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Annual Report 2016 Table of Contents ANNUAL REPORT 2016 TABLE OF CONTENTS FOREWORD BY THE CEO 3 PUBLIC SERVICE CONTRACT 5 CONTROL SYSTEMS 7 INVESTMENTS, DEVELOPMENTS 9 METRO LINE M4 29 ACCIDENT INDICATORS 32 SECURITY DIRECTORATE 34 COMPANY RELATIONS OFFICE 37 TOURISM REPORT 41 BALANCE 44 2 TABLE OF CONTENTS FOREWORD BY THE CEO As Charles Dickens wrote, “annual income twenty pounds, annual expenditure nineteen six, result happiness.” 2016 was a year full of changes, events and achievements in the life of BKV Zrt. One of the most important events of the year both for the Company and the Municipality was that the renovation of metro line M3 combined with vehicle modernisation began. As for the achievements, the first prototype train arrived to the Kőér utca site in May, which passed the inspection required by the National Transport Authority on July 19, and on September 29 made its first run on line M3 during the night time outage. Another significant achievement is that as part of enabling the fully automatic operation of the vehicles of metro line M4, all driver compart- ments were removed in 2016, and thus the dri- verless modern metro reached its planned con- train (HÉV) sector with the effective date of 7 dition, and passengers can now enjoy a special November 2016, which continued to operate and exciting experience by looking through the in the newly formed transportation company windscreen and see the metro tunnel ahead. BHÉV Zrt. We were able to significantly reduce the avera- We, of course, need to remember the busi- ge age of our bus fleet by continuing the procu- ness results: thanks to the debt consolidation a rement programme of new and used vehicles in year before, BKV Zrt. closed the 2016 business 2016. New models added to our fleet included year once again with a positive result. Due to Modulo M108d, Mercedes-Benz Conecto, Mer- higher revenues and a more conservative cost cedes Citaro and Volvo 7000 buses, and at the management, our Company realised an opera- beginning of the year a contingent of 20 Modu- ting profit HUF 9,151 million higher than what lo C68e electric midibuses entered service. was planned. We closed the 2016 year with a Highlights of our 2016 results also include tram profit of HUF 3,799 million. In addition, BKV purchases as well as vehicle and infrastruc- Zrt.’s liquidity position was stable at the end of tural improvements: delivery of the new CAF 2016, which was primarily due to the custom- trams was completed by the end of the year, er’s timely provisioning of the compensations totalling the Company’s two-year tram prog- that accounted for the majority of the Com- ramme of the new, low-floor CAF trams at 47, pany’s revenues. which BKK Zrt. as the customer procured with EU funding. In parallel with that, another out- As in the past, in 2016 also all the employees standing achievement in the infrastructural de- of BKV Zrt., the largest public transport service velopment of our tram network was the start provider of Budapest, combined their efforts to of the interconnecting tram network in Buda provide the highest possible service quality to on 16 January, which integrated a number of the residents and tourists of the Hungarian ca- tram lines to create a transfer-free track-based pital. We plan to continue this tradition in the network offering a faster and more convenient future. travel option than before. In 2016 our Company underwent a large-volu- me organisational change following the Buda- pest General Assembly’s resolution to restruc- ture BKV Zrt., thereby separating the suburban 4 FOREWORD BY THE CEO PUBLIC SERVICE CONTRACT The Company performs the timetable-based ber–December 2016. The deteriorating traffic sa- public transportation service based on the Pub- fety situation in Budapest had a significant impact lic Service Contract concluded by the Budapest on the accident indicator of BKV Zrt. resulting in Transport Privately Held Corporation (hereinafter: an overall Malus rating of the sector accident in- BKV Zrt.) and the Centre for Budapest Transport dex for both the 2015–2016 timetable year and (hereinafter: BKK Zrt.) on 28 April 2012 and as the period September–December 2016. However, amended later. the overall assessment of service outages and ac- cidents concluded a Bonus rating for both periods Within the context of the Public Service Cont- under review. ract, BKK Zrt. orders the timetable-based public transportation service as required for the specific BKV Zrt. complied with its reporting obligation sectors by stating the quantitative and qualitative pursuant to the provisions of the Public Service requirements as well as the detailed rules pertai- Contract. In the monthly, quarterly and annual re- ning to the public service, including the rules app- ports as well as the quarterly and annual Service licable to the compensation for the costs of public Reports, BKV Zrt. reported