Volito AB | An n ua l Rep ort 2010
Volito AB | Group Presentation Annual Report 2010 Volito AB is an investment company operating within Aviation, Real Estate, Industry and Structured Finance. The company creates value through long-term, active ownership based on genuine expertise within its lines of business. Value growth is generated both through current earnings and the increase in value of the company’s investments.
Volito AB, Södra Förstadsgatan 4, SE-211 43 Malmö tel +46 40 660 30 00 fax +46 40 660 30 20 e-mail info@volito.se internet www.volito.se corporate identity number 556457-4639
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he cover this year is painted by John Stockwell, born 1958 in Boston. John has been living in Sweden for ten years. His dramatic paintings with nature as a base are witnesses of a huge love and passion for the southern Swedish landscape. Over the years John has had several exhibitions in the USA, Europe and Sweden. His work is represented in numerous major collections, i.e. Fidelity Trust, IBM, Merril Lynch and Harvard Business School. John Stockwell – Apple orchard in Vitaby. Pastel on paper 2010
Addresses Volito AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 660 30 00 Fax +46 40 660 30 20 www.volito.se
Volito Fastigheter AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 664 47 00 Fax +46 40 664 47 19 www.volitofastigheter.se
Volito Aviation AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 660 30 00 Fax +46 40 30 23 50 www.volito.aero
Volito Industri AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 660 30 00 Fax +46 40 660 30 20 www.volito.se
This English version is a translation of the Swedish original. In case of any dispute as to the interpretation of this document, the Swedish version shall prevail.
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2004 K G Nilsson
2007 Bjรถrn Wessman
2005 Martin Wickstrรถm
2008 Emanuel Bernstone
2006 Anders ร sterlin
2009 Helmtrud Nystrรถm
The Volito Group – 20 years of long-term investment
5
T H E G R OUP
Volito is a privately owned investment group headquartered in Malmö. The Group’s story begins in 1991 when Karl-Axel Granlund acquires and merges two established aircraft leasing companies. The new company is soon given the name Volito – “to fly and aspire to new heights” – and operates with great success. Gradually, the company expands into other business areas. Aircraft leasing is still a significant part of the business with aircraft placed all over the world. The majority of the fleet is jointly owned with the American company, Goldman Sachs. Other business areas are Real Estate, with a growing portfolio in the Malmö region; Industry, consisting of several Swedish hydraulics companies, and Structured Finance, which comprises of Nordkap Bank AG in Switzerland. The Volito Group also contains substantial holdings in listed companies with influence at board level and ownership interests in associated companies and jointly-owned companies. In total, the Volito Group has adjusted equity of SEK 1 771 million. Volito’s overall objective is to create long-term, balanced value growth for the shareholders, both through current income from operational activities and value growth in the Group’s investments. The Group’s success is based on its staff members’ ability to assess and manage capital-intensive investments, and welldocumented experience in the spreading of risk. The Group is characterised by a high degree of independence and integrity. The Volito Group takes a long-term perspective and strives for investments that are based on sector knowledge, experience, relations and mutual trust.
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2010 in brief • The Volito Group reported a pre-tax profit for 2010 of SEK 121.7 million, which is 47 % higher than the previous year. The rise in the stock market in 2010 has increased the value of Volito’s share portfolio. On 31 December 2010 the Volito Group’s adjusted equity amounted to SEK 1 771.1 million, which represents an increase of 21 %. •
VGS Aircraft Holding (Ireland) Limited (VGS) made a profit of USD 12.9 million before tax. On 31 December 2010 VGS had a fleet of 44 aircraft with a value of USD 836 million, representing an increase of 15 %. The Volito Aviation AB Group made a profit of SEK 37.2 million (71.0) before tax.
• Volito Fastigheter reported a pre-tax profit for the year of SEK 43.9 million (36.2). The market value of the portfolio at year-end 2010 was SEK 1 603.1 million, which is an increase of 8.5 %. Volito’s holding in Peab AB (publ) has grown in value with an increase of around 30 % including received dividends. The Peab Group’s turnover rose by 9 % and the reported operating profit was SEK 1 563 million, which is 2 % lower than the previous year.
• Volito Industri has continued its expansion in the Swedish Hydraulics market. HydX has grown and established itself in the market. At the end of the year Volito Automation acquired Hydro Swede, and began to establish Hydraulic Supplier under own management. Volito’s holding in CTT Systems (publ) at year-end was at a similar share price level as the previous year-end. The company made a loss after tax of SEK -2.3 million. • In 2010 Nordkap Bank AG consolidated its loan portfolio and focused on the problem loans that arose during the financial crisis. The bank has succeeded in increasing the number of customers who have made a considerable recovery. This, in combination with the improved credit market, has resulted in a reduced loan portfolio and improved liquidity. Nordkap Bank AG reported a profit before tax for 2010 of CHF 0.5 million (0.3).
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T H E G R OUP
Volito AB
AVIATION Business Area Aviation consists of Volito Aviation AB, a holding company that, via its subsidiaries, acquires, finances and leases out commercial aircraft all over the world. The fleet consists of 49 aircraft, which are chiefly owned by Ireland-based VGS Aircraft Holding – a joint venture between Volito and Goldman Sachs Group. Volito Aviation Services AB is responsible for managing the aircraft of both VGS and Volito Aviation AB.
INDUSTRY Business Area Industry consists of HydX AB, Hydro Swede AB, Hydratech AB and Hydraulic Supplier i Norden AB, all of which operate under the parent company, Volito Automation. The companies supply systems, aggregates and components for industrial, mobile and marine hydraulics. The business area also contains an active ownership interest in CTT Systems, which develops humidity control systems for aircraft. CTT Systems is on the Small Cap listing of OMX Nordic Exchange.
REAL ESTATE Business Area Real Estate consists of the subsidiary, Volito Fastigheter AB, which owns and manages commercial properties in the Malmö region. The portfolio comprises of 23 properties, divided between offices, retail, industry and warehousing, with a total area of around 104 000 m2. The business area also contains Volito’s holding in Peab AB (publ), which is active in the construction and civil engineering field and listed on OMX Nordic Exchange Stockholm.
STRUCTURED FINANCE Business Area Structured Finance consists of the Swiss bank Nordkap Bank AG, of which Volito owns 40%. Nordkap Bank AG is an independent commercial bank, specialising in structured finance with a focus on emerging markets around the world. Nordkap Bank AG finances infrastructure projects, such as power plants, roads, railways, waste management and telecommunication networks. Other investment areas include biofuels, oil extraction, mining and hard commodities.
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Comments from the CEO Overall, 2010 was a good year for the Volito Group. The operations developed according to plan, profits improved considerably compared with the previous year and the value of our portfolio reached a new all-time high. The relatively low level of business activity in the first half of 2010 changed for the better, with an increasing number of transactions towards the end of the year and into 2011. Satisfying developments included new acquisitions in Aviation and Real Estate, and continued expansion in Business Area Industry.
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he rise in the stock market during 2010 has increased the value of Volito’s share portfolio. At year-end 2010, the Volito Group’s adjusted equity amounted to SEK 1 771.1 million, which represents an increase of 21 %. The Group reported a pre-tax profit for 2010 of SEK 121.7 million, which is 47 % higher than the previous year. Business Area Aviation Tough times continued for the aviation sector in 2010. However, in the second half of the year we noted a considerable improvement in business conditions, increased traffic volumes and more positive financial figures from the airlines. Volito Aviation has succeeded in strengthening its position and enters 2011 without any significant refinancing exposure. All aircraft, with the exception of one Fokker 50, are commited for lease and eight new leasing agreements were signed during the year, allowing Aviation to broaden its market to Germany, Israel, Lithuania, Belgium, Latvia and the Philippines. Three aircraft have been taken back from customers, who for a variety of
reasons could not meet their payment obligations. VGS Aircraft Holding Ltd (VGS) has acquired three aircraft, a used Boeing 737-800 from Transavia (Netherlands) and two newly produced Airbus 320s from Air Berlin. VGS now has a fleet of 44 aircraft with a value of USD 836 million, which represents an increase of 15 %. VGS made a pre-tax profit of USD 12.9 million. The Volito Aviation AB Group’s pre-tax profit was SEK 37.2 million. Challenges remain regarding the placing and refinancing of aircraft, but we can expect a growth period in traffic volumes and an improving business climate. Business Area Real Estate Volito Fastigheter reported another year of strong performance. The company is stable after the recession of recent years, which have been devoted to consolidation and organisational improvements. During the second half of 2010 there were again opportunities for acquisitions, and Volito Fastigheter began a new phase of expansion. In late 2010 and early 2011 seven new properties were acquired with attractive locations
in central Malmö. The transactions mean a 30 % increase in the market value of the real estate portfolio. As we enter 2011 the market situation is optimistic, dynamic and conditions for growth are good – as a result we expect continued expansion. The property leasing market in the Öresund Region remains strong and the property value trend is upwards. During 2011 we can expect stable demand for commercial premises in the region. Volito’s holding in Peab AB (publ) developed positively in value terms with an increase of around 30 % including received dividend. The Peab Group’s turnover increased by 9 % and the reported operating profit was SEK 1 563 million, which is 2 % lower than the previous year. Although there was a subdued start to 2010 for all business areas, higher levels of activity were noted during the rest of the year. The construction business has displayed a strong recovery and at year-end the company had its largest order book ever. Peab assesses the outlook for 2011 as good with increased demand for housing and commercial premises.
SEK million The Volito Group, adjusted equity 1 750 1 500
Volito expects to be able to expand its activities on several fronts during 2011”
1 250 1 000 750 500 250 01
02 03 04 05 06 07 08 09 10
Johan Lundsgård CEO and President, Volito AB
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T H E G R OUP
Business Area Industry Volito Industry has developed in line with our expectations and continued its expansion in the Swedish hydraulics market. HydX has grown, become established and set up a sales office in Gothenburg. From the second quarter the flow of orders has been good, which will generate rising revenues in 2011. In late 2010, Volito Automation also acquired the Stockholm-based company Hydro Swede, and began to establish Hydraulic Supplier under own management in Örnsköldsvik and Skellefteå. Hydratech in Smålandsstenar was acquired in January 2011. All the companies are closely related to HydX and the ambition is to become a leading supplier of industrial and mobile hydraulics that covers the Swedish market both in geographical terms and the scope of the customer offering. The Swedish engineering industry has performed strongly in 2010 and demand for mobile hydraulics has been rising for some time. Our assessment is that there will also be increased demand and a higher inflow of orders on the industry side in the first half of 2011.
technology continues to rise. In recent years CTT has achieved success in selling direct to aircraft manufacturers and it is here that future potential lies. Both Boeing and Airbus use CTT’s systems in their new aircraft. The company made a loss after tax of SEK -2.3 million. It is our conviction that CTT Systems will continue to develop positively and in time will become a very profitable investment. Business Area Structured Finance During 2010 Nordkap Bank AG has consolidated its loan portfolio and focused on customer credit problems that arose during the financial crisis. We decided early in the crisis to take a long term view and work actively together with our clients. In the ongoing reconstruction process the bank has succeeded in increasing the number of customers who have achieved a good recovery. The efforts made in recent years mean that the bank has an increasingly healthy portfolio and can resume its focus on core activities. Nordkap Bank AG made a pre-tax profit of CHF 0.5 million for 2010.
as a demanding stock market or risk capitalists who expect rapid returns, we can act calmly and cautiously when the times requires it, and move forward again when the markets have stabilised. After the consolidation in recent years at various levels of the Group we have seen in the second half of 2010 an improved business climate with growing optimism. We have noted a significant increase in both demand and the range of business transactions. Therefore, Volito expects to expand its activities on several fronts during 2011. In conclusion, I would like to take this opportunity to thank our customers, staff, business partners and owners for their good cooperation during the past year.
Johan Lundsgård CEO and President
The financial crisis of recent years can be used to show the Volito Group’s strength and stability. We have a position of trust in managing our lenders’ money and we are diligent in honouring that trust. Without pressure from external forces, such
At year-end our holding in CTT Systems AB (publ) was around the same share price as the previous year-end. CTT develops advanced solutions for regulating humidity on board aircraft and interest in their
The Volito Group, Ten-year summary SEK million
2010 2009 2008 2007 2006 2005 2004 2003 2002
Result before taxes
121.7
82.5
Adjusted equity
1 771
Return on adjusted equity, (%) Equity ratio, (%) Assets
2001
-28.4 600.9 144.5
79.0
30.7
70.7
-6.5
-13.7
1 465
1 121
1 518
1 273
935
663
563
497
496
23
33
-23
22
37
42
19
14
0
12
46
51
45
52
26
23
26
25
25
34
2 748 4 010
3 575
2 267 2 029
1 792
1 290
2 939
2 821 2 930
Definitions Return on equity Result after tax in relation to average equity Adjusted equity Equity and surplus values in real estate and listed shares with reduction for deferred tax Return on adjusted equity Change in value on adjusted equity before dividends to shareholders Adjusted equity ratio Adjusted equity in relation to total assets including surplus values
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b u s i n e s s
a r e a
Business Area Aviation consists of wholly-owned Volito Aviation AB, a holding company that acquires, finances and leases out commercial aircraft via its subsidiaries. The internal resources of Volito Aviation bring together many years of experience in aircraft leasing with specialist expertise in areas such as law, marketing, administration, maintenance, financing and risk management. One of Volito Aviation’s strengths is the ability to compose a balanced, fuel-efficient fleet. Volito’s fleet comprises mainly of twin-engine, fuel-efficient narrow body aircraft such as the Airbus 320 and Boeing 737-800 – assets with long economic lives that have proven to be very resilient in recessions. The aircraft are based on several continents and spread over a number of different markets, ensuring stability and the power to act, even in a fluctuating business climate. Today, the fleet is made up of 49 aircraft, of which 44 are owned by Ireland-based VGS Aircraft Holding – a joint venture between Volito and Goldman Sachs Group. Five aircraft are owned by other subsidiaries within the Volito Aviation Group. Volito Aviation Services AB is responsible for managing the aircraft of both VGS and Volito Aviation AB. Business Area Aviation acts strategically with a long-term perspective and plans to continue its expansion with new acquisitions.
AVI AT I ON
Aviation
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AV I AT I O N A B
Going for growth in a recovering market Aviation has been one of the markets hit hardest by the recession of recent years. A well-balanced approach to risk taking and the ability to secure leasing agreements and financing, even in difficult times, has enabled Volito Aviation to emerge confidently from the financial crisis.
2010
was a year in which the after-effects of the recession continued to impact on business activities. A weak market meant continued tough conditions for securing leasing agreements and financing aircraft transactions. Our operations are directly linked to the business climate affecting passenger airlines, as the entire fleet consists of passenger aircraft. With this in mind, increases in traffic volumes and the improved financial performance of airlines are seen as positive signs of recovery. In addition there are positive trends indicating an improvement in the business climate for the financial and capital markets.
2010 with no significant refinancing exposure and all but one Fokker 50 committed for lease. This is an outstanding performance considering the difficult business conditions. There is also the added satisfaction that we have succeeded in securing several new aircraft acquisitions and increased our aircraft fleet.
Thanks to the tireless efforts and commitment of my colleagues, we end
Eight new leasing agreements have been entered into by VGS for aircraft
Three aircraft were acquired during the year, all in sale and leaseback transactions. A used Boeing 737800 was acquired by VGS Aircraft Holding Ltd (VGS) from Transavia (Netherlands) and two newly produced Airbus 320s were acquired from Air Berlin (Germany).
placed with Zest Air (Philippines), Belle Air (Albania), Brussels Airlines (Belgium), Israir (Israel), Small Planet Airlines (Lithuania), Comair (South Africa), Jet2 (United Kingdom) and SmartLynx (Latvia). Volito Aviation AB had to take back three aircraft during 2010; two Fokker 50s from Denim Air (Netherlands), due to bankruptcy, and one Boeing 737-400 from Blue Air (Romania), as the client could not meet payment obligations. New leasing agreements for aircraft in Germany, Israel, Lithuania, Belgium, Latvia and the Philippines mean we have also expanded geographically. This expansion is significant as our business is to a great extent concerned with the managing of financial risks. The spreading of the fleet in
SEK million Result before tax 300 250
New agreements and acquisitions, despite a subdued market, is a sign of strength�
200 150 100 50 03
04
05
06
07
08
09
10
Siggi Kristinsson CEO, Volito Aviation
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Structure Volito Aviation Volito Aviation AB
The Goldman Sachs Group Inc.
100%
51%
Volito Aviation Services AB
Other subsidiaries
Volito Aviation AG
5 aircraft with a book value of SEK 204 million
AVI AT I ON
20%
80%
Management Agreement
(NYSE:GS)
VGS Aircraft Holding (Ireland) Limited
50%
44 aircraft with a book value of USD 836 million
Volito Aviation AB – Wholly-owned subsidiary of Volito AB. The company is Volito’s holding company for aircraft leasing. The Goldman Sachs Group Inc – USA-based investment bank and Volitos’ partner in VGS.
Volito Aviation Services AB – Management company with responsibility for the aircraft fleet of VGS and Volito Aviation AB. Volito Aviation AG – Swiss holding company for aircraft leasing.
