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Laing(John) PLC (LNGO)

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Monday 21 March, 2005

Laing(John) PLC

Final Results

Laing(John) PLC
21 March 2005


Monday 21 March 2005

John Laing today announces results for the year to 31 December 2004. John Laing
is now well established as a leading project developer and investor in the PFI/
PPP sector in the UK and increasingly in mainland Europe.


Results Overview                     2004               2003                  %
                                                                       increase
--------------------------------------------------------------------------------
Turnover                          £480.7m            £481.5m                 -
--------------------------------------------------------------------------------
Profit before taxation             £25.1m             £21.2m               +18%
--------------------------------------------------------------------------------
Earnings per share - basic           4.9p               3.1p               +58%
--------------------------------------------------------------------------------
Dividend per share                   3.3p               3.0p               +10%
--------------------------------------------------------------------------------

Strong financial performance
     
•    Higher profits from core investment businesses - profit before taxation up 
     43% to £23.4m (2003 - £16.4m)*
•    Improved profitability from all three core sectors - Equion, Laing Roads and
     Laing Rail

Growing Investment portfolio

•    Portfolio valuation increased by over 20% to £301.2m from £250.3m as at 31
     December 2003 - an underlying growth of 18% after adjusting for 
     acquisitions, sales and cash distributions
•    Portfolio extended to 42 projects of which 24 are fully operational
•    Preferred bidder on projects with a capital value of £3.3bn

Excellent prospects for growth

•    Growing pipeline of opportunities in the UK and European infrastructure
     markets
•    Strong joint venture partnerships established and supporting bids - JV with
     Commonwealth Bank of Australia to invest in UK health and European roads
     projects, ExcellCare, Regenter, London & Western
•    Secondary market for PFI/PPP investments showing signs of maturity with an
     increasing number of transactions taking place

Bill Forrester, Chairman of John Laing plc commented

"I am pleased to report another year of strong performance from John Laing. Our
focus on public service accommodation, roads and rail has proved to be a sound
basis for significant growth. We remain committed to a strategy of delivering
sustainable project earnings and cash returns, together with continuing growth
in value of the infrastructure assets developed and managed by the Group"

Enquiries:
John Laing plc                                            020 7901 3200
Andy Friend, Chief Executive Officer
Adrian Ewer, Finance Director
Finsbury                                                  020 7251 3801
Edward Orlebar / Robin Walker

The Company's presentation to analysts will be available from the website
www.laing.com by 3pm today

The Company will issue an explanatory booklet to all shareholders on the
implications of IFRS convergence and will brief analysts on implementation of
IFRS on 20 April 2005

*Profit before tax from core investment businesses excludes results of non-core
businesses; retained businesses £1.6m (2003 - £0.3m) and discontinued businesses
of £0.1m (2003 - £4.5m). Refer note 3.



CHAIRMAN'S STATEMENT

I am pleased to report that 2004 saw a continuation of our strong performance
and our focus on public service accommodation, roads and rail has proved to be a
sound basis for significant growth.

During 2004 we were able to create new partnerships and pursue innovative
solutions against a background of continuing Government commitment to investment
in public services, and increasing appreciation that infrastructure investment
is creating an asset class of significance for the future. At the same time the
growing international interest in PFI/PPP is facilitating our entry into new
markets.

Your Board remains committed to a strategy of delivering sustainable project
earnings together with continuing growth in value of the infrastructure assets
developed and managed by the Group.

RESULTS AND TRADING

The Group profit before tax for the year ended December 2004 was £25.1 million,
compared to £21.2 million in the prior year.
The profit before tax attributable to the core continuing businesses increased
by 43% to £23.4 million compared to £16.4 million in the prior year.

This result reflects underlying growth in the profitability of the investments
portfolio. It was achieved after allowing for increases in business development
and asset management expenditure and costs relating to an expanded programme of
bidding.

Equion, our accommodation business, increased profit before tax to £13.7 million
(2003 - £10.5 million) as a result of bringing more projects into the operating
phase, at which point revenues commence. In particular, the Ministry of Defence
Main Building was completed in July 2004, ahead of scheduled time and on budget.

Laing Roads saw growth in underlying profit before tax to £6.9 million (2003 -
£6.0 million, excluding disposals) and, in addition, generated a net profit of
£6.4 million from the purchase and sale of a 50% interest in M40 road.

Laing Rail improved profit before tax to £9.5 million on normal operations (2003
- £8.9 million) as a result of revenue growth on the Chiltern Line. In addition,
a profit of £2.9 million was realised from the sale of a development site
adjacent to the station at Aylesbury.

DIVIDENDS

Shareholder returns from the Group's principal infrastructure development and
operations businesses derive from capital as well as earnings growth, and the
John Laing dividend policy now reflects this in accordance with our aim of
establishing a platform for future growth.

For the year ended 31 December 2004 the Board is recommending a final dividend
of 2.2 pence per Ordinary Share (2003 - 2.0 pence), bringing the total for the
year to 3.3 pence per Ordinary Share (2003 - 3.0 pence). Subject to shareholder
approval, the final dividend will be paid on 1 June 2005 to shareholders
registered at the close of business on 1 April 2005.

PORTFOLIO REVIEW AND VALUATION

At the year end, our portfolio included 42 project interests of which 24 are
fully operational and a further 7 partially operational.

Operational projects continue to perform well, with the risk management
strategies embedded in our approach to sourcing construction and ongoing service
activities proving robust. The value of the portfolio remains heavily weighted
towards less risky projects with availability based payment mechanisms. Our most
significant exposure to volume risk relates to Chiltern Railways where, once
again, both passenger revenues and profits grew ahead of expectations during
2004.

A valuation exercise has been conducted in line with the methodology which we
have consistently applied since 2000 and the application of that methodology has
been independently validated by Ernst & Young LLP. The results indicate a
portfolio valuation of £301.2 million, an 18% growth over the December 2003
valuation after intervening transactions are taken into account.

ACQUISITIONS AND DISPOSALS

After several years in which Group restructuring saw a series of major disposals
matched by acquisition of two significant PFI portfolios (from Hyder and Amey),
2004 was a year that focussed primarily on organic growth of our key project
interests.

As an existing shareholder in the successful M40 road project, we acquired the
remaining 50% interest from Carillion in June 2004 for £19.7 million. Following
management action to optimise the project structure, we disposed of a 50%
interest in the project for £26.3 million to the Secondary Market Infrastructure
Fund in October 2004 resulting in a £6.4 million profit after costs. This
transaction was a further demonstration of liquidity in a now competitive
secondary market for project investments.

During the first half, Laing Rail realised £2.9 million profit from the disposal
of its 50% interest in a development site identified as a result of Chiltern
Railway activity and assembled for housing by the Transcend joint venture with
Kier Property.

JOINT VENTURES

More broadly, joint venture activity with our chosen partners in key sectors
progressed strongly during the year.

