John Laing construction sale losses jump £70m

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The Independent Online

John Laing, the building group, faces total losses that are £70m higher than expected in connection with its construction division, which is being sold to the private construction business O'Rourke. The news prompted a 4 per cent fall in Laing's shares to 430p.

The sale of the construction arm will soon be finalised, and is expected to result in a £30m charge. Originally, Laing had been hoping for a price close to the £30m book value.

In addition, the group will retain liability for fixed-price contract losses on a number of construction projects, including the National Physical Laboratory. These trading losses, together with a recent adverse arbitration judgement for delays on construction of No. 1 Poultry, in the City of London, will result in a trading loss for the division which will be around £40m worse than an earlier loss forecast of £10m.

Laing's deputy chairman, Robert Wood, said: "It's a bitter pill to swallow but it's the right move. We have three excellent businesses going forward and we remain committed to shareholder value." The three other divisions, homes, property and infrastructure investments, are ahead of budget at the half-year stage. An analyst, who asked not to be named, said: "I don't think they expected the losses to be this high. I suspect the next step will be to get rid of the housing division."

Laing expects to report a pre-tax loss after exceptionals for the year end December 2001 of around £25m, compared with a pre-tax profit of £5.7m last year.