Jarvis posts half-year losses of £283.1m
UK support services group Jarvis today posted half-year losses of £283.1m (€400.7m) but said it was winning the battle to avoid bankruptcy.
Jarvis said the deficit was mainly due to write-offs on the value of its roads business, as well as provisions for construction losses and bad debts.
The figure for the six months to September 30, which compared with profits of £33.7m (€47.7m) last year, was expected by investors and marked the “nadir of the group’s fortunes”, chairman Steve Norris said.
The more optimistic tone from Jarvis emerged just days after it announced the sale of its most valuable asset – its stake in the Tubelines consortium that carries out engineering work on the London underground – for £147m (€208m).
That proved the key to winning the support of its primary lenders to refinance debts – at £242m (€342.5m) at the half-year stage – until March 2006.
Agreement has also been reached to secure funds of £105m (€148.6m) to enable 14 construction contracts to be completed, reducing its exposure to additional costs.
Mr Norris said these allowed Jarvis “to draw a line under the past and look forward with much more confidence to a positive future with a smaller but profitable business”.
Jarvis has been selling assets to focus on UK rail renewal, roads and plant hire work.
It handed back its rail maintenance contracts to Network Rail following a number of derailments and its involvement in the Potters Bar rail crash.
Chief executive Alan Lovell is understood to have a long-term plan to find a strategic investor to acquire up to 40% of the company – a move that may be accompanied by a debt-for-equity swap with banks.
In its statement today, Jarvis appeared to accept that customers may shy away from a company whose problems have been well-publicised.
In spite of the progress made in stabilising the group’s financial position, Mr Norris said: “More work needs to be done in many areas to re-establish and enhance our reputation in our core markets.”
A programme to save £20m (€28.3m) a year has been implemented ahead of schedule and a further £30m (€42.4m) of annual savings cost cuts were identified in November.
Shares in Jarvis rose 17% to 21p following the announcement.