In June 2004 we announced a ground breaking co-investment partnership with the
Commonwealth Bank of Australia ('CBA'). The John Laing-CBA joint venture is
targeting project equity investment opportunities of up to £300 million in the
UK Health and European Roads sectors over a three to five year period. Bidding
activity is jointly supported and good progress has been made in the first half
year with four projects currently at the preferred bidder stage. John Laing
selected CBA as a partner after a highly competitive process, which demonstrated
strong international interest in the UK infrastructure market. This joint
venture gives us the ability to pursue a broader range of large project
investments in alliance with a partner that has an enviable track record of
innovation and performance over the long-term.

ExcellCare, our 50:50 joint venture with HBOS, is active in the market for
primary care and other local health facilities and reached financial close on
five local LIFT ('Local Infrastructure Finance Trust') schemes during the year.
Regenter, our 50:50 joint venture with UK Pacific Investment Management Limited
focussing on housing and regeneration initiatives, became active during the year
with two schemes at preferred bidder stage.

Within the Rail sector, the London & Western Railway Company, a joint venture
between Laing Rail and GNER (a subsidiary of the Seacontainers Group) is seeking
pre-qualification for the Greater Western franchise, which will be competed
during 2005. Chiltern's operational success and Laing Rail's infrastructure
expertise are well suited to further opportunities emerging in the UK rail
sector following the Government's Rail Review and Network Rail's improving
stewardship of the underlying system. Laing Rail Projects, focussed on
delivering rail enhancements for third parties with the same efficiency achieved
elsewhere through PFI, produced a breakeven performance in its first full year
of trading. Together with chosen partners we are currently evaluating further
operations and infrastructure opportunities in the UK market.

Strategic alliances are also central to John Laing's approach to the growing PPP
market in Europe, outside the UK. Our evaluation of these opportunities is based
principally on the strength of the relevant Government authority's commitment
and covenant, the level of risk-adjusted returns likely to be available and the
strength of our chosen partners. In this regard we were fortunate during 2004 to
be developing bids in Europe with Skanska, Vinci, Bilfinger Berger and other
high quality local partners.

RETAINED LIABILITIES

During 2004 considerable progress was made in finalising residual obligations
relating to construction activities undertaken by former Laing Construction
entities, closing out a number of historical disputes in relation to projects
such as the Cardiff Millennium Stadium and the Second Severn River Crossing.

The one major outstanding legacy issue relating to Laing Construction, concerns
its conduct of construction management activities at the Great Eastern Hotel
during the period 1998 to 2000. As set out in a press release last month, these
have been the subject of litigation heard in the Construction Court, defended at
the direction of our insurers, and judgement in this matter has been handed down
since the balance sheet date. The Directors are satisfied that the remaining
construction liability provision is sufficient to cover this judgement and all
other unresolved construction issues. Provisions and reserves relating to such
issues reduced from £44.4 million at the end of 2003 to £34.3 million at the
current year end.

PENSION LIABILITIES

The Group retains responsibility for The John Laing Pension Fund, which is
closed to new entrants and has approximately 50 contributory active members, but
some 9,500 deferred members (now working elsewhere) and pensioners drawing
pensions.

The Group adopted the FRS 17 accounting standard relating to retirement benefits
in 2003, ahead of its mandatory implementation, which results in a net deficit
of £135.0 million (2003 - £93.7 million) being recognised in the balance sheet.
This number is highly sensitive to some critical assumptions, and the increase
in the net deficit over the last year results from the combined impact of taking
a more cautious view of future inflation and the reduction in the AA corporate
bond yield.

It is Group strategy to effect a reduction of this deficit over 20 years. This
approach is well matched to the long run nature of the robust cash flows
generated by John Laing's project investment activity.

The Group has reached an agreement with the Trustees under which an enhanced
contribution of £6 million is to be made in 2005 (2004 - £4 million).

FINANCING STRATEGY

PFI/PPP and related infrastructure investment is associated with long lead times
followed by long running predictable returns. The Group's funding requirements
can therefore be predicted well ahead of the final commitment to investment and
it is the Board's strategy to ensure that the financial resources are in place
to meet actual and likely investment commitments.

In December 2004, the Group successfully refinanced its main borrowing and
letter of credit facilities on more favourable terms. It now has access to £145
million of committed facilities, £115 million of which extend to March 2010.

DIRECTORS & STAFF

As I foreshadowed at the half year, your Board was reinforced with four new
appointments becoming effective on 1 September 2004. Tim Matthews and Michael
Medlicott joined the Board as independent non-executive Directors and at the
same time Derek Potts and Richard Weston, the Managing Directors of Laing Roads
and Equion respectively, joined the Board as executive Directors. The
reconstituted Board team can now draw on a wider range of skills and experience
and evaluation of performance to date suggests that Board composition is now
well aligned to the needs of an expanding John Laing.

Progressing value creation on behalf of shareholders is crucially dependant on
the skills and dedication of staff. 2004 saw a continuation of both the
challenges and the opportunities of recent years and, on behalf of the Board, I
would like to pay tribute to the enthusiasm and commitment of the many staff
contributing to improved performance across the business. If John Laing has
established a leading position in a number of growing sectors, it is in no small
measure due to the determination to succeed and focus on quality characterising
the approach of so many staff.

PROSPECTS

The early months of 2005 have seen a continuation of successful bidding, with
new preferred bidder positions including Leicester Hospital, together with
pre-qualification and short-listing for future opportunities. In each of our key
sectors the identified pipeline of future opportunities for asset creation and
related servicing requirements either remains strong or is growing. After
reaching financial close on 11 projects in 2004, we expect to close at least 8
in 2005, including major investments in the health sector.

Favourable Government policies in many OECD countries are contributing to the
continuing spread and growth of private financing and delivery of major assets
required as part of public service provision, and within the UK better managed
procurement programmes of considerable value are emerging. Government and audit
authority concentration on value for money issues is to be welcomed and assists
companies such as John Laing which are focussed on delivering sustainable long
running returns from quality outcomes.

Opportunities in the primary market are growing and broader awareness of the
investment dynamics relating to infrastructure and service concessions has
progressed. This is partly due to the scale of PFI/PPP investments now committed
and delivered, and the growing number of operational PFI/PPP's. Greater
transparency on the part of market participants and the development of a liquid
secondary market for PFI equity as well as debt have also assisted this process.

Our chosen markets are increasingly providing scope for further growth and we
are well placed to take advantage of emerging opportunities. We approach these
prospects determined to maintain our leading position established in recent
years and to build further on our reputation for innovation and delivery.

