Results for the six months ended 30 June 2018

JOHN LAING GROUP PLC

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018

John Laing Group plc (John Laing, the Company or the Group) announces its unaudited results for the six months ended 30 June 2018.

Highlights

· Net asset value (NAV) per share at 30 June 2018 of 307p (31 December 2017 - 281p1)

- 9.3% increase since 31 December 2017

- 11.7% increase including dividend paid in May 2018

· NAV of £1,505.4 million at 30 June 2018 (31 December 2017 - £1,123.9 million)

· £39.2 million in investment commitments (six months ended 30 June 2017 - £111.3 million)2

· Strong pipeline of £2.3 billion of investment opportunities, including 12 shortlisted PPP positions representing c.£325 million of potential investment

· Realisations of £241.5 million from the sale of investments in project companies (six months ended 30 June 2017 - £151.3 million)

· Profit before tax of £174.3 million (six months ended 30 June 2017 - £36.6 million) and earnings per share (EPS) of 38.8p (six months ended 30 June 2017 - 9.4p)3

· Portfolio value at 30 June 2018 of £1,259.7 million representing 18.2% increase on rebased portfolio value4 at 31 December 2017

· Interim dividend of 1.80p per share payable in October 2018 (six months ended 30 June 2017 - 1.75p per share5)

· 1 for 3 rights issue in March 2018 raising £210.5 million, net of costs (the Rights Issue)

· 2018 guidance for investment commitments and realisations maintained

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

"We are pleased with our performance in the first half of 2018. John Laing is growing as an international expert investor in greenfield infrastructure, in Europe, North America, Asia Pacific and beyond. Our pipeline of opportunities continues to grow, whilst our exposure to the UK market continues to reduce. The recent Rights Issue has given us the financial credibility to team up with the best international infrastructure players. At the same time we will retain our risk analysis and investment discipline to continue to grow safely and in a scalable way. Our pipeline should continue to drive our investment growth, whilst the quality of our secondary portfolio and the dynamism of the market for operational assets should continue to fund that growth. The recent reorganisation around our three regions will ensure scalability of our growth and cost base while reinforcing local presence. We are confident about our business model and our future performance."

Notes:

(1) NAV per share at 31 December 2017 of 281p is the previously reported NAV per share of 306p multiplied by the Rights Issue bonus factor6

(2) Based on new investment commitments secured in the six months ended 30 June 2018; for further details see the Primary Investment section of the Business Review

(3) Basic EPS (adjusted for the Rights Issue); see note 7 to the Condensed Group Financial Statements

(4) Rebased portfolio value is described in the Portfolio Valuation section

(5) Interim dividend per share for the six months ended 30 June 2017 of 1.75p is the 1.91p paid in October 2017 multiplied by the Rights Issue bonus factor6

(6) For details of the Rights Issue bonus factor see note 7 to the Condensed Group Financial Statements

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 3936 2999

Other locations: +44 (0) 20 3936 2999

Participant access code: 39 57 10

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

https://www.investis-live.com/john-laing/5b58540205eeee1000fe20b4/thgs 

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

Analyst/investor enquiries:

Media enquiries:

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 aims to create value for shareholders through originating, investing in and managing greenfield 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 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 debt.

Our business, which integrates origination, investment and asset management capabilities, has three 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, 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 Limited (JLCM) which is regulated by the Financial Conduct Authority (FCA).

We focus on three core geographical regions: North America; Asia Pacific; and Europe, including the UK.

Further information is available at www.laing.com.

Notes:

(1) NAV per share at 30 June 2018 calculated as NAV of £1,505.4 million divided by the number of shares in issue at 30 June 2018 of 490.78 million.

(2) NAV per share at 30 June 2017 and 31 December 2017 of 261p and 281p is the previously reported NAV per share of 284p and 306p, respectively, multiplied by the Rights Issue bonus factor9.

(3) Basic EPS (adjusted for the Rights Issue); see note 7 to the Condensed Group Financial Statements.

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

(5) Gross investment portfolio, less shareholding in JLEN valued at £9.7 million (30 June 2017 - £10.1 million; 31 December 2017 - £10.3 million).

(6) Based on published portfolio values of JLIF (£1,378.6 million) and JLEN (£429.5 million) as at 31 March 2018.

(7) Interim dividend per share for the six months ended 30 June 2017 of 1.75p is the 1.91p paid in October 2017 multiplied by the Rights Issue bonus factor9.

(8) The dividends per share for the year ended 31 December 2017 comprise an interim dividend of 1.75p (see note 7 above) and a final dividend of 7.17p paid after the Rights Issue.

(9) For details of the Rights Issue bonus factor see note 7 to the Condensed Group Financial Statements.

BOARD

As part of our succession planning, at the Annual General Meeting in May 2018, Phil Nolan stepped down as Chairman and as a Director of the Company. On the same date, Will Samuel became Chairman.

