zssk ENG.indd - ZSSK Cargo

2008 ANNUAL REPORT
Železničná spoločnosť Cargo Slovakia, a. s.

INTRODUCTORY SPEECH BY THE CHAIRMAN
OF THE BOARD OF DIRECTORS 4
INTRODUCTORY SPEECH BY THE CHAIRMAN
OF THE SUPERVISORY BOARD 5
LIST OF USED ABBREVIATIONS 6
MILESTONES OF 2008 7
FREIGHT TRANSPORT 8
CAPITAL INVESTMENTS OF COMPANY ZSSK CARGO 11
QUALITY MANAGEMENT SYSTEM 11
HUMAN RESOURCES 12
RISKS 13
SELECTED ECONOMIC INDICATORS 13
AUDITOR´S REPORT AND IFRS FINANCIAL STATEMENT
FOR THE YEAR FINISHED ON 31. 12. 2008 15
ORGANIZATION STRUCTURE AS AT 31. 12. 2008 53
CONTACTS 54

INTRODUCTORY SPEECH BY THE CHAIRMAN
OF THE BOARD OF DIRECTORS
It is essential to evaluate the year 2008 as a year of the company’s stabilization, in particular looking at its core activity
– transport of goods. Integrated and clear business strategy which ZSSK CARGO applied in 2008 brought positive
results. We pronounced already in July 2008 that company had achieved profit in the amount of more than 400 million
SKK for the first half-year. During referred period we actually transported almost 100 thousand tons of goods above the
plan. The first stagnation in freight transport was registered in the second half of the year. Financial crisis on the world
trade markets was the reason that had particular impact on automotive, building and mainly metallurgy industry. Exactly
metallurgy represents more than 60 percent of the overall ZSSK CARGO transport volume, therefore the decreasing of
transport was irreversible. These circumstances caused the operations slump by more than 30 percent what consequently
inflicted transport revenues decrease. Despite of the operations downturn ZSSK CARGO showed a profit in the amount
of 83 million SKK, for the first time in its history. Management of the company succeeded in achieving the positive
2008 economic results after the historical loss limit in 2007. Attained results prove that the changes within the company,
which were initiated during the period 2006 and 2007 were well-founded and brought along success.
ZSSK CARGO is a strategic freight transport company of the Slovak republic, which besides goods transport operates
crucial transshipment and pump through capacities on the Eastern border with Ukraine. Its operation is essential for
strategic production companies in Slovakia and in neighboring countries. In this context the modernization and reconstruction
of pump through complex started in Eastern Slovak Transshipment Yards in Čierna nad Tisou in 2008. The
modernization will improve the level of safety and protection of employees at work as well as environmental protection
with minimization of negative impact and operations optimizing. From the view of investments most of the finances were
aimed at core business of our company. The company’s fleet has significantly been strengthened by purchase of new cargo
wagons. Energy measurement system installation to electric locomotives will allow real electric power consumption
measurement which is unreserved condition for ZSSK CARGO performance on liberalized market with electric power in
a position of the authorized user.
ZSSK CARGO operates approximately 95 per cent of the Slovak freight railway transport. The level of fixed costs for realization
of transport is disproportionately higher compare to road transporters, which takes effect in annual rail transport
decrease. In this situation it is essential to invoke Principles of the State Transport Policy in particular in the field of
entrepreneurship conditions equalization for all types of transport, internalization of external costs as well as general
support of ecological transport modes.
All processes which have been started by now in railway sector and within ZSSK CARGO bring gradually positive effects.
I express my trust that financial and economic crisis discloses hidden reserves and in final effect will start the new
chapter in 160 year long tradition of rail freight transport which is environmental friendly and safe at the same time. And
herein is its future.
I believe that in 2008 we made a significant progress in all specified scopes and targets. I extremely appreciate high
employees’ dedication and at the same time I am well aware that we have been reaching up these results also thanks to
the trust of our business partners and customers. Therefore I would like to thank you all.
Mgr. Matej Augustín
Chief Executive Officer & Chairman of the Board of Directors
4

INTRODUCTORY SPEECH BY THE CHAIRMAN
OF THE SUPERVISORY BOARD
In order to assess year 2008 at ZSSK CARGO competently it is necessary to review the previous year when company
successfully managed to decrease operational costs by more than 600 mil. SK, verify and post impartial necessary
reserves for environmental loads and comprehensively change the financing system by banks.
Despite needful investments the level of general company indebtedness decreased. Gradually significant move in
transparency of ZSSK CARGO financial management took place by International Financial Reporting Standards (IFRS)
implementation what on a large scale contributed to increased trust of the banks and financial institutions. The company
also started up complex inspection of entrusted property utilization efficiency and identification of economically
ineffective repair capacities. Moreover the procurement processes have been changed with the aim to assure savings
in orders of goods and services. These restructuring steps enabled company to decrease the loss in 2007 compared
to 2006 by more than 600 million SKK to historically lowest loss since the establishment of the company in an amount
of 252 million SKK.
In 2008 the trend proceeded and the main target was primarily stabilization and sustainability of decreased costs in
the range of 2007. Based on this, the company’s management set up the highest target for 2008 to reach profit. All
processes in ZSSK CARGO were started up to reach a fair profit by retaining standard transport performance of the
company at a regular level of approximately 50 million tons of goods, whilst sustaining employment, competitiveness
and technological development.
In spite of significantly negative trends which were indicated by the incoming global financial crisis, the result of
company’s consistent cost management was that ZSSK CARGO fulfilled its principal target for 2008 and according to
financial results reached a profit in the amount of 83 million SKK for the first time in its history.
The first 9 months of 2008 were at the level of planned performance and revenues with approximately 9 % decrease
in the months of August and September. In the last quarter the impact of the world financial and consequently also
economical crisis fully displayed also in the demand for transportation. Slump especially in metallurgical, building and
automotive industry caused the downturn in the performance of ZSSK CARGO by more than 30 % and consequently
almost identical downturn in the revenues from transportation of goods. I would like to point out that in spite of this
fact the company finished year 2008 with a profit, what is very important also in regard of assessing the performance
of the company into the future.
In conclusion I would like to highlight that the company managed to stabilize certain transportations, develop cooperation
with new customers and gain new transportations. The company’s share at the railway transport market in
the year 2008 with 94 % in tons and 97 % in net ton-kilometers is the clear proof of the facts. Given persisting way of
financing of the railway transport which makes it advantageous for road transport and in situation when ZSSK CARGO
pays more than 40 % of costs to Infrastructure Manager ŽSR for the operation of the railway transport tracks, it is
undoubtedly a success.
JUDr. Zdeněk Schraml
Chairman of the Supervisory Board
5

LIST OF USED ABBREVIATIONS
BCS
ČD
DB
DRV
EU
ESTY
GCU
GPS
IT
LP
MÁV
ÖBB
PKP
RUW
RIV
TCT
TDS
VAT
WTO
ZSSK CARGO
ŽSR
Border Crossing Station
České dráhy (Czech Railways)
Deutsche Bahn AG (German Railways)
Driving Railway Vehicle
European Union
Eastern Slovak Transshipment Yards
General Contract of Use for Wagons
Global Positioning System (global system for determination position)
Information Technologies
Loading Prohibited
Magyar Államvasutak (Hungarian Railways)
Österreichische Bundesbahnen (Austrian Railways)
Polskie Koleje Pánstwowe (Polish Railways)
Regulations on Use of Wagons in International Rail Transport of Passengers and Goods
Agreement Governing the Exchange and Use of Wagons between Railway Undertakings
Terminal of Combined Transport
Train Dispatching System
Value Added Tax
Wagon-Traffic Office
Železničná spoločnosť Cargo Slovakia, a.s.
Železnice Slovenskej republiky
6

MILESTONES OF 2008
The operation and economic activity of the company ZSSK CARGO were influenced during the year 2008 by these
following important events:
• Finishing of the commercial and energetic dispatching system, completion of installation of measurement systems
on DRV of electric traction (303 DRV), preparation and realization of necessary steps and terms resulting from valid
legislation for conducting business with electric energy,
• Purchase of new freight wagons (139 wagons of Shimmns(s) line, 132 wagons of Habbillns(s) line, 100 wagons of
Eamos line and 2 wagons of model Lgs line for intermodal transport), which significantly reinforced the rolling stock
of ZSSK CARGO,
• Modernization of DRV bearing line of independent traction (3 DRV of series 735 to 736, 1 model DRV of series 742
to 746 and 1 model DRV of series 750/753 to 756),
• Homologization of DRV of series 131 on PKP rail network and DRV of series 363 and 240 on MÁV rail network,
• 1st phase of reconstruction and modernization of pumping complex of Trade Centre and Transshipment Yard Čierna
nad Tisou, which will allow to pump through commodities like petroleum products, alcoholic derivatives, methanol,
ethanol, mineral oils and hydrocarbons. At the same time, the modernization will improve the level of safety and
protection of employees at work as well as environmental protection and will afford the enhancement of work
technology,
• Test operation and realization of new transportations within intermodal transport:
– Dunajská Streda – Bremerhaven (DB) and back
– Dunajská Streda – Hamburg (DB)
– Liptovský Hrádok – Pöls (ÖBB) (wood chip)
– Veľká Ida – Malaszewicze (PKP) (dismantled automobiles)
– Shezen (China) – Mělník (ČD) (pilot train),
• Signing of the agreement on long-term lease of the Terminal of Combined Transport Dobrá with the company TRANS-
CONTAINER Moscow for the purpose of increasing the volume of traffic of ZSSK CARGO across Slovakia and the
utilization of the terminal for transportations of containers between Russia and Adriatic ports Terst and Koper,
• Taking-over of activities of wagon-traffic office and shunting from ŽSR for the purpose of higher work utilization of
own employees and improvement of processes by the register of train. During the year 2008 ZSSK CARGO took over
WTO in all BCS besides the station Bratislava – Východ,
• Expansion of taking-over of trains on confidence of individual BCS within EU from foreign railway transporters. In
2008 the number of BCS taking-over of trains on confidence increased by the border crossing Plaveč – Muszyna,
• Development and implementation of the information system TDS (train dispatching system) for the support of decision
making processes within the operative management of operation,
• Separation of procurement and purchase processes from processes of stock control and centralization of procurement
process in structure on relevant commodities of goods and services,
• Activation of the 2nd phase of the information system for the support of operation management (OIS), where it was
solved: optimalization of run of empty wagons, monitoring and registration of dispositions of wagon keepers, control
and registration of LP, monitoring of delivery terms on consignments, planning of circulation of DRV, locomotive and
train crew, tracking of train position through GPS,
• Preparation of conversion to euro exactly solved modification of all information systems as well as updating company’s
tangible internal documents. Meanwhile transition period, company try to avoid possible risks of loss of the
customer, injury to company’s reputation or possible interruption of business activity in time of transition period.
• Contract conclusion with Infrastructure Manager (ŽSR) to assure operation quality on track.
7

