(in millions of euros) | Provisions for reorganisation costs | Provision for soil remediation | Other provisions | Total |
Balance as at 1 January 2019 | 6 | 70 | 67 | 143 |
Addition | 1 | 4 | 102 | 107 |
Accrued interest | - | |||
Withdrawal | -5 | - | -44 | -49 |
Other changes | - | |||
Release | -1 | -3 | -4 | |
Balance as at 31 December 2019 | 2 | 73 | 122 | 197 |
Presented under: | ||||
Non-current | - | 67 | 59 | 126 |
Current | 2 | 6 | 63 | 71 |
Provision for reorganisation costs
The purpose of the provision for reorganisation costs is to cover the costs arising from reorganisation measures. Most of the provision is needed for redundancy schemes, bridging payments and the redeployment of staff whose jobs have been eliminated as a result of reorganisations.
Provision for soil remediation
The provision for soil remediation is for managing and remedying environmental damage. The provision is calculated using an average discount rate of 1.5% (2018: 1.5%).
Other provisions
‘Other provisions’ include provisions for losses arising from accidents and fire, uncertainties concerning settlements with carriers, provisions for maintenance in connection with lease contracts and provisions for staff-related matters. This also includes the provision for Individual Compensation for Victims of WWII Transport. The release from ‘Other provisions’ includes a release relating to the settlement of the amounts reserved for personnel expenses and a release resulting from agreements made with a foreign carrier.
Individual Compensation for Victims of WWII Transport
During the Second World War, NS operated trains on instructions from the occupying forces. Various discussions with Mr Salo Muller, a Holocaust survivor, have shown that Mr Muller, but also others, want NS not only to commemorate the victims of the transports and their direct descendants collectively, but also to acknowledge and compensate for their suffering individually. NS does not believe that anyone benefits from lengthy legal proceedings and has expressed its willingness to grant individual financial compensation on moral grounds, to those most directly affected by its actions. It was therefore jointly decided not to institute legal proceedings on liability and to set up a committee to implement the compensation scheme. A special committee chaired by Job Cohen has been tasked with handling individual compensation on moral grounds to an as yet undefined group of survivors and their direct descendants. The committee started work in January 2019. The Committee on Individual Compensation for Victims of WWII Transport by NS presented its recommendation on 26 June 2019. NS has adopted the committee's recommendation and made a provision of €47 million in 2019 to account for the expected compensatory payment and costs of execution (recognised under other operating expenses). The nature of this compensation scheme gives rise to estimation uncertainty regarding both the number of survivors and their direct descendants who are still alive and the number of them who will actually apply for compensation. In 2019, €29 million was withdrawn from the provision and paid out. The provision was remeasured as at 31 December 2019, based on the expected number of applications.
Accounting policies
A provision is recognised in the balance sheet whenever the Group has a legal or constructive obligation as a consequence of a past event and it is probable that the settlement of that obligation will entail an outflow of funds.
Provisions are determined by calculating the net present value of expected future cash flows based on a pre-tax discount rate that reflects both the current market valuations of the time value of money and, where necessary, the specific risks relating to the liability.
Reorganisation costs and non-activity schemes
Provisions are made in connection with reorganisations if a formal, detailed plan has been drawn up for the reorganisation, and the reorganisation is either under way or has been publicly announced. No provision is made for future operating expenses. Provisions for reorganisations relate mainly to redundancy schemes, bridging payments and the redeployment of redundant staff.
Provision for soil remediation
The provision for soil remediation work is intended to cover the costs incurred for the upkeep or repair of operating assets. In line with the Group's published environmental policy and the applicable legal requirements, provisions for the control and remediation of environmental contamination are formed when the contamination occurs or is found to have occurred.
Onerous contracts
A provision for onerous contracts is included in the balance sheet if the economic benefits that the Group expects to derive from a contract are exceeded by the unavoidable costs of meeting the obligations under the contract.
The provision is measured at the present value of the anticipated net costs of continuing the contract or, where this is lower, the present value of the anticipated costs of termination of the contract, being any compensation or penalty entailed by the breach of contract. Before the provision is formed, an impairment loss is applied to the assets to which the contract relates.
Other provisions
Provisions are formed for losses arising from fire, accidents, guarantees issued, claims, provisions for maintenance in connection with lease arrangements and other risks.