Future uncertain as losses rise at Jarvis

Jarvis's auditor has reported there is a "fundamental uncertainty" over whether the group can continue as a going concern after it racked up a cumulative loss of £610m over two years.
Latest financial results, covering the 12 months to 31 March 2005, show a pre-tax loss of £350m. In the previous year, Jarvis dived into the red to the tune of £260m.
RSM Robson, which replaced Ernst & Young as auditor in May because of alleged fee issues, said that "uncertainties that exist" mean that the audit report is likely to be modified.
Jarvis's turnover has plunged to £840m, which is well down on the £1.3bn figure in the previous year.
Three reasons for this are the transfer of rail maintenance to Network Rail on 1 April 2004, less track renewal work on the West Coast Main Line and the decision to withdraw from bidding for all construction and FM contracts.
The latest £350m loss includes £250m of exceptional charges. Within this £250m tally is £110m for losses and provisions against contracts undertaken by the Accommodation Services division together with a further £23m adjustment to the cost of sales on facilities management contracts, according to the group.
Jarvis had to stump up £18m against onerous lease liabilities and £8m to cover redundancy costs. Impairment of goodwill attributed to the UK roads business led to a £65m charge.
Keeping Jarvis afloat has not come cheap - professional fees associated with the restructuring ran to £55m.
The second element contributing to the group's £350m loss was an operating loss of £96m. By way of an explanation for this, Jarvis listed the following:
Rail: a cutback in the volume of rail renewal work and provisions of £31m on certain contracts.
Roads: loss of maintenance contracts (particularly Cheshire), lower margins and £13m of provisions for "foreseeable losses on loss-making contracts".
Accommodation services: losses in FM due to disruption caused by construction difficulties and under-recovery of bidding costs.
Jarvis's headaches would have been even worse if it hadn't been for the £53m profit on the disposal of the group's interest in TubeLines and the £43m share of joint venture profits, mainly in TubeLines.
Jarvis plans to sell its highway maintenance business to Accord. About 500 staff on Jarvis's Hertfordshire term maintenance contract will transfer to Accord, which will also buy Jarvis's 50% stake in the Accord/Jarvis jv.
The sale is subject to successful completion of due diligence. Jarvis will keep Prismo.