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REG-Jarvis PLC Annual Financial Report - Part 1
Released: 14/07/2009
http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20090714:RnsN5989V
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RNS Number : 5989V
Jarvis PLC
14 July 2009
Jarvis plc
Jarvis plc today announces financial results for the year ended 31 March 2009
Financial:
* Group revenue* £345.8m (2008: £321.9m)
* Profit for the period* £5.1m (2008: profit £7.5m)
* Exceptional costs £11.4m, as previously announced, relating to restructuring
and redundancy costs and exit from container haulage business
* (Loss)/earnings per share (4.5p) (2008: 5.4p)
* Net debt down to £21.5m from £38.8m in 2008
* Working capital facilities successfully extended to January 2011
*before tax and exceptional items
Strategic delivery:
* Reduced central overheads to £10.2m (2008: £12.4m) - now below strategic
target and achieved in line with plan
* Secured extension to E.ON coal haulage contract in Freight until December
2015
* Focused on development of Rail, Plant and Freight businesses while ensuring
Facilities Management business continues to improve margins
Board Changes:
* Richard Entwistle, Chief Executive, will retire with effect from the Annual
General Meeting in September this year
* Stuart Laird, currently the Group's Chief Operating Officer, to be appointed
as Chief Executivefollowing the retirement of Richard Entwistle
* Professor Brian Mellitt to retire as a Non-Executive Director following
completion of his second three year term
Outlook:
* Network Rail committed to a course of substantial improvement to the UK rail
network which is greater than any other period, although commencing later than
initially expected
* Working closely with Network Rail to ensure we are at the forefront of the
challenge to deliver more efficient ways of working
* Crossrail is now progressing and Network Rail has announced plans to
electrify the whole network
* Significant opportunities in the global rail market for contactors with our
level of expertise
* Confident of wider opportunities in Freight, longer term prospects positive
Steven Norris, Executive Chairman Jarvis plc, said: "I am pleased to report that
the results for the year to 31 March 2009 are in line with management
expectations. This is testament to the effort put in at all levels across the
business.
Our strategy continues to be that of concentrating on the development of our
Rail, Plant and Freight businesses while ensuring that our facilities management
business continues to improve margins. We are ensuring we will be at the
forefront of the challenge to produce more efficient ways of working which will
ultimately deliver a seven day railway. The current economic conditions and
Network Rail's decision to delay works created a difficult trading environment
in the second half of the year under review and this is expected to continue
through 2009-10. The prospects beyond that appear much more promising."
For further information please contact:
Toni Jackson Head of Communications - Jarvis T: 01904 712 667 M: 07921 939031
Tim Anderson / Isabel Podda / James StrongBuchanan Communications T: 020 7466
5000
2009 Jarvis plc Annual Report and Accounts
Contents
1 Financial Highlights
2 Chairman's Statement
4 Chief Executive's Statement
6 Financial Review
8 Operating Review
14 Biographies
16 Corporate Governance Statement
20 Corporate Social Responsibility
24 Directors' Remuneration Report
28 Directors' Report
32 Statement of Directors' Responsibilities
33 Consolidated Income Statement
33 Consolidated Statement of Recognised Income and Expense
34 Consolidated Balance Sheet
35 Consolidated Cash Flow Statement
36 Notes to the Consolidated Financial Statements
57 Company Balance Sheet
58 Notes to the Company Balance Sheet
61 Group Historical Summary
62 Report of the Independent Auditor to the members of
Jarvis plc
63 Investor Information
Financial Highlights
2009 2008
£m £m
Revenue 345.8 321.9
Operating profit* 7.7 9.2
Profit before tax* 5.1 7.5
Net cash from operating activities 18.2 (18.7)
Net debt 21.5 38.8
* Before exceptional items.
Chairman's Statement
We are ensuring we will be at the forefront of the challenge to produce more
efficient ways of working which will ultimately deliver a seven day railway.
I am pleased to report that the results for the year to 31 March 2009 are in
line with management expectations. It is testament to the effort put in at all
levels across the business that the Group can report a profit before tax and
exceptional items of £5.1m (2008: £7.5m). It is particularly pleasing to note
the reduction in net debt which was £21.5m compared with £38.8m in the previous
year, principally due to a substantial reduction in accounts receivable shortly
before the year end.
The financial year was characterised by a strong first half performance across
the board, but a second half - particularly the last quarter - in which rail
volumes declined because of reductions in track renewals and significant delay
in replacement enhancement project work following completion of the West Coast
Route Modernisation programme. This also had a knock-on effect on our Plant
business which, as we have already made clear, is likely to continue to be felt
through at least the first half of the current year.
