INTERIM FINANCIAL REPORT Q1 2014

Transcription

1 INTERIM FINANCIAL REPORT Q

2 AVINOR Group main figures 4 Board of directors report 5 Balance sheet 10 Income statement 11 Statement of comprehensive income 12 Statement of changes in equity 13 Statement of cash flows 14 Notes 15 Avinor has two primary business areas, operation of a nationwide network of airports, and the national air navigation services for civil and military aviation. In total, this includes 46 airports as well as control towers, control centres and other technical infrastructure for safe air navigation. In addition to the aviation-operative activities, commercial earnings are facilitated through airport hotels, parking facilities, tax-free stores, restaurants and other services for air passengers. Avinor is a group where the operational activities are partly organised in divisions and in partly in legal entities (subsidiaries). Financially, the airport operations are run as a single aviation system. The air navigation services finance themselves by pricing the services in accordance with international provisions. The Group has approximately 3,300 employees and annual operating revenues of NOK 10 billion. The shares in Avinor AS are wholly owned by the Norwegian state as represented by the Ministry of Transport and Communications. The Ministry of Transport and Communications manages the Norwegian state s ownership of Avinor, and stipulates e.g. the tasks imposed on the Group to safeguard the general interests of Norwegian society, the required rate of return and dividends. In addition, the Ministry of Transport and Communications regulates the aviation fees. The Ministry of Transport and Communications is the highest authority for Norwegian aviation and also stipulates the Civil Aviation Authority s regulations, which have consequences for Avinor s operations. Avinor has issued bonds that are listed on the Oslo Stock Exchange. The Group s corporate governance must adhere to the Oslo Stock Exchange s recommendations for corporate governance to the extent applicable. The principles complement the government s focus on corporate governance in the management of the Norwegian state s shareholdings. Avinor s head office is located in Oslo. 2

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4 MAIN FIGURES AVINOR GROUP Amounts in MNOK First quarter Year Traffic income 719,1 658, ,6 Security (cost based) 262,6 242, ,5 Other income 1 073,4 950, ,0 Inter-group income 38,6 45,0 192,1 Total income airport operations 2 093, , ,2 En route charges 232,4 202,8 945,6 Inter-group income approach and control tower services 188,9 180,5 734,7 Other income 48,3 60,3 217,4 Total income air navigation services 469,6 443, ,7 Other group income (a) 158,0 127,4 545,2 Elimination of inter-group income -385,3-352, ,5 Total group income 2 336, , ,6 Operating expenses airport operations (a) , , ,7 Operating expenses air navigation services -484,7-464, ,0 Other operating expenses group -223,2-189,9-829,4 Elimination of inter-group expenses 385,3 352, ,5 Total group expenses , , ,6 EBITDA airport operations 617,1 544, ,5 EBITDA air navigation services -15,1-21,1 20,7 EBITDA others -65,2-62,5-284,2 EBITDA group 536,8 460, ,0 Depreciation, amortisation and impairment charges -325,1-331, ,5 Changes in value and other (losses)/gains, net -7,6 8,7 0,1 Operating profit/(loss) 204,2 137, ,6 Net finance income/(costs) -102,2-78,9-346,0 Profit/(loss) before income tax 102,0 58, ,6 Income tax expense -27,6-16,6-382,7 Profit/(loss) after tax 74,4 41,9 890,9 EBITDA-margin airport operations 29,5 % 28,7 % 36,2 % EBITDA-margin air navigation services -3,2 % -4,8 % 1,1 % EBITDA-margin others 23,0 % 21,8 % 30,0 % Investments airport operations 697,9 648, ,2 Investments air navigation services 26,2 18,1 116,1 Investments others 86,1 46,9 229,9 Total investments 810,2 713, ,2 Distributed dividends ,4 Cash flow before borrowings -622,6-332, ,3 Net interest-bearing debts , , ,9 Total assets , , ,0 Equity ratio 36,6 % 35,8 % 40,0 % Return on total capital after tax 5,0 % Number of passengers (in 1000) , , ,0 Number of aircraft departures (in 1000) 178,7 168,9 731,1 Number of service units (in 1000) 508,7 439, ,9 Punctuality (b) 87 % 81 % 86 % Regularity (b) 98 % 99 % 98 % (a) Exclusive of inter-group leases on land (b) Past 12 months 4