The Company also announced in May 2018 the appointment of Andrea Abt as a non-executive director. Andrea has also become a member of the Audit & Risk, Remuneration and Nomination Committees.

BUSINESS REVIEW

Overview and outlook

Our NAV increased from £1,123.9 million at 31 December 2017 to £1,505.4 million at 30 June 2018. This is equivalent to 307p per share and represents growth of 9.3% versus NAV per share of 281p per share at 31 December 2017 (as adjusted for the Company's one for three rights issue in March 2018 (the Rights Issue)). The gain on disposal of the Group's remaining 15% investment in Intercity Express Programme (IEP) Phase 1, which was announced in March 2018 and completed in May 2018, was a significant contributor to this performance.

After adding back dividends paid, growth in adjusted NAV per share in the first half of 2018 was 11.7%. In line with our dividend policy, we are declaring an interim dividend for 2018 of 1.80p per share, a 2.9% increase versus 1.75p for 2017 (as adjusted for the Rights Issue bonus factor). For the three years to 31 December 2017, the Company delivered a compound annual growth rate (CAGR) in NAV per share, including dividends paid, of 15.5%.

Our investment portfolio was valued at £1,259.7 million at 30 June 2018, an increase of £65.9 million from £1,193.8 million at 31 December 2017 reflecting principally fair value growth and cash invested, net of realisations completed in the first half (see the Portfolio Valuation section for further details). After adjusting for realisations, cash yield and cash invested into projects in the period, the value of our portfolio increased by £193.9 million or 18.2% of the rebased value. Cash yield from investments of £17.4 million was in line with expectations.

The first half highlights included:

· The Rights Issue which was 97% taken up by shareholders;

· Proceeds of £241.5 million from the disposal of our investments in two PPP projects - IEP Phase 1 and Lambeth Social Housing; and

· Investment commitments of £39.2 million to two PPP projects - MBTA Automated Fare Collection System in Massachusetts and the A16 Road in the Netherlands.

Since 30 June 2018, we have committed £30.0 million to two solar farms in North Carolina.

The Rights Issue has enhanced the Group's standing with its partners and this is reflected in the increased pipeline of opportunities at 30 June 2018. As flagged in the end-June 2018 pre-close update, bidding activity was lower in the early part of 2018, but has since picked up significantly. The Primary Investment teams in each region have been and are actively bidding on a number of projects, while maintaining their focus on investment discipline. We remain confident in our ability to deploy the funds available to us.

Our pipeline of PPP and renewable energy opportunities stood at £2.3 billion at 30 June 2018 (31 December 2017 - £2.15 billion). This included:

· 12 shortlisted PPP bids due to reach financial close in the next two years, representing a total potential investment opportunity of approximately £325 million; and

· Six exclusive renewable energy positions, representing a total potential investment opportunity of approximately £185 million.

Profit before tax in the period was £174.3 million (six months ended 30 June 2017 - £36.6 million). The gain on disposal of the Group's investment in IEP Phase 1 was a significant contributor as referred to above.

Our external Assets under Management grew to £1,808.1 million (31 December 2017 - £1,648.5 million). On 3 August 2018, the Board of JLIF recommended a cash offer for its entire issued share capital from a consortium comprising funds managed by Dalmore Capital Limited and Equitix Investment Management Limited at 142.5p per share plus a dividend of 3.57p per share for the six months ended 30 June 2018. The offer is expected to become effective in late September/early October 2018. During this period, the Group expects to discuss with the acquiring consortium the future of its asset management services to JLIF. As previously disclosed, the Investment Advisory Agreement between JLIF and JLCM is terminable by either side with 12 months' notice.

Looking forward:

· We expect investment commitments to be weighted towards the second half and we are maintaining our full year guidance of approximately £250 million;

· With further sale processes underway, full year guidance for realisations is also maintained at approximately £250 million; and

· We continue to assess (i) other infrastructure classes that might fit our business model and (ii) new geographies where we see potential opportunities to invest alongside established partners at appropriate returns.

Our overall strategy remains to create value for shareholders through originating, investing in and managing greenfield infrastructure assets internationally. In that respect, we see NAV per share growth and dividends as key measures of our success.

Primary Investment

Our Primary Investment portfolio of shareholdings in 12 PPP and 2 renewable energy projects was valued at £636.2 million at 30 June 2018 (31 December 2017 - £580.3 million). The increase resulted principally from cash invested into existing and new projects in the portfolio and the fair value movement in the first half of 2018 (see the Portfolio Valuation section below for further details), net of realisations.

Our Primary Investment teams, operating within each of our core regions, are responsible for the Group's bid development activities. The teams target 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, stadiums, public sector accommodation, broadband and social housing.

During the first half of 2018, the Primary Investment teams successfully made two investment commitments in the PPP sector totalling £39.2 million; £21.7 million in the A16 Road project in the Netherlands and £17.5 million in the MBTA Automated Fare Collection System in Massachusetts, US.

Since 30 June 2018, we have committed £30.0 million to two solar farms in North Carolina. 

