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John Laing plc Interim Results Presentation Monday 1 st September 2003

John Laing plc Interim Results Presentation Monday 1 st September 2003. Bill Forrester Chairman. Andy Friend Chief Executive. H1 2003 Summary. Focused investor, developer, operator of infrastructure projects 32 project investments, 23 fully operational Portfolio value up by 8%

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John Laing plc Interim Results Presentation Monday 1 st September 2003

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  1. John Laing plc Interim Results Presentation Monday 1st September 2003

  2. Bill Forrester Chairman

  3. Andy Friend Chief Executive

  4. H1 2003 Summary • Focused investor, developer, operator of infrastructure projects • 32 project investments, 23 fully operational • Portfolio value up by 8% • 11 new preferred bidder positions, short listed on 21 new projects • Group PBT of £5.1m (2002 - £17.9m) • Interim dividend of 1.0p (2002 – 2.0p)

  5. Key Developments H1 2003 • Disposal of Beechcroft, WL Homes • Progress with extinguishing retained liabilities • Investments PBT of £11.5m (£6.8m prior) • 8 project interests acquired, 2 new projects closed • Good progress with projects under construction • Strong performance from Chiltern

  6. John Laing Plc Portfolio Value 23% 39% 27% 11%

  7. Portfolio by Origin Queen Elizabeth 50% North Birmingham 100% Norfolk & Norwich 20% HEALTH Laing Origination MPS Firearms 100% JSCSC 50% Greater Manchester Police 100% MPS South East London 100% HIL Acquisition British Transport Police 100% Cleveland Firearms 100% MEIL Acquisition POLICE Amey Acquisition Cleveland Acquisition South East Essex College 100% Glasgow Schools 25.5% Edinburgh Schools 30% Highlands School 100% SCHOOLS DARA Red Dragon 50% MoD Main Building 50% DEFENCE Severn River Crossing 35% E39 KB 50% Nelostie 50% M6 19.5% Walsall Street Lighting 50% M40 50% A55 50% A130 100% ROADS Chiltern Railways 100% Midland Metro 33.3% Brisbane Air Rail Link 15% DLR (CGL) 40% LUL Connect 19.5% RAIL Adelaide Airport 14.5% NT Airports 14.5% Horizon Energy 4.5% Kinnegar 50% UTILITIES / OTHER

  8. 2003 Acquisitions to date 8 projects acquired from Amey plc (March 2003); A19 & 10% of Modus on sold £24.1 million net cash consideration (including transaction costs), plus assumption of £8.5 million of forward equity commitment Operational performance in line with expectations Acquisition of Cleveland Firearms Training Facility

  9. 2003 Disposals to date • National Physical Laboratory: £0.8m • Manchester Metro : £1.1m • UK Highway Services: £0.7m • Horizon: conditional contract

  10. Assets under construction • A130 South completed • Metropolitan Police Firearms & Public Order Training Facility completed • Glasgow 28 of 29 schools completed • Edinburgh 12 of 13 schools completed

  11. Assets under construction • 3 out of 4 South East London Police Stations handed over • Construction commenced on 9 out of 17 police stations in Greater Manchester • Ministry of Defence Main Building: 2004 completion on track • E39 Norway on programme • LUL Connect programme delayed

  12. Portfolio by payment mechanism 100% 90% 80% Volume 70% Airport 60% Shadow Toll 50% 40% Availability 30% 20% 10% 0% Dec 02 June 03

  13. Assets in operation Chiltern Passenger income growth: 9.5% Rated #1 nationally re customer satisfaction H1 PBT £2.5 m, 25% up on H1 2002 Platform extensions, car parking, depot facilities to time, on budget

  14. Assets in operation Volume based SRC, CGL ahead of base case Airports Deregulation benefits Shadow Toll A130 behind due to slower traffic growth Availability Based Projects All projects performing to plan

  15. Portfolio Value by concession length remaining (years) 100% 90% Less than 10 80% 70% 10 to 20 60% 20 to 30 50% 40% Greater than 30 30% 20% 10% 0% Dec 02 June 03

  16. Portfolio Valuation Methodology • Consistent • DCF, 3rd Party Value, or Market Value • Value of portfolio if held to maturity • Laing WACC: 7.5% • Risk premia: 2% - 6%, plus up to 4% project specific • Average discount rate 10.8% (10.5% prior)

  17. Portfolio Valuation Movements

  18. Value Growth 300 Utilities Rail 250 Roads Accommodation 200 Book 150 £m 100 50 0 Dec 00 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03 Dec 00 and Jun 01 excluding Europistas

  19. Adrian Ewer Finance Director

  20. Financial Summary • Investment PBT £11.5m • Accounting policies - Consistent • Bid Costs - £1.8m credit • Interest charge - £2.2m • Tax charge - 45% on Projects • Retained liabilities - £32.0m • Cash - £36.7m

  21. Interim Results Continuing includes Octagon Developments & John Laing Partnership

  22. Sector Performance

  23. Change of Accounting Policies Impact on 2003 Interim Results

  24. 2003 Bid Costs & Overheads

  25. Interest Charge

  26. Tax Charge

  27. Retained Construction Liabilities

  28. Net Assets at 30 June 2003

  29. Significant Cash Flows – Group Funds

  30. Investment Commitments

  31. Resources

  32. Cashflows Cash Inflows 40 30 £m 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 -10 -20 £m -30 -40 -50 Cash Outflows Utilities Rail Roads Accommodation