5 BOARD OF DIRECTORS REPORT HIGHLIGHTS The Group had a strong first quarter with traffic growth measured by passenger numbers of 4.8 per cent and growth in operating income of 10.4 per cent compared with the corresponding reporting period last year. The Group s operating margin in the first quarter was 8.7 per cent compared to 6.5 per cent in the first quarter of In the first quarter, the Group s operating income amounted to NOK 2,336 million with a NOK 74 million profit after tax. Capitalised project expenses amounted to NOK 810 million. Before changes in debt, the Group s cash flow was minus NOK 623 million compared to minus NOK 332 million in the corresponding period last year. In March, Avinor issued a bond of EUR 300 million maturing in March 2021 under the EMTN programme. This issue was well received in the European market. The Group s net interest-bearing debt as at 31 March 2014 amounted to NOK 12.7 billion. The Group s equity ratio was 36.6 per cent as at 31 March The extension project to increase capacity at Oslo Airport, Gardermoen is half complete and on schedule. A decision was made in March with regard to expanded terminal capacity at Bergen Airport, Flesland with a total cost of NOK 4.7 billion. Completion is scheduled for On 21 March, the Norwegian Government announced that it will meet Avinor s issue proposal with an adjustment to the dividend policy by putting forward a proposal to Parliament for a reduction in Avinor s dividend requirements for the financial years The proposal means that 50 per cent of the Group s profit after tax up to NOK 1 billion will be taken as dividend for the financial years , with no further dividend to be taken from profits exceeding this amount. The Government s proposal facilitates greater financial flexibility for Avinor with regard to adapting the Group s tied-up capital and capital structure to the ongoing investment needs of core operations. On 23 April, an Extraordinary General Meeting was held in Avinor AS, where it was decided that the air navigation division will be established as a wholly-owned subsidiary of Avinor AS. The restructuring will take place during the second quarter of No aviation accidents have been registered, with or without personal injury, in which Avinor was a participant to date this year. One serious aviation incident was registered. In the last 12 months, the Group has had an injury absence value (H1 value) of 2.1, and a sick leave value of 4.5 per cent. FIRST QUARTER 2014 NOK million 3M M 2013 Change Operating income 2 336, ,0 10,4 % EBIT 204,2 137,4 48,6 % Profit for the year 74,4 41,9 77,6 % Investments 810,2 714,3 13,6 % Table 1: Key financial figures During the first quarter, the Group had a profit after tax of NOK 74 million against NOK 42 million for the corresponding period in The Group s balance sheet has increased by NOK 2,923 million since 31 December 2013, totalling NOK 32.8 billion as at 31 March The Group s equity ratio was 36.6 per cent as at 31 March 2014, while equity over total net interest-bearing debt and equity were 48.7 per cent. Operating income The Group s operating income in the first quarter of 2014 amounted to NOK 2,336 million compared with NOK 2,116 million for the corresponding period last year. The growth of operating income is primarily attributed to increased traffic volumes and increased revenues from airport operations. The Easter holiday in 2013 fell in March and in April this year, which has had a positive effect (growth) on the comparison with last year. Compared with the first quarter last year, the operating income of airport operations increased by 10.4 per cent to NOK 2,094 million in the first quarter. This growth is primarily due to increased traffic volumes combined with increased commercial revenues per passenger. Operating income from air navigation services increased by 5.9 per cent to NOK 470 million in the first quarter compared with the corresponding period last year. Underlying traffic growth within air navigation services was counteracted by reduced airline fees. Intra-Group services have increased since last year as a result of restructuring and the centralisation of the Group s IT operations, management, and development. Operating income by business area is shown in table 2 below: NOK million 3M M 2013 Change Konsernets finansresultat i andre kvartal ble minus 90,1 Airports operations 2 093, ,2 10,4 % millioner kroner sammenlignet med minus 92,8 millioner Air traffic services 469,6 443,6 5,9 % kroner i tilsvarende periode i fjor. Resultatet er påvirket Group services 258,2 224,8 14,9 % av økt omfang av balanseføring av renteutgifter. Consolidated items (485,5) (449,6) 8,0 % Avinor group 2 336, ,0 10,4 % Table 2: Operating income 1 Investments are defined as additions to the balance sheet for property, plant and equipment. 5

6 Operating expenses Total operating expenses before changes in value and other gains/losses amounted to NOK 2,124 million in the first quarter compared with NOK 1,987 million for the corresponding period last year. The accounts to date this year reflect NOK 78 million in additional costs associated with ensuring normal operations parallel to the expansion of terminal capacity at Oslo Airport, Gardermoen. The corresponding figure for the first quarter last year was NOK 63 million. There was a nominal 2.0 per cent increase in operating expenses per passenger in the first quarter compared with the first quarter last year. Adjusted for additional costs associated with ensuring normal operations at Oslo Airport, Gardermoen, operational expenses per passenger increased nominally by 1.4 per cent compared with the first quarter last year. The first of the new expanded airside areas opened in the winter of 2013/2014 in line with the ongoing capacity expansion efforts at Oslo Airport, Gardermoen. Combined with challenging winter weather, costs related to snow removal, runway maintenance, and the maintenance of technical equipment increased compared with the corresponding period last year. The Group s pension expenses have decreased compared with the first quarter last year as a result of changes in the economic assumptions for calculating this liability. Operating profit The Group s operating profit in the first quarter amounted to NOK 204 million with an operating margin of 8.7 per cent, compared with an operating profit of NOK 137 million and an operating margin of 6.5 per cent in the first quarter of This increase in profit is largely due to an increase in traffic volumes and increased commercial revenues within airport operations. Financial items and tax The Group s net financial loss in the first quarter was minus NOK 102 million compared with minus NOK 79 million for the corresponding period last year. The change in the Group s net financial result is largely due to increased interest-bearing debt. Based on the expected tax rate on an annual basis, tax costs for the year to date are estimated at NOK 28 million. 6

