NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

  • I ACCOUNTING POLICIES

    • STATEMENT OF COMPLIANCE

      The unaudited interim consolidated financial statements for the six months ended 30 June 2018 were prepared in accordance with International Accounting Standard 34 (IAS 34) Interim Financial Reporting. They do not contain all the information included in the consolidated financial statements for the year ended 31 December 2017 and should therefore be read in conjunction with the latter.

    • Changes in accounting policies

      The company adopted the following new and amended International Financial Reporting Standards which are mandatory for the first time for financial year 2018 beginning on 1 January:

      • 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 application of the new and amended Standards does not have a significant impact on these interim consolidated financial statements. In all other respects, these interim consolidated financial statements were prepared in accordance with the accounting policies described in the consolidated financial statements for the year ended 31 December 2017.

      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 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, but will affect disclosure in the consolidated financial statements.

    • Changes in the consolidated group

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

    • Seasonal factors

      Due to the nature of the civil aviation sector and based on statistics, traffic volumes (passenger volumes and number of flights) are usually higher in the second half of the year than in the first half.

  • II REPORTING OF NOISE-RELATED COSTS IN THE FINANCIAL STATEMENTS

    • CURRENT DEVELOPMENTS RELATING TO THE REPORTING OF NOISE-RELATED COSTS IN THE FINANCIAL STATEMENTS

      PROVISION FOR FORMAL EXPROPRIATIONS

      In the first half of 2018, the Swiss Federal Supreme 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 total cost expected in relation to 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 10, 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 7, Intangible assets).

      PROVISION 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 3, Other income and expenses and note 10, Provision for formal expropriations plus sound insulation and resident protection).

  • III NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

    • 1 Segment reporting

      (CHF million)

       

      Regulated business

       

      Noise

       

      Non-regulated business

       

      Eliminations

       

      Consolidated

      First half 2018

       

       

       

       

       

      Revenue from third parties

       

      303.4

       

      5.6

       

      231.2

       

      0.0

       

      540.2

      Inter-segment revenue

       

      9.4

       

      0.0

       

      43.8

       

      –53.2

       

      0.0

      Total revenue

       

      312.8

       

      5.6

       

      275.0

       

      –53.2

       

      540.2

      Operating expenses

       

      –170.6

       

      –59.1

       

      –124.1

       

      53.2

       

      –300.6

      Segment result (EBITDA)

       

      142.2

       

      –53.5

       

      150.9

       

      0.0

       

      239.6

      Depreciation and amortisation

       

      –67.8

       

      –2.7

       

      –53.3

       

       

       

      –123.8

      Segment result (EBIT)

       

      74.4

       

      –56.2

       

      97.6

       

      0.0

       

      115.8

      Finance result

       

       

       

       

       

       

       

       

       

      –9.4

      Share of profit or loss of associates

       

       

       

       

       

       

       

       

       

      –1.8

      Gain on disposal of associates

       

       

       

       

       

       

       

       

       

      0.0

      Income tax expense

       

       

       

       

       

       

       

       

       

      –20.1

      Profit

       

       

       

       

       

       

       

       

       

      84.5

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 30 June 2018

       

      1,883.1

       

      72.7

       

      1,429.4

       

       

       

      3,385.2

      Non-interest-bearing non-current liabilities 2)

       

       

       

       

       

       

       

       

       

      585.3

      Non-interest-bearing current liabilities 3)

       

       

       

       

       

       

       

       

       

      212.7

      Total assets as at 30 June 2018

       

       

       

       

       

       

       

       

       

      4,183.2

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %) 1)

       

      6.7

       

      –39.6

       

      11.8

       

       

       

      7.2

      (CHF million)

       

      Aviation

       

      PRM

       

      User fees

       

      Air security 4)

       

      Access fees 4)

       

      Eliminations

       

      Total regulated business

      First half 2018

       

       

       

       

       

       

       

      Revenue from third parties

       

      178.8

       

      7.2

       

      34.0

       

      82.8

       

      0.6

       

      0.0

       

      303.4

      Inter-segment revenue

       

      9.2

       

      0.0

       

      2.8

       

      5.3

       

      1.1

       

      –9.0

       

      9.4

      Total revenue

       

      188.0

       

      7.2

       

      36.8

       

      88.1

       

      1.7

       

      –9.0

       

      312.8

      Operating expenses

       

      –83.6

       

      –6.4

       

      –16.2

       

      –43.3

       

      –30.1

       

      9.0

       

      –170.6

      EBITDA

       

      104.4

       

      0.8

       

      20.6

       

      44.8

       

      –28.4

       

      0.0

       

      142.2

      Depreciation and amortisation

       

      –50.3

       

      –0.1

       

      –12.6

       

      –3.1

       

      –1.7

       

       

       

      –67.8

      EBIT

       

      54.1

       

      0.7

       

      8.0

       

      41.7

       

      –30.1

       

      0.0

       

      74.4

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 30 June 2018

       

      1,421.8

       

      6.5

       

      310.3

       

      112.0

       

      32.5

       

       

       

      1,883.1

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %) 1)

       

      6.5

       

      27.4

       

      4.0

       

      62.4

       

      –142.7

       

       

       

      6.7

      1) Based on the result of the 12-month period preceding the reporting date.

