Our financial position needs to be sound if we are to achieve our ambitions. Investments must produce sufficient returns to ensure the company’s continued existence. This is also in the public interest. The development in the underlying result from operating activities is a good yardstick for this. It shows the result from business activities after eliminating exceptional items.

Underlying result from operating activities

The underlying operating result fell by €89 million in 2016 to €145 million (from €234 million in 2015¹). In the main rail network, where the underlying operating result decreased by €20 million, generally higher revenues from transport were offset by higher personnel expenses and higher usage fees for the track. The underlying operating result at NS Stations fell by €32 million in 2016, mainly because of fewer sales of property, lower rental income from assets that were sold in 2015 and 2016, and lower rents as a result of the Railways Act. There was no loss on operations in 2016 for Retail Internationaal as it ceased operations. Finally, there was a fall in the underlying result of €36 million due to centralisation of the accommodation costs and increased personnel expenses for the corporate staff departments.

The largest profit item in 2016 from ad hoc business activities came from the sale of the properties in the Basisfonds Stationslocaties company, which resulted in a one-off book profit of €117 million.

ROI

The return on invested capital (ROI) increased to 5.7% in 2016 (3.5% in 2015). Based on the underlying result, the ROI fell from 4.9%² in 2015 to 3.1% in 2016. NS seeks to achieve a return on equity that is in line with the market. The return on investment achieved in 2016 is sufficient, but the financial outlook for the long term is challenging. NS is working on improved controls, speeding up maintenance activities through Pitstop and embedding lean management across the organisation; this should lead to both excellent processes and better financial results. Increasing the quality and improving the cost efficiency of the support departments will also help improve the return on investment. Over the next few years, the costs of corporate staff departments and indirect employees should show a downward trend, which will create room for more investment in customers.

• 1Comparative figures for 2015 have been adjusted by €22 million (2015: €212 million) as a consequence of a change in the classification of exceptional items
• 2Comparative figures for the underlying result in 2015 have been adjusted by €22 million (annual report 2015: 4.5% was reported) as a consequence of a change in the classification of exceptional items