Annual Report and Accounts 2008
UK Rail
Revenue for the year was £1,332.5 million (2007: £1,472.1 million) with normalised profit from operations of £81.3 million (2007: £63.3 million). These results were broadly in line with our franchise forecasts, despite considerably more challenging trading conditions than anticipated in the fourth quarter, whilst also benefiting from the successful resolution of outstanding issues on previously exited franchises.
Behind these achievements was the fact that more people are choosing to travel on National Express trains. The East Coast franchise, for example, saw numbers of customers rise from 18.1 million to 18.7 million during the course of the year.
Customers benefited from increased reliability, better value and a more pleasant journey. Carefully targeted investments, combined with effective performance management programmes in each of the three businesses, ensured that customers' experiences matched their expectations. Punctuality improved across the board, according to independently audited Moving Annual Average (MAA) figures. East Anglia saw punctuality up from 89.8% to 90.6%, its best performance since National Express took over the franchise. Even more impressive was c2c's 2008 punctuality rate of 94.9% – the second highest in the UK. On the long-distance East Coast line, punctuality improved to 85.7%, rising on two occasions to 100% – a first for the line since privatisation.
We have also offered customers better, more easily accessible deals in 2008, including greater emphasis on online marketing. 43% of East Coast revenues came through online sales, including a substantial proportion of the £11 million raised by the company's highly successful 'miniature prices' campaign. East Anglia boosted customer numbers on the Stansted Express route by relaunching its website to include translations in languages determined by the airport's destinations. Special offers from c2c included a popular two-for-one summer package and attractive weekend leisure fares.
Having convinced customers to travel on our trains because of reliability and good value, the third challenge in 2008 was to make the customer experience even better. On the East Coast line, alongside an extensive train refurbishment programme, we laid the groundwork for a new onboard catering service. Improvements to car parks at two important c2c and East Anglia stations made access easier for customers and security initiatives in both companies not only reduced anti-social behaviour but also enhanced revenues by discouraging fare dodgers.
Industry awards have recognised our rail companies' high levels of professionalism. Among the accolades have been the National Rail Awards' recognition of Tony Smith, Acting Engineering Director for c2c, for Outstanding Personal Contribution in 2008 and East Coast's citations for the best stations of the year for Durham and Doncaster.
During the year, customer satisfaction surveys reflected our award success, with improvements across the board. Among the highlights was c2c's move into second place in the National Passenger Autumn 2008 Survey, with an overall satisfaction score of 90%. Customer satisfaction with East Coast rose from 82% at the beginning of our franchise to 88% by year end, giving us the highest ranking of any long distance train operating company.
With East Coast delivering its first year franchise commitments, the rail business achieved strong results, with East Anglia performing well, c2c improving profitability and overall profitability supported by one-time benefits from the resolution of outstanding commercial claims in former franchises.
During the year we took steps to reduce costs across all our rail businesses. During the first half of 2008, the creation of a single customer contact centre and a Finance Shared Services centre for all our franchises centralised operations and improved efficiency. In the fourth quarter of 2008, we identified additional opportunities to improve efficiency and combat the recession. In our East Anglia business, changes will result in headcount reductions, including changes to onboard catering services and the removal of onboard staff on the Stansted Express. On the East Coast, this restructuring programme will result in a reduction of roles. We are also reducing UK divisional headcount.
