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of the financial statements subsequently deviate from the actual circumstances, the estimates and assumptions originally made are adjusted prospectively in the financial year in which the circumstances changed.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 2019:

      • IFRS 16 Leases
      • IFRIC 23 Uncertainty over Income Tax Treatments
      • Amendments to IAS 19: Plan Amendment, Curtailment or Settlement
      • Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures
      • Amendments to IFRS 9: Prepayment Features with Negative Compensation
      • Annual Improvements to IFRSs (2015–2017 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 2019:

      IFRS 16 Leases

      IFRS 16 replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most leases in the balance sheet.

      For lessors, IFRS 16 leaves lease accounting essentially unchanged compared with IAS 17. Lessors will continue to classify leases as operating leases or finance leases, applying similar principles to those in IAS 17. IFRS 16 therefore had no impact on leases where the group is the lessor.

      On initial application of IFRS 16 at 1 January 2019 (date of initial application), Flughafen Zürich AG chose the modified retrospective approach, under which the Standard is applied retrospectively by recognising the cumulative effect of initially applying the Standard at the date of initial application.

      The effects of initially applying IFRS 16 at 1 January 2019 are as follows:

      (CHF 1,000)

       

      01.01.2019

      Property, plant and equipment

       

       

      Transfer of leased assets to right-of-use assets

       

      –2,359

      Right-of-use assets

       

       

      Transfer of leased assets from property, plant and equipment

       

      2,359

      Effect of the initial application from IFRS 16

       

      41,894

      Increase in total assets

       

      41,894

       

       

       

      Lease liabilities (current and non-current)

       

       

      Effect of the initial application from IFRS 16

       

      41,894

      Increase in total liabilites

       

      41,894

       

       

       

      Change in equity

       

      0

      Prior to the initial application of IFRS 16, Flughafen Zürich AG classified its leases (as lessee) either as a finance lease or an operating lease at inception of the contract. On initial application of IFRS 16, the group recognised and measured all leases (with the exception of short-term leases) by applying a single model.

      The Standard contains specific transition guidance and practical expedients, which were applied in Flughafen Zürich AG’s consolidated financial statements:

      • The company did not change the original carrying amounts of assets and liabilities under leases that were previously classified as finance leases.
      • The company recognised right-of-use assets and liabilities for leases (with the exception of short-term leases) that were previously classified as operating leases. An amount equal to the corresponding lease liabilities was in each case recognised when measuring right-of-use assets. Initial application therefore has no effect on retained earnings. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate of 0.0% at the date of initial application.

      In addition, Flughafen Zürich AG chose to apply the following practical expedients:

      • The company applied the exemption for short-term leases to leases for which the lease term ends within twelve months of the date of initial application.
      • The company did not include initial direct costs when measuring the right-of-use asset at the date of initial application.

      Initial application of IFRS 16 at 1 January 2019 impacted on the consolidated financial statements of Flughafen Zürich AG as follows:

      • Right-of-use assets amounting to CHF 41.9 million were recognised in the consolidated financial statements and presented under “Right-of-use assets”. This figure includes leased assets amounting to CHF 2.4 million that were previously recognised as finance leases.
      • Additional lease liabilities totalling CHF 41.9 million were recognised as current and non-current lease liabilities.

      The lease liabilities at 1 January 2019 can be reconciled to the obligations under operating leases at 31 December 2018 as follows:

      (CHF 1,000)

       

      Total

      Obligations under operating leases as at 31 December 2018

       

      0

      Leases previously not recognised 1)

       

      –41,894

      Liabilities under leases previously classified as finance leases (aircraft energy supply system)

       

      –3,010

      Lease liabilities as at 1 January 2019

       

      –44,904

      1) Due to the incremental borrowing rate of 0.0% applied at the date of initial application of IFRS 16, the present value stated in the balance sheet for previously unrecognised leases is also the nominal amount of the future lease payments.

      INTRODUCTION OF NEW STANDARDS IN 2020 AND LATER

      The new, revised and amended standards and interpretations issued by the end of 2019 and set out in the table below are not yet effective and were not applied early in these consolidated financial statements.

      Amendments to standards and interpretations

       

       

       

      Effective date

       

      Planned application by Flughafen Zürich AG

      Amendments to IAS 1 and IAS 8: Definition of materiality

       

      *

       

      1 January 2020

       

      Financial year 2020

      Amendments to IFRS 3: Definition of a business

       

      *

       

      1 January 2020

       

      Financial year 2020

      Amendments to references to the conceptual framework in IFRS standards

       

      *

       

      1 January 2020

       

      Financial year 2020

      Amendments to IAS 1: Requirements for classifying liabilities as current or non-current

       

      *

       

      1 January 2022

       

      Financial year 2022

       

       

       

       

       

       

       

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

    • CHANGES IN THE CONSOLIDATED GROUP

      On 15 March 2019, in a public tender conducted by the Brazilian government, Flughafen Zürich AG was awarded concessions for the operation and expansion of Vitória and Macaé airports in the southeast of Brazil. The wholly-owned subsidiary Aeroportos do Sudeste do Brasil S.A. based in Vitória (Brazil) was established for this purpose (see note 24.7, Concessions for the operation of foreign airports).

    • 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.

      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.

      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

      PROJECTS IN PROGRESS

      Projects in progress are stated at acquisition or production cost and include investments in projects that have not yet been billed. These mainly comprise assets under construction. Once a project has been put into operation and billed, the related asset is transferred to the relevant categories of property, plant and equipment and segments and depreciated over its useful life. From the date the asset is taken into use, or from the date of completion, no further borrowing costs are capitalised.

      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.

      LEASES AS LESSEE

      At inception of a contract, Flughafen Zürich AG assesses whether the contract is, or contains, a lease. This is the case if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This assessment requires a certain amount of judgement.

