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 (IFRSs) and comply with Swiss law. They have been prepared under the historical cost convention, with the exception of the financial assets of the Airport of Zurich Noise Fund, derivative financial instruments, associates and defined benefit obligations.

      The single-entity financial statements of the group’s 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 IFRSs 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of the financial statements subsequently deviate from the actual circumstances, the estimates and assumptions originally made are adjusted prospectively in the financial year in which the circumstances changed.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 IFRSs 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 new and amended International Financial Reporting Standards which are mandatory for the first time for the financial year beginning 1 January 2018:

      • IFRS 9 Financial Instruments
      • IFRS 15 Revenue from Contracts with Customers
      • IFRIC 22 Foreign Currency Transactions and Advance Consideration
      • Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions
      • Amendments to IAS 40: Transfers of Investment Property
      • Annual Improvements to IFRSs (2014–2016 Cycle):

      Except as outlined in the following, 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 2018:

      IFRS 9 Financial Instruments

      IFRS 9 Financial Instruments contains revised principles for classifying and measuring financial instruments, a new expected credit loss model for calculating impairment on financial assets and new general hedge accounting requirements. It replaces the existing principles in IAS 39 Financial Instruments: Recognition and Measurement.

      In some cases, the new principles in IFRS 9 resulted in changes in the classification of financial assets, in particular the financial assets of the Airport of Zurich Noise Fund (AZNF), which were previously classified as available-for-sale securities. The financial assets of the AZNF are now classified as at amortised cost (bonds) or at fair value through profit or loss (other financial assets). In addition, under the new principles governing impairment, losses on financial assets are recognised earlier. In the case of trade receivables, Flughafen Zürich AG uses a simplified method to calculate expected credit losses. Therefore, changes in credit risk are not tracked; instead, a loss allowance is recognised at each reporting date on the basis of the lifetime expected credit losses. The company conducted an analysis based on its credit loss experience to date and taking into account forward-looking factors specific to the borrowers and general economic conditions. In hedge accounting, there were no changes. Initial application of IFRS 9 reduced equity by CHF 3.8 million as at 1 January 2018. Prior-year amounts were not adjusted, as the company chose to apply the modified approach on initial application.

      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 the existing principles for recognising revenue, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

      The new principles in IFRS 15 do not have a significant impact on revenue recognition or on equity as at 1 January 2018. The additional disclosures required under IFRS 15 are presented accordingly in the Notes to the consolidated financial statements.

      INTRODUCTION OF NEW STANDARDS IN 2019 AND LATER

      The new, revised and amended standards and interpretations issued by the end of 2018 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 16 Leases

       

      **

       

      1 January 2019

       

      Financial year 2019

      IFRIC 23 Uncertainty over Income Tax Treatments

       

      *

       

      1 January 2019

       

      Financial year 2019

       

       

       

       

       

       

       

      Revisions and amendments of standards and interpretations

       

       

       

       

       

       

      Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)

       

      *

       

      1 January 2019

       

      Financial year 2019

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

       

      *

       

      1 January 2019

       

      Financial year 2019

      Prepayment Features with Negative Compensation (Amendments to IFRS 9)

       

      *

       

      1 January 2019

       

      Financial year 2019

      Annual Improvements to IFRSs (2015 – 2017 Cycle)

       

      *

       

      1 January 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 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. An analysis has revealed that application of IFRS 16 as of 1 January 2019 – with the exception of additional disclosures – is not expected to have any significant effects on the consolidated financial statements of Flughafen Zürich AG.

    • CHANGES IN THE CONSOLIDATED GROUP

      In April 2018, Flughafen Zürich AG established the wholly-owned subsidiary Zurich Airport International Asia Sdn. Bhd. based in Kuala Lumpur (Malaysia), with a view to developing the markets in Asia.

    • 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 TRANSLATION

      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 currency 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 PERFORMANCE INDICATORS

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

      EBITDA comprises earnings before tax, the finance result, the share of profit/loss of associates plus depreciation and amortisation.

      Earnings before interest and tax (EBIT)

      EBIT comprises earnings before tax, the finance result and the share of profit/loss of associates.

      Revenue recognition

      Revenue is recognised by Flughafen Zürich AG when the customer obtains control of a service (instead of when the risks and rewards of ownership transfer, as was previously the case).

      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 at inception of the lease 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 on a straight-line basis 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), interest expense as a result of adjusting the present value of provisions and non-current liabilities, interest and dividend income, foreign currency gains and losses, and gains and losses on financial assets.

      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 30 years
      • Engineering structures: maximum 30 years
      • Movables: 4 to 20 years

      Government subsidies and grants

      Government subsidies and grants related to investments are deducted from the carrying amount in the relevant balance sheet items and recognised in profit or loss over the useful life of the related asset. They are 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 cost 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. Revenues and costs relating to upgrade services are generally recognised in accordance with IFRIC 12.14. 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

      The new principles in IFRS 9 resulted in changes in relation to the financial assets of the Airport of Zurich Noise Fund (AZNF), which until the end of financial year 2017 were classified as available for sale. Since 1 January 2018, the financial assets of the AZNF have been classified as at amortised cost (bonds) or at fair value through profit or loss (other financial assets).

      Derivative financial instruments

      Derivative financial instruments are used exclusively for the purpose of hedging interest rate and currency risks, and are recognised as other receivables or other current liabilities at fair value. 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 is usually their nominal value, minus individual allowances for doubtful accounts. As soon as there is sufficient evidence that a receivable will not be recoverable, it is directly written off or offset against the corresponding allowances.

