Annual Report 2018
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Annual Report 2018 www.nav.pt TABLE OF CONTENTS 0MESSAGE FROM THE CHAIRMAN ....................................................................... 2 1KEY INDICATORS................................................................................................... 4 2OVERVIEW OF THE YEAR ..................................................................................... 5 3COMPLIANCE WITH LEGAL GUIDELINES ......................................................... 16 4STRATEGY ............................................................................................................ 36 5BUSINESS EVOLUTION ....................................................................................... 41 6INVESTMENTS ...................................................................................................... 47 7HUMAN RESOURCES .......................................................................................... 51 8ECONOMIC AND FINANCIAL ANALYSIS ........................................................... 59 9RESEARCH AND DEVELOPMENT ...................................................................... 71 10OUTLOOK ........................................................................................................... 76 11PROPOSAL FOR THE APPROPRIATION OF PROFITS ................................... 80 12FINANCIAL STATEMENTS AND APPENDIX ..................................................... 81 13 REPORT AND OPINION OF THE AUDIT COMMITTEE 14 LEGAL CERTIFICATION OF ACCOUNTS 15 REPORT OF THE EXTERNAL AUDITORS March/19 1 NAV Portugal, E.P.E. – 2018 Annual Report 0MESSAGE FROM THE CHAIRMAN The year 2018 was a landmark in the Company's history. Not only because it marked the start of the Company's twentieth year of operations but, above all, because it saw the decision taken to join the COOPANS Consortium, as a result of which this Alliance of ANSPs, as a whole, has become the biggest European air traffic control operator. The importance of this decision goes beyond the underlying adoption of the TOPSKY system, which will leverage new capacities adequate to the growth in air traffic that the Portuguese network of airport infrastructures will be accommodating. The significance of this decision, along with other investment options in the area of surveillance, communications and air navigation, is essentially due to the fact that it will provide the company with technological instruments that will place it at the cutting edge of the innovation demanded by the changes that will inevitably occur in the architecture of European airspace. If one believes that the sovereignty of each State will never be in any doubt, the survival of the role of the respective ANSPs may be called into question. This is why it is imperative that NAV Portugal should position itself at the forefront of the European spectrum of air traffic control and management. But the transformations required are not merely technological in nature. The organisational restructuring, which is ongoing but has yet to be completed, must continue in order to ensure that the company is capable of responding adequately to the challenges it will face as a result of the new regulatory requirements, with regard to safety and efficiency. A new reference period is about to start and the lessons learned during RP2 must not be ignored if the company's competitiveness and economic sustainability are not to be called into question. The decisions taken towards the end of the financial year by the Portuguese Government – authorising the implementation of the personnel recruitment plan presented – and by the European Commission – authorising the revision of the performance indicators for the years 2018 and 2019 under the terms proposed by NAV Portugal – lent consistency to the decision to join the COOPANS Alliance and create conditions for a more optimistic future. March/19 2 NAV Portugal, E.P.E. – 2018 Annual Report But much still remains to be done, with regard to both technology and human resource management, requiring the updating of the collective labour agreements in order to bring them into line with the new reality in the sector. A final word about the company's financial performance, especially in comparison to last year. The impact of the evolution of the capital markets led to an increase, in comparison to the previous year, of actuarial liabilities resulting from the expected return on financial assets, as explained in the report, to the tune of 17 million euros; this, in and of itself, completely negated the measures to contain costs and increase income associated with the review of the performance indicators for the financial year. With the optimism that the Company's performance justifies, reflected in the various