Notes to the financial statements
I Accounting principles
The 2017 financial statements of Flughafen Zürich AG, based in Kloten, have been prepared in accordance with the provisions of Swiss accounting legislation.
The significant valuation principles that have been applied but are not prescribed by law are described below. These single-entity financial statements also serve for tax purposes and form the basis for the statutory business of the General Meeting of Shareholders.
As Flughafen Zürich AG prepares consolidated financial statements in accordance with accepted financial reporting standards (IFRS), it has omitted to present disclosures on interest-bearing liabilities, disclosures on auditorsʼ fees, a cash flow statement and a management report in these financial statements in accordance with the statutory provisions.
As in the previous year, the average number of full-time equivalents was over 250 in the reporting period.
Reporting of noise-related costs in the financial statements
Costs for formal expropriations qualify as an intangible asset under the accounting provisions of the Swiss Code of Obligations. They are recognised as assets at the latest on the date on which the counterparty has attained an assertable claim. An equal amount is also recognised as a provision at the same date. Amortisation of capitalised costs for formal expropriations is based at a minimum on the consolidated financial statements. Adequate provisions are recognised for liabilities arising from sound insulation and resident protection measures. Any balance of revenue from noise charges after deduction of noise-related costs (compensation for formal expropriations, sound insulation and resident protection measures, operating costs, financing costs and amortisation) is transferred to the provision for aircraft noise.
The reporting of noise-related costs in the financial statements is a complex matter requiring significant assumptions and estimates concerning the obligation to recognise provisions. This complexity is attributable to a large variety of relevant legal bases, unclear or pending court rulings and political debate. Flughafen Zürich AG has received a total of around 20,000 noise-related claims for compensation, of which some 7,000 were still pending at the end of 2017. Approximately 1,200 of these cases are currently being examined by the Swiss Federal Assessments Commission.
The rulings by the Swiss Federal Supreme Court in the first half of 2008 on fundamental issues related to formal expropriations enabled Flughafen Zürich AG to reliably estimate the total cost of compensation for formal expropriations for the first time, in spite of the remaining uncertainties regarding the accuracy of this estimate. With further rulings on 8 June 2010 and 9 December 2011, the Swiss Federal Supreme Court definitively set the cut-off date for the foreseeability of an eastern approach as 1 January 1961 and ruled definitively on the method used to calculate a decline in the market value of investment property. Based on these Swiss Federal Supreme Court rulings and other fundamental issues that have since been decided in a court of final instance, the company undertook a reappraisal of noise-related costs at the end of 2010 and 2011.
In the first half of 2016, the Swiss Federal Supreme Court handed down two rulings in test cases regarding claims for compensation due to eastern and southern approach routes. By answering important questions relating to how pending claims for compensation will be dealt with in a court of last instance, these rulings increased legal certainty significantly. These Swiss Federal Supreme Court rulings enabled Flughafen Zürich AG to undertake a reappraisal of the outstanding cost of compensation for formal expropriations at 30 June 2016.
With respect to sound insulation and resident protection measures, the Federal Office of Civil Aviation (FOCA) required Flughafen Zürich AG, in connection with its 2014 operating regulations application, to submit an extended sound insulation programme by the end of June 2015. Based on the permitted noise exposure levels specified by FOCA, and taking into account the still pending changes to the 2014 operating regulations, the company duly submitted its 2015 sound insulation programme by this deadline. At its meeting on 22 June 2015, the Board of Directors approved a further CHF 100 million of measures in this context in addition to the CHF 240 million previously estimated for sound insulation and resident protection.
As at 31 December 2017, Flughafen Zürich AG has recognised an intangible asset from the right of formal expropriation of CHF 15.1 million (2016: CHF 14.4 million) and a provision for aircraft noise of CHF 485.3 million in total (2016: CHF 497.6 million) in the financial statements according to the provisions of the Swiss Code of Obligations.
Depending on future and final-instance legal judgements, especially with respect to the southern approaches, noise-related liabilities may in future be subject to substantial adjustments, which would also require adjustments to the noise-related costs recognised in the balance sheet. At the present time, it is not possible to reliably estimate the total costs to capitalise as an intangible asset from the right of formal expropriation, the resulting amortisation or the corresponding provision.
As based on current knowledge, the Airport of Zurich Noise Fund has sufficient assets to be able to finance the costs for formal expropriations as well as noise insulation and resident protection measures that can be estimated under the base case at the present time, the passenger-related noise supplement was suspended as of 1 February 2014.
