Network Rail profits hit 1.2 bln pounds

Rail operator Network Rail made a profit after tax of 1.2 billion pounds last year, up from 1 billion, and said it would now double its spending on growing its railways.

The state-backed company, which must reinvest all profits in the network or use them to reduce debt, added on Friday that train punctuality was at a record high with nearly 90 percent of services arriving on time.

"Overall, the last year has been a good one a 4 billion pound investment programme has been delivered, delays caused by the infrastructure have been cut and costs have also been reduced," the company said.

Chief Executive Iain Coucher added that of the 4 billion pounds Network Rail invests annually, just 1 billion had been put into expanding the railways and the other 3 billion on renewal in the year to March 2008.

However, the expansion cash-pile would double to 2 billion pounds this year to help meet rising passenger numbers as consumers increasingly switch from cars to the railways amid soaring fuel prices and concerns over the environment.

"There is a whole new range of schemes, including an upgrade of the south-east railways," he told Reuters, adding that the plans included an expansion of major London stations such as London Bridge.

He said lessons had been learnt following engineering overruns at New Year, which led to the company being hit with a 14 million pound fine due to resultant delays.

"We saw at New Year what can happen when things do go wrong, but since then we have spent nearly 300 million pounds in ways that haven't been seen," Coucher said.

"We have better risk analysis, control and more hands on, front line managers making decisions," he added.

Network Rail took over running the railways following the collapse of Railtrack in 2002. It is part funded by government subsidies and has the amount of income it is allowed to generate fixed by a regulator.

Regulator the Office of Rail Regulation (ORR) on Wednesday said Network Rail needed 26.5 billion pounds to improve railway efficiency and overcrowding during the period 2009 to 2014 - below what Network Rail had requested as well as the figure for the current five year period.

Network Rail said it would fight the decision, adding that in order to extend platforms to ease overcrowding it would need around 29 billion pounds.

Coucher said the ORR had not appreciated the urgency of some of the expansion work, putting some of the potential income into the following five year period. "We will show evidence that it should be done earlier," he said.

Network Rail turnover increased to nearly 6 billion pounds for the year, up from around 5.8 billion, but net debt stood at 19.7 billion pounds, up from 18.4 billion.