VGS Aircraft Holding (Ireland) Limited – Joint venture between Volito and Goldman Sachs with an aim to acquire, finance and lease out aircraft. As of 31 December 2010, VGS owned 44 aircraft.
many different countries on several continents makes us less sensitive overall to regional changes in the business climate.
VGS made a profit before tax in 2010 of USD 12.9 million. The Volito Aviation AB Group, (which reports VGS as a joint venture) made a pre-tax profit in 2010 of SEK 37.2 million. Net profit after tax and minority interests was SEK 14.8 million.
remain focused. Although VGS has performed relatively well in 2010, the leasing and refinancing markets will remain difficult for older assets in 2011 and that is likely to affect financial performance in 2011.
At year-end the VGS fleet consisted of 44 aircraft with a book value of USD 836 million. Liabilities linked to the fleet amounted at year-end to USD 509 million. Volito Aviation owns directly five aircraft with a book value of SEK 204 million. Fleet-related liabilities amounted at year-end to SEK 47 million. The fleet consists entirely of narrow body aircraft, of which 88 % are next generation aircraft. These aircraft have a long economic lifetime, are among the most stable in value fluctuation terms, and considered the most liquid asset in this market.
Several challenges remain, but I am optimistic as we enter 2011. My colleagues have succeeded in maintaining stability in the business, managing to refinance all agreements while also achieving valuable new acquisitions at a time when many observers thought such results were impossible. These are achievements that highlight the clear strengths of our company as we prepare for future challenges.
Predictions relating to the length of a recession are very difficult. Previous experience in the aviation sector suggests business cycles of 6-10 years. Given that the industry is now coming out of a recession, good grounds exist for expecting a growth period in traffic volumes over the next 4-6 years, which will result in a considerably improved business climate. There is tough competition in our market, so it is essential that we
Volito Aviation AB, Five-year summary SEK (USD) million Revenues Profit before tax Return on equity, (%)
2010
2009
2008
2007
2006
102.0 (14.2)
113.5 (14.8)
163.7 (24.9)
321.6 (46.8)
396.1 (52.9)
37.2 (6.9)
71.0 (10.6)
82.5 (16.2)
356.9 (45.2)
103.2 (10.8)
3.0
-0.1
9.9
54.7
26.7
Equity
460 (57)
485 (52)
532 (52)
437 (51)
260 (27)
Assets
1 117 (146)
1 115 (131)
1 159 (133)
977 (121)
2 670 (342)
Based on original USD values.
50%
14
Geographical spread in 2010 The Aircraft Fleet December 31st 2010 Aircraft
MSN/year
Engine Model
Registration
Operator
Lease Expiry
Boeing 737-5Y0 Boeing 737-5Y0 Boeing 737-5Y0 Airbus 320-200 Airbus 320-200 Boeing MD-82 Boeing MD-82 Airbus 320-233 Airbus 320-233 Airbus 319-132 Airbus 319-112 Airbus 319-122 Airbus 319-122 Boeing 737-800 Boeing 737-800 Boeing 737-71Q Boeing 737-71Q Airbus 320-231 Boeing 737-46J Airbus 320-231 Airbus 320-231 Boeing 737-800 Airbus 320-232 Airbus 319-112 Airbus 319-112
24900/1991 25176/1991 24899/1991 4463/2010 4478/2010 49269/1984 49270/1984 561/1995 558/1995 1098/1999 1102/2000 1068/1999 1145/1999 28373/1998 28374/1998 29047/1999 29048/1999 230/1991 27171/1993 308/1992 314/1992 28375/1998 2531/2005 1283/2000 1305/2000
CFM56-3B1 CFM56-3B1 CFM56-3B1 CFM56-5B4/3 CFM56-5B4/3 PW JT8D-217C PW JT8D-217C IAE V2527E-A5 IAE V2527E-A5 IAE V2524-A5 CFM56-5B6/2P CFM56-5B6/2P CFM56-5B6/2P CFM56-7B26 CFM56-7B26 CFM56-7B22 CFM56-7B22 IAE V2500-A1 CFM56-3C1 IAE V2500-A1 IAE V2500-A1 CFM56-7B26 IAE V2527-A5 CFM56-5B6/2P CFM56-5B6/2P
LV-BDV LV-BEO LV-BDD D-ABFL D-ABFM N249AA N251AA F-ORAE F-ORAD F-ORAG OO-SSD F-GYFM F-GYJM ZS-ZWO ZS-ZWQ HP-1369CMP HP-1370CMP UR-DAB VP-BQG VT-EVS VT-EVT G-GDFC VT-KFF EI-DEZ EI-DFA
Aerolineas Argentinas, Argentina Aerolineas Argentinas, Argentina Aerolineas Argentinas, Argentina Air Berlin, Germany Air Berlin, Germany American Airlines, USA American Airlines, USA Belle Air, Albania Belle Air, Albania Belle Air, Albania Brussels Airlines, Belgium CCM Airlines, France CCM Airlines, France Comair, South Africa Comair, South Africa Copa, Panama Copa, Panama Donbassaero, Ukraine Globus, Russia Air India, India Air India, India Lease signed with Jet2.com, Great Britain Kingfisher, India Meridiana Fly, Italy Meridiana Fly, Italy
Mar June Nov June June Dec July Oct Oct Apr Apr Oct Oct Mar Mar Oct Dec Apr Mar Mar Mar Dec Sep Apr May
2011 2011 2011 2012 2012 2013 2014 2011 2011 2012 2016 2014 2014 2013 2014 2011 2011 2015 2014 2010* 2010* 2014 2012 2015 2015
* Extended lease
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AVI AT I ON
Aircraft
MSN/year
Engine Model
Registration
Operator
Lease Expiry
Airbus 320-232 Boeing 737-3L9 Airbus 320-211 Airbus 321-200 Airbus 320-232 Airbus 320-232 Airbus 319-132 Airbus 320-232 Airbus 320-232 Airbus 320-232 Airbus 320-232 Airbus 319-112 Boeing 757-2Y0 Boeing 757-2Y0 Boeing 737-800 Boeing 737-3G7 Boeing 737-3G7 Airbus 320-200 Airbus 319-132 Boeing 737-4C9
872/1998 27061/1992 426/1993 1276/2000 1652/2001 1802/2002 1575/2001 1835/2002 1591/2001 1827/2002 1891/2002 629/1996 26160/1993 26161/1993 30389/2000 24010/1988 24009/1988 803/1998 1074/1999 25429/1992
IAE V2527-A5 CFM56-3B2 CFM56-5A1 IAE V2533-A5 IAE V2527-A5 IAE V2527-A5 IAE V2524-A5 IAE V2527-A5 IAE V2527-A5 IAE V2527-A5 IAE V2527-A5 CFM56-5B6/2 RR RB211-535E4 RR RB211-535E4 CFM56-7B26 CFM56-3B1 CFM56-3B1 IAE V2527-A5 IAE V2524-A5 CFM56-3C1
B-6256 LY-FLE YL-LCH EC-HPM PR-MBQ PR-MBR PR-MBI PR-MBS PR-MBX PR-MBZ PR-MBY CS-TTQ G-FCLJ G-FCLK PH-HZJ N303AW N302AW N649AW RP-C8990 SE-RID / SP-ENF
July Nov Nov Nov Oct Feb Mar Apr June Sep Nov Mar Apr Apr Nov Nov Dec Mar Aug
2011 2011 2011 2014 2013 2014 2014 2014 2014 2014 2014 2012 2013 2013 2013 2011 2011 2013 2013
Fokker 50 Fokker 50 Boeing 737-33A Boeing 737-4C9
20210/1992 20252/1991 24094/1989 26437/1992
PWC PW125B PWC PW125B CFM56-3B2 CFM56-3C1
SE-MEI PH-KXM LN-KKS UR-GAV
Sichuan Airlines, China Small Planet, Lithuania Lease signed with SmartLynx, Latvia Spanair, Spain TAM, Brazil TAM, Brazil TAM, Brazil TAM, Brazil TAM, Brazil TAM, Brazil TAM, Brazil TAP, Portugal Thomas Cook, Great Britain Thomas Cook, Great Britain Transavia, The Netherlands US Airways, USA US Airways, USA US Airways, USA Zest Airlines, Philippines Lease signed with Enter Air, Poland, to be delivered in Jan 2011 Letter of intent Parked Norwegian, Norway Ukraine Int. Airl, Ukraine
Oct Mar
2011 2012
Owned by Volito Aviation AB
Owned by VGS
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17
b u s i n e s s
a r e a
Real Estate Business Area Real Estate consists of the wholly-owned subsidiary, Volito Fastigheter AB. The company owns and manages commercial properties in the Malmö region. The business is characterised by a long-term approach, efficient property management, a high level of service and close relations with customers and partners. At present the portfolio consists of 23 properties in the Malmö region, which are all strategically located close to service functions, access roads and other communications. The portfolio is divided between offices, retail, industry and warehousing, and the total area amounts to around 104 000 m2.
Business Area Real Estate also contains Volito’s holdings in Peab AB (publ). Peab is active in the construction and civil engineering field and listed on OMX Nordic Exchange Stockholm.
R E A L E STAT E
Volito Fastigheter has continuously developed its portfolio in order to strengthen its presence in the Malmö region’s most attractive areas. Looking forward, the company intends to continue its development and expansion. The aim is not to be the market’s biggest player, but to position the company as the best in terms of management and customer relations.
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Optimism, high expectations and new acquisitions Volito Fastigheter is strong and stable after the recession of recent years. The company has implemented successful consolidation work according to plan with a focus on enhancing the efficiency of the organisation and reducing costs. Volito Fastigheter is now entering an expansion phase and looking forward we expect the market will offer opportunities for acquisitions. Around the turn of the year 2010-2011 the company carried through two property transactions in central Malmö, one of which is the largest in our history.
O
ur assessment is that conditions for new property transactions have become significantly better in the second half of 2010. We are now leaving a period in which the market for real estate transactions has in general been completely closed. Looking forward we can expect more properties to be on the market and an increasing interest in financing property transactions from the banks’ side.
The acquisition of S:t Peter 3 with an area of 2 850 m2 was completed at the end of 2010. S:t Peter 3, built in 1881, is one of the classic properties on Östergatan about 200 metres from Malmö’s main square, Stortorget, and houses a well-know lawyer’s office. At the start of 2011 we acquired six properties, a total area of 16 800 m2, for around SEK 390 million. This is the biggest single transaction since the company was formed. Overall, the new
acquisition represents an increase in our The City Tunnel will make travelling easier in the Öresund Region and is portfolio of around 30 %, in terms of set to increase the attraction for basing market value. commercial operations here, which is one of the most important reasons for Four of the new properties, Laxen our continuous expansion in the area. 23, Söderport 8, Stjärnan 10 and Claus Mortensen 29 are attractively The maintaining of quality in located along the stretch considered our activities is one of our biggest as Malmö’s absolute centre, from the Triangle down to Stortorget. The other challenges when we increase our portfolio. The latest acquisitions mean two, Söderhavet 5 and 6, are located no drastic changes in our organisation. in Nyhamnen, one of the region’s Management continues with the same most expansive and exciting areas. efficiency as before, guided by our Nyhamnen offers similar potential to principles of rapid decision-making Skeppsbron, the university campus at processes and close dialogue with our Hjälmarekajen, Dockan and Västra Hamnen, areas that in the last 10 years tenants, financiers and entrepreneurs. have been developed with attractive During 2010 we have continued the and exclusive seafront properties for development and refinement work both residential and commercial uses. on our existing portfolio. We have In the next few years Nyhamnen will proceeded with the rebuilding of undergo a similar transformation. Aegir 1 (Post House) in Skeppsbron. These districts are also close to the The new parts of the property will Central Station and City Tunnel, be completed in the summer of 2011. which opened in early December.
SEK million Adjusted equity 600 500
The market situation is optimistic and we are well prepared for continued expansion”
400 300 200 100 01
02 03 04 05 06 07 08 09 10
Per Hammarström CEO, Volito Fastigheter
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Regarding the property leasing market we have noted that interest from potential tenants remains strong in general. During 2010 two of our tenants outgrew their premises and left us. At the same time we have signed several new lease agreements with tenants taking occupancy in 2010 and 2011 with a total rental value of SEK 92 million. Two of the major contracts relate to office space at Flygkameran 2 Distribution of rent by category and m2
4
%
4 2
13 48
29
and Nejlikebuketten 4. The vacancy rate in our portfolio is 9.8 %, which is fully in line with our expectations. The development project in Bara town centre, which is being implemented in cooperation with Peab, continues to progress. Peab plans new construction of a large number of houses and apartments, and various premises for a library, sport, shops and service functions. We are actively participating in the changes to Bara’s town centre and plan in early 2011 to be part of a company that will manage the completed multi-use sports hall. We have high expectations for the expansion of Bara and plan to increase our involvement together with Peab.
R E A L E STAT E
Several important lease agreements were signed during the year, including those with the two major tenants, and we expect all areas to be leased by the opening. In the same area we own and manage Ran 4, a six-storey property incorporating shops and office premises. We are planning rebuilding work on the attic to release 1 500 m2 of new office space. These premises will be ready at the end of 2011, when the Volito Group intend to become one of the tenants.
The market value of Volito’s property portfolio was assessed by an external party at year-end and was set at SEK 1 603.1 million, which represents an increase of 8.5 % compared with the previous year. I would like to take this opportunity to thank all of my colleagues, whose great efforts and commitment are behind Volito Fastigheter’s success. Having access to their knowledge and experiences is a constant source of inspiration.
Looking ahead we assess the market situation as optimistic. Opportunities for financing are improving, something clearly shown by our latest transactions. We are stronger than ever and well prepared for our continued Volito Fastigheter reported a pre-tax profit for 2010 of SEK 43.9 million. The expansion. We look forward to the coming year with high expectations. result is higher than expected, which is partly due to the favourable interest rate. Volito Fastigheter AB, Five-year summary SEK million
2010
2009
2008
2007
2006
Industry
Rental income including capital gains
119.5
111.4
130.7
92.1
81.5
Trade
Result before tax
43.9
36.2
48.1
27.0
26.5
Residential
Return on equity, (%)
13.3
11.7
25.9
11.3
12.2
Hotel
Equity
251
229
222
178
166
Nursery school
Real estate market value
1 603
1 402
1 357
1 186
999
Offices
20
Real estate holding 2010 N
1
9
ÖRESUND
10
13
14
16
8
23
7 4
24
2
11 5
3 22
MALMÖ
12
15 6
19
KLAGSHAMN 1
Property Address Area
17
21
18
2
Segeholm 10 Ågatan 1 15 199 m 2
20
Property Address Area
3
Diana 28 Engelbrektsg 5 902 m 2
Property Address Area
4
Äpplet 15 Generalsg 5 664 m 2
Property Address Area
5
Hangaren 2 Flygplansg 1-3 2 200 m 2
Property Address Area
Flygkameran 2 Höjdroderg 7-9 1 376 m 2
21
6
Property Address Area
7
Nejlikebuketten 4 Derbyvägen 6 6 557 m 2
11
Property Address Area
8
Medusa 4 Carlsgatan 44 7 201 m 2
12
Property Address Area
9
Medusa 3 Carlsgatan 42 1 300 m 2
13
Property Address Area
10
Utgrunden 7 Aspögatan 1 7 291 m 2
14
Property Address Area
Ran 4 Skeppsbron 3 4 019 m 2
15
R E A L E STAT E
Property Address Area
Flygledaren 7 Höjdroderg 22 1 971 m 2
16
Property Address Area
Address Area
Address Area
Härsjön 4 Hålsjögatan 8 3 147 m 2
17
Aegir 1 Carlsgatan 1 7 610 m 2
21
Property
Property
Property Address Area
Property Address Area
Address Area
Ran 9 Jörgen Kocksg 1 7 904 m 2
18
Lastbryggan 2 Nygårdsvägen 4 1 158 m 2
22
Runstenen 16 Käglingevägen 37 3 068 m 2
Property
Property Address Area
Property Address Area
Address Area
Ran 8 Skeppsbron 7 1 084 m 2
19
Skytteltrafiken 2 Nygårdsvägen 6 1 730 m 2
23
Delfinen 17 S Förstadsgatan 4 3 034 m 2
Property
Property Address Area
Property Addess Area
Address Area
Kupolen 3 Krossverksg 7-17 9 970 m 2
20
Bronsdolken 26 Stenyxegatan 25A 3 423 m 2
24
Hamnen 22:2 Jörgen Kocksg 3 7 597 m 2
Property
Sankt Peter 3 Östergatan 30 2 850 m 2
Property Address Area
Bronsdolken 26 Stenyxegatan 25B 2 221 m 2
22
Volito’s portfolio gains six new properties After a period of good consolidation work, Volito Fastigheter has entered an expansion phase. In early 2011 an acquisition was made consisting of six strategically located properties in the Malmö region. It is the single largest acquisition since the business was formed and means that Volito Fastigheter has raised the market value of its portfolio by 24 %.
