Amec's exceptional costs of £80m take group into £58m loss

Amec’s inability to present a “clean” set of financial results rolls on yet again. This time a one-off hit of almost £80m left the group in the red at the end of the first six months of 2006.

Amec's interim results (to 30 June) show revenue (the new term for turnover) higher at £1.7bn (comparable figure in the first half of 2005: £1.4bn). There would have been a pre-tax profit of £24m if it hadn’t been for the toll of past management decisions. The cost of these ran to £79m, leaving the group carrying a pre-tax loss of £58m.

Following the sale of Amec Spie, chief executive Sir Peter Mason has separated the remaining parts of the group into two discrete divisions: Energy & Process and Built Environment.

Sir Peter said: “Within the Built Environment division, our Investments business has done well, but this progress has been overshadowed by disappointing performance in construction. We are tackling this and believe we have put the business on the road to recovery.

“Performance in UK building and civil engineering was unsatisfactory and reflected poor performance on a number of current contracts and also overhead under-recoveries.”

Losses in UK building and civil engineering ran to £23m, higher than the £14m of losses racked up in the 12 months to the end of 2005. Its net liabilities have risen to £157m; at the start of the six-month period they stood at £114m.

Amec’s £7m bid cost on the cancelled Colchester General Hospital PFI is still as much an uncertainty as before. “It is expected that these costs will be reimbursed,” said Sir Peter.

Average weekly net cash debt during the first half of 2006 was £400m. At 30 June 2006 the group’s net debt was £460m (six months earlier: £385m). The sale of Amec Spie is expected to eliminate this problem and leave Amec with net cash of £150m.