      Flughafen Zürich AG uses a simplified method to calculate expected credit losses on trade receivables. Changes in credit risk are not tracked; instead, a loss allowance is recognised at each reporting date on the basis of the lifetime expected credit losses. In addition to forward-looking factors specific to the borrowers and general economic conditions, credit loss experience to date is also taken into account.

      The recoverable amount of receivables is 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.

      Impairment

      The carrying amounts of non-current non-financial assets (excluding deferred taxes) are assessed 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 carrying amount and the redemption amount is amortised over the term 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. Changes in the present value are recognised in the income statement as personnel expenses.

      Share-based payment

      Flughafen Zürich AG’s annual bonus programme provides for one-third of the allocated bonus to be paid out to members of the Management Board and eligible members of management in the form of shares. The share-based payment is recognised as an expense with a corresponding increase in equity.

      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 company’s 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 segments’ performance.

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

    • REPORTING OF NOISE-RELATED COSTS IN THE consolidated 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. In the first half of 2016, the Swiss Federal Supreme Court handed down two rulings in test cases regarding claims for compensation relating to the eastern and southern approach routes. Based on these Swiss Federal Supreme Court rulings and other fundamental issues that have since been decided in a court of final instance, the company undertook a reappraisal of costs for formal expropriations, 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 2018, the court handed down two rulings in test cases regarding cooperative ownership. 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, the expected total costs for formal expropriations decreased from CHF 385.0 million to CHF 350.0 million. This enabled the provision for formal expropriations to be reduced by CHF 34.5 million (nominal amount: CHF 35.0 million) as at 30 June 2018 (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 (see note 11, Intangible assets).

      As at the reporting date, the estimated costs for formal expropriations amounted to CHF 350.0 million (31 December 2017: CHF 385.0 million), of which CHF 72.1 million had already been paid out at that date. The outstanding costs of CHF 277.9 million (nominal amount) are stated at their present value of CHF 275.2 million in the consolidated financial statements for the period ended 31 December 2018.

      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 its 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.

      Flughafen Zürich AG is required to implement sound insulation measures in the area where it claims exemptions from noise limits (emission limit). In this context, the Federal Office of Civil Aviation (FOCA) has initiated a night-time noise abatement procedure. The area with exemptions under the Sectoral Aviation Infrastructure Plan adopted by the Federal Council on 23 August 2017 is to be extended. A provision for further costs of CHF 60.0 million, with a present value of CHF 57.6 million, was recognised in this context as at 30 June 2018 in addition to the cost of CHF 340.0 million previously estimated for sound insulation and resident protection (see note 5, Other income and expenses and note 19, Provision for formal expropriations plus sound insulation and resident protection).

      As at the reporting date, the estimated costs for sound insulation and resident protection measures amounted to CHF 400.0 million (31 December 2017: CHF 340.0 million), of which CHF 249.1 million had already been paid out at that date. The outstanding costs of CHF 150.9 million (nominal amount) are stated at their present value of CHF 148.2 million in the consolidated financial statements for the period ended 31 December 2018.

      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.

    • 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 2.9 billion. If there is any indication that an asset may be impaired, the recoverable amount of the asset is calculated (impairment test). On each reporting date, 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 section “Reporting of noise-related costs in the consolidated financial statements”.

  • 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

      2018

       

       

       

       

       

      Revenue from contract with customers (IFRS 15)

       

      644.9

       

      11.6

       

      237.6

       

      0.0

       

      894.1

      Other revenue (non IFRS 15)

       

      0.2

       

      0.0

       

      258.6

       

      0.0

       

      258.8

      Total revenue from third parties

       

      645.1

       

      11.6

       

      496.2

       

      0.0

       

      1,152.9

      Inter-segment revenue

       

      19.3

       

      0.0

       

      88.3

       

      –107.6

       

      0.0

      Total revenue

       

      664.4

       

      11.6

       

      584.5

       

      –107.6

       

      1,152.9

      Operating expenses

       

      –352.1

       

      –60.9

       

      –276.5

       

      107.6

       

      –581.9

      Segment result (EBITDA)

       

      312.3

       

      –49.3

       

      308.0

       

      0.0

       

      571.0

      Depreciation and amortisation

       

      –135.1

       

      –4.8

       

      –104.6

       

      0.0

       

      –244.5

      Segment result (EBIT)

       

      177.2

       

      –54.1

       

      203.4

       

      0.0

       

      326.5

      Finance result

       

       

       

       

       

       

       

       

       

      –23.1

      Share of profit or loss of associates

       

       

       

       

       

       

       

       

       

      –4.3

      Income tax expense

       

       

       

       

       

       

       

       

       

      –61.3

      Profit

       

       

       

       

       

       

       

       

       

      237.8

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 31 December 2018

       

      1,901.6

       

      109.8

       

      1,505.4

       

       

       

      3,516.8

      Non-interest-bearing non-current liabilities 1)

       

       

       

       

       

       

       

       

       

      617.5

      Non-interest-bearing current liabilities 2)

       

       

       

       

       

       

       

       

       

      231.0

      Total assets as at 31 December 2018

       

       

       

       

       

       

       

       

       

      4,365.3

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      7.3

       

      –32.2

       

      11.2

       

       

       

      7.4

       

       

       

       

       

       

       

       

       

       

       

      Capital expenditure

       

      128.8

       

      0.2

       

      231.8

       

       

       

      360.8

      Investments in associates

       

       

       

       

       

      12.3

       

       

       

      12.3

      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

      2018

       

       

       

       

       

       

       

      Revenue from contract with customers (IFRS 15)

       

      380.6

       

      15.6

       

      69.9

       

      177.7

       

      1.1

       

      0.0

       

      644.9

      Other revenue (non IFRS 15)