E
ver since it was established, Volito Fastigheter has invested long term in the Malmö region’s most attractive areas. All acquisitions are thoroughly assessed and valued, using criteria such as proximity to service functions, access roads and other communications. The new properties are a good fit for the portfolio. Laxen 23, Söderport 8, Stjärnan 10 and Claus Mortensen 29, are all attractively located in areas beside the long pedestrian precinct that makes
up Malmö’s absolute centre. The properties incorporate everything from office space to training companies and well-known shops and entertainment venues. Söderhavet 5 and 6 are in Nyhamnen – one of the districts along Malmö’s coastal strip. Major changes are planned for this area in the next few years including housing, commercial premises and green spaces. The properties consist of modern office and exhibition spaces. All of the new properties are within walking distance of either the Central Station or the
newly opened City Tunnel, which in time will make travelling easier in the Öresund region, through benefits such as shortening journey times for commuters. All the new acquisitions are considered as long-term investments and will in the near future be modernised regarding ventilation, refrigeration, digital technology and workspace flexibility – enhancements that will make the properties even more attractive.
23
h o l d i n g
i n
p e a b
Value increases and cooperation deepens Business Area Real Estate also includes Volito’s holding in Peab AB (publ). Seen over the full year the value trend for the Peab holding has been positive. The construction market has steadily improved and the company has the largest inflow of orders in its history. Cooperation on the real estate side has deepened further, including projects such as the development of Bara town centre. Peab is active in the construction and civil engineering field and listed on OMX Nordic Exchange Stockholm (Large Cap from 2011). At year-end 2010, Volito owned 5.15% of the capital and 2.52 % of the votes in Peab. The holding is a long-term investment and Volito has had a welldeveloped cooperative relationship with Peab for a number of years. Volito Fastigheter engages Peab for construction and civil engineering work using the cooperative procurement method. Volito also acts as an advisor and partner, and acquires and administers the completed properties in the case of new production managed by Peab.
includes around 340 rented and owner-occupied apartments, a large number of houses, premises for health care, social services and shops, and a new library on behalf of Svedala Municipality. There are also plans for entertainment and recreation facilities in the area. Volito Fastigheter is actively participating in the changes to Bara’s town centre and plans in early 2011 to be part of a company that will manage the completed multi-use sports hall. The tenant in this case is also Svedala Municipality. Volito sees good business opportunities in Bara’s expansion and intends to increase its involvement together with Peab.
One example of development and improvement is the small town of Bara, located just outside Malmö. Bara is popular for its proximity to the countryside and golf courses, and is set for significant expansion. Peab plans new construction that
Peab trends Volito’s holding in Peab has developed positively in value terms during the year. The share price fell somewhat in the first half of the year, but recovered and rose over the full year by around 24 %, which is in line with OMXSPI.
The Peab Group’s turnover increased by 9 % compared with 2009. The reported operating profit was SEK 1 563 million, which is 2 % lower than the previous year. After a subdued opening to 2010, due to the harsh winter, all three business areas – Construction, Civil Engineering and Industry – reported increased activity. The construction business experienced a strong recovery and at year-end Peab had its biggest order book ever, amounting to SEK 27 billion (plus 11 %). One notable order is for the new construction of 10 IKEA stores in the Nordic countries, which is Peab’s largest single order ever. Peab deems the outlook for 2011 as good, an assessment mainly based on the increasingly strong construction market, which is driven by demand for new homes and apartment buildings as well as commercial premises.
R E A L E STAT E
t h e
24
25
b u s i n e s s
a r e a
Industry HydX has 15 employees in Ystad and Gothenburg; Hydro Swede, with five employees, is active south of Stockholm; Hydratech has 10 employees in Smålandsstenar, while Hydraulic Supplier is in a recruitment phase as it sets up for business in Örnsköldsvik and Skellefteå. The companies operate under the parent company, Volito Automation. Volito’s ambition for Volito Automation is for it to establish itself as a leading supplier in industrial hydraulics. The aim is to create a structure of knowledge-intensive companies that together will offer complete sector coverage for the Swedish market. Business Area Industry also contains a long-standing, active ownership interest of 15.5% in CTT Systems. CTT develops advanced on-board humidity regulation systems for aircraft. The technology is used to create a more comfortable, healthier cabin environment and to combat condensation in the aircraft fuselage, leading to improved operational reliability, lower weight and lower fuel consumption. CTT Systems is on the Small Cap listing of OMX Nordic Exchange Stockholm.
IND U ST RY
Business Area Industry invests in well-established industrial companies with long-term growth possibilities. Today, the business area consists of partly-owned HydX AB, wholly-owned Hydro Swede AB and Hydratech AB, and the newly established Hydraulic Supplier i Norden AB. In its respective specialist areas, the companies deliver systems, aggregates and components for industrial, mobile and marine hydraulics.
26
Business Area Industry continues to progress Business Area Industry has developed in line with expectations. The Hydraulics company HydX has expanded and established business partnerships in accordance with the set business plan. In late 2010 the Stockholm-based company Hydro Swede was acquired, and the formation of Hydraulic Supplier under own management began in Örnsköldsvik and Skellefteå. The sector-covering company structure, which is the aim of Volito Automation, is becoming clearer.
B
usiness Area Industry currently consists of four companies in the hydraulics sector: the partly owned HydX, the wholly-owned Hydro Swede and Hydratech, and the newly formed Hydraulic Supplier. All companies operate under the parent company, Volito Automation. The business area also contains a long-standing active ownership interest of 15.5 % in CTT Systems. CTT develops advanced solutions for humidity regulation on board aircraft and is on the Small Cap listing of OMX Nordic Exchange Stockholm. The ambition for Volito Automation is to build up a position in the Swedish market as a leading supplier of solutions in industrial hydraulics. HydX has completed its first financial year and progress has been according to plan. The company has been positively received by the market and has established itself with the majority of intended target customers. The inflow
of orders has been good from the start of the second quarter in 2010 onwards and with the current order book we can expect rising revenues during 2011. HydX has achieved success in areas such as turbine regulation on the industry side and tracked contractor’s machinery on the mobile side. During 2010 HydX has also succeeded in signing partnership agreements with two of the sector’s largest and most respected suppliers, Parker-Hannifin and Sauer-Danfoss. The agreements means close and deepened cooperation that broadens HydX’s customer offering – a sign that the company’s expertise is sought after in the market. The business partnerships will have a positive effect on future sales. During the year recruitment opportunities to strengthen the company’s team of qualified sales representatives resulted in the setting up of a sales office in Gothenburg. The year’s positive developments have meant that HydX in Ystad has outgrown its premises and from the start of 2011
the business has operated from a new address with plenty of space for growth in the years to come. At the end of the year we also acquired the Stockholm-based Hydro Swede, and started to establish Hydraulic Supplier. Hydratech AB in Smålandsstenar was acquired at the start of 2011. Like HydX, these companies supply hydraulic components and systems within their respective specialist areas. Hydro Swede and Hydratech have five and 10 employees respectively and similar turnovers of around SEK 20 million. Recruitment is underway at Hydraulic Supplier for both facilities in Örnsköldsvik and Skellefteå. In the foreseeable future we see a situation in which Volito Automation will be the owner of a number of companies in industrial hydraulics. The aim is that together these companies will provide total coverage
Volito Industri is expanding – the aim is to be a leader in industrial hydraulics” Johan Lundsgård CEO, Volito Industri
27
for the Swedish market, both in terms of geography and the product and service offering, with an estimated total turnover of around SEK 200 million within a few years time.
CTT Systems Interest in CTT’s humidity control technology continues to grow. In recent years CTT has been successful in selling direct to aircraft manufacturers and it is here that future potential lies – both Boeing
previous year-end. The company made a loss after tax of SEK -2.3 million, which is lower than the previous year. Volito has had an ownership interest in CTT Systems for many years and we consider the company as a longterm investment. It is our conviction that CTT Systems will continue to develop positively and in time will be a very profitable investment. Finally, I would like to thank all the staff and partners who make our successes possible in Business Area Industry. It is a privilege to be surrounded by individuals who possess so much expertise, experience and commitment.
IND U ST RY
The Swedish engineering industry has on the whole performed very strongly in 2010. In the hydraulics sector it is usually considered that, in business cycle terms, the mobile market is six months ahead of the industrial market, in both upswings and downturns. Demand for mobile hydraulics has been on the rise for a time and we also expect increased demand and inflow of orders on the industry side in the first half of 2011.
and Airbus use CTT’s systems in their new aircraft. The aviation industry had another tough year in 2010, which has affected the inflow of orders, as has the delay in delivery of Boeing’s B787, which is equipped with CTT’s Zonal Drying system. Despite this, there is a regular flow of orders. The order relating to Boeing’s B787-programme in October is CTT’s single largest order ever and indicates that the company is entering a fase where OEM-deliveries will lead to a regular increase in turnover. The retrofit market remains weak, but CTT deems that the will to invest will increase as airlines become more profitable. The Board considers that the company’s financial situation remains satisfactory. Our holding in CTT Systems rose in value by around 25% in the first half-year, and fell by a similar percentage during the second. The OMXSPI rose by around 21% during the year. At year-end the share price was at a similar level to the
28
29
b u s i n e s s
a r e a
Structured Finance Business Area Structured Finance consists of the Swiss bank Nordkap Bank AG, of which Volito owns 40 %. Nordkap Bank AG is an independent commercial bank, specialising in financing solutions for infrastructure development. The bank’s customers are primarily active within infrastructure, mainly energy, and the industrial sector, and are spread over all the world’s continents. Within infrastructure and energy, which accounts for more than 60 % of lending, power generation is the single largest area with 20 % of the portfolio value. The largest geographical markets of the bank are North America (36 % of the portfolio value), Eastern Europe/CIS (16 %), Asia (13 %) and Middle East & North Africa (13 %). Nordkap Bank AG mainly finances power plants, roads, railways, waste management and telecommunication networks. Other investment areas include biofuels, oil extraction, mining and hard commodities. The bank strives to spread its risks as widely as possible, in terms of different sectors and geographical areas, and also link risk-taking to the greatest possible yield.
Structured Finance
30
Nordkap Bank AG sees the value of long-term approach Both 2009 and 2010 were characterised by consolidation and reconstruction. A focus on long-term thinking, rather than short-term fixes, has enabled Nordkap Bank AG to find long-term solutions for problem loans. Since the autumn of 2009 steady improvements have been noted in the bank’s portfolio. There has been a return to profit and the bank can increasingly resume its core activities.
D
uring the financial crisis a number of Nordkap Bank AG’s customers faced difficulties and were unable to meet payment obligations. For the last two years our focus has been on managing and restructuring problematic credits, which has meant that we have only completed a few new transactions. In the same period credit markets have improved, increasing customers’ repayment capacity to the extent that
several have chosen to pay off their loans in advance. This combination of factors caused a reduction in the loan portfolio last year as well as a high level of liquidity. We are achieving good results in restructuring problem loans and a positive trend has been noted since the autumn of 2009. This has been mainly due to our decision at an early stage to take a long-term
CHF million Total loan and guarantee portfolio 600
After the consolidation of recent years we can resume our focus on core activities”
500 400 300 200
Niklaus Hasler CEO, Nordkap Bank AG
100
04
05
06
07
08
09
10
31
Distribution of loan and guarantee portfolio per sector % 12.9
Energy
5.6 Industry 51.8
13.8
Infrastucture
in enabling a large number of our customers to achieve a good recovery and a renewed capability to act. Nordkap Bank AG’s profit before tax for 2010, in accordance with IFRS principles, was CHF 1.6 million, which is a strong improvement compared to the last two years.
Key financial figures Nordkap Bank AG, five years summary CHF million 2010 2009 2008 2007 2006 Profit before tax according to Swiss regulatory accounting* 0.5 Result before tax according to IFRS*
Financial Industry Others
1.6
0.3
1.5
11.5
8.8
-16.6
-8.0
10.4
13.1
Net result according to IFRS*
1.3
-13.1
-5.4
7.2
10.2
Return on equity (%) according to IFRS*
0.0
-14.6
-5.3
6.8
10.4
76.9
81.7
97.2
108.2
103.5
Equity according to IFRS*
15.9
We are cautiously optimistic for 2011. Our customer’s financial positions are improving continuously and consequently Nordkap Bank AG can return to business as usual with a dedicated focus on our core activities.
Structured Finance
perspective rather than opt for short-term solutions. We usually prefer to actively contribute in the restructuring of a loan, rather than selling our distressed positions and accepting a loss. To a great extent we offer individual advice, using our specialist expertise and experience to help our customers to secure sustainable solutions. With this approach we have succeeded
* Within the Volito Group, Nordkap Bank’s result is reported in accordance to IFRS. The main differences between Swiss regulatory accounting and IFRS refer to valuation of the loan and guarantee portfolio and current provisions for credit losses.
32
Board of Directors and Management
President and CEO
Chairman of the Board
Johan Lundsg책rd, born 1953, Economist
Karl-Axel Granlund, born 1955, Master of Science
Board Member of Volito Aviation AB, Volito Fastigheter AB and Volito Industri AB. Chairman of the Board at CTT Systems AB (publ), SAA AB och HydX AB.
Chairman of the Board at Volito Aviation AB, Volito Fastigheter AB and Volito Industri AB. Board Member of PEAB AB (publ) and others.
Board Member
Board Member
Lennart Blecher, born 1955, Bachelor of Laws
Bo Olsdal, born 1945, Master of Science
Senior Partner of EQT. Chairman of the Board at Brunswick Leasing Ltd. and Nordkap Bank AG, Z체rich. Board Member of Volito Aviation AB, Volito Fastigheter AB, Volito Industri AB and Falcon Private Bank, Z체rich.
Board Member of Volito Aviation AB, Volito Fastigheter AB, Volito Industri AB, SAA AB and Ste-Nic AB.
33
t h e
g r o u p
annual report Administration report 34-36 Consolidated income statement 37 Consolidated balance sheet 38-39 Pledged assets and contingent liabilities 40 Summary of changes in equity 41 Cash flow statement 42 Supplement to cash flow statement 43-44 Accounting principles and notes to the accounts 45-57 Signatures 57 Auditors’ report 58 Addresses 59
A N N UA L R EP O R T
34
Administration report The business in brief The Group Volito AB (556457-4639) is the Parent company in a Group that operates in the business areas Aviation, Real Estate, Structured Finance and, since the autumn of 2009, Industry. Aviation currently consists solely of Volito Aviation (aircraft leasing). Until September, the business area also included the divested SAA Group (training). The Real Estate business area consists of Volito Fastigheter and Volito’s holding in Peab AB (publ). As part of the Group’s continued expansion, Volito established HydX AB in the autumn of 2009, whose business concept is to supply customised hydraulic systems for different application areas in industry. Volito Industry has continued its expansion in the Swedish hydraulics market through the acquisition of Hydro Swede i Stockholm AB and the establishing under own management of Hydraulic Supplier i Norden AB. Volito’s holding in CTT Systems AB (publ) is now contained in the Industry business area. Structured Finance includes Volito’s ownership in Nordkap Bank AG.
Training – Scandinavian Aviation Academy AB group The company was divested in the autumn, resulting in a capital gain for the Group of SEK 4.7 million. The profit before tax for the nine months the company was owned by the Group was SEK 2.9 million. SAA runs training courses for personnel in the aviation industry, principally pilots, and has operations in Sweden and the USA.
Real Estate Volito Fastigheter AB group Volito Fastigheter AB is a wholly-owned subsidiary of Volito AB. Volito Fastigheter is involved in the trade and management of real estate in the Öresund Region, with a focus on commercial properties in the Malmö region. During the year Volito Fastigheter acquired the property, S:t Peter 3 with a leasable residential space of 2 850 m2. The investment amounted to SEK 68 million.
The result before tax for the Parent company amounted to SEK 47.9 million (47.0) and the result before tax for the Group was SEK 121.7 million (82.5). The balance sheet total for the Parent company at yearend was SEK 1 146.3 million (1 111.0) and for the Group, SEK 2 938.8 million (2 820.5). The equity amounted to SEK 648.8 million (597.2) and SEK 872.5 million (824.4) for the Parent company and Group respectively.
In early 2011 an acquisition was made consisting of six strategically located properties in Malmö. It is the single largest acquisition since the business was formed.
Aviation
In value terms the real estate market has remained relatively stable during the year. The market value of Volito’s property portfolio was assessed by an external party at year-end and was set at SEK 1 603.1 million (1 401.8). Adjusted for acquisitions and rebuilding work this represents an increase of 8.5% compared with the previous year-end.
Leasing – Volito Aviation AB group Volito Aviation runs operations in the leasing of commercial jet aircraft in the narrow-body segment, mainly Boeing 737 and Airbus 319/320 aircraft.
There have been no property sales during the year. Volito Fastigheter has a vacancy rate of 9.8% (10.6%).
The company VGS Aircraft Holding (Ireland) Ltd. is jointly owned with Goldman Sachs and is based in Ireland. During 2010 VGS invested in three new aircraft. All acquisitions are sale and leaseback transactions and relate to one used 737-800 to the Dutch airline Transavia, and two newly produced Airbus 320 aircraft to Air Berlin in Germany. As no aircraft sales have taken place, VGS had a fleet of 44 aircraft at yearend. These have a total book value of USD 836.0 million. Liabilities linked to the fleet amounted to USD 509.1 million at year-end. The percentage of narrow-body aircraft in the fleet is 100%, and there is a good spread of risk in geographical terms. The company has lessees in Europe, Central and South America, North America, Asia and Africa.
