Report on the Group's Financial Position. SBB in 2012

Report on the Group’s financial position. SBB in 2012. SBB has improved on its 2011 result: consolidated net income for 2012 came in at CHF 422.5 million (2011: CHF 338.7 million). One-off effects and reversals of provisions (CHF 93.2 million, including reversals of provisions for the pension fund and higher market valuation of securities) raised the result. When adjusted for these one-off effects, the operating performance improved slightly compared to the previous year. Traffic revenues rose slightly by 0.8 % thanks to fare adjustments, despite a stagnation in demand for transport. A positive contribution was made by real estate rental revenue. By contrast, operating expenses increased despite productivity improvements. This was due in part to higher personnel expenses, train path costs, and maintenance costs, as well as depreciation. Finally, the financial result boosted consolidated net income thanks to a lower financ- ing requirement. Free cash flow improved to CHF 905.8 million (previous year: CHF –5.2 million) owing to active cash management and the sale of Railway Employees’ Building Society (EGB) mortgages. By contrast, higher commercially financed investment (particularly rolling stock) weighed on free cash flow. Net interest-bearing debt amounted to CHF 6.8 billion, and was reduced by CHF 0.7 billion compared to 2011. SBB Financial Report 2012 Finanz e.indd 78 12.03.13 11:39 P 79 Contents. Financial Report. SBB Group P80 Report on the Group’s financial position P88 Consolidated income statement P89 Consolidated balance sheet P90 Consolidated cash flow statement P91 Consolidated statement of changes in equity P92 Notes to the consolidated financial statements 2012 P 119 Report of the statutory auditor on the consolidated financial statements SBB AG P121 SBB AG income statement P122 SBB AG balance sheet P123 Notes to the separate financial statements of SBB AG P132 Board’s proposal for the appropriation of accumulated loss P133 Report of the statutory auditor on the financial statements The full Annual Report is available in German, French and Italian only. SBB Financial Report 2012 Finanz e.indd 79 12.03.13 11:39 P 80 SBB in 2012 Report on the Group’s financial position Consolidated net income 2008-2012. Capital expenditure 2008-2012. CHF millions CHF millions 600 3,500 3,207 3,000 500 491 2,500 400 422 2,000 300 1,500 200 1,000 100 500 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Operating result (EBIT) Infrastructure (network) Real Estate, Consolidated net income Passenger Infrastructure (energy), Freight other A difficult economic environment last year resulted in stagnating Extension of the rail network, particularly the Zurich cross-city to declining demand in some of the passenger and freight mar- line and the Cornavin-Eaux-Vives-Annemasse (CEVA) rail link, kets. The number of passenger-kilometres declined for the first together with an increase in network capacity utilisation, required time due to the trend in long-distance passenger services, which additional funding for the rail infrastructure. The Infrastructure revealed a saturation tendency in the commuter market as well Division invested CHF 1,659.4 million (+20.7 % year on year) in as a decline in the leisure travel market. Passenger revenues 2012. SBB contributed to the other rail infrastructure investment grew solely because of fare adjustments. In the Freight Division, projects that have been implemented by improving its efficiency the closure of the Gotthard mountain route on three occasions, and through successful purchasing activities. the economic situation and ongoing capacity reductions in The Passenger Division expanded its regional and long- freight-intensive industries led to a decrease in volumes distance fleets with the addition of new double-deck trains. and revenues. Real Estate increased rental revenue thanks to Investment was made in new ETR-610 tilting trains for services the commissioning of new premises and optimisation of the to Italy. In addition to further purchases of rolling stock, existing tenant mix. vehicles were also modernised. Overall, new investment volume Operating expenses rose by 2.5 % year on year. The primary rose by CHF 460.2 million (+83.1 %) year on year to CHF 1,013.7 causes of this development were higher headcount, higher train million. path and energy costs, higher IT costs and an increase in third- The investment volume in the Freight Division declined by party services for maintenance and repairs. CHF 15.7 million year to CHF 46.3 million, due among other Overall, this led to a year-on-year decline in the operating things to the decision not to carry out retrofits on shunting result (CHF 490.9 million, –7.3 %). Thanks to a stronger finan- locomotives. cial result, consolidated net income rose from CHF 338.7 million Real Estate invested CHF 392.1 