engineering the future transforming today

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ANNUAL REVIEW 2015

ENGINEERING THE FUTURETRANSFORMINGTODAY

STRATEGIC REPORTLaing O’Rourke at a glance ifcPerformance highlights 1Chairman’s statement 2Group Chief Executive’s review 4Market overview 7Our business model 10Our strategy 12Key performance indicators 17Group financial review 20

HUB PERFORMANCEEurope Hub 24Australia Hub 50

SAFETY AND SUSTAINABILITYOverview 70Europe Hub 76Australia Hub 88

RISKRisk management 98Summary of principal risks 102

GOVERNANCECorporate governance 105Board of Directors 112Senior leadership team 113

FINANCIALSDirectors, officers and advisers 116Directors’ report 117Independent auditors’ report 119Consolidated income statement 120Consolidated statement of comprehensive income 121Consolidated statement of financial position 122Consolidated statement of cash flows 123Consolidated statement of changes in equity 124Notes to the financial statements 125Independent limited assurance report 155Contacts ibc

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THIS ANNUAL REVIEW IS DEDICATED TO THE LIFE AND WORK OF OUR COLLEAGUE, BERNADETTE O’ROURKE.

(26 October 1960 – 5 May 2015)

AN ENDURING ENGINEERING ENTERPRISEWE AIM TO BECOME THE TRUSTED PARTNER FOR OUR CUSTOMERS FROM THE EARLIEST ENGAGEMENT

Laing O’Rourke is a globally diverse engineering and construction group with a commitment to delivering exceptional value, founded on 167 years of experience. Offering a true end-to-end service – we invest, define, design, manufacture, deliver and operate – across a broad spectrum of exciting projects for our customers – providing the right environments to accommodate, educate, employ, transport, care for and sustain communities.

Our value proposition comprises the full range of engineering, manufacturing, construction and project management services. Through our fully integrated approach we deliver unparalleled certainty to meet the particular requirements of some of the world’s most prestigious public- and private-sector clients.

Our collaborative approach combines discipline in delivery with the continuous pursuit of innovation: engaging with customers and partners from the earliest stages, advising on and providing the best ways to complete projects with total surety and achieve greatest value for all stakeholders – employees, customers, communities and shareholders.

We are enabling the organisation to be leaner and more efficient, and deepening relationships through significant investment in our unique approach. Our long-term strategy aims to create sustainable growth by meeting the economic, social and environmental challenges of our rapidly changing world.

SEE OVERLEAF FOR LAING O’ROURKE AT A GLANCE OR VISIT: WWW.LAINGOROURKE.COM

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LAING O’ROURKE AT A GLANCE

WORLD-CLASS CAPABILITIES

DELIVERED THROUGH A UNIQUE APPROACH

WE ARE TRUSTED BY CLIENTS TO MEET THEIR NEEDS THROUGH EARLY ENGAGEMENT AND AN ABILITY TO DELIVER CERTAINTY USING OUR UNIQUE DESIGN-MANUFACTURE-CONSTRUCT APPROACH.

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WE ARE SELECTIVELY PURSUING OPPORTUNITIES THAT COMPLEMENT OUR CAPABILITIES, BUSINESS CODE, FINANCIAL GOALS AND DELIVERY DISCIPLINE.

DESIGN

MANUFACTURE

DIRECT DELIVERY

CONSTRUCT

MANAGE

ENGAGEMENT

ASSET

EARLY

• Project Investment Services• Project Management

• Excellence in Engineering• Digital Engineering

• Design for Manufacture and Assembly (DfMA) and Offsite Manufacturing

• Plant and Logistics Management

• Construction and Infrastructure Services• Mechanical, Electrical and Process Technologies

PROJECT MANAGE

DYNAMIC GROWTH SECTORS

COMMERCIAL

• Commercial Offices• Data Centres• Industrial• Retail & Mixed-use• Science & Research• Sport & Leisure

- Hotels - Leisure Complexes - Stadia

ACCOMMODATION

• High-rise• Multi-unit Residential• Single-unit Residential• Social Housing

SOCIAL INFRASTRUCTURE

• Defence• Education• Healthcare• Law & Order

ECONOMIC INFRASTRUCTURE

Transport• Aviation• Commuter Rail• Highways• Marine

Power• Generation• Networks• New Nuclear• Renewables

Water & Utilities Networks• Utility Networks• Waste Treatment• Water Treatment

Mining & Natural Resources• Coal & Minerals Processing• Heavy-haul Rail• Industrial Equipment Installation• Labour Accommodation• Minerals-handling

Oil & Gas• Civil Infrastructure• Labour Accommodation• LNG & CSG Terminals• Pipelines & Pump Stations• Processing Plants• Storage

ATTRACTIVE GEOGRAPHIC MARKETS

EUROPE HUB• United Kingdom• United Arab Emirates• Saudi Arabia• Canada

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AUSTRALIA HUB• Australia• Hong Kong• New Zealand• Southeast Asia

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WE ARE DELIVERING CUSTOMER SOLUTIONS THAT MEET THE ECONOMIC, SOCIAL AND ENVIRONMENTAL CHALLENGES OF OUR RAPIDLY CHANGING WORLD.

WE ARE BUILDING STRONG, COMPETITIVE POSITIONS IN GROWTH-ORIENTED SECTORS THAT PLAY TO OUR ENGINEERING AND CONSTRUCTION STRENGTHS.

PERFORMANCE HIGHLIGHTS

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Laing O’Rourke | Annual Review 2015 1

OPERATIONAL PERFORMANCE: STRONG FOUNDATIONS IN PLACE TO ACHIEVE THE NEXT STAGE OF OUR STRATEGY.

- Good geographic and sector diversity delivering resilience and strong future profit sources.

- Industry-leading senior leadership team now in place.

- Maintained commercial discipline to create highest ever quality order book.

- Sustainable long-term investments in engineering excellence, digital engineering and advanced manufacturing capabilities.

- Maintained expenditure levels in global health, safety and sustainability programmes.

- Increased focus on human capital agenda, with substantial commitment to enhancing entry-level development opportunities.

- Strengthened corporate governance and risk management frameworks.

OUTLOOK: DRIVE SALES OF OUR VALUE PROPOSITION BY FOCUSING ON DELIVERING CERTAINTY FOR CUSTOMERS.

- Group investing for the long term to respond to increased customer demands for greater certainty in time, cost, quality, safety and sustainability.

- Strong medium-term revenue visibility and an attractive pipeline of high-quality contract opportunities in key sectors.

- Anticipated benefits derived from the widespread deployment of our value proposition coupled with an unrelenting focus on productivity.

AT THE MIDWAY POINT IN OUR TEN-YEAR STRATEGIC PLAN, LAING O’ROURKE REMAINS ON TRACK TO FULFIL ITS LONG-TERM AMBITION TO HELP LEAD THE INDUSTRY INTO A NEW ERA OF DELIVERY AS AN ENDURING ENGINEERING ENTERPRISE.”

A NNA STEWARTGROUP CHIEF EXECUTIVE

FINANCIAL PERFORMANCE: PROFITABLE TRADING PERFORMANCE MAINTAINED, WITH STRONG RESULT IN AUSTRALIAN BUSINESS OFFSETTING A YEAR OF OPERATIONAL CHALLENGES IN UK CONSTRUCTION MARKET.

SAFETY, SUSTAINABILITY AND EMPLOYEE ENGAGEMENT:IMPROVED SAFETY PERFORMANCE AND HIGH DEGREE OF EMPLOYEE ENGAGEMENT AND CLIENT SATISFACTION.

* For definitions see Key Performance Indicators on pages 17 to 19.

** See footnote on page 72.

MANAGED REVENUE*

£3.85bnDown 13 per cent, reflecting selective bidding and adverse foreign exchange movements

GROSS MARGIN

7.5%Reflects impact of UK construction market issues, price inflation and foreign exchange fluctuations

ACCIDENT FREQUENCY RATE (AFR)*

0.12**

AFR reduced to 0.12 reflecting exceptional performance in Australia Hub

EARNINGS BEFORE INTEREST AND TAX*

£73.2mStrong pre-exceptional EBIT performance despite continuing market challenges

TOTAL REVENUE*

£3.13bnDown 13 per cent, in line with reduction in managed revenue

CLIENT SATISFACTION*

80%Highlights positive response to the certainty of our value proposition

ORDER BOOK*

£9.2bnGroup order book increased significantly in value and quality

NET FUNDS*

£370mMaintained peer-group-leading net funds position

EMPLOYEE ENGAGEMENT*

72%Highest ever score – 18 per cent above the global norm for comparator large companies

CHAIRMAN’S STATEMENT

THE SUCCESS OF OUR ORGANISATION – OR ANY ORGANISATION – IS MEASURED BY THREE FUNDAMENTALS: THE VISION, THE ABILITY TO REALISE THE VISION, AND THE REALISATION ITSELF. IT IS MY HOPE THAT THIS REPORT IS CLEAR ON ALL THREE FRONTS. WHILE WE ARE PROUD OF THE STRUCTURES DEPICTED IN THIS ANNUAL REVIEW AND GRATEFUL TO OUR CLIENTS WHO ENGAGED US AS TRUSTED PARTNERS, OUR EMPHASIS INSIDE LAING O’ROURKE IS NOT ON WHAT WE HAVE BUILT IN THE PAST, BUT ON HOW WE ARE BUILDING STRUCTURES TODAY, AND HOW WE WILL BUILD THEM IN THE FUTURE.

After the Board review of the Mission Zero safety programme during the year, we are shifting emphasis to industry-proven measures for greater levels of accident and incident prevention.

We continue to focus on more efficient delivery processes using new technologies, particularly in areas of automation and offsite manufacturing. This reduces the physical demands placed on onsite workers, helping to remove traditional hazards and risks.

PEOPLEInnovation and delivery are the heart of Laing O’Rourke. Our people are the key. In 2015, our Group employee engagement score rose to a new high of 72 per cent – 18 per cent above the global norm for comparator companies. This affirms our strategic direction and the work of the executive team.

This heightened engagement demonstrates clearly the resolve of our people in the face of global economic challenges. It is they who have transformed our operating methods and moved us into new markets.

Our belief in people is further demonstrated by the recruitment and training of young apprentices, trainees and graduates. Our investment in the development of their engineering, construction and business skills is vital to our future.

SAFETY AND SUSTAINABILITYLaing O’Rourke’s corporate responsibility is the safety and security of our people and all who come into contact with our operations. This past year, the Group saw its Accident Frequency Rate (AFR) reduce from 0.13 to 0.12. This result was achieved while delivering increasingly complex engineering projects. However, it is with great regret that I report two fatalities in the past year. These tragedies heighten our resolve in our commitment to our Group-wide safety programme and mission to send all our people home safe every day.

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INNOVATION AND DELIVERY ARE THE HEART OF LAING O’ROURKE. OUR PEOPLE ARE THE KEY.”

VALUE AT EVERY STAGE

Laing O’Rourke | Annual Review 20152

TECHNOLOGYOur investment programme supports the development of construction techniques to deliver quality, certainty and value for our customers. In May 2015, the Board ratified the Final Investment Decision (FID) to build and operate a new Advanced Manufacturing Facility (AMF) alongside our existing factory at Explore Industrial Park in the East Midlands. The new facility will use intelligent design, precision engineering and fully automated processes to deliver modular solutions that will revolutionise house-building in the UK.

Earlier in the year, this initiative had taken a major step forward when the former UK Government Business Secretary, Vince Cable, announced a £22.1 million grant from the Department for Business Innovation and Skills (BIS), as part of its Advanced Manufacturing Supply Chain Initiative (AMSCI). Then in April 2015, we received a €2.1million (£1.6 million) grant from the European Union.

The Advanced Manufacturing Facility will be a safer working environment with greater productivity. It will require new skills developed through on-the-job training. It will have lower carbon emissions with greater energy performance.

GOVERNANCE AND LEADERSHIPWe recruit people who can achieve our vision – people with globally renowned talent. We welcome Paul Sheffield, Europe Hub’s new Managing Director; Stewart McIntyre, Group Finance Director; and Paul Westbury, Group Technical Director. We also welcome Nick Jordan, Company Secretary. Nick’s rigour in the setting, tracking and monitoring of our Board objectives will be invaluable. Our global leadership team has the right balance between technical acumen and core engineering and construction expertise.

We continued our human capital strategy to develop leaders from within our ranks. Our development programmes are essential to driving market confidence and widespread adoption of our value proposition.

PERFORMANCEDespite persistent economic uncertainty, Laing O’Rourke remains profitable. This can be attributed to our business model. This past year, the Australia Hub posted a strong financial result, whereas performance in the Europe Hub has been disappointing. Our strategic approach keeps us disciplined to pursue only opportunities in the right markets. As a result, the Group posted solid performances in cash generation and exceeded our targets for new business orders. Looking forward, the bid pipeline is the strongest I can ever recall. There is a broad range of opportunities and a robust forecast for revenue and cash generation.

In 2014/15 we refreshed our Group strategy at the midway point in our ten-year development plan. The work to build our engineering credentials started in 2009/10, in response to the onset of the global recession. We made further advances in 2012 with the Group Strategic Roadmap – engineering excellence, technology and human capital. We have progressed this agenda to become an enduring engineering enterprise.

With a sectoral emphasis on oil and gas, power, mining, infrastructure, and the built environment, Anna Stewart, Group Chief Executive, has laid the foundation to achieve our targets over the next five years. In early 2015, we gave greater accountability to the hub-level leadership teams and more closely aligned key people with roles and opportunities. Our technical teams are now moving our transformation forward in engineering, manufacturing and construction.

THE FUTURE Laing O’Rourke will be highly selective in pursuing opportunities that align with our value proposition. We will focus on our engineering and manufacturing capabilities. We will create certainty for our customers from the earliest engagement.

I thank our customers, stakeholders, our people and supply chain partners for the trust they place in our ability and their continued support for our vision.

RAY O’ROURKE KBECHAIRMAN

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ENGINEERING CERTAINTY

GROUP CHIEF EXECUTIVE’S REVIEW

IT IS DIFFICULT NOT TO BE EXCITED BY THE INCREASINGLY ATTRACTIVE MARKET OPPORTUNITIES, AS OUR ECONOMIES RECOVER FROM THE FINANCIAL CRISIS.”


This gives us the confidence to make the bold investment decisions we know are necessary to achieve our ambitions. At the same time, however, we continue to wrestle with the challenge of completing projects secured in tougher times, which for the time being presents a drag to our financial performance and short-term ambitions.

SAFETY AND SUSTAINABILITYWe are at the mid-point of our ten-year, Mission Zero campaign. Although we continue to make improvements, as measured by a reduction in the frequency of harmful incidents, we remain frustrated that we have not yet achieved the transformational change in our operations necessary to eliminate high-risk activities forever from our industry.

Change is something that is tolerated extensively in engineering and construction. With that tolerance comes difficulty assuring the outcome of activities and, therefore, difficulty in eliminating risk to the individuals carrying out those activities. We are focusing substantially on this important area.

Our staff and customers are very complimentary in their views of our safety culture. Both groups acknowledge the value we place on it and the efforts we make daily to sustain it. This has been evidenced in the results of our global customer perception audit, inaugural health and safety survey and in our biennial staff engagement survey.

Sadly, however, two young men, employees of ours, lost their lives this year, while working in our operations and left behind families and colleagues devastated in their grief. Nothing we can say can ever make that better. We are sincere and committed in our intention to find the breakthrough needed to avoid such tragedy.

IT IS DIFFICULT NOT TO BE EXCITED BY THE INCREASINGLY ATTRACTIVE MARKET OPPORTUNITIES, AS OUR ECONOMIES RECOVER FROM THE FINANCIAL CRISIS. ALTHOUGH UNCERTAINTY REMAINS, PARTICULARLY WITHIN EUROPE, AND THE UK’S RELATIONSHIP WITH EUROPE, THE ELECTION OUTCOMES IN MOST OF OUR GEOGRAPHIES WOULD SEEM TO CREATE THE ENVIRONMENT FOR MEDIUM- TO LONG-TERM STABILITY.

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AS WELL AS IMPROVING PRODUCTIVITY, OUR INDUSTRY HAS TO MODERNISE AND AUTOMATE TO ENGENDER WIDER APPEAL OR RISK LOSING OUT TO THOSE SECTORS THAT HAVE ALREADY EMBRACED OPERATIONAL CHANGE ON A TRANSFORMATIONAL SCALE.”

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Employee productivity is the key to our future success. As important as securing sustainable, efficient solutions in the utilisation of our human resources is, finding more productive ways to design, procure, deliver and operate projects with fewer people is essential.

We believe our recruitment, development and education programmes are all excellent. But they alone are not enough to reverse the ageing profile of the industry’s workforce – exacerbated by the understandable desire of young people and, particularly, women to avoid the very tough physical roles that previous generations had to accept. This challenge is pronounced in all of our geographies.

As well as improving productivity, our industry has to modernise and automate to engender wider appeal or risk losing out to those sectors that have already embraced operational change on a transformational scale.

CUSTOMERS AND PARTNERSWe have reached an important inflection point, having finalised our Group executive team, established new leadership in the Europe Hub and strengthened the leadership of our Australia Hub – in its tenth anniversary year. Being conscious of the growing threat of international competition and consolidation – and having arrived at the half-way point on our ten-year strategy – we embarked on extensive consultation with our customers and stakeholders during the year. This will help us better understand their perceptions, so that we can mould our activities in a responsive and constructive manner.

We enjoyed a 72 per cent response rate from the parties approached and have been delighted with the open engagement from the 150 or so detailed interviews undertaken. We have already addressed a number of points raised through the feedback and are working carefully on our customer and sector plans to effect structural change in response to the priorities shared with us. We are genuinely appreciative of all the help so generously given and hope that our customers will notice our response as they engage with us going forward.

PERFORMANCE OVERVIEWAs I said last year, we expected a challenging two years as we worked through the portfolio of projects secured in recessionary times, which are being delivered in a period of acute skills shortage and resource cost inflation. Our financial results, although profitable, pay testimony to this and have also inevitably been impacted by our continuing programme of investments. Our private ownership is supportive of the long-term ambitions of the business and we are confident our strategy is both attractive and commercially prudent, through the cycles.

Our profit after tax, at £20.1 million on reduced managed revenue of £3.85 billion, is however disappointing, albeit parts of the Group, such as the Australia Hub, have enjoyed a record year.

Cash generation and management continues to be strong, with net cash of £370 million, while at the same time we are recognised as one of the industry’s fairest employers and best payers.

We expect the 2015/16 period to be equally challenging with margin improvements yielding enhanced financial performance in the 2016/17 year. Unfortunately, we are a three-year cycle business so will emerge from recession later than most other sectors.

STRATEGYWe are increasingly recognised as being an engineering enterprise, underpinned by the highest-quality people and programmes. We continue to differentiate with our focus on direct employment and substantial direct delivery with our in-house capability, increasingly deploying digital and manufacturing technology. The value of certainty is a fundamental tenet of our business strategy.

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The Board has now endorsed the investment decision to proceed with the next stage of our manufacturing ambitions by adding an additional Advanced Manufacturing Facility (AMF) on our UK campus at Explore Industrial Park. The new facility will provide the capability to manufacture high-performing, attractive homes, in a modular format, flexible plantroom and service distribution configurations, bathroom, kitchen and vocational pods, and our SmartWall product. These advances have the potential to transform the quality of offering, while delivering in a fraction of traditional timeframes, in a safer, more controlled environment. An added advantage will be the spreading of economic benefit and employment across the country.

ORDER BOOK AND BID PIPELINEWe are increasingly being entrusted to develop large and complex project solutions with blue-chip clients in the power, mining, oil and gas, and nuclear markets. Clients and governments around the world are demanding industry transformation and we are excited and emboldened by the challenge that presents.

In Australia, from a standing start five years ago, we have now delivered, or are delivering, AUD$4 billion (£2.2 billion) of oil and gas infrastructure, ranging across accommodation villages, water treatment plants, general utilities, concrete and civil works, upstream gas field facilities, marine works and cryogenic tanks. This has provided a very creditable platform from which to pursue participation in the new wave of LNG facilities planned for the Province of British Columbia in Canada and we have already secured our first commission there.

In infrastructure, on our own and with partners, we are participating in Crossrail, the extension of the Northern Line for London Underground and the Thames Tideway Tunnel. We are also hopeful of getting underway on the new nuclear facility at Hinkley later this year and have formed joint ventures to pursue work on the High Speed 2 rail programme. We are also very excited to be appointed as delivery partner for Pacific Complete, the final stage of the Pacific Highway Upgrade, a role we are familiar with from our London 2012 Olympics and Paralympic Games experience but a first of its kind in the Australian market.

Although critical mass is important for market credibility and scale, our focus – as we assess the opportunities to pursue – is very much around fit with our business strategy. Therefore we will prioritise those loyal and respectful customers whose work offers sustainable earnings potential. Having said that, I am pleased to report that our order book is now in excess of £9 billion, up materially in the last year and the depth and quality of the pipeline is at an all-time high.

OUTLOOKThis Annual Review showcases much of what we have achieved with our customers, partners and many friends in the year. We are privileged with the opportunities afforded us and excited by the prospect of effecting change through our ongoing pursuit of innovation.

I am proud of my colleagues and their many achievements and of the refreshing approach they display to any challenge they face. I am confident we will translate our endeavour and enthusiasm into tangible results.

A big part of our lives is spent in our pursuit of excellence at work and I am delighted that, through our biennial staff survey, so many of our people have demonstrated such high levels of engagement in what we are trying to achieve.

I look forward to the future and continuing to work closely with all of you on whom our business depends.

ANNA STEWART GROUP CHIEF EXECUTIVE

GROUP CHIEF EXECUTIVE’S REVIEW: CONTINUED

I AM PROUD OF MY COLLEAGUES AND THEIR MANY ACHIEVEMENTS AND OF THE REFRESHING APPROACH THEY DISPLAY TO ANY CHALLENGE THEY FACE. I AM CONFIDENT WE WILL TRANSLATE OUR ENDEAVOUR AND ENTHUSIASM INTO TANGIBLE RESULTS.”

MARKET OVERVIEW

GLOBAL ECONOMIC ENVIRONMENT AND TRENDSGLOBAL GROWTH IN 2014 WAS A MODEST 3.4 PER CENT, REFLECTING A PICK-UP IN GROWTH IN ADVANCED ECONOMIES RELATIVE TO THE PREVIOUS YEAR AND A SLOWDOWN IN EMERGING MARKETS AND DEVELOPING ECONOMIES. DESPITE THE SLOWDOWN, EMERGING MARKETS AND DEVELOPING ECONOMIES STILL ACCOUNTED FOR THREE QUARTERS OF GLOBAL GROWTH IN 2014.

Complex forces that affected global activity in 2014 are still shaping the outlook, including declining potential growth and population ageing; global shocks, such as lower oil prices; crisis legacies and exchange rate swings triggered by actual and expected changes in monetary policies.

Medium-term prospects have become less optimistic for both advanced and emerging economies, however distribution of risks to global growth is now more balanced, albeit still slightly negative. A greater boost to demand from oil prices presents an upside, however persisting downside risks remain relevant, including geopolitical tensions, disruptive asset price shifts in financial markets, and, in advanced economies, stagnation and low inflation.

Growth is projected to be stronger in 2015 relative to 2014 in advanced economies, but weaker in emerging markets, reflecting more subdued prospects for some large emerging market economies and oil exporters.

Overall, global growth is projected to reach 3.5 per cent and 3.8 per cent in 2015 and 2016 respectively.

Region

2014 Economic Growth

Rate (EGR) %

2015 Anticipated

EGR %

UK 2.6 2.7Canada 2.5 2.2United Arab Emirates 3.6 3.2Australia 2.7 2.8Hong Kong (China) 2.3 2.8World 3.4 3.5

Source: International Monetary Fund: World Economic Situation and Prospects 2014 Report (publication date: January 2014).

EUROPE HUBUK2014 represented a sea change in the fortunes of the UK construction industry, with output increasing by 7.4 per cent versus 2013. Despite this, rates of growth have been slowing over the year off the back of increased capacity constraints resulting from tightened demand conditions. Following slight falls in January and February 2015, driven partly by election uncertainty, output increased by 3.9 per cent in March, a positive sign. The main driver of the decline in early 2015 was a slowdown in public new housing (down 7.1 per cent). However this was offset by positive movements in private new housing (up 8.4 per cent) and infrastructure (up 4.6 per cent).

2014/15 was characterised by strong output demand which has stretched supply chains across the industry. This has led to increased capacity constraints and, as such, addressing the wider issue of skills shortages has moved up the agenda for most construction and engineering firms. Strong demand is also reflected in tighter tender margins industry-wide, which increased by 6.6 per cent at Q1 2015, on an annual basis.

With capital starting to flow into construction again, the outlook is positive, however capacity constraints within the industry represent a risk to the ability of construction and engineering companies to meet the demand. Laing O’Rourke is committed to championing apprenticeship schemes as well as our undergraduate and graduate programmes to address this and we welcome the new government’s proposals to support three million new apprenticeships across the lifetime of the next parliament.

Historically low interest rates, rising employment, increasing consumer and investor confidence, a growing population and increasing urbanisation all suggest good growth prospects for UK construction.

Laing O’Rourke | Annual Review 2015 77Laing O’Rourke | Annual Review 2015

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MARKET OVERVIEW: CONTINUED

The residential sector grew 25 per cent in 2014, across both private and public housing. This remains particularly evident in London and the southeast, where demand is high and growth looks set to continue. Laing O’Rourke continues to focus on large-scale developments and is well positioned with key clients like British Land, and a pipeline of prestigious projects that include the Clarges estate in Piccadilly, 190 The Strand and Riverlight, Nine Elms.

Commercial construction remains flat year-on-year, however growth is set to continue in the London tall buildings sector, where Laing O’Rourke has strong experience and where there are more than 100 tall buildings approved for planning. Outside London, we have secured a number of high-profile commercial projects during the year, including Two St Peter’s Square in Manchester and the Oxford Westgate retail centre.

Despite a marginal decline in infrastructure output of 1 per cent in 2014, Laing O’Rourke continues to build its presence in sectors such as power, rail and water, which all have good long-term growth prospects. Key projects secured during the year include Thames Tideway Tunnel and the Northern Line Extension, which reflect the success of this strategy.

The Group welcomes the government’s commitment to long-term infrastructure investment, in addition to election pledges around High Speed 3 and various major road improvement opportunities. Infrastructure projects such as Hinkley Point C, Crossrail, High Speed 2 and the Northern Line Extension represent opportunities for growth in this area for Laing O’Rourke.

Laing O’Rourke has also historically been very active in social infrastructure sectors, such as health and education, and these remain key areas going forward. There continues to be a steady stream of opportunities in these sectors under the new PF2 model and Priority Schools Programme, in addition to election pledges around the potential for 500 new free schools over the next government.

As construction volumes pick up, there are clear signs of cost inflation in the supply chain and shortages in some key trades, especially bricklaying, joinery, electrical and roofing. Laing O’Rourke’s direct delivery model and its Design for Manufacture and Assembly approach should help to mitigate the impact of this, however we continue to closely monitor input and output prices.

CANADACanada is the largest construction market that Laing O’Rourke operates in, with construction of CAD$346 billion (£188 billion) placing it as the seventh largest construction market in the world.

Growth in Canada is expected to be driven by oil and gas – the country being the fourth largest oil exporter in the world. Focus is currently on investment in large-scale LNG facilities in British Columbia, including the Kitimat Export Terminal, Prince Rupert and Pacific Northwest LNG Plants.

Investment decisions on many oil and gas projects were highly influenced in 2014 by the significant fall in Brent Crude prices, which in January 2015 fell below USD$50 (£31) per barrel. This impacted in particular on the oil sands projects in Alberta (Fort McMurray) and the north, many of which have gone on hold until prices become more viable. Laing O’Rourke remains relatively unaffected with respect to the specific projects which we are targeting in this sector.

Despite the dynamics around weakening oil prices, Canada’s economy remains a relatively stable environment in which to operate, with falling unemployment, consistent growth in GDP and low interest rates.

MIDDLE EASTThe United Arab Emirates’ economy has demonstrated strong growth since 2010, with GDP growth in 2014 at 3.6 per cent, however this represents a slowdown compared to historic levels, due in part to oil price decline.

Growth is set to continue, with the International Monetary Fund projecting 3.2 per cent in 2015 and 2016, increasing to 4.1 per cent in 2017. This is expected to derive mostly from non-oil activity.

The economy is still heavily dependent on oil and gas, which accounts for approximately 38 per cent of GDP. The Economist Intelligence Unit has indicated that the UAE’s oil production will remain stable at 2.8 million barrels per day over the period 2015 to 2019, a revision to previous projections in light of falling oil prices.

In order to reduce its reliance on oil and gas, and in preparation for Expo 2020, the government has been investing in other sectors such as tourism, finance and manufacturing, creating opportunities for the construction sector. Laing O’Rourke is active in this area, with recent wins including the DreamWorks Big Box at Dubai Parks.


The recovery in the UAE construction industry, which commenced in 2013, is set to continue. Annual average growth is expected to rise to 8.2 per cent over 2016 to 2020. Large-scale infrastructure projects, including the expansion of the Dubai metro and the planned Abu Dhabi metro and light-rail network, as well as Expo 2020 in Dubai will contribute to this. The UAE will also continue to attract investment in the commercial buildings sector given its rapid emergence as a hub for regional and global business and tourism. Laing O’Rourke is well set to benefit from this.

AUSTRALIA HUB

AUSTRALIAUnlike the decline seen in most of the western economies as a result of the global financial crisis, Australia has enjoyed an unprecedented 22 consecutive years of growth, driven by mining and natural resources investment, sustained by strong demand, in particular, from China and other Asian economies. This is expected to moderate over the coming years following the end of the heavy investment phase in these sectors.

GDP growth in 2014 was 2.7 per cent and is forecast to remain at 2.8 per cent into 2015. Official interest rates remain on hold at 2.5 per cent to facilitate additional growth. Australia remains one of only ten countries worldwide to hold AAA sovereign debt ratings from all three major ratings agencies.

The construction sector has grown rapidly over the last ten years and in 2014 grew by a further 5 per cent in real terms, to reach AUD$210.6 billion (£113.8 billion). This historic growth was underpinned by mega resources projects such as Wheatstone, Gorgon and Ichthys. Laing O’Rourke is actively involved in five of the seven major LNG projects currently under construction, which will generate revenue through to 2017.

As a result of the natural resources boom, the resources construction sector is now worth AUD$59 billion (£32 billion) per annum. However this growth is not expected to continue and investment in resources is already starting to reduce as major projects complete and new investment decisions are deferred, pending a slowdown in demand from China. Growth in the Australian construction market is expected to come from increased investment in public infrastructure through the National Building Plan,

mainly in the roads and rail sectors as well as minerals export infrastructure, where scheduled projects include the NSW Westconnex Motorway, Adelaide North-South Road and the Perth Freight Link. The Australian Constructors Association forecasts growth in transport infrastructure spend of 9 per cent in 2015, with total committed/potential pipeline of projects worth AUD$101 billion (£55 billion) due to commence over the next two years. Laing O’Rourke is well placed to exploit these opportunities, given our presence in the market and historic credentials including Novo Rail, Adelaide Metro Electrification and Auburn Stabling, in addition to extensive experience in structuring, financing and managing PPP projects.

Laing O’Rourke remains actively involved in the commercial construction market. This market has declined in recent years, however it was up by 4 per cent in nominal value terms in 2014. Market indicators suggest that this will pick up further in 2015, as private-sector-led investment increases.

HONG KONGThe Hong Kong construction market is mature and well established. Laing O’Rourke’s activities are focused on transport infrastructure, which accounts for around 20 per cent of construction output in 2014 and is expected to remain substantial, with 11 transport infrastructure projects currently under construction worth £39 billion.

Overall economic growth was 2.3 per cent in 2014 and is expected to increase steadily to 3.5 per cent by 2020, with plans for the airport, further rail links into mainland China and a major new public infrastructure and development precinct in West Kowloon.

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OUR BUSINESS MODEL

LAING O’ROURKE IS COMMITTED TO CONSISTENTLY DELIVERING SUPERIOR SERVICE IN THE MOST EFFICIENT AND EFFECTIVE WAYS POSSIBLE, FOR THE SHARED BENEFIT OF OUR CUSTOMERS, SHAREHOLDERS, EMPLOYEES AND THE COMMUNITIES IN WHICH WE WORK.

Our business model is founded on our reputation for smart and certain delivery, aligned to our Group Strategic Roadmap. Taken together this sets us apart in the industry as an innovative, growth-oriented business.

HOW WE CREATE VALUE

OUR CLIENT PLATFORMAs a client-centric organisation, we work across a broad spectrum of project types in building, infrastructure and natural resources sectors offering a true end-to-end service. We design and deliver complex engineering solutions for customers who value the certainty that we can provide. This allows us to build long-term partnerships, from the very earliest engagement, with customers and strategic partners who value our approach and share our commitment to intelligent engineering, delivered smartly, ensuring our world is built better.

OUR UNIQUE APPROACHWe are trusted by clients to meet their needs through early engagement and our ability to maximise the value of our ‘Design-Manufacture-Construct’ approach.

DESIGN Early involvement ensures the most efficient and value-creating engineering solution and buildability.

MANUFACTURE Maximising the use of our offsite manufacturing skills and capabilities, where it is appropriate to do so, de-risks the design and delivery.

CONSTRUCT We are able to exercise unparalleled control and efficient onsite assembly through the expertise of our highly skilled, directly employed workforce and the construction resources we own.

WHAT WE DELIVER

OUR CLIENT PLATFORM

END-TO-END SERVICE ACROSS BROAD

PROJECT SPECTRUM

OUR UNIQUE APPROACH

DESIGN / MANUFACTURE /

CONSTRUCT


LAING O’ROURKE IS A VERY DIFFERENT TYPE OF ENTERPRISE – ONE THAT IS SUCCESSFULLY COMBINING ENGINEERING INNOVATION WITH DELIVERY DISCIPLINE, PROVIDING VALUABLE AND LONG-LASTING BENEFITS FOR OUR CLIENTS AND SOCIETY.”PAUL WESTBURYGROUP TECHNICAL DIRECTOR

HOW WE DELIVER

THE VALUE OF CERTAINTYOur unique approach is underpinned by four complementary capabilities, which combine to deliver unparalleled certainty for clients and end-users. By setting higher standards for our industry, we are redefining the future of construction.

EXCELLENCE IN ENGINEERING Engineering solutions are key to our success, and our ability to deliver for our clients is reliant upon us driving excellence throughout our engineering teams. The Engineering Excellence Group sits at the heart of this objective and provides a catalyst for our innovation and gives us a competitive advantage, but they are one element of a broader expertise. We are committed to investment in research and development and education, as these are fundamental to our sustainability and addressing the step change required in the construction industry. We will work

together across the business to ensure that all of our engineering abilities are lifted up to the next level and deployed as a key differentiator on our projects.

DIGITAL ENGINEERING We build virtually in a digital-engineering-enabled environment first. This ensures greater predictability of cost, quality, safety and sustainability for clients, through the provision of smarter engineering-led solutions – focused on whole-life value and long-term performance.

DESIGN FOR MANUFACTURE AND ASSEMBLY AND OFFSITE MANUFACTURING Design for Manufacture and Assembly (DfMA) provides an efficient design process which is aligned to our offsite manufacturing and onsite assembly approach. Using standard product design for bespoke solutions where appropriate

and where it adds value to our clients, manufacturing off site allows us to better control quality and assure delivery, without compromising the original architectural intent. We can be faster, cleaner, safer and more reliable and sustainable than our competition. We can achieve higher standards in a controlled factory environment, with a highly automated approach which supports optimum performance.

DIRECT DELIVERY With our in-house supply chain, we can move faster, integrate better, develop our own products more successfully, and control the methods of production, enabling logistics and site construction. This reduces the risks associated with a traditional fragmented delivery approach and our clients consistently appreciate the certainty that this creates.

DIGITAL ENGINEERING

DESIGN FOR MANUFACTURE AND ASSEMBLY

AND OFFSITE MANUFACTURING

EXCELLENCE IN ENGINEERING

DIRECT DELIVERY

THE VALUE OF CERTAINTY

TIME / COST/ QUALITY / SUSTAINABILITY /

HEALTH AND SAFETY

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LAING O’ROURKE’S STRATEGY IS A CONCISE ARTICULATION OF OUR CLIENT FOCUS, CORE SERVICE OFFERING, AND THE BENEFITS WE PROMISE TO DELIVER TO OUR CUSTOMERS TO SATISFY THEIR PARTICULAR NEEDS. IT DESCRIBES OUR AIM TO BECOME AN ENDURING ENGINEERING ENTERPRISE – A TRUSTED PARTNER FOR CLIENTS THROUGH THE OUTSTANDING PERFORMANCE OF OUR OPERATIONAL ASSETS, FINANCIAL RESOURCES AND HUMAN CAPITAL ON EXCITING PROJECTS IN ATTRACTIVE SECTORS, WHILE AT ALL TIMES MAINTAINING A RESOLUTE COMMITMENT TO THE HIGHEST STANDARDS OF SAFETY AND SUSTAINABILITY.

CLIENTS, MARKETS AND SECTORSWe expect our hubs and business units to create leading market positions in targeted sectors that play to our engineering and construction strengths. This ensures we have strong competitive positions which create earnings diversity and resilience. We engage and work with customers who prefer to build long-term, value-based partnerships, rather than one-off, transactional relationships. We listen to our customers, and focus on delivering the solution that is right for them. We are collaborative and responsive, and ensure our objectives are aligned with our customers.

VALUE PROPOSITION We integrate our leading technical expertise in engineering and construction, combining our capabilities in a unique approach that guarantees greater certainty for clients than they would be able to get elsewhere in the marketplace. As a learning organisation, we continually push the boundaries with technology, drive process and product innovations, and employ the best talent to ensure our unique approach is achieving the levels of efficiency and value our clients require.

ENABLING THE ORGANISATIONWe operate a lean and agile business model that does not tolerate waste and duplication, reducing the cost of delivering our services. We allocate our resources where they will achieve the best returns for our key stakeholder groups – customers, through the certainty of the value we create; employees, through safe, rewarding careers and continual professional development we provide; and shareholders, through the sustainable returns we generate.

The Group’s approach is underpinned by our unique character and is described in our value proposition – incorporating our vision and values, customer mission and service offering. Combined, they form a compelling guide to our stakeholder promises and how we will deliver them. They continue to unite us in pointing the way towards achieving future success that is in the common interest.

The Group Strategic Roadmap (GSR) creates the framework which defines the direction and shape we will pursue over the medium to long term to realise our vision. This provides a clear mechanism to enable the Board and Group Executive Committee to fully understand the operating environment and prevailing market forces, prioritise objectives and allocate the necessary financial and non-financial resources to achieve the required state.

CLIENTS, MARKETS AND SECTORS

ENABLING THE ORGANISATION

VALUE PROPOSITION

OUR STRATEGY


DEFINING VALUE

OUR STRATEGY: CONTINUED

OUR GROUP STRATEGIC ROADMAP (GSR) DEFINES THE DIRECTION, SHAPE AND DELIVERY CULTURE OF THE GROUP OVER THE LONG TERM AS AN ENDURING ENGINEERING ENTERPRISE.

We operate in a complex and rapidly changing world – a world in which the cyclical structure of markets is creating significant new challenges and substantial new opportunities.

We refreshed our strategy during the year in review to ensure it maintains focus on specific high-value sectors, markets and client opportunities. We employ our value proposition, including our direct delivery model, to create certainty for clients and procure competitively to connect and integrate the supply chain.

We combine a deep understanding of global building and infrastructure markets with a proven track record in engineering and constructing high-performing capital assets. We have the people and skills to capture value at any point in the client value chain – from project definition right through to asset management.

CLIENTS, MARKETS AND SECTORSANALYSE, TARGET AND SECUREWe focus exclusively on markets, sectors and client opportunities with good growth potential that meet our financial targets and align with our business ethics and delivery approach. To achieve this, we maintain engineering and commercial discipline in the application of our value proposition and its ability to produce greater certainty in an industry that is often characterised by time, cost and quality issues. Therefore we will only commit resources to opportunities where there is a high likelihood of long-term relationships based on mutual respect and value creation.

EARLY ENGAGEMENTActing as a long-term trusted partner we directly support our clients to invest, define and design their projects to validate their capital investment decisions from the very beginning. By ensuring the very earliest engagement, we have access to and influence over the architectural and design detailing stages of a project, allowing us to optimise the delivery approach and provide a world-class solution. By re-distributing time in the delivery schedule to the front-end in this way, greater levels of engineering and commercial insight ensure the design is fit for purpose and can be delivered using smart solutions that provide greater certainty against key client objectives.

DELIVERING VALUE

ANALYSE, TARGET AND SECURE

VALUE PROPOSITIONEXCELLENCE IN ENGINEERINGOur commitment to excellence in engineering is at the heart of our early engagement approach. Our Group-wide consultancy, the Engineering Excellence Group (EnEx.G) and our extensive project-focused engineering resources are responsible for creating smart client solutions. This generates greater certainty by influencing client-side partners to embrace standard design protocols, embedding more efficient and effective solutions into the final design, facilitated through our Design for Manufacture and Assembly (DfMA) methodology.

Our early engagement approach extends to close collaboration with architects, design and cost consultants and supply chain partners, improving predictability through the application of consistent standards and, where appropriate, a component-led solution, reducing the complexities and timescales associated with the traditional design process.

DIGITAL ENGINEERINGDigital engineering is a key enabler of this approach through the production of a detailed data-driven model. These models are allowing us to engineer and price projects to an unprecedented level of accuracy much earlier in the process, providing clients and investors with the cost predictability that justifies their investment decisions. Digital models are proving invaluable tools in de-risking the delivery stages of a project, by providing project teams with the ability to build and test virtually before commencing on site.

All projects share common elements, therefore major benefits come from using standardised components, without compromising the architectural intent of the agreed design. Our extensive product sets cover the full range of intelligent building and infrastructure components that can be technically configured to suit any project type. Driven by government and public-sector procurement requirements, a growing number of leading design consultants are adopting our approach as the industry’s default design process.

DESIGN FOR MANUFACTURE AND ASSEMBLY AND OFFSITE MANUFACTURINGOnce a design is completed, the specifications for the preassembled components are fed directly to our manufacturing facilities where both standardised structural and modular components are manufactured in a controlled factory environment. This assures much higher quality, greater design integrity and more reliable and resource-efficient delivery. Our significant investment in offsite manufacturing means that we have, in-house, some of the most advanced facilities in the world.

Our specialist delivery businesses manage the complex logistics involved in scheduling delivery, lifting and positioning, and installation of the offsite components. Intelligently engineered DfMA products are delivered to site ready to ‘plug and play’, allowing the testing and commissioning phases to commence at the point of manufacture. Thus, they are finalised much sooner, once again reducing build time, and handing control of the asset to the client much earlier than can be achieved via the traditional approach. This radically cuts waste, minimises offsite traffic and onsite labour, reduces programme duration, assures quality and delivers cost certainty.

DIRECT DELIVERYProject management provides the critical link between all activities on a project. Our project management professionals expertly integrate and oversee all the phases, from bidding and contract award negotiations to commissioning and maintenance, to ensure the project is delivered within budget, meets the schedule and achieves the required technical quality safely and sustainably.

Using a proprietary quality management system called The LOR Way, incorporating our proven Core and Enabling Processes, we resolve conflicts, establish priorities and verify readiness to proceed through key project gateways. Coupled with the know-how of our project managers, this process supports the identification and elimination of issues before they become problems.

Laing O’Rourke’s construction and infrastructure teams manage delivery of the project in parallel with the testing and commissioning phases with the client. With our directly employed workforce and substantial in-house resources, we can undertake the most complex engineering challenges with unmatched expertise. Our experience extends across international markets and regulatory environments. We have developed and embedded numerous innovative construction techniques into our approach over many years, and today we deploy one of the most technologically advanced safety and quality assurance processes in the world.

Our expertise in construction extends from the start to the finish of a project and covers supply chain management, procurement, materials consolidation for controlled site release, project controls and site administration to final commissioning and ongoing maintenance.

As a natural extension of our trusted relationship with clients, we provide integrated operational management, refurbishment and maintenance services. The extensive knowledge we acquire through designing and delivering buildings and infrastructure provides a unique insight into how capital assets can be more efficiently managed and maintained.

The multi-dimensional digital model transforms into the asset management system over the lifespan of the capital investment. This unique source of technical data creates smarter buildings and infrastructure by increasing the operating efficiency while reducing the running and maintenance costs for the client.

ENABLING THE ORGANISATIONHUMAN CAPITALOur people are at the heart of delivering our targets – and those of our clients and partners – and we will therefore continue to ensure all our people are enterprise-aligned, by focusing on future skills development in accordance with our value proposition. We aim to attract the very best in the industry who share our vision and values, to develop their careers, contribute to our success and, most importantly, share in it. We are pursuing a ‘grow our own’ human capital strategy through industry-leading reward and development programmes. This will ensure we build the next generation of talent, skilled in product innovation and process efficiency to help transform our industry.

PRODUCTIVITYOur relentless focus on productivity, through greater process efficiency enables us to reduce the cost of doing business and deliver improvements in cash generation and margin enhancement. It also allows us to prioritise investment in areas that will accelerate growth in our two operating hubs. We continuously review and update our product and project delivery processes to align with our enterprise thinking and value proposition. We constantly seek operational synergies to remove duplication and wasteful practices, allowing us to work smarter and do more with less. Our partners are integral to our success. We focus relentlessly on aligning them to our enterprise approach to assure the project delivery of highly engineered products that have quality and safety built in.

FINANCIAL PERFORMANCEWe drive our financial performance to make acceptable returns that allow us to reinvest in sustaining our own success. We focus on quality of earnings, cash generation and margin enhancement, and exercise strict discipline in selecting and pursuing project opportunities which meet or better these financial targets. Revenue growth is not a major driver of business development, shielding the business from pursuing potentially riskier opportunities which are predicated on lowest price procurement routes. Capital allocation is tightly controlled, and our investment appetite is driven by our excellence in engineering, human capital and manufacturing agendas.

Taken together, our business model and approach improve our competitiveness and are helping us achieve our goal of being the trusted partner for our customers as an enduring engineering enterprise.

VALUE CREATION

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See our KPIs from page


CLIENTS, MARKETS AND SECTORS

WE WILL BUILD CLOSER AND DEEPER RELATIONSHIPS WITH OUR CLIENTS IN KEY MARKETS TO BECOME THEIR TRUSTED PARTNER, CREATING MORE VALUE FOR THEM AND FOR US. OUR WAY OF WORKING WITH SUPPORTING PARTNERS, STAKEHOLDERS AND SUPPLIERS IS THE BASIS FOR SETTING HIGHER STANDARDS, GROWING OUR BUSINESS AND INCREASING QUALITY OF EARNINGS, AND ULTIMATELY REDEFINING OUR INDUSTRY.

KEY ELEMENTS CLIENTS MARKETS SECTORS

PRIORITIES We will be selective and discerning in assessing and accepting new business by balancing the need for portfolio diversity with the need for greater controls and finite capability.

We will enhance our customer interactions, moving from a transactional nature to one based on trusted relationships.

We will differentiate on the basis of technical capabilities in engineering and construction.

We will develop a ‘licence to operate’ in selective building and infrastructure sectors on a global basis and follow valued key clients to new markets on a project-by-project basis provided this is strategically aligned to our enterprise model.

We will leverage our talent, significant in-house resources and reputation for delivery. Our strategic focus is based on the pursuit of a varied building and infrastructure client portfolio spanning both public and private sectors that delivers acceptable margin returns and creates future market resilience.

We concentrate exclusively on regions and markets with good growth rates and socioeconomic environments that align with our value proposition.

This level of internationalisation will create a broader business base to shield us from economic fluctuations in, or an over-reliance on, any one market. We will extend our presence in infrastructure to create a more balanced earnings profile with growing markets.

We will increase our footprint in the UK and Australia, while seeking to strengthen our presence in Canada and the Middle East. We will only follow our clients into markets which are benefiting from the right combination of economic, social and environmental developments, and where we can be sure that the project will be profitable and successful in terms of deepening our relationship.

Dedicated sector leaders will focus exclusively on tracking preferred opportunities and nurturing key client relationships to build understanding externally of our capability and increase our strike rate. Over the next few years, we will build up our capacity to deliver projects in key markets and sectors through organic development and, potentially, in-fill acquisitions.

We will enhance how we win work with the use of our SCOPE customer relationship management model – sharing knowledge and influencing major projects early, and boosting our presence with more innovative and proactive marketing.

Our plan is to target high-margin, technically complex projects that utilise more of the engineering excellence inherent within our value proposition.

We will remain disciplined in targeting opportunities and will only commit resources to projects that meet our financial objectives or where we have the potential to build longer-term strategic relationships.

2014/15 ACHIEVEMENTS

- Secured repeat business with long-term customers who value earlier engagement and certainty of our unique approach.

- Secured high-quality new business with blue-chip customers in key sectors.

- Re-organised and strengthened hub senior management teams to achieve better market coverage and penetration.

- Expanded geographic footprint with new office openings in Australia and Canada to capture opportunities in sectors where we have established delivery credibility.

- Increased presence in sectors by recruiting and exporting project talent to focus on opportunities in high-assurance sectors like economic infrastructure and natural resources.

- Re-established our presence in the Australian urban infrastructure market.

- Formalised our CRM framework with dedicated executive-level client contacts and specialist sector leaders.

- Introduced a clear customer perception and satisfaction measurement process to track and continuously improve our service offering.

KEY PERFORMANCE INDICATORS

- Managed Revenue

- EBIT

- Order Book

- Repeat Business

- Customer Satisfaction

- Quality

- Accident Frequency Rate


VALUE PROPOSITION

LAING O’ROURKE IS AN ENGINEERING-LED ORGANISATION WITH GLOBAL EXPERTISE IN DELIVERING MAJOR PROJECTS. WE WILL CONSISTENTLY OFFER A TRUE END-TO-END SERVICE THAT DELIVERS HIGH-QUALITY COMPLEX BUILDINGS AND INFRASTRUCTURE TO BUDGET, ON TIME, SAFELY AND SUSTAINABLY, EXCEEDING CUSTOMERS’ EXPECTATIONS. ULTIMATELY WE WILL BE RECOGNISED FOR INTELLIGENT ENGINEERING, DELIVERED SMARTLY, TO CREATE A WORLD BUILT BETTER.

KEY ELEMENTS

EXCELLENCE IN ENGINEERING

DIGITAL ENGINEERING

DfMA AND OFFSITE MANUFACTURING

DIRECT DELIVERY

PRIORITIES Through our engineering and technical resources we will engage with clients on projects at the very outset, to exert significant influence in the design and delivery of projects which set new standards in achieving absolute certainty of outcomes.

The Engineering Excellence Group (EnEx.G) will drive our innovation agenda, creating competitive advantage through the development of superior engineering solutions.

Our technical functions will integrate seamlessly with like-minded clients and supply chain organisations, partners and project teams at the earliest stages, examining challenges from new angles and seeking out transferable solutions from other sectors.

We will actively engage with clients ‘off project’, building long-term relationships based on advocacy and continuous thought leadership.

We will proactively deploy new skills and technologies ensuring that complex projects are ‘built’ twice – once virtually in a digital-engineering-enabled environment and then at the point of delivery on site, ensuring greater predictability of the time, cost, quality, safety and sustainability outcomes for clients. To meet the demand for more intelligent assets, we will create smarter, engineering-led solutions, constructed with a focus on whole-life value and long-term controlled performance, where the digitally engineered model transforms into the asset management system.