      2) 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 the non-interest-bearing portion of non-current financial liabilities.

      3) 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, and the non-interest-bearing portion of current financial liabilities.

      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 14.1%.

      The reportable segments for the prior-year period are as follows:

      (CHF million)

       

      Regulated business

       

      Noise

       

      Non-regulated business

       

      Eliminations

       

      Consolidated

      First half 2017

       

       

       

       

       

      Revenue from third parties

       

      286.9

       

      5.5

       

      196.4

       

       

       

      488.8

      Inter-segment revenue

       

      9.6

       

      0.0

       

      43.4

       

      –53.0

       

      0.0

      Total revenue

       

      296.5

       

      5.5

       

      239.8

       

      –53.0

       

      488.8

      Operating expenses

       

      –171.6

       

      –1.6

       

      –97.0

       

      53.0

       

      –217.2

      Segment result (EBITDA)

       

      124.9

       

      3.9

       

      142.8

       

      0.0

       

      271.6

      Depreciation and amortisation

       

      –68.7

       

      –2.7

       

      –49.0

       

       

       

      –120.4

      Segment result (EBIT)

       

      56.2

       

      1.2

       

      93.8

       

      0.0

       

      151.2

      Finance result

       

       

       

       

       

       

       

       

       

      –7.3

      Share of profit or loss of associates

       

       

       

       

       

       

       

       

       

      –1.3

      Gain on disposal of associates

       

       

       

       

       

       

       

       

       

      36.3

      Income tax expense

       

       

       

       

       

       

       

       

       

      –35.7

      Profit

       

       

       

       

       

       

       

       

       

      143.2

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 30 June 2017

       

      1,889.8

       

      146.7

       

      1,268.3

       

       

       

      3,304.8

      Non-interest-bearing non-current liabilities 2)

       

       

       

       

       

       

       

       

       

      609.0

      Non-interest-bearing current liabilities 3)

       

       

       

       

       

       

       

       

       

      156.4

      Total assets as at 30 June 2017

       

       

       

       

       

       

       

       

       

      4,070.2

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %) 1)

       

      5.6

       

      1.6

       

      13.5

       

       

       

      8.4

      (CHF million)

       

      Aviation

       

      PRM

       

      User fees

       

      Air security 4)

       

      Access fees 4)

       

      Eliminations

       

      Total regulated business

      First half 2017

       

       

       

       

       

       

       

      Revenue from third parties

       

      169.1

       

      6.8

       

      33.4

       

      77.1

       

      0.5

       

       

       

      286.9

      Inter-segment revenue

       

      9.5

       

      0.0

       

      2.8

       

      5.3

       

      1.0

       

      –9.0

       

      9.6

      Total revenue

       

      178.6

       

      6.8

       

      36.2

       

      82.4

       

      1.5

       

      –9.0

       

      296.5

      Operating expenses

       

      –84.6

       

      –6.1

       

      –15.8

       

      –44.0

       

      –30.1

       

      9.0

       

      –171.6

      EBITDA

       

      94.0

       

      0.7

       

      20.4

       

      38.4

       

      –28.6

       

      0.0

       

      124.9

      Depreciation and amortisation

       

      –50.1

       

      –0.1

       

      –12.3

       

      –4.0

       

      –2.2

       

       

       

      –68.7

      EBIT

       

      43.9

       

      0.6

       

      8.1

       

      34.4

       

      –30.8

       

      0.0

       

      56.2

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 30 June 2017

       

      1,422.7

       

      6.2

       

      316.8

       

      108.6

       

      35.5

       

       

       

      1,889.8

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %) 1)

       

      5.7

       

      28.7

       

      2.2

       

      71.0

       

      –134.3

       

       

       

      5.6

      1) Based on the result of the 12-month period preceding the reporting date.

      2) 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 the non-interest-bearing portion of non-current financial liabilities.

      3) 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, and the non-interest-bearing portion of current financial liabilities.

      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 12.7%.

