Prism Rail turns in first profits since flotation

Prism Rail, the privatised rail company which operates four lines in England and Wales, has raced to its first profits since its flotation last year, fuelling concerns that the franchises were sold too cheaply.

Prism turned a loss of pounds 500,000 into a profit of pounds 4.8m in the six months to October, boosted by lower costs and passenger revenue growth of 9 per cent.

The group is to invest pounds 20m in train refurbishment and the improvement of stations over the next 18 months. Around pounds 3m of this will be spent on a new station at West Ham, East London, while the retail development at Fenchurch Street station in the centre of the capital will be improved.

Prism said passenger revenue growth had been boosted by a lower fare avoidance rate helped by the introduction of more ticket barriers. Growth in the London-based companies, which include the London, Tilbury and Southend Line, were up by 10 per cent. Growth at the Wales and West country subsidiaries, which include Cardiff Railways and South Wales & South West, were ahead by 7 per cent.

Prism's chief executive, Giles Fearnley, said the group was considering moving up from the Alternative Investment Market to the main market.

Prism shares, which have hit the buffers since soaring to 580p following flotation, closed 4p higher at 371p.