Annual Report and Accounts

Network Rail Limited

21 July 2025

 

21 July 2025

Network Rail publishes annual report and accounts for the 12 months to 31 March 2025.

Network Rail Ltd ("Network Rail") today announces its results for the financial year ended 31 March 2025, the first year of Control Period 7 (CP7), which spans from 1 April 2024 to 31 March 2029.

Jeremy Westlake, Chief Financial Officer for Network Rail said "We are continuing to build further on the £4bn of efficiencies we made in our previous control period, which ran from 2019 to 2024. Our target is to achieve £3.9bn of efficiencies in CP7 and we have made a good start, one that is ahead of our delivery plans."

"While continuing to drive cost efficiencies, we are also delivering significant investment across the entire rail network to enhance the experience for passengers. Alongside safety improvements, we are focused on boosting train performance, introducing modern technologies, and substantially increasing our investment to address the challenges of climate change."

Operational and Strategic Highlights

·      This financial year (2024/25) marks the commencement of CP7, Network Rail's five-year spending plan.

·      Strong progress has been made against the CP7 Delivery Plan, with early momentum in delivering targeted efficiencies.

·      Network Rail remains on track to achieve £3.9bn in cost efficiencies over the CP7 period, building on £4bn delivered in CP6 (2019-2024)

·      All profits are reinvested into the railway, primarily to fund infrastructure renewals.

Financial Performance

·      Revenue: £11.3bn (2023/24: £11.6bn), reflecting a reduction in government revenue grants, partially offset by increased regulated charges, freight income and retail revenues.

·      Operating Costs: £8.1bn (2023/24: £7.5bn), driven by increased maintenance activity, inflationary pressures, and higher depreciation charges.

·      Profit Before Tax: £0.7bn (2023/24: £1.5bn), reflecting the above revenue and cost movements.

·      Capital Investment: £6.2bn (2023/24: £6.8bn), comprising £0.4bn lower renewals expenditure and £0.2bn reduction in enhancements, in line with business plans.

Strategic and Infrastructure Update

·      A refreshed CP7 Delivery Plan was published in March 2025, reflecting the impact of inflation, constrained public finances, and increased investment to mitigate climate-related risks.

·      Network Rail remains committed to maintaining performance while delivering greater productivity and value for money.

Outlook

Network Rail is focused on delivering its CP7 objectives, ensuring the long-term sustainability and resilience of the UK rail network. The company continues to work closely with government and industry partners to optimise funding and investment outcomes.

Financial highlights

for the year ended 31 March 2025

		2024
	2025	(Restated)
	£m	£m
Revenue	11,345	11,580
Operating profit	3,242	4,056
Profit before tax	725	1,503
Profit after tax	515	1,141
Net cash from operating activities	3,918	4,037
Net debt	(60,923)	(60,145)
Net assets	20,996	19,182
Rail network fixed assets	88,916	86,883
Investment property	194	227

Income statement

for the year ended 31 March 2025

			2024
		2025	Group
		Group	(Restated)
	Note	£m	£m
Revenue	2	11,345	11,580
Net operating costs	3	(8,103)	(7,524)
Operating profit		3,242	4,056
Property revaluation movements and profits on disposal		(30)	(6)
Profit from operations	4	3,212	4,050
Investment revenue		5	15
Other gains and losses		29	57
Finance costs		(2,521)	(2,619)
Profit before tax		725	1,503
Tax	5	(210)	(362)
Profit for the year attributable to the owner of the company		515	1,141

Under section 408 of the Companies Act 2006 the group has elected to take the exemption with regards to disclosing the company income statement. The company's result for the year was £nil (2024: £nil)

Statement of comprehensive income

for the year ended 31 March 2025

		2024
	2025	Group
	Group	(Restated)
	£m	£m
Profit for the year	515	1,141
Other comprehensive (expense)/income:
Items that will not be reclassified to profit or loss:
Gain on revaluation of the rail network	556	2,883
Actuarial gain on defined benefit pension schemes	1,143	149
Deferred tax relating to components of other comprehensive income	(425)	(758)
Total items that will not be reclassified to profit or loss	1,274	2,274
Items that may be reclassified to profit or loss:
Reclassification of balances in hedging reserve to the income statement	25	41
Total items that may be reclassified to profit or loss	25	41
Other comprehensive income for the year	1,299	2,315
Total comprehensive income for the year	1,814	3,456

