Collapsed railway line contributed to a £0.8m loss in rail business but contractor says it will be compensated
Ongoing problems with Chiltern Railway line dragged down pre-tax profits at developer John Laing which fell 11% to £12.3m for the first six months of the year.
The result includes profits from disposals of PFI investments of £4.6 million and a loss from normal rail operations of £0.8m. At the same stage last year the PFI specialist had made no disposal while rail operations posted a £4.8m profit.
Laing Roads increased profits to £4.5m up from £3.4m and the accommodation division recorded profits of £12.2m including the above disposals.
The valuation of its project portfolio grew 11% for the first six months to 30 June 2006 excluding Chiltern.
The Chiltern Railway line, which is operated by John Laing, was closed for seven weeks when work to build a Tesco store on top of a railway cutting collapsed in June.
In his trading statement, chairman Bill Forrester said that Tesco has accepted liability and John Laing has now commenced a formal dispute resolution process in order to settle on the quantum of compensation.
Forrester also reiterated the developer’s plans to open offices in Canada and central Europe as is looks to take advantage of overseas PFI markets.
However the chairman warned that although the group’s portfolio of infrastructure projects was strong the UK market for infrastructure projects is currently suffering from programme delays, in part caused by budgetary constraints.
During the sixth months John Laing reached financial close on the £1bn Barts and the London Hospital project and signed off the £319m South Lanarkshire school project.