Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Jarvis losses spiral further

Beleaguered engineering firm Jarvis today revealed widening losses, but said trading had improved.
Jarvis, which is asking its investors to approve a debt-for-equity restructuring that will leave them with 4.75 per cent of the company, said losses in the year to March 31 rose to £353.8 million from £256 million a year ago.

The firm has been battling for survival after over-stretching itself on contracts, particularly on private finance initiative deals. It is exiting non-core businesses to focus on UK rail renewal, roads and plant hire work.

It said nearly two-thirds of the losses were due to one-off items such as a goodwill write-off in its roads business, restructuring costs and provisions for construction losses.

The group attributed operating losses of £95.5 million to less rail renewals work, the loss of roads maintenance contracts and losses in its facilities management operations.

Jarvis said its auditors were likely to modify their report to highlight the 'fundamental uncertainty in respect of the ability of the group to continue as a going concern'.

But it said its continuing roads business, rail renewal and plant hire had shown 'remarkable and heartening resilience' .

It said its two major overhead cost reduction programmes, which have included job cuts and the closure of its London head office, would produce annual savings of £50 million.

The group added: 'Trading at the start of the current financial year demonstrates an improved performance.

'The cost base of the core business reflects the benefits of significant savings achieved in the last nine months and there are a number of encouraging developments in the core business, which is trading in line with the board's expectations.

'The directors believe the successful completion of the restructuring announced on July 12 and the continuation of the group's strategy of focusing on the core businesses of rail, plant and road, aligned with further cost-saving measures and exit from, or stabilisation of, the non-core activities of construction and facilities management, will provide a much improved base from which to develop the business.'

The debt-for-equity restructuring, which Jarvis hopes to complete by the end of August, will be followed by a £50 million share placing so the recapitalised company can pay back £31.4 million of loans to Deutsche Bank.

It warned alternative measures were being explored in the event that shareholders rejected the swap, including a proposal providing no shareholder value.

It has already been forced to sell its most valuable asset - its stake in the Tube Lines consortium - for £146.8 million as part of efforts to secure sufficient working capital through to next March.

Contact the newsdesk