annual report 2007 volito
DESCRIPTION
Annual Report 2007 VolitoTRANSCRIPT
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Volito AB, Södra Förstadsgatan 4, SE-211 43 Malmö tel +46 40 660 30 00 fax +46 40 660 30 20 e-mail [email protected] internet www.volito.se corporate identity number 556457-4639
Volito AB is an investment company operating within Aviation, Real Estate 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 | GROUP PRESENTATION ANNUAL REPORT 2007
This year’s cover artist, Björn Wessman, was born in Hässleholm in 1949. He attended the Royal College of Art, Stockholm, 1976-81. The collective name for Björn’s recent paintings is "The nature of light" and he comments:
"I have walked through Australia’s jungles and gone to mountain-tops in Abisko and the Pyrenees, all to gather inspiration for pain-tings. My paintings are inspired by walks just around the corner, in our village in the south of France. The drama that colours display on the canvas is steered by the light. There is nothing more difficult to nail down than the nature of southern light. I think I have got closer to the subjective truth that my paintings describe."
Björn has held a large number of exhibitions in Sweden and abroad. His work is shown in the Jubilee Room of the Swedish king, Carl XVI Gustaf, in the Royal Castle in Stockholm, and at several museums including the Museum of Modern Art in Stockholm, Malmö Museum and Göteborg Museum.
AddressesVolito ABSödra Förstadsgatan 4, SE-211 43 MalmöTel: +46 40 660 30 00 Fax: +46 40 660 30 20www.volito.se
Volito Aviation ABSödra Förstadsgatan 4, SE-211 43 MalmöTel: +46 40 660 30 00 Fax: +46 40 30 23 50www.volito.aero
Volito Fastigheter ABSödra Förstadsgatan 4, SE-211 43 MalmöTel: +46 40 664 47 00 Fax: +46 40 664 47 19www.volitofastigheter.se
Scandinavian Aviation Academy ABHässlögatan 20, SE-721 31 VästeråsTel: +46 21 80 28 00 Fax: +46 21 80 28 90www.bfsaa.se
Nordkap Bank AGThurgauerstrasse 54, CH-8050 Zürich, SchweizTel: +41 1 306 49 10 Fax: +41 1 306 49 11www.nordkapbank.com
CTT Systems AB (publ)Box 1042, SE-611 29 NyköpingTel: +46 155 20 59 00 Fax: +46 155 20 59 25www.ctt.se
Peab AB (publ)SE-260 92 FörslövTel: +46 431 89 000 Fax: +46 431 45 19 75www.peab.se
Peab Industri AB (publ)Box 1291, SE-262 24 ÄngelholmTel: +46 431 44 96 00 Fax: +46 431 44 96 01www.peabindustri.se
DefınitionsReturn on equityProfit/loss after tax in relation to average equity
Adjusted equityEquity and surplus values in real estate and listed shares with reduction for deferred tax
Return on adjusted equityChange in value on adjusted equity
Adjusted equity ratioAdjusted equity in relation to total assets including surplus values
VOLITO
The Group
VOLITO AB
Volito AB is a privately-owned investment company based in Malmö. The company runs operations in the areas of Aviation, Real Estate and Structured Finance. Volito structures its activities in operating subsidiaries and in other investments within its three business areas.
The Aviation business area covers the leasing of commercial jet aircraft, mainly Boeing 737 and Airbus 319/320, in the narrow-body segment. The leasing business is operated by the wholly-owned subsidiary, Volito Aviation AB, as well as by the partly owned VGS Aircraft Holding Ltd. Both these operations are managed by Volito Aviation Services AB, a company that is 80% owned by Volito.
Aviation also includes SAA AB based in Västerås. The SAA Group runs training courses mainly for pilots, but also for other personnel in the aviation industry, and has activities in Sweden, Switzerland and the USA.
The Aviation business area also administers Volito’s holding in CTT Systems AB (publ). CTT develops and sells humidity control systems for commercial aircraft and is listed on the OMX Nordic Exchange Stockholm.
The Real Estate business area includes the wholly-owned Volito subsidiary, Volito Fastigheter AB. Volito Fastigheter mainly focuses on commercial real estate in the Öresund Region. Real Estate also includes Volito’s ownership in Peab
AB (publ) and Peab Industri AB (publ). Peab and Peab Industri are both active in the construction and civil engineering field and listed on the OMX Nordic Exchange Stockholm.
Structured Finance encompasses Volito’s ownership in Nordkap Bank AG. Nordkap Bank offers structured financing solutions, and its customers are primarily in developing regions of the world. The bank runs its operations from Zürich, Switzerland.
Volito’s overall objective is to create long-term, balanced value growth for the shareholders. 2007 saw growth in adjusted equity of 21.7% (37.5%). The Group’s adjusted equity on 31 December 2007 amounted to SEK 1 518.1 million (1 272.9).
Business concept, structure and objective
AVIATION REAL ESTATE STRUCTURED FINANCE
2007 in brief• The Volito Group’s adjusted equity increased by 21.7% to SEK 1 518.1 million(1 272.9).
• The Volito Group’s profit before tax amounted to SEK 600.9 million (144.5).
• Volito Aviation sold the majority of its aircraft fleet to VGS Aircraft Holding Ltd (VGS). VGS is 25.5% owned by Volito Aviation. The transaction generated a gain of SEK 289.2 million before tax.
• SAA has improved the profitability compared to last year. The result before extraordinary expenses
amounted to SEK -0.5 million (-3.0). SAA generated SEK 2.7 million in cash flow.
• Volito increased its ownership in CTT Systems AB (publ) and owned 14.4% of the company at year-end.
• Volito Fastigheter acquired real estate for SEK 144.2 million during 2007. After the acquisitions, the company’s real estate portfolio amounted to SEK 1 185.8 million. Volito Fastigheter reported a profit before tax for the year of SEK 27.0 million (26.5).
• Peab AB (publ) distributed its industrial operations to the shareholders. Volito owns, after the dividend, approximately 5.0% of the capital and approximately 2.5% of the votes in Peab Industri AB (publ). The transaction affected Volito’s profit before tax by SEK 258.0 million.
• Nordkap Bank continued to develop positively and reported a profit before tax of CHF 11.5 million (8.8).
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Volito’s adjusted equity continued to develop well in 2007 and on 31 December amounted to SEK 1 518.1 million, which represents a 21.7% increase during the year. In contrast to previous years, the rise has been driven mainly by the company’s profit, in particular by the gains from the transaction with VGS (SEK 289.2 million before tax).
During the year, Volito Aviation sold the majority of its aircraft fleet to VGS, which is structured as a Joint Venture with Goldman Sachs. The transaction has major strategic value for Volito; realising the value increase in our portfolio, further diversifying the risk concerning our involvement in aircraft leasing, strengthening our liquidity position and also considerably reducing the Volito Group’s balance sheet total.
The VGS fleet and Volito’s remaining fleet is managed by Volito Aviation Services AB, a company that is 80% owned by Volito. At year-end, this organisation had complete management responsibility for 49 aircraft and one engine. In order to fully meet the increased demands placed on the service organisation, 17 new staff members were taken on during the year, which means that a total of 30 people worked for the company at year-end. With this expansion, we feel we are well equipped for the future in terms of organisational resources and I must say that I am deeply impressed by Aviation Services’ handling of both the transaction and creation of VGS during the year, as well as by its own strong growth.
The aviation school, SAA, has shown during the year that it is on the way to
restoring profitability in the company. A continued increase in turnover (+11%) has enabled the company to report an improved result before tax and extraordinary expenses for 2007.
Volito increased its ownership in CTT Systems AB (publ) during 2007 and at year-end owned 14.4% of the company’s capital and votes. CTT has continued to develop positively even though Boeing’s delays concerning the B787 aircraft means a deferring of profitability further into the future. Volito sees clear potential in the CTT holding and takes a long-term view of its involvement in the company.
The Volito Fastigheter portfolio grew by the acquisition of a total of five properties for approx. SEK 144.2 million. A profit before tax for the year of SEK 27.0 million (26.5) was reported by the company.
Comments from the CEOThe Volito Group’s three business areas have all developed positively during the year with increased profits as a result. Completion of the transaction regarding VGS Aircraft Holding Ltd (VGS) in Ireland means that Volito realised part of the value growth that has been built up in the company’s aircraft portfolio in recent years. The transaction also involved a substantial risk reduction for the business in the form of a strengthened equity ratio and a further risk diversification of our aircraft portfolio.
The Volito Group, Five-year summary
SEK million 2007 2006 2005 2004 2003
Profit/Loss before tax 600.9 144.5 79.0 30.7 70.7
Adjusted equity 1 518 1 273 935 663 563
Return on adjusted equity, (%) 22 37 42 19 14
Equity ratio, (%) 52 26 23 26 25
Assets 2 748 4 010 3 575 2 267 2 029
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SEK million The Volito Group, adjusted equity
98 99 00 01 02 03 04 05 06 07
The property rental market in the Öresund Region has continued to improve, which means that the company has reduced vacancy levels in its portfolio during 2007. Volito Fastigheter is well positioned to continue benefiting from the positive development in the region, while the expected more moderate value growth in the market in the future ought to provide scope for continued expansion.
Peab AB (publ) distributed its industrial operations to its share-holders during the year. This means that since 1 October Volito owns approximately 5.0% of the capital and approximately 2.5% of the votes in Peab Industri AB (publ). Volito expects that the distribution of Peab Industri will further strengthen conditions for value creation in both Peab companies in the future. Volito also views
the transaction positively because the holding in Peab Industri is considered as a long-term investment, as opposed to the holding in Peab, which continues to be of a strategic character. This, of course, increases our financial flexibility for the future.
Nordkap Bank continued to increase its earnings in 2007. The bank’s profit before tax for the year was CHF 11.5 million (8.8). Nordkap also had success in its efforts to diversify its business model. Considerable revenues are now also generated from arranger and advisory mandates, something that increases the potential for the future as well as spreading the risk in the business.
The turmoil that struck the world’s credit and finance markets in the latter part of the year have not passed without effect. We have noted that
risks are being priced differently today than at the start of 2007. However, we feel that we are in a strong position with positive cash flows in all parts of our business. Furthermore, the transaction with VGS has further diversified the risks in our Group. We therefore feel comfortable with our situation, even if the market conditions we saw in the autumn were to remain for some time in the future.
In conclusion, I would like to express my thanks to our customers, owners, personnel and business partners for the year that has passed with hopes that 2008 shall be yet another successful year.
Sven HolmgrenCEO and President, Volito AB
Sven HolmgrenCEO and President,Volito AB
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VOLITO AVIATION
Aviation
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In late 2006, Volito Aviation signed an agreement with Goldman Sachs concerning the merger of their respective fleets into a jointly owned company, VGS, based in Ireland. This transaction has taken the major part of 2007 to implement and was fully in place at year-end. The transaction brought a realisation of parts of the value that has been built up in recent years within Volito Aviation’s aircraft fleet. This also means the deconsolidation of large parts of Volito’s balance sheet, while Volito Aviation’s exposure is distributed over more aircraft than previously. All these factors have been important driving forces in carrying out the
transaction, as they change the risk profile of the entire business for the future.
In addition to the merger of the existing fleets of Volito and Goldman Sachs, VGS invested USD 393 million in 18 additional aircraft in 2007. These investments were almost exclusively in Airbus 319/320 and Boeing 737 aircraft, i.e. in accordance with the business model that Volito Aviation has applied over a long period.
At year-end, VGS had an aircraft fleet of 44 aircraft plus one engine. These have a total book-value of USD 745 million, liabilities of USD 551
million and an estimated market value of USD 845 million. Narrow-body aircraft make up 96% of the fleet. Furthermore, the portfolio has good diversification in terms of geographical spread in Europe, Central and South America, North America and Asia.
The VGS fleet and Volito’s remaining fleet has been managed since 1 July by Volito Aviation Services AB, a management company with Volito Aviation as principal owner. Aircraft leasing is a complex business in which a smoothly functioning organisation is an absolute requirement for being able to create a return over time that reflects the risks of the business.
High activity levels and good results2007 has been an eventful year for Volito Aviation. VGS Aircraft Holding Limited (VGS) was established in Ireland, investments in new aircraft were made for a total of USD 393 million, six existing leasing agreements were extended and offices were set up in Singapore and Dublin. In addition, the organisation has grown and been reinforced with 17 new members of staff. With these measures, Volito Aviation has further strengthened its position for the future.
Volito Aviation AB, Five-year summary
SEK (USD) million 2007 2006 2005 2004 2003
Revenues 321.6 (46.8) 396.1 (52.9) 210.8 (28.1) 98.9 (13.2) 79.0 (9.7)
Profit before tax 356.9 (45,2) 103.2 (10,.8) 8.8 (1.6) 12.0 (1.3) 29.9 (2.2)
Return on equity, (%) 55,7 26.7 3.1 15.3 16.2
Equity 437.9 (50.5) 259.6 (27.3) 200.3 (21.3) 161.8 (15.0) 141.4 (13.7)
Assets 976.9 (120.6) 2 669.5 (341.8) 2 466.2 (309.6) 1 171.8 (129.6) 777.8 (80.3)
SEK million Profit/Loss before tax
With the recruiting that has taken place during the year, Volito Aviation Services is well manned to ensure the continued success of the business in the future. “Getting Volito Aviation Services and VGS in place have been the main objectives for the year. That we have also been able to expand the VGS portfolio is highly satisfactory. I am very impressed with our staff, who have handled all this in a highly professional way. I feel that we have a strong platform for the future and a well diversified fleet in a segment with robust future demand,” says Sigurdur Kristinsson, CEO of Volito Aviation.
During the year, existing lease agreements were extended for six of the aircraft that are now part of the VGS fleet. Two Airbus 320 aircraft on lease to Indian Airlines have been extended until March 2010. Furthermore, lease egreements with CCM have been extended on two Airbus 319 aircraft until October 2014 and finally two leases with US Airways were extended until March 2010 and 2011. All leases have been extended with good conditions.
Moreover, four older Boeing 737 aircraft, with an average age of 21 years, were sold. A sale during the current year was deemed to generate
a better return than having the aircraft remain in the portfolio. The sale also provided a better balance in the VGS portfolio in terms of risk diversification on aircraft type and lessees. The sale resulted in a capital gain of USD 3.8 million.
Volito Aviation’s profit before tax for 2007 was SEK 356.9 (103.2) million. Of this profit, SEK 289.2 million is attributable to the transaction with VGS. The results for 2006 contained capital gains and settlement of associated maintenance reserves of SEK 32.8 million.
