cult market conditions, they continued to drive implementation of our strategy, while in parallel delivering a proﬁ table performance from our core business operations.

1 2 3 4

5 6 7 8

1. RAY O’ROURKE KBE 3. ANNA STEWART CHAIRMAN GROUP CHIEF EXECUTIVE Age 66. Major shareholder and founder of the Laing O’Rourke Age 49. Joined the Group with the acquisition of Laing Group. He chairs the Group Executive Committee and is Construction by R O’Rourke & Son in 2001. Anna was appointed responsible for leading the strategic direction and operational Group Chief Executive with effect from April 2013. She was management of the Group’s business activities. Ray founded previously Group Commercial Director from 2004 and was R O’Rourke & Son in 1977 and commenced trading the appointed Group Director of Finance and Commerce in March following year. The business acquired the construction arm of 2010. Anna is responsible for leading the operational and John Laing PLC in 2001 and, with the acquisition of Barclay performance management of the Group within the limits agreed Mowlem in 2006, created today’s extended international by the Board, including the development and delivery of the engineering and construction group. Ray has a passion for Group’s strategy, budget, business plan and corporate policies. developing and promoting engineering and project delivery She is a member of the Group Executive Committee and chairs talent to meet global construction challenges, and has a keen the newly formed Group Management Committee. focus on safety performance. Anna was a Commercial Director at Laing Limited, where she Committee membership: 1, 3, 6, 9 had been employed in a number of senior commercial and Other appointments: general management roles since joining as a trainee in 1982. Non-Executive Director of Anglo American PLC Committee membership: 1, 3, 4, 6, 9 Other appointments: 2. DES O’ROURKE from 1 November 2012, Non-Executive Director of Babcock International PLC DEPUTY CHAIRMAN Age 64. Shareholder and co-founding director of the Laing O’Rourke Group. Des provides Board-level support to the 4. CALLUM TUCKETT Executive Chairman and Group Chief Executive in their GROUP DIRECTOR, FINANCE AND COMMERCE operational management of the Group’s business activities. Age 38. Joined the Group with the acquisition of Laing Des has a proven track record in project delivery, mobilising Construction by R O’Rourke & Son in 2001. Callum was large teams of people on to complex projects around the world. appointed Group Director, Finance and Commerce effective Committee membership: 3, 10 April 2013, and was most recently Managing Director of the Construction business in the UK. He is responsible for the

88 Laing O’Rourke | Annual Review 2013 Group’s fi nance, commercial and work-winning functions, as 7. ROGER ROBINSON well as supporting business development and Group strategy formulation. He is a member of the Group Management CHIEF EXECUTIVE OFFICER, EUROPE HUB Committee and several of its subcommittees. Age 62. Joined the Group and appointed a director in 2009. He joined John Laing Construction in 1992 and previous roles Became Chief Executive Offi cer of the Europe Hub in 2010 and included Commercial Services Director for Europe as well is a member of the Group Executive Committee. Roger has a as Commercial Director for Laing O’Rourke’s Middle East broad executive remit covering strategic business development and South Asia portfolio of businesses from 2006 to 2009. and operational management across the Group’s largest and Callum is a Chartered Quantity Surveyor and was an inaugural most complex project delivery activities. Prior to joining Laing member of the Young Guns programme for high-potential O’Rourke, he was Executive Director for Construction Services leaders in 2003 and subsequently the Guns programme in 2008. and a main board member of Carillion PLC. He is a Fellow of the Institution of Civil Engineers, and has worked for major Committee membership: 3, 4, 8, 11 contractors throughout his career. Committee membership: 3, 5, 10 5. GEORGE ROSE NON-EXECUTIVE CHAIRMAN, EUROPE HUB 8. DAVID STEWART Age 61. Joined Laing O’Rourke in September 2011 as a CHIEF EXECUTIVE OFFICER, AUSTRALIA HUB Non-Executive Director. Reporting jointly to the Executive Age 61. Joined the Group in 2012 and appointed Chief Chairman and Group Chief Executive, he is Chairman of the Executive Offi cer, Australia Hub in April 2013. He is a member Europe Hub and has oversight responsibility for the Audit of the Group and Australia Hub Executive Committees. Committee, with the objective of enhancing confi dence in the David has a broad executive remit covering strategic business integrity of our processes and procedures relating to internal development and operational management across the Group’s control and corporate fi nancial reporting. This includes a most growth-oriented infrastructure markets. David was continuous review of our fi nancial internal reporting systems previously Chief Executive of Leighton Holding PLC. GOVERNANCE and the work of the external auditor. The Audit Committee also plays a key role in enterprise-wide risk management. A civil engineer by profession, with experience of managing large international contracting operations throughout Australia, A chartered management accountant, George’s previous roles Southeast Asia and the Middle East in mining, power and include Finance Director of Leyland DAF UK and Director of transportation, David brings global market knowledge at a Finance and Treasury at British Aerospace. Following this in time of signifi cant growth in the large infrastructure sectors. 1998, George was appointed to the Board of BAE Systems PLC as Group Finance Director. He retired from BAE Systems at the Committee membership: 3, 5, 6, 11 end of March 2011. Committee membership: 2, 10 Other appointments: Non-Executive Director of National Grid PLC, Genel Energy PLC, Experian PLC

6. JIM SLOMAN OAM COMMITTEE MEMBERSHIP EXECUTIVE CHAIRMAN, AUSTRALIA HUB 1. BOARD OF DIRECTORS 7. STRATEGY COMMITTEE 2. AUDIT COMMITTEE 8. INVESTMENT COMMITTEE Age 68. Joined the Group and appointed a director in 2010. 3. GROUP EXECUTIVE 9. ENGINEERING He has oversight responsibility for corporate direction, as well COMMITTEE EXCELLENCE GROUP as implementation of the construction and investment strategy 4. GROUP MANAGEMENT 10. EUROPE HUB across the territories of the Australia Hub. During a long and COMMITTEE EXECUTIVE COMMITTEE distinguished career, Jim has held a number of high-proﬁ le 5. SAFETY AND SUSTAINABLE 11. AUSTRALIA HUB roles in the engineering and construction industry, including DEVELOPMENT COMMITTEE EXECUTIVE COMMITTEE Chief Operating Ofﬁ cer responsible for the delivery of the 6. HUMAN CAPITAL 12. BUSINESS UNIT COMMITTEE FUNCTIONAL COMMITTEES Sydney Olympic and Paralympic Games in 2000. Committee membership: 11 Other appointments: Independent Director of Goodman PLUS Trust, Non-Executive Director of ISIS Holdings Pty Ltd, Chairman of MI Associates Pty Ltd

GROUP 1. STEVE HOLLINGSHEAD GROUP HUMAN CAPITAL DIRECTOR 2. CERI RICHARDS GROUP INVESTMENT DIRECTOR 3. VALERIE TELLER COMPANY SECRETARY 1 2 3 4 4. PHILIP WAINWRIGHT GROUP BUSINESS IMPROVEMENT AND SUPPLY CHAIN DIRECTOR

Laing O’Rourke | Annual Review 2013 89 GROUP FINANCIAL REVIEW

Managed revenue, including share of joint ventures and associates, increased by 2 per cent in 2012/13 to £4.4 billion (2011/12: £4.3 billion), primarily due to continued growth in our Australian business and the resilience of our integrated business model despite the ongoing challenging conditions in the UK and Middle East construction markets. The results for the Group’s two main operating divisions are considered in the operational review section of this document.

Gross margin Gross margin pre-exceptional items improved to 9.3 per cent, refl ecting the turnaround in our Australian business, effective cost management and greater commercial discipline. Gross margin is a key indicator of performance and earnings quality. We expect gross margins to remain tight over the period CALLUM TUCKETT to 2015, particularly in the UK. At the same time, continued GROUP DIRECTOR, focus on cost effi ciency, greater deployment of our DfMA FINANCE AND COMMERCE delivery methodology and changes in our geographic and sector mix should ensure our profi t performance is maintained.

Cash fl ow and borrowings Laing O’Rourke is an integrated The Group ended the fi nancial year with gross cash of £684 million, refl ecting our continued focus on strong cash engineering enterprise with a management and counter-cyclical benefi ts of geographic substantial global portfolio of building, diversity which saw our net funds position increase by 27 per cent at the year-end to £410 million – the strongest social and economic infrastructure performance to date by the Group. The Group also retained projects and extensive self-delivery strong average month-end cash balances during the 2012/13 period, which provides coverage surety to accommodate construction capabilities. This wide contract-specifi c cyclical fl ows. At the year-end, the Group range of skills and resources coupled had undrawn facilities of £159 million. Gross debt remained broadly fl at during the year, reducing with our geographic diversity enables £5 million to £274 million. Our UK property debt facility was the Group to deliver valued solutions reduced by £30 million in the year, offset by short-term funding in Australia to support the proprietary McLachlan and Ann to some of the world’s most Street development, which we remain confi dent will be sold prestigious public and private during the 2013/14 period facilitating full repayment of the sector client organisations. associated debt. Joint venture borrowings solely relate to non-recourse debt within Public Private Partnership (PPP) and Private Finance The Group continued to deliver a resilient overall fi nancial Initiative (PFI) investments in which the Group participates. performance in 2012/13 with profi t before tax, prior to exceptional items, increasing by 81 per cent to £77.9 million (2011/12: £43.0 million), benefi ting from the restoration of Order book performance in our Australian operations through strengthened The Group order book was maintained at £8.2 billion (2011/12: leadership, commercial discipline, strict bid criteria and £8.2 billion) as we continued to replenish our pipeline of delivery process effi ciency. Notwithstanding the extremely secured work with high-quality contract wins in prioritised challenging market in the UK, we delivered strong contributions sectors such as oil and gas exploration and processing in from our core delivery businesses. This increase in profi tability Australia, and rail engineering in the UK. Order book quality is also as a direct consequence of our selectivity in securing has also improved following a number of reappointments by more complex, higher-margin engineering contracts including existing clients, as well as securing a number of new client those in the oil and gas sector. accounts, giving us good forward visibility of earnings over the next three-year period.

Cost management Continuing management The Group continued to focus on improving the cost effi ciency of its operations, benefi ting in the current year from cost prudence has ensured that we containment and reduction measures implemented since remain balanced and strong the commencement of the global fi nancial crisis in 2009. These early and decisive steps have allowed a continuation with an effective capital of a longer-term investment programme in our Group strategy structure supported by healthy to develop core capabilities, including establishing the operational cash fl ows and a Engineering Excellence Group and digital engineering function. stable order book.”

90 Laing O’Rourke | Annual Review 2013 Given the strength of our Finance and treasury The Group maintained suffi cient fi nancial capacity to support balance sheet, strong cash its long-term contracting commitments and accommodate position, and secured banking future economic and operational challenges. The quantum of the cash and committed credit lines to which the Group has and bonding facilities, we access to satisfy the current and future funding requirements remain confi dent we have the of the Group’s business plan totalled £843 million (2011/12: £762 million). The Group has successfully renegotiated and fi nancial resources to fund extended the term by three years for a revolving credit facility our growth and achieve our which is currently fully undrawn. strategic targets.” The Group’s centralised treasury function has prudently managed the Group’s liquidity, funding and fi nancial risks arising from movements in areas such as interest rates and foreign currency exchange rates. The Group continues to review its credit support requirement Taxation and broaden its base of key fi nancial stakeholders, including The Group tax charge for 2012/13 is £13.2 million on profi t key banking relationships and surety bonding providers who before tax of £57.0 million, which equates to an effective tax support our long-term strategic growth agenda. rate for 2012/13 of 23.2 per cent. This is broadly in line with the We will continue to ensure our treasury policy is appropriate UK corporate tax rate of 24 per cent. In 2013/14, we expect the for the scale, complexity and operating environment of our Group to be a net payer of tax at a rate similar to the prevailing business. We will further develop our credit support capacity in UK corporate tax rate. line with the requirements of our core markets and to ensure we are optimising the Group’s signifi cant cash position. Pensions The Group operates a number of pension schemes with leading industry providers in Europe and Australia. These are defi ned Risk and accounting policies The Group’s risk management framework and processes are contribution schemes and as such there are no outstanding largely unchanged from 31 March 2012. The Board continuously pension liabilities. assesses and monitors risks affecting the Group and the Chairman’s Statement, Chief Executive Review and Hub Insurance operating reviews include consideration of the relevant Insurance broking globally is consolidated with Marsh, given its uncertainties affecting the business. Further details of how the technical expertise in underwriting engineering-based projects, Group has managed key fi nancial and operational risks such FINANCIALS combined with international market coverage. as credit and liquidity risks are set out on pages 54 to 59. During 2012/13, the Group continued to experience low levels As an EU-domiciled company, Laing O’Rourke reports its of claims, although we carefully monitor the balance between consolidated fi nancial statements in accordance with insurance risk retained by the Group through its insurance International Financial Reporting Standards as adopted by captive, and that which we purchase in the external market. the European Union and the Cyprus Companies Law, Cap 113. Our insurance profi le closely tracks and correlates with our The Group’s signifi cant accounting policies and measures safety performance, which this year was again low with a rolling are explained in the Notes to the Financial Statements on Accident Frequency Rate of 0.21. We remain comfortable with pages 101 to 135. the level of insurance risk we are carrying internally. Conclusion Exceptional items The Group has performed well and, as we had planned, built Total exceptional costs before tax of £23.4 million have been additional resilience in 2012/13. We have an appropriate capital recognised in the year. The Group continues to monitor its structure, good cash fl ows and a strong order book providing exposure to land and development and £23.3 million of this suffi cient fi nancial resources, which combined with a Unique charge is a non-cash impairment against this portfolio. Business Offering and long-term relationships with major Further details are provided in note 4 to the fi nancial clients and supply chain partners across high-value sectors statements. and markets put us in a strong position to move forward with confi dence. Goodwill and intangible assets As a result, the Board has considered the Group’s fi nancial The Group carries £338 million of goodwill in the consolidated requirements, based on current commitments and its balance sheet. Goodwill is not amortised under International secured order book as well as the latest projections of Financial Reporting Standards, but is tested annually for future opportunities, against its banking and surety bonding impairment. arrangements and has concluded that the Group is well In accordance with IAS 36, the recoverable amount has been placed to manage its business risks and meet its fi nancial tested by reference to four-year forecasts, discounted at the targets successfully, despite the continuing uncertainty in Group’s estimated weighted average cost of capital. As at the economic outlook. 31 March 2013, based on the internal value-in-use calculations, CALLUM TUCKETT the Board concluded that the recoverable value of the cash- GROUP DIRECTOR, FINANCE AND COMMERCE generating units exceeded the carrying amount. Details of this test can be found in note 13 to the fi nancial statements. July 2013

Laing O’Rourke | Annual Review 2013 91 DIRECTORS, OFFICERS AND ADVISERS

Directors R G O’Rourke KBE S Anastasiades C Klerides V Papadopoulos A M Stewart

Company PricewaterhouseCoopers Associates Limited secretary Julia 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 Laing O’Rourke plc address Bridge Place Anchor Boulevard Admirals Park Crossways Dartford Kent DA2 6SN United Kingdom

Independent PricewaterhouseCoopers Limited auditors Julia House 3 Themistocles Dervis Street CY-1066 Nicosia Cyprus

Bankers Lloyds Bank Corporate Markets Santander Bank of Scotland plc 17 Ulster Terrace 10 Gresham Street Regent’s Park London EC2V 7HN London NW1 4PJ United Kingdom United Kingdom

HSBC Commonwealth Bank 8 Canada Square Darling Park Tower 1 London E14 5HQ 201 Sussex Street United Kingdom Sydney NSW 2000 Australia Insurance Marsh Limited advisers Tower Place London EC3R 5BU United Kingdom

Insurers QBE European Operations Plantation Place 30 Fenchurch Street London EC3M 3BD United Kingdom