Statement of changes in equity

for the year ended 31 March 2025

	Revaluation	Other	Hedging	Retained	Total
Group	reserve	reserves*	reserve	earnings	equity
	£m	£m	£m	£m	£m
Balance at 31 March 2023 previously stated	5,949	249	(101)	9,055	15,152
Restatement	-	-	-	574	574
Balance at 31 March 2023 restated	5,949	249	(101)	9,629	15,726
Profit for the year	-	-	-	1,141	1,141
Other comprehensive income
Revaluation of the rail network	2,883	-	-	-	2,883
Transfer of deemed cost of depreciation from revaluation reserve	(204)	-	-	204	-
Increase in deferred tax liability on the rail network	(721)	-	-	-	(721)
Actuarial gain on defined benefit pension schemes	-	-	-	149	149
Deferred tax on actuarial gain	-	-	-	(37)	(37)
Transfer between reserves - deferred tax	51	-	-	(51)	-
Reclassification of balances in hedging reserve to the income statement	-	-	41	-	41
Total comprehensive income	2,009	-	41	1,406	3,456
Balance at 31 March 2024	7,958	249	(60)	11,035	19,182
Profit for the year	-	-	-	515	515
Other comprehensive income		-	-
Revaluation of the rail network	556	-	-	-	556
Transfer of deemed cost of depreciation from revaluation reserve	(240)	-	-	240	-
Increase in deferred tax liability on the rail network	(139)	-	-		(139)
Actuarial gain on defined benefit pension schemes	-	-	-	1,143	1,143
Deferred tax on actuarial gain	-	-	-	(286)	(286)
Transfer between reserves - deferred tax	60	-	-	(60)	-
Reclassification of balances in hedging reserve to the income statement	-	-	25	-	25
Total comprehensive income	237	-	25	1,552	1,814
Balance at 31 March 2025	8,195	249	(35)	12,587	20,996

*Other reserves of £249m (2024: £249m) include a £242m vesting reserve on privatisation.

There has been no movement in the current or prior year affecting the statement of changes in equity for the company.

Balance Sheet

at 31 March 2025

			2024	2023
		2025	Group	Group
		Group	(Restated)	(Restated)
	Note	£m	£m	£m
Assets
Non-current assets
Intangible assets		58	59	59
Right of use assets		385	341	408
Property, plant and equipment - the rail network	6	88,916	86,883	82,733
Investment property		194	227	231
Derivative financial instruments		13	40	72
Retirement benefit asset		1,075	82	-
Interest in joint ventures		30	32	28
		90,671	87,664	83,531
Current assets
Assets held for sale		4	4	4
Inventories		418	371	349
Trade and other receivables		1,381	1,678	1,729
Current tax asset		-	-	50
Derivative financial instruments		9	32	21
Cash and cash equivalents		595	428	303
		2,407	2,513	2,456
Total assets		93,078	90,177	85,987
Liabilities
Current liabilities
Trade and other payables	7	(2,405)	(2,594)	(3,727)
Current tax liabilities		-	(1)	-
Borrowings	9	(8,360)	(15,792)	(4,037)
Derivative financial instruments		(18)	(54)	(49)
Provisions		(142)	(122)	(68)
		(10,925)	(18,563)	(7,881)
Net current liabilities		(8,518)	(16,050)	(5,425)
Non-current liabilities
Borrowings	9	(53,203)	(44,863)	(55,463)
Derivative financial instruments		(46)	(98)	(182)
Other payables	7	(125)	(253)	(644)
Retirement benefit obligation		(152)	(222)	(215)
Deferred tax liabilities		(7,631)	(6,996)	(5,876)
		(61,157)	(52,432)	(62,380)
Total liabilities		(72,082)	(70,995)	(70,261)
Net assets		20,996	19,182	15,726
Equity
Revaluation reserve		8,195	7,958	5,949
Other reserve		249	249	249
Hedging reserve		(35)	(60)	(101)
Retained Earnings		12,587	11,035	9,629
Total shareholder's funds and equity attributable to equity holders of the parent company		20,996	19,182	15,726

