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Annual Report 2016 2 Správa Železnicní Dopravní Cesty, Státní Organizace | Annual Report 2016 CONTENTS

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Annual Report 2016 2 Správa Železnicní Dopravní Cesty, Státní Organizace | Annual Report 2016 CONTENTS Annual report 2016 2 Správa železnicní dopravní cesty, státní organizace | Annual report 2016 CONTENTS Foreword 6 Organisation’s profile 10 Basic information 10 Management 11 Corporate governance 14 Strategy 18 Organisation’s activities in 2016 20 2016 highlights 20 Track section anniversaries in the period from 1841 to 2016 21 Operability of the railway infrastructure 24 Operating the railway infrastructure 25 Passenger station asset management 26 Modernisation and the development of the railway infrastructure 27 Utilisation of the railway infrastructure by carriers 31 Human resources 33 International cooperation 36 Financial performance 40 Financial performance of SŽDC 40 Financial outlook for 2017 42 Risk management 42 Corporate social responsibility 46 Financial section 50 Independent auditor’s report to the institutor of Správa železniční dopravní cesty, státní organizace 51 Financial statements 56 Notes to the financial statements 66 Persons responsible for the annual report 100 Annual report on the provision of information in compliance with Section 18 of Act No. 106/1999 Coll., on Free Access to Information 102 List of abbreviations 104 Identification and contact details 106 Annual report 2016 | Správa železnicní dopravní cesty, státní organizace 3 Strážnice 4 Správa železnicní dopravní cesty, státní organizace | Annual report 2016 Annual report 2016 | Správa železnicní dopravní cesty, státní organizace 5 FOREWORD In 2016, Správa železniční dopravní cesty, státní organizace such as the reconstruction of railway tracks 1 and 2 between (“SŽDC”) continued to successfully draw from the EU funds Ostrov nad Oslavou – Žďár nad Sázavou, enhancement of to enhance the quality of railroad infrastructure. In summer, speed in the Golčův Jeníkov – Čáslav track, modernisation of the long-awaited transactions in which SŽDC, representing the Okříšky – Zastávka u Brna track and the modernisation of the state, acquired a part of České dráhy, a.s. (“ČD”) assets, the between-the-station track sections Petříkov – Borovany by which the management and operation of most railway (excl.) – České Budějovice (excl.). stations was transferred under SŽDC. “To a smaller extent, the funding of constructions from the In 2016, SŽDC drew CZK 18.6 billion of investment subsidies new CEF (Connecting Europe Facility) subsidy programme to modernise railway tracks, and received further CZK 3.31 providing EU subsidies into trans-European networks was billion for the acquisition of a part of ČD. Major projects from also launched. At the end of 2016, SŽDC launched major the 2007–2013 programming period were completed; and investments, in particular in the III. Corridor, including the initial investment activities from the succeeding Operation Beroun (incl.) – Králův Dvůr track optimisation and Pilsen Programme Transport 2 (“OPT2”). junction, 2nd construction – reconstruction of the passenger station, including the Mikulášská bridges projects,” adds Pavel “We perceive 2016 as the year in which the drawing of EU Surý. funds from the OPT2 for the current programming period EU 2014–2020 as the successor of the previous Operation Besides the constructions, 2016 also included project programme Transport (“OPT1”) was successfully launched. CZK preparations for major billion investments. The preparations 8.4 billion invested is a very promising result at the beginning for the reconstruction of the Negrelli’s viaduct or the Prague- of the budgeting period. This has significantly contributed Hostivař – Prague main station track’s optimisation were towards the fact that the Operation Programme Transport completed. The preparations of the project to build a railway became of the operation programmes with the highest connection between Veleslavín and the Václav Havel Airport utilisation in the Czech Republic in 2016,” says Pavel Surý, were also launched. The modernisation of Prague – Kladno Director General of SŽDC. The aim is to keep this trend up and track with a connection to the Václav Havel Airport is a priority to avoid postponing the constructions and subsidy drawing transport construction project of the Czech government and into the final stage of the programming period. one of the most comprehensive infrastructure projects in the Czech Republic. The subsidies from OPT2 were used, among others, to complete the funding of the 2nd stage of the so-called A long-awaited transaction of 2016 was the acquisition of phased projects, i.e. activities started from OPT1 and a part of ČD, which concerned 1 569 buildings and 1.385 completed under the successor programme OPT2. In 2016, million square metres of land in nearly 950 passenger