92 Laing O’Rourke | Annual Review 2013 FINANCIALS 93 is provided if necessary. provided if necessary. is Charitable contributions contributions Charitable £0.3m) to £0.4m (2012: During the year the Group contributed its nominated charities. Research and development are activities Details of the Group’s research and development 76 to 77. set out on pages Risk management managing for procedures Details of the Group’s policies and 59. risk are set out on pages 54 to uncertainty are on detailed and estimation Key judgements 2.23 to the financial statements. page 107 in note in note 31 to pages 126 to 130 detailed on Financial risks are the financial statements. capital Share Details of the Company’s share capital are set out on page 125 in note 28 to the financial statements. sheet events Post balance of the Explore Capital Limited, a subsidiary 2013, On 30 April the share capital of Sycamore 100 per cent of Group, acquired acquisition Further details regarding the Properties Limited. 36 to the financial statements. page 133 in note can be found on events requiring sheet There were no other post balance disclosure. Employment policy Employment relevant employees with continues to provide The Group on matters of common and to seek their views information representatives and through line concern through their that employees are to is given managers. Priority ensuring trading affecting the Group’s matters aware of significant changes. organisational significant and of any position applicationThe Group treats each and for employment, training and fair promotion on merit. Full consideration is given to both If existing and employees. applicants and able-bodied disabled effort is made to find them every disabled, become employees training appropriate work and Payment of creditors for all the period to 31 March 2014 The Group’s policy for the terms is to fix terms of payment when agreeing suppliers theof each business transaction, to ensure that supplier terms agreed abide by the is aware of those terms, and to from suppliers billing number of days of payment. The (2012: 31 days). outstanding as at 31 March 2013 was 35 days their interests Directors and Board is as set out on page 92. of the The current membership to the Board since the last financial The only change of A M Stewart on 1 April statements was the appointment of the trust beneficiary KBE is the ultimate 2013. R G O’Rourke the Company. of of the shareholding which owns the majority has an interest in the shares No other Director of the Company. found on pages 132 Details of related party transactions can be and 133 in note 34 to the financial statements. 2013 | Annual Review Laing O’Rourke h 2013 REPORT

31 Marc r ended Programme management Programme management Construction and building Civil engineering engineering Mechanical and electrical management services logistics Core enabling and Infrastructure and support services Construction and maintenance of utilities Architectural and environmental services Plant hire and operations products Building Design services management operations Building Manufacturing construction products Property development Housebuilding year the

DIRECTORS’ fo The Group is committed to ensuring the health, safety and to ensuring The Group is committed at work. All reasonable measures welfare of all employees have been taken to achieve this policy. Arrangements have against risk to health other persons protect been made to of the Group’s employees and safety arising from the activities when at work. Health, safety and welfare and welfare Health, safety Results and dividends Results and dividends year are set out in the Consolidated Income The results for the year after tax Statement on page 96 and show a profit for the of £41.1m (2012: £28.7m). (2012: of £nil during the year The Company paid dividends the payment of a recommend £8.8m). The Directors do not £nil). final dividend (2012: Parent undertaking Parent undertaking of Suffolk subsidiary a wholly owned The Company is incorporated in the British a company Partners Corporation, Virgin Islands. Principal activities Principal activities are: activities The Group’s principal Construction • • • • • • • • • • • • • Capital • • entities, subsidiaries, jointly controlled A list of principal found on be can operations and associates jointly controlled the financial statements. in note 38 to pages 134 and 135 through operate Laing O’Rourke Corporation Limited did not any branches during the year. for the year and performance A review of the Group’s activities pages 1 to 81. is presented on The Board of Directors present their annual report together annual report their of Directors present The Board of the Laing O’Rourke financial statements with the audited ‘Group’) for the (the group Limited consolidated Corporation 2013. year ended 31 March DIRECTORS’ REPORT

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 Group’s 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 Group’s 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 Group’s 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 Group’s 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 O’Rourke Corporation Limited will be proposed at the Annual General Meeting. Approval This report was approved by the Board on 25 July 2013 and signed on its behalf by:

C KLERIDES DIRECTOR

94 Laing O’Rourke | Annual Review 2013 FINANCIALS 95 opted by the EU and EU and by the opted

rmation and explanations we rmation and explanations OF

CCOUNTANT AND REGISTERED AUDITOR MEMBERS

We have obtained all the info We have obtained considered necessary for the purposes of our audit. purposes of necessary for the considered have been kept by proper books of account In our opinion, the Company. agreementThe Company’s financial statements are in with of account. the books and our information and to the best of In our opinion given to us, the consolidated explanations to the according by the required financial statements give the information manner so required. Cap. 113, in the Companies Law, the report of the given in information the In our opinion, with 94 is consistent on pages 93 and Board of Directors the consolidated financial statements.

THE Other matter Other matter has been prepared for and the opinion, This report, including accordance as a body in only for the Company’s members of Annual and Statutory Audits of the Auditors with Section 34 no other and for of 2009, Accounts Law and Consolidated or assume not, in giving this opinion, accept We do purpose. person to or to any other for any other purpose responsibility may come to. this report whose knowledge PITTASANDROULLA S CERTIFIED PUBLIC A of For and on behalf PRICEWATERHOUSECOOPERS LIMITED CERTIFIED PUBLIC ACCOUNTANTS AND REGISTERED AUDITORS 2013 25 July Nicosia, Opinion give a financial statements consolidated the In our opinion, O’Rourke of Laing position view of the financial true and fair March 2013, as at 31 Limited and its subsidiaries Corporation and their cash flows performance and of their financial for the year then accordance with International ended in as ad Financial Reporting Standards Cap. 113. Cyprus Companies Law, the requirements of the requirements other legal and regulatory Report on the Auditors and Statutory of Pursuant to the requirements Consolidated Accounts Law of 2009, Audits of Annual and we report the following: • • • • •

LIMITED

REPORT 2013 | Annual Review

Laing O’Rourke DITORS’ CORPORATION

U ries (the ‘Group’) on pages 96 96 ries (the ‘Group’) on pages A

ated financial statements that give a ated financial RKE U O’RO

LAING INDEPENDENT Our responsibility is to express an opinion on these on these an opinion is to express Our responsibility audit. statements based on our consolidated financial with International our audit in accordance We conducted that we Standards require Standards on Auditing. Those and plan and perform the ethical requirements comply with theaudit to obtain reasonable assurance whether financial statements are misstatement. free from material audit obtain to performing procedures An audit involves amounts and disclosures in the evidence about the selected statements. The procedures consolidated financial the assessment including on the auditors’ judgement, depend of the consolidated of the risks of material misstatement or error. In making financial statements, whether due to fraud control internal those risk assessments, the auditor considers financial relevant to the entity’s preparation of the consolidated statements that to design audit give a true and fair view in order but not that are appropriate in the circumstances, procedures opinion on the effectiveness of expressing an for the purpose of the entity’s internal control. An audit also includes evaluating of accounting policies used and the the appropriateness by the Board made reasonableness of accounting estimates of as well as evaluating the overall presentation of Directors, the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient opinion. for our audit a basis to provide and appropriate Auditors’ responsibility true and fair view in accordance with International Financial true and fair view in accordance Union by the European Reporting Standards (IFRS) as adopted Law, (EU) and the requirements of the Cyprus Companies the Board of Cap. 113, and for such internal control as preparation to enable the is necessary Directors determines financial statements that are free from of consolidated error. or material misstatement, whether due to fraud The Company’s Board of Directors is responsible for the of Directors The Company’s Board preparation of consolid Board of Directors’ responsibility for the responsibility for Board of Directors’ statements consolidated financial Report on the Consolidated financial statements statements financial Consolidated the Report on financial consolidated the accompanying We have audited (the Limited Corporation of Laing O’Rourke statements ‘Company’) and its subsidia to 135 which comprise the consolidated statement of financial the consolidated statement to 135 which comprise income consolidated the as at 31 March 2013, position of comprehensive statement statement, the consolidated in equity and statement of changes the consolidated income, flows for the year then of cash the consolidated statement and accounting policies of significant ended, and a summary other explanatory notes. CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2013

Pre- Exceptional Pre- Exceptional exceptional items exceptional items Items (note 4) Total Items (note 4) Total 2013 2013 2013 2012 2012 2012 Continuing operations Note £m £m £m £m £m £m Total revenue 3,566.9 – 3,566.9 3,544.6 – 3,544.6 Less: share of joint ventures’ and associates’ revenue (339.3) – (339.3) (639.6) – (639.6) Revenue 3 3,227.6 – 3,227.6 2,905.0 – 2,905.0 Cost of sales (2,928.0) (14.7) (2,942.7) (2,641.0) (17.2) (2,658.2) Gross profit 299.6 (14.7) 284.9 264.0 (17.2) 246.8 Administrative expenses (226.8) (2.6) (229.4) (238.9) (3.8) (242.7) Other operating income 7 1.2 2.4 3.6 1.1 4.2 5.3 Operating profit 5 74.0 (14.9) 59.1 26.2 (16.8) 9.4 Share of post-tax profit of joint ventures and associates 14 7.1 (6.0) 1.1 25.5 (2.8) 22.7 Profit from operations 81.1 (20.9) 60.2 51.7 (19.6) 32.1 Net non-operating (expense)/income 8 (0.4) – (0.4) 0.2 – 0.2 Finance income 9 8.9 – 8.9 6.0 – 6.0 Finance expense 10 (11.7) – (11.7) (14.9) – (14.9) Net financing expense (2.8) – (2.8) (8.9) – (8.9) Profit before tax 77.9 (20.9) 57.0 43.0 (19.6) 23.4 Income tax (expense)/benefit 11 (16.8) 3.6 (13.2) 7.9 3.5 11.4 Profit for the year from continuing operations 61.1 (17.3) 43.8 50.9 (16.1) 34.8 Discontinued operations Loss for the year from discontinued operations 27 (0.2) (2.5) (2.7) (1.1) (5.0) (6.1) Profit for the year 60.9 (19.8) 41.1 49.8 (21.1) 28.7 Attributable to: Equity holders of the Parent 60.1 (19.8) 40.3 49.5 (21.1) 28.4 Non-controlling interests 0.8 – 0.8 0.3 – 0.3 60.9 (19.8) 41.1 49.8 (21.1) 28.7

The notes on pages 101 to 135 form part of these financial statements.

96 Laing O’Rourke | Annual Review 2013 FINANCIALS 97 £m 2012 Total £m 2012 items (note 4) Exceptional

– – – £m £m 1.4 –1.4 1.4 –0.6 0.6 (3.7) –(3.7)–(0.4)(3.7) (0.4) –(2.7) (2.7) Pre- 2012 49.8 (21.1) 28.7 47.1 (21.1)46.5 (21.1) 26.0 47.1 (21.1) 25.4 26.0 Items Items exceptional INCOME

£m 7.6 0.3 1.1 0.9 9.9 1.0 2013 Total 41.1 51.0 50.0 51.0 – – – – – – £m 2013 items (19.8) (19.8) (19.8) (19.8) (note 4) Exceptional £m 7.6 0.3 1.1 0.9 9.9 1.0 Pre- 2013 60.9 70.8 69.8 70.8 COMPREHENSIVE Items

exceptional OF

2013 | Annual Review 29 11 Note Note

Laing O’Rourke STATEMENT

h 2013 31 Marc r ended year the CONSOLIDATED fo The notes on pages 101 to 135 form part of these financial statements. form 101 to 135 The notes on pages Attributable to: Attributable to: Equity holders of the Parent Total comprehensive income for for income Total comprehensive year the Profit for the year Profit for the year Other comprehensive afterincome tax: Other comprehensive income for income Other comprehensive tax of net year, the Available-for-sale financial assets Available-for-sale financial Cash flow hedges income Share of other comprehensive and associates of joint ventures Exchange differences on translating Exchange differences foreign operations Non-controlling interests Non-controlling 29 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 March 2013

2013 2012 Assets Note £m £m Non-current assets Intangible assets 13 345.8 339.8 Investments in joint ventures and associates 14 51.5 54.6 Loans to joint ventures 14 59.1 72.8 Other investments 15 – 4.2 Property, plant and equipment 16 268.0 256.1 Investment property 17 59.0 38.8 Deferred tax assets 26 26.5 26.4 Trade and other receivables 22 24.8 20.0 Restricted financial assets 20 0.3 0.4 Total non-current assets 835.0 813.1 Current assets Inventories 21 289.7 274.3 Trade and other receivables 22 499.4 453.6 Available-for-sale financial assets 18 0.7 3.5 Derivative financial instruments 19 2.8 0.2 Other investments 15 4.2 – Current tax assets – 0.5 Assets held-for-sale 27 6.6 13.8 Cash and cash equivalents 684.0 600.6 Total current assets 1,487.4 1,346.5 Total assets 2,322.4 2,159.6 Liabilities Current liabilities Borrowings 23 (152.6) (97.9) Trade and other payables 24 (1,295.1) (1,227.3) Provisions 25 (15.5) (7.5) Derivative financial instruments 19 (0.7) (0.7) Current tax liabilities (18.1) (8.4) Liabilities held-for-sale 27 (1.2) (4.9) Total current liabilities (1,483.2) (1,346.7) Non-current liabilities Borrowings 23 (121.8) (181.3) Trade and other payables 24 (70.6) (30.1) Provisions 25 (25.3) (28.8) Deferred tax liabilities 26 (6.4) (8.0) Total non-current liabilities (224.1) (248.2) Total liabilities (1,707.3) (1,594.9) Net assets 615.1 564.7 Equity Share capital 28 – – Share premium 28 286.4 286.4 Fair value reserve 29 (1.4) (1.7) Hedging reserve 29 1.1 – Foreign currency translation reserve 29 55.7 47.4 Retained earnings 29 270.3 230.0 Total equity attributable to equity holders of the Parent 612.1 562.1 Non-controlling interests 29 3.0 2.6 Total equity 615.1 564.7 The financial statements were approved by the Board of Directors on 25 July 2013 and were signed on its behalf by:

R G O’ROURKE KBE C KLERIDES DIRECTOR DIRECTOR The notes on pages 101 to 135 form part of these financial statements.

