SLIMMED-down building group John Laing has returned to profit and says it is confident about prospects following a major overhaul in the past year.

Laing now focuses on house building and infrastructure investment following the sale of its loss-making construction business for a token £1.

The strategy paid off as pre-tax profits in the six months to June 30 rallied to £13.5m from a loss of £49.7m in the previous year.

Laing has also benefited from the buoyant housing market and said its outlook for the rest of the year had been helped by signs of stable house prices.

Executive chairman Bill Forrester said: "Our two businesses, Laing Homes and Laing Investments, operated in favourable markets in the first half of the year and we expect conditions to remain broadly positive in the second half."

In the long term, Mr Forrester pledged to chase acquisitions and increase bidding activity in the firm's infrastructure investment division.

The upbeat comments come after John Laing plunged into the red last year because of the difficulties at its construction arm.

The division, which was involved in the building of Cardiff's Millennium Stadium, saw losses increase last year to £128.1m from £88.9m.

That prompted the sale of the division to Essex firm O'Rourke, while Laing's office and industrial property-based development business was offloaded as part of asset disposals worth more than £120m.

Mr Forrester added: "The group has significantly reduced its risk profile, repaired its balance sheet, reduced central costs and has put in place a strategy which we believe will deliver future growth."

In housing, Laing completed 648 units in the first six months, an increase on the 567 reported last year. The average selling price went up to £241,000 from £223,000.

However, pre-tax profits in the division, which is concentrated in the South-East and the Midlands, eased to £22.5m from £23.9m because of the impact of a high-margin development in south London on last year's figures.

The group said the value of its investment division portfolio, which develops, owns and operates infrastructure and other accommodation, had increased ten per cent in the six-month period to £220m.

Highlights in the first half of the year included the granting of a new 20-year extension to its Chiltern Railways' franchise by the Strategic Rail Authority. The division generated half-year profits of £13.6m, down on £16.2m last time, because of the absence of a business now sold.