Sigurdur KristinssonCEO, Volito Aviation AB
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Aircraft MSN/year Engine Model Registration Operator Lease Expiry
Fokker 50 20210/1991 PW100-125 PH-FZH Denim Air, The Netherlands Feb 2009
Fokker 50 20252/1992 PW100-125 PH-KXM Denim Air, The Netherlands Feb 2009
Boeing 737-33A 24094/1989 CFM56-3B2 LN-KKS Norwegian Air Shuttle, Norway April 2010
Boeing 737-4C9 25429/1992 CFM56-3C1 YR-BAD Blue Air, Romania March 2012
Boeing 737-4C9 26437/1992 CFM56-3C1 UR-GAV Ukraine International, Ukraine March 2012
Airbus 320-232 0872/1998 IAE V2527-A5 B-6256 Sichuan Airlines, China July 2011
Airbus 320-231 0230/1991 IAE V2500-A1 UR-DAB Donbassaero, Ukraine April 2012
Airbus 319-132 1074/1999 IAE V2524-A5 9V-SBA SilkAir, Singapore April 2010
Airbus 319-132 1098/1999 IAE V2524-A5 9V-SBB SilkAir, Singapore April 2010
Boeing 737-3L9 27061/ 1992 CFM56-3B2 9M-AAG Air Asia, Malaysia March 20 10
Airbus 319-132 1575/2001 IAE V2524-A5 PR-MBI TAM, Brazil March 20 14
Boeing 737-3G7 24009/1988 CFM56-3B1 N302AW US Airways, USA March 2011
Boeing 737-3G7 24010/1988 CFM56-3B1 N303AW US Airways, USA March 2010
Airbus 320-231 0308/1992 IAE V2500-A1 VT-EVS Indian Airlines, India March 2010
Airbus 320-231 0314/1992 IAE V2500-A1 VT-EVT Indian Airlines, India March 2010
Airbus 320-233 0558/1995 IAE V2527E-A5 F-HBAE Aigle Azur, France April 2009
Airbus 320-233 0561/1995 IAE V2527E-A5 F-HBAD Aigle Azur, France March 2009
Boeing 737-71Q 29047/1999 CFM56-7B HP-1369CMP COPA, Panama April 2009
Boeing 737-71Q 29048/1999 CFM56-7B HP-1370CMP COPA, Panama June 2009
Airbus A319-112 0629/1996 CFM56-5B6/2P CS-TTQ TAP, Portugal March 2012
Airbus A319-112 1068/1999 CFM56-5B6/2P F-GYFM CCM, France Nov 2014
Airbus A319-112 1145/1999 CFM56-5B6/2P F-GYJM CCM, France Oct 2014
Boeing 737-4J6 27161/1993 CFM56-3C1 EI-DGL Air One, Italy July 2008
Boeing 737-5Y0 24900/1991 CFM56-3C1 LV-BDV Aerolineas Argentinas, Argentina March 2011
Boeing 737-5Y0 25176/1991 CFM56-3C1 LV-BEO Aerolineas Argentinas, Argentina June 2011
The Aircraft Fleet, December 31st 2007
Brazil
Panama
Argentina
USA
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Aircraft MSN/year Engine Model Registration Operator Lease Expiry
Boeing 737-8K2 28373/1998 CFM56-7B PH-HZA Transavia, The Netherlands Dec 2009
Boeing 737-8K2 28374/1998 CFM56-7B PH-HZB Transavia, The Netherlands Dec 2010
Boeing 737-8K2 28375/ 1998 CFM56-7B PH-HZC Transavia, The Netherlands Dec 2010
Boeing 757-2Y0 26160/ 1993 RB211-535E4 G-FCLJ Thomas Cook, Great Britain April 2013
Boeing 757-2Y0 26161/1993 RB211-535E4 G-FCLK Thomas Cook, Great Britain April 2013
Boeing 767-201ER 23900/1987 CF6-80C2 N248AY US Airways, USA Aug 2009
Boeing 767-201ER 23901/1987 CF6-80C2 N249AU US Airways, USA Aug 2009
Boeing 767-201ER 23902/1988 CF6-80C2 N250AY US Airways, USA Sept 2009
Boeing 767-200ER 26847/1993 CF6-80C2 N256AY US Airways, USA Aug 2009
Airbus A319-112 1102/1999 CFM56-5B6/2P EI-DEY Meridiana, Italy June 2009
Airbus A319-112 1283/2000 CFM56-5B6/2P EI-DEZ Meridiana, Italy March 2009
Airbus A319-112 1305/2000 CFM56-5B6/2P EI-DFA Meridiana, Italy March 2009
Airbus A320-232 1652/2001 IAE 2527-A5 PR-MBQ TAM, Brazil Oct 2013
Airbus A320-232 1802/2002 IAE 2527-A5 PR-MBR TAM, Brazil Feb 2014
Airbus A320-232 1835/2002 IAE2527-A5 PR-MBS TAM, Brazil April 2014
Airbus 320-232 2531/2005 IAE V2527-A5 VT-KFF Kingfisher, India Sep 2012
Airbus 320-214 0426/1993 CFM56-5A EC-KBM Air Comet, Spain Dec 2011
Airbus 321-231 1276/2000 IAE V2531-A5 EC-HPM Spanair, Spain Nov 2014
MD-82 49269/1984 JT8-219 N249AA American Airlines, USA Dec 2013
MD-82 49270/1984 JT8-219 N251AA American Airlines, USA July 2014
Letters of Intent
B737-5Y0 24899/1991 CFM56-3C1 LV-BDD Aerolinas Argentinas, Argentina Feb 2011
B737-3T0 23942/1988 CFM56-3B1 N17356 Continental Airlines, USA Sep 2009
MD-82 49393/1986 JT8D-219 N93EV Aercap, USA Feb 2009
MD-82 49394/1986 JT8D-219 N94EV Aercap, USA Feb 2009
Portugal
Great Britain
Spain
Norway
France
The Netherlands
Romania
Italy
Ukraine
India
Singapore
China
Malaysia
Owned by Volito Aviation AB Owned by VGS
Structure Volito Aviation
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Volito Aviation AB – 100% subsidiary of Volito AB and Volito’s holding company for aircraft leasing
The Goldman Sachs Group Inc – US-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 in which Volito Aviation AB owns 51%
VGS Aircraft Holding Ltd – Joint venture between Volito and Goldman Sachs with an aim to acquire, finance and lease out aircraft. As of 31 December 2007, VGS owned 44 aircraft plus one engine with an estimated market value of USD 845 million
During 2007, Scandinavian Aviation Academy AB turned around the negative earnings trend of 2006. Excluding one-off items, all four companies within the SAA group displayed an improved trend compared with the previous year and the group’s turnover increased by 11% and amounted to SEK 128.3 million (116.1) for 2007.
The integration work that took up a major part of 2006 continued during the year. SAA has become a more integrated group with the advantages that this ought to have over time in
terms of efficient production, marketing and sales.
Major progress has been made at SAAs San Diego operations, which constituted the major challenge of 2006. The number of admissions increased sharply in 2007 and at year-end amounted to around 100 students. The majority of these come from India, where SAA has in a short time established effective channels to secure a stable supply of students for the foreseeable future. A stable management organisation, which
was not in place previously, has been established in San Diego. This has enabled an increase in quality in all parts of the company’s US activities, which guarantees continued stable growth with continuously improved profit as a result.
The company has also had successes in its role as a sales agent for Cessna. A total of 13 aircraft have been sold and the market for small aircraft is expected to remain strong in the coming years and generate continued revenue.
Aviation – additional investments
CTT Systems AB (publ) received further orders for its systems in 2007 from well-reputed customers within the aviation industry. Among the customers that have been active during the year were First Choice, TUI, TAP and MyTravel. The continued orders indicate CTTs established position in the market.
The system deliveries for Boeing’s new model, B787, were delayed during the year, due to the B787 being delayed by around six months. This will mean that CTT’s capital tied up in the project will be higher than planned. In view of this, CTT carried out a share issue in the autumn, which
raised around SEK 40 million after issue expenses. The issue was aimed at CTT’s shareholders and was oversubscribed, despite the tough climate in the finance market at the time of the issue.
In 2007, CTT also acquired one of its larger and most important subcontractors, Bröderna Ingemar och Bo Mekaniska AB (Bribo) in Nybro. Bribo has an engineering workshop and carries out work in sheet metal. The acquisition secures the vital sheet metal working operation for CTT’s forthcoming expansion.
There was a negative development in CTT’s share price during 2007. Overall, the price fell by 35%. In the same period, OMX All Share Index was down 6.0%.
Volito increased its ownership in CTT in 2007 and at year-end owned 1 561 427 shares, which represents 14.4% of the capital and votes in the company. Overall, this means that Volito’s ownership has increased by 2.1% of the capital and votes since the previous year-end. Volito continues to have an enduing belief in the long-term high value growth potential of CTT.
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VOLITO FASTIGHETER
Real Estate
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Volito Fastigheter AB, Five-year summary
SEK million 2007 2006 2005 2004 2003
Rental income including capital gains 92.1 81.5 109.6 94.4 70.2
Profit/Loss before tax 27.0 26.5 56.2 42.2 19.6
Return on equity, (%) 11.3 12.2 28.5 24.7 25.5
Equity 178.4 166.2 148.1 135.8 108.3
Real estate market value 1 185.8 998.6 890.7 764.7 748.0
SEK million, Adjusted equity400
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98 99 00 01 02 03 04 05 06 07
Volito Fastigheter acquired the properties Lastbryggan 2, Skyttel-trafiken 2, Bronsdolken 26 & 27 and Runstenen 16 during 2007. The total area for the five properties is about 11 600 m2. Two of the properties are located in Klagshamn, while three are in the expansive Fosie industrial area. The acquisitions have been made at yield levels between 5.50% and 7.25%.
“It is very satisfactory that we managed to expand our portfolio in 2007. We have again been able to find transactions in which we have seen
a coherent link between yield and risk. All the properties we acquired have a good tenant structure, which bodes well for positive value growth in the long run. The acquisitions have also been in areas where we want to expand in the future, which is also positive,” says Per Hammarström, CEO of Volito Fastigheter.
During the year, the company sold the Skevrodret property, which gave rise to a satisfactory capital gain. The property, with a total area of about 1 700 m2, was not considered to fit in
with Volito Fastigheter’s long-term management strategy. The sale should also be seen as an indication that Volito’s real estate business has now reached such a volume and extent that sales are to be considered a natural part of business activities.
The market in the region remained strong during the year even though the rate of value growth was not as high in 2007 as in previous years. This trend should be seen in the context of the continued rise in market interest rates during the year.
A falling vacancy level in a strong property rental marketVolito Fastigheter expanded its portfolio in 2007 via the acquisition of five properties. A total of SEK 144.2 million has been invested, which means that the company’s portfolio amounted to SEK 1 185.8 million (998.6) at year-end. The acquisitions have been made at satisfactory yield levels for the company. Volito Fastigheter has also been successful on the property rental side, which meant that the company’s vacancy level fell to 11.8 % (12.6%).
PerHammarström,CEO, Volito Fastigheter AB
Distribution of rent by category and m2
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2Offices
Trade
Industry
Residential
Nursery school
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Volito’s portfolio (excluding new acquisitions and sales) generated value growth of 4% (12%) in 2007, and at year-end the market value totalled SEK 1 185.8 million (998.6).
There was continued strong demand for premises during the year. Volito Fastigheter has among other transac-tions entered into rental agreements with Hexagon Polymers AB, Ifacts AB, Malmö LBC AB and Atelier Gyllene Snittet Postorder AB. In addition, important agreements with tenants such as AGA Gas AB and
Svenskt Näringsliv were extended. Overall, the company’s vacancy level decreased and at year-end it was 11.8% (12.6%).
Volito Fastigheter’s profit before tax for 2007 was SEK 27.0 million (26.5). The result for the year contains capital gains totalling SEK 2.9 million (0.0). The return on equity for 2007 was 11.3% (12.2%). Volito Fastigheter expects in the coming years to see a continued stable market in the Öresund Region. Value
growth is not expected to be as strong in the future as in recent years, as the interest rate rises of the past few years will have a dampening effect. However, this will be counterbalanced by a continuing strong and positive trend regarding demand for premises.
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Real Estate Address Area Office Trade Industry Residential Nursery school
Segeholm 10 Ågatan 1 15 199 • • •
Spjutet 2 Garnisonsgatan 14, Helsingborg 6 883 • • •
Diana 28 Engelbrektsgatan 5 902 •
Äpplet 15 Generalsgatan 5 664 • •
Hangaren Flygplansgatan 1-3 2 200 • •
Flygkameran 2 Höjdrodergatan 7-9 1 376 • •
Nejlikebuketten 4 Derbyvägen 6 6 557 •
Medusa 4 Carlsgatan 44 7 201 • •
Medusa 3 Carlsgatan 42 1 300 • •
Utgrunden 7 Aspögatan 1 7 291 • •
Ran 4 Skeppsbron 3 4 019 • •
Flygledaren 7 Hödrodergatan 22 1 971 • •
Härsjön 4 Hålsjögatan 8 3 147 •
Ran 9 Jörgen Kocksgatan 1 7 904 • • •
Ran 8 Skeppsbron 7 1 084 • •
Kupolen 3 Krossverksgatan 7-17 9 970 • •
Aegir 1 Carlsgatan 1 7 610 • •
Lastbryggan 2 Nygårdsvägen 4, Klagshamn 1 158 •Skytteltrafiken 2 Nygårdsvägen 6, Klagshamn 1 730 • •Bronsdolken 26 Stenyxegatan 25 3 423 • •
Bronsdolken 27 Stenyxegatan 25 2 221 • •
Runstenen 15 Käglingevägen 37 3 068 •
Delfinen 17 * Södra Förstadsgatan 4 3 034 • • • •
* OWNED BY VOLITO AB Total Area 99 912
Volito Fastigheter’s real estate holding
Malmö
Klagshamn
Helsingborg
The Annual General Meeting of Peab AB (publ) in May resolved to distribute the industrial operations, Peab Industri AB (publ), to its shareholders. This dividend creates improved possibilities for specialisation and development of both companies, as well as in-creased competitiveness. The aim is to develop the businesses with a focus on profitability and growth in the continuingly robust Nordic construction market.
Volito’s holding in Peab after the transaction stated above consists of 8 600 000 Series B shares in Peab
and 4 300 000 Series B shares in Peab Industri. Volito’s holding represents approx. 5.0% of the capital and approx. 2.5% of the votes in both companies.
For Volito, the holding in Peab continues to be of a strategic character. The company is looking at a number of real estate projects at an early stage that would mean considerable expansion of the company’s real estate activities. All these projects are linked to the close cooperation that exists between Volito and Peab regarding real estate development.
Peab Industri is seen for the present as a long-term investment for Volito. The assessment is that the holding hasgood prerequisites for positive valuegrowth in years to come, while also giving Volito considerable financial flexibility and strength for the future.
The market value for the total holding in both Peab companies at year-end was SEK 819.2 million (698.8), which represents value growth of 17.2% for the year. Including the dividend, value growth was 19.4% for 2007. This can be compared to the OMX All Share Index, which in the same period decreased by 6.0%.
Real Estate – additional investments
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Structured Finance
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Nordkap Bank AG, Five-year summary
CHF million 2007 2006 2005 2004 2003
Profit/Loss before tax 11.5 8.8 8.0 2.1 1.1
Return on equity, (%) 10.6 9.4 9.6 2.6 1.2
Equity 108.2 95.9 88.6 84.4 75.4
Loan and insurance portfolio 573.0 550.1 464.3 389.8 202.4
Distribution of loan and insuranceportfolio per sector
Energy
Industry
Transportation& Telecom
Others
At year-end, Nordkap Bank had a loan portfolio, including loan commitments, totalling CHF 573.0 million. This was an increase of 4.2% compared with the same period for 2006. 99.9% of the bank’s portfolio has an internal credit rating corresponding to at least BB. The average margin in the portfolio was 3.04% at year-end and the bank had no credit losses during the year. Furthermore, the portfolio has a good spread of risk from both geographical and sector perspectives.
The relatively modest portfolio growth during the year is to be seen in the light of the very good economic situation that many of Nordkap’s loan customers, mainly within commodity operations, have experienced over a long period. High commodity prices have generated strong cash flows, which in turn has led to a higher percentage of premature repayments than normal. However, a clear break in this repayment trend could be seen when the credit markets became more restrained after the summer.
Nordkap increased its available financing framework in 2007 to USD 500 million (previously USD 400 million). Financing has been entered into with two of the three banks that have financed Nordkap’s activities in the past. The increase in the bank’s financing scope is a stamp of quality for the developments within Nordkap Bank in recent years.
The bank recruited during the year and also partly reorganised its operations with the continued aim of
Nordkap Bankincreases its profit2007 was a good year for Nordkap Bank. The profit before tax continued to rise, while the bank has also increased its revenues on the advisory side. The autumn’s turmoil in the credit market have not affected Nordkap, as lending operations are mainly aimed directly at projects with good cash flows. In early 2007, Nordkap increased its financing frame-work to a total of USD 500 million and is in a strong position for the future.
