Results for the 6 months ended 30 June 2017

JOHN LAING GROUP PLC

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017

John Laing Group plc (John Laing or the Company or the Group) announces its unaudited results for the six months ended 30 June 2017.

Highlights

· Net asset value (NAV) of £1,040.4 million at 30 June 2017

- 2.3% increase since 31 December 2016

- 4.6% increase including dividend paid in May 2017

· NAV per share at 30 June 2017 of 284p (31 December 2016 - 277p)1

· £111.3 million in investment commitments (six months ended 30 June 2016 - £76.0 million)2

· Realisations of £151.3 million from the sale of investments in project companies (six months ended 30 June 2016 - £57.7 million)

· Profit before tax of £36.6 million (six months ended 30 June 2016 - £108.3 million) and earnings per share (EPS) of 10.2p (six months ended 30 June 2016 - 29.1p)3

· 7.4% increase in external Assets under Management to £1,582 million4 since 31 December 2016

· Interim dividend of 1.91p per share payable in October 2017 (six months ended 30 June 2016 - 1.85p per share)

· New Royal Adelaide Hospital operational; agreement reached on Manchester Waste

· Strong pipeline, including 11 shortlisted PPP positions

· 2017 guidance for investment commitments and realisations maintained

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

"It has been an active year so far and I am pleased to report growth in NAV, after taking into account the reduction in value on our two Manchester Waste investments. We have made good progress on investment commitments and disposals and are on track to achieve our full year guidance on both fronts. As regards our portfolio, the New Royal Adelaide Hospital reached a key milestone with its commercial acceptance by the Government of South Australia in June, and our team was instrumental in getting to this stage. Looking to the second half and beyond, our teams continue to bring forward a steady stream of new investments, while the asset management teams are actively managing projects through the construction phase. We continue to see strong opportunities for attractive growth in our business by scaling up our model in our three core regions: North America, Asia Pacific and Europe."

Notes:

(1) Calculated as NAV at 30 June 2017 of £1,040.4 million (31 December 2016 - £1,016.8 million) divided by number of shares in issue at 30 June 2017 of 366.96 million (31 December 2016 - 366.92 million)

(2) Based on new investment commitments secured in the six months ended 30 June 2017; for further details see the Primary Investment section of the Business Review

(3) Basic EPS; see note 7 to the Condensed Group Financial Statements

(4) Based on published portfolio values of JLIF and JLEN at 31 March 2017

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.

Conference call dial in details:

UK: 020 3059 8125

Other locations: +44 (0) 20 3059 8125

Participant password: John Laing Conference Call

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

http://www.investis-live.com/john-laing/59775a3ec6702b0a00a35fbe/fgde

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

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 greenfield infrastructure projects. The Group aims to create value for shareholders through originating, investing in and managing infrastructure assets internationally.

We are focused on major transport, energy, social and environmental infrastructure projects in regions of the world where we have expertise and where there is a legal and commercial environment supportive of long-term investment. We hold a portfolio of investments in projects awarded under government backed Public-Private Partnership (PPP) programmes and renewable energy projects and have developed capabilities in other closely linked sectors which have similar operational and financial characteristics.

We typically invest in infrastructure projects at the greenfield, pre-construction stage. We apply our management, engineering and technical expertise and invest equity and subordinated debt into special purpose companies which have rights to the underlying infrastructure asset. These special purpose companies are typically also financed with ring-fenced medium to long-term senior debt.

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 infrastructure projects which are in the construction phase.

· Secondary Investment: we own a substantial portfolio of investments in operational infrastructure 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 external funds, John Laing Infrastructure Fund (JLIF) and John Laing Environmental Assets Group (JLEN), through John Laing Capital Management (JLCM) which is regulated by the Financial Conduct Authority, 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.

Summary financial information

Notes:

(1) Calculated as NAV at 30 June 2017 of £1,040.4 million divided by the number of shares in issue at 30 June 2017 of 366.96 million.

(2) Basic EPS; see note 7 to the Condensed Group Financial Statements.

(3) For further details, see the Primary Investment section of the Business Review.

(4) Gross investment portfolio, less shareholding in JLEN valued at £10.1 million (30 June 2016 - £15.2 million; 31 December 2016 - £10.0 million).

(5) Based on published portfolio values of JLIF and JLEN at 31 March 2017.

BUSINESS REVIEW

Overview and outlook

Our NAV increased from £1,016.8 million at 31 December 2016 to £1,040.4 million at 30 June 2017. This represents growth of 2.3% and is net of a £25.5 million reduction in the value of the Group's two Manchester Waste investments. After adding back last year's final dividend of £23.1 million paid in May 2017, growth in NAV was 4.6%. In line with our dividend policy, we are declaring an interim dividend for 2017 of 1.91p per share, a 3.2% increase versus 2016.

