Fraport AG Annual Report 2013

Plain-text annual report

Annual Report 2013 Frankfurt Airport behind the Scenes 3 1 0 2 t r o p e R l a u n n A t r o p a r F Fraport Group At a Glance The Fraport Group operates internationally at 13 airports and belongs to the world’s leading airport operators. The Group’s main site is Frankfurt Airport, one of the world’s major air traffic hubs. Divided into four segments, Fraport had a workforce of more than 20,000 employees and generated revenue of € 2.56 billion in 2013. Group EBITDA stood at € 880.2 million, and the Group result was € 235.7 million. Listed since 2001, the parent company of the Fraport Group, Fraport AG, is headquartered in Frankfurt am Main. Financial performance indicators € million Revenue EBITDA EBIT EBT Group result Profit attributable to shareholders of Fraport AG Earnings per share (basic) (€) Year-end closing price of the Fraport share (€) Dividend per share 1) (€) Operating cash flow Free cash flow Total assets Shareholders’ equity Group liquidity Net financial debt Return on revenue (%) Return on shareholders’ equity (%) EBITDA margin (%) EBIT margin (%) ROCE (%) ROFRA (%) Gearing ratio (%) Non-financial performance indicators Global satisfaction (Frankfurt) (%) Punctuality rate (Frankfurt) (%) Baggage connectivity (Frankfurt) (%) Equipment availability (Frankfurt) (%) Employee satisfaction 2) Total number of work accidents Employees Average number of employees 1) Proposed dividend (2013). 2) No employee satisfaction survey took place for the 2012 fiscal year. 2013 2012 Change in % 2,561.4 2,442.0 880.2 528.1 340.7 235.7 221.0 2.40 54.39 1.25 574.8 73.1 9,523.4 3,098.8 1,486.3 2,975.4 13.3 7.5 34.4 20.6 8.9 9.5 101.3 2013 80 82.3 98.4 94.8 3.02 1,346 2013 20,947 848.7 496.0 364.1 251.5 238.2 2.59 43.94 1.25 553.0 –162.4 9,640.6 2,948.2 1,663.1 2,934.5 14.9 8.5 34.8 20.3 8.7 9.6 104.9 2012 80 80.3 98.2 95.0 – 1,445 4.9 3.7 6.5 – 6.4 – 6.3 – 7.2 – 7.3 23.8 0.0 3.9 – –1.2 5.1 –10.6 1.4 – – – – – – – Table 1 Change in % – – – – – – 6.9 Table 2 2012 Change in % 20,963 – 0.1 Table 3 Fraport Segments Aviation The Aviation segment includes airside and terminal management as well as corporate safety and security at the Frankfurt site. The growth in traffic and the increase in airport charges boosted revenue by 2.6 % to € 845.2 million in the previous fiscal year. With a workforce of 6,194 employees the segment achieved EBITDA of € 205.4 million. Aviation € million Revenue EBITDA EBITDA margin EBIT ROFRA Average number of employees 2013 2012 Change in % 845.2 205.4 24.3 % 88.1 4.0 % 6,194 823.4 201.9 24.5 % 79.6 3.9 % 6,298 Retail & Real Estate The Retail & Real Estate segment consists of retailing activities, parking facility and real estate management at Frankfurt Airport. In the fiscal year 2013 Pier A-Plus in particular, which was inau- gurated in October 2012, boosted revenue and EBITDA. With a workforce of 648 employees, the segment generated revenue of € 469.0 million and EBITDA of € 350.7 million. Retail & Real Estate € million 2013 2012 Revenue EBITDA EBITDA margin EBIT ROFRA Average number of employees 469.0 350.7 74.8 % 267.9 15.0 % 648 452.9 335.2 74.0 % 252.8 15.5 % 629 Ground Handling The core business of the Ground Handling segment comprises all services dealing with passengers, aircraft and cargo. With a workforce of 9,017 employees, the most staff-intensive seg- ment at the Frankfurt site achieved revenue growth of 1.1 % to € 656.2 million in the previous fiscal year, thanks to the growth in traffic and the increase in infrastructure charges. EBITDA for the segment was € 38.2 million. Ground Handling € million 2013 2012 Revenue EBITDA EBITDA margin EBIT ROFRA Average number of employees 656.2 38.2 5.8 % – 2.3 – 0.4 % 9,017 649.3 37.8 5.8 % –1.1 – 0.2 % 8,924 External Activities & Services The External Activities & Services segment comprises the Group companies outside the Frankfurt site and auxiliary services in Frankfurt, including IT and facility management in particular. The growth in foreign companies was the main factor behind an increase in revenue of 14.4 %. With revenue of € 591.0 million, the segment posted EBITDA of € 285.9 million in fiscal year 2013. External Activities & Services € million 2013 2012 Revenue EBITDA EBITDA margin EBIT ROFRA Average number of employees 591.0 285.9 48.4 % 174.4 14.0 % 5,088 516.4 273.8 53.0 % 164.7 15.7 % 5,112 s t n e m g e S t r o p a r F d n a p u o r G t r o p a r F 2.6 1.7 – 10.7 – –1.7 Table 4 Change in % 3.6 4.6 – 6.0 – 3.0 Table 5 Change in % 1.1 1.1 – – – 1.0 Table 6 Change in % 14.4 4.4 – 5.9 – – 0.5 Table 7 About this Report The present Annual Report enables Fraport to render account for the fiscal year 2013. The data and comments concerning the asset, financial and earnings position have been prepared in compliance with the accounting and disclosure standards to be applied to the fiscal year 2013. The disclosures contained in the Business Outlook also take the accounting standards to be applied as from January 1, 2014 into consideration and can be found from page 84 onwards of the Report. To increase the currency of the Report, Fraport has taken into consideration relevant disclosures concerning events that occurred up to the Responsibility Statement and Auditor’s Report by PricewaterhouseCoopers AG on March 4, 2014. The Annual Report is published in German and English. 1 To our Shareholders 3 Consolidated Financial Statements Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Consolidated Statement of Changes in non-current Assets Segment Reporting Group Notes Notes to the Consolidation and Accounting Policies Notes to the Consolidated Income Statement Notes to the Consolidated Financial Position Notes to the Segment Reporting Notes to the Consolidated Statement of Cash Flows Other Disclosures 4 Further Information Responsibility Statement Auditor’s Report Seven-Year Overview List of Graphics and Tables Glossary Financial Calendar 2014 Traffic Calendar 2014 Imprint 92 93 94 95 96 98 100 102 102 120 128 154 155 156 194 195 196 198 200 C5 C5 C5 Letter of the CEO The Fraport Executive Board Report of the Supervisory Board Statement on Corporate Governance and Corporate Governance Report 2 Group Management Report Overview of Business Development Situation of the Group Operating Activities Structure Strategy Control Legal Disclosures Remuneration Report Economic Report General Statement of the Executive Board Economic and industry-specific Conditions Significant Events Business Development Results of Operations Segments Asset and Financial Position Value Management Non-financial Performance Indicators Employees Research and Development Share and Investor Relations Significant Events after the Balance Sheet Date Outlook Report General Statement of the Executive Board Risk and Opportunities Report Business Outlook 4 8 10 16 24 26 26 26 29 32 35 36 44 44 44 45 46 48 50 53 59 60 61 63 63 67 67 67 67 84 Aviation Page 2 Retail & Real Estate Page 22 Frankfurt Airport behind the Scenes With 58 million passengers and more than two million metric tons of air freight and air mail handled, Frankfurt Airport is one of the largest passenger and cargo airports in the world. While passengers only experience the airport processes that are visible to them, such as check-in or security control, Fraport and its business partners provide a much broader range of services “behind the scenes” to ensure a seamless traveling experience. Some of these processes are presented to you on the section dividers of this Annual Report. You can also get an idea of further Fraport processes on site during a tour of the airport and experience the fascinating world of the airport live. Ground Handling Page 90 External Activities & Services Page 192 1 l s r e d o h e r a h S r u o o T t r o p e R t n e m e g a n a M p u o r G s t n e m e t a t S l a i c n a n F i d e t a d i l o s n o C n o i t a m r o f n I r e h t r u F Group Management Report 2 Fraport Annual Report 2013 To our Shareholders Fraport Annual Report 2013 To our Shareholders 3 3 Aviation A good 17,000 airfield lights... In the previous fiscal year about 473,000 aircraft took off and landed at Frankfurt. This equated to about 1,300 daily aircraft movements. Seamless airport operations would be impossible without the use of about 17,000 airfield lights that mark the ways between the take-off and landing runway system and the terminal. To ensure that the system is always ready for use, Fraport maintains the airfield lights on an as-required and cyclical basis. In addition to a computer-controlled system, which reports defective halogen or LED lamps, Fraport employees check that the airfield lights are functioning by covering the take-off and landing runway system on a regular basis. l s r e d o h e r a h S r u o o T t r o p e R t n e m e g a n a M p u o r G s t n e m e t a t S l a i c n a n F i d e t a d i l o s n o C n o i t a m r o f n I r e h t r u F Group Management Report 2 Fraport Annual Report 2013 To our Shareholders ...with uninterrupted energy supply Fraport monitors the uninterrupted energy supply of Frankfurt Airport on a centralized basis and ensures this by means of a redundantly configured power supply system. Even if the power supply system fails, Fraport can guarantee an energy supply to the take-off and landing runway system by using several oversized diesel motors. Direct refueling of the motors, whose tanks hold about 40,000 liters of diesel, ensures that airport operations can be constantly maintained in an emergency. Fraport requires about 600 million kilowatt hours annually to operate the Frankfurt site. Fraport Annual Report 2013 To our Shareholders 3 3 Group Management ReportTo our Shareholders4 To our Shareholders / Letter of the CEO Dr Stefan Schulte Chairman of the Executive Board Fraport AG Fraport Annual Report 2013To our Shareholders / Letter of the CEO 5 Letter of the CEO Your company has performed well in the past fiscal year. After a difficult start to the year with declining passenger numbers at our main site in Frankfurt, a good summer season and solid booking numbers in the final months of the fiscal year helped us to achieve an increase in passengers of almost one percent to more than 58 million. The cargo tonnage handled in Frankfurt also developed favorably, increasing to almost 2.1 million metric tons. Frankfurt Airport was thus the largest cargo airport in Europe last year, ahead of the previous front runner Paris-Charles de Gaulle. Outside of Frankfurt Airport, our Group airports were also doing well. I would like to high- light in particular our investment at Lima Airport, which continued to benefit from the country’s economic prosperity and the upturn in tourism. Almost 15 million passengers have meant that the site’s growth in percentage terms was again in double digits. Our airport investment at Antalya also saw significant passenger growth, welcoming around seven percent more passengers notwithstanding the strong result in the previous year. Over the past fiscal year we also laid the foundations for future growth in our investments in St. Petersburg, Varna and Burgas. The opening of new terminals at those three sites means that the investments now have sufficient capacity to accommodate the expected traffic growth. The Group-wide positive traffic development was also reflected in the financial performance indicators of the fiscal year 2013. The important operating key figures of Group EBITDA, which amounted to around 880 million Euros, and Group EBIT, which amounted to a good 528 million Euros, both exceeded the previous year’s figures by more than 30 million Euros. Due to the worsening of the Group financial result which had already been forecasted at the start of the fiscal year, the Group result in 2013 was almost 16 million Euros lower than the previous year figure at around 236 million Euros. The causes of this included among others high non-recurring income in the previous year within the financial asset management. Group Management ReportTo our ShareholdersFraport Annual Report 20136 To our Shareholders / Letter of the CEO Despite the decreasing Group result, we will be proposing an unchanged dividend of 1.25 Euro per share to you at our Annual General Meeting at the end of May this year. This would be equivalent to a pay-out ratio of around 52 percent of the underlying Group result. Aviation market in Europe remains under pressure Dear Shareholders, the aviation market in Europe continues to be characterized by high intensity of competition. This is caused by various factors such as the persistently weak macroeconomic environment in Europe, price-sensitive demand, the continuing success of so-called low-cost providers and the undiminished high level of growth of new competitors from the Middle East. In this environment, the German aviation tax and the emissions trading scheme which currently only applies to flights within the European Union additionally comprise considerable competitive disadvantages for the domestic aviation industry. Your company nevertheless performed well at Frankfurt Airport in 2013, despite these difficult circumstances, and also expects further passenger and cargo growth for 2014. As our economic system becomes increasingly collaborative on both a national and international level, it requires excellent mobility options for road, rail and air. With around 300 destinations, Frankfurt Airport is Germany’s “gate to the world”. At the same time we are seeing greater sensitization amongst the population to sources of noise, irrespective of the carrier in question. That is why in 2013, we, together with our partners in the “Alliance for Noise Abatement”, also gave high priority to working on further reducing the impact of aircraft noise within the framework of the legally, technically and operationally feasible. For example, we have decided to invest in a new satellite-supported ground-based augmentation system (GBAS) at Frankfurt Airport. If aircraft have corresponding technical equipment and authorization is granted by the supervisory authorities, GBAS will mean that aircraft can also land on the south and center runways at a raised approach angle of 3.2 degrees.In addition, we are giving the airlines further commercial incentives to fly the passenger growth at Frankfurt Airport with low-noise aircraft with our “FRAConnect” program. Outlook for 2014 Despite the recent positive traffic development, 2014 will again be a challenging year for your company. In view of the competitive environment, we will continue to invest in a more customer-friendly layout of our airport at the Frankfurt site. At the same time, we need to further speed up our processes and make them more efficient without lowering our sights regarding high quality. Fraport Annual Report 2013To our Shareholders / Letter of the CEO 7 Expressed in figures, we are expecting passenger growth of two to three percent at the Frankfurt site for the current fiscal year and continuing positive development at Group airports. With respect to financial performance, we expect a Group EBITDA of between approxi- mately 780 and some 800 million Euros and Group EBIT to develop towards up to around 500 million Euros for the 2014 fiscal