Six-month report January-June 2017

Transcription

1 Six-month report January-June 2017 Increased focus on development Jonas Abrahamsson President and CEO

2 ABOUT SWEDAVIA Interim report January June 2017 January - June 2017 During the first half of the year, Swedavia s airports had 20.3 million (18.9)¹ passengers, which is a 7.2 per cent increase compared to the previous year. Stockholm Arlanda set a record of more than 100,000 passengers in a single day Net revenue totalled SEK 2,827 M (2,724) Operating profit totalled SEK 419 M (532) and profit for the period was SEK 284 M (413). Operating profit for 2016 was affected by a capital gain of SEK 146 M attributable to the sale of Säve Airport. Adjusted for the capital gain, operating profit increased SEK 33 M The Group s capital spending for the first half of the year totalled SEK 1,593 M (703), which is an effect of the accelerated investment pace in its development programmes and Real Estate KET FINANCIAL DATA, GROUP 2 SEK M, unless otherwise indicated Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Net revenue 1,480 1,425 2,827 2,724 5,546 Operating profit Operating profit, excluding capital gain Operating margin, % Operating margin, excluding capital gain, % Profit for the period Return on operating capital, % ,5³ Debt/equity ratio, times Cash flow from operating activities ,650 Capital spending 1, , ,138 Average number of employees 3,007 2,878 3,007 2,878 2,949 Passengers, million Operating costs per departing passenger, SEK⁴ Commercial revenues per departing passenger, SEK ¹ Figures in parentheses are results for the corresponding period for the previous year, except for liquidity, financial position and contingents liabilities and pledged assets where the comparison is with the opening balance for the previous year. 2 Return on operating capital is calculated based on a rolling twelve-month period; for definitions see page The basis for calculating the return on operating capital has been adjusted, and the figure was changed from 8.6% to 8.5%. 4 As of June 30, 2017, the item Work performed by the company for its own use and capitalised has been taken in account in calculating the metric Operating costs per departing passenger ; see page 18 for a definition. Comparable periods have been restated. SWEDAVIA INTERIM REPORT JANUARY JUNE

3 ABOUT SWEDAVIA Increased focus on development The strong growth in air traffic continued during the first half of More people than ever flew via Swedavia s ten airports, and Stockholm Arlanda Airport set a record in May, with more than 100,000 passengers on a single day. That is precisely why we need to accelerate what is already a rapid pace of developing Swedavia s capacity. The second quarter of the year was dominated by a number of new developments and political decisions that will probably affect the potential for Swedish access by air. The Swedish government set up the Arlanda Council, an advisory body that will consider broader issues when Stockholm Arlanda Airport is developed into the leading airport in the Nordic countries. During the quarter, a report was presented by the commission on US Preclearance concerning US border control at Stockholm Arlanda Airport. The report includes a proposal on how the agreements could be implemented in conformity with Swedish laws. Swedavia has carried out preparations to begin the work on the facility that is required for US Preclearance at Stockholm Arlanda but now awaits further legal work before a final investment decision can be made. The government s proposal for a national aviation tax continued to be an important topic of discussion. A majority of consultative bodies, and Swedavia, believe that the introduction of such a tax would have adverse effects on Swedish access. The tax is expected to have at most a marginal impact on greenhouse gas emissions. During the quarter, Swedavia also joined the Swedish delegation for the 2030 Agenda for Sustainable Development, which is working for a fleet of vehicles that does not rely on fossil fuels. This provides us with good opportunities for collaboration and the exchange of knowledge on issues concerning the future fossil fuel independence of air travel. CONTINUED PASSENGER GROWTH During the first half of the year, 20.3 million passengers flew to or from Swedavia s airports. Compared to the same period in 2016, that is equivalent to growth of 7.2 per cent. May 24, 2017, was also the biggest travel day ever at Stockholm Arlanda Airport. More than 100,000 passengers flew to or from the airport on that day, with many people flying because the UEFA Europa League final, which was held in Stockholm. Swedavia continues its successful work to attract new long-haul routes to Stockholm Arlanda. During the quarter, a new route was launched between Stockholm Arlanda and Changi Airport, one of the fastest air links between Singapore and Sweden. It was also confirmed that Air India will launch direct service between Stockholm and Delhi during the second half of August Both Norwegian Air Shuttle and Scandinavian Airlines continue to expand their links between the US and Stockholm Arlanda, and passengers can now choose from eleven nonstop routes to seven US destinations. Net revenue increased four per cent during the period to SEK 2,827 M (2,724). Adjusted for positive non-recurring effects during 2016, the underlying operating profit increased SEK 33 M and the operating margin was on a par with last year. Meanwhile, airport charges were lowered. Return on operating capital was 7.1 per cent (8.9). APPEAL ON PRICING DECISION Both in 2016 and 2017, a number of airport users appealed Swedavia s decision on new prices. The Swedish Transport Agency ruled in Swedavia s favour in 2016, in part on the issue of the Company s capital costs. The decision was appealed in the Stockholm Administrative Court, which upheld the Swedish Transport Agency s ruling. Airport users have appealed the decision to the Administrative Court of Appeal, which has not yet decided whether to grant a leave to appeal. Swedavia s pricing decision for 2017 was rejected by the Swedish Transport Agency after an appeal by airport users. The Agency s ruling for 2017 deviates from the ruling issued by the Administrative Court for 2016, and Swedavia has appealed it in order to get greater clarity. At the same time that the Agency rejected Swedavia s pricing decision for 2017, it also decided in Swedavia s favour on four of six points that had been appealed. Swedavia s charges for 2016 will remain in effect until further notice and new charges are planned to enter into force on January 1, PACE OF CAPACITY DEVELOPMENT DOUBLED Capital spending totalled SEK 1,593 M for the first six months of the year, which is SEK 890 M higher than last year. Going forward, it will be necessary to further speed up the pace. Investments are being made mainly in our development programmes, which are aimed at increasing capacity and creating the airports of the future, which will be the most important meeting places in Scandinavia. During the spring, measures were implemented at all of our airports, primarily by making even more efficient use of existing capacity but in some cases also by expanding. This is especially important now during the summer, when passenger volume entails major capacity challenges at many airports. Measures include higher staffing levels, better queue management and providing information to passengers before their departure to create faster, smoother flows. During the quarter, it was decided that the new hotel project at Stockholm Arlanda, which will be run by Nordic Choice Hotels, will grow from 463 to 503 hotel rooms. The new hotel will be the largest airport hotel in the Nordic region and one of the largest in Stockholm. At Göteborg Landvetter Airport, Scandic Hotels will be the operator of the new hotel, which is expected to have about 220 rooms and will be an important piece of the puzzle in the airport s expansion and the construction of the new Airport City Göteborg. SWEDAVIA S STRATEGIC FOCUS REMAINS UNCHANGED During my first six months as CEO, I have spent a lot of time meeting employees, customers, political leaders and business representatives. It is apparent to me that Swedavia has a clear strategic focus. We will meet the need for future capacity through extensive investments in our airports, while delivering on our economic targets, increasing customer satisfaction and promoting sustainability issues. Going forward, the focus must be on the successful implementation of our development programmes, in order to create long-term solutions while managing the challenges we see here and now. The conviction I had when I walked through these doors at the beginning of year has been reinforced. Swedavia has a fantastically important mission. Through our operations, we create conditions for Sweden s continued prosperity and well-being. Jonas Abrahamsson President and CEO SWEDAVIA INTERIM REPORT JANUARY JUNE

