Top auditor parts company with Jarvis

Exclusive by Carol Millett



PriceWaterhouseCoopers has resigned as Jarvis's auditor four weeks before the company's year-end and the run up to publication of the company's annual accounts.

A letter of resignation sent by PWC to Jarvis and lodged at Companies House reveals that PWC, one of the UK's top five accountancy firms, resigned on 3 March this year.

The opening paragraph of the letter states: "In accordance with section 392 of the Companies Act 1985, we give notice that we are resigning as auditors of Jarvis plc, with effect from the date of this letter." The rest of the letter has been deleted by Jarvis. A Companies House spokeswoman said: "The company has the right to withhold the details of the resignation letter and in this case the company has exercised that right.

Jarvis's financial director Henry Lafferty told CJ: "We have changed our auditors. It is a formal process that they resign. We had a five-year review and moved to another of the top five accounting firms." Jarvis's auditor is now Ernst and Young.

A spokesman for PWC said: "It was our decision to resign but we cannot disclose the reasons for that decision because we are bound by client confidentiality rules." Jarvis declined to reveal the contents of PWCs' letter of resignation.

Construction and facilities management analysts expressed surprise at the news this week. Jarvis has not announced the resignation of PWC or the appointment of Ernst and Young on the Stock Exchange regulatory news service. A spokeswoman for Jarvis said the news had been issued in a press release, dated 17 February, two weeks before PWC's letter of resignation. The press release makes no reference to PWC's resignation, nor does it say Ernst and Young has replaced PWC as Jarvis's auditor. It states: "Jarvis, the leading international facilities group, announces that it has appointed Ernst and Young to review its financial management systems and implement a business transformation programme designed to establish Jarvis in the vanguard of e-business and supply-chain management as part of its £10m investment programme."

In June last year, the company's share price fell dramatically from 494p to 322.5p after Jarvis posted pre-tax profits of £34.4m, some £20m short of expectations and revealed it was in a dispute with Railtrack, its biggest client, over payment on maintenance and track renewal contracts.

The dispute was settled by August but the shares continued to slide. In December, the company announced a near halving of pre-tax profits from £19.7m to £10.9m in the six months ending 1 October 1999. By February, Jarvis's shares had fallen to a low of 125p.

Jarvis responded to this setback by promising a boardroom reshuffle. This reshuffle has yet to happen. Recently Jarvis's share price has started to rally and stood at 179p, as CJ went to press.