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Network Rail Limited Annual report and accounts 2021 Network Rail Limited’sLimited’s Annual Report andand AccountsAccounts 20212016 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 2021 CmCP 492 9297 © Crown copyright 2021 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 at www.gov.uk/official-documents Any enquiries regarding this publication should be sent to us at [email protected] ISBN 978-1-5286-2511-1 CCS0321145780 07/21 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 CONTENTS STRATEGIC REPORT CORPORATE GOVERNANCE 06 Our year in numbers 90 Our board of directors 07 Key improvements to the network 94 Corporate governance report 08 Network Rail’s story Safety, health and environmental compliance 104 committee report 09 Operating model 107 Environmental sustainability committee report 10 Introduction by our chair 109 Property supervisory committee report 12 Message from our chief executive 111 Audit and risk committee report 15 Our response to Covid-19 and leaving the EU 117 Treasury committee report 19 About Network Rail 119 Nomination and remuneration committee report 24 How we engage with our stakeholders 122 Directors’ remuneration report 26 How we performed 2020/21 134 Directors’ report 30 Chief financial officer’s review 2020/21 35 Network Rail regions and routes FINANCIAL STATEMENTS 36 Eastern Independent auditor’s report to the member of 40 North West & Central 138 Network Rail Limited 44 Scotland’s Railway 48 Southern 149 Income statement 52 Wales & Western 150 Statement of comprehensive income 56 Route Services 151 Statement of changes in equity 59 Network Services 152 Balance sheets 61 System Operator 153 Statement of cash flows 64 Technical Authority 154 Notes to the financial statements 67 Our people 71 Environmental sustainability Commentary in this Annual Report & Accounts is also designed to satisfy the Annual Return requirements as Risk management 77 defined within our network licence.The Annual Return data tables are available on our website at: Viability statement 87 https://www.networkrail.co.uk/who-we-are/publications- and-resources/regulatory-and-licensing/annual-return/ Annual Report and Accounts 2021 \ Network Rail Limited \ 05 Strategic report The numbers below are important to show our financial and non-financial performance. We report OUR YEAR IN numbers for both 2019/20 and 2020/21. For 2019/20, only three weeks were affected by the coronavirus pandemic. However, the whole of 2020/21 was NUMBERS impacted by the pandemic. Revenue in the year Passenger km travelled (bn) 2020/2021 2019/2020 2020/2021 2019/2020 £9,618m £8,099m 12.5km 66.8km Operating costs (before depreciation & amortisation) Passenger trains on time Public Performance Measure 2020/2021 2019/2020 2020/2021 2019/2020 £4,479m £3,924m 93.4% 86.2% Profit before tax Freight moved Net tonne kilometres 2020/2021 2019/2020 2020/2021 2019/2020 £1.6bn £375m 15.2bn 16.6bn Net debt Freight trains on time Freight Delivery Metric 2020/2021 2019/2020 2020/2021 2019/2020 £54.7bn £54.6bn 95.2% 93.4% Capital expenditure Lost time injury frequency rate 2020/2021 2019/2020 2020/2021 2019/2020 £5,928m £5,176m 0.277 0.290 Means time lost to injuries and fatalities among Network Rail staff and contractors. A lower figure represents a better performance. Environmental sustainability 2020/2021 2019/2020 Network Rail’s employee engagement index 9.8% 5.7% June 2021 pulse survey July 2020 pulse survey % reduction in greenhouse gas emissions against our 2018/19 baseline. Numbers do not include traction carbon reduction, which 58% 66% is not part of Network Rail’s direct emissions. 06 / Network Rail Limited / Annual Report and Accounts 2021 Strategic report KEY IMPROVEMENTS TO THE NETWORK North West & Central Scotland’s Railway HS2 On-Network Works (ONW) Kintore Station Location: Euston, Old Oak Common, Location: Kintore, Aberdeenshire Water Orton The new station will reconnect Ongoing work to prepare for Kintore to the rail network for the first construction, and connection to the time since the original station closed existing rail network, of HS2 between in the 1960s. London Euston and Birmingham Curzon Street. HS2 will bring much-needed East Kilbride Electrification additional capacity to the West Coast. Location: East Kilbride, South Trans-Pennine Route Upgrade Lanarkshire Location: Hope Valley - Manchester- Electrification will transform Leeds-York / Manchester to Sheffield the service we provide to our customers and offer greener, more Work to improve