FREIGHT TRANSPORT
Development of Transportation Compared to the Plan
Company ZSSK CARGO transported 44 525 thousand of tons in 2008. The plan of transport in volume of 48 112 thousand
of tons was filled to 92,5 %, in absolute numbers it was default of 3 587 thousand of tons.
In thousand tons Plan 2008 Actual 2008
Import 18 816 16 790 89,2%
Transit 11 980 11 996 100,1%
Export 11 456 10 280 89,7%
Domestic 5 860 5 459 93,2%
48 112 44 525 92,5%
20 000
15 000
Plan 2008
Actual 2008
10 000
5 000
0
Import
Transit
Export
Domestic
Strong default was in commodities as iron ore (by 1 922 thou. of tons), metals (by 525 thou. of tons) and coal
(by 513 thou. of tons), compared to fair settlement which was only in intermodal transport (by 550 thou. of tons) and
petroleum products (by 70 thou. of tons).
In thousand tons Plan 2008 Actual 2008
Iron Ore 14 302 12 380 86,6%
Metal 7 932 7 407 93,4%
Coal 7 885 7 372 93,5%
Building Materials 4 950 4 609 93,1%
Petroleum Products 3 270 3 340 102,1%
Chemical Products 3 431 3 257 94,9%
Intermodal Transport 1 730 2 280 131,8%
Wood 2 430 2 248 92,5%
Nonspecified 1 313 1 092 83,2%
Foodstuffs 869 540 62,1%
48 112 44 525 92,5%
8

Comparison of Freight Transport with Previous Period
In comparison with last year, the volume of transportation decreased by 4 629 thousand of tons, i.e. inter-annual
decrease by 9,4 %, which was caused mainly by decreasing in transportation of iron ore (by 1 362 thou. of
tons), coal (by 1 118 thou. of tons) and metals (by 967 thou. of tons). Compared to previous year, only intermodal
transport increased by 471 thou. of tons.
In thousand tons 2008 2007 2006 2005 2008/2007
Export 16 790 11 639 12 204 11 686 144,3%
Transit 11 996 12 116 13 013 11 330 99,0%
Import 10 280 19 015 18 454 17 825 54,1%
Domestic 5 459 6 384 6 384 6 904 85,5%
44 525 49 154 50 055 47 745 90,6%
20 000
15 000
Actual 2007
Actual 2008
10 000
5 000
0
Export
Transit
Import
Domestic
Development of Freight Transport According to Commodities
In thousand tons 2008 2007 2006 2005 2008/2007
Iron Ore 12 380 13 742 15 235 12 904 90,1%
Metal 7 407 8 374 7 757 6 893 88,5%
Coal 7 372 8 490 8 297 8 652 86,8%
Building Materials 4 609 5 027 5 160 5 121 91,7%
Petroleum Products 3 340 3 515 3 375 3 483 95,0%
Chemical Products 3 257 3 598 3 643 3 759 90,5%
Intermodal Transport 2 280 1 809 1 334 1 179 126,0%
Wood 2 248 2 471 2 588 3 517 91,0%
Nonspecified 1 092 1 328 1 577 949 82,2%
Foodstuffs 540 800 1 090 1 288 67,5%
44 525 49 154 50 055 47 745 90,6%
9

STRUCTURE OF DRV
Development of DRV Number
2008 2007 2006 2005
Electric Locomotives 331 333 333 338
Diesel Locomotives 405 464 469 476
Motor Coaches 2 2 2 2
738 799 804 816
Age Structure of DRV
Years up to 15 up to 30 over 30 Total
Electric Locomotives 17 149 165 331
Diesel Locomotives 33 85 287 405
Motor Coaches - 1 1 2
50 235 453 738
STRUCTURE OF FREIGHT WAGONS FLEET
Development of Number of Wagons
2008 2007 2006 2005
Covered Wagons 2 725 3 227 3 427 3 962
Open Wagons 7 121 7 244 7 202 7 265
Platform Wagons 2 973 3 058 3 059 3 154
Other Freight Wagons 1 691 1 790 1 933 1 989
14 510 15 319 15 621 16 370
Number of Wagons According to International Specifications and their Age Structure
Years up to 5 6-10 11-15 16-20 21-25 26-30 over 30 Total
E 105 133 159 1 472 2 159 1 921 2 5 951
F - - - - - 717 453 1 170
G - - - 238 443 45 103 829
H - 59 127 - 391 72 694 1 343
I - - - - - 15 - 15
K 15 - - 18 - - 215 248
L - - - 40 2 - 3 45
R 300 - - - 448 275 860 1 883
S - 72 354 - - - 371 797
T - 36 87 203 52 4 156 538
U - - - 54 75 18 88 235
Z - - - - 549 166 741 1 456
420 300 727 2 025 4 119 3 233 3 686 14 510
10

CAPITAL INVESTMENTS
OF COMPANY ZSSK CARGO
(ACCOUNTING BALANCE AS AT DECEMBER 31, 2008 IN SKK)
Company
Number of
equites (pcs.)
Share (%) Value of capital investments
EU-RAIL SLOVAKIA, a.s., Košice 60 30 1
Intercontainer - Interfrigo s. c. Brusel, Belgicko 385 0,03 229 269
Bureau Central de Clearing s. c. r. l. Brusel, Belgicko 4 2,96 89 616
Durban 41 964 40 46 120 000
46 438 886
QUALITY MANAGEMENT SYSTEM
Satisfaction of external as well as internal customer with provided services is key objective of ZSSK CARGO. Established
Quality Management System promotes fulfillment of this scope. In order to come up to expectations of the business
partners, company ZSSK CARGO is focusing in particular on continuous improvement of the quality of provided
services and products.
Performed re-certifying and supervisory audits by an independent certification company TÜV SÜD Slovakia in 2008
confirmed that the implemented system of quality management system has been further maintained and continuously
improved in compliance with requirements of the international standard STN EN ISO 9001:2001.
Company ZSSK CARGO owns the quality certificate according to STN EN ISO 9001:2001 for the following products:
• Freight Rail Transport (Logistic Trains)
• Maintenance and Repair of Rolling Stock
• Group of Procurement and Logistics Processes
• Eastern Slovak Transshipment Yards
11

HUMAN RESOURCES
Company Železničná spoločnosť Cargo Slovakia, a.s. within the frame of strategic management of human resources
pays great attention to skilled and personal improvement as well as employees care.
As at December 31st 2008, company ZSSK CARGO had 10 448 registered employees, which means a decrease of
365 employees compared to year 2007. During the year 2008 354 employees were employed from external labour
market and 724 ZSSK CARGO employees finished their employment. Decreasing of number of staff resulted from
implementation of the projects aimed at optimalization and increasing effectiveness of work as well as turn-out of
employees to external surroundings.
Development of Employment
2008 2007 2006 2005 2008 - 2007
Registered Number of Employees 10 448 10 813 11 375 11 856 (365)
Average monthly wage 22 337 20 638 19 388 18 305 1 699
Education Structure
Education 2008 2007 2006 2005 2008 - 2007
Elementary 288 304 336 381 (16)
Apprenticeship (Apprent.School) 4 126 3 890 4 724 4 830 236
Completed Secondary 2 598 2 050 2 102 2 455 548
Completed Sec. Proffesional 2 716 3 868 3 529 3 567 (1 152)
University 720 701 684 623 19
10 448 10 813 11 375 11 856 (365)
Age Structure
Age 2008 2007 2006 2005 2008 - 2007
18-29 640 713 832 1 101 (73)
30-39 2 311 2 549 2 797 3 067 (238)
40-49 3 549 3 670 3 942 4 214 (121)
50-62 3 935 3 872 3 801 3 474 63
over 62 13 9 3 - 4
10 448 10 813 11 375 11 856 (365)
Within the human resources development in 2008 company ZSSK CARGO focused on:
• Obligatory education of operative employees to acquire skills related to Act on Railroads;
• Additional education to acquire miscellaneous skills and knowledge to relevant job positions;
• Improvement of foreign languages knowledge of employees in selected working positions where this knowledge is
required;
• Extending of employees´ qualification in the form of distance learning and its support.
Company ZSSK CARGO concluded Collective Labour Agreement with nine Union Headquarters. In line with Collective
Labour Agreement within 2008 social dialog sustained with social partners. Within a year 2008 company ZSSK CAR-
GO compensated social benefits according to Collective Labour Agreement above scope of Labour Code in an amount
244 million SKK (23 353 SKK per employee).
Average wage within a year 2008 was achieved in an amount 22 337 SKK, whereby company fulfilled its obligation
from Collective Labour Agreement and represent 6,5 % increasing compared to 2007 according to methodology of
Collective Labour Agreement evaluation.
12

RISKS
Influence of negative trends that have been accompanying the rail transport for several years deepened in the second
half of 2008 due to economic and financial crisis. The period of the end of 2008 is defined by strong decrease of
transportation volume and operation performance of ZSSK CARGO, mainly in transportation of collective and heavy
substrates. One of the main reasons of transportation decrease has been the reduction of industrial production of
crucial companies influenced by stated economic and financial crisis.
The steps destined to legislative changes in the scope of track access charges were not realized neither in 2008 nor
systemic steps were created from side of national government that should have led to harmonization of conditions
between road and rail freight transport in line with European legislative.
Without application of state systemic implementation in scope of track access charges for purpose to achieve at least
the level of surrounding states, hereafter remains high risk scope of securing of competitiveness. From that point of
view domestic transport and transit are the highest risk transport modes.
SELECTED ECONOMIC INDICATORS
in million SKK 2008 2007 2006 2005 2008 - 2007
Total Assets 23 712 22 752 23 058 22 535 960
Longterm Tangible Property 20 033 18 918 18 654 19 221 1 115
Equity 11 834 11 616 11 787 12 392 218
Loans (short-term + long term) 5 199 5 788 6 086 5 029 (589)
Revenues 13 887 14 480 16 507 16 095 (593)
Costs 13 991 14 579 17 668 16 245 (588)
Profit/(Lost) out of financial
operations
187 (154) 306 (278) 341
Economic Result 83 (252) (855) (428) 335
13

AUDITOR´S REPORT AND IFRS FINANCIAL STATEMENT
FOR THE YEAR FINISHED ON 31. 12. 2008

16
AUDITOR’S REPORT

INCOME STATEMENT
In million of Slovak crowns Note 31 December 2008 31 December 2007
Revenues
Transport and related revenues 3 12,228 12,847
Other revenues 4 1,659 1,633
13,887 14,480
Costs and expenses
Consumables and services 5 (8,296) (8,979)
Staff costs 6 (3,787) (3,836)
Depreciation, amortisation and impairment of property,
plant and equipment and intangible assets
12, 13 (1,981) (1,553)
Other operating income / (expenses), net 7 73 (211)
(13,991) (14,579)
Finance income (costs)
Finance income 8 270 130
Finance costs 9 (411) (427)
Penalty interest on unpaid State contribution 17 266 -
Gains on financial derivatives, net 10 62 143
187 (154)
Net profit / (loss) 83 (252)
The accounting policies and explanatory notes form an integral part of the financial statements.
Approved by Mgr. Matej Augustín and Ing. Anton Jaborek on behalf of the Board of Directors on 20 May 2009.
18