Statement of cash flows

for the year ended 31 March 2025

		2025	2024
		Group	Group
	Note	£m	£m
Cash flow from operating activities
Cash generated from operations	8	5,533	5,258
Interest paid*		(1,615)	(1,271)
Income tax received		-	50
Net cash generated from operating activities		3,918	4,037
Investing activities
Interest received		5	16
Purchase of property, plant and equipment		(6,274)	(6,852)
Proceeds on disposal of property		107	78
Capital grants received		2,545	2,995
Net cash inflows / (outflows) from joint ventures		2	(4)
Net cash used in investing activities		(3,615)	(3,767)
Financing activities
Repayment of borrowings		(40)	(1,210)
New loans raised		-	1,150
Decrease in collateral placed		40	56
(Decrease) / Increase in collateral received		(3)	1
Cash flow on settled derivatives		-	-
Repayment of lease liabilities		(133)	(142)
Net cash used in financing activities		(136)	(145)
Net increase in cash and cash equivalents		167	125
Cash and cash equivalents at the beginning of the year		428	303
Cash and cash equivalents at the end of the year		595	428

*Balance includes the net interest on derivative financial instruments

Notes to the financial statements

for the year ended 31 March 2025

1.  General information

Network Rail Limited ('the company') is a company limited by guarantee which is incorporated and domiciled in Great Britain and registered in England and Wales under the Companies Act 2006. Network Rail Limited is an arm's length body of the Department for Transport.

The company registration number is 04402220.

The company's registered office is situated at Waterloo General Office, London, SE1 8SW, United Kingdom.

The company's and its subsidiaries' (together 'the group' or 'Network Rail') principal activities are detailed in the 'About Network Rail' section of our Annual Report and Accounts 2025, Strategic report.

Network Rail is organised as a single operating segment for financial reporting purposes.

The Secretary of State is the sole member of the Company.

Prior period restatement

Network Rail have restated the 2024 financial statements and opening balance sheet following a change in our accounting for unused tax losses.

IAS 12 (Income Taxes) requires that tax losses be recognised as a deferred tax asset only where their utilisation is probable. Network Rail is not expected to generate taxable profits in any foreseeable future period and therefore previously had concluded that the probability criteria was not met.

Following a revised reading of the standard and IFRIC updates, Network Rail now concludes that where a deferred tax liability exists and is expected to reverse in the same period and jurisdiction, then a deferred tax asset in relation to unused tax losses is required to be recognised. With this view, the reversal of the deferred tax liability is sufficient evidence to meet the probability criteria. The impact of the change is as follows:

Financial Statement Area	2024 Impact	2023 Impact
Balance Sheet	Deferred tax liability reduced by £720m; therefore net assets increased by £720m	Deferred tax liability reduced by £574m and net assets increased by £574m
Income Statement	Profit for the year attributable to the owner of the company increased by £146m and tax charge decreased by £146m	Not presented
Cash Flow Statement	No impact on cash generated from operations or other cash flows in any year presented

Going concern

The group's business activities, together with the factors likely to affect its future development, performance and position are set out in our Strategic report, About Network Rail section and Network Rail regions and routes section for our business unit summaries. The financial position of the group, its cash flows, liquidity position and borrowing facilities are described in the chief financial officer's review.

The directors took into account the publication of the Williams-Shapps Plan for Rail Review and its plans to reform the rail industry. This proposes that a new public body, Great British Railways, will integrate the railways, owning the infrastructure, collecting fare revenue, running, and planning the network, and setting most fares and timetables. It is planned that Network Rail will be absorbed into the public body to bring about single, unified, and accountable leadership for the national network. At this stage it is not likely that this reform will involve the winding up of Network Rail Limited but in any event Great British Railways will assume the existing functions of Network Rail Limited as well as have a wider range of powers and functions. The transformation programme is dependent on further activities including legislation and will take time to fully deliver.