The announcement by Network Rail which we reported in January 2009 effectively
delayed work which was planned in 2009-10 until later in Control Period 4 (which
runs from April 2009 to March 2014). Following this unexpected decision we have
moved quickly to downsize our business at all levels to adapt to the reduced
workload. Working with Network Rail and other stakeholders we are putting our
plans into effect, albeit at a net restructuring cost of £8.1m as previously
reported. This is a painful process in which we are inevitably releasing people
who have been loyal to the company over many years and who will be a great loss
to us. This is not a pleasant task for anyone and I take this opportunity to
thank all of those involved for their understanding, their co-operation and
their unstinting service to the business. I wish them every success in the
future.
Financial Performance
Principally due to the performance in the first half, Group revenue increased
over the year to £345.8m (2008: £321.9m). Operating profit for the period before
exceptional items was £7.7m which is down from £9.2m in the previous year. This
reduction was primarily as a consequence of the unexpected decline in rail
project volumes in the final quarter resulting in unrecovered costs, and the
significant decline in freight container volumes as a result of the worsening
global economic conditions.
Exceptional items in the period were £11.4m of which £8.1m relates to
restructuring and redundancy costs. As previously reported the downturn in
freight import volumes particularly during the second half of last year meant
that our container haulage operation was no longer viable and we exited that
business at a cost of £2.2m.
In these difficult economic times it is pleasing to have been able to announce
on 9 July 2009 that we have extended our working capital facilities for a
further year until 31 January 2011. We appreciate the continuing support of our
lenders, Bank of Ireland and Bank of America.
Rail
The Rail business was exceptionally busy in the first half with work on the West
Coast Main Line accounting for a significant proportion of revenues. It is
particularly pleasing to note that all of the associated projects completed on
time, including our largest and most complex contract at Rugby which enabled
Network Rail to launch its new timetable in December 2008.
The London North East Integrated Management Team track renewals contract has
performed well and has achieved all the Key Performance Indicators (KPIs)
necessary to qualify for a four year extension from April 2010.
Plant (Fastline)
Our Plant business experienced a mixed year. Performance in On Track Machines
(OTM) and Small Plant was strong and exceeded expectations. Performance in
Specialist Plant was below expectations whilst our Transport offering performed
poorly due to a lack of external demand as a result of the economic downturn and
the reduction in rail workload in the final quarter.
Freight (Fastline)
Our coal haulage business continues to perform well and we are now fully
focussed on expanding it. Following a successful roll-out and first year
performance we confirmed on 3 June 2009 that we have been awarded an extension
of the E.ON contract to December 2015, giving us the confidence to order
additional equipment to service the contract.
Accommodation Services
Jarvis Accommodation Services, our facilities management arm, is a transformed
business. Following the closure of the construction activity and the disposal of
loss-making contracts the business has continued to improve and has performed
substantially better than last year. The business has been rationalised and the
team is focussed on continuing to improve its service and safety performance
whilst reducing costs and establishing an overhead appropriate for the current
size of the business.
Board Changes
It is with great regret that I have to report that after four years as Chief
Executive, Richard Entwistle has decided to retire with effect from the Annual
General Meeting in September this year. Richard has performed resolutely
throughout what has been a very tough period for the Company. Under his
leadership we have worked our way through some major challenges and the business
is in better shape than it has been for many years. In my personal estimation
no-one could have served us better and he leaves us with our very best wishes
for the future. I am however extremely pleased to announce that Richard will be
succeeded as Chief Executive by Stuart Laird, currently the Group's Chief
Operating Officer. Stuart has already demonstrated considerable leadership in
the successful restructuring of our FM operation and I am certain he will make
an equal success of this wider brief.
Professor Brian Mellitt will also be retiring following completion of two three
year terms as a Non-Executive Director. Professor Mellitt is a former President
of the Institution of Electrical Engineers and is a distinguished authority on
railway engineering issues. His wise counsel has been an enormous benefit to the
Company.
In line with our objective of downsizing our group overhead, the role of Chief
Operating Officer will not be replaced and the number of Non-Executive Directors
will be reduced from three to two.
Future Prospects
Our strategy continues to be that of concentrating on the development of our
Rail, Plant and Freight businesses while ensuring that our facilities management
business continues to improve margins.
We believe that the longer term prospects for the bulk haulage Freight business
are also very positive. Our underlying service culture puts us ahead of the
field in terms of delivery and we are confident that this will lead to wider
opportunities.