98 Laing O’Rourke | Annual Review 2013 FINANCIALS – – – 99 £m 6.5 8.9 6.2 0.3 0.2 6.1 0.3 (6.6) (4.5) (4.3) (1.4) (0.3) (0.6) (6.9) (8.8) (2.4) 2012 34.9 23.4 21.8 54.2 15.9 30.7 36.8 (22.7) (34.7) (33.0) (30.1) (14.9) (18.5) (81.3) (44.8) (19.0) (71.5) 154.9 115.1 565.7 600.6 134.3 619.3 600.6 (131.7) – – – £m 2.8 0.1 1.7 0.6 2.3 8.9 0.1 2.8 (3.9) (4.9) (0.6) (3.7) (2.5) (1.1) (0.1) (4.6) (6.3) 2013 37.1 20.3 23.3 15.5 58.9 69.3 14.1 57.0 14.9 52.9 68.9 92.1 (57.2) (39.4) (38.3) (32.9) (47.9) (11.7) (29.4) 646.9 684.0 600.6 684.0 108.4

4 17 14 18 28 12 13 32 Note Note FLOWS

CASH

2013 | Annual Review Laing O’Rourke STATEMENT

h 2013 31 Marc r ended year the CONSOLIDATED fo Disposal of investment property property of investment Disposal (Increase)/decrease in trade and other receivables (Increase)/decrease in Cash generated from operations joint ventures and associates Loans repaid by Adjustments for: Adjustments for: of intangibles Loss on disposal activities operating from generated cash Net net of cash acquired Acquisition of subsidiaries, of available-for-sale financial assets Disposal Dividends paid The notes on pages 101 to 135 form part of these financial statements. form 101 to 135 The notes on pages Cash and cash equivalents comprise: comprise: equivalents Cash and cash Cash at bank and on hand Non-cash transactions principally relate to new hire purchase and finance lease agreements taken out during the year amounting relate to new Non-cash transactions principally £31.2m). to £39.0m (2012: Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash flows from financing activities activities financing from Cash flows new bank loans from Proceeds Purchase of property, plant and equipment Purchase of property, plant and equipment Tax paid paid Tax activities investing from Cash flows Interest paid Non-cash exceptional items items Non-cash exceptional Profit before tax from continuing operations from continuing operations before tax Profit Cash flows from operating activities activities operating from Cash flows Dividends paid to non-controlling interests non-controlling paid to Dividends 29 Payments to acquire joint ventures and associates Payments to acquire 14 activities financing in used cash Net Increase in inventories Increase in inventories and provisions Increase/(decrease) in trade and other payables Purchase of intangible assets Finance lease principal repayments premium Reduction in share Loans to joint ventures and associates Loans to joint ventures 14 Share of post tax profit of joint ventures and associates Share of post tax profit plant and equipment of property, Disposal of joint ventures and associates Disposal Interest received ventures and associates Distributions received from joint 14 Net financing costs

Loss before tax from discontinued operations operations from discontinued Loss before tax amortisation Depreciation and and equipment plant of property, on disposal Profit Other 27 Disposal of intangibles 5 activities investing in) from/(used generated cash Net bank loans Repayments of end of year at equivalents Cash and cash Short-term bank deposits Short-term bank deposits Effect of exchange rate fluctuations on cash held CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2013

Share capital Total Non- and share Other Retained shareholders’ controlling Total premium reserves earnings equity interests equity Note £m £m £m £m £m £m At 1 April 2011 319.4 48.7 210.4 578.5 2.6 581.1 Profit for the year – – 28.4 28.4 0.3 28.7 Other comprehensive income after tax – (3.0) – (3.0) 0.3 (2.7) Total comprehensive income for the year – (3.0) 28.4 25.4 0.6 26.0 Reduction in share premium 28 (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 Profit for the year – – 40.3 40.3 0.8 41.1 Other comprehensive income after tax – 9.7 – 9.7 0.2 9.9 Total comprehensive income for the year – 9.7 40.3 50.0 1.0 51.0 Dividends paid 12 – – – – (0.6) (0.6) At 31 March 2013 286.4 55.4 270.3 612.1 3.0 615.1

Additional disclosure and details are provided in note 29. The notes on pages 101 to 135 form part of these financial statements.

100 Laing O’Rourke | Annual Review 2013 FINANCIALS 101 Financial Statements, (effective for Financial and financial liabilities, (effective for accounting periods (effective and financial liabilities, after 1 January 2013) on or beginning on or after 1 January 2015) periods beginning on or after 1 January 2013) beginning accounting periods on or after 1 January 2013) periods beginning after on or beginning (effective for accounting periods 1 January 2013) after on or beginning (effective for accounting periods 1 January 2013) entities, (effective for accounting periods beginning on or after 1 January 2014) on or after 1 January 2013) beginning accounting periods for accounting comprehensive income, (effective on or after 1 July 2012) periods beginning January 2013) on or after 1 beginning accounting periods January 2013) on or after 1 beginning accounting periods January 2013) on or after 1 beginning accounting periods periods beginning (effective for accounting liabilities, on or after 1 January 2014) Each standard has been reviewed, the impact on the Group the impact on has been reviewed, Each standard these new standards, of adopting financial statements has been determined and interpretations amendments to be minimal. new recently published IFRSs, considered The Directors have to existing standards that are and amendments interpretations on commencing periods Group’s accounting mandatory to the or after 1 April 2013. yet effectiveStandards that are not early- and have not been Group: by the adopted a) assets – Offsetting 7, Disclosures Amendment to IFRS b) for accounting Instruments, (effective IFRS 9, Financial c) IFRS 10, Consolidated d) (effective for accounting Arrangements, IFRS 11, Joint e) of Interests in Other Entities, 12, Disclosures IFRS f) Amendments to IFRS 10, 11 and 12, Transition guidance, g) to IFRS 10, 12 and IAS 27, Investment Amendments h) (effective for Value Measurement, IFRS 13, Fair i) Amendment to IAS 1, Presentation of other j) for benefits, (effective Employee IAS 19 (revised 2011), k) for IAS 27, Separate Financial Statements, (effective l) and Joint ventures, (effective for IAS 28, Associates m) assets and financial 32, Offsetting Amendment to IAS STATEMENTS 2013 | Annual Review

ards as adopted ards as adopted Laing O’Rourke h 2013 FINANCIAL the Directors in accordance with

THE

31 Marc r ended financial assets, (effective for accounting periods for accounting periods financial assets, (effective after 1 July 2011) on or beginning (effective for accounting periods underlying assets, after 1 January on or 2012) beginning year the NOTES fo

2 2.1 Policies Accounting Significant Statement of compliance statements have been financial The Group consolidated by prepared and approved International Financial Reporting Standards as adopted by the Standards as adopted Reporting International Financial Financial European Union (Adopted IFRS and International interpretations) Interpretations Committee (IFRIC) Reporting Cap. 113. and the Cyprus Companies Law, 2.2 of preparation Basis statements are presented financial The Group consolidated nearest hundred thousand to the in pounds sterling, rounded subsidiary its company, and include the results of the holding in associates, jointly undertakings and the Group’s interest operations for the year controlled entities and jointly controlled statements financial 2013. The consolidated ended 31 March the concern basis under have been prepared on a going of by the revaluation as modified convention, historical cost available- of IFRS), to the adoption (prior land and buildings financial assets and financial for-sale financial assets, and instruments) at fair value derivative liabilities (including which policies accounting or loss. The principal through profit entities all consolidated for have been consistently applied are set joint ventures and associates subsidiaries, including out below. standards, amendments and interpretations The following and have in the year ended 31 March 2013 became effective been adopted: a) of – Transfers 7, Disclosures Amendment to IFRS b) of Amendments to IAS 12, Deferred tax – Recovery 1 General Information is a (the ‘Company’) Corporation Limited Laing O’Rourke company incorporated in Cyprus. The and domiciled Company financial statements in accordance company prepares parent Reporting Stand with International Financial by the European Union and the Cyprus Companies Law, Cap. Union and the Cyprus by the European on page 92. registered of the given 113. The address office is activities and its principal operations The nature of the Group’s Review on and in the Group Financial are set out in note 38 financial statements of pages 90 to 91. The consolidated comprise year ended 31 March 2013 the Company for the (together referred to as subsidiaries the Company and its interest in associates, jointly the ‘Group’) and the Group’s operations. jointly controlled controlled entities and NOTES TO THE FINANCIAL STATEMENTS

2 Significant Accounting Policies continued The purchase method of accounting is used to account The effect on the Group financial statements of adopting for the acquisition of subsidiaries by the Group falling these new standards, amendments and interpretations has within the scope of IFRS 3, ‘Business Combinations’. been determined to be minimal with the exception of those The consideration transferred for the acquisition of detailed below: a subsidiary is the fair values of the assets, equity instruments issued and liabilities incurred or assumed IFRS 9 is expected to replace IAS 39 Financial Instruments: at the date of exchange. Acquisition related costs are Recognition and Measurement from 2015, subject to EU expensed as incurred. Identifiable assets acquired and adoption. IFRS 9 is being completed in stages, new liabilities and contingent liabilities assumed in a business requirements for impairments and hedge accounting were combination are measured initially at their fair values issued in March 2013 and are currently undergoing review. at the acquisition date, irrespective of the extent of any The requirements of IFRS 9 in issue at 31 March 2013 would non-controlling interest. The excess of the consideration result in the Group’s available for sale financial assets being transferred over the fair value of the Group’s share of the reclassified as this is a category that will no-longer exist identifiable net assets acquired is recorded as goodwill. under the new standard. The assets will be measured either If this is less than the fair value of the net assets of the at amortised cost or fair value through profit or loss, as a subsidiary acquired, the difference is recognised directly result movements in the fair value of these assets would in the income statement. no longer be recognised in other comprehensive income. Retrospective application of this standard would result in b) Associates are operations over which the Group has the the closing balance of the fair value reserve (£1.4m) being power to exercise significant influence but not control, transferred to retained earnings. generally accompanied by a share of between 20 per cent and 50 per cent of the voting rights. Associates are IFRS 10, 11, 12 and IAS 27 and 28 are effective for periods accounted for using the equity method and are initially beginning on or after 1 January 2013 but all can be early recognised at cost. The Group’s investment in associates adopted if all applied simultaneously. The new standards includes goodwill identified on acquisition, net of any and amendments were developed to eliminate the choice accumulated impairment loss. The Group’s share of of accounting treatments available for interests in other its associates’ post-acquisition profits or losses is entities and allow for further comparability between financial recognised in the income statement, and its share of post- statements of different companies. With the application acquisition movements in other comprehensive income of this suite of standards, certain of the Group’s jointly is recognised in the statement of other comprehensive controlled entities may change between equity accounting income. If the Group’s share of losses in an associate and proportional consolidation. The change in treatment of equals its investment, the Group does not recognise these entities will have no impact on the Group’s net assets further losses, unless it has incurred obligations or or EBIT, but will effect the presentation of the joint ventures made payments on behalf of the associate, in which balances in the primary financial statements. case a provision is recognised. 2.3 Basis of consolidation c) Jointly controlled entities are those entities over whose a) The Group financial statements include the financial activities the Group has joint control, established by statements of the Company and subsidiaries controlled contractual agreement. In a number of these, the Group’s by the Company. Control exists where the Company has share of the underlying assets and liabilities may be the power, directly or indirectly, to govern the financial greater than 50 per cent but the terms of the relevant and operating policies of an entity so as to obtain benefits agreements make it clear that control is not exercised. from its activities. In assessing control, potential voting Jointly controlled entities are accounted for using the rights that presently are exercisable are taken into equity method from the date that the jointly controlled account. Subsidiaries are consolidated from the date entity commences until the date that joint control of the on which effective control is transferred to the Group entity ceases. If the Group’s share of the losses in the and are deconsolidated from the date control ceases. 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.

102 Laing O’Rourke | Annual Review 2013 FINANCIALS 103 position presented are translated at the closing rate at at the closing are translated presented position date; the reporting translated at average exchange rates; and reserve. foreign currency translation Group companies Group companies entities of all Group and financial position The results has the currency (none of which of a hyper-inflationary from the functional currency different economy) that have a are translated presentation currency into the presentation currency as follows: i) of financial assets and liabilities for each statement ii) are and expenses for each income statement income iii) in the differences are recognised all resulting exchange from the On consolidation, exchange differences arising and of operations, translation of the net investment in foreign are taken of such investments, designed as hedges borrowings operation is When a foreign income. to other comprehensive were differences that exchange or sold, of, disposed partially in income are recognised comprehensive in other recorded on sale. loss the income statement as part of the gain or arising on the acquisition value adjustments and fair Goodwill are treated as liabilities of the of a foreign entity assets and rate. foreign entity and translated at the closing 2.5 and equipment plant Property, historical cost plant and equipment are reported at Property, impairment any recognised and depreciation less accumulated item of Where parts of an depreciated. loss. Land is not different useful lives, they property, plant and equipment have comprises purchase are accounted for as separate items. Cost is calculated price and directly attributable costs. Depreciation down the cost to their write on the straight-line method to lives as follows: residual values over their estimated useful property Group owner occupied Other buildings and vehicles Plant, equipment revalued under previous Certain land and buildings were the Group elected accounting standards. On transition to IFRS, to use the revalued amount as deemed cost. over the Assets held under finance leases are depreciated the asset term of the lease or the estimated useful life of as appropriate. 2% 6% – 50% cost Gains and losses on disposal are recognised within of sales, administrative expenses or non-operating as appropriate. in the income statement income/expense 2% 2013 | Annual Review Laing O’Rourke unrealised gains arising from intra-Group transactions transactions arising from intra-Group unrealised gains consolidated financial the are eliminated in preparing transactions statements. Unrealised gains arising from controlled entities and jointly with jointly controlled extent of the Group’s to the operations are eliminated share of unrealisedinterest in the entity. The Group’s is with associates gains arising from transactions the investment in the associate. eliminated against of unrealised losses is eliminated The Group’s share the to in the same way as unrealised gains, but only extent that thereof impairment. is no evidence undertakes a joint venture, established by contractual by contractual a joint venture, establishedundertakes entity. establishing a separate agreement, without assets and incurs its own The Group uses its own a means agreement the joint venture provides liabilities, any joint expenses are sharedby which revenue and The Group recognises its share amongst the venturers. and cash flows it liabilities of the assets it controls, the resultsincurs and its share of under each relevant and the statement of statement heading in the income financial position. 2.4 Foreign currency translation presentation currency and Functional in the financial statements of each of the Items included of the are measured using the currency Group’s entities environment in which the entityprimary economic operates financial (‘the functional currency’). The consolidated the is statements are which presented in pounds sterling, O’Rourke functional and presentation currency of Laing primary Corporation Limited and the currency of the operates. economic environment in which the Group and balances Transactions into the functional Foreign currency transactions are translated the dates of the currency using the exchange rates at prevailing resulting from losses transactions. Foreign exchange gains and the settlement of such transactions translation and from the at year-end exchange assets and liabilities rates of monetary in the denominated in foreign currencies, are recognised income statement. Translation differences on non-monetary financial assets and loss. of the fair value gain or as part liabilities are reported Translation differences on non-monetary financial assets and or profit ‘fair value through such as equities held at liabilities or loss as part of the fair value loss’ are recognised in profit financial on non-monetary differences gain or loss. Translation assets such as equities classified as available-for-sale are in the fair value reserve in equity. included e) and transactions with any Intra-Group balances together 2 d) continued Policies Accounting Significant Group are where the operations Jointly controlled

NOTES TO THE FINANCIAL STATEMENTS

2 Significant Accounting Policies continued 2.7 Investment property 2.6 Goodwill and other intangible assets Investment properties are held for long-term rental yields Goodwill and are not occupied by the Group. Acquired investment Goodwill represents the excess of the cost of an acquisition properties are initially measured at cost, being the fair value over the fair value of the Group’s share of the net assets of of consideration given to acquire the property. The cost of the acquired subsidiary, associate or joint venture at the date self-constructed investment properties include all directly of acquisition. Goodwill on acquisitions prior to 1 April 2006 attributable costs. Completed investment properties are (the date of transition to IFRS) is carried at its book value stated at fair value, which is supported by market evidence, (original cost less cumulative amortisation) on that date, as assessed annually by the chief surveyor or by qualified less any subsequent impairment. This is in accordance with external valuers at three year intervals. Depreciation is not the transitional provisions of IFRS 1. Goodwill arising before provided on investment properties. Changes in fair values are 1 January 1998 was eliminated against reserves and has not recorded in the income statement as part of non-operating been reinstated in accordance with the transitional provisions income/expense. of IFRS 3, ‘Business Combinations’. Goodwill arising on the 2.8 Financial investments Group’s investments in associates and joint ventures since The Group has classified its financial investments as available- that date is included within the carrying value of these for-sale financial assets which are recognised at fair value. investments. Negative goodwill arising on or after 1 April 2006 Purchases and sales of investments are recognised on the is recognised immediately within operating profit in the income trade date, which is the date that the Group commits to statement. Separately recognised goodwill is tested annually purchase or sell the assets, at their fair values less transaction for impairment and carried at cost less impairment losses. costs. The fair values of listed financial investments are Goodwill is included when determining the profit or loss determined using bid market prices. Changes in the fair value on subsequent disposal of the business to which it relates. of financial investments classified as available-for-sale are Goodwill is allocated to cash generating units for the purpose recorded in the fair value reserve within equity. When these of impairment testing. are sold, the fair value adjustments recognised in equity are Other intangible assets included in the income statement. Other intangible assets are stated at cost less accumulated 2.9 Derivative financial instruments amortisation and impairment losses. Amortisation is based The Group enters into forward contracts or borrows/deposits on the useful lives of the assets concerned, and recognised funds in foreign currencies in order to hedge against on a straight line basis over the following periods: transactional foreign currency exposures. Fair value derivatives Brands 8-10 years are initially recognised at fair value on the date of the contract and are subsequently remeasured at their fair value. Computer software and licences 2-4 years Movements in fair value are recorded in the income statement, Impairment of non-financial assets together with any changes in the fair value of the hedged asset Assets that have an indefinite useful life are not subject or liability that are attributable to the hedged risk. The full fair to amortisation and are tested for impairment annually. value of a hedging derivative is classified as a non-current Assets that are subject to amortisation or depreciation are asset or liability if the remaining maturity of the hedged item reviewed for impairment or reversal of prior impairments is more than 12 months and, as a current asset or liability, when circumstances or events indicate there may be a change if the maturity of the hedged item is less than 12 months. in the carrying value. For impairment testing, goodwill is The hedging reserve comprises the effective portion of the allocated to cash-generating units by geographical reporting cumulative net change in fair value of cash flow hedging unit and business segment. Assets are grouped at the lowest instruments related to hedged transactions that have not level for which there are separately identifiable cash flows. yet occurred, together with any related deferred taxation.