The Directors also took into account the publication of the consultation "A Railway fit for Britain's Future" published in February 2025 and its plans to reform the rail industry.

The group has considerable financial resources together with long-term contracts with a number of customers and suppliers. Network Rail does not expect to undertake any new borrowing in the next 12 months. Instead, its activities will be largely funded by grants from the Department for Transport (DfT) and revenue from customers. Network Rail has secured a £41.6bn loan facility with the DfT, which it intends to draw upon to specifically refinance its existing debt. This facility remains within its parameters.

Network Rail has eight separate grant agreements in place with DfT and Transport Scotland (TS) to fund activities in the next 12 months. These grants are: - with DfT - Network Grant; Enhancements Grant; British Transport Police Grant; Financing Costs Grant for DfT interest; Financing Costs Grant for external interest (bonds and swaps); and Corporation Tax Grant - with TS - Network Grant and Enhancements Grant.

Business plans and financial models are used to project cash flows and monitor financial risks and liquidity positions, forecast future funding requirements and other key financial ratios, including those relevant to our network licence. Analysis is undertaken to understand the resilience of the group and its business model to the potential impact of the group's principal risks, or a combination of those risks. This analysis takes account of the availability and effectiveness of the mitigating actions that could realistically be taken to avoid or reduce the impact or occurrence of the underlying risks. The Board considers the likely effectiveness of such actions through regular monitoring and review of risk management and internal control systems. Further details are set out in the Viability Statement within our Strategic report. In addition, note 23 to the accounts includes the group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit, liquidity and foreign exchange risk.

After making enquiries, including those detailed above, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

2.  Revenue

	2025	2024
	Group	Group
	£m	£m
Grant income	7,633	8,372
Franchised network access	3,326	2,851
Freight revenue	70	53
Property rental income	270	249
Other income	46	55
Revenue	11,345	11,580

The effect of the performance regimes was a reduction in income of £86m (2024: reduction of £360m) which is included in the Franchised network access line of the above table.

3.  Net operating costs

	2025	2024
	Group	Group
	£m	£m
Employee costs	3,069	2,910
Own costs capitalised	(833)	(942)
Maintenance external charges	1,348	1,263
Energy charges	1,010	961
Business rates	311	232
Telecommunication and IT	243	219
Operational external charges	857	906
Other industry costs	167	152
Other operating income and recoveries	(371)	(444)
Net operating costs before depreciation and amortisation	5,801	5,257
Depreciation	2,732	2,606
Amortisation of grants	(430)	(427)
Impairment of HS2 related works	-	88
Net operating costs	8,103	7,524

Other operating income and recoveries includes income earned by the group's trading subsidiaries and ancillary income.

4.  Profit from operations

Total profit from operations is stated after charging/(crediting):

	2025	2024
	Group	Group
	£m	£m
Research and development costs expensed	10	17
Amortisation of intangible assets	1	1
Profit/(Loss) on sale of properties	(1)	-
Decrease in the fair value of investment properties	30	5
Cost of inventories recognised as an expense	191	182
Write down of inventories recognised as an expense	12	5
Amounts payable to auditors
Fees payable to the company's auditors for the audit of the company and consolidated financial statements	0.55	0.55
Fees payable to the company's auditors for audit related services:
-  The audit of the company's subsidiaries	0.14	0.10
-  Regulatory accounts audit and interim review	0.04	0.08
Total amounts payable to group auditors	0.73	0.73

The group's auditors has not undertaken the regulatory audit in the current year.

For financial years ended 31 March 2025 and 2024 no fees were payable to the company's auditors in respect of non-audit related services. In addition to the audit fee information given in the table the group pays £0.3m for the audit of subsidiaries that are not performed by the group auditor. The 2024 figures have been restated to reallocate the audit fee of a subsidiary. It had previously been included in the fees payable for the audit of the company and consolidated financial statements. It has been reallocated to the audit of the company's subsidiaries line.