indicators revealed throughout this report, it should be noted that this was only possible due to the quality and commitment shown by all the Company's employees and the support that was constantly available from the sectoral and financial oversight authorities, endorsing or authorising decisions or proposed decisions by the Company's Management. A word of thanks must go to the members of the Supervisory Board for the prompt collaboration and attention always given to the concerns raised by the Management. Lisbon, 14 March 2019 The Chairman of the Board of Directors Jorge Manuel da Mota Ponce de Leão March/19 3 NAV Portugal, E.P.E. – 2018 Annual Report 1KEY INDICATORS BUSINESS ACTIVITY OF NAV PORTUGAL, E.P.E. 2018 2017 % TRAFFIC Service Units – Portugal Terminal Charging Zone 275 684 258 955 6,5 Service Units – Lisbon En-route Charging Zone 3 855 541 3 777 024 2,1 Service Units – Santa Maria En-route Charging Zone 5 504 172 5 308 501 3,7 Movements Controlled – Lisbon Flight Information Region 632 192 610 704 3,5 Movements Controlled – Santa Maria Flight Information Region 166 490 161 770 2,9 FIR entry permits in the required flight profile (%) 95,94 95,27 0,7 Average Delay in Route per Controlled Movement (minutes) – Lisbon FIR 0,19 0,19 0,0 Average Delay in Route per Controlled Movement (minutes) – Santa Maria FIR 0,000 0,000 s.s. Hours Controlled 865 668 856 264 1,1 STAFF Permanent staff as at 31 Dec. 950 961 (1,1) Staff Costs (thousands of €) 170 316 144 340 18,0 Movements Controlled / Average Staff Headcount 834 795 4,9 Hours Controlled / Average Staff Headcount 904 882 2,5 ECONOMIC AND FINANCIAL Overall En-route Unit Rate – Lisbon Charging Zone (€) 36,97 40,19 (8,0) Overall En-route Unit Rate – Santa Maria Charging Zone (€) 9,52 10,06 (5,4) Terminal Unit Rate – Portugal Terminal Charging Zone (€) 140,65 152,27 (7,6) Turnover (thousands of €) 201 506 181 623 10,9 Comprehensive Income (thousand euros) 208 3 554 (94,1) Operating Cash-Flow – EBITDA (thousand euros) * 12 241 17 189 (28,8) Operating Costs / EBITDA * 17,0 10,8 56,6 Total Costs / Controlled Hour (€) 239,9 217,4 10,3 Staff Costs / EBITDA * 13,9 8,4 65,7 EBITDA / Net Interest * 1771,8 979,6 80,9 Investments (thousand euros) 24 417 20 010 22,0 Net Assets (thousand euros) 349 163 329 118 6,1 Equity (thousand euros) 107 170 106 962 0,2 Return on Equity (%) 0,2 3,3 (94,2) Performance – EBITDA Margin (%) 74,9 84,3 (11,2) Performance – Indebtedness Ratio (%) n/a n/a s.s ROCE (%) 0,0 6,5 (99,7) Debt / Equity (%) 0,0 0,0 s.s Average Payment Delay (RCM 34/2008 and Ordinance 9870/2009) 39 48 (15,0) *includes the actuarial and financial gains and losses of the defined benefit pension plans, which, in accordance with accounting and financial reporting standard NCRF 28, were recognised in Equity (2018: €18,993,581 and 2017: €3,612,252). March/19 4 NAV Portugal, E.P.E. – 2018 Annual Report 2OVERVIEW OF THE YEAR In 2018, the global economy continued to expand in an environment of continued favourable financial and labour market conditions and relatively high levels of confidence among economic agents in the major advanced economies. However, the year saw the materialisation of some previously identified risks, among which the increase in trade protectionism and the outbreaks of financial turbulence in certain more vulnerable emerging economies stand out. In this context, the projections of the Bank of Portugal1 estimate that the global GDP should maintain a growth of 3.6% in 2018. In the euro area, activity is expected to slow down more sharply (from 2.5% to 1.9%) reflecting the developments in the area’s four largest economies. World trade slowed down more sharply than economic activity, but still maintained a relatively strong growth rate (from 5.2% in 2017 to 4.7% in 2018). The price of oil showed some volatility throughout the year. In the first nine months, the price of Brent showed an upward trend, reaching around 86 USD/barrel in early October. This occurred against a background of continued growth in demand and some supply- side constraints, such as the collapse of production in Venezuela and the expectations of reduced exports from Iran associated with the reintroduction of sanctions on the country. More recently, the continued and very significant growth in US production, the higher level of stocks and the downward revision of the growth prospects of the global economy translated into a fall in the price of oil of more than 20%, placing it at levels close to those observed at the beginning of the year (around 67 USD/barrel). The monetary and financial context was also favourable, maintaining the accommodative monetary policy in the euro area and the improvement of the economic agents’ financial conditions. 1 BE BoP, December 2018 March/19 5 NAV Portugal, E.P.E. – 2018 Annual Report This positive