NSB GROUP / ANNUAL REPORT The will to succeed

Transcription

1 NSB GROUP / ANNUAL REPORT 2015 The will to succeed

2 NSB GROUP Facts and Figures /04/ CEO s report /06/ Highlights 2015 /08/ 14 MAGAZINE Society trends/14/ Busy people need more than a station /18/ Good interchanges make life easier /28/ Groceries take the train again /34/ 42 BUSINESS AREAS Passenger train /42/ Freight /44/ Real estate /46/ Bus /48/ Train maintenance /50/ 54 THE YEAR 2015 Report of the board of directors /54/ Social responsibility /66/ Corporate governance /82/ 87 FACTS AND FIGURES NSB Group /87/ NSB AS /131/

3 About The NSB Group is a Nordic transport group where passenger transport by train and bus, freight by rail, property and hub development as well as train maintenance constitutes the main business. NSB GROUP CORPORATE FUNCTIONS

4 OPERATIONAL KEY FIGURES Passenger train Number of train journeys (mill.) Punctuality passenger trains in Norway 88.6 % 88.3 % Customer satisfaction pass. train (index 0-100) Bus Number of bus journeys (mill.) Customer satisfaction express bus (index 0-100) Freight Number of transported TEU freight train (1,000) Punctuality freight train 91.9 % 90 % KEY FINANCIAL FIGURES (MNOK) Group profit Operating revenue 15,372 15,336 Operating profit 2,814 2,001 Profit for the year 2,158 1,509 Group cash flow Net cash flow from operations 2,233 1,338 Group balance sheet Net interest bearing debt (NIBD) 7,312 7,359 Equity Return on equity (ROE) 23.5 % 19.2 % Equity ratio 34.1 % 30.2 % ,372 15, Number of train journeys (mill.) Number of bus journeys (mill.) Number of transported TEU (1,000) Operating revenue (mill.)

5 Determined to succeed The NSB Group is facing extensive changes in the near future, but even if NSB's role changes, the social mission will remain the same. Ability and willingness to meet customers needs will be our prime priority in years to come. 3

6 NSB GROUP ANNUAL REPORT 2015 A community partner that adds value Our main goal is to create value for our owner and society, through ensuring effective, accessible, safe and environmentally friendly transport of people and goods. NUMBER OF EMPLOYEES AS AT ,668 OPERATING PROFIT (MNOK) 3,000 2, ,000 1, ,

7 AN OVERVIEW NUMBER OF TRAIN JOURNEYS 72.4 million 67.1 million NSB passengers in Norway (including NSB Gjøvikbanen and Flåmsbanen) and 5.3 million in Sweden (Svenska Tågkompaniet AB) NUMBER OF BUS JOURNEYS million Norway: 75.3 million / Sweden: 34.2 million AREA PROPERTY MANAGEMENT 730,000 m 2 CONTAINER TRANSPORT BY TRAIN 372,748 ENVIRONMENTAL CONTRIBUTION 504,000* tonnes CO 2 The NSB Group saves society tonnes of CO 2 annually. This is the equivalent to the greenhouse gas emissions from 9 per cent of all cars in Norway. *Increase in CO 2 emissions if the transport provided by NSB Group had instead been provided by cars and lorries. 5 5

8 NSB GROUP ANNUAL REPORT 2015 Pride, sadness and determination Geir Isaksen, CEO, The NSB Group It is with pride we present our financial results for Pride from the NSB Group achieving an operating profit of over 2,800 million Norwegian kroner in This is the best result in the history of the company. Pride because this is the fourth year in a row with record results for NSB. Pride because, since 2012, NSB has improved the service offered, has brought 71 new trainsets into service and has increased the number of journeys by 26 % the last four years. Pride because CargoNet has turned eight years of losses into a healthy surplus, and made freight by rail a profitable operation. Pride because ROM Eiendom builds attractive housing, offices and industrial buildings, and redesigns old railway property, making improved urban spaces where people like to meet. Pride because Nettbuss has strengthened its position in the bus market in both Norway and Sweden, and continues to deliver improved results. run much further between each unplanned stoppage. It is with sadness we acknowledge that the end of the NSB Group in its current form is approaching. After the railway reform NSB will no longer own passenger trains, decide route planning or purchase new rolling stock. Neither will we maintain trains. ROM Eiendom will no longer be part of the Group. Ticket- and sales systems for train travel will not be run by us. We are to compete with other train operators from other countries for contracts to run trains on Norwegian tracks. The government expects this reorganization will create a better and more efficient train operation. We hope that the reorganization succeeds, and that improvements in the future will be at least as great as in preceding years. It is with a determination to succeed that we embark upon our new role. We realize what is at stake, although the adjustments, especially as regards passenger train operations, are quite extensive. We will do everything possible to ensure that our current customers and all new customers receive an increasingly improved range of services. Pride because Mantena improves the maintenance of our trains continually, so that trains 6

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10 NSB GROUP ANNUAL REPORT 2015 Important events in 2015 NSB Group Changes in the railway sector In Spring 2015 the Norwegian parliament passed the government s proposal for significant changes to the railway sector in Norway. This railway reform will have major consequences for the NSB Group. The main changes consist of: // a railway directorate will be established // an infrastructure company will be established // ROM Eiendom will be transferred to the infrastructure company // Mantena will be transferred to the Ministry of Transport and Communications // all rolling stock is to be transferred either to the infrastructure company or to the Ministry of Transport and Communications // current passenger train operations run by NSB AS will be put out to tender in six to eight traffic packages Passenger train operations The positive trend, with an annual growth rate of about 6 per cent in passenger volume, has continued in NSB has laid the basis for increased passenger volume in Eastern Norway with new trains and a new route model that better covers passenger needs. On long distance routes, Oslo- Trondheim (Dovrebanen) and Oslo-Bergen (Bergensbanen) show a particularly positive development in passengers carried, with daytime departures showing 6.8 and 7.2 per cent growth respectively. Satisfied customers Customers regularly express satisfaction with the services provided by NSB. The customer satisfaction index (CSI) supports this and showed a welcome increase of 3 percentage points, up from the previous year s figure of 70 to 73. New trains In the Norwegian state budget for 2016 NSB was given a residual value guarantee for the purchase of 44 new trains. Delivery is planned starting from 2018 and until 2020 and will ensure rolling stock renewal both in and outside Eastern Norway. These trains are planned to replace those running on the Bergen-Voss (Vossabanen) and the Oslo-Gjøvik (Gjøvikbanen) lines. Furthermore, some of the new trains will be allocated to Eastern Norway to ensure more double trainsets running during rush hour. A new contract won by Svenska Tågkompaniet AB NSB s subsidiary in Sweden, Svenska Tågkompaniet, is to run regional rail traffic in northern Sweden for the next nine years. Start-up will be 20th August Svenska Tågkompaniet has selected Euromaint as supplier and partner for the maintenance of these trains an integral part of this contract. Every fourth ticket sold by our app Ticket purchase and e-ticketing using the NSB app are increasingly popular. Today every fourth ticket is sold using the app. More NSB passengers now also choose to use NSB s entertainment app during their journey, giving them access to audio books, electronic newspapers, podcasts and music. Bus operations Nettbuss has secured several important contracts in Sweden and Norway, starting in Contracts in Sweden The county transport authority, Länstrafiken, has awarded Nettbuss the contract to operate bus traffic in Östersund (mid Sweden). The contract is valid for five years from 13th June The Gothenburg area transport authority, Västtrafik, awarded Nettbuss two contracts, one for local traffic in Fyrbodal and another for two express services in the Gothenburg area (the Red and Purple lines). The contracts run for 10 years commencing on 1st July

11 IMPORTANT EVENTS Contracts in Norway The county transport authority, Hedmark Trafikk, has awarded Nettbuss the Glåmdalen contract. This contract is for ten years from 1st July Nettbuss also won back bus services in a large part of Sunnmøre (mid Norway) based on two nine-year contracts commencing on 1st January In addition, Nettbuss were awarded a 10 year contract commencing on 10th October 2016 for Indre Nordmøre (mid Norway), and a seven-year contract commencing on 1st July 2016 for Grenland in southern Norway was recaptured. Moreover Brakar (Buskerud county) awarded Nettbuss the contract for the bus service between Oslo and Hønefoss. The contract commences on the 1st August 2016 and lasts for six years. Nettbuss was also successful in Jæren and in Dalane, both contracts commencing on 1st July 2016 and lasting for eight years. Decreasing passenger volume between Sandnes/Stavanger and Bergen resulted in Nettbuss shutting down the route from autumn The route made a loss initially and passenger growth did not meet expectations. The decline in traffic followed the downturn in oil-related activities worsening during the autumn. Streamlining Over a period the business has been through major restructuring to improve results and streamline operations. This has given good results so far and efficiency measures are to continue. Freight operations Reorganisation measures Major changes and restructuring in freight operations have been introduced giving positive financial and operational effects. Streamlining of operations continues in New freight services CargoNet has established new freight services in A direct service between Trondheim and Mosjøen to the north has been established, creating transit opportunities to and from the other terminals in CargoNet s network. In cooperation with DFDS Seaways and North Sea Terminal a direct transport connection has been established between Brevik (on the south coast) and both Bergen and Oslo, with direct links to the Continent and Britain. Train maintenance Realignment and reorganisation Mantena has reorganised its operations to meet increased demands to deliver costeffective services in a competitive market. New contracts Mantena has won contracts with Svenska Jernbanen (SJ) in Sweden for maintenance of SJs own rolling stock starting in 2016, but lost the contract with Botniatåg on the Baltic coast. Real estate A new agreement for urban development in Drammen The Drammen municipality, ROM Eiendom and Jernbaneverket (the railway Infrastructure manager) have agreed to ensure positive urban development on railway properties in Drammen, and have signed a new cooperation agreement for the development of these properties. This means specifically that ROM Eiendom can now go ahead with its hotel plans at Drammen station. More places to park bicycles ROM Eiendom has finalised plans for new bicycle parking at Oslo S. This will make an important contribution to facilitate cycling which the city of Oslo emphasises and promotes. Initially, 250 new cycle parking spaces can be built using existing buildings at Oslo S. Buildings sold In 2015 the office building in Munkedamsveien 62 in Oslo was completed and sold. The sales agreement for this building was signed even before construction started. The buyer was a consortium of RS Platou and Fabritius AS. Alf Bjerckes vei 30 at Alna in Oslo, which was developed together with Aspelin Ramm Eiendom AS, was sold to Braathen Eiendom. ROM Eiendom AS and Aspelin Ramm Eiendom AS owned 50 % each of this building. Bestselling housing projects The apartments at the Grefsen station transport hub in Oslo are Norway s bestselling housing project. Almost 1,200 apartments will be built here altogether, jointly developed with JM Norge. In apartments were sold in this project. Housing project in Bjørvika Through Oslo S Utvikling AS, ROM Eiendom participates in developing Bjørvika. Both residential property and commercial properties are being developed. In 2015 the development of residential properties was the main focus, and 57 apartments were sold last year. Sale of land in Bjørvika ROM Eiendom has sold its remaining properties in Bjørvika to the part-owned joint venture Oslo S Utvikling AS. In total aproximately 100,000 sq m is to be constructed on the relevant sites, of which about 25 % is commercial and 75 % residential. The sales price for the land option was 543 MNOK. Estimated net profit for the NSB Group amounts to 285 MNOK. 9

12 12,328 NSB Group turnover in MNOK ,199 NSB Group turnover in MNOK ,145 NSB Group turnover in MNOK

13 15,336 NSB Group turnover in MNOK ,372 NSB Group turnover in MNOK

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15 14 Social trends EXPERT EXPECTATIONS 18 Passenger traffic BUSY PEOPLE NEED MORE THAN A STATION SIMPLICITY, FLEXIBILITY AND ACCESSIBILITY ARE THE RECIPE FOR SUCCESS Om NSB-konsernet Samfunnsbidraget Virksomhetsområden Årsrapport 28 Hub development GOOD INTERCHANGES MAKE LIFE EASIER 34 Freight GROCERIES ARE BACK ON THE TRAIN 13

16 Population growth and centralisation are two mega trends that will influence and shape public transport in the future. 14

17 NSB GROUP ANNUAL REPORT 2015 SOCIAL TRENDS 15

18 NSB GROUP ANNUAL REPORT 2015 SOCIAL TRENDS The Norwegian Institute of Transport Economics (TOI) has recently carried out a futures study where 300 experts have given their views on public transport in the years to come. In short, there is agreement that public transport will take over more passenger transport, especially in cities. They also believe that mobile communications technology will change people s travel habits significantly, says senior research analyst Tom Erik Julsrud at TOI. TOM ERIK JULSRUD The Norwegian Institute of Transport Economics The travel experience itself becomes more important Young people increasingly postpone taking their driving test or reject driving altogether. An increasing number wish to travel in an environmentally friendly manner. As the incidence of traffic jams increases in line with population growth, the bus and train become more attractive modes of transport. On the bus and train you are free to do other things, like surfing the net, reading for exams or working. Our studies show that the most ardent users of public transport today are teenagers and women in cities. These groups are quick to adopt new communications technologies, says Julsrud. He believes that now is the time for NSB to ensure its competitiveness by developing services that make choosing public transport even more attractive. Soon, every Norwegian will have a smartphone. This provides new possibilities for how people organise their journeys. Must meet the customer s needs Soon, every Norwegian will have a smartphone. This provides new possibilities for how people organise their journeys. Individual mobility is growing quickly; people plan and organise their journeys themselves. If delays occur, they are quick to find alternative solutions. People want real time information, and public transport providers need to be on the ball, says Julsrud. He believes the NSB app is a good example of improved service, eg by enabling you to check whether the train is on time. Another general social trend is that long distance commuting is on the increase. This favors the train, both because many work-related journeys are into and out of cities where the train has a good service, and because many wish to work during the journey. It is therefore important that NSB meet these long distance commuters needs, says Julsrud. Similarly, those who live outside urban areas should have a practical alternative to the car. 16

19 NSB GROUP ANNUAL REPORT 2015 SOCIAL TRENDS Freight will go by rail Transport is not just about moving people, but also moving goods. The railway is a cost efficient service for freight transport between large cities in the south of Norway and between southern and northern Norway. Many customers want to load their goods in the evening for arrival early the next morning. Offering such a service the railway is competitive provided everything works as it should, says head of research for industry and transportation, Inger Beate Hovi at TOI. Growth in population and centralization are also two strong driving forces working in favour of rail-freight. We also see that business is increasingly concerned about cost efficiency at all levels, promoting rail-freight which is so much cheaper than road transport between terminals, says Hovi. Increased focus on the environment is obviously no disadvantage for the train, and some of the larger buyers of transport services are now taking the initiative by showing social responsibility through choosing a more environmentally-friendly mode of transport. Hovi points out trends such as increased shopping on the internet and express delivery. Delivering directly to the end customer will also become more important for future rail-freight INGER BEATE HOVI Head of research The Norwegian Institute of Transport Economics DRIVING LICENSE TRENDS AMONGST NORWEGIAN TEENAGERS Figures show the percentage with drivers license in 1992, 2001 og 2009 National travel survey/tøi (Institute of Transport Economics Norwegian Centre for Transport research) yrs 19 yrs 20 yrs 21 yrs 22 yrs 23 yrs 24 yrs 17

20 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC 18

21 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC Busy people need more than a station. Trains are increasingly more frequent, with an influx of customers, the result of long term planning. 19

22 I don t need to keep an eye on the time, there is always a train. Lars Magnus Øksnes, daily commuter Lillestrøm-Oslo 20

23 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC In million journeys were made with the NSB Group s passenger trains. In Norway the number of journeys has increased by 26 per cent in the last four years. Why so many more people choose to use the train, especially to and from work, can be traced back to planned improvements that started in We saw that population growth over the coming years would be very high, especially in Eastern Norway. We had to change our way of thinking. How do we ensure that as many as possible choose environmentally friendly trains? The solution we proposed, a ten-minute frequency between Asker and Lillestrøm, either side of Oslo, was proclaimed wishful thinking, remembers Excecutive Vice President for NSB passenger train operations Tom Ingulstad. Our planners did not give up, ignoring the sceptics. With a new double track under construction in the western corridor out of Oslo, this frequency could be achieved with some small adjustments. But there was one clear requirement: we needed new trains. Many new trains, states Ingulstad. TOM INGULSTAD Excecutive Vice President for NSB Passenger train operations The vision became a reality We got trains. In 2007 NSB ordered the first new trains of type 74/75, better known as the Swiss Flirt trains. Reliable, comfortable, environmentally friendly and quiet, these trains have room for many new train passengers. Then, in 2012, the new timetable was ready for roll-out. Train passengers in the Oslo region were offered more frequent train departures, and every third week a new train was put into operation. The culmination of planned improvements was reached when Høvik station opened in December Finally the vision of train departures every ten minutes between Asker and Lillestrøm was a reality. You no longer have to look at your watch before going to the station. The trains run all the time, says Ingulstad. Also Sørlandsbanen, the south coast line, and Trønderbanen, serving Trondheim, have increased departure frequencies. When Follobanen, running south out of Oslo, opens in 2021, increased train services will be possible there too. More capacity is absolutely necessary. We know that an increasing number of people will travel by train in the years to come. That is why we continue to purchase new trains. Late last year we received the go-ahead to purchase much needed trains for both the Bergen Voss line(vossebanen) and the Oslo Gjøvik line (Gjøvikbanen), says Ingulstad. KRISTIN KJØGE JANSSON Leader for sales and business development, NSB passenger rail operations Digital services If as many people as possible are to choose to travel by train, it must be simple. NSB s app has been downloaded 1.4 million times. One in four customers purchases their ticket using the app. Most of us have our mobile with us at all times, and now customers can use their phone both to plan their journey, to purchase their ticket and check if the train is on time. Additional services like free newspapers, audiobooks, music and podcasts are also available on the app, says the leader for sales and business development, NSB passenger rail operations, Kristin Kjøge Jansson. NSB continuously develop new digital solutions based on customer trends and in-depth knowledge of customer requirements. During autumn 2015 the new national travel planner Tidr.no was launched. Here you get an overview of all the country s public transport services, irrespective of mode of transport. Many train passengers use other modes of transport on their way to and from their destination. We need to make it easy for them to plan their entire trip, which is why we launched Tidr.no, says Kjøge Jansson. 21

24 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC More satisfied customers So the question is: do digital solutions and more frequent departures mean anything to the customer? The answer is definitely yes. The increased number of train journeys speaks for itself, but customer satisfaction is also on the increase, albeit from a fairly low level. Five years ago customer satisfaction was at 65 points. This result was too low, and showed that NSB had a lot of work to do. The customer satisfaction survey shows that customer satisfaction is now at 73 points for 2015, and we re aiming for further improvements. There is still a lot to work with, but the figures show that it pays to invest in customer-friendly solutions, says Ingulstad. Tackling train disruptions Not surprisingly, customers are most dissatisfied with NSB when disruptions occur. They want better information and they want us to come up with alternatives quickly, so that they can get where they are going as quickly as possible, says director in NSB East Øivind Leet. The railway is to undergo major developments for many years to come. Good for the customers in the long term, but it also means that train services are suspended for certain periods while the work is being done. NSB therefore cooperates closely with Jernbaneverket (the Norwegian National Rail Administration), Statens vegvesen (Norwegian Public Roads Administration), Ruter (Oslo region tram, bus and metro) and other transport organisations to ensure practical alternatives when the trains are not running. Unfortunately we experience too often that trains are hindered because of signalling problems, power outages, track breakages or technical faults on the trains. We work hard to provide information to customers on alternative transport to help get them to their destination. Our efforts will intensify further in the years to come, says Leet. ØIVIND LEET Director NSB East We understand that it is annoying when the train is not punctual. We will continue to look for better solutions for our customers. At peak hour customers take the train from Oslo S. As bus capacity at Oslo S is 40 buses an hour i.e. 2,000 passengers it is an enormous challenge when faults occur unexpectedly on the railway. We understand that it is annoying when the train is not punctual. We will continue to look for better solutions for our customers, confirms Leet. When the train runs on time and customers are well informed, then the train is a success. We know we succeed when we listen to the customers. We need to purchase more trains, to run these more frequently, ensure relevant information is available to customers and make it easier to find travel information and purchase tickets. If we manage this, then we know that it is an easy choice to leave the car at home and take the train instead, says passenger rail director Tom Ingulstad. CUSTOMER SATISFACTION PASSENGER RAIL

25 Simplicity, flexibility and accessibility are the recipe for success. Nettbuss Bus4You has Sweden s most satisfied customers five years running. 23

26 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC Bus drivers are known for their good humour, or so says the Norwegian nursery rhyme. Based on the Swedish quality index survey, this is not just a cliché: Nettbuss Bus4You in Sweden is the public transport customer s favourite for the fifth consecutive year. Neither metro, trains nor planes have beaten the bus. According to the survey, simplicity, flexibility and accessibility are the recipe for success. This does not only apply to the actual journey, but the whole experience, such as being able to purchase tickets without fuss, and then get to and from the station and terminal quickly and easily. Transport companies must think about the entire journey as experienced by the customer, concludes Swedish quality index. Guests, not just customers Nettbuss Bus4You runs commercial express routes in both Sweden and between Sweden, Norway and Denmark. How do they themselves explain why customers are so satisfied? We emphasize that our customers are taken care of and treated as guests. A bus driver is not only a driver, but also a host who ensures his customers have a pleasant experience while on the bus, says Mats Johansson, CEO of Nettbuss Express AB. This also means that Nettbuss Bus4You offers the most pleasurable journey on the market. The buses are spacious and have comfortable leather seats. Large windows give good views of the countryside. Power sockets at each seat and wireless Wi-Fi are givens. MATS JOHANSSON CEO of Nettbuss Express AB ESPEN HOEL Bus driver Gjøvik A pleasant driving style Nettbuss has systematically instilled throughout the organisation how to ensure passengers a pleasant journey whether in Norway or Sweden. It is no coincidence that our bus drivers have an agreeable driving style, with controlled acceleration and deceleration. Buses are equipped to analyse both the technical condition of the bus, its environmental impact and the driver s way of driving. The system provides continuous feedback on the driver s style through an indicator on the dashboard, and logs each individual driver. The data is collected in a report showing how driving may be improved. Bus driver Espen Hoel from Gjøvik has driven buses for about ten years now. He uses the system actively to ensure that he drives the way customers prefer. Customers notice the smoother driving style. They should not really notice that I brake at all. There are many who have come and thanked me for a very comfortable bus journey. It is especially nice when people fall asleep in the bus, because then you know that they feel safe with you behind the wheel, he says. When the system was adopted in Gjøvik about two years ago, each driver had approximately 17 alerts in the system each month. This has now been reduced to 4-5 alerts. Espen Hoel drove 11 out of 12 months in 2015 without a single alert. It is not only our customers who appreciate a calmer driving pattern, clean and pleasant buses and service-minded drivers. In 2015 Nettbuss received bonuses from several of the contracting municipalities around Norway on these specific points, says Arne Veggeland, CEO in Nettbuss. Contracting entities in many municipalities conduct such surveys and it is most motivating to see that Nettbuss time and time again beats our competitors and delivers a better product for our customers. Moreover, it is environmentally friendly to drive in the manner preferred by our customers. Buses use less fuel which in turn reduces emissions. Calmer driving is also safer and reduces the risk of accidents. This is good for everybody. 24

27 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC Growth of passenger rail traffic in Norway was 26 % over the last four years - due to route restructuring, more trains and increased demand. 26% Did you know that a full buss substitutes 50 cars and one kilometer with queues? 1 km CUSTOMER SATISFACTION BUS4YOU IN SWEDEN Out of the 3,359 buses we have in service, 576 of these run on alternative fuel such as natural gas, biogas and biodiesel instead of diesel NUMBER OG JOURNEYS BY NETTBUSS IN SWEDEN (MILL.) ,3 27,4 33,2 34,

28 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC Bus beats car When enough people choose the bus, this helps prevent disruption caused by traffic jams in steadily growing cities. The Swedish university city of Lund is a very good example of this. Lund has well over inhabitants, and the population has grown steadily in recent years. Yet they have managed what many other cities have not, namely to get people to leave the car at home. This is largely down to the Nettbuss Stadsbussarna (city buses). With over 10 million journeys on city buses in 2015 and a growth of 13 per cent, the bus sets new records each year. Traffic counts show that there is a reduction in car usage. The figures are so outstanding that elected officials and public employees from throughout the Nordic countries visit Lund to learn what it takes to reduce car use. Working with our client Skånetrafiken we have increased bus services. On some routes, there is now a seven-minute frequency and here the number of journeys increased by 36 per cent, says Gustav Jansson, head of Nettbuss Stadsbussarna. We have achieved a fantastic result in a very short time, agrees Fredrik Schell, senior traffic developer at Skånetrafiken. A sharp increase in both service provision and marketing has paid off, to the envy of other cities. GUSTAV JANSSON head of Nettbuss Stadsbussarna Considering customers needs, both in long-term planning and in daily operations, produces results, whether by bus or by train. Customer orientation is paying off Ultimately, it s about seeing the customer. In Lund, the customer is often travelling to the centre, where the streets are narrow, and car parking is costly. When the bus is so frequent, the choice is simple. This way of thinking is reciprocated by Nettbuss and their Norwegian contracting authorities. Current experience shows: frequent bus services result in more passengers. Customer orientation in both long-term planning and daily operations produces results, whether we drive a bus or a train. Customers become more and more satisfied. This contributes to more people choosing to travel in a more environmentally friendly manner by leaving the car at home, says CEO in Nettbuss Arne Veggeland. ARNE VEGGELAND CEO Nettbuss 26

29 NSB GROUP ANNUAL REPORT 2015 PASSENGER TRAFFIC KRISTINE LETÉN Commuter Oslo-Lillehammer, student I always sit in the quiet carriage. Here I read a book or listen to podcasts. It s a comfortable way to travel, it is as if time stands still. The train services suit me, and I use the ticket app to book my tickets. It makes everything much easier. KLAS GRINELL Commuter Goteborg-Oslo by bus and train Actually I prefer trains to buses, but Bus4You works very well and the departures suit me perfectly. There is ample room, the double decker is very comfortable allowing me to work throughout the journey. XRXUAN LIU Commuter Oslo-Ås, student I find it comfortable to read both on the train and at the station. I find the new trains much better than the previous trains. I use my mobile phone a lot, so internet and power socket on the trains make travelling much easier. 76 per cent of our customers were very pleased with their last train journey. Compared to 2013 there were 3.8 million more journeys where customers were satisfied. 76% 27

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31 NSB GROUP ANNUAL REPORT 2015 HUB DEVELOPMENT Good interchanges make life easier. A station is a place you go to, to catch a bus or a train. A hub is something much, much more. 29

32 NSB GROUP ANNUAL REPORT 2015 HUB DEVELOPMENT There is no one typical bus or train passenger. One might be a commuter who is in a hurry to get to work or be in time for the kindergarten. Another is a student going home for the holidays. Diversity between travellers is considerable, but one thing is important to them all time. They all have appointments to keep, and no one wants to spend to long a time on their journey, says CEO Petter Eiken in ROM Eiendom, NSB Group s real estate operation. This is why time is especially important when one is developing stations or hubs, as ROM Eiendom likes to call them. We know many people change mode of transport during their journey. At transportation hubs we connect bus, metro, trams, taxi and ferries in one and the same place, making it easier to travel, says Eiken. One example of a hub is at Lillehammer, eastern Norway. Here ROM Eiendom has built what is heralded as Norway s most modern hub, with stops for train, bus and taxi. In addition travellers can get a bite to eat, they can stop by the tourist office and they can stay the night at the hostel. Everything is situated in the station building, says Eiken. PETTER EIKEN CEO ROM Eiendom We know that commuters collecting children from kindergarten only have a few minutes leeway between office and platform. So it is important then to be able to manage a few errands. All-in-one-hubs Trondheim has a slightly different basis to Lillehammer. It is the «capital» of the Trøndelag region, with all that that entails for journeys to work, to the hospital or for other errands. Modes of travel are many. Ferryboats are one alternative for quite a few of the passengers. That is the reason why we have linked the ferry dock with Trondheim S using a bridge over the railway tracks. Buses and taxis stop right outside the station. Here we have brought together all modes of transport within walking distance of each other. This makes it easy to travel by public transport, says Eiken. Rom Eiendom is now building a four storey commercial building with space for shops, service- and commercial units over the tracks. This will become a workplace for many people in close proximity to many modes of public transport. TORSTEIN HELDAL Centre director at Oslo S, ROM Eiendom Norway s most important hub Nowhere is diversity greater than at Oslo S people pass through Norway s busiest meeting place every day. That s almost three times as many as through Norway s second busiest, Oslo Airport Gardermoen. And «busy» is the key word when developing a hub like Oslo S. ROM Eiendom knows that commuters collecting children from kindergarten on their way home only have a few minutes leeway between office and platform. To be able to fix a few errands while passing through. To shop, for instance. At Oslo S you will find both chemists, florists, grocery shops, post office, hair dressers and liquor store just to mention a few. 30

