NS’s investments abroad


The risk that NS’s investments abroad cost money rather than bringing it in.


Abellio is a fully-owned subsidiary of NS and operates in the passenger transport markets in the United Kingdom and Germany. NS invests in these markets through this subsidiary. Abellio's priority is to achieve positive financial results by controlling risks effectively and making sure that investments remain within the Capital-at-Risk framework. This framework was agreed with the Ministry of Finance in 2016 and limits the size of the investments abroad by NS and the guarantees provided by NS.

In 2017, the ScotRail franchise in the United Kingdom showed disappointing results, while the expectations relating to passenger growth and revenue growth for the Greater Anglia franchise have become less predictable. Despite various improvement initiatives, passenger revenues are lower than expected. The reasons for this are: a) disappointing economic growth resulting from uncertainty regarding the consequences of Brexit; b) patterns of passenger behaviour that deviate from trends, as a result of which initiatives aimed at passenger growth are failing to have the desired effect; c) dependency on Network Rail to deliver infrastructure projects on time.

In Germany, revenue growth will be achieved over the next few years from €246 million in 2017 to over €677 million in 2020. This is because a number of franchises have been won that will become operational in the next few years, after the mobilisation for these franchises has been completed. Preparations are required during this mobilisation phase, such as recruiting and training staff, purchasing trains and preparing workshops for the maintenance of trains. The mobilisation for each franchise requires meticulous preparation and investments in time and money by Abellio Germany, while we run the risk that everything will not be completed on time for the start of the franchise.


In 2016, NS completed the agreements with its shareholder concerning the total financial resources designated for Abellio's international activities. Based on the agreements made, NS will limit the risk to providing group guarantees and the invested capital. The size of the risk for certain franchises will be limited by entering strategic partnerships, as in Greater Anglia and West Midlands: Mitsui has a stake of 40% in the franchise in Greater Anglia and Mitsui and Japanese Railways East (JRE) have a joint 30% stake in West Midlands. Abellio has started various initiatives that should support the operating results. Abellio UK is for example setting up workflows to identify and implement growth initiatives and analyse passenger behaviour. Close consultations are being held with Network Rail about the infrastructure projects with the aim of limiting the impact of these projects on the timetable.
In Germany, the mobilisations are being prepared thoroughly using a programme approach with experienced managers. The execution is also being closely monitored to control the risks of delays and budget overruns. The experience and lessons learned from previous mobilisations are also incorporated in the programme approach for new mobilisations.

Risk control trend

The above-mentioned measures will lead to results in the short and medium term. It is still expected that all franchises will make a net positive contribution to the result over their term.

Residual risk

Medium. The current risk profile matches the desired risk profile.