We will work to better coordinate the virtual model environment to integrate the design stages and reduce the risk of discipline interfaces, creating more informed decision making, and providing digital work packs that drive improved productivity through accessible, accurate, real-time data at the workface.

Design for Manufacture and Assembly (DfMA) and offsite manufacturing are transforming the process of construction, making it faster, cleaner, and more reliable. By taking much of the construction activity off site and into a controlled factory environment we will achieve consistently higher standards than traditional contractors can offer.

Our highly automated approach enhances quality and efficiency at every stage – both in the products themselves, which will be repeatedly honed to support optimum performance, and in the production process. This continued optimisation will also improve the sustainability credentials of our products, including energy efficiency and maintenance.

Laing O’Rourke has a unique integrated delivery capability, bringing together the people, technologies and processes under one roof to enable a full-service approach. Owning our own supply chain and directly employing the necessary skills helps to reduce the risks normally associated with a traditional delivery approach.

Through the integration of our core competencies in project management and construction delivery, the specialist knowledge, shared values and level of control we maintain deliver the value inherent in our value proposition.

At the same time we respect the value of all resources and endeavour to deliver more with less by completing projects quicker and without need for reworking.

In parallel we will minimise the amount of energy and materials we consume, helping us to comply with sustainability best practice.


- Continued investment in recruiting and upskilling engineering talent, prioritising design management, to meet technical requirements of our early engagement approach.

- Accelerated digital engineering and DfMA deployment across both hubs through greater alignment of our core engineering, manufacturing and delivery businesses.

- Expanded building and MEP component sets to achieve defect-free quality, improving time and predictability of commissioning process.

- Strengthened capabilities in logistics management as utilisation levels of DfMA on projects increase.

- New Group-wide organisational structure rolled out, placing accountability for margin performance closer to project delivery.


- EBIT

- Order Book

- Repeat Business


- Quality


- Employee Engagement

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KEY ELEMENTS HUMAN CAPITAL PRODUCTIVITY FINANCIAL PERFORMANCE

PRIORITIES The long-term success of our industry depends on its ability to attract the very best talent. We will create an industry-leading, meritocratic culture based on the performance and development of our people.

We will prioritise investment in our human capital practices to sustain our position as a recognised employer of choice. We will continue to recruit young talent across all our development programmes, including graduates, scholars, cadets and apprentices, as part of the ‘grow our own’ human capital strategy.

We will derive additional value from our network of alliances with prestigious universities.

We believe that a strong leadership capability is vital to any organisation, and will work to build the skills of our senior executives, functional leaders and key project delivery teams. Our ‘Guns’ and ‘Young Guns’ programmes are designed to fast-track high-potential employees into leadership roles.

We will ensure integrity, honesty, respect and expertise in all our interactions to build and sustain our reputation as a trusted partner.

Protecting the health and safety of everyone involved in or affected by our operations is, and will remain, a core business value. We will continue to lead the industry by investing to further develop and embed our behaviour-based safety culture to eliminate all harm from our operations.

Our projects, business units and supporting functions will reduce operating costs by removing duplication and activities that do not add value – to achieve zero or negative overhead growth. This will ensure we are continually challenging ourselves to deliver superior levels of performance at an acceptable cost. We will have balanced team structures that are resourced to be efficient, effective and in control.

In parallel we will invest in state-of-the-art plant, equipment, services and technologies that enhance our value proposition, allowing us to deliver more with less.

We will share this knowledge and the associated processes, encouraging the supply chain to adopt and comply with Laing O’Rourke’s policies and best practices.

Our DfMA approach will drive up productivity levels, addressing the skills gap in our industry by creating more sustainable careers. It will ensure our people are trained in more future-proofed and exportable skill-sets, deployed in cleaner and safer working environments.

We will drive strong financial performance based on stretching but achievable monetary goals. This will deliver future investment flexibility for the organisation. We will strengthen our capital structure and will always consider more efficient options that are aligned to our operating model.

The Group will continue to focus on its core business, disposing of non-core assets, recycling PFI/PPP assets and building internal capability through our specialist businesses, while continuing to invest in our unique value proposition to clients. Our globally diversified revenue and profit sources will be well balanced and we will work to extend our sector diversification in both hubs with high-value long-term client relationships. Delivery of legacy contracts during 2016 will not be without challenges, however the European market will continue to improve during the year, and we expect the full benefits to be realised in 2017 and beyond. In Australia we anticipate further reduction of activity in natural resources and will therefore maintain investment in urban infrastructure and geographically into Victoria and South Australia which are already seeing success.

We will invest for the long term in areas that support our engineering enterprise model, including, but not restricted to, excellence in engineering, our human capital agenda and manufacturing capability.


- Increased productivity and reduced associated overheads through further efficiency gains following Group-wide organisational restructure and better integration of our delivery businesses.

- Increased investment in, and promotion of, our leading entry-level training programmes for apprentices, scholars, cadets and graduates to bridge growing skills gap.

- Further investment in manufacturing platform, and associated technology interfaces to support development of value proposition.

- World-class senior leadership team in place to drive next stage of strategy execution to 2020.

- Restructured balance sheet by reducing non-core assets and levels of indebtedness, creating a more stable net funds position and better investment capacity.


- Managed Revenue

- EBIT

- Net Funds


- Quality


- Employee Engagement



WE WILL FOCUS ON COST EFFICIENCY AND MARGIN ENHANCEMENT ACROSS ALL OUR BUSINESS ACTIVITIES TO IMPROVE THE PRODUCTIVITY OF THE GROUP AND ENHANCE OUR ABILITY TO INVEST IN AND DETERMINE OUR OWN FUTURE. TO ACHIEVE THIS WE WILL RECRUIT, RETAIN AND DEVELOP THE VERY BEST PEOPLE FOR THE JOB.


MEASURING OUR PERFORMANCE


THE BOARD AND GROUP EXECUTIVE COMMITTEE USE A BALANCED RANGE OF FINANCIAL AND OPERATIONAL INDICATORS ACROSS OUR BUSINESS UNITS TO MEASURE THE GROUP’S PERFORMANCE AGAINST KEY GROUP STRATEGIC ROADMAP (GSR) TARGETS, HELPING TO GUIDE OUR THINKING AND DECISION-MAKING AT EVERY STAGE OF DEVELOPMENT.

FINANCIAL PERFORMANCEThe Group sets stretching but achievable financial performance targets as part of its annual strategic planning process to improve performance from both a cost and sales perspective to drive appropriate financial returns, with complementary capital structures. These are derived from the Group’s consolidated financial statements.

MANAGED REVENUE

£3.85bn

1514131211

4.0

4.3

4.4

4.4

3.9

3.3

3.5

3.6

3.6 3.1

MANAGED REVENUETOTAL REVENUE

NET FUNDS

£370m

1514131211

283

321

439 409

370

EARNINGS BEFORE INTEREST AND TAX(EBIT)

£73.2m

1514131211

51 54

78

60

73

41 34

58 53

12

EBIT PRE-EXCEPTIONAL ITEMSEBIT POST-EXCEPTIONAL ITEMS

Definition: Managed revenue represents the amount of sales generated from the provision of engineering and construction-related services, including the Group’s share of joint ventures, associates and inter-segment sales.

Performance: Managed revenue decreased by 12.7 per cent to £3.85 billion (2014: £4.41 billion) during the year. This was a result of reduced revenue from natural resources projects in the Australia Hub, selective bidding during periods of intense market competition in the latter stages of the global recession, and adverse foreign exchange movements in the trading period. This also reflects an increased focus on quality of earnings over volume of sales across our work-winning activities globally.

Definition: Earnings before interest and tax (EBIT) is a measure of a company’s profit that includes all expenses except interest and income tax expenses. It is the difference between operating revenues and operating expenses, and is a key measure of the operating profitability of all revenue-generating business units.

Performance: Pre-exceptional earnings before interest and tax improved 21.8 per cent to £73.2 million (2014: £60.1 million) despite continuing market challenges facing our industry globally. The performance benefitted from our geographic diversity, with strong performances in Australia and Hong Kong. The improvement was also attributed to a reduction in overheads as we accelerated technical integration of our delivery businesses, and drove productivity improvements in parallel.

This helped to offset a disappointing performance in the UK construction business in the Europe Hub, where three exceptional loss-making projects created additional margin pressure.

Definition: Net funds position at the year-end is a key factor in evaluating the Group’s cash and liquidity position. The Group’s capacity to generate positive net cash balances is an important measure of its ability to invest in business growth and serves as a strong attractor to outside investment.

Performance: The Group ended the financial year with a strong net funds position of £370.4 million (2014: £409 million), despite the reduction in Group revenue and the weaker Australian dollar adversely impacting foreign exchange translations. This is a strong performance in the current market and indicates the underlying strength of the result and the resilience of our enterprise model.

The Group continued to hold significant cash balances compared to its tier-one competitor peer group, and this performance has been achieved in parallel with continued investment in core areas of the business, and the continuation of the Group’s debt reduction strategy over the course of the year. As a result, the Group’s concerted efforts to repay long-term funding and divest itself of leveraged non-core assets, resulted in debt reducing by £96.6 million during the year.

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KEY PERFORMANCE INDICATORS: CONTINUED

ORDER BOOK

£9.2bn(2014: £7.4bn)

REPEAT BUSINESS

67% (2014: 67%)68% – EUROPE HUB66% – AUSTRALIA HUB

CUSTOMER SATISFACTION

80%

OPERATIONAL PERFORMANCE

THE GROUP SETS AND TRACKS OPERATIONAL PERFORMANCE THROUGH ALIGNMENT TO THE GROUP STRATEGIC ROADMAP (GSR) AND OUR VISION TO TRANSFORM THE ORGANISATION INTO ONE RECOGNISED GLOBALLY AS AN ENDURING ENGINEERING ENTERPRISE OF CONSIDERABLE SCALE. THESE RESULTS FORM PART OF A CONTINUOUS MONITORING AND IMPROVEMENT CYCLE THAT HELPS GUIDE THE IMMEDIATE NEXT STEPS IN OUR STRATEGY REALISATION.

CLIENTS, MARKETS AND SECTORS VALUE PROPOSITION

To assess progress towards our aim of becoming an enduring engineering enterprise, we continuously track the marketing, adoption and application of the core elements of our value proposition across our targeted clients, sectors and markets. We also use qualitative client satisfaction survey results as key indicators of our engineering and delivery performance on projects.

The Group’s desire is to fully understand the needs of its clients and deliver on its promises throughout the life of the engineering and construction services provided. Engineering excellence is fundamental to our strategy – through

Definition: Order book represents the value of work outstanding on secured contracts. It is a key measure of our success in winning new work and also provides visibility of future earnings.

Performance: The Group order book increased to £9.2 billion (2014: £7.4 billion). The strong performance is directly attributable to the improving market conditions, particularly in the UK, and the Group’s selective focus on high-quality, profitable work rather than volume. This disciplined approach resulted in some major successes during the year, in targeted key sectors such as commercial building, power, water, rail, healthcare and accommodation.

We are rebuilding future workload beyond 2015 and, encouragingly, our medium-term pipeline of higher-certainty opportunities includes significant prospects in all our core markets. In addition, at year-end, we had a pipeline of ‘in-bid’ opportunities worth approximately £7.4 billion in the Europe Hub, with over AUD$30 billion (£16 billion) of upcoming opportunities being closely tracked in the Australia Hub. We will continue to take a cautious approach, maintaining selectivity to avoid bidding for lower-margin work at a time when price competition in the market remains intense.

Definition: All of our key clients and strategic partners have a dedicated executive-level relationship contact. Client satisfaction data is collected from key clients and strategic partners relating to their perception of the Group’s operational performance on their projects as part of the Quality Management System. In 2014/15 the Group undertook its first global client perception study and developed a new method of gathering and reporting client feedback at project level – a first in our industry. This provides clients with an opportunity to share their views on strengths and weaknesses of the Group’s value proposition and supports our continuous improvement process by allowing us to track and manage client engagement and drive further improvement across all aspects of our business.

Performance: The Group’s goal is a year-on-year improvement in client satisfaction on its major projects, with a targeted 20 per cent overall uplift by 2020 from the 2015 benchmark. As a result previous years’ data has not been included for comparison purposes due to its incompatibility with the new approach.

The newly published client perception feedback is derived from over 150 detailed interviews with 103 of our key clients and strategic partners, representing major existing and potential clients, plus consultants, partners and influencers. When asked to rate their experience of working with Laing O’Rourke, the average score was 8 out of 10 (or 80 per cent). When asked to rate the quality of Laing O’Rourke’s people, the average score was 4 out of 5 (or 80 per cent).

Definition: Repeat business* ratio is the value of external contracting turnover in the year generated from repeat clients as a proportion of total external contracting turnover in the year. It is a measure of the progress against our ‘trusted partner’ objective, client satisfaction levels and is a driver of revenue and earnings growth, as retention helps increase the lifetime value of a client, reduces marketing costs and provides key insights into client behaviour, which supports continuous improvements in our value proposition.

Performance: Repeat business was maintained at 67 per cent of our revenue (2014: 67 per cent). In both the European and Australian businesses we have seen a shift into new sectors with new clients, reflecting the Group’s strategy of focusing on higher-margin, complex engineering projects in core building and infrastructure sectors. We aim to achieve ‘trusted partner’ status with our key clients, through our unique value proposition and the quality of Laing O’Rourke’s delivery.

* Repeat business represents clients with whom we have a previous relationship, having delivered more than one project. All healthcare and education projects in the UK have been aggregated under National Health Service and Department for Education respectively.


ACCIDENT FREQUENCY RATE

0.12(2014: 0.13)

EMPLOYEE ENGAGEMENT

72% (2014: 64%)

QUALITY

98% (2014: 97%)RIGHT FIRST TIME ACROSS OUR GLOBAL MANUFACTURING FACILITIES


extensive deployment of our unique value proposition embracing excellence in engineering, digital engineering, Design for Manufacture and Assembly (DfMA), offsite manufacturing and integrated direct delivery, across all our key sectors and markets.

We are refining our business systems and processes to optimise our assets, capabilities and risk appetite. By working according to our governance framework and complying with the high standards set out in our Global Code of Conduct, the Group will sustain long-term business success.

Definition: ‘Right first time’ is a measure of output quality from our manufacturing facilities and is calculated as the number of products produced less those rejected for quality or non-conformance. It is a key measure of operational efficiency and effectiveness as the impact on projects of defective products – in terms of client satisfaction and the costs and delays of rectifications – can be substantial.

Performance: 98 per cent of product output from our UK and Australian manufacturing facilities was approved as ‘right first time’ quality standard (2014: 97 per cent). This figure is significantly in excess of what can be achieved using traditional in-situ construction and demonstrates the value of our Design for Manufacture and Assembly strategy. As our manufacturing output increases with the addition of advanced manufacturing capabilities, we will continue to work hard to maintain and improve on this ratio, but also to increase the proportion of our industry utilising manufactured components to continue to drive improvements in quality and efficiency.

Definition: The elimination of all accidents from our business is an objective of the highest strategic significance. Our health and safety performance determines our strength as a business. It is not an isolated measure but one that defines our success in all other areas of our operations. For this reason, it is central to business improvement – a precondition of our continued growth and licence to operate.

Accident Frequency Rate (AFR) is an industry-standard measurement equivalent to one reportable lost-time incident resulting in more than seven working days’ absence per 100,000 hours worked (see footnote on page 72).

The Group’s health and safety approach is aligned globally through our Mission Zero programme.

Performance: AFR reduced to 0.12 in the year (2014: 0.13). This reflects an industry-leading performance relative to our peers, validating the investment in leadership time and resources given to all aspects of safety management. Sadly, however, there were two fatalities in our UK operations during the year. In July, factory worker Richard Reddish died following an incident at Explore Industrial Park. Regrettably, this was followed in October by an incident at the Heathrow Terminal 2A Multi-Storey Car Park project, where construction worker Philip Griffiths also lost his life. The Laing O’Rourke leadership team – and colleagues everywhere – share a collective determination to learn the lessons and prevent anything like this from happening again.

Harm of any kind in our workplaces – especially the loss of life – is a matter for the deepest regret, shared by colleagues in every part of the business.

Definition: The Group’s pursuit of industry-leading financial and operational performance is dependent on the quality and commitment of its people. It is critical that the Group attracts, develops and retains the best talent to ensure project delivery within the tight tolerances of quality, time, cost, safety and sustainability required to provide certainty for our clients.

Employee engagement is an all-encompassing metric which determines the level 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, business growth and financial performance.

We increasingly use our employee engagement survey – Shape – to assess individual motivation and organisational processes in this regard.

Performance: Employee engagement is measured every two years and in the recently completed 2015 survey the Group achieved an overall score of 72 per cent – the highest ever on a like-for-like basis, 18 per cent above the global norm for comparator large companies. This is a clear endorsement of our strategic direction and the executive team tasked with leading its implementation.

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GROUP FINANCIAL REVIEW

DEEPENING CAPABILITY

IN THE CONTEXT OF THE MARKET CONDITIONS FACING OUR INDUSTRY ACROSS THE WORLD, THE UNDERLYING GROUP PERFORMANCE HAS BEEN GOOD.”


OVERVIEWIn the context of the market conditions facing our industry across the world, the underlying Group performance has been good, generating pre-exceptional EBITDA of £130.3m (2014: £115.4m). We continue to benefit from our geographic diversity, with a strong performance from our businesses in Australia and Hong Kong during the period, although our business in Europe had a disappointing year.

Despite the continuing economic pressures, we have also continued to increase investment in our strategic innovation, education and training programmes. Our sustainable long-term approach covers entry-level trade apprenticeships, through to cadet, graduate, management training, Young Guns and Guns leadership development, alongside technical and professional courses. This level of Group spend directly supports strategy

implementation, as well as continuing to build the capabilities of supply chain partners who work with us, and ensuring we offer something different and more valuable to clients. Further investment in key sectors including oil and gas, power and accommodation and the private rental and social housing markets in the UK during the year are already proving successful.

The Group continues to maintain a significant level of cash, with net cash of £370 million, and has remained profitable despite the increasing long-term investment, introduction of new innovative methods, rising input price inflation in Europe and significant investment in work-winning to grow the Group’s order book.

Managed revenue reduced by 12.7 per cent to £3.85 billion during the year. This was a result of reduced revenue in the Australia Hub from natural resources projects, selective bidding during periods of intense market competition and adverse foreign exchange movements in the trading period. Profit after tax of £20.1 million (2014: £41.9 million) was delivered through a strong performance from the Australia Hub and a disappointing performance from the Europe Hub which was impacted by three exceptional loss-making UK construction contracts.

LAING O’ROURKE CONTINUES TO FOCUS ON ITS ESTABLISHED OBJECTIVE TO DEEPEN ITS CAPABILITY AS AN ENDURING ENGINEERING ENTERPRISE. OUR FOCUSED INVESTMENT IN INNOVATION THROUGH OUR EXCELLENCE IN ENGINEERING CAPABILITIES, DIGITAL ENGINEERING, DESIGN FOR MANUFACTURE AND ASSEMBLY (DfMA) APPROACH AND OUR SPECIALIST DIRECT DELIVERY BUSINESSES IS HAVING A SIGNIFICANTLY POSITIVE IMPACT ON THE WAY WE GENERATE VALUE AND BENEFIT TO OUR CLIENTS.

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WE WILL CONTINUE TO STRENGTHEN THE RELATIONSHIPS WITH OUR CLIENTS, THROUGH FURTHER DEVELOPMENT AND REFINEMENT OF OUR VALUE PROPOSITION AND INCREASING THE EFFECTIVENESS OF OUR FINANCIAL AND HUMAN RESOURCES.”

GROSS MARGIN The anticipated tightening of gross margins was realised in the year, with pre-exceptional gross margin down from 8.5 per cent in 2014 to 7.5 per cent as a result of lower margins in the European business. In particular, UK construction projects which were won in a highly competitive price-driven market did not allow for the labour, materials and subcontractor price escalation experienced during the year, which impacted margins. The learning curve from the first generation of DfMA-led projects in Europe has been steep, with technical integration and productivity challenges as we built out projects under the new methodology. However, our current bidding processes take on board these learning points and the next generation of DfMA-led projects are showing early signs of success.

We are now seeing margins steadily improving in work currently being secured, and we expect underlying margin to improve over the next two to three years.

Reduced gross margin has been partly offset by a reduction in overheads from £219.0 million to £192.7 million, and profit on sale of £40.6 million from disposal of Private Finance Initiative (PFI) investments which generated an improved pre-exceptional profit from operations of £75.7 million (2014: £62.7 million).

The outlook in the UK construction market has significantly improved during the year, with the number and quality of opportunities being the highest since the start of the global financial crisis.

The Australia Hub generated a 10.8 per cent gross margin through efficient delivery and achieving key milestones on remote resources projects. In Australia we are continuing to see a shift in opportunities from natural resources back to urban development. We expect inner-city margins to remain competitive, with higher margins to be delivered from our key target sectors of rail, defence and oil and gas. The Australian market landscape continues to evolve, with the opportunity for Laing O’Rourke to gain further market share.

Our strategy of generating diversified sources of revenue from both a geographic and a sector perspective will help us maintain our profitable performance.

CASH FLOW AND BORROWINGSThe Group maintained a strong net funds position of £370 million (2014: £409 million) despite reduced Group revenue and the weaker Australian dollar. We believe this is a strong performance in the current market and indicates the underlying strength of the result and our business model. We anticipate cash will come under continued pressure over the next year, with this pressure reducing thereafter as legacy contracts are completed, and as we build out our high-quality order book and grow. Our average month-end cash balances are healthy and at the year-end the Group had undrawn credit facilities of £168.4 million.

Group indebtedness reduced by £96.6 million during the year, primarily due to the planned repayment of all significant property development loans as part of our debt reduction strategy. Investment in core operational plant assets was also carefully managed in the year, with asset-based financing reducing by 4.8 per cent to £120 million. Joint venture borrowings solely relate to non-recourse debt within PFI investments in which the Group participates and this borrowing also reduced as four PFI investments were sold during the year, the funds from which will be re-invested in new PFI investments currently in the construction phase. We intend to invest further in our core operations to support our Design for Manufacture and Assembly strategy.

The Group supports prompt payment to suppliers and has consistently been amongst the industry leaders in its standard payment terms. As such we will continue with our commitment to the UK Government’s Construction Supply Chain Payment Charter which has been agreed by the Construction Leadership Council (CLC), the body set up to deliver the government’s industrial strategy for construction, and of which our Group Chief Executive, Anna Stewart, is a leading member.

£130.3mPRE-EXCEPTIONAL EBITDA (2014: £115.4M)

£370mNET CASH (2014: £409M)

GROUP FINANCIAL REVIEW: CONTINUED


ORDER BOOKThe Group order book increased significantly during the year to £9.2 billion (2014: £7.4 billion), up £1.8 billion on the previous year. Order book growth was driven by the Europe Hub which increased by £2.6 billion in the year to £8.1 billion. Whilst we maintained a cautious approach during the period to avoid lower-margin work as part of our bid-to-win approach, as the market improved we invested to secure the improved opportunities available. A number of key large projects were secured during the year, including Oxford’s Westgate Shopping Centre, and the Northern Line Extension and Thames Tideway Tunnel in joint venture with Ferrovial. In the Middle East we continue to target opportunities in Dubai and Abu Dhabi, where we have a permanent presence and strong track record. We are starting to see an improvement in the construction market in the region and expect to grow our business over the next two to three years. In western Canada we are continuing to pursue oil and gas opportunities and have been awarded an Engineering and Technical Support Services Agreement with Nexen Energy to assist the development of the proposed Aurora project in British Columbia.

In Australia work is underway to replenish the order book, which reduced from £1.9 billion to £1.1 billion in the year. This was primarily due to the expected curtailing of new opportunities in the natural resources sectors with existing projects being delivered during the year. Our targeting of significant opportunities in the urban infrastructure markets that play to our strengths is already proving successful. Recent significant successes include the Perth Stadium Station and Transport Hub in partnership with AECOM and the Woolgoolga to Ballina upgrade in partnership with the New South Wales Roads and Maritime Services department (RMS) and Parsons Brinckerhoff. We also expect decisions on a number of key bids and have £2.3 billion of opportunities awaiting a decision.

COST MANAGEMENTThe Group continued to focus on improving the cost efficiency of its operations, and overheads reduced from £219.0 million to £192.7 million in the year. We continued to develop sector expertise and staff training in the business units, alongside further longer-term expenditure in the Engineering Excellence Group and digital engineering functions. We believe these levels of investment exceed those made by others in the industry, and remain confident they will deliver the targeted benefits and act as one of the main catalysts for the implementation of our strategy.

TAXATIONThe Group generated a corporation tax credit of £7.7 million in the year (2014: £10.0 million charge). The credit was generated primarily from three items:

1. Tax incentives granted in Australia and the UK for the significant investments the Group made in research and development.

2. Settlement of an outstanding dispute in Australia in relation to the treatment of work in progress held by Barclay Mowlem Limited when it was acquired by the Group.

3. Non-taxable profit on the sale of PFI assets.

The Group takes its social and economic responsibilities seriously and pays the appropriate amount of tax in all countries where we operate.

PENSIONSThe Group operates a number of pension schemes with leading industry providers in Europe and Australia. These are defined contribution schemes and, as such, there are no outstanding pension liabilities.

INSURANCEInsurance broking globally is consolidated with Marsh, given its technical expertise in underwriting engineering-based projects, combined with international market coverage. During the year the Group continued to experience low levels of claims, although we carefully monitor the balance between insurance risk retained by the Group through its insurance captive, and that which we purchase in the external market. Our insurance profile closely tracks and correlates with our safety performance; this year we reduced our rolling Accident Frequency Rate (AFR) to 0.12. We remain comfortable with the level of insurance risk we are carrying internally.

EXCEPTIONAL ITEMSExceptional operating costs of £61.2 million were recognised in the year, which relate to three first-generation DfMA UK construction contracts which were adversely impacted by input cost inflation and delays in delivery using new construction methods. Significant lessons have been learned from these projects, all of which were secured during the recession, which was a particularly aggressive, price-driven market immediately prior to labour, material and subcontractor cost escalation which outstripped inflation. The lessons learned mean these unusual circumstances are unlikely to recur on new contracts.

Skills shortages, particularly in the UK market, threaten industry productivity improvements demanded by our clients. Our DfMA strategy and the lessons learned on these projects will enable the Group to meet this challenge and deliver greater certainty, quality and value for our clients. Further details on exceptional items are provided in note 4 to the financial statements.

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GOODWILL AND INTANGIBLE ASSETSThe Group carries £326 million of goodwill in the consolidated balance sheet. Goodwill is not amortised under International Financial Reporting Standards, but is tested annually for impairment. In accordance with IAS 36, the recoverable amount has been tested by reference to four-year forecasts, discounted at the Group’s estimated weighted average cost of capital. As at 31 March 2015, based on the internal value-in-use calculations, the Board concluded that the recoverable value of the cash generating units exceeded the carrying amount. Details of this test can be found in note 13 to the financial statements.

FINANCE AND TREASURYThe Group maintains sufficient financial capacity to support its long-term contracting commitments and accommodate future economic and operational challenges. The Group has access to undrawn committed credit lines of £168 million (2014: £81 million) to satisfy the current and future funding requirements of the Group’s business plan. The Group’s centralised treasury function has prudently managed the Group’s liquidity, funding and financial risks arising from movements in areas such as interest rates and foreign currency exchange rates. The Group continues to review its credit support requirement and broaden its base of key financial stakeholders, including key banking relationships and surety bonding providers who support our long-term strategic growth agenda.

During the year the Group secured an oversubscribed five-year £135m revolving credit facility provided by five global banks. The facility is part of the Group’s prudent approach to liquidity management. The size and duration of this facility is a testament to the creditworthiness and balance sheet resilience of the Group.

RISK AND ACCOUNTING POLICIESThe Group’s risk management framework and processes are largely unchanged from 31 March 2014. The Board continuously assesses and monitors risks affecting the Group, and the Chairman’s Statement, Group Chief Executive’s Review and Hub performance reviews include consideration of the relevant uncertainties affecting the business. Further details of how the Group has managed key financial and operational risks such as credit and liquidity risks are set out on pages 98 to 104. As an EU-domiciled company, Laing O’Rourke reports its consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and the Cyprus Companies Law, Cap 113. The Group’s significant accounting policies and measures are explained in the Notes to the Financial Statements on pages 125 to 154.

CONCLUSIONThe Group has continued to focus on its core business, disposing of non-core assets, recycling PFI assets and building internal capability through our specialist businesses whilst continuing to invest in our value proposition to clients. Our globally diversified revenue and profit sources are well balanced and we are working to extend our sector diversification in both hubs. Delivery of legacy contracts during 2016 is not without challenges and will constrain the Group result, however the European market improved significantly during the year, and we expect the full benefits of this to be realised in 2017 and beyond. In Australia we anticipated reduced activity in oil and gas and mining and have invested in target sectors such as defence and roads and geographically into Victoria and South Australia where we are already seeing success.

The Board continues to review our capital structure and we will always consider more efficient options that are aligned to our operating model. At present we are satisfied that we have an appropriate structure, well balanced cash flows, acceptable risk exposure to the supply chain, and a high-quality order book, which taken together are providing sufficient financial resources to meet today’s requirements and fund future growth. We are well positioned to invest further to support our DfMA strategy and benefit from the improving market conditions.

Establishing and consolidating deeper and longer-term relationships with major clients and supply chain partners across high-value sectors and markets provides greater confidence in the validity of our strategic direction.

As a result, the Board has considered the Group’s financial requirements, based on current commitments and its secured order book, as well as the latest projections of future opportunities, against its banking and surety bonding arrangements, and has concluded that the Group is well placed to manage its business risks and meet its financial targets successfully.

STEWART MCINTYREGROUP FINANCE DIRECTOR

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OUR EUROPE HUB COMPRISES LAING O’ROURKE’S OPERATIONS IN KEY BUILDING AND INFRASTRUCTURE SECTORS COVERING PRINCIPAL MARKETS IN THE UNITED KINGDOM, UNITED ARAB EMIRATES, SAUDI ARABIA AND CANADA.

The Group is one of the leading engineering and construction solution providers in its chosen sectors. Our aim is to leverage the scale and efficiencies of our proven value proposition to generate profitable revenues in our core markets, collaborating with like-minded clients and partners who value the certainty of our approach. We will complement this approach by building leading positions in selective growth-oriented sectors and geographies with the right strategic and cultural fit.

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PRINCIPAL OFFICESUNITED KINGDOM1. CARDIFF2. DARTFORD3. EXPLORE INDUSTRIAL PARK4. MANCHESTER5. MOTHERWELL

UNITED ARAB EMIRATES6. ABU DHABI7. DUBAI

SAUDI ARABIA8. RIYADH

CANADA9. CALGARY10. TORONTO11. VANCOUVER

HUB PERFORMANCE: EUROPE

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SELECT PLANT & LOGISTICS

DIGITAL ENGINEERING & VISUALISATION

MANUFACTURING

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CROWN HOUSE TECHNOLOGIES

EXPANDED


THE FRANCIS CRICK INSTITUTE WILL BE AN ENTIRELY NEW FACILITY WITH A DISTINCTIVE VISION OF HOW MEDICAL RESEARCH SHOULD BE CONDUCTED. IT WILL PLAY A KEY ROLE IN CREATING THE FOUNDATION OF KNOWLEDGE ON WHICH THIS CENTURY’S IMPROVEMENTS IN HEALTHCARE WILL BE BASED. IT IS A UNIQUE PARTNERSHIP BETWEEN SIX OF THE UK’S MOST SUCCESSFUL SCIENTIFIC INSTITUTIONS. ESTABLISHED AS A CHARITY, IT WILL BE A WORLD-CLASS RESEARCH CENTRE AND ONE OF THE MOST SIGNIFICANT DEVELOPMENTS IN UK BIOMEDICAL SCIENCE FOR A GENERATION.

A technically complex project which is very heavily serviced, the Laing O’Rourke team is delivering 84,000m² of research and development laboratories plus support facilities in a four-storey basement and eight-storey building – all within a highly congested central London location.

Laing O’Rourke is responsible for the design completion and delivery of the building envelope and internal general and laboratory fit-out works, comprising complex multidisciplinary MEP building services and science equipment using 4D Building Information Modelling (BIM) and Design for Manufacture and Assembly (DfMA) principles.

Construction commenced in April 2011, with completion on schedule for operational readiness in November 2015 for approval by the Home Office and the client.

THE FRANCIS CRICK INSTITUTE, LONDON


ENGINEERINGTHE FUTURETRANSFORMINGSCIENTIFIC RESEARCH

VALUE PROPOSITIONVALUE PROPOSITION IN ACTION

CLIENTS, MARKETS AND SECTORSThe client organisation consists of multiple different entities ranging from charities and government bodies to universities. This unique and innovative partnership between six of the UK’s most successful scientific institutions was established as a charity, bringing together the research capacities and complementary expertise of: the Medical Research Council, Cancer Research UK, the Wellcome Trust, University College London, Imperial College London and King’s College London. This demanded a high degree of collaborative working from the very earliest engagement to ensure the wide range of objectives that had been set for this project were being met.

Given the central London location and the intended use of the facility as a biomedical research centre, a varied range of stakeholders have been proactively and continuously engaged throughout the programme to ensure the interests of all parties are being considered in delivering the client solution.

Science and research is, by its very nature, a highly specialised and bespoke sector that demands very specific expertise and delivery capabilities. Technical precision is paramount on these types of projects, and Laing O’Rourke was able to hand-pick a team with the right skills and experience to deliver this highly complex engineering challenge to an immovable deadline.

IT’S INNOVATIVE. I’VE NEVER SEEN IT BEFORE (DfMA) BUT WILL ALWAYS ASK THE QUESTION GOING FORWARD. IT ENABLES CONTROL AND QUALITY.”

SIR PAUL NURSE,CHIEF EXECUTIVE AND DIRECTOR, THE FRANCIS CRICK INSTITUTE

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Digital images created by Symmetry

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1,500RESEARCH STAFF WHEN FULLY OCCUPIED

1,250SCIENTISTS

12,560m2DEDICATED TO LABORATORY SPACE

VALUE PROPOSITIONDfMAVery early engagement with the architects and designers from the outset ensured that the structural designs had ‘buildability’ engineered into them. Over the course of the two years of design engagement, over 45 per cent of the final asset was reconfigured and delivered using a DfMA solution, both in the structural and mechanical, electrical and plumbing (MEP) phases, ensuring greater certainty for the client.

For example, the basement rooms were manufactured off site using a specialist membrane which allows greater ‘flex’ or movement in the final structure, so essential in research facilities, to ensure air tightness is maintained and the risk of contamination eradicated.

EXCELLENCE IN ENGINEERINGThe Engineering Excellence Group conducted a peer review, given the criticality of the MEP installations. It was identified that the LB2 plantroom (the main energy centre), which is the location for the vast majority of the plant for the building, was a critical installation milestone for the project.

82,578m2GROSS INTERNAL FLOOR AREA

42%OF FLOOR AREA DEDICATED TO MECHANICAL PLANT SPACE

12LEVELS WITH FOUR LOCATED UNDERGROUND

VALUE PROPOSITION IN ACTION

ENGINEERINGTHE FUTUREREDEFINING THE PROCESS

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DIGITAL ENGINEERING FOR LOGISTICSUtilising the latest in digital modelling techniques, animation capability and our in-house MEP offsite manufacturing expertise, a sophisticated visual sequencing programme was produced to communicate a complex and difficult installation. This involved a combination of very-large-scale plant and MEP modules, which were built at our own Crown House Technologies manufacturing facility, being sequenced in the virtual environment to highlight any areas of risk in order to ensure fast, safe and high quality, first-time delivery on site.

An animation was created of the complex delivery sequence, modelling the route of 55 of the plant modules from delivery to final installation. The weights and dimensions of the plant modules, along with just-in-time delivery, were used to create the installation sequence. The animation supported the creation of visual method statements, which were used to communicate key information to staff working on the energy centre, and were also used to demonstrate the delivery sequence to the client, supply chain and other staff on the project.

This process utilised all four elements of Laing O’Rourke’s value proposition (engineering excellence, DfMA, digital engineering and direct delivery) to simplify and streamline an extremely complex operation, which removed significant time and cost risk from the project.

DIRECT DELIVERYThe procurement route for the project advocated UK Government standard open tendering on all the major work packages. Laing O’Rourke was able to demonstrate through the initial delivery stages that it possessed the necessary capabilities within our direct delivery model to satisfy all the demands on such a complex build and installation project. By offering the best service on each element of the project, including construction management, Expanded, Select Plant and Logistics, and Crown House Technologies, Laing O’Rourke significantly de-risked the critical path, and in the process, convinced the client that self-delivery was the only viable approach to achieving the necessary levels of cost, quality and time certainty.

45%OF THE BUILDING COMPLETED UTILISING DfMA

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ENABLING THE ORGANISATIONThe Francis Crick Institute project showcases the depth of Laing O’Rourke’s proven, in-house technical capabilities. Considered a modern-day feat of engineering, many of the innovative solutions that have been successfully implemented on this project are now being rolled out for the benefit of other Laing O’Rourke clients. It has also established the Group as the leading provider of advanced pharmacology and biomedical research facilities in the scientific research sector.

CLIENT SATISFACTIONOn completion, the facility will bring together scientists from many disciplines, all united in one aim – to help to improve people’s lives and keep the UK at the forefront of innovation in medical research, attracting high-value investment and strengthening the economy. When it is fully operational in early 2016, the Francis Crick Institute will employ 1,500 staff, including 1,250 scientists, and have an operating budget of over £100 million a year.

SUSTAINABILITYLaing O’Rourke worked with the Prince’s Trust “Get into Construction” programme to support 40 young people over the course of the project with structured work experience which has in several cases led to a permanent role. They were able to gain valuable work experience, a CSCS (Construction Skills Certification Scheme) qualification and a certification in traffic management.

The project has also provided a major boost to the neighbouring area, providing jobs and local inward investment, as well as a number of initiatives that have helped forge a stronger sense of community in the locality, through the provision of new public spaces, exhibition facilities and a 450-seat auditorium.


1,700m2OF ROOF TOP SOLAR PANELS INSTALLED

2,475m2SIZE OF THE NEW PIAZZA CREATED FOR THE EXCLUSIVE USE OF THE LOCAL COMMUNITY

ENGINEERINGTHE FUTUREPROVIDING A LASTING LEGACY

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CREATING VALUE FOR THE COMMUNITY

40APPRENTICES RECRUITED FROM THE LOCAL BOROUGH OF CAMDEN

5PRINCE’S TRUST ‘GET INTO CONSTRUCTION’ PROGRAMME EVENTS HELD TO PROMOTE CONSTRUCTION CAREERS IN THE LOCAL COMMUNITY

CONTINUING ISSUES, PRIMARILY WITHIN THE UK CONSTRUCTION MARKET, CREATED A ‘PERFECT STORM’ DURING THE 2014/15 REVIEW PERIOD RESULTING IN A CHALLENGING YEAR FOR THE HUB.

The financial performance was adversely impacted by our UK Construction business, causing a materially negative impact on Group performance – this was a disappointing set of results given the good underlying progress made by the business to execute key elements of its strategy and further embed our value proposition with our clients.

In the UK Construction business, projects in delivery had been secured within a previously aggressive, price-driven market where overcapacity had forced down selling prices. At the same time labour, materials and subcontractor costs had escalated at a rate which outstripped inflation, resulting in the buying gain assumptions made during the tender stage failing to materialise. The issue was further compounded by the accelerated deployment of our Design for Manufacture and Assembly (DfMA) approach which placed additional strain on our project delivery resources and critical path activities due to the shorter build programmes, as we brought new products and processes to market.

The hub posted a solid managed revenue performance of £2.4 billion (including share of joint ventures and associates), down moderately on the previous year (2013/14: £2.6 billion), with a loss after tax of £53.1 million, down £90 million on the previous year. As previously stated, this fall can be largely attributed to the impact of severe market pressures in the UK building market, coupled with strategic investments made in our engineering excellence capabilities, project delivery resources and DfMA-led approach, which once fully deployed and embedded will help further insulate us from future external market pressures. There was good underlying growth in Infrastructure, Expanded, Crown House Technologies and Select Plant, helping to offset some of the reduction in the UK Construction business.

Transitioning to our new proposition has taken time, and the learning curve for our delivery businesses has been steep. Technical integration on this scale is complex and multi-faceted, and this has caused additional productivity challenges which we are now addressing as a priority. What this has highlighted is the absolute imperative for the entire industry to recognise and address the importance of early design development, to ensure schemes are fully approved prior to onsite delivery commencing, to achieve greater certainty of outcomes. The lessons learned are now being implemented on all new and future work.

The highlight of the year has been the success of our sector-specific approach to work-winning, which has continued to deliver a strong pipeline of secured work, maintaining our bid-to-win ratio. At the year-end the hub increased its order book to £8.1 billion, with £4.8 billion of new work won during the period, maintaining long-term revenue visibility of 87 per cent for 2016, 62 per cent for 2017 and 33 per cent for 2018.

HUB PERFORMANCE: EUROPE CONTINUED

RUNNING A DIFFERENT RACE

I JOINED LAING O’ROURKE BECAUSE I BELIEVED IT HAD THE RIGHT STRATEGIC PLAN TO RUN THAT DIFFERENT RACE – IN MY FIRST YEAR WITH THE GROUP I AM MORE CONVINCED THAN EVER THAT BY PLACING OUR ENGINEERING ENTERPRISE MODEL AT THE HEART OF EVERYTHING WE DO, WE ARE ON THE RIGHT TRACK TO SUCCESS.”


We have continued to take a cautious approach, maintaining selectivity to avoid bidding for lower-margin work at a time when price competition in the market remains intense. We further enhanced our ‘permission to bid’ criteria, focusing on specific sector opportunities where the combination of excellence in engineering, digital engineering, DfMA methodologies and integrated delivery provides the greatest value potential. We are rebuilding future workload beyond 2015 and, encouragingly, our medium-term pipeline of higher-certainty opportunities includes significant prospects in Canada, the Middle East and the UK. In addition, at the year-end, we had a pipeline of ‘in-bid’ opportunities worth approximately £7.4 billion. This selective approach to new work, our absolute focus on technical excellence and our ability to self deliver up to 60 per cent of the construction value provides confidence that we will soon return our operating margins at the project level to industry leading standards, despite continuing pressures from supply price inflation. This is a journey, not an overnight transformation, but the building blocks are in place to enable it to happen.

In light of the operational challenges, we are accelerating core elements of our strategic plan to enhance our leadership and technical capabilities. In the year we made senior appointments in Scotland, the Middle East, our UK business units and our design, engineering and project management functions. We took significant steps to further integrate and embed our unique approach from the earliest preconstruction stages, bolster our commercial and contract management processes, place project controls at the front and centre of our delivery activities, and prioritise quality management to avoid expensive reworking, and ensure we consistently achieve contract entitlements. The lessons learned from integrating our offsite capabilities into our onsite activities, and the recognition that logistics management presents a major opportunity to achieve substantial efficiency gains, are being progressed into our current bid process at pace to improve further the performance of the business. It is therefore pleasing to be able to report that the next generation of DfMA-led projects is showing early signs of success.

In addition, we are progressing management actions to focus on controllable costs as we remove functional duplication and low-value activities in the delivery business units, aided by a new organisational structure and clearer lines of accountability. By handing greater control of costs and efficiency gains closer to the point of activity, we are confident of achieving a material reduction in overhead strain.

We remain positive about our prospects for the future, reinforced by the results of our first customer perception survey, which highlighted the progress we are making in building long-term, value-based partnerships with customers, and the priority they place on delivery certainty. The exercise was a further demonstration of our willingness to listen and

collaborate, as we position ourselves as a self-aware, outward-looking company, committed to becoming a trusted partner.

Tragically, during the year in review we suffered two employee fatalities that remind us all of just how dangerous our working environments can be. In July, factory worker Richard Reddish died following an incident at Explore Industrial Park. Sadly, this was followed in October by an incident at the Heathrow Terminal 2A Multi-Storey Car Park project, where construction worker Philip Griffiths also lost his life. I want to assure everyone that the Laing O’Rourke leadership team – and colleagues everywhere – share a collective determination to learn the lessons and prevent anything like this from happening again.

Our Mission Zero vision is simple: for each and every one of us to do everything within our power to ensure everybody goes home safely, every day. This constitutes our most important goal – and one we must never, ever give up on. That means we have to be 100 per cent committed, 100 per cent of the time. As a business we are focusing our efforts much more on the big risks – through our ‘Take 5’ programme, we will be relentless in our pursuit to eliminate these from our activities. As an industry we must all play our part by raising concerns where we have them.

Looking forward, revenue levels in 2015/16 will remain consistent with this year’s performance, with the management team firmly focused on driving up the quality of our work and the profitability of our solutions. In the UK, we foresee a period of stability following the result of the general election. We will continue to focus on a balanced portfolio of projects across our preferred building and infrastructure sectors. Further afield, we are re-scaling the Middle East business to offer customers the benefits of our unique approach, while in Canada we are seeing opportunities to export our oil and gas capabilities into British Columbia where we see the adoption of the latest construction techniques, based on the deployment of digital engineering and remote manufacturing, as an opportunity to reduce the labour intensiveness and development risks on these complex, economic infrastructure projects.

At Laing O’Rourke, we believe the construction industry needs to run a different race if it ever hopes to achieve the productivity gains being sought by public and private sector clients, who are demanding greater certainty, quality and value from the next generation of built assets. I joined Laing O’Rourke because I believed it had the right strategic plan to run that different race – in my first year with the Group I am more convinced than ever that by placing our enduring engineering enterprise model at the heart of everything we do, we are on the right track to success.

PAUL SHEFFIELD CBEMANAGING DIRECTOR, EUROPE HUB

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SECTOR HIGHLIGHTS

UNITED KINGDOM


HEALTHCAREIn our UK Construction business, we continued to transform the health services footprint for many communities, further enhancing our position as the UK’s leading provider of healthcare infrastructure. This included the commencement and completion of major construction phases of complex hospital, healthcare and medical research facilities around the country.

During the year we worked on 15 live healthcare projects with a total value of £700 million, and are currently at preferred bidder stage on a further £700 million of work across six schemes.

Laing O’Rourke achieved financial close on the £270 million NHS Dumfries and Galloway Hospital, a new district general hospital for the region. The facility is designed to incorporate new models of care that accommodate the needs of patients, and includes 100 per cent en-suite single rooms, a combined assessment unit, theatre complex, critical care unit and outpatients department. The transfer of skills and lessons learned from the Alder Hey Hospital project proved vital in securing this complex contract, with the clinical design completed early, paving the way for a delivery approach that will ensure a positive impact upon the local community and economy.

Two significant healthcare schemes also achieved a major step forward in the year, with approval granted for the £420 million Brighton 3Ts scheme and the £120 million Cambridge Forum biomedical campus. The Brighton 3Ts project will redevelop Royal Sussex County Hospital to enable our client, Brighton and Sussex University Hospitals NHS Trust, to provide specialist tertiary, trauma and teaching facilities. The Chancellor of the Exchequer, George Osborne, announced Department of Health funding approval for the Brighton reconstruction project, following five years of development work between Laing O’Rourke and Brighton and Sussex University Hospitals NHS Trust. The Cambridge Forum will provide a mixed-use medical and education facility comprising a post-graduate medical education centre, 900 delegate conference centre, 90-bed private hospital and four-star hotel.

Subject to approval of the business case in September 2015, Laing O’Rourke has also been selected as preferred bidder to build a £175 million Specialist and Critical Care Centre in Gwent under the Welsh Government’s ‘Design for Life’ health framework. The new facility will consolidate specialist services in the region and will provide a trauma and emergency assessment centre; cardiac, radiology and stroke services; and specialist paediatric and emergency inpatient care. Construction will commence in early 2016, and when complete, the four-storey building will feature a number of products manufactured in-house at Explore Industrial Park, including our SmartWall technology, plantrooms, risers and distribution modules.

DELIVERING OUR STRATEGY - Laing O’Rourke is the leading

provider of healthcare infrastructure in the UK by value of current projects

- Early engagement with the client led to early design completion and extensive deployment of DfMA

- Transfer of skills and lessons learnt from previous healthcare projects helped secure the contract

Laing O’Rourke achieved financial close on the £270 million NHS Dumfries and Galloway Hospital, a new district general hospital for the region. The facility is designed to incorporate new models of care that accommodate the needs of patients.

NHS DUMFRIES AND GALLOWAY HOSPITAL, SCOTLAND


Work continued on the new £160 million cancer centre at Guy’s Hospital in central London. The scheme has been designed in a digital environment from the outset and, to make best use of space during construction and in the operation of the building, maximises Laing O’Rourke’s DfMA-led offsite approach, including the use of exposed concrete elements, modularisation of services and the addition of an adjacent 12-storey prefabricated steel-frame plant tower. The project achieved multiple milestones, including the laying of the foundation stone in May 2014 and the topping out of the building’s 14-storey frame in March 2015. The team also completed the construction of the innovative above-ground bunkers, and began the signature cladding. It was also partly constructed using Laing O’Rourke’s newly patented E6 flooring system, manufactured off site in a controlled environment by Explore Manufacturing prior to delivery to the construction site for assembly.

In April 2014, Laing O’Rourke completed the final phase of the multi-award winning Pride mental health development in Sunderland – a 122-bed facility at nearby Ryhope Hospital. Later in the year, the first element of the scheme to complete – the Roker and Mowbray Dementia Care Centre at Monkwearmouth Hospital – became the first NHS building to receive a Gold award from the Stirling University’s world-leading Dementia Services Development Centre.

Also in April 2014 Laing O’Rourke completed the transformation of the historic Cardiff Royal Infirmary after four years – with zero defects and an excellent safety record. The combined expertise of Laing O’Rourke Construction, Crown House Technologies and Select transformed an at-risk Victorian landmark into a state-of-the-art medical facility.

In January 2015, the Clatterbridge Cancer Centre NHS Foundation selected Laing O’Rourke to work with it on the business case and design-and-build proposal for a major new cancer hospital in the heart of Liverpool. The Trust, which provides the specialist cancer service for Merseyside and Cheshire, as well as carrying out groundbreaking research, plans to expand its services with a new hospital on the same site as the Royal Liverpool University Hospital and the University of Liverpool. Laing O’Rourke will provide construction and other technical expertise that is vital in developing this outline business case. We will also work closely with staff from the Clatterbridge Cancer Centre, patient representatives and architects BDP to begin the detailed design process. The project includes the redesign of the Trust’s existing Wirral site, as well as designs for the new hospital in Liverpool. If the project receives full approval, Laing O’Rourke would also build the new hospital in Liverpool.

Work began on site in May 2014 to deliver a new £22 million NHS radiotherapy centre for NHS client, the West of Scotland Regional Planning Group. Delivered by an integrated Laing O’Rourke team, the project takes place in a live hospital environment, within a very restricted site footprint. DfMA solutions combined with our ability to use digital engineering to model the construction process have allowed us to reduce the programme time and provide the client with reassurance that we will complete the works with minimal disruption. The project follows the successful delivery of two phases of work at Aberdeen Royal Infirmary, where an integrated Laing O’Rourke team provided a new facility for four radiotherapy bunkers with associated accommodation.