Our investment commitments to date in 2018 are summarised in the table below. Since 31 December 2017, we have converted one shortlisted position into an investment (A16 Road, Netherlands) and added four new positions in North America.

At 30 June 2018, our total pipeline of investment opportunities stood at £2,300 million, higher than at 31 December 2017 (£2,150 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 £1,567 million, compared to £1,585 million at 31 December 2017. The renewable energy pipeline at 30 June 2018 was £733 million, compared to £565 million at 31 December 2017.

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 exclusive positions on six renewable energy projects.

As at 30 June 2018, we were part of 12 shortlisted PPP bids as summarised in the table below:

* Since 30 June 2018, this bid has been awarded to another party.

Secondary Investment

At 30 June 2018, our Secondary Investment portfolio comprised investments in 10 PPP projects and 17 renewable energy projects with a book value of £613.8 million (31 December 2017 - £603.2 million). The Secondary Investment portfolio also included a 2.4% shareholding in JLEN valued at £9.7 million (31 December 2017 - 2.5% shareholding valued at £10.3 million). The increase in the Secondary Investment portfolio between 31 December 2017 and 30 June 2018 is primarily due to fair value movements in the period.

During the first half of 2018, one investment, St Martin Wind Farm, transferred from the Primary Investment portfolio to the Secondary Investment portfolio.

Also during the first half, we received proceeds of £241.5 million from realisations (before costs) of two investments, achieving returns consistent with our historic track record:

· Sale of our remaining 15% shareholding in IEP Phase 1 for consideration of £232.0 million, which was in excess of the valuation at 31 December 2017.

· Sale of our 50% shareholding in the Lambeth Social Housing project, announced in late 2017 but not completed until May 2018, with proceeds of £9.5 million.

Our realisations are summarised in the table below:

* A primary investment at the time of the sale.

A number of further disposal processes are currently underway.

Asset Management

We actively manage our Primary and Secondary Investment portfolios and also generate fee income from the provision of (i) Investment Management Services (IMS) to JLIF and JLEN and (ii) Project Management Services (PMS) directly to project companies.

Asset Management teams in each of our core regions actively monitor and manage each project we invest in. A number of these projects are large, sophisticated infrastructure assets, and therefore delays and other issues do occur. In all instances, a judgement as to potential outcomes is taken into account when preparing John Laing's portfolio valuation. Projects include:

· IEP Phase 2, UK - the first trains for the East Coast mainline, which have the same design as IEP Phase 1, are scheduled to be accepted into service in Q4 2018;

· Denver Eagle P3, Colorado, US - the project company has made good progress in H1 2018 to obtain the necessary approvals for the level crossings on the "A" and "G" lines. Subject to final certification, full revenue service is expected to be achieved by the end of the year;

· Optus Stadium (formerly New Perth Stadium), Perth, Australia - the stadium has performed well during a number of high capacity, high profile events in H1 2018, with over 1,000,000 spectators to date. The project was the winner of the 2018 Australian Construction Achievement Award;

· Sydney Light Rail, New South Wales, Australia - the programme is approximately 12 months behind the contract schedule, but remains within the overall long-stop date. Part of the delay is attributable to the presence of below ground utility services not identified before construction commenced. This has led to various claims by the principal contractor, which are currently the subject of negotiations between the contractor and the public sector client, facilitated by the project company;

· New Royal Adelaide Hospital, South Australia - the project company continues to monitor the performance of the facilities management services provider. Whilst performance has been improving, the project company and the South Australian government are currently in discussions about the application of the abatement regime resulting from service under-performance;

· New Generation Rollingstock, Queensland, Australia - whilst the programme is currently behind schedule, a further 18 trains were accepted during the first half of 2018, bringing the total number of accepted trains to 24. The operating performance of the trains in service has been in line with forecast during the period; and

· I-4 Ultimate, Florida, US - this availability-based road project in central Florida is approximately eight months behind the contract schedule. All parties are currently discussing schedule optimisation approaches in order to further mitigate any potential delays.

We earned revenues of £9.4 million from the provision of IMS during the first half of the year (six months ended 30 June 2017 - £9.1 million). These revenues principally represent fees earned from investment advisory agreements with JLIF and JLEN. As at 30 June 2018, John Laing had external Assets under Management, based on the latest published portfolio values of JLIF and JLEN as at 31 March 2018, of £1,808.1 million, a 9.7% increase since 31 December 2017.

We earned revenues of £2.9 million from the provision of PMS during the first half of the year (six months ended 30 June 2017 - £2.8 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.

PORTFOLIO VALUATION

The Group's investments at 30 June 2018 were valued at £1,259.7 million compared to £1,193.8 million at 31 December 2017. After adjusting for realisations, cash yield and cash invested, this represented a positive movement in fair value of £193.9 million (18.2%) on the rebased portfolio valuation:

Cash investment in respect of two new PPP assets entered into during the first half of 2018 totalled £39.2 million. In addition, equity and loan note subscriptions of £91.7 million were injected into existing projects in the portfolio as they progressed through, or completed, construction.

