Annual Report 2 0
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ANNUAL REPORT 2012 ANNUAL REPORT The picture on the cover: As part of the project Construction of the second track in Skrīveri – Krustpils section, building of a new bridge was commenced to replace the former one, built in 1860. Putting it into operation is foreseen in May 2013. 2012 The picture on the cover: As part of the project Construction of the second track in Skrīveri – Krustpils section, building of a new bridge was commenced to replace the ANNUAL REPORT former one, built in 1860. Putting it into operation is foreseen in May 2013. LATVIJAS DZELZCeļš 2 ANNUAL REPORT CONTENTS PRESIDENT’S ADDRESS 4 MISSION, VISION AND VALUES 6 STRUCTURE 7 AREAS OF OPERATION 8 HISTORY OF DEVELOPING THE SJSC LATVIAN RAILWAY 9 BOARD OF DIRECTORS 10 CHARACTERISTICS OF OPERATIONS 10 INFRASTRUCTURE DEVELOPMENT PROJECTS 12 REAL ESTATE MANAGEMENT 17 TRAFFIC SAFETY 19 INTERNATIONAL COOPERATION 27 PERSONNEL 31 COMMUNICATION AND CORPORATE SOCIAL RESPONSIBILITY 36 MUSEUM OF LATVIAN RAILWAY HISTORY 38 SUBSIDIARIES AND OPERATION THEREOF IN 2012 41 LDZ CARGO Ltd 42 LDZ INFRASTRUKTŪRA Ltd 55 LDZ RITOŠĀ SASTĀVA SERVISS Ltd 58 LDZ APSARDZE Ltd 62 FINANCIAL REPORT 64 JOINT STOCK COMPANY LATRAILNET 74 EVENTS OF THE YEAR 77 2012 3 THE RESULTS OF THE YEAR ARE GOOD THE STATE JOINT STOCK COMPANY LATVIAN RAILWAY REACHED A RECORD-HIGH PROFIT OF 25.8 MILLION LATS IN THE REPORTING YEAR The Latvian Railway (LDz) concern not only reached a record high freight transportation amount fi gure in 2012 by carrying 60.6 million tonnes of freight, but also a record high profi t by earning 25.8 million lats, which contributed to a 35.2% or 6.7 million lats more than the previous year. POSITIVE EVALUATION The audited annual report of LDz bears evidence that apart LDz has been a stable leader of the transportation business from the increase in profi t and turnover, the consolidated by the amount of freight carried per kilometre since 2005, income of the concern increased by 4.8%, reaching 334 acquiring an even larger market share last year. Most of the million lats last year and the profi tability of LDz own funds freight carried by LDz comes from the main cooperation increased to 11.8%. LDz paid 81.3 million lats in tax into Lat- partners of the company in Russia and Belarus, as well as via’s budget in 2012, including 39.2 million lats in social tax. in Kazakhstan and Lithuania. Both the government of the Republic of Latvia and the Last year was really successful to us and this success was shareholder, positively assess the accomplishment of a result of several years of purposeful work. The calcula- the company in general, however, we cannot stop at our tions of the Ministry of Transport bear evidence that the achievement – the infrastructure upgrade projects which economy of Latvia gains approximately 10 lats from each have been commenced must be accomplished, and the tonne carried by LDz and therefore we can be content that logistics systems must be upgraded in an attempt to reach the economy of our country gained approximately 600 even farther logistics centres in the East, and the planning million lats from the amount of cargoes carried last year, and development of new container transport routes must when the practically impossible was achieved in the area be implemented. of freight transport. The operational and fi nancial results of Latvian Railway Oil products and coal traditionally constitute the largest pro- confi rm that the reforms implemented at the company, the portion of cargoes. These two types of cargoes make up investment and the strategy used have been correct and more than two thirds of all cargoes. They are followed by justifi ed. LDz serves as a good example to prove that Latvia mineral fertilisers, chemicals, metals, ores and grains. can successfully export its services, thus contributing to the development of the economy. LATVIJAS DZELZCeļš 4 ANNUAL REPORT MORE INVESTMENT IN THE UPGRADE OF INFRASTRUCTURE The largest investment into the development of LDz since as a serious contribution to raising competitiveness on 2007, amounting to 86 million lats, was performed last an international level. Therefore investment of the largest year. This investment became the basis for the achieve- proportion of the profit into the development of railway ments of the last year and future development, and infrastructure is crucial. therefore LDz will continue an extensive investment pro- gramme with the objective of raising the throughput ca- The fi nancial results of 2012 can serve as an excellent pacity of the railway, the security of transportation and, precondition for the implementation of the investment pro- thus, the competitiveness of the company. The govern- gramme. The investment programme of Latvian Railway ment does not participate in the co-financing of railway provides for an investment amounting to 317.6 million lats infrastructure maintenance, which is why raising the until 2015, which is a great challenge to our company. The competitiveness