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| Name | Symbol | Market | Type |
|---|---|---|---|
| Net.r.i.4.75% | LSE:85MJ | London | Medium Term Loan |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.275 | -0.28% | 98.625 | 96.65 | 100.60 | 98.825 | 98.55 | 98.75 | 0 | 12:19:27 |
From Dec 2019 to Dec 2024
TIDM85MJ
RNS Number : 4008J
Network Rail Infrastructure Finance
04 December 2018
4 December 2018
NETWORK RAIL INFRASTRUCTURE FINANCE PLC
HALF-YEAR RESULTS 2018/19
Commentary
Network Rail Infrastructure Finance PLC ("NRIF", "the company") was incorporated on 31 March 2004 and entered into documentation to facilitate debt issuance on 29 October 2004.
As of 4 July 2014 Network Rail's funding requirement is met by the Department for Transport ("DfT") via a loan facility to Network Rail Infrastructure Limited ("NRIL") the owner and operator of the national rail network of Great Britain. As a result, NRIF continues to operate as the administrator of existing debt issues and derivatives under the Debt Issuance Programme ("DIP"), but will not be issuing new debt for the foreseeable future. Existing debt, derivatives and related interest payments within NRIF are passed onto NRIL in the form of an intercompany loan and embedded derivative.
The company was incorporated for the sole purpose of acting as the issuer under Network Rail's DIP and legally is not a member of the Network Rail group or related to or controlled by the Secretary of State for Transport. However, for accounting purposes the company is treated as a subsidiary in the consolidated accounts of Network Rail Limited ("NRL"). The DIP is guaranteed by a financial indemnity from the Secretary of State for Transport and as a result the financial indemnity is a direct sovereign obligation of the Crown and Network Rail's debt is zero per cent risk weighted.
The financial indemnity is an unconditional and irrevocable obligation of the UK Government to make payments directly to a security trustee to cover all debt service shortfalls, whatever the cause. The financial indemnity is also designed to ensure timely payment as well as ultimate recourse to the UK Government.
Within the DIP, which is administered by NRIL, is a multi-currency note programme with a maximum limit of GBP40bn, which has been assigned the following credit ratings: AA by Standard and Poor's, Aa2 (stable outlook) by Moody's and AA (negative outlook) by Fitch.
NRIF made a profit before tax of GBP55,000 in the six months to 30 September 2018, being the excess of the fee charged to NRIL for the administration of the facility over the fee charged by NRIL for the provision of the facility.
Reclassification of Network Rail
In December 2013, the Office for National Statistics announced the reclassification of Network Rail as a Central Government Body in the UK National Accounts and Public Sector Finances with effect from 1 September 2014. This is a statistical change driven by new guidance in the European System of National Accounts 2010 (ESA10).
As part of Network Rail's formal reclassification to the public sector, an arrangement was agreed whereby funding would be provided by the DfT in the form of a loan made directly to NRIL. As a result, from 4 July 2014, Network Rail borrows directly from the UK Government and currently has no plans to issue debt in its own name through NRIF.
In the unlikely event that the DfT withdraws or breaches its obligations on the loan facility to NRIL, NRIF may issue further bonds or commercial paper. NRIF's future debt service obligations will be met through repayments of the intercompany loan by NRIL.
Financial commentary
All of the outstanding bonds under the DIP, including nominal and index-linked benchmarks and private placements in all currencies, will continue to benefit from a direct and explicit guarantee from the UK Government under the financial indemnity.
At 30 September 2018 there was GBP28,834m of bonds outstanding issued under the DIP. During the period a nominal bond of USD 1,750m matured. UK RPI index-linked debt was 77 per cent of gross debt at 30 September 2018. There was no issued commercial paper outstanding as at 30 September 2018 (30 March 2018: GBPnil).
Cash balances are required for settlement of maturing bonds and for the purposes of managing collateral posted by financial derivative counterparties. This is funded by NRIL through the intercompany borrowing. The cash and cash equivalents balance as at 30 September 2018 totalled GBP8m.
