Nsb Group 2017

NSB GROUP 2017

Report of the Board of Directors Corporate social responsibility report Corporate Governance NSB GROUP ANNUAL REPORT 2017

Report of the Board of Directors of the NSB group, 2017

Summary of results and trends for the NSB Group for 2017

The NSB Group has delivered good results in a year that has been marked by significant restructuring through demerger of parts of the operations, preparation for tender for passenger traffic and a changed role due to the railway reform. The key figures in the following points are compared with similar activities in 2016.

(Last year’s figures in brackets)

// Operating profit for 2017 amounted to NOK 773 million (NOK 638 million)

// Profit before tax amounted to NOK 772 million (NOK 685 million)

// Return on equity was 13.2% (12.1%)

// Increased traffic volume and operating revenue from passenger rail services

// Stable results from bus services

// Negative results from the rail freight service

// Punctuality for passenger rail services was at 88.4 % which is in line with last year

// Extensive efforts and effects related to the Norwegian railway reform and restructuring

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The railway reform and organization At the start of 2017, due to the railway reform, the ownership of the train maintenance company Mantena AS, the sales and ticketing company Entur AS, the rolling stock company Norske Tog AS and the real estate group ROM Eiendom was transferred to the Ministry of Transport and Communications. The legal processes were finalized 24th of April 2017.

In 2016, the NSB Group presented the business transferred to the Ministry of Transport and Communications, as discontinued operations / assets held for distribution. To give a representative picture of the trend in 2017, this year's operations is compared to continuing business in 2016 adjusted for the profit element in deliveries from the discontinued operations.

The Norwegian Railway Directorate is putting out for tender the passenger train packages on routes currently run by NSB. As a consequence the NSB Group and the competitive situation is significantly changed.

From 2017, the NSB Group’s business activities involve the following main activities:

// Passenger train: passenger train operations

// Bus: bus operations

// Freight: freight train operations

// Tourism: tourism operations in Norway

Financial development for the total operations of the NSB Group and the parent company NSB AS The NSB Group had a profit after tax of NOK 634 million (NOK 555 million), an improvement of NOK 79 million. The operating profit amounted to NOK 773 million (NOK 638 million), an improvement of NOK 135 million. The improvement is mainly due to increased profit from joint ventures and associates.

The parent company, NSB AS, showed a profit after tax for the year amounting to NOK 502 million (NOK 185 million). Group contributions and dividends from subsidiaries amounting to NOK 45 million (NOK 561 million) are included in the annual profit for the parent company. The operating profit for the parent company amounted to NOK 371 million (NOK 436 million). The change in operating profit is mainly due to increased costs for lease and maintenance of trains.

Net cash flow from operating activities amounted to NOK 572 million (NOK 2,698 million). Net cash flow invested was NOK 708 million (NOK 1,016 million). This includes NOK 148 million (NOK 1,471 million) in purchases of fixed assets. These investments focused primarily on increasing capacity and profitability within the Group’s business segments. No dividend was paid to the company’s owner in 2017.

After this year’s profit, total equity for the parent company amounted to NOK 4,113 million (NOK 6,464 million). The main reason for the reduction is the demerger of operations due to the railway reform. The equity ratios is of 51 % (42.7 %). After implementation on 1 January 2018 of the change in lease obligations in IFRS 16, the equity ratio of the parent company NSB AS will decrease to 29.2% before deduction of dividend distribution for the 2017 income year. The parent company’s retained earnings amounted to NOK 428 million.

For the NSB Group, total equity amounted to NOK 4,985 million (NOK 9,934 million), giving an equity ratio of 43.6 % (34.3 %). Following the implementation on 1 January 2018 of the change regarding lease obligations in IFRS 16, the equity ratio of the NSB Group drops to 26.5% before deduction of dividend distribution for the 2017 income year.

Group return on equity is 13.2 % (12.1 %).

3 NSB GROUP ANNUAL REPORT 2017

The Group working capital amounted to 4,911 MNOK (4,219 MNOK), a change of 692 MNOK.

The owner, represented by the Ministry of Transport and Communications, normally expects a dividend equal to 50% of the NSB Group’s profit after tax. The Board proposes the following allocation from the total profit of the parent company, NSB AS:

Dividend 315 MNOK Transfers to other equity 187 MNOK Total profit for the year 502 MNOK

The accounts have been submitted on the assumption of the continuing operation of the company, and the Board confirms that this is the case.

Summary of results and trends for the business areas

Passenger train operations Passenger train operations are run by NSB AS and its subsidiaries NSB Gjøvikbanen AS and Svenska Tågkompaniet AB. The ownership of Norske Tog AS and Entur AS, which were established in 2016 as a result of the Norwegian railway reform in order to safeguard the ownership of passenger rolling stock and ownership and operations of sales and ticketing systems, was at the beginning of 2017 transferred to the Ministry of Transport and Communications. The legal processes were finalized 24th of April 2017.

As a part of the railway reform, the Norwegian government has announced three tenders relating to passenger rail services; service packages South, North and Vest, with operations commencing in June/July 2019, December 2019 and December 2020. In addition, further tenders are planned, for example for the central eastern Norway area. The passenger train operations has implemented a change programme to prepare for such tenders. Organisation and staffing will both have to be adapted to the new situation in the Norwegian market.

During 2017 the number of new Flirt-trains in operation has increased to 91 (81), of which 4 are being phased in at Gjøvikbanen as replacement for older train sets. During 2017 the capacity in seat kilometers has increased by 5 %, by the start of 4 express services at Vestfoldbanen, and the use of more double sets in the local train service south and north of Oslo.

For NSB AS and NSB Gjøvikbanen AS, at the end of December 2017, it was decided to close the current pension scheme in SPK for those over 55 years by the end of 2018. All younger employees at the time of the closing date will receive a registered right in SPK and from 2019 a new defined contribution pension scheme. Pension cost for 2017 and commitment as of 31 December 2017 is calculated for these companies in accordance with the principles in IAS 19. The pension commitments for these companies amounting to MNOK 1 560 are considered to provide a true and fair expression of the companies' obligations taking into account the estimated effect of liquidation of the scheme.

Operating revenue from the passenger train operations in 2017 was NOK 7,966 million (NOK 7,880 million), an increase of 1.1 %. The total no. of journeys in Norway and Sweden was 70 million, an increase of 4 %. For the passenger train operations in NSB AS the increase was 6.3 %.

The operating profit was NOK 558 million (NOK 398 million), an increase of NOK 160 million from 2016, mainly due to increased profit from joint ventures and associates and profit from the sale of shares in Oslo S Parkering AS. The increase in revenue was offset by increased costs for the hire and maintenance of trains and use of sales and ticketing systems.The Swedish operations has an operating profit of NOK – 52 million (NOK 4 million), a reduction mainly due to a change in tenders operated. An efficiency program is planned and under implementation.

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Passenger train operations in Norway achieved a punctuality of 88.4 %, which is at about the same level as 2016, but under the official target of 90 %.

Bus operations The bus operation is run by Nettbuss AS which has 28 subsidiaries and 7 associated companies.

The Nettbuss Group operates in almost all counties in Southern and Central Norway. Most of the operations of the Swedish subgroup are in the south west of Sweden. Both in Norway and in Sweden, bus services are mainly under contract to regional authorities, but the Group also offers express bus services, tourist services and workshop maintenance.

The operating profit amounted to NOK 264 million (NOK 306 million). Total operating revenue for 2017 amounted to NOK 6,075 million (NOK 5,850 million), an increase of 3.8 % from the previous year. The change in operating revenue is mainly due to changes in tender traffic in 2017.

The Scandinavian express bus market is characterized by strong competition from both air- craft, trains and other bus operators. Although overall development is stable, there is a large variation between areas. After several years of extensive restructuring, we have now achieved a satisfactory level of profitability in the Norwegian express bus market. However, competition is still fierce and further restructuring is required in order to maintain the market position. In Sweden, express bus operations have grown their market share, and shows good profitability

The bus operation has participated in relatively few but important tenders over the past year. In 2017 the bus operation was awarded contracts commencing 2018 (Nordhordland and Nord Trøndelag) with 107 busses and a total contract value of NOK 1,100 million, and a contract commencing 2019 (Trondheim) with150 busses and a total contract value of NOK 3,500 million. At the same time tenders for bus services in Kristiansand and Hadeland were lost, and will be discontinued in the summer of 2018.

The Swedish part of the business has maintained stable production in 2017 and does not expect major changes in 2018, but in the beginning of 2018, significant production will be put out for tender.

The bus operations transported a total of 122 (119) million passengers in 2017 as part of scheduled and express services, and drove 175 (172) million kilometres.

Freight train operations Freight train operations are run by CargoNet AS with subsidiaries. The largest part of the business uses shuttle trains for transportation of containers and other intermodal platforms, and terminal operations related to this. CargoNet also operates dedicated services for specific customers for transporting for instance aviation fuel, ore and timber.

The freight train operations has in 2017 been characterized by high punctuality and less affected by infrastructure instability than previous years, with the exception of an increase in the autumn associated with storm and flooding. All in all, this helps to improve the standing of rail transport among our customers.

Operating revenue amounted to NOK 1,027 million (NOK 980 million), and operating profit NOK – 49 million (NOK – 2 million). The market is characterized by increased competition as the largest freight train competitor was established in the market in mid-2016, has increased its transport offer. The introduction of track access charges has also adversely affected the competitive power compared to road transport. This has resulted in pressure on prices and lower filling rates in the trains, while there are increased costs for rent and maintenance of locomotives and other rolling stock.

5 NSB GROUP ANNUAL REPORT 2017

The extent of unplanned stops due to infrastructure at 103, is higher than last year (50), mainly due to storms and flooding a short period this autumn. Punctuality was 95 % (94 %) measured as delivery within 15 minutes, better than the 90 % target.

Tourism operations The tourism operations sells fjord, mountain and cultural experiences to Norwegian customers, tourists and international tour operators. The main parts of the activity is operated through the partly owned companies Flåm Utvikling and Fjord Tours. Work is in process to develop more attractive travel packages by train, bus and boat, together with local tourism actors, which will be available through a digital tourism portal.

Corporate governance The Board of Directors has discussed and approved the statement regarding Corporate Governance that is included in the annual report.

Ownership NSB is one of Norway’s largest transport 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 situated throughout most of Norway and parts of Sweden.

Targets and strategies The change in activities related to the railway reform also has the consequence that the Group's goals and strategies need to be adjusted. The NSB Group has therefore prepared a new group strategy; The best journey.

The Group's strategy for creating the best journey is to develop the Group to become a leader within these four journeys:

// The smart journey // The green journey // The safe journey // The profitable journey

The four journeys can be understood in two ways. Specifically, the four journeys mean that we promise our customers a simple and comfortable journey from door to door, a climate-friendly and sustainable journey, a safe journey where we take care of the customer and a profitable journey that provides quality and value for money. At the same time, the four journeys means that the NSB Group aims at developing the company so that we offer the best journey for the customer. The four trips are the framework for strategic development, and are leading our work in the coming years.

Our goal is to have the most satisfied customers in the industry, that we are better than the competitors to take social responsibility, that we will be Nordic industry leader in traffic safety and HSE, have economic growth, and a return on capital that meets the requirements of the owner.

Internal control The NSB Group has adopted its own framework for internal control and has established internal control systems that include values, ethical guidelines and corporate social responsibility, organisation, authorisation structure and governing documents. The Board of Directors reviews the Group’s business concept, values, strategies and plans on an annual basis. Risk analyses are performed annually for the Group as a whole, as well as for each business area. Risk pertaining to financial reporting is evaluated through separate risk analyses of specific areas and periodic follow-up meetings with the business areas.

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The internal control system is revised according to the above strategies and evaluations, resulting in revision of management documents, recommendations, procedures and key controls.

Risk

Financial risk The Group’s activities expose the Group to a variety of financial risks: market risk (currency exchange risk, interest rate risk and other price risks), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group can utilize financial derivativesto reduce certain risk exposures. The Group’s financial risk management is described further in note 15 to the accounts.

NSB borrows money in the markets and currencies that offer the most favourable terms overall. Borrowings in foreign currencies are converted to Norwegian kroner through currency swap agreements. NSB aims to minimise currency exchange risk in its financial management. NSB has some exposure to currency exchange risk in its daily operations related to cash and cash equivalents in connection with operations abroad, but otherwise the Group has little exposure to currency exchange risk as most of its income and expenses are in NOK. In the case of agreements entailing a considerable outlay in foreign currency, the currency exchange risk is covered almost entirely for the term of the agreement. As a consequence of the railway reform, NSB’s bond debt has been settled, but the principles above will be applied in the case of future funding.

Surplus liquidity is invested in bank accounts, short-term Norwegian bonds and certificates, as well as in bond and money market funds. Changes in interest rates may affect the value of the investments in interest-bearing securities, but these are normally held until maturity. Limits to credit exposure within certain sectors and institutions are established on the basis of credit assessments.

Current guidelines state that funding needs during the next twelve months must be covered by means of excess liquidity and committed credit facilities. The Group aims to have free liquidity of at least NOK 500 million.

NSB will continue to focus on counterparty risk in financial transactions and has established a framework for exposure and regular follow-up of credit quality on individual counterparties. A minimum A- rating from Standard & Poor's (or equivalent from another recognized rating agency) is required for the conclusion of agreements relating to financial derivatives.

Operational risk Operational risks are analysed systematically, for example for traffic safety and the achievement of financial targets. An overall risk analysis is prepared for the Group in connection with the annual planning and budgeting process, and both potential negative and positive effects are identified and actions introduced to manage the risk level. The analysis comprises both assessments of the competitive and market situation, the consequences of environmental requirements, climate change and changes in the regulatory framework. Based on the risk analyses, measures and control activities have been established which reduce identified risks, including automatic controls, audits and follow-up, and extended analyses of specific risk areas.

The NSB Group and corporate social responsibility The Board of Directors is committed to ensuring that the company maintains corporate social responsibility, and guidelines have been adopted for exercising this. The Group's biggest contribution to society is to make sure that the transport challenges of society are conducted in an efficient, accessible, safe and environmentally friendly manner.

7 NSB GROUP ANNUAL REPORT 2017

The NSB Group's new strategy for the green and safe journey will be the guide for how the company works with corporate social responsibility. The goal of the green journey is that we are better than the competitors on sustainability, and this will be measured through climate and reputation assessments. Important measures are to reduce the Group's emission of green house gases, and use of quality standards and certification as a basis for our environmental work.

The goal of the safe journey is that we shall be the industry leader in traffic safety and HSE, and goal achievement must be assessed on absence due to illness, work injuries which lead to absence and employee satisfaction. Key areas of action are safe transportation for people and goods, a safe journey that is predictable on time and quality, with safe handling of personal data and a safe workplace for our employees.

The NSB Group reports on the status of managing corporate social responsibility to the owner in the annual report as specified in the Articles of Association § 10, and in accordance with Accounting Act § 3-3 a and c and GRI4 CORE. The CSR report is an integral part of the NSB Group's annual report and include a statement on strategies, plans and status of working environment and absence, security, gender equality / discrimination, impact on the environment and corruption.

Future prospects The market for passenger and freight transport is facing major changes over the next few years. Customers make new demands for smart and environmentally friendly solutions, and new technology makes it possible. To succeed in the future, the NSB Group must respond to the customer's growing expectations. To improve coordination of the Group’s total resources, we will combine the resources that currently work with innovation and business development to develop and offer seamless transport to the customers. The NSB Group will focus on new technology, green solutions, and an offer to the customer that is flexible and tailored to the customer's needs. The goal is to offer the customer the best journey from door to door.

In the short term, the NSB Group has to adapt to a new market situation where all passenger routes in Norway are to be put out to tender. Therefore, a change program is being implemented that will contribute to a strong and viable NSB Group with a lower cost base and thereby more competitive power. In order to ensure that the Group wins the future tenders, the Kompass improvement program is implemented. The freight train operations is implementing the Flyt improvement program to improve and digitize work processes, thereby improving competitiveness.

The board is concerned about the low punctuality of passenger traffic, a development that deterio- rated in the second half of 2017. NSB is committed to reducing operational deviations that NSB itself may influence and is committed to closer cooperation with BaneNOR on measures to reduce operating deviations due to infrastructure failures.

The passenger train operations is negotiating a new public purchase agreement with the State to run passenger services until these are put out to tender. In 2018 the production will be at the same level as in 2017, but with improvements on the Vestfold line where the opening of the Eidanger line will provide a better offer to the Grenland region with travel time savings to Porsgunn and Skien of 20-25 minutes. New trains will gradually be phased in on Gjøvikbanen and then Vossebanen. For 2018 the total capacity increase will be just over 3%.

The bus operations continues its efforts to improve the framework conditions in the industry, including working for a better environment, increased road safety and customer-friendly solutions. There are especially three factors that will be important in the future; An offensive focus on public transport solutions that ensures good accessibility for the bus, developing a tender regime that ensures adequate margins to maintain and develop customer-oriented offers, as well as ensuring good and efficient operation in all parts of the business.

8 REPORT OF THE BOARD OF DIRECTORS

The bus operations have an ambition to strengthen market share in Norway and increase this significantly in Sweden. By 2018, there will be several tenders related to existing production. This applies to Romerike in the Ruter area and Gjøvik, in addition, tenders comprising more than 700 buses related to lines we do not operate today. In Sweden, tenders of about 1,000 buses will be put out annually for the next 3 years.

The competitive situation for rail freight is very demanding. Continued strong competition is expected from both road and other railway companies. The introduction of track access fees have further reduced the competitiveness compared to road transport. In the freight operations, efforts are being made to reduce the negative effects of the introduction of these fees, and to reinforce the efficiency measures in order to adapt the business to current market conditions. However, in order to ensure economically sustainable freight transport by rail, it is necessary to reverse the negative development in competitiveness for rail transport.

2017 has been characterized by the restructuring of the group, and the establishment and implementation of a new strategy. At the same time, the Group's businesses have managed to maintain good and profitable daily operations, and employee satisfaction has increased. The NSB Group still has good results in external reputation surveys and measurements of customer satisfaction. The Board thanks all employees for good efforts this year and looks forward to a joint effort for the further development of the new NSB Group.

Oslo, 9th of February 2018

Dag Mejdell / Chairman of the Board

Bjarne Borgersen Wenche Teigland Åsne Havnelid

Kjerstin Fyllingen Ove Sindre Lund Rolf Juul Ringdal

Jan Audun Strand Geir Isaksen / CEO

9 NSB GROUP ANNUAL REPORT 2017

Corporate social responsibility report 2017

1. Strategy and goals

2. Our priorities

3. Satisfied customers

4. Satisfied and safe employees

5. The safe journey

6. We take the environment seriously

7. Responsible procurement

8. Our results

9 Principles and reporting standards

10 CORPORATESAMFUNNSREGNSKAP SOCIAL RESPONSIBILITY REPORT

1. Strategy and goals

In 2017, we worked on defining a new sustainability strategy - the green journey - with the clear goal that the NSB Group should be better than its competitors to take responsibility for sustainability. The strategy will ensure that we prioritize areas where we can make a significant contribution to society through our business, and through focused efforts contribute to meeting the UN's sustainability goals.

We shall:

// Strengthen the Group's sustainability and improve climate contribution through long-term measures, including developing sustainable tourism destinations

// Achieve common systematics and quality approach as a basis for environmental work, including ISO 14001 certification of all entities in the Group

// Build a clearer green profile in our communication and marketing so that the group is identified as a leading player in sustainability and the environment

The key performance indicators for this work shall measure the sustainability performance in our daily operations and our contribution to society, such as reducing climate change.

2. Our priorities

The Annual Report including the CSR report for 2017 describe the issues that the NSB Group has identified through stakeholder and materiality analyzes, as the most closely related to our corporate social responsibility, including:

// Help to achieve the goal that transport growth shall be met by public transport

// Ensure reliable transport

// Eliminate injuries and deaths

// Take responsibility for deliveries to customers and clients

// Reduce energy and resource consumption

// Ensure that the Group has committed employees

// Ensure employee health, safety and the environment

3. Satisfied customers

Reputation In Ipsos MMI's annual profile survey, "Large Norwegian companies", NSB is among the best on corporate social responsibility and the environment. While overall impression of NSB in the survey decreased from 18th to 22nd place, NSB gets a good character from the Norwegian people on environmental awareness and social responsibility.

11 11 NSB GROUP ANNUAL REPORT 2017

Within environmental awareness, NSB achieved a strong second place in this year's survey, only beaten by Norsk Gjenvinning, with Tine in third place. This is the same order as in 2016. In the area of social responsibility, NSB took 7th place (No. 5 last year).

Customer satisfaction In the NSB Group, we are committed to customer satisfaction and set goals for this. The measurement is used to give us feedback on the areas we need to improve.

New customer satisfaction top score

CUSTOMER SATISFACTION

75 75 74 73 71

70 69 68 68

65 63

55 2010 2011 2012 2013 2014 2015 2016 2017

In 2017, the passenger train operations has achieved the highest score in customer satisfaction that we have measured until now.

The main features of the customer satisfaction survey in the autumn of 2017 are:

// The customers are more satisfied with the purchase of the tickets than before and NSB's mobile app is one of the highest-performing sales channels

// Better handling of bus for trains than ever measured, and positive development for the ticket purchase process

// Significantly lower experienced punctuality and poorer assessment of deviation information than last measurement

// The experience of information on the train, boarding, cabin comfort and on board staff stays high

Customer satisfaction for NSB Gjøvikbanen is relatively stable, and customers are mainly satisfied with the delivery. Satisfaction was 73 points, a decline of one point from 2016.

The customer satisfaction for our express buses is high and ended at 78 in 2017, one point decline from last year.

Volume development The positive volume development for passenger train operations in Norway continues and the growth in the number of journeys this year was 6.3%.

12 CORPORATE SOCIAL RESPONSIBILITY REPORT

The increase was highest in commuter and local traffic in the eastern region, but there was also a good development on Flåmsbanen, which has a high proportion of tourist traffic. There was a decline in long regional trains, and in Sweden due to change in the no. of tenders in operation.

NO. OF TRAVELS (MILL.) 2015 2016 2017

140

120

100 121.7 118.8

80 109.6

60 70.1 67.1 67.4 40

0 Passenger train Bus

In bus operations, the number of travels increased from 118.8 million to 121.7 million. The number of journeys in Norway and Sweden in 2017 was 85.8 (84.2) and 35.9 (34.6) million respectively, a growth of 1.9% and 3.8%. The change is mainly due to changes in the no. of tenders operated.

The freight (numbers of TEU) was reduced by 3.6% in 2017. The main reason is increased competition both on rail and from freight transport by road. However, the net ton kilometres increased due to increased activity within the system train segment.

Quality of delivery In the passenger train operations, punctuality is continuously measured and the measurements are divided into operator-dependent and total punctuality. Operator-dependent punctuality (where only delays due to NSB are calculated) is 98% for the year, which is on par with last year. The total punctuality of NSB's passenger trains ended at 88.4%, which is still significantly below the target. Punctuality statistics provide a good basis for dialogue between rail operators and BaneNOR (the state-owned railway infrastructure manager) to improve the overall punctuality of passenger traffic on rail.

The number of delay hours (total hours of passenger traffic delayed in 2017) ended 26 279, a decrease of 4% from last year. The share that has a direct cause in NSB is 17%, the same as last year.

NSB Gjøvikbanen AS had an average punctuality of 89 % in 2017, compared with 90% in 2016. Our passenger train operations in Sweden achieved a punctuality of 88.5%, against 86.3% in 2016.

Challenges related to the infrastructure have increased slightly in 2017. Several railway lines were closed for shorter or longer periods due to flood, landslide and storms. This resulted in the cancellation of 103 freight trains, an increase from 50 in 2016. The punctuality for freight trains exceeded the target of 90%, ending at 95% (94%) within 15 minutes delivered at the terminal.

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4. Satisfied and safe employees

Number of employees and man years At the end of the year, the NSB Group has 10 858 employees, of whom 2 124 are temporary employees and 2 583 working part-time. The largest share of part-time and temporary employees is in bus operations. The number of man years is 8 964. Of the Group's employees, 1 679 work in Sweden.

The number of employees is reduced as parts of our business due to the railway reform has been demerged from the NSB Group. In addition, the restructuring process in the passenger service business will have consequences for the future numbers of employees.

EMPLOYEE SATISFACTION 2015 2016 2017

80 80 79 75 79

70 71 71

65 69

60 Satisfaction Loyalty

Employee satisfaction In our employee satisfaction survey we measure two key indicators, "Work Happiness", summarizing how our employees experience the key factors that affect work efficiency, and "Loyalty", which provide an indication of the final intentions of our employees.

For the Group as a whole, we achieved an increase to 71 points for work satisfaction in 2017, a growth of 2 points from 2016. For loyalty the result is 80, an increase of 1 point from last year. There are no significant differences between the sexes. The job satisfaction seems to increase somewhat in line with age. Leaders have a higher level of work satisfaction and loyalty than employees.

The Group has a well established work process related to the employee satisfaction survey. Adequate tools have been established for identifying and following improvement measures, and feedback meetings are made for managers and employees, as well as own reviews in local and central working environment committees. This work is carried out both at unit level and at individual level in connection with employee interviews.

Sick leave and LTI Customer safety starts with safe employees. We can only create the best journey, if the employees experience a safe and evolving workplace, and are motivated to help realize the Group's vision and goals.

Sick leave for the NSB group is higher compared to last year due to an increase in NSB AS, NSB Gjøvikbanen and Nettbuss. Also, LTI (lost time injuries) is higher than last year, mainly due to an increase in NSB AS and CargoNet. Within Nettbuss, LTI is significantly higher in Team Verksted than in the rest of the company.

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SICK LEAVE RATIO 2017 2016

NSB AS 7.3 6.9 Gjøvikbanen AS 7.6 7.4 TKAB 3.0 3.5 CargoNet AS 6.0 6.5 Nettbuss AS 8.5 8.3 NSB Trafikkservice AS 11.4 11.5 Total 7.9 7.7

To ensure satisfied and safe colleagues, we will implement the following strategic initiatives:

// Increase the Group's follow-up of HSE internally and vis-à-vis suppliers, and reduce the number of employee injuries

// Increase the Group's follow-up of sick leave, with emphasis on competence transfer and joint efforts to reduce absence rate due to sickness

LTI 2017 2016

NSB AS 7.1 2.9 Gjøvikbanen AS 0.0 5.9 CargoNet AS 12.4 12.4 Nettbuss AS 3.0 3.4 Total 4.7 3.8

Equality The proportion of women in the NSB Group is 18%. The proportion of women in the Group's units varies between 9 and 50%. In the NSB Group's Board, the proportion of women among the shareholders-elected is 60%, in the Group Management 38%, while in the business area's top management teams the proportion ranges from 11% to 43 %. There are female top managers in the Tourism business area and in the subsidiaries NSB Trafikkservice AS and Finse Forsikring AS.

