Today the SRA published its Annual Report for financial year 2002-2003. It includes Network Rail's accounts for the six months from 3 October 2002 to 31 March 2003. This is because, under accounting rules, Network Rail is treated as a quasi-subsidiary of the SRA.

SRA Chairman, Richard Bowker said:

"Passengers will not tolerate anything that gets in the way of improving services and neither will I. I assure them that the work done in the last 18 months will change the railway for the better: its services, its planning, and its delivery to customers. Our work has been about laying the foundations on which to build a transformed railway. There will be no slow down in the pace of change over the next year."

The key points from the Annual Report include:

Internal:

• Organisational re-structure
• 16 interim managers replaced by full time staff
• Corporate plan published
• Network Rail accounts consolidated onto SRA balance sheet as 'Group'

External:

• Franchising policy statement published
• New Trains Programme for Southern Region - deployed
• West Coast Mainline Strategy confirmed
• TPWS fitted
• Network Rail founded
• Railway Safety & Standards Board and Rail Accident Investigation Branch established

Financial

• Government target met on public expenditure
• £120m spend on enabling capital projects - on budget
• Group (includes Network Rail) deficit of £544.9m (see Special Editor's Notes)

Special Notes to Editors

1. The SRA's Annual Report and Accounts 2002/3 can be viewed on our website - under Annual Report. Details below.

2. This year's report consolidates the accounts for infrastructure provider Network Rail from 3 October 2002 to 31 March 2003, the public interest company set up to run on commercial lines and firmly focussed on providing a safe, reliable and efficient railway. 3. The SRA complies with government accounting requirements, which are modelled on standard Companies Act requirements and UK GAAP (General Accepted Accounting Practice). 4. The 'Group' deficit has arisen in part through compliance with these Government Accounting requirements and in part through consolidation of Network Rail losses. 5. These requirements mean that Grant-in-Aid received on April 1st 2003 cannot be included in accounts closing on March 31st 2003, even though that Grant-in-Aid pays for 02/03 expenditure.* 6. Under arrangements agreed between Network Rail and the SRA, roles and responsibilities have been set out. The SRA does not have operational control of the railway - that rests with the Network Rail management team and its Board. 7. The SRA does however have a critical interest in the organisation delivering across a range of challenges - performance improvement and cost reduction being two of the most important. Given the SRA's leadership role in the industry, the accounting rules dictate that a set of group accounts should be prepared in which Network Rail is treated as a quasi subsidiary of the SRA.

For further details contact the SRA Press Office on 020 7654 6339/ 6387 /6234/ 6862 Or visit the website at www.sra.gov.uk

* Extract from Report by John Bourn, Comptroller and Auditor General, National Audit Office (Page 77, SRA Annual Report 2002-03):

The balance sheet at 31 March 2003 discloses an excess of liabilities over assets of £659 million for the group includes Network Rail Ltd, and £1,580 million for the Authority. The Authority's balance sheet includes liabilities for grant and other payments which will be met from future grants or grant-in-aid recoverable from the Authority's sponsor department, the Department for Transport.

In line with its Accounts Direction, the Authority recognises liabilities on an accruals basis. However, under the normal conventions applying to Parliamentary control over income and expenditure, the Authority's grant-in-aid cannot be issued or accounted for in advance of need and will be made available once liabilities fall due for payment.

In preparing its Supply Estimates for 2003-4, the Department for Transport has taken into account the amounts needed to meet liabilities of the Authority payable in the year. These Estimates have been approved by Parliament and the Authority received funding of £1,575 million during April 2003 to allow it to meet liabilities existing at 31 March 2003.

As disclosed in the Foreword to these accounts, the Authority's Directors have assessed that there is no reason to believe that the Department for Transport's future sponsorship of the Authority and future Parliamentary approval of funding to allow the Authority to meet its liabilities will not be forthcoming. Accordingly, the financial statements have been prepared on a going concern basis. I have reviewed the basis for this judgement and have concluded that it is appropriate.