The cost of delays in laying track and upgrading ramshackle Tube stations has seen profits for Metronet investors tumble nearly 20% and lead to big losses for its engineering contractors.

The poor financial performance was laid bare in a statement to the Stock Exchange by Metronet investor and main contractor WS Atkins, whose chief executive Keith Clarke is Metronet's chairman.

'The operational performance of the lines for which Metronet is responsible remains inconsistent and behind Metronet's original expectation,' the statement said.

'The stations renewal programme remains challenging. Only 13 stations had been completed by 31 March compared to the 36 contracted. It will take time to evidence any significant recovery.'

Metronet has overseen a string of fiascos on Underground lines - it runs the whole of the London Tube network bar the Jubilee, Northern and Piccadilly lines. Figures today revealMetronet last year made profits of £54m for its five investors - engineering groups WS Atkins and Balfour Beatty, French-owned energy group EDF, German-owned Thames Water and Bombardier, the Canadian-based train manufacturer - against a profit of £65m the previous year.

Atkins has also revealed its own engineering contracts for station improvement has seen it book losses of £4.2m against a profit the previous year of £4.5m. Atkins' take from Metronet has fallen by 70% in the year, leading it to warn that unless there is 'significant recovery', the value of its investment will come under question.

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Atkins' £4.6m profit from Tube contract

Daily Telegraph: 22/06/2006
By Stephen Seawright

Engineering consultants WS Atkins made £4.6m profit last year from its stake in Metronet, the consortium responsible for modernising two thirds of London Underground that has been heavily criticised for its failures.

Profit from its 20pc Metronet stake slumped from £11.9m to £4.6m for a difficult year that culminated in Tube regulator Chris Bolt threatening to step in to oversee Metronet's contracts. Last month, Metronet was fined £2.5m for track defects and delays in refurbishing stations.

WS Atkins chief executive Keith Clarke, who is also non-executive chairman of Metronet, said: "The Metronet Enterprise... continues to present challenges and this has impacted the group's overall profitability."

Atkins also admitted today that the operational performance of the lines for which Metronet is responsible "remains inconsistent and behind Metronet's original expectations". However, the company said operational performance is improving.

The refurbishment of Tube stations has also hit problems. WS Atkins said: "Only 13 stations had been completed by 31 March 2006 compared to the 36 contracted." The company expects to recover the programme by 2008.

The poor performance of Metronet, which is responsible for upgrading the Circle, District and Central lines amongst others, came as Atkins group pre-tax profit jumped 41pc to £74.8m. Turnover rose 22pc to £1.4bn as a final dividend of 11.5p was recommended bringing the total for the year to 16p, a rise of 33pc.

Atkins' solid trading performance came on the back of successful bids for other public sector contracts, despite the Metronet problems.

It won an order to help design road, bridge and water systems for London's 2012 Olympic Games and had a contract extended to provide security support at Britain's GCHQ electronic eavesdropping center.

Demand from Network Rail, which operates the UK's railways, picked up during the second half, the group added.