       

      0.2

       

      0.0

       

      0.0

       

      0.0

       

      0.0

       

      0.0

       

      0.2

      Revenue from third parties

       

      380.8

       

      15.6

       

      69.9

       

      177.7

       

      1.1

       

      0.0

       

      645.1

      Inter-segment revenue

       

      19.2

       

      0.0

       

      5.2

       

      10.7

       

      2.2

       

      –18.0

       

      19.3

      Total revenue

       

      400.0

       

      15.6

       

      75.1

       

      188.4

       

      3.3

       

      –18.0

       

      664.4

      Operating expenses

       

      –171.0

       

      –13.1

       

      –33.4

       

      –89.0

       

      –63.6

       

      18.0

       

      –352.1

      EBITDA

       

      229.0

       

      2.5

       

      41.7

       

      99.4

       

      –60.3

       

      0.0

       

      312.3

      Depreciation and amortisation

       

      –100.6

       

      –0.1

       

      –24.8

       

      –6.2

       

      –3.4

       

      0.0

       

      –135.1

      EBIT

       

      128.4

       

      2.4

       

      16.9

       

      93.2

       

      –63.7

       

      0.0

       

      177.2

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 31 December 2018

       

      1,419.2

       

      7.1

       

      324.2

       

      108.8

       

      42.3

       

       

       

      1,901.6

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      7.1

       

      25.1

       

      4.2

       

      66.5

       

      –119.3

       

       

       

      7.3

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

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

       

      1,323.2

       

      2.9

       

      306.4

       

      65.0

       

      38.9

       

       

       

      1,736.4

      ROIC (in %) pursuant to FGV

       

      8.5

       

      66.8

       

      4.5

       

      116.0

       

      –131.6

       

       

       

      8.8

      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 15.3%.

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

      (CHF million)

       

      Regulated business

       

      Noise

       

      Non-regulated business

       

      Eliminations

       

      Consolidated

      2017

       

       

       

       

       

      Revenue from contract with customers (IFRS 15)

       

      612.4

       

      11.6

       

      166.9

       

      0.0

       

      790.9

      Other revenue (non IFRS 15)

       

      0.2

       

      0.0

       

      246.0

       

      0.0

       

      246.2

      Total revenue from third parties

       

      612.6

       

      11.6

       

      412.9

       

      0.0

       

      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

      Operating 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

       

      0.0

       

      –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 as at 31 December 2017

       

      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 as at 31 December 2017

       

       

       

       

       

       

       

       

       

      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 contract with customers (IFRS 15)

       

      361.3

       

      14.7

       

      68.6

       

      166.8

       

      1.0

       

      0.0

       

      612.4

      Other revenue (non IFRS 15)

       

      0.2

       

      0.0

       

      0.0

       

      0.0

       

      0.0

       

      0.0

       

      0.2

      Total 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

       

      0.0

       

      –138.6

      EBIT

       

      105.0

       

      2.1

       

      16.0

       

      79.3

       

      –61.8

       

      0.0

       

      140.6

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 31 December 2017

       

      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)

       

      1,337.9

       

      2.5

       

      296.5

       

      62.7

       

      38.0

       

       

       

      1,737.6

      ROIC (in %) pursuant to FGV

       

      7.0

       

      64.3

       

      4.3

       

      97.5

       

      –126.6

       

       

       

      7.0

      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%.

      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

      The “Regulated business” column presented in the segment reporting tables is not a separate segment in accordance with IFRS 8; for presentation reasons, it merely combines the reportable segments in which charges and fees are regulated by the FGV (excluding the “Noise” segment).

      All regulated revenue related to aircraft noise and the corresponding expenses are reported separately in the “Noise” segment so as to ensure transparency in presenting the performance and balance of the Airport of Zurich Noise Fund in particular (note 20, Airport of Zurich Noise Fund).

      In all, Flughafen Zürich AG 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 related to 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 in the “Aviation” segment. Pursuant to this rule, in 2018 the sum of CHF 14.5 million (2017: CHF 14.3 million) was allocated to the “Aviation” segment and is reflected 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 2018, external consulting services totalling CHF 6.0 million (2017: CHF 6.6 million) were provided in Brazil and Chile. Flughafen Zürich AG’s revenue with Lufthansa Group in the reportable segments amounted to CHF 432.3 million in the past financial year (2017: CHF 400.1 million).

    • 2 Revenue

      (CHF 1,000)

       

      2018

       

      2017

      Passenger charges

       

      251,798

       

      238,757

      Security charges

       

      175,685

       

      165,884

      PRM charges

       

      15,554

       

      14,675

      Passenger-related flight operations charges

       

      443,037

       

      419,316

      Landing charges

       

      86,838

       

      82,609

      Aircraft-related noise charges

       

      11,629

       

      11,561

      Emission charges

       

      4,068

       

      3,830

      Parking charges

       

      26,257

       

      25,102

      Freight revenue

       

      8,919

       

      8,667

      Other flight operations charges

       

      137,711

       

      131,769

      Total flight operations charges

       

      580,748

       

      551,085

      Baggage sorting and handling system

       

      43,500

       

      41,438

      De-icing

       

      11,742

       

      12,750

      Check-in

       

      5,900

       

      5,830

      Aircraft energy supply system

       

      3,800

       

      3,636

      Other fees

       

      6,148

       

      5,933

      Total aviation fees

       

      71,090

       

      69,587

      Refund of security costs

       

      1,961

       

      943

      Other revenue

       

      2,868

       

      2,626

      Total other aviation revenue

       

      4,829

       

      3,569

      Total aviation revenue

       

      656,667

       

      624,241

      Retail, tax & duty-free

       