The external derivative value increased by GBP45m to negative GBP623m at 30 September 2018 (31 March 2018: negative GBP668m). This movement relates to the decrease in valuation of cross currency swaps of GBP53m, offset by an increase in the valuation of interest rate swaps of GBP98m.
Treasury operations
The treasury operations of NRIL, who administers the programme on behalf of NRIF, are co-ordinated and managed in accordance with policies and procedures approved by the Treasury Committee, being a full sub-committee of the Network Rail board. Treasury operations are subject to internal audits and the company does not engage in trades of a speculative nature.
Liquidity is provided by monitoring that NRIL has sufficient funds to meet its obligations to NRIF. NRIL are able to vary drawdowns under the DfT loan agreement in order to maintain liquidity. In addition a GBP4bn commercial paper programme is available to provide liquidity in the event of the withdrawal of, or default by, DfT under the DfT Loan Facility.
NRIF is also affected by future cash flow risks arising from changes in interest rate, inflation rate and foreign currency movements. The company enters into derivative financial instruments to partially mitigate these risks. Further detail is available in the Network Rail Limited annual report and accounts 2018.
Counterparty limits are set with reference to published credit ratings. These limits dictate how much and for how long management deals with each counterparty, and are monitored on a regular basis.
Outlook
The principal risks managed by Network Rail are unchanged from those set out in the directors' report on pages 39-45 of the Network Rail Limited annual report and accounts 2018. There are also further details on funding and financial risk management in note 25 on pages 126-134 of these accounts.
The major risks that the company faces are financing risks including, interest rate risk, foreign currency fluctuation risk, and liquidity risk. The treasury operation of NRIL, which administers the programme on behalf of NRIF, seeks to provide sufficient liquidity to meet the company's needs, while reducing financial risks and prudently maximising interest receivable on surplus cash.
Liquidity risk is managed by maintaining adequate cash balances and continuous monitoring of forecast and actual cash flows.
The company has certain debt issuances which are index-linked and thus exposed to movements in inflation rates. The company does not enter into any derivative arrangements to hedge these.
The credit risk with regard to all classes of derivative financial instruments entered into before 1 January 2013 is limited because Network Rail has arrangements in place which limits each counterparty to a threshold (based on credit ratings) which if exceeded requires the counterparty to post cash collateral. Trades entered into after 1 January 2013 are governed by new agreements where both Network Rail and its counterparties post collateral on their full adverse net derivative positions. The new agreements do not contain threshold provisions.
Treasury operations are co-ordinated and managed in accordance with policies and procedures approved by NRIL's board. Treasury operations are subject to regular internal audits and treasury does not engage in trades of a speculative nature.
Statement of directors' responsibilities
The directors confirm that this interim financial information has been prepared in accordance with International Accounting Standard ("IAS") 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The directors of NRIF are listed on our website at www.networkrail.co.uk
Approved by the board of directors and signed by order of the board.
Cliff Pearce (director)
3 December 2018
Independent review report
to Network Rail Infrastructure Finance PLC
I have been engaged by the company to review the condensed interim financial statements of Network Rail Infrastructure Finance Plc for the six months ended 30 September 2018 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Cash Flow Statement, the Statement of Changes in Equity and related explanatory notes.
I have read the other information contained in the interim financial statements and considered whether it contains any apparent misstatements or material inconsistences with the information in the condensed interim financial statements.
Respective responsibilities of the directors and the auditor
The condensed interim financial statements are the responsibility of, and have been approved by, the directors of Network Rail Infrastructure Finance Plc. As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for preparing the condensed interim financial statements in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union. The condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
My responsibility is to express to the company a conclusion on the condensed interim financial statements.
Scope of Review
I conducted my review in accordance with International Standards on Review Engagement (UK & Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom.
A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion.
Conclusion
Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information for the six months ended 30 September 2018, is not prepared in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Matthew Kay (Senior Statutory Auditor)
4 December 2018
For and on behalf of the
Comptroller and Auditor General (Statutory Auditor)
National Audit Office
157-197 Buckingham Palace Road
Victoria
LONDON SW1W 9SP
Statement of comprehensive income
Hot Features
Premium
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
Profit from operations - - -
Finance income 699 757 1,330
Finance costs (699) (757) (1,330)
Profit before taxation - - -
Tax - - -
Profit and total comprehensive income - - -
for the period
All income and expense in the company is recognised in the statement of comprehensive income and there are no transactions that impact the statement of comprehensive income.