PROPORTION OF FEMALE EMPLOYEES (%) 2015 2016 2017

30 %

20 % 24 24 19 18 17 10 % 17

0 % Total Managers

The proportion of women in management positions is 24 %, which is higher than the proportion of women among employees. Women's average wage varies between businesses, from 88 to 104 % of the average wage for men. The main reason can be attributed to position and seniority. Average working hours for women are marginally lower than men.

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Human rights, labour rights and anti-corruption work In the NSB Group we have established ethical guidelines and guidelines for corporate social responsibility such as human rights, labour rights and anti-corruption efforts. The work on gender equality and equality is described in the Group's personnel policy:

// All NSB Group employees are equal, regardless of gender, age, disability, sexual orientation or religious, ethnic and cultural background.

// We want a wide and diverse range of executives and employees, where individual qualities must be respected and appreciated.

// Increased balance between women and men is desirable at all levels in the Group, and should be emphasized through recruitment and development

Our business operations are in Norway and Sweden. Here, the handling of human rights and labour rights is well taken care of through the venues where the employees and the company's management meet to discuss such conditions, and our employees have rights that are well defined through collective agreements. The employees are represented in the company's board, and working environment committees have been established which regularly holds meetings. In 2017, the NSB Group continued its work on internal control, including risk analysis for fraud / corruption. As part of this, we conducted a test of compliance with our ethical guidelines, as well as the quality of our accounting systems, and their ability to prevent mistakes and fraud. At the same time, a relationship analysis has been conducted to ensure that managers and close relations do not handle financial transactions where they have ownership or controlling interests.

Based on data collection from our systems, external advisors have analysed the status and recommended improvements in our systems, routines and practices. During this work no serious errors and / or incidents related to fraud / corruption have been found, but the analyses have provided the basis for measures to improve data and internal processes. Nor are we aware of criminal cases initiated against our companies or employees regarding corruption. The management groups and boards of the NSB Group were informed during the year of status and development in separate internal control reviews.

In the passenger and freight train operations, ethical guidelines are part of the employment contract for new employees. In bus operations ethical guidelines are available in the Operator's Manual (intranet), personnel manual and mentioned / linked in the driver's manuals. Anti- corruption training was given to key personnel in all businesses as part of this year's internal control project, and the freight operations has introduced e-learning related to our ethical guidelines. We have created a notification channel in accordance with requirements of the Working Environment Act. One notice of discriminatory behaviour has been received in 2017, which has been handled in accordance with adopted procedures.

Proportion of immigrants The proportion of immigrants in the NSB Group is 17.4%, an increase from 16% last year for comparable activities. The largest immigrant share is within the train cleaning services at 39% and bus at 25%, while the proportion in the passenger and freight train operations is respectively 6.5 and 3.2%. The proportion is relatively stable in all the Group's businesses, but with a growth in bus operations.

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PROPORTION OF IMMIGRANTS (%)

20 %

15 % 17 16 10 % 15

5 %

0 % 2015 2016 2017

5. The safe journey

Preparing our new strategy, we have set the goal for 2020 that the NSB Group is to be the Nordic industry leader in safety and HSE. The following three areas have priority:

// Road safety: Safe transportation for people and goods

// Safe customers: Customers will experience safe travel, predictable on time and quality, and with safe handling of personal data

// Satisfied and safe colleagues: Our employees must have a safe workplace, which is developing and motivating for the employees

Traffic Safety Traffic safety is central to the culture of the NSB Group, and employees have high competence and pride in safety work. In all the Group's businesses we work to further reduce the number of incidents and dangerous situations.The goal is to reduce the number of unwanted traffic events and dangerous situations so that we avoid injuries and deaths related to our operations.

Traffic safety - injuries and fatalities No passengers died due to the NSB group's transport activity in 2017. One third party died in a bus collision, and one employee for hire and three employees in the bus business were killed due to accidents at work. In the passenger rail operations, 3 external persons were killed in level crossing accidents. In the freight operations, 2 external persons died in level crossing accidents.

INJURIES AND FATALITIES 2015 2016 2017

25 21 20

15 12

10 6 7 6 5 3 4 4 2 1 0 1 0 Fatalities - Fatalities - Serious injuries - Serious injuries - employees external employees external

Traffic safety related to rail

17 NSB GROUP ANNUAL REPORT 2017

For the NSB group, 22 events have been defined as railway accidents in accordance with regulations. The number of railway accidents increased from 2016, mainly due to more accidents involving injuries. The number of incidents due to passenger rail activity has increased compared to 2016. The cases are followed up by established procedures and internal investigations are implemented as required.The causes for many of these incidents are outside 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, both internally and in collaboration with others.Our traffic safety record overall is rated as satisfactory and target achievement is considered acceptable. NSB’s operations are conducted in compliance with external and internal requirements as assessed by management follow-up.

Traffic safety in bus operations The NSB Group’s bus operations transport large numbers of passengers daily and take great responsibility for ensuring that everyone arrives safely while no other road users are harmed in any way. As part of its road safety activities, the bus operations in their entirety hold accreditation to ISO 39001 (traffic safety). Efforts to reduce injuries and accidents have continued in 2017. The increase in the number of accidents unfortunately correlates poorly with the increased work on road safety in the bus operations.

Collisions with animals In 2017 1,351 collisions with animals on Norwegian railways killed a total of 2,144 animals, 5% more than in 2016, and almost 10% higher than the average in the last 10 years. The largest number is elk and reindeer, and the most vulnerable route is Nordlandsbanen.

BaneNOR, in its role as infrastructure manager, coordinates preventive measures to reduce collision with animals, and has developed an action plan to reduce these, such as vegetation eradication, fencing, warning systems and speed reduction. The train companies, including NSB, are responsible for notifying the infrastructure manager after collisions.

6. We take the environment seriously

Under the Paris agreement, Norway shall reduce greenhouse gas emissions by 40 percent by 2030 compared with 1990 levels. The transport sector is the largest source of greenhouse gas emissions in Norway and must carry a significant part of emissions reductions in the years to come. The NSB Group also has to deliver on society's change to climate-friendly transport. This will be a requirement from public sector clients, while at the same time consumers, especially young people, increasingly focus on green solutions when making their choices. The NSB Group will take a clear position in order to build a competitive edge towards customers and clients, and has decided that sustainability is a strategic focus area for the Group.

Energy consumption Energy efficient passenger trains From 2013 to 2017, the NSB passenger train operations had set the goal of reducing electric power consumption by 15%. The result is a decrease of 8.3% measured in energy consumption per ton kilometre. The target was ambitious and some of the energy efficiency projects are delayed due to the railway reform. In addition, a large proportion of the flow meters on the new Flirt trains have been out of order. The tariff used to calculate power consumption is on average higher than actual consumption. The higher tariff leads to higher invoiced energy consumption.

Energy consumption in freight operations By 2017, energy consumption per ton kilometre is reduced by 3.3%. Consumption is largely

18 CORPORATE SOCIAL RESPONSIBILITY REPORT

influenced by the lines that are operated and the mix between diesel and electrical operation. The main measures in 2017 are training in energy-efficient driving, improvement to locomotives, and data capture and presentation of target achievement for reduced energy consumption.

Freight rail transport represents a significantly less strain on the environment than road transport. The business relieves the roads for a significant number of trailers, thus helping to reduce emissions, accidents and queues. In 2017, the NSB Group's freight operations relieved the roads for approx. 177,000 trailer journeys. This represents about 700 trailers per day.

Energy consumption in the bus operations The use of fleet management systems, which includes fuel consumption, idle driving and driving behavior, has led to reduced fuel consumption and thus emissions to the outside environment. The use of alternative fuels such as natural gas, biogas and biodiesel has been significantly expanded in recent years, as are the use of hybrid buses. The proportion of the operations driven by buses using HVO / biodiesel or gas is 46%.

PROPORTION OF BUSKM. RUN BY RENEWABLE ENERGY (%)

50 %

40 % 46 46

30 % 35

20 %

10 %

0 % 2015 2016 2017

Greenhouse gas emissions For trains, NSB purchases power with certificates of origin. By purchasing these certificates of origin, NSB is helping to support producers of renewable energy. In its annual environmental audits, NSB worked on the basis of zero emissions from electric trains due to the purchase of these certificates of origin. In 2014, a change was made to a new, recommended standard for calculation and comparison of energy consumption and gas emissions for transport services. The basis for calculating our emissions from power consumption is now the Nordic electricity mix, and “well to wheel” calculations for emissions from diesel consumption.

EMISSIONS 2015 2016 2017

250,000 209,438

200,000 167,057 155,068 150,000

100,000 74,626 64,771 65,425 37,186 34,558 50,000 31,808

0 Passenger train Bus tonnes CO2 Freight train tonnes CO2 tonnes CO2

19 NSB GROUP ANNUAL REPORT 2017

Emissions of greenhouse gas from NSB's operations have been significantly reduced in recent years. The main reason is a significant transition to renewable energy in bus operations, and that the Nordic electricity mix has become "cleaner" in recent years, with a larger proportion of electricity produced with renewable energy. From 2015 to 2017, emissions have decreased by 67,827 tonnes of CO2 equivalents, or 21%.

Waste Due to organizational changes because of the railway reform, it has been challenging to get an overview of the total volume and recycling rate for waste in 2017, and especially for passenger operations. The bus operations has recorded a waste volume of 919 tonnes with a recycling rate of 75%. Corresponding figures for freight operations are 852 tonnes with a recycling rate of 92%. A complete report for 2018 is planned.

7. Responsible procurement

In the NSB Group, we are concerned that we are a responsible buyer, which specifies both quality, environment, and human rights and employee rights in our procurement.

The NSB Group buys goods and services and fixed assets for around NOK 7.5 billion a year from more than 6,000 suppliers. Of these, about 6% are registered outside Norway. Efforts to ensure compliance with social and ethical requirements in the value chain is therefore an important part of the group's work with social responsibility. The purchasing function is set up to ensure that the NSB Group collectively uses its purchasing power to achieve optimal purchasing conditions and that the agreements / contracts NSB engages with externally ensures NSB's interests in a satisfactory manner. We further develop our governing documents related to the Group's procurement, and continuously pursue further training of our employees in this area. The NSB Group is a member of the Ethical Trade Initiative (IEH), which aims to promote responsible supply chains.

A minimum standard has been established through the Group's "Ethical Guidelines for Suppliers", which provide a basis for all acquisitions and resulting contracts. These confirm, among other things, that suppliers should safeguard basic labour and human rights in their operations.

Procurement Risk analysis is performed annually based on the Group's and business areas purchasing plans. The risk analysis includes both environmental, social and ethical requirements as well as procurement that affect road safety. By 2017, the following procurement areas were defined as being at risk for violation of ethical and social requirements:

// Cleaning services

// Train maintenance services

Measures were taken in these procurements, and among other things, no more than 2 levels of subcontractors in the supply chain is accepted to avoid social dumping. There have also been introduced stricter requirements related to reporting these conditions during the contract period. Moreover, audits were implemented in the procurement of cleaning services.

20 CORPORATE SOCIAL RESPONSIBILITY REPORT

Existing contracts and suppliers Work to follow up social and ethical requirements is also done regarding existing contracts. In total, the group has more than 600 ongoing contracts registered in the contract system. This represents the suppliers with deliveries over NOK 200,000, - where the rule is that a written contract must be entered into. An analysis was made in 2017 in view of the risk of violations of social and ethical requirements. The analysis resulted in a list of the following risk areas;

// IT operating services

// Train maintenance services abroad

// Spare parts special production

// Bus and taxi services

// Cleaning Services

// Signage and marking of rolling stock

// Night Comfort Packs

// Office supplies, gift and profile items, office furniture and fruit baskets

// Hotel Accommodation

// Clothing and uniforms

Suppliers with deliveries within risk areas are given special attention. Based on identified risk, measures are determined based on nature and severity of the risk. In 2017, audits were carried out regarding

// Production and distribution of uniforms

// Night Comfort Packs

There were no significant violations of ethical and social requirements in 2017.

21 NSB GROUP ANNUAL REPORT 2017

8. Our results

2017 2016 2015

Passenger train journeys (mill.) 70.1 67.4 67.1

Bus journeys (mill.) 121.7 118.8 109.6 Transported TEU (1 000) 355 368 373 Punctuality - passenger train (Norway) 88.4 % 88.3 % 88.6 % Punctualityt - freight tain 95.1 % 93.6 % 91.9 % Customer satisfaction - passenger train (index 0-100) 75 73 73 Customer satisfaction - expressbus (index 0-100) 78 79 80

Energy consumption - passenger train Norway - electricity (MWh) 376,761 364,441 344,453 Energy consumption passenger train - diesel (mill.litre) 8.8 8.9 8.7 Energy consumption bus - diesel (mill.litre) 32.2 31.2 49.0 Energy consumption bus - biodiesel (mill.litre) 4.0 9.9 16.0 Energy consumption bus - HVO (mill.litre) 16.1 11.2 Energy consumtion- bus (gass mill.m3) 8.1 7.2 8.3 Energy consumption freight train - electricity (MWh) 125,199 101,631 105,613 Energy consumption freight train - diesel (mill.litre) 5.7 6.6 7.2 Energy consumption passenger train - (kWh/seatkm.) 0.0406 0.0402 0.0385 Energyconsumption bus - (litre/buskm.) 0.34 0.34 0.41 Energy consumption freight train - (kWh/tonnekm) 0.045 0.047 0.045

Emissions passenger train (Norway) - tonnes CO2 65,425 64,771 74,626 Emissions bus - tonnes CO₂ 155,068 167,057 209,438 Emissions freight train - tonnes CO₂ 34,558 31,808 37,816

Waste (tonnes) n.a. 5,131 5,096 Recycling rate n.a. 53 % 45 %

Fatalities - employees 3 0 1 Fatalities - external 7 4 6 Serious injuries - employes 1 4 2 Serious injuries - external 12 6 21 Railway accidents 22 15 15

Employees 10,858 12,578 12,668 Man years 8,964 10,488 10,439 Employee satisfaction 71 69 71 Sick leave ratio 7.9 % 7.7 % 7.9 %

Proportion of women 18 % 17 % 17 % Proportion of female managers 24 % 24 % 19 % Proportion of immigrants 17 % 16 % 15 % Notices on discriminatory behaviour 1 1 0

22 CORPORATE SOCIAL RESPONSIBILITY REPORT

9. Principles and reporting standards

As part of our group policy, NSB has established corporate recommendations for corporate social responsibility as well as ethical guidelines. These are incorporated in the NSB Group’s management system. We must follow these basic principles regarding corporate social responsibility:

// Every business manager is responsible for ensuring that their entity safeguards corporate social responsibility as an integral part of running their operations

// Corporate social responsibility must be incorporated in our strategic foundation and values

// We support the principles stated in the UN’s Declaration of Human Rights and the ILO’s Core Conventions

// We are active in preventing all forms of corruption

// We must actively contribute to the reduction of the transport sector’s environmental impact

// We publish the status and development of corporate social responsibility in our corporate social responsibility report each year

We apply the precautionary principle in our management of corporate social responsibility. This is achieved through application of risk analyses as a basis for business management and implementation of measures to reduce risk. In order to ensure a satisfactory approach to the Group's corporate social responsibility, we have conducted stakeholder and materiality analyses to identify and prioritize the areas we are going to work with. We have sorted our stakeholders into the following groupings:

// Owner

// National and local authorities

// Suppliers and other partners

// Customers

// Employees and employee organizations

// Interest groups and communities

For each of these, an overview of the type of dialogue, the number of meetings, and an aspect (theme) list has been recorded. The aspect list shows the most important topics that the business and stakeholders have been interested in.

Rail reform and reorganization have changed our surroundings, and these changes are also reflected in the updated materiality analysis for this year. While we have previously considered safety as a hygiene factor because the security system is thoroughly implemented in the organization, customer safety is now promised as our foremost priority. In addition, the materiality analysis shows that reliability and public transport growth is NSB’s most significant contribution to society:

23 NSB GROUP ANNUAL REPORT 2017 High

• Eliminate customer injuries/ fatalities • Reliable transport • Meet transport growth by public transport

• Reduce energy consumption • Reduce waste and use of chemicals • Reduce local emissions(NOx) • Take responsibility for • Transfer freight from road delivieries to customers • Demonstrate good ethics to rail in customer and supplier and clients • Development and innovation contact • Door to door transport • More cost efficient public transport

• Strong return on capital How important is the aspect for external stakeholders? external How important is the aspect for • Diversity in the transport • Ensure human rights in the • Reduce emissions sector supply chain (employees) • Committed employees • Work against corruption in • Nordic volume growth • Employee health, safety and the transport sector • High information security sustainability • Efficient procurement Medium

Medium How important is the aspect for the NSB Group future survival? High

Based on strategic analyses and stakeholder and materiality analyses, we have prioritized the areas we will focus on in the Group's work on corporate social responsibility.

The NSB Group has been reporting on environmental and corporate social responsibility since the early 2000s. The report and its emphasis have evolved on the basis of materiality assessments related to the challenges facing the company and the expectations of stakeholders. Like other major enterprises, the NSB Group reports on corporate social responsibility in accordance with the Norwegian Accounting Act, Section 3-3, paragraphs (a) and (c). The report is also based on the requirements of GRI4 Core (Global Reporting Initiative G4, a voluntary standard for reporting corporate social responsibility).

The NSB Group’s auditor has commented in the auditor’s report on the information in the corporate social responsibility report and is of the opinion that the corporate social responsibility report is consistent with the financial statements and compliant with the law and regulations.

24 25 NSB GROUP ANNUAL REPORT 2017

Corporate governance

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.

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 environment- friendly 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 part-owned 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.

26 CORPORATE GOVERNANCE

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.

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.

27 NSB GROUP ANNUAL REPORT 2017

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.n 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.

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.

28 CORPORATE GOVERNANCE

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.

Accounts 2017

NSB Group NSB AS

4 6 48 29 40 141 712 -40 168 -36 780 -60 555 638 685 696 696 696 2016 -130 -699 1,261 1,267 1,267 1,267 6,341 6,341 6,881 6,881 14,571 14,002 - 4 -1 -4 24 28 43 20 -47 157 634 772 773 152 524 634 520 520 634 634 655 630 2017 -138 -135 -163 7,674 7,674 6,084 6,084 14,990 14,413 2 6 11 31 10 24 24 23 22 22 28 29 30 30 Notes 2

Items that may be reclassified in net income in future periods Items that may translation differences Currency Total comprehensive income for the year comprehensive Total Attributable to Attributable interest Non-controlling Shareholders equity Total comprehensive income for the year comprehensive Total Tax on items that will not be reclassified on items Tax Actuarial gain/loss Actuarial Items that will not be reclassified to profit or loss Items that will not be reclassified to profit Attributable to Attributable interest Non-controlling Shareholders equity INCOME COMPREHENSIVE OTHER year for the Profit PROFIT FOR THE YEAR FOR PROFIT TOTAL PROFIT FOR THE YEAR FOR CONTINUING OPERATIONS THE YEAR FOR FOR PROFIT Discontinued operations operations discontinued year from tax for the after Profit Profit before income tax before income Profit expense Income tax Net financial items Change in unrealised fair value Net financial expenses - pensions expenses Net financial Financial expenses Operating profit Financial items Financial income Share of loss(-)/profit in associates Share of loss(-)/profit Total operating expenses Total ventures of joint Share of loss(-)/profit Other operating expenses Depreciation and impairment Payroll and related expenses and related Payroll

Operating revenue Income statement Income

Accounts 2017 NSB Group Accounts 2017 NSB Group - -1 27 72 34 50 117 811 139 310 273 732 700 835 8,311 8,311 1,247 3,517 3,517 5,144 2,145 2,318 2,875 3,782 3,782 2,647 3,601 3,601 3,543 3,543 8,240 8,240 9,934 9,934 13,845 13,845 25,183 25,183 15,430 15,430 28,966 28,966 28,966 28,966 31.12.16 31.12.16 1 - - - - - 2 47 42 90 -16 341 124 126 285 892 802 1,315 7,907 7,907 3,142 3,142 1,882 2,276 3,528 3,528 3,453 3,453 3,085 3,085 4,985 2,653 3,686 3,686 2,996 2,090 11,434 11,434 31.12.17 31.12.17 CEO Geir Isaksen 7 2 2 8 11 17 21 21 12 19 16 10 16 24 22 22 25 22 20 26 Ove Sindre Lund Ove Wenche Teigland Wenche 9,14 Notes Notes 3 of Februar 2018 of Februar th Kjerstin Fyllingen Bjarne Borgersen Jan Audun Strand Jan Audun Oslo, 9 Oslo, Dag Mejdell Åsne Havnelid Åsne Rolf Juul Ringdal

Chairman of the Board

Total short term liabilities Total TOTAL EQUITY AND LIABILITIES EQUITY TOTAL Short term liabilities directly associated with the assets held for distribution with the assets liabilities directly associated Short term Derivative financial instruments Derivative Debt Tax payable Tax Total long term liabilities Total and other payables Trade Provisions for other liabilities and charges Provisions Retirement benefit obligations Deferred income tax liabilities income tax Deferred Restricted equity - revalued investment property investment - revalued equity Restricted Retained earnings Retained Non-controlling interest Non-controlling Total equity Total Debt TOTAL ASSETS TOTAL Total current assets current Total AND LIABILITIES EQUITY Ordinary shares and share premium Assets held for distribution Assets Cash and bank deposits Financial assets Derivative financial assets Derivative Trade and other receivables and other Trade Inventories Financial assets in joint ventures Investment Total non-current assets non-current Total Investments in associates in Investments Property, plant and equipment Property, Deferred Tax Assets Tax Deferred

ASSETS assets Intangible Statement of financial position of financial Statement 5 - - - -58 -71 141 -12 -12 804 298 137 -40 103 746 746 758 230 230 886 -153 -171 -179 2016 -133 -783 -276 -985 -595 1,497 1,497 1,314 1,055 1,602 1,503 2,698 -1,958 -1,471 -1,016 -2,249 ------1 -7 18 10 45 63 -16 -24 -28 772 772 129 -59 -20 -50 572 655 2017 -148 -274 -274 -708 -195 -790 -205 1,314 2,979 2,979 2,090 -2,079 -2,222 -2,086 8 2 31 19 19 10 24 28 35 20 30 30 26 8, 9 10, 11 10, Notes 4

Net cash flows related to the Group`s discontinued operations Net cash flows related to the Group`s operating activities in discontinued operations Net cash flow from Cash and bank deposits for continuing operations in 2016 amounted to 1,247 MNOK. to for continuing operations in 2016 amounted Cash and bank deposits Net cash flow from investing activities in discontinued operations investing Net cash flow from financing activities in discontinued operations Net cash flow from Foreign exchange gain/loss on cash and bank deposits gain/loss on exchange Foreign OF THE YEAR THE END AT AS DEPOSITS AND BANK CASH Demerger effect as of 1 st of January Demerger Net cash flow from financial activities Net cash flow from Dividends paid to non-controlling interests non-controlling Dividends paid to THE YEAR FOR DEPOSITS AND BANK IN CASH CHANGE NET as at the beginning of the year Cash and bank deposits Net cash flow from investment activities investment Net cash flow from borrowings from Proceeds of borrowings Repayment shareholders company's Dividends paid to Dividends received Proceeds from sale of assets from Proceeds Grants Changes in financial non-current assets Changes in financial non-current property Purchase of PPE and investment Loans paid to/from single purpose/joint ventures Loans paid to/from Proceeds from sale of property from Proceeds Change in working capital Change in working Net cash flow from operating activities Net cash flow from less cash acquired of subsidiaries, Acquisition Taxes paid Taxes Shares of profit/loss (-) from associated and joint ventures and joint associated (-) from Shares of profit/loss Interest items Interest Change in unrealised fair value Change in unrealised fair Change in provisions for other liabilities and charges Change in provisions Difference between exp. and paym. made/receiv. for pensions made/receiv. and paym. exp. Difference between Gain/loss on sale of property, plant and equipment (PPE) plant and Gain/loss on sale of property, Depreciation and impairment Profit for the period before income tax expense tax for the period before income Profit

Profit before income tax from continuing operations tax from before income Profit discontinued operations tax from before income Profit Cash flow statement flow Cash

Accounts 2017 NSB Group Accounts 2017 NSB Group - -2 -3 -9 -17 634 -115 Total Total -571 -595 1,267 9,838 9,838 9,934 9,934 9,934 9,934 4,985 -5,442 - - - - 4 3 6 -1 -1 -1 -8 -4 -9 -6 -16 Non- Non- contr. contr. contr. contr. interest interest - 2 -3 10 -17 630 848 -126 -525 -595 2,142 1,297 1,297 2,142 2,405 -1,332 earnings earnings Retained Retained Retained Retained ------2 2 20 -4 18 42 Acc. Acc. -40 currency currency translation translation ------10 413 value value value value 2,244 2,647 2,647 equity, equity, equity, equity, -2,647 changes changes Restricted Restricted ------Ord. Ord. Ord. Ord. 5 5,144 5,144 5,144 3,686 shares shares -1,458 premium premium and share and share 22 22 20 20 Notes Notes

OF DECEMBER 2016 OF DECEMBER 2017 ST ST of January 2016 of January 2017 st st

EQUITY 31 EQUITY Dividends paid EQUITY 31 EQUITY Effect form demerger Change in income tax rate Change in income tax From other comprehensive income other comprehensive From Change in income tax rate Change in income tax Changes in fund value From other comprehensive income other comprehensive From Changes in non-controlling interest Changes in non-controlling Changes to non-controlling interest non-controlling Changes to Profit for the interim period for the interim Profit Profit for the interim period for the interim Profit Equity 1 Equity 1 2016

2017 Statement of changes in equity Statement 7 - 0 43 40 29 152 773 148 780 638 655 1,101 Group Group 14,571 13,757 13,757 11,287 14,571 14,413 15,120 15,120 13,222 13,222 14,990 14,002 14,990 - - - - 9 -2 13 15 10 37 32 971 -49 945 804 982 980 1,018 1,077 1,027 1,045 1,066 Freight Freight - - 2 12 27 26 Bus Bus 127 575 264 950 306 608 5,813 5,813 4,341 4,190 5,570 5,570 5,238 5,238 5,838 5,838 6,075 6,075 5,850 5,850 4,962 6,048 6,048 6 14 48 42 43 29 118 135 138 150 558 398 train train 7,601 7,601 7,762 7,762 7,924 7,924 7,553 7,553 7,880 7,880 6,911 6,911 7,525 7,525 7,390 7,390 7,966 7,966 9,843 9,843 Passenger Passenger 6

of December 2017, the Group has its main activities in the following segments: main has its the Group of December 2017, (MNOK) (MNOK) th

