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Added value from the re-listing route


IT IS hardly surprising that Peterhouse chief executive David Jackson is keen to persuade the Stock Exchange to re-list the group in the support services sector rather than in construction.

As the average price-earnings ratio in the support services sector is 31.9 compared with just 13.5 for construction and building materials, there is a dramatic difference in the effect it has on a company's share price.

Over the past year, Amey's switch into support services has helped more than double its share price from a low of 527p to more than 1196p, adding £300 million to the company's stock market value.

Last week WS Atkins was making use of its high rating to offer bonuses and options in the form of shares to executives at Benham, its new US acquisition.

For an acquisitive group like Peterhouse, inclusion in the support services sector would be a major bonus enabling it to use more highly rated shares tosnap up modestly rated niche businesses, such as Eve, which remain out of fashion with the City and have no obvious route to develop as independents.

The gulf in share ratings between construction and support services is creating some anomalies.

Amec, for example, is rated as a lowly construction business, although in the first half the firm derived two thirds of its profits from services operations.

But, because it maintains a large construction turnover, the group continues to be classed in its traditional sector.

Eventually, if the gap between the two sectors remains this wide, larger groups will start thinking about floating off their support services operations, such as facilities management businesses, into separate concerns.

For now, though, Peterhouse is probably not the only medium-sized group in the industry eyeing up potential acquisitions that will take their services business above the magic 60 per cent of group turnover that can qualify firms for inclusion in the support services sector.