There has been no impact to the statement of comprehensive income on adoption of IFRS9. Restatement of prior year balances also has had no impact.
Statement of changes in equity
Share Retained
capital Earnings Total
GBPm GBPm GBPm
-
---------------------- -------- --------- -----
At 1 April 2017 - 1 1
Profit for the period - - -
-
---------------------- -------- --------- -----
At 1 April 2018 - 1 1
Profit for the period - - -
At 30 September 2018 - 1 1
Balance sheet
Unaudited Audited
Unaudited 30 September 31 March
30 September 2017 2018
2018 (restated)* (restated)*
Notes GBPm GBPm GBPm
Non-current assets
Receivables: amounts falling
due after more than one year* 2 28,858 29,727 29,977
Derivative financial instruments 270 466 269
Total non-current assets 29,128 30,193 30,246
Current assets
Receivables: amounts falling
due within one year* 2 1,711 3,690 2,664
Derivative financial instruments* 163 193 228
Cash and cash equivalents 3 8 946 1
Total current assets 1,882 4,829 2,893
Total assets 31,010 35,022 33,139
Current liabilities
Borrowings* 3 (765) (2,985) (1,957)
Derivative financial instruments (39) (3) (19)
Other payables 4 (320) (349) (269)
Total current liabilities (1,124) (3,337) (2,245)
Net current assets 758 1,492 648
Non-current liabilities
Borrowings* 3 (28,868) (30,367) (29,747)
Derivative financial instruments (1,017) (1,317) (1,146)
Total non-current liabilities (29,885) (31,684) (30,893)
Total liabilities (31,009) (35,021) (33,138)
Net assets 1 1 1
Equity
Share capital - - -
Retained earnings 1 1 1
Total equity 1 1 1
* Prior period comparatives have been restated to fair value for IFRS 9 classification and measurement requirements. See note 7 for further details. The prior period comparatives for 31 March 2018 were audited before the restatement for IFRS 9.
This interim report was approved by the board of directors on 3 December 2018.
It was signed on its behalf by:
Cliff Pearce (director) Helena Whitaker (director)
Cash flow statement
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Note GBPm GBPm GBPm
Cash flows from operating activities 6 1,095 1,113 1,819
Interest paid (319) (272) (652)
Net cash inflow from operating
activities 776 841 1,167
Investing activities
Interest received 319 271 651
Net cash flow from investing
activities 319 271 651
Financing activities
Repayment of borrowings (1,126) - (1,524)
Decrease/(Increase) in collateral
posted 23 (193) (125)
Increase/(Decrease) in collateral
held 15 (136) (172)
Cash flow on settlement of derivatives - 159 -
Net cash used in financing activities (1,088) (170) (1,821)
Net increase/ (decrease) in
cash and cash equivalents 7 942 (3)
Cash and cash equivalents at
beginning of the period 1 4 4
Cash and cash equivalents at
end of the period 8 946 1
Notes to the interim financial statements
Six months ended 30 September 2018
1. General information
Network Rail Infrastructure Finance PLC is a company incorporated in Great Britain and registered in England and Wales under the Companies Act 2006.
The company's registration number is 5090412. The company's registered office is situated at 1 Eversholt Street, London, NW1 2DN, United Kingdom.
The company's principal activities, details of the company's business activities and key events, and changes during the year are contained within the commentary on pages 1 to 3.
This condensed interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2018 were approved by the board of directors on 27 June 2018 and delivered to the Registrar of Companies. The auditors' report on these accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under Section 498 of the Companies Act 2006.
The condensed interim financial statements are prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. The condensed interim financial statements are prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union.
This condensed interim financial information has been reviewed, not audited. The condensed interim financial information should be read in conjunction with the annual report and accounts for the year ended 31 March 2018, which have been prepared in accordance with IFRSs as adopted by the European Union. A copy of this document is available on the company's website: www.networkrail.co.uk
Accounting policies
The accounting policies and methods of computation adopted in this condensed set of financial statements are consistent with those set out in the annual financial statements for the year to 31 March 2018 with the exception of IFRS 9 adoption detailed below.