4 ABOUT SWEDAVIA About Swedavia Swedavia owns, operates and develops a network of ten airports in Sweden, from Kiruna in the north to Malmö in the south. The company was formed in 2010 and is wholly owned by the Swedish State. Swedavia works in a competitive, international market. The company s role is to create the access Sweden needs to facilitate travel, business and meetings in Sweden, elsewhere in Europe and in the rest of the world. Swedavia s primary customer is the passenger. At the same time, airlines and the tenants who lease retail, office or hotel premises in Swedavia s properties are both customers and important partners of the company. In its work to attract airline investments, Swedavia competes with other airports. Safety, security and sustainable development with a focus on the customer are the foundation of everything Swedavia does, both in its own operations and in society in general. Operations are run based on sound business principles, and the company shall build a business that is sustainable in the long term through development, planning and operational efficiency. Engaged employees and a good working environment are crucial to Swedavia s operations. Swedavia shall continuously reduce its own carbon footprint and help to reduce the climate impact of the entire air travel industry SUSTAINABLE DEVELOPMENT AS STRATEGIC FOCUS Swedavia s strategic focus is based on three dimensions social development, economy and environmental concern combined with a focus on customers. OUR SUSTAINABILITY TARGETS Actual* Actual* Targets, Sustainability targets, Jun 30, 2017 Jun 30, Satisfied passengers, % Engaged leaders and employees, %** Return on operating capital, % Carbon dioxide emissions 2,120 2,800 3,200 0 * The actual figure is for 12 rolling months ** Measured once a year. The measurement was published in the third quarter last year *** The Group s environmental target is 0 tonnes of fossil carbon dioxide emissions from its own operations Mission Swedavia is a State-owned company that owns, operates and develops Sweden s national basic infrastructure of airports a network of airports that connects the whole country with the rest of the world. Our role is to create the access Sweden needs to facilitate travel, business and meetings. Business concept We at Swedavia create added value for our customers through attractive airports and access. Together with our partners, we continually develop our business. Vision Together we bring the world closer. Swedavia s operations give Sweden access and enable people who live in Sweden to experience the world. Together with our partners and employees, we create an experience that makes passengers want to return, time and time again. Swedavia brings the world closer. Values Reliable Engaged Innovative Welcoming SWEDAVIA INTERIM REPORT JANUARY JUNE