7 Investments Recognised additions to property, plant, and equipment in the first quarter amounted to NOK 810 million, compared with NOK 713 million for the corresponding period last year. The investments can be broken down into business areas as follows: NOK million 3M M 2013 Change Airports operations 697,9 648,3 49,6 Air traffic services 26,2 18,1 8,0 Joint items, group 32,2 12,4 19,7 Consol idated items 54,0 34,4 19,6 Group 810,2 713,3 96,9 Table 3: Addition to PPE recognised in the balance sheet A significant part of the investments undertaken to date this year are associated with the expansion project for increased terminal capacity at Oslo Airport, Gardermoen. The project is half complete and on schedule. Most of the project s construction and installation contracts are contracted out, which reduces the project s market risk considerably. There is a residual risk related to outstanding technical contracts and the project s residual production. The final forecast for the project of NOK 14,050 million is unchanged. Completion is scheduled for April A decision was made in March with regard to expanded terminal capacity at Bergen Airport, Flesland. The expansion project has a total budget of NOK 4,700 million with completion schedule for Altogether, the budget target including cost contingency of the Group s project portfolio as at 31 March 2014 is NOK 26.3 billion. Cash flow and financing Due to investments exceeding the contribution from ongoing operations, the Group had a cash flow before changes in debt of minus NOK 623 million in the first quarter. The corresponding figure for the same period last year was minus NOK 332 million. The Group s total capital amounted to NOK 32.8 billion as at 31 March Equity as a percentage of the sum of equity and net interest-bearing debt was 48.7 per cent as at 31 March At the same point in time last year, this ratio was 50.5 per cent. Net interest-bearing debt as at 31 March 2013 amounted to NOK 12,684 million, which is an increase of NOK 2,475 million since the end of the first quarter last year. In March, Avinor issued a bond of EUR 300 million maturing in March 2021 under the EMTN programme. This issue was well received in the European market. As at 31 March 2013, the Group s cash reserves amounted to NOK 7,752 million, distributed between NOK 2,952 million in bank deposits and NOK 4,800 million in unutilised bank overdrafts. Traffic development and service goals A total of 11.0 million air passengers travelled via Avinor s airports in the first quarter, which is an increase of 4.8 per cent compared with the corresponding period last year. The figure below shows the trend in traffic on a quarterly basis for : Passengers (millions) Q1 Q2 Q3 Q In comparison with the corresponding period last year, domestic traffic increased by 4.6 per cent, while international traffic increased by 5.3 per cent. Domestic traffic totalled 63 per cent of the total traffic volume for the first quarter. The volume of offshore helicopter traffic increased 3.6 per cent compared with last year. Passenger volume was distributed between the airports as follows: PAX 000s 3M M 2013 Change Gardermoen ,3 % Flesland ,3 % Sola ,2 % Værnes ,9 % Others ,7 % Avinor group ,8 % Table 4: No. of passengers The number of commercial aircraft movements, including offshore helicopters, increased by 6.0 per cent in comparison with the corresponding period last year. The traffic volume for the en route service measured by the number of service units increased year-to-date by 15.9 per cent in comparison with last year. Punctuality for the past 12 months aggregated over all air traffic movements was 87 percent, while the regularity was 98 percent. 7