W W Forrester
Chairman




                              Group Profit and Loss Account

                                                      2004                           2003
For the year ended 31                Continuing  Discontinued +       Total     £ million
December 2004                Notes    £ million       £ million   £ million
-------------------------------------------------------------------------------------------
Turnover                         3        479.9             0.8       480.7         481.5
Deduct:
  Share of joint venture                 (206.4)              -      (206.4)       (170.5)
  turnover
  Share of associate turnover             (24.2)              -       (24.2)        (62.5)
                                     ------------------------------------------------------
Group turnover                            249.3             0.8       250.1         248.5
                                     ------------------------------------------------------
   Existing operations               |    249.3               -       249.3         212.6 |
   Discontinued                      |        -             0.8         0.8          35.9 |
                                     ------------------------------------------------------
Cost of sales                            (201.0)           (1.0)     (202.0)       (211.7)
                                     ------------------------------------------------------
Gross profit                               48.3            (0.2)       48.1          36.8
Operating and administrative
expenses                                  (51.9)           (0.6)      (52.5)        (43.2)
Other operating income                      6.7               -         6.7           0.9
                                     ------------------------------------------------------
   Profit on purchase and            |      6.4               -         6.4             - |
   sale of 50% interest in           |                                                    |
   M40 road project                  |                                                    |
   Other                             |      0.3               -         0.3           0.9 |
                                     ------------------------------------------------------

                                     ------------------------------------------------------
Operating profit/(loss)                     3.1            (0.8)        2.3          (5.5)
Share of operating profit of:
  Joint ventures                           17.0               -        17.0          14.3
  Associates                                3.7               -         3.7           3.7
                                     ------------------------------------------------------
Operating profit including
joint ventures and associates              23.8            (0.8)       23.0          12.5
                                     ------------------------------------------------------
   Existing operations               |     23.8               -        23.8          10.4 |
   Discontinued                      |        -            (0.8)       (0.8)          2.1 |
                                     ------------------------------------------------------
Profit on disposal of, and 
amounts written off 
investments and other fixed 
assets                                      0.2               -         0.2           4.9
Profit on disposal of
operations                                    -               -           -           4.9
                                     ------------------------------------------------------

Profit on ordinary activities
before interest                  3         24.0            (0.8)       23.2          22.3
                                     ------------------------------------------------------

Interest receivable                        85.4             0.9        86.3          84.5
                                     ------------------------------------------------------
  Group                              |     32.7             0.9        33.6          31.7 |
  Joint ventures                     |     52.7               -        52.7          52.7 |
  Associates                         |        -               -           -           0.1 |
                                     ------------------------------------------------------

Interest and other finance
costs payable                             (84.4)              -       (84.4)        (85.6)
                                     ------------------------------------------------------
  Group - refinancing costs          |     (1.2)              -        (1.2)         (2.0)|
        - other                      |    (23.4)              -       (23.4)        (27.0)|
  Joint ventures                     |                                                    |
        - refinancing costs          |        -               -           -          (0.7)|
        - other                      |    (56.9)              -       (56.9)        (53.0)|
  Associates                         |     (2.9)              -        (2.9)         (2.9)|
                                     ------------------------------------------------------

Net finance income/(charge)                 1.0             0.9         1.9          (1.1)
                                     -----------------------------------------------------
Profit on ordinary activities
before taxation                            25.0             0.1        25.1          21.2
                                     ------------------------------
Tax on profit on ordinary
activities                       5                                    (13.7)        (13.3)
                                                                   -----------------------
Profit attributable to
shareholders                                                           11.4           7.9
Dividends on equity and
non-equity shares                6                                     (8.6)         (7.8)
                                                                   -----------------------
Retained profit for the
financial year                                                          2.8           0.1
                                                                   =======================
Earnings per share  - basic      7                                      4.9p          3.1p
                    - diluted    7                                      4.9p          3.0p
Dividends per share              6                                      3.3p          3.0p


+   The results of discontinued businesses include the winding down costs of the
    disposed construction, house building and property development businesses.



Group Statement of Total Recognised Gains and Losses

                                                            2004             2003
For the year ended 31                    Notes         £ million        £ million
December 2004             
-----------------------------------------------------------------------------------

Profit attributable to shareholders                         11.4              7.9
                                                       ----------------------------
  Group                                                |     3.8              0.8 |
  Joint ventures and associate                         |     7.6              7.1 |
                                                       ----------------------------
Currency translation differences on 
foreign currency net investments                             0.9             (0.9)
Tax relief on pension contribution           5               1.2                -
Actuarial (losses)/gains on post 
retirement obligations                       4             (45.5)             8.4
                                                       ----------------------------
Total (losses)/gains recognised in the
year                                                       (32.0)            15.4
                                                       ============================




                                   Group Balance Sheet

                                                          2004                     2003
At 31 December 2004                 Notes            £ million                £ million
-----------------------------------------------------------------------------------------
Fixed assets
Intangible assets                                         11.6                     12.2
Tangible assets                                           45.2                     31.2
Investments                                                  -                      0.5
Investments in joint ventures                            130.8                    101.1
                                                     ------------------------------------
  Share of gross assets                              | 1,304.4                  1,126.3 |
  Share of gross liabilities                         |(1,173.6)                (1,025.2)|
                                                     ------------------------------------
Investment in associate                                   15.9                     15.8
                                                     ------------------------------------
                                                         203.5                    160.8
                                                     ------------------------------------
Current assets
Stocks                                                     2.1                      2.8
Debtors                                                  460.5                    380.2
                                                     ------------------------------------
- due within one year                   8            |    54.3                     59.3 |
- due after more than one year          8            |   406.2                    320.9 |
                                                     ------------------------------------
Short-term investments                                       -                      2.2
Cash at bank and in hand                9                112.0                    121.1
                                                     ------------------------------------
                                                         574.6                    506.3
                                                     ------------------------------------
Creditors: amounts falling due 
within one year
Bank and other loans                 9,12                 23.6                      4.0
Other creditors                        10                 84.3                     68.4
                                                     ------------------------------------
                                                         107.9                     72.4
                                                     ------------------------------------
Net current assets                                       466.7                    433.9
                                                     ------------------------------------
Total assets less current                                670.2                    594.7
liabilities

Creditors: amounts falling due
after more than one year
Bank and other loans                 9,12                401.2                    325.3
Other creditors                        10                  3.5                      3.8
                                                     ------------------------------------
                                                         404.7                    329.1

Provisions for liabilities and 
charges
Investment in joint venture            11                  8.7                      8.8
                                                     ------------------------------------
  Share of gross assets                              |    53.2                     55.1 |
  Share of gross liabilities                         |   (61.9)                   (63.9)|
                                                     ------------------------------------
Other provisions                       11                 41.5                     49.1
                                                     ------------------------------------
                                                          50.2                     57.9

                                                     ------------------------------------
Net assets excluding post                                215.3                    207.7
retirement benefits
Pensions and other post                 4                135.0                     93.7
retirement liabilities (net)
                                                     ------------------------------------
Net assets including post                                 80.3                    114.0
retirement benefits 
                                                     ====================================

Capital and reserves
Called up share capital                                   85.1                     83.6
Share premium account                                     87.4                     82.8
Other reserves                                             2.3                      2.3
Profit and loss account                                  (94.5)                   (54.7)
                                                     ------------------------------------
  Deficit relating to pensions and      4            |  (135.0)                   (93.7)|
  post retirement obligations (net)                  |                                  |
  Other                                              |    40.5                     39.0 |
                                                     ------------------------------------
Shareholders' funds                                       80.3                    114.0
                                                     ------------------------------------
Equity                                               |    42.2                     75.9 |
Non-equity                                           |    38.1                     38.1 |
                                                     ------------------------------------
                                                          80.3                    114.0
                                                     ====================================




                                   Group Cash Flow

                                                                 2004          2003
For the year ended 31 December 2004             Notes       £ million     £ million
-------------------------------------------------------------------------------------