Volito Fastigheter’s profit before tax for 2010 was SEK 43.9 million (36.2). The results for 2010 include a non-recurrent remuneration of SEK 11.5 million from the City of Malmö regarding land redemption. Lower interest rates have also had a positive effect during the year while a decrease in CPI have led to lower rental incomes. The return on equity for the year was 13.3% (11.7%).
The fleet of VGS and Volito Aviation’s own fleet of five aircraft are managed by Volito Aviation Services AB (VAS), a dedicated management company that is principally owned by Volito Aviation AB (80%). During the year eight aircraft in the VGS fleet were remarketed under new leases.
Volito’s holding in Peab amounts to 15 250 000 series B shares in Peab AB (publ), which corresponds to 5.15% of the capital and 2.52% of the votes.
Volito Aviation AB has had to take back three aircraft, two Fokker 50s from Denim Air in Holland due to bankruptcy, and one Boeing 737-400 from Blue Air in Romania, as the customer could not fulfil payment obligations. A new leasing agreement has been signed for the latter with delivery in January 2011. In the beginning of 2011 a letter of intent has been sign for one of the two F50s. The second F50 is still to be leased out. Volito Aviation AB has upgraded its own aircraft for a total of SEK 18.5 million (7.4). The after-effects of the recession continued to impact on business activities in 2010. It has been difficult to sign leasing agreements and finance aircraft transactions. However, positive signs were noted in the second half of the year – a considerable improvement in market conditions, increased traffic volumes and more positive financial figures from the airlines. Volito Aviation generated a pre-tax profit of SEK 37.2 million (71.0).
Other holdings – Peab AB (publ) Peab is active in the construction and civil engineering field in the Nordic Region. The company’s shares are listed on OMX Nordic Exchange Stockholm.
For Volito, the holding in Peab AB is of a strategic character. Volito has had a well developed cooperative relationship with Peab for a number of years. Cooperation between Volito Fastigheter and Peab has deepened further through projects such as the development of Bara town centre. Peab has developed positively in 2010. The construction market has improved steadily and the company has the biggest inflow of orders in its history. The market value of Volito’s total holding at year-end was SEK 873.1 million (701.5), which represents a value increase of 30% (taking received dividends into consideration) for the year. This growth in value (excluding dividends) is in line with OMX SPI.
35
Industry
The Parent company
Business Area Industry invests in well-established industrial companies with long-term growth possibilities.
The profit before tax for the Parent company amounted to SEK 47.9 million (47.0).
The hydraulics company HydX AB, which was formed in late 2009, has expanded and established partnerships according to the set business plan. HydX provides a complete service relating to development, design, production and service of hydraulic and lubrication systems. Volito owns 40% of the shares in the company.
Tax
In late 2010 Hydro Swede i Stockholm AB was acquired and the establishment of Hydraulic Supplier i Norden AB began. Hydratech AB in Smålandsstenar was acquired in early 2011. Like HydX, these companies supply hydraulic components and systems within their respective specialist areas. Volito AB owns 91% of the shares in the Volito Industry group, which has generated a profit before tax of SEK 5.7 million. The result includes a capital gain from the sale of the company’s holding in Haldex AB (publ) of SEK 6.8 million. Other holdings - CTT Systems AB (publ) CTT is a Swedish technology company that develops and markets humidity control systems for commercial aircraft. The company’s shares are listed on OMX Nordic Exchange Stockholm. Interest in CTT’s humidity control technology continues to grow. In recent years CTT has had success in selling direct to aircraft manufacturers – both Boeing and Airbus use CTT’s systems in their new aircraft. The order relating to the B787 programme in October is CTT’s single largest order ever.
Deductible deficiency relating to Volito Aviation Finance Volito Aviation Finance was acquired in 2004. The National Tax Board made a claim in the County Administrative Court that the deductible deficiency as on 31 December 2004 should be disallowed in accordance with the law on tax evasion. The County Administrative Court found in favour of Volito Aviation Finance. The National Tax Board appealed to the Administrative Court of Appeal, which has accepted the National Tax Board’s interpretation. Volito Aviation Finance thereafter applied for leave to appeal to the Supreme Administrative Court, but this was rejected in 2010. Due to the fact that the possibility of a leave to appeal was uncertain, the company decided to report the tax that results from the judgements in the Administrative Court of Appeal with the interest on this tax as costs and liabilities as on 31 December 2009. The tax amounts to SEK 36.2 million and the interest to SEK 1.2 million, and will be paid in early 2011.
Important leasing agreements Volito Aviation’s aircraft fleet is leased out under operational leasing agreements. The period during which aircraft are leased out ranges from one to four years, see note 5. Volito Fastigheter had a vacancy rate of 9.8% (10.6%). The breakdown of leases is 95% commercial properties and 5% residential. The commercial rental income is divided between 171 contracts in a number of different sectors. For more information, see notes 5 and 19.
Volito’s holding amounts to 15.5% of the votes and capital in CTT.
Important events after the end of the financial year At year-end the share price was at a similar level to the previous yearend, SEK 25.70 per share (24.6). In the same period the OMX Small Cap increased by just over 20%.
In early 2011 Volito Fastigheter made an acquisition consisting of six strategically located properties in Malmö. It is the largest single acquisition since the business started and means that Volito Fastigheter has raised the market value of its portfolio by 24%.
Structured Finance Nordkap Bank AG is a Swiss commercial bank specialising in structured financing solutions. Volito AG owns 40% of the shares in Nordkap Bank AG.
Volito Industri AB acquired Hydratech AB at the beginning of January 2011.
Expectations concerning future developments Nordkap Bank AG has been adversely affected by the financial crisis that started in 2008. During the financial crisis a number of the bank’s customers found themselves in difficulties and consequently had problems in fulfilling their payment obligations to the bank. This resulted in increased provisions for customer losses at Nordkap Bank AG. For the last two years the focus has been on managing and restructuring problem loans. As the credit market has improved, customers’ repayment capability has increased and several have paid off loans in advance, which has resulted in a reduction in the loan portfolio. Nordkap Bank AG reported a profit before tax for 2010 of CHF 0.5 million (0.3). The return on equity was 0.5% (0.1%). Within the Volito Group, Nordkap Bank AG’s result is reported in accordance with IFRS. The consolidated loss for the Nordkap Holding group in accordance with IFRS was CHF -0.2 million (-15.2).
Other holdings
We are now leaving a period in which the market for real estate transactions has in general been completely closed. In the near future we expect more properties to be for sale and an increasing interest in financing of property transactions from the banks’ side, which means that the market situation is deemed as optimistic. At the same time, Volito Fastigheter is stronger than ever and is well prepared for continued expansion. The ambition for Volito Automation is to build up a position in the Swedish market as a leading supplier of solutions in industrial hydraulics. The Swedish engineering industry overall has performed strongly in 2010. Demand for mobile hydraulics has been rising for a time and Volito expects increased demand and inflow of orders on the industry side in the first half of 2011.
A N N UA L R EP O R T
Volito has shares in AB Nordsidan, Custos and a number of different small companies. The combined value of these holdings for the Group amounted at year-end to SEK 18.5 million (29.0). Volito’s holdings in Galenica AB and Haldex AB have been divested during the year and resulted in a capital gain for the Group of SEK 12.0 million.
The Group Forecasting the future after a recession is difficult. However there are good reasons to expect a growth period in traffic volumes in the next four to six years, which will lead to a considerably improved business climate. Even so, there is tough competition in the market and interest for the leasing and refinancing of older aircraft will be subdued for a while longer, which in all probability will also affect Volito’s performance in 2011.
36
After a few years of focusing on portfolio management, Nordkap Bank has noted a continuous improvement in its customers’ financial capability, which means that Nordkap Bank can return to business as usual with a focus on its core activities.
Interest rate exposure The Volito Group is exposed to changes mainly in short-term interest rates through its involvement in the Volito Fastigheter AB group. The Parent company, Volito AB, also has risk exposure relating to short-term interest rates.
Information on risks and uncertainty factors The Group The Group owns aircraft, which are leased to different lessees. The aircrafts’ value can fluctuate over time and the Group bears the risk relating to what the aircraft are worth at the time of a future sale. This risk is managed by continuous analysis of both the market for aircraft, and of potentially suitable times for selling aircraft. In addition the Group bears risks relating to the lessees’ credit rating in the form of leasing payments that are to be made during the period of the lease, and to other contractual obligations in the leasing agreement. If the lessee does not fulfil their obligations according to the leasing agreement, the Group may need to recover the aircraft, which is often associated with one-off costs. Risk management in this case is carried out through continuous credit analysis of the respective lessees. Banking activities carry risks, mainly in the form of credit losses, when the borrower cannot make repayments due on the loan. Nordkap Bank AG in cooperation with external auditors carries out continuous assessments of risks in the loan portfolio.
Financial risks In its business activities the Volito Group is exposed to various types of financial risks. Financial risks relate to changes in exchange rates and interest rates that affect the company’s cash flow, profit and thereby associated equity. The financial risks also include credit and refinancing risks. Exposure applying to the different operations is presented quarterly for the respective companies’ boards, which make current decisions regarding financial risk management based on the market situation and macroeconomic information, see note 37. Currency exposure In its business activities the Volito Group is exposed to risks relating to exchange rate changes principally through its involvement in aircraft leasing. Income from the leasing business is set and paid in USD. This exposure is counterbalanced to a large degree in that interest and amortisation are similarly USD-based. The results of VGS are reported as participations in joint ventures. Exchange rate differences related to translation of VGS are posted in the equity. The Volito Group’s holding in Nordkap Bank AG is partly hedged against changes in the CHF exchange rate through certain borrowings in CHF. However, a certain amount of the holding is exposed to changes in the CHF exchange rate. Exchange rate differences related to translation of participations in associated companies are posted in the equity. The Board of Volito has decided to accept the exposure to USD and CHF according to the above, as this exposure in itself constitutes a risk diversification within the Volito Group. The extent of this exposure will be decided according to continuous review.
Taken together, the Volito Group’s total loans exposed to short-term interest rates amount to SEK 906 million (892). The Volito Group manages part of its interest rate risks using interest rate swaps. Hedging relating to 48.6% of the debt portfolio of the Volito Fastigheter AB group is being managed with swaps, something that gives the company a higher degree of flexibility in terms of future debt management. See note 37.
Refinancing risks The Volito Group depends on a functioning credit market. The Group has a need to continuously refinance parts of its business, see note 39. The Group has a satisfactory equity ratio and loan capacity. It is therefore Volito’s assessment that there is at present no problem concerning the credit that is due for refinancing.
Information on non-financial result indications Volito’s employees The Volito Group is a relatively small organisation that handles large capital amounts. The well-being and development of the Group’s employees are hence of vital importance for the long-term prosperity of the Group. Volito uses employment conditions as the primary tool for attracting suitable and talented people. A number of events are organised within the Group’s various companies to further strengthen the team spirit and loyalty among people working at Volito.
Proposed allocation of the company’s profit The Board of Directors and CEO propose that the unappropriated earnings, SEK 383 788 117.08, is allocated as follows (SEK K): Dividend, [2 440 000 at SEK 10.25 per share] Retained earnings carried forward
25 010 358 778
Total
383 788
The proposed dividend reduces the Group’s equity ratio to 54% from 57%. The equity ratio is prudent, in view of the fact that the company’s activities continue to operate profitably. Liquidity in the Group is likewise expected to be maintained at a similarly secure level. The Board’s understanding is that the proposed dividend will not hinder the company in carrying out its duties in the short or long term nor from conducting necessary investments. The proposed dividend can thus be seen in accordance with sections 2 and 3 of Paragraph 3 of ABL 17 (prudence principle). For further information on the company’s income and position, refer to the subsequent income statements and balance sheets, and related notes to the accounts.
37
Income Statement Note 1 3
Amounts in SEK K Net sales Other operating income
5
4 6 7 8
Operating expenses Other external costs Personnel costs Depreciation and write-downs of tangible and intangible fixed assets Other operating expenses Operating result
The Group
The Parent Company
2010
2009
2010
2009
317 265 16 741
333 870 7 041
8 058 3
10 697 1
334 006
340 911
8 061
10 698
-134 520 -95 194
-121 944 -96 258
-9 611 -8 652
-10 330 -11 182
-45 986 -3 783
-47 359 -260
-355 –
-334 –
54 523
75 090
-10 557
-11 148
5 590 49 269 2 465
-153 63 973 -41 767
26 223 – 2 109
30 585 – 1 149
13 14
Result from financial income and expenses Result from participations in group companies Result from participations in joint ventures Result from participations in associated companies Result from other securities and receivables held as fixed assets Interest income and similar income Interest expenses and similar expenses
46 758 10 057 -47 009
32 943 11 287 -58 831
35 801 2 933 -8 567
29 203 9 120 -11 938
15
Result before tax
121 653
82 542
47 942
46 971
16
Taxes Minority interests
-4 824 -22 872
-49 186 -29 778
8 044 –
4 236 –
RESULT FOR THE YEAR
93 957
3 578
55 986
51 207
9 10 11 12
A N N UA L R EP O R T
38
Balance Sheet Note
17 18
19 20 21 22 23
24 25 26 27 28 29 30 31 32 33 34
Amounts in SEK K
2009-12-31
2010-12-31
2009-12-31
392 9 000
632 712
– –
– –
9 392
1 344
–
–
1 037 637 205 055 70 5 071
968 624 237 837 238 17 440
– – – 3 336
– – – 3 106
27 296
14 939
–
–
1 275 129
1 239 078
3 336
3 106
– – 346 430 453 432 64 526 90 644 440 589 34 777 2 009 31 817 9 019
– – 317 012 403 429 64 837 84 228 447 590 33 720 2 761 32 823 1 371
530 122 103 522 – – 5 156 – 409 415 23 995 – – 7 999
544 540 85 361 – – 10 629 – 416 416 23 325 – – –
1 473 243
1 387 771
1 080 209
1 080 271
2 757 764
2 628 193
1 083 545
1 083 377
3 289
4 391
14
1
3 289
4 391
14
1
15 913 3 928 18 618 20 181 12 311 11 039 5 038
15 901 218 11 641 17 536 11 287 7 558 7 945
– 57 854 – – 210 1 174 832
13 22 780 – – 681 479 862
87 028
72 086
60 070
24 815
Short-term investments
1 312
1 276
1 312
1 276
Cash and bank balances
89 369
114 590
1 343
1 487
180 998
192 343
62 739
27 579
2 938 762
2 820 536
1 146 284
1 110 956
ASSETS Fixed assets Intangible fixed assets Other intangible assets Goodwill
Tangible fixed assets Real estate Aircraft Aircraft inventories Equipment, tools and installations Construction in progress and advance payments relating to tangible fixed assets
Financial fixed assets Participations in Group companies Receivables from Group companies Participations in joint ventures Receivables from joint ventures Participations in associated companies Receivables from associated companies Other securities held as fixed assets Deferred tax assets Pre-paid borrowing expenses Financial leasing agreements Other long-term receivables
Current assets Inventories etc. Raw materials and necessities
36
The Parent Company
2010-12-31
Total fixed assets
35
The Group
Current receivables Accounts receivable – trade Receivables from Group companies Receivables from joint ventures Receivables from associated companies Income tax receivables Other receivables Prepaid expenses and accrued income
Total current assets TOTAL ASSETS
39
Balance Sheet Note
38
Amounts in SEK K
39 41
39 40
42
The Parent Company
2010-12-31
2009-12-31
2010-12-31
2009-12-31
EQUITY AND LIABILITIES Equity Restricted equity Share capital (2 440 000 shares at nom. SEK 100) Restricted reserves
244 000 41 631
244 000 40 636
244 000 21 005
244 000 21 005
Non-restricted equity Proposed dividend Non-restricted reserves/Profit brought forward Net result for the year
25 010 467 871 93 957
25 010 511 165 3 578
25 010 302 792 55 986
25 010 255 932 51 207
872 469
824 389
648 793
597 154
369 791
315 445
–
–
87 200
89 581
–
–
87 200
89 581
–
–
389 774 97 677
788 841 80 112
250 000 –
250 000 –
487 451
868 953
250 000
250 000
775 103 169 068 – 17 017 – – 31 315 79 346 50 002
435 603 131 447 9 113 20 975 330 480 64 977 6 053 53 190
83 208 141 617 – 692 19 077 – – 227 2 670
79 965 124 467 – 691 55 283 – – 218 3 178
1 121 851
722 168
247 491
263 802
2 938 762
2 820 536
1 146 284
1 110 956
Minority interests
31
The Group
Provisions Provisions for deferred taxes
Long-term liabilities Liabilities to credit institutions Other liabilities
Current liabilities Liabilities to credit institutions Bank overdraft facilities Advance payment from customers Accounts payable - trade Liabilities to Group companies Liabilities to joint ventures Income tax liabilities Other liabilities Accrued expenses and deferred income
TOTAL EQUITY AND LIABILITIES
A N N UA L R EP O R T
40
Pledged Assets and Contingent Liabilities Amounts in SEK K
The Group
The Parent Company
2010-12-31
2009-12-31
2010-12-31
2009-12-31
850 622 20 000 389 890 222 464 43 611 – 32 823 1 000
778 955 26 130 389 882 260 064 99 995 26 000 34 094 1 807
– – 363 676 312 014 – – – 1 000
– – 363 668 312 014 – – – 1 000
1 560 410
1 616 927
676 690
676 682
Contingent liabilities Guarantees for Group companies Guarantees for associated companies Other contingent liabilities
– 1 020 50
– 5 400 1 746
115 630 1 020 50
112 375 5 400 1 559
Total contingent liabilities
1 070
7 146
116 700
119 334
Pledged assets For own liabilities and provisions Property mortgages Chattel mortgages Shares Shares in subsidiaries Aircraft mortgages Receivables Leasehold Mosippan Other Total pledged assets
41
Summary of Changes in Equity Amounts in SEK K Balance carried forward according to balance sheet of 31 December 2008
The Group Share capital
244 000
FX/translation diff during the year Transfer between unrestricted and restricted equity Result for the year Dividend Buy-back of option Group contribution Tax effects on Group contribution Equity as of 31 December 2009
244 000
FX/translation diff during the year Transfer between unrestricted and restricted equity Result for the year Dividend Group contribution Tax effects on Group contribution Equity as of 31 December 2010
244 000
Restricted Non-restricted reserves equity
88 625
566 549
–
The Parent Company Share capital
244 000
Restricted reserves
Non-restricted equity
21 005
309 794
-31 373
–
–
-47 989
47 989 3 578 -20 130 -26 860 – –
–
– 51 207 -20 130 -26 860 24 610 -6 472
40 636
539 753
21 005
332 149
–
-20 867
–
–
995
-995 93 957 -25 010 – –
–
– 55 986 -25 010 28 037 -7 374
41 631
586 838
21 005
383 788
244 000
244 000
Note 38 contains further information on equity.