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broadening the bank’s revenue sources and moving up the value chain in Nordkap’s chosen sector. As a result of this, an increased percentage of the bank’s future revenues is expected to be generated from an advisory role and own mandates to arrange major financing solutions. This broadening means that the potential of the business rises, while the risks are spread across more sources of revenue. A continued intense focus on costs meant that Nordkap’s cost/income ratio for 2007 was 38.3% (37.6%),
which is well in line with the bank’s long-term aim of a cost/income ratio below 40.0%.
For 2007, Nordkap generated a profit before tax of CHF 11.5 million (8.8). The profit represents an increase of 30.7% compared with the previous year. The return on equity was 10.6% (9.4%).
The bank has a positive view concerning the future development of its business. The business cycle
for large parts of the markets in which Nordkap is active is expected to remain stable for the foreseeable future. Nordkap has set an objective to continue expanding the advisory and arranger side of its business, while the bank also sees good opportunities to continue the development of its lending activities with good profitability.
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Niklaus Hasler,CEO, Nordkap Bank AG
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Board Member
Bo Olsdal, born 1945, Master of ScienceBoard Member of Volito Aviation AB, Volito Fastigheter AB, SAA AB and Ste-Nic AB.
Chairman of the Board
Karl-Axel Granlund, born 1955, Master of ScienceChairman of the Board at Volito Aviation AB, Volito Fastigheter AB, CTT Systems AB (publ) and Avansys AB. Board Member of PEAB AB (publ) and others.
Board Member
Lennart Blecher, born 1955, Bachelor of LawsSenior Partner of EQT. Chairman of the Board at Brunswick Leasing Ltd. Chairman of the Board at Nordkap Bank AG, Zürich. Board Member of Volito Aviation AB, Volito Fastigheter AB and AIG Private Bank, Zürich.
President and CEO
Sven Holmgren, born 1961, Bachelor of LawsBoard Member of Volito Fastigheter AB, Nordkap Bank AG and others. Deputy Board Member of Volito Aviation AB and others.
Vice President and CFO
Anders Wehtje, born 1964, Graduate in Business AdministrationChairman of the Board at SAA AB and Itesco AB. Board Member of Avensia Innovation AB (publ), NSP Holding AB (publ) and others. Deputy Board Member of CTT Systems AB (publ) and others.
Board of Directors and Management
THE GROUP
Annual Report
Administration report
28-30
Consolidated income statement
31
Consolidated balance sheet
32-33
Pledged assets and
contingent liabilities
34
Summary of changes in equity
35
Cash flow statement
36
Supplement to cash flow statement 37-38
Accounting principles and notes
to the accounts
39-51
Signatures
51
Auditors’ report
53
Addresses and definitions
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Administration reportThe business in brief
Volito AB (Corp. ID. No. 556457-4639) is the Parent company in a
Group that operates in the business areas Aviation, Real Estate and
Structured Finance. Aviation includes Volito Aviation (aircraft leasing),
SAA (training) and Volito’s holding in CTT Systems AB (publ). The Real
Estate business area consists of Volito Fastigheter and Volito’s holding
in Peab AB (publ) and Peab Industri AB (publ). Structured Finance
includes Volito’s ownership in Nordkap Bank AG.
Profit before tax for the Parent company amounted to SEK 206.1
million (7.6) and for the Group SEK 600.9 million (144.5). The balance
sheet total for the Parent company at year-end was SEK 1 241.2 million
(985.1) and for the Group, SEK 2 747.9 million (4 010.2). The equity
amounted to SEK 668.0 million (511.5) and SEK 908.9 million (544.8)
for the Parent company and Group respectively.
AviationLeasing – Volito Aviation AB group
Volito Aviation was established in the spring of 2001 as a subsidiary of
Volito AB. The company runs operations in aircraft leasing.
In late 2006, Volito Aviation signed an agreement with Goldman Sachs
concerning the merger of their respective fleets into a jointly owned
company, VGS Aircraft Holding Ltd., based in Ireland. This transaction
has taken the major part of 2007 to implement and was fully in place
at year-end. The transaction brought a realisation of parts of the value
that has been built up in recent years within Volito Aviation’s aircraft
fleet. The transaction also meant the deconsolidation of large parts of
Volito’s balance sheet, while Volito Aviation’s risk exposure is spread
over more aircraft than previously.
In addition to the merger of the existing fleets of Volito and Goldman
Sachs, VGS invested USD 393 million in 18 additional aircraft in 2007.
At year-end, VGS had an aircraft fleet of 44 aircraft plus one engine.
These have a total book-value of USD 745 million, liabilities of USD 551
million and an estimated market value of USD 845 million. Narrow-
body aircraft make up 96% of the fleet. Furthermore, the portfolio
has good diversification in terms of geographical spread in Europe,
Central and South America, North America and Asia.
The VGS fleet and Volito’s remaining fleet has been managed since
1 July by Volito Aviation Services AB, a management company with
Volito Aviation as principal owner.
During the year, existing lease agreements were extended for six of
the aircraft that are now part of the VGS fleet. Two Airbus 320 aircraft
on lease to Indian Airlines have now been extended until March 2010.
Furthermore, lease agreements with CCM have been extended on
two Airbus 319 aircraft until October 2014 and finally two leases with
US Airways were extended until March 2010 and 2011. All leases have
been extended with good conditions.
Moreover, four older Boeing 737 aircraft, with an average age of 21
years, were sold. The sale resulted in a capital gain of USD 3.8 million.
Volito Aviation’s profit before tax for 2007 was SEK 356.9 (103.2)
million. Of this profit, SEK 289.2 million is attributable to the
transaction with VGS. The results for 2006 contained capital
gains of SEK 4.3 million and reversed maintenance reserves of
SEK 28.5 million.
Training – SAA AB group
SAA runs training courses for personnel in the aviation industry,
principally pilots.
SAA AB improved its results before tax in 2007 compared with the
previous year to SEK -5.0 million (-7.3). Excluding one-off items,
all companies within the SAA group displayed an improved trend
compared with 2006 and the group’s turnover increased by 11% and
amounted to SEK 128.3 million (116.1) for 2007.
The integration work that took up a major part of 2006 continued
during the year. SAA has become a more integrated group with the
advantages that this ought to have over time in terms of efficient
production, marketing and sales.
Major progress has been made at SAA´s San Diego operations, which
constituted the major challenge of 2006. The number of admissions
increased sharply in 2007 and at year-end amounted to around
100 students. The majority of these come from India, where SAA
has in a short time established effective channels to secure a stable
supply of students for the foreseeable future. A stable management
organisation, which was not in place previously, has been established
in San Diego. This has enabled an increase in quality in all parts of the
company’s US activities, which guarantees continued stable growth
with continuously improved profit as a result.
The company has also had successes in its role as a sales agent for
Cessna. A total of 13 aircraft have been sold. The market for small
aircraft is expected to remain strong in the coming years and generate
continued revenue.
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 the OMX Nordic Exchange Stockholm.
CTT received further orders for its systems in 2007 from well-reputed
customers within the aviation industry. Among the customers that
have been active during the year were First Choice, TUI, TAP and
MyTravel. The continued orders indicate CTT’s established position in
the market.
The system deliveries for Boeing’s new model, B787, were delayed
during the year, due to the B787 being delayed by around six months.
This will mean that CTT’s capital tied up in the project will be higher
than planned. In view of this, CTT carried out a share issue in the
autumn, which raised around SEK 40 million after issue expenses.
The issue was aimed at CTT’s shareholders and was oversubscribed,
despite the tough climate in the finance market at the time of the issue
In 2007, CTT also acquired one of its larger and most important
subcontractors, Bröderna Ingemar och Bo Mekaniska AB (Bribo) in
Nybro. Bribo has an engineering workshop and carries out work in
sheet metal. The acquisition secures the vital sheet metal working
operation for CTT’s forthcoming expansion.
The share price of CTT developed negatively in 2007. Overall, the price
fell by 35%. In the same period OMX All Share Index was down 6.0%.
Volito increased its ownership in CTT in 2007 and at year-end owned
1 561 427 shares, which represents 14.4% of the capital and votes in
the company. The market value on the total holding amounted to SEK
46.8 million (52.3) at year-end.
Real Estate Volito Fastigheter AB group
Volito Fastigheter is a subsidiary of Volito AB. Volito Fastigheter
acquires and developes real estate in the Öresund region.
Volito Fastigheter acquired the properties Lastbryggan 2,
Skytteltrafiken 2, Bronsdolken 26 & 27 and Runstenen 16 during 2007.
The total area for the five properties is about 11 600 m2. Two of the
properties are located in Klagshamn, while three are in the expansive
Fosie industrial area. The acquisitions have been made at yield levels
between 5.50% and 7.25%.
During the year, the company sold the Skevrodret property, which
gave rise to a satisfactory capital gain. The property, with a total area
of about 1 700 m2, was not considered to fit in with Volito Fastigheter’s
long-term management strategy. The sale should also be seen as an
indication that Volito’s real estate business has now reached such a
volume and extent that sales are to be considered a natural part of
business activities.
The market in the region remained strong during the year even
though the rate of value growth was not as high in 2007 as in previous
years. This trend should be seen in the context of the continued rise in
market interest rates during 2007. Volito’s portfolio (excluding new
acquisitions and sales) generated value growth of 4% (12%) in 2007,
and at year-end the market value totalled SEK 1 185.8 million (998.6).
There was continued strong demand for premises during 2007.
Volito Fastigheter has among other transactions entered into rental
agreements with Hexagon Polymers AB, Ifacts AB, Malmö LBC AB
and Atelier Gyllene Snittet Postorder AB. In addition, important
agreements with tenants such as AGA Gas AB and Svenskt Näringsliv
were extended. Overall, the company’s vacancy level decreased and at
year-end it was 11.8% (12.6%).
Volito Fastigheter’s profit before tax for 2007 was SEK 27.0 million
(26.5). The result for the year contains capital gains totalling SEK 2.9
million (0.0). The return on equity for 2007 was 11.3% (12.2%).
Other holdings – Peab AB (publ) and Peab Industri AB (publ)
Peab and Peab Industri are companies active in the construction and
civil engineering field in the Nordic countries. The shares of the two
companies are listed on the OMX Nordic Exchange Stockholm.
The Annual General Meeting of Peab in May resolved to distribute
the industrial operations, Peab Industri , to its shareholders.
This dividend creates improved possibilities for specialisation and
development of both companies, as well as increased competitiveness.
The aim is to develop the businesses with a focus on profitability and
growth in the continuingly robust Nordic construction market.
Volito’s holding in Peab after the transaction stated above consists of
8 600 000 Series B shares in Peab and 4 300 000 Series B shares in
Peab Industri. Volito’s holding represents approx. 5.0% of the capital
and approx.2.5% of the votes in both companies.
For Volito, the holding in Peab continues to be of a strategic character.
The company is looking at a number of real estate projects at an early
stage that would mean considerable expansion of the company’s
real estate activities. All these projects are linked to the close
cooperation that exists between Volito and Peab regarding real estate
development.
Peab Industri is seen for the present as a long-term investment for
Volito. The assessment is that the holding has good prerequisites
for positive value growth in years to come, while also giving Volito
considerable financial flexibility and strength for the future.
The market value for the total holding in both Peab companies at year-
end was SEK 819.2 million (698.8), which represents value growth of
17.2% for the year. Including the dividend, value growth was 19.4% for
2007. This can be compared to the OMX All Share Index, which in the
same period decreased by 6.0%.
Structured Finance Nordkap Bank AG
Nordkap Bank is a Swiss commercial bank specialising in structured
financing solutions. Volito owns 40% of the shares.
At year-end, Nordkap Bank had a loan portfolio, including loan
commitments, totalling CHF 573.0 million. This was an increase of
4.2% compared with the same period for 2006. 99.9% of the bank’s
portfolio has an internal credit rating corresponding to at least BB.
The average margin in the portfolio was 3.04% at year-end and
the bank had no credit losses during the year. Furthermore, the
portfolio has a good spread of risk from both geographical and
sector perspectives.
The relatively modest portfolio growth during the year is to be seen in
the light of the very good economic situation that many of Nordkap’s
loan customers, mainly within raw material-related operations,
have experienced over a long period. High raw material prices
have generated strong cash flows, which in turn has led to a higher
percentage of premature repayments than normal. However, a clear
break in this repayment trend could be seen when the credit markets
became more restrained after the summer.
Nordkap increased its available financing framework in 2007 to
USD 500 million (previously USD 400 million). Financing has been
entered into with two of the three banks that have financed Nordkap’s
activities in the past.
The bank recruited during the year and also partly reorganised its
operations with the continued aim of broadening the bank’s revenue
sources and moving up the value chain in Nordkap’s chosen sector. As
a result of this, an increased percentage of the bank’s future revenues
is expected to be generated from an advisory role and own mandates
to arrange major financing solutions.
A continued intense focus on costs meant that Nordkap’s cost/income
ratio for 2007 was 38.3% (37.6%), which is well in line with the bank’s
long-term aim of a cost/income ratio below 40.0%.
For 2007, Nordkap generated a profit before tax of CHF 11.5 million
(8.8). The profit represents an increase of 30.7% compared with the
previous year. The return on equity was 10.6% (9.4%).
Other holdingsVolito has ownership shares in AB Nordsidan, Galenica AB, Itesco AB,
St Victor S.a.r.l., Simcenter Copenhagen A/S and a number of other
small companies. The combined value of these holdings for the Group
amounted at year-end to SEK 19.1 million.
Important leasing agreementsVolito Aviation’s aircraft fleet is leased out under operational leasing
agreements. The period during which aircraft are leased out ranges
from one to five years, see note 6.
Volito Fastigheter has a rental rate of 88.2% (87.4%). The breakdown
of rentals is 97% commercial properties and 3% residential. The
commercial rental income is divided between 128 contracts in a
number of different sectors. For more information, see notes 6 and
21. In addition to the real estate within Volito Fastigheter, there is
a property within the Parent company, with 22 contracts divided
between residential (36%) and commercial premises (64%).
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Important events after the end of the financial yearThere are no significant events after the end of the financial year.
Expectations concerning future developmentsSeveral asset classes have displayed very positive value growth
around the world in recent years. These favourable conditions,
together with strong earnings, have contributed to creating strong
growth in the Volito Group’s adjusted equity. The conditions for
similarly strong growth in the next few years are deemed to have
weakened given the current uncertainty surrounding future global
business cycles.
Volito has a positive view on the long-term development of all its three
business areas. Aviation, Real Estate and Structured Finance have
strong cash flows, sound capital structures, competent management
and good market positions, which means good preparedness for
facing an uncertain future. Volito also deems that the uncertainty
concerning future economic developments on a global basis ought
to create business opportunities that favour the Volito Group in the
longer term.
Finance policyThe Volito Group is through its business activities 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 risk management based on the market situation and
macroeconomic information, see note 36.
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. For long-term liabilities that
make up the financing of aircraft, there is no translation at accounting
year-end. Latent exchange rate profits (according to valuation at
the accounting year-end exchange rate) from these loans amount to
SEK 24.0 million. Any latent exchange rate profits or losses released
by disposals are counterbalanced in that aircraft are entered in
the accounts at the original purchase exchange rate. This method
constitutes a far-reaching hedging of the balance sheet for that part of
the Group’s activities which concern aircraft leasing. Latent exchange
rate losses for aircraft amount to SEK 58.0 million. The market value of
the aircraft however exceeds the book value at year end.
Due to the transaction with VGS Aircraft Holding Ltd, the Volito
Group’s profit/loss will be less sensitive to changes in the USD
exchange rate than previously. This is due to the fact that Volito’s
result from VGS is presented as associated company business. In
previous years the leasing activity has been shown as a consolidated
part of the Volito group’s business.
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 foreign subsidiaries 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.
Interest rate exposure
The Volito Group is exposed to changes mainly in short-term interest
rates through its involvement in Volito Fastigheter AB and SAA AB.