Net cash outflow from operating activities         13           (61.3)       (102.1)
Dividends received from joint ventures and 
associate                                                         7.7           7.7
Returns on investments and servicing of finance
   Interest received                                             10.9           9.1
   Interest and other financing costs paid                      (31.7)        (29.4)
   Dividends received                                               -           0.5
   Dividends paid to non-equity shareholders                     (2.5)         (2.5)
                                                            -------------------------
Net cash outflow from returns on investments 
and servicing of finance                                        (23.3)        (22.3)

Taxation                                                         (0.1)         (2.3)
                                                            -------------------------
   UK corporation tax received/(paid)                       |     1.7          (0.1)|
   Overseas tax paid                                        |    (1.8)         (2.2)|
                                                            -------------------------
Capital expenditure and financial investment
   Purchase of fixed assets                                      (0.1)         (2.0)
   Construction of infrastructure assets                        (15.8)        (13.9)
   Purchase of short-term investments                           (19.7)            -
   Sale of fixed assets                                             -           0.3
   Sale of short-term investments                                35.1          12.8
                                                            -------------------------
Net cash outflow from capital expenditure and 
financial investments                                            (0.5)         (2.8)

Acquisitions and disposals
Purchase of subsidiary undertakings                                 -         (32.8)
Net overdraft acquired with subsidiaries                            -         (20.7)
Purchase of interests in and loans to joint 
ventures and associated undertakings                            (33.8)         (5.4)
Sale of subsidiary undertakings                                     -         220.0
Net overdraft balance disposed with subsidiaries                    -          27.8
Sale of interests in and repayment of loans by
joint ventures and associated undertakings                        6.1          49.3
                                                            -------------------------
Net cash (outflow)/inflow from acquisitions
and disposals                                                   (27.7)        238.2
Equity dividends paid                                            (5.6)        (10.2)
                                                            -------------------------
Net cash (outflow)/inflow before management of
liquid resources and financing                                 (110.8)        106.2

Management of liquid resources
Net cash transfer from bank deposits               14           (17.2)            -
                                                            -------------------------
Net cash outflow from management of liquid
resources                                                       (17.2)            -

Financing 
Issue of ordinary share capital                                   6.1             -
Increase/(decrease) in bank borrowings
falling due within one year                        14            18.2        (192.3)
Increase in bank borrowings falling due
after more than one year                           14            75.9         118.9
                                                            -------------------------
Net cash inflow/(outflow) from financing                        100.2         (73.4)
                                                            -------------------------
(Decrease)/increase in cash in the year            14           (27.8)         32.8
                                                            =========================



                             Accounting Policies

                            Notes to the Accounts


1.  The financial information set out above does not constitute the Company's
    statutory accounts for the years ended 31 December 2004 or 2003 but is
    derived from those accounts. Statutory accounts for 2003 have been delivered
    to the Registrar of Companies and those for 2004 will be delivered following
    the Company's annual general meeting. The Auditors have reported on those
    accounts; their reports were unqualified and did not contain statements
    under section 237(2) or (3) of the Companies Act.


2.  Accounting policies
    The Group's principal accounting policies have been applied consistently in
    dealing with items which are considered material in relation to the Group's
    financial accounts.

                                                      
3.  Sector analysis
                                               Profit/(loss) on          Profit/(loss) on
                                              ordinary activities       ordinary activities
                                                before interest           before taxation
                                            -------------------------------------------------
                                                 2004        2003          2004        2003
                                            £ million   £ million     £ million   £ million
                                            -------------------------------------------------
Activity
Accommodation                                     8.0         6.6          13.7        10.5
Roads              - normal operations            4.7         5.5           6.9         6.6
                   - purchase and sale            6.4           -           6.4           -
                     of 50% interest in
                     M4O road project
Rail               - normal operations            9.8         9.9           9.5         9.9
                   - bid costs on new            (0.7)          -          (0.7)          -
                     franchise
                   - sale of development land     2.9         0.2           2.9         0.2
Utilities & Airports                              2.9         6.6          (1.4)        6.2
Bidding activity and Group costs                (14.0)      (13.4)        (13.9)      (17.0)
                                            -------------------------------------------------
                                                 20.0        15.4          23.4        16.4

Non-core businesses sold or held for resale
    Homes                                         3.0         3.8           0.6         0.3
    Construction                                  0.6         1.8           1.5         2.7
    Property                                     (0.4)        1.3          (0.4)        1.8
                                            -------------------------------------------------
                                                 23.2        22.3          25.1        21.2
                                            =================================================


Activity
Accommodation            - Group                  3.8         2.4           9.5         6.5
                         - Joint ventures         4.2         4.2           4.2         4.0
                                            -------------------------------------------------
                                                  8.0         6.6          13.7        10.5
                                            -------------------------------------------------

Roads                    - Group                  6.4         0.9           8.7         2.2
                         - Joint ventures         4.7         4.6           4.6         4.4
                                            -------------------------------------------------
                                                 11.1         5.5          13.3         6.6
                                            -------------------------------------------------

Rail                     - Group                  6.3         5.1           6.0         5.4
                         - Joint ventures         5.7         5.0           5.7         4.7
                                            -------------------------------------------------
                                                 12.0        10.1          11.7        10.1
                                            -------------------------------------------------

Utilities & Airports     - Group                    -         5.3          (0.2)        5.2
                         - Joint ventures         2.9         1.1          (1.2)        0.8
                         - Associate                -         0.2             -         0.2
                                            -------------------------------------------------
                                                  2.9         6.6          (1.4)        6.2
                                            -------------------------------------------------

Bidding activity and
Group costs              - Group                (13.5)      (13.4)        (13.4)      (17.0)
                         - Joint ventures        (0.5)          -          (0.5)          -
                                            -------------------------------------------------
                                                (14.0)      (13.4)        (13.9)      (17.0)
                                            -------------------------------------------------

Non-core businesses
sold or held for resale  - Group                 (0.5)        3.2           0.9         4.0
                         - Associate              3.7         3.7           0.8         0.8
                                            -------------------------------------------------
                                                  3.2         6.9           1.7         4.8
                                            -------------------------------------------------

Total                    - Group                  2.5         3.5          11.5         6.3
                         - Joint ventures        17.0        14.9          12.8        13.9
                         - Associates             3.7         3.9           0.8         1.0
                                            -------------------------------------------------
                                                 23.2        22.3          25.1        21.2
                                            =================================================
                                                                                                                
                                              Turnover including joint         Net assets /
                                               ventures and associates       (liabilities) +
                                             ---------------------------------------------------
                                                  2004          2003          2004        2003
                                             £ million     £ million     £ million   £ million
                                             ---------------------------------------------------
Activity
Accommodation                                    265.6         237.6         370.2       261.4
Roads                                             57.3          37.3         129.2       126.3
Rail                                             109.0          96.6          45.1        44.3
Utilities & Airports                               8.2           4.7           6.0        12.8
Bidding activity and Group costs                  15.6           5.6          11.4        (2.5)
Non-core businesses sold or held for resale

    Homes                                         24.2          98.4          10.8        15.6
    Construction                                     -           0.3         (42.8)      (43.1)
    Property                                       0.8           1.0          (1.8)       (1.1)
                                             ---------------------------------------------------
                                                 480.7         481.5         528.1       413.7
                                             ===================================================

