Sir Peter Mason, the outgoing Amec chief executive, admitted he should have acted quicker to tackle the problems in the group’s UK construction business, which led to losses of £58m in its interim results.
Mason, who will take up a non-executive role at the Olympic Delivery Authority when he leaves at the end of the month, added that it was not automatic that Amec’s construction arm would be formed into a separate company – even though market analysts believe it to be inevitable.
In response to the poor performance of UK construction, Mason said: “It has not been well managed for the past three years. The people running the business were not following proper business processes and did not carry out proper tender reviews.”
He added that the management team had been replaced.
Last week Amec announced its interim results for the first six months to 30 June 2006. The figures include a pre-tax loss of £58m owing to writedowns on a number of projects.
The loss does not include £79m of pre-tax exceptional provisions and one-off charges.
The exceptional charge was more than double the £35m that the company had flagged up in its trading update on 16 June 2006. This news, which took the City by surprise, caused Amec’s share price to drop 27.5p to 291p by the close of play on 31 August 2006.
Amec’s recent financial results have been plagued by exceptional charges.
In March the group announced that it had made a provision of £89m associated with its withdrawal from construction markets in the UK and USA, its oil and gas division, and a legal dispute in the USA.
However Mason said he believed the construction group would have a clean balance sheet at the end of the financial year.
Amec is conducting a strategic review of its business, which is due to end in December. This is widely anticipated to include the breakaway of the energy and the nuclear division. This will be managed by incoming chief executive Samir Brikho. However Mason said this was not a foregone conclusion. “Our job is to turn the business around, whether that be for a sale or not,” he said.