      Flughafen Zürich AG recognises the right-of-use asset and the lease liability at the commencement date of the lease. The right-of-use asset is presented in “Right-of-use assets” and the lease liability as a current or non-current financial liability, depending on its maturity. The initial measurement of the right-of-use asset is based on the present value of the lease payments, plus any initial direct costs and costs for the obligation to dismantle and remove the asset and restore the site, less any incentives received. When calculating the present value of the lease payments, the company uses its incremental borrowing rate at the commencement date, as the interest rate implicit in the lease cannot be readily determined. The right-of-use asset is depreciated over the shorter of the lease term and the useful life of the underlying asset. The right-of-use asset is tested for impairment if there are indicators of impairment. If the lease contains an extension or purchase option that the company believes it is reasonably certain to exercise, the costs related to the option are included in the lease payments.

      Flughafen Zürich AG has decided not to recognise the right-of-use asset and the lease liability if the lease term is twelve months or less or if the lease relates to IT equipment of low value (less than CHF 5,000). Payments for such leases are recognised on a straight-line basis over the term of the contract.

      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 OF THE AIRPORT OF ZURICH NOISE FUND

      In accordance with the principles in IFRS 9, the financial assets of the Airport of Zurich Noise Fund are 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 measured initially at fair value and subsequently 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 the probable total cost can be estimated reliably based on 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 FINANCIAL STATEMENTS

      With respect to formal expropriations, the reporting of noise-related costs in the financial statements is a complex matter due to a multitude of relevant legal bases, unclear or pending case law and political debate. Especially in the case of formal expropriations, this financial reporting requires significant assumptions and estimates concerning the capitalisation of such costs and the obligation to recognise appropriate provisions.

      Flughafen Zürich AG has received a total of around 20,000 noise-related claims for compensation, of which around 6,300 were still pending at the end of 2019. Almost 800 of these cases are currently being examined by the Swiss Federal Assessments Commission.

      The rulings by the Swiss Federal Supreme Court in the first half of 2008 on fundamental issues related to formal expropriations enabled Flughafen Zürich AG to 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. In further rulings in 2010, the Swiss Federal Supreme Court definitively set the cut-off date for the foreseeability of an eastern approach as 1 January 1961 and, in 2011, it ruled definitively on the method used to calculate a decline in the market value of investment property. In 2016, the Swiss Federal Supreme Court handed down two rulings in test cases regarding claims for compensation relating to eastern and southern approach routes and, in 2018, it handed down two rulings in test cases regarding cooperative ownership. Based on these Swiss Federal Supreme Court rulings and other fundamental issues that have been decided, the company undertook a reappraisal of costs for formal expropriations at these dates, 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.

      On 22 November 2019, the Swiss Federal Supreme Court handed down a ruling in test cases regarding the period of limitation on claims for compensation in Oberglatt. This Swiss Federal Supreme Court ruling and other fundamental issues that have been decided enabled Flughafen Zürich AG to undertake a reappraisal of the outstanding cost of compensation for formal expropriations. Based on the reappraisal, the total cost expected in relation to formal expropriations decreased from CHF 350.0 million to CHF 330.0 million, enabling the provision for formal expropriations to be reduced by CHF 20.0 million as at 31 December 2019 (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 330.0 million (31 December 2018: CHF 350.0 million), of which CHF 81.9 million had already been paid out at that date. As at 31 December 2019, a provision was recognised for the outstanding costs of CHF 248.1 million (see note 19, Provision for formal expropriations plus sound insulation and resident protection).

      With respect to sound insulation and resident protection measures, the Federal Office of Civil Aviation (BAZL) required Flughafen Zürich AG, in connection with its 2014 operating regulations application, to submit an extended sound insulation programme. In June 2015, based on the sound insulation programme submitted, the Board of Directors approved a further CHF 100.0 million of measures in addition to the CHF 240.0 million of costs previously estimated for sound insulation and resident protection. The company is also required to implement sound insulation measures in the area where it claims exemptions from noise limits (emission limit). In this context, the FOCA 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 was extended. In this context in mid-2018, Flughafen Zürich AG recognised a provision for further costs of CHF 60.0 million, with a present value of CHF 57.6 million, in addition to the costs 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 2018: CHF 400.0 million), of which CHF 260.6 million had already been paid out at that date. As at 31 December 2019, a provision was recognised for the outstanding costs of CHF 139.4 million (see note 19, Provision for formal expropriations plus sound insulation and resident protection).

      Depending on future 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 separate charges. As, based on current knowledge, the Airport of Zurich Noise Fund has sufficient assets to be able to finance the costs for formal expropriations as well as noise insulation and resident protection measures that can be estimated under the base case at the present time, the passenger-related noise supplement was suspended as of 1 February 2014. Aircraft noise charges based on flight movements and noise category continue to be levied.

    • VALUE OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS; RELIABILITY OF ESTIMATE OF CAPITALISED NOISE-RELATED COSTS

      Flughafen Zürich AG owns property, plant and equipment and intangible assets with a total carrying amount of around CHF 3.3 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 significantly 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

      2019

       

       

       

       

       

      Revenue from contract with customers (IFRS 15)

       

      648.4

       

      12.8

       

      285.3

       

      0.0

       

      946.6

      Other revenue (non IFRS 15)

       

      0.2

       

      0.0

       

      263.3

       

      0.0

       

      263.5

      Total revenue from third parties

       

      648.6

       

      12.8

       

      548.6

       

      0.0

       

      1,210.1

      Inter-segment revenue

       

      21.4

       

       

       

      91.9

       

      –113.3

       

      0.0

      Total revenue

       

      670.1

       

      12.8

       

      640.5

       

      –113.3

       

      1,210.1

      Personnel expenses

       

      –82.5

       

      –1.9

       

      –132.0

       

      0.0

       

      –216.3

      Other operating expenses

       