In Rail the current economic conditions and Network Rail's decision to delay
works created a difficult trading environment in the second half of the year
under review and this is expected to continue through 2009-10. The prospects
beyond that appear much more promising. Our major client Network Rail has a huge
capital works programme which we understand is fully funded until at least 2014
and that funding is substantially greater than any prior period. The Crossrail
project, which is currently valued at £15.9bn, is now progressing and Network
Rail has tabled plans to electrify the busiest 4,800 kilometres of the UK rail
network.
Our strategy included accessing international markets in a selective way at the
appropriate time once we had stabilised our business and that task is now
largely complete. There are significant opportunities in the wider global rail
market for contractors with our level of expertise.
We are ensuring we will be at the forefront of the challenge to produce more
efficient ways of working which will ultimately deliver a seven day railway.
Steven Norris
Executive Chairman
13 July 2009
Chief Executive's Statement
We have continued to work towards strengthening the underlying business.
Overview of Activity
This year we have continued to focus on the Rail, Plant and Freight businesses
as previously outlined in our Group strategy. The underlying business is in far
better condition than it has been for some considerable time. However, the
global economic downturn and Network Rail's decision to delay a significant
amount of enhancement and track renewals work have inevitably had some impact,
particularly in the second half of the year. With this in mind we are pleased to
report an operating profit of £7.7m, before exceptional items, and the
generation of a positive cash inflow in the year, which in my view is a
testament to the strength and tenacity of everyone within the business.
Health, Safety and Environment
Health and Safety continues to be our number one priority and we have performed
reasonably well in the year. The Rail and Plant businesses achieved a combined
Accident Frequency Rate (AFR) of 0.18 accidents per 100,000 hours worked. Rail
achieved a reduction of 10 per cent and Plant a remarkable 55 per cent
improvement in their AFRs compared to the previous year.
As part of Network Rail's 365 day safety challenge 12 of our Rail depots were
awarded certificates for completing a full year or more accident free. The Route
Section 12 rail project team on the West Coast finished the works on schedule
without any reportable accidents totalling more than 500 days, while the Jarvis
overhead line team working on the W181 project, based in Crewe, has now achieved
more than 700 days without a reportable accident.
The Plant business continued to recognise safety performance with its internal
award scheme with a total of 13 depots surpassing at least a year without a
reportable accident. The Small Plant and Transport businesses have worked a
highly commendable 761 and 1,462 days respectively without an accident, whilst
the team operating the Medium Output Ballast Cleaner (MOBC) contract achieved an
outstanding three years accident free.
We are committed to reducing the impact of our activities, products and services
on the environment. During the Rugby Station Remodelling project we achieved a
recycling rate of 96 per cent. The team worked hard to minimise the amount of
waste that had to be sent to landfill including the recycling of more than
116,000 tonnes of spoil at a special soil recycling centre.
Through a concerted effort and the proactive approach of the team to raise
awareness and further improve training we have seen a 41 per cent reduction in
the number of environmental incidents relating to oil spills on our worksites.
This was the lowest spill data since our records began in 1998 and a real credit
to everyone involved considering the volume of work that has been undertaken in
the year.
Rail
Overall the Rail business has performed well during the year although trading in
the second half suffered as a result of the reduced volumes in enhancement work
following the successful completion of projects on the West Coast. Indeed
Network Rail's decision to delay works, particularly track renewals, until later
in Control Period 4 (April 2009-March 2014) will mean that volumes will probably
remain at a reduced level throughout the 2009-10 financial year but pick up
thereafter.
As we have previously stated a key task, initiated in the final quarter of the
year, is to reduce headcount in our rail and plant businesses in recognition of
the lower volumes now anticipated for the coming year. This process is well
underway and continues into 2009-10.
Work on the West Coast accounted for a significant proportion of enhancement
revenues in the year with all the associated projects completed on time. A
considerable achievement given their scale and complexity.
The track renewals activity secured as one of Network Rail's four preferred
track renewals contractors has performed very well. We operate under a framework
agreement in the London North East region. Our client, Network Rail, operates a
series of KPIs to measure performance under this agreement. By achieving certain
predetermined targets we qualify for a four year extension to the contract. It
is pleasing to report that we have achieved the targets.
Our Electrical Projects Group has enjoyed a very busy and productive period
achieving a 45 per cent growth in revenue in the year. Similarly our Scottish
projects business, strc, has had a very successful year. The award of the Lugton
Loop contract, which will see the provision of a dynamic loop on the
Barrhead-Kilmarnock line in the West of Scotland, was a major achievement and
the work on the project is progressing well.