year. Compared to the aforementioned figures for fiscal year 2013, at first glance this looks like a decrease. However, this is solely due to a changed accounting standard which has to be applied from fiscal year 2014 onwards. This standard means that as of January 1, 2014, there will no longer be the option to consolidate joint ventures proportionately in Group accounting, which in our case particularly affects our investment in Antalya Airport. The result from Antalya will from then on only be reported in the Group’s financial result, which will lead to a distortion of the figures reported in the current fiscal year. If we had already applied this accounting standard to the figures for the 2013 fiscal year, the corresponding comparative figure for EBITDA would have been around 733 million Euros and the comparative figure for EBIT would have been 439 million Euros. The forecast for both figures for 2014 is accordingly around 40 to 60 million Euros higher than the adjusted figures for fiscal year 2013. We also expect a positive change in the Group result compared to 2013. This growth will also be in 2014 only possible through the dedication and great commitment of our employees, and I would like to take this opportunity to thank them on behalf of the whole Executive Board. We would also like to thank you, our esteemed shareholders, for the trust you have placed in us and for the open dialog. Let’s shape Fraport’s future and face the challenges which lie ahead of us together. Sincerely yours, Stefan Schulte Group Management ReportTo our ShareholdersFraport Annual Report 20138 To our Shareholders / The Fraport Executive Board The Fraport Executive Board The strategic and operational responsibility for Fraport AG and its worldwide Group companies lies with the Executive Board. In the previous fiscal year the Fraport Executive Board comprised five members: Dr Stefan Schulte (Chair), Anke Giesen, Michael Müller, Peter Schmitz and Dr Matthias Zieschang. The appointment of Executive Board members is the responsibility of the company’s Supervisory Board. The Annual General Meeting formally approves the Executive Board’s actions. Fraport Annual Report 2013To our Shareholders / The Fraport Executive Board 9 The Fraport Executive Board (from left to right) Michael Müller Executive Director Labor Relations Born in 1957 Appointed until September 30, 2017 Dr Matthias Zieschang Executive Director Controlling and Finance Born in 1961 Appointed until March 31, 2017 Dr Stefan Schulte Chairman of the Executive Board Born in 1960 Appointed until August 31, 2019 Anke Giesen Executive Director Ground Handling Born in 1963 Appointed until December 31, 2017 Peter Schmitz Executive Director Operations Born in 1950 Appointed until August 31, 2014 Group Management ReportTo our ShareholdersFraport Annual Report 20131 0 To our Shareholders / Report of the Supervisory Board Karlheinz Weimar Chairman of the Supervisory Board Fraport AG Fraport Annual Report 2013To our Shareholders / Report of the Supervisory Board 11 Report of the Supervisory Board The Supervisory Board performed all the tasks incumbent on it under law, the company statutes and rules of internal procedure and continuously monitored the management of the company in fiscal year 2013. The Supervisory Board obtained regular, timely and comprehensive information from the Executive Board, in writing and orally, on the proposed business policies, fundamental questions concerning future management and corporate planning, the situation and de- velopment of the company and the Group as well as significant business transactions, and consulted with the Executive Board on these matters. Deviations in the development of business from the planning were explained in detail to the Supervisory Board. Based on the reports of the Executive Board, the Supervisory Board has extensively discussed the business transactions of significance to the company. The Supervisory Board harmonized the strategic alignment of the company with the Executive Board. In addition, the Chairman of the Executive Board maintained regular contact with the Chairman of the Supervisory Board and informed him about the current developments concerning the business situation as well as significant business transactions. The Supervisory Board was directly involved in all the decisions that were of fundamental importance to the company. Where required by law, the company statutes or rules of internal procedure, the Supervisory Board voted on the relevant proposals made by the Executive Board after having thoroughly examined and consulted on those matters. During the reporting period, the Supervisory Board convened five ordinary meetings, one strategy session and one special meeting. On average for all of the meetings, around 98 % of the members took part in the meetings. No member of the Supervisory Board took part in fewer than half of the meetings of the Board. Focal points of the consultation of the Supervisory Board The business development of the Fraport Group and its Group companies, with a particular emphasis on the traffic and earnings development at Frankfurt Airport, were the subject of regular discussions by the Supervisory Board. The improved development of the European economy and the recovery in passenger numbers played a prominent role over the course of the year. Besides this regular reporting, the following matters were extensively discussed in particular: > In 2013, the Supervisory Board also obtained extensive information on various measures and initiatives to improve active and passive noise abatement. As part of the “alliance for noise abatement” concluded already in February 2012, 19 measures for active noise abatement were defined and will be implemented successively, with regular reports on their effectiveness being submitted to the Supervisory Board. Additional spreading of noise-based airport charges was implemented at the beginning of 2013 in order to give airlines greater incentive to use quieter air planes. Also the current implementation status of the voluntary real estate program, CASA, the application deadline for which has been extended to October 31, 2014, formed part of the regular reporting to the Supervisory Board. In addition under particular focus was the program to secure roofing from gusts of wind caused by wake turbulences, under which the owners of approximately 3,000 buildings beneath the arriving and departing flight paths can make a claim for the securing of roof tiles. > In addition, more detailed information was provided about the plans for Terminal 3 on the south side of Frankfurt Airport. Alternatives to the construction of the terminal were discussed, the demand forecast was critically reviewed and the processes in the existing terminals were reviewed. Here, the Supervisory Board was particularly pleased to note the improvement of passenger satisfaction as a result of the “Great to have you here!” service initiative. Additionally, waiting times at security controls at year-end were critically attended. Group Management ReportTo our ShareholdersFraport Annual Report 20131 2 To our Shareholders / Report of the Supervisory Board > As a continuation of the internationalization strategy of the Group, the Supervisory Board agreed to the participation in the tender process for the new international Istanbul Airport at its special meeting held on April 29, 2013. Furthermore, it authorized the investment and capital expenditure committee with the final decision regarding the tender process in Rio de Janeiro after thorough prior consultation. The committee agreed to submit an offer for the concession at its special meeting on November 8, 2013. > With respect to the investment in Manila, the Supervisory Board continued to support the efforts in and out of court in reaching an appropriate compensation agreement with the Philippine government for the capital expenditure made in connection with the construction of Terminal 3 at Manila Airport. The progress of the ICSID arbitration proceedings in Washington, for which hearings took place in the fall of 2013, remained the subject of particular focus. > In addition, the Supervisory Board dealt with the financial statements and management reports of the company and the Group as at December 31, 2012, the agenda and the including resolution proposals for the Annual General Meeting (AGM) on May 31, 2013, as well as the 2012 Annual Report. Furthermore, the Supervisory Board has decided to pro- pose to the AGM that PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, be appointed as the auditor for fiscal year 2013 in accordance with the scheduled cyclical change of auditors. Furthermore, the Supervisory Board made specific decisions on the following subjects, among others: > As a continuation of its previous resolution, the Supervisory Board agreed to implement the expansion of the south of Frankfurt Airport in accordance with the zoning decision and the current version of the preliminary plan. > It authorized the executive committee’s expansion from six to eight members and, on its recommendation with regard to Section 4.2.3 (2) of the German Corporate Governance Code (GCGC), agreed to the introduction of upper amount limits for the variable remuneration elements of the Executive Board’s remuneration, on which no agreement had thus far been made. The Executive Board’s remuneration now specifies upper amount limits as a whole and with respect to all variable remuneration. > It also approved the 2014 Business Plan. As part of its strategy session in mid-June 2013, the Supervisory Board also addressed in more detail the challenges arising for Frankfurt Airport as a result of the deteriorating market environment in particular. Measures for structural counteraction in view of the negative traffic development in the first six months of 2013 were also discussed. Further topics of discus- sion were freight as a major factor for success for the site and the critical compliance with the planned revised version of EU ground handling services guidelines. Work of the committees The Supervisory Board continued its successful work with the committees it had formed to increase the efficiency of its work and to prepare for the Supervisory Board meetings. In individual appropriate cases and in accordance with law, decision-making powers of the Supervisory Board were granted to the committees. The chairpersons of the committees provided regular reports at the next Supervisory Board meeting to the plenum of the Supervisory Board on the work of the committees. The composition and responsibilities of the individual committees can be found in the chapter “Statement on Corporate Governance and Corporate Governance Report” as well as on the Group’s website www.fraport.com under the section The Fraport Group. The finance and audit committee met seven times during the reporting period and discussed significant business transactions, the annual and consolidated financial statements, the management reports and the recommendation for the appropriation of profit to the AGM, respectively, the amount of the dividend. Representatives of the auditor often participated in the meetings on individual agenda items. The finance and audit committee prepared the determination of the focal points of the 2013 audit for the Supervisory Board. The half-year interim report and the other interim reports were discussed in detail prior to their publication. Comments were also made on the 2014 Business Plan of Fraport AG (prepared in accordance with the German Commercial Code, HGB) and the 2014 Group Plan (prepared in accordance with IFRS). Furthermore, the finance and audit committee dealt with the issuance of awarding the audit mandate to the auditor and made a proposal to the plenum for the election of the auditor for fiscal year 2013. In this context, the audi- tor’s confirmation of independence pursuant to Section 7.2.1 of the GCGC was obtained, the qualification of the auditor monitored and the remuneration of same discussed. Furthermore, the issue of mandates for non-audit-related services Fraport Annual Report 2013To our Shareholders / Report of the Supervisory Board 13 to the auditor was discussed. In accordance with the cyclical scheduled change of the auditor, it was proposed to the plenum to recommend PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt am Main, to the AGM as auditor for fiscal year 2013. Further focal points of the proceedings were asset and liability management as well as the regular supplementary report in accordance with Section 90 of the German Stock Corporation Act (AktG) to the consolidated financial statements and/ or the consolidated interim financial reports. In addition, the committee discussed the risk management, the internal control system, the internal audit system as well as the compliance management system in detail and ensured that the Supervisory Board was appropriately informed. In its four ordinary meetings as well as two special meetings, the focal points of the discussions of the investment and capital expenditure committee in fiscal year 2013 were again the further business development of the investment business and the area of capital expenditure. With regard to activities abroad, the committee expressed its support for participation in the tender process for the new international Istanbul Airport and therefore prepared the corresponding resolution of the entire Supervisory Board in its first special meeting on April 26, 2013. In addition, as already mentioned, it agreed to submit an offer for the concession regarding Rio de Janeiro Airport based on the corresponding authorization by the Supervisory Board as part of its second special meeting on November 8, 2013. The existing Group companies, with Antalya, Lima, St. Petersburg as well as Varna and Burgas in particular focus, were also part of regular reporting. The development of national Group companies operating mainly at the Frankfurt site were also considered, however. Furthermore, the committee assisted with the capital expenditure at the Frankfurt am Main site and commented on the investment plan in the context of the 2014 Business Plan. The human resources committee met four times in fiscal year 2013 and was regularly involved with the topics related to human resources within the Group. Alongside the development of the workforce, the topics of vocational training, current wage issues in the Group and, on federal level, the restructuring of apron supervision, health management, remuneration for senior managers in the Group and the social and employment regulations in the EU draft of ground handling services guidelines also formed part of the discussion. Through the “HR Top Executives” department, managed by Ms. Giesen since the start of the year 2013, further topics such as the remuneration system for senior executives, development of top executives, the concept of the reintegration of expatriate employees returning abroad as well as the establishment of lean management were also focal points of the proceedings. The executive committee met five times during the reporting period. It dealt with Executive Board matters arising in fiscal year 2013 and, first of all, the