Interim Management Statement
17 Février 2010 - 8:00AM
UK Regulatory
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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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