Q1 Trading Update

28 April 2021

Q1 TRADING UPDATE

Good investment momentum, underlying NAV growth in-line with expectations

John Laing Group plc ("John Laing" or the "Group"), the responsible investor and active manager of infrastructure projects internationally, is today issuing a trading update for the quarter ended 31 March 2021.

Highlights:

· On track to deliver underlying NAV growth in 2021, in-line with expectations

· Good investment momentum, with investment commitments year-to-date already ahead of full year guidance

· Strong realisation results with each realisation achieved at a premium to book value

· Further progress in reducing portfolio exposure to merchant power prices with the completion of realisations of Australian and European renewable energy generation assets

· Strong balance sheet and liquidity position

· 2021 special dividend underpinned by proceeds from realisations year-to-date and completion of second phase of IEP East divestment later in the year

· Confident in the outlook, with a growing investment pipeline and a favourable backdrop of significant government infrastructure plans in John Laing's key markets

Underlying Net Asset Value ("NAV") growth, in-line with expectations

Underlying NAV increased during the first quarter driven largely by the PPP & Projects business which benefited from good progress on the delivery of a number of key projects, and a gain on the divestment of New Royal Adelaide Hospital.

Underlying performance of the Renewable Energy generation portfolio continued to be stable in the first quarter and we have seen limited changes in power price forecasts in the period.

During the period, foreign exchange presented a headwind, with sterling strengthening by approximately 3% against the currencies in which our portfolio is denominated. After taking foreign exchange movements into account, total NAV as at 31 March 2021 showed a small increase versus the year end position at 31 December 2020.

Good investment momentum, with £107 million of new investment committed

Investment commitments for 2021 currently amount to approximately £107 million. This comprises the Pacifico 2 availability-based road PPP project in Colombia, a German fibre-to-the-premises roll-out platform, and a UK specialised accommodation business in retirement living.

We have therefore achieved our full year guidance for 2021 investment commitments of at least £100 million at an early stage of the year.

We have a good investment pipeline for the remainder of 2021, including three preferred and short-listed bidder positions in greenfield PPP projects, with an aggregate equity value in excess of £100 million. These are: North-East Link in Australia, ViA15 in the Netherlands and Georgia Express Lanes in the US. In addition to these opportunities, we are pursuing in 2021 a number of investment opportunities including several acquisitions of additional interests in greenfield PPP projects, as well as in adjacent greenfield projects and mid-market economic infrastructure businesses in energy transition, digital infrastructure, transport and specialised accommodation.

We continue to be confident about the investment outlook, particularly as Governments in our key markets are looking to infrastructure investment not only to stimulate economic growth, but also to modernise and improve the sustainability of their economies.

Strong realisation results with each realisation achieved at a premium to book value

During the period, we have announced and completed three further realisations for total proceeds of approximately £110 million. This is in addition to completing the sale of the Australian wind farm portfolio in the period, which was agreed last year. Importantly, each realisation was achieved at a premium to book value, evidencing the solid NAV base established last year and providing a strong underpinning to the portfolio valuation.

In the period, two further Renewable Energy generation assets were realised: Glencarbry wind farm in Ireland and Rammeldalsberget wind farm in Sweden. These realisations are in line with the Group's strategy to reduce its exposure to Renewable Energy generation assets, and in doing so, reduce the portfolio exposure to merchant power prices and the corresponding volatility in portfolio value and returns.

Since the beginning of 2020, we have completed the divestment of 12 Renewable Energy generation assets, enabling us to materially de-risk and re-position the portfolio. As at the end of March 2021, the Group's Renewable Energy portfolio represented approximately 21% of total pro forma[1] portfolio value (23% at 31 December 2020; 34% at 31 December 2019).

In the period, we also completed the realisation of the Group's interest in the New Royal Adelaide Hospital in Australia at a strong valuation, and equivalent to a money multiple on our investment of 2.1 times.

