Combined independent auditor’s report and assurance report To: the shareholder and supervisory board of N.V. Nederlandse SpoorwegenOur conclusionsWe have audited the 2016 financial statements of N.V. Nederlandse Spoorwegen based in Utrecht. The financial statements include the consolidated and the company financial statements.In our opinion:The accompanying consolidated financial statements give a true and fair view of the financial position of N.V. Nederlandse Spoorwegen as at 31 December 2016 and of its result and its cash flows for 2016 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.The accompanying company financial statements give a true and fair view of the financial position of N.V. Nederlandse Spoorwegen as at 31 December 2016 and of its result for 2016 in accordance with Part 9 of Book 2 of the Dutch Civil Code.We have reviewed the non-financial information in the NS Annual Report 2016 of N.V. Nederlandse Spoorwegen based in Utrecht over 2016. A review engagement is aimed at obtaining limited assurance. In addition, we have audited the Selected Information included in this NS Annual Report 2016. An audit engagement is aimed at obtaining reasonable assurance. The scope of our assurance engagement is described in the section “Our Scope”.Based on our review procedures performed, nothing has come to our attention that causes us to conclude that the non-financial information, in all material respects, does not present, a reliable and adequate view of:The policy and business operations with regard to corporate social responsibility / sustainability; andThe events and achievements relating to these aspects in 2016in accordance with the reporting criteria (as disclosed in the chapter “Scope and reporting criteria” of the NS Annual Report 2016).Based on our audit procedures performed, in our opinion the Selected Information in the NS Annual Report 2016 has been prepared, in all material respects, in accordance with the reporting criteria (as disclosed in the chapter “Scope and reporting criteria” of the NS Annual Report 2016).Basis for our conclusionsWe conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the section “Our Responsibilities” in this report.We have conducted our review regarding the non-financial information and our audit regarding the Selected Information in accordance with Dutch law, including the Dutch Standard 3810N: “Assurance engagements relating to sustainability reports”. Our responsibilities hereunder are further described in the section “Our Responsibilities” in this report.We believe the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusions.Our independenceWe are independent of N.V. Nederlandse Spoorwegen in accordance with the “Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO)” and other relevant independence regulations in the Netherlands. This includes that we do not perform any activities that could result in a conflict of interest with our independent assurance engagements. Furthermore, we have complied with the Code of Conduct and Professional Practice for Accountants Regulation (Verordening gedrags- en beroepsregels accountants, VGBA).Our scopeThe consolidated financial statements comprise:The consolidated statement of financial position as at 31 December 2016.The following statements for 2016: the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, and the consolidated cash flow statement.The notes comprising a summary of the significant accounting policies and other explanatory information.The company financial statements comprise:The company statement of financial position as at 31 December 2016.The company income statement for 2016.The notes comprising a summary of accounting policies applied and other explanatory information.The non-financial information comprises the chapters Company Profile, Report by the Executive Board, Dialogue with our stakeholders, Our strategy, Finances in brief, Scope and reporting criteria, Activities in The Netherlands and Abellio, in the NS Annual Report 2016 of N.V. Nederlandse Spoorwegen.The Selected Information consists of the following parameters as listed in the NS Annual Report 2016 of N.V. Nederlandse Spoorwegen:C02 emissions per passenger-kilometer of NS Reizigers, NS HiSpeed and the Abellio Greater Anglia concession;C02 emissions per bus-kilometer of Abellio London Bus & Surrey;Tonnage industrial, office and consumer waste from the stations and trains of NS Netherlands and the percentage of waste that NS Netherlands offers separated to its waste processors.The non-financial information contains prospective information relating to ambitions, strategy, targets, expectations and projections, and risk assessments. Inherent to this information is that actual future results may differ and are therefore uncertain. We do not provide any assurance on the achievability and feasibility of the prospective information included in the non-financial information.Scope of the group auditN.V. Nederlandse Spoorwegen is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements of N.V. Nederlandse Spoorwegen.Our group audit mainly focused on significant group entities: NS Operatie, NS Commercie & Ontwikkeling, and Abellio. Based on the full scope and specific scope procedures, we have obtained audit assurance on 98% of assets, 92% of revenues and 98% of result before income tax. At other group entities, we performed procedures with a limited scope.We have performed audit procedures ourselves at Dutch group entities. We used the work of other auditors in our international network for the foreign group entities.By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the consolidated financial statements.Reporting CriteriaThe consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted within the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code.The company financial statements have been prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code.N.V. Nederlandse Spoorwegen uses version G4 (“Comprehensive”) of the Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) and the supplemental internally applied reporting criteria as disclosed in chapter Scope and reporting criteria of the NS Annual Report 2016 as a