Notes to the consolidated financial statements

  • I Accounting policies

    • General remarks

      The operating licence awarded by the Federal Government authorises and obliges the airport operator, Flughafen Zürich AG, to operate Zurich Airport until 2051. In addition to combining transport services by road, rail and air, Flughafen Zürich AG also operates Zurich Airport as a shopping, entertainment and services centre.

      The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law. They have been prepared under the historical cost convention, with the exception of derivative financial instruments, assets of the Airport of Zurich Noise Fund that are classified as available for sale, associates and pension obligations.

      The single-entity financial statements of the groupʼs subsidiaries, which have been prepared in accordance with uniform accounting policies, have been used as the basis for consolidation. The reporting date for all subsidiaries is 31 December.

      The preparation of financial statements in accordance with IFRS requires the Management Board to make estimates and assumptions, as well as exercise its discretion, when applying the accounting policies. This may affect reported income, expenses, assets, liabilities and contingent liabilities at the time of preparation of the financial statements. In the event that such estimates and assumptions made in good faith by the Management Board at the time of preparation of the financial statements subsequently deviate from the actual circumstances, the estimates and assumptions originally made are adjusted prospectively in the financial year in which the circumstances changed.

      Judgements made by the Management Board in its application of IFRS that have a significant effect on the consolidated financial statements, and estimates and assumptions with a significant risk of adjustment in the following financial year, are discussed in “II. Judgements and significant estimates and assumptions in the application of accounting policies” and in the following notes in Notes to the consolidated financial statements:

    • New and amended accounting policies

      Changes in accounting policies

      The company adopted the following amended International Financial Reporting Standards which are mandatory for the first time for the financial year beginning 1 January 2017:

      • Amendments to IAS 7 Disclosure Initiative
      • Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses
      • Annual Improvements to IFRSs (2014–2016 Cycle)

      The above-mentioned amendments did not have a significant impact on the financial position, results of operations or cash flows of Flughafen Zürich AG for financial year 2017.

      Application of accounting policies to new transactions and events

      In connection with the acquisition of a controlling interest in A-port Chile S.A. and the related concessions for the airports in Antofagasta and Iquique as well as the concession in connection with the future operation and upgrade of Hercílio Luz Airport in the Brazilian city of Florianópolis, the following accounting policy was applied for the first time:

      IFRIC 12 Service Concession Arrangements

      IFRIC 12 Service Concession Arrangements governs the accounting for rights created by contracts under which the public sector (the grantor) grants a private sector entity (the operator) the licence to provide public services such as the construction, operation and maintenance of infrastructure and the public sector retains certain rights to exercise control. The operator must recognise the right granted by the grantor as a financial asset to the extent that the operator obtains an unconditional right to receive a specified amount of consideration from the public sector entity (financial asset model). If the operator is granted a right to consideration that is contingent on the extent to which the infrastructure is used, the operator recognises an intangible asset (intangible asset model).

      Introduction of new standards in 2018 and later

      The new, revised and amended standards and interpretations issued by the end of 2017 and set out in the table below are not yet effective and were not applied early in these consolidated financial statements.

      New standards or interpretations

       

       

       

      Effective date

       

      Planned application by Flughafen Zürich AG

      IFRS 9 Financial Instruments

       

      **

       

      01.01.2018

       

      Financial year 2018

      IFRS 15 Revenue from Contracts with Customers

       

      **

       

      01.01.2018

       

      Financial year 2018

      IFRIC 22 Foreign Currency Transactions and Advance Consideration

       

      *

       

      01.01.2018

       

      Financial year 2018

      IFRS 16 Leases

       

      **

       

      01.01.2019

       

      Financial year 2019

      IFRIC 23 Uncertainty over Income Tax Treatments

       

      *

       

      01.01.2019

       

      Financial year 2019

       

       

       

       

       

       

       

      Revisions and amendments of standards and interpretations

       

       

       

       

       

       

      Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)

       

      *

       

      01.01.2018

       

      Financial year 2018

      Transfers of Investment Property (Amendments to IAS 40)

       

      *

       

      01.01.2018

       

      Financial year 2018

      Annual Improvements to IFRSs (2014 – 2016 Cycle)

       

      *

       

      01.01.2018

       

      Financial year 2018

      Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)

       

      *

       

      01.01.2019

       

      Financial year 2019

      Prepayment Features with Negative Compensation (Amendments to IFRS 9)

       

      *

       

      01.01.2019

       

      Financial year 2019

      Annual Improvements to IFRSs (2015 – 2017 Cycle)

       

      *

       

      01.01.2019

       

      Financial year 2019

      * No, or no significant, impact is expected on the consolidated financial statements of Flughafen Zürich AG.

      ** Mainly additional disclosures or changes in presentation are expected in the consolidated financial statements of Flughafen Zürich AG.

      IFRS 9 Financial Instruments

      IFRS 9 Financial Instruments, issued in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidelines on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets and new general hedge accounting requirements. It also carries forward the guidance on the recognition and derecognition of financial instruments from IAS 39. In some cases, the new requirements will lead to changes in classification and the new impairment requirements will lead to losses being recognised in profit or loss earlier. An analysis has revealed that application of IFRS 9 as of 1 January 2018 is not expected to have any significant effects on the companyʼs consolidated financial statements.

      IFRS 15 Revenue from Contracts with Customers

      IFRS 15 Revenue from Contracts with Customers establishes a comprehensive framework in the form of a single, five-step model for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. The company has chosen the modified retrospective application approach for initial application of the new standard, under which the standard is applied retrospectively at 1 January 2018 only to contracts that are not yet completed contracts at that reporting date. Any effect of the transition is recognised in equity at 1 January 2018 (without adjusting prior-year amounts). An analysis of agreements with customers has shown that the company does not have any significant agreements for which IFRS 15 would result in changes in revenue recognition. No material consequences are therefore expected in terms of revenue recognition.

      IFRS 16 Leases

      IFRS 16 Leases sets out the accounting and disclosure requirements for lessees and lessors. The new standard supersedes the existing IAS 17 Leases and the related interpretations. A detailed analysis of the effects will be carried out in the current financial year. However, the company does not expect the application of the new standard to have a significant impact on the consolidated financial statements.

      The explanations above and the expected effects resulting from revisions and amendments to standards and interpretations, as set out in the table, reflect the current assessment of the Management Board.

    • CHANGES IN THE CONSOLIDATED GROUP

      The acquisition in mid-April 2017 of a controlling interest in A-port Chile S.A. based in Santiago de Chile extended the consolidated group in Latin America. Through its subsidiary A-port S.A. (formerly Zurich Airport Latin America S.A.), Flughafen Zürich AG had for several years held a 49% interest in this company, which primarily holds the concessions for the Chilean airports in Antofagasta and Iquique.

      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.

    • SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      SCOPE AND METHODS OF CONSOLIDATION

      The consolidated financial statements comprise Flughafen Zürich AG and all companies in Switzerland and abroad that it directly or indirectly controls. Flughafen Zürich AG controls an entity if it is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

      The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control begins until the date on which control ceases. All assets and liabilities are therefore included in the consolidated financial statements together with all income and expenses in accordance with the principles of full consolidation. All unrealised gains and losses on intra-group transactions and all intra-group balances are eliminated on consolidation.

      Business combinations are accounted for using the acquisition method at the date of acquisition. Consideration transferred in a business combination includes the fair value of the assets transferred, liabilities assumed or incurred and equity instruments issued by the group. Transaction costs incurred in connection with a business combination are recognised in the income statement. Goodwill arising from a business combination is recognised as an asset. Goodwill represents the excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of any previously held equity interest in the acquiree over the fair value of the assets acquired and liabilities assumed. Two choices exist regarding the measurement of non-controlling interests. Non-controlling interests are measured at their fair value or at their proportionate share of the recognised amount of the identifiable net assets. When the excess is negative, a bargain purchase gain is recognised immediately in the income statement, after first reassessing the fair value of the net assets acquired.

      FOREIGN CURRENCY

      For consolidation purposes, all assets and liabilities reported in the balance sheets of companies within the group are translated into Swiss francs (functional currency of Flughafen Zürich AG) at the closing rate. Income statements and cash flow statements are translated at the average exchange rate for the period. Foreign exchange differences arising on the translation of balance sheets and income statements are credited/charged directly to the translation reserve in equity. Transactions in foreign currency are translated into Swiss francs at the exchange rate in effect on the day of the transaction.

      Foreign currency monetary items are translated at the exchange rate at the reporting date. Foreign exchange gains/losses that arise from the settlement or remeasurement of foreign currency items at the reporting date are recognised in the income statement.

      Alternative key results

      Earnings before interest, tax, depreciation and amortisation (EBITDA)

      EBITDA comprises earnings before tax, the finance result, the share of profit/loss of associates, gains on the disposal of financial assets classified as available for sale, plus depreciation and amortisation.

      Earnings before interest and tax (EBIT)

      EBIT comprises earnings before tax, the finance result, the share of profit/loss of associates plus gains on the disposal of financial assets classified as available for sale.

      Revenue recognition

      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 in the “Aviation” segment primarily comprises passenger and landing charges. Charges for providing assistance to passengers with reduced mobility are received by the “PRM” segment, while the “User fees” segment primarily receives fees for the use of the central infrastructure. Revenue in the “Air security” segment mainly includes security charges, and in the “Noise” segment it mainly contains noise charges. Revenue is recognised immediately on rendering the service in question. Landing charges are billed per landing according to the weight of the aircraft. Passenger charges, fees for the use of the baggage sorting and handling system and security charges are based on the number of departing passengers. Noise charges are based, in turn, on the number of departing passengers and on an emissions-based charge according to the aircraft type.

      The main components in the “Non-regulated business” segment are revenue from the marketing and rental of the commercial infrastructure at the airport (retail, tax & duty free, food & beverage operations, advertising media, parking, rental and leasing agreements, and energy and utility cost allocation). The service is rendered as soon as the commercial space is made available and the revenue recognised accordingly. For fixed-rent tenancy agreements classified as operating leases, the rents are recognised on a straight-line basis over the term of the tenancy agreement. Conditional rental payments (e.g. from 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. The company does not currently have any tenancy agreements classified as finance leases.

      Leases as lessee

      Finance leases

      Lease agreements that substantially transfer all the risks and rewards of ownership to the company concerned are classified as finance leases. They are stated at the lower of fair value and present value of the minimum lease payments less accumulated depreciation and any impairment losses. Lease payments are allocated between an interest expense and a reduction of the outstanding liability. Leased assets are depreciated over the estimated useful life or over the term of the lease, whichever is shorter. Interest on finance leases and depreciation of the leased assets are charged to the income statement.

      Operating leases

      Income and expenses associated with operating leases are recognised in the income statement over the period of the lease.

