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Thursday 20 Nov 2003

NETWORK RAIL INFRASTRUCTURE LIMITED INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2003

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National

Network Rail today published its interim financial results, covering the period 1 April 2003 to 30 September 2003. In summary:- Financial performance ·        Turnover is broadly flat at £1,501m (2002: £1,522m) ·        Operating loss of £95m (2002: profit £121m) ·        Loss before taxation of £233m (2002: £3m) ·        Net debt £10.3bn (2002/3: £9.4bn) – below previous forecast of £10.7bn ·        Net cash inflow from operating activities £1,048m (2002: £211m) Significant increase in investment in rail infrastructure ·        Maintenance expenditure increased from £583m to £685m ·        Renewals expenditure increased from £1,050m to £1,494m ·        Enhancement expenditure of £334m (2002: £404m) Demanding efficiency savings being introduced ·        Efficiency Improvement Programme targeting £1.3 billion annual cost savings by 2006/7 (equivalent to 20% costs) – published in June ·        Total headcount reduction of 2000 within three years. Performance beginning to improve ·        82.4% of trains running on time compared to 81.8% in first half of 2002 despite significant delays caused by exceptional heat related speed restrictions in summer and the August power black-out ·        Network Rail caused delay minutes for the financial year to date (periods 1-8) are 8.5 million minutes down from 8.7 million for the same period in 2002 - more - Interims - 2 Substantial organisational change to improve performance and reduce costs ·        Common organisational structure introduced across the UK affecting over 8,000 staff ·        Functional reorganisation recently announced to streamline decision making and improve operational focus ·        Single integrated rail maintenance operation to be created - Reading maintenance contract already taken back in-house, other 19 to follow Interim review and financing plans progressing ·        Interim Review of Track Access Charges nearing completion ·        £4 billion commercial paper programme signed Ian McAllister, Chairman of Network Rail, said: “These results are largely in line with the performance we predicted upon acquisition. Our inheritance was a poor one, with low train punctuality, a degraded infrastructure and an explosion in costs. As we said on 3 October 2002 when Network Rail acquired Railtrack, it will be three to five years before we deliver sustainable change. Today, one year on, we stand by that analysis. “Some indices such as net debt show significantly better performance than predicted just over one year ago. On this measure, for instance, we projected net debt at this point would be £10.7bn, rather more than the £10.3bn we actually have. Other measures showing pleasing performance include the number of broken rails and category A signals passed at danger, for instance, which are at historically low levels. We must be eternally vigilant, but rail continues to be an extremely safe mode of transport. “Train punctuality, the measure which matters most to the travelling public, shows frustratingly slow improvement with 82.4% of trains running on time over the six months compared to 81.8% during the same period last year. “The six months covered by this Interim Report were challenging but the important thing is that an enormous amount of change is being initiated, and this puts us on the right path towards much improved performance in the future. The changes we have put in place provide this solid foundation and my fellow Directors and I are determined that we will deliver the improvements that the Company, and our customers, want to see.”