Accountant examines books and cash flow as support services group renegotiates banking agreements
Beleaguered support services group Jarvis has drafted in accountant Deloitte & Touche to review its day-to-day finances.

Jarvis made the appointment this month to reassure backers such as the Royal Bank of Scotland that the company has weathered six months of turmoil.

Speculation has grown over its future direction after a profit warning in January and the departure of several senior figures, including finance director Robert Kendall (see graph).

A source said that Deloitte was looking at cash flow and will examine the books. Jarvis and its auditor, Ernst & Young, is also preparing its delayed year-end results, expected to be announced next month. Jarvis is expected to post severe losses in some divisions.

The source said: "It is a good idea to take a second check at the books when you are negotiating on banking agreements. This is a reassurance to financial institutions."

Jarvis is renegotiating its banking arrangements as they are due to expire in March. It is believed that these negotiations have been complicated by the concerns of some lenders.

It is a good idea to take a look at the books when negotiating agreements

Jarvis source

The group is undertaking a strategic review in an attempt to simplify the business. Jarvis hopes that this will placate lenders and the stock exchange, where its share price has fallen from more than 200p at the start of the year to about 80p.

Jarvis decided last week not to move into the £30m headquarters it has built in Smithfield, central London. Instead, it will let the Smithfield space for its rental income.

A spokesperson for Jarvis declined to comment on the Deloitte appointment, but said of the decision not to move into the headquarters: "In the current situation we felt it was not appropriate to move there. Substantial amounts of office and retail have already been let and we are marketing the rest."

Building reported earlier this month that the Smithfield project had been delayed. The company had originally hoped to move in by April, but archaeological work and bad weather delayed the scheme.

Jarvis insisted at the time it would occupy the building by the end of this month and pointed out that the ground floor had already been handed over to retail tenant Tesco.

In the current situation, it was not appropriate to move to the new offices

Jarvis spokesperson

Despite the group's problems, there are rumours of some good news in the offing.

Bids came in last week for Jarvis' one-third equity stake in London Underground consortium Tube Lines. There is speculation that some of the bids might have topped £140m, well above expectations, which some had put as low as £100m.

Jarvis is allowed to sell only half its Tube stake under current contractual arrangements. If it receives approval from Transport for London, it can sell the whole stake.