BALANCE SHEET
In million of Slovak crowns Note 31 December 2008 31 December 2007
ASSETS
Non-current assets
Property, plant and equipment 13 20,033 18,918
Intangible assets 12 536 403
Investments 46 -
20,615 19,321
Current assets
Inventories 14 640 571
Trade and other receivables 15 2,353 2,823
Cash and cash equivalents 16 104 37
3,097 3,431
TOTAL ASSETS 23,712 22,752
EQUITY AND LIABILITIES
Shareholder’s equity
Registered capital 17 12,100 12,100
Legal reserve fund 17 1,150 1,150
Other funds 17 36 (330)
Other reserves 17 - 231
Accumulated losses 17 (1,452) (1,535)
Total equity 11,834 11,616
Non-current liabilities
Interest-bearing loans and borrowings 18 2,328 1,681
Employee benefits 19 355 469
Provisions 20 1,275 1,534
Obligations under finance leases 22 1,701 359
Other non-current liabilities 6 7
5,665 4,050
Current liabilities
Interest-bearing loans and borrowings 18 2,871 4,107
Employee benefits 19 18 16
Provisions 20 93 45
Trade and other payables 21 3,028 2,829
Obligations under finance leases 22 203 89
6,213 7,086
Total liabilities 11,878 11,136
TOTAL EQUITY AND LIABILITIES 23,712 22,752
The accounting policies and explanatory notes form an integral part of the financial statements.
Approved by Mgr. Matej Augustín and Ing. Anton Jaborek on behalf of the Board of Directors on 20 May 2009.
19

STATEMENT OF CHANGES OF EQUITY
In million of Slovak crowns
Registered
capital
Legal
reserve
fund
Other
funds
Other
reserves
Accumulated
losses Total
At 1 January 2007 12,100 1,150 (430) 250 (1,283) 11,787
Net losses on financial
derivatives
- - - (19) - (19)
State contribution - - 100 - - 100
Net loss - - - - (252) (252)
At 31 December 2007 12,100 1,150 (330) 231 (1,535) 11,616
Net losses on financial
derivatives
- - - (231) - (231)
State contribution (Note 17) - - 366 - - 366
Net profit - - - - 83 83
At 31 December 2008 12,100 1,150 36 - (1,452) 11,834
The accounting policies and explanatory notes form an integral part of the financial statements.
Approved by Mgr. Matej Augustín and Ing. Anton Jaborek on behalf of the Board of Directors on 20 May 2009.
20

CASH FLOW STATEMENT
In million of Slovak crowns Note 31 December 2008 31 December 2007
Operating activities
Net profit / (loss) 83 (252)
Adjustments to reconcile net profit / (loss) to net cash flows:
Non-cash items
Depreciation, amortisation and impairment of property,
plant and equipment and intangible assets
1,981 1,554
Unrealised foreign exchange differences (169) (123)
Gain on sale of property, plant and equipment (46) (53)
Interest expense 405 423
Interest income (2) (2)
Movements in provisions and employee benefits (340) 262
Working capital adjustments
(Increase) decrease in inventories (35) 1
(Increase) decrease in trade and other receivables (84) 83
Decrease in net receivables from derivatives 296 406
Increase in trade and other payables 207 230
Net cash flows from operating activities 2,296 2,529
Investing activities
Purchase of property, plant and equipment 12, 13 (1,671) (1,970)
Proceeds from sale of property, plant and equipment 47 28
Net cash flows used in investing activities (1,624) (1,942)
Financing activities
State contribution 17 366 100
Proceeds from loans and borrowings 33,385 28,307
Repayment of loans and borrowings (33,231) (29,084)
Interest paid (405) (418)
Interest received 2 2
Principal payments under finance lease obligations (151) (196)
Net cash flows used in financing activities (34) (1,289)
Net increase (decrease) in cash and cash equivalents 638 (702)
Cash and cash equivalents at 1 January 16 (1,023) (321)
Cash and cash equivalents at 31 December 16 (385) (1,023)
The accounting policies and explanatory notes form an integral part of the financial statements.
Approved by Mgr. Matej Augustín and Ing. Anton Jaborek on behalf of the Board of Directors on 20 May 2009.
21

1. CORPORATE INFORMATION
Železničná spoločnosť Cargo Slovakia, a.s. (“ZSSK CARGO” or “the Company”), a joint stock company registered in the
Slovak Republic, was founded on 1 January 2005 as one of two successor companies to Železničná spoločnosť, a.s.
(“ŽS”). ZSSK CARGO was incorporated with the Commercial Register of the District Court Bratislava I, Section Sa, Insert
No. 3496/B at the date of its establishment, IČO 35 914 921, DIČ 20 219 200 65.
The Slovak State is the sole shareholder of the Company through the Ministry of Transport, Post and Telecommunications
of the Slovak Republic (“MTPT”) with its registered office on Námestie slobody 6, 811 06 Bratislava. The
Company does not belong to any group for consolidation purposes. The Company is not an unlimited liability partner
in any other company.
The Company’s predecessor, ŽS, was founded on 1 January 2002 through the demerger of Železnice Slovenskej Republiky
(“ŽSR”) and assumed responsibility for the provision of freight and passenger rail transport and traffic services within
Slovakia, while ŽSR retained responsibility for the operation of the traffic routes. ŽS was dissolved without liquidation effective
31 December 2004 and replaced, following a second demerger, by two newly established successor companies:
Železničná spoločnosť Slovensko, a.s. (“ZSSK”) for passenger transportation and traffic services and ZSSK CARGO for
freight transportation and traffic services.
ZSSK CARGO’s main business is the provision of freight transportation and related services. Additionally, the Company
rents properties and provides repair and maintenance, cleaning and other support services to ZSSK. The Company is
organized and managed as a single business segment and is viewed as a single operating segment by the Board of
Directors for the purposes of resource allocation and assessing performance.
The registered office of the Company is Drieňová 24, 820 09 Bratislava, Slovakia.
These financial statements have been prepared as the Company’s annual financial statements in accordance with
Section 17 (6) of the Slovak Accounting Act No. 431/2002 Coll. as later amended and are placed at the Company’s
registered address and at the Commercial Register of the District Court Bratislava I, Záhradnícka 10, 812 44 Bratislava.
These financial statements were approved and authorized for issue by the Board of Directors on
20 May 2009.
The General Meeting held on 19 June 2008 approved the Company’s financial statements for the previous accounting
period.
2.1 BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting Standards and all
applicable standards that have been adopted by the European Union (“IFRS”). IFRS comprise standards and interpretations
approved by the International Accounting Standards Board (“IASB”) and the International Financial Reporting
Interpretations Committee (“IFRIC”).
At this time, due to the endorsement process of the European Union and the nature of the Company’s activities, there is
no difference between the IFRS policies applied by the Company and those adopted by the European Union.
The financial statements have been prepared on a historical cost basis, except for certain derivative financial instruments
that have been measured at fair value. The financial statements are presented in Slovak crowns and all values
are rounded to the nearest million of Slovak crowns except when otherwise indicated.
The financial statements were prepared using the going concern assumption that the Company will continue its operations
for the foreseeable future.
The Company’s financial year is the same as the calendar year.
22

2.2 CHANGES IN ACCOUNTING POLICIES
AND DISCLOSURES
The accounting policies adopted are consistent with those applied in the financial statements at 31 December 2007
except that the Company has adopted the following new and amended IFRS and IFRIC interpretations during the accounting
period:
– Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments:
Disclosures on reclassification of financial assets
– IFRIC 11, IFRS 2: Group and Treasury Share Transactions
The principal effects of these changes are as follows:
Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments:
Disclosures on reclassification of financial assets
The changes to IAS 39 permit an entity to reclassify non-derivative financial assets out of the ‘fair value through profit
or loss’ and ‘available-for-sale’ categories in limited circumstances. Such reclassifications trigger additional disclosure
requirements. The Company has not made any reclassification based on this amendment.
IFRIC 11 IFRS 2: Group and Treasury Share Transactions
This interpretation requires arrangements whereby an employee is granted rights to an entity‘s equity instruments to be
accounted for as an equity-settled scheme, even if the entity buys the instruments from another party, or the shareholders
provide the equity instruments needed. This interpretation had no impact on the financial position of the Company.
The Company has not early adopted any standards and interpretations where adoption is not mandatory at the balance
sheet date.
Issued but not yet effective International Financial Reporting Standards
At the date of authorization of these financial statements, the following Standards and Interpretations were in issue but
not yet effective:
– IFRS 1 First-time Adoption of International Financial Reporting Standards - Amendment relating to cost of an investment
on first-time adoption (effective for annual periods beginning on or after 1 January 2009)
– IFRS 2 Share-based Payment - Amendment relating to vesting conditions and cancellations (effective for annual
periods beginning on or after 1 January 2009)
– IFRS 3 Business Combinations - Comprehensive revision on applying the acquisition method (effective for annual
periods beginning on or after 1 July 2009, this revision has not yet been approved by the EU)
– IFRS 7 Financial Instruments: Disclosures - Amendment enhancing scope of disclosures about fair value and liquidity
risk (effective for annual periods beginning on or after 1 January 2009)
– IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2009)
– IAS 1 Presentation of Financial Statements - Comprehensive revision including requirement for a statement of
comprehensive income (effective for annual periods beginning on or after 1 January 2009)
– IAS 1 Presentation of Financial Statements - Amendments relating to disclosure of puttable instruments and obligations
arising on liquidation (effective for annual periods beginning on or after 1 January 2009)
– IAS 23 Borrowing Costs - Comprehensive revision to prohibit immediate expensing (effective for borrowing costs relating
to qualifying assets for which the commencement date for capitalization is on or after 1 January 2009)
– IAS 27 Consolidated and Separate Financial Statements - Consequential amendments arising from amendments
to IFRS 3 (effective for annual periods beginning on or after 1 July 2009, these amendments have not yet
been approved by the EU)
– IAS 27 Consolidated and Separate Financial Statements - Amendment relating to cost of an investment on firsttime
adoption (effective for annual periods beginning on or after 1 January 2009)
– IAS 28 Investments in Associates - Consequential amendments arising from amendments to IFRS 3 (effective for
annual periods beginning on or after 1 July 2009)
– IAS 31 Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS 3 (effective for
annual periods beginning on or after 1 July 2009)
– IAS 32 Financial Instruments: Presentation - Amendments relating to puttable instruments and obligations arising
on liquidation (effective for annual periods beginning on or after 1 January 2009)
23