framework for reporting on corporate social responsibility and sustainability.We consider the reporting criteria used relevant and suitable for our review and audit.MaterialityGeneralThe scope of our assurance procedures is influenced by the application of materiality. Our assurance engagements aim to provide assurance about whether the financial statements, the non-financial information, and the Selected Information are free from material misstatement. Misstatements may arise due to fraud or error. They are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements and the non-financial information. Materiality affects the nature, timing and extent of our assurance and review procedures and the evaluation of the effect of identified misstatements on our conclusions.Financial statementsFor the audit of the financial statements our considerations regarding materiality are as follows:Materiality€ 40 millionBenchmark used 0.8% of revenueAdditional explanationGiven the nature of NS, its objectives, and the importance of its operating performance in the Netherlands and abroad, its revenue activity base is considered the most relevant basis for materiality.We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.We agreed with the supervisory board that misstatements in excess of € 2 million, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.Non-financial Information and Selected InformationBased on our professional judgment, we determined specific materiality levels for the non-financial information and the Selected Information as a whole and for each part of the non-financial information and the Selected Information. When evaluating our materiality levels, we have considered the relevance of information for the intended users of the non-financial information and the Selected Information, based on the materiality analysis performed by N.V. Nederlandse Spoorwegen.Our key audit and review mattersKey audit and review matters are those matters that, in our professional judgment, were of most significance during our audit of the financial statements and the Selected Information, and for our review of the non-financial information. We have communicated the key audit and review matters to the supervisory board. The key audit and review matters are not a comprehensive reflection of all matters discussed.These matters were addressed in the context of the audit of the financial statements, the review of the non-financial information and audit of the Selected Information as a whole and to conclude thereon, and we do not provide a separate conclusion on these matters.For the audit of the financial statements, we identified the following key audit matters:Irregularities identified in the bid for the Limburg franchiseKey MatterHow our audit addressed the matterIn 2015, following the tender in Limburg and a complaint received from Veolia, the Netherlands Authority for Consumers and Markets (ACM) launched an investigation.We have verified that the actions taken by NS are sufficient to determine the nature and extent of the identified irregularities. NS furthermore received the support of various legal advisers.The ACM concluded that NS had violated the Railways Act (Spoorwegwet) in certain aspects in the preparation of the tender in Limburg. ACM concluded that NS had prejudiced Veolia in doing so. In 2016, NS presented its views to ACM. A final ruling, or possible decision by the ACM to impose a penalty, has not yet been received.We assessed the independence and expertise of the external investigators. Where necessary, we have performed additional procedures to mitigate risks identified for our audit.The Public Prosecution Service also stated that a number of NS Group companies were deemed to be suspects in this case.The disclosure related to the financial reporting on the identified irregularities is included in note 29 of the financial statements.Revenue recognition relating to passenger servicesKey MatterHow our audit addressed the matterRevenue of € 4.5 billion from passenger services is included in the account “Revenue”. These passenger revenues include revenues out of the sales of various ticket types entitling their holder to transport as well as, government contributions. In order to determine these revenues, management must make assumptions regarding to the allocation to periods, and other conditions as stated in the various concession agreements. The diversity in ticket types, combined with the high volume of transactions, require high standards of reliability and continuity of transaction-processing systems in order to guarantee that individual transactions will result in correct and complete revenue recognition.In 2016, NS followed up on various findings we reported and is gradually improving their control over revenue recognition. Our activities include the assessment of internal controls and the IT environment, performing data analysis procedures such as trend analyses and inspection of manual journal entries, performing partial observations on correct and complete transaction processing, and a review of management’s estimates with regard to revenue allocation.The disclosures relating to revenue recognition with regard to passenger services are included in note 1 and 29 of the financial statements. Tax position and fiscal risksKey MatterHow our audit addressed the matterThe key issues regarding the tax position are the Group’s relationship with the Irish subsidiary NS Financial Services, which operates as a leasing company for the other NS business units, the recognition of the impairment loss on the V250 rolling stock and the valuation of the deferred tax assets.Where applicable, we took note of the relevant discussions and verified that tax assets and liabilities have been recorded in accordance with IFRS in the financial statements. In certain circumstances, estimation differences or disputes may occur with the various national tax authorities.We have performed procedures on the estimation process and tested the acceptability and adequacy of the recorded deferred tax assets and liabilities. We have included our internal tax experts in our team. We reviewed the assumptions underlying the estimates and