Investments Investments Segment assets Investments Investments PROFIT FOR THE YEAR FOR PROFIT PROFIT FOR THE YEAR FOR PROFIT Segment assets Share of profit/loss in associates in associates Share of profit/loss Share of profit/loss in associates in associates Share of profit/loss Share of profit/loss in joint ventures in joint Share of profit/loss Share of profit/loss in joint ventures ventures in joint Share of profit/loss Total operating cost Total Total operating cost Total Depreciation, impairment Depreciation, Depreciation, impairment Depreciation, Operating expenses Operating expenses Operating expenses Operating expenses Operating revenue Operating revenue Operating revenue Operating revenue Internal operating revenue operating revenue Internal Internal operating revenue operating revenue Internal External operating revenue operating revenue External External operating revenue operating revenue External 2016 2017 Please refer to note 6 for further details. note Please refer to (1) Passenger train: passenger train operations, including travel train operations, (1) Passenger train: passenger (2) Bus: passenger bus operations operations (3) Freight: freight train segment. as a separate presented is not yet Travel while and cash, other assets and inventories assets, intangible plant and equipment, mainly of property, below consist in the tables Segment assets are not included. asset and investments tax deferred

Business segments of 31 As Segment information

Accounts 2017 NSB Group Accounts 2017 NSB Group of February 2018. of February th 7

NSB Group accounting principles accounting NSB Group reform and railway De-merger Shares in subsidiaries structure and company Group in the Nordic Region passenger operations NSB-Group’s Segment information assets Intangible equipment plant and Property, Periodic maintenance in associates Investments in joint ventures Investments held for sale Assets other receivables and Trade Financial risk management and loss profit value through at fair Other financial assets category by Financial instruments Cash and bank deposits and share premium Share capital expense tax income tax/Income Deferred expenses and related Payroll obligations Retirement benefit obligations and similar payables other short and term Trade charges for other liabilities and Provisions Contract losses amortization and impairment Depreciation, Other expenses Financial income and expenses financing activities Liabilities from party transactions Related date reporting the after Business combinations Restructuring costs Events

Leases

Contingencies

Derivatives

Inventory Debt

All figures in the report are in MNOK. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 17. 11. 12. 13. 14. 15. 16. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

36. 37. on 9 by the Board of Directors were approved financial statements The consolidated Notes 9

CONSOLIDATION PRINCIPLES CONSOLIDATION The Group financial statements show the total financial result and the total financial result and the total show the financial statements The Group subsidiaries. and its financial position for the parent company Subsidiaries Control control. exercises Subsidiaries are companies where the Group variable influence has the ability to as an investor, occurs when the Group, to. or is exposed has a right to yield that the Group and control, obtain the time the Group from Subsidiaries are consolidated exist. ceases to consolidation when control from are excluded as owners in subsidiaries are treated with non-controlling Transactions equity transactions. and associates Joint ventures are companies or entities where NSB has joint control Joint ventures has considerable shares in The Group other investors. with one or several note for periodic maintenance for further details. for periodic maintenance note of the railway reform. The use of best estimates is exercised when calcu- is exercised The use of best estimates reform. of the railway on provisions notes Please refer to lating the basis of provisions. for furtherfor restructuring costs details. for costs of periodic maintenance Provision for periodic for accrued costs prepares an ongoing provision The Group in accordance with the obligation in the lease agreement. maintenance route the Group’s driven, cost per kilometer This is based on estimated These as- and regulation in the lease agreement. plan, and maintenance see Please the use of judgment and estimates. involve sessments rights in defined pension benefit plans. Calculations are based on in defined pension benefit plans. rights assumptions can Changes to economic and demographic assumptions. liabilities of future retirement benefit considerably affect the calculated more information on pensions and a more detailed For expenses. the retirement benefit see description on the assumptions used, the financial statements. to obligation note how sensitive that illustrates analysis is a sensitivity Included in the note deviations Actuarial assumptions. in key changes the calculations are to income such changes are included in other comprehensive to related tax. deducting deferred after equity, with a direct effect to of revenue Accrual a fare cooperation with other come from revenue of the Groups’ Parts of travels, are accrued on the number These revenues transport operators. a entail These evaluations data. and historical types composition of ticket significant degree of judgment and use of estimates. for restructuring costs Provisions as a result for restructuring costs provisions has significant The Group experience combined with expectations of future events that are probable that are probable of future events combined with expectations experience at the time of evaluation. are significant for the and estimates Areas where the use of assumptions accounts: Group assets Fixed useful life and expected expected evaluate continues to The Group The annual depreciation. to determine assets on fixed residual value These downs. write values and the need for assets fixed its reviews Group for assets a on fixed the note See require considerable judgment. reviews sensitivity analysis. and related tests description of impairment for contract losses Provisions for contract provisions evaluate annually to tests conducts The Group plant and equip- property, For losses based on indications of impairment. value of Then the present performed first. is ment an impairment test evaluations These contract is measured. future cash flow for each separate for a on Provisions the note refer to We degree of judgment. a large involve description. more detailed Retirement benefit obligation pension employees’ to liabilities related has considerable The Group 8

of January 2017. The of January 2017. st

Passenger train and bus transport Freight train transport The train maintenance company Mantena AS was demerged to to demerged was AS Mantena company The train maintenance Togvedlikehold AS Togvedlikehold to demerged was Entur AS company The sales and ticketing AS Reiseplan og Billett to demerged was AS tog Norske company stock The rolling AS Togmateriell Bane Nor Eiendom 1 AS to demerged ROM Eiendom was ASSUMPTIONS AND ACCOUNTING ESTIMATES AND ACCOUNTING ASSUMPTIONS BASIS OF PREPARATION BASIS GENERAL INFORMATION GENERAL historical cost convention with the exception of financial derivatives, of financial derivatives, the exception with cost convention historical property investment and financial liabilities and certain financial assets at fair value. which are valued consolidated the going concern basis in preparing its adopts The Group financial statements. Application of the Group accounting principles implies that the manage- Application of the Group and assumptions. use of estimates judgment through ment must exercise and are based on and assumptions are continuously evaluated Estimates consistently for all presented periods, unless otherwise stated. periods, for all presented consistently the been prepared under have financial statements The consolidated The consolidated financial statements have been prepared in accordance have financial statements The consolidated Financial Reporting (IFRS) and IFRIC inter- Standards with International the EU. by as approved pretations Significant accounting principles used in the preparation of the Group are used These principles are described below. financial statements • • Travel own insurance operation which is organized has its the Group Additionally, AS. Finse Forsikring Captive, in a separate the Group’s reform (jernbanereformen), railway partAs of the Norwegian train stock, rolling function, passenger transport sales and ticketing Norges Statsbaner AS (NSB AS) and its subsidiaries (NSB-Group) operate operate subsidiaries (NSB-Group) and its (NSB AS) AS Statsbaner Norges in the following areas: • maintenance operation, and real estate business were demerged. business were and real estate operation, maintenance • • • • out in line with the concept pooling of carried were The demergers 1 financial reporting and with effect from interests demergers have resulted in a reduction in equity of 5,442 MNOK, which is equity of 5,442 in a reduction in MNOK, resulted have demergers The effect of net group of changes in equity. specified in the statement are included in the equity reduction effects tax contributions and related the demerger. from were classified entities as the demerged In the 2016 financial statement, / liabilities and assets discontinued operations in the income statement, of financial position. held for distribution in the statement figures for the demerged principles that affect the comparative Accounting section below. in a separate presented business are real estate and Ministry of Transport the Norwegian by shares are owned All NSB AS Communication. in Oslo. main offices are located The NSB-Group’s on by the Board of Directors were approved 2017 The financial statements 2018. 9th February unless otherwise stated. All numbers in the report are in MNOK,

General information and Group accounting and Group information 1 General principles Note 1

Accounts 2017 NSB Group Accounts 2017 NSB Group

5 – 12 years 5 – 30 years 10 – 30 years 10 – 50 years HELD FOR SALE/HELD FOR DISTRIBUTION FOR SALE/HELD HELD FOR IMPAIRMENT LOSSES POSSIBLE CONTRACT if the sale or distribution in its present condition is considered highly present if the sale or distribution in its year. during a fiscal with implementation probable classified as held for distribution are recognized at the assets Non-current sell. to less costs amount and fair value carrying of its lower the income statement When an entity is classified as held for distribution, at the start as if the entity had been distributed profit shows the Group’s operations does not show what The figures for discontinued of the period. had been if they and expenses had of revenues have these entities would the impact the distribution has on but it shows independent entities, continued operations of the Group. amount is the higher of fair value The recoverable amount. recoverable in use. and value less selling costs at the are grouped assets the purposes of assessing impairment, For identifiable cash flows for which there are separately levels lowest one considers the each reporting date, At (cash-generating units). goodwill). (except of prior impairments possibilities for a reversal in accordance with is completed an evaluation 37, IAS according to measures Then the Group 36 (see section for impairment above). IAS cash flow from of future expected continuously the present value where estimated contract, operational activities in each separate including operating costs of all future unavoidable consists payments of continuing the the lower to is limited The provision on assets. wear the over is reversed The provision go out of the contract. contract or to remaining life of the contract. Operations and non-current assets are classified as held for distribution assets Operations and non-current plant and equipment that depreciate as property, as well assets Intangible that futureare considered for impairment when there are indications earnings cannot justify balance sheet value. to life are not subject useful with indefinite assets Goodwill and intangible annually for impairment. but are tested depreciation, amount is higher than theImpairment is recognized if the carrying for public contracts long-term into in entering activity results The Group’s the Group of the contracts, several For of public transportation. delivery cost areas (for in several assumes part of the risk for the development This income adjustment. and fuel) without any interest salaries, example are higher thancould result in contract losses if future remaining costs revenues. estimated result in losses that may is performed for contracts Before a provision Buses Buildings assets Other fixed Land and residential buildings are not depreciated. and are reviewed, values and useful lives residual assets’ The fixed date. at each balance sheet if appropriate, adjusted and income statement Gains and losses on disposals are included in the the sales price and the balance the difference between by are determined sheet value. probable that future economic benefits will flow to the Group and the cost to the will flow that future economic benefits probable are other repairs and maintenance All can be measured reliably. of the item during the financial period in which they statement the income to charged are incurred. until are capitalized construction of PPE, accrued during costs Borrowing use. the asset is ready for intended using the straight-line method is calculated Depreciation on other assets estimated its over value residual its asset to the cost of each allocate to as follows: useful life, vehicle Railroad 9

PROPERTY, PLANT AND EQUIPMENT PLANT PROPERTY, REVENUE PUBLIC GRANTS CURRENCY SEGMENT INFORMATION SEGMENT Property, plant and equipment (PPE) and operating related property is property plant and equipment (PPE) and operating related Property, Cost includes expenditure shown at cost less subsequent depreciation. such that it’s items the acquisition of the to which is directly attributable ready for use. amount when it is carrying are included in the asset’s Subsequent costs expenses are mainly in the following currencies: NOK, SEK, DKK, CHF and DKK, SEK, NOK, following currencies: are mainly in the expenses the functional to are re-calculated in foreign currency Transactions EUR. gains and losses exchange Foreign transaction date. at the currency are the translation of foreign currencies from such transactions and from recognised in the income statement. The Group’s revenues come mainly from sale of passenger- and freight come mainly from revenues The Group’s transport services. Sale of transport services is including public purchase of passenger traffic services, Sale of services, included in the accounting period the services are delivered. Dividends associates companies other than subsidiaries, from Dividends received the decision was when are recognized on the date and joint ventures the distributing company. made by Public grants are systematically recognized in the income statement in recognized in the income statement are systematically Public grants that the grants include the expenses the accounting periods the company are assets to that are related Public grants compensate. are meant to as a reduction of the treated the grant being through for net, accounted amount included on the balance sheet. functional currency different from the presentation currency are converted are converted currency the presentation different from functional currency other equity through translation differences directly to accruing currency income. comprehensive Transactions as financing purchases as well Operating income and –expenses, Functional currency and presentation currency and presentation Functional currency kroner Norwegian in are presented statements financial The NSB-Group and the functional currency which is both and all numbers are in MNOK, for the parent company. currency presentation as some in Sweden. as well mainly in Norway, operates The NSB-Group entities with a Group from and balance sheets Income statements NSB reports its operating segments according to how Group management, management, how Group according to operating segments its NSB reports follow-up and evaluates adopt, which is the operating decision-maker, decisions. not controlling influence. Normally, considerable influence is defined considerable influence is as Normally, influence. not controlling rights. 20 % and 50 % of the voting an ownership between having for using are accounted and associates Ownership in both joint ventures the equity method of accounting. Acquisitions business combinations. accounting applies to The acquisition method of which is date on the transaction at fair value Compensation is measured will normally coincide with the and is transferred when risk and control price is based on An allocation of the acquisition date. implementation that cannot be value Additional and liabilities acquired. of assets fair value If to goodwill. and liabilities are allocated identifiable assets to allocated and liabilities is higher than consideration of identifiable assets fair value income. to is charged the excess given, and joint acquisition of associates recognize The principles on how to acquisition of subsidiaries. are the same as for ventures

single purpose companies for development of real estate projects that are projects of real estate for development single purpose companies be joint venture. considered to but considerable, are companies where NSB has Share of associates Note 1 11 LEASES LEASES PROVISIONS DEBT SHORT-TERM OTHER RETIREMENT BENEFIT OBLIGATIONS BENEFIT RETIREMENT Provisions for environmental restoration, restructuring costs and legal restructuring costs restoration, for environmental Provisions has a present legal or constructive claims are recognised when: the Group an than not that it is more likely obligation as a result of past events; the obligation; and theto settle outflow of resources will be required comprise of Restructuring provisions amount has been reliably estimated. Contract by Pension Regulated when withdrawing Early Retirement costs and associated pay severance normal expectations, (AFP) beyond not recognized for are Provisions costs. and liquidation termination ongoing operations nor future operating losses. that an the likelihood Where there are a number of similar obligations, by considering the is determined outflow will be required in settlement class of obligations as a whole. expenditure of the expected are measured at the present value Provisions - deter used to The discount rate the present obligation. settle required to of the time assessments market current reflects mine the present value The increase in to the liability. and the increases specific of money value expense. of time is recognized as interest passage due to the provision and are initially measured at include trade payable debts Other short-term measure- later At be fair value. which is also considered to original value at amortized will be considered cost by trade receivables ment dates, method. interest using the effective of all the risks and rewards substantially Leases where the lessor retains made under Payments ownership are classified as operating leases. on a straight-line the income statement to operating leases are charged the period of the lease. basis over mainly has all the risk and return are classified Leases where the Group the financial lease is an agreement, When entering as financial lease. and fair value of the assets included on the balance sheet at the lower are divided The lease payments of future lease value. value current plant and equipment are Property, liabilities and financial items. between using the linear method. depreciated The companies in the Group operate various pension schemes; both pension various operate The companies in the Group defined contribution plans. defined benefit plans and plans are schemes where the employer Defined benefit pension when he/she to the employee benefits periodical pension to commits will mainly depend on number of years The pension payment retires. size of the at retirement age and the compensation level in the plan, scheme. the national insurance from benefits of present value The liability recognized on the balance sheet is the the less sheet date, the defined benefit pension plan at the balance The defined pension at the balance sheet date. of plan assets fair value an independent actuary using the annually by liability is calculated The cost of pension contributions and net unit credit method. projected on the defined benefit pension plan obligation is included rate interest in net income. or expensed (plan changes) are plan benefits the pension Changes to Actuarial statement. recognized as income continuously in the income the actu- new information and changes to by that are caused deviations other comprehensive through arial assumptions are included instantly, income. Defined contribution plans are pension plans under which the employer future pension without the employees’ towards contributions pays are The payments the contribution is paid. further obligations after expense. related and as payroll included in the income statement Deferred income tax asset and liability are offset when there is a legally en- asset and liability are tax income Deferred the same by levied taxes income to and it is related offset, forceable right to taxable for separate entity or (ii) authority for (i) the same taxable taxation positions on a net basis. taxable settle is to entities where the intention 10

TAX BORROWINGS/LOANS CASH AND BANK DEPOSITS AND BANK CASH RECEIVABLES INVENTORY FINANCIAL ASSETS HELD FOR TRADING PURPOSES HELD FOR ASSETS FINANCIAL DERIVATIVES AND FINANCIAL INSTRUMENTS AND FINANCIAL DERIVATIVES currency swaps. Where measurement and reporting at fair value showed Where measurement and reporting at fair value swaps. currency measurement of loans information because inconsistent more relevant a certain degree or to eliminated, was swap interest and associated Choice of used in the financial statements. this principle was reduced, raised and was loan were made at the time of each separate principle was of the loan. the term binding throughout tax. and deferred payable of tax for a period consists expense Income tax differences between on all temporary is calculated income tax Deferred forwards. effect of net losses carry as tax as well and book values tax- laws that apply and tax rates using tax is determined income tax Deferred be to asset that are expected tax Deferred on the balance sheet date. utilized are included on the balance sheet. The initial recognition for loans was at fair value adjusted for directly adjusted at fair value The initial recognition for loans was transaction costs. related measured at as a rule, the loans were, In the following accounting periods, that the effective method such interest amortized cost using the effective the life of the loan. is equal throughout interest and interest- that had associated bonds has had several The Group Cash and bank deposits including restricted tax withholdings and tax including restricted Cash and bank deposits Receivables include trade receivables and are initially measured at original receivables include trade Receivables be fair value. to which is also considered value are considered at amortised subsequent measurement receivables For for probable less provisions method, interest cost using the effective when is established for impairment of trade receivables A provision losses. collect all will not be able to that the Group evidence there is objective of the receivables. the original terms due according to amounts restricted bank deposits in Finse Forsikring are specified in note 18. 18. are specified in note in Finse Forsikring bank deposits restricted under it will be included in borrowings are utilized, If bank overdrafts liabilities. current Inventory is valued at the lower of acquisition cost and net realizable value. cost and net realizable value. of acquisition at the lower is valued Inventory method. price using the average cost is calculated Acquisition comprises of design progress work in The cost of finished goods and production and related other direct costs direct labour, raw materials, costs, lowest possible price and predictability in prices. prices. in price and predictability possible lowest financial instru- Derivative does not use hedge accounting. The Group is contract a derivative date on the at fair value are recognised ments Changes in measured at fair value. and are subsequently into entered are instruments as debt into entered contracts derivative on fair value to related contracts while derivative income, included in net financial are included as other operating expenses. electric power primaryits as held for trading purposes if A financial asset is classified in fair changes short-term result in gains due to reason for acquiring is to value. If the value. last registered is based on its investments listed of value Fair or if it concerns a security that is not active for the security is not market fair value. determine methods to uses evaluation the Group listed, costs borrowing Incurred (based on normal operating capacity). overheads is the acquisition or manufacture of the goods, to that are directly related included in the cost price of the goods. selling price in the ordinary course of estimated is the Net realizable value selling expenses. variable less applicable business,

The Group uses swaps to secure interest rates and currency on long-term on long-term and currency rates secure interest to uses swaps The Group the obtain prices to hedge energy and to ensure predictability, debt to Note 1

Accounts 2017 NSB Group Accounts 2017 NSB Group

CHANGES IN ACCOUNTING PRINCIPLES, NEW STANDARDS AND NEW STANDARDS PRINCIPLES, CHANGES IN ACCOUNTING DEVELOPMENTAL PROPERTY DEVELOPMENTAL INTERPRETATIONS INTERPRETATIONS made nor new accounting standards any has not implemented The Group in 2017. accounting principles changes to into effect and not yet taken not yet and interpretations New standards implemented standards early adopt any not to has elected The Group the reporting period. after an adoption date have that nor interpretations been that have of the most central Standards Below is an overview the IASB. by adopted 39 which describes IFRS 9 Financial instruments replace the parts of IAS and classification and measurement of financial assets accounting, measurement at amortized cost and hedge accounting, liabilities, to to lead is not considered The standard impairment of financial assets. valuation of financial significant changes regarding the classification or of as- testing nor is the new model for impairment or liabilities, assets of 1st of January 2018, date effective has a mandatory The standard sets. chosen the has The Group retrospectively. be implemented and is to figures. of comparative without conversion option of implementation from contracts with customers IFRS 15 Revenue for revenue a new standard adopted the IASB In the spring of 2014, for recognition a framework establishes The standard recognition. principle that based on a fundamental and measurement of revenue the transfer of ownership of goods and reflects recognition of revenue the customer. services to passenger and goods to streams mainly relate revenue The group’s been identified between transport where no significant differences have It is in a new standard. principles for recognition and framework today’s significant will cause any therefore not considered that the standard takes The standard principles. differences compared with current will implement the The Group effect on 1st of January 2018. mandatory of conversion using a modified method that does not involve standard figures. comparative Property where the intention was to develop and then sell were develop to was where the intention Property if the properties even 2), (IAS property as development categorized agreements. leased on short-term temporarily were of acquisition at the lower valued for sale was property Developmental 2. in accordance with IAS cost and net realizable value as as well of purchase price for properties, cost consisted Acquisition related Project each property. develop to expenses related project made and regulated up until it was expenses mainly included expenses Incurred etc. consultants, external ready for sale including salaries, of the the development to directly related that were costs borrowing Net realizable value 23. in accordance with IAS capitalized were property the completion. to related selling price less costs estimated was separated for sale was available property The portfolio of developmental based on The separation was projects. up as separate followed and was geographical location. property’s the separate First time measurement at cost and inclusion of costs on the balance cost and inclusion of costs First time measurement at property principles for PPE and operating related sheet complied with the at was property Further measurement of investment as described above. used in a value market with estimated corresponds value Fair fair value. The values parties. independent two between possible sales transaction The at each balance sheet date. appraisers using external estimated were expected property based on each separate was determination fair value yield. future cash flow with individual risk adjusted discounted property of investment value changes in market changes due to Value presented and were the income statement to charged continuously were to reclas- Value changes due line in the operating profit. on a separate incometo the were charged property developmental sification from operating related reclassification from due to changes Value statement. income. other comprehensive to charged were property 11

of December 2016. st

PROPERTY REVENUE FROM THE REAL ESTATE BUSINESS ESTATE REVENUE FROM THE REAL FAIR VALUE ESTIMATION VALUE FAIR DIVIDEND DISTRIBUTION General property of operating related portfolio consisted property The Group’s 2). (IAS property 40) and development (IAS property investment 16), (IAS which was ROM Eiendom, mainly owned by were properties The Group’s classified as held for distri- therefore were and the Group from demerged bution as of 31 It was the building’s character and buyer’s ability to influence the final ability to and buyer’s character the building’s It was conducted was recognition whether revenue that determined project property For 18 revenue. or IAS 11 construction contracts IAS according to an where the purchaser had significantly influenced outcome, constructed of the rate included according to were 11, IAS according to gain, expected completion. Lease and sale of real property the length of the accrued over was lease of real property from Revenue lease agreement. period where risk recognized in the was sale of property from Revenue a main rule this means that As the buyer. to transferred were and control recognized on the acquisition date. was the revenue of commercial- and residential buildings Construction and development The Group measures several financial assets and obligations as well aswell and obligations as financial assets measures several The Group the Group value, of fair classification For at fair value. property investment of the input that is utilized the significance that reflects in uses a system divisions: the preparation with the following 1 Level identical for markets active prices from quoted is measured using value Fair and obligations. assets 2 Level factors; using input based on other observable decided by is value Fair prices) rather than noted from either direct (price) or indirect (derived 1) for the asset or obligation. prices (used in level 3 Level that are not based on observable measured using inputs is value Fair data. market The 3. or 2 1, classified in level were and obligations Financial assets 3. is classified in level property investment company’s The dividend distribution to the company’s shareholders is recognised as the company’s to The dividend distribution when the dividend is financial statements a liability in the Group’s the General Assembly. by approved Description of accounting principles relating to to Description of accounting principles relating 2017 only included in the business, for estate real figures comparative

There was a close and compound relation between operating property (IAS (IAS operating property a close and compound relation between There was combined properties. 40) with several (IAS property 16) and investment each separate combined buildings that could be sectioned for sale, For separately. evaluated section and part was of the property Operating related property considered as operating operations were used within the Group’s Property in compliance treated 16 and were in accordance with IAS property related with PPE as described above. property Investment building or both) that were (land, of property consists property Investment income, rental yield from a long-term achieve owned for the purpose to the leases out to that the Group Property or both. increase in fair value are classified as basis, and long-term terms on commercial market external 40. and are considered in accordance with IAS property investment Note 1 of January 2021. of January 2021. st the absence of this, the Group has used an estimated market-based bor- market-based has used an estimated the Group the absence of this, - The implemen asset and duration. company, relevant for the rate rowing the parent 1st of January 2018 decreases the equity ratio of on the tation dividend for (42.7%) before recognition of 29.2% to NSB AS company equity ratio decreases to the the NSB Group, For the 2017 income year. year. before recognition of dividend for the 2017 income (34.3%) 26.5% be- a reclassification the change will provide In the income statement, cost of the use / total The expenses. and financial costs operating tween the beginning At standard. the current to will be equivalent period rental the end the cost of the period will be higher than towards of the period, linear depreciation and reduced interest This is due to of the period. reduce operating to this is estimated 2018, For time. over expenses MNOK by costs 170 (reduced rental MNOK approximately by expenses 1430) and increased financial by 1,600 and increased depreciation for income statement Net effect in the 265 MNOK. of around expenses leasing. to related 2018 is an increased cost of 95 MNOK classified as payment the part of the rental In the cash flow statement, to financing operational reclassified from of loans will be repayment 1330 approximately to amount to 2018 this is estimated For activities. MNOK. IFRS 17 Insurance Contracts in 2017 and replaces IFRS 4 Insurance the IASB by IFRS 17 is adopted measurement, principles for recognition, IFRS 17 states Contracts. The new standard of insurance contracts. and disclosure presentation The operations. the Group’s to be of importance is not considered to effect on 1 mandatory takes standard Other and clarifications in several small changes several has also adopted IASB of these changes will that any It is not expected different standards. considerable effect for the Group. have 12 of January 2018, of January 2018, st