Construction of the future-proofed Alder Hey PFI Hospital in Liverpool – the first NHS health park for children in the UK – entered the final phase of delivery during the year. The project is a proving ground for the deployment of major elements of our value proposition. Alder Hey Hospital has been designed to incorporate an extensive number of innovative construction techniques – largely enabled by our own manufacturing capability – both in precast concrete and MEP plant modules. Our direct delivery approach has seen our Expanded business construct all of the concrete frame and iconic stone and glass façades. Crown House Technologies has manufactured the MEP modules throughout the building. This has enabled us to halve the required site employee resource levels in the latter stages of the contract. Digital engineering has been used extensively on this project – not only to aid and de-clash the complex design – but also to enable modularisation and allow our construction teams to effectively create and communicate daily work plans and risk assessments and keep track on progress. When complete in the autumn of 2015, it will create a new benchmark in the industry for the speed of construction for hospitals of this scale.

Completed six weeks ahead of schedule and under budget, Aberdeen Royal Infirmary’s state-of-the-art facility was officially opened by Scotland’s First Minister in February 2015. It will improve cancer care for patients across NHS Grampian, Orkney and Shetland, with some specialised services being provided to other health boards in the region. Built in two phases the construction was managed throughout by Laing O’Rourke, phase one opening back in July 2012, with the first patients being treated in phase two in early 2014. The Laing O’Rourke and radiotherapy teams worked very closely together to enable patient treatment to continue while building work was carried out. The spacious building at the east end of the infirmary will bring all aspects of radiotherapy delivery under one roof.

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EDUCATION We enhanced our reputation for delivering state-of-the-art educational facilities across the UK during the year. In October 2014, the Education Funding Agency (EFA) selected Laing O’Rourke to fund, design, deliver and provide asset management services for the seven secondary schools in its Yorkshire Priority School Building Programme. More than 8,100 pupils will benefit from new, purpose-built facilities. The seven schools across Bradford, Kirklees and North Yorkshire have a capital value of circa £110 million.

Laing O’Rourke’s Explore Investments will raise the finance for the schools through the government’s PF2 private finance model. Designing the schools in collaboration with architectural and engineering consultants Atkins, Laing O’Rourke will self-deliver the majority of the works through its construction and specialist businesses, and will also provide maintenance and asset management services over a 25-year period. The projects have recently received planning approval and the team is now working towards financial close, due in summer 2015.

Five years after we were appointed to help transform learning through Salford Building Schools for the Future (BSF), the final schools were handed over in October 2014. All Hallows RC High School and Ellesmere Park High School were the last in the three-phase programme that has seen eight new schools created across Salford, Greater Manchester. The completion marks a major achievement for the Group. Partnering with the local authority to form the Local Educational Partnership (LEP), we have provided funding for five of the schools and delivered all eight schools through a one-team solution. Each subsequent phase of the schools has enabled us to further drive benefits through DfMA and digital engineering.

The £50 million Sobell Redevelopment in Aberdare, Wales for Rhondda Cynon Taf County Borough Council achieved major handovers including the opening of the Sobell Leisure Centre in October by Welsh Rugby Union and British Lions stars Jamie Roberts and Alex Cuthbert. The leisure centre includes a flexible, double-height Sport England standard sports hall with sprung vinyl floor. Delivered by Laing O’Rourke Construction, Crown House Technologies, Expanded and Select Plant, the project has incorporated a significant level of DfMA with products from Explore Manufacturing and Bison. The next major milestone will be the completion of Aberdare Community School, with final handover of the full Sobell Redevelopment, complete with athletics track and stadium, scheduled for September 2015.

HIGHER EDUCATIONIn the higher education sector we delivered another successful year, with notable wins and delivery milestones achieved throughout the period. In July 2014 Laing O’Rourke completed the final handover of Oxford Brookes University’s John Henry Brookes and Abercrombie buildings in the same week that the project was named on the fifteen-entry mid-list for the Royal Institute of British Architects (RIBA) Stirling Prize – the most prestigious award in architecture.

In October 2014 we began construction of the £110 million Imperial West Research and Translation Hub for clients, Imperial College London and Voreda Developments Ltd. The construction project will form the centrepiece of the new Imperial West innovation district in White City, west London. The 48,000m² complex will deliver world-class education, research and translation activities, and foster partnerships with global stakeholders from industry, higher education and the NHS. An integrated approach consisting of Laing O’Rourke Construction, Crown House Technologies, Explore Manufacturing, Expanded, Select Plant and Laing O’Rourke Façades will deliver the two buildings.

Our long association with Oxford and Cambridge Universities continued throughout the year. In Oxford we continue work on the new Blavatnik School of Government – due for completion in autumn 2015. We were also appointed to deliver the £35 million Beecroft Physics Building, with the client citing Laing O’Rourke’s proven track record in Oxford and unique integrated one-team offer as key win themes for the bid. This is our eleventh project for the university over a 14-year period, and will create a significant new building with four storeys above ground and three basement levels.

IMPERIAL WEST RESEARCH AND TRANSLATION HUB – WHITE CITY, LONDONIn October 2014 we began construction of the £100 million Imperial West Research and Translation Hub for clients, Imperial College London and Voreda Developments Ltd. The construction project will form the centrepiece of the new Imperial West innovation district in White City, west London.



In October Laing O’Rourke began the Here East scheme at the former Queen Elizabeth Olympic Park media and broadcasting centre, spearheading plans to create a world-class creative and digital cluster in London. At least 25 per cent of people working on the project live in the four neighbouring boroughs with a new apprenticeship created for every 20 people employed.

LEISURE, SPORTS AND PUBLIC SERVICESLaing O’Rourke was appointed at the start of April 2014 to expand the Etihad Stadium in Manchester, for one of the Premier League’s most successful football clubs, increasing capacity from 48,000 to 54,000 and enhancing the range of facilities for fans, corporate hospitality guests and visitors. In June we were appointed for phase two of the Etihad Stadium expansion, with Laing O’Rourke now delivering a further three rows of pitch-side seating. The extremely complex nature of this project is an excellent case study of Group engineering and logistics planning capabilities, and includes the use of a specially procured Select tower crane, capable of lifting a heavier load than any other in the UK. Over the course of the year the team has achieved significant milestones including the completion of the first bay of new seats in October and the installation of the first of six 53m roof rafters in January 2015.

Significant milestones were achieved on the Beswick Community Hub development in East Manchester, including completions and new project wins. The multi-project scheme is a joint venture between Manchester City Football Club, long-standing client, Manchester City Council, and urban regeneration company, New East Manchester. Connell College – a 600-place sixth form college for 16-21-year-olds – opened in September 2014. The East Manchester Leisure Centre element subsequently opened in October, with a public celebration and high praise

from local councillors. In January 2015 we secured further work through the scheme, as we were appointed to construct the world-class Manchester Institute of Health and Performance – the first of its kind in the UK.

In October Laing O’Rourke began the Here East scheme at the former Queen Elizabeth Olympic Park media and broadcasting centre, spearheading plans to create a world-class creative and digital cluster in London. The project is being developed by iCITY, a joint venture between specialist real estate investment and advisory company Delancey and Infinity SDC, the UK’s leading data centre operator. Laing O’Rourke will also provide facilities management during the construction phase of the project. Responding to the London 2012 Olympic and Paralympic Games legacy requirements, the Group will work closely with Here East and the London Legacy Development Corporation (LLDC) to ensure at least 25 per cent of people working on the project live in the four neighbouring boroughs, with a new apprenticeship created for every 20 people employed.

Manchester’s iconic Grade 1 listed Central Library and Town Hall Complex Transformation Programme, completed in March 2014, continued to receive plaudits nationally for the quality of engineering and construction. To date it has won 18 industry awards including, most recently, Project of the Year (over £50 million category) and the Judge’s Supreme Award at the Construction News Awards 2015.

HERE EAST SCHEME, QUEEN ELIZABETH OLYMPIC PARK, LONDON

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ACCOMMODATION

During the year the Group further developed its route to market for a new housing solution in the UK accommodation sector. Branded E5+, the innovative proposition is based on an Advanced Design for Manufacture and Assembly (DfMA) approach.

In November 2014 housing developers London and Quadrant (L&Q) appointed Laing O’Rourke as the delivery partner on their £140 million Whitechapel Central residential-led scheme near central London. Over 70 per cent of the project is being delivered through Group businesses. Our ability to influence design, develop a robust energy strategy and ensure minimal disruption to the community, were key to the bid’s success. This project is still in the early stages, with planning expected to be achieved in mid-2015.

The Elephant Road residential project in inner London, for Southwark Borough Council and DV4 Eadon Developments UK Ltd (a joint venture between long-standing client Oakmayne, and Delancey), started to take shape over the course of 2014/15. The first DfMA components arrived from EIP for onsite installation in August with significant progress made since. Fully utilising Laing O’Rourke’s manufacturing capabilities, almost every structural element will be manufactured off site – over 8,000 components at EIP alone, adding to the 13,000m² of SmartWall, 870 bathroom pods coming from Modulor, stairs, landings and hollowcore floors from Bison and modular MEP. Prior to the decision to use DfMA the anticipated contract programme was 174 weeks. We are now delivering this project within a 133-week schedule.

The William Street Quarter residential development in Barking, London completed in the autumn. The development of 201 properties comprises houses and apartment blocks, including a ten-storey tower block which will provide 76 one-bed apartments. The construction works have been predominantly offsite, featuring concrete construction. The project is shortlisted for RIBA’s East London Housing Project of the Year and Building Magazine’s Housing Project of the Year.

In September 2014, the Group completed a £34 million 710-room student residence scheme for the University of Bath. A project of this scale could not have been delivered in such a tight schedule using traditional construction methods. Therefore, Laing O’Rourke’s integrated delivery capability has been central to the quality and certainty of programme and demonstrates an approach that can be replicated to suit other projects in the residential sector, from student accommodation to private dwellings.

COMMERCIAL

We continued to see tangible signs of recovery in the UK commercial development sector, particularly in central London where demand is returning to pre-recession levels.

Following the award of the prestigious contract to build the iconic Leadenhall Building in the City of London for clients British Land and Oxford Properties, the extensive application of preassembly techniques to significantly enhance programme efficiency through a material reduction in the delivery schedule and waste volumes saw this iconic design quickly become a reality on the UK capital’s skyline, with over 85 per cent of the building manufactured off site. The project hit all its major delivery milestones and achieved practical completion and handover to the client in summer 2014.

Laing O’Rourke’s trusted relationship with British Land over the course of the Leadenhall Building project led to the Group being invited to directly negotiate the contract to construct their next flagship central London commercial development scheme – Clarges in Piccadilly. In March 2015 the project delivery team successfully completed the first ever installation of our new Megaplank decking solution. The new offsite decking solution is a further enhancement of the E6 design first used at the Leadenhall Building and its implementation saved five days on every installation, due to larger plank sizes, fewer crane lifts and faster application.


CLARGES, PICCADILLY, LONDON Laing O’Rourke’s trusted relationship with British Land over the course of the Leadenhall Building project led to the Group being invited to directly negotiate the contract to build their next flagship central London commercial development scheme – Clarges in Piccadilly. In March 2015 the project delivery team successfully completed the first ever installation of our new Megaplank decking solution.


The solution was developed in collaboration with the EnEx.G, Explore Manufacturing, Expanded, the project team and our external partners.

During the year the Group was appointed to deliver the flagship £55 million Scottish Power Headquarters in Glasgow. Laing O’Rourke’s winning solution was predicated on a DfMA solution and direct delivery capability combining the in-house expertise of Select, Expanded, Explore Manufacturing, Bison, Vetter and Crown House Technologies under the project management of the core Construction business unit.

In February 2015, new client Mosley Street Ventures appointed us to deliver its landmark office building, Two St Peter’s Square on Mosley Street, Manchester. Work commenced immediately on the re-development of the existing building, with completion scheduled for January 2017.

SCIENCE AND RESEARCHFollowing the original contract award to construct the shell and core for the Francis Crick Institute in the heart of London, the Group was awarded the remaining mechanical and electrical work packages to complete the advanced biomedical research facility, recognising our groundbreaking collaborative methodology to date.

Read the detailed case study on pages 25 to 31 to find out more about this extraordinary project.

The Glasgow Centre for Virus Research topped-out in May 2014, showcasing outstanding delivery quality of a facility with high specification laboratories and a striking copper façade.

Exactly 16 months after holding a ground-breaking ceremony for the Blavatnik School of Government at the University of Oxford, on January 26, 2015, Laing O’Rourke celebrated reaching the building’s highest point in a ‘topping out’ ceremony. More than one hundred guests, from local Oxford councillors and community leaders, to Laing O’Rourke construction workers and Herzog & de Meuron architects involved with the project, gathered to celebrate the achievement. The Blavatnik School of Government building provides Europe’s first and currently only purpose-built, dedicated facility for research and education in improving government globally.

DELIVERING OUR STRATEGY - 12th project for the University

of Oxford over 12-year period - Client collaboration will continue for

a year after handover to monitor the effectiveness of the building systems

- 99 per cent of the works are being directly delivered by Laing O’Rourke

- In a construction first, tablet devices with 3D digital models of the concrete detailing were used by steel fixers to aid right-first-time delivery

Exactly 16 months after holding a ground-breaking ceremony for the Blavatnik School of Government at the University of Oxford, on January 26, 2015, Laing O’Rourke celebrated reaching the building’s highest point in a ‘topping out’ ceremony.

‘TOPPING OUT’ CEREMONY, BLAVATNIK SCHOOL OF GOVERNMENT, UNIVERSITY OF OXFORD

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RETAILLaing O’Rourke reinforced its position as the leading delivery partner on major retail schemes in the UK with a number of prestigious contract wins and delivery milestones during the year.

In February 2015, the Westgate Oxford Alliance (a joint venture between Land Securities and The Crown Estate) announced Laing O’Rourke as the principal contractor for the £440 million Westgate Oxford Shopping Centre, with work starting on site in spring 2015. Located in the heart of Oxford city centre, the project will transform the existing Westgate shopping centre into an 74,322m² retail and leisure destination. It is due for completion in autumn 2017. Our previous major retail development projects include the award-winning work on Trinity Leeds and Liverpool One, as well as Selfridges at the Bullring in Birmingham, and the modernisation and refurbishment programme at Manchester’s Arndale retail centre.

Since the year-end, Laing O’Rourke has been appointed by British Land as the preferred delivery partner to lead the £50 million internal refurbishment of Meadowhall Shopping Centre in Sheffield. The refurbishment is set to commence in autumn 2015 and will be completed by the end of 2017. The extensive works will create distinct districts within the centre, each with a different finish, including wood and punctured metal. The works will also enable a number of retailers to install double height shop fronts. The refurbishment includes new way-finding, mall seating and lighting as well as the installation of dramatic lighting artwork. The works will largely be completed out of hours to enable all retail and leisure operators to trade throughout the period.

Laing O’Rourke project leader Chris Rafferty was recognised for leadership and collaboration with a gold medal at the Construction Manager of the Year Awards in October for his work at Trinity Leeds retail development – the previous scheme we delivered for our customer Land Securities.


In February 2015, the Westgate Oxford Alliance (a joint venture between Land Securities and The Crown Estate) announced Laing O’Rourke as the principal contractor for the £440m Westgate Shopping Centre Oxford, with work starting on site in spring 2015.

WESTGATE SHOPPINGCENTRE, OXFORD



TRANSPORT

RAILWe continue to be engaged on the UK’s largest commuter rail projects for Network Rail, Crossrail, London Underground and Transport for Greater Manchester. We have established strong working relationships with these client organisations which proved invaluable in securing new contracts during the year.

To support our ambitions in the area of high-speed rail, we announced the appointment of Nadia Savage to lead our approach for the High Speed 2 (HS2) programme. Nadia joined us with over 20 years’ experience in complex project, programme, engineering and operational management in both the public and private transport sectors. In June 2015 we announced that Laing O’Rourke has teamed up with leading UK and European engineering companies FCC Construcción and Murphy to form a powerful joint venture to bid for work on the HS2 scheme. The joint venture combines world-class experience in delivering major high-speed rail projects, together with acknowledged global expertise in tunnelling and station development and delivery. The partners also have an exceptional track record in key areas such as engineering innovation, including offsite manufacturing, sustainability, employment, training and skills development.

In autumn 2014, the Laing O’Rourke/Ferrovial Agroman joint venture – FLO – secured the £500 million London Underground contract to design and build the Northern Line Extension running from Kennington to Battersea via Nine Elms. The six-year project will help kick-start regeneration in the Nine Elms area of south London, supporting up to 160,000 new homes, as well as cutting journey times to the city to under 15 minutes. The new infrastructure will also support up to 25,000 jobs – including the employment of 50 apprentices in the supply chain.

We continued our programme of intensive construction on major stations for Crossrail – covering Tottenham Court Road, Bond Street, Liverpool Street, Canary Wharf and Custom House. The Custom House project team achieved a major milestone during the year with the installation of a 34m 93-tonne bridge ahead of programme. Key to our success on Crossrail to date has been the Group’s ability to demonstrate its extensive rail infrastructure capabilities across its internal supply chain, from the design and digital engineering team to Explore Manufacturing and Expanded for civil engineering and station assembly.

Also during the year, Transport for Manchester awarded MPT, the consortium of Laing O’Rourke, VolkerRail and Thales UK, a contract variation

to deliver the transformational £60 million Second City Crossing in Manchester, the latest phase of the Metrolink tram network expansion programme. This followed the team’s success completing the Metrolink airport line a year ahead of programme.

Laing O’Rourke also received peer-group recognition during the year for its achievements in the rail sector. The Crossrail team at Liverpool Street clinched the Outstanding Contract Award in the Employer category of the Crossrail Apprentice Awards, which recognises performance on individual Crossrail projects against the ‘Quality of Apprenticeships’ criteria.

AIRDuring the year we were recognised for our expertise in working in live air environments to deliver complex programmes of work, when Her Majesty Queen Elizabeth II officially opened Heathrow Terminal 2A – The Queen’s Terminal. This complex engineering challenge was achieved on time and within budget after a highly successful construction programme by Laing O’Rourke and Ferrovial Agroman, working together as the HETCo joint venture.

The team went on to win the Sustainability Award for Heathrow Terminal 2A in the Constructing Excellence Regional Awards. The approach taken was recognised by the judges as highly collaborative from the start, with real supply chain engagement and enthused suppliers. HETCo demonstrated leadership in sustainability across the board – from strategy, through to detailed working on the site. The project embraced all aspects of sustainability – economic, social and environmental – and HETCo’s commitment to sharing best practice was seen as exemplar behaviour. This should put us in a good place to secure further airport work.

LONDON UNDERGROUND – NORTHERN LINE EXTENSION In autumn 2014, the Laing O’Rourke/Ferrovial Agroman joint venture – FLO – secured the £500 million London Underground contract to design and build the Northern Line Extension running from Kennington to Battersea via Nine Elms. The six-year project will help kick-start regeneration in the Nine Elms area of south London.

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HIGHWAYSIn road infrastructure, Laing O’Rourke continued construction on the A453 widening near Nottingham to alleviate one of the UK’s most congested roads. The project team is now relieving another pinch-point for motorists at junction 24 of the M1 near Kegworth in Leicestershire. The £6 million contract involves constructing a new carriageway at the junction to alleviate traffic between the A50 and the M1 southbound.

WATER

The UK water and utilities markets are strategically important to Laing O’Rourke, with £25 billion of investment planned by water companies between 2015 and 2020.

In February 2015, Laing O’Rourke, in joint venture with Ferrovial Agroman, was selected as preferred bidder to construct the largest works package on the Thames Tideway Tunnel project – the central section. The project, which will be the biggest infrastructure scheme ever undertaken by the UK water industry, will make London’s sewerage network fit for the 22nd Century by helping to prevent the millions of tonnes of sewage pollution that currently discharge into the River Thames every year.

Severn Trent Water also extended our place on the AMP6 framework for the next investment period to 2020. Similarly, United Utilities announced LiMA, a partnership of Laing O’Rourke, Imtech and Atkins,

as one of four construction delivery partners for the same period. The appointment was secured on the basis of the team’s ability to harness and build on existing experience and relationships, to provide innovative solutions that deliver value for United Utilities and a world-class water infrastructure for their customers.

United Utilities also appointed the Laing O’Rourke/ Imtech joint venture to undertake the £140 million modernisation of Davyhulme Waste Water Treatment Works in Manchester, the largest treatment plant in the northwest, serving a population of over a million people. The modernisation programme will see the significant remediation of previously abandoned land in advance of the construction of six circular primary settlement tanks, and a new activated sludge plant and ten circular final settlement tanks. This work will lead to significant environmental benefits for the site, greatly improving the outflow, and subsequently the quality, of water entering the Manchester Ship Canal.

DELIVERING OUR STRATEGY - Working with long-standing client

Thames Water, the TTT will be the biggest infrastructure project ever undertaken by the UK water industry

- A key advantage was our ability to optimise our capabilities and experience in tunnel boring machine operation and logistics management already in place as part of the adjacent Northern Line Extension project

In February 2015, Laing O’Rourke, in joint venture with Ferrovial Agroman, was selected as preferred bidder to construct the largest works package on the Thames Tideway Tunnel (TTT) project – the central section. The project, which will be the biggest infrastructure scheme ever undertaken by the UK water industry, will make London’s sewerage network fit for the 22nd Century.

THAMES TIDEWAY TUNNEL, CENTRAL SECTION, LONDON

THE HIGHLIGHT OF THE YEAR HAS BEEN THE SUCCESS OF OUR SECTOR-SPECIFIC APPROACH TO WORK-WINNING, WHICH HAS CONTINUED TO DELIVER A STRONG PIPELINE OF SECURED WORK.”PAUL SHEFFIELD CBEMANAGING DIRECTOR, EUROPE HUB



During the year Laing O’Rourke was announced as a preferred partner for the circa £200 million contract to deliver Swansea Bay tidal lagoon’s 410m turbine house and sluice structure block.

POWER

The Group’s strategic growth plans are predicated on establishing a significant delivery presence in the buoyant global power sector. Therefore the UK’s investment plans to replace ageing power-generation infrastructure with a fleet of new-nuclear plants and supporting infrastructure provide high earnings potential. We are one of the only UK contractors with the engineering know-how, specialist delivery capabilities and reputation for quality needed to perform to the exacting standards of the nuclear generation, processing and storage industry.

As preferred bidder with our partner Bouygues TP for the main civil engineering works package at Hinkley Point C since June 2012, we have been working with the client under an Early Contractor Involvement (ECI) agreement to support the business case for the investment in nuclear new-build and ensure that we can mobilise into the delivery phases rapidly once the Final Investment Decision has been taken.

Regulated power markets are less cyclical and the margin potential less volatile. In response, we have bolstered our delivery capabilities in utility networks, such as power distribution, where we already possess significant expertise backed by the technology platforms, specialist plant and equipment needed to efficiently deploy and manage resources on the multidisciplinary programmes of work typical of these markets. The Group is strongly positioned in this market, securing 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. As part of the framework, Laing O’Rourke has secured £120 million of work at Wimbledon and Dudgeon Sands (Necton) to reinforce the power distribution network in these areas.

RENEWABLESDuring the year Laing O’Rourke was announced as a preferred partner for the circa £200 million contract to deliver Swansea Bay tidal lagoon’s 410m turbine house and sluice structure block.

This element of the build will require up to 500 workers at peak construction, a substantial number of whom will be local to South Wales. Concrete, reinforcing and other materials will also be sourced locally. We will be working with Arup as our chosen design and engineering partner for the contract.

The proposed lagoon is being developed by Tidal Lagoon (Swansea Bay) plc, a special purpose vehicle established specifically for the development of this project. The project will produce sustainable and predictable electricity during the planned 120 years of operation. Many of the component parts for the building of the lagoon could be manufactured or fabricated locally. These include turbine housings, sluice gates, flood doors, rails, electrical controls, hydraulics, precast concrete components, the visitor centre and ancillary buildings. During peak construction, approximately 1,900 FTE (full time equivalent) jobs will be created or supported, covering a range of engineering and construction skill levels.

SWANSEA BAYTIDAL LAGOON, WALES

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SPECIALIST SERVICES

OUR SPECIALIST TRADING BUSINESSES ARE THE ‘ENGINE ROOM’ OF OUR VALUE PROPOSITION, DELIVERING UNPARALLELED CERTAINTY FOR OUR CUSTOMERS THROUGH OUR UNIQUE END-TO-END APPROACH.

MANUFACTURINGThe 2014/15 reporting period has seen productivity improvements across our manufacturing facilities, with a concerted focus on the efficiency, quality and safety of our operations. We increased production volumes with a corresponding improvement in labour efficiency, as customers increasingly recognise the benefits of our value proposition. We still have some way to go to achieve the full potential of its wide-scale adoption, but the direction of travel remains positive.

Our manufacturing facilities also delivered a strong operating performance, with major productivity gains at Explore Industrial Park, Bison, Crown House Technologies Offsite, and the now fully-integrated GRCUK Limited, consistently achieving over £1 million of product being detailed, manufactured and ready for despatch on a weekly basis. Aligned to this, the range, scale and complexity of products being designed and manufactured have grown as expertise and capability within the factories have expanded. The manufacturing, plant and logistics operations were also brought together under single leadership control during the year, which is already delivering a marked uplift in productivity through the introduction of leaner, more efficient working practices, and closer collaboration between the DfMA-influenced project interfaces.

Our ambitions took a significant step forward with the announcement in May 2015 that the Laing O’Rourke shareholders and senior executive team have ratified the Final Investment Decision to build and operate a new Advanced Manufacturing Facility (AMF) alongside our existing factory at Explore Industrial Park in the East Midlands. This state-of-the-art factory will use intelligent design, precision engineering and fully automated processes to deliver a new range of modular residential solutions that will revolutionise house-building in the UK. This is an exciting development for the Group and marks a major step in our plans to establish Laing O’Rourke as a true engineering enterprise by applying the very latest thinking and exploiting the power that new technologies and processes provide.

Bison received a prestigious award in the year from the Concrete Society for its involvement in the extension of an east London sewage treatment facility. Bison was tasked with the design and

manufacture of 8,504m² of unique wall planks for use in the expansion of Beckton Sewage Treatment Works being completed by Tamesis, a joint venture consisting of Laing O’Rourke and Imtech. In recognition of its work on the project, Bison was bestowed with the Excellence in Concrete (Civil Engineering) Award at a ceremony hosted by the Concrete Society.

SELECT PLANT AND LOGISTICS MANAGEMENTThe Select Plant business posted another year of achievement providing a range of innovative heavy plant and lifting solutions, while further developing its industry-leading capabilities in complex logistics management, particularly in areas that support the Group’s DfMA-led delivery approach. It continued to create a series of regional logistics hubs to support Laing O’Rourke’s UK projects, to drive greater efficiencies that derive from ‘just in time’ delivery.

Sustained investment in one of the UK’s youngest and greenest construction fleets has given Select Plant the opportunity to claim prime rental position in the UK, as strict new controls will see old equipment eliminated from London projects. Under new legislation announced by Mayor of London, Boris Johnson, all construction plant over ten years old will be banned from the capital in a bid to improve air quality. Any equipment over this timeline will need to be replaced or retrofitted to meet stringent new standards covering both particulates and nitrogen oxides, with a view to cutting emissions by up to 40 per cent by 2020.

In response, continued investment throughout the recession has provided Select Plant with a young and modern fleet with strong environmental credentials. During the year Select Plant invested over £45 million in new construction equipment. The investment across the range of products ensures the fleet of assets remains young and contains products from premium suppliers ranging from Liebherr and Terex cranes to Caterpillar plant and Scania logistics vehicles, which are being utilised on projects across the UK, including the expansion of the Etihad Stadium for Manchester City Football Club, and the Battersea Power Station redevelopment project.

In August 2014, Select Building Solutions, working in partnership with Atkins and Servaccomm, handed over a new primary school in Salford, Greater Manchester, just 22 weeks after work commenced on the brownfield site. Enabling and ground works, including concrete floor planks supplied by Bison and a steel frame for the hall, took just seven weeks to complete, volumetric accommodation was installed in just three days, and fit-out and commissioning took up the remaining 13 weeks. With an acute shortage of primary school places in Salford, the eight classrooms, main hall, ‘learning street’ and supporting facilities making up the complete one-form entry school are very welcome additions to the educational resources of the area.



In September 2014, Select Plant launched a new apprentice scheme to recruit skilled technicians for its expanding lifting operations team. Developed in conjunction with CITB, the programme will seek to develop highly skilled technicians who will be at the very heart of our DfMA delivery strategy. Successful applicants will work towards a Level 2 certificate in plant operations – (cranes/lifting), with ongoing training throughout their career development. At 31 March 2015, 23 apprentices were enrolled on the scheme and 16 have successfully completed their 14-week intensive training at CITB’s Bircham Newton training facility. These 16 are now gaining experience at Select depots and completing their first lifts on live projects.

EXPANDEDThrough the Expanded Group, Laing O’Rourke is able to self-deliver all of the foundation and superstructure to the major developments the Group is involved in. Backed by a central technical design and engineering resource, the business can deliver the full range of site remediation, piling, foundations, superstructure, precast concrete erection, post-tensioning, slipforming and the installation of our DfMA products.

The majority of the work executed by Expanded over the year was delivered on Laing O’Rourke projects in direct support to the Construction and Infrastructure businesses, to win then deliver the concrete

structures and façades. Typical examples of this collaboration can be seen in the £110 million Imperial West in White City and the £440 million Oxford Westgate Centre. On Imperial West, Expanded have now completed the slipform cores to the high-rise development and are constructing the floor plates with a precast column, beam and lattice plank solution. At Oxford Westgate, Expanded are now well underway with bulk excavation and foundations on their £63 million contract. During the tender they were able to influence the design to accommodate a significant proportion of DfMA products.

THE COMBINATION OF EXCELLENCE IN ENGINEERING, DIGITAL ENGINEERING, DfMA METHODOLOGIES AND INTEGRATED DELIVERY PROVIDES THE GREATEST VALUE POTENTIAL.” PAUL SHEFFIELD CBEMANAGING DIRECTOR, EUROPE HUB

In October 2014, the Education Funding Agency (EFA) selected Laing O’Rourke to fund, design, deliver and provide asset management services for the seven secondary schools in its Yorkshire Priority School Building Programme. More than 8,100 pupils will benefit from new, purpose-built facilities.

YORKSHIRE PRIORITY SCHOOL BUILDING PROGRAMME

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Expanded successfully completed contract negotiations to deliver the piling, basement, sub and superstructure for phase one of 250 City Road, a high-quality mixed-use residential development in the London Borough of Islington. The £42 million, 150-week programme will include all piling, the construction of single and double storey basements, frames for the 43-storey tower building and five apartment blocks, each eight storeys high.

Expanded achieved a major milestone by completing the largest concrete pour it has ever undertaken in the UK, with over 3,300m³ of concrete placed at the One Blackfriars project in London. An integrated Laing O’Rourke team including Expanded Structures, Piling, Demolition and Select is delivering the development’s substructure: a three-storey basement to include plant rooms, hotel conferencing facilities, health club with swimming pool and residents’ car park.

CROWN HOUSE TECHNOLOGIESCrown House Technologies (CHt) retained its leading industry position, posting a strong performance despite the prevailing conditions which have seen a number of high-profile competitors scale back their ambitions. The business expanded its range of services into new industries and sectors to support wider Group interests in heavy industrial, infrastructure, process engineering, power and utilities markets. It has also been working with the EnEx.G and strategic design specialists from Arup, Hoare Lea, AECOM, Atkins and Watermans during the period to further align the external MEP design parameters with the DfMA approach.

CHt also continued to add significant offsite manufacturing capacity during the year as part of the ongoing productivity drive at its facilities. Through early involvement in the preconstruction phase, it has manufactured the mechanical, electrical and plumbing infrastructure on a number of the Group’s major building and social infrastructure projects, including the Alder Hey Hospital, the Francis Crick Institute and Heathrow’s Terminal 2A.

Increased investment in CHt’s DfMA capability has led to the development of several new product ranges including interstitial VRF modules for the commercial sector and volumetric pod components for highly serviced healthcare facilities. The VRF ‘island’ modules have been developed in conjunction with the CHt Manufacturing centre in Oldbury for installation on Laing O’Rourke’s Scottish Power Headquarters project. They combine an extensive list of MEP systems into a single prefabricated module. In late 2014, CHt Manufacturing successfully completed the first Laing O’Rourke modular plant room prototype in Oldbury. The two megawatt prototype is from a new range of small, medium and large modular plant rooms designed by the business. They have been developed as a solution to standardise the plant rooms we provide on our commercial office and retail

projects, rather than installing hundreds of bespoke plant rooms – each with their own level of complexity and differing maintenance requirements.

The business also secured a number of prestigious projects during the year. CHt played a significant role in the successful appointment of Laing O’Rourke for the Here East project (formerly iCITY) on the Queen Elizabeth Olympic Park. The process started as a twin procurement exercise for the infrastructure of a 40MW Infinity data centre and for the redevelopment of the International Broadcasting, Press and Media Centre into a new digital quarter for east London.

CHt has continued to make progress in the industrial sector, particularly in relation to Combined Heat and Power (CHP) and district heating with a number of notable milestones including the award of the £20 million Glasgow University Infrastructure Renewal project in December 2014. The team was praised by the client for its collaborative approach and levels of client engagement, helping CHt establish ‘trusted partner’ status as a contractor of choice with a key Group customer.

ASSET MANAGEMENTWe further invested in the development of our targeted offer in ‘hard’ facilities management during the year. Our approach includes the expertise gained in advanced delivery techniques, visualisations and commercial and technical data derived through the design and construction phases of a project, to provide the client with a whole-life asset management solution, based on our data-rich digital engineering asset models.

We believe we have the opportunity to redefine the value of asset services; to meet the increasingly challenging requirements of clients and end-users for future-proofed buildings and infrastructure that achieve the most exacting environmental and economic performance standards.

WE REMAIN POSITIVE ABOUT OUR PROSPECTS FOR THE FUTURE, REINFORCED BY THE RESULTS OF OUR FIRST CUSTOMER PERCEPTION SURVEY, WHICH HIGHLIGHTED THE PROGRESS WE ARE MAKING IN BUILDING LONG TERM, VALUE-BASED PARTNERSHIPS WITH CUSTOMERS.”PAUL SHEFFIELD CBEMANAGING DIRECTOR, EUROPE HUB



Since the year-end, Laing O’Rourke Middle East has been awarded a third contract on Dubai Parks for Meeras Developments. The new project consists of the construction of 33 buildings which will form the motiongate™ theme park, adjacent to the DreamWorks Big Box that was awarded to Laing O’Rourke in August 2014.

OUTSIDE THE UKTHE MIDDLE EASTOutside the UK, we have maintained our core construction, manufacturing and specialist services capabilities in the Middle East under refocused leadership, to bring greater market knowledge to our opportunity-selection process. We will continue with our cautious approach to securing opportunities that meet our rigorous financial requirements.

We continued the rescaling of our business activities in Dubai and Abu Dhabi, appointing Mark Andrews as the new Managing Director for the region. Mark has a proven track record of adding value to organisations through driving new sales growth alongside performance improvement. He possesses broad expertise in civil, mechanical and electrical engineering, with significant leadership credentials in heavy industrial sectors and has first-hand experience of deploying modular and manufacturing techniques onto a variety of project types.

There are signs that the Dubai economy is recovering strongly and this is supported by an increasing number of attractive opportunities for our construction and specialist trading businesses. The emirate has been awarded the right to host Expo 2020 and this is likely to provide the catalyst for significant government and private-sector investment in infrastructure. Abu Dhabi remains more subdued as a market, but we expect to see an improvement in the medium term, especially with high-end customers who value our history of quality and

reliability. In the wider Gulf region, Qatar is pushing ahead with its ambitious development plans, largely linked to the award of the 2022 FIFA World Cup, but we will limit our exposure in this market to selling products from our Modulor and Joinery businesses.

During the year, we were designated preferred delivery partner (with Majid Al Futtaim) to construct the new Hilton Garden Inn in Dubai. The hotel marks an interesting evolution for the Hilton Group in the region, with the launch of a new three-star-plus brand concept. The project is an ideal opportunity to demonstrate the Group’s design-manufacture-construct capabilities, and is reward for our continuing commitment to the region as an important market. The quality of the bathroom pods manufactured in-house by our own team at Modulor has enabled the Hilton Group to upgrade the hotel to four-star standard.

Since the year-end, Laing O’Rourke Middle East has been awarded a third contract on Dubai Parks for Meeras Developments. The new project consists of the construction of 33 buildings which will form the motiongate™ theme park, adjacent to the DreamWorks Big Box that was awarded to Laing O’Rourke in August 2014. The project scope includes the completion of the frame construction of 15 buildings undertaken within a previous work package, and the completion of the envelope, façade and internal finishes, including all MEP. In addition a further 13 buildings of various shapes and sizes are to be constructed and finished in their entirety.

MOTIONGATE, DUBAI

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Modulor continued to supply preassembled kitchen and bathroom units to the region from its Dubai factory, and has established itself as a supplier to the Group’s projects in the UK. Likewise, the Laing O’Rourke Joinery business also secured a number of new work packages on Group projects across the hub, alongside the provision of high-end traditional carpentry and carving for private commissions.

The longer-term prospects for the Middle East remain broadly positive with global demand for the region’s oil and gas reserves over the long term remaining buoyant. Laing O’Rourke has an outstanding track record of delivering high-quality projects in the region, including the Atlantis Hotel, Dubai Airport’s third terminal, Aldar headquarters and the Al Zeina and Al Bandar residential and mixed-use developments on Al Raha Beach in Abu Dhabi.

Therefore, as global confidence returns, we believe the number of planned projects expected to come to market will increase, with the most active market being the UAE and Dubai in particular, where we are focusing our attention. With our strong brand recognition and track record spanning over three decades in the region, the Group is well positioned to benefit from this renewed confidence.

CANADAWe remain confident in our ability to establish a strong business in Canada that, over time, could contribute a material proportion of the Europe Hub’s revenue and earnings volumes.

Building on our successful engagement in Australia’s oil and gas industry, we have broadened our sector focus to embrace Canada’s growing Liquefied Natural Gas (LNG) opportunities. Our approach is based on following existing strategic customers into new growth markets in areas like British Columbia where several of our global customers are pursuing major LNG export facility developments.

As a result, Laing O’Rourke has signed its first oil and gas contract in Canada, reflecting both our growth plans in key sectors and an aim to develop our work in the region. The Engineering and Technical Support Services Agreement has been signed and Laing O’Rourke will provide technical assistance to develop the proposed Aurora LNG project in British Columbia, Canada. The proposed project is a LNG facility and marine terminal which will be located near Prince Rupert in British Columbia. Natural gas from British Columbia will be converted into LNG for shipment to markets in Asia, where it will be degasified and distributed. The Aurora LNG project is a joint venture between Nexen Energy ULC (a CNOOC Limited company), INPEX and JGC Corporation, which will see us engage with existing clients to showcase our growing expertise in the sector.


PROPOSED AURORA LNG PROJECT, BRITISH COLUMBIA, CANADALaing O’Rourke signed its first oil and gas contract in Canada, reflecting both our growth plans in key sectors and an aim to develop our work in the region. The Engineering and Technical Support Services Agreement has been signed and Laing O’Rourke will provide technical assistance to develop the proposed Aurora LNG project in British Columbia, Canada.


As an integral part of the international consortium, CHUM Collectif, Laing O’Rourke made significant progress during the year in the delivery of Canada’s largest PPP healthcare scheme and the world’s second largest hospital.

To effectively position the business for these future projects, and leverage our current oil and gas portfolio and resources capability, we announced the appointment of Terry Jones, a senior Canadian sector specialist. He is a respected oil and gas professional with over 25 years’ experience in the Canadian market, having worked previously with Suncor and SNC Lavalin in various locations. He brings both sector and regional project and construction experience to bear on the major project proposals we are currently pursuing. To demonstrate the level of our intent, we also established a regional office in Vancouver to help develop closer working relationships with customers by raising awareness of our global and local capabilities.

Although we do not expect a similar number of major projects to be developed in parallel as we experienced in Australia, we are confident that world demand for LNG continues to support the need for additional facilities to meet what is projected to be a shortfall between demand and the supply provided by current projects already under construction.

As an integral part of the international consortium, CHUM Collectif, Laing O’Rourke made significant progress during the year in the delivery of Canada’s largest PPP healthcare scheme and the world’s

second largest hospital – the Centre Hospitalier de l’Université de Montréal – despite the very harsh winter weather conditions, as the project works to complete the first phase of this complex build programme by April 2016.

The project to construct the new home of York University’s Lassonde School of Engineering, 10km outside Toronto, received a major accolade during the year, winning recognition at the Canadian Institute of Steel Construction, 2015 National Steel Design Awards. The Toronto-based project received an Award of Excellence in the ‘Projects Converted to Steel’ category. This award recognised buildings and other structures built and manufactured within Ontario over the last two years for which structural steel was chosen over other building materials because of its unique qualities, validating a key Laing O’Rourke direction to the client and design teams 18 months ago to investigate, design and construct a factory-made structural framing system to support the complicated envelope cladding system.

We expect the Canadian construction market to maintain year-on-year growth of four per cent for the next four-year period, and maintain its position as the seventh largest construction market globally.

CENTRE HOSPITALIER DE L’UNIVERSITÉ DE MONTREAL (CHUM), QUÉBEC, CANADA

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OUR AUSTRALIA HUB COMPRISES A DIVERSIFIED PROJECT PORTFOLIO THROUGH PRINCIPAL OPERATIONS IN AUSTRALIA, HONG KONG AND NEW ZEALAND.

Laing O’Rourke is now offering a distinctive value proposition based on our status as the largest privately owned engineering and construction group in Australia. The business has developed its scope, reach and capability by offering an attractive alternative to the traditional competitors. It is increasingly taking leading positions in carefully targeted natural resources and urban infrastructure sectors, through a dedication to providing highly engineered solutions to a varied set of blue-chip clients across Australasia.

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PRINCIPAL OFFICESAUSTRALIA1. BRISBANE2. DARWIN3. MELBOURNE4. PERTH5. PORT HEDLAND6. SYDNEY

SOUTHEAST ASIA7. HONG KONG

NEW ZEALAND8. AUCKLAND

HUB PERFORMANCE: AUSTRALIA

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REDISPAN

AUSTRAK

LAING O’ROURKE

STABILOR

SELECT PLANT & LOGISTICS

DIGITAL ENGINEERING & VISUALISATION

ENGINEERING EXCELLENCE GROUP


MOOREBANK UNITS RELOCATION, NEW SOUTH WALESTHE LARGEST SINGLE CAPITAL WORKS INVESTMENT IN AUSTRALIAN DEFENCE SINCE WORLD WAR TWO. THE AUD$870 MILLION (£470 MILLION) MOOREBANK UNITS RELOCATION (MUR) PROJECT INVOLVED THE DEMOLITION OF AROUND 200 BUILDINGS AND CONSTRUCTION OF STATE-OF-THE-ART TRAINING FACILITIES FOR THE SCHOOL OF MILITARY ENGINEERING AND OTHER DEFENCE ELEMENTS.

Relocating the services to Holsworthy Barracks in Sydney’s southwest, the 110 hectare site, and its 100 buildings, becomes the first of its kind, globally, to incorporate a fully developed asset information management model.

Laing O’Rourke was responsible for masterplanning the project – and worked closely with the Department of Defence throughout the parliamentary approval phase to demonstrate value for money and secure the necessary public funding.

Given the requirements of the client (also the end-user) absolute assurance of programme was paramount as any delays might impede military capability. The extremely high-profile project was completed as planned, in April 2015, with more than 2,000 personnel transitioned successfully to their new premises.



ENGINEERINGTHE FUTURETRANSFORMINGEFFICIENCIES

RISK MITIGATION IS ABSOLUTELY PARAMOUNT TO THE MILITARY. IT DEFINES EVERY ASPECT OF THEIR OPERATIONS. IT WAS THEREFORE EXTREMELY PLEASING TO HAVE WORKED WITH SUCH AN INFORMED CLIENT, WHO UNDERSTOOD IMPLICITLY THE CERTAINTY OF OUR UNIQUE APPROACH. ”

GRANT D’ARCY, PROJECT LEADER, MOOREBANK UNITS RELOCATION

CLIENTS, MARKETS AND SECTORSThe Department of Defence owns one of the largest real estate portfolios in Australia with around 25,000 buildings, spread over 380 properties, covering millions of hectares of land – including five world heritage listed areas.

Its capital spend per annum is around AUD$1.5 billion (£0.8 billion), making it a strategically important sector for Laing O’Rourke. In particular, we believe our Design for Manufacture and Assembly (DfMA) approach – backed by our digital engineering capabilities – can set us apart by providing the high levels of standardisation required for government buildings.

The MUR project exposed the local market to DfMA and digital engineering on an unprecedented scale. Under the management of Laing O’Rourke, more than 250 subcontractors were engaged in its delivery. To realise our objectives, therefore, it was vital that common standards were achieved across the supply chain – with effective communication maintained at all times.

>250SUBCONTRACTORS ENGAGED IN THE DELIVERY OF THE MUR PROJECT

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1 hourPER MEMBER OF STAFF PER WEEK, APPROXIMATE SAVING ON TRAVEL TIME AROUND THE SUPERIOR NEW LAYOUT

Aerial view of the MUR project

Digital images created by Symmetry

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VALUE PROPOSITIONTo achieve standards of uniformity and durability – required for defence structures, prefabricated steel walls, precast walls, panelised roofs, ceilings and façades were used, along with 250 modular bathroom pods.

DfMA principles were also applied to the project planning and logistics elements, where the scheme was ‘built’ virtually – ahead of the start of works – to ensure delivery to schedule and budget. This was particularly important to minimising disruption, with around 3,000 military personnel using the base during the works.

Laing O’Rourke was responsible for progressing the project from concept to completion, with digital engineering applied throughout the design and delivery phases to develop, assess and implement the planned approach. This enabled the team to maximise time and cost savings, including a substantial reduction in workforce requirements. In addition, the superior layout of the base has cut travel time between buildings by up to an hour a week per member of staff.

250MODULAR BATHROOM PODS INSTALLED

ENGINEERINGTHE FUTURECOLLABORATINGTO SUCCEED

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During construction, Laing O’Rourke also trialled the development of a combined asset model for the mess, gym and pool building. This involved augmenting the existing digital engineering model, through specialist software to link the building systems and information (including furniture, fixtures and equipment) with live facilities management feeds. The pilot was initiated and funded by Laing O’Rourke in order to gain a better understanding of the technology available.

We have since continued the relationship with the Department of Defence to further develop its asset management approach – incorporating the entire base within a seven-dimensional building information model (three physical dimensions, plus time, cost, energy and facilities management). We have also been commissioned to examine the feasibility of using digital engineering to manage the client’s activities more broadly.

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3,000MILITARY PERSONNEL CONTINUED TO USE THE BASE DURING THE CONSTRUCTION

ENABLING THE ORGANISATION Along with schedule, value for money was a non-negotiable factor. As with all publicly funded schemes value for money is, by definition, value for society. Not only did this translate into cost efficiencies, but it also increased local economic activity.

In total, the project employed around 8,000 people during its lifecycle – with numbers peaking at around 1,300. On average, 35 per cent of the workforce was recruited from within 15km of the base. Of the 180 Laing O’Rourke employees, 70 per cent were new to the business – meaning new skills had to be developed rapidly. Likewise, scale of the works – and sophistication of the delivery techniques – provided valuable learning opportunities for the 250 subcontractors engaged on the project.

However, the greatest value lies in the quality of the end product, designed and delivered to provide world-class facilities for a world-class military, with better training ultimately leading to better defence.


ENGINEERINGTHE FUTUREPROVIDING A LASTING LEGACY

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8,000PEOPLE EMPLOYED DURING PROJECT LIFECYCLE

35%RECRUITED WITHIN 15KM OF THE BASE

2,000MILITARY PERSONNEL NOW INHABIT AND USE THE NEW INTEGRATED FACILITIES AT HOLSWORTHY SUCH AS THE RELOCATED AND PURPOSE-BUILT CHAPEL

THE COMPREHENSIVE APPLICATION OF DIGITAL ENGINEERING SIGNIFICANTLY DE-RISKED THE DESIGN AND DELIVERY PHASE – AND WILL PROVE INVALUABLE IN THE OPERATIONAL PHASE AS THE DEPARTMENT OF DEFENCE LOOKS

TO UTILISE THIS TECHNOLOGY TO CREATE ADDITIONAL VALUE IN MANAGING THE FACILITIES AND SERVICES AT HOLSWORTHY IN THE FUTURE.”

GRANT D’ARCY, PROJECT LEADER, MOOREBANK UNITS RELOCATION

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The digital engineering model has continued to be used by the Department of Defence after project completion.

LATE IN THE 2014/15 FINANCIAL YEAR, LAING O’ROURKE MARKED AN IMPRESSIVE AND IMPORTANT MILESTONE – A DECADE OF OPERATIONS IN ITS AUSTRALIA HUB.

Over the past ten years, we have steadily built up a diverse portfolio spanning the oil and gas, transport, building construction, defence, airports, mining, marine and civil, and social infrastructure sectors. This is a testament to our people’s dedication to providing the best possible solutions to a varied, and increasingly blue-chip, set of clients across Australasia.

After incorporating the respected Australian infrastructure firm Barclay Mowlem, we have grown to become the largest privately owned engineering and construction business in Australia. We have developed our scope, reach and capability through overseas expansions into Hong Kong and New Zealand, and in the past year further increased our operations in Victoria, South Australia and the Australian Capital Territory. Now, in 2015, we enjoy an aligned leadership team combining long-term experience from within the organisation with the best local delivery knowledge and client connectivity. Under this model we are successfully delivering some of the largest and most technically complex projects in these regions.

The hub posted a solid managed revenue performance of AUD$2.7 billion (£1.5 billion) (including share of joint ventures and associates), materially in line with

2013/14 when excluding non-core development revenue. Profit after tax was AUD$142 million (£76.5 million), up AUD$80 million (£43.5 million) on the previous year. This improved result can be attributed to operational focus and discipline translating to stronger delivery performances across all regions.

These results have been achieved against a changing economic landscape in the Australia Hub. 2014 marked a year of negative real growth in the Australian construction sector as the resources boom subsided, utilities construction entered a downturn, and government fiscal policy tightened, coupled with a weak commercial sector. Most economists expect a period of downturn extending into 2017, principally driven by a 30 to 40 per cent decline in resources construction. The largest falls occurred in oil and gas, which was the sector that had enjoyed the biggest upturn through the record-spending schemes of previous years.

Nevertheless, activity is remaining at high levels overall and we see many opportunities where Laing O’Rourke’s global expertise and local delivery credibility will be valued by our clientele. The national focus has shifted to urban infrastructure development – including road and rail, airports, freight facilities and healthcare – while the Federal Government is also sponsoring ‘asset recycling’ by funding new infrastructure in return for the privatisation of existing long-term state services. State, territory and major city administrations are publicly debating new packaging strategies as they compete for the funding, partnerships and supply chain resources that will be needed to drive several infrastructure mega-schemes.

With these projects in focus, at year-end the hub order book sat at AUD$2.2 billion (£1.2 billion) secured, more than AUD$1 billion (£540 million) in submitted tenders under consideration, and more than AUD$30 billion (£16 billion) in upcoming opportunities currently being tracked by the business. However, a watching brief on

HUB PERFORMANCE: AUSTRALIA CONTINUED

A DECADE OF DELIVERY

I AM CONFIDENT WE HAVE WHAT IT TAKES TO PERPETUALLY RAISE THE BAR AND GROW AS AN INNOVATIVE, COMPETITIVE AND SUSTAINABLE BUSINESS FOR OUR NEXT TEN YEARS IN AUSTRALIA, AND MANY MORE AFTER THAT.”


all projects will remain, as the Australian market and construction industry are highly leveraged to exogenous factors, particularly offshore demand for our traditional resources.

Showcasing our attention on delivery, the 2015 trading year saw us completing works on the largest defence capital project in Australia since World War Two, while providing a critical element of the largest investment in public transport ever made by the Queensland Government. We are responsible for the works that will underpin the return of light-rail transport to the heart of the Sydney central business district (CBD), while building a hospital expansion in the fastest growing area of the city’s western suburbs. We’ve secured the contract to deliver Perth’s newest transport link, are working with federal authorities on the nation’s premiere science and research facility, and have closed out a three-year package of repeat works to provide record iron ore export capacity to resources giant Rio Tinto. In 2014/15, we continued work on three of the largest oil and gas developments in the world, through our clients APLNG, Inpex/JKC and Chevron/Bechtel – while also closing out the commissioning and handover of the 100mL/day Northern Water Treatment Plant for QGC, the third and largest such plant for that client that Laing O’Rourke has delivered.

The highlight of the operating period was the recent award of Australia’s first-ever delivery partner contract to a consortium comprising Laing O’Rourke and Parsons Brinckerhoff. That partnership – Pacific Complete – has been entrusted by the New South Wales Government with the five-year, AUD$4.3 billion (£2.3 billion) task of upgrading the Pacific Highway on the New South Wales (NSW) far north coast.

It is Australia’s largest regional public infrastructure project. The NSW Roads and Maritime Services department (RMS) elected to deliver the scheme via a delivery partner model similar to the role Laing O’Rourke played in overseeing the infrastructure of the London 2012 Olympic and Paralympic Games. The project involves the duplication of approximately 155km of the national highway network, on a crucial stretch connecting Sydney and Brisbane. As programme manager, Laing O’Rourke is uniquely placed to bring key smarts throughout design, procurement and delivery. We believe the delivery partner methodology and our experience on such major programmes globally will set new standards in infrastructure provision and public–private collaboration, and potentially offer other public-sector clients, and their private counterparts, an alternative for the upcoming delivery of major works.

Like the Pacific Highway project, our portfolio shows a continued focus on being at the forefront of smarter, safer and faster delivery – a push that we believe will further strengthen our position in the market. Our innovative processes and technologies are being recognised by our clients and the wider business community. Laing O’Rourke was placed eighth on the prestigious BRW 50 Most Innovative Companies

list, the first time a construction company has been featured. The list recognises great innovation across all areas, including products and services, processes, and communication.

Our industry leadership in digital engineering – or advanced Building Information Modelling (BIM) – has also been recognised by key clients, including the Australian Department of Defence and Queensland’s Department of Transport and Main Roads, and was even showcased as industry best-practice at events held to support the G20 Summit in Brisbane in November 2014. At the same time, our continual investment in Laing O’Rourke’s Design for Manufacture and Assembly (DfMA) approach has seen us refine the practice for the Australian marketplace, delivering prefabricated steel components for our resources projects, mechanical and electrical modules for oil and gas processing plants, and modular bathroom pods, prefabricated façades and integrated services risers for our building projects.

As the hub capability has continued to grow and shift, our focus on delivering that work safely has never been more intense. Over the past four years we have embedded Laing O’Rourke’s Mission Zero programme in the Australia Hub through training, engineering and systems improvements, and universal awareness. We took Mission Zero into every one of our projects and offices, as well as to our supply chain, subcontractors, clients and peers. For 30 consecutive months we reduced our incident rates to reach a Group-leading standard. But we’ve been impatient and restless to do more – and to meet our goal of having a true, industry-leading safety culture. That next step is MZ Next Gear – a programme based on three fundamental principles. We believe people are part of the solution when it comes to safety, not a problem to be managed. We need to focus more on learning from positives as a way to eliminate negatives. Safety is about acting ethically, doing the right thing, not creating a bureaucracy. Our campaign demonstrates that safety is not just about speaking up when you have concerns, it’s about becoming involved in the very decisions that create a safe environment on our projects and in our offices. Engagement, leadership, empowerment and innovation are as big a part of safety management as incident numbers will ever be. We have invested heavily in the rollout of MZ Next Gear in Australia and will work closely with our Europe Hub counterparts as they embark on a similar programme this coming year.

Looking ahead, our agility and responsiveness in the hub will be strongly valued in an ever-changing world, and in the current contraction of the Australian resources market and the economy’s new focus on urban infrastructure. There is no room for complacency. I am confident we have what it takes to perpetually raise the bar and grow as an innovative, competitive and sustainable business for our next ten years in Australia, and many more after that.

CATHAL O’ROURKE MANAGING DIRECTOR, AUSTRALIA HUB

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SECTOR HIGHLIGHTS

AUSTRALIA

COMMERCIAL


BUILDING Laing O’Rourke’s work in Australia in the building sector was headlined in the 2014/15 financial year by the Moorebank Units Relocation (MUR) project in Sydney’s southwest. At almost AUD$900 million (£486 million), this managing contract to demobilise one sprawling military base and re-establish it at another revitalised facility nearby, is the Australian Department of Defence’s largest capital works scheme since World War Two.

MUR is a significant and complex project, involving numerous new structures being built at the Holsworthy base, many with special-use requirements. These range from instructional and training facilities for the School of Military Engineering – such as a minefield clearance training area, tree felling zone, bridging yard, and a plant training compound – to an area reserved for training dogs in detecting explosives. One of the largest facilities is a 58,000m² plant training area, complete with watchtowers over an eight-metre pit containing a granular fill, which is used to teach engineers how to operate earth-moving equipment. During the operating period, the project reached its peak, with more than 1,300 people delivering AUD$1.6 million (£0.9 million) of work every day (equivalent to AUD$40 million (£22 million) per month).

The key driver for success at MUR, beyond the military’s clear safety and quality expectations, has been timely delivery. On 27 February 2015, Laing O’Rourke handed over the School of Military Engineering facilities and the new Holsworthy Chapel, ahead of programme and in time for the April 2015 Centenary of Anzac Day services held at the Australian Army’s newest facilities. Defence is also championing the use of Building Information Modelling (BIM) for Australian Government departments.

Read the detailed case study on pages 51 to 57 to find out more about this groundbreaking project.

The level of client engagement achieved on the MUR project has benefitted our teams in Queensland who are also working with Defence to deliver the Battlefield Airlifter project, an upgrade of the RAAF Amberley air base west of Brisbane. Completing its design phase during 2014/15, Laing O’Rourke will move into delivery mode for this managing contract, which provides a new headquarters and office accommodation, maintenance and hangar complex,

new aircraft parking apron and a combined training facility incorporating integrated simulator and fuselage trainer and maintenance training.

In civilian aviation Laing O’Rourke has returned to Sydney’s international airport, with the September 2014 awarding of a new contract to deliver the Terminal 1 Northern Concourse Main Building Works – demolishing existing amenities, expanding the departures level, refurbishing the lounge, constructing full-height glazed partitions to separate the gate lounges, redesigning the smoke exhaust system, and upgrading the existing air-conditioning plant. The project will ultimately increase gate lounge capacity, consolidate amenities and provide additional space for secondary screening facilities required for flights to the US. Earlier in the year, the hub’s most recently completed airports project – a highly automated in-flight catering facility for Qantas in Brisbane – won the Master Builders Association Award for ‘best industrial building’.

The Griffith University Health Centre on the Queensland Gold Coast also received external recognition during the year when it was named the region’s best health and education facility. This AUD$136 million (£74 million) state-of-the-art facility was the largest single building project in the university’s 40-year history – delivering an 11-storey Centre for Medicine and Oral Health capable of supporting teaching, research and clinical activities and facilities. The three-storey Common Use Teaching Facility incorporates two lecture theatres (600 seats and 200 seats), four seminar rooms (30 seats each) and a common foyer with servery.

BLACKTOWN HOSPITAL CLINICAL SERVICES BUILDING, NEW SOUTH WALESThe New South Wales Premier, The Hon. Mike Baird MP (third from left), Treasurer, The Hon. Gladys Berejiklian MP (second from left) and Health Minister, The Hon. Jillian Skinner MP (fourth from left front row) joined the Laing O’Rourke team on site to celebrate progress at Sydney’s newest public health facility.


On August 1, 2014 and on the back of strong delivery of stadium facilities in the UK, Laing O’Rourke was named as preferred constructor for ANZ Stadium at Homebush Bay – the venue that played host to the Sydney 2000 Olympic and Paralympic Games. Won through our innovative digital engineering approaches to the complex redesign and repurposing of the stadium and its surrounding precinct, the centrepiece of the proposal is a retractable roof made of a translucent membrane which allows sunlight through and is capable of closing in 20 minutes. The stadium’s private-sector owners and operators continue to work with the NSW Government for a funding solution that would allow the precinct upgrades to proceed, as part of a wider state sporting venues strategy. Decisions are expected during 2015.

Another project with NSW Government involvement and a showcase for our unique approach has been the Blacktown Hospital Clinical Services Building. NSW Premier, Mike Baird, presided over the building’s topping out ceremony in November, inspecting DfMA elements including integrated services risers, offsite-manufactured façade panels and 166 modular bathroom pods, a first for any NSW Department of Health project. Part of a AUD$324 million (£175 million) upgrade to the local health facilities, the new 170-bed building will include comprehensive care centres for cancer, cardiac, respiratory and aged care – with a fully enclosed ‘street’ linking the old and new areas.

The Griffith University Healthcare Centre on the Queensland Gold Coast received external recognition during the year when it was named the region’s best health and education facility. This AUD$136 million (£74 million) state-of-the-art facility was the largest single building project in the university’s 40-year history.

WE SEE MANY LOCAL OPPORTUNITIES WHERE LAING O’ROURKE’S GLOBAL EXPERTISE AND LOCAL DELIVERY CREDIBILITY WILL BE VALUED BY OUR CLIENTELE.” CATHAL O’ROURKEMANAGING DIRECTOR, AUSTRALIA HUB

GRIFFITH UNIVERSITY HEALTHCARE CENTRE, GOLD COAST, QUEENSLAND

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TRANSPORT

RAIL The 2014/15 financial year saw Laing O’Rourke delivering urban rail upgrades in Sydney, Brisbane, Adelaide, offshore in Auckland and Hong Kong, winning signature new rail works in Perth and being shortlisted to bid for work on Melbourne’s transport network from our newly opened regional office.

The consortium responsible for Queensland’s largest ever investment in public transport commissioned Laing O’Rourke to deliver a modern, sophisticated rail maintenance centre – as the centrepiece of its strategy to provide commuters with 75 new metro trains, servicing and upgrades for the next 32 years. The AUD$190 million (£103 million) New Generation Rolling Stock (NGRS) facility outside Ipswich will include equipment that can lift an entire six-car, 200-tonne train off the rails for inspection and maintenance, and must be ready in time to support the introduction of the upgraded fleet. NGRS has also served as a digital engineering showcase project, impressing the client Bombardier and eventual asset owners at the Queensland Government, leading to it being selected to demonstrate leading-edge BIM techniques at exhibitions tied to the November 2014 G20 Summit in Brisbane.

The integrated digital model was used to underpin the sophisticated coordination required on the complex site, where the team has encountered more than 1,000 possible in-ground services conflicts. Staff accessed the information with tablet devices in the field or through augmented reality walk-throughs. Around 38 per cent of the project has also been manufactured off site, through the creation and installation of high-level, modular steel walkways

and gantries, as well as utilising lightweight castellated beam sections to allow full roof structure bays to be made up at ground level and lifted up and into place.

The billion-dollar Novo Rail Alliance also had another big year, as it now services the second five-year tranche of the contract with Transport for NSW. Novo Rail – comprising Laing O’Rourke, Aurecon and O’Donnell Griffin – has now delivered more than AUD$1.1 billion (£600 million) in track, power, services and signalling upgrades across the Sydney rail network to cater for patronage increases and rolling stock upgrades. On 16 April, the team was mobilised to deliver Clyde Junction – part of the busy Liverpool to Granville Corridor Upgrade – and connecting in to the Auburn Stabling project, also delivered by Laing O’Rourke in the period, and where the first trains ran through the facility six months earlier. Several other key projects were added to Novo Rail’s increasing list of deployments in 2014/15, including the enabling works for Wickham Transport Interchange (with the main works also to be delivered by Laing O’Rourke in 2015), all-weather canopies for key city stations (manufactured safely and efficiently off site as a DfMA product by Laing O’Rourke company Redispan) and the upgrade of Wynyard Station in Sydney’s central business district (CBD).

DELIVERING OUR STRATEGY - The project team introduced static

frequency converters (SFCs) into the Australian rail network, providing a clean and even transfer of power from the railway to the local grid

The innovative Bauhinia Rail Electrification in the Queensland coalfields for client Aurizon was completed in December 2014. Over 12 months, the Bauhinia team had worked to convert the 110km freight line to an electrified service, in a remote location with ever-changing topography, including high, steep embankments, deep gullies and expansive floodplains, and with temperatures that can hit 50 degrees Celsius.

OVER THE PAST TEN YEARS, WE HAVE STEADILY BUILT UP A DIVERSE PORTFOLIO SPANNING THE OIL AND GAS, TRANSPORT, BUILDING CONSTRUCTION, DEFENCE, AIRPORTS, MINING, MARINE AND CIVIL, AND SOCIAL INFRASTRUCTURE SECTORS.”

CATHAL O’ROURKEMANAGING DIRECTOR, AUSTRALIA HUB

BAUHINIA RAIL ELECTRIFICATION, QUEENSLAND


WYNYARD STATION, SYDNEY, NEW SOUTH WALESWynyard is the third busiest station in Sydney, with around 110,000 people using its platforms every weekday. Early works began in September 2014 and the main upgrade contract for the station is now underway to transform an ageing facility into a new gateway for Sydney’s financial district, the Barangaroo harbourfront precinct and the western CBD.

Wynyard is the third busiest station in Sydney, with around 110,000 people using its platforms every weekday. Early works began in September 2014 and the main upgrade contract for the station is now underway to transform an ageing facility into a new gateway for Sydney’s financial district, the Barangaroo harbourfront precinct and the western CBD. The project is due for completion next year. At its peak, a workforce of around 200 will deliver the work, including an upgrade to the station’s concourse and platforms, with a less cluttered concourse and wider ticket gate area and also new lighting, new tiling, an overhaul of retail outlets and way-pointing signage to help customers move around the station more easily. Digital engineering models have helped provide certainty for the client around passenger services and disruption management, with public access to the busy underground precinct to be maintained throughout construction and the station to remain operational.

The appointment to the critical and sensitive Wynyard works followed Laing O’Rourke’s delivery of an intense early works construction programme to enable the return of light rail to the Sydney CBD. Working on the city’s main thoroughfare, George Street, the light-rail team worked through weekend nights to uncover, map and relocate essential utilities and services such as water, telecommunications, gas and electricity cables and pipes. Preparing the 12km route required careful staging, safety and logistics considerations to ensure the city centre could be returned to full operating capacity each morning – while still meeting the state’s timetable to hand the prepared zone over to the eventual PPP contractor. The team mixed local skills and experience with the learnings, methodologies and key people from the award-winning Manchester Metrolink programme in the Europe Hub.

The Australia Hub’s strategic decision to convert its reputation for urban rail delivery on the east coast to other jurisdictions was rewarded in March 2015 with the awarding of an alliance, featuring Laing O’Rourke and AECOM, to the prestigious Perth Stadium Station project. The contract involves building Perth’s newest transport link, the Stadium Station, as well as significant rail works and stabling infrastructure that will enable our client to store 117 railcars at Burswood. Previous rail works in Western Australia, whilst extensive, had focused on the resources sector and heavy-haul railroads through the remote Pilbara. This urban transport infrastructure project includes a pedestrian footbridge linking the stadium site to east Perth and a dedicated interchange to load up to 20 buses at a time. The station is a vital part of the new Perth Stadium project and will enable up to 28,000 passengers to depart the new sporting and entertainment zone within an hour of an event. Construction will begin in July 2015.

Laing O’Rourke was also recognised for its delivery of remote and regional rail services in the period. The innovative Bauhinia Rail Electrification in the Queensland coalfields for client Aurizon was completed in December 2014. Over 12 months, the Bauhinia team had worked to convert the 110km freight line to an electrified service, in a remote location with ever-changing topography, including high, steep embankments, deep gullies and expansive floodplains, and with temperatures that can hit 50 degrees Celsius. Reaching the construction site could take up to two hours by road, and often involved negotiating rough dirt tracks easily damaged by heavy rain.

The success of the AUD$116 million (£63 million)project owed much to our innovative and often groundbreaking approach. Constructing an electrified rail line including a 132kV switch yard and associated transmission facilities in a location where electrification was never envisaged created unique challenges for the team. Our crews introduced static frequency converters (SFCs) into the Australian rail network, which were designed and built by GE in Germany to suit Bauhinia’s specific and unique requirements. SFCs provide a clean and even transfer of power from the railway’s 50kV electrical system to the 132kV electrical supply from the local grid. The project also used helicopters to install preassembled masts and overhead line equipment where it was logistically challenging, slow and costly to use conventional cranes. Helicopters were also used to string overhead wires and cables along the rail line – another first for the Australian rail network. The project was recognised at both the Infrastructure Partnerships Australia and Permanent Way Institute annual awards.

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INFRASTRUCTURE In addition to the hub’s rail expertise, combined rail, road and light-rail infrastructure projects have been the focus of the new Victoria/South Australian (Vic/SA) region office. Plans for the new region headquarters and a dedicated team were first unveiled in April 2014, with a permanent office up and running, staffed by experienced local leadership in under six months. Thanks to detailed client engagement and a strong welcome from key stakeholders, the Vic/SA team was quickly shortlisted to bid a significant series of public infrastructure works across Melbourne. The new State Government in Victoria has committed to removing 50 of the worst level crossings in the city, through road and rail under- or overpasses, with Laing O’Rourke at the centre of ongoing bidding works for these projects. Also in Vic/SA, at the time of publication, we have been shortlisted to bid a major highways project in South Australia. The Darlington Upgrade, a AUD$600 million (£324 million) motorway in Adelaide’s south, will provide an additional 15,000 motorists a day with improved, non-stop commuting as well as enhanced road freight links. Freight corridors are also high on the agenda in neighbouring Western Australia, with Laing O’Rourke ending the financial year as one of two tenderers shortlisted to compete for stage one of the Perth Freightlink proposal, a dedicated truck bypass servicing the city and ports.

The jewel in the road infrastructure crown for the Australia Hub in 2014/15 was undoubtedly the success in winning the lengthy and detailed tender process for Australia’s largest regional public infrastructure project, also the country’s first-ever delivery partner procurement model. The NSW Roads and Maritime Services department (RMS) embarked on the innovative model to deliver 155km of upgrades to the Pacific Highway, between the north coast towns of Woolgoolga and Ballina. Citing the 2012 London Olympics and Paralympics infrastructure as an example of higher-level coordination of design, procurement and works, interface and stakeholder management, the client called for delivery partner consortiums to work with them on designing the delivery brief. Utilising the global experience gained through our involvement in London 2012, Laing O’Rourke formed the Pacific Complete entity with Parsons Brinckerhoff, which has now been announced as the successful proponent to work with RMS on defining and delivering the AUD$4.3 billion (£2.3 billion), five-year project. Pacific Complete will relocate to Grafton, NSW in mid-2015, from where it will coordinate the project and its subcontractors, completing the last stages of four-lane divided highway between Sydney and Brisbane, and leading to a continuous four-lane divided road all the way from Brisbane to Melbourne.

Laing O’Rourke handed over another piece of key economic infrastructure in the period, following the completion of Sydney Port Botany Terminal 3. Part of the second-largest freight facility in the country, the

Port Botany upgrade involved civil and rail works and associated services over a 46-hectare reclaimed site, and 100,000m³ of concrete paving. The completion of Port Botany gives Laing O’Rourke undeniable industry-leading experience at all key stages of the NSW freight value chain: having delivered the port-side civil works, rail infrastructure on the Southern Sydney Freight Line, and readying the site of the state’s proposed intermodal facility at Moorebank (through the MUR project).

Upgrading export infrastructure has also been in sharp focus on the western coast of Australia. During 2014/15 the Group rounded out a string of back-to-back delivery contracts for Rio Tinto, a client who we have worked with since 1975, to upgrade their main export facility at Cape Lambert. Through a series of repeat deployments over the past three years, our delivery teams have installed and upgraded materials handling infrastructure, modifying the export facility for increasing ore yields. Offsite manufacture and modularisation of steel components have been key to our performance, along with our expertise in long-term remote deployment of large numbers of staff.

Home for most of our people on such deployments are camps that house thousands of fly-in, fly-out workers – with the need to provide en-suite bedrooms, canteens, health services and wifi connectivity – even gymnasiums, tennis and basketball courts. Laing O’Rourke has to date delivered half a dozen modern camp ‘villages’ to support the remote infrastructure industries of Australia, with a combined capacity of almost 7,000 remote workers.


CAPE LAMBERT, PILBARA, WESTERN AUSTRALIAThrough a series of repeat deployments over the past three years, our delivery teams have installed and upgraded materials-handling infrastructure, modifying the export facility for increasing ore yields. Offsite manufacture and modularisation of steel components have been key to our performance, along with our expertise in long-term remote deployment of large numbers of staff.


Digital engineering and DfMA were both used extensively in construction of the AUD$550 million (£297 million) project, utilising learnings from previous delivery of water treatment infrastructure to the same coal-seam gas scheme.

OIL AND GAS

While the pace of the region’s oil and gas capital investment slowed markedly towards the end of the 2014/15 financial year, during the period Laing O’Rourke continued to deliver strongly on five key projects in the sector – which themselves formed part of some of the largest energy investments in the world.

Commissioning of the 100mL per day Northern Water Treatment Plant (NWTP) in regional Queensland, delivered for client QGC, continued ahead of its mid-2015 handover. The reverse osmosis unit was run successfully from November 2014, while digital engineering and DfMA were both used extensively in construction of the AUD$550 million (£297 million) project, utilising learnings from previous delivery of water treatment infrastructure to the same coal-seam gas scheme.

The design team converted the provision of in-situ pipe racks at NWTP to an offsite manufacture and ‘plug and play’ approach, involving designers, suppliers, the logistics team, our Redispan manufacturing business and the rigging, mechanical and scaffolding teams on site. The pipe racks were broken down into 263 module sets based on transport envelopes – eliminating the need for police escorts and pilot vehicles to move the components to the remote Queensland site.

The modules were tagged in computer modelling software which divided each process line into the individual modules. Using a single source of data coordinated all the disciplines and allowed the team to understand the composition of each module, the location of each pipe and the installation sequence. The distance between the drafting team in Sydney, Redispan in Newcastle and the site team in Queensland was bridged using the digital model which generated over 1,500 drawings, facilitating clear communication of the detailed data to everyone involved.

Innovative use of data has also been instrumental to the success of the massive Wheatstone LNG project for Chevron, near Onslow on the coast of Western Australia (WA). The project’s ‘digital workpack’ initiative has led to a 25 per cent improvement in productivity and is now being applied at other hub developments. Some 950 workpacks were prepared – digital programmes that sub-divide the project into elements of around 2,000 hours each. These digital packs contain all the construction, works programme, materials, logistics and inspection information and plans for a programme of work, plus checklists for the delivery teams. Each workpack communicates how the work is to be done and there’s a unique identifier for every piece of work, so different people across key functions describe and report on progress the same way. Digital engineering, the workpacks concept and workforce planning, have transformed the way we

NORTHERN WATER TREATMENT PLANT, QUEENSLAND

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have delivered the half-billion-dollar civil project. The digital knowledge transfer has helped create alignment and engagement in the team, and also been shared with the client for full transparency.

Off the Pilbara coast of WA, Laing O’Rourke’s other project for Chevron has entered final commissioning phase. The AUD$54 billion (£29 billion) Gorgon project on Barrow Island, where we are delivering the general utilities packages, is now being supplied with potable and service water from Laing O’Rourke installations after a gruelling series of 800 commissioning checks. Several other key components will be progressively handed over once testing is completed through mid-2015.

An aligned, engaged and highly efficient direct delivery workforce – part of Laing O’Rourke’s unique value proposition – has made the difference on another oil and gas megaproject, this time in the Northern Territory.

Laing O’Rourke has now completed construction of the four cryogenic LNG tanks in Darwin for the Ichthys project, which will be used to process collected gas and ready it for transportation. Our management of the delivery workforce has seen ongoing increases in efficiency, delighting the client with new standards of safety, productivity and excellence in engineering. The structure of the first

In October, the first trains rolled into the Auburn Stabling project. The project is connected to the busy Liverpool to Granville Corridor upgrade – where our teams have been mobilised to deliver further works for Clyde Junction.


165,000m3 tank was completed in less than six months, regarded as an outstanding achievement in the tropical wet season. However, the team was able to learn from the experience and upgraded its methodology, delivering the second tank in six weeks and the third in just 19 days. The project team across the entire AUD$34 billion (£18 billion) scheme has also been captivated by the engineering solution used by Laing O’Rourke to raise the roof on the giant tanks, the largest of which is bigger than Twickenham Rugby Stadium in London, venue for the Rugby World Cup final in autumn 2015. Once the steel roof petals were lowered into place and connected, the entire structure was lifted into place using an ‘air raise’ technique, hovering off the ground using only 2.23kPa of air pressure (or 1/100th the pressure inside a car tyre).

Following our successful work on these and other key coal-seam gas (CSG) and liquefied natural gas (LNG) projects in Australia, the Group has won its first contract in the emerging Canadian sector. Our experience in regional deployment, digital engineering and DfMA options for the sector, indigenous relations and community engagement will be critical to delivering the same high-quality outcomes for our clients in this new operating region.

AUBURN STABLING, SYDNEY, NEW SOUTH WALES


OUTSIDE AUSTRALIA HONG KONG During the period Laing O’Rourke’s delivery of three transport infrastructure mega-projects in Hong Kong has been characterised by our recognition for excellence in safety, engineering and high-quality delivery – against a backdrop of incredibly complex technical challenges.

The HKD$1 billion (£100 million) 811A rail extension project at the West Kowloon Terminus Approach Tunnel (North) drew towards completion, which will make it one of client MTR’s first Express Rail Link projects to be finalised, when it closes out in mid-2015. The project’s 300m, cut-and-cover tunnelling works will help create an express train link between Hong Kong’s rail network and the rail system of mainland China. The link starts from the Laing O’Rourke operations at West Kowloon on the edge of Victoria Harbour – an urbanised area with many challenges, including existing road and rail infrastructure. Major safeguards have had to be put in place to protect adjacent buildings and infrastructure.

Project 810B, the southern tunnel infrastructure for the West Kowloon Terminus, and 901 – which is the connection to the new South Island Line under Admiralty Station on Hong Kong Island – will continue into late 2016/early 2017. Laing O’Rourke hosted UK Chancellor of the Exchequer George Osborne at the 810B site in 2014, who praised the global engineering effort that was apparent on the infrastructure works.

During 2014/15, Laing O’Rourke also commenced the final phase of its long-term contract with MTR to maintain the Tseung Kwan O Line. Since 2002, Laing O’Rourke has been the only external contractor authorised to deliver maintenance services on Hong Kong’s underground network – the rest performed in-house by MTR. Laing O’Rourke has also delivered the enabling works for the West Kowloon Cultural District, and will monitor the next stages of this major development as they come to market.

NEW ZEALAND During the period Laing O’Rourke completed the NZD$150m (£75 million) electrification of the Auckland rail network. We are maintaining an ongoing presence in the region to evaluate more work with our joint venture partner.

Paired with Hawkins Infrastructure, the rail works involved 34,000 hours of work to install overhead wiring and supporting systems for 80km of dual tracked line, requiring 3,700 support structures, around 4,000 foundations, 50 switching stations and two new power supply stations.

While closing out the important project for client KiwiRail, Laing O’Rourke and Hawkins have continued their successful partnership and are now working with selected clients to evaluate other upcoming opportunities in the region.

MTR INFRASTRUCTURE, HONG KONGLaing O’Rourke’s delivery of three transport infrastructure mega-projects in Hong Kong has been characterised by our recognition for excellence in safety, engineering and high-quality delivery.

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SPECIALIST SERVICES

OUR SPECIALIST TRADING BUSINESSES BUILD ON LAING O’ROURKE’S UNIQUE VALUE PROPOSITION FOR ITS AUSTRALIA HUB CLIENTS.

AUSTRAKThe Austrak business performed strongly during the year in review in a marketplace for concrete sleepers that has softened compared with previous trading periods. Our Rockhampton (Queensland) facility operated at near capacity for both mainline sleepers and turnout bearers, whilst our Geelong (Victoria) facility operated throughout the year to meet a number of contracts. Our Wagga Wagga plant in New South Wales also reopened to deliver the Maules Creek and Gosford Passing Loops supply contracts.

The business achieved 0 DIFR for the first time and has now operated for 17 months without a disabling injury. Quality performance has continually improved with reject rates falling throughout the year and the operations team setting ever-higher quality targets to beat. Long-term supply arrangements with freight and passenger rail operators in both Queensland and Victoria were extended during the year with the business able to compete favourably with both domestic and overseas competitors. Business development activity undertaken included domestic and overseas projects, with tenders submitted for a number of significant projects that will fall across the forward year estimates.

REDISPANRedispan’s business model has centred on the manufacture and marketing of modular, pre-engineered, DfMA conveyor systems for materials-handling applications. These highly versatile systems have become an integral part of major Australian power generation, export ports, mining and minerals treatment facilities.

During 2014/15 Redispan also partnered with the Australia Hub’s Construction and Infrastructure delivery businesses to act as the fabrication plant for key components on major projects. This included 300 mechanical and electrical modules for the Northern Water Treatment Plant in regional Queensland, and DfMA canopies for ‘plug and play’ installation at railway stations in the Sydney network, on behalf of the Novo Rail Alliance.

SELECT PLANTSelect Plant has established a strong foothold in Australia over the past six years and continues to respond to the needs of the Laing O’Rourke delivery businesses, particularly in servicing the rail and oil and gas projects with specific plant requirements. However, with much of the regional deployment that has been the trademark of recent years in Australia curtailing due to the lull in the traditional resources markets, Select will consolidate its business, and prepare for the next round of growth in the region. Operational management will prioritise closely controlling costs, increasing client focus, developing key product streams, increasing asset utilisation and the exploration of new business streams that assist Laing O’Rourke’s Australian operations. In addition, Select will progress around AUD$12 million (£6 million) of new plant acquisitions to support the hub’s emerging markets.

STABILORAnother Laing O’Rourke innovation that advanced during the reporting period was the company’s acquisition and further development of a new construction solution that offers a faster and more cost-effective solution to the traditional alternatives to road and pavement building. Stabilor is a liquid additive that improves the performance and application of cement stabilisation. It is a unique solution that has now been fully tested and is proven to deliver improved pavement infrastructure, faster and for less. It has a particular application in road rehabilitation and the construction of unsealed access or haul roads on construction sites.


LOOKING AHEAD, OUR AGILITY AND RESPONSIVENESS IN THE HUB WILL BE STRONGLY VALUED IN AN EVER-CHANGING WORLD, AND IN THE CURRENT CONTRACTION OF THE AUSTRALIAN RESOURCES MARKET AND THE ECONOMY’S NEW FOCUS ON URBAN INFRASTRUCTURE.”

CATHAL O’ROURKEMANAGING DIRECTOR, AUSTRALIA HUB


Our innovative Stabilor ‘liquid latex’ roadbuilding polymer is achieving 30 per cent savings on major trials, paving the way for its roll-out on remote infrastructure, roads, bridges and other facilities in the unique Australian environment – examples of which include the Great Northern Highway project in Western Australia which Laing O’Rourke completed in recent years.

Stabilor has proven its value during trials on the Ichthys Cryogenic Tanks project at Blaydin Point – the gas-processing facility under construction near Darwin in the Northern Territory. The client had a particular challenge at the materials offloading facility, where the access road surfaces were failing after being used to transport huge pieces of prefabricated gas-processing equipment arriving from overseas. The successful Blaydin Point trials were just one of a range of tests carried out during the year for clients across Australia and in Southeast Asia.

Stabilor can achieve up to 30 per cent savings compared to traditional multi-layered granular road designs. It is classified as non-hazardous, has been shown to work well with most soil types and can be applied at a rate of 5,000m2 per day. Research and development has been key to Laing O’Rourke’s success with Stabilor, providing a point of difference to existing pavement stabilisation solutions. The next phase of that development includes ‘Stabilor X’ – a further optimisation of the formula. Laing O’Rourke is working closely with state roads agencies to accredit the product.

SUNSHIFT During the year, spearheaded by the Engineering Excellence Group (EnEx.G), Laing O’Rourke partnered with the Australian Government to pilot a new renewable energy initiative.

The Australian Renewable Energy Agency (ARENA) provided AUD$860,000 (£465,000) over the course of the year to help Laing O’Rourke develop the world’s first large-scale, redeployable, solar-diesel hybrid energy farm.

ARENA labelled the plant a clear demonstration of a versatile alternative to diesel powered generators. The first 1MW hybrid plant was delivered, unpacked and fully functional in one week. The Laing O’Rourke solution is a real game-changer – providing off-grid locations with a viable energy alternative to expensive, trucked-in diesel, and overcoming the barriers and risks associated with permanent, fixed framed solar installations. The pilot plant included 144 KWp of solar PV and supplies power to a 350-bed accommodation village for a large Laing O’Rourke construction project in remote Queensland.

The EnEx.G is now in the process of testing the system’s commercial viability for the broader market.

GREAT NORTHERN HIGHWAY, WESTERN AUSTRALIA

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SAFETY AND SUSTAINABILITY: OVERVIEW

For Europe Hub Health and Safety performance see page 76

For Australia Hub Health and Safety performance see page 88 For Australia Hub Environmental

performance see page 91

For Europe Hub Environmental performance see page 79

HEALTH AND SAFETY

To protect the health and safety of everyone involved in or affected by our operations, ensuring everyone goes home safe and well every day.

ENVIRONMENT

To minimise the negative impacts of our operations and maximise the quality of the built environment for future generations.

ACTING RESPONSIBLY

0.12^

(2014: 0.13) GROUP AFR*

0.28^

(2014:0.29) GROUP DIFR*

2.42^

(2014: 2.71) GROUP AAFR*

* See footnotes on page 72.

^ Symbol represents figures assured by PwC. Please refer to page 74 for further detail.

SAFETY AND SUSTAINABILITY REPRESENT OUR MOST IMPORTANT BUSINESS PRIORITIES AND SIT RIGHT AT THE HEART OF OUR VALUE PROPOSITION, CONSTITUTING OUR LICENCE TO OPERATE.


£72.6m^(2014: £59.9M) INVESTMENT IN TRAINING, DEVELOPMENT, EDUCATION NETWORKS, R&D AND DfMA

- £54.4m^(2014: £38.1M) R&D AND DfMA

-£18.2m^(2014: £21.8M) TRAINING, DEVELOPMENT AND EDUCATION NETWORKS

72% (2013: 64% ) EMPLOYEE ENGAGEMENT

£402k(2014: £572K) FUNDS AND MATERIALS DONATED BY LAING O’ROURKE EMPLOYEES

£466k(2014: £456K) CORPORATE DONATIONS

775^

(2014: 748) EMPLOYEES ON DEVELOPMENT PROGRAMMES

£10.3m^(2014: £12.1M) HEALTH AND SAFETY TRAINING

For Europe Hub People performance see page 81

For Australia Hub People performance see page 93 For Australia Hub Industry

performance see page 95 For Australia Hub Community performance see page 97

For Europe Hub Industry performance see page 84 For Europe Hub Community

performance see page 86

PEOPLE

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

INDUSTRY

To grow our business by delivering superior engineering strategies that meet the needs of individual clients, while responding to the wider challenges facing our industry.

COMMUNITY

To work with the communities in which we operate to deliver truly transformational projects that enable economic progression and leave behind a positive public legacy.

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SAFETY AND SUSTAINABILITY: OVERVIEW CONTINUED

The attraction, development and retention of construction and engineering skills remains a priority – both for the business and the wider industry. This is particularly so in our Australia Hub, where voluntary leaver rates rose within the year from 17 per cent to 19^ per cent.

Here, as elsewhere, we continue to make every effort to provide our people with rewarding careers that enable them to fulfil their potential. During the year, we invested £18.2 million^ in training, development and education (£21.8 million in 2013/14). In addition £54.4 million^ (£38.1 million in 2013/14) was allocated to our research and development activities.

There are currently 775^ employees on our entry-level development and fast-track leadership programmes (748 in 2013/14). This includes 21 staff completing Laing O’Rourke sponsored masters degrees at the University of Cambridge and Imperial College London. We are also supporting 18 PhD projects at the Universities of Cambridge, Manchester, Nottingham and Oxford, University College London and Imperial College London.

To ensure we are meeting the needs of employees of all disciplines and experience levels, we have expanded our suite of training and development programmes, and introduced a new e-learning portal.

Building on the learning from the Europe Hub, we have enhanced our environmental data-capturing processes within our Australia Hub, resulting in the establishment during the year of a water consumption baseline. This follows the establishment of a construction waste baseline in 2013/14.

Our Group Accident Frequency Rate (AFR) is down from 0.13 to 0.12^. This has been driven by an exceptional performance within our Australia Hub, which has resulted in a reduction in AFR from 0.14 (2013/14) to 0.09^ (2014/15).

Sadly, however, there were two fatalities in our Europe Hub: one in July at Explore Industrial Park and one in October at our Heathrow Terminal 2A Multi-Storey Car Park project. The elimination of harm from our operations is our single most important objective. These two incidents, therefore, represent a tragic failure – and are a matter of sincere regret.

LISTENING TO OUR PEOPLEWe value the views of our employees – and provide a number of avenues for feedback, which allow us to measure the effectiveness of our activities and take action to address areas for improvement.

In November we held our first global health and safety survey. This was followed in February by our biennial employee engagement survey. We have communicated the outcomes of both surveys to our employees – with the full set of reports available via our intranet.

OUR GLOBAL HEALTH AND SAFETY SURVEY In November, 10,029 people participated in our first global health and safety survey – which was open to everyone in our workplaces, including subcontractors and joint venture partners. The questionnaire was compiled by Laing O’Rourke in consultation with ORC International, who collated and analysed the results on our behalf. The survey was produced in ten languages – and will take place again in 2016.

A variety of topics were incorporated, including: processes and procedures; training and equipment; leadership, communication and culture. On the whole, the responses were overwhelmingly positive. However, a number of opportunities for improvement were identified.

THE RESULTSOverall, 89 per cent of respondents agreed the business cares about their health and safety. This compares to a global norm of 59 per cent. The results confirm employees understand our objectives – and that the correct procedures are in place. However, further work is required to improve the effectiveness of incident investigations, with greater focus on communicating lessons learned.

The top five strengths identified were: ‘I know how to report an incident in my workplace’ (95 per cent positive); ‘my supervisor trusts me to do my job safely’ (94 per cent positive); ‘the objectives of Mission Zero are clear to me’ (92 per cent positive);

WE MADE GOOD PROGRESS DURING THE YEAR IN A NUMBER OF STRATEGICALLY IMPORTANT AREAS. IN 2015, WE ACHIEVED OUR HIGHEST EVER EMPLOYEE ENGAGEMENT SCORE AT 72 PER CENT (64 PER CENT IN 2013) – 18 PER CENT ABOVE THE GLOBAL NORM.

SAFETY AND SUSTAINABILITY OVERVIEW

1. In October 2013, new UK legislation came into effect in relation to the classification of work-related accidents (Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013). This means organisations are no longer automatically required to report incidents resulting in an absence from work of between four and seven days. Laing O’Rourke publishes figures corresponding to current RIDDOR but also continues to report three-to-seven day absences internally to allow us to draw direct comparisons with historical data. There were 80 incidents accounted for in our year-end AFR, and a further 24 which resulted in an absence from work of between three and seven days, and are not deemed reportable under the new conventions. Figures for 2013/14, as stated in our 2014 Annual Review, were based on the previous criteria and do not, therefore, correspond with those cited here, which have been restated in line with the new legislation.

2. DIFR (Disabling Incident Frequency Rate): An accident resulting in the loss of one or more days.

3. AAFR (All Accident Frequency Rate): Any accident at all, from serious injuries to minor incidents.


‘I understand how I can contribute to achieving Mission Zero’ (91 per cent positive); ‘the risks to my health and safety at work have been clearly explained to me’ (90 per cent positive).

The top five opportunities identified were: ‘lessons learned through incident investigations are communicated to me’ (68 per cent positive); ‘incident investigations are mainly used to identify how to avoid a recurrence rather than who is to blame’ (72 per cent positive); ‘incidents are always reported through the correct procedures’ (72 per cent positive); ‘Laing O’Rourke communicates changes to safety procedures and processes well’ (76 per cent positive); ‘my colleagues would speak up if they saw anyone working unsafely’ (77 per cent positive).

OUR ‘SHAPE’ EMPLOYEE ENGAGEMENT SURVEY In February, we conducted our biennial Shape survey. Managed by Ipsos MORI, the questionnaire covers a wide range of subjects, including career progression and performance management, safety and sustainability, leadership, communication and corporate strategy.

THE RESULTS In total, 3,855 members of staff participated. This represents a response rate of 71 per cent – our highest ever (62 per cent in 2013). We also recorded our highest ever employee engagement score on a like-for-like basis: 72 per cent (64 per cent in 2013) – 18 per cent above the global norm.

Out of 49 questions, 47 showed an improvement. Against the areas identified as the top drivers of engagement in 2013 – ‘performance management and career development’ and ‘setting ourselves apart’ – positive responses were up on average 8 and 12 per cent respectively.

The results for 2015 show the top drivers for engagement are ‘performance and career development’, ‘safety and sustainability’, and ‘leadership’. The highest and lowest scores against each of these areas were:

- Performance management and career development: ‘I am treated with fairness and respect’ (81 per cent positive) and ‘promotion decisions are made consistently and fairly’ (29 per cent positive).

- Safety and sustainability: ‘Laing O’Rourke puts safety first’ (95 per cent positive) and ‘I feel proud of the contribution Laing O’Rourke makes to the communities where it operates’ (76 per cent positive).

- Leadership: ‘the leadership team of my function communicates a clear vision (65 per cent positive); ‘the changes instigated by Laing O’Rourke’s management have a positive impact’ (50 per cent positive).

HOW WE MEASURE EMPLOYEE ENGAGEMENT – AND WHAT IT MEANSEmployee engagement is measured through a defined set of questions relating to personal fulfilment, pride in the company and confidence in its management. This tells us how satisfied our people are in their jobs, how connected they feel to our ambitions and how motivated they are to give their best. There is, therefore, a direct correlation between employee engagement levels and other key performance indicators, such as quality of service, staff retention, and health and safety.

COMMUNICATIONS ROADSHOWSIn November, we held communications roadshows across the Europe and Australia Hubs. As well as delivering an update on business performance and strategy, the events provide an open forum for individuals to pose questions to the leadership team and share their views. The events were open to staff of all grades and disciplines. In total, around 2,000 people attended.

UNDERSTANDING OUR RESPONSIBILITIESWe have set ourselves a range of targets to guide our activities. These are outlined in hub-specific ‘sustainability roadmaps’ – which reflect the key challenges and opportunities identified by the business. Both are broadly aligned, while allowing for local variations where desirable. We have grouped these targets under the headings: environment, people, industry and community.

- Environment, including: carbon, water and waste.

- People, including: professional development, employee engagement, attraction, retention and diversity.

- Industry, including: client satisfaction, sustainable procurement, research and innovation.

- Community, including: engagement with social enterprises and marginalised groups, local employment and skills building, volunteering and charitable giving.

CORPORATE CHARITIESWe support a number of charities. These include RedR, Cancer Research UK and the Integrated Education Fund of Northern Ireland. In 2014/15 a total of £466,086 was donated by the Group.

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OUR GLOBAL CODE OF CONDUCTOur Global Code of Conduct sets out our standards for working together and with others – and defines the way we manage the social, economic and environmental challenges associated with our activities. A full copy of the document is available on our website.

Compliance with the Code is monitored by our Group security function. Its development and application are the ultimate responsibility of the Group Executive Committee. All employees must pledge their commitment to uphold its principles – and anyone found in breach will be subject to disciplinary action, up to and including dismissal.

We operate an independent ‘conductline’ for individuals wishing to raise a concern. This is open to everyone (including members of the public), with contact details displayed in all our workplaces. During the year 17 suspected breaches of the Code were reported – of which 11 were of a human resources nature (performance, behaviour, grievance). Of the remaining six, five have been investigated and closed out. One remains under active investigation.

To ensure we maintain the highest ethical standards in all our commercial interactions, staff must report ‘gifts and hospitality’ and ‘conflicts of interest’ through our online registers. The threshold for gifts and hospitality is as follows: Australia more than AUD$100 (£54), Canada more than CAD$40 (£76), UAE more than AED150 (£89), UK more than £25. All gifts and hospitality regardless of value must be registered in Hong Kong.

GOVERNANCEWe operate a comprehensive governance framework to ensure issues impacting our sustainability are appropriately addressed. This is managed through a network of committees, all ultimately accountable to the Board and Group Executive Committee (GEC).

The Board sets the strategic direction of our activities, allocates investment and oversees delivery by the GEC. As a subcommittee of the GEC, our Safety and Sustainable Development Committee ensures risks and opportunities associated with health, safety and sustainability are given the highest priority across the Group.

Chaired by the Group Chief Executive, the Human Capital Committee leads the formulation of our people agenda. Its main priority is to mitigate capability risk through targeted attraction, development and retention of a highly skilled, globally mobile workforce.

Primary authority for the day-to-day execution of business strategy is assumed by our Europe and Australia Hub Executive Committees, which are responsible for implementing the GEC’s objectives in their respective jurisdictions. These include targets relating to health and safety, human capital and other key performance indicators.

The explicit management of health, safety and sustainability is delegated to hub-level Safety and Sustainability Leadership Forums. Chaired by the hub MD, the forums are made up of the leaders of each of the relevant business units, who are responsible for ensuring hub-level strategy is implemented within their respective areas.

In both the Europe and Australia Hubs, we have established Sustainability Steering Committees to monitor performance against the respective sustainability roadmaps. These are made up of individuals from a wide range of disciplines and supported by a number of regional forums, which are tasked with validating its proposals.

ABOUT THIS REPORTThis report describes our activities for the 2014/15 financial year (1 April to 31 March) except where stated otherwise. Specifically, it addresses the issues we regard as having the greatest material impact on the sustainability of our business.

The figures published within this section are sourced from centralised and hub-specific databases. 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.

It should be noted that the scope of our sustainability activities will vary according to the size of each of our regional businesses. While it is not always appropriate to adopt uniform initiatives across all areas, those measures identified as business-critical are enforced across the Group.

ASSURANCETo read PwC’s ‘Independent Limited Assurance Report to the Directors of Laing O’Rourke Corporation’ see pages 155 to 156. Figures assured by PwC are marked with a ^ symbol. The criteria for each of these measures are outlined on our annual review website www.laingorourke.com/annual-review-2015

Our Global Code of Conduct.


SAFETY AND SUSTAINABILITY: OVERVIEW CONTINUED

UK2 Australia3 Hong Kong4

2008/09 (baseline) 2013/14 2014/15

2010/11(baseline)

2012/13 AUS FY

2013/14AUS FY 2012/13 2013/14

Scope 1 80,833 37,800 31,701^ 19,159 35,860 38,243^ 5,028 1,185Scope 2 17,600 12,000 12,031^ 6,538 6,570 5,636^ 7,423 773Total (Scope 1 and 2) 98,433 49,800 43,732^ 25,697 42,430 43,879^ 12,451 1,958Scope 3 (Excl waste) 8,230 4,500 4,706 N/A N/A N/A N/A N/ATotal (Scope 1, 2 and 3) 106,663 54,300 49,158 25,697 42,430 43,879 12,451 1,958Waste (Scope 3 – excluded from baseline) 1,200 720 N/A N/A N/A N/A N/A

1. All figures are absolute.

2. Figures are for FY 1 April to 31 March. All UK figures have been subject to CEMARS external verification audit.

3. Figures are for FY 1 July to 30 June. All Australia figures verified under the NGER Act. Includes all projects regardless of operational control. Does not include subcontractor emissions.

4. Figures are for calendar year: 1 January to 31 December. Not externally verified.

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EMPLOYEES ON DEVELOPMENT PROGRAMMES

2015^ 2014Apprentices 237 279Graduates 205 164Scholars and Cadets 245 193Young Guns 36 47Guns 29 30Masters Students 23 35Total 775 748

STAFF LENGTH OF SERVICE

2015^ 2014

Less than 6 months 9% 11%6 months to 1 year 10% 11%1-2 years 16% 13%2-3 years 9% 11%3-5 years 14% 10%5 years + 42% 44%

STAFF AGE PROFILE

2015^ 201425 and under 9% 9%26-35 31% 30%36-45 28% 28%46-55 21% 22%Over 55 11% 11%

WORKFORCE AGE PROFILE

2015^ 201425 and under 8% 10%26-35 32% 30%36-45 29% 28%46-55 21% 21%Over 55 10% 11%

EMPLOYEE TOTALS

Staff^ Workforce^ Total 2015^ Total 2014Europe Hub 4,009 6,369 10,378 10,427Australia Hub 2,026 2,684 4,710 4,885Group 6,035 9,053 15,088 15,312

EMPLOYEES: STAFF TO WORKFORCE RATIO

2015^ 2014Staff 38% 39%Workforce 62% 61%

STAFF: MALE TO FEMALE RATIO

2015^ 2014Male 79% 80%Female 21% 20%

ATTRITION

ALL LEAVERS

Monthly paid 2015^ 2014Europe Hub 15.0% 14.6%Australia Hub 36.9% 31.8%Group 22.5% 21.0%

VOLUNTARY LEAVERS

2015^ 2014Europe Hub 12.8% 11.4%Australia Hub 18.6% 16.7%Group 14.8 % 13.4%

FIGURES AT A GLANCE

SUMMARY OF CARBON EMISSIONS1

SAFETY AND SUSTAINABILITY: EUROPE HUB

EUROPE HUB

HEALTH AND SAFETY We concluded the year in review with a Europe Hub Accident Frequency Rate (AFR) of 0.14^ (up from 0.13 in 2013/14). In the same period our Disabling Incident Frequency Rate (DIFR) was 0.29^ (up from 0.27 in 2013/14).

This deterioration in performance was brought into stark focus during the year with the loss of two colleagues. In July, an incident occurred at Explore Industrial Park, causing the death of Richard Reddish. In October, Philip Griffiths was killed in an accident at our Heathrow Terminal 2A Multi-Storey Car Park project.

These dreadful events serve as a reminder of just how dangerous our working environments can be – and reinforce our determination to do everything within our power to consign to history a construction industry where harm on this scale is a reality.

COMMUNICATION AND ENGAGEMENTWhile we have a number of established metrics for measuring our health and safety performance, none can provide us with the depth of insight gained through direct feedback.

Those who apply our processes are best placed to evaluate their effectiveness. Likewise, their experiences tell us whether we are living up to our values by sustaining a culture that supports and empowers them.

We not only rely on our people to do the right thing – but to help us find ways to do it better. For this reason, an informed and involved workforce is essential to achieve our health and safety objectives.

In addition to the more traditional approach to communication (senior leader tours and toolbox talks), we have introduced a range of new methods to engage our employees in the decision-making process.

