Half-year Results

JOHN LAING GROUP PLC

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016

John Laing Group plc (John Laing or the Company or the Group) announces its unaudited results for the six months ended 30 June 2016.

Highlights

· Net asset value (NAV) £963.7 million, up 8.3% from £889.6 million at 31 December 2015

· NAV per share at 30 June 2016 of 263p (31 December 2015 - 242p)

· £76.0 million in investment commitments (six months ended 30 June 2015 - £72.1 million)

· Realisations of £57.7 million from the sale of investments in project companies

· Profit before tax of £108.3 million (six months ended 30 June 2015 - £32.6 million pro forma1)

· 12.5% increase in external Assets under Management to £1,277.5 million2 since 31 December 2015

· Cash yield from investment portfolio of £18.3 million (six months ended 30 June 2015 - £11.4 million)

· Sale of UK activities of Project Management Services announced on 21 June 2016

· Interim dividend of 1.85p per share payable in October 2016

Olivier Brousse, John Laing's Chief Executive Officer, commented:

"We made good progress in the first half and are maintaining our full year guidance for investment commitments and realisations. These results demonstrate that our business model is delivering consistent results, and has the ability to cope with today's changing macro-economic environment, including the impact of Brexit."

Note:

(1) Pro forma financial information prepared on the basis described in the Financial Review section

(2) Based on portfolio values of JLIF and JLEN at 31 March 2016

A presentation for analysts and investors will be held at 9:00am (London time) today at The Lincoln Centre, 18 Lincoln's Inn Fields, London WC2A 3ED. A webcast of the presentation and a conference call facility will be accessible using the details below.

Participant URL for live access to the on-line presentation:

http://www.investis-live.com/john-laing/57a88e7b123a7b060067fcc8/sd4th4

Conference call dial in details:

UK: 020 3059 8125

Other locations: +44 (0)20 3059 8125

Participant password: John Laing

A copy of the presentation slides will be available at www.laing.com later today.

Analyst/investor enquiries:

Olivier Brousse, Chief Executive Officer +44 (0)20 7901 3200

Patrick O'D Bourke, Group Finance Director +44 (0)20 7901 3200

Tom Randell, Head of Investor Relations and Communications +44 (0)20 7901 3200

Media enquiries:

James Isola, Maitland +44 (0)20 7379 5151

This announcement may contain forward looking statements. It has been made by the Directors of John Laing in good faith based on the information available to them up to the time of their approval of this announcement and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward looking information.

John Laing is an international originator, active investor and manager of infrastructure projects. Our business is focused on major transport, social and environmental infrastructure projects awarded under governmental Public-Private Partnership (PPP) programmes, and renewable energy projects, across a range of international markets comprising the UK, Europe, Asia Pacific and North America. Our business, which integrates origination, investment and asset management capabilities, has three key areas of activity:

· Primary Investment: we source, originate, bid for and win greenfield infrastructure projects, typically as part of a consortium in the case of PPP projects. Our Primary Investment portfolio comprises interests in PPP and renewable energy projects which have recently reached financial close and/or are in the construction phase.

· Secondary Investment: we own a substantial portfolio of interests in operational PPP and renewable energy projects, almost all of which were previously part of our Primary Investment portfolio.

· Asset Management: we actively manage our own Primary and Secondary Investment portfolios and provide investment advice and asset management services to two listed funds, John Laing Infrastructure Fund (JLIF) and John Laing Environmental Assets Group (JLEN), through our FCA-regulated subsidiary, John Laing Capital Management (JLCM), as well as in respect of a small number of PPP assets held by John Laing Pension Fund (JLPF).

Further information is available at www.laing.com.

Basis of preparation - the financial information for the six months ended and as at 30 June 2016 has been prepared on a statutory basis. The financial information for the six months ended 30 June 2015 and for the year ended 31 December 2015 is pro forma financial information which was prepared on the basis that the restructuring associated with the Company's admission to listing in February 2015 had been in place throughout the year ended 31 December 2015. See the Financial Review section and note 2 of the Condensed Group Financial Statements for further details of the basis of preparation.

Summary financial information

Notes:

(1) Profit before tax from continuing operations of £100.9 million and from discontinued operations of £5.7 million.

(2) Basic EPS from continuing operations (see note 7 to the Condensed Group Financial Statements). 

(3) Gross investment portfolio less £15.2 million shareholding in JLEN (30 June 2015 - £16.4 million; 31 December 2015 - £16.1 million).

(4) Based on portfolio values of JLIF and JLEN at 31 March 2016.

BUSINESS REVIEW

Overview and outlook

During the first half, we continued to focus on: investment commitments and realisations; enhancing our investment portfolio; and maintaining a strong pipeline of future opportunities.

Our NAV increased from £889.6 million at 31 December 2015 to £963.7 million at 30 June 2016. This increase represents growth of 8.3%. In line with the dividend policy set out in our IPO prospectus, we are declaring an interim dividend for 2016 of 1.85p per share.

Our investment portfolio was valued at £945.2 million at 30 June 2016. After adjusting for realisations, cash yield and new investments made in the period, the value of our portfolio increased by £128.2 million or 15.7%. In absolute terms, the portfolio increased by £103.8 million from £841.4 million at 31 December 2015 (see the Portfolio Valuation section for further details). Cash yield from investments was in line with our expectations.

The first half highlights included:

· £76.0 million committed to new infrastructure projects in Australia and Europe;

· Realisations of £57.7 million from the sale of investments; and

· 12.5% increase in external Assets under Management to £1,277.5 million since 31 December 2015.