IFRS 16 Leasing The for leasing. beginning of 2016 a new standard in the adopted IASB recognize all is that the lessee must general rule of the new standard all to IFRS 16, According position. of financial leases in the statement year must be recognized. one over term a lease significant leases with “right-of- lease liability and the associated Lessee must recognize the Under the lease term. the underlying asset over use asset” for the use of and financial there will no longer be a distinction between IFRS 16, lessee. operating leases for the to premises, of leases relating has a significant number The NSB Group the of bus rental, With the exception and train and bus equipment. lease to the current operating leases according leases are classified as agreement (IAS17). year the financial implement IFRS 16 from has decided to The Group use a modified retrospective and will in the implementation 2018, - The implementa figures. method without recalculation of comparative against the opening balance on 1 tion effect is taken

by recognition of the value of the assets (right-of-use) equal to the (right-of-use) equal to of the assets recognition of the value by of the lease obligations. value equivalent obliga- corresponding When calculating the “right-of-use asset” and the The operating are used as base case. the present lease agreements tion, business usually include an option for one of included in the agreements In estimating the length of the discounting the agreement. the parties to duration of the lease agreement of the best estimate the Group’s period, account. into has been taken result in a significantly is considered to of the standard Implementation the recognition of future lease obligations, balance due to increased total - Use As a “Right to by is matched which at the time of implementation the which represents MNOK an amount of 7,400 to This is estimated set”. that has been rate The discount future lease payments. of present value and in in the lease agreement, rate the interest to used is corresponding Note 1

Accounts 2017 NSB Group Accounts 2017 NSB Group - 4 48

40 29 141 -36 780 -60 638 556 686 -130 6,341 6,341 6,881 6,881 14,571 14,002 operations Continuing 1 -7 111 Dis- 818 712 716 551 102 540 989 206 -106 -284 -593 1,102 1,288 -1,465 continued operations 41 131 -44 551 252 209 Total -236 -236 -236 -236 -654 1,740 1,740 1,267 5,416 5,416 7,630 7,630 1,503 1,496 14,542 15,559 15,559 of January 2017. The demerger has The demerger of January 2017. operations st 13

- prepare organiza founded and wholly owned subsidiaries to newly to and transferred separated operations were key important two of October

th The train maintenance company Mantena AS was demerged to to demerged was AS Mantena company The train maintenance AS Togvedlikehold demerged was AS Entur company systems The sales- and ticketing AS Reiseplan og Billett to AS Togmateriell to demerged was AS tog Norske The train owning company demerged was ROM Eiendom AS company The real estate Bane Nor Eiendom 1 AS to 2016 INCOME STATEMENT Share of loss(-)/profit of joint ventures of joint Share of loss(-)/profit in associates Share of loss(-)/profit Total operating expenses Total Operating profit Other operating expenses property change investment Unrealised value Financial items Financial income Payroll and related expenses and related Payroll Depreciation and impairment Operating revenue Financial expenses tax before income Profit expense Income tax year for the Profit Net financial expenses - pensions Net financial Change in unrealised fair value Net financial items tional changes adapted to the railway reform. The operations associated with sales- and ticketing system was transferred to Entur AS. Trains and staff and staff Trains Entur AS. to transferred was system with sales- and ticketing operations associated The reform. the railway to tional changes adapted part of the parent an integral The entities were AS. Materiellselskapet to transferred of equipment in NSB was with acquisition and leasing who works Expenses, process. in a subsequent AS Materiellselskapet to transferred trains was funding relating to External the structural change. prior to company are reallocated these costs Similarly, to discontinued operations. are allocated to these entities and depreciation related expenses including financial from The profit services. and sales- and ticketing in the form of lease of trains, will be charged for continuing operations as they operating expenses to had if they achieved would have these entities not the profit and effect of the remaining NSB Group, discontinued operations includes the consolidated expenses. to operating 60 of MNOK by adding a profit restated been figures have The comparative during the period. the Group from been separated

The demerger was completed pursuant to the accounting pooling of interest method with accounting effect 1 method the accounting pooling of interest pursuant to completed was The demerger - Ministry of Trans the owned by companies to the NSB Group from demerged the following companies were sector part of the railway of the reform As 1th of January 2017: port with effect from • • • • reform 2 De-merger and railway

resulted in a reduced equity of NOK 5,442 MNOK, which is specified in the Statement of changes in equity. The effects of net group contributions paid contributions of net group The effects of changes in equity. which is specified in the Statement 5,442 MNOK, of NOK in a reduced equity resulted the demerger. from are included in the equity effects effects tax including corresponding entities, demerged to and liabili- and assets classified as discontinued operations in the Income statement, were entities the demerged for 2016, In the annual statement below. find further Please details of financial position. ties held for distributions in the Statement operations: Principles of preparation of figures for continuing expenses and less income, operations, total been prepared based on and financial position of continuing operations have The income statement continuing and discontinued operations areexpenses between income and intercompany Previously operations. discontinued financials position from operations. continuing and discontinued between when allocating expenses are exercised estimates Best income and expense. included as external at the beginning of 2016. discontinued operations has been separated that The Annual Report thus expresses On 15 Note 2 15 - 72 27 34 50 117 811 139 310 732 273 700 835 3,782 7,120 7,120 1,247 8,240 8,240 3,517 3,517 2,318 2,875 3,601 3,601 3,543 3,543 11,338 10,721 10,721 15,120 15,120 operations Continuing 0 - - 2 35 29 66 206 Dis- -45 146 857 537 136 440 626 1,187 17,111 8,311 8,311 8,175 8,175 5,431 5,431 7,080 7,080 -5 915 11,474 11,474 -3,265 -3,265 13,845 13,845 continued operations 27 50 117 571 278 578 735 276 339 Total 1,314 7,915 7,915 5,431 5,431 3,472 3,472 7,256 7,256 3,021 3,021 1,998 8,073 8,073 1,590 2,944 2,325 15,017 15,017 11,776 19,031 19,031 20,893 20,893 28,966 28,966 operations of December 2016. st 14 of December 2016 are as follows: of December 2016 are as st

STATEMENT OF FINANCIAL POSITION OF FINANCIAL STATEMENT Financial assets Trade and other receivables Trade financial assets Derivative Cash and bank deposits assets current Total Inventories ASSETS TOTAL AND LIABILITIES EQUITY Debt ASSETS assets Intangible assets non-current Total in joint ventures Investment liabilities income tax Deferred Retirement benefit obligations payable Tax Property, plant and equipment Property, associates in Investments Financial assets for other liabilities and charges Provisions and other payables Trade Debt Investment property Investment long term liabilities Total financial instruments Derivative short term liabilities Total LIABILITIES TOTAL Assets and liabilities from discontinued operations per 31 from and liabilities Assets

Trade and other receivables from continuing operations in NSB AS will increase compared to trade and other receivables in NSB Group for total opera- for total in NSB Group trade and other receivables compared to will increase continuing operations in NSB AS from and other receivables Trade discontinued operations as of 31 of 5,671 in continuing operations towards a receivable MNOK tions due to Note 2

Accounts 2017 NSB Group Accounts 2017 NSB Group - 0 6 21 -3 20 65 -54 -52 loss 126 Profit/ 9 0 -3 59 181 713 -35 497 497 265 1,685 Equity 1 2 0 21 59 30 139 333 500 of December 2017. 1,086 st in parent shares in company Book value Book value subsidiaries

45 % 55 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Votes and Votes profit share profit

Oslo Oslo Oslo Oslo Oslo Oslo Oslo Oslo Gävle office Registered

15 date acquisition- of April 2005 Established-/ st 1 of August 2016 of August of January 2007 of January 2002 of January 2002 of October 2001 of October st st st 1 st nd 1 1 1 of December 2001 of December 1996 of December 2008 2 st st st 1 1 31 1

Tømmervogner AS Tømmervogner NSB Gjøvikbanen AS NSB Gjøvikbanen NSB Anbud AS Finse Forsikring AS Finse Forsikring AB Tågkompaniet Svenska CONTINUING OPERATIONS TOTAL Banestasjoner AS Banestasjoner CargoNet AS CargoNet NSB Trafikkservice AS NSB Trafikkservice Nettbuss AS Nettbuss Subsidiaries Remaining shares are owned by CargoNet AS. CargoNet Remaining shares are owned by The Equity presented, is 100 % of the equity recognized in the subsidiary’s Statement of financial position as of 31 of financial Statement is 100 % of the equity recognized in the subsidiary’s The Equity presented, 1

Shares in subsidiaries 3 Shares indirectly. also owns companies and interests The group directly owned investments. the parent company’s shows The table Note 3 TRAVEL GROUP FUNCTIONS GROUP 16 TERMINAL TERMINAL

GROUP OPERATIONS NSB GROUP FREIGHT ON RAIL ON FREIGHT CARGONET AS CARGONET FREIGHT OPERATIONS FREIGHT

-ENTITIES OPERATIONS OPERATIONS MAINTENANCE LARGE VEHICLES BUS OPERATIONS BUS OPERATIONS BUS OPERATIONS NETTBUSS AS NETTBUSS AS GROUP

NSB SVENSKA

NSB AS GJØVIKBANEN AS GJØVIKBANEN OPERATIONS TÅGKOMPANIET AB TÅGKOMPANIET PASSENGER TRAIN PASSENGER

NSB operates in Norway and Sweden. Operations are run in accordance with the Business Segments which slightly differs from the legal structure: the legal differs from which slightly the Business Segments Operations are run in accordance with and Sweden. in Norway NSB operates in Passenger rail operations. are included AS AB and NSB Anbud Tågkompaniet Svenska AS, Gjøvikbanen NSB - NSB AS, operations. of the Nettbuss-Group - The bus segment consists operations. of the CargoNet-Group consists - The freight traffic segment

Group- and company structure 4 Group- and company Note 4

Accounts 2017 NSB Group Accounts 2017 NSB Group 17

Passenger train Passenger express / Nettbuss Nettbuss lines express Other Nettbuss by operated CargoNet

Nettbuss in Scandinavia

NSB-Group’s passenger operations in the Nordic Region in the Nordic passenger operations 5 NSB-Group’s Note 5 19 40 902 2016 14,571 13,629 13,629 23 971 2017 13,996 13,996 14,990 18

activities in the following segments: main has its the Group of December 2017, th

including travel train operations, Passenger train: passenger Bus: passenger bus operations Freight: freight train operations Analysis of Operating income by category of Operating income by Analysis Other revenue Transport revenue Transport Sales revenue SUM (1) (2) (3) segment. as a separate presented is not yet Travel and cash, and other assets inventories assets, intangible plant and equipment, consist mainly of property, below in the tables The segment assets are not included. asset and investments tax while deferred 6 Segment information Business segments of 31 As

The Group mainly operates in Norway. The Group also has some operations in Sweden. Group The in Norway. mainly operates The Group customers Information on important is included in the NSB-Group purchase from The Government’s % of operating income. more than 10 that constitutes has one customer The Group 33. note Note 6

Accounts 2017 NSB Group Accounts 2017 NSB Group - 87 -1 -1 87 32 -15 102 117 117 -16 133 2016 Total 1 9 0 -1 117 117 -16 133 -17 143 126 126 2017 - 6 6 - 4 4 -1 21 -1 20 -15 -16 2016

Other December 2017, goodwill recorded on goodwill December 2017, th - - 4 4 0 3 3 -1 20 20 -16 -17 2017

- - - - - 81 81 81 32

113 113 113 2016 Goodwill 1 - -

9 - - 113 113 113 123 123 123 123 123 2017 19

2.00 % 7.00 % 7.00

1 of December

st of January

st At 31 At TOTAL Amortization and depreciation Additions Acquisition Exchange differences Exchange Changes during the year Opening net book value TOTAL TOTAL Accumulated amortization and impairments Accumulated Accumulated amortization and impairments Accumulated At 1 Accumulated acquisition cost Accumulated Accumulated acquisition cost Accumulated Interest rate before tax used to discount the cash flows. Interest rate before Weighted average growth used to derive cash flows past the budgeting period. average growth used to derive cash flows past the budgeting Weighted Goodwill is exclusively in the Nettbuss Group. There is no goodwill impairment in 2016, nor 2017. There is no goodwill impairment in 2016, Group. in the Nettbuss Goodwill is exclusively Impairment test of Goodwill is based on what The ratio is monitored amount. amount with the recoverable the carrying comparing for impairment by Goodwill is annually tested There are as of 31 with each acquisition. associated considered as the natural cash-generating unit (CGU) several CGUs in the Bus-business segment, and all these CGUs are followed up locally in the wholly owned corporate group Nettbuss. group up locally in the wholly owned corporate and all these CGUs are followed CGUs in the Bus-business segment, several are approved budgets based on approved Liquidity prognosis’ CGU. it’s the asset will add to based on the value amount is calculated The recoverable For the com- period. to the end of the agreement-/tender period are limited tender from the The cash flows year period. five leadership for the next by below. rates presented growth years utilize the estimated five the first the cash flows after mercial agreements, amounts Estimates used when calculating recoverable rate Growth These assumptions have been used for the analysis of each cash-generating unit within the business segment. Management determines budgeted net budgeted Management determines of each cash-generating unit within the business segment. been used for the analysis These assumptions have with the used is consistent rate growth average weighted The development. of market expectations cash flows based on the past performance and its The recoverable segments. to the relevant specific risks relating and reflects used are pre-tax The discount rates included in industry reports. forecasts the sensitivity other assumptions remain constant, Assuming are higher than the balance sheet values. the CGU based on usage value from amounts 6. MNOK of 2 % of the goodwill amount on the balance sheet will decrease by level calculations regarding an increase in the interest 1 2 Intangible assets 7 Intangible Discount rate

Note 7 21 - 4 0 -5 -3 38 313 885 Total -194 -789 -650 3,142 3,142 3,142 3,142 3,544 3,544 17,364 17,364 16,735 16,735 -13,820 -13,820 -13,593 -13,593 - - - - - 4 -1 -4 10 181 -48 784 784 832 869 869 -158 -105 1,027 buses Leased ------14 14 24 38 92 92 -10 -71 -10 tion -45 102 Under construc------0 0 0 10 -10 trains Partially delivered delivered - - - - 2 0 0 19 -11 110 110 188 188 -20 -69 252 -111 300 -142 Land and buildings 4 -4 51 51 27 -6 53 577 -194 20 -478 -469 2 385 1,996 2,385 Trans- 1,996 1,996 14,321 13,833 13,833 -11,837 -11,936 portation - 9 0 -7 41 19 -0 94 64 94 154 and 331 -55 154 -343 1,610 1,820 -1,725 -1,456 Machinery equipment of December 2017 st

of December 2017

st of January 2017

st At 31 At TOTAL Impairments Depreciations Transfers from development property development from Transfers Transfers to prepaid maintenance to Transfers Transfers within PPE Transfers Accumulated depreciation disposals Accumulated Disposals at acquisition cost Additions Year ended 31 Year Accumulated depr. Acq. of subsidiary Acq. depr. Accumulated TOTAL TOTAL Acquisition of subsidiary of Acquisition Accumulated depreciation Accumulated Accumulated depreciation Accumulated Exchange differences Exchange Accumulated acquisition cost Accumulated At 1 Accumulated acquisition cost Accumulated Opening net book value

Property, plant and equipment 8 Property, Note 8

Accounts 2017 NSB Group Accounts 2017 NSB Group 6 1 - 48 -12 -43 113 194 -40 -69 -716 206 -735 2017 -101 Total 1,209 3,543 1,483 2,128 3,543 3,543 17,364 17,364 -1,532 29,477 14,499 14,499 -14,978 -14,978 -13,820 -13,820 -12,683 ------1 -47 784 -48 784 832 832 Leased Busses - - - - 4 ------1 102 tion 102 102 867 453 453 453 -388 -833 Under construc------10 -10 -10 617 617 617 257 -533 -351 trains Partially delivered delivered - 2 - - 4 10 -6 -11 35 53 -12 188 -90 987 188 -30 -111 300 -976 -976 1,851 1,851 2,827 -2,604 Land and buildings 3 - everlast. 3 - everlast. - - 1 - - 141 -41 131 -68 -573 -603 1,377 1,013 2,385 2,385 Trans- 11,191 11,191 14,321 -1,428 -8,756 -8,756 23,428 23,428 -12,237 -12,237 -11,936 21 portation 5 - 30 years - - - 81 -1 -1 12 37 94 94 96 and 119 -10 -73 -53 -98 387 387 -401 2,152 1,820 -1,725 -1,765 Machinery equipment 5 - 30 years 5 - 30 years OF DECEMBER 2017 ST of January 2017 st 9 of December 2016 st

of December 2015 st of January 2016

st Prepaid maintenance as of 1 Prepaid maintenance Accrual for incurred maintenance cost through the year cost through maintenance for incurred Accrual the year through Performed maintenance Accumulated acquisition cost Accumulated Periodic maintenance on leased trains At 1 Opening net book value PREPAID MAINTENANCE AS OF 31 MAINTENANCE AS PREPAID Accumulated depreciation Accumulated Accumulated acquisition cost Accumulated Exchange differences Exchange TOTAL CONTINUING OPERATIONS TOTAL Accumulated depreciation Accumulated Acquisition of subsidiary of Acquisition Depreciation period TOTAL Accumulated depr. Acq. of subsidiary Acq. depr. Accumulated Year ended 31 Year Additions Disposals at acquisition cost Accumulated depreciation disposals Accumulated Grants from public sources* from Grants Transfers within PPE Transfers Transfers to investment property investment to Transfers Transfers from development property development from Transfers Depreciations continuing operations Depreciations discontinued operations Impairments continuing operations Impairments Accumulated acquisition cost transferred to to acquisition cost transferred Accumulated discontinued operations Accumulated depreciation transferred to to depreciation transferred Accumulated discontinued operations CONTINUING OPERATIONS TOTAL At 31 At As a train lessee, the Group is under the lease agreement responsible for carrying out heavy maintenance. Provisions for maintenance costs are con- costs for maintenance Provisions maintenance. out heavy is under the lease agreement responsible for carrying the Group a train lessee, As existing based on are estimated Costs plan. and maintenance and the route- driven, per kilometer costs tinuously recorded on the basis of estimated Upon return of the leased are offset against the provision. costs maintenance incurred Actual work. maintenance and historic contracts, maintenance level, maintenance based on the equipment’s the lessor, from a compensation or will be entitled to compensate, to will have the Group equipment, use of judgment and estimates. The assessment involves assessed at the end of the lease period.

Periodic maintenance 9 Periodic Note 8 | Note 23 - - - - - % % 40 50 -13 0 % 200 43% 34% 34% 49% 49% 49% 33% 25% 40% -177 2016 43 % 34 % 34 % 25 % 49 % 49 % 49 % 33 % 25 % 40 % Int. held Int. held Int. 2 2 1 - - - - - 1 - - 2 0 0 6 -1 11 42 17 17 -5 -0 27 76 28 28 42 40 50 -15 -16 152 loss loss 2017 -144 Profit/ Profit/ - - 71 81 21 19 16 73 44 42 43 22 22 58 52 20 66 66 627 670 308 299 1,279 1,279 Revenues Revenues - - - 7 4 4 4 8 5 5 9 17 14 18 12 19 16 76 63 829 110 182 829 620 Liabilities Liabilities - - - 7 7 9 6 6 12 18 12 13 47 19 61 20 20 131 162 297 297 109 846 1,208 1,208 Assets Assets

Oslo Oslo Oslo Oslo Oslo Oslo Våler Våler Bodø Bodø office office 22 Sande Sande Ørskog Ørskog Bergen Bergen Glostrup Stockholm Registered Registered Tanumshede Tanumshede of December 2017 include goodwill of 0 MNOK (0 MNOK). of December 2017 include goodwill of 0 MNOK st OF DECEMBER ST of January st

TOTAL OPERATIONS TOTAL TOTAL DISCONTINUED OPERATIONS TOTAL Tunnelbanan Technik Stockholm AB Stockholm Technik Tunnelbanan TOTAL TOTAL Keolis Danmark AS Keolis Fjord Tours AS Fjord Tours Fjord Tours AS Fjord Tours Sjøholt Last og Buss AS Sjøholt Last og Buss AS Larsens Last og Buss AS Larsens Last og Buss AS Minibuss 247 AS Minibuss 247 AS Peer Gynt Tours AS Peer Gynt Tours Peer Gynt Tours AS Peer Gynt Tours Strømstad-Tanum Buss AB Buss Strømstad-Tanum Strømstad-Tanum Buss AB Strømstad-Tanum Interoperabilitetstjenester AS Interoperabilitetstjenester Interoperabilitetstjenester AS Interoperabilitetstjenester Nordlandsbuss AS Nordlandsbuss AS Oslo S Parkering AS Oslo S Parkering AS Oslo S Parkering associates of Acquisition Disposals/ -sale of associates Share of profit/loss Exchange differences Exchange operations discontinued to Transferred Currency translation difference Currency Other equity movements 31 VALUE BOOK NET Book value 1 Book value 2016 2017 Share of profit/loss is after tax, non-controlling interests and dividends paid. interests non-controlling tax, is after Share of profit/loss Investments in associates at 31 in associates Investments The group’s share of 25% of Oslo S Parkering AS was sold on December 7, 2017. In connection with the sale, the Group reconized a gain of 133 MNOK, reconized a gain of 133 MNOK, the Group In connection with the sale, 2017. sold on December 7, was AS share of 25% of Oslo S Parkering The group’s in 2017. associates from which is included in the share of profit are as follows: all of which are unlisted, associates, and liabilities of its assets Profit/loss,

Investments in associates 10 Investments Note 10 Note

Accounts 2017 NSB Group Accounts 2017 NSB Group

2 of 131 34 st 131 -34 133 -85 571 -95 947 106 455 492 555 226 2016 2016 -537 1,412 31 1,518 2016* December Book value

1 - - - - 43 47 19 19 47 34 43 42 65 99 65 -58 -30 2017 2017 2017 Profi/loss 94 Equity 50 % Votes and Votes profit share profit office Aurland Registered 2013 23 Year of Year acquisition OF DECEMBER ST of January st

Operating expenses PROFITS Operating revenue Income/expenses Short term liabilities Short term NET ASSETS NET Book value 1 Book value Assets assets Non-current assets Current TOTAL Liabilities liabilities Long term TOTAL Acquisition of joint venture of Acquisition venture Disposals/ -sale of joint Other equity movements Share of profit/loss operations discontinued to Transferred NET BOOK VALUE 31 VALUE BOOK NET Joint venture: Flåm Utvikling AS Flåm Utvikling AS The amounts below show the Group’s share of assets and liabilities as well as revenue and expenses in joint ventures. in joint ventures. and expenses as revenue and liabilities as well share of assets Group’s below show the The amounts Share of profit and loss includes adjustments from prior years. prior from and loss includes adjustments Share of profit is as follows: in joint ventures interest The NSB Group’s Description of operations: Passenger train operations Flåm Utvikling Flåm Utvikling conducts as a supplier of train transport services. Flåmsbana with NSB AS product the travel Flåm Utvikling has operated 19 years, For as the foundation for as well of Flåmsbana, relationship management and brand development customer marketing, sales, development, product destination. railway mountain/fjord year-round first Flåmsbana is the country’s operations of Flåmsbana. commercial year-round Investments in joint venture 11 Investments

* Applies to both continuing and discontinuing operations. Note 11 Note 25 8 2 10 72 39 -11 121 721 731 907 1,571 8,240 5,761 5,761 1,582 2016* 2016* 2016* 1 9 17 13 191 -10 179 213 784 802 509 2017 2017 2017 1,195 1,883 1,205 24 14 13 |

Trade and other receivable and other Trade Inventory Assets held for sale held for Assets Prepayments Other receivables Trade receivables - net receivables Trade RECEIVABLES TRADE AND OTHER TOTAL Less: provision for impairment of receivables Less: provision Components parts Not completed parts Completed INVENTORY TOTAL receivables Trade Matured between 0 - 2 mnths ago 0 - 2 mnths Matured between Maturity of receivables: Matured receivables on balance sheet date Matured receivables ago 2 - 6 mnths Matured between Matured more than 6 mnths ago The carrying amounts of the trade receivables, prepayments and other receivables approximate their fair value. Trade receivables include mainly receivables Trade fair value. their approximate and other receivables prepayments of the trade receivables, amounts The carrying counties. due from amounts public purchase and non-calculated revenue rental freight revenue, * Applies to continuing operations. 14 The Group has no assets or business held for sale or distribution as of 31th Desember 2017. has no assets The Group figures. 2 for comparative please see Note reform in 2017, as part of the railway demerged operations that were of non-continuing details For 12 13 * Applies to continuing operations. Note 12 | 12 Note

Accounts 2017 NSB Group Accounts 2017 NSB Group

of December 2017 st

LIQUIDITY RISK LIQUIDITY by obligations NSB reduces liquidity risk on maturity of financial and internationally, accessing a number of financing sources in Norway operating-, planned cover liquidity to adequate as maintaining as well and refinancing needs without assuming new debt due investing-, rate interest of bank deposits, Liquidity consists within 12 months. and a committed accounts overdraft funds, market money certificates, in April 2019. which expires credit facility on 2,000 MNOK revolving long-term NSB’s rates & Poor’s Standard NSB has a high credit rating. NSB good This high credit rating gives outlook). (negative debt at A- financing. external access to Liquidity risk is the potential inability to meet short term liabilities. meet short term inability to Liquidity risk is the potential of (consists reserve liquidity the Group monitors management NSB’s forecasts rolling through and cash equivalents) facilities borrowing cash flow. expected based on the Group’s The Group’s securities in the interest rate market are exposed to changes to exposed are market rate in the interest securities The Group’s rate interest a short average have the investments As rates. in market changes are moderate. value duration, rate uses interest and rates, changes in interest to is exposed The Group duration preferred its achieve risk and to rate reduce interest to swaps possible future to reduce risk related The goal is to debt portfolio. on its the future as to more predictability and create increases, rate interest the regulate to been established Guidelines have payments. interest changes within a twelve rate interest to share of loans that is subject duration of the portfolio. rate position. and for the interest month time period, fair value booked risk of changes to create into entered swaps Any of of the statement as at the date level when measuring against interest financial as at 31 Sensitivity evaluations Interest rate risk is calculated using the Group’s long-term loans with loans long-term using the Group’s risk is calculated rate Interest 50 basis by changing the rate By swaps. rate interest corresponding change risk of fair value in a calculated risk results rate interest points, (2016: 27 MNOK). of 0 MNOK excess In 2017, 2017. repaid in November issue was last bond The Groups excess The years. than in previous significantly higher liquidity was therefore and was market money in the Norwegian invested liquidity was The management rates. market money changes in Norwegian to exposed duration and therefore interest liquidity has a short average of excess are rates market changes in money due to changes the fair value the fact that by be exposed risk will largely In addition, moderate. maturity. securities are held to in interest-bearing investments Other price risk electric to with price changes related has a risk associated The Group are The Group train and bus operations. and diesel used in its power and diesel needs. future electricity hedging its extent only in a limited 25

MARKET RISK MARKET FINANCIAL RISK FACTORS RISK FINANCIAL CAPITAL MANAGEMENT CAPITAL whose net in foreign subsidiaries, investments has certain The Group be of This risk is not considered to risk. currency to are exposed assets to the Group. significant importance position or cash flows. cash or risk exchange Foreign will lead rate exchange is the risk that fluctuations in the risk Currency of financial statement income statement, changes in the Group’s to position foreign exchange will be hedged through debt in foreign currency Any changes in the fair value are offset by and changes in value swaps risk on debt currency to is therefore not exposed The Group derivatives. instruments. foreign from purchases makes in the Nordic region, operates The Group The Group risks. currency to suppliers and is therefore exposed foreign from investments with larger risk associated minimizes currency The goal is to in NOK. agreements into entering mainly suppliers by measured future payments with respect to predictability create in NOK. Interest rate risk of a financial instrument risk is the risk that a fair value rate Interest interest to changes in market due or future cash flows will fluctuate rates. hedge certain risks. risk financial risk: market types of activities result in various The Group’s credit risk and liquidity and price risk), rate-, interest (foreign exchange-, risk. certain markets the capital focuses on risk management policy The Group’s effects negative minimize the potential to and strives unpredictability to uses financial derivatives Group The financial results. on the Group’s hedge treasury a centralized Group out by Risk management is carried and hedges financial evaluates, identifies, treasury Group department. operating units. risk in co-operation with the Group’s The Group’s objectives when managing capital are to safeguard the to are capital when managing objectives The Group’s returns provide going concern in order to continue as a to ability Group’s reduce structure to an optimal capital maintain shareholders and to to liquidity in excess manages some of its The Group the cost of capital. commercial papers and bonds, deposits, like bearing products interest The the Board of Directors. prepared by in accordance with guidelines guidelines for the principles of risk management and gives Board sets demand of In accordance with the guidelines’ specific risk areas. should maximize the return NSB of risk and liquidity, spread security, of the managed capital. portions in interest-bearing of the surplus liquidity invests The Group bonds with short remaining certificates, as bank deposits, such products funds. rate maturity and interest

15 Financial risk management Note 15 Note 27 - - 811 274 274 384 1,247 2016* 4,901 2,569 > 5 years - - - 371 2017 7,057 7,057 1,882 3,085 3,085 2,090 2-5 years - - 137 1-2 years 1 995 2,653 < 1 year of December 2017: st 26

Property, plant and equipment Property, Debt Short term liabilities Short term Liquidity risk Financial derivatives receivables and other short term receivable Trade TOTAL Cash and bank deposits (placements) Certificates NSB assesses maximum credit risk to be the following: CREDIT RISK CREDIT Credit risk is the potential loss if an external part cannot meet its financial obligations to NSB. The Group’s exposure to credit risk is mainly related to to credit risk is mainly related exposure The Group’s to NSB. financial obligations part cannot meet its an external loss if Credit risk is the potential individual customers. public authorities based on long-term to given is of payment Deferral services on a cash basis. operations mainly sell its Passenger train- and bus through is tracked whose financial development medium sized customers several freight operations is divided between from Revenue agreements. to a small degree exposed is therefore to The Group as their main customer. parent company its Other subsidiaries have credit assessments. updated credit risk. for limits has established The parent company liquidity with issuers of debt securities. placement of excess credit risk through to NSB is exposed based on credit assessments. and individual counterparties against sectors credit exposure financial transac- its risk in NSB focuses on counterparty agreements. derivative and currency in interest- counterparties NSB has risk against its tions.