Plant (Fastline)
The Plant businesses have had a mixed year with strong performances from On
Track Machines (OTM) and Small Plant, and Specialist Plant and Transport not
meeting expectations.
Performance in On Track Machines exceeded expectations with the teams playing an
integral part in the successful delivery of many rail project enhancement works
including Rugby. The strong performance in OTM was in part as a result of the
contract to operate and maintain Network Rail's Multi Purpose Vehicles (MPVs).
The first season of the MPV weed-spraying contract has gone well and the six
machines have now commenced their second season.
Small Plant also performed well with increased turnover primarily due to the
higher volumes of rail activity in the first half and sustained growth in
revenues from the contract with Metronet. Specialist Plant completed many
projects on behalf of all the major contractors and was utilised by our rail
teams on major projects including Airdrie-Bathgate, Lugton Loop and Rugby.
However performance did not meet expectations. Transport performed poorly,
affected by a downturn in external demand as result of the worsening economic
climate and the reduction in our rail workload in the final quarter.
We have been working with several companies in the Middle East, Egypt and
Central and Eastern Europe to assess their on track machinery requirements. This
resulted in 11 machines being exported in the year including six which are now
being utilised on major projects in Saudi Arabia.
The targets set by the Office of Rail Regulation (ORR) for CP4 mean that Network
Rail is required to find more efficient and cost effective ways of delivering
its planned works safely. To this end we have developed a new modular technique
and are working closely with Network Rail on trials which will be undertaken in
the first half of 2009-10.
Freight (Fastline)
The Freight business, whose results are included in the Plant segment for
reporting purposes, consisted of two quite separate activities, the coal haulage
contract and the intermodal (container) business.
To service the E.ON coal haulage contract we acquired, through operating lease,
five new class 66 locomotives and 94 coal hopper wagons. The contract commenced
in May 2008 with the new equipment being phased in until we achieved full
production in November 2008. The phased start up worked to plan and in general
the contract is performing well. Indeed E.ON has now extended the contract to
December 2015 which has enabled us to place an order for additional equipment.
As previously reported the intermodal business has been quite a different story.
There has been a significant reduction in container imports as the impact of the
economic downturn has come in to full effect. Container volumes through
Thamesport reduced dramatically in the second half of the year. We therefore
concluded that we should close this business and we ceased to carry any
containers from March 2009.
Accommodation Services
Our facilities management business has improved its performance consistently
throughout the year.
We have disposed of one further contract during the period and many of the
remaining contracts have now reached their first benchmarking dates. The
benchmarking process is well underway and provides the business with the
opportunity to further improve performance.
We retain 24 contracts of which 22 are long-term PFI contracts with relatively
stable and secure revenue streams. As such, the business for the most part seems
isolated from the effects of the global economic downturn.
Central Overheads
An important part of our stated strategy has been the significant reduction of
the Group's overhead cost. Our central overhead cost in 2008-09 was £10.2m
compared to £12.4m in the prior year. I am pleased to report that our run rate
is now below the strategic target we set ourselves and this has been achieved in
line with the planned timescales.
Previously I have reported on the introduction of a new management information
system that is more appropriate for the size and shape of the business. This is
progressing well and we expect to have the programme completed by the end of the
2009-10 financial year.
Outlook
In the last few years we have overcome many challenges and as a result of this
the business and our people have become adept at responding rapidly to changing
circumstances. The global economic downturn and Network Rail's decision to delay
rail infrastructure works until later in the control period are simply
additional challenges that we will deal with. They impacted on the business in
2008-09 and will continue to impact performance in the 2009-10 financial year.
Beyond that however the prospects look much brighter since Network Rail has a
substantial budget for infrastructure expenditure between 2010-14 and through
our accelerated track renewals process and other initiatives we should be well
positioned to capitalise on these opportunities.
Richard Entwistle
Chief Executive
13 July 2009
Financial Review
The Group achieved an operating profit, before exceptional items, of £7.7m.
Revenue and Operating Profit
The Group's revenue for the year to 31 March 2009 increased by £23.9m to
£345.8m, due to the increased demand for Rail services experienced in the first
half of the year.
The Group achieved an operating profit, before exceptional items, of £7.7m
(2008: £9.2m). The reduction was a consequence of the significant decline in
rail project volumes, and resultant increase in unrecovered costs, in the final
quarter of the year.