      111,379

       

      102,108

      Food & beverage operations

       

      18,900

       

      17,496

      Advertising media and promotion

       

      18,137

       

      18,303

      Revenue from multi-storey car parks

       

      81,462

       

      79,387

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

       

      18,427

       

      16,924

      Total commercial revenue

       

      248,305

       

      234,218

      Revenue from rental and leasing agreements

       

      89,994

       

      89,234

      Energy and utility cost allocation

       

      21,959

       

      21,438

      Cleaning

       

      4,712

       

      4,872

      Revenue from services

       

      4,686

       

      4,254

      Total revenue from facility management

       

      121,351

       

      119,798

      Communication services

       

      15,436

       

      15,282

      Other services and miscellaneous

       

      17,446

       

      16,072

      Catering

       

      2,109

       

      1,977

      Fuel charges

       

      8,707

       

      8,220

      Total revenue from services 

       

      43,698

       

      41,551

      Revenue from consulting activities

       

      6,048

       

      6,596

      Other revenue from international business

       

      36,130

       

      7,589

      Revenue from construction projects as part of concession arrangements

       

      40,698

       

      3,132

      Total revenue from international business

       

      82,876

       

      17,317

      Total non-aviation revenue

       

      496,230

       

      412,884

      Total revenue 

       

      1,152,897

       

      1,037,125

      Presentation of revenue from contracts with customers (IFRS 15):

      (CHF 1,000)

       

      2018

       

      2017

      Flight operations charges

       

      580,748

       

      551,085

      Aviation charges

       

      71,090

       

      69,587

      Other aviation revenue

       

      4,624

       

      3,364

      Total aviation revenue from contracts with customers (IFRS 15)

       

      656,462

       

      624,036

      Aviation revenue (non IFRS 15)

       

      205

       

      205

      Total aviation revenue

       

      656,667

       

      624,241

      Commercial and parking revenue

       

      81,738

       

      79,246

      Revenue from facility management

       

      30,763

       

      30,146

      Revenue from services 

       

      42,238

       

      40,135

      Revenue from international business

       

      82,876

       

      17,317

      Total non-aviation revenue from contracts with customers (IFRS 15)

       

      237,615

       

      166,844

      Non-aviation revenue (non IFRS 15)

       

      258,615

       

      246,040

      Total non-aviation revenue

       

      496,230

       

      412,884

      Total revenue 

       

      1,152,897

       

      1,037,125

    • 3 PERSONNEL EXPENSES

      (CHF 1,000)

       

      2018

       

      2017

      Wages and salaries

       

      158,551

       

      151,131

      Pension costs for defined benefit plans 1)

       

      21,617

       

      23,170

      Social security contributions

       

      14,326

       

      14,114

      Other personnel expenses and employee benefits

       

      16,989

       

      13,043

      Total personnel expenses

       

      211,483

       

      201,458

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

       

      1,735

       

      1,618

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

       

      1,757

       

      1,713

      Personnel expense per full-time position as at 31 December

       

      120

       

      118

      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 140 shares (2017: 151 shares) worth CHF 28,506 (2017: CHF 33,644) 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. 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 decision relating to the degree of achievement of the consolidated result is taken in the following financial year (grant date). Two thirds of the bonus is paid out in cash and one third in shares.

       

       

      2018

       

      2017

       

      2017 1)

       

      Price per share 1)

      (Recipient)

       

      (CHF 1,000)

       

      (CHF 1,000)

       

      (Number of shares)

       

      (CHF)

      Members of the Management Board

       

      390

       

      401

       

      1,921

       

      205.20

      Other members of management

       

      772

       

      760

       

      3,560

       

      205.20

      Adjustment of bonus accrued in the previous year 2)

       

      –36

       

      16

       

       

       

       

      Total

       

      1,126

       

      1,177

       

      5,481

       

       

      1) Shares distributed in the 2018 financial year under the bonus programme for the Management Board and other members of management (number and price per share) for the 2017 financial year.

      2) In the subsequent period, the accrued bonus is adjusted through personnel expenses on the basis of the actual degree of achievement of the relevant profit figure.

      The equity-settled portion of the bonus for financial year 2018 was calculated and accounted for on the basis of the data available as at the reporting date regarding the degree of achievement of the consolidated result. The number of shares to be granted cannot yet be established precisely at the reporting date, as that number is determined based on the quoted price as at the payment date (mid-April 2019). If the shares had been granted as at year-end, a total of 7,150 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.

      Option programme

      No option programme exists at Flughafen Zürich AG.

    • 4 OTHER OPERATING EXPENSES

      (CHF 1,000)

       

      2018

       

      2017

      Zurich Protection & Rescue Services

       

      20,973

       

      20,830

      PRM costs (service costs of service providers)

       

      12,111

       

      11,768

      Other operating costs

       

      9,235

       

      7,478

      Insurance

       

      3,599

       

      3,201

      Cleaning by external contractors, incl. snow clearing

       

      3,200

       

      3,030

      Costs for own car park

       

      2,116

       

      2,201

      Communication costs

       

      2,138

       

      1,817

      Passenger services

       

      1,382

       

      1,246

      Total other operating expenses

       

      54,754

       

      51,571

    • 5 OTHER INCOME and EXPENSES

      (CHF 1,000)

       

      2018

       

      2017

      Capitalised expenditure

       

      14,450

       

      14,649

      Other income

       

      1,020

       

      5,101

      Capitalised expenditure and other income

       

      15,470

       

      19,750

       

       

       

       

       

      Expenses for construction projects as part of concession arrangements

       

      –40,698

       

      –3,132

      Other expenses

       

      –63,841

       

      –2,168

      Expenses for construction projects and other expenses

       

      –104,539

       

      –5,300

      Capitalised expenditure of CHF 14.5 million (2017: CHF 14.6 million) primarily comprises fees for the company’s architects and engineers as well as for project managers representing the client.