Our investment portfolio was valued at £1,119.3 million at 30 June 2017. After adjusting for realisations, cash yield and new investments made in the period, the value of our portfolio increased by £53.3 million or 5.0%. In absolute terms, the portfolio reduced by £56.6 million from £1,175.9 million at 31 December 2016 reflecting the realisations completed in the first half (see the Portfolio Valuation section for further details) net of fair value growth and cash invested. Cash yield from investments was in line with our expectations.

The first half highlights included:

· Disposal of investments in three projects - A1 Poland, M6 Hungary and Croydon & Lewisham Street Lighting - totalling £151.3 million; and

· Investment commitments to three projects - New Grafton Correctional Centre, Solar House and Hornsdale 3 Wind Farm - totalling £111.3 million.

We have a strong and diversified pipeline of both PPP and renewable energy opportunities and are currently part of 11 shortlisted PPP bids due to close within the next 18 months.

Profit before tax in the period was £36.6 million (six months ended 30 June 2016 - £108.3 million). This was lower than the first half of last year primarily because of the value reduction on the Manchester Waste investments of £25.5 million and the strongly positive foreign exchange movement of £49.4 million in the six months ended 30 June 2016 largely as a result of the EU referendum.

Our external Assets under Management grew to £1,581.7 million (31 December 2016 - £1,472.3 million). Both JLIF and JLEN have grown their portfolios since 31 December 2016.

Since 30 June 2017, we have made a further investment commitment amounting to £47.6 million, giving us a total of £158.9 million year to date. This is consistent with our full year guidance for investment commitments of approximately £200 million, which we are maintaining. Similarly, we are maintaining our guidance that we expect realisations to be at a broadly similar level to our investment commitments.

As regards our two Manchester Waste investments, legally-binding heads of terms have been entered into between the Greater Manchester Waste Disposal Authority (GMWDA), Manchester Waste VL Co (VL Co) and its shareholders, and the operator, Viridor Waste. 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 between VL Co and the GMWDA, as well as acquisition of VL Co 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 Manchester Waste TPS Co (TPS Co - in which John Laing has a 37.43% 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 VL Co, 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 took the view that the alternative could have been long and costly legal proceedings with an uncertain outcome for the valuation of its two investments.

As previously stated, taken together, the fair value of the two investments represented 8% of John Laing's investment portfolio of £1,175.9 million at 31 December 2016. Like all John Laing's investments, the two investments are made on a non-recourse basis.

Looking to the second half and beyond, we continue to see strong opportunities for attractive growth in our business by scaling up our model in our three core regions of North America, Asia Pacific and Europe.

Primary Investment

Our Primary Investment portfolio of shareholdings in 10 PPP and 8 renewable energy projects was valued at £656.5 million at 30 June 2017 (31 December 2016 - £696.3 million). The decrease resulted principally from transfers of investments to the Secondary Investment portfolio once the underlying projects had completed construction (see the Portfolio Valuation section below for further details).

Our Primary Investment team is responsible for all 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, energy storage and biomass), water treatment and waste management; and

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

During the first half of 2017, the Primary Investment team successfully achieved three investment commitments totalling £111.3 million:

· In the PPP sector, we made a £79.3 million investment commitment to the New Grafton Correctional Centre PPP project in New South Wales, Australia;

· In the renewable energy sector, we committed to an onshore wind farm investment for £10.0 million in South Australia, Australia; and to a rooftop solar energy project in France with a total investment commitment of £22.0 million.

Since 30 June 2017, we have committed £47.6 million for a 90% shareholding in the Buckthorn Wind Farm in Texas, US. 

Our investment commitments to date in 2017 are summarised in the table below:

At 30 June 2017, our total pipeline of investment opportunities stood at £1,885 million, a similar level to that as at 31 December 2016 (£1,859 million). The PPP pipeline, which comprises opportunities to invest equity in PPP projects with the potential to reach financial close over the next three years, amounted to £1,383 million, compared to £1,408 million at 31 December 2016.

The renewable energy pipeline at 30 June 2017 was £502 million, compared to £451 million at 31 December 2016.

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.

*includes eight renewable energy projects in exclusive positions.

As at mid-August 2017, we were part of 11 PPP bids which were shortlisted or had preferred bidder status as summarised in the table below:

*John Laing's consortium was chosen as preferred bidder in July 2017.

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 projects which offer support mechanisms, in each of our three geographical regions. In addition, we are continually assessing opportunities in infrastructure sectors linked to our existing PPP and renewable energy sectors.