8 AIR SAFETY AND HSE No aviation accidents have been registered, with or without personal injury, in which Avinor was a participant to date this year. One serious aviation incident during an approach to Brønnøysund was registered. At the end of the first quarter of 2014, the Group had a total H-value for injuries resulting in absence of 2.1 for the preceding 12 months. The expansion project at Gardermoen has an H-value of 2.1 accumulated over the lifetime of the project. Sick leave for the Group over the last 12 months was 4.5 per cent. RISKS The Group s operations are focused on safe air traffic management with procedures and measures to minimise both the risks and consequences of accidents and serious incidents. In addition to aviation-related operating conditions, the business is exposed to financial risk. Regulatory developments are occurring continuously in domestic and international aviation. The Group s continuous updating of operations to comply with new provisions has financial consequences. The Norwegian state has defined Avinor as a category 4 company, i.e. a company with national sectoral policy objectives. This entails, for example, the Norwegian state setting guidelines for a number of conditions, including airport structure, emergency preparedness, aviation fees, and duties imposed by society. Depending on the various political priorities, the scope and organisation of sectoral policy guidelines may change over time. Avinor s operations are characterised by long-term investments in infrastructure. The management of operations and emergency preparedness is largely regulated by provisions and regulations. The Group therefore has a high percentage of fixed operating costs that vary to a limited extent with changes in traffic volumes. The Group s financial earnings and value are therefore sensitive to traffic fluctuations, and for downturns in traffic there is a risk of an impairment in value with regard to property, plant, and equipment on the Group s balance sheet. Experience has shown that there is a correlation between general economic development and demand for air travel over time, although there may be significant deviations in the short term. Oslo Airport Gardermoen accounts for almost 50 per cent of the Group s operating income and is a key source of funding for the rest of the airport network in Norway. The airport s earnings are exposed to economic cycles and competition from other domestic and international airports. The Group s traffic income and earnings are exposed to future changes in the airlines schedules and production. The majority of the Group s receivables are from the airlines and are not hedged. Revenues from commercial offerings at the airports are very important to the Group s funding. Changes in the framework conditions for these activities will have a major impact on the Group s earnings and financial value. The Group has financial risk in connection with foreign currency, interest rates, and energy prices. Financial hedging instruments (derivatives) are used to limit risk. The Group s long-term debt to the Norwegian state is exposed to changes in the interest rate on long-term government bonds. A significant portion of the Group s other debt has fixed interest rates or is hedged by means of financial derivatives. When investing the Group s surplus cash, emphasis is given to the issuer s solidity and the liquidity of the investment. The Group s liquid assets are deposited in a bank on negotiated terms. On 18 February 2011 a co-operation agreement was signed between the Norwegian Armed Forces and Avinor, which, with effect from 2 January 2010, will regulate the distribution of costs and other conditions between the parties where the Norwegian Armed Forces and Avinor operate jointly. There continues to be significant disagreement between the Norwegian Armed Forces and Avinor about the interpretation of key points in the co-operation agreement. A petition for a discretionary court assessment to determine the purchase price or an annual user fee for aviation-critical areas that are owned by the Norwegian Armed Forces at Flesland and Værnes airports has been submitted to the court of appraisement. Following the recommendation from the Government (Proposition 73 S ( 2011)), the Storting resolved that new fighter planes are to be based in Ørland with the advanced base in Evenes. It has been resolved to close down Bodø s main air station. Changes in the Norwegian Armed Forces base structure alter current joint operations between civil and military aviation in Bodø, and will have significant financial consequences for Avinor s future operating and investment costs. There are negotiations with the Norwegian National Rail Administration in connection with capacity expansions at Oslo Airport, Gardermoen, regarding the principles for 8

9 the distribution of costs of development of the railway station. In connection with the pension settlement in 2005, it was determined that public service pensions shall be adjusted for life expectancy and made subject to the new pension adjustment rules. The life expectancy adjustment will entail employees having to work longer in order to achieve pension benefits corresponding to what has been the case up until now. The rules for those who were born after 1953 have, however, not been clarified, and therefore they have not been taken into consideration in the accounts. The airports have discharge permits that require risk assessments to identify potential sources of acute pollution that represent a risk of damage to the external environment. Work is continuing on reducing the risk of incidents occurring that harm the environment, while at the same time existing pollution is being surveyed and cleaned up. Environmentally hazardous additives in fire extinguishing foam, which has spread to the natural environment, have been detected at all the airports. Work is currently being conducted to clarify the scope of the measures that will need to be implemented. As a basis for this work, risk assessments have been conducted of the potential harm to persons and the external environment from these pollutants. The economic consequences of this work depend on the extent of the localities that require measures to be implemented, as well as the authorities requirements and the measures available. FUTURE PROSPECTS Based on the positive Norwegian trends, there is expected to be continued long-term growth in air traffic. It is therefore assumed that the current high level of activity and investment will continue so as to safeguard the public service mission of beneficial aviation. The Board is concerned with ensuring that Avinor contributes to national and regional development. This takes place through efficient and safe aviation services, but also through active collaboration with local stakeholders and close dialogue with other relevant parties regarding airport development and development of the respective regions in general. Avinor will continue to assess the sale of assets in order to adapt the Group s capital structure to the investment needs of core operations. Considerable changes within the air navigation service, new international regulatory requirements, and the greater need for increased capacity at Gardermoen and Flesland airports in particular mean that Avinor has entered a phase characterised by significant challenges. Emphasis is placed on ensuring good cost control with regard to operations and projects, and meeting the expectations of the airlines, passengers, regulators, supervisory authorities, and the Ministry of Transport and Communications as the owner. Oslo, 14 May 2014 Board of Directors of Avinor AS 9

