Laing's rail claim put at £30m

Chiltern Railways subsidiary goes into the red, but group still hits an interim pre-tax profit of £12m as roads division speeds up.

John Laing has remained tight-lipped over the size of its claim against Tesco, triggered by the collapse of a tunnel being built by the supermarket at Gerrards Cross.

The sum is estimated to be close on £30m. A spokesman declined to comment.

Latest interim results from the PFI developer group show that its Chiltern Railways subsidiary lost £2.4m as a result of the tunnel incident in June last year.

Before that, commuter usage had been expanding rapidly, but having to close the service has resulted in former passengers switching to alternative methods of travelling.

Despite the set-back in rail, the group still made an interim pre-tax profit of £12m (£14m). Turnover ran to £240m (£190m) with almost half of this latest figure coming from Laing's operations in joint ventures.

Bill Forrester, chairman, said: "The UK infrastructure market continues to present opportunities and there is potential for John Laing to target and have continued success in overseas markets."

Bid costs, net of recoveries, amounted to £2.3m (£1.2m). Forrester expected bid costs to rise further in the short and medium term as the level of the group's bid activity increases.

Laing's portfolio has grown to 50 projects that have reached financial close. The cash investment in them runs to £190m, with committed future investment adding a further £56m.

The assessment of the likely investment in projects at the preferred bidder stage is £70m and at the shortlist stage - assuming a 40% success rate by value - the likely investment is £61m.

In order to manage exposure to inflation rate movements, a number of projects have hedged a proportion of costs through inflation-indexed swaps. To help to reduce its exposure to rising fuel costs, Chiltern Railways has fixed the cost of its estimated fuel usage until March 2008 by entering a commodity swap.

Segmental analysis: John Laing (Six months to 30 June 2005 - £m)

* = The accommodation division made an additional one-off profit of £4.6m through the sale of interests in PFI/PPP project companies.

Accommodation     

[Contract Journal, 30 August 2006, p 6]