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FINANCIAL REPORT 2005 2005 FINANCIAL REPORT G R O U P E G R O U P E CCouv_FIN_SNCF_EN_1606.inddouv_FIN_SNCF_EN_1606.indd 1 116/06/066/06/06 112:45:502:45:50 SNCF Direction de la Communication Direction de la Comptabilité et du Contrôle de gestion 34, rue du Commandant Mouchotte 75699 Paris Cedex 14 www.sncf.com Photo credit: SNCF /CAV Dominique Larosière Design and production: Printing: Sérag Imprimerie Document printed on ECF paper (Elementary Chloring Free) June 2006 The 2005 Financial Report is published in French and in English. It is also available on the site www.sncf.com. 22_3_3 CCouv_FIN_SNCF_1506_EN.inddouv_FIN_SNCF_1506_EN.indd 1 115/06/065/06/06 115:16:055:16:05 1 GROUP MANAGEMENT REPORT All amounts are in millions of euros (€ millions), unless stated otherwise. 1- SNCF GROUP STRUCTURE 2 2- SIGNIFICANT EVENTS OF THE YEAR 4 2.1 Environment 4 2.2 Group Strategy 5 2.3 Highlights 6 3- SNCF GROUP 8 3.1 Consolidated Net Income 8 3.2 Cash Position and Finance Sources 11 3.3 Changes in Accounting Method 12 3.4 Balance Sheet 14 3.5 Financial Relations with the French State, Réseau Ferré de France and Local Authorities 15 3.6 Human Resources 17 4- ACTIVITIES AND RESULTS BY DIVISION 19 4.1 Long-distance Passengers, France & Europe Division 19 4.2 Public Transport Division 21 4.3 Freight Division 23 4.4 Infrastructure Division 26 4.5 Common Operations and Investments Division 27 5- CORPORATE GOVERNANCE 28 EEXE_SNCF_GESTION_06_FP_EN.inddXE_SNCF_GESTION_06_FP_EN.indd SSec1:1ec1:1 224/05/064/05/06 110:28:320:28:32 2 SNCF Group — Management Report 2005 1. SNCF GROUP STRUCTURE Corporate structure LONG-DISTANCE PUBLIC FREIGHT INFRASTRUCTURE COMMON PASSENGERS, FRANCE TRANSPORT DIVISION DIVISION OPERATIONS & EUROPE DIVISION DIVISION AND INVESTMENTS DIVISION MAIN LINES - STATIONS TRANSILIEN SNCF FREIGHT INFRASTRUCTURE TRANSVERSAL MAINTENANCE FUNCTIONS TGV CORAIL INTERCITY TRANSPORT AND AND MANAGEMENT, LOGISTICS OPERATORS PROJECT MANAGEMENT, EQUIPMENT ENGINEERING CORAIL TER TRACTION Combined INTERNATIONAL Alsace activity Naviland Cargo SNCF International HOUSING LONG-DISTANCE Aquitaine activity Novatrans Systra Group SICF TRANSPORT Auvergne activity Rouch AREP SFCI Froidcombi Eurostar Basse-Normandie activity ORFEA Écorail Thalys Bourgogne activity Rail motorway Artesia Bretagne activity REAL ESTATE CME Rhealys Centre activity SNEF Group Distribution Lyria Champagne-Ardenne activity SCI Ney Districhrono Elipsos Franche-Comté activity SCI du Cercle Haute-Normandie activity Grain SNC Monceau Languedoc-Roussillon activity Logistra SNC Vézelay CTC TRANSPORT-RELATED Limousin activity Nuclear chemicals and SERVICES Lorraine activity FINANCING Midi-Pyrénées activity indivisible loads GIE fi nancière SCETA Services Nord-Pas-de-Calais activity STSI Eurofi ma A2C Pays-de-la-Loire activity Automobile SPFRD Distribution Picardie activity STVA and new services Poitou-Charentes activity Geodis Group OTHERS Rail Europe Ltd Provence-Alpes-Côte d’Azur France Seafrance Voyages-sncf.com activity Europe (excl. France) SCETA Services Rail Europe INC Rhône-Alpes activity Rest of the world Ceretif VFE commerce Chemins de fer de la Corse Port facilities Shem VSC Technologie Sealogis L’Agence Voyages-sncf.com International ®iDTGV Keolis Group Fret International Freight cars Effi a Group France Wagons Ermewa SGW Final-stage carriage and logistics VFLI Garmatex FINANCING AND OTHER SERVICES Segi Sefergie Stesimaf Edifret EEXE_SNCF_GESTION_06_FP_EN.inddXE_SNCF_GESTION_06_FP_EN.indd SSec1:2ec1:2 224/05/064/05/06 110:28:340:28:34 SNCF GROUP MANAGEMENT REPORT 3 Legal structure 723 entities SNCF Eurofi ma SICF SNCFP Voyageurs France SFCI Naviland Geodis Europe Eurostar SEMAPA Calberson Cargo 259 entities Partenaires Group FRP SHEM 4 entities 4 entities Novatrans Bourgey Transmanche Montreuil Night Travel Fret SOCRIF Rouch Ltd intermodal International Geodis 9 entities French GIE Logistics Railways Ltd Intercapital Eurail Test Froidcombi Regional Rail Züst Ltd Seafrance Ambrosetti French Rail Sefergie Inc. ORFEA Vitesse Districhrono Rail Europe Groupe Ltd GIE Sealogis United Garmatex 4 entities Financière 11 entities Distribution G. Rail Europe Sceta Group Inc. Ecorail Rail Europe Espagne SRL SNEF STSI EFA Rail Europe SCI Ney Logistra Benelux EFT Rail Europe Suisse Sceta Edifret VFLI Rail Europe SCI Services 15 entities Italia La Chapelle Rail Europe Stesimaf Deutschland SCI Financière Lyria EF2R du Cercle CWS Ermewa Thalys SCI Groupe International Vézelay Cie Modalhor Express Ermewa Holding Genève VFE SNC Commerce 8 entities L’Agence Monceau LONG-DISTANCE PASSENGERS, FRANCE & EUROPE DIVISION France Voyages- GEIE Wagons Ermewa sncf.com CERETIF Sysrail/Data France CTC 22 entities Voyages- SPFRD ® iDTGV sncf.com SGW STVA 37 entities CRM VSC AREP