Summary of significant accounting policies
Revenue is recognised by Flughafen Zürich AG when the service has been rendered, it is probable that the economic benefits will flow to the company and it can be measured reliably. In addition, the significant risks and rewards of ownership have to be transferred to the recipient of the service. Revenue from fixed-rent tenancy agreements is recognised on a straight-line basis over the term of the agreement. Conditional rental payments (including turnover-based tenancy agreements) are recognised on an accrual basis based on the turnover generated by the lessee, in which case a minimum rent may be applied.
Where treasury shares are used for share-based payments for management and employees, the difference between the cost and the selling price on allocation of the shares represents personnel expense.
Lease and rental transactions are accounted for according to legal ownership. Accordingly, in the financial statements of the lessee or tenant, the expenses are recognised on an accrual basis; the leased or rented items themselves are not recognised, however.
Inventories mainly comprise operating supplies and consumables used for the maintenance and repair of property, plant and equipment and are stated at cost or, if lower, at net realisable value. The first-in, first-out method is applied when calculating the cost.
Financial assets of Airport of Zurich Noise Fund
The financial assets of the Airport of Zurich Noise Fund comprise quoted securities held for the short or long term. They are initially recognised at cost (fair value plus directly attributable transaction costs). The securities are subsequently measured at the market price at the reporting date, with gains and losses recognised in profit or loss. A fluctuation reserve is not recognised.
Property, Plant anD Equipment
Property, plant and equipment is stated at acquisition or production cost less accumulated depreciation and impairment. With the exception of land, items are depreciated over their estimated useful life using the straight-line method. If there are indications that they are impaired, the carrying amounts are reviewed and, if necessary, adjusted.
Intangible assets are stated at cost less amortisation. They are amortised over their estimated useful life using the straight-line method. If there are indications that they are impaired, the carrying amounts are reviewed and, if necessary, adjusted.
At the date of acquisition, treasury shares are recognised at cost as a deduction from equity. In the event of their sale at a later date, the gain or loss is credited or charged directly to voluntary retained earnings.
II Notes to the financial statements
1 Extraordinary result
In the reporting period, extraordinary income consists mainly of a payment of CHF 4.8 million in connection with the liquidation of Swissair in debt restructuring proceedings and the gain of CHF 42.9 million on the disposal of the 5% interest in Bangalore International Airport Ltd. In addition to a payment of CHF 3.5 million in connection with the liquidation of Swissair in debt restructuring proceedings, the prior-year balance included an additional purchase price payment of CHF 7.3 million for the land for THE CIRCLE, which fell due upon the initiation of the second phase of THE CIRCLE project.
In both the reporting period and the previous year, extraordinary expenses mainly included losses on asset disposals.
2 Trade receivables
Trade receivables from third parties
Trade receivables from investments
Total trade receivables
Trade receivables from investments comprise amounts still due from Zurich Airport International AG for services rendered.
3 Prepaid expenses
Prepaid expenses in respect of third parties
Prepaid expenses in respect of investments
Total prepaid expenses
Prepayments and accrued income relating to investments comprise accruals for receivables not yet billed to Zurich Airport International AG for services rendered.
Stake held in %
Zurich Airport International AG 1)
Zurich Airport Latin America Ltda. 2)
Rio de Janeiro
BRL 1.8 million
Concessionária do Aeroporto Internacional de Florianópolis S.A. 2)
BRL 150 million
A-port S.A. 2)
Santiago de Chile
CLP 9,760 million
A-port Chile S.A. 2)
Santiago de Chile
CLP 10,613 million
Sociedad Concesionaria Antofagasta S.A. 2)
Santiago de Chile
CLP 3,600 million
Sociedad Concesionaria Iquique S.A. 2)
Santiago de Chile
CLP 600 million
Sociedad Concesionaria Aeropuerto Diego Aracena S.A. 2)
Santiago de Chile
CLP 5,350 million
A-port Operaciones S.A. 2)
Santiago de Chile
CLP 1,352 million
A-port Operaciones Colombia S.A. 2)
COP 100 million
Unique IDC S.A. de C.V. 2)
HNL 200 million
Sociedade de Participação no Aeroporto de Confins S.A. 2)
BRL 399 million
Concessionária do Aeroporto Internacional de Confins S.A. 2)
BRL 762 million
Administradora Unique IDC C.A. 1)
VEB 25 million
1) Direct investment.
