The private financing of new and modernised assets to support better public services is a growth activity both in the UK, John Laing’s home market, and in other major economies. 2005 saw the Group initiate activity in a number of new markets and additional sectors and the outlook for 2006 and beyond remains encouraging.
2005 was marked by substantial growth in the number of international bidding opportunities and, while the Group will continue to be highly selective, the outlook for further activity in the enlarged EU is strongly positive over both the short and medium term. The most significant near term opportunities within the EU outside the UK are in the roads sector. Accommodation projects are becoming more numerous and widespread in the EU outside the UK, and rail offers potential project opportunities of significant size. Beyond Europe, North America as a whole is currently the international market that is most attractive from a John Laing perspective.
Within the UK, the health sector, followed by education and local government are likely to be the sectors with the most substantial flow of new opportunities in the near term, with waste, housing and regeneration all exhibiting both growth and substantial longer term opportunity. During 2005 the Group created additional capacity to pursue opportunities in all of these areas where bidding opportunities tend to have a long lead time. A limited number of substantial major project opportunities exist in the UK transport sector (including the current M25 procurement initiated by the Highways Agency)* but road maintenance, street-lighting and rail infrastructure projects will also provide a continuing stream of individual opportunities of an attractive scale.
The waste sector represents a significant opportunity in the coming years, driven by the requirements of EU directives on landfill reduction during 2005. John Laing announced a partnership with Viridor to bid for the Greater Manchester waste management PFI project.
The Group has a substantial programme of bidding under way. A total of 24 projects are currently at shortlist stage as at 10 March 2006 which, assuming a 40% future success rate, involve a total projected potential equity and loan investment of £82 million. £76 million is due to be invested in primary projects currently at the preferred bidder stage and £48 million as further equity and loan contributions to already signed projects. In order to take full advantage of the opportunities for further investment the Group secured additional funds in July 2005 through a rights issue that raised £95.5 million net of costs.

In October 2005 John Laing played a lead role in organising a PPP Summit as part of the UK Presidency of the EU. Structured as a high level dialogue between the private sector, the Member States and EU institutions, this focussed on the transport investment opportunities arising from the economic and environmental pressures that must be addressed at the community level and on the potential for more effective promotion of PPP structures. Further urgency has been added to this dynamic by the outcome of the EU Budget process.

A E Friend
13 March 2006

* Laing Roads has been prequalified for the £1.5 billion M25 Design, Build, Finance and Operate (‘DBFO’) project in consortium with Autoroutes du Sud de la France, Carillion, Costain, and Vinci.