Each of New Royal Adelaide Hospital, Glencarbry and Rammeldalsberget were mature assets in the Group's secondary portfolio, and these realisations are consistent with the Group's strategy to realise these types of secondary assets and re-invest the proceeds into new opportunities in greenfield projects and in mid-market economic infrastructure businesses.

The secondary market continues to be buoyant, with significant investor appetite for stable, yielding assets such as those that John Laing develops.

Strong balance sheet and liquidity position

Following the receipt of proceeds from recent divestments, as at 31 March 2021, the Group had a net cash position £69 million, including off-balance sheet debt. Our committed revolving credit banking facilities of £650 million, with maturities in 2023, mean that we have considerable financial resources available to fund new investment opportunities. Our permanent and flexible balance sheet capital is a key competitive strength, and enables the Group to actively manage its portfolio, realising assets where this maximises value, whilst providing the flexibility to retain assets which contribute attractive returns over the longer term.

2021 special dividend well underpinned

The strong realisation results achieved to date underpin the 2021 special dividend, with total proceeds eligible to be included in the 2021 special dividend calculation now amounting to approximately £460 million[2]. This includes the divestments announced and completed in the period, together with the second stage of the IEP East divestment which will complete later in 2021.

Shareholders participate in the success of realisations through the special dividend, with the Group paying out approximately 5-10% of gross proceeds received from the sale of investments on an annual basis. 

Strategic progress and capabilities

The Group has continued to make good progress in implementing the strategy announced in November last year. In particular, in the period we have added new capabilities and talent to the business, including important appointments in the investment and asset management team which bring additional skills in adjacent greenfield projects and Core-plus businesses, and in sectors such as energy transition and digital infrastructure. These appointments include:

· Angenika Kunne, Director, Investment. Previously Macquarie Capital's Infrastructure business and the Green Investment Group

· Director of Group Asset Management. 30 years of experience in the Infrastructure sector, including in leading infrastructure investment firms investing in and managing PPP projects, Renewable Energy, Core and Core-plus infrastructure businesses

· Niamh McBreen, Director, Asset Management. Previously AMP Capital's Infrastructure business and UK Government Investments, UK Treasury

· Helen Tang, Associate Director, Investment. Previously UBS and Infracapital

Ben Loomes, Chief Executive of John Laing Group plc, commented:

"Q1 was another period of steady and solid performance, building upon the work done last year to re-position and develop the business for future growth. Our PPP & Projects business continues to perform well and contribute to NAV growth.

I am particularly pleased with the momentum in investment activity achieved in the period, with investment commitments to date ahead of plan. The secondary market continues to be buoyant, and during the period we delivered a number of strong realisation results. Importantly, each realisation was achieved at a premium to book value. 

We continue to make good progress with implementing John Laing's strategic priorities, and have made a number of key hires to our European team, with skills and track record in adjacent greenfield projects and Core-plus infrastructure businesses, and in sectors such as energy transition and digital infrastructure. 

The outlook for infrastructure investment is strong. Governments in each of our key markets are looking for infrastructure investment to stimulate economic growth and to modernise their economies, and John Laing is well positioned as a partner with a strong balance sheet, and a proven and long-term track record in developing greenfield infrastructure. 

We continue to be confident in the outlook and are on track to deliver underlying NAV growth in 2021, in-line with our expectations."

ENDS

About John Laing

John Laing is a leading international investor across a range of infrastructure sectors. We seek to deliver attractive and sustainable returns over the medium-term. We are a responsible investor, committed to delivering critical and enduring infrastructure which responds to public needs and improves the lives of the communities we serve.

John Laing has operations in seven countries around the world, and invests in the UK & Europe, North America, Latin America and Australia. We invest in greenfield projects and in businesses which develop and own infrastructure assets. We have invested in over 150 projects and businesses to date, across a range of sectors, including transport, social infrastructure, energy transition, accommodation and digital infrastructure.