5.  Tax

The tax charge is made up as follows:

		2024
	2025	Group
	Group	(Restated)
	£m	£m
Current tax:
Corporation tax charge	-	-
Adjustment in respect of prior years	-	(1)
Total current tax charge	-	(1)
Deferred tax:
Current year charge	(206)	(242)
Adjustment in respect of prior years	(4)	(119)
Total deferred tax charge	(210)	(361)
Total tax charge	(210)	(362)

The tax charge for the year can be reconciled to the profit per the income statement as follows:

		2024
	2025	Group
	Group	(Restated)
	£m	£m
Profit before tax	725	1,503
Tax at the UK corporation tax rate of 25 per cent (2024: 25 per cent)	(181)	(376)
Adjustment in respect of prior years	(4)	(119)
Income/(expense) not subject to tax	(22)	134
De-recognition of deferred tax assets recognised in the year	(3)	(1)
Total tax charge for the year	(210)	(362)

Deferred tax at 31 March 2025 is calculated at a rate of 25 per cent (2024: 25 per cent) based on the tax rate expected to prevail based on legislative enactments at the point temporary differences resolve. The amount at which temporary differences crystallise is sensitive to the decisions on future tax laws to be taken by Parliament.

UK corporation tax is calculated at 25 per cent (2024: 25 per cent).

6.  Property, plant and equipment - the rail network

	Group assets	Group capital grants	Group carrying value
	£m	£m	£m
Valuation
At 31 March 2023	95,621	(12,888)	82,733
Additions - Enhancements	2,699	(2,699)	-
Additions - Renewals	4,070	-	4,070
Total additions	6,769	(2,699)	4,070
Disposals	(162)	-	(162)
Transfers to investment property	(1)	-	(1)
(Depreciation charge)/grant amortisation for the year	(2,477)	419	(2,058)
Reclassification of deferred capital grants	-	(494)	(494)
Impairment of HS2 related works	(145)	57	(88)
Revaluation in the year	2,883	-	2,883
At 31 March 2024	102,488	(15,605)	86,883
Additions - Enhancements	2,520	(2,520)	-
Additions - Renewals	3,684	-	3,684
Total additions	6,204	(2,520)	3,684
Disposals	(16)	-	(16)
Transfers to investment property	(1)	-	(1)
(Depreciation charge)/grant amortisation for the year	(2,612)	422	(2,190)
Reclassification of deferred capital grants	556	-	556
At 31 March 2025	106,619	(17,703)	88,916

Given the economic and physical interdependency of the assets comprising the rail network, the company has concluded that the rail network is considered as a single class of asset. The rail network is carried at its fair value.

As there is no active market in railway infrastructure assets, the company has derived the fair value of the rail network using an income approach.

When valuing the network, management is required to consider the value a knowledgeable willing party would place on the network in an arm's length transaction. On the grounds that third-party investors are known to value the assets of regulated companies by reference to the Regulated Asset Base (RAB), and that the cash flows associated with the regulatory framework are considered sufficiently stable and robust to form the basis of a third-party valuation, management has used the RAB as the starting point for its valuation.

Under this approach the cash flows that a network licence holder expects to generate from the rail network are assessed using a market rate of return. This valuation is carried out twice a year and revaluation gains and losses are reflected in other comprehensive income.

Under this model the network licence holder's annual income (received in the form of the network grant and track access charges) would comprise:

a)  The regulator's assessment of the efficient costs of operating and maintaining the network.

b)  An allowance for Regulatory Asset Base (RAB) amortisation - qualifying capital expenditure is added to the RAB as incurred and recovered by the company through future amortisation allowances (in order to spread the cost to customers and stakeholders of investment in the rail network over many years)

c)  An allowed return on the RAB - calculated by applying the rate of return permitted by the ORR (based on its assessment of the market's cost of capital) to the RAB balance.

Future cash flows under (a) are assumed to be equivalent over time to the network licence holder's actual costs of operation and maintenance, on the basis that the Regulator aims to set targets which are ambitious but achievable. These therefore have no net impact on forecast future cash flows, or the valuations. The allowed return (c) is based on a cost of capital which would be offset in a discounted future cash flows model (see Discount rate below). The economic rights inherent in ownership of the regulated rail network asset are therefore vested primarily in the value of the RAB, which will be recovered through future regulated income as the RAB is amortised (b).