    • 2 Revenue

      (CHF 1,000)

       

      First half 2018

       

      First half 2017

      Passenger charges

       

      117,075

       

      109,998

      Security charges

       

      81,746

       

      76,639

      PRM charges

       

      7,239

       

      6,799

      Passenger-related flight operations charges

       

      206,060

       

      193,436

      Landing charges

       

      41,457

       

      39,699

      Aircraft-related noise charges

       

      5,619

       

      5,466

      Emission charges

       

      1,944

       

      1,844

      Parking charges

       

      12,725

       

      12,477

      Freight revenue

       

      4,378

       

      4,010

      Other flight operations charges

       

      66,123

       

      63,496

      Total flight operations charges

       

      272,183

       

      256,932

      Baggage sorting and handling system

       

      20,718

       

      19,892

      De-icing

       

      6,286

       

      6,526

      Check-in

       

      2,873

       

      2,739

      Aircraft energy supply system

       

      1,725

       

      1,736

      Other fees

       

      3,026

       

      3,014

      Total aviation fees

       

      34,628

       

      33,907

      Refund of security costs

       

      1,008

       

      470

      Other revenue

       

      1,205

       

      1,100

      Total other aviation revenue

       

      2,213

       

      1,570

      Total aviation revenue

       

      309,024

       

      292,409

      Retail, tax & duty-free

       

      52,211

       

      48,066

      Food & beverage operations

       

      8,895

       

      8,236

      Advertising media and promotion

       

      9,103

       

      9,037

      Revenue from multi-storey car parks

       

      38,846

       

      38,076

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

       

      8,448

       

      7,878

      Total commercial revenue

       

      117,503

       

      111,293

      Revenue from rental and leasing agreements

       

      44,884

       

      44,300

      Energy and utility cost allocation

       

      11,226

       

      11,416

      Cleaning

       

      2,348

       

      2,409

      Revenue from services

       

      1,999

       

      1,892

      Total revenue from facility management

       

      60,457

       

      60,017

      Communication services

       

      7,605

       

      7,639

      Other services and miscellaneous

       

      8,635

       

      7,705

      Catering

       

      960

       

      923

      Fuel charges

       

      4,121

       

      3,900

      Total revenue from services 

       

      21,321

       

      20,167

      Revenue from consulting activities

       

      3,198

       

      3,214

      Other revenue from international business

       

      19,918

       

      1,693

      Revenue from construction projects as part of concession arrangements

       

      8,761

       

      0

      Total revenue from international business

       

      31,877

       

      4,907

      Total non-aviation revenue

       

      231,158

       

      196,384

      Total revenue 

       

      540,182

       

      488,793

      Presentation of Revenue from Contracts with Customers (IFRS 15):

      (CHF 1,000)

       

      First half 2018

       

      First half 2017

      Flight operations charges

       

      272,183

       

      256,932

      Aviation charges

       

      34,628

       

      33,907

      Other aviation revenues

       

      2,110

       

      1,467

      Total aviation revenue from contracts with customers (IFRS 15)

       

      308,921

       

      292,306

      Aviation revenue (non IFRS 15)

       

      103

       

      103

      Total aviation revenue

       

      309,024

       

      292,409

      Commercial and parking revenue

       

      38,882

       

      37,531

      Revenue from facility management

       

      15,322

       

      15,503

      Revenue from services 

       

      20,631

       

      19,481

      Revenues from international activities

       

      31,877

       

      4,907

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

       

      106,712

       

      77,422

      Non-aviation revenue (non IFRS 15)

       

      124,446

       

      118,962

      Total non-aviation revenue

       

      231,158

       

      196,384

      Total revenue 

       

      540,182

       

      488,793

    • 3 Other income and expenses

      (CHF 1,000)

       

      First half 2018

       

      First half 2017

      Capitalised expenditure

       

      6,620

       

      7,703

      Other income

       

      587

       

      242

      Capitalised expenditure and other income

       

      7,207

       

      7,945

       

       

       

       

       

      Expenses for construction projects as part of concession arrangements

       

      –8,761

       

      0

      Other expenses

       

      –60,672

       

      –952

      Expenses for construction projects and other expenses

       

      –69,433

       

      –952

      The expenses of CHF 8.8 million (prior-year period: CHF 0.0 million) for construction projects under concession arrangements are the result of investments 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 10, Provision for formal expropriations plus sound insulation and resident protection).

    • 4 finance result

      (CHF 1,000)

       

       

       

       

      Net interest expenses on debentures and non-current loans

       

      –5,545

       

      –7,047

      Net interest expenses on defined benefit obligations

       

      –409

       

      –542

      Interest expenses on finance lease liabilities

       

      –75

       

      –105

      Other interest expenses

       

      –781

       

      –712

      Losses on financial assets of Airport of Zurich Noise Fund

       

      –2,746

       

      –594

      Present value adjustment on provision for formal expropriations plus sound insulation and resident protection 1)

       

      –94

       

      0

      Present value adjustment on liabilities from concession arrangements

       

      –933

       

      0

      Other finance costs

       

      –1,345

       

      –835

      Total finance costs

       

      –11,928

       

      –9,835

       

       

       

       

       

      Interest income on financial assets of Airport of Zurich Noise Fund

       

      1,088

       

      1,171

      Present value adjustment on provision for formal expropriations plus sound insulation and resident protection 1)

       

      0

       

      1,115

      Other interest income

       

      1,012

       

      87

      Foreign exchange gains

       

      185

       

      100

      Other finance income

       

      204

       

      93

      Total finance income

       

      2,489

       

      2,566

       

       

       

       

       

      Finance result

       

      –9,439

       

      –7,269

      1) See note 10, Provision for formal expropriations plus sound insulation and resident protection.

