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Multi-year overview• LFV showed a loss of SEK 545 M in 2007. This earnings figure included a nonrecurring item of SEK 1.1billion due to new actuarial principles for calculating future pension obligations. Excluding this nonrecurringitem, 2007 was another successful year. International traffic continued to grow. Togetherwith cost-cutting measures and favourable earnings from commercial ventures, this represented anearnings improvement of SEK 120 M. Without pension expenses affecting comparability, for the firsttime LFV could also have met its financial targets for both the equity/assets ratio and return on equity.The events of September 2001 togetherwith a deep and lengthy economic downturncaused passenger volume at LFV’sairports to decline by 15 per cent overthe three-year period 2001 – 2003. Afterthis sharp downturn, passenger numbershave again climbed in recent years,especially when it comes to internationaltraffic. The increase in the numberof international passengers that beganin 2004 continued at a rate of between 5and 8 per cent annually, but the upturnin domestic traffic during 2004 and 2005came to an end. The number of domesticpassengers decreased in 2007 for the secondstraight year.During the traffic downturn of 2001 –2003, LFV completed the largest capitalspending programme in its history. Thismainly included a third runway and anexpanded terminal system at Stockholm-Arlanda Airport plus a new air trafficmanagement system. The traffic downturnas well as increased capital andoperating expenses due to the capitalspending programme led to earningsreductions at LFV of about SEK 1 billion.To offset this deterioration in earnings,in the autumn of 2001 LFV initiatedan action programme calling for alasting improvement in LFV’s earningsof SEK 1 billion by the end of 2006. Thisaction programme achieved its desiredeffect earlier, meeting its target by theend of 2005. During 2006 and 2007, LFVattached great importance to consolidatingthe effects of the action programmeand ensuring good cost control and continuousfavourable growth in commercialproducts.In recent years, LFV has reduced itsnumber of airports by three, with themunicipalities of Halmstad, Kalmar andNorrköping fully assuming ownershipand operation of their respective airports.These changes have enabled LFVto improve its efficiency.RevenueOver the past decade, LFV’s revenue rosefrom SEK 4,469 M in 1998 to SEK 6,273M in 2007, an increase of SEK 1.8 billionor an average of nearly 4 per cent annually.During the same period, the numberof air travel passengers at LFV’s airportsincreased by nearly 2.6 million, or anaverage of only 1 per cent annually. Duringthe late 1990s, the aviation industryexperienced a very expansive period,with passenger increases in the rangeof 5-6 per cent annually and roughlyequally large revenue increases for LFV.Beginning in 2001, a sharp downturn inpassenger volume began. During a threeyearperiod, this very adversely affectedthe entire aviation industry, and thusalso the finances of LFV.Equity/assets ratio and return onequity 1998-2007%40Revenue and capital spending1998-2007SEK M7,000Profit after financial items1998-2007SEK M6006,00045025100-55,0004,0003,0002,0001,0003001500-150-300-450-2098 99 00 01 02 03 04 05 06 07098 99 00 01 02 03 04 05 0607-60098 99 00 01 02 03 04 050607Equity/assets ratioReturn on equityCapital spendingOf which, Arlanda LinkRevenueProfit after financial itemsProfit excluding “items affectingcomparability”The above three charts show developments during the 1998- 2007 decade in terms of equity/assets ratio, return on equity, capital spending and revenue,as well as profit after financial items. The downturn in earnings, equity/assets ratio and return in 1999 was due to the district court ruling in adispute with SAS concerning rental income at Terminal 2 at Stockholm-Arlanda Airport (item affecting comparability of SEK -659 M) plus the investmentin A-Banan Projekt AB (SEK 1,144 M). The changes after 2000 were a consequence of decreased traffic and large investments. Between 2000 and 2003,passenger volume fell by 15 per cent, while major investments were completed and extensive steps were taken to improve airport security. The 2007downturn in earnings, equity/assets ratio and return on equity was due to a decision by the National Government Employees Pensions Board (SPV) tochange its actuarial principles concerning provisions for future pension obligations, which represented a nonrecurring expense of SEK 1,113 M for LFV.56> LFV 2007 < Multi-year overview