Key Points:

Rail and ferry operator Toll NZ's annual profit has fallen nearly 35 per cent, despite a 5 per cent increase in revenue.

The company posted a net profit after tax of $34.7 million for the year to June, well down from last year's profit of $53.3 million. Operating profit before unusual items rose 3 per cent to $56.4 million, on revenues of $725.8 million. No dividends will be paid.

The company said the result reflected a generally positive second half, with revenue growth and cost management lifting operating earnings.

Its freight by rail and car-carrying business had made "good progress", and the Interislander ferry service had performed ahead of target, with record passenger loadings achieved in the summer peak periods.

The TranzAlpine train had carried a record 204,000 passengers during the year. The focus was now on turning the Overlander and TranzCoastal services into similar high-value tourist experiences.

Despite a year of continued negotiations over a revised track access arrangement between itself and the Crown, there had not been a permanent outcome, the company said.

However, an interim agreement has been reached which allowed both parties to keep talking without risk to the operations of the rail network.

"Toll continues to remain optimistic that the right outcome for stakeholders will be found, and that it allows rail to play a full and sustainable long-term part in the country's land transport infrastructure."

The takeover of Toll by its majority shareholder, Toll Holdings, is currently subject to approval of the Overseas Investment Office.

The deal is due to be completed by the end of October, and Toll NZ would then be delisted.

Shares in Toll closed unchanged at $2.95 yesterday.

Year to June 30

2007 - $725.8m
2006 - $690.6m

Op profit
2007 - $56.4m
2006 - $54.7m

Net profit
2007 - $34.7m
2006 - $53.3m