Amey has put aside an exceptional charge of £55m relating to the possible ‘unfavourable resolution’ of its long-running dispute with Birmingham City Council, the company’s annual report states.
The dispute, involving a £2.7bn contract to maintain the city’s roads and pavements over 25 years, went to the High Court after an unsuccessful attempt at adjudication.
Birmingham City Council is in a long-running dispute with Amey
Last Autumn a judge reportedly criticised both parties over their handling of the case. The case was heard in February and a judgement is awaited.
Amey’s 2015 annual report states: ‘An exceptional charge of £55.0 million arose in respect of the possible impact of an unfavourable resolution of ongoing litigation on the Birmingham contract and a revision of the contract’s profitability going forward.’
It states that the dispute resulted in a ‘post-exceptional operating loss’ of £41m for its local government division, adding: ‘Cash collections in the local government sector have proved to be particularly challenging this year, a position which has been exacerbated by the ongoing litigation on the Birmingham contract.’
The £55m charge cut by more than a half the company’s operating profit before exceptional items of £102.1m, which came from slightly increased annual revenue of £2.23bn.
An Amey spokesperson said that the company could not comment at this time due to the ongoing legal case, but added: ‘We are committed to continuing to provide a comprehensive, high-level service to Birmingham City Council and its residents.’
A spokesman for the council also declined to comment in advance of the judgement.
At the beginning of this month Amey’s new maintenance and response contract covering Highways England Area 7 in the neighbouring East Midlands went live. The contract could be worth £300m over 15 years.