      Finance result

      The finance result comprises interest payments on borrowings calculated using the effective interest method (excluding borrowing costs relating to buildings under construction), unwinding of the discount on non-current provisions, interest income, dividend income, foreign currency gains and losses, gains on/losses from the disposal of financial assets classified as available for sale, impairment losses on financial assets and gains on/losses from hedging instruments recognised in the income statement.

      Interest income is recognised in the income statement using the effective interest method. Dividend income is recognised in the financial statements at the due date.

      Borrowing costs arising during the construction stage for movables, buildings and engineering structures are capitalised up until the date the asset is taken into use or at the date of completion, if earlier.

      Property, plant and equipment

      Property, plant and equipment is stated at acquisition or construction cost, less accumulated depreciation and accumulated impairment losses. The construction cost of buildings includes direct costs for labour (third-party services and internal personnel), materials and overheads, plus the borrowing costs arising during the construction stage, which are capitalised up until the date the asset is taken into use or at the date of completion, if earlier. Borrowing costs and expenditure relating to significant assets under construction are capitalised.

      Components of an item of property, plant and equipment with a different useful life are reported individually and depreciated separately. Expansion and replacement expenditure is capitalised only if it is probable that future economic benefits will flow to Flughafen Zürich AG. Maintenance and renovation expenditure is charged to the income statement when incurred.

      The assets (with the exception of land, which is not depreciated) are depreciated using the straight-line method over the estimated useful life or over the term of the lease, whichever is shorter. The useful life for each category of property, plant and equipment is as follows:

      • Buildings: maximum 40 years
      • Engineering structures: maximum 30 years
      • Tunnels and bridges: maximum 50 years
      • Equipment and vehicles: 3 to 20 years

      Government subsidies and grants

      Government subsidies and grants related to investments are recognised as income over the useful life of each asset and reported in the income statement as an adjustment to the depreciation of the related asset. All government subsidies take the form of “à fonds perdu” grants and do not have to be repaid.

      Projects in progress

      Projects in progress are stated at acquisition or production cost and include investments in projects that have not yet been completed. These mainly comprise assets under construction. Once a project has been completed, the related asset is transferred to the relevant categories of property, plant and equipment and segments. Assets that are already in use or are classified as “Projects in progress” are depreciated from the time they are brought into use. From the date the asset is taken into use or at the date of completion, if earlier, no further expenditure on the asset or related borrowing costs is capitalised.

      Investment property

      Investment property (in accordance with IAS 40) is property held for the long term to earn rentals or for capital appreciation. It is measured at initial recognition at its cost and subsequently at cost less straight-line depreciation and any impairment losses in accordance with IAS 36.

      JOINT ARRANGEMENTS

      A joint arrangement (in accordance with IFRS 11) is a contractual arrangement between two or more parties which gives those parties joint control of an activity. Each joint arrangement must be classified as either a joint operation or a joint venture. In a joint operation, the parties that have joint control have rights to the assets and obligations for the liabilities of the joint arrangement and account for them in relation to their interest. In a joint venture, the parties that have joint control merely have rights to the net assets of the joint arrangement (the investment is accounted for using the equity method).

      Intangible assets

      Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses. Intangible assets are amortised using the straight-line method.

      With the award of the operating licence, Flughafen Zürich AG was also granted a right of formal expropriation in respect of property owners exposed to aircraft noise. This right of formal expropriation was granted on condition that the airport operator bears the costs associated with compensation payments and is recognised as an intangible asset at the date when the probable total cost can be estimated based on final-instance court rulings, so that the cost can be reliably estimated in accordance with IAS 38.21. The timing of recognition may differ depending on the airport region. At the same time as an intangible asset is recognised at the present value of the expected future payments, an equal amount is recognised as a provision. Any future adjustments to the probable total cost already recognised as assets and liabilities will be reflected on both sides of the balance sheet. The intangible asset is amortised using the straight-line method over the remaining duration of the operating licence (i.e. until May 2051).

      In the case of clearly defined projects, external and internal costs directly attributable to the development of computer software are capitalised if they will be exceeded by the future economic benefits. The useful life of software is three to five years.

      Investments in airport operator projects

      The concession arrangements for the operation of foreign airports fall within the scope of IFRIC 12 and are generally accounted for under the intangible asset model (IFRIC 12.17), as the company as operator receives the right to charge for usage as consideration for the obligation to pay concession fees and provide upgrade services. The obligations under the concession arrangements to pay fixed concession fees are recognised as financial liabilities. They are initially measured at the fair value of the liabilities using a discount rate appropriate to the risk. The rights to operate the airports that are received as consideration are recognised as intangible assets in the same amount and presented as investments in airport operator projects. The rights received as consideration for the upgrade services provided are recognised as an intangible asset on an accrual basis at the cost of construction. Under IFRIC 12.14, revenues and costs relating to upgrade services are generally recognised in accordance with IAS 11. The financial liabilities recognised are subsequently measured at amortised cost using the effective interest method. The rights recognised as assets are subsequently measured at cost less accumulated amortisation over the term of the concessions. In accordance with IFRIC 12.18, any minimum revenue guaranteed by the grantor is deducted from the intangible asset and accounted for as a financial asset.

      Investments in associates

      Associates are companies where the group is able to exercise significant influence, but not control, over the financial and operating policies (where the group holds between 20% and 50% of the voting rights). Associates are included in the consolidated financial statements by applying the equity method. Any difference between the cost of the investment and the fair value of the share of net assets acquired is determined at the time of acquisition and recognised as goodwill and included in the carrying amount of the investment. In subsequent reporting periods, the carrying amount is adjusted to recognise the share of Flughafen Zürich AG of any profit or loss and changes recognised in other comprehensive income of the investee and any dividends received.

      Investments in associates where the group holds less than 20% of the voting rights, but where it nonetheless is able to exercise significant influence, are also included in the consolidated financial statements by applying the equity method.

      Financial assets

      Financial assets include securities of the Airport of Zurich Noise Fund classified as available-for-sale financial assets. They are measured initially at fair value plus directly attributable transaction costs. The securities are also subsequently measured at fair value, with the unrealised gains and losses recognised and presented in equity (in the fair value reserve, net); when the securities are sold or in the event of impairment, these gains and losses are transferred to the income statement.

      Financial assets also include non-controlling interests not providing significant influence and loans that are measured at amortised cost, less impairment losses.

      Derivative financial instruments

      Derivative financial instruments are used exclusively for the purpose of hedging interest rate and currency risks, and are reported under other receivables or other current liabilities. They are carried at fair value in accordance with IAS 39. Changes in the fair value of derivative instruments which fulfil the requirements for cash flow hedges are booked directly to the hedging reserve, net. As soon as the hedged transaction occurs, the accumulated unrealised gains and losses are transferred to the income statement. For all other derivative instruments not qualifying for hedge accounting, changes in fair value are recognised in the income statement.

      Inventories

      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.

      Receivables

      Receivables are stated at amortised cost, which usually corresponds to their nominal value, less an impairment allowance. The impairment allowance comprises individual adjustments for specifically identified items for which there is objective evidence that the outstanding amount will not be recovered in full, and collective adjustments for groups of receivables with a similar risk profile. Collective impairment losses relate to losses that have been incurred but for which the precise amounts are not yet known. They are based on historical data on payment statistics for receivables. As soon as there is sufficient evidence that a receivable will not be recoverable, it is directly written off or offset against the corresponding allowance.

      The recoverable amount of receivables is equivalent to the present value of the estimated future cash flows. Impairment losses on receivables are reversed if the amount of the impairment loss decreases and the decrease is related to an event that occurred in a period after the impairment loss was recognised.

      Cash and cash equivalents

      Cash and cash equivalents comprise cash on hand, in postal accounts and at banks and short-term investments with a maturity of 90 days or less from the date of acquisition.

      Non-current assets held for sale

      A non-current asset or disposal group is classified as held for sale when its carrying amount will be recovered principally through a sale transaction rather than through continuing use. This sale transaction to which management has committed should be expected to be completed within one year from the date of classification as held for sale.

      Non-current assets or disposal groups held for sale are presented separately under current assets and liabilities. In doing so, the assets or disposal groups are measured at the lower of carrying amount and fair value less costs to sell. Any impairment losses arising on initial reclassification are recognised in profit or loss.

      Impairment

      The carrying amounts of non-current non-financial assets (excluding deferred taxes) are assessed at least once a year for indications of impairment. If there is any indication that an asset may be impaired, the recoverable amount of the asset is calculated (impairment test).

      If the carrying amount of an asset or related cash generating unit exceeds its recoverable amount, an impairment loss is recognised in the income statement.

      The recoverable amount is the higher of the fair value less costs to sell and value in use. To determine value in use, the estimated future cash flows are discounted. The discount rate is a pre-tax rate that reflects the risks associated with the corresponding asset. If an asset does not generate cash inflows that are largely independent of those from other assets, the recoverable amount is determined for the cash generating unit to which the asset belongs.

      Impairment losses on other assets are reversed if indications exist that the impairment loss has decreased or no longer exists, and if estimates that were used for calculating the recoverable amount have changed.

      The increased carrying amount cannot exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years.

      Equity

      Share capital

      Shares are classified as equity since they are non-redeemable and dividend payments are at the discretion of the company.

      Treasury shares

      The cost (purchase price and directly attributable transaction costs) of treasury shares is deducted from equity.

      Dividends

      Dividends are recognised as a liability as soon as they have been approved at the General Meeting of Shareholders.

      Financial liabilities

      Financial liabilities are initially recognised at fair value less transaction costs. The difference between the amount initially recognised and the redemption amount is amortised over the duration of the liability using the effective interest method.

      Provisions

      Provisions are recognised when the entity has a present obligation as a result of a past event that occurred prior to the reporting date, if an outflow of resources is probable and the amount of the outflow can be estimated reliably. If the effect is significant, provisions are reported in the balance sheet at their present value.

      Provisions for legal and constructive obligations for sound insulation and resident protection measures are recognised on the basis of the Environmental Protection Act as soon as they can be estimated reliably.

      Provisions for formal expropriations are recognised for compensation payments as soon as these have been reliably estimated on the basis of final-instance court rulings (see Intangible assets).

      Employee benefits

      For defined benefit plans, the benefit cost and the defined benefit obligation are determined on the basis of various economic and demographic assumptions using the projected unit credit method and taking into account the past years of insurance up until the measurement date. The assumptions required to be made by Flughafen Zürich AG include, among others, expectations about future salary increases, the long-term return on retirement savings accounts, employee turnover and life expectancy. The calculations are performed annually by independent actuaries. The plan assets are measured annually at fair value and deducted from the defined benefit obligation.

      The defined benefit cost consists of three components:

      • service cost, which is recognised in the income statement within personnel expenses;
      • net interest expense, which is recognised in the income statement within the finance result; and
      • remeasurement components, which are recognised in other comprehensive income.