– IAS 39 Financial Instruments: Recognition and Measurement - Amendments for eligible hedged items (effective for
annual periods beginning on or after 1 July 2009, these amendments have not yet been approved by the EU)
– IFRIC 12 Service Concession Arrangements (effective for annual periods beginning on or after 1 January 2008, this
interpretation has not yet been approved by the EU)
– IFRIC 13 Customer Loyalty Programmes (effective for annual periods beginning on or after 1 July 2008)
– IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective
for annual periods beginning on or after 1 January 2008, but not approved by EU until December 2008)
– IFRIC 15 Agreements for the Construction of Real Estates (effective for annual periods beginning on or after 1 January
2009, this interpretation has not yet been approved by the EU)
– IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective for annual periods beginning on or after 1 October
2008, this interpretation has not yet been approved by the EU)
– IFRIC 17 Distributions of Non-cash Assets to Owners (effective for annual periods beginning on or after 1 July 2009,
this interpretation has not yet been approved by the EU)
– IFRIC 18 Transfers of Assets from Customers (effective for annual periods beginning on or after 1 July 2009, this
interpretation has not yet been approved by the EU)
– Annual Improvements to IFRSs (issued in May 2008)
The principal effects of these changes are as follows:
IFRS 2 Share-based Payment - Amendment relating to vesting conditions and cancellations
This amendment to IFRS 2 – Share-based Payment clarifies the definition of vesting and non-vesting conditions, as well
as the accounting treatment of cancellations. Management expects that this amendment will have no material impact
on the Company‘s financial statements.
IFRS 7 Financial Instruments: Disclosures - Amendment enhancing scope of disclosures about fair value and
liquidity risk
This amendment establishes a three-level hierarchy for making fair value measurements: Level 1 - quoted prices, Level 2
- prices derived from market data, Level 3 - prices not based on market data, along with specific disclosure requirements
for each class of financial instruments according to the levels. Management expects that, among others, qualitative
disclosures on determining fair values and maturity analysis for derivative financial liabilities will be added.
IFRS 8 Operating Segments
This standard requires disclosure of information about the Company‘s operating segments and replaces the requirement
to determine primary (business) and secondary (geographical) reporting segments of the Company. Management expects
that there will be no change in the current disclosures, as the primary business segments determined for reporting
purposes will qualify as operating segments under the new Standard.
IAS 23 Borrowing Costs - Comprehensive revision to prohibit immediate expensing
The standard has been revised to require capitalization of borrowing costs when such costs relate to
a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its
intended use or sale. Management expects that the revision will have no material impact on the financial statements of
the Company.
IAS 32 Financial Instruments: Presentation - Amendments relating to puttable instruments and obligations arising
on liquidation
This revised standard requires some puttable financial instruments and some financial instruments that impose on the
entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be
classified as equity. The amendment will have no impact on the existing financial instruments of the Company.
IFRIC 12 Service Concession Arrangements
IFRIC 12 applies to service concession operators between public and private sector and explains how to account for the
obligations undertaken and rights received in service concession arrangements. The Company is not an operator and
hence this interpretation will have no impact on the Company.
24

IFRIC 13 Customer Loyalty Programmes
IFRIC 13 requires customer loyalty award credits to be accounted for as a separate component of the sales transaction in
which they are granted and therefore part of the fair value of the consideration received is allocated to the award credits
and deferred over the period that the award credits are fulfilled. The Company expects that this interpretation will have
no material impact on the Company’s financial statements.
IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
IFRIC 14 provides guidance on how to assess the limit on the amount of surplus in a defined benefit scheme that can be
recognized as an asset under IAS 19 Employee Benefits. This interpretation will have no impact on the financial position
or performance of the Company as currently it has no funded defined benefit schemes.
IFRIC 15 Agreements for the Construction of Real Estates
IFRIC 15 standardizes accounting practice across jurisdictions for the recognition of revenue by real estate developers
for sales of units, such as apartments or houses, ‘off plan’ – that is, before construction is complete. This interpretation
will have no impact on the financial position or performance of the Company.
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 17 provides guidance on how an entity should measure distributions of assets other than cash when it pays dividends
to its owners. This interpretation will have no impact on the financial position or performance of the Company.
IFRIC 18 Transfers of Assets from Customers
IFRIC 18 clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of
property, plant, and equipment that the entity must then use either to connect the customer to a network or to provide
the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water). This
interpretation will have no impact on the financial position or performance of the Company.
Annual Improvements to IFRSs (issued in May 2008)
In May 2008 the IASB issued its first collection of amendments to its standards, primarily with a view to removing inconsistencies
and clarifying wording. The following standards were amended:
– IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (effective for annual periods beginning on or
after 1 July 2009)
– IAS 1 Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009)
– IAS 16 Property, Plant and Equipment (effective for annual periods beginning on or after 1 January 2009)
– IAS 19 Employee Benefits (effective for annual periods beginning on or after 1 January 2009)
– IAS 20 Government Grants and Disclosure of Government Assistance (effective for annual periods beginning on or
after 1 January 2009)
– IAS 23 Borrowing Costs (effective for annual periods beginning on or after 1 January 2009)
– IAS 27 Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 January
2009)
– IAS 28 Investments in Associates (effective for annual periods beginning on or after 1 January 2009)
– IAS 29 Financial Reporting in Hyperinflationary Economies (effective for annual periods beginning on or after
1 January 2009)
– IAS 31 Interests in Joint Ventures (effective for annual periods beginning on or after 1 January 2009)
– IAS 36 Impairment of Assets (effective for annual periods beginning on or after 1 January 2009)
– IAS 38 Intangible Assets (effective for annual periods beginning on or after 1 January 2009)
– IAS 39 Financial Instruments: Recognition and Measurement (effective for annual periods beginning on or after
1 January 2009)
– IAS 40 Investment Property (effective for annual periods beginning on or after 1 January 2009)
– IAS 41 Agriculture (effective for annual periods beginning on or after 1 January 2009)
It is anticipated that these changes will have no material effect on the Company’s financial statements.
25

2.3 SIGNIFICANT ACCOUNTING JUDGEMENTS
AND ESTIMATES
Critical judgments in applying the accounting policies
In the process of applying the accounting policies, management has made certain judgments that have a significant
effect on the amounts recognized in the financial statements (apart from those involving estimates, which are dealt
with below). These are detailed in the respective notes, however, the most significant judgments relate to the following:
Environmental matters
Existing regulations, especially environmental legislation, do not specify the extent of remediation work required or the
technology to be applied in resolving environmental damage. Management uses the work of specialists, its previous
experience and its own interpretations of the relevant regulations in determining the need for environmental provisions.
Legal claims
The Company is party to a number of legal proceedings arising in the ordinary course of business. Management uses the
work of specialists and its previous experience of similar actions in making an assessment of the most likely outcome of
these actions and of the need for legal provisions.
Lease arrangements
The Company has entered into a number of lease arrangements by which it gains the right to use specific assets, primarily
railway wagons, for extended periods of time. The Company has determined that under these arrangements it takes
on substantially all the risks and rewards of ownership and so accounts for these arrangements as finance leases.
The Company has entered into other lease arrangements by which it gains the right to use railway wagons that are owned
by other transport networks for short-term periods. The Company has determined that under these arrangements it does
not take on the significant risks and rewards of ownership and so accounts for these arrangements as operating leases
(these transactions are disclosed in the financial statements as “wagon rentals”).
Similarly, the Company has entered into lease arrangements by which it leases railway wagons to other transport networks
and third parties. The Company has determined that under these arrangements it retains the significant risks and
rewards of ownership and so accounts for these arrangements as operating leases (these transactions are disclosed in
the financial statements as “wagon rentals”).
Sources of estimate uncertainty
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that
affect the amounts reported in the financial statements and the Notes thereto. Although these estimates are based
on management’s best knowledge of current events, actual results may defer from these estimates. These issues are
detailed in the respective notes, however, the most significant estimates comprise the following:
Quantification and timing of environmental liabilities
Management makes estimations as to the future cash outflows associated with environmental liabilities using comparative
prices, analogies to previous similar work and other assumptions. Furthermore, the timing of these cash outflows
reflects management’s current assessment of priorities, technical capabilities and the urgency of such obligations. The
estimates made and the assumptions upon which these estimates are made are reviewed at each balance sheet date.
Impairment of property, plant and equipment
The Company determines at each reporting date whether there is an indication that items of property, plant and equipment
are impaired. Where such indications exist, the Company makes an estimate as to the recoverable amount of
the assets concerned or of the cash-generating unit to which the assets are allocated. In determining value in use the
Company is required to make an estimate of expected future cash flows and to choose a suitable discount rate in order
to calculate the present value of those cash flows, while net selling price is determined by reference to market developments
in Slovakia and other central European countries.
26

Actuarial estimates applied for calculation of retirement benefit obligations
The cost of defined benefit plans is determined using actuarial valuations. The actuarial valuation involves making assumptions
about discount rates, future salary increases and mortality or fluctuation rates. Due to the long-term nature
of these plans, such estimates are subject to significant uncertainty.
Depreciable lives and residual values of property, plant and equipment
Management assigns depreciable lives and residual values to items of property, plant and equipment by reference to
the organisation’s latest strategic objectives. Management determines at each reporting date whether the assumptions
applied in making such assignations continue to be appropriate.
Fair values of derivative financial instruments
The fair valuation of derivative financial instruments reflects management’s estimates as to future trends in the key drivers
of such values, including (but not limited to) yield curves, foreign exchange movements and risk-free interest rates.
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Foreign currency translation
The Company’s functional currency has been determined to be the Slovak Crown (SKK), that being the currency of the
primary economic environment in which the Company operates (but refer to Note 26 for comments on Slovakia’s adoption
of the Euro on 1 January 2009).
Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of
exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-monetary items that
are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the date of
the initial transaction.
Property, plant and equipment
Property, plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation
and accumulated impairment in value. Such cost includes the cost of replacing part of such property, plant and
equipment when that cost is incurred, if the recognition criteria are met.
Maintenance, repairs and minor renewals are charged to the income statement as incurred.
Depreciation is calculated on a straight-line basis over the useful life of the assets (8-50 years for buildings, 3-40 years
for machines, equipment and other assets).
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the
year the asset is derecognised.
When property, plant and equipment meet the criteria to be classified as held for sale, they are stated at whichever is the
lower of their carrying amount and fair value less costs to sell and reclassified from non-current to current assets. The
Company measures an item of property, plant and equipment that ceases to be classified as held for sale at the lower of:
a) its carrying amount before the asset was classified as held for sale, adjusted for any depreciation and amortisation
that would have been recognised had the asset not been classified as held for sale, and
b) its recoverable amount at the date of the subsequent decision not to sell.
The residual values, useful lives and depreciation methods of property, plant and equipment are reviewed and adjusted,
if appropriate, at each financial year end.
27

Intangible assets
Intangible assets are carried at cost, less accumulated amortisation and any accumulated impairment losses.
Amortisation is calculated on a straight-line basis over the useful life of the assets (3-8 years).
Intangible assets are derecognised upon disposal or when no future economic benefits are expected from their use or
disposal. Any gain or loss arising on derecognition of an asset (calculated as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
The residual values, useful lives and amortisation methods of intangible assets are reviewed and adjusted, if appropriate,
at each financial year end.
Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is
the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for
an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other
assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
Impairment losses are recognised in the income statement within depreciation, amortisation and impairment of property,
plant and equipment and intangible assets.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the Company makes an estimate of recoverable
amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset
in prior years.
Such reversal is recognised in the income statement. After such a reversal the depreciation charge is adjusted in future
periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining
useful life.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost includes the purchase price of inventory and
expenses related to the acquisition of inventory (including transportation costs, insurance and customs duties) and is
accounted for using the weighted average method.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary
to make the sale.
Allowances for old, obsolete and slow-moving items are booked to reduce the carrying value of these items to net realisable
value.
Financial assets
Initial recognition
Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets
at initial recognition.
28

Financial assets are recognized initially at fair value.
The Company’s financial assets comprise cash at bank and on hand and cash equivalents, trade and other receivables
and derivative financial instruments.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated
upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they
are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered
into by the Group that do not meet the hedge accounting criteria as defined by IAS 39. Derivates are also classified as
held for trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit
and loss are carried in the balance sheet at fair value with gains or losses recognized in the income statement.
The Company has not designated any financial assets at fair value through profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial measurement loans and receivables are subsequently carried at amortized cost using the effective
interest rate method less any allowance for impairment. Gains and losses are recognized in the income statement
when the loans and receivables are derecognized or impaired, as well as through the amortization process.
Financial liabilities
Initial recognition
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans
and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company
determines the classification of its financial liabilities at initial recognition.
Financial liabilities are recognized initially at fair value and in the case of loans and borrowings, directly attributable
transaction costs.
The Group’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings and derivative
financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This
category includes derivative financial instruments entered into by the Company that do not meet the hedge accounting
criteria as defined by IAS 39. Gains or losses on liabilities held for trading are recognised in the income statement.
The Company has not designated any financial liabilities at fair value through profit or loss.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest rate method.
Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the
amortisation process.
29