    • 5 Property, Plant and equipment

      (CHF million)

       

      Land

       

      Engineering structures

       

      Buildings

       

      Projects in progress

       

      Movables

       

      Leased assets

       

      Total property, plant and equipment

      Cost

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      118.7

       

      1,712.0

       

      4,311.7

       

      122.8

       

      273.5

       

      21.8

       

      6,560.5

      Additions

       

       

       

       

       

       

       

      72.4

       

       

       

       

       

      72.4

      Disposals

       

       

       

      –1.0

       

      –44.7

       

       

       

      –8.7

       

       

       

      –54.4

      Transfers

       

       

       

      –0.1

       

      4.0

       

      –10.9

       

      3.5

       

       

       

      –3.5

      Balance as at 30 June 2018

       

      118.7

       

      1,710.9

       

      4,271.0

       

      184.3

       

      268.3

       

      21.8

       

      6,575.0

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      0.0

       

      –880.6

       

      –2,798.6

       

      0.0

       

      –192.0

       

      –18.0

       

      –3,889.2

      Additions

       

       

       

      –31.3

       

      –77.3

       

       

       

      –7.7

       

      –0.7

       

      –117.0

      Disposals

       

       

       

      1.0

       

      44.6

       

       

       

      8.5

       

       

       

      54.1

      Balance as at 30 June 2018

       

      0.0

       

      –910.9

       

      –2,831.3

       

      0.0

       

      –191.2

       

      –18.7

       

      –3,952.1

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Government subsidies and grants

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      0.0

       

      –10.9

       

      –1.1

       

      0.0

       

      –0.7

       

      0.0

       

      –12.7

      Additions

       

       

       

       

       

       

       

       

       

       

       

       

       

      0.0

      Disposals

       

       

       

      0.4

       

      0.1

       

       

       

      0.1

       

       

       

      0.6

      Balance as at 30 June 2018

       

      0.0

       

      –10.5

       

      –1.0

       

      0.0

       

      –0.6

       

      0.0

       

      –12.1

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 1 January 2018

       

      118.7

       

      820.5

       

      1,512.0

       

      122.8

       

      80.8

       

      3.8

       

      2,658.6

      Net carrying amount as at 30 June 2018

       

      118.7

       

      789.5

       

      1,438.7

       

      184.3

       

      76.5

       

      3.1

       

      2,610.8

      Projects in progress

      In the first half of 2018, Flughafen Zürich AG invested a total of CHF 72.4 million in projects in progress (prior-year period: CHF 28.4 million). The biggest items comprise the following projects:

      • Upgrading and expansion of the baggage system (CHF 14.4 million)
      • Expansion of the south-side aircraft stands (CHF 10.4 million)
      • Construction of multiple-entry and high-speed taxiways (CHF 7.2 million)

      Depreciation

      Depreciation of property, plant and equipment totalling CHF 117.0 million was offset against government grants and subsidies recognised in the income statement in the amount of CHF 0.6 million.

    • 6 investment property

      (CHF 1,000)

       

      Land

       

      Project and construction costs

       

      Total investment property

      Cost

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      950

       

      211,309

       

      212,259

      Additions

       

      0

       

      36,426

       

      36,426

      Balance as at 30 June 2018

       

      950

       

      247,735

       

      248,685

       

       

       

       

       

       

       

      Accumulated depreciation and impairment losses

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      0

       

      –352

       

      –352

      Additions

       

      0

       

      –120

       

      –120

      Balance as at 30 June 2018

       

      0

       

      –472

       

      –472

       

       

       

       

       

       

       

      Net carrying amount as at 1 January 2018

       

      950

       

      210,957

       

      211,907

      Net carrying amount as at 30 June 2018

       

      950

       

      247,263

       

      248,213

      THE CIRCLE PROJECT

      Based on the nature of the contractual arrangement, the co-ownership structure 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 (Flughafen Zürich AG’s share: 51%).

      The share of THE CIRCLE properties under construction is classified as investment property in accordance with IAS 40. In this context, Flughafen Zürich AG has decided to apply the cost model. The land recognised in the amount of CHF 1.0 million represents the purchase cost of the share of the plot of land on which the project will be implemented. The item “Project and construction costs” in the amount of CHF 247.3 million (31 December 2017: CHF 211.0 million) includes the share of the production costs capitalised to date.

      The fair value of THE CIRCLE was CHF 298.7 million at the reporting date (31 December 2017: CHF 242.6 million).