We have a strong and diversified pipeline of both PPP and renewable energy opportunities. While the PPP market has been subdued in some jurisdictions, we are currently part of eight shortlisted PPP bids due to close in 2016 or 2017.

On 21 June 2016, we announced the sale of the business and assets of our Project Management Services (PMS) activities in the UK to HCP Management Services Limited ("HCP"). The background to the sale is that whereas our PMS activities are mainly provided under Management Services Agreements (MSAs) to UK operational projects, in which JLIF and JLEN are investors, our future investment pipeline is focused on greenfield opportunities. As part of the sale, it is expected that approximately 90 staff roles and 62 MSAs will transfer to HCP. The planned sale strengthens our focus on our core greenfield investment activities and we expect completion to occur in the fourth quarter.

Group profit before tax in the period was £108.3 million (six months ended 30 June 2015 - £32.6 million pro forma). This was higher than the first half last year primarily because of a higher fair value movement which in turn was largely due to a combination of positive foreign exchange movements in the portfolio in the first half of 2016 and adverse foreign exchange movements in the first half of 2015.

Our external Assets under Management grew to £1,277.5 million. Both JLIF and JLEN acquired investments from John Laing and other parties during the first half.

Looking to the second half, we are maintaining our full year guidance for investment commitments. Based on our current work-in-progress and the time required for projects to reach financial close, we expect that investment commitments in 2016 will be in line with the total in 2015 of £180.5 million. This compares with average investment commitments over the last five years of £143 million per annum. Separately, and in line with previous guidance, we expect asset disposals for the full year to be close to £100 million, excluding the £19.5 million transaction agreed in February 2016.

Looking further forward, we operate in a market for infrastructure which is mainly driven by population growth, urbanisation and climate change, but is also affected by external factors such as government policy, interest rates, exchange rates and, for renewable assets, energy prices. We remain confident in our business model and its ability to address these challenges, including change in any particular jurisdiction, such as that caused by the EU referendum in the UK. As we look to maintain the momentum from the first half, our focus is on growing our investments while keeping an appropriately balanced portfolio. We will also continue to take advantage of opportunities for realisation of assets in what remains a strong secondary market.

Primary Investment

Our Primary Investment portfolio of interests in 14 PPP and seven renewable energy projects was valued at £486.8 million at 30 June 2016 (31 December 2015 - £405.9 million). The increase resulted principally from positive movements in fair value in the six months ended 30 June 2016 (see the Portfolio Valuation section below for further details).

Our Primary Investment team is responsible for the Group's bid development activities. The team targets a wide range of infrastructure sectors in Europe (including the UK), North America and Asia Pacific:

· Transport - rail (including rolling stock), roads, street lighting and highways maintenance;

· Environmental - renewable energy (including wind power, solar power and biomass), water treatment and waste management; and

· Social infrastructure - healthcare, education, justice, public sector accommodation and social housing.

During the first half of 2016, the Primary Investment team successfully achieved four investment commitments totalling £76.0 million:

· In the PPP sector, we made a £9.0 million investment commitment to the A6 Parkway road project in the Netherlands;

· In the renewable energy sector, we committed to two onshore wind farm investments totalling £30.0 million, with combined generation capacity of 126MW, in Australia and the UK; and

· We acquired a further 6% stake in the Intercity Express Programme (Phase 1) project and now hold a 30% investment.

Since 30 June 2016, we have committed £36.7 million for a 30% shareholding in the Nordergründe wind farm project in Germany. This is our first investment in offshore wind, in what is a substantial market largely focused on the UK and Germany.

Our investment commitments for the first half of 2016 are summarised in the table below:

At 30 June 2016, our total pipeline of investment opportunities was higher than at 31 December 2015. The PPP pipeline, which comprises opportunities to invest equity in projects with the potential to reach financial close over the next three years, stood at £1,337 million, compared to £1,135 million at 31 December 2015.

The renewable energy pipeline at 30 June 2016 was £441 million, higher than the £359 million pipeline at 31 December 2015.

The total pipeline is broken down below according to the bidding stage of each project. Our overall pipeline is constantly evolving as new opportunities are added and other opportunities drop out.

As at mid-August 2016, we were part of PPP bids which were shortlisted or had preferred bidder status as summarised in the table below:

We continue to monitor further PPP markets which offer potential in the medium to long term, including certain countries in Latin America. In renewable energy, our main focus is on European countries which offer attractive support mechanisms, but our teams are also seeing opportunities in both Australia, following our first investment in that jurisdiction last year, and in North America. In addition, we are assessing potentially attractive opportunities in infrastructure sectors closely linked to our existing PPP and renewable energy sectors.

Secondary Investment

At 30 June 2016, our Secondary Investment portfolio comprised investments in 14 PPP projects and four renewable energy projects with a book value of £443.2 million (31 December 2015 - £419.4 million). The Secondary Investment portfolio also included a 6% shareholding in JLEN valued at £15.2 million (31 December 2015 - 7% shareholding valued at £16.1 million).

During the first half, the New Albion Wind Farm (UK) and the Rammeldalsberget Wind Farm (Sweden) investments transferred from the Primary Investment portfolio to the Secondary Investment portfolio.

Also during the first half, we received proceeds of £57.7 million from realisations, achieving returns consistent with our historic track record:

· Our investment in one renewable energy project, Dungavel Wind Farm (100%), was sold to JLEN for £38.2 million

· Our investments in two PPP projects, Oldham Housing and British Transport Police, were sold to JLIF for £19.5 million

On 21 July 2016, we sold our 100% shareholding in New Albion Wind Farm for proceeds of £11.8 million (before costs). Further realisations are in progress and we are maintaining our guidance for total realisations in 2016 of approximately £100 million, excluding the sale of our investments in Oldham Housing and British Transport Police for £19.5 million.

