9 April 2014 1/

Network Rail 2014 public member recruitment briefingA warm welcome

9 April 2014 2/9 April 2013 2

Welcome

Peter Reichwald, director Harvey Nash

9 April 2014 3/9 April 2013 3

Agenda

► Welcome

► About Network Rail

► Role of public members

► How to apply

9 April 2014 4/

About Network Rail

Richard Parry-Jones, chairman

9 April 2014 5/

About Network Rail

We own and operate the GB rail infrastructure including:

► 830 signal boxes► 2,500 stations► 7,400 commercial properties► 6,300 level crossings ► 20,000 miles of track► 40,000 bridges and tunnels

One of the country’s largest private landowners – we have 35,000 employees and 22 million neighbours (people who live or work within 500 metres of our infrastructure).

9 April 2014 6/

What we do

► We operate, maintain and renew the infrastructure► We operate signals, set the timetable and measure

how punctual trains are► We organise access to the track for train and freight

operators ► We are responsible for planning for the future of the

railway in the short, medium and long-term► We manage the 19 largest stations (like Euston,

Manchester Piccadilly and Glasgow Central)► We deliver projects to improve the railway for the

people and companies that rely on it

9 April 2014 7/

Our purpose, role and vision

To generate outstanding value for customers and taxpayers

Our purpose(Why we exist)

A better railway for a better BritainOur role

(What we do)

To be a trusted leader in the railway industryOur vision

(What we want to be)

To work with our partners and use our full potential to improve safety, reliability, capacity and value for customers and taxpayers

Our strategy(How we’re going to do it)

Our behaviours(How we need to work)

Customer driven

Accountable Challenging Collaborative

9 April 2014 8/

Eleven years of Network Rail

Safety - took over in a period of crisis. Now we have one of the safest railways in Europe as

a result of taking maintenance in-house and projects to share best practice

Our People – our leadership and management development centres have improved staff

training; we developed a nationally admired apprenticeship programme and increased

graduate recruitment; and we have opened our National Centre at Milton Keynes.

Projects – we have become world class in the delivery of major infrastructure projects and

plan to use these skills abroad.

Performance – with a million more trains carrying a billion more passengers, we have taken

performance from c.75% to over 90%.

9 April 2014 9/ 9

The railway is a success…

Passenger Journeys

800

900

1000

1100

1200

1300

1400

1500

1600

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

Year

Jou

rney

s

9 April 2014 10/ 10

The railway is a success…

…but passenger and freight demand is expected to continue to increase (by 15% and 30% respectively over Control Period 5)

The challenge for the rail industry is how to deliver the network capacity and capability we need for the future:► efficiency► cost-effectively; and► at a time when public finances will be increasingly constrained

The Government has shown it is committed to investment in rail if the industry can substantially reduce its costs – they know rail can help drive sustainable long-term economic growth.

9 April 2014 11/ 11

Punctuality is at record levels… but has reached a plateau

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

199

9/0

0

200

0/0

1

200

1/0

2

200

2/0

3

200

3/0

4

200

4/0

5

200

5/0

6

200

6/0

7

200

7/0

8

200

8/0

9

200

9/1

0

201

0/1

1

201

1/1

2

201

2/1

3

201

3/1

4

CP2 CP3 CP4

9 April 2014 12/ 12

Safety is good… but there is room to improve

0.1

44

0.0

96

0.0

93

0.0

79

0.0

68

0.0

61

0.0

51

0.0

50

0.0

50

0.0

49

0.0

42

0.0

38

0.0

37

0.0

27

0.0

16

0.0

15

0.0

14

0.0

11

0.0

10

0.0

07

0.0

07

0.0

03

0.0

03

0.0

00

0.1

51

0.026

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

Bu

lga

ria

Esto

nia

Be

lgiu

m

Ro

ma

nia

Po

rtu

ga

l

La

tvia

Gre

ece

Lith

ua

nia

Sp

ain

Po

lan

d

Hu

ng

ary

Cze

ch

Re

pu

blic

Slo

va

kia

Ita

ly

Slo

ve

nia

Fra

nce

Ire

lan

d

Au

str

ia

Ge

rma

ny

Fin

lan

d

Sw

ed

en

De

nm

ark

Ne

the

rla

nd

s

Un

ite

d K

ing

do

m

Lu

xe

mb

ou

rg

Fa

taliti

es

pe

r m

illio

n t

rain

km

Normalised workforce fatalities

Normalised passenger fatalities

EU average

9 April 2014 13/ 13

How are we funded?

