Jarvis poised to report spiralling losses

Click to follow

Alan Lovell, chief executive of the Jarvis construction group, is today in talks with his financial advisers as he puts the finishing touches to an interim results statement which is expected to include millions of pounds of provisions and write-offs.

"The net result is likely to show a very substantial deterioration in the group's financial position since 31 March," said Mr Lovell. He promised that Jarvis' results will be out by the end of this week.

He was speaking after a Christmas Eve announcement that Jarvis has sold its one-third stake in Tube Lines Holdings - which maintains London's Jubilee, Northern and Piccadilly Underground lines - to the Spanish group Ferrovial for £146.8m.

Jarvis owes more than £230m. On 6 December Mr Lovell warned it could go under if it did not secure refinancing by the middle of January. Friday's statement said Jarvis had agreed with its lenders to extend its existing credit facilities until March next year. It also agreed terms with its private finance initiative (PFI) partner companies to complete its 14 biggest construction projects.

Mr Lovell said: "The board has not yet completed its review of the interim results but it is considering the need for a number of provisions and write- offs." Losses for the half year are expected to be more than £250m, compared to a loss for the whole previous year of £300m. The group is finalising the details of write-offs within the UK road maintenance and facilities management businesses, provisions for construction project losses and restructuring costs.

A drive to achieve annualised future savings of more than £20m has been implemented ahead of plan, and last month annual savings worth nearly £30m were identified. Jarvis said property sales and relocation of the headquarters will achieve most of the planned cut in accommo-dation costs envisaged in the business plan published in the 2004 annual report.