Secondary Investment

At 30 June 2017, our Secondary Investment portfolio comprised investments in 14 PPP projects and 10 renewable energy projects with a book value of £452.7 million (31 December 2016 - £469.6 million). The Secondary Investment portfolio also included a 2.8% shareholding in JLEN valued at £10.1 million (31 December 2016 - 3.3% shareholding valued at £10.0 million). The decrease in the Secondary Investment portfolio between 31 December 2016 and 30 June 2017 is primarily due to the disposals completed in the first half, net of investments transferring from the Primary Investment portfolio.

During the first half, six investments transferred from the Primary Investment portfolio to the Secondary Investment portfolio:

· Glencarbry Wind Farm

· Hornsdale 2 Wind Farm

· Lambeth Housing

· Llynfi Wind Farm

· New Royal Adelaide Hospital

· Speyside Biomass

Also during the first half, we received proceeds of £151.3 million from realisations of three investments, achieving returns consistent with our historic track record:

· Our investments in two PPP road projects, A1 Poland and M6 Hungary, were sold to third parties for £120.4 million and £22.7 million respectively in March 2017

· Our investment in one PPP project, Croydon and Lewisham Street Lighting, was sold to JLIF in June 2017.

Our realisations are summarised in the table below:

A number of further disposal processes are currently underway.

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.

In South Australia, the New Royal Adelaide Hospital successfully achieved technical completion in mid-March followed by commercial acceptance in mid-June. The investment therefore moved into the Secondary Investment portfolio as at 30 June 2017.

Key projects under construction, which made up 85.3% of the Primary Investment portfolio by value at 30 June 2017, are progressing:

· Intercity Express Programme (IEP), UK - acceptance of the first batch of trains for Phase 1 is expected to occur as scheduled in late 2017;

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

· Denver Eagle P3, Colorado - testing and commissioning of the third line (the G line), together with the overall project, are expected to be completed by the end of 2017;

· New Perth Stadium, Western Australia - construction of the stadium remains on track for completion in advance of the 2018 Australian Football League season;

· Nordergründe offshore wind farm, Germany - installation of the offshore sub-station is scheduled to take place in September 2017 and full operations are due to start later in the year;

· Sydney Light Rail, New South Wales, Australia - the first light rail vehicles have recently arrived in Australia and services are scheduled to begin in the first half of 2019; and

· New Generation Rollingstock, Queensland, Australia - 15 trains at the new purpose built maintenance facility in Queensland are in the final stages of testing. The manufacturer is required to carry out some rectification works to achieve provisional acceptance for the first few trains and all parties are working together to assess the impact on the overall delivery timetable.

We earned revenues of £9.1 million from the provision of IMS during the first half of the year (six months ended 30 June 2016 - £8.0 million). These revenues principally represent fees earned from investment advisory agreements with JLIF and JLEN. As at 30 June 2017, John Laing had external Assets under Management, based on the latest published portfolio values of JLIF and JLEN at 31 March 2017, of £1,581.7 million, a 7.4% increase since 31 December 2016. External Assets under Management also included a small number of PPP investments held by JLPF.

We earned revenues of £2.8 million from the provision of PMS during the first half of the year (six months ended 30 June 2016 - £7.8 million), in respect of administrative and financial services provided under Management Services Agreements directly to project companies in which John Laing, JLIF or JLEN are investors. The UK activities of PMS sold to HCP Management Services Limited (HCP) in November 2016 contributed £4.7 million of the £7.8 million PMS revenues for the six months ended 30 June 2016.

PORTFOLIO VALUATION

The portfolio valuation at 30 June 2017 was £1,119.3 million compared to £1,175.9 million at 31 December 2016. After adjusting for realisations, cash yield and cash invested, this represented a positive movement in fair value of £53.3 million (5.0%):

Cash investment in respect of two new renewable energy investments entered into during the first half of 2017 totalled £10.8 million. In addition, equity and loan note subscriptions of £45.3 million were injected into existing projects in the portfolio as they progressed through, or completed, construction.

During the first half of 2017, the Group completed the realisation of three investments for a total consideration of £151.3 million. Cash yield on the portfolio during the first half of 2017 totalled £14.7 million.

The movement in fair value of £53.3 million is analysed in the table below. The fair value movement includes a net benefit of £20.2 million from the amendment of benchmark discount rates for a number of investments in response to our understanding and experience of the secondary market.

Value enhancements and other changes in the table above include a reduction in the valuation of the Group's two Manchester Waste investments of £25.5 million compared to their valuation at 31 December 2016.

The net movement in fair value comprised unwinding of discounting (£37.8 million), the reduction of construction risk premia (£21.6 million), the reduction in operational benchmark discount rates (£20.2 million) and favourable foreign exchange movements of £3.2 million, offset by adverse movements from lower power and gas price forecasts (£22.9 million), adverse movements in macroeconomic forecasts (£2.1 million) and net value enhancements (including uplift on financial closes of new investment commitments) and other negative changes (£4.5 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 decrease in the Primary Investment portfolio is due to transfers to the Secondary Investment portfolio of £166.7 million offset by a movement in fair value of £71.6 million, including value enhancements and financial closes achieved during the period, and cash invested of £55.3 million.

