Notes to the financial statements

  • I Accounting principles

    • General remarks

      The 2020 financial statements of Flughafen Zürich AG, based in Kloten, have been prepared in accordance with the accounting provisions of the Swiss Code of Obligations.

      The significant valuation principles that have been applied but are not prescribed by law are described below. These single-entity financial statements also serve for tax purposes and form the basis for the statutory business of the General Meeting of Shareholders.

      As Flughafen Zürich AG prepares consolidated financial statements in accordance with accepted financial reporting standards (IFRSs), it has omitted to present disclosures on interest-bearing liabilities, disclosures on auditorsʼ fees, a cash flow statement and a management report in these financial statements in accordance with the statutory provisions.

      As in the previous year, the average number of full-time equivalents was over 250 in the reporting period.

    • Reporting of noise-related costs in the financial statements

      Costs for formal expropriations qualify as an intangible asset under the accounting provisions of the Swiss Code of Obligations. They are recognised as assets at the latest on the date on which the counterparty has attained an assertable claim. Amortisation of capitalised costs for formal expropriations is based at a minimum on the consolidated financial statements. Adequate provisions are recognised for current liabilities arising from sound insulation and resident protection measures. Any balance of revenue from noise charges after deduction of noise-related costs (compensation for formal expropriations, sound insulation and resident protection measures, operating costs, financing costs and amortisation) is transferred to the provision for aircraft noise (see note 10, Provision for aircraft noise).

      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 5,800 were still pending at the end of 2020. Almost 700 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 as at 31 December 2019.

      With respect to sound insulation and resident protection measures, Flughafen Zürich AG is required to implement sound insulation measures in the area where it claims exemptions from noise limits (emission limit). In this context, the Federal Office of Civil Aviation (FOCA) has initiated a night-time noise abatement procedure. The area with exemptions under the Sectoral Aviation Infrastructure Plan adopted by the Federal Council on 23 August 2017 is to be extended. In 2018, the Board of Directors approved further sound insulation measures in this context.

      As at 31 December 2020, Flughafen Zürich AG has recognised an intangible asset from the right of formal expropriation of CHF 27.2 million (2019: CHF 26.8 million) and a provision for aircraft noise of CHF 460.5 million in total (2019: CHF 473.4 million) in the financial statements in accordance with the provisions of the Swiss Code of Obligations.

      Depending on future and final-instance legal judgements, especially with respect to the southern approaches, noise-related liabilities may in future be subject to substantial adjustments, which would also require adjustments to the noise-related costs recognised in the balance sheet. At the present time, it is not possible to reliably estimate the total costs to capitalise as an intangible asset from the right of formal expropriation, the resulting amortisation or the corresponding provision.

    • ADDITIONAL SIGNIFICANT ACCOUNTING POLICIES

      REVENUE RECOGNITION

      Revenue is recognised by Flughafen Zürich AG when the service has been rendered, it is probable that the economic benefits will flow to the company and it can be measured reliably. In addition, the significant risks and rewards of ownership have to be transferred to the recipient of the service. Revenue from fixed-rent tenancy agreements is recognised on a straight-line basis over the term of the agreement. Conditional rental payments (including turnover-based tenancy agreements) are recognised on an accrual basis based on the turnover generated by the lessee, in which case a minimum rent may be applied. If lessees are granted significant lease incentives (e.g. rent concessions), the equivalent value of the incentive is recognised on a straight-line basis over the original or remaining lease term.

      Inventories

      Inventories mainly comprise operating supplies and consumables necessary for the maintenance and repair of property, plant and equipment and are stated at cost or, if lower, at net realisable value. The first-in, first-out method is applied when calculating the cost.

      Financial assets of Airport of Zurich Noise Fund

      The financial assets of the Airport of Zurich Noise Fund comprise quoted securities held for the short or long term. They are initially recognised at cost (fair value plus directly attributable transaction costs). The securities are subsequently measured at amortised cost (bonds) or at fair value (other financial assets), with gains and losses recognised in profit or loss. A fluctuation reserve is not recognised.

      Property, Plant anD Equipment

      Property, plant and equipment is stated at acquisition or production cost less accumulated depreciation and impairment. With the exception of land, which is not depreciated, items are depreciated over their estimated useful life using the straight-line method. If there are indications that they are impaired, the carrying amounts are reviewed and, if necessary, adjusted.

      LEASES

      Leases are accounted for by applying the concept of control. In doing so, a lease contract is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the leased item to Flughafen Zürich AG as lessee. All other leases are operating leases. At the commencement date of a finance lease, the value of the leased item is recognised as a right-of-use asset and as a lease liability in the same amount. The right-of-use asset is depreciated and the lease liability amortised over the lease term. In the case of an operating lease, the lease payments are recognised directly in profit or loss at maturity.

