Birmingham pull-out adds to service provider’s £428m losses
Amey has posted a pre-tax loss of £428m for the year to 31 December 2018, hampered by a long list of exceptional items including £123m on the failed Birmingham City Council Highways PFI contract.
The losses also include a £314m write down on the waste collection and utilities businesses as the highways and environmental divisions all made losses before exceptional items.
However, the other areas of the business such as consulting and rail facilities management, justice and defence posted profits.
Overall the group revenue increased to £2.32bn from £2.2bn and results show Amey UK made a pre-tax profit of £208,000 before exceptional items.
Amey finalised a deal at the beginning of July to pay £215m to terminate its troubled Birmingham highways maintenance PFI contract.
Parent company Ferrovial said that the agreement would see £160m paid in 2019 and the remaining £55m over the next six years.
Amey will continue to provide services on an interim basis until 30 September 2019, and it said this period may be extended until 31 March 2020.
“Release from this difficult contract is hugely significant for the group and enables the business to capitalise on the major changes that have been made over the past three years and focus on success,” said chief executive Andy Milner.
Parent company Ferrovial put Amey up for sale late last year and has since reduced its valuation of the business to £88m.
“In 2018, the group has recorded and exceptional cost of £123.2m as part of the overall cost of exiting from Birmingham City Council Highways PFI contract, which has suffered from high level performance deductions and penalties applied by the contract,” a company statement said.
“Included in this amount is £95m of additional provisions for the cost of exiting the contract and £35m in respect of impairment of loan balances plus accrued interest receivable from Amey Birmingham Highways Holdings Limited, which is now in administration.”
In 2017 the company’s exceptional charges on the Birmingham contract were £208.5m.