The decrease in the Secondary Investment portfolio is due to investment realisations during the year of £151.3 million, a negative movement in fair value of £18.3 million and cash yield of £14.7 million offset by transfers from the Primary Investment portfolio of £166.7 million and cash invested of £0.8 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 operational stage.

The discounted cash flow valuation was based on future cash distributions from projects forecast as at 30 June 2017, 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 2017 valuation, the overall weighted average discount rate was 8.6% compared to the weighted average discount rate at 31 December 2016 of 8.9%. The decrease was primarily due to reductions in operational benchmark discount rates for certain investments. The weighted average discount rate at 30 June 2017 was made up of 8.9% (31 December 2016 - 9.1%) for the Primary Investment portfolio and 7.8% (31 December 2016 - 8.4%) for the Secondary Investment portfolio.

The overall weighted average discount rate of 8.6% 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 discount rate ranges used in the portfolio valuation at 30 June 2017 were as set out below:

The shareholding in JLEN was valued at its closing market price on 30 June 2017 of 107.75p per share (31 December 2016 - 106p 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 2017.

Macroeconomic assumptions

During the first half of 2017, lower than previously forecast actual inflation and deposit rates receivable on cash balances within projects had a slight net 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, movements of foreign currencies against Sterling over the six months to 30 June 2017 resulted in net favourable foreign exchange movements of £3.2 million (excluding the effect of foreign exchange hedges as described in the Financial Review section) (six months ended 30 June 2016 - £49.4 million net favourable foreign exchange movement).

Investments in overseas projects are fair valued based on the spot exchange rate on the balance sheet date. As at 30 June 2017, a 5% movement of each relevant currency against Sterling would decrease or increase the value of investments in overseas projects by c.£30 million.

At 30 June 2017, based on a sample of five of the larger PPP investments by value, a 0.25% increase in inflation is estimated to increase the value of PPP investments by £16 million and a 0.25% decrease in inflation is estimated to decrease the value of PPP investments by £15 million. Certain of the underlying project companies incorporate some inflation hedging.

A 5% increase or decrease in power price forecasts is estimated to increase or decrease the total portfolio valuation at 30 June 2017 by 1.0%.

The table below summarises the main macroeconomic assumptions used in the portfolio valuation:

Discount rate sensitivity

The weighted average discount rate applied at 30 June 2017 was 8.6% (31 December 2016 - 8.9%). The table below shows the sensitivity of each 0.25% change in this rate of up to plus or minus 0.75%.

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, 60.0% of the portfolio by value had a greater than 25-year unexpired concession term or useful economic life remaining at 30 June 2017, compared to 53.6% at 31 December 2016. The investment in JLEN, which represented 0.9% (31 December 2016 - 0.9%) 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 49.7% of the portfolio valuation at 30 June 2017, with Secondary PPP investments representing a further 21.9%.

by revenue type

Availability-based investments continued to make up the majority of the portfolio, representing 69.0% of the portfolio valuation at 30 June 2017. 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

Rail rolling stock investments made up the largest proportion of the portfolio valuation, representing 29.6% of the portfolio at 30 June 2017, with transport sector investments (excluding rail rolling stock) accounting for a further 22.8%. Wind and solar investments made up 26.3% of the portfolio by value, social infrastructure investments - 12.9% and waste and biomass investments - 7.5%. 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 decreased slightly from 56.6% to 55.1% reflecting the realisation of two overseas investments in the first half, net of new investment commitments outside the UK.

by geographical region

Investments in the UK continued to make up the largest single region in the portfolio valuation, representing 44.0% of the portfolio at 30 June 2017. Investments in projects located in the Asia Pacific region increased to 24.5% to become the next largest category. Investments in North America made up 12.0% and investments in Europe 18.6%. 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 45.2% of the portfolio at 30 June 2017. The next five largest investments made up a further 18.2%, with the remaining investments in the portfolio comprising 35.7%. The shareholding in JLEN made up 0.9% of the portfolio.

Investment portfolio as at 30 June 2017

* Commercial close (reached financial close on 21 July 2017)

FINANCIAL REVIEW

Basis of preparation

The interim financial information has been prepared on the historical cost basis except for the revaluation of the Group's investment in John Laing Holdco Limited through which the Group holds its 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 to John Laing beyond its 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".