frequency, reliability environmentally friendly travel options and speed of services between to the public. Manchester, Leeds and York (TRU). Hope Valley upgrades will also remove bottleneck to allow passenger services to overtake freight trains. Wales & Western Southern Eastern Great Western Electrification, Severn Upgrading Gatwick Airport Station East Coast Main Line upgrade Tunnel (electric operation) Location: Gatwick Airport, West- Location: Werrington, Cambridgeshire Location: Severn Tunnel. South Sussex, England A new tunnel under the East Coast Gloucestershire, England to Widening platforms reduces crowding Main Line will separate passenger Monmouthshire, Wales and improves accessibility. and freight services – delivering better Electrification allows journeys reliability for millions of passengers from Cardiff to London, realising Upgrading Sandwich Station every year. environmental and journey time Location: Sandwich, Kent, England improvements for passengers. Horden Station Improvements at Sandwich station, Location: Horden, County Durham South West Rail Resilience Programme, including longer platforms and a Phase 1 - Marine Parade Dawlish new footbridge, were largely third A new station was built in just six party funded and well received by months, restoring services to Horden Location: Dawlish, South Devon stakeholders. for the first time in nearly 60 years. Reducing the number of weather induced line closures allows us to run more of our planned services. Annual Report and Accounts 2021 \ Network Rail Limited \ 07 Strategic report NETWORK RAIL’S STORY Vision, values, strategy, performance. Network Rail exists to get people and goods where they need to be and to support our country’s economic prosperity. We do this by running a safe, reliable and efficient railway that serves our customers and communities. To be successful, we need to be a company that is on the side of passengers and freight users. This is why we developed our vision of Putting Passengers First. OUR VISION Putting Passengers First Our regions make sure that their services and decisions meet the needs of the passengers, customers and communities they serve. OUR VALUES Our values – how we behave – allow us to deliver our vision. We empower our people to always be safe, care about the railway, its users and each other, and put teamwork at the heart of all that we do. This means that we Put Passengers First. STRATEGIC PRIORITIES The key elements of Putting Passengers First are grouped under our six strategic priorities: • Safety • Sustainable Growth • Train Service Delivery • Customers and Communities PERFORMANCE • Efficiencies • People Our balanced scorecard allows us to measure how well we’re doing against our strategic priorities. The linkages between our vision, values, strategic priorities and performance are explained more in About Network Rail on page 19. 08 / Network Rail Limited / Annual Report and Accounts 2021 Strategic report OPERATING MODEL In 2020/21 we continued our journey to become more We can deliver a more sustainable, efficient, joined-up customer focussed and service driven. We’ve introduced railway which is on the side of passengers and freight users. a new operating structure to bring us closer to the passengers, customers and communities we serve. Our operating model reflects that we all work directly for We’re now in better shape to meet the changing needs the benefit of passengers and freight users, or we work to of passengers and freight users and respond to external support those that do. changes like coronavirus and future rail industry reform. Eastern; North West Our funding & Central; Scotland’s comes from: PASSENGERS AND Railway; Southern; • UK Government FREIGHT USERS Wales & Western - make sure services and • Transport Scotland decisions will meet • Charging train operators the needs of their to use our track passengers, customers • Income from our OUR FIVE and communities: REGIONS property assets These regions are sub- divided into 15 routes, whose focus is on running services and repairing or renewing the railway SERVICE infrastructure. We are held to DIRECTORATE account by: • The Office of Rail and Route Services - leads Road - our economic and network operations and safety regulator strategy, and provides essential operational and • UK Government: NETWORK-WIDE business services. Department for DIRECTORATES Transport, HM Treasury • Transport Scotland System Operator - brings together timetables, EXECUTIVE network and industry LEADERSHIP
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