Our realisations for the first half of 2016 are summarised in the table below:

Asset Management

The Asset Management team manages our Primary and Secondary Investment portfolios, and also generates fee income from the provision of (i) Investment Management Services (IMS) to JLIF, JLEN and JLPF and (ii) Project Management Services (PMS) directly to project companies.

Key projects under construction, which made up 77% of the Primary Investment portfolio by value at 30 June 2016, are moving forward:

· Intercity Express Programme (IEP) - five trains are now undergoing testing on the UK rail network for Phase 1;

· I-4 Ultimate road project - while construction is currently running a few months behind schedule, the expected completion date in 2021 has not changed;

· New Royal Adelaide Hospital - construction is close to completion but the contractor is incurring delays in achieving commercial acceptance. We have reflected the estimated impact in our portfolio valuation at 30 June 2016;

· Denver Eagle P3 - following opening of the first stage of the project, the University of Colorado "A" Line in April 2016, the next stage, the North West Electrified Section, opened in July 2016;

· New Perth Stadium - the programme is 50% complete and is on schedule to achieve completion at the end of 2017; and

· Hornsdale 1 Wind Farm - construction is on schedule and the first energy generation occurred during June 2016.

We earned revenues of £8.0 million from the provision of IMS during the first half of the year (six months ended 30 June 2015 - £6.6 million). These revenues principally represent fees earned from investment advisory agreements with JLIF and JLEN. As at 30 June 2016, John Laing had external Assets under Management, based on the latest published portfolio values of JLIF and JLEN at 31 March 2016, of £1,277.5 million, a 12.5% increase since 31 December 2015. External Assets under Management also included a small number of PPP investments held by JLPF.

We earned revenues of £7.8 million from the provision of PMS during the first half of the year (six months ended 30 June 2015 - £7.5 million), in respect of administrative and financial services provided under MSAs directly to project companies in which John Laing, JLIF or JLEN are investors. PMS revenue can also include development management fees from property-related investments.

On 21 June 2016, the Group announced the sale of the business and assets of its PMS activities in the UK to HCP, a leading specialist in the delivery of project management services to the UK PPP industry. Completion is expected to occur in the fourth quarter following receipt of a number of consents at project level. As part of the sale, it is expected that approximately 90 staff roles and 62 MSAs will transfer to HCP. The activities to be sold contributed £4.7 million of the £7.8 million PMS revenues for the six months ended 30 June 2016 referred to above and had attributable costs of c.£4.0 million.

PORTFOLIO VALUATION

The portfolio valuation at 30 June 2016 was £945.2 million compared to £841.4 million at 31 December 2015. After adjusting for realisations, cash yield and cash invested, this represented a positive movement in fair value of £128.2 million (15.7%):

Cash investment in respect of three new projects (one PPP and two renewable energy) entered into during the first half of 2016 totalled £18.7 million. An additional stake in one existing PPP project was acquired in June 2016 for £19.8 million (with an additional cash injection to the project made in July). In addition, equity and loan note subscriptions of £13.1 million were injected into existing projects in the portfolio as they progressed through, or completed, construction.

During the first half of 2016, the Group completed the realisation of three investments for a total consideration of £57.7 million. Cash yield during the first half of 2016 totalled £18.3 million.

The movement in fair value of £128.2 million is analysed in the table below. The fair value movement includes a net benefit of £27.5 million from the amendment of benchmark discount rates for a number of investments in response to our understanding and experience of the secondary market.

The net movement in fair value comprised unwinding of discounting (£36.6 million), the reduction of construction risk premia (£17.4 million), the reduction in operational benchmark discount rates (£27.5 million), value enhancements (including from new investment commitments) and other changes (£13.6 million) and favourable foreign exchange movements of £49.4 million, offset by adverse movements from lower power and gas price forecasts (£16.3 million). Foreign exchange movements are addressed further in the Financial Review section.

The split between primary and secondary investments is shown in the table below:

The increase in the Primary Investment portfolio is due to a movement in fair value of £59.1 million, including value enhancements and financial closes achieved during the period, and cash invested of £51.6 million, offset by transfers to the Secondary Investment portfolio of £28.6 million and cash yield of £1.2 million.

The increase in the Secondary Investment portfolio is due to transfers from the Primary Investment portfolio of £28.6 million and a movement in fair value of £69.1 million, offset by investment realisations during the year of £57.7 million and cash yield of £17.1 million.

Methodology

A full valuation of the investment portfolio is prepared every six months, at 30 June and 31 December, with a review at 31 March and 30 September, principally using a discounted cash flow methodology. The valuation is carried out on a fair value basis assuming that forecast cash flows from investments are received until maturity of the underlying assets.

Under the Group's valuation methodology, a base case discount rate for an operational project is derived from secondary market information and other available data points. The base case discount rate is then adjusted to reflect additional project-specific risks. In addition, risk premia are added to reflect the additional risk during the construction phase. The construction risk premia reduce over time as the project progresses through its construction programme, reflecting the significant reduction in risk once the project reaches the operating stage.

The discounted cash flow valuation was based on future cash distributions from projects forecast as at 30 June 2016, derived from detailed financial models for each underlying project. These incorporate the Group's expectations of likely future cash flows including value enhancements.

For the 30 June 2016 valuation, the overall weighted average discount rate was 9.1% compared to the weighted average discount rate at 31 December 2015 of 9.5%. The decrease was primarily due to changes in operational discount rates for a number of investments. The weighted average discount rate at 30 June 2016 was made up of 9.3% (31 December 2015 - 9.7%) for the Primary Investment portfolio and 8.5% (31 December 2015 - 8.9%) for the Secondary Investment portfolio.

