By Jonathan Davies

Network Rail has reported a 50% fall in annual profits after it was forced to reduce revenues by nearly £250 million.

Network Rail said annual pre-tax profits were £506m, down from £1.04bn in the previous year. Revenues were £6.08bn, down from £6.3bn after the rail regulator decided to cut its revenue by £246m.

It said profits were also hurt by a £41m loss on "financial hedges", compared with a profit of more than £300m last year.

Network Rail said the fall in profits would not impact on investment in the UK's rail networks.

The company also said that passenger numbers have doubled in the past 20 year, which has led to reduced punctuality. Last year, 90% of trains departed on time. That is a fall from 2013's 90.9% and Network Rail's target of 92.5%.

Patrick Butcher, Network Rail's finance director, said: "The railways continue to grow in popularity and we continue to invest heavily to respond to that demand.

"While progress is being made in improving performance, safety, asset reliability and delivering more renewals and projects, our rate of acceleration in these areas isn't yet where we want it to be."