Trade and other payables
Trade and other payables are recognized and carried at amortized cost, being original invoice amount. The Company
accrues for those expenses that have not been invoiced at the balance sheet date. Penalty interest charged on overdue
payables is recorded within trade payables.
Fair value of financial instruments
The fair value of financial instruments that are actively traded in organised financial markets is determined by reference
to quoted market bid prices at the close of business on the balance sheet date. For financial instruments where there is
no active market, fair value is determined using valuation techniques. Such techniques may include using recent arm’s
length market transactions; reference to the current fair vale of another instrument that is substantially the same; discounted
cash flow analysis or other valuation models.
Amortised cost of financial instruments
Amortised cost is computed using the effective interest method less any allowance for impairment and principal repayment
or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction
costs and fees that are an integral part of the effective rate.
Impairment of financial assets
The Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or a
group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and
only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial
recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows
of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in
interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where
observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults.
Classification and derecognition of financial instruments
Financial assets and financial liabilities carried on the balance sheet include cash and cash equivalents, trade and other
accounts receivable and payable and loans and borrowings. The accounting policies on recognition and measurement
of these items are disclosed in the respective accounting policies found in this Note.
Financial instruments (including compound financial instruments) are classified as assets, liabilities or equity in accordance
with the substance of the contractual agreement. Interest, dividends, gains, and losses relating to a financial
instrument classified as a liability, are reported as expense or income as incurred. Distributions to holders of financial
instruments classified as equity are charged directly to equity. In case of compound financial instruments the liability
component is valued first, with the equity component being determined as a residual value. Financial instruments are
offset when the Company has a legally enforceable right to offset and intends to settle either on a net basis or to realize
the asset and settle the liability simultaneously.
The derecognition of a financial asset takes place when the Company no longer controls the contractual rights that
comprise the financial asset, which is normally the case when the instrument is sold, or all the cash flows attributable to
the instrument are passed through to an independent third party. A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or expires.
Derivative financial instruments and hedging activities
The Company uses derivative financial instruments such as forwards, options and swaps to hedge its risks related to
foreign currency fluctuations. Such derivative financial instruments are initially recognized at fair value on the date on
which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets
when the fair value is positive and as liabilities when the fair value is negative.
30

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts
with similar maturity profiles. The fair value of options and swap contracts is determined by reference to generally recognised
measurement techniques which incorporate available market data.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging exposure to variability in
cash flows attributable to a highly probable forecast transaction.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to
which the Company wishes to apply hedge accounting, the risk management objective and the strategy for undertaking
the hedge.
The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the
risk being hedged and how the Company will assess the hedging instrument’s effectiveness in offsetting the exposure
to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to
be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to
determine that they have been highly effective throughout the financial reporting periods for which they were designated.
When cash flow hedges meet the strict criteria for hedge accounting, the effective portion of the gain or loss on the
hedging instrument is recognized directly in equity, while the ineffective portion is recognized in the income statement.
Amounts taken to equity are recycled to the income statement when the hedged transaction affects profit or loss, that
being when a forecast sale occurs. If the hedging instrument expires or is sold, terminated or exercised without replacement
or rollover, or if its designation as a hedge is revoked, the amounts previously recognized in equity are recycled to
the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three
months or less and that are subject to an insignificant risk of change in value.
For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
Employee benefits
The Company makes contributions to the State health, retirement benefit and unemployment schemes at the statutory
rates in force during the year, based on gross salary payments. The cost of these payments is charged to the income
statement in the same period as the related salary cost. The Company has no obligation to contribute to these schemes
beyond the statutory rates in force.
Also, the Company operates unfunded long-term defined benefit programmes comprising lump-sum post-employment,
jubilee and disability benefits. The cost of providing these employee benefits is assessed separately for each programme
using the projected unit credit method, by which the costs incurred in providing such benefits are charged to the income
statement so as to spread the cost over the service lives of the Company’s employees. The benefit obligation is measured
as the present value of the estimated future cash outflows.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged
or credited to the income statement when incurred. Amendments to these long-term defined benefit programmes are
charged or credited to the income statement over the average remaining service lives of the related employees.
Provisions
A provision is recognized when the Company has a present obligation (legal or constructive) as a result of a past event
and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at
each balance sheet date and adjusted to reflect the current best estimate. The amount of the provision is the present
value of the risk adjusted expenditures expected to be required to settle the obligation, determined using the estimated
risk free interest rate as discount rate. Where discounting is used, the carrying amount of provision increases in each
period to reflect the unwinding of the discount by the passage of time. This increase is recognized as an interest expense.
31

Environmental matters
Liabilities for environmental costs are recognized when environmental clean-ups are probable and the associated costs
can be reliably estimated. Generally, the timing of these provisions coincides with the commitment to a formal plan of
action or, if earlier, on divestment or on closure of inactive sites. The amount recognized is the best estimate of the
expenditure required.
Legal claims
Liabilities arising from litigation and disputes are recognized when an outflow of resources embodying economic benefits
is probable and when such outflows can be reliably measured.
Termination payments
The employees of the Company are eligible, immediately upon termination due organizational changes, for redundancy
payment pursuant to the Slovak law and the terms of the Collective Agreement between the Company and its employees.
The amount of such a liability is recorded as a provision in the balance sheet when the workforce reduction program is
defined, announced and the conditions for its implementation are met.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
As Lessee
Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present
value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of
the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the
lease term.
As Lessor
Leases where the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified
as operating leases. Rental income is recognised on a straight-line basis over the lease term.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts,
rebates and sales taxes.
Revenue from transport and related services and from repair and maintenance and other such services is recognized in
the period in which the services are provided, net of discounts and deductions.
Borrowing costs
Borrowing costs are recognised as an expense when incurred.
32

Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted at the balance sheet date.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits
and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax
asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised
to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date.
Deferred income tax relating to items recognised directly in equity is recognised directly in equity and not in the income
statement.
33

3. TRANSPORT AND RELATED REVENUES
In million of Slovak crowns 31 December 2008 31 December 2007
Inland transport:
Transport of goods 1,371 1,571
Wagon deposition 514 591
Haulage fees 32 40
1,917 2,202
International transport:
Import 4,553 4 464
Export 3,853 4 175
Transit 1,216 1 494
9,622 10,133
Other transport related revenues:
Usage of wagons under RIV, RUW and GCU regimes 148 74
Wagon rentals 299 237
Border services 130 142
Other 112 59
689 512
12,228 12,847
Included in transport and related revenues are amounts invoiced to Express Slovakia of SKK 2,357 million (2007: SKK
2,636 million) and to US Steel Košice of SKK 2,183 million (2007: SKK 2,543 million).
4. OTHER REVENUES
In million of Slovak crowns 31 December 2008 31 December 2007
Repairs and maintenance 1,062 1,086
Operational performance 266 288
Property rentals 89 77
Other 242 182
1,659 1,633
Included in other revenues are amounts charged to ZSSK of SKK 1,360 million (2007: SKK 1,555 million) for repair
and maintenance, operational performance, property rental and other support services.
34

5. CONSUMABLES AND SERVICES
In million of Slovak crowns 31 December 2008 31 December 2007
Network fees (4,080) (4,809)
Traction electricity (1,127) (1,054)
Traction diesel oil (569) (577)
Other energy costs (246) (209)
Materials (685) (722)
Wagon rentals (513) (500)
IT services and telecommunication charges (277) (317)
Border services (134) (167)
Rentals (113) (110)
Third party loading services (87) (64)
Security services (66) (67)
Repair and maintenance (63) (54)
Advisory and consultancy fees (61) (36)
Travelling and entertainment (55) (55)
Cleaning (45) (47)
Training (19) (26)
Medical care (13) (25)
Other (143) (140)
(8,296) (8,979)
Included in consumables and services are amounts charged by ŽSR of SKK 5,426 million (2007: SKK 6,235 million),
primarily relating to the usage of ŽSR’s network (the Company has a one year contract with ŽSR which specifies
planned kilometres and charge rates for different types of transport) and also to the purchase of traction energy (refer
to Note 22).
6. STAFF COSTS
In million of Slovak crowns 31 December 2008 31 December 2007
Wages and salaries (2,709) (2,632)
Social security costs (1,156) (1,103)
Employee benefits (Note 19) 97 (139)
Termination payments (Note 20) (19) 38
(3,787) (3,836)
Average employee numbers were 10,499 (2007: 10,969), of whom eight were members of management (as members
of the Board of Directors or directors of individual departments).
The average salary amounted to SKK 22,337 (2007: SKK 20,638).
35

7. OTHER OPERATING INCOME / (EXPENSES), NET
In million of Slovak crowns 31 December 2008 31 December 2007
Provision for environmental matters (Note 20) 82 (127)
Gains on sale of property, plant and equipment 46 53
Provision for legal cases (Note 20) 31 (23)
Allowance for doubtful debts (48) (9)
Insurance of assets (37) (26)
Other (1) (79)
73 (211)
8. FINANCE INCOME
In million of Slovak crowns 31 December 2008 31 December 2007
Foreign exchange gains, net 268 128
Interest revenue 2 2
270 130
Foreign exchange gains, net include unrealised foreign exchange gains and losses of SKK 116 million and SKK 29 million,
respectively, resulting from the recalculation of assets and liabilities denominated in EUR at 31 December 2008
(refer to comment on Euro conversion (note 26).
9. FINANCE COSTS
In million of Slovak crowns 31 December 2008 31 December 2007
Interest expense (405) (423)
Other (6) (4)
(411) (427)
10. GAINS ON FINANCIAL DERIVATIVES, NET
In million of Slovak crowns 31 December 2008 31 December 2007
Unrealised gains (losses) on open financial derivatives 6 (9)
Realised gains on closed financial derivatives 56 152
62 143
The Company enters into financial derivative contracts to hedge against the foreign exchange risk on forecast sales.
Where the contracts meet the strict criteria for hedge accounting set out in IAS 39, the changes in intrinsic values are
recognised within equity. Where the strict criteria are not met, gains and losses are recognised in the income statement,
with gains of SKK 6 million being recognised in 2008 (losses of SKK 9 million in 2007).
Realised gains on closed financial derivatives of SKK 56 million and SKK 152 million represent the change in fair values
of trading derivatives closed in 2008 and 2007, respectively.
36

