Are contract announcements helpful to the investment community?
30 January 2012 2 comments
Accurate and timely disclosure is paramount, particularly against the current background of uncertainty and tension in the markets. Besides, construction companies, with their lumpy work flows and bespoke accounting, are a case in point for helpful disclosure.
At Balfour Beatty, we have been praised for our order book disclosure. We exclude unsecured orders from the published numbers. We disclose order book figures for each division, twice a year, and also allocate the orders to the years in which we expect them to be fulfilled.
Presuming the market believes that the order book is the best leading indicator of revenue, is there an additional benefit in announcing contracts to the stock market as and when we sign them?
During 2011, we were challenged to debate this topic internally on several occasions. There was the newspaper article that criticised the practice on the basis that winning contracts was part of our day-to-day business and didn’t warrant shouting from the rooftops. This led to some hesitancy on our part to announce new work. Towards the end of the year however, we signed quite a few orders and announced them. This seemed to cause excitement among, not only analysts, but also the media.
We remain convinced that in addition to the large contracts, investors would like to hear about those that help explain the strategic direction or indeed, just give a better understanding of emerging trends. Do you agree?
What do you think?
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