► Network Rail was designed to be debt funded

► One of the largest borrowers in the UK

► Debt is raised to fund enhancement capital expenditure of the network

► Income covers day to day running of the infrastructure only: main sources of income► Track access fees (c.1/3 /£2bn p.a.)► Government grants (c. 2/3 /4bn p.a.)► Property portfolio revenue (c.£233m p.a.)

► Profits after servicing debt are typically re-invested in the network, but can also be used to repay debt or provide rebate to DFT & Transport Scotland

9 April 2014 14/ 14

Debt Management

► NRIF has £33bn of debt outstanding (as at 21st March), primarily in the GBP and USD bond markets

► 51% of debt is currently index linked; policy target is 45-55%

► The average maturity of debt is c.15 years; nominal debt c.5 years

► In the current year to date, £5.0bn of debt has been issued (of which £3.1bn in USD); this completes the funding requirement for 2013/14

► Total funding requirement for CP5 is £28bn, comprised of £17bn of new debt and £11bn of refinancing

9 April 2014 15/ 15

Network Rail debt is widely held

SAFE (Central Bank of China)

Central Bank of Russia

Central Bank of Israel

Diversified investor base: nearly 50% of bonds held outside the UK

9 April 2014 16/16

An overview of the rail industry

Specify and fund rail services

Wo

rk to

geth

er

Independent regulator of monopoly and health and

safetyTrain and

freight operators Passengers

and freight users

Access charges

Revenue

Funding Network Grant

9 April 2014 17/ 17

Who else has economic oversight powers

Apart from the ORR, a number of other bodies scrutinise Network Rail’s activities, including:

► Governments:• Department for Transport (DfT) • Transport Scotland• Welsh Assembly

► Parliament:• Parliamentary Select Committees –

- Transport Select Committee- Public Accounts Committee

• National Audit Office

9 April 2014 18/ 18

Control Period 5 (CP5)

► Network Rail’s track access charges are subject to periodic reviews every 5 years. These periods are called control periods.

► Network Rail has just entered into CP5 which commenced on 1 April 2014

► CP5 will benefit the rail experiences for four million daily passengers, freight users and strengthen Britain’s economic growth.

► Over the period £38 billion will be spent in maintaining, renewing and improving the network. More and new trains will be added to the network, new stations built, facilities improved, platforms lengthened and transformational projects, such as the Thameslink programme, Birmingham New Street, the Northern Hub and main line electrification, completed.

18

9 April 2014 19/ 19

Questions

9 April 2014 20/

Role of public members

Win Chime, deputy company secretary

9 April 2014 21/ 21

Our governance structure

MEMBERS

BOARD

EXECUTIVE DIRECTORS

NON-EXECUTIVE DIRECTORS

Oversee, advise

Accountable

Holds to accountAccountable

9 April 2014 22/ 2222

Holding our board to account

The primary role of a public member is to:HOLD THE NETWORK RAIL BOARD TO ACCOUNT

This is achieved by members:► Monitoring and engaging with our board on matters such as performance,

safety, corporate governance and remuneration ► Engaging with our board and other members in an objective and informed

manner where board performance falls below standards, outputs or targets, while acknowledging progress and success where achieved

► Entering into dialogue on matters that are an immediate subject of votes at general meetings

With the aim of understanding how our board is building a better railway for a better for a Britain in furtherance of generating

outstanding value for tax payers and customers.

9 April 2014 23/ 2323

Holding our board to account (2)

How do public members hold our board to account?

► keeping abreast of our performance► keeping abreast of developments that drive the delivery of our purpose and the

our risks► satisfying themselves that our leadership is effective► satisfying themselves that our board adheres to the spirit of the UK Corporate

Governance Code and governance best practice► considering the quality of Network Rail’s reporting

Ultimately by

Attending and voting at our annual general meeting and other general meetings

9 April 2014 24/ 2424

Holding our board to account (3)

Attending and voting at our annual general meeting and other general meetings

Members have similar voting rights to that of shareholders in a PLC:► Our annual report and financial statements► Our remuneration report ► the appointment or re-appointment of our directors► the appointment or re-appointment of our auditors► the appointment or re-appointment of the members of the membership

selection panel► the terms of the long-term element of the incentive scheme for our

executive directors► changes to our constitution.