      –183.3

       

      –0.9

       

      –167.8

       

      0.0

       

      –351.9

      Inter-segment operating expenses

       

      –91.2

       

      –0.7

       

      –21.4

       

      113.3

       

      –0.0

      Segment result (EBITDA)

       

      313.1

       

      9.4

       

      319.3

       

      0.0

       

      641.8

      Depreciation and amortisation

       

      –139.1

       

      –4.3

       

      –95.4

       

      0.0

       

      –238.7

      Segment result (EBIT)

       

      174.1

       

      5.1

       

      223.9

       

      0.0

       

      403.1

      Finance result

       

       

       

       

       

       

       

       

       

      –14.0

      Share of profit or loss of associates

       

       

       

       

       

       

       

       

       

      –2.5

      Income tax expense

       

       

       

       

       

       

       

       

       

      –77.4

      Profit

       

       

       

       

       

       

       

       

       

      309.1

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 31 December 2019

       

      1,693.0

       

      109.6

       

      1,951.1

       

       

       

      3,753.7

      Non-interest-bearing non-current liabilities 1)

       

       

       

       

       

       

       

       

       

      611.6

      Non-interest-bearing current liabilities 2)

       

       

       

       

       

       

       

       

       

      228.2

      Total assets as at 31 December 2019

       

       

       

       

       

       

       

       

       

      4,593.5

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      7.7

       

      3.7

       

      10.3

       

       

       

      8.8

       

       

       

       

       

       

       

       

       

       

       

      Capital expenditure

       

      144.4

       

      0.2

       

      679.3

       

       

       

      823.9

      Investments in associates

       

       

       

       

       

      9.3

       

       

       

      9.3

      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

      2019

       

       

       

       

       

       

       

      Revenue from contract with customers (IFRS 15)

       

      381.8

       

      15.7

       

      70.7

       

      178.9

       

      1.3

       

      0.0

       

      648.4

      Other revenue (non IFRS 15)

       

      0.2

       

      0.0

       

      0.0

       

      0.0

       

      0.0

       

      0.0

       

      0.2

      Revenue from third parties

       

      382.0

       

      15.7

       

      70.7

       

      178.9

       

      1.3

       

      0.0

       

      648.6

      Inter-segment revenue

       

      21.7

       

      0.0

       

      4.6

       

      11.6

       

      2.1

       

      –18.5

       

      21.4

      Total revenue

       

      403.7

       

      15.7

       

      75.3

       

      190.5

       

      3.4

       

      –18.5

       

      670.1

      Personnel expenses

       

      –69.0

       

      0.0

       

      –10.1

       

      –2.5

       

      –1.0

       

      0.0

       

      –82.5

      Other operating expenses

       

      –44.4

       

      –12.3

       

      –6.2

       

      –73.3

       

      –47.1

       

      0.0

       

      –183.3

      Inter-segment operating expenses

       

      –61.3

       

      –1.1

       

      –17.7

       

      –15.4

       

      –14.3

       

      18.5

       

      –91.2

      EBITDA

       

      229.0

       

      2.4

       

      41.3

       

      99.4

       

      –58.9

       

      –0.0

       

      313.1

      Depreciation and amortisation

       

      –103.9

       

      –0.1

       

      –25.1

       

      –6.8

       

      –3.1

       

      0.0

       

      –139.1

      EBIT

       

      125.2

       

      2.3

       

      16.1

       

      92.6

       

      –62.0

       

      –0.0

       

      174.1

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Invested capital as at 31 December 2019

       

      1,287.6

       

      1.2

       

      323.5

       

      50.1

       

      30.6

       

       

       

      1,693.0

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      ROIC (in %)

       

      7.4

       

      43.1

       

      4.0

       

      92.7

       

      –135.5

       

       

       

      7.7

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

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

       

      1,318.6

       

      2.3

       

      329.2

       

      64.4

       

      29.4

       

       

       

      1,743.8

      ROIC (in %) pursuant to OAC

       

      8.3

       

      68.6

       

      4.0

       

      113.9

       

      –144.7

       

       

       

      8.5

      3) The Ordinance on Airport Charges (OAC) 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 pursuant to OAC of the “Air security” segment amounts to 24.6%.

      The following table shows the reportable segments in the previous 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

      Personnel expenses

       

      –80.1

       

      –1.9

       

      –129.5

       

      0.0

       

      –211.5

      Other operating expenses

       

      –184.3

       

      –58.4

       

      –127.7

       

      0.0

       

      –370.4

      Inter-segment operating expenses

       

      –87.7

       

      –0.6

       

      –19.3

       

      107.6

       

      0.0

      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

      Personnel expenses

       

      –66.8

       

      0.0

       

      –10.4

       

      –1.8

       

      –1.1

       

      0.0

       

      –80.1

      Other operating expenses

       

      –44.7

       

      –12.1

       

      –6.3

       

      –72.4

       

      –48.8

       

      0.0

       

      –184.3

      Inter-segment operating expenses

       

      –59.5

       

      –1.0

       

      –16.7

       

      –14.8

       

      –13.7

       

      18.0

       

      –87.7

      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 (OAC) 3)

       

      1,323.2

       

      2.9

       

      306.4

       

      65.0

       

      38.9

       

       

       

      1,736.4

      ROIC (in %) pursuant to OAC

       

      8.5

       

      66.8

       

      4.5

       

      116.0

       

      –131.6

       

       

       

      8.8

      3) The Ordinance on Airport Charges (OAC) 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 pursuant to OAC of the “Air security” segment amounts to 23.0%.

      Internal reporting of operating segments to the chief operating decision-maker is carried out in accordance with the Ordinance on Airport Charges (OAC), 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 OAC (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 (OAC)

      In accordance with Art. 34 OAC, 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 financial year 2019, an amount of CHF 12.7 million (2018: CHF 14.5 million) was allocated to the “Aviation” segment and is reflected in the reported return on operating assets. Moreover, in accordance with Art. 45 OAC, the shortfall in the “Access fees” segment can be charged to the “Air security” segment.