Activity
Accommodation            - Group                 133.4         113.0         303.3       225.3
                         - Joint ventures        132.2         124.6          66.9        36.1
                                             ---------------------------------------------------
                                                 265.6         237.6         370.2       261.4
                                             ---------------------------------------------------

Roads                    - Group                   1.7           1.8          92.0        92.3
                         - Joint ventures         55.6          35.5          37.2        34.0
                                             ---------------------------------------------------
                                                  57.3          37.3         129.2       126.3
                                             ---------------------------------------------------

Rail                     - Group                  98.6          90.9          33.7        30.0
                         - Joint ventures         10.4           5.7          11.4        14.3
                                             ---------------------------------------------------
                                                 109.0          96.6          45.1        44.3
                                             ---------------------------------------------------

Utilities & Airports     - Group                     -             -             -         5.6
                         - Joint ventures          8.2           4.7           6.0         7.2
                                             ---------------------------------------------------
                                                   8.2           4.7           6.0        12.8
                                             ---------------------------------------------------

Bidding activity and
Group costs              - Group                  15.6           5.6          10.8        (3.2)
                         - Joint ventures            -             -           0.6         0.7
                                             ---------------------------------------------------
                                                  15.6           5.6          11.4        (2.5)
                                             ---------------------------------------------------

Non-core businesses
sold or held for resale  - Group                   0.8          37.2         (49.7)      (44.4)
                         - Associate              24.2          62.5          15.9        15.8
                                             ---------------------------------------------------
                                                  25.0          99.7         (33.8)      (28.6)
                                             ---------------------------------------------------

Total                    - Group                 250.1         248.5         390.1       305.6
                         - Joint ventures        206.4         170.5         122.1        92.3
                         - Associate              24.2          62.5          15.9        15.8
                                             ---------------------------------------------------
                                                 480.7         481.5         528.1       413.7
                                             ===================================================



                                                  Profit/(loss) on           Profit/(loss) on
                                                 ordinary activities        ordinary activities
                                                   before interest            before taxation
                                              ---------------------------------------------------
                                                   2004          2003          2004        2003
                                              £ million     £ million     £ million   £ million
                                              ---------------------------------------------------
Geographic area (by origin and destination)
United Kingdom                                     22.4          13.5          22.6        11.2
Rest of Europe                                      0.8           0.7           2.4         2.0
America                                               -           2.7           0.1         2.6
Australasia                                           -           5.4             -         5.4
                                              ---------------------------------------------------
                                                   23.2          22.3          25.1        21.2
                                              ===================================================


                                                Turnover including joint        Net assets /
                                                ventures and associate        (liabilities) +
                                              ---------------------------------------------------
                                                   2004          2003          2004        2003
                                              £ million     £ million     £ million   £ million
                                              ---------------------------------------------------
Geographic area (by origin and destination)
United Kingdom                                    452.6         426.6         520.5       402.4
Rest of Europe                                     28.1          20.0           7.6         5.4
America                                               -          34.6             -        (0.4)
Australasia                                           -           0.3             -         6.3
                                              ---------------------------------------------------
                                                  480.7         481.5         528.1       413.7
                                              ---------------------------------------------------



                                                         2004                                     2003
                         -------------------------------------------------------------------------------
                             Turnover          Profit/(loss)    Net finance      Profit/       Profit/
                            including            on ordinary         income    (loss) on     (loss) on
                                joint             activities                    ordinary      ordinary
                         ventures and        before interest                  activities    activities
                            associate                                             before        before
                                                                                taxation      taxation
                            £ million              £ million      £ million    £ million     £ million
                         -------------------------------------------------------------------------------
Continuing operations
Accommodation                   265.6                    8.0            5.7      13.7             10.5
Roads                            57.3                   11.1            2.2      13.3              6.6
Rail                            109.0                   12.0           (0.3)     11.7             10.1
Utilities & Airports              8.2                    2.9           (4.3)     (1.4)             6.2
Bidding activity and
Group costs                      15.6                  (14.0)           0.1     (13.9)           (17.0)
Retained businesses#             24.2                    4.0           (2.4)      1.6              0.3
                         -------------------------------------------------------------------------------
                                479.9                   24.0            1.0      25.0             16.7
Discontinued operations
Homes                               -                   (0.9)             -      (0.9)               -
Construction                        -                    0.4            0.9       1.3              2.7
Property                          0.8                   (0.3)             -      (0.3)             1.8
                         -------------------------------------------------------------------------------
                                  0.8                   (0.8)           0.9       0.1              4.5
                         -------------------------------------------------------------------------------
Total                           480.7                   23.2            1.9      25.1             21.2
                         ===============================================================================

+   net assets/(liabilities) exclude cash of £112.0 million (2003 - £121.1 
    million), short-term investments of £nil (2003 - £2.2 million), total 
    borrowings of £424.8 million (2003 - £329.3 million) and pensions and other 
    post retirement liabilities of £135.0 million (2003 - £93.7 million), which 
    have not been allocated across the sectors. In the prior year, short-term 
    investments were included in Construction.

#   Includes Octagon Developments Limited


4.  Post retirement obligations

a.  Pension plans

The Group operates four main defined benefit schemes in the UK. The two John
Laing schemes are closed to new entrants, Company contributions re-commenced
from January 2003 and employee contributions from January 2004. Staff employed
since the schemes closed, who are entitled to retirement benefits, can choose to
be members of a defined contribution stakeholder scheme sponsored by the Group
in conjunction with Legal & General Assurance Society Limited. John Laing has
reached agreement with the pension scheme trustees to increase contributions to
address the deficit over time. The two Chiltern schemes remain open to new
members.

The Group has an existing agreement with the Trustees of the John Laing Pension
Fund to provide additional contributions of £4.0 million per annum towards
funding of the pension deficit. Due to recent adverse movements in actuarial
assumptions we are in renewed discussion with the Trustees, which is likely to
result in an increase in these additional contributions. The Group intends to
fully fund the deficit over a period of 20 years and the additional contribution
is likely to vary over this period. However, the Group has committed to increase
the additional contribution to £6.0 million in 2005, subject to review
regularly. In order to progressively remove the Pension Fund, and hence the
Group, from volatility to the value of equities, the Trustees have agreed on a
strategy to shift the balance from approximately 50% currently invested in
equities to 40% by the end of 2005 and to a fully non-equity investment
portfolio over the next 25 years. This strategy has been agreed following
consultation between the Trustees and the Group and reflects the advice of the
actuaries to the Trustees and the independent actuaries to the Group.

The pension deficit has been calculated using the Institute and Faculty of
Actuaries' current mortality tables for life expectancy. These are due to be
updated in the first half of 2005 and it is expected that the revised tables
will show increased longevity. The pension fund liabilities are therefore likely
to increase.

With effect from April 2005, new legislation will oblige the Group to pay a levy
to the Pension Protection Fund. This is expected to amount to approximately
£130,000 in the first year and double that amount in the second year. Thereafter
the levy will be calculated on a risk weighted basis, which remains to be
determined.