A N N UA L R EP O R T
42
Cash Flow Statement Amounts in SEK K
The Group
The Parent Company
2010
2009
2010
2009
Operating activities Result after financial income and expenses Adjustments for items not requiring an outflow of cash
121 653 -19 400
82 542 17 661
47 942 -4 058
46 971 -2 011
Income taxes paid
102 253 -39 662
100 203 -39 085
43 884 471
44 960 -34 003
Cash flow from operating activities before changes in working capital
62 591
61 118
44 355
10 957
Cash flow from changes in working capital Increase(-)/Decrease(+) in inventories Increase(-)/Decrease(+) in current receivables Increase(+)/Decrease(-) in current liabilities
-81 -25 504 13 776
-558 65 819 -11 275
-13 21 325 -26 262
5 10 493 -16 458
Cash flow from operating activities
50 782
115 104
39 405
4 997
Investment activities Acquisition of subsidiaries Disposal of subsidiaries Acquisition of intangible fixed assets Acquisition of tangible fixed assets Disposal of tangible fixed assets Investments in financial assets Disposal of financial assets
-7 842 -11 746 -21 -116 171 781 -77 538 20 233
– -6 970 -106 -31 051 1 845 -42 801 5 701
-1 051 4 040 – -585 – -21 282 17 794
-900 6 062 – -299 – -9 840 5 701
-192 304
-73 382
-1 084
724
Financing activities Capital contribution from minority in subsidiaries Buy–back of option Proceeds from borrowings Repayment of borrowings Dividends paid Dividends paid to minority
50 741 – 414 905 -325 783 -25 010 –
–
–
–
-26 860 99 881 -104 358 -20 130 -4 800
– 40 699 -54 067 -25 010 –
-26 860 82 452 -40 852 -20 130 –
Cash flow from financing activities
114 853
-56 267
-38 378
-5 390
Cash flow for the year Liquid funds at beginning of period Exchange rate difference in liquid funds
-26 669 114 590 1 448
-14 545 129 561 -426
-57 1 487 -87
331 1 234 -78
89 369
114 590
1 343
1 487
Cash flow from investment activities
Liquid funds at end of period
43
Supplement to Cash Flow Statement Amounts in SEK K
The Group
The Parent Company
2010
2009
2010
2009
Interest paid and dividends received Dividends received Interest received Interest paid
38 741 2 468 -44 079
34 557 4 012 -46 559
60 472 90 -7 213
62 283 859 -29 885
Adjustments for items not requiring an outflow of cash Less: Profit participation in associated companies and joint ventures Dividends from subsidiaries Depreciation and write-downs of fixed assets Depreciation of prepaid loan expenses Write-downs of assets Reversed write-downs Unrealised exchange rate differences Gains/losses from disposal of fixed assets Gains/losses from disposal of financial fixed assets Gains/losses from sale of subsidiaries Other non cash items
-47 854 – 45 986 1 698 105 -36 -3 760 2 095 -12 046 -5 588 –
-22 178 – 47 359 1 397 1 121 -7 220 -4 135 -407 7 250 153 -5 679
– -23 644 355 – 22 971 -10 089 -716 7 065 – – –
– -9 308 334 – 10 053 -7 301 2 505 7 385 – – -5 679
-19 400
17 661
-4 058
-2 011
9 000 41 3 275 4 256 7 232
– – – – –
– – – – –
– – – – –
23 804
–
–
–
Operating liabilities
4 426
–
–
–
Total provisions and liabilities
4 426
–
–
–
Purchase price Less: Promissory note
19 378 -4 304
– –
– –
– –
Purchase price paid Less: Liquid funds in the acquired operations
15 074 -7 232
– –
– –
– –
Effect on liquid funds (minus=increase)
7 842
–
–
–
Acquisition of subsidiaries and other business units Acquired assets and liabilities: Intangible fixed assets Tangible fixed assets Inventories Operating receivables Liquid funds Total assets
A N N UA L R EP O R T
44
Supplement to Cash Flow Statement Amounts in SEK K
The Group
The Parent Company
2010
2009
2010
Disposal of subsidiaries and other business units Disposal of assets and liabilities: Intangible fixed assets Tangible fixed assets Fixed assets Operating receivables Liquid funds
178 31 357 4 458 14 767 15 466
– – – 49 13 021
– – – – –
– – – – –
Total assets
66 226
13 070
–
–
– 3 910
5 967
–
–
–
–
–
Liabilities to credit institutions
30 056
–
–
–
Operating liabilities
26 082
899
–
–
60 048
6 866
–
–
11 719 -7 999
6 051
–
–
–
–
–
Received cash Less: Liquid funds in disposed-of operations
3 720 -15 466
6 051 -13 021
– –
– –
Effect on liquid funds
-11 746
-6 970
–
–
2010
2009
2010
89 369
114 590
1 343
Minority Provisions
Total provisions and liabilities Purchase price received Promissory note
Liquid funds The following components are included in liquid funds: Cash and bank balances
Unutilised credit facilities Unutilised credit facilities amount to SEK 127.6 million (157.7) for the Group and SEK 41.4 million (58.5) for the Parent Company.
2009
2009
1 487
45
Accounting principles and notes to the accounts
A write-down is reversed if a change has taken place in the calculations used to determine the recovery value. A reverse is only carried out to the extent that the asset’s booked value does not exceed the booked value that would have been shown, with a deduction for the depreciation, if there was to be no write-down.
Amounts are in SEK thousand, unless otherwise stated.
General accounting principles The Annual Accounts have been drawn up in accordance with the Swedish Annual Accounts Act, the recommendations of the Swedish Financial Accounting Standards Council and the pronouncements of its Emerging Issues Task Force, with the exception of RR 18, information on earnings per share, which is a recommendation only for listed companies.
Receivables After individual valuation, receivables have been reported at the sum at which they are calculated to be received.
Reporting on segments
Receivables and debts denominated in foreign currencies Receivables and liabilities in foreign currencies have been translated at the accounting year-end exchange rate in accordance with recommendation No.8 of the Swedish Financial Accounting Standards Council. Exchange rate differences for operating receivables and operating liabilities are included in the operating profit/loss, while differences for financial receivables and financial liabilities are reported among financial income and expense items.
The primary basis for classification of the Group’s segments is the lines of business; Aviation, Real Estate, Structured Finance and Industry. Since the business area Industry just has been started it has been included in others in the information of lines of business (see note 1).
Regarding aircraft reported in the aircraft leasing operation, financing and flow of income are tied to USD, which means extensive hedging. Therefore, long-term liabilities in USD that constitute financing of aircraft are not translated at accounting year-end.
The company’s registered office, etc Volito AB runs its operations in the legal form of business entity, limited company, and its registered office is in Malmö. The head office address is Södra Förstadsgatan 4, SE-211 43 MALMÖ.
Classification, etc Fixed assets, long-term liabilities and provisions essentially consist only of amounts that are expected to be recovered or paid after more than 12 months calculated from accounting year-end. Current assets and short-term liabilities consist essentially only of amounts that are expected to be recovered or paid within 12 months calculated from accounting year-end.
Valuation principles, etc Assets, provisions and liabilities have been valued at the acquisition value, unless otherwise stated below. Intangible assets Intangible assets that are acquired by the company are reported at the acquisition value minus accumulated depreciation and write-downs. Depreciation Depreciation is linear over the asset’s period of use and is shown as expenses in the income statement. The following depreciation periods are applied: Software Goodwill Other intangible assets
The Group 5 years 5 years 5 years
Parent company – – –
Tangible fixed assets Tangible fixed assets that are acquired by the company are reported at the acquisition value less accumulated depreciation and write-downs. Additional costs Additional costs for value-adding improvements on intangible assets are capitalized. All other costs are recognized in the income statement as incurred. Depreciation principles for tangible fixed assets Depreciation according to plan is based on the original acquisition values reduced by the calculated residual value. Depreciation is linear over the period the asset is expected to be used. The following depreciation periods are applied: Real estate and buildings Equipment, tools, and installations Computer equipment
The Group 100 years 5 years 3–5 years
Parent company – 5 years 3–5 years
Aircraft Proportional depreciation is applied annually for aircraft so that the booked value is 15% of the acquisition value when the aircraft is 25 years old. The fuselages of the aircraft that was used in training operations were written off over 15 years. The length of the life of the engines was based on the number of flying hours, and depreciation of these stemmed from the number of utilised flying hours. Loan charges Depreciation of prepaid loan charges is based on the term of the loan. In the Parent company, loan charges are debited from the profit/loss in the period to which they are related. In the Consolidated accounts, subsidiaries loan charges are charged to the profit/loss over the term of the loans. Loan charges refer to set-up charges and other charges associated with obtaining the loan.
Inventories Inventories, valued according to recommendation No.2:02 of the Swedish Financial Accounting Standards Council, are reported at the lowest of either the acquisition value or the net realisable value. In this way, the risk for obsolescence has been taken into account. Short-term investments Short-term investments are valued according to the Swedish Annual Accounts Act as the lowest of either the acquisition value or the actual value. Financial instruments and securities holdings Financial instruments intended to be held to maturity in the business are classified as fixed assets. Financial assets that consist of shares shall be measured at cost less any impairment losses. The assessment is made for each individual class of shares and an impairment loss is recognized if fair value is lower than carrying value or if the impairment is considered to be permanent, a write-down to fair value is made. Other long-term receivables are valued at the sum at which they are calculated to be received. Hedge accounting In order to meet the requirements for hedge accounting, there has to be a designated hedging relationship to the hedged item and the hedge has to be highly effective. Gains and losses on the hedging instrument are recognized at the same time as profit and losses on the hedged items. Hedging of group’s fixed interest rate Interest rate swaps are used for hedging of interest rate risk. Amounts that shall be paid or received according to the interest rate swap are currently recognized as interest income or interest expense. The market value of the interest rate swap is calculated by analyzing discounted cash flows. Real estate The company and the Group apply the Swedish Financial Accounting Standards Council’s recommendation RR24, Real estate. Real estate is reported in the balance sheet at the acquisition value with deductions for accumulated depreciation and any write-downs, as well as additions for any write-up. The actual value of real estate is stated in the supplementary information. Remuneration to employees Benefit-based pensions: The pensions for SAA were secured through insurance with Collectum. The SAA-group has been sold during the year. Contribution-based pensions: For all other employees, the company’s obligation for each period is comprised of the amounts that the company will contribute for the period in question. Consequently, no actuarial adoption is required to calculate the obligation or cost, and there is no possibility of any actuarial profits or losses.
A N N UA L R EP O R T
Write-downs The booked values of the Group’s assets are checked at each accounting year-end to determine if there is any indication of a need for write-downs. If there is such an indication, the recovery value of the asset is calculated as the highest of the utilisation value and net sales value. The asset is written down if the recovery value is less than the booked value. When calculating the utilisation value, the future cash flow is discounted to a rate of interest before tax that aims to take into consideration the market assessment of risk-free interest and the risk associated with the asset in question. An asset that is dependent on other assets is not considered to generate any independent cash flows. Such an asset is assigned instead to the smallest cash-generating unit where the independent cash flows can be stated.
To the extent that receivables and liabilities in foreign currencies have been secured under a forward contract, they have been translated to the forward rate.
46
Tax The company and the Group apply the Swedish Financial Accounting Standards Council’s recommendation RR.9, Income taxes. The total tax is made up of the current tax and deferred tax. Taxes are reported in the income statement, except where the underlying transaction is charged to the equity, in which case the associated tax effect is reported in the equity. Current tax is tax that is to be paid or received relating to the current year. Adjustments of current tax relating to earlier periods come into this category. Deferred tax is calculated according to the balance sheet method based on temporary differences between the reported values and fiscal values of assets and liabilities. The sums are calculated based on how the temporary differences are expected to be evened out and by the application of the tax rates and tax rules that have been adopted or announced at accounting year-end. Temporary differences are not taken into account in the goodwill for the Group or in the differences relating to the participations in subsidiaries, associated companies and joint ventures that are not expected to be taxed in the foreseeable future. Untaxed reserves including deferred tax liabilities are reported in the legal entity. In the Consolidated accounts on the other hand, untaxed reserves are divided into deferred tax liabilities and equity. Deferred tax receivables concerning deductible temporary differences and deductible deficiencies are only reported to the extent it is likely that these will mean lower tax payments in the future. Provisions (excluding negative goodwill and deferred tax) A provision is reported in accordance with RR 16, Provisions, contingent liabilities and possible assets, in the balance sheet when the company has a formal or informal commitment as the result of an event that has occurred and it is likely that an outflow of resources is required to regulate the commitment, and that a reliable estimate of the amount can be made. Present value calculations are made to take time effects into account for important future payments. Accounting of income Accounting of income is recognized according to the Swedish Financial Accounting Standards Council’s recommendation No.11, Income. Income accounting is done in the income statement when it is probable that the future economic benefits will go to the company and these benefits can be calculated in a reliable way. Income includes only the gross inflow of economic benefits that the company receives, or can receive, for its own use. Income is reported at the actual value of what has been received, or will be received, with a deduction for rebates given. Remuneration is received in liquid funds and income is made up of the remuneration. The criteria for income accounting are applied for each individual transaction. Leasing – lessees Recommendation RR 6:99 of the Swedish Financial Accounting Standards Council is applied. Leasing is classified in the Consolidated accounts as either financial or operational leasing. Financial leasing is used when the economic risks and advantages associated with ownership are essentially transferred to the lessee. If this is not the case, it is a matter of operational leasing. Leasing and rental income are reported on a linear basis over the term of the leasing contract. Finance leases are recognized as assets in the consolidated balance sheet. The obligation to pay future leasing fees is reported with long-term and short-term liabilities. These assets are depreciated according to plan, while payments of the leasing fees are reported as interest expense and a reduction of the outstanding liability. Operational leasing means that the leasing fee is taken in to the profit/loss account over the duration time based on the utilisation, which can differ from the payments during the year. Items affecting comparability The Swedish Financial Accounting Standards Council’s recommendation No. 4 is applied, which means that the effects on results of certain events and transactions of importance are specified within the relevant income concepts.
Consolidated financial statements The consolidated financial statements have been prepared according to recommendation RR 1:00 of the Swedish Financial Accounting Standards Council. Subsidiaries Subsidiaries are companies in which the Parent company directly or indirectly has more than 50% of the votes or in other ways has a deciding influence over operational and financial control. Subsidiaries are reported according to the acquisition method. The acquisition method means that the acquisition of the subsidiary is considered as a transaction from which the Parent company indirectly acquires the assets of the subsidiary and takes over its debts. The income and expenses, identifiable assets and debts as well as the goodwill or negative goodwill of the acquired company are included in the Consolidated accounts from the day of acquisition.
