Amey reveals pre-tax loss of £428m

Amey has recorded hefty losses of £428m before tax for the year to December 2018, as it continues to feel the effects of its disfunctional Birmingham PFI contract.

Despite the losses, Amey say they maintained operating profitability before exceptionals, which CEO Andy Milner claimed was “an outstanding achievement and a testament to the hard work and commitment of the people working across Amey.”

In 2018, the company lost a legal battle with Birmingham City Council, with the Court of Appeal finally releasing Amey from a PFI contract at a cost of £215m, which will be paid in instalments up to 2025. Amey will formally exit the contract in September 2019, which will reportedly aid owner Ferrovial’s efforts to find a buyer, as it attempts to sell Amey separately from the rest of its asset support division.

The firm also had to write off £314m of goodwill impairment charges due to difficult conditions in the waste and utilities markets. This follows a loss of £208m in 2017, mainly due to a troubled highways PFI.

But, despite a second successive year of losses, the company has recorded revenue up 5.7% to £2.32bn as it drives ahead with its Fit 4 the Future programme.

Amey has also reported some positive wins over the past year, including the £5bn 15-year Wales and Borders rail franchise in joint venture with Keolis. They also won the £325m Area 10 motorway and trunk road maintenance contract with Highways England. And taking over full responsibility for a £550m contract with the Defence Infrastructure Organisation (DIO) following Carillion’s collapse helped to increase revenue from Amey’s facilities management business to £738.8m in 2018.

This momentum has continued into 2019, where Amey has already won around £200m of additional new work, including a contract with the Northern Powergrid and another to develop infrastructure as part of the new Brent Cross West station.

Amey CEO Andy Milner said: “In 2018 Amey performed well in a challenging landscape for the market and our competitors. Our Fit 4 the Future programme continued to deliver meaningful improvements to the business. We are now in the second phase and remain focused on the four pillars of this programme; processes, performance, leadership and direction. The first half of the year was particularly transformative. In the wake of the collapse of Carillion, Amey had to make a number of decisions which have ultimately strengthened our business in the long run. 

“In recent years, our Highways business has experienced significant challenges, primarily due to the dispute with Birmingham City Council. As announced at the end of June 2019, we are pleased to have reached a consensual settlement agreement to exit the Birmingham Highways PFI contract. With the dispute behind us we are in a much stronger financial position.

“In 2018, in spite of difficult conditions, Amey maintained operating profitability before exceptionals. This is an outstanding achievement and is a testament to the hard work and commitment of the people working across Amey. We continue to work hard to further strengthen Amey, as we enter a new chapter in our evolution. With the Birmingham contract dispute now resolved, we can move forward to focus on delivering the services our clients and communities across the UK rely on.”