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Network Rail Limited's Annual Report and Accounts 2020 Network Rail Limited Annual report and accounts 2020 NetworkNetwork Rail Limited’sLimited’s Annual Report andand AccountsAccounts 20202016 PrePresentedsented to Parliament by Theby The Secretary Secretary of Stateof State for forTransport Transport by Command of Her Majesty by Command of Her Majesty July 2020 CmCP 244 9297 © Crown copyright 2020 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/ version/3 Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available on our website at www.gov.uk/government/official-documents Any enquiries regarding this publication should be sent to us at [email protected] ISBN 978-1-5286-2094-9 CCS0320287812 07/20 Printed on paper containing 75 per cent recycled fibre content minimum Printed in the UK by the APS Group on behalf of the Controller of Her Majesty’s Stationery Office Our year in numbers In this report we outline performance during 2019/2020, the first year of Control Period 6. Here is a snapshot of how we performed against a selection of key indicators. * Before depreciation and amortisation. Revenue in the year Passenger km travelled (bn) £8,099m 66.8km (2018/2019: £6,676m) (2018/2019: 68km) Operating costs* Passenger trains on time £3,924m 86.2% Public Performance Measure (2018/2019: £3,577m) (2018/2019: 86.3%) Profit before tax Freight trains on time £375m 93.4% Freight Delivery Metric (2018/2019: loss before (2018/2019: 94.0%) tax of £173m) Net debt Freight moved £54.6bn 16.6bn Net tonne kilometres (2018/2019: £54.1bn) (2018/2019: 17.4bn) Lost time injury frequency rate Capital expenditure 0.290 £5,176m Improvement of 6.5% on 2018/19 X-RAY Means time lost to injuries and fatalities among Network (2018/2019: £7,043m) Rail staff and contractors. A lower figure represents a better performance. Putting Passengers First Network Rail is changing. We’re becoming a company that is on the side of passengers and freight users – committed to doing what is right by them. Over the last year we have undergone some major changes to help us do just that. But putting passengers first is also about the small, day-to-day actions we can all take to put the people we serve first. Below are just some examples of how our colleagues have done this over the last year. While temperatures soared to record highs in summer 2019, colleagues in Southern worked hard to keep trains moving, and make things a little more bearable for passengers by dishing out Honesty Box free water and ice creams at stations. Passengers at Glasgow Central station got to have their say about what matters most to them when colleagues installed an ‘honesty box’ for written and video recorded feedback. Similar events were also held at our managed stations in Keeping cool Eastern and Southern regions. At London Bridge station we installed the railway’s first contactless donation point to help tackle the rise of Helping the homeless homelessness in London. In December 2019, four stations introduced optional sunflower lanyards for passengers with hidden disabilities. This means passengers at Manchester Piccadilly, London Euston, Liverpool Lime Street and Sunflower support Birmingham New Street stations now have a discreet way to ask for extra help while making their journeys. In September we announced a new WiFi service, due later this year, which will offer seamless connectivity and single sign-on at all 20 Network Supporting spectators Rail-managed stations. In October Network Rail, Northern and London North Eastern Railway (LNER) provided additional rail services when the Free WiFi announced Union Cycliste Internationale (UCI) Road World Championships took place in Yorkshire. To make Bristol Temple Meads achieved the title of journeys more comfortable 62 most improved railway station following a additional trains ran between string of significant upgrades to the railway York and Leeds, providing 17,000 in the Bristol area – part of the biggest extra seats for passengers. investment in the Great Western Railway in more than 150 years. Bristol Temple Meads dubbed most improved Contents Strategic report Corporate governance 01 Introduction by our chair 73 Our board of directors 03 Message from our chief executive 77 Corporate governance report 05 About us 85 Safety, health and environment committee report 12 Directors’ statement, section 172 of the 88 Audit and risk committee report Companies Act (2006) 96 Treasury committee report 14 How we performed in 2019/20 98 Nomination and remuneration committee report 17 Chief financial officer’s review 100 Directors’ remuneration report 22 Route performance 120 Directors’ report 23 Eastern 27 North West & Central 31 Scotland’s Railway Financial statements 35 Southern 123 Independent auditor’s report to the member of Network Rail Limited 39 Wales & Western 43 Network