104 Laing O’Rourke | Annual Review 2013 FINANCIALS 105 adjusted for impairment adjusted for 2.15 Construction and service contracts contracts service and Construction 2.15 be estimated contract can of a construction When the outcome revenue and costs by contract are recognised reliably, of completion of each contract, as reference to the stage costs at the balance of total proportion measured by the of the contract. cost total sheet date to the estimated costs will exceed total that total contract When it is probable immediately. expected loss is recognised contract revenue, the recognised recognised profits less plus Where costs incurred as the balance is recognised billings, losses exceed progress within trade contracts construction on due from customers costs billings exceed Where progress and other receivables. losses, the less recognised profits incurred plus recognised as advance payments on construction balance is recognised trade and other payables. contracts within (PPP) Private Partnership Initiative (PFI)/Public Private Finance are expensed as incurred until the Group is appointed bid costs to generate is expected preferred bidder. Provided the contract the award recovery and sufficient net cash inflows to enable incurred costs bid PFI/PPP of the contract is virtually certain, are included after the appointment as preferred bidder are expensed bid costs within receivables. The PFI/PPP on reimbursement at financial surplus on close. Any in of costs compared with those recorded reimbursement in the income statement. receivables is recognised Inventories 2.16 activity development land and related Inventories, including estimated net thereon, are stated at the lower of cost and direct materials, direct realisable value. Cost comprises and those costs borrowing labour, specific and subcontract inventories overheads that have been incurred in bringing Net realisable value to their present location and condition. of less all estimated costs represents the estimated income selling in marketing, and costs to be incurred completion and distribution. 2.17 commitments purchase hire and Leases and leases, under hire purchase contracts Assets obtained risks and rewards of portion of the where a significant as finance to the Group, are classified ownership is transferred leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the payments. Lease payments lease present value of the minimum between the liability and finance charge to are apportioned produce a constant rate of interest on the finance lease balance outstanding. Assets held for use in such leases are included in plant and equipment’ (note 16) and are depreciated ‘Property, to their residual values over the estimated useful lives or the are and lease term as appropriate losses. Obligations under such agreements are included in 23). (note ‘Borrowings’ 2013 | Annual Review Laing O’Rourke estimated irrecoverable amounts. amounts. estimated irrecoverable Subsequent recoveries of amounts previously written off are written previously of amounts Subsequent recoveries line in which the provision the income statement credited to was originally recognised. payables other and Trade 2.12 value and are initially recognised at fair Trade payables the effective using subsequently measured at amortised cost interest method. Provisions 2.13 when the Group has a present legal are recognised Provisions of a past event, where it is as a result obligation or constructive to settle the obligation required be probable that an outflow will can be estimated reliably. and the amount of the obligation the present measured at the best estimate of are Provisions to settle to be required value of the expenditures expected the obligation. recognition Revenue 2.14 Revenue is measured at the fair the consideration value of and services tax, for goods net of sales received or receivable, the Group’s share It includes customers. to external supplied under jointly controlled out of revenue from work carried operations. Revenue from services and construction contracts reference to the stage of completion of the by is recognised for construction contract, as set out in the accounting policy goods is Revenue from of and service contracts. the sale when the Group has risks transferred significant recognised goods to the buyer, the ownership of the and rewards of amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Group. in the income statement on a Rental income is recognised over the term of the lease. Lease incentives straight-line basis as an integral part of the total rental income. are recognised is property Revenue on private housing and commercial of the sale. completion on legal recognised 2 2.10 continued Policies Accounting Significant equivalents cash Cash and equivalentsCash and cash cash at bank consist of and in other short-term at call with banks, and hand, deposits held with less than 90 days maturity investments highly liquid cash of the the purpose acquisition. For from the date of cash equivalentscash and flow statement, bank also include the statement in are included in borrowings overdrafts, which of financial position. 2.11 Trade and other receivables at fair value and initially recorded Trade receivables are by at amortised cost as reduced subsequently measured for appropriate allowances

NOTES TO THE FINANCIAL STATEMENTS

2 Significant Accounting Policies continued in the income statement except when it relates to items Leases other than finance leases are classified as operating charged or credited directly to equity, in which case the leases. Payments made under operating leases are recognised deferred tax is also included in equity. as an expense in the income statement on a straight-line basis Deferred tax assets and liabilities are offset when there is a over the lease term. Any incentives to enter into operating legally enforceable right to offset current tax assets against leases are recognised as a reduction of rental expense over current tax liabilities and when the deferred tax assets and the lease term on a straight-line basis. liabilities relate to income taxes levied by the same taxation 2.18 Pension costs authority on either the same taxable entity or different taxable The Group operates defined contribution pension schemes for entities where there is an intention to settle the balances on staff and Directors. The contributions paid by the Group and a net basis. the employees are invested in the pension fund within 30 days 2.20 Borrowings and borrowing costs following deduction. Once the contributions have been paid, Interest bearing bank loans and overdrafts are recognised the Group, as employer, has no further payment obligations. initially at fair value net of transaction costs incurred. The Group’s contributions are charged to the income statement All borrowings are subsequently stated at amortised cost in the year to which they relate. with the difference between initial net proceeds and redemption 2.19 Tax value recognised in the income statement over the period Tax expense represents the sum of the tax currently payable to redemption. and deferred tax. The current tax expense is based on the Borrowing costs are capitalised where the Group borrows taxable profits for the year, after any adjustments in respect of funds specifically for the purpose of acquiring, constructing prior years. Taxable profit differs from net profit as reported in or producing a qualifying asset, in accordance with IAS 23, the income statement because it excludes items of income or ‘Borrowing Costs’. All other finance costs of debt, including expense that are taxable or deductible in other years and it premiums payable on settlement and direct issue costs, are also excludes items that are neither taxable nor deductible. charged to the income statement on an accruals basis over the The Group’s liability for current tax is calculated using tax rates term of the instrument, using the effective interest method. and laws that have been enacted or substantially enacted by the reporting date. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for Deferred tax is provided on temporary differences arising from at least 12 months after the balance sheet date. investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary 2.21 Exceptional items difference can be controlled and it is probable that the Exceptional items are defined as items of income or difference will not reverse in the foreseeable future. expenditure which, in the opinion of the Directors, are material Deferred taxes are not provided in respect of temporary and unusual in nature or of such significance that they require differences arising from the initial recognition of goodwill, separate disclosure on the face of the consolidated income or from goodwill for which amortisation is not deductible for statement in accordance with IAS 1, ‘Presentation of tax purposes, or from the initial recognition of an asset or Financial Statements’. liability in a transaction which is not a business combination 2.22 Trading analysis and affects neither accounting profit nor taxable profit or loss Trading analysis information is based on the Group’s at the time of the transaction. Deferred income tax assets are internal reporting structure of two operational hubs. recognised to the extent that it is probable that future taxable Further information on the business trading activities is set out profit will be available against which the temporary differences in the Operating Overview on pages 30 to 31. Trading analysis can be utilised. Deferred tax is calculated at the tax rates based results represent the contribution directly attributable for the on those enacted or substantially enacted at the balance sheet different hubs to profit of the Group. Transactions between date and are expected to apply when the related asset is hubs are conducted on an arm’s length basis. realised or liability settled. Deferred tax is charged or credited

106 Laing O’Rourke | Annual Review 2013 FINANCIALS 107 deferred tax assets. The Group provides for future provides for assets. The Group deferred tax where positions of uncertain tax respect liabilities in periods payable in future tax may become additional are based upon management’s and such provisions Assets are only recognised assessment of exposures. tax will become certain additional where it is reasonably asset can the and when payable in future periods be utilised. of the fair values of expected requires an estimation A detailed review costs to complete. prices and selling 2013 which resulted in an at 31 March was completed recognised. being of £23.3m exceptional impairment note 4. in are included Further details rental yields compared requires an estimation of future comparable to current market evidence. In certain cases due to the current is limited information market price have exercised management and economic conditions of the fair value in determining their best judgements investment properties. Provision is exclusively to the Group. provides reinsurance for future made on actuarial assessment of the reserve estimates of the likely necessarily includes which claims, and the emergence of further trend of future claims costs year-end. An actuarial to the review claims subsequent annually. To the extent that actual of claims is performed could the provisions differ from those projected, claims vary significantly. interest rate risk and risk, risk, liquidity foreign currency Group’s financial risk The overall aim of the credit risk. minimise to use judgement management policies is to effects on financial performance and potential adverse 31 to these in note net assets. Further details are provided financial statements. e) in progress Development land and work developments are impaired land whether Determining property f) Investment properties fair value of investment Determining the g) company Captive insurance which a captive insurance company The Group operates h) management risk Financial to is exposed Group In the course of its business, the 2013 | Annual Review d assumptions that have d assumptions that have Laing O’Rourke policies, which are set out in notes 2.14 and 2.15, are are set out in notes 2.14 policies, which it has carried the work central to the way the Group values out in each financial year and have been consistently of made to be require forecasts These policies applied. and service long-term construction the outcomes of require assessments and judgements contracts, which contract scopes, in work on changes to be made programmes and maintenance liabilities. and cases legal amounts, disputed account in reporting may be different but the actual future outcome claims from this judgement. of the value in use of the cash generating units estimation value in use The to which the goodwill has been allocated. of the an estimation to be made calculation requires to arise of future cash flows expected timing and amount from the cash generating unit, and a suitable discount Thecalculate the present value. discount rate in order to details of rate used, carrying value of goodwill and further note 13. in are included loss calculation the impairment the worldwide is required in determining and judgement of the recognition taxes including income for provision 2 uncertainty estimation and judgements Key 2.23 continued Policies Accounting Significant statements financial of consolidated The preparation and to make estimates management under IFRS requires for assets and affect amounts recognised assumptions that sheet date and the amounts of liabilities at the balance period. revenue and the incurred during the reported expenses differ from these estimates may therefore Actual outcomes The estimates an and assumptions. the most significant impact on the carrying value of assets and impact on the the most significant the next financial Group within year are detailed liabilities of the as follows: a) recognition Revenue and margin recognition and margin recognition The Group’s revenue b) Disputes been taken into has Management’s best judgement c) Impairment of goodwill an requires impaired goodwill is Determining whether d) Taxation to tax in a number of jurisdictions The Group is subject

NOTES TO THE FINANCIAL STATEMENTS

3 Trading Analysis Europe Hub Australia Hub Total Group 2013 2013 2013 Performance by geography: £m £m £m Managed revenue 2,570.1 1,824.5 4,394.6 Less: Inter-segment revenue (616.2) (211.5) (827.7) Total revenue 1,953.9 1,613.0 3,566.9 Less: Share of joint ventures’ and associates revenue (227.0) (112.3) (339.3) Revenue 1,726.9 1,500.7 3,227.6

Profit from operations post-exceptional items 35.7 24.5 60.2 Profit before tax post-exceptional items 35.8 21.2 57.0

EBIT post-exceptional items 33.6 23.9 57.5 EBITDA post-exceptional items 69.6 40.8 110.4

Profit from operations pre-exceptional items 51.1 30.0 81.1 Profit before tax and exceptional items 51.2 26.7 77.9

EBIT pre-exceptional items 49.0 29.4 78.4 EBITDA pre-exceptional items 85.0 46.3 131.3

Europe Hub Australia Hub Total Group 2012 2012 2012 £m £m £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 3,544.6 Less: 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) 32.1 Profit before tax post-exceptional items 62.1 (38.7) 23.4

EBIT post-exceptional items 69.5 (35.1) 34.4 EBITDA post-exceptional items 105.4 (17.0) 88.4

Profit from operations pre-exceptional items 79.9 (28.2) 51.7 Profit before tax and exceptional items 75.4 (32.4) 43.0

EBIT pre-exceptional items 82.8 (28.8) 54.0 EBITDA pre-exceptional items 118.7 (10.7) 108.0

108 Laing O’Rourke | Annual Review 2013 FINANCIALS – £m £m 2.0 2.6 3.0 7m (3.5) (4.2) 109 2012 2012 ng Total 21.2 24.6 21.1

– – – £m £m 2.5 2012 (2.4) (3.6) 2013 23.3 23.4 19.8 items (note 4) Exceptional

£m £m 0.2 –0.2 0.2 7.1 –7.1 7.1 –2.3 2.3 (5.0) –(5.0) (5.0) Pre- Pre- 2012 51.7 (19.6) 32.1 –51.754.0 (19.6)51.7 34.4 items items 108.0 (19.6) 88.4 exceptional £m 0.3 3.1 (0.4) (2.6) 2013 Total 60.2 57.5 49.8 110.4 – – – – – £m 2013 items (20.9) (20.9) (20.9) (note 4) Exceptional £m 0.3 3.1 Pre- (0.4) (2.6) 2013 81.1 78.4 49.8 items 131.3 exceptional

2013 | Annual Review 14 Note Note Laing O’Rourke JV net finance income JV net finance income JV tax expense 14 Closure costs after tax costs Exceptional Impairments of land and developments developments land and of Impairments assets in development and mixed-use During the year the Directors reviewed the carrying value of the Group’s residential market based on recent selling prices current accounting standards. The valuations incorporated forecast accordance with planning Costs to complete consents will be granted. and in certain instances the Directors assumed appropriate conditions costs) were assessed at the balance sheet date. exceptional As a result(including finance of the review, the Group recognised £23.3m (2012: £21.2m). impairments of of debt Gain on renegotiation of the Group. A subsidiary final payment During the year the Directors renegotiated the debt facility of a property development Income tax credit on exceptional items Income tax credit on exceptional items Impairments of land and developments land and developments of Impairments of debt Gain on renegotiation 4 Exceptional Items Items 4 Exceptional loan and security over the outstanding as full and final settlement for the the lender on 19 October 2012 was accepted by recognised within has been of £2.4m which was released. This restructure resulted in an exceptional gain development site income. other operating There is no material difference between revenue by origin between revenue and revenue by destination. Revenue on difference includes £2,735.4m There is no material in IAS 11, Construction Contracts. Revenue arisi definition included calculated on the (2012: £2,529.4m) construction contracts 5 Depreciation

EBIT and EBITDA Reconciliation: Reconciliation: EBITDA and EBIT operations Profit from 3 Analysis continued Trading

Impairment of receivables of receivables Impairment of a business Gain on acquisition Exceptional before tax costs Exceptional EBIT EBIT EBITDA Adjusted for: Adjusted for: Net non-operating (expense)/income 8 Impairment of group owner occupied property property occupied owner of group Impairment Amortisation 5 Amortisation (2012: £4,693.4m). (2012: £4,693.4m). from the sale of goods amounted to £145.4m (2012: £115.0m) and from the sale of services amounted to £346.8m (2012: £260.6m). (2012: £260.6m). of services amounted to £346.8m £115.0m) and from the sale goods amounted to £145.4m (2012: from the sale of less losses of £6,026. profits plus recognised date Contracts in progress at the balance sheet costs incurred comprise contract NOTES TO THE FINANCIAL STATEMENTS