station subsidies were also drawn for newly launched constructions, localities. ČD sold these assets for CZK 3.3 billion. The transfer 6 Správa železnicní dopravní cesty, státní organizace | Annual report 2016 of buildings also included the assignment of 316 employees. window and door replacement, repairs of roofs, covering and The transaction excluded the main station in Brno and the facades. Passenger facilities, station halls and lavatories Masaryk station in Prague. also underwent reconstruction. The repairs concerned a total of 161 station buildings,” says Pavel Surý. The station buildings are often very dilapidated, since the original owner lacked funds to ensure the repairs When planning, preparing and realising the constructions of necessary. SŽDC needs to put a lot of effort into the gradual the stations, intensive communication with the town council, reconstruction and modernisation of the station buildings. regional government and carriers is necessary to ensure that The plan and schedule of reconstruction works shall be the construction activities result in an enhancement of the prepared based on detailed analysis of the buildings’ condition quality of services provided to passengers. Besides repairing performed by the new owner and railway operator and once the station buildings, SŽDC also envisages their further the needs and development intents of all railway station possible use. Redundant space is offered authorities, public localities have been assessed. We expect the cost of repairs administration or self-administration bodies. The revitalisation and investments to amount to billions of Czech crowns. The of the station buildings should provide further possibilities to expert estimates say that the cost of all construction works rent the remaining space to private entities. shall amount to CZK 10 billion and they will be realised in the course of several years according to funds availability. “We could not have achieved these results without great effort, professional attitude and dedication of our employees. “Given the condition of the stations, the preparation and We would like to thank them all. From the point of view of realisation of small repairs worth CZK 125 million in total was investments and due the assignment of the management and launched in 2016. These include in particular emergency operation of the station buildings, 2016 was a challenging works. Their realisation is the first example of SŽDC’s long-term year, yet everyone performed their tasks with a maximum objective to bring the stations into good technical, operation responsibility,” concludes Pavel Surý, Director General of SŽDC. and aesthetic condition. In general, the repairs included Annual report 2016 | Správa železnicní dopravní cesty, státní organizace 7 Plzeň hlavní nádraží 8 Správa železnicní dopravní cesty, státní organizace | Annual report 2016 Annual report 2016 | Správa železnicní dopravní cesty, státní organizace 9 ORGANISATION’S PROFILE Basic information SŽDC MANAGES - the rail infrastructure as a state-owned asset; WHO WE ARE - assets listed in the Annex to the Transformation Act; Pursuant to applicable legal regulations, Správa železniční - specified payables and receivables of Czech Railways, dopravní cesty, státní organizace, acts as a rail owner and a state organisation, that existed as at 31 December 2002. operator. LEGAL GROUNDS OF BUSINESS ACTIVITY OUR LEGAL STATUS - SŽDC carries out its business activities in accordance with The state organisation was incorporated on 1 January 2003 the Trades Licensing Act. pursuant to Act No. 77/2002 Coll., on Czech Railways, a joint- stock company, the Railway Infrastructure Administration, OUR STRATEGIC GOALS a state organisation, and on the Amendment to Railway - reliable, safe, smooth and environmentally friendly Act No. 266/1994 Coll., as amended (the “Railway Act”), and operation of the rail transport; Act No. 77/1997 Coll., on State Enterprises, as amended (the - steady increase in the speed and capacity of the rail “Transformation Act”), as one of the legal successors of ČD, infrastructure; a state organisation. The state organisation was incorporated - greater efficiency of the rail infrastructure administration, without being founded; the Ministry of Transport of the Czech supervision, maintenance and repairs; Republic is the establishing entity on behalf of the Czech - interoperability – introducing modern interoperable Republic. systems and technologies; - strengthening of the pro-client focus and active BUSINESS ACTIVITY communication; - Operation of the railway infrastructure; - increase in our market share in rail transport, - Ensuring the operability of the railway infrastructure; - strengthening of the position of SŽDC as a significant and - Maintenance and repairs of the railway infrastructure; attractive employer. - Development and modernisation of the railway infrastructure;
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