TAKE 5: DYNAMIC RISK ASSESSMENTIn 2014, we re-launched our ‘Take 5’ initiative. Take 5 emphasises the importance of ‘dynamic’ risk assessment by encouraging those at the workface to routinely re-examine their surroundings, paying particular attention to any changes to the environment or deviations from planned process.

If a hazard or near-miss is observed, individuals should immediately alert their supervisor or manager. Work must not resume until appropriate mitigation methods have been agreed.

The details of the event and follow-up actions should be reported via one of our Take 5 improvement cards. These are readily available at all sites and facilities – and can also be used to suggest ideas for enhancing health and safety more generally.

During the year, 24,123 improvement cards were submitted. We have recently begun rolling out a one-and-a-half-hour Take 5 training workshop which will be delivered to everyone in our workplaces.

CLOCS – LOOKING OUT FOR VULNERABLE ROAD USERSThe new CLOCS standard for large goods vehicles (LGVs) over 3.5 tonnes aims to improve safety for vulnerable road users – and has been in force across the business since January. To enter a Laing O’Rourke site, LGV drivers must be able to demonstrate they have undertaken vulnerable road-user training and are certified to a minimum FORS (Fleet Operator Recognition) bronze level. The vehicle must have specific safety kit fitted, including warning stickers, side under-run protection, blind spot minimisation features and an audible alert for turning left.


VISUAL TASK SHEETSWe have mandated the use of ‘visual task sheets’ wherever possible on our sites. These illustrate the sequence of work being carried out and the environment in which they are taking place – making it easier to understand the process and potential risks involved. The aim is to ensure our people have the knowledge they need to work safely – and encourage them to contribute to the development of methodologies.

ONE-TO-ONE SAFETY COMMITMENT INTERVIEWS It is vital everyone in our workplaces understands what is expected of them – and what they can expect from us. For this reason, all new hires and transfers – including subcontractors – must complete a one-to-one safety commitment interview with the project leader or facility manager (or appropriate representative). As part of this process, both interviewee and interviewer must pledge to uphold the highest standards at all times.

During the year, we conducted 4,758 interviews. Three individuals were refused entry for failing to demonstrate the necessary level of engagement.

OUR GLOBAL HEALTH AND SAFETY SURVEY To coincide with our annual health and safety awareness day in November, we launched our first global health and safety survey. The survey was open to all Laing O’Rourke employees, as well as subcontractors and joint venture partners working on our sites. In total 6,847 people participated within the Europe Hub (10,029 worldwide).

PROCESS IMPROVEMENTS AND POSITIVE INDICATORSTo guide activities on our projects, we have established a set of ‘active indicators’ – which sit alongside the more conventional ‘reactive indicators’ (accidents, incidents and near-misses).

These centre on the positive factors that, together, create the conditions for success: engaged and responsive leadership; effective planning and resourcing; rigorous risk management; a culture of two-way communication.

For each active indicator, a range of measures – and desired actions – has been outlined, allowing projects to evaluate strengths and take structured steps to address areas of weakness. Performance is reviewed quarterly, with the results displayed in control rooms.

The approach has been widely embraced, with 94 per cent of projects on average reporting as required.

MANAGING MAJOR RISKWe have also revised our monthly workplace safety reviews, with greater focus placed on the process for major risk management, alongside

workforce engagement. In addition, the health and safety function carries out quarterly audits of high-risk operations. During the year, these covered: lifting and logistics, plant and equipment, fire, and competency. The results are reported to the hub leadership for review, with key findings communicated across the business via our monthly learning bulletin. Where necessary our safety management system will be revised to reflect any change in process.

SYSTEMSOur health and safety management system complies with OHSAS 18001 standards. Its content is regularly reviewed to ensure it remains relevant and that lessons learned are being captured and shared.

During the year, we launched IMPACT 2, an enhanced version of our health, safety and environmental reporting system. The new system will provide greater assurance over the integrity of our data. Its dashboard reporting function will make it easier to isolate and aggregate specific indicators, reducing administrative work and the associated risk of human error.

IMPACT 2 uses the latest software to interface with other business systems. By downloading Laing O’Rourke’s ‘Our People’ app, employees can enter data (such as hazards, near-misses or learning opportunities) direct from their mobile phone or tablet device.

TRAINING AND DEVELOPMENTDuring the year we invested £5.8 million^ in health and safety training across the hub (£5.6 million 2013/14). A range of programmes was delivered – to our own people as well as colleagues from client organisations, consultancies and our supply chain.

In total, 3,097 individuals attended our behavioural safety workshop: ‘Ask the Question’. The mandatory half-day module examines the ‘evolution’ of risk from design and development stage through to delivery – and is tailored specifically to our operations. We have 230 qualified trainers in-house.

Our two-day safety leadership programme was delivered to 270 senior managers (grades six to eight). We have also developed a one-day version for employees, grades three to five, with 31 completing so far.

To date, 463 people have completed our new IOSH-accredited course: ‘building a healthier workforce’. The one-day module is designed for line managers and supervisors (including subcontractors). Subjects include: heart and lung disease, drug and alcohol awareness, noise and hearing loss, hand-arm vibration and musculoskeletal injury, skin monitoring and stress management. We have 27 qualified trainers in-house.

All senior members of the health and safety function (grade six and above) have received professional training in investigative practice.

See our summary of results on page

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OCCUPATIONAL HEALTHDuring the year we carried out a comprehensive review of our occupational health programme. The six-month exercise resulted in a range of recommendations which are now being put into practice.

The need for a more targeted approach to health surveillance was identified as a priority, with greater focus on employees in ‘safety-critical’ or ‘at-risk’ roles. For employees exposed to noise, vibration, solvents, fumes, dusts and other hazardous substances, and those who work in compressed air, this is carried out annually. Those in ‘safety-critical’ roles will receive a full medical every two years (if over 50 years old) and every three years (if under 50 years old).

A new ‘fit for task’ initiative has been developed to ensure pre-start assessments are taking place consistently across our projects. The aim is to identify any condition that may impair an individual’s ability to carry out their duties safety – as well as any existing condition that may need managing.

To enable us to achieve our objectives, we have appointed a new lead provider, Optima Health, to deliver a range of medical services.

In 2014/15 we conducted 1,979 combined safety critical and health surveillance medicals, we also conducted 256 health surveillance medicals and 66 management referrals. There were no RIDDOR reportable industrial diseases.

SAFETY AND SUSTAINABILITY: EUROPE HUB CONTINUED

H&S PROJECT LEADERS’ CONFERENCEBritish sporting legend, Sir Jackie Stewart, speaks about his crusade to raise health and safety standards in Formula One motor racing at the second annual health and safety conference, which was attended by more than 250 project leaders and functional heads.

ADDRESSING THE RISKSTo address the biggest health risks across the business (exposure to noise, vibration, silica dust, diesel exhaust fumes and other hazardous substances) we have been working with a team of occupational hygienists. The team is responsible for monitoring exposure levels on our sites, reviewing control measures and developing robust mitigation strategies.

WELLBEINGWe have invested in a number of ‘WellPoint’ machines, which are rotated around our workplaces. These offer basic tests such as heart rate, blood pressure and weight. For more detailed analysis employees can schedule a ‘mini medical’.

THE RESULTS Since the rollout of our new approach, we have seen increased uptake in our occupational health service – as well as our employee assistance programme. In the coming months, we will be developing a ‘health alert’ system to share information about specific incidents and the actions required to prevent a recurrence.

Over the next two years, we will be working with our suppliers to help them develop their own occupational health strategies, aligned to ours. Already, we have conducted trials on a number of our sites to demonstrate the benefits of pre-start assessments – with positive results.

DRUG AND ALCOHOL TESTINGWe enforce a zero-tolerance approach to drug and alcohol misuse. This is enforced through random and with-cause testing. Disciplinary action up to and including dismissal will be taken against anyone found in breach of our drugs and alcohol policy. During the year we conducted 2,623 screenings. 103 returned positive results (3.92 per cent). In the majority of cases (55) cannabis was the cause.

1,979COMBINED SAFETY CRITICAL AND HEALTH SURVEILLANCE MEDICALS


ENVIRONMENT With our clients placing increasing emphasis on the sustainability of their assets, opportunities for environmental innovations are expanding. To this end, we remain committed to developing smarter products and processes that improve resource efficiency in delivery and operation. This will be strengthened substantially as our new advanced manufacturing facility comes online within the next two years.

To reduce fuel consumption (and associated pollution) we have invested more than £45 million over the past year in new equipment and machinery, specified to the highest possible emissions standards. The average age of our heavy plant fleet is just under three years, making it among the youngest and greenest in the market.

During the year, three of our projects received Green Apple Awards, which celebrate best practice in sustainable development: Heathrow Terminal 2A, Bond Street Station Upgrade and Manchester Town Hall Complex Transformation.

As part of the HETCo consortium, Laing O’Rourke and Ferrovial Agroman were responsible for designing, constructing and commissioning the new Heathrow Terminal 2A building – which achieved an ‘excellent’ rating, following the world’s first BREEAM assessment of an airport. The project also recorded a 40 per cent reduction in carbon emissions and a 30 per cent saving in water consumption. In addition, 99.5 per cent of construction waste was diverted from landfill.

Elsewhere, the Midpark Hospital acute mental health unit earned the title of best-performing healthcare project at the annual BREEAM Awards, while Oxford Maths Institute achieved BREEAM ‘excellent’ at post-construction stage.

Our Tottenham Court Road and Liverpool Street Station projects were recognised in Crossrail’s Green Line Awards, which celebrates environmental best practice. At Custom House, we have been rated ‘world-class’ in noise and vibration management in Crossrail’s fourth ‘performance assurance’ report – and ‘world-class’ in air-quality control at Liverpool Street.

CARBON AND ENERGYIn 2012 we set ourselves the target of cutting carbon emissions by 30 per cent by 2020 from our 2008/9 baseline. We have already achieved a 54 per cent reduction in gross emissions, and a 14 per cent reduction after taking into account change in turnover on non-joint venture projects. We estimate that our carbon efficiency per unit of work has improved by 25 per cent since our baseline year, after taking into account the effect of increased work on joint ventures.

In 2014/15, we delivered a 33 per cent decrease in red diesel use (against 2013/14 figures). This has been supported by ongoing investment in fuel-efficient road and site fleet, along with a concerted focus on reducing travel through video conferencing and other communications technologies. In addition, the use of telematic information to monitor machine operator behaviour has contributed substantially.

CERTIFIED EMISSIONS MEASUREMENT AND REDUCTION SCHEME (CEMARS)Our UK business has maintained CEMARS accreditation every year since 2008/9, when our carbon baseline was established. This process requires us to open up our carbon management and measurement processes to in-depth scrutiny, providing us with increased assurance over the accuracy of our CO2 data.

WHOLE-LIFE CARBON MANAGEMENT We continue to develop our capabilities in whole-life carbon management in order to reduce emissions at every stage. Areas of focus include: the use of digital engineering technology to automatically generate embodied carbon data at individual product level and across an entire project – to be embedded within the design and estimating processes. We are also refining our energy monitoring software to promote greater efficiency in asset management, while designing products made from materials that can be recycled in future. In addition, we have been conducting research into reducing the cement content of concrete.

SELECT PLANTOur Select Plant business boasts one of the youngest and greenest fleets in the market, with an average age of three years. Over the past year more than £45 million has been invested in new equipment and machinery, specified to the highest possible emissions standards.

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THE UK’S ‘MOST SUSTAINABLE HEALTHCARE BUILDING’Delivered by Laing O’Rourke, the Midpark Hospital acute mental health unit in Dumfries, Scotland, was named best-performing healthcare project at the 2015 BREEAM Awards.

WASTEOur offsite manufacturing capability underpins our drive to improve resource efficiency – and we continue to work towards a 50 per cent reduction in construction waste by 2020. In 2014/15, our UK operations generated 8.5 m3/£100,000 turnover – a 27 per cent improvement on our 2009/10 baseline, but up from 7.8 m3/£100,000 turnover the previous year.

We operate strict environmental protocols on all our sites. In the UK, we diverted 97.32 per cent of non-hazardous waste from landfill during the year, a marginal increase on 2013/14 figures.

In partnership with Community Wood Recycling (CWR), we put more than 450 tonnes of waste timber back into use during the year, helping to fund permanent jobs in the process. CWR is a network of UK-based social enterprises that provides a wood collection service, while giving disadvantaged people employment and training opportunities.

WATERWe have developed a suite of best practice guidelines to support our projects in reducing water consumption – and encourage the use of ‘grey’ water wherever possible. The percentage of sites, facilities and offices now recording water usage has increased significantly and we expect to have a baseline in place later in the year – with reduction targets to follow.

RESPONSIBLE SOURCINGThrough our Global Code of Conduct, we have mandated the selection of products and services with the lowest environmental impact. This includes the use of non-hazardous and/or re-usable materials wherever practical.

In particular, the ability to trace materials through every stage back to source is becoming increasingly important to us and our clients. Naturally this requires the support of like-minded trading partners, equipped with the necessary capabilities. To this end, we have become a partner of the Supply Chain Sustainability School, which is designed to help small-to-medium enterprises achieve common standards of excellence.

We require our timber suppliers to provide 100 per cent FSC (Forest Stewardship Council), PEFC (Programme for the Endorsement of Forest Certification) or similarly accredited materials and collect chain of custody information on each project. This is verified through environmental audits and other assessment standards, including BREEAM. There were no non-conformances identified in 2014/15.

BES 6001Our Explore Industrial Park facility has again retained ‘good’ status under BRE’s responsible sourcing standard, BES 6001. This means that projects using our products will automatically achieve BREEAM points. We have now submitted an application to have BES 6001 (Version 3) certification extended to cover our Bison business.

The accreditation recognises best practice in the sustainable procurement and production of construction materials. To qualify, manufacturers must demonstrate that their products are made from responsibly sourced materials, while providing detailed evidence of the way in which social, environmental, health and safety, and other ethical issues are managed – within the business and across the supply chain.

ENVIRONMENTAL INCIDENTSThere were no Category 1 environmental incidents during the year. There were 24 Category 2 and 36 Category 3 incidents.

We have successfully implemented ‘concrete socks’ on a number of projects. These fit over the end of concrete wagon chutes and negate the need for wash-out facilities on site. This not only saves money but significantly reduces the risk of environmental incidents. We will now look to extend usage across the business.

The team at our A453 road-widening scheme has, on a number of occasions, supported the authorities in cleaning up spills caused by traffic collisions. This has meant pollutants have been prevented from contaminating the surface water drainage system. They are also working with the local Wildlife Trust to install a new bird screen in a nearby nature reserve.

ENVIRONMENTAL MANAGEMENT SYSTEMWe are committed to the highest standards of environmental compliance and management. All Laing O’Rourke Group businesses operate to ISO 14001-accredited environmental management systems. In the coming period, we will be upgrading our EMS in line with the requirements of ISO 14001:2015.

97.32%OF NON-HAZARDOUS WASTE DIVERTED FROM LANDFILL


PEOPLEThe volume of work secured during the year is a welcome sign that the sector is returning to growth. From the onset of the recession, we made a conscious decision to continue to invest in our people, progressively increasing spend on training, development and education.

This has provided us with a good base from which to build the high-quality delivery teams we need. However, there remain more entrenched resourcing issues across the industry – to which we are not immune.

The impact of the financial crisis on construction is well documented, with thousands leaving in recent years to pursue other careers. Replacing these skills – as well as those of the many workers approaching retirement – will not be easy, especially at the pace required. But, if done effectively, it will open up real opportunities for people across our communities.

During the year, we introduced an employee referral scheme in the UK to help attract high quality candidates. The scheme offers bonuses of up to £2,000 for the successful recruitment of technical, managerial and support staff.

TRAINING AND DEVELOPMENT In 2014/15, the Europe Hub invested £11.7 million^ in training, development and education (£12.5 million in 2013/14). In the same period, we increased the number of places

available on our entry-level and fast-track leadership programmes, supporting 544^ employees in total, 775^ at Group level.

This includes the creation of a number of new apprenticeships, designed to address skills requirements in emerging trades. To monitor performance against our objectives, an Apprenticeship Steering Group has been formed, which reports to the Europe Hub Executive Committee.

In September, the business was recognised at CITB’s Pride of Construction Awards, receiving Gold in the ‘Outstanding Employer (Large)’ category.

NEW TRAINING FOR NEW TRADES Our construction assembly technician apprenticeship was launched last year as part of the UK Government’s Trailblazer scheme. Participants will acquire a range of competencies required to assemble and install DfMA components to the correct specifications – and, on completion, will achieve an internationally recognised qualification.

In March, the development of a new Trailblazer apprenticeship in digital engineering was approved. Led by Laing O’Rourke, the programme will provide a grounding in design and building information modelling.

To address the need for our site-based employees to work with more complex methodologies, we have created the UK’s first steelfixers apprenticeship with support from CITB, NOCN and Bridgwater College – rated ‘outstanding’ by Ofsted.

Working with CITB’s in-house specialists, Select Plant has developed an industry-leading lifting technician apprenticeship. Trainees will work towards a Construction Skills Award Level 2

A MOMENT IN TIME CAPTURED AT ONE BLACKFRIARS, LONDONPupils from the nearby Notre Dame Girls School lower a time capsule into the ground on the site of the One Blackfriars residential development in London. The capsule, not to be unearthed for another 25 years, contains items that celebrate the local Southwark area, including leaflets for local tourist attractions such as the Clink Prison museum and HMS Belfast, Borough market and the Tate Modern.

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certificate in plant operations (cranes/lifting), with the very best achieving ‘master’ status. In March, we welcomed our third intake.

We are also reviewing the structure and content of our graduate and cadet programmes to ensure they are equipping participants with the well-rounded set of capabilities needed to progress steadily into leadership roles.

BUILDING ON EXPERIENCEWe have introduced a number of programmes to help our more experienced employees further their careers through enhanced technical and managerial skills.

We will shortly begin piloting a new ‘global leadership development’ programme. This is designed for staff with the potential to progress into high-ranking roles, who are not already part of our Guns or Young Guns programmes.

In the coming months, we will also be communicating the launch of a formal mentoring scheme – an effective means of ensuring valuable knowledge is being shared across the business.

Our Supervisor 2020 programme has been developed in partnership with the Institute of Leadership and Management (ILM). The course is being rolled out to all directly employed supervisors – with more than 230 already enrolled. Content includes: building effective teams, leadership and management, quality, planning and programme management. Participants will receive a Level 3 qualification.

In July, we will begin the first trial of a bespoke new ‘construction management development’ programme. The programme is designed for construction managers from professional and trades backgrounds – as well as experienced new-starters.

TALENT REVIEW AND SUCCESSION PLANNINGFollowing an executive-level assessment, we have also developed a centralised system for talent review and succession planning. The new process will ensure all potential successors for a given role are identified – with robust plans in place so that they are developed accordingly.

This information will be housed in our SuccessFactors system – and will be used, among other things, to select candidates for programmes such as Guns, Young Guns and our sponsored masters degrees. As a first step, we have begun a review of our project leader population to ensure each has the correct qualities and competencies – and that opportunities for progression are being provided.

We are also trialling a new ‘global human capital dashboard’ containing up-to-date data on key performance indicators – such as recruitment, attrition and overhead costs. The new system will provide a single source of truth to help inform the decisions of the senior executive and human capital leadership, with month-on-month trend analysis.

RETAINING TRADES SKILLSDuring the year, we established a workforce management function to oversee the recruitment and deployment of our directly employed operatives. The new team will work across business units to ensure the highest ethical and legal standards are maintained at all times – and that resourcing is planned effectively to meet the needs of our projects and our people.

This will include the development of a forecasting system, with the ability to track the availability of existing employees in order to reduce the risk of attrition as work on one site comes to an end.

This will help us maintain a solid base of talented tradespeople, who understand our organisational culture, particularly in relation to health and safety.

In addition, training records have been streamlined. All formal training is now booked and recorded via our SuccessFactors system. An interface is now being developed to enable this data to be pushed through to our ‘head office database’. This will provide us with a full view of workforce competencies – by individual or course.

EMPLOYEE ENGAGEMENT We regard employee engagement as a key indicator of business performance. This is measured through our Shape survey – and based on responses to a defined set of questions relating to personal fulfilment and motivation, pride in the company and confidence in its management.

In 2015, the hub recorded an employee engagement score of 72 per cent – 18 per cent above the global norm (up from 64 per cent in 2013). The overall response rate increased 2 per cent to 64 per cent.



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SELECT AND CHt APPRENTICES THE BEST IN THE NORTH WESTLaing O’Rourke apprentices take top prize in their respective trades at the 2015 Building and Engineering Services North West Awards. Ryan Galbraith, Crown House Technologies, won Heating and Ventilation Installer of the Year, while Michael Rice, Select Site Wide Services, was named Apprentice Plumber of the Year. From left to right: Peter Williams (Workforce Manager, Crown House Technologies), Ryan Galbraith, Michael Rice, Neil Philp (Product Leader, Select Site Wide Solutions).


WOMEN’S NETWORK LAUNCHGroup Chief Executive, Anna Stewart, addresses attendees at the inaugural women’s network event. The network was launched in June 2014 to provide peer-to-peer support to Laing O’Rourke women to help them progress their careers – while finding ways to encourage more women to enter the industry.

EQUALITY, DIVERSITY AND INCLUSIONThe reputation of our sector for its lack of diversity in many ways serves to reinforce the reality. In order to bring about change, we must address both – challenging perceptions, while eliminating the causes.

As our resourcing activities gather pace, this is not only a matter of corporate responsibility, but a business-critical priority. In the short- to medium- term, we will need to adopt a more creative approach to recruitment. This must be backed up by practices that support genuine equality of opportunity.

Through our PeopleFIRST (Fairness, Inclusion, Respect, Sustaining Talent) programme we are engaged in a range of activities designed to promote greater diversity in our workplaces. During the year, we rolled out mandatory equality, diversity and inclusion training to staff across the hub. We are currently developing a version for our site-based workforce and supply chain.

While flexible working options are the norm in many sectors, they have not traditionally been embraced in construction. But we know that the best talent will go to the best employers. To compete, therefore, we must be able to demonstrate a forward-thinking culture that accommodates the different lifestyle needs and preferences of people in our society.

Linked to this is parental leave, which is fundamental to attracting more women – and providing greater choice around work-life balance in general. For this

reason, we have substantially enhanced our maternity and paternity packages. Female employees are now entitled to take up to 26 weeks’ ordinary and 26 weeks’ additional maternity leave – 13 weeks at full pay, 26 weeks at statutory pay and 13 weeks at full pay on return to work. Male employees are entitled to two weeks at full pay.

In order to reach a broader variety of people, we are working with our recruitment agencies to ensure that, wherever possible, we are receiving applications from candidates from minority and disadvantaged groups.

INDUSTRIAL RELATIONSLaing O’Rourke respects the right to freedom of association with others and the right to participate in lawful activities which do not restrict or in any way unduly influence an individual’s duties. We accept and support the role of trade unions and the assistance they can provide our employees and us.

When approached by a trade union, we offer the official slot within our site inductions to advertise the benefits of and seek to recruit our employees into trade union membership. In our view, this is the most productive and professional environment for engagement. We offer a voluntary check-off facility to employees who wish to have their trade union subscriptions deducted from their weekly wage.

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INDUSTRYOur innovation agenda comprises many different activities, each geared toward the same goal: to provide the best possible solution for the clients who procure our services and the communities that benefit from the end result.

At the heart of this, is our DfMA delivery approach – enhanced by the exploitation of technologies such as digital engineering. To drive this forward, a decision has been made to proceed with the construction of a new Advanced Manufacturing Facility, adjacent to our existing factory at Explore Industrial Park.

The state-of-the-art facility will use intelligent design, precision engineering and fully automated processes to deliver a new range of modular residential solutions that will revolutionise house-building in the UK.

Once complete, it will be three times the size of our existing factory, with the capacity to manufacture up to 10,000 new homes per annum, alongside other products, including preassembled building services units, bathroom pods and SmartWall.

DIGITAL ENGINEERINGIn recognition of our work in digital engineering training and awareness, Laing O’Rourke received the ‘BIM Initiative of the Year’ at the Building Awards 2015.

The campaign ‘BIM: now it’s personal’ has been designed to ensure everyone in the business – regardless of role – has an understanding of the technology, enabling us to meet the UK Government mandate for BIM level 2 on all public-sector projects by 2016.

KNOWLEDGE-SHARING To ensure we are making the most of our technical expertise, we have launched a new knowledge management portal, iKNOW. The site can be accessed from our intranet and allows the business to capture lessons learned in a single location.

LISTENING TO OUR CUSTOMERSIn 2014, we began the roll out of a customer perception audit. The objective of this exercise is to strengthen our relationships with our clients by better understanding what ‘trusted partner’ means to them.

The interviews ask clients about their objectives over the next five years and any anticipated challenges – as well as seeking feedback on our operational performance, their perception of our business as a whole and their views of the wider industry.

The findings were reported to the Group Executive Committee in June 2015, along with a set of recommendations, before being presented to the hub leadership. Summaries and commitments will be relayed to our clients later in the year.

BUILDING A STRONG SUPPLY CHAINLast year, more than £1 billion of products and services was procured in the Europe Hub. It is clear, therefore, that our success brings considerable value to our supply chain. But it is also true to say that our success, in the first place, depends on our partners. So, it is essential that we invest wisely to strengthen these mutually beneficial relationships.

To this end, we meet regularly with our suppliers to share best practice. During the year, we held ten supply chain forums (with invitations extended to 416 businesses) and 800 supply chain relationship meetings. We also ran a series of trade-specific workshops, covering a range of topics including the management of building information modelling files. In total, 53 businesses were engaged.

More than 1,000 personnel have received digital engineering training, along with capability assessments. The same number have completed a dedicated online module aimed at building a better understanding of our approach in practice.

Working with 36 of our suppliers, we have developed detailed digital engineering strategies. This will help ensure key trades not only understand our requirements but have the technical competence to respond to these.

FIRST HOUSING PROTOTYPE COMPLETEDAT EXPLORE INDUSTRIAL PARK, EAST MIDLANDSThe first housing prototype – a four-storey block containing seven apartments – is completed at Explore Industrial Park, demonstrating the quality and flexibility of our new housing solution.

For further information see page

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ACHIEVING COMMON STANDARDSLaing O’Rourke is a partner of the Supply Chain Sustainability School, which has been established to encourage common standards across the industry. The school offers resources to help small-to-medium enterprises measure their performance and develop plans to address areas for improvement.

We are also one of 12 organisations, including CITB and BRE, to support the development of a new Offsite Management School. The school provides suppliers with free access to e-learning modules and face-to-face workshops in advanced offsite techniques.

The initiative was developed after Laing O’Rourke secured funding earlier in the year from the UK Commission for Employment and Skills (UKCES) to examine future learning requirements for offsite construction. Using our Scottish Power Headquarters project to pilot the approach, a set of training solutions was tested, before recommendations were made to UKCES.

ETHICAL BUSINESS PRACTICEWe are committed to maintaining the highest ethical standards in all our commercial interactions. This is mandated through our Global Code of Conduct and anti-bribery and corruption policy.

As a condition of engagement, we expect our suppliers to comply with the principles outlined in these documents – as well as all national and international regulations. This includes legislation

relating to working hours, wages, welfare and human rights – along with the principles outlined through the International Labour Organisation’s Core Conventions.

FALSE SELF-EMPLOYMENT We operate robust processes to ensure compliance with false self-employment legislation, which came into effect in April 2014. Our approach has been communicated to all business unit leaders and others engaged in workforce management – including our suppliers.

Laing O’Rourke does not employ any individual paid via the Construction Industry Scheme (CIS). Nor will we permit temporary labour agency subcontractors to deploy CIS-paid workers to our sites. To ensure this is consistently enforced, we conduct weekly labour audits.

In the event that a subcontractor is found to have breached these standards, the management will be contacted immediately – whereupon we will request they transfer all CIS workers to PAYE.

THE CONSTRUCTION WORKERS COMPENSATION SCHEMELaing O’Rourke is one of eight construction companies that developed, launched and are funding The Construction Workers Compensation Scheme (TCWCS).

The scheme, which opened in July 2014, offers straightforward access to compensation for anyone who has been affected by the existence of The Consulting Association (TCA) records. It is a faster and less onerous process than a court case and since launch has received hundreds of eligible applications.

Awards start at £4,000 for those on whom very basic information was held, rising to £100,000 where there is proof of significant loss of earnings. The lowest level of compensation is intended to reflect a basic award for breach of data protection where there is no evidence of financial loss.

In addition, the scheme pays for legal advice to ensure applicants make the right decision based on their circumstances. Where necessary, refresher training can be provided to support affected workers and prevent impediment to future employment.

Each of the eight companies involved in TCWCS is determined to ensure this issue stays in the past and would comply fully with any code of conduct – either statutory or voluntary – that may be introduced to this end.

SELECT DELIVERS SCHOOL IN JUST 22 WEEKSSelect Building Solutions, working in partnership with Atkins and Servaccomm, has delivered a new primary school in Salford, Greater Manchester, in just 22 weeks.

St John’s Church of England Primary School was constructed using a unique hybrid precast and steel volumetric design. Enabling and ground works, including concrete floor planks supplied by Bison and a steel frame for the hall, took seven weeks, volumetric accommodation was installed in just three days, while fit-out and commissioning made up the remaining 13 weeks.

1,000SUPPLY CHAIN PERSONNEL PROVIDED WITH DIGITAL ENGINEERING TRAINING

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COMMUNITYOur community engagement activities are immensely important – not only in maintaining good neighbourly relationships with those living or working near our projects, but in creating a positive impression of our industry as a whole. Each of these interactions defines who we are in the eyes of others – and each has the power to make a difference.

From July, all new projects will be required to implement social sustainability plans – based on a template developed by the business. The template is designed to allow sites to address specific needs within their communities, while supporting broader corporate sustainability objectives – working with our human capital and procurement functions, for instance, to maximise local employment and business opportunities. The roll-out will be led by the sustainability function, with full-time, site-based resource allocated where required. In addition, projects will be encouraged to appoint their own ‘sustainability champion’.

ATTRACTING THE NEXT GENERATION OF TALENTOur ‘partnering with schools’ programme seeks to raise awareness among young people of the many careers our industry offers, while providing an exciting insight into the role engineering plays in shaping the world around us.

Through a range of learning experiences and vocational guidance, our teams help students make informed educational choices. The scheme has been designed to support the UK Government’s STEM agenda by encouraging greater participation in subjects such as science, technology, engineering and mathematics. All projects over £20 million are partnered with at a school in their local community.

DESIGN ENGINEER CONSTRUCT!Laing O’Rourke has ‘adopted’ three UK schools as part of the Design Engineer Construct! (DEC) programme. DEC provides a platform for the industry to take the lead in addressing future skills requirements by engaging with young people in their educational environments – and is cited in the UK Government’s Construction 2025 strategy.

The programme is delivered through an Ofqual-accredited curriculum, which has been created in consultation with participating organisations. Students complete a series of online learning modules, while putting their knowledge into practice by undertaking a sustainable building project. This helps develop their technical expertise, while face-to-face workshops with industry representatives allow them to broaden their professional skills.


Participants provide financial support for software and other resources, and must commit to at least five curriculum-enhancing activities per year. Laing O’Rourke-sponsored schools are: St Ambrose Barlow Roman Catholic High School in Salford; Skipton Girls’ High School in North Yorkshire; More House School in Farnham, Surrey. During the year, a team from St Ambrose won top prize in a national design competition set by DEC-creators Class of Your Own.

SUPPORTING SKILLS IN THE NORTHWEST Laing O’Rourke’s northwest operations were awarded CITB National Skills Academy for Construction status in 2012. Since then, many of the targets set have been exceeded, with the business providing more than 2,000 construction curriculum support activities (well above the 88 originally planned). In addition, ten graduates have been employed and 26 apprenticeships started.

The site-based training programme is designed to match the learning requirements of individuals with the needs of the industry, while generating valuable employment opportunities. During the year, our Etihad Stadium expansion project for Manchester City FC was incorporated into the scheme.

LEARNING IN LONDON At our Clarges project, in central London, Laing O’Rourke has been working with client, British Land, to provide employment and training opportunities within the local community. Around 20 long-term unemployed residents and young jobseekers have benefitted from pre-employment training initiatives. So far the business has opened up four permanent roles in London through this route.

To promote the industry to new talent, the project team has hosted work placements for more than 20 students through the Construction Youth Trust’s Budding Brunels programme. In partnership with the charity, Pursuing Independent Pathways, the project is also creating long-term placements for adults with learning difficulties.

NETHERGATE SCHOOL, NOTTINGHAMSHIRE Nethergate is a school for students with mild to moderate learning difficulties, located near our A453 road widening scheme. With the support of the local supply chain, the project team created a sensory garden and bike track, recording more than 120 volunteering days in total.


CONSIDERATE CONSTRUCTORS SCHEMELaing O’Rourke is an ‘associate member’ of the Considerate Constructors Scheme (CCS). To qualify, companies must have proved their commitment to improving the image of the industry by consistently upholding the principles of the CCS.

During the year, we achieved an average CCS score of 41.5 out of 50 – against an industry average of 35.7. Additionally, 26 of our projects were recognised with CCS awards – four Gold, 11 Silver and 11 Bronze.

One of those to receive a Gold CCS Award was our Alder Hey in the Park project in Liverpool – which has supported 80 apprenticeships and provided in excess of 1,800 hours of work experience, welcoming more than 900 students. The team has also dedicated 1,100 voluntary hours to local causes and raised more than £30,000 for organisations such as the Alder Hey Children’s Charity and St Vincent’s School for Sensory Impairment and Other Needs.

A FORCES-FRIENDLY ORGANISATIONWe recognise the benefits ex-service personnel can bring to the civilian workplace – and are working with a number of organisations to attract this rich talent pool to our industry. These include the Career Transition Partnership (the official resettlement provider for UK armed forces) as well as the Royal Foundation and BiTC (Business in the Community).

In December, Laing O’Rourke signed the Armed Forces Corporate Covenant which outlines our commitment to supporting employees (and their families) in the reserve forces. We are also represented on the National Employer Advisory Board, which advises the Ministry of Defence on its approach to reservist recruitment. In 2014 we received a Silver Award in the Defence Employer Recognition Scheme for our work with reservists.

A FRESH START FOR EX-OFFENDERS Regular work not only generates financial benefits, but can boost self-esteem and personal wellbeing. It encourages a sense of purpose and brings structure to our lives – and, in the case of ex-offenders, can dramatically reduce the risk of recidivism.

We believe that those who are committed to making a fresh start should be given the opportunity. During the year our Select Plant business began piloting a programme for ex-offenders.

VOLUNTEERINGWe actively encourage our people to support good causes as both a means of generating social value and enhancing personal wellbeing. In 2014/15 we recorded 15,318 volunteering hours. Additionally staff raised £164,086 for local and not-for-profit organisations and donated £37,735 worth of materials.

TRANSFORMING THE FUTURETo help our people continue their good work we have established a charitable fund, known as ‘Transforming the Future’. The aim of the scheme is to support projects that promote education, employability and engagement. During the year, £81,000 was donated to employee-backed initiatives.

IMAGE TBC

15,318EMPLOYEE VOLUNTEERING HOURS

£201,821FUNDS AND MATERIALS DONATED BY LAING O’ROURKE EMPLOYEES

EBOR GARDENS PRIMARY SCHOOL, LEEDS Located in one of the most deprived areas of Leeds, a sudden increase in pupil numbers has left Ebor Gardens Primary School short on space. A solution was found in the form of an out-of-service bus, which a team of 30 Laing O’Rourke employees helped transform into a library, supported by a £3,500 donation from our Transforming the Future fund.

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SAFETY AND SUSTAINABILITY: AUSTRALIA HUB

AUSTRALIA HUB

HEALTH AND SAFETY We concluded the year in review with an Australia Hub Accident Frequency Rate (AFR) of 0.09^ (down from 0.14 in 2013/14). In the same period, we reduced our Disabling Incident Frequency Rate (DIFR) from 0.34 to 0.26^.

These figures build on a pattern of continued improvement within the hub, with many parts of the business exceeding their targets. To sustain this momentum, we have been working to refine our Mission Zero strategy, challenging ourselves to think differently about health and safety. In June we began communicating our new approach under the banner ‘MZ Next Gear’.

OUR MZ NEXT GEAR STRATEGYMZ Next Gear centres around three principles: people are the solution, not the problem; safety is the presence of positives, not the absence of negatives; safety is an ethical responsibility, not a bureaucratic process.

PEOPLE ARE THE SOLUTION, NOT THE PROBLEMIt is essential that those responsible for putting our processes into practice not only have the competence, but the confidence, to make the right decisions.

To support this, we have developed a tool we call ‘collective insight’, which is used to guide group discussions between management and the workforce on high-risk activities. The aim of these sessions is to review the hazards involved and the associated control measures – and to invite feedback on the planned approach. Where viable improvements are proposed, they are incorporated into the methodology.

An idea initiated by the workforce, which has also been adopted, is ‘pit crews’ – committees of employee representatives, voted in by their peers, who meet regularly with management to discuss opportunities for improvement.

SAFETY IS THE PRESENCE OF POSITIVES, NOT THE ABSENCE OF NEGATIVES Traditionally, health and safety has been measured in negatives. The number of incidents divided by hours worked over a given period results in a ‘frequency rate’. In short, this tells us how often things have gone wrong. As a consequence, in working to improve our performance, we have tended to focus on learning from failure rather than success.

While it is important to understand where mistakes have been made in order to prevent a recurrence, there is equal value in capturing examples of excellence – so that these can be replicated across our workplaces.

To support this, we have developed the concept of a ‘positive investigation’. The process applies standard causal analysis (used in the event of an incident) to work activities that have been delivered safely. The aim is to identify the primary factors that contributed to its success, while isolating any redundant activities.

Similarly, individuals can report positive observations through our ‘Good on Ya’ card. This initiative, which was instigated by the workforce, ensures those who go beyond expectations are recognised for their efforts.

MZ NEXT GEAR CHAMPIONSDuring the year we refined our health and safety strategy. In June we began communicating the new approach under the banner ‘MZ Next Gear’.


SAFETY IS AN ETHICAL RESPONSIBILITY, NOT A BUREAUCRATIC ACTIVITY While process is vitally important to managing risk, our safest workplaces are those where our people are committed and empowered. Likewise, not all process is equally effective.

To test this theory, our New Generation Rolling Stock project took up the challenge of reducing paperwork, eliminating most elements of our standard health and safety inspection programme. This enabled the team to concentrate on more impactful activities, such as workforce engagement and the management of major risks. During the year, the project was selected to participate in an educational video, sponsored by the Queensland State Government, aimed at keeping young workers safe.

LISTENING TO OUR PEOPLE: OUR GLOBAL SURVEYIn November, we marked our annual health and safety awareness day with the roll out of our first ever global health and safety survey. The survey was open to all Laing O’Rourke employees, as well as subcontractors and joint venture partners working on our sites. In total 3,173 people participated within the Australia Hub (10,029 worldwide).

Following on from this, we held a series of project-based group discussions, facilitated by a third party and involving around 10-12 employees per session. The workshops examined both headline results and site-specific variations, capturing a wealth of feedback.

Through this exercise three consistent themes emerged: leadership; communication; blame culture. It was also observed that participants demonstrated a genuine passion for health and safety – and a clear sense of accountability for their own actions. Likewise, the opportunity to engage face-to-face was seen as highly valuable – and, as such, we will seek to encourage these types of conversations on a more regular basis through shorter, more frequent surveys conducted in focus groups.

TRAINING AND DEVELOPMENTIn 2014/15, the hub invested £4.5 million^ in health and safety training (£6.4 million in 2013/14). In March, we began rolling out our ‘put your hand up’ engagement workshop. We now have master trainers in all the regions, responsible for delivering three-day train-the-trainer sessions.

A suite of other materials has been developed to support our strategy. These include: a ‘collective insight’ learning package for managers; supervisor.com to help supervisors communicate effectively with their work crews; change management for senior leaders.

MANAGING MAJOR RISKDuring the year, we revised our approach to managing major risk, resulting in the development of a ‘fatal and severe risks control standard’. This mandatory process allows project teams to review, validate and improve the controls in place around a particular activity. It must be applied in all cases where there is the potential for serious harm – or in the event of a ‘class one’ near-miss.

SAFER, SMARTER SYSTEMS Our health and safety management system is accredited to AS/NZS 4801 standards. Its content is regularly reviewed to ensure it remains relevant and that lessons learned are being captured and shared.

In June, we launched IMPACT 2, an enhanced version of our health, safety and environmental reporting system. The new system will provide greater assurance over the integrity of our data. Its dashboard reporting function will make it easier to isolate and aggregate specific indicators, reducing administrative work and the associated risk of human error.

IMPACT 2 uses the latest software to interface with other business systems. By downloading Laing O’Rourke’s ‘Our People’ app, employees can enter data (such as hazards, near-misses or learning opportunities) direct from their mobile phone or tablet device.

£4.5mINVESTMENT IN HEALTH AND SAFETY TRAINING


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SAFETY AND SUSTAINABILITY: AUSTRALIA HUB CONTINUED

HEALTH AND WELLBEINGIn Australia, where many of our projects are located in remote areas, working away from home is common. This brings with it a unique set of occupational health issues.

If left unchecked, feelings of isolation can lead to more serious mental health concerns. To address this we have developed a programme aimed at helping employees identify the symptoms of anxiety and depression. The ‘keep your head screwed on’ campaign was created in collaboration with not-for-profit organisation, Beyond Blue. Materials include a reference book – written by remote workers for remote workers.

Likewise, for our ‘drive-in-drive-out’ employees, road safety is a key concern. During the year, we

launched ‘drive to stay alive’ to raise awareness of the primary causes of fatal collisions: fatigue; distraction; driving under the influence; not wearing seatbelts; speeding.

During the year 2,245 pre-start medicals were conducted. There were 186 workers compensation claims lodged.

DRUG AND ALCOHOL TESTINGIn Australia, the regulatory requirements for heavy civil engineering operations in the rail and resources sectors mean our workforce is subject to routine checks. During the year 507,478 drug and alcohol tests were carried out with 91 positive alcohol results and 62 positive drug results. In Hong Kong 368 breath tests were conducted with zero positive results.

Ichthys Cryogenic Tanks project in Darwin, which received the HS&E Excellence Award at the INPEX Australia 2014 Awards.


ENVIRONMENTThrough our sustainability roadmap, we have outlined five overarching environmental objectives: to reduce direct carbon emissions, water consumption and construction waste, eliminate environment incidents and promote biodiversity.

In 2014/15, we achieved a 15 per cent reduction in carbon emissions against our 2010/11 baseline, surpassing our target of 5 per cent. By 2020 we aim to reduce this by 30 per cent.

A water consumption baseline has now been established at 95kL per AUD$1 million (£0.5 million) turnover. Following on from this we will agree a 2020 reduction target. All projects are now required to demonstrate they are implementing water-saving initiatives.

We have reduced construction waste by an estimated 19 per cent on our 2013/14 baseline, exceeding our target of 15 per cent. This has been supported by the introduction of our waste-tracker system. Launched last year, the web-based tool brings all our information onto a single portal, standardising our approach to data-capture and making it easier for projects to report output.

For the fourth successive year, we have met our target of zero Class 1 environmental incidents. There were 25 Class 2 and 221 Class 3 incidents. Overall, we have slightly exceeded our targeted frequency rate of one per million hours worked – recording 1.1, down from 1.3 in 2013/14. 31 internal environmental audits were carried out and 594 potential hazards reported.

To reduce the risk of environmental incidents, we have implemented a series of measures, including senior leader debriefs on significant events or potential hazards, improved investigating and reporting protocols, and a new fatal and severe risks control standard.

In line with our objectives, a project biodiversity management plan and scorecard have been developed. Between 2015 and 2020 sites will be required to work progressively toward a 20 per cent improvement target.

During the year, we rolled out a series of educational campaigns to increase awareness of our environmental standards and protocols. These focused on four key areas: erosion and sediment control; waste reduction; hydrocarbon and chemicals; noise and out-of-hours work. Materials included presentations, posters and videos.

INNOVATIONIn July, Laing O’Rourke secured a second round of government funding from the Australian Renewable Energy Agency for a world-first innovation: SunShift, a >100kWp (kilowatt-peak) fully re-deployable hybrid solar-diesel generator.

Following a successful feasibility and prototyping phase, the first plant has already been manufactured – and is being used to help power the accommodation village at our APLNG project in Queensland. It is now undergoing commercial viability testing for the external market.

SunShift represents a viable alternative for off-grid communities and businesses, which typically rely on expensive diesel generators. Laing O’Rourke’s modular solution, which can be rapidly dismantled and reassembled, has the potential to lower energy bills, cut carbon emissions and reduce the operating risks associated with undertaking projects in remote areas.

Conceived by our Engineering Excellence Group (EnEx.G), the product was taken from concept to creation in less than one year. It was developed entirely in-house with our engineering team responsible for design, Redispan for production and Select Plant for components.

At our concrete sleeper manufacturing facility, Austrak has implemented an initiative to reduce gas consumption during the curing process by using an alternative method for insulating casting beds. This follows on from a successful pilot last year.

APLNG, QUEENSLANDFollowing a successful trial of our new SunShift solar-diesel generator, the plant is now being used to power the accommodation village at our APLNG project in Queensland.

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INDUSTRY PARTNERSHIPSLaing O’Rourke is a member of the Green Building Council of Australia (GBCA) and is represented on its industry group panel. In July, the EnEx.G hosted a special GBCA ‘innovation in construction’ event, where the environmental benefits of modular housing, offsite assembly and other cutting-edge delivery methods were debated.

We have also become members of the Infrastructure Sustainability Council of Australia (ISCA). The ISCA links industry, academia, policy-makers, investors and communities to raise social, economic and environmental performance beyond regulatory requirements. It also administers the leading sustainability rating tool in the sector. Our Wickham Transport Interchange project is currently registered for an ‘IS’ as-built rating.

Laing O’Rourke is part of the organisation’s ‘contractors working group’ and ISCA training has been rolled out to all work-winning teams in the hub.

WORKING WITH OTHERS TO ACHIEVE OUR OBJECTIVESThe plant, equipment and materials we procure have a significant impact on our environmental performance – and our ability to meet our own targets. The priority for us now, therefore, is to work with our supply chain partners to improve standards industry-wide.

In 2015 Laing O’Rourke (along with seven other contractors) became a founding member of the Supply Chain Sustainability School in Australia. We are the only construction company to be registered in both Australia and the UK.

The school provides resources to help small- to-medium enterprises build their capability in sustainable practices, including a self-assessment tool which allows them to develop tailored action plans. Since its launch, we have been actively encouraging existing and potential suppliers to access the advice available to them through this valuable network.

To align ourselves with partners that best support our ambitions, we operate a hub-wide procurement database that captures information relating to socioeconomic and environmental performance, responsible sourcing and ethical business principles.

ENVIRONMENTAL MANAGEMENT SYSTEMWe are committed to the highest standards of environmental compliance and management. All Laing O’Rourke Group businesses operate to ISO 14001-accredited environmental management systems. In April, the Australia Hub launched an enhanced EMS. This is accessible to all staff via our intranet.

WICKHAM TRANSPORT INTERCHANGE, NEW SOUTH WALESWe have become members of the Infrastructure Sustainability Council of Australia, which administers the leading sustainability rating tool in the sector. Our Wickham Transport Interchange project is currently registered for an ‘IS’ as-built rating.


PEOPLEAs in other regions, construction and engineering skills remain in short supply within the Australia Hub, where the priority is to retain and develop the capabilities we already have, while addressing the root causes through more forward-looking measures.

For this reason, we continue to work with schools and colleges to demonstrate the variety of careers available. Likewise, through our innovation and community-engagement agendas, we are challenging traditional perceptions, presenting an image of our industry as enlightened and exciting.

To enhance our ability to attract high-quality candidates, we also operate an employee referral scheme, which offers bonuses of up to AUD$5,000 (£2,703) for the successful recruitment of technical, managerial and support staff.

TRAINING AND DEVELOPMENT During the year, the Australia Hub invested £6.5 million^ in training, development and education (£9.3 million in 2013/14). This figure validates our ongoing commitment to our people – and the future of the industry as a whole.

In total, the hub supports 231 employees across the spectrum of development programmes, 775 at Group level.

To ensure our people are aware of the training available to them, we have created a comprehensive catalogue, which is available via our intranet. The document details the full suite of courses on offer, broken down by discipline, so that users can easily identify resources relevant to them.

We have also launched an ‘online academy’. This e-learning portal contains an extensive variety of materials designed to meet the diverse needs of our employees. By interfacing with our own learning management system, it is able to suggest courses relevant to individual role profiles. It is particularly useful for those based on remote projects, where access to training can be challenging.

PROFESSIONAL DEVELOPMENTLaing O’Rourke has entered into a formal agreement with Engineers Australia (EA). Working collaboratively with EA, we have established a structured professional development programme to progress our engineers towards chartership – with learning objectives aligned to the needs of our business.

Last year, we launched a scholarship in ‘engineering leadership’. The four-year scheme, designed by the University of Sydney – in consultation with Laing O’Rourke and others – provides undergraduates with an accelerated progression path. Along with financial support, students benefit from professional experience and industry mentoring.

EXTERNAL RECOGNITIONIn February, the Australian Association of Graduate Employers named Laing O’Rourke third best graduate employer in its ‘Top 75’ list. The list is based on the results of a survey, which asked approximately 1,900 graduates to rank their employer on categories including: career progression, company culture, and compensation and benefits.

The business was also recognised by Construction Skills Queensland, receiving its prestigious ‘Employer Commitment to Training Excellence’ Award (in the over AUD$20 million (£10.8 million) turnover category).

DEVELOPING OUR PEOPLEWe continue to invest heavily in training and development to equip our people with the professional and technical skills to meet the current and future needs of the industry.

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EMPLOYEE ENGAGEMENT We regard employee engagement as a key indicator of business performance. This is measured through our Shape survey – and based on responses to a defined set of questions relating to personal fulfilment and motivation, pride in the company and confidence in its management.

In 2015, the hub recorded an employee engagement score of 67 per cent – 13 per cent above the global norm (up from 60 per cent in 2013). The overall response rate increased 14 per cent to 73 per cent. See page 73 for a summary of results.

COMMUNICATIONDuring the year, we held a series of employee roadshows with more than 530 people in attendance. As well as delivering an update on business performance and strategy, the events provide an open forum for staff to pose questions to the leadership team and voice their views on the issues that matter most to them.

SHARING THE BENEFITSWe also hosted benefits and lifestyle expos at our Sydney, Brisbane and Perth offices, with advice on private health insurance, superannuation and financial planning – as well as information on our employee assistance programme and offers available through our corporate partnerships.

In May, we extended our benefits scheme, OneTeam Rewards, to weekly-paid employees and their families, who can now access discounts at hundreds of retailers. In addition, they are eligible for competitive corporate rates on private medical and dental cover, with the business reimbursing the annual excess fee in the event of hospitalisation.

EQUALITY, DIVERSITY AND INCLUSIONBusinesses with diverse workforces benefit in many ways, opening themselves up to different perspectives and experiences – and a wider talent pool. The reality is, however, that our industry is not attracting a broad enough variety of people.

In recent years, we have taken a number of direct steps to address this issue. Our flexible working policy provides employees with a range of options to allow them to balance work, family and personal commitments.