Cash Flow, Net Debt and Financing
The operating cash inflow for the year was £18.2m (2008: outflow £18.7m), a
result of a significant working capital inflow in the year, due to improved cash
management and accelerated cash receipts from our major customer. Cash flow in
the prior year was impacted by a £12.5m outflow associated with the termination
of loss-making facilities management contracts.
As a consequence of this operating cash inflow net debt at the year end reduced
to £21.5m (2008: £38.8m).
Subsequent to the year end the Group negotiated a £50m facility and extended the
terms of its borrowings to 31 January 2011.
Exceptional Items
Exceptional items in the year include an £8.1m cost associated with the
restructuring of the Rail and Plant businesses following a significant reduction
in demand by Network Rail for these services, and £2.2m of costs arising from
the closure of the freight container services business. Both of these costs were
announced in March 2009.
Finance Costs
Net finance costs for the year ended 31 March 2009 increased to £2.6m (2008:
£0.6m), principally as a result of a £2.1m reduction in net finance income from
the Group's defined benefit pension schemes and £0.4m of refinancing costs
incurred in the year, offset by a £1.8m reduction in interest charged on
borrowings. Net finance costs in the prior year also included a £1.1m interest
rebate associated with a tax refund from HMRC.
Taxation
A tax charge of £3.3m (2008: credit £5.2m) has been recognised in the
Consolidated Income Statement, arising from movements in the provision for
deferred taxation. The prior year credit arose due to a tax refund of £5.4m from
HMRC.
Pensions
The last formal actuarial valuation of the Railways Pension Scheme was carried
out at 31 December 2007 and, for Jarvis's three sections in the Scheme, showed a
funding position of 101 per cent. The position of these schemes has been updated
by actuaries to 31 March 2009, the IAS 19 surplus reducing to £3.2m (2008:
£40.4m), principally as a result of falling equity markets and the use of
updated mortality tables.
The last formal actuarial valuation of the Streamline Pension Schemes was
carried out at 5 April 2007 and showed a funding position of 67 per cent. The
IAS 19 deficit on the Streamline Pension Schemes, which hold a higher proportion
of their assets in gilts, has reduced to £9.9m (2008: £15.1m). Decreases in
pension asset values have been offset by a reduction in the pension liability, a
consequence of higher discount rates and lower inflationary expectations.
A net actuarial loss on defined benefit schemes of £35.8m has been recognised in
the Consolidated Statement of Recognised Income and Expense, with an associated
tax credit of £10.0m.
During the year the Group's contributions to these schemes was £4.0m (2008:
£4.1m) and included special contributions to the Streamline Pension Schemes of
£1.0m (2008: £1.0m).
Financial Risk Management
The Group has a centralised Treasury function whose primary role is to manage
funding, liquidity and financial risks. The Group Treasury function ensures
financial risks are identified through:
- receiving regular, formalised reports from all operating
divisions;
- review of operational results and executive information, in
particular each division's cash generation and usage and
working capital position; and
- involvement in, and review of, the output from the planning
and forecasting process.
In order to establish the Group's funding requirements the Group Treasury
function monitors:
- regular cash flow forecasts prepared by the divisions;
- budgets and forecasts;
- actual trading results and resultant debt and balance
sheet positions; and
- capital expenditure requests.
If appropriate, the Group enters into derivative transactions, principally
interest rate swaps and forward currency purchases, to manage material interest
rate and foreign exchange risks arising from the Group's operations and its
sources of finance. It is the Group's policy that no trading in financial
instruments for speculative purposes shall be undertaken.
The Group's principal financial assets are bank balances, cash, amounts
recoverable on contracts and trade receivables, which represent the Group's
maximum exposure to credit risk in relation to financial assets.
The Group's credit risk is primarily attributable to its amounts recoverable on
contracts and trade receivables. Credit risk is managed by monitoring the
aggregate amount and duration of exposure to any one customer depending upon
their credit rating. The amounts presented in the balance sheet are net of
allowances for doubtful debts, estimated by the Group's management based on
prior experience and their assessment of the current economic environment.
Key Financial Performance Indicators
The key financial performance indicators of the Group are highlighted below.
These are monitored as part of the divisional Monthly Operating Review meetings,
where performance against budget and forecast is reviewed.
2009 2008
£m £m
Revenue 345.8 321.9
Operating profit* 7.7 9.2
Operating margin* 2.2% 2.9%
Operating cash flow 18.2 (18.7)
Net debt 21.5 38.8
* Before exceptional items.
