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Abellio’s strategy

Abellio was founded to prepare NS for the liberalisation of the European rail market and help NS to achieve its objectives in the Netherlands.

Abellio’s strategy was established on three pillars: earn, learn and prepare. The current focus is on providing reliable services to passengers which ultimately also the Dutch passenger should benefit from, for example by improving cross border connections, and achieving a sustainable long-term return on invested capital whilst managing risks through a diversified portfolio and keeping investments within the risk capital as reserved by NS. This has been challenging in 2020.

However, the rail markets in both UK and Germany are currently difficult to operate. In the UK a restructuring of the national rail industry is anticipated to achieve better alignment between track and train, to facilitate future climate targets and a return of growth in mobility. The corona virus pandemic in 2020 has been severely disruptive for public transport with a projected longer term impact on travel behaviour. For future sustainable profitability of our existing contracts it is necessary in the short term to reach agreement with the franchising bodies to compensate for the challenges that train operating companies (TOCs) are facing which are beyond their control. In the UK, passenger railway contracts are tendered as net contracts, meaning that passenger revenue risk is taken by the operator and any subsidy received is calculated on costs net of revenue. In 2020 for most UK railway contracts a temporary emergency agreement was offered to compensate for the loss of passenger revenue due to the corona virus pandemic. In Germany, most passenger railway contracts are tendered as gross contracts, meaning that passenger revenue risk is retained by the tendering Public Transport Authority (PTA) and any subsidy received is based on the gross costs of the contract. The direct impact of the corona crisis has therefore been limited to changes in timetables and additional safety and cleaning measures. The German government indicated to compensate the additional costs relating to the pandemic and Abellio has received first payments from the PTAs in 2020.

In 2020 Abellio worked within the capital at risk framework which has been agreed between the Dutch Ministry of Finance and NS in 2016. With this framework NS and its subsidiary Abellio can develop foreign activities. The framework stipulates how much capital at risk can be invested in the UK and Germany. Foreign franchises and concessions, like Dutch activities, involve (financial) risks. The core of the framework is that an upper limit has been set for the capital at risk that NS, as the parent of Abellio, may allocate for its foreign activities of Abellio. This consists of € 500 million for invested capital (defined as NS share in Abellio equity) and issued guarantees. An additional limit of € 500 million applies to the contracts in the United Kingdom for specific parent company guarantees (PCS) that the franchise provider in the UK requires from the ultimate shareholder. These guarantees can be seen as a contingent contribution in capital which can be drawn as a subordinated shareholder loan to support activities of the franchise and to fulfil required liquidity ratios. No capital contributions or equity investments are required at the start of a franchise. Shareholder loans drawn for investments during the franchise are relatively low because investments in rolling stock are financed via lease rentals for the duration of the contract. The losses made in 2020 have reduced the Abellio equity and the decrease in the value of the British pound from € 1.18 at 31 December 2019 to € 1.12 at 31 December 2020 has also reduced the value in euro of guarantees provided.

Abellio capital at risk 



(in € million) 


Equity attributable to NS*



Guarantees provided by NS



Guarantees called on (NS portion)



Total equity and guarantees



Total PCS guarantees provided by NS




PCS guarantees called on (NS portion)




Total capital at risk



Of which called on



Of which reserved through capital increase



* The total net cash investment of NS in Abellio amounts to € 175 million per 31 December 2020, consisting of capital contributions of € 249 million offset by dividends received of € 74 million. In addition, a capital increase of
€ 240 million is reflected in equity as at 31 December 2020 and in the drawn capital at risk, although the related cash contribution has not yet taken place.

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