      In the previous year, “Other income” included a payment of CHF 4.8 million in connection with the liquidation of Swissair in debt restructuring proceedings.

      The expenses for construction projects as part of concession arrangements amounting to CHF 40.7 million (2017: CHF 3.1 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.

      “Other expenses” include the CHF 57.6 million increase in the provision for sound insulation and resident protection measures that is recognised in profit or loss (see note 19, Provision for formal expropriations plus sound insulation and resident protection). Also included are losses on asset disposals (CHF 1.3 million), the share of the costs for the new shooting range of the Canton of Zurich police force (CHF 3.0 million) and expenses from variable concession payments relating to international business (CHF 1.4 million).

    • 6 Finance result

      (CHF 1,000)

       

      2018

       

      2017

      Interest expenses on debentures and non-current loans

       

      –10,960

       

      –12,178

      Net interest expenses on defined benefit obligations

       

      –796

       

      –1,072

      Interest expenses on finance lease liabilities

       

      –135

       

      –195

      Other interest expenses

       

      –1,375

       

      –710

      Losses on financial assets of Airport of Zurich Noise Fund

       

      –6,205

       

      –2,222

      Present value adjustment on provision for formal expropriations plus sound insulation and resident protection

       

      –1,859

       

      –1,355

      Present value adjustment on liabilities from concession arrangements

       

      –3,123

       

      –843

      Foreign exchange losses

       

      0

       

      –1,493

      Other finance costs

       

      –2,694

       

      –4,063

      Total finance costs

       

      –27,147

       

      –24,131

       

       

       

       

       

      Interest income on financial assets of Airport of Zurich Noise Fund

       

      621

       

      3,183

      Other interest income

       

      3,255

       

      1,287

      Foreign exchange gains

       

      50

       

      650

      Other finance income

       

      157

       

      687

      Total finance income

       

      4,083

       

      5,807

       

       

       

       

       

      Finance result

       

      –23,064

       

      –18,324

      Thanks to the debenture refinanced on more favourable terms in May 2017, interest expenses on debentures and non-current loans declined by CHF 1.2 million year on year to CHF 11.0 million.

      Under the new requirements in IFRS 9 Financial Instruments, losses on financial assets of the Airport of Zurich Noise Fund (some of them unrealised) must be recognised in profit or loss (previously recognised in equity). This was a factor contributing to the increase in the losses from CHF 2.2 million to CHF 6.2 million.

      The adjustment to the present value of the provision for formal expropriations plus sound insulation and resident protection resulted in an expense of CHF 1.9 million in the reporting period (2017: CHF 1.4 million). An additional expense of CHF 3.1 million (2017: CHF 0.8 million) was incurred due to the adjustment to the present value of liabilities from concession arrangements in Brazil and Chile.

      The CHF 2.0 million increase in other interest income compared with the previous year is due primarily to higher average bank balances of the group companies in Brazil and Chile.

    • 7 GAIN ON DISPOSAL OF 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 AG’s consolidated balance sheet. The sale transaction was completed on 24 March 2017. The disposal resulted in a pre-tax gain of CHF 36.3 million.

    • 8 Income tax

      (CHF 1,000)

       

      2018

       

      2017

      Taxes for current year

       

      78,175

       

      73,027

      Taxes for prior years

       

      –94

       

      –3,610

      Total current income tax

       

      78,081

       

      69,417

      Deferred income tax on changes in temporary differences

       

      –16,788

       

      –167

      Total deferred income tax

       

      –16,788

       

      –167

      Total income tax

       

      61,293

       

      69,250

      Income tax can be analysed as follows:

      (CHF 1,000)

       

      2018

       

      2017

      Profit before tax

       

      299,134

       

      354,777

       

       

       

       

       

      Tax expense based on the statutory tax rate of 20.5% applicable at the parent company (2017: 20.5%)

       

      61,286

       

      72,686

      Prior-period adjustments

       

      –94

       

      –2,787

      Effect of share of results of associates

       

      –124

       

      –932

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

       

      1,122

       

      343

      Effect of application of different income tax rates

       

      404

       

      –138

      Miscellaneous items

       

      –1,301

       

      78

      Total income tax

       

      61,293

       

      69,250

    • 9 Property, plant and equipment

      (CHF million)

       

      Land

       

      Engineering structures

       

      Buildings

       

      Projects in progress

       

      Movables

       

      Leased assets

       

      Total

      Cost

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      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

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      118.7

       

      1,712.0

       

      4,311.7

       

      122.8

       

      273.5

       

      21.8

       

      6,560.5

      Additions

       

       

       

       

       

       

       

      194.7

       

       

       

       

       

      194.7

      Disposals

       

       

       

      –3.6

       

      –54.6

       

       

       

      –16.3

       

       

       

      –74.5

      Transfers

       

       

       

      50.6

       

      59.9

       

      –132.7

       

      15.8

       

       

       

      –6.4

      Reclassification

       

       

       

      –61.0

       

      61.0

       

       

       

       

       

       

       

      0.0

      Foreign exchange differences

       

       

       

       

       

      –0.1

       

       

       

      –0.1

       

       

       

      –0.2

      Balance as at 31 December 2018

       

      118.7

       

      1,698.0

       

      4,377.9

       

      184.8

       

      272.9

       

      21.8

       

      6,674.1

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      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

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      0.0

       

      –880.6

       

      –2,798.6

       

      0.0

       