      Intangible assets

      Intangible assets are stated at cost less amortisation. They are amortised over their estimated useful life using the straight-line method. If there are indications that they are impaired, the carrying amounts are reviewed and, if necessary, adjusted.

      Treasury Shares

      At the date of acquisition, treasury shares are recognised at cost as a deduction from equity. In the event of their sale at a later date, the gain or loss is credited or charged directly to voluntary retained earnings.

  • II Notes to the financial statements

    • 1 Extraordinary result

      (CHF 1,000)

       

      2020

       

      2019

      Extraordinary income

       

      1,290

       

      1,887

      Extraordinary expenses

       

      –89,072

       

      –5,526

      Extraordinary result

       

      –87,782

       

      –3,639

      Extraordinary expenses included a valuation allowance of CHF 75.0 million on loans to subsidiaries that relates primarily to unfavourable exchange rate movements in Brazil (see note 4, Investments and loans). Both in the reporting period and in the previous year, project costs derecognised, losses on asset disposals and losses on receivables were also recognised in this line item.

    • 2 Trade receivables

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Trade receivables from third parties

       

      66,226

       

      111,528

      Valuation allowance

       

      –2,022

       

      –979

      Trade receivables from investments

       

      845

       

      1,164

      Total trade receivables

       

      65,049

       

      111,713

    • 3 PREPAYMENTS AND ACCRUED INCOME

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Prepaid expenses in respect of third parties

       

      97,349

       

      42,492

      Prepaid expenses in respect of investments

       

      820

       

      0

      Total prepaid expenses

       

      98,169

       

      42,492

    • 4 Investments and loans

      Investments comprised the following as at the reporting date:

      Company

       

      Domicile

       

      Share capital

       

      Stake held in %

      Airport Ground Services AG 1)

       

      Kloten

       

      CHF 100,000

       

      100.0

      Zurich Airport International AG 1)

       

      Kloten

       

      CHF 100,000

       

      100.0

      Zurich Airport International Asia Sdn. Bhd. 2)

       

      Kuala Lumpur

       

      MYR 1.0 million

       

      100.0

      Yamuna International Airport Private Ltd. 2)

       

      New Delhi

       

      INR 490 million

       

      100.0

      Concessionária do Aeroporto Internacional de Florianópolis S.A. 2)

       

      Florianópolis

       

      BRL 304 million

       

      100.0

      Zurich Airport Latin America Ltda. 2)

       

      Rio de Janeiro

       

      BRL 578 million

       

      100.0

      Aeroportos do Sudeste do Brasil S.A. 2)

       

      Vitória

       

      BRL 571 million

       

      100.0

      A-port S.A. 2)

       

      Santiago de Chile

       

      CLP 16,139 million

       

      100.0

      Sociedad Concesionaria Antofagasta S.A. 2)

       

      Santiago de Chile

       

      CLP 3,600 million

       

      100.0

      Sociedad Concesionaria Iquique S.A. 2)

       

      Santiago de Chile

       

      CLP 600 million

       

      100.0

      Sociedad Concesionaria Aeropuerto Diego Aracena S.A. 2)

       

      Santiago de Chile

       

      CLP 10,700 million

       

      100.0

      A-port Operaciones S.A. 2)

       

      Santiago de Chile

       

      CLP 1,352 million

       

      99.0

      A-port Operaciones Colombia S.A. 2)

       

      Bogotá

       

      COP 100 million

       

      99.0

      Unique IDC S.A. de C.V. 2)

       

      Tegucigalpa

       

      HNL 0.2 million

       

      99.0

      Sociedade de Participação no Aeroporto de Confins S.A. 2)

       

      Belo Horizonte

       

      BRL 474 million

       

      25.0

      Concessionária do Aeroporto Internacional de Confins S.A. 2)

       

      Belo Horizonte

       

      BRL 907 million

       

      12.8

      Administradora Unique IDC C.A. 1)

       

      Porlamar

       

      VEB 25 million

       

      49.5

      Aeropuertos Asociados de Venezuela C.A. 2)

       

      Porlamar

       

      VEB 10 million

       

      49.5

      1) Direct investment.

      2) Indirect investment.

      The equity interests stated are also the share of the voting power in the investees listed.

      As a precautionary measure in connection with the coronavirus crisis, Flughafen Zürich AG established Airport Ground Services AG based in Kloten in financial year 2020. In an emergency, this wholly-owned subsidiary could take over services related to airport operations. The company was inactive at the reporting date.

      Zurich Airport International AG, the wholly-owned subsidiary responsible for advising, operating and/or owning airports and airport-related companies throughout the world, holds all the investees existing in this context (with the exception of those in 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. Flughafen Zürich AG is entitled to 50% of this sum. After rejection of the application for annulment, the tribunalʼs decision is definitive and final. The value of this holding has been fully impaired.