4 Exceptional Items continued Impairment of group owner occupied property and closure costs Following the approval of the Group’s management and Directors on 9 February 2012 to sell Naturstein Vetter GmbH the assets were reclassified as held-for-sale (see note 27). The sale of the assets was completed on 27 September 2012, and the loss on sale recognised in the current year was £2.5m, which has been recognised within discontinued operations in the income statement. In the prior year land and buildings were impaired by £2.0m and closure costs of £3.0m were also recognised as discontinued operations in the income statement. Impairment of receivables During the prior year an outstanding debt was only partially recovered after the client went into administration, resulting in a £2.6m loss. Exceptional gain on acquisition of a business During the prior year the Group secured full control of Bison Holdings Limited and Bison Manufacturing Limited, recognising an exceptional gain of £4.2m on acquisition. 5 Operating Profit 2013 2012 Operating profit is stated after charging/(crediting): Note £m £m Staff costs 6 867.1 774.8 Depreciation of property, plant and equipment: 16 Owned assets 27.0 23.4 Under finance leases 22.8 28.3 Impairment of plant and equipment 16 – 1.0 Operating lease rentals and short term hires: Property, plant and equipment 80.3 79.3 Amortisation of other intangible assets 13 3.1 2.3 Profit on disposal of plant and equipment (2.7) (3.9) Loss on disposal of intangibles 0.1 – Foreign exchange gains (3.6) (1.3) Investment property income 17 (2.4) (1.7) Cost of inventories recognised as an expense: Amount of inventories recognised as an expense 75.5 68.7 Amount of inventories written off as an expense 21.9 21.2 Auditors’ remuneration (see below) 3.0 2.2

2013 2012 Auditors’ remuneration Note £m £m Fees payable to the Company’s auditor for the audit of: The Company’s annual financial statements and consolidated financial statements 0.3 0.3 The Company’s subsidiaries pursuant to legislation 0.9 0.9 Total audit fees 1.2 1.2 Fees payable to the Company’s auditor and its associates for other services: Services relating to taxation 0.8 0.8 All other services 1.0 0.2 Total non-audit fees 1.8 1.0 Total fees 3.0 2.2

The fees stated above include £0.2m for other non-assurance services and £0.1m for audit fees charged by the Company’s statutory audit firm PricewaterhouseCoopers Limited Cyprus.

110 Laing O’Rourke | Annual Review 2013 FINANCIALS – – £m £m £m £m aid 4.4 0.5 4.2 0.8 0.2 0.1 5.3 111 2012 2012 39.0 34.0 2012 2012 2012 3,810 701.8 774.8 11,048 14,858 Number – £m £m £m £m 2.4 0.1 0.8 0.5 3.6 4.1 0.3 (0.2) 2013 2013 57.2 36.3 2013 2013 2013 4,143 773.6 867.1 11,208 15,351 Number

ment personnel compensation above) was as follows: compensation above) ment personnel 2013 | Annual Review ted costs, including Directors: Directors: including costs, ted Laing O’Rourke Investment income Investment income

Exceptional gain on acquisition of a business (see on note 4) gain Exceptional of debt (see note 4) renegotiation on gain Exceptional 7 Income/(Expense) Other Operating Salaries and other short-term benefits benefits were p (2012: nil). No post-retirement scheme are accruing benefits under a defined contribution None of the directors Directors’ remuneration in key manage of the Directors (included The total remuneration Salaries and other short-term employee benefits Salaries and other short-term employee benefits (2012: £nil). on behalf of Directors At 31 March 2013 £1.4m (2012: £1.4m) was payable in respect of defined contribution schemes and included in other payables included of defined contribution schemes and payable in respect At 31 March 2013 £1.4m (2012: £1.4m) was (see note 24). Transactions with key management personnel (2012: four members the four Directors and seven other the period include management personnel during The Group’s key during the year. on the Group Executive Committee Directors and eight other members) who served is as follows: The compensation of key management personnel Aggregate remuneration and rela and remuneration Aggregate Wages and salaries Social security costs

The average monthly number of employees (including Directors) during the period was: during the period employees (including Directors) number of The average monthly Europe Hub 6 Numbers Costs and Employee Staff employees of Number

Australia Hub Rents received income Other operating Loss on sale of subsidiary subsidiary Loss on sale of Other pension costs Total number of employees employees of number Total NOTES TO THE FINANCIAL STATEMENTS

8 Net Non-operating (Expense)/Income 2013 2012 £m £m (Loss)/profit on sale of property (0.2) 0.6 Profit on sale of investments 0.1 – Impairment of investments (0.3) (0.4) (0.4) 0.2

9 Finance Income 2013 2012 £m £m Bank interest 7.2 4.9 Other interest and similar income 1.7 1.1 8.9 6.0

10 Finance Expense 2013 2012 £m £m Interest payable on bank loans and overdrafts 7.4 8.7 Finance lease charges 3.3 4.7 Other interest payable and similar charges 1.0 1.5 11.7 14.9

11 Income Tax 2013 2012 £m £m Cyprus corporation tax Current tax on income for the year 0.3 0.6 Foreign tax Current tax on income for the year 16.5 5.7 Adjustment in respect of prior years (3.3) (2.4) Total current tax 13.5 3.9

Net origination of temporary differences (0.3) (14.6) Impact of change in tax rate – (0.7) Total deferred taxation (0.3) (15.3) Tax expense/(benefit) for the year 13.2 (11.4)

The overall tax expense for the year of £13.2m is explained relative to the UK statutory rate of 24 per cent below: Total tax reconciliation Profit before tax 57.0 23.4 Tax at the UK corporation tax rate of 24% (2012: UK 26%) 13.7 6.1 Effects of – lower overseas tax rates (0.3) (9.0) – other expenditure that is not tax deductible 1.4 1.4 – adjustments in respect of prior years (3.3) (5.3) – unutilised losses 3.3 2.3 – tax effect of joint ventures (0.3) (5.3) – impact of change in UK tax rate (0.3) (0.7) – other adjustments (1.0) (0.9) Total tax charge/(credit) 13.2 (11.4)

112 Laing O’Rourke | Annual Review 2013 FINANCIALS 5. £m £m 8.8 113 2012 15 amount

able able Net-of-tax – £m £m 2013 2012 Tax credit

– – – £m £m 1.4 –1.4 1.4 (3.7) –(3.7) (3.7) (0.5) 0.1 (0.4) (2.8) 0.1 (2.7) amount Before-tax Before-tax £m 7.6 0.3 1.1 0.9 9.9 tion of debt and disposal of a subsidiary of a subsidiary and disposal debt of tion amount Net-of-tax – – £m (0.1) (0.5) (0.6) 2013 Tax expense her reduce the £0.7m. tax asset by an additional deferred £m 7.6 0.4 1.6 0.9 10.5 amount Before-tax Before-tax

2013 | Annual Review Laing O’Rourke These changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial in these financial not date and, included therefore, are sheet been substantively enacted at the balance These changes had not statements. 20 and to 20 per cent from 1 April tax to1 April 2014 of corporation in the main rate 21 per cent from reductions The proposed to the of these further enacted as part of the Finance Act 2013. to be changes, if applied overall effect The are both expected be to furt at the balance sheet date, would deferred tax balance income of comprehensive component each to relating Tax effects (see note 4 and note 7). (see note 4 and note 7). to the UK corporation tax system wereA number of changes and the announced in the 2012 Autumn Statement March 2013 UK 201 1 April cent from 1 April and to 20 per from tax reduces to 21 per cent 2014 of corporation The main rate Budget Statement. Interim dividends paid of £nil per ordinary share (2012: £972). per paid of £nil Interim dividends the payment (2012: £nil). of a final dividend do not recommend The Directors exceptional expenditure for impairments of land and developments, gain on renegotia developments, of land and expenditure for impairments exceptional 12 Dividends Exchange differences on translating foreign operations Available-for-sale financial assets 11 Income Tax continued continued Tax 11 Income to tax allow of £13.2m expense for the year The total tax relation (2012: £3.5m) in tax credit of £3.6m includes an exceptional

Share of other comprehensive income Share of other comprehensive income and associates of joint ventures Cash flow hedges NOTES TO THE FINANCIAL STATEMENTS

13 Intangible Assets Computer software and Goodwill Brands licences Total £m £m £m £m Cost At 1 April 2012 336.2 2.6 17.6 356.4 Acquisitions – – 4.3 4.3 Additions – – 2.0 2.0 Disposals – – (1.6) (1.6) Exchange differences 3.1 0.1 0.3 3.5 At 31 March 2013 339.3 2.7 22.6 364.6 Accumulated amortisation and impairment At 1 April 2012 0.8 1.9 13.9 16.6 Amortisation for the year – 0.3 2.8 3.1 Impairment 0.3 – – 0.3 Disposals – – (1.3) (1.3) Exchange differences – – 0.1 0.1 At 31 March 2013 1.1 2.2 15.5 18.8 Net book value at 31 March 2013 338.2 0.5 7.1 345.8

Cost At 1 April 2011 335.9 2.6 16.3 354.8 Additions – – 1.4 1.4 Disposals – – (0.1) (0.1) Transferred to disposal group classified as held-for-sale – – (0.1) (0.1) Exchange differences 0.3 – 0.1 0.4 At 31 March 2012 336.2 2.6 17.6 356.4 Accumulated amortisation At 1 April 2011 – 1.5 12.0 13.5 Amortisation for the year – 0.4 1.9 2.3 Impairment 0.8 – – 0.8 Disposals – – (0.1) (0.1) Exchange differences – – 0.1 0.1 At 31 March 2012 0.8 1.9 13.9 16.6 Net book value at 31 March 2012 335.4 0.7 3.7 339.8 Net book value at 31 March 2011 335.9 1.1 4.3 341.3

Acquisitions On 1 June 2012, the Group acquired the trade and certain assets of Symmetry Digital and Visual Limited, a company incorporated in Hong Kong. The consideration included £4.3m relating to computer software and is included within acquisitions above. Current year impairment During the year the Group fully impaired goodwill of £0.3m which related to an Australian scaffolding business, this amount is recognised in net non-operating (expense)/income.

114 Laing O’Rourke | Annual Review 2013 FINANCIALS

£m £m 2.3 115 2012 2012 56.5 278.9 335.4 £m £m 3.1 2013 2013 59.3 278.9 338.2

sed on four-year financial budgets approved by budgets approved sed on four-year financial 2013 | Annual Review Laing O’Rourke

Administrative expenses Administrative expenses United Kingdom United Kingdom in accordance value in use calculations on each cash generating unit is based of goodwill attached to The recoverable amount ba flow projections of Assets. Each calculation uses cash with IAS 36, Impairment Australia 13 continued Assets Intangible goodwill containing units cash-generating for tests Impairment of goodwill amounts units have significant The following management and a perpetual growth rate of 3 per cent (2012: 3 per cent), discounted at the Group’s pre-tax weighted cent), discounted rate of 3 per cent (2012: 3 per estimated growth management and a perpetual and margins are based on past performance gross per cent (2012: 12.5 per cent). Budgeted 10.0 capital of average cost of exceed the rate of 3 per cent (2012: 3 per cent) does not The estimated perpetual growth expectations. market management’s industry with cash-generating unit operates and is consistent the business in which the growth rate for long-term average for adjusted competitors, industry is a prudent estimate from listed The weighted average cost of capital forecast reports. structures. changes in capital value of the the recoverable internal value in use calculations, that management concluded As at 31 March based on the 2013, amount. cash generating units exceeded their carrying charge Amortisation in the line item in the following is recognised charge in respect of software,licences and brands The amortisation income statement:

NOTES TO THE FINANCIAL STATEMENTS

14 Investments in Joint Ventures and Associates Joint ventures Associates Loans equity equity to joint investments investments ventures Total £m £m £m £m Cost At 1 April 2012 19.2 13.3 115.3 147.8 Equity investment purchases 3.9 – – 3.9 Equity investment disposals (0.7) – – (0.7) Loans advanced – – 4.9 4.9 Loans repaid – – (2.3) (2.3) Impairment – – (2.6) (2.6) Exchange differences – – 2.8 2.8 At 31 March 2013 22.4 13.3 118.1 153.8 Share of post-acquisition results At 1 April 2012 (22.3) 0.1 – (22.2) Share of results for the year after tax 1.1 – – 1.1 Distributions received (23.3) – – (23.3) Exchange differences (1.1) 0.7 – (0.4) At 31 March 2013 (45.6) 0.8 – (44.8) Net book value at 31 March 2013 (23.2) 14.1 118.1 109.0

Cost At 1 April 2011 19.2 13.0 86.5 118.7 Equity investment purchases – 0.3 – 0.3 Loans advanced – – 34.7 34.7 Loans repaid – – (0.2) (0.2) Impairment – – (1.2) (1.2) Exchange differences – – (4.5) (4.5) At 31 March 2012 19.2 13.3 115.3 147.8 Share of post-acquisition results At 1 April 2011 (16.1) – – (16.1) Share of results for the year after tax 22.7 – – 22.7 Distributions received (30.7) – – (30.7) Exchange differences 1.8 0.1 – 1.9 At 31 March 2012 (22.3) 0.1 – (22.2) Net book value at 31 March 2012 (3.1) 13.4 115.3 125.6 Net book value at 31 March 2011 3.1 13.0 86.5 102.6

The Group’s 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 Group’s obligation to fund net liabilities of a joint venture or associate exceeds the amount loaned, a provision is recorded (see note 25).

