Network Rail debt breaches £28bn on higher spending

The net debt of Network Rail has soared to more than £28bn, it has been announced. The rail infrastructure company said its net borrowings had risen from £27.2bn at the end of March 2012 to just over £28.04bn at the end of September.

The increase was not unexpected, it said, and was primarily due to the funding of capital investment and, to a lesser extent, the increase in the valuation of RPI inflation-linked bonds.

The figure was disclosed as it announced its financial results for the first half of the 2012/13 financial year.

Profit after taxation rose sharply from £136m in the first half of 2011/12 to £573m in the period April-September 2012. Revenue was up from just under £3bn to £3.167bn. Capital expenditure – the amount invested in the railway over the period – was £2.064bn compared with £2.071bn in the same period last year.

Network Rail added that the value of the railway network increased from £43bn at the end of March 2012 to £45bn at the end of September.

The results come as the company faces a tough challenge to cut costs as well as attempting to improve, at the behest of rail regulators, punctuality on long-distance services.

The group's finance director, Patrick Butcher, said: "The railway continues to see strong traffic growth which provides us with the challenge of getting the balance right between capacity, reliability and efficiency.

"We have seen growth on the network of 5% a year for a decade and this is set to continue. That means we continue to become more efficient so we can continue to invest to meet this growth."

The half-year level of expenditure was about the same as last year "despite the suspension of work during the Olympics and the reduction in activity following the achievement of key milestones on the King's Cross and Thameslink projects (in London)", he said.

"Our daily focus remains on running a safe, reliable and efficient railway service for passengers and freight users alike. While train punctuality is at high, historical levels Network Rail recognises that on parts of the network performance is not as good as it should be. As we have before, we will continue to take any appropriate action to improve services."