33 We are superbly placed for the traffic we get here. Meri Carina Hammer, shop proprietor at Eidsvoll station 31

34 NSB GROUP ANNUAL REPORT 2015 HUB DEVELOPMENT A commuter has normally little time to wait in long queues, and in that case will shop somewhere else. An important hub like Oslo S must have the shops people need, organized in an efficient manner. We see that people tend to choose familiar chains and brands when they are in a hurry, says centre director at Oslo S, Torstein Heldal in ROM Eiendom. Heldal mentions the example of the coffee bar at Oslo S, which had a skilled barista who served good coffee. But the name was unfamiliar and there were few customers. Then we got one of the best known coffee chains in the world in, and presto, sales increased by 450 per cent! The traveller s decision-making process is so short that he is drawn towards brands he knows well. This increase is not due to the coffee bar being four and a half times better. The traveller s decision making process is so short that he is drawn towards brands he knows well, says Heldal. When the new Østbanehallen was completed in February 2015, it was to give passengers an alternative experience. This is the closest Oslo comes to an Italian piazza. Ten restaurants and shops offer the guests a welcoming atmosphere. The shop staff in Østbanehallen realised quickly that time is of the essence for the customer here too. They offered wonderful delicacies which customers could prepare at home. It did not take off. But when they offered ready-to-eat meals, it became a success. Not only a station Eidsvoll station is a junction where three railway lines, Gardermobanen, Hovedbanen and Dovrebanen, meet, with bus- and taxi stops situated right by the station building. Between Eidsvoll and Oslo trains run almost non-stop. This is good news for many who commute to work in the capital. It may also be one of the reasons why the municipality has experienced strong population growth. Inside the station passengers can buy a newspaper and purchase kiosk articles. Recently ROM Eiendom installed a new, exciting service: Bellas Emne is an interior designer and lifestyle shop that also sells coffee and home baked pastries for travellers on the move. Our location is fantastic due to all the traffic we get here. Many pop in if they have time to spare, leading to some impulse shopping. We also have visitors who are not travelling, says the owner Meri Carina Hammer. She moved the shop from a large shopping complex in Strømmen to Eidsvoll station in December The shop has been very well received, says Hammer, and adds that the Eidsvoll station locality has been a success. A station is not only a station. It has taken on a new function. The station is the hub where work meets leisure, where people meet and where daily tasks may be carried out efficiently, coupled with a seamless journey. To achieve seamless journeys is important to us in ROM Eiendom. It is all about rethinking and innovation, and keeping the customer s needs in focus. The goal is to create good, vibrant urban spaces that make it easy to choose to leave the car at home, says Petter Eiken in ROM Eiendom. Did you know that more than 150,000 people daily pass through Oslo S? 150,000 Did you know that the tenant index for ROM Eiendom is at 79 points which is amongst the best in the country? 79 CUSTOMER SATISFACTION TENANTS OF PROPERTY

35 NSB GROUP ANNUAL REPORT 2015 HUB DEVELOPMENT LEIF MØEN Commuter Voss-Oslo Airport There is no doubt that the services offered have improved lately. I always travel NSB Komfort and am happy with that, and I am interested in the same comfort on the stations too. I use the cafes at Oslo S and and would rather wait here than at Oslo Airport. Here I can shop at the supermarket when the refrigerator at home is empty. MARTINA KALDAHL General Manager at Flavours Food Market in Østbanehallen It is fantastic to work in Østbanehallen! It has become so nice, at the same time it s always quiet and has a good atmosphere, even when it is busy. People take their time and many who travel, purchase local food with them as a souvenir. It is very important for us to offer passengers fast service and an effective meal. MARTYNAS LOZORIS Commuter from Vestby to school at Lysaker Daily I change trains at Oslo S, because there is no direct connection between Vestby and Lysaker. I usually only need to wait a few minutes between each train, so it works out really well and makes it easy to be a commuter. Sometimes I wait for my stepmother at Oslo S, and then we buy food. Our customers purchase goods and services for 2.35 MNOK each day at Oslo S million Each day this amounts to: // 2,100 cups of coffee // 850 hot dogs // 900 baguettes 33

36 34

37 NSB GROUP ANNUAL REPORT 2015 FREIGHT Groceries take the train again. Many transport customers are concerned about the environment, and would certainly choose the train whenever they can. The reliability of, and trust in freight trains has increased considerably. 35

38 NSB GROUP ANNUAL REPORT 2015 FREIGHT For many years, there has been a clear political ambition to move the transport of goods from road to rail. However, the proportion of goods transported by road increased, while freight trains have struggled to keep their customers. Now the situation is about to change. Additional funding for the maintenance of the railways recently helped produce a clear improvement in CargoNet s punctuality and its service to its customers. In fact, punctuality for CargoNet trains in 2015 was better than for many years: 92 per cent of freight was delivered on time. And customers notice. Customer oriented An increasing number of transport customers want to make green choices. NorgesGruppen (one of Norway s largest grocery chains), with stores like Meny, Kiwi, Joker and Spar, now books even more space on CargoNet trains through its wholesale company ASKO Transport. Environmentally friendly distribution means two things to them: containers must have maximum utilisation and as many as possible should be transferred from lorries to trains. We are very concerned about the environment, and over longer transport distances the railway is a more environmentally friendly option than transport by road. We have a very good dialogue with CargoNet. They have become more market- and customer-oriented, so the railway will get a large percentage of our volume of goods this year, said Asko Transport director Kjell Kirkeby. KJELL KIRKEBY Asko Transport director Environmentally friendly distribution means two things to customers: containers must have maximum utilisation and as many as possible should be transferred from lorries to trains. Our main customers appreciate the effort CargoNet makes to get freight delivered on time. This means that fruit, vegetables and meat both chilled products and frozen goods now travel by freight train. Much is transported by ARE-train (Arctic Rail Express) from Oslo to Narvik, via Sweden. In Narvik the trains are reloaded with fresh fish which is transported south. Upgrading docks The town of Mosjøen (mid Norway) saw its last freight train in early This resulted in far more trailers on the roads from this industrial hub in the south of Nordland county. Mosjøen harbour was at that time being refurbished to increase the shipping of goods by sea. An upgraded port should also accomodate transport by rail, said the local Enterprise Board and Mosjøen harbour authority. They contacted CargoNet and Mosjøen has now become a permanent stop for freight trains. This means that industry in Mosjøen and Mosjøen harbour are now connected to CargoNet s transport routes around Norway and on into Europe. Aluminium from the Alcoa plant and plastic waste for recycling are now carried by CargoNet trains. 36

39 The business community is showing an interest in adopting rail freight. Jon Einar Skarding, Logistics Director in Grenland Havn 37

40 NSB GROUP ANNUAL REPORT 2015 FREIGHT This is only the start for us. This collaboration started during the spring of 2015, and led to us moving 750 tons of aluminium every month from trailer to train. Environmentally this is important for us and in addition loading and unloading is easier. Currently we only transport to Sweden, but we see great opportunities going forward to use rail instead of sea transport to other countries in Northern Europe, says managing director of Alcoa Mosjøen, Kathrine Næss. Great opportunities Further south more and more transport entities saw the possibility of combining freight transport by sea with rail. Grenland harbour is located in the industrial belt in Telemark county. 11 million tons of goods spread between boat arrivals makes Brevik one of the country s main ports, with ties to the Continent and Britain. Grenland harbour has long been working towards CargoNet enabling a connection to Brevik terminals. DFDS and CargoNet embraced the idea in 2013, and have brought it to fruition, says the marketing and logistic director for Grenland harbour, Jan Einar Skarding. In 2015 train freight started up once a week between both Brevik and Bergen and Brevik and Oslo. The service soon became a success, and was immediately doubled: yet another weekly departure has been set up. We believe this can be developed further, and see the possibility of establishing a railway terminal for handling goods. Businesses in the region who currently use trucks for distribution, are showing interest in adopting this railway service, says Skarding showed a slight decline in the volume transported by CargoNet, but, for the first time in seven years, the company finally delivered positive financial results. Customers appetite for more environmentally friendly transport, combined with increased demand due to population growth in urban areas, means that CargoNet is well positioned to contribute to increased transport by rail. PUNCTUALITY FREIGHT TRAINS 94% 92% 90% 88% 86% 84% 82% 80% 78% 76% 74% The distance by rail between Oslo-Narvik is 2,000 kilometres the distance by air between Oslo and Rome. Freight trains use 27 hours on the journey, and run this route ten times a week, round trip. If everything CargoNet transports by train had been transported by road this would have constituted 186,000 lorry loads per year on Norwegian roads. 186,000 If every customer who used CargoNet had used trucks instead, this would have increased CO 2 emissions in Norway by 147,000 tonnes.this corresponds to over 1,078 round trips by car to the moon. 1,078 round trips 38

41

42 87.1 Punctuality passenger trains Punctuality passenger trains

43 88.4 Punctuality passenger trains Punctuality passenger trains Punctuality passenger trains

44 NSB GROUP ANNUAL REPORT 2015 The best result ever Passenger train operations The best result ever. NSB passenger rail operations delivered its best result ever in A good result provides the financial leeway to continue investing and to increase services. Growth in traffic. Strong growth in traffic in 2015 lay the foundation for the excellent financial outcome. The reason for the growth in traffic is twofold. A good year for tourism resulted in an increase in the number of passengers travelling on our regional trains. In addition, an extended train service, primarily in the eastern region of Norway, has resulted in many more passengers. NSB has worked for several years to achieve a 10-minute departure frequency between Asker and Lillestrøm and 2015 was the first full year with such a service. Sørlandsbanen, the south coast service, and the extended Trønderbanen through Trondheim to Melhus are other examples of lines with more frequent departures during Increased services have resulted in more passengers here as well. More trains Especially in eastern Norway, the influx of customers during rush hour is so great that the trains get crowded, despite more trains put in service and longer trains. We are therefore pleased that NSB has received residual value for purchasing 44 new trains. Up until 2020, a new train set will be put in service each month. These train sets will replace ageing trains on the Voss and Gjøvik lines, as well as several other lines in eastern Norway. Better alternative journey. Upgrading by Jernbaneverket, the infrastructure owner, affects the predictability of the train service supplied by NSB, due to both planned and unplanned disruptions. When surveyed our customers single out this type of disruption as most problematic. Providing alternative transport as soon as the need occurs has therefore a high priority. For the customer this entails getting information early and personnel available to answer questions properly and suggest a good alternative route to their final destination, ideally by train if that is possible. It is nevertheless encouraging that customer feedback was noticeably more positive after the planned summer closure in 2015, compared to National travel planner. Development of digital services is a major component in NSB passenger rail operations. The NSB app has become the preferred method of payment for most passengers, with improvements and additional services introduced regularly. In 2015 a pilot version of a new service tidr.no was rolled out in Østfold, south-east Norway. This national route planner helps users find route information for the train, bus, tram and metro all over Norway. Improved train service. NSB s goal for 2016 is an even better train service for our passengers. A more seamless connection from the south-east (Østfoldbanen) through Oslo to the west (Bærum and Asker) and additional departures during peak hours from Hamar was introduced in December 2015, ready for the new year. 42

45 BUSINESS AREAS Economy 5-7% growth in number of journeys NSB passenger train operations had its best result ever in The increase in profit was mainly due to increased traffic revenue is the third year in a row with a growth in number of journeys of between 5 and 7 per cent. The operating profit was 1,208 MNOK. Environment The new digital tool «My Energy» makes it easier for the train driver to reduce electrical energy consumption and improve punctuality. Through this app, train drivers can also send tips to each other, discuss driving techniques and become more aware of their own performance. Innovation 1.4 mill. passengers downloaded the NSB app 1.4 million passengers have downloaded the NSB app, and many are using the app to purchase train tickets. In a separate entertainment app, NSB offers useful extras such as complimentary newspapers, podcast and audiobooks. With the tindr.no service customers are offered a national travel planner for all public transport. The pilot is in use in Østfold county, and will eventually be rolled out throughout Norway. HSE Union representatives and dedicated safety employees cooperate well in important areas such as working environment, rehabilitation and drug prevention. HR 72 out of a possible 100 points The employee satisfaction index in NSB is in general high compared with other Norwegian transport companies. Employees consider NSB to be an attractive place to work, are satisfied with their job content and their immediate supervisor. Short-term absenteeism is low. NSB Passenger Rail operations sets strict health requirements for our employees and this leads to long-term absence being slightly higher than the national average. Customer satisfaction 73 out of a possible 100 points The customer satisfaction index was 73. This is a historically high result but there is still room for improvement. Customers are least satisfied with help concerning alternative routes when trains are cancelled. Better information, better implementation of alternative journeys and increased capacity on the trains during rush hour, are three areas NSB will concentrate on in The goal is to improve the customer satisfaction index by three points in

46 NSB GROUP ANNUAL REPORT 2015 The new structure gave results Freight Positive result. For the first time in eight years, NSB s own freight company has achieved a positive result. The improvement is due to cost reductions and heightened operational performance. The sale of freight wagons has also contributed. Restructuring programme. CargoNet has implemented a comprehensive restructuring programme, with considerable downsizing and other cost reductions. Despite a 20 percent reduction in employees during the last two years, the organisation has managed to keep up the same level of produc tion as in Just as many trains ran, with regularity maintained at a respectable level, and punctual delivery increased to 92 percent. Reduced costs CargoNet put maintenance of rolling stock out to tender in 2015 and renegotiated a series of agreements with suppliers to reduce costs. High employee satisfaction. Employee satisfaction is improving despite the reorganisation of the company and fewer employees producing the same service. Employee satisfaction, surveyed during autumn 2015, shows an increase in job satisfaction and contentment. Employees are more motivated in 2015 compared to Improved punctuality. Major investments in the upgrading of the railway network have led to extensive construction work, with disruptions as a consequence. Adapting freight traffic to avoid closed routes has been a challenge at times. Despite this, CargoNet has still managed to increase regularity and punctuality. This flexibility bodes well for the future as the volume of network construction is planned to increase. New transport services. Mosjøen and Brevik were new terminals offered in These new services came about by cooperating with local stakeholders and major customers. This initiative has worked according to plan. Traffic has met expectations. Green transport Rema and NorgesGruppen are examples of major food distributors who transport increasing amounts by rail. Grocery wholesalers are taking the environment into consideration by looking for more environmentally friendly forms of transport in the short- and longer term. For CargoNet it is essential to maintain the quality of delivery, and to have good, alternative plans when disruptions occur. Restructuring programme. In 2016 CargoNet s restructuring programme will be completed. CargoNet aims to strengthen its position in the market as a supplier which is both punctual and has a clear environmental profile. 44

47 BUSINESS AREAS Economy 89 MNOK in operating result Operating profit for 2015 was 89 MNOK. This is the first time since 2007 that CargoNet has managed a positive result, the consequence of a good strategy, major restructuring and hard work. Environment Freight transport by CargoNet s trains reduces environmental pollution from road transport, and annually replaces 186,000 truck trips. Finding environmentally friendly solutions permeates all our work at CargoNet. Adoption of electrically powered vehicles at the freight terminal at Alnabru in Oslo is one example. Innovation Concurrent with the readjustments within CargoNet, customer services were also improved. New freight lines have started up from Brevik to Bergen and from Brevik to Oslo and between Mosjøen and Trondheim. HSE 20% reduction in number of employees The number of employees in CargoNet was reduced by 20 per cent over two years. In such a situation it is essential to maintain a high level of HSE, which the organization has managed. HR 7.2% sick leave Despite the restructuring of the company, CargoNet has a stable level of sick leave. CargoNet started recruiting new train drivers in 2015, to fill vacancies left by drivers approaching retirement age. We had numerous applicants, indicating that CargoNet is regarded as an attractive workplace. Customer satisfaction In 2015 punctuality for CargoNet trains was higher than for several years. The number of train cancellations fell by two thirds from 2013, giving improved service quality delivered to customers. Customer satisfaction has increased considerably. 45

48 NSB GROUP ANNUAL REPORT 2015 Successful development Real estate Good year was a very good year for the NSB Group s property operations. ROM Eiendom sold an office building in Munkedamsveien 62 and a logistic property in Alf Bjerkes vei 30, both in Oslo and the Saga Centre shopping centre in Jessheim, while a large plot in Oslo at Bjørvika was purchased. Attractive area. ROM Eiendom develops residential and commercial buildings in and around public transportation nodes. The growth in population in Eastern Norway is strong, and good railway links have ensured that towns like Drammen, Ski, Moss, Fredrikstad and Jessheim are especially attractive. These are areas in which ROM Eiendom has a significant presence today and where we will continue to develop property. Low risk. ROM Eiendom has a low risk profile, and is aware of the downturn in the Norwegian economy, in particular in the Stavanger region. ROM Eiendom will therefore be cautious when initiating projects that do not have a high pre-sales index or a high level of occupancy. Østbanehallen is well received. The rehabilitation of Østbanehallen in Oslo was completed in February The heritage building from 1884 has now emerged as a culinary «cathedral». Rehabilitation was especially demanding due to difficult ground conditions in addition to preservation orders, both internally and externally. Cooperation with the city and cultural heritage authorities, however, has been good. The public have also welcomed the variety of choice in Østbanehallen. Both travellers to the city and residents in Oslo use the good shopping possibilities and restaurants. High environmental standard. ROM Eiendom s new buildings are classified according to the BREEAM-NOR environmental standard. This international standard safeguards environmental aspects throughout the life of the building. The choice of BREEAM-NOR contributes to good, environmentally friendly and cost effective solutions, making projects more attractive to foreign buyers. ROM Eiendom s ambition is to achieve the «Excellent» certification in all our projects, where possible. 46

49 BUSINESS AREAS Economy 1,307 MNOK in operating profit We achieved an operating profit of 1,307 MNOK in This is an improvement of 61 MNOK compared to 2014, and is our best ever operating profit. Revenues amounted to 1,187 MNOK in Environment ROM Eiendom achieved the BREEAM-NOR «Excellent» level for Munkedamsveien 62, and all current projects will be classified as «Excellent» or energy class A. ROM Eiendom have established green leases with several of its tenants. These are agreements concerning investments in environmental measures where the benefit will be split in the form of lower operating costs. Several of these measures are supported by Enova, the government building agency. Innovation Innovation is one of the most important parameters in BREEAM-NOR, which emphasises new and innovative solutions for energy and energy sources throughout the project. HSE 3.9% sick leave Sick leave in 2015 was at 3.9 %, an increase from 2.9 % in HR 81 out of a possible 100 points Low turnover and a high retirement age indicate that our employees thrive, confirmed through high employee satisfaction measurements. Many are proud of ROM Eiendom s social mission to develop modern cities where people choose to travel by public transport. Customer satisfaction Both among ROM Eiendom s tenants and among passengers who use public transportation hubs, customer satisfaction is high. 47

50 NSB GROUP ANNUAL REPORT 2015 Improved bus services, more passengers Bus Norway s largest. Nettbuss is Norway s largest bus company, and the second largest in Scandinavia. In 2015 there were 110 million journeys delivered by Nettbuss, encompassing both local-, schooland express buses. Good customer surveys. Currently Nettbuss has operations in both Norway and Sweden, and has improved results in both countries, despite strong competition and low margins in the bus market. This is partly due to a special programme to improve company profitability. Service-minded bus drivers who perform in a customer friendly manner are appreciated. The company has done well in customer satisfaction surveys in 2015, both in Norway and in Sweden. Bus tenders won. During 2015 Nettbuss was successful in numerous bus tenders in Norway. The contracts in both Møre, Glåmdalen, Grenland and inner Nordmøre were won back, and from the 1st July the company will be back in Rogaland after winning the tender in Jæren and Dalane. Nettbuss lost the tender in Kvinesdal. In Sweden Nettbuss won tenders in Lerum and Østersund, whilst the tender in Orust was lost. The contract for driving the red and purple express routes for Västtrafik was recaptured by Nettbuss, as well as the new Fyrbodal tender for the same customer. Increased efficiency. For several years, express bus operations have struggled to make a reasonable profit. Bus4You between Bergen and Stavanger was closed down in August 2015 due to weak financial performance. Elsewhere, increased efficiency in production, modifications to express bus services as well as high load factors during the summer of 2015 meant that Nettbuss Express improved its financial performance. Good profitability. In Sweden the express bus business is still growing, and profitability is good. Nettbuss is the market leader on the Oslo Gothenberg Malmø route. During the summer of 2015 Nettbuss Express started a new direct service between Västerås and Arlanda airport, as a further development to the Oslo Stockholm route. Anniversary. In November 2015 Nettbuss celebrated 90 years since its first bus route, Selburuta, came into operation. Nettbuss considers the 9th November 1925 as the company s inauguration date. In 2016 Nettbuss will amalgamate all the separate Norwegian route operations into one company. Nettbuss will continue efficiency programmes to improve results throughout the Norwegian and Swedish operations. Additionally the company will continue to create new service solutions that make it easier and more attractive to travel by bus. 48

51 BUSINESS AREAS Economy 172 MNOK in operating profit Operating profit for 2015 was 172 MNOK, an improvement of 52 MNOK compared to This improvement is mainly due to profit-enhancing measures implemented in Revenues for 2015 totaled 5,583 MNOK This is a reduction of 324 MNOK compared to 2014, mainly due to Nettbuss selling off parts of the Danish operations in Environment The entire Norwegian operation apart from Nettbuss Express is environmentally certified according to the ISO standard. Two of the companies are road-safety certified to the ISO standard, while one of the companies is certified to the quality management system ISO From 2016 Nettbuss AS will be certified in all three areas as the new combined company, though introduction of the new standards in regions that previously did not have these certifications, will be gradual. All employees complete environment awareness courses. In 2015 Nettbuss arranged a Nettbuss competition in customerand environment-friendly driving, to be repeated in Innovation 45% sales on the internet Nettbuss has made considerable efforts to move away from cash sales in express bus operations. Internet sales are on the increase, and now account for 45 percent of the revenues for TIMEkspressen and Nettbuss Express. In Sweden Nettbuss Express has established a new route between Västerås and Arlanda, and in Norway a new express bus service has been started between Ulsteinvik and Oslo with double-decker buses. HSE Common basic training for new drivers has been introduced throughout the company. We have also implemented new skill development measures for managers. HR 72 out of a possible 100 points Nettbuss scored 72 points out of a possible 100 for both employee satisfaction and attractiveness as an employer, in our annual survey. This is higher than average for the Norwegian transport industry. Other areas with a high score amongst our employees are dedication and loyalty. Sick leave was at 8.3 percent. Customer satisfaction In Sweden Nettbuss Bus4You has won the Swedish Quality Index for passenger transport for five consecutive years. In Norway customer satisfaction levels have resulted in bonus pay-outs for several contracts that Nettbuss operate. The company has adopted its own system to ensure a safe, environmentally friendly and customer friendly performance on all the routes Nettbuss operates, both in Norway and in Sweden. 49

52 NSB GROUP ANNUAL REPORT 2015 Ready for increased competition Train maintenance High expectations. Mantena maintains rolling stock in Norway and Sweden, and aims to become the best supplier of train maintenance in Europe. New contracts. In Sweden Mantena has won two new contracts with SJ, the Swedish Railway, commencing in The contracts cover rolling stock of the types X40 and X55, are based in two locations involving around 50 employees. Mantena s operation in Sweden also includes maintenance of the trains for the Stockholm Metro, performed by TBT, a company jointly owned by Mantena and Hong-Kong-based MTR. Putting out for tender. Mantena was also selected in three out of four tenders when CargoNet put their train maintenance out for tender in We expect that an increasing proportion of Mantena s train maintenance assignments will be put out for tender. Large customers. The largest customers in Norway are NSB, the Airport Express train, CargoNet and NSB Gjøvikbanen. In Sweden Skånetrafiken, SL and SJ are major customers. Increased competition. In 2015 our Norwegian operations were characterized by significant change in order to meet new demands and increased competition for railway vehicle maintenance. The company has reorganised and adjusted both production lines and staffing, continuing on into Improved quality. During 2015 Mantena worked on specific goals in close collaboration with the train operators to ensure timely delivery. This has also resulted in a clear progression in the quality of maintenance. Developing competence. Mantena builds the workforce through skill development, to ensure that we have competent professionals, familiar with the different types of rolling stock used by customers. In addition Mantena puts emphasis on management development during the process of restructuring the company. Innovation and development are important to ensure that we remain market leader in train maintenance in a European market that is rapidly evolving. Active contributor. We intend Mantena to be characterized by high quality, efficient deliveries and processes to meet increased international competition. At the same time Mantena aims to be an active contributor in the development of trains as both socially important and an effective transport option. 50

53 BUSINESS AREAS Economy 51 MNOK in operating profit The operating profit for 2015 was 51 MNOK. This is an improvement of 4 MNOK compared to Operating revenues for 2015 were 1,367 MNOK Environment Mantena is environmentally certified according to ISO and were recertified in No serious environmental emissions have been registered during the year. Mantena works continuously to reduce the use of environmentally harmful chemicals. Innovation Mantena focus on strengthening our technical expertise and working with innovative ideas in the development of maintenance of rolling stock. HSE 7.9% sick leave Sick leave in 2015 was 7.9 percent, and the Inclusive working life (IW) is to continue. The number of injuries is at the same level as Work has begun on a new certification - OHSAS (ISO 45001). Risk analyses are conducted regularly as well as job-safety analysis to prevent serious incidents. HR 69 out of a possible 100 points The employee satisfaction survey in 2015 gave 69 out of a possible 100 points for work satisfaction, where 70 points is considered high. Considering the reorganisation Mantena has been through over the past few years, this is a good result. Mantena is working actively to recruit new expertise and has at any given time between 20 and 25 apprentices. Customer satisfaction As a maintenance provider Mantena has contributed to a considerable increase in the mean distance between failures for passenger trains in Norway over the year. 51

54 75.1% Capacity utilisation freight trains % Capacity utilisation freight trains % Capacity utilisation freight trains

55 86.6% Capacity utilisation freight trains % Capacity utilisation freight trains

56 NSB GROUP ANNUAL REPORT 2015 Report of the board of directors 2015 (Previous year s figures in brackets) Om NSB-konsernet Samfunnsbidraget Virksomhetsområdene Årsrapport Summary of the results and development of the NSB Group for 2015 // Operating profit for 2015 was 2,814 MNOK (2,001 MNOK) // Profit before tax was 2,664 MNOK (1,597 MNOK) // Return on equity was 23.5 % (19.1 %) // Increased traffic volume and operating income from passenger train operations // Improved results from bus operations // Positive development in freight operations due to efficiency measures // Considerable gains from the development and sale of property // Punctuality in the passenger train operations somewhat lower than target 54 54