Non-financial key performance indicators are as reported in the Corporate Social
Responsibility report on pages 20 to 23.
John O'Kane
Group Finance Director
13 July 2009
Operating Review
Rail
Overview of Activities in the Business
Jarvis Rail Limited (Jarvis Rail) is the rail engineering arm of the business
which undertakes rail enhancement projects, signalling and telecommunications,
overhead line and track renewals nationwide. The business has maintained its
position as a major provider of infrastructure works to the UK rail industry not
only through the provision of plain line and switch and crossing renewals as one
of Network Rail's chosen track renewals contractors, but also through the
delivery of some key enhancement projects.
Safety remains at the top of the agenda with both the Rail and Plant teams
continuing on the mission to achieve zero accidents. The period saw the company
once again achieve a highly credible safety performance with a combined Rail and
Plant Accident Frequency Rate (AFR) of 0.18 at the end of the period. By
comparison the trackside target set by Network Rail is 0.18.
The business undertook renewal work on the network every single weekend of the
year successfully delivering upgrades and improvements on 5,180 worksites
including around 400 core sites.
Revenues in the first half of the year exceeded expectations, and were
predominantly due to the increase in enhancement project volumes which continued
through from the last half of the previous financial year.
Over the summer months Jarvis Rail was involved in the successful delivery of a
number of high profile projects across the UK rail network. Working closely with
Network Rail the teams drove forward the Airdrie-Bathgate Rail Link in Scotland,
undertook a significant nine day blockade in Staffordshire, progressed the Rugby
Station remodelling project and completed a substantial project at Lincoln in
the London North East (LNE) area. The level of work completed in the given time
frame represents one of the most intensive periods of activity undertaken by
Jarvis Rail.
The second half, particularly the final quarter, has been hugely challenging for
the business as it began restructuring following the news that Network Rail is
deferring a significant amount of its expenditure for enhancement projects and
track renewals until later in Control Period 4 (CP4) which runs from 2009-14.
Due to this the business was adversely impacted by a downturn in replacement
projects following the completion of West Coast Route Modernisation projects.
Network Rail has stated that in deferring some of its workload until later in
CP4 it is looking to develop and implement more efficient ways of working to
ultimately achieve a seven day railway. To this end the team has been developing
an accelerated track renewal process by using the constituent parts of industry
best practice and we will be implementing practical trials in the first half of
2009. Jarvis Rail is fully engaged working closely with Network Rail to ensure
that we are at the forefront of such initiatives and following the restructuring
will be a much leaner operation.
West Coast Route Modernisation
The main focus of the year was the completion of substantial works on the West
Coast ahead of the introduction of the new railway timetable in December 2008.
The successful completion of Network Rail's West Coast Route Modernisation
programme, particularly the complex Rugby Station Remodelling project, in time
for the opening of the route to 125mph traffic was an outstanding achievement by
the team.
Work on the remodelling of Rugby Station was regarded as one of the UK's largest
and most complex multi-disciplined rail infrastructure projects and was
completed under some testing conditions. In a four week blockade over summer
2008 the team installed an outstanding 3,750 metres of plain line, 43 new
insulated block joints and 11 switch and crossing units.
When the full bank of works was completed ahead of schedule in December, the
installation of a remarkable 66 switch and crossing units, more than 30
kilometres of new plain line track and extensive drainage had been undertaken.
Following the successful completion of the works numerous tamping shifts were
also undertaken throughout the week prior to opening the line to enhanced
permissible speeds of 125mph. Working alongside Network Rail engineers and
monitoring train the team received up to the minute track geometry data
detailing how the track was performing during the speed increase process, and
targeted spot tamps from the data in order to achieve the planned speeds.
As well as the high profile remodelling at Rugby work was also completed on
projects including several stages of the A09 line speed enhancement project,
Trent Valley Four Track (TV4) and the Ipswich to Ely gauge enhancement.
Throughout the year the West Coast and Scotland Track Renewal Company (strc)
teams, supported by the Electrical Projects Group (EPG), worked on completing
the A09 contracts. These included work on five route sections between London and
the Scottish border with the largest of these projects the multi-disciplined
Route Section 12 (RS12) which commenced in spring 2008.
RS12 involved major civils, track renewals, signalling, overhead line and
mechanical and electrical systems works as part of the remodelling of the
infrastructure between Stoke and Manchester and was split into three key stages
involving two major nine day possessions in May and August 2008 and a further
major blockade in May 2009. During the blockade in August the teams worked more
than 25,000 man hours on site with 200 on track plant shifts and 2,000 machine
point movements. The project was completed without the team sustaining a RIDDOR*
reportable accident and the line was open on schedule.
