Interim Management Statement

 

TIDMJRVS 
 
RNS Number : 2524H 
Jarvis PLC 
17 February 2010 
 

                                17 February 2010 
Jarvis plc (the "Company") today publishes its Interim Management Statement 
covering the period from 1 October 2009 to date. 
Throughout the period and indeed for the whole of this financial year the 
Company has been impacted by economic conditions generally and in particular the 
very considerable reduction in available volumes of rail and plant work to which 
we have referred in previous announcements. Trading conditions have continued to 
be difficult during the period, specifically with the timing of contract awards 
which now means that full year performance is likely to be below previous 
management expectations, with an anticipated operating loss in the region of 
GBP5m. Net debt on 16 February 2010 was down to GBP12.6m primarily due to the 
fact that, as previously stated, our working capital facility is linked to rail 
and plant volumes which have reduced. Additional restructuring costs of 
approximately GBP3m have been incurred during the period. 
However, through our greatly improved focus on business development and our 
success in being awarded the Chiltern Railway's Evergreen 3 contract, as 
previously confirmed on 15 January 2010, in association with our partners BAM 
Nuttall, a significant proportion of anticipated work has already been secured 
for the next financial year whilst the business is experiencing a healthier bid 
pipeline overall.  The majority of the GBP55m of rail associated work on the 
first phase of Evergreen 3 will be undertaken in the next financial year and the 
Jarvis team is now working very closely with BAM Nuttall on the mobilisation and 
design phase of the contract. 
The focus on business development opportunities outside Network Rail has 
progressed well. The team now has good visibility of future works with new 
customers and as well as the Evergreen 3 contract has also recently secured its 
first small signalling contract with London Underground Limited. 
Management 
It is particularly pleasing that Stuart Laird and Graham Denton have settled 
into their positions as Chief Executive Officer and Finance Director and have 
been focussed on further strengthening the management team, improving 
efficiencies within the business and supporting our business development 
efforts. 
Phillip Price joined the senior management team as Managing Director, Rail and 
Plant on 1 February and has taken over day to day responsibility from John 
Snowdon who plans to retire. Phillip joins Jarvis from Laing O'Rourke where he 
has been Managing Director of its Infrastructure business for the last three 
years and brings with him a wealth of experience following a career in 
construction and related markets spanning more than 18 years. John is working 
closely with Phillip to ensure a comprehensive handover and will also stay with 
the Company for a period to carry out some projects before retiring fully. 
Rail and Plant 
Volumes in Rail and subsequently Plant have not improved in the second half as 
anticipated and the businesses have therefore performed below previous 
management expectations. The restructuring of the businesses has been ongoing 
and has now been largely completed. During the period the team has been working 
closely with business development to ensure that our all-important skill base is 
not lost. 
Throughout the period, the Rail and Plant teams have safely undertaken vital 
renewals and other works on behalf of Network Rail in some very severe weather 
conditions. The teams in Scotland successfully commissioned the Lugton Loop 
project and in England the Electrical Projects Group and London North East 
Integrated Management Team successfully carried out major works at Trent East, 
Peterborough, Barnsley and on the Midland Mainline. 
Recently we also undertook a high profile renewal at Grangetown, where new 
innovative methodology and techniques to renew ballast, sleepers and rail were 
trialled with considerable success utilising our Slinger  (track renewals system 
or TRS) to improve efficiency and safety.  The team delivered 705 yards in under 
21 hours, using a renewal process incorporating industry best practice, which we 
believe will ultimately enable Network Rail to achieve its efficiency targets 
and the emergence of the reality of a 7-day railway. 
Overall operational performance levels in Freight for the E.ON contract were 
below management expectations as the business was further impacted by the 
general reduction in demand for electricity in the economy, especially by 
businesses, and the continued high level of coal stocks at power stations. 
Accommodation Services 
Jarvis Accommodation Services performed in line with management expectations. 
The business continues to perform well, increasing margins and adding value to 
its existing contracts. The division now represents a mature portfolio of 
facilities management contracts, 22 of which are long term PFIs. The team also 
worked hard through the extreme weather to ensure the hospitals, fire stations 
and schools they manage remained safe and operational. 
Outlook 
Overall, despite the very good performance of our Accommodation Services 
business, this has been a disappointing year for us as we have battled the very 
large reduction in rail volumes in 2009. However we have not stood idly by. The 
new management team has concentrated on improving our performance and efficiency 
whilst reducing our dependency on Network Rail.  The emphasis we have placed on 
this is already bearing fruit.  The Evergreen contract is a huge boost and we 
now have a strong bid pipeline with a significant proportion of work secured 
already for next year. 
Steven Norris 
Chairman, Jarvis plc 
 
 
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