      Service cost comprises current service cost, past service cost and gains and losses on settlement. Gains and losses resulting from curtailments are regarded as past service cost. Employee contributions and contributions from third parties reduce service cost and are deducted from it if they are set out in the formal terms of the plan or arise from a constructive obligation.

      The net interest expense is the amount calculated by multiplying the net defined benefit obligation (or asset) by the discount rate, both as at the beginning of the financial year, including any changes during the period as a result of contributions and benefit payments. Cash flows and changes during the year are factored in pro rata.

      Remeasurement components comprise actuarial gains and losses resulting from changes in the present value of the defined benefit obligations due to changes in assumptions and experience adjustments, the return on plan assets less amounts included in net interest expense, and changes in unrecognised assets less effects included in net interest expense. Remeasurement components are recognised in other comprehensive income and cannot be recycled.

      The amount recognised in the consolidated financial statements is the surplus or deficit of the defined benefit plans (net defined benefit obligation or asset). However, the asset recognised as a result of any surplus is limited to the present value of economic benefits to the group available in the form of reductions in future contributions.

      Employer contributions to defined contribution plans are recognised in the income statement as personnel expenses when the employee earns the benefit entitlement. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. For other long-term employee benefits, the present value of the obligation is recognised at the end of the reporting period.

      For other long-term employee benefits, the present value of the obligation is recognised at the end of the reporting period. Changes in the present value are recognised in the income statement as personnel expenses.

      Share-based payment

      Flughafen Zürich AG issues shares to its employees as part of its bonus and staff participation programme. The fair value of the shares is recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the vesting period.

      Income taxes

      Income taxes comprise current and deferred taxes. They are recognised in the income statement unless relating to transactions recognised in other comprehensive income or directly in equity. In these cases, taxes are also recognised in other comprehensive income or directly in equity.

      Current taxes comprise the taxes expected to be payable on the taxable result, calculated using tax rates enacted or substantively enacted at the reporting date.

      Deferred taxes are recognised for temporary differences between the carrying amount of assets and liabilities in the consolidated financial statements and their tax base using the balance sheet liability method. No deferred taxes are recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets and liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Measurement of deferred taxes takes into account the expected timing and manner of realisation or settlement of the assets and liabilities concerned using tax rates that are enacted or substantively enacted at the reporting date.

      Deferred tax assets are only recognised if it is probable that the deductible temporary differences can be offset against future taxable profits.

      Segment reporting

      Reporting of operating segments is carried out in accordance with IFRS 8 in line with the internal reporting to the companyʼs chief operating decision-maker. The Board of Directors has been identified as chief operating decision-maker of Flughafen Zürich AG responsible for major decisions concerning the allocation of resources and the assessment of the operating segmentsʼ performance.

  • II Judgements and significant estimates and assumptions in the application of accounting policies

    • Current risk situation

      1.1 Legal uncertainties

      Various domestic and foreign restrictions could mean that Flughafen Zürich AG will not be able to fully utilise its infrastructure and would need to finance additional investments. These restrictions include the following:

      • Regulation governing the use of south German airspace
      • Sectoral Aviation Infrastructure Plan (SAIP)
      • Investments to reduce operational complexity
      • Annual noise exposure reporting
      • Zurich Aircraft Noise Index (ZFI)
      • The lapsing of the bilateral agreements with the EU

      1.2 Decline in demand

      Experience over the past few years has shown that the air transport sector is a growing but also volatile industry that is affected by external events such as economic crises, acts of terrorism or epidemics. Such events could temporarily cause a drop in demand at Zurich Airport. In addition, other external factors such as the political and macro-economic environment could have a negative impact on demand in both the aviation and non-aviation business at Zurich Airport.

      1.3 Increasing safety and security requirements

      Additional safety and security regulations may result in rising costs and reduced revenue or changes in capacity. While some of these higher costs could at least subsequently be offset or refinanced through higher charges, the possibility of other elements having a negative impact on earnings cannot be ruled out.

      1.4 Interruptions to business due to operational events or natural hazards

      The complex and tightly interconnected airport operations could be severely disrupted by operational events such as accidents or the failure of critical systems. Depending on the scale of the disruption, operations would have to be curtailed or even discontinued in order to maintain the safety of passengers and airport employees. The extensive airport infrastructure is especially exposed to natural hazards, in particular earthquakes and flooding following heavy precipitation. To minimise the risk, infrastructure and operations are designed to be robust and, where possible, cost-efficient property and business interruption insurance is taken out to cover them.

      1.5 Hub carrier

      Like any other hub airport, Flughafen Zürich AG depends to a considerable extent on the operational and financial development of its hub carrier Swiss (and the latterʼs parent, Lufthansa). The airline Swiss is the main customer of Flughafen Zürich AG. During the year under review, Swiss accounted for around 52% of the passenger volume. The airline plays a major role within the Lufthansa Group as far as profits are concerned, so the risk of the hub carrier failing for economic reasons can be considered minor at present. Capacity reductions can never be ruled out, however.

      1.6 Reporting of noise-related costs in the financial statements

      The reporting of noise-related costs in the financial statements is a complex matter. In particular the issue of formal expropriations involves significant assumptions and estimates concerning the capitalisation of such costs and the obligation to recognise appropriate provisions. This complexity is attributable to a large variety of relevant legal bases, unclear or pending legal practice and political debate.

      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 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 costs for formal expropriations at the end of 2010 and 2011, which in each case led to an adjustment to both the provision for formal expropriations and the intangible asset from the right of formal expropriation.

      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. Based on the recalculation with estimated costs for formal expropriations amounting to CHF 385.0 million, the provision for formal expropriations was reduced by CHF 21.5 million as at 30 June 2016. At the same time, the intangible asset from the right of formal expropriation was reduced by the same amount.

      As at the reporting date, the estimated costs for formal expropriations remained unchanged at CHF 385.0 million, of which CHF 63.9 million had already been paid out at that date. The outstanding costs of CHF 321.1 million (nominal amount) are stated at their present value of CHF 316.6 million in the consolidated financial statements for the period ended 31 December 2017.

      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 the reporting date, the estimated costs for sound insulation and resident protection measures remained unchanged at CHF 340.0 million, of which CHF 236.5 million had already been paid out at that date. The outstanding costs of CHF 103.5 million (nominal amount) are stated at their present value of CHF 102.7 million in the consolidated financial statements for the period ended 31 December 2017.

      Depending on future and final-instance legal judgements, including 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 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.

      Aircraft noise costs are refinanced through charges. The most important charge from a refinancing standpoint up until 1 February 2014 was the separate CHF 5.00 passenger noise charge. Owing to a directive on airport charges issued by FOCA on 14 November 2013, this passenger-related noise supplement was no longer collected as of 1 February 2014 as it can be assumed that the funds of the Airport of Zurich Noise Fund are sufficient to finance the costs currently estimated. Should actual future noise-related costs significantly exceed the estimate, this supplement would have to be levied again over the medium term in order to cover the costs. Aircraft noise charges are still levied.

    • Impact of the current risk situation on the financial position, the results of operations and the cash flows

      Value of property, plant and equipment and intangible assets; reliability of estimate of capitalised noise-related costs

      Flughafen Zürich AG owns property, plant and equipment and intangible assets with a total carrying amount of around CHF 3.0 billion. If there is any indication that an asset may be impaired, the recoverable amount of the asset is calculated (impairment test). At least once a year, a check is conducted to determine whether there are any such indications and an impairment test needs to be performed. The calculation is based on the estimated future free cash flows of Flughafen Zürich AG, and a variety of assumptions have to be made in order to estimate them. Actual cash flows may be negatively impacted by the risk factors described in the previous sections (in particular 1.1 Legal uncertainties and 1.6 Reporting of noise-related costs in the financial statements) (see note 8, Property, plant and equipment and note 10, Intangible assets).

  • III Notes to the consolidated financial statements

    • 1 Segment reporting

      The following table shows the reportable segments in the current financial year:

      (CHF million)

       

      Regulated business

       

      Noise

       

      Non-regulated business

       

      Eliminations

       

      Consolidated

      2017

       

       

       

       

       

      Revenue from third parties

       

      612.6

       

      11.6

       

      412.9

       

       

       

      1,037.1

      Inter-segment revenue

       

      18.9

       

      0.0

       

      88.6

       

      –107.5

       

      0.0

      Total revenue

       

      631.5

       

      11.6

       

      501.5

       

      –107.5

       

      1,037.1

      Operational expenses

       

      –352.3

       

      –3.5

       

      –205.3

       

      107.6

       

      –453.5

      Segment result (EBITDA)

       

      279.2

       

      8.1

       

      296.2

       

      0.1

       

      583.6

      Depreciation and amortisation

       

      –138.6

       

      –5.3

       

      –99.8

       

       

       

      –243.7

      Segment result (EBIT)

       

      140.6

       

      2.8

       

      196.4

       

      0.1

       

      339.9

      Finance result

       

       

       

       

       

       

       

       

       

      –18.3

      Share of profit or loss of associates

       

       

       

       

       

       

       

       

       

      –3.1

      Gain on disposal of assets held for sale

       

       

       

       

       

       

       

       

       

      36.3

      Income tax expense

       

       

       

       

       

       

       

       

       

      –69.3

      Profit

       

       

       

       

       

       

       

       

       

      285.5

       

       

       

       

       

       

       

       

       

       

       

      Invested capital

       

      1,934.4

       

      157.5

       

      1,378.8

       

       

       

      3,470.7

      Non-interest-bearing non-current liabilities 1)

       

       

       

       

       

       

       

       

       

      579.8

      Non-interest-bearing current liabilities 2)

       

       

       

       

       

       

       

       

       

      248.2

      Total assets

       

       

       

       

       

       

       

       

       

      4,298.7

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      5.9

       

      1.4

       

      12.2

       

       

       

      8.1

       

       

       

       

       

       

       

       

       

       

       

      Capital expenditure

       

      94.4

       

      0.1

       

      196.2

       

       

       

      290.7

      Investments in associates

       

       

       

       

       

      13.5

       

       

       

      13.5

      1) Non-interest-bearing non-current liabilities include non-current provisions for formal expropriations plus sound insulation and resident protection, deferred tax liabilities, employee benefit obligations and non-current liabilities from concession arrangements.

      2) Non-interest-bearing current liabilities include current provisions for formal expropriations and sound insulation and resident protection, current tax liabilities, trade payables and other current liabilities plus accruals and deferrals.

