Upbeat Laing 'won't do a Jarvis

Private Finance Initiative (PFI) specialist John Laing boasted yesterday that it is working on 42 different infrastructure projects, that it is preferred bidder on four more and shortlisted for another 18.

But Andy Friend, its chief executive, insisted the company would not fall into the trap of troubled rival Jarvis and become overstretched, saying he had learned from others trying to "realise too much [value] too quickly".

Issuing an upbeat trading statement, he also confirmed that Laing needed to pump more money into a retirement scheme whose deficit is believed to have risen by as much as 50% over the last 12 months to £145m.

Laing's shares fell 2% to 269p, although the company is still expected to produce underlying pre-tax profits for the year to December 31, 2004 of anywhere between £19m and £24m, compared with £14m last time. Laing has quit direct construction to concentrate on managing projects in the road, rail and accommodation sectors.

Mr Friend said the accommodation business had handed over 17 public sector projects on time during the course of 2004.

And while Laing was busy with 27 other projects such as courts, schools and hospitals, it would not be offering to take over any of the 14 Jarvis has ceased working on.

"We are very careful to ensure that Laing only gets involved with projects that we can deliver on time and under the terms they were originally bid for. They have got to be sustainable," Mr Friend said.

But he did not believe the problems at Jarvis had damaged the wider PFI sector and made it more difficult for companies like his own.

Mr Friend said concerns about the accounting methods for special financing vehicles and the treatment of refinancing gains had probably been more important than the performance of an individual company.

Laing has itself profited from recycling its assets. A 50% stake in an M40 road project was sold in October for £26.3m, having been bought for £19.9m three months earlier.

The company has left its construction business behind but not all of its liabilities.

It has £40m put aside to cover current historic disputes such as the one with Terence Conran that is now going through the courts over the modernisation of the Great Eastern Hotel in London.

Much of the pension liabilities stem from the days when Laing had a large building workforce.

Mr Friend declined to say what the exact deficit under FRS17 accounting arrangements was, but pointed out these were liabilities that would not crystallise for at least 15 years.

Broker Panmure Gordon said in a research note that the pension hole at Laing could have grown from £95m to £145m.

There was some good news from the Chiltern Railways arm, which runs services from Birmingham to London Marylebone - it has seen a 13% increase in passenger revenues.

But the late signing of the public private partnerships (PPPs) on London Underground has delayed a contract for Thales, Fluor and Laing to deliver a new communications network. This delay cost Laing £1.1m in the first six months of the year, but there is not expected to be any similar financial impact in the second half.