During the first half of 2018, the Group completed the realisation of two investments for a total consideration of £241.5 million. Cash yield on the portfolio during the six months ended 30 June 2018 totalled £17.4 million.

The movement in fair value of £193.9 million is analysed in the table below.

The net benefit of £43.2 million from the change in operational benchmark discount rates for a number of investments is in response to our understanding and experience of the secondary market. The net benefit from value enhancements and other changes of £86.3 million is primarily due to the gain on the disposal of the Group's investment in IEP Phase 1 which completed in May 2018.

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

The increase in the Primary Investment portfolio is due to a positive movement in fair value of £176.8 million, including value enhancements and financial closes achieved during the year, and cash invested of £116.8 million, offset by the transfer to the Secondary Investment portfolio of £5.7 million in relation to St Martin Wind Farm and investment realisations of £232.0 million relating to IEP Phase 1.

Methodology

A full valuation of the investment portfolio is prepared every six months, as at 30 June and 31 December, with a review as at 31 March and 30 September, principally using a discounted cash flow methodology. The two principal inputs are (i) forecast cash flows from investments in projects and (ii) discount rates. 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, a risk premium is added to reflect the additional risk during the construction phase. The construction risk premium reduces 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 is based on future cash flows to and from investments forecast as at 30 June 2018, derived from detailed financial models for each underlying project. These incorporate the Group's expectations of likely future cash flows, which are stated net of project tax where applicable, and therefore reflect changes in tax legislation as at 30 June 2018 in the jurisdictions in which the Group operates, including such changes in the US effective in early 2018. Expectations of future cash flows also include expected value enhancements and the Group's expectations of future macroeconomic factors such as inflation and, for renewable energy projects, power and gas prices.

For the 30 June 2018 valuation, the overall weighted average discount rate was 8.7% compared to the weighted average discount rate at 31 December 2017 of 8.8%. The decrease was primarily due to reductions in operational discount rates for certain investments and progress by projects in construction, partially offset by the impact of new investments. The weighted average discount rate at 30 June 2018 was made up of 9.0% (31 December 2017 - 9.3%) for the Primary Investment portfolio and 7.9% (31 December 2017 - 7.9%) for the Secondary Investment portfolio.

The overall weighted average discount rate of 8.7% is closer to the weighted average discount rate for the Primary Investment portfolio, reflecting 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 2018 and 31 December 2017 were:

The shareholding in JLEN was valued at its closing market price on 30 June 2018 of 103.5p per share (31 December 2017 - 109.25p 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 2018.

Macroeconomic assumptions

During the first half of 2018, updates for actual macroeconomic outcomes and assumptions had a negative impact of £5.4 million on the portfolio valuation. Additionally, as mentioned above, movements of foreign currencies against Sterling over the six months to 30 June 2018 resulted in net adverse foreign exchange movements of £0.9 million (2017 - £3.2 million net favourable foreign exchange movements).

Investments in overseas projects are fair valued based on the spot exchange rate on the balance sheet date. As at 30 June 2018, a 5% movement of each relevant currency against Sterling would decrease or increase the value of investments in overseas projects by c.£40 million.

Based on a sample of five of the larger PPP investments by value at 30 June 2018, a 0.25% increase in inflation is estimated to increase the value of PPP investments by c.£16 million and a 0.25% decrease in inflation is estimated to decrease the value of PPP investments by c.£15 million. Certain of the underlying project companies incorporate some inflation hedging.

On each valuation and review of the portfolio, the Group updates the detailed financial model of each renewable energy project to reflect the impact of the latest forecast power and gas prices on the project's revenue to the extent that prices are not fixed by governmental support mechanisms and/or offtake arrangements. The Group obtains forecasts for power and gas prices from external parties who are recognised as experts in the market in the relevant region, including by potential secondary market buyers. During the first half of 2018, a small decrease in forecast power and gas prices resulted in a £3.4 million adverse fair value movement (2017 - adverse fair value movement of £22.9 million). Based on a sample of six of the larger renewable energy investments by value at 30 June 2018, a 5% increase in power price forecasts is estimated to increase the value of renewable energy investments by c.£9.4 million and a 5% decrease in power price forecasts is estimated to decrease the value of renewable energy investments by c.£9.5 million.

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 2018 was 8.7% (31 December 2017 - 8.8%). The table below shows the sensitivity of a 0.25% change in this rate.