      (CHF million)

       

      Aviation

       

      PRM

       

      User fees

       

      Air security 4)

       

      Access fees 4)

       

      Eliminations

       

      Total regulated business

      2017

       

       

       

       

       

       

       

      Revenue from third parties

       

      361.5

       

      14.7

       

      68.6

       

      166.8

       

      1.0

       

      0.0

       

      612.6

      Inter-segment revenue

       

      19.0

       

      0.0

       

      5.7

       

      10.7

       

      2.1

       

      –18.6

       

      18.9

      Total revenue

       

      380.5

       

      14.7

       

      74.3

       

      177.5

       

      3.1

       

      –18.6

       

      631.5

      Operating expenses

       

      –174.7

       

      –12.5

       

      –33.4

       

      –89.6

       

      –60.7

       

      18.6

       

      –352.3

      EBITDA

       

      205.8

       

      2.2

       

      40.9

       

      87.9

       

      –57.6

       

      0.0

       

      279.2

      Depreciation and amortisation

       

      –100.8

       

      –0.1

       

      –24.9

       

      –8.6

       

      –4.2

       

       

       

      –138.6

      EBIT

       

      105.0

       

      2.1

       

      16.0

       

      79.3

       

      –61.8

       

      0.0

       

      140.6

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Invested capital

       

      1,452.3

       

      7.4

       

      318.2

       

      114.0

       

      42.5

       

       

       

      1,934.4

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      5.8

       

      27.0

       

      4.0

       

      61.1

       

      –116.4

       

       

       

      5.9

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Operating assets pursuant to Ordinance on Airport Charges (FGV) 3)

       

      1,419.0

       

      5.8

       

      311.9

       

      100.1

       

      38.2

       

       

       

      1,875.0

      ROIC (in %) pursuant to FGV

       

      6.7

       

      39.1

       

      4.2

       

      75.6

       

      –126.3

       

       

       

      6.7

      3) The Ordinance on Airport Charges (FGV) defines operating assets, on which a reasonable rate of return forms the basis for the charges, as the sum of the "residual cost of the existing assets and net working capital". This definition therefore results in minor deviations compared with the reported capital employed.

      4) In accordance with the Swiss Ordinance on Airport Charges, the shortfall in the “Access fees” segment can be charged to the “Air security” segment. Taking the shortfall into account, the ROIC of the “Air security” segment amounts to 9.6%.

      The following table shows the reportable segments in the previous year:

      (CHF million)

       

      Regulated business

       

      Noise

       

      Non-regulated business

       

      Eliminations

       

      Consolidated

      2016

       

       

       

       

       

      Revenue from third parties

       

      608.7

       

      11.7

       

      392.4

       

       

       

      1,012.8

      Inter-segment revenue

       

      19.6

       

       

       

      92.5

       

      –112.1

       

      0.0

      Total revenue

       

      628.3

       

      11.7

       

      484.9

       

      –112.1

       

      1,012.8

      Operational expenses

       

      –351.6

       

      –3.5

       

      –191.0

       

      112.1

       

      –434.0

      Segment result (EBITDA)

       

      276.7

       

      8.2

       

      293.9

       

      0.0

       

      578.8

      Depreciation and amortisation

       

      –141.6

       

      –5.6

       

      –94.3

       

       

       

      –241.5

      Segment result (EBIT)

       

      135.1

       

      2.6

       

      199.6

       

      0.0

       

      337.3

      Finance result

       

       

       

       

       

       

       

       

       

      –17.4

      Share of profit or loss of associates

       

       

       

       

       

       

       

       

       

      –5.3

      Income tax expense

       

       

       

       

       

       

       

       

       

      –66.6

      Profit

       

       

       

       

       

       

       

       

       

      248.0

       

       

       

       

       

       

       

       

       

       

       

      Invested capital

       

      1,887.5

       

      149.8

       

      1,178.4

       

       

       

      3,215.7

      Non-interest-bearing non-current liabilities 1)

       

       

       

       

       

       

       

       

       

      649.1

      Non-interest-bearing current liabilities 2)

       

       

       

       

       

       

       

       

       

      200.6

      Total assets

       

       

       

       

       

       

       

       

       

      4,065.4

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      5.7

       

      1.3

       

      13.6

       

       

       

      8.4

       

       

       

       

       

       

       

       

       

       

       

      Capital expenditure

       

      93.7

       

      1.1

       

      125.9

       

       

       

      220.7

      Investments in associates

       

       

       

       

       

      14.8

       

       

       

      14.8

      1) Non-interest-bearing non-current liabilities include non-current provisions for formal expropriations plus sound insulation and resident protection, deferred tax liabilities and employee benefit obligations.

      2) Non-interest-bearing current liabilities include current provisions for formal expropriations and sound insulation and resident protection, current tax liabilities, trade payables and other current liabilities plus accruals and deferrals.

      (CHF million)

       

      Aviation

       

      PRM

       

      User fees

       

      Air security 4)

       

      Access fees 4)

       

      Eliminations

       

      Total regulated business

      2016

       

       

       

       

       

       

       

      Revenue from third parties

       

      358.5

       

      12.9

       

      61.4

       

      174.9

       

      1.0

       

       

       

      608.7

      Inter-segment revenue

       

      20.9

       

       

       

      4.9

       

      11.7

       

      1.9

       

      –19.8

       

      19.6

      Total revenue

       

      379.4

       

      12.9

       

      66.3

       

      186.6

       

      2.9

       

      –19.8

       

      628.3

      Operating expenses

       

      –178.1

       

      –12.1

       

      –31.3

       

      –88.4

       

      –61.5

       

      19.8

       

      –351.6

      EBITDA

       

      201.3

       

      0.8

       

      35.0

       

      98.2

       

      –58.6

       

      0.0

       

      276.7

      Depreciation and amortisation

       

      –94.9

       

      –0.2

       

      –34.1

       

      –8.0

       

      –4.4

       

       

       

      –141.6

      EBIT

       

      106.4

       

      0.6

       

      0.9

       

      90.2

       

      –63.0

       

      0.0

       

      135.1

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Invested capital

       

      1,437.9

       

      4.7

       

      310.6

       

      92.5

       

      41.8

       

       

       

      1,887.5

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      5.9

       

      11.6

       

      0.2

       

      79.9

       

      –106.9

       

       

       

      5.7

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Operating assets pursuant to Ordinance on Airport Charges (FGV) 3)

       

      1,384.8

       

      2.6

       

      301.0

       

      66.7

       

      39.5

       

       

       

      1,794.6

      ROIC (in %) pursuant to FGV

       

      7.0

       

      19.9

       

      0.2

       

      104.0

       

      –114.7

       

       

       

      6.7

      3) The Ordinance on Airport Charges (FGV) defines operating assets, on which a reasonable rate of return forms the basis for the charges, as the sum of the "residual cost of the existing assets and net working capital". This definition therefore results in minor deviations compared with the reported capital employed.

      4) In accordance with the Swiss Ordinance on Airport Charges, the shortfall in the “Access fees” segment can be charged to the “Air security” segment. Taking the shortfall into account, the ROIC of the “Air security” segment amounts to 15.8%.

      Internal reporting of operating segments to the chief operating decision-maker is carried out in accordance with the Ordinance on Airport Charges (FGV), more specifically with regard to the regulated charges and fees affected by the Ordinance. The following segments are presented for the regulated business and submitted to the chief operating decision-maker as the basis for his significant judgements and decisions:

      • “Aviation” segment
      • “PRM” segment
      • “User fees” segment
      • “Air security” segment
      • “Access fees” segment

      In all, the company therefore has the following reportable segments:

      → Aviation

      The “Aviation” segment comprises the original infrastructure and services related to flight operations. It incorporates all the core services provided to airlines and passengers by Flughafen Zürich AG in its capacity as operator of Zurich Airport. These services include the runway system, most apron zones (including control activities), passenger zones in the terminals, freight operations, passenger handling and services, and safety. The main sources of revenue for the “Aviation” segment are passenger and landing charges. Revenue from third parties is determined by passenger volumes, flight volumes and the trend with respect to aircraft take-off weights.

      → PRM

      The “PRM” (People with Reduced Mobility) segment combines the infrastructure and services related to implementing the regulation regarding the provision of support for passengers with reduced mobility. Revenue consists exclusively of the PRM charge.

      → User fees

      The “User fees” segment comprises the central infrastructure, in particular the check-in areas and facilities, baggage sorting and handling system, aircraft power supply system, handling apron areas and the related services and fees.

      → Air security

      The “Air security” segment comprises the equipment and services that Flughafen Zürich AG is responsible for providing for air security (passenger and aircraft security measures). This includes all systems and their operation and maintenance designed to prevent actions of any kind that affect the security of commercial civil aviation, in particular facilities for checks on passengers, hand luggage, checked baggage and freight. The security charges levied per passenger are the main source of revenue for covering the costs of the “Air security” segment.

      → Access fees

      The “Access fees” segment comprises the air security-related equipment and services that have to be provided in order to allow all persons other than passengers to access the airside areas. This includes all relevant systems and their operation and maintenance. It also includes airport policing duties such as surveillance patrols and other security-related duties. Revenue in the “Access fees” segment comes mainly from the fees for issuing airport badges.

      → Noise

      All revenue and expenses associated with aircraft noise are reported separately in the “Noise” segment. A liquidity-based statement of noise-related data is presented in the notes to the consolidated financial statements (note 20, Airport of Zurich Noise Fund). This statement presents the accumulated surplus or shortfall as at the reporting date arising from noise charges determined on a costs-by-cause basis, less expenses for formal expropriations, sound insulation and resident protection measures, and operating costs.

      → Non-regulated business

      The “Non-regulated business” segment encompasses all activities relating to the development, marketing and operation of the commercial infrastructure at Zurich Airport. This includes all retail and restaurant/catering operations at the airport, revenue from rented premises and supplementary costs (energy supply, etc.), parking charges plus a broad range of commercial services provided by Flughafen Zürich AG.

      Principles of segment reporting

      For reporting purposes, each profit centre has been allocated to a segment. Any internal supplies and services that have been provided to other segments have been booked as inter-segment revenue or offset against costs. For example, the “Supplementary costs” profit centre is allocated to Non-regulated business and proportionate costs are charged to the Regulated business segments on a “costs-by-cause” basis. Support functions are also allocated to non-regulated business and charged on accordingly.

      Invested capital is allocated to the respective operating segments based, firstly, on the allocation of the individual assets in the fixed-asset ledger and, secondly, on the pro rata allocation of the remaining assets (buildings, engineering structures and net working capital) to the respective segments. Until projects in progress have been completed, they are allocated to the segment with the largest share of the project measured by value. The definitive allocation to segments takes place after the projects have been classified into the relevant asset categories.

      The identified operating segments have not been aggregated.

      Additional disclosures in accordance with the Swiss Ordinance on Airport Charges (FGV)

      In accordance with Art. 34 FGV, 30% of the economic added value in the airside area of the airport not relevant to flight operations and the area of road vehicle parking is to be used in the form of a transfer payment to finance the costs of air traffic in the “Aviation” segment. Pursuant to this rule, in 2017 the sum of CHF 13.4 million (2016: CHF 16.3 million) was allocated to the “Aviation” segment and is recognised in the reported return on operating assets. Moreover, in accordance with Art. 45 FGV, the shortfall in the “Access fees” segment can be charged to the “Air security” segment.

