Carillion is to axe 300 jobs from its rail business and close a swath of depots after revenues in that division dropped 拢50m in the first half of the year.

The job losses represent about 15% of the 2000-strong workforce in the rail business. About 200 of the staff affected will be transferred to other parts of Carillion鈥檚 business, but there will be at least 100 forced redundancies. Fifteen of the rail division鈥檚 depots will also be closed.

Chris Girling, finance director, said the redundancies were not directly related to the news last month that Network Rail had banned the contractor from bidding for rail projects until its safety performance improved.

However, Carillion is also set to appoint a health and safety director in an effort to improve its record in this area. Girling said: 鈥淭he issues [with Network Rail] were localised over a four-week period and we鈥檝e made personnel changes. But across the company as a whole our safety record is very good.鈥�

He added that the firm was in constant dialogue with Network Rail and hoped the ban would be lifted in 鈥渁 matter or months, not years鈥�.

The news came as Carillion posted a 23% rise in pre-tax profit to 拢27m for the six months to 30 June 2006. This was dented by exceptional costs of 拢13m. These included 拢5.7m for restructuring Mowlem. Girling said he expected this to rise to 拢15m for the full year.

Carillion bought Mowlem in February for 拢313m. Following the acquisition, Carillion had to make 拢135m of writedowns on the troubled business.

The remaining 拢7.3m of exceptional costs reflected the decreasing value of assets. The restructuring of the rail business is expected to generate costs of 拢3m in the second half of the year.

Carillion has also revealed that it had sold a number of stakes in PPP investments, which were expected to raise 拢46m.

In addition, the contractor has made a number of changes to the board. These include Girling鈥檚 announcement that he will retire at the end of the financial year.