Preliminary results
May 28 2008 - 2:00AM
UK Regulatory
RNS Number : 3475V
Jarvis PLC
28 May 2008
Jarvis plc
Preliminary results for the period ended 31 March 2008
Financial:
* Group revenue* £321.9m (2007: £288.5m).
* Operating profit* £9.2m (2007: £4.9m).
* Profit for the period £11.1m (2007: loss £21.7m).
* Net debt £38.8m (2007: £23.6m).
* Earnings per share 5.4p (2007: loss of 13.5p).
* Working Capital facilities extended at reduced cost subsequent to the period end.
* Continuing operations, before exceptional items
Strategic delivery:
Made substantial progress, ensuring that the period was a significant milestone for the new Jarvis.
* Increased Rail revenue by 45%.
* Reduced central overheads by 38%.
* Secured five-year coal haulage contract in Freight, substantially increasing revenues going forward.
* Secured position as one of Network Rail's four track renewals contractors.
* Exited six facilities management contracts plus our share in the Herefordshire Jarvis Services business.
Outlook:
* Strong progress continues in turnaround of Group.
* The Government is embarking on a course of substantial improvement to the UK rail network.
* Significant opportunities in the UK rail market.
Steven Norris, Executive Chairman Jarvis plc, said:
"The implementation of our strategy remains on track. The period just ended was a significant milestone for the new Jarvis and we have
achieved the best result for five years. This result, our performance to date and the increasing opportunities within the rail market allow
us to look forward to the year to come with confidence."
For further information please contact:
Toni Jackson
Group Communications Manager - Jarvis
T: 01904 712 667
M: 07921 939031
Tim Anderson / Isabel Podda / James Strong
Director - Buchanan Communications
T: 020 7466 5000
Chairman's Statement
I am pleased to report that the Group has continued to make encouraging progress under improving conditions which prevailed across the
whole of the rail industry, particularly in the second half of the financial year. As a result of a great deal of effort at all levels
across the divisions, aided by a stronger demand for our services, the Group has generated a profit of £11.1m for the year, our best
overall result since 2003.
It was disappointing that despite these significant improvements in the business overall, the financial performance was held back by
problems within our plant business which led the Board to issue the trading update in November 2007. However, during the second half of the
year volumes were substantially improved in Jarvis Rail and as a consequence our Fastline Plant operation also performed better. Meanwhile
the Group has disposed of its share in Herefordshire Jarvis Services Limited and has also exited a number of other facilities management
contracts, three of which were significantly loss-making. At the same time we have continued to reduce our overhead costs and have initiated
a major overhaul of our information technology and our property requirements. That exercise continues and is proceeding as planned.
Our strategy continues to be that of concentrating on our core competencies in rail and associated plant activity, while building our
rail freight business and looking carefully at all the strategic options which are available to us in relation to our remaining facilities
management business.
Most pleasingly, as we announced on 22 May, we have agreed with our lenders, Bank of Ireland and Bank of America, an extension of our
working capital facilities to January 2010 together with a reduction in our overall cost of borrowing. We believe this represents a strong
signal by our lenders of their confidence in our business model, particularly in current debt market conditions, and we appreciate their
continuing support of our strategy.
Financial Results
Our financial performance for the year reflects a tale of two halves. Our revenues from continuing operations increased by 36 per cent
in the second half compared to the first, totalling £321.9m for the full year (2007: £288.5m). This drove a second half operating profit,
excluding discontinued operations and exceptional items, of £8.9m compared to £0.3m in the first half. Total operating profit of £9.2m
compared to £4.9m in the previous year.
Our results benefited from the receipt of a tax refund, including accrued interest, of £6.5m which we announced in February. Net debt
increased to £38.8m (2007: £23.6m) as we put the equity raised at the previous year end to good use, by exiting loss-making facilities
management contracts and funding overhead reductions to improve efficiency, including investing in new information systems.
Group profit for the year attributable to equity shareholders was £11.1m (2007: loss £21.7m).
Rail
Our Rail business is now extremely busy. The first half performance was affected by the late start of a number of large enhancement
contracts for Network Rail but these are now virtually all well underway and continue in the current year. One of our largest and most
complex contracts is at Rugby where we have been the Principal Contractor for Network Rail's largest single scheme on its West Coast
enhancement programme, undertaking major and preparatory works every weekend since January 2007.
