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Jarvis incurs £3m restructuring costs after Q1 loss

Jarvis will incur a further £3 million in restructuring costs after making a small operating loss over the last three months.

In a three month trading update for the period since the start of Jarvis’ financial year in April the firm incurred a small operating loss during the period which is in line with management expectations.

A restructuring programme announced in March 2009 to reduce the group’s cost base is progressing well.

But with volumes not expected to improve in the short term the business has identified further cost and operational efficiencies which will result in a further £3 million in exceptional costs.

Unaudited net debt at the end of June 2009 stood at £20.2 million.

Bosses said the group’s strategy to concentrate on its rail, plant and freight businesses, while ensuring its facilities management business continues to improve margins, remains on track. 

Volumes in Jarvis’ rail business have reduced following Network Rail’s previously reported decision to delay work until later in the current control period - which runs from April 2009 to March 2014.

Jarvis chairman Steven Norris said: “As we have said before volumes are expected to continue at the anticipated lower levels throughout the current financial year.

“Tender activity should start to pick up in the second half, although short term visibility remains poor.  Beyond this year prospects look more promising.

“The CP4 five year control period has now commenced and Network Rail has a capital works programme which is funded to 2014.

“The Government also recently announced a £1.1 billion project to electrify two major rail lines.”

As announced on 14 July 2009 chief executive, Richard Entwistle has decided to retire with effect from this year’s annual general meeting on 3 September.

Mr Entwistle will be succeeded by Stuart Laird, currently Jarvis’ chief operating officer and in line with the group’s objective of downsizing the role of chief operating officer which will not be replaced.