Jarvis builds recovery hopes
UK engineering group Jarvis offered signs of recovery today as it posted operating profits for the first time in two years.
The struggling contractor, which underwent a dramatic restructuring over the summer, turned first-half operating losses of £276.2m (€405.5m) last year into profits of £5.5m (€8m) this time around.
It was the first positive result for two years – and the first time in two years figures have met with management expectations.
Chairman Steven Norris said: “This statement reflects a number of welcome firsts. It is the first since the successful completion of the financial restructuring, the first which we report under new IFRS (accounting rules), and the first time for two years that we report operating profits.
“It is certainly the first time, since my appointment as chairman two years ago, that I can confidently say that the performance of our core business has been in line with our forecasts and that it provides the basis for a viable business model for the future.”
The turnaround followed a financial overhaul which saw Jarvis hand 95% control of the group to creditors in a debt-for-equity restructuring.
It was needed to tackle debts of more than £300m (€440m) racked up as Jarvis overstretched itself on contracts, particularly in private finance initiatives.
The company also sold off its European roads business as well as its stake in the Tube Lines London Underground maintenance consortium.
Today, Jarvis said its net debt had been reduced to £6.2m (€9m) from £303.8m (€446m) at the start of the financial year.
Mr Norris said: “The group expects to be cash positive from approximately the middle of the next financial year.”
Turnover fell from £299m (€438m) to £204m (€300m) in the six months to September 30 following the loss of work in highways maintenance and delays to rail projects.
But bottom-line pre-tax losses were slashed from £283.4m (€416m) to losses of £60.9m (€90m).
Mr Norris said: “Having survived what has been unquestionably the most difficult period in the company’s history and successfully completed one of the most complex and challenging restructurings seen on the London market, the company is now returning to normality.”