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

by time remaining on project concession/OPERATIONAL 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, 52.9% of the portfolio by value had a greater than 25-year unexpired concession term or useful economic life remaining at 30 June 2018, compared to 62.0% at 31 December 2017. This change was principally as a result of the sale of our interest in IEP Phase 1 in the first half of 2018.

split between PPP and renewable energy

Primary PPP investments made up the largest part of the portfolio, representing 47.6% of the portfolio value at 30 June 2018, with Secondary renewable energy investments representing a further 31.1%.

by revenue type

Availability-based investments continued to make up the majority of the portfolio, representing 58.8% of the portfolio value at 30 June 2018. Renewable energy investments comprise the majority of the volume-based investments. The investment in JLEN, which holds investments in renewable energy and environmental projects, is shown separately.

by sector

Wind and solar investments represented 30.3% of the portfolio value at 30 June 2018, with other transport (excluding rail rolling stock) accounting for a further 27.3%. Rail rolling stock investments made up 22.4% of the portfolio by value, while social infrastructure investments and waste and biomass investments made up 11.0% and 8.2% respectively. The portfolio underlying the JLEN shareholding consists of investments in a mix of renewable energy and environmental projects.

by currency

The percentage of investments denominated in foreign currencies increased from 65.2% to 68.6%. This is consistent with our pipeline and the overseas jurisdictions we target.

by geographical region

Investments in the UK decreased to 30.6% of the portfolio value at 30 June 2018. North America was the next largest category at 26.8%. Investments in projects located in Asia Pacific made up 24.3% and investments in Continental Europe made up 17.5%. 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 41.3% of the portfolio at 30 June 2018, an increase from 39.3% at 31 December 2017. The next five largest investments made up a further 18.6%, with the remaining investments in the portfolio comprising 40.1%.

The valuation ranges for the five largest Primary Investments and the five largest Secondary Investments are shown in the tables below:

Primary

Secondary

At 30 June 2018, the Group's largest investment was its shareholding in IEP Phase 2. Seven out of its ten largest investments were outside the UK.

Investment portfolio as at 30 June 2018

FINANCIAL REVIEW

Basis of preparation

The interim financial information has been prepared on the historical cost basis except for (i) the revaluation of the Group's investment in its subsidiary John Laing Holdco Limited, through which the Group holds its investment portfolio, and (ii) financial instruments that are measured at fair value at the end of each reporting period. The Company concluded that it meets the definition of an investment entity set out in IFRS 10 Consolidated Financial Statements paragraph 27 on the following basis:

(i) as an entity listed on the London Stock Exchange, the Company is owned by a number of investors;

(ii) the Company holds a substantial portfolio of investments in project companies through intermediate holding companies. The underlying projects have a finite life and the Company has an exit strategy for its investments which is either to hold them to maturity or, if appropriate, to divest them. Investments take the form of equity and/or subordinated debt;

(iii) the Group's strategy is to originate, invest in, and manage infrastructure assets. It invests in PPP and renewable energy projects and aims to deliver predictable returns and consistent growth from its investment portfolio. The underlying project companies have businesses and activities that the Group is not directly involved in. The Group's returns from the provision of management services are small in comparison to the Group's overall investment-based returns; and

(iv) the Group measures its investments in PPP and renewable energy projects on a fair value basis. Information on the fair value of investments forms part of monthly management reports reviewed by the Group's Executive Committee, who are considered to be the Group's key management personnel, and by its Board of Directors.

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. 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 when making business decisions, including when reviewing the level of financial resources and deciding where these resources should be utilised. Therefore, the Directors believe it is helpful to readers of these 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 and also comprises income and costs that do not arise directly from investments in this portfolio, including investment fees earned from project companies by recourse subsidiaries that are held at FVTPL.

Notes:

a) Adjustment comprises £1.3 million of finance income reclassified from 'fair value movements - other' to 'finance costs'.

b) Under IAS 19, the costs of the pension schemes, including the post-retirement medical benefits, comprise a service cost of £0.6 million, included in administrative expenses in the Condensed Group Income Statement, and a finance charge of £0.3 million, included in finance costs in the Condensed Group Income Statement. These amounts are combined together under management reporting.

c) For a reconciliation between the Condensed Group Income Statement and re-presented income statement for the six months ended 30 June 2017, refer to the June 2017 Interim Accounts.

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

Profit before tax for the six months ended 30 June 2018 was £174.3 million (2017 - £36.6 million). A significant contributor to the higher profit before tax was the gain on disposal of the interest in IEP Phase 1, which completed in May 2018.

The main profit contributor in the first half of 2018 was the Primary Investment division principally due to the IEP Phase 1 gain.

The higher contribution in the first half of 2018 from the Secondary Investment division was primarily due to the reduction in value of the two Manchester Waste investments of £25.5 million in the first half of 2017 together with a less adverse impact from changes in power and gas price forecasts in the first half of 2018.

The movement in fair value on the portfolio for the six months ended 30 June 2018, after adjusting for investments, cash yield and realisations, was a £193.9 million gain (2017 - £53.3 million gain). The higher value uplift is primarily due to the gain on disposal of the interest in IEP Phase 1, as mentioned above. 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 2018 comprised a £1.2 million loss which primarily related to net foreign exchange losses outside of the investment portfolio of £1.0 million. For the six months ended 30 June 2017, other negative fair value movements of £1.4 million primarily comprised net foreign exchange losses offset by group relief surrendered.

