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Last Updated: Friday, 30 July, 2004, 13:54 GMT 14:54 UK
Jarvis slides to 246m year loss
Students in university library
Jarvis has been involved in the student accommodation business
Engineering group Jarvis has revealed a pre-tax loss of 246.7m ($448m) for the year ending 31 March, compared to 62.7m profit the previous year.

Its accommodation services arm had 100m of losses on building contracts, and it was "uncertain" about the extent of future losses on construction.

Jarvis's public image was hit after the 2002 Potters Bar crash, and it quit the rail maintenance business last year.

As part of its recovery strategy it has secured a further 25m overdraft.

In afternoon trade in London shares in Jarvis were down more than 8% at 47.50 pence, after previously being ahead in early trade.

'Long way to go'

Shares in the firm, which bids for local and national government project such as building schools and installing railway tracks, had lost more than half of their value earlier this month amid worries over its 230m debt.

As part of the terms agreed with lenders, Jarvis will now focus on UK rail activities and local authority services, while scaling back accommodation services.

A crew works on a railway line
JULY 2004 - fined 400,000 for breaching safety laws in relation to a freight train derailment near Rotherham in November 2002
JUNE 2004 - Rotherham - fined 400,000 for faulty repairs in relation to derailment in January 2002
JUNE 2004 - Norfolk - 25-year contract to refurbish 37 schools - delayed
APRIL 2004 - Jarvis, along with Network Rail accepts legal responsibility for claims brought over Potters Bar crash
MARCH 2004 - Network Rail says no evidence the October maintenance certificates were deliberately falsified
FEBRUARY 2004 - Brighton - 105m contract to redevelop and manage four schools - council brands work "unacceptable"
NOVEMBER 2003 - Wirral - 55m project to build and maintain nine schools - four sites unable to open on time
OCTOBER 2003 - pulls out of day-to-day rail maintenance work citing worries about reputation and profits
OCTOBER 2003 - railway maintenance investigated after track not properly reassembled at Alexandra Palace, London
OCTOBER 2003 - Network Rail launches investigation into claims the firm falsified documents relating to rail maintenance work

A lending group - led by Barclays and Royal Bank of Scotland - will provide the cash and additional banking facilities, as well as continued support, to 25 March next year.

Existing overdraft facilities totalling 21.5m will remain in place.

But, negative news surrounding its rail and private finance initiatives with schools and universities, as well as the company's huge debt burden has battered its reputation.

"I think it has absolutely zero credibility," Emma Ormand, a director at Oriel Securities, told BBC Radio 4's Today programme.

"Frankly there are relatively few institutional shareholders in this stock. It's going to be a very long road to recovery."

Chairman Steve Norris appeared to agree with the sentiment when he appeared on BBC Radio Five.

"There is a long way to go yet. The truth is we have had a really bad time," he said.

But he insisted Jarvis had a "very good base" to go forward.

And he defended Jarvis's PFI construction projects for education and local authorities, saying "many have gone very well".

Jarvis said the accommodation services business was committed to its current projects, but would not take on any new construction activities.

Instead it will concentrate on offering its skills in developing successful bids and then managing the building process.

Jarvis has breached debt covenants and had until the end of the week to agree a credit extension with its banks.

'Difficult year'

Charges and write-offs after it quit the rail maintenance business have been compounded by the problems at its accommodation services division.

Jarvis said it had been a difficult year, but was pleased to have the support of its lenders.

"Our recovery strategy is designed to develop a simpler, leaner and more cash generative business that is sustainable in the long term," said chief executive Kevin Hyde.

"In the last few months we have acted on a number of challenging issues and are well advanced with a range of important disposals."

However, analysts said that "massive uncertainties" still remained over its future.

"It is by no means certain that Jarvis will survive," Investec Securities said in an investment note.

"The group has a long, hard road ahead of it and huge uncertainties remain. The shares should still be avoided," it added.

The sentiment was echoed by Arbuthnot Securities, which said the degree of uncertainty surrounding Jarvis was "astounding" and that the stock was "impossible to value".

Steve Norris, Jarvis chairman
"It can be tough out there"

Jarvis 'struggling for survival'
05 Jul 04  |  Business
Derailment costs Jarvis 400,000
05 Jul 04  |  South Yorkshire
Debt worries hammer Jarvis shares
02 Jul 04  |  Business
Firms agree Potters Bar liability
27 Apr 04  |  Beds/Bucks/Herts
Cost overruns hit Jarvis shares
15 Apr 04  |  Business
Network Rail takes repairs in-house
24 Oct 03  |  Business

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