In September we were confirmed as one of Network Rail's four contractors for track renewals. Throughout the year we have secured
additional enhancement contracts. This decision by Network Rail shows their confidence in Jarvis as a leading supplier of track renewals and
is another key step in our strategy to focus on our core competencies and to maximise our increased opportunities following the unveiling of
Network Rail's programme of rail expansion.
Plant (Fastline)
Plant had a particularly challenging first half year and everyone in the business worked exceptionally hard to maximise the
opportunities that the upturn in Rail volumes presented to our Plant business. Consequently the second half performance saw much improvement
over the first half.
We have sold some of our older and largely unused heavy plant to Poland and Egypt. Not only has this released funds which will reduce
debt and assist our plant renewal efforts but it has allowed us to establish contacts in these rail markets which along with a number of
others, particularly in Central and Eastern Europe, are now growing rapidly and are increasingly looking for the services we can provide.
Freight
Our rail freight operation has launched its third container route and now operates a service to the North West. Work on the E.ON coal
haulage contract commenced in May 2008 and marks a significant milestone in the continued development of the freight business. It is
becoming increasingly vital to the economy and the environment that more freight is moved across the country by Rail. We continue to see our
rail freight business as capable of further expansion in a market which is set to grow substantially in the coming years.
Accommodation Services
Thanks to the hard work of Stuart Laird and his whole team, the Accommodation Services division is now no longer the source of a
continuing outflow of cash. The business is now profitable at the contract level and benchmarking of several other contracts will also
improve profitability. We have disposed of seven further contracts, including our share in the Herefordshire Jarvis Services business,
during the period and continue to examine all strategic options regarding the remainder.
Our people
I have been enormously impressed by the quality and assiduity of our loyal colleagues in every part of the business. In paying tribute
to them for their exceptional efforts I also warmly thank Richard Entwistle, our Chief Executive and John O'Kane, our Group Finance
Director, who has managed our finances with skill and prudence throughout the year, for their outstanding contributions and finally my
Non-Executive colleagues on the Group Board for their unstinting support and advice.
Future prospects
The implementation of our strategy remains on track. We encountered some setbacks which meant that we have not progressed as quickly as
we would have liked in the period. However, I am pleased that with the hard work of everyone involved we have made substantial progress. The
business is in far better shape now than it has been for a long time.
It is clear from Network Rail's recently updated Strategic Business Plan for April 2009 to April 2014 and the Government's "Delivering a
Sustainable Railway" White Paper that the government is embarking on a course of substantial improvement to the UK rail network. The levels
of spend forecast within these documents is at an unprecedented high and is considerably greater than the industry has witnessed before. As
a result there are significant opportunities in the UK rail market and the Board believes we are well placed to capitalise on these.
The year to the end of March 2008 was a significant milestone for the new Jarvis and we have achieved the best result for five years.
This result, our performance to date and the increasing opportunities within the UK rail market allow us to look forward to the year to come
with equal confidence.