Pension valuations

The valuation of the Group's defined benefit schemes used for the FRS 17
disclosures are based upon the most recent actuarial valuations. These have been
updated by the respective schemes' professionally qualified actuaries to take
into account the requirements of FRS 17 and to assess the liabilities of the
schemes at 31 December 2004. Scheme assets are stated at their market value at
31 December 2004.

The weighted average financial assumptions used in the actuarial valuation were:

                                                    2004    2003    2002   2001
                                                      %       %       %      %
Discount rate                                       5.30    5.50    5.51   6.00
Rate of increase in salaries                        4.25    4.09    3.57   3.80
Rate of increase in non-GMP pensions in payment     2.75    2.28    2.03   2.30
Rate of increase in non-GMP pensions in deferment   2.75    2.25    2.00   2.30
Inflation                                           2.75    2.28    2.02   2.30


The aggregate fair values of the assets in the Group's defined benefit schemes,
the aggregate net pension liabilities and their expected weighted average long-
term rates of return at 31 December 2004 were:

                                               2004               2003               2002              2001
                                        £ million    %     £ million    %     £ million    %    £ million    %
                                                                     
Bonds                                   197.4       5.0    167.0       4.8    174.3       4.5   162.5       5.0
Equities                                308.6       8.5    321.3       8.0    291.5       7.6   399.7       7.5
Property                                 88.0       8.5     74.5       8.0     61.7       7.5    54.9       7.5
Cash                                     16.6       5.0      9.3       4.7     11.8       4.5    16.0       5.0
                                       ------------------------------------------------------------------------ 
Total market value of assets            610.6              572.1              539.3             633.1
Present value of schemes liabilities   (794.9)            (692.7)            (678.2)           (615.3)
                                       ------------------------------------------------------------------------
Deficit in the schemes                 (184.3)            (120.6)            (138.9)             17.8
Unrecoverable surplus in Plan            (4.3)              (4.7)              (3.9)             (4.9)
                                       ------------------------------------------------------------------------
Net pension deficit                    (188.6)            (125.3)            (142.8)             12.9
Associated deferred tax asset            56.6               34.5               41.8              (3.9)
                                       ------------------------------------------------------------------------
Net pension liability                  (132.0)             (90.8)            (101.0)              9.0
                                       ========================================================================


Analysis of amounts charged to operating profit                  2004            2003
                                                            £ million       £ million
                                                            ---------------------------
Current service cost                                             (4.2)           (4.5)
Credit arising from curtailment of membership                       -             1.2
                                                            ---------------------------
                                                                 (4.2)           (3.3)
                                                            ===========================

Analysis of amounts credited/(charged) to other 
finance income
                                                                 2004            2003
                                                            £ million       £ million
                                                            ---------------------------
Expected return on scheme assets                                 38.0            33.5
Interest on scheme liabilities                                  (36.7)          (36.2)
                                                            ---------------------------
Net credit/(charge) to other finance income                       1.3            (2.7)
                                                            ===========================

Analysis of the amount recognised in Statement of Total
Recognised Gains and Losses (STRGL)      
                                                                 2004            2003
                                                            £ million       £ million
                                                            ---------------------------
Actual return less expected return on pension scheme assets      22.3            41.0
Experience (losses)/gains arising on the scheme liabilities      (0.7)            3.8
Changes in assumptions underlying the present value of the 
scheme liabilities                                              (89.6)          (28.3)
Decrease/(increase) in unrecoverable surplus                      0.4            (0.8)
                                                            ---------------------------
                                                                (67.6)           15.7
Associated deferred tax asset/(liability)                        22.1            (7.3)
                                                            ---------------------------
Actuarial (loss)/gain recognised in STRGL                       (45.5)            8.4
                                                            ===========================



History of the weighted average experience 
gains and losses
                                                  2004           2003            2002
                                                ---------------------------------------
Difference between actual and expected 
returns on assets:
Amount (£ million)                                22.3           41.0          (105.2)
% of scheme assets                                 4%             7%            (20%)
Experience (losses)/gains on scheme liabilities
Amount (£ million)                                (0.7)           2.3           (26.1)
% of present value of scheme liabilities           0%             0%             (4%)
Total amount recognised in STRGL (excluding
deferred tax)
Amount (£ million)                               (67.6)          15.7          (153.5)
% of present value of scheme liabilities          (9%)            2%            (23%)



Analysis of movement in deficit during the period 
                                                                 2004            2003
                                                            £ million       £ million
                                                            ---------------------------
Deficit at 1 January                                           (120.6)         (138.9)
Contributions                                                     7.2             9.3
Current service cost                                             (4.2)           (4.5)
Curtailment gain                                                    -             1.2
Other finance income                                              1.3            (2.7)
Actuarial (loss)/gain                                           (68.0)           15.0
                                                            ---------------------------
Deficit in scheme at 31 December                               (184.3)         (120.6)
Unrecovered surplus in the Plan                                  (4.3)           (4.7)
                                                            ---------------------------
Net pension deficit at 31 December                             (188.6)         (125.3)
                                                            ===========================


b.  Post retirement medical insurance

The Group provides post retirement medical insurance to a group of 71 past and
present employees. The scheme was closed to new members in 1991 and only two of
the members remain in the employment of the Group. This scheme is unfunded.
The present value of the future liabilities under this arrangement have been
assessed by our actuary, Mercer Human Resource Consultancy Limited and this
amount has been included on the balance sheet, net of deferred taxation under
pensions and other post retirement liabilities as follows:

                                                                 2004            2003
                                                            £ million       £ million
                                                            ---------------------------
Post retirement medical liabilities                              (4.3)           (4.2)
Associated deferred tax asset                                     1.3             1.3
                                                            ---------------------------
Net post retirement medical liability                            (3.0)           (2.9)
                                                            ===========================


5.  Tax on profits on ordinary activities

Analysis of tax charge on ordinary activities                  2004                                   2003
                                           -----------------------------------------------------------------
                                           Continuing     Discontinued           Total           £ million
                                            £ million        £ million       £ million
                                           -----------------------------------------------------------------
The taxation charge comprises:
Group UK corporation tax at 30% (2003 - 30%)
                                - current        (2.3)            (2.7)           (5.0)                  -
                                - prior year     (0.7)               -            (0.7)               (0.5)
Overseas tax                    - current        (0.4)               -            (0.4)               (1.4)
                                - prior year     (0.3)               -            (0.3)                0.6
Group deferred tax                               (1.5)             0.2            (1.3)               (4.1)
Joint ventures and associates   - current        (6.9)               -            (6.9)               (6.5)
                                - prior year      0.9                -             0.9                (1.4)
                                           -----------------------------------------------------------------
                                                (11.2)            (2.5)          (13.7)              (13.3)
                                           =================================================================

The Group UK corporation tax current year charge for continuing businesses
includes £nil million (2003 - £1.1 million) in respect of double tax relief.

Total deferred tax of £8.6 million (2003 - £10.5 million) includes tax for joint
ventures and associates of £7.3 million (2003 - £6.4 million) and Group tax of
£1.3 million (2003 - £4.1 million).

During the year an additional pension contribution of £4 million was paid to
reduce the deficit on the Pension Fund. Tax relief at 30% of this contribution
is recognised in the statement of recognised gains and losses as the original
provision for the Pension Fund deficit was recognised in the statement of
recognised gains and losses.

