Profits down and debts up at Network Rail

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The Independent Online

Rail infrastructure company Network Rail (NR) today announced a much-reduced annual profit and an increase in net debt to £23.8 billion.







The company's operating profits, revenue and capital expenditure also fell in the 12 months ending March 2010.



But NR stressed that costs had been controlled, charges to rail companies had been cut and the number of trains on time had reached an annual record level.



The not-for-dividend company, which has no shareholders, made an after-tax profit of £284 million in 2009/10 - well down on the £609 million figure for 2008/09.



Net debt rose from £22.30 billion to £23.83 billion. But NR said its debt had a lower gearing (debt to regulated asset base) ratio of 64% - down from 70% - and that this was "well within permitted limits".



Revenue was £5.66 billion compared with £6.16 billion in 2008/09, while net operating costs were up slightly from £3.61 billion to £3.68 billion.



This was largely due to higher (but lower than inflation) staff costs, NR said.



Operating profits were down to £1.98 billion from £2.54 billion, but the company said this was in line with terms laid down by the Office of Rail Regulation (ORR).



NR said charges to passenger train companies had been cut by 7% or 22p per passenger train journey, while, on average, freight charges had fallen 35%.



NR chief executive Iain Coucher said: "Passengers care most about trains being on time and we have delivered another record year with punctuality surpassing 91%.



"NR also has a duty to get best value for the British people and we have retained a tight focus on controlling costs. This has meant that we can cut charges to passenger and freight operators.



"As a result, the savings we make could be passed on to passengers in lower fares or to taxpayers through lower Government subsidies to the rail industry."



He went on: "This year is the first of five under the current funding settlement agreed with the ORR. Our results show we are delivering well against the ORR's key performance indicators, meeting or exceeding the vast majority of them.



"There remains a lot more hard work to do in this control period. This is a long-term business but solid groundwork has been laid."



Mr Coucher continued: "In a more austere spending environment it is vital that NR continues to drive down costs and make further efficiency savings.



"A strong start has been made in 2009/10 in delivering against our targets but we must and we will work harder and faster in the coming years."



The results come a day after the ORR reported that NR had had a "mixed" year.



ORR boss Bill Emery said he had written to NR's remuneration committee urging it to take into account this mixed performance when considering top NR executives' bonuses which are due to be announced later this month.



Mr Emery expressed disappointment last summer, and again yesterday, that, despite his sending a similar letter last year, top NR directors had received bonuses totalling around £1.2 million.



Transport Secretary Philip Hammond has also expressed concern about the level of bonuses, writing to NR chairman Rick Haythornthwaite about the matter.

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