John Laing: 2006 profit of £6m was hit by take-over costs

John Laing, the infrastructure owner and PFI developer, made a pre-tax profit of £5m last year.

The figure was trimmed back severely by an exceptional cost of £11m that resulted from the group being bought by Henderson Infrastructure for £1bn. Laing’s shares were taken off the Stock Exchange in December 2006 as the group went private.

Laing’s financial results (12 months to 31 December 2006) show turnover much higher at £600m. In the previous year a turnover of £410m generated a profit of £36m.

Disposals accounted for £21m of the 2005 profit figure, whereas last year Laing’s disposals ran to just £5m. The change in ownership led to asset disposal plans targeted for the second half of 2006 to be put on hold.

Last year’s bid costs for PFI/PPP work ran to £8m last year, a rise of £2m over 2005.

During 2006, Laing was appointed as preferred bidder on six new projects with a combined capital value of £870m. The investment potential runs to £38m.

Laing’s PFI/PPP infrastructure portfolio runs to a total of 52 projects. The valuation of the investment in these stands at £440m, a rise of £20m on the previous year.

Accommodation projects account for 32 of this tally. Other sectors include: roads (9), heavy rail (3), street lighting (3), and light rail (2).

Laing’s annual statement indicated that as the UK market is not growing and “is unlikely to do so within the foreseeable future”. The group’s main growth potential is in the emerging markets overseas.

Laing has existing projects in Finland, Norway, Poland and Canada. Bids are in the pipeline in Ireland, Holland, Austria, Germany and the Czech Republic as well as North America and Singapore.

In October, Equion changed its name to John Laing Social Infrastructure.

The group’s rail division was hit by the knock-on effect on Chiltern Railways of the tunnel collapse at Gerrards Cross. Laing said that the result has been that it has lost “broadly one year’s worth of passenger revenue growth”.

Turnover in rail moved ahead to £120m but the division ran up a pre-tax loss of £6m after making a £3m profit the previous year.

The group’s pension fund had a net deficit of £160m, down on the figure of £200m the previous year.

The fund has only 82 active members. Deferred pensioner numbers run to 6,100 and exiting pensioners number 3,200.

Using accounting standard IAS19 to evaluate the scheme, Laing points to the way minor changes can have major effects: if inflation runs 0.25% ahead of the assumed figure, the deficit jumps by £42m while adding one year to the post retirement longevity assumption moved the shortfall another £31m higher.

Laing pays its suppliers in an average of 72 days. In 2005, the figure was 106 days.