The overall weighted average discount rate of 9.1% reflects the fact that project cash flows for investments in the Primary Investment portfolio tend to have a longer duration than for investments in the Secondary Investment portfolio.

The weighted average discount rate of 8.5% for the Secondary Investment portfolio reflects (i) the impact of renewable energy projects which tend to have higher discount rates than PPP projects and (ii) a few PPP projects with above average discount rates because of location or an element of volume/technology risk.

The discount rate ranges used in the portfolio valuation at 30 June 2016 were as set out below:

The shareholding in JLEN was valued at its closing market price on 30 June 2016 of 97.0p per share (31 December 2015 - 103.0p per share).

The Directors have obtained an independent opinion from a third party, which has considerable expertise in valuing the type of investments held by the Group, that the investment portfolio valuation represented a fair market value in the market conditions prevailing at 30 June 2016.

Macro - economic assumptions

During the first half of 2016, lower than previously forecast inflation and deposit rates receivable on cash balances within projects had a negative impact on the majority of forecast project cash flows within the portfolio. Deposit rates are anticipated to remain at low levels in the short-term. As mentioned above, strengthening of foreign currencies against Sterling over the six months to 30 June 2016 resulted in favourable foreign exchange movements of £49.4 million (excluding the effect of foreign exchange hedges as described in the Financial Review section).

Investments in overseas projects are fair valued based on the spot exchange rate on the balance sheet date. As at 30 June 2016, a 10% movement of each relevant currency against Sterling would decrease or increase the value of investments in overseas projects by c.£50 million.

The table below summarises the main macro-economic assumptions used in the portfolio valuation:

Discount rate sensitivity

The weighted average discount rate applied at 30 June 2016 was 9.1% (31 December 2015 - 9.5%). The table below shows the sensitivity of each 1% change in this rate of up to plus or minus 3.0%.

Further analysis of the portfolio valuation is shown in the following tables:

by time remaining on project concession/life

PPP projects are based on long-term concessions and renewable energy assets have long-term useful economic lives. As demonstrated in the table above, 49.2% of the portfolio by value had a greater than 25-year unexpired concession term or useful economic life remaining at 30 June 2016, compared to 47.8% at 31 December 2015. The investment in JLEN, which represented 1.6% (31 December 2015 - 1.9%) of the portfolio valuation, is shown separately.

split between PPP and renewable energy

Primary PPP investments made up the largest part of the portfolio, representing 42.9% of the portfolio valuation at 30 June 2016, with Secondary PPP investments representing a further 36.9%.

by revenue type

Availability-based investments continued to make up the majority of the portfolio, representing 74.3% of the portfolio valuation at 30 June 2016. Renewable energy investments comprised the majority of the volume-based investments. The investment in JLEN, which holds investments in PPP and renewable energy projects, is shown separately.

by sector

Investments in the transport sector (excluding rail rolling stock) continued to make up the largest proportion of the portfolio valuation, representing 35.7% of the portfolio at 30 June 2016, with rail rolling stock investments accounting for a further 20.8%. Renewable energy investments made up 18.6% of the portfolio by value, social infrastructure investments - 12.5% and waste investments - 10.8%. The portfolio underlying the JLEN shareholding consists of a mix of renewable energy and environmental projects.

by currency

The percentage of investments denominated in foreign currencies increased from 48.0% to 53.6%. This was partly caused by the weakness of Sterling in the first half but is also consistent with our pipeline and the overseas jurisdictions we target.

by geographical region

Investments in the UK continued to make up the largest single region in the portfolio valuation, representing 44.8% of the portfolio at 30 June 2016. Continental Europe remained the next largest category with 28.8%. Investments in projects located in the Asia Pacific region made up 14.1% and investments in North America 10.7%. A substantial majority of the JLEN portfolio consists of investments in UK based projects.

by investment size

The top five investments in the portfolio made up 46.0% of the portfolio at 30 June 2016. The next five largest investments made up a further 23.0%, with the remaining investments in the portfolio comprising 29.4%. The shareholding in JLEN made up 1.6% of the portfolio.

Investment portfolio as at 30 June 2016

FINANCIAL REVIEW

Basis of preparation

Statutory financial information for the six months ended 30 June 2016 is presented in the Condensed Group Income Statement, the Condensed Group Statement of Comprehensive Income and the Condensed Group Statement of Changes in Equity alongside comparative pro forma financial information for the six months ended 30 June 2015 and the year ended 31 December 2015. The comparative pro forma financial information was prepared on the basis that the restructuring associated with the Company's admission to listing in February 2015 (Admission), as described in more detail in the Financial Review section of the 2015 Annual Report and Accounts, had been in place throughout the year ended 31 December 2015 . In the opinion of the Directors, presenting pro forma information for 2015 was necessary in order to give a true and fair view of the state of the Company's affairs for that year. Note 18 to the Condensed Group Financial Statements provides details of the statutory financial information for the 2015 financial year, which is the last year for which pro forma financial information will be presented, including how it differs from pro forma financial information.

The statutory and pro forma financial information has been prepared on the historical cost basis except for the revaluation of the investment portfolio and financial instruments that are measured at fair value at the end of each reporting period. The Company meets the definition of an investment entity set out in IFRS 10. Investment entities are required to account for all investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit or loss (FVTPL), except for those directly-owned subsidiaries that provide investment related services or engage in permitted investment related activities with investees (Service Companies). Service Companies are consolidated rather than recorded at FVTPL.

