15. (Reversal of) impairment charges on fixed assets/loss-making contracts
Reason for impairment testing
At the end of 2025, indicators were established for impairments specifically relating to the HRN franchise in the Netherlands. In 2025, adjusted assumptions were made with regard to passenger forecasts and revenues for the coming years. These developments give cause to reassess the impairment at the end of 2025. In that context, an impairment test was performed based on the most likely scenario.
No indicators have been identified for other activities (station development and operation).
Cash-generating unit (CGU)
The HRN has been designated as a single cash-generating unit (excluding the lines in 'open access'). The recoverable amount has been determined on the basis of value in use.
Important assumptions
At the end of 2025, the impairment test was performed based on the following assumptions:
The discount rate at the end of 2025 after tax is 7.0% (31 December 2024: 6.9%). The discount rate before tax is 9.1% (31 December 2024: 8.7%).
At the end of 2023, the franchise for the period 2025-2033 was awarded to NS by the Ministry of Infrastructure and Water Management. The financial return over this period is expected to be lower than the cost of capital according to market standards. Important elements in the franchise with a possible financial impact are:
NS receives an annual subsidy of €5.5 million for the implementation of the HRN franchise. This amount is supplemented by €7.5 million per year for the costs incurred by NS for the management of the national travel information system.
the franchise includes agreements on the distribution of risks when the number of passenger kilometres deviates from the upper and lower limits. This limits the risk (both upward and downward) for NS. The expected cash flows underlying the impairment test assume that the lower limit will be reached and an amount has been included for this in the coming years, taking into account a maximum.
NS is given scope to incorporate the financial impact of sharply rising energy costs (which exceed CPI developments) into its fares;
In determining the return over the contract period of the HRN franchise, the maximum expected operating return as approved by the Group's Executive Board and Supervisory Board has been taken into account. In the extrapolated years (2031 to 2033), a discount has been applied to the expected cash flows as a result of this return.
The fair value of the assets in question cannot be reliably determined given the strong link between the assets and the HRN contract, the fact that the trains were produced specifically for the Dutch railways, and the fact that there is no active market for these specific trains.
Revenue from passenger transport is partly dependent on choices regarding the timetable, which are coordinated with the Ministry of Infrastructure and Water Management;
continuation of the current public transport student card contract;
the means of production can be transferred at book value to the subsequent franchisee at the end of the franchise period if this is not NS. If, at the end of the franchise period, the franchise is restructured in whole or in part (e.g., through Open Access), NS and I&W will make (process) agreements on how to deal with the transfer of the associated means of production or how support will be provided in other ways.
The adjustment of the depreciation period (see General principles) has resulted in a substantially higher carrying amount at the end of the franchise. This adjustment forms a substantial part of the reversal of the impairment loss in 2025.
Results
The reassessment of the impairment loss at the end of 2025 resulted in a reversal of the impairment loss in the amount of €468 million. (2024: an impairment loss of €90 million).
As a result of the impairment, €114 million less (2024: €113 million less) was depreciated in 2025 compared to the situation before this impairment.
The movement in the impairment loss over the financial year is as follows:
|
(in millions of euros) |
2025 |
2024 |
|
Balance as at 1 January |
1,174 |
1,197 |
|
Impact on financial year result |
||
|
Lower depreciation charge for the financial year |
-114 |
-113 |
|
(Reversal of) impairment charges |
-468 |
90 |
|
-582 |
-23 |
|
|
Balance as at 31 December |
592 |
1,174 |
The impairment loss is divided into the following categories:
|
(in millions of euros) |
2025 |
2024 |
|
Property, plant, and equipment |
-451 |
86 |
|
Intangible assets |
-7 |
3 |
|
Right-of-use assets |
-10 |
1 |
|
Total |
-468 |
90 |
After recognising an impairment loss, the remaining carrying amount is depreciated over the expected useful life of the asset concerned.
Sensitivity
The sensitivity of the cost of capital is as follows:
An adjustment of the cost of capital by 0.5 percentage points (positive or negative) has an effect of approximately €110 million on the recognised impairment loss.
The Group notes that the underlying analyses contain significant estimation uncertainties. Actual results may differ, which may require the impairment to be adjusted in the future with a positive or negative effect on results.
The recognised impairments have been deducted pro rata from the carrying amounts of the HRN's assets. The revised carrying amounts are depreciated over the remaining useful lives of the assets.
No impairments occurred in the other activities (station development and operation).
Accounting policy
The carrying amount of the Group's fixed assets is reviewed at each reporting date to determine whether there are any indications of impairment. If such indications exist, an estimate is made of the recoverable amount of the asset. For goodwill and intangible assets that are not yet ready for use, an estimate of the recoverable amount is made at each reporting date.
For an asset or cash-generating unit, the recoverable amount is the higher of its value in use and its fair value less costs to sell. In determining value in use, the present value of estimated future cash flows before tax is calculated using a pre-tax discount rate that reflects both the current market assessments of the time value of money and the risks specific to the asset.The discount rate is determined after tax based on the interest rate on government bonds issued by the most creditworthy government in the relevant market, in the same currency as the cash flows, adjusted for a risk premium to reflect both the increased risk of an investment in shares in general and the risk of the specific CGU.
For impairment testing purposes, assets are aggregated into the identifiable group of assets that generates cash flows from continuing use that are largely independent of other assets and groups (the "cash-generating unit"). Goodwill acquired in a business combination is allocated for impairment testing to cash-generating units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset, or the cash-generating unit to which the asset belongs, exceeds its estimated recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are first deducted from the carrying amount of any goodwill allocated to the units and then pro rata from the carrying amount of the other assets of the unit (or group of units).
An assessment is then made as to whether, in addition to the impairment loss that may be recognised, it was necessary to recognise a provision for onerous contracts.
No impairment losses are reversed in respect of goodwill. For other assets, impairment losses recognised in previous periods are reviewed at each reporting date for indications that the loss has decreased or no longer exists. An impairment loss is reversed if the estimates used to determine the recoverable amount have changed. An impairment loss is reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount, after deducting depreciation, that would have been determined if no impairment loss had been recognised.