      Additional disclosures

      Flughafen Zürich AG primarily provides services within Switzerland. In financial year 2017, external consulting services totalling CHF 6.6 million (2016: CHF 3.2 million) were provided in Brazil and Chile. Flughafen Zürich AGʼs revenue with Lufthansa Group in the reportable segments amounted to CHF 400.1 million in the past financial year (2016: CHF 391.2 million).

    • 2 Revenue

      (CHF 1,000)

       

      2017

       

      2016

      Passenger charges

       

      238,757

       

      235,034

      Security charges

       

      165,884

       

      173,934

      PRM charges

       

      14,675

       

      12,887

      Passenger-related flight operations charges

       

      419,316

       

      421,855

      Landing charges

       

      82,609

       

      90,976

      Aircraft-related noise charges

       

      11,561

       

      11,680

      Emission charges

       

      3,830

       

      3,688

      Parking charges

       

      25,102

       

      13,238

      Freight revenue

       

      8,667

       

      7,675

      Other flight operations charges

       

      131,769

       

      127,257

      Total flight operations charges

       

      551,085

       

      549,112

      Baggage sorting and handling system

       

      41,438

       

      35,251

      De-icing

       

      12,750

       

      5,549

      Check-in

       

      5,830

       

      4,265

      Gate and transfer desks

       

      0

       

      1,798

      Aircraft energy supply system

       

      3,636

       

      10,886

      CUTE charges (check-in system for handling agents)

       

      0

       

      3,591

      Other fees

       

      5,933

       

      6,476

      Total aviation fees

       

      69,587

       

      67,816

      Refund of security costs

       

      943

       

      959

      Other revenue

       

      2,626

       

      2,515

      Total other aviation revenue

       

      3,569

       

      3,474

      Total aviation revenue 1)

       

      624,241

       

      620,402

      Retail, tax & duty-free

       

      102,108

       

      96,450

      Food & beverage operations

       

      17,496

       

      16,673

      Advertising media and promotion

       

      18,303

       

      16,888

      Revenue from multi-storey car parks

       

      79,387

       

      75,350

      Other commercial revenue (car rentals, taxis, banks, etc.)

       

      16,924

       

      15,320

      Total commercial revenue

       

      234,218

       

      220,681

      Revenue from rental and leasing agreements

       

      89,234

       

      89,011

      Energy and utility cost allocation

       

      21,438

       

      22,008

      Cleaning

       

      4,872

       

      4,770

      Revenue from services

       

      4,254

       

      7,645

      Total revenue from facility management

       

      119,798

       

      123,434

      Communication services

       

      15,282

       

      14,568

      Other services and miscellaneous 1)

       

      16,072

       

      15,148

      Catering

       

      1,977

       

      1,918

      Fuel charges

       

      8,220

       

      7,928

      Total revenue from services

       

      41,551

       

      39,562

      Revenue from consulting activities 1)

       

      6,596

       

      8,725

      Other revenue from international business

       

      7,589

       

      0

      Revenue from construction projects as part of concession arrangements

       

      3,132

       

      0

      Total revenue from international business 1)

       

      17,317

       

      8,725

      Total non-aviation revenue

       

      412,884

       

      392,402

      Total revenue

       

      1,037,125

       

      1,012,804

      1) For reasons of transparency, revenue from international business is stated as a separate item for the first time in 2017. For the purpose of comparison, the previous year's figures have been adjusted accordingly (reclassification of consulting revenue from the item “Other services and miscellaneous”).

    • 3 PERSONNEL EXPENSES

      (CHF 1,000)

       

      2017

       

      2016

      Wages and salaries

       

      151,131

       

      148,496

      Pension costs for defined benefit plans 1)

       

      23,170

       

      23,325

      Social security contributions

       

      14,114

       

      13,326

      Other personnel expenses and employee benefits

       

      13,043

       

      11,486

      Total personnel expenses

       

      201,458

       

      196,633

      Average number of employees (full-time positions) 2)

       

      1,618

       

      1,523

      Number of employees as at reporting date (full-time positions) 2)

       

      1,713

       

      1,523

      Personnel expense per full-time position as at 31 December

       

      118

       

      129

      1) See note 22, Employee benefits.

      2) Including employees of all subsidiaries.

      Staff participation programme

      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: CHF 49,055) were handed out.

      Bonus programme for members of the Management Board and other members of management

      The total annual remuneration awarded to members of the Management Board and other members of management comprises a fixed salary and a variable performance component (bonus), which is based on the consolidated result and, depending on the function level, the degree of achievement of personal objectives. The criterion for measuring the consolidated result is earnings before interest and tax (EBIT) excluding noise-related factors, or the difference between targeted and achieved EBIT (excluding noise-related factors). The assessment of the degree of achievement of personal objectives is based on the annual management by objectives process. In both cases, the decision for a given year is taken or confirmed in the following financial year (grant date). Two thirds of the performance component is paid out in cash and one third in shares. For detailed information on the remuneration of the members of the Management Board, please refer to the separate Remuneration Report.

       

       

      2017

       

      2016

       

      2016 1)

       

      Price per share 1)

      (Recipient)

       

      (CHF 1,000)

       

      (CHF 1,000)

       

      (Number of shares)

       

      (CHF)

      Members of the Management Board

       

      401

       

      424

       

      1,960

       

      216.00

      Other members of management

       

      760

       

      815

       

      3,849

       

      216.00

      Adjustment of share price to market price in subsequent year 2)

       

      16

       

      –38

       

       

       

       

      Total

       

      1,177

       

      1,201

       

      5,809

       

      216.00

      1) Shares distributed in the 2017 financial year under the bonus programme for the Management Board and other members of management (number and price per share) for the 2016 financial year.

      2) The value of the shares comprising the bonus for the 2016 financial year was CHF 15,550 higher in April 2017 (grant date) than the amount accrued for the bonus for the 2016 financial year as at year-end.

      The bonus for financial year 2017 was estimated and accounted for on the basis of the data available as at the reporting date relating to the degree of achievement of the relevant consolidated result and personal objectives. The number of shares to be granted cannot be precisely calculated yet since the number depends on the share price at the grant date. If the shares had been granted as at year-end, a total of 5,208 shares would have been distributed.

      Bonus programme for the Board of Directors

      No bonus programme exists for members of the Board of Directors. Their remuneration comprises an annual lump sum plus payments for attending meetings (see the separate Remuneration Report).

      Option programme

      No option programme exists at Flughafen Zürich AG.

    • 4 OTHER OPERATING EXPENSES

      (CHF 1,000)

       

      2017

       

      2016

      Zurich Protection & Rescue Services

       

      20,830

       

      21,014

      PRM costs (service costs of service providers)

       

      11,768

       

      11,517

      Other operating costs

       

      7,478

       

      7,263

      Insurance

       

      3,201

       

      3,200

      Cleaning by external contractors, incl. snow clearing

       

      3,030

       

      2,418

      Costs for own car park

       

      2,201

       

      2,116

      Communication costs

       

      1,817

       

      1,863

      Passenger services

       

      1,246

       

      1,575

      Total other operating expenses

       

      51,571

       

      50,966

    • 5 OTHER INCOME and EXPENSES

      (CHF 1,000)

       

      2017

       

      2016

      Capitalised expenditure

       

      14,649

       

      13,513

      Other income

       

      5,101

       

      10,835

      Capitalised expenditure and other income

       

      19,750

       

      24,348

       

       

       

       

       

      Expenses for construction projects as part of concession arrangements

       

      –3,132

       

      0

      Other expenses

       

      –2,168

       

      –4,012

      Expenses for construction projects and other expenses

       

      –5,300

       

      –4,012

      Capitalised expenditure of CHF 14.6 million (2016: CHF 13.5 million) primarily comprises fees for the companyʼs architects and engineers as well as for project managers representing the client.

      In the reporting period, “Other income” consists mainly of a payment of CHF 4.8 million (2016: CHF 3.5 million) in connection with the liquidation of Swissair in debt restructuring proceedings. In the previous year, this item also 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 project THE CIRCLE.

      The expenses for construction projects as part of concession arrangements amounting to CHF 3.1 million (2016: CHF 0.0 million) are the result of investments made in infrastructure at the airports in Brazil and Chile. The corresponding counter-item can be found under note 2, Revenue.

      In both the reporting period and the previous year, the balance of “Other expenses” mainly included losses on asset disposals.

    • 6 Finance result

      (CHF 1,000)

       

      2017

       

      2016

      Interest expenses on debentures and non-current loans

       

      –13,016

       

      –15,375

      Less capitalised interest on borrowings for buildings under construction

       

      838

       

      1,038

      Net interest expenses on debentures and non-current loans

       

      –12,178

       

      –14,337

      Interest expenses on finance lease liabilities

       

      –195

       

      –622

      Accretion of interest on financial liabilities at amortised cost

       

      –330

       

      –733

      Net interest expenses on defined benefit obligations

       

      –1,072

       

      –1,240

      Other interest expenses

       

      –710

       

      –776

      Total interest expenses

       

      –14,485

       

      –17,708

      Loss on financial assets of Airport of Zurich Noise Fund

       

      –2,222

       

      –2,324

      Other finance costs

       

      –3,733

       

      –1,825

      Foreign exchange losses

       

      –1,493

       

      –396

      Unwinding of discount on provision for formal expropriations plus sound insulation and resident protection 1)

       

      –1,355

       

      0

      Unwinding of discount on non-current liabilities from concession arrangements

       

      –843

       

      0

      Total finance costs

       

      –24,131

       

      –22,253

      Interest income on financial assets of Airport of Zurich Noise Fund

       

      3,183

       

      3,011

      Interest income on postal accounts and bank deposits/loans

       

      1,287

       

      39

      Unwinding of discount on provision for formal expropriations plus sound insulation and resident protection 1)

       

      0

       

      1,052

      Total interest income

       

      4,470

       

      4,102

      Foreign exchange gains

       

      650

       

      434

      Net change in fair value of derivative financial instruments held for trading

       

      671

       

      0

      Other finance income

       

      16

       

      288

      Total finance income

       

      5,807

       

      4,824

      Finance result, net

       

      –18,324

       

      –17,429

      1) See note 19, Provision for formal expropriations plus sound insulation and resident protection.

      The net finance result of Flughafen Zürich AG amounted to CHF –18.3 million in the reporting period (2016: CHF –17.4 million).

      A debenture that matured in May 2017 was refinanced on much more favourable terms, saving CHF 2.4 million in interest year on year.

      On the other hand, the finance result for the past financial year reflects additional expenses of around CHF 1.2 million due to the first-time consolidation of the subsidiaries in Latin America. Of this amount, CHF 0.4 million are cash items.

      Whereas the unwinding of the discount on provisions for formal expropriations plus sound insulation and resident protection resulted in income of CHF 1.1 million in the previous year, an expense of CHF 1.4 million was recognised in the reporting period.

    • 7 Income tax

      (CHF 1,000)

       

      2017

       

      2016

      Taxes for current year

       

      73,027

       

      71,641

      Taxes for prior years

       

      –3,610

       

      189

      Total current income tax

       

      69,417

       

      71,830

      Deferred income tax on changes in temporary differences

       

      –167

       

      –5,253

      Total deferred income tax

       

      –167

       

      –5,253

      Total income tax

       

      69,250

       

      66,577

      Income tax can be analysed as follows:

      (CHF 1,000)

       

      2017

       

      2016

      Profit before tax

       

      354,777

       

      314,595

       

       

       

       

       

      Tax expense based on the statutory tax rate of 20.5% applicable at the parent company (2016: 20.5%)

       

      72,686

       

      64,515

      Prior-period adjustments

       

      –2,787

       

      190

      Effect of share of results of associates

       

      –932

       

      847

      Current-year losses for which no deferred tax assets were recognised

       

      343

       

      0

      Effect of application of different income tax rates in Switzerland

       

      1

       

      384

      Effect of application of different income tax rates in foreign countries

       

      –139

       

      100

      Miscellaneous items

       

      78

       

      541

      Total income tax

       

      69,250

       

      66,577

    • 8 Property, plant and equipment

      (CHF million)

       

      Land

       

      Engineering structures

       

      Buildings

       

      Projects in progress

       

      Movables

       

      Leased assets

       

      Total property, plant and equipment

      Cost

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2016

       

      108.3

       

      1,659.6

       

      4,029.7

       

      227.2

       

      273.3

       

      112.6

       

      6,410.7

      Additions

       

       

       

       

       

       

       

      174.1

       

       

       

       

       

      174.1

      Disposals

       

       

       

      –26.1

       

      –7.2

       

      –0.8

       

      –11.5

       

       

       

      –45.6

      Transfers

       

      0.4

       

      55.7

       

      175.3

       

      –253.1

       

      13.9

       

       

       

      –7.8

      Reclassification

       

       

       

       

       

      90.8

       

       

       

       

       

      –90.8

       

      0.0

      Balance as at 31 December 2016

       

      108.7

       

      1,689.2

       

      4,288.6

       

      147.4

       

      275.7

       

      21.8

       

      6,531.4

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      108.7

       

      1,689.2

       

      4,288.6

       

      147.4

       

      275.7

       

      21.8

       

      6,531.4

      Additions

       

      10.0

       

       

       

       

       

      136.9

       

       

       

       

       

      146.9

      Disposals

       

       

       

      –3.4

       

      –87.2

       

       

       

      –18.7

       

       

       

      –109.3

      Transfers

       

       

       

      26.2

       

      110.3

       

      –161.5

       

      16.4

       

       

       

      –8.6

      Change in consolidation scope

       

       

       

       

       

       

       

       

       

      0.1

       

       

       

      0.1

      Balance as at 31 December 2017

       

      118.7

       

      1,712.0

       

      4,311.7

       

      122.8

       

      273.5

       

      21.8

       

      6,560.5

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2016

       

      0.0

       

      –791.8

       

      –2,497.3

       

      0.0

       

      –191.3

       

      –90.9

       

      –3,571.3

      Additions

       

       

       

      –55.9

       

      –152.1

       

       

       

      –14.8

       

      –11.2

       

      –234.0

      Disposals

       

       

       

      25.1

       

      6.1

       

       

       

      11.3

       

       

       

      42.5

      Reclassification

       

       

       

       

       

      –85.5

       

       

       

       

       

      85.5

       

      0.0

      Balance as at 31 December 2016

       

      0.0

       

      –822.6

       

      –2,728.8

       

      0.0

       

      –194.8

       

      –16.6

       

      –3,762.8

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      0.0

       

      –822.6

       

      –2,728.8

       

      0.0

       

      –194.8

       

      –16.6

       

      –3,762.8

      Additions

       

       

       

      –60.8

       

      –156.4

       

       

       

      –15.6

       

      –1.4

       

      –234.2

      Disposals

       

       

       

      2.8

       

      86.6

       

       

       

      18.4

       

       

       

      107.8

      Balance as at 31 December 2017

       

      0.0

       

      –880.6

       

      –2,798.6

       

      0.0

       

      –192.0

       

      –18.0

       

      –3,889.2

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Government subsidies and grants

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2016

       

      0.0

       

      –3.6

       

      –1.0

       

      –4.6

       

      –0.2

       

      0.0

       

      –9.4

      Additions

       

       

       

       

       

       

       

      –4.1

       

      0.1

       

       

       

      –4.0

      Disposals

       

       

       

      0.4

       

      0.6

       

       

       

       

       

       

       

      1.0

      Transfers

       

       

       

      –7.0

       

      –0.7

       

      7.6

       

       

       

       

       

      –0.1

      Balance as at 31 December 2016

       

      0.0

       

      –10.2

       

      –1.1

       

      –1.1

       

      –0.1

       

      0.0

       

      –12.5

      Additions

       

       

       

       

       

       

       

      –1.3

       

       

       

       

       

      –1.3

      Disposals

       

       

       

      0.7

       

      0.1

       

       

       

      0.3

       

       

       

      1.1

      Transfers

       

       

       

      –1.4

       

      –0.1

       

      2.4

       

      –0.9

       

       

       

      0.0

      Balance as at 31 December 2017

       

      0.0

       

      –10.9

       

      –1.1

       

      0.0

       

      –0.7

       

      0.0

       

      –12.7

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 1 January 2016

       

      108.3

       

      864.2

       

      1,531.4

       

      222.6

       

      81.8

       

      21.7

       

      2,830.0

      Net carrying amount as at 31 December 2016

       

      108.7

       

      856.4

       

      1,558.7

       

      146.3

       

      80.8

       

      5.2

       

      2,756.1

      Net carrying amount as at 31 December 2017

       

      118.7

       

      820.5

       

      1,512.0

       

      122.8

       

      80.8

       

      3.8

       

      2,658.6

      Projects in progress

      In the past financial year, Flughafen Zürich AG invested CHF 136.9 million in projects in progress (2016: CHF 174.1 million). The biggest items comprise the following projects:

      • Expansion of the aircraft stands on the western and southern sides of the airport (CHF 31.0 million)
      • Expansion and refurbishment of the baggage sorting system (CHF 21.9 million)
      • Upgrade of car park 1 (CHF 8.9 million)

      Lease aircraft energy supply system and baggage sorting and handling system

      In December 2001, Flughafen Zürich AG concluded a framework lease agreement for financing the aircraft energy supply system and the baggage sorting and handling system, which was then under construction. On 1 August 2003, since the systems were near completion, a first tranche of each of the definitive lease agreements totalling CHF 84.5 million was put into effect. Between 2004 and 2014, a further eleven tranches totalling CHF 28.2 million were added. Based on their form and content, both the framework agreement and the definitive lease agreements are classed as finance leases and have therefore been recognised in the balance sheet. The leased facilities available for use have been depreciated with effect from their date of completion.

      The finance lease for the aircraft energy supply system runs until 31 July 2020. The lease for the baggage sorting and handling system ended on 31 December 2016. At that date, the relevant system was included at its net amount of CHF 5.3 million and reclassified into buildings.

      Depreciation

      Depreciation of property, plant and equipment totalling CHF 234.1 million was offset against government grants and subsidies recognised in the income statement in the amount of CHF 1.1 million.

      Impairment

      Flughafen Zürich AG voluntarily carries out a calculation at company level on a yearly basis to determine whether there is any indication that property, plant and equipment and intangible assets (see note 10, Intangible assets) may be impaired. The calculation is based on expected future free cash flows of Flughafen Zürich AG and various assumptions regarding future trends (e.g. passenger and traffic volumes, investments, the hub status of Zurich Airport and the discount rate). The calculation as at 31 December 2017 did not identify any indications of impairment.

    • 9 Investment property

      (CHF 1,000)

       

      Land

       

      Project and constrution costs

       

      Total investment property

      Cost

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2016

       

      950

       

      72,624

       

      73,574

      Additions

       

      0

       

      46,562

       

      46,562

      Balance as at 31 December 2016

       

      950

       

      119,186

       

      120,136

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      950

       

      119,186

       

      120,136

      Additions

       

      0

       

      92,123

       

      92,123

      Balance as at 31 December 2017

       

      950

       

      211,309

       

      212,259

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2016

       

      0

       

      0

       

      0

      Additions

       

      0

       

      0

       

      0

      Balance as at 31 December 2016

       

      0

       

      0

       

      0

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      0

       

      0

       

      0

      Additions

       

      0

       

      –352

       

      –352

      Balance as at 31 December 2017

       

      0

       

      –352

       

      –352

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 1 January 2016

       

      950

       

      72,624

       

      73,574

      Net carrying amount as at 31 December 2016

       

      950

       

      119,186

       

      120,136

      Net carrying amount as at 31 December 2017

       

      950

       

      210,957

       

      211,907

      THE CIRCLE project

      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. Flughafen Zürich AG then transferred the project costs incurred for THE CIRCLE up until that date to the co-ownership structure.

      Based on the nature of the contractual arrangement, the co-ownership structure for THE CIRCLE is classified as a joint operation in accordance with IFRS 11. The share of the rights to the assets and the share of the obligations for the liabilities of the co-ownership structure are therefore recognised and presented in the relevant line items in the consolidated financial statements of Flughafen Zürich AG.

      The share of the THE CIRCLE property under construction is classified as investment property in accordance with IAS 40. In this context, Flughafen Zürich AG has decided to apply the cost model. The land recognised for THE CIRCLE in the amount of approximately CHF 1.0 million represents the purchase cost of the share of the plot of land on which the project will be implemented. The item “Project and construction costs” in the amount of CHF 211.0 million includes the share of the production costs capitalised to date.

      The share of fair value of THE CIRCLE was CHF 242.6 million at the reporting date (2016: CHF 166.8 million). The value was calculated by an external expert using the discounted cash flow method (level 3). Under this method, the fair value is determined on the basis of the total expected future net income (before tax, interest payments, depreciation and amortisation) discounted to the present date. A risk-adjusted discount rate is set depending on the risks and rewards and in line with market rates.