    • 7 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 2018

       

      188,558

       

      77,094

       

      84,962

      Additions

       

      0

       

      28,735

       

      1,012

      Disposals

       

      –34,528

       

      0

       

      –2,084

      Transfers

       

      0

       

      1,116

       

      2,367

      Foreign exchange differences

       

      0

       

      –7,985

       

      –222

      Balance as at 30 June 2018

       

      154,030

       

      98,960

       

      86,035

       

       

       

       

       

       

       

      Accumulated depreciation and impairment losses

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      –56,876

       

      –1,901

       

      –69,950

      Additions

       

      –1,971

       

      –2,458

       

      –2,752

      Disposals

       

      0

       

      0

       

      1,841

      Foreign exchange differences

       

      0

       

      171

       

      28

      Balance as at 30 June 2018

       

      –58,847

       

      –4,188

       

      –70,833

       

       

       

       

       

       

       

      Net carrying amount as at 1 January 2018

       

      131,682

       

      75,193

       

      15,012

      Net carrying amount as at 30 June 2018

       

      95,183

       

      94,772

       

      15,202

      Intangible asset from right of formal expropriation

      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 costs for formal expropriations. Based on the recalculation, the provision for formal expropriations was reduced by CHF 34.5 million (see note 10, 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 the reporting date, Flughafen Zürich AG has therefore recognised an intangible asset from the right of formal expropriation in the amount of CHF 95.2 million (31 December 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 94.8 million (31 December 2017: CHF 75.2 million) include concession rights which, due to the application of IFRIC 12, comprise minimum concession payments recognised as assets and investments made. They relate to the expansion and operation of the Chilean airports in Antofagasta and Iquique (CHF 33.3 million; 31 December 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 61.5 million; 31 December 2017: CHF 50.8 million) through the subsidiary Concessionária do Aeroporto Internacional de Florianópolis S.A. The obligations of CHF 25.9 million (31 December 2017: CHF 11.7 million) relating to the corresponding concessions are recognised as current and non-current liabilities (see note 9, Financial liabilities).

    • 8 CASH AND CASH EQUIVALENTS AND FIXED-TERM DEPOSITS

       

       

      30.06.2018

       

      31.12.2017

      (CHF 1,000)

       

      Total

       

      of which AZNF

       

      Total

       

      of which AZNF

      Cash on hand

       

      224

       

      0

       

      227

       

      0

      Cash at banks and in postal accounts

       

      191,881

       

      17,127

       

      225,346

       

      20,184

      Fixed-term deposits 1)

       

      73,037

       

      0

       

      89,042

       

      0

      Total cash and cash equivalents

       

      265,142

       

      17,127

       

      314,615

       

      20,184

       

       

       

       

       

       

       

       

       

      Current fixed-term deposits 2)

       

      162,645

       

      0

       

      230,000

       

      0

      Non-current fixed-term deposits 2)

       

      50,000

       

      0

       

      41,667

       

      0

      Total fixed-term deposits

       

      212,645

       

      0

       

      271,667

       

      0

      1) Due within 90 days from date of acquisition.

      2) Due after 90 days from date of acquisition.

    • 9 FINANCIAL LIABILITIES

      (CHF 1,000)

       

      30.06.2018

       

      31.12.2017

      Debentures

       

      1,050,309

       

      1,050,134

      Non-current lease liabilities

       

      2,110

       

      3,010

      Non-current liabilities from concession arrangements

       

      25,041

       

      11,665

      Other non-current financial liabilities

       

      9,798

       

      11,751

      Non-current financial liabilities

       

      1,087,258

       

      1,076,560

       

       

       

       

       

      Debentures

       

      38,319

       

      0

      Current lease liabilities

       

      1,783

       

      1,752

      Current liabilities from concession arrangements

       

      835

       

      0

      Other current financial liabilities

       

      2,832

       

      2,967

      Current financial liabilities

       

      43,769

       

      4,719

       

       

       

       

       

      Total financial liabilities

       

      1,131,027

       

      1,081,279

    • 10 PROVISION FOR FORMAL EXPROPRIATIONS PLUS SOUND INSULATION AND RESIDENT PROTECTION

      (CHF 1,000)

       

      Formal expropriations

       

      Sound insulation and resident protection

       

      Total

      Balance as at 1 January 2018

       

      316,623

       

      102,724

       

      419,347

      Provisions used 1)

       

      –3,830

       

      –1,795

       

      –5,625

      Release of provision

       

      –34,528

       

      0

       

      –34,528

      Increase of provision

       

      0

       

      57,556

       

      57,556

      Present value adjustment

       

      527

       

      –433

       

      94

      Balance as at 30 June 2018

       

      278,792

       

      158,052

       

      436,844

      of which current (planned payment within 1 year)

       

      45,062

       

      21,655

       

      66,717

      of which non-current (planned payment from 1 year on)

       

      233,730

       

      136,397

       

      370,127

      1) The amount paid for formal expropriations only includes effective payments of compensation, and excludes other associated external costs in accordance with the regulations of the Airport of Zurich Noise Fund.