116 Laing O’Rourke | Annual Review 2013 FINANCIALS £m £m (1.8) 117 2012 2012 Total 54.6 72.8 125.6 ow: ow: £m £m 2012 (1.6) 2013 51.5 59.1 109.0 Associates

– – – – – – – 4.4 4.4 – – – £m £m 5.1 (0.1) 5.0 (3.1) 13.4 10.3 (7.1) –(7.1) (7.1) (2.8) –(2.8) (2.8) 2012 24.7 0.1 24.8 29.8 –29.8–22.729.8 22.7 28.2 –28.2 28.2 (39.1) –(39.1) (39.1) 202.8 –202.8249.6 0.8202.8 250.4 164.9 9.6645.5 14.8 174.5 660.3 639.4 0.2 639.6 (205.0) (0.2)(404.5) (1.2) (205.2) (648.6) (1.4) (405.7) (650.0) (611.9) (0.1) (612.0) Jointventures – £m 4.4 0.1 2.6 1.4 1.1 (0.5) (9.1) (1.2) (0.3) 2013 23.7 Total (6.0) (35.2) 299.2 239.3 145.6 712.2 339.3 (211.2) (474.4) (721.3) (334.5) – – – – – – – – – – – – – – £m 4.4 0.9 (0.5) (1.0) (1.5) 2013 10.3 15.6 14.1 Associates – – – £m 0.1 2.6 1.4 1.1 (1.2) (0.3) 2013 23.7 (6.0) (35.2) (23.2) 298.3 239.3 135.3 696.6 339.3 (211.2) (473.4) (719.8) (334.5) Joint ventures

2013 | Annual Review Laing O’Rourke Other current liabilities Other current liabilities Profit after tax Profit after tax

Total liabilities

Net assets assets Net Financial commitments Capital commitments Borrowings Borrowings Current liabilities Non-current assets Goodwill Tax expense Net finance income/(expense) Revenue Expenses No impairment losses to equity investments were brought forward at 31 March 2013 or charged in the year (2012: equity investments were brought forward losses to £nil). at 31 March 2013 or charged No impairment out bel assets and liabilities of the Group’s in joint ventures and associates is set interest income, The analysis of revenue, Investments in joint ventures and associates andInvestments in joint ventures associates Loans to joint ventures 14 continued and Associates Joint Ventures in Investments as: in the statement financial position of are presented ventures and associates in joint investments The Group’s

Non-current liabilities Other non-current liabilities Exceptional items (see note 4) Exceptional Operating (loss)/profit Operating (loss)/profit Property, plant and equipment Property, Profit before tax Cash and cash equivalents Borrowings Other non-current assets Current assets Other current assets Total assets Provisions Provisions NOTES TO THE FINANCIAL STATEMENTS

15 Other Investments 2013 2012 Fair Value £m £m At 1 April 4.2 4.5 Impairment – (0.3) At 31 March 4.2 4.2

Disclosed within: Non-current assets – 4.2 Current assets 4.2 – 4.2 4.2

Other investments relates to mezzanine debt in a property development company. At 31 March 2013 the book value equated to fair value and is expected to be recovered within the next year. 16 Property, Plant and Equipment Group owner Plant, occupied Other land equipment property and buildings and vehicles Total £m £m £m £m Cost At 1 April 2012 16.3 26.5 488.7 531.5 Additions – 0.4 67.4 67.8 Disposals – (0.6) (58.3) (58.9) Transferred to disposal group classified as held-for-sale – – (4.5) (4.5) Exchange differences 0.2 0.5 10.0 10.7 At 31 March 2013 16.5 26.8 503.3 546.6 Accumulated depreciation At 1 April 2012 1.6 15.2 258.6 275.4 Depreciation charge for the year 0.2 1.6 48.0 49.8 Disposals – (0.4) (47.8) (48.2) Transferred to disposal group classified as held-for-sale – – (4.0) (4.0) Exchange differences – 0.4 5.2 5.6 At 31 March 2013 1.8 16.8 260.0 278.6 Net book value at 31 March 2013 14.7 10.0 243.3 268.0

Cost At 1 April 2011 21.2 26.7 508.9 556.8 Additions 1.6 0.2 47.9 49.7 Acquisitions 7.9 – – 7.9 Disposals (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 26.5 488.7 531.5 Accumulated depreciation At 1 April 2011 7.2 13.7 259.4 280.3 Depreciation charge for the year 0.2 1.7 50.0 51.9 Impairment 2.0 – 1.0 3.0 Disposals (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 15.2 258.6 275.4 Net book value at 31 March 2012 14.7 11.3 230.1 256.1 Net book value at 31 March 2011 14.0 13.0 249.5 276.5

Exceptional impairment charges were made during the prior year of £2.0m (see note 4).

118 Laing O’Rourke | Annual Review 2013 FINANCIALS – £m £m £m £m 2.8 1.5 2.5 3.5 0.7 3.5 0.2 (6.2) (0.3) (0.2) (0.4) (0.4) 119 2012 2012 2012 2012 10.3 38.8 16.1 20.1 28.5 26.3 22.1 17.4 (28.3) (99.2) (37.3) 264.6 165.4 154.8 Freehold – – – £m £m £m £m 0.7 0.7 1.7 2.5 3.5 0.7 1.8 0.1 (2.8) (1.7) (0.6) 2013 2013 2013 2013 59.0 14.9 19.1 38.3 75.2 38.8 22.4 (22.8) 256.1 154.8 123.0 (101.3) (124.3) Freehold

ture operating lease income commitments comprise: comprise: lease income commitments ture operating 2013 | Annual Review (2012: £0.3m). Direct operating expenses arising on investment properties not (2012: £0.3m). Direct operating expenses arising Laing O’Rourke Exchange differences Exchange differences Exchange differences Exceptional impairment The fair value of available-for-sale financial assets is determined from quoted prices in active markets. quoted from financial assets is determined The fair value of available-for-sale Available-for-sale financial assets include the following: Listed securities Fair value At 1 April Disposals 18 Assets Financial Available-For-Sale Due within one year Expiry date: date: Expiry Investment property income earned by the Group, all of which was received under operating leases, amounted to £2.4m (2012: amounted to received under operating leases, of which was all by the Group, Investment property income earned generating properties arising on investment Direct operating expenses £1.7m) and is shown as revenue statement. in the income the year amounted to £0.4m rental income in generating rental income in the year amounted to £nil (2012: £nil). generating rental income in the agreements. The leases have varying terms, non-cancellable operating lease are let under The Group’s investment properties fu and renewal rights. The Group’s escalating clauses At 1 April Transfers in 17 Investment Property Property 17 Investment Net book value Finance lease terms are between one and five years, see note 23 for ageing of finance lease obligations. of finance lease obligations. one and five years, see note 23 for ageing Finance lease terms are between Additions/acquisitions Additions/acquisitions Cost at 1 April at 1 April Accumulated depreciation 16 continued Equipment Plant and Property, equipment amounts: leases held under finance and vehicles’ are assets Included in ‘plant, Finance leases: at the following

Unlisted securities Unlisted securities Net losses transferred to equity Net losses transferred to equity At 31 March Exchange differences Exchange differences Net book value at 1 April at 1 April Net book value out on disposals/transfers Depreciation Due between one and five years Due after more than five years At 31 March Net book value at 31 March book value Net

Cost of disposals/transfers out Cost of disposals/transfers for the year Depreciation charge Disposals NOTES TO THE FINANCIAL STATEMENTS

19 Derivative Financial Instruments 2013 2012 Assets Liabilities Assets Liabilities £m £m £m £m Current portion: Foreign exchange fair value hedges – – 0.1 – Foreign exchange cash flow hedges 2.6 – – – Forward foreign exchange contracts 0.2 (0.7) 0.1 (0.7) Total derivative financial instruments 2.8 (0.7) 0.2 (0.7)

Foreign Exchange Fair Value Hedges During the year the Group fully repaid funds borrowed in a foreign currency to hedge the foreign currency exposure of future income. No gains or losses were recognised in the period to 31 March 2013 (2012: £nil). There were no ineffective portions to be recognised in the profit or loss account arising from fair value hedges (2012: £nil). Foreign Exchange Cash Flow Hedges The cashflow hedge is to hedge forecast revenue which is denominated in a foreign currency. The hedge instruments are forward exchange contracts designed to minimise the risk of exchange fluctuation in future revenue. The gain from remeasuring the hedge instruments at fair value is recognised in other comprehensive income to the extent that the hedge is effective. In the year ended 31 March 2013, the ineffective hedge portion recognised in the income statement is £nil (2012: £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. 20 Restricted Financial Assets 2013 2012 £m £m Restricted cash deposits 0.3 0.4

At 31 March 2013 £0.3m (2012: £0.4m) 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. 21 Inventories 2013 2012 £m £m Development land and work in progress 277.7 257.9 Raw materials and consumables 8.4 10.4 Finished goods and goods for resale 3.6 6.0 289.7 274.3

Development land and work in progress at 31 March 2013 includes assets to a value of £144.7m (2012: £193.2m) 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 increased in the year by £0.1m (2012: decreased by £1.0m). Inventories carried at fair value less costs to sell at 31 March 2013 had a carrying value of £47.7m (2012: £8.9m).

120 Laing O’Rourke | Annual Review 2013 FINANCIALS £m £m £m 2.6 7.4 of

ng 121 2012 2012 2012 65.3 97.9 10.0 32.6 49.1 29.5 39.5 20.0 lease 132.2 181.3 279.2 247.2 137.4 453.6 473.6 Minimum payments £m £m £m 2.4 4.9 2012 2013 2013 33.0 72.4 49.4 29.0 39.5 17.5 24.8 119.6 152.6 121.8 274.4 307.6 123.3 499.4 524.2 Principal

– – – £m £m 2.9 32.62.5 49.1 35.5 5.4 81.7 51.6 87.1 2012 Interest Interest £m 0.7 2013 35.6 50.7 87.0 lease Minimum payments £m 0.7 2013 33.0 48.7 82.4 Principal – £m 2.6 2.0 4.6 2013 Interest

2013 | Annual Review Laing O’Rourke Finance lease obligations Finance lease obligations Obligations under finance leases are secured by legal charges on certain non-current assets of the Group with an original cost on certain non-current assets of the Group with an original cost charges Obligations under finance leases are secured by legal £154.8m). £256.1m) and total net book value of £123.0m (2012: £172.7m (2012: Less than one year Between one and five years Total borrowings are secured on the assets to which they relate. £197.5m) (2012: Bank loans amounting to £192.0m obligations lease Finance Finance lease obligations are payable as follows: Amounts expected to be settled after more than one year: one year: than more after settled to be expected Amounts Bank loans Bank loans Amounts expected to be settled within one year: year: one within settled to be expected Amounts 23 Borrowings 23 Borrowings At 31 March 2013, trade and other receivables include retentions of £86.9m (2012: £94.1m) relating (2012: of £86.9m contracts of to construction receivables include retentions At 31 March 2013, trade and other Total trade and other receivables Amounts expected to be recovered after more than one year: year: one than more after recovered to be expected Amounts on construction contracts customers due from Gross amounts Amounts expected to be recovered within one year: year: one within recovered to be expected Amounts on construction contracts customers due from Gross amounts 22 Receivables and Other Trade which £17.5m (2012: £7.4m) are non-current assets.which £17.5m (2012: was received as an advance (2012: £356.1m) and is included 2013, £335.1m at 31 March contracts in progress For construction (see note 24). in trade and other payables contracts within advance payments on construction via recognised The net losses (2012: £15.6m). receivables amounted to £11.7m provision for trade At 31 March 2013 the bad debt which has £1.2m (2012: £12.1m) to and other receivables in the year to 31 March 2013 amounted write off or impairment of trade written off, the remaini provided for have now been fully previously expenses, £5.9m of debts in administrative been recognised is a result of exchange rate fluctuations.£0.8m movement

Other receivables Other receivables More than five years Finance lease obligations Other receivables Other receivables Trade receivables Trade receivables income and accrued Prepayments NOTES TO THE FINANCIAL STATEMENTS

24 Trade and Other Payables 2013 2012 £m £m Amounts expected to be settled within one year: Advance payments on construction contracts 315.1 356.1 Trade payables 316.4 257.8 Other tax and social security 24.9 32.9 Other payables 106.8 109.0 Accruals and deferred income 531.9 471.5 1,295.1 1,227.3 Amounts expected to be settled after more than one year: Advance payments on construction contracts 20.0 – Trade payables 20.8 11.0 Other payables 3.0 2.2 Accruals and deferred income 26.8 16.9 70.6 30.1 Total trade and other payables 1,365.7 1,257.4

At 31 March 2013, trade and other payables include retentions of £71.2m (2012: £80.8m) relating to construction contracts of which £20.2m (2012: £10.3m) are non-current liabilities. 25 Provisions Insurance technical Employee Joint venture Total provisions provisions provisions provisions £m £m £m £m At 1 April 2012 29.4 5.1 1.8 36.3 Provisions created 4.6 0.7 0.1 5.4 Provisions utilised (0.6) – (0.3) (0.9) At 31 March 2013 33.4 5.8 1.6 40.8 Disclosed within: Current liabilities 10.9 3.0 1.6 15.5 Non-current liabilities 22.5 2.8 – 25.3 33.4 5.8 1.6 40.8

At 1 April 2011 25.3 5.0 4.1 34.4 Provisions created 5.2 0.1 0.5 5.8 Provisions 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 7.5 Non-current liabilities 26.4 2.4 – 28.8 29.4 5.1 1.8 36.3

Insurance provisions relate to provisions held by the Group’s captive insurer Laing O’Rourke 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 2013 these provisions amounted to £1.6m (2012: £1.8m) which were measured in accordance with the Group’s 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.

122 Laing O’Rourke | Annual Review 2013 FINANCIALS – – £m £m £m £m 6.7 Net (7.9) 123 2012 2012 (3.9) 2013 12.3 14.0 18.4 11.7 18.4 12.2 24.0 20.1 2012 As at As at in 31 March 31 March 31 March – – – £m £m £m £m 0.1 18.4 Net 0.7 7.1 (0.6) (3.9) (0.6) 2013 24.0 20.1 19.4 20.1 2013 in equity in equity Recognised Recognised Recognised Recognised

– – – – £m £m £m £m 4.0 8.6 0.3 0.3 (8.0) (8.0) (3.4) (4.6) (8.0) 2012 (12.3) Liabilities Liabilities in income income in in income income in Recognised Recognised Recognised Recognised – – – – £m £m £m 2.0 2.0 (6.4) (6.4) (0.4) (6.0) (6.4) 2013 and other and other Liabilities Exchange Exchange movements movements movements movements £m £m £m 0.1 0.1 (0.1) 12.3 – 12.3 8.7 3.1 2.1 0.1 14.0 (0.2) 0.2 (7.9) (7.1) (1.7) 0.9 – (7.9) 2012 2011 2012 12.3 11.3 14.0 26.4 15.1 26.4 14.0 12.3 18.4 oyee benefits, project accruals and cost provisions have provisions and cost accruals project oyee benefits, As at As at 1 April 1 April Assets – £m 2.5 6.7 2013 24.0 26.5 19.8 26.5 Assets 2013 | Annual Review utable to the following; following; utable to the Laing O’Rourke

Tax losses carried forward Tax losses Tax losses to unused tax losses. The tax losses have arisen in the Group tax assetsdeferred of £7.1m relating The Group has unrecognised asset has been recognised No deferred tax use against part of future profits. future periods for and can be carried forward to Other items relate to Laing O’Rourke Australia Pty Limited where empl Australia Pty Limited to Laing O’Rourke Other items relate Intangible assets Property, plant and equipment Property, Other items Tax losses carried forward 1.5 be taxed in another. will one period but been charged in 1.5Unrecognised deferred tax assets and liabilities Deferred tax assetsitems: have not been recognised in respect of the following 15.3 in using the losses. the constraints and respect of these amounts due to the unpredictability of future taxable profits Property, plant and equipment Property, Other items Movements in deferred tax assets and liabilities during the year The ageing of deferred tax assets/(liabilities) at the year-end was:deferred The ageing of Less than one year Other items Other items Recogniseddeferred tax assets and liabilities plant and equipment Property, 26 and Liabilities Assets Tax Deferred assetsDeferred tax are attrib and liabilities

Deferred tax assets/(liabilities) Deferred tax assets/(liabilities)

Tax losses carried forward Tax losses carried forward More than one year NOTES TO THE FINANCIAL STATEMENTS

27 Non-current Assets Held-for-sale and Discontinued Operations Discontinued operations relate to the assets and liabilities of the Group’s German operations following the approval to sell by the group’s management and Directors on 9 February 2012. The sale of the assets completed on 27 September 2012. Held-for-sale assets relate to certain items of plant and equipment held by Laing O’Rourke Australia Holdings Limited, a subsidiary of the Group. 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.

2013 Discontinued 2013 2013 2012 operations Held-for-sale Total Total £m £m £m £m Assets of disposal group classified as held-for-sale Property, plant and equipment 0.2 5.5 5.7 11.9 Inventory – – – 1.3 Other current assets 0.9 – 0.9 0.6 1.1 5.5 6.6 13.8 Liabilities of disposal group classified as held-for-sale Trade and other payables (1.1) – (1.1) (3.8) Other current liabilities (0.1) – (0.1) (1.1) (1.2) – (1.2) (4.9) Cumulative income or expense recognised in other comprehensive income relating to disposal group classified as held-for-sale Foreign exchange translation adjustments (3.2) – (3.2) (4.0) Cash flows of discontinued operations Operating cash flow (3.2) – (3.2) (0.5) Investing cash flow 3.9 – 3.9 0.1 Financing cash flow – – – – 0.7 – 0.7 (0.4)

Analysis of the results of discontinued operations, and the result recognised on re-measurement of disposal groups Discontinued Operations 2013 2012 £m £m Revenue 2.1 5.2 Expenses (3.3) (6.8) Exceptional items (see note 4) (2.5) (2.1) Loss before tax of discontinued operations (3.7) (3.7) Income tax benefit/(expense) 1.0 (0.1) Loss after tax of discontinued operations (2.7) (3.8) 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 (2.7) (6.1)

Closure costs and re-measurement of assets of the disposal group are included as exceptional items, see note 4.