Factors affecting tax charge for the year

The current tax charge assessed for the year is lower than that resulting from
applying the 30% standard rate of corporation tax in the UK, even though the
total tax charge is higher.

The differences are explained as follows:                                             2004            2003
                                                                                 £ million       £ million
                                                                                 ---------------------------
    Profit on ordinary activities before taxation                                     25.1            21.2
                                                                                 ---------------------------

    Tax at 30% (2003 - 30%) thereon                                                   (7.5)           (6.4)
    Effects of:
    Tax losses in PFI companies                                                        4.9             5.0
    Sale of tax losses of PFI joint ventures to third parties                          2.5               -
    Tax losses not utilised                                                           (0.7)           (5.1)
    Chargeable gains in excess of book profits                                        (0.3)            2.8
    Capital allowances in excess of depreciation                                       0.8             0.6
    Disallowed expenses and similar items                                             (3.7)            0.6
    Prior year adjustments                                                            (1.1)            0.9
    Other differences                                                                    -            (1.2)
                                                                                 ---------------------------
    Current tax charge for the year                                                   (5.1)           (2.8)

    Deferred tax of PFI Companies                                                    (10.0)           (7.0)
    Accelerated capital allowances of PPP/non-PFI Companies                           (0.7)           (0.6)
    Spread deduction for pension contribution                                          0.7               -
    Prior year deferred tax adjustments                                                1.4            (2.9)
                                                                                 ---------------------------
    Total tax charge for the year                                                    (13.7)          (13.3)
                                                                                 ===========================


Effective tax rate analysis                                                       2004
                                                        ----------------------------------------------------
                                                        Profit before          Tax charge        Effective
                                                                  tax           £ million         tax rate
                                                            £ million                                    %
                                                        ----------------------------------------------------
Continuing businesses
   PFI/PPP Project Companies                                     24.3                 8.9               37
   Capital gains on sale of investments                           6.6                 2.0               30
   Holding companies, bid costs and overheads                    (5.9)                0.4                7
                                                        ---------------------------------------
                                                                 25.0                11.3               45
Discontinued businesses                                           0.1                 2.4                -
                                                        ---------------------------------------
Total                                                            25.1                13.7               55
                                                        =======================================


6.  Dividends
                                                                                       2004           2003
                                                                                  £ million      £ million
                                                                                  --------------------------
The following have been paid or are proposed:

    Equity
    On Ordinary Shares
    Interim   - paid         1.1 pence per share (2003 - 1.0 pence)                     2.0            1.8
    Final     - proposed     2.2 pence per share (2003 - 2.0 pence)                     4.1            3.5
                                                                                  --------------------------
                                                                                        6.1            5.3
    Non-equity
    On 6.4% Convertible Cumulative Preference Shares                                    2.5            2.5
                                                                                  --------------------------
                                                                                        8.6            7.8
                                                                                  ==========================

Included within the non-equity dividend is an accrual of £0.4 million (2003 - 
£0.4 million).


7.  Calculation of earnings per share
                                                                   2004                            2003
                                                            ----------------------------------------------------
                                                            Basic       Diluted            Basic       Diluted
                                                            ----------------------------------------------------
Earnings per share (pence)                                    4.9           4.9              3.1         3.0
                                                            ====================================================

Basis of calculation

Profit attributable to shareholders (£ million)              11.4          11.4              7.9         7.9
Preference dividends                                         (2.5)            -             (2.5)          -
                                                            ----------------------------------------------------
Profit after tax and preference  dividends                    8.9          11.4              5.4         7.9
                                                            ====================================================

Weighted average number of shares (millions)                180.4         180.4            176.7       176.7
Weighted average number of warrants adjusted for 
issue of shares at fair value                                   -             -                -         2.2
Weighted average number of options adjusted for 
issue of shares at fair value                                   -           0.4                -         0.6
Average number of LTIP share awards                             -           1.3                -         0.8
Weighted average number of unexercised preference
share conversions                                               -          13.3                -        13.3
                                                            ----------------------------------------------------
Weighted average number of shares used for EPS              180.4         195.4            176.7       193.6
                                                            ====================================================

Earnings per share have been calculated by reference to 180.4 million basic
shares (2003 - 176.7 million) and 180.4 million diluted shares (2003 - 179.5
million) being the average number of shares in issue during the year. Share
awards under the share option scheme totalling 0.4 million shares (2003 - nil),
share awards under the LTIP scheme totalling 1.3 million shares (2003 - 0.8
million) and Convertible Cumulative Preference Shares totalling 13.3 million
shares (2003 - 13.3 million) have been excluded from the calculation as they are
anti-dilutive.


8.  Debtors
                                                                                     31 December
                                                                             -------------------------
                                                                                  2004          2003
                                                                             £ million     £ million
                                                                             -------------------------
Amounts falling due within one year
         Finance debtors                                                           8.3           5.9
         Amounts recoverable on contracts                                          0.7           6.2
         PFI/PPP bid costs                                                        10.4           9.6
         Trade debtors                                                            13.6          10.0
         Amounts owed by joint ventures and associated undertakings                4.7           4.5
         Corporation tax recoverable                                               0.1           2.4
         Other taxation                                                            2.5           3.3
         Other debtors                                                             5.5           9.7
         Prepayments and accrued income                                            8.5           7.7
                                                                             -------------------------
                                                                                  54.3          59.3
                                                                             =========================

Amounts falling due after more than one year
         Finance debtors                                                         326.6         257.2
         Amounts recoverable on contracts                                         73.9          55.0
         Trade debtors                                                               -           3.6
         Prepayments and accrued income                                            5.7           5.1
                                                                             -------------------------
                                                                                 406.2         320.9
                                                                             =========================

9.  Analysis of Group funds

                                    31 December 2004                           31 December 2003 
                    -----------------------------------------------------------------------------------------
                                         Non-                                          Non-           
                     Recourse        recourse           Total      Recourse        recourse           Total
                    £ million       £ million       £ million     £ million       £ million       £ million
                    -----------------------------------------------------------------------------------------
Cash at bank             
and deposits             61.7            50.3           112.0          86.8            34.3           121.1
Loans repayable 
within 1 year            (1.5)          (22.1)          (23.6)            -            (4.0)           (4.0)
Loans repayable after
more than 1 year            -          (401.2)         (401.2)            -          (325.3)         (325.3)
                    -----------------------------------------------------------------------------------------
                         60.2          (373.0)         (312.8)         86.8          (295.0)         (208.2)
                    =========================================================================================

Group cash includes £17.3 million (2003 - £19.2 million) which is held in the
Group's captive insurance company.