57 REPORT OF THE BOARD OF DIRECTORS Summary of results and development for the business areas Passenger train operations Passenger train operations are run by NSB AS and its subsidiaries NSB Gjøvikbanen AS and (in Sweden) Svenska Tågkompaniet AB. Operating income from passenger train operations was 7,534 MNOK (7,087 MNOK), an increase of 6.3 % compared to the previous year. A significant part of the change stems from an increase in journeys by 5.7 % to 72.4 million. This is primarily due to increased train capacity and expanded services in Eastern Norway. Operating profit was 1,208 MNOK (659 MNOK), an increase of 549 MNOK, due mainly to increased revenue. Operations in Sweden gave a profit of 9 MNOK (0 MNOK). An adjusted and improved timetable was introduced in December 2015, building further on the major changes introduced in All these improvements have given customers in the eastern part of Norway and, from 2014, also around Trondheim and along the south coast, a better train service in terms of more departures, new trains and more seats. These changes have led to a 26 % increase in traffic volume over the last four years. The procurement of new regional and local trains is going according to plan - 28 regional trains (type 74) and 43 local trains (type 75) are now in service in Eastern Norway. 81 new trains in total will have been delivered by the end of Passenger train operations in Norway achieved a punctuality of 88.6 %, somewhat better than in 2014 but below the target of 90 %. Bus operations Bus operations are run by the parent company Nettbuss AS, 10 wholly owned subsidiaries and 8 partly owned companies. The Nettbuss Group operates in most counties in southern and mid-norway. The Swedish operations are located mainly in the south west of Sweden. Both in Norway and in Sweden bus services are mainly on contract to municipal county authorities, but the group also offers express bus routes, tourist services and workshop maintenance. The operating result was 172 MNOK (120 MNOK). The Nettbuss Group s operating income for 2015 was 5,583 MNOK (5,907 MNOK), a decrease of 5.5 % from the previous year. The change in operating income was mainly due to a reduced stake in the Danish operations and changes in tender traffic during The Scandinavian market for long distance express bus travel is characterized by strong competition from air and train services and from other bus companies. Even though development is fairly stable, there are large regional variations. The Norwegian market for long distance express bus travel has changed in recent years. To address this, the Group has established and developed Nettbuss Ekspress as a separate brand for the company's regional routes in Norway and Sweden, and thereby established Scandinavia's largest express bus network. In 2015 production was adapted extensively to meet competition in this market. Express bus operations in Sweden are growing and market share is increasing. Profitability is good, and the company is now the market leader for Oslo - Gothenburg Malmø. In 2015 a new express route was started between Vesterås and Arlanda (Stockholm airport). The company has taken part in several tenders in In Norway contracts in Aust-Agder and Elverum were not renewed, and the same will apply in Kvinesdal from Contracts for Sunnmøre, Glåmdalen, Grenland, Hønefoss Oslo and Indre Nordmøre were won back while new tenders were won for Dalane and Jæren starting up in

58 NSB GROUP ANNUAL REPORT 2015 In Sweden two tenders were won in the VästTrafik (Gothenburg) region, as well as in Østersund, both with start-up in In addition, operations in Lerum will start from July, delayed due to complaints from other bidders. Operations in Orust will be wound up. The Nettbuss Group transported 110 (131) million passengers and drove 174 (190) million km in Freight operations Freight operations are run by the CargoNet Group. The largest share of the business is operating shuttle freight trains for containers and other intermodal platforms. CargoNet also operates dedicated customer train services for the transport of fuel and timber. Container terminal operations are run by wholly owned subsidiaries, Rail Combi AS and Terminaldrift AS. Operating income was 1,096 MNOK (1,032 MNOK) in 2015, giving an operating result of 89 MNOK (-90 MNOK). The improvement in operating profit came mainly from the positive impact of the restructuring program. This entailed both reductions in staffing, introducing competitive tendering in rolling stock maintenance, as well as sales of fixed assets. The quality of railway infrastructure has again affected operations during Several lines have been closed for shorter or longer periods due to floods, landslides and other extreme weather conditions. In total 155 (128) trains had to be cancelled due to unforeseen problems with infrastructure. Operations in Norway have also been affected by increased competition from road haulage and other suppliers of cargo transport by rail. Punctuality in Norway was 92 % (90 %) measured on delivery within 15 minutes, equalling our goal. Train maintenance Train maintenance is operated by Mantena AS, which is the largest supplier of maintenance services to train operators in Norway. The main activity is maintaining locomotives, wagons and passenger trainsets. In addition Mantena runs workshops for the maintenance of parts and components. The company also maintains and repairs equipment used on railway infrastructure in Norway. Mantena runs workshops in Oslo, Trondheim, Drammen, Skien, Bergen, Stavanger, Narvik and Bodø. Mantena runs maintenance operations in Sweden through Mantena Sverige AB, and is an important partner in the company maintaining the Stockholm underground trains. Mantena intends to meet future competition through efficient and reliable maintenance operations. The company s competitiveness is a critical factor and over several years has introduced measures to meet ever increasing demands for efficiency and reliability. During 2015 Mantena won tenders for maintenance of heavy freight locomotives and wagons for CargoNet AS. Operating income was 1,367 MNOK (1,367 MNOK) resulting in an operating profit of 51 MNOK (47 MNOK). This increase is mainly due to improved operations in both Norway and Sweden. Real estate The group strategy for real estate operations is to optimize development of real estate asset value with a view to sale of non-operational property, taking market opportunities and Group finance into account. Real estate operations should also develop and manage real estate properties to strengthen the transport business of the NSB Group. The NSB Group, by means of its real estate operations, aims to be the leading developer of transport hubs for public transport and freight transport by rail. ROM Eiendom completed and sold an office building at Filipstad in Oslo in the spring of 2015, and a large plot of land has been sold in Bjørvika in Oslo. The Special Purpose companies are highly active and profitable. Real estate operations, which comprise just under buildings and a property 56

59 REPORT OF THE BOARD OF DIRECTORS development potential of about 2 million square meters, achieved an operating profit of MNOK (1 246 MNOK) in This positive result stems mainly from gains on property sales and unrealized gains from investment property. About the NSB Group Corporate governance The Board of Directors has discussed and approved the statement regarding Corporate Governance that is included in the annual report. Ownership The NSB Group is one of Norway s largest transportation groups. The parent company NSB AS is owned by the State of Norway, represented by the Ministry of Transport and Communications. The Group s headquarters is in Oslo, while operations are spread throughout most of Norway, and in parts of Sweden and Denmark. The organisation The Group consists of the following businesses // Passenger train: Passenger train operations and common group services // Bus: Bus operations // Freight: Freight train operations // Train maintenance: Maintenance and repair of passenger and cargo trains // Real estate operations: Operation and development of real estate Goals and strategies The NSB Group core business is passenger traffic by train and bus in the Nordic countries, freight transport by rail within and to/from the Nordic countries, development of transport hubs and ownership of strategic property close to stations and freight terminals. In addition, the NSB Group carries out operations closely connected to the core business. The NSB Group aims to add value through developing, producing, marketing and selling safe and competitive passenger and freight transport in the Nordic countries and, based on group-owned property, to support urban development facilitating public transport. The NSB Group shall // avoid injuries to people and damage to the environment // be the leading land-based transport company in the Nordic region // generate profit // satisfy customers // employ highly qualified and motivated employees // maintain financial freedom of action 57

60 NSB GROUP ANNUAL REPORT 2015 Internal control The NSB Group has adopted a framework for internal control, and has established a control-environment that consists of values, ethical guidelines, organisational structure, authorisation structure and governing documents. The Board of Directors evaluates the Group s business idea, values, strategies and plans on an annual basis. Risk analysis is performed annually for the business as a whole as well as for each operation. Risk pertaining to financial reporting is evaluated through risk analysis of specific areas and periodic follow-up meetings with the business segments. The internal control system is revised periodically, resulting in changes and improvements to governing documents, procedures and key controls. Economic development of the NSB Group and of the parent company NSB AS The NSB Group had a profit after tax for 2015 of 2,158 MNOK (1,509 MNOK), an improvement of 649 MNOK. The operating profit was 2,814 MNOK (2,001 MNOK), an improvement of 813 MNOK. This improvement accrued from increased volume and income from passenger train operations, gains from the development and sale of real estate, improved operations in all business segments, and one- time effects from changes in pension costs. The parent company NSB AS showed a profit after tax for the year amounting to 1,723 MNOK (947 MNOK). Group contributions and dividends from subsidiaries of 901 MNOK (720 MNOK) are included in this result. Operating profit for the parent company was 1,084 MNOK (541 MNOK), due mainly to increased volume and income as well as one-time effects from changes in pension costs. The Group s net cash flow from operations was 2,233 MNOK (1,338 MNOK). Net cash flow employed in investment was 1,429 MNOK (637 MNOK). This includes 2,148 MNOK (2,302 MNOK) in acquisition of property, plant and equipment as well as investment property, and the sale of assets, including real estate, of 319 MNOK (1,755 MNOK). Investments were directed primarily towards increased capacity and profitability within the Group s business segments. A dividend of 753 MNOK was paid to the company shareholder in After this year s profit, total equity for the parent company amounted to 6,849 MNOK (5,961 MNOK), an equity ratio of 29.2 % (25 %). Parent company retained earnings were 1,705 MNOK. For the NSB Group, total equity was 9,838 MNOK (8,400 MNOK), giving an equity ratio of 34.1 % (30.2 %). Group return on equity was 23.5 % (19.2 %). Group working capital was 4,259 MNOK (2,740), a change of 1,519 MNOK. The owner, represented by the Ministry of Transport and Communication, normally expects a dividend equal to 50 % of Group profit after tax. The Board proposes the following allocation from parent company (NSB AS) profit: Dividend Allocated to retained earnings Sum allocated 1,074 MNOK 649 MNOK 1,723 MNOK The accounts have been submitted under the assumption of a going concern, and the board confirms that this is the case. 58

61 REPORT OF THE BOARD OF DIRECTORS Risk Financial risk Group activities expose the Group to a variety of financial risks: market risk (including currency exchange risk, interest rate risk and other price risk), credit risk and liquidity risk. The Group overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on Group financial performance. The Group utilizes derivative financial instruments to reduce some risk exposures. NSB Group financial risk management is described in note 14. NSB borrows money in the markets in the currency that offers the most favourable terms. Borrowings in foreign currencies are converted to Norwegian currency through currency swap agreements. NSB aims to minimise currency risk in its financial management. NSB has some exposure to currency risks in its daily operations related to bank and cash deposits for business units abroad, but otherwise to a minimal degree as its income and expenses primarily occur in NOK. For agreements entailing a considerable outlay in foreign currency, the currency risk is covered almost 100 % for the course of the agreement. NSB is exposed to changes in interest rates. The parent company uses financial instruments to reduce interest rate risk and to achieve its desired interest rate structure. Guidelines have been established, regulating what portion of total outstanding debt is to be subjected to interest rate protection during any 12 month period, and for the duration of the loan portfolio. Surplus liquidity is invested in short-term Norwegian bonds and commercial papers. Changes in interest rates can affect the value of the portfolio, but the papers are normally held until maturity. Limits to exposure within certain sectors and institutions are established based on credit evaluations. Current guidelines state that funding needs during the next twelve months should be covered through excess liquidity and committed credit facilities. The NSB Group aims to have free liquidity of at least 500 MNOK. NSB has covered its borrowing needs for 2015 satisfactorily through several short-term loans in the domestic commercial paper market during the year. Unrest in financial markets has lessened somewhat, but there is still uncertainty related to the development of interest rates. At the end of the year there was a general increase in loan margins. NSB has a strong focus on counterparty risk in financial transactions. Operational risk Analysis of operational risks is done systematically, for example for traffic safety and the achievement of financial goals. Based on this risk analysis, control activities reduce identified risks through automatic controls, audits and analysis of specific risk areas. Social responsibility The Ministry of Transport and Communication through the articles of association has directed the board to ensure that the company remains socially responsible. The company reports on this theme annually to the owner by means of the annual planning document( 10-plan). 59

62 NSB GROUP ANNUAL REPORT 2015 The NSB Group s most significant contribution to society is to ensure that transportation needs are covered in an efficient, accessible, safe and environmentally friendly manner. This is to be achieved by planning and implementing measures for increasing the capacity of public transport to/from home and work, developing both public transportation hubs and residential and commercial buildings in close proximity to these hubs, and offering sustainable freight transport by rail. The NSB Group reports on social responsibility in accordance with Norwegian accounting law ( 3-3 a and c) by publishing a social responsibility report as part of the annual report. This CSR report covers information i.e. on the working environment, absence due to illness, on equality and discrimination, the impact on external environment and how corruption is prevented. Future challenges Railway reform will bring about major changes in the NSB Group in years to come. Competitive tendering will be introduced for passenger train traffic, grouped in bid packages. Group passenger train rolling stock, real estate operations, maintenance operations and ticketing systems will be transferred to a separate state-owned body to promote competition. The Ministry of Transport and Communications published on February 4th two competitive tenders for passenger rail services as part of the Norwegian rail reform, scheduled traffic starting from December Tender number 1 consists of the railway routes that serve the southern coast of Norway (Sørlandet Line, Jær Line and Arendal Line). Tender number 2 consists of the Dovre Line, Røros Line, Nordland Line, Rauma Line and Meråker line. This constitutes about 25 % of the revenue of the Norwegian passenger train operations. Further changes are not yet scheduled, pending both concretization and clarification. To meet the railway reform the NSB Group has initiated a change program that will help build a strong and viable NSB Group, both competitive and highly competent. For the passenger train operations four different projects have been started to adapt to the reform and to ensure a competitive future: to customize operations to new parameters, the sale of rolling stock, retail solutions and the customization of staff and support functions. The Board is committed to helping implement railway reform and has in the annual 10 plan provided input to the government's work with this. The Board emphasizes among other things that customers are dependent on a public transport system with sufficient capacity and quality. Timetables for the longer term and all organizational changes must be clarified before initiating tendering processes, and NSB should be given the opportunity to compete on equal terms with other companies. The Paris Agreement on climate change was adopted on 12 December 2015, and the Norwegian government has set a target for Norway to cut greenhouse gas emissions by at least 40 percent by 2030 compared with The transportation sector in Norway accounted for 26 percent of emissions in 2013 and thus is key to reducing total emissions. The NSB Group with its rail, bus and real estate business plays an important role in facilitating a shift towards public transport and thereby reduced emissions. NSB s expanded services for passenger train transport, especially in Eastern Norway, launched in December 2012, have created high growth in both customer volume and revenue. A further expansion of the route network was brought in in December 2014 with both a ten-minute frequency between Norway's seven largest stations, more departures between Oslo and Stavanger and also around Trondheim. Investment in and delivery of new passenger trains continues. Altogether 81 new trainsets will have been delivered by Stabekk, Høvik and Blommenholm stations to the west of Oslo were renovated and reopened in December 2015 enabling a new timetable and 4 departures per hour. 60

63 REPORT OF THE BOARD OF DIRECTORS In the real estate business, we are developing major projects close to public transport hubs will see a lot of activity in and around station areas and on the company's most attractive and central development sites. Examples include Hamar, Drammen, Bergen and Trondheim stations and further development of our own properties adjacent to the office buildings Schweigaards gate 21 and 23. At Grefsen in Oslo a large number of homes are being developed in cooperation with local partners. Most of the bus industry, except express buses, is based on tenders. In 2015, Nettbuss won many contracts securing continued operation in these areas for another 8-10 years. In 2016 only Sogn (west Norway) and some other minor areas of our existing bus network will be put out to tender. The company works continually to streamline its operations, improving competitiveness so that the company can be a long-term player in the market. Current restructuring of Nettbuss companies in Norway will significantly reduce administrative costs. Nettbuss aims to retain market share in Norway and somewhat strengthen its position in Sweden. Freight operations are affected by increased competition on both road and rail, as well as new customer-induced structures and strategies. Restructuring our freight operations is a first step towards becoming a profitable and sustainable participant in the rail freight market and we continue to look for further improvement in order to achieve this goal. To make rail transport a more attractive and competitive alternative for customers, the standard and quality of transport services must be improved, increasing capacity where relevant. Currently, supply quality is not good enough and a substantial share of train delays and cancellations is due to infrastructure deficiencies. Infrastructure investment and maintenance is therefore essential, including the need for rapid and extensive development of railway capacity. To succeed in this endeavor requires improved cooperation in the railway sector. Ensuring effective collaboration is central to continued implementation of the railway reform has in sum been a good year for the NSB Group, with underlying operations improving in all business areas. The Board would like to thank the NSB Group s employees for their efforts in 2015, and encourage them to take part in a collective effort to develop the NSB Group to meet forthcoming challenges and opportunities, also where related to railway reform. Oslo, 24th of February 2016 Kai Henriksen / Chairman of the board Bjarne Borgersen Wenche Teigland Åsne Havnelid Kjerstin Fyllingen Audun Sør-Reime Rolf Jørgensen Jan Audun Strand Geir Isaksen / CEO 61

64 NSB GROUP ANNUAL REPORT 2015 Kjerstin Fyllingen Åsne Havnelid Wenche Teigland Bjarne Borgersen Kjerstin Fyllingen is chief director for Haraldsplass Diakonale Sykehus AS (private hospital). She has a Master s degree in management from BI (Norwegian Business School). She was previously executive vice president of Tryg and was part of the Group management team with different responsibilities. Before that, she was Vice Precident of Vital (DnB Life insurance), she has also worked as general manager of Infodoc International and has been responsible for economy -IT at DnB. Åsne Havnelid is a graduate of the Academy of Commerce (now BI). She is the secretary general of the Norwegian Read Cross. She was previously World Championship manager for the Ski World Championships in Oslo in 2011 and prior to that Vice President Cabin Operations in SAS Braathens and Director of Development in Braathens. She has been assistant top director of sports for Olympiatoppen (Norwegian Olympic Organisation) and deputy for the Norwegian OL-Olympic team in five Olympics, general manager at Toppidrettssenteret (Elite Sports Centre) and principal at the Toppidrettsgymnas (The Norwegian College of Elite Sport). She is a board member for Det Norske Teater (Norwegian theatre) and deputy chairman for Rådet for Forsvarets Høyskole (Council for the National Defence College). Wenche Teigland is a Group Director for Energi at BKK (Energy Company in Bergen). She has graduated as an engineer and has previously worked for Gasnor, ABB Offshore Systems, Aker Engineering and Solbos AS. Teigland is a board member for Agua Imara and Chairman of the Board for BKK Varme and Vestavind Offshore. Bjarne Borgersen is a partner in the law firm Borgersen and Partners. He is a lawyer from the University in Oslo, and has amongst other things been the CEO of Tromsbanken AS and later in Fokus Bank. He has also been the chief for Norsk Lotteritilsyn ASA (Norwegian Lottery authority). He has several board positions and has also been on the board of the Norwegian Banking Association, with two years as chairman ( ), and a member of the board for Eksportfinans AS ( ). 62

65 REPORT OF THE BOARD OF DIRECTORS Audun Sør-Reime Jan Audun Strand Rolf Jørgensen Kai Henriksen Audun Sør-Reime started as a conductor trainee in NSB in 1976, and was the head of Kristiansand Konduktørforening (Conductor Association) from 1991 to He was the secretary for the Konduktørenes Landsråd (Conductors national council) in 1997, and the leader from 2000 to 1st September Member of NJFs (Norwegian Railway Associations) board since 2000, and national secretary for the Norwegian Railway Association from the 1st September Board member for NSB from President in the European Transport Federation (ETF) advisory group for on board staff since Jan Audun Strand joined NSB Biltrafikk (Nettbuss) in Previously worked as a sales representative for Mills DA. He has been a representative for NNN (Norwegian Food and Allied Workers Union) and NJF (Norwegian Railway Association) since Head of the Bilpersonalets Landsråd (National Association for Car staff) for NJF (Norwegian Railway Association) since Board member for NJF (Norwegian Railway Association) and NSB from Deputy for the Nettbuss Board during the same period. Head of the Europeisk samarbeidsutvalg (ESU) (European Works Council (EWC)) for Nettbuss. Elected as the main union representative for Nettbuss AS from 1st January Rolf Jørgensen has been the head of the Norsk Lokomotivmannsforbund (Norwegian Train driver Association) since Jørgensen is educated as an electrician and an engine driver and has worked for the NSB Group for over 30 years. Jørgensen is also a board member for the Jernbanepersonalets Bank og Forsikring (The bank and insurance company for the employees of the railway). Kai Henriksen is educated cand. polit. from the University in Oslo and Master of Business administration from Harvard University. He is the CEO of Vinmonopolet AS (Wine monopoly), and has previously been CEO of the law firm DLA Nordic, CEO of Storebrand Bank, director of Marketing for Avanse Forvaltning and project leader for McKinsey. In addition to being Chairman of the Board for NSB he is chairman of the corporate assembly in Kollektivtransportproduksjon AS (KTP), Chairman of the board for Fjellinjen and board member for the The Employers Association Spekter. 63

66 68% Customer satisfaction NSB passenger train % Customer satisfaction NSB passenger train % Customer satisfaction NSB passenger train

67 70% Customer satisfaction NSB passenger train % Customer satisfaction NSB passenger train

68 NSB GROUP ANNUAL REPORT 2015 Public transport is the future The main goal for the NSB Group is to create values for the owner and society through efficient, accessible, safe and environmentally friendly passenger and freight transport. The Paris Agreement on climate change, adopted on 12 December 2015, provides a clear direction for future global climate goals. Companies and society will have to adapt to these new climate targets. The NSB Group wants to contribute, as reflected in our strategic objectives: The main goal for the NSB Group is to create values for the owner and society through efficient, accessible, safe and environmentally friendly passenger and freight transport. The Government proposed in White Paper no. 13 ( ) that by 2030 Norway should cut greenhouse gas emissions by at least 40 percent compared with Amongst efforts to reduce Norwegian emissions, the government points to five specific priority areas, of which one is reduced emissions from the transport sector. Transport accounted for 26 percent of total emissions in 2013 and thus is key to reducing climate change and achieving sustainable development. Greenhouse gas emissions in the transport sector can be reduced through transition to transport modes that emit less, by curbing the need for transport or by lowering emissions from a given transport type. The government says in the White Paper that they will help more people choose either public transport, walking or cycling. It is also important that urban development patterns and transportation systems encourage development of compact cities and towns, reducing transportation needs and promoting climate-friendly forms of transport. The NSB Group can and will contribute in significantly reducing greenhouse gas emissions in the transport sector. Our contribution will be delivered by planning and implementing increased capacity on public transport to/from home and work, developing public transport hubs and adjacent residential and commercial buildings, and delivering sustainable rail-freight solutions. Central elements here are a more attractive and efficient timetable in Eastern Norway implemented between December 2012 and December 2015, bringing 71 new trains into service to date, and intensive real estate development in and around transport hubs. These efforts have resulted in a considerable increase in traffic volume in 2015 too, with an increase in train journeys by 5.7 % to 72.4 million, up by 26 % compared to In Norway our bus traffic declined by 5.6 % but Sweden showed a 3 % increase in

69 CORPORATE SOCIAL RESPONCIBILITY REPORT Key milestones in 2015 // From the route change on December 13 the commuter line west of Oslo between Lysaker and Sandvika reopened after upgrading of stations and tracks and a new turning branch at Høvik. The route network which started up in 2012 is now completed, incorporating three upgraded local stations Høvik, Blommenholm and Stabekk // The growth in journeys by passenger train was 5.7 % // Energy consumption per train seat km. was reduced by 4.5 % compared to 2014 // The proportion of buses which are either hybrid, use biodiesel or run on natural gas has almost doubled to 35 % // The office building in Munkedamsveien 62 at Filipstad, Oslo west, was completed and classified as BREEAM NOR Excellent // Energy consumption by our properties has been reduced by 5 %, measured in in kwh/m 2 // The NSB Group continues to support SOS Children s Villages, donating to the Siteki village in Swaziland in lieu of Christmas presents to our employees. Om NSB-konsernet Samfunnsbidraget Virksomhetsområdene Årsrapport Corporate responsibility for the NSB Group As part of our group policy NSB has established corporate guidelines for social responsibility as well as ethical guidelines. We follow the following basic principles regarding social responsibility: // Every company manager has to ensure that their company safeguards social responsibility as an integral part of running their business // Social responsibility shall be incorporated into our strategic foundation and values // We support the principles stated in FN s Declaration on human rights and ILOs core conventions // We are active in preventing all forms of corruption // We shall actively contribute in the reduction of the environmental impact of the transport sector // We publicise annually the status and development of social responsibility in our CSR report The NSB Group has reported on environmental and social responsibility since the early 2000's. The report and its emphasis has evolved based on materiality considerations related to the challenges facing the company and the expectations of stakeholders. As other large enterprises the NSB Group reports CSR according to the Norwegian Accounting Act 3-3 paragraphs (a) and (c). The report is also in part based on the requirements of the GRI (Global Reporting Initiative G4 a voluntary standard for reporting corporate responsibility) and the UIC SIR (Sustainability Indicators, Rail)

70 NSB GROUP ANNUAL REPORT 2015 Customer relations Traffic volume development The first major schedule change in Eastern Norway in recent history came in In December 2015, a new step in facilitating more services for more customers was implemented, reopening the Blommenholm, Høvik and Stabekk stations on the Drammen line, west of Oslo, with 4 departures per hour. Changes implemented since 2012, together with the introduction of many new trains gave a 5.7 % traffic increase in the last 12 months, and in million journeys, of which 67.1 mill. in Norway. 71 new trains are now in service with 26 % more traffic than in Number of train journeys (mill.) Number of bus journeys (mill.) Number of transported TEU (1 000) Bus operations saw the number of journeys reduced to million. This reflects the reduction in ownership share of the operations in Denmark. Journeys in Norway and Sweden totalled 75.3 (79.8) and 34.2 (33.2) million, representing a change of 5.6 % and + 3 % respectively. This was mainly due to changes in route production. Freight volume stabilized in 2015, although it is still considerably lower than the peak year of Improved delivery quality has encouraged customers to choose to send their cargo by train. However many railway lines have been prone to flooding, landslides and infrastructure failures in 2015 too. Last year 155 freight trains were cancelled due to unforeseen closures, half that of Learning from 2015 shows that increased demand for rail-freight presupposes stable infrastructure so that customers can have more confidence in punctual delivery. Reputation and customer satisfaction The operational entities within the NSB Group conduct annual surveys on customer satisfaction. These give a good picture of how NSB s service and quality is perceived, and give us feedback on which areas we need to improve. Survey results for autumn 2015 showed a new peak for the CSI for passenger trains at 73 points. CUSTOMER SATISFACTION (INDEX 0-100) PASSENGER TRAIN EXPRESS BUS

71 CORPORATE SOCIAL RESPONCIBILITY REPORT Customers report that they are satisfied with, inter alia, information, staff on board, comfort on board and ticket purchase, but want improvements related to punctuality, route choice and the handling of disruptions. A customer satisfaction index under 60 is considered weak, over 70 as good. Customer satisfaction measured on the NSB Oslo-Gjøvik line (Gjøvikbanen) is relatively stable, and customers are in general very pleased with the service. The index reached 72 points, up 1 percentage point from Customer satisfaction for buses includes the express-bus products TIMEkspressen, the airport bus in Trondheim, Bus4You and Nettbuss express in Norway and Sweden. Customer satisfaction is stable and high. Punctuality NSB passenger train punctuality was 88.6 % in This is an improvement of 0.3 percentage points compared to 2014 but below the target of 90 %. Regularity was at 90.5 %. A local train is considered on time if it arrives at its destination within three minutes and 59 seconds of schedule. For long-distance trains the margin is five minutes and 59 seconds. Total hours delayed which affected NSB passenger trains in 2015 amounted to 11,606, a reduction of 1 % compared to For NSB passenger trains infrastructure delays are still most prevalent, accounting for 4,978 hours (43 %) compared to 5,886 (50 %) in 2014, a reduction of 15 %. NSBrelated delay hours at 20 % of the total were unchanged from NSB related delays were mainly due to long stops at stations (44 %) and failures by rolling stock (30 %). Delay hours due to long stops at stations were reduced by 4 % from 2014 and delay hours due to failures by rolling stock has increased by 4 %. Our passenger train operational staff have an ongoing program of technical improvements and maintenance to reduce faults. In 2015 the program focused on station dwell-time in collaboration with the National Rail Administration (Jernbaneverket) to improve punctuality generally and especially during rush-hour in the Oslo area. This work continues in NSB PASSENGER TRAIN PUNCTUALITY (INDEX 0-100) TARGET Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 69