Goodwill Goodwill for the Group arises when the acquisition value on acquiring participations in a subsidiary exceeds the actual value of the acquired company’s identifiable net assets. Goodwill is reported at the acquisition value with deductions for accumulated depreciation and write-downs, if any. Associated companies and joint ventures Shareholdings in associated companies and joint ventures, in which the Group has at least 20% and at most 50% of the votes or in other ways has significant influence over the operation and financial running of the company, are normally reported using the equity method. A joint venture is a contractual business undertaking between two or more parties. The contract means that two or more parties have a joint control. The equity method means that the value of shares in the associated company and the joint venture booked in the Group corresponds to the Group’s participation in the equity of the associated company and the joint venture as well as any residual value in the Group’s overall surplus value or under value. The Group’s participation in the companies result after tax adjusted for any amortization or resolution of acquired surplus or under value is reported in the Consolidated balance sheet as “Participation in associated companies’ result” and ”Participation in joint ventures’ result”. Profit shares built up after the acquisition of companies that have not yet been realised through dividends are allocated to the Group’s restricted equity. In cases where companies make losses, these are included in the Group’s non-restricted equity. The associated company, Nordkap Holding AG and the joint venture VGS Aircraft Holding Ltd have been reported according to IFRS. No translation according to the Parent company’s accounting principles has been possible, due to practical difficulties. Elimination of transactions between companies in the Group Receivables and liabilities within the Group, transactions between companies in the Group, and associated unrealised profits are all totally eliminated. Unrealised profits deriving from transactions with associated companies and joint ventures are eliminated to the extent that the Group owns participations in the companies. Unrealised profits arising as a result of transactions with associated companies and joint ventures are eliminated in “Participations in associated companies” and ”Participation in joint ventures”. Unrealised losses are eliminated in the same way as unrealised profits, providing that there is no write-down requirement. Foreign currency translation of foreign subsidiaries or other operations abroad The translation of foreign currencies is done according to recommendation No.8 of the Swedish Financial Accounting Standards Council. The current method is applied for currency translation of income statements and balance sheets in independent foreign operations. The current method means that all assets, provisions and liabilities are translated at the accounting year-end rate, and that all items in the income statement are translated at the average exchange rate. Exchange rate differences are posted as equity. All foreign subsidiaries, associated companies and joint ventures are translated according to the current method.
Group contributions and shareholders’ contributions The company reports Group contributions and the shareholders’ contributions according to the pronouncements of the Emerging Issues Task Force of the Swedish Financial Accounting Standards Council. The shareholders’ contribution is entered directly against equity at the recipient and is activated in shares and participations at the donor, to the extent that a write-down is not required. Group contributions are reported according to economic significance. This means that the Group contributions submitted aimed at minimising the Group’s total tax are reported directly against retained profits after deduction for the current tax effect. Group contributions on par with a dividend are reported as a dividend. This means that the Group contributions received and their current tax effect are reported in the income statement. The Group contributions submitted and their current tax effect are reported directly against retained profits. Group contributions on par with a shareholders’ contribution are reported, taking into account the current tax effect, at the recipient directly against retained profits. The donor reports the Group contribution and its current tax effect as investment in participations in Group companies to the extent that a write-down is not required.
Application of the Swedish Financial Accounting Standards Council’s recommendations The Volito Group has chosen to follow the recommendations of the Swedish Financial Accounting Standards Council. There are no changes in the accounting principles since last year.
47
Information about the Group
Related party transactions
The company is a subsidiary of AB Axel Granlund, corporate identity number 556409-6013 with registered office in Malmö. AB Axel Granlund owns 83.3% (83.3%) of the capital and votes in the Volito Group and prepares the Consolidated accounts for the largest Group.
The Group The transactions that take place between companies concern normally occurring transactions such as administration fees, rent, interest and loans. Prices are set according to market conditions.
Of the Group’s total purchases and sales in Swedish kronor, 2% of the purchases and 0% of the sales apply to other companies within the group of companies to which the Group belongs.
With associated companies and joint ventures As of 31 December 2010, associated companies had a debt to the Volito Group of SEK 582.9 million (516.8). The largest item relates to a loan that Volito Cyprus Holding made to VGS Aircraft Holding Ltd for SEK 453.4 million (403.4) and which can partly be converted into shares in VGS. Another large item relates to the loan made by Volito AG to Nordkap Holding AG for SEK 87.6 million (84.2). Transactions with associated companies are priced according to market conditions.
Of the Parent company’s total purchases and sales in Swedish kronor, 31% of the purchases and 98% of the sales apply to other companies within the group of companies to which the company belongs.
Information about acquisitions and disposals during the period As a part of the Group’s continued expansion, Volito has established a new company, Hydraulic Supplier i Norden AB and purchased Hydro Swede in Stockholm AB.
Related parties
With key employees For salaries and other remuneration, expenses and obligations concerning pensions and similar benefits and agreements concerning severance payments to the Board and the CEO, see note 6.
Important events after accounting year-end
Close relationships that involve a controlling influence The Group The Group is owned by AB Axel Granlund (83.3%), as well as Lennart Blecher (partly through companies) 9.0%, and Bo Olsdal (through companies) and sons 7.7%.
In early 2011 Volito Fastigheter made an acquisition consisting of six strategically located properties in Malmö. It is the largest single acquisition since the business started and means that Volito Fastigheter has raised the market value of its portfolio by 24%.
Parent company In addition to the close relationships that are stated for the Group, the Parent company has close relationships that mean a controlling influence with its subsidiaries, see note 24.
Volito Industri AB acquired Hydratech AB at the beginning of January 2011.
Note 1 Information on lines of business
Aviation 2010 2009
Real Estate 2010 2009
Structured Finance 2010 2009
Industry/Other 2010 2009
Elimination 2010 2009
Total 2010 2009
Income External sales Internal sales
216 144 –
231 008 –
117 136 2 361
109 139 2 267
– –
– –
726 7 385
764 9 671
– -9 746
– -11 938
334 006 –
340 911 –
Total income
216 144
231 008
119 497
111 406
–
–
8 111
10 435
-9 746
-11 938
334 006
340 911
-3 030
26 540
68 996
61 254
-173
-232
-11 270
-12 472
–
–
54 523
75 090
-11 539 4 927 55 409 -1 161 -22 340
-19 792 106 63 973 -40 946 -30 763
-27 513 2 088 38 125 -11 793 –
-27 436 1 929 34 295 -6 004 985
-2 019 2 198 -511 – –
-2 575 2 807 -42 712 – –
-7 865 2 771 11 059 8 130 -532
-11 703 9 120 561 -2 236 –
1 927 -1 927 – – –
2 675 -2 675 -1 121 – –
-47 009 10 057 104 082 -4 824 -22 872
-58 831 11 287 54 996 -49 186 -29 778
22 266
-882
69 903
65 023
-505
-42 712
2 293
-16 730
–
-1 121
93 957
3 578
Elimination 2010 2009
2010
Operating result Operating result per line of business Interest expenses Interest income Profit participations/dividends Tax expenses for the year Minority interests Net result for the year
Other information Assets Equity share/ securities Total assets
Aviation 2010 2009
787 138 346 430
Real Estate 2010 2009
833 357 1 149 885 361 510 387 667
Structured Finance 2010 2009
Industry/Other 2010 2009
Total 2009
1 072 715 387 667
107 809 58 000
101 403 56 254
54 689 59 448
129 549 24 008
-12 304 –
-145 927 –
2 087 217 1 991 097 851 545 829 439
1 537 552 1 460 382
165 809
157 657
114 137
153 557
-12 304
-145 927 2 938 762 2 820 536 -146 275 2 066 293
1 133 568
1 194 867
Liabilities/provisions/minority interests
579 594
639 107
883 587
856 592
93 710
87 660
521 706
559 063
-12 304
Investments in tangible assets Depreciation of tangible assets Costs, exceeding depreciation, not matched by payments
21 566 -34 845
15 744 -35 142
94 020 -9 991
14 968 -9 924
– –
– –
585 -355
340 -336
– –
– –
116 171 -45 191
31 052 -45 402
-1 698
-1 154
-530
-487
–
–
–
–
–
–
-2 228
-1 641
1 996 147
The internal price between the Group’s various segments is set according to the “arm’s length” principle, i.e. between parties who are independent of each other, well-informed and with an interest in the transactions. Sales between the Group’s various segments relate to administrative fees and rents. The administrative fees have been allocated according to actual costs and utilisation. The rents conform to market conditions. Loans between Group companies have been marked for interest according to the current finance policy. The interest rates conform to market conditions. The segments’ result, assets and liabilities (including provisions) include directly attributable items and items that can be allocated to the segments in a reasonable and reliable way.
Costs, exceeding depreciation, not matched by payments includes depreciation on prepaid borrowing expences and capitel losses on tangible assets.
A N N UA L R EP O R T
The segments’ investments in tangible fixed assets include all investments, except investments in short-term inventories and inventories of minor value.
48
Real Estate According to the contract portfolio at year-end, rental income in the Volito Fastigheter group and Volito AB was divided between 95% commercial properties and 5% residential. The commercial rental income was divided between 171 contracts in a number of different sectors. With the aim of limiting exposure to credit losses, regular follow-ups are made of tenants’ credit ratings. There is no sector or tenant that accounts for more than 10% of the rental income.
Lines of business Lines of business constitute the Group´s primary basis for classification, which is described in the administration report. The new business area, Industry, is included in others, since the business is in the start up phase.
Note 2 Net turnover breakdown The Parent company Income from administration
2010
2009
8 058
10 697
8 058
10 697 Within one year Between one and five years Later than five years
Note 3 Other operating income The Group Compensation for land redemption Exchange rate differences Remunerations from depositions Capital gains from sale of fixed assets Other
The Parent company Other
The contract portfolio for commercial premises in the Volito Group expires as below. The stated amounts refer to contracted closing rents in the portfolio.
2010
2009
11 500 3 144 1 389 – 708
– 6 195 – 651 195
16 741
7 041
3
1
3
1
Volito Fastigheter AB has received a non-recurrent remuneration from Malmö Stad regarding land redemption.
2010
2009
14 797 76 926 25 774
17 279 57 723 26 571
117 497
101 573
Note 6 Staff and personnel costs 2010
of which, men
2009
of which, men
5
40%
6
50%
Subsidiaries Sweden USA Ireland
70 35 6
73% 66% 17%
90 39 7
70% 72% 29%
Total in subsidiaries
111
68%
136
68%
Group total
116
66%
142
68%
Average number of employees Parent company Sweden
Note 4 Auditing: fees and expenses 2010 The Group kpmg Audit assignments Other assignments other auditors Audit assignments Other assignments The Parent company kpmg Audit assignments Other assignments
2009 Gender distribution in company management
1 606 171
1 632 107
21 –
34 10
339 15
298 30
Note 5 Leasing income related to operational leasing 2010 The Group Agreed future leasing income with reference to non-revocable contracts in the aviation business due for payment: Within one year Between one and five years
2009
23 955 19 884
45 089 50 592
43 839
95 681
2010 Percentage of women
2009 Percentage of women
0%
0%
The Group Board of Directors
Salaries, other remuneration and social security expenses 2010 2009 Salaries and Social security Salaries and Social security remuneration expenses remuneration expenses Parent company (of which, pension costs) Subsidiaries (of which, pension costs) Total for the Group (of which, pension costs)
5 407
3 156
61 775
67 182
4 177 1) (1 528)
21 346 (5 917)
63 294
24 502
70 150
2) (7 040)
18 123 (6 852) 22 300 2) (8 380)
1) Of the Parent company’s pension costs, SEK 747 K (previous year: SEK 640 K) refers to the group: Board and CEO. The company has no outstanding pension obligations to them. 2) Of the Group’s pension costs, SEK 1 706 K (previous year: SEK 1 510 K) refers to the group: Board and CEO. The Group has no outstanding pension obligations to them.
Important leasing agreements Aviation In March 2002, Volito South Pacific AB acquired a Boeing 737-33A. The aircraft is leased to Norwegian Air Shuttle, Norway. The leasing agreement runs until October 2011.
Salaries and remunerations by country and by the Board and CEO and other employees
In 2003, Volito Aviation Deux Lux AB acquired two Boeing 737-4C9 aircraft. In December 2006, a new leasing agreement was signed for one of the aircraft with Blue Air of Rumania until the end of March 2012. Blue Air could not meet the payment obligations and the aircraft was taken back. A new leasing agreement has been signed with Enter Air, Poland, to be delivered in January 2011. The leasing agreement runs until 31 May 2014. In March 2007, a leasing agreement was signed with Ukraine International of Ukraine regarding the other aircraft. The agreement runs until 22 March 2012. Translation of contracts in USD has been done at the accounting year-end exchange rate of 1 USD = SEK 6.8025 (previous year: USD 1 = SEK 7.2125).
6 856
1) (1 123)
Board and CEO
2010 Other employees
Board and CEO
2009 Other employees
Parent company Sweden
3 346
2 061
3 023
3 833
Subsidiaries Sweden
9 431
34 738
7 102
35 116
667 – – 138
10 252 6 549 – –
726 – – 141
11 484 8 526 199 –
Subsidiaries total
10 236
51 539
7 969
55 325
Group total
13 582
53 600
10 992
59 158
Subsidiaries abroad USA Ireland Singapore Switzerland
Of the salaries and remuneration paid to the other members of staff in the Group, SEK 7 820 K (SEK 7 093 K) refers to leading executive managers other than the Board and the CEO.
49
Severance payments Agreements have been signed with executive managers regarding severance payments amounting to between five months’ and one year’s salary.
Note 12 Result from other securities and receivables that are fixed assets
Absence due to illness As there are only six people employed by the parent company there is no obligation to account for absence due to illness.
The Group Dividend Capital loss from disposal of participations and receivables Reversed write-downs
Note 7 Depreciation and write-downs of tangible and intangible fixed assets The Group Other intangible assets Goodwill Real estate Aircraft Aircraft inventories Equipment, tools and installations
The Parent company Equipment, tools and installations
2010
2009
-261 -534 -9 981 -31 711 -168 -3 331
-300 -1 657 -9 916 -31 596 -168 -3 722
-45 986
-47 359
-355
-334
-355
-334
2010
2009
Note 8 Other operating expenses The Group Exchange losses on receivables/liabilities of an operating nature Capital loss Other
-769 -2 095 -919
-16 -244 –
-3 783
-260
Note 9 Result from participations in Group companies The Group Capital loss from disposal of participations
The Parent company Dividends received Capital loss from disposal of participations Write-downs Reversed write-downs
2010
2009
5 590
-153
5 590
-153
49 529 -10 642 -22 717 10 053
40 774 -136 -10 053 –
26 223
30 585
Not 10 Result from participations in joint ventures Result from participations in joint ventures
2010
2009
49 269
63 973
49 269
63 973
38 358
34 312
8 505 -105
-1 369 –
46 758
32 943
34 202 1 704 -105
30 572 -1 369 –
35 801
29 203
Note 13 Interest income and similar profit/loss items The Group Interest income, others Leasing income Exchange rate difference Profit on short-term investments Reversed write-downs of short-term investments Dividend from short-term investments Reversed tax interest
The Parent company Interest income, Group companies Interest income, others Exchange profit Profit on short-term investments Reversed write-downs of short-term investments Dividends Reversed tax interest
2010
2009
2 468 1 934 5 572 – 36 47 –
3 204 1 498 – 149 716 41 5 679
10 057
11 287
2 151 1 698 – 36 47 –
2 534 1 – 149 716 41 5 679
2 933
9 120
Note 14 Interest expenses and similar profit/loss items The Group Interest expenses, Group companies Interest expenses, others Tax interest Depreciation on prepaid borrowing expenses Exchange rate difference Others
The Parent company Interest expenses, Group companies Interest expenses, others Exchange rate differences Others
2010
2009
– -43 672 – -1 698 -899 -740
-52 -45 422 -1 225 -1 397 -10 267 -468
-47 009
-58 831
-611 -7 316 – -640
-288 -10 301 -927 -422
-8 567
-11 938
2010
2009
337
204
3 541 -102 – -1 311 –
-6 029 -1 121 6 504 -41 795 470
2 465
-41 767
337
204
1 874 -102 – –
-6 029 – 6 504 470
2 109
1 149
The Group Exchange rate differences that have affected operating result Financial exchange rate differences
The Parent company Financial exchange rate differences
2010
2009
2 375 4 673
6 179 -10 267
7 048
-4 088
698
-927
A N N UA L R EP O R T
The Parent company Dividend Capital gain/loss from disposal of participations Write-downs of receivables Reversed write-downs Other costs
2009
Note 15 Exch. rate differences that have affected the profit/loss
Note 11 Result from participations in associated companies The Group Dividend Capital gain/loss from disposal of participations and receivables Write-downs of receivables Reversed write-downs Profit participations in associated Other costs
The Parent company Dividend Capital loss from disposals Reversed write-downs
2010
50
Note 16 Tax
Note 18 Goodwill 2010
2009
The Group Current tax Deferred tax
-2 850 -1 974
-30 823 -18 363
Total reported tax
-4 824
-49 186
2010
2009
The Parent company Deferred tax
8 044
4 236
Total reported tax
8 044
4 236
Reconciliation of effective tax rate
The Group Result before tax Tax according to the current tax rate for the Parent company Effect of other tax rates for foreign subsidiaries Depreciation on group wise surplus values Non-deductible expenses Tax-exempt income Tax losses carryforward not recognized as deferred tax assets Previously unassessed deductible deficiency Tax relating to previous years Taxable result from disposal of shares Unreported tax on associated companies’ profits Others Reported effective tax Reconciliation of effective tax rate
The Parent company Result before tax Tax according to the current tax rate for the Parent company Non-deductible expenses Tax-exempt income Tax relating to previous years Taxable result from disposal of shares Reported effective tax Tax items charged to equity The Parent company Estimated tax in received/ submitted Group contributions
2010 2009 Per cent Amount Per cent Amount
121 653
2009-12-31
The Group Accumulated acquisition values At beginning of year Acquisition of subsidiaries Disposed subsidiaries
8 282 9 000 -8 282
8 282 – –
At year end
9 000
8 282
Accumulated depreciation according to plan At beginning of year Disposed subsidiaries Depreciation according to plan for the year
-7 570 8 104 -534
-5 913 – -1 657
–
-7 570
9 000
712
2010-12-31
2009-12-31
1 082 350 68 127 -3 135 13 513
1 080 514 983 – 853
1 160 855
1 082 350
-113 726 489 -9 981
-103 810 – -9 916
-123 218
-113 726
1 037 637
968 624
2010-12-31
2009-12-31
124 903
111 159
2010-12-31
2009-12-31
1 037 637 –
965 931 2 693
1 037 637
968 624
Reported value at end of period
82 542
26,3% -6,8% 0,2% 0,6% -13,6%
-31 995 8 232 -295 -706 16 566
26,3% -7,7% 0,9% 6,8% -14,9%
-21 709 6 344 -731 -5 640 12 258
– 0,9% -1,7% 1,5% -3,4% 0,0%
– -1 053 2 079 -1 858 4 192 14
1,1% -0,1% 47,2% 2,4% -2,4% -0,2%
-921 72 -38 973 -1 982 1 968 128
4,0%
-4 824
59,6% -49 186
Note 19 Real Estate The Group Accumulated acquisition values At beginning of year New acquisitions Disposed subsidiaries Reclassifications
Accumulated depreciation according to plan At beginning of year Disposed subsidiaries Depreciation according to plan for the year
2010 2009 Per cent Amount Per cent Amount Reported value at end of period 47 942
46 971
26,3% 13,0% -51,7% -8,3% 3,9%
-12 609 -6 237 24 763 3 984 -1 857
26,3% 6,3% -47,3% 1,6% 4,1%
-12 353 -2 960 22 231 -739 -1 943
-16,8%
8 044
-9,0%
4 236
2010
7 374
2009
Of which, land The Group Accumulated acquisition values Reported value at end of period The Group Real estate Buildings and land
6 472 Cost for construction in progress relating to properties classified as real estate are entered under the item on-going new construction, extensions or rebuilding:
Note 17 Other intangible assets 2010-12-31
2009-12-31
The Group Accumulated acquisition values At beginning of year New acquisitions Sales and disposals
1 731 21 –
2 132 106 -507
At year-end
1 752
1 731
Accumulated depreciation according to plan At beginning of year Sales and disposals Depreciation according to plan for the year
-1 099 – -261
-1 097 298 -300
At year-end
-1 360
-1 099
392
632
Reported value at end of period
2010-12-31
The Group
The item mainly consists of computer software set up as an asset.
