1

John Laing plcInterim Results Presentation

Monday 1st September 2003

2

Bill ForresterChairman

3

Andy FriendChief 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

23%

39%

27%

11%

PortfolioValue

7

Portfolio by Origin

Adelaide Airport 14.5%

NT Airports 14.5%

Horizon Energy 4.5%

Kinnegar

50%UTI

LITI

ES /

OTH

ER

Glasgow Schools 25.5%

Edinburgh Schools 30%

SCH

OO

LS South East Essex College 100%

Highlands School 100%

Severn River Crossing 35%

Nelostie

50%

RO

AD

S

Midland Metro 33.3%

Chiltern Railways 100%

Brisbane Air Rail Link 15%

LUL Connect 19.5%

DLR (CGL) 40%R

AIL

A130

100%

M40

50%

A55

50%

Walsall Street Lighting 50%

M6

19.5%

E39 KB

50%

British Transport Police 100%

POLI

CE MPS

Firearms 100%

Greater Manchester Police 100%

MPS South East London 100%

Cleveland Firearms100%

HIL Acquisition

Amey Acquisition

Laing Origination

MEIL Acquisition

Cleveland Acquisition

DEF

ENC

E JSCSC

50%

MoD Main Building 50%

DARA Red Dragon50%

Norfolk & Norwich 20%

Queen Elizabeth 50%

North Birmingham 100%H

EALT

H

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

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec 02 June 03

Portfolio by payment mechanism

Volume

Airport

Shadow Toll

Availability

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)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec 02 June 03

Less than 10

10 to 20

20 to 30

Greater than 30

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

Portfolio valuation

Dec 02£m

Acquisitions

£m

Disposals£m

Equity & Loan Notes

£m

Distributions

£m

RebasedDec 02

valuation

£m

Growth on

valuation £m

ValuationJune 2003

£m

Accom 75.3 20.7 (4.4) 2.9 (3.3) 91.2 8.0 99.2

Rail 66.8 - (1.1) - (2.7) 63.0 4.3 67.3

Roads 51.6 9.2 (2.3) 0.4 (1.5) 57.5 0.4 57.9

Utilities

21.6 - - - (0.3) 21.2 7.1 28.3

Total 215.3 29.9 (7.8) 3.3 (7.8) 232.9

19.8 252.7

18

Value Growth

0

50

100

150

200

250

300

Dec 00 Jun 01 Dec 01 Jun 02 Dec 02 Jun 03

£m

UtilitiesRailRoads

AccommodationBook

Dec 00 and Jun 01 excluding Europistas

19

Adrian EwerFinance 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

6 months 2003Restated

6 months2002

Year2002

£m Continuing Discontinued Group

Turnover 157.7 37.6 195.3 363.2 741.5

Operating Profit 4.7 (0.1) 4.6 25.8 33.4

Profit on fixed assets 1.2 - 1.2 0.5 3.7

Disposals - 1.5 1.5 1.8 (8.8)

5.9

(2.9)

1.4

0.7

7.3

(2.2)

28.1

(10.2)

28.3

(43.0)Interest

Profit before tax 3.0 2.1 5.1 17.9 (14.7)

Taxation (3.0) (3.7) (6.7) (6.4) (11.3)

Profit after tax - (1.6) (1.6) 11.5 (26.0)

EPS

Dividend per share

(1.6)p

1.0p

5.8p

2.0p

(16.2)p

6.8p

Continuing includes Octagon Developments & John Laing Partnership

22

Sector Performance

£m

PBT PBIT

June 03 June 02 June 03 June 02

Accommodation 5.4 2.2 5.1 5.5

Roads 3.6 4.4 3.1 2.2

Rail 3.8 2.0 3.3 2.4

Utilities / Airports 0.5 0.1 0.7 0.7

Bids/Overheads (1.8) (1.9) (1.8) (1.9)

Investments sub-total 11.5 6.8 10.4 8.9

Group Costs (6.9) (14.6) (3.8) (6.8)

Non-Core Businesses (0.5) 25.7 0.7 26.0

Interest - - (2.2) (10.2)

Total Group 5.1 17.9 5.1 17.9

23

Change of Accounting Policies

Impact on 2003 Interim Results

FRS 17

New Basis

SSAP 24

Old Basis

Pension Charge (4.3) (9.0)

Investments PBT Road Project Accounting

Finance Debtor

New Basis

Fixed Asset

Old Basis

SRC 1.5 0.2

A130 DBFO Road 0.4 (0.8)

Other projects 9.6 9.7

11.5 9.1

24

2003 Bid Costs & Overheads

Balance Sheet

BID COSTS Cash Flow

P&L Capitalised Costs

DeferredRevenue

Opening 1.9 (6.7)

3rd Party Costs (3.2) (0.7) 2.5 -

Internal costs capitalised (0.6) - 0.6 -

Invoiced on financial close 0.6 - - (0.6)