determination of the performance-related remuneration components for the past fiscal year. In addition, the executive committee prepared the resolutions of the Supervisory Board on the reappointment of the Chairman of the Executive Board, Dr Schulte, as well as the adjustment of the Executive Board’s remuneration, in particular with regard to the most recent recommendation of the GCGC Government Commission. The nomination committee formed for preparing for the new election of shareholder representatives met twice in the 2013 fiscal year: once to prepare the candidate list for the AGM on May 31, 2013, in which all shareholder representatives cyclically stood for election, and once to provide advice regarding the succession of Mr. Stefan H. Lauer after his leaving at the end of 2013. It was not necessary to convene the mediation committee in accordance with the German Co-Determination Act in fiscal year 2013. Corporate Governance and statements of compliance The Executive Board and the Supervisory Board have addressed in detail the further developments of the GCGC that were presented by the Government Commission on May 13, 2013. In accordance with the recommendation recently included in the code, that the remuneration for Executive Board members should be indicated inclusive of upper amount limits for the variable remuneration elements (Section 4.2.3 (2), sentence 6 of the GCGC), the incumbent Executive Board members agreed on December 17, 2013 to supplementary upper amount limits complying fully to the recommendation, in addition to those upper amount limits already in existence. Group Management ReportTo our ShareholdersFraport Annual Report 20131 4 To our Shareholders / Report of the Supervisory Board Fraport AG is therefore in alignment with the recommendations of the GCGC Government Commission and will continue to be in future. In continuation of examining the efficiency of its activities from the previous year, the Supervisory Board commissioned an external advisor with the evaluation of its statutes and rules of internal procedure in fiscal year 2013, particularly with regard to the adequacy of the defined numerical limits that trigger approval or reporting obligations. Ultimately, it commis- sioned the Corporate Governance work group (formed of its own members) to develop specific proposals to the plenum. Further details on Corporate Governance as well as the text of the current statement of compliance pursuant to Section 161 of the AktG made by the Executive Board and Supervisory Board on December 17, 2013 can be found in the chapter “Statement on Corporate Governance and Corporate Governance Report” starting on page 16. The Fraport code and the current and past statements of compliance can also be found on the Group’s website www.fraport.com under the section The Fraport Group. Conflicts of interest and their treatment In fiscal year 2013, there was no indication of the existence of potential conflicts of interest. Annual and consolidated financial statements PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft audited the annual financial statements of Fraport AG and the consolidated financial statements as at December 31, 2013 as well as the management report and Group management report and issued unqualified auditor’s reports. The Supervisory Board issued the audit mandate on January 20, 2014 in accordance with the resolution passed by the AGM on May 31, 2013. The annual financial statements and the management report were prepared and audited by the auditor in accordance with the regulations of the HGB applicable to large capital companies, the consolidated financial statements and the Group management report were prepared and audited by the auditor in accordance with IFRS as they apply in the EU. The consolidated financial statements and the Group management report meet the conditions for exemption from the preparation of consolidated financial statements in accordance with German law. The auditor established that an early risk warning system that meets the legal requirements and which makes it possible to identify at an early stage develop- ments that may put the continued existence of the Company at risk was in place. The documents mentioned as well as the proposal by the Executive Board for the utilization of profits have been sent to the Supervisory Board by the Executive Board without delay. The finance and audit committee of the Supervisory Board examined these documents extensively and the Supervisory Board reviewed them also personally. The audit reports of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft and the financial statements were available to all the members of the Supervisory Board, and were comprehensively dealt with in the accounting meeting of the Supervisory Board in the presence of the auditors who reported on significant results of their audit, and were available to respond to additional questions and provide further information. The chairwoman of the finance and audit committee provided in the meeting a comprehensive report on the treatment of the annual financial statements and the consoli- dated financial statements in the committee. The Supervisory Board approved the results of the annual audit. After the completion of the audit by the finance and audit committee and its own review, the Supervisory Board did not raise any objections. The Supervisory Board approved the annual financial statements prepared by the Executive Board; the annual financial statements were thus adopted. The Supervisory Board approved the proposal by the Executive Board to use the profit earmarked for distribution to pay a dividend of € 1.25 per no-par value share. The report prepared by the Executive Board on the relationships of Fraport AG with affiliated companies pursuant to Section 312 of the AktG was submitted to the Supervisory Board. The report concludes with the following statement by the Executive Board, which is also included in the management report: Fraport Annual Report 2013To our Shareholders / Report of the Supervisory Board 15 “The Executive Board declares that under the circumstances known to us at the time the legal transactions were con- ducted, Fraport AG received fair and adequate compensation for each and every legal transaction. During the reporting year, measures were neither taken nor omitted at the request of or in the interests of the State of Hesse and the City of Frankfurt am Main and their affiliated companies.” The auditor reviewed the report on the relationships with affiliated companies and issued the following opinion: “Based on our audit and the conclusions reached, we confirm that 1. the disclosures made in the report are correct, 2. the consideration paid by the company for the legal transactions referred to in the report was not unreasonably high.” The auditor participated in the discussions with the Supervisory Board on March 21, 2014 on the report regarding the relationships with affiliated companies and was available to the Supervisory Board to provide additional information. After conducting its own review, the Supervisory Board agreed with the assessment by the auditor and raised no objections to the statement by the Executive Board regarding the relationships with affiliated companies provided at the end of the report and included in the management report. Personnel particulars The term of office of all members of the Supervisory Board ended at the end of the AGM on May 31, 2013. In advance of the AGM, the following representatives of the employees were elected for the first time or reelected to the Supervisory Board in accordance with the specifications of the Co-Determination Act: Ms. Claudia Amier, Mr. Devrim Arslan, Mr. Hakan Cicek, Dr Roland Krieg, Mr. Mehmet Özdemir, Mr. Arno Prangenberg, Mr. Gerold Schaub, Mr. Hans-Jürgen Schmidt, Mr. Werner Schmidt and Mr. Edgar Stejskal. During the AGM, the following representatives of the shareholders were also elected for the first time or reelected to the Supervisory Board: City Treasurer Mr. Uwe Becker, Ms. Kathrin Dahnke, Lord Mayor Mr. Peter Feldmann, Dr Margarete Haase, Mr. Jörg-Uwe Hahn, Mr. Lothar Klemm, Mr. Stefan H. Lauer, State Secretary Mr. Michael Odenwald, Mr. Karlheinz Weimar and Prof Dr-Ing Katja Windt. In its constituent meeting on May 31, 2013, the Supervisory Board reelected Mr. Karlheinz Weimar as Chairman and Mr. Gerold Schaub as Vice Chairman. In addition, the competent trade registry court of the City of Frankfurt am Main appointed Mr. Karl Ulrich Garnadt to the Supervisory Board on February 10, 2014. Mr. Garnadt assumes the mandate of Mr. Stefan H. Lauer, who left the Supervisory Board on December 31, 2013. With regard to the Executive Board, on September 2, 2013, the Supervisory Board also agreed to the appointment of Dr Schulte as Chairman of the Executive Board with effect of September 1, 2014 for a further five years until August 31, 2019. The Supervisory Board also acknowledged Mr. Peter Schmitz’s intention not to extend his appointment as member of the Executive Board, which ends on August 31, 2014. Looking back on the 2013 fiscal year, which was successful despite a difficult environment in the European aviation industry, the Supervisory Board thanks the Executive Board and the company’s employees for their dedicated commitment in the interests of the company. Frankfurt am Main, March 21, 2014 Karlheinz Weimar (Chairman of the Supervisory Board) Group Management ReportTo our ShareholdersFraport Annual Report 20131 6 To our Shareholders / Statement on Corporate Governance and Corporate Governance Report Statement on Corporate Governance and Corporate Governance Report In the following statement on corporate governance, pursuant to Section 289a of the German Commercial Code (HGB) and corporate governance report pursuant to Section 3.10 of the German Corporate Governance Code (GCGC), the Executive Board – simultaneously for the Supervisory Board and in summary (see also Section 3.10 of the GCGC) – reports on the company’s management and the corporate governance of Fraport. The term “corporate governance” at Fraport means responsible corporate management and control, the objective of which is sustainable value creation. Good corporate governance has highest priority at Fraport. In this context, efficient collaboration between the Executive Board and the Supervisory Board is as important as protecting shareholders’ interests and maintaining open and transparent corporate communications. Fraport follows the national and international developments in this area and regularly modifies its own corporate code to the new standards of the GCGC. In accordance with Section 317 (2) sentence 3 of the HGB, the following disclosures under Section 289a of the HGB were not included in the annual audit by the auditor. Statement of compliance pursuant to Section 161 of the German Stock Corporation Act (AktG) On December 17, 2013, the Executive Board and the Supervisory Board of Fraport AG issued the following statement of compliance for the year 2013 in accordance with Section 161 of the AktG: “The last Compliance Statement was issued on December 14, 2012. Since then, Fraport AG has complied with and will con- tinue to comply with the recommendations made by the Government Commission on the German Corporate Governance Code in the code version dated May 15, 2012, and the amended version of May 13, 2013, with the following exception related to previous contractual agreements: The May 13, 2013, amended version of the German Corporate Governance Code (GCGC) included a new recommendation that the amount of compensation paid to members of the Executive Board should be capped, both overall and for individual compensation components (Section 4.2.3 paragraph 2 sentence 6 of the GCGC). The service contracts for the incumbent Executive Board members already provided for compensation caps, which however did not fully meet the requirements of the new GCGC recommendation. On December 17, 2013, amendment agreements including compensation caps complying fully with the GCGC (Section 4.2.3 paragraph 2 sentence 6) were concluded with the incumbent members of Fraport AG’s Executive Board.” The statement of compliance was promptly made permanently available to the shareholders on the company’s website at www.fraport.com in the section The Fraport Group. The new recommendation with respect to the content and future format of the remuneration report (Section 4.2.5 (3) of the GCGC) relates to fiscal years beginning after December 31, 2013. Accordingly, Fraport will comply with the new recom- mendation for the first time in fiscal year 2014. GCGC recommendations Fraport AG also voluntarily complies with the recommendations of the GCGC, solely with the following exceptions: Transmission of the Annual General Meeting via modern communication media (Section 2.3.3 of the GCGC). Fraport Annual Report 2013 To our Shareholders / Statement on Corporate Governance and Corporate Governance Report 17 Primarily for security reasons and personal privacy, Fraport published only the speeches of the Chairman of the Supervisory Board and the Chairman of the Executive Board at the beginning of the 2013 Annual General Meeting on the Internet. First-time appointment of members of the Executive Board (Section 5.1.2 (2) of the GCGC). All Executive Board members were initially appointed for a term of five years, indicating the company’s willingness to enter into a long-term arrangement. Furthermore, an initial term of five years represents the common practice among experienced professionals and is therefore in line with the expectations of many potential Executive Board members. Objectives for the composition of the Supervisory Board Pursuant to Section 5.4.1 of the GCGC, the Supervisory Board set the following unchanged objective for its composition already in fiscal year 2010: “Fraport AG is committed to forward-looking, equal opportunity cooperation across genders. It will continue to promote the employment of women according to qualification and skill at all levels and areas of responsibility in a targeted manner. This also applies to the Supervisory Board that aims to achieve a gender ratio in the coming years that reflects the gender ratio within the overall workforce.” The ratio of female employees to the total number of employees at Fraport AG (single entity) is 19.3 %. The Supervisory Board of Fraport AG comprises 20 members, with the number of female members currently at four. The number of female members fell intially from five to three in 2012. Furthermore, the former lord mayor Dr Petra Roth resigned from the Supervisory Board in 2013. At the Supervisory Board elections in 2013, however, the mandates of Dr Margarete Haase and Prof Dr-Ing Katja Windt were confirmed, and Kathrin Dahnke was elected to the Supervisory Board as a new female member. Together with the employee representative Claudia Amier, who was also newly elected by employees in 2013, the ratio of women on the Supervisory Board is now 20 % and has therefore reached the target level. In addition, there is an adequate number of members on the Supervisory Board who have international experience. When proposing candidates, the nomination committee and the