  33. Andy Friend Chief Executive

  34. UK Government PFI/PPP Procurement • Government commitment remains robust • More sophisticated approach to Value for Money • Progress on: • Employment issues • Refinancing • Public sector accounting • Better defined, better managed pipelines • Standardisation of contracts

  35. Evolution of UK PFI/PPP

  36. UK Market – Current Trends • 10-15% of projected rising total of public sector capex • Sectoral focus refined through experience • £9bn of further deals in Health, Education, Housing – to end 2005 • Schools for the future: £1.2bn per annum from 2005 • Expansion of demand: Housing, Regeneration, Waste, Local Authority needs • Roads: post 2006 pipeline • Rail: infrastructure enhancement projects

  37. Evolving Procurement Models • Centralised capacity: PUK/Departmental JVs • LIFT: Tranches of Investment • Framework funding for bundled schemes • Major Acute Hospitals: Batching • Scrutiny of operational performance • Annual review and pipeline plan

  38. PFI in local authorities

  39. Emergence of local infracos – a real prospect Equion Police sites Excellcare Health Sites Regeneration Projects

  40. Laing as Developer, Investor, Operator Rigorous targeting & selective partnering Last 6 PBs: Laing O’Rourke x 2, Costain x 2, . Skanska, Wates • Sector focussed JVs: • Excellcare (Equion & HBOS) • Transcend (Laing Rail & Kier Property) • Rail operations (Laing Rail & partner) • Scandinavian Roads (Laing Roads & Skanska BOT) • Street Lighting & Road Maintenance (Laing Roads & Amey/Ferrovial) • Social Housing (Equion & Pinnacle) • ‘A’ Programme (Laing Roads & WALTER BAU)

  41. Laing: Key capabilities • Brands, commercial governance, critical mass of operational projects • Skilled and experienced teams in place • Stakeholder management & non-standard PFI/PPP models • Laing Rail projects: example of cross-fertilisation • Refinancing & secondary market experience

  42. Bid Pipeline Preferred Bidder shortlisted Newham Hospital £32m 100% Newcastle Hospital £250m 100 % Kingston Hospital £25m 60% North Staffs Hospital £250m 75% Leicester Hospital £400m 100% GLMCA Courts £25m / 100% JSCSC variation Corsham Dev Project £70m / 50% POLICE DEFENCE Newham Housing £33m 50% Forrest Gate Housing £25m - £30 50% Bentilee Housing £10m 50% Evergreen 2 £70m 100% Chiltern (primary & secondary aspirations) £400m / 100% HOUSING RAIL Newham & Enfield Schools £60m / 75% Surrey CC £30m-£50m 100% Avon & Somerset Courts £45m / 50% Nth Swindon Schools £65m+ 100% Telford & Wrekin Schs £65m+ 100% LOCAL AUTH Sirhowy £35m 50% Manchester Lighting £33m 50% Wakefield Lighting £24m 50% Portsmouth Highways £48m 100% E39 South £130m 50% ROADS LIFT MAST £50m -£150m 50% LIFT Sandwell £15m < £31m 50% LIFT Leicester £26m - £88m 50% LIFT Coventry £42m - £60m 50% LIFT St Helens £22m -£50m 50% LIFT Oldham £17m-£35m 50% LIFT Leeds £28m-£100m 50% NEW MARKETS LIFT Brent, Harr. & Hill. £20m - £45m 50% LIFT Great Nottingham £27m -£60m 50% LIFT North Notts. £20m - £30m 50% LIFT Liverpool £25m - £60m 50% LIFT Sthern Derbyshire £21m - £33m 50% LIFT Tees & S Durham £25m - £90m 50% HEALTH

  43. Value Creation Time Value of Equity Value Cash Distributions Construction (9) Preferred Bidder (14) Ramp Up (12) Yield (11) Maturity (0) Newcastle Hospital Kingston Hospital Newham Hospital Surrey C.C. Avon & Somerset Courts Wakefield Street Lighting Manchester Street Lighting Evergreen II Newham & Enfield Schools Newham Housing LIFT Manchester LIFT Sandwell LIFT Leicester Sirhowy Way MPS SEL GMPA MoD Main Building Edinburgh Schools E39 LU Connect S.E.E. College Walsall St Lighting DARA – Red Dragon N&N Hospital A130 A55 Midland Metro Brisbane Air Link Adelaide Airport NT Airports Kinnegar WWT Plant MPS Firearms British Transport Police N. Birmingham MHT Glasgow Schools QE Hospital Highlands School JSCSC Cleveland FireArms Training Horizon Energy Chiltern Railways City Greenwich Lewisham (DLR) M6 M40 Nelostie Severn River Crossing As at 26th August 2003

  44. Strategy • Provider of choice • Developer, Investor, Operator • Sustained growth • Grow assets under management • Focus

  45. Appendices

  46. (i) Value methodology 100% 90% 80% Market 70% 60% 3rd party 50% 40% DCF 30% 20% 10% 0% Dec 02 June 03

  47. (ii) Homes – sales and profits

  48. (iii) Year 2002 Restatement

  49. (iv) FRS 17 Disclosure

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