SWEDAVIA | ANNUAL AND SUSTAINABILITY REPORT 2017 The airports ANNUAL AND SUSTAINABILITY of the future REPORT 2017 World leader in Customers with Strategic focus We shall enable climate-smart different needs on sustainable the air travel of airports and expectations development the future KAPITELRUBRIK Swedavia owns, operates and develops a network of ten Swedish airports, from Kiruna in the north to Malmö in the south. The Company was formed in 2010 and is wholly owned by the Swedish State. About Swedavia’s reporting This is Swedavia’s Annual and Sustainability Report for the finan- cial year 2017. The report is aimed primarily at its owner, customers, credit analysts and partners but also at other stakeholders, and is focused on the Company’s strategy, objectives, targets and results for the past year. The report concerns the entire Group unless otherwise indicated. Swedavia reports results using the guidelines (standards) of the Global Reporting Initiative (GRI). Reported indicators have been chosen based on Swedavia’s and its stakeholders’ shared view of mate- rial issues and what is important for long-term sustainable operations. The report also constitutes Swe- davia’s report (Communication on Progress, COP) for the UN Global Compact. The last publication date for the Annual and Sustainability Report was March 31, 2017. Read more at: www.swedavia.se This is a translation of the Swedish original. In the event of any discrep- ancy between the two versions, the Swedish version takes precedence. Contact us Contact person: David Karlsson, in charge of sustainability communication Tel. +46 (0) 10 109 00 00 [email protected] 2 SWEDAVIA 2017 Contents 4. THE YEAR IN BRIEF 6. STATEMENT OF THE 8. THE AVIATION MARKET 5. THIS IS SWEDAVIA PRESIDENT AND CEO 12. THE CUSTOMER JOURNEY 20. STRATEGY 34. OPERATIONS 34. Customer 40. Economy 56. Environ- mental concern 60. Social development 69. ANNUAL REPORT 2017 128. AUDITOR’S REPORT 70. Report of the Directors 131. STATEMENT OF and Sustainability Report COMPLIANCE 80. Corporate Governance 132. GRI – CONTENT AND Statement REFERENCES 90. Consolidated financial statements 137. KEY METRICS AND DEFINITIONS 95. Parent Company financial statements 99. Notes 127. Signatories to the Annual 68. STATEMENT FROM THE Report CHAIRMAN OF THE BOARD SWEDAVIA 2017 3 THE YEAR IN BRIEF The year in brief The Group in figures The Group SEK, unless otherwise indicated 2017 2016 2015 2014 Net revenue 5,745 5,546 5,416 5,384 5,745 Operating profit 651 966 1,755 1,405 SEK M in net Operating margin, % 11.3 17.41 32.41 26.11 revenue Profit for the year 407 717 1 410 926 Return on operating capital, %2 5.1 8.5 14.6 10.3 Debt/equity ratio, times2 1.0 0.7 0.6 1.4 3,866 Investments 3,866 2,138 1,120 924 SEK M in Dividend 1223 143 232 231 investments Average number of employees 3,074 2,949 2,787 2,516 Number of passengers, million 41.9 39.5 37.6 35.7 Operating costs per departing passenger, SEK4 197.3 197.3 195.2 186.6 41.9 Commercial revenue per departing passenger, SEK 75.7 75.5 76.1 78.5 million passengers, 2017 Satisfied passengers, % 75 77 76 75 Engaged leaders and employees, %5 67 64 na na Fossil carbon dioxide emissions, tonnes 1,896 2,723 3,066 3,108 For key metrics and definitions, see pages 137–138. 1 The operating margin excluding capital gains was 13.1 per cent in 2016, 15.4 per cent in 2016 and 19.6 per cent in 2014. 2 As of 2017, the Company’s pension provision and receivable for the related employee pension tax are offset. Previous years have been restated. 3 Dividend proposed to the Annual General Meeting. 4 As of 2017, capitalised work for the Company’s own account has been taken into consideration; previous years have been restated. For 2016–2017, this metric is calculated based on the business segment Airport Operations, and for 2013–2015 the metric is based on Swedavia AB. 5 Swedavia changed its measurement method in 2016. Read more on pages 62–63. Performance in 2017 For the full year, Operating profit was SEK 651 M The Group’s investments increased Swedavia’s airports had (966). It was negatively affected by to SEK 3,866 M (2,138), which is an 41.9 million passengers SEK 160 M (74) attributable to impair- effect of a higher investment pace in (39.5), which is a 6.1 per ment losses and disposals. The oper- its development programmes cent increase ating margin in 2016 was affected by In accordance with Swedavia’s Net revenue increased to capital gains of SEK 241 M. Excluding dividend policy, the Board of SEK 5,745 M (5,546) these items affecting comparability, Directors proposes a dividend of operating profit was SEK 811 M (799), SEK 0.08471 per share, for a total of an improvement compared to 2016 about SEK 122 M 4 SWEDAVIA 2017 THIS IS SWEDAVIA This is Swedavia Swedavia owns, operates and develops Sweden’s national basic infrastructure of airports. These ten airports form a system Values that connects Sweden together – and connects Sweden with the rest of the world. Reliable Owned by Swedavia Partly owned by the Kiruna Airport Engaged Swedish Air Forces, but Swedavia is responsible for Innovative commercial air Luleå Airport traffic Umeå Airport Welcoming Åre Östersund Airport Stockholm Arlanda Airport Bromma Stockholm Airport A world leader Göteborg Landvetter Airport Swedavia is a world leader Visby Airport in developing airports Ronneby Airport with the least possible Malmö Airport environmental impact. Purpose Together we enable people to meet. smaller carbon foot- print per passenger Vision 2% in 2017 than in 2016 Swedavia develops the airports of the future and creates sustainable growth for Sweden. Business idea Together with its partners, Swedavia creates added value for its customers by offering attrac- tive airports and access that provide smooth and inspiring travel experiences. Swedavia’s airports shall be the most important meeting places in Scandinavia, while the Company shall be an international role model in sustainability and a growth engine for all of Sweden. SWEDAVIA 2017 5 STATEMENT FROM THE PRESIDENT AND CEO We shall enable the air travel of the future 2017 was an exciting year, both for Swedavia as a company and for me personally. When I started in January, I said that it was fantastic to be able to work in operations that are so vital to Sweden’s development. Swedavia operates and develops the airports of the in every area and essentially at every airport. This involves future. The access they create enables meetings between terminals and baggage handling, IT systems and operational people and cultures. They provide Sweden with a com- processes. One key area that we are working with is remote petitiveness that forms the basis of long-term sustainable air traffic management. This is an area in which modern growth. Our operations cover a wide range of activities. Day- technology presents new opportunities to increase the to-day operations at our airports have to function efficiently, operational excellence we strive for in a safe, secure way. and safety and security are always our top priority. At the same time, we are building for the future. We are carrying INVESTMENTS AND COMPETITION out major investments in our development programmes, Our objective is for Stockholm Arlanda Airport to be the and we have a planning horizon that stretches several dec- leading airport in Scandinavia. To achieve this, we must be ades ahead. It is an honour to be able to work with this, and competitive from every perspective. It also requires that I have felt that even more strongly over the past year. we have the support of political leaders and the business community. The Arlanda Council, which was established CONTINUED PASSENGER GROWTH in 2017, has an important role here. Collaborations across It is gratifying that the services we offer are in demand, boundaries, especially when it comes to sustainable but that also puts requirements on us. In 2017, things were ground transport to and from the airport, are an essential literally crowded. A total of nearly 42 million passengers condition for success. passed through our airports, six per cent more than in Swedavia’s commercial and real estate operations are 2016. Seven airports set records, including Stockholm both increasingly important. For instance, by developing Arlanda Airport, which handled more than 26 million pas- hotels adjacent to our airports, we enhance the role of these sengers, an eight per cent increase. Since 2013, Swedavia airports as attractive meeting places while contributing to has attracted 19 new intercontinental routes, and we have the funding of their development. One example is the sale of established some 300 international routes. Meanwhile we the hotel property now being built at Stockholm Arlanda. see that air cargo is growing. This is an important condi- The work to introduce US preclearance – US border control tion for the profitability of airlines and thus for access. – at Stockholm Arlanda encountered challenges in 2017 in the To meet this passenger growth, we are carrying out a large form of a Swedish aviation tax, increased investment costs number of projects to increase our capacity and efficiency and lost funding for additional security screening. As a result, 6 SWEDAVIA 2017 STATEMENT FROM THE PRESIDENT AND CEO the conditions are not now in place for introducing this ser- see that we must be better in our collaborations with both vice. However, we believe that the introduction of US preclear- airlines and tenants.