9 April 2014 25/ 2525

Resources and opportunities for public members

MEETINGS

Our AGM and half-yearly meeting

Meeting workshops

Focussed engagement groups – safety, people, finance and risk, performance and future

Site visits

ORR meeting

PUBLICATIONS

Chairman’s quarterly governance letter

Press releases

Network Rail and rail publications

ORR publications

DIALOGUE

Non-executive director scrutiny sessions

Active / regular correspondence with board, ORR and members

SUPPORT

Dedicated members’ support team - service level agreement

Members’ website

Induction for new members

9 April 2014 26/ 2626

Who are the public members?

► We currently have 41 public members with experience in various industries and professions.

► Public members have in common:

Hold / held

senior positions

Active role

in governance

arena

Held large / complex

organisations

to account

9 April 2014 27/

Questions

9 April 2014 28/9 April 2013 28

How to apply

Peter Reichwald, director Harvey Nash

9 April 2014 29/9 April 2013 29

What I will be covering

► Deciding if you should apply

► Your CV – what it should address?

► Your application form – what are we looking for?

► Preparing for the interview

► Helping you understand the process

9 April 2014 30/9 April 2013 30

Is this the role for you?

► Do you have the skill set required?

• A good knowledge of UK Corporate Governance Code

• An appreciation of secondary governance – what it means

• Be able to appreciate the specific issues for Network Rail

• An ability to hold others to account

► Do you have the time?

• 8 meetings a year but at least 2

• There is a fair amount of reading

► What is motivating you?

► Are you going to enjoy it? If not, walk away now.

9 April 2014 31/9 April 2013 31

Where is the information you need?

► www.harveynash.com/nr - you have all visited the site but have you

• Listened to the video clips

• Look at what is said about the role and Network Rail

• Looked specifically at the person specification

• Down loaded the application form

9 April 2014 32/9 April 2013 32

Your CV

► You have been told a maximum of 3 pages

► Address, contact details – repeat name in footer

► ADDRESS THE CV TO THE ROLE

► Key attributes

► In detail for last 10 years, summary for prior years

► About your employer(s) (t/o; total staff & its prime activity)

► Brief description of roles / tasks of influence

► Achievements

► Outside work – charities, school governorship etc.

9 April 2014 33/9 April 2013 33

Your supporting statement

► Use the headings of the person specification as the points to address

• Motivation and ability to contribute

• Understanding the role

• Corporate governance experience

9 April 2014 34/9 April 2013 34

Your supporting statement (2)

► Use examples to demonstrate your skill and ability to contribute to a successful outcome

I am a member of a Police AuthoritySAYS NOTHING

I am a member of the Police Authority – with my property background I have been able to advise on improving the reporting structures and accounting for the £1.7 billion real estate and from my work in the community in respect of

dishonour violence and forced marriages I have helped the police have a wider understanding of the issues.GIVES REAL STRENGTH

The panel is looking for ‘I’ not ‘WE’

9 April 2014 35/9 April 2013 35

Your supporting statement (3)

► Be explicit – be clear so a third person reading it can identify your skills

► Do not assume – job titles mean different things in different organisations

► Do no leave out aspects that might be second nature to you

► How much should you write? – you have been told 2 pages

► Be succinct – but not over succinct

► FINALLY – with your responses drafted

• Cross reference to the bullet points of the person specification – check that your examples cover them

9 April 2014 36/9 April 2013 36

The practicalities - referee

► Think of people who can speak about you in the context of the role you are applying for

► A known name will not help if they do not know you in that context

9 April 2014 37/9 April 2013 37

The practicalities – the interview

► Research • Understand why Network Rail needs public members• What is the role?

► Establish• The challenges Network Rail is facing • How your contribution will help

► Plan the interview • Consider the points you want to make • Think of examples that bring these points out

9 April 2014 38/9 April 2013 38

The process

► Submit your application by uploading through the website

► Closing date Tuesday 22 April (midnight)

► Applications are processed

► MSP reviews all applications

► You are advised by Friday 30 May if you are invited for interview

► Interview dates: 30 June, 1, 2, 3, 4, 8 July

► Appointees advised w/c 28 July

9 April 2014 39/9 April 2013 39

What do we need from you?► Documentation

• The application form – purely statistical information

• A supporting statement for your fit to the criteria sought (no more than 2 pages)

• CV (no more than 3 pages)

► To submit your application

• Go back to the web site, www.harveynash.com/nr

• Click ‘APPLY’ on the top menu bar and follow the instructions

9 April 2014 40/9 April 2013 40

Thank you

Peter Reichwald

Any questions

Peter.Reichwald@harveynash.com

Network Rail’s Help line at Harvey Nash 020 7158 5614

www.harveynash.com/nr