This means that it is possible for the RAB itself to be used as the starting point for a discounted cash flow valuation. The RAB fluctuates in valuation; increasing in value principally as a result of allowances for capital expenditure and inflation indexation, whilst reducing for amortisation. The adjustments may give rise to upwards or downwards revaluations. Further changes are subject to:

a)  Adjustment for any difference between regulatory rate of return and the market cost of capital that a third-party investor would use to assess the value of the network (the rate of return and market cost of capital are currently assessed as fully aligned); and

b)  Adjustment for forecast future under or out performance against the regulatory determination over the remainder of the current control period. No adjustment is made in respect of future control periods on the expectation of the Regulator setting, over the long term, ambitious but achievable determination.

Revaluation

The valuation includes a £556m upward movement in the value of the railway. The key drivers for the valuation are:

· The impact of indexation inflation (£2.3bn increase in the valuation) offset by,

· £250m adverse impact of expected performance

· The rate at which assets are amortised in the RAB and assets are depreciated under IAS 16 (£1.5bn decrease in the valuation).

Impact of indexation inflation

Indexation inflation was based on November CPI, of 2.6 per cent. This has added £2.3bn to the valuation of the Regulatory Asset Base.

The valuation is sensitive to the CPI assumption. If CPI varied by 1 per cent, this would result in a £800m change in the valuation of the network.

Third party funding

Additions to the railway network funded by capital grant, rather than via the RAB funding mechanism, are included in the valuation at cost. The carrying value of property, plant and equipment is calculated after netting off associated grant funding received or receivable.

Disposals

The disposals of £16m were as the result of property sales in the usual course of business. In line with Regulatory Accounting Guidelines the net proceeds of sales are deducted from the RAB, reducing the valuation of the Railway Network Valuation. The valuation of the disposals is assessed as being equal to the reduction in the valuation of the rail network relating to property sales. Renewals are completed at the useful life of the asset and hence there is no value attributable to the item being renewed that needs to be derecognised from PPE.

Depreciation

The depreciation charge for any year is calculated using the average carrying value for the year and the estimated remaining weighted average useful economic life of the rail network. The remaining weighted average useful economic life of the rail network was calculated using the engineering assessment of serviceable economic lives of the major categories that comprise the rail network. The estimated remaining weighted average useful economic life of the network is currently 40 years (2024: 40 years).

Discount rate

The discount rate used in the income approach is the pre-tax rate of return set by the ORR. The ORR performs a periodic review every five years, which leads to the setting of the appropriate rate for the five-year period. The ORR's method encompasses advice from consultants, comparisons to similar infrastructure assets and discussions with Network Rail. Management believes this cost of capital reflects the assumptions that a market participant would make in arriving at a discount rate.

Should the ORR amend the permitted rate of return in future quinquennial reviews, the regulator would raise or lower the permitted charges to customers so as to achieve the new rate of return. In other words, the cash flows would change but the RAB would not.

The ORR confirmed that a conventionally funded market participant would receive an allowed return equal to the full market cost of capital. This has been reiterated in their final determination for CP7. Management expects that if the rail network asset were to be transferred to a private owner during CP7, ORR would determine the private owner's revenue requirement for CP7 using the original pre-tax (CPI) weighted average cost of capital of 3.98 per cent set out in their final determination for this Control Period amended for the movement since then. Management expects that the rate of return set by the regulator in subsequent quinquennial reviews will be consistent with the market discount rates for infrastructure assets at the quinquennial review date.

	Change in cost of capital (basis points)	31 March 2025	31 March 2024
Change in fair value	25	£949m	£976m
	50	£1,795m	£1,949m
Percentage change in fair value	25	1.1%	1.1%
	50	2.0%	2.2%
Change in annual deprecation charge	25	£24m	£24m
	50	£45m	£49m

7.  Trade and other payables

	2025	2024
	Group	Group
Current liabilities: trade and other payables	£m	£m
Trade payables	(832)	(950)
Collateral received from counterparties	-	(3)
Payments received on account	(31)	(29)
Other payables	(412)	(396)
Other interest accruals	(268)	(290)
Other accruals	(600)	(679)
Deferred income	(262)	(247)
Total	(2,405)	(2,594)

The average credit period taken for trade purchases is 35 days (2024: 40 days).