      Revenue from security charges is allocated in full to the “Security” segment and revenue from PRM charges to the “PRM” segment. All other flight operations charges (with the exception of aircraft noise charges) are allocated to the “Aviation” segment. A breakdown of revenue by charge type can be found in note 2, Revenue.

      Additional disclosures

      Flughafen Zürich AG primarily provides services within Switzerland. In financial year 2019, external consulting services totalling CHF 6.6 million (2018: CHF 6.0 million) were provided in Brazil and Chile. Flughafen Zürich AG’s revenue with Lufthansa Group in the reportable segments amounted to CHF 445.3 million in the past financial year (2018: CHF 432.3 million).

    • 2 Revenue

      (CHF 1,000)

       

      2019

       

      2018

      Passenger charges

       

      253,117

       

      251,798

      Security charges

       

      176,860

       

      175,685

      PRM charges

       

      15,730

       

      15,554

      Passenger-related flight operations charges

       

      445,707

       

      443,037

      Landing charges

       

      86,903

       

      86,838

      Aircraft-related noise charges

       

      12,827

       

      11,629

      Emission charges

       

      4,100

       

      4,068

      Parking charges

       

      26,641

       

      26,257

      Freight revenue

       

      8,352

       

      8,919

      Other flight operations charges

       

      138,823

       

      137,711

      Total flight operations charges

       

      584,530

       

      580,748

      Baggage sorting and handling system

       

      43,489

       

      43,500

      De-icing

       

      12,730

       

      11,742

      Check-in

       

      5,726

       

      5,900

      Aircraft energy supply system

       

      3,873

       

      3,800

      Other fees

       

      6,181

       

      6,148

      Total aviation fees

       

      71,999

       

      71,090

      Refund of security costs

       

      2,070

       

      1,961

      Other revenue

       

      2,852

       

      2,868

      Total other aviation revenue

       

      4,922

       

      4,829

      Total aviation revenue

       

      661,451

       

      656,667

      Retail, tax & duty-free

       

      114,211

       

      111,379

      Food & beverage operations

       

      20,129

       

      18,900

      Advertising media and promotion

       

      18,185

       

      18,137

      Revenue from multi-storey car parks

       

      82,617

       

      81,462

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

       

      17,557

       

      18,427

      Total commercial revenue

       

      252,699

       

      248,305

      Revenue from rental and leasing agreements

       

      91,708

       

      89,994

      Energy and utility cost allocation

       

      23,740

       

      21,959

      Cleaning

       

      4,896

       

      4,712

      Revenue from services

       

      4,913

       

      4,686

      Total revenue from facility management

       

      125,257

       

      121,351

      Communication services

       

      15,969

       

      15,436

      Other services and miscellaneous

       

      17,135

       

      17,446

      Catering

       

      2,165

       

      2,109

      Fuel charges

       

      8,869

       

      8,707

      Total revenue from services 

       

      44,138

       

      43,698

      Revenue from consulting activities

       

      6,577

       

      6,048

      Other revenue from international business

       

      36,612

       

      36,130

      Revenue from construction projects as part of concession arrangements

       

      83,350

       

      40,698

      Total revenue from international business

       

      126,539

       

      82,876

      Total non-aviation revenue

       

      548,633

       

      496,230

      Total revenue 

       

      1,210,084

       

      1,152,897

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

      (CHF 1,000)

       

      2019

       

      2018

      Flight operations charges

       

      584,530

       

      580,748

      Aviation charges

       

      71,999

       

      71,090

      Other aviation revenue

       

      4,709

       

      4,624

      Total aviation revenue from contracts with customers (IFRS 15)

       

      661,238

       

      656,462

      Aviation revenue (non IFRS 15)

       

      213

       

      205

      Total aviation revenue

       

      661,451

       

      656,667

      Commercial and parking revenue

       

      83,132

       

      81,738

      Revenue from facility management

       

      33,013

       

      30,763

      Revenue from services 

       

      42,665

       

      42,238

      Revenue from international business

       

      126,539

       

      82,876

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

       

      285,349

       

      237,615

      Non-aviation revenue (non IFRS 15)

       

      263,284

       

      258,615

      Total non-aviation revenue

       

      548,633

       

      496,230

      Total revenue 

       

      1,210,084

       

      1,152,897

    • 3 PERSONNEL EXPENSES

      (CHF 1,000)

       

      2019

       

      2018

      Wages and salaries

       

      162,632

       

      158,551

      Pension costs for defined benefit plans 1)

       

      19,898

       

      21,617

      Social security contributions

       

      14,559

       

      14,326

      Other personnel expenses and employee benefits

       

      19,242

       

      16,989

      Total personnel expenses

       

      216,331

       

      211,483

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

       

      1,833

       

      1,735

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

       

      1,909

       

      1,757

      Personnel expense per full-time position as at 31 December

       

      113

       

      120

      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, 138 shares (2018: 140 shares) worth CHF 24,356 (2018: CHF 28,506) were handed out in this context.

      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.

