Contractor worries derail Jarvis

TROUBLED public-sector contractor

Apparently, the company has received complaints and the Specialist Engineering Contractors' Group is lobbying the government to look into its practices. If so, surely this must threaten the group's ability to win any more UK government contracts.

Broker ABN Amro downgraded from hold to sell. The broker said the in-depth report exacerbated operational and cashflow concerns and it is concerned about the sum of £24m, which Jarvis claims is owed by Network Rail.

It was recognised as a debtor in the interim results and was said to relate to cost increases in safety standards in its outgoing rail maintenance business.

ABN believes there is a big risk that some of this amount may not be recoverable. Indeed, there must be a danger that Jarvis could breach its net debt banking covenants in March 2005.

Wall Street's overnight surge of 134 points to a 31-month high gave the Footsie an early leg-up. It advanced 34 points but soon ran out of steam. It closed just 1.5 points better at 4447.0 on hefty overall turnover of 4.6bn. The Dow Jones succumbed to profit-taking yesterday and shed 77 points in early dealings.

Sterling firmed to $1.826, while the euro edged up to 69.1p and $1.263.

Buying ahead of fourth-quarter figures on 5 February helped former bellwether ICI rise 10 1/4p to 229 3/4p.

More than 173m shares in mobile phone giant mmO2 changed hands and the close was 2 3/4p higher at 86p.

Rumours of a possible merger with Hutchison Whampoa continues to do the rounds, while Deutsche Telekom T-Mobile's figures also surprised on the upside.

Vodafone buzzed 3 1/4p higher to 145p but BT slipped 4p to 176 1/2p.

Drugs giant GlaxoSmithKline was under the weather at 1200p, down 22p, on fears it could ride to the rescue of rival Aventis, which has received an unwelcome £32bn bid from French group Sanofi-Synthelabo.

Tullow Oil gushed 4 1/4p to 97 3/4p on hearing that Fidelity Investments has increased its shareholding to 13.45%, or 50.8m shares.

Heart FM radio group Chrysalis jumped 10p to 245p as Investec advised clients to tune in. It said the company will be a major player in the sector's consolidation.

Small-to-mid cap broker Evolution (unchanged at 121p) put another big feather in its cap by placing 89.57m shares (at 132p) in photo-booth operator Photo-Me International, 1 1/2p off at 133p. The stock came from a former director and was gobbled up by institutional investors in the UK, US and Europe. Chief executive Serge Crasnianski took 2m shares on board and dealers reckon the stock could motor.

Charles Stanley helped push facilities management group Connaught 3 1/2p higher to 392 1/2p. It advised clients to buy after the company announced a 10-year regeneration partnership, worth a combined £100m, with South Somerset Homes to supply planned central heating, gas servicing and capital works.

Aim-listed online financial analysis group The Market Age soared 6 1/2p to 8 1/2p in a thin market. The board said that apart from a significant improvement in its balance sheet, an improving sales performance and a reduction in its operating cost base, it sees no reason for the rise in its share price. Really!

International architect, designer and engineer Aukett gained 1p to 4 5/8p following an eventful AGM. A dissident shareholder concert party comprising Imagina, with 13.6% of the group's equity, and ex-directors with a total of 24% voted against the current management team.

MyTravel improved 1p to 14p on whispers that the struggling package tour group has done a deal with its legion of bondholders.

Patagonia Gold glittered at 17 1/2p, up 1p, after announcing drilling at its Coyhaique project in Chile has intersected veins up to 12m thick in gold.

TAKE takeover stories about Retail Decisions with a big pinch of salt. The international market leader in credit card fraud prevention wants to remain independent. It jumped 2 1/4p further to a high of 22 3/4p on turnover of 15m-plus following a strong buy recommendation from Daniel Stewart. Full-year results in March should show pre-tax profits soaring to £5.4m from £0.8m last time.