Auditors give support services group guarded bill of health as it posts loss of £247m for year to 31 March
Question marks still hang over the future of support service group Jarvis even though the firm received support from its banks last Friday.
The firm posted a loss of £246.7m for the year to 31 March and admitted that “fundamental uncertainties” existed over the business.
This lack of certainty was described by one construction analyst as a “huge, huge issue” for the firm, which must rapidly sell off assets to lighten its debt burden. It is expected to dispose of its Tube PPP stake and pull out of contracting. It is therefore looking for partners to take over the construction elements in its present contracts.
Chief executive Kevin Hyde described the firm’s year as “difficult” and the results as “disappointing”.
Jarvis received a guarded bill of health from auditor Ernst & Young, assisted by Deloitte & Touche. However, they have pointed to “significant uncertainties” hanging over the future of Jarvis. These include:
- Whether parts of the business can be sold to the timescale and prices predicted. If not the firm will have to look at further sell-offs or seek more working capital from its banks.
- Uncertainty over money owed to Jarvis.
- Bad publicity has soured relations with customers and suppliers, and the auditors say this needs to be improved quickly. Schemes where Jarvis is preferred bidder must be signed quickly.
- The Jarvis business plan is predicated on the firm’s ability to attract new business and the effectiveness of its management changes. The auditors note that if these do not prove to be the case “the going-concern basis on which these financial statements have been prepared may prove to be inappropriate”.
Turnover increase by 10% to £1.3bn from for the 12 months to 31 March compared with same period for the previous year.
One analyst said the firm’s future was in the balance. He said: “The company’s chances of achieving a turnaround are too difficult to call at the moment. I wouldn’t like to comment on where Jarvis will go from here. Much will rest on whether other outstanding liabilities come out of the woodwork.”
Robert Wallace, Jarvis accommodation services chief executive, said he was disappointed at the decision to scale down the division less than a month after he took over.
Wallace joined Jarvis on 1 July with a brief to turn round the loss-making PFI arm, but has now been told that it will no longer undertake the construction element of contracts but instead focus on areas such as facilities management.
A Jarvis source said: “We are talking to potential construction partners. We will get construction partners on board in the next month – we might end up setting on one or two smaller players to work on [all] projects.”