The finance directors of the UK鈥檚 four largest listed contractors are in discussions to agree a common way of presenting their private finance initiative revenue and profit to the City.
The move is the brainchild of Chris Girling, Carillion鈥檚 new finance director, who says the value of contractors鈥� PFI portfolios is not factored into their share prices.
Girling, who joined Carillion from engineering group Vosper Thornycroft and has worked in the car and aerospace industries, is talking to his counterparts at Balfour Beatty, Amec and Laing.
He said the aim of the initiative was to make it easier for analysts to understand the PFI. 鈥淭he analysts have precious little time, so we need a common and transparent approach to help them,鈥� he said. 鈥淲e all have opinions on the subject of accounting for PFI and agreeing what information we give to the City should help that.鈥�
Carillion expects to make about 拢10m a year over the next 25 years from the 14 PFI projects on its books. But, like other contractors, it feels the value is not reflected in its share price.
Carillion, Balfour and Laing have all started trying to help analysts value their PFI portfolios by using similar graphs. These show the three PFI profits streams 鈥� construction margin, facilities management profit over the concession and dividend on equity.
Many contractors also report revenue and profit from the PFI in different parts of their businesses. 鈥淚t may be a forlorn hope, but if we all used the same segmental reporting it would help, too,鈥� said Girling.
Girling met with Balfour鈥檚 Ian Tyler on Tuesday and is planning meetings with Adrian Ewer of Laing and Amec鈥檚 Stuart Siddall.
Ewer said: 鈥淚 think a common approach is beginning to happen by default and I am beginning to detect a change in City sentiment. But I am 100% behind the idea of getting a common approach.鈥�
Stephen Williams, analyst at Williams de Bro毛, said: 鈥淭he City doesn鈥檛 really understand PFI in terms of profit and what it could be worth, so its value is either underrated or ignored. A common approach would lead to better share valuations.鈥�
