Jarvis back on track, claims new chief executive

Alan Lovell, the chief executive of Jarvis, claimed victory yesterday in his battle to rescue the road and rail maintenance group from financial collapse despite announcing a half-year loss of £283.1m compared with a profit of £33.7m for the same period last year.

Mr Lovell said that although there was still work to be done to ensure a profitable core business going forward, the group would now survive as a going concern, having been forced to warn earlier this month that it might cease to trade if a refinancing was not achieved. However, Jarvis revealed that its complex and urgent restructuring process had cost it £32m in fees.

The market responded positively to an upbeat assessment of the company's prospects, sending its shares up 100 per cent to 36.5p.

Steve Norris, the chairman, said: "These results, which have been largely foreshadowed in trading statements in July and November and in recent disposal circulars to shareholders, represent the nadir of the group's fortunes."

In November Mr Lovell announced that his longer-term objective would be to bring in strategic partners, probably from Europe, to help repair the company's battered balance sheet. He repeated the aim yesterday, saying other restructuring options could include a debt-for-equity swap or even a merger with an industry rival.

"The priority so far has been survival. Now my priority is to ensure the future of the core business going forward with repair of the balance sheet coming next," Mr Lovell said.

The company's interim results included £240.1m of exceptional items mainly relating to write-offs of goodwill in its roads maintenance business, provisions for construction losses and write-offs of old debts. It said it had reached agreements valued at £105m that would cap its exposure to construction contracts related to various private finance initiatives which had been causing Jarvis to haemorrhage cash. A refinancing deal has been made with its banks that will extend their support to March 2006.

Mr Lovell said he envisaged the future of Jarvis would involve a UK rail and road maintenance business with a turnover of about £500m.