ANNUAL REPORT 2016 ANNUAL REPORT 2016 Slovenske železnice, d. o. o. and the Slovenske Železnice Group TABLE OF CONTENTS 17 31 129 INTRODUCTION BUSINESS REPORT FINANCIAL REPORT Statement of the Director-General 6 Corporate Governance Statement 31 1 Introductory notes 6 Carrying amount and fair value Statement of responsibility Basic development policies 40 to the Financial Statements 129 of financial instruments 175 of the Management Board 10 Economic developments and 1.1 Basis for compiling the Audit Report of Report of the Supervisory Board competition 43 financial statements 129 the SŽ Group for 2016 179 for 2016 11 Participation in the international 1.2 Significant accounting 7 Impact of the introduction General information environment 48 policies 131 of the IFRS for Slovenske Železnice, d. o. o. 182 regarding the controlling company 17 Risk management 50 2 Effect of the introduction of the IFRS 142 8 Financial Statements General information regarding Performance analysis 55 subsidiaries 18 3 Consolidated Financial of SŽ d. o. o. 187 Operating results by activity 60 Key performance indicators 20 Statements of the SŽ Group 146 8.1 Statement of financial position 187 Sales and Marketing 67 Significant events in 2016 21 3.1 Consolidated statement of 8.2 Statement of profit or loss 188 Investments 84 financial position 146 Significant events after the end 8.3 Statement of other Information technology 85 of the 2016 financial year 26 3.2 Consolidated statement comprehensive income 188 Research and development 86 of profit or loss 147 8.4 Statement of cash flows 189 Sustainable development 90 3.3 Consolidated statement of 8.5 Statement of Employees 90 other comprehensive income 147 changes in equity 190 Traffic safety and regulation 94 3.4 Consolidated statement 8.6 Notes to the of cash flows 148 Quality management system 95 financial statements 191 3.5 Consolidated statement of Environmental 8.6.1 Notes to the statement changes in equity 149 management system 99 of financial position 191 3.6 Notes to the consolidated Social responsibility 101 8.6.2 Notes to the statement financial statements 150 Profit and loss by individual of profit or loss 202 3.6.1 Notes to the statement company/activity 108 8.6.3 Transactions with related of financial position 150 Consolidated statement of financial parties 206 3.6.2 Notes to the statement position of group companies as at 8.6.4 Events after the of profit or loss 162 31 December 2016 122 accounting period 207 3.6.3 Transactions with 9 Financial Risks at SŽ, d. o. o. 208 related parties 167 10 Capital Adequacy Management 213 3.6.4 Events after 11 Carrying amount and fair the accounting period 168 value of financial instruments 214 4 Financial Risks Audit Report within the SŽ Group 169 of SŽ, d. o. o. for 2016 216 5 Capital Adequacy Management 174 4 Annual Report 2016 Annual Report 2016 5 3%. According to the projections relating to work vol- manager until the end of 2020, which helps us better STATEMENT OF THE DIRECTOR-GENERAL ume, we will transport more than 23 tonnes of freight plan the maintenance of the rail infrastructure and in 2020, up 20% on the figure for 2016, and complete manage it in a more efficient manner. SŽ-Infrastruk- 35% more net tonne kilometres. We put a large amount tura, d. o. o., took over additional manager functions of effort in providing services along longer transport that are required by EU law from the Public Agency Dear owners, colleagues, users and business partners, routes and key European corridors. We are planning for Rail Transport, i.e. the allocation of train paths, to further increase the Company’s presence on interna- the formulation of the train timetable, the charging The financial year 2016 was very successful for Slovenske železnice on tional markets and plan to upgrade our rolling stock. of infrastructure fees and the provision of an effi- several levels. By using well-thought-out measures we further improved ciency management system. We continued to main- operations, realised the planned strategic objectives and continued to Despite the solid year-end results, the freight trans- tain all of the 1,207 kilometres of lines throughout lower our debt. In 2016 we operated at a profit, and expect the same port segment faced major issues throughout the Slovenia this year with due diligence and performed trend to continue in the future. year. At the beginning of the year the provision of the public service obligation without interruption. logistical services was still impeded by the increased The condition of the rail lines is improving and At the beginning of the year, by way of a strategic plan that we plan flow of migrants into Slovenia. These logistical their capacities are constantly increasing through to implement until 2020, we set ambitious objectives, selected strategic issues were successfully resolved through good investments that the government has increasingly projects and made major steps towards their realisation. Our perfor- cooperation with our