Services 132 Income statement 45 Route Services 133 Statement of comprehensive income 47 System Operator 134 Statement of changes in equity 49 Property 135 Balance sheets 51 Focussing on our people 136 Statement of cash flows 54 Being responsible 137 Notes to the financial statements 60 Our approach to risk management 70 Viability statement For further information visit networkrail.co.uk Strategic report Network Rail Limited Annual Report and Accounts 2020 Introduction by our chair, Sir Peter Hendy CBE Our railway network is critical to Britain’s success, by supporting and sustaining economic growth and, in the light of Coronavirus, recovery. Connectivity by rail for goods and passengers, enables house building and creates and supports jobs. Passengers are starting to see the results of recent have been on the front line of the fight against investment across the railway. Alongside some major Coronavirus. We are proud of how the industry has come capacity improvements, including electrification, and the together throughout this crisis – the efforts of the entire redevelopment of some of our managed stations, we are in rail industry to support the nation and keep Britain the midst of one of the biggest refreshes of rolling stock in moving have been immense. decades. Many trains are now longer, with more seats and greater capacity, meaning better and more comfortable But what we can’t forget is that we will also be measured journeys for passengers. on our ability to come together through the recovery. With passenger numbers at around 15 per cent of what they At least in normal circumstances, we’re also seeing an were pre-pandemic, working together as an industry to evolution in the way passengers use our stations. At a time provide a truly safe and reliable, phased return to the full when the high street is struggling, our station retail sales timetable will be essential. have grown. Stations are becoming a destination in themselves for people to eat, drink and shop, providing us Coronavirus has given some opportunities to bring forward with more income to reinvest straight back into the railway. maintenance and renewals, but it has also forced us to scale back or delay other planned engineering work. We will Unfortunately, despite improvements in some elements of have to work closely with the supply chain and wider passenger experience, performance has not shown a similar industry as we re-plan, to give us the best chance of trend. A much greater focus on seamless operations and supporting those who have been affected through this increasing the resilience of our network will go a long way crisis, while still providing the best possible service for to helping this. But on a network that is almost full, actually passengers and freight users. full, or already has an excess of demand over capacity in many places, a step change in capacity is crucial. Throughout this crisis we remain committed to safety, as we do our best to protect the public, our passengers and our Creating new lines through major infrastructure people. Safety is always a priority and because of that we programmes, HS2, Crossrail and Northern Powerhouse have been deeply saddened this year by the deaths of three Rail, are an effective way of doing this, but these are colleagues, in two separate tragic accidents. Our thoughts costly schemes with long lead times. We must invest are with everyone affected, and we will do everything we wisely and efficiently, constantly looking for innovative can to learn from these terrible incidents and make the and creative ways of increasing capacity, in an railway safer for everyone. environmentally sustainable way, so that rail can continue to support economic growth without adding too great a We remain committed to putting passengers first, and this burden on the taxpayer. year has been pivotal in setting us up to do just that. Our Putting Passengers First programme is helping us to refocus Recently, we have been reminded on a daily basis how on the people we serve – ensuring that their needs are at valuable Britain’s railway is, as many of our colleagues the centre of our decision making. But this is not yet 01 Network Rail Limited Annual Report and Accounts 2020 Strategic report Chair’s introduction continued This year we said goodbye to Board members Chris Gibb, Richard Brown and Bridget Rosewell. I’d like to thank them all for their commitment during their time serving on our Board. Thank you, too, to our executive leadership team for the brilliant work they have done in setting us up to be happening on an industry-wide scale. Coronavirus has more passenger focussed. There is still more to do but I accelerated change within the industry and shown what we have confidence in them, and particularly in Andrew Haines, can achieve when we are truly aligned.
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