Re-presented financial RESULTS

As described above, the Company meets the criteria for being an investment entity under IFRS 10 and accordingly the Company is required to fair value its investments in its subsidiaries, joint ventures and associates except for those directly-owned subsidiaries that provide investment-related services, and do not themselves qualify as Investment Entities; it consolidates such subsidiaries on a line by line basis.

Included within the subsidiaries that the Company fair values in its financial statements are recourse subsidiaries through which the Company holds its investments in non-recourse project companies. These recourse subsidiaries have, in addition to investments in non-recourse project companies, other assets and liabilities, including recourse cash balances, which are included within the Company's investments at FVTPL. For management reporting purposes, these other assets and liabilities are reported separately from the investments in non-recourse project companies as are certain income and costs that do not arise directly from these investments in project companies. Under management reporting, it is the investments in non-recourse project companies that are considered as investments of the Group.

The Directors of the Company use the management reporting basis, including when reviewing the level of financial resources and deciding where these resources should be utilised, when making business decisions. Therefore, the Directors believe it is helpful to readers of the Company's financial statements to set out in this Financial Review the Condensed Group Income Statement, the Condensed Group Balance Sheet and the Condensed Group Cash Flow Statement on the management reporting basis. When set out on the management reporting basis, these statements are described as "re-presented".

Re-presented income statement

Preparing the re-presented income statement involves a reclassification of certain amounts within the Condensed Group Income Statement principally in relation to the net gain on investments at FVTPL. The net gain on investments at FVTPL in the Condensed Group Income Statement includes fair value movements from the portfolio of investments in non-recourse project companies but also comprises income and costs that do not arise directly from investments in this portfolio, including investment fees earned from project companies.

Notes:

a) Adjustment comprises reclassifying costs incurred in relation to divestments from 'other net income/(costs)' to 'fair value movement - other'.

b) Adjustment comprises reclassifying the deferred proceeds received in 2017 from the sale of the UK PMS activities in November 2016 from 'other income' to 'other net income/(costs)'.

c) Under IAS 19, the costs of the pension schemes, including the post-retirement medical benefits, comprise a service cost of £0.6 million (2016 - £0.7 million), included in administrative expenses in the Condensed Group Income Statement, and a finance charge of £0.7 million (2016 - £0.8 million), included in finance costs in the Condensed Group Income Statement. These amounts are combined together under management reporting.

d) For a reconciliation between the Condensed Group Income Statement and re-presented income statement for the six months ended 30 June 2016, please see the Additional Financial Information.

The results for the period are also shown by operating segment in the table below.

Profit before tax for the six months ended 30 June 2017 was £36.6 million (2016 - £108.3 million). The main reasons for the lower profit before tax were the value reduction on the two Manchester Waste investments of £25.5 million and the positive foreign exchange movement in the first half last year of £49.4 million compared to £3.2 million in the first half this year.

· The main profit contributor in the first half of 2017 was the Primary Investment division. Its contribution was higher than last year primarily because of a higher fair value movement, which in turn was principally as a result of higher value enhancements and other changes to project cash flows offset by foreign exchange movements adverse to the first half of 2016 by £29.1 million.

· The lower contribution in the first half of 2017 from the Secondary Investment division was primarily due to the reduction in value of the two Manchester Waste investments of £25.5 million and foreign exchange movements adverse to the first half of 2016 of £17.1 million.

· The lower contribution in the first half of 2017 from the Asset Management division was principally due to lower fee income from PMS as a result of the sale of the UK activities of PMS in late 2016 offset by higher fee income from IMS as a result of increased external Assets under Management.

The movement in fair value on the portfolio for the six months ended 30 June 2017, after adjusting for the impact of investments, cash yield and realisations, was a £53.3 million gain (2016 - £128.2 million gain). The lower value uplift is primarily due to positive foreign exchange movements in the first half of 2016 and the reduction in the value of the two Manchester Waste investments, as detailed above. The fair value movement also reflects the impact of lower power and gas price forecasts of £22.9 million (six months ended 30 June 2016 - £16.3 million). For further details of the movement in fair value on the portfolio, see the Portfolio Valuation section.

Other fair value movements for the six months ended 30 June 2017 comprised a £1.4 million loss which included net foreign exchange losses of £4.1 million (see the foreign currency exposure section in this Financial Review for further details) offset by £3.2 million of income for group relief surrendered. For the six months ended 30 June 2016, other negative fair value movements of £9.1 million primarily comprised net foreign exchange losses.

The Group earned IMS revenue of £9.1 million (2016 - £8.0 million) for investment advisory and asset management services primarily to the external funds JLIF and JLEN, with the increase from last year due to the higher level of external Assets under Management.

The Group also earned PMS revenue of £2.8 million (2016 - £7.8 million). On 30 November 2016, the Group completed the sale of the business and assets of its PMS activities in the UK to HCP. The activities sold contributed approximately £4.7 million of the £7.8 million PMS revenues for the six months ended 30 June 2016.

