Agreement reached on Manchester Waste

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

John Laing Group plc

Agreement reached on Manchester Waste

This update is given further to the statement issued on 2 May 2017, which reported that the Greater Manchester Waste Disposal Authority (GMWDA) had published minutes of a meeting held on 26 April 2017, referring to an intended termination of the Recycling & Waste Management Private Finance Initiative Contract (the PFI Contract).

The PFI Contract relates to Manchester Waste VL Co (VL Co), which is jointly owned by John Laing (50%) and Viridor (50%). Manchester Waste TPS Co (TPS Co), which is jointly owned by John Laing, Viridor and Inovyn, is contractually linked to VL Co; the thermal power station owned by TPS Co burns refuse-derived fuel from VL Co's waste processing facilities.

Discussions have been continuing with the GMWDA since 2 May 2017 and have now culminated in legally-binding heads of terms between the GMWDA, VL Co and its shareholders, and the operator, Viridor Waste, which were entered into on 23 August.

The heads of terms envisage a number of transactions which are intended to complete by the end of September 2017 and which would result in termination of the PFI Contract, as well as acquisition of VLCo, by the GMWDA. As part of the same set of transactions, it is also intended that certain changes will be made to the long term contractual arrangements between TPS Co (in which John Laing has a 37.4% interest) and the GMWDA. TPS Co would continue to be held by its three existing shareholders. The transactions are subject to strict confidentiality arrangements and a number of conditions and consents.

The estimated financial effect of the transactions on John Laing in the investment portfolio valuation at 30 June 2017, taking into account certain compensation receivable in respect of VLCo, is a reduction in the valuation of the two Manchester Waste investments by £25.5 million from their valuation at 31 December 2016. In arriving at its decision to enter into the heads of terms, the Company's view was that the alternative could have been long and costly legal proceedings with an uncertain outcome for the valuation of its two investments. The Group's results for the six months ended 30 June 2017 are being announced today.

As previously stated, taken together, the fair value of the two investments represented 8% of John Laing's investment portfolio of £1,176 million at 31 December 2016. Like all John Laing's investments, the two investments are made on a non-recourse basis.