SEGI Services Technologies SNCF A2C SARI Parvis International Rhealys SA Trans- SAM Financière informatique Systra KEOLIS RE 4A 210 entities Groupe Elipsos Systra EFFIA 46 entities 11 entities Artesia PUBLIC TRANSPORT DIVISION FREIGHT DIVISION FREIGHT COMMON OPERATIONS AND INVESTMENTS DIVISION DIVISION INFRASTRUCTURE Full consoIidation Proportionate consolidation Equity accounted Non consolidated EEXE_SNCF_GESTION_06_FP_EN.inddXE_SNCF_GESTION_06_FP_EN.indd SSec1:3ec1:3 224/05/064/05/06 110:28:350:28:35 4 SNCF Group — Management Report 2005 2. SIGNIFICANT EVENTS OF THE YEAR 2.1 Environment household consumption generated favourable impacts to the development of passenger traffi c essentially for home- work commuting. However, the increase in the price of oil A Mixed Macro-economic Environment products reduced the revenue available to the French for leisure travel. The macro-economic environment for fi scal year 2005 In addition, weak industrial production has hindered can be described as mixed. While the extent of the third industrial freight traffi c development, particularly for SNCF quarter upturn in the French economy was surprising, INSEE Freight, while the rise in oil prices has strained road and statistics repor ted grow th of only 1.6% for French economic rail operating costs for freight and generated price increase activity in 2005. impacts for the electricity market, increasing energy costs The situation was particularly marked by: for rail carriers. • A recognised oil shock whose impact remains muted; Finally, low interest rates limit the fi nancial income SNCF • Contrasting changes in internal Euro zone demand; driven could have drawn from the rapid improvement of its cash posi- by an oil price increase, Euro zone infl ation rose from 2.1% tion. In terms of structural costs, the low infl ation rate restricts in June 2005 to 2.5% in October, although experts are the margin for manoeuvre with respect to the price of ser vices banking on a slowdown in the trend; offered by the various Group companies, even though certain • Poor growth in the French manufacturing sector (–0.2% companies are faced with average wage increases that are in the third quarter following +0.3% in the second quarter structurally higher than the infl ation rate, thereby creating an and –0.3% in the fi rst quarter), even though the business unfavourable environment for job growth. climate indicator has been up since the spring of 2005; • A recovery in salaried jobs complemented by an accelera- tion of the subsidised employment programme; A Changing Rail Sector • A decline in household spending in the second quarter (–0.1%), and a sharp rebound in the third quarter (+0.7%), SNCF will have to confront major structural changes following a leap in consumption during the 2004-2005 at the Community and national level, which will intensify winter. Overall, average annual growth in consumption competition in the short term for international freight traffi c stood at 2%, corresponding to a virtually stable savings and for all national and international freight and passenger rate. According to INSEE, the surge in household spending traffi c in the longer term. essentially acted as a stimulus to consumer business and Accordingly, law 2006-10 relating to transport safety services; and development, which transposes into domestic law • Historically low interest rates with a very low slope and certain European Community commitments undertaken by an increase of 25 basis points in ECB offi cial rates on France, introduced four major changes: 1 December 2005 after two and a half years of status quo. • It creates, pursuant to EC Directive 2004-49 on Euro- The impacts on the SNCF Group are remarkably diffi - pean Community Railway Safety, a French Railway Safety cult to analyse. With respect to the main positive impacts, Agency, to act as domestic safety authority in this area. The the increase in petrol costs and the relative fi rmness in agency will grant safety certifi cates and monitor compliance EEXE_SNCF_GESTION_06_FP_EN.inddXE_SNCF_GESTION_06_FP_EN.indd SSec1:4ec1:4 224/05/064/05/06 110:28:350:28:35 SIGNIFICANT EVENTS OF THE YEAR 5 with safety and interoperability rules. It will be fi nanced by tiveness and solidarity, the two factors indispensable to the the infrastructure fees paid to RFF by the rail carriers; Company’s endeavour. • It transposes EC Directive 2004-51 (“second railway The 2006-2008 corporate plan will concentrate on three package”) by opening up the rail freight market to competi- focal points: tion, keeping in mind that the opening up to competition of • A strategy calling for substantial development in France the domestic freight market as of 31 March 2006 was one and Europe: sound fi nancing for investment growth, deve- of the European Commission’s requirements