Network Rail has reported full-year profits of £1.2 billion and an improvement in punctuality to 89.9 per cent.

All the profits will be reinvested in the company, Network Rail said, as the company has no shareholders.

Profit after tax of £1.2 billion was up from £1 billion in 2006/07, on a turnover of £5.96 billion.

Network Rail also reported train punctuality is at its highest level since records began, with an average of 89.9 per cent of trains arriving on-time over the period. The significant 90 per cent mark was reached at the end of April 2008, the group added.

In addition, Network Rail cut the costs of running the railway by a further £178 million over the year.

Chairman Ian McAllister said: “Overall, the last year has been a good one for Network Rail and the industry as a whole, with passengers seeing a better service.

“Train performance is at an all time high, a £4 billion investment programme has been delivered, delays caused by the infrastructure have been cut and costs have also been reduced.”

Consumer group Passenger Focus welcomed the improvement in performance.

Anthony Smith, Passenger Focus chief executive, said: “Passengers know that performance is slowly improving.

“Network Rail and its directors can take some of the credit for that. However, more than one in ten trains is still over five or ten minutes late, engineering work needs much better planning and execution and performance remains patchy and brittle in some parts of the country.”

The company, which operates Britain’s rail infrastructure, was fined earlier in the year by the Office of Rail Regulation for New Year engineering overruns.

Mr McAllister said “lessons had been learnt” from the project, which caused travel chaos when commuters returned to work in January.

“Changes have been made to make the planning and execution of such big improvement schemes more robust,” Mr McAllister added.