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Thursday 11 Jun 2015

Investment up as Network Rail publishes its full-year results

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National

A record £3.4bn was invested in expanding and growing Britain’s rail network over the last 12 months, Network Rail revealed today in its full-year results for the 2014/15 financial year.

New stations, new services, new facilities, new railway lines - all have been built or brought into use over the last year as millions of passengers and business have benefitted from continued high levels of investment in the railway network.

The expenditure, which is double the level of five years ago (£1.6bn in 2009/10), is part of an investment of over £120m a week, which includes almost £3bn over the year replacing worn out assets.

Over the same 12-month period, the number of people travelling by rail grew 67.3m to a new record high in modern times of 1.65bn. Passenger numbers have now more than doubled in the past 20 years and although this increase has meant that we are not hitting punctuality targets, more passengers are arriving on time than ever before.

Patrick Butcher, 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.

“With more than a million more trains on the network than ten years ago, there are inevitable challenges. We are determined to do more to improve and action is being taken to quicken the pace of change.”

Q&A:

Q1. Why have your operating profits dropped from £2,001m to £1,735m?

A1. Network Rail is a not for dividend company and so does not have shareholders to take a share of the surplus. Any surplus, like Transport for London, are reinvested in the railway to replace worn out assets.

The lower surplus reported today reflects a decision by our regulator that we require a smaller margin to manage our business in our new five year funding period, CP5, which started 1 April 2014.  In 2014/15 our income was £246m lower than last year as a result and this is reflected in our operating surplus.

Q2. Why have your profits (before tax) dropped from £1,035m to £506m?

A2. As described above, income has reduced by £246m, the remaining movement arose because in 2013/14 we recorded accounting gains on our financial hedges of £304m, which turned into a loss of £41m in 2014/15. These are accounting movements and do not affect the amount of money available for railway investment.

Q3. Why have your profits (after tax) dropped even more (£1,256m to a £376m loss)?

A3. This is because of the reduction in income of £246m and the non-recurring gains on financial hedges of £304m recorded in 2013/14 as well as a change in underlying deferred taxation assumptions that increased the tax provision by £597m, but has no cash impact.