       

       

      2019

       

      2018

       

      2018 1)

       

      Price per share 1)

      (Recipient)

       

      (CHF 1,000)

       

      (CHF 1,000)

       

      (Number of shares)

       

      (CHF)

      Members of the Management Board

       

      333

       

      390

       

      2,245

       

      173.50

      Other members of management

       

      667

       

      772

       

      4,429

       

      173.50

      Adjustment of bonus accrued in the previous year 2)

       

      –4

       

      –36

       

       

       

       

      Total

       

      996

       

      1,126

       

      6,674

       

       

      1) Shares distributed in the 2019 financial year under the bonus programme for the Management Board and other members of management (number and price per share) for the 2018 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 2019 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 2020). If the shares had been granted as at year-end, a total of 5,662 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)

       

      2019

       

      2018

      Zurich Protection & Rescue Services

       

      21,117

       

      20,973

      PRM costs (service costs of service providers)

       

      12,241

       

      12,111

      Other operating costs

       

      4,960

       

      9,235

      Insurance

       

      3,641

       

      3,599

      Cleaning by external contractors, incl. snow clearing

       

      3,322

       

      3,200

      Costs for own car park

       

      2,091

       

      2,116

      Communication costs

       

      2,020

       

      2,138

      Passenger services

       

      1,450

       

      1,382

      Total other operating expenses

       

      50,842

       

      54,754

    • 5 OTHER INCOME and EXPENSES

      (CHF 1,000)

       

      2019

       

      2018

      Capitalised expenditure

       

      15,264

       

      14,450

      Other income

       

      1,920

       

      1,020

      Capitalised expenditure and other income

       

      17,184

       

      15,470

       

       

       

       

       

      Expenses for construction projects as part of concession arrangements

       

      –83,350

       

      –40,698

      Other expenses

       

      –7,707

       

      –63,841

      Expenses for construction projects and other expenses

       

      –91,057

       

      –104,539

      Capitalised expenditure of CHF 15.3 million (2018: CHF 14.5 million) primarily comprises fees for the company’s architects and engineers as well as for project managers representing the client.

      In the reporting period, “Other income” included a payment in connection with the liquidation of Swissair in debt restructuring proceedings.

      The expenses of CHF –83.4 million (2018: CHF –40.7 million) for construction projects as part of concession arrangements are the result of investments in airport infrastructure in Brazil and Chile. The corresponding counter-item can be found under note 2, Revenue.

      In both the reporting period and the previous year, other expenses included losses on asset disposals and losses on receivables, among other items. In the previous year, this line item also contained the CHF 57.6 million increase in the provision for sound insulation and resident protection measures that was recognised in profit or loss (see note 19, Provision for formal expropriations plus sound insulation and resident protection).

    • 6 Finance result

      (CHF 1,000)

       

      2019

       

      2018

      Interest expenses on debentures and non-current loans

       

      –10,473

       

      –10,960

      Net interest expenses on defined benefit obligations

       

      –1,128

       

      –796

      Interest expenses on finance lease liabilities

       

      –72

       

      –135

      Other interest expenses

       

      –2,828

       

      –1,375

      Adjustments to fair value on financial assets of Airport of Zurich Noise Fund

       

      0

       

      –6,205

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

       

      –5,423

       

      –1,859

      Present value adjustment on liabilities from concession arrangements

       

      –2,676

       

      –3,123

      Foreign exchange losses

       

      –909

       

      0

      Other finance costs

       

      –4,103

       

      –2,694

      Total finance costs

       

      –27,612

       

      –27,147

       

       

       

       

       

      Interest income on financial assets of Airport of Zurich Noise Fund

       

      765

       

      621

      Adjustments to fair value on financial assets of Airport of Zurich Noise Fund

       

      9,103

       

      0

      Other interest income

       

      3,530

       

      3,255

      Foreign exchange gains

       

      0

       

      50

      Other finance income

       

      204

       

      157

      Total finance income

       

      13,602

       

      4,083

       

       

       

       

       

      Finance result

       

      –14,010

       

      –23,064

      Interest expenses on debentures and non-current loans were down slightly on the prior-year figure to CHF –10.5 million for the reporting period.

      The expense for the present value adjustment on the provision for formal expropriations plus sound insulation and resident protection rose by CHF –3.6 million year on year to CHF –5.4 million. The expense for the present value adjustment on liabilities from concession arrangements, on the other hand, declined slightly.

      Positive changes in value amounting to CHF 9.1 million were achieved on the financial assets of the Airport of Zurich Noise Fund (AZNF) held at fair value in the reporting period. In the previous year, a negative change in value of CHF –6.2 million was incurred in this context. Interest income on the other assets of the AZNF rose slightly to CHF 0.8 million.

    • 7 Income tax

      (CHF 1,000)

       

      2019

       

      2018

      Taxes for current year

       

      –82,288

       

      –78,175

      Taxes for prior years

       

      2,647

       

      94

      Total current income tax

       

      –79,641

       

      –78,081

      Deferred income tax on changes in temporary differences

       

      2,228

       

      16,788

      Total deferred income tax

       

      2,228

       

      16,788

      Total income tax

       

      –77,413

       

      –61,293

      Income tax can be analysed as follows:

      (CHF 1,000)

       

      2019

       

      2018

      Profit before tax

       

      386,558

       

      –299,134

       

       

       

       

       

      Tax expense based on the statutory tax rate of 20.4% applicable at the parent company (2018: 20.5%)

       

      –78,774

       

      –61,286

      Prior-period adjustments

       

      2,647

       

      94

      Effect of share of results of associates

       

      20

       

      124

      Non deductable losses

       

      –493

       

      0

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

       

      –1,377

       

      –1,122

      Effect of application of different income tax rates

       

      778

       

      –404

      Miscellaneous items

       

      –214

       

      1,301

      Total income tax

       

      –77,413

       

      –61,293

    • 8 Property, plant and equipment

      (CHF million)

       

      Land

       

      Engineering structures

       

      Buildings

       

      Projects in progress

       

      Movables

       

      Leased assets

       

      Total

      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

       

       

       

       

       

       

       

      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

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 31 December 2018

       

      118.7

       

      1,698.0

       

      4,377.9

       

      184.8

       

      272.9

       

      21.8

       

      6,674.1

      Effect of initial application of IFRS 16

       

       

       

       

       

       

       

       

       

       

       

      –21.8

       

      –21.8

      Balance as at 1 January 2019

       

      118.7

       

      1,698.0

       