* Applies to continuing operations. - are set for the counterpar Strict requirements counterparties. several across exposure diversifying risk) is reduced by The credit risk (counterparty upon conclusion of the agreement. rating agency another international from or equivalent S & P, rating from with a minimum A- creditworthiness ty’s agree- situation (ISDA in a bankruptcy judicial offset calculations that regulate has agreements NSB AS monitored. risk is continuously Counterparty banks. with several ments) Guide- funds. market money well as Norwegian as remaining maturity, with short-term and bonds certificates in Norwegian liquidity is placed Excess based on credit assessments. and specific issuers companies. sectors, against several exposure for credit lines are established The com- on placement of surplus liquidity. limits extended has approved the Board of Directors AS, Finse Forsikring the wholly owned subsidiary, For Aksjer Global Etisk” and ”Storebrand Global”,” Nordea Stabile “Skagen mutual funds on the Oslo Exchange; in four listed has made investments pany pension Global Multifactor”. of percentage and determination The evaluation 39 % -21 MNOK). (2016: portfolio risk of 25 MNOK a calculated of 41 % gives A decline in value for insurance regulations on reporting stress tests of Norway’s has been set in accordance with the Financial Supervisory Authority decline in value and

The table below shows future maturities for the Group’s liabilities as at 31 shows future maturities for the Group’s below The table Note 15 Note

Accounts 2017 NSB Group Accounts 2017 NSB Group - - 3 17 22 -2 55 784 274 274 -27 -25 219 2016* 2016* 2016* Liabilities - 2016* 2 19 21 -2 62 811 811 2017 2017 2017 -786 1,493 1,509 3,085 3,085 Assets - -2 -2 Liabilities 2017 - - -

Assets of December 2017 (2016: 1.5 % ) and the placements has of December 2017 (2016: 1.5 % ) and the placements st of December 2017 was 13 MNOK (2016*: 3,180 MNOK). (2016*: 3,180 MNOK). 13 MNOK of December 2017 was st 27 of December 2017 (2016: 2.5 %). st

of December 2017, the fixed interest rate was 5,25 % (2016*: 3.97 % to 4.13 %) and the floating rates are mainly 6M NIBOR + margin. are mainly 6M NIBOR + margin. to 4.13 %) and the floating rates % 3.97 5,25 % (2016*: was rate interest the fixed of December 2017,

st TOTAL Energy swaps Energy Interest and exchange rate swaps rate and exchange Interest Changes in fair values of listed securities Changes in fair values This period’s change in fair value This period’s Accumulated change in fair value Accumulated Accumulated change in fair value Accumulated Listed securities Changes derivatives fair value: Changes derivatives This period’s change in fair value This period’s equity securities – Norway and other listed Stocks Stocks and other listed equity securities – Europe and other listed Stocks Other financial instruments TOTAL Bonds and certificates * Applies to continuing operations. Fair value is based on changes in original interest rate, currency exchange and spread (at recording time) against market interest rate, and currency and currency rate, interest time) against market and spread (at recording exchange currency rate, is based on changes in original interest value Fair at the reporting date. rates exchange was 1.20 % at 31 of financial instruments placements on short term rate interest Effective * Applies to continuing operations. Other financial assets at fair value through profit or loss profit through value fair at 17 Other financial assets Interest rate and foreign exchange swaps Interest rate and foreign exchange at 31 contracts swaps rate interest The notional principal of the outstanding * Applies to continuing operations. * Applies to continuing operations. the income statement. are continuous recognized in changes in derivatives value Fair does not use hedge accounting. The Group of electricity and diesel prices. to hedging relate contracts Energy or contractual obligations. assets as current are classified Derivatives 16 Derivatives 1.05 % as at 31 was bank deposits on short term rate interest Effective an average maturity of 93 days. 93 of maturity average an

At 31 At Note 16 | Note 29 1 - 2 3 72 27 27 811 811 274 274 273 Total Total 1,247 1,247 8,240 7,057 7,057 3,321 3,321 3,710 2,875 2016* 2016* 2016* 1,085 3,085 3,085 3,085 3,085 2,902 10,643 10,643 Total Total ------2 90 893 850 2017 2017 2017 1,373 3,085 6,638 2,090 2,090 4,193 2,448 Level 3 Level 3 Level - 1 ------2 3 27 27 811 811 219 273 2,875 2016* 2016* 2,875 1,084 1,030 2,902 2,902 Level 2 Level 2 Level - - - 1 - - - 2 3 ------55 55 2017 2017 3,085 3,085 3,085 3,085 3,085 3,085 Level 1 Level 1 Level Assets at fair value value at fair Assets Liabilities at fair value Liabilities at fair value through profit and loss profit through through profit and loss profit through - - - - 72 835 1,247 3,321 3,321 2016* 2016* 4,156 8,240 9,559 9,559 - - - 90 892 850 2017 2017 of December 2016*: of December 2017: 1,373 4,190 2,448 3,553 2,090 st st 28 Other financial liabilities at amortised cost Loans and receivables

19 of December st of December st

Cash and bank deposits TOTAL Cash and bank deposits TOTAL Financial assets at fair value through profit or loss profit through at fair value Financial assets Trade and other payables (excl. statutory liabilities) statutory (excl. and other payables Trade Trade and other receivables (excl. prepayments) (excl. receivables and other Trade Derivatives Derivatives Financial lease liabilities Derivatives used for hedging Derivatives LIABILITIES TOTAL TOTAL ASSETS TOTAL Debt and accrued interest Financial fixed assets Financial fixed Debt (excl. Financial lease liabilities) Debt (excl. Financial assets available-for-sale: Financial assets - Debt instruments ASSETS TOTAL Derivatives used for hedging Derivatives used for hedging Derivatives Cash and bank deposits Liabilities at 31 Assets at 31 Assets Debt and accrued interest used for hedging Derivatives LIABILITIES TOTAL Year Year Financial assets and liabilities at fair value through profit and loss per. 31 and loss per. profit through Financial assets and liabilities at fair value * Applies to continuing operations. 19 * Applies to continuing operations. Includes restricted funds of 128 MNOK (2016: 132 MNOK). funds of 128 MNOK Includes restricted Financial assets and liabilities at fair value through profit and loss per. 31 and loss per. profit through Financial assets and liabilities at fair value * Applies to continuing operations.

Financial instruments by category by 18 Financial instruments Note 18 | Note

Accounts 2017 NSB Group Accounts 2017 NSB Group 7

92 829 835 835 Total Total 7,911 7,911 5,144 3,710 2,783 2,875 MNOK 3,686 3,686 -5,886 -1,190 31.12.16* 31.12.16*

- 1 1 - - 6 57 835 892 892 893 886 Share MNOK 1,458 31.12.17 31.12.17 premium shares Ordinary 3,685,500 3,685,500 3,685,500 3,685,500 No. of No. shares 3,685,500 3,685,500 3,685,500 3,685,500 29

21 of December 2017 st of January 2017 st

OF DECEMBER ST of January st Shares at 1 Change in value during the current period during the current Change in value Transferred discontinued operations Transferred 31 Shares at 31 1 Nominal value of long-term interest bearing debt of Nominal value Other non-current debt, incl. financial lease incl. debt, Other non-current TOTAL loans Current debt share of non-current Current Total DEBT TOTAL Mortgage loan Mortgage debt Other current Non-current loans Non-current * Applies to continuing operations. facilities. bank overdraft has not utilized its The Group There is only one class of shares. The par value of a share is NOK 1,000,-. As a result of demerger, the share premium reserve was reduced. was the share premium reserve a result of demerger, As 1,000,-. share is NOK of a par value The shares. There is only one class of for 2017. dividend has been proposed A 315 MNOK 2016. year for the fiscal dividend payment no There was in 2018. at the General Assembly The decision will be made is a The EMTN programme (EMTN-Programme). loan programme Note Medium Term under the Euro been completed bond issues have All existing optional for an except financial covenants, any does not contain The EMTN-programme that NSB utilizes when bonds are issued. loan-documentation shall own 100 % of NSB. of Norway clause that requires that the State a minimum equity share of 20 %. that demands with a covenant credit facility of 2,000 MNOK revolving NSB has a multicurrency in the second-hand market. banks and the price/exchange from observations on bonds is based on market of the credit margin value Fair 21 Debt Share capital and share premium and share capital 20 Share

Nominal value of long-term debt per 31st of December 2017: 892 MNOK (2016: 835 MNOK). debt per 31st of December 2017: 892 MNOK of long-term Nominal value Note 20 | Note 31 - - 50 812 581 120 861 407 927 280 308 600 3.01 3.01 2.28 3.06 3.06 1,722 3,710 2,783 2016* 2016* 2016* 2016* 2016* 2016* 2016* 1,366 2,050 2,000 - - - - 50 137 371 218 384 675 253 495 880 893 856 2017 2017 2017 2017 2017 2017 2017 3.01 3.01 -812 3.29 3.29 1,604 2,050 2,000 SEK NOK NOK

Other loans Expiring after 5 years Expiring after TOTAL Expiring between 1 and 5 years Expiring between Expiring within 1 year The Group has the following unused loan facilities: has the following The Group Floating interest rate - Expiring within one year - Expiring after one year one - Expiring after TOTAL NOK SEK The carrying amounts of the Group`s debt are denominated in the following currencies: Group`s amounts of the The carrying CHF TOTAL Changes in fair value on non-current debt: on non-current Changes in fair value Change in fair value during the current period during the current Change in fair value Accumulated change in fair value Accumulated Effective interest rate at the balance sheet date in %: interest rate at the balance sheet Effective Bonds Between 1 and 2 years 1 and Between 5 years 2 and Between 5 years Over Non-current debt expire in: debt expire Non-current Loans and hedgings 6 months or less 6 months Over In addition, NSB has entered an agreement to lease trains from 2016 to 2021. The rent amounts to 1,212 MNOK for 2018. MNOK 1,212 to The rent amounts 2021. 2016 to lease trains from an agreement to NSB has entered In addition, * Applies to continuing operations. Operating leases Future accumulated cancel the agreement. to the lessee the right give also leases plant and equipment where the leasing agreements The Group are as follows: cancellable leasing agreements to related minimum payments * Applies to continuing operations. at the time and is for one year Credit is granted bank account system. NSB-Group to related is a bank overdraft within one year The facility that expire in April 2019. credit facility expires revolving NSB`s long term annually. renewed * Applies to continuing operations. their fair value. debt approximate of the non-current amounts The carrying

The exposure of the Group`s debt to interest changes and the contractual dates at the balance sheet dates are as follows: dates at the balance sheet dates are as debt to interest changes and the contractual of the Group`s The exposure Note 21 Note

Accounts 2017 NSB Group Accounts 2017 NSB Group 1 - - - -1 -3 -4 37 -17 -32 -35 746 186 130 130 700 698 698 17 % -568 2016* 2016* 2016* - - - - 2 -1 -6 22 -11 772 185 -34 -25 347 347 138 138 341 2017 2017 2017 18 % -209 31

Effective tax rate tax Effective Reconciliation between nominal and actual tax expense rate: expense and actual tax nominal Reconciliation between Tax payable on the balance sheet are as follows: payable Tax expense tax payable Current ON THE BALANCE SHEET PAYABLE TAX tax before income Profit % / 25 %) (24 rate using the nominal tax income tax Expected the following items: effect from Tax method) (exemption investm. to Other permanent differences related expense Income tax Tax on Group contributions on Group Tax years prior tax provision excessive Insufficient/ on the balance sheet on discontinued operations payable Taxes Other non-deductible expenses Other non-taxable income Other non-taxable assets tax Fiscal loss concerning unrecognized deferred rate Effect of change in income tax years prior tax provision Insufficient Other items Change in already recognized downgrade of deferred tax asset tax Change in already recognized downgrade of deferred Income tax expense: Income tax TOTAL INCOME TAX EXPENSE INCOME TAX TOTAL Current income tax payable tax income Current Changes in deferred tax Changes in deferred * Applies to continuing operations. 22 Tax

Tax payable in the balance sheet will partly be offset by proposed group contributions which will be decided by the general assembly in 2018. the general assembly in 2018. contributions which will be decided by group proposed will partly in the balance sheet be offset by payable Tax Note 22 Note 7 0 9 -7 15 -2 -0 84 35 127 -21 -47 418 427 551 129 524 322 859 -115 -173 -148 -139 -273 -545 -293 -308 -566 31.12. 31.12. 2,223 2,223 2,204 -2,120 -2,647 ------to -8 -2 -0 -18 -16 -67 457 624 439 -398 -562 1,829 distri- distri- 1,829 2,584 2,383 bution -2,709 owners owners Held for Held for bution to ------

-8 ------

5 -8 Tax Tax -32 -32 -32 Tax Tax -93 -93 Group Group effect -356 -362 -362 bution Group Group effect contribution contri------1 ------8 2 9 9 to to -1 35 -4 -3 53 -18 222 222 386 -160 equity equity directly directly Charged Charged Charged Charged ------1 - - -1 29 -2 -6 39 163 -10 172 163 691 163 166 688 689 Charge Charge Charge Charge income income hensive hensive hensive hensive to other to other compre- compre- - - 8 14 -2 -2 46 36 26 184 210 -18 122 -25 -68 567 106 762 762 692 464 500 360 -191 -140 -614 ment ment -358 -208 -402 1,870 2,743 2,743 state- state- 1,868 charge charge Income Income - - - - - 1 - - - - - 1 ------2 32 0 0 -1 -2 -2 -6 -11 -11 -39 -46 -46 sition sition Acqui- Acqui- sidiary sidiary of sub- of sub------1 - - 1 1 1 3 2 2 2 -3 31 15 16 Ex- Ex- diff. diff. -15 -28 -32 change change - 7 8 0 21 10 70 36 -21 -47 124 418 322 829 683 -139 -293 -139 -272 -545 -328 -565 -462 01.01. 01.01. 2,257 2,204 -1,139 -1,139 -2,180 -2,647 -4,234 -5,594 -5,594 -4,562

2017 2016 Benefit (+) / Liability (-) assets Fixed Benefit (+) / Liability (-) Benefit (+) / Liability (-) assets Fixed Financial assets Inventories Inventories Inventories Inventories Receivables Receivables Receivables Receivables Value changes to investment property property investment changes to Value Value changes to financial current assets assets current financial changes to Value Value changes to financial current assets assets financial current changes to Value Retirement benefit obligations Retirement benefit obligations Provisions for other liabilities and charges for other liabilities and charges Provisions Provisions for other liabilities and charges for other liabilities and charges Provisions Gains (losses) Losses carried forward forward Losses carried Gains (losses) Other Losses carried forward forward Losses carried Total gross temporary differences temporary gross Total Off-balance sheet deferred tax benefits benefits tax Off-balance sheet deferred Other Net temporary differences Total gross temporary differences temporary gross Total Net deferred tax asset/liability 27 % tax Net deferred Effect from changes in tax rate rate changes in tax Effect from Off-balance sheet deferred tax benefits benefits tax Off-balance sheet deferred Net deferred tax asset/liability on the tax Net deferred balance sheet Net temporary differences Net deferred tax asset/liability 25 % asset/liability tax Net deferred Effect from changes in tax rate rate in tax changes Effect from Net deferred tax asset/liability on the asset/liability tax Net deferred balance sheet 24 %

Spesification of the tax effect from temporary differences and losses carried forward: carried temporary differences and losses tax effect from Spesification of the liabilities and tax current against assets tax offset current right to are offset where there is a legally enforced asset and liabilities tax income Deferred are as follows: The offset amounts authority. the same tax are due to income taxes where the deferred Note 22 Note

Accounts 2017 NSB Group Accounts 2017 NSB Group 2 -1 56 681 105 240 683 -821 -139 -822 5,941 5,941 9,287 9,287 2016* 2016* 2016* 2016* 6,341 6,341 11,479 7 -7 141 131 127 691 684 296 2017 2017 2017 2017 -557 -564 5,515 5,515 8,928 8,928 6,084 6,084 10,992 10,992

33 23

Payroll and related expenses and related Payroll Other employee benefit expenses benefit Other employee TOTAL Pension costs – defined benefit plans (note 24) plans (note – defined benefit Pension costs Pension costs – defined contribution plans (note 24) plans (note – defined contribution Pension costs

Wages and salaries, including employment taxes including employment and salaries, Wages equivalent full-time Average of employees number Average Deferred income tax assets tax income Deferred Deferred income tax assets to be recovered after more than 12 months more than 12 after be recovered to assets tax income Deferred 12 months within be recovered to assets tax income Deferred TOTAL Deferred tax liabilities tax Deferred 12 months within be recovered to assets tax income Deferred (NET) LIABILITY DEFERRED INCOME TAX TOTAL Deferred income tax assets to be recovered after more than 12 months more than 12 after be recovered to assets tax income Deferred TOTAL * Applies to continuing operations. operation in 2017 and 2016. the total apply to and number of employees full-time equivalent Average for the year. of the actual full-time equivalent average The calculation is based on a weighted * Applies to continuing operations. 33). transactions (note for related-party to in the note covered key management are Officer and for Chief Executive Benefits 23 Deferred tax assets on forwarded fiscal losses are recognized when it is probable that the Group will utilize the losses towards future taxable profits. profits. taxable future towards the losses will utilize that the Group fiscal losses are recognized when it is probable on forwarded assets tax Deferred 290 amounting to forward (64 MNOK) in respect of losses carried of 64 MNOK in Sweden assets income tax deferred has not recognize The Group MNOK (291 MNOK). * Applies to continuing operations. Note 22 | Note 35 of st of st

quarter of 2019. The Group’s 2017 pension cost and 31 2017 pension cost The Group’s of 2019. quarter th December 2017 pension liability is calculated according to IAS 19. The The 19. IAS according to liability is calculated December 2017 pension to liability in these companies amounts of the pension value carrying as of the balance sheet and a fair, give to and is considered MNOK, 1,574 account the estimated into liability taking the Group’s best view of date, to Agreed compensation the pension plans settlement. effect from will pension plan settlement for whom the defined benefit employees with 78 MNOK. is expensed effect, a negative have the on who should pay amended the criteria state The Norwegian from 1 defined benefit plans for the SPK accrued regulation liability in the 4 January 2018. The amendment to the payable regulation liability is not the payable The amendment to January 2018. by grants is primarily financed pension liability as it included in NSB AS national budget for 2017. in the revised state the Norwegian from and Sweden in Norway Other arrangements which in Norway There are additionally defined contribution plans employees). (5,243 employees 5,167 covers the and pension rights have in Sweden employees All of the Groups’ covers plan that are funded in a Multiemployer obligations companies’ (1,519 employees). 1,615 employees is responsible for plan and the employer The plan is a Multiemployer to the statement According are made in full. until payments the benefits It has this is a performance based settlement. Redovisningsrådet, from and to calculate sufficient information obtain so far not been possible to and therefore it is treated for this plan, obligations and assets allocate not received The companies have as a defined contribution plan. This is today. 2007 until years from of the fiscal for any actuary estimates most companies with a retirement benefit obligation an issue faced by plan in Sweden. with the Multiemployer are included (notional numbers) taxes employment below, In the tables expense. and this year’s obligations for both gross 34

Closed defined benefit plan the current settle December 2017 to made end of A decision was AS in the AS and NSB Gjøvikbanen pension benefit plan for NSB old by 55 years for those above Public Service Fund (SPK) Norwegian an earned right will be granted employees All younger the end of 2018. The plan as of 2019. and will join a new defined contribution in the SPK, available to be to employees final settlement employer’s expects SPK Retirement benefit obligations and similar obligations and similar benefit obligations 24 Retirement General and age-disability- to related has pension arrangements The Group Below is a more detailed for spouses and children. benefits bereaved and how these are structured. description of type of arrangements top leader- for The additional defined benefit pension plan agreement operations. ship is not funded and will be paid through retirement benefit agreements, tariff through The companies have, by Regulated obligations in affiliation with Early Retirement Pension active 3,708 this agreement cover Obligations through Contract (AFP). members. plan Defined benefit pension pension agree- collective several have The companies in the Group Pension Fund Public Service Norwegian the handled by that are ments companies comply with Norwegian The (SPK) or insurance companies. out. the pension from benefits The plan covers the law on public pension. a age- and disablity pension of 66 % in 12G and results basis up to to connected The obligations fully vested. of the pension basis when retirees. members and 3,769 active 3,708 covers these agreements paid services that mainly The retirement benefit plans entitle defined future at level and wage are dependent on the number of contribution years are coordinated received benefits The pension the time of retirement. be dependent on its with the National Insurance scheme and will also benefits Note 24 Note

Accounts 2017 NSB Group Accounts 2017 NSB Group

9 -2 54 36 36 -34 281 -43 381 105 613 224 276 285 240 -1 % 2016 -627 -529 2,318 2,318 2,345 2,264 9,806 9,806 -7,542 -7,542 (7-9%) (9-11%) - - - 47 -2 -3 47 46 -11 1 % 141 484 343 144 251 301 296 Increase in G 2017 -473 2,318 2,276 2,230 2,230 -7,817 -7,817 -2,276 10,047 10,047 14-15% 10-12% -1 % (4-6%) (13-15%) 1 % 6-8% Salary growth rate Salary growth 18-20% -1 % 16-18% 21-23% 1 % Discount rate 35 (12-14%) (22-24%) of January st OF DECEMBER ST

Increase (+)/decrease (-) net pension obligation at 31.12. in % Increase (+)/decrease (-) net pension obligation at 31.12. Increase (+)/decrease (-) this period's net pension expense in % net pension expense Increase (+)/decrease (-) this period's Net financial items in the acount from discontinued operations in the acount from Net financial items Curtailments 31 VALUE BOOK This years net return on assets/increase in obligation continued operations net return on assets/increase This years continuing operations in the acount from Net financial items plan to Payments discontinued operations to Net pension obligation transferred Specification of net defined benefit pension plan obligations Specification of net defined Present value of earned pension rights for funded collective pension plans for funded collective of earned pension rights Present value of unfunded obligations Present value Unrecognised actuarial losses actuarial deviations This years' in obligation discontinued operations net return on assets/increase This years Fair value of plan assets value Fair ON THE BALANCE SHEET PENSION OBLIGATION NET Changes in pension retirement obligations: Changes in pension retirement net pension obligation 1 Book value Total financial items in the accounts Total PENSION PLAN PENSION EXPENSES DEFINED BENEFIT TOTAL Defined contribution plan 23 – see note expense and related included as payroll contribution, Employer’s PENSION EXPENSES TOTAL Pension expenses included in the accounts, defined benefit pension plan in the accounts, included Pension expenses – see note 23 and related expenses in payroll incl. return on pension plan, Total Present value of current pension earnings of current Present value contribution Employee Curtailments The Population is characterized by a high pensioner population and high average age on participants that affects the sensitivity analysis. age on participants that affects a high pensioner population and high average by The Population is characterized

Sensitivity analysis with change in central assumptions Sensitivity analysis the defined benefit pension plans in affects with change in assumptions that significantly effects for potential below shows estimates The table these estimates. differ from substantially may results Actual Norway. Note 24 Note 37 - - - -7 413 420 420 2012 2012 9,781 9,781 2,543 2,543 -7,238 -7,238 2.75 % 3.70 % 3.70 3.80 % 3.80 3.80 % 3.80 3.50 % 3.50 0.00 % 0.00 14.10 % - - 72 59 -13 351

2013 2013 -364 2,465 2,465 -7,574 -7,574 2.75 % 3.70 % 3.70 3.50 % 3.50 3.90 % 3.90 3.90 % 3.90 0.00 % 0.00 10,039 10,039 14.10 % - - - 76