Adoption of new standards
During the period the company adopted the classification and measurement requirements of IFRS 9 Financial Instruments. As the new standard does not permit bifurcation of classification between embedded derivatives in financial assets and their host contracts and since the intercompany loan as a whole does not meet the 'solely payment of principal and interest' test, the entire loan receivable from NRIL has been restated to fair value. To eliminate the mismatch between the external bonds (previously held at amortised cost) that NRIF holds and the intercompany loan receivable with NRIL, all bonds have also been designated irrevocably at fair value through profit and loss. As part of this adoption, prior period comparatives have been restated and additional disclosures have been included in the notes to the accounts.
There are no IFRS or IFRS Interpretation Committee interpretations not yet effective that would be expected to have a material impact on the company.
Going concern
After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
In reaching this conclusion the directors considered: the financial indemnity as described on page 1; the collateral arrangements with banking counterparties; and that the company has an inter-company agreement that recovers all net costs from NRIL.
Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
Operating segments
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the company that are regularly reviewed by the board to allocate resources to the segments and to assess their performance. The company has adopted IFRS 8 for these financial statements. However, there has been no material change in presentation of these statements because the company operates one class of business, that of acting as issuer for Network Rail's DIP and undertakes that class of business in one geographical area, Great Britain. This debt is often issued in currencies other than sterling and sold to overseas investors.
Debt
Debt instruments are initially recorded at fair value, net of discount and direct issue costs, and are subsequently measured at fair value. Finance charges, including premiums payable on settlement or redemption and direct issue costs are recognised in the statement of comprehensive income over the life of the debt instrument. They are added to the carrying value of the debt instrument to the extent that they are not settled in the period in which they arise.
Derivative financial instruments
The company's activities expose it primarily to the financial risks of changes in interest rates and foreign currency exchange rates. The company uses interest rate swaps and foreign exchange forward contracts to hedge these exposures.
Interest rate swaps and foreign exchange forward contracts are recorded at fair value at inception and at each balance sheet date. Movements in fair value are recorded in the statement of comprehensive income.
Investments
Investments are classified as available-for-sale and measured at subsequent reporting dates at fair value. For available-for-sale investments, gains or losses from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the statement of comprehensive income for the period.
Foreign currencies
Monetary assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange prevailing at the balance sheet date. Individual transactions denominated in foreign currencies are translated into sterling at the exchange rates prevailing on the dates payment takes place. Gains or losses realised on any foreign exchange movements are recognised in the statement of comprehensive income.
Intra-group borrowings
The company provides the Network Rail group with funding. It passes all transactions and balances through the intra-group borrowings to NRIL. As a result an intra-group receivable arises from NRIL to NRIF.
2. Receivables
Unaudited Audited
Unaudited 30 September 31 March
30 September 2017 2018
2018 (restated)* (restated)*
GBPm GBPm GBPm
Non-current assets