In addition, included in transport and related revenues is an amount of SKK 393 million partly recycled from equity
relating to expired financial derivative contracts recognised within equity at 31 December 2007 (SKK 139 million in
prior period).
11. INCOME TAX
A reconciliation between the reported income tax expense and the theoretical amount that would arise using the
standard rates is as follows:
In million of Slovak crowns 31 December 2008 31 December 2007
Profit / (loss) before tax 83 (252)
Tax (charge) / credit at statutory tax rate of 19% 16 (48)
Effect of tax loss not assessable for tax release 277 -
Change in valuation allowance (349) 61
Non-deductible expenses 56 13
Total income tax - -
Deferred tax assets and liabilities at 31 December related to the following:
In million of Slovak crowns 31 December 2008 31 December 2007
Deferred tax assets
Tax loss carryforwards 981 995
Provision for environmental matters 224 257
Impairment of property, plant and equipment 221 167
Provisions for employee benefits 71 92
Allowance for trade and other receivables 34 31
Other 36 37
1,567 1,579
Deferred tax liabilities
Accelerated depreciation for tax purposes (1,061) (667)
Revaluation of financial derivatives to fair value - (57)
(1,061) (724)
Valuation allowance (506) (855)
Net deferred tax assets (liabilities) - -
A valuation allowance of SKK 506 million (SKK 855 million at 31 December 2007) has been recognised for temporary
deductible differences due to uncertainty as to the realization of tax benefits in future years. The Company will continue
to assess the valuation allowance and, to the extent it is determined that such allowance is no longer required, the tax
benefits of the remaining deferred tax assets will be recognised at that time.
37

The Company’s income tax loss carryforwards arose in the fiscal years 2004-2008 and amount to SKK 5,163 million,
of which SKK 1,312 million arose in the predecessor company, ŽS. Under Slovak tax legislation a company is entitled to
carry forward taxable losses incurred over the previous five fiscal years for offset against future taxable profits. The carry
forwards expire as follows:
In million of Slovak crowns 31 December 2008 31 December 2007
2008 - 1,459
2009 1,312 1,312
2010 1,114 1,114
2011 273 273
2012 1,081 1,081
2013 1,383 -
Total tax loss carry forwards 5,163 5,239
12. INTANGIBLE ASSETS
In million of Slovak crowns
Development
cost Software
Assets under
construction
Total
Acquisition cost
At 1 January 2008 - 392 49 441
Additions - - 182 182
Disposals - - (1) (1)
Transfers - 58 (58) -
At 31 December 2008 - 450 172 622
Accumulated amortisation
At 1 January 2008 - (37) (1) (38)
Charge for the period - (49) - (49)
Impairment loss - - 1 1
At 31 December 2008 - (86) - (86)
Net book value at 31 December 2008 - 364 172 536
In million of Slovak crowns
Development
cost Software
Assets under
construction
Total
Acquisition cost
At 1 January 2007 9 106 184 299
Additions - - 151 151
Disposals (9) - - (9)
Transfers - 286 (286) -
At 31 December 2007 - 392 49 441
Accumulated amortisation
At 1 January 2007 (8) (17) (25)
Charge for the period - (20) - (20)
Disposals 8 - - 8
Impairment loss - - (1) (1)
At 31 December 2007 - (37) (1) (38)
Net book value at 31 December 2007 - 355 48 403
38

13. PROPERTY, PLANT AND EQUIPMENT
In million of Slovak crowns
Land and
buildings
Machines,
equipment,
other assets
Assets under
construction
Total
Acquisition cost
At 1 January 2008 3,824 19,676 284 23,784
Additions - - 3,095 3,095
Disposals (22) (296) (6) (324)
Transfers 32 2,903 (2,935) -
At 31 December 2008 3.834 22.283 438 26.555
Accumulated depreciation
At 1 January 2008 (831) (4,014) (21) (4,866)
Charge for the period (67) (1,395) - (1,462)
Disposals 18 218 5 241
Impairment loss (14) (421) - (435)
At 31 December 2008 (894) (5,612) (16) (6,522)
Net book value at 31 December 2008 2,939 16,671 422 20,033
In million of Slovak crowns
Land and
buildings
Machines,
equipment,
other assets
Assets under
construction
Total
Acquisition cost
At 1 January 2007 3,789 18,109 88 21,986
Additions - - 1,774 1,774
Disposals (4) 28 - 24
Transfers 39 1,539 (1,578) -
At 31 December 2007 3,824 19,676 284 23,784
Accumulated depreciation
At 1 January 2007 (643) (2,667) (22) (3,332)
Charge for the period (78) (1,208) - (1,286)
Disposals 11 (60) 1 (48)
Impairment loss (121) (79) - (200)
At 31 December 2007 (831) (4,014) (21) (4,866)
Net book value at 31 December 2007 2,993 15,662 263 18,918
Included within land and buildings are halls used in the repair of locomotives and wagons, depots, stores, workshops
and administrative buildings; and included within machines, equipment and other assets are locomotives and wagons,
cranes, trucks, cars and other vehicles, tools and equipment used in repair and maintenance, boilers and other heating
equipment and office equipment, including computers, printers and other IT equipment.
At 31 December 2008, after concluding that the consequences of the global credit crisis provided both external and
internal indicators that the Company’s property, plant and equipment might be impaired, management performed a
comprehensive impairment test. This test comprised a review of the condition and usage of all property, plant and equipment,
and resulted in the recognition of an additional impairment loss of SKK 435 million, primarily for wagons. The
assets’ recoverable amounts were determined by reference to fair value less costs to sell on an asset by asset basis, with
value in use being determined to be zero or close to zero.
39

The loss, reported net of the reversal of an impairment loss of SKK 34 million recognised in prior years in respect of
specific wagons, is recognised in the income statement within depreciation, amortisation and impairment of property,
plant and equipment and intangible assets.
Within property, plant and equipment are wagons acquired by means of finance lease with an aggregate value of SKK
2,490 million (SKK 964 million at 31 December 2007).
Property, plant and equipment in the ownership of the Company with a value of SKK 542 million (SKK 542 million at 31
December 2007) is registered by the State as protected for cultural purposes.
Property, plant and equipment are insured against (i) natural disaster, (ii) theft and vandalism and (iii) machinery (all
risk cover). Risks (i) and (ii) are covered to a maximum of SKK 10,000 million (SKK 6,200 million in 2007) and (iii) to a
maximum of SKK 16,900 million (SKK 4,000 million in 2007). In addition, motor vehicles have third party and accident
insurance cover, the cost of which is immaterial.
14. INVENTORIES
In million of Slovak crowns 31 December 2008 31 December 2007
Electrical materials 274 202
Machine and metal-working materials 344 343
Chemicals and rubber 49 88
Diesel fuel 30 30
Protective tools 16 17
Other 19 17
Allowance for slow moving and obsolete inventories (92) (126)
640 571
15. TRADE AND OTHER RECEIVABLES
In million of Slovak crowns 31 December 2008 31 December 2007
Domestic trade receivables 1,510 1,680
Foreign trade receivables 609 777
VAT receivables 229 142
Other receivables 178 74
Financial derivatives (Note 25) 6 311
Allowance for impaired trade and other receivables (179) (161)
2,353 2,823
At 31 December 2008 overdue receivables amounted to SKK 480 million (SKK 369 million at 31 December 2007).
Trade receivables are non-interest bearing and are generally on 30-90 days’ terms.
For details of related party receivables, refer to Note 23.
40

16. CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash equivalents comprise the following:
In million of Slovak crowns 31 December 2008 31 December 2007
Cash at banks and on hand and cash equivalents 104 37
Bank overdrafts (489) (1,060)
(385) (1,023)
Cash at banks earns interest at floating rates based on daily bank deposit rates.
Bank overdrafts as of 31 December are as follows:
31 December 2008 31 December 2007
In million of Slovak crowns
Overdraft limit Drawn down Overdraft limit Drawn down
Všeobecná úverová banka, a.s. 500 - 400 -
Tatra banka, a.s. 900 34 900 77
UniCredit Bank Slovakia a.s. 530 115 530 429
Citibank (Slovakia) a.s. 400 114 400 128
Slovenská sporiteľňa, a.s. 600 57 400 101
Dexia banka Slovensko a.s. 400 169 400 325
Calyon S.A., pobočka zahr. banky 100 - 100 -
3,430 489 3,130 1,060
17. SHAREHOLDER’S EQUITY
Registered capital
Registered capital represents the State’s investment in the Company, held through MTPT, made through the contribution
of certain assets and liabilities of the Company’s predecessor, ŽS, and comprises 121 registered ordinary shares, each
with a face value of SKK 100 million. All of these shares are issued and fully paid.
Legal reserve fund
On the Company’s incorporation, in accordance with Slovak legislation, a legal reserve fund was established at 10% of
the Company’s registered capital, again through an in-kind contribution. Slovak legislation requires that the legal reserve
fund be increased by amounts at least equal to 10% of annual net profit up to an amount equal to 20% of the Company’s
registered capital. Under the Company’s Articles of Association, the legal reserve fund is not available for distribution and
can only be used to cover losses or increase registered capital.
Other funds
Other funds represent the difference between the value of the assets and liabilities contributed by the State on the
Company’s incorporation and through an additional capital contribution made on 2 November 2005 and that of the
Company’s registered capital and legal reserve fund, adjusted by an amount of SKK 127 million to restate an error in the
initial valuation of the assets contributed by the State identified in 2006.
During 2008 the Company received an additional capital contribution of SKK 366 million from MTPT, this being a previously
unpaid part of the initial equity contribution made on the Company’s incorporation. In addition, the Company
was awarded penalty interest of SKK 266 million to compensate for the late payment of this contribution, and this is
disclosed in the income statement within finance income.
Other reserves
Other reserves represent cash flow hedges which meet the criteria for hedge accounting (see Note 25).
41

Distribution of loss from previous accounting period
The distribution of the 2007 statutory loss was approved by the Company’s General Meeting on 19 June 2008 and was
booked to accumulated losses.
18. INTEREST-BEARING LOANS AND BORROWINGS
In million of Slovak crowns Maturity date 31 December 2008 31 December 2007
Long-term loans
Secured
Express Slovakia 21 February 2012 714 885
Slovenská sporiteľňa, a.s. (EUR) 30 September 2010 211 -
Všeobecná úverová banka, a.s. 27 November 2010 500 -
Unsecured
ČSOB,a.s. (EUR) 30 September 2012 525 732
Dexia banka Slovensko a.s. (EUR) 31 May 2010 167 311
Dexia banka Slovensko a.s. 31 December 2015 692 -
Slovenská sporiteľňa, a.s. (EUR) 31 May 2010 167 311
Všeobecná úverová banka, a.s. (EUR) 05 December 2008 - 306
Express Interfracht 01 January 2009 - 122
Calyon (EUR) 31 December 2008 - 65
Total 2,976 2,732
Short-term portion of loans (648) (1,051)
Long-term portion of loans 2,328 1,681
Short-term loans
Secured
Citibank (Slovakia) a.s. (EUR) 24 July 2009 238 -
Citibank (Slovakia) a.s. (EUR) 25 July 2008 - 265
Tatra banka, a.s. (EUR) 30 April 2009 573 -
Tatra banka, a.s. 30 April 2009 200 750
UniCredit Bank Slovakia a.s. (EUR) 30 September 2009 395 -
UniCredit Bank Slovakia a.s. 30 September 2009 - 460
Calyon S.A., pobočka zahr. banky (EUR) 30 November 2009 328 434
Slovenská sporiteľňa, a.s. (EUR) 30 September 2008 - 87
Short-term loans 1,734 1,996
Short-term portion of loans (see above) 648 1,051
Overdrafts (Note 16) 489 1,060
Total 2,871 4,107
All loans are denominated in Slovak crowns, except as otherwise noted in the table above.
All loans described as secured in the table above, other than the Express Slovakia loan, are secured by promissory notes
with a value of SKK 2,188 million (SKK 2,134 million at 31 December 2007), and with a nominal value of SKK 3,770
million (SKK 2,785 million as of 31 December 2007). The Express Slovakia loan is secured on various wagons, each
assigned a value of SKK 2,380 thousand in the respective guarantee agreement.
42

Under the terms of certain loan agreements the Company is required to meet a number of financial and non-financial
covenants, which include the maintenance of an interest coverage ratio in excess of 1.2 and a debt service ratio of less
than 75%. All loan covenants are based on the Company’s management accounts (as the Company no longer prepares
Slovak GAAP financial statements). The Company was in compliance with these covenants at 31 December 2008 and
31 December 2007.
The fair value of interest-bearing loans and borrowings amounts to SKK 2,979 million (SKK 4,260 million at 31 December
2007).
All interest-bearing loans and borrowings bear interest at floating rates which range from 2.68% to 6.225% (3.97% to
5.84% in 2007), except for the loan provided by Express Slovakia which bears interest at fixed rate of 12.75%.
19. EMPLOYEE BENEFITS
In million of Slovak crowns
Retirement
benefits
Jubilee
payments
Disability
benefits
Total
At 1 January 2008 355 103 27 485
Current service cost 2 6 - 8
Interest cost 15 4 1 20
Actuarial gains / (losses) on obligation (105) (17) (3) (124)
Utilization (4) (8) (4) (16)
Past service cost - - - -
At 31 December 2008 263 89 21 373
Current 31 December 2008 3 11 4 18
Non-current 31 December 2008 260 78 17 355
At 31 December 2008 263 89 21 373
In million of Slovak crowns
Retirement
benefits
Jubilee
payments
Disability
benefits
Total
At 1 January 2007 276 33 37 346
Current service cost 25 5 - 30
Interest cost 12 1 2 15
Actuarial gains / (losses) on obligation - 6 (8) (2)
Utilization (3) (7) (4) (14)
Past service cost 45 65 - 110
At 31 December 2007 355 103 27 485
Current 31 December 2007 4 8 4 16
Non-current 31 December 2007 351 95 23 469
At 31 December 2007 355 103 27 485
The principal actuarial assumptions used were as follows:
2008 2007
Discount rate (% p.a.) 4.2 4.2
Future salary increases (%) 3 5 – 6.4
Mortality probability (male) (%) 0.03 – 3.14 0.03 – 3.14
Mortality probability (female) (%) 0.02 – 1.33 0.02 – 1.33
43

20. PROVISIONS
In million of Slovak crowns Environmental Legal Terminations Total
At 1 January 2008 1,351 183 45 1,579
Additions - 13 20 33
Reversals (82) (44) - (126)
Utilization (90) (5) (23) (118)
At 31 December 2008 1,179 147 42 1,368
Current 31 December 2008 51 - 42 93
Non-current 31 December 2008 1,128 147 - 1,275
At 31 December 2008 1,179 147 42 1,368
In million of Slovak crowns Environmental Legal Terminations Total
At 1 January 2007 1,231 160 83 1,474
Additions 126 30 45 201
Reversals - - (40) (40)
Utilization (6) (7) (43) (56)
At 31 December 2007 1,351 183 45 1,579
Current 31 December 2007 - - 45 45
Non-current 31 December 2007 1,351 183 - 1,534
At 31 December 2007 1,351 183 45 1,579
Environmental matters
During 2008, the Company updated their analysis of potential breaches of environmental regulations at its various sites,
with the support of a specialist organisation, Centrum environmelntalnych sluzieb, s.r.o. (previously operating under the
name, Life & Waste, s.r.o.). As a result of this analysis, and based on the findings of Centrum environmelntalnych sluzieb,
s.r.o., the Company estimates that, after utilising SKK 90 million of the provision brought forward, further operating
expenditures of SKK 1,179 million (SKK 1,351 million at 31 December 2007) will be required to remedy the significant
issues relating to water, oil and fuel management identified previously. In consequence, an amount of SKK 82 million
was released from the provision for environmental matters.
In addition, the Company estimates that capital expenditures of SKK 238 million (SKK 238 million at 31 December
2007) will be required to ensure that the Company complies with environmental legislation, as disclosed in Note 22.
Legal claims
Provisions for legal claims relate to several legal actions, most of which were initially filed against the Company’s predecessor,
ŽS. The provision includes an amount of SKK 90 million relating to a series of proceedings brought by the Antimonopoly
Office (“AMO”) which has issued judgments against the Company for alleged abuse of its dominant market
position. The Company has appealed against the AMO judgements, but management has decided to provide in full for
the penalties imposed by AMO believing that the evidence currently available indicates that an outflow of economic
resources represents the most likely outcome.
44

Termination payments
The Board of Directors approved a programme for the reduction of total headcount from 2008 through 2010. A detailed
plan was prepared for 2009 terminations, specifying the locations and positions of the employees involved, and this envisages
a reduction of 500 in total employee numbers. The full cost of the 2009 termination plan has been recognised
in the current period.
No provision was created for 2010 terminations as the recognition conditions were not met.
21. TRADE AND OTHER PAYABLES,
AND OTHER NON-CURRENT LIABILITIES
In million of Slovak crowns 31 December 2008 31 December 2007
Domestic trade payables 1,846 1,707
Foreign trade payables 581 577
Payables due to employees 240 245
Payables due to social institutions 135 144
Financial derivatives (Note 25) - 9
Other payables 226 147
3,028 2,829
At 31 December 2008 overdue trade payables amounted to SKK 809 million (SKK 629 million at 31 December 2007).
For details of related party payables, refer to Note 23.
The social fund payable is included in other non-current liabilities. Movements in the social fund during the period
are shown in the table below:
In million of Slovak crowns 31 December 2008 31 December 2007
At 1 January 5 10
Additions 27 26
Utilization (27) (31)
At 31 December 5 5
45

22. COMMITMENTS AND CONTINGENCIES
Finance lease commitments
At 31 December 2008 the Company has finance lease commitments relating to the acquisition of 973 wagons
(524 at 31 December 2007). All leases are on a fixed repayment basis with interest rates fixed at the contract date.
Future minimum lease payments under finance leases, together with the present value of net minimum lease payments
are as follows:
31 December 2008 31 December 2007
Minimum
lease
Present
value of
Minimum
lease
Present value
of payments
In million of Slovak crowns
payments payments payments
Within one year 320 207 102 89
After one year but not more than five years 1,117 895 215 187
More than five years 837 802 180 172
Total minimum lease payments 2,274 1,904 497 448
Less: future finance charges (370) - (49) -
Present value of minimum lease payments 1,904 1,904 448 448
Capital commitments
The Company’s capital expenditure plans for the period 1 January 2008 to 31 December 2012 are as follows:
In million of Slovak crowns 31 December 2008 31 December 2007
Land and buildings 36 356
Machines, equipment and other assets 1,885 5,309
Intangible assets 182 369
2,103 6,034
Of the total balance above, capital expenditures of SKK 1,222 million (SKK 1,889 million at 31 December 2007) are
committed under contractual arrangements.
Included above are planned capital expenditures of SKK 238 million (SKK 238 million at 31 December 2007) required
to address specific breaches of environmental legislation identified by the relevant authorities.
Contingencies
A former supplier of the Company’s legal predecessors, ŽSR and ŽS, has commenced an action against the Company in
respect of unpaid advance invoices and related penalty interest. Similar actions are being taken by several other parties
to whom the original receivables were ceded. The total value of the claims (principal) against the Company is estimated
at approximately SKK 322 million (SKK 286 million at 31 December 2007). Management believe that these actions are
unfounded as the supplier failed to meet the contractual conditions and, supported by their legal advisors, believe that
the likelihood of these actions succeeding is remote: accordingly, no provision for any liability has been made in these
financial statements.
46

As explained in Notes 5 and 23, the Company purchases traction electricity from ŽSR. The contract is renewed on an
annual basis and specifies delivery conditions and the method applied for determining the volume of traction electricity
used. Contract negotiations regarding the provision of traction electricity for 2008 were completed by 30 June 2008,
based on which the Company made regular prepayments to ŽSR. However, the agreement reached was not finalised in
written form and on 2 December 2008 the Company received a contract from ŽSR that contained a different method for
determining the volume of electricity used, to be applied retrospectively from 1 January 2008. In addition, in the cover
letter sent with the contract ŽSR stated that, in the event that the Company would not sign the contract, they would
impose penalties at a rate applicable for the unauthorised consumption of traction electricity. The Company formally
rejected the new contract terms in a letter sent to ŽSR and MTPT on 18 December 2008. ŽSR did not accept the Company’s
arguments and on 6 February 2009 issued a catch-up invoice in the amount of SKK 398 million for the usage
of traction electricity. This amount exceeds the figure accrued by the Company on the basis of the earlier negotiations
by SKK 370 million. On 10 February 2009 the Company rejected the invoice received. As management believe that the
actions of ŽSR are inappropriate and, supported by their legal advisors, that the likelihood of ŽSR succeeding in a legal
action against the Company is remote, no provision for the difference of SKK 370 million between the amount accrued
by the Company and the amount charged by ŽSR has been made in these financial statements.
23. RELATED PARTY DISCLOSURES
Related parties of the Company have been identified as all companies under common ownership (meaning under
the control of the State) and the Board of Directors.
The following tables provide the total amount of transactions which have been entered into with related parties for
the years ended 31 December 2008 and 2007:
31 December 2008
In million of Slovak crowns
Sales
to related
parties
Purchases
from related
parties
Amounts owed
by related
parties
Amounts owed
to related
parties
ŽSR 100 5,426 47 508
ZSSK 2,067 59 544 8
Slovenský plynárenský priemysel - 15 - 1
Other related parties - 89 36 6
31 December 2007
In million of Slovak crowns
Sales
to related
parties
Purchases
from related
parties
Amounts owed
by related
parties
Amounts owed
to related
parties
ŽSR 114 6,235 24 805
ZSSK 1,920 36 482 6
Slovenský plynárenský priemysel - 63 - 10
Other related parties - 13 - 1
The Company’s major contractual relationships with ŽSR and ZSSK are for fixed one year periods and are subject to an
annual renewal process. Purchases from ŽSR include primarily network fees and traction electricity. Sales to ŽSR comprise
transport services, while sales to ZSSK include primarily the repair of passenger wagons and track vehicles and
the sale of diesel oil.
47

