TIDMJLG
RNS Number : 3201K
John Laing Group plc
13 December 2018
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 2018.
Investment activity
-- Total investment commitments to date of GBP267 million,
slightly ahead of our guidance for 2018 of approximately GBP250
million. One further GBP20 - GBP30 million investment is possible
before the year-end.
o PPP: MBTA Automated Fare Collection System (US): GBP17.5
million
o PPP: A16 road (Netherlands): GBP21.7 million
o PPP: I-75 Michigan Road (US): GBP15.3 million
o RE: Fox Creek / Brantley Solar Farms (US): GBP30.0 million
o RE: IS54 and IS67 Solar Farms (US): GBP27.0 million
o RE: Sunraysia Solar Farm (Australia): GBP59.0 million
o RE: Finley Solar Farm (Australia): GBP41.0 million
o RE: Granville Wind Farm (Australia): GBP55.8 million
-- Strong pipeline of future opportunities as described in June 2018 interim results
(RE = renewable energy)
Realisations
-- Total realisations agreed in 2018 to date of GBP296.0 million
(before costs), of which GBP241.5 million completed, in line with
our guidance for 2018 of approximately GBP250 million
-- Realisations agreed in 2018 to date (see Appendix I):
o Sale of remaining 15% shareholding in Intercity Express
Programme (IEP) (Phase 1) for consideration of GBP232.0 million.
Completed in May 2018.
o Sale of 50% shareholding in Lambeth Social Housing project for
consideration of GBP9.5 million. Completed in May 2018.
o Sale of 37.43% shareholding in Manchester Waste TPS Co for
consideration of GBP54.5 million. Expected to complete in Q1 2019
following customary EU anti-trust clearance. Once completed, this
transaction will further reduce our UK exposure.
-- Other realisation processes underway, but not expected to reach completion before year end
Investment portfolio
Other than the sale of our shareholding in IEP Phase 1 in excess
of its valuation, our investment portfolio performance in 2018 to
date has been in line with expectations.
Our asset management team actively monitors and manages each
project we invest in. A number of these projects are large,
sophisticated infrastructure assets, and therefore delays and other
issues do occur. In all instances, a judgement as to potential
outcomes is taken into account when John Laing's portfolio
valuation is prepared.
IEP (Phase 2) (valuation > GBP225m at 30 June 2018)
-- The first trains for the East Coast mainline, which have a
similar design to IEP (Phase 1), are now scheduled to be accepted
into service in Q1 2019.
Denver Eagle P3 (valuation GBP75m - GBP100m at 30 June 2018)
-- Both the A line and the B line have been operating
successfully since 2016 and have achieved above 97% on-time
performance. Final certification of the overall project is subject
to approvals from both state and federal transport regulators for
the third line, the G line. Delays associated with the legal and
regulatory regime have led to certain claims by the project company
and these are currently the subject of discussion or dispute
between the parties involved, including the public sector client.
Commencement of full service revenue is subject to the final
certification.
Sydney Light Rail (valuation GBP50m - GBP75m at 30 June
2018)
-- As stated in our June 2018 results announcement, the
programme is running behind schedule (c15 months), though remains
within the overall long stop date. Part of the delay is
attributable to the presence of below ground utility equipment not
identified before construction commenced. This has led to various
claims by the principal contractor, which continue to be the
subject of negotiations between the contractor and the public
sector client, facilitated by the project company.
Pension fund
-- As at 30 November 2018, the combined IAS19 pension surplus
for the John Laing Pension Schemes was estimated at GBP6 million
based on an IAS 19 discount rate of 3.05% and long term RPI of
3.3%. This compares to a surplus at 30 June 2018 of GBP24.0 million
based on an IAS 19 discount rate of 2.75% and long term RPI of
3.0%. The change is primarily due to a decrease in the valuation of
John Laing Pension Fund's equity investments as well as an increase
in inflation expectations, offset by the increase in the IAS 19
discount rate.