Within the Parent company, Volito AB, there is also an exposure
regarding short-term interest rates.
Taken together, the Volito Group’s total loans exposed to short-term
interest rates amount to approx. SEK 560 million. This means that the
Group’s profit before tax is affected by SEK 560 thousand when there
is an increase or decrease in the short-term interest rate of 0.10%.
In 2005, the Volito Group began to manage part of its interest rate
risks using interest rate swaps. Hedging relating to 47% 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 36.
Volitos employeesVolito Group is a relatively small organisation handling capital
intensive investments. The well-being and continuous development of
the Groups employees are hence of vital importance for the long term
prosperity of the company.
Volito uses the employment conditions as the primary tool for
attracting talented people. This includes fixed as well as variable
compensation for major part of the employees within the Group.
There are further a number of different event-like happenings taking
place in the company every year, this in order to further strengthen
the team spirit and loyalty among the people working at Volito
Proposed allocation of the company’s profit The Board of Directors and CEO propose that the profit available for
disposal, SEK 524 981 232.39 is allocated as follows (SEK K):
Bonus issue [1 220 000 shares à nom 100] 122 000
Dividend, [1 220 000 at SEK 33 per share] 40 260
Carried forward 362 721
524 981
The proposed dividend reduces the Group’s equity ratio to 51% from
54%. 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.
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Income Statement The Group The Parent Company
Note Amounts in SEK K 2007 2006 2007 2006
2 Net sales 530 694 550 566 4 478 4 291
3 Income affecting comparability 110 003 – – –
4 Other operating income 15 937 48 310 6 692 4 928
1, 6 656 634 598 876 11 170 9 219
Operating expenses
5 Other external expenses -148 380 -131 121 -12 612 -10 772
7 Personnel costs -91 095 -74 892 -13 673 -11 816
8 Depreciation and write-downs of tangible
and intangible fixed assets -147 697 -165 995 -670 -484
39 Dissolution of negative goodwill – 169 – –
9 Expenses affecting comparability -73 219 – – –
10 Other operating expenses -6 497 -7 093 – -137
Operating profit/loss 189 746 219 944 -15 785 -13 990
Result from financial income and expenses
11 Profit/loss from participations in group companies 11 634 – 12 205 2 092
12 Profit/loss from participations in associated companies -11 500 21 680 -23 640 40
13 Profit/loss from other securities and
receivables held as fixed assets 276 736 20 708 246 573 19 283
14 Interest income and similar income 27 356 46 496 9 095 13 167
15 Interest expenses and similar expenses -142 136 -164 343 -22 386 -12 998
16 Items affecting comparability 249 042 – – –
17 Profit/loss before tax 600 878 144 485 206 062 7 594
18 Taxes -91 607 -20 200 -30 845 3 638
Minority interests’ participation in profit/loss for the year -117 805 -29 159 – –
PROFIT/LOSS FOR THE YEAR 391 466 95 126 175 217 11 232
Balance Sheet The Group The Parent Company
Note Amounts in SEK K 2007-12-31 2006-12-31 2007-12-31 2006-12-31
ASSETS Fixed assets
Intangible fixed assets
19 Other intangible assets 1 680 671 – –
20 Goodwill 4 025 5 681 – –
5 705 6 352 – –
Tangible fixed assets
21 Real estate 892 020 742 573 38 432 32 794
22 Aircraft 280 804 2 545 362 - –
23 Aircraft inventories 573 741 - –
24 Equipment, tools and installations 10 021 9 704 2 977 2 269
Construction in progress and advance
25 payments relating to tangible fixed assets 3 686 16 012 - 5 011
1 187 104 3 314 392 41 409 40 074
Financial fixed assets
26 Participations in group companies – – 535 203 516 121
27 Receivables from group companies – – 74 031 77 213
28 Participations in associated companies 287 525 95 882 18 509 16 440
29 Receivables from associated companies 413 326 89 696 – 21 488
30 Other securities held as fixed assets 544 251 272 075 500 967 257 291
31 Deferred tax assets 47 171 50 235 25 616 16 531
32 Pre-paid borrowing expenses 5 134 27 005 1 10
33 Other long-term receivables 6 076 7 105 625 1 649
1 303 483 541 998 1 154 952 906 743
Total fixed assets 2 496 292 3 862 742 1 196 361 946 817
Current assets
Inventories etc.
Raw materials and necessities 3 081 4 413 8 14
3 081 4 413 8 14
Current receivables
Accounts receivable – trade 7 404 9 605 1 281 7
Receivables from group companies 2 865 19 030 18 996 32 846
Receivables from associated companies 52 902 8 466 19 059 2 901
Income tax receivables 9 664 732 379 377
Other receivables 8 180 24 228 1 905 90
34 Prepaid expenses and accrued income 24 241 20 920 845 866
105 256 82 981 42 465 37 087
35 Short-term investments 998 644 998 644
Cash and bank balances 142 224 59 381 1 377 579
Total current assets 251 559 147 419 44 848 38 324
1 TOTAL ASSETS 2 747 851 4 010 161 1 241 209 985 141
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Balance Sheet The Group The Parent Company
Note Amounts in SEK K 2007-12-31 2006-12-31 2007-12-31 2006-12-31
EQUITY AND LIABILITIES
37 Equity
Restricted equity
Share capital (1 220 000 shares at nom. SEK 100) 122 000 122 000 122 000 122 000
Issue with option 5 005 5 005 5 005 5 005
Restricted reserves/Statutory reserve 80 985 69 497 16 000 16 000
Non-restricted equity
Non-restricted reserves/Profit brought forward 309 490 253 157 349 764 357 293
Net profit/loss for the year 391 466 95 126 175 217 11 232
908 946 544 785 667 986 511 530
Minority interests 228 697 108 972 – –
38 Untaxed reserves
Accumulated accelerated depreciation – – 2 342 2 342
– – 2 342 2 342
Provisions
31 Provisions for deferred taxes 144 766 97 590 44 495 –
10 Other provisions 93 6 065 – –
144 859 103 655 44 495 –
Long-term liabilities
40 Convertible loans – 16 170 – –
41 Other liabilities to credit institutes 504 375 2 174 035 82 106 82 446
43 Other liabilities 33 693 233 611 – 11 249
538 068 2 423 816 82 106 93 695
Current liabilities
41 Liabilities to credit institutes 595 071 615 724 156 991 156 991
42 Bank overdraft facilities 159 467 104 693 138 691 79 679
Advance payment from customers 12 939 5 572 – –
Accounts payable - trade 15 460 21 345 1 760 1 000
Liabilities to Parent company 822 424 822 424
Liabilities to Group companies – – 118 322 131 267
Liabilities to associated companies 23 271 444 240 –
Income tax liabilities 42 455 3 695 – –
Other liabilities 17 422 4 422 12 232 404
44 Accrued expenses and deferred income 60 374 72 614 15 222 7 809
927 281 828 933 444 280 377 574
TOTAL EQUITY AND LIABILITIES 2 747 851 4 010 161 1 241 209 985 141
36
36
36
Pledged Assets and Contingent Liabilities The Group The Parent Company
Amounts in SEK K 2007-12-31 2006-12-31 2007-12-31 2006-12-31
Pledged assets
For own liabilities and provisions
Property mortgages 731 355 646 235 44 000 44 000
Chattel mortgages 36 130 36 330 10 000 10 000
Shares 469 710 239 847 458 886 229 023
Shares in subsidiaries 193 359 199 399 290 030 276 008
Receivables 26 000 26 000 – –
Aircraft mortgages 147 548 1 755 778 – –
Other 1 000 1 000 1 000 1 000
Total pledged assets 1 605 102 2 904 589 803 916 560 031
Contingent liabilities
Guarantees for Group companies – – 55 367 65 797
Guarantees for associated companies 5 400 – 5 400 –
Ongoing tax case relating to claimed deductible deficiency 58 155 56 212 58 155 56 212
Ongoing tax case relating to claimed deductible deficiency 36 224 31 408 – –
Put option – 15 261 – 15 261
Claim for tax-fee capital gain 4 578 7 196 – –
Ongoing tax case relating to claim
for tax-free dividend 7 116 8 810 4 185 5 879
Claim for tax-free dividend – 4 967 – 4 235
Other contingent liabilities 200 1 700 200 5 464
Total contingent liabilities 111 673 125 554 123 307 152 848
The Group
The Swedish Tax Authority has imposed a tax payment on Volito, equivalent to a total cost exposure of SEK 58 (56) million related to the tax assessment
years 2000 and 2001. Volito has appealed against the decision, and the appeal was upheld in the County Administrative Court. The Swedish Tax Authority
has appealed against the County Administrative Court’s decision.
The Swedish Tax Department has filed a claim with the County Administrative Court that the deduction as at 2004-12-31 in an acquired company should
not be permitted in accordance with the Swedish law against tax avoidance. Utilised and valued deductible deficiencies amount to SEK 129 million,
which corresponds to SEK 36 million in deferred taxes.
Since 2001, the Volito Group has received dividends from its Peab shares equivalent to SEK 60.2 (50.3) million. Volito asserts that the holding is
business-contingent, which means the dividends are not taxable. The Swedish Tax Authority has rejected the claim for the years 2001, 2002, 2003,
(2003 only for Kattegat Invest) and 2004. Volito has appealed against this decision, regarding 2001 and 2002 and this appeal has been upheld in the
County Administrative Court. The Swedish Tax Authority has appealed against the County Administrative Court’s decision. Volito deems that the
companies claim will be upheld in a higher instance regarding 2001 and 2002 and that the dividends for 2003 and 2004 will also be exempted from tax.
In December 2007 the Swedish Tax Authority conceded that the holding is business-contingent for 2005, which means that the dividend for that year
is not to be taxed. Volito’s opinion is that there is a strong likelihood that the Swedish Tax Authority will also grant tax-free status to the dividends for
2006 and 2007, which means that the dividends for these years are not reported as a contingent liability.
A similar line of argument also applies to the capital gains the company made from the sales of Peab shares in 2004.
The Parent Company
The Swedish Tax Authority has imposed a tax payment on Volito, equivalent to a total cost exposure of SEK 58 million (56) related to the tax
assessment years 2000 and 2001. Volito has appealed against the decision, and the appeal was upheld in the County Administrative Court.
The Swedish Tax Authority has now appealed against the County Administrative Court’s decision.
Since 2001, Volito AB has received dividends from its Peab shares equivalent to SEK 44.9 million (36.6). Volito asserts that the holding is business-contingent,
which means the dividends are not taxable. The Swedish Tax Authority has rejected the claim for the years 2001, 2002 and 2004. Volito has appealed against
this decision, regarding 2001 and 2002 and this appeal has been upheld in the County Administrative Court. The Swedish Tax Authority has appealed against
the County Administrative Court’s decision. Volito deems that the companies claim will be upheld in a higher instance regarding 2001 and 2002 and that the
dividends for 2004 will also be exempted from tax. In December 2007 the Swedish Tax Authority conceded that the holding is business-contingent for 2005,
which means that the dividend for that year is not to be taxed. Volito’s opinion is that there is a strong likelihood that the Swedish Tax Authority will also grant
tax-free status to the dividends for 2006 and 2007, which means that the dividends for these years are not reported as a contingent liability.
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Summary of Changes in Equity The Group The Parent Company
Restricted Non-restricted Restricted Non-restricted
Amounts in SEK K Share capital reserves equity Share capital reserves equity
Balance carried forward according to
balance sheet of 31 December 2005 61 000 60 302 347 819 61 000 21 005 429 471
Movements between unrestricted
and restricted equity – 22 891 -22 891 – – –
Profit/loss for the year – – 95 126 – – 11 232
Dividend – – -12 200 – – -12 200
Bonus issue 61 000 – -61 000 61 000 – -61 000
FX/translation diff for the year – -8 691 1 429 – – –
Group contribution – – – – – 1 420
Tax effects on Group contribution – – – – – -398
Equity as of 31 December 2006 122 000 74 502 348 283 122 000 21 005 368 525
Movements between unrestricted
and restricted equity – 10 133 -10 133 – – –
Profit/loss for the year – – 391 466 – – 175 217
Dividend – – -30 500 – – -30 500
FX/translation diff for the year – 1 355 1 840 – – –
Group contribution – – – – – 16 304
Tax effects on Group contribution – – – – – -4 565
Equity as of 31 December 2007 122 000 85 990 700 956 122 000 21 005 524 981
Note 37 contains further information on equity.
Cash Flow Statement The Group The Parent Company
Amounts in SEK K 2007-12-31 2006-12-31 2007-12-31 2006-12-31
Operating activities
Profit/loss after financial income and expenses 600 878 144 485 206 062 7 594
Adjustments for items not included in cash flow, etc -374 260 102 398 -208 105 -13 726
226 618 246 883 -2 043 -6 132
Income taxes paid -11 949 -333 -518 475
Cash flow from operating activities before
changes in working capital 214 669 246 550 -2 561 -5 657
Cash flow from changes in working capital
Increase(-)/Decrease(+) in inventories 1 332 -1 926 6 -14
Increase(-)/Decrease(+) in current receivables 15 537 -41 655 -7 687 -4 499
Increase(+)/Decrease(-) in current liabilities -5 669 123 584 11 345 -5 464
Cash flow from operating activities 225 869 326 553 1 103 -15 634
Investment activities
Acquisition of subsidiaries -33 513 -7 441 – -6 557
Disposal of subsidiaries 12 371 – 240 132
Acquisition of intangible fixed assets -1 482 -424 – –
Acquisition of tangible fixed assets -98 764 -470 554 -2 005 -6 489
Disposal of tangible fixed assets 386 884 76 267 – 104
Investments in financial assets -408 301 -160 707 -49 340 -160 642
Disposal of financial assets 16 398 20 402 28 068 24 902
Cash flow from investment activities -126 407 -542 457 -23 037 -148 550
Financing activities
Proceeds from borrowing 157 868 630 694 83 348 285 280
Repayment of borrowing -145 899 -407 992 -30 116 -118 261
Dividends paid -30 500 -2 305 -30 500 -2 305
Cash flow from financing activities -18 531 220 397 22 732 164 714
Cash flow for the year 80 931 4 493 798 530
Liquid funds at beginning of period 59 381 56 375 579 49
Exchange rate difference in liquid funds 1 912 -1 487 – –
Liquid funds at end of period 142 224 59 381 1 377 579
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Supplement to Cash Flow Statement The Group The Parent Company
Amounts in SEK K 2007-12-31 2006-12-31 2007-12-31 2006-12-31
Interest paid and dividends received
Dividends received 15 737 9 764 29 177 8 339
Interest received 4 153 4 020 349 640
Interest paid -135 909 -144 643 -17 754 -8 646
Adjustments for items not included in the cash flow, etc
Less: Profit participation in associated companies -12 242 -21 640 – –
Dividends from subsidiaries – – -9 550 -2 200
Depreciation and write-downs of fixed assets 147 697 165 826 670 484
Depreciation of prepaid loan expenses 34 921 14 181 9 9
Write-downs of assets 59 374 14 55 574 14
Reversed write-downs -1 019 -1 065 -1 019 -1 065
Unrealised exchange rate differences 5 472 3 502 -2 472 -1 008
Gains/losses from disposal of fixed assets 70 108 -4 387 – 25
Gains/losses from disposal of financial fixed assets 2 781 -13 918 8 783 -10 093
Gains/losses from sale of subsidiaries -11 979 – – 108
Other provisions 28 6 065 – –
Cost reduction in interest on participating loan – -3 764 – –
Reversed maintenance reserves -106 940 -42 416 – –
Dividend, Peab Industri AB -292 400 – -260 100 –
Exchange profit on payment of loans -270 061 – – –
-374 260 102 398 -208 105 -13 726
Acquisition of subsidiaries and other business units
Acquired assets and liabilities:
Intangible fixed assets – 318 – –
Tangible fixed assets 78 498 10 453 – –
Operating receivables 2 011 9 571 – –
Liquid funds 2 719 808 – –
Total assets 83 228 21 150 – –
Minority liabilities – 4 476 – –
Provisions – 1 200 – –
Loans 44 468 5 358 – –
Operating liabilities 2 528 1 867 – –
Total provisions and liabilities 46 996 12 901 – –
Purchase price paid 36 232 8 249 – –
Less: Liquid funds in the acquired operations -2 719 -808 – –
Effect on liquid funds (minus=increase) 33 513 7 441 – –
Supplement to Cash Flow Statement The Group The Parent Company
Amounts in SEK K 2007-12-31 2006-12-31 2007-12-31 2006-12-31
Disposal of subsidiaries and other business units
Disposal of assets and liabilities:
Operating receivables 2 247 – – –
Liquid funds 130 – – –
Total assets 2 377 – – –
Operating liabilities 1 855 – – –
Total provisions and liabilities 1 855 – – –
Purchase price received 12 501 – – –
Less: Liquid funds in disposed-of operations -130 – – –
Effect on liquid funds 12 371 – – –
Liquid funds
The following components are included in liquid funds:
Cash and bank balances 142 224 59 381 1 377 579
Unutilised credit facilities
Unutilised credit facilities amount to SEK 66 029 K (120 803) for the Group and SEK 16 788 K (78 554) for the Parent Company.