10.  Other creditors                                          31 December
                                                     ---------------------------
                                                          2004            2003
                                                     £ million       £ million
                                                     ---------------------------
Amounts falling due within one year
            Trade creditors                               25.0            19.9
            Amounts owed to joint ventures and             3.3             3.5
            associated undertakings
            Corporation tax payable                        7.7             4.8
            Other taxation                                 5.3             6.0
            Dividends proposed                             4.4             3.9
            Accruals                                      33.5            24.4
            Deferred income                                5.1             5.9
                                                     ---------------------------
                                                          84.3            68.4
                                                     ===========================

Amounts falling due after more than one year
            Trade creditors                                  -             0.5
            Accruals                                       0.9             2.4
            Deferred income                                2.6             0.9
                                                     ---------------------------
                                                           3.5             3.8
                                                     ===========================


11. Provisions for liabilities and charges

Investment in joint venture

Following the refinancing of the Norfolk and Norwich PFI Project Company in
2003, the Group has received cash distributions that exceeded the Group's
initial investment and share of reserves in the joint venture. This resulting
net liability of £8.7 million is included in provisions (2003 - £8.8 million).
The net liability will reduce as the Project Company generates retained profits
over the life of the project agreement.

Other provisions
                            At 1 January         Charged/        Utilised   At 31 December
                                            (released) to
                                               profit and 
                                             loss account
                                    2004                                              2004
                               £ million        £ million       £ million        £ million

Retained liabilities                44.4             (0.4)           (9.7)            34.3
                               -------------------------------------------------------------
Reorganisation costs                 0.5              0.1            (0.4)             0.2
Onerous lease costs                  0.3              1.2               -              1.5
Other                                0.1              0.3               -              0.4
                               -------------------------------------------------------------
Total other provisions              45.3              1.2           (10.1)            36.4
Deferred tax                         3.8              1.3               -              5.1
                               -------------------------------------------------------------
Total provisions                    49.1              2.5           (10.1)            41.5
                               =============================================================


RETAINED LIABILITIES provisions include amounts for retained liabilities in
respect of the disposed businesses. £24.2million (2003 - £23.3 million) for
Construction, £1.6 million (2003 - £1.1 million) for Homes and £0.1 million
(2003 - £1.0 million) for Property. These are assessed regularly on a contract
by contract basis and are expected to be utilised over the next few years. In
addition, there are provisions of £8.4 million (2003 - £19.0 million) in respect
of self insurance which are calculated using historical data and are based on
the advice of loss adjustors and an independent actuary. While it is expected
that it will take some years to finalise these matters, the Directors are
satisfied that the overall level of provisions is adequate.

The Group has made provision for the sum that the Directors prudently consider
to be the likely outcome of a dispute with the Great Eastern Hotel relating to
the construction management contract performed between 1998 and 2000 and entered
into by the Group's former construction subsidiary, John Laing Construction
Limited. The dispute has been the subject of legal proceedings on which
judgement was handed down, after the balance sheet date, on 24 February 2005.
The final damages claimed amounted to £14.8 million against which the judge has
awarded damages of £8.2 million and has left a further £3.8 million to be
finally decided following further input from independent experts. In addition to
damages, the claimant is seeking recovery of costs and interest which have yet
to be agreed. John Laing (and its insurers who had conduct of the defence), are
considering whether to appeal against the judgement. The provision included in
the accounts does not assume any reduction in the damages as a result of an
appeal process. However it does assume a reasonable outcome on the issue of
costs, interest and insurance.

REORGANISATION COSTS provisions are expected to be utilised during 2005.

ONEROUS LEASE COSTS will be utilised over the remaining life of the leases.

DEFERRED TAX provisions are reviewed with regard to changing legislation and
contract positions.

                                      Provided at                           Not provided at
                                      31 December                             31 December
                              -------------------------------------------------------------------
                                   2004            2003                        2004        2003
                              £ million       £ million                   £ million   £ million
                              -------------------------------------------------------------------

Opening balance                     3.8             1.7                       (11.9)       (9.2)
Charge to profit and loss account   1.3             4.1                           -           -
Amounts arising on acquisition/
disposal of business                  -            (2.0)                          -           -
Other movements                       -               -                        (1.0)       (2.7)
                              -------------------------------------------------------------------
Closing balance                     5.1             3.8                       (12.9)      (11.9)
                              ===================================================================

                                      Provided at                           Not provided at
                                      31 December                             31 December
                              -------------------------------------------------------------------
                                   2004            2003                        2004        2003
                              £ million       £ million                   £ million   £ million
                              -------------------------------------------------------------------
Excess of capital allowances
over depreciation and other
long-term timing differences        3.9             1.9                           -           -
Short-term timing differences       1.2             1.9                       (12.9)#     (11.9)#
                              -------------------------------------------------------------------
                                    5.1             3.8                       (12.9)      (11.9)
                              ===================================================================

#   The unprovided tax asset of £12.9 million (2003 - £11.9 million) is in 
    respect of losses available to offset against future profits.


12. Analysis of net debt

                                  At 1 January     Cash flow        Non-cash      At 31 December
                                        2004                       movements                2004
                                   £ million       £ million       £ million           £ million
                                  ----------------------------------------------------------------
Cash in hand and at bank                20.4            (9.5)            0.1                11.0
Bank deposits maturing in one day       30.9           (16.9)              -                14.0
Overdrafts repayable on demand             -            (1.4)              -                (1.4)
                                                   -----------
Increase in cash in the year                       |   (27.8)|
                                                   -----------
Bank deposits maturing in:
  more than one day                     69.8            17.2               -                87.0
Bank loans repayable in:
  less than one year                    (4.0)          (18.2)              -               (22.2)
  more than one year                  (325.3)          (75.9)              -              (401.2)
                                  ----------------------------------------------------------------
Net Group debt                        (208.2)         (104.7)            0.1              (312.8)
Current asset investments                2.2            (2.2)              -                   -
                                  ----------------------------------------------------------------
Total                                 (206.0)         (106.9)            0.1              (312.8)
                                  ================================================================


13.  Reconciliation of operating profit/(loss) to net cash flow from
     operating activities

                                                              2004           2003
                                                         £ million      £ million
                                                         --------------------------
Operating profit/(loss)                                        2.3           (5.5)
Depreciation and amortisation charges                          3.1            2.5
Profit on sale of vehicles, plant and machinery                  -           (0.1)
Profit on sale of investments                                 (6.6)             -
Dividends received                                            (0.2)          (0.9)
Increase in stocks                                             0.7           (7.1)
Increase in debtors                                          (62.5)         (69.6)
Share award schemes                                            0.9            0.3
Pension payment less FRS 17 charge                            (2.9)          (2.1)
Exchange (gain)/loss in trading profit                        (0.1)           0.2
Increase/(decrease) in creditors                              12.7           (7.0)
Decrease in provisions                                        (8.7)         (12.8)
                                                         --------------------------
Net cash outflow from operating activities                   (61.3)        (102.1)
                                                         ==========================


14.  Reconciliation of net cash flow to movement in net debt

                                                              2004           2003
                                                         £ million      £ million
                                                         --------------------------
(Decrease)/increase in cash in the year                      (27.8)          32.8
Net cash outflow to management of liquid resources            17.2              -
(Increase)/decrease in bank borrowings due within one year   (18.2)         192.3
Increase in bank borrowings due in more than one year        (75.9)        (118.9)
Exchange movement                                              0.1           (0.3)
                                                         --------------------------
Movement in net debt in the year                            (104.6)         105.9
Net debt at 1 January                                       (208.2)        (314.1)
                                                         --------------------------
Net debt at 31 December                                     (312.8)        (208.2)
                                                         ==========================




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