      –192.0

       

      –18.0

       

      –3,889.2

      Additions

       

       

       

      –62.2

       

      –150.7

       

       

       

      –15.2

       

      –1.4

       

      –229.5

      Disposals

       

       

       

      3.5

       

      53.7

       

       

       

      15.6

       

       

       

      72.8

      Reclassification

       

       

       

      40.9

       

      –40.9

       

       

       

       

       

       

       

      0.0

      Balance as at 31 December 2018

       

      0.0

       

      –898.4

       

      –2,936.5

       

      0.0

       

      –191.6

       

      –19.4

       

      –4,045.9

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Government subsidies and grants

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      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

      Additions

       

       

       

       

       

       

       

      –0.7

       

       

       

       

       

      –0.7

      Disposals

       

       

       

      0.8

       

      0.1

       

       

       

      0.3

       

       

       

      1.2

      Transfers

       

       

       

       

       

      –0.7

       

      0.7

       

       

       

       

       

      0.0

      Balance as at 31 December 2018

       

      0.0

       

      –10.1

       

      –1.7

       

      0.0

       

      –0.4

       

      0.0

       

      –12.2

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 31 December 2017

       

      118.7

       

      820.5

       

      1,512.0

       

      122.8

       

      80.8

       

      3.8

       

      2,658.6

      Net carrying amount as at 31 December 2018

       

      118.7

       

      789.5

       

      1,439.7

       

      184.8

       

      80.9

       

      2.4

       

      2,616.0

      Projects in progress

      In the past financial year, Flughafen Zürich AG invested CHF 194.7 million in projects in progress (2017: CHF 136.9 million). The biggest items comprise the following projects:

      • Expansion and refurbishment of the baggage sorting system (CHF 33.0 million)
      • Creation of multiple-entry runway 16 and high-speed runway 28 (CHF 17.6 million)
      • Expansion of the south-side aircraft stands (CHF 17.1 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 lease for the baggage sorting and handling system ended on 31 December 2016. The finance lease for the aircraft energy supply system runs until 31 July 2020.

      Depreciation

      Depreciation of property, plant and equipment totalling CHF 229.5 million was offset against government grants and subsidies recognised in the income statement in the amount of CHF 1.2 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 11, Intangible assets) may be impaired. The calculation is based on the 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 2018 did not identify any indications of impairment.

    • 10 Investment property

      (CHF 1,000)

       

      Land

       

      Project and constrution costs

       

      Total investment property

      Cost

       

       

       

       

       

       

       

       

       

       

       

       

       

      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

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      950

       

      211,309

       

      212,259

      Additions

       

      0

       

      95,387

       

      95,387

      Balance as at 31 December 2018

       

      950

       

      306,696

       

      307,646

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2017

       

      0

       

      0

       

      0

      Additions

       

      0

       

      –352

       

      –352

      Balance as at 31 December 2017

       

      0

       

      –352

       

      –352

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      0

       

      –352

       

      –352

      Additions

       

      0

       

      –240

       

      –240

      Balance as at 31 December 2018

       

      0

       

      –592

       

      –592

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 31 December 2017

       

      950

       

      210,957

       

      211,907

      Net carrying amount as at 31 December 2018

       

      950

       

      306,104

       

      307,054

      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 property under construction for THE CIRCLE 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. “Project and construction costs” in the amount of CHF 306.1 million (2017: CHF 211.0 million) include the share of the production costs capitalised to date.

      The fair value of THE CIRCLE was CHF 373.3 million at the reporting date (2017: CHF 242.6 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.

    • 11 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 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

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      188,558

       

      77,094

       

      84,962

      Additions

       

      0

       

      66,763

       

      3,937

      Disposals

       

      –34,529

       

      0

       

      –2,142

      Transfer

       

      0

       

      0

       

      6,378

      Foreign exchange differences

       

      0

       

      –13,382

       

      –758

      Balance as at 31 December 2018

       

      154,029

       

      130,475

       

      92,377

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

       

       

       

       

       

       

       

      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

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      –56,876

       

      –1,901

       

      –69,950

      Additions

       

      –3,416

       

      –5,586

       

      –6,804

      Disposals

       

      0

       

      0

       

      2,142

      Foreign exchange differences

       

      0

       

      2,644

       

      120

      Balance as at 31 December 2018

       

      –60,292

       

      –4,843

       

      –74,492

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 31 December 2017

       

      131,682

       

      75,193

       

      15,012

      Net carrying amount as at 31 December 2018

       

      93,737

       

      125,632

       

      17,885

      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 2018 in test cases regarding cooperative ownership, Flughafen Zürich AG was able, as at 30 June 2018, to undertake a reappraisal of the outstanding cost of compensation for formal expropriations. Based on the recalculation, the provision for formal expropriations was reduced by CHF 34.5 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 2018, Flughafen Zürich AG has therefore recognised an intangible asset from the right of formal expropriation in the amount of CHF 93.7 million (2017: CHF 131.7 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 125.6 million (2017: CHF 75.2 million) consist of concession rights which, due to the application of IFRIC 12, comprise minimum concession payments recognised as assets and investments made. They relate to the expansion and operation of the Chilean airports in Antofagasta and Iquique (CHF 30.4 million; 2017: CHF 24.4 million), in which Flughafen Zürich AG holds a controlling interest via its subsidiary A-port Chile S.A., as well as the expansion and operation of the Brazilian airport in Florianópolis (CHF 95.2 million; 2017: CHF 50.8 million) through the subsidiary Concessionária do Aeroporto Internacional de Florianópolis S.A. The obligations of CHF 26.1 million (2017: CHF 11.7 million) relating to the corresponding concessions are recognised as current and non-current liabilities (see note 18, Financial liabilities).

      Impairment

      Flughafen Zürich AG 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 9, Property, plant and equipment) and intangible assets may be impaired. The calculation is based on the 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 2018 did not identify any indications of impairment.

    • 12 Investments in associates

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

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

       

       

       

       

      Share capital: BRL 474 million (previous year BRL 399 million)/Equity share 25.0% (previous year 25.0%)

       

      12,323

       

      13,518

      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

       

      12,323

       

      13,518

      Brazil

      Alongside Brazilian company CCR, Flughafen Zürich AG holds a 25% interest in Sociedade de Participação no Aeroporto de Confins S.A., a private consortium which in turn controls 51% of the local airport operator Concessionary 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 months’ 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 22.2 million accrued as at 31 December 2018). 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 tribunal’s decision on the grounds of an infringement of procedural rules. A decision is expected in the next few months. Regardless of the outcome the tribunal’s decision is already binding and enforceable. The value of this holding has been fully impaired.

      Additional disclosures

      The following table contains the summarised financial information for the associate Sociedade de Participação no Aeroporto de Confins S.A. The amounts correspond to those in the associate’s financial statements prepared in accordance with IFRSs.

      SOCIEDADE DE PARTICIPAÇÃO NO AEROPORTO DE CONFINS S. A.

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

      Revenue

       

      96,299

       

      122,219

      Loss

       

      –17,316

       

      –12,272

      Comprehensive income

       

      –17,316

       

      –12,272

       

       

       

       

       

      Non-current assets

       

      607,805

       

      676,421

      Current assets

       

      31,669

       

      40,335

      Non-current liabilities

       

      –498,857

       

      –442,898

      Current liabilities

       

      –44,089

       

      –167,849

      Equity attributable to non-controlling interests

       

      –47,238

       

      –51,936

       

       

       

       

       

      Net equity

       

      49,290

       

      54,073

      Equity share

       

      25.0% 

       

      25.0% 

       

       

       

       

       

      Carrying amount of interest in associate

       

      12,323

       

      13,518

    • 13 FINANCIAL ASSETS OF THE AIRPORT OF ZURICH NOISE FUND

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

      Current financial assets of Airport of Zurich Noise Fund

       

      21,967

       

      76,578

      Non-current financial assets of Airport of Zurich Noise Fund

       

      377,241

       

      360,525

      Total financial assets of Airport of Zurich Noise Fund

       

      399,208

       

      437,103

      The financial assets of the Airport of Zurich Noise Fund consist mostly of CHF-denominated bonds and a mixed investment fund. The investment horizon 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 2018 (2017: between 0.00% and 2.625%). The funds are managed by professional financial institutions (see note 6, Finance result, and note 24.1 a) Financial risk management, i) Credit risk).

    • 14 Trade receivables

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

      Trade receivables, gross 1)

       

      102,610

       

      110,663

      Allowance for expected credit loss

       

      –586

       

      –761

      Trade receivables, net

       

      102,024

       

      109,902

      1) Trade receivables include an amount of CHF 21.8 million due from Swiss (2017: CHF 27.1 million). In the period between the balance sheet date and the preparation of the 2018 annual report, Swiss had paid the outstanding amount arising from airport charges in full as at 31 December 2018.

      Geographical distribution of trade receivables:

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

      Switzerland

       

      35,013

       

      41,927

      Europe

       

      9,110

       

      10,004

      Other

       

      7,670

       

      6,031

      Total aviation

       

      51,793

       

      57,962

      Switzerland

       

      44,918

       

      50,400

      Europe

       

      67

       

      247

      Latin America

       

      5,785

       

      1,973

      Other

       

      47

       

      81

      Total non-aviation

       

      50,817

       

      52,701

      Total trade receivables, gross

       

      102,610

       

      110,663

      The expected credit losses in the case of trade receivables for both the reporting period and the previous year are as follows:

      (CHF 1,000)

       

       

       

       

       

       

       

       

       

      31.12.2018

       

       

      Not past due

       

      Past due, 0 to 30 days

       

      Past due, 31 to 60 days

       

      Past due, more than 60 days

       

      Total

      Expected credit loss rate (in %)

       

      0.3

       

      1.5

       

      2.5

       

      5.0

       

       

      Trade receivables, gross

       

      88,039

       

      9,683

       

      2,050

       

      2,838

       

      102,610

      Expected credit loss

       

      –248

       

      –145

       

      –51

       

      –142

       

      –586

      (CHF 1,000)

       

       

       

       

       

       

       

       

       

      31.12.2017

       

       

      Not past due

       

      Past due, 0 to 30 days

       

      Past due, 31 to 60 days

       

      Past due, more than 60 days

       

      Total

      Expected credit loss rate (in %)

       

      0.3

       

      1.5

       

      2.5

       

      4.0

       

       

      Trade receivables, gross

       

      88,719

       

      12,269

       

      1,428

       

      8,247

       

      110,663

      Expected credit loss

       

      –222

       

      –179

       

      –36

       

      –325

       

      –761

      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.

    • 15 Other receivables and prepaid expenses

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

      Services not yet invoiced

       

      14,686

       

      11,119

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

       

      380

       

      566

      Prepaid services

       

      61,712

       

      21,923

      Prepaid expenses and accruals

       

      76,778

       

      33,608

      Tax receivables (VAT and withholding tax)

       

      11,812

       

      5,600

      Other receivables

       

      627

       

      1,712

      Total other receivables and prepaid expenses

       

      89,217

       

      40,920

      of which financial instruments

       

      15,066

       

      11,685

      of which other receivables and prepaid expenses

       

      74,151

       

      29,235

      The interest from the liquid funds of the Airport of Zurich Noise Fund that were invested separately (see also note 13, Financial assets of the 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 allowance.