Information on actual value of real estate The Group Accumulated actual value At beginning of year At year-end
2010-12-31
2009-12-31
27 296
14 939
2010-12-31
2009-12-31
1 401 800 1 603 100
1 356 900 1 401 800
On 31 December 2010, the company carried out an external market valuation of the Group’s real estate. The valuation was done according to the guidelines applied by SFI/IPD Swedish Real Estate Index. Based on this valuation, the market value of the real estate amounts to SEK 1 603.1 million (1 401.8). The value is calculated as a yield at an average 5.8% (6.5%).
51
Real Estate - Effect on profit/loss for the period The Group Rental income Direct costs for real estate that generated rental income during the period (operational and maintenance costs, property tax and ground rent)
The Group Tax assessment value, buildings (in Sweden) Tax assessment value, land (in Sweden)
2010-12-31
2009-12-31
107 997
111 406
Future leasing income that relates to non-revocable operational leasing contracts falls due for payment as below: 2010-12-31
2009-12-31
23 955 19 884
45 089 50 592
43 839
95 681
The Group Within one year Between one and five years -26 843
-26 216
2010-12-31
2009-12-31
591 372 160 409
507 700 132 925
The greater part of leasing income is USD-based. Translation has been done at the accounting year-end exchange rate of USD 1 = SEK 6.8025 (previous year: USD 1 = SEK 7.2125).
Note 21 Aircraft inventories Borrowing expenses No capitalised interest has been included in the acquisition values. Leasing Properties leased under operational leasing contracts are included with the following amounts: The Group Acquisition values Accumulated depreciation at beginning of year Depreciation for the year
2010-12-31
2009-12-31
1 160 855 -113 726 -9 492
1 079 215 -103 431 -9 853
1 037 637
965 931
2010-12-31
2009-12-31
14 797 76 926 25 774
17 279 57 723 26 571
117 497
101 573
Note 20 Aircraft
Accumulated depreciation according to plan At beginning of year Disposed subsidiaries Sales/disposals Depreciation according to plan for the year Exchange rate differences for the year
Reported value at end of period
2010-12-31
2009-12-31
443 847 20 261 -44 923 -1 230 -1 001
439 212 9 873 – -4 119 -1 119
416 954
443 847
-206 010 24 082 1 099 -31 711 641
-177 990 – 2 967 -31 596 609
-211 899
-206 010
205 055
1 174
1 174
-936 -168
-768 -168
-1 104
-936
70
238
2010-12-31
2009-12-31
30 945 1 913 720 -4 241 -17 535 -741
25 237 6 233 – -38 – -487
11 061
30 945
-13 505 -679 1 456 9 704
-10 029 – – –
-3 331 365
-3 722 246
-5 990
-13 505
Reported value at end of period
5 071
17 440
The Parent company Accumulated acquisition values At beginning of year New acquisitions Sales/disposals
5 413 585 -426
5 115 298 –
5 572
5 413
-2 307 426
-1 973 –
Accumulated depreciation according to plan At beginning of year Depreciation according to plan for the year based on acquisition values
Reported value at end of period
Note 22 Equipment, tools and installations
Counterparty risks in rental incomes According to the contract portfolio at year-end, rental income was divided between 95% commercial properties and 5% residential. The commercial rental income was divided between 171 contracts in a number of different sectors. With the aim of limiting exposure to credit losses, regular follow-ups are made of tenants’ credit ratings. No sector or tenant accounts for more than 10% of the rental income.
The Group Accumulated acquisition values At beginning of year New acquisitions Disposed subsidiaries Sales/disposals Exchange rate differences for the year
2009-12-31
The Group Accumulated acquisition values At beginning and end of year
The contract portfolio for commercial premises within the Volito Group as of 31 December 2010 expires according to the table below. Stated amounts refer to contracted closing rents in the portfolio.
The Group Within one year Between one and five years Later than five years
2010-12-31
The Group Accumulated acquisition values At beginning of year New acquisitions Acquisition of subsidiaries Sales/disposals Disposed subsidiaries Exchange rate differences for the year
Accumulated depreciation according to plan At beginning of year Acquisition of subsidiaries Sales/disposals Disposed subsidiaries Depreciation according to plan for the year based on acquisition values Exchange rate differences for the year
Accumulated depreciation according to plan At beginning of year Sales/disposals Depreciation according to plan for the year based on acquisition values
237 837 Reported value at end of period
Leasing Aircraft that are leased under operational leasing contracts are included with the following amounts:
The Group The period’s leasing income amounts to:
-334 -2 307
3 336
3 106
Borrowing expenses No capitalised interest has been included in the acquisition values.
2010-12-31
2009-12-31
416 954 -183 633 -28 266
398 463 -156 345 -27 288
205 055
214 830
2010-12-31
2009-12-31
34 696
52 249
Leasing Equipment, tools and installations obtained through financial and operational leasing agreements amount to insignificant amounts.
A N N UA L R EP O R T
The Group Acquisition values Accumulated depreciation at beginning of year Depreciation for the year
-355 -2 236
52
Note 23 Construction in progress and advances with respect to tangible fixed assets
Note 24 Participations in Group companies
2010-12-31
2009-12-31
The Group At beginning of year Reclassifications Investments
14 939 -13 513 25 870
1 830 -853 13 962
Reported value at end of period
27 296
14 939
Accumulated acquisition values At beginning of year New acquisitions Submitted shareholders’ contribution Sales Reclassifications
Borrowing expenses No capitalised interest has been included in the acquisition values.
Accumulated write-downs At year beginning and end Reversed write-downs for the year Write-downs for the year
Reported value at end of period
2010-12-31
2009-12-31
564 493 1 051 20 117 -14 923 -7 999
550 443 19 279 18 457 -23 686 –
562 739
564 493
-19 953 10 053 -22 717
-9 900 – -10 053
-32 617
-19 953
530 122
544 540
Note 24 continued. List of the Parent company’s and Group’s participations in Group companies
Subsidiary/Corp. ID no./Registered office Volito Aviation AB, 556603-2800, Malmö, Sweden Volito South Pacific AB, 556004-0452, Malmö, Sweden Volito Altitude Partner AB, 556627-7280, Malmö, Sweden Volito Altitude KB, 916539-3852, Malmö, Sweden Volito Leisure Partner AB, 556631-7987, Malmö, Sweden Volito Aviation Leisure KB, 916543-6115, Malmö, Sweden Volito Commuter KB, 916550-3872, Malmö, Sweden Volito Aviation Camilla HB, 969707-4418, Malmö, Sweden Volito Aviation Annika HB, 969688-2647, Malmö, Sweden Volito Aviation Cornelia HB, 969707-7387, Malmö, Sweden Volito Aviation November 2003 AB, 556604-0498, Malmö, Sweden Volito Aviation Deux Lux AB, 556604-0506, Malmö, Sweden Volito Aviation Finance AB, 556435-2952, Malmö, Sweden Volito Aviation Christine AB, 556585-5326, Malmö, Sweden Volito Overseas AB, 556507-0223, Malmö, Sweden Volito Aviation September 2007 AB, 556733-0955, Malmö, Sweden Volito Aviation Oktober 2007 AB, 556733-1029, Malmö, Sweden Volito Aviation Services AB, 556673-5782, Malmö, Sweden Volito Aviation Services Ltd, 436832, Dublin, Ireland Volito Aviation Services Asia Pte Ltd, 200708179R, Singapore Volito Aviation AG, CH - 170.3.027.511-0, Zug, Switzerland Volito Cyprus Holding Ltd, HE 173483, Limassol, Cyprus Regana Company Ltd, HE 152714, Limassol, Cyprus Bragina Company Ltd, HE 153654, Limassol, Cyprus Gribanova Company Ltd, HE 155087, Limassol, Cyprus Volito TakeOff Ltd, HE 158317, Limassol, Cyprus Volito Global Ltd, HE 162753, Limassol, Cyprus Volito Universal Ltd, HE 162951, Limassol, Cyprus Volito Sunrise Ltd, HE 170888, Limassol, Cyprus Volito Cirrus Ltd, HE 167295, Limassol, Cyprus Volito Aviation Ltd, 324448, Dublin, Ireland Volito Fastigheter AB, 556539-1447, Malmö, Sweden Volito Fastighetsutveckling AB, 556375-6781, Malmö, Sweden Volito Fastighetsförvaltning AB, 556142-4226, Malmö, Sweden Fastighetsbolaget Flygledaren HB, 916760-2035, Malmö, Sweden HB Ran Förvaltning, 916766-5224, Malmö, Sweden Volito Fastighetskupolen AB, 556629-1117, Malmö, Sweden Fastighets AB Centralposthuset i Malmö, 556548-1917, Malmö, Sweden Volito Leisure AB, 556541-9164, Malmö, Sweden KB Snickaren 208, 969684-1023, Malmö, Sweden Volito Agatel AB, 556677-1472, Malmö, Sweden Volito Fosiestenen AB, 556690-0873, Malmö, Sweden Volito Mosippan AB, 556131-7979, Malmö, Sweden Volito Delfinen AB, 556630-7988, Malmö, Sweden Volito Proveniens AB, 556758-2415, Malmö, Sweden Kattegat Invest AB, 556381-1388, Malmö, Sweden BF Scandinavian Aviation Academy AB, 556182-0910, Västerås, Sweden Volito 2001 AB, 556599-8217, Malmö, Sweden Volito Industri AB, 556662-5835, Malmö, Sweden Volito Automation AB, 556669-2157, Malmö, Sweden Hydro Swede i Stockholm AB, 556235-5130, Stockholm, Sweden Volito Oktober 2006 AB (Hydraulic Supplier i Norden AB), 556718-2091, Malmö, Sweden Volito Malaysian Holding AB, 556662-7609, Malmö, Sweden Volito AG, CH-170.3.026.619-3, Zug, Switzerland Other subsidiaries, dormant
No. of shares
Share in % 1)
1 222 000
100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 80,0
2010-12-31 Reported value
2009-12-31 Reported value
173 789
173 789
312 014
312 014
51,0
6 500
100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0
– 11 000 9 100 10 000
– 100,0 91,0 100,0
10 000
100,0
1 000 100
100,0 100,0
423 000
1) Refers to the share of the capital, which also agrees with the share of votes for the total number of shares.
638
638
– 1 324 910
11 609 3 145 109 1 020
121 40 596 730
900 40 596 720
530 122
544 540
53
Note 25 Receivables in the Group companies
Note 28 Participations in associated companies
2010-12-31 The Parent company Accumulated acquisition values At beginning of year Additional receivables Settlement of receivables Exchange rate differences for the year
2009-12-31
86 751 20 379 -5 633 3 471
93 448 1 133 -3 003 -4 827
104 968
86 751
-1 390 -56
-1 469 79
-1 446
- 1 390
103 522
85 361
2010-12-31
2009-12-31
Accumulated write-downs At beginning of year Exchange rate differences for the year
Reported value at end of period
Note 26 Participations in joint ventures The Group Accumulated acquisition values At beginning of year Result from participation in joint ventures Exchange rate differences for the year Reported value at end of period
317 012 49 269 -19 851
274 430 63 973 -21 391
346 430
317 012
2010-12-31
2009-12-31
64 837 1 602 -3 808 -1 311
111 533 298 -561 -41 791
1 049 2 259 -102
320 -4 962 –
64 526
64 837
The Parent company Accumulated acquisition values At beginning of year New acquisitions Sales Reclassifications
12 065 102 -5 473 –
18 509 298 -7 062 320
6 694
12 065
Accumulated write-downs At beginning of year Sales Write-downs for the year1)
-1 436 – -102
-7 940 6 504 –
The Group Accumulated acquisition values At beginning of year New acquisitions Sales Participations in the result of associated companies for the year Reclassifications Exchange rate differences for the year Write-downs for the year1)
Reported value at end of period List of the Parent company’s and Group’s participations in joint ventures
Joint venture / Corp. ID no. Reg. office Indirectly owned VGS Aircraft Holding (Ireland) Ltd, 43005, Dublin, Ireland
2010-12-31 Shares /no. as %
25,5
Reported value at end of period
Proportion of equity’s value in the Group
346 430
–
346 430
–
List of the Parent company’s and Group’s participations in joint ventures
Joint venture / Corp. ID no. Reg. office Indirectly owned VGS Aircraft Holding (Ireland) Ltd, 43005, Dublin, Ireland
Reported value in the Parent
2009-12-31 Shares /no. as %
25,5
Reported value at end of period
Proportion of equity’s value in the Group
Reported value in the Parent
317 012
–
317 012
–
-1 538
-1 436
5 156
10 629
1) Reversed write-downs and write-downs for the year have been posted in the result from participation in associated companies in the income statement. List of the Parent company’s and Group’s participations in associated companies
Associated company / Corp. ID no. Reg. office Directly owned AB Nordsidan, 556058-3212, Malmö, Sweden Indirectly owned Nordkap Holding AG, CH-170.3.026.601- 4, Zug, Switzerland Nordkap Bank AG, CH-020.3.907.391-5, Zug, Switzerland Nordkap Energy Holding AG, CH-170.3.031.564-5, Zug, Switzerland HydX AB, 556791-5326, Ystad, Sweden
2010-12-31 Shares /no. as % 1)
Proportion of equity’s value in the Group
Reported value in the Parent
34,0
5 058
5 156
40,0
59 021 –
50,0 40,0
-1 020 1 467 64 526
List of the Parent company’s and Group’s participations in associated companies
Note 27 Receivables in joint ventures 2010-12-31
2009-12-31
The Group Accumulated acquisition values At beginning of year Additional receivables Reclassifications Exchange rate differences for the year
403 429 72 936 – -22 933
418 129 – 14 425 -29 125
Reported value at end of period
453 432
403 429
Associated company / Corp. ID no. Reg. office Directly owned Galenica AB, 556567-7449, Malmö, Sweden AB Nordsidan, 556058-3212, Malmö, Sweden Indirectly owned Nordkap Holding AG, CH-170.3.026.601- 4, Zug, Switzerland Nordkap Bank AG, CH-020.3.907.391-5, Zug, Switzerland Nordkap Energy Holding AG, CH-170.3.031.564-5, Zug, Switzerland
5 156
2009-12-31 Shares /no. as % 1)
Proportion of equity’s value in the Group
Reported value in the Parent
20,1 34,0
3 525 5 058
5 473 5 156
40,0
57 234 –
50,0
-980 64 837
10 629
1) Refers to owned share of the capital, which also corresponds with the share of the votes for the total number of shares.
