French mop-up costs AMEC £172m

INFRASTRUCTURE group AMEC faces a bill of at least e270m (£172.3m) to exercise its option to buy out the remaining 54% stake in French-owned SPIE, chief executive Sir Peter Mason has revealed.

The option on SPIE, market leader in maintaining telecoms networks in France through its Netcom business, became exercisable from last month. Completion and payment is scheduled to take place from next January.

If the acquisition goes ahead as expected, it will take AMEC's business even deeper into the lucrative services sector.

Today the group said that in the first six months of the financial year to June 64% of its earnings came from services, an increase of 5% over the same period last year. Pre-tax profits rose 7% to £41.6m before goodwill, amortisation and exceptional items. The interim dividend is being boosted by 10% to 3.4p.

One of the biggest engineering projects to benefit London, the Docklands Light Railway extension to London City Airport, is likely to be carried out by AMEC. It became one of the preferred bidders earlier this week with its 50% partner Royal Bank of Scotland for the 4.4 kilometre (2.75 miles) extension.

Contracts for the design, construction and running of the DLR, worth £300m over 30 years, are likely to be signed by the end of the year. The link could be the making of London City Airport, which operates short-haul flights to Europe and has a growing passenger list of 1.6m who will use the railway in preference to road transport.

AMEC and RBS will have to contribute £110m to the project if they are successful. With targeted returns of between 15% and 20% on this and a series of Private Finance Initiatives AMEC is well placed to boost its long-term contracts programme.

AMEC was also involved in clearing Ground Zero, site of New York's World Trade Centre disaster, removing more than 1.5m tons of steel during the period.

Its order book includes long-term deals with BP for its offshore platform on the Clair project in the North Sea as well as servicing Shell oil rigs in that area.