Amey heading for £65m loss after heavy asset write-down

Amey, the troubled PFI contractor, indicated yesterday that it would plunge to a pre-tax loss of about £65m for the year after incurring heavy asset write-downs which are likely to put it in breach of its banking covenants.

However, the company said it believed its lenders remained "supportive" and brushed aside renewed speculation that its chief executive, Brian Staples, would be forced out.

The company, which has lost 90 per cent of its value since March, axed its interim dividend and shed two finance directors in quick succession, said that asset write-downs would cost it £85m this year. This is in addition to £15m of costs relating to the restructuring of the group.

Amey was already facing a reduction in operating profits to about £35m as a result of delays in completing the public private partnership for London Underground, delays in other PFI bids and a deterioration in its technology services business, which is being sold off.

The group has been further hit by an increase in its net debt to between £190m and £200m that will result in interest charges being £2m to £3m more than previously expected.

The asset write-downs follow a preliminary financial review of Amey carried out by its acting finance director Eric Tracey, who was parachuted in after the previous finance director, Michael Kayser, abruptly quit in October after just five weeks in the job.

The write-downs relate mainly to the Croydon Tramlink and Amey's decision to sell off its equity interests in nine PFI projects. The write-downs will be offset by a £20m tax credit but next year there will be a further write-down of up to £20m on other assets.

Analysts and investors again questioned whether Mr Staples could survive. But a spokesman for the company said Mr Staples continued to have the full support of the Amey board.

The company ran into trouble in March when it announced a more conservative accounting approach that had the effect of turning a £56m profit last year into an £18m loss. Since then, Amey's shares have crashed and its partners in the Tubelines consortium, which is taking over the Jubilee, Northern and Piccadilly underground lines, have been forced to fund its equity stake in the project.

A spokesman said the bottom line loss for the year arose partly because Amey would have to wait until next financial year to recoup its £28m bidding costs on the Tube contract.