Released from deferred revenue

- 2.4 - 2.4

(3.2) 1.7 Closing 5.0 (4.9)

OVERHEADS

Investment business (4.7)

- recoveries 1.2

Total investments (1.8)

John Laing plc (3.8)

Total Bid Costs & Overheads (5.6)

25

Interest Charge

6 Months ended 30 June

£m 2003 2002 Year 2002

Group - Recourse Funds 4.5 (7.0) (11.3)

-Pension interest (cost)/income

(1.3) 2.8 5.5

- 100% PFI project co’s 0.4 (1.1) 0.1

- Amortisation of issue costs (2.3) (0.7) (0.6)

- Makewhole / costs written off - - (22.7)

1.3 (6.0) (29.0)

Joint Ventures (2.0) (2.6) (1.9)

SRC refinancing - - (9.1)

Associates (1.5) (1.6) (3.0)

(2.2) (10.2) (43.0)

26

Tax Charge

Tax charge

£m Profit Continuing Discontinued

Current Prior Year

Group operating loss (3.8) 0.5 (overseas) 0.4 1.0

Joint ventures

- PBIT 7.5

- Interest receivable

24.1

- Interest payable (26.1)

5.5 2.5 (45%)

Associates 0.9 - 0.4 1.9

Capital profits 2.7 -

Group interest (0.2) -

5.1 3.0 0.8 2.9

27

£m

6 months to 30 June Year

Opening balance

2003 2002 2002

39.2 57.0 57.0

Profit & Loss credit - (1.5) (2.7)

Provisions utilised (7.2) (12.9) (15.1)

Closing balance 32.0 42.6 39.2

Retained Construction Liabilities

28

Net Assets at 30 June 2003

Pro Forma£m Reported Non-recourse Recourse

Net Assets Balance Sheet

Investments 418.9 (241.6) 177.3

HomesWimpey receivable 95.2 (64.0) 31.2Provisions (3.0) (3.0)

Retained businesses 7.4 7.4

WL Homes 26.3 26.3Property 2.3 2.3Construction - retained liabilities (32.0) (32.0) - insurance provisions (25.1) (25.1)

Group/general (13.1) (13.1)

Net assets employed 476.9 171.3

BankRecourse 36.7 36.7Project debt (241.6) -Wimpey bridge (64.0) -

Net assets (ex pension) 208.0 208.0

Pension deficit (net) (97.9) (97.9)

Net assets 110.1 110.1

29

Significant Cash Flows – Group Funds

£m6 months to 30

June 2003

Corporate Sale of Beechcroft 33.4

Purchase of Amey (31.1)

2.3

Trading Construction liabilities (7.2)

Laing Homes trading (10.8)

Laing Investments - Sales 4.2

- Investment (5.7)

- Distributions 7.8

Other working capital (5.0)

Overheads (10.5)

Interest (3.4)

Tax (3.2)

Dividends (1.3)

Net cash flow (32.8)

Opening balance 69.5

Closing balance 36.7Source management accounts

30

Investment Commitments

£m

Committed equity – 30 June 2003 56.9

Preferred Bidder Projects 50.8

Short listed Projects 61.3

31

Resources

£m

Cash - 30 June 2003 37

Debtors

Wimpey receivable – 31 December 2003 31

WL Homes – 1 July 2003 26

94

Less: Blocked Cash (24)

70

Residual housing assets 7

Bank facilities

90

167

32

Cashflows

Cash Inflows

0

10

20

30

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

£m

Cash Outflows

-50-40-30-20-10

0

£m

Utilities

Rail

Roads

Accommodation

33

Andy FriendChief 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

DfES - schools

OPDM - fire, housing,regenerationDfT - transport

Home Office - police

DoH - social services

LCD - court services

DEFRA - wastemanagementDCMS - leisure services

Joint projects

39

Emergence of local infracos – a real prospect

Equion Police sites

Excellcare Health Sites Regeneration Projects

40

Laing as Developer, Investor, Operator

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)