A N N UA L R EP O R T
54
Note 29 Receivables in associated companies
Note 31 Deferred tax
2010-12-31 The Group Accumulated acquisition values At beginning of year Additional receivables Exchange rate differences for the year
Accumulated write-downs At beginning of year Exchange rate differences for the year
Reported value at end of period
2009-12-31
85 271 3 000 3 458
90 078 – -4 807
91 729
85 271
-1 043 -42
-1 121 78
-1 085
-1 043
90 644
84 228
Note 30 Holdings in other long-term securities The Group Accumulated acquisition values At beginning of year Additional assets Deductible assets Reclassifications
2010-12-31
2009-12-31
448 559 – -6 896 –
440 310 8 261 -1 869 1 857
441 663
448 559
-969 -105
-969 –
-1 074
-969
440 589
447 590
2010-12-31
2009-12-31
Accumulated write-downs At beginning of year Reversed write-downs during the year
Reported value at end of period
The Parent company Accumulated acquisition values At beginning of year Additional assets Deductible assets Reclassifications
417 385 – -6 896 –
409 136 8 261 -1 869 1 857
410 489
417 385
-969 -105
-969 –
-1 074
-969
409 415
416 416
Accumulated write-downs At beginning of year Reversed write-downs during the year
Reported value at end of period
2010-12-31
List of securities The Group Peab AB (publ) CTT Systems AB (publ) Haldex AB (publ) Bear Stearns (investment fund) Båstadtennis och Hotell AB Custos Other
Market value or equivalent
Reported value
873 063 45 269 – 1 484 – – –
382 707 44 498 – 1 938 3 960 6 186 1 300
701 500 43 331 8 900 1 938 – – –
382 707 44 498 6 896 1 938 3 960 6 186 1 405
919 816
440 589
755 669
447 590
2010-12-31
List of securities The Parent Company Peab AB (publ) CTT Systems AB (publ) Haldex AB (publ) Bear Stearns (investment fund) Custos Other
Reported value
Market value or equivalent
2009-12-31
Reported value
Market Reported value
Reported value
777 884 45 269 – 1 484 – –
356 493 44 498 – 1 938 6 186 300
625 025 43 331 8 900 1 938 – –
356 493 44 498 6 896 1 938 6 186 405
824 637
409 415
679 194
416 416
Deferred tax liabilities
Net
The Group 2010 Accelerated depreciation Real estate Aircraft Group surplus value Real estate Aircraft Deductible deficiency
– –
22 984 45 013
-22 984 -45 013
– – 34 786
18 687 525 –
-18 687 -525 34 786
Offset
34 786 -9
87 209 -9
-52 423 –
Net deferred tax liabilities
34 777
87 200
-52 423
– – –
20 202 51 904 285
-20 202 -51 904 -285
– 79 35 181
18 140 590 –
-18 140 -511 35 181
Offset
35 260 -1 540
91 121 -1 540
-55 861 –
Net deferred tax liabilities
33 720
89 581
-55 861
The Parent company 2010 Deductible deficiency
23 995
–
23 995
Net deferred tax liabilities
23 995
–
23 995
The Group 2009 Accelerated depreciation Real estate Aircraft Tax allocation reserves Group surplus value Real estate Aircraft Deductible deficiency
The Parent company 2009 Deductible deficiency
23 325
–
23 325
Net deferred tax liabilities
23 325
–
23 325
The change in the Parent company between years has been shown as deferred tax expenses/income, except those amounts that according to note 38 are charged directly against equity. Deferred taxes are valued based on the nominal rate of tax. The only exception to this rule is the acquisition of material assets in which the tax assessment was a significant part of the business transaction when the deferred tax is valued based on the purchase price. All deferred taxes have been valued at a nominal amount on 31 December 2010 (the same applies for the previous year). Unreported deferred recoverable taxes Deductible temporary differences and fiscal deductible deficiencies for which deferred recoverable taxes have not been reported in the income statement and balance sheet:
2009-12-31 Market value or equivalent
Deferred recoverable taxes
Fiscal deficit
2010-12-31
2009-12-31
18 994
14 589
The fiscal deficit is relating to Swedish subsidiaries where the ownership is less than 90% and hence they can not be set of against profits in other companies by group contributions.
55
Note 32 Prepaid borrowing expenses
Note 34 Other long-term receivables 2010-12-31
The Group Accumulated acquisition values At beginning of year Additional items Settled items Redeemed loan
Accumulated depreciations At beginning of year Settled items Depreciations for the year
2009-12-31
1 728
-8 666 3 062 -1 174
-7 363 94 -1 397
Accumulated write-downs At beginning and end of the year
-357
-357
Reported value at year-end
9 019
1 371
The Parent company Accumulated acquisition values At beginning of year Additional receivables Settled receivables Reclassifications
357 – – 7 999
1 699 35 -19 -1 358
8 356
357
-357
-357
7 999
–
3 456
Reported value at year-end, long-term component Reported value at year-end, short-term component
2 009 1 174
2 761 695
3 183
3 456
Note 33 Financial leasing agreements One of the properties in Volito Fastigheter Group is leased out on a financial leasing agreement. 2010-12-31 2009-12-31
Accumulated write-downs At beginning and end of the year Reported value at year-end
Note 35 Prepaid expenses and accrued income 59 353 -26 530
62 558 -28 464
Net investment of the leasing agreement Less not guaranteed residual value that goes to the lessee
32 823
34 094
–
–
Present value of the future leasing income
32 823
34 094
Present value of future leasing income falls due for payment as below Within one year Between one and five years Later than five years
9 376
12 122
-8 666
Net investment of financial agreements
7 430 35 -4 368 -1 358 – -11
9 961
3 183
Less not earned financial income
1 728 – -62 7 999 -289 –
12 216 – -94 –
-6 778
As per 31 December the breakdown of the remaining duration was as follows Gross investment Within one year Between one and five years Later than five years
2009-12-31
12 122 1 425 -3 062 -524
Prepaid borrowing expenses
The Group Reconciliation of the gross investment and the present value of the receivable of future leasing income: Gross investment Less not earned financial income
2010-12-31 The Group Accumulated acquisition values At beginning of year Additional receivables Settled receivables Reclassifications Disposed subsidiaries Exchange rate differences for the year
2010-12-31
2009-12-31
1 174 3 850 14 –
695 5 399 1 661 190
5 038
7 945
818 14
783 79
832
862
The Group Short-term comp. of prepaid borrowing expenses Prepaid expenses Accrued income Other items
The Parent company Prepaid expenses Other items 2 872 10 154 46 327
3 205 10 487 48 866
59 353
62 558
-26 530
-28 464
32 823
34 094
Note 36 Short-term investments The Group and Parent company List of securities Listed participations
1 007 3 135 28 681
1 271 3 288 29 535
32 823
34 094
2010-12-31 Market value or equivalent 1 464
2009-12-31
Market value or Reported value equivalent 1 313
1 385
Reported value 1 276
A N N UA L R EP O R T
56
Note 37 Financial instruments and financial risk management Finance policy Financial risks refer to changes in exchange rates and interest rates that affect the company’s cash flow, profit/loss and thereby the related shareholders’ equity. Financial risks also include credit risks and refinancing risks. Exposure applying to the different operations is presented quarterly for the respective companies’ boards, which make current decisions regarding financial risk management based on the market situation and macroeconomic information. Below is a summary of the Group’s loan portfolio divided according to currency and due dates. Due date of loan Nominal amount in 1 year 1-5 >5 original currency or less years years Real estate SEK Aviation USD USD, credit line Other SEK, credit line SEK, investment loan CHF
Financial exposure – outstanding derivatives 2010-12-31 Liabilities Loan amount Market value The Group Interest rate swaps
381 295
2009-12-31 Loan amount Market value
-10 650
380 675
-18 521
The market value has been calculated as the expenses/income that would have related to the contract if it had been closed at accounting year-end. In this context the banks’ official rates have been used. Below is a summary of the Group’s interest rate swaps by due dates.
Total
785 033
671 703
93 620
19 710
785 033
6 411 3 591
20 192 24 429
26 444 –
– –
46 636 24 429
144 639 250 000 11 500
144 639 – 83 208
– 250 000 –
– – –
144 639 250 000 83 208
944 171
370 064
19 710
1 333 945
Volito’s policy concerning borrowing is that the due dates for loans shall be spread over time. The policy relating to interest is that the fixed term periods for the portfolio shall be well balanced and assessed at all times against the company’s current view of the interest rate market. Part of Volito’s borrowing is linked to the fulfilment of financial key ratios. These key ratios are followed up on a continuous basis and constitute part of the management’s daily framework for the financial planning of the business. Currency risks The Volito Group is exposed to exchange rate changes mainly in the US dollar through its involvement in the Volito Aviation group. Income in the form of leasing fees is USD-based and is set against amortisation and interest payments on loans, which are similarly USD-based. The results of VGS are reported as a share in joint ventures. Exchange rate differences related to translation of VGS are posted in the equity. The Volito Group’s holding in Nordkap Bank AG is partly hedged against changes in the CHF exchange rate through certain borrowings in CHF. However, a certain amount of the holding is exposed to changes in the CHF exchange rate. Exchange rate differences related to translation of the foreign subsidiary are posted under equity.
SEK, interest rate swap
Nominal amount
1 year or less
1-5 years
>5 years
Total
381 295
–
61 295
320 000
381 295
Refinancing risks The Volito Group depends on a functioning credit market. The Group has a need to continuously refinance parts of its business, see note 39. The Group has a satisfactory equity ratio and loan capacity. It is therefore Volito’s assessment that there is at present no problem concerning the credit that is due for refinancing.
Note 38 Equity Share capital The Group Balance carried forward according to balance sheet of 31 December 2008
Equity on 31 December 2009
Taken together, the Volito Group’s total loans that are exposed to short-term interest rates is SEK 906 million (892). During 2005, the Volito Group began to manage part of its interest rate risks using interest rate swaps. The hedging relating to 48.6% of the debt portfolio in the Volito Fastigheter AB group is managed with swaps, something that gives the company a higher degree of flexibility in terms of future debt management. The nominal amounts on Volito Fastigheter’s outstanding interest rate swaps as of 31 December amounted to SEK 381.3 million (380.7). As of 31 December the fixed interest rates varied from 2.58% (2.58 %) to 4.03 % (4.89 %) and floating interest rates are STIBOR 3 months plus a margin for borrowing in SEK .
244 000
Translation difference for the year Transfers between non-restricted and restricted equity Result for the year Dividend Equity on 31 December 2010
The Board of Volito has decided to accept the exposure for USD and CHF according to the above, as this exposure in itself constitutes a risk diversification within the Volito Group. The extent of this exposure will be decided according to continuous review. Interest risks The Volito Group is exposed to changes mainly in short-term interest rates though its involvement in the groups Volito Fastigheter AB and SAA AB. Within the Parent company, Volito AB, there is also an exposure relating to short-term interest rates.
244 000
Translation difference for the year Transfers between non-restricted and restricted equity Result for the year Dividend Buy-back of option
244 000 Share capital
The Parent company Balance carried forward according to balance sheet of 31 December 2008
244 000
Restricted Non-restricted reserves equity
88 625
566 549
–
-31 373
-47 989
47 989 3 578 -20 130 -26 860
40 636
539 753
–
-20 867
995
-995 93 957 -25 010
41 631
586 838
Restricted Non-restricted reserves equity
21 005
Result for the year Dividend Buy-back of option Group contributions Tax effect on group contributions Equity on 31 December 2009
51 207 -20 130 -26 860 24 610 -6 472 244 000
21 005
Result for the year Dividend Group contributions Tax effect on group contributions Equity on 31 December 2010
309 794
332 149 55 986 -25 010 28 037 -7 374
244 000
21 005
383 788
Retained Earnings Contains the unrestricted equity from the previous year, less any transfers to restricted reserves and any dividend payments. Such amounts and net income for the current period, constitutes total unrestricted equity, i.e. the amount available for dividend payments.
57
Fully paid Class B shares
Number of issued shares Not fully paid
2 440 000
Note 40 Bank overdraft facilities
–
Specification of accumulated exchange rate difference in equity: 2010-12-31
100
2009-12-31
Acc. exchange rate difference at beginning of year Exch. rate diff for the year in foreign subsidiaries In foreign associated companies and joint ventures
54 650 -15 913 -4 954
86 023 -24 543 -6 830
Accumulated exchange rate difference at year-end
33 783
54 650
The Group Granted credit limit Unutilised part
296 630 -127 562
289 125 -157 678
Utilised credit amount
169 068
131 447
The Parent company Granted credit limit Unutilised part
183 000 -41 383
183 000 -58 533
141 617
124 467
Utilised credit amount
The Group Debts
Note 39 Other debts to credit institutes, long-term
The Parent company Due date, 1-5 years from accounting year-end
2009-12-31
Note 41 Other debts, long-term and short-term
The Board of Directors and CEO propose that of disposable standing profit, SEK 25 010 000 is distributed to shareholders.
The Group Due date, 1-5 years from accounting year-end Due date, later than five years from acc year-end
2010-12-31
Nominal amount
2010-12-31
2009-12-31
370 064 19 710
608 932 179 909
389 774
788 841
2010-12-31
2009-12-31
97 677
80 112
In a number of leasing contracts there is an agreement that the lessees make regular payments to Volito that are allocated to a maintenance reserve that is utilised for future maintenance on aircraft. The cash-in and cash-out in the maintenance reserve is controlled by the lessee’s utilisation of the aircraft and by foreseen and unforeseen maintenance costs. The maintenance reserve as of 31 December 2010 amounted to SEK 65.0 million (68.4).
250 000
250 000
250 000
250 000
The Group intends to refinance those credits that fall due in 2010. Volito’s assessment is that amortisation in 2011 will amount to SEK 30.4 million for the Group and SEK 0 million for the Parent company, which in accordance with RR 22 is reported as short-term.
Note 42 Accrued expenses and prepaid income The Group Personnel-related items Accrued interest expenses Prepaid rental income Prepaid leasing income Other prepaid income Other accrued expenses
The Parent company Personnel-related items Accrued interest expenses Other items
2010-12-31
2009-12-31
15 639 4 525 15 807 2 772 – 11 259
16 516 4 932 15 700 3 725 1 735 10 582
50 002
53 190
1 630 727 313
1 606 479 1 093
2 670
3 178
Malmö, 28 February 2011
Karl-Axel Granlund Chairman
Bo Olsdal
Lennart Blecher
Johan Lundsgård CEO
Our auditors’ report was submitted 3 March 2011 KPMG AB
The Group’s income statement and balance sheet, and the Parent company’s income statement and balance sheet, will be confirmed at the Annual General Meeting on 15 March 2011.
A N N UA L R EP O R T
Eva Melzig Henriksson David Olow Authorized Public Accountant Authorized Public Accountant
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Audit Report - translation
To the annual meeting of the shareholders of Volito AB Corporate identity number 556457-4639 We have audited the annual accounts, the accounting records and the administration of the board of directors and the managing director of Volito AB for the year 2010. The annual accounts are presented in the printed version of this document on pages 34-57. These accounts and the administration of the company and the application of the Annual Accounts Act when preparing the annual accounts are the responsibility of the board of directors and the managing director. Our responsibility is to express an opinion on the annual accounts and the administration based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain high but not absolute assurance that the annual accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the managing director and significant estimates made by the board of directors and the managing director when preparing the annual accounts as well as evaluating the overall presentation of information in the annual accounts. As a basis for our opinion concerning discharge from liability, we examined signiÂficant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below. The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The statutory administration report is consistent with the other parts of the annual accounts. We recommend to the annual meeting of shareholders that the income statement and balance sheet be adopted, that the profit be dealt with in accordance with the proposal in the administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year. MalmĂś 3 March 2011 KPMG AB
Eva Melzig Henriksson Authorized Public Accountant
David Olow Authorized Public Accountant
T
he cover this year is painted by John Stockwell, born 1958 in Boston. John has been living in Sweden for ten years. His dramatic paintings with nature as a base are witnesses of a huge love and passion for the southern Swedish landscape. Over the years John has had several exhibitions in the USA, Europe and Sweden. His work is represented in numerous major collections, i.e. Fidelity Trust, IBM, Merril Lynch and Harvard Business School. John Stockwell – Apple orchard in Vitaby. Pastel on paper 2010
Addresses Volito AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 660 30 00 Fax +46 40 660 30 20 www.volito.se
Volito Fastigheter AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 664 47 00 Fax +46 40 664 47 19 www.volitofastigheter.se
Volito Aviation AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 660 30 00 Fax +46 40 30 23 50 www.volito.aero
Volito Industri AB Södra Förstadsgatan 4, SE-211 43 Malmö Tfn +46 40 660 30 00 Fax +46 40 660 30 20 www.volito.se
This English version is a translation of the Swedish original. In case of any dispute as to the interpretation of this document, the Swedish version shall prevail.
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Volito AB | An n ual Rep ort 2010
Volito AB | Group Presentation Annual Report 2010 Volito AB is an investment company operating within Aviation, Real Estate, Industry and Structured Finance. The company creates value through long-term, active ownership based on genuine expertise within its lines of business. Value growth is generated both through current earnings and the increase in value of the company’s investments.
Volito AB, Södra Förstadsgatan 4, SE-211 43 Malmö tel +46 40 660 30 00 fax +46 40 660 30 20 e-mail info@volito.se internet www.volito.se corporate identity number 556457-4639
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