This loss was in addition to a £26m provision on the Cardiff project last year, which put Laing £24.4m in the red in 1998. James Armstrong, chairman of Laing construction arm Laing Ltd, said he now believed that all losses for the contract had been absorbed and that the remaining external works presented little risk.
But he also said that the Cardiff débâcle had been a “catalyst for change” within the group. “We don’t see a construction company operating without risk – that’s the business we are in. But we are now looking at strengthening our resources in such things as risk management, managing bids and cost planning.”
The strategy, to be announced shortly, will see Laing adopt a new marketing approach. It is already describing itself as an “investor, developer and construction manager of accommodation and infrastructure”.
The construction arm loss contributed to a 12% drop in group pre-tax profit to £16.2m for the six months to 30 June 1999.
The rest of the group performed well. Armstrong said the housing arm benefited from rising prices, lifting operating profit from £10.4m to £13.1m.
The property division saw operating profit drop 29% to £2.7m. Armstrong put this down to the timing of transactions.
The investments arm, which includes the Europistas toll road in Spain, raised its operating profit to £7.6m from £3.8m this time last year.