Steven Norris
Executive Chairman
27 May 2008
Consolidated Income Statement for the period ended 31 March 2008
2008 2007
Before Exceptional Total Before Exceptional Total
exceptiona items excepti items
l (Note 3) onal (Note 3)
items items
Notes £m £m £m £m £m £m
Continuing operations
Revenue 2 321.9 - 321.9 288.5 - 288.5
Cost of sales (282.8) (4.7) (287.5) (248.2) (13.1) (261.3)
Gross profit 39.1 (4.7) 34.4 40.3 (13.1) 27.2
Administration expenses (29.9) 0.6 (29.3) (35.4) (0.3) (35.7)
Operating profit / (loss) 9.2 (4.1) 5.1 4.9 (13.4) (8.5)
Finance income 4.3 1.1 5.4 3.4 - 3.4
Finance expense (6.0) - (6.0) (8.0) - (8.0)
Net finance costs 4 (1.7) 1.1 (0.6) (4.6) - (4.6)
Profit / (loss) before 7.5 (3.0) 4.5 0.3 (13.4) (13.1)
taxation
Taxation 5 (0.2) 5.4 5.2 2.0 - 2.0
Profit / (loss) for the period from continuing 7.3 2.4 9.7 2.3 (13.4) (11.1)
operations
Post-tax (loss) / profit from 6 (0.4) 1.8 1.4 (4.2) (6.4) (10.6)
discontinued operations
Profit / (loss) for the period attributable to 6.9 4.2 11.1 (1.9) (19.8) (21.7)
equity shareholders
Basic and diluted earnings /
(loss) per share
- Continuing operations 4.7 p (6.9)p
- Discontinued operations 0.7 p (6.6)p
Total 7 5.4 p (13.5)p
Consolidated Statement of Recognised Income and Expense for the period ended 31 March 2008
2008 2007
£m £m
Net actuarial gains on defined benefit pension 1.5 11.4
schemes
Tax in respect of items taken - (3.5)
directly to equity
Net income recognised directly 1.5 7.9
in equity
Profit / (loss) for the period
- From continuing operations 9.7 (11.1)
- From discontinued operations 1.4 (10.6)
Total recognised income / (expense) for the period attributable to equity 12.6 (13.8)
shareholders
Consolidated Balance Sheet at 31 March 2008
2008 2 April
2007
Notes £m £m
Non-current assets
Intangible assets 2.8 -
Property, plant and equipment 18.6 22.8
Interests in associates - -
Interests in joint ventures - -
Deferred tax assets 12.7 10.0
Retirement benefit assets 40.4 36.4
74.5 69.2
Current assets
Inventories 3.3 3.4
Trade and other receivables 98.0 87.0
Cash and cash equivalents 3.4 27.6
104.7 118.0
Total assets 179.2 187.2
Current liabilities
Borrowings (10.6) (18.3)
Trade and other payables (96.1) (113.8)
Current tax liabilities (2.5) (1.0)
Provisions (5.9) (6.4)
(115.1) (139.5)
Non-current liabilities
Borrowings (31.6) (32.9)
Trade and other payables (0.8) -
Retirement benefit obligations (15.1) (17.0)
Deferred tax liabilities (15.0) (11.2)
Provisions (0.1) (0.9)
(62.6) (62.0)
Total liabilities (177.7) (201.5)
Net assets / (liabilities) 1.5 (14.3)
Equity
Share capital 10.7 10.2
Share premium 63.3 581.4
Special reserve 3.7 -
Capital redemption reserve 7.2 7.2
Other reserve 89.7 89.7
Accumulated losses (173.1) (702.8)
Equity shareholders' funds / (deficit) 8 1.5 (14.3)
Consolidated Cash Flow Statement for the period ended 31 March 2008
2008 2007
Notes
£m £m
Operating activities
Cash flows from operating 9
(17.8) (21.0)
activities
Restructuring costs paid
(2.2) (7.7)
Income taxes received
6.4 1.0
Net interest costs paid
(5.1) (7.5)
Net cash used in operating
(18.7) (35.2)
activities
Investing activities
Dividends received from joint ventures and
- 3.2
associates
Purchase of intangible assets
(2.4) -
Purchase of property, plant
(0.4) (4.2)
and equipment
Disposal of businesses, net of cash and cash equivalents disposed
1.9 5.1
Disposal of property, plant
1.2 -
and equipment
Net cash from investing
0.3 4.1
activities
Financing activities
Net proceeds from issue of
3.2 27.4
ordinary shares
Proceeds from new debt
1.0 51.2
Repayment of old debt
(10.0) (29.1)
Finance lease principal
- (0.5)
repayments
Net cash from financing
(5.8) 49.0
activities
Net (decrease) / increase in cash and cash
(24.2) 17.9
equivalents
Opening cash and cash
27.6 9.7
equivalents
Closing cash and cash
3.4 27.6
equivalents
Cash and cash equivalents
comprise:
- Unrestricted cash
- 24.7
- Restricted use cash*
3.4 2.9
3.4 27.6
*Use is restricted to certain contracts in accordance with defined contractual obligations.