We also offer an industry-leading parental leave package, which entitles primary carers (after 12 months’ continuous employment) to 26 weeks of paid leave – 18 at full pay and eight at half pay. Additional benefits include flexible working arrangements and return-to-work coaching. Secondary carers (after 12 months’ continuous employment) are entitled to four weeks of parental leave, two at full pay and two unpaid.

During the year we reviewed our suite of human capital policies, resulting in the introduction of a number of new ones. These include: ‘harmonious workplace’, ‘union relationship’, ‘union delegate and employee relations’ policies – as well as a new ‘workplace behaviour complaints’ procedure.

We recognise the value of transparency as a vehicle for positive change – and welcome the Federal Government’s guidelines on diversity reporting as an opportunity to engage in an honest dialogue with ourselves, our employees and the wider public. In June we communicated our submission to the Workplace Gender Equality Agency to all staff.

SETTING A SHINING EXAMPLELaing O’ Rourke is a major sponsor of the National Association of Women in Construction ‘Crystal Vision’ Awards, where senior project leader Raquel Rubalcaba, was recognised for her efforts to drive diversity within the business. Raquel was also instrumental in championing the Australia Hub’s industry-leading parental leave scheme.

WOMEN IN TRANSPORTIn March, Laing O’Rourke hosted a ‘women in transport’ networking event at its Sydney office, with more than 140 guests in attendance. A panel of professionals – representing organisations including Transport for NSW, Qantas and Aurecon – discussed ways to increase female representation within the sector and debated the role of high-profile male gender diversity champions.


INDUSTRYWe continue to see the benefits of our research and development activities, with a number of innovations progressing to deployment during the year. Our Engineering Excellence Group (EnEx.G) is strategically growing our capability in renewable energy and clean technologies, while working with small businesses to help bring new ideas to market.

Our ‘DfMA framework’ is now in operation. The tool is designed to help work-winning and delivery teams maximise the use of offsite manufacturing methodologies. Linked to this is our ‘preassembly calculator’ which analyses opportunities for DfMA based on a range of criteria, including programme and package constraints, and cost compared to traditional approaches. This has now been trialled on a number of bids, with key functions trained in its use.

To ensure we are achieving our performance targets, we have developed the ‘excellence in productivity’ platform. The comprehensive strategy incorporates seven key areas, with activities led by senior leaders from across the hub. These are: effective mobilisation and set-up; integrated digital engineering and systems; optimised procurement, logistics and delivery management; proactive workforce engagement and management; capability and capacity planning; focus on quality; productivity controls and change management.

During the year we launched the iKNOW knowledge management portal. The site can be accessed from our intranet and allows the business to capture technical information and lessons learned in a single location.

INNOVATIONOur in-house research and development activities are led under the guidance of the EnEx.G. During the year, a number of EnEx.G innovations were deployed. These include: SunShift (off-grid solar-diesel generator) and Stabilor (in-situ road stabilisation). In 2015, Laing O’Rourke became the first construction company to feature in the prestigious Business Review Weekly 50 Most Innovative Companies list, ranking eighth out of 50.

To encourage innovation in the supply chain, the EnEx.G has been working with local start-up business, Augg’d, on the use of augmented reality for several successful bids and live jobs. These include: Sydney Light Rail, Burswood Stadium and New Generation Rolling Stock, which was showcased at the G20 Summit in November.

The team also piloted a diesel-battery generator for powering site sheds, designed by another local start-up. Trialled by our Hunter Valley Rail Operations and Select Plant, the innovation was a success, demonstrating a reduction in fuel expenditure.

STABILOR Following a series of successful trials on live projects, one of our newest products, Stabilor, has been launched to the external market. Stabilor is a unique polymer-based soil stabilisation solution, which uses a type of liquid latex to bind in-situ soil materials.

The environmentally inert product replaces the need for imported infill materials and can be used in the construction of roads, railways, slopes and dams. It has the potential to reduce capital expenditure on civil engineering projects, particularly those in remote locations.

AUSTRAKAustrak continues to build its position as a leader in railway sleeper design and manufacture. In September, the business conducted its first pour using self-compacting concrete. The fluid, high-strength concrete was ready for removal from the mould within 11 hours, with no vibration needed to bed it down. The breakthrough could accelerate production by increasing the number of pours per day.

GREEN ENERGY INNOVATIONDuring the year, a number of EnEx.G innovations were deployed, including off-grid solar-diesel generator, SunShift (pictured). In the same period, Laing O’Rourke became the first construction company to feature in the prestigious Business Review Weekly’s 50 Most Innovative Companies list.

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LISTENING TO OUR CUSTOMERSWe have extended our customer perception audit to a number of clients in our Australia Hub. This builds on the work ongoing in our Europe Hub. The objective of this exercise is to strengthen our relationships with our clients by better understanding what ‘trusted partner’ means to them.

The interviews ask clients about their objectives over the next five years and any anticipated challenges – as well as seeking feedback on our operational performance, their perception of our business as a whole and their views of the wider industry.

The findings were reported to the Group Executive Committee in June 2015, along with a set of recommendations, before being presented to the hub leadership. Summaries and commitments will be relayed to our clients later in the year. For further information see page 17.

SUPPORTING OUR SUPPLIERS The value our suppliers bring to our operations depends not only on the quality of their products and services, but the way in which we engage with them. As client to many different businesses, we are committed to working closely with our suppliers so that they, in turn, can become ‘trusted partners’ to us.

For this reason, we meet regularly with our suppliers to share knowledge, communicate work-winning opportunities and celebrate their contribution to our success. One of the ways we do this is through supply chain forums.

In 2014/15 we held six of these events, which took place in Sydney, Brisbane, Perth and Darwin. Items on the agenda included a business overview, as well as a focus on health, safety, sustainability and quality. A workshop was held to debate ‘what Laing O’Rourke can do better for its supply chain’ – and awards were presented for exceptional health and safety performance.

To keep our partners up to date with our activities, we have also introduced a quarterly supply chain newsletter.

THE FOUNDATIONS FOR EFFECTIVE ENGAGEMENT Our procurement, commercial and administration functions have developed a standard process for supplier, subcontractor and materials management. This is supported by an easy-to-understand guide, which outlines the protocols for effective engagement, from timely ordering to prompt payment.

During the year, the hub’s procurement contracts working group updated our ‘national major subcontract’. The revised documentation will ensure greater consistency in how we appoint suppliers, with a new scope of works template that can be tailored for different sectors.

The changes take into account feedback from our project, commercial, legal and procurement teams – and are designed to improve the supplier experience by reducing the volume of paperwork.

The group also delivered four web-based training modules on the application of standard contracts – which to use and when, how to compile a subcontract and schedules, contract administration and claims management.

RESPONSIBLE SOURCINGWe have established a hub-wide procurement database which captures details of our suppliers’ sustainability performance, including responsible sourcing and ethical business principles. We have also updated our tender documents with sustainability-related questions and requirements.

GROWING INDIGENOUS BUSINESSES Laing O’Rourke is a member of Supply Nation – a business-to-business network dedicated to connecting corporate clients (both public and private) with certified indigenous suppliers.

To maintain membership, organisations must appoint a dedicated relationship manager and participate in promotional events and activities. They must also provide quarterly reports on the value and nature of the goods and services procured, and meet agreed targets for annual spend.

EMPLOYEES CELEBRATE EPIC WEEKEmployees celebrated EPIC Week, by participating in a range of community activities. In total, the hub recorded 3,460 volunteering hours during the year.


COMMUNITYWe are committed to being a responsible neighbour by helping to enrich the lives of those around us and acting considerately at all times. To support this, we have set ourselves a range of objectives to channel our good intentions into meaningful impact.

We have made strong progress during the year, exceeding a number of our targets. In 2014/15 we estimate approximately 20,294 people benefitted directly from Laing O’Rourke donations, sponsorships, EPIC grants and EPIC community project initiatives. This far surpasses our goal of 500.

Over 300 employees completed EPIC community training. Sustainability workshops (outlining our aspirations) have been delivered to all projects and offices. There is at least one EPIC champion on every site, skilled in the development of community engagement plans – and capturing social value data.

Each of our projects has been tasked with delivering tailored local engagement plans; 60 per cent are now complete, with the reminder progressing. 100 per cent of sites have secured third-party testimonials for community projects completed in the year. This compares to a target of 75 per cent.

73 per cent of all community projects are focused on supporting disadvantaged groups, against a target of 40 per cent. The remainder are centred on environmental or educational activities.

VOLUNTEERING AND EMPLOYEE FUNDRAISING During the year our people raised AUD$370,493 (£200,266) for a range of causes in the communities where we work.

Our nominated charity for 2014/15 was the National Indigenous Youth Leadership Academy (NIYLA) – which received AUD$90,300 (£48,811) in employee-generated fundraising.

NIYLA helps young indigenous people to drive positive transformation in communities across Australia, as the next generation of change makers. During the year, we engaged with the charity through a range of initiatives, attending youth leadership forums and national gatherings for school students.

As a foundation member, we also participated in NIYLA’s indigenous young professionals’ network. Members of our Young Guns programme are working to support the assessment and development of its business model.

In total our employees spent 3,460 hours supporting more than 40 charitable initiatives. Adding to this, we dedicated more than 250 hours to promote construction careers to young people, participating in skills expos, school visits and site tours.

Projects ranged from environmental clean-ups (including the ‘adopt a road’ programme), waterways monitoring, community garden developments, and the refurbishment and maintenance of facilities for sick children, homeless people and people with learning difficulties.

Beneficiaries included: the Red Cross; Oxfam Rice Day Sale; ‘Bring me a Book’ and Community Chest in Hong Kong; the 139 Club; McGrath Foundation; Taldumande Youth Refuge; the Royal Flying Doctor Service; Riding for the Disabled and Royal Far West.

PROJECT SPONSORSHIPS AND EPIC GRANTSEPIC grants totalling AUD$33,000 (£17,838) were donated to a range of community causes. In addition project and company sponsorships of AUD$97,698 (£52,810) were awarded.

Beneficiaries included: the Variety Club; Disability Skills Services; a range of medical researchers, such as the Zipper & Stent, Cystic Fibrosis and Immune Deficiency foundations; the Roma Aboriginal Health Centre; National Indigenous Resource Sector Forum; ‘Bring me a Book’ and Oxfam in Hong Kong; the Pilbara Legal Service; Greenway Public Housing Tenants Group; Suited to Success and the Hunter Youth Mentor Collaborative.

AUD$370,493(£200,266) FUNDS RAISED BY LAING O’ROURKE EMPLOYEES

20,294PEOPLE BENEFITED DIRECTLY FROM LAING O’ROURKE DONATIONS, SPONSORSHIPS, EPIC GRANTS AND EPIC COMMUNITY INITIATIVES

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RISK MANAGEMENT

PROACTIVELY AND EFFECTIVELY MANAGING RISK

GROUP RISK MANAGEMENTHOW LAING O’ROURKE MANAGES RISKThe Group’s structured approach to risk management is based on the principle of prevention through early identification. Detailed analysis and decisive action planning are carried out to remove or mitigate the potential for and impact of key risks before they actually occur. As risks and uncertainties do materialise, this structured approach also ensures actual issues are effectively dealt with.

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

The Board and Group Executive Committee have overall responsibility for ensuring that risk is effectively managed across the Group to guarantee full compliance with the legislative and regulatory requirements in the jurisdictions where it operates. The Board delegates certain risk management activities to designated subcommittees. Risk is a regular agenda item at these senior management forums and an integral component of the Group’s periodic strategy review process. This ensures the Board has a full appreciation of the principal risks affecting business operations as well as a comprehensive oversight of how they are being managed in line with our Group risk appetite and Risk Management Policy. Further information on the activities of these committees, together with the Group’s core business processes and mandated policies, can be found on pages 100 and 107 to 111.

The Board considers Laing O’Rourke’s internal control system to be effective and appropriate. Our internal controls assurance report maps the key activities that are undertaken to assure the areas where the organisation has legal, contractual, regulatory or statutory responsibilities; these elements are placed under continuous review and improvement.

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.

Risk reporting at the operational business unit level is structured so that key risks can be escalated rapidly through the management team, and ultimately to the Board where necessary. The individual businesses are able to tailor and adapt standard risk management processes to suit the specific circumstances of their respective operating environments. In doing so, they must always adhere to the underlying principles of the Group’s Risk Management Policy, which is to continuously identify, analyse, plan and provide for, report and monitor the principal risks through established control procedures. Our ‘risk aware’ culture supports this, with staff involvement at all levels to promote an environment of learning from experience, in order to adapt and continually improve our controls and communication on risks.

Project risks are monitored and reported by our project leadership teams, which are reviewed by business unit operational management at monthly contract reviews. This process covers the financial and schedule performance of projects and is overseen by the commercial function. Reporting structures and mechanisms ensure that project risks are continually monitored and significant exposures can be escalated from project level to business unit level and ultimately to the Group Executive Committee and the Board. All project-owning business units must have assurance

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.


LAING O’ROURKE’S ASSESSMENT OF

STRATEGIC, FINANCIAL, OPERATIONAL AND

PROJECT RISKS

IDENTIFYING RISKS

Risks are identified at a corporate and project level and monitored regularly as their impact and probability may change

over time. Material risks are consolidated into a material risk register, which is reviewed by the Audit Committee and

reported to the Group Executive Committee and the Board.

REPORTING AND MONITORING

This type of robust mitigation strategy is subject to rigorous and ongoing review by

accountable management, and is supported through the Group’s internal audit processes.

The Audit Committee evaluates the effectiveness of risk controls deployed and reports its findings to the Group Executive Committee and the Board

on a regular basis.

ANALYSING RISKS AND CONTROLS TO MANAGE IDENTIFIED RISKSThe process evaluates identified risks

to ascertain the degree of financial and non-financial impact on the Group, together

with the root causes and level of occurrence. Consideration of

the appropriate controls required to successfully mitigate the risks is

also undertaken, which enables identified risks to be prioritised

for action.

DETERMINING MANAGEMENT ACTIONS

REQUIREDExisting and additional risk controls will be agreed and responsibilities

assigned to appropriate ‘risk-owning’ management forums for

implementation.

1

2 3

4

SUBCOMMITTEES

GROUP EXECUTIVE COMMITTEE

BOARD

mechanisms to assess the likelihood and potential impact of risks and to ensure actions can be taken to mitigate and eliminate risks, while strengthening our internal controls and systems to manage the recurrence of such risks at any point in the future. Furthermore, Laing O’Rourke is striving to assess risks and viable opportunities collectively, that will enable more efficient prioritising of time and effort throughout the business.

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


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RISK MANAGEMENT: CONTINUED

OPERATIONAL GOVERNANCEGLOBAL CODE OF CONDUCTLaing O’Rourke believes laws and regulations act as our minimum integrity standards, and we constantly seek to go beyond this level. The Global Code of Conduct articulates our approved set of ethical principles covering key business issues that we expect every employee and contracted supply chain partner to uphold in every activity, every day, wherever we operate. By setting the expected minimum standards of business conduct in different areas of our work, the Code is integral to the way we do business at Laing O’Rourke and is underpinned by our Group vision and values. Compliance with the Code provides heightened assurance of our business affairs, which in turn supports the long-term sustainability of the Group by encouraging more ethical and effective relationships and stimulating deeper economic, social and environmental contributions where we work.

The Code applies globally and its development and application are the responsibility of the Group Executive Committee.

GROUP POLICIESOur Group policies underpin the Global Code of Conduct and are based on government laws and regulations that impact upon every Laing O’Rourke business and every employee. The policies establish and define the internal rules that everyone must comply with to conduct business effectively. As the Group expands globally, we are subject to a growing number of regulations in the jurisdictions where we operate. This environment demands that every employee be aware of, knowledgeable about and committed to excellence in the application of clear, global and mandatory Laing O’Rourke policies.

PROJECT QUALITY MANAGEMENT SYSTEMThe LOR Way is a Group-wide project quality management system. It comprises the Core and Enabling Processes and functional toolkits, a set of standards and procedures that guide and direct The LOR Way for finding, winning and delivering projects. This proven quality assurance framework enables us to connect and direct all of the different decisions and activities necessary, through a series of mandated process gateways, to achieve maximum performance and control across the entire lifecycle of a project. The quality management system is subject to continuous improvement to reflect the evolving organisation.

CORE PROCESSCore Process enables accountable business leaders to fully understand the critical sign-off procedures in bidding for and securing a project, and the formal governance approach which must be observed to secure optimum performance. It is also a vital tool for establishing accurate and reliable assessments of risk and opportunity in commercial and design activities and is aligned with our health, safety and environment systems. Core Process is mandatory across all of our projects and compliance is monitored by our risk and assurance function.

A key element of Core Process is our centrally managed and governed client relationship management system – Salesforce – which captures information in relation to the opportunities the Group is pursuing, and also acts as a repository for supporting documentation. Information captured in Salesforce is used across the business to aid collaboration and provide reporting at all governance levels. Opportunity pipeline information to this level of quality and detail helps ensure all bidding-related decisions are fact-based and fully informed, heightening the Group’s chance of success in the tendering phases.

THE BOARD TAKES A PROACTIVE APPROACH TO RISK MANAGEMENT WITH THE AIM OF PROTECTING ITS EMPLOYEES AND CUSTOMERS AND SAFEGUARDING THE INTERESTS OF THE GROUP AND ITS SHAREHOLDERS.”

GEORGE ROSECHAIRMAN, AUDIT COMMITTEE


CORE PROCESSA standard approach to the key business decisions and

activities, delivering effective governance, organisational diligence and consistency for finding, winning and

delivering projectsENABLING PROCESS

Best-in-class project delivery to assure greater

predictability in operational and financial performance

- Required minimum standards and skill-sets

- Best practice procedures – functional toolkits

- Continuous improvement – formal feedback process

SALESFORCE CRM SYSTEM - Opportunity

pipeline tracking - Key sectors contact

management - Process gateway

governance – ‘permission to bid’

ENABLING PROCESSEnabling Process helps accountable project leaders to fully understand the minimum requirements, in terms of operational procedures, for assuring success in project design and delivery. It also supports project leaders to ensure that their teams have the necessary skills to meet these minimum requirements, allowing them to allocate clear responsibilities to team members. Adherence to Enabling Process is also mandatory, and it is only permissible to omit elements in clearly defined circumstances, and by specific dispensation from an accountable director.

Key elements of Enabling Process are the functional toolkits, which enable accountable functional leaders and their teams to deploy current best practice consistently, executing project-specific plans in an integrated and disciplined manner. A frequent and formal feedback process is implemented to capture key information to enable us continually to assimilate the best and most current ways of working.

BUSINESS UNIT/FUNCTION GUIDELINES AND PROCEDURESBusiness unit and function-specific guidelines ensure that the different operating hubs and their constituent parts can effectively adapt their business practices and processes to suit the markets and sectors in which they operate. They are designed to align with, and complement, Group policies and stem directly from The LOR Way. In addition, they remain true to both the spirit and the letter of the Global Code of Conduct, and comply with applicable laws and regulations.


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Further information on our financial risks can be found in note 30 to the financial statements on pages 147 to 150. This list is not intended to be exhaustive, and some risks and uncertainties have not been included on the basis that they are not considered to be material, to affect or be likely to affect businesses in general, or are not presently known by the Board and Audit Committee. However, we have established controls and systems in place to identify and manage these risks.

Key: Increase in risk during 2014/15 No change in risk during 2014/15 Decrease in risk during 2014/15

HEALTH, SAFETY AND SUSTAINABILITY

Risk/Impact: The nature of our activities present considerable threats that could cause significant harm to employees, suppliers, clients, members of the public or the environment, which could lead to injuries, health implications, financial loss/penalties or serious damage to the Group’s reputation.

Link to business model and strategy:

Mitigation: Health and safety is the key focus for Laing O’Rourke and mitigation occurs throughout every level of the Group’s governance framework. Our global safety campaign is an integrated programme designed to eradicate accidents from our business by driving continuous improvement through our culture and leadership. Every project is subject to regular reviews and changes implemented where necessary.

The Safety and Sustainable Development Committee meets periodically to review policy against any industry changes and continue to develop a consistent approach to health, safety and environmental best practice. Our documented Safety Management System (SMS) clearly details compulsory procedural, behavioural and training requirements, is implemented on every project and is continually reviewed and updated.

Further details can be found in the Group Safety and Sustainability Review on pages 70 to 97.

WORK-WINNING

Risk/Impact: Market limitations on securing new business could put pressure on the business to secure projects with inadequate price/risk profiles or with difficult client/contractual arrangements, which could impact the Group’s future profitability and its reputation with clients, suppliers and employees resulting in lost opportunities.


Mitigation: The Group’s approach to project selection is guided by a detailed set of protocols known as Core Process. This has defined delegated authority levels for approving all tenders depending on the size and complexity of the project under consideration that is supported through our gateway process.

Our end-to-end delivery capability results in greater certainty of the build sequence, cost and risk profile pre-contract. Weekly tender review meetings are held to check progress, understand the win strategy and test the contract risk profile in turn providing considerations/recommendations where necessary.


SUMMARY OF PRINCIPAL RISKS

THE GROUP’S PRINCIPAL RISKS ARE IDENTIFIED OVER THE FOLLOWING PAGES, TOGETHER WITH A DESCRIPTION OF HOW WE MITIGATE THEM


PROJECT DELIVERY

Risk/Impact: The Group continues to deliver innovative, yet complex, construction and engineering projects across a range of geographies and sectors. Any inability to deliver on time, to budget and to the right quality could result in financial loss or reputational damage.


Mitigation: Once a project has gone through our rigorous work-winning and project selection as described above, Laing O’Rourke’s approach is guided by a detailed set of protocols – Core Process – and an associated project management approach – Enabling Process. Together these form The LOR Way, which is mandated across all global projects to ensure a standardised approach to tendering and delivery based on robust project controls and a continuous improvement cycle.

Laing O’Rourke’s revolutionary DfMA methodology and our integrated end-to-end capabilities result in greater surety of delivery. Building Information Modelling (BIM) and digital engineering technologies are used to achieve time and cost certainty through a full visualisation of the build sequence.

SUPPLY CHAIN AND JOINT VENTURE PARTNERS

Risk/Impact: Non-delivery by our supply chain or joint venture partners – through poor performance, financial failure, or reduced capacity/capability – could impact the Group’s ability to deliver projects on time, on budget and to the right quality, and result in financial loss or reputational damage.


Mitigation: Our in-house delivery capability allows the Group to actively work independently wherever possible reducing our reliance on third parties. Joint ventures are only established when the Group’s interests are complementary to those of its partners. Laing O’Rourke undertakes a thorough evaluation process to determine the financial, operational and reputational integrity of potential partners before committing to any formal arrangement. Once established, implementation of robust governance procedures ensures compliance with all contractual terms and practices within the joint venture.

Whenever specialist subcontractors are used to meet specific delivery needs, the risk is mitigated through a robust selection process, including reviews to assess financial and operational viability, as well as contractor capacity and capability. Our list of preferred suppliers is regularly reviewed to ensure compliance with Group standards, applicable laws and industry regulations. Furthermore, price inflation trends and supply chain feedback are used to better inform the business of the latest market movements.

PEOPLE

Risk/Impact: Inability to recruit, develop and retain appropriately skilled people in the right geographic locations could impact the Group’s ability to meet current commitments, deliver projects and grow the business as planned.


Mitigation: Human capital is a primary component of Laing O’Rourke’s strategy and is overseen by the Group Executive Committee. The Group aims to be a progressive employer of choice and offers attractive reward packages, training and development, and a broad range of career opportunities. Succession planning is undertaken for all key roles. Innovative partnerships with universities also help position Laing O’Rourke in attracting leading graduates. We monitor engagement levels through our biennial staff survey.


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SUMMARY OF PRINCIPAL RISKS: CONTINUED

FINANCIAL

Risk/Impact: Inability to secure funding – in the form of cash bonding facilities – could impact the Group’s ability to bid work, make investments or meet its ongoing liquidity needs, which could adversely impact profitability, cash flow and future growth.


Mitigation: Our experienced in-house treasury management team takes a prudent approach to liquidity and constantly monitors and maintains sufficient cash reserves and available bank facilities to meet liabilities and financing needs as they fall due. Procedures are in place to monitor and forecast cash usage and other highly liquid current assets. This, together with committed credit facilities, ensures that we have adequate availability of cash when required. At year-end, the Group had cash and undrawn facilities of £724 million.

POLITICAL, ECONOMIC AND REGULATORY

Risk/Impact: The Group operates in a cyclical industry and changes in the economic environment, government policy and regulatory developments can have a significant impact on the number of new projects, thus affecting the Group’s profitability.


Mitigation: The Group seeks to maintain a diverse portfolio of projects for both private and public clients and a broad exposure to a number of resilient sectors and geographic markets. Laing O’Rourke also maintains a focus on sustainable relationships with key clients, government departments and related regulatory authorities. This includes members of the senior leadership team actively participating in a number of political, economic and regulatory forums to share knowledge and, where appropriate, support the development of policy and legislation.

CONDUCT, COMPLIANCE AND REPUTATION

Risk/Impact: Damage to the Group’s reputation through poor conduct or acts of fraud, bribery, corruption or anticompetitive behaviour can all adversely impact corporate reputation and result in financial loss.


Mitigation: The Group has very clear principles governing the way in which it conducts its business and expects all employees and partners to act in accordance with its published Global Code of Conduct and established policies. Continuous awareness programmes ensure high levels of understanding of the Group’s expectations and each individual’s obligations. The Group also provides a confidential independent ‘whistle-blowing’ service to encourage the reporting of inappropriate behaviour.

We use a range of strategic advisers to protect and enhance our brand and reputation in the eyes of key business influencers and opinion formers.



CORPORATE GOVERNANCE

LAING O’ROURKE IS COMMITTED TO ACHIEVING CORPORATE GOVERNANCE STANDARDS AND ETHICAL BUSINESS PRACTICES THAT MEET THE HIGHEST POSSIBLE LEVELS OF INTEGRITY AND COMPLIANCE FOR A PRIVATELY OWNED ENTERPRISE. WE EVALUATE THE EFFECTIVENESS OF OUR DECISION-MAKING, ACCOUNTABILITY AND AUDIT PROCESSES AGAINST SIMILARLY SIZED PUBLICLY LISTED CORPORATIONS. WE BELIEVE THIS IS THE BEST WAY OF ENSURING SUSTAINABLE LONG-TERM GROWTH AND THE SUCCESS OF THE GROUP.

Good corporate governance is integral to the shareholders’ and Board’s objective to sustain an organisational culture based on the Group’s value proposition, placing strong emphasis on upholding the highest standards of business conduct, ethics and integrity amongst the Group’s employees, supply chain and other business partners. This approach is encompassed in our Global Code of Conduct, which provides detailed guidance on a range of standards, including compliance with the UK Bribery Act 2010. The Global Code of Conduct is available on the company’s website: www.laingorourke.com

The company’s governance framework is based on the leadership principles outlined in the UK Corporate Governance Code. The core activities of the Board and its committees are documented and planned on an annual basis, and this forms the basic structure within which the Board operates.

The Board has clear terms of reference that reflect principles contained in the Code, and cover the following:

- Strategy – reviewing and agreeing strategy.

- Performance – monitoring the performance of the Group and also evaluating its own performance.

- Code of Conduct – setting standards and values to guide the affairs of the Group.

- Oversight – ensuring an effective system of internal controls is in place, ensuring that the Board and its nominated subcommittees receive timely and accurate information on the performance of the Group and the proper delegation of authority.

COMMITTED TO GOOD GOVERNANCE AND ETHICAL BUSINESS PRACTICE

- People – ensuring the Group is managed by individuals with the necessary skills and experience, and that senior appointments are decided appropriately.

CORPORATE GOVERNANCE FRAMEWORKAs a large privately owned, internationally focused engineering and construction group, Laing O’Rourke aspires to the highest standards of governance. For that reason, the Board seeks to ensure that the Group’s corporate governance arrangements align with those principles set out in the UK Corporate Governance Code which are deemed to be applicable and appropriate given the private ownership of the Group. The Group’s businesses operate within an established and externally benchmarked corporate governance framework that is underpinned by the Group’s value proposition (see pages 12 to 16). A key function of Laing O’Rourke’s corporate governance framework is the identification, management and mitigation of operational and financial risks. At every governance level, we ensure the necessary decision-making processes are functioning correctly, in line with developments in company laws, corporate governance and best practice.

The framework is reviewed annually to ensure that the committee structure and delegations of authority continue to meet the needs of the business and provide the Board and management with the necessary oversight of the Group’s affairs. During the year, the committee structure was updated in order to align more closely with the needs of the business. This review entailed the creation of the Executive Leadership Team (ELT), whose members meet at least nine times a year. The principle behind the creation of the ELT is to facilitate improved cooperation and coordination between executive management members and to speed up the process of disseminating information with the aim of ensuring an approach that is more ‘fleet of foot’. In addition, following the appointment of Paul Westbury as Group Technical Director, the Engineering Excellence Group (EnEx.G) was incorporated into the new Group Technical Committee in December 2014, recognising the broad scope of the development and execution of the Group’s technical and engineering strategy in support of its drive to be an enduring engineering enterprise. The current terms of reference of the Board and its various committees and subcommittees are set out overleaf.

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105Laing O’Rourke | Annual Review 2015

CORPORATE GOVERNANCE: CONTINUED

1 BOARD OF DIRECTORS (‘BOARD’)

3 3 AUDIT COMMITTEE

4 SAFETY AND SUSTAINABLE DEVELOPMENT COMMITTEE

8 INVESTMENT COMMITTEE

9 EXECUTIVE LEADERSHIP TEAM (ELT)

7GROUP TECHNICAL COMMITTEE (GTC) (Incorporating the Engineering Excellence Group (EnEx.G)

13 PROJECT GOVERNANCE

11 AUSTRALIA HUB EXECUTIVE COMMITTEE

12 BUSINESS UNIT / FUNCTIONAL COMMITTEES

10 EUROPE HUB EXECUTIVE COMMITTEE

12 BUSINESS UNIT/ FUNCTIONAL COMMITTEES

5 GROUP MANAGEMENT COMMITTEE (GMC)

2 GROUP EXECUTIVE COMMITTEE (GEC)

CORPORATE GOVERNANCE FRAMEWORKINDEPENDENT ASSURANCE

2014/15 BOARD AND GROUP COMMITTEE ATTENDANCE

NameBoard (Four meetings)

Group Executive Committee (Eight meetings)

Audit Committee (Three meetings)

Investment Committee (Ten meetings)

Safety and Sustainable Development Committee (Three meetings)

Human Capital Committee (Three meetings)

Ray O’Rourke All All – – – –Anna Stewart All All – – – AllChristakis Klerides All – – – – –Victor Papadopoulos All – – – – –Stelios Anastasiades All – – – – –Des O’Rourke – All – – – TwoGeorge Rose – – All – – –Paul Sheffield – All (Four*) – – All (Two*) All (One*)Cathal O’Rourke – All – – All AllStewart McIntyre – All (Three*) – All (Three*) – All (One*)Callum Tuckett** – All – Six – –Paul Westbury – All (Four*) – – – All (Two*)John O’Connor – All (Five*) – – – AllCeri Richards – – – All – –* Since appointment.** Mr Tuckett was unable to attend two meetings owing to attendance at overseas Group board meetings.

6 HUMAN CAPITAL COMMITTEE


1 BOARD OF DIRECTORS (‘BOARD’)

Description:The Board determines the strategic direction of the Group and allocation of necessary resources to ensure the implementation of the Group’s strategy. It retains oversight of operations through regular reports by the Group Chief Executive. It has overall responsibility for the management of risk and reviews the effectiveness of internal controls and risk management procedures at Group level through reports by the Audit Committee Chairman.

Certain key decisions are the preserve of the Board and are identified in a schedule of reserved matters for its prior approval. These include: changes to the Group’s capital structure; approval of material mergers, acquisitions and disposals; significant investments; capital expenditure; debt facilities; contracts and bids. Authority for the day-to-day running of the Group is delegated to the Group Executive Committee.

The Board is responsible for ensuring that the Group’s accounts give a true and fair view of the business using suitable accounting standards and judgements and determining whether the Group is a going concern. It also has responsibility for approving the Annual Review and ensuring compliance with Cyprus company law (where the company is registered) and other applicable legislation.

The Board is composed of directors providing an appropriate balance of skills, experience, independence and diverse backgrounds. In addition to Ray O’Rourke, the current members of the Board are Christakis Klerides, Victor Papadopoulos, Stelios Anastasiades and Anna Stewart. Their biographies can be found on pages 112 to 113.

2 GROUP EXECUTIVE COMMITTEE (GEC)

Description:The GEC is responsible to the Board for the day-to-day management of the Group’s operations and creating sustainable shareholder value through the management by the Hub Executive Committees (see page 110) of the Group’s constituent businesses. Its role includes recommending to the Board the Group’s overall business strategy and driving its implementation, driving the Group’s human capital agenda, driving safety and sustainability performance across the Group, reviewing and monitoring the performance of management, and setting, and ensuring compliance with, the Group’s internal controls and risk management procedures. The internal risk assurance function reports to the GEC through the Chairman of the Audit Committee on a regular basis. The members of the GEC are set out on pages 113 to 115.

The GEC has further delegated authority to a series of subcommittees which focus on particular Group-wide matters.

Main responsibilities: - Recommending the Group’s overall strategy to the Board. - Recommending to the Board for approval material

acquisitions and disposals, material contracts and bids, major capital expenditure projects and budgets.

- 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.

3 AUDIT COMMITTEE

Description:The Audit Committee provides independent assurance to the Board and Group Executive Committee regarding the management of the Group’s affairs and oversees the Group’s financial reporting, risk management and internal controls. It also provides a formal reporting link with the external auditors, PricewaterhouseCoopers.

Main responsibilities: - Monitoring the integrity of the financial statements and formal

communications relating to the Group’s financial performance. - Reviewing significant financial reporting issues and

accounting policies and disclosures in financial reports. - Reviewing the effectiveness of the Group’s internal control

procedures and risk management systems. - Considering how the Group’s internal audit requirements

shall be satisfied and making recommendations to the Board. - Making recommendations to the Board on the appointment

or reappointment of the Group’s external auditors. - Ensuring that an effective whistleblowing procedure is in place.


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4 SAFETY AND SUSTAINABLE DEVELOPMENT COMMITTEE

Description:A subcommittee of the GEC, this forum ensures risks and opportunities associated with safety and sustainability are given the highest priority within the Group. It also directly supports the delivery of business strategy through the management of sustainable development issues covering social, economic and environmental matters.

Main responsibilities: - Reviewing the development of policies and guidelines for

managing safety and sustainable development (SD) issues. - Reviewing the implementation of these policies and guidelines

and measuring the performance of the Group across these areas. - Monitoring and acting on reports covering matters relating to

significant safety and SD risks and liabilities. - Monitoring incidents, including key impacts and mitigation actions

and, where appropriate, ensuring these are communicated Group-wide.

- Considering domestic and international regulatory and technical developments affecting safety and SD management.

5 GROUP MANAGEMENT COMMITTEE (GMC)

Description:A subcommittee of the GEC, the GMC has operational responsibility for coordinating the preparation of the Group strategy and Group budget and business plan. It also has accountability for the day-to-day implementation of the Group’s strategy and associated plans as approved by the GEC and the Board. Its remit further includes recommending the prioritisation of projects and business development opportunities, and determining the appropriate allocation of capital within the limits of the Board-approved Group budget and business plan.

Main responsibilities: - Coordinating the implementation of the Group’s strategy

and monitoring performance. - Coordinating the Group’s budget and business plan process. - Allocating capital across the Group within Board and GEC-

approved limits. - Coordinating the development of Group policies and standards. - Maximising Group alignment, including practices, resources

and procurement. - Driving senior talent management and development (in liaison

with the GEC and the Human Capital Committee).

6 HUMAN CAPITAL COMMITTEE

Description:This subcommittee of the GEC is chaired by the Group Chief Executive, with members drawn from the GEC and relevant functional disciplines. The main purpose of the committee is to lead the formulation and endorsement of the Group’s people and organisation agenda, and ensure total alignment with Group business strategy.

Main responsibilities: - Setting guidelines for the types of skills, capability and diversity

of human capital necessary to achieve the Group’s strategic goals. - Ensuring the human capital function works with management

to carry out regular reviews of talent and succession plans. - Managing the necessary investment in development and education

activities, including development programmes and education networks, to meet current and future talent requirements.

- Overseeing the Group’s recruitment and resource mobilisation plans to meet operational demands in the field.

- Establishing and developing the Group’s general policy on employee rewards.

- Considering legal and regulatory developments affecting human capital management.

- Developing and maintaining effective people management systems and processes.


7 GROUP TECHNICAL COMMITTEE (GTC) – INCORPORATING THE ENGINEERING EXCELLENCE GROUP (EnEx.G)

Description:The GTC was formed in December 2014 and is responsible for leading the development and execution of the Group’s technical and engineering strategy in support of the Group’s drive to be an enduring engineering enterprise. It incorporates the EnEx.G, the Group’s central innovation hub, and is chaired by the Group Technical Director. The Group’s Chief Engineering Adviser, Professor Robert Mair, continues to advise the business through the GTC in a non-executive capacity. Other members include the Europe Hub and Australia Hub Technical Directors, the Group heads of digital engineering, manufacturing and logistics, and quality.

Main responsibilities: - Defining the technical strategy for the business, fully aligned

with Group vision, ensuring its timely delivery. - Ensuring the assurance and performance of the Group’s

technical portfolio, for current and future activities. - Providing technical leadership and governance for the Group

across the full remit of technical and engineering activities – operational projects, design management and leadership, digital engineering, manufacturing and logistics, and quality.

- Providing technical guidance to the Europe and Australia Hub Executive Committees, their respective businesses, projects and functions, being accountable to these management forums for effective, end-to-end technical strategy and performance.

- Developing systems and processes to optimise technical performance, maximising efficient utilisation of existing capabilities and future capabilities.

- Acting as a compelling advocate for excellence in engineering and thereby providing a framework within which to source and retain the best engineering and technical talent.

- Identifying, proposing, prioritising and monitoring areas where engineering excellence can add value to existing projects, new bids and opportunities.

- Collaborating with clients, supply chain partners, government bodies and other organisations (including charities) to generate goodwill, loyalty and new opportunities.

- Leading the innovation and research agenda across the Group’s target sectors and markets to give competitive advantage and ultimately drive industry-wide transformation.

- Partnering with leading universities and research providers to support our research agenda, complemented by our commercialised in-house research and development capability.

- Overseeing programmes utilising partner universities to support engineers, technical and construction specialists, project managers and management across the business.

8 INVESTMENT COMMITTEE

Description:The subcommittee is chaired by the Group Investment and Corporate Finance Director, and is responsible for investment and treasury policy decisions. It oversees the commercial prioritisation and development of Private Finance Initiative (PFI)/Public Private Partnership (PPP) investment opportunities and the Group’s capital expenditure programme for sanction by the GEC and Board. Investment funding for acquisition, disposal, partnering and joint venturing transactions, and related commercial decisions are also managed by this committee.

Main responsibilities: - Proposing the Group’s investment strategy to the GEC and

monitoring the implementation of the investment policy and procedures.

- Monitoring compliance with legislation, rules and regulations affecting the Group’s investment activities.

- Considering and recommending to the GEC for approval the appointment of external investment advisers, managers of the company’s investments and/or custodians, including agreeing remuneration, approving engagement terms, and monitoring performance.

- Considering all investment and divestment proposals. - Approving internal processes relating to investment transactions.


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9 EXECUTIVE LEADERSHIP TEAM (ELT)

Description:The ELT met for the first time in November 2014. The primary function of the ELT, which is not a decision-making body, is to enable the executives to flag matters of concern or interest and to provide

a regular sounding board to facilitate the rapid and efficient dissemination of information across the organisation. The ELT membership is set out on pages 113 to 115.

10 EUROPE HUB EXECUTIVE COMMITTEE

Description:This hub-level executive committee has primary authority for the day-to-day management of business operations across the constituent territories within agreed limits set by the GEC. Its members are drawn from senior management in our Construction, Infrastructure and specialist services businesses and key supporting functions. The committee is also responsible for driving the implementation of health, safety and sustainable development policies and monitoring the performance of related activities.

Main responsibilities: - Coordinating the implementation of the hub’s strategy

and monitoring performance. - Coordinating the hub’s budget and business plan process. - Allocating capital across the hub within Board and

GEC-approved limits. - Coordinating the development of hub policies, processes

and standards. - Maximising hub alignment, including practices, resources

and procurement. - Driving senior talent management and development

(in liaison with the GEC and the Human Capital Committee).

11 AUSTRALIA HUB EXECUTIVE COMMITTEE

Description:This hub-level executive committee has primary authority for the day-to-day management of business operations across the constituent territories within agreed limits set by the GEC. Its members are drawn from senior management in its various regions and key supporting functions. The committee is also responsible for driving the implementation of health, safety and sustainable development policies and monitoring the performance of related activities.

Main responsibilities: - Coordinating the implementation of the hub’s strategy

and monitoring performance. - Coordinating the hub’s budget and business plan process. - Allocating capital across the hub within Board and

GEC-approved limits. - Coordinating the development of hub policies, processes

and standards. - Maximising hub alignment, including practices, resources

and procurement. - Driving senior talent management and development

(in liaison with the GEC and the Human Capital Committee).

12 BUSINESS UNIT/FUNCTIONAL COMMITTEES

Description:As subcommittees of the main hub-level executive committees (10 and 11), these forums have delegated authority for the day-to-day management of individual business unit operations or functions,

ensuring the alignment of business plans with strategic targets and that operational performance is in line with, or ahead of, approved budget plans.


13 PROJECT GOVERNANCE

TENDER AND POST-TENDER REVIEW BOARDS Tender reviews Bid selection is an area of particular focus and we have regular forums in both hubs where the business unit leaders and their functional heads meet to review potential bids. These meetings are viewed as one of the critical decision forums for our hub, EnEx.G and business unit leadership. The meetings are chaired by our hub MDs. In line with our Core and Enabling Processes, the Gateway 1 (permission to pre-qualify) and 2 (permission to bid) documents are presented and reviewed at these meetings. This approach facilitates an active engagement from each of the internal businesses in the decision on whether to bid or not. This breadth of experience and knowledge provided by the full complement of Laing O’Rourke businesses, generates discussion and debate that ultimately supports better informed decisions.

Project delivery review boardsProject boards are governed by the standardised processes and practices of The LOR Way – a systematic approach to risk management and quality assurance in the tendering and delivery stages of all projects, whatever their scale and complexity.

Through the Core and Enabling Processes (Laing O’Rourke’s approved business quality management system), the project boards ensure project activities are performed in line with legislation, regulations, codes of practice and the requirements of BS EN ISO 9001:2008 quality management assurance accreditations.

Continual improvement is achieved through the implementation of business objectives, audits, data analysis, corrective and preventive actions and management reviews.

THE BOARD HAS ESTABLISHED A CULTURE AND APPROACH TO GOVERNANCE AND BUSINESS ETHICS THAT HAVE BEEN ADOPTED ACROSS THE BUSINESS, POSITIVELY INFLUENCING OUR ABILITY TO CONTINUALLY ACHIEVE THE HIGHEST STANDARDS: HONESTY AND INTEGRITY IN ALL OUR BUSINESS DEALINGS, RESPECT FOR EACH OTHER, APPRECIATION FOR THOSE THAT WE TRADE WITH, AND RECOGNITION AND REWARD FOR OUR CUSTOMERS.”RAY O’ROURKE KBECHAIRMAN

EffectivenessAll directors are advised regularly of likely time commitments and are asked to seek approval from the Board if they wish to take on additional external appointments. The ability of individual directors to allocate sufficient time to the discharge of their responsibilities is considered as part of the directors’ annual performance review process overseen by the Chairman. Any issues concerning the Chairman’s time commitments are dealt with by the Board.

An induction programme is agreed for all new directors aimed at ensuring that they are quickly able to develop an understanding and awareness of the company’s governance structure and Core and Enabling Processes, its people and businesses. In addition to the above, as part of the induction process, new directors will typically visit the Group’s principal operations in order to meet employees and gain an understanding of the Group’s projects and services. Ongoing training is provided for individual directors as required. Directors are supplied with mobile tablet-based information in a timely manner that is in a form and of a quality appropriate to enable them to discharge their duties. In the normal course of business, such information is provided in a regular report to the GEC and the Board that includes information on operational matters, strategic developments, reports on the performance of Group operations, financial performance relative to the business plan, business development, corporate responsibility and client/stakeholder relations.

Independent assuranceThe financial statements are independently audited by external auditors PricewaterhouseCoopers. The Group’s internal risk and audit function provides assurance to the Audit Committee and, through it the Group Executive Committee and the Board, of the adequacy of the internal control environment across all of Laing O’Rourke’s operations. This includes ensuring that efficient and effective control processes are in place to identify, manage and, to the greatest extent possible, mitigate business risk across the Group’s operations.

The independent external auditors report to the members of Laing O’Rourke Corporation Limited and the Board of Directors, on the financial position of the Group. Their audit opinion on the financial statements is set out on page 119 of this Annual Review.

Additional independent assurance is also carried out by PricewaterhouseCoopers on the Group’s position and statements pertaining to business risk and its health, safety and sustainable development performance. To read their ‘Independent Limited Assurance Report to the Directors of Laing O’Rourke Corporation’ see pages 155 to 156.


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IN ADDITION TO THE CHAIRMAN, RAY O’ROURKE, AND GROUP CHIEF EXECUTIVE, ANNA STEWART, THE CURRENT MEMBERS OF THE BOARD ARE:

A TRUSTED TEAM TO DELIVER ON OUR STRATEGIC AMBITION

CHRISTAKIS KLERIDESDIRECTOR

Age: 64. Christakis joined the Board in March 2007, when Laing O’Rourke Corporation was incorporated in Cyprus. Fellow of the UK Chartered Association of Certified Accountants. As a senior partner of KPMG, he specialised in banking, finance and insurance. In 1999, he was appointed by the President of the Republic of Cyprus to the post of Minister of Finance (until 2003). Since 2003, he has been involved in a number of directorships in quoted companies in London, Oslo and Cyprus in the financial, shipping, property and IT sectors as well as participating in corporate governance committees.

VICTOR PAPADOPOULOSDIRECTOR

Age: 62. Victor joined the Board in March 2007, when Laing O’Rourke Corporation was incorporated in Cyprus. He is an experienced senior banking executive, founding member of the London Forfaiting Company and previously Chief Executive of LFC Cyprus, spearheading the group’s trade finance and capital market operations in the Middle East and Asia. In more recent times, he has served on the boards of several international financial institutions and private equity groups.

STELIOS S ANASTASIADESDIRECTOR

Age: 61. Stelios joined the Board in September 2007, following Laing O’Rourke Corporation’s incorporation in Cyprus in March 2007. He is a qualified mechanical engineer with a first-class honours BSc (Eng) from Queen Mary College, and MSc and DIC from Imperial College London. He is currently the Managing Director of KONE Elevators Cyprus Ltd. He is also President of the Nicosia Chamber of Commerce and Industry, a member of the Cyprus Technical Chamber and a member of the Labour Court.

BOARD OF DIRECTORS


DES O’ROURKEDEPUTY CHAIRMAN

Committee membership 2, 6, 10

Age: 66. Des is a shareholder and co-founding director of the Laing O’Rourke Group. Des provides Board-level support to the Chairman and Group Chief Executive in their operational management of the Group’s business activities. Des has a proven track record in project delivery, mobilising large teams of people onto complex projects around the world.

RAY O’ROURKE KBE, HONFRENG, CENG, FIEI, FICECHAIRMAN

Committee membership 1,2,11

Age: 68. Ray is the major shareholder and founder of the Laing O’Rourke Group. Ray founded the O’Rourke Group in 1977, having begun his career at Kier and J Murphy & Sons. In 2001, R O’Rourke & Son acquired John Laing and formed Laing O’Rourke in 2003, now Europe’s largest privately owned construction company. Ray has a passion for developing and promoting engineering innovation and project delivery talent in meeting today’s global construction challenges, and has a keen focus on safety performance.

Other appointments: Non-Executive Director of Anglo American PLC

ANNA STEWART FRICS, FICEGROUP CHIEF EXECUTIVE

Committee membership 1, 2, 5, 6, 9

Age: 51. Anna joined Laing Limited as a trainee in 1982, and was employed in a number of senior commercial and general management roles, prior to the acquisition of Laing Construction by R O’Rourke & Son in 2001. She was appointed Group Chief Executive of Laing O’Rourke with effect from April 2013. She was previously Group Commercial Director from 2004 and was appointed Group Director of Finance and Commerce in March 2010. Anna is a member of the UK Government’s Construction Industrial Strategy Advisory Council (CISAC), set up by the department of Business, Innovation and Skills (BIS) to drive a long-term strategy for growth in construction across the UK.

Other appointments: Non-Executive Director of Babcock International PLC / UK Government British Business Ambassador / Non-Executive Director of The Major Projects Association / Trustee of the Lighthouse Club

SENIOR LEADERSHIP TEAM

THE SENIOR LEADERSHIP TEAM HAS THE BREADTH OF EXPERTISE AND DEPTH OF EXPERIENCE NECESSARY TO MAINTAIN OUR STRATEGIC FOCUS. DESPITE CONTINUING ECONOMIC CHALLENGES, THE SENIOR TEAM HAS REMAINED RESOLUTE IN DRIVING IMPLEMENTATION OF OUR STRATEGY, SUSTAINING A PROFITABLE PERFORMANCE FROM OUR CORE BUSINESS OPERATIONS, WHILE UPHOLDING THE HIGHEST STANDARDS OF BUSINESS CONDUCT.


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SENIOR LEADERSHIP TEAM: CONTINUED

CATHAL O’ROURKEBENG (HONS), CENG, MICE MANAGING DIRECTOR, AUSTRALIA HUB

Committee membership 2, 4, 5, 6, 9, 11

Age: 38. Cathal was appointed Managing Director of the Group’s Australia Hub in November 2013. Prior to this he was Southern Region Director from February 2011, building on his existing responsibilities as Executive General Manager of Building South. He has been a member of the Australia Hub Executive Committee since joining this part of the business in 2011 and played an active role in the development of the strategic direction of the business. Previously, Cathal held a number of senior operational and project delivery roles in the Europe Hub. Cathal is a Chartered civil engineer and was an inaugural member of the Group’s senior leadership development programmes – ‘Young Guns’ and ‘Guns’ in 2003 and 2008 respectively.

CALLUM TUCKETT FRICS GROUP COMMERCIAL DIRECTOR

Committee membership 2, 5, 6, 8, 9,11

Age: 40. Callum joined the Group Executive in April 2013 and was appointed Group Commercial Director in November 2014. He joined the Group with the acquisition of Laing Construction by R O’Rourke & Son in 2001, having worked for Laing Limited since 1992 in a number of senior commercial and operational management roles. Callum was an inaugural member of the ‘Young Guns’ programme for high-potential leaders in 2003 and subsequently the ‘Guns’ senior leadership programme in 2008.

PAUL SHEFFIELD CBE, FICE MANAGING DIRECTOR, EUROPE HUB

Committee membership 2, 4, 5, 6, 9, 10

Age: 54. Paul joined Laing O’Rourke as Managing Director of the Group’s Europe Hub in October 2014. This followed a 31-year career with Kier – the construction, services and property development group. Most recently he served as Chief Executive Officer, stepping down in June 2014 following a successful four-year tenure overseeing a significant expansion in their activities, including the successful acquisition of May Gurney. In January 2015, Paul was recognised for services to construction and charity work in the UK’s New Year’s Honours List, and awarded a CBE (Commander of the Order of the British Empire).

