Half-year Report

10 December 2025

Network Rail Infrastructure Finance PLC

Half-Year results 2025-2026

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 has been met by the Department for Transport ("DfT") via a loan facility and grants 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 reimbursed by NRIL in the form of an intercompany loan.

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. 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.

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 £40,000m multi-currency note programme which, at 30 September 2025 had been assigned the following credit ratings: AA by Standard and Poor's, Aa3 (outlook stable) by Moody's and AA- (outlook stable) by Fitch.

Financial review

During the period the company incurred finance costs of £1,156m (September 2024: £833m) relating to the interest on bonds in issue. These costs were higher due to the increase in inflation on RPI-linked bonds.

NRIF received finance income as it passed on these costs onto NRIL in line with the intercompany loan agreement.

NRIF made a gain of £92m (September 2024: gain of £100m) on the fair value of its debt due primarily to increases in market interest rates in the period.

NRIF has a legacy hedging programme made up primarily of interest rate and cross-currency swaps. This programme is unwinding resulting in a gain of £9m (September 2024: £15m) in the period.

These gains and losses were passed through to NRIL in line with the intercompany loan agreement.

NRIF made a profit before tax of £55,000 (September 2024: £55,000) in the period, being the excess of the fee charged to NRIL for the provision of the facility over the fee charged by NRIL for the administration of the facility. All shares and distributable reserves in the company are held for charitable purposes.

On a fair value basis, net borrowings as described in note 5 have decreased from £27,324m to £27,245m, primarily as a result of a decrease in market prices which has an impact on the fair value movement (£92m) during the period. UK RPI index-linked debt was 92 per cent of gross debt at 30 September 2025.

Cash balances are required for settlement of maturing bonds and for the purposes of managing collateral posted by financial derivative counterparties. These cash requirements are met by NRIL through repayment of the intercompany loan.

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.

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 committee reviews 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. 

The major financing risks that the company faces are interest rate risk, foreign currency fluctuation risk and liquidity risk. Treasury operations seek to provide sufficient liquidity to meet the company's needs, while reducing financial risks and managing interest receivable on surplus cash.

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 is limited because both Network Rail and its counterparties are required to post cash collateral on their full adverse net derivative positions. The collateral agreements do not contain threshold provisions.

NRIF will continue in operation to manage the existing bond portfolio. The bond portfolio is expected to be held to maturity and as such while market sentiment will drive changes in fair value, the impact on fair value of the portfolio held is not considered to be a major financing risk. NRIF does not anticipate entering into any new derivative contracts in the future and existing derivatives are currently being fully utilised.

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 United Kingdom and that the interim management report includes a fair review of the information required by Disclosure and Transparency Rules (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.

Approved by the board of directors and signed by order of the board.

Paul Marshall (director)

8 December 2025

Statement of comprehensive income

All income and expense in the company is recognised in the statement of comprehensive income.

Statement of changes in equity

Balance sheet

This interim financial report was approved by the board of directors on 4 December 2025 and authorised for issue on the date of the Independent Auditor's Review Report. They were signed on 8 December 2025 on its behalf by:

Cash flow statement

*Balance includes the net interest on derivative financial instruments

Notes to the interim financial statements

Six months ended 30 September 2025

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 Waterloo General Office, London, ED1 8SW, 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.

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 2025 were approved by the board of directors on 30th June 2025 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 report any matters by exception 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 United Kingdom.

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 2025, which have been prepared in accordance with IFRSs in conformity with the requirements of the Companies Act 2006. A copy of this document is available on the Companies House website.

2. Material 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 2025.

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; 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. The company's debt was also issued in currencies other than sterling and sold to overseas investors.

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. Existing debt, derivatives and related interest payments within NRIF are passed onto NRIL in the form of an intercompany loan. The nature of the arrangement means that the instrument fails the Solely Payment of Principal and Interest test under IFRS 9 and as such, the entire instrument is measured at fair value through profit or loss.

Debt

Debt instruments are initially measured at fair value, and subsequently designated and measured at Fair Value Through Profit and Loss (FVTPL) using the mid-market price. The intra-group borrowings from NRIL are measured at FVTPL. Given the relationship between this balance and the debt instruments, the debt instruments were designated at fair value through profit or loss. This treatment results in all fair value movements on debt being passed to NRIL within these financial statements, in line with the intercompany agreement. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are recognised in the period in which they arise and are not capitalised against the financial instrument measured at FVTPL.

Derivative financial instruments

The company's activities expose it to the financial risks of changes in interest rates and foreign currency exchange rates. The company uses interest rate swaps and cross currency swaps to hedge these exposures.

Interest rate swaps and cross currency swaps are recorded at fair value at inception and at each balance sheet date. Movements in fair value are recorded in other gains and losses in the statement of comprehensive income.

Derivatives are presented in the balance sheet in line with their maturity dates.

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 date payment takes place. Gains or losses realised on any foreign exchange movements are captured within the fair value line of 'Other Gains and Losses' in the statement of comprehensive income.

Critical accounting judgements and key sources of uncertainty

Valuation of the debt portfolio by its nature includes judgements and estimates. Since the company's bonds are traded with varying frequency, valuations are derived with reference to both directly observed activity on the bonds themselves and to observations of frequently traded reference gilts which have similar characteristics. Where bonds are frequently traded and independent prices are available, these are used in valuing the bonds. Where bonds are infrequently traded, independent prices are determined using an independent pricing service. These valuations include the analysis of similar but more frequently traded bonds in order to determine a price. There are a small number of privately held bonds that are valued by management. Management review comparator bonds and determine an appropriate yield rate based on similar bonds that have available prices.

3. Receivables

4. Other payables

5. Net borrowings

Reduction in the market prices at the reporting date were the main driver of the £92m decrease in the fair value of bonds and loans since 31 March 2025. The increase in finance costs reported in the Statement of Comprehensive Income occurred largely as a result of the increase in RPI which had a direct impact on the finance costs associated with index linked bonds.

6. Financial instruments

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. Fair values for Level 1 financial instruments are obtained from Bloomberg.

· 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. For bonds, the majority of fair values for Level 2 financial instruments are obtained from Bloomberg. A small number of privately held bonds have been valued by management. Certain Level 2 financial liabilities (collateral and accrued interest) are carried at an amortised cost that approximates the fair value. 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).

A review of the categorisation of financial instruments into the three levels is made at each reporting date. There were no transfers into and out of Level 1, 2 and 3 fair value measurements in the current or prior years.

7. Controlling party and related party transactions

50,000 shares of the company are held by CSC Corporate Services (London) 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.

8. Post balance sheet events

Apart from the events disclosed above, there have not been any significant post balance sheet events, whether adjusting or non-adjusting.