Notes to the Consolidated Financial Statements
1 Basis of preparation
The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union (EU) and
in accordance with the provisions of the Companies Act 1985. The Group has applied all accounting standards and interpretations issued by
the International Accounting
Standards Board and the International Financial Reporting Interpretations Committee (IFRICs) relevant to its operations and effective at
the time of preparing these
statements.
This preliminary report does not constitute the statutory accounts of the Company as defined by section 240 of the Companies Act 1985, but
is extracted from those
accounts. The auditors, Grant Thornton UK LLP, have reported on those statutory accounts and given an unqualified opinion, which did not
include any statement under
section 237(2) or 237(3) of the Companies Act 1985. The statutory accounts will be filed with the Registrar of Companies in due course.
The results presented are for the financial year 3 April 2007 to 31 March 2008. The comparative results are for the financial year 1 April
2006 to 2 April 2007 the Group
having extended its 2007 financial year end by two days to incorporate the Placing and Open Offer transaction completed on 2 April 2007, as
disclosed in the 2007 Annual
Report and Accounts.
2 Segmental analysis for continuing business
Segmental information is presented in respect of the Group's business segments, which are the primary format of segmental reporting and
reflect the Group's management reporting structure. The Group is organised into
three main business segments:
Rail - provides rail infrastructure works to the UK rail industry, including rail renewal, major track development, electrical and
signalling services.
Plant - provides on-track machinery, small plant equipment and manages an extensive fleet of purpose-built vehicles for the rail and other
industries; provides bulk haulage and container rail freight services.
Accommodation Services - undertakes facilities management and residual construction operations.
Discontinued operations in the period ended 31 March 2008 relate to Herefordshire Jarvis Services Limited, previously reported as part of
the Accommodation Services segment. For the period ended 2 April 2007
discontinued operations also include the Prismo Road Markings business, previously reported as the Roads segment. The disclosure in respect
of the segmental information for discontinued operations is shown in Note
6.
2.1 Performance by business segment for the period ended 31 March 2008
Rail Plant
Accommodation Services Centre, eliminations and unallocated Total
£m £m
£m £m £m
External revenue 206.3 53.4
62.2 - 321.9
Inter-segment revenue - 35.1
- (35.1) -
Total revenue 206.3 88.5
62.2 (35.1) 321.9
Operating profit / (loss) before exceptional items 14.7 9.0
(2.1) (12.4) 9.2
Exceptional items (0.9) (0.2)
(3.0) - (4.1)
Operating profit / (loss) 13.8 8.8
(5.1) (12.4) 5.1
Centre recharges (4.3) (4.3)
(3.0) 11.6 -
Operating profit / (loss) after centre recharges 9.5 4.5
(8.1) (0.8) 5.1
Net finance costs
(0.6)
Taxation
5.2
Profit for the period from continuing operations
9.7
Segment assets 80.5 60.0
15.6 7.0 163.1
Unallocated assets - -
- 16.1 16.1
Total assets 80.5 60.0
15.6 23.1 179.2
Segment liabilities (62.4) (24.9)
(19.4) (11.2) (117.9)
Unallocated liabilities - -
- (59.8) (59.8)
Total liabilities (62.4) (24.9)
(19.4) (71.0) (177.7)
Net assets / (liabilities) 18.1 35.1
(3.8) (47.9) 1.5
Capital expenditure 0.1 0.4
- 2.8 3.3
Depreciation 0.1 3.1
- - 3.2
Unallocated assets represent cash and cash equivalents and deferred tax assets. Unallocated liabilities represent current and non-current
borrowings, current tax liabilities and deferred tax liabilities.
