Media centre

Wednesday 2 Jun 2004

NETWORK RAIL INFRASTRUCTURE LIMITED – PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2004

Region & Route:

National

‘A YEAR OF SUBSTANTIAL PROGRESS’ Network Rail today publishes its preliminary results for the year to 31 March 2004, a year during which the Company began to take the first substantial steps towards the delivery of the  safe, reliable and efficient rail infrastructure the country wishes to see. The financial and performance highlights for 2003/04, compared with 2002/03, include: ·                A 7% reduction in Network Rail delay minutes, down to 13.7m minutes from 14.7m minutes ·                An increase in the proportion of ‘on time’ trains, as indicated by the Public Performance Measure, to 81.2% from 79.2% ·                Operating loss of £758m, compared to last year’s operating profit of £80m.  Of this nearly three-quarters (£544m) is attributable to a change in the phasing of network grant income from the Strategic Rail Authority ·                Net debt levels at £12.6bn, some £1.3bn lower than forecast in October 2002 ·                Broken rails reduced to 334 compared to 444 last year – the lowest level ever recorded ·                Reduction in the number of temporary speed restrictions to 458 from 537 ·                1,373km of new rail laid, compared to 1,010km ·                820km of sleepers renewed, compared to 666km ·                806km of ballast renewed, compared to 665km ·                380 units of switches & crossings renewed, compared to 254 ·                Completion of the installation of the Train Protection & Warning System (TPWS) ·                Substantial progress on the transfer in-house of rail maintenance ·                Successful conclusion of the Interim Review process - more - Prelims-2 Commenting on the year, Network Rail Chairman Ian McAllister said: “Last year was one of substantial progress.  Significant strides were taken towards delivering Network Rail’s vision of the safe, reliable and efficient railway everyone wishes to see. “The reduction in Network Rail delay minutes is one of the year’s most important achievements.  The 7% reduction in delay minutes compared to the previous year means they now stand at their lowest level for four years.  This very welcome performance improvement is something for the Company to continue to build upon in the year to come. “Network Rail concluded the year on 31 March with the publication of the 2004 Business Plan.  The plan details how the Company will modernise the railway, significantly reduce costs and make substantial improvements in train punctuality.  Our target is for 90% of trains to run on time by the end of the five year period, with year-on-year improvements to get to this symbolic milestone. “Network Rail is undergoing huge change, at an incredible pace.  Over the next five years, Network Rail’s dedicated and highly skilled employees will be working tirelessly to meet the challenges of safety, performance and cost.  The travelling public expects nothing less.” Chief Executive John Armitt added: “When Network Rail was created, the twin priorities were clear – to improve train performance and get a grip on costs which had increased substantially over the previous few years.  I am pleased to report good progress on cost control.  Whilst we have made a £758m operating loss in the past year, the Company’s debt levels are now some £1.3bn lower than forecast in October 2002, principally due to a rigorous approach to cash management. “There are improvements in other areas too.  Measures of asset condition continue to demonstrate significant improvement, largely as a consequence of the sizeable increases in renewals volumes which have been carried-out in recent years.  In 2003/04, 1,373km of rail and 380 units of switches and crossings were renewed compared to 1,010km and 254 units respectively in 2002/03. - more - Prelims-3 “Many of the principal safety indices, such as significant train accidents, have shown improvement over the course of the year.  One disturbing feature of the year, however, was the increase in workforce fatalities from four in 2002-03 to eight in 2003-04.  Any fatality is unacceptable and we will continue to work to eliminate fatal incidents on our infrastructure. “Further improvement is essential, but Network Rail believes that people will look back on 2003/04 as the year when the railways turned the corner towards a future that delivers a much better service to passengers. In the year to come, that improvement must continue.” Management Incentive Plan (MIP) outcome As detailed in last year’s Annual Report, the annual bonus for 2003-04 was to be calculated  by measuring actual company performance against the three equally weighted targets set in the MIP for 2003-04.  These targets were Public Performance Measure (PPM), Asset Stewardship Index (ASI) and Financial Efficiency Index (FEI). Each measure had three achievement levels comprising ‘target’, ‘enhanced’ and ‘maximum’ with the outcome being: ·        PPM - the target level was not reached so no award was payable under this measure ·        ASI - the enhanced target level was reached, at which a potential bonus of 12% of basic salary is payable for executive directors ·        FEI - the maximum target level was reached, at which a potential bonus of 20% of basic salary is payable for executive directors The resultant total potential award was 32%.  The Committee then chose to use their discretion by reducing the overall bonus award for the executive directors to 24% of their basic salary.  The bonus scheme is cascaded down through the organisation and, as a consequence, all Network Rail employees will receive a bonus this year. - more - Prelims-4 Commenting on the award of the bonuses, Network Rail Chairman Ian McAllister said: “Network Rail has achieved a great deal in the last twelve months.  Delay minutes are at their lowest for four years and significant strides have been taken to improve the efficiency of the Company and the condition of the railway assets. “Following this, I think it is only right that all Network Rail employees will receive a bonus this year.  The substantial improvements in Network Rail’s performance are testament to the hard work of all of our employees.”