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The BBC's Simon Montague
"Railtracks ability to reinvent itself and to keep its finances under control remain highly uncertain"
 real 56k

Railtrack chief executive Steve Marshall
"We have learnt a lot of lessons"
 real 56k

Rail Passenger Association's Stuart Francis
"I think passengers will be wondering when they will get their dividend"
 real 28k

Thursday, 24 May, 2001, 15:40 GMT 16:40 UK
Railtrack reports massive loss
Train pulling into station
Compensation payouts to train operators have added to the loss
Railtrack, the company that maintains and owns the UK train tracks and stations, has reported a much worse-than-expected loss of 534m for last year.

The company's first loss since privatisation was due to a 733m payment spent on a rail renewal programme and compensation claims in the wake of the Hatfield crash in October, which claimed four lives.

The disruption led to huge compensation pay-outs to train operating companies.

Railtrack still needs to raise 3bn to help maintain the rail network. It confirmed on Thursday that it will plead its case for an additional 2bn of public money from the regulator, the Strategic Rail Authority.

The company has already been awarded early payment of 1.5bn from public funds that had not been due until 2006.

The financial markets reacted badly to the results and Railtrack shares fell 7% in early trading. The stock has since recovered, but was still down 2.5% at 465p at 1510 GMT.

'Still not good enough'

Although the company will not pay bonuses to its company directors, it has decided to continue paying a dividend to its shareholders.

Chief executive Steve Marshall, speaking on the BBC's Today programme, said the service was "still not good enough" and that it was "not appropriate" to pay the company directors their annual bonuses.

But Mr Marshall defended the decision to pay a dividend, saying: "We do need to retain the confidence of the financial markets and we will need to borrow billions of pounds in the coming years."

The company has said it would tap the debt markets for up to 4bn.

In addition, Railtrack announced it will segregate its activities into three distinct areas, each with its own operating board.

Mr Marshall denied the internal shake-up was an attempt to pre-empt a possible government move to take away some of Railtrack's responsibilities.

Stark contrast

The financial results for the year ending 31 March are in stark contrast to the previous year, which saw profits of 360m.

The company's earnings have been dragged down by the compensation claims.

Only last month, Railtrack paid Sir Richard Branson's company, Virgin Trains, a 100m payout.

The disruption to the national network was so severe after Hatfield that Railtrack has only been able to claim in the last week that services have returned to their pre-Hatfield levels.

The trade unions representing rail workers dispute this claim.

New chairman

Last week, Railtrack ended its long search for a new chairman when it announced that John Robinson would take the post when Sir Philip Beck stands down in July.

Mr Robinson said his priority would be to make the network "safe and reliable" and to win back the confidence of the City investors and the government.

But he warned that it would take another decade to create a "world class railway".

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See also:

17 May 01 | Business
New chairman for Railtrack
15 May 01 | Business
Train group's profits rise
11 May 01 | Business
Rail trouble continues
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