      Loans comprised the following as at the reporting date:

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Loans to Zurich Airport International AG

       

      334,478

       

      313,118

      Valuation allowance for loans to Zurich Airport International AG

       

      –75,000

       

      0

      Total loans

       

      259,478

       

      313,118

      In the reporting period, an impairment allowance of CHF 75.0 million was recognised for loans to the subsidiary Zurich Airport International AG. This allowance relates in particular to unfavourable exchange rate movements in Brazil (see note 1, Extraordinary result).

      As at the reporting date, loans to Zurich Airport International AG in the amount of CHF 150 million were subject to terms of subordination (2019: CHF 0.0 million).

    • 5 EQUITY INTEREST IN THE CO-OWNERSHIP STRUCTURE for THE CIRCLE

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Share of assets of co-ownership structure for the Circle

       

      565,585

       

      445,698

      Share of liabilities of co-ownership structure for the Circle

       

      –19,758

       

      –18,731

      Total equity interest in co-ownership structure for the Circle

       

      545,827

       

      426,967

      On 5 February 2015, Flughafen Zürich AG and Swiss Life AG notarised the purchase agreement for the share of land for the real estate project the Circle and registered it for entry in the Land Register, thereby establishing the co-ownership structure between the two parties provided for in the financing agreements, in which Flughafen Zürich AG has a 51% interest and Swiss Life AG a 49% interest.

      The co-ownership structure for the Circle is responsible for the implementation and operation of the real estate project.

    • 6 Property, plant and equipment

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Land

       

      139,026

       

      129,958

      Buildings, engineering structures

       

      2,193,894

       

      2,280,889

      Projects in progress

       

      395,560

       

      308,745

      Movables

       

      81,964

       

      82,053

      Total property, plant and equipment

       

      2,810,444

       

      2,801,645

    • 7 Leases

      The cost of the right-of-use assets recognised and the accumulated depreciation are shown below:

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Cost of recognised right-of-use assets

       

      139,291

       

      133,720

      Accumulated depreciation on right-of-use assets

       

      –15,462

       

      –5,807

      Total right-of-use assets

       

      123,829

       

      127,913

      The corresponding lease liabilities have the following maturity structure:

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Due within 1 year

       

      9,895

       

      5,986

      Due between 1 and 5 years

       

      38,117

       

      43,556

      Due in more than 5 years

       

      81,067

       

      80,268

      Total recognised lease liabilities

       

      129,079

       

      129,810

    • 8 Other current liabilities

      (CHF 1,000)

       

      31.12.2020

       

      31.12.2019

      Other current liabilities to third parties

       

      34,427

       

      84,122

      Other current liabilities to employee pension funds

       

      2,486

       

      2,559

      Total other current liabilities

       

      36,913

       

      86,681

      At the reporting date, other current liabilities to employee pension funds comprised outstanding liabilities to the BVK Employee Pension Fund of the Canton of Zurich.

    • 9 NON-CURRENT FINANCIAL LIABILITIES

       

       

      31.12.2020

       

       

       

       

       

       

       

       

       

       

      Nominal value

       

      Duration

       

      Interest rate

       

      Early amortisation

       

      Interest payment date

       

       

      (CHF 1,000)

       

       

       

       

       

       

       

       

      Debenture (2023)

       

      400,000

       

      2013 – 2023

       

      1.500% 

       

      no

       

      17.4.

      Debenture (2024)

       

      300,000

       

      2020 – 2024

       

      0.700% 

       

      no

       

      22.5.

      Debenture (2027)

       

      200,000

       

      2020 – 2027

       

      0.100% 

       

      no

       

      30.12.

      Debenture (2029)

       

      350,000

       

      2017 – 2029

       

      0.625% 

       

      no

       

      24.5.

      Debenture (2035)

       

      400,000

       

      2020 – 2035

       

      0.200% 

       

      no

       

      26.2.

      Total non-current financial liabilities

       

      1,650,000

       

       

       

       

       

       

       

       

      External financing is subject to standard guarantees and covenants, which were complied with as at the reporting date. In addition, unused credit facilities at the reporting date amounted to a total of CHF 87.9 million (2019: CHF 224.1 million).

    • 10 Provision for aircraft noise

      (CHF 1,000)

       

      2020

       

      2019

      Balance as at 1 January

       

      473,368

       

      468,428

      Change in provision for aircraft noise

       

      –12,846

       

      4,940

      Balance as at 31 December

       

      460,522

       

      473,368

      of which current (planned payment within 1 year)

       

      32,139

       

      27,483

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

       

      428,383

       

      445,885

      For information on the reporting of noise-related data in the financial statements in accordance with the Swiss Code of Obligations, see also Reporting of noise-related costs in the financial statements in the notes to the financial statements.