Investments
Investments made that can be considered to have raised the operation’s capacity level amount to SEK 98.8 million.
The year’s investments in tangible fixed assets amount to SEK 2.0 million.
Other transactions that have not affected cash flow
In conjunction with the Volito Group’s sale of the major part of its aircraft fleet to VGS Aircraft Holding Ltd the loan linked to these aircraft has
also been transferred to VGS. In total the sales proceeds amounted to SEK 2 050 million, of which SEK 1 436 million has been applied against
transferred loans and SEK 237 million has been contributed as equity in the newly formed VGS. The net sum received from the transaction
amounted to SEK 377 million.
Amounts in SEK K 2007-12-31 2006-12-31 2007-12-31 2006-12-31
Change in net debt
Net debt at beginning of period 2 753 726 2 530 611 320 504 165 440
Proceeds from new interest-bearing borrowings 157 868 630 694 83 348 285 280
Reclassifications – – – -10 261
Repayment of interest-bearing borrowings -145 899 -407 992 -30 116 -118 261
Unrealised FX rate differences in interest-bearing borrowings 116 -5 243 -694 -6 956
Loan transferred to VGS Aircraft Holding -1 436 479 – – –
Realised FX rate differences due to the VGS-transaction -270 061 – – –
Other changes in interest-bearing borrowings 43 273 2 496 -17 166 -1 476
Investment in new interest-bearing assets -408 301 – – –
Disposal/reduction of interest-bearing assets 16 398 2 783 -240 7 151
Unrealised FX rate differences in interest-bearing receivables 4 798 5 948 -1 778 5 948
Other changes in interest-bearing assets 56 623 -2 565 25 416 -5 831
Changes in liquid funds -82 843 -3 006 -798 -530
Net debt at end of period 689 219 2 753 726 378 476 320 504
Accounting principles and notes to the accountsSums are in SEK K, unless otherwise stated.
General accounting principlesThe Annual Accounts have been drawn up in accordance with the Swedish Annual Accounts Act and 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, and to some parts of RR 8 – for more information see “Foreign currency translation of foreign subsidiaries.” Due to the transaction with VGS this exception will not be topical in the future.
The accounting principles are unchanged in comparison with the previous year.
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.
Reporting on segmentsThe primary basis for classification of the Group’s segments is the lines of business; Aviation, Real Estate and Structured Finance.
Classification, etcFixed 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, etcAssets, 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: The Group Parent companyBalanced expenditure for development and similar work 5 years 5 yearsSoftware 5 years –Goodwill 5 years _
Depreciation principles for tangible fixed assetsDepreciation 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: The Group Parent companyBuildings 100 years 100 yearsEquipment, tools, and installations 5 years 5 yearsComputer equipment 3–5 years 3–5 years
AircraftProportional 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 used in training operation are written off over 15 years. The length of life of engines is based on the number of flying hours, and depreciation of these stems from the number of utilised flying hours.
Loan chargesAmortisation 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.
Write-downsThe book 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 book 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. 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 book value does not exceed the book value that would have been shown, with a deduction for the depreciation, if there was to be no write-down.
ReceivablesAfter individual valuation, receivables have been reported at the sum at which they are calculated to be received.
Receivables and debts denominated in foreign currenciesReceivables and debts 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.
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.
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.
InventoriesInventories, 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 investmentsShort-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 holdingsOther long-term securities holdings are valued at the acquisition value. In those cases where the market value is lower than the book value, the potential need for a write-down is checked in accordance with the above-mentioned principle.
Other long-term receivables are valued at the sum at which they are calculated to be received.
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 employeesBenefit-based pensions:Pensions for just over 40 of the Group’s employees have been secured through insurance with Alecta. According to a pronouncement of the Emerging Issues Task Force, URA 42, this is a benefit-determined plan that covers several employers. The company has not had access to such information for the financial years 2004 to 2007 that would make it possible to report this plan as a benefit-determined plan. The pension plan according to ITP, which is secured through insurance with Alecta, is therefore reported as a contribution-determined plan.
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. The obligations are calculated without discounting, except in those cases where they do not in their entirety fall due for payment within 12 months after the end of the period during which the employees carry out the related services.
TaxThe 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 transactionis 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 and associated companies 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.
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Accounting of incomeAccounting of income is done 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.
Remuneration in the form of interest/royalties/dividends due to another’s use of the company’s assets is reported as income when it is likely that the economic benefits that are associated with the transaction go to the company and that they can be calculated in a reliable way. Dividends are reported when the shareholder’s right to receive the payment is assessed as secure.
Leasing – lesseesRecommendation 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.
For the Group and Parent company, all leasing agreements are reported according to the rules for operational leasing. There are no significant financial leases.
Consolidated financial statements The consolidated financial statements have been prepared according to recommendation RR 1:00 of the Swedish Financial Accounting Standards Council.
SubsidiariesSubsidiaries 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.
GoodwillGoodwill 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.
Negative goodwillNegative goodwill arises when the acquisition value of participations on acquiring the subsidiary is less than the actual value of the acquired company’s identifiable net assets. If the negative goodwill that arises relates to future costs or future losses, the negative goodwill is accounted for as a provision in the balance sheet and is resolved in line with the costs (losses) that arise. If instead the negative goodwill arises due to other reasons, the negative goodwill is accounted for as a provision in the balance sheet to the extent that it does not exceed the actual value of the acquired identifiable non-monetary assets. That part which exceeds this value is immediately taken up as income. That part of negative goodwill that does not exceed the actual value of acquired identifiable non-monetary assets is taken up as income in a systematic way over a period that is calculated as the remaining balanced average period of utilisation for the acquired identifiable assets that are depreciable.
Associated companiesShareholdings in associated companies, 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. The equity method means that the value of shares in the associated company booked in the Group corresponds to the Group’s participation in the equity of the associated company as well as any residual value in the Group’s overall surplus value or under value. The Group’s participation in the associated company’s profit/loss after tax adjusted for any amortization or resolution of acquired surplus or under value is reported in the Consolidated income statement as “Participation in associated companies’ profit/loss”. Profit shares built up after the acquisition of associated companies that have not yet been realised through dividends are allocated to the Group’s restricted equity. In cases where associated companies make losses, these are included in the Group’s non-restricted equity.
The associated companies, Nordkap Holding AG and 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 GroupReceivables and debts 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 company. Unrealised profits arising as a result of transactions with associated companies are eliminated in “Participations in associated companies”. 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 abroadThe 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.
VGS Aircraft Holding Ltd, Volito AG, SAA Inc., Twinair SA and SimCenter A/S are translated according to the current method.
In principle, the monetary method means that monetary assets and liabilities are translated at the accounting year-end exchange rate, whereas non-monetary items and corresponding items in the income statement are translated at the exchange rates on the dates of the transactions. Other profit/loss items are translated at the average exchange rate. Differences in exchange rates that arise are included in the year’s profit/loss.
Currency translation of the Volito Aviation group’s foreign subsidiaries, which are run as independent units, has been carried out according to the monetary method. This principle follows the Group’s finance policy. As all operations in these companies have now been transferred to VGS, translation according to the monetary method is not applicable as of 31 December 2007.
The method gave a fair impression of the company’s view of the currency risks that the foreign operations were exposed to. In addition, a strict application of the Swedish Financial Accounting Standards Council’s recommendation No. 8 has the effect that the translation would not be applied in a uniform way, as aircraft leasing operations, which are USD-based would be translated differently depending on the country in which operations were run. Profit/loss from aircraft leasing operations will in the future be mainly reported via associated company accounts.
Comparative EntriesThe Swedish Financial Accounting Standards Council’s recommendation no 4 has been applied, which means that the affect on the results produced by certain events and transactions of significance have been specified with the relevant income concept.
Group contributions and shareholders’ contributionsThe company reports Group contributions and shareholders’ contributions according to the pronouncements of the Emerging Issues Task Force of the Swedish Financial Accounting Standards Council.
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 that can be likened to 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 that can be likened to 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 recommendationsThe Volito Group has chosen to follow the recommendations of the Swedish Financial Accounting Standards Council. The changes that have taken place during the year are the result of the greater part of the aircraft leasing business now lying under VGS and, as a result of this, the business area is accounted for on the basis of the current exchange rate.
Information about the GroupThe company is a subsidiary of AB Axel Granlund, corporate identity number 556409-6013 with its registered office in Malmö. AB Axel Granlund owns 82.1% (81.1%) of the share capital and votes in the Volito Group and prepares the Consolidated accounts for the largest Group.
Of the Group’s total purchases and sales in Swedish kronor, only a negligible amount of sales apply to other companies within the whole group of companies to which the Group belongs.
Of the Parent company’s total purchases and sales in Swedish kronor, 26% (13%) and 64% (52%) apply to other companies within the whole group of companies to which the company belongs.
Information about acquisitions and disposals during the periodAll the employees of Volito Avation AB were transferred during the year to the newly created company Volito Aviation Services AB. The company is a management company with responsibility for VGS and Volito Aviation’s remaining aircraft fleet. 20% of the shares have been sold during 2007 to Goldman Sachs with a capital gain of SEK 12 million as a result.
Volito Fastigheter acquired three companies in 2007. The purchase price for KB Snickaren, Agatel AB and Fosiestenen AB amounted to SEK 36 million.
Related partiesThe GroupThe Group is owned by AB Axel Granlund 82.1%, as well as Lennart Blecher (partly through companies) 9.0%, and Bo Olsdal (partly through companies) and family 8.9%.
Parent companyIn 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 26.
Related party transactions The GroupThe 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.
In late 2007, Volito AB acquired all AB Axel Granlund’s shares and receivables in Cartela AB. In total this was 2 946 shares and a receivable of SEK 2.4 million. Volito paid SEK 17.8 million for the shares and SEK 2.4 million for the receivable. The transaction was based on a mutual option agreement entered into between Volito AB and AB Axel Granlund when AB Axel Granlund acquired all Volito’s shares in Cartela in 2006.
With associated companiesAs of 31 December 2007, associated companies had a debt to the Volito Group of SEK 466.2 (98.2) million. The largest item relates to a loan that Volito Cyprus Holding made to VGS Aircraft Holding Ltd for SEK 344.3 million 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 of SEK 69.0 million. Transactions with associated companies are priced according to market conditions.
With key employees During 2004, Volito AB issued two promissory notes combined with separable op-tions, which entitles subscription for new shares in Volito AB. Each option gives the
owner the right to subscribe for one share in Volito AB during the period 1–30 April 2009. In total the promissory notes are combined with 100 000 options. The promissory notes were subscribed for by the CEO and the CFO of Volito AB.
In January 2007, Volito AB acquired a convertible promissory note issued by Volito Aviation AB. The holder of the promissory note was Melgaard Invest ApS, a company controlled by Jan Melgaard who until 31 January 2007 was CEO for Volito Aviation AB. The convertible promissory note carried the right of conversion to 110 000 shares in Volito Aviation AB. The promissory note was acquired according to market conditions.
Volito Aviation has issued two convertible promissory notes to the CEO and CFO of Volito Aviation Services AB. The promissory notes have a nominal value of 26.4 MSEK and 5.1 MSEK respectively and carry the right of conversion to 64 315 and 12 343 shares respectively in Volito Aviation AB. The promissory notes have been issued according to market conditions.
For salaries and other remuneration, expenses and obligations concerning pensions and similar benefits, agreements concerning severance payments as well as loans to the Board and the CEO, see note 7.
Companies in which key individuals from the Volito group has a board positionDuring the year Volito Fastigheter AB aquired two properties from Peab AB (publ) for the total amount of approximately 62 MSEK. The properties are located in Klagshamn in the vicinity of Malmö. The transaction was carried out on arm’s length terms.
During the year the Volito group has purchased good and services from Avansys AB for a total value of 1 MSEK. Further, an agreement was entered into with Avansys by which Avansys provides certain companies within the Volito group with IT support. All transactions between the Volito group and Avansys have been conducted on arm’s length terms.
Important events after accounting year-endThere have been no events of considerable significance after accounting year-end.
Note 1 Information on lines of business Primary segment Aviation Real Estate Structured Finance Other Elimination Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
IncomeExternal sales 451 038 512 222 95 182 86 295 – – 411 359 – – 546 631 598 876Income affecting comparability 110 003 – – – – – – – – – 110 003 –Internal sales – – 176 – – – 6 710 4 569 -6 886 -4 569 – –
Total income 561 041 512 222 95 358 86 295 – – 7 121 4 928 -6 886 -4 569 656 634 598 876
Profit/loss Profit/loss per line of business 158 892 192 138 49 202 45 120 -209 -229 -18 139 -17 085 – – 189 746 219 944
Operating profit/loss 158 892 192 138 49 202 45 120 -209 -229 -18 139 -17 085 – – 189 746 219 944
Interest expenses -97 203 -134 496 -31 261 -23 757 -2 906 -2 324 -18 439 -11 720 7 595 7 954 -142 214 -164 343Interest income 19 307 31 690 3 484 7 022 3 142 2 571 9 096 13 167 -7 595 -7 954 27 434 46 496Profit participations/dividends 16 495 10 519 273 050 9 675 10 080 19 642 -22 755 2 552 – – 276 870 42 388Items affecting comparability 249 042 – – – – – – – – – 249 042 –Tax expenses for the year -47 598 -7 320 -56 973 -10 646 – – 12 964 -2 234 – – -91 607 -20 200
Profit/loss before minority interests 298 935 92 531 237 502 27 414 10 107 19 660 -37 273 -15 320 – – 509 271 124 285Minority interests -118 022 -30 336 217 1 177 – – – – – – -117 805 -29 159
Net profit/loss for the year 180 913 62 195 237 719 28 591 10 107 19 660 -37 273 -15 320 – – 391 466 95 126
Aviation Real Estate Structured Finance Other Elimination Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
Other informationAssets 872 005 2 748 884 1 032 850 888 113 92 626 79 931 59 229 69 800 -140 635 -144 524 1 916 075 3 642 204Equity share/ securities 215 519 22 810 501 807 243 807 100 333 88 784 14 117 12 556 – – 831 776 367 957
Total assets 1 087 524 2 771 694 1 534 657 1 131 920 192 959 168 715 73 346 82 356 -140 635 -144 524 2 747 851 4 010 161
Liabilities/provisions/minority interests 611 928 2 483 031 1 011 353 831 154 74 713 64 809 281 545 230 906 -140 635 -144 524 1 838 904 3 465 376
Total liabilities 611 928 2 483 031 1 011 353 831 154 74 713 64 809 281 545 230 906 -140 635 -144 524 1 838 904 3 465 376
Investments in tangible assets 24 338 447 187 73 457 22 110 – – 969 1 400 – -143 98 764 470 554Depreciation of tangible assets -136 945 -156 330 -8 359 -7 601 – – -261 -167 – – -145 565 -164 098Costs, exceeding depreciation, not matched by payments -107 596 -20 041 -533 -674 – – – – – – -108 129 -20 715
Secondary segments (geographic markets), SEK million Sweden Rest of Europe Asia USA South and Central America Total 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
External sales 230 666 182 363 173 965 212 074 80 992 106 472 24 101 34 873 36 907 63 094 546 631 598 876
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 con-form 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.