The Group earned IMS revenue of £9.4 million (2017 - £9.1 million) for investment advisory and asset management services primarily to the external funds JLIF and JLEN, with the increase from last year due to higher external Assets under Management.

The Group also earned PMS revenue of £2.9 million (2017 - £2.8 million).

The Group achieved recoveries of bidding costs on financial closes of £3.0 million in the six months ended 30 June 2018 (2017 - £1.4 million).

Staff costs by division are shown below:

Included within Asset Management staff costs are costs relating to:

Total staff costs have remained broadly constant after taking account of inflationary pay increases.

Finance costs of £5.1 million (2017 - £4.7 million) include costs arising on the corporate banking facilities net of any interest income, with the increase from last year primarily due to an increase in facilities in October 2017.

The Group's overall tax expense on profit from operations for 2018 was £0.2 million (2017 - credit of £4.0 million). This comprised a tax expense of £0.5 million (2017 - credit of £0.8 million) in recourse group subsidiary entities that are consolidated (shown in the 'Tax' line of the Condensed Group Income Statement), primarily in relation to deferred tax, and a tax credit of £0.3 million (2017 - £3.2 million credit) 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), comprising 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.

In January 2018, the Group initiated an internal reorganisation under which the Primary Investment and Asset Management teams in each of the three core geographical regions now report to a single regional head. The principal objective behind this revised structure is to enable the Group to focus more effectively on value creation in each region. Accordingly, certain regional performance targets for 2018 have been set, principally in relation to the investment portfolio in each region, including fair value movements thereon.

The fair value movements on the investment portfolio by geographical region are shown in the table below:

Re-presented balance sheet

The re-presented balance sheet is reconciled to the Condensed Group Balance Sheet at 30 June 2018 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 £178.0 million (31 December 2017 - £152.6 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 £1,259.7 million and other assets and liabilities within recourse investment entity subsidiaries of £178.0 million (see note 9 to the Condensed Group Financial Statements).

b) Other assets and liabilities within recourse investment entity subsidiaries of £178.0 million referred to in note (a) include (i) cash and cash equivalents of £176.1 million, of which £134.4 million is held to collateralise future investment commitments, (ii) positive working capital and other balances of £1.5 million and (iii) other small investments at FVTPL not included in the portfolio valuation of £0.4 million.

c) Trade and other receivables (£10.1 million), current tax liabilities (£0.6 million), trade and other payables (£16.4 million) and provisions (£1.5 million) are combined within working capital and other balances.

d) Borrowings of £8.9 million comprise cash borrowings of £11.0 million less unamortised financing costs of £2.1 million, re-presented in working capital and other balances.

e) For a reconciliation between the Condensed Group Balance Sheet and re-presented balance sheet as at 31 December 2017, refer to the 2017 Annual Report and Accounts.

Components of net assets, including reportable segments, are shown in the table below.

Note:

(1) Cash balances of £244.5 million (31 December 2017 - £147.7 million), of which £134.4 million (31 December 2017 - £133.1 million) was held to collateralise future investments commitments, net of short-term cash borrowings of £11.0 million (31 December 2017 - £176.0 million).

The portfolio valuation by geographical region is shown in the table below.

Net assets increased from £1,123.9 million at 31 December 2017 to £1,505.4 million at 30 June 2018 principally as a result of (i) the Rights Issue and (ii) the Group's profitability in the first half of 2018.

The Group's portfolio of investments in project companies and listed investments was valued at £1,259.7 million at 30 June 2018 (31 December 2017 - £1,193.8 million). The valuation methodology and details of the portfolio value are described in the Portfolio Valuation section.

The Group held cash balances of £244.5 million at 30 June 2018 (31 December 2017 - £147.7 million) of which £134.4 million (31 December 2017 - £133.1 million) was held to collateralise future investment commitments (see the Financial Resources section below for more details). Of the total Group cash balances of £244.5 million, £176.1 million was held in recourse subsidiaries held at FVTPL, including the cash collateral balances, that are included within investments at FVTPL on the Condensed Group Balance Sheet. The remaining £68.4 million was held in the Company and recourse subsidiaries that are consolidated and shown as cash and cash equivalents on the Condensed Group Balance Sheet (see the re-presented balance sheet for further details).

Working capital and other balances (a negative amount) were a slightly higher liability primarily because of higher fair value liabilities on foreign exchange hedges offset by higher receivables at 30 June 2018.

The Group operates two defined benefit pension 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.

In December 2016, following a triennial actuarial review of JLPF as at 31 March 2016, a seven-year deficit repayment plan was agreed with the JLPF Trustee. It was agreed to repay the actuarial deficit of £171 million at 31 March 2016 as set out below. The discount rate used for the actuarial deficit is lower than the IAS 19 discount rate (see below).

