John Laing was forced to take a £25m hit on its long-troubled Greater Manchester Waste projects in half-year results reported on Thursday, but the British infrastructure group still managed to increase its net asset value by 2.3 per cent compared to the same period last year.
The company said it had reached an agreement on the investments with Greater Manchester Waste Disposal Authority which saw them book a reduction in their value of £25.5m compared to their valuation at 31 December 2016.
In arriving at its decision to enter into an agreement with Manchester Waste, John Laing said it “took the view that the alternative could have been long and costly legal proceedings with an uncertain outcome for the valuation of its two investments.”
Olivier Brousse, John Laing’s chief executive, said:
It has been an active year so far and I am pleased to report growth in NAV, after taking into account the reduction in value on our two Manchester Waste investments. We have made good progress on investment commitments and disposals and are on track to achieve our full year guidance on both fronts.
According to Barclay’s, the Manchester Waste investments represented 8 per cent of John Laing’s total investment at the end of last year.
However, while admitting that the Manchester Waste loss was disappointing, Peel Hunt’s Andrew Shepherd-Barron said that John Laing has “done 100 projects and this is just one… if they take another provision that hurts a bit but it’s only one project out of a hundred”.
The company reported £111.3 of investment commitments and £151.3 of realisations, in line with its full year guidance of close to £200m in both cases.
John Laing’s share price is up 13 per cent year to date while the FTSE All Share index is up 4.5 per cent.
Reporting by David Keohane