Loans to Network Rail Infrastructure
Limited* 28,858 29,727 29,977
Current assets
Interest on loans to Network Rail
Infrastructure Limited 218 226 181
Loans to Network Rail Infrastructure
Limited* 766 2,646 1,733
Collateral receivable 727 818 750
Total receivables 30,569 33,417 32,641
*Adoption of IFRS 9
Prior period comparatives have been restated to fair value for IFRS 9 classification and measurement requirements. The restatement of comparative periods has been calculated as follows:
Audited
31 March
2018
Option to
recognise
inter-company
Audited 31 loan at fair
March 2018 value option (restated)
31 March 2018 GBPm GBPm GBPm
Non-current assets
Loans to Network Rail Infrastructure
Limited* 23,379 6,598 29,977
Current assets
Interest on loans to Network Rail
Infrastructure Limited 181 - 181
Loans to Network Rail Infrastructure
Limited* 1,738 (5) 1,733
Collateral receivable 750 - 750
Total receivables 26,048 6,593 32,641
Audited
31 March
2017
Option to
recognise
inter-company
Audited 31 loan at fair
March 2017 value option (restated)
31 March 2017 GBPm GBPm GBPm
Non-current assets
Loans to Network Rail Infrastructure
Limited* 24,730 8,695 33,425
Current assets
Interest on loans to Network Rail
Infrastructure Limited 184 - 184
Loans to Network Rail Infrastructure
Limited* 1,524 (30) 1,494
Collateral receivable 625 - 625
Total receivables 27,063 8,665 35,728
Audited
30 September
2017
Option to
recognise
Audited 30 inter-company
September loan at fair
2017 value option (restated)
30 September 2017 GBPm GBPm GBPm Non-current assets Loans to Network Rail Infrastructure Limited* 22,775 6,952 29,727 Current assets Interest on loans to Network Rail Infrastructure Limited 226 - 226 Loans to Network Rail Infrastructure Limited* 2,650 (4) 2,646 Collateral receivable 818 - 818 Total receivables 26,469 6,948 33,417
3. Net borrowings
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
(restated) (restated)
GBPm GBPm GBPm
Net borrowings by instrument
Cash and cash equivalents* 8 946 1
Collateral receivable 727 818 750
Collateral obligation (102) (123) (87)
Bank loans (799) (801) (811)
Bonds issued under the Debt Issuance
Programme (28,834) (32,551) (30,893)
At the end of the period/year (29,000) (31,711) (31,040)
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
(restated) (restated)
GBPm GBPm GBPm
Movements in net borrowings
At the beginning of the period (31,040) (34,491) (34,491)
Increase/(Decrease) in cash and
cash equivalents 7 942 (3)
Movement in collateral receivable (23) 193 125
Movement in collateral obligation
to counterparties (15) 136 172
Repayment of borrowings 1,126 - 1,524
Capital accretion on index-linked
bonds (359) (459) (715)
Exchange differences - - -
Fair value and other movements 1,304 1,968 2,348
At the end of the period/year (29,000) (31,711) (31,040)
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
(restated) (restated)
GBPm GBPm GBPm
Cash and cash equivalents* 8 946 1
Collateral receivable 727 818 750
Collateral obligation (102) (123) (87)
Borrowings included in current
liabilities (765) (2,985) (1,957)
Borrowings included in non-current
liabilities (28,868) (30,367) (29,747)
At the end of the period/year (29,000) (31,711) (31,040)
* Includes collateral received from derivative counterparties of GBP102m (September 2017: GBP123m, March 2018: GBP87m)
All borrowings are denominated in or swapped into sterling.
*Adoption of IFRS 9
Prior period comparatives have been restated to fair value for IFRS 9 classification and measurement requirements. The restatement of comparative periods has been calculated as follows:
Audited
31 March
2018
Option to
recognise
inter-company
Audited 31 loan at fair
March 2018 value option (restated)
31 March 2018 GBPm GBPm GBPm
Net borrowings by instrument
Cash and cash equivalents 1 - 1
Collateral receivable 750 - 750
Collateral obligation (87) - (87)
Bank loans (484) (327) (811)
Bonds issued under the Debt Issuance
Programme (25,677) (5,216) (30,893)
At the end of the period/year (25,497) (5,543) (31,040)
