LFV Annual report 2018 1
L F V 2018 C OMMENT S ON THE B ALANCE SHEET AN D
F UNDS S T A TEMENT S COMMENTS ON THE BALANCE SHEET AND FUNDS STATEMENTS Unless otherwise stated, all amounts are declared in SEK (millions). Information in brackets concerns the previous year. FIXED ASSETS LFV’s investments in 2018 amounted to 324 MSEK (227), of which capitalised production costs amounted to 35 MSEK (31). The two largest investment projects relate to investments in the new control centre at Arlanda for remote air traffic management, and investments in radar equipment. Regular investments are made for maintaining the integrity of monitoring equipment and technical systems, and funds are also invested in new technology as required by regulations and increased requirements for airspace monitoring. Other large investments are made to improve capacity, continuity and robustness of operation for the control centres and voice/radio communication systems. In addition, there has been continued development and adaptation of the air traffic management system within the COOPANS collaboration. LFV’s budget for investments in 2018 amounted to 392 MSEK (225). Additional needs have been identified, and the investment framework as well as the rate of investment have been increased. LONG-TERM RECEIVABLES AND LIABILITIES LFV’s revenue attributable to en route operations adheres to a charging model within the EU that involves risk sharing between air navigation service providers and airlines. The conditions are set out in a performance plan for a given reference period. Risk sharing is applied for deviations relative to a designated traffic forecast, where the provider is responsible for the entire deviation risk up to 2 percent from the forecast in the performance plan. Between 2 and 10 percent, the provider carries 30 percent of the risk. Deviations over 10 percent are carried by the provider entirely. Additionally, exceptions are made for uncontrollable cost increases. In Sweden, changes in pension costs fall under this category. LFV has accrued previous years’ and this year’s recoverable losses, which are accounted for under the “Other long-term receivables” and “Other non-interest-bearing long-term liabilities” items. Long-term receivables have increased this year from 1,180 MSEK 50 to 1,288 MSEK. Of this change, 201 MSEK is due to risk sharing between LFV and the airlines in accordance with the performance plan and corrections from previous years, and -104 MSEK is due to a reduction in previous years’ claims. The long-term, other non-interest-bearing liabilities have increased this year from 270 MSEK to 283 MSEK. Of this change, -207 MSEK is due to risk sharing between LFV and the airlines in accordance with the performance plan, and 197 MSEK is due to a reduction in previous years’ liabilities. CASH AND CASH EQUIVALENTS The liquidity of the LFV group remains good. Liquid assets amount to 5,626 MSEK (5,322), an increase of 304 MSEK since the beginning of the year, 1 January 2018. Of the liquid assets, 520 MSEK (801) are placed in short-term certificates of deposit that mature in 2019. PENSION PROVISIONS In November 2018, the National Government Employee Pensions Board (SPV) decided on new bases of calculation for pension provisions for state-owned enterprises’ commitments concerning pension provisions as of 1 January 2019. The gross interest rate was set at -0.7 percent (-0.6) and, following deductions for yield tax of 0.1 percent (0.1) and overheads of 0.2 percent (0.2), the net rate amounts to -1.0 percent (-0.9). LFV applies the 2019 bases of calculation in the annual accounts for 2018. In the in the annual accounts for 2017, LFV applied the bases of calculation for 2018, with a net rate of -0.7 percent. Pension provisions, including special payroll tax, amount to 7,056 MSEK (6,539) as of 31 December 2018, which is an increase of 517 MSEK compared with 31 December 2017. This is change consists of indexation and interest of 33 MSEK net (-7), pension payments of -114 MSEK (-108), accrued pension benefits for the year of 462 MSEK (446), and the effect of changes to the bases of calculation, 136 MSEK (390). TAX AND DIVIDENDS The tax equivalent for the year amounts to -4 MSEK (17), of which 1 MSEK (4) concerns tax in subsidiaries, and deferred tax of -3 MSEK (21) from tax losses and temporary differences between the accounting results and tax balance for the year. The tax equivalent is calculated in accordance with government guidelines. LFV is to distribute dividends for the 2018 financial year to the equivalent of 15 percent of the result after tax equivalent. A dividend of 0 MSEK is proposed for 2018. RETURN ON EQUITY AND SOLIDITY The Government's financial targets for LFV are that return on equity after tax equivalent over a business cycle shall amount to 4 percent, and the equity/ assets ratio shall equate to 15 percent in the long term. As of 31 December 2018, the return on equity is 1 percent (negative the previous year), and the equity/assets ratio amounted to 9 percent (9). The fact that the equity/assets ratio and return on equity do not reach the targets is due to the effects of lower interest rates in the bases of calculation for pension liability, and that future pensions are secured by means of a separate balance sheet for pension liability. FUNDS STATEMENT The cash flow for the year is positive and amounts to 304 MSEK (432). The cash flow from operating activities amounts to +673 MSEK (+881). Cash flow from investing activities mainly relates to investments in intangible and tangible fixed assets. The change in claims and other non-interestbearing liabilities is due to the charging model for en route charges and carries a net effect to the cash flow of the year of around -38 MSEK (-226). The change that is accounted for under financing activities also includes the part of these claims and liabilities classified as short-term on the balance sheet. STATEMENT OF APPROPRIATIONS LFV has allocated funds for management costs and other expenses relating to emergencies and civil defence within the transportation sector, as well as expenses relating to investments in certain infrastructure for air navigation services.