Introduction

In the early 2000s, NS decided to enter the deregulated railway market via a separate subsidiary (Abellio) to prepare for the liberalisation of European markets. At the same time other European rail companies such as Deutsche Bahn (DB) and SNCF are active in the Dutch public transport market. Abellio has been active in the United Kingdom (UK) since 2002 and in Germany since 2009 and has since achieved a diversified portfolio of rail contracts in several regions in UK and Germany as well as bus services in London. The focus of Abellio is on providing reliable services to the passengers and achieving a sustainable return on invested capital which ultimately also the Dutch passenger should benefit from, for example by improving cross border connections.
 2019 has been a significant year with the win and start of the East Midlands franchise in August, timetable changes, introduction of new trains and the mobilisation and start of operations for 3 new concessions in Germany. In December 2019, the Scottish government decided not to accept our proposal to extend the franchise to 2025 under certain financial conditions and subsequently exercised the break clause within the franchise agreement to end the ScotRail franchise early in March 2022. Therefore ScotRail is the earliest franchise expiry in our portfolio.
 Both UK and Germany are currently difficult markets to operate in. In the UK the vote to leave EU has dominated UK politics in the past 3 years and although leaving EU on 31st of January 2020 is not expected to have a direct impact on our operations, it resulted in a slowdown in government decisions and investments relating to public transport and a lower economic growth in the past years. At this moment there are no rail bidding activities. In March 2020 the publication of findings and recommendations is expected following a review of the UK rail industry, the so-called ‘Williams review’, as commissioned by the UK Government in 2018. The recommendations will have an impact on future rail franchises.
 The passenger rail market in Germany is still dominated by the state-owned DB. The German state and DB will invest € 86 billion up to 2030 to modernise the rail network. This causes construction works with a massive impact on both passengers and train operating companies as these works will disrupt train services and will therefore impact the punctuality of the train operators. In Germany Abellio finalised the mobilisation phase of 3 new concessions in 2019. Recruitment of new staff proved to be difficult in a tight labour market and resulted in additional recruitment and training costs. On top of that Abellio also needed to train and recruit additional staff for existing contracts due to new collective tariff agreements for staff which resulted next to higher compensation also in a lower productivity which lead to a higher need of staff as well as higher staff costs. The current subsidy indexation mechanism is not sufficient to cover for such additional staff costs. It will be key to reach agreement with the clients (PTAs) in 2020 on a compensation for increased staff costs due to lower productivity and increased training costs as well as a fair penalty regime for infrastructure related reduction in punctuality which cannot be influenced by the operator. Without such agreements it will be difficult to realise a reasonable result in the German rail market.

Key figures

In 2019, Abellio achieved a revenue of € 3.69 billion, of which € 3.15 billion for Abellio UK (including joint venture Merseyrail), and € 534 million for Abellio Germany. Mainly following the addition of East Midlands in UK in August and the start of Stuttgarter Netz and S-Bahn Rhein-Ruhr in Germany in June and December respectively, the revenue has increased in 2019 by € 650 million. The total number of employees increased by 3,754 to 20,447 employees mainly due to the new contracts. With the start of these new contracts during 2019 and growth in the existing franchises, Abellio expects the revenue will further rise to approximately € 4 billion in 2020.