Amec highlights PPP hitch

Companies involved in public-private partnerships face the possibility of
reductions to the book value of their concessions under new accounting rules for
PPP deals.

Last week FTSE250 support services group Amec said its management team had
increased its PPP concession valuation from £77m as at March 2005 to £99m, but
warned that uncertainties around the PPP accounting since the introduction of
IFRS could see amendments to this valuation.

IFRIC, the interpretations body for the new reporting standards, has been
struggling to finalise interpretations for concessions accounting. Three draft
interpretations have been issued, but guidance is still unclear and companies
have been confused as to how to account for PPP deals.

‘The whole thing is a bit a of mess,’ said Howard Seymour, an analyst at
Bridgewell Securities. ‘Determining the underlying value of PPPs has become
difficult and directors have had to come in and give the market an idea of what
the value is.’

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