      Provision for formal expropriations

      In the first half of 2018, the Swiss Federal Supreme 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 provision for formal expropriations was reduced by CHF 34.5 million (nominal amount: CHF 35.0 million) as at 30 June 2018. At the same time, the intangible asset from the right of formal expropriation was reduced by the same amount (see note 7, Intangible assets).

      As at the reporting date, the estimated costs for formal expropriations amounted to CHF 350.0 million, of which CHF 67.7 million had already been paid out at that date. The outstanding costs of CHF 282.3 million (nominal amount) are stated at their present value of CHF 278.8 million in the interim consolidated financial statements for the period ended 30 June 2018. The discount rate used to discount the future nominal payments flows remained unchanged at 0.35%. It is currently expected that the payments can be completed by the end of 2025.

      Provision 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 3, Other income and expenses).

      As at the reporting date, the estimated costs for sound insulation and resident protection measures amounted to CHF 400.0 million (previously: CHF 340.0 million), of which CHF 238.3 million had already been paid out at that date. The outstanding costs of CHF 161.7 million (nominal amount) are stated at their present value of CHF 158.1 million in the interim consolidated financial statements for the period ended 30 June 2018. The discount rate used to discount the future nominal payment flows rose from 0.25% to 0.45%, as the average term of the future payments increased. It is currently expected that the total payments, including the extended sound insulation programme, can be completed by the end of 2030 (previously: end of 2025).

    • 11 AIRPORT of ZURICH NOISE FUND

      (CHF 1,000)

       

      2018

      Airport of Zurich Noise Fund as at 1 January

       

      443,505

      Revenue from noise charges

       

      5,293

      Costs for sound insulation and resident protection

       

      –1,795

      Costs for formal expropriations 1)

       

      –3,916

      Airport of Zurich Noise Fund as at 30 June before operating costs and finance result

       

      443,087

      Noise-related operating costs

       

      –1,669

      Interest income from financial assets of Airport of Zurich Noise Fund

       

      571

      Adjustments to fair value and gains/losses on financial assets

       

      –2,196

      Airport of Zurich Noise Fund as at 30 June

       

      439,793

      1) In addition to compensation payments for formal expropriations, this amount includes other associated external costs (in accordance with the regulations of the Airport of Zurich Noise Fund).

      Summary of assets invested in the Airport of Zurich Noise Fund:

      (CHF 1,000)

       

      30.06.2018

       

      31.12.2017

      Cash equivalents (see note 8, "Cash and cash equivalents")

       

      17,127

       

      20,184

      Current financial assets of Airport of Zurich Noise Fund

       

      33,772

       

      76,578

      Non-current financial assets of Airport of Zurich Noise Fund

       

      386,528

       

      360,525

      Accrual / deferral towards Flughafen Zürich AG 1)

       

      2,366

       

      –13,782

      Total assets invested for Airport of Zurich Noise Fund

       

      439,793

       

      443,505

      1) For accounting reasons, an asset or liability towards Flughafen Zürich AG arises as of the balance sheet date. This is compensated in the subsequent month, so the balance of liquid funds is restored.

    • 12 DEFERRED TAX ASSETS AND LIABILITIES

      In accordance with IAS 12.47, deferred tax assets and liabilities are calculated at the rate that is expected to apply when the asset is realised or the liability settled. Flughafen Zürich AG currently anticipates an applicable tax rate of 20.5% (31 December 2017: 20.5%).

      The balance of deferred taxes changed as follows:

      (CHF 1,000)

       

      2018

      Deferred tax assets and liabilities, net as at 1 January

       

      –61,687

      Deferred taxes on remeasurement of defined benefit liability, recognised in OCI

       

      –2,172

      Change according to income statement

       

      14,086

      Deferred tax assets and liabilities, net as at 30 June

       

      –49,773

      of which deferred tax assets

       

      10,907

      of which deferred tax liabilities

       

      –60,680

    • 13 FAIR VALUE DISCLOSURES

      Due to their short-term nature, the carrying amounts of cash and cash equivalents, fixed-term deposits, trade receivables, other current receivables and current liabilities are a reasonable approximation of their fair values (level 1).

      Financial assets in the Airport of Zurich Noise Fund (AZNF) : The fair value of the bonds corresponds to the market price of the securities at the reporting date (level 1). The fair value of the mixed investment fund is the net asset value, as the units may be redeemed at that value as at the reporting date (level 2).

      Financial liabilities: The fair value of the debentures corresponds to the market price at the reporting date (level 1).

