Network Rail added £100 billion to its value because of an ‘accounting quirk’

Nework Rail
Network Rail says more than 4.5 million customers use it every day. Bath Business

Network Rail — Britain’s state-owned rail operator — will add at least £100 billion ($141 billion) to its value this summer because of an “accounting quirk” according to the Telegraph.

Network Rail’s current valuation is £54.1 billion ($76.4 billion).

The Telegraph says the added value is based on an “accounting quirk of privatisation from the 1990s that values Network Rail according to estimated future passenger fares.”

This new valuation would mean Network Rail is worth more than Highway England, another state owned company that builds and maintains Britain’s roads.

Highway England is valued at £111.9 billion, which takes into account how much it would cost to replace England’s motorways and A-roads. The government decided to value Network Rail in the same way, which meant a considerably higher valuation.

Minutes from a meeting of the Financial Reporting Advisory Board — which guides the government on its accounting — confirm it has been working on the new valuation, The Telegraph added.

This will be welcome news for Network Rail, who have had a tough time in recent years.

Chairman Richard Parry Jones was replaced by Sir Peter Hendy in 2015 after a series of missed budgetary targets.

The company says that over the past 20 years passenger numbers have doubled, and that more than 4.5 million people use the network every day. This equates to almost 1.7 billion passenger journeys a year.

Network Rail did not respond the valuation news at the time of writing.

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