5 IMPORTANT EVENTS Important events January June NEW PRESIDENT AND CEO Jonas Abrahamsson assumed his duties as President and CEO of Swedavia on January 2, Karl Wistrand, who served as acting President and CEO starting in December 2015, resumed his previous position as Deputy CEO and Director of Commercial and Real Estate. DEBUT OF FLIGHTS USING SWEDAVIA S BIOFUEL On January 3, the first official refuelling using biofuel purchased by Swedavia took place at Stockholm Arlanda Airport. The first flight running on biofuel travelled between Stockholm and Copenhagen. On January 9, the first official refuelling using biofuel at Åre Östersund Airport took place. Bromma Stockholm Airport was also supplied with some of the 450 tonnes of biofuel purchased to offset the environmental impact of Swedavia s own flights on official business in On May 18, aircraft at Göteborg Landvetter Airport refuelled for the first time using a percentage of biofuel. This was the result of Swedavia purchasing another 450 tonnes of biofuel in 2017 to reduce the environmental impact of all the Company s air travel for business purposes in In 2016, Swedavia was the first company in the world to make such an investment, and this effort is now being repeated in AIRPORT CHARGES Swedavia s pricing decision for 2017 was rejected by the Swedish Transport Agency after an appeal by airport users. The Agency s ruling for 2017 deviates from the ruling made by the Administrative Court in Stockholm for 2016, and Swedavia has appealed the decision in order to get greater clarity. While the Swedish Transport Agency has rejected the pricing decision for 2017, it also ruled in Swedavia s favour on four of six points that were appealed. Swedavia s airport charges for 2016 are in effect until further notice, and new charges are planned to enter into force on January 1, A SWEDISH AVIATION STRATEGY On January 26, 2017, the government presented its first Swedish aviation strategy for the role of air travel in the transport system of the future. In the strategy, emphasis is given to the crucial role of air travel and its importance for Sweden s economic growth and development. The government noted in particular the importance of Stockholm Arlanda Airport for the development of and access to international contacts for the entire country. The strategy also includes the government s aim, noted earlier, to introduce an aviation tax, which the air travel industry believes will have a limited effect on greenhouse gas emissions and risks being a Swedish competitive disadvantage, especially with respect to international airlines. In its aviation strategy, the government announced the formation of the Arlanda Council, a consultative body that will handle broader issues pertaining to the objective of developing Stockholm Arlanda Airport into the leading airport in the Nordic region. On May 18, the government announced the members of the Arlanda Council. The strategy also includes the government s previously announced aim to introduce an aviation tax, a tax that the air travel industry believes will have a minor effect on greenhouse gas emissions and risks being a competitive disadvantage, especially with respect to international airlines. On June 20, the Swedish Council on Legislation issued its response to the government s draft proposal for a national aviation tax (SOU 2016:83). In its statement of opinion, the Council on Legislation highlighted a number of areas where it believes the proposal should be reworked so that it is clearer, including in the government s reasons for making the proposed adjustments. The Council of Legislation also highlighted arguments in instances where the government has dismissed objections in the opinions submitted by consultative bodies. ENVIRONMENTAL PERMIT In a ruling on March 16, 2017, the Land and Environmental Court of Appeal rejected an application from Swedavia to change Condition 5, which regulates so-called low-speed traffic at Stockholm Arlanda Airport. Swedavia has appealed the ruling to the Supreme Court. A ruling on a leave to appeal can be expected in the autumn of 2017 or spring of The main hearing took place in the Land and Environmental Court on March 28-29, 2017, on two other issues concerning Stockholm Arlanda Airport, a change in the glideslope angle and the application of other runway use patterns. The Court ruled in Swedavia s favour on these issues on May 17, Three counterparties have appealed the decision to the Land and Environmental Court of Appeal. A ruling on a leave to appeal is expected in early autumn. In late April, the Land and Environmental Court of Appeal ruled to limit Göteborg Landvetter Airport s aircraft movements to 90,000 a year in a decision on the airport s environmental permit. This consequently lowers the number of movements from the 120,000 specified in the environmental permit issued by the Land and Environmental Court in June Swedavia appealed the decision to the Supreme Court in the hope of being issued an environmental permit that will enable the long-term development at the airport. The Supreme Court ruled in June not to grant a leave to appeal. HOTEL OPERATOR CHOSEN On April 25, it was announced that Scandic Hotels will be the operator of Göteborg Landvetter Airport s new hotel. The hotel is expected to have about 220 rooms, and the plans are for it to be a modern mid-range hotel with the feel of affordable everyday luxury. The hotel is an important piece of the puzzle in the airport s expansion and the construction of the new Airport City Göteborg. US PRECLEARANCE On June 21, the Swedish government received a report from the commission on US Preclearance, which is studying the introduction of US border control at Stockholm Arlanda Airport. The report includes a proposal on how the agreements could be implemented in conformity with Swedish laws. Swedavia has carried out preparations to begin the work on the facility that is required for US Preclearance at Stockholm Arlanda but now awaits further legal work before a final investment decision can be made. Events after the end of the period There are no important events to report. SWEDAVIA INTERIM REPORT JANUARY JUNE

6 PASSENGER TRENDS Passenger trends January June The number of passengers increased 7.2 per cent during the first half of the year. International passenger volume increased 9.3 per cent, and domestic passenger volume increased 3.6 per cent. Demand for international travel has been strong all year, and the range of air links on offer has been enhanced, which had a positive effect on passenger volume. Domestic travel also continued to increase, which illustrates the important role aviation plays in providing access in Sweden. Overall the passenger load factor has continued to rise. Demand for flights was strong throughout the first half of the year, which means that airlines continue to invest in the Swedish market. In the first six months of 2017, a number of airlines decided on new or expanded routes going forward. Economic growth in Europe was strong in early 2017, which contributes to a continued increase in the number of visitors coming to Sweden. Improved access to Sweden by air is a key factor in this trend. In intercontinental scheduled traffic, passenger volume also continued to rise during the first half of the year. The increase in intercontinental volume for both passengers and cargo is mainly due to new routes and higher frequency at Stockholm Arlanda Airport. Charter traffic at Swedavia s airports also showed a strong trend compared to the same period last year. The seasonally adjusted passenger trend shows that international travel has continued to reach record volumes, with an accelerated pace of growth in the second quarter. Domestic travel is also at historically high and rising levels. April June The number of passengers increased 8.2 per cent during the first half of the year. International passenger volume increased 11.2 per cent, and domestic passenger volume increased 2.4 per cent. Demand for international travel was very strong throughout the quarter, but comparable figures were affected by a pilot strike at SAS during the second quarter of During the second quarter, Singapore Airlines launched service between Stockholm Arlanda Airport and Singapore. Air India announced that it will start nonstop flights between Stockholm Arlanda Airport and Delhi beginning in August. PASSENGER TRENDS SWEDAVIA ROLLING TWELVE-MONTH TREND APRIL 2010 TO JUNE 2017 Number of passengers 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 International Domestic Total 500, PASSENGER VOLUME - SWEDAVIA S SECOND QUARTER AND FIRST SIX MONTHS, 2017 Number of passengers Apr-Jun Number of passengers Jan-Jun Passengers Per cent change Per cent change International ,2% ,3% Domestic ,4% ,6% Total ,2% ,2% SWEDAVIA INTERIM REPORT JANUARY JUNE

