Engineering the Future… …Today
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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