The Group achieved recoveries of bidding costs on financial closes of £1.4 million in the six months ended 30 June 2017 (2016 - £1.0 million).

Staff costs by division are shown below:

Included within Asset Management staff costs are costs relating to:

The slight increase in staff costs was principally due to higher costs under IFRS 2 of share-based incentive schemes with costs in the six months ended 30 June 2017 of £1.6 million compared to £1.0 million in the same period in 2016, offset by lower PMS costs. There is a corresponding credit for the IFRS 2 charge in the Condensed Group Statement of Changes in Equity. See note 8 to the Condensed Group Financial Statements for further details on the share-based incentive schemes.

Finance costs of £4.7 million (2016 - £2.9 million) include costs arising on the corporate banking facilities net of any interest income, with the increase from last year primarily due to a lower level of borrowings in the first half of 2016 and the £50 million increase in facilities in June 2016.

The Group's overall tax credit on profit on continuing activities for 2017 was £4.0 million (2016 - credit of £2.9 million). This comprised a tax credit of £0.8 million (2016 - charge of £1.6 million) 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 £3.2 million (2016 - £4.5 million) 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 (i) group relief with recourse group subsidiary entities that are consolidated, together with (ii) group/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.

A second UK 2017 Finance Bill has been announced and draft provisions published, including provisions to restrict tax deductible interest to 30% of a UK company's earnings before interest, tax, depreciation and amortisation (EBITDA) effective from 1 April 2017. This follows a consultation by HM Treasury in 2016 on Base Erosion and Profit Shifting (BEPS) to which the Company responded as part of industry representative forums. The Company holds a provision as at 30 June 2017 for the estimated impact of the proposed legislation; this provision is not material in the context of the Company's net asset value at this date.

Re-presented balance sheet

The re-presented balance sheet is reconciled to the Condensed Group Balance Sheet at 30 June 2017 below. The re-presented balance sheet involves the reclassification of certain amounts within the Condensed Group Balance Sheet principally in relation to assets and liabilities of £27.4 million (31 December 2016 - £81.6 million) within certain of the Company's recourse subsidiaries that are included in investments at FVTPL in the Condensed Group Balance Sheet as a result of the requirement under IFRS 10 to fair value investments in these subsidiaries.

Notes:

a) Investments at fair value through profit or loss (FVTPL) comprise: portfolio valuation of £1,119.3 million (31 December 2016 - £1,175.9 million) and other assets and liabilities within recourse investment entity subsidiaries of £27.4 million (31 December 2016 - £81.6 million) (see note 9 to the Condensed Group Financial Statements). Re-presented cash and cash equivalents increased from £1.7 million (31 December 2016 - £1.6 million) on the Condensed Group Balance Sheet because of the inclusion of available cash balances in recourse group investment subsidiaries of £3.9 million (31 December 2016 - £51.5 million) excluding cash collateral balances of £20.5 million (31 December 2016 - £23.7 million); see the Financial Resources section in this Financial Review.

b) Other assets and liabilities within recourse investment entity subsidiaries of £27.4 million (31 December 2016 - £81.6 million) referred to in note (a) include (i) cash and cash equivalents of £24.4 million (31 December 2016 - £75.2 million), of which £20.5 million (31 December 2016 - £23.7 million) is held to collateralise future investment commitments, (ii) positive working capital and other balances of £2.7 million (31 December 2016 - £6.1 million) and (iii) other small investments at FVTPL not included in the portfolio valuation of £0.3 million (31 December 2016 - £0.3 million).

c) Plant and equipment and deferred tax assets are combined as other long term assets together with the non-current portion of unamortised financing costs disclosed in note e) below.

d) Trade and other receivables, current tax liabilities, trade and other payables and provisions are combined as working capital and other balances.

e) Borrowings comprise cash borrowings of £64.7 million (31 December 2016 - £165.0 million) net of unamortised financing costs of £3.0 million (31 December 2016 - £3.6 million), with the non-current portion of £1.8 million (31 December 2016 - £2.4 million) re-presented as other long term assets and the current portion of £1.2 million (31 December 2016 - £1.2 million) re-presented as working capital and other balances.

f) Total retirement benefit obligations are shown in their separate components as in note 11 to the Condensed Group Financial Statements.

g) For a reconciliation between the Condensed Group Balance Sheet and re-presented balance sheet as at 31 December 2016, please refer to the 2016 Annual Report and Accounts.

Net assets are also shown by operating segment in the table below.

Note:

(1) Short-term cash borrowings of £64.7 million (31 December 2016 - £165.0 million) net of cash balances of £26.1 million (31 December 2016 - £76.8 million), of which £20.5 million (31 December 2016 - £23.7 million) was held to collateralise future investments commitments.