Project companies in which the Group invests are described as "non-recourse", which means that providers of debt to such project companies do not have recourse beyond John Laing's equity commitments in the underlying projects. Subsidiaries through which the Company holds its investments in project companies, which are held at FVTPL, and subsidiaries that are Service Companies, which are consolidated, are described as "recourse".

The comparative financial information in this Financial Review is pro forma financial information unless stated otherwise.

results for the six month period

Profit before tax for the six month period ended 30 June 2016 was £108.3 million (six months ended 30 June 2015 - £32.6 million).

Net asset value increased from £889.6 million at 31 December 2015 to £963.7 million at 30 June 2016.

Note:

(1) includes cash balances held to collateralise future investment commitments of £145.2 million (31 December 2015 - £123.9 million) and is presented net of short-term cash borrowings of £100.0 million (31 December 2015 - £19.0 million).

· The main profit contributor in the first half of 2016 was the Secondary Investment division. Its contribution was higher than the first half last year primarily because of a higher fair value movement, which in turn was principally as a result of favourable foreign exchange rate movements and higher value enhancements and other changes to project cashflows.

· The higher contribution in 2016 from the Primary Investment division was also primarily as a result of foreign exchange gains on the portfolio, offset by lower value enhancements and other changes to project cashflows.

· The higher contribution in the first half of 2016 from the Asset Management division was principally due to higher fee income from IMS as a result of increased external Assets under Management.

Profit before tax shown above is net of the following staff costs:

Included within Asset Management staff costs are costs relating to:

The principal matters affecting the financial performance, financial position and cash flows of the Group in the first half of 2016 were:

· The net gain on investments at FVTPL of £123.1 million (six months ended 30 June 2015 - £49.8 million) (see below);

· Total investment commitments of £76.0 million across four projects (six months ended 30 June 2015 - three projects with investment commitments of £72.1 million);

· Cash investment of £51.6 million into existing projects during and at the end of their construction phase or on acquisitions of projects;

· Realisation of investments in three projects (comprising two investments to JLIF and one investment to JLEN) for proceeds of £57.7 million. In the first half of 2015, there were realisations of investments in four projects (comprising one investment to JLIF and three investments to JLEN), resulting in proceeds of £54.1 million; and

· The combined deficit (under IAS 19) of the Group's defined benefit pension and post-retirement medical schemes at 30 June 2016 decreased to £43.6 million (31 December 2015 - £46.2 million) due to cash contributions to JLPF of £18.1 million in line with the agreed schedule of contributions, partly offset by a lower discount rate for JLPF's liabilities.

Condensed Group Income Statement

The Condensed Group Income Statement includes:

· the consolidated results of the Company and the Company's recourse subsidiaries that perform service related activities;

· the movement in the fair value of the Company's investment in its recourse investment entity subsidiaries through which it invests in both non-recourse project companies and listed investments.

The net gain on investments at FVTPL for the six months ended 30 June 2016 was £123.1 million (six months ended 30 June 2015 - £49.8 million). This includes a value uplift on the investment portfolio, after adjusting for the impact of investments, cash yield and realisations, of £128.2 million (six months ended 30 June 2015 - £44.5 million). The higher value uplift in the first half of 2016 is primarily due to favourable foreign exchange movements in the first half of 2016 compared to adverse foreign exchange movements in the comparable period last year. There was also a fair value gain in respect of non-portfolio investments in small joint ventures of £1.0 million (six months ended 30 June 2015 - £0.1 million) and other net losses in recourse group subsidiaries held at FVTPL of £6.1 million (six months ended 30 June 2015 - gain £5.2 million).

The Group earned other income of £17.6 million (six months ended 30 June 2015 - £14.6 million) primarily from IMS and PMS as well as from a recovery on financial close of £1.0 million in the six months ended 30 June 2016 (six months ended 30 June 2015 - net nil recovery with £0.6 million of income earned on the financial close of Sydney Light Rail offset by costs incurred on the resolution of the East West Link project). This was earned on the financial closes of Glencarbry Wind Farm and A6 Parkway.

Finance costs include costs arising on the corporate banking facilities and interest on the pension fund deficit. These resulted in a net finance cost of £4.4 million in the six months ended 30 June 2016 (six months ended 30 June 2015 - £7.1 million) with the decrease in the period being primarily due to lower interest on the pension fund deficit in the six months ended 30 June 2016 as well as reduced finance costs due to lower average usage of the corporate banking facilities.

The Group's overall tax credit on profit on continuing activities for the first half of 2016 was £2.9 million (six months ended 30 June 2015 - £nil). This comprised a tax charge of £1.6 million (six months ended 30 June 2015 - £nil) in recourse group subsidiary entities that are consolidated (shown in the 'Tax' line of the Condensed Group Income Statement), primarily in relation to group relief payable to entities held at FVTPL, and a tax credit of £4.5 million (six months ended 30 June 2015 - £nil) in recourse group subsidiary entities that are held at FVTPL (included within 'net gain on investments at fair value through profit or loss' on the Condensed Group Income Statement), including group relief receivable from recourse group subsidiary entities that are consolidated together with group and consortium relief received from project companies. The contributions made to JLPF are tax deductible when paid and, as a result, there is minimal tax payable by the UK holding and asset management activities of the Group. Capital gains from the realisation of investments in projects are generally exempt from tax under the UK's Substantial Shareholding Exemption for shares in trading companies or under the overseas equivalent. To the extent this exemption is not available, gains may be sheltered using current year losses or losses brought forward within the Group's holding companies. There are no losses in the Company but there are tax losses in recourse group subsidiary entities that are held at FVTPL.

