Jarvis, the road and rail contractor that played a large part in the new year travel chaos in the Midlands, is predicting its best set of results for five years, largely on the back of the success of its rail business.

More than 250,000 passengers had journeys disrupted by the four-day overrun of work at Rugby, where Jarvis was responsible for upgrading overhead lines for Network Rail.

The problems prompted Network Rail to promise that it would take more engineering work back in-house, but Jarvis told investors yesterday that it expected to benefit from a huge programme of improvement projects planned by the rail infrastructure group.

Steve Norris, the former Tory transport minister who chairs Jarvis, said: “I am confident that we are still on track to report the best set of results since 2003 and prospects for our rail business remain good, given the future programme of enhancement projects planned by Network Rail.”

Shares in Jarvis, which lost 75 per cent of their value after a profit warning in November, moved up 3¼p to close at 16¼p. Richard Entwhistle, chief executive of the group, said: “We are continuing to work with Network Rail to help them discover what lay behind the problems.”

Mr Entwhistle said that, while the press had made much of the problems on the West Coast Main Line over the Christmas period, Jarvis successfully completed many projects for Network Rail through the year.

Far from suffering from reductions to its workload, Jarvis is hoping to benefit from a recent Network Rail decision to reduce the number of renewal contractors from six to four.

The company made about £150 million of revenue from Network Rail last year and this is expected to increase by £15 million in the next financial year and following years.

Jarvis, which jointly accepted liability with Network Rail for the Potters Bar rail crash in 2002, came close to collapse in 2004 when several of its Private Finance Initiative building contracts got into trouble. The company was forced to sell almost all its valuable businesses, including its one-third stake in the Tube Lines rail maintenance consortium, and had to hand back rail maintenance to Network Rail.

It was restructured through a £350 million debt for equity swap and went through two chief executives in quick succession until Mr Entwhistle joined in 2005.The recovery of the company has been particularly slow and it is yet to make a net profit.

On the right track

16.25p Jarvis share price yesterday
£27.7m market capitalisation
4,500 employees
£2.5m loss for six months to September 30, 2007
£136.3m revenue in 2007
£5.2m operating profit in rail division before exceptional items
2.2p loss per share in six months to September 30
£41.4m net debt in 2007

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