million (CHF +65.2 million in 2011 to CHF 422.5 million in the 2012 financial year. The year on year) in the development of central sites near to stations financial result of the previous year was influenced by negative such as the Europaallee in Zurich, Basel’s Südpark and Trans- one-off effects such as the early termination of a leasing trans- Europe in Neuchâtel. action. Energy invested CHF 67.8 million (CHF –75.6 million year on year) in upgrading and maintaining energy production and transmission facilities. SBB Financial Report 2012 Finanz e.indd 80 12.03.13 11:39 SBB in 2012 P 81 Report on the Group’s financial position Free cash flow before and after public-sector Public-sector funding 2008-2012. funding 2008-2012. CHF millions CHF millions 3,109 1,000 3,000 906 0 2,250 00 –7 –1,000 1,500 –2,000 750 –3,000 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Free cash flow before public-sector funding of rail infrastructure Grants and payments for infrastructure and grants to Cargo Free cash flow after public-sector funding of rail infrastructure for non-transalpine rail freight Grants for regional passenger services Federal and cantonal loans for infrastructure Free cash flow came in at CHF 905.8 million, a substantial Federal government grants for infrastructure cover any costs improvement on the previous year (CHF –5.2 million). not covered by the statutory track charges in relation to the Cash flow from operating activities improved by CHF 551.1 provision and operation of the rail network and a network main- million thanks to active cash management, particularly in adjust- tenance contribution equivalent to reported depreciation. ments to invoicing and booking processes in passenger services Grants for regional passenger services are the subsidies and due to payments received for the cross-city line from the paid by public-sector authorities for services whose costs are previous year. not covered by passenger revenues. Cash outflows as a result of higher investment in property, Loans from the infrastructure fund and the “FinöV” fund plant and equipment such as rolling stock were more than off- were granted primarily for expanding the Zurich cross-city line, set by cash inflows from divestments of financial assets, par- CEVA and links with the European high-speed network. ticularly the sale of Railway Employees’ Building Society (EGB) mortgages to the SBB pension fund. Overall, cash flow from investing activities improved by CHF 229.7 million year on year. The public sector commissions and finances rail infrastructure maintenance and improvements. In the 2012 financial year this amounted to CHF 1,605.3 million (CHF +130.2 million compared to the previous year, of which CHF 137.6 million was earmarked for CEVA). SBB Financial Report 2012 Finanz e.indd 81 12.03.13 11:40 P 82 SBB in 2012 Report on the Group’s financial position Operating income 2008-2012. Operating expenses 2008-2012. CHF millions CHF millions 10,000 10,000 8,169 7,678 8,000 8,000 6,000 6,000 4,000 4,000 2,000 2,000 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Traffic revenues Other income Personnel expenses Depreciation Public-sector payments Own work capitalised Other operating expenses Cost of materials (excluding loans) Rental revenue from Real Estate Operating income rose by 1.8 % year on year to CHF 8,168.5 Operating expenses rose by 2.5 % year on year. million. Personnel expenses rose by 2.2 % in the reporting year Despite a decline in passenger-kilometres due to develop- owing to wage increases and a higher average workforce (+655 ments in long-distance services, passenger traffic revenues rose to 29,240 FTEs). by 1.8 % year on year owing to fare adjustments. The decline Other operating expenses rose by CHF 76.5 million year in freight traffic revenues by 3.0 % was primarily the result of on year owing to higher train path and energy costs, higher IT lower traffic volumes. The underlying causes were thee closur costs and an increase in third-party services for maintenance of the Gotthard mountain route on three occasions, the difficult and repairs. economic environment and ongoing capacity reductions in Depreciation of investments, particularly in expansion, asset freight-intensive industries. maintenance and rolling stock, rose by 4.0 % year on year The public-sector grants figures include the revenue com- because of the higher investment volume. Taking impairment ponents for infrastructure operations and maintenance that are into account, the volume of depreciation overall remained virtu- reflected in the income statement, plus grants for regional and ally constant at +1.1 %. freight services. The increase of CHF 16.9 million compared to Increased maintenance activity led to a CHF +12.5 million the previous year is primarily due to higher grants to regional rise in the cost of materials.

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