Rigorous targeting & selective partnering

Last 6 PBs: Laing O’Rourke x 2, Costain x 2, . Skanska, Wates

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 PipelineH

EALT

H

Preferred Bidder

shortlisted

Newcastle Hospital £250m100 %

Kingston Hospital £25m 60%

North Staffs Hospital £250m 75%

LIFT Sandwell£15m < £31m50%

LIFT MAST£50m -£150m50%

POLI

CE

DEF

ENC

E

RO

AD

S

RA

IL

NEW

MA

RK

ETS

Sirhowy£35m50%

Wakefield Lighting£24m50%

Portsmouth Highways£48m100%

Manchester Lighting£33m50%

Leicester Hospital £400m100%

Newham Hospital £32m100%

HO

USI

NG Newham

Housing £33m50%

Forrest Gate Housing £25m - £3050%

LOC

AL

AU

TH Newham & Enfield Schools £60m / 75%

Surrey CC £30m-£50m 100%

Avon & Somerset Courts £45m / 50%

JSCSC variation

LIFT Leicester£26m - £88m50%

LIFT Coventry£42m - £60m50%

E39 South£130m50%

Bentilee Housing£10m50%

Nth Swindon Schools£65m+100%

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 - £33m50%

Chiltern (primary & secondary aspirations)£400m / 100%

Evergreen 2£70m100%

GLMCA Courts£25m / 100%

LIFT St Helens£22m -£50m50%

LIFT Oldham£17m-£35m50%

LIFT Tees & S Durham£25m - £90m50%

Corsham Dev Project £70m / 50%

LIFT Leeds£28m-£100m50%

Telford & Wrekin Schs£65m+100%

43

Value Creation

As at 26th August 2003

Preferred Bidder(14)

Construction(9)

Ramp Up(12)

Yield(11)

Maturity (0)

Cash Distributions

Value of Equity

Time

Value

Newcastle HospitalKingston HospitalNewham HospitalSurrey C.C.Avon & Somerset CourtsWakefield Street LightingManchester Street LightingEvergreen IINewham & Enfield SchoolsNewham HousingLIFT ManchesterLIFT SandwellLIFT LeicesterSirhowy Way

MPS SELGMPAMoD Main BuildingEdinburgh SchoolsE39LU ConnectS.E.E. CollegeWalsall St LightingDARA – Red Dragon

N&N HospitalA130A55Midland MetroBrisbane Air LinkAdelaide AirportNT AirportsKinnegar WWT PlantMPS FirearmsBritish Transport PoliceN. Birmingham MHTGlasgow Schools

QE HospitalHighlands SchoolJSCSCCleveland FireArms TrainingHorizon EnergyChiltern RailwaysCity Greenwich Lewisham (DLR)M6M40NelostieSevern River Crossing

44

Strategy

Provider of choice

Developer, Investor, Operator

Sustained growth

Grow assets under management

Focus

45

46

Appendices

47

(i) Value methodology

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec 02 June 03

Market

3rd party

DCF

48

(ii) Homes – sales and profits

6 months to 30 June 2003 6 months to 30 June 2002

£mTurnover Profit

Net Assets

Turnover ProfitNet

Assets

Private housing - (0.2) - 150.2 16.1 251.7

Land sales - - - 14.2 2.2 11.3

- 0.2 - 164.4 18.3 263.0

Net deferred consideration

- - 92.2 - - -

Partnership housing

23.2 - (7.5) 19.1 0.2 (6.2)

Beechcroft 2.3 (0.7) - 5.8 0.2 32.0

Octagon 9.9 (0.3) 14.9 8.1 1.1 14.7

UK 35.4 (1.2) 99.6 197.4 19.8 303.5

USA 34.9 1.7 26.3 36.0 2.7 32.7

Total70.3 0.5 125.9 233.4 22.5 336.2

49

(iii) Year 2002 Restatement

£m Reported FRS 17 Road Projects

Restated

Operating profit 12.6 1.0 (7.9) 5.7

Joint ventures 33.3 - (5.6) 27.7

Disposals (9.5) 5.0 (0.6) (5.1)

Profit before interest 36.4 6.0 (14.1) 28.3

Interest (32.3) 5.5 15.6 (11.2)

SRC Refinancing (22.7) (9.1) (31.8)

Profit before tax 18.6 11.5 7.6 (14.7)

Shareholders Funds 222.8 (110.0) (5.6) 107.2

All road projects including SRC now use Finance Debtor accounting

50

(iv) FRS 17 Disclosure 6 months ended 30 June

£m 2003 2002Year2002

Profit and Loss

Charged to operating profit (3.0) (3.4) (8.3)

(Charged)/Credited to interest (1.3) 2.8 5.5

(4.3) (0.6) (2.8)

Balance Sheet

Deficit (138.1) (77.4) (146.8)

Deferred tax thereon40.2 22.1 42.9

(97.9) (55.3) (103.9)

51

... an extreme example of a general dilemma

(v) UK Public Sector Net Investment

0

1

2

3

4

5

6

7

8

1965 1970 1975 1980 1985 1990 1995 2000 2003/4

% share of GDP Source: HM Treasury

PFI/PPP contributionSource: Laing Calculation from HM Treasury data%

Year

52

Non-PFI PFI

Cost escalation 73% 22%

Delayed delivery 70%24%

(8% >60 days)

National Audit Office: Feb 2003

(vi) Project Delivery under PFI

HM Treasury: July 2003

89% on time, all within budget, 77% meeting expectations

53

(vii) Laing: Key capacities

Full range of skills to play integrator role: 100+ development, transaction & portfolio management professionals 35 banking, financial & accounting 15 legal & commercial 22 bidding & marketing including sector experts 31 engineering, surveying, property,

construction, planning, facilities management, quality systems

Plus administrative support, project company administration

Total: 820, includes Chiltern & Equion FM