Development in the first half of 2019

Despite reduced punctuality of the S-Bahn (metro) Munich due to vehicle problems, punctuality in rail transport im - proved due to the increased values in regional transport and the S-Bahn (metro) Berlin.

The performance development in the rail line of business was dampened by tender losses. On the positive side, more stable production and associated lower train cancellations, performance expansions and higher capacity utilization contributed to a slight increase in the number of passengers.

Overall, economic development was virtually stable. The increase in revenues was offset by expense increases.

• Revenue development was significantly influenced by the increase in concession fees due to dynamization. Performance losses had a negative effect. A change in fair charging terms in gross contracts resulted in a shift between concession fees and revenues from fares not affecting profits.
• Other operating income rose noticeably, mainly due to higher compensation payments and higher income from vehicle sales.

On the expense side, there were additional charges, especially for personnel expenses and due to higher maintenance expenses:

• Cost of materials in particular increased due to higher costs for infrastructure use and increased maintenance expenses.
• Personnel expenses increased as a result of the collective agreement and the higher number of employees.
• Other operating expenses increased slightly due to higher IT services purchased.
• Depreciation increased slightly as a result of vehicle additions and redesign measures.

Capital expenditure activity declined due to lower vehicle access for awarded traffic contracts.

The number of employees rose slightly, partly as a result of recruitment and functional training.

Punctuality in bus services was almost at the same level of the first half of 2018.

Performance in bus services declined as a result of tenderrelated performance losses.

Economic development remains challenging. A decline in income combined with a slight increase in expenses led to a significant decline in operating profit figures.

• Revenue development was characterized by performance losses and lower rail replacement services.
• Other operating income partly compensated for the revenue development, partly as a result of higher in - come from compensation and reimbursements.

On the expense side, there were noticeable additional burdens, particularly personnel expenses:

• Cost of materials climbed slightly, driven by higher diesel prices and supplier performance, among other things.
• Personnel expenses increased due to the higher number of employees and due to collective bargaining.
• Other operating expenses increased slightly. Reducing effects of IFRS 16 were offset by higher IT expenses and compensation expenses, among other things.
• The increased depreciation resulted, among other things, from capital expenditures in the previous year.

Capital expenditures increased due, among other things, to IT capital expenditures and due to IFRS 16 effects. The number of employees increased as of June 30, 2019, partly due to the hiring of bus drivers.