Before accepting new suppliers, and upon letting significant contracts, the group evaluates suppliers' creditworthiness using external credit scoring systems and other relevant data.

The directors consider that the carrying value of trade and other payables approximates to their fair value. All balances are ordinarily non-interest bearing and denominated in sterling.

The Other accruals balances contains a degree of estimation uncertainty regarding the amounts to be paid. The majority of the balance relates to COWD which is disclosed as a key source of estimation uncertainty.

	2025	2024
	Group	Group
Non-current liabilities: other payables	£m	£m
Capital grants deferred income	(104)	(240)
Other payables	(21)	(13)
Total	(125)	(253)

As part of the acquisition of Railtrack PLC, Network Rail received a grant of £300m from the Strategic Rail Authority to fund the purchase. In line with Network Rail's accounting policy this revenue is deferred and amortised over the average remaining life of the rail network (as this represents the substantial part of the assets purchased), currently 40 years, on a straight-line basis. The balance on the grant after amortisation at 31 March 2025 is £83m (2024: £90m).

8.  Notes to the statement of cash flows

	2025	2024
	Group	Group
	£m	£m
Profit before tax	725	1,503
Adjustments for:
Property revaluation movements and profits on disposal	30	5
Fair value gain on derivatives and debt	(29)	(57)
Net interest expense	2,516	2,604
Depreciation of the rail network and leases under IFRS 16	2,732	2,606
Amortisation of grants	(430)	(427)
Amortisation of intangible assets	1	-
Impairment of HS2 related works	-	88
Non cash movement in retirement benefit obligations	77	66
Increase in provisions	20	-
Operating cash flows before movements in working capital	5,642	6,388
Increase in inventories	(47)	(22)
(Increase)/Decrease in receivables	(14)	1
Decrease in payables	(48)	(1,109)
Cash generated from operations	5,533	5,258

Cash and cash equivalents

Cash and cash equivalents (which are represented as a single class of assets on the face of the balance sheet) comprise cash at bank and commercial paper, all of which are on call with the exception of short-term deposits. There were £631m (excluding offsetting clearing accounts) of short-term deposits with the government banking scheme ("GBS") held as at 31 March 2025 (2024: £463m).

9.  Borrowings

	2025	2024
	Group	Group
	£m	£m
Net borrowings by instrument:
Cash and cash equivalents	595	428
Collateral placed with counterparties	45	85
Collateral received from counterparties	-	(3)
Bank loans	(687)	(663)
Lease liabilities	(410)	(356)
Bonds issued under the Debt Issuance Programme (less unamortised premium, discount and fees)	(28,586)	(27,708)
Borrowings issued by the DfT*	(31,880)	(31,928)
	(60,923)	(60,145)
Movement in net borrowings:
At the beginning of the year	(60,145)	(59,058)
Increase in cash and cash equivalents	167	125
Proceeds from borrowings	(15,698)	(3,915)
Repayment of borrowings	15,698	3,915
Capital accretion	(938)	(1,303)
Movement in collateral placed with counterparties	(40)	(56)
Movement in collateral received from counterparties	3	(1)
Movement in lease liabilities	(54)	51
Decrease in DfT collateral facility	40	60
Fair value and other movements	44	37
At the end of the year	(60,923)	(60,145)
Net borrowings are reconciled to the balance sheet as set out below:
Cash and cash equivalents	595	428
Collateral placed with counterparties (included in trade and other receivables)	45	85
Collateral received from counterparties (included in trade and other payables)	-	(3)
Borrowings included in current liabilities	(8,360)	(15,792)
Borrowing included in non-current liabilities	(53,203)	(44,863)
	(60,923)	(60,145)

*As at 31 March 2025, a collateral facility of £40m (2024: £80m) was included in this balance.

 

END