of the company is a serious challenge fi nancial results of 2012 give rise to a justifi ed hope that the to LDz. The intensive investment programme will serve program will be implemented. NEW PROJECTS HAVE BEEN COMMENCED Last year LDz commenced several signifi cant railway infra- 2012 was not an easy year for us, but it was inspiring, as structure development projects. One of the largest projects we had a lot of work. The current throughput capacity of is the construction of the second railway track in the sec- the railway in Latvia is 65 million tonnes of cargo annually, tion Skrīveri – Krustpils, which is worth 65 million lats. The while in 2012 we carried 60.6 million tonnes. We plan our project will considerably improve the throughput capacity future, and our investment in infrastructure provides the and traffi c security – the trains will be able to use parallel actual basis for the increase in throughput capacity to 85 tracks in both directions instead of using the same track million tonnes per year. as previously. The project of the marshalling yard upgrade at šķirotava station was also commenced. As a result of It is important for us to prove that we are able to contribute to the implementation of the project, the processing of wagons Latvia much more by developing and upgrading the railway and formation of trains will be increased by 30% daily, re- network. This achievement is possible and we would like sulting in more than 3,000 wagons being processed daily. the public to understand – if we build railway tracks, if we A project aimed at the development of the left bank of the electrify the railway, we do it in the interests of the state and River Daugava was also commenced during the reporting the people of Latvia. year. The modernisation of the signalisation and commu- nication system at the station Bolderāja – 1, as well as the construction of a new Bolderāja – 2 station is planned within UĢIS MAGONIS, the framework of this project. President of the State Joint Stock Company Latvian Railway While planning LDz development and the future growth of the company, LDz has come to an agreement with the Latvian Rail and Transport Industry Trade Union, providing for considerably more favourable work conditions to its employees. Being aware that in the labour market LDz is involved in fi erce competition, not only with Latvian, but also European employers, we understand the necessity to invest in our employees – since a good employee is a loyal employee, who feels secure about its future, an employee, who feels allegiance with the company and who feels ex- pected there. This might be the reason why the residents of Latvia have ranked LDz as the holder of 3rd position in the top of the most desired employers of the transport and logistics sector. MISSION VISION VALUES MISSION TO ENSURE THE MANAGEMENT OF THE RAILWAY INFRASTRUCTURE AND RAILWAY TRANSPORT IN THE INTERESTS OF THE ECONOMY OF LATVIA VISION TO BECOME A PROGRESSIVE, SAFE AND EFFICIENT RAILWAY COMPANY VALUES COMPETENCE. RESPONSIBILITY. SECURITY. INITIATIVE. COOPERATION LATVIJAS DZELZCeļš 6 ANNUAL REPORT STRUCTURE LEADING COMPANY: State Joint Stock Company Latvian Railway ensures the maintenance of railway tracks, control of train traffi c, operation of railway stations, real estate management services, hiring of rolling stock, distribution and sales of electricity, information technology and electronic communication services. STATE JOINT STOCK COMPANY LATVIJAS DZELZCEĻŠ LDZ RITOŠĀ LDZ CARGO LDZ INFRASTRUKTŪRA LDZ APSARDZE JSC SASTĀVA SERVISS Ltd Ltd Ltd LATRAILNET Ltd LDZ CARGO loģistika Ltd SUBSIDIARIES: LDZ Cargo Ltd deals with domestic and international rail freight transportation, loading, unloading and storage of cargoes, management of warehousing facilities, organises interna- tional passenger transport. Subsidiary: LDZ Cargo Loģistika Ltd a subsidiary of LDZ Cargo Ltd dealing with the attraction of new freight fl ows and the facilitation of rail cargo transport between European and Asian countries and the provision of forwarding services. LDZ infrastruktūra Ltd deals with the construction of railway tracks and the major overhaul thereof. LDZ ritošā sastāva serviss Ltd deals with the repair, equipping and upgrading of locomotives and railway cars. LDZ apsardze Ltd provides security services to the companies of Latvian Railway, as well as private individuals, companies, public organisations, state institutions and municipalities. JSC LatRailNet determines the charge for the use of railway infrastructure, distributes the capacity of the railway infrastructure and takes decisions regarding the assigning of the trains of a particular carrier. 7 AREAS OF OPERATION THE OBJECTIVE AND TASKS OF THE ANNUAL REPORT The annual report summarises the information on the operations of the State Joint Stock Company Latvian Railway and the companies of the group: LDZ infrastruktūra Ltd, LDZ ritošā sastāva serviss Ltd, LDZ apsardze Ltd, LDZ Cargo Ltd and a subsidiary LDZ Cargo Ltd Loģistika, the Joint Stock Company LatRailNet in 2012.