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Elements to Jarvis’s recovery strategy:
- Focus: Core infrastructure services - UK rail, UK/US road maintenance and products; LA outsourcing
- Reduce/dispose: High risk activities - e.g. ‘Accommodation Services’ (JAS)
- Dispose: Non-core activities - European roads; plant and property; some JCVs/subsidiaries; Tube PPP project
It listed, in a way we consultants generally like to, which of its businesses it would keep, which seek to fix and which sell. We show this below. It is commendably straightforward.
Jarvis clearly didn’t have the luxury of leisurely reflection: it is doing what it needs to do fast. Has it had to sell good businesses? Yes – Tubelines is an example.
Are there businesses with good long term prospects that it might like to have fixed? We believe construction is a better sector than the City allows, although perhaps Jarvis was too far gone.
Are there other businesses that look uncomfortable as ‘keepers’? Yes – Prismo is a thermoplastics company with a large factory in Chorley. It looks odd as a core Jarvis business.
Zoom chartJarvis’s shares were around 40p when we went to press. Its debt had ballooned to £123m and £240m was written off reserves, wiping out shareholders’ funds. No one is expecting a quick climb back.
BPO: who's who
Now that ratings are (at last) down, companies are not quite so keen to call themselves business process outsourcers. It remains a frustratingly elusive term anyway - so, who are the UK’s leading BPO players?
At Credo we reckon a good test of a true British BPO player is this: have you got a multi-service white collar local government contract? Logica CMG, BT, Vertex, Hyder Business Services, Capita and Liberata all have. Agilisys may have. This seems to describe the leaders pretty well. How are these BPO companies doing? Capita, BT and Logica are well-known. Vertex, Liberata and HBS are shown below.
Guy Hands has made a lot of money; HBS was not his best investment.
Simon Bones is a Partner at Credo.
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