Financial result

Below we present the income statement plus explanatory notes, up to the result from operating activities, differentiating between our activities in the Netherlands and those in Germany. The income statement presents revenues and costs net of the public transport availability payment and other non-recurring and exceptional items, and is reconciled with the result from operating activities as recognised in the financial statements. Due to the proposed sale of our operations in the United Kingdom, we present the results concerned on a net basis under result from discontinued operations after tax.

Underlying result improves but is not sufficient to ensure financial health for NS

The result from operating activities was €391 million (2021: €71 million). However, this result is highly distorted due to the public transport availability payment received and other non-recurring and exceptional items. This is why the development of the underlying result from operating activities is a more reliable measure of our financial performance. The underlying result from operating activities reflects the result from operating activities net of non-recurring and exceptional items and amounted to €-304 million in 2022 (2021: €-952 million, 2020: €-977 million). While less negative than in previous years since the COVID-19 outbreak, the result remains far too low.

The new normal

As in previous years, NS received compensation from the Dutch government for the costs incurred to keep its trains running, despite the sharp fall in passenger numbers, In 2022 this compensation amounted to €274 million (2021: €925 million, 2020: €818 million). Since passengers returned to our trains, our revenues from passenger transport and station activities in the Netherlands have risen substantially, by nearly 50% relative to 2021. The number of passenger kilometres in 2022 was up 76% compared with 2019, the last year before the COVID-19 crisis (2021: 49% (2020: 45%). The passenger kilometres increased gradually throughout the year: from 46% in January to 86% in December. We now seem to have reached a new normal in terms of passenger numbers since COVID-19. Now that working from home has become commonplace, passenger numbers, especially for commuters, remain behind 2019 levels.

Rising energy prices and inflation rate

The inflation rate in the Netherlands for 2022 was 10%. The consequences were widely felt, also by NS. Nevertheless, over the same period we only increased the price of most train tickets and season tickets by an average of 1.8%. In 2021, too, the increase in the price of most train tickets, at 1.2%, was lower than the inflation rate. The ‘indexation gap’ of 9.4% is obstructing the crucial recovery of our revenues while the high inflation rate is pushing up our costs.

Adjusted for non-recurring items, our operating expenses increased by 10% relative to 2021. This is mainly due to the higher passenger numbers compared with 2021, the rising inflation rate and the increase in negotiated wages. Personnel expenses account for nearly half of our operating expenses. We are a high-volume user of electricity, but as regards the traction electricity requirements of our rolling stock we only suffered very limited exposure to the sharp increase in market prices in 2021 and 2022. This is thanks to a hedging strategy under which we purchased much of the required traction electricity for the period up to and including 2024. In 2022 we recognised a franchise fee and a high-speed line fee payable to the Ministry of Infrastructure and Water Management totalling €172 million (2021: €167 million) and an infrastructure fee payable to ProRail of €249 million (2021: €247 million).

Due to the impact of the COVID-19 pandemic on NS, we recognised an asset impairment of €1.6 billion in 2020. This resulted in a €150 million decrease in depreciations in 2022. Due to realised losses, the impairment has since been reversed in the amount of €385 million. The impairment does not generate any cash flows.

NS has adapted its operating practices within the IT domain to reflect current developments in IT. This has reduced the amount of IT expenditure that can be capitalised. While this is generating higher costs, the effect is temporary and due to lower depreciations the cumulative effect of this change on the result will fall to zero in the next few years.

Positive operating result in Germany

The financial impact of the COVID-19 crisis on NS in Germany was limited. This is because in Germany it is the public transport authorities, rather than the carriers themselves, who bear the transport revenue risk. The result from operating activities in Germany was positive. Due to the restructuring operation in Germany, however, the 2022 results cannot be compared with those for 2021. As the railway companies in Lower Saxony (WestfalenBahn) and Thüringen (Abellio Rail Mitteldeutschland) were restructured successfully, the insolvency proceedings could be terminated. Hence, these units have once again been included in the consolidated results of the Group.

Abellio Rail Nordrhein-Westfalen went bankrupt; once it had been established that no agreement could be reached, its activities were transferred to operators designated by the public transport authorities. Abellio Rail Baden-Württemberg was taken over by SWEG, a company owned by the federal state of Baden-Württemberg. The insolvency proceedings with respect to the former holding Abellio GmbH are still pending. The finalisation of these proceedings may take some considerable time, and the outcome is highly uncertain. At the end of 2021, we made provisions for the expected outflow of funds in the context of the settlement, and we maintained these provisions in 2022.

Positive result

Below is the second part of the income statement.

The positive net financing result is mainly attributable to the negative goodwill and partial reversal of the downward value adjustment and provisions created as recognised in 2021 in connection with the restructuring of operations of Abellio Rail Mitteldeutschland and WestfalenBahn in Germany. The partial reversal of the downward value adjustment and provisions created was possible thanks to the successful completion of the restructuring operation for these business units.

It has been a requirement under the NS strategy since 2018 for international operations to serve the interests of passengers in the Netherlands. In compliance with this principle, we have been preparing to exit the UK market. Due to the intended sale of our UK operations to Abellio UK's local management in the first half of 2023, we present the results concerned on a net basis under result from discontinued operations after tax (2022: €54 million, 2021: €417 million). For a further explanation of the result, see Note 2 to the financial statements. which recognised an underlying result from operating activities of €44 million (2021: €29 million).

Thanks to the result from operating activities and the exceptional items it includes, in combination with the above, we are able to report a net profit of €579 million (2021: €339 million).