Support services group Jarvis, which has its railheadquarters in York, today said annual profits at a key division had been wiped out by cost overruns on a number of contracts.

The group, which is currently at the centre of the inquiry into the Potters Bar rail crash, warned its accommodation services arm would now make losses of about £5 million, against previous market hopes for profits of £5 million.

At the same time, Jarvis said finance director Robert Kendall had resigned and that its dividend policy was under review following its recent performance.

Jarvis said it expected to take an exceptional charge of £40 million to cover the cost of handing back rail maintenance contracts to Network Rail.

The company's results for the year to March 31 are expected in June.

The accommodation services arm, which is involved in rebuilding schools and other public-private partnership projects, has suffered from "complexities" in a number of major refurbishment programmes.

It said most of these contracts were now nearing completion and that a substantial restructuring had taken place within the division, which said in January delays in new contract awards would cost it about £12 million.

Updated: 09:41 Thursday, April 15, 2004