Costs, exceeding depreciation, not matched by payments, contains of depreciation of prepaid loan expenses and capital loss on sold tangible assets.
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The segments’ profit/loss, assets and liabilities (including provisions) include directly attributable items and items that can be allocated to the segments in a reasonable and reliable way. The segments’ investments in tangible fixed assets include all investments, except investments in short-term inventories and inventories of minor value.
Lines of businessLines of business constitute the Group’s primary basis for classification. The Group consists of the following lines of business, which follow the structure described in the administration report:AviationReal EstateStructured FinanceOther holdings: Volito’s other holdings and other items that are not included in any of the above.
Geographical marketsGeographical markets make up the Group’s secondary basis for classification. The information presented relating to the segment’s income refers to the geographical areas grouped according to where customers are localised.
Note 2 Net turnover breakdown 2007 2006
The Parent companyNet turnover by main types of incomeReal Estate 4 478 4 291
Note 3 Income affecting comparability 2007 2006
The GroupSettlement of maintenance reserves for sold aircraft 106 940 –Other income affecting comparability 3 063 –
110 003 –
Note 4 Other operating income 2007 2006
The GroupCapital gains from sale of fixed assets 3 111 4 458Exchange rate differences 2 826 1 123Guarantee reserve 855 –Income from administration 402 313Maintenance compensation within aircraft leasing 7 097 42 416Other 1 646 –
15 937 48 310
The Parent companyIncome from administration 5 837 4 882Guarantee reserve 855 –Capital gains from sale of fixed assets – 46
6 692 4 928
In conjunction with Volito Aviation’s disposal of one of its aircraft in 2006, maintenan-ce reserves corresponding to SEK 28.5 million were recovered for the Group. Other income linked to maintenance reserves have been gained through changes of lessee.
Note 5 Auditing: fees and expenses 2007 2006
The GroupÖHRLINGS PRICEWATERHOUSECOOPERS
Audit assignments 458 2 140Other assignments 27 40KPMG
Audit assignments 1 341 18Other assignments – 40OTHER AUDITORS
Audit assignments 124 126
The Parent companyÖHRLINGS PRICEWATERHOUSECOOPERS
Audit assignments – 363Other assignments – 2KPMG
Audit assignments 325 –Other assignments – 4
Note 6 Leasing fees related to operational leasing 2007 2006
The GroupAgreed future leasing income with reference to non-revocable contracts in the aviation business due for payment: Within one year 43 423 283 350 Between one and five years 99 490 621 725 Later than five years – 64 107
142 913 969 182
Important leasing agreementsAviationIn 2001, Volito Commuter KB acquired two Fokker 50 aircraft, which are leased to De-nim Air B.V. The leasing agreement runs until the end of February 2009.
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 the end of April 2010.
In 2003, Volito Aviation Deux Lux AB acquired two Boeing 737-4C9 aircraft. In Decem-ber 2006, a new leasing agreement was signed for one of the aircraft with Blue Air of Rumania until the end of March 2012. 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 USD 1 = SEK 6.4675 (previous year: USD 1 = SEK 6.8725).
Real EstateAccording to the contract portfolio at year-end, rental income in the Volito Fastig-heter group and Volito AB was divided between 97% commercial properties and 3% residential. The commercial rental income, including real estate within Volito AB, was divided between 142 contracts in a number of different sectors. With the aim of limi-ting 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.
The contract portfolio for commercial premises in the Volito Group expires as below. The stated amounts refer to contracted closing rents in the portfolio.
2007 2006
Within one year 11 074 15 176Between one and five years 67 282 56 769Later than five years 18 241 7 292
96 597 79 237
Note 7 Staff and personnel costs
of which, of which, Average number of employees 2007 men 2006 men
Parent companySweden 7 43% 7 43%
SubsidiariesSweden 74 73% 68 76%USA 35 74% 20 75%Switzerland 9 78% 9 78%Ireland 3 0% – 0%Other 2 100% 1 100%
Total in subsidiaries 123 77% 98 74%
Group total 130 71% 105 74%
Gender distribution in 2007 2006company management Percentage of women Percentage of women
The Group and Parent companyBoard of Directors 0% 0%Other executive managers 0% 0%
Salaries, other remuneration and social security expenses 2007 2006 Salaries and Social security Salaries and Social security remuneration expenses remuneration expenses
Parent company 8 529 4 924 6 767 4 297(of which, pension costs) 1) (1 505) 1) (1 391)Subsidiaries 52 892 17 188 48 985 14 678(of which, pension costs) (3 740) (3 485)
Total for the Group 61 421 22 112 55 752 18 975(of which, pension costs) 2) (5 245) 2) (4 876)
1) Of the Parent company’s pension costs, SEK 882 K (previous year: SEK 774 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 1 781 K (previous year: SEK 2 211 K) refers to the group: Board and CEO. The Group has no outstanding pension obligations to them.
The subsidiary SAA has signed pension insurance for just over 40 employees with Alecta and Collectum. All other employees in the Group have individual pension insu-rance, which is contribution-based.
According to a pronouncement from the Emerging Issues Task Force, URA 42, ITP plans at Alecta are a benefit-determined plan that covers several employers. It is a si-milar case for Collectum. The company has not had access to such information for the financial year 2007 that would make it possible to report these plans as benefit-deter-mined plans. The pension plan according to ITP, which is secured through insurance with the above-mentioned companies, is therefore accounted for as a contribution-determined plan.
Salaries and other remuneration by country and between Board Members etc. and the other employees 2007 2006 Board Other Board Other and CEO employees and CEO employees
Parent company Sweden 2 697 5 832 1 860 4 907
Subsidiaries Sweden 7 084 31 154 7 573 29 848
Subsidiaries abroad USA 608 5 652 34 3 892Switzerland 655 3 849 1 864 4 691Denmark – 868 1 083 –Ireland – 2 514 – –Singapore – 508 – –
Subsidiaries total 8 347 44 545 10 554 38 431
Group total 11 044 50 377 12 414 43 338
Of the salaries and remuneration paid to the other members of staff in the Group, SEK 1 580 K (SEK 1 350 K) refers to leading executive managers other than the Board and the CEO.
Severance paymentsAgreements have been signed with executive managers regarding severance payments amounting to between six months’ and one year’s salary.
Absence due to illnessAs there are only 7 people employed by the parent company there is no obligation to account for absence due to illness.
Note 8 Depreciation and write-downs of tangible and intangible fixed assets 2007 2006
The GroupOther intangible assets -476 -241Goodwill -1 656 -1 656Real estate -8 296 -7 554Aircraft -135 144 -154 869Aircraft inventories -168 -168Equipment, tools and installations -1 957 -1 507
-147 697 -165 995
The Parent companyReal estate -409 -317Equipment, tools and installations -261 -167
-670 -484
Note 9 Items/expenses affecting comparability 2007 2006
The GroupCapital losses from disposal of aircraft -73 219 –
Note 10 Other operating expenses 2007 2006
The GroupExchange losses on receivables/liabilities of an operating nature -497 -953Provision for acquisition of promissory notes in excess of nominal amount -6 000 -6 000Capital loss – -137Other – -3
-6 497 -7 093
The Parent company Capital losses – -137
Note 11 Profit/loss from participations in Group companies 2007 2006
The GroupCapital gain/loss from disposal of participations 11 979 –Other -345 –
11 634 –
The Parent companyDividends received 24 550 2 200Acquisition of convertible promissory note -12 000 –Other -345 –108
12 205 2 092
Note 12 Profit/loss from participations in associated companies 2007 2006
The GroupDividend – 40Capital gain/loss from disposal of participations and receivables 618 3 825Write-downs of receivables -4 404 –Bankruptcy -19 956 –Profit participations in associated companies’ profit/loss for the year 12 242 17 815
-11 500 21 680
The Parent company Dividend 102 40Capital gain/loss from disposal of participations 618 –Write-downs of receivables -4 404 –Bankruptcy -19 956 –
-23 640 40
Note 13 Profit/loss from other securities andreceivables that are fixed assets 2007 2006
The GroupDividend 308 107 9 675Capital gain/loss from disposal of participations and receivables 2 519 9 982Write-downs -34 909 -14Reversed write-downs 1 019 1 065
276 736 20 708
The Parent companyDividend 274 144 8 250Capital gain/loss from disposals 2 519 9 982Write-downs -31 109 -14Reversed write-downs 1 019 1 065
246 573 19 283
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Note 14 Interest income and similar profit/loss items 2007 2006
The GroupInterest income, Group companies 104 120Interest income, others 6 280 5 729Exchange rate difference 20 863 36 724Cost reduct. in interest on profit partic. loan – 3 763Profit/loss on short-term investments 79 111Dividend from short-term investments 30 49
27 356 46 496
The Parent companyInterest income, Group companies 3 457 2 926Interest income, others 1 493 1 792Exchange profit 4 036 8 289Profit/loss from short-term investments 79 111Dividends 30 49
9 095 13 167
A major part of the exchange profit, SEK 17.1 million (28.), is attributable to Volito Aviation, as the foreign subsidiaries have been translated according to the monetary method.
Note 15 Interest expenses and similar profit/loss items 2007 2006
The GroupInterest expenses, Group companies – -40Interest expenses, others -127 359 -149 203Amortisation on prepaid borrowing expenses -13 902 -14 181Exchange rate difference -57 -352Other -818 -567
-142 136 -164 343The Parent companyInterest expenses, Group companies -4 405 -5 145Interest expenses, others -17 077 -7 277Amortisation on prepaid borrowing expenses -9 -9Other -895 -567
-22 386 -12 998
No interest expenses have been set up as assets in the acquisition value of the assets
Note 16 Income and expenses items affecting comparability 2007 2006
The Group Exchange profit from repayment of loan 270 061 –Amortisation on prepaid borrowing expenses -21 019 –
249 042 –
The loan was repaid in conjunction with the Group selling its aircraft to VGS.
Note 17 Exch. rate differences that have affected the profit/loss 2007 2006
The GroupExchange rate differences that have affected operating profit/loss 2 329 170Financial exchange rate differences 20 806 36 372Financial exchange rate differences, affecting comparability 270 061 –
293 196 36 542
The Parent companyFinancial exchange rate differences 4 036 8 289
Note 18 TaxThe GroupTax 2007 2006
Current tax -41 916 -4 156Deferred tax -49 691 -16 044
Total reported tax expenses -91 607 -20 200
The Parent companyTax 2007 2006
Deferred tax -30 845 3 638
Total reported tax expenses -30 845 3 638
Reconciliation of effective tax rate 2007 2006The Group Per cent Amount Per cent Amount
Profit/loss before tax 600 878 144 485Tax according to the current tax rate for the Parent company 28.0% -168 246 28.0% -40 456Effect of other tax rates for foreign subsidiaries -7.1% 42 754 -9.5% 13 700Depreciation on group wise goodwill 0.1% -464 0.3% -416Non-deductible expenses 3.1% -18 821 1.4% -2 077Tax-exempt income -15.6% 93 921 -4.7% 6 741Previously unassessed deductible deficiency -1.6% 9 370 -4.0% 5 801Tax relating to previous years 0.0% 167 4.2% -6 018Temporary differences 8.6% -51 612 0.0% –Unreported tax on associated companies’ profits -0.2% 1 354 -1.7% 2 525Other 0.0% -30 0.0% 0
Reported effective tax 15.2% -91 607 14.0% -20 200
Reconciliation of effective tax rateThe Parent company Per cent Amount Per cent Amount
Profit/loss before tax 206 062 7 594Tax according to the current tax rate for the Parent company 28.0% -57 697 28.0% -2 126Non-deductible expenses 9.3% -19 225 4.0% -301Tax-exempt income -41.4% 85 268 -75.6% 5 740Tax relating to previous years -0.1% 134 1.8% -138Previously unassessed deductible deficiency -2.5% 5 201 -6.1% 463Temporary differences 21.6% -44 495 0.0% –Other 0.0% -31 0.0% –
Reported effective tax 15.0% -30 845 -47.9% 3 638
Tax items charged to equity 2007-12-31 2006-12-31
The Parent companyEstimated tax in received/ submitted Group contributions 4 565 398
Note 19 Other intangible assets 2007-12-31 2006-12-31
The Parent companyAccumulated acquisition valuesAt beginning of year 1 936 1 206New acquisitions 1 482 424Acquisitions of subsidiaries – 316Translation differences for the year 3 -10
At year-end 3 421 1 936
Accumulated depreciation according to planAt beginning of year -1 265 -1 024Depreciation according to plan for the year -476 -241
At year-end -1 741 -1 265
Reported value at end of period 1 680 671
The item mainly consists of computer software set up as an asset.
Note 20 Goodwill 2007-12-31 2006-12-31
The GroupAccumulated acquisition valuesAt beginning and end of year 8 282 8 282 Accumulated depreciation according to planAt beginning of year -2 601 -945Depreciation according to plan for the year -1 656 -1 656
-4 257 -2 601
Reported value at end of period 4 025 5 681
Note 21 Real Estate 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 830 357 808 441New acquisitions 64 394 1 137Acquisitions of subsidiaries 80 948 9 532Sales/disposals -7 167 –Reclassifications 21 307 11 358Exchange rate differences for the year 271 -111
990 110 830 357
Accumulated depreciation according to plan At beginning of year -87 784 -80 230Acquisitions of subsidiaries -2 493 –Sales/disposals 483 –Depreciation according to plan for the year -8 296 -7 554
-98 090 -87 784
Reported value at end of period 892 020 742 573
Of which, landAccumulated acquisition values 103 151 84 422
2007-12-31 2006-12-31
The Parent company Accumulated acquisition valuesAt beginning of year 35 452 35 027New acquisitions 1 036 425Reclassifications 5 011 –
41 499 35 452 Accumulated depreciation according to planAt beginning of year -2 658 -2 341Depreciation according to plan for the year -409 -317
-3 067 -2 658
Reported value at end of period 38 432 32 794 Of which, landAccumulated acquisition values 4 371 4 371
The Group The Parent company
Reported value at end of periodReal estate 879 738 38 432Buildings and land 12 282 –
892 020 38 432
Accrued rebuilding costs relating to properties classified as real estate are entered under the item on-going new construction, extensions or rebuilding.
2007-12-31 2006-12-31
The Group 3 686 16 012The Parent company – 5 011
Information on actual value of real estate 2007-12-31 2006-12-31
The GroupAccumulated actual valueAt beginning of year 1 078 600 947 700At year-end 1 267 800 1 078 600
The Parent companyAccumulated actual valueAt beginning of year 80 000 57 000At year-end 82 000 80 000
On 31 December 2007, the company carried out an internal 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 1 267.8 million (1 078.6). The value is calculated as a yield at an average 6.3%% (6.2%).
The value assessment has been checked by authorised real estate valuers regarding, market rents, value levels and key ratios.
Real Estate - Effect on profit/loss for the period 2007-12-31 2006-12-31
The GroupRental income 92 466 86 295Direct costs for real estate that generated rental income during the period (operational and maintenance costs, property tax and ground rent) -24 433 -24 684
The Parent companyRental income 4 478 4 291Direct costs for real estate that generated rental income during the period (operational and maintenance costs, property tax and ground rent) -1 296 -878
2007-12-31 2006-12-31 The Group Tax assessment value, buildings (in Sweden) 485 919 309 588Tax assessment value, land (in Sweden) 126 524 128 735
The Parent companyTax assessment value, buildings (in Sweden) 29 000 16 352Tax assessment value, land (in Sweden) 9 469 8 362
The tax assessment values above refer in their entirety to the Group’s real estate.Other buildings and land are not assigned a tax assessment value.