Movements in net borrowings
At the beginning of the period (27,113) (7,378) (34,491)
Increase/(Decrease) in cash and
cash equivalents (3) - (3)
Movement in collateral receivable 125 - 125
Movement in collateral obligation
to counterparties 172 - 172
Repayment of borrowings 1,524 - 1,524
Capital accretion on index-linked
bonds (715) - (715)
Exchange differences 480 (480) -
Fair value and other movements 33 2,315 2,348
At the end of the period/year (25,497) (5,543) (31,040)
Net borrowings are reconciled to
the balance sheet as set out below:
Cash and cash equivalents 1 - 1
Collateral receivable 750 - 750
Collateral obligation (87) - (87)
Borrowings included in current
liabilities (1,962) 5 (1,957)
Borrowings included in non-current
liabilities (24,199) (5,548) (29,747)
At the end of the period/year (25,497) (5,543) (31,040)
Audited
Audited 31 March
31 March 2017
Option to
recognise
inter-company
loan at fair
2017 value option (restated)
31 March 2017 GBPm GBPm GBPm
Net borrowings by instrument
Cash and cash equivalents 4 - 4
Collateral receivable 625 - 625
Collateral obligation (259) - (259)
Bank loans (467) (405) (872)
Bonds issued under the Debt Issuance
Programme (27,016) (6,973) (33,989)
At the end of the year (27,113) (7,378) (34,491)
Movements in net borrowings
At the beginning of the period (28,702) (3,684) (32,386)
Increase/(Decrease) in cash and
cash equivalents (96) - (96)
Movement in collateral receivable (194) - (194)
Movement in collateral obligation
to counterparties 71 - 71
Repayment of borrowings 2,388 - 2,388
Capital accretion on index-linked
bonds (449) - (449)
Exchange differences (164) 164 -
Fair value and other movements 33 (3,858) (3,825)
At the end of the year (27,113) (7,378) (34,491)
Net borrowings are reconciled to
the balance sheet as set out below:
Cash and cash equivalents* 4 - 4
Collateral receivable 625 - 625
Collateral obligation (259) - (259)
Borrowings included in current
liabilities (1,745) 30 (1,715)
Borrowings included in non-current
liabilities (25,738) (7,408) (33,146)
At the end of the year (27,113) (7,378) (34,491)
30 September 2017 Audited
30 September
Audited 2017
Option to
recognise
inter-company
30 September loan at fair
2017 value option (restated)
GBPm GBPm GBPm
Net borrowings by instrument
Cash and cash equivalents* 946 - 946
Collateral receivable 818 - 818
Collateral obligation (123) - (123)
Bank loans (471) (330) (801)
Bonds issued under the Debt Issuance
Programme (27,231) (5,320) (32,551)
At the end of the period/year (26,061) (5,650) (31,711)
Movements in net borrowings
At the beginning of the period (27,113) (7,378) (34,491)
Increase in cash and cash equivalents 942 - 942
Movement in collateral receivable 193 - 193
Movement in collateral obligation
to counterparties 136 - 136
Repayment of borrowings - - -
Capital accretion on index-linked
bonds (459) - (459)
Exchange differences 224 (224) -
Fair value and other movements 16 1,952 1,968
At the end of the period/year (26,061) (5,650) (31,711)
Net borrowings are reconciled to
the balance sheet as set out below:
Cash and cash equivalents* 946 - 946
Collateral receivable 818 - 818
Collateral obligation (123) - (123)
Borrowings included in current
liabilities (2,989) 4 (2,985)
Borrowings included in non-current
liabilities (24,713) (5,654) (30,367)
At the end of the period/year (26,061) (5,650) (31,711)
4. Other payables
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
Current liabilities
Interest payable on bonds issued 217 225 180
Interest on long term loans 1 1 2
Collateral obligation 102 123 87
Total payables 320 349 269
5. Financial instruments
The fair values of financial assets and liabilities are recognised at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
With the exception of bank loans and bonds, all financial assets and liabilities are carried at amounts that approximate to their fair value. Bank loans and bonds are initially measured at fair value and subsequently at amortised cost, as explained in note 1.