In May 2016, HM Treasury published a consultation on Base Erosion and Profit Shifting (BEPS) following the UK Government's announcement in March 2016 that it would be introducing legislation to restrict tax deductible interest to 30% of a Company's earnings before interest, tax, depreciation and amortisation (EBITDA). The consultation included a Public Benefit Project Exemption for projects where it is public policy to provide for the benefit of the public. The Company has made a provision as at 30 June 2016 on the basis that the proposals had been enacted at 30 June 2016; this provision is not material in the context of the Company's net asset value at 30 June 2016. The Company has responded to HM Treasury's consultation as part of industry representative forums.

Condensed Group Balance Sheet

The Condensed Group Balance Sheet includes the assets and liabilities of the Company, the assets and liabilities of the Company's recourse subsidiaries that perform service related activities (Service Companies) consolidated on a line by line basis and the fair value of the Company's investment in its recourse investment entity subsidiaries through which it invests in non-recourse project companies and listed investments.

The Group's portfolio of investments in project companies and listed investments was valued at £945.2 million at 30 June 2016 (31 December 2015 - £841.4 million). The valuation methodology is set out in the Portfolio Valuation section.

The portfolio value is reconciled to the Condensed Group Balance Sheet as follows:

Note:

(1) include cash and cash equivalents of £176.1 million (31 December 2015 - £128.3 million), of which £145.2 million (31 December 2015 - £123.9 million) is held to collateralise future investment commitments, and trade and other receivables less trade and other payables.

The combined accounting deficit in the Group's defined benefit pension and post-retirement medical schemes at 30 June 2016 was £43.6 million (31 December 2015 - £46.2 million). The Group operates two defined benefit schemes in the UK - the John Laing Pension Fund (JLPF) and the John Laing Pension Plan (the Plan). Both schemes are closed to new members and future accrual.

Within the combined accounting deficit of £43.6 million, the pension deficit in JLPF at 30 June 2016 was £35.9 million (31 December 2015 - £38.9 million), based on a discount rate applied to pension liabilities of 2.85% (31 December 2015 - 3.75%). The amount of the deficit is dependent on key assumptions, principally: inflation; the discount rate used; and the anticipated longevity of members. The discount rate, as prescribed by IAS 19, is based on yields from high quality corporate bonds.

In December 2013, a schedule of contributions was agreed with the JLPF trustee over a period of ten years, comprising annual contributions of £26.1 million, increasing by 3.55% annually, payable each March, starting from March 2014. As part of the IPO process in February 2015, the Group made a special contribution satisfied by the transfer of assets, including cash, valued at £100 million to JLPF and agreed a reduction in contributions payable in March 2016 and March 2017. In line with this amended schedule, the Company made cash contributions of £18.1 million in the first half of 2016 (six months ended 30 June 2015 - £27.0 million). The next triennial actuarial valuation of JLPF as at 31 March 2016 is currently underway and is expected to be finalised later in the year.

Financial Resources

At 30 June 2016, the Group had committed corporate banking facilities of £400.0 million, expiring in March 2020 (31 December 2015 - £350.0 million), which are primarily used to back investment commitments. The Group increased its committed facilities by £50.0 million in June 2016. Net available financial resources at 30 June 2016 were £179.1 million (31 December 2015 - £180.1 million).

Analysis of Group financial resources (recourse)

Cash and bank deposits shown above, which exclude cash collateral balances, are included in the Condensed Group Balance Sheet within the following lines:

Letters of credit issued under the committed corporate banking facilities of £100.1 million (31 December 2015 - £154.2 million) and under additional surety facilities of £50.0 million (31 December 2015 - £nil) and cash collateral together represent future cash investment by the Group into underlying projects in the Primary Investment portfolio.

The table below shows the letters of credit issued analysed by investment and the date or dates when cash is expected to be invested into the underlying project at which point the letter of credit would expire:

The table below shows the cash collateral balances at 30 June 2016 analysed by investment and the date when the cash collateral is expected to be invested into the underlying project:

Cash collateral is included within 'investments at fair value through profit or loss' in the Condensed Group Balance Sheet.

The Group tends not to be a cash borrower at the corporate level for significant periods of time and does not, therefore, generally seek to hedge its exposure to interest rate movements. However, there are significant non-recourse borrowings within the project companies in which the Group invests. The interest rate exposure on the debt of such project companies is, in almost all circumstances, fixed on financial close, through a long-dated bond or fixed rate debt, or through the fixing of floating rate bank debt via interest rate swaps. Given this, the impact on the Group's returns from investments in project companies of changes in interest rates on project borrowings is minimal. There is an impact from changes in interest rates on the investment income from monies held on deposit both at Group level and within project companies but such an effect has not been, and is unlikely to be, significant in the context of the Condensed Group Income Statement.

The Group regularly reviews the sensitivity of its balance sheet to changes in exchange rates relative to Sterling and to the timing and amount of forecast foreign currency denominated cash flows. As set out in the Portfolio Valuation section, the Group's portfolio comprises investments denominated in Sterling, Euro, and Australian, US and New Zealand Dollars. As a result of foreign exchange movements in the six months ended 30 June 2016, there was a favourable fair value movement of £49.4 million in the portfolio valuation between 31 December 2015 and 30 June 2016. This positive impact was partly offset by net losses, both realised and unrealised, included within net gain on investments at FVTPL in the Group Income Statement, of £11.4 million from foreign exchange hedges held by the Group at 30 June 2016 on part of its Euro-denominated investments (£93 million) and on part of its New Zealand Dollar-denominated investment (£10 million). Net losses of £7.8 million on other hedges held by the Group against cash collateral balances in foreign currencies were offset by foreign exchange translation gains of £7.8 million on those balances.