Under IAS 19, at 30 June 2018, JLPF had a surplus of £21.0 million (31 December 2017 - deficit of £35.2 million) and the Plan had a surplus of £3.0 million (31 December 2017 - surplus of £2.9 million). The liability at 30 June 2018 under the post-retirement medical scheme was £7.5 million (31 December 2017 - £8.0 million).

The pension liabilities in JLPF under IAS 19 are based on a discount rate of 2.75% (31 December 2017 - 2.50%) and long term RPI of 3.10% (31 December 2017 - 3.10%). The amount of the liabilities is dependent on key assumptions, principally: inflation rate, discount rate and life expectancy of members. The discount rate, as prescribed by IAS 19, is based on yields from high quality corporate bonds. The surplus (under IAS 19) as at 30 June 2018 has moved from a deficit at 31 December 2017 primarily as a result of the Group's cash contribution to JLPF of £26.5 million in March 2018 and the higher discount rate.

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 Condensed Group 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 £17.4 million (2017 - £14.7 million) from the investment portfolio and £nil (2017 - £0.4 million) from non-portfolio investments.

Operating cash flow in the six months ended 30 June 2018 was adverse compared to 2017 primarily due to deferred consideration of £2.1 million in relation to the sale of the PMS UK business received in the first half of 2017.

Total operating cash flow was net of a favourable foreign exchange impact of £2.5 million (2017 - adverse impact of £0.1 million).

During the period, cash of £130.9 million (2017 - £57.7 million) was invested in project companies. In the same period, investments in two projects were realised for total proceeds of £241.5 million (2017 - £151.3 million from the realisation of three investments), offset by disposal costs paid of £4.5 million (2017 - £1.7 million).

In the period, the Group made a cash contribution to JLPF of £26.5 million (2017 - £24.5 million).

Dividend payments of £35.2 million in the six months ended 30 June 2018 comprised the final dividend for 2017 (2017 - final dividend for 2016 of £23.1 million).

FINANCIAL RESOURCES

At 30 June 2018, the Group had principal committed corporate banking facilities of £475 million (31 December 2017 - £475 million), expiring in March 2020, which are primarily used to back investment commitments. The Group also had additional liquidity facilities of £50 million (31 December 2017 - £50 million) committed until February 2019. Net available financial resources at 30 June 2018 were £504.0 million (31 December 2017 - £153.1 million).

In July 2018, the Group refinanced its existing borrowing facilities, including additional liquidity facilities, and entered into new facilities totalling £650 million, of which £500 million is committed until July 2023 and £150 million for 18 months until January 2020.

Analysis of Group financial resources

1 Cash and bank deposits exclude cash collateral balances. Of the total cash and bank deposit balances of £110.1 million, £68.4 million was held in the Company and recourse subsidiaries that are consolidated and therefore shown as cash and cash equivalents on the Condensed Group Balance Sheet, with the remaining £41.7 million held in recourse subsidiaries held at FVTPL which are included within investments at FVTPL on the Condensed Group Balance Sheet (see the re-presented balance sheet). 

Letters of credit issued under the committed corporate banking facilities of £91.3 million (31 December 2017 - £152.3 million) and under additional liquidity facilities of £25.2 million (31 December 2017 - £50.0 million) together with cash collateral represent future cash investment by the Group into underlying projects in the Primary Investment portfolio.

The letters of credit issued will reduce and ultimately expire as cash is invested into the underlying projects, expected to be over the period from December 2018 to December 2019.

The table below shows the cash collateral balances at 30 June 2018 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 2018, there was a net adverse fair value movement of £0.9 million in the portfolio valuation. In the first half of 2018, Sterling strengthened against the Euro and Australian and New Zealand Dollars, but weakened 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.

Letters of credit in issue at 30 June 2018 of £116.5 million (31 December 2017 - £202.3 million) are analysed by currency as follows:

Cash collateral at 30 June 2018 of £134.4 million (31 December 2017 - £133.1 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 2018 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's objectives are, inter alia, 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;

· a deterrent to fraud;

· another layer of assurance that the Group is meeting its FCA regulatory requirements; and

· 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 Head of Internal Audit meets regularly with senior management and the Audit & Risk Committee to discuss key findings and management actions undertaken. The 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 Chief Risk Officer, 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, which 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. All divestment decisions are scrutinised by the Divestment Committee and approved 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 2017 Annual Report and Accounts. These risks are not expected to change significantly in the second half of 2018. 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.

As set out in the 2017 Annual Report and Accounts, 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 AuM 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.

CORPORATE RESPONSIBILITY

The John Laing Group remains committed to its corporate responsibility agenda. We are proud of the fact that many of the projects we invest in or have invested in have a positive environmental and/or social impact. These include:

· Renewable energy projects (wind farms, solar farms, biomass and energy-from-waste) which help to reduce CO2 emissions;

· Waste processing plants which divert waste away from landfill;

· Electric rolling stock and light rail transit systems which help to reduce inner city pollution;

· Social housing projects; and

· Hospitals.

