Analysts warn that contractor's overvaluing of US subsidiary Comax will lead to readjustments next year.
Analysts believe contractor Amey may have to write off tens of millions of pounds next year, despite announcing this week that it had cut the value of its assets by 拢85m.

The largest elements in the write-down, published in its trading statement, come from a fall in the value of the Croydon Tramlink project in south London and some old construction balances.

Amey was dropped from the FTSE-250 on Tuesday, although its share price stabilised at about 30p. The year-high was 413.5p.

Before the statement there had been speculation that the writedown might include a reassessment of the value of Comax, a US business services group bought in 1999.

Some analysts believe this asset is overvalued because the brand is overrated. In the company accounts, the value of Comax was calculated to fall over a 20-year period but City experts believe that this period is too long. Comax accounts for the bulk of the company's 拢172m goodwill.

Mike Foster, an analyst at stockbroker KBC Peel Hunt, said: "I don't think Comax can be defined as a brand with sufficient name recognition to knock out competition in itself 鈥� it may have good people but this does not justify 20 years. I believe that the Comax goodwill will need to be looked at in the next year."

We all agree that Comax is not worth what Amey paid for it

Senior City analyst

A senior City analyst said the company should have written off Comax's goodwill, or at least written down its value. But he added that this was not likely to occur unless chief executive Brian Staples left.

He said: "We all agree externally that Comax is not worth what Amey paid for it but Brian Staples is emotionally linked to it.

"Another writedown would also leave the possibility of negative shareholders' funds, meaning that it would be very difficult for bankers to lend money to the company."

The Amey statement, based on a review by acting group finance director Eric Tracey, was bullish about Comax. It said: "The cash flows arising from additional business won as a result of the group's ownership of the Comax capabilities are expected to support the goodwill carried on the balance sheet."

A spokesperson said Tracey had been cautious in his review. She said Comax had helped it win deals it would otherswise have lost.