The Group may apply an appropriate hedge to a specific currency transaction exposure, which could include borrowing in that currency or entering into forward foreign exchange contracts. An analysis of the portfolio value by currency is set out in the Portfolio Valuation section.

Letters of credit in issue at 30 June 2016 of £150.1 million (31 December 2015 - £154.2 million) are analysed by currency as follows:

PRINCIPAL Risks AND RISK MANAGEMENT

The effective management of risks within the Group is essential to the successful delivery of the Group's objectives. The Board is responsible for ensuring that risks are identified and appropriately managed across the Group and has delegated to the Audit & Risk Committee responsibility for reviewing the effectiveness of the Group's internal controls, including the systems established to identify, assess, manage and monitor risks.

The principal internal controls that operated throughout the first half of 2016 and up to the date of this announcement include:

• an organisational structure which provides adequate segregation of responsibilities, clearly defined lines of accountability, delegated authority to trained and experienced staff and extensive reporting;

• clear business objectives aligned with the Group's risk appetite;

• risk reporting, including identification of risks through Group-wide risk registers, that is embedded in the regular management reporting of business units and is communicated to the Board; and

• an independent internal audit function, which reports to the Audit & Risk Committee. The external auditor also reports to the Audit & Risk Committee on the effectiveness of controls.

In addition, a management risk committee, comprising senior members of management and chaired by the Group Finance Director, assists the Board, Audit & Risk Committee and Executive Committee in formulating and enforcing the Group's risk management policy.

The Group risk register is reviewed at every meeting of the Audit & Risk Committee and management risk committee and every six months by the Board.

The above controls and procedures are underpinned by a culture of openness of communication between operational and executive management. All investment decisions are scrutinised in detail by the Investment Committee and, if outside the Investment Committee's terms of reference, also by the Board.

The Directors' assessment of the principal risks applying to the Group is set out below, including the way in which risks are linked to the three strategic objectives set out in the Chief Executive Officer's review in the 2015 Annual Report and Accounts. These risks are not expected to change significantly in the second half of 2016. Additional risks and uncertainties not presently known to the Directors, or which they currently consider not to be material, may also have an adverse effect on the Group:

Note:

The Group's three strategic objectives, as set out in the Chief Executive Officer's review in the 2015 Annual Report and Accounts, are:

1. Growth in primary investment volumes (new capital committed to greenfield infrastructure projects) over the medium term.

2. Growth in the value of external AuM and related fee income.

3. Management and enhancement of the Group's investment portfolio, accompanied by realisations of investments which, combined with the Group's corporate banking facilities and operational cash flows, enable it to finance new investment commitments.

Related party transactions

Related party transactions are disclosed in note 16 to the Condensed Group Financial Statements.

Other than transactions specifically linked to the Company's IPO in February 2015, and as disclosed in note 16, there have been no other related party transactions in the first six months of the financial year or the comparative period in 2015 that have had a material effect on the financial position or performance of the Group.

Going concern

The Group has committed corporate banking facilities which mature in March 2020 and has sufficient resources available to meet its committed capital requirements, investment commitments and operating costs for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the Condensed Group Financial Statements.

Signed on behalf of the Directors

Responsibility statement

We confirm that to the best of our knowledge:

· The condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and

· The Interim Management Report includes a fair review of the information required by:

a) the Disclosure and Transparency Rules (DTR) rule 4.2.7R, being an indication of important events during the first six months and a description of principal risks and uncertainties for the remaining six months of the year; and

b) DTR rule 4.2.8R, being the disclosure of related party transactions and changes therein.

By order of the Board

INDEPENDENT REVIEW REPORT TO JOHN LAING GROUP PLC

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprise the Condensed Group Income Statement, the Condensed Group Statement of Comprehensive Income, the Condensed Group Statement of Changes in Equity, the Condensed Group Balance Sheet, the Condensed Group Cash Flow Statement and the related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

24 August 2016

Condensed Group Income Statement

for the six months ended 30 June 2016

Condensed Group Statement of Comprehensive Income

for the six months ended 30 June 2016

The only movement which could subsequently be recycled to the Group Income Statement is the exchange difference on translation of overseas operations.

Condensed Group Statement of Changes in Equity

for the six months ended 30 June 2016

for the six months ended 30 June 2015

for the year ended 31 December 2015

Condensed Group Balance Sheet

as at 30 June 2016

Condensed Group Cash Flow Statement

for the six months ended 30 June 2016

Notes to the Condensed Group Financial Statements

for the six months ended 30 June 2016

1 General information

The interim Condensed Group Financial Statements of John Laing Group plc (the Company or the Group) have been prepared as described below. The registered office of the Company is 1 Kingsway, London, WC2B 6AN. The principal activity of the Company is the origination, investment in and management of international infrastructure projects.

The statutory and pro forma financial information is presented in pounds sterling and has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union. The annual financial statements of John Laing Group plc are prepared in accordance with IFRS as adopted by the European Union.

The information for the year ended 31 December 2015 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the registrar of Companies House. The auditor's report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2 Accounting policies

Basis of preparation

Statutory financial information for the six months ended 30 June 2016 has been presented in the Condensed Group Income Statement, the Condensed Group Statement of Comprehensive Income and the Condensed Group Statement of Changes in Equity alongside pro forma financial information for the six months ended 30 June 2015 and the year ended 31 December 2015. The pro forma financial information has been prepared on the basis that the restructuring associated with the Company's admission to listing in February 2015 (Admission), as described in more detail in the Financial Review section of the 2015 Annual Report and Accounts, had been in place throughout the year ended 31 December 2015. In the opinion of the Directors, presenting pro forma information for 2015 was necessary in order to give a true and fair view of the state of the Company's affairs for that year. Statutory financial information for 2015 corresponding to the pro forma financial information is presented separately in note 18 to the Condensed Group Financial Statements.

There is no difference in the balance sheet as at 31 December 2015 prepared on a pro forma basis and that prepared on a statutory basis. However, there is a difference in the income statement relating to the 27-day period between 1 January 2015 and 27 January 2015 when the Company only owned 22.46% of the John Laing Holdco Limited group (the Company acquired the remaining 77.54% of the John Laing Holdco Limited group on 27 January 2015). The statutory income statements for 2015 included an additional £3.4 million fair value loss within 'net gain on investments at fair value through profit or loss' that arose on the Company's acquisition of John Laing Holdco Limited on 27 January 2015, from the difference between the acquisition price of £630.0 million and the net assets of the John Laing Holdco group at the date of acquisition of £626.6 million. The net assets of the John Laing Holdco Limited group at the date of acquisition were lower than the net assets at 31 December 2014 of £649.8 million on a pro forma basis primarily as a result of an increase in the deficit on the John Laing Holdco Limited group's pension schemes between 1 January 2015 and the date of acquisition.

The statutory and pro forma financial information has been prepared on the historical cost basis except for the revaluation of the investment portfolio and financial instruments that are measured at fair value at the end of each reporting period. The Company meets the definition of an investment entity set out within IFRS 10. Investment entities are required to account for all investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit or loss (FVTPL), except for those directly-owned subsidiaries that provide investment related services or engage in permitted investment related activities with investees (Service Companies). Service Companies are consolidated rather than recorded at FVTPL. On 17 February 2015, the legal ownership of certain Service Companies in the John Laing Holdco Limited group was transferred to the Company and these transfers are also reflected in the pro forma financial information as if they had been in place throughout the year ended 31 December 2015. In the 2015 statutory financial information, the results of the Service Companies are only consolidated from 17 February 2015. For the period from 1 January 2015 to 17 February 2015, the results of the Service Companies are reflected in net gains on investments at FVTPL in the Condensed Group Income Statement.

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, being a period of not less than 12 months from the date of approval of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Changes in accounting policies

There have been no changes to the accounting policies followed in the Condensed Group Financial Statements since the 2015 Annual Report and Accounts with the exception of the adoption of amendments resulting from Annual Improvements to IFRS (2012-14). These are amendments to existing standards which have not had a material impact on the Condensed Group Financial Statements.

3 Operating segments

Information is reported to the Group's Board (the chief operating decision maker under IFRS 8) for the purposes of resource allocation and assessment of segment performance based on the category of activities undertaken within the Group. The principal categories of activity, and thus the reportable segments under IFRS 8, are: Primary Investment, Secondary Investment and Asset Management.

The results included within each of the reportable segments comprise:

· Primary Investment - investment returns from and growth in the value of the Primary Investment portfolio, net of associated costs; costs and cost recoveries associated with sourcing, bidding for and winning greenfield infrastructure projects.

· Secondary Investment - investment returns from and growth in the value of the Secondary Investment portfolio, net of associated costs.

· Asset Management - fee income and associated costs from Investment Management Services in respect of both the Primary and Secondary Investment portfolios and in respect of JLIF's and JLEN's portfolios; fee income and associated costs from Project Management Services.

The Board's primary measure of profitability for each segment is adjusted profit before tax.

The following is an analysis of the Group's operating income and profit before tax for the six months ended 30 June 2016 and 2015 and for the year ended 31 December 2015:

For the six months ended 30 June 2016, more than 10% of operating income was derived from IEP (Phase 1) and IEP (Phase 2) (six months ended 30 June 2015 - IEP (Phase 1) and IEP (Phase 2); year ended 31 December 2015 - IEP (Phase 1)).

The Group's investment portfolio, comprising investments in project companies and one listed fund and included within investments at FVTPL (see note 9), is allocated between primary and secondary investments. The Primary Investment portfolio includes investments in projects which have yet to reach financial close or have recently reached financial close and/or are in the construction phase. The Secondary Investment portfolio comprises investments in operational projects.

4 Seasonality

Neither operating income nor profit are impacted by seasonality.

5 Other income

6 Tax

The tax charge for the period comprises:

For the six months ended 30 June 2016, a tax rate of 20% has been applied (six months ended 30 June 2015 and year ended 31 December 2015 - 20.5%).

The Group expects that the majority of its deferred tax assets will be realised after 1 April 2020 and therefore the Group has measured its deferred tax assets and liabilities at both 30 June 2016 and 31 December 2015 at 18% (30 June 2015 - 20%). The announced reduction in corporation tax rates for UK companies to 17% from 1 April 2017 had not been substantively enacted as at 30 June 2016.

7 Earnings per share

The calculation of basic and diluted earnings per share is based on the following data:

8 Share-based incentives

The Group operates share-based incentive arrangements for the executive directors, senior executives and other eligible employees under which awards are granted over the Company's ordinary shares. The awards vest three years from the grant date, subject to the Group achieving a target share-based performance condition (total shareholder return - 50% of the award), and a non-market based performance condition (net asset value growth - 50% of the award). Awards are also conditional on the relevant employee completing three years' service (the vesting period). The Group has no legal or constructive obligation to repurchase or settle the awards in cash.

The movement in the number of shares awarded is as follows:

The total expense recognised in the Condensed Group Income Statement for awards granted under share-based incentive arrangements for the six months ended 30 June 2016 was £1.0 million (six months ended 30 June 2015 - £0.2 million; year ended 31 December 2015 - £0.7 million).

9 Investments at fair value through profit or loss