      4,377.9

       

      184.8

       

      272.9

       

      0.0

       

      6,652.3

      Additions

       

      10.3

       

       

       

      210.4

       

      233.9

       

      0.5

       

       

       

      455.1

      Disposals

       

       

       

      –36.8

       

      –55.3

       

       

       

      –14.2

       

       

       

      –106.3

      Transfers

       

       

       

      12.1

       

      75.0

       

      –113.5

       

      18.0

       

       

       

      –8.4

      Reclassification

       

       

       

       

       

      –0.3

       

       

       

      0.3

       

       

       

      0.0

      Foreign exchange differences

       

       

       

       

       

       

       

       

       

      –0.1

       

       

       

      –0.1

      Balance as at 31 December 2019

       

      129.0

       

      1,673.3

       

      4,607.7

       

      305.2

       

      277.4

       

      0.0

       

      6,992.6

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      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

       

       

       

      –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

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Balance as at 31 December 2018

       

      0.0

       

      –898.4

       

      –2,936.5

       

      0.0

       

      –191.6

       

      –19.4

       

      –4,045.9

      Effect of initial application of IFRS 16

       

       

       

       

       

       

       

       

       

       

       

      19.4

       

      19.4

      Balance as at 1 January 2019

       

      0.0

       

      –898.4

       

      –2,936.5

       

      0.0

       

      –191.6

       

      0.0

       

      –4,026.5

      Additions

       

       

       

      –59.4

       

      –140.3

       

       

       

      –16.1

       

       

       

      –215.8

      Disposals

       

       

       

      36.4

       

      54.2

       

       

       

      13.8

       

       

       

      104.4

      Balance as at 31 December 2019

       

      0.0

       

      –921.4

       

      –3,022.6

       

      0.0

       

      –193.9

       

      0.0

       

      –4,137.9

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      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

       

       

       

       

       

       

       

      –0.7

       

       

       

       

       

      –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

      Additions

       

       

       

       

       

       

       

      –0.2

       

       

       

       

       

      –0.2

      Disposals

       

       

       

      0.8

       

      0.2

       

       

       

      0.2

       

       

       

      1.2

      Transfers

       

       

       

       

       

      –0.2

       

      0.2

       

       

       

       

       

      0.0

      Balance as at 31 December 2019

       

      0.0

       

      –9.3

       

      –1.7

       

      0.0

       

      –0.2

       

      0.0

       

      –11.2

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 31 December 2018

       

      118.7

       

      789.5

       

      1,439.7

       

      184.8

       

      80.9

       

      2.4

       

      2,616.0

      Net carrying amount as at 31 December 2019

       

      129.0

       

      742.6

       

      1,583.4

       

      305.2

       

      83.3

       

      0.0

       

      2,843.5

      Projects in progress

      In the past financial year, Flughafen Zürich AG invested CHF 233.9 million in projects in progress (2018: CHF 194.7 million). The biggest items comprise the following projects:

      • Expansion and refurbishment of the baggage sorting system (CHF 50.2 million)
      • Renovation of runway 28/10 (CHF 22.5 million)
      • Upgrading of airfield power supply systems (CHF 19.6 million)

      Depreciation

      Depreciation of property, plant and equipment totalling CHF –215.8 million was offset against government grants and subsidies recognised in the income statement in the amount of CHF 1.2 million.

      Impairment

      On a yearly basis, Flughafen Zürich AG carries out a calculation at company level 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 2019 did not identify any indications of impairment.

    • 9 Right-of-use assets

      FLUGHAFEN ZÜRICH AG AS LESSEE

      (CHF 1,000)

       

      Technical installations

       

      Real estate

       

      Total right-of-use assets

      Cost

       

       

       

       

       

       

      Balance as at 31 December 2018

       

      0

       

      0

       

      0

      Transfer of leased assets from property, plant and equipment

       

      21,755

       

      0

       

      21,755

      Effect of the initial application from IFRS 16

       

      0

       

      41,894

       

      41,894

      Balance as at 1 January 2019

       

      21,755

       

      41,894

       

      63,649

      Additions

       

      0

       

      45,403

       

      45,403

      Balance as at 31 December 2019

       

      21,755

       

      87,297

       

      109,052

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

      Balance as at 31. Dezember 2018

       

      0

       

      0

       

      0

      Transfer of leased assets from property, plant and equipment

       

      –19,396

       

      0

       

      –19,396

      Effect of the initial application from IFRS 16

       

      0

       

      0

       

      0

      Balance as at 1 January 2019

       

      –19,396

       

      0

       

      –19,396

      Additions

       

      –1,423

       

      –4,839

       

      –6,262

      Balance as at 31 December 2019

       

      –20,819

       

      –4,839

       

      –25,658

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 31 December 2019

       

      936

       

      82,458

       

      83,394

      technical installations

      In December 2001, Flughafen Zürich AG entered into a framework lease contract to finance the aircraft energy supply system (ESS). The ESS contract has a term of around 19 years and expires on 31 July 2020. The contract does not contain any extension or termination options, and the leased asset will transfer to Flughafen Zürich AG at the end of the lease term without any further consideration.

      real estate

      Flughafen Zürich AG has a right-of-use asset entitling it to use space in a building that is located on Flughafen Zürich AG’s land and was constructed under a granted building right from 2005. Although its right to use the space ends on 31 January 2080, Flughafen Zürich AG has termination options, which have been taken into account. Had the termination options not been taken into account, additional liabilities of CHF 91.2 million (nominal amount) would arise in addition to the lease liabilities recognised as at 31 December 2019.

      In financial year 2020, following the completion of the real estate project THE CIRCLE, Flughafen Zürich AG will move into new office premises for which the company has signed a 20-year lease (taking into account extension options) with the co-ownership structure THE CIRCLE.

      Flughafen Zürich AG leases space that is subleased as car parking space. The average period of use is five years.

