Network Rail investment at record levels
Network Rail investment continues at record levels, according to the latest half yearly report for the six months ending 30 September 2013. Capital expenditure of £2,743m (H1 2012/3, £2,064m) was 33% up on the same period for the previous year, and the total value of railway assets (property, plant and equipment) increased £1,522m during the last six months from £46,411m to £47,933m.
This is a clear reflection of the many different projects, ranging from new construction, to upgrades and renewals, which are now being rolled out across the network. NR says it is carrying one million more trains and half a billion additional passengers than it was a decade ago.
Total revenue £3,267m (H1 2012/3, £3,167m) increased 3%, broadly in line with the Retail Price Index (RPI), but the £1,199m operating profit fell 3% (H1 2012/3, £1,227m). However, profit after tax increased 53% to £861m (H1 2012/3, £563m), mainly due to a tax rate change credit amounting to £110m (as against a £57m payment during H1 2012/3).
Operating costs rose 7% to £2,068m (H1 2012/3, £1,940m). Employee costs are the largest single item and account for almost half (£961m) of all costs (NR has nearly 35,000 on the payroll). Depreciation and other amounts written off is the second largest cost and amounted to £764m.
Track access charges and government grant income account for more than 95% of total revenue. Freight now brings in less than 1% at £31m, even lower than the £118m from property rentals. This is a far cry from the days when freight formed the bulk of the traffic.
Net debt increased from £30,358m to £30,611m over the last six months. Borrowings rose 36% to £2,550m (H1 2012/3, £1,870m), largely to refinance maturing debt, with repayments soaring 255% to £1,283m (H1 2012/3, £361m). Finance costs (mainly debt interest) dropped 3% to £679m (H1 2012/3, £702m).
The Olympic factor has gone, and the passenger train performance MMA (moving annual average) has slipped from 91.7% to 90.7%. NR compensation payments for missed performance targets increased £35m in the first six months (as against a £6m net income during H1 2012/3). NR is expecting to incur additional financial penalties for long distance passengers as ORR train performance targets will not be met this year, and it still has to cope with the weather-related problems that autumn and winter will subsequently bring.