      (CHF 1,000)

       

       

       

      30.06.2018

       

       

       

      31.12.2017

       

       

      Carrying amount

       

      Fair value

       

      Carrying amount

       

      Fair value

      Debentures

       

      1,088,628

       

      1,123,714

       

      1,050,134

       

      1,095,379

      Total

       

      1,088,628

       

      1,123,714

       

      1,050,134

       

      1,095,379

      Derivative financial instruments: The fair value of the cross-currency swap is determined using a fair value model (level 2). The key inputs are foreign exchange rates and interest rates observable in the market. Unobservable inputs are not significant to the measurement.

      Financial instruments recognised or disclosed at fair value are categorised according to the following hierarchy, reflecting the significance of the inputs used to measure fair value:

      Level 1 – Quoted market prices

      The inputs used to measure the assets or liabilities are quoted, unadjusted market prices determined in active markets for identical assets or liabilities at the measurement date.

      LEVEL 2 – Measurement based on observable inputs

      The assets or liabilities are measured on the basis of inputs (other than the quoted prices included within level 1) that are directly or indirectly observable for the asset or liability.

      LEVEL 3 – Measurement based on unobservable inputs

      The inputs for these assets or liabilities are not observable. Flughafen Zürich AG does not have any assets or liabilities in this level.

      (CHF 1,000)

       

      30.06.2018

       

      01.01.2018

       

      31.12.2017

       

       

      Level 1

       

      Level 2

       

      Level 3

       

      Level 1

       

      Level 2

       

      Level 3

       

      Level 1

       

      Level 2

       

      Level 3

      Available-for-sale financial assets of the AZNF

       

       

       

       

       

       

       

       

       

       

       

       

       

      335,653

       

      101,450

       

       

      Bonds of the AZNF at amortised cost 1)

       

      320,875

       

       

       

       

       

      331,846

       

       

       

       

       

       

       

       

       

       

      Mixed investment fund of the AZNF at fair value 2)

       

       

       

      99,425

       

       

       

       

       

      101,450

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Cross Currency Swap

       

       

       

      –6,004

       

       

       

       

       

      –6,088

       

       

       

       

       

      –6,088

       

       

      1) The change of CHF –3.8 million between 31 December 2017 and 1 January 2018 is attributable to the introduction of IFRS 9. CHF –3.4 million results from the measurement of the bond at amortised cost (previously: fair value through OCI) and CHF –0.4 million from the new guidance on calculating impairment losses under IFRS 9. Among other things, the new standard requires forward-looking information (expected credit losses) to be included. For further information, see also Notes to the consolidated statements, I. Accounting policies, IFRS 9 Financial Instruments.

      2) The AZNF’s mixed investment fund continues to be measured at fair value. Since 1 January 2018, changes in fair value have been recognised in profit or loss (previously through OCI). The cumulative amount in equity as at 31 December 2017 (CHF 1.4 million) was therefore reclassified out of the fair value reserve and into other retained earnings within equity as at 1 January 2018 (see also Consolidated statement of changes in equity, Effect of the initial application of IFRS 9, net of tax).

    • 14 FURTHER DETAILS

      14.1 SERVICE CONCESSIONS FOR THE OPERATION OF FOREIGN AIRPORTS

      As at the reporting date, Flughafen Zürich AG was responsible, via its subsidiaries, for the operation and expansion of following three foreign airports:

      Brazil (Florianópolis)

      On 16 March 2017, in a public tender conducted by the Brazilian government as part of an airport privatisation programme, Flughafen Zürich AG was awarded the concession for the operation and expansion of Hercílio Luz International Airport (IATA: FLN) in Florianópolis in the south of Brazil. The airport has a catchment area of 1.1 million people and is located in Santa Catarina, a popular holiday destination for both local and international travellers. In 2017, traffic volumes reached 3.8 million passengers. A concession fee of BRL 241.5 million (CHF 61.7 million) is due as consideration for the right to operate the airport. A portion of the concession fee (BRL 83.3 million; adjusted for inflation: BRL 83.7 million – approximately CHF 21.4 million) was paid and recognised as an intangible asset on the day that the concession arrangement was signed. Further minimum concession payments totalling BRL 158.2 million (adjusted for inflation; approximately CHF 40.4 million as at 30 June 2018) are payable over the term of the concession and have been recognised as a provision at their present value and as an intangible asset. The concession runs for 30 years. Following the signing of the concession arrangement on 28 July 2017 and with all suspensive conditions having been met, the wholly-owned subsidiary Concessionária do Aeroporto Internacional de Florianópolis S.A., as sole holder of the concession, took over flight operations from the state-owned operator Infraero on 3 January 2018. Flughafen Zürich AG is currently expecting investments in airport infrastructure of approximately BRL 550 million (CHF 141 million) during the first five years.

      Chile (Antofagasta and Iquique)

      Since 2011, Sociedad Concesionaria Aeropuerto de Antofagasta S.A., a wholly-owned subsidiary of A-port Chile S.A., has held the concession for the expansion and operation of Andrés Sabella International Airport (IATA: ANF) in Antofagasta in the north of Chile. The airport is located approximately 25 kilometres north of the city of Antofagasta. The concession has a term that is dependent upon traffic volumes and ends 36 months after the date on which 75% of the maximum aeronautical revenues are generated, but at the latest after 15 years. It is currently expected to end in 2025. No notable infrastructure investments are anticipated in the period through to the end of the concession.

      Until the end of March 2018, Sociedad Concesionaria Aeropuerto de Iquique S.A., a wholly-owned subsidiary of A-port Chile S.A., held the concession for the operation and expansion of Diego Aracena International Airport (IATA: IQQ) in Iquique in the north of Chile. The airport is located 41 kilometres south west of the city of Iquique in the Tarapacá region. With 1.3 million passengers a year, it is the country’s fifth-largest airport.

      In 2017, Sociedad Concesionaria Aeropuerto Diego Aracena S.A., a wholly-owned subsidiary of A-port Chile S.A., acquired the new concession for the operation and expansion of Diego Aracena International Airport in Iquique. The new concession commenced on 1 April 2018 and has a variable term that is dependent upon traffic volumes and ranges from an anticipated 18 years up to a specified maximum of 25 years. As part of the concession arrangement, the company has undertaken to invest in measures to upgrade and extend the airport infrastructure, in particular to extend the existing terminal. Flughafen Zürich AG is currently expecting investments in airport infrastructure of approximately USD 60 million (CHF 59 million) during the first four years.

      14.2 Contingent liabilities

      A number of legal proceedings and claims against Flughafen Zürich AG in the context of its normal business activities are still pending. The company does not expect the amounts required to settle these lawsuits and claims to have a significantly negative impact on the consolidated financial statements and cash flow of Flughafen Zürich AG.

      Depending on future and final-instance legal judgements, especially with respect to the southern approaches, 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.

      As part of its involvement in the expansion and operation of Confins International Airport in Belo Horizonte, Flughafen Zürich AG provides a guarantee as security for local debt financing, which is made available by the Brazilian development bank Banco Nacional de Desenvolvimento Econômico e Social (BNDES). As at the reporting date, the amount arising from this guarantee was CHF 13.8 million (31 December 2017: CHF 15.9 million). In the context of the local debt financing, the company has also entered into a counterbond in the amount of CHF 12.9 million (31 December 2017: CHF 14.9 million) in respect of Companhia de Concessões Rodoviárias S.A., which is a co-shareholder in Confins Airport. Moreover, the company has entered into a counterbond for a performance bond which the operator, Concessionária do Aeroporto Internacional de Confins S.A., had to submit to Brazil’s National Civil Aviation Authority (ANAC). As at the reporting date, the amount arising from the counterbond was CHF 10.7 million (31 December 2017: CHF 12.0 million).

      In connection with the concession for the airport in Florianópolis, the operator, Concessionária do Aeroporto Internacional de Florianópolis S.A., has entered into a performance bond for Brazil’s National Civil Aviation Authority (ANAC). As at the reporting date, the amount arising from the counterbond was CHF 29.0 million (31 December 2017: CHF 33.5 million).

      In addition, in June 2018, Concessionária do Aeroporto Internacional de Florianópolis S.A. arranged a one-year bond with Brazilian company Simplific Pavarini Distribuidora de Títulos e Valores Mobiliários. Comprising two tranches of BRL 150 million each, the bond will be used to finance the mandatory infrastructure measures specified in the concession arrangement, including the construction of a new terminal building, the expansion of the parking areas and the extension of the runway at Florianópolis airport. Flughafen Zürich AG provides a guarantee to Simplific Pavarini Distribuidora de Títulos e Valores Mobiliários as security for the local debt financing. As at the reporting date, an initial tranche of the bond had been drawn down in the amount of BRL 150 million (CHF 38.3 million).

      As part of the concession arrangements for the airports in Antofagasta and Iquique, the operators have entered into counterbonds for performance bonds issued to the Chilean Ministry of Public Works (Ministerio de Obras Públicas). As at the reporting date, the total amount arising from these counterbonds was CHF 7.3 million (31 December 2017: CHF 6.9 million).

      Flughafen Zürich AG is jointly and severally liable to third parties for the liabilities of the co-ownership structure THE CIRCLE and the ordinary partnership THE CIRCLE.

      14.3 Events after the reporting date

      The Board of Directors approved the 2018 interim consolidated financial statements and authorised them for issue on 23 August 2018. No events occurred between 30 June 2018 and the date on which these consolidated financial statements were authorised for issue by the Board of Directors which would require an adjustment to the carrying amounts of the group’s assets and liabilities or which would have to be disclosed here.