2. Assets and liabilities held for sale/Discontinued operations
In line with its strategy, which dictates that international activities should be in the interest of passengers in the Netherlands, NS has been preparing its departure from the British market with the consent of the shareholder. As at 31 May 2022, Abellio Transport Group Ltd and its group companies are presented as ‘held for sale’.
On 31 August 2022, NS and the current UK management signed a Share Purchase Agreement for the transfer of the shares for an initial sale price of £ 15 million (€ 17 million). Additional agreements have been made on the following subjects:
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Settlement of potential benefits arising from past outstanding claims by local management. After settlement, these benefits mainly accrue to NS.
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Earn-out scheme. Under an earn-out scheme over the period 2022-2025, NS is entitled to a share of the joint profits achieved on the Merseyrail franchise and London Bus business up to a maximum of £ 10 million.
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Settlement and transfer of assets of the terminated franchises and settlement of the associated guarantees for a guarantee value of € 0.3 billion.
NS will be entitled to the value of the old franchises and claims that will be settled for NS by the local management. In addition, the local management will take care of the settlement of the terminated franchises on behalf of NS. A successful settlement will result in the release of guarantees issued by NS. This process may take several years.
The assessment of the fair value of Abellio Transport Group Ltd and its group companies takes into account all expected cash flows from the transaction, potential benefits from outstanding claims and the earn-out.
It is expected that the sale transaction will be completed by the end of February 2023.
The assets and liabilities of the entities held for sale can be broken down as follows:
(in millions of euros) | 31 December 2022 |
Assets held for sale | |
Property, plant and equipment | 24 |
Intangible non-current assets | - |
Right-of-use assets | 681 |
Investments recognised using the equity method | 12 |
Other financial assets, including investments | 15 |
Deferred tax assets | 19 |
Total non-current assets | 751 |
Inventories | 13 |
Trade and other receivables | 388 |
Income tax receivable | 18 |
Other financial assets, including investments | 2 |
Cash and cash equivalents | 304 |
Total current assets | 725 |
Total assets | 1,476 |
Liabilities held for sale | |
Loans and other financial liabilities, including derivatives | 41 |
Lease liabilities | 497 |
Employee benefits | - |
Provisions | 10 |
Deferred tax liabilities | 1 |
Total non-current liabilities | 549 |
Loans and other financial liabilities, including derivatives | 1 |
Lease liabilities | 219 |
Income tax payable | 3 |
Trade and other liabilities | 538 |
Deferred income | 28 |
Provisions | 9 |
Total current liabilities | 798 |
Total liabilities | 1,347 |
As at 31 May 2022, the Group ceased to depreciate all the property, plant and equipment of Abellio UK. The effect of stopping depreciation amounts to € 146 million positive. The assets and liabilities have been measured at the carrying amount. The Group has intercompany loans (receivables) outstanding to Abellio UK of € 171 million, which are not presented in the above overview because they were eliminated in the consolidation.
Prior to the qualification as ‘assets and liabilities held for sale’, the carrying amount of Abellio Transport Group Ltd and its group companies was determined in accordance with the reporting system applied by the Group. Subsequently, as of 31 December 2022, it was determined that there was an impairment loss, as the net carrying amount of assets and liabilities of Abellio Transport Group Ltd and its group companies was higher than the expected realisable value (minus expected costs to sell). This led to an impairment loss of € 157 million.
The results for 2022 of Abellio UK and its group companies have been classified as discontinued operations. The comparative figures have been restated accordingly. The recognised result from discontinued operations for the whole of 2022 and 2021 amounts to € 54 million and € 417 million respectively and is made up as follows:
(in millions of euros) | 2022 | 2021 |
Revenue | 2,460 | 3,294 |
Operating expenses | 2,251 | 2,887 |
Share in result of investments accounted for according to the equity method | 10 | 4 |
Result from operating activities | 219 | 411 |
Net finance income | -7 | -18 |
Impairment recognised in the remeasurement at fair value less costs to sell* | -157 | - |
Result before income tax | 55 | 393 |
Income tax | -1 | 24 |
Net result from discontinued operations | 54 | 417 |
- * No income tax has been recognised on this impairment.
The financing costs of discontinued operating results in 2022 include an intercompany interest expense of € 10 million (2021: € 16 million). This interest expense is not included in the above overview because it was eliminated in the consolidation.
In summary, the result from discontinued operations can be presented as follows:
(in € millions) | 2022 |
Result Abellio UK 2022 before depreciation stop | 55 |
Effect of depreciation stop | 146 |
Impairment to fair value | -157 |
Intercompany interest | 10 |
54 |