2) Indirect investment.
The equity interests stated are also the share of the voting power in the investees listed.
Zurich Airport International AG, the wholly-owned subsidiary responsible for advising, operating and/or owning airports and airport-related companies throughout the world, holds all the investments in Latin America (with the exception of Venezuela).
In the reporting period, Zurich Airport International AG acquired additional shares in A-port Chile S.A. (now 100.0%, previously 49.0%) and its investees as well as in A-port Operaciones S.A. (now 99.0%, previously 62.0%) and its investees via its subsidiary A-port S.A. Moreover, in connection with taking over the operation and upgrade of Hercílio Luz Airport in Florianópolis (Brazil), Flughafen Zürich AG also established the wholly-owned subsidiary Concessionária do Aeroporto Internacional de Florianópolis S.A.
In 2010, Flughafen Zürich AG and its consortium partner Unique IDC turned to the International Centre for Settlement of Investment Disputes (ICSID) in Washington D.C. in the matter of the airport expropriated in Venezuela (Isla de Margarita). This step is in compliance with the investment protection treaty between Venezuela, Switzerland and Chile. The ICSID reached its decision in November 2014, requiring the Bolivarian Republic of Venezuela to reimburse the consortium the costs incurred for the proceedings and project plus a compensation payment of around USD 19.5 million as well as interest incurred up until receipt of payment (around USD 19.4 million accrued as at 31 December 2017). Flughafen Zürich AG is entitled to 50% of the total amount of the payments. Prior to the deadline set for 18 March 2015, Venezuela appealed to the ICSID to set aside the tribunalʼs decision on the grounds of an infringement of procedural rules. A decision is expected in the next few months. Regardless of the outcome the tribunalʼs decision is already binding and enforceable. The value of this holding has been fully impaired.
5 Equity interest in the co-ownership structure for The Circle
Share of assets of co-ownership structure for THE CIRCLE
Share of liabilities of co-ownership structure for THE CIRCLE
Total equity interest in co-ownership structure for THE CIRCLE
On 5 February 2015, Flughafen Zürich AG and Swiss Life AG notarised the purchase agreement for the share of land for THE CIRCLE and registered it for entry in the Land Register, thereby establishing the co-ownership structure between the two parties provided for in the financing agreements, in which Flughafen Zürich AG has a 51% interest and Swiss Life AG a 49% interest.
The co-ownership structure is responsible for the implementation and subsequent operation of THE CIRCLE.
6 Property, plant and equipment
Buildings, engineering structures
Projects in progress
Total property, plant and equipment
7 Other current liabilities
Other current liabilities to third parties
Other current liabilities to employee pension funds
Total other current liabilities
At the reporting date, other current liabilities to employee pension funds comprise outstanding liabilities to the BVK Employee Pension Fund of the Canton of Zurich.
8 Non-current interest-bearing financial liabilities
as at 31.12.2017
Interest payment date
2012 – 2020
2013 – 2023
2017 – 2029
Total non-current financial liabilities
External financing is subject to standard guarantees and covenants, which were complied with as at the reporting date. In addition, unused credit facilities at the reporting date amounted to a total of CHF 238.5 million.
9 Provision for aircraft noise
Balance as at 1 January
Decrease in provision for aircraft noise
Balance as at 31 December
of which current (planned payment within 1 year)
of which non current (planned payment from 1 year on)
The decrease in the provision for aircraft noise comprises the balance of revenue from noise charges plus noise-related costs and expenses:
Revenue from noise charges
Costs for sound insulation and resident protection
Costs for formal expropriations
Noise-related operating costs
Amortisation of intangible asset from right of formal expropriation
Interest income and realised/unrealised gains/losses on financial assets of Airport of Zurich Noise Fund
Total decrease of provision for aircraft noise
For information on the reporting of noise-related data in the financial statements according to the Swiss Code of Obligations, see also Reporting of noise-related costs in the financial statements in the notes to the financial statements.
10 Equity and capital contribution reserves
A 5-for-1 share split was implemented on 6 May 2016. The share capital of Flughafen Zürich AG amounting to CHF 307,018,750 has, since this date, been redivided into 30,701,875 fully paid-up registered shares (previously 6,140,375 registered shares) with a par value of CHF 10.00 (previously CHF 50.00). At the reporting date, the capital contribution reserves amounted to CHF 313.5 million (2016: CHF 411.7 million).
