32. Off-balance sheet arrangements

A number of investigations are under way against NS and/or group companies, and various claims have been submitted that are being contested by NS. Where deemed necessary, provisions have been made for this. A number of important subjects are explained below.

Long-term contracts

There were a number of long-term financial commitments to third parties at year-end 2024, mainly concerning lease arrangements for trains, company cars and copiers. There are also long-term contracts for services by third parties in the areas of automation, maintenance and cleaning.

Energy contracts

As at the end of 2024, the purchase commitments under the traction electricity contracts for the volumes already covered, the payments for the Programme for Responsibility (PV) and the surcharge for green electricity came to €384 million (compared with €288 million at the end of 2023). The purchase commitments for the years 2025-2027 concern the contractual value of the traction electricity purchased for those years, the expected payments for the PV and the expected surcharge for green electricity. The contract value of any traction electricity purchased for delivery in 2028 and beyond is also included in these purchase commitments.

PZEM offers NS the option to buy traction electricity for the period after 2027. This purchased traction electricity will be brought under a new supply contract if this contract is not renewed. NS has two renewal options of one year each, subject to PZEM’s agreement. Upon renewal of this contract, this purchased traction electricity will become part of the existing (extended) contract.

The expected volume of traction electricity to be used in 2025 is almost completely covered. The expected volumes for the years 2026-2029 are partially covered (80% for 2026, 60% for 2027, 40% for 2028 and 20% for 2029). Additional costs such as transport costs and energy taxes are not included in the purchase commitments shown. Based on the daily determined risk position and the subsequent settlement between NS and PZEM, NS provided €16 million in cash collateral to PZEM at the end of 2024 (year-end 2023: €6.8 million) as security for PZEM's risks in relation to this contract.

For more detailed information about the energy contracts, see note 26.

Tax group

For the purpose of corporation tax, all the Dutch subsidiaries belonging to the Group are part of the NV Nederlandse Spoorwegen tax entity. As a result, the Group is jointly and severally liable for all tax liabilities of the subsidiaries included in the fiscal unity.

Investment commitments

At the end of 2024, the Group had outstanding investment commitments of €1.175 million (2023: €1.304 million), primarily for purchasing and upgrading trains and investments in the areas around the stations.

Contingent liabilities

The Group has paid €32 million (translated) of its share in the issued share capital (€160 million after translation) of EUROFIMA AG. The Group has a liability for full payment on demand of the shares and other guarantee commitments totalling €289 million (after translation). Payment of the liability can be demanded if EUROFIMA AG’s own equity position gives reason to do so.

As a result of the agreements made with the Belgian carrier regarding the IC Brussels service in the context of the main rail network, the Group is making allowances for a negative balance for the Group in the settlement of the costs of commercial operation for this route. The amount of that negative balance depends on the commercial results on that route. The expected outcomes are part of the main rail network impairment test as explained in note 15.

Contingent assets

The Group has several outgoing claims and/or disputes that have not been valued as the outcome of these matters is uncertain.

Guarantees

The Group has issued guarantees totalling €261 million (31 December 2023: €289 million) relating to the operation of the current and former concessions in the United Kingdom and Germany.

Concessions

The Group had the following concessions in the Netherlands during 2024.

Main rail network transport concession for 2015-2024

The main rail network concession is awarded by the Ministry of Infrastructure and Water Management. It covers passenger transport by rail on the main rail network in the Netherlands for the period 1 January 2015 to 31 December 2024. The train services on the HSL South are also covered by this concession. The concession agreement stipulates that performance must improve during the term of the concession. The evaluation will take place over the year 2024. If NS does not achieve the target values for 2024, NS will be obliged to pay a sum of €1.5 million for each performance indicator not attained up to a maximum of €19.5 million per evaluation. If NS does meet the conditions, a maximum bonus of €10 million can be earned for each evaluation. In addition, the Ministry can impose a fine of up to €6.5 million a year on NS if NS does not achieve the minimum baseline values for the concession performance indicators. The performance indicators are measured for the following performance areas: general (customer satisfaction), the door-to-door journey, ease of travelling (transport capacity at peak times), journey information (in the event of disruptions), safety (including personal safety) and reliability (punctuality for passengers).