2.2 Performance by business segment for the period ended 2 April 2007 (restated)
Rail Plant Accom-modation
Services Centre, eliminations Discontinued operations Total
and unallocated
£m £m
£m £m £m £m
External revenue 142.3 68.0 78.2
- - 288.5
Inter-segment revenue - 35.8 -
(35.8) - -
Total revenue 142.3 103.8 78.2
(35.8) - 288.5
Operating profit / (loss) before exceptional items 9.4 13.3 2.3
(20.1) - 4.9
- -
-
Exceptional items (1.8) (1.9)
(8.9) (0.8) - (13.4)
Operating profit / (loss) 7.6 11.4
(6.6) (20.9) - (8.5)
Centre recharges (5.0) (7.4)
(3.4) 15.8 - -
Operating profit / (loss) 2.6 4.0
(10.0) (5.1) - (8.5)
after centre recharges
Net finance costs
(4.6)
Taxation
2.0
Loss for the period from continuing operations
(11.1)
Segment assets 53.7 60.6 25.5
5.8 4.0 149.6
Unallocated assets - - -
37.6 - 37.6
Total assets 53.7 60.6 25.5
43.4 4.0 187.2
Segment liabilities (42.0) (32.0)
(40.3) (19.8) (4.0) (138.1)
Unallocated liabilities - - -
(63.4) - (63.4)
Total liabilities (42.0) (32.0)
(40.3) (83.2) (4.0) (201.5)
Net assets / (liabilities) 11.7 28.6
(14.8) (39.8) - (14.3)
Capital expenditure - 4.5 0.1
- - 4.6
Depreciation 0.2 2.8 0.1
0.1 - 3.2
The assets and liabilities presented for discontinued operations relate to Herefordshire Jarvis Services Limited, sold in the period ended
2 April 2007, in accordance with the presentation requirements of IFRS 5
'Non-current Assets Held for Sale and Discontinued Operations'.
3 Exceptional items
2008 2007
£m £m
Termination costs of facilities management contracts
(2.7) (6.9)
Provision for construction
- (1.6)
defects
Redundancy costs
(2.0) (4.6)
Professional fees associated with financial
- (0.3)
restructuring
Disposal of property, plant
0.6 -
and equipment
Corporation tax refund
5.4 -
Interest on corporation tax
1.1 -
refund
Exceptional items relating to continuing operations
2.4 (13.4)
Exceptional items relating to discontinued
1.8 (6.4)
operations (Note 6)
Total exceptional items
4.2 (19.8)
On 23 October 2007 the Group completed the termination of three loss making facilities management contracts. The £2.7m exceptional costs
in the period are a result of the delayed disposal of these contracts.
Agreement was reached during the period with Her Majesty's Revenue and Customs to amend corporation tax returns submitted by the Group for
the years 2000, 2001 and 2002, following a change in tax legislation in
2007. This resulted in a tax refund of £5.4m and associated interest rebate of £1.1m.
4 Net finance costs
2008 2007
£m £m
Finance income
Interest receivable from short term bank deposits
- 0.2
Net finance income from defined benefit pension
4.1 3.1
schemes
Other interest
0.2 0.1
4.3 3.4
Finance expense
Interest payable on bank and
(5.6) (6.7)
other loans
Finance charges payable under
- (0.1)
finance leases
Other interest
(0.4) (1.2)
(6.0) (8.0)
Net finance cost before
(1.7) (4.6)
exceptional items
Exceptional finance income
1.1 -
(Note 3)
Total net finance cost for continuing operations
(0.6) (4.6)
5 Taxation credit for
2008 2007
continuing operations
£m £m
UK corporation tax at the
standard rate:
- Current period
- 0.4
- Adjustment in respect of
(6.3) (0.8)
prior period
Total current tax credit
(6.3) (0.4)
UK deferred tax:
- Current period
1.1 (2.3)
- Adjustment in respect of
- 0.7
prior period
Total deferred tax credit
1.1 (1.6)
Total income tax credit
(5.2) (2.0)
There is no taxation charge in the period attributable to discontinued operations (2007: £nil).
6 Discontinued operations
On 31 August 2007 the Group sold its 80 per cent interest in Herefordshire Jarvis Services Limited to Amey plc and its results, detailed
below, have been classified as
discontinued operations. Prior period comparatives, which have been restated accordingly, also include the results of the Prismo Road
Markings business, the sale of which
was completed on 1 December 2006, and the Accord Jarvis Limited Joint Venture, the Group's 50 per cent holding having being sold on 27
February 2007.
