Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


APPENDIX

KEY RATING DRIVERS FOR THE SUCCESSOR COMPANY TO RAILTRACK

BUSINESS/PERFORMANCE OBLIGATIONS

  Capital expenditure upgrades—requirements to undertake certain projects, and specific targets for specific projects.

  Investment obligations in non-core business (eg railway company SPVs).

  Operation and maintenance obligations. Key measures of performance.

  Cost reduction/efficiency targets.

MANAGEMENT AND STRUCTURAL COMPETENCE

  Physical state of the assets and likely variability around the operation and maintenance cost base.

  "Base Case" costs of capital projects and likely variability around them.

  Business plans for meeting required performance objectives. Methodology of implementation (Business Model/Management structures/Sub-contractual structures (if relevant)).

  Track record of management and views on management competence going forward. Background and experience of management team.

  Ability to deal with unforeseen events.

REVENUE STRUCTURE/REGULATORY FRAMEWORK

  "Base Case" revenues under CP2 (and most likely framework for CP3).

  Variability around revenues.

  Potential Penalties for under-performance.

  Regulatory Provisions for dealing with increased and/or unforeseen costs.

FINANCIAL STRUCTURE

  "Base Case" cash flow, profit and loss and balance sheet projections.

  Funding Plans and contingencies built into funding plans.

  Sensitivity to interest rate changes.

  Liquidity (availability of standby lines of credit and short term cash resources) to cover temporary reduction in cash flow or loss of debt markets.

  As can be seen the financial structure of Railtrack is only a part of our analysis, albeit an important part.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 8 March 2002