Troubled engineering firm Amey, one of the companies lined up to help run the London Underground, has wrapped up a grim year by warning that it will miss its financial targets.

Amey said profits before taxes and one-off costs for 2002 would come in at about �27m ($41m), down from an earlier forecast of �35m.

The firm blamed hiccups in selling its stake in government contracts to build or maintain public service facilities.

It said the sale should now go ahead in mid-January, about two weeks behind schedule, and probably at a lower price than originally expected.

Amey added that it expected to write off about �95m to reflect a decline in the value of its assets, up from an initial estimate of �85m.

Shares dip

Investors reacted with dismay, marking Amey shares down 12.2% to 26.75p in mid-afternoon trade.

Amey's shares, formerly among the best-performing on the stock market, have now lost 92% of their value since the beginning of the year.

The company initially won plaudits from investors by becoming a major player in the government's private finance initiative (PFI), a scheme which encourages private businesses to fund public service facilities in return for a guaranteed revenue stream from government coffers.

But Amey shocked the City earlier this year when it changed the way it accounted for costs and revenues stemming from its public service contracts, leading to an unexpected �18m loss for 2001.

Investor confidence in the firm took a further knock in October when its finance chief Michael Kayser resigned unexpectedly just five weeks after taking up the job.

Tube delays

The firm was forced to put its PFI contracts up for sale and cancel its annual dividend payment to shareholders in an effort to save cash.

Amey's deepening financial troubles last month delayed the completion of its contract to help run the London Underground's Piccadilly, Northern and Jubilee lines.

The firm said that contract should now be signed on Tuesday.

It added that it was in talks with its lenders, saying they remained "supportive."

Amey is bidding to run the Piccadilly, Northern and Jubilee Lines as part of the Tube Lines consortium, which also includes British rail contractor Jarvis and US engineering firm Bechtel.