Net asset value increased from £1,016.8 million at 31 December 2016 to £1,040.4 million at 30 June 2017.

The Group's portfolio of investments in project companies and listed investments was valued at £1,119.3 million at 30 June 2017 (31 December 2016 - £1,175.9 million). The valuation methodology and details of the portfolio value are provided in the Portfolio Valuation section.

The Group held cash balances of £26.1 million at 30 June 2017 (31 December 2016 - £76.8 million) of which £20.5 million (31 December 2016 - £23.7 million) was held to collateralise future investment commitments (see the Financial Resources section below for more details).

Working capital and other balances (a negative amount) were slightly lower primarily because of higher receivables as a result of increased fund management fees and lower provisions at 30 June 2017, offset by a lower fair value at 30 June 2017 on foreign exchange hedges.

The combined accounting deficit in the Group's defined benefit pension and post-retirement medical schemes at 30 June 2017 was £38.2 million (31 December 2016 - £69.3 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. Under IAS 19, at 30 June 2017, JLPF had a deficit of £32.9 million (31 December 2016 - £64.2 million) whilst the Plan had a surplus of £2.8 million (31 December 2016 - £2.9 million). The liability at 30 June 2017 under the post-retirement medical scheme was £8.1 million (31 December 2016 - £8.0 million).

The pension deficit in JLPF is based on a discount rate applied to pension liabilities of 2.70% (31 December 2016 - 2.80%) and long term RPI of 3.2 % (31 December 2016 - 3.2%). 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. The deficit (under IAS 19) has decreased since the year end primarily as a result of the Group's cash contribution to JLPF of £24.5 million in March 2017.

In December 2016, following a triennial actuarial review of the JLPF as at 31 March 2016, a seven-year deficit repayment plan was agreed with the JLPF Trustee. The actuarial deficit of £171 million at 31 March 2016 is to be repaid through annual contributions as follows:

Re-presented cash flow statement

The Condensed Group Cash Flow Statement includes the cash flows of the Company and certain recourse subsidiaries that are consolidated (Service Companies). The Group's recourse investment entity subsidiaries, through which the Company holds its investments in non-recourse project companies, are held at fair value in the financial statements and accordingly cash flows relating to investments in the portfolio are not included in the Condensed Group Cash Flow Statement. Investment-related cash flows are disclosed in note 9 to the financial statements.

The re-presented cash flow statement shows all recourse cash flows that arise in both the consolidated group (the Company and its consolidated subsidiaries) and in the recourse investment entity subsidiaries.

Cash yield comprised £14.7 million (2016 - £18.3 million) from the investment portfolio and £0.4 million (2016 - £0.9 million) from non-portfolio investments.

Operating cash flow in the six months ended 30 June 2017 was less adverse than in 2016 primarily due to lower staff costs (in cash terms) and lower payments in relation to provisions.

Total operating cash flow was net of an adverse foreign exchange impact of £0.1 million (2016 - adverse impact of £3.5 million).

During the period, cash of £57.7 million (2016 - £53.5 million) was invested in project companies comprising £56.1 million into the investment portfolio and a £1.6 million advance payment for a future investment commitment. In the same period, investments in three projects were realised (including one investment to JLIF and two investments to third parties) for total proceeds of £151.3 million (2016 - £57.7 million from the realisation of two investments).

In the period, the Group made a cash contribution to JLPF of £24.5 million (2016 - £18.1 million).

Dividend payments of £23.1 million in the six months ended 30 June 2017 comprised the final dividend for 2016 (2016 - final dividend for 2015 of £19.4 million).

FINANCIAL RESOURCES

At 30 June 2017, the Group had principal committed corporate banking facilities of £400.0 million (31 December 2016 - £400.0 million), expiring in March 2020, which are primarily used to back investment commitments. The Group also had surety facilities of £50.0 million backed by committed liquidity facilities expiring in March 2018. Net available financial resources at 30 June 2017 were £187.9 million (31 December 2016 - £168.1 million).

Analysis of Group financial resources

1 Cash and bank deposits excluding cash collateral balances

Letters of credit issued under the committed corporate banking facilities of £150.0 million (31 December 2016 - £112.6 million) and under additional surety facilities of £50.0 million (31 December 2016 - £50.0 million) and cash collateral together represent future cash investments by the Group into underlying projects in the Primary Investment portfolio.

The table below shows the letters of credit in issue 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 2017 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.

There are significant non-recourse borrowings within the project companies in which the Group invests. The interest rate exposure on the borrowings of such project companies is, in most 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 is not material in the context of the Condensed Group Balance Sheet.