-- We expect the IAS19 position at 31 December 2018 in the full
year results to reflect a preliminary estimate of the impact on
liabilities from GMP equalisation, as well as any changes in other
assumptions, including mortality.
Outlook
-- Net asset value at 31 December 2018 is projected to be in the
range of management expectations, assuming constant exchange rates
and no change in the IAS19 pension surplus at 30 November 2018.
-- We expect the special dividend for 2018 to be based on
realisations completed to date of GBP241.5 million. In arriving at
the appropriate percentage within the 5% - 10% pay-out rate, the
Board plans to consider all relevant factors, including funding
needs for new investments.
-- The pipeline of new investment opportunities remains strong
in both PPP and renewable energy, especially in the US and
Australia and may soon include opportunities from certain countries
in Latin America.
-- We are currently part of 10 shortlisted PPP bids due to reach
financial close in the next eighteen months, of which seven are in
North America and three in Europe.
-- As previously stated, we continue to assess (i) other
infrastructure asset classes that might fit our business model (ii)
new geographies where we see potential opportunities to invest
alongside established partners at appropriate returns.
-- The market for secondary assets remains strong.
Olivier Brousse, John Laing's Chief Executive Officer, said:
"Following our rights issue in March, we have continued to take
advantage of our strong pipeline of opportunities and we have
exceeded our investment guidance for 2018. As we look forward to
2019, we are confident in our ability to manage our existing
projects actively and generate more value from them, as well as
spread our activity across different geographies and sectors, which
reduces our exposure to local policy uncertainties. We continue to
see an attractive pipeline both in existing and new sectors."
The Group's results for the year ending 31 December 2018 will be
announced on 5 March 2019.
A call for analysts and investors will be held at 8.00am (London
time) today.
Conference call details:
Number 0800 358 9473
US number +1 855 85 70686
Pin code 90791746#
Further information
Analyst/investor enquiries:
Olivier Brousse, Chief Executive
Officer +44 20 7901 3200
Patrick O'D Bourke, Group Finance
Director +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 Region PPP RE Total
commitments GBPm GBPm GBPm
MBTA Automated Fare
Collection
System North America 17.5 --- 17.5
-------------------------- ----------------- ----------------- -----------------
A16 Road Europe 21.7 --- 21.7
-------------------------- ----------------- ----------------- -----------------
I-75 Michigan Road North America 15.3 --- 15.3
-------------------------- ----------------- ----------------- -----------------
Fox Creek / Brantley
Solar
Farms North America --- 30.0 30.0
-------------------------- ----------------- ----------------- -----------------
IS54 and IS67 Solar
Farms North America --- 27.0 27.0
-------------------------- ----------------- ----------------- -----------------
Sunraysia Solar Farm Asia Pacific --- 59.0 59.0
-------------------------- ----------------- ----------------- -----------------
Finley Solar Farm Asia Pacific --- 41.0 41.0
-------------------------- ----------------- ----------------- -----------------
Granville Wind Farm Asia Pacific --- 55.8 55.8
-------------------------- ----------------- ----------------- -----------------
Total 54.5 212.8 267.3
----------------- ----------------- -----------------
Realisations agreed Shareholding Purchaser Total
(gross proceeds) GBPm
IEP (Phase 1) 15% Third party 232.0
------------- ------------ ------
Lambeth Social Housing 50% JLIF 9.5
------------- ------------ ------
Manchester Waste TPS
Co 37.43% Third party 54.5
------------- ------------ ------
Total 296.0
------
JLIF = John Laing Infrastructure Fund
Appendix II: Exchange rates at 31 December 2017, 30 June 2018
and 30 November 2018
Exchange rate vs 31 December 30 June 2018 30 November
Sterling 2017 2018
Euro 1.1252 1.1307 1.1260
------------ ------------- ------------
US dollar 1.3527 1.3199 1.2742
------------ ------------- ------------
Australian dollar 1.7311 1.7841 1.7441
------------ ------------- ------------
New Zealand dollar 1.9055 1.9477 1.8540
------------ ------------- ------------
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END
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