Borrowing expensesNo capitalised interest has been included in the acquisition values.
LeasingProperties leased under operational leasing contracts are included with the following amounts: 2007-12-31 2006-12-31
The GroupAcquisition values 977 143 817 760Accumulated depreciation at beginning of year and acquired subsidiaries -87 347 -80 040Depreciation for the year -8 049 -7 492Depreciation on acquired properties -2 493 –Depreciation on sold properties 484 –
879 738 730 228
Parent companyAcquisition values 41 500 35 452Accumulated depreciation at beginning of year -2 659 -2 341Depreciation for the year -409 -317
38 432 32 794
The contract portfolio for commercial premises within the Volito Group as of 31 December 2007 expires according to the table below. Stated amounts refer to cont-racted closing rents in the portfolio.
The Group 2007-12-31 2006-12-31
Within one year 11 074 15 176Between one and five years 67 282 56 769Later than five years 18 241 7 292
96 597 79 237
Counterparty risks in rental incomesAccording to the contract portfolio at year-end, rental income was divided between 97% commercial properties and 3% residential. The commercial rental income was divided between 142 (122) 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.
Note 22 Aircraft 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 2 931 226 2 563 950New acquisitions 22 536 444 149Sales/disposals -2 521 307 -82 718Reclassifications – 7 429Exchange rate differences for the year -576 -1 584
431 879 2 931 226
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2007-12-31 2006-12-31
Accumulated depreciation according to planAt beginning of year -385 864 -240 277Sales/disposals 369 666 8 511Depreciation according to plan for the year -135 144 -154 869Exchange rate differences for the year 267 771
-151 075 -385 864
Reported value at end of period 280 804 2 545 362
LeasingAircraft that are leased under operational leasing contracts are included with the following amounts:
2007-12-31 2006-12-31
The GroupAcquisition values 382 205 2 878 743Accumulated depreciation at beginning of year -366 431 -222 727Depreciation for the year -130 603 -150 504Depreciation on sold aircraft 367 053 6 800
252 224 2 512 312
The period’s leasing income amounts to: 310 151 348 277
Future leasing income that relates to non-revocable operational leasing contracts falls due for payment as below:
2007-12-31 2006-12-31
The Group Within one year 43 423 283 350Between one and five years 99 490 621 725Later than five years – 64 107
142 913 969 182
The greater part of leasing income is USD-based. Translation has been done at the accounting year-end exchange rate of USD 1 = SEK 6.4675 (previous year: USD 1 = SEK 6.8725).
Note 23 Aircraft inventories 2007-12-31 2006-12-31
KoncernenAccumulated acquisition valuesAt beginning and end of year 1 174 1 174
Accumulated depreciation according to plan At beginning of year -433 -265Depreciation according to plan for the year based on acquisition values -168 -168
-601 -433
Reported value at end of period 573 741
Note 24 Equipment, tools and installations 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 16 628 12 477New acquisitions 2 853 4 184Acquisitions of subsidiaries 72 1 223Sales/disposals -1 639 -479Exchange rate differences for the year -234 -777
17 680 16 628
Accumulated depreciation according to planAt beginning of year -6 924 -6 127Acquisitions of subsidiaries -26 -114Sales/disposals 1 082 351Depreciation according to plan for the year based on acquisition values -1 957 -1 507Exchange rate differences for the year 166 473
-7 659 -6 924
Reported value at end of period 10 021 9 704
The Parent company Accumulated acquisition valuesAt beginning of year 3 656 3 083New acquisitions 969 1 052Sales/disposals – -479
4 625 3 656
Accumulated depreciation according to planAt beginning of year -1 387 -1 571Sales/disposals – 351Depreciation according to plan for the year based on acquisition values -261 -167
-1 648 -1 387
Reported value at end of period 2 977 2 269
Borrowing expensesNo capitalised interest has been included in the acquisition values.
LeasingInventories obtained through financial and operational leasing agreements amount to insignificant sums.
Note 25 Construction in progress and advances with respect to tangible fixed assets 2007-12-31 2006-12-31
The GroupAt beginning of year 16 012 6 286Reclassifications -21 307 -11 358Investments 8 981 21 084
Reported value at end of period 3 686 16 012
The Parent companyAt beginning of year 5 011 –Reclassifications -5 011 –Investments – 5 011
Reported value at end of period – 5 011
Borrowing expensesNo capitalised interest has been included in the acquisition values.
Note 26 Participations in Group companies 2007-12-31 2006-12-31
Accumulated acquisition valuesAt beginning of year 526 021 519 703Purchases – 6 557Submitted shareholders’ contribution 19 322 –Sales -240 -240
545 103 526 020
Accumulated write-downs At beginning of year -9 900 -9 899
-9 900 -9 899
Reported value at end of period 535 203 516 121
Note 26 continued.List of the Parent company’s and Group’s participations in Group companies 2007-12-31 2006-12-31 Share Reported Reported Subsidiary/Corp. ID no./Registered office No. of shares in % 1) value value
Volito Aviation AB, 556603-2800, Malmö 1 222 000 100.0 173 788 173 788 Volito South Pacific AB, 556004-0452, Malmö 100.0 Volito Altitude Partner AB, 556627-7280, Malmö 100.0 Volito Altitude KB, 916539-3852, Malmö 100.0 Volito Leisure Partner AB, 556631-7987, Malmö 100.0 Volito Aviation Leisure KB, 916543-6115, Malmö 100.0 Volito Commuter KB, 916550-3872, Malmö 100.0 Volito Aviation Camilla HB, 969707-4418, Malmö 100.0 Volito Aviation Annika HB, 969688-2647, Malmö 100.0 Volito Aviation Cornelia HB, 969707-7387, Malmö 100.0 Volito Aviation November 2003 AB, 556604-0498, Malmö 100.0 Volito Aviation Deux Lux AB, 556604-0506, Malmö 100.0 Volito Aviation Finance AB, 556435-2952, Malmö 100.0 Volito Aviation Christine AB, 556585-5326, Malmö 100.0 Volito Overseas AB, 556507-0223, Malmö 100.0 Volito Aviation Services AB, 556673-5782, Malmö 100.0 Volito Aviation AG, CH – 170.3.027.511-0, Zürich 51.0 Volito Cyprus Holding Ltd, HE 17 34 83, Limassol Regana Company Ltd, Cyprus HE 15 27 14, Limassol Bragina Company Ltd, Cyprus HE 15 36 54, Limassol Gribanova Company Ltd, HE 15 50 87, Limassol Volito Aviation Management AB, 556663-9646, Malmö Volito Malaysian Holding AB, 556662-7609, Malmö Volito TakeOff Ltd, HE 15 83 17, Limassol Volito Global Ltd, HE 16 27 53, Limassol Volito Universal Ltd, HE 16 29 51, Limassol Volito Aviation Malaysian Ltd, LL 04516, Labuan Volito Sunrise Ltd, HE 17 08 88, Limassol Volito Cirrus Ltd, HE 16 72 95, Limassol Volito Aviation Ltd, 324448, Dublin, Ireland 100.0 Cryfield Ltd, 324614, Dublin, Ireland 100.0
Volito Fastigheter AB, 556539-1447, Malmö 423 000 100.0 290 030 276 008 Volito Fastighetsutveckling AB, 556375-6781, Malmö 100.0 Volito Fastighetsförvaltning AB, 556142-4226, Malmö 100.0 Fastighetsbolaget Flygledaren HB, 916760-2035, Malmö 100.0 HB Ran Förvaltning, 916766-5224, Malmö 100.0 Volito Fastighetskupolen AB, 556629-1117, Malmö 100.0 Fastighets AB Centralposthuset i Malmö, 556548-1917, Malmö 100.0 Volito Leisure AB, 556541-9164, Malmö 100.0 KB Snickaren 208, 969684-1023, Malmö 100.0 Volito Agatel AB, 556677-1472, Malmö 100.0 Volito Fosiestenen AB, 556690-0873, Malmö 100.0
Kattegat Invest AB, 556381-1388, Malmö 6 500 100.0 638 638BF Scandinavian Aviation Academy AB,556182-0910, Västerås 50 000 100.0 19 609 14 309 Scandinavian AirTech AB, 556522-7849, Borlänge 100.0 Hangarbolaget i Bromma AB, 556267-2369, Västerås 100.0 Bromma Flygskola AB, 556129-1880, Västerås 100.0 Scandinavian Aviation Academy Inc, San Diego 100.0 Twinair SA, Lausanne, Switzerland 67.4
Volito 2001 AB, 556599-8217, Malmö 11 000 100.0 3 145 3 145SimCenter A/S, Copenhagen, Denmark 51.0 6 196 6 196Volito AG, CH-170.3.026.619-3, Zug, Switzerland 100 100.0 40 596 40 596Other subsidiaries, dormant 1 201 1 441
535 203 516 1211) Refers to the share of the capital, which also agrees with the share of votes for the total number of shares.
Note 27 Receivables in the Group companies 2007-12-31 2006-12-31
The Parent companyAccumulated acquisition valuesAt beginning of year 77 213 82 386Reclassifications -4 000 –Exchange rate differences for the year 818 -5 173
Reported value at end of period 74 031 77 213
Note 28 Participations in associated companies 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 97 880 90 514Less: bankruptcy -17 761 –Purchases 264 322 102Maintenance provision against equity in associated companies -89 659 –Sales/Conversions -2 218 -8 721Participations in the profit/loss of associated companies for the year 12 242 17 815Capital gains/losses 618 3 825Reclassifications 19 288 600Exchange rate differences for the year 4 811 -6 255
289 523 97 880Accumulated write-downsAt beginning of year -1 998 -1 998
-1 998 -1 998
Reported value at end of period 287 525 95 882
The Parent company Accumulated acquisition valuesAt beginning of year 18 438 28 057Purchases 2 142 102Less: bankruptcy -17 761 –Sales -1 600 -10 321Reclassifications 19 288 600
20 507 18 438Accumulated write-downs At beginning of year -1 998 -3 598Write-downs connected to sold participations – 1 600
-1 998 -1 998
Reported value at end of period 18 509 16 440
List of the Parent company’s and Group’s participations in associated companies 2007-12-31 Shares Proportion of Reported Associated company /no. as equity’s value value in / Corp. ID no. Reg. office Market value % 1) in the Group the Parent
Directly ownedSaint Victor s.a.r.l. 433 613 676, France 40.0 – –Galenica AB, 556567-7449, Malmö 20.1 1 929 5 377Itesco AB, 556574-0759, Stockholm 24.1 1 162 4 814DMH Ltd, 165299, Ireland 40.0 679 17AB Nordsidan, 556058-3212, Malmö 45.0 6 579 8 301
Indirectly ownedNordkap Holding AG,CH-170.3.026.601- 4, Switzerland 40.0 100 333 Nordkap Bank AG, CH-020.3.907.391-5, Switzerland –Nordkap Energy Holding AG, CH-170.3.026.601-4, Switzerland 50.0 – VGS Aircraft Holding Ltd, 43005, Dublin, Ireland 25.5 176 843
287 525 18 509
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List of the Parent company’s and Group’s participations in associated companies 2006-12-31 Shares Proportion of Reported Associated company /no. as equity’s value value in / Corp. ID no. Reg. office Market value % 1) in the Group the Parent
Directly owned Saint Victor s.a.r.l. 433 613 676, France 40.0 – –Galenica AB, 556567-7449, Malmö 20.1 2 079 5 377Itesco AB, 556574-0759, Stockholm 24.1 1 188 4 814DMH Ltd, 165299, Ireland 40.0 710 17AB Nordsidan, 556058-3212, Malmö 90.0 2 923 5 632Bokks AB, 556623-2137, Malmö 30.0 198 600 Indirectly ownedNordkap Holding AG,CH -170.3.026.601- 4, Switzerland 40.0 88 784 Nordkap Bank AG, CH-020.3.907.391-5, Switzerland –
95 882 16 440
Shares in profits from associated companies are shown in the Consolidated income statement on the line “Profit/loss from participations in associated companies.”
1) Refers to owned share of the capital, which also corresponds with the share of the votes for the total number of shares as per 31 of December 2007. On 31 of December 2006 Volito owned 90% of the capital and 47% of the votes in AB Nordsidan.
Note 29 Receivables in associated companies 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 94 696 96 685Less: bankruptcy -2 195 –Additional receivables 344 300 3 960Reclassifications -25 253 –Exchange rate differences for the year 1 778 -5 949
413 326 94 696Accumulated write-downsAt beginning of year -5 000 -5 000Write-downs for the year -4 404 –Reclassifications 9 404 –
– -5 000
Reported value at end of period 413 326 89 696
The Parent company Accumulated acquisition valuesAt beginning of year 26 488 23 304Less: bankruptcy -2 195 –Additional receivables – 3 960Reclassifications -25 253 –Exchange rate differences for the year 960 -776
– 26 488Accumulated write-downsAt beginning of year -5 000 -5 000Write-downs for the year -4 404 –Reclassiifcations 9 404 –
Reported value at end of period – 21 488
Note 30 Holdings in other long-term securities 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 279 712 128 873Additional assets 18 513 157 062Additional assets, Peab Industri AB 292 400 –Deductible assets -7 065 -6 223Reclassifications/conversions 2 218 –
585 778 279 712Accumulated write-downsAt beginning of year -7 637 -8 702Reversed write-downs during the year 1 019 1 065Write-downs for the year -34 909 –
-41 527 -7 637
Reported value at end of period 544 251 272 075
The Parent companyAccumulated acquisition valuesAt beginning of year 259 279 108 440Additional assets 18 513 57 062Additional assets, Peab Industri AB 260 100 –Deductible assets -7 065 -6 223Reclassifications/conversions 2 218 –
533 045 259 279Accumulated write-downsAt beginning of year -1 988 -3 053Reversed write-downs during the year 1 019 1 065Write-downs for the year -31 109 –
-32 078 -1 988
Reported value at end of period 500 967 257 291
Note 30 continuedThe Group Market value 2007-12-31 Market value 2006-12-31List of securities or equivalent Number of shares Reported value or equivalent Number of shares Reported value
Peab AB (publ) 574 050 8 600 000 239 847 698 750 4 300 000 239 847Peab Industri AB (publ) 245 100 4 300 000 258 000 – – –CTT Systems AB (publ) 46 843 1 561 427 38 678 52 282 1 103 000 22 810Bear Stearns (funds) 2 205 – 1 938 2 648 – 1 938GFA Domain de Brescou – 218 1 059 – 218 1 568Båstadtennis & Hotell AB – 18 333 3 960 – 18 333 3 960Other – – 769 – – 1 952
544 251 272 075The Parent Company Market value Market value List of securities or equivalent Number of shares Reported value or equivalent Number of shares Reported value
Peab AB (publ) 510 638 7 650 000 229 023 621 562 3 825 000 229 023Peab Industri AB (publ) 218 025 3 825 000 229 500 – – –CTT Systems AB (publ) 46 843 1 561 427 38 678 52 282 1 103 000 22 810Bear Stearns (funds) 2 205 – 1 938 2 648 – 1 938GFA Domain de Brescou – 218 1 059 – 218 1 568Other – – 769 – – 1 952
500 967 257 291
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Not 31 Deferred tax Deferred Deferred tax recoverable taxes liabilities Net
The Group 2007Accelerated depreciation Real estate – 23 787 -23 787 Aircraft – 50 526 -50 526 Machinery and inventories – 136 -136Group surplus value Real estate – 19 855 -19 855 Aircraft 104 445 -341Temporary differences Financial fixed assets – 51 612 -51 612Other – 1 417 -1 417Deductible deficiency 50 079 – 50 079
50 183 147 778 -97 595Offset -3 012 -3 012 –
Net deferred tax liabilities 47 171 144 766 -97 595
The Group 2006Accelerated depreciation Real estate – 21 087 -21 087 Aircraft – 52 935 -52 935Group surplus value Real estate – 20 127 -20 127 Aircraft – 1 838 -1 838Other – 4 987 -4 987Deductible deficiency 53 619 – 53 619
53 619 100 974 -47 355Offset -3 384 -3 384 –
Net deferred tax liabilities 50 235 97 590 -47 355
The Parent company 2007Temporary differences – 44 495 -44 495Deductible deficiency 25 616 – 25 616
Net deferred tax liabilities 25 616 44 495 -18 879
Moderbolaget 2006Deductible deficiency 16 531 – 16 531
Net deferred tax liabilities 16 531 – 16 531
The change in the Parent company between years has been shown as deferred tax ex-penses/income, except those amounts that according to note 37 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 purcha-se price. All deferred taxed have been valued at a nominal amount on 31 December 2007 (the same applies for the previous year).