7 ECONOMIC OVERVIEW Economic overview Net revenue and operating profit JANUARY-JUNE Consolidated revenue for the period totalled SEK 2,827 M (2,724), which was an increase of SEK 103 M or 3.8 per cent compared to the same period last year. Revenue from Aviation Business totalled SEK 1,765 M (1,699), which is an increase of SEK 66 M. The increase in passenger- and operations-related revenue was lower than the increase in passenger volume. The reason for this is that the pricing model, which was agreed with the airlines, includes a risk sharing component, whereby revenue from passenger volume exceeding forecast levels is given back to the airlines to some extent. Increased sales of de-icing, apron and passenger services helped to increase revenue in Aviation Business. Revenue from Commercial Services totalled SEK 1,048 M (1,006), which is an increase of SEK 42 M. Revenue from car parking and parking facilities increased SEK 26 M compared to the previous year, a rate of increase that is close to the passenger trend. Food & beverage increased in line with passenger growth. Retail revenue was in line with last year but is still a challenge since average retail income is falling. Commercial revenue per passenger was SEK 75.4 (75.5). External costs were SEK 32 M higher compared to the previous year. Higher operating costs attributable to higher passenger volumes and expanded security screening are the main explanation for the increase. Continued investments in the environment and IT entailed higher costs. Staff expenses increased SEK 78 M. The increase in operational staff at the airports attributable to passenger growth explains some of the change. Higher staff expenses are also explained by the effect of annual salary reviews and increased resources for development projects. The financial metric of operating costs per departing passenger was SEK (199.0). Depreciation, amortisation and impairment losses decreased SEK 13 M compared to the same period last year. This decrease is explained by the fact that most facilities, such as runway systems and assets related to Pier F, were fully depreciated last year. Consolidated operating profit totalled SEK 419 M (532). Last year was positively affected by a capital gain of SEK 146 M attributable to the sale of Säve Airport. The operating margin excluding the capital gain was 14.8 per cent compared to 14.2 per cent last year. APRIL-JUNE Consolidated net revenue for the second quarter was SEK 1,480 M (1,425), which was an increase of SEK 55 M or 3.9 per cent compared to the previous year. Aviation revenue totalled SEK 920 M (890), which is an increase of SEK 30 M. The higher revenue is explained by the higher passenger volume. Revenue from Commercial Services in the second quarter was SEK 555 M (522), which was SEK 33 M higher than the same period last year. The increase is attributable to food & beverage and car parking and parking facilities and is explained by the increase in passenger growth. External costs and staff expenses increased SEK 33 M, which is largely due to the higher number of employees. Depreciation and amortisation decreased SEK 6 M. Operating profit was SEK 303 M. Compared to the previous year, adjusted for capital gains of SEK 146 M, the increase was SEK 43 M. The operating margin excluding capital gains was 20.4 per cent (18.3). BREAKDOWN OF NET REVENUE Jan-Jun 2017 NET REVENUE, SEK M OPERATING INCOME, SEK M (including capital gains) Aviation Business Car parking & parking facilities Retail, food & beverage Other real estate revenue Advertising Other commercial services Other net revenue 1,500 1,450 1,400 1,350 1,300 1,250 1,200 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q SWEDAVIA INTERIM REPORT JANUARY JUNE

