Jarvis sells its property for £25m

Jarvis has entered into an agreement to sell its York Central site, Jarvis House and its wider property portfolio to Network Rail for £25m.

Network Rail has already paid £4.5m for the York Central site and will pay £3.5m for Jarvis House and £17m for the rest of the portfolio. The aggregate book value of the properties was stated at £17.6m in Jarvis's accounts to 31 March, thus the sale will realise a profit of £5.6m.

The vast bulk of the proceeds from the sale will be used as working capital rather than being used to reduce debt, subject to Jarvis's core lenders giving their consent. The lenders have reduced the group's bonding facility by £4m and this sum has been added to its working capital facility.

Jarvis's statement to the Stock Exchange this morning also highlights that trading "is continuing to prove difficult". It hopes to sell its share in TubeLines and its European roads business before the end of the year. The proceeds from these sales will be used to boost working capital rather than reducing debt.

The nine-page statement is littered with paragraphs in bold, highlighting the dangers ahead. On such paragraph reads: "The directors are of the opinion that the continuing group does not have sufficient working capital for its present requirements, that is for at least 12 months from the date of this announcement. The directors are actively pursuing the measures described herein to ensure that the group secures adequate facilities for its present requirements but there can be no certainty that these measures will prove to be successful."