Supervisory Board will continue to take the international experi- ence of Supervisory Board candidates appropriately into account. Furthermore, based on the new provision in Section 5.4.1 of the GCGC, the Supervisory Board decided in its meeting on December 14, 2012 that at least three independent shareholder representatives within the meaning of Section 5.4.2 of the GCGC should be members of the board. With Kathrin Dahnke, Dr Margarete Haase and Prof Dr-Ing Katja Windt, there are already today at least three independent shareholder representatives on the Supervisory Board. Notes on corporate governance practices Beyond the statutory provisions, Fraport AG utilizes the following corporate governance practices: Own corporate governance code The Supervisory Board of Fraport AG has adopted its own corporate governance principles for the company. The Fraport Corporate Governance Code describes the fundamental principles for the management and control of the company as well as the responsible corporate governance that the company has undertaken to uphold. Furthermore, it clarifies the material rights of shareholders. Group Management ReportTo our ShareholdersFraport Annual Report 2013 1 8 To our Shareholders / Statement on Corporate Governance and Corporate Governance Report The Fraport Corporate Governance Code is closely modeled after the GCGC and is regularly monitored and adapted where necessary in light of new legal regulations as well as revised national and international standards (last amended on December 17, 2013). It can be downloaded from the company website www.fraport.com in the section The Fraport Group. Values-based compliance At Fraport the issues of compliance and values management are brought together in a values-based compliance manage- ment system. The values management system helps to prevent and monitor corruption and has been an integral component of employees’ and executives’ employment contracts at Fraport since 2005. In past years it has been phased in at national and international Group locations in which an interest of at least 50 % is held. An efficient information and reporting system is an important tool for preventing violations. Consequently, Fraport AG introduced an electronic whistleblower system (BKMS®-System) in 2009, which is also being rolled out in the Group companies on an ongoing basis. In addition, Fraport has had an ombudsperson who confidentially receives and legally examines tips on serious legal violations since December 1, 2011. The central task of the ombudsperson (an external lawyer) is to confidentially receive tips on corporate crimes and inadmis- sible business practices and infringements that are detrimental to the company. In February 2013, the Executive Board expanded this well-implemented values management system with the adoption of two codes of conduct, one for employees and one for suppliers. These codes of conduct enable Fraport to anchor the company ever more firmly in corporate governance in terms of its long-standing commitment to comply with internationally accredited standards such as the principles of the UN Global Compact, OECD Guidelines and ILO Core Labor Standards. The Fraport Policy forms the umbrella for these commitments and describes the values-related basis of the Fraport Group’s corporate action. Structure and functioning of the management and control bodies For Fraport AG, a responsible, transparent corporate governance and control structure is the central foundation for creating value and trust. In accordance with the provisions of law, Fraport AG is subject to a “dual governance system”, which is achieved through strict separation of the personnel in the management and control bodies (two-tier board). While the Executive Board manages the company, the Supervisory Board supervises the Executive Board. The members of the Executive Board and the Supervisory Board work closely together in the interest of the company. The structure of the management and control bodies at Fraport AG is as follows: Executive Board The Executive Board of Fraport AG has comprised five members since January 1, 2013: the Chairman, Dr Stefan Schulte, Anke Giesen, Michael Müller, Peter Schmitz and Dr Matthias Zieschang. As management body, it conducts the business of the company. Within the framework of the stock corporation law, the Executive Board is bound by the company’s interests and corporate socio-political principles. Beyond this, the rules of procedure, which the Executive Board established for itself and presented to the Supervisory Board for approval, form the basis of its work. The schedule of responsibilities for the Executive Board, which governs the allocation of responsibilities, is also attached to the rules of procedure as an annex. Fraport Annual Report 2013 To our Shareholders / Statement on Corporate Governance and Corporate Governance Report 19 On this basis, the Executive Board reports to the Supervisory Board in a regular, timely and comprehensive manner concerning all relevant matters of business development, corporate strategy and possible risks. In addition, the Executive Board must have the prior approval of the Supervisory Board for several matters, particularly for the assumption of obligations above a value of € 5 million, to the extend such is not provided for in a business plan approved by the Supervisory Board. The length of the appointment of Executive Board members is geared toward the long-term and is – as already stated – as a rule five years. Remuneration of the Executive Board comprises fixed and performance-related components. A detailed schedule of the remuneration is provided in the remuneration report in the Group management report. The Executive Board usually meets weekly and constitutes a quorum if at least half of its members participate in the meeting. Resolutions are adopted by a simple majority of all the participating members of the Executive Board. In the case of a tie vote, the vote of the chairman is deciding. Supervisory Board The Supervisory Board of Fraport AG supervises the activities of the Executive Board. It is composed of an equal number of representatives of shareholders and employees and comprises 20 members. The ten shareholder representatives are elected by the AGM and the ten representatives of the employees are elected by the employees in accordance with the provisions of the German Co-Determination Act (MitbestG) for five years. The Supervisory Board has created rules of procedure, under which it has a quorum if – on the basis of a proper notice of meeting – at least half of its members participate in the voting in person or through submission of written votes. Resolutions are adopted with a simple majority unless otherwise mandated by law. In the event of a tie vote, the chairman of the Supervisory Board, who must be from among the shareholder representa- tives, is entitled to a second vote. Beyond that, the rules of procedure regulate, in particular, the appointment and powers of committees of the Supervisory Board. As a rule, the Supervisory Board meets four times a year (2013: seven times) and monitors the efficiency of its activities on a regular basis with respect to both their effectiveness and their appropriateness in view of new challenges. In its Report of the Supervisory Board, the Supervisory Board reviews its activities in the past fiscal year on an annual basis. A detailed schedule of its remuneration is included in the remuneration report in the Group management report. At the time of the adoption of the annual financial statements, the Supervisory Board was comprised as follows: Composition of the Supervisory Board Representatives of the shareholders Representatives of the employees Karlheinz Weimar (Chairman) Gerold Schaub (Vice Chairman) Uwe Becker Kathrin Dahnke Peter Feldmann Karl Ulrich Garnadt Dr Margarete Haase Jörg-Uwe Hahn Lothar Klemm Michael Odenwald Prof Dr-Ing Katja Windt Claudia Amier Devrim Arslan Hakan Cicek Dr Roland Krieg Mehmet Özdemir Arno Prangenberg Hans-Jürgen Schmidt Werner Schmidt Edgar Stejskal Table 8 Group Management ReportTo our ShareholdersFraport Annual Report 2013 2 0 To our Shareholders / Statement on Corporate Governance and Corporate Governance Report Committees of the Supervisory Board On the basis of statutory provisions and the provisions of its rules of procedure, the Supervisory Board has formed the following committees: Committees of the Supervisory Board Committee Functions Normal number of meetings Meetings 2013 Normal number of members Members Finance and audit com- mittee Investment and capital expenditure committee > Preparation of Supervisory Board resolutions in the area of 4 7 8 Dr Margarete Haase (Chair) finance and audit-related resolutions > Monitoring of the accounting process, the effectiveness of the internal control system, the risk management system, the in- ternal audit system, the audit of the accounts – particularly the independence of the external auditor and the auxiliary services rendered by the external auditor – and the compliance > Statement of opinion on the business and development plan, with the exception of the capital expenditure plan, the annual and consolidated financial statements, the management report and the Group management report, the audit report of the external auditor and other auditors, the proposal of the audit report for the Supervisory Board, the approval of the Executive Board’s actions and the awarding of the audit mandate to the auditor, the fees agreement and the determination of the focus of the audit Arno Prangenberg (Vice Chairman) Uwe Becker Kathrin Dahnke Lothar Klemm Dr Roland Krieg Hans-Jürgen Schmidt Edgar Stejskal > Preparation of resolutions relating to capital expenditure, 4 6 8 Jörg-Uwe Hahn (Chair) resolutions or decisions concerning the founding, acquisition and sale of Group companies and ongoing monitoring of the economic development of existing Group companies > Final decision to the extent that the obligation or entitlement of Fraport AG arises from an investment-related action is between € 5,000,000.01 and € 10,000,000 > Statement of opinion on the capital expenditure plan and on capital expenditure reporting Gerold Schaub (Vice Chairman) Claudia Amier Peter Feldmann Lothar Klemm Werner Schmidt Edgar Stejskal Prof Dr-Ing Katja Windt Human resour- ces committee > Preparation of resolutions in the area of human resources > Statement of opinion, in particular, on the development of the number of workforce, fundamental issues relating to collective bargaining law, payment systems, employee investment plan, matters concerning company retirement plan Executive committee > Preparations for the appointment of members of the Executive Board and the conditions of employment contracts, including remuneration > Final decision concerning outside activities of members of the Executive Board which require the approval of the Supervisory Board 4 4 8 Claudia Amier (Chair) Jörg-Uwe Hahn (Vice Chairman) Devrim Arslan Uwe Becker Hakan Cicek Mehmet Özdemir Michael Odenwald Prof Dr-Ing Katja Windt As needed 4 8 Chairman of the Committee in accordance with Section 27 MitbestG > Preparation of a recommendation for the appointment or dismissal of members of the Executive Board, if the entire Supervisory Board does not conclude such decision As needed Nomination committee > Recommendation of suitable candidates to the Supervisory As needed Board for its recommendations to the AGM Supervisory Board Karlheinz Weimar (ex officio) Vice Chairman of the Supervisory Board Gerold Schaub (ex officio) Claudia Amier Peter Feldmann Dr Margarete Haase Jörg-Uwe Hahn Werner Schmidt Edgar Stejskal 4 Chairman of the Supervisory Board Karlheinz Weimar (ex officio) Vice Chairman of the Supervisory Board Gerold Schaub (ex officio) Devrim Arslan Lothar Klemm 3 Karlheinz Weimar Uwe Becker Dr Margarete Haase Table 9 0 1 Fraport Annual Report 2013 To our Shareholders / Statement on Corporate Governance and Corporate Governance Report 21 Shareholders and AGM The shareholders of Fraport AG exercise their rights in the company at the AGM and exercise their right to speak and to vote there. With sufficient time prior to the meeting, the shareholders are informed of business developments in the past year and the company’s forecasts through the management report. During the year, the shareholders are provided with comprehensive and timely information about current business developments through interim reports and other company publications on its website. The AGM of Fraport AG is held each year in the first six months of the fiscal year and makes decisions concerning the tasks assigned to it by law, such as the appropriation of profits, election and approval of the actions of the members of the Supervisory Board and approval of the actions of the Executive Board, the selection of the external auditor, amendments to the company statutes, and other tasks. The shareholders can exercise their right to vote in person or can authorize third parties to exercise their right to vote. Remuneration of the Executive Board and the Supervisory Board The disclosures on the essential features of the remuneration system as well as the disclosures on the remuneration of the Executive Board and the Supervisory Board can be found in a separate remuneration report. In compliance with Section 4.2.5 and Section 5.4.6 (3) of the GCGC, this is part of the Group management report. Acquisition or disposal of shares of the company Pursuant to Section 15a of the WpHG, management and persons closely related thereto are obliged by law to disclose the acquisition or disposal of shares of Fraport AG or any financial instruments related thereto, if the value of the transactions undertaken exceeds the sum of € 5,000 within one calendar year. The notifications in this respect are disclosed by Fraport AG without delay. Shareholdings of the bodies The total shareholdings of all members of the Executive Board and Supervisory Board are less than 1 % of the total number of shares issued by Fraport. Group Management ReportTo our ShareholdersFraport Annual Report 20132 2 Fraport Annual Report 2013 Group Management Report Fraport Annual Report 2013 Group Management Report 23 23 Retail & Real Estate About 300 businesses... It does not matter whether we are talking about a coffee bar or a high-end boutique, these days an airport without shopping and rest areas is unthinkable. Both Frankfurt terminals are currently home to about 300 businesses and food service facilities, including 22 duty free and travel value shops. Fraport does not operate its own shops, but develops and markets the spaces and optimizes the offer of concepts and brands. The key figure “net retail revenue per passenger” is therefore not the average amount spent by a passenger at Frankfurt, but the lease revenue earned by Fraport on these spaces. In 2013 this rose from 3.32 Euros to 3.60 Euros. t r o p e R t n e m e g a n a M p u o r G Consolidated Financial Statements 2 2 Fraport Annual Report 2013 Group Management Report ...with first-class logistics It is not only passengers who have to be subjected to a security control before their departure, this also applies to goods sold in the security area. As