Senior construction analyst identifies 拢255m of 鈥榩otential issues鈥� on group鈥檚 balance sheet

A senior construction analyst this week warned investors that Amec鈥檚 demerged infrastructure business could end up worth almost nothing.

Mark Howson, analyst at investment bank ABN Amro, said that excluding the PPP investment business, he could identify 拢255m of 鈥減otential issues鈥� at the group.

The 拢255m figure refers to 鈥渦nagreed income鈥�, which Howson defines as items of revenue/debtors placed on the balance sheet where the final outcome is not 100% certain at the time of the year-end.

Howson said: 鈥淲e believe a number of such items were being carried on the balance sheet last year under this category.鈥� He warned that his estimate of 拢255m could be lower than the real figure because 鈥渨e cannot guarantee that we have unearthed every item of disputed income鈥�.

In a trading update published last month, Amec chairman Peter Mason announced it would be making a 拢35m post-tax provision, associated with charges and contract provisions related to historic construction contracts. He added it was making a further 拢30m provision over future legal costs.

An Amec spokesperson said: 鈥淲e recently updated the market on 16 June when we made full disclose of exceptional items 鈥� both gains and costs. We have said we have taken a cautious view and believe that we have now drawn a line under previously announced business closures.鈥�

In May Amec sold its French services business Spie to a firm controlled by funds managed by private equity firm PAI for a gross value of 拢707m. Howson said this ought to place the group, which had been highly geared, 鈥渋n an overall net cash position for now鈥�.

Howson said: 鈥淭here has been too much emphasis on the glossy side of Amec, with not enough on the potential risks.鈥