    • 10 Intangible assets

      (CHF 1,000)

       

      Intangible asset from right of formal expropriation

       

      Investments in airport operator projects

       

      Other intangible assets

      Cost

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2016

       

      210,043

       

      0

       

      69,386

      Additions

       

      0

       

      0

       

      0

      Disposals

       

      –21,485

       

      0

       

      –916

      Transfer

       

      0

       

      0

       

      7,887

      Balance as at 31 December 2016

       

      188,558

       

      0

       

      76,357

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      188,558

       

      0

       

      76,357

      Additions

       

      0

       

      51,294

       

      434

      Disposals

       

      0

       

      0

       

      –425

      Transfer

       

      0

       

      0

       

      8,596

      Changes in consolidation scope

       

      0

       

      25,800

       

      0

      Balance as at 31 December 2017

       

      188,558

       

      77,094

       

      84,962

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2016

       

      –48,687

       

      0

       

      –62,521

      Additions

       

      –4,248

       

      0

       

      –4,246

      Disposals

       

      0

       

      0

       

      816

      Balance as at 31 December 2016

       

      –52,935

       

      0

       

      –65,951

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      –52,935

       

      0

       

      –65,951

      Additions

       

      –3,941

       

      –1,901

       

      –4,390

      Disposals

       

      0

       

      0

       

      391

      Balance as at 31 December 2017

       

      –56,876

       

      –1,901

       

      –69,950

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 1 January 2016

       

      161,356

       

      0

       

      6,865

      Net carrying amount as at 31 December 2016

       

      135,623

       

      0

       

      10,406

      Net carrying amount as at 31 December 2017

       

      131,682

       

      75,193

       

      15,012

      Intangible asset from right of formal expropriation

      With the award of the operating licence, Flughafen Zürich AG was also granted a right of formal expropriation in respect of property owners exposed to aircraft noise. This right of formal expropriation was granted on condition that the airport operator bears the costs associated with compensation payments and is recognised as an intangible asset at the date when the probable total cost can be estimated based on final-instance court rulings, so that the cost can be reliably estimated in accordance with IAS 38.21.

      As a result of the Swiss Federal Supreme Court rulings in the first half of 2016 in test cases regarding claims for compensation due to eastern and southern approach routes, Flughafen Zürich AG was able, as at 30 June 2016, to undertake a reappraisal of the outstanding costs for formal expropriations. Based on the recalculation, the provision for formal expropriations was reduced by CHF 21.5 million (see note 19, Provision for formal expropriations plus sound insulation and resident protection). At the same time, the intangible asset from the right of formal expropriation was reduced by the same amount.

      As at 31 December 2017, Flughafen Zürich AG has therefore recognised an intangible asset from the right of formal expropriation in the amount of CHF 131.7 million (2016: CHF 135.6 million). This is amortised using the straight-line method over the remaining term of the operating licence (i.e. until May 2051).

      Investments in airport operator projects

      The investments in airport operator projects in the amount of CHF 75.2 million (2016: CHF 0.0 million) include concession rights which, due to the application of IFRIC 12, comprise minimum concession payments recognised as assets and investments made. They relate to the upgrade and operation of the Chilean airports in Antofagasta and Iquique (CHF 24.4 million), in which Flughafen Zürich AG has held a controlling interest via its subsidiary A-port Chile S.A. since April 2017, as well as the upgrade and operation of the Brazilian airport in Florianópolis (CHF 50.8 million) through the subsidiary Concessionária do Aeroporto Internacional de Florianópolis S.A. The liabilities relating to the corresponding concessions amounting to CHF 11.7 million (2016: CHF 0.0) are recognised as non-current liabilities (see note 18, Financial liabilities).

      Impairment

      Flughafen Zürich AG voluntarily carries out a calculation at company level on a yearly basis to determine whether there is any indication that property, plant and equipment (see note 8, Property, plant and equipment) and intangible assets may be impaired. The calculation is based on expected future free cash flows of Flughafen Zürich AG and various assumptions regarding future trends (e.g. passenger and traffic volumes, investments, the hub status of Zurich Airport and the discount rate). The calculation as at 31 December 2017 did not identify any indications of impairment.

    • 11 Investments in associates

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Sociedade de Participação no Aeroporto de Confins S.A., Belo Horizonte (Brazil)

       

       

       

       

      Share capital: BRL 323 million (previous year BRL 144 million) / Equity share 25.0% (previous year 25.0%)

       

      13,518

       

      11,487

      A-port Chile S.A., Santiago de Chile (Chile)

       

       

       

       

      Share capital: CLP 10,613 million (previous year CLP 5,264 million) / Equity share 100.0% (previous year 49.0 %) 1)

       

      n/a

       

      3,284

      Administradora Unique IDC C.A., Porlamar (Venezuela)

       

       

       

       

      Share capital: VEB 25 million (previous year VEB 25 million) / Equity share 49.5% (previous year 49.5 %)

       

      0

       

      0

      Aeropuertos Asociados de Venezuela C.A., Porlamar (Venezuela)

       

       

       

       

      Share capital: VEB 10 million (previous year VEB 10 million) / Equity share 49.5% (previous year 49.5 %)

       

      0

       

      0

      Total investments in associates

       

      13,518

       

      14,771

      1) A-port Chile S.A. has been consolidated since acquisition of the controlling interests on 12 April 2017.

      Brazil

      Alongside Brazilian company CCR, Flughafen Zürich AG holds a 25% interest in a private consortium, which in turn controls 51% of the local airport operator Concessionária do Aeroporto Internacional de Confins S. A. The remaining 49% of the shares are held by the state-owned Infraero. As a consequence, since 2014 Flughafen Zürich AG and CCR have been responsible for the operation and expansion of the international airport in Belo Horizonte in the Brazilian state of Minas Gerais. The concession agreement is for 30 years and prescribes certain infrastructure expansion during the first few years. After only 14 monthsʼ construction time, a new terminal commenced operation at the end of 2016. There is an Operations, Management & Service Agreement (OMSA) with the licence holder. The company receives revenue from this service agreement. Flughafen Zürich AG appoints the retail and flight operations managers.

      Venezuela

      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.

      Additional disclosures

      The following tables summarise the financial information for the associates of Flughafen Zürich AG. The amounts correspond to those in the associatesʼ financial statements prepared in accordance with IFRS, adjusted for differences in accounting policies if required.

      SOCIEDADE DE PARTICIPAÇÃO NO AEROPORTO DE CONFINS S. A.

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Revenue

       

      122,219

       

      219,206

      Loss

       

      –12,272

       

      –20,202

      Comprehensive income

       

      –12,272

       

      –20,202

       

       

       

       

       

      Non-current assets

       

      676,421

       

      635,942

      Current assets

       

      40,335

       

      37,858

      Non-current liabilities

       

      –442,898

       

      –415,869

      Current liabilities

       

      –167,849

       

      –167,949

      Equity attributable to non-controlling interests

       

      –51,936

       

      –44,035

       

       

       

       

       

      Net equity

       

      54,073

       

      45,947

      Equity share

       

      25.0% 

       

      25.0% 

       

       

       

       

       

      Carrying amount of interest in associate

       

      13,518

       

      11,487

      A-port Chile S. A.

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Revenue

       

      n/a

       

      7,385

      Loss

       

      n/a

       

      –2,582

      Comprehensive income

       

      n/a

       

      –2,582

       

       

       

       

       

      Non-current assets

       

      n/a

       

      37,867

      Current assets

       

      n/a

       

      2,954

      Non-current liabilities

       

      n/a

       

      –29,252

      Current liabilities

       

      n/a

       

      –4,863

      Equity attributable to non-controlling interests

       

      n/a

       

      –4

       

       

       

       

       

      Net equity

       

      n/a

       

      6,702

      Equity share

       

      n/a

       

      49% 

       

       

       

       

       

      Carrying amount of interest in associate

       

      n/a

       

      3,284

    • 12 Financial assets of Airport of Zurich Noise Fund

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Current available-for-sale securities (see note 20, Airport of Zurich Noise Fund)

       

      76,578

       

      47,136

      Non-current available-for-sale securities (see note 20, Airport of Zurich Noise Fund)

       

      360,525

       

      308,594

      Total financial assets of Airport of Zurich Noise Fund

       

      437,103

       

      355,730

      Available-for-sale securities consist mostly of CHF-denominated bonds and a mixed investment fund. The investment horizon of the bonds is based on the expected obligation to make payments from the Airport of Zurich Noise Fund and averages around four years. Interest on bonds was between 0.00% and 2.625% in 2017 (2016: between 0.00% and 3.375%). The funds are managed by professional financial institutions (see note 6, Finance result, and note 24.1 a) Financial risk management, i) Credit risk).

    • 13 Trade receivables

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Trade receivables 1)

       

      110,663

       

      112,147

      Impairment allowance

       

      –761

       

      –1,282

      Total trade receivables, net

       

      109,902

       

      110,865

      1) Trade receivables include an amount of CHF 27.1 million due from Swiss (2016: CHF 35.3 million). In the period between the balance sheet date and the preparation of the 2017 annual report, Swiss had paid the outstanding amount arising from airport charges in full as at 31 December 2017.

      Geographical distribution of trade receivables:

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Switzerland

       

      41,927

       

      46,970

      Europe

       

      10,004

       

      9,484

      Other

       

      6,031

       

      5,790

      Total aviation

       

      57,962

       

      62,244

      Switzerland

       

      50,400

       

      48,634

      Europe

       

      247

       

      93

      India

       

      0

       

      6

      Latin America

       

      1,973

       

      1,096

      Other

       

      81

       

      74

      Total non-aviation

       

      52,701

       

      49,903

      Total trade receivables

       

      110,663

       

      112,147

      Classification of receivables by maturity as at the reporting date:

       

       

      Trade receivables gross

       

      Individual allowance

       

      Collective allowance

       

      Trade receivables gross

       

      Individual allowance

       

      Collective allowance

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2017

       

      31.12.2017

       

      31.12.2016

       

      31.12.2016

       

      31.12.2016

      Not past due

       

      88,719

       

      –192

       

      –418

       

      104,647

       

      –674

       

      –522

      Past due, 0 to 30 days

       

      12,269

       

      –27

       

      –58

       

      4,273

       

      –28

       

      –21

      Past due, 31 to 60 days

       

      1,428

       

      –3

       

      –7

       

      1,021

       

      –7

       

      –5

      Past due, more than 61 days

       

      8,247

       

      –18

       

      –38

       

      2,206

       

      –14

       

      –11

      Total

       

      110,663

       

      –240

       

      –521

       

      112,147

       

      –723

       

      –559

      The impairment allowance changed as follows in the reporting period:

       

       

      Individual allowance

       

      Collective allowance

       

      Total allowance

      (CHF 1,000)

       

      2017

       

      2016

       

      2017

       

      2016

       

      2017

       

      2016

      Balance as at 1 January

       

      –723

       

      –491

       

      –559

       

      –490

       

      –1,282

       

      –1,282

      Change

       

      483

       

      –232

       

      38

       

      –69

       

      520

       

      –301

      Balance as at 31 December

       

      –240

       

      –723

       

      –521

       

      –559

       

      –761

       

      –1,282

      In almost all cases, receivables not past due concern long-standing client relationships. Based on past experience, Flughafen Zürich AG does not expect any additional credit losses.

