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Reviews 25
The Rail segment performed well this year
and delivered an operating profit of £11.9m,
an anticipated and substantial improvement
on the prior year driven by increased
activity in our higher margin design
business and the impact of the change in
the contractual arrangements on our work
for London Underground. As expected,
revenue reduced slightly, partly due to the
changes at Metronet and also due to
a reduction in volumes of pass-through
expenses on our re-signalling contracts.
We continue to derive around half of our
revenue from large re-signalling contracts
for Network Rail. During the year
approximately 60% of that work consisted
of significant projects at Basingstoke and
the Rugby/Nuneaton section of the West
Coast Main Line upgrade. Our delivery
performance has been good which has
helped us secure work with Network Rail
on a number of additional projects. The
re-signalling requirement for Network Rail
remains significant with spending anticipated
to remain at approximately the same level
over the next few years. Our strong
reputation for delivery and our relationship
with Network Rail makes us well placed
to win a significant share of this market.
The other part of our business focuses on
design and consultancy services. Performance
in the year has been good as we have
benefited from an improving market as
Network Rail and other Passenger Transport
Executives bring more enhancement projects
to market. Significant projects during the
year include the Glasgow Airport Rail Link,
where we are providing design and
technical consultancy for the new railway
line running from Glasgow Central station
to the international airport, and Farringdon
Station where we have been appointed by
Network Rail Thameslink to provide
detailed design for the upgrade of this
major interchange between Thameslink,
London Underground and Crossrail.
During the year we have secured work on
a number of major strategic programmes
including Thameslink, Crossrail, the
InterCity Express programme, Network
Rail enhancement frameworks and major
stations including Birmingham New Street.
Additionally we had success in the
sustainability-driven renaissance of
electrification, in particular the Glasgow
to Edinburgh line where we have been
appointed by Network Rail acting on
behalf of Transport Scotland. Our work
involves feasibility studies and outline plans
for the electrification of approximately
100 miles of main and branch lines in the
Glasgow to Edinburgh corridor ahead
of works required for the Commonwealth
Games in 2014.
As anticipated, there has been a decline
in revenue from our work on the London
Underground, through Metronet and
Trans4m, which reduced by around
one-third. On 18 July 2007 the Metronet
infrastructure companies entered PPP
Administration and on 30 August 2007 the
contracts with Trans4m were terminated.
Since then we have continued to provide
station and civils design, civils inspection
and assessment capability to Metronet
under a series of short-term contracts.
Following the transfer on 27 May 2008
of certain of the trade and assets of the
Metronet infrastructure companies to new
entities established by Transport for
London, we have entered into longer-term
contracts with the successor companies for
the provision of consultancy, design and
engineering support.
Our investment in Metronet and
Trans4m is discussed on page 33 under
Discontinued Operations.
Outlook
In the short term the outlook for our
Rail segment remains good with 65%
of 2008/09 budget revenue secured by
31 March 2008. The UK rail market
continues to demonstrate steady growth,
with increasing demand for innovative
solutions to meet the need for
a capacity-enhanced, reliable railway.
Over the longer term a significant increase
in spending on enhancements, and continued
spending on major signalling works is
expected. We are well placed to meet those
demands with the breadth and depth of
our multidisciplinary expertise.
Introduction Reviews Governance Financial Statements Investor Information
WS Atkins plc Annual Report 2008