Network Rail says profits down and seeks debt rating
Reuters: November 20, 2008
LONDON -- Network Rail said on Thursday its pretax profits fell 10 percent in the six months to end September to 706 million pounds, and that it was seeking a debt rating in the new year.
The state-backed company, said in a statement punctuality was higher than ever before at 92 percent, but that maintenance and track renewal performance had fallen short of target.
The Office of Rail Regulation (ORR) said last month Network Rail could receive 27.7 billion pounds over the next five years to improve the country's railways, but the operator said it could not accept the ruling until it had a debt rating.
"The company needs to attain an appropriate investment grade from the ratings agencies to allow it to commence a stand alone debt programme," it said in the statement.
Network Rail debt has risen slightly to nearly 20.5 billion pounds since March.
The firm took over the running of Britain's railways following the collapse of Railtrack Plc in 2002. Part funded by government subsidies, it must reinvest all profits in the network or reduce debt.
See also:
Network Rail debt now over £20bn
Network Rail's debt exceeds £20 billion, the rail infrastructure company said.
The not-for-dividend company said its net debt for the period April to September 2008 was £20.49 billion - up from £19.74 billion in the same six-month period last year.
Network Rail also reported that its April to September 2008 pre-tax profit was £706 million compared with £780 million in April-September 2007.
The company's profit after tax was £5 million compared with £591 million in the same period last year. This was due to the increase in the tax charge following the abolition of the industrial building allowance, it said.
Earlier this year, the Office of Rail Regulation (ORR) fined Network Rail a record £14 million for three highly-disruptive engineering work overruns at the new year - one of them on the busy London to Scotland West Coast Main Line route.
On Thursday, the firm said it was on track to complete the West Coast upgrade on time. It also pointed to the fact that 92% of trains ran on time during the April-September 2008 period - the best level of train punctuality since records of this kind began in 1992.
Chief executive Iain Coucher said: "Network Rail continues to improve the railway for passengers and freight with record levels of train punctuality and continued high levels of investment. Once again, the company has delivered train performance ahead of forecast while running a safe and financially efficient railway.
"We have also met all the major project milestones on the West Coast main line in a period of intense activity and are on track to complete the upgrade on time, a phenomenal achievement on such a complex project."
He went on: "Starting in December, commuters, long-distance passengers and freight users on the West Coast will start to enjoy the benefits of our work with hundreds more trains and thousands of extra seats.
"Going forward, our twin aims are even better on-time performance and increasing railway capacity so that passengers and freight users benefit from longer, more frequent trains and better stations and information."
See also:
Network Rail’s profits derailed by industrial buildings tax
Property Week: 20.11.08
By Georgie Hobbs
Network Rail’s profits have been hit by the abolition of the industrial buildings allowance and falling property values.
In its interim results, the rail operator revealed a pre-tax profit of £706m in September, compared to £780m for the same period last year.
However Network Rail said that, due to the abolition of industrial buildings allowance, profit after tax was £5 million compared with £591 million in the same period in 2007.
Its statement showed it had paid out £512m because of the ‘abolition of industrial buildings allowance.’
Its property portfolio also declined by £83m, down to £866m from £949m at 31 March 2008. It also revealed net debts of £20bn.
Chief executive Iain Coucher said: ‘Network Rail continues to improve the railway for passengers and freight with record levels of train punctuality and continued high levels of investment. Once again, the company has delivered train performance ahead of forecast while running a safe and financially efficient railway.
‘Going forward, our twin aims are even better on time performance and increasing railway capacity so that passengers and freight users benefit from longer, more frequent trains and better stations and information.’