    • 11 SHARE CAPITAL AND CAPITAL CONTRIBUTION RESERVES

      The share capital of Flughafen Zürich AG amounting to CHF 307,018,750 is composed of 30,701,875 fully paid-up registered shares with a par value of CHF 10.

      At the reporting date, the capital contribution reserves remained unchanged from the 2019 figure of CHF 117.0 million.

    • 12 Treasury shares

      (Number of shares)

       

      2020

       

      2019

      Balance as at 1 January

       

      3,133

       

      1,655

      Acquisitions (at applicable market price)

       

      9,568

       

      8,290

      Allocation to management, employees and third parties 1)

       

      –8,650

       

      –6,812

      Balance as at 31 December

       

      4,051

       

      3,133

      1) See also note 17, Equity interests of members of the Management Board, other members of management and employees.

      In the reporting period, 9,568 registered shares were purchased at the market price (2019: 8,290 registered shares). Treasury shares are distributed to members of the Management Board and other members of management under the bonus programme. They are used primarily for this participation programme. In addition, Flughafen Zürich AG gives those employees who have completed their first year of service a one-off gift in the form of one share free of charge.

    • 13 Contingent liabilities

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

      Depending on future and final-instance legal judgements, especially with respect to the southern approaches, in particular the new noise-related liabilities, but also the old ones, may in future be subject to substantial adjustments, which would also require adjustments to the noise-related costs recognised as assets and liabilities in the balance sheet. At the present time, it is not possible to reliably estimate the total costs to capitalise as an intangible asset from the right of formal expropriation, the resulting amortisation or the corresponding provision.

      Flughafen Zürich AG and Swiss Life AG are jointly and severally liable to third parties for the liabilities of the co-ownership structure the Circle and the ordinary partnership the Circle.

    • 14 Net reversal of hidden reserves

      As in the previous year, no hidden reserves were reversed in financial year 2020.

    • 15 MAJOR SHAREHOLDERS

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

       

       

      2020

       

      2019

      Canton of Zurich

       

      33.33% 

       

      33.33% 

      City of Zurich

       

      5.00% 

       

      5.00% 

    • 16 SHAREHOLDINGS OF THE BOARD OF DIRECTORS

      As at the reporting date, members of the Board of Directors and related parties held the following number of shares:

       

       

       

       

      Number of shares as at

       

      Number of shares as at

      Name

       

      Function

       

      31.12.2020

       

      31.12.2019

      Andreas Schmid

       

      Chairman

       

      11,115

       

      11,115

      Eveline Saupper 

       

      Vice Chairwoman; Chairwoman Nomination & Compensation Committee

       

      675

       

      675

      Vincent Albers

       

      Member

       

      2,517

       

      2,517

      Guglielmo L. Brentel

       

      Member

       

      309

       

      309

      Josef Felder

       

      Member; Chairman Audit & Finance Committee

       

      25,200

       

      25,100

      Stephan Gemkow

       

      Member; Chairman International Business Committee

       

      100

       

      100

      Corine Mauch

       

      Member

       

      0

       

      0

      Carmen Walker Späh

       

      Member; Chairwoman Public Affairs Committee

       

      5

       

      5

      Total

       

       

       

      39,921

       

      39,821

    • 17 EQUITY INTERESTS OF MEMBERS OF THE MANAGEMENT BOARD, OTHER MEMBERS OF MANAGEMENT AND EMPLOYEES

      As part of the performance-related remuneration awarded to members of the Management Board and other members of management, 2,885 shares (2019: 2,245 shares) worth CHF 332,641 (2019: CHF 389,508) were distributed to members of the Management Board and 5,618 shares (2019: 4,429 shares) worth CHF 647,755 (2019: CHF 768,432) to other members of management in the reporting period.

      As at the reporting date, members of the Management Board and related parties held the following number of shares:

       

       

      Number of shares as at

       

      Number of shares as at

      Name

       

      31.12.2020

       

      31.12.2019

      Stephan Widrig

       

      6,693

       

      5,572

      Lukas Brosi

       

      1,484

       

      1,043

      Stefan Gross

       

      1,301

       

      860

      Daniel Scheifele

       

      1,318

       

      877

      Stefan Tschudin

       

      859

       

      418

      Total

       

      11,655

       

      8,770

      In addition, Flughafen Zürich AG gives those employees who have completed their first year of service a one-off gift in the form of one share free of charge. In the reporting period, 147 shares (2019: 138 shares) worth CHF 19,232 (2019: CHF 24,356) were handed out in this context.

    • 18 Significant events after the reporting date

      The Board of Directors authorised the 2020 financial statements in accordance with the provisions of the Swiss Code of Obligations (CO) for issue on 11 March 2021. These also have to be approved by the General Meeting of Shareholders.