10 BALANCE SHEET Balance sheet Avinor AS 31 December 31 March 31 March 31 December All amounts in MNOK Notes ASSETS Non-current assets Intangible assets 1 632, , ,6 Deferred tax assets , , ,0 31,4 42,6 27,6 Other intangible assets 6 27,6 42,6 31, , , ,2 Total intangible assets 2 042, , ,4 Property, plant and equipment 9 761, , ,7 Property, plant and equipment , , , , , ,1 Derivative financial instruments , , , , , ,8 Total property, plant and equipment , , ,7 Financial assets 853,1 672,0 853,1 Investments in subsidiaries , , ,3 Loans to group companies ,4 - Derivative financial instruments 3,2 23,4 7,5 30,2 9,2 42,8 Other financial assets 135,8 71,1 130, , , ,2 Total financial assets 139,0 94,5 138, , , ,2 Total non-current assets , , ,4 Curent assets 24,6 13,4 21,8 Inventories 21,8 13,4 24, , , ,3 Trade and other receivables 1 604, , ,4-1,0 1,4 Derivative financial instruments 7,1 1,8 3,9 644, , ,7 Cash and cash equivalents 2 951, ,3 673, , , ,2 Total current assets 4 585, , , , , ,4 TOTAL ASSETS , , ,0 EQUITY AND LIABILITIES Equity 5 400, , ,1 Share capital 5 400, , , , , ,6 Other equity 6 629, , , , , ,7 Total equity , , ,4 Provisions 2 018, , ,0 Retirement benefit obligations 2 392, , ,9 151,8 159,1 154,5 Other provisions 255,6 190,2 252, , , ,5 Total provisions 2 648, , ,8 Non-current liabilities State loan , , ,4 18,2 21,7 36,4 Derivative financial instruments 132,6 138,9 113, , , ,1 Other non-current liabilities , , , , , ,5 Total non-current liabilities , , ,7 Current liabilities 800, , ,0 Commercial papers 1 200, ,0 800,0 247,7 338,9 183,3 Trade payables 400,7 545,6 481,7 2,4 137,8 - Tax payable 200,6 181,2 383,1 154,7 123,1 137,9 Public duties payable 175,0 198,5 172,5 13,7 2,6 11,0 Derivative financial instruments 19,7 4,2 22,6 405,6 6,4 404,0 First annual instalment on long-term liabilitirs 7 943,2 519,5 945, , , ,5 Other current liabilities 1 591, , , , , ,7 Total current liabilities 4 531, , , , , ,7 Total liabilities , , , , , ,4 TOTAL EQUITY AND LIABILITIES , , ,0 10

11 INCOME STATEMENT Income statement First quarter All amounts in MNOK Notes Operating income Traffic income 1 214, , ,6 Other operating income 1 121, , ,0 Total operating income 2 336, , ,6 Operating expenses Raw materials and consumables used 28,4 32,9 169,1 Employee benefits expense 4 892,8 891, ,4 Depreciation, amortisation and impairment charges 4,6 325,1 331, ,5 Other operating expenses 4 877,9 731, ,1 Total operating expenses before changes in value and other losses/gains, net 2 124, , ,1 Operating profit/(loss) before changes in value and other losses/gains, net 211,8 128, ,5 Changes in value and other (losses)/gains, net (7,6) 8,7 0,1 Operating profit/(loss) 204,2 137, ,6 Finance income 8,3 9,4 72,5 Finance costs 110,5 88,3 418,5 Net finance income/(costs) (102,2) (78,9) (346,0) Profit/(loss) before income tax 102,0 58, ,6 Income tax expense 5 27,6 16,6 382,7 Profit/(loss) for the period 74,4 41,9 890,9 Year Avinor AS Income statement First quarter Year All amounts in MNOK Notes Operating income Traffic income 780,9 704, ,1 Other operating income 629,7 548, ,9 Total operating income 1 410, , ,0 Operating expenses Raw materials and consumables used 18,1 21,1 112,5 Employee benefits expense 747,5 740, ,9 Depreciation, amortisation and impairment charges 6 167,6 157,3 667,0 Other operating expenses 563,7 489, ,2 Total operating expenses before changes in value and other losses/gains, net 1 496, , ,6 Operating profit/(loss) before changes in value and other losses/gains, net (86,3) (156,1) (55,6) Changes in value and other (losses)/gains, net (4,0) 7,7 7,3 Operating profit/(loss) (90,3) (148,4) (48,3) Finance income 60,5 45,0 805,5 Finance costs 94,5 50,4 275,9 Net finance income/(costs) (34,0) (5,4) 529,6 Profit/(loss) before income tax (124,3) (153,8) 481,3 Income tax expense 5 (33,6) (43,1) 149,5 Profit/(loss) for the period (90,7) (110,7) 331,8 11