FOREIGN CURRENCY EXPOSURE

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 2017, there was a net favourable fair value movement of £3.2 million in the portfolio valuation, £3.0 million of which represented a gain on the divestment of the Group's investment in the A1 Poland project where the proceeds were hedged (see below). In the first half, Sterling weakened against the Euro and Australian and New Zealand Dollars between 31 December 2016 and 30 June 2017, but strengthened against the US Dollar.

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. In the first half of the year, there was a net loss of £4.1 million from foreign exchange movements outside the portfolio, which was primarily as a result of a loss of £3.0 million on forward foreign exchange contracts taken out to hedge the proceeds from the divestment of the Group's investment in the A1 Poland project, which was completed in the first half of 2017.

Letters of credit in issue at 30 June 2017 of £200.0 million (31 December 2016 - £162.6 million) are analysed by currency as follows:

Cash collateral at 30 June 2017 of £20.5 million (31 December 2016 - £23.7 million) is 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 Group's risk appetite when making decisions on investment commitments or potential realisations is assessed by reference to the expected impact on NAV.

The principal internal controls that operated throughout the first half of 2017 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 financial controls relevant to the audit.

The Group's Internal Audit function has several objectives, in particular:

· to provide independent assurance to the Board, through the Audit & Risk Committee, that internal control processes, including those related to risk management, are relevant, fit for purpose, effective and operating throughout the business;

· to provide a deterrent to fraud and to provide another layer of assurance that the Group is meeting its FCA regulatory requirements; and

· to provide advice on efficiency improvements to internal control processes.

Internal Audit is independent of the business and reports functionally to the Group Finance Director and directly to the Chairman of the Audit & Risk Committee. The Group Head of Internal Audit meets regularly with senior management and the Audit & Risk Committee to discuss key findings and management actions undertaken. 

The Group Head of Internal Audit can call a meeting with the Chairman of the Audit & Risk Committee at any time and meets privately with the Audit & Risk Committee, without senior management present, as and when required, but at least annually. 

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 Head of Internal Audit attends each meeting of the Management Risk Committee. It reports formally to the Audit & Risk Committee.

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 2016 Annual Report and Accounts. These risks are not expected to change significantly in the second half of 2017. 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.

The Group's three strategic objectives 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 Assets under Management and related fee income.

3. Management and enhancement of the Group's investment portfolio, with a clear focus on active management during construction, 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 15 to the Condensed Group Financial Statements.

There have been no other related party transactions in the first six months of the financial year or the comparative period in 2016 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 Group Financial Statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and

· The Business Review 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 2017 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 16. 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 2017 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

Statutory Auditor

London, United Kingdom

23 August 2017

Condensed Group Income Statement

for the six months ended 30 June 2017

Condensed Group Statement of Comprehensive Income

for the six months ended 30 June 2017

The only movement which could subsequently be recycled to the Condensed 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 2017

for the six months ended 30 June 2016

for the year ended 31 December 2016

Condensed Group Balance Sheet

as at 30 June 2017

Condensed Group Cash Flow Statement

for the six months ended 30 June 2017

Notes to the Condensed Group Financial Statements

for the six months ended 30 June 2017

1 General information

The 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 Condensed Group Financial Statements are presented in Sterling and have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

The financial information for the year ended 31 December 2016 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. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006. The annual financial statements of John Laing Group plc are prepared in accordance with IFRS as adopted by the European Union. The Condensed Group Financial Statements included in this half-yearly financial report have been prepared in accordance with, and contain the information required by IAS 34 Interim Financial Reporting, as adopted by the European Union, as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, and the Financial Pronouncements as issued by the Financial Reporting Standards Council.

The same accounting policies, presentation and methods of computation are followed in the Condensed Group Financial Statements as were applied in John Laing Group plc's latest annual audited financial statements.

2 Accounting policies

Basis of preparation

The Condensed Group Financial Statements have 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.

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 Group Financial Statements.

Changes in accounting policies

There have been no changes to the accounting policies followed in the Condensed Group Financial Statements since the 2016 Annual Report and Accounts.

3 Operating segments

Information is reported to the Group's Board (the chief operating decision maker under IFRS 8 Operating Segments) 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 Operating Segments, are: Primary Investment, Secondary Investment and Asset Management.

The results included within each of the reportable segments comprise:

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

· 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 and the PPP assets in JLPF's portfolio plus fee income and associated costs from Project Management Services.

The Board's primary measure of profitability for each segment is profit before tax. The Board does not monitor on an ongoing basis the results of the Group on a geographical basis. An analysis of the Group's portfolio valuation by foreign currency can be found in the Portfolio Valuation section.

The following is an analysis of the Group's operating income and profit before tax for the six months ended 30 June 2017 and 2016 and for the year ended 31 December 2016: