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Monday, 13 May, 2002, 19:01 GMT 20:01 UK
Jarvis in the spotlight
Passengers getting off a train
Rail passengers: Safety a major concern
Not many people have heard of Jarvis plc, an unglamorous outsourcing company focused mainly on government contract work.

But the Potters Bar rail crash, which occurred on a stretch of railway line that Jarvis is responsible for maintaining, could change all that.

Investigators believe that a faulty set of points caused last Friday's accident, in which seven people died and more than 70 were injured.

Jarvis has said it inspected the points the day before the crash, and found them "compliant with standards".

It also stressed that the inspection staff were full-time Jarvis employees, dismissing speculation that under-qualified subcontractors may have been involved.

But the incident has given investor confidence in the ailing UK railway sector a severe jolt, wiping nearly 15% off Jarvis' share price on Monday.

Rags to riches

The Potter's Bar disaster has come as a serious setback for a company which has turned in an otherwise strong performance over the past few years.

Jarvis, a small and nearly bankrupt construction firm in the mid-1990s, had by the end of the decade transformed itself into a services company with an 8,000-strong workforce and annual sales of about 750m.

The icing on the cake came in late 2001 when Jarvis announced a 100% increase in half-year profits to 17.7m, sending its shares soaring to a 30-month high.

Jarvis' flamboyant Iranian-born boss Paris Moayedi, who took over as chief executive in 1994, is widely credited with masterminding the turnaround.

He achieved the transformation by spotting and ruthlessly exploiting the trend for contracting out government services which swept through western Europe during the 1990s.

Road builder

Responsible for about 4,700 miles of track, Jarvis is the biggest railway maintenance company in the UK.

Its engineers also maintain and upgrade long stretches of the UK's road network.

Jarvis' railway and road maintenance operations form the backbone of its business, accounting for nearly two thirds of total sales in its last financial year.

The remainder of the company's revenues are generated through the contracted management of premises for schools, universities and hospitals.

PFI jackpot

Jarvis is also one of the main beneficiaries of the government's policy of involving the private sector more closely in public construction and engineering projects.

It is part of the Tube Lines consortium bidding for the contract to maintain the Jubilee, Northern and Piccadilly lines on the London Underground.

And the company has racked up a series of lucrative orders to rebuild railways, roads and schools under the government's private finance initiative, a scheme aimed at making public construction projects more efficient.

Under the PFI, construction firms which agree to put up part of the money for major public building projects themselves are offered a guaranteed revenue stream for a number of years in return.

But critics allege that it would be cheaper to fund the construction projects directly from the public purse.

Strike two

This is not the first time that a contractor has come under fire following fatal accidents along the east coast main line.

Jarvis took over the maintenance contract in April last year from rival Balfour Beatty, which was heavily criticised after a faulty rail caused a train crash in October 2000 at Hatfield, just five miles further down the line.

The Hatfield disaster raised concerns over the safety implications of leaving essential maintenance work to contractors.

Potters Bar is sure to do the same.

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