LFV Annual Report 2019 1
L F V 2019 C OMMENT S ON THE B ALANCE SHEET AN D
FUNDS S T ATEMENT COMMENTS ON THE BALANCE SHEET AND FUNDS STATEMENT Unless otherwise stated, all amounts are shown in million SEK. Information in brackets concerns the previous year. FIXED ASSETS LFV's investments in 2019 amounted to SEK 498 million (324), of which initiation of internal work amounts to SEK 45 million (35). Investments are made continuously for maintenance of supervision equipment and technical systems, as well as investments in new technology driven by regulations and increased demands on supervision of the airspace. LFV has several larger ongoing projects that will progress over years. Investments have been made to strengthen capacity, continuity and robustness in operations for the control centres and communications and radio communications systems. The largest investment projects relate to investments within the scope of robust air traffic service, SEK 196 million. Other larger projects relate to technical equipment for the new control centre at Arlanda for remote air traffic control (RTS) and associated equipment at Swedavia's four airports for RTS, investments in the TopSky air traffic control system within the scope of COOPANS and investment in radar equipment. The year's total investments were SEK 174 million higher than last year, but the outcome is lower than the plan, SEK 621 million, which can be explained by some delays in the project due to limited human resources and external suppliers, to a certain extent. LONG-TERM RECEIVABLES AND LIABILITIES LFV's earnings for en route operations follow a model of fees within the EU that entails risk sharing between suppliers of air traffic service and airlines. The conditions are defined in a performance plan for a given reference period. Risk sharing is applied with respect to deviations in relation to a defined traffic forecast, wherein the supplier bears the entire risk up to a 2 per cent deviation from the forecast in the performance plan. Between 2 and 10 per cent, the supplier bears 30 per cent of the risk. Deviations over 10 per cent are borne entirely by the supplier. An exception is also made for uncontrollable cost increases. 50 Changes in pension costs are included in this category for Sweden's part. LFV has accrued earlier years' and this year's recoverable shortfall, which is reported under the items of other long-term receivables and other non-interest bearing long-term debt. The long-term receivables increased by SEK 107 million in 2019 from SEK 1,288 million to SEK 1,395 million. The long-term other non-interest bearing debt decreased by SEK 71 million in 2019 from SEK 283 million to SEK 212 million. CASH AND CASH EQUIVALENTS Liquidity in LFV remains good. Liquid assets amount to SEK 5,748 (5,626), an increase by SEK 122 million since 1 January 2019. Liquid assets include SEK 2,534 (520) invested in short-term certificates that are due in 2020. PENSION PROVISIONS Pension provisions, including special wage tax amount to SEK 7,471 million (7,056) as of 31 December 2019, which is an increase by SEK 415 million over 31 December 2018. The change consists of indexing and net interest of SEK -66 million (33), pension payments of SEK -114 million (-114), the years earned pension benefits SEK 595 million (462). The calculation bases for 2019 were used for the the annual report for both 2018 and 2019, which means that there was no effect of changed bases of calculation in 2019. The gross interest for 2019 calculated by the National Government Employee Pensions Board (SPV) is -0.7, and 0.1 per cent after deduction for yield tax and 0.2 per cent operating costs, the net interest amounts to -1.0 per cent. SPV's decision on new accounting principles and bases of calculation for the state-owned enterprise's commitments relating to pension reservations starting on 1 January 2020, meaning that the effect of 2020's new bases of calculation will not be factored in until fiscal year 2020. TAX AND DIVIDENDS The annual tax equivalent yield amounts to SEK 9 million (-4) of which SEK 9 million (-3) is a tax asset for loss carried forward and temporary differences between accounting and tax results for the year. The tax equivalent yield is calculated according to the government's guidelines. LFV will issue dividends for the business year 2019 equivalent to 15 per cent of the profit after tax equivalent yield. Dividends of SEK 0 million are proposed for 2019. RETURN ON EQUITY AND SOLIDITY The government's economic goals for LFV are that return on equity after tax equivalent yield over a business cycle should amount to 4 per cent and solidity should equate to 15 per cent in the long term. The return on equity as of 31 December 2019 is negative (1 per cent) and solidity amounts to 8 per cent (9). The fact that the solidity and return on equity do not meet the goals depends on the effect of low interest rates in the bases of calculation for pension liability, and that future pensions will be secured by applying a dedicated balance sheet to the pension liability. FUNDS STATEMENT The annual cash flow is positive and amounts to SEK 122 million (304). The cash flow from operations amounted to SEK +673 million (+673). The cash flow from investments pertains primarily to investments in intangible and tangible fixed assets. The change in receivables and other non-interest bearing debt attributable to the fee model for en route fees has had a net influence on the annual cash flow of approximately SEK -48 million (-38). The change reported under financing also includes the part of the receivables and debts that are classified as short-term in the balance sheet. STATEMENT OF APPROPRIATIONS LFV has been appropriated funds partly for administrative costs and other measures for preparedness and civil defence within the transport sector and with respect to investments in infrastructure for air traffic service.