annual report 2008 volito eng
DESCRIPTION
Annual report 2008 Volito EngTRANSCRIPT
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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 2008
2003 Anita Nilsson Billgren
2004 K G Nilsson
2005 Martin Wickström
2006 Anders Österlin
2007 Björn Wessman
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
y bird painting essentially serves a
romantic tradition that is as equally
based on consciousness and enligh-
tenment as it is on the pursuit of the idyllic
and the escape from reality, and whose ideal
of beauty springs from the magical moment
of perfection. But, in a style that denounces
sentimentality and pathos as much as irony
and reflection lies the instrument that is
intended to overcome the gulf between the
painting’s elementary denominators, time
and timelessness.
Emanuel Bernstone, February 2009
Emanuel Bernstone was born in 1973
in Karlskrona. He trained at the Art
Academy in Düsseldorf, 1997-2003.
Following his studies, he has had a
number of exhibitions both in Sweden
and abroad. His work has been exhibi-
ted in cities such as Stockholm, Malmö
and Gothenburg. Abroad, his work has
been seen in Norway, Denmark,
Germany and the USA. He currently
lives and works in Berlin.
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The Volito Group’s strength stems from the experience and dynamics of its staff and owners, and the capacity to adapt the business to new conditions” Johan Lundsgård CEO and President, Volito AB
Dynamics& experience
– THE VOLITO GROUP –
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Business concept, structure and objective
VOLITO AB
AVIATION REAL ESTATE STRUCTURED FINANCE
V olito 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 owned by the wholly-owned subsidiary, Volito Aviation AB, as well as by the partly owned (50%) VGS Aircraft Holding Ltd. The two companies are managed by Volito Aviation Services AB, which 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 operations in Sweden and the USA.
The Aviation business area also includes Volito’s holding in CTT Systems AB (publ). CTT develops and markets humidity control systems for commercial aircraft. The company’s most important products are the Zonal Drying and Cair brands. CTT Systems is listed on OMX Nordic Exchange Stockholm.
The Real Estate business area includes the wholly-owned Volito subsidiary, Volito Fastigheter AB. Volito Fastigheter focuses primarily on commercial real estate in the Malmö region. Real Estate also includes
Volito’s ownership in Peab AB (publ). Peab is active in the construction and civil engineering field and listed on 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. In 2008 Volito’s results were negatively affected due to the considerable fall in the stock market. Adjusted equity during the year has decreased by 26.2% (+21.7%). The Group’s adjusted equity on 31 December 2008 amounted to SEK 1 121.0 million (1 518.1).
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2008 in brief• The Volito Group’s profit/loss before tax amounted to SEK -28.4 million (600.9).
• The Volito Group’s adjusted equity decreased by 26.2% to SEK 1 121.0 million (1 518.1).
• VGS Aircraft Holding Ltd (VGS) generated a profit before tax of USD 18.4 million in its first financial year.
• SAA returned to profitability after two loss-making years and reported a profit before tax of SEK 1.3 million (-5.0) for the full year.
• Volito has further increased its ownership in CTT Systems AB (publ) and owned 16.2% of the company at year-end.
• Volito Fastigheter reported one of its best profits ever before tax of SEK 48.1 million (27.0).
• Peab AB (publ) made an offer for Peab Industri AB (publ) during the year. After the implemented acquisition, Volito owns 5.24% of the capital and 2.54% of the votes in Peab AB (publ).
• Nordkap Bank reported a profit before tax for 2008 of CHF 1.5 million (11.5).
• The financial turbulence and falling share prices during the year have in general negatively affected the business climate in which Volito is active. In view of this, it is satisfying to note that the majority of Volito’s businesses have generated positive results.
• Johan Lundsgård took up his appointment as the new CEO and President on 1 September.
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D espite the good results from the business area’s operations, Volito’s adjusted equity was negatively affected due to the falling share prices. On 31 December 2008, the Volito Group’s adjusted equity amounted to SEK 1 121.0 million, which represents a reduction of 26.2%.
Business area AviationThe global aviation industry had a troublesome year in 2008. In a changing and tough market, Volito Aviation has continued to generate good results. VGS Aircraft Holding Ltd (VGS), the Ireland-based aircraft leasing company jointly-owned with Goldman Sachs’, completed its first full financial year in 2008. During 2008 the company invested a total of USD 155 million in 6 aircraft that all match VGS’s criteria in terms of aircraft assets. In the same period VGS sold 8 aircraft and an aircraft engine for USD 82 million. The sales have generated combined capital gains of USD 6.4 million while also reducing the average age of the company’s remaining fleet. The sales were also made with an aim to decrease the exposure of VGS
relating to certain lessees and in this way reduce the risks in the company’s aircraft portfolio. The aircraft sold have also in part been models that do not fit in with the future strategy of VGS that was established when VGS was formed in 2007.
As a result of the worsening business climate, Volito Aviation implemented a cost-saving programme in autumn 2008 that aimed to cut costs and improve competitiveness.
The aviation school, SAA, has improved its results during the year and reported a profit. This positive development stems from a general improvement in quality within the business and the sale of Swiss company, Twinair.
CTT Systems received further orders in 2008 from both OEMs and airlines, and thereby strengthened its base for the coming years. However, an improvement in results will be deferred due to the delays that have affected Boeing in the launch of the new B 787. During the year Volito increased its ownership in CTT and
at year-end 2008 owned 16.2% of the votes and capital.
Business area Real EstateVolito Fastigheter’s result for 2008 were one of its best since the company was established in 1997. The company has both acquired and sold properties during the year. All transactions have had a strategic aim. The property leasing market in the Öresund Region continues to be strong, but property values have fallen as a result of the increased required rate of return in the wake of the financial crisis.
In the transactions carried out in 2008, Volito Fastigheter focused solely on Malmö and the surrounding area. My assessment is that Malmö will continue to be a highly attractive city seen from the perspective of the entire Öresund Region. Through an internal transaction the Delfinen property on Södra Förstadsgatan has been transferred from the Parent company, enabling Volito to bring together its property portfolio solely within the Volito Fastigheter Group – a structure that enhances the
Comments from the CEOThe financial turbulence and falling share prices that have been apparent during the year have had a generally negative impact on Volito’s business climate. In view of this, it is satisfying to note that the majority of Volito’s businesses have generated positive results.
SEK million The Volito Group, adjusted equity
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efficiency of management, increases transparency and improves the business ratios within the Volito Group.
The property leasing market in the region has continued strongly even though a certain weakening in the number of enquiries regarding premises was noticeable towards the end of the year.
The real estate market has developed negatively during the year in value terms as a consequence of the increased required rate of return that the financial crisis has brought with it. The rise in required rate of return has not only resulted in an increased risk premium, but also altered financing requirements regarding external capital.
Volito Fastigheter expects that the market in 2009 will be somewhat weaker in terms of demand for commercial premises in the Öresund Region. However, it is felt that the market dynamics and long-term growth conditions will remain good, which is why the coming years can provide exciting opportunities for expansion from a long-term perspective.
Volito’s holdings in Peab AB (publ) and Peab Industri AB (publ) have developed positively during the year regarding the respective operations, but negatively in terms of value development.
Both Peab and Peab Industri had a high level of activities during the year which led to increased turnover(+8%) as well as operating
profit (+9%) for the whole of Peab now being consolidated as one group. The company’s order book continue to look robust, however a decline in incoming orders was noticeable in the latter part of the year.
The board of Peab decided in October to make an official bid for all the shares in Peab Industri. Three shares in Peab were offered for two shares in Peab Industri. The companies, which were split into two units in 2007, were consequently brought together again to form a joint group.
The construction industry was hit hard in terms of value development during the financial crisis of autumn 2008. During 2008 Volito’s holding in the two Peab companies lost 57% in value compared with the start of the year. As a comparison, the OMX
All Share Index fell by 40% in the same period.
Business area Structured FinanceNordkap Bank continued to develop positively during the first three quarters of 2008. The financial crisis and the emerging recession in 2008 have so far had only a small effect on the company. In the course of the fourth quarter a handful of customers suffered liquidity problems which resulted in increased provisions for potential credit losses.
The financial crisis and start of the recession have had fairly limited effects on the Volito Group’s results in 2008. We see a considerably weakened business climate in 2009 and the consequences for Volito are hard to predict at the present time. The Group is focusing on creating and maintaining cash flows from the business areas with an aim to ensure readiness to meet a weakening business climate.
Despite the concerns that mark the world economy at present, I have confidence in meeting the challenges that Volito faces. In conclusion, I would like to thank our customers, staff, business partners and owners for their good cooperation.
Johan LundsgårdCEO and PresidentJohan LundsgårdCEO and President
Definitions
Return 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
“ The Group is focusing on creating and maintaining cash flows from the business areas with an aim to ensure readiness to meet a weakening business climate.“
The Volito Group, Ten-year summary
SEK million 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999
Profit/Loss before taxes -28.4 600.9 144.5 79.0 30.7 70.7 -6.5 -13.7 80.6 77.8
Adjusted equity 1 121 1 518 1 273 935 663 563 497 496 445 365
Return on adjusted equity, (%) -23 22 37 42 19 14 0 12 21 39
Equity ratio, (%) 45 52 26 23 26 25 25 34 51 43
Assets 2 930 2 748 4 010 3 575 2 267 2 029 1 792 1290 736 754
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– VOLIT O AV I ATION –
Trust & execution
We earn our customers trust through diligent execution” Siggi Kristinsson CEO, Volito Aviation
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V GS Aircraft Holding (Ireland) Ltd (VGS), the Ireland-based aircraft leasing company jointlyowned with Goldman Sachs, completed its first full financial year in 2008. During the year the company invested a total of USD 155 million in 6 aircraft that are all well suited to fit VGS’s criteria in terms of aircraft assets. These were mainly Airbus 320-200 aircraft with an average age of around 6 years, which has reduced the average age of the VGS aircraft portfolio.
In the same period VGS sold 8 aircraft and an aircraft engine for USD 82 million. The sales have generated total capital gains of USD 6.4 million while also reducing the average age of the company’s remaining fleet. The sales were also made with an aim to decrease the exposure of VGS relating to certain lessees and in this way reducing the risks in the company’s
aircraft portfolio. The aircraft sold were also in part models that do not fit in with the future strategy of VGS that was established when VGS was formed in 2007.
At year-end VGS had an aircraft fleet of 41 aircraft with a book-value of USD 805 million. Liabilities linked to the fleet amounted at year-end to USD 574 million. The percentage of narrow-body aircraft in the fleet is 100% and there is a good spread of risk in geographical terms. The company has lessees in areas such as Europe, Central and South America, North America and Asia.
After the year’s completed transactions, VGS has a strong financial position and at year-end had liquid funds of USD 28.8 million. Furthermore, the company is now free of obligations regarding acquisitions and has an aircraft fleet that generates
a strong operative cash flow. In view of this background the company sees many interesting opportunities in 2009 in a market that for the foreseeable future will be characterised by downward pressure on prices and companies with a need to sell assets.
Volito Aviation Services AB (VAS) is the service and management company that manages the VGS fleet and the fleet that is wholly owned by Volito Aviation (see under summary ”Aircraft fleet, 31 December 2008”). The company has worked during the year to further refine its internal routines and processes. In addition, VAS was audited by the consulting firm SH&E in 2008. This was done to place yet another seal of quality on the organisation and to strategically prepare the company to also serve customers outside the Volito Group.
A year of dramatically altered market conditionsThe global aviation industry experienced a year of upheaval in 2008. The runaway oil prices in the first half of the year together with the financial turbulence in the autumn have led to extremely tough conditions for the world’s airlines. Volito Aviation has continued to generate good results under these conditions – a testament to the quality of the business plan.
SEK million Profit/Loss before tax
Direct and straight dealing, with a Swedish flavour. Great to experience this in the airline business” Pieter van Dijk, Transavia
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“I feel privileged to work with such a dedicated and professional team as my colleagues at VAS. The fact that some of the sales we carried through during the year were made in November, in the toughest possible market conditions, shows the organisation’s
strength and ability to adapt itself to new circumstances,” says Sigurdur Kristinsson, CEO of Volito Aviation.VGS made a profit before tax for 2008 of USD 18.4 million. This result represents a return on equity of 19%. The Volito Aviation AB Group
(which reports VGS as an associated company) made a profit before tax for 2008 of SEK 82.5 million (356.9) and a return on equity of 9.9% (54.7%). The results for 2007 included SEK 289.2 million that was related to the VGS transaction.
Volito Aviation AB, Five-year summary
SEK (USD) million 2008 2007 2006 2005 2004
Revenues 163.7(24.9) 321.6 (46.8) 396.1 (52.9) 210.8 (28.1) 98.9 (13.2)
Profit before tax 82.5(16.2) 356.9 (45.2) 103.2 (10..8) 8.8 (1.6) 12.0 (1.3)
Return on equity, (%) 9.9 54,7 26.7 3.1 15.3
Equity 532.1(52.4) 436.9 (50.5) 259.6 (27.3) 200.3 (21.3) 161.8 (15.0)
Assets 1 158.5(133.2) 976.9 (120.6) 2 669.5 (341.8) 2 466.2 (309.6) 1 171.8 (129.6)
Volito Aviation AB – 100% subsidiary of Volito ABand Volito’s holding company for aircraft leasing
The Goldman Sachs Group Inc – USA-basedinvestment 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 foraircraft leasing
VGS Aircraft Holding (Ireland) Ltd – Joint venture between Volito and Goldman Sachs with an aim to acquire, finance and lease out aircraft. As of 31 December 2008, VGS owned 41 aircraft.
Structure Volito Aviation
Argentina
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The Aircraft Fleet, December 31st 2008
Geographical spread in 2008
USA
ARGENTINA
PANAMA
BRAZIL
Aircraft MSN/year Engine Model Registration Operator Lease Expiry
Fokker 50 20210/1991 PW100-125 PH-FZH Denim Air, The Netherlands March 2012
Fokker 50 20252/1992 PW100-125 PH-KXM Denim Air, The Netherlands March 2012
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 (Nacil), India March 2010
Airbus 320-231 0314/1992 IAE V2500-A1 VT-EVT Indian Airlines (Nacil), 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 2010
Boeing 737-71Q 29048/1999 CFM56-7B HP-1370CMP COPA, Panama June 2010
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 27171/1993 CFM56-3C1 VP-BQG Globus, Russia March 2014
Airbus 320-232 803/1998 IAE V2527-A5 N649AW US Airways, USA March 2013
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Owned by Volito Aviation AB Owned by VGS
GREAT BRITAIN
FRANCE
SPAIN
NORWAY
THE NETHERLANDS
UKRAINE
INDIA
ROMANIA
SINGAPORE
CHINA
MALAYSIA
PORTUGAL
ITALY
Aircraft MSN/year Engine Model Registration Operator Lease Expiry
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
Boeing 737-5Y0 24899/1991 CFM56-3C1 LV-BDD Aerolinas Argentinas, Argentina Feb 2011
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
Airbus A319-112 1102/1999 CFM56-5B6/2P EI-DEY Meridiana, Italy Feb 2015
Airbus A319-112 1283/2000 CFM56-5B6/2P EI-DEZ Meridiana, Italy April 2015
Airbus A319-112 1305/2000 CFM56-5B6/2P EI-DFA Meridiana, Italy May 2015
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 A320-232 1591/2001 IAE2527-A5 PR-MBX TAM, Brazil June 2014
Airbus A320-232 1827/2002 IAE2527-A5 PR-MBZ TAM, Brazil Sep 2014
Airbus A320-232 1891/2002 IAE2527-A5 PR-MBY TAM, Brazil Oct 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
Boeing 737-3T0 23942/1988 CFM56-3B1 N17356 Continental Airlines, USA Sep 2009
Acquired in 2009
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Scandinavian Aviation Academy AB (SAA) continued its positive trend from 2007 during the year and reported a profit before tax of SEK 1.3 million (-5.0). The strong improvement has been driven mainly by continued positive developments relating to SAA’s operations in San Diego and the sale of the loss-making business, Twinair, in Switzerland.
The stability regarding the student base, organisation and quality of the business that was built up in 2007 at SAA in San Diego has also been reflected during the year in considerably improved profitability. An agreement was signed with an agent in 2008 concerning exclusivity for the Chinese market, which means that the majority of the company’s students will come from China in the coming years.
These students are assessed thoroughly before they go to the USA, which consequently makes it easier to achieve high efficiency in the training.
After a strategic assessment of the various companies within the SAA Group, a decision was made in March to sell SAA’s ownership share in Twinair. The company was deemed not to contribute anything substantial to SAA’s future development and strategy, while the operation took up much of the management’s time. The sale also contributed considerably to SAA’s improved profitability during the year.
SAA also performed well in 2008 in its role as a distributor for Cessna. A total of 8 aircraft were sold, a decrease compared with the 13 sold in the previous year. The lower volume is
attributable to the weaker demand that was noticeable in the latter part of the year.
After going through a period of profitability problems in 2006 and 2007, SAA now has a solid foundation in terms of profitability and management. The company has a strong name and a good product in a sector that can expect continued interesting developments in the future. In addition, the company has a competent business in terms of technical maintenance, which has potential for expansion in the coming years. These factors considered together mean that Volito views SAA’s continued development with great interest.
Aviation training
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CTT Systems AB took another major step forward in its development during 2008 when the company was chosen as the supplier for the forthcoming aircraft from Airbus, A350 XWB. CTT will supply both its systems for humidification and dehumidification for A350 XWB on an option basis. The transaction is a confirmation that CTT has become established in the OEM market among the world’s aircraft manufacturers following the order from Boeing that was received in 2005 relating to the B787.
Another important milestone was passed in September when Air New Zealand placed an order for 42 Zonal Drying systems for various aircraft types in its fleet. Air New Zealand is a company with a high profile in
the environmental area and chose CTT as part of moves to minimise its fuel consumption and thereby its environment-affecting CO2 emissions.
A further indication that CTT’s products are spearheading development in the field of aircraft humidity control was an order from the market’s VIP segment for the company’s Cair system to be installed on six aircraft. CTT has taken a clear leading role in this market segment, which indicates the quality delivered by the company’s products.
CTT’s profitability has been deferred further into the future due to the delays announced by Boeing regarding the B787. In addition to this, Boeing was hit by strikes during the autumn
of 2008 and delivery of the B787 to costumer is now expected in the first quarter of 2010. In May 2008, Volito increased its holding in CTT through the acquisition of a further 200 000 shares in the company. Volito’s holding after the acquisition amounted to 16.2% of the votes and capital in CTT. The acquisition of the shares shows Volito’s fundamental belief that CTT will generate good value growth in the future for its shareholders.
CTT’s share price decreased in 2008. All told, the share price fell by -48%. The trend for the OMX Small Cap over the same period was -46%.
Aviation technology
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– VOLIT O FA STIGHE TER –
Dialogue& proximity
The strength of Volito Fastigheter lies in the ability of its staff to maintain a good dialogue and work in close proximity to their tenants and business partners” Pelle Hammarstöm CEO, Volito Fastigheter
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uring the year Volito Fastigheter acquired the properties Hamnen 22:2 and Delfinen 17. The combined purchase price for the two properties amounted to SEK 207 million. Hamnen is located close to Skeppsbron where Volito has built up a strong presence over the years. The area is deemed to be of special interest for the future due to the construction and establishment of the City Tunnel. Delfinen was acquired from Volito AB, the parent company of the Volito Group, and is located centrally on Södra Förstadsgatan in Malmö. The transaction regarding Delfinen refines Volito’s property portfolio and brings
it solely within the Volito Fastigheter Group – a structure that enhances the efficiency of management, increases transparency and improves the business ratios within the Volito Group.
“We felt it was right to acquire both these properties. The Hamnen acquisition further strengthens our presence around Skeppsbron, perhaps the most interesting location in Malmö when the City Tunnel is finished in 2010. We had previously managed Delfinen and it feels good to take on full ownership responsibility for the property. Delfinen further strengthens our cash flow while also providing possibilities for future
expansion, as the property was acquired without external financing,” says Pelle Hammarström, CEO of Volito Fastigheter.
Volito Fastigheter sold the Spjutet 2 property in Helsingborg. The sale generated a capital gain of SEK 29.5 million.
“For some time we have focused solely on Malmö and the surrounding area, so the sale felt like a natural step. In addition, we received a good price that further strengthens our financial position and situation,” states Pelle Hammarström.
Continued strong operating result in a weaker property marketThe result reported by Volito Fastigheter for 2008 were one of the strongest since the company was established in 1997. Volito Fastigheter’s profit before tax amounted to SEK 48.1 million (27.0). The result included capital gains of SEK 29.5 million (2.9). The company has both acquired and sold properties during the year. All transactions have had a strategic aim. The property leasing market in the Öresund Region continues to be strong, but property values have fallen somewhat as a result of the increased required rate of return in the wake of the financial crisis.
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The premises in central Malmö offered us new possibilities. We definitely like the location” Georg Brunstam Hexpol AB
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The property leasing market in the region has continued strongly even though a certain weakening in the number of enquiries regarding premises was noticeable towards the end of the year. In 2008 the company signed new agreements with Banverket, Maendi AB och Victoria Park. The new agreements have been signed at a rent above or well in line with previous levels. The company’s vacancy level fell during the year to 7.8% (11.8%). This reduction in vacancy level is attributable to the high occupancy rate of the properties that were acquired, as well as the successful management work regarding new tenants.
In value terms the real estate market has developed negatively as a consequence of the increased required rate of return in the wake of the financial turbulence. The increased required rate of return has not only resulted in an increased risk premium, but also altered financing requirements regarding external capital. The market value of Volito’s property portfolio was assessed by an external party at year-end and was set at SEK 1 357 million. Excluding acquisitions and sales, this represents an increase of 2.2% compared with the previous year-end.
Volito Fastigheter’s profit before tax for 2008 was SEK 48.1 million (27.0).
The result included capital gains of SEK 29.5 million (2.9). This result is one of the best in the company’s history and indicates a successful business model, efficient management and a highly competent organisation. Volito Fastigheter expects that the market in 2009 will be somewhat weaker in terms of demand for commercial premises in the Öresund Region. However, it is felt that the market dynamics and long-term growth conditions will remain good, which is why the coming years can provide exciting opportunities for expansion in the long-term.
Volito Fastigheter AB, Five-year summary
SEK million 2008 2007 2006 2005 2004
Rental income including capital gains 130.7 92.1 81.5 109.6 94.4
Profit/Loss before tax 48.1 27.0 26.5 56.2 42.2
Return on equity, (%) 25.9 11.3 12.2 28.5 24.7
Equity 222.1 178.4 166.2 148.1 135.8
Real estate market value 1 356.9 1 185.8 998.6 890.7 764.7
Distribution of rent by category and m2
Offices
Industry
Trade
Residential
Hotel
Nursery school
1
15
12
2222
33
2
91
4411
3 52 4
ÖRESUND
KLAGSHAMN
N
2316141310
212019
6
78
11
5
MALMÖ
NN 17 18
20
Real estate holding 2008
Property Segeholm 10Address Ågatan 1Area 15 199 m2
Property Äpplet 15Address Generalsg 5Area 664 m2
Property Flygkameran 2Address Höjdroderg 7-9Area 1 376 m2
Property Diana 28Address Engelbrektsg 5Area 902 m2
Property Hangaren 2Address Flygplansg 1-3Area 2 200 m2
6
11
16
21
8
13
18
23
10
15
20
7
12
17
22
9
14
19
21R
EA
L E
ST
AT
E
Property Nejlikebuketten 4Address Derbyvägen 6Area 6 557 m2
Property Aegir 1Address Carlsgatan 1Area 7 610 m2
Property Flygledaren 7Address Hödroderg 22Area 1 971 m2
Property Runstenen 16Address Käglingevägen 37Area 3 068 m2
Property Medusa 3Address Carlsgatan 42Area 1 300 m2
Property Skytteltrafiken 2Address Nygårdsvägen 6Area 1 730 m2
Property Ran 9Address Jörgen Kocksg 1Area 7 904 m2
Property Hamnen 22:2Address Jörgen Kocksg 3Area 7 597 m2
Property Ran 4Address Skeppsbron 3Area 4 019 m2
Property Bronsdolken 27Address Stenyxegatan 25Area 2 221 m2
Property Kupolen 3Address Krossverksg 7-17Area 9 970 m2
Property Medusa 4Address Carlsgatan 44Area 7 201 m2
Property Lastbryggan 2Address Nygårdsvägen 4Area 1 158 m2
Property Härsjön 4Address Hålsjögatan 8Area 3 147 m2
Property Delfinen 17Address S Förstadsgatan 4Area 3 034 m2
Property Utgrunden 7Address Aspögatan 1Area 7 291 m2
Property Bronsdolken 26Address Stenyxegatan 25Area 3 423 m2
Property Ran 8Address Skeppsbron 7Area 1 084 m2
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Volito’s holdings in Peab AB (publ) and Peab Industri AB (publ) have developed positively during the year regarding the respective operations, but negatively in terms of value development.
Both Peab and Peab Industri had a high level of activities during
the year which led to increased turnover(+8%) as well as operating profit (+9%) for the whole of Peab now being consolidated as one group. The company’s order book continue to look robust, however a decline in incoming orders was noticeable in the latter part of the year.
In October the board of Peab decided to make an official bid for all the shares in Peab Industri. Three shares in Peab were offered for two shares in Peab Industri. The companies, which were split into two units in 2007, were consequently brought together again to form a joint group.
Real Estate – other holdings
23R
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The transaction means that Peab’s status is further strengthened through a higher equity ratio, increased cash flow and thereby an enhanced capability to both further develop the business and maintain good conditions to enable a continued stable return for shareholders.
The construction industry was hit hard in terms of value growth during the financial crisis of autumn 2008. In view of this, Volito’s holdings in the two Peab companies lost 57% (including received dividends) in value compared with the start of the year. As a comparison, the OMX Mid Cap Index fell by 40% in the same period.
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25S
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NC
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– NOR DK A P BA NK AG –
Structure& perspective
Nordkap Bank AG has a long term perspective and remains committed in difficult times” Niklaus Hasler, CEO, Nordkap Bank AG
600
500
400
300
200
100
26
MSEK Loan and guarantee portfolio
I t was a year of unprecedented volatility with sharply falling commodity prices and declining inflation rates. What started as a mortgage crisis in the United States turned into a collapse of the world’s leading financial markets, creating a severe downturn in the real economy. These events affected the level of trust in free markets, risk controls, supervision, regulation and the overall efficiency of the financial industry.
During 2008, the loan portfolio of Nordkap Bank AG grew by 25% to CHF 539 million (432). Nordkap Bank AG performed well in the first three quarters of 2008 and it took advantage of attractive discounts available in the secondary loan market. However, in the course of the fourth quarter, the economic crisis started to affect the liquidity situation of a handful of Nordkap Bank’s borrowers and, as a consequence, Nordkap Bank AG
experienced payment delays and increased its provisions for potential credit losses from CHF 0.1 million to CHF 17.3 million. This increase in provisions turned the net profit into a loss of CHF 5.4 million (2007: net profit of CHF 7.2 million).
Challenging times for the fi nancial industryThe year 2008 was difficult for the entire financial services industry. The financial and economic crisis and the sharp drop in commodity markets is a big challenge for the customers of Nordkap Bank AG. In order to mitigate the impact of potential future loan losses, Nordkap Bank AG has initiated corrective measures and increased the loan loss provisions.
600
500
400
300
200
10004 05 06 07 08
CHF million Loan and guarantee portfolio
%
27S
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Nordkap Bank AG, Five-year summary
CHF million 2008 2007 2006 2005 2004
Profit / loss before tax -8,0 10,4 13,1 3,6 3,6
Net profit / loss -5,4 7,2 10,2 4,1 2,9
Return on equity (%) -5,3 6,8 10,4 4,4 3,2
Equity 97,2 108,2 103,5 94,3 91,2
Distribution of loan and insuranceportfolio per sector
Energy
Industry
Infrastucture
Others
Nordkap Bank AG is now working out solutions together with the borrowers who have encountered difficulties. This may involve restructuring of repayment schedules, execution of securities and other actions.
In general terms the outlook for 2009 is negative, and a worsening economic crisis is predicted.
As a result, Nordkap Bank AG will focus on portfolio management and
restructuring in order to preserve the quality of the loan portfolio.
Moreover, Nordkap Bank AG sees not only increased risks, but also increased opportunities in a negative market environment. With a strong team, strong risk management culture, low cost basis and key competencies in infrastructure and industrial lending, Nordkap Bank AG will benefit from tighter loan structures and higher margins.
” Nordkap Bank AG is acting long term and sees new opportunities in a changing market”
%
51
25
10
14
Nordkap Bank AG, Five-year summary
CHF million 2008 2007 2006 2005 2004
Profit before tax according to Swiss regulatory accounting 1,5 11,5 8,8 8,0 2,1
Profit / loss before tax according to IFRS -8,0 10,4 13,1 3,6 3,6
Net profit / loss according to IFRS -5,4 7,2 10,2 4,1 2,9
Return on equity according to IFRS (%) -5,3 6,8 10,4 4,4 3,2
Equity according to IFRS 97,2 108,2 103,5 94,3 91,2
Distribution of loan and insuranceportfolio per sector
Energy
Industry
Infrastructure
Others
8
9
6 75
4
3
2
1
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N
Geographicalspread in 2008 ordkap Bank AG strives to spread risks as widely as possible, and therefore is active within a variety of sectors and different geographical areas.
The bank’s customers are mainly in the energy, industry and infrastructure sectors. Within the energy sector, which accounts for 51% of loans, the largest single segment is power generation, providing approx. 17% of the portfolio value.
The geographical spread covers all continents. The largest geographical markets are Eastern Europe (24%), North America (22%), Asia (15%) and Western Europe (13%).
24
25
30
32
3127
28
33
34
35
36
29
26
2319
1715
2221
2018
16
1413
1211
10
1 9 17 25 33
2 10 18 26 34
3 11 19 27 35
4 12 20 28 36
5 13 21 29
6 14 22 30
7 15 23 31
8 16 24 32
29
Canada
USA
Mexico
Belize
Costa Rica
Panama
Cayman Islands
Brazil
Argentina
Ireland
Great Britain
The Netherlands
Belgien
Luxembourg
Germany
Switzerland
Czech Republic
Croatia
Hungary
Bosnia-Herzegovina
Montenegro
Serbia
Romania
Lithuania
Finland
Ukraine
Turkey
Egypt
Saudi Arabia
Russia
Azerbaijan
Kazakhstan
Indonesia
Singapore
Philippines
Australia
ST
RU
CT
UR
ED
FIN
AN
CE
30
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.
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). Board Member of PEAB AB (publ) and others.
President and CEO
Johan Lundsgård, born 1953, EconomistBoard Member of Volito Aviation AB, Volito Fastigheter AB. Chairman of the Board at SAA AB. Board Member of Partnertech Karlskoga AB.
Board of Directors and Management
31
THE GROUP
Annual Report
Administration report
32-34
Consolidated income statement
35
Consolidated balance sheet
36-37
Pledged assets and
contingent liabilities
38
Summary of changes in equity
39
Cash flow statement
40
Supplement to cash flow statement 41-42
Accounting principles and notes
to the accounts
43-55
Signatures
55
Auditors’ report
57
Addresses
59
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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, Volito’s holding
in Peab AB (publ) and the previous holding in Peab Industri AB (publ).
Structured Finance includes Volito’s ownership in Nordkap Bank AG.
The result before tax for the Parent company amounted to SEK
-54.8 million (206.1) and the result before tax for the Group was
SEK -28.4 million (600.9). The balance sheet total for the Parent
company at year-end was SEK 1 119.5 million (1 241.2) and for the
Group, SEK 2 929.7 million (2 747.9). The equity amounted to
SEK 574.8 million (668.0) and SEK 899.2 million (908.9) 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 the leasing of commercial
jet aircraft in the narrow-body segment, mainly Boeing 737 and Airbus
319/320 aircraft.
In late 2006, Volito Aviation signed an agreement with Goldman Sachs
concerning the merger of their respective aircraft fleets into a jointly
owned company, VGS Aircraft Holding Ltd. (VGS), based in Ireland.
This transaction took the major part of 2007 to implement. The
transaction brought a realisation of parts of the value that has been
built up in Volito Aviation’s aircraft fleet.
During the year VGS invested USD 155 million (363) in 6 (18) new
aircraft and sold 8 aircraft and one aircraft engine for USD 82 million.
At year-end, VGS had a fleet of 41 aircraft. These have a total book
value of USD 805 million. Liabilities linked to the fleet amounted to
USD 574 million at year-end. The percentage of narrow-body aircraft
in the fleet is 100%, and there is a good spread of risk in geographical
terms. The company has lessees in areas such as Europe, Central and
South America, North America and Asia.
The fleet of VGS and Volito Aviation’s own fleet of five aircraft
are managed by Volito Aviation Services AB (VAS), a dedicated
management company that is principally owned by Volito Aviation
AB (80%). In 2008, VAS was audited by SH&E (a prominent global
consulting company in the aviation industry) in order to strategically
prepare the company to also serve customers outside the Volito
Group.
In addition to the investments made by VGS, Volito has upgraded its
own aircraft for a total of SEK 8.9 million.
Volito Aviation’s profit before tax for 2008 was SEK 82.5 million
(356.9). Of the previous year’s result, SEK 289.2 million was
attributable to the transaction with VGS.
Training – SAA AB group
SAA runs training courses for personnel in the aviation industry,
principally pilots, and has operations in Sweden and the USA.
SAA in San Diego has displayed considerably improved profitability
during the year. This is attributable to a large degree to the integration
work carried out in recent years, which has led to a more stable
organisation and better quality in the business. An agreement was
signed with an agent in 2008 regarding exclusivity for the Chinese
market, which means that the majority of the company’s students will
come from China in the next few years.
After a strategic assessment of the various companies within the SAA
group, a decision was made to sell SAA’s ownership share in Twinair.
The company was deemed not to contribute anything substantial to
SAA’s future development and strategy, while the operation took up
much of the management’s time.
The company acts as a distributor for Cessna. A total of 8 aircraft
(13) were sold, which generated SEK 2.3 million (3.2) in the form of
commissions. The lower volume compared with 2007 is attributable to
weaker demand in the latter part of the year.
The SAA group improved its results in 2008 and reported a profit
before tax of SEK 1.3 million (-5.0). The improvement is mainly due to
continued positive developments relating to SAA’s operations in San
Diego and the sale of the loss-making business Twinair in Switzerland.
Other holdings – CTT Systems AB (publ)
CTT is a Swedish technology company that develops and markets
humidity control systems for commercial aircraft. The company’s
shares are listed on OMX Nordic Exchange Stockholm.
CTT Systems AB (publ) took another major step in its development in
2008, as the company was chosen as the supplier for the forthcoming
aircraft from Airbus, A350 XWB. CTT will supply both its systems for
humidification and dehumidification for A350 XWB on an option basis.
In the autumn Air New Zealand placed an order for 42 Zonal Drying
systems for various aircraft types in its fleet. Air New Zealand is a
company with a high profile in the environmental area and chose CTT
as part of moves to minimise its fuel consumption and thereby its
environment-affecting CO2 emissions.
CTT’s profitability has been deferred further into the future due to the
delays announced by Boeing regarding the B787.
In May, Volito increased its holding in CTT through the acquisition of a
further 200 000 shares in the company. Volito’s ownership share after
the acquisition amounted to 16.2% of the votes and capital in CTT.
CTT’s share price declined in 2008. All told, the share price fell by 48%.
The fall in the OMX Small Cap over the same period was 46 %.
Real Estate Volito Fastigheter AB group
Volito Fastigheter AB is a wholly-owned subsidiary of Volito AB.
Volito Fastigheter is involved in the trade and management of real
estate in the Öresund Region. The company is focused on commercial
properties in the Malmö region.
During the year Volito Fastigheter acquired the properties Hamnen
22:2 and Delfinen 17. The combined purchase price for the two
properties (acquired via the acquisition of a subsidiary) amounted
to SEK 207.0 million. Hamnen is located close to Skeppsbron where
Volito has owned property for some time. The area is deemed to be
of special interest for the future due to the establishment of the City
Tunnel. Delfinen was acquired from Volito AB and is located centrally
in Malmö. The transaction regarding Delfinen refines Volito’s property
portfolio and brings it solely within the Volito Fastigheter group – a
structure that improves the efficiency of management and increases
transparency within the Volito Group.
The company sold the Spjutet 2 property in Helsingborg. The sale
generated a capital gain for the Group of SEK 27.6 million.
The market in the region has continued strongly, even though a
certain weakening in the number of enquiries regarding premises was
noticeable towards the end of the year. Volito Fastigheter signed
33
new agreements with Banverket, Meandi AB and Victoria Park. The
new agreements have been signed at a rent level above, or well in line
with, previous levels. The company’s vacancy level fell during the year
to 7.8% (11.8%). The reduction in vacancy level is attributable to the
high occupancy rate of the properties that were acquired, as well as
successful management work regarding new tenants.
In value terms the real estate market has displayed a downward trend
as a consequence of the increase in required rate of return that the
financial turbulence has brought with it. The increase in required
rate of return has resulted not only in an increased risk premium,
but also altered financing requirements regarding external capital.
The market value of Volito’s property portfolio was assessed by an
external party at year-end and was valued at SEK 1 357 million (1 186).
Excluding acquisitions and sales, this corresponds to an increase of
2.2% compared with the previous year-end.
Volito Fastigheter’s profit before tax for 2008 was SEK 48.1 million
(27.0). The result includes capital gains of SEK 29.5 million (2.9). The
return on adjusted equity for the year was 25.9% (11.3%).
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 Region. Both companies’ shares
are listed on OMX Nordic Exchange Stockholm.
The board of Peab decided in October to make an official offer for all
the shares in Peab Industri. Three shares in Peab were offered for two
shares in Peab Industri. The companies, which were split into two units
in 2007, will consequently be brought together again to form a joint
Group.
Volito’s holding in Peab after the transaction stated above consists of
15 243 000 Series B shares in Peab AB (publ), which represents 5.24%
of the capital and 2.54% of the votes.
For Volito, the holding in Peab AB 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.
The construction industry was one of the sectors hardest hit in terms
of the value growth during the financial turbulence of autumn 2008.
Both Peab and Peab Industri have increased turnover (7% and 8%
respectively) and operating profit (7% and 9% respectively). The
companies’ order books continue to look robust, however a decline
in incoming orders was noted in the latter part of the year. The total
holding in both Peab companies at year-end had a market value of
SEK 329.2 million (819.2), which represents a value reduction of 57%
(taking into account the received dividend) for the year. This can be
compared to the OMX Mid Cap, which in the same period decreased
by 40%.
Structured Finance Nordkap Bank AG
Nordkap Bank is a Swiss commercial bank specialising in structured
financing solutions. Volito AG owns 40% of the shares in Nordkap Bank.
Nordkap Bank’s loan portfolio increased by 25% in 2008 to CHF 539
million (432). The bank performed well in the first three quarters,
gaining benefits from the attractive prices in the credit market. In Q4
the financial crisis began to have an effect on some of the bank’s loan
customers, who felt the impact of sharply falling commodity prices.
This resulted in delays in payments from customers and has led to
increased provisions for feared customer losses at Nordkap Bank.
For 2008 Nordkap Bank reported a profit before tax of CHF 1.5 million
(11.5). The return on equity was 2.0% (10.6%). Within the Volito Group,
Nordkap Bank’s profit/loss is translated in accordance with IFRS. The
consolidated loss for the Nordkap Holding Group in accordance with
IFRS was CHF 8.2 million (4.6).
Other holdingsVolito has ownership shares in AB Nordsidan, Galenica AB, Itesco AB,
Simcenter Copenhagen A/S and a number of other small companies.
During the year Volito sold its shares in Saint Victor s.a.r.l. The
combined value of the remaining holdings for the Group amounted at
year-end to SEK 22.1 million (19.1).
The Parent companyThe loss before tax for the Parent company was SEK 54.8 million
(profit 206.1).
During the year Volito AB sold the property Delfinen 17 to Volito
Fastigheter. The transaction generated a capital gain of SEK 42.7
million.
Peab’s decision to buy back Peab Industri has resulted in a capital loss
of SEK 132.9 million. The capital loss relating to Kattegat Invest AB,
which owned 475 000 shares in Peab Industri amounted to SEK
16.9 million.
TaxTax-exempt dividend on the holding in Peab AB
Volito AB has successfully concluded the process concerning tax
exemption on dividends and capital gains relating to the holding in
Peab AB. In April 2008 the Administrative Court of Appeal judged that
the dividend on the holding is tax exempt for the income years 2001
and 2002. Thereafter, the Swedish Tax Board decided in accordance
with these rulings relating to the income year 2004. (The Swedish Tax
Board had previously approved tax exemption for the income years
2003 and 2005. The years 2006 and 2007 have never been called into
question.)
Between the years 2000-2008 Volito received dividends from Peab
AB of SEK 67.3 million. Together with the tax-exempt dividends and
capital gains in the subsidiary, Kattegat Invest AB of SEK 33.8 million,
the Volito Group has received dividends and made capital gains
totalling just over SEK 100 million during the years in question.
Deficit in Dean Aviation Company LLC
For the financial years 1999 and 2002 Volito has claimed a deduction
for the deficit in the subsidiary, Dean Aviation Company LLC.
The deduction was called into question by the National Tax Board.
In 2004, The County Administrative Court approved the deficit. The
National Tax Board appealed in the Administrative Court of Appeal,
which in December 2008 ruled in the National Tax Board’s favour.
Volito AB has decided to apply for leave to appeal in the Supreme
Administrative Court.
Due to the fact that the possibility of a leave to appeal is uncertain,
the company has decided to report the tax that resulted from the
judgment in the Administrative Court of Appeal, together with the
interest on this tax, as expenses and liabilities as of 31 December 2008.
The tax has been estimated at SEK 34.5 million and the interest at SEK
15.6 million.
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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 four years, see note 6.
Volito Fastigheter has an occupancy rate of 92.2 % (88.2%). The
breakdown of leases is 96% commercial properties and 4% residential.
The commercial rental income is divided between 169 contracts in a
number of different sectors. For more information, see notes 6 and 21.
Important events after the end of the financial year There are no significant events after the end of the financial year.
Expectations concerning future developments We see a considerably worsened business cycle for 2009 and the
consequences for Volito are hard to predict at present. All three
business areas Aviation, Real Estate and Structured Finance have strong
cash flows, sound capital structures, competent managements and good
market positions, which means that preparedness is good when facing
a more uncertain future. Volito deems that the prevailing uncertainty
concerning future global economic developments ought to generate
business opportunities that benefit the Volito Group in the long term.
In view of its strong financial position and an aircraft fleet that
generates a strong operative cash flow, Volito Aviation sees
interesting opportunities in a market that for the foreseeable future
will be marked by downward pressure on prices and companies with a
need to sell assets.
Volito Fastigheter expects that in 2009 the market will be somewhat
weaker in terms of demand for commercial premises. However, it is
felt that the market dynamics and long-term growth conditions will
remain good, which is why the coming years can provide exciting
opportunities for expansion in a longer perspective.
It is feared that the ongoing financial crisis will worsen. As a result of
this, Nordkap Bank will focus on consolidating and structuring its loan
management with an aim to maintain the quality of its loan portfolio.
Nordkap Bank also sees new business opportunities in the changing
market. With a competent team, a strict risk management culture
and cost-effective organisation, Nordkap Bank will be able to gain
advantages from a tighter loan market with higher margins.
Financial risksIn its business activities the Volito Group is exposed to various types
of financial risks. Financial risks relate to changes in exchange rates
and interest rates that affect the company’s cash flow, profit and
thereby associated equity. The financial risks also include credit and
refinancing risks.
Exposure applying to the different operations is presented quarterly
for the respective companies’ boards, which make current decisions
regarding 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.
The results of VGS are reported as a share in an associated company.
Exchange rate differences related to translation of VGS are posted in
the equity.
The Volito Group’s holding in Nordkap Bank AG is partly hedged
against changes in the CHF exchange rate through certain borrowings
in CHF. However, a certain amount of the holding is exposed to
changes in the CHF exchange rate. Exchange rate differences related
to translation of the company 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
groups. The Parent company, Volito AB, also has risk exposure relating
to short-term interest rates.
Taken together, the Volito Group’s total loans exposed to short-term
interest rates amount to approx. SEK 948 million.
The Volito Group manages part of its interest rate risks using interest
rate swaps. Hedging relating to 41.8% 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.
Refinancing risks
The Volito Group depends on a functioning credit market. The Group
has a need to continuously refinance parts of its business, see note
39. The Group has a satisfactory equity ratio and loan capacity. It is
therefore Volito’s assessment that there is at present no problem
concerning the credit that is due for refinancing.
Volito’s employees The Volito Group is a relatively small organisation that handles large
capital amounts. The well-being and continuous development of the
Group’s employees are hence of vital importance for the long term
prosperity of the Group.
Volito uses employment conditions as the primary tool for attracting
suitable and talented people. A number of events are organised within
the Group’s various companies to further strengthen the team spirit
and loyalty among people working at Volito.
During the year Johan Lundsgård was appointed CEO of the Volito
Group. Johan has a background as a CEO of various industrial companies.
Previously to joining the company, he was President of Finnveden.
Proposed allocation of the company’s profit The Board of Directors and CEO propose that the profit available for
disposal, SEK 309 794 097.28 is allocated as follows (SEK K):
Dividend, [2 440 000 at SEK 8.25 per share] 20 130
Carried forward 289 664
Total 309 794
The proposed dividend reduces the Group’s equity ratio to 50% from
51%. 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 2008 2007 2008 2007
2 Net sales 381 208 530 694 11 639 10 315
3 Income affecting comparability – 110 003 – –
4 Other operating income 51 314 15 937 42 719 855
1, 6 432 522 656 634 54 358 11 170
Operating expenses
5 Other external expenses -163 086 -148 380 -13 691 -12 612
7 Personnel costs -108 659 -91 095 -13 135 -13 673
8 Depreciation and write-downs of tangible
and intangible fixed assets -44 192 -147 697 -633 -670
9 Expenses affecting comparability – -73 219 – –
10 Other operating expenses -2 153 -6 497 -1 149 –
Operating profit/loss 114 432 189 746 25 750 -15 785
Result from financial income and expenses
11 Profit/loss from participations in group companies - 11 634 36 495 12 205
12 Profit/loss from participations in associated companies 33 377 -11 500 -7 344 -23 640
13 Profit/loss from other securities and
receivables held as fixed assets -91 735 276 736 -81 475 246 573
14 Interest income and similar income 15 131 27 356 12 331 9 095
15 Interest expenses and similar expenses -99 620 -142 136 -42 938 -22 386
16 Items affecting comparability - 249 042 – –
Profit/loss after financial items -28 415 600 878 -57 181 206 062
Appropriations
Reversed accelerated depreciations – – 2 341 –
17 Profit/loss before tax -28 415 600 878 -54 840 206 062
18 Taxes 20 768 -91 607 11 714 -30 845
Minority interests’ participation in profit/loss for the year -35 583 -117 805 – –
PROFIT/LOSS FOR THE YEAR -43 230 391 466 -43 126 175 217
36
Balance Sheet The Group The Parent Company
Note Amounts in SEK K 2008-12-31 2007-12-31 2008-12-31 2007-12-31
ASSETS Fixed assets
Intangible fixed assets
19 Other intangible assets 1 035 1 680 – –
20 Goodwill 2 369 4 025 – –
3 404 5 705 – –
Tangible fixed assets
21 Real estate 976 704 892 020 – 38 432
22 Aircraft 261 222 280 804 – –
23 Aircraft inventories 405 573 – –
24 Equipment, tools and installations 15 208 10 021 3 142 2 977
Construction in progress and advance
25 payments relating to tangible fixed assets 1 830 3 686 – –
1 255 369 1 187 104 3 142 41 409
Financial fixed assets
26 Participations in group companies – – 540 543 535 203
27 Receivables from group companies – – 91 979 74 031
28 Participations in associated companies 385 963 287 525 10 569 18 509
29 Receivables from associated companies 508 207 413 326 – –
30 Other securities held as fixed assets 439 341 544 251 408 167 500 967
31 Deferred tax assets 45 104 47 171 25 561 25 616
32 Pre-paid borrowing expenses 3 409 5 134 – 1
33 Other long-term receivables 7 073 6 076 1 342 625
1 389 097 1 303 483 1 078 161 1 154 952
Total fixed assets 2 647 870 2 496 292 1 081 303 1 196 361
Current assets
Inventories etc.
Raw materials and necessities 3 833 3 081 6 8
3 833 3 081 6 8
Current receivables
Accounts receivable – trade 10 651 7 404 14 1 281
Receivables from group companies 65 2 865 33 746 18 996
Receivables from associated companies 107 658 52 902 288 19 059
Income tax receivables 12 475 9 664 – 379
Other receivables 4 848 8 180 578 1 905
34 Prepaid expenses and accrued income 11 304 24 241 827 845
147 001 105 256 35 453 42 465
35 Short-term investments 1 477 998 1 477 998
Cash and bank balances 129 561 142 224 1 234 1 377
Total current assets 281 872 251 559 38 170 44 848
1 TOTAL ASSETS 2 929 742 2 747 851 1 119 473 1 241 209
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Balance Sheet The Group The Parent Company
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Note Amounts in SEK K 2008-12-31 2007-12-31 2008-12-31 2007-12-31
EQUITY AND LIABILITIES
37 Equity
Restricted equity
Share capital (2 440 000 shares at nom. SEK 100) 244 000 122 000 244 000 122 000
Issue with option 3 003 5 005 3 003 5 005
Restricted reserves/Statutory reserve 85 622 80 985 18 002 16 000
Non-restricted equity
Non-restricted reserves/Profit brought forward 609 779 309 490 352 920 349 764
Net profit/loss for the year -43 230 391 466 -43 126 175 217
899 174 908 946 574 799 667 986
Minority interests 312 020 228 697 – –
38 Untaxed reserves
Accumulated accelerated depreciation – – – 2 342
– – – 2 342
Provisions
31 Provisions for deferred taxes 80 919 144 766 – 44 495
Other provisions – 93 – –
80 919 144 859 – 44 495
Long-term liabilities
39 Other liabilities to credit institutes 749 097 504 375 350 000 82 106
41 Other liabilities 71 955 33 693 – –
821 052 538 068 350 000 82 106
Current liabilities
39 Liabilities to credit institutes 575 382 595 071 84 473 156 991
40 Bank overdraft facilities 40 412 159 467 34 885 138 691
Advance payment from customers 4 946 12 939 – –
Accounts payable - trade 16 385 15 460 1 027 1 760
Liabilities to Parent company 242 822 177 822
Liabilities to Group companies – – 17 195 118 322
Liabilities to associated companies 17 054 23 271 240 240
Income tax liabilities 79 144 42 455 33 322 –
Other liabilities 8 360 17 422 536 12 232
42 Accrued expenses and deferred income 74 652 60 374 22 819 15 222
816 577 927 281 194 674 444 280
TOTAL EQUITY AND LIABILITIES 2 929 742 2 747 851 1 119 473 1 241 209
38
Pledged Assets and Contingent Liabilities The Group The Parent Company
Amounts in SEK K 2008-12-31 2007-12-31 2008-12-31 2007-12-31
Pledged assets
For own liabilities and provisions
Property mortgages 698 855 731 355 – 44 000
Chattel mortgages 36 130 36 130 10 000 10 000
Shares 377 454 469 710 351 240 458 886
Shares in subsidiaries 193 339 193 359 295 610 290 030
Receivables 26 000 26 000 – –
Aircraft mortgages 146 884 147 548 – –
Other 1 000 1 000 1 000 1 000
Total pledged assets 1 479 662 1 605 102 657 850 803 916
Contingent liabilities
Guarantees for Group companies – – 134 357 55 367
Guarantees for associated companies 5 400 5 400 5 400 5 400
Tax case relating to claimed deductible deficiency – 58 155 – 58 155
Ongoing tax case relating to claimed deductible deficiency 38 771 36 224 – –
Claim for tax-fee capital gain – 4 578 – –
Tax case relating to claim
for tax-free dividend – 7 116 – 4 185
Claim for tax-free dividend 1 696 – 1 509 –
Other contingent liabilities 200 200 200 200
Total contingent liabilities 46 067 111 673 141 466 123 307
The Group
For the financial years 1999 and 2000, Volito has claimed a deduction for the deficiency in the subsidiary, Dean Aviation Company LLC. The deduction was
called into question by the Swedish Tax Authority. The County Administrative Court approved the deficiency, but the Swedish Tax Authority appealed to the
Administrative Court of Appeal, which in December 2008 ruled in the Swedish Tax Authority’s favour. Volito has decided to apply for leave to appeal to the
Supreme Administrative Court. Due to the fact that the possibility of a leave to appeal is uncertain, the company has decided to report the tax that resulted
from the judgments in the Administrative Court of Appeal, together with the interest on this tax, as expenses and liabilities as of 31 December 2008. With
this disappears the contingent liability that was reported for the named tax and interest.
The Swedish Tax Authority has filed a claim in the County Administrative Court that the deductible deficiency as of 31 December 2004 in an acquired
company should not be permitted according to the law on tax avoidance. Utilised and valued deductible deficiencies amount to SEK 140 million, which cor-
responds to SEK 39 million in deferred taxes.
Volito AB has successfully concluded the process concerning tax exemption on dividends and capital gains relating to the holding in Peab AB. In April 2008
the Administrative Court of Appeal judged that the dividend on the holding is tax exempt for the income years 2001 and 2002. Thereafter, the Swedish Tax
Authority decided in accordance with these rulings relating to the income year 2004. (The Swedish Tax Authority had previously approved tax exemption
for the income years 2003 and 2005. The years 2006 and 2007 have never been called into question.)
In 2008 the Volito Group received SEK 6.1 million in dividends from Peab Industri AB. Volito asserts that, like the holding in Peab AB, this holding is busi-
ness-contingent, which means the dividends are exempt from tax. As the claim that the holding in Peab Industri AB is business-contingent has not yet been
reported to the Swedish Tax Authority the issue has not been adjudicated. If the company is denied exemption from tax, no taxable income arises, as the
deductible deficiency from 2007 covers the received dividend.
The Parent Company
For the financial years 1999 and 2000, Volito has claimed a deduction for the deficiency in the subsidiary, Dean Aviation Company LLC. The deduction was
called into question by the Swedish Tax Authority. The County Administrative Court approved the deficiency, but the Swedish Tax Authority appealed to the
Administrative Court of Appeal, which in December 2008 ruled in the Swedish Tax Authority’s favour. Volito has decided to apply for leave to appeal to the
Supreme Administrative Court. Due to the fact that the possibility of a leave to appeal is uncertain, the company has decided to report the tax that resulted
from the judgment in the Administrative Court of Appeal, together with the interest on this tax, as expenses and liabilities as of 31 December 2008. With
this disappears the contingent liability that was reported for the named tax and interest.
Volito AB has successfully concluded the process concerning tax exemption on dividends and capital gains relating to the holding in Peab AB. In April 2008
the Administrative Court of Appeal judged that the dividend on the holding is tax-exempt for the income years 2001 and 2002. Thereafter, the Swedish Tax
Authority decided in accordance with these rulings relating to the income year 2004. (The Swedish Tax Authority had previously approved tax exemption
for the income years 2003 and 2005. The years 2006 and 2007 have never been called into question.)
In 2008 Volito received SEK 5.7 million in dividends from Peab Industri AB. Volito asserts that, like the holding in Peab AB, this holding is business-contin-
gent, which means the dividends are exempt from tax. As the claim that the holding in Peab Industri AB is business-contingent has not yet been reported
to the Swedish Tax Authority the issue has not been adjudicated. If the company is denied exemption from tax, no taxable income arises, as the deductible
deficiency from 2007 covers the received dividend.
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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 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
Movements between unrestricted
and restricted equity – 2 635 - 2 635 – – –
Profit/loss for the year – – - 43 230 – – -43 126
Dividend – – -40 260 – – -40 260
Bonus Issue 122 000 – -122 000 122 000 – -122 000
Buy-back of option – – -14 475 – – -14 475
FX/translation diff for the year – – 88 193 – – –
Group contribution – – – – – 6 492
Tax effects on Group contribution – – – – – -1 818
Equity as of 31 December 2008 244 000 88 625 566 549 244 000 21 005 309 794
Note 37 contains further information on equity.
40
Cash Flow Statement The Group The Parent Company
Amounts in SEK K 2008-12-31 2007-12-31 2008-12-31 2007-12-31
Operating activities
Profit/loss after financial income and expenses -28 415 600 878 -57 181 206 062
Adjustments for items not included in cash flow, etc 102 276 -374 260 67 082 -208 105
73 861 226 618 9 901 -2 043
Income taxes paid -14 601 -11 949 -326 -518
Cash flow from operating activities before
changes in working capital 59 260 214 669 9 575 -2 561
Cash flow from changes in working capital
Increase(-)/Decrease(+) in inventories -752 1 332 2 6
Increase(-)/Decrease(+) in current receivables -69 956 15 537 -1 551 -7 687
Increase(+)/Decrease(-) in current liabilities -6 245 -5 669 -27 507 11 345
Cash flow from operating activities -17 693 225 869 -19 481 1 103
Investment activities
Acquisition of subsidiaries -79 559 -33 513 – –
Disposal of subsidiaries 31 871 12 371 120 240
Acquisition of intangible fixed assets – -1 482 – –
Acquisition of tangible fixed assets -31 291 -98 764 -490 -2 005
Disposal of tangible fixed assets 46 918 386 884 – –
Investments in financial assets -28 228 -408 301 -27 290 -49 340
Disposal of financial assets 8 185 16 398 12 985 28 068
Cash flow from investment activities -52 104 -126 407 -14 675 -23 037
Financing activities
Buy–back of option -14 475 – -14 475 –
Proceeds from borrowing 520 292 157 868 430 416 83 348
Repayment of borrowing -426 996 -145 899 -350 113 -30 116
Dividends paid -31 815 -30 500 -31 815 -30 500
Dividends paid to minority -2 200 – – –
Cash flow from financing activities 44 806 -18 531 34 013 22 732
Cash flow for the year -24 991 80 931 -143 798
Liquid funds at beginning of period 142 224 59 381 1 377 579
Exchange rate difference in liquid funds 12 328 1 912 – –
Liquid funds at end of period 129 561 142 224 1 234 1 377
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Supplement to Cash Flow Statement The Group The Parent Company
Amounts in SEK K 2008-12-31 2007-12-31 2008-12-31 2007-12-31
Interest paid and dividends received
Dividends received 26 829 15 737 40 270 29 177
Interest received 6 554 4 153 1 107 349
Interest paid -66 285 -135 909 -22 800 -17 754
Adjustments for items not included in the cash flow, etc
Less: Profit participation in associated companies -33 377 -12 242 – –
Dividends from subsidiaries – – -21 588 -9 550
Dividends from associated companies 596 – – –
Depreciation and write-downs of fixed assets 44 192 147 697 633 670
Depreciation of prepaid loan expenses 2 206 34 921 10 9
Write-downs of assets 5 827 59 374 15 236 55 574
Reversed write-downs -36 907 -1 019 -33 108 -1 019
Unrealised exchange rate differences -12 290 5 472 -1 255 -2 472
Gains/losses from disposal of fixed assets -2 076 70 108 91 557 –
Gains/losses from disposal of financial fixed assets 151 187 2 781 – 8 783
Gains/losses from sale of subsidiaries -32 586 -11 979 – –
Other provisions -93 28 – –
Cost reduction in interest on participating loan – – – –
Reversed maintenance reserves – -106 940 – –
Dividend, Peab Industri AB – -292 400 – -260 100
Exchange profit on payment of loans – -270 061 – –
Other non cash items 15 597 – 15 597 –
102 276 -374 260 67 082 -208 105
Acquisition of subsidiaries and other business units
Acquired assets and liabilities:
Tangible fixed assets 125 000 78 498 – –
Operating receivables 170 2 011 – –
Liquid funds 198 2 719 – –
Total assets 125 368 83 228 – –
Loans – 44 468 – –
Operating liabilities 45 491 2 528 – –
Total provisions and liabilities 45 491 46 996 – –
Purchase price paid 79 757 36 232 – –
Less: Liquid funds in the acquired operations -198 -2 719 – –
Effect on liquid funds (minus=increase) 79 559 33 513 – –
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Supplement to Cash Flow Statement The Group The Parent Company
Amounts in SEK K 2008-12-31 2007-12-31 2008-12-31 2007-12-31
Disposal of subsidiaries and other business units
Disposal of assets and liabilities:
Operating receivables 331 – – –
Fixed assets 30 143 – – –
Operating receivables 2 659 2 247 – –
Liquid funds 570 130 – –
Total assets 33 703 2 377 – –
Operating liabilities 33 848 1 855 – –
Total provisions and liabilities 33 848 1 855 – –
Purchase price received 32 441 – – –
Less: Liquid funds in disposed-of operations -570 – – –
Effect on liquid funds 31 871 – – –
Liquid funds
The following components are included in liquid funds:
Cash and bank balances 129 561 142 224 1 234 1 377
Unutilised credit facilities
Unutilised credit facilities amount to SEK 240 821 K (66 029) for the Group and SEK 122 115 K (16 788) for the Parent Company.
Investments
Investments made that can be considered to have raised the operation’s capacity level amount to SEK 110.8 million (132,2).
The year’s investments in tangible fixed assets amount to SEK 0.5 million (2.0).
Amounts in SEK K 2008-12-31 2007-12-31 2008-12-31 2007-12-31
Change in net debt
Net debt at beginning of period 694 353 2 753 726 378 476 320 504
Proceeds from new interest-bearing borrowings 520 292 157 868 430 416 83 348
Repayment of interest-bearing borrowings -426 996 -145 899 -350 113 -30 116
Unrealised FX rate differences in interest-bearing borrowings 18 941 116 18 941 -694
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 -15 763 43 273 -90 104 -17 166
Investment in new interest-bearing assets -5 597 -403 167 – –
Disposal/reduction of interest-bearing assets 2 002 16 398 6 802 -240
Unrealised FX rate differences in interest-bearing receivables – 4 798 -20 196 -1 778
Other changes in interest-bearing assets -78 883 56 623 8 674 25 416
Changes in liquid funds 12 663 -82 843 142 -798
Net debt at end of period 721 012 694 353 383 038 378 476
43
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, 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.
From 2008 all foreign subsidiaries are translated according to the current method. Otherwise, all other 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 operations 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 booked values of the Group’s assets are checked at each accounting year-end to determine if there is any indication of a need for write-downs. If there is such an indication, the recovery value of the asset is calculated as the highest of the utilisation value and net sales value. The asset is written down if the recovery value is less than the booked value. When calculating the utilisation value, the future cash flow is discounted to a rate of interest before tax that aims to take into consideration the market assessment of risk-free interest and the risk associated with the asset in question. An asset that is dependent on other assets is not considered to generate any independent cash flows. Such an asset is assigned instead to the smallest cash-generating unit where the independent cash flows can be stated. A write-down is reversed if a change has taken place in the calculations used to determine the recovery value. A reverse is only carried out to the extent that the asset’s booked value does not exceed the booked value that would have been shown, with a deduction for the depreciation, if there was to be no write-down.
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 liabilities in foreign currencies have been translated at the accounting year-end exchange rate in accordance with recommendation No.8 of the Swedish Financial Accounting Standards Council. Exchange rate differences for operating receivables and operating liabilities are included in the operating profit/loss, while differences for financial receivables and financial liabilities are reported among financial income and expense items.
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.
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 and Collectum.
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.
Items affecting comparabilityThe Swedish Financial Accounting Standards Council’s recommendation No. 4 is applied, which means that the effects on results of certain events and transactions of importance are specified within the relevant income concepts.
Consolidated financial statements The consolidated financial statements have been prepared according to recommendation RR 1:00 of the Swedish Financial Accounting Standards Council.
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 the 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 balance sheet 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 liabilities within the Group, transactions between companies in the Group, and associated unrealised profits are all totally eliminated. Unrealised profits deriving from transactions with associated companies and joint ventures are eliminated to the extent that the Group owns participations in the 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 previously been carried out according to the monetary method. This principle followed 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 from the start of 2008.
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.
Group contributions and shareholders’ contributionsThe company reports Group contributions and the shareholders’ contributions according to the pronouncements of the Emerging Issues Task Force of the Swedish Financial Accounting Standards Council.
The shareholders’ contribution is entered directly against equity at the recipient and is activated in shares and participations at the donor, to the extent that a write-down is not required.
Group contributions are reported according to economic significance. This means that the Group contributions submitted aimed at minimising the Group’s total tax are reported directly against retained profits after deduction for the current tax effect.
Group contributions 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 occurred during the year are mainly due to the fact that the major part of the aircraft leasing operation is now within VGS and as a result the operation is translated according to the current method.
Information about the GroupThe company is a subsidiary of AB Axel Granlund, corporate identity number 556409-6013 with registered office in Malmö. AB Axel Granlund owns 83.3% (82.1%) of the 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 the purchases and sales apply to other companies within the group of companies to which the Group belongs.
Of the Parent company’s total purchases and sales in Swedish kronor, 26% (26%) of the purchases and 75% (64%) of the sales apply to other companies within the group of companies to which the company belongs.
Information about acquisitions and disposals during the periodVolito Fastigheter acquired three companies in 2008 – Volito Mosippan AB, Volito Delfinen AB and Volito Proveniens AB. Volito Mosippan and Volito Delfinen were acquired from the Parent company, Volito AB
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Related partiesClose relationships that involve a controlling influenceThe GroupThe Group is owned by AB Axel Granlund (83.3%), as well as Lennart Blecher (partly through companies) 9.0%, and Bo Olsdal (partly through companies) and sons 7.7%.
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.
Volito AB has sold the property, Delfinen 17, to Volito Fastigheter via the subsidiary Volito Delfinen AB. The property was sold for the market value.
With associated companiesAs of 31 December 2008, associated companies had a debt to the Volito Group ofSEK 615.9 million (466.2). The largest item relates to a loan that Volito Cyprus Holding made to VGS Aircraft Holding Ltd for SEK 418.1 million (344.3) and which can partly be converted into shares in VGS. Another large item relates to the loan made by Volito AG to Nordkap Holding AG for SEK 90.1 million (69.0). Transactions with associated companies are priced according to market conditions.
With key employees In 2004 Volito AB issued two promissory notes combined with separable options, 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. One of the two promissory notes for a nominal SEK 2 million was redeemed in November. The value of the option amounted to SEK 14.5 million and has been entered under equity.
Volito Aviation has issued two convertible promissory notes to the CEO and CFO of Volito Aviation Services AB. The promissory notes are for a nominal SEK 26.4 million and SEK 5.1 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. As the preconditions for the programme will be drastically changed due to the worsened economic climate, it was decided to suspend the programme and redeem the promissory notes.
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.
Important events after accounting year-endThere have been no events of considerable significance after accounting year-end.
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Note 1 Information on lines of business Primary segment Aviation Real Estate Structured Finance Other Elimination Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
IncomeExternal sales 294 830 451 038 137 692 95 182 – – – 411 – – 432 522 546 631Income affecting comparability – 110 003 – – – – – – – – – 110 003Internal sales – – 1 343 176 – – 7 541 6 710 -8 884 -6 886 – –
Total income 294 830 561 041 139 035 95 358 – – 7 541 7 121 -8 884 -6 886 432 522 656 634
Profit/lossProfit/loss per line of business 50 720 158 892 82 955 49 202 -224 -209 -19 019 -18 139 – – 114 432 189 746
Operating profit/loss 50 720 158 892 82 955 49 202 -224 -209 -19 019 -18 139 – – 114 432 189 746
Interest expenses -25 293 -97 203 -34 078 -31 261 -6 255 -2 906 -39 825 -18 439 5 831 7 595 -99 620 -142 214Interest income 1 525 19 307 3 430 3 484 3 865 3 142 12 142 9 096 -5 831 -7 595 15 131 27 434Profit participations/dividends 56 535 16 495 -87 171 273 050 -20 872 10 080 -6 850 -22 755 – – -58 358 276 870Items affecting comparability – 249 042 – – – – – – – – – 249 042Tax expenses for the year -5 084 -47 598 58 084 -56 973 -98 – -32 134 12 964 – – 20 768 -91 607
Profit/loss before minority interests 78 403 298 935 23 220 237 502 -23 584 10 107 -85 686 -37 273 – – -7 647 509 271Minority interests -31 580 -118 022 -4 003 217 – – – – – – -35 583 -117 805
Net profit/loss for the year 46 823 180 913 19 217 237 719 -23 584 10 107 -85 686 -37 273 – – -43 230 391 466
Aviation Real Estate Structured Finance Other Elimination Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
Other informationAssets 944 393 872 005 1 039 930 1 032 850 109 153 92 626 148 535 59 229 -137 573 -140 635 2 104 438 1 916 075Equity share/ securities 318 926 215 519 387 478 501 807 104 027 100 333 14 873 14 117 – – 825 304 831 776
Total assets 1 263 319 1 087 524 1 427 408 1 534 657 213 180 192 959 163 408 73 346 -137 573 -140 635 2 929 742 2 747 851
Liabilities/provisions/minority interests 678 232 611 928 888 642 1 011 353 93 947 74 713 507 320 281 545 -137 573 -140 635 2 030 568 1 838 904
Total liabilities 678 232 611 928 888 642 1 011 353 93 947 74 713 507 320 281 545 -137 573 -140 635 2 030 568 1 838 904
Investments in tangible assets 21 608 24 338 9 193 73 457 – – 490 969 – – 31 291 98 764Depreciation of tangible assets -34 563 -136 945 -9 303 -8 359 – – -326 -261 – – -44 192 -145 565Costs, exceeding depreciation, not matched by payments -1 747 -107 596 -523 -533 – – -10 – – – -2 280 -108 129
The internal price between the Group’s various segments is set according to the “arm’s length” principle, i.e. between parties who are independent of each other, well-informed and with an interest in the transactions.
Sales between the Group’s various segments relate to administrative fees and rents. The administrative fees have been allocated according to actual costs and utilisation. The rents conform to market conditions.
Loans between Group companies have been marked for interest according to the current finance policy. The interest rates conform to market conditions.
The segments’ 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.
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Costs exceeding depreciation that are not matched by payments include depreciation on prepaid borrowing expenses as well as capital gains /losses on divested tangible fixed assets.
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.
Note 2 Net turnover breakdown 2008 2007
The Parent companyNet turnover by main types of incomeReal Estate 3 318 4 478Income from administration 8 321 5 837 11 639 10 315
Note 3 Income affecting comparability 2008 2007
The GroupSettlement of maintenance reserves for sold aircraft – 106 940Other income affecting comparability – 3 063
– 110 003
Note 4 Other operating income 2008 2007
The GroupCapital gains from sale of fixed assets 34 215 3 111Exchange rate differences 16 798 2 826Guarantee commission – 855Income from administration – 402Maintenance compensation within aircraft leasing – 7 097Other 301 1 646
51 314 15 937
The Parent companyGuarantee commission – 855Capital gains from sale of fixed assets 42 719 –
42 719 855
Volito AB has sold the property, Delfinen 17, to Volito Fastigheter via the subsidiary Volito Juli 2002 AB. The transaction generated a capital gain of SEK 42.7 million.
Note 5 Auditing: fees and expenses 2008 2007
The GroupKPMG
Audit assignments 1 010 1 341Other assignments 90 –ÖHRLINGS PRICEWATERHOUSECOOPERS
Audit assignments – 458Other assignments 44 27OTHER AUDITORS
Audit assignments 100 124
The Parent companyKPMG
Audit assignments 288 325Other assignments 20 –
Note 6 Leasing fees related to operational leasing 2008 2007
The GroupAgreed future leasing income with reference to non-revocable contracts in the aviation business due for payment: Within one year 52 050 43 423 Between one and five years 91 149 99 490 Later than five years – –
143 199 142 913
Important leasing agreementsAviationIn 2001, Volito Commuter KB acquired two Fokker 50 aircraft, which are leased to Denim Air B.V. The leasing agreements run until the end of March 2012.
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 De-cember 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 sig-ned 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 7,7525 (previous year: USD 1 = SEK 6,4675).
Real EstateAccording to the contract portfolio at year-end, rental income in the Volito Fastig-heter group and Volito AB was divided between 96% commercial properties and 4% residential. The commercial rental income was divided between 169 contracts in a number of different sectors. With the aim of limiting exposure to credit losses, regular follow-ups are made of tenants’ credit ratings. There is no sector or tenant that accounts for more than 10% of the rental income.
The contract portfolio for commercial premises in the Volito Group expires as below. The stated amounts refer to contracted closing rents in the portfolio.
2008 2007
Within one year 9 108 11 074Between one and five years 72 645 67 282Later than five years 23 036 18 241
104 789 96 597
Note 7 Staff and personnel costs
of which, of which, Average number of employees 2008 men 2007 men
Parent companySweden 7 43% 7 43%
SubsidiariesSweden 79 70% 74 73%USA 44 77% 35 74%Switzerland – 0% 9 78%Ireland 7 29% 3 0%Other 1 100% 2 100%
Total in subsidiaries 131 70% 123 77% Group total 138 69% 130 74%
Gender distribution in 2008 2007company 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 2008 2007 Salaries and Social security Salaries and Social security remuneration expenses remuneration expenses
Parent company 8 378 4 544 8 529 4 924(of which, pension costs) 1) (1 455) 1) (1 505)Subsidiaries 65 289 23 637 52 892 17 188(of which, pension costs) (5 969) (3 740)
Total for the Group 73 667 28 181 61 421 22 112(of which, pension costs) 2) (7 424) 2) (5 245)
1) Of the Parent company’s pension costs, SEK 687 K (previous year: SEK 882 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 1 635 K (previous year: SEK 1 781 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 48 employees with Alecta and Collectum. All other employees in the Group have individual pension insurance, which is contribution-based.
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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 similar case for Collectum. The company has not had access to such information for the financial year 2008 that would make it possible to report these plans as benefit-determined 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 2008 2007 Board Other Board Other and CEO employees and CEO employees
Parent company Sweden 3 211 5 167 2 697 5 832
Subsidiaries Sweden 14 793 36 223 7 084 31 154
Subsidiaries abroad USA 619 8 634 608 5 652Switzerland 147 – 655 3 849Denmark – – – 868Ireland – 3 891 – 2 514Singapore – 982 – 508
Subsidiaries total 15 559 49 730 8 347 44 545
Group total 18 770 54 897 11 044 50 377 Of the salaries and remuneration paid to the other members of staff in the Group, SEK 1 840 K (SEK 1 580 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 five 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 2008 2007
The GroupOther intangible assets -314 -476Goodwill -1 656 -1 656Real estate -9 201 -8 296Aircraft -30 352 -135 144Aircraft inventories -168 -168Equipment, tools and installations -2 501 -1 957
-44 192 -147 697
The Parent companyReal estate -307 -409Equipment, tools and installations -326 -261
-633 -670
Note 9 Items/expenses affecting comparability 2008 2007
The GroupCapital losses from disposal of aircraft – -73 219
Note 10 Other operating expenses 2008 2007
The GroupExchange losses on receivables/liabilities of an operating nature -246 -497Provision for acquisition of promissory notes in excess of nominal amount – -6 000Write-downs of receivables -1 149 –Other -758 –
-2 153 -6 497
The Parent company Write-downs of receivables 1 149 –
Note 11 Profit/loss from participations in Group companies 2008 2007
The GroupCapital gain/loss from disposal of participations – 11 979Other – -345
– 11 634
The Parent companyDividends received 37 964 24 550Acquisition of convertible promissory note – -12 000Other -1 469 -345
36 495 12 205
Note 12 Profit/loss from participations in associated companies 2008 2007
The GroupDividend 665 –Capital gain/loss from disposal of participations and receivables 1 540 618Write-downs of receivables -3 417 -4 404Reversed write-downs 1 998 –Bankruptcy – -19 956Profit participations in associated 32 781 12 242Other costs -190 –
33 377 -11 500
The Parent company Dividend 665 102Capital gain/loss from disposal of participations 1 540 618Write-downs of receivables -11 357 -4 404Reversed write-downs 1 998 –Bankruptcy – -19 956Other costs -190 –
-7 344 -23 640
Note 13 Profit/loss from other securities andreceivables that are fixed assets 2008 2007
The GroupDividend 26 084 308 107Capital gain/loss from disposal of participations and receivables -2 886 2 519Write-downs – -34 909Reversed write-downs 34 909 1 019Exchange of shares -149 842 –
-91 735 276 736
The Parent companyDividend 23 234 274 144Capital gain/loss from disposals -2 886 2 519Write-downs – -31 109Reversed write-downs 31 109 1 019Exchange of shares -132 932 –
-81 475 246 573
Note 14 Interest income and similar profit/loss items 2008 2007
The GroupInterest income, Group companies – 104Interest income, others 6 015 6 280Exchange rate difference 9 036 20 863Profit/loss on short-term investments – 79Dividend from short-term investments 80 30
15 131 27 356
The Parent companyInterest income, Group companies 4 578 3 457Interest income, others 122 1 493Exchange profit 7 551 4 036Profit/loss from short-term investments – 79Dividends 80 30
12 331 9 095
A major part of last year’s exchange profit, SEK 17.1 million, is attributable to Volito Aviation, as the foreign subsidiaries have been translated according to the monetary method. From the year 2008 the current method is applied for foreign subsidaries.
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Note 15 Interest expenses and similar profit/loss items 2008 2007
The GroupInterest expenses, Group companies -134 –Interest expenses, others -67 224 -127 359Tax interest -15 597 –Write-downs of short term investments -779 –Amortisation on prepaid borrowing expenses -2 206 -13 902Exchange rate difference -12 979 -57Other -701 -818
-99 620 -142 136The Parent companyInterest expenses, Group companies -3 221 -4 405Interest expenses, others -22 946 -17 077Tax interest -15 597 –Write-downs of short term investments -779 –Amortisation on prepaid borrowing expenses -10 -9Other -385 -895
-42 938 -22 386
No interest expenses have been set up as assets in the acquisition value of the assets.
Note 16 Income and expenses items affecting comparability 2008 2007
The Group Exchange profit from repayment of loan – 270 061Amortisation on prepaid borrowing expenses – -21 019
– 249 042
The loan was repaid in conjunction with the Group selling its aircraft to VGS in 2007.
Note 17 Exch. rate differences that have affected the profit/loss 2008 2007
The GroupExchange rate differences that have affected operating profit/loss 16 552 2 329Financial exchange rate differences -3 943 20 806Financial exchange rate differences, affecting comparability – 270 061
12 609 293 196 The Parent companyFinancial exchange rate differences 7 551 4 036
Note 18 TaxThe GroupTax 2008 2007
Current tax -41 950 -41 916Deferred tax 62 718 -49 691
Total reported tax expenses 20 768 -91 607
The Parent companyTax 2008 2007
Current tax -34 543 –Deferred tax 46 257 -30 845
Total reported tax expenses 11 714 -30 845
Reconciliation of effective tax rate 2008 2007The Group Per cent Amount Per cent Amount
Profit/loss before tax -28 415 600 878Tax according to the current tax rate for the Parent company 28,0% 7 956 28,0% -168 246Effect of other tax rates for foreign subsidiaries 52,7% 14 983 -7,1% 42 754Depreciation on group wise goodwill -1,6% -464 0,1% -464Non-deductible expenses -181,1% -51 465 3,1% -18 821Tax-exempt income 102,7% 29 169 -15,6% 93 921Tax losses carryforward not recognizedas deferred tax assets -14,6% -4 162 0,0% –Previously unassessed deductible deficiency 9,9% 2 800 -1,6% 9 370Tax relating to previous years -128,5% -36 514 0,0% 167Temporary differences 184,3% 52 360 8,6% -51 612Taxable result from disposal of shares -3,9% -1 114 0,0% –Effect due to change in tax rate 7,1% 2 016 0,0% –Unreported tax on associated companies’ profits 18,0% 5 127 -0,2% 1 354Other 0,3% 76 0,0% -30
Reported effective tax 73,1% 20 768 15,2% -91 607
Reconciliation of effective tax rate 2008 2007The Parent company Per cent Amount Per cent Amount
Profit/loss before tax -54 840 206 062Tax according to the current tax rate for the Parent company 28,0% 15 355 28,0% -57 697Non-deductible expenses -84,5% -46 349 9,3% -19 225Tax-exempt income 72,8% 39 920 -41,4% 85 268Tax relating to previous years -61,9% -33 929 -0,1% 134Previously unassessed deductible deficiency 0,0% – -2,5% 5 201Temporary differences 81,1% 44 495 21,6% -44 495Effect of previously assessed deficiency -9,3% -5 088 0,0% –Taxable result from disposal of shares -2,0% -1 114 0,0% –Effect due to change in tax rate -3,0% -1 652 0,0% –Other 0,1% 76 0,0% -31
Reported effective tax 21,4% 11 714 15,0% -30 845
Tax items charged to equity 2008-12-31 2007-12-31
The Parent companyEstimated tax in received/submitted Group contributions 1 818 4 565
Note 19 Other intangible assets 2008-12-31 2008-12-31
The Parent companyAccumulated acquisition valuesAt beginning of year 3 421 1 936New acquisitions – 1 482Disposal of subsidiary -539 –Sales and disposals -750 –Translation differences for the year – 3
At year-end 2 132 3 421
Accumulated depreciation according to planAt beginning of year -1 741 -1 265Disposal of subsidiary 208 –Sales and disposals 750 –Depreciation according to plan for the year -314 -476
At year-end -1 097 -1 741
Reported value at end of period 1 035 1 680
The item mainly consists of computer software set up as an asset.
Note 20 Goodwill 2008-12-31 2007-12-31
The GroupAccumulated acquisition valuesAt beginning and end of year 8 282 8 282 Accumulated depreciation according to planAt beginning of year -4 257 -2 601Depreciation according to plan for the year -1 656 -1 656
-5 913 -4 257
Reported value at end of period 2 369 4 025
Note 21 Real Estate 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 990 110 830 357New acquisitions 351 64 394Acquisitions of subsidiaries 125 000 80 948Sales/disposals -45 585 -7 167Reclassifications 10 638 21 307Exchange rate differences for the year – 271
1 080 514 990 110
Accumulated depreciation according to plan At beginning of year -98 090 -87 784Acquisitions of subsidiaries – -2 493Sales/disposals 3 481 483Depreciation according to plan for the year -9 201 -8 296
-103 810 -98 090
Reported value at end of period 976 704 892 020Of which, land Accumulated acquisition values 111 159 103 151
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2008-12-31 2007-12-31
The Parent company Accumulated acquisition valuesAt beginning of year 41 499 35 452New acquisitions – 1 036Sales and disposals -41 499 –Reclassifications – 5 011
– 41 499 Accumulated depreciation according to planAt beginning of year -3 067 -2 658Sales and disposals 3 374 –Depreciation according to plan for the year -307 -409
– -3 067
Reported value at end of period – 38 432 Of which, landAccumulated acquisition values – 4 371
The Group The Parent company
Reported value at end of periodReal estate 973 950 –Buildings and land 2 755 –
976 705 –
Accrued rebuilding costs relating to properties classified as real estate are entered under the item on-going new construction, extensions or rebuilding:
2008-12-31 2007-12-31
The Group 1 830 3 686
Information on actual value of real estate 2008-12-31 2007-12-31
The GroupAccumulated actual valueAt beginning of year 1 267 800 1 078 600At year-end 1 356 900 1 267 800
The Parent companyAccumulated actual valueAt beginning of year 82 000 80 000At year-end – 82 000
On 31 December 2008, the company carried out an external market valuation of the Group’s real estate. The valuation was done according to the guidelines applied by SFI/IPD Swedish Real Estate Index. Based on this valuation, the market value of the real estate amounts to SEK 1 356.9 million (1 267.8). The value is calculated as a yield at an average 6.3% (6.3%).
Real Estate - Effect on profit/loss for the period 2008-12-31 2007-12-31
The GroupRental income 103 533 92 466Direct costs for real estate that generated rental income during the period (operational and maintenance costs, property tax and ground rent) -26 722 -24 433
The Parent companyRental income 3 318 4 478Direct costs for real estate that generated rental income during the period(operational and maintenance costs, property tax and ground rent) -1 306 -1 296
2008-12-31 2007-12-31 The Group Tax assessment value, buildings (in Sweden) 508 210 485 919Tax assessment value, land (in Sweden) 132 924 126 524
The Parent companyTax assessment value, buildings (in Sweden) – 29 000Tax assessment value, land (in Sweden) – 9 469
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: 2008-12-31 2007-12-31
The GroupAcquisition values 1 077 379 977 143Accumulated depreciation at beginning of year -97 403 -87 347Depreciation for the year -8 954 -8 049Depreciation on acquired properties – -2 493Depreciation on sold properties 2 928 484
973 950 879 738Parent companyAcquisition values 41 500 41 500Accumulated depreciation at beginning of year -3 068 -2 659Depreciation for the year -307 -409Disposals for the year -38 125 –
– 38 432
The contract portfolio for commercial premises within the Volito Group as of 31 December 2008 expires according to the table below. Stated amounts refer to contracted closing rents in the portfolio.
The Group 2008-12-31 2007-12-31
Within one year 9 108 11 074Between one and five years 72 645 67 282Later than five years 23 036 18 241
104 789 96 597
Counterparty risks in rental incomesAccording to the contract portfolio at year-end, rental income was divided between 96% commercial properties and 4% residential. The commercial rental income was divided between 169 (150) 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 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 431 879 2 931 226New acquisitions 13 823 22 536Sales/disposals -8 763 -2 521 307Exchange rate differences for the year 2 273 -576
439 212 431 879
Accumulated depreciation according to planAt beginning of year -151 075 -385 864Sales/disposals 4 848 369 666Depreciation according to plan for the year -30 352 -135 144Exchange rate differences for the year -1 411 267
-177 990 -151 075
Reported value at end of period 261 222 280 804
LeasingAircraft that are leased under operational leasing contracts are included with the following amounts:
2008-12-31 2007-12-31
The GroupAcquisition values 391 073 382 205Accumulated depreciation at beginning of year -129 981 -366 431Depreciation for the year -26 364 -130 603Depreciation on sold aircraft – 367 053
234 728 252 224
The period’s leasing income amounts to: 45 246 310 151
Future leasing income that relates to non-revocable operational leasing contracts falls due for payment as below:
2008-12-31 2007-12-31
The Group Within one year 52 050 43 423Between one and five years 91 149 99 490Later than five years – –
143 199 142 913
The greater part of leasing income is USD-based. Translation has been done at the accounting year-end exchange rate of USD 1 = SEK 7,7525 (previous year: USD 1 = SEK 6,4675).
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Note 23 Aircraft inventories 2008-12-31 2007-12-31
The GroupAccumulated acquisition valuesAt beginning and end of year 1 174 1 174
Accumulated depreciation according to plan At beginning of year -601 -433Depreciation according to plan for the year based on acquisition values -168 -168
-769 -601
Reported value at end of period 405 573
Note 24 Equipment, tools and installations 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 17 680 16 628New acquisitions 8 348 2 853Acquisitions of subsidiaries – 72Sales/disposals -1 402 -1 639Exchange rate differences for the year 611 -234
25 237 17 680
Accumulated depreciation according to planAt beginning of year -7 659 -6 924Acquisitions of subsidiaries – -26Sales/disposals 538 1 082Depreciation according to plan for the yearbased on acquisition values -2 501 -1 957Exchange rate differences for the year -407 166
-10 029 -7 659
Reported value at end of period 15 208 10 021
The Parent company Accumulated acquisition valuesAt beginning of year 4 625 3 656New acquisitions 491 969
5 116 4 625
Accumulated depreciation according to planAt beginning of year -1 648 -1 387Depreciation according to plan for the year based on acquisition values -326 -261
-1 974 -1 648
Reported value at end of period 3 142 2 977
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 2008-12-31 2007-12-31
The GroupAt beginning of year 3 686 16 012Reclassifications -10 638 -21 307Investments 8 782 8 981
Reported value at end of period 1 830 3 686
The Parent companyAt beginning of year – 5 011Reclassifications – -5 011
Reported value at end of period – –
Borrowing expensesNo capitalised interest has been included in the acquisition values.
Note 26 Participations in Group companies 2008-12-31 2007-12-31
Accumulated acquisition valuesAt beginning of year 545 203 526 021Submitted shareholders’ contribution 5 580 19 322Sales -240 -240
550 543 545 103
Accumulated write-downs At beginning of year -9 900 -9 900
-9 900 -9 900
Reported value at end of period 540 543 535 203
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Note 26 continued.List of the Parent company’s and Group’s participations in Group companies 2008-12-31 2007-12-31 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 September 2007 AB, 556733-0955, Malmö 100,0 Volito Aviation Oktober 2007 AB, 556733-1029, Malmö 100,0 Volito Aviation Services AB, 556673-5782, Malmö 80,0 Volito Aviation Services Ltd, 436832, Dublin, Ireland Volito Aviation Services Asia Pte Ltd, 200708179R, Singapore Volito Aviation AG, CH - 170.3.027.511-0, Zürich 51,0 Volito Cyprus Holding Ltd, Cyprus HE173483, Limassol Regana Company Ltd, Cyprus HE152714, Limassol Bragina Company Ltd, Cyprus HE153654, Limassol Gribanova Company Ltd, Cyprus HE155087, Limassol Volito Aviation Management AB, 556663-9646, Malmö Volito Malaysian Holding AB, 556662-7609, Malmö Volito TakeOff Ltd, Cyprus HE158317, Limassol Volito Global Ltd, Cyprus HE162753, Limassol Volito Universal Ltd, Cyprus HE162951, Limassol Volito Aviation Malaysian Ltd, LL 04516, Labuan Volito Sunrise Ltd, Cyprus HE170888, Limassol Volito Cirrus Ltd, Cyprus HE167295, Limassol Volito Aviation Ltd, 324448, Dublin, Ireland 100,0 Cryfield Ltd, 324614, Dublin, Ireland 100,0
Volito Fastigheter AB, 556539-1447, Malmö 423 000 100,0 295 610 290 030 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 Volito Mosippan AB, 556631-7979, Malmö 100,0 Volito Delfinen AB, 556630-7988, Malmö 100,0 Volito Proveniens AB, 556758-2415, 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 19 609 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
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 961 1 201
540 543 535 2031) 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 2008-12-31 2007-12-31
The Parent companyAccumulated acquisition valuesAt beginning of year 74 031 77 213Additional receivables 1 223 –Settlement of receivables -2 002 –Reclassifications – -4 000Exchange rate differences for the year 20 196 818
Reported value at end of period 93 448 74 031
Accumulated write-downsAt beginning of year -1 469 –
Reported value at end of period 91 979 74 031
Note 28 Participations in associated companies 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 289 523 97 880Less: bankruptcy – -17 761Purchases 155 264 322Maintenance provision against equity in associated companies – -89 659Sales/Conversions -1 998 -2 218Participations in the profit/loss of associated companies for the year 32 781 12 242Capital gains/losses – 618Reclassifications – 19 288Exchange rate differences for the year 65 502 4 811
385 963 289 523
Accumulated write-downsAt beginning of year -1 998 -1 998Reversal of write-downs for the year 1 998 –
– -1 998
Reported value at end of period 385 963 287 525 The Parent company Accumulated acquisition valuesAt beginning of year 20 507 18 438Purchases – 2 142Less: bankruptcy – -17 761Sales -1 998 -1 600Reclassifications – 19 288
18 509 20 507Accumulated write-downs At beginning of year -1 998 -1 998Write-downs connected to sold participations 1 998 –Write-downs for the year -7 940 –
-7 940 -1 998
Reported value at end of period 10 569 18 509
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List of the Parent company’s and Group’s participations in associated companies 2008-12-31 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 ownedGalenica AB, 556567-7449, Malmö 20,1 2 150 5 377Itesco AB, 556574-0759, Stockholm 24,1 339 339DMH Ltd, 165299, Ireland 40,0 181 17AB Nordsidan, 556058-3212, Malmö 45,0 4 836 4 836
Indirectly ownedNordkap Holding AG,CH-170.3.026.601- 4, Switzerland 40,0 105 062 Nordkap Bank AG, CH-020.3.907.391-5, Switzerland Nordkap Energy Holding AG, CH-170.3.031.564-5, Schweiz 50,0 -1 033 VGS Aircraft Holding (Ireland) Ltd, 43005, Dublin 25,5 274 428
385 963 10 569
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, Schweiz –Nordkap Energy Holding AG, CH - 170.3 031.564.5, Switzerland 50,0 –VGS Aircraft Holding (Ireland) Ltd, 43005, Dublin 25,5 176 843
287 525 18 509 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.
Note 29 Receivables in associated companies 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 413 326 94 696Less: bankruptcy 5 516 -2 195Additional receivables – 344 300Reclassifications – -25 253Exchange rate differences for the year 89 365 1 778
508 207 413 326
Accumulated write-downsAt beginning of year – -5 000Write-downs for the year – -4 404Reclassifications – 9 404
– –
Reported value at end of period 508 207 413 326
The Parent company Accumulated acquisition valuesAt beginning of year – 26 488Less: bankruptcy – -2 195Additional receivables – –Reclassifications – -25 253Exchange rate differences for the year – 960
– –Accumulated write-downsAt beginning of year – -5 000Write-downs for the year – -4 404Reclassiifcations – 9 404
Reported value at end of period – –
Note 30 Holdings in other long-term securities 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 580 129 274 063Additional assets 20 120 18 513Additional assets, Peab Industri AB – 292 400Deductible assets -10 097 -7 065Reclassifications/conversions – 2 218Exchange of shares -149 842 –
440 310 580 129Accumulated write-downsAt beginning of year -35 878 -1 988Reversed write-downs during the year 34 909 1 019Write-downs for the year – -34 909
-969 -35 878
Reported value at end of period 439 341 544 251
The Parent companyAccumulated acquisition valuesAt beginning of year 533 045 259 279Additional assets 19 120 18 513Additional assets, Peab Industri AB – 260 100Deductible assets -10 097 -7 065Reclassifications/conversions – 2 218Exchange of shares -132 932 –
409 136 533 045Accumulated write-downsAt beginning of year -32 078 -1 988Reversed write-downs during the year 31 109 1 019Write-downs for the year – -31 109
-969 -32 078
Reported value at end of period 408 167 500 967
Note 30 continuedThe Group Market value 2008-12-31 Market value 2007-12-31List of securities or equivalent Number of shares Reported value or equivalent Number of shares Reported value
Peab AB (publ) 329 249 15 243 000 382 518 574 050 8 600 000 239 847Peab Industri AB (publ) – – – 245 100 4 300 000 258 000CTT Systems AB (publ) 27 302 1 761 427 44 498 46 843 1 561 427 38 678Bear Stearns (investment fund) 2 177 – 1 938 2 205 – 1 938GFA Domain de Brescou – – – – 218 1 059Båstadtennis & Hotell AB – 18 333 3 960 – 18 333 3 960Tisko 5 010 167 000 5 010 – – –Other – – 1 417 – – 769
439 341 544 251
The Parent Company Market value 2008-12-31 Market value 2007-12-31List of securities or equivalent Number of shares Reported value or equivalent Number of shares Reported value
Peab AB (publ) 293 339 13 580 500 356 304 510 638 7 650 000 229 023Peab Industri AB (publ) – – – 218 025 3 825 000 229 500CTT Systems AB (publ) 27 302 1 761 427 44 498 46 843 1 561 427 38 678Bear Stearns (investment fund) 2 177 – 1 938 2 205 – 1 938GFA Domain de Brescou – – – – 218 1 059Tisko 5 010 167 000 5 010 – – –Other – – 417 – – 769
408 167 500 967
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Volito deems that the market values of the holdings in Peab AB and CTT Systems AB do not reflect their actual value. The share prices in the period after the end of the financial year have been higher than the reported value. In view of this, and that the holding is long-term, Volito deems that there is no write-down requirement in this case.