124 Laing O’Rourke | Annual Review 2013 FINANCIALS

£m £m 9.9 125 (0.6) 51.0 Total 41.1 equity 564.7 615.1 Share 286.4 ts premium premium £m 0.2 1.0 3.0 2.6 0.8 (0.6) Non- interests 9,000 controlling controlling €1 shares Number of

£m £m 9.7 9.7 50.0 50.0 40.3 40.3 Total

equity equity 612.1 612.1 562.1 562.1 shareholders’ – – £m 40.3 40.3 270.3 230.0 earnings Retained – – £m 8.3 8.3 55.7 47.4 reserve Foreign currency translation – – – £m 1.1 1.1 1.1 reserve Hedging – – £m 0.3 0.3 (1.4) (1.7) reserve Fair value – – – – £m £m 2013 | Annual Review Share 286.4 286.4 286.4 premium premium – – – – – 319.4 (1.3) – 50.0 210.4 578.5 2.6 581.1 – – – – – – – 28.4 28.4 0.3 28.7 £m £m Laing O’Rourke share capital capital Called-up Called-up

At 31 March 2013 At 31 March 2013 that hedge the Group’s net investment in foreign operations. The translation reserve also includes any related current tax. that hedge the Group’s net investment in foreign operations. The translation reserve also includes Retained earnings by the Group less distributions. income retained Retained earnings relate to the proportion of net related to hedged transactions that have not yet with any related deferred tax. occurred, together related to hedged reserve Foreign currency translation the financial statements of differences arising from the translation of all foreign exchange The translation reserve comprises in the fair value of instrumen and the cumulative net change foreign operations, as well as from the translation of liabilities Share premium premium Share its share premium a resolution to reduce passed Limited Corporation O’Rourke Laing period, reporting During the prior by €37.7m. Fair value reserve cumulative net change in theThe fair value reserve includes the fair value of available-for-sale financial assets until the tax. together with any related deferred investment is de-recognised, Hedging reserve of the cumulative net change in fair value of cash flow hedging instruments the effective portion reserve comprises The hedging Total comprehensive Total comprehensive the year income for Dividends paid Profit for the year Profit for Other comprehensive income after tax Total comprehensive Total comprehensive the year income for Reduction in share premium paid Dividends At 31 March 2012 – – – – (33.0) (0.4) – – – – (2.6) – 28.4 – – 25.4 – – 0.6 (8.8) (33.0) 26.0 (8.8) – (0.6) (33.0) (9.4) At 1 April 2011 At 1 April 2011 the year Profit for Other comprehensive income after tax – – (0.4) – (2.6) – (3.0) 0.3 (2.7) 29 Equity in Shareholders’ Movements of Reconciliation At 1 April 2012 and at 31 March 2013 at 31 March 2013 At 1 April 2012 and of €1 each ordinary shares at 31 March 2013 was 18,000 Corporation Limited of Laing O’Rourke share capital The authorised (2012: 18,000 shares). 28 Capital and Premium Share

NOTES TO THE FINANCIAL STATEMENTS

30 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 Group’s own contracts. The Group has given guarantees in respect of its share of certain contractual obligations of joint ventures and associates. At 31 March 2013, 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 (2012: £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. 31 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 Group’s financial risk management policies is to minimise potential adverse effects on financial performance and net assets. The Group’s 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. 31.1 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 Group’s financial assets and liabilities, were as follows:

Pound sterling value of equivalent currency (m) 2013 2013 2013 2013 2013 2013 2013 2013 2013 Total GBP EUR AUD AED SAR CAD HKD Other £m Loans to joint ventures 19.2 64.3 34.6 – – – – – 118.1 Other investments 4.2 – – – – – – – 4.2 Trade and other receivables 289.1 1.8 129.0 52.5 32.4 0.6 0.9 0.6 506.9 Available-for-sale financial assets – 0.7 – – – – – – 0.7 Derivative financial instruments 0.2 – 2.6 – – – – – 2.8 Restricted financial assets 0.2 – – 0.1 – – – – 0.3 Cash and cash equivalents 357.9 7.6 234.8 10.9 5.0 47.5 14.6 5.7 684.0 Total financial assets 670.8 74.4 401.0 63.5 37.4 48.1 15.5 6.3 1,317.0

Borrowings (147.3) – (127.1) – – – – – (274.4) Derivative financial instruments – – (0.7) – – – – – (0.7) Trade and other payables (774.5) (3.0) (426.1) (55.0) (1.9) (46.1) (30.3) (4.5) (1,341.4) Net financial (liabilities)/assets (251.0) 71.4 (152.9) 8.5 35.5 2.0 (14.8) 1.8 (299.5)

Other cash and cash equivalents include £3.9m held in USD.

126 Laing O’Rourke | Annual Review 2013 FINANCIALS £m re 127 2012 Total 2012 Other

HKD 2012 CAD 2012 SAR 2012 AED 2012 changed adversely by 10 per cent at the balance sheet date, the per cent at the balance sheet date, adversely by 10 changed Pound sterling value of equivalent currency (m) currency (m) of equivalent value Pound sterling AUD 2012 EUR 2012 2013 | Annual Review e contracts are taken out for all material foreign currency receivables and payables whe receivables and payables currency e contracts are taken out for all material foreign – – – – – – – (0.7)(0.7) – – – – – – – – 3.5 – – – – – –3.5 – – – – – 3.5 – 4.2 – – – – – – –4.2 – – – – – – –0.2 – – – – – – 4.2 0.2 GBP 2012 671.8 83.5 238.6 80.3 51.2 31.5 21.4 5.6 1,183.9 Laing O’Rourke (192.6) – (68.1) – (6.9) – – (11.6) (279.2)

they differ from the functional currency of the Company or subsidiary. Company or subsidiary. the functional currency of the they differ from had is exposed to If the foreign exchange rates that the Group £2.0m). This sensitivity analysis takes into account the tax the year and equity would have decreased by £2.8m (2012: profit for contracts in place. exchange impact and the forward instruments Borrowings Derivative financial instruments 78.8(116.9) payables Trade and other Net financial (liabilities)/assets (316.1) (795.3) (4.2) used to finance non-UK operations of borrowings the amount (2012: £86.6m), of £127.1m Of the total foreign currency borrowings (4.7) (2012: £86.6m). amounts to £127.1m 40.7It is Group policy that forward exchang (287.4)(11.9)(320.5) (84.5) 15.2 (3.6) (6.1) (16.3) (27.5) (5.2) (1,224.5)

instruments receivables Trade and other Available-for-sale 236.6 financial assets Derivative financial instruments 3.8 Restricted financial assets 107.0Cash and cash equivalents Total financial assets 0.2 415.5 67.3 10.2 0.1 43.2 97.3 – 0.4 12.9 0.1 0.6 8.0 0.8 – 31.1 459.7 20.8 – 4.8 – 600.6 – 0.4 Other investments investments Other Loans to joint ventures Loans to joint ventures 15.1 65.9 34.3 – – – – – 115.3 31 continued Instruments Financial 31.1 Foreign Currency continued Risk

NOTES TO THE FINANCIAL STATEMENTS

31 Financial Instruments continued 31.2 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 Between Effective Within one and two After interest Total one year years two years rate £m £m £m £m % At 31 March 2013 Bank loans 192.0 119.6 14.0 58.4 4.82% Finance lease obligations 82.4 33.0 27.2 22.2 4.50% 274.4 152.6 41.2 80.6 4.63% At 31 March 2012 Bank loans 197.5 65.3 58.9 73.3 4.19% Finance lease obligations 81.7 32.6 27.4 21.7 4.83% 279.2 97.9 86.3 95.0 4.59%

If interest rates had been 1 per cent higher during the period, profit and equity would have reduced by £2.1m (2012: £2.1m). This sensitivity analysis takes into account the tax impact. 31.3 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 Group’s non-current liabilities including interest is as follows:

Trade and other Finance payables Bank loans leases Total £m £m £m £m At 31 March 2013 Between one and less than two years 37.6 16.7 28.5 82.8 Between two and less than five years 15.5 57.5 22.2 95.2 Five or more years 5.7 4.7 0.7 11.1 58.8 78.9 51.4 189.1 At 31 March 2012 Between one and less than two years 24.5 69.8 29.0 123.3 Between two and less than five years 5.6 74.1 22.6 102.3 Five or more years – 6.7 – 6.7 30.1 150.6 51.6 232.3

128 Laing O’Rourke | Annual Review 2013 FINANCIALS

– t £m £m 129 2012 2012 the the 81.7 79.4 ted ws 161.1 . ance r nancial trade Group Impairment Impairment between – £m £m 9.85.8 – – 2012 2013 21.0 (15.6) 95.723.3 – – 53.3 Gross Gross 155.6 (15.6) 105.6 158.9 receivables

– – – – £m 2013 (11.7) (11.7) (11.7) trade and other receivables Impairment Impairment £m 5.4 2013 15.2 83.2 19.1 14.5 Gross 137.4 receivables impairment of its loan assets, hierarchy classifies each class of financial instrument depending on depending classifies each class of financial instrument hierarchy 2013 | Annual Review Laing O’Rourke The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales are made in place to ensure that sales are made has policies risk. The Group of credit concentrations The Group has no significant receivables. its the ageing profile of on a continuing basis and monitors history credit an appropriate to customers with institutions. Cash balances are held with high credit quality financial Values Fair 31.5 fair value in the investments, available-for-sale fi are other statement of carried at financial position Financial instruments assets and derivative financial instruments. The following future cash flows using asset specific discount rates. rates. future cash flows using asset specific discount or preceding year. There have been no transfers between these categories in the current Receivables at 31 March 2013 that are more than one year past due date but not impaired amount to £3.5m (2012: £5.4m). amount to £3.5m (2012: impaired are more than one year past due date but not March 2013 that Receivables at 31 of these balances. that there isrespect no material exposure in The Group believes is no further believes there management experience and an assessment of the current economic environment, Based on prior in excess of the normal provision for provision required credit risk from financial assets on hand at the balance sheet date. The Group’s credit risk is primarily attributable to its loan assets, on hand atattributable to its the balance sheet is primarily from financial assets date. The Group’s credit risk is estimated to be the difference instruments The fair value of derivative financial directly or indirectly. either liability, of the instrument, and the current forward price for the residual maturity of the instrument at the bal the fixed forward price sheet date. expec is calculated by discounting Level 3: The fair value is based on unobservable inputs. The fair value of other investments Not past due Not past due Past due 0-30 days 31.4 Credit Risk Risk Credit 31.4 the amount of future cash inflo could reduce their obligations by counterparties to discharge when a failure Credit risk arises Expiring within one year within Expiring one and two years between Expiring 31 continued Instruments Financial 31.3 Liquidity continued Risk facilitiesBorrowing precedent facilities year-end in respect of which all conditions at the borrowing undrawn committed The Group has the following had been met: and other receivables. at the year-endThe was: receivables ageing of trade value. valuation technique applied in determining its fair assets or liabilities. The for identical traded in active markets quoted prices Level 1: The fair value is calculated based on a per unit market price closing based on the investments which are tradedmarkets and valued in active holds available-for-sale 31 March 2013. Level 1 that are observable for the asset o included within than quoted prices Level 2: The fair value is based on inputs other

Past due 121-365 days Past due 121-365 More than one year Past due 31-120 days Past due 31-120 Expiring in more than two years in more Expiring

NOTES TO THE FINANCIAL STATEMENTS

31 Financial Instruments continued 31.5 Fair Values continued Financial instruments measured at fair value:

Fair value measurement 2013 Fair value measurement 2012 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total £m £m £m £m £m £m £m £m Other investments – – 4.2 4.2 – – 4.2 4.2 Derivative financial instruments – 2.1 – 2.1 – (0.5) – (0.5) Available-for-sale financial assets 0.7 – – 0.7 3.5 – – 3.5 0.7 2.1 4.2 7.0 3.5 (0.5) 4.2 7.2

The fair value movements on other investments and certain derivative financial instruments are recognised in the consolidated income statement. The fair value movements on available-for-sale financial assets and cash flow hedges are recognised in the statement of comprehensive income. The carrying and fair values of the Group’s financial instruments at 31 March 2013 and 31 March 2012 are as follows:

Carrying Carrying Fair value amount Fair value amount 2013 2013 2012 2012 £m £m £m £m Other investments 4.2 4.2 4.2 4.2 Derivative financial instruments 2.1 2.1 0.9 0.9 Available-for-sale financial assets 0.7 0.7 3.5 3.5 Loans and receivables 625.0 625.0 575.0 575.0 Financial liabilities measured at amortised cost (1,615.8) (1,615.8) (1,503.7) (1,503.7)

The carrying and fair values of the Group’s financial instruments were not materially different at 31 March 2013. Loans, receivables and financial liabilities are valued at their amortised cost which is deemed to reflect fair value due to their short-term nature. 31.6 Capital Risk Management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, to maintain an optimal capital structure to reduce the cost of capital and to comply with the insurance capital required by the Regulator, The Companies (Guernsey) Law, 2008 and The Insurance Business (Bailiwick of Guernsey) Law, 2002. 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 2013 the Group had net funds of £409.6m (2012: £321.4m); see note 37. The Group is required to hold regulatory capital for its captive insurance company in compliance with the rules issued by the Guernsey Financial Services Commission. The Company must hold assets in excess of the higher of two amounts. The first is based on a fixed per centage of premium income. The second is based on a fixed per centage of claims outstanding (including claims incurred but not reported). In addition the Company must complete an own risk solvency assessment which is reviewed by the Guernsey Financial Services Commission. The Group’s capital is sufficient to meet all regulatory requirements.

130 Laing O’Rourke | Annual Review 2013 FINANCIALS

d £m £m 0.4 131 2012 2012 Other xternal £m £m 0.3 2012 2013 27.669.8 5.5 10.5 140.1 – 237.5 16.0 buildings Land and

– £m 5.7 5.7 5.5 2013 11.2 11.2 Other Other £m 2013 27.2 76.7 132.2 236.1 Land and buildings re claims. The cash by the Company are reported balances held re claims. The 2013 | Annual Review and equipment, authorised and contracted for which has not been provided for in the been provided for which has not and contracted and equipment, authorised Laing O’Rourke

insurance companies. The standby letters of credit have been issued via banking facilities that Laing O’Rourke Insurance Limite Laing O’Rourke that facilities banking have been issued via The standby letters of credit insurance companies. 36). Limited (see note Properties of Sycamore the Group following the acquisition purpose in PPP special investments debt further equity funding and subordinated its share of provide The Group has committed to £35.8m). entities amounting to £38.6m (2012: within cash and cash equivalents. As is usual practice for captive insurance companies some of the cash is used insurance companies some of the cash equivalents. As is usual practice for captive within cash and cash as collateral to certain e £34.0m) have been provided (2012: credit to the value of £36.2m letters of standby against contingent liabilities, Future commitments have been computed on current rental payments which are subject to periodic review. review. current rental payments which are subject to periodic on have been computed Future commitments a commitment for be over the next 10 years that will no-longer of £21.6m payable includes financial commitments The table above Due within one year operated by its captive insurance subsidiary company, Laing O’Rourke Insurance Limited. This Company is a wholly owned wholly This Company is a Insurance Limited. Laing O’Rourke company, insurance subsidiary by its captive operated held to meet futu are paid and premiums of the Group subsidiary has in place. to the Group as collateral (2012: £nil). have been provided No financial assets date: Expiry Capital expenditure for property, plant Capital expenditure 33 Commitments Capital and Financial financial statements amounted to £14.7m (2012: £3.2m) in the Group. (2012: financial statements amounted to £14.7m agreements. operating lease assets under non-cancellable and other various equipment land and buildings, The Group leases and renewal rights. The lease expenditure charge to the income statement escalating clauses The leases have varying terms, payments comprise: lease minimum in note 5. The Group’s future aggregate is disclosed Financial assets pledged as short-term collateral and included within cash equivalents were £37.1m (2012: £34.9m). cash equivalents were £37.1m (2012: £34.9m). within and included as short-term collateral Financial assets pledged self insurance programmes is managed through risk of this of its insurable risks a proportion management As part of the Group’s Restricted financial assets Restricted financial assets 32 for Assets as Security Accepted Collateral and Liabilities for Charged as Security Assets as follows: liabilities are pledged to secure Financial assets

Due between one and five years Due after more than five years NOTES TO THE FINANCIAL STATEMENTS

34 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 14.

