Amey profit up despite 17% revenue slide

Amey UK saw a dip in turnover last year despite improving its tender success rate, according to the company’s latest annual accounts.

Revenue at the transport infrastructure and facilities management contractor, which was ranked fifth in the CN100 2023 table of top contractors by turnover, reached £1.84bn in the year ending 31 December 2023.

This marked a 17 per cent year-on-year fall, partly because the previous year’s total included revenue from discontinued operations in the waste treatment and water sectors.

However, its pre-tax profit of £97m last year was up 12 per cent on 2022, boosted by £8m from the final settlement of a loan to an unnamed joint venture. The group’s margin broadened to 5.3 per cent compared with 3.9 per cent in 2022.

“In 2023, there was renewed focus on work-winning capabilities, where process and execution have been a major priority,” said chief executive Andy Milner.

“A significant improvement in tender success has been seen across all sectors: defence, health, education, justice, highways and rail. We also secured extensions on some existing contracts and were awarded places on major frameworks.

“Our win rate in 2023 was one in three which is a significant improvement over 2022 (one in 14).”

Amey’s core activities are divided between its transport infrastructure, facilities management and consulting segments.

All of these “have achieved or exceeded their budget plans”, said Milner, adding that “the performance of the business has not been affected by macroeconomic or geopolitical turbulence”.

Transport accounted for 64 per cent (£1.18bn) of turnover and Amey described future facilities management growth opportunities in “building decarbonisation”.

In his strategic report accompanying the accounts, Milner said that the latest results proved that Amey “is capable of significant cash generation”.

Cash and cash equivalents at the end of 2023 almost tripled to £115.9m compared to £41.9m the previous year.

Amey reported a positive cash inflow of £79.9m from all operations even after payments of £30.9m against “historic contract loss provisions”. In 2023 the firm recognised an £87.9m contract loss provision related to guarantees to subsidiary undertakings.

“The timing of future utilisation of provisions can be uncertain. The contract loss provision will be utilised over a period of up to 15 years,” Amey stated.

There are no bank loans repayable within 12 months. But this April, after the period covered by the latest accounts, Amey completed a loan refinancing with a new £235m five-year syndicated facility from six lenders. Up to £75m of the revolving credit facility is available for loans.

“We have used part of this facility, together with the group’s excess cash, to repay £159m of equity,” said Milner.

Amey did not pay out an interim dividend and the directors do not recommend a final dividend.

The firm employed a monthly average of 10,269 staff, down from 10,540 in 2022. Amey said that employee turnover of 12 per cent was “below the industry average“ in 2023. Its annual wage bill rose by 5.8 per cent to £426.8m, however.

Milner replaced Amanda Fisher as chief executive in December 2022, two months after the business was bought by private equity firms Buckthorn and One Equity Partners (OEP) from Ferrovial for £400m.

Giving his outlook for the current financial year, he said that Amey was “well positioned to take advantage of the growing investment in the infrastructure sector and decarbonisation in particular. We are expanding and diversifying our service capability and sector footprint across the infrastructure landscape, while enhancing our market share in our core markets”.

Milner cited the Treasury and Infrastructure Project Authority’s National Infrastructure and Construction Pipeline document, published in February, which stated that 70 per cent of infrastructure spending over the next decade would be allocated for energy and transport projects.

Amey’s year-end order book increased by 23 per cent from £6.2bn in 2022 to £7.6bn at the end of December 2023.

“Since the end of 2023, additional key frameworks such as the Network Rail North-West and Central Electrification and Power framework have been secured and further results are awaited,” Milner said.