The Company encourages staff in each of its three core geographical regions to involve themselves in activities that benefit their local communities, both related and unrelated to projects John Laing might invest in. Amounts raised by John Laing employees through charitable activities are frequently matched by the John Laing Charitable Trust (JLCT), a registered charitable trust which is independent of the Company. During 2018, to celebrate 170 years since John Laing was founded, JLCT plans to increase its donations to staff and project initiatives to up to £1.5 million.

John Laing is an internationally diverse group. The number of staff located outside the UK has been growing and now stands at 40% of our 165 employees at 30 June 2018. In terms of nationality, some 40% are British; the other 100 or so employees come from approximately 25 other nationalities.

The Group recognises it has further work to do on gender diversity. Our overall gender balance was 27% female, 73% male at 30 June 2018. In our central functions (largely UK-based), the split is more even at 41% female, 59% male. We have therefore been focusing in particular on redressing the balance outside the UK by taking a number of positive steps and are pleased that the number of female staff being hired has been increasing. Further initiatives, including "unconscious bias" training and mentoring for female staff across the Group, are being rolled out in the second half of the year.

Related party transactions

Related party transactions are disclosed in note 16 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 2017 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 July 2023 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 2018 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 17. 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 Financial Reporting Council. 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 Guidance 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 Financial Reporting Council 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 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 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

London, United Kingdom

22 August 2018

Condensed Group Income Statement

for the six months ended 30 June 2018

Condensed Group Statement of Comprehensive Income

for the six months ended 30 June 2018

Condensed Group Statement of Changes in Equity

for the six months ended 30 June 2018

for the six months ended 30 June 2017

for the year ended 31 December 2017

1 Dividends paid:

a The interim dividend for 2017 of 1.91p paid in October 2017 becomes 1.75p after adjustment for the Rights Issue.

b The final dividend for 2017 was originally reported in the 2017 Annual Report and Accounts as 8.70p. This was adjusted for the Rights Issue to 7.17p and paid in May 2018.

The total estimated amount to be paid in October 2018 in respect of the proposed interim dividend for 2018 is £8.8 million.

Condensed Group Balance Sheet

as at 30 June 2018

Condensed Group Cash Flow Statement

for the six months ended 30 June 2018

Notes to the Condensed Group Financial Statements

for the six months ended 30 June 2018

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 greenfield 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 2017 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, and the disclosure guidance and transparency rules of the Financial Conduct Authority.

The same accounting policies, presentation and methods of computation are followed in these Condensed Group Financial Statements as were applied in John Laing Group plc's latest annual audited financial statements with the exception that the Group has adopted in these Condensed Group Financial Statements IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments.

2 Accounting policies

Basis of preparation

The Condensed Group Financial Statements have been prepared on the historical cost basis except for (i) the revaluation of the investment portfolio and (ii) financial instruments that are measured at fair value at the end of each reporting period. The Company concluded that it meets the definition of an investment entity set out within IFRS 10 Consolidated Financial Statements, paragraph 27 on the following basis:

(i) as an entity listed on the London Stock Exchange, the Company is owned by a number of investors;

(ii) the Company holds a substantial portfolio of investments in project companies through intermediate holding companies. The underlying projects have a finite life and the Company has an exit strategy for its investments which is either to hold them to maturity or, if appropriate, to divest them. Investments take the form of equity and/or subordinated debt;

(iii) the Group's strategy is to originate, invest in, and manage infrastructure assets. It invests in PPP and renewable energy projects and aims to deliver predictable returns and consistent growth from its investment portfolio. The underlying project companies have businesses and activities that the Group is not directly involved in. The Group's returns from the provision of management services are small in comparison to the Group's overall investment-based returns; and

(iv) the Group measures its investments in PPP and renewable energy projects on a fair value basis. Information on the fair value of investments forms part of monthly management reports reviewed by the Group's Executive Committee, who are considered to be the Group's key management personnel, and by its Board of Directors.

Although the Group has a net defined benefit pension asset, IFRS 10 does not exclude companies with non-investment related assets from qualifying as investment entities.

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 and/or subordinated debt 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".

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

The Group has adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. The adoption of IFRS 15 has had no impact on these Condensed Group Financial Statements as the Group's principal revenue stream is the fair value movement on investments held at FVTPL which is outside the scope of the standard.

The Group does not hold any material financial assets not already held at fair value and therefore credit risk is not considered material. The Group also does not apply hedge accounting. The adoption of IFRS 9 has therefore not had an impact on these Condensed Group Financial Statements.

IFRS 16 Leases is effective from 1 January 2019. The adoption of IFRS 16 will require the Group to bring its operating leases on to the balance sheet. The Group does not have material operating leases and therefore adopting the standard is not expected to have a material impact. Total outstanding commitments under operating leases at 30 June 2018 were £5.8 million.

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, 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 JLIF's and JLEN's portfolios and, until late 2017, 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 following is an analysis of the Group's operating income and profit before tax for the six months ended 30 June 2018 and 2017 and for the year ended 31 December 2017 for each segment: