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Laing O’Rourke finance chief rebuffs no-deal Brexit threat

Hinkley steel pic

A no-deal Brexit will have little to no impact on Laing O’Rourke, the firm’s group finance director has claimed.

Laing O’Rourke’s group finance director, Stewart McIntyre, dismissed the idea that a no-deal Brexit would heavily impact the firm’s current projects.

McIntyre said: “Laing O’Rourke has analysed its current order book and pipeline and this review supports an assessment that, to date, a no-deal Brexit would present minimal, if any, risk to current projects and liquidity forecasts.” 

“The business has also considered implications [of Brexit] for the sector and, to date, has not identified any negative impact on the UK construction market either in the traditional built environment or infrastructure sectors.”

Yesterday Construction Leadership Council (CLC) chair Andy Mitchell published a letter warning the government that a no-deal Brexit could send project costs soaring and lead to delays.

Laing O’Rourke’s most recent internal data highlights that 16.1% of its UK staff and workforce are non-British European Union (EU) citizens with 23% of that total being Irish citizens who have the full ongoing right to work in the UK.

“This risk assessment has highlighted a dependency on [non-British] EU nationals in certain job families and the business is monitoring developments in these areas/. However, it is clear that earnings and rewards are such that it does not present a significant risk to staff retention, staff recruitment or the ability to comply with the minimum earnings threshold for securing visas,” said McIntyre.

Laing O’Rourke’s UK business buys assets such as tower cranes as part of its core business and has conducted an analysis of potential post-Brexit tariffs, based on its past 12-month record of direct imports from the EU and possible product registration procedures to mitigate import supply difficulties.

“No tariffs apply under World Trade Organisation rules to the import of tower cranes and it is assumed that additional customs procedures will create delays of no more than seven days,” said McIntyre.

“Apart from construction capital assets, the level of direct EU imports is low and the estimated additional costs arising from a ‘no deal Brexit’ are deemed to be immaterial.”

The firm’s most recent results show that its European division, which includes the UK, United Arab Emirates and Canada, in 2018 returned to a profit before interest and tax of £10.3M compared with a loss of £51.9M for 2017. Total revenue reported by the division fell from £2.24bn to £2.11bn.

The Laing O’Rourke group reported reduced losses before interest and tax of £27.5M, down from £52.4M while total revenues were also down at £2.93bn from £3.172bn.

Laing O’Rourke has also announced that its UK operation had completed a three-year refinancing deal

In its financial results, Laing O’Rourke affirmed that it has withdrawn from bidding for PFI contracts. The firm’s announcement follows the completion of a problematic PFI hospital construction project in Canada in 2017.

“The risk and reward is considerably unbalanced,” McIntyre explained when asked why the firm would not longer enter into PFI contracts.

“The returns on PFI projects for a contractor are very low and you are taking significant risk for anything up to 12 years,” he added.

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