on the provisioning of service. the public service ordered and the related econo- mic issues. The Parties most recently amended the Public Service Contract in November 2016, which was needed to implement resolutions no. 1529/2015. (XI.04.) and 1530/2015. (XI.04.) of the Budapest General Assembly. As a result, the number of ve- hicles to be procured as part of the availability scheme and the extent of the related performan- ce to order were modified. The client requirements for the specific timetable year and the related financing criteria are listed in the Annual Agreement incorporated in the Public Service Contract. Considering that the public ser- vice was ordered in timetable cycles (from Sep- tember 1 to August 31), the evaluation and the financial settlements for the annual public service of the 2015–2016 timetable were completed in 2016. During the preparatory works of the Annual Agre- ement of the 2016–2017 timetable, BKK Zrt. and BKV Zrt. agreed to switch from the timetable-ba- sed annual period to the calendar-based (busi- ness) annual period beginning 1 January 2017. Thus the next Annual Agreement was only conclu- ded for the period between 01.09.2016 and 31.12.2016. Rendering services in the appropriate quality is encouraged by the expectations defined by BKK Zrt. and the application of the relevant incentives/ sanctions. Improved BKV Zrt. service quality is evidenced by the fact that based on the mileage index measuring compliance with performance requirements, BKV Zrt. realized significant Bonus results even with the stricter limits both during the timetable year of 2015–2016 and of Septem- 6 PUBLIC SERVICE CONTRACT CONTROL SYSTEMS Quality control systems according to the MSZ EN ISO 9001:2009 standard The commitment of BKV Zrt.’s management to qu- ality is reflected by the fact that in 2016 the com- pany successfully operated and improved its range of activities covered by quality control systems as per the ISO 9001 standard. The quality control sy- stems concerning the energy management, educa- tion and investment processes of BKV Zrt. as well as its public transport activities carried out with buses and trolleybuses continued to operate successfully and passed supervisory audits as well. Environment-focused control system according to the MSZ EN ISO 14001:2005 standard The operation of an environment-focused control system („KIR”) by BKV Zrt.— besides the functi- onal need for an environmentally friendly opera- tion—was also necessitated by a requirement of the financing bank connected to the purchase of ALSTOM metro cars. Continuous compliance with and development of the system requirements was indispensable for the purpose of maintaining the validity of the successful compliance certificate and ensuring the effective operation of the KIR system. At the supervisory audit implemented on 14 June 2016, after an examination of the docu- ments, and an on-site survey of the plants, ware- houses, storage facilities and the outdoor spaces, the external independent, accredited entity found the entire area of the metro vehicle depot located on Fehér út to be suitable for the further opera- tion of KIR without limitations. Energy control systems according to the MSZ EN ISO 50001:2012 standard For the purpose of compliance with the provisions of Act LVII of 2015 on Energy Efficiency and based on the decision by the Management of the BKV Zrt., an energy control system as per the MSZ EN ISO 50001:2012 standard had to be implemented and certified. Within the 5 months available un- der the schedule and with help from a consultant, our colleagues prepared the system documenta- tion and, as a result, our Company launched the energy control system on 15 August 2016. After successful system certification, BKV Zrt. obtai- ned the certificate for the energy control system as per the MSZ EN ISO 50001:2012 standard and thus complied with the legal requirements above. 8 CONTROL SYSTEMS INVESTMENTS, DEVELOPMENTS Vehicle purchases, renovation Another 12 Volvo 7000 buses purchased from Ber- lin also entered service to increase the fleet to 36. and modernisation At the end of the year the Company purchased the 5 Mercedes Citaro buses it had been renting Bus sector for close to a year. As these buses had already been naturalised, their commissioning was purely Upgrading of the bus vehicle fleet continued in administrative and thus they did not have to be 2016 to reduce average age, implement higher withdrawn from service and did not create any service level and reduce maintenance needs. extra expenses. Replacement of the vehicles was implemented in various arrangements in 2016 as well: exercising In the autumn another 4 Volvo 7000A articulated the options of our existing framework agreements buses procured from Geneva entered service. As and procurement of used buses by announcing a result, the total count of this model reached 29.
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