Executive Summary
Jarvis is a support services company focused on providing engineering, maintenance and upgrading services to the rail sector in the UK, and operating rail freight. It also retains some facilities management services under the PFI (Private Finance Initiative) programme, though it has disposed of its legacy construction activities. The company is only marginally profitable and has made losses in four of the last five years. It has also struggled with debt, and borrowings remain high, though it is not in immediate need of a refinancing.
Company History
The original Jarvis construction company was founded in 1846. It was transformed during the 1990s into a major facilities and infrastructure management firm, with a number of acquisitions and the disposal of some of its traditional interests. It also became involved in the PFI programme, under which construction contracts for the UK government were rewarded with a long term facilities management contract.
In 2002 the Potters Bar rail crash focused attention on Jarvis, which was carrying out maintenance works at the time and was alleged to be responsible. At the same time it appeared the company had become over-extended with too much debt. In 2004 it sold a number of its operations (notably the PFI business and European roads business). This has left it focused almost solely on the railway business.
Current Events
Business Model
Jarvis now operates three businesses; rail, plant, and accommodation services.
Rail
This is the rail engineering arm of the business, which undertakes rail enhancement projects, including signalling, telecoms, track renewal and overhead line work. It does not undertake maintenance work, which was taken in-house by Network Rail in 2003. It is a major provider to the UK rail sector, with one customer - Network Rail - accounting for 90% of its business. It operates mainly on the basis of large projects and framework agreements, with contracts lasting from 3-5 years on average. Track renewals and enhancement projects account for just under half the revenue each; electrical projects also account for a small percentage.
In 2009, this division made £ 253m in revenue in 2009, up 22% on the year before. However, profit fell slightly to £ 14.4m, with margins falling from 7.1 to 5.7%[1].
Plant
This division, which trades as 'Fastline', provides the rail industry with specialised machinery including OTM (on-track machines), and also manages a fleet of commercial…