371 371 447 2014 2014 2,552 2,552 1.95 % 2.70 % 2.95 % 2.80 % 2.80 % -8,386 -8,386 10,938 10,938 0.00 % 0.00 14.10 % - -3 54 138 192 398 2015 2015 -257 2,345 2,345 11,091 1.65 % -8,746 -8,746 2.70 % 2.70 % 2.40 % 2.60 % 0.00 % 0.00 14.10 % - - -2 36 276 242 240 2016 2,318 2,318 2016* 9,860 9,860 1.75 % -7,542 -7,542 2.55 % 2.50 % 0.00 % 0.00 2.60 % 2.60 % 14.10 % - - -2 47 298 343 296 2017 2017 2,276 2,276 36 -7,817 -7,817 1.65 % 2.25 % 2.40 % 2.50 % 2.50 % 0.00 % 0.00 10,093 10,093 14.10 %

of December 2017 st

20,5 years 20,5 years 23

NET PENSION OBLIGATION AT THE FINANCIAL POSITION THE FINANCIAL AT OBLIGATION PENSION NET Non-recognised actuarial losses Total net pension obligations Total Pension assets Average social security tax social Average Financial position obligations Total Annual reg. of pension increases Annual reg. TOTAL FINANCIAL ITEMS IN THE ACCOUNTS ITEMS IN THE ACCOUNTS FINANCIAL TOTAL Corridor: % of max (PBO, pension assets) % of max (PBO, Corridor: Total financial items in the accounts financial items Total G-regulation Total cost in the income statement cost in the Total Average salary growth salary Average Changes and deviations in estimates allocated to net income to allocated in estimates Changes and deviations Plan changes during the year Plan changes during the return on plan assets Expected Income statement earnings pension of current Present value Discount rate

Financial assumptions (defined benefit plans) * Applies to continuing operations. assumptions 31 Explanation of key The last few years’ development in pension expenses and pension obligations shows the following: in pension expenses development The last few years’ Female responsibility in the as the effect of increased regulatory as well changes in economic parameters in 2017 are mainly due to deviations Actuarial Public Service Pension Fund. Norwegian in an increased obligation for the Group. liquid is considered a deep and The OMF-market bonds (OMF). based on preferential is set at 2.5 % ( 2.6 %) and is determined The discount rate 19. to IAS according rate a reference for interest maturity that qualifies as to with applicable terms marked the of 1 % and inflation of 1.5 %. real salary growth of expected as the total schemes is primarily calculated for Norwegian Salary adjustments 0.75 %. of factor G regulation) less a fixed to (equivalent salary growth primarily follows average disbursement Pension adjustments for are: and disability risk. of mortality rate K2013 and IR 73 has been used for determination the tariffs On the demographic factors, K2013: old is according to for a person retiring when he/she turns 65 years remaining life expectancy Average obligation risks Male increased key of defined benefit contribution plans Risk evaluation events. to uncertainties in assumptions and future defined benefit contribution plans due a range of risks via its to is exposed The Group an The Expected longevity among members results An increase in life expectancy live. for as long as they the employees pension to pay has assumed an obligation to The Group in Yield risk obligations. the Group’s which will cause an increase to a reduction in actual yield on the pension assets, by is affected The Group risk Inflation- and salary growth to closely related changes are though salary development even changes, both inflation and salary to pension obligation is exposed The Group’s obligations. Group’s increases the Higher inflation and salary changes than used in the pension calculations, inflation. Note 24 Note

Accounts 2017 NSB Group Accounts 2017 NSB Group 7 77 317 310 115 317 197 197 317 -24 -29 255 289 -105 Total Total 2016 1,751 3,517 3,517 2016* 1,569

- - 4 5 6 6 6 -1 27 -27 of December 1996 285 289 564 205 2017 2017 st Other Other 1,884 2,653

- - 9 16 16 - 7 50 -12 -22 losses losses Contract Contract of January 2005. NSB was compensated compensated NSB was of January 2005. st - 78 -5 25 -98 295 275 275 295 zation zation Reorgani- Reorgani- obligation obligation - - - - 0 -7 -2 34 -25 ment. ment. ment. ment. Environ- Environ- Environ- Environ- Pollution Pollution 37 26

of January of January

st st Trade and other short term payables short term other and Trade TOTAL Transferred to discontinued operations to Transferred TOTAL Used during the year Used during the year Change in provision during the year Change in provision Change in provision during the year Change in provision At 1 At 1 Classification in the statement of financial position: Classification in the statement TOTAL Non-current liabilities Non-current 25) liabilities (included in note Current 2016 2017 Social security and other taxes Social security and other liabilities Other short term TOTAL

Trade payables Trade Restructuring reform (see the railway the changes required by adapt to The purpose of the restructuring is to announced a restructuring plan in 2016. NSB Group at the end of 2017 is mainly of 275 MNOK The restructuring provision 36. note please refer to restructuring costs of the total an overview For 2). Note as of 31 December 2018. pension scheme compensation in the revised as approved as well the downsizing that will incur in 2018, due to are covered by the company. Accruals are made for expected outcomes of existing cases and expected future cases. future cases. cases and expected of existing outcomes are made for expected Accruals the company. by are covered Legal disputes and where there is a probable are made for disputes Accruals with some being tried in the courts. in legal disputes, is involved The NSB-Group quantifiable risk of losing. with a limited calculated amount, which is included as a reorganization obligation in other long-term debt on the balance sheet. obligation in other long-term which is included as a reorganization amount, calculated with a limited related injuries Work until the formation of NSB BA 1 of January 1990, 1st during the period from injuries which occurred related Compensation for work Provisions for other liabilities charges and other for 26 Provisions * Applies to continuing operations. (18 MNOK). parties is in 2017: 51 MNOK related The amount due to and related accrued payroll liabilities include pre-paid revenue, Other current fair value. to corresponds of trade and other payables Book value expenses. as other accrued as well expenses 25

Severance – reorganization liability – reorganization Severance made redundant before 1 who were refund employees to obligated was the company NSB AS, In establishing Note 25 | Note 39 - 43 777 777 735 2016* 1 5 655 650 2017

38 of December 2017 an evaluation of the value of the Groups’ PPE is performed, where there are PPE is performed, of the Groups’ of the value of December 2017 an evaluation st evaluations according to IAS 37 IAS according to evaluations evaluations according to IAS 36 IAS according to evaluations 3.0 % 3.0 2.0 % % 7.0 28

December 2017, there are accruals of 9 MNOK (16 MNOK) for future contract losses with in the bus operation. (16 MNOK) of 9 MNOK there are accruals December 2017, st

Contract losses Contract Depreciation intangible assets (note 7) (note assets Depreciation intangible TOTAL Depreciation current assets (note 8) (note assets Depreciation current 8) (note assets Impairment non-current Based on the main assumptions, the Group has not recognized or reversed impairment losses in 2017. The Group has cash-generating units where cash-generating units has The Group impairment losses in 2017. has not recognized or reversed the Group Based on the main assumptions, also has cash-generating units The Group 35). (MNOK 23 MNOK down by in use as at 31 December 2017 and are written at value are valued the assets where the contracts For 11). 3 (MNOK MNOK down by which are written of buses as at 31 December 2017, at the fair value are valued where the assets than fair value. 1 lower MNOK approximately which was 103, in use is MNOK value total fair value, down to are written assets Sensitivity in the calculation have variables on selected sensitivity analysis 36 impairment calculations, that are included in the IAS the uncertainty describe To year. where PPE is impaired in the current is performed on contracts A sensitivity analysis been performed. Discount rate a below shows the effects overview The contracts. differently across present value changes to affects of +/- 1 % -points A change in discount rate plant and equipment. with a need for impairment of property, change has on the contracts discountrate Borrowing rate rate Borrowing for further 28 information. see note in the bus operation, on losses on tenders provisions For * Applies to continuing operations. Property, plant and equipment, and contract losses plant and equipment, Property, plant and equipment in property, which means significant investments contracts tender long term to is mainly related in the Group Operating revenue as at 31 of the accounts In the presentation (PPE). Depreciation, amortization and impairment amortization 28 Depreciation, 27 of 31 As indications of permanent impairment (IAS 36). 36). indications of permanent impairment (IAS cash flow generating unit for every in use is calculated Value been performed. in use have calculations using value the balance sheet value, test To where there is an indication of permanent impairment on PPE. in use has been performed on the tenders Calculation of value (CGU). operating expected and the contracts from Revenue tender. future cash flows for each of expected as present value in use is calculated The value At the lifespan in the future cash flows. are included in the contracts’ CGU, each separate to that can be allocated including overhead expenses, Included in the suppliers. from guarantees or residual value on experiences based on the buses is included, value a repurchase end of the contract, - it is assumed that these options are ex of the contracts, In the evaluations the contracts. extend the contracting entity has the option to contracts, The recoverable amount. the recoverable than value is lower if the balance sheet are undertaken Impairments ercised and included in the cash flows. use. in and value less sales costs amount is the higher of fair value IAS according to additional provisions for any are also evaluated the contracts 36, IAS according to balance sheet values evaluating In addition to activities in each separate operational cash flows from of future expected continuously present value measures the Group In these evaluations 37. amount of continuing or the lower to is limited The provision operating expenses. include all future unavoidable payments where estimated contract, the remaining life of the contract. is released over The provision the contract. exiting main assumptions are used: the following 37, 36 and IAS in accordance with IAS evaluations In the future cashflows of rate Growth

Discount rate Discount rate Note 27 | Note

Accounts 2017 NSB Group Accounts 2017 NSB Group 1 3 5 9 28 30 26 26 825 1,473 1,324 2016* 2016* 6,881 6,881 3,259 3,259 Estimated Estimated impairment* impairment* accumulated accumulated 1 - 5 6 26 26 26 26 932 2017 2017 1,747 1,747 7,674 7,674 1,455 Actual Actual 3,540 3,540 impairment impairment accumulated accumulated - - 2 -2 value value present present Change in Change in 39 29

TOTAL FEE TO AUDITOR FEE TO TOTAL

Sales- and overhead expenses Sales- and overhead VAT): operations (excluding fees total Auditing fee audit Statutory services Assurance Other services Energy used in operations Energy expenses property machinery rental, Repair and maintenance, Other operating expenses TOTAL EBITDA Change in factors Discount rate Change in factors Interest rate +1% rate Interest per contract + 1 MNOK EBITDA Interest rate -1% rate Interest per contract - 1 MNOK EBITDA * Applies to continuing operations. 29 Other expenses * Actual accumulated impairment affected by evaluations of market value of buses. of market evaluations by affected accumulated impairment * Actual value valued at use that are The assets valuation hierarchy. 2 in a be classified at Level for buses would at fair value rated The cash-generating units valuation hierarchy. 3 in a be classified at Level would Note 28 | Note 41 2 4 -4 12 48 178 -10 -47 175 141 -36 -60 -39 150 180 -26 325 1,007 2016* 2016* TOTAL 2,925 -2,084 4 -1 24 21 -47 -11 -15 157 132 297 297 2017 2017 -135 -108 1,158 1,455 - 11 180 872 963 -100 lease Financial liabilities - - - 2 786 -784 to hedge liabilities Asset held Asset 1 - 42 -812 2,837 -1,984 Liabilities 40 32 31 | of December 2017 st of January 2017 st

Leases Liabilities from financing activities Liabilities from Acquisition lease liabilities Acquisition changes value Fair Cash flow from financial activities Cash flow from Non-cash changes gain/loss exchange Foreign Other transaction Liabilities 31 Liabilities 1 Lease of machinery/equipment, not incl. on the balance sheet not incl. Lease of machinery/equipment, (external) Lease of property TOTAL

TOTAL FINANCIAL ITEMS FINANCIAL TOTAL Unrealised value changes Unrealised value Net financial expenses - pensions expenses Net financial Net foreign exchange losses Net foreign exchange EXPENSES FINANCIAL TOTAL Other financial expenses Other financial Interest expense Interest

TOTAL FINANCIAL INCOME FINANCIAL TOTAL Interest income Interest Other financial income gains Net foreign exchange * Applies to continuing operations 32 31 * Applies to continuing operations.

Financial income and expenses 30 Financial income and Note 30 | Note

Accounts 2017 NSB Group Accounts 2017 NSB Group

2 2 2 3 4 18 43 20 46 348 508 2016 2016 3,515 3,515 3,007 3,007 - -

3 14 14 45 49 52 45 847 2017 2017 1,685 4,185 3,338 3,338 41

Related party transactions Related

the Ministry of Transportation Entities owned by TOTAL the Ministry of Transportation Entities owned by TOTAL

Sale of goods and services: Sales of other goods and services TOTAL Purchases of goods and services: Receivables: Loans to related parties Other companies in the Group Public purchase of passenger traffic services companies Associated Debts Other companies in the Group the Ministry of Transportation Entities owned by TOTAL 33 parties: NSB has the following related Owner the Ministry of Transport other businesses owned by In addition, party. and Communication is a related the Ministry of Transport of NSB, the owner As NSB. party to a related and Communication is also Group Companies within the same these parties to companies that are related as other Group as well 10 and 11, 3, in notes as noted and joint ventures associates All subsidiaries, NSB. party to is a related companies, management Board of Directors and excecutive NSB. party to are also related the Board of Directors management and Executive of Below is an overview parties includes both continuing and discontinued operations. balances against related intercompany sales and Purchases, parties: related to and guarantees balances transactions, There are no related party loans. There are no related Guarantees trains in operate AB for a license to Tågkompaniet fully owned subsidiary Svenska on behalf of its 40 MSEK of has issued a guarantee NSB AS in Sweden. Värmland AB. a contract with Norrtåg to AB related Tågkompaniet fully owned subsidiary Svenska on behalf of its 150 MSEK of has issued a guarantee NSB AS

Year-end balances arising from sales/purchases of goods/services: balances arising from Year-end Note 33 43 ------15 30 783 165 955 748 748 212 212 779 164 210 783 387 735 467 467 239 239 893 250 685 2016 4,046 3,122 3,122 3,370 3,370 1,360 Calcul. Calcul. Pension Pension expence* expence* - - 454 217 217 612 444 444 222 328 829 993 256 2017 Total Total 1,304 1,209 1,209 1,727 1,184 1,448 1,438 1,463 2,801 3,125 3,125 payed payed 1,360 1,036 4,855 2,495 5,067 5,067 2,486 2,803 2,652 3,086 3,086

20,213 20,857 20,857 benefits benefits 21 76 76 76 43 54 54 63 51 76 68 62 124 132 131 191 191 929 143 133 103 939 Other Other benefits benefits ------431 327 426 426 362 387 349 349 892 463 356 466 3,621 1,186 salary salary 2,799 Variable Variable 729 729 433 623 968 1,284 1,228 1,932 1,362 2,166 1,122 2,311 1,185 1,041 3,772 2,321 1,400 1,920 Salary Salary 17,119 17,119 2,566 3,690 3,690 15,663 42 of July 17) st of June 2016) of June 2016) st st of June 2017) of June 2017) th th of November 2017 of November of August 2017) of August st of May 2016) of May st st of May 2016) of May st of June 2016) of June 2016) st st of Juni 2016) st of May 2016) of May st Chief Financial Officer (until 31 Executive Vice President travel (from 1 (from President travel Vice Executive General Manager CargoNet Executive Vice President travel (from 1 (from President travel Vice Executive CEO, Director of Passenger Train Director CEO, Chief Financial Officer (from 1 Chief Financial Officer (from General Manager Nettbuss Chief Financial Officer (from 1 Chief Financial Officer (from and President strategy Vice Executive 1 functions (from corporate General Manager Nettbuss (until 30 (until General Manager Nettbuss General Manager Nettbuss (from 1 (from General Manager Nettbuss Executive Vice President HR, IT and Legal IT President HR, Vice Executive (until 31 CEO, Director of Passenger Train Director CEO, Executive Vice President strategy and corporate functions and corporate President strategy Vice Executive 1st of June 2016) (from Chief Executive Officer Chief Executive General Manager CargoNet (until 30 General Manager CargoNet Chief Executive Officer Chief Executive 1 (from of Passenger Train Director CEO, General Manager CargoNet (from 1 (from General Manager CargoNet Director Strategy and BD (until 31 Strategy Director Title Staff representative (until June 2016) representative Staff 2016) Chairman of the board (until May Staff representative Staff Staff representative Staff Staff representative (from June 2016) (from representative Staff Member of the board Member of the board Vice chairman of the board (acting Chairman, May-October 2016) May-October chairman of the board (acting Chairman, Vice Title Title Chairman of the board (from October 2016) October Chairman of the board (from Member of the board

Kjell Haukeli Marianne B. Einarsen Marianne B. Arne Fosen TOTAL Marianne B. Einarsen Marianne B. Tom Ingulstad Tom Irene Katrin Thunshelle Arne Veggeland Irene Katrin Thunshelle Homble Synne TOTAL Arne Veggeland Ole Engebret Haugen Ståle Rooth Ståle Tom Ingulstad Tom Synne Homble Synne Geir Isaksen Arne Fosen Geir Isaksen Arne Fosen Erik Røhne Erik Røhne 2016 (Figures in TNOK) management: Group TOTAL Audun Sør-Reime Audun Kai Henriksen Jan Audun Strand Jan Audun Rolf Juul Ringdal Ove Sindre Lund Ove Kjerstin Fyllingen Åsne Havnelid Åsne Bjarne Borgersen 2017 (Figures in TNOK) management: Group Board members Dag Mejdell Teigland Wenche * Calculated pension expenses for executives are related to personal pension arrangements in addition to collective arrangements, for further description see point d) in the text further description see point d) in the text for in addition to collective arrangements, are related to personal pension arrangements executives for * Calculated pension expenses below. * 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. below. further see point d) in the text description for in addition to collective arrangements, are related to pension arrangements executives for * Calculated pension expenses in the Group. for These costs have earlier been accrued the arrangements. exiting Some of the participants have been compensated for

Compensation of members of the Board and executive management (Figures in TNOK) of the Board and executive Compensation of members Note 33 All employees are included in the collective pension agreement. The agreement premium is not included above. For NSB AS, the General Meeting has the General Meeting NSB AS, For The agreement premium is not included above. pension agreement. are included in the collective All employees In addition, each. TNOK other board members 216.5 and the Chairman 263 TNOK Vice a fee for the Chairman of the Board of 434.5 TNOK, approved and the compensation commit- each of the other members, for TNOK and 39.5 leader, for the with 66 TNOK fees for members of the audit committee wages. include their employee representatives for the staff Fees for each member. for the leader and 5 TNOK with 11.5 TNOK tee

Accounts 2017 NSB Group Accounts 2017 NSB Group of st

of January 2019, the Group Manage- the Group of January 2019, st of February 2015 are followed. These guidelines 2015 are followed. of February th of December 2017 to switch to a new pension scheme in NSB to switch of December 2017 to th Travel, Strategy and Mobility, Group Economics and Finance, and Finance, Economics and Group and Mobility, Strategy Travel, are used in results overall Group’s the and Staff, Organization achievement. calculating target own / business area’s and the company results overall Group’s achievement the target count for 50% each in calculating results for this bonus component. The variable salary must be based on defined and measurable criteria. measurable criteria. salary must be based on defined and The variable must be applied. criteria relevant Several the goals for the variable connection between There must be a strong of the company. strategies salary and the goals and can the executive must be based on variables The bonus criteria he/she is executives of the group either directly or through influence, part of. under- to must be transparent and simple The bonus arrangement stand. this bonus the calculation, (in profit to operating related Profitability, for 50%) counts criterion counts this bonus criterion satisfaction (in the calculation, Customer for 15%) for counts this bonus criterion Sickness absence (in the calculation, 15%). counts this bonus criterion (in the calculation, process The strategy for 20%) Bonus targets must be established within each of the four strategic within each of the four strategic must be established Bonus targets requirements. profitability including strategy, areas of the NSB Group’s total account for 50% of the profitability to related Bonus targets with the following differentiation: bonus potential, for Presidents Vice CEO and the four Executive the Group - For the and CargoNet, Nettbuss the three CEOs of NSB Persontog, - For and the the green journey the smart journey, to related Bonus target for and counts bonus potential up 50% of the total make safe journey area of responsibility. each executive’s and is tailored one third each, that can be included in these categories of bonus targets Examples of mobility development Flyt), (Kompass, measures are efficiency gas emissions, climate quality, satisfaction, customer travel, solutions, occupational injuries and sickness absence, development, reputation accidents. AS with effekt from year end 2018. This entails a liquidation of the current a liquidation of the current This entails end 2018. year with effekt from AS as of 31 55 year over and closure for employees scheme in the SPK, ment, except the CEO will be on a defined contribution plan with the the CEO will be on a defined except ment, This scheme has a 5.5 in NSB AS. same conditions as all other employees The and 12G. 7.1 and 15 percent between 7.1G, up to percent deposit rate life insurance of 20G. AFP and a group a private pension scheme contains sheeme in SPK. is the same as in today’s The disability coverage pension ar- He has a collective pensionable age is 67 years. The CEO’s a pension of maximum 12 to rights carries The arrangement rangement. the CEO has a defined contribution plan of 30 % of the of that, On top G. in 2011. into entered G, 12 over salary fixed state that the pension conditions for senior executives shall be in line that the pension conditions for senior executives state continue to No former senior employees terms. with other employees’ the Group. leaving earn occupational pensions after - Follow pension scheme. are members of a collective All 2017 employees Board decided the Group federation, ing negotiations with the employees’ on the 19 • • • • on goal based for earning a bonus in 2017 was bonus criteria The CEO’s of: achievement • • • • based bonus criteria management have The other members of the group area of responsi- the individual’s to but tailored criteria, on the CEO’s collectively that the group It is a precondition for bonus payout bility. a return on equity of at least 5 %. achieves the Board has decided that the Group in 2018, earn bonus In order to for the CEO and Group following principles should be used as the basis senior executives: • • • d) Pension guide- mentioned state’s the above are appointed, When new executives 13 lines with effect from December 2018. 1 with effect from Consequently, 43

of February 2015. of February th

Executive compensation should be competitive, but NSB will not be a compensation should be competitive, Executive compa- equivalent when compared to leader in compensation market on evaluation compensation an annual external ensure this, To nies. positions is performed. central executive com- executive Total skillful leaders. and keep NSB shall attract and results of responsibility, pensation in NSB shall reflect the level of consideration the size and complexity into and take development, form or be at a level must not take The compensation the operation. reputation. where it impairs the Groups’ salary and additional compensation can consist of fixed Executive and severance bonus, benefits, including fringe compensation, total part be the main of the salary shall always The fixed pension. compensation. and in ac- compensation scheme must be transparent, The executive as the as well governance, cordance with the principles of corporate compensation. for executive guidelines state as understandable should be perceived The compensation system and externally. both internally and acceptable so that flexible should be adequately The compensation system the needed. can be made if adjustments a) Fixed salary a) Fixed of salary is the main element in the compensation arrangement The fixed but not market salary will be competitive, The fixed in NSB. the executives the executives, At hiring of year. salary is assessed once a The fixed leading. a grandfather-principle should apply and be discussed among executives The CEO must consult an offer. is given before the candidate above level No salaries. executive the Chairman of the Board before hiring and setting for Board participation within the NSB-Group. are compensated executives b) Fringe benefits Ex- rates. at comparable market are offered fringe benefits Executives car compensation and free service, free internet amples are free phone, newspapers. salary c) Variable The CEO has a bonus ar- for executives. NSB has bonus arrangements set and individual bonus criteria profit based on the Groups’ rangement, Other The maximum bonus is 5 months salary. the Board of Directors. by limited bonus agreements annual and individually tailored have executives is based on the in the NSB Group The arrangement 3 months salary. to following principles: The Board annually evaluates the CEO’s salary and terms and the Group’s and the Group’s and terms salary the CEO’s The Board annually evaluates of the remuneration The CEO determines Salary Declaration. Executive Management in accordance with the the other members of the Group principles. salary wage adopted compensation in NSB is determined using the following main Executive principles: • • • • • • compensation Elements in executive salary and compensation is composed of fixed of executive level The total that can be included in the various elements Below are the other benefits. salary compensation. executive

Executive salary and benefits policy: salary and benefits Executive guidelines provides Salary Declaration that has an Executives The Group executives. for remuneration of senior Executives as defined in the executives apply to The principles in the declaration This Act. and the Accounting Liability Companies Act Public Limited Guidelines in NSB. management Group also applies to means that they in setting are applied in this statement, and principles as expressed subsidiaries. salaries in Group executive salaries in NSB Main principles for executive are in the NSB Group senior executives to Principles for remuneration for salaries and Board and follow Guidelines the Group by determined and companies in enterprises executives other remuneration of senior and the Ministry of Industry by determined ownership interest with state 13 Fisheries with effect from Note 33 45 - 8 3 17 14 -9 -8 14 37 37 37 32 -19 2016 2016 - 1 7 3 5 9 9 -7 -7 11 20 20 20 2017 2017 44 35 | 34

Business combinations Consideration paid OF NEW SUBSIDIARY VALUE TOTAL Cash and bank deposits Identified assets and liabilities on the balance sheet recognized from the acquisition: Identified assets and liabilities on the balance sheet recognized from Property, plant and equipment Property, Inventories and other receivables Trade Trade and other payables Trade interest Non-controlling Borrowings on PPE value asset on excessive tax Deferred net identifiable assets Total Goodwill TOTAL 35 and Lastebil- Mek AS TK Dekk and Bilservice AS, Gråmyra Bilservice AS, acquired 100% of the shares in the companies Toppen the Group In 2017, AS. Trøndelag senteret The group Eigedom Sogndal AS. and Nettbuss AS Lastvagndelar LVD AS, acquired 100% of the shares in Hallingdal Lastebilservice the Group In 2016, then in January 2018 and from exercised The option was purchase the remaining 51%. with an option to also acquired 49% of Nordvik Last og Buss AS og Nordvik Last 9. of MNOK and other payables” below as “Trade The option price is shown in the table is a wholly owned subsidiary. on the company the company. controlled that the Group assumed as it was of acquisition of 49%, the date from has been fully consolidated Buss AS liabilities: of the purchase price for acquired assets and below shows the allocation The table 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 material that any It is not anticipated liabilities in respect of legal claims arising in the ordinary course of business. has contingent The group for. liabilities other than those provided the contingent will arise from 34 Contingencies NSB has historically entered into pension agreement, with executives, which entitles them to a 60 % pension compensation level of their pension level 60 % pension compensation a which entitles them to with executives, pension agreement, into entered NSB has historically management team no one in the There is currently closed as of 1st of January 2008. was pension arrangement This operating the age of 62. earned from in this scheme. e) Severance arrangements e) Severance period will reduce the severance other salary in this severance Any involuntarily. if leaving benefits and 6 months of severance The CEO has the right to compensation. - the termi does not dispute effect if the employee which takes pay can be reached for a reasonable severance an agreement executives other senior For when the cessation of will not be utilized arrangements Severance salary. 12 months of fixed cannot exceed severance salary including The total nation. is voluntary. employment year accounting the previous in in the NSB-Group and compensation principles for executives Application of the salary was adjusted salary The CEOs fixed guidelines. with abovementioned in accordance for 2017 has been completed compensation policy The executive in 2016. achieved for results 892,185 NOK bonus was Received NOK. 3,741,696 2.4 % to by this are according to All these agreements management team. of the group signed in 2017 with new members were agreements employment Four declaration. salary. fixed 12 month that exceeded 2017 for executives made during payments no severance There were companies. salaries in group executive of also applies for the determination executives to benefits The principles and guidelines for salary and other these principles without exception. in 2017 followed companies have All group Note 33 | Note

Accounts 2017 NSB Group Note 36 | 37

36 Restructuring costs Accounts 2017 NSB Group

The Group’s continuing operations has the following restructuring costs relating to the adaptions to the reform of the Norwegian railway sector.