The corresponding carrying values and fair values of bank loans and bonds are set out below:
At 30 September At 30 September At 31 March 2018
2018 2017
Carrying Fair Carrying Fair Carrying Fair
value value value value value value
GBPm GBPm GBPm GBPm GBPm GBPm
(restated) (restated)
Bank loans (799) (799) (801) (801) (811) (811)
Bonds issued under
the DIP (28,834) (28,834) (32,551) (32,551) (30,893) (30,893)
Total (29,633) (29,633) (33,352) (33,352) (31,704) (31,704)
Bonds issued by NRIF benefit from a credit enhancement provided by the financial indemnity from the Secretary of State for Transport. This credit enhancement is reflected in the fair value of the bonds disclosed above.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities
-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of interest rate and cross currency swaps is calculated as the present value of the estimated future cash flows using yield curves at the reporting date; and
-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
(restated)* (restated)*
Level 2:
Derivative financial assets 433 659 497
Financial assets at fair value 30,577 34,363 32,642
Level 1:
Financial liabilities held at fair
value (28,278) (31,751) (30,258)
Level 2:
Derivative financial liabilities (1,056) (1,320) (1,165)
Financial liabilities held at fair
value (1,675) (1,950) (1,715)
Total 1 1 1
*Adoption of IFRS 9
Prior period comparatives have been restated to fair value for IFRS 9 classification and measurement requirements. The restatement of comparative periods has been calculated as follows:
Audited
year
ended
31 March
2018
Audited year Derecognise
ended 31 Embedded
March 2018 Derivative (restated)
31 March 2018 GBPm GBPm GBPm
Derivative financial assets included
in non-current assets 269 - 269
Derivative financial assets included
in current assets 228 - 228
Embedded derivatives in the inter-company
loan to NRIL (included in current
assets) 1,050 (1,050) -
(
------------------------------------------ ------------- ----------- -----------
1,547 (1,050) 497
========================================== ============= =========== ===========
Derivative financial liabilities
included in current liabilities (19) - (19)
Derivative financial liabilities
included in non-current liabilities (1,146) - (1,146)
(1,165) - (1,165)
Audited
year
ended
31 March
2017
Audited year Derecognise
ended 31 Embedded
March 2017 Derivative (restated)
31 March 2017 GBPm GBPm GBPm
Derivative financial assets included
in non-current assets 864 - 864
Derivative financial assets included
in current assets 237 - 237
Embedded derivatives in the inter-company
loan to NRIL (included in current
assets) 1,287 (1,287) -
2,388 (1,287) 1,101
========================================== ============== =========== =============
- - -
Derivative financial liabilities
included in current liabilities
Derivative financial liabilities
included in non-current liabilities (1,527) - (1,527)
(1,527) - (1,527)
Audited
year
ended
30 September
Unaudited 2017
Derecognise
30 September Embedded
2017 Derivative (restated)
30 September 2017 GBPm GBPm GBPm
Derivative financial assets included
in non-current assets 466 - 466
Derivative financial assets included
in current assets 193 - 193
Embedded derivatives in the inter-company
loan to NRIL (included in current
assets) 1,298 (1,298) -
1,957 (1,298) 659
========================================== ============== =========== =============
Derivative financial liabilities
included in current liabilities (3) - (3)
Derivative financial liabilities
included in non-current liabilities (1,317) - (1,317)
(1,320) - (1,320)
A review of the categorisation of financial instruments into the three levels is made at each reporting date. There were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements in the current or prior years.
There were no changes in valuation techniques during the periods.
6. Notes to the cash flow statement
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
Profit before tax - - -
Operating cash flow before movements - - -
in working capital
Increase in receivables 1,095 1,113 1,819
Cash generated from operations 1,095 1,113 1,819
Cash and cash equivalents (which are represented as a single class of assets on the face of the balance sheet) comprise cash at bank, money fund balances and money market deposit investments with a maturity of up to three months.
7. Explanation of transition to IFRS 9
The following Balance Sheet reconciliations discloses the adjustments made to prior years as part of the transition to IFRS 9.