Other appointments: Independent Non-Executive Director of Southern Water PLC.

GEORGE ROSE FCCA EUROPE HUB CHAIRMAN

Committee membership 3, 10

Age: 63. George joined Laing O’Rourke in September 2011 as a Non-Executive Director. A chartered management accountant, George’s previous roles include Finance Director of Leyland DAF UK and subsequently Director, Group Control of DAF NV located in The Netherlands. He was also Director of Financial Control and accounting at British Aerospace. Following this, George was appointed to the Board of BAE Systems PLC as Group Finance Director. He retired from BAE Systems at the end of March 2011.

Other appointments: Deputy Chairman and Senior Independent Director of Experian PLC, Non-Executive Director of Genel Energy PLC.

JIM SLOMAN OAM AUSTRALIA HUB CHAIRMAN

Committee membership 11

Age: 70. Jim joined the Group as a director in 2010. During a long and distinguished career, he has held a number of high-profile roles in the engineering and construction industry, including Chief Operating Officer responsible for the delivery of the Sydney Olympic and Paralympic Games in 2000.

Other appointments: Independent Director of Goodman Group, Non-Executive Director of ISIS Holdings Pty Ltd.

STEWART MCINTYRE FCCA GROUP FINANCE DIRECTOR


Age: 59. Stewart joined the Group in November 2014 following five years as Managing Director of the luxury yacht manufacturer, Sunseeker International Limited. A qualified accountant, he brings a wealth of experience, having held finance leadership roles spanning the advertising, property, financial advisory, food manufacturing and legal services sectors. He has a proven ability to lead the implementation of management initiatives and efficiency improvement programmes.


PAUL WESTBURY CBE, FICE, FISTRUCTE, FRSA, FRENG GROUP TECHNICAL DIRECTOR


Age: 45. Paul joined Laing O’Rourke in October 2014 as the Group Technical Director with executive responsibility for global engineering resources. He joined from Buro Happold, the global technical design and engineering consultancy where he served as Chief Executive Officer. Prior to his appointment as CEO, Paul was Managing Director for its European business. In January 2013, Paul was recognised for his services to engineering and construction in the UK’s New Year’s Honours list and awarded a CBE (Commander of the Order of the British Empire).

JOHN O’CONNOR FRICS GROUP HUMAN CAPITAL DIRECTOR

Committee membership 2, 5, 6, 9

Age: 49. John was appointed Group Director for Human Capital in May 2014. This is a critical strategic role as talent attraction and retention forms one of the cornerstones of the Group’s strategy and John brings a business perspective to the role. Having joined the Group over 30 years ago, he was previously Commercial Director for the Australia Hub. After qualifying as a Chartered Surveyor in 1990, he spent the first 12 years of his Laing O’Rourke career in the UK, with most of the subsequent 18 years supporting the Group in Hong Kong, the Philippines, Dubai, Abu Dhabi and Australia.

NICK JORDAN BARRISTER GROUP COMPANY SECRETARY

Committee membership 9

Age: 60. Nick joined Laing O’Rourke as Company Secretary in August 2014. He is responsible for ensuring the Group is compliant with the regulatory requirements of the jurisdictions where it operates – and that it maintains the highest standards of conduct in all its business activities. Between 1999 and 2014, Nick was Company Secretary of Anglo American PLC. Prior to this, he was Company Secretary of Minorco SA – which in 1999 merged with Anglo American Corporation of South Africa Limited. Nick qualified as a barrister in 1978 and since 1979 has been a Company Secretary in a variety of sectors including retail, construction, civil engineering and mining.

COMMITTEE MEMBERSHIP1. BOARD OF DIRECTORS

2. GROUP EXECUTIVE COMMITTEE

3. AUDIT COMMITTEE

4. SAFETY AND SUSTAINABLE DEVELOPMENT COMMITTEE

5. GROUP MANAGEMENT COMMITTEE

6. HUMAN CAPITAL COMMITTEE

7. GROUP TECHNICAL COMMITTEE

8. INVESTMENT COMMITTEE

9. EXECUTIVE LEADERSHIP TEAM

10. EUROPE HUB EXECUTIVE COMMITTEE

11. AUSTRALIA HUB EXECUTIVE COMMITTEE

12. BUSINESS UNIT/ FUNCTIONAL COMMITTEES

13. PROJECT GOVERNANCE

CERI RICHARDSGROUP INVESTMENT AND CORPORATE FINANCE DIRECTOR

Committee membership 5, 8, 9

Age: 56. Ceri joined Laing O’Rourke in October 2010. Previously she worked for Lloyds Banking Group as Managing Director for Energy, Real Estate, Housing and Government. Prior to this she was Managing Director at HBOS with responsibility for Infrastructure, Energy, and Transport. This followed 11 years with BNP Paribas, where she worked in investment banking providing corporate banking, project finance and securitisation for PPP and the public sector. Ceri initially worked in the public sector for seven years and is an accountant by training.


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DIRECTORS, OFFICERS AND ADVISERS

116 Laing O’Rourke | Annual Review 2015

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

COMPANY SECRETARY

CMK Management Limited 23 Kennedy Avenue Globe House, 4th Floor 1075 Nicosia Cyprus

COMPANY NUMBER 190393 REGISTERED OFFICE

23 Kennedy Avenue Globe House, 4th Floor 1075 Nicosia Cyprus

UK CONTACT ADDRESS

Laing O’Rourke plc Bridge Place Anchor Boulevard Admirals Park Crossways Dartford Kent DA2 6SN United Kingdom

INDEPENDENT AUDITORS

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

BANKERS Lloyds Bank Corporate Markets

Bank of Scotland plc 10 Gresham Street London EC2V 7HN United Kingdom

BNP Paribas 10 Harewood Avenue London NW1 6AA United Kingdom

HSBC

8 Canada Square London E14 5HQ United Kingdom

Commonwealth Bank Darling Park Tower 1 201 Sussex Street Sydney NSW 2000 Australia

INSURANCE ADVISERS

Marsh Limited Tower Place London EC3R 5BU United Kingdom

INSURERS QBE European Operations

Plantation Place 30 Fenchurch Street London EC3M 3BD United Kingdom


DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2015


The Board of Directors present their annual report together with the audited financial statements of the Laing O'Rourke Corporation Limited consolidated group (the 'Group') for the year ended 31 March 2015.

PRINCIPAL ACTIVITIES The Group's principal activities are:

CONSTRUCTION - Programme management

- Construction and building

- Civil engineering

- Mechanical and electrical engineering

- Core enabling and logistics management services

- Infrastructure and support services

- Construction and maintenance of utilities

- Architectural and environmental services

- Plant hire and operations

- Building products

- Design services

- Building operations management

- Manufacturing construction products

CAPITAL - Property development

- Housebuilding

A list of principal subsidiaries, joint arrangements and associates can be found on pages 153 and 154 in note 37 to the financial statements.

A review of the Group's activities and performance for the year is presented on pages 1 to 104.

GENERAL INFORMATION The Company is a wholly owned subsidiary of Suffolk Partners Corporation, a company incorporated in the British Virgin Islands.

BRANCHES OUTSIDE CYPRUS Laing O'Rourke Corporation Limited did not operate through any branches during the year.

FUTURE DEVELOPMENTS Details of future developments are presented on pages 1 to 104.

RESULTS AND DIVIDENDS The results for the year are set out in the Consolidated Income Statement on page 120 and show a profit for the year after tax of £20.1m (2014: £41.9m).

The Company paid dividends of £21.0m during the year (2014: £20.5m). The Directors do not recommend the payment of a final dividend (2014: £nil).

RESEARCH AND DEVELOPMENT Details of the Group's research and development activities are set out on pages 84 to 85 and pages 95 to 96.

CHARITABLE CONTRIBUTIONS During the year the Group contributed £0.5m (2014: £0.5m) to its nominated charities.

POST BALANCE SHEET EVENTS There were no post balance sheet events requiring disclosure.

DIRECTORS AND THEIR INTERESTS The current membership of the Board is as set out on page 116. R G O'Rourke KBE is the ultimate beneficiary of the trust which owns the majority of the shareholding of the Company. No other Director has an interest in the shares of the Company. Details of related party transactions can be found on pages 151 and 152 in note 33 to the financial statements.

HEALTH, SAFETY AND WELFARE The Group is committed to ensuring the health, safety and welfare of all employees at work. All reasonable measures have been taken to achieve this policy. Arrangements have been made to protect other persons against risk to health and safety arising from the activities of the Group's employees when at work.

EMPLOYMENT POLICY The Group continues to provide employees with relevant information and to seek their views on matters of common concern through their representatives and through line managers. Priority is given to ensuring that employees are aware of significant matters affecting the Group's trading position and of any significant organisational changes.

The Group treats each application for employment, training and promotion on merit. Full and fair consideration is given to both disabled and able-bodied applicants and employees. If existing employees become disabled, every effort is made to find them appropriate work and training is provided if necessary.


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DIRECTORS’ REPORT: CONTINUED


RISK MANAGEMENT Details of the Group's policies and procedures for managing risk are set out on pages 98 to 101.

Key judgements and estimation uncertainty are detailed on page 130 in note 2.23 to the financial statements.

Financial risks are detailed on pages 147 to 150 in note 30 to the financial statements.

SHARE CAPITAL Details of the Company's share capital are set out on page 146 in note 27 to the financial statements.

GOING CONCERN The Board has carefully considered those factors likely to affect the Group’s future development, performance and financial position in relation to the ability of the Group to operate within its current and foreseeable resources, financial and operational. The Group has significant financial resources, committed banking facilities, long-term contracts and a strong order book. For these reasons the directors continue to adopt the going concern basis in preparing the Group's financial statements.

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;

- 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.

APPROVAL This report was approved by the Board on 3 July 2015 and signed on its behalf by:

C KLERIDES DIRECTOR


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF LAING O’ROURKE CORPORATION LIMITED


REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS We have audited the accompanying consolidated financial statements of Laing O'Rourke Corporation Limited (the 'Company') and its subsidiaries (together with the Company, the 'Group') on pages 120 to 154 which comprise the consolidated statement of financial position as at 31 March 2015, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

BOARD OF DIRECTORS' RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 March 2015, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.

REPORT ON OTHER LEGAL REQUIREMENTS Pursuant to the additional requirements of the Auditors and Statutory Audits of Annual and Consolidated Accounts Laws of 2009 and 2013, we report the following:

- We have obtained all the information and explanations we considered necessary for the purposes of our audit.

- In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of these books.

- The consolidated financial statements are in agreement with the books of account.

- In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give the information required by the Cyprus Companies Law, Cap. 113, in the manner so required.

- In our opinion, the information given in the report of the Board of Directors on pages 117 and 118 is consistent with the consolidated financial statements.

OTHER MATTER This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 34 of the Auditors and Statutory Audits of Annual and Consolidated Accounts Laws of 2009 and 2013 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

ANDROULLA S PITTAS CERTIFIED PUBLIC ACCOUNTANT AND REGISTERED AUDITOR FOR AND ON BEHALF OF

PRICEWATERHOUSECOOPERS LIMITED CERTIFIED PUBLIC ACCOUNTANTS AND REGISTERED AUDITORS NICOSIA, 3 JULY 2015


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CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2015


Note

Pre-exceptional

items2015

£m

Exceptionalitems

(note 4)2015

£m

Total2015

£m

Pre- exceptional

items 2014

£m

Exceptional items

(note 4) 2014

£m

Total2014

£m

Continuing operations

Total revenue 3,127.4 – 3,127.4 3,574.3 – 3,574.3Less: share of joint ventures' and associates' revenue (241.6) – (241.6) (247.7) – (247.7)

Revenue 3 2,885.8 – 2,885.8 3,326.6 – 3,326.6Cost of sales (2,668.8) (61.4) (2,730.2) (3,044.2) (3.3) (3,047.5)

Gross profit 217.0 (61.4) 155.6 282.4 (3.3) 279.1Administrative expenses (192.7) – (192.7) (219.0) – (219.0)Other operating income/(expense) 7 3.7 – 3.7 2.3 (3.4) (1.1)Profit on disposal of joint ventures 14 46.5 – 46.5 – – –Share of post-tax profit/(losses) of joint ventures and associates 15 1.2 – 1.2 (3.0) – (3.0)

Profit from operations 5 75.7 (61.4) 14.3 62.7 (6.7) 56.0Net non-operating expense 8 – – – (1.2) – (1.2)

Finance income 9 9.2 – 9.2 6.8 – 6.8Finance expense 10 (11.1) – (11.1) (9.7) – (9.7)

Net financing expense (1.9) – (1.9) (2.9) – (2.9)

Profit before tax 73.8 (61.4) 12.4 58.6 (6.7) 51.9

Taxation 11 (5.2) 12.9 7.7 (10.9) 0.9 (10.0)

Profit for the year 68.6 (48.5) 20.1 47.7 (5.8) 41.9

Attributable to: Owners of the Parent 68.8 (48.5) 20.3 47.1 (5.8) 41.3Non-controlling interests (0.2) – (0.2) 0.6 – 0.6

68.6 (48.5) 20.1 47.7 (5.8) 41.9

The notes on pages 125 to 154 form an integral part of these consolidated financial statements.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2015


Note

Pre-exceptional

items2015

£m

Exceptionalitems

(note 4)2015

£m

Total2015

£m

Pre- exceptional

items 2014

£m

Exceptionalitems

(note 4)2014

£m

Total2014

£m

Profit for the year 68.6 (48.5) 20.1 47.7 (5.8) 41.9Other comprehensive income/(expense): Items that may be subsequently reclassified to profit or loss

Exchange differences on translating foreign operations (30.6) – (30.6) (30.3) – (30.3)Available-for-sale financial assets 0.3 – 0.3 1.0 – 1.0Cash flow hedges – – – (1.1) – (1.1)Disposal of cash flow hedges 15 6.8 – 6.8 – – –Share of other comprehensive income/(expense) of investments accounted for using the equity method 15 3.3 – 3.3 (10.6) – (10.6)

Other comprehensive expense for the year, net of tax 11 (20.2) – (20.2) (41.0) – (41.0)

Total comprehensive income for the year 48.4 (48.5) (0.1) 6.7 (5.8) 0.9

Attributable to: Owners of the Parent 28 48.6 (48.5) 0.1 6.3 (5.8) 0.5Non-controlling interests 28 (0.2) – (0.2) 0.4 – 0.4

48.4 (48.5) (0.1) 6.7 (5.8) 0.9



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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2015


Note 2015

£m 2014

£m

Assets Non-current assets Intangible assets 13 334.6 333.8Investments in joint ventures and associates 15 14.0 14.7Loans to joint ventures 15 37.5 58.7Property, plant and equipment 16 282.2 287.0Investment property 17 30.4 48.4Deferred tax assets 26 38.8 28.3Trade and other receivables 22 32.5 44.8Restricted financial assets 20 – 0.2

Total non-current assets 770.0 815.9

Current assets Inventories 21 76.4 133.6Trade and other receivables 22 466.2 509.0Available-for-sale financial assets 18 0.5 0.6Derivative financial instruments 19 – 2.0Assets held-for-sale – 0.2Cash and cash equivalents 555.9 690.7

Total current assets 1,099.0 1,336.1

Total assets 1,869.0 2,152.0

Liabilities Current liabilities Borrowings 23 (45.5) (165.4)Trade and other payables 24 (999.0) (1,145.6)Provisions 25 (19.2) (7.9)Derivative financial instruments 19 (3.2) –Current tax liabilities (18.2) (16.0)

Total current liabilities (1,085.1) (1,334.9)

Non-current liabilities Borrowings 23 (140.0) (116.7)Trade and other payables 24 (38.4) (64.5)Provisions 25 (29.6) (36.6)Deferred tax liabilities 26 (3.0) (5.3)

Total non-current liabilities (211.0) (223.1)

Total liabilities (1,296.1) (1,558.0)

Net assets 572.9 594.0

Equity Share capital 27 – –Share premium 27 286.4 286.4Fair value reserve 28 (0.1) (0.4)Hedging reserve 28 – (6.8)Foreign currency translation reserve 28 (5.5) 21.8Retained earnings 28 290.4 291.1

Total equity attributable to owners of the Parent 571.2 592.1Non-controlling interests 28 1.7 1.9

Total equity 572.9 594.0

The financial statements were approved and authorised for issue by the Board of Directors on 3 July 2015 and were signed on its behalf by:

A M STEWART C KLERIDES DIRECTOR DIRECTOR



CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2015


Note 2015

£m2014

£m

Cash flows from operating activities Profit before tax 12.4 51.9Adjustments for: Non-cash exceptional items 4 0.2 6.7Depreciation and amortisation 5 57.1 55.3Profit on disposal of property, plant and equipment (6.3) (5.0)Profit on disposal of joint ventures 14 (46.5) –Loss on disposal of intangibles 0.4 –Net financing costs 1.9 2.9Share of post tax (profit)/loss of joint ventures and associates 15 (1.2) 3.0(Increase)/decrease in trade and other receivables 51.7 (48.5)Decrease in inventories 52.2 112.8Decrease in trade and other payables and provisions (169.3) (83.7)Other 2.6 (2.0)

Cash (used in)/generated from operations (44.8) 93.4

Interest paid (11.1) (9.7)Tax paid (1.6) (17.3)

Net cash (used in)/generated from operating activities (57.5) 66.4

Cash flows from investing activities Purchase of property, plant and equipment (25.6) (18.2)Purchase of intangible assets 13 (6.0) (2.0)Acquisition of subsidiaries, net of cash acquired 14 (1.3) (6.1)Proceeds from disposal of available-for-sale financial assets 0.5 0.3Proceeds from disposal of non-current assets held-for-sale – 5.8Proceeds from sale of property, plant and equipment 24.1 18.4Proceeds from sale of investment property 18.0 14.0Proceeds from disposal of other investments – 4.2Proceeds from disposal of joint ventures and associates 14 69.4 –Loans to joint ventures and associates 15 (5.5) (2.8)Loans repaid by joint ventures and associates 15 0.2 0.2Interest received 9.2 6.2Distributions received from joint ventures and associates 15 8.9 21.7

Net cash generated from investing activities 91.9 41.7

Cash flows from financing activities Proceeds from new bank loans 50.0 53.9Repayments of bank loans (139.9) (86.5)Proceeds from re-financing existing property, plant and equipment – 29.4Finance lease principal repayments (48.5) (41.7)Dividends paid to non-controlling interests 28 – (1.5)Dividends paid 12 (21.0) (20.5)

Net cash used in financing activities (159.4) (66.9)

Net (decrease)/increase in cash and cash equivalents (125.0) 41.2Cash and cash equivalents at beginning of year 690.7 713.8Effect of exchange rate fluctuations on cash held (9.8) (64.3)

Cash and cash equivalents at end of year 555.9 690.7

Non-cash transactions principally relate to new hire purchase and finance lease agreements taken out during the year amounting to £45.4m (2014: £90.8m).

Cash and cash equivalents comprise: Cash at bank and in hand 541.4 644.7Short-term bank deposits 31 14.5 46.0

555.9 690.7



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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2015


Note

Share capital and sharepremium

£m

Other reserves

£m

Retained earnings

£m

Total shareholders’

equity £m

Non-controlling

interests £m

Total equity

£m

At 1 April 2013 286.4 55.4 270.3 612.1 3.0 615.1

Profit for the year – – 41.3 41.3 0.6 41.9Other comprehensive expense after tax

– (40.8) – (40.8) (0.2) (41.0)

Total comprehensive income for the year

– (40.8) 41.3 0.5 0.4 0.9

Dividends paid 12 – – (20.5) (20.5) (1.5) (22.0)

At 31 March 2014 286.4 14.6 291.1 592.1 1.9 594.0

Profit for the year – – 20.3 20.3 (0.2) 20.1Other comprehensive expense after tax – (20.2) – (20.2) – (20.2)Total comprehensive expense for the year – (20.2) 20.3 0.1 (0.2) (0.1)Dividends paid 12 – – (21.0) (21.0) – (21.0)At 31 March 2015 286.4 (5.6) 290.4 571.2 1.7 572.9

Additional disclosure and details are provided in note 28.



NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015


1 GENERAL INFORMATION Laing O'Rourke Corporation Limited (the 'Company') is a company incorporated and domiciled in Cyprus. The Company prepares parent company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and the Cyprus Companies Law, Cap. 113. The address of the registered office is given on page 116. The nature of the Group's operations and its principal activities are set out in note 37 and in the Group Financial Review on pages 20 to 23. The consolidated financial statements of the Company for the year ended 31 March 2015 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in joint arrangements and associates.

2 SIGNIFICANT ACCOUNTING POLICIES 2.1 STATEMENT OF COMPLIANCE The Group consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union (Adopted IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations) and the Cyprus Companies Law, Cap. 113.

2.2 BASIS OF PREPARATION The Group consolidated financial statements are presented in pounds sterling, rounded to the nearest hundred thousand and include the results of the holding company, its subsidiary undertakings and the Group's interest in joint arrangements and associates for the year ended 31 March 2015. The consolidated financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of land and buildings (prior to the adoption of IFRS), available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. The principal accounting policies which have been consistently applied for all consolidated entities including subsidiaries, joint arrangements and associates are set out below.

The following standards, amendments and interpretations became effective in the year ended 31 March 2015 and have been adopted:

a) Amendments to IFRS 10, 12 and IAS 27: Investment entities (effective for accounting periods beginning on or after 1 January 2014)

b) Amendments to IAS 39: Novation of Derivatives and Continuation of Hedge Accounting (effective for accounting periods beginning on or after 1 January 2014)

Each standard has been reviewed and the effect on the Group financial statements of adopting these new standards, amendments and interpretations has been determined to be minimal.

The Directors have considered recently published IFRSs, new interpretations and amendments to existing standards that are mandatory to the Group's accounting periods commencing on or after 1 April 2015.

Standards that are not yet effective and have not been early-adopted by the Group:

a) IFRIC 21, Levies, (effective for accounting periods beginning on or after 17 June 2014)

b) Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (effective for accounting periods beginning on or after 1 January 2016)

c) Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation (effective for accounting periods beginning on or after 1 January 2016)

d) Amendments to IAS 1: Disclosure Initiative (effective for accounting periods beginning on or after 1 January 2016)

e) Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception (effective for accounting periods beginning on or after 1 January 2016)

f) IFRS 15, Revenue from Contracts with Customers, (effective for accounting periods beginning on or after 1 January 2017)

g) IFRS 9, Financial Instruments, (effective for accounting periods beginning on or after 1 January 2018)

The effect on the Group financial statements of adopting these new standards, amendments and interpretations has been determined to be minimal with the exception of those detailed below:

IFRS 15 is expected to replace the two main revenue recognition standards, IAS 18 Revenue and IAS 11 Construction Contracts. The standard establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The mandatory effective date for IFRS 15 is 1 January 2017, and it will therefore be applied for the first time to the Group accounts for the year ending 31 March 2018. The standard has not yet been endorsed by the EU. The Group will carry out a systematic review of all existing major contracts to ensure that the impact and effect of the new standard is fully understood and changes to the current accounting procedures are highlighted and acted upon in advance of the effective date.

IFRS 9 is expected to replace IAS 39 Financial Instruments: Recognition and Measurement from 2018, subject to EU adoption. The standard covers the classification, measurement and derecognition of financial assets and financial liabilities together with a new hedge accounting model. The IASB intends to expand IFRS 9 to add new requirements for impairment. The mandatory effective date for IFRS 9 is 1 January 2018. The standard has not yet been endorsed by the EU. The Group will consider the impact of IFRS 9 when the remaining phases of the IAS 39 Replacement Project are complete.


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NOTES TO THE FINANCIAL STATEMENTS: CONTINUED


2 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 2.3 BASIS OF CONSOLIDATION a) The Group financial statements include the financial

statements of the Company and subsidiaries controlled by the Company. Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are deconsolidated from the date control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group falling within the scope of IFRS 3, 'Business Combinations'. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets, equity instruments issued and liabilities incurred or assumed at the date of exchange. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the consideration transferred over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

b) Associates are operations over which the Group has the power to exercise significant influence but not control, generally accompanied by a share of between 20 per cent and 50 per cent of the voting rights. Associates are accounted for using the equity method and are initially recognised at cost. The Group's investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group's share of its associates' post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in the statement of other comprehensive income. If the Group's share of losses in an associate equals its investment, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate, in which case a provision is recognised.

c) Under IFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of each joint arrangement and has determined some to be joint operations and some to be joint ventures, as detailed in Note 37.

i) The Group accounts for its share of the assets, liabilities, revenue and expenses in a joint operation, under each relevant heading in the income statement and the statement of financial position.

ii) Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group's share of losses in a joint venture equals or exceeds its interest in the joint ventures (which includes any long-term interests that, in substance, form part of the Group's net investment in the joint venture), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture.

d) Intra-Group balances and transactions together with any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with jointly controlled entities and jointly controlled operations are eliminated to the extent of the Group's interest in the entity. The Group's share of unrealised gains arising from transactions with associates is eliminated against the investment in the associate. The Group's share of unrealised losses is eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

2.4 FOREIGN CURRENCY TRANSLATION Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in pounds sterling, which is the functional and presentation currency of Laing O'Rourke Corporation Limited and the currency of the primary economic environment in which the Group operates.

Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the income statement.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at 'fair value through profit or loss' are recognised in the income statement as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the fair value reserve in equity.



2 SIGNIFICANT ACCOUNTING POLICIES CONTINUED Group companies The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the reporting date;

ii) income and expenses for each income statement are translated at average exchange rates; and

iii) all resulting exchange differences are recognised in the foreign currency translation reserve.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings designed as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially disposed of, or sold, exchange differences that were recorded in other comprehensive income are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.5 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are reported at historical cost less accumulated depreciation and any recognised impairment loss. Land is not depreciated. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items. Cost comprises purchase price and directly attributable costs. Depreciation is calculated on the straight-line method to write down the cost to their residual values over their estimated useful lives as follows:

Group owner occupied property 2%Other buildings 2%Plant, equipment and vehicles 6% – 50%

Certain land and buildings were revalued under previous accounting standards. On transition to IFRS, the Group elected to use the revalued amount as deemed cost.

Assets held under finance leases are depreciated over the term of the lease or the estimated useful life of the asset as appropriate.

Gains and losses on disposal are recognised within cost of sales, administrative expenses or non-operating income/expense in the income statement as appropriate.

2.6 GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net assets of the acquired subsidiary, associate or joint venture at the date of acquisition. Goodwill on acquisitions prior to 1 April 2006 (the date of transition to IFRS) is carried at its book value (original cost less cumulative amortisation) on that date, less any subsequent impairment. This is in accordance with the transitional provisions of IFRS 1. Goodwill arising before 1 January 1998 was eliminated against reserves and has not been reinstated in accordance with the transitional provisions of IFRS 3, 'Business Combinations'. Goodwill arising on the Group's investments in associates and joint ventures since that date is included within the carrying value of these investments. Negative goodwill arising on or after 1 April 2006 is recognised immediately within profit from operations in the income statement. Separately recognised goodwill is tested annually for impairment and carried at cost less impairment losses. Goodwill is included when determining the profit or loss on subsequent disposal of the business to which it relates. Goodwill is allocated to cash generating units for the purpose of impairment testing.

Other intangible assets Other intangible assets are stated at cost less accumulated amortisation and impairment losses. Amortisation is based on the useful lives of the assets concerned, and recognised on a straight line basis over the following periods:

Brands 8-10 yearsComputer software and licences 2-4 years

Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually. Assets that are subject to amortisation or depreciation are reviewed for impairment or reversal of prior impairments when circumstances or events indicate there may be a change in the carrying value. For impairment testing, goodwill is allocated to cash-generating units by geographical reporting unit and business segment. Assets are grouped at the lowest level for which there are separately identifiable cash flows.

2.7 INVESTMENT PROPERTY Investment properties are held for long-term rental yields and are not occupied by the Group. Acquired investment properties are initially measured at cost, being the fair value of consideration given to acquire the property. The cost of self-constructed investment properties includes all directly attributable costs. Completed investment properties are stated at fair value, which is supported by market evidence, as assessed annually by the chief surveyor or by qualified external valuers at three year intervals. Depreciation is not provided on investment properties. Changes in fair values are recorded in the income statement as part of non-operating income/expense.


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2 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 2.8 FINANCIAL INVESTMENTS The Group has classified its financial investments as available-for-sale financial assets which are recognised at fair value. Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the assets, at their fair values less transaction costs. The fair values of listed financial investments are determined using bid market prices. Changes in the fair value of financial investments classified as available-for-sale are recorded in the fair value reserve within equity. When these are sold, the fair value adjustments recognised in equity are included in the income statement.

Under the terms of a PFI or similar project, where the risks and rewards of ownership remain largely with the purchaser of the associated services, the Group's interest in the asset is classified as a financial asset and included at its amortised cost within investment in joint ventures.

2.9 DERIVATIVE FINANCIAL INSTRUMENTS The Group enters into forward contracts or borrows/deposits funds in foreign currencies in order to hedge against transactional foreign currency exposures. Fair value derivatives are initially recognised at fair value on the date of the contract and are subsequently remeasured at their fair value. Movements in fair value are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less than 12 months.

The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred, together with any related deferred taxation.

2.10 CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, and other short-term highly liquid investments with less than 90 days maturity from the date of acquisition. For the purpose of the cash flow statement, cash and cash equivalents also include bank overdrafts, which are included in borrowings in the statement of financial position.

2.11 TRADE AND OTHER RECEIVABLES Trade receivables are initially recorded at fair value and subsequently measured at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts. Subsequent recoveries of amounts previously written off are credited to the income statement line in which the provision was originally recognised.

2.12 TRADE AND OTHER PAYABLES Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

2.13 PROVISIONS Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, where it is probable that an outflow will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are measured at the best estimate of the present value of the expenditures expected to be required to settle the obligation.

2.14 REVENUE RECOGNITION Revenue is measured at the fair value of the consideration received or receivable, net of sales tax, for goods and services supplied to external customers. It includes the Group's share of revenue from work carried out under jointly controlled operations. Revenue from services and construction contracts is recognised by reference to the stage of completion of the contract, as set out in the accounting policy for construction and service contracts. Revenue from the sale of goods is recognised when the Group has transferred significant risks and rewards of ownership of the goods to the buyer, the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Group.

Rental income is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives are recognised as an integral part of the total rental income.

Revenue on sale of private housing and commercial property is recognised on legal completion of the sale.

2.15 CONSTRUCTION AND SERVICE CONTRACTS When the outcome of a construction contract can be estimated reliably, contract revenue and costs are recognised by reference to the stage of completion of each contract, as measured by the proportion of total costs at the balance sheet date to the estimated total cost of the contract.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately.

Where costs incurred plus recognised profits less recognised losses exceed progress billings, the balance is recognised as due from customers on construction contracts within trade and other receivables. Where progress billings exceed costs incurred plus recognised profits less recognised losses, the balance is recognised as advance payments on construction contracts within trade and other payables.

Private Finance Initiative (PFI)/Public Private Partnership (PPP) bid costs are expensed as incurred until the Group is appointed preferred bidder. Provided the contract is expected to generate sufficient net cash inflows to enable recovery and the award of the contract is virtually certain, PFI/PPP bid costs incurred after the appointment as preferred bidder are included within receivables. The PFI/PPP bid costs are expensed on reimbursement at financial close. Any surplus on reimbursement of costs compared with those recorded in receivables is recognised in the income statement.



2 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 2.16 INVENTORIES Inventories, including land and related development activity thereon, are stated at the lower of cost and estimated net realisable value. Cost comprises direct materials, direct and subcontract labour, specific borrowing costs and those overheads that have been incurred in bringing inventories to their present location and condition. Net realisable value represents the estimated income less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

2.17 LEASES AND HIRE PURCHASE COMMITMENTS Assets obtained under hire purchase contracts and leases, where a significant portion of the risks and rewards of ownership is transferred to the Group, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are apportioned between the liability and finance charge to produce a constant rate of interest on the finance lease balance outstanding. Assets held for use in such leases are included in 'Property, plant and equipment' (note 16) and are depreciated to their residual values over the estimated useful lives or the lease term as appropriate and are adjusted for impairment losses. Obligations under such agreements are included in 'Borrowings' (note 23).

Leases other than finance leases are classified as operating leases. Payments made under operating leases are recognised as an expense in the income statement on a straight-line basis over the lease term. Any incentives to enter into operating leases are recognised as a reduction of rental expense over the lease term on a straight-line basis.

2.18 PENSION COSTS The Group operates defined contribution pension schemes for staff and Directors. The contributions paid by the Group and the employees are invested in the pension fund within 30 days following deduction. Once the contributions have been paid, the Group, as employer, has no further payment obligations. The Group's contributions are charged to the income statement in the year to which they relate.

2.19 TAX Tax expense represents the sum of the tax currently payable and deferred tax. The current tax expense is based on the taxable profits for the year, after any adjustments in respect of prior years. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it also excludes items that are neither taxable nor deductible. The Group's liability for current tax is calculated using tax rates and laws that have been enacted or substantially enacted by the reporting date.

Deferred tax is provided on temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the foreseeable future. Deferred taxes are not provided in respect of temporary differences arising from the initial recognition of goodwill, or from goodwill for which amortisation is not deductible for tax purposes, or from the initial recognition of an asset or liability in a transaction which is not a business combination and affects neither accounting profit nor taxable profit or loss at the time of the transaction. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax is calculated at the tax rates based on those enacted or substantially enacted at the balance sheet date and are expected to apply when the related asset is realised or liability settled. Deferred tax is charged or credited in the income statement except when it relates to items charged or credited directly to equity, in which case the deferred tax is also included in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.20 BORROWINGS AND BORROWING COSTS Interest bearing bank loans and overdrafts are recognised initially at fair value net of transaction costs incurred. All borrowings are subsequently stated at amortised cost with the difference between initial net proceeds and redemption value recognised in the income statement over the period to redemption.

Borrowing costs are capitalised where the Group borrows funds specifically for the purpose of acquiring, constructing or producing a qualifying asset, in accordance with IAS 23, 'Borrowing Costs'. All other finance costs of debt, including premiums payable on settlement and direct issue costs, are charged to the income statement on an accruals basis over the term of the instrument, using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.21 EXCEPTIONAL ITEMS Exceptional items are defined as items of income or expenditure which, in the opinion of the Directors, are material and unusual in nature or of such significance that they require separate disclosure on the face of the consolidated income statement in accordance with IAS 1, 'Presentation of Financial Statements'.

Judgement has therefore been used when determining exceptional items, which this year primarily relate to issues encountered using new construction methods and the lessons that have been learned, meaning these unusual circumstances are unlikely to recur on new contracts.


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2 SIGNIFICANT ACCOUNTING POLICIES CONTINUED 2.22 TRADING ANALYSIS Trading analysis information is based on the Group’s internal reporting structure of two operational hubs and corporate management centre. Further information on the business trading activities is set out in the operating overview on pages 24 to 69. Trading analysis results represent the contribution directly attributable for the different hubs to profit of the Group. Transactions between hubs are conducted on an arm’s length basis.

2.23 KEY JUDGEMENTS AND ESTIMATION UNCERTAINTY The preparation of consolidated financial statements under IFRS requires management to make estimates and assumptions that affect amounts recognised for assets and liabilities at the balance sheet date and the amounts of revenue and the expenses incurred during the reported period. Actual outcomes may therefore differ from these estimates and assumptions. The estimates and assumptions that have the most significant impact on the carrying value of assets and liabilities of the Group within the next financial year are detailed as follows:

a) Revenue and margin recognition The Group's revenue recognition and margin recognition

policies, which are set out in notes 2.14 and 2.15, are central to the way the Group values the work it has carried out in each financial year and have been consistently applied. These policies require forecasts to be made of the outcomes of long-term construction and service contracts, which require assessments and judgements to be made on changes in work scopes, contract programmes and maintenance liabilities.

b) Disputes Management's best judgement has been taken into

account in reporting disputed amounts, legal cases and claims but the actual future outcome may be different from this judgement.

c) Impairment of goodwill Determining whether goodwill is impaired requires an

estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires an estimation to be made of the timing and amount of future cash flows expected to arise from the cash generating unit, and a suitable discount rate in order to calculate the present value. The discount rate used, carrying value of goodwill and further details of the impairment loss calculation are included in note 13.

d) Taxation The Group is subject to tax in a number of jurisdictions

and judgement is required in determining the worldwide provision for income taxes including the recognition of deferred tax assets. The Group provides for future liabilities in respect of uncertain tax positions where additional tax may become payable in future periods and such provisions are based upon management's assessment of exposures. Assets are only recognised where it is reasonably certain additional tax will become payable in future periods and when the asset can be utilised.

e) Development land and work in progress Determining whether land developments are impaired

requires an estimation of the fair values of expected selling prices and costs to complete.

f) Investment property Determining the fair value of investment properties

requires an estimation of future rental yields compared to current market evidence. In certain cases comparable market price information is limited due to the current economic conditions and management have exercised their best judgements in determining the fair value of investment properties.

g) Captive insurance company The Group operates a captive insurance company which

provides reinsurance exclusively to the Group. Provision is made on actuarial assessment of the reserve for future claims, which necessarily includes estimates of the likely trend of future claims costs and the emergence of further claims subsequent to the year-end. An actuarial review of claims is performed annually. To the extent that actual claims differ from those projected, the provisions could vary significantly.

h) Financial risk management In the course of its business, the Group is exposed to

foreign currency risk, liquidity risk, interest rate risk and credit risk. The overall aim of the Group's financial risk management policies is to use judgement to minimise potential adverse effects on financial performance and net assets. Further details are provided in note 30 to these financial statements.



3 TRADING ANALYSIS

Europe Hub 2015

£m

Australia Hub 2015

£m

Corporate Management

& Treasury2015

£m

Total Group 2015

£m

Performance by geography: Managed revenue 2,353.4 1,482.8 13.9 3,850.1 Less: Inter-segment revenue (605.9) (104.1) (12.7) (722.7)Total revenue 1,747.5 1,378.7 1.2 3,127.4Less: Share of joint ventures’ and associates revenue (241.6) – – (241.6)Revenue 1,505.9 1,378.7 1.2 2,885.8 Profit from operations post-exceptional items (54.2) 92.9 (24.4) 14.3Profit before tax post-exceptional items (57.5) 91.7 (21.8) 12.4 EBIT post-exceptional items (56.7) 92.9 (24.4) 11.8EBITDA post-exceptional items (18.3) 110.5 (23.3) 68.9 Profit from operations pre-exceptional items 7.2 92.9 (24.4) 75.7Profit before tax and exceptional items 3.9 91.7 (21.8) 73.8 EBIT pre-exceptional items 4.7 92.9 (24.4) 73.2EBITDA pre-exceptional items 43.1 110.5 (23.3) 130.3

Europe Hub 2014

£m

Australia Hub 2014

£m

Corporate Management

& Treasury2014

£m

Total Group 2014

£m

Managed revenue 2,585.8 1,808.2 14.5 4,408.5 Less: Inter-segment revenue (627.0) (193.8) (13.4) (834.2)

Total revenue 1,958.8 1,614.4 1.1 3,574.3Less: Share of joint ventures’ and associates revenue (247.7) – – (247.7)

Revenue 1,711.1 1,614.4 1.1 3,326.6

Profit from operations post-exceptional items 45.9 42.1 (32.0) 56.0Profit before tax post-exceptional items 42.0 38.7 (28.8) 51.9

EBIT post-exceptional items 43.3 42.1 (32.0) 53.4EBITDA post-exceptional items 79.4 60.2 (30.9) 108.7

Profit from operations pre-exceptional items 49.7 45.0 (32.0) 62.7Profit before tax and exceptional items 45.8 41.6 (28.8) 58.6

EBIT pre-exceptional items 47.1 45.0 (32.0) 60.1EBITDA pre-exceptional items 83.2 63.1 (30.9) 115.4


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3 TRADING ANALYSIS CONTINUED

EBIT and EBITDA: Note

Pre- exceptional

items2015

£m

Exceptional items

(note 4)2015

£m

Total2015

£m

Pre- exceptional

items 2014

£m

Exceptional items

(note 4) 2014

£m

Total2014

£m

Profit from operations 75.7 (61.4) 14.3 62.7 (6.7) 56.0 Adjusted for: Net non-operating expense 8 – – – (1.2) – (1.2)JV net finance income 15 (3.3) – (3.3) (2.0) – (2.0)JV tax expense 15 0.8 – 0.8 0.6 – 0.6

EBIT 73.2 (61.4) 11.8 60.1 (6.7) 53.4

Depreciation 5 53.8 – 53.8 52.0 – 52.0Amortisation 5 3.3 – 3.3 3.3 – 3.3

EBITDA 130.3 (61.4) 68.9 115.4 (6.7) 108.7

There is no material difference between revenue by origin and revenue by destination. Revenue includes £2,455.0m on construction contracts (2014: £2,791.3m) calculated on the definition included in IAS 11, Construction Contracts. Revenue arising from the sale of goods amounted to £78.9m (2014: £87.8m) and from the sale of services amounted to £351.9m (2014: £447.5m).

Contracts in progress at the balance sheet date comprise contract costs incurred plus recognised profits less losses of £5,571.9m (2014: £6,338.0m).

4 EXCEPTIONAL ITEMS

2015

£m 2014

£m

Impairment of land and developments 0.2 3.3Contract losses 61.2 –Impairment of investment property – 3.4

Exceptional costs before tax 61.4 6.7Income tax credit on exceptional items (12.9) (0.9)

Exceptional costs after tax 48.5 5.8

IMPAIRMENT OF LAND AND DEVELOPMENTS During the year the Directors reviewed the carrying value of the Group’s residential and mixed-use development assets in accordance with current accounting standards. The valuations incorporated forecast selling prices based on recent market conditions and in certain instances the Directors assumed appropriate planning consents will be granted. Costs to complete (including finance costs) were assessed at the balance sheet date. As a result of the review, the Group recognised exceptional impairments of £0.2m (2014: £3.3m).

CONTRACT LOSSES Exceptional costs of £61.2m were recognised in the year, which relate to three first generation Design for Manufacture and Assembly (DfMA) construction contracts in the UK. These three projects were substantially redesigned in order to demonstrate the benefits of DfMA, the impact of which become apparent during the year. Significant lessons have been learned from these projects, all of which were won in 2013; a particularly aggressive price-driven market. As issues were encountered using new construction methods and lessons have been learned, these unusual circumstances are unlikely to recur on new contracts.

IMPAIRMENT OF INVESTMENT PROPERTY During the prior year the Directors reviewed the fair value of the Group's investment properties. The valuations incorporated future rental yields compared to market evidence at the time. As a result of the review, the Group recognised exceptional impairments of £3.4m in 2014.



5 PROFITS FROM OPERATIONS

Profit from operations is stated after charging/(crediting): Note 2015

£m2014

£m

Staff costs 6 923.8 940.6Depreciation of property, plant and equipment: 16

Owned assets 42.5 26.7Under finance leases 11.3 25.3

Operating lease rentals and short term hires: Property, plant and equipment 67.2 73.4

Amortisation of other intangible assets 13 3.3 3.3Profit on disposal of joint ventures (46.5) –Profit on disposal of plant and equipment (6.3) (5.4)Loss on disposal of intangibles 0.4 –Research and development expenditure 54.4 38.1Foreign exchange (gains)/losses (4.8) 3.4Investment property income 17 (1.7) (2.5)Cost of inventories recognised as an expense:

Inventories recognised as an expense 93.9 190.6Inventories written off as an expense 0.1 3.3

Auditors’ remuneration (see below) 2.6 2.7

Auditors’ remuneration Note 2015

£m2014

£m

Fees payable to the Company’s auditor for the audit of: The Company’s annual financial statements and consolidated financial statements 0.3 0.3The 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 0.9 0.8All other services 0.5 0.7

Total non-audit fees 1.4 1.5

Total fees 2.6 2.7

The fees stated above include £0.3m for other non-assurance services and £0.1m for audit fees charged by the Company’s statutory audit firm PricewaterhouseCoopers Limited Cyprus.

6 STAFF COSTS AND EMPLOYEE NUMBERS

Number of employees 2015

Number2014

Number

The average monthly number of employees (including Directors) during the period was: Europe Hub 10,378 10,427Australia Hub 4,710 4,885

Total number of employees 15,088 15,312

Aggregate remuneration and related costs, including Directors: 2015

£m 2014

£m

Wages and salaries 834.9 835.4Social security costs 47.7 66.3Other pension costs 41.2 38.9

923.8 940.6

At 31 March 2015 £0.3m (2014: £1.7m) was payable in respect of defined contribution schemes and included in other payables (note 24).


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6 STAFF COSTS AND EMPLOYEE NUMBERS CONTINUED TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL The Group's key management personnel during the period include the five Directors and eight other members (2014: five Directors and eleven other members) who served on the Group Executive Committee during the year, as well as five other individuals considered key management personnel during the year.

The compensation of key management personnel is as follows:

2015

£m 2014

£m

Salaries and other short-term employee benefits 9.6 8.3

DIRECTORS’ REMUNERATION The total remuneration of the Directors (included in key management personnel compensation above) was as follows:

2015

£m 2014

£m

Salaries and other short-term benefits 3.5 2.8

None of the Directors are accruing benefits under a defined contribution scheme (2014: one). Nil post-retirement benefits were paid on behalf of Directors (2014: £nil).

7 OTHER OPERATING INCOME/(EXPENSE)

2015

£m 2014

£m

Exceptional impairment on investment properties – (3.4)Fair value gain/(loss) on investment properties 0.8 (0.7)Rents received 0.8 1.1Research and development expenditure credit 2.0 1.8Other operating income 0.1 0.1

3.7 (1.1)

8 NET NON-OPERATING EXPENSE

2015

£m 2014

£m

Loss on sale of property – (0.4)Loss on sale of investments – (0.8)

– (1.2)

9 FINANCE INCOME

2015

£m 2014

£m

Bank interest 6.5 4.3Other interest and similar income 2.7 2.5

9.2 6.8

10 FINANCE EXPENSE

2015

£m 2014

£m

Interest payable on bank loans and overdrafts 6.3 5.0Finance lease charges 4.7 3.7Other interest payable and similar charges 0.1 1.0

11.1 9.7



11 TAXATION

2015

£m2014

£m

Cyprus corporation tax Current tax on income for the year 0.3 0.5Foreign tax Current tax on income for the year 16.6 21.3Adjustment in respect of prior years (10.5) (3.6)

Total current tax 6.4 18.2 Net origination of temporary differences – current year (16.1) (8.6)Net origination of temporary differences – prior years 2.0 –Impact of change in tax rate – 0.4

Total deferred taxation (14.1) (8.2)

Tax (credit)/charge for the year (7.7) 10.0

The overall tax (credit)/charge for the year of £(7.7m) is explained relative to the UK statutory rate of 21 per cent below:

Total tax reconciliation Profit before tax 12.4 51.9

Tax at the UK corporation tax rate of 21% (2014: UK 23%) 2.6 11.9Effects of – lower overseas tax rates 3.6 (1.3)– other expenditure that is not tax deductible (2.5) 2.8– adjustments in respect of prior years (8.5) (4.4)– impact of unrecognised losses 0.2 (0.5)– utilisation of previously unrecognised losses (1.8) –– tax effect of joint ventures (0.5) 0.7– impact of change in UK tax rate – 0.5– other adjustments (0.8) 0.3

Total tax (credit)/charge (7.7) 10.0

The total tax (credit)/charge for the year of £(7.7m) includes an exceptional tax credit of £12.9m (2014: £0.9m) in relation to tax allowable exceptional expenditure for UK contract losses and impairments of land and developments (see note 4).

The standard rate of corporation tax in the UK changed from 23 per cent to 21 per cent with effect from 1 April 2014. Accordingly, the Group's profits for this accounting period are taxed at an effective rate of 21 per cent.

A number of changes to the UK corporation tax system were announced in the 2012 Autumn Statement and the March 2013 UK Budget Statement. These changes had been substantively enacted at the balance sheet date and, therefore, are included in these financial statements.

TAX EFFECTS RELATING TO EACH COMPONENT OF COMPREHENSIVE INCOME

2015 2014

Before-tax amount

£mTax charge

£m

Net-of-tax amount

£m

Before-tax amount

£m Tax charge

£m

Net-of-tax amount

£m

Exchange differences on translating foreign operations (30.6) – (30.6) (30.3) – (30.3)Available-for-sale financial assets 0.3 – 0.3 1.0 – 1.0Cash flow hedges – – – (1.5) 0.4 (1.1)Disposal of cash flow hedges 6.8 – 6.8 – – –Share of other comprehensive income of joint ventures and associates 3.3 – 3.3 (10.6) – (10.6)

(20.2) – (20.2) (41.4) 0.4 (41.0)


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12 DIVIDENDS

2015

£m 2014

£m

Interim dividends paid of £2,333 per ordinary share (2014: £2,278). 21.0 20.5

The Directors do not recommend the payment of a final dividend (2014: £nil).

13 INTANGIBLE ASSETS

Goodwill£m

Brands£m

Computer software and

licences £m

Development costs

£m Total

£m

Cost At 1 April 2014 329.0 2.2 22.2 – 353.4Acquisitions 1.6 – – – 1.6Additions – – 2.6 3.4 6.0Disposals – – (0.4) – (0.4)Exchange differences (3.4) (0.1) 0.4 – (3.1)At 31 March 2015 327.2 2.1 24.8 3.4 357.5Accumulated amortisation At 1 April 2014 1.0 2.1 16.5 – 19.6Amortisation for the year – 0.1 3.2 – 3.3Disposals – – – – –Exchange differences (0.1) (0.1) 0.2 – –At 31 March 2015 0.9 2.1 19.9 – 22.9Net book value at 31 March 2015 326.3 – 4.9 3.4 334.6

Cost At 1 April 2013 339.3 2.7 22.9 – 364.9Acquisitions 1.0 – – – 1.0Additions – – 2.0 – 2.0Disposals – – (1.8) – (1.8)Exchange differences (11.3) (0.5) (0.9) – (12.7)

At 31 March 2014 329.0 2.2 22.2 – 353.4

Accumulated amortisation At 1 April 2013 1.1 2.2 15.7 – 19.0Amortisation for the year – 0.3 3.0 – 3.3Disposals – – (1.8) – (1.8)Exchange differences (0.1) (0.4) (0.4) – (0.9)

At 31 March 2014 1.0 2.1 16.5 – 19.6

Net book value at 31 March 2014 328.0 0.1 5.7 – 333.8

Net book value at 31 March 2013 338.2 0.5 7.2 – 345.9

ACQUISITIONS During the year the Group acquired Cellence Plus Limited and Cellence Plus Australia Pty Limited. Further details can be found in note 14.

During the prior year, the Group acquired Sycamore Properties Limited, Glass Reinforced Concrete UK Limited and Renolith International Pty Limited.



13 INTANGIBLE ASSETS CONTINUED IMPAIRMENT TESTS FOR CASH-GENERATING UNITS CONTAINING GOODWILL The following units have significant amounts of goodwill:

2015

£m2014

£m

Australia 45.1 48.4United Kingdom 281.2 279.6

326.3 328.0

The recoverable amount of goodwill attached to each cash generating unit is based on value in use calculations in accordance with IAS 36, Impairment of Assets. Each calculation uses cash flow projections based on four-year financial budgets approved by management and a perpetual growth rate of 3 per cent (2014: 3 per cent), discounted at the Group's estimated pre-tax weighted average cost of capital of 10 per cent (2014: 10 per cent). Budgeted gross margins are based on past performance and management's market expectations. The estimated perpetual growth rate of 3 per cent (2014: 3 per cent) is in line with the long-term average growth rate for the business in which the cash-generating unit operates and is consistent with industry forecast reports. The weighted average cost of capital is an estimate from listed industry competitors, adjusted for changes in capital structures.

