Rowan Baker
Laing O’Rourke’s chief financial officer has denied there are any further skeletons in the company’s closet after a legacy Australian job cost the contractor £193m last year.
This week, the UK’s largest private contractor reported a £288m loss before tax, driven by provisions, legal costs and a write-off relating to a contract it held between 2010 and 2016 – although it also blamed a £78.8m operating loss on inflation and delays to project starts.
The company’s chief financial officer Rowan Baker told Construction News: “We’ve significantly enhanced our governance and significantly adjusted our exposure in terms of the types of contracts and the types of clients that we engage with.
“That’s something that is constantly evolving for the better. [The loss related to the Australia contract] is treated as an exceptional item because it isn’t a reflection of the business that we see today.”
Baker said the company is now focused on six sectors: nuclear and green energy; defence; data centres; rail; healthcare; and science and research.
“You’ll see us less in the residential space. And in the commercial and mixed-use [markets] we would only tend to be working with those clients that we have a long-standing relationship with, that understand us and the model and value that we bring.”
Baker also acknowledged that the company had suffered from “contracts that were signed that didn’t contemplate the level of inflationary challenge”, adding “there has been a lot of learnings from the inflationary environment.
When CN asked Baker if there were any further skeletons in the closet, she said: “Through the governance processes that we have, we’re ensuring that we aren’t in that same position again.
“There aren’t any further skeletons – as you put it – in the closet. We’re constantly trying to improve and it’s something that’s really important to us to get right.”
Baker said that while Laing O’Rourke’s 2022/23 financial period had been “a challenging year”, there were “essentially two reasons for that” – inflation and the exceptional costs in Australia. She suggested these issues were now behind the company, which has “a lot to be positive about for the future”.
Baker added that Laing O’Rourke returned to profit in the first six months of its 2023/24 financial year and extended its borrowing facility with HSBC. It also finished its past financial year with net cash of £286.3m.
“We have been through quite a process of reducing our levels of debt over the past few years,” she said. “That sort of increases our resilience and has stood us in really good stead considering the rising interest rates as well.”