      The following table shows the carrying amounts of the lease liabilities and the changes during the reporting period:

      (CHF 1,000)

       

      2019

      Balance as at 1 January

       

      –44,904

      Additions

       

      –45,403

      Payments

       

      5,797

      Present value adjustment

       

      –72

      Balance as at 31 December

       

      –84,582

      of which current (payment within 1 year)

       

      –6,163

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

       

      –78,419

      A detailed overview of the maturities of the lease liabilities can be found in note 18, Financial liabilities.

      In the reporting period, the following amounts were recognised in profit or loss in connection with leases:

      (CHF 1,000)

       

      2019

      Depreciation charges for right-of-use assets

       

      –6,262

      Interest expense on lease liabilities

       

      –72

      Expense relating to short-term leases

       

      –1,111

      Total amount recognised for leases in profit or loss

       

      –7,445

      The total cash outflow for leases amounted to CHF 6.9 million in the reporting period. Future cash outflows for leases not yet commenced as at the reporting date amount to CHF 23.2 million.

      FLUGHAFEN ZÜRICH AG AS LESSOR

      The tenancy agreements entered into by Flughafen Zürich AG as lessor may be either fixed tenancy or turnover-based agreements:

      FIXED TENANCY AGREEMENTS

      Fixed tenancy agreements comprise in particular agreements for office, warehouse, archive and workshop premises. They are divided into limited-term and indefinite agreements, with the latter usually being subject to either six or twelve months’ notice to be communicated in advance.

      TURNOVER-BASED AGREEMENTS

      Sales-based tenancy agreements primarily relate to commercial premises. These agreements between the parties generally comprise guaranteed basic rents plus turnover-based portions with a fixed term of five years and no other options. Moreover, some agreements involving basic rents and turnover-based portions exist as a function of passenger trends or prior-year sales.

      Commercial revenue (retail, tax & duty free plus food & beverage) and revenue from facility management (rental and leasing agreements) contained conditional rental payments amounting to CHF 14.2 million in the reporting period (see also note 2, Revenue).

      At the reporting date, minimum lease payments (fixed rents and guaranteed basic rents) under non-cancellable leases were as follows:

      (CHF 1,000)

       

      31.12.2019

       

      31.12.2018

      Due date up to 1 year

       

      229,706

       

      202,615

      Due date from 1 to 5 years

       

      774,776

       

      675,995

      Dute date in more than 5 years

       

      368,050

       

      403,071

      Total

       

      1,372,532

       

      1,281,681

    • 10 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

       

      95,387

       

      95,387

      Balance as at 31 December 2018

       

      950

       

      306,696

       

      307,646

       

       

       

       

       

       

       

      Balance as at 1 January 2019

       

      950

       

      306,696

       

      307,646

      Additions

       

      0

       

      125,823

       

      125,823

      Balance as at 31 December 2019

       

      950

       

      432,519

       

      433,469

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

      Balance as at 1 January 2018

       

      0

       

      –352

       

      –352

      Additions

       

      0

       

      –240

       

      –240

      Balance as at 31 December 2018

       

      0

       

      –592

       

      –592

       

       

       

       

       

       

       

      Balance as at 1 January 2019

       

      0

       

      –592

       

      –592

      Additions

       

      0

       

      –120

       

      –120

      Balance as at 31 December 2019

       

      0

       

      –712

       

      –712

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 31 December 2018

       

      950

       

      306,104

       

      307,054

      Net carrying amount as at 31 December 2019

       

      950

       

      431,807

       

      432,757

      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 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 CIRCLE property under construction is classified as investment property in accordance with IAS 40. In this context, Flughafen Zürich AG has decided to apply the cost model. The land recognised for THE CIRCLE in the amount of approximately CHF 1.0 million represents the purchase cost of the share of the plot of land on which the project will be implemented. “Project and construction costs” in the amount of CHF 431.8 million (2018: CHF 306.1 million) include the share of the production costs capitalised to date.

      The fair value of THE CIRCLE was CHF 530.9 million at the reporting date (2018: CHF 373.3 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 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

       

       

       

       

       

       

       

      Balance as at 1 January 2019

       

      154,029

       

      130,475

       

      92,377

      Additions

       

      0

       

      242,449

       

      721

      Disposals

       

      –20,000

       

      –211

       

      –5,580

      Transfer

       

      0

       

      –572

       

      8,926

      Reclassification

       

      0

       

      2,035

       

      –2,035

      Foreign exchange differences

       

      0

       

      –20,417

       

      –295

      Balance as at 31 December 2019

       

      134,029

       

      353,759

       

      94,114

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Depreciation, amortisation

       

       

       

       

       

       

      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

       

       

       

       

       

       

       

      Balance as at 1 January 2019

       

      –60,292

       

      –4,843

       

      –74,492

      Additions

       

      –2,892

       

      –7,808

       

      –6,935

      Disposals

       

      0

       

      0

       

      5,252

      Transfer

       

      0

       

      0

       

      0

      Reclassification

       

      0

       

      –486

       

      486

      Foreign exchange differences

       

      0

       

      2,668

       

      108

      Balance as at 31 December 2019

       

      –63,184

       

      –10,469

       

      –75,581

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      Net carrying amount as at 31 December 2018

       

      93,737

       

      125,632

       

      17,885

      Net carrying amount as at 31 December 2019

       

      70,845

       

      343,290

       

      18,533

      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.

      On 22 November 2019, the Swiss Federal Supreme Court handed down a ruling in test cases regarding the period of limitation on claims for compensation in Oberglatt. This Swiss Federal Supreme Court ruling and other fundamental issues that have been decided 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 350.0 million to CHF 330.0 million, enabling the provision for formal expropriations to be reduced by CHF 20.0 million as at 31 December 2019 (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.