    • 14 Other receivables and prepaid expenses

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Services not yet invoiced

       

      11,119

       

      10,254

      Accrued interest on interest-bearing debt instruments Airport of Zurich Noise Fund

       

      566

       

      910

      Prepaid services

       

      21,923

       

      21,616

      Prepaid expenses and accruals

       

      33,608

       

      32,780

      Tax receivables (VAT/withholding tax)

       

      5,600

       

      6,346

      Other receivables

       

      1,712

       

      944

      Total other receivables and prepaid expenses

       

      40,920

       

      40,070

      Other receivables and prepaid expenses include the following financial instruments:

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Services not yet invoiced

       

      11,119

       

      10,254

      Accrued interest on interest-bearing debt instruments Airport of Zurich Noise Fund

       

      566

       

      910

      Total financial instruments

       

      11,685

       

      11,164

      Tax receivables (VAT/withholding tax)

       

      5,600

       

      6,346

      Prepaid services

       

      21,923

       

      21,616

      Other receivables

       

      1,712

       

      944

      Total other receivables and prepaid expenses

       

      40,920

       

      40,070

      The interest from the liquid funds of the Airport of Zurich Noise Fund that were invested separately (see also note 12, Financial assets of Airport of Zurich Noise Fund and note 20, Airport of Zurich Noise Fund), was recognised on an accrual basis.

      All services provided in the reporting period were invoiced between the reporting date and the preparation of the annual report. There are no past due receivables reported in the above items that would require the recognition of an individual or collective allowance.

    • 15 Cash and cash equivalents and fixed-term deposits

       

       

      31.12.2017

       

      31.12.2016

      (CHF 1,000)

       

      Total

       

      of which AZNF

       

      Total

       

      of which AZNF

      Cash on hand

       

      227

       

      0

       

      219

       

      0

      Cash at banks and in postal accounts

       

      225,346

       

      20,184

       

      312,559

       

      58,605

      Call money and fixed-term deposits 1)

       

      89,042

       

      0

       

      135,000

       

      0

      Total cash and cash equivalents

       

      314,615

       

      20,184

       

      447,778

       

      58,605

       

       

       

       

       

       

       

       

       

      Current fixed-term deposits 2)

       

      230,000

       

      0

       

      50,000

       

      50,000

      Non-current fixed-term deposits 2)

       

      41,667

       

      0

       

      0

       

      0

      Total fixed-term deposits

       

      271,667

       

      0

       

      50,000

       

      50,000

      1) Due within 90 days from date of acquisition.

      2) Due after 90 days from date of acquisition.

      The table below shows the original currency, the interest rates and the maturity of cash and cash equivalents and fixed-term deposits:

       

       

       

       

      2017

       

      2016

       

      2017

       

      2016

       

       

      Original currency

       

      Interest rates (%)

       

      Interest rates (%)

       

      Latest maturity

       

      Latest maturity

      Cash at banks and in postal accounts

       

      CHF

       

      -0.75 to 0.00

       

      –0.75 to 0.00

       

      n/a

       

      n/a

      Call money and fixed-term deposits 1)

       

      CHF

       

      0.00 to 0.10

       

      –0.40 to 0.01

       

      n/a

       

      n/a

      Call money and fixed-term deposits 1)

       

      USD

       

      2.40

       

       

       

      01.02.2018

       

      n/a

      Fixed-term deposits 2)

       

      CHF

       

      0.00 to 0.10

       

       

       

      24.05.2019

       

      n/a

      1) Due within 90 days from date of acquisition.

      2) Due after 90 days from date of acquisition.

    • 16 Assets held for sale

      On 15 April 2016, Flughafen Zürich AG had signed an agreement for the sale of its 5% interest in Bangalore International Airport Ltd. (BIAL), the owner and operator of the international airport in the Indian city of Bengaluru, at a price of USD 48.9 million. At that date, the interest in BIAL was for the last time measured using the equity method applied up until then and presented as a “Non-current asset held for sale” within current assets on Flughafen Zürich AGʼs consolidated balance sheet. The sale transaction was completed on 24 March 2017. The disposal resulted in a gain of CHF 31.4 million (after tax).

    • 17 Equity and reserves

      (Number of shares)

       

      Issued registered shares (nominal value, CHF 10)

       

      Treasury shares

       

      Total shares in circulation

      Balance as at 1 January 2016

       

      30,701,875

       

      6,150

       

      30,695,725

      Purchase of treasury shares

       

       

       

      5,206

       

      –5,206

      Distribution of treasury shares to employees and third parties

       

       

       

      –5,643

       

      5,643

      Balance as at 31 December 2016

       

      30,701,875

       

      5,713

       

      30,696,162

      Purchase of treasury shares

       

       

       

      2,349

       

      –2,349

      Distribution of treasury shares to employees and third parties

       

       

       

      –5,968

       

      5,968

      Balance as at 31 December 2017

       

      30,701,875

       

      2,094

       

      30,699,781

      Share split

      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).

      Share rights

      The holders of registered shares are entitled to participate at the General Meeting of Shareholders and cast one vote per share.

      Treasury shares

      Treasury shares are distributed to employees and third parties under the bonus programme, see note 3, Personnel expenses, and note 24.5, Related parties. Treasury shares are used for the bonus programme and are held as treasury stock.

      Hedging reserve

      The hedging reserve comprises the effective portion of the cumulative fair value changes in cash flow hedging instruments in connection with transactions that have been hedged but have not yet occurred.

      Fair value reserve

      The fair value reserve comprises the cumulative fair value changes in available-for-sale financial assets up to the time of their derecognition.

      Translation reserve

      The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations and associates.

      Earnings per share

      Basic and diluted earnings per share are calculated from the results and share data as at 31 December, which are composed as follows:

       

       

      2017

       

      2016

      Profit attributable to shareholders of Flughafen Zürich AG in CHF

       

      285,224,564

       

      247,728,063

      Weighted average number of outstanding shares

       

      30,698,833

       

      30,697,277

      Effect of dilutive shares

       

      7,046

       

      8,286

      Adjusted weighted average number of outstanding shares

       

      30,705,879

       

      30,705,563

      Basic earnings per share (CHF)

       

      9.29

       

      8.07

      Diluted earnings per share (CHF)

       

      9.29

       

      8.07

      Dividend distribution limit

      The amount available for payment as a dividend is based on the available retained earnings of Flughafen Zürich AG and is determined in accordance with the provisions of the Swiss Code of Obligations (CO). As at the reporting date, reserves amounting to CHF 154.0 million (2016: CHF 154.4 million) were subject to a restriction on distribution under the provisions of commercial law.

      Dividends

      The Board of Directors will propose to the General Meeting of Shareholders that an ordinary dividend of CHF 3.30 per share (CHF 101.3 million in total) be distributed from retained earnings for financial year 2017. The Board of Directors will also request that an additional dividend of CHF 3.20 per share (CHF 98.2 million in total) be paid out and charged to the capital contribution reserves.

      In accordance with the resolution by the General Meeting of Shareholders on 20 April 2017, Flughafen Zürich AG paid an ordinary dividend of CHF 98.2 million in total and an additional dividend of CHF 98.2 million in total for financial year 2016.

      Major shareholders and shareholder structure

      The shareholder structure as at 31 December was as follows:

       

       

      2017

       

      2016

      Public sector

       

      38.60% 

       

      38.60% 

      Private individuals

       

      4.69% 

       

      4.07% 

      Companies

       

      4.55% 

       

      5.01% 

      Pension funds

       

      1.96% 

       

      2.23% 

      Financial institutions (including nominees)

       

      26.58% 

       

      28.58% 

      Balance available and non-registered shareholders

       

      23.62% 

       

      21.51% 

      Total

       

      100.00% 

       

      100.00% 

       

       

       

       

       

      Number of shareholders

       

      9,862

       

      7,334

      As at the reporting date, the following shareholders or groups of shareholders held more than 5% of the voting rights:

       

       

      2017

       

      2016

      Canton of Zurich

       

      33.33% 

       

      33.33% 

      City of Zurich

       

      5.00% 

       

      5.00% 

    • 18 Financial liabilities

      (CHF 1,000)

       

      31.12.2017

       

      31.12.2016

      Debentures

       

      1,050,134

       

      699,274

      Other non-current financial liabilities

       

      11,751

       

      0

      Non-current lease liabilities

       

      3,010

       

      4,762

      Non-current liabilities from concession arrangements

       

      11,665

       

      0

      Non-current financial liabilities

       

      1,076,560

       

      704,036

      Debentures

       

      0

       

      249,800

      Other current financial liabilities

       

      2,967

       

      0

      Current lease liabilities

       

      1,752

       

      1,692

      Current financial liabilities

       

      4,719

       

      251,492

      Total financial liabilities

       

      1,081,279

       

      955,528

      The debenture of CHF 250.0 million (nominal amount) that matured in May 2017 was refinanced by placing a new, twelve-year debenture in the amount of CHF 350.0 million (nominal amount)

      Also in financial year 2017, a total of CHF 1.7 million (2016: CHF 19.2 million) of the outstanding lease liabilities was repaid in accordance with the existing lease agreements.

      Other current and non-current financial liabilities include bank loans taken out by the Chilean subsidiary A-port S.A.

      Composition of non-current financial liabilities as at the reporting date:

       

       

      as at 31.12.2017

       

      as at 31.12.2017

       

       

       

       

       

       

       

       

      Financial liabilities

       

      Nominal value

       

      Carrying amount

       

      Duration

       

      Interest rate

       

      Early amortisation

       

      Interest payment date

       

       

      (CHF 1,000)

       

      (CHF 1,000)

       

       

       

       

       

       

       

       

      Debenture

       

      300,000

       

      299,695

       

      2012 – 2020

       

      1.250% 

       

      no

       

      3.7.

      Debenture

       

      400,000

       

      399,745

       

      2013 – 2023

       

      1.500% 

       

      no

       

      17.4.

      Debenture

       

      350,000

       

      350,695

       

      2017 – 2029

       

      0.625% 

       

      no

       

      24.5.

      Other non-current financial liabilities

       

      11,751

       

      11,751

       

      2022

       

      6.200% 

       

      no

       

      n/a

      Non-current lease liabilities

       

      3,094

       

      3,010

       

      2019 – 2020

       

      3.476% 

       

      no

       

      1 st of each month

      Non-current liabilities from concession arrangements

       

      46,576

       

      11,665

       

      2023 – 2047

       

      n/a

       

      no

       

      n/a

      Total non-current financial liabilities

       

       

       

      1,076,560

       

       

       

       

       

       

       

       

      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 (see note 24.1 a) Financial risk management, ii) Liquidity risk).

      The maturities of financial liabilities are shown in the table below: