Network Rail revenues down but train operators benefit
Tougher conditions imposed by the ORR (Office of Rail Regulation) during the new control period benefited train operating companies but depressed Network Rail revenues during the first six months ended 30 September 2014.
Network Rail’s unaudited interim statement for this period show that revenue fell 4% to £3.122bn (H1 2013: £3.267bn). Franchised track access and grant income made up the bulk of this, down from £3.106bn to £2.947bn, though freight revenue actually increased by almost a third (from £31m to £41m).
Net operating cost rose 4% to £2.155bn (H1 2013: £2.068bn), mainly due to an increase in the depreciation provision to £851m from £764m to cover the larger fixed asset base.
The operating profit dropped 19% to £0.967bn (H1 2013: £1.199bn). The profit before tax but after special items – investment revenue, other gains and losses and finance costs – plummeted 57% to £321m (H1 2013: £751m). The profit after tax was £281m (H1 2013: £861m), down 67%, though the previous year included a £110m tax credit, as against a £40m payout in 2014.
Total finance costs (including interest payments) increased 12% to £762m (H1 2013 £679m).
Net borrowings stood at £35.044bn as against (H2 2013: £32.987bn) and (H1 2013: £30.611bn), which means the debt increased by 14.5% in 12 months. This is reflected in the fixed asset value (property, plant and equipment) which now stands at £52.359bn (H2 2013: £49.833bn) and (H1 2013: £47.933bn), an annual increase of 9.2%.
From 4 July 2014, NR has borrowed directly from the government and no longer issues debt in its own name.
The additional £2.896bn investment during the first six months was spent on enhancements (£1.6bn), and renewals (£1.3bn). This was lower than planned, though Network Rail hopes to complete the works during the next six month period (H2 2014).