Unreported deferred recoverable taxesDeductible temporary differences and fiscal deductible deficiencies for which deferred recoverable taxes have not been reported in the income statement and balance sheet:
2007-12-31 2006-12-31
Fiscal deficit 9 396 23 375
Deferred recoverable taxes have not been reported for these items, as it appears unlikely that the Group will utilise them for settlement against future taxable profits within the next three years.
Note 32 Prepaid borrowing expenses 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 65 717 54 568Additional items 2 845 15 321Settled items -55 690 -4 172Exchange rate differences for the year -18 –
12 854 65 717
Accumulated amortisationAt beginning of year -26 530 -16 342Settled items 55 670 3 995Amortisation for the year -13 862 -14 183Extra amortisation in conjunction with settlement of prepaid borrowing expenses -21 019 –Exchange rate differences for the year 12 –
-5 729 -26 530 Prepaid borrowing expenses 7 125 39 187 Reported value at year-end, long-term component 5 134 27 005Reported value at year-end, short-term component 1 991 12 182
7 125 39 187
Note 33 Other long-term receivables 2007-12-31 2006-12-31
The Group Accumulated acquisition valuesAt beginning of year 7 462 9 284Additional receivables via acquired subsidiaries – 56Additional receivables 653 163Settled receivables -36 -2 043Reclassifications -1 649 –Exchange rate differences for the year 3 2
6 433 7 462Accumulated write-downs At beginning of year -357 -357
Reported value at year-end 6 076 7 105
The Parent companyAccumulated acquisition valuesAt beginning of year 1 649 1 649Additional receivables 625 –Reclassifications -1 649 –
Reported value at year-end 625 1 649
Note 34 Prepaid expenses and accrued income 2007-12-31 2006-12-31
The Group Short-term comp. of prepaid borrowing expenses 1 991 12 182Prepaid expenses 5 632 4 834Accrued income 15 074 2 673Accrued interest income 1 347 1 081Accrued expenses compensation 197 150
24 241 20 920
The Parent company Short-term comp. of prepaid borrowing expenses 9 9Prepaid expenses 376 369Accrued interest income 310 338Accrued income 150 150
845 866
Note 35 Short-term investments
The Group and Parent company 2007-12-31 2006-12-31List of Market value Reported Market value Reported securities or equivalent value or equivalent value
Listed participations 1 060 998 780 644
Note 36 Finance policy
Finance policyThrough its operations, the Volito Group is exposed to various types of financial risks.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 risk management based on the market situation and macroeconomic information.
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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 Interest % or less years years Total
Real estateSEK 681 740 See below 405 965 126 625 149 150 681 740SEK 7 824 Nbu +0.45 256 1 024 6 544 7 824SEK 6 400 Nbu +0.55 200 800 5 400 6 400SEK 3 465 NSSu +1.5 660 2 640 165 3 465SEK, credit line 1 711 1 711 – – 1 711SEK 155 875 NSSU + 0.8% 155 875 – – 155 875AviationUSD 4 141 6.9% 10 687 28 630 – 39 317USD 6 234 7.2% 7 943 35 757 2 058 45 758USD 6 342 7.3% 7 810 37 090 1 649 46 549SEK 13 289 Stib + 2.9% 3 408 9 831 – 13 239SEK 30 600 4.0% 2 267 11 335 16 998 30 600OtherSEK, credit line 17 892 NSSU+0.65 17 892 – – 17 892SEK, credit line 76 932 NSSU+0.8 76 932 – – 76 932USD, credit line 6 783 USDU+0.8 43 867 – – 43 867SEK, credit line 19 065 NBU + 1% 19 065 – – 19 065DKK 2 477 – 3 147 – 3 147CHF 5 750 4.3% – 32 766 – 32 766CHF 5 750 3.5% – 32 766 – 32 766
754 538 322 411 181 964 1 258 913
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.
Due to the transaction with VGS Aircraft Holding Ltd, the Volito Group’s profit/loss will be less sensitive to changes in the USD exchange rate than previously. This is due to the fact that Volito’s result from VGS is presented as an associated company business. In previous years the leasing activity has been shown as a consolidated part of the Volito Group’s business.
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 diffe-rences related to translation of foreign subsidiaries 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.
Interest risksThe Volito Group is exposed to changes mainly in short-term interest rates though its involvement in Volito Fastigheter AB and SAA AB. Within the Parent company, Volito AB, there is also an exposure relating to short-term interest rates.
Taken together, the Volito Group’s total loans that are exposed to short-term interest rates is approx. SEK 560 million. This means that the Group’s profit before tax is af-fected by SEK 560 K from any increase or decrease in the short-term interest rate by 0.10%.
During 2005, the Volito Group began to manage part of its interest rate risks by using interest rate swaps. The hedging relating to 47% 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 320 268 K (179 150). As of 31 December, the fixed interest rates varied from 2.28% (2.28 %) to 4.71% (4.13 %) and the floating interest rates are STIBOR 3 months for borrowing in SEK.
Financial exposure – outstanding derivativesThe Group 2007-12-31 2006-12-31Liabilities Loan amount Market value Loan amount Market value
Interest rate swaps 320 268 9 095 179 150 4 954
There are no derivatives accounted for in the balance sheet at the year-end. The market value has been accounted as if the contracts had been closed at the year-end.
At accounting year-end there are no derivative instruments reported in the balance sheet. Actual value has been calculated as the expenses/income that would have ari-sen if the contract 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.
1 year Nominal amount Interest % or less 1-5 years >5 years Total
SEK, interest rate swap 27 530 4.1% – 27 530 – 27 530SEK, interest rate swap 7 765 2.3% 7 765 – – 7 765SEK, interest rate swap 41 295 2.8% – 41 295 – 41 295SEK, interest rate swap 27 530 3.1% – – 27 530 27 530SEK, interest rate swap 27 530 3.3% – – 27 530 27 530SEK, interest rate swap 4 000 4.1% – – 4 000 4 000SEK, interest rate swap 12 500 4.1% – – 12 500 12 500SEK, interest rate swap 25 000 4.1% – – 25 000 25 000SEK, interest rate swap 22 000 4.4% – – 22 000 22 000SEK, interest rate swap 40 000 4.5% – – 40 000 40 000SEK, interest rate swap 15 168 4.3% – 15 168 – 15 168SEK, interest rate swap 15 000 4.4% – – 15 000 15 000SEK, interest rate swap 15 700 4.7% – 15 700 – 15 700SEK, interest rate swap 39 250 4.7% – – 39 250 39 250
320 268 7 765 99 693 212 810 320 268
Note 37 Equity Share Restricted Non-restricted capital reserves equity
The GroupBalance carried forward according to balance sheet of 31 December 2005 61 000 60 302 347 819
Transfers between non-restricted and restricted equity 22 891 -22 891Profit/loss for the year 95 126Dividend -12 200Bonus issue 61 000 – -61 000Translation difference for the year – -8 691 1 429
Equity on 31 December 2006 122 000 74 502 348 283
Transfers between non-restricted and restricted equity 10 133 -10 133Profit/loss for the year 391 466Dividend -30 500Translation difference in equity – 1 355 1 840
Equity on 31 December 2007 122 000 85 990 700 956
Share Restricted Non-restricted capital reserves equity
The Parent companyBalance carried forward according to balance sheet of 31 December 2005 61 000 21 005 429 471
Profit/loss for the year 11 232Dividend -12 200Bonus issue 61 000 – -61 000Group contributions 1 420Tax effect on group contributions -398
Equity on 31 December 2006 122 000 21 005 368 525
Profit/loss for the year 175 217Dividend -30 500Group contributions 16 304Tax effect on group contributions -4 565
Equity on 31 December 2007 122 000 21 005 524 981
Issue with option During 2004, Volito AB issued two promissory notes combined with separable op-tions, which entitles subscription for new shares in Volito AB. Each option gives the owner the right to subscribe for one share in Volito AB during the period 1–30 April 2009. In total the promissory notes are combined with 100 000 options. If all options are converted they will amount to 7.57% of the total number of shares in Volito AB.
Number of issued shares Fully paid Not fully paid Nominal amount
Class B shares 1 220 000 – 100
Disclosure of accumulated exchange rate differences in foreign operations has been done from the beginning of 1999.
Specification of accumulated exchange rate difference in equity: 2007-12-31 2006-12-31
Acc exchange rate difference at beginning of year -5 365 1 897Exch rate diff for the year in foreign subsidiaries 1 366 -7 163Exch rate diff for the year in foreign ass companies 1 829 -99
Accumulated exchange rate difference at year-end -2 170 -5 365
The Board of Directors and CEO propose that of disposable standing profit, SEK 40 260 000 is distributed to shareholders.
Note 38 Untaxed reserves 2007-12-31 2006-12-31
The Parent companyAccumulated depreciation in excess of plan:Real estate 2 342 2 342
Of the untaxed reserves, SEK 656 (656) K is deferred tax. The deferred tax is not included in the Parent company’s balance sheet, but is included in the Group’s.
Note 39 Negative goodwill 2007-12-31 2006-12-31
The GroupAccumulated negative goodwill from acquisitionsAt beginning of year 934 765Additional negative goodwill from acquisition of subsidiaries – 169
At year-end 934 934
Accumulated dissolutions At beginning of year -934 -765Dissolutions for the year – other negative goodwill – -169
At year-end -934 -934
Reported value at end of period – –
Note 40 Convertible loans As of 31 December 2006, Volito Aviation AB had outstanding loans that are conver-tible or combined with options for new subscription of shares. Volito AB acquired these in early 2007 and the loans were repaid.
Note 41 Other debts to credit institutes, long-term 2007-12-31 2006-12-31
The Group Due date, 1-5 years from accounting year-end 322 412 1 933 432Due date, later than five years from acc year-end 181 963 240 603
504 375 2 174 035
The Parent companyDue date, 1-5 years from accounting year-end 69 997 69 220Due date, later than five years from acc year-end 12 109 13 226
82 106 82 446
The Group intends to refinance those credits that fall due in 2008. Volito’s assessment is that amortisation in 2007 will amount to SEK 44.8 million for the Group and SEK 1.1 million for the Parent company, which in accordance with RR 22 is reported as short-term.
Note 42 Bank overdraft facilities 2007-12-31 2006-12-31
The GroupGranted credit limit 220 717 225 496Unutilised part -61 250 -120 803
Utilised credit amount 159 467 104 693 The Parent companyGranted credit limit 155 479 158 233Unutilised part -16 788 -78 554
Utilised credit amount 138 691 79 679
Note 43 Other debts, long-term and short-term 2007-12-31 2006-12-31
The GroupDebts 33 693 233 611
The Parent companyDebts – 11 249
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 2007 amounted to SEK 33.7 million (222.3).
Note 44 Accrued expenses and prepaid income 2007-12-31 2006-12-31
The Group Personnel-related items 14 655 10 117Accrued interest expenses 7 474 16 024Prepaid rental income 13 272 14 887Prepaid leasing income 5 114 11 505Other prepaid income 3 927 4 662Other accrued expenses 15 932 15 419
60 374 72 614
The Parent companyPersonnel-related items 3 723 2 800Accrued interest expenses 4 360 3 719Prepaid rental income 286 577Other items 6 853 713
15 222 7 809
Malmö, 25 February 2008
Karl-Axel Granlund Bo Olsdal Lennart Blecher Sven HolmgrenChairman CEO
Our auditors’ report was submitted 3 March 2008KPMG
Eva Melzig Henriksson David OlowAuktoriserad revisor Auktoriserad revisor
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 5 March 2008.
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Audit Report - translation
To the annual meeting of the shareholders of Volito ABCorporate 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 2007. The annual accounts are presented in the printed version of this document on pages 28-51. 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 applica-tion 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 significant decisions, actions taken and circumstances of the company in order to be able to determine the liabili-ty, 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 cont-ravention 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.
Malmö 3 March 2008
KPMG Bohlins AB
Eva Melzig Henriksson David Olow Authorized Public Accountant Authorized Public Accountant
This year’s cover artist, Björn Wessman, was born in Hässleholm in 1949. He attended the Royal College of Art, Stockholm, 1976-81. The collective name for Björn’s recent paintings is "The nature of light" and he comments:
"I have walked through Australia’s jungles and gone to mountain-tops in Abisko and the Pyrenees, all to gather inspiration for pain-tings. My paintings are inspired by walks just around the corner, in our village in the south of France. The drama that colours display on the canvas is steered by the light. There is nothing more difficult to nail down than the nature of southern light. I think I have got closer to the subjective truth that my paintings describe."
Björn has held a large number of exhibitions in Sweden and abroad. His work is shown in the Jubilee Room of the Swedish king, Carl XVI Gustaf, in the Royal Castle in Stockholm, and at several museums including the Museum of Modern Art in Stockholm, Malmö Museum and Göteborg Museum.
AddressesVolito ABSödra Förstadsgatan 4, SE-211 43 MalmöTel: +46 40 660 30 00 Fax: +46 40 660 30 20www.volito.se
Volito Aviation ABSödra Förstadsgatan 4, SE-211 43 MalmöTel: +46 40 660 30 00 Fax: +46 40 30 23 50www.volito.aero
Volito Fastigheter ABSödra Förstadsgatan 4, SE-211 43 MalmöTel: +46 40 664 47 00 Fax: +46 40 664 47 19www.volitofastigheter.se
Scandinavian Aviation Academy ABHässlögatan 20, SE-721 31 VästeråsTel: +46 21 80 28 00 Fax: +46 21 80 28 90www.bfsaa.se
Nordkap Bank AGThurgauerstrasse 54, CH-8050 Zürich, SchweizTel: +41 1 306 49 10 Fax: +41 1 306 49 11www.nordkapbank.com
CTT Systems AB (publ)Box 1042, SE-611 29 NyköpingTel: +46 155 20 59 00 Fax: +46 155 20 59 25www.ctt.se
Peab AB (publ)SE-260 92 FörslövTel: +46 431 89 000 Fax: +46 431 45 19 75www.peab.se
Peab Industri AB (publ)Box 1291, SE-262 24 ÄngelholmTel: +46 431 44 96 00 Fax: +46 431 44 96 01www.peabindustri.se
DefınitionsReturn on equityProfit/loss after tax in relation to average equity
Adjusted equityEquity and surplus values in real estate and listed shares with reduction for deferred tax
Return on adjusted equityChange in value on adjusted equity
Adjusted equity ratioAdjusted equity in relation to total assets including surplus values
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Volito AB, Södra Förstadsgatan 4, SE-211 43 Malmö tel +46 40 660 30 00 fax +46 40 660 30 20 e-mail [email protected] internet www.volito.se corporate identity number 556457-4639
Volito AB is an investment company operating within Aviation, Real Estate 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 | GROUP PRESENTATION ANNUAL REPORT 2007