Contractor says it will ‘substantially complete’ delayed hospital this March
Laing O’Rourke has confirmed losses on its troubled PFI hospital job in Canada currently run to £93m.
The writedown on the Centre Hospitalier de l’Université de Montréal (CHUM), which the firm is delivering in joint venture with Spanish contractor OHL, is disclosed in the heavyweight contractor’s annual report, which is now available on the company’s website.
Laing O’Rourke says the delayed hospital will hit “substantial completion” by this March. The first phase had been due to be handed over to the client last April.
Commenting on the CHUM project, the report states: “The write-down in this contract was due to additional costs due to programme slippage including damages payable after the original substantial completion date was not achieved.
“The client and the joint venture project team have now agreed to target substantial completion in the last quarter of the year ending 31 March 2017.
“Whilst the scale and complexity of this contract means the position is not without risk, management believe project progress together with recent alignment of programme with the client significantly de-risks the company from further material slippage.”
The annual report also confirms the group suffered an overall £246m pre-tax loss in the year to March 2016.
The publication comes after Laing O’Rourke plc - its trading division covering operations in Europe, Canada and Abu Dhabi, but not Australia - disclosed earlier this month it made a £267m pre-tax loss for the period, blaming the Canadian PFI hospital, problems with its offsite manufacturing business, compensating blacklisted workers and restructuring costs.
In a letter to clients and staff before Christmas, the company’s founder Ray O’Rourke sought to explain the deep losses, saying: “We all know that when recession starts, our industry … enters a race to the bottom - regrettably Laing O’Rourke joined in.”
He also set out plans for the firm to become a £4bn-turnover business within four years and restated the firm’s commitment to investing in off-site manufacturing. He added: “I want to assure all our stakeholders that our company is adequately financed, has returned to profit in FY17 and is … well-positioned to move forward from these less than satisfactory results.”