The TV4 project, which involved the building of two additional railway tracks to
separate freight trains and local passenger trains from the fast passenger
services, had a heavy programme of works throughout the year. A solid
performance resulted in significant additional works being included in the
project. In total the teams installed 36 point ends and 18 kilometres of plain
line track, slewed more than eight kilometres of track and removed 14 point
ends.
Track Renewals
Following the successful integration of the East Midlands area in spring 2008
the LNE Integrated Management Team (IMT) has been wholly focussed on achieving
the Key Performance Indicators (KPIs) set by Network Rail. The KPIs were
introduced by the client in the early part of the year and were used to measure
the performance of each territory and contractor. The team bettered the results
required for four consecutive periods and has now qualified for a four year
extension to the contract.
In November the LNE team was presented with six '365' safety challenge awards by
Network Rail in one month. Altogether the six depots totalled more than 3,650
days - or ten years - project work without a RIDDOR reportable accident, with
the Darlington track renewals team leading the way with an outstanding three
years RIDDOR free. The Doncaster and Newcastle teams surpassed two years and the
York switches and crossing team, as well as the Peterborough and Leeds plain
line depots, all reached the major milestone of a full year accident free.
On top of a highly credible safety record the LNE team continued to make
improvements to track quality throughout the year, especially switches and
crossings. The team delivered a total of 411 composite kilometres of plain line
and 109 switch and crossing units compared to 62 units the previous year.
Notable achievements include projects at Sheffield Station, Deeping, Bradford
and Lincoln. The works undertaken by the York switches and crossing team at
Lincoln as part of a £63m signalling enhancement scheme. During an intensive six
week blockade over the summer months the team delivered 22 point ends, five
kilometres of track renewals and platform extensions worth over £6m safely
within the time frame.
In June the team safely and efficiently installed and commissioned 14 point ends
at Sheffield during an 80 hour possession. In order to achieve this the point
ends were delivered to site in 16 pre-constructed panels. Over a period of three
weeks the Peterborough depot delivered a total of 3,621 metres of plain line at
Deeping, 2,000 metres of which were installed within a single 33 hour
possession.
Working with EPG the LNE team successfully commenced the commissioning of the
North Erewash 1b project during the summer as part of the East Midlands
Signalling Renewal programme. Working together they also completed the
remodelling of Bradford Interchange Station during a nine day possession in
October 2008. The work bank included the installation and commissioning of 12
point ends along with renewal of more than 1,350 metres of plain line.
National Multi-disciplinary Projects
Despite the exit from the IMT track renewals framework contract in Scotland at
the end of the previous financial year the team secured additional work streams
and has experienced a particularly busy year.
As well as the contract for works on the Airdrie-Bathgate Rail link, which
commenced in 2007 and continued throughout 2008, the business secured new
contracts during the period including the second phase of the Glasgow Airport
Rail Link project and the Lugton Loop renewal project in Scotland. Both projects
have started and are progressing well.
The enabling works for the Airdrie-Bathgate Rail Link line enhancement project
have been successfully delivered along with the associated switch and crossing
renewal on the route. Working 24 hours a day during two 16 day blockades during
July and October the team successfully completed the first three stages of the
advanced works between Boghall and Bathgate and the major remodelling works
between Livingston and Newbridge. These works enable the twin track operation
for the full extent of the branch between Newbridge Junction and Bathgate
Station.
Work extending more than eight kilometres of new track from the existing Lugton
Loop to a point just south of Stewarton Station commenced in August 2008. Second
platforms are also being constructed at the unmanned stations at Dunlop and
Stewarton which, along with the single platform at Kilmaurs, will be capable of
accommodating trains of up to six carriages in length. This is a very complex,
multi-discipline design and build project which requires an integrated approach
to civils, rail, plant and electrical services. Work is progressing and the team
are focussed on ensuring that the project maintains its momentum and is
commissioned in line with programme this autumn.
In the South work on the Thameslink programme has continued throughout the year
with a variety of switch and crossing, plain line, overhead line, signalling and
station improvement projects successfully delivered in the restrictive and
technically challenging central London core of the Thameslink route.
The team successfully completed the Overhead Line works for the Olympic
Development Authority and is currently working with Halcrow on the development
of the Plumstead to Abbey Wood section of Crossrail. Development of a programme
of key projects along various sections of the Thameslink route has now
commenced.
