Head of PFI arm at Jarvis quits after profit warning

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The Independent Online

Jarvis, the troubled engineering and rail contractor, announced a fresh boardroom upheaval yesterday with the departure of the executive who heads its private finance initiative (PFI) arm.

Jarvis, the troubled engineering and rail contractor, announced a fresh boardroom upheaval yesterday with the departure of the executive who heads its private finance initiative (PFI) arm.

Robert Johnson has stepped down with immediate effect as chief executive of the group's accommodation services division, which is responsible for all of Jarvis's PFI deals in the health and education sectors.

His departure follows a profit warning two months ago from Jarvis, which said the accommodation services business would book a £5m loss for the year to the end of March compared with expectations of a £5m profit. Profits for the year are now expected to come in at about £51m against estimates in January of £80m.

The warning, the second from Jarvis this year, prompted a 21 per cent fall in its share price and the resignation of the group's finance director, Robert Kendall. The shares have since fallen a further 36 per cent to 90.5p, valuing the company at £129m.

A spokesman for Jarvis said Mr Johnson would not receive a pay-off, stressing that he was leaving of his own accord, not because he had been forced out of the company. Mr Johnson has agreed to stay on through the summer to ensure an orderly handover to his replacement, Robert Wallace, a former deputy chief executive with the construction company Skanska UK. Mr Wallace joins Jarvis at the beginning of next month.

Jarvis is in the midst of a wide-ranging strategic review which could result in it cutting its dividend, raising new finances through a rights issue, selling off parts of the business, or a combination of these. The results of the review are due to be announced next month alongside Jarvis's annual results.

The company also said Steven Norris had been confirmed as chairman of Jarvis following his defeat by Ken Livingstone in the London mayoral elections. Mr Norris has nevertheless said he is prepared to take on Mr Livingstone for a third time if he is selected again as Conservative candidate.

Mr Norris was widely criticised for keeping a foot in both camps when he declared that he would remain as interim chairman of Jarvis while fighting the mayoral campaign. He argued, however, that his role at Jarvis - one of the private contractors which has taken over parts of the London Underground - was only ever an issue with the "chattering classes" and was not raised on the doorstep.

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