72 NSB GROUP ANNUAL REPORT 2015 Our subsidiary in Sweden, Svenska Tågkompaniet AB, attained a punctuality of 90 % in 2015, compared to 88.4 % in NSB Gjøvikbanen AS (the Oslo-Gjøvik subsidiary) had an average punctuality of 84 % in 2015, down from 89 % in Infrastructure problems affected operations in 2015 as in previous years. Several lines were closed for shorter or longer periods due to flooding, landslides and bad weather. This resulted in the cancellation of 155 freight trains compared to 128 in Despite this, freight train punctuality was higher than the goal of 90 %, and ended on 92 % (90 % in 2014) within the 15 minute delay margin. The Environment Strategy The NSB Group has incorporated environmental issues into its strategies, goals and plans. One of the company s key strategic objectives is to prevent harm to both people and the environment. As a part of this, a strategic environmental plan was developed for the period The main objectives of this plan were: // Certify group businesses in accordance with ISO // Develop environmental competence and awareness in our employees // Further develop an eco-friendly rolling stock // Use environmentally friendly and innovative products in our businesses // Implement energy optimization and resource conservation // Renovate previously polluted sites // Increase the waste recycling fraction This plan contained policies and guidelines on how the work should be accomplished, and standards for measurement indicators related to the environment. A new environment strategy is under development and will be finalised in New international and national climate targets The Paris Agreement on climate change was adopted on 12 December It provides a clear direction for future global climate action; companies and society generally will have to adapt to the new climate targets. The agreement aims for global emissions to peak as soon as possible. The overall objective is to limit global warming to "well below 2 degrees." The Norwegian government proposed in its White Paper no. 13 ( ) that Norway by 2030 cut greenhouse gas emissions by at least 40 percent compared with Amongst efforts to reduce Norwegian emissions, the government points to five specific priority areas, of which one is reduced emissions from the transport sector. Transport accounted for 26 percent of total emissions in 2013 and thus is key to reducing climate change and achieving sustainable development. 70

73 CORPORATE SOCIAL RESPONCIBILITY REPORT Greenhouse gas emissions from the transport sector can be reduced through transition to transport modes with lower emissions, by reducing the need for transport or through lowering emissions from each individual transport mode. The government says in the White Paper that they will make it easier for more people to choose public transport, walking and cycling. The NSB Group plays an important part in reducing the transport sector s environmental footprint The NSB Group s rail, bus and real estate operations play an important part in facilitating a shift towards public transport. Our passenger rail and bus operations build on a substantial and sustainable route network to and from transport hubs. Our real estate operations develop hubs that make it possible to live and work near good public transport services. Our freight operations deliver freight transport by rail, which is both energy efficient and sustainable, and avoids drawbacks associated with freight transport by road. The NSB Group aims to reduce its own energy consumption and greenhouse gas emissions through more energy- efficient trains, buses and real estate and a focus on energy efficient driving. This has yielded good results. The development of hub-adjacent houses and commercial property can reduce the need for travel. Passenger train operations in NSB AS, train maintenance operations in Mantena and all operating companies in Nettbuss are environmentally certified in accordance with ISO Development of good urban spaces with both residential and commercial properties will reduce the need for travel. Energy consumption Energy consumption pass. trains electricity (MWh) 404, , ,858 Energy consumption pass. trains diesel (mill. liter) Energy consumption bus diesel (mill. liter) Energy consumption bus biodiesel (mill. liter) Alternative energy bus gas (mill. m 3 ) Energy consumption freight trains electricity (MWh) 105, , ,091 Energy consumption freight trains diesel (mill. liter) Energy consumption buildings (MWh) 130, , ,589 Energy consumption pass. trains (kwh)/seatkm Energy consumption pass. trains(kwh)/gtkm Energy consumption bus (liter/buskm) Energy consumption freight trains (kwh)/tonnekm) Energy consumption buildings (kwh/m 2) Energy efficiency, passenger rail From 2013 to 2017, NSB has set itself the goal of reducing power consumption by 15 %. With an energy expenditure of 44.6 Wh / gtkm in 2015, NSB is on track to reach its target. New, efficient trains and a focus on energy-efficient driving are central here. The latter will form the basis for new basic training for train drivers, together with My energy. My energy is an application for train drivers that monitors energy consumption during train trips, to understand better how driving style affects power consumption, and thus save energy. Energy consumption, freight trains In 2015 the energy consumption per tonne-kilometre was reduced by 4.3 %. A project on energy conservation will be established in 2016, with the introduction of ECO-driving during autumn At terminals the goal is to reduce idling emissions, with 4 diesel trucks at Alnabru, Oslo, replaced by 4 electric vehicles. 71

74 NSB GROUP ANNUAL REPORT 2015 Freight transport by rail has an appreciably smaller environmental impact than the same transport by road. It relieves roads of a substantial number of long trailer journeys, and thereby contributes towards lower emissions, fewer road accidents and traffic jams. During 2015 NSB freight operations relieved the roads of about 186,000 long trailer trips, i.e.600 trailers per day. Energy consumption, bus operations The introduction of a new fleet management system, which amongst other things registers fuel consumption, idling and driving patterns, shows potential savings in fuel consumption and local emissions. Use of alternative fuels such as natural gas, biogas and biodiesel has been extended considerably, and the same applies to hybrid buses. 35 % of our buses have been run on alternative energy in 2015, a significant increase from last year. Ground contamination Some minor diesel leakages at freight terminals occurred during 2015, but the contaminated soil has now been removed. When developing our properties these are first examined and if necessary cleansed of pollution. In connection with a building project at Grefsen station 5,507 tons of polluted material was removed in This program of eliminating ground contamination from our real estate sites continues into Greenhouse gas emissions Emissions passenger trains (Norway) tonnes CO2 94,087 94,866 91,536 Emissions bus tonnes CO2 207, , ,586 Emissions freight trains tonnes CO2 44,026 41,974 40,183 Emissions buildings tonnes CO2 18,026 15,455 15,941 The NSB Group currently purchase all electrical power for trains from the Norwegian National Rail Administration (Jernbaneverket) with a certificate of origin guarantee. This is not in itself an incentive to save on energy, but by purchasing these guarantees NSB helps to support the producers of renewable energy. In its greenhouse gas emission calculations up until 2014 NSB used zero emissions for electrical trains based on the purchase of these origin guarantees. From 2014, we have used a new universal standard for computing energy consumption and gas emissions for transport services, and the emissions for 2013 are restated. The basis for calculating our electricity emissions is now the Nordic electricity mix, and for diesel emissions well to wheel. Management of waste Waste (tonnes) 5,096 5,933 5,340 Recycling rate 45 % 59 % 56 % Both the waste in tonnes and the recycling rate have decreased in 2015 compared with previous years. This is mostly due to the previous disposal of freight wagons with a high recycling rate. The real estate and train maintenance operations have the greatest amount of waste, and define the potential reduction in waste and recycling rate. The recycling rate from real estate operations increased from 31.9 to 35.7% last year, while the train maintenance operations reached a recycling rate of 77.3 %, about the same level as in

75 CORPORATE SOCIAL RESPONCIBILITY REPORT Safety and security The safety and security policy of the NSB Group states that: // Our operations shall not cause serious harm to either people, the environment or assets // Operational entities shall proactively prevent unwanted incidents and have the necessary competence to handle critical situations. The core business shall as far as possible stay operational even in threatening or crisis situations // Learning from experience and continual improvement shall be facilitated. Information regarding safety and security should be easy to understand and accessible. No one is to be penalized for reporting faults or problems // Safety and security activities should be customized to each individual operation and developed to meet new requirements Nobody should die or be seriously injured as a result of the group s business. Line management is responsible for ensuring that employees at all levels build an attitude that prioritizes safety in all circumstances. If safety goals are not met or established safety rules not adhered to, the line manager is to take corrective action. The realm of traffic safety includes reporting of adverse incidents, their investigation, emergency exercises, risk analysis and monitoring results. Together these provide the basis for defining critical conditions and the steps for correction and improvement. Security policy for railway operations is described in separate governing documents. The figure shows accidents, injuries and fatalities related to group transport activities Number of fatalities employees Number of fatalities external Number of serious injuries employees Number of serious injuries external Number of railway accidents Injuries and fatalities No passengers died as a result of the NSB Group's transport activities in One third party and one employee died in bus collisions, and five third parties died in level crossing accidents. 21 third parties were seriously injured, including 20 within the bus segment, mainly due to collisions. Accidents For the NSB Group there have been 15 incidents, deemed railway accidents in accordance with regulations, during The causes of many of the incidents in 2015 are beyond the group s direct influence. Incidents are systematically recorded and reported to the infrastructure manager. Traffic safety measured through performance management and risk management remains a high priority and is used to reduce risk both internally and in collaboration with others. 73

76 NSB GROUP ANNUAL REPORT 2015 Our traffic safety record overall is rated as satisfactory and goal achievement is considered acceptable. NSB s operations are conducted in compliance with external and internal requirements as assessed by management follow-up. Traffic safety, bus operations Bus operations transport large numbers of passengers daily, with the responsibility to ensure that everyone arrives safely, and no other road users suffer damage of any kind. As part of its road safety activities, the bus operation has started certification to ISO (traffic safety). Nettbuss Mid Norway, Nettbuss South and Nettbuss Sweden are already certified to this standard which, together with driving behaviour monitoring, should help reduce accidents. Employee relations Our strategic goal is for the NSB Group to have highly qualified and motivated employees. As a personnel intensive service organization NSB should aim to be an attractive workplace, ensuring a professional and conducive working environment with open, honest and consistent communication both internally and externally in order to create trust and credibility. The NSB Group has established a personnel policy. Policy manuals are prepared in each operational entity that contain guidelines, policies and standards for handling personnel issues Number of employees 12,668 12,989 13,523 Number of man years 10,439 10,996 11,191 Employee satisfaction NSB Group NA Sickness absence rate 7.9 % 7.8 % 7.8 % The NSB Group had by year-end 12,668 employees. The equivalent number of man-years was , a reduction of 5 %, mainly due to a change in ownership of bus operations in Denmark. Employee satisfaction is at 71 on a scale of This is one percentage point above the average for Norwegian companies, and 5 percentage points above the average in the transport sector. We see signs that satisfaction in the various businesses and staff areas in the group are affected by the ongoing change projects.on the basis of survey results measures have been enacted to improve satisfaction in the areas where performance is too weak. The employee satisfaction survey itself was modified slightly in 2015, and the figure for 2014 has been restated accordingly. Absence due to sickness last year was at 7.9 %, about the same level as last year. High sickleave was mostly incurred through strain injuries and inconvenient working hours, and the main measures to reduce long-term absence are adjustments to the work place and shift working. For passenger rail employees LTI (Lost Time Injuries) fell to 3.8 per million working hours while TRI (Total Recordable Injuries) was also lower at 5.9. These ratios were 4.2 and 6.5 respectively in 2014, a 9.5 % lower LTI and a 9.2 % lower TRI. Both Rom Eiendomsutvikling AS, (parent company for real estate operations), and NSB Gjøvikbanen AS which operates the Oslo-Gjøvik line, had zero LTI and TRI. The LTI and TRI ratios for train maintenance operations were at 15.2 and 18 respectively. The goal is to reduce the number of injuries, partly by means of annual safety seminars for all employees. 74

77 CORPORATE SOCIAL RESPONCIBILITY REPORT For the freight train operations, LTI was 12.7 and TRI For the bus operations LTI was 4.5 and TRI 6.2. These ratios were higher than the previous year, mainly due to improved reporting procedures. Human rights, labour rights and anti-corruption activities In the NSB Group we have established ethical guidelines and guidelines for social responsibility covering for example human rights, labour rights and anti-corruption measures. Most of our activities take place in Norway, with links to Sweden too. Management of human rights and labour rights are well taken care of through formal procedures that employees and management have established to deal with such questions. Most of our employees have rights that are well defined within collective agreements and understandings. Employees are represented on the Board, and working environment committees are established and hold regular meetings. The percentage of our employees covered by collective agreements varies between businesses from 84 % to almost 100 %. Most of the remaining employees have individual agreements. Our operations aim for a high ethical standard as described in our ethical guidelines, with ethical requirements on our suppliers in force. During 2015 the NSB Group carried out a large internal control project. One of the main elements was risk analysis regarding possible corruption or irregularities as well as a data analysis and analysis of close links between our employees and suppliers. We found no significant violations of our policies or procedures. These analyses are the basis for the reduction of risk and mistakes. Routines, systems and practice will be changed and improved where necessary, and the effects monitored. In the passenger train, freight, train maintenance and real estate operations ethical guidelines are a part of the employment contract for new employees. For the bus operations ethical guidelines form part of the manager s manual and the personnel handbook, and are also linked to the drivers manual. Key personnel in all our businesses were trained in anti-corruption work as part of the internal control project. The freight business has also introduced e-training on our ethical guidelines. A process has been started for self-declaration by the Board and top management regarding ethics and social responsibility as well as any association to other legal entities that have or may have a commercial relationship with the NSB Group. Supply chain The NSB Group buys goods and services as well as fixed assets for about 8 billion NOK a year. The NSB Group has approved governing documents and guidelines related to group purchasing. The procurement function is set up to ensure that the NSB Group is using its purchasing power to achieve optimum terms, and that the agreements and contracts NSB signs with external suppliers safeguard NSB s interests in a satisfactory manner. This function is also responsible for corporate support, consulting and decision support in addition to following up the cost and legal aspects of large or strategically important contracts for the NSB Group. Based on group- and business area procurement plans for 2015, we carried out a risk analysis for social and corporate responsibility for all significant agreements. Risk assessment of the procurement plans for 2015 showed five contract areas that may be at risk of violating ethical or social requirements. These are: 75

78 NSB GROUP ANNUAL REPORT 2015 // Uniform production // Ingredients in the night train comfort package // Cleaning services // Building construction // IT (programming resources abroad) No significant violations of either ethical or social requirements have been found. These risk analyses have however provided a basis for reducing this risk, e.g. using external contractors and consultants to audit and possibly in monitoring suppliers. Equality Based on statutory requirements and NSB s ethical guidelines, promoting equality is given substance in the group personnel policy. It states among other things, that: // All employees in the NSB Group are equal regardless of sex, age, disability, sexual orientation, or religious, ethnic or cultural background // We seek a broad and varied range of leaders and employees, whose individual skills and ability are valued and respected // A more equal proportion of male and female employees is desirable at all levels, and will be emphasized in recruitment and in skills development Proportion of female employees 17% 17 % 16 % Proportion of female managers 17% 16 % 15 % The proportion of women in the NSB Group is 17 %, ranging from 7 to 44 %, depending on operation. On the Board of Directors for the NSB Group, the proportion of women representing shareholders is 60 %, while the proportion in top management of the various operations varies from zero to 33 %. There are female CEO s in our subsidiaries NSB Trafikkservice AS and Finse Forsikring AS. The NSB Group top management team included no women in The average proportion of female managers is 17 %, on a level with the share of female employees generally. The proportion of women with personnel responsibility is 20 %. The average wage for women varies between the different operations, from 77 to 106 % of the average male wage, mainly dependent on position and seniority. The average working hours for women is slightly lower than for men, except for the freight and train maintenance operations. The difference in working hours is mainly due to the fact that a larger proportion of female employees work part time. We aim to increase the proportion of women in middle- and top management in the long term by, for example: 76

79 CORPORATE SOCIAL RESPONCIBILITY REPORT // Identifying and publishing a number of jobs held by females as role models // Encouraging women to apply when recruiting for male-dominated jobs. In several business areas, it is standard practice always to interview female applicants who fill eligibility requirements // Applying moderate gender quotas in recruitment for a number of job categories in which male dominance is especially great // Managerial focus on curbing sexist attitudes and behaviour // Introducing systematic processes for management evaluation and succession planning, focusing on female representation // Mobilization of talented female employees and managers in the group's ongoing change program // Prioritization of women in group management development Proportion of immigrants 13.5% 12.2 % 11.0 % The proprtion of immigrants in the NSB Group is 13.5 %, up from 12.2 % last year. The largest immigrant share is in railcar cleaning at 35.3 %, while the lowest, 3.6 %, is in rail freight. The immigrant share is increasing in all group operations. NSB's goal is greater employee diversity in the group, but it is difficult to achieve. The biggest challenge here is the non-fulfillment of linguistic requirements. When the intake of new recruits is limited, it also becomes more difficult to expand diversity in higher positions in the group, since we largely develop and promote internally. Key action areas are: // Thorough and serious treatment of suspected or reported discriminatory behaviour // An emphasis on NSB's policy of diversity and equality when publicizing the vast majority of vacancies // Highlighting role models with immigrant background on the group s website // For most vacancies, making it a regular practice to call for interview at least one candidate with immigrant background // Managerial focus on ethnic diversity as a value added We have established a notification channel in accordance with the requirements of the Working Environment Act. We received no formal notification of discriminatory behaviour in 2015, and only one in

80 NSB GROUP ANNUAL REPORT 2015 Stakeholder inclusiveness and materiality One of the main elements in the international GRI standard and in the Norwegian accounting act on corporate responsibility is a description of how the organization has identified and involved stakeholders. The operational entities in the NSB Group have in 2015 made a stakeholder analysis based on an assessment of importance, and grouped stakeholders according to the following criteria: // The Norwegian Government as owner // National and local authorities // Suppliers and other partners // Customers // Employees and unions // Interest groups and local communities For each of these categories we have logged the type of dialogue, the number of meetings and their scope. The overview shows which major issues operational entities and interest groups have discussed. Formal meetings and other contact with interest groups ensure that each entity in the NSB Group has an updated knowledge of stakeholders and their needs, contributing to better management decisions. The social mission of the NSB Group and it's businesses, as contained in the articles of association, stakeholder requirements and the annual strategic plan details prioritized areas of corporate responsibility. Materiality criteria are the basis for the CSR reports and their design from the 2000's to this report for The Annual Report and the CSR report for 2015 describe which goals the NSB Group believes are central to our corporate responsibility i.e.: // To contribute to better public transport solutions for Norway s future // To provide a comprehensive route network // Building on and near transport hubs - closer and smarter // Economic sustainability // That we should not cause serious harm to people, property or the environment // Increased energy efficiency These goals will remain central in future. In 2016 we will concentrate on improving methodology as suggested in the GRI standard on stakeholders and materiality. Stakeholder analysis has been the basis for the CSR report since Materiality analysis according to the GRI template will be implemented initially in the passenger train and real estate operations as part of strategies related to corporate responsibility. 78

81 CORPORATE SOCIAL RESPONCIBILITY REPORT Key figures Number of train journeys (mill.) Number of bus journeys (mill.) Number of transported TEU (1,000) Punctuality passenger trains (Norway) 88.6 % 88.3 % 88.4 % Punctuality freight trains 91.9 % 90.0 % 89.3 % Customer satisfaction passenger trains (index 0-100) Customer satisfaction express bus (index 0-100) Energy consumption pass. trains electricity (MWh) 404, , ,858 Energy consumption pass. trains diesel (mill. liter) Energy consumption bus diesel (mill. liter) Energy consumption bus biodiesel (mill. liter) Alternative energy bus gas (mill. m 3 ) Energy consumption freight trains electricity (MWh) 105, , ,091 Energy consumption freight trains diesel (mill. liter) Energy consumption buildings (MWh) 130, , ,589 Energy consumption pass. trains (kwh)/seatkm Energy consumption pass. trains(kwh)/gtkm Energy consumption bus (liter/buskm) Energy consumption freight trains (kwh)/tonnekm) Energy consumption buildings (kwh/m 2 ) Emissions passenger trains (Norway) tonnes CO 2 94,087 94,866 91,536 Emissions bus tonnes CO 2 207, , ,586 Emissions freight trains tonnes CO 2 44,026 41,974 40,183 Emissions buildings tonnes CO 2 18,026 15,455 15,941 Waste (tonnes) 5,096 5,933 5,340 Recycling rate 45 % 59 % 56 % Number of fatalities employees Number of fatalities external Number of serious injuries employees Number of serious injuries external Number of railway accidents Number of employees 12,668 12,989 13,523 Number of man years 10,439 10,996 11,191 Employee satisfaction NSB Group NA Sickness absence rate 7.9 % 7.8 % 7.8 % Proportion of female employees 17 % 17 % 16 % Proportion of female managers 17 % 16 % 15 % Proportion of immigrants 13.5 % 12.2 % 11.0 % Number of notifications of discriminatory behaviour

82 79% Customer satisfaction, station area for local trains % Customer satisfaction, station area for local trains % Customer satisfaction, station area for local trains

83 81% Customer satisfaction, station area for local trains % Customer satisfaction, station area for local trains

84 NSB GROUP ANNUAL REPORT 2015 Corporate governance Om NSB-konsernet Samfunnsbidraget Virksomhetsområdene Årsrapport 1. Reporting on corporate governance This statement follows the chapters in the Norwegian Code of Practice for Corporate Governance. NSB AS and the NSB Group adheres to the Code but with notable exceptions as the Group is not listed on a stock exchange, is owned 100 % by the Norwegian State and has certain restrictions in its articles of association. The Code is designed to ensure that companies listed on the stock exchange have ownership control and a corporate governance that clarifies the roles between shareholders, the board of directors and management in addition to basic legal requirements. The Code is intended to strengthen confidence in listed companies among shareholders, the capital market and other interested parties. The board of directors has adopted a set of Group values including both ethical- and social responsibility guidelines and which are published on our homepage nsbkonsernet.no

85 CORPORATE GOVERNANCE 2. Nature of business NSB is a transport group with activities in both Norway and other Nordic countries. The parent company, NSB AS, is owned by the Norwegian Government through the Ministry of Transport and Communications. The Group s headquarters are in Oslo. The group s business is as stated in the articles of association: // The company s social mission is to provide efficient, accessible, secure and environmentfriendly passenger and freight transport. // The company s business is the carriage of passengers by rail in Norway, transport of passengers and goods in Norway and other Nordic countries as well as other related business. // The business may be run by the company itself, by wholly owned subsidiaries, through other partowned companies or by collaboration with other companies. The company may do business in other Nordic countries as far as this helps to strengthen company effectiveness in the Norwegian market and/or helps the company to cover its social duties mandated by state ownership. 3. Equity and dividends NSB AS is a State Limited Liability company, ie a limited liability company where the state owns 100 % of the shares. The Minister of Transport or he/she to whom he delegates authority safeguards the rights of shareholders at the annual general meeting. Important rules made specifically for such companies are as follows: // The annual general meeting is not bound by the dividend recommendation agreed by the board of directors. // The Office of the Auditor General of Norway who audits the management of all state ownership has a right to demand information from the CEO, the board and the external auditor. The government expects an annual dividend equal to 50 % of Group profit after tax, but the actual level is decided annually. The board does not have a mandate to apportion dividends or to increase the number of shares. 4. Equal treatment of shareholders and transactions with close associates The company has only one class of shares. They are not listed on a stock exchange and there are no share transactions. NSB AS has a contract with the Ministry of Transport and Communications concerning the public purchase of passenger traffic services on non-profitable railway lines. A similar contract applies to NSB s subsidiary NSB Gjøvikbanen AS regarding operation of the Gjøvik line. Guidelines appertaining to material transactions between the company and members of the board of directors or management are given in the Group s ethical guidelines and specified in instructions to the board and the CEO. 5. Freely negotiable shares The company s articles of association are without any form of restrictions on the negotiability of its shares. 6. General meeting The general meeting consists of the government represented by the Ministry of Transport and Communications. The Ministry calls the meeting. An annual general meeting is to be held before the end of June. 83

86 NSB GROUP ANNUAL REPORT 2015 The members of the board, the CEO and the auditor have the right to attend the general meetings. 7. Nominating committee The general meeting consists of the government represented by the Ministry of Transport and Communications. The general assembly does not appoint a nominating committee. 8. Corporate assembly and board of directors: composition and independence The company does not have a corporate assembly. The board is elected by the general meeting. Two or three board members with deputies are elected by and among the employees. By agreement and in lieu of a corporate assembly, the employees elect a board member and deputy in addition to the above representatives. The members of the board of directors are chosen based on experience, competence, diversity and ability to contribute to the development of the company. A company manager cannot be a member of the board of directors or own shares in the company. Information on board members is published on the NSB AS homepage. 9. The work of the board of directors The board s work is governed by the Norwegian Companies Act, ie to manage company value on behalf of the owners. This is specified in separate instructions. The board follows a formal work plan on an annual basis. The plan regulates the board s main tasks which are to oversee the goal, strategy, organization and control of operations. The board of directors work is evaluated annually by the board itself. The board has established a separate set of instructions for the CEO. The board of directors must ensure that the company has effective systems for internal control and risk management that are commensurate with the extent and nature of the company s activities. The board, according to the principles of association, shall ensure that the company acts in a socially responsible manner. The board has established audit and remunerations committees. 10. Risk management and internal control To ensure the quality of internal control, a separate governing system has been implemented. This includes leadership instructions, preparedness plans, safety procedures and processes to govern and control operations. Guidelines, routines, handbooks and authorization matrices are in place to ensure the quality of the company s economics, financial reporting and financing. Risk analysis of all the various activities of the Group are evaluated on an annual basis, and measures are taken to control risks. The board reviews company risk management and internal control annually. 11. Remuneration of the board of directors Information about the compensation of the board and key management is included in notes to the financial statement. The remuneration of the board is not linked to the company s performance. The shareholder-elected members of the board of directors do not normally take on specific assignments for the company. 84

87 CORPORATE GOVERNANCE 12. Remuneration of executive personnel The board of directors hires the CEO and decides his/her remuneration. The board evaluates the CEO s performance and salary parameters on an annual basis, and reviews the compensation of key management. The board has established guidelines for remuneration of members of key management. The CEO has been given authority to determine remuneration for key management within the above mentioned guidelines and adhering to the principles of remuneration for management in state owned companies. Remuneration guidelines for management are discussed at the annual general meeting. Information on the compensation of the board and key management is included in notes to the financial statement. 13. Information and communications Public information is communicated by the senior management of the Group. Financial information and the publication dates are to be found on the company s homepage. Paragraph 10 in the articles of association state that NSB has a specific duty to inform the shareholder about the Group s operations. Matters of principle or social significance should be communicated to the Minister of Transport and Communications by the board of directors before they make any final decision. Every year the board of directors is obliged to present to the Minister of Transport and Communications a plan for the operations of the NSB Group that includes the following aspects: 1. An assessment of the market in which the NSB Group operates, including developments since the previous plan. 2. The Group s main activities for the next few years, including plans for major restructuring, further development, the winding up of existing operations and the establishment of new ones. 3. The level of investment, new major investments and their financing. 4. The Group s economic development. 5. A report on measures and results regarding the company s social mission and corporate responsibility. The board of directors has also to submit information regarding any material change to plans previously communicated to the Minister of Transport and Communications. 14. Take-overs State ownership precludes take-overs and is not relevant here. 15. Auditor The auditor is elected by the annual general meeting. The auditor submits annually a Management Letter to the board of directors, reporting the main findings from the audit of the company and status regarding management and internal control. The board of directors hosts an annual meeting with the auditor where the CEO is not present. The auditor attends the annual general meeting and some board meetings where relevant. The auditor s remuneration is reported in notes to the financial statement. 85

88 NSB GROUP ANNUAL REPORT

89 ACCOUNTS AND NOTES Accounts and notes 2015 NSB Group Income statement page 88 Overview financial position page 89 Cash Flow statement for the Group page 90 Development in Equity page 91 Notes page Principal notes page Shares in subsidiaries page Group and company structure page NSB Group s passenger operations in the Nordic Region page Segment information page Intangible assets page Property, plant and equipment page Investment property page Investments in associates page Joint ventures page Inventory and development property page Assets held for sale page Trade and other receivables page Financial risk management page Derivatives page Other financial assets at fair value through profit and loss page Financial instruments by category page Cash and bank deposits page Share capital and share premium page Borrowings page Deferred income tax/income tax expenses page Payroll and related expenses page Retirement benefit obligations and similar obligations page Trade and other receivables page Provisions for other liabilities and charges page Contract losses page Depreciation, amortization and impairment page Other expenses page Financial income and expenses page Unrealised fair value changes page Leases page Related party transactions page Contingencies page Business combinations page Events after the balance sheet date page

90 Income statement Accounts 2015 NSB Group Notes Operating revenue 5 15,372 15,336 Payroll and related expenses 22 6,710 6,975 Depreciation and impairment 27 1,450 1,624 Other operating expenses 28 5,114 5,064 Total operating expenses 13,274 13,663 Share of loss(-)/profit of joint ventures Share of loss(-)/profit in associates Unrealised value change investment property Operating profit 2,814 2,001 Financial posts Financial income Financial expenses Net financial expenses - pensions Unrealised fair value changes Net financial items Profit before income tax 2,664 1,597 Income tax expense PROFIT FOR THE YEAR 2,158 1,509 Attributable to Non-controlling interest 9 4 Equity holders 2,149 1,505 TOTAL 2,158 1,509 OTHER COMPREHENSIVE INCOME Profit for the year 2,158 1,509 Items that will not be reclassified to profit or loss Deviation retirement benefit obligations Tax related to items that will not be reclassified Items that can be reclassified in net income in later items Change in value of reclassification of investment property Currency translation differences 40 3 Tax related to items that are not reclassified Total comprehensive income for the year 2, Attributable to Non-controlling interest 9 4 Equity holders 2, TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,

91 Overview financial position Notes ASSETS Intangible assets Property, plant and equipment 7 14,499 14,415 Investment property 8 4,622 4,206 Investments in associates Financial assets Total non-current assets 19,554 18,968 Investment in joint ventures Inventories 11 1,424 1,437 Assets held for sale Trade and other receivables 13 2,167 1,800 Derivative financial assets 15 2,546 2,252 Financial assets Cash and bank deposits 18 1,602 2,284 Total current assets 9,282 8,883 TOTAL ASSETS 28,836 27,851 Accounts 2015 NSB Group Notes EQUITY AND LIABILITIES Ordinary shares and share premium 19 5,144 5,144 Restricted equity - revalued investment property 2,244 1,976 Retained earnings 2,447 1,286 Non-controlling interest 3-6 Total equity 9,838 8,400 Borrowings 20 10,387 9,926 Deferred income tax liabilities 21 1, Retirement benefit obligations 23 2,345 2,552 Provisions for other liabilities and charges Total long term liabilities 13,975 13,308 Trade and other payables 24 3,060 3,302 Tax payable Borrowings 20 1,534 2,495 Derivative financial instruments Total short term liabilities 5,023 6,143 TOTAL EQUITY AND LIABILITIES 28,836 27,851 Oslo, 24 th of February 2016 Kai Henriksen Chairman of the Board Jan Audun Strand Kjerstin Fyllingen Bjarne Borgersen Wenche Teigland Rolf Jørgensen Åsne Havnelid Audun Sør-Reime 89 Geir Isaksen CEO

92 Cash flow statement for the Group Accounts 2015 NSB Group Notes Profit for the year before income tax expense 2,664 1,597 Depreciation and impairment in the income statement 27 1,450 1,642 Gain/loss on sale of property, PPE and investment property Net changes to obligations and retirement benefit obligations Net changes to provisions for other liabilities and charges Net unrealised fair value changes Interest items Shares of profit/loss (-) from associated and joint ventures 9, Changes to working capital Net cash flow from operating activities 2,233 1,338 Acquisition of subsidiaries less cash acquired Sale of property and buss operations 187 1,671 Loans paid to/from single purpose/joint ventures Purchase of PPE and investment property 7, 8-2,148-2,302 Proceeds from sale of PPE and investment property Grants Dividends received Net cash flow from investment activities -1, Proceeds from borrowings 1,800 2,289 Repayment of borrowings -2,579-1,451 Dividends paid to company's shareholders Dividends paid to non-controlling interest owners - -3 Net cash flow from financial activities -1, NET CHANGE IN CASH AND BANK DEPOSITS FOR THE PERIOD ,021 Cash and bank deposits as at the beginning of the period 18 2,284 1,248 Foreign exchange gain/loss on cash and bank deposits CASH AND BANK DEPOSITS AS AT THE END OF THE PERIOD 18 1,602 2,284 90

93 Development in equity 2015 Notes Ord. shares and share premium Restricted equity, value changes Acc. currency translation Retained earnings Noncontr. interest Equity 1 st of January ,144 1, , ,400 Profit for the interim period , ,159 Changes to fund due to value changes From other comprehensive income Change in income tax rate Dividends paid EQUITY 31 ST OF DECEMBER ,144 2, , ,838 Total Accounts 2015 NSB Group 2014 Notes Ord. shares and share premium Restricted equity, value changes Acc. currency translation Retained earnings Noncontr. interest Total Equity 1 st of January ,536 1, ,941 Profit for the interim period , ,509 Changes to non-controlling interest Changes to fund due to value changes From other comprehensive income Dividends paid EQUITY 31 ST OF DECEMBER ,144 1, , ,400 91

94 Notes Accounts 2015 NSB Group All figures in the report are in MNOK. 1. Principle notes for the companies in the NSB Group 2. Shares in subsidiaries 3. Group and company structure 4. NSB-Group s passenger operations in the Nordic Region 5. Segment information 6. Intangible assets 7. Property, plant and equipment 8. Investment property 9. Investments in associates 10. Investments in Joint ventures 11. Inventory and developmental property 12. Assets held for sale 13. Trade and other receivables 14. Financial risk management 15. Derivatives 16. Other financial assets at fair value through profit and loss 17. Financial instruments by category 18. Cash and bank deposits 19. Share capital and share premium 20. Borrowings 21. Deferred income tax/income tax expense 22. Payroll and related expenses 23. Retirement benefit obligations and similar obligations 24. Trade and other payables 25. Provisions for other liabilities and charges 26. Contract losses 27. Depreciation, amortization and impairment 28. Other expenses 29. Financial income and expenses 30. Unrealised fair value changes 31. Leases 32. Related party transactions 33. Contingencies 34. Business combinations 35. Events after the balance sheet date The consolidated financial statements were approved by the Board of Directors on 24th of February

95 Note 1 1 General information and summary of important accounting principles GENERAL INFORMATION Norges Statsbaner AS (NSB AS) and its subsidiaries (NSB-Group) run operations in the following areas: Passenger transportation by train and bus Freight transportation by train Real estate operations Train maintenance Additionally, the Group has its own insurance function which is organized in a separate Captive, Finse Forsikring AS. The NSB-Group has its main office in Oslo. All the shares for NSB AS are owned by the Norwegian Ministry of Transport and Communication. The financial statements for 2015 were approved by the Board of Directors 24 th of February All numbers in the report are in MNOK, unless otherwise stated. BASIS OF PREPARATION The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as approved by the EU. Financial assets and liabilities at fair value The Group has long-term debt, financial derivatives and certain financial assets, that are accounted for using fair value. The estimates are mainly based on observed prices, which change over time. Changes in assumptions will lead to changes on the balance sheet as well as affecting the income statement. Fixed assets The Group continues to evaluate expected useful life and expected residual value on fixed assets. This is of importance for annual depreciation. Furthermore, the Group considers the value on its fixed assets and whether write downs are necessary. These considerations involve a great deal of judgment. See the note on fixed assets for a description of impairment tests and related sensitivity analysis. Estimated impairment of goodwill The Group performs tests annually to assess impairment on goodwill. Recoverable amount is determined through calculations of value of use determined by use of estimates. Refer to the note on intangible assets for a description of impairment tests and corresponding sensitivity evaluations. Estimated provisions for contract losses The Group conducts tests annually to evaluate provisions for contract losses, where there are negative operating profits and therefore indications of impairment. For property, plant and equipment that are used in these contracts, an impairment test is performed first, as mentioned above. Then the present value of future cash flow for each separate contract is measured. These evaluations involve a large degree of judgment. We refer to the note on Provisions for a further description. Accounts 2015 NSB Group The most important accounting principles which are utilized in the preparation of the Group financial statements are described below. These principles are utilized consistently for all periods that are presented, unless otherwise specifically stated. The consolidated financial statements have been prepared under the historical cost convention with the exception of financial derivatives, certain financial assets and financial liabilities and investment property which are valued at fair value. The Group adopts the going concern basis in preparing its consolidated financial statements. IMPORTANT ASSUMPTIONS AND ACCOUNTING ESTIMATES Application of the Group accounting principles implies that the management must exercise judgment through use of estimates and assumptions. Estimates and assumptions are continuously evaluated and are based on historical experience combined with expectations on future events that are probable at the time of evaluation. Areas where the use of assumptions and estimates are material for the Group accounts: Investment property measured at fair value When estimating investment property at fair value one uses estimates and assumptions. The level of yield/return on equity and the lease rate of the market are the most important factors. The change of these factors can result in material changes in recognized income/expense and the balance sheet value of investment property. A sensitivity analysis showing the effects when these assumptions are changed, is presented in the note for investment property. Retirement benefit obligation The Group has considerable liabilities related to employees pension rights regarding defined pension benefit plans. Calculations show that the Group must determine economic and demographic assumptions. Changes to assumptions can result in considerable effects on the calculated liabilities on future retirement benefit expenses. For more information on pensions and for a more detailed description on what assumptions are used, see the retirement benefit obligation note to the financial statements. Included in the note is a sensitivity analysis that shows how sensitive the calculations are in relation to central assumptions. Actuarial deviations related to such changes are included in other comprehensive income with a direct effect to equity, after deducting deferred tax. Accrual of revenue Parts of the Groups revenue come from a sales and fare cooperation with other transport operators. These revenues are accrued based on counting the number of travels, composition of type of tickets sold and experiences from prior periods. These evaluations entail a significant degree of judgment and use of estimates. CONSOLIDATION PRINCIPLES The Group financial statements show the total financial result and the total financial position for the parent company and its subsidiaries. Subsidiaries Subsidiaries are companies where the Group has actual control. Control occurs when the Group as an investor has the ability to influence variable yield that the Group has a right to or is exposed to. Subsidiaries are consolidated from the time the Group obtain control and are excluded from consolidation when control ceases to exist. Transactions with non-controlling owners in subsidiaries are treated as equity transactions. 93

96 Note 1 Accounts 2015 NSB Group Joint ventures and associates Joint ventures are companies or entities where NSB has joint control with one or several other investors. The Group has considerable shares in single purpose companies for development of real estate projects that are considered to be joint venture. Share of associates are companies where NSB has considerable, but not controlling influence. Normally, considerable influence is defined as having an ownership between 20 % and 50 % of the voting rights. Ownership in both joint ventures and associates are accounted for using the equity method of accounting. Acquisitions The acquisition method of accounting applies to business combinations. Compensation is measured at fair value on the transaction date which is when risk and control is transferred and will normally coincide with the implementation date. An allocation of the acquisition price is based on fair value of assets and liabilities acquired. Additional value that cannot be allocated to identifiable assets and liabilities are allocated to goodwill. If fair value of identifiable assets and liabilities is higher than consideration given, the excess is charged to income. The principles on how to recognize acquisition of associates and joint ventures are the same as for acquisition of subsidiaries. SEGMENT INFORMATION NSB reports its operating segments according to how Group management, which is the operating decision-maker, adopt, follow-up and evaluates decisions. CURRENCY Functional currency and presentation currency The NSB-Group financial statements are presented in Norwegian kroner and all numbers are in MNOK, which is both the functional currency and presentation currency for the parent company. The NSB-Group operates mainly in Norway, as well as in Sweden and Denmark. Income statements and balance sheets from Group entities with a functional currency different from the presentation currency are converted accruing currency translation differences directly to equity through other comprehensive income. Transactions Operating income and expenses, purchases as well as financing expenses are mainly in the following currencies: NOK, SEK, DKK, CHF and EUR. Transactions in foreign currency are re-calculated to the functional currency at the transaction date. Foreign exchange gains and losses from such transactions and from the translation of foreign currencies are recognised in the income statement. Public grants Public grants are systematically recognized in the income statement in the accounting periods the company include the expenses that the grants are meant to compensate. Public grants that are related to assets are accounted for net, through the grant being treated as a reduction of the amount included on the balance sheet. Lease and sale of real property Revenue from lease of real property is accrued over the length of the lease agreement. Revenue from sale of property is recognized in the period where risk and control is transferred to the buyer. As a main rule this means that the revenue is recognized on the acquisition date. Construction and development of commercial- and residential buildings It s the building s character and buyer s ability to influence the final project that will determine whether revenue recognition will be according to IAS 11 construction contracts or IAS 18 revenue. For property constructed where the purchaser has significantly influenced outcome, an expected gain, according to IAS 11, has been included according to the rate of completion. Dividends Dividends received from companies other than subsidiaries, associates and joint ventures are recognized on the date when the decision was made by the distributing company. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment (PPE) and operating related property is shown at cost less subsequent depreciation. Cost includes expenditure which is directly attributable to the acquisition of the items such that it s ready for use. Subsequent costs are included in the asset s carrying amount when it is probable that future economic benefits will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Borrowing costs accrued during construction of PPE, are capitalized until the asset is ready for intended use. Depreciation on other assets is calculated using the straight-line method to allocate the cost of each asset to its residual value over its estimated useful life, as follows: Railroad vehicle years Buses 5 12 years Buildings years Other fixed assets 5 30 years Land and residential buildings are not depreciated. The fixed assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are included in the income statement and are determined by the difference between the sales price and the balance sheet value. Fixed assets classified as assets for sale are recognised at the lower of balance sheet value and fair value deducted sales cost if balance sheet value is mainly recovered by a sales transaction and when a sale is considered to be probable. REVENUE The Group s revenues come mainly from sale of passenger- and freight transport services as well as lease and sale of real property. Sale of transport services Sale of services, including public purchase of passenger traffic services, is included in the accounting period the services are delivered. PROPERTY General The Group s property portfolio consists of operating related property (IAS 16), investment property (IAS 40) and development property (IAS 2). There is a close and compound relation between operating property (IAS 16) and investment property (IAS 40) with several combined properties. 94

97 Note 1 For combined buildings that may be sectioned for sale, each separate section and part of the property is evaluated separately. Areas that change character from operating property or development property to investment property or the other way around must be reclassified. Reclassification will occur at the moment when there is a changed purpose and use of the actual property on a permanent basis. Operating related property Property used within the Group s operations are considered as operating related property in accordance with IAS 16 and are treated in compliance with PPE as described above. Investment property Investment property consists of property (land, building or both) that are owned for the purpose to achieve a long-term yield from rental income, increase in fair value or both. Property that the Group leases out to the external market on commercial terms and long-term basis, are classified as investment property and are considered in accordance with IAS 40. First time measurement at cost and inclusion of costs on the balance sheet complies with the principles for PPE and operating related property as described above. Further measurement of investment property is at fair value. Fair value corresponds with estimated market value used in a possible sales transaction between two independent parties. The values are estimated using external appraisers at each balance sheet date. The fair value determination is based on each separate property expected discounted future cash flow with individual risk adjusted yield. Value changes due to changes in market value of investment property are continuously charged to the income statement and are presented on a separate line in the operating profit. Value changes due to reclassifications from developmental property are charged to the income statement. Value changes due to reclassification from operating related property are charged to other comprehensive income. Developmental property Property where the intention is to develop and then sell is categorized as development property (IAS 2), even if the properties are temporarily leased on short-term agreements. Developmental property for sale is valued at the lower of acquisition cost and net realizable value in accordance with IAS 2. Impairment is recognized if the carrying amount is higher than the recoverable amount. The recoverable amount is the higher of fair value less selling costs and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each reporting date, one considers the possibilities for a reversal of prior impairments (except goodwill). POSSIBLE CONTRACT LOSSES The Group s activity results in entering into long-term public contracts for delivery of public transportation. For several of the contracts, the Group assumes part of the risk for the development in several cost areas (for example salaries, interest and fuel) without any income adjustment. This could result in contract losses if future remaining costs are higher than estimated revenues. Before a provision is performed for contracts that may result in losses according to IAS 37, an evaluation is completed in accordance with IAS 36 (see section for impairment above). Then the Group measures continuously the present value of future expected cash flow from operational activities in each separate contract, where estimated payments consists of all future unavoidable operating costs including wear on assets. The provision is limited to the lower of continuing the contract or to go out of the contract. The provision is reversed over the remaining life of the contract. DERIVATIVES AND FINANCIAL INSTRUMENTS The Group uses swaps to secure interest rates and currency on longterm debt to ensure predictability, and to hedge energy prices to obtain the lowest possible price and predictability in prices. The Group does not use hedge accounting. Derivative financial instruments are recognised at fair value on the date a derivative contract is entered into and are subsequently measured at fair value. Changes in fair value on derivative contracts entered into as debt instruments are included in net financial income, while derivative contracts related to electric power are included as other operating expenses. FINANCIAL ASSETS HELD FOR TRADING PURPOSES A financial asset is classified as held for trading purposes if its primary reason for acquiring is to result in gains due to short-term changes in fair value. Accounts 2015 NSB Group Acquisition cost consists of purchase price for properties, as well as project related expenses to develop each property. Project related expenses mainly include expenses up until it is regulated and made ready for sale including salaries, external consultants, etc. Incurred borrowing costs that are directly related to the development of the property are capitalized in accordance with IAS 23. Net realizable value is estimated selling price less costs related to the completion. The portfolio of developmental property available for sale is separated and is followed up as separate projects. The separation is based on the separate property s geographical location. IMPAIRMENT Intangible assets as well as property, plant and equipment that depreciate are considered for impairment when there are indications that future earnings cannot justify balance sheet value. Goodwill and intangible assets with indefinite useful life are not subject to depreciation, but are tested annually for impairment. Fair value of listed investments is based on its last registered value. If the market for the security is not active or if it concerns a security that is not listed, the Group uses evaluation methods to determine fair value. INVENTORY Inventory is valued at the lower of acquisition cost and net realizable value. Acquisition cost is calculated using the average price method. The cost of finished goods and work in progress comprises of design costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). Incurred borrowing costs that are directly related to the acquisition or manufacture of the goods, is included in the cost price of the goods. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. RECEIVABLES Receivables include trade receivables and are initially measured at original value which is also considered to be fair value. 95

98 Note 1 Accounts 2015 NSB Group For subsequent measurement receivables are considered at amortised cost using the effective interest method, less provisions for probable losses. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. CASH AND BANK DEPOSITS Cash and bank deposits including restricted tax withholdings and restricted bank deposits in Finse Forsikring are specified in note 18. If bank overdrafts are utilized, it will be included in borrowings under current liabilities. BORROWINGS/LOANS The initial recognition for loans is fair value adjusted for directly related transaction costs. In the following accounting periods, the loans are, as a rule, measured at amortized cost using the effective interest method such that the effective interest is equal throughout the life of the loan. The Group has several bonds that have associated interest- and currency swaps. Where measurement and reporting at fair value show more relevant information because inconsistent measurement of loans and associated interest swap is eliminated, or to a certain degree reduced, this principle is used in the financial statements. Choice of principle is made at the time of each separate loan raised and is binding throughout the term of the loan. TAX Income tax expense for a period consists of tax payable and deferred tax. Defined contribution plans are pension plans under which the employer pays contributions towards the employees future pension without further obligations after the contribution is paid. The payments are included in the income statement as payroll and related expense. PROVISIONS Provisions for environmental restoration, restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise of termination of contracts and employee termination payments. Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are measured at the present value of the expected expenditure required to settle the present obligation. The discount rate used to determine the present value reflects current market assessments of the time value of money and the increases specific to the liability. The increase in the provision due to passage of time is recognized as interest expense. OTHER SHORT-TERM DEBT Other short-term debts include trade payable and are initially measured at original value which is also considered to be fair value. At later measurement dates, trade receivables will be considered at amortized cost by using the effective interest method. Deferred income tax is calculated on all temporary differences between tax- and book values as well as tax effect of net losses carry forwards. Deferred income tax is determined using tax rates and tax laws that apply on the balance sheet date. Deferred tax asset that are expected to be utilized are included on the balance sheet. Deferred income tax asset and liability are offset when there is a legally enforceable right to offset, and it is related to income taxes levied by the same taxation authority for (i) the same taxable entity or (ii) for separate taxable entities where the intention is to settle taxable positions on a net basis. RETIREMENT BENEFIT OBLIGATIONS The companies in the Group operate various pension schemes; both defined benefit plans and defined contribution plans. Defined benefit pension plans are schemes where the employer commits to periodical pension benefits to the employee when he/she retires. The pension payment will mainly depend on number of years in the plan, compensation level at retirement age and the size of the benefits from the national insurance scheme. The liability recognized on the balance sheet is the present value of the defined benefit pension plan at the balance sheet date, less the fair value of plan assets at the balance sheet date. The defined pension liability is calculated annually by an independent actuary using the projected unit credit method. The cost of pension contributions and net interest rate on the defined benefit pension plan obligation is included in net income. Changes to the pension plan benefits (plan changes) are expensed or recognized as income continuously in the income statement. Actuarial deviations that are caused by new information and changes to the actuarial assumptions are included instantly, through other comprehensive income. LEASES Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. Leases where the Group mainly has all the risk and return are classified as financial lease. When entering an agreement, the financial lease is included on the balance sheet at the lower of the assets fair value and current value of future lease value. The lease payments are divided between liabilities and financial items. Property, plant and equipment are depreciated using the linear method. DIVIDEND DISTRIBUTION The dividend distribution to the company s shareholders is recognised as a liability in the Group s financial statements when the dividend is approved by the General Assembly. FAIR VALUE ESTIMATION The Group measures several financial assets and obligations as well as investment property at fair value. For classification of fair value, the Group uses a system that reflects the significance of the input that is utilized in the preparation with the following divisions: Level 1 Fair value is measured using quoted prices from active markets for identical assets and obligations. Level 2 Fair value is decided by using input based on other observable factors; either direct (price) or indirect (derived from prices) rather than noted prices (used in level 1) for the asset or obligation. 96

99 Note 1 Level 3 Fair value is measured using inputs that are not based on observable market data. Financial assets and obligations were classified in level 1, 2 or 3. The company s investment property is classified in level 3. Changes in accounting principles, new standards and interpretations Accounts 2015 NSB Group The Group has not implemented any new accounting standards or made changes to accounting principles in New standards and interpretations not yet taken effect and not yet implemented The Group has elected not to early adopt any standards or interpretations that have an adoption date after the balance sheet date. Below is an overview of the most central Standards that have been adopted by the IASB, but not the EU. IFRS 9 FINANCIAL INSTRUMENTS replaces parts of IAS 39 which deals with accounting, classification and measurement of financial assets and liabilities, hedge accounting, measurement at amortized cost and impairment of financial assets. The last phases were completed by the IASB in the fall of The standard takes mandatory effect on 1st of January IFRS 15 REVENUE RECOGNITION In the spring of 2014, the IASB adopted a new standard for revenue recognition. The standard establishes a framework for recognition and measurement of revenue based on a fundamental principle that recognition of revenue reflects the transfer of ownership of goods and services to the customer. The standard takes mandatory effect on 1st of January Neither IFRS 9 nor IFRS 15 are approved by the EU. Preliminary assessments indicate that the standards will not result in considerable effects for the Group. IASB has also adopted several small changes and clarifications in several different standards where the changes have not yet been implemented. It is not expected that any of these changes will have considerable effect for the Group. 97

100 Note 2 Accounts 2015 NSB Group 2 Shares in subsidiaries Subsidiaries Established-/ acquisitiondate Registered office Votes and profit share Nettbuss AS 1 st of December 1996 Oslo 100 % Rom Eiendom AS 18 th of December 1998 Oslo 100 % 4, NSB Trafikkservice AS 1 st of October 2001 Oslo 55 % Finse Forsikring AS 1 st of December 2001 Oslo 100 % CargoNet AS 1 st of January 2002 Oslo 100 % Mantena AS 1 st of January 2002 Oslo 100 % NSB Gjøvikbanen AS 1 st of April 2005 Oslo 100 % Svenska Tågkompaniet AB 1 st of January 2007 Gävle 100 % Tømmervogner AS 1 31 st of December 2008 Oslo 45 % 7 - Banestasjoner AS 2 nd of January 2002 Oslo 100 % - - TOTAL 5,228 1,002 Equity Profit/ loss 1 Remaining shares are owned by CargoNet AS. 100 % of the equity in the accounts is included as at

101 Note 3 2 Aksjer i datterselskap Tabellen viser morselskapets direkte eide investeringer. Konsernet består i tillegg av selskaper og eierinteresser i indirekte eie. Datterselskap Etablerings-/ anskaffelsestidspunkt Kontoradresse Stemme-/ res.andel Bokført egenkapital Årets resultat Nettbuss AS søndag 1. desember 96 Oslo 100 % - - Rom Eiendom AS fredag 18. desember 98 Oslo 100 % - - Accounts 2015 NSB Group NSB AS GROUP NSB SHARED SERVICES GROUP FUNCTIONS PASSENGER TRAIN OPERATIONS BUS OPERATIONS FREIGHT OPERATIONS REAL ESTATE OPERATIONS TRAIN MAINTENANCE OPERATIONS NSB AS NETTBUSS AS GROUP CARGONET AS GROUP ROM EIENDOM AS GROUP MANTENA AS GROUP NSB GJØVIKBANEN AS BUS OPERATIONS- SUBSIDIARIES FREIGHT ON RAIL REAL ESTATE DEVELOPMENT SP-COMPANIES SVENSKA TÅGKOMPANIET AB MAINTENANCE OPERATIONS LARGE VEHICLES TERMINAL OPERATIONS RENTAL OPERATIONS INCL. PARKING 99

102 Note 4 Accounts 2015 NSB Group 4 NSB-Group s passenger operations in the Nordic Region Passenger train Nettbuss / Nettbuss express Other express lines operated by Nettbuss CargoNet Haulage service 100

103 Note 5 5 Segment information Segment information At 31st of December 2015, the Group has its main activities in the following segments: (1) Passenger train: passenger train operations (2) Bus: passenger bus operations (3) Freight: freight train operations (4) Train maintenance: workshop and maintenance of freight- and passenger trains (5) Real estate: rental and development of property Accounts 2015 NSB Group Segment assets in the tables below consist mainly of property, plant and equipment, intangible assets, inventories, derivatives that are mainly used for hedging towards future transactions, trade assets and other assets and cash, while deferred tax asset, investments and derivatives held for sale or used for hedging for borrowings are not included (MNOK) Passenger train Bus Freight Train mainten. Real estate Group External operating revenue 7,406 5,570 1, ,372 Internal operating revenue , Operating revenue 7,534 5,583 1,096 1,367 1,187 15,372 Operating expenses 5,655 4, , ,824 Depreciation, impairment ,450 Total operating cost 6,359 5,417 1,008 1, ,274 Share of profit/loss in joint ventures Share of profit/loss in associates Unrealized value changes, investment property PROFIT FOR THE YEAR 1, ,307 2,814 Segment assets 12,461 4, ,411 26,290 Investments 1, , (MNOK) Passenger train Bus Freight Train mainten. Real estate Group External operating revenue 6,934 5,883 1, ,207 15,336 Internal operating revenue , Operating revenue 7,087 5,907 1,032 1,367 1,461 15,336 Operating expenses 5,673 5,148 1,077 1, ,039 Depreciation, impairment ,624 Total operating cost 6,466 5,807 1,123 1, ,663 Share of profit/loss in joint ventures Share of profit/loss in associates Unrealized value changes, investment property PROFIT FOR THE YEAR ,246 2,001 Segment assets 12,659 4, ,025 25,599 Investments 1, ,