As well as working alongside the LNE track renewals, West Coast, Scotland and
Southern teams to deliver the signalling design and build on projects such as
Lugton Loop, North Erewash, A09, RS12 and Rugby, the EPG team has been
exceptionally busy delivering a number of high profile projects including level
crossing renewals at Moss, Balne and Widdrington on the East Coast Mainline as
well as the renewal of the crossing at Melton Lane between Doncaster and Hull.
In April 2009 the EPG team successfully completed the Low Row Sector B
Signalling contract. This was a significant project consisting of the design and
build of a new two storey signal box, complete conversion of Low Row level
crossing from manual control to full CCTV control and the refurbishment and
re-control of two further level crossings along with the renewal of 16
kilometres of line-side infrastructure. As part of the five year Minor
Signalling Renewals Framework work has already commenced on two other schemes
for line-side signalling renewals at Peterborough Station and Sleaford East. The
team is also due to commence work shortly on several other level crossing
conversions with associated line-side signalling improvements including one in
North Staffordshire.
* Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995.
Operating Review
Plant
Overview of Activities in the Business
Fastline is the trading name of the Group's Plant business, which operates as a
division of Fastline Limited. Fastline provides the rail industry with a wide
range of on track machines (OTMs), specialist plant and small plant equipment.
Through its transport business Fastline also manages an extensive fleet of
commercial vehicles, many of which are purpose built, to serve the rail and
other specialist industries.
In the first half the Plant business continued to benefit from the increase in
rail volumes as it supported the extensive enhancement works programme
undertaken for key Network Rail projects on the West Coast Main Line including
RS12, Rugby remodelling, Northampton and Milton Keynes.
The On Track Machines (OTM) and Small Plant businesses sustained a strong
performance in the year. However, in the final quarter as a result of Network
Rail's decision to reduce its track renewals volumes in 2009-10 and the
reduction in volume on the OTM contract, the business commenced a restructuring
programme to accommodate the lower volumes expected in the year to April 2010
and cancelled its plans to order new vehicles for its Transport division.
On Track Machines
OTM performed well in the year exceeding expectations. This was in part as a
result of the contract to operate and maintain Network Rail's fleet of Multi
Purpose Vehicles (MPVs).
The fleet undertook weed spraying across much of the network covering more than
37,000 kilometres of track over the spring and summer of 2008 and the 2009
season is now well underway. Last spring was the first season Fastline undertook
weed spraying with MPVs. The contract utilised six MPVs across the country from
Penzance to the North of Scotland and Wales. The mobilisation required six new
Herbicide stores to be set up to service the chemical deliveries and six new
vehicles to deliver the herbicides safely to the machines to ensure compliance
with the standards governing the carriage and delivery of herbicides. The
operation of MPVs for Sandite rail head treatment in Scotland, London North West
and Western territories took place throughout November and December 2008 with a
total of 551 circuits completed treating 125,045 kilometres of track.
In addition to its own machines Fastline operates and maintains a total of 48
machines that are owned by Network Rail including seven MPVs, four Stoneblowers
across the LNE and Scotland territories, one Medium Output Ballast Cleaner
(MOBC) and 36 powered ballast distribution wagons. During the year Fastline
completed 34,264 metres of ballast cleaning in 56 shifts. In December 2008 the
MOBC team achieved a remarkable three years without a reportable accident.
Of particular note is the support the team provided to the Rail business during
much of its major August blockade works on many sites on the West Coast
including Rugby and the RS12 works.
The National Framework contracts for Tamping continued to perform as expected
with reliability once again outstanding achieving 98 per cent. However, as a
result of a reduction in demand by Network Rail for 2009-10, OTMs supplied by
the Company will reduce significantly during this period. A new one year
national contract commenced in May 2009 and we are working with Network Rail to
understand its future requirements for a further seven year contract to commence
in 2010.
During the year the Rail Recovery Train collected 227.9 kilometres of scrap rail
from the trackside returning it to Network Rail's recycling depots. The contract
has been successfully extended for a further 12 months until the end of March
2010.
We have achieved a 41 per cent reduction in the number of environmental
incidents that relate to oil spillage. This has resulted in a 34 per cent
reduction in the volume of oil being spilt in the year.
International Machine Sales
For some time we have been working with companies in the Middle East, North
Africa and Central and Eastern Europe to assess their machinery requirements and
demand going forward. These territories continue to be key growth markets for
infrastructure investments.
During the period Fastline successfully exported a further 11 machines for work
More to follow, for following part double-click [nRn2N5989V]
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