business partners. earmarked for the public rail infrastructure and the mance analysis has already shown the first encouraging results which upgrades to it. Once the investment projects are will significantly change the image of Slovenske železnice, logistics and Major improvements in public rail transport completed, operators will have access to an even public transport in Slovenia in the coming months and years. more competitive transport route through Slovenia. At the beginning of the school year we introduced a Among other things, the electrification of the Prag- Our successful restructuring process major new feature, integrated public rail transport. ersko–Hodoš section of the line was completed this has increased our sales and cost efficiency Secondary-school and college students were given year. Our lines are also equipped with the GSM-R the option of selecting an operator and means of system and certain sections have been upgraded to Slovenske železnice operated according to the adopted business plan. transport for their travel to school or college, and comply with the requirements applying to European The plan foresees a decrease in operating revenues, primarily on the fares for these trips were loaded onto a stan- transport corridors. account of the lower volume of work of SŽ-Železniško gradbeno pod- dardised ticket. Travel, transfers and searching for jetje. This shortfall was successfully compensated for by improvements the best routes was therefore simplified and made Another very successful financial year in other business segments. We cut costs significantly and generated more passenger-friendly. Over the next few years EUR 25.1 million in profit at the group level. we are planning to expand integrated public rail Slovenske železnice made several important steps transport to all passengers. forward in key work areas in the 2016 financial year We continued the restructuring of the operations of Slovenske železnice, of which I am especially proud. which began a few years ago, and increased our sales and cost efficiency. This year we have started testing internet access on Through our multi-year strategy that focuses on reducing our debt, we trains and at stations and preparing the documen- In the future we will focus our efforts on the managed to lower our net financial liabilities from EUR 379 million to tation for a public tender for the purchase of new computerisation and digitalisation of operations, EUR 92 million over the last five years, thereby providing a basis for trains. Due to several factors, ridership was down by enabling us to continue to provide even higher development and for successfully overcoming future challenges. just over 3% in year-on-year terms. We are however quality services to our business partners and passen- planning to significantly increase the total number gers in a more cost-efficient manner. We increased our productivity of passengers by 2020. We will strive to increase passenger satisfaction as much as possible through I would like to take this opportunity and thank all The year 2016 was also marked by staff restructuring. In order to cut the diversification of our operations, expansion our colleagues and everyone that we do business costs the Group downsized its staff, lowered the average employee age within the public transport segment and the provi- with for their trust and excellent cooperation. I am and increased productivity. Greater attention in the coming years will sion of a wide range of modern services. convinced that due to the dedication of our employ- be devoted to professional employee training and maintaining the high ees and the support of our business partners, we level of qualifications of our operations staff. Effective management of the public rail will continue to achieve our strategic objectives. infrastructure Success in maintaining growth in the volume of freight transported In 2016 we signed an important long-term agreement We continued to increase returns and the volume of freight transported in with the Government of the Republic of Slovenia on Dušan Mes the freight transport segment, and exceeded last year's figures by just over the provision of services as a public rail infrastructure Director-General of Slovenske železnice 6 Annual Report 2016 Annual Report 2016 7 We are concerned with the efficient supply of goods and services, and we contribute to increasing public mobility in a safe, reliable and environmentally acceptable manner. Slovenske železnice is a passenger and freight transport operator and the manager of the rail infrastructure in Slovenia. 8 Annual Report 2016 Annual Report 2016 9 STATEMENT OF RESPONSIBILITY REPORT OF THE SUPERVISORY BOARD OF THE MANAGEMENT BOARD FOR 2016 The Management Board of Slovenske železnice, d. o. o., is responsible for the compilation of the Annual Composition and functioning of the Supervisory Board sixth to the sixteenth session) and one a correspon- Report of the Slovenske Železnice Group and of Slovenske železnice, d.