In the year to 31st March 2023, Laing O鈥橰ourke achieved top line revenue growth of 13% 聽to 拢3.4bn but it made an operating loss of 拢276.6m and a pre-tax loss of 拢288.1m.
The results include 拢195m of exceptional items, mostly relating to an old contract in Australia that was terminated in 2017 but remains subject to arbitration.
Laing O鈥橰ourke reports that inflation destroyed profit margins on some of its UK contracts, resulting in a pre-exceptional EBIT loss of 拢78.8m.
However it started the current financial year with a record order book of 拢10.0bn, up 16% from 拢8.6bn a year before.
Chief executive Ray O'Rourke said: 鈥淒uring FY23, geopolitical upheaval had profound inflationary effects, impacting the global economy, households, the wider sector, and our business. Official figures showed inflationary costs for the sector peaked at 26% during 2022, the biggest impact on construction in 40 years.
鈥淭he work we have done over a number of years has ensured Laing O鈥橰ourke remains a resilient business and I thank all our colleagues for their hard work. With a record order book and a return to profitability in the first half of FY24, I remain very positive about the future.
鈥淲e continue to win work in our priority sectors, fuelling our strong order book growth and at the same time helping us to reduce our exposure to wider market conditions beyond our control. Our investment in the products, digital tools, and systems to unlock the productivity, quality, and safety benefits of advanced manufacturing underpins our strong sense of optimism about the outlook for the business. I am excited about our plans to deliver infrastructure projects of significant size and complexity in a new way.鈥�
Chief financial officer Rowan Baker said: 鈥淚 am encouraged by the fact that in FY23 we delivered strong pre-exceptional group revenue growth of 13% (to 拢3.4bn) versus FY22, ended the period with gross cash of 拢428.1m, net cash of 拢286.3m, and added 拢1.4bn to our group order book. These are positive indicators for our future performance.
鈥淭ogether with the whole UK construction sector, we were presented with extremely challenging market conditions during this trading period. Unprecedented inflation impacted margins on a small number of our fixed-price projects in the UK. And while it had no immediate cash impact, provision for an exceptional item on a legacy project in Australia added to our loss.
鈥淲e have seen strong performance across the business in the first half of the current financial year. Our revenue increased 22% versus the same period prior year and results are well ahead of management鈥檚 expectations at 拢31.4m EBIT.鈥�
In the company's annual report, Ray O'Rourke also had a crack at clients and repeated his often-made call for industry change.
He said:聽 鈥淒uring my long career, I cannot recall such a sharp surge in costs. We have sought to collaborate with clients to manage the impacts of this and keep projects on track, but our commitment to finding solutions in a difficult environment has not always been reciprocated. Inequitable risk-sharing adds to the ongoing turbulence across construction. It directly impacts our business and all our people, and it convinces me that the need for radical transformation is more pressing than ever.
鈥淭he sector must embrace a technology and innovation-enabled shift to manufacturing-led methods of construction. This future is encapsulated in our DfMA 70:60:30 operating model, which is being deployed on projects now and is a visible pathway for the industry to engage in advanced manufacturing.
鈥淚t is the only way to change the nature of the work we do. Making such a shift will enable us to attract a much more diverse range of people to the best industry there is and achieve a step change in productivity which will give clients certainty. It will also help create a more sustainable built environment and improve the health, safety, and overall wellbeing of our greatest asset 鈥� the people who pick up the tools every day to deliver.鈥�
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