Study on Separation of accounts of railway undertakings and rail infrastructure managers Final Report 5th November 2009 CONTENTS PAGE 1 EXECUTIVE SUMMARY.............................................................................................3 2 AUSTRIA...................................................................................................................21 3 BELGIUM ..................................................................................................................36 4 BULGARIA ................................................................................................................58 5 CZECH REPUBLIC...................................................................................................70 6 DENMARK ................................................................................................................89 7 ESTONIA.................................................................................................................102 8 FINLAND.................................................................................................................121 9 FRANCE..................................................................................................................133 10 GERMANY ..............................................................................................................152 11 GREECE .................................................................................................................192 12 HUNGARY ..............................................................................................................213 13 IRELAND.................................................................................................................233 14 ITALY ......................................................................................................................248 15 LATVIA....................................................................................................................272 16 LITHUANIA..............................................................................................................288 17 LUXEMBOURG.......................................................................................................299 18 THE NETHERLANDS .............................................................................................308 19 NORWAY ................................................................................................................327 20 POLAND..................................................................................................................331 21 PORTUGAL.............................................................................................................347 22 ROMANIA................................................................................................................360 23 SLOVAKIA...............................................................................................................373 24 SLOVENIA ..............................................................................................................389 25 SPAIN......................................................................................................................399 26 SWEDEN.................................................................................................................434 27 SWITZERLAND.......................................................................................................450 28 UNITED KINGDOM.................................................................................................462 29 ACCOUNTING SEPARATION IN THE RAIL SECTOR ..........................................586 30 ANNEX 1 – Ratios...................................................................................................603 2 1 EXECUTIVE SUMMARY 1.1 Introduction 1.1.1 This report is the Final Report for the Study on Separation of Accounts of Railway Undertakings and Rail Infrastructure Managers, prepared by RGL Forensics, Frontier Economics and Aecom (formerly Faber Maunsell). 1.1.2 The objective of the study, as set out in the ITT, is to: “verify whether Member States have appropriately implemented the provisions of Directive 91/440 as amended by Directive 2001/12 on the separation of accounts and to collect financial data from railway undertakings and infrastructure managers to assess to what extent both comply with the accounting separation requirements”1 1.1.3 The study had six key objectives: To assess whether member states have implemented the accounting separation provisions of the railway Directives. To assess whether relevant railway undertakings and infrastructure managers complied with the domestic legislation and underlying directives. To review the evidence that railway undertakings or infrastructure managers have been cross-subsidising different activities To review the evidence that railway undertakings or infrastructure managers have been inappropriately using public funds. To obtain financial data on all railway undertakings and infrastructure managers with revenues of Euro 50m or more. To establish best practice guidelines for accounting separating by railway businesses. 1.1.4 Our findings on these topics are summarised below. Full details of our research and analysis are provided in detailed country chapters. 1.2 Member States transposition of Accounting Separation directives 1.2.1 The purpose of this task was to assess the extent to which Member States had transposed the accounting separation provisions of the EU railway directives. 1.2.2 Our review involved obtaining copies of domestic legislation relating to accounting separation and comparing it to the underlying directives. In particular, our review assessed the transposition of the elements of the directive set out in Table 1 below. Table 1 Accounting Separation elements of Directive 2001/12/EC Article Issue 6.1 ‘Member States shall take the measures necessary to ensure that separate profit and loss accounts and balance sheets are kept and published, on the one hand, for business relating to the provision of transport services by railway undertakings and, on the other, for business relating to the management of railway infrastructure..’ 6.1 ‘Public funds paid to one of these two areas of activity may not be transferred to the other.’ 1 ITT for study p10 3 Article Issue 6.1 ‘The accounts for the two areas of activity shall be kept in a way that reflects this prohibition.’ 6.2 ‘Member States may also provide that this separation shall require the organisation of distinct divisions within a single undertaking or that the infrastructure shall be managed by a separate entity.’ 9.4 ’In the case of railway undertakings profit and loss accounts and either balance sheets or annual statements of assets and liabilities shall be kept and published for businesses relating to the provision of rail freight transport services.’ 9.4 ’Funds paid for activities relating to the provision of passenger-transport services as public service remits must be shown separately in the relevant accounts…’ 9.4 ’…and may not be transferred to activities relating to the provision of other transport services or any other business.’ 1.2.3 We encountered a number of issues in determining whether or not member states had fully transposed the legislation, or whether companies separated accounts were consistent with the directives: Article 6.1 ‘take the measures necessary…’. 1.2.4 We have interpreted this requirement to “take the necessary measures” as principally one requiring the implementation of legislation requiring relevant businesses to prepare and publish separated accounts. Where identified, we have also commented on the responsibility or authority of regulators to enforce this requirement. Article 6.1 publication of accounts 1.2.5 In considering whether or not companies had ‘published’ their accounts, we reviewed company websites, sent companies questionnaires and, where possible, made enquiries at the national companies’ registrar to identify accounts they were available to the public (in some cases for a fee). We note that in some cases, accounts may be ‘published’ but that our review has not identified this due to lack of response to our enquiries. Articles 6.1 and 9.4 transfer of funds 1.2.6 The possible transfer of public funds can be considered as being either direct or indirect. A direct transfer could occur for example by the simple use of public service funding received for passenger service operations for the funding of freight operations. Indirect transfers of funds could occur in a number of less transparent ways including: the transfer of profits from one activity to another (for example via a holding company) through transfer pricing arrangements cross subsidies from one service to another the sale or transfer of assets or liabilities 4 1.2.7 Following guidance from the Commission, we have assumed that this directive should be interpreted to cover indirect, as well as direct, transfers of funds. 1.2.8 However, because the separated accounts in nearly all cases do not provide sufficient information to enable the detailed analysis required to assess whether or not indirect transfer of funds has occurred, we have determined that in most cases the accounts are not prepared “in a way that reflects this prohibition”. Article 9.4 publication of funds received for public service remits. 1.2.9 The Commission has indicated to us that, in their view, compliance with this directive requires publication of funds received