Jarvis _ Out look 2004

Record loss for Jarvis as it writes off £240m
By Peter John in London
Published: December 29 2004 18:10 | Last updated: December 29 2004 18:10

Jarvis, the support services group, announced a record loss on Wednesday as it wrote off £240m to cover past and future problems.


It passed its half-year dividend and turnover fell almost 30 per cent, partly because of the slump in its private finance initiative building projects most of which have ground to a halt. Jarvis also lost income after its rail maintenance contracts ended in March.

But the share price more than doubled, from 18p to 37p, after Jarvis signalled it was hunting for a big strategic investor.

Alan Lovell, the new chief executive, said: “There are some elements there [in the results] which are designed to be a clean-up, for example the write-off of goodwill. We have a no-risk balance sheet going forward. We are drawing a line under the business which is one version short of kitchen-sinking.”

The stock market had its first full chance to react to the news on Christmas Eve that Jarvis had agreed to sell its stake in Tube Lines, the consortium that runs part of the London Underground, and had negotiated a one-year extension on banking facilities.

Jarvis said yesterday's results represented the “nadir of the group's fortunes”.

“The realisation of the value of our Tube Lines interest and the effective capping of our liabilities in respect of our outstanding construction contracts allow us to draw a line under the past and look forward with much more confidence to a positive future with a smaller but profitable business,” he said.

Mr Lovell agreed that in part the share price increase reflected the size of its recent fall from a high of 787½p in 1998 to a low of 7¾p but said Jarvis was on a recovery track. “Some increase to reflect the fact that survival is an excellent prospect is justified,” he said. “We have got survival. Now we need to ensure that the business is profitable and feasible on its own account.”

The £283m loss for the six months to September 30 compared with a £247m pre-tax loss for the whole of last year and £33.7m profit during the previous first half. The company passed its dividend and turnover fell almost 30 per cent to £510m.


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