Jarvis' £6m cash flow headache

Industrial action by Jarvis employees who are members of the RMT trade union has hit the group's cash flow to the tune of £6 million.

The problem surfaced in the summer and is not yet resolved. All six railway maintenance contractors - Jarvis included - want to modernise the working conditions of those involved in trackside duties. To date, only staff at Amey have accepted new terms.

Paris Moayedi, chief executive, said Jarvis' RMT members are currently being balloted for a second time over proposed changes. Jarvis' first proposal was turned down by a small margin: 981 employees voting for industrial action, 935 voting against.

Moayedi said: "Employees in our infrastructure maintenance division voted to accept the new deal, while those in our track renewal business rejected it. All in all, we lost by a small margin. The revised offer contains some slightly revised terms, but nothing major.

"Most of the work lost during the period as a result of the dispute has been replanned to take place in the latter months of the financial year."

However the problem barely dented Jarvis' performance. Interim results (six months to 30 September) show turnover at £280 million (£130 million). Pre-tax profit of £20 million (£13 million) provided Jarvis with a margin of over 7 per cent, streets ahead of its rivals who have stuck to conventional work.

Turnover in Jarvis's facilities division ran to £140 million. Jarvis recently extended its rail maintenance contract in the Liverpool/North Wales area, valued at £22 million, to March 2001.

Turnover in the projects and construction division ran to £60 million, over 65 per cent of this being negotiated. Prospective funding of £500 million has been arranged for Jarvis's University Partnerships Programme.

The latest results include a four-month contribution from Streamline which Jarvis bought for £200 million. In the full year, Jarvis is expected to hit a turnover of £600 million.