Reconciliation of equity at 31 March 2018
Option
to recognise Option Restated
Derecognise inter-company to carry 31 March
31 March embedded loan at borrowings 2018 balance
31 March 2018 2018 derivative fair value at FVTPL sheet
GBPm GBPm GBPm GBPm GBPm
Non-current assets
Receivables: amounts falling
due after more than one year 23,379 - 6,598 - 29,977
Derivative financial instruments 269 - - - 269
Total non-current assets 23,648 - 6,598 - 30,246
Current assets
Receivables: amounts falling
due within one year 2,669 - (5) - 2,664
Derivative financial instruments 1,278 (1,050) - - 228
Cash and cash equivalents 1 - - - 1
Total current assets 3,948 (1,050) (5) - 2,893
Total assets 27,596 (1,050) 6,593 - 33,139
Current liabilities
Borrowings (1,962) - - 5 (1,957)
Derivative financial instruments (19) - - - (19)
Other payables (269) - - - (269)
Total current liabilities (2,250) - - 5 (2,245)
Net current assets 1,698 (1,050) (5) 5 648
Non-current liabilities
Borrowings (24,199) - - (5,548) (29,747)
Derivative financial instruments (1,146) - - - (1,146)
Total non-current liabilities (25,345) - - (5,548) (30,893)
Total liabilities (27,595) - - (5,543) (33,138)
Net assets 1 (1,050) 6,593 (5,543) 1
Equity
Share capital - - - - -
Retained earnings 1 - - - 1
Total equity 1 - - - 1
Reconciliation of equity at 31 March 2017
Option
to recognise Option Restated
Derecognise inter-company to carry 31 March
31 March embedded loan at borrowings 2017 balance
31 March 2017 2017 derivative fair value at FVTPL sheet
GBPm GBPm GBPm GBPm GBPm
Non-current assets
Receivables: amounts falling
due after more than one year 24,730 - 8,695 - 33,425
Derivative financial instruments 864 - - - 864
Total non-current assets 25,594 - 8,695 - 34,289
Current assets
Receivables: amounts falling
due within one year 2,333 - (30) - 2,303
Derivative financial instruments 1,524 (1,287) - - 237
Cash and cash equivalents 4 - - - 4
Total current assets 3,861 (1,287) (30) - 2,544
Total assets 29,455 (1,287) 8,665 - 36,833
Current liabilities
Borrowings (1,745) - - 30 (1,715)
Derivative financial instruments - - - - -
Other payables (444) - - - (444)
Total current liabilities (2,189) - - 30 (2,159)
Net current assets 1,672 (1,287) (30) 30 385
Non-current liabilities
Borrowings (25,738) - - (7,408) (33,146)
Derivative financial instruments (1,527) - - - (1,527)
Total non-current liabilities (27,265) - - (7,408) (34,673)
Total liabilities (29,454) - - (7,378) (36,832)
Net assets 1 (1,287) 8,665 (7,378) 1
Equity
Share capital - - - - -
Retained earnings 1 - - - 1
Total equity 1 - - - 1
Reconciliation of equity at 30 September 2017
Option
to recognise Option Restated
Derecognise inter-company to carry 30 September
30 September embedded loan at borrowings 2017 balance
30 September 2017 2017 derivative fair value at FVTPL sheet
GBPm GBPm GBPm GBPm GBPm
Non-current assets
Receivables: amounts falling
due after more than one year 22,775 - 6,952 - 29,727
Derivative financial instruments 466 - - - 466
Total non-current assets 23,241 - 6,952 - 30,193
Current assets
Receivables: amounts falling
due within one year 3,694 - (4) - 3,690
Derivative financial instruments 1,491 (1,298) - - 193
Cash and cash equivalents 946 - - - 946
Total current assets 6,131 (1,298) (4) - 4,829
Total assets 29,372 (1,298) 6,948 - 35,022
Current liabilities
Borrowings (2,989) - - 4 (2,985)
Derivative financial instruments (3) - - - (3)
Other payables (349) - - - (349)
Total current liabilities (3,341) - - 4 (3,337)
Net current assets 2,790 (1,298) (4) 4 1,492
Non-current liabilities
Borrowings (24,713) - - (5,654) (30,367)
Derivative financial instruments (1,317) - - - (1,317)
Total non-current liabilities (26,030) - - (5,654) (31,684)
Total liabilities (29,371) - - (5,650) (35,021)
Net assets 1 (1,298) 6,948 (5,650) 1
Equity
Share capital - - - - -
Retained earnings 1 - - - 1
Total equity 1 - - - 1
8. Controlling party and related party transactions
50,000 shares of the company are held by Intertrust Corporate Services (C.I.) Limited. All shares and distributable reserves in the company are held for charitable purposes.
Legal control of the company is disclosed above but effective control of the company is held by Network Rail and therefore by the DfT and Secretary of State.
On this basis for accounting purposes the company is treated as a subsidiary in the consolidated accounts of Network Rail.
Transactions with NRIL are clearly identified within the relevant notes to the accounts.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LLFELFILSIIT
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December 04, 2018 08:00 ET (13:00 GMT)
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