a result, for example the around 40,000 items on sale in the duty free and travel value shops are already checked at the main warehouse of the operator “Gebr. Heinemann” in Hamburg. Once they have been checked, these items are transported along the logistics chain to a temporary storage in Frankfurt and delivered from there underground to the shops at the airport. Thus, more than 100 roll containers are filled and emptied every day. Up to 200 roll containers are required on busy days. Fraport Annual Report 2013 Group Management Report 23 23 Consolidated Financial StatementsGroup Management Report2 4 Group Management Report / Overview of Business Development Group Management Report for the Fiscal Year 2013 Information about reporting statement, as well as the consolidated statement of financial position The presentation of the Group management report has changed in for 2012, were adjusted based on the retroactive application of IAS 19. comparison with the previous year due to the first-time application of The impact of the first-time application of IAS 19 with regard to partial German Accounting Standard 20 (GAS 20). The application of GAS 20 retirement and pension accounting is shown in the Group notes to does not have any impact on the presentation of the asset, financial this Annual Report (see Group note 4). and earnings position of the Fraport Group. Since the beginning of 2013, Fraport has also applied the revised consolidated financial statements as well as a description of specialist version of IAS 19 “Employee Benefits”. The consolidated income terms, can be found in the glossary. Detailed information about the calculation of key financial figures of the Overview of Business Development The following graphics and notes provide an overview of the situation can be found in the further chapters of the Group management report of the Fraport Group in the past fiscal year, as well as a comparison with and the Group notes. the previous years. More detailed information on business development, Passenger development at Group airports in which an interest of at least 50 % is held > Passenger record in Frankfurt > Strong relative and absolute growth in Antalya > Airport in Lima with double-digit growth rate again > Solid passenger development in Burgas and Varna million Frankfurt Antalya Lima Burgas Varna 0 10 20 30 40 50 60 58.0 57.5 56.4 53.0 26.7 25.0 25.0 22.1 14.9 13.3 11.8 10.3 2.5 2.4 2.3 1.9 1.3 1.2 1.2 1.2 2013 2012 2011 2010 Graphic 1 Fraport Annual Report 2013Group Management Report / Overview of Business Development 25 > Increase in Group revenue resulting from positive business develop- ment in Germany and abroad > Group EBITDA further increased due to price and volume effects > Decline in Group result, mainly due to high income in the previous year in financial asset management Development of Group revenue, Group EBITDA and Group result 0 500 1,000 1,500 2,000 2,500 € million Group revenue Group EBITDA Group result 2013 2012 2011 2010 2,561.4 2,442.0 2,371.2 2,194.6 880.2 848.7 802.3 710.6 235.7 251.5 250.8 271.5 Graphic 2 > Operating cash flow at €574.8 million > Free cash flow positive due to reduced capital expenditure > Lower Group liquidity due to loan repayment and dividend distribution > Slight rise in net financial debt > Gearing ratio slightly improved to 101.3 % Development of key figures of the consolidated statement of cash flows and the consolidated statement of financial position € million Operating cash flow Free cash flow Group liquidity Net finanical debt Gearing ratio in % – 500 0 500 1,000 1,500 2,000 2,500 3,000 574.8 553.0 618.8 567.5 73.1 – 162.4 – 350.1 – 291.1 1,486.3 1,663.1 1,606.9 2,384.0 2,975.4 2,934.5 2,647.0 2,024.4 101.3 104.9 97.5 77.8 0 % 50 % 100 % 2013 2012 2011 2010 Graphic 3 Target/actual comparison of major forecasts for 2013 Frankfurt passengers Group revenue Group EBITDA Group result Dividend per share Forecast for 2013 Actual 2013 At approximately the previous year’s level 58.0 million (+0.9 %) Increase up to 5 % €2,561.4 million (+4.9 %) Between €870 million and €890 million €880.2 million (+3.7 %) Decrease €235.7 million (–6.3 %) Stable dividend recommendation Unchanged dividend recommendation of €1.25 1) 1) Recommendation to the Annual General Meeting (AGM). Table 10 > Major forecasts for 2013 realized > Slight passenger growth due to good summer season and year-end 2013 > Group revenue, EBITDA and result 2013 in line with the forecast > Unchanged dividend recommendation to the AGM Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 2 6 Group Management Report / Situation of the Group Situation of the Group Operating Activities companies consolidated excluding associates was at 52; including associates this figure was at 58 (previous year: 51 and 57 companies). For a detailed overview of the shareholdings within the Group, please see the Group notes (see Group note 55). A leading international Airport Group Key features of the management and control structure Fraport Group (hereinafter also referred to as: Fraport) is among the As a stock corporation in accordance with German law, Fraport is sub- leading global airport operators with its international portfolio of ject to strict segregation of the decision-making powers exercised by airport investments. The range of services of the Group comprises all the Executive Board, the Supervisory Board and the AGM as manage- services of airside and terminal operation. The further development ment and control bodies. of airports into integrated mobility, event and real estate locations additionally represents a broad and stable revenue and earnings basis As a management body, the Fraport Executive Board bears the stra- for the Group. tegic and operational responsibility for the Group. Compared with the previous year, the Executive Board was expanded on January 1, 2013 by the The Group’s main site and key driver of revenue and earnings is Frankfurt addition of Anke Giesen as a fifth member. The Executive Board was in Airport, one of the largest passenger and cargo airports in the world. the reporting period made up of the five members Dr Stefan Schulte In contrast to time-limited concession models, the Fraport Group (Chairman), Anke Giesen (Executive Director Ground Handling), parent company, Fraport AG Frankfurt Airport Services Worldwide Michael Müller (Executive Director Labor Relations), Peter Schmitz (Fraport AG) wholly owns and operates Frankfurt Airport with no (Executive Director Operations) and Dr Matthias Zieschang (Executive time limits. With just under 11,000 employees, Fraport AG, which Director Controlling and Finance). In its meeting of September 2, 2013, was founded in 1924 and has been a listed company since 2001, is also the Supervisory Board resolved to extend the contract of the Chairman the largest single entity in the Fraport Group, which has over 20,000 of the Executive Board, Dr Stefan Schulte, which runs until the end employees. It directly or indirectly holds the shares in the Group of August 2014, for an additional five years, until August 31, 2019. companies (companies pursuant to Section 313 (2) of the German Commercial Code (HGB)). As a control body, the Fraport Supervisory Board supervises and advises the Executive Board in its decisions and is therefore directly In addition to Frankfurt Airport, Fraport is involved in twelve other involved in all company decisions that are of fundamental importance. airports on four continents through majority or minority holdings At the time of the adoption of the annual financial statements, the and management contracts. The holdings with the greatest impact Supervisory Board was comprised as follows: on earnings, due to each having equity attributable to Fraport of at least 50 %, include the fully consolidated Group companies Lima (con- cession agreement until 2031 with renewal option of ten years) and Composition of the Supervisory Board Twin Star (concession agreement for the operation of the airports in Varna and Burgas until 2041), as well as the proportionately consoli- dated Group company Antalya (concession agreement until 2024). Representatives of the shareholders Representatives of the employees Karlheinz Weimar (Chairman) Gerold Schaub (Vice Chairman) Structure Changes compared with the previous year Uwe Becker Kathrin Dahnke Peter Feldmann Karl Ulrich Garnadt Dr Margarete Haase Compared with the previous year, no fundamental changes were Jörg-Uwe Hahn made to the legal and organizational Group structure in the 2013 fiscal Lothar Klemm year. There were no material acquisitions or disposals of businesses, Michael Odenwald or significant increases or decreases in shareholdings. The number of Prof Dr-Ing Katja Windt Claudia Amier Devrim Arslan Hakan Cicek Dr Roland Krieg Mehmet Özdemir Arno Prangenberg Hans-Jürgen Schmidt Werner Schmidt Edgar Stejskal Table 11 Fraport Annual Report 2013 Group Management Report / Situation of the Group 27 As an additional control and co-determination body, the shareholders, which is mainly responsible for the business development of Group as owners of Fraport AG, exercise their voting rights in the company companies that are not integrated into the business processes at the at the AGM. Each of the approximately 92 million shares that have Frankfurt site. been issued entitles the owner to one vote. There are no differing classes of shares. Furthermore, eleven additional central units (previous year: twelve central units), such as “Corporate Compliance, Risk and Values Man- A detailed description of the structure and operation of the manage- agement”, “Central Purchasing, Construction Contracts” or “Finance ment and control bodies is presented in the “Statement on Corporate and Investor Relations”, render among other things Group-wide Governance”. This does not form part of the annual audit by the auditor services, for which the costs are distributed across the four segments. and can be found in the chapter “Statement on Corporate Governance Compared with the previous year, as of October 1, 2013, the central and Corporate Governance Report”. unit “Passenger Experience” was dissolved and the functions were Division of the Group into four segments ment, Corporate Safety and Security”, and the central unit “Corporate For the purpose of reporting and managing the operating business, the Communications”. By integrating “Passenger Experience” in the line Executive Board has divided the company’s units, comprising strategic processes, Fraport aims to achieve efficient and sustainable anchoring business, service and central units, into four segments: “Aviation”, and development of customer satisfaction within the company. assigned to the strategic business unit “Airside and Terminal Manage- “Retail & Real Estate”, “Ground Handling” and “External Activities & Services”. The segments also encompass the Group companies Key sites and competitive positions involved in each of these business processes. With just under 80 % of Group revenue and more than 90 % of the While the Aviation segment incorporates the strategic business units Airport – was again the most important site of the Fraport Group employees, the German site – and here almost exclusively Frankfurt “Airside and Terminal Management, Corporate Safety and Security” in 2013. and “Airport Security Management” at Frankfurt Airport, the Retail & Real Estate segment mainly comprises the strategic business unit In respect to its competitive position, the Frankfurt site competes on “Retail and Properties”, which primarily handles the retailing activities, the one hand with airports in its catchment area for boarding passen- parking facility management and the rental and marketing of real estate gers and – primarily – on the other hand for national and international at the Frankfurt site. The Ground Handling segment is comprised of the transfer passengers on the basis of its passenger structure. Its largest “Ground Services” strategic business unit. The External Activities & competitors are the European hub airports London-Heathrow, Paris- Services segment includes in addition to the service units “Facility Charles de Gaulle, Amsterdam-Schiphol and also – due to the strong Management”, “Information and Telecommunications” and “Corporate performance of their national airlines – the airports Dubai-International Infrastructure Management”, which are also active at the Frankfurt site, and Istanbul-Atatürk, in Germany in particular Munich Airport. With in particular, the “Global Investments and Management” central unit, 58.0 million passengers, Frankfurt Airport again took third position Segment structure Fraport Group Segments 1) Aviation Retail & Real Estate Ground Handling External Activities & Services Business units Airside and Terminal Management, Corporate Safety and Security Airport Security Management Retail and Properties Ground Services Global Investments and Management Information and Telecommunications Facility Management Corporate Infrastructure Management 1) Including assigned Group companies. Graphic 4 Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 2 8 Group Management Report / Situation of the Group Revenue by region in % 2 4 3 Employees by region in % 2 3 4 1 1 AVIATION 1 Germany 2 Asia 3 Rest of Europe 4 Rest of World 79.6 7.3 4.3 8.8 The expansion program launched by the Executive Board in the 2009 fiscal year with start of construction work on Runway Northwest and the FRA North modernization program, that was being progressed almost in parallel, continue to help maintain and strengthen the international competitive position of the site in the future. The programs, which mainly include Runway Northwest, Pier A-Plus, the A380 moderniza- tion measures, the CD-Pier and the planned Terminal 3, secure airport capacities and quality in the long-term in order to give the Frankfurt site a successful, lasting competitive edge. The development of CargoCity North and South, which has also started, will significantly strengthen the competitive position in the cargo segment (air freight and air mail) over the long-term. Graphic 5 AVIATION 1 Germany 2 Asia 3 Rest of Europe 4 Rest of World 90.8 1.3 5.0 2.9 The competitive situation at the very tourist-centered airports in Antalya, Varna and Burgas differs from that of the Frankfurt site. The key driver for the development at these sites is the attractiveness of the tourist regions with regard to quality and price level, among other things. With 26.7 million passengers, the airport in Antalya was the second largest passenger airport in Turkey in the past fiscal year behind Atatürk Airport in Istanbul, and the largest tourist airport in the Mediter- ranean region, ahead of Palma de Mallorca. The airports in Burgas and Varna, with 2.5 million and 1.3 million passengers respectively, were the second and third largest passenger airports in Bulgaria and the largest airports in the country in the Black Sea region. With the opening of the terminal in Varna in August 2013 and in Burgas in December 2013, all three tourist sites have installed sufficient capacity since the end of the past fiscal year to be able to serve the growth that is expected in Graphic 6 these regions in the medium-term. The competitive