discussed them with management taking into consideration local tax regulations. We concur with the assumptions used by management.The Dutch tax authorities (Belastingdienst) is currently investigating the fiscal treatment of the transactions with the Irish subsidiary NS Financial Services. The disclosures relating to the tax position and tax risks are included in note 10 and 16 of the financial statements.Sale and valuation of real estateKey MatterHow our audit addressed the matterFocus areas relating to the NS Real Estate concern the valuation at year-end, as well as governance of real estate transactions during the year.We have performed procedures on the estimation process supporting the valuation of the real estate. We have examined the appropriateness of the assumptions used. To this end, we added real estate experts to our team. If indications of impairment are present, NS examines whether an impairment to a lower net realizable value is required. In this examination, important assumptions are made that support the valuation. If deemed necessary by NS, the assistance of independent external appraiser is used.We also assessed the independence and expertise of the external appraisers used by NS.In 2016, NS sold its real estate portfolio, which was held jointly with other participants in a real estate fund. Strict governance procedures have been agreed with regard to the sales process with these participants.We concur with the assumptions used by management. Regarding the sale of the real estate portfolio, we assessed the governance agreed upon between the participants, and subsequently audited compliance. Furthermore, we have performed substantive procedures in relation to sales transactions. The disclosures related to property, plant and equipment, investment property and investments recognized using the equity method are included in note 11, 12 and 14 of the financial statements.Reliability and continuity of the automated data processing systemKey MatterHow our audit addressed the matterTo a considerable extent, NS depends on its IT infrastructure for the continuity of its business operations. In recent years, NS has invested in the improvement of IT hardware, systems and processes focusing on increasing the IT infrastructure effectiveness and the reliability and continuity of automated data processing. We reviewed the reliability and continuity of the automated data processing only insofar as necessary within the scope of the audit of the financial statements. For this purpose, we included specialized IT auditors in our audit team. Our procedures consisted of the assessment of the developments in the IT infrastructure and testing of the internal control procedures relating to IT systems and processes. In our management letter, we reported on identified risks and recommendations for improvements in this area. As a result of our procedures we note that NS has again improved the quality of its IT management by following up on some of the findings reported in 2015. The findings that still require attention have been highlighted again. Furthermore a number of new attention areas have been identified. We refer to the paragraph Managing risks included in the NS Annual Report.For the review of the non-financial information and the audit of the Selected Information in the NS Annual Report 2016, we identified the following key review matters:Reliability of the creation of and reporting on main rail network concession performance indicatorsKey MatterHow our review addressed the matterNS measures its progress in achieving its strategy through the main railway network concession performance indicators. The progress of these performance indicators is also an important part of the mid-term review and final evaluation in 2019 or 2024 respectively regarding to the possible concession extension. Given their relevance we have identified this set of performance indicators as a whole as a key review matter. As part of our procedures, we gained insight into the reporting process, and reviewed the quality of this process (including controls) in design and implementation. We furthermore reviewed the degree of consistency with the public definitions in the “Vervoerplan 2016” (Transport Plan 2016), and reconciled these with what was reported by NS to the Ministry of Infrastructure and Environment (IenM). We reviewed the disclosures in the chapter Activities in the Netherlands in respect of the performance indicators.Impact Model Regarding Social ImpactKey MatterHow our review addressed the matterNS measures its impact on society by means of an impact model. Inherent to the nature of this impact model is that the information used in the model is largely based on external sources, estimates and underlying assumptions.As part of our review procedures we have taken note of the design of the impact model. We assessed the reasonableness of the assumptions and estimates applied. We also reviewed the correctness of the calculations. Where applicable, we reconciled the applied assumptions to external sources. We reviewed the disclosures in the chapter Our impact on the environment and on society and in the methodology document.Other information included in the NS Annual Report 2016In addition to the financial statements and our combined auditor’s report thereon, the NS Annual Report 2016 contains other information, which consists of:The NS Management Report, which is included in chapters I, II, and III;The Report by the Supervisory Board, which is included as part of chapter I; andThe other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.Based on the following procedures performed, we conclude that the other information:Is consistent with the financial statements and does not contain material misstatements.Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of the financial statements and the Selected Information or in our review of the non-financial information.Management is responsible for the preparation of the other information, including the NS Management Report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information pursuant to Part 9 of Book 2 of the Dutch Civil Code.Report on other legal and regulatory requirementsEngagementWe were engaged by the shareholder as auditor of N.V. Nederlandse Spoorwegen on 3 September 2013 as of the audit for the financial year 2014, and have acted as external auditor since that date.ResponsibilitiesResponsibilities of management and the supervisory boardManagement is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code.Management is also responsible for the preparation of the non-financial information and the Selected Information in accordance with version G4 (“Comprehensive”) of the Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) and the supplemental internally applied reporting criteria as disclosed in the chapter Scope and Reporting Criteria of the NS Annual Report 2016, including the identification of stakeholders and the determination of material issues. The choices made by management with respect to the scope of the non-financial information and the reporting policy are included in the chapter “Scope and reporting criteria”.Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements, the non-financial information and the Selected Information that are free from material misstatement, whether due to fraud or error.As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern principle of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements.The supervisory board is responsible for overseeing the company’s reporting process.Our responsibilitiesOur objective is to plan and perform the assurance engagements in a manner that allows us to obtain sufficient and appropriate assurance evidence for our conclusions.Our audit of the financial statements has been performed with a high, but not absolute, level of assurance, which means we may not have detected all material errors and fraud.We apply the ‘Nadere voorschriften accountantskantoren ter zake van assurance opdrachten RA’ and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and other relevant regulatory requirements.Our review of the non-financial information is aimed at obtaining limited assurance. The procedures performed in obtaining limited assurance are focused on the plausibility of information which does not require exhaustive gathering of evidence as in engagements focused on reasonable assurance. The procedures performed consisted primarily of making inquiries of management and others within the entity, as appropriate, applying analytical procedures and evaluating the evidence obtained. The level of assurance obtained in review engagements is therefore substantially less than the assurance obtained in an audit engagement.Our audit of the Selected Information is aimed at obtaining reasonable assurance. Reasonable assurance provides a high, but not absolute, level of assurance, which means we may not have detected all material errors and fraud.Rotterdam, 24 February 2017Ernst & Young Accountants LLPSigned by J. HetebrijAppendix to the combined independent auditor’s report and assurance reportWork performedWe have exercised professional judgment and have maintained professional skepticism throughout the assurance engagements, in accordance with the Dutch Standards on Auditing and the Dutch standard 3810N, ethical requirements, and independence requirements.Our audit to obtain reasonable assurance about the financial statements included the following:Our review to obtain limited assurance about the non-financial information in the NS Annual Report 2016 included the following:•Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.•Performing an external environment analysis and obtaining insight into relevant social themes and issues, and the characteristics of the organization. •Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.•Evaluating the appropriateness of the reporting policy and its consistent application, including the evaluation of the results of the stakeholders’ dialogue and the reasonableness of management’s estimates.•Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.•Evaluating the design and implementation of the reporting systems and processes related to the non-financial information in the NS Annual Report 2016.• Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.•Interviewing management responsible for the sustainability strategy, policies, and performance.•Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.•Interviewing relevant staff responsible for providing the information for the Report, carrying out internal control procedures on the data and consolidating of data in the non-financial information in the NS Annual Report 2016.•Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.•Various site visits to Abellio Greater Anglia, Abellio London & Surrey and Abellio ScotRail in the UK to evaluate the source data and to evaluate the design and implementation of control and validation procedures at local level. •Performing analytical review of the data and trend explanations submitted for consolidation at group level. For our audit to obtain reasonable assurance about the Selected Information in the NS Annual Report 2016, we performed the procedures above with more depth, and additionally performed the following additional procedures, among others: •Evaluating the underlying transactions and events. •Auditing source documents during site visits to Abellio Greater Anglia, Abellio London & Surrey and Abellio ScotRail in the UK; •Assessing relevant data and internal and external documentation, on a test basis, to determine the reliability of the Selected Information.Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items. We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the assurance procedures and significant findings, including any significant findings in internal control that we identify during our assurance procedures. We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. We determine the key matters of our assurance engagement on the NS Annual Report 2016 of N.V. Nederlandse Spoorwegen on the basis of all matters discussed with the supervisory board of N.V. Nederlandse Spoorwegen. We describe these matters in our combined auditor’s report and assurance report, unless laws or regulations precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.