2013 2012 Income Income earned Receivable at earned Receivable at in year year-end in year year-end Sale of goods and services provided to related parties £m £m £m £m Jointly controlled entities 125.5 63.8 251.5 49.6

2013 2012 Expenses Payables at Expenses Payables at paid in year year-end paid in year year-end Purchase of goods and services provided by related parties £m £m £m £m Jointly controlled entities – 0.5 2.9 1.0

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. Property Leases During the year the Group incurred expenditure of £3.4m (2012: £3.6m) with Sycamore Properties Limited, £2.0m (2012: £2.2m) with Mark Holding and Finance Limited and £7.1m (2012: £7.1m) with Steetley Investments Limited in respect of amounts due under lease agreements for premises occupied by the Group. During the year the interests in Sycamore Properties Limited, Mark Holding and Finance Limited and Steetley Investments Limited were held in trust, the beneficiaries of which are R G O’Rourke KBE and H D O’Rourke, who are also the beneficiaries of the trusts which ultimately own Suffolk Partners Corporation. At the year-end the balance outstanding to Sycamore Properties Limited was £0.7m (2012: £nil), to Mark Holding and Finance Limited was £0.5m (2012: £nil) and to Steetley Investments Limited was £nil (2012: £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 April 2013, Explore Capital Limited, a subsidiary of the Group, acquired 100 per cent of the share capital of Sycamore Properties Limited (‘Sycamore’). Prior to the acquisition the interests in Sycamore were held in trust, the beneficiaries of which are R G O’Rourke KBE and H D O’Rourke, who are also the beneficiaries of the trusts which ultimately own Suffolk Partners Corporation. Further details are provided in note 36. Loans During the year, the Group loaned £2.4m (2012: repaid £7.5m) to its ultimate parent company, Suffolk Partners Corporation. The loan is subject to interest at commercial rates. At the year-end the balance outstanding was £15.3m (2012: £12.4m). The Group has a minority share of a syndicated senior debt facility jointly repayable from Southside & City Developments Limited and KDC Properties Limited. The Group’s interest in the senior debt facility ranks pari-passu with other lenders, who are financial institutions. During the year the group loaned £1.4m (2012: £6.7m) to Southside & City Developments Limited. The loans entered into are based on normal commercial terms. C Klerides and V Papadopoulos are Directors of Laing O’Rourke Corporation Limited and Southside & City Developments Limited. At the year-end the fair value of the amounts outstanding was £9.2m (2012: £7.1m). 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 £0.5m (2012: £1.0m) to Augur Investments Limited. Suffolk Partners Corporation is the ultimate parent company of Laing O’Rourke 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 £3.8m (2012: £3.2m). In the opinion of the Directors the agreements entered into are based on normal commercial terms.

132 Laing O’Rourke | Annual Review 2013 FINANCIALS t – . r

£m (0.5) 133 2012 89.3 38.6 70.3 (31.2) 282.8 321.4 (19.0) rke rke £m 9.4 2013 37.7 10.8 88.2 69.3 (39.0) 107.0 321.4 409.6

2013 | Annual Review ny of Laing O’Rourke Corporation Limited is Suffolk Partners Corporation, a company a company Corporation, Partners is Suffolk Limited Corporation Laing O’Rourke ny of Laing O’Rourke ventures and associates and associates ventures Foreign exchange translation differences Net funds at 1 April New finance leases Increase/(decrease) in cash and cash equivalents for the year lease financing Cash inflow from debt and 37 in Net Funds Movement Cash Flow to Net of Reconciliation 36 Period Events after the Reporting cent of the share capital of Sycamore per 100 Explore Capital Limited, a subsidiary of the Group, acquired On 30 April 2013, Group. Prior to by the occupied that own property currently Sycamore is a group of companies (‘Sycamore’). Properties Limited H D O’Rourke, in trust, O’Rourke KBE and which are R G interests in Sycamore were held the beneficiaries of the acquisition the incorporated in the British Virgin Islands. the British incorporated in the beneficiaries of which are R G O’Rou Corporation are held in trusts, Partners capitalThe interests in the share of Suffolk 35 Ultimate Parent Company Company Parent 35 Ultimate compa parent The immediate and ultimate At 31 March 2013 loans to joint ventures amounted to £118.1m (2012: £115.3m) and loans from joint ventures amounted to amounted to ventures amounted and loans from joint (2012: £115.3m) to £118.1m ventures 2013 loans to joint At 31 March received management fees from to, and services of business the Group provided the normal course During £52.3m (2012: £6.6m). and associates a Amounts due to and from joint ventures £2.3m). to £2.2m (2012: and associates amounting certain joint ventures 34 continued and Balances Transactions Party Related Loans to and from joint 31 March 2013 are disclosed within investments in joint ventures and associates, trade and other receivables and trade and othe trade and other investments in joint ventures and associates, within 31 March 2013 are disclosed 14, 22 and 24 respectively. payables in notes KBE and H D O’Rourke. Suffolk Partners Corporation. which ultimately own who are also the beneficiaries of the trusts The fair value of the net assets acquired were was fully paid. consideration of £7.3m which was made for cash The acquisition are deemed tobe required under acquisition accounting adjustments and currently no fair value equal to the cash consideration,

Net funds at 31 March at 31 funds Net Non-cash exceptional items Non-cash exceptional items Movement in net funds in the year year the in funds net in Movement Change in net funds resulting from cash flows flows from cash net funds resulting in Change NOTES TO THE FINANCIAL STATEMENTS

38 Principal Subsidiaries, Jointly Controlled Entities and Associates Group interest in ordinary voting Country of incorporation Principal subsidiaries Principal activity shares or registration Austrak Pty Limited Manufacture of construction products 100% Australia 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 100% England and Wales and demolition 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 Manufacture of construction products 100% England and Wales John Laing International Limited Overseas contracting 100% England and Wales Laing O’Rourke Australia Construction Building contracting, civil engineering, 100% Australia Pty Limited infrastructure and plant hire Laing O’Rourke Australia Holdings Limited Holding company 100% Cyprus Laing O’Rourke Australia Pty Limited Holding company 100% Australia Laing O’Rourke Canada Limited Building contracting 100% Canada Laing O’Rourke Construction Limited Building contracting, civil engineering 100% England and Wales and infrastructure Laing O’Rourke Construction Hong Kong Limited Building contracting, civil engineering 100% Hong Kong and infrastructure Laing O’Rourke Infrastructure Limited Civil engineering and infrastructure 100% England and Wales Laing O’Rourke Ireland Holdings Limited Holding company 100% Cyprus Laing O’Rourke Ireland Limited Building contracting 100% Ireland Laing O’Rourke Middle East Holdings Limited Building contracting and civil engineering 100% Cyprus Laing O’Rourke plc Holding company 100% England and Wales Laing O’Rourke Services Limited Service company 100% England and Wales Laing O’Rourke Utilities Limited Utilities contracting 100% England and Wales Naturstein Vetter GmbH Finished stone products 94% Germany O’Rourke 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

134 Laing O’Rourke | Annual Review 2013 FINANCIALS is 135 n Australia

Country of incorporation Country of incorporation or registration

60% Wales England and 50% Wales England and 45% Wales England and 50% Wales England and 80% Wales England and 50% Canada 40% Wales and England 40% Wales and England 40% Wales England and 40% Wales and England 40% Wales and England 50% Australia 25% Australia 40% Wales and England 50% Ireland 40% Wales England and 40% Arab Emirates United 80% Wales England and 40% Wales England and Group 37.5% Wales England and 67.5% Australia interest ownership ools ools 68% Wales England and schools schools 68% Wales England and erator schools schools erator 40% Wales England and ion operator hospital ion operator 25% Canada odation operator schools schools operator odation odation operator schools schools operator odation mmodation operator hospital operator mmodation tructure and building construction tructure and building construction 43% Hong Kong ter than 50 per cent ownership interest in a number of jointly controlled a number of jointly interest in ter than 50 per cent ownership Civil engineering Civil engineering PFI accommodation operator schools schools operator PFI accommodation Affordable housing Affordable housing Civil engineering Delivery partner for 2012 Olympics Olympics for 2012 Delivery partner Civil engineering Civil engineering Infrastructure and building construction Infrastructure and building construction 50% Hong Kong Civil engineering Civil engineering Housing construction Housing construction 33.3%

Principal activity activity Principal Property development Property development Rail Infrastructure Infrastructure and building construction 55% Hong Kong PFI accommodation operator schools schools operator PFI accommodation schools operator PFI accommodation Mining infrastructure PFI accomm Construction and project management Construction and project 49% United Arab Emirates PFI accomm PFI accommodation operator sch operator PFI accommodation PFI acco Infras Manufacture of precast concrete Manufacture of concrete precast PFI accommodation operator schools schools operator PFI accommodation ed operator accommodation PFI 2013 | Annual Review Laing O’Rourke Associates Associates North East Business Park Pty Limited M-Pact Manchester Omega JV O’Rourke Thames Water Laing Civil engineering Costain Laing O’Rourke Farringdon Farringdon Costain Laing O’Rourke Heathrow East Terminal Project M-Pact Ireland entities. These ownership interests do not constitute control as the voting power attached to each of these ownership interests attached to each of these control as the voting power constitute entities. These ownership interests do not operations Jointly controlled TPFL Project Co One Limited One Limited Co TPFL Project TPFL Regeneration Limited grea Group has Limited Corporation The Laing O’Rourke Strategic Indigenous Housing and Infrastructure Infrastructure Housing and Strategic Indigenous Program Alliance Limited Thames Partnership for Learning op PFI accommodation S&W TLP Project Co One Limited Co One Limited Project S&W TLP Co Two Limited Project S&W TLP Education Partnership Limited S&W TLP schools operator PFI accommodation 50 per cent or less. entities have a All of the above jointly controlled year-end of 31 March with the Laing O’Rourke Constructio exception of Aldar which have 31 December year-end and Partnership Limited Montreal Collective and Health LLC, CLM Delivery Partner Limited Partnership which has a 30 April year-end. Health Montreal Collective CJV Limited LORRCRPT JV LORRCRPT Limited Partnership Newham Transformation Co Limit Project Newham Learning Partnership Laing O’Rourke – Bachy Soletance JV Laing O’Rourke – Bachy Soletance JV – Hsin Chong Paul Y JV Laing O’Rourke JV – Kier Kaden Laing O’Rourke Health Montreal Collective CJV Limited Partnership CJV Limited Health Montreal Collective engineering civil and Building Partnership Health Montreal Collective Limited HILOR JV PFI accommodat Barnsley Local Education Partnership Limited Barnsley Local Education Limited CLM Delivery Partner schools operator PFI accommodation LLC Construction Emirates Precast Barnsley SPV One Limited Barnsley SPV One Limited Barnsley SPV Two Limited Barnsley SPV Three Limited Jointly controlled entities Jointly controlled entities LLC Construction Aldar Laing O’Rourke Alder Hey SPV Limited 38 Associates continued and Entities Controlled Jointly Subsidiaries, Principal

CONTACTS

Europe Hub offices Australia Hub offices UNITED KINGDOM Scotland AUSTRALIA WESTERN AUSTRALIA Dartford 21 Woodhall NEW SOUTH WALES Perth Bridge Place 1 & 2 Eurocentral Sydney Level 3 Anchor Boulevard Holytown Level 4 43-47 Burswood Road Crossways Motherwell ML1 4YT Innovation Place Burswood Dartford United Kingdom 100 Arthur Street WA 6100 Kent DA2 6SN Tel: +44 (0)1698 731000 North Sydney NSW 2060 Australia United Kingdom Fax: +44 (0)1698 731001 Australia Tel: +61 (0)8 9362 7111 Tel: +44 (0)1322 296200 Tel: +61 (0)2 9903 0300 Fax: +61 (0)8 9362 7100 Steetley Fax: +44 (0)1322 296262 Fax: +61 (0)2 9903 0333 Explore Industrial Park NORTHERN TERRITORY Cambridgeshire Off A619 Hunter Valley Darwin Barford Road Worksop Cnr Strathmore and 24 Sandgroves Crescent Little Barford Nottinghamshire S80 3DT Blakefield Roads Winnellie St Neots United Kingdom Muswellbrook NT 0820 Cambridgeshire PE19 6WB Tel: +44 (0)1777 353000 NSW 2333 Australia United Kingdom Fax: +44 (0)1777 353027 Australia Tel: +61 (0)8 8984 3477 Tel: +44 (0)1480 402500 Tel: +61 (0)2 6543 4600 Fax: +61 (0)8 8984 4325 CANADA Fax: +44 (0)1480 402572 Fax: +61 (0)2 6543 4060 401 Bay Street HONG KONG Cardiff Suite 1600 Sydney Rail Operations 11/F Kerry Centre Building 2 Toronto M5H 2Y4 14 Carter Street 683 King’s Road The Eastern Business Park Ontario Homebush Bay Quarry Bay Wern Fawr Lane Canada NSW 2127 Hong Kong St Mellons Tel: +1416 (0)646 5167 Australia Tel: +852 (0) 2721 0143 Cardiff CF3 5XA Tel: +61 (0)2 9647 3200 Fax: +852 (0) 2721 0807 UNITED ARAB EMIRATES United Kingdom Fax: +61 (0)2 9647 3205 Abu Dhabi Tel: +44 (0)2920 775000 Ladies Beach Hunter Valley Rail Operations Fax: +44 (0)2920 778482 PO Box 110800 Junction St Leeds Abu Dhabi Telarah 3320 Century Way United Arab Emirates NSW 2333 Thorpe Park Tel: +971 (0)25017 017 Australia Leeds LS15 8ZB Fax: +971 (0)25017 018 Tel: +61 (0)2 4932 3636 United Kingdom Fax: +61 (0)2 4932 3680 Dubai Tel: +44 (0)113 2840250 Al Shoala Building QUEENSLAND Fax: +44 (0)113 2607054 5th Floor Brisbane – Principal Office Manchester Block A Level 3 Archway 3 PO Box 25948 895 Ann Street Birley Fields Dubai Fortitude Valley Greenheys Lane West United Arab Emirates QLD 4006 Hulme Tel: +971 (0)42949 944 Australia Manchester M15 5QJ Fax: +971 (0)42949 049 Tel: +61 (0)7 3223 2300 United Kingdom Fax: +61 (0)7 3223 2303 Tel: +44 (0)161 2276000 Brisbane Fax: +44 (0)161 2276199 Level 3 Newcastle 200 Adelaide Street Rushwood Brisbane Balliol Business Park QLD 4000 Benton Lane Australia Newcastle upon Tyne Tel: +61 (0)7 3012 3300 NE12 8EW United Kingdom Tel: +44 (0)191 2381430 Fax: +44 (0)191 2381431

136 Laing O’Rourke | Annual Review 2013 Production of this report This report is printed by an EMAS-certified Carbon Neutral® company, 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. Written, designed and produced by Laing O’Rourke Corporate Communications and Black Sun Plc. LAING O’ROURKE CORPORATION

Laing O’Rourke plc Bridge Place Anchor Boulevard Crossways Dartford, Kent DA2 6SN United Kingdom T +44 (0)1322 296 200 F +44 (0)1322 296 262 www.laingorourke.com