situation in Lima Airport, Peru, also differs from the in Europe in the past fiscal year after London-Heathrow (72.4 million Frankfurt site. The aviation market in Lima continues to benefit from passengers) and Paris-Charles de Gaulle (62.1 million passengers); the economic prosperity of the country, the continually increasing their lead remained more or less stable in comparison with the previ- tourist demand and the good geographical location in South America, ous year. With 52.6 million passengers, Amsterdam-Schiphol Airport which is particularly attractive for transfer traffic between South and was in fourth place after Frankfurt. In 2013, the continued dynamic North America. Following the high rates of growth in the last ten years development of Turkish Airlines led to a strong growth rate at Atatürk (compound annual passenger growth of 12.6 %), Lima Airport has now Airport in Istanbul (+13.6 % to 51.1 million passengers) and thus to established itself as a continental hub airport. As the airport capacity gains in market share versus other European competitors. With a signifi- will reach its limit in the foreseeable future due to passenger growth, cant distance behind Frankfurt Airport, Munich Airport continued to capital expenditure on the airport’s infrastructure (construction of a be the second-largest German passenger airport with 38.7 million new terminal and new take-off and landing runway) is required in the passengers (+0.8 %). medium-term to maintain and strengthen the competitive position. Compared across continents, some airports in Asia in particular de- Additional information about business development in the past fiscal veloped much more dynamically and recorded gains in market share year can be found in the chapter titled “Economic Report” beginning compared with Frankfurt Airport. In the transfer segment especially, on page 44. airports in the Gulf States, primarily Dubai Airport, continued to record increases in connections between Europe and Asia in particular. This was partly at the expense of the Frankfurt site because transfer pas- sengers were diverted from Frankfurt. Fraport Annual Report 2013Group Management Report / Situation of the Group 29 Strategy Group strategy remains oriented toward long-term market development Manage capital expenditure To maintain its international competitiveness and participate in the growth of air traffic over the long-term, the provision of airport infrastruc- ture in a demand, safety and cost-oriented manner is at high priority for Compared with the previous year, no changes were made to the Fraport. The Executive Board therefore took substantial steps toward Group strategy in the 2013 fiscal year. The Fraport Group strategy the sustainability of the Frankfurt site with the start of implementation remains oriented toward the long-term forecasted development of the of the expansion program in the 2009 fiscal year and the FRA North global aviation market and its market trends. Despite the now slightly modernization program, which was progressed almost in parallel. improved – but still unfavorable – conditions, primarily as a result of With the inauguration of Runway Northwest in the 2011 fiscal year, the European debt crisis, the restrained supply behavior of the airlines the opening of Pier A-Plus in the 2012 fiscal year and the completion and the aviation tax that was introduced in Germany in the 2011 fiscal of the remodeling of Pier B (also in 2012) and of the CD-Pier in the year, which, for Fraport, has a particular impact on the Frankfurt site, 2008 fiscal year, four key parts of the capital expenditure program have the leading aviation associations and aircraft manufacturers continue already been completed as they were needed. to expect long-term stable growth rates in the aviation market. These growth expectations will also have a positive impact on the traffic The focus for the coming years will continue to be on planning based development of the airports of the Fraport Group. on needs and the construction of Terminal 3 in the southern part of the airport. Due to the temporary weaker air traffic development, Fraport Due to the uncertain short-term conditions and the predicted long- delayed the start of construction work on the terminal in the past fiscal term development of global air traffic, the Fraport Group faces strategic year, from 2013 to a period of time from around 2015 onwards. With challenges. The Executive Board has summarized these challenges in the submission of the building application, Fraport has at the same the five areas of activity of Agenda 2015: “manage capital expenditure”, time laid the foundation for construction to begin on Terminal 3 from “strengthen profitability”, “increase customer satisfaction”, “secure around 2015 onwards and for the first phase able to begin operation sustainability” and “utilize growth potentials”. These challenges are from around 2021 onwards in line with demand. described in the following. Agenda 2015 Utilize growth potentials Strengthen profitability Increase customer satisfaction Secure sustainability Manage capital expenditure Graphic 7 In harmony with the forecasted growth in air traffic, Fraport is also ex- panding the airport infrastructure at the Group sites outside Frankfurt. In this context, Fraport opened a new terminal at Varna Airport and a new terminal at Burgas Airport in the past fiscal year. On the one hand, the two terminals expand local passenger capacities and, on the other hand, provide additional retail space to strengthen the retail business. Opening these terminals means both sites are prepared for the anticipated future growth, so that no additional capacity-related capital expenditure is required in Varna or Burgas in the medium-term. Forecasts for the long-term development of global air traffic Source Period Reference Airports Council International (ACI) Airbus Boeing Embraer Rolls Royce until 2031 until 2032 until 2032 until 2031 until 2031 Passengers Passenger kilometers Passenger kilometers Passenger kilometers Passenger kilometers CAGR 4.1 % 4.7 % 5.0 % 5.0 % 4.5 % Table 12 Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 3 0 Group Management Report / Situation of the Group Fraport is also planning an increase in capacity at the Group company to improve profitability; which are not part of the short- and medium- Lima, where in the medium-term the construction of a new terminal term business outlook and are shown by way of example in the chapter and a new runway will accommodate the dynamic growth in traffic of titled “Risk and Opportunities Report” beginning on page 67. past years and the forecasted development. Increase customer satisfaction The passenger development and capacity requirement are constantly Fraport sees the ongoing improvement of customer satisfaction as a analyzed at the Antalya site. The ground service processes are con- challenge for all Group units. The Frankfurt site as well as the entire tinuously optimized and the capacity of the terminal infrastructure is Fraport Group will benefit from passengers considering Group airports adjusted to meet operating requirements as necessary. as their airports of choice. This applies to departing and arriving The key risks and opportunities associated with the expansion of airport passengers, who are using food and beverage and retail areas during infrastructures inside and outside of Frankfurt can be found in the “Risk their visit. It is essential to have satisfied customers in order to fully passengers, who for example use parking facilities, as well as transfer and Opportunities Report” beginning on page 67. The report on the realize the potentials of the business. level of capital expenditure in the past fiscal year can be found in the chapter titled “Asset and Financial Position” beginning on page 53. The results of customer surveys underscore that the quality improve- The forecasted development for the 2014 fiscal year can be found in ments made at the Frankfurt site in past years have been positively the “Business Outlook” beginning on page 84. The business outlook received by customers. To continue this trend, Fraport is continuing also contains the expected development in the medium-term. to intensively pursue the “Great to have you here!” service initiative Strengthen profitability begun in 2010. The objective is to maintain a perceived service qual- ity – determined using “Global satisfaction” – at Frankfurt Airport of The extensive capital expenditure measures directly result in a sig- at least 80 % in the long-term and thus continue the positive trend of nificant financial burden for Fraport, primarily consisting of operating previous years. In the past, Fraport included the following measures costs as well as depreciation, amortization and interest. The Executive in its approach to improve customer satisfaction: Board therefore faces already in the short-term the challenge of further improving the profitability of the company in order to increase the > Expansion of so-called “fast lanes” at security controls for time- operating result as well as the Group result. In this context, Fraport in sensitive passengers past years has, e.g., driven the following areas forward: > Optimization of terminal labeling for better orientation > New information desks with boarding card scanners for individual > Sustained traffic growth at the Frankfurt site through the inauguration route, service and flight information of Runway Northwest and Pier A-Plus > Gradually raising airport charges at the Frankfurt site in the Aviation In the future, the focus for Fraport at the Frankfurt site is primarily the segment to cover capital costs further optimization of the transfer process. In this context, the follow- > Increasing retail revenue at the Frankfurt site in particular due to ing areas can be cited as examples: Pier A-Plus > New ground handling services contract at the Frankfurt site with Deutsche Lufthansa until 2018 > Extending and modernizing terminal and retail areas at sites outside Frankfurt > Optimizing internal processes and structures, including the restructur- ing of Corporate Infrastructure Management and merging compa- > Optimized transfer route structure > Improvement of (advance) information for inexperienced passen- gers, for example, using better communication via social media > Expansion of self-services for experienced passengers, for example, by increasing the use of easyPass and baggage drop-off systems or navigation via app rable functions in Facility Management > Development of culture-specific services, such as personal shopper Key performance indicators relating to the “strengthen profitability” Outside of Frankfurt, the Lima site in particular demonstrates its customer area of activity can be found in the chapter titled “Control” beginning focus impressively with numerous awards (including “Skytrax Best on page 32. A description of the development of performance indicators Airport in South America” 2009 – 2013). At Antalya Airport, the focus during the past fiscal year can be found in the chapters titled “Results is also on the quality of the ground service processes and customer of Operations” and “Segments” beginning on page 48. The associated satisfaction: in 2011, the airport won the ACI Europe award for the forecasted figures for the 2014 fiscal year and a medium-term outlook best European airport in the under 25 million passengers category. can be found in the chapter titled “Business Outlook” beginning on In the future, the two terminal inaugurations will, in particular, have a page 84. In addition, the Executive Board is examining further measures positive impact on customer satisfaction at the Varna and Burgas sites. Fraport Annual Report 2013Group Management Report / Situation of the Group 31 Key performance indicators relating to the “increase customer satis- In addition, the Group-wide focus is on three further growth drivers: faction” area of activity can be found in the chapter titled “Control” beginning on page 32. A description of the development during the Growth driver 1: Retail business past fiscal year can be found in the chapter titled “Non-financial Per- The expansion and modernization of the shopping and food and formance Indicators” beginning on page 60; the associated forecasted beverage areas in the terminals are essential elements of growth plans figures for the 2014 fiscal year and a medium-term outlook can be for retail business. Through the inauguration of in total about 12,000 m² found in the chapter titled “Business Outlook” beginning on page 84. of retail space in Pier A-Plus, in the 2012 fiscal year Fraport created the Secure sustainability foundation for further retail growth at Frankfurt Airport. After the net retail revenue per passenger increased in Frankfurt in the past fiscal Fraport understands sustainability as responsibly developing the year in the direction of € 4 (increase from an average of €3.32 in 2012 concept for its future, where economic objectives are to be combined to an average of € 3.60 in 2013), the objective remains to increase the with environmental and social targets. For this purpose, Fraport has net retail revenue per passenger to € 4 in the medium-term. To achieve developed a materiality matrix and systematized its objectives in a this objective, the focus is primarily on the ongoing improvement of sustainability program. The extent to which the objectives have been the utilization of Pier A-Plus, accelerated handling of passengers at achieved and the effectiveness of the measures included are regularly the security controls, a stronger concentration of Asian flight destina- checked and, if necessary, amended. The materiality matrix and the tions in Pier A, the sustained modernization of existing spaces and the sustainability program were both updated in the past fiscal year. The continued implementation of sales-promoting measures while taking key areas of activity include: air traffic safety, noise abatement, product market trends into account. quality and customer satisfaction, employment development, value creation, compliance/governance and attractiveness as an employer. Retail revenue at Group airports outside of Frankfurt also developed positively with growth of more than 6 % at the Antalya site and some Key performance indicators relating to the “secure sustainability” area 11 % at the Lima site. At the airports in Varna and Burgas, the two of activity can be found in the chapter titled “Control” beginning on new terminals created attractive retail space which will increase retail page 32. A description of the development during the past fiscal year revenue in the long-term. By continuously modernizing existing spaces can be found in the chapter titled “Non-financial Performance Indicators” and implementing the expertise gained in Frankfurt with regard to beginning on page 60; the associated forecasted figures for the 2014 market trends, the Executive Board aims to further improve retail fiscal year and a medium-term outlook can be found in the chapter revenue at the Group airports. titled “Business Outlook” beginning on page 84. An additional descrip- tion of measures taken and a status report on