    • 16 Cash and cash equivalents and fixed-term deposits

       

       

      31.12.2018

       

      31.12.2017

      (CHF 1,000)

       

      Total

       

      of which AZNF

       

      Total

       

      of which AZNF

      Cash on hand

       

      213

       

      0

       

      227

       

      0

      Cash at banks and in postal accounts

       

      273,288

       

      34,242

       

      225,346

       

      20,184

      Fixed-term deposits 1)

       

      122,371

       

      0

       

      89,042

       

      0

      Total cash and cash equivalents

       

      395,872

       

      34,242

       

      314,615

       

      20,184

       

       

       

       

       

       

       

       

       

      Current fixed-term deposits 2)

       

      149,167

       

      0

       

      230,000

       

      0

      Non-current fixed-term deposits 2)

       

      37,500

       

      0

       

      41,667

       

      0

      Total fixed-term deposits

       

      186,667

       

      0

       

      271,667

       

      0

      1) Due within 90 days from date of acquisition.

      2) Due after 90 days from date of acquisition.

    • 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 2017

       

      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

      Purchase of treasury shares

       

       

       

      5,185

       

      –5,185

      Distribution of treasury shares to employees and third parties

       

       

       

      –5,624

       

      5,624

      Balance as at 31 December 2018

       

      30,701,875

       

      1,655

       

      30,700,220

      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.

      Fair value reserve

      Until 31 December 2017 the fair value reserve comprised the cumulative fair value changes in available-for-sale financial assets of the Airport of Zurich Noise Fund.

      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:

       

       

      2018

       

      2017

      Profit attributable to shareholders of Flughafen Zürich AG in CHF

       

      237,832,160

       

      285,224,564

      Weighted average number of outstanding shares

       

      30,691,512

       

      30,698,833

      Effect of dilutive shares

       

      8,873

       

      7,046

      Adjusted weighted average number of outstanding shares

       

      30,700,385

       

      30,705,879

      Basic earnings per share (CHF)

       

      7.75

       

      9.29

      Diluted earnings per share (CHF)

       

      7.75

       

      9.29

      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 153.9 million (2017: CHF 154.0 million) were subject to a restriction on distribution under the provisions of commercial law.

      Major shareholders and shareholder structure

      The shareholder structure as at 31 December was as follows:

       

       

      2018

       

      2017

      Public sector

       

      38.60% 

       

      38.60% 

      Private individuals

       

      6.50% 

       

      4.69% 

      Companies

       

      4.60% 

       

      4.55% 

      Pension funds

       

      2.09% 

       

      1.96% 

      Financial institutions (including nominees)

       

      25.78% 

       

      26.58% 

      Balance available and non-registered shareholders

       

      22.43% 

       

      23.62% 

      Total

       

      100.00% 

       

      100.00% 

       

       

       

       

       

      Number of shareholders

       

      13,592

       

      9,862

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

       

       

      2018

       

      2017

      Canton of Zurich

       

      33.33% 

       

      33.33% 

      City of Zurich

       

      5.00% 

       

      5.00% 

    • 18 Financial liabilities

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

      Debentures

       

      1,050,244

       

      1,050,134

      Non-current liabilities from concession arrangements

       

      25,711

       

      11,665

      Non-current lease liabilities

       

      1,655

       

      3,010

      Other non-current financial liabilities

       

      7,860

       

      11,751

      Non-current financial liabilities

       

      1,085,470

       

      1,076,560

       

       

       

       

       

      Debentures

       

      38,204

       

      0

      Current liabilities from concession arrangements

       

      438

       

      0

      Current lease liabilities

       

      1,355

       

      1,752

      Other current financial liabilities

       

      2,660

       

      2,967

      Current financial liabilities

       

      42,657

       

      4,719

       

       

       

       

       

      Total financial liabilities

       

      1,128,127

       

      1,081,279

      In financial year 2018, a total of CHF 1.8 million (2017: CHF 1.7 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 subsidiaries in Brazil and Chile.

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

       

       

      as at 31.12.2018

       

      as at 31.12.2018

       

       

       

       

       

       

       

       

      Financial liabilities

       

      Nominal value

       

      Carrying amount

       

      Duration

       

      Interest rate

       

      Early amortisation

       

      Interest payment date

       

       

      (CHF 1,000)

       

      (CHF 1,000)

       

       

       

       

       

       

       

       

      Debenture

       

      300,000

       

      299,816

       

      2012 – 2020

       

      1.250% 

       

      no

       

      3.7.

      Debenture

       

      400,000

       

      399,792

       

      2013 – 2023

       

      1.500% 

       

      no

       

      17.4.

      Debenture

       

      350,000

       

      350,636

       

      2017 – 2029

       

      0.625% 

       

      no

       

      24.5.

      Non-current liabilities from concession arrangements

       

      52,495

       

      25,711

       

      2023 – 2047

       

      n/a

       

      no

       

      n/a

      Non-current lease liabilities

       

      1,195

       

      1,655

       

      2019 – 2020

       

      3.476% 

       

      no

       

      1 st of each month

      Other non-current financial liabilities

       

      7,860

       

      7,860

       

      2022

       

      6.200% 

       

      no

       

      n/a

      Total non-current financial liabilities

       

       

       

      1,085,470

       

       

       

       

       

       

       

       

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

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

      (CHF 1,000)

       

      31.12.2018

       

      31.12.2017

      Due within 1 year

       

      42,657

       

      4,719

      Due between 1 and 5 years