12 STATEMENT OF COMPREHENSIVE INCOME Statement of comprehensive income Avinor AS Year First quarter First quarter Year All amounts in MNOK ,8 (110,7) (90,7) Profit/(loss) for the period 74,4 41,9 890,9 Other comprehensive income: Items that will not be reclassified to profit or loss in subsequent periods: 1 442,2 - - Actuarial gains/(losses) on post employment benefit obligations ,0 (403,8) - - Tax effect - - (475,4) (1,5) - - Change in tax rate, effect deferred tax assets/-liabilities - - (2,0) Items that may be subsequently reclassified to profit or loss: - - (17,0) Cash flow hedges (20,0) 5,0 33, ,6 Tax effect 5,5 (1,4) (9,4) 1 036,9 - (12,4) Other comprehensive income, net of tax (14,5) 3, , ,7 (110,7) (103,1) Total comprehensive income 59,9 45, ,5 Attributable to: 1 368,7 (110,7) (103,1) Owners of the parent 59,9 45, ,5 12

13 STATEMENT OF CHANGES IN EQUITY Statement of changes in equity Other Other All amounts in MNOK Share capital reserves equity Total equity Balance at 1 Januar ,1 (1 319,2) 6 275, ,7 Total comprehensive income 3,6 41,9 45,5 Dividends provided for or paid - - Balance at 31 March ,1 (1 315,6) 6 317, ,2 Balance at 1 Januar ,1 (74,6) 6 643, ,4 Total comprehensive income (14,5) 74,4 59,9 Dividends provided for or paid - Balance at 31 March ,1 (89,1) 6 718, ,4 Avinor AS Statement of changes in equity Other Other All amounts in MNOK Share capital reserves equity Total equity Balance at 1 Januar ,1 (1 093,0) 4 262, ,0 Total comprehensive income (110,7) (110,7) Dividends provided for or paid - - Balance at 31 March ,1 (1 093,0) 4 152, ,3 Balance at 1 Januar ,1 (56,1) 4 074, ,8 Total comprehensive income (12,4) (90,7) (103,1) Dividends provided for or paid - Balance at 31 March ,1 (68,5) 3 984, ,7 13

14 STATEMENT OF CASH FLOWS Statement of cash flows Avinor AS Year First quarter First quarter Year All amounts in MNOK Cash flow from operating activities 481,3 (153,8) (124,3) Profit/(loss) before income tax 102,0 58, ,6 667,0 157,3 167,6 Depreciation 325,1 331, ,5 1,1 (4,5) 1,0 (Profit)/loss on disposals of non-current assets 0,7 (4,5) 0,9 9,0 (3,1) (4,1) Changes in value and other losses/(gains) - net (unrealised) (3,7) (5,2) 11,3 (529,6) 5,4 34,0 Net finance (income)/costs 102,2 78,9 346,0 (64,3) (40,6) (77,1) Change in inventories, trade receivables and trade payables (26,5) (46,3) (130,0) 139,7 57,0 39,3 Difference between post employment benefit expense and amount paid/received 45,0 65,5 163,2 121,5 115,0 (19,3) Change in other working capital items (64,7) 197,2 116,5 141,6 (87,4) 186,1 Change in group receivables and payables ,5 7,8 8,2 Interest received 8,3 8,3 58,1 (144,6) (6,7) (72,3) Income tax paid (182,4) (177,1) (363,6) 875,2 46,4 139,1 Net cash generated from operating activities 306,0 507, ,5 Cash flow from investing activities (2 134,2) (407,0) (436,4) Investments in property, plant and equipment (PPE) (879,5) (819,0) (4 182,9) 75,3 9,6 9,1 Proceeds from government grants 9,1 9,6 75,3 8,6 4,4 0,9 Proceeds from sale of PPE, incl assets under construction 1,2 4,5 8,8 (1 550,0) - (300,0) Group loans ,0-0,7 Group interests ,9 - - Net group contribution/dividend (15,9) (0,5) (12,7) Change in other investments (12,7) (0,5) (14,2) (2 888,3) (393,5) (738,4) Net cash used in investing activities (881,9) (805,4) (4 113,0) Cash flow from financing activities 2 450, ,0 Proceeds from borrowings 2 513, ,0 (459,6) (1,4) (1,6) Repayment of borrowings (12,3) (14,1) (977,7) 100,0 800,0 400,0 Net proceeds/repayment of short term borrowings (commercial papers) 400,0 800,0 100,0 (229,8) (8,6) (13,7) Interest paid (28,8) (34,0) (458,2) (29,2) - (17,9) Other borrowing charges (17,9) - (29,2) (463,4) - - Dividends paid to owner - - (463,4) 1 368,0 790, ,8 Net cash generated/used in financing activities 2 854,0 751,9 621,5 Net (decrease)/increase in cash, cash equivalents and (645,1) 442, ,5 bank overdrafts 2 278,1 453,6 (642,0) Cash, cash equivalents and bank overdrafts at the 1 289, ,3 644,2 beginning of the period 673, , ,7 Cash, cash equivalents and bank overdrafts at the end 644, , ,7 of the period 2 951, ,3 673,7 14