the sustainability program Growth driver 2: External business can be found in the separate report “Connecting Sustainably”, which is In the previous fiscal year, the External Activities & Services segment available on the Group homepage under www.sustainability-report. generated around one third of the Group result. Besides the long-term fraport.com. The separate sustainability report does not form part of expectations for positive development in the existing portfolio, the the annual audit by the auditor. clear objective is to further expand the external business. Opportunities that are currently being examined include projects in South America, Utilize growth potentials Europe and Asia. Fraport’s objective is to achieve Group-wide participation in the growth of the aviation market. With the completion of Runway Northwest, Pier Growth driver 3: Airport city A-Plus and the CD-Pier, Fraport has significantly increased its capacity at Around the world, hub airports are developing into airport cities. the Frankfurt site in past years. Using these growth potentials is prefer- Fraport recognized this trend at an early stage and identified sites ably foreseen with most modern and low-noise aircraft possible. In this that are worth consideration for real estate development. Depending context, in 2013 the Executive Board adopted, among other things, on the particular project, Fraport decides if and to what extent the an incentive program for airlines, which aims to generate passenger Group will participate in the development. Examples of the further growth for new airlines or existing airlines on new international routes development of Frankfurt Airport City are: with low-noise aircraft. The Executive Board thus seeks to participate in the global growth in air traffic with a simultaneous reduction in noise emissions. In the long-term, the conditions for participation in further growth in air traffic will be created thanks to Terminal 3. In the Group airports outside of Frankfurt, the focus is also on active site marketing. Thanks to more favorable conditions, it was possible to achieve significantly higher growth rates in the Group airports in the past fiscal year. > Mönchhof site > Gateway Gardens > CargoCity South > Ticona site Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20133 2 Group Management Report / Situation of the Group Fraport is also examining the development potential of available Results of operations key figures spaces at sites other than Frankfurt. However, specific projects with a As a fundamental component of the interim and consolidated annual fundamental impact on the course of business of the Group are not financial statement reporting, the results of operations include the currently being implemented. presentation and explanation of significant results components and key figures. While the results of operations in the context of regular As a result of the short- and medium-term realizable opportunities for reporting provide information about the past business development growth and taking account of the future development of industry- and are explained in the short- to medium-term in the business outlook, specific conditions, the Executive Board has drawn up the earnings earnings forecasts are also regularly drawn up over long-term periods forecast for the 2014 fiscal year as well as a medium-term outlook. The for internal planning purposes. The results obtained from this are forecast and medium-term outlook can be found in the chapter titled essential for the Executive Board with regard to the long-term value “Business Outlook” beginning on page 84. In addition, the Execu- management of the company. tive Board is examining the implementation of further opportunities, which are not part of the short- and medium-term business outlook The key financial performance indicators for Fraport are revenue as a and are shown in the chapter titled “Risk and Opportunities Report” key component of total revenue, EBITDA, EBIT, EBT and the Group beginning on page 67. Control result. Revenue reflects the Group’s operating activities. EBITDA is calculated from the total revenue less operating expenses (personnel, material and other operating expenses). EBITDA therefore reflects the success of the operating activities and is a key performance indicator both in terms of absolute development as well as in relation to the Changes compared with the previous year development of revenue and indirectly to traffic development. Compared with the previous year, no fundamental changes were made to Group control in the 2013 fiscal year. However, due to the first-time Group EBIT, which plays a decisive role in Group value management, application of GAS 20, the presentation has changed in a way, that presents EBITDA in the context of depreciation and amortization. Less the key financial and non-financial performance indicators which are the financial result, which is essentially comprised of interest income derived from the Group strategy are now provided in the following. and interest expenses, the EBIT results into the EBT. Financial performance indicators The Group result is the result of the operating activities and measures For Fraport, the growth-oriented development of financial performance taken to influence EBITDA, EBIT and EBT. It is calculated from EBT less indicators is critical for the long-term success of the company. The over- taxes on income. The Group result alters the Group shareholders’ riding importance of these indicators is reflected in the Group strategy equity. as a set of criteria for the “manage capital expenditure”, “utilize growth potentials” and “strengthen profitability” areas of activity. Asset and financial position key figures Fraport mainly uses key figures relating to the results of operations of Fraport are besides the results of operations reflected in the asset and to the asset and financial position, as well as key figures that link and financial position of the Group. For Fraport, the development of the results of operations with the asset and financial position, as key shareholders’ equity, the equity ratio, the net financial debt, the financial performance indicators. In accordance with the long-term gearing ratio, the operating cash flow and the free cash flow are The result of the strategically adopted measures and operating activities oriented Group strategy, the Executive Board manages and evaluates of particular importance. the development of financial performance indicators while also tak- ing account of long-term forecasted market trends. In this context, The level of shareholders’ equity represents the basis for the current strategic measures taken – for example, the implementation of larger and future operating activities for Fraport. A solid base of shareholders’ capital expenditure projects – can also lead to a short- to medium- equity is, for example, essential for the financing of large strategic term burden on the financial performance indicators, as long as it is projects. Also connected with this was the company’s listing in the assumed that the results of operations will develop in a clearly positive 2001 fiscal year, which led to a significant increase in shareholders’ manner over the long-term and the measures do not pose significant equity of around € 900 million and formed the essential basis for the risks to the company. financing of the expansion of the Frankfurt site as well as the external business. On the 2013 balance sheet date, Fraport held shareholders’ The key financial performance indicators and their significance for equity of € 3,098.8 million, corresponding to a shareholders’ equity Fraport are described in the following. A description of the develop- ratio in relation to total assets of 30.8 % (shareholders’ equity without ment of these indicators during the past fiscal year can be found in the non-controlling interests of € 45.7 million and profit earmarked for chapters titled “Results of Operations” and “Segments” beginning on distribution of € 115.4 million). page 48. The associated forecasted figures for the 2014 fiscal year and a medium-term outlook can be found in the chapter titled “Business Outlook” beginning on page 84. Fraport Annual Report 2013Group Management Report / Situation of the Group 33 Besides shareholders’ equity, the net financial debt and gearing ratio While EBIT is one of the key figures of the results of operations, Fraport in particular serve as key financial indicators to the Executive Board assets are derived from the consolidated financial position and are to assess the company’s situation. To calculate the gearing ratio, the defined as the average of the Group’s or segments’ interest bearing company calculates the shareholders’ equity on the balance sheet date capital required for operations. Fraport assets are comprised as follows: in relation to the net financial debt also on the balance sheet date, whereby the net financial debt is defined as the difference between the Goodwill + Other intangible assets at cost/2 + Investments in airport Group’s liquidity and the non-current and current financial liabilities. operating projects at cost/2 + Property, plant and equipment at cost/2 + To achieve a more accurate result, the shareholders’ equity is also ad- Inventories + Trade accounts receivable – Construction in progress at justed by the planned dividend distribution as well as non-controlling cost/2 – Current trade accounts payable interests. The gearing ratio therefore measures the extent to which the level of shareholders’ equity corresponds to the relevant net financial To avoid value creation coming solely from depreciation and amor- debt position and thus provides the Group’s leverage ratio. In general, tization in calculating its value-added figure, Fraport’s depreciable the level of the gearing ratio varies depending on Fraport’s current assets are generally recognized at half of their historical acquisition/ phase in the capital expenditure cycle. The gearing ratio therefore manufacturing costs (at cost/2) and not at residual carrying amounts. usually increases in times of high capital expenditure and falls when Goodwill is recognized at carrying amount because it is not subject the company’s capital expenditure is lower. In the context of the to regular depreciation and amortization. capital expenditure program at the Frankfurt site, the Executive Board has defined that the gearing ratio should not exceed 140 %. After a Contrary to the calculation of the Fraport value added at Group level value of 104.9 % was recorded for the gearing ratio at the end of the and in the Aviation, Retail & Real Estate and Ground Handling seg- 2012 fiscal year, this figure was 101.3 % at the 2013 balance sheet date. ments, the value added in the External Activities & Services segment is supplemented by the results from associated companies and other In addition to the gearing ratio, the Executive Board uses the operating Group companies assigned to this segment as well as the correspond- cash flow and the free cash flow as key performance indicators for the ing assets of the Group companies. In this way, Fraport also takes evaluation of the financial strength of the Group. While the operating account of the associated companies and other Group companies in cash flow shows the cash inflow and outflow from operating activities, value management. the free cash flow is the result of the operating cash flow less the cash outflow for investments in airport operating projects, other intangible Fraport calculates the weighted average cost of capital (WACC) using assets, property, plant and equipment, and investment property. The the capital asset pricing model. Given the continuously changing free cash flow thus provides information about the financial funds economic environment, interest rate levels and/or Fraport’s risk and available to the Group from the operating activities of a period after financing structure, Fraport regularly reviews and, if needed, adjusts deducting operating investing activities. These “free” liquid funds its WACC. In the 2013 fiscal year, this was, as in the previous year, at (free cash flow) can in turn be retained in order to be available to the 9.5 % before taxes and 6.6 % after taxes. company as a financial reserve for future capital expenditure or to reduce the leverage ratio (gearing ratio), or they can be distributed To allow comparisons between segments of varying size, Fraport has to shareholders as dividends. After Fraport opened Pier A-Plus at expanded its value added by the measurement and steering figure to the Frankfurt site in 2012 – the last large investment project before include “return on Fraport assets” (ROFRA). ROFRA is calculated from Terminal 3 – positive free cash flow was achieved in 2013 for the first the ratio of EBIT to Fraport assets and shows whether the business units time since the start of the airport expansion and the FRA North capital created value (ROFRA > WACC) or not (ROFRA < WACC). expenditure program. Non-financial performance indicators Links between the results of operations and the asset and financial position (value management) In addition to its financial development, Fraport also measures the development of “non-financial performance indicators”, which are also In order to sustainably increasing the company’s value the Executive essential for the long-term success of the company and result primarily Board, in addition to the key figures for the results of operations and from the “increase customer satisfaction” and “secure sustainability” asset and financial position, specifically draws parallels between the areas of activity of Group strategy. development of the results of operations and the asset and financial position. In this context, the Executive Board plans and manages the These performance indicators include, for example, service quality as Group’s development according to the principles of value manage- perceived by passengers and employee satisfaction. To improve the ment. At Fraport, the central figure used to measure and steer this company control, Fraport has assigned the key non-financial perfor- approach is the “Fraport value added” figure, which is calculated mance indicators to the “customer satisfaction and product quality” as the difference between EBIT and the capital costs (= Fraport assets × and “attractiveness as an employer” categories. cost of capital). The value added is consolidated and recorded at Group and at segment level. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20133 4 Group Management Report / Situation of the Group The significant non-financial performance indicators in the sense of High connectivity, where passengers are transported with their bag- GAS 20 and their significance for Fraport are shown in the following. gage on the same flight, results in good baggage process quality. This The description of their development during the past fiscal year can is particularly important because Frankfurt has a high proportion of be found in the chapter titled “Non-financial Performance Indicators” transfer baggage with a transfer share of around 55 %. The objective beginning on page 60; the associated forecasted figures for the 2014 is to achieve a sustainable baggage connectivity of more than 98.5 %. fiscal year and a medium-term outlook can be found in the chapter titled “Business Outlook” beginning on page 84. An additional descrip- The availability of mobility equipment in terminals is particularly tion of the non-financial performance indicators that are not essential important for passengers with limited mobility. Fraport uses the equip- for understanding business development in the sense of GAS 20, as ment availability rate to track the availability of this equipment at the well as a status report on the sustainability program can be found in Frankfurt site; the rate measures the proper technical operation of the separate sustainability report “Connecting Sustainably”, which is elevators, escalators and aerobridges. Fraport aims for an availability available on the company website under www.sustainability-report. rate of far above 90 %. fraport.com. The audit of the sustainability report does not form part of the consolidated financial statement audit by the auditor. Attractiveness as an employer Customer satisfaction and product quality and product quality, a key factor to ensure the long-term success of the For Fraport, the quality of services performed and the associated business. Fraport understands attractiveness to mean the creation of customer satisfaction are decisive competitive factors and of key good working conditions in order to gain and retain committed and For Fraport, attractiveness as an employer is, like customer satisfaction significance for the long-term success of the business. The clear objec- qualified employees. tive is therefore to raise its own quality and customer satisfaction to a high level. To make it possible to measure and manage its attractiveness as an em- ployer, Fraport uses various performance indicators, such as employee Fraport uses a number of performance indicators to measure and satisfaction, as well as key figures relating to employee safety and steer quality and customer satisfaction. The most important indica- health management. tors at the Frankfurt site include the global satisfaction of the pas- sengers, the punctuality rate, the baggage connectivity and the Employee satisfaction, which is recorded annually or every two years equipment availability rate. Beyond the Frankfurt site, the focus is at a minimum by means of a questionnaire to Fraport AG employees primarily on passenger satisfaction at the Group airports, similar to and 13 other Group companies including Lima and Twin Star, is a global satisfaction. central instrument for the measurement of employee morale. Fraport is convinced that satisfied employees achieve better customer loyalty For Fraport, global satisfaction covers a number of passenger-related and improved performance. The employee satisfaction key figure is processes and the associated quality. The processes that are assessed calculated from nine aspects of satisfaction and shows potential areas include, among others, waiting times at security controls and baggage of improvement. Fraport aims to increase employee satisfaction to claim as well as terminal cleanliness. Fraport aims to achieve a target an average grade of better than 3.0 (whereby 1 = very good and 5 = of at least 80 % for global satisfaction at Frankfurt Airport. Compared inadequate). In 2013, it was at 3.02. with the 2010 fiscal year, this increase is equivalent to a rise of ten percentage points. Outside of Frankfurt, passenger satisfaction is mainly Furthermore, health and safety management is key in order to become recorded using surveys. more attractive. Fraport needs efficient and high-performing employees to withstand international competition. One measurement of employee The punctuality rate indicates how many flights took off and landed occupational health and safety which Fraport uses is the number of on time in Frankfurt, whereby a flight is regarded as being late after work accidents per year. The objective is to continuously reduce the 15 minutes in accordance with the International Air Transport Associa- total number of work accidents and the resulting days missed due to tion (IATA). A high level of punctuality is an indicator of the reliability accidents. of the respective airport and improves the ability of airlines and airport service providers to plan. The assessment of the punctuality rate may Finance Management particularly be distorted by bad weather conditions in Frankfurt or Fraport’s finance management encompasses the strategic goals of by already existing delays to incoming flights. With a comparable securing liquidity, limiting financial risks, profitability and flex- weather situation, Fraport aims for a continued high punctuality rate ibility. The highest priority is to secure liquidity. Based on the Group’s of around 80 %. solid sharholders’ equity base, it is secured through both internal financing via operating cash flow and external financing in form of debt. Baggage connectivity provides information about the percentage of departure baggage at the Frankfurt site that is loaded on time and sent With regard to debt, Fraport AG’s financial management aims to to the correct destination in relation to the total departure baggage. achieve a balanced financing base composed of bilateral loans, bonds Fraport Annual Report 2013Group Management Report / Situation of the Group 35 (capital market), loan financing from public loan institutions and Takeover-related disclosures promissory note loans. To reduce interest rate risk from floating rate The capital stock of Fraport AG is € 922,896,540 (as at Decem- borrowing, some interest rate hedges have been entered into; these ber 31, 2013). It is divided into 92,289,654 no-par-value bearer hedges predominantly fulfill the conditions set out under IAS 39 for shares. The company holds treasury shares (77,365 shares) which the establishment of a unit of valuation (hedge accounting). For Group are offset from capital stock on the balance sheet. The subscribed companies in which an interest of at least 50 % is held, there are mainly capital less treasury shares as at December 31, 2013 was recognized bank liabilities and a corporate bond issue relating to project financing. at € 922,122,890 (92,212,289 no-par-value shares) in the commercial balance sheet. There are no differing shares. In the light of risk spreading and outflows at different times, the Group’s liquidity is invested broadly. The medium- and long-term investment On the basis of the consortium agreement concluded between the horizon corresponds to the greatest possible extent to the expected State of Hesse and Stadtwerke Frankfurt am Main Holding GmbH long-term cash outflows. For payments expected shortly within the dated April 18/23, 2001, the total voting rights in Fraport AG held framework of current outflows as a result of capital expenditure, by both shareholders, calculated in accordance with Section 22 (2) Fraport AG has time deposits, securities with short remaining terms of the German Securities Trading Act (WpHG), amounted to 51.40 % and commercial paper available. The established strategy for the broad as at December 31, 2013. At that time, they were attributed as fol- diversification of investments in corporate bonds was extended in the lows: State of Hesse 31.37 % and Stadtwerke Frankfurt am Main past fiscal year with regard to the rating classification so that invest- Holding GmbH 20.03 %. The voting rights in Fraport AG owned by ments can also be made to a small extent in low-risk, non-rated bonds. the City of Frankfurt am Main are held indirectly via the Stadtwerke Frankfurt am Main Holding GmbH subsidiary. According to the last offi- For the purposes of diversification, in addition to investments in indus- cial report in accordance with the WpHG or disclosures by individual trial bonds, there is also a broad diversification of counterparties in the shareholders, the other voting rights in Fraport AG were attributable financial sector. Total limits are determined in various business sectors; as follows (as at December 31, 2013): Deutsche Lufthansa AG 8.46 %, these limits are continuously monitored with regard to, among other Lazard Asset Management LLC 3.16 % and RARE Infrastructure Limited things, the changes in the banks’ credit ratings. If the credit rating 3.06 %. The relative ownership interests were adjusted to the current is downgraded to non-investment grade during the asset’s holding total number of shares as at the balance sheet date and therefore period, a decision is made on a case-by-case basis on the further may differ from the figures given at the time of reporting or from the course of action with the asset taking into account its remaining term. respective shareholders’ own disclosures. Within the context of securing liquidity, Fraport showed liquidity at The appointment and dismissal of Executive Board members is carried December 31, 2013 composed of liquid funds and freely negotiable out in compliance with the relevant provisions of the German Stock securities totaling € 1,486.3 million (previous year: € 1,663.1 million). Corporation Act (AktG) (Sections 84 and 85). Pursuant to Section 179 (1) In contrast, there were current and non-current financial liabilities in sentence 2 of the AktG in conjunction with Section 11 (3) of the com- the amount of € 4,461.7 million (previous year: € 4,597.6 million). pany statutes, the Supervisory Board is entitled to amend the company In addition, as at the balance sheet date, additional credit lines of statutes only with respect to the wording. Other amendments to the € 533.2 million were available to Fraport (previous year: € 452.9 million). company statutes require a resolution of the AGM, which, according to Section 18 (1) of the company statutes, must be passed by a simple The financing and liquidity analysis at the end of the past fiscal year can majority of the votes cast and the capital stock represented at the time be found in the chapter titled “Asset and Financial Position” beginning of the resolution. If, by way of exception, the law requires a higher on page 53. Legal Disclosures capital majority (e.g., when changing the purpose of the company as stated in the company statutes, Section 179 (2) sentence 2 of the AktG; or when creating contingent capital, Section 193 (1) sentence 1 of the AktG), the resolution of the AGM has to be passed by a three- quarter majority of the represented capital stock. As a listed Group company headquartered in Germany, Fraport is subject to a number of statutory disclosure requirements. Important Pursuant to Sections 202 et seqq. of the AktG, the Executive Board was reporting obligations that apply to the Group management report as authorized by resolution of the AGM held on May 27, 2009 to increase a result of these requirements are shown in the following. the capital stock by up to € 5.5 million on one or more occasions until May 26, 2014 with the approval of the Supervisory Board. It was pos- sible to exclude the statutory subscription rights of the shareholders. In 2013, a total of € 552,980 of authorized capital was used for issuing shares within the scope of the employee investment plan. At the AGM of May 31, 2013, by canceling the existing authorized capital, new authorized capital of € 3.5 million was approved, which can be Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20133 6 Group Management Report / Situation of the Group used for issuing shares to employees of Fraport AG (see also Group note 31). The Executive Board is now entitled, with the approval of Statement on Corporate Governance and Corporate Governance Report the Supervisory Board, to increase the capital stock once or several Acting also for the Supervisory Board, the Executive Board prepares times by up to a total of €3.5 million until May 30, 2018, by issuing a Statement on Corporate Governance in accordance with Section new shares in return for cash. The statutory subscription rights of the 289a of the HGB and Section 3.10 of the German Corporate Govern- shareholders may be excluded. ance Code for the Group. The Statement on Corporate Governance including the Corporate Governance Report is published in the A contingent capital increase of €13.9 million was approved under Sec- chapter “To our Shareholders” and on the corporate website tions 192 et seqq. of the AktG at the AGM held on March 14, 2001. www.fraport.com under the section The Fraport Group. The purpose of the contingent capital was expanded at the AGM on June 1, 2005. The contingent capital increase also serves to fulfill subscription rights under the approved Fraport Management Stock Key features of the internal control and risk management system Options Plan 2005 (MSOP 2005). The Executive Board and Super- The description of the key features of the internal control and risk man- visory Board were authorized to issue up to 1,515,000 stock options agement system with respect to the accounting process in accordance to beneficiaries entitled to subscribe until August 31, 2009, in accord- with Section 315 (2) no. 5 of the HGB can be found in the chapter titled ance with more detailed provisions in this regard. Some of the shares “Risk and Opportunities Report” beginning on page 67 of this report. which were issued to members of the Executive Board as part of performance-related remuneration until 2010 are subject to a vesting period of twelve or 24 months. Remuneration Report Contingent capital totaled € 3.4 million as at December 31, 2013. In The following remuneration report describes the main features of the 2013, subscription rights in the amount of € 226,000 (22,600 options) remuneration system for the Executive Board and Supervisory Board of were exercised under MSOP 2005. Fraport AG in accordance with the statutory regulations and the recom- Under a resolution of the 2010 AGM, the Executive Board is authorized amended on May 13, 2013. It summarizes which principles apply in to purchase treasury shares of up to 3 % of the capital stock available determining the total compensation of the members of the Executive at the time of the 2010 AGM. The Executive Board may only use these Board and explains the structure and amount of the remuneration of treasury shares to serve subscription rights under MSOP 2005, while the Executive Board and Supervisory Board members. mendations of the German Corporate Governance Code (GCGC) as the Supervisory Board may use them as a share-based portion of the Executive Board’s remuneration. No treasury shares were purchased in 2013 based on these authorizations. Remuneration of the Executive Board members in fiscal year 2013 Remuneration system The aforementioned provisions set under Section 315 (4) of the HGB Executive Board remuneration is set by the Supervisory Board upon are rules customarily applied by similar listed companies and are not the recommendation of its executive committee and is reviewed on intended to hinder any takeover attempts. a regular basis. The remuneration of the Executive Board members Report on the relationships with affiliated companies the company’s situation and in line with a transparent and sustainable Due to the interest of 31.37 