Financial targets and achievements

SAS’ overall goal is to create value for its shareholders. To reach this goal, SAS works with its customer offering, efficiency enhancements and sustainability to provide the basis for long-term sustainable profitability. We operate in a capital-intensive sector that requires optimization of the capital structure. For this reason, SAS has three financial targets:

• Return on invested capital (ROIC): to exceed the post-tax Weighted Average Cost of Capital (WACC) over a business cycle.
• Financial net debt/Adjusted EBITDA: to be a multiple of less than three and a half (3.5x).
• Financial preparedness: cash and cash equivalents and available credit facilities must exceed 25% of SAS’s annual fixed costs.

The ROIC target corresponds with the capital markets’ and SAS’s internal assessment of SAS’s weighted average cost of capital (WACC). This is also linked to SAS’s dividend policy for shareholders, which stipulates that dividends can first be paid when value is created through SAS’s ROIC exceeding its WACC.

Leverage target —Financial net debt/EBITDA is a key ratio used by credit rating agencies and banks for assessing creditworthiness and includes the value of leased aircraft. The aim with maintaining a ratio with a multiple of less than three and a half (3.5x) is aligned with SAS’s ambition of improving the financial position and credit rating, and thereby lowering financing costs.

The financial preparedness target is to have cash funds in preparedness of at least 25% of annual fixed costs. Normally, this covers SAS’ unearned transportation liability and also meets regulatory requirements regarding liquidity.