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Company Spotlight: Amey


AMEY'S share price picked up sharply after last week's boast of 20 per cent returns from its work on the partial privatisation of London Underground.

This halted an alarming crash but a sudden revival looks unlikely in the wake of the Potters Bar rail crash.

The stock collapsed after Amey changed accounting techniques on Private Finance Initiative work to take on board bid costs earlier, which took the firm into the red.

This deficit was a one-off but, despite Amey's protestations, the City lost faith and the share price continued falling.

Part of the problem is the ragbag support services sector, in which more firms wash clothes than maintain roads.

Amey is a top player in road maintenance but, along with Jarvis, another firm keen to hide its origins, insists this is not construction.

Even on successful PFIs such as that involving Glasgow schools, Miller was used as a contractor, with Amey acting as a concessionaire.

Avoiding one-off contracts has seen Amey crash out of the Construction News contracts league - from third a year ago, the firm has slumped to 52nd overall.

This is part of the City's problem - construction brings in regular up-front payments but PFI can empty a firm's pockets in the short term as it involves outlay until the work is done.

The City will forget about the recent losses if Amey's investments, such as the £60 million ploughed into the Tube deal, bring a quick return, which is unlikely for anyone buying the shares at the moment. Avoid.