11 Treasury shares
(Number of shares)
Balance as at 1 January
Acquisitions (at applicable market price)
Allocation to management, employees and third parties 1)
Balance as at 31 December
1) See also note 17, Equity interests of members of the Management Board, other members of management and employees.
In the reporting period, 2,349 registered shares were purchased at the market price (2016: 5,206 registered shares). Treasury shares are distributed to members of the Management Board and other members of management under the bonus programme. They are used primarily for this participation programme. In addition, Flughafen Zürich AG gives those employees who have completed their first year of service a one-off gift in the form of one share free of charge.
12 Off-balance sheet lease obligations
The maturity structure of lease liabilities that will not mature or cannot be cancelled within twelve months is as follows:
Due within 1 year
Due between 1 and 5 years
Due in more than 5 years
Total unrecognised finance lease liabilities
13 Contingent liabilities
A number of legal proceedings and claims against Flughafen Zürich AG in the context of its normal business activities are still pending. The company does not expect the amounts required to settle these lawsuits and claims to have a significantly negative impact on the consolidated financial statements and cash flow of Flughafen Zürich AG.
Depending on future and final-instance legal judgements, especially with respect to the southern approaches, in particular the new noise-related liabilities, but also the old ones, may in future be subject to substantial adjustments, which would also require adjustments to the noise-related costs recognised as assets and liabilities in the balance sheet. At the present time, it is not possible to reliably estimate the total costs to capitalise as an intangible asset from the right of formal expropriation, the resulting amortisation or the corresponding provision.
Flughafen Zürich AG is jointly and severally liable to third parties for the liabilities of the co-ownership structure THE CIRCLE and the ordinary partnership THE CIRCLE.
14 Net reversal of hidden reserves
In the reporting period, hidden reserves of CHF 4.0 million were reversed (2016: CHF 7.5 million).
15 Major shareholders
As at the reporting date, the following shareholders or groups of shareholders held more than 5% of the voting rights:
Canton of Zurich
City of Zurich
16 Shares held by the Board of Directors
As at the reporting date, members of the Board of Directors and related parties held the following number of shares:
Number of shares as at
Number of shares as at
Guglielmo L. Brentel
Josef Felder 1)
Member; Chairman Audit & Finance Committee
Stephan Gemkow 1)
Vice Chairwoman; Chairwoman Nomination & Compensation Committee
Kaspar Schiller 2)
Ulrik Svensson 3)
Carmen Walker Späh
Member; Chairwoman Public Affairs Committee
1) Since 20 April 2017.
2) Until 20 April 2017.
3) Until 31 December 2016.
17 Equity interests of members of the Management Board, other members of management and employees
As part of the performance-related remuneration awarded to members of the Management Board and other members of management, 1,960 shares (2016: 1,630 shares) worth CHF 423,360 (2016: CHF 289,162) were distributed to members of the Management Board and 3,849 shares (2016: 3,705 shares) worth CHF 831,384 (2016: 657,267) were distributed to other members of management in the reporting period.
As at the reporting date, members of the Management Board and related parties held the following number of shares:
Number of shares as at
Number of shares as at
Lukas Brosi 4)
Stefan Conrad 5)
Stefan Gross 1)
Daniel Scheifele 2)
Daniel Schmucki 3)
Stefan Tschudin 6)
1) Since 1 February 2017.
2) Until 30 September 2017.
3) Since 1 February 2016.
4) Since 1 April 2016.
5) Until 31 January 2017.
6) Since 1 October 2017.
In addition, Flughafen Zürich AG gives those employees who have completed their first year of service a one-off gift in the form of one share free of charge. In the reporting period, 151 shares (2016: 302 shares) worth CHF 33,644 (2016: 49,055) were handed out in this context.
18 Significant events after the reporting date
The Board of Directors authorised the 2017 financial statements according to the provisions of the Swiss Code of Obligations (CO) for issue on 26 February 2018. These also have to be approved by the General Meeting of Shareholders.
No events occurred between 31 December 2017 and the date on which the financial statements according to the provisions of the Swiss Code of Obligations were authorised for issue by the Board of Directors which would require an adjustment to the carrying amounts of the assets and liabilities in the financial statements according to the provisions of the Swiss Code of Obligations or which would have to be disclosed here.