2008 2007
£m £m
Revenue
8.9 44.7
Cost of sales
(8.3) (41.6)
Gross profit
0.6 3.1
Administration expenses
(1.0) (7.6)
Operating loss before
(0.4) (4.5)
exceptional items
Exceptional items
- (0.2)
Operating loss
(0.4) (4.7)
Net finance costs
- (0.1)
Share of post-tax profits from joint ventures sold
- 0.6
Loss before taxation
(0.4) (4.2)
Taxation
- -
Loss after taxation
(0.4) (4.2)
Net profit / (loss) on
1.8 (6.4)
disposals
Post-tax profit / (loss) from discontinued
1.4 (10.6)
operations
The net profit on disposals in the period to 31 March 2008 relates to the £2.4m profit on disposal of Herefordshire Jarvis Services
Limited (detailed below) offset by £0.6m of additional expenses incurred in relation to previously discontinued businesses.
Herefordshire Jarvis Services Limited disposal
£m
Net assets disposed of:
Inventories
0.1
Trade and other receivables
3.7
Trade and other payables
(4.3)
(0.5)
Sale proceeds
3.5
Working capital adjustment
(1.5)
Costs of disposal
(0.1)
Net cash consideration
1.9
received
Profit on disposal
2.4
7 Earnings / (loss) per share
2008 2007
£m £m
Profit / (loss) for the period
- Continuing operations
9.7 (11.1)
- Discontinued operations
1.4 (10.6)
Total
11.1 (21.7)
Number of shares
Number (m) Number (m)
Weighted average number of shares in issue - basic
208.0 160.6
Effect of share options and warrants
0.3 -
Weighted average number of shares in issue - diluted
208.3 160.6
Basic and diluted earnings /
(loss) per share
- Continuing operations
4.7p (6.9)p
- Discontinued operations
0.7p (6.6)p
Total
5.4p (13.5)p
8 Reconciliation of movement in shareholders' equity
Share Share Special
Capital redemption Other Accumulated Total
capital premium reserve
reserve reserve losses equity
£m £m £m
£m £m £m £m
At 3 April 2007 10.2 581.4 -
7.2 89.7 (702.8) (14.3)
Profit for the period - - -
- - 11.1 11.1
Transfer between reserves - - (520.7) 3.7
- - 517.0 -
capital reduction
Actuarial gains on defined - - -
- - 1.5 1.5
benefit pension schemes
Shares issued in connection 0.5 2.6 -
- - - 3.1
with exercise of warrants
Equity settled share-based - - -
- - 0.1 0.1
payments
At 31 March 2008 10.7 63.3 3.7
7.2 89.7 (173.1) 1.5
At 1 April 2006 7.6 556.6 -
7.2 89.7 (689.3) (28.2)
Loss for the period - - -
- - (21.7) (21.7)
Placing and Open Offer (net of 1.9 19.8 -
- - - 21.7
expenses)
Issue of shares to existing 0.2 2.2 -
- - - 2.4
warrant holders
Shares issued in connection 0.5 2.8 -
- - - 3.3
with exercise of warrants
Actuarial gains on defined - - -
- - 11.4 11.4
benefit pension schemes
Tax in respect of items taken - - -
- - (3.5) (3.5)
directly to equity
Equity settled share-based - - -
- - 0.3 0.3
payments
At 2 April 2007 10.2 581.4 -
7.2 89.7 (702.8) (14.3)
By special resolution, confirmed by the High Court on 2 May 2007, the Company reduced its share premium account by £520.7m, eliminating
the accumulated deficit on the Company's profit and loss account and creating a special reserve of
£3.7m.
9 Cash generated from operations
2008 2007
Profit / (loss) from operations £m £m
Operating profit / (loss) from continuing operations 5.1 (8.5)
Operating loss from discontinued operations (Note 6) (0.4) (4.7)
4.7 (13.2)
Adjustments for non-cash movements
Depreciation of property, plant and
equipment
- Continuing operations 3.2 3.2
- Discontinued operations - 0.8
Non-cash pension costs / (income) 1.1 (0.7)
Restructuring costs 1.0 4.9
Profit on disposal of property plant and equipment (0.6) -
Share of post-tax profits from joint - 0.5
ventures
4.7 8.7
Movement in working capital
Decrease in inventories 0.1 3.6
(Increase) / decrease in receivables (14.0) 12.3
Decrease in payables and provisions (13.3) (32.4)
(27.2) (16.5)
Cash flows from operating activities (17.8) (21.0)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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