Media centre

Thursday 22 Nov 2012

Network Rail half-year results 2012/2013

Region & Route:

National

Financial highlights of the last six months:

• Revenue was £3,167m compared to £2,997m for the same period last year
• Operating profit was £1,226m compared to £1,227m
• Profit after taxation was £573m compared to £136m
• Capital expenditure – the amount invested in the railway over the period – was £2,064m compared to £2,071m
• Net borrowings were £28,043m compared to £27,200m at 31 March 2012

Patrick Butcher, Network Rail’s group finance director said: “The railway continues to see strong traffic growth which provides us with the challenge of getting the balance right between capacity, reliability and efficiency. We have seen growth on the network of 5% a year for a decade and this is set to continue. That means we continue to become more efficient so we can continue to invest to meet this growth.”

“This, combined with the traffic growth allow us to sustain high levels of capital investment, delivering £2.1bn of worth of capital work in the six months."

Investment

Investment in the railway continues, with a further £2.1bn outlay in the half year. The level of expenditure is the same as in the corresponding period last year, despite the suspension of work during the Olympics and the reduction in activity following the achievement of key milestones on the King's Cross and Thameslink projects.

There has been a significant ramping up of activity on the Reading Station area redevelopment project together with works on the East Coast main line and West Coast main line.

Milestones were also achieved on Southern platform lengthening and East London line works.

Revenues

Revenue in the period increased in line with expectations. The majority of Network Rail’s turnover increases annually in line with the retail price index (RPI), in accordance with the regulatory settlement. The RPI increase for the period was 5.2%.

Borrowings

As anticipated, net borrowings have increased from £27,200m at the year end to £28,043m. The increase is primarily due to the funding of capital investment and to a lesser extent the increase in the valuation of RPI-linked bonds. £1.5bn was raised in the half year through the issue of six new bonds, denominated in US dollars and sterling. US dollar issues are immediately swapped to sterling so no currency risk is taken. During the first six months of the year £600m was raised under the commercial paper programme.

Assets

The value of the railway network increased to £45,342m from £43,112m at 31 March 2012. The increase reflects £2,064m of capital investment in the infrastructure, depreciation of £737m and an upwards revaluation of £903m, largely because of inflation.

Outlook

Mr Butcher concluded: “Network Rail continues to evolve. Last year we completed devolving authority to all ten of our routes and now we can make progress to moving to a group structure that reflects this. We have already set up our infrastructure projects division as a standalone business unit, launched Network Rail Consulting as our international business and we have plans to run our energy, telecoms and recycling operations each with their own profit and loss account. We believe this will generate greater efficiencies and unlock greater value to the business.

“Our daily focus remains on running safe, reliable and efficient railway service for passengers and freight users alike. Whilst train punctuality is at high, historical levels Network Rail recognises that on parts of network performance is not as good as it should be. As we have before, we will continue to take any appropriate action to improve services.”