      In the previous year, based on Swiss Federal Supreme Court rulings in test cases regarding cooperative ownership, the company was likewise able to undertake a reappraisal of the outstanding cost of compensation for formal expropriations and reduce both the provision for formal expropriations and the intangible asset from the right of formal expropriation by CHF 34.5 million.

      As at 31 December 2019, Flughafen Zürich AG has therefore recognised an intangible asset from the right of formal expropriation in the amount of CHF 70.8 million (2018: CHF 93.7 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 343.3 million (2018: CHF 125.6 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 34.3 million; 2018: CHF 30.4 million), in which Flughafen Zürich AG holds a controlling interest via its subsidiary A-port Chile S.A., the expansion and operation of the Brazilian airport in Florianópolis (CHF 178.3 million; 2018: CHF 95.2 million) through the subsidiary Concessionária do Aeroporto Internacional de Florianópolis S.A. and the expansion and operation of the Brazilian airports in Vitória and Macaé (CHF 130.7 million; 2018: CHF 0.0 million) through the subsidiary Aeroportos do Sudeste do Brasil S.A. The obligations of CHF 26.3 million (2018: CHF 26.1 million) relating to the corresponding concessions have been recognised as current and non-current liabilities (see note 18, Financial liabilities).

      Impairment

      On a yearly basis, Flughafen Zürich AG carries out a calculation at company level to determine whether there is any indication that property, plant and equipment (see note 8, Property, plant and equipment) and intangible assets may be impaired. The calculation is based on 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 2019 did not identify any indications of impairment.

    • 12 Investments in associates

      (CHF 1,000)

       

      31.12.2019

       

      31.12.2018

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

       

       

       

       

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

       

      9,270

       

      12,323

      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

       

      9,270

       

      12,323

      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 Concessionária no 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. After just 14 months’ construction time, a new terminal was put into operation in 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 flight operations manager.

      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 24.7 million accrued as at 31 December 2019). 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. On 15 April 2019, the ICSID ad hoc committee rejected the application for annulment in full. This means that the tribunal’s decision is definitive and final. 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)

       

      31.12.2019

       

      31.12.2018

      Revenue

       

      95,922

       

      96,299

      Loss

       

      –10,193

       

      –17,316

      Comprehensive income

       

      –10,193

       

      –17,316

       

       

       

       

       

      Non-current assets

       

      565,553

       

      607,805

      Current assets

       

      27,479

       

      31,669

      Non-current liabilities

       

      –479,506

       

      –498,857

      Current liabilities

       

      –40,898

       

      –44,089

      Equity attributable to non-controlling interests

       

      –35,548

       

      –47,238

       

       

       

       

       

      Net equity

       

      37,080

       

      49,290

      Equity share

       

      25.0% 

       

      25.0% 

       

       

       

       

       

      Carrying amount of interest in associate

       

      9,270

       

      12,323

    • 13 FINANCIAL ASSETS OF THE AIRPORT OF ZURICH NOISE FUND

      (CHF 1,000)

       

      31.12.2019

       

      31.12.2018

      Current financial assets of Airport of Zurich Noise Fund

       

      17,376

       

      21,967

      Non-current financial assets of Airport of Zurich Noise Fund

       

      394,428

       

      377,241

      Total financial assets of Airport of Zurich Noise Fund

       

      411,804

       

      399,208

      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. In 2019, interest on bonds was unchanged year on year at 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)

       

      31.12.2019

       

      31.12.2018

      Trade receivables, gross 1)

       

      112,805

       

      102,610

      Allowance for expected credit loss

       

      –616

       

      –586

      Trade receivables, net

       

      112,189

       

      102,024

      1) Trade receivables include an amount of CHF 18.8 million due from Swiss (2018: CHF 21.8 million). In the period between the balance sheet date and the preparation of the 2019 annual report, Swiss had paid the outstanding amount arising from airport charges in full as at 31 December 2019.

      Geographical distribution of trade receivables:

      (CHF 1,000)

       

      31.12.2019

       

      31.12.2018

      Switzerland

       

      50,513

       

      35,013

      Europe

       

      4,356

       

      9,110

      Other

       

      809

       

      7,670

      Total aviation

       

      55,678

       

      51,793

      Switzerland

       

      52,545

       

      44,918

      Europe

       

      110

       

      67

      Latin America

       

      4,377

       

      5,785

      Other

       

      95

       

      47

      Total non-aviation

       

      57,127

       

      50,817

      Total trade receivables, gross

       

      112,805

       

      102,610

      Expected credit losses on trade receivables are as follows for the reporting period and the previous year:

      (CHF 1,000)

       

       

       

       

       

       

       

       

       

      31.12.2019

       

       

      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

       

      3.0

       

      5.0

       

       

      Trade receivables, gross

       

      94,505

       

      14,754

       

      1,499

       

      2,047

       

      112,805

      Expected credit loss

       

      –247

       

      –221

       

      –46

       

      –102

       

      –616

      (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

      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)

       

      31.12.2019

       

      31.12.2018

      Services not yet invoiced

       

      21,388

       

      14,686

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

       

      406

       

      380

      Prepaid services

       

      24,888

       

      61,712

      Prepaid expenses and accruals

       

      46,682

       

      76,778

      Tax receivables (VAT and withholding tax)

       

      25,655

       

      11,812

      Other receivables

       

      1,281

       

      627

      Total other receivables and prepaid expenses

       

      73,618

       

      89,217

      of which financial instruments

       

      21,794

       

      15,066

      of which other receivables and prepaid expenses

       

      51,824

       

      74,151

      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

       

       

      31.12.2019

       

      31.12.2018

      (CHF 1,000)

       

      Total

       

      of which AZNF

       

      Total

       

      of which AZNF

      Cash on hand

       

      120

       

      0

       

      213

       

      0

      Cash at banks and in postal accounts

       

      115,845

       

      18,092