John Laing weighed down by renewables weakness

The group registered £234m of write downs during the first half, of which £173m relates to renewable energy projects – there were £77m of performance losses from its solar and biomass assets. A £62m decline in the ‘fair value’ of its total portfolio pushed John Laing into a pre-tax loss.

Following on from March's announcement that it would not commit any new investment to wind and solar generation, the group is now looking to reduce its existing renewables exposure – and therefore vulnerability to merchant power prices – instead focusing on infrastructure assets.

Amid subdued market activity following the pandemic, it sold four of its renewable energy projects in the first half and, alongside divesting a correctional facility in New Zealand, this pulled in £88m. It is pointing to its secondary portfolio for future sales and has divestment plans in place for each asset. John Laing believes that in the current low interest environment, the yields on these assets will make them attractive to investors and it says it should be able to offload them at or above their book value.

A measly £2m was invested into new projects as a number of public procurement processes were delayed until next year. It had been targeting £1bn of investments between 2019 and 2021, but having spent only £186m in total by the end of June, it says it is unlikely to fulfil this ambition.

It has seen an increase in the number of preferred and short-listed bidder positions secured on public-private partnership projects, however, taking the total gross investment value of its pipeline to £572m, up from £443m at the start of the year.

Net debt has surged by more than 80 per cent from the 2019 year-end position to £436m, although the group is sitting on £311m of financial resources. Unlike many others, it stuck with its final dividend for 2019 has also increased the half-year payout.

John Laing is guiding to “modest” underlying NAV growth in the second half, although Peel Hunt lowered its forecast NAV at the year-end to 320p, from 338p.