8 ECONOMIC OVERVIEW Net financial items Net financial items for the first half of the year totalled SEK -45 M (- 43). The share of profit from joint ventures had a positive effect on net financial items of SEK 16 M (31), with the decrease compared to last year explained by the disposal of assets in a joint venture. Net financial items for the second quarter totalled SEK -29 (-20) M. The share of profit from joint ventures had a positive effect on net financial items of SEK 1 M (15). Profit for the period Profit before tax for the period totalled SEK 374 M (490) and profit for the period totalled SEK 284 M (413). Profit before tax for the second quarter totalled SEK 274 (386) M and profit for the second quarter totalled SEK 204 M (326). Liquidity and financial position Consolidated equity at the end of the period was SEK 7,517 M (7,351). Swedavia s borrowings at the end of the period totalled SEK 5,232 M (4,298), which is an increase of SEK 934 M. Swedavia s borrowings are divided into corporate notes of SEK 3,832 M (3,298) and commercial paper of SEK 1,401 M (1,000). Liquid assets increased SEK 90 M to SEK 260 M. The debt-equity ratio was 0.8, which is higher compared to year-end, when the figure was 0.7. On the balance sheet date, Swedavia had credit facilities totalling SEK 700 M, divided into a loan commitment of SEK 500 M and an overdraft facility of SEK 200 M. The overdraft facility was not used at the end of the period. Capital spending During the first half of the year, investments totalled SEK 1,593 M (703). Important capital spending during the period was for development programmes to expand capacity at Stockholm Arlanda Airport and Göteborg Landvetter Airport. Investments were also made for the safety classification of the runway system at Bromma Stockholm Airport, the construction of Sky City Office One at Stockholm Arlanda Airport, and maintenance and capacity expansion measures at other airports. During the second quarter, investments totalled SEK 1,004 M (451). Cash flow Cash flow for the first half of the year totalled SEK 90 M (172). Cash flow from operating activities was SEK 867 M (695), which is SEK 172 M higher compared to the same period last year. The difference is largely explained by changes in operating capital, with liquid assets received from the earnout on the sale of Hotel Clarion having a positive effect. Cash flow from investing activities was SEK -1,581 M (-483). Capital spending more than doubled compared to the previous year. Cash flow last year was also positively affected by SEK 229 M attributable to liquid assets received from the sale of Säve Airport and a payment settlement attributable to the previous sale of land to a joint venture with Bockasjö. Cash flow from financing activities totalled SEK 803 M (-40). The increase since the beginning of the year is explained by increased borrowings in the form of corporate notes and commercial paper to fund the increase in capital spending. The payment of the dividend adopted had a negative effect of SEK 143 M (232). Cash flow for the second quarter was SEK 57 M (25). The change compared to the previous year is explained by the accelerated investment pace and increased borrowing. SWEDAVIA INTERIM REPORT JANUARY JUNE

9 ECONOMIC OVERVIEW Employees The average number of employees for the period July 1, 2016 June 30, 2017 was 3,007 (2,878). The change is explained by an increase in operational staff at the airports to handle the passenger growth and increased resources in development projects. Risks and uncertainty factors Risk is defined here as an event that affects the Group s prospects of achieving its operational goals and implementing its strategies. Swedavia works continuously to map, monitor and manage risks in its operations. Risk analyses are performed and reported to the Board of Directors on a quarterly basis. Swedavia s significant risks are described in the Annual Report 2016 on pages and in Note 45. Swedavia s top overall risks consist of its capability to meet the need for capital spending and to carry out investments in a sustainable and cost-effective way, compliance with the conditions of its environmental permits, a disruption in operations and political decisions that could affect operations. Swedavia s operations are also affected by the general economic trend, and a downturn could have a negative effect on Swedavia in the form of lower demand for air travel and thus lower revenue. Moreover, other external factors could affect Swedavia s performance. Parent Company Net revenue and profit The Parent Company s net revenue for the period totalled SEK 2,806 M (2,694), which was an increase of SEK 112 M. Operating profit totalled SEK 342 M (354) and the operating margin was 12.2 per cent (13.1). Profit before tax was SEK 1,322 M (1,048) and profit for the period was SEK 1,257 M (983). Profit for the period was positively affected by dividends from subsidiaries. During the second quarter, the Parent Company s net revenue totalled SEK 1,476 M (1,408), which was an increase of SEK 68 M. Operating profit totalled SEK 263 M (261) and the operating margin was 17.8 per cent (18.5). Profit before tax was SEK 1,136 M (986) and profit for the period was SEK 1,083 M (935). Dividends from subsidiaries had a positive effect of SEK 1,039 M (757). SWEDAVIA S FINANCIAL TARGETS Jun 30, 2017 CAPITAL SPENDING, SEK M CASH FLOW FROM OPERATING ACTIVITIES, SEK M Actual Targets Return on operating capital, % Debt/equity ratio, times Dividend, % n/a , Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q SWEDAVIA INTERIM REPORT JANUARY JUNE

10 GROUP Income statement Amounts in SEK M Note Apr-Jun Apr-Jun Jan-Jun jan-jun Jan-Dec Net revenue 2,7 1,480 1,425 2,827 2,724 5,546 Other operating revenue Work performed by the company for its own use and capitalised External expenses ,087-1,055-2,251 Staff expenses ,761 Depreciation/amortisation and impairment losses on tangible fixed assets and intangible non-current assets Other operating expenses Operating profit Income from financial items Income from holdings in associated companies and joint ventures Interest income and similar items Interest expenses and similar items Income after financial items Tax Profit for the period Earnings per share Earnings per share before and after dilution, SEK The total number of shares was 1,441,403,026 for all periods Statement of comprehensive income Amounts in SEK M Note Apr-Jun Apr-Jun Jan-Jun jan-jun Jan-Dec Profit for the period Other comprehensive income: Items that can be reclassified to the income statement Cash flow hedges Items reclassified to the income statement Change in fair value for the period Tax Other comprehensive income from joint ventures, net after tax Items that cannot be reclassified to the income statement Revaluations of defined benefit pensions Tax Total other comprehensive income, net after tax Comprehensive income for the period SWEDAVIA INTERIM REPORT JANUARY JUNE

