Tube Lines makes £73m pre-tax profit

Tube Lines, the consortium responsible for the upgrade of the Jubilee, Northern and Piccadilly portion of the London Underground, has lifted its pre-tax profit to £73m.

The latest figure represents a profit margin of 8.5%.

Turnover in the 12-month period to 31 December 2007 ran to £860m.

Comparisons with the previous financial period are less simple than normal as it covered only the nine months to 31 March 2006. In that time, a pre-tax profit of £45m represented a margin of 6.9%.

During 2007 Tube Lines invested £430m which is more than double the sum spent in its first year of operation.

Professor David Begg, chairman, said that last year was another of improving performance as progress was achieved on all three lines. Delays caused by Tube Lines’ infrastructure are 42% down on the figure in 2003, the first year of its existence.

Looking forward, Professor Begg said: “The Jubilee line upgrade is our next major challenge. This is fully testing the skill, knowledge and ability of our projects team.

“The collapse of Metronet brought the PPP concept further scrutiny. While the type of contractual arrangement is important, I believe that what matters more than anything is having he right people with good skills sets and motivation.

“We have this at Tube Lines which is why we could make any system work.”

Turning to the question of Crossrail, he commented that the decision to press ahead was welcome but warned that the move “is not made at the expense of investment in the existing tube infrastructure” adding that “we won’t get the world-class underground system London needs if we rob Peter to pay Paul”.

Tube Lines’ net debt rose during the period to £1.7bn after starting the year at £1.4bn.

Four of its key KPI targets during the year were:

• £70m pre-tax profit (actual: £73m)
• £410m project investment (actual: £430m)
• 100% performance (actual 88%)
• 0.47 lost time injury frequency rate as measure by total number of hours divided by 100,000 (actual: 0.22)

Tube Lines won its PPP award on 31 December 2002. It has a 30-year project agreement with London Underground with a review interval every 7½ years.

Last year the main achievements were:

• 16 station upgrades finished
• 12 new station upgrades started
• 8.2km of track replaced or refurbished

Thanks to new techniques and approaches that Tube Lines has pioneered, the typical time to refurbish an escalator has been trimmed back from 26 to just eight weeks, while the duration of a station upgrade is now a little as four months, well below the earlier figure of more than 18 months.