Not 31 Deferred tax Deferred Deferred tax recoverable taxes liabilities Net
The Group 2008Accelerated depreciation Real estate – 17 622 -17 622 Aircraft – 47 572 -47 572Group surplus value Real estate – 17 589 -17 589 Aircraft 92 656 -564Deductible deficiency 47 532 – 47 532
47 624 83 439 -35 815Offset -2 520 -2 520 –
Net deferred tax liabilities 45 104 80 919 -35 815
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 -341Other – 1 417 -1 417Temporary differences Financial fixed assets – 51 612 -51 612Deductible 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 Parent company 2008Deductible deficiency 25 561 – 25 561
Net deferred tax liabilities 25 561 – 25 561
The Parent company 2007Temporary differences – 44 495 -44 495Deductible deficiency 25 616 – 25 616
Net deferred tax liabilities 25 616 44 495 -18 879
The change in the Parent company between years has been shown as deferred tax expenses/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 taxes have been valued at a nominal amount on 31 December 2008 (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:
2008-12-31 2007-12-31
Fiscal deficit 15 895 9 396
Deferred recoverable taxes, 4 180 TSEK (2 631) 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 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 12 854 65 717Additional items – 2 845Settled items -638 -55 690Exchange rate differences for the year – -18
12 216 12 854
2008-12-31 2007-12-31
Accumulated amortisationAt beginning of year -5 729 -26 530Settled items 572 55 670Amortisation for the year -2 206 -13 862Extra amortisation in conjunction with settlement of prepaid borrowing expenses – -21 019Exchange rate differences for the year – 12
-7 363 -5 729 Prepaid borrowing expenses 4 853 7 125 Reported value at year-end, long-term component 3 409 5 134Reported value at year-end, short-term component 1 444 1 991
4 853 7 125
Note 33 Other long-term receivables 2008-12-31 2007-12-31
The Group Accumulated acquisition valuesAt beginning of year 6 433 7 462Additional receivables 3 184 653Settled receivables -2 090 -36Reclassifications -93 -1 649Exchange rate differences for the year -4 3
7 430 6 433Accumulated write-downs At beginning and end of the year -357 -357
Reported value at year-end 7 073 6 076
The Parent companyAccumulated acquisition valuesAt beginning of year 982 2 006Additional receivables 717 625Reclassifications – -1 649
1 699 982Accumulated write-downs At beginning and end of the year -357 -357
Reported value at year-end 1 342 625
Note 34 Prepaid expenses and accrued income 2008-12-31 2007-12-31
The Group Short-term comp. of prepaid borrowing expenses 1 443 1 991Prepaid expenses 6 927 5 632Accrued income 1 976 15 074Accrued interest income 808 1 347Accrued expenses compensation 150 197
11 304 24 241
The Parent company Short-term comp. of prepaid borrowing expenses – 9Prepaid expenses 677 376Accrued interest income – 310Accrued income 150 150
827 845
Note 35 Short-term investments
The Group and Parent company 2008-12-31 2007-12-31List of Market value Reported Market value Reported securities or equivalent value or equivalent value
Listed participations 1 477 1 477 1 060 998
Note 36 Finance policy
Finance policyFinancial risks refer to changes in exchange rates and interest rates that affect the company’s cash flow, profit/loss and thereby the related shareholders’ equity. Financial risks also include credit risks and refinancing risks.
Exposure applying to the different operations is presented quarterly for the respective companies’ boards, which make current decisions regarding financial risk management based on the market situation and macroeconomic information.
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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 or less years years Total
Real estateSEK 744 604 456 329 142 125 146 150 744 604SEK; credit line 3 681 3 681 – – 3 681Aviation USD 4 141 11 476 17 154 – 28 630USD 5 216 8 478 29 799 – 38 277USD 5 216 8 477 29 799 – 38 276SEK 9 832 3 581 6 251 – 9 832SEK, credit line 1 814 1 814 – – 1 814SEK 27 334 2 567 11 034 13 733 27 334USD 394 – 3 053 – 3 053Other SEK, credit line 101 001 1 001 100 000 – 101 001SEK, credit line 8 646 8 646 – – 8 646SEK, credit line 25 238 25 238 – – 25 238SEK, credit line 32 32 – – 32SEK, investment loan 62 500 – 62 500 – 62 500SEK, investment loan 62 500 – 62 500 – 62 500SEK, investment loan 62 500 – 62 500 – 62 500SEK, investment loan 62 500 – 62 500 – 62 500CHF 5 750 42 237 – – 42 237CHF 5 750 42 236 – – 42 236
615 793 589 214 159 883 1 364 891
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 because Volito’s results from VGS will be reported as a participation in an associated company. In previous years leasing activities have been reported 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 the foreign subsidiary are posted under equity.
The Board of Volito has decided to accept the exposure for USD and CHF according to the above, as this exposure in itself constitutes a risk diversification within the Volito Group. The extent of this exposure will be decided according to continuous review.
Interest risksThe Volito Group is exposed to changes mainly in short-term interest rates through its involvement in the groups Volito Fastigheter AB and SAA AB. Within the Parent company, Volito AB, there is also an exposure relating to short-term interest rates.
Taken together, the Volito Group’s total loans that are exposed to short-term interest rates is approx. SEK 948 million.
During 2005, the Volito Group began to manage part of its interest rate risks using interest rate swaps. The hedging relating to 41.8% 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 311 589 (320 268) K. As of 31 December the fixed interest rates varied from 2.76% (2.28 %) to 4.89 % (4.71 %) and floating interest rates are STI-BOR 3 months for borrowing in SEK.
Financial exposure – outstanding derivativesThe Group 2008-12-31 2007-12-31Liabilities Loan amount Market value Loan amount Market value
Interest rate swaps 311 589 -17 548 320 268 9 095
There are no derivatives reported in the balance sheet at accounting year-end.
The market value has been calculated as the expenses/income that would have re-lated to the contract if it had been closed at accounting year-end. In this context the banks’ official rates have been used.
Below is a summary of the Group’s interest rate swaps by due dates.
1 year Nominal amount or less 1-5 years >5 years Total
SEK, interest rate swap 27 530 – 27 530 – 27 530SEK, interest rate swap 41 295 – 41 295 – 41 295SEK, interest rate swap 27 530 – 27 530 – 27 530SEK, interest rate swap 27 530 – – 27 530 27 530SEK, interest rate swap 4 000 – 4 000 – 4 000SEK, interest rate swap 12 500 – 12 500 – 12 500SEK, interest rate swap 25 000 – 25 000 – 25 000SEK, interest rate swap 22 000 – – 22 000 22 000SEK, interest rate swap 40 000 – – 40 000 40 000SEK, interest rate swap 14 254 – 14 254 – 14 254SEK, interest rate swap 15 000 – – 15 000 15 000SEK, interest rate swap 15 700 – 15 700 – 15 700SEK, interest rate swap 39 250 – – 39 250 39 250
311 589 – 167 809 143 780 311 589
Refinancing risksThe Volito Group depends on a functioning credit market. The Group has a need to continuously refinance parts of its business, see note 39. The Group has a satisfactory equity ratio and loan capacity. It is therefore Volito’s assessment that there is at present no problem concerning the credit that is due for refinancing.
Note 37 Equity Share Restricted Non-restricted capital reserves equity
The GroupBalance carried forward according to balancesheet of 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 for the year – 1 355 1 840
Equity on 31 December 2007 122 000 85 990 700 956
Transfers between non-restricted and restricted equity 2 635 -2 635Profit/loss for the year -43 230Dividend -40 260Bonus issue 122 000 – -122 000Buy-back of option – – -14 475Translation difference for the year – – 88 193
Equity on 31 December 2008 244 000 88 625 566 549 Share Restricted Non-restricted capital reserves equity
The Parent companyBalance carried forward according to balance sheet of 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
Profit/loss for the year -43 126Dividend -40 260Bonus issue 122 000 – -122 000Buy-back of option – -14 475Group contributions 6 492Tax effect on group contributions -1 818
Equity on 31 December 2008 244 000 21 005 309 794
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.
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One of the two promissory notes for a nominal SEK 2 million was redeemed in November. The value of the option amounted to SEK 14.5 million and has been entered under equity.
Number of issued shares Fully paid Not fully paid Nominal amount
Class B shares 2 440 000 – 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: 2008-12-31 2007-12-31
Acc exchange rate difference at beginning of year -2 170 -5 365Exch rate diff for the year in foreign subsidiaries 69 344 1 366Exch rate diff for the year in foreign ass companies 18 849 1 829
Accumulated exchange rate difference at year-end 86 023 -2 170
The Board of Directors and CEO propose that of disposable standing profit, SEK 20 130 000 is distributed to shareholders.
Note 38 Untaxed reserves 2008-12-31 2007-12-31
The Parent companyAccumulated depreciation in excess of plan:Real estate – 2 342
Of the untaxed reserves, SEK 0 (656) K is deferred tax. The deferred tax is notincluded in the Parent company’s balance sheet, but is included in the Group’s.
Note 39 Other debts to credit institutes, long-term 2008-12-31 2007-12-31
The Group Due date, 1-5 years from accounting year-end 589 214 322 412Due date, later than five years from acc year-end 159 883 181 963
749 097 504 375
The Parent companyDue date, 1-5 years from accounting year-end 350 000 69 997Due date, later than five years from acc year-end – 12 109
350 000 82 106
The Group intends to refinance those credits that fall due in 2009. Volito’s assessment is that amortisation in 2009 will amount to SEK 48.1 million for the Group and SEK 0 million for the Parent company, which in accordance with RR 22 is reported as short-term.
Note 40 Bank overdraft facilities 2008-12-31 2007-12-31
The GroupGranted credit limit 281 233 220 717Unutilised part -240 821 -61 250
Utilised credit amount 40 412 159 467 The Parent companyGranted credit limit 157 000 155 479Unutilised part -122 115 -16 788
Utilised credit amount 34 885 138 691
Note 41 Other debts, long-term and short-term 2008-12-31 2007-12-31
The GroupDebts 71 955 33 693
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 2008 amounted to SEK 69.7 million (33.7).
Note 42 Accrued expenses and prepaid income 2008-12-31 2007-12-31
The Group Personnel-related items 25 090 14 655Accrued interest expenses 4 792 7 474Prepaid rental income 13 986 13 272Prepaid leasing income 4 269 5 114Other prepaid income 1 992 3 927Other accrued expenses 24 523 15 932
74 652 60 374
The Parent companyPersonnel-related items 4 082 3 723Accrued interest expenses 1 798 4 360Prepaid rental income – 286Other items 16 939 6 853
22 819 15 222
Malmö, 4 March 2009
Karl-Axel Granlund Bo Olsdal Lennart Blecher Johan LundsgårdChairman CEO
Our auditors’ report was submitted 5 March 2009KPMG AB
Eva Melzig Henriksson David OlowAuthorized Public Accountant Authorized Public Accountant
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 14 March 2009.
Johan Lundsgård
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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 2008. The annual accounts are presented in the printed version of this document on pages 32-55. 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 signi ficant 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 5 March 2009
KPMG AB
Eva Melzig Henriksson David OlowAuthorized Public Accountant Authorized Public Accountant
This English version is a translation of the Swedish original.
In the case of any dispute as to the interpretation of this
document, the Swedish version shall prevail.
2003 Anita Nilsson Billgren
2004 K G Nilsson
2005 Martin Wickström
2006 Anders Österlin
2007 Björn Wessman
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
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y bird painting essentially serves a
romantic tradition that is as equally
based on consciousness and enligh-
tenment as it is on the pursuit of the idyllic
and the escape from reality, and whose ideal
of beauty springs from the magical moment
of perfection. But, in a style that denounces
sentimentality and pathos as much as irony
and reflection lies the instrument that is
intended to overcome the gulf between the
painting’s elementary denominators, time
and timelessness.
Emanuel Bernstone, February 2009
Emanuel Bernstone was born in 1973
in Karlskrona. He trained at the Art
Academy in Düsseldorf, 1997-2003.
Following his studies, he has had a
number of exhibitions both in Sweden
and abroad. His work has been exhibi-
ted in cities such as Stockholm, Malmö
and Gothenburg. Abroad, his work has
been seen in Norway, Denmark,
Germany and the USA. He currently
lives and works in Berlin.
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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 2008