As at 31 March 2015, based on the internal value in use calculations, management concluded that the recoverable value of the cash generating units exceeded their carrying amount and there is no reasonably possible change in a key assumption that would result in an impairment change.

AMORTISATION CHARGE The amortisation charge in respect of software, licences and brands is recognised in the following line item in the income statement:

2015

£m2014

£m

Administrative expenses 3.3 3.3

14 ACQUISITIONS AND DISPOSALS ACQUISITIONS Cellence Plus Limited and Cellence Plus Australia Pty Limited On 30 September 2014 Laing O'Rourke Holdings Limited, a subsidiary of the Group, acquired 100 per cent of the share capital of Cellence Plus Limited, a company incorporated in England and Wales. On the same date, Laing O'Rourke Australia Pty Limited, a subsidiary of the Group, acquired 100 per cent of the share capital of Cellence Plus Australia Pty Limited, a company incorporated in Australia (together 'Cellence'). Cellence provides private executive search and selection services. The total consideration of £2.0m included net assets of £0.4m and goodwill of £1.6m. This consideration is included in the cash flow statement within acquisition of subsidiaries, net of cash acquired.

DISPOSALS Private Finance Initiatives During the year Laing O'Rourke Plc, a subsidiary of the Group, disposed of equity interests in four Private Finance Initiatives ('PFIs'). The investments had reached maturity and were disposed to enable the Group to reinvest in new PFI/Public Private Partnership ('PPP') investments currently in the construction phase. Disposals of PFI investments at the completion of the construction phase is part of the Group’s PFI strategy and the profit on disposal is therefore considered a part of underlying trade. The disposals were made for cash consideration of £69.1m, £68.6m of which is included in the cash flow statement within disposal of joint ventures, with £0.5m held in receivables at year end. The disposals generated a profit of £40.6m, which is included within profit on disposal of joint ventures.

Aldar Laing O'Rourke Construction LLC On 30 March 2015, Laing O'Rourke Middle East (Holdings) Limited disposed of its equity interest in Aldar Laing O'Rourke Construction LLC. The disposal generated cash consideration of £0.8m, which is included in the cash flow statement within disposal of joint ventures, and a profit of £5.9m, which is included in profit on disposal of joint ventures. The profit on disposal comprised a £0.2m gain in respect of the fair value of net assets disposed and a £5.7m gain on recycling currency translation reserves to the income statement.


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15 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES Joint ventures

equity investments

£m

Associates equity

investments £m

Loans to joint

ventures £m

Total£m

Cost At 1 April 2014 2.3 13.3 84.4 100.0Loans advanced – – 5.5 5.5Loans repaid – – (0.2) (0.2)Disposals (1.5) – (21.6) (23.1)Exchange differences – – (7.3) (7.3)At 31 March 2015 0.8 13.3 60.8 74.9Share of post-acquisition results At 1 April 2014 (27.6) (1.9) – (29.5)Share of results for the year after tax 1.2 – – 1.2Distributions received (8.9) – – (8.9)Disposal of cash flow hedges 6.8 – – 6.8Disposal of joint ventures (3.9) – – (3.9)Exchange differences 4.0 (0.7) – 3.3At 31 March 2015 (28.4) (2.6) – (31.0)Net book value at 31 March 2015 (27.6) 10.7 60.8 43.9

Cost At 1 April 2013 2.3 13.3 83.4 99.0Loans advanced – – 2.8 2.8Loans repaid – – (0.2) (0.2)Exchange differences – – (1.6) (1.6)

At 31 March 2014 2.3 13.3 84.4 100.0

Share of post-acquisition results At 1 April 2013 5.0 0.8 – 5.8Share of results for the year after tax (3.0) – – (3.0)Share of change in fair value of cash flow hedges (net of taxation) (6.8) – – (6.8)Distributions received (21.7) – – (21.7)Exchange differences (1.1) (2.7) – (3.8)

At 31 March 2014 (27.6) (1.9) – (29.5)

Net book value at 31 March 2014 (25.3) 11.4 84.4 70.5

Net book value at 31 March 2013 7.3 14.1 83.4 104.8

The Group's share of joint venture and associate equity investments and loans to joint ventures are presented above. IFRS 11, Joint Arrangements, 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).

The Group's investments in joint ventures and associates are presented in the statement of financial position as:

2015

£m 2014

£m

Investments in joint ventures and associates 14.0 14.7Loans to joint ventures 37.5 58.7Provisions (7.6) (2.9)

43.9 70.5

No impairment losses to equity investments were brought forward at 31 March 2015 or charged in the year (2014: £nil).



15 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES CONTINUED The principal joint ventures and associate are shown in note 37. Each joint venture and associate has share capital consisting solely of ordinary shares, which is held directly by the Group. Each joint venture is a private company and there is no quoted market price available for its shares.

Set out below is the summarised financial information for the joint ventures and associates which are material to the group and are accounted for using the equity method.

Joint Ventures disposed 2015

Aldar Laing O'Rourke

Construction LLC

2015 £m

Private Finance

Initiatives (PFIs)

2015£m

Total disposed

JVs2015

£m

Emirates Precast

Construction LLC

2015£m

Canal Harbour

Development Company

Limited2015

£m

Health Montreal

Collective CJV Limited Partnership

2015£m

Private Finance

Initiatives (PFIs)

2015 £m

Other joint

ventures 2015

£m

Associates2015

£m

Total2015

£m

Revenue – 27.6 27.6 5.0 – 102.7 94.6 11.7 – 241.6Depreciation and amortisation (0.3) – (0.3) (0.1) – – – – – (0.4)Other (expenses)/income 0.7 (26.9) (26.2) (4.2) – (105.4) (95.0) (11.7) – (242.5)Operating (loss)/profit 0.4 0.7 1.1 0.7 – (2.7) (0.4) – – (1.3)Net finance income – 0.5 0.5 – – 0.2 2.6 – – 3.3Profit/(loss) before tax 0.4 1.2 1.6 0.7 – (2.5) 2.2 – – 2.0Tax expense – (0.3) (0.3) – – – (0.5) – – (0.8) Profit/(loss) after tax 0.4 0.9 1.3 0.7 – (2.5) 1.7 – – 1.2Other comprehensive income 0.3 – 0.3 0.6 3.0 0.1 – – (0.7) 3.3Total comprehensive income 0.7 0.9 1.6 1.3 3.0 (2.4) 1.7 – (0.7) 4.5

Dividends received from joint ventures 7.7 0.4 8.1 0.8 – – – – – 8.9

Non-current assets Goodwill – – – – – 4.4 4.4Property, plant and equipment 0.5 – – 3.9 – – 4.4Other non-current assets 0.1 9.9 – 207.2 – – 217.2Current assets Cash and cash equivalents 2.0 – 14.5 27.8 3.2 0.1 47.6Other current assets 5.2 – 45.2 38.7 3.1 7.8 100.0Total assets 7.8 9.9 59.7 277.6 6.3 12.3 373.6Current liabilities Borrowings – – – – – – –Other current liabilities (1.9) (0.1) (68.3) (14.0) (8.8) (0.3) (93.4)Non-current liabilities Borrowings – – – (262.8) – (1.3) (264.1)Other non-current liabilities (0.5) (32.5) – – – – (33.0)Total liabilities (2.4) (32.6) (68.3) (276.8) (8.8) (1.6) (390.5)Net (liabilities)/assets 5.4 (22.7) (8.6) 0.8 (2.5) 10.7 (16.9)

Financial commitments – – – – – – –

Capital commitments – – – – – – –


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15 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES CONTINUED

Joint Ventures disposed 2015

Aldar Laing O'Rourke

Construction LLC

2014 £m

Private Finance

Initiatives (PFIs)

2014 £m

Total disposed

JVs2014

£m

Emirates Precast

Construction LLC

2014£m

Canal Harbour

Development Company

Limited2014

£m

Health Montreal

Collective CJV Limited Partnership

2014£m

Private Finance

Initiatives (PFIs)

2014 £m

Other joint

ventures 2014

£m

Associates2014

£m

Total2014

£m

Revenue 0.4 101.2 101.6 5.0 45.7 12.4 – 247.7Depreciation and amortisation (1.0) – (1.0) (0.4) – – – – – (1.4)Other (expenses)/income 0.4 (100.0) (99.6) (3.8) – (86.1) (46.4) (14.8) – (250.7)

Operating (loss)/profit (0.2) 1.2 1.0 0.8 – (3.1) (0.7) (2.4) – (4.4)Net finance income – 0.7 0.7 – – 0.6 0.7 – – 2.0

(Loss)/profit before tax (0.2) 1.9 1.7 0.8 – (2.5) – (2.4) – (2.4)Tax expense – (0.3) (0.3) – – – (0.2) (0.1) – (0.6)

(Loss)/profit after tax (0.2) 1.6 1.4 0.8 – (2.5) (0.2) (2.5) – (3.0)

Other comprehensive expense (0.8) (6.7) (7.5) (0.5) 0.7 (0.6) – – (2.7) (10.6)

Total comprehensive expense (1.0) (5.1) (6.1) 0.3 0.7 (3.1) (0.2) (2.5) (2.7) (13.6)

Dividends received from joint ventures 0.8 0.5 1.3 0.9 – 10.9 – 8.6 – 21.7

Non-current assets Goodwill – – – – – – – – 4.4 4.4Property, plant and equipment 2.8 – 2.8 0.5 – – – – – 3.3Other non-current assets – 200.4 200.4 0.6 11.1 – 171.9 – 0.1 384.1Current assets Cash and cash equivalents 5.4 17.5 22.9 1.5 – 44.6 34.2 3.7 – 106.9Other current assets 0.4 4.4 4.8 4.2 – 39.1 42.2 1.2 7.8 99.3

Total assets 8.6 222.3 230.9 6.8 11.1 83.7 248.3 4.9 12.3 598.0

Current liabilities Borrowings – – – – – – – – (0.1) (0.1)Other current liabilities (1.1) (17.7) (18.8) (1.4) (0.1) (89.9) (6.0) (7.4) (0.1) (123.7)Non-current liabilities Borrowings – (208.1) (208.1) – – – (233.5) – (0.7) (442.3)Other non-current liabilities – – – (0.5) (36.8) – (8.5) – – (45.8)

Total liabilities (1.1) (225.8) (226.9) (1.9) (36.9) (89.9) (248.0) (7.4) (0.9) (611.9)

Net (liabilities)/assets 7.5 (3.5) 4.0 4.9 (25.8) (6.2) 0.3 (2.5) 11.4 (13.9)

Financial commitments – – – – – – – – – –

Capital commitments – – – – – – – – – –



16 PROPERTY, PLANT AND EQUIPMENT Group owner

occupied property

£m

Other land and buildings

£m

Plant, equipment

and vehicles£m

Total£m

Cost At 1 April 2014 35.5 23.6 504.1 563.2Additions 0.7 1.4 68.9 71.0Disposals – (0.1) (55.2) (55.3)Exchange differences (0.3) 0.8 (4.8) (4.3)At 31 March 2015 35.9 25.7 513.0 574.6Accumulated depreciation At 1 April 2014 2.1 13.5 260.6 276.2Depreciation charge for the year 0.2 1.7 51.9 53.8Disposals – – (37.5) (37.5)Exchange differences (0.1) 0.8 (0.8) (0.1)At 31 March 2015 2.2 16.0 274.2 292.4Net book value at 31 March 2015 33.7 9.7 238.8 282.2

Cost At 1 April 2013 16.5 26.9 508.3 551.7Additions – 0.9 78.5 79.4Acquisitions 19.7 – 0.2 19.9Disposals – (1.8) (50.7) (52.5)Transferred between categories – (1.3) 1.3 –Exchange differences (0.7) (1.1) (33.5) (35.3)

At 31 March 2014 35.5 23.6 504.1 563.2

Accumulated depreciation At 1 April 2013 1.8 16.9 261.7 280.4Depreciation charge for the year 0.3 1.6 50.1 52.0Disposals – (1.4) (37.8) (39.2)Transferred between categories – (2.8) 2.8 –Exchange differences – (0.8) (16.2) (17.0)

At 31 March 2014 2.1 13.5 260.6 276.2



Finance leases: Included in ‘plant, equipment and vehicles’ are assets held under finance leases at the following amounts:

2015

£m2014

£m

Cost at 1 April 245.9 172.7Accumulated depreciation at 1 April (82.5) (49.7)

Net book value at 1 April 163.4 123.0Additions/acquisitions 45.1 61.3Refinanced assets/transfers in – 22.5Cost of disposals/transfers out (51.2) (22.7)Depreciation on disposals/transfers out 19.9 12.3Depreciation charge for the year (11.3) (25.3)Exchange differences (3.6) (7.7)

Net book value at 31 March 162.3 163.4

Finance lease terms are between one and five years, see note 23 for ageing of finance lease obligations.


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17 INVESTMENT PROPERTY

Freehold 2015

£m

Freehold2014

£m

Net book value at 1 April 48.4 59.0Transfers in – 7.7Disposals (17.3) (14.8)Exceptional fair value adjustment – (3.4)Exchange differences (0.7) (0.1)

Net book value at 31 March 30.4 48.4

Investment property income earned by the Group, all of which was received under operating leases, amounted to £1.7m (2014: £2.5m) and is shown as revenue in the income statement. Direct operating expenses arising on investment properties generating rental income in the year amounted to £0.6m (2014: £0.7m).

The Group's investment properties are let under non-cancellable operating lease agreements. The leases have varying terms, escalating clauses and renewal rights. The Group's future operating lease income commitments comprise:

2015

£m 2014

£m

Expiry date: Due within one year 1.0 1.3Due between one and five years 2.8 2.7Due after more than five years 13.5 15.3

17.3 19.3

18 AVAILABLE-FOR-SALE FINANCIAL ASSETS

2015

£m 2014

£m

At 1 April 0.6 0.7Disposals (0.3) (0.3)Exchange differences – (0.1)Net gains transferred to equity 0.2 0.3

At 31 March 0.5 0.6

Available-for-sale financial assets include the following: Unlisted securities 0.5 0.6

The fair value of available-for-sale financial assets is determined from quoted prices in active markets.

19 DERIVATIVE FINANCIAL INSTRUMENTS 2015 2014

Assets£m

Liabilities £m

Assets £m

Liabilities£m

Current portion: Foreign exchange cash flow hedges – – 0.1 –Forward foreign exchange contracts – (3.2) 1.9 –

Total derivative financial instruments – (3.2) 2.0 –

FOREIGN EXCHANGE CASH FLOW HEDGES Cash flow hedges are used 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 cash flows subject to the hedges in existence at 31 March 2014 occurred in the current year, and were recorded in profit and loss for the year ended 31 March 2015.

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

2015

£m2014

£m

Restricted cash deposits – 0.2

At 31 March 2015 £nil (2014: £0.2m) relates to bank deposits previously held as collateral in relation to specific construction and development projects. The contractual requirement to obtain permission from third parties to withdraw these monies was removed during the year.

21 INVENTORIES

2015

£m2014

£m

Development land and work in progress 67.0 122.4Raw materials and consumables 5.8 8.2Finished goods and goods for resale 3.6 3.0

76.4 133.6

Development land and work in progress at 31 March 2015 includes assets to a value of £62.8m (2014: £71.5m) expected to be consumed after more than one year.

Capitalised specific borrowing costs attributable to qualifying assets and included in development land and work in progress decreased in the year by £1.9m (2014: decreased by £4.5m).

Inventories carried at net realisable value at 31 March 2015 had a carrying value of £11.1m (2014: £20.7m).

22 TRADE AND OTHER RECEIVABLES

2015

£m2014

£m

Amounts expected to be recovered within one year: Gross amounts due from customers on construction contracts 309.0 349.6Trade receivables 69.4 90.7Prepayments and accrued income 32.6 32.1Other receivables 55.2 36.6

466.2 509.0

Amounts expected to be recovered after more than one year: Gross amounts due from customers on construction contracts 28.9 35.5Trade receivables 3.2 2.4Other receivables 0.4 6.9

32.5 44.8

Total trade and other receivables 498.7 553.8

At 31 March 2015, trade and other receivables include retentions of £99.0m (2014: £101.2m) relating to construction contracts of which £28.9m (2014: £35.5m) are non-current assets.

For construction contracts in progress at 31 March 2015, £287.6m (2014: £371.5m) was received as an advance and is included within advance payments on construction contracts in trade and other payables (see note 24).

At 31 March 2015 the bad debt provision for trade receivables amounted to £1.3m (2014: £1.2m). The net losses recognised via write off or impairment of trade and other receivables in the year to 31 March 2015 amounted to £0.4m (2014: £0.1m) which has been recognised in administrative expenses. £0.3m of debts previously provided for have now been fully written off or recovered.

23 BORROWINGS

2015

£m2014

£m

Amounts expected to be settled within one year: Bank loans 3.4 123.0Finance lease obligations 42.1 42.4

45.5 165.4

Amounts expected to be settled after more than one year:Bank loans 62.1 33.1Finance lease obligations 77.9 83.6

140.0 116.7

Total borrowings 185.5 282.1

Bank loans amounting to £16.5m (2014: £106.1m) are secured on the assets to which they relate.


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23 BORROWINGS CONTINUED FINANCE LEASE OBLIGATIONS Finance lease obligations are payable as follows:

Interest2015

£m

Principal2015

£m

Minimumlease

payments2015

£m

Interest 2014

£m

Principal 2014

£m

Minimumlease

payments2014

£m

Less than one year 3.5 42.1 45.6 4.1 42.4 46.5Between one and five years 4.0 77.9 81.9 5.7 80.2 85.9More than five years – – – – 3.4 3.4

7.5 120.0 127.5 9.8 126.0 135.8

Obligations under finance leases are secured by legal charges on certain non-current assets of the Group with an original cost of £235.1m (2014: £245.9m) and total net book value of £162.3m (2014: £163.4m).

24 TRADE AND OTHER PAYABLES

2015

£m 2014

£m

Amounts expected to be settled within one year: Advance payments on construction contracts 287.6 348.2Trade payables 239.9 225.6Other tax and social security 33.3 43.2Other payables 33.9 73.2Accruals and deferred income 404.3 455.4

999.0 1,145.6

Amounts expected to be settled after more than one year: Advance payments on construction contracts – 23.3Trade payables 18.9 26.6Other payables 1.4 1.8Accruals and deferred income 18.1 12.8

38.4 64.5

Total trade and other payables 1,037.4 1,210.1

At 31 March 2015, trade and other payables include retentions of £58.2m (2014: £66.9m) relating to construction contracts of which £18.9m (2014: £24.2m) are non-current liabilities.

25 PROVISIONS Insurance technical

provisions£m

Employee provisions

£m

Joint venture provisions

£m

Total provisions

£m

At 1 April 2014 36.8 4.8 2.9 44.5Provisions created – 0.8 4.7 5.5Provisions utilised (0.8) (0.4) – (1.2)At 31 March 2015 36.0 5.2 7.6 48.8

Disclosed within: Current liabilities 9.2 2.4 7.6 19.2Non-current liabilities 26.8 2.8 – 29.6 36.0 5.2 7.6 48.8

At 1 April 2013 33.4 5.8 – 39.2Provisions created 3.4 0.2 2.9 6.5Provisions utilised – (1.2) – (1.2)

At 31 March 2014 36.8 4.8 2.9 44.5

Disclosed within: Current liabilities 2.5 2.5 2.9 7.9Non-current liabilities 34.3 2.3 – 36.6

36.8 4.8 2.9 44.5



25 PROVISIONS CONTINUED 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 employee provision relates to the accrual of long service leave for employees in Australia and New Zealand.

The Group provides in full for obligations to remedy net liabilities of jointly controlled entities in excess of amounts already loaned. At 31 March 2015 these provisions amounted to £7.6m (2014: £2.9m) 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.

26 DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets and liabilities are attributable to the following:

RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES

Assets2015

£m

Assets2014

£m

Liabilities2015

£m

Liabilities 2014

£m

Net2015

£m

Net2014

£m

Property, plant and equipment – 2.3 (8.5) (12.9) (8.5) (10.6)Other temporary differences 44.3 33.6 – – 44.3 33.6Offsetting of deferred tax balances (5.5) (7.6) 5.5 7.6 – –Deferred tax assets/(liabilities) 38.8 28.3 (3.0) (5.3) 35.8 23.0

The ageing of deferred tax assets/(liabilities) at the year end was:

Less than one year 24.9 17.1 (1.5) – 23.4 17.1More than one year 13.9 11.2 (1.5) (5.3) 12.4 5.9 38.8 28.3 (3.0) (5.3) 35.8 23.0

MOVEMENTS IN DEFERRED TAX ASSETS AND LIABILITIES DURING THE YEAR As at

1 April 2014

£m

Exchange and other

movements £m

Recognised in income

£m

Recognised in equity

£m

As at 31 March

2015£m

Property, plant and equipment (10.6) – 2.1 – (8.5)Other temporary differences 33.6 (1.3) (2.7) – 29.6Tax losses carried forward – – 14.7 – 14.7 23.0 (1.3) 14.1 – 35.8

As at 1 April

2013 £m

Exchange and other

movements £m

Recognised in income

£m

Recognised in equity

£m

As at 31 March

2014 £m

Property, plant and equipment (3.9) – (6.7) – (10.6)Other temporary differences 24.0 (5.7) 14.9 0.4 33.6Tax losses carried forward – – – – –

20.1 (5.7) 8.2 0.4 23.0

Other temporary differences relate mainly to assets in Laing O'Rourke Australia Pty Limited, where employee benefits, project accruals and cost provisions are debited in one period but deducted against tax in another, and LOR Canada Limited where advance project payments are taxed when received but spread across several periods under accounting standards.

UNRECOGNISED DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assets have not been recognised in respect of the following items:

2015

£m 2014

£m

Tax losses 4.5 8.5

The Group has unrecognised deferred tax assets of £4.5m relating to unused tax losses. The tax losses have arisen in the Group and can be carried forward to future periods for use against part of future profits. No deferred tax asset has been recognised in respect of these amounts due to the unpredictability of future taxable profits and the constraints in using the losses.


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27 SHARE CAPITAL AND PREMIUM

Number of €1 Shares

Share premium

£m

At 1 April 2014 and at 31 March 2015 9,000 286.4

The authorised share capital of Laing O'Rourke Corporation Limited at 31 March 2015 was 18,000 ordinary shares of €1 each (2014: 18,000 shares).

28 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ EQUITY

Called-up share

capital £m

Share premium

£m

Fair value reserve

£m

Hedging reserve

£m

Foreign currency

translation reserve

£m

Retained earnings

£m

Total shareholders’

equity £m

Non-controlling

interests£m

Total equity

£m

At 1 April 2013 – 286.4 (1.4) 1.1 55.7 270.3 612.1 3.0 615.1

Profit for the year – – – – – 41.3 41.3 0.6 41.9Other comprehensive income after tax – – 1.0 (7.9) (33.9) – (40.8) (0.2) (41.0)

Total comprehensive income for the year – – 1.0 (7.9) (33.9) 41.3 0.5 0.4 0.9Dividends paid – – – – – (20.5) (20.5) (1.5) (22.0)

At 31 March 2014 – 286.4 (0.4) (6.8) 21.8 291.1 592.1 1.9 594.0Profit for the year – – – – – 20.3 20.3 (0.2) 20.1Other comprehensive income after tax – – 0.3 6.8 (27.3) – (20.2) – (20.2)Total comprehensive income for the year – – 0.3 6.8 (27.3) 20.3 0.1 (0.2) (0.1)Dividends paid – – – – – (21.0) (21.0) – (21.0)At 31 March 2015 – 286.4 (0.1) – (5.5) 290.4 571.2 1.7 572.9

FAIR VALUE RESERVE The fair value reserve includes the cumulative net change in the fair value of available-for-sale financial assets until the investment is de-recognised, together with any related deferred tax.

HEDGING RESERVE The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred, together with any related deferred tax. The movement in the year of £6.8m primarily relates to joint venture disposals, see note 15.

FOREIGN CURRENCY TRANSLATION RESERVE The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities and the cumulative net change in the fair value of instruments that hedge the Group's net investment in foreign operations. The translation reserve also includes any related current tax.

RETAINED EARNINGS Retained earnings relate to the proportion of net income retained by the Group less distributions.

29 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 2015, 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 (2014: £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.



30 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.

30.1 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)

2015 GBP

2015EUR

2015AUD

2015AED

2015SAR

2015 CAD

2015 HKD

2015Other

2015 Total

£m

Loans to joint ventures 5.4 55.4 – – – – – – 60.8Trade and other receivables 232.7 0.8 100.0 79.7 27.1 6.6 18.9 1.6 467.4Available-for-sale financial assets – 0.5 – – – – – – 0.5Cash and cash equivalents 318.9 13.5 157.1 4.3 1.6 30.8 27.6 2.1 555.9Total financial assets 557.0 70.2 257.1 84.0 28.7 37.4 46.5 3.7 1,084.6 Borrowings (147.8) – (37.7) – – – – – (185.5)Derivative financial instruments – – (3.2) – – – – – (3.2)Trade and other payables (597.2) (2.7) (239.0) (86.6) (1.5) (32.9) (42.6) (2.2) (1,004.7)Net financial (liabilities)/assets (188.0) 67.5 (22.8) (2.6) 27.2 4.5 3.9 1.5 (108.8)

Other cash and cash equivalents include £1.5m (2014: £0.6m) held in QAR, £0.3m (2014: £5.5m) held in USD and £0.1m (2014: £5.2m) held in NZD.

Pound sterling value of equivalent currency (m)

2014 GBP

2014EUR

2014AUD

2014AED

2014SAR

2014 CAD

2014 HKD

2014Other

2014 Total

£m

Loans to joint ventures 21.8 62.6 – – – – – – 84.4Trade and other receivables 318.6 0.3 140.9 11.3 29.2 0.9 19.7 2.0 522.9Available-for-sale financial assets – 0.6 – – – – – – 0.6Derivative financial instruments 0.1 – 1.9 – – – – – 2.0Restricted financial assets 0.2 – – – – – – – 0.2Cash and cash equivalents 398.6 9.6 195.3 7.0 0.3 30.8 36.0 13.1 690.7

Total financial assets 739.3 73.1 338.1 18.3 29.5 31.7 55.7 15.1 1,300.8 Borrowings (212.4) – (69.7) – – – – – (282.1)Trade and other payables (725.3) (1.1) (298.2) (38.5) (1.3) (30.9) (66.6) (5.4) (1,167.3)

Net financial (liabilities)/assets (198.4) 72.0 (29.8) (20.2) 28.2 0.8 (10.9) 9.7 (148.6)

Of the total foreign currency borrowings of £37.7m (2014: £69.7m), the amount of borrowings used to finance overseas operations amounts to £37.7m (2014: £69.7m).

It is Group policy that forward exchange contracts are taken out for all material foreign currency receivables and payables where they differ from the functional currency of the Company or subsidiary.

If the foreign exchange rates that the Group is exposed to had changed adversely by 10 per cent at the balance sheet date, the profit for the year and equity would have decreased by £4.8m (2014: £2.9m). This sensitivity analysis takes into account the tax impact and the forward exchange contracts in place.


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30 FINANCIAL INSTRUMENTS CONTINUED 30.2 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

Total£m

Within one year

£m

Between one and

two years £m

After two years

£m

Effectiveinterest

rate%

At 31 March 2015 Bank loans 65.5 3.4 0.8 61.3 3.04%Finance lease obligations 120.0 42.1 41.8 36.1 3.62% 185.5 45.5 42.6 97.4 3.41%

At 31 March 2014 Bank loans 156.1 123.0 20.5 12.6 3.52%Finance lease obligations 126.0 42.4 33.1 50.5 4.28%

282.1 165.4 53.6 63.1 3.86%

If interest rates had been 1 per cent higher during the period, profit and equity would have reduced by £1.5m (2014: £2.2m). This sensitivity analysis takes into account the tax impact.

30.3 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 payables

£mBank loans

£m

Finance leases

£m Total

£m

At 31 March 2015 Between one and less than two years 29.8 1.1 44.8 75.7Between two and less than five years 2.5 52.3 37.1 91.9Five or more years 6.1 11.3 – 17.4 38.4 64.7 81.9 185.0

At 31 March 2014 Between one and less than two years 47.3 21.5 35.9 104.7Between two and less than five years 11.4 3.5 49.9 64.8Five or more years 5.8 11.1 3.5 20.4

64.5 36.1 89.3 189.9

Borrowing facilities The Group has the following undrawn committed borrowing facilities at the year-end in respect of which all conditions precedent had been met:

2015

£m 2014

£m

Expiring within one year 83.2 77.8Expiring between one and two years 0.2 –Expiring in more than two years 85.0 3.5

168.4 81.3



30 FINANCIAL INSTRUMENTS CONTINUED 30.4 CREDIT RISK Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the balance sheet date. The Group's credit risk is primarily attributable to its loan assets, trade and other receivables.

The ageing of trade receivables at the year-end was:

Gross receivables

2015£m

Impairment 2015

£m

Gross receivables

2014£m

Impairment2014

£m

Not past due 50.1 – 79.7 –Past due 0-30 days 15.4 – 7.7 –Past due 31-120 days 2.5 – 3.1 –Past due 121-365 days 3.0 – 1.4 –More than one year 2.9 (1.3) 2.4 (1.2)

73.9 (1.3) 94.3 (1.2)

Receivables at 31 March 2015 that are more than one year past due date but not impaired amount to £1.6m (2014: £1.2m). The Group believes that there is no material exposure in respect of these balances.

Based on prior experience and an assessment of the current economic environment, management believes there is no further credit risk provision required in excess of the normal provision for impairment of its loan assets, trade and other receivables. The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales are made to customers with an appropriate credit history and monitors on a continuing basis the ageing profile of its receivables. Cash balances are held with high credit quality financial institutions.

30.5 FAIR VALUES Financial instruments carried at fair value in the statement of financial position are other investments, available-for-sale financial assets and derivative financial instruments. The following hierarchy classifies each class of financial instrument depending on the valuation technique applied in determining its fair value.

Level 1: The fair value is calculated based on quoted prices traded in active markets for identical assets or liabilities. The Group holds available-for-sale investments which are traded in active markets and valued based on the closing per unit market price at 31 March 2015.

Level 2: The fair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of derivative financial instruments is estimated to be the difference between the fixed forward price of the instrument, and the current forward price for the residual maturity of the instrument at the balance sheet date.

Level 3: The fair value is based on unobservable inputs. The fair value of other investments is calculated by discounting expected future cash flows using asset specific discount rates.

There have been no transfers between these categories in the current or preceding year.

The following table presents the Group's financial assets and liabilities that are measured at fair value at 31 March 2015.

Fair value measurement 2015 Fair value measurement 2014

Level 1£m

Level 2£m

Level 3£m

Total£m

Level 1 £m

Level 2 £m

Level 3£m

Total£m

Derivative financial instruments – (3.2) – (3.2) – 2.0 – 2.0Available-for-sale financial assets 0.5 – – 0.5 0.6 – – 0.6

0.5 (3.2) – (2.7) 0.6 2.0 – 2.6

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.


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30 FINANCIAL INSTRUMENTS CONTINUED 30.5 FAIR VALUES The carrying and fair values of the Group's financial instruments at 31 March 2015 and 31 March 2014 are as follows:

Fair value2015

£m

Carrying amount

2015 £m

Fair value 2014

£m

Carrying amount

2014£m

Derivative financial instruments (3.2) (3.2) 2.0 2.0Available-for-sale financial assets 0.5 0.5 0.6 0.6Loans and receivables 528.8 528.8 607.3 607.3Financial liabilities measured at amortised cost (1,190.2) (1,190.2) (1,449.4) (1,449.4)

The carrying and fair values of the Group's financial instruments were not materially different at 31 March 2015.

Loans, receivables and financial liabilities are valued at their amortised cost which is deemed to reflect fair value due to their short-term nature.

The fair values of investment properties are based on an annual assessment of future rental yields compared to current market evidence. Further details are found in note 2.23 (f). The fair values are within level 3 of the hierarchy above.

30.6 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 a 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 2015 the Group had net funds of £370.4m (2014: £408.6m); see note 36.

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 percentage of premium income. The second is based on a fixed percentage 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.

31 ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS SECURITY FOR ASSETS Financial assets pledged to secure liabilities are as follows:

2015

£m 2014

£m

Restricted financial assets – 0.2

Financial assets pledged as short-term collateral and included within cash equivalents were £14.5m (2014: £46.0m).

As part of the Group's management of its insurable risks a proportion of this risk is managed through self insurance programmes operated by its captive insurance subsidiary company, Laing O'Rourke Insurance Limited. This Company is a wholly owned subsidiary of the Group and premiums paid are held to meet future claims. The cash balances held by the Company are reported within cash and cash equivalents. As is usual practice for captive insurance companies some of the cash is used as collateral against contingent liabilities, standby letters of credit to the value of £14.5m (2014: £46.0m) have been provided to certain external insurance companies. The standby letters of credit have been issued via banking facilities that Laing O'Rourke Insurance Limited has in place.

No financial assets have been provided to the Group as collateral (2014: £nil).



32 FINANCIAL AND CAPITAL COMMITMENTS Capital expenditure for property, plant and equipment, authorised and contracted for which has not been provided for in the financial statements amounted to £5.5m (2014: £18.4m) in the Group.

The Group leases land and buildings, equipment and other various assets under non-cancellable operating lease agreements. The leases have varying terms, escalating clauses and renewal rights. The lease expenditure charge to the income statement is disclosed in note 5. The Group's future aggregate minimum lease payments comprise:

Land and buildings

2015£m

Other 2015

£m

Land and buildings

2014£m

Other2014

£m

Future operating lease expenditure commitments: Due within one year 24.0 2.5 21.6 4.0Due between one and five years 57.5 1.2 58.7 1.4Due after more than five years 92.8 – 104.6 –

174.3 3.7 184.9 5.4

Future commitments have been computed on current rental payments which are subject to periodic review.

The Group has committed to provide its share of further equity funding and subordinated debt investments in PPP (public-private partnerships) special purpose entities amounting to £37.1m (2014: £31.0m).

33 RELATED PARTY TRANSACTIONS AND BALANCES IDENTITY OF RELATED PARTIES The Group has a related party relationship with its major shareholder, subsidiaries, joint arrangements, 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.

SALE OF GOODS AND SERVICES PROVIDED TO RELATED PARTIES 2015

2014

Income earned in year

£m

Receivable at year-end

£m

Income earned in year

£m

Receivable at year-end

£m

Joint ventures 212.2 10.7 239.1 7.4

PURCHASE OF GOODS AND SERVICES PROVIDED BY RELATED PARTIES 2015

2014

Expenses paid in year

£m

Payable at year-end

£m

Expenses paid in year

£m

Payable at year-end

£m

Joint ventures – – – –

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 £2.1m (2014: £2.1m) with Mark Holding and Finance Limited and £7.1m (2014: £7.4m) with Steetley Investments Limited in respect of amounts due under lease agreements for premises occupied by the Group. During the year the interests in 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 Mark Holding and Finance Limited was £nil (2014: £nil) and to Steetley Investments Limited was £nil (2014: £nil). No amounts were written off in the period by either party in respect of amounts payable under the agreements entered into.

SHARE ACQUISITION AND CONSULTANCY COSTS On 30 September 2014 two Group subsidiaries, Laing O'Rourke Holdings Limited and Laing O'Rourke Australia Pty Limited acquired 100 per cent of the share capital of Cellence Plus Limited and Cellence Plus Australia Pty Limited (together "Cellence") for cash consideration of £2.0m. Prior to the acquisition the beneficial owners of the shares in Cellence were R G O'Rourke KBE and H D O'Rourke, who are also the beneficiaries of the trusts which ultimately own Suffolk Partners Corporation, the ultimate parent company of Laing O'Rourke Corporation Ltd. Cellence provides executive search and selection services.

Prior to the acquisition, the Group incurred expenditure of £0.5m (2014: £0.9m) with Cellence Plus Limited. At 1 April 2014 and at the date of acquisition no amounts were due to or from Cellence. No amounts were written off by any party in the period prior to acquisition in respect of amounts payable under the agreements entered into.


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33 RELATED PARTY TRANSACTIONS AND BALANCES CONTINUED CONSTRUCTION CONTRACTS During the year the Group entered into a £3.0m construction contract with R G O’Rourke KBE, who is a beneficiary of the trusts which ultimately own Laing O’Rourke Corporation Limited. At the year end, the contract was in progress and the fair value of work performed during the year was £0.2m (2014: £nil). No amounts were outstanding at the year end and no amounts were written off in the period by either party in respect of amounts payable under the agreement entered into. The contract is based on normal commercial terms.

During the year the Group completed a construction contract with H.E. Sultan Saeed Mohammed Naser Al Mansoori, a beneficial owner of a minority stake in six UAE entities of the Group. At the year end, the contract was complete and there was an amount outstanding of £0.7m (2014: £0.5m). No amounts were written off during the period by either party in respect of amounts payable under the agreement entered into. The contract was based on normal commercial terms.

JOINT VENTURE DISPOSAL On 30 March 2015 Laing O'Rourke Middle East (Holdings) Limited, a subsidiary of the Group, disposed of its 49 per cent equity interest in Aldar Laing O'Rourke Construction LLC to Suffolk Partners (Two) Limited for cash consideration of £0.8m. The interests in the share capital of Suffolk Partners (Two) Limited are held in trusts, 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, the ultimate parent company of Laing O'Rourke Corporation. Further details are provided in note 14.

LOANS The Group has a loan outstanding from its ultimate parent company, Suffolk Partners Corporation, although did not advance any loan amount in the year (2014: £0.2m). The loan is subject to interest at commercial rates and at the year-end the balance outstanding was £16.7m (2014: £16.1m).

The Group has a 50 per cent share of a super senior debt facility, a minority share of a syndicated senior debt facility and provides an enabling debt facility which are jointly repayable from Southside & City Developments Limited and KDC Properties Limited. The Group's interest in the super senior and senior debt facilities rank pari-passu with other lenders, who are financial institutions. During the year the Group loaned £0.9m (2014: £0.8m) 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 £12.6m (2014: £10.7m). 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 £0.4m (2014: £1.1m) 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 £5.9m (2014: £5.1m).

In the opinion of the Directors the agreements entered into are based on normal commercial terms.

LOANS TO AND FROM JOINT VENTURES AND ASSOCIATES At 31 March 2015 loans to joint ventures amounted to £60.8m (2014: £84.4m) and loans from joint ventures amounted to £24.1m (2014: £28.7m). During the normal course of business the Group provided services to, and received management fees from certain joint ventures and associates amounting to £2.9m (2014: £4.3m). Amounts due to and from joint ventures and associates at 31 March 2015 are disclosed within investments in joint ventures and associates, trade and other receivables and trade and other payables in notes 15, 22 and 24 respectively.

34 ULTIMATE PARENT COMPANY The immediate and ultimate parent company of Laing O'Rourke Corporation Limited is Suffolk Partners Corporation, a company incorporated in the British Virgin Islands.

The interests in the share capital of Suffolk Partners Corporation are held in trusts, the beneficiaries of which are R G O'Rourke KBE and H D O'Rourke.

35 POST BALANCE SHEET REVIEW There were no post balance sheet events requiring disclosure.



36 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

2015

£m2014

£m

(Decrease)/increase in cash and cash equivalents for the year (125.0) 41.2Cash outflow from debt and lease financing 138.4 74.3

Change in net funds resulting from cash flows 13.4 115.5New finance leases (45.4) (90.8)Acquisitions – (13.2)Foreign exchange translation differences (6.2) (42.3)

Movement in net funds in the year (38.2) (30.8)Net funds at 1 April 408.6 439.4

Net funds at 31 March 370.4 408.6

37 PRINCIPAL SUBSIDIARIES, JOINT ARRANGEMENTS AND ASSOCIATES

Principal subsidiaries Principal activity

Group interest in ordinary

voting shares Principal place of business

Austrak Pty Limited Manufacture of construction products 100% Australia Bison Manufacturing Limited Manufacture of precast concrete 100% United Kingdom Crown House Technologies Limited Mechanical and electrical contracting 100% United Kingdom Expanded Limited Civil and structural engineering,

piling and demolition 100% United Kingdom

Explore Capital Limited Holding company 100% United Kingdom Explore Investments Australia Pty Limited Property development 100% Australia Explore Investments Limited Commercial property development 100% United Kingdom Explore Living Limited Residential development 100% United Kingdom Explore Manufacturing Limited Manufacture of construction products 100% United Kingdom John Laing International Limited Overseas contracting 100% Hong Kong Laing O'Rourke Australia Construction Pty Limited

Building contracting, civil engineering, infrastructure and plant hire

100% Australia

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 and infrastructure 100% United Kingdom

Laing O'Rourke Construction Hong Kong Limited Building contracting, civil engineering and infrastructure

100% Hong Kong

Laing O'Rourke Infrastructure Limited Civil engineering and infrastructure 100% United Kingdom 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% United Kingdom Laing O'Rourke Services Limited Service company 100% United Kingdom O'Rourke Investments Holdings (UK) Limited Holding company 100% United Kingdom Select Plant Hire Company Limited Plant hire and operations 100% United Kingdom Vetter UK Limited Finished stone products 100% United Kingdom


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37 PRINCIPAL SUBSIDIARIES, JOINT ARRANGEMENTS AND ASSOCIATES CONTINUED

Joint ventures Principal activity

Group ownership

interest Principal place of business

Alder Hey (Special Purpose Vehicle) Limited PFI hospital operator 40% United Kingdom CLM Delivery Partner Limited Delivery partner for 2012 Olympics 37.5% United Kingdom Emirates Precast Construction LLC Manufacture of precast concrete 40% United Arab Emirates Health Montreal Collective CJV Limited Partnership

Building and civil engineering 50%

Canada

Health Montreal Collective Limited Partnership PFI hospital operator 25% Canada

Emirates Precast Construction LLC has a year-end of 31 March. Alder Hey SPV Limited, CLM Delivery Partner Limited and Health Montreal Collective Limited Partnership have a 31 December year-end and Health Montreal Collective CJV Limited Partnership has a 30 April year-end.

Joint operations

BYLOR JV Civil engineering 50% United Kingdom Heathrow East Terminal Project Civil engineering 45% United Kingdom HILOR JV Rail infrastructure 50% Australia COLOR Bond Street Civil engineering 50% United Kingdom FLO JV Civil engineering 50% United Kingdom Staffordshire Alliance Civil engineering 33% United Kingdom Laing O'Rourke – Bachy Soletanche JV Infrastructure and building construction 50% Hong Kong Laing O'Rourke – Hsin Chong Paul Y JV Infrastructure and building construction 55% Hong Kong Laing O'Rourke – Kier Kaden JV Infrastructure and building construction 43% Hong Kong LORRCRPT JV Mining infrastructure 67.5% Australia M-Pact Manchester Civil engineering 60% United Kingdom LIMA JV Civil engineering 62.5% United Kingdom LORI JV Civil engineering 60% United Kingdom Strategic Indigenous Housing and Infrastructure Program Alliance

Housing construction 33.3%

Australia

Tamesis – Main Works Civil engineering 75% United Kingdom Tamesis – Thermal Hydrolysis Plant Civil engineering 50% United Kingdom

Associates

North East Business Park Pty Limited Property development 25% Australia


INDEPENDENT LIMITED ASSURANCE REPORT TO THE DIRECTORS OF LAING O’ROURKE CORPORATION LIMITED


The Board of Directors of Laing O’Rourke Corporation Limited engaged us to provide limited assurance on the information described below and set out in the Laing O’Rourke Annual Review 2015 for the year ended 31 March 2015.

OUR CONCLUSION Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Selected Information for the year ended 31 March 2015 has not been prepared, in all material respects, in accordance with the Reporting Criteria.

This conclusion is to be read in the context of what we say in the remainder of our report.

SELECTED INFORMATION The scope of our work was to provide limited assurance over the safety and sustainability information marked with the symbol [^] in the Laing O’Rourke Annual review 2015 (the “Selected Information”).

The Selected Information and the Reporting Criteria against which it was assessed are summarised below. Our assurance does not extend to information in respect of earlier periods or to any other information included in the Laing O’Rourke Annual Review 2015.

The Selected Information consists of:

- �CO2e (scope 1 and scope 2 emissions due to energy use);

- �Health & Safety (AAFR, DIFR, & AFR);

- �Workplace (Employee totals, demographics and ratios, attrition, and development programmes);

- �Investment in research and development;

- �Investment in DfMA; and

- �Investment in training.

We assessed the Selected Information using Laing O’Rourke’s Reporting Criteria as set out at:

www.laingorourke.com/annual-review-2015

PROFESSIONAL STANDARDS APPLIED AND LEVEL OF ASSURANCE We performed a limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 ‘Assurance Engagements other than Audits and Reviews of Historical Financial Information’ and, in respect of the greenhouse gas emissions, in accordance with International Standard on Assurance Engagements 3410 ‘Assurance engagements on greenhouse gas statements’, issued by the International Auditing and Assurance Standards Board. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks.

OUR INDEPENDENCE AND QUALITY CONTROL We apply the Institute of Chartered Accountants in England and Wales (ICAEW) Code of Ethics, which includes independence and other requirements founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

We apply International Standard on Quality Control (UK and Ireland) 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Our work was carried out by an independent team with experience in sustainability reporting and assurance.

UNDERSTANDING REPORTING AND MEASUREMENT METHODOLOGIES The Selected Information needs to be read and understood together with the Reporting Criteria, which Laing O’Rourke is solely responsible for selecting and applying. The absence of a significant body of established practice on which to draw to evaluate and measure non-financial information allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time. The Reporting Criteria used for the reporting of the Selected Information are as at 31 March 2015.

WORK DONE We are required to plan and perform our work in order to consider the risk of material misstatement of the Selected Information. In doing so, we:

- Made enquiries of Laing O’Rourke’s management, including the Corporate Responsibility (CR) team and those with responsibility for CR management and group CR reporting;

- Evaluated the design of the key structures, systems, processes and controls for managing, recording and reporting the Selected Information;

- Performed limited substantive testing on a selective basis of the Selected Information at corporate head office to check that data had been appropriately measured, recorded, collated and reported; and

- Considered the disclosure and presentation of the Selected Information.

LAING O’ROURKE’S RESPONSIBILITIES The Directors of Laing O’Rourke are responsible for:

- Designing, implementing and maintaining internal controls over information relevant to the preparation of the Selected Information that is free from material misstatement, whether due to fraud or error;

- Establishing objective Reporting Criteria for preparing the Selected Information;

- Measuring and reporting the Selected Information based on the Reporting Criteria; and

- The content of the Laing O’Rourke Annual Review 2015.


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INDEPENDENT LIMITED ASSURANCE REPORT TO THE DIRECTORS OF LAING O’ROURKE CORPORATION LIMITED: CONTINUED


OUR RESPONSIBILITIES We are responsible for:

- Planning and performing the engagement to obtain limited assurance about whether the Selected Information is free from material misstatement, whether due to fraud or error;

- Forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained; and

- Reporting our conclusion to the Directors of Laing O’Rourke.

This report, including our conclusions, has been prepared solely for the Board of Directors of Laing O’Rourke in accordance with the agreement between us, to assist the Directors in reporting Laing O’Rourke’s safety and sustainability performance and activities. We permit this report to be disclosed in the Laing O’Rourke Annual Review 2015 for the year ended 31 March 2015, to assist the Directors in responding to their governance responsibilities by obtaining an independent assurance report in connection with the Selected Information. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Board of Directors for our work or this report except where terms are expressly agreed between us in writing.

PRICEWATERHOUSECOOPERS LLP CHARTERED ACCOUNTANTS LONDON 3 JULY 2015

The maintenance and integrity of Laing O’Rourke’s website is the responsibility of the Directors; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the reported Selected Information or Reporting Criteria when presented on Laing O’Rourke’s website.


CONTACTS


EUROPE HUB OFFICES

UNITED KINGDOM DARTFORD Bridge Place 1 & 2 Anchor Boulevard Crossways Dartford Kent DA2 6SN United Kingdom Tel: +44 (0) 1322 296200

CAMBRIDGESHIRE Barford Road Little Barford St Neots Cambridgeshire PE19 6WB United Kingdom Tel: +44 (0) 1480 402500

CARDIFF Building 2 The Eastern Business Park Wern Fawr Lane St Mellons Cardiff CF3 5XA United Kingdom Tel: +44 (0) 2920 775000

EXPLORE MANUFACTURING Explore Industrial Park Explore Way, Off A619 Steetley, Worksop S80 3DT United Kingdom Tel: +44 (0) 1777 353000

LEEDS 3150 Century Way (2nd Floor) Thorpe Park Leeds LS15 8ZB United Kingdom Tel: +44 (0) 1777 356 075

MANCHESTER Archway 3 Birley Fields Greenheys Lane West Hulme Manchester M15 5QJ United Kingdom Tel: +44 (0) 1612 276000

NEWCASTLE Rushwood Balliol Business Park Benton Lane Newcastle upon Tyne NE12 8EW United Kingdom Tel: +44 (0) 1777 356380

SCOTLAND 21 Woodhall Eurocentral Holytown Motherwell ML1 4YT United Kingdom Tel: +44 (0) 1698 731000

CANADA CALGARY 888 3rd Street SW Level 10, Suite 1000 Bankers Hall West Tower Calgary Alberta T2P 5C6 Canada Tel: +1403 (0) 444 6660

TORONTO 401 Bay Street Suite 1600 Toronto Ontario M5H 2Y4 Canada Tel: +1416 (0) 646 5167

VANCOUVER Suite 500 666 Burrard Street Vancouver British Columbia V6C 3P6 Canada Tel: +1604 (0) 642 6190

UNITED ARAB EMIRATES ABU DHABI Ladies Beach PO Box 110800 Abu Dhabi United Arab Emirates Tel: +971 (0) 2501 7017

DUBAI Al Shoala Building 5th Floor Block A PO Box 25948 Dubai United Arab Emirates Tel: +971 (0) 4294 9944

AUSTRALIA HUB OFFICES

AUSTRALIA NEW SOUTH WALES SYDNEY Level 4 Innovation Place 100 Arthur Street North Sydney NSW 2060 Australia Tel: +61 (0) 2990 30300

QUEENSLAND BRISBANE Level 3 825 Ann Street Fortitude Valley QLD 4006 Australia Tel: +61 (0) 7322 32300

VICTORIA/SOUTH AUSTRALIA MELBOURNE Level 20 HWT Tower 40 City Road Southgate VIC 3006 Tel: +61 (0) 3924 96400

WESTERN AUSTRALIA PERTH Level 1 3 Craig Street Burswood WA 6100 Australia Tel: +61 (0) 8936 27111

NORTHERN TERRITORY DARWIN 24 Sadgroves Crescent Winnellie NT 0820 Australia Tel: +61 (0) 8894 35200

HONG KONG Suite 2201 22/F Oxford House Taikoo Place 979 King’s Road Quarry Bay Hong Kong Tel: +852 3994 8300

PRODUCTION OF THIS REPORTThis 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.

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LAING O’ROURKE CORPORATIONUK contact address:Laing O’Rourke plcBridge PlaceAnchor BoulevardCrosswaysDartford, KentDA2 6SNUnited KingdomT +44 (0)1322 296 200F +44 (0)1322 296 262www.laingorourke.com

Canary Wharf Crossrail Station, LondonWritten, designed and produced by Laing O’Rourke Corporate Communications and Black Sun Plc.

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