11 GROUP Balance sheet Amounts in SEK M Note Jun 30, 2017 Jun 30, 2016 Dec 31, 2016 ASSETS 2 NON-CURRENT ASSETS Intangible non-current assets Tangible non-current assets 13,059 11,015 11,897 Non-current financial assets 1,104 1,009 1,091 Total non-current assets 14,783 12,632 13,620 CURRENT ASSETS Materials and supplies Trade receivables Receivables from associated companies Other receivables Prepaid expenses and accrued income Derivative instruments Liquid assets Total current assets 1,211 1,062 1,096 TOTAL ASSETS 15,994 13,695 14,716 EQUITY AND LIABILITIES 2 EQUITY Share capital 1,441 1,441 1,441 Other paid-in capital 2,162 2,162 2,162 Hedge reserve Retained earnings 3,998 3,582 3,866 Total equity 7,517 7,015 7,351 NON-CURRENT LIABILITIES Provisions 1, ,048 Deferred tax liability Interest-bearing liabilities 2,136 2,813 3,321 Derivative instruments Other non-current liabilities Total non-current liabilities 3,766 4,430 4,985 CURRENT LIABILITIES Provisions Interest-bearing liabilities 3,143 1,109 1,010 Derivative instruments Trade payables Other liabilities Liabilities to associated companies Accrued expenses and prepaid income Total current liabilities 4,712 2,249 2,380 TOTAL EQUITY AND LIABILITIES 15,994 13,695 14,716 SWEDAVIA INTERIM REPORT JANUARY JUNE

12 GROUP Changes in equity Amounts in SEK M Jun 30, 2017 Jun 30, 2016 GROUP Equity, opening balance 7,351 6,863 Comprehensive income for the period Dividend Equity, closing balance 7,517 7,015 Cash flow statement Amounts in SEK M Note Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec Operating activities Profit after financial items Adjustments for items not included in cash flow etc Tax paid Cash flow from operating activities before changes in working capital ,483 Cash flow from changes in working capital Increase( )/Decrease(+) in materials and supplies Increase( )/Decrease(+) in operating receivables Increase(+)/Decrease(-) in operating liabilities Cash flow from operating activities ,650 Investing activities Disposal of subsidaries Acquisitions/disposal of intangible non-current assets Acquisitions/disposal of tangible fixed assets , ,075 Acquisitions/disposal of other financial assets Cash flow from investing activities , ,855 Financing activities Borrowings raised 6 1,755 1,400 2,705 1,987 2,141 Borrowings repaid 6-1,171-1,250-1,771-1,794-1,548 Increase(+)/Decrease(-) in other financial liabilities Dividend paid Cash flow from financing activities Cash flow for the period Liquid assets at the beginning of the period Liquid assets at the end of the period SWEDAVIA INTERIM REPORT JANUARY JUNE

13 PARENT COMPANY Income statement Amounts in SEK M Note Apr-Jun Apr-Jun Jan-Jun jan-jun Jan-Dec Net revenue 1,476 1,408 2,806 2,694 5,492 Other operating income Work performed by the company for its own use and capitali External expenses ,129-1,053-2,267 Staff expenses ,733 Depreciation/amortisation and impairment losses on tangible fixed assets and intagible non-current assets Other operating expenses Operating profit Income from financial items Profit on holdings in Group companies , Interest income and similar items Interest expenses and similar items Income from financial items 1, ,322 1,048 1,295 Appropriations Profit before tax 1, ,322 1,048 1,219 Tax Profit for the period 1, , ,095 SWEDAVIA INTERIM REPORT JANUARY JUNE

14 PARENT COMPANY Balance sheet Amounts in SEK M Note Jun 30, 2017 Jun 30, 2016 Dec 31, 2016 ASSETS NON-CURRENT ASSETS Intangible non-current assets Tangible fixed assets 12,421 10,604 11,467 Total financial assets 3 1, ,070 Non-current assets 14,074 12,187 13,145 CURRENT ASSETS Materials and supplies Current receivables 3 1,868 1,610 1,653 Liquid assets Total current assets 2,166 1,832 1,859 Total assets 16,241 14,019 15,003 EQUITY AND LIABILITIES EQUITY Restricted equity Share capital (1,441,403,026 shares) 1,441 1,441 1,441 Reserve for development expenditures Unrestricted equity Retained earnings/share premium reserve 3,324 2,395 2,372 Profit for the period 1, ,095 Total equity 6,045 4,819 4,931 Untaxed reserves 1,943 1,982 1,943 Provisions 1,318 1,275 1,332 Non-current liabilities 2,136 2,813 3,324 Current liabilities 3 4,799 3,130 3,475 TOTAL EQUITY AND LIABILITIES 16,241 14,019 15,003 SWEDAVIA INTERIM REPORT JANUARY JUNE