104 Note 5 6 Accounts 2015 NSB Group Analysis of operating income by category Transport revenue 13,498 13,442 Sales revenue Other revenue 1,304 1,291 TOTAL 15,372 15,336 Most of the Group operations are in Norway. The Group also has some operations in Sweden and Denmark. Information on important customers The Group has one customer that constitutes more than 10 % of operating income. The Government s public purchase from the NSB-Group is included in note Intangible assets Goodwill Other Total At 1 st of January Accumulated acquisition cost Accumulated amortization and impairments TOTAL Year ended 31 st of December Opening net book value Exchange differences Acquisition Disposals at acquisition cost Accumulated depreciation disposals Impairments Amortization and depreciation TOTAL At 31 st of December Accumulated acquisition cost Accumulated amortization and impairments TOTAL Goodwill is exclusively in the Nettbuss Group. Impairment test of Goodwill Impairment of goodwill is annually evaluated by comparing the carrying amount to its recoverable amount. The Group has been through an evaluation and selection process of the natural cash-generating units (CGU) connected to each acquisition. There are goodwill on the following CGU s as at : Team Verksted Sør AS Team Verksted Vest AS E18 Lastebilservice AS Flybuss i Trøndelag Helges Bil AS Fjeldhus Motor AS 102

105 Note 6 7 The calculated recoverable amount of a CGU unit is based on what value the asset will add to operations. Liquidity prognosis are based on next year s budget for the next 5 year period. The cash flows from the tender period are limited to the end of the agreement-/tender period. For the commercial agreements, the cash flows after the first five years utilize the estimated growth rates presented below. Assumptions used when calculating recoverable amounts Growth rate % Discount rate % 1 Weighted average growth used to derive cash flows past the budgeting period. 2 Interest rate before tax used to discount the cash flows. Accounts 2015 NSB Group These assumptions have been used for the analysis of each cash-generating unit within the business segment. Management determines budgeted net cash flows based on the past performance and its expectations of market development. The weighted average growth rate used is consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflects specific risks relating to the relevant segments. The recoverable amounts from the CGU based on usage value are higher than the balance sheet values. Assuming other assumptions remain constant, the sensitivity calculations regarding an increase in the interest level of 2 % of the goodwill amount on the balance sheet will be reduced by MNOK Property, plant and equipment At 1 st of January 2015 Machinery and equipment Transportation Land and buildings Partially delivered trains Under construction Total Accumulated acquisition cost 2,577 23,184 2, ,262 Accumulated depreciation -2,157-11, ,847 TOTAL ,392 1, ,415 Year ended 31 st of December 2015 Opening net book value ,392 1, ,415 Exchange differences Acquisition of subsidiary Accumulated depr. Acq. of subsidiary Additions ,682 Disposals at acquisition cost ,392 Accumulated depreciation disposals ,352 Grants* Transfers within PPE Transfers to investment property Transfers to/from development property Depreciations , ,429 Impairments TOTAL ,191 1, ,499 At 31 st of December 2015 Accumulated acquisition cost 2,152 23,428 2, ,477 Accumulated depreciation -1,765-12, ,978 TOTAL ,191 1, ,499 *For the period , NSB AS received government grants to reimburse for new trains to be used in eastern Norway, (Oslo package 2), as well as grants for the on-board equipment ERTMS (European Rail Traffic Management System). 103

106 Note 7 Accounts 2015 NSB Group At 1 st of January 2014 Machinery and equipment Transportation Land and buildings Partially delivered trains Under construction Accumulated acquisition cost 2,650 22,569 3, ,110 Accumulated depreciation -1,922-11, ,053 TOTAL ,296 2, ,057 Year ended 31 st of December 2014 Opening net book value ,296 2, ,057 Exchange differences Acquisition of subsidiary Accumulated depr. Acq. of subsidiary Additions ,785 Disposals at acquisition cost Accumulated depreciation disposals Transfers within PPE 84 1, Transfers to investment property Transfers to/from development property Depreciations , ,586 Impairments TOTAL ,392 1, ,415 Total At 31 st of December 2014 Accumulated acquisition cost 2,577 23,184 2, ,262 Accumulated depreciation -2,157-11, ,847 TOTAL ,392 1, ,415 Depreciation period 5-30 years 5-30 years 3 - everlast. 104

107 Note 8 8 Investment property Summary of investment property valued at fair value Date 31. Dec Aug Apr Dec Aug Apr Dec. 13 Value (MNOK) 4,622 4,880 4,526 4,206 3,895 4,468 4,238 Overview of value changes to investment property Balance sheet value 1 st of January 4,206 4,238 Reclassification from property, plant and equipment Disposals Additions /investments Value changes due to change in market value Value changes when reclassifying 18 1 BALANCE SHEET VALUE AT THE END OF THE PERIOD 4,622 4,206 Accounts 2015 NSB Group Fair value Investment properties in the property portfolio are measured at fair value on the balance sheet date. Fair value is the amount each property may be sold for in an arm s length transaction between well informed, independent parties. Valuation methodology Value of the portfolio is primarily determined by using a valuation model for estimating fair value. As an addition an external market valuation is conducted for a representative sample of the portfolio. A reliability interval for an acceptable deviation between the two valuation methods is predetermined. Any deviation beyond the reliability interval set for each property is analysed for identification of the cause and assessing whether there are factors that may cause significant deviation in the estimated fair value of the total portfolio. Primary valuation to estimate fair value of the total portfolio Valuation according to the primary valuation models at year end is undertaken with the assistance of external appraisers. For smaller properties with annual rentals below 150 TNOK an internal valuation has been performed based on a simplified yield calculation. Estimating the fair value for primary valuations models is calculated on the basis of future operating cash flows decreased by ownership costs discounted to present value within a defined time period. The valuation is made on the basis of a summary of all leases in conjunction with floor-space lists and lists of vacancies on each property. Contractual rent forms the basis for on-going contracts, whereas after the expiration of the lease contract is estimated at the market price. For the remainder of the buildings expected life is assumed the perpetual market rent reduced by owners cost for all areas. For space not rented at the reporting date a market rate is estimated from the time it is expected that the space is rented out. Market rent for each property is considered based on the property s location and level of standard. Required return on equity reflects the market risk in the valuation model. Real return requirement is calculated based on the 10-year government bonds rate, the banks spreads, premiums on bank margins and propertyspecific risk. This represents prime location in Oslo. In addition, consideration is given to property specific risk such as geographical location in relation to a metropolitan area (city/district), local area (centre/hub), type of property (office/warehouse/shop), the standard of the building, tenancy and risk of vacant properties. Market assessment secondary valuation of selected properties As a supplement to the primary valuation there is an external market valuation performed for a selection of 10 properties that collectively represent 45.2 % of the portfolio value at year-end. Selection is made on a rolling basis throughout the year and amounts collected constitute to about 65.1 %. Value development and sensitivity For the year there are net positive changes identified in the market value for the Group s investment property of 536 MNOK, which is included in net profits as of 31 st of December. Estimated fair value is especially sensitive for changes to the return on equity demand/yield and assumptions in the development for leases. The following sensitivity analysis has been performed: 105

108 Note 8 9 Accounts 2015 NSB Group Changes in assumptions Changes in fair value Percentage change Reduction of 25 basis points on 1. yrs direct yield % Increase of 25 basis points on 1. yrs direct yield % Increase of future rental agreements under contract by 5% % Overview of rental income and expenses Rental income from investment property Direct operating costs from investment properties that generated rental income during the year Direct operating costs from investment property that did not generate rental income during the year -6-4 TOTAL Investments in associates Book value 1 st of January Acquisition of associates - 79 Disposals/ -sale of associates Share of profit/loss Currency translation difference 5 1 Other equity movements NET BOOK VALUE 31 ST OF DECEMBER Share of profit/loss is after tax, non-controlling interests and dividends paid. Investments in associates at include goodwill of 0 MNOK (39 MNOK). Profit/loss, assets and liabilities of its associates, all of which are unlisted, are as follows: 106

109 Note Registered office Assets Liabilities Revenues Profit/ loss % Int. held Oslo S Parkering AS Oslo % Nordlandsbuss AS Bodø % Interoperabilitetstjenester AS Oslo % Strømstad-Tanum Buss AB Tanumshede % Peer Gynt Tours AS Oslo % Tunnelbanan Technik Stockholm AB Stockholm % Minibuss 247 AS Våler % Larsens Last og Buss AS Sande % Sjøholt Last og Buss AS Ørskog % Fjord Tours AS Bergen % Keolis Danmark AS Glostrup , % TOTAL 1,605 1,064 2, Accounts 2015 NSB Group 2014 Registered office Assets Liabilities Revenues Profit/ loss % Int. held Oslo S Parkering AS Oslo % Ålmhults Terminal AB Ålmhult % Nordlandsbuss AS Bodø % Interoperabilitetstjenester AS Oslo % Roslagståg AB Gävle % Strømstad-Tanum Buss AB Tanumshede % Peer Gynt Tours AS Oslo % Tunnelbanan Technik Stockholm AB Stockholm % Minibuss 247 AS Våler % Real Rail AB Stockholm % Larsens Last og Buss AS Sande % Sjøholt Last og Buss AS Ørskog % Fjord Tours AS Bergen % TOTAL

110 Note 10 Accounts 2015 NSB Group 10 Investment in Joint ventures Book value 1 st of January Acquisition of joint venture 6 - Disposals/ -sale of joint venture Share of profit/loss Other equity movements NET BOOK VALUE 31 ST OF DECEMBER The NSB Group s interest in joint ventures is as follows: Joint ventures: Year of acquisition Registered office Votes and profit share Equity Profit/ loss our share Book value 31st of December Oslo S Utvikling AS 2000 Oslo 33 % 1, ,383 Alf Bjerckes vei 30 AS 2000 Oslo 50 % Grefsen Utvikling AS 2000 Bærum 50 % Alfheim Bolig AS 2006 Oslo 50 % 1-1 Bellevue Utvikling AS 2006 Fredrikstad 50 % Strandsonen Utvikling AS 2007 Hamar 50 % 20-7 Jessheim Byutvikling AS 2007 Ullensaker 50 % Lilleelva Parkering AS 2011 Oslo 50 % Jernbanebrygga AS 2011 Skien 50 % Lagårdsveien Utvikling AS 2012 Oslo 50 % 2-11 Trondheim Stasjonssenter AS 2013 Trondheim 40 % Gjøvik Utvikling AS 2013 Gjøvik 50 % Hokksund Vest Utvikling AS 2013 Oslo 50 % 4-6 Flåm Utvikling AS 2013 Aurland 50 % Sjøsiden Moss AS 2015 Moss 50 % 6-6 TOTAL 1, ,

111 Note 10 The amounts below show the Group s share of assets and liabilities as well as revenue and expenses in joint ventures Assets Non-current assets Current assets 1,489 1,315 TOTAL 1,577 1,507 Accounts 2015 NSB Group Liabilities Long term liabilities Short term liabilities TOTAL 1, NET ASSETS Income/expenses Operating revenue Operating expenses PROFITS Description of operations: Real estate operations The Groups joint ventures consist of development and sale of property projects in cooperation with other external operators which are organized in single purpose companies. The largest of these is Oslo S Utvikling AS (OSU) which is a development company founded with a purpose to construct properties in Bjørvika in Oslo. The activity in the company is related to commercial properties, residential properties and infrastructure projects. Through the development company Grefsen Utvikling AS a large area at Grefsen in Oslo is being developed. The project consists of approx. 1,000 residences and is one of Norways largest. Also, there are large development projects at Jessheim and Fredrikstad. Passenger train operations Flåm Utvikling For 17 years, Flåm Utvikling has operated the tourism product Flåmsbana with NSB AS as a supplier of train transport services. Flåm Utvikling conducts product development, sales, marketing, customer relationship management and brand development of Flåmsbana, as well as the foundation for commercial year-round operations of Flåmsbana. Flåmsbana is the country s first year-round. 109

112 Note Accounts 2015 NSB Group 11 Inventory and developmental property Components Not completed parts 9 22 Completed parts 20 2 TOTAL INVENTORY Inventory developmental property for sale TOTAL INVENTORY DEVELOPMENTAL PROPERTY AND COMPONENTS 1,424 1, Assets held for sale Assets held for sale consists of properties with a book value of MNOK 640 (MNOK 42). Properties held for sale are properties where the sales process has been initiated and the actual sale is expected to be completed in Trade and other receivable Trade receivables 1, Less: provision for impairment of receivables Trade receivables - net Prepayments Other receivables TOTAL TRADE AND OTHER RECEIVABLES 2,167 1,800 The carrying amounts of the trade receivables, prepayments and other receivables approximate their fair value. Trade receivables include mainly freight revenue, rental revenue and non-calculated public purchase amounts due from counties. Maturity of receivables: Matured receivables on balance sheet date Matured between 0-2 mnths ago Matured between 2-6 mnths ago 22 6 Matured more than 6 mnths ago

113 Note Financial risk management CAPITAL MANAGEMENT The Group s objectives when managing capital are to safeguard the Group s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. The Group manages some of its excess liquidity in interest bearing products like deposits, commercial papers and bonds, according to guidelines prepared by the Board of Directors. The Board adopts principles for the main course of risk management and gives guidelines for specific risk areas. In accordance with the guidelines demand of security, spread of risk and liquidity, NSB will maximize the return of the managed capital. The Group invests its excess liquidity in stocks and interest bearing products as for example, certificates and bonds with short-term remaining life. FINANCIAL RISK FACTORS The Group s activities results in various types of financial risk: market risk (foreign exchange-, interest rate-, and price risk), credit risk and liquidity risk. The Group s risk management policy focuses on the capital markets unpredictability and strives to minimize the potential negative effects on the Group s financial results. The Group uses financial derivatives to hedge certain risks. Risk management is carried out by a centralized Group treasury department. Group treasury identifies, evaluates, and hedges financial risk in co-operation with the Group s operating units. MARKET RISK Foreign exchange risk Foreign currency exchange risk due to fluctuations of the foreign currency rates will result in changes to the Group s income statement, balance sheet or cash flows. The Group operates in the Nordic region and makes purchases from foreign suppliers and is therefore exposed to foreign currency exchange risk. The Group minimizes its foreign currency exchange risk by entering into agreements in NOK, as it has when purchasing new trains. The goal is to be predictable regarding future payments measured in NOK. All debt in foreign currency is secured through foreign exchange swaps and changes in value are offset by fair value change to the derivatives. The Group is therefore not exposed to foreign currency exchange risk on debt instruments. The Group has certain investments in foreign subsidiaries, whose net assets are exposed to foreign currency exchange risk. This risk has been evaluated to not be of any significance. Interest rate risk Interest rate risk is the risk for the fair value of the financial instrument or future cash flows to fluctuate due to changes in the market rate. The Group is exposed to changes in interest rates. The parent company uses interest rate swaps to reduce interest rate risk and to achieve preferred duration on its debt portfolio. The goal is to reduce risk related to possible future interest rate increases, and create more predictability regarding future interest payments. Guidelines have been established to regulate the share of loans that should be interest rate regulated within a twelve month time frame, and for the duration of the portfolio. Swaps entered into create risk for change to booked fair value when measuring against long term interest level. Sensitivity evaluations as at Interest rate risk is calculated using the Group s long term loans with corresponding interest rate swaps. By changing the rate by 50 basis points, interest rate risk results in a calculated risk of fair value change of 52 MNOK (2014: 79 MNOK). Since the Group doesn t have any considerable interest bearing assets, the Group s net income and cash flow from operations is not affected by changes to the market rate. Other price risk The Group is exposed to price risk related to electricity and diesel used for the transport- and real estate operations. The Group hedges future electricity and diesel prices. The goal for certain companies is to achieve predictable prices over time, while other units want to achieve the lowest possible price. The Group s ability to create value in the developmental property portfolio is dependent of changes in demand for housing and commercial space. The Group seeks to reduce risk regarding each separate development projects by establishing single purpose companies together with professional partners, where realization of the project begins after a defined number of units have been sold. The Group s development portfolio consists mainly of attractive, centrally located properties that result in the Group being less exposed to small changes in demand. LIQUIDITY RISK Liquidity risk is the potentially lack of ability to timely pay ones daily economic obligations. NSB s management monitors the Group liquidity reserve (consists of borrowing facilities and cash equivalents) through rolling prognosis based on the Group s expected cash flow. NSB reduces liquidity risk related to maturity of financial obligations through spreading the maturity structure, access to several financing sources in Norway and internationally, as well as sufficient liquidity to cover planned operating-, investing-, and refinancing needs without borrowing new debt within a time frame of 12 months. Liquidity consists of bank deposits, certificates and committed lines of credit and NSB s revolving credit facility on 2,000 MNOK which expires in April NSB has a high credit rating. Standard & Poor s and Moody s have given NSB credit ratings on long term debt of AA- (stable) and Aa2 (stable) respectively. Accounts 2015 NSB Group 111

114 Note 14 Accounts 2015 NSB Group This table shows future maturities for the Group s liabilities as at : Liquidity risk < 1 year 1-2 years 2-5 years > 5 years Short term liabilities 3, Borrowings 1,535 3,031 3,785 3,570 New trains 827 1, Property, plant and equipment 1, CREDIT RISK Credit risk is the potential loss that an external part cannot meet its financial obligations to NSB. The Group s exposure to credit risk is mainly related to each separate customer. Passenger train- and bus operations mainly sell its services on a cash basis. Credit is given to public authorities through long term agreements. Revenue from freight operations is divided between medium sized customers whose financial development is tracked through updated credit assessments. Other subsidiaries have its parent company as their main customer. The Group is therefore to a small degree exposed to credit risk. NSB is exposed to credit risk through placement of excess liquidity with issuers of debt securities. The parent company has framework established for credit exposure against sectors and institutions based on credit assessments. NSB has risk against its counterparties in the interest- and currency derivatives. NSB focuses on counterparty risk in its financial transactions. NSB assesses maximum credit risk to be the following: Cash and bank deposits 1,602 2,284 Certificates (placements) Financial derivatives 2,546 2,252 Trade receivable and other short term receivables 2,167 1,800 TOTAL 6,663 6,723 The credit risk is reduced by diversifying exposure on several counterparties. Counterparty rating is closely monitored. The demand is that the counterparty should have at least an A-rating from S&P or equivalent rating from an international rating agency. The respondent risk is constantly monitored. NSB AS has agreements that regulate judicial set-off calculations in a bankruptcy situation (ISDA agreements) with 19 banks. Excess liquidity is placed in Norwegian bonds and certificates with short term maturity. Guidelines are established for credit exposure against several sectors, and certain sectors also have guidelines based on credit assessments. For the wholly-owned subsidiary Finse Forsikring AS the Board of Directors has approved extended limits in relation to placement of surplus liquidity. The company has made investments in four listed mutual funds on the Oslo Exchange; Skagen Global, Nordea Internasjonale aksjer, Storebrand Global Quant Equity and Delphi kombinasjon. The presentation shows the effect on the income statement before tax with the specification of the decline in value compared to the values at the balance sheet date. Portfolio risk by a decline in value of 38 % gives a calculated risk of - 20 MNOK (45 % -31 MNOK). This evaluation and determination of percentage for a decline in value has been reached in accordance with the Financial Supervisory Authority of Norway s regulations on reporting of stress tests for insurance companies and pension companies. 112

115 Note Derivatives Assets Liabilities Assets Liabilities Interest rate swaps 2, , Energy swaps TOTAL 2, , The Group does not use hedge accounting, fair value changes of derivatives are charged on a continuous basis to the income statement. Derivatives are classified as current assets or contractual obligations. The energy contracts relate to both hedging of electricity and diesel prices. Accounts 2015 NSB Group Changes in fair value of derivatives: This period s change in fair value: Accumulated change in fair value: 2,271 1,910 Interest rate and foreign exchange swaps The notional principal amounts of the outstanding interest rate swaps contracts at 31 st of December 2015 were 8,717 MNOK (2014: 10,381 MNOK). At 31 st of December 2015, the fixed interest rates vary from 3.97 % to 5.25 % (3.97 % to 5.25 %) and the floating rates are mainly 6M NIBOR + margin. 16 Other financial assets at fair value through profit or loss Listed securities Stocks and other listed equity securities Europe Bonds and certificates TOTAL Fair value is based on changes to original interest rate, currency exchange (at recording time) in relation to market interest rate, currency exchange rates at the balance sheet date. Effective interest rate on short term placements in the bank was 1.6 % at 31 st of December 2015 (2014: 2.2 % ) and the placements has an average maturity of 84 days. Effective interest rate on short term placements were 2.5 % as at 31 st of December 2015 (2014: 3.0 %). Changes in fair values of listed securities at fair value This period s change in fair value Accumulated change in fair value

116 Note 17 Accounts 2015 NSB Group 17 Financial instruments by category Assets at 31 st of December Loans and receivables Assets at fair value through profit and loss Year Financial fixed assets Derivative financial instruments - - 2, ,546 2,252 Trade and other receivables (excl. prepayments) 1, ,501 1,344 Financial assets at fair value through profit or loss Cash and bank deposits 1, ,602 2,284 TOTAL 3, , ,143 6,364 Total Liabilities at 31 st of December Liabilities at fair value through profit and loss Other financial liabilities at amort. cost Year Borrowings (excl. Financial lease liabilities) 8, , ,921 12,422 Financial lease liabilities Derivative financial instruments Trade and other payables excl. statutory liabilities - - 2, ,833 3,090 TOTAL 8, , ,029 15,854 Financial assets at fair value through profit and loss as at 31 st of December 2015 Financial assets at fair value through profit or loss: Level 1 Level 2 Level 3 Total Derivatives used for hedging - 2,546-2,546 Financial assets available-for-sale: - Debt instruments TOTAL ASSETS 52 2,842-2,894 Borrowings and accrued interest - 8,613-8,613 Derivatives used for hedging TOTAL LIABILITIES - 8,888-8,888 Financial assets at fair value through profit and loss as at 31 st of December 2014 Financial assets at fair value through profit or loss: Level 1 Level 2 Level 3 Total Derivatives used for hedging - 2,252-2,252 Financial assets available-for-sale: - Debt instruments TOTAL ASSETS 68 2,571-2,639 Borrowings and accrued interest - 9,107-9,107 Derivatives used for hedging TOTAL LIABILITIES - 9,449-9,449 Total 114

117 Note Cash and bank deposits Cash and bank deposits 1,602 2,284 Includes restricted funds of 162 MNOK (2014: 154 MNOK). Furthermore, there are restricted funds of 147 MNOK (2014: 119 MNOK) in Finse Forsikring AS. 19 Share capital and share premium No. of shares Ordinary shares Share premium (MNOK) Total (MNOK) Shares at 1 st of January ,685,500 3,685,500 1,458 5,144 Shares at 31 st of December ,685,500 3,685,500 1,458 5,144 Accounts 2015 NSB Group There is only one class of shares, each share with a par value of NOK 1,000,-. There have been no changes to capital in There was a payment of dividends for the accounting year 2014 at 753 MNOK. The proposal for dividends for 2015 is 1,079 MNOK. The decision will be made at the General Assembly in Borrowings Non-current Bonds measured at fair value 7,079 6,612 Bonds measured at amortized cost 3,243 3,243 Other non-current borrowings, incl. financial lease TOTAL 10,387 9,926 Current Current share of non-current borrowings 730 2,193 Other current borrowings Total 1,534 2,495 TOTAL BORROWINGS 11,921 12,421 Nominal value of long-term borrowings per : 7,911 MNOK (2014: 8,466 MNOK). Nominal value of long-term interest bearing debt st of January ,353 Changes during the year ST OF DECEMBER ,466 Fair value on bondes measured at amortized cost is MNOK 3,705 (2014: 3,717 MNOK). The Group has not utilized available bank overdraft facilities. All existing bond issues have been completed under the Euro Medium Term Note loan programme (EMTN-Programme). The EMTN programme is a loan-documentation that NSB utilizes when bonds are issued. The EMTN-programme does not contain any financial covenants, except for an optional clause that requires that the State of Norway shall own 100 % of NSB. NSB has a multicurrency revolving credit facility of 2,000 MNOK with a covenant that demands a minimum equity share of 20 %. 115

118 Note 20 Accounts 2015 NSB Group Fair value of the credit margin on bonds is based on market observations from banks and the price/exchange NSB bonds in the second-hand market. The exposure of the Group`s borrowings to interest changes and the contractual dates at the balance sheet dates are as follows: Borrowings and hedgings months or less 2,553 3,718 More than 6 months - - Non-current borrowings expire in: Between 1 and 2 years 3, Between 2 and 5 years 3,785 3,878 Over 5 years 3,570 5,447 Effective interest rate at the balance sheet date: Bonds NOK Other borrowings NOK SEK Calculated effective interest rate includes the effect of interest rate swaps. The Group has swapped all exposure in CHF to NOK. The carrying amounts of the non-current borrowings approximate their fair value. Changes in fair value on non-current borrowings: This periods change in fair value This periods change in fair value from the spread - - Accumulated change in fair value 2,482 2,197 The carrying amounts of the Group s borrowings are denominated in the following currencies: NOK 5,151 4,670 SEK CHF 6,725 7,698 TOTAL 11,921 12,421 The Group has the following undrawn borrowing facilities: Floating interest rate - Expiring within one year Expiring beyond one year 2,000 2,000 TOTAL 2,050 2,050 The facilities expire within one year is a bank overdraft related to NSB-Group bank account system. The credit is for one year at the time and is renewed annually. NSB`s long term revolving credit facility which expires in April

119 Note The Group also leases plant and equipment where the leasing agreements give the lessee the right to cancel the agreement. Future accumulated minimum payments related to cancellable leasing agreements are as follows: Expiring within 1 year Expiring between 1 and 5 years Expiring beyond 5 years TOTAL Accounts 2015 NSB Group 21 Deferred income tax/income tax expense Income tax expense Current income tax payable Changes in deferred tax TOTAL INCOME TAX EXPENSE Tax payable on the balance sheet are as follows: Current payable tax expense TAX PAYABLE ON THE BALANCE SHEET Reconciliation between nominal and actual tax expense rate: Net income before tax 2,664 1,597 Expected income tax using the nominal tax rate (27 %) Tax effect of the following items: Other permanent differences related to investm. (exemption method) Other non-deductible expenses 1 9 Other non-taxable income Fiscal loss concerning unrecognized deferred tax assets Change in already recognized downgrade of deferred tax asset Effect of change in income tax rate Insufficient tax provision prior years Fiscal loss concerning unrecognised deferred tax assets Other items - 2 Income tax expense Effective tax rate 19 % 6 % 117

120 Note 21 Accounts 2015 NSB Group Spesification of the tax effect of temporary differences and losses carried forward: Deferred income tax asset and liabilities are offset when there is a legally enforced right to offset current tax assest against current tax liabilities and when the deferred income taxes relate to the same tax authority. The offset amounts are as follows: 2015 Benefit (+) / Liability (-) Book value Exchange diff. Acquisition of subsidiary Income statement charge Charge to other comprehensive income Effect due to change in income tax rate charged directly to equity Tax effect Group contribution Book value Fixed assets -5, ,594 Financial assets Inventories Receivables Value changes to investment property -1, ,180 Value changes to financial current assets Retirement benefit obligations 2, ,257 Provisions for other liabilities and charges (Gains)/losses Losses carried forward Other 1, Total gross temporary differences -2, , ,234 Off-balance sheet deferred tax benefits Net temporary differences -2, , ,562 Net deferred tax asset/liability 27% ,233 Effect from changes in tax rate Net deferred tax asset/liability on the balance sheet ,

121 Note Benefit (+) / Liability (-) Book value Exchange diff. Acquisition of subsidiary Income statement charge Charge to other comprehensive income Effect due to change in income tax rate charged directly to equity Tax effect Group contribution Fixed assets -5, ,347 Inventories Receivables Value changes to investment property -1, ,626 Value changes to financial current assets Retirement benefit obligations 2, ,581 Provisions for other liabilities and charges Impairments (Gains)/losses Losses carried forward Other ,222 Total gross temporary differences -2, ,275 Off-balance sheet deferred tax benefits Net temporary differences -3, ,640 Net deferred tax asset/liability 27% Book value Accounts 2015 NSB Group Deferred income tax assets Deferred income tax assets to be recovered after more than 12 months 1,069 1,401 Deferred income tax assets to be recovered within 12 months 9 4 TOTAL 1,078 1,405 Deferred tax liabilities Deferred income tax liabilities to be recovered after more than 12 months -2,197-2,058 Deferred income tax liabilities to be recovered within 12 months TOTAL -2,217-2,121 TOTAL DEFERRED INCOME TAX LIABILITY (NET) -1, Deferred tax assets regarding forwarded fiscal loss are recognized when it is probable that the Group will utilize the losses towards future taxable surplus. The Group did not recognize deferred income tax assets of 65 MNOK (80 MNOK) in respect of losses amounting to 296 MNOK (365 MNOK). 119

122 Note Accounts 2015 NSB Group 22 Payroll and related expenses Wages and salaries, including employment taxes 6,432 6,395 Pension costs defined contribution plans (note 23) Pension costs defined benefit plans (note 23) Other employee benefit expenses TOTAL 6,710 6,975 Benefits for Chief Executive Officer and key management are referred to in the note for related-party transactions (note 32) Average man-labour year* 10,438 10,996 Number of employes at 31 st Dec. 12,668 12,989 *The calculation is based on a weighted average based on the true number of man-labour year throughout the year. 23 Retirement benefit obligations and similar obligations General The Group has pension arrangements related to age-disability- and bereaved benefits for spouses and children. Below is a further description of type of arrangements and how these are organized. Defined benefit pension plan The companies in the Group have several collective pension agreements that are handled by the Norwegian Public Service Pension Fund (SPK) or insurance companies that for the Norwegian companies satisfies the demands according to the law on public pension. The arrangement covers benefits from the pension basis up to 12G and results in a age- and disablity pension of 66 % of the pension basis when fully vested. The obligations connected to these agreements covers 5,617 active members, and 3,984 retirees. The retirement benefit plans entitle defined future services that mainly are dependent on the number of contribution years and wage level at the time of retirement. The pension benefits received are coordinated with the National Insurance scheme and will also be dependent on its benefits paid out. The companies have, through tariff agreements, retirement benefit obligations in affiliation with Early Retirement Pension Regulated by Contract (AFP). Obligations through this agreement cover 5,617 active members. The additional defined benefit pension plan agreement for top leadership is not funded and will be paid through operations. Other arrangements in Norway and Sweden Additionally, there are defined contribution plans in Norway that covers 5,030 employees. All of the Groups employees in Sweden have pension rights and the companies obligations are funded in a Multiemployer plan that covers 860 active members. The plan is a Multiemployer plan and the employer is responsible for the benefits until they have completely covered the payments. According to the statement from Redovisningsrådet this is a performance based settlement. It has so far not been possible to obtain sufficient information to calculate and allocate obligations and assets from this plan, and therefore is treated as a defined contribution plan. The companies have not received actuary estimates for any of the fiscal year from 2007 until today. This is a problem connected to most companies with a retirement benefit obligation with the Multiemployer plan in Sweden. In the tables below, employment taxes (notional numbers) are included in both gross obligations and this year s expense. 120

123 Note 23 Specification of net defined benefit pension plan obligations Present value of earned pension rights for funded collective pension plans 11,024 10,854 Fair value of plan assets -8,746-8,386 Present value of unfunded obligations 2,278 2,468 Unrecognised actuarial losses NET PENSION OBLIGATION ON THE BALANCE SHEET 2,345 2,552 Changes in pension retirement obligations: Book value net pension obligation 1 st of January 2,552 2,465 This years' actuarial deviations This years net return on assets/increase in obligation Net financial items in the acount Acquisitions /disposal of operations during the year - 1 Curtailments Payments to plan Plan changes during the year BOOK VALUE 31 ST OF DECEMBER 2,345 2,552 Accounts 2015 NSB Group Pension expenses included in the accounts, defined benefit pension plan Present value of current pension earnings Effects due to plan changes Employee contribution -3-3 Total return on pension plan, incl. in payroll and related expenses see note Total financial items in the accounts TOTAL PENSION EXPENSES DEFINED BENEFIT PENSION PLAN Defined contribution plan Employer's contribution, included as payroll and related expense see note DEFINED CONTRIBUTION PLAN Sensitivity analysis with change in central assumptions The table below shows estimates for potential effects with change in assumptions that significantly affects the defined benefit pension plans in Norway. Actual results may substantially differ from these estimates. Discount rate Salary growth rate Increase in G 1 % -1 % 1 % -1 % 1 % -1 % Increase (+)/decrease (-) this period's net pension expense in % (23-25 %) % % (14-16 %) % (8-10 %) Increase (+)/decrease (-) net pension obligation at in % (12-14%) % 6-8 % (4-6 %) 9-11 % (7-9 %) The Population is affected by a high pensioner population and high average age on participants that affects the sensitivity analysis. 121

124 Note 23 Accounts 2015 NSB Group The last few years development in pension expenses and pension obligations shows the following: Income statement Present value of current pension earnings Plan changes during the year Recognized actuarial gains Total cost in the income statement Total financial items in the accounts TOTAL PENSION COST Financial position Total obligations 11,091 10,938 10,039 9,781 10,333 8,910 Pension assets -8,746-8,386-7,574-7,238-6,821-6,521 Total net pension obligations 2,345 2,552 2,465 2,543 3,512 2,389 Non-recognised actuarial losses ,624-1,435 NET PENSION LIABILITY 2,345 2,552 2,465 2, Financial assumptions (defined benefit plans) Discount rate 2.70 % 2.80 % 3.90 % 3.80 % 2.80 % 3.80 % Expected return on plan assets 2.70 % 2.80 % 3.90 % 3.80 % 4.00 % 4.60 % Average salary growth 2.60 % 2.95 % 3.70 % 3.70 % 3.30 % 3.50 % G-regulation 2.40 % 2.70 % 3.50 % 3.50 % 3.20 % 3.75 % Corridor: % of max (PBO, pension assets) 0.00 % 0.00 % 0.00 % 0.00 % % % Annual reg. of pension increases 1.65 % 1.95 % 2.75 % 2.75 % 2.45 % 3.00 % Average social security tax % % % % % % Explanation to selected assumptions 31 st of December 2015 The discount rate has been set at 2.7 % and is determined with basis in preferential bonds (OMF). The OMF-market has been assessed to represent a deep and liquid marked with relevance to maturities that qualifies to be used as a reference for interest rate according to IAS 19. Salary adjustments for Norwegian schemes is mainly calculated as the total of expected real salary growth of 0.7 % and inflation of 1.9 %. Regulation of pensions during disbursement mainly follows average salary growth (equivalent to G regulation) less a fixed factor of For the demographic factors, the tariffs K2013 and IR 73 has been used for determination of mortality rate and disability risk. The effect of the transition to K2013 has resulted in actuarial deviations of approximately MNOK 505, which is an increase in the retirement benefit obligation as at Male Female 19 years 22 years Actuarial deviations in 2015 are mainly due to changes in economic parameters 122

125 Note The Group is affected through its defined benefit contribution plans by several factors due to uncertainties in assumptions and future development. The most central factors are described as follows: Expected longevity The Group has assumed an obligation to pay pension to the employees for as long as they live. An increase in life expectancy among members results in an increased obligation for the Group. Yield risk The Group is affected by a reduction in actual yield on the pension assets, which will cause an increase to obligations for the Group. Inflation- and salary growth risk The Group s pension obligation has risk related to both inflation and salary development, even though the salary development is closely related to inflation. Higher inflation and salary development than what is used in the pension calculations, result in increased obligation for the Group. Accounts 2015 NSB Group 24 Trade and other payables Trade payables Social security and other taxes Other current liabilities 2,332 2,498 TOTAL 3,060 3,302 The amount due to related parties is in 2015: 16 MNOK (10 MNOK). Book value of trade and other payables corresponds to fair value. Other current liabilities include pre-paid revenue, accrued payroll and related expenses as well as other accrued expenses. 25 Provisions for other liabilities and charges Provisions for other liabilities 2015 Environment. Pollution Reorganization obligation Contract losses Other Total At 1 st of January Change in provision during the year Used during the year TOTAL Provisions for other liabilities 2014 Environment. Pollution Reorganization obligation Contract losses Other Total At 1 st of January Change in provision during the year Used during the year TOTAL Analysis of total provisions: Non-current liabilities Current liabilities TOTAL

126 Note Accounts 2015 NSB Group Severance reorganization liability In connection with formation of NSB AS the company acquired a liability to refund pay for employees who are laid off due to redundancy before 1 st of January NSB was however compensated with a limited calculated amount, which is included as a reorganization obligation in other long-term debt on the balance sheet. Work related injuries Compensation for work related injuries which occurred during the period from 1st of January 1990, until the formation of NSB BA 1 st of December 1996 are covered by the company. To account for these estimated liabilities, accruals have been made for both expectations of cases currently being handled and justifiable cases not yet reported. Environmental pollution As a train and workshop operator as well as a real estate owner, the NSB-Group has a considerable responsibility for pollution which occurs due to operations. A quantification of any known liabilities is accrued for on a continuous basis. The accrual is reversed based on actual cost as the clean-up processes. Polluted ground land sold Creosote pollution has been discovered on some occasions when selling land. When NSB BA was formed the pollution was known but not the extent. No accruals were made since NSB BA was not the polluter. Polluted ground developmental land Examination of the ground indicates environmental liabilities. When identifying developmental projects, costs are taken into consideration when ground is prepared. This includes costs related to polluted soil which is included in the project cost. Preserved buildings maintenance liability If preserved buildings are used commercially, running maintenance is done. If preserved buildings are not used commercially accruals are made for future maintenance, unless it is likely that the maintenance is covered by future tenants or owners. Legal disputes The NSB-Group is involved in legal disputes. Accruals are made for disputes where it appears to be a probable and qualified risk of losing. 26 Contract losses There have been accruals of 28 MNOK for future contract losses in the bus operations. For provisions on losses on tenders in the bus operations, see note 27 for further information. 27 Depreciation, amortization and impairment Depreciation current assets (note 7) 1,429 1,586 Impairment non-current assets (note 7) Depreciation intangible assets (note 6) 1 2 Impairment intangible assets (note 6) - 9 TOTAL 1,450 1,624 Property, plant and equipment and contract losses This year s impairments are related to buses used in operations under official contract. Operating revenue is mainly related to long term tender contracts which means significant investments in property, plant and equipment (PPE). In the presentation of the accounts as at 31 st of December 2015 an evaluation of the value of the Groups PPE is performed, where there might be an indication of permanent impairment (IAS 36). To test the balance sheet value, calculations using utility value have been performed. Utility value is calculated for every cash flow generating unit (CGU). Calculation of utility value has been performed on the tenders where there is an indication of permanent impairment on PPE. The utility value is calculated as present value of expected future cash flows for each tender. Revenue from the contracts and expected operating expenses, including overhead that are possible to allocate to each separate CGU, are included in the contracts lifespan in the future cash flows. At the end of the contract, a repurchase value on the buses is included, based on experiences or rest value guarantees from suppliers. Included in the contracts the contracting entity has options for an extension of the contracts. In the evaluations of the contracts, it s assumed that these options are 124

127 Note exercised and are included in the cash flows. Impairments are undertaken if the balance sheet value is lower than the recoverable amount. The recoverable amount is the higher of fair value less sales costs and utility value. In addition to evaluating balance sheet values according to IAS 36, the contracts are also evaluated for any additional provisions according to IAS 37. In these evaluations the Group measure continuously present value of future expected cash flows from operational activities in each separate contract, where estimated payments include all future inevitable operating expenses that are to be expected. The provision is limited to the lower amount of either to continue or exit the contract. The provision is reversed over the remaining life of the contract. In the future cash flows that include evaluations according to IAS 36 and IAS 37, the following main assumptions are used: Growth rate of 2.5 % Discount rate 7.0 % evaluations according to IAS 36 Borrowing rate 3.5 % evaluations according to IAS 37 Accounts 2015 NSB Group Sensitivity To describe the uncertainty that are included in the calculations of impairments according to IAS 36, sensitivity analysis on chosen factors in the calculation have been performed. A sensitivity analysis has been performed on the contracts where an impairment of property, plant and equipment has occurred. Discount rate A change in discount rate of +/- 1 % -points will result in different changes to present value for the different contracts. The overview below show what effects a change in discount rate have for the contracts that have shown a need for impairment to property, plant and equipment. Discount rate Change in factors Change in present value Actual accumulated impairment Estimated accumulated impairment* Interest rate +1% -4,781-37,918-39,388 Interest rate -1% 5,031-37,918-37,918 EBITDA Change in factors Change in present value Actual accumulated impairment Estimated accumulated impairment* EBITDA + 1 MNOK per contract 10,112-37,918-40,575 EBITDA - 1 MNOK per contract -10,075-37,918-37,918 * Actual accumulated impairment affected by evaluations of market value of buses. 28 Other expenses Sales- and overhead expenses 1,116 1,177 Energy used in operations Repair and maintenance, machinery rental, property expenses 1,478 1,478 Other operating expenses 1,685 1,448 TOTAL 5,114 5,064 Auditing fees (excluding VAT): Auditing 5 5 Other services* 1 2 TOTAL 6 7 * relates to support to prepare financial statements, tax returns as well as additional service regarding investment property. 125

128 Note Accounts 2015 NSB Group 29 Financial income and expenses Interest income Other financial income Net foreign exchange gains TOTAL FINANCIAL INCOME Interest expense Other financial expenses Net foreign exchange losses TOTAL FINANCIAL EXPENSES Net financial expenses - pensions Unrealised value changes TOTAL FINANCIAL ITEMS Unrealised fair value changes The table below shows unrealised value changes in assets, liabilities and derivatives valued at fair value: Unrealized value changes investment property Unrealized value changes reclass. Inv. Property - other compr. Income 18 1 TOTAL UNREALIZED VALUE CHANGES INVESTMENT PROPERTY Unrealized value changes derivatives used for hedging Unrealized value changes bonds Unrealized value changes market placements TOTAL UNREALIZED VALUE CHANGES FINANCIAL ITEMS Total unrealized value changes income statement Total unrealized value changes other comprehensive income 18 1 TOTAL UNREALIZED VALUE CHANGES OTHER COMPREHENSIVE INCOME Leases Lease of machinery/equipment, not incl. on the balance sheet Lease of property (external) TOTAL

129 Note Related party transactions NSB has the following related parties: Owner As the owner of NSB, the Ministry of Transport and Communication is a related party. In addition, other businesses owned by the Ministry of Transport and Communication will also be a related party to NSB. Companies within the same Group All subsidiaries, associates and joint ventures as noted in notes 2, 9 and 10 as well as other Group companies that are related parties to these companies will be a related party to NSB. Accounts 2015 NSB Group Board of Directors and key management Persons that are key management or on the Board of Directors are also related party to NSB. Below is an overview of transactions, balances and guarantees to related parties: Sale of goods and services: Public purchase of passenger traffic services 3,081 2,996 Sales of other goods and services TOTAL 3,578 3,446 Sale of goods and services Year-end balances arising from sales/purchases of goods/services: Receivables: Associated companies 1 87 Entities owned by the Ministry of Transportation TOTAL Debts Other companies in the Group 44 1 Entities owned by the Ministry of Transportation 8 7 TOTAL 52 8 Loans to related parties Other companies in the Group TOTAL There are no borrowings from related parties. Guarantees NSB AS has guaranteed for the pension obligations in case Nettbuss AS no longer would exist, which means that the transferring agreement of 1974 can be used. The consequence is that Nettbuss AS cannot make changes in its pension without first getting approval from the Board of Directors of NSB AS. NSB AS has issued a guarantee of 40 MSEK on behalf of its fully owned subsidiary Svenska Tågkompaniet AB for licensing to operate trains in Värmland in Sweden. NSB AS has issued a guarantee of 150 MSEK on behalf of its fully owned subsidiary Svenska Tågkompaniet AB related to a contract with Norrtåg AB. Mantena AS has counterguaranteed towards an external part a guarantee of 200 MSEK. MSEK 100 for Skånetrafiken in connection with Mantena winning the maintenance contract for Pågatåg in Skåne in Sweden. Sale to related parts ROM Eiendom has sold its remaining properties in Bjørvika to the partially owned, joint venture company Oslo S Utvikling AS. There will be a total of 102,917 m 2 developed on these properties, about 25 % will be commercial property and 75 % residential property. The sales price for the option properties is 543 MNOK. Estimated gain for the NSB Group that is recognized is 285 MNOK. 127

130 Note 32 Accounts 2015 NSB Group Compensation for members of the Board and key management (Figures in TNOK) Board members Title Kai Henriksen Chairman of the board (from June 2014) Bjarne Borgersen Vice chairman of the board Wenche Teigland Member of the board Tore Heldrup Rasmussen Member of the board (until November 2015) Åsne Havnelid Member of the board (from June 2014) Audun Sør-Reime Staff representative Rolf Jørgensen Staff representative Jan Audun Strand Staff representative Ingeborg Moen Borgerud Chairman of the board (until June 2014) Erlend Helle Member of the board (until June 2014) TOTAL 3,124 2,713 All employees are included in the collective pension agreement. The agreement premium is not included above. For NSB AS the General Meeting has approved a fee for the Chairman of the Board of 416 TNOK, Vice Chairman TNOK and the other board members 207 TNOK each. In addition, fees for members of the audit committee with 63.5 TNOK for the leader, and 38 TNOK for each of the other members, and the compensation committee with 11 TNOK for the leader and 5 TNOK for each member. Fees for the staff representatives include their wages as an employee Group management (Figures in TNOK) Title Salary 128 Variable salary Other benefits Total benefits payed Calcul. Pension expence* Geir Isaksen Chief Executive Officer 3, , Tom Ingulstad CEO, Director of Passenger Train 1, ,174 1,247 Kjell Haukeli Chief Financial Officer 1, ,899 1,481 Ståle Rooth Executive Vice President HR, IT and Legal 1, ,256 - Erik Røhne Director Strategy and BD 1, ,212 - Arne Veggeland General Manager Nettbuss 1, , Arne Fosen General Manager CargoNet 2, , Petter Eiken General Manager Rom Eiendom (member until aug -15) 1, ,273 - Tomm Otto Bråten General Manager Mantena (member until aug -15) 1, ,427 - TOTAL 17,167 3,311 1,065 21,543 4,822 * Calculated pension expenses for executives are related to pension arrangements in addition to collective arrangements, for further description see point d) in the text below Group management (Figures in TNOK) Title Salary Variable salary Other benefits Total benefits payed Calcul. Pension expence Geir Isaksen Chief Executive Officer 3, , Tom Ingulstad CEO, Director of Passenger Train 1, ,171 1,894 Kjell Haukeli Chief Financial Officer 1, , Ståle Rooth Executive Vice President HR, IT and Legal 1, ,157 - Erik Røhne Director Strategy and BD 1, ,712 - Arne Veggeland General Manager Nettbuss 1, ,145 1,205 Arne Fosen Vice CEO NSB (to jan-14) GM CargoNet (from mar-14) 1, ,517 2,376 Are Kjensli General Manager CargoNet (to feb -14) 1, , Petter Eiken General Manager Rom Eiendom (from mar-14) 1, ,910 - Jørn Seljelid** General Manager Rom Eiendom (to feb-14) Tomm Otto Bråten General Manager Mantena (from sept -14) Ole Edvardsen General Manager Mantena (til aug -14) 1, , TOTAL 19,386 2,025 1,302 22,713 8,181 ** Jørn Seljelid was the stand-in as CEO in Rom Eiendom until Petter Eiken was appointed.

131 Note 32 Determination of salary and other benefits to executives: Main principles for executive salaries in NSB Principles on salary for executives in NSB AS and its subsidiaries are determined by the Board of Directors. Annually, the Board performs an evaluation on the CEO salary and other compensation and the principles of executive compensation. The CEO determines the compensation to the other members of the Group management according to adopted executive compensation principles. Executive compensation in NSB is determined using the following main principles: Executive compensation is to be competitive, but NSB will not be a leader in the market in regards to compensation when compared to equivalent companies. To ensure this, an annual external compensation evaluation on central executive positions is performed. NSB shall attract and keep skillful leaders. The total compensation to executives in NSB will reflect their responsibility level of management, results and development and take into consideration the size and complexity of the operations. The compensation must not be in the nature of or such a scope that will impair the Groups reputation. The executive compensation can consist of fixed salary and additional compensation, including fringe benefits, bonus, severance and pension. The fixed salary shall always be the main part of the total compensation. The executive compensation scheme must be transparent, and in accordance with the principles for corporate governance, as well as the state guidelines for executive compensation. The compensation system is to be perceived as understandable and acceptable both internal and external. The compensation system is to be adequately flexible so that adjustments can be made if the needs change. Elements in executive compensation The starting point for the compensation is the total level of fixed salary and other benefits. a) Fixed salary The fixed salary is the main element in the compensation arrangement of the executives in NSB. The fixed salary will be competitive, but not be market leading. The fixed salary is to be assessed once a year. At employment of executives, the grandfather-principle is to be utilized, which will be discussed among executive above that level before the candidate is given an offer. The CEO is to consult the Chairman of the Board before the employment and determination of such members of executives. No executives are compensated for any Board participation within the NSB-Group. b) Fringe benefits Executives are offered fringe benefits that are common for such positions. Examples of this are free phone, free internet service, car compensation and free newspapers. c) Variable salary NSB has bonus arrangements for executives. The CEO has a bonus arrangement, based on the Groups profit and individual bonus criteria determined by the Board of Director s. The maximum bonus is 4 months salary. Other executives have annual and individual adapted bonus agreements limited to 3 months salary. The arrangement in NSB is based on the following principles: The variable salary will be based on defined and measurable criteria. Several relevant criteria are to be applied. There will be a strong connection between the goals for the variable salary and the goals of the company. The bonus criteria will be based on conditions the executive can influence, either directly or through the group of executives he/she is part of. The bonus arrangement must be transparent and simple to understand. The CEOs bonus criteria for 2015 are based on achievement within profits and customer satisfaction, as well as implementation of strategyand improvement work within the Group. A prerequisite for the bonus is that the Group achieves a yield on capital employed of at least 5 %. d) Pension All employees are members in a collective pension arrangement. The CEO s pensionable age is 67 years. He has a collective pension arrangement. The arrangement carries rights to a pension of maximum 12 G. On top of that, the CEO has a defined contribution plan of 30 % of the fixed salary over 12 G, entered into in NSB has prior entered into pension agreement with executives, which entitles them to a 60 % pension compensation level of their pension earned from the age of 62. This operating pension arrangement was closed as of 1st of January When new executives are hired the State s guidelines for executive compensation are used, and the pension terms for executives are equal to other employees. e) Severance arrangements In his employment agreement the CEO has the right to 6 months of severance and benefits when leaving involuntarily. Any other salary in this severance period will reduce the severance compensation. Severance agreements for executives in the subsidiaries are in accordance with the agreement of the CEO. If the CEO decides to leave the position, there will be no severance payment. Where there are agreements regarding severance with other executives, will total salary including severance not exceed 12 months of fixed salary. Severance arrangements will not be utilized when the cessation of employment is voluntary. There were no severance payments made during 2015 for executives that exceeded 12 month fixed salary. Completion of the principles for salary and compensation for executives in the NSB-Group in the previous accounting year The executive compensation policy for 2015 has been completed in accordance with abovementioned guidelines. The CEOs fixed salary was adjusted by 3.3 % to 3,558 TNOK in Received bonus was 861 TNOK for results achieved in Contingencies The group has contingent liabilities in respect of legal claims arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for. Examination of the Group s properties and land indicates environmental obligations. When identifying developmental projects, costs are taken into consideration when ground is prepared. Accounts 2015 NSB Group 129

132 Note Accounts 2015 NSB Group During incorporation of NSB BA in 1996 the company statutory transferred properties belonging to the administration company NSB. The process of the statutory transfer is not yet fulfilled. For some of the transfers concerning sold properties the approval of the Norwegian National Rail Administration has been required. The Nettbuss Group is involved in disputes that may be tried in the court system. Disputes where the outcome may have a significant effect are: Nettbuss is involved in a dispute with Aust Agder county. According to a resolution in ESA, the county is required to pay back parts of the grant received. The parties disagree on how to calculate the consequence of the ESA resolution. The company s opinion assesses the calculation of the wrongfully received grant to be of no significance in amount and has made an accrual of 1.7 million kroner which is equivalent to the offer Nettbuss has given to Aust Agder county. Additionally, Aust Agder county has through arbitration and summons in Aust Agder district court claimed repayment of parts of the grants received in addition to the resolution in ESA. Nettbuss will contest the basis for these cases and has assessed there are no preponderance to show there will be any obligations related to these. 34 Business combinations 2015 E 18 Lastebilservice AS Fjeldhus Motor AS 2014 Helges Bil AS The table below shows the allocation of the purchase amount on acquired assets and liabilities Consideration paid 49 7 Total value of new subsidiary 49 7 Identified assets and liabilities on the balance sheet recognized from the acquisition: Cash and bank deposits 5 1 Property, plant and equipment 33 - Inventories 6 5 Trade and other receivables 13 3 Trade and other payables Borrowings -7 - Deferred tax asset on excessive value on PPE -5 - Total net identifiable assets 25 5 Goodwill 24 2 TOTAL Events after the balance sheet date There are no material events which have occurred after the balance sheet date that will affect the Groups profit and position. 130

133 NSB AS Income Statement Page 132 Overview Financial Position Page 133 Cash Flow Statement Page 134 Development in Equity Page 135 Notes Page Principle notes Page Shares in subsidiaries Page NSB-Group s passenger operations in the Nordic Region Page Segment information Page Property, plant and equipment Page Investments in associates Page Investments in joint ventures Page Inventory and components and goods Page Trade and other receivables Page Financial risk management Page Derivatives Page Financial instruments by category Page Cash and bank deposits Page Share capital and share premium Page Borrowings Page Deferred income tax/income tax expense Page Payroll and related expenses Page Retirement benefit obligations and similar obligations Page Trade and other payables Page Provisions for other liabilities and charges Page Depreciation, amortization and impairment Page Other expenses Page Financial income and expenses Page Unrealised fair value changes Page Leases Page Related party transactions Page Contingencies Page Events after the balance sheet date Page 152 Statement from the Board and CEO regarding the annual report 2014 Page 153 Auditor s Report Page 154 Accounts 2014 NSB AS 131

134 Income Statement Accounts 2015 NSB AS Notes Operating revenue 4 6,946 6,561 Payroll and related expenses 17 2,415 2,469 Depreciation and impairment Other operating expenses 22, 25 2,747 2,767 Total operating expenses 5,862 6,020 Operating profit 1, Financial posts Financial income 23 1,413 1,253 Financial expenses Net financial expenses - pensions 18, Unrealised fair value changes 23, Net financial items Profit before income tax 1,990 1,039 Income tax expense PROFIT FOR THE YEAR 1, Attributable to Equity holders 1, Other Comprehensive Income Profit for the year 1, Items that will not be reclassified to profit or loss Deviation retirement benefit obligations Tax related to items that will not be reclassified TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1, Attributable to Equity holders 1,

135 Overview Financial Position Notes ASSETS Property, plant and equipment 5 9,258 8,929 Investments in subsidiaries 2 3,086 5,860 Investments in associates Financial assets Loans to group companies 9, 26 5,984 3,717 Total non-current assets 18,342 18,520 Investment in joint ventures Inventories Trade and other receivables Derivative financial assets 11 2,546 2,252 Cash and bank deposits 13 1,349 2,032 Total current assets 5,099 5,358 TOTAL ASSETS 23,441 23,878 Accounts 2015 NSB AS Notes EQUITY AND LIABILITIES Ordinary shares and share premium 14 5,144 5,144 Retained earnings 1, Total equity 6,849 5,961 Borrowings 15 10,321 9,856 Deferred income tax liabilities Retirement benefit obligations 18 1,410 1,490 Provisions for other liabilities and charges Total long term liabilities 12,547 11,973 Trade and other payables 19 2,184 3,122 Tax payable Borrowings 15 1,534 2,494 Derivative financial instruments Total short term liabilities 4,045 5,944 TOTAL EQUITY AND LIABILITIES 23,441 23,878 Oslo, 24 th of February 2016 Kai Henriksen Chairman of the Board Jan Audun Strand Kjerstin Fyllingen Bjarne Borgersen Wenche Teigland Rolf Jørgensen Åsne Havnelid Audun Sør-Reime Geir Isaksen CEO 133

136 Cash Flow Statement Accounts 2015 NSB AS Notes Profit for the year before income tax expense 1,990 1,039 Depreciation and impairment in the income statement Gain/loss on sale of assets Net changes to obligations and retirement benefit oblig Net changes to provisions for other liabilities and charges Net unrealised fair value changes 23, Interest items Changes to working capital -1,023 1,004 Net cash flow from operating activities 442 1,865 Acquisition of subsidiaries 2 2,738-4,500 Loans paid to/from single purpose/joint ventures Purchase of PPE 5-1,219-1,278 Proceeds from sale of PPE 5-1 Grants from public sources Dividends received Net cash flow from investment activities 2,610-5,079 Conversion loans to subsidiaries 2-4,453 Increase in loans to subsidiaries 15-2, Repayment of loans from subsidiaries Proceeds from borrowings 15 1,800 2,297 Repayment of borrowings 15-2,562-1,450 Group contributions paid to subsidiaries Dividends paid to company's shareholders Net cash flow from financial activities -3,746 4,251 NET CHANGE IN CASH AND BANK DEPOSITS FOR THE PERIOD ,037 Cash and bank deposits as at the beginning of the period 13 2, Foreign exchange gain/loss on cash and bank deposits 11 2 CASH AND BANK DEPOSITS AS AT THE END OF THE PERIOD 13 1,349 2,

137 Development in Equity 2015 Notes Ord. shares and shares premium Retained earnings Equity 1 st of January , ,961 Profit for the interim period - 1,723 1,723 From other comprehensive income Change for income tax rate Dividends paid EQUITY 31 ST OF DECEMBER ,144 1,705 6,849 Total Accounts 2015 NSB AS 2014 Notes Ord. shares and shares premium Retained earnings Total Equity 1 st of January , ,809 Profit for the interim period From other comprehensive income Dividends paid EQUITY 31 ST OF DECEMBER , ,

138 Notes Accounts 2015 NSB AS All figures in the report are in MNOK. 1. General information and a summary of the most important accounting principles 2. Shares in subsidiaries 3. NSB-Group s passenger operations in the Nordic Region 4. Segment information 5. Property, plant and equipment 6. Investments in associates 7. Investments in Joint ventures 8. Inventory components 9. Trade and other receivables 10. Financial risk management 11. Derivatives 12. Financial instruments by category 13. Cash and bank deposits 14. Share capital and share premium 15. Borrowings 16. Deferred income tax/income tax expense 17. Payroll and related expenses 18. Retirement benefit obligations and similar obligations 19. Trade and other payables 20. Provisions for other liabilities and charges 21. Depreciation, amortization and impairment 22. Other expenses 23. Financial income and expenses 24. Unrealised fair value changes 25. Leases 26. Related party transactions 27. Contingencies 28. Events after the balance sheet date The consolidated financial statements were approved by the Board of Directors on 24th of February

139 Note General information and summary of important accounting principles We refer to note 1 in the NSB Group annual report, with the exception of the following: - method for incorporation of associated companies and joint ventures. Associated companies and joint ventures in NSB AS Ownership in companies where NSB AS has considerable, but not controlling influence, and ownership in joint venture companies, are treated using the cost method of accounting. Considerable influence is considered to be where the company owns between 20 % and 50 % of the voting shares. Accounts 2015 NSB AS 2 Shares in subsidiaries See note 2 in NSB Group report. 3 NSB-Group s passenger operations in the Nordic Region See note 3 in NSB Group report. 4 Segment information NSB AS has only one operating segment - passenger train Analysis of operating income by category Transport revenue 6,636 6,243 Other revenue TOTAL 6,946 6,561 Information on important customers The Group has one customer that constitutes more than 10 % of operating income. The Government s public purchase from the NSB-Group is included in note

140 Note 5 Accounts 2015 NSB AS 5 Property, plant and equipment At 1 st of January 2015 Machinery and equipm. Transportation Partially delivered trains Under construction Accumulated acquisition cost 1,403 15, ,654 Accumulated depreciation -1,226-7, ,725 TOTAL 177 8, ,929 Total Year ended 31 st of December 2015 Opening net book value 177 8, ,929 Additions ,219 Grant from public sources* Disposals at acquisition cost Accumulated depreciation disposals Transfers within PPE Depreciations TOTAL 179 8, ,258 At 31 st of December 2015 Accumulated acquisition cost 1,102 16, ,050 Accumulated depreciation , ,792 TOTAL 179 8, ,258 At 1 st of January 2014 Accumulated acquisition cost 1,449 14, ,563 Accumulated depreciation -1,022-6, ,001 TOTAL 427 7, ,562 Year ended 31 st of December 2014 Opening net book value 427 7, ,562 Additions ,278 Disposals at acquisition cost Accumulated depreciation disposals Transfers within PPE 81 1, Depreciations TOTAL 177 8, ,929 At 31 st of December 2014 Accumulated acquisition cost 1,403 15, ,654 Accumulated depreciation -1,226-7, ,725 TOTAL 177 8, ,929 Depreciation period 5-30 years 5-30 years 3 - everlast. *For the period , NSB AS received government grants to reimburse for new trains to be used in eastern Norway (Oslo package 2), as well as grants for the on-board equipment ERTMS (European Rail Traffic Management System). 138

141 Note Investments in associates Book value 1 st of January NET BOOK VALUE 31 ST OF DECEMBER Profit/loss, assets and liabilities of its associates, all of which are unlisted, are as follows: 2015 Registered office Assets Liabilities Revenues Oslo S Parkering AS Oslo % Interoperabilitetstjenester AS Oslo % Fjord Tours AS Bergen % TOTAL Profit/ loss % Int. held Accounts 2015 NSB AS 2014 Registered office Assets Liabilities Revenues Oslo S Parkering AS Oslo % Interoperabilitetstjenester AS Oslo % Fjord Tours AS Bergen % TOTAL Profit/ loss % Int. held 7 Investments in joint ventures Book value 1 st of January 5 10 Equity transactions - -5 NET BOOK VALUE 31 ST OF DECEMBER 5 5 NSB AS interest in joint ventures is as follows: Year of acquisition Registered office Votes and profit share Equity Profit/loss Book value 31 st of December Flåm Utvikling AS 2013 Aurland 50 % Description of operations: Flåm utvikling Flåm Utvikling has for 16 years, along with NSB AS as a provider of train transport services, operated the tourism product; the Flåm line. Flåm Utvikling is to conduct product development, sale, marketing, customer management, and brand development of the Flåm line, as well as develop the foundation for commercial operations of the Flåm line all year-round. The Flåm line is the country s first complete all year-round mountain/fjord destination. 8 Inventory components Components Not completed parts - 14 TOTAL INVENTORY

142 Note 9 10 Accounts 2015 NSB AS 9 Trade and other receivable Trade receivables Group internal trade receivables Less: provision for impairment of receivables -4-7 Trade receivables - net Prepayments Other receivables TOTAL TRADE AND OTHER RECEIVABLES Loans to group companies 5,984 3,717 TOTAL 6,601 4,310 The carrying amounts of the trade receivables, prepayments and other receivables approximate their fair value. Trade receivables include mainly passenger train income. Maturity of receivables: Matured receivables on balance sheet date Matured between 0-2 mnths ago Matured between 2-6 mnths ago 2 1 Matured more than 6 mnths ago Financial risk management Liquidity risk < 1 year 1-2 years 2-5 years > 5 years Short term liabilities 2, Borrowings 1,533 3,003 3,760 3,558 New trains 827 1, Property, plant and equipment NSB assesses maximum credit risk to be the following: Cash and bank deposits 1,349 2,032 Financial derivatives 2,546 2,252 Trade receivable and other short term receivables TOTAL 4,512 4,

143 Note Derivatives Assets Liabilities Assets Liabilities Interest rate & currency swaps 2, , The company does not use hedge accounting, fair value changes of derivatives are charged on a continuous basis to the income statement. Derivatives are classified as current assets or contractual obligations. Accounts 2015 NSB AS Changes in fair value of derivatives: This period s change in fair value: Accumulated change in fair value: 2,296 1,925 Interest rate and foreign exchange swaps The notional principal amounts of the outstanding interest rate swaps contracts at 31st of December 2015 were 8,703 MNOK(2014: 10,365 MNOK). At 31st of December 2014, the fixed interest rates vary from 3.97 % to 4.64 % (3.97 % to 4.64 %) and the floating rates are mainly 6M NIBOR + margin. 12 Financial instruments by category Assets Loans and receivables Assets at fair value through profit and loss Total Year Financial fixed assets Derivative financial instruments - - 2,546 2,252 2,546 2,252 Trade and other receivables (excl. prepayments) 6,138 4, ,138 4,017 Cash and bank deposits 1,349 2, ,349 2,032 TOTAL 7,489 6,051 2,546 2,252 10,035 8,303 Liabilities Liabilities at fair value through profit and loss Other financial liabilities at amortised cost Total Year Borrowings (excl. Financial lease liabilities) 8,611 9,106 3,244 3,244 11,855 12,350 Derivative financial instruments Trade and other payables excl. statutory liabilities - - 2,095 3,027 2,095 3,027 TOTAL 8,861 9,434 5,339 6,271 14,200 15,705 The following table presents the company s assets and liabilities that are measured at fair value at 31 st of December 2015: Level 1 Level 2 Level 3 Total Derivatives used for hedging - 2,546-2,546 TOTAL ASSETS - 2,546-2,546 Borrowings and accrued interest - 8,611-8,611 Derivatives used for hedging TOTAL LIABILITIES - 8,861-8,861 The following table presents the company s assets and liabilities that are measured at fair value at 31 st of December 2014: Level 1 Level 2 Level 3 Total Derivatives used for hedging - 2,252-2,252 TOTAL ASSETS - 2,252-2,252 Borrowings and accrued interest - 9,106-9,106 Derivatives used for hedging TOTAL LIABILITIES - 9,434-9,

144 Note Accounts 2015 NSB AS 13 Cash and bank deposits Cash and bank deposits 1,349 2,032 Includes restricted funds of 108 MNOK (2014: 101 MNOK). 14 Share capital and share premium See note 19 in NSB Group report. 15 Borrowings Non-current Bonds 7,078 6,612 Bonds measured at amortized cost 3,243 3,244 Total 10,321 9,856 Current Current share of non-current borrowings 730 2,193 Other current borrowings Total 1,534 2,494 TOTAL BORROWINGS 11,855 12,350 Nominal value of long-term interest bearing debt st of January 8,396 8,261 Changes during the year ST OF DECEMBER 7,846 8,396 Fair value on bondes measured at amortized cost is MNOK 3,742 as at (2014: 3,717 MNOK). All existing bond issues have been issued under the Euro Medium Term Note loan programme (EMTN-Programme). The EMTN programme is a loandocumentation that NSB utilizes when bonds are issued. The EMTN-programme does not contain any financial covenants, except for an optional clause that requires that the State of Norway shall own 100 % of NSB. NSB has a multicurrency revolving credit facility of 2,000 MNOK with a covenant that demands a minimum equity share of 20 %. Fair value of the credit margin on bonds is based on market observations from banks and the price/exchange NSB bonds in the second-hand market. The exposure of the Group`s borrowings to interest changes and the contractual dates at the balance sheet dates are as follows: Borrowings and swaps months or less 2,501 3,665 Non-current borrowings expire in: Between 1 and 2 years 3, Between 2 and 5 years 3,760 3,845 Over 5 years 3,558 5,

145 Note Effective interest rate at the balance sheet date: Bonds NOK Calculated effective interest rate includes the effect of interest rate swaps. The Group has swapped all exposure in CHF. The carrying amounts of the non-current borrowings approximate their fair value. Accounts 2015 NSB AS Changes in fair value on non-current borrowings: This periods change in fair value Accumulated change in fair value 2,482 2,197 The carrying amounts of the Group`s borrowings are denominated in the following currencies: NOK 5,130 4,652 CHF 6,725 7,698 TOTAL 11,855 12,350 The Group has the following undrawn borrowing facilities: Floating interest rate - Expiring within one year Expiring beyond one year 2,000 2,000 TOTAL 2,050 2,050 The facilities expire within one year is a bank overdraft related to NSB-Group bank account system. The credit is for one year at the time and is renewed annually. NSB`s long term revolving credit facility which expires in April Deferred income tax/income tax expense Income tax expence Current income tax payable 77 - Change in deferred tax TOTAL INCOME TAX EXPENSE Tax payable on the balance sheet are as follows: Current payable tax expense 77 - TAX PAYABLE ON THE BALANCE SHEET

146 Note 16 Accounts 2015 NSB AS Reconciliation between nominal and actual tax expense rate: Net income before tax 1,990 1,039 Expected income tax using the nominal tax rate (27 %) Tax effect of the following items: Other non-taxable income Effect of change in income tax rate Insufficient tax provision prior years - 6 Income tax expense Effective tax rate 13 % 9 % Spesification of the tax effect of temporary differences and losses carried forward: Deferred income tax asset and liabilities are offset when there is a legally enforced right to offset current tax assest against current tax liabilities and when the deferred income taxes relate to the same tax authority. The offset amounts are as follows: 2015 Benefit (+) / Liability (-) Book value Effect of change i accounting principle Income statement charge Charge to other comprehensive income Effect due to change in income tax rate charged directly to equity Tax effect Group contribution Book value Fixed assets -4, ,221 Inventories Receivables Value changes to financial current assets Retirement benefit obligations 1, ,335 Provisions for other liabilities and charges (Gains)/losses Losses carried forward Other Total gross temporary differences -2, ,060 Net temporary differences -2, ,060 Net deferred tax asset/liability 27% Effect from changes in tax rate Net deferred tax asset/liability on the balance sheet

147 Note Benefit (+) / Liability (-) Book value Effect of change i accounting prin-ciple Income statement charge Charge to other comprehensive income Effect due to change in income tax rate charged directly to equity Tax effect Group contribution Book value Accounts 2015 NSB AS Fixed assets -4, ,940 Inventories Receivables Value changes to financial current assets Retirement benefit obligations 1, ,490 Provisions for other liabilities and charges (Gains)/losses Losses carried forward Other Total gross temporary differences -1, ,058 Net temporary differences -1, ,058 Net deferred tax asset/liability 27% Deferred income tax assets Deferred income tax assets to be recovered after more than 12 months TOTAL Deferred tax liabilities Deferred income tax liabilities to be recovered after more than 12 months -1,329-1,340 Deferred income tax liabilities to be recovered within 12 months -1-1 TOTAL -1,330-1,341 TOTAL DEFERRED INCOME TAX LIABILITY (NET) Payroll and related expenses Wages and salaries, including employment taxes 2,340 2,227 Pension costs defined benefit plans (note 18) Other employee benefit expenses TOTAL 2,415 2,469 Benefits for Chief Executive Officer and key management are referred to in the note for related-party transactions (note 26) Average man-labour year* 3,064 3,041 Number of employees at 31 st Dec. 3,509 3,468 *The calculation is based on a weighted average based on the true number of man-labour year throughout the year. 145

148 Note 18 Accounts 2015 NSB AS 18 Retirement benefit obligations and similar obligations General The Group has pension arrangements related to age-disability- and bereaved benefits for spouses and children. Below is a further description of type of arrangements and how these are organized. Defined benefit pension plan The companies in the Group have several collective pension agreements that are handled by the Norwegian Public Service Pension Fund (SPK) or insurance companies that for the Norwegian companies satisfies the demands according to the law on public pension. The arrangement covers benefits from the pension basis up to 12G and results in a age- and disablity pension of 66 % of the pension basis when fully vested. The obligations connected to these agreements covers 3,154 active members and 1,825 retirees. The retirement benefit plans entitle defined future services that mainly are dependent on the number of contribution years and wage level at the time of retirement. The pension benefits received are coordinated with the National Insurancescheme and will also be dependent on its benefits paid out. The companies have, through tariff agreements, retirement benefit obligations in affiliation with Early Retirement Pension Regulated by Contract (AFP). Obligations through this agreement cover 3,154 active members. The additional defined benefit pension plan agreement for top leadership is not funded and will be paid through operations. In the tables below, employment taxes (notional numbers) are included in both gross obligations and this year s expense. Specification of net defined benefit pension plan obligations Present value of earned pension rights for funded collective pension plans 6,408 6,270 Fair value of plan assets -5,051-4,844 Present value of unfunded obligations 1,357 1,426 Present value of accrued pension liabilities for defined benefit plan in unfunded obligations NET PENSION OBLIGATION ON THE BALANCE SHEET 1,410 1,490 Changes in pension retirement obligations: Book value net pension obligation 1 st of January 1,490 1,548 This years' actuarial deviations This years net return on assets/increase in obligation Net financial items in the account Curtailments -2 - Payments to plan Plan changes during the year BOOK VALUE 31 ST OF DECEMBER 1,410 1,490 Pension expenses included in the accounts, defined benefit pension plan Present value of current pension earnings Employee contribution Total return on pension plan, incl. in payroll and related expenses see note Total financial items in the accounts Total pension expenses defined benefit pension plan

149 Note 18 Sensitivity analysis with change in central assumptions The table below shows estimates for potential effects with change in assumptions that significantly affects the defined benefit pension plans in Norway. Actual results may substantially differ from these estimates. Discount rate Salary growth rate Increase in G 1 % -1 % 1 % -1 % 1 % -1 % Increase (+)/decrease (-) this period's net pension expense in % (23-25%) 21-23% 24-26% (14-16%) 12-14% (7-9%) Increase (+)/decrease (-) net pension obligation at in % (12-14%) 16-18% 6-8% (5-7%) 8-10% (6-8%) Accounts 2015 NSB AS The Population is affected by a high pensioner population and high average age on participants that affects the sensitivity analysis. The last few years development in pension expenses and pension obligations shows the following: Income statement Present value of current pension earnings Plan changes during the year Changes and deviations in estimates allocated to net income Total cost in the income statement Total financial items in the accounts TOTAL FINANCIAL ITEMS IN THE ACCOUNTS Financial position Total obligations 6,461 6,334 6,437 5,365 5,577 4,779 Pension assets -5,051-4,844-4,889-3,926-3,751-3,569 Total net pension obligations 1,410 1,490 1,548 1,439 1,826 1,210 Non-recognised actuarial losses NET PENSION OBLIGATION AT THE FINANCIAL POSITION 1,410 1,490 1,548 1, Financial assumptions (defined benefit plans) Discount rate 2.70 % 2.80 % 3.90 % 3.80 % 2.80 % 3.80 % Expected return on plan assets 2.70 % 2.80 % 3.90 % 3.80 % 4.00 % 4.60 % Average salary growth 2.60 % 2.95 % 3.45 % 3.70 % 3.30 % 3.50 % G-regulation 2.40 % 2.70 % 3.50 % 3.50 % 3.20 % 3.75 % Corridor: % of max (PBO, pension assets) 0.00 % 0.00 % 0.00 % 0.00 % % % Annual reg. of pension increases 1.65 % 1.95 % 2.75 % 2.75 % 2.45 % 3.00 % Average social security tax % % % % % % 147

150 Note Accounts 2015 NSB AS Explanation to selected assumptions 31st of December 2015 The discount rate has been set at 2.7 % and is determined with basis in preferential bonds (OMF). The OMF-market has been assessed to represent a deep and liquid marked with relevance to maturities that qualifies to be used as a reference for interest rate according to IAS 19. Salary adjustment for Norwegian arrangements are mainly calculated as the sum of expected nominal salary growth of 0.7 % (incl career salary increase) and inflation of 1.9 % with some individual adjustments. Regulation of pensions during disbursements mainly follows average salary growth (equivalent to G-regulation) less a fixed factor of For the demographic factors, the tariffs K2013 and IR 73 has been used for determination of mortality rate and disability risk. Average remaining life expectancy for a person retiring when he/she turns 65 years old will according to K2013 be: Male Female 19 years 22 years Risk evaluation of defined benefit contribution plans The company is affected through its defined benefit contribution plans by several factors due to uncertainties in assumptions and future development. The most central factors are described as follows: Expected longevity The company has assumed an obligation to pay pension to the employees for as long as they live. An increase in life expectancy among members results in an increased obligation for the company. Yield risk The company is affected by a reduction in actual yield on the pension assets, which will cause an increase to obligations for the company. Inflation- and salary growth risk The company s pension obligation has risk related to both inflation and salary development, even though the salary development is close related to inflation. Higher inflation and salary development than what is used in the pension calculations, result in increased obligation for the company. 19 Trade and other payables Trade payables Group internal trade payables 1,374 2,035 Social security and other taxes Other current liabilities TOTAL 2,184 3,122 The amount due to related parties is in 2014: 8 MNOK (6 MNOK). Book value of trade and other payables corresponds to fair value. Other current liabilities include pre-paid revenue, accrued payroll and related expenses as well as other accrued expenses. 148

151 Note Provisions for other liabilities and charges Provisions for other liabilities 2015 Environment. Pollution Reorganization obligation Other Total At 1 st of January Change in provision during the year Used during year TOTAL Accounts 2015 NSB AS Provisions for other liabilities 2014 Environment. Pollution Reorganization obligation Other Total At 1 st of January Change in provision during the year Used during year TOTAL Analysis of total provisions: Non-current liabilities Severance reorganization liability In connection with formation of NSB AS the company acquired a liability to refund pay for employees who are laid off due to redundancy before 1 st of January NSB was however compensated with a limited calculated amount, which is included as a reorganization obligation in other long-term debt on the balance sheet. Work related injuries Compensation for work related injuries which occurred during the period from 1 st of January 1990, until the formation of NSB BA 1 st of December 1996 are covered by the company. To account for these estimated liabilities, accruals have been made for both expectations of cases currently being handled and justifiable cases not yet reported. Environmental pollution As a train operator, the company has a considerable responsibility for pollution which occurs due to operations. A quantification of any known liabilities is accrued for on a continuous basis. The accrual is reversed based on actual cost as the clean-up processes. Known liabilities are quantified and a provision made in the accounts. Best estimate is used. Polluted ground land sold Creosote pollution has been discovered on some occasions when selling land. When NSB BA was formed the pollution was known but not the extent. No accruals were made since NSB BA was not the polluter. Legal disputes NSB AS is involved in legal disputes, where some of them will be tried in court. Accruals are made for disputes where it appears to be a probable and qualified risk of losing. 149

152 Note Accounts 2015 NSB AS 21 Depreciation, amortization and impairment Depreciation current assets (note 5) TOTAL Other expenses Sales- and overhead expenses Energy used in operations Repair and maintenance, machinery rental, property expenses Other operating expenses 1,559 1,572 TOTAL 2,747 2,767 Auditing fees (excluding VAT): Auditing 1 1 Other services 1 1 TOTAL Financial income and expenses Interest income Dividend Group contribution Net foreign exchange gains 14 4 Total financial income 1,413 1,253 Interest expense Other financial expenses Net foreign exchange losses -7-5 TOTAL FINANCIAL EXPENSES Net financial expenses - pensions Unrealised value changes TOTAL FINANCIAL ITEMS

153 Note Unrealised fair value changes The table below shows unrealised value changes in assets, liabilities and derivatives valued at fair value: Unrealized value changes derivatives used for hedging Unrealized value changes bonds Unrealized value changes intercompany loans 36 6 TOTAL UNREALIZED VALUE CHANGES FINANCIAL ITEMS Accounts 2015 NSB AS 25 Leases Lease of machinery/equipment, not incl. on the balance sheet 2 2 Lease of property (external) TOTAL Related party transactions NSB has the following related parties: Owner As the owner of NSB, the Ministry of Transport and Communication is a related party. In addition, other businesses owned by the Ministry of Transport and Communication will also be a related party to NSB. Companies within the same Group All subsidiaries, associates and joint ventures as noted in notes 2, 6 and 7 as well as other Group companies that are related parties to these companies will be a related party to NSB. Board of Directors and key management Persons that are key management or on the Board of Directors are also related party to NSB. Below is an overview of transactions, balances and guarantees to related parties: Sale of goods and services: Public purchase of passenger traffic services 3,013 2,919 Sales of other goods and services Sales to other companies within the Group TOTAL 3,362 3,315 Purchases of goods and services:

154 Note Accounts 2015 NSB AS Intercompany balances with related parties as a result of buying and selling of goods and services: Receivables: Group internal trade receivables Associated companies 1 1 Entities owned by the Ministry of Transportation 1 1 TOTAL Debts Group internal trade payables 1,374 2,041 Other companies in the Group 1 1 Entities owned by the Ministry of Transportation 7 5 TOTAL 1,382 2,047 Loans to related parts Other companies in the Group 5, There are no borrowings from related parties. Guarantees NSB AS has guaranteed for the pension obligations in case Nettbuss AS no longer would exist, which means that the transferring agreement of 1974 can be used. The consequence is that Nettbuss AS cannot make changes in its pension without first getting approval from the Board of Directors of NSB AS. NSB AS has issued a guarantee of 40 MSEK on behalf of its fully owned subsidiary Svenska Tågkompaniet AB for licensing to operate trains in Värmland in Sweden. NSB AS has issued a guarantee of 150 MSEK on behalf of its fully owned subsidiary Svenska Tågkompaniet AB related to a contract with Norrtåg AB. Compensation for members of the Board and key management See note 32 in NSB Group report. 27 Contingencies See note 33 in NSB Group report. 28 Events after the balance sheet date See note 35 in NSB Group report. 152

155 Statement from the Board and CEO regarding the annual report 2015 The Board of Directors confirm that to the best of our knowledge the condensed set of Group financial statements and the financial statements for the parent company for the period 1. January 2015 to 31. December 2015 have been prepared in accordance with IFRS as determined by EU, with requirements of supplementary information in the Accounting Act, and that the information in the accounts give a true and fair view of the company s and Group s assets, liabilities, debt, financial position and profit or loss as a whole. The Board of Directors confirm that the annual report give a true and fair view of the development, profit and position for the company and the Group, as well as a description of the most central risk- and uncertainty factors the company and the Group faces. Accounts 2015 NSB AS Oslo, 24 th of February 2016 Kai Henriksen Chairman of the Board Bjarne Borgersen Wenche Teigland Kjerstin Fyllingen Åsne Havnelid Audun Sør-Reime Rolf Jørgensen Jan Audun Strand Geir Isaksen CEO 153

156 Auditor s report Accounts 2015 NSB AS 154

157 155 Accounts 2015 NSB AS

158 156

159 ANNUAL REPORT 2015 Design: REDINK Illustrations: Katinka Pisani Photo: Thomas Ekstrøm, Hampus Lund and Thomas Haugersveen Print: RK Grafisk NSB GROUP Schweigaards gate 23, Oslo Postboks 1800 Sentrum 0048 Oslo Tel nsbkonsernet.no

160 NSB GROUP