TIDMJLG
RNS Number : 3821R
John Laing Group plc
09 December 2016
JOHN LAING GROUP plc
PRE-CLOSE UPDATE
John Laing Group plc ("John Laing" or "the Group"), the
international originator, active investor and manager of
infrastructure projects, today issues a pre-close update for the
year ending 31 December 2016.
Investment Activity
-- Primary Investment activity has remained strong in each of
our three geographical regions: Asia Pacific, North America and
Europe (including the UK)
-- Total investment commitments to date of GBP181 million, in line with guidance for 2016
-- Investment commitments in 2016 (see Appendix I for full list):
o A6 Parkway (Netherlands): GBP9.0 million
o Intercity Express Programme (IEP) Phase 1 (UK): GBP37.0
million
o Eight wind farm investment commitments totalling GBP133.9
million in the UK, Germany, France, Australia and the US
Realisations
-- Total realisations agreed in 2016 to date of GBP255 million,
with aggregate prices achieved in line with portfolio valuation
(see Appendix I for full list):
o Sale of holdings in British Transport Police and Oldham
Housing for GBP19.5 million (counted towards realisations guidance
for 2015)
o Proceeds from a further three completed transactions of
GBP56.4 million
o Agreed sale of 100% holding in A55 road, UK for GBP28.3
million to JLIF, expected to complete shortly
o Agreed sale of 30% holding in M6 road, Hungary for EUR26.6
million (estimated GBP22.5 million), not expected to complete until
Q1 2017. This transaction is subject to a number of consents and
conditions
o Agreed sale of 29.69% holding in A1 motorway, Poland for
EUR146.9 million (estimated GBP128.6 million), not expected to
complete until Q1 2017. This transaction is also subject to a
number of consents and conditions
Investment portfolio
-- Our investment portfolio as a whole is performing in line with expectations
New Royal Adelaide Hospital (NRAH)
-- In John Laing's interim results for the six months ended 30
June 2016, which were issued in late August 2016, it was reported
that the contractor for the NRAH project was incurring delays and
that the estimated impact had been reflected in John Laing's
portfolio valuation. The scheduled date for technical completion
was April 2016
-- Since mid-November 2016, the NRAH project company, in which
John Laing has a 17.26% shareholding, has been in dispute over the
Government of South Australia's (the State's) non-acceptance of a
cure plan submitted in August 2016 to address the contractor's
delays, and the State's asserted right to terminate the contract
between it and the project company. Mediation between parties to
the project is scheduled for mid-December 2016. The project company
is also in dispute with the State in relation to certain
construction defects alleged by the State. Court proceedings in
relation to these matters began on 28 November 2016
-- Technical completion is on track for Q1 2017 and it is John
Laing's view that the current differences are capable of being
resolved. As previously disclosed, John Laing's original equity
commitment to the NRAH project, which was made in 2011, was in the
range GBP25 million - GBP50 million. Our investment is currently
held at its estimated fair value; this will be reviewed as part of
our portfolio valuation at 31 December 2016
Manchester Waste
-- As previously reported, the assets underlying our two
Manchester Waste investments (Manchester Waste VL Co - 50%
interest; Manchester Waste TPS Co - 37.43% interest) became
operational in 2015. Levels of diversion of waste from landfill
being achieved are ahead of contractual commitments
-- The Greater Manchester Waste Disposal Authority ("GMWDA") has
indicated that it is not satisfied with the current status of the
VL Co project and it continues to seek significant cost savings and
efficiencies. The process by which these issues will be resolved is
currently unclear to the project company, which continues to work
with GMWDA to explore options. As previously disclosed, John
Laing's original equity commitment to the VL Co project, which was
made in 2009, was in the range GBP25 million - GBP50 million. Our
investment is currently held at its estimated fair value; this will
be reviewed as part of our portfolio valuation at 31 December
2016
Other Investments
-- Eight investments are expected to move from the primary to
the secondary investment portfolio during 2016, namely New Albion
Wind Farm, Rammeldalsberget Wind Farm, A15 Road Netherlands,
Speyside Biomass, Croydon and Lewisham Street Lighting, Pasilly
Wind Farm, Hornsdale Wind Farm Phase I and Horath Wind Farm
Pension fund
-- Following a triennial actuarial review of the John Laing
Pension Fund (JLPF) as at 31 March 2016, a seven-year deficit
repayment plan has been agreed in principle with the JLPF Trustee.
The plan includes contributions by John Laing of GBP24.5m, GBP26.5m
and GBP29.1m in 2017, 2018 and 2019 respectively
-- As at 30 November 2016, using unaudited asset values the
IAS19 pension deficit for JLPF was estimated at GBP75 million based
on an IAS 19 discount rate of 2.85% and long term RPI of 3.20%. The
deficit has increased since 30 June 2016 primarily as a result of
higher long term inflation expectations
Other
-- Sale of the UK activities of Project Management Services completed on 30 November 2016
-- Based on a preliminary review of the Base Erosion and Profit
Sharing (BEPS) legislation published by the UK Government on 5
December 2016, no further provision is expected to be required as
at 31 December 2016 beyond that established at 30 June 2016
Outlook
-- Net asset value at 31 December 2016 is projected to be in the
range of management expectations, assuming constant exchange rates
and no change in the IAS19 pension deficit as at 30 November
2016
-- We expect the special dividend for 2016 to be based on the
three completed realisations (GBP56.4 million), the A55 transaction
expected to complete shortly (GBP28.3 million) and the M6 Hungary
transaction expected to complete in Q1 2017 (approx. GBP22.5
million), giving a total of approximately GBP107 million versus our
guidance of approximately GBP100 million
-- The pipeline of new investment opportunities remains strong
in both PPP and Renewable Energy, across Asia Pacific, North
America and Europe (including the UK)
-- John Laing is currently part of nine shortlisted PPP bids due
to reach financial close in 2017 or 2018, including five in North
America
-- We continue to assess opportunities in infrastructure sectors
closely linked to our existing PPP and renewable energy sectors
-- The market for secondary infrastructure investments remains strong
Olivier Brousse, John Laing's Chief Executive, said:
"It has been a busy year so far for John Laing and we are in
line with our guidance for 2016. Throughout the year, we have
continued to focus on our core business of greenfield
infrastructure, including investments in new projects, active
management of our existing portfolio and realisation of several
mature assets as we anticipate future opportunities. We are well
positioned to take advantage of a growing number of new
infrastructure projects in the US, Canada, Australia, New Zealand
and Europe."
The Group's results for the year ending 31 December 2016 will be
announced on 7 March 2017.
A call for analysts and investors will be held at 8.00am (London
time) today.
Conference call details:
UK number 020 3139 4830
Pin code 45187978#
Further information
Analyst/investor enquiries:
Olivier Brousse, Chief Executive +44 20 7901 3200
Patrick O'D Bourke, Group Finance Director +44 20 7901 3200
Tom Randell, Head of Investor Relations and Communications +44 20 7901 3200
Media enquiries:
James Isola, Maitland +44 20 7379 5151
www.laing.com
Appendix I: details of investment commitments and
realisations
Investment commitments Region PPP RE Total
GBPm GBPm GBPm
----------------------------- -------------- ------ ------ ------
A6 Parkway (Netherlands) Europe 9.0 - 9.0
----------------------------- -------------- ------ ------ ------
Intercity Express Programme
(IEP) Phase 1 UK 37.0 - 37.0
----------------------------- -------------- ------ ------ ------
I-77 Managed Lanes US 1.1 - 1.1
----------------------------- -------------- ------ ------ ------
Hornsdale Wind Farm
Phase 2 Asia Pacific - 6.0 6.0
----------------------------- -------------- ------ ------ ------
Lynfi Wind Farm UK - 24.0 24.0
----------------------------- -------------- ------ ------ ------
Nordergründe Offshore
Wind Farm Europe - 36.7 36.7
----------------------------- -------------- ------ ------ ------
Sommette-Eaucourt Wind
Farm Europe - 11.7 11.7
----------------------------- -------------- ------ ------ ------
Sterling Wind Farm US - 15.7 15.7
----------------------------- -------------- ------ ------ ------
Kiata Wind Farm Asia Pacific - 20.4 20.4
----------------------------- -------------- ------ ------ ------
Horath Wind Farm Europe - 14.3 14.3
----------------------------- -------------- ------ ------ ------
Saint-Martin-L'Ars Wind
Farm Europe - 5.1 5.1
----------------------------- -------------- ------ ------ ------
Total 47.1 133.9 181.0
--------------------------------------------- ------ ------ ------
Realisations completed Shareholding Purchaser Total
GBPm
------------------------ ------------- --------------- ------
British Transport
Police* 54.17% JLIF 19.5*
------------------------ ------------- --------------- ------
Oldham Housing* 95%
------------------------ ------------- --------------- ------
Dungavel Wind Farm 100% JLEN 38.2
------------------------ ------------- --------------- ------
New Albion Wind
Farm 100% JLEN 11.8
------------------------ ------------- --------------- ------
Shareholding in
JLEN 2.2% Market placing 6.4
------------------------ ------------- --------------- ------
Total 75.9
-------------------------------------------------------- ------
*Counted towards the realisations guidance for 2015
Realisations agreed Shareholding Purchaser Total
but not yet completed GBPm
------------------------ ------------- ------------ --------
A55 UK 100% JLIF 28.3
------------------------ ------------- ------------ --------
M6 Hungary 30% Third party 22.5**
------------------------ ------------- ------------ --------
A1 Poland 29.69% Third party 128.6**
------------------------ ------------- ------------ --------
Total 179.4
----------------------------------------------------- --------
**GBP amounts are estimates based on EUR/GBP exchange rates as
at 30 November 2016 and incorporate the
effect of some foreign exchange hedging
JLIF = John Laing Infrastructure Fund
JLEN = John Laing Environmental Assets Group
Appendix II: exchange rates at 31 December 2015, 30 June 2016
and 30 November 2016
Exchange rate 31 December 30 June 2016 30 November
vs Sterling 2015 2016
-------------------- ------------ ------------- ------------
Euro 1.3592 1.2086 1.1800
-------------------- ------------ ------------- ------------
US dollar 1.4833 1.3410 1.2485
-------------------- ------------ ------------- ------------
Australian dollar 2.0340 1.8166 1.6901
-------------------- ------------ ------------- ------------
New Zealand dollar 2.1692 1.8871 1.7629
-------------------- ------------ ------------- ------------
This information is provided by RNS
The company news service from the London Stock Exchange
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