Company’s bodies
The Company’s bodies as registered in the Commercial Register at the District Court Bratislava I at 31 December 2008
are as follows:
Board of Directors
Supervisory Board
Chairman: Mgr. Matej Augustín Chairman: JUDr. Zdeněk Schraml
Vice chairman: Ing. Anton Jaborek Vice chairman: Ing. Peter Kubala
Member: Dipl. Ing. Ján Simčo Member: Mgr. Jozef Schmidt
Member: Ing. Jaroslav Bajužik Member: Mgr. Imrich Sloboda
Member: Ing. Jozef Pavúk Member: Ing. Igor Krško
Member:
Dr. Ing. Peter Schlosser
Emoluments of the members of the Board of Directors and Supervisory Board
The Board of Directors’ total remuneration approximated SKK 1 million (SKK 1 million in 2007). The total remuneration
of members of the Supervisory Board amounted to SKK 1 million (SKK 1 million in 2007).
Loans granted
No loans have been granted to key management and members of the Board of Directors and Supervisory Board.
24. FINANCIAL RISK MANAGEMENT
The Company’s principal financial liabilities, other than derivatives, comprise interest-bearing loans and borrowings,
overdrafts and trade payables. The main purpose of these financial liabilities is to raise finance for the Company’s operations.
The Company has various financial assets such as trade and other receivables and short-term deposits, which
arise directly from its operations.
The Company also enters into derivative transactions, including forwards, options and swaps, to manage the currency
risks arising from its operations.
The main risks arising from the Company’s financial instruments are cash flow foreign currency risk, interest rate risk,
liquidity risk and credit risk. The Board of Directors reviews and agrees policies for managing each of these risks which
are summarised below. The Company’s accounting policies in relation to derivatives are set out in Note 2.4.
Foreign currency risk
The Company enters into various types of foreign exchange contracts in managing its foreign exchange risk resulting
from cash flows from its business activities, financing arrangements denominated in foreign currencies and certain
transactional exposures. In particular, the Company has significant Euro denominated sales and interest-bearing loans
and borrowings.
The Company follows the basic economic currency risk management principle that the currency mix of the debt portfolio
should reflect the net operating cash flow position of the Company, constituting a natural hedge. In addition, foreign
exchange risk is mitigated by entering into currency forward and option contracts to match the terms of the hedged item
to maximize hedge effectiveness.
48

The table below contains a sensitivity analysis on the foreign currency risk arising from a 5% strengthening or weakening
of the Slovak crown against relevant foreign currencies, with all other variables held constant. The estimated
impact on profit before taxes is disclosed for a 12 month period after the reporting date. There is no impact on the
Company’s equity.
In million of Slovak crowns 31 December 2008 31 December 2007
USD (+5%) - 2
USD (-5%) - (2)
CHF (+5%) 2 2
CHF (-5%) (2) (2)
Interest rate risk
The Company’s exposure to the risk of changes in market interest rates relates to the Company’s long-term and shortterm
borrowing obligations and overdrafts with floating interest rates. The Company has a broad portfolio of borrowings
bearing a range of fixed and floating interest rates.
The following table demonstrates the sensitivity of the Company’s profit before taxes for the period of 12 months after
the reporting date to a reasonable change in interest rates of 50 basis points higher/lower, with all other variables held
constant. There is no impact on the Company’s equity.
In million of Slovak crowns 31 December 2008 31 December 2007
EURIBOR (+0,5%) 17 11
EURIBOR (-0,5%) (17) (11)
BRIBOR (+0,5%) - 6
BRIBOR (-0,5%) - (6)
Liquidity risk
The Company’s policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate
number of credit facilities to cover the liquidity risk in accordance with its financing strategy. The amounts
available in the form of credit facilities as at 31 December 2008 and 2007 consist of following:
In million of Slovak crowns 31 December 2008 31 December 2007
Long-term loan facilities available 276 94
Short-term loan facilities available 565 478
Total loan facilities available 841 572
As at 31 December 2008 the Company made use of bank payment guarantees of SKK 53 million (88 million as at 31
December 2007) and banks custom guarantees of SKK 56 million (56 million as at 31 December 2007).
49

The table below summarises the maturity profile of the Company’s financial liabilities at 31 December 2008 based on
contractual undiscounted payments.
In million of Slovak crowns
On demand
Less then 3
months
From 3 to
12 months
From 1 to 5
years
Over 5
years Total
Long-term loans - 81 567 2,130 198 2,976
Trade and other payables 1,768 1,260 - - - 3,028
Short-term loans - 169 2,054 - - 2,223
1,768 1,510 2,621 2,130 198 8,227
The table below summarises the maturity profile of the Company’s financial liabilities at 31 December 2007 based on
contractual undiscounted payments.
In million of Slovak crowns
On demand
Less then 3
months
From 3 to
12 months
From 1 to 5
years
Over 5
years Total
Long-term loans - 152 899 1,681 - 2,732
Trade and other payables 626 1,826 377 - - 2,829
Short-term loans - 325 2,731 - - 3,056
626 2,303 4,007 1,681 - 8,617
Credit risk
The Company provides a variety of customers with products and services, none of whom, based on volume and creditworthiness,
present a significant credit risk, individually or in aggregate. The Company’s procedure is to ensure that sales
are made to customers with appropriate credit histories and that acceptable credit limits are not exceeded.
The book value of financial assets, including derivative financial instruments, recognised in the balance sheet reduced
by impairment provisions reflects the Company’s maximum exposure to credit risk.
Capital management
The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value.
The Company manages its capital structure, and makes adjustments to it, in light of changes in economic conditions.
No changes were made in the objectives, policies or processes during the years ended 31 December 2008 and 31
December 2007.
50

The Company monitors indebtedness using a debt service ratio, which is calculated as debt consisting of interest-bearing
loans and borrowings divided by total equity. The debt service ratio was considered low in 2008 and 2007.
In million of Slovak crowns 31 December 2008 31 December 2007
Long-term debt, net of current portion 2,328 1,681
Short-term debt, including current portion of long-term debt 2,871 4,107
Debt 5,199 5,788
Equity 11,834 11,616
Debt service ratio (%) 44% 50%
25. FINANCIAL INSTRUMENTS
Fair values of financial instruments
Financial instruments in the balance sheet include trade and other receivables, cash and cash equivalents, interestbearing
loans and borrowings, finance leases and trade and other payables. Market values have been used to determine
the fair value of financial instruments. The estimated fair values of these instruments approximate their carrying
amounts, except for interest-bearing loans and borrowings (see Note 18).
Hedging activities
The Company has designated certain derivative instruments as cash flow hedges (forwards and options) to hedge
against changes in the amount of future cash flows of the Company’s commitments.
The fair values of derivatives are based on closing market prices at the balance sheet date and are summarised in the
table below:
31 December 2008 31 December 2007
In million of Slovak crowns
Positive Negative Positive Negative
FX forwards 6 - 61 -
FX options - - 244 (9)
MM swaps - - 6 -
6 - 311 (9)
At 31 December 2007 the Company had designated certain derivative instruments listed in the table above as cash flow
hedges to hedge against changes in the cash flows of expected future sales; these hedges were assessed to be highly
effective and an unrealised gain of SKK 231 million was included in equity as at 31 December 2007. None of the Company’s
derivative instruments were designated as cash flow hedges at 31 December 2008.
No cash flow hedges were discontinued during the year because it was probable that the original forecasted transaction
would not occur by the end of the originally specified time period.
51

26. EVENTS AFTER THE BALANCE SHEET DATE
With the introduction of the Euro as the official currency of the Slovak Republic on 1 January 2009, the Company’s
functional currency changed from the Slovak Crown to Euro as at that date. The change in the functional currency was
implemented prospectively and the Company’s assets, liabilities and equity were converted into Euro based on the official
conversion rate of €1 = SKK 30.1260. The change did not affect the financial position of the Company.
The Company spent an amount of SKK 12 million in connection with the introduction of the Euro, of which SKK 10 million
relates to the modification of information systems.
Long-term financial assistance of SKK 5,000 million (EUR 166 million) to support the Company’s operations was approved
by the government on 4 March 2009. The Company received these funds in April 2009. Under the terms of the
agreement entered into with the Ministry of Finance, the financial assistance is to be repaid in full by February 2019, with
the first principal repayment being due in February 2011.
52

ORGANISATION STRUCTURE AS 31. 12. 2008
General Assembly
Supervisory Board
Board of Directors
Internal Audit
CEO and Chairman of the Board
of Directors
Head of CEO office
Legal services
Department
Inspection and
crises management
Department
Strategy Department
Human resources
management
Department
Crises management
Unit
HR services Section
Security and health
protection Unit
Trade Division
Operation Division
Services Division
Rolling stock
services Division
Economy
Department
Wages Centre Unit
Marketing Section
Trade development and
product portfolio Unit
Sales Section
Customer services
Section
Trade support Unit
Guidelines
and tariff rates Unit
Back office Unit
Guidelines and tariff
rates Unit
Intermodal
transportation
Section
Railway transport
security Unit
Section of technical
and technological
preparation
of operations
Strategy and technical
investments development
operations Unit
Operations planning
Unit
Operations efficiency
analyses Unit
Operations and
transportation
Section
Transportation
dispatching Unit
Transportation Unit
Transport execution
Section
Traction management Unit
Technical operations of waggon
management Unit
East Slovak
Transshipment
Section
Technological
transahipment Unit
Technical-technological
transshipment infrastructure
Unit
Facility managment
Section
Efficiency facility Unit
Facility management
and investments Unit
Investments and Repairs Unit
Logistics Section
Management of logistic
network Unit
Procurement
and Purchase Unit
Stock Holding Unit
Fleet of vehicles Unit
Power station Unit
ICT Section
IT Operation Unit
Maintenance
and repairs
trade Section
Marketing on
maintenancenand repairs
of rolling stock Unit
Trade on maintenance
and repairs of rolling
stock Unit
Rolling stock
maintenance
and repairs Section
Management on maintenance
and repairs of rolling
stock Unit
Technical and technological
safety on infrastructure
of maintenance and repairs Unit
Technical development
and administration of
rolling stock Section
Unit for modernisation
and reconstruction
of rolling stock
Unit for administration
of rolling stock
Economy Department
Projekt Management Office
(PMO)
Control Section
Accounting taxes
and Reporting Section
Accounting Unit
Treasury Section
Cash-Flow Administration Unit
Rail clearing
centre Section
Input and international
transportation price
calculation Units
International transportation
claiming Unit
Domestic transportation
input control Unit
International transportation
accounting Unit
Transportation accounting
and clearing Unit
Control and methodology
Unit
Operative Operations
Managment Section
Transport Dispatching Unit
Wagons Managment Unit
Transportation Planning
and CIS States Relations Unit
53

CONTACTS
Železničná spoločnosť Cargo Slovakia, a.s.
Drieňová 24
820 09 Bratislava
tel.: 02/20 29 77 76
fax: 02/43 42 03 89
e-mail: cargo.gr@zscargo.sk
www.zscargo.sk
FOREIGN REPRESENTATION:
General Agency in Vienna
Železničná spoločnosť Cargo Slovakia, a.s.
General Agency in Austria
Ing. Jozef GAZDA CSc.
Parkring 12, 1010 Wien
Tel. Nr, public: 004315128974
Tel. Nr, railway: 907-180-111044
Fax Nr: 00431512897475
Cell: 00436764310086
E-mail: jozef.gazda@utanet.at
General Agency in Lvov
Železničná spoločnosť Cargo Slovakia, a.s.
General Agency in Ukraine
Ing. Jozef VIRBA
Gogoľa 1, 290 604 Ľvov
Tel. Nr, public: 00380322971198
Fax Nr: 00380322971198
Cell: 00380503173568
E-mail: railway1@complex.lviv.ua
General Agency in Warsaw
Železničná spoločnosť Cargo Slovakia, a.s.
General Agency in Poland
Mgr. Ivan RUŽBACKÝ
Aleje Jerozolimskie 125/127
02-017 Warszawa
Tel. Nr, public: 0048 22 699 7262
Fax Nr: 0048 22 699 7262
Cell: 0048 605 980 771
E-mail: zsskwa@gazeta.pl
54

Železničná spoločnosť Cargo Slovakia, a.s.
Drieňová 24, 820 09 Bratislava
www.zscargo.sk