15 NOTES Notes NOTE 1. ACCOUNTING PRINCIPLES transactions are carried out at market prices and on standard commercial terms. GENERAL This interim report was prepared in conformity with IAS 34 and Sweden s Annual Accounts Act. The report was prepared in conformity with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), to the extent these have been adopted by the EU, as well as interpretations of standards in effect issued by the IFRS Interpretations Committee (IFRIC). Swedavia applies the same accounting principles that are described in the Annual and Sustainability Report for Ongoing work analysing the effects of IFRS 15 Revenue from contracts with customers, which enters into force on January 1, 2018, indicates that the new standard does not have any material effect on the timing of revenue recognition. Application of IFRS 9 Financial instruments, which enters into force on January 1, 2018, is not expected to entail any change in items reported. The effects of IFRS 16 Leases, which enters into force on January 1, 2019, have not yet been analysed. The Group s reporting is in millions of Swedish kronor (SEK M) unless otherwise indicated. Rounding differences may occur. RELATED PARTY TRANSACTIONS Related party transactions involve transactions with State-owned companies and enterprises as well as government agencies. Related parties also include companies over which Swedavia can exercise a controlling interest. Costs arise mostly from meteorological services, fees to government authorities and air traffic management services, which are largely included in the costs reimbursed by the Swedish Transport Agency. The PARENT COMPANY The Parent Company applies Sweden s Annual Accounts Act and the Swedish Financial Accounting Standards Council s recommendation RR 2 Financial reporting for legal entities. The differences arising between the accounting principles of the Parent Company and the Group are caused by the limited ability to apply IFRS in the Parent Company as a result of Sweden s Annual Accounts Act and the Swedish Pension Obligations Vesting Act as well as in some cases by the relationship between financial reporting and taxation. NOTE 2. SEGMENT REPORTING Swedavia s operations are organised and managed in two operating segments, Airport Operations and Real Estate. Airport Operations owns, operates and develops Swedavia s airports. Most revenue consists of passenger-related revenue Real Estate owns, develops and manages properties and developable land at and around Swedavia s airports. Most revenue consists of rental income The basis of segment reporting is the Group s internal reporting. The Board of Directors and executive management mainly use operating profit by segment for their monitoring. Financial expenses, financial income and income tax are handled at the Group level. The accounting principles conform to those applied in consolidated financial reporting. SWEDAVIA INTERIM REPORT JANUARY JUNE

16 NOTES SEGMENT REPORTING, NOTE 2 Airport Operations Real Estate Eliminations/adjustments* Total Swedavia Income statement Apr-Jun Amounts in SEK M Revenue from external customers 1,493 1, ,533 1,611 Revenue from other segments Total revenue 1,523 1, ,533 1,611 Operating expenses -1, , Depreciation, amortisation and impairment losses Operating profit Income statement Jan-Jun Airport Operations Real Estate Eliminations/adjustments* Total Swedavia Amounts in SEK M Revenue from external customers 2,839 2, ,923 2,941 Revenue from other segments Total revenue 2,897 2, ,923 2,941 Operating expenses -2,101-1, ,059-1,950 Depreciation, amortisation and impairment losses Operating profit Balance sheet Airport Operations Real Estate Eliminations/adjustments* Total Swedavia Amounts in SEK M Jun 30, 2017 Jun 30, 2016 Jun 30, 2017 Jun 30, 2016 Jun 30, 2017 Jun 30, 2016 Jun 30, 2017 Jun 30, 2016 Non-current assets 14,023 12,138 1,451 1, ,783 12,632 Current assets 2,168 1, ,061-1,260-1,831 1,211 1,063 Total assets 16,191 13,971 1,755 2,268-1,952-2,544 15,994 13,695 Equity 7,714 6, , ,517 7,015 Liabilities 8,478 7,389 1, ,165-1,677 8,478 6,680 Total equity and liabilities 16,191 13,971 1,755 2,268-1,952-2,544 15,994 13,695 * Eliminations consist of intra-group transactions, and adjustments consist of consolidating adjustments. NOTE 3. RECEIVABLES FROM GROUP COMPANIES Receivables, non-current and current, from Group companies pertain mostly to loans funding the Swedavia Real Estate group. NOTE 4. FINANCIAL INSTRUMENTS, FAIR VALUE VALUATION AT FAIR VALUE For current receivables and liabilities, such as trade receivables and trade payables, with a remaining life of less than six months, the recognised value is considered to reflect the fair value. Fair value for interest-bearing liabilities is calculated by discounting the future cash flow of the amount of capital and interest discounted at the current market interest rate. All derivatives on the balance sheet date are classified under Level 2, which means the derivatives can be measured through directly or indirectly quoted prices based on observable market data. The Group has entered ISDA agreements for derivatives, which allow set-off, for instance, against payments. There is no net accounting. Group Amounts in SEK M Jun 30 Dec 31 Loan receivables and trade receivables Other financial liabilities -6,056-5,018 Derivatives Total -5,237-4,448 Total book value -5,214-4,411

17 NOTES NOTE 5. CONTINGENTS LIABILITIES AND PLEDGED ASSETS Swedavia s pledged assets of shares and holdings in the joint ventures Swedish Airport Infrastructure KB and Swedish Airport Infrastructure AB. The carrying amount is SEK 858 M (841). Swedavia s contingent liabilities consist of pension obligations in endowment insurance owned by the company, totalling SEK 8 M (8), and a guarantee for SEK 81 M (81) to the joint venture Landvetter Logistik Center AB, which it owns together with Bockasjö AB. Swedavia furthermore has obligations related to environmental requirements to run its airport operations. NOTE 6. CASH FLOW STATEMENT Short-term borrowings, with a maturity of 3 months or less, are recognised on a net basis and are repaid the same month. NOTE 7. NET REVENUE Group, amounts in SEK M Apr-Jun Apr-Jun Jan-Jun jan-jun Jan-Dec Breakdown of net revenue Aviation Business Passenger-related revenue ,638 Aircraft-related revenue Externally regulated charges Ground handling Other additional services ,765 1,699 3,446 Commercial Services Car parking & parking facilities Retail, food & beverage Real estate revenue Advertising Other commercial services ,048 1,006 2,062 Other net revenue Total net revenue 1,480 1,425 2,827 2,724 5,546 NOTE 8. SUPPLEMENTARY INFORMATION FOR KEY FINANCIAL DATA For the period January-December 2016, capital gains totalled SEK 241 M. NET LIABILITIES The pension liability totalled SEK 810 M as of June 30, 2017, and SEK 779 M as of June 30, As of December 31, 2016, the pension liability totalled SEK 803 M. NOTE 9. EVENTS AFTER THE END OF PERIOD There were no events after the end of the period to report. OPERATING PROFIT EXCLUDING CAPITAL GAINS There was no capital gain reported for the period April-June or January-June Capital gains that are excluded from the period April-June and January-June 2016 totalled SEK 146 M. SWEDAVIA INTERIM REPORT JANUARY JUNE

