Jarvis set to gain from boom in PFI contracts

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The Independent Online
JARVIS, the transport infrastructure maintenance company, yesterday predicted that the Government's Private Finance Initiative (PFI) would yield it further opportunities.

Reporting a 55 per cent increase in half-year pre-tax profit to pounds 19.7m, Paris Moayedi, the chief executive, said: "We do not view the PFI as a fad, but as the most common way capital projects will be funded in future. Most value will not be in construction, but in facility management."

Jarvis, which has track maintenance contracts with Railtrack worth over pounds 500m and a large road marking operation, maintains that its businesses are recession-resilient.

Chairman Roger Payton said: "Jarvis has a secured workload for the current and future years in excess of pounds 1.2bn [and] operates in markets where demand for its services can be expected to remain high."

Mr Moayedi said: "The demand for road marking does not change if there is a recession." Jarvis wants to expand road maintenance into Europe, and expects to benefit from Railtrack's pounds 17bn investment plan.

One analyst said that, with maintenance contracts lasting up to 30 years, "the City believes PFI has a massive future". Peter Jones, analyst at Peel Hunt, said: "The likelihood of growth in PFI contracts in the sectors in which Jarvis specialises means it will have above average turnover growth, and significant forward earnings visibility."

With the shares flat at 605p yesterday, and analysts forecasting full- year profits of pounds 65m, the stock trades at a forward p/e of 17. With rivals such as Serco trading at up to 30, Jarvis looks cheap at these levels.