15 NOTES Note 1 - General information Avinor AS and its subsidiaries (together 'the group') own, manage and develop aviation infrastructure and systems by facilitating safe and efficient aviation. The group also renders services within the same areas together with other activities that add to the group's main business, including commercial development. The Avinor group's headquarters are located in Oslo. The interim financial information was approved for issue on 14 May The interim financial information has not been audited. Note 2 - Basis of preparation and accounting policies The interim financial statement for Avinor AS and for the first quarter, ended 31 March 201, has been prepared in accordance with International Financial Reporting Standards (IFRS) and encompasss Avinor AS and all its subsidiaries. The interim financial information has been prepared in accordance with IAS 34 Interim financial reporting. The interim financial information should be read in conjunction with the annual financial statement for the year ended 31 December The accounting policies are consistent with those of the annual financial statement for the year ended 31 December Note 3 - Segment information Other Medium Air Oslo large and small Navigation All amounts in MNOK Airport airports airports Services Others Elimination Total First quarter 2014 Traffic income 433,4 328,5 219,8 232, ,1 Other income 653,9 297,8 121,7 48,3 0, ,9 Inter-segment income 15,8 18,3 4,5 188,9 258,0 (485,5) - Total income 1 103,0 644,6 346,0 469,6 258,2 (485,5) 2 336,0 Employee benefits expenses 145,3 90,6 214,6 355,0 87,3 892,8 Depreciation and amortisation 146,4 63,2 86,5 21,1 7,8 325,0 Other operating expenses 343,6 124,5 247,3 105,2 93,5 913,9 Inter-segment expenses 190,4 95,3 128,8 24,5 46,5 (485,5) - Total expenses 825,7 373,6 677,2 505,6 235,0 (485,5) 2 131,7 Net income/(expense) 277,3 271,0 (331,3) (36,1) 23,2-204,3 Group adjustments depreciation (a) 45,4 (16,5) (28,9) - (0,3) (0,2) Group adjustments lease (b) 100,2 (100,2) - Operating profit/(loss) 423,0 254,6 (360,1) (36,1) (77,3) - 204,2 Assets* 8 547, , ,3 590,0 131, ,1 Other Medium Air Oslo large and small Navigation All amounts in MNOK Airport airports airports Services Others Elimination Total First quarter 2013 Traffic income 400,3 303,1 198,4 202, ,7 Other income 597,5 243,5 109,5 60,3 0, ,3 Inter-segment income 18,8 19,7 6,5 180,5 224,1 (449,6) - Total income 1 016,5 566,4 314,4 443,6 224,8 (449,6) 2 116,0 Employee benefits expenses 150,8 91,4 214,7 356,0 78,7 891,6 Depreciation and amortisation 162,9 56,2 80,7 22,6 9,1 331,6 Other operating expenses 272,6 118,7 219,0 84,4 60,5 755,2 Inter-segment expenses 157,4 97,5 127,3 24,3 43,2 (449,6) - Total expenses 743,6 363,8 641,6 487,2 191,6 (449,6) 1 978,4 Net income/(expense) 273,0 202,5 (327,3) (43,6) 33,2 (0,0) 137,6 Group adjustments depreciation (a) 45,4 (16,5) (28,9) - (0,3) (0,2) Group adjustments lease (b) 97,3 (97,3) - Operating profit/(loss) 415,7 186,1 (356,2) (43,6) (64,4) (0,0) 137,4 Assets* 7 355, , ,5 637,0 151, ,2 (a) Group adjustments due to assessment of the opening balance as at 1 January (b) The lease on the land at Gardermoen is attributed to Oslo Lufthavn AS in the segment reporting. * Inclusive other intangible assets, exclusive assets under construction. 15

16 Note 4 - Impact on earnings - Terminal 2 project As a result of the development of Gardermoen (Terminal 2 project) the income statement includes charges for extra costs related to the maintenance of normal operations during the construction period, as well as costs related to the scrapping of assets, including higher depreciation as a result of re-assessed economoc life. Specification First quarter Year All amounts in MNOK Employee benefits expense 9,6 10,2 43,2 Depreciation, amortisation and impairment charges 16,5 31,3 96,1 Other operating expenses 52,0 21,0 216,0 Sum 78,1 62,5 355,3 Note 5 - Income tax expense The income tax expense is calculated using the expected annual effective tax rate. Note 6 - Property, plant and equipment, other intangible assets All amounts in MNOK Other intangible assets Property, plant and equipment Avinor AS Assets under construction Total Other intangible assets Property, plant and equipment Assets under construction At 31 March 2013 Opening net book amount 46, , , ,7 46, , , ,2 Additions - 153,3 331,7 485,0-189,7 713,3 903,0 Reclassification ,3 153, ,7 189,7 Disposals - 0,3-0,3-0,5-0,5 Depreciation charge 3,8 153,5-157,3 3,8 328,0-331,8 Closing net book amount 42, , , ,8 42, , , ,2 At 31 March 2014 Opening net book amount 31, , , ,7 31, , , ,1 Additions - 23,5 344,5 368,0-40,8 810,2 851,0 Reclassification ,5 23, ,8 40,8 Disposals - 0,2-0,2-0,2-0,2 Depreciation charge 3,8 163,8-167,6 3,8 321,3-325,1 Closing net book amount 27, , , ,4 27, , , ,0 Total Measurement of recoverable amount There are no significant changes affecting the recoverable amount of the group's assets in Note 7 - Borrowings Avinor AS 31 March 31 March All amounts in MNOK Non-current 8 403, , , ,9 Current 1 604, , , ,5 Total , , , ,4 Movement in borrowings Opening net book amount 7 118, , , ,9 Proceeds from borrowings 2 490, ,0 - Repayment of borrowings (1,6) (1,4) (12,3) (14,1) Net proceeds/repayment of short term borrowings (commercial papers) 400,0 800,0 400,0 800,0 Changes in value - 4,6-4,6 Closing net book amount , , , ,4 Avinor AS has on 13 March 2014 issued new bonds under the company s EMTN program, with a nominal value of EUR 300m, maturity of 7 years and a coupon of 1.75%. The bonds are qouted at the Luxembourg Stock Exchange. 16

17 Note 7 - Borrowings continued Liquidity reserves Avinor AS 31 March 31 March All amounts in MNOK Cash and cash equivalents 2 901, , , ,3 Unused bank overdraft 800,0 800,0 800,0 800,0 Unused credit facility 4 000, , , ,0 Total 7 701, , , ,3 The group has, at the end of first quarter 2014, sufficient headroom to enable it to conform to covenants on existing borrowings. The groups liquidity reserves equals at least 12 months prognosticated liquidity requirement including repayment of borrowings, as set out in internal policies. Note 8 - Financial instruments Fair value estimation The fair value of foreign exchange forward contracts and financial power forward contracts is based on market value at the balance sheet date. The fair value of all interest rate swaps is confirmed by the financial institutions which are the company's opposite party in the financial contracts entered into. The carrying amount of cash and bank overdrafts is approximately equal to the fair value of these instruments as they fall due in a short period of time. Similarly, the carrying amount of receivables and payables is approximately equal to fair value as they are entered into under "normal" conditions. The fair value of long-term debt is based on quoted market prices or on the interest rates for debt with corresponding terms and similar credit risk. The fair value of commercial papers equals principal amount as at 31 March Below is a comparison of the carrying amounts and fair values of Avinor AS and the group's interest-bearing debt. All amounts in MNOK Avinor AS 31 March 31 March Interest-bearing debt Carrying amount Fair value Carrying amount Fair value State loan , ,7 Bonds 5 736, , , ,0 Bank borrowings 3 025, , , ,7 Commercial papers 1 200, , , ,0 The table below shows financial instruments at fair value by level of the following fair value measurement hierarchy: *Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). *Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is derived from prices) (level 2). *Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The following table presents the group s assets and liabilities that are measured at fair value at 31 March 2014: Level 1 Level 2 Level 3 Total Assets Financial assets at fair value through profit or loss - 2,8-2,8 Derivatives used for hedging - 7,5-7,5 Total assets 0,0 10,3 0,0 10,3 Liabilities Financial liabilities at fair value through profit or loss 19,7 16,8-36,5 Derivatives used for hedging - 115,8-115,8 Total liabilities 19,7 132,6 0,0 152,3 17

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20 AVINOR AS Organisation number: Visiting address: Oslo Atrium Dronning Eufemias gate Oslo Post address: Pb Gardermoen