18 Definitions AIRPORT OPERATIONS Airport Operations is one of Swedavia s two operating segments. Owns, operates and develops Swedavia s airports. AVERAGE NUMBER OF EMPLOYEES The average number of employees is calculated based on hours worked, restated as the total number of hours worked divided by the normal working time as defined by the Swedish Accounting Standards Board. Calculated on a rolling twelve-month basis. AVERAGE OPERATING CAPITAL The closing balance of operating capital on the balance sheet date plus the closing balance of operating capital on the balance sheet for the previous year divided by two. AVIATION BUSINESS Infrastructure services aimed at airlines and ground handling companies, such as take-off and landing services and security screening. CAPITAL SPENDING Swedavia s investments in tangible fixed assets and intangible assets including investment projects in progress. Swedavia is in an intensive development phase, and this investment pace is important to Swedavia s management and external stakeholders. COMMERCIAL REVENUE PER DEPARTING PASSENGER Revenue from retail, food & beverage and parking divided by the number of departing passengers for the same period. A metric that the Group considers crucial for monitoring changes in commercial revenue. COMMERCIAL SERVICES Services connected to the airports such as leasing of premises for retail operations, offices, warehousing and logistics as well as land leases, parking operations and the leasing of advertising space. DEBT/EQUITY RATIO Net liabilities divided by equity. This financial ratio is what the owner uses as a capital structure target for the Group. The metric is considered to be directly linked to the Group s actual funding and financial risk. EARNINGS PER SHARE Profit for the period divided by the average number of shares. INTEREST-BEARING LIABILITIES Interest-bearing liabilities on the balance sheet consist of liabilities to credit institutions, corporate notes, commercial paper and liabilities to leasing companies. NET LIABILITES Interest-bearing liabilities plus pension liability minus liquid assets. NET REVENUE Swedavia s net revenue includes revenue from Aviation Business and Commercial Services. OPERATING CAPITAL Equity plus net liabilities. OPERATING COSTS PER DEPARTING PASSENGER Swedavia AB s total external costs and staff expenses minus own work capitalised divided by the number of departing passengers for the same period. A metric that Swedavia considers crucial for monitoring improvements in costeffectiveness. OPERATING MARGIN Operating profit as a percentage of net revenue. For the operating margin excluding capital gains, see Operating profit excluding capital gains. OPERATING PROFIT EXCLUDING CAPITAL GAINS Operating profit minus capital gains from important transactions. A metric that is crucial since Swedavia s management monitors operating profit excluding capital gains. PASSENGER The term passenger refers to the statistical event in which a person has departed from or arrived at one of Swedavia s airports. The number of departing passengers is approximated by dividing the number of passengers by two. PROFIT FOR THE PERIOD Profit after tax. REAL ESTATE Real Estate is the second of Swedavia s two operating segments. Owns, develops and manages properties and developable land at and around Swedavia s airports. RETURN ON OPERATING CAPITAL Operating profit plus profit from holdings in associated companies for a rolling twelve-month period divided by average operating capital. This financial ratio is the owner s metric for profitability at Swedavia and one of the Group s sustainability targets. This metric reflects the Group s cost of capital. SUSTAINABILITY TARGETS Swedavia s sustainability targets are monitored on a continuous basis based on the latest verified data for each target and in accordance with the same accounting principles described in the Annual and Sustainability Report SWEDAVIA INTERIM REPORT JANUARY JUNE

19 Calendar Nine Month Report Jan-Sep 2017 October 30, 2017 Year End Report 2017 February 15, 2018 Annual Report 2017 March 29, 2018 Swedavia s financial reports are published on Swedavia s website This interim report has not been reviewed by Swedavia s auditors. This is a translation of the Swedish language original. In event of any differences between this translation and the original, the Swedish version shall prevail. Contact people JONAS ABRAHAMSSON President and CEO MATS PÅHLSON CFO Telephone The undersigned attest that the six-month report provides an accurate overview of the Parent Company s and the Group s operations, position and results, and describes important risks and uncertainty factors faced by the Parent Company and the companies in the Group. Stockholm-Arlanda July 18, 2017 Åke Svensson Adine Grate Axén Lars Backemar Lottie Knutson Lotta Mellström Lottie Svedenstedt Lars Mydland Mikael Norman Robert Olsson Employee representative Lars Andersson Employee representative Jonas Abrahamsson President and CEO Swedavia AB (publ) Tel: Stockholm-Arlanda Sweden Fax: Visiting address: Flygvägen 1 info@swedavia.se Corporate identity no Coordinates: N O Headquarters Municipality of Sigtuna SWEDAVIA INTERIM REPORT JANUARY JUNE