Jarvis pushes ahead

Jarvis will achieve operating margins of 7% to 8% in the full year, said chief executive Paris Moayedi last week. Announcing the group's interim results, Moayedi said that being market leader in its five chosen sectors gave the support services group a competitive advantage.

"Our investment in R&D puts distance between us and the competition, especially in productivity," Moayedi said. "We provide value to customers and preserve our margins."

The results (six months to 30 September) show turnover well ahead at £570m (£440m) with pre-tax profit rising to £19m (£16.3m). "We have had a good trading period," said Moayedi. "All our businesses are in sectors that have long-term demand. New schools, university accommodation and hospitals are not optional extras, they are a necessity."

Jarvis has avoided the headlong rush to hold PFI equity stakes. It has invested only £7m of equity in its current 46 projects, with a further £9m committed to those in the future. Jarvis has aimed at medium-sized PFI projects, up to £120m, and has avoided huge trophy schemes.

In Estonia, however, the policy has been the opposite. "That's because we needed a bridgehead to be in Europe and we wanted some experience of a vertically integrated railway system," said Moayedi. "Also, as this was formerly a communist-run network, there was the potential for a lot of cost to be squeezed out." This has turned out to be the case, with profits outperforming expectations.

The cost of switching to Oracle software was put at £15m. Oracle is one of five Enterprise Resource Planning (ERP) providers.

Jarvis had initially anticipated being able to upgrade its various IT systems at a price of £8m. Even today the process is not complete. "There are still a few legacy systems in place," conceded Moayedi.

Jarvis' rail business grew to £270m, an increase of 29% with operating profit ahead at £11m, a rise of 13%. The profit was boosted by a pension credit of £3.7m. The division benefited by a similar amount last year.