Based on Article 24 of the main rail network concession, NS is obliged to pay a sum of money if NS fails to achieve one or more minimum values in any calendar year. Paragraph 3 of this article stipulates that the sum of money is €0.5 million per minimum value not achieved for a first failure, €0.75 million for a second failure, and €1.0 million for a third or subsequent failure. The increase is applicable only in consecutive years. If NS fails to meet the target values for 2024, except those for the performance area ‘Reliability’, NS will also owe a maximum sum of money of €1.5 million per performance indicator. If NS does achieve the target values, NS will receive a maximum of €1.0 million per performance indicator.

A point system is applied to assess the result achieved based on the target values. The payment based on the minimum and target values for 2024 is expected to amount to a penalty of €2.25 million. This amount is fully provided for as a liability in December 2024.

The agreements made with the government include agreements on the production assets (rolling stock in particular) that are to be used for operating the main rail network concession. Depending on the ownership situation and the form of tender, the production assets may be leased in the event of complete or partial loss of the main rail network concession to a subsequent concession holder, or sold at the carrying amount, and/or their leases may be transferred unchanged to the subsequent concession holder.

The overall fees for track use and the concession for the integrated main rail network/HSL South were €231 million in 2024. The negotiation agreement of 2011 included an adjustment mechanism to avoid the liquidation of HSA. This adjustment mechanism has been included in the implementation agreement for the concession. It works as follows: if the average return on investment for the concession holder over a fixed period turns out to be lower than the threshold value (4%), the holder will be entitled to an adjustment to the concession price (equal to the difference between the actual return and 4%, with the adjustment over the entire duration of the concession being capped at the equivalent of €144 million at 2010 prices). There was no entitlement to any such adjustment over 2015. Any entitlement to an adjustment was first calculated in 2016 using the average return on investment for 2015 and 2016, and thereafter on a rolling basis using the previous three years. An entitlement to an adjustment to the concession price deriving from the implementation agreement does not lapse if at any point in subsequent years the return on investment exceeds the threshold value. Payment of any entitlement that may have arisen through an adjustment to the concession price will be spread in instalments, as per the implementation agreement. The adjustment mechanism for the average profitability is recognised during the concession on a straight-line basis covering the entire concession term.

The concession also includes an adjustment mechanism for a settlement of any windfalls in energy price changes over the concession period. This adjustment will be calculated cumulatively, with NS owing the Ministry of Infrastructure and Water Management 75% of the difference between the actual energy prices and the forecast energy prices according to the business case, with no adjustment being made if the cumulative actual return on investment falls below the cumulative norm return. Apart from the calculation outlined above, NS owes an unconditional one-off sum of €56 million to the ministry for 2016. This payment is amortised on a straight-line basis over the entire term of the concession. This arrangement is capped at €290 million (including the one-off payment) and will never result in a payment to NS by the Ministry of Infrastructure and Water Management. No energy cost adjustment is owed for 2024 and previous years.

In addition to the concession fee and the HSL fee, infrastructure levies amounting to €314 million (2023: €273 million) are owed to ProRail.

Main rail network concession for 2025-2033 

The 1st of January 2025 marked the start of the new main rail network concession, which was awarded to NS Reizigers B.V. by the Ministry of Infrastructure and Water Management in December 2023. The concession runs until the end of 2033. The concession agreement, which is public and can be accessed online, sets out the conditions under which NS provides train services on the main rail network. As compensation for performing these services, NS receives a subsidy of €13 million a year.

The new concession includes a similar bonus-malus system as in the 2015-2024 concession. If NS fails to achieve the minimum values in any year, NS will owe the Ministry of Infrastructure and Water Management a sum of money. In addition, target values have been agreed for 2029 and 2033. If these target values are comfortably met, NS can receive a bonus. If NS fails to meet the target values, it will owe a sum of money.

Given the uncertainty about the recovery of passenger numbers after the COVID-19 pandemic and permanent changes in travel behaviour, a risk-sharing measure has been agreed in the new concession with regard to the development of passenger numbers. Up to a certain limit, deviations in passenger numbers are considered a normal business risk that is entirely the responsibility and risk of NS. Outside these ranges, 75% of the risk is allocated to the concession grantor and 25% to NS. Any payments from NS to the Ministry of Infrastructure and Water Management and payments from the Ministry to NS are capped.