Jarvis plc trading statement

Jarvis Plc is due to release its interim results for the six months to 30 September 2007 on 27th November 2007. Ahead of that the Company wishes to make the following trading update as clarity on a number of factors affecting second half performance has become apparent.

In the trading update of 28th September 2007, we stated that the Group's trading performance had been in line with management expectations with workloads in the rail business building well for the second half of the current year. At the same time we referred to lower visibility in the plant business providing an element of uncertainty.

Since that update, whilst the results for the first half have come in broadly in line with our expectations with a loss before tax and exceptional items of £0.6 million (2006: Profit £0.5 million), the uncertainty we identified in the plant business has become more pronounced with several factors impacting on trading:

1. The utilisation pattern for on track machines provided under the national agreement has changed substantially from last year, which has had a negative effect on revenues and profitability. The Directors estimate an adverse impact on operating profit in the full year of approximately £3 million. We are in discussions with our client with a review to resolving this matter and will provide an update in due course.
2. Whilst the pick up in rail work has been excellent in the current year, the mix of work has been of a more general nature, with a particular emphasis on overhead line rather than pure track work, which has adversely impacted the utilisation of track renewal equipment. The Directors estimate an adverse impact on operating profit in the full year of approximately £3 million.
3. In transport, revenues were impacted by a reduction in the number of hires as one of our main clients elected to buy vehicles directly from suppliers. The Directors estimate an adverse impact on operating profit in the full year of approximately £2 million.

As a consequence, management now expects that the full year performance for the year to 31 March 2008 is likely to be materially below management's previous expectations.

Whilst the issues highlighted above are disappointing and are in the nature of a business in the recovery process, what has been achieved in the year to date has evidenced considerable progress towards the recovery of the Group.

Prospects for the rail renewal business going forward appear to be extremely good since the government and Network Rail have committed themselves to a substantial programme of enhancements to the current network reflecting the increased demand for rail services, which has been evident in recent years and is forecast to continue. We are well placed to take advantage of this additional work both north and south of the border and intend to seek out all opportunities to do so.

For further information please contact:

Toni Jackson - Group Communications Manager
T: 01904 712667
M: 07921 939031

Isabel Podda / Tim Anderson, Buchanan Communications
T: 020 74665000

View the RNS.

Back to top