Amey suffered a £189.9M pretax loss last year after making a £208M additional provision for a problem highways contract.
The local authority and Amey are involved in a legal dispute about the quality of work carried out so far under the 25-year maintenance and management service.
The contract, which began in June 2010, was front-loaded for the first five years with major infrastructure investment in roads, including the recent Queensway tunnel upgrades, and new LED street light installation.
The rest of the contract concerns maintenance of Birmingham’s 2,400km roads network until 2025.
Chief executive office Andy Milner said: “We have been involved in a dispute with Birmingham City Council over the last 36 months regarding the scope of our contractual obligations in the core investment period, and recent communications from the council make it clear that an exceptional provision of £208.5M needs to be accounted for in our 2017 results.
“This is in respect of undertaking additional investment during the initial phase of the contract as well as expectation of high deductions and penalties to be applied by the council.
“Discussions are on-going with the council and the provision made is expected to cover all outcomes anticipated at this current time.”
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