2017 2016 Payroll and related expenses 1 310 Other operating expenses 66 205 Financial expenses -2 27 TOTAL RESTRUCTURING COSTS 65 542

Additionally, total restructuring costs for discontinued operations amounted to 218 MNOK in 2016.

37 Events after the reporting date

There are no material events which have occurred after the reporting date that will affect the Groups’ profit and financial position.

45 Figures and notes | NSB AS Accounts 2017 NSB AS Income Statement Page 47 Statement of Financial Position Page 48 Cash Flow Statement Page 49 Statement of changes in Equity Page 50 Notes Page 51 1. Principle notes Page 52 2. Continuing and discontinued operations Page 52 3. Shares in subsidiaries Page 54 4. NSB-Group’s passenger operations in the Nordic Region Page 54 5. Segment information Page 55 6. Property, plant and equipment Page 55 7. Investments in associates Page 56 8. Joint venture Page 57 9. Inventory components Page 57 10. Trade and other receivables Page 57 11. Financial risk management Page 58 12. Derivatives Page 58 13. Financial instruments by category Page 59 14. Cash and bank deposits Page 59 15. Share capital and share premium Page 59 16. Borrowings Page 60 17. Deferred income tax/Income tax expense Page 61 18. Payroll and related expenses Page 62 19. Retirement benefit obligations and similar obligations Page 63 20. Trade and other short term payables Page 65 21. Provisions for other liabilities and charges Page 65 22. Depreciation, amortization and impairment Page 66 23. Other expenses Page 66 24. Financial income and expenses Page 67 25. Liabilities from financing activities Page 67 26. Leases Page 67 27. Related party transactions Page 68 28. Contingencies Page 69 29. Restructuring costs Page 69 30. Periodic maintenance on leased trains Page 69 31. Events after the balance sheet date Page 69 Statement from the Board and CEO regarding the annual report 2017 Page 70 Auditor’s Report Page 71

46 47 Accounts 2017 NSB AS 92 -24 134 -35 185 -26 210 507 507 507 322 223 223 223 436 269 2016 -377 -434 -226 2,714 7,235 7,235 3,952 3,952 6,800 6,800 - 6 34 44 371 -33 237 -68 346 502 502 502 502 608 440 440 -110 -106 2017 7,015 7,386 4,578 2,393 5 17 17 18 19 24 24 24 22 19, 24 19, Notes 23, 26 47

Tax on items that will not be reclassified that will not be reclassified on items Tax Actuarial gain/loss Actuarial TOTAL COMPREHENSIVE INCOME FOR THE YEAR COMPREHENSIVE INCOME FOR TOTAL to Attributable Shareholders equity Discontinued operations operations discontinued year from tax for the after Profit THE YEAR FOR PROFIT to Attributable Equity holders Income Other Comprehensive year for the Profit PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS FOR PROFIT or loss Items that will not be reclassified to profit Net financial items Profit before income tax before income Profit expense Income tax Change in unrealised fair value Net financial expenses - pensions expenses Net financial Financial expenses Total operating expenses Total Operating profit Financial items Financial income Other operating expenses Depreciation and impairment Payroll and related expenses and related Payroll

Operating revenue Income Statement Income 49 - - 2 5 11 25 68 811 575 644 392 593 296 960 1,701 7,404 7,404 5,144 2,783 1,320 1,649 2,013 6,745 6,745 2,675 8,384 8,384 3,200 3,200 6,652 6,652 6,464 6,464 15,129 15,129 15,129 15,129 31.12.16 31.12.16 - - - - - 4 2 5 79 912 130 276 428 634 260 2,112 1,557 4,113 1,458 1,852 1,833 1,086 8,058 8,058 8,058 8,058 1,066 2,682 5,692 5,692 3,686 3,686 2,366 31.12.17 31.12.17 CEO Geir Isaksen 7 2 8 3 9 6 17 17 14 12 21 12 15 13 19 10 16 20 Rolf Juul Ringdal Kjerstin Fyllingen 10, 27 10, Notes Notes 48 of February 2017 of February th Dag Mejdell Ove Sindre Lund Ove Wenche Teigland Wenche Chairman of the Board Oslo, 9 Oslo, Åsne Havnelid Åsne Bjarne Borgersen Jan Audun Strand Jan Audun

Total short term liabilities Total AND LIABILITIES EQUITY TOTAL Derivative financial instruments Derivative Debt Tax payable Tax Total long term liabilities Total Trade and other short term payables and other short term Trade Provisions for other liabilities and charges Provisions Retirement benefit obligations Retained earnings Retained Total equity Total liabilities income tax Deferred Total current assets current Total TOTAL ASSETS TOTAL AND LIABILITIES EQUITY Ordinary shares and share premium Current assets held for distribution held assets Current Financial assets Cash and bank deposits Derivative financial assets Derivative Trade and other receivables Trade Inventories Total non-current assets non-current Total Investments in joint ventures in Investments Loans to group companies group Loans to Financial fixed assets Financial fixed Investments in associates in Investments Investments in subsidiaries in Investments

ASSETS assets tax Deferred plant and equipment Property, Statement of Financial Position of Financial Statement

Accounts 2017 NSB AS Accounts 2017 NSB AS - - - - -11 -77 -38 210 531 597 597 245 322 895 868 559 205 800 960 -171 -177 -137 -148 -887 2016 -133 -378 -139 -595 -946 2,188 1,349 6,514 6,514 1,064 9,360 9,360 -7,760 -7,760 -6,415 -6,415 -2,150 -2,459 -2,350 ------2 12 12 -5 44 45 144 -76 -34 -20 608 496 608 960 2017 -185 -135 -752 -407 -160 -500 1,458 3,637 3,637 6,356 6,356 -1,966 -2,956 -2,668 7 7 3 3 6 6 6 14 14 21 15 19 10 10 16 16 24 24 22 Notes 49

Net cash flow from investing activities in discontinued operations investing Net cash flow from financing activities in discontinued operations Net cash flow from Net cash flows related to the Group`s discontinued operations: Net cash flows related to the Group`s operating activities in discontinued operations Net cash flow from Foreign exchange gain/loss on cash and bank deposits gain/loss on exchange Foreign THE END OF THE PERIOD AT AS DEPOSITS AND BANK CASH Net cash flow from financial activities Net cash flow from THE PERIOD FOR DEPOSITS AND BANK CHANGE IN CASH NET as at the beginning of the period Cash and bank deposits Dividends paid to company's shareholders company's Dividends paid to Group contributions paid to subsidiaries to contributions paid Group Repayment of paid-in equity Repayment Repayment of borrowings Repayment Proceeds from borrowings from Proceeds Repayment of loans from subsidiaries of loans from Repayment Increase in loans to subsidiaries Increase in loans to Net cash flow from investment activities investment Net cash flow from subsidiaries loans to Conversion Dividends received Grants from public sources from Grants Proceeds from sale of PPE from Proceeds Changes in current assets Changes in current Purchase of PPE Loans paid to/from single purpose/joint ventures Loans paid to/from Acquisition of subsidiaries Acquisition Taxes paid Taxes operating activities Net cash flow from Changes to working capital working Changes to Interest items Interest Change in unrealised fair value Change in provisions for other liabilities and charges Change in provisions Net changes to obligations and retirement benefit oblig. obligations and retirement Net changes to Gain/loss on sale of associated companies Gain/loss on sale of associated Impairments of shares in subsidiaries Impairments Gain/loss on sale of assets Profit before income tax from discontinued operations tax from before income Profit expense tax for the period before income Profit Profit before income tax from continuing operations tax from before income Profit

Depreciation and impairment Cash Flow Statement Flow Cash 51 -12 -12 -62 507 502 Total Total -284 -595 4,114 6,849 6,849 6,464 6,464 6,646 6,646 -2,778 -12 -12 -62 507 428 502 -284 -595 1,321 1,321 1,705 -1,320 earnings earnings Retained Retained ------5,144 5,144 5,144 3,686 3,686 -1,458 premium premium and shares and shares Ord. shares Ord. Ord. shares Ord. 17 17 15 15 Notes Notes 50

OF DECEMBER 2016 OF DECEMBER 2017 ST ST of January 2016 of January 2017 st st

EQUITY 31 EQUITY EQUITY 31 EQUITY Dividends paid Effect of change in income tax rate tax Effect of change in income Effect of change in income tax rate Effect of change in income tax From other comprehensive income other comprehensive From From other comprehensive income other comprehensive From Effects from demerger from Effects Equity 1 Profit for the interim period for the interim Profit Profit for the interim period for the interim Profit Equity 1 2016

2017 Statement of changesEquity in Statement

Accounts 2017 NSB AS Accounts 2017 NSB AS of February 2018. of February th 51

Restructuring costs on leased trains Periodic maintenance the reporting date after Events Trade and other payables and Trade charges for other liabilities and Provisions amortization and impairment Depreciation, Other expenses Financial income and expenses adjustments Unrealised fair value party transactions Related Retirement benefit obligations and similar obligations Retirement benefit obligations and similar Payroll and related expenses and related Payroll Financial risk management category by Financial instruments Cash and bank deposits and share premium Share capital expense tax income tax/Income Deferred Trade and other receivables Trade Shares in subsidiaries in the Nordic Region Passenger train operations Segment information equipment plant and Property, in associates Investments in joint ventures Investments components Inventory Continuing and discontinued operations Continuing and discontinued NSB accounting principles Leases

Contingencies

Loans

Derivatives

30. 30. 31. on 9 by the Board of Directors were approved The financial statements 29. 21. 22. 23. 24. 25. 26. 27. 28. 20. 19. 17. 12. 13. 14. 15. 16. 18. 11. 4. 5. 6. 7. 8. 9. 10. 3. 2. All figures in the report are in MNOK. 1. Notes 53 of January 2017. The demergers have have demergers The of January 2017. st 52

October 2016, two important business units were separated and transferred to newly founded and wholly owned subsidiaries to prepare prepare newly founded and wholly owned subsidiaries to to and transferred separated were important business units two 2016, October

th The train maintenance company Mantena AS was demerged to Togvedlikehold AS Togvedlikehold to demerged was AS Mantena company The train maintenance AS Reiseplan og Billett to demerged was Entur AS company The sales and ticketing AS Togmateriell to demerged was AS tog Norske The train owing company Bane Nor Eiendom 1. to demerged ROM Eiendom was organizational changes adapted to the railway reform. The unit associated with sales- and ticketing system was transferred to Entur AS. Trains and Trains Entur AS. to transferred was system with sales- and ticketing The unit associated reform. the railway to changes adapted organizational AS tog Norske (changed name to AS Materiellselskapet to transferred with acquisition and leasing of the equipment in NSB was who works staff to transferred trains was funding relating to External until the structural change. part of the parent company an integral The entities were in 2017). to these entities is related expenses and depreciation including financial Expenses, in a subsequent process. AS tog AS/Norske Materiellselskapet will occur in the for continuing operations as they operating expenses to are reallocated costs these Similarly, discontinued operations. to allocated services. form of lease of trains and sales- and ticketing have would these entities AS and not the profit effect of the remaining NSB discontinued operations shows the consolidated from The profit to dividends from is related year for discontinued operations for the Profit during the period. the Company from had been separated if they achieved AS. down of shares in Mantena and write ROM Eiendom AS Continuing and discontinued operations 2 Continuing and discontinued operations 1 NSB accounting principles of the following: with the exception annual report, 1 in the NSB Group note refer to We companies and joint ventures. of associated a) Method for incorporation in NSB AS and joint ventures companies Associated using are treated venture companies, and ownership in joint influence, but not controlling has considerable, where NSB AS Ownership in companies 20 % and 50 % of the owns between company to be when the Considerable influence is considered is applies. the the cost method of accounting shares. voting led to a reduced equity of MNOK 2,778 which is specified in developement of equity. The net effect of group contributions paid to demerged entities to demerged contributions paid The net effect of group of equity. 2,778 MNOK a reduced equity of which is specified in developement led to the demerger. is included in the equity effect from effects tax including corresponding for held assets/liabilites and profit and loss the in operations discountinued as classified were entities demerged the statement 2016 financial the For below. This is descriebed in more detail distribution in the balance sheet. for 2016: operations for comparable figures Principles for preparation of figures for continuing expenses and less income, operations, total been prepared based on and financial position of continuing operations have The income statement continuing and discontinued expenses between allocating when exercised are Best estimates discontinued operations. financial positions from at the beginning of 2016. that discontinued operations had been separated Report The Annual thus expresses operations. On 15 The demergers were completed using the pooling of interest method and with accounting effect from the 1 method and with accounting effect from using the pooling of interest completed were The demergers In preparation to the railway reform NSB AS’ train and sales- and ticketing system were sold to the newly founded and wholly owned subsidiaries the newly founded and wholly sold to were system ticketing train and sales- and reform NSB AS’ the railway In preparation to together These companies, terms. on marked AS tog Norske to transferred were swaps bonds and accoumpanying Also, and Entur AS. AS tog Norske with accounting effect 1st of January 2017. 2017 demerged in were and ROM Eiendom AS AS with Mantena • • • • Note 1 | 2 Note

Accounts 2017 NSB AS Accounts 2017 NSB AS -24 134 -35 210 185 -26 436 269 -434 -226 2,714 7,235 7,235 3,952 3,952 6,800 6,800 operations Continuing - - - 177 145 Dis- 144 322 322 648 463 206 -177 -710 -785 continued operations 171 -82 -24 531 918 -26 597 597 613 507 Total Total 7,235 7,235 3,166 3,166 2,859 6,622 6,622 -1,144 operations 53

2016 INCOME STATEMENT Payroll and related expenses and related Payroll Depreciation and impairment Operating revenue Other operating expenses operating expenses Total Operating profit Financial expenses Net financial items expense Income tax year for the Profit

Financial items Financial income - pensions expenses Net financial Change in unrealised fair value tax before income Profit Note 2 52 2 5 11 25 68 811 575 392 644 593 296 960 1,701 7,404 7,404 5,144 1,320 2,783 1,649 2,013 6,745 6,745 2,675 8,384 8,384 3,200 3,200 6,464 6,464 6,652 6,652 15,129 15,129 15,129 15,129 operations Continuing ------Dis- 2,675 2,675 -2,675 -2,675 continued operations - 2 5 11 25 68 811 392 644 593 296 960 Total Total 1,701 7,404 7,404 5,144 1,320 2,783 1,649 2,013 4,070 3,250 3,250 3,200 3,200 6,464 6,464 6,652 6,652 15,129 15,129 15,129 15,129 11,059 operations

54 December 2016 are as follows: st

STATEMENT OF FINANCIAL POSITION OF FINANCIAL STATEMENT Total non-current assets non-current Total in joint ventures Investment and other receivables Trade financial assets Derivative Cash and bank deposits owners to held for distribution Assets Loans to group companies group Loans to Inventories assets current Total Investments in subsidiaries in Investments Financial assets ASSETS plant and equipment Property, associates in Investments TOTAL ASSETS TOTAL AND LIABILITIES EQUITY Ordinary shares and share premium earnings Retained Total equity Total Retirement benefit obligations Deferred income tax liabilities income tax Deferred for other liabilities and charges Provisions Total long term liabilities Total Borrowings Trade and other payables Trade payable Tax Derivative financial instruments Derivative Total short term liabilities Total TOTAL EQUITY AND LIABILITIES EQUITY TOTAL NSB-Group’s passenger operations in the Nordic Region in the Nordic passenger operations 4 NSB-Group’s Shares in subsidiaries 3 Shares report. 3 in NSB Group See note Assets and liabilities from discontinued operations as of 31 discontinued operations as of and liabilities from Assets

report. 5 in NSB Group See note | 4 2 | 3 Note

Accounts 2017 NSB AS Accounts 2017 NSB AS 1 - -1 -12 -12 392 -44 130 130 432 392 Total -194 1,484 -938 7,235 7,235 2016* 1,068 6,803 6,803 -1,092 ------5 5 5 19 36 36 36 -51 tion 291 2017 7,386 7,386 Under 7,095 7,095 construc------1 - - - - - 1 1 13 -11 trains Partially delivered - - - 44 68 68 275 768 -12 274 274 -44 375 -194 -307 -493 Trans-

portation 1 - - -1 81 81 19 56 56 -12 680 -32 687 -631 -599 Machinery and equipm. 55

of December 2017 st

of December 2017 st of January 2017

st At 31 At TOTAL Depreciations discontinued operations Depreciations continuing operations Transfers within PPE Transfers Year ended 31 Year Accumulated depreciation disposals Accumulated TOTAL TOTAL Disposals at acquisition cost Accumulated depreciation Accumulated Accumulated depreciation Accumulated Grants from public sources from Grants Additions Analysis of operating income by category income by of operating Analysis revenue Transport Other revenue TOTAL Accumulated acquisition cost Accumulated Accumulated acquisition cost Accumulated Opening net book value At 1 Property, plant and equipment 6 Property, * Applies to continuing operations. customers Information on important 27). income (see note more than 10 % of operating that constitutes has one customer The company

5 Segment information train. has only one operating segment - passenger NSB AS Note 5 | 6 Note 57 -

- 11 11 held held 945 392 392 Total -134 2016 43 % 43 % 33 % 33 % 25 % 25 % -463 % Int. % Int. % Int. 1,484 9,258 9,258 9,258 9,258 8,296 8,296 -8,792 -8,792 -1,092 -17,511 -17,511 18,050 18,050 1 ------2 -9 57 28 28 11 17 27 44 36 36 36 191 191 191 tion 719 loss loss 2017 -137 -737 Under Profit/ Profit/ construc------81 43 22 21 42 58 146 121 617 617 617 226 -351 -492 trains Partially delivered Revenues Revenues 7 - - 9 17 24 19 62 90 -85 275 275 768 -447 -493 8,271 8,271 7,908 7,908 1,005 Trans- -7,869 -7,869 16,140 16,140 -16,377 portation Liabilities Liabilities 5-30 years - - 12 61 73 13 47 81 81 83 -15 179 179 -49 109 169 388 680 -923 -923 -505 -599 1,102 Assets Assets of December 2017. The Company has as part a of the sale recognised The Company of December 2017. th Machinery 5-30 years and equipm. Oslo Oslo Oslo Oslo office office 56 Bergen Bergen Registered Registered OF DECEMBER ST of December 2016 st of January st

of December 2016 st of January 2016

st At 31 At TOTAL Depreciations discontinued operations Depreciations continuing operations Transfers within PPE Transfers Year ended 31 Year Depreciation period Accumulated depreciation disposals* Accumulated TOTAL TOTAL TOTAL TOTAL Disposals at acquisition cost * Disposals at acquisition Accumulated depreciation Accumulated depreciation Accumulated Fjord Tours AS Fjord Tours Fjord Tours AS Fjord Tours Additions Interoperabilitetstjenester AS Interoperabilitetstjenester AS Interoperabilitetstjenester Disposals of associates NET BOOK VALUE 31 VALUE BOOK NET Book value 1 Book value Accumulated acquisition cost Accumulated Accumulated acquisition cost Accumulated 2016 2017 Oslo S Parkering AS* Oslo S Parkering AS Oslo S Parkering Opening net book value At 1 The Company’s stake of 25 % of the shares in Oslo S Parkering AS was sold on the 7 was AS of 25 % of the shares in Oslo S Parkering stake The Company’s * In preparation to the railway reform NSB AS’ trains and sales- and ticketing system were sold as of 15th of October 2016 sold to the newly founded and wholly owned subsidiaries, and wholly owned subsidiaries, founded were sold as of 15th of October 2016 sold to the newly system trains and sales- and ticketing NSB AS’ * In preparation to the railway reform more information. See note 2 for in 2017. which were demerged *The Companys shares in Oslo S Parkering AS was sold on the 7th of December 2017. was sold on the 7th of December AS shares in Oslo S Parkering *The Companys Investments in associates 7 Investments

profit of 135 MNOK which is included in financial income in 2017. of 135 MNOK profit are as follows: are unlisted, all of which associates, and liabilities of its assets Profit/loss, Note 6 | 7 Note

Accounts 2017 NSB AS Accounts 2017 NSB AS 4 4 3 5 5 of 41 -5 10 46 st 131 131 919 593 593 960 699 2015 1,701 7,404 7,404 31 2016* 2016* 2016* 9,105 9,105 December Book value Book value 1 3 5 5 -3 84 84 43 54 39 116 472 273 912 523 523 634 634 2017 2017 2017 2017 1,978 1,978 1,066 Profit/loss

94 94 Equity 50 % Votes and Votes profit share profit office Aurland Registered 2013 57 Year of Year acquisition OF DECEMBER ST of January st

NET BOOK VALUE 31 VALUE BOOK NET TOTAL INVENTORY INVENTORY TOTAL Components receivables Trade Group internal trade receivables trade receivables internal Group Book value 1 Book value for impairment of receivables Less: provision Trade receivables - net receivables Trade Prepayments Other receivables TOTAL TRADE AND OTHER RECEIVABLES TRADE AND OTHER TOTAL companies group Loans to TOTAL Maturity of receivables: Matured between 2 - 6 mnths ago Matured between Matured more than 6 mnths ago Joint ventures on balance sheet date Matured receivables 0 - 2 mnths ago Matured between TOTALT Flåm Utvikling AS Flåm Utvikling AS NSB AS has interest in joint ventures as follows: as ventures in joint has interest AS NSB * Applies to continuing operations. * Applies to continuing operations. Trade and other receivable and other 10 Trade Inventory components 9 Inventory 8 Joint venture The carrying amounts of the trade receivables, prepayments and other receivables approximate their fair value. approximate and other receivables prepayments of the trade receivables, amounts The carrying include mainly passenger train income. receivables Trade

The table above shows equity that includes this year’s profit, profit/loss and book value (100%). and book profit/loss profit, shows equity that includes this year’s above The table Description of operations: Flåm Utvikling the Flåm line. product; the travel operated of train transport services, as a provider with NSB AS Flåm Utvikling has for 19 years, as develops as well of the Flåm line, relationship management and brand development customer marketing, sales, development, product conducts mountain/fjord year-round all first complete The Flåm line is the country’s Flåm line all year-round. the foundation for commercial operations of the destination. | 10 8 | 9 Note 59 - - - 786 811 -25 -25 960 2016 1,701 2016* 3,472 3,472 > 5 years Liabilities 2016* - - - 811 811 912 2017 2017 -786 1,458 Assets 2,682 5,052 5,052 2-5 years - - - 1-2 years Liabilities 2017 - - 1,852 Assets < 1 year of December 2017: st of December 2017 were 0 MNOK (2016: 3,166 MNOK). MNOK). (2016: 3,166 0 MNOK of December 2017 were st 58

Derivatives TOTAL Short term liabilities Short term Interest and exchange rate swaps rate and exchange Interest This period’s change in fair value change in fair value This period’s Changes in fair value of derivatives: Changes in fair value Accumulated change in fair value Accumulated NSB assesses maximum credit risk to be the following: NSB assesses maximum Cash and bank deposits Financial assets Financial derivatives receivables and other short term receivable Trade TOTAL Liquidity risk The Company does not use hedge accounting, fair value changes of derivatives are charged on a continuous basis to the income statement. Derivatives Derivatives the income statement. on a continuous basis to are charged of derivatives changes fair value not use hedge accounting, does The Company or contractual obligations. assets are classified as current * Applies to continuing operations. swaps Interest rate and foreign exchange at 31 contracts swaps rate interest of the outstanding The nominal principal amounts * Applies to continuing operations. * Applies to continuing operations. 12

11 Financial risk management as of 31 continuing operations liabilities from future maturities for the company’s shows This table Note 11 | 12 Note

Accounts 2017 NSB AS Accounts 2017 NSB AS - - - - 2 25 25 811 811 811 960 960 Total Total 3,104 3,104 2,783 2,783 2016* 2016* 2016* 5,912 5,912 2,808 2,682 2,682 8,406 8,406 10,179 10,179 Total Total ------4 2017 2017 2017 1,458 1,733 1,705 1,733 1,458 5,849 5,849 2,682 Level 3 Level Level 3 Level ------25 25 811 811 811 811 2,783 2,783 2016* 2016* 2,808 2,808 Level 2 Level Level 2 Level ------2017 2017 2,682 2,682 2,682 2,682 Level 1 Level Level 1 Level Assets at fair value value at fair Assets Liabilities at fair value Liabilities at fair value through profit and loss and profit through through profit and loss profit through

- - - - 2 960 3,104 3,104 2016* 2016* 3,104 3,104 9,368 9,368 8,406 8,406 - - - - 4 2017 2017 1,733 1,705 1,733 1,458 3,167 3,167 59 of December 2017: of December 2016*: at amortised cost st st Loans and receivables Loans and receivables Other financial liabilities of December st of December st

Cash and bank deposits Financial instruments by category by Financial instruments TOTAL Cash and bank deposits Financial assets at fair value in the income statement at fair value Financial assets Trade and other receivables (excl. prepayments) (excl. receivables and other Trade SUM Derivative financial instruments financial Derivative Trade and other payables excl. statutory liabilities statutory excl. and other payables Trade TOTAL ASSETS TOTAL Debt and accrued interest used for hedging Derivatives LIABILITIES TOTAL Financial fixed assets Financial fixed Derivative financial instruments Derivative Debt and accrued interest used for hedging Derivatives LIABILITIES TOTAL TOTAL ASSETS TOTAL Derivatives used for hedging Derivatives Derivatives used for hedging Derivatives Cash and bank deposits Lialibilites at 31 Assets at 31 Assets Year Borrowings (excl. Financial lease liabilities) (excl. Borrowings Year Financial assets and liabilities at fair value through profit or loss per. 31 or loss per. profit through Financial assets and liabilities at fair value See note 20 in NSB Group report. 20 in NSB Group See note Share capital and share premium and share capital 15 Share * Applies to continuing operations. 14 * Applies to continuing operations. Includes restricted funds of 105 MNOK (2016: 106 MNOK). funds of 105 MNOK Includes restricted * Applies to continuing operations. 31 or loss per. profit through Financial assets and liabilities at fair value

13 Note 13 | 14 | 15 Note 61 - - - - -

50 766 812 2016 2016 2016 2016 2016 3.46 3.46 7,846 7,846 2,783 2,783 2,783 2,783 2,783 2,050 2,000 -1,960 -5,886 -5,886 31.12.16* 31.12.16* ------50 2017 2017 2017 2017 2017 -812 2,050 2,000 31.12.17 31.12.17 NOK 60

OF DECEMBER ST of January st Changes during the year - continuing operations Changes during the year 31 Transferred discontinued operations Transferred Bonds The Group has the following undrawn borrowing facilities: has the following undrawn borrowing The Group - Expiring within one year Floating interest rate Floating interest one year - Expiring beyond TOTAL The carrying amounts of the Group`s borrowings are denominated in the following currencies: borrowings amounts of the Group`s The carrying NOK CHF TOTAL Changes in fair value on non-current borrowings: on non-current Changes in fair value 1 swaps and Borrowings 6 months or less continued operations This periods change in fair value change in fair value Accumulated Nominal value of long-term interest bearing debt of long-term interest bearing Nominal value Current share of non-current debt of non-current share Current debt Other current Total BORROWINGS TOTAL Bonds measured at fair value Current Calculated effective interest rate includes the effect of interest rate swaps. rate the effect of interest includes rate interest effective Calculated * Applies to continuing operations. (EMTN-Programme). loan programme Note Medium Term issued under the Euro bonds were All previous that demands a minimum equity share of 20 %. with a covenant of 2,000 MNOK credit facility revolving NSB has a multicurrency NSB bonds in the second-hand market. banks and the price/exchange from observations on bonds is based on market of the credit margin value Fair and the contractual dates at the balance sheet dates are as follows: to interest changes borrowings of the Group`s The exposure 16 Debt The facilitiy that expires within one year is a bank overdraft related to NSB-Group bank account system. system. bank account NSB-Group to related is a bank overdraft within one year The facilitiy that expires in April 2019. credit facility which expires revolving NSB`s long term annually. at the time and is renewed The credit is for one year

Effective interest rate at the balance sheet date: interest Effective Note 16 Note

Accounts 2017 NSB AS Accounts 2017 NSB AS -

2 6 12 -3 -8 -2 79 83 24 52 24 -11 511 -18 -88 641 641 210 344 344 644 12 % -617 Book 31.12 value 1,517 2016* 2016* 2016* -1,602 ------

- - 22 -19 152 -43 106 106 260 608 260 260 17 % 2017 2017 2017 -153 Group Group bution contri------Tax -12 -12 equity charged charged directly to ------6 16 68 68 68 -10 Charge Charge income hensive hensive to other compre- 7 13 19 -17 115 -70 134 153 619 560 560 -106 charge Income statement statement ------Acqui- Acqui- sition of 61 subsidiary ------acc. acc. Effect change principle - 5 23 -18 -24 -68 -68 396 Book -284 -284 value 01.01. 1,555 -2,221

Income tax expense expense Income tax rate tax Effective Insufficient tax provision prior years prior tax provision Insufficient Net income before tax Net income before tax (24 % / 25 %) rate using the nominal tax income tax Expected effect of the following items: Tax income Other non-taxable rate Effect of change in income tax demerger effect group Tax 2017 The actual tax payable in the balance sheet will mostly be offset by group contributions which are proposed contributions which are proposed group in the balance sheet will mostly be offset by payable The actual tax the general assembly in 2017. be decided by to rate: expense and actual tax nominal Reconciliation between TAX PAYABLE ON THE BALANCE SHEET ON THE BALANCE SHEET PAYABLE TAX Insufficient/too much tax provision prior years prior tax provision much Insufficient/too Tax payable on the balance sheet are as follows: payable Tax expense tax payable Current Change in deferred tax Change in deferred Current income tax payable tax income Current EXPENSE INCOME TAX TOTAL Income tax expence Income tax Benefit (+) / Liability (-) assets Fixed Inventories Inventories Receivables Receivables Value changes to financial current assets assets financial current changes to Value Retirement benefit obligations Provisions for other liabilities and charges for other liabilities and charges Provisions Gains (losses) Total gross temporary differences temporary gross Total Net temporary differences Net deferred tax asset/liability 24% tax Net deferred Effect from changes in tax rate rate changes in tax Effect from Net deferred tax asset/liability on the tax Net deferred balance sheet 23% * Applies to continuing operations. forward: of temporary differences and losses carried tax effect Spesification of the

Deferred income tax/income tax expense tax income tax/income 17 Deferred and liabilities, tax against current assets tax offset current right to are offset when there is a legally enforced asset and liabilities tax income Deferred are as follows: amounts The offset authority. the same tax to relate income taxes when the deferred Note 17 Note 63 - - - 5 3 -1 12 23 -71 -18 -24 -68 -68 497 497 497 497 190 396 Book 2016 2016 2016 -284 -284 31.12 value -566 -565 2,511 1,555 2,714 2016* 2,979 2,979 3,438 3,438 -2,221 ------

3 -7 79 102 467 470 232 232 2017 2017 2017 2017 Group Group -391 -385 bution contri- 2,993 2,393 2,059 2,605 ------Tax -12 -12 equity charged charged directly to ------2 92 94 377 377 377 Charge Charge income hensive hensive to other compre- - - 4 17 -23 -23 617 342 600 -157 -561 -206 2,399 2,399 3,000 3,000 charge Income statement statement ------Acqui- Acqui- sition of 62 subsidiary ------acc. acc. Effect change principle - - 5 -1 54 -22 561 229 Book -765 -765 value 01.01. 1,335 -5,221 -5,221 -3,060 -3,060 -3,060 Dec. st

of December 2017 there are 2,540 man-labour years and 2,931 employees. and 2,931 of December 2017 there are 2,540 man-labour years st

Deferred tax to be recovered within 12 months within 12 months be recovered to tax Deferred TOTAL (NET) LIABILITY DEFERRED INCOME TAX TOTAL

Deferred tax to be recovered after more than 12 months after be recovered to tax Deferred man-labour year Average at 31 Number of employees Deferred tax liabilities tax Deferred

Deferred income tax assets income tax Deferred Deferred income tax assets to be recovered within 12 months be recovered to assets income tax Deferred taxes including employment and salaries, Wages TOTAL 2016 Deferred tax to be recovered after more than 12 months after be recovered to tax Deferred TOTAL 19) – defined benefit plans (note Pension costs expenses benefit Other employee Benefit (+) / Liability (-) assets Fixed Inventories Inventories Receivables Receivables Value changes to financial current assets assets financial current changes to Value Retirement benefit obligations Retirement benefit obligations Provisions for other liabilities and charges and charges for other liabilities Provisions Gains (losses) Losses carried forward forward Losses carried Other Total gross temporary differences temporary gross Total Net temporary differences Net deferred tax asset/liability 25% tax Net deferred Effect from changes in tax rate rate in tax changes Effect from Net deferred tax asset/liability on the asset/liability tax Net deferred balance sheet 24% The calculation is based on a weighted average based on the true number of man-labour year throughout the year. throughout of man-labour year based on the true number average The calculation is based on a weighted * Applies to continuing operations. 27) transactions (note for related-party to in the note key management are referred Officer and for Chief Executive Benefits Payroll and related expenses and related 18 Payroll

Average man-labour years and number of employees relates total operations in 2016 and 2017. total relates of employees and number man-labour years Average of 31 As Note 17 | 18 Note

Accounts 2017 NSB AS Accounts 2017 NSB AS - 1 26 13 47 25 216 -49 190 190 328 205 -284 1,410 6,511 6,511 2016* 2016* 2016* 1,602 1,649 1,649 -4,909 9 - - - 33 42 34 46 187 265 232 232 232 2017 2017 2017 -364 1 511 1,557 1,557 1,649 6,808 6,808 -5,297 -5,297 quarter of 2019. The Company’s 2017 pension The Company’s of 2019. quarter th 63 of January st OF DECEMBER ST of January 2018. The amendment to the payable regulation liability is not included in NSB AS pension liability as it is primarily financed pension liability as it is primarily liability is not included in NSB AS regulation the payable amendment to The of January 2018. of December 2017 pension liability is calculated according to IAS 19. The carrying value of the pension liability amounts to 1,511 MNOK, 1,511 MNOK, to of the pension liability amounts value The carrying 19. IAS according to of December 2017 pension liability is calculated st

Retirement benefit obligations and similar obligations and similar benefit obligations Retirement Pension expenses included in the accounts, defined benefit pension plan included in the accounts, Pension expenses Present value of current pension earnings of current Present value 18 – see note expenses and related in payroll incl. return on pension plan, Total financial items in the accounts Total defined benefit pension plan pension expenses Total NET PENSION OBLIGATION ON THE BALANCE SHEET OBLIGATION PENSION NET Present value of unfunded obligations of unfunded Present value pension liabilities for defined benefit plan in unfunded obligations of accrued Present value plan to Payments Changes in pension retirement obligations: Specification of net defined benefit pension plan obligations Specification of net defined benefit pension plan Present value of earned pension rights for funded collective pension plans for funded collective rights of earned pension Present value of plan assets value Fair 1 net pension obligation Book value actuarial deviations This years' in obligation discontinued operations net return on assets/increase This years operations in obligation continued net return on assets/increase This years Curtailments/transfer discontinued operations Curtailments/transfer 31 VALUE BOOK Net financial items in the acount from discontinued operations in the acount from Net financial items continuing operations in the acount from Net financial items by grants from the Norwegian state in the revised national budget for 2017. in the revised state the Norwegian from grants by and is considered to give a fair, and as of the balance sheet date, best view of the Company’s liability taking into account the estimated effect from effect from account the estimated into liability taking best view of the Company’s and as of the balance sheet date, a fair, give and is considered to effect, a negative have will for whom the defined benefit pension plan settlement employees Agreed compensation to the pension plans settlement. defined benefit the accrued regulation liability for the SPK on who should pay amended the criteria state The Norwegian with 78 MNOK. is expensed 1 plans from * Applies to continuing operations. with change in central assumptions Sensitivity analysis the defined benefit pension plans in affects with change in assumptions that significantly effects for potential below shows estimates The table these estimates. differ from substantially may results Actual Norway. 19 General Below is a further description of type for spouses and children. benefits and bereaved age-disability- to related has pension arrangements The Group and how these are organized. of arrangements plan Defined benefit pension Fund (SPK) or Public Service Pension the Norwegian that are handled by pension agreements collective several have The companies in the Group covers The arrangement pension. to the law on public companies satisfies the demands according for the Norwegian insurance companies that The obligations vested. fully pension of 66 % of the pension basis when in a age- and disablity results to 12G and the pension basis up from benefits services that retirement benefit plans entitle defined future The retirees. members and 1,957 2,611 active covers agreements these to connected are coordinated received benefits The pension at the time of retirement. level and wage the number of contribution years mainly are dependent on paid out. benefits and will also be dependent on its with the National Insurancescheme by Contract with Early Retirement Pension Regulated retirement benefit obligations in affiliation agreements, tariff through The companies have, members. 2,611 active this agreement cover Obligations through (AFP). operations. be paid through top leadership is not funded and will for The additional defined benefit pension plan agreement Closed defined benefit plan Service Fund (SPK) for Public AS in the Norwegian pension benefit plan for NSB the current settle December 2017 to made end of A decision was join a new defined contribu- and will an earned right in the SPK, will be granted employees All younger the end of 2018. old by 55 years those above in the 4 available to be to employees settlement final employer’s expects The SPK tion plan as of 2019,

cost and 31 Note 19 65 - - - -3 228 228 225 -1 % 2012 2012 1,439 1,439 5,365 5,365 2.75 % 3.70 % 3.70 3.80 % 3.80 3.80 % 3.80 3.50 % 3.50 0.00 % 0.00 -3,926 -3,926 (7-8 %) 14.10 % (3-4 %) - - 70 42 28 1 % 233 233 Increase in G 2013 2013 -205 1,548 1,548 6,437 6,437 2.75 % 3.45 % 3.45 3.50 % 3.50 3.90 % 3.90 3.90 % 3.90 -4,889 0.00 % 0.00 (7-8 %) 14.10 % (10-11 %) - - - 48 213 213 261 -1 % 2014 2014 1,490 1,490 6,334 6,334 1.95 % 2.70 % -4,844 2.95 % 2.80 % 2.80 % 0.00 % 0.00 14.10 % (5-6 %) (12-13 %) - - - 47 47 79 32 1 % 2015 2015 1,410 1,410 6,461 6,461 1.65 % 2.70 % 2.70 % -5,051 -5,051 2.40 % 2.60 % 0.00 % 0.00 Salary growth rate Salary growth (7-8 %) 14.10 % (17-18 %) (17-18 - - - 25 191 191 216 -1 % 2016 2016 1,649 1,649 6,558 6,558 1.75 % 2.55 % 2.50 % 0.00 % 0.00 2.60 % 2.60 % -4,909 14.10 % (17-18 %) (17-18 (23-24 %) (23-24 - - 33 46 1 % 232 232 232 232 265 2017 2017 Discount rate 1,511 1,557 64 6,808 6,808 1.65 % -5,297 -5,297 2.25 % 2.40 % 2.50 % 2.50 % 0.00 % 0.00 14,10 % (17-18 %) (17-18 (13-14 %) of December 2017 st 23 years 23 years 20,5

NET PENSION OBLIG. AT THE BALANCE SHEET DATE THE BALANCE SHEET AT OBLIG. PENSION NET Non-recognised actuarial losses Total net pension obligations Total Pension assets Average social security tax social Average Financial position obligations Total Annual reg. of pension increases Annual reg. TOTAL FINANCIAL ITEMS IN THE ACCOUNTS ITEMS IN THE ACCOUNTS FINANCIAL TOTAL Corridor: % of max (PBO, pension assets) % of max (PBO, Corridor: Total financial items in the accounts financial items Total G-regulation Total cost in the income statement Total Average salary growth salary Average Changes and deviations in estimates allocated to net income net to allocated estimates in Changes and deviations Expected return on plan assets Expected Plan changes during the year Increase (+)/decrease (-) net pension obligation at 31.12. in % net pension obligation at 31.12. Increase (+)/decrease (-) Income statement pension earnings of current Present value Discount rate Increase (+)/decrease (-) this period's net pension expense in % net pension expense this period's Increase (+)/decrease (-)

Financial assumptions (defined benefit plans in Norway) Financial assumptions (defined benefit plans in Explanation to selected assumptions 31 The last few years’ development in pension expenses and pension obligations shows the following: in pension expenses development The last few years’ The sensitivity analysis applies to continuing operations. applies to The sensitivity analysis the sensitivity analysis. that affects on participants age and high average a high pensioner population by The Population is affected The discount rate has been set at 2.5 % and is determined with basis in preferential bonds (OMF). The OMF-market has been assessed to represent has been assessed to The OMF-market with basis in preferential bonds (OMF). has been set at 2.5 % and is determined The discount rate 19. to IAS according rate to be used as a reference for interest maturities that qualifies to with relevance a deep and liquid marked 1 % (incl career salary in- of nominal salary growth as the sum of expected are mainly calculated arrangements Salary adjustment for Norwegian salary growth average follows mainly Regulation of pensions during disbursements crease) and inflation of 1.5 % with some individual adjustments. 0.75 %. of factor G-regulation) less a fixed to (equivalent and disability risk. of mortality rate K2013 and IR 73 has been used for determination the tariffs the demographic factors, For K2013 be: old will according to for a person retiring when he/she turns 65 years remaining life expectancy Average Male

Female changes in economic parameters. in 2017 are mainly due to deviations Actuarial Note 19

Accounts 2017 NSB AS Accounts 2017 NSB AS 51 -5 78 96 296 -98 180 276 250 802 296 296 Total Total 2016 2,122 2016* 3,200 3,200 1 1 - - - - 1 1 276 119 167 782 785 2017 2017 Other Other 1,852 -5 78 25 -98 275 275 295 295 zation zation Reorgani- Reorgani- obligation obligation ------25 -25 ment. ment. Environ- Environ- Pollution Pollution 65

of January of January

st st Used during year TOTAL Change in provision during the year Change in provision Analysis of total provisions: of total Analysis Non-current liabilities Non-current Provisions for other liabilities 2017 Provisions At 1 Social security and other taxes Other short term liabilities Other short term TOTAL Provisions for other liabilities 2016 Provisions Trade payables Trade trade payables internal Group At 1

Change in provision during the year Change in provision Used during year TOTAL Provisions for other liabilities charges and other for 21 Provisions Total trade and other payables include liabilities to related parties in 2017: 15 MNOK (18 MNOK). parties in 2017: 15 MNOK related include liabilities to trade and other payables Total fair value. to corresponds payables of trade and other Book value accrued expenses. as other as well expenses and related accrued payroll pre-paid revenue, liabilities include Other current * Applies to continuing operations. Trade and other short term payables short term and other 20 Trade

Risk evaluation of defined benefit contribution plans of defined Risk evaluation - develop and future in assumptions to uncertainties due factors several by defined benefit contribution plans its through is affected The company are described as follows: factors The most central ment. Expected longevity among members An increase in life expectancy live. for as long as they the employees pension to pay to has assumed an obligation The company increased obligation for the company. in an results Yield risk obligations for the company. which will cause an increase to actual yield on the pension assets, a reduction in by is affected The company risk Inflation- and salary growth to is close related though the salary development even both inflation and salary development, to pension obligation has risks related The company’s obligation for the company. result in increased than what is used in the pension calculations, development Higher inflation and salary inflation. | 21 | 20 19 Note 67 of 1

2 3 6 st 177 496 134 134 996 of 2016 st 2016* 2016* 2,282 3,952 3,952 1 -

3 4 44 44 201 986 2017 2017 2017 4,578 1,026 2,364 of January 1990, until the formation of NSB BA 1st of December 1996 until the formation of January 1990, st 66

Other expenses TOTAL FEE TO AUDITOR FEE TO TOTAL Assurance services Assurance Other services

Auditing fees for total operations (excluding VAT): operations (excluding fees for total Auditing Statutory audit fee Statutory

Sales- and overhead expenses Sales- and overhead used in operations Energy expenses property machinery rental, Repair and maintenance, TOTAL Other operating expenses

Depreciation current assets (note 6) (note assets Depreciation current TOTAL December the Company has also made a provision related to the change of the current pension agreement. pension agreement. the change of the current to related has also made a provision December the Company January 2005. NSB was however compensated with a limited calculated amount, which is included as a reorganization obligation in other long-term long-term obligation in other which is included as a reorganization amount, calculated with a limited compensated however NSB was January 2005. debt on the balance sheet. related injuries Work 1 during the period from injuries which occurred related Compensation for work * Applies to continuing operations. 23 * Applies to continuing operations. Depreciation, amortization and impairment amortization 22 Depreciation, Severance – reorganization liability – reorganization Severance before 1 redundancy to laid off due who were for employees refund pay acquired a liability to the company of NSB AS In connection with formation

are covered by the company. To account for these estimated liabilities, provisions have been made for cases currently being handled and estimated handled and estimated being been made for cases currently have provisions liabilities, account for these estimated To the company. by are covered yet reported. justifiable cases not pollution Environmental liabilities is known quantification of any A operations. for pollution which occurs due to has a considerable responsibility the company a train operator, As - liabilities are quantified and a provi Known based on actual cost as the clean-up processes. The accrual is reversed basis. accrued for on a continuous is recognised the accounts. sion based on best estimate Legal disputes and be a probable where it appears to are made for disputes Provisions where some of them will be tried in court. in legal disputes, is involved NSB AS qualified risk of losing. Restructuring 2). reform (see Note the railway the changes required by adapt to The purpose of the restructuring is to NSB announced a restructuring plan in 2016. 275 MNOK to amounted The restructuring provision 29. reform see Note the railway for 2016 relating to restructuring costs of the total an overview For of 31 As in 2017 and 2018. and will be completed downsizing that was to and is mainly due at the end of 2017, at the end of 2016 and 192 MNOK | 23 21 | 22 Note

Accounts 2017 NSB AS Accounts 2017 NSB AS - - -7 -7 -2 43 35 -26 -35 -52 207 242 250 269 Total -425 -226 -434 2016* 2016* 3,994 3,994 -3,942 -3,942 - 3 34 -4 45 -11 -33 237 138 135 -95 -26 163 998 346 2017 2017 -110 lease 1,997 1,997 1,136 -1,971 Financial obligations - - 786 -786 to hedge to liabilities Asset held Asset - -812 2,783 -1,971 Liabilities 67

Liabilities from financing activities Liabilities from LIABILITIES 31 DECEMBER 2017 Non-cash changes changes value Fair Cash flow from financial activities Cash flow from Liabilities 1. January 2017 Liabilities 1.

Lease of machinery/equipment, not incl. on the balance sheet not incl. Lease of machinery/equipment, Lease of property (external) Lease of property TOTAL

Interest income Interest Dividend sale of companies Gain from changes Unrealised value ITEMS FINANCIAL TOTAL Net foreign exchange gains Net foreign exchange financial income Total expense Interest expenses Other financial losses Net foreign exchange EXPENSES FINANCIAL TOTAL - pensions expenses Net financial * Applies to continuing operations. 26 Leases 25 * Applies to continuing operations. Financial income and expenses 24 Financial income and

The increase in lease costs is a consequense of the railway reform. is a consequense of the railway The increase in lease costs 25 24 | | 26 Note 69 1 - -

19 170 211 202 910 930 2016 2016 1,352 2,916 3,288 7,404 7,404 2,122 2,122 1,563 1

14 14 79 23 54 743 743 103 242 693 665 2017 2017 1,066 1,740 1,740 1,498 3,222 3,222 4,068 of October 2016 sold to the newly founded and wholly 2016 sold to of October th 68

Related party transactions Related Receivables: companies Associated

Group internal trade receivables internal Group the Ministry of Transportation Entities owned by TOTAL Debts trade payables internal Group Other companies in the Group Loans to related parts Other companies in the Group Entities owned by the Ministry of Transportation Entities owned by TOTAL

Sale of goods and services: Public purchase of passenger traffic services Sales of other goods and services Sales to other companies within the Group other companies Sales to Purchases of goods and services in the Group companies Purchases from TOTAL TOTAL 27 parties: NSB has the following related Owner the Ministry of Transport other businesses owned by In addition, party. and Communication is a related the Ministry of Transport of NSB, the owner As NSB. party to also be a related and Communication will Group Companies within the same these compa- parties to that are related companies as other Group 7 and 8 as well 3, in notes as noted and joint ventures associates All subsidiaries, NSB. party to nies will be a related management Board of Directors and key NSB. party to also related are management or on the Board of Directors Persons that are key parties includes both continuing and discontinued operations. balances against related intercompany sales and Purchases, parties: related to guarantees and balances transactions, of is an overview Below owned subsidiaries Norske tog AS and Entur AS, which were demerged in 2017. Also, bonds and accompanying swaps were, as part of the sales transac- were, swaps bonds and accompanying Also, in 2017. demerged which were and Entur AS, AS tog owned subsidiaries Norske with the transfer of the trains from established that was receivable offset the previous was Settlement terms. on market AS tog Norske to transferred tion, 2 for more information. See note AS. Materiellselskapet to NSB AS management Compensation for members of the Board and key report. 33 in NSB Group See note There are no borrowings from related parties. related from There are no borrowings in in Värmland trains operate AB for licensing to Tågkompaniet fully owned subsidiary Svenska on behalf of its of 40 MSEK has issued a guarantee NSB AS Sweden. AB. a contract with Norrtåg to AB related Tågkompaniet fully owned subsidiary Svenska on behalf of its 150 MSEK of has issued a guarantee NSB AS Sale to related parties as of 15 were systems trains and sales- and ticketing NSB AS’ reform the railway In preparation to

Intercompany balances with related parties and selling of goods and services: as a result of buying balances with related Intercompany Note 27

Accounts 2017 NSB AS Accounts 2017 NSB AS 27 113 542 205 194 310 206 2017 -101 2016 1 0 67 66 2017 69 OF DECEMBER 2017 ST of January 2017 st

Events after the balance sheet date the balance sheet after Events Accrual for incurred maintenance cost through the year the cost through maintenance for incurred Accrual the year through maintenance Conducted OF 31 MAINTENANCE AS PREPAID Other operating expenses Financial expenses Payroll and related expenses and related Payroll TOTAL Periodic maintenance on leased trains

Prepaid maintenance as of 1 Prepaid maintenance See note 37 in NSB Group report. 37 in NSB Group See note 31 Periodic maintenance 30 Periodic Restructuring costs 29 Restructuring sector. railway reform of the Norwegian the the adaptions to relating to restructuring costs continuing operations has the following The company’s 28 Contingencies report. 34 in NSB Group See note

As a train lessee, the Group is under the lease agreement responsible for carrying out heavy maintenance. Provisions for maintenance costs are con- costs for maintenance Provisions maintenance. out heavy for carrying is under the lease agreement responsible the Group a train lessee, As based on existing are estimated Costs plan. and maintenance and the route- driven, per kilometer costs tinuously recorded on the basis of estimated Upon return of the leased the provision. are offset against costs maintenance incurred Actual work. maintenance and historic contracts, maintenance level, maintenance based on the equipment’s the lessor, a compensation from to or will be entitled compensate, to will have the Group equipment, use of judgment and estimates. The assessment involves assessed at the end of the lease period. | 31 29 | 30 28 | Note 71 CEO Geir Isaksen Rolf Juul Ringdal Kjerstin Fyllingen 70 of February 2018 of February th Dag Mejdell Ove Sindre Lund Ove Wenche Teigland Wenche Chairman of the Board Oslo, 9 Oslo, Åsne Havnelid Åsne Bjarne Borgersen Jan Audun Strand Jan Audun Statement from the Board and CEO regarding the annual report 2017 the annual report CEO regarding and the Board from Statement for statements and the financial statements financial the condensed set of Group to the best of our knowledge confirm that The Board of Directors with EU, by prepared in accordance with IFRS as determined been 31 December 2017 have 2017 to for the period 1 January the parent company a true and fair view of the company’s give information in the accounts and that the Act, in the Accounting information of supplementary requirements or loss as a whole. financial position and profit debt, liabilities, assets, and Group’s Group, and the for the company and position profit a true and fair view of the development, annual report confirm that the give The Board of Directors faces. and the Group the company factors and uncertainty of the most central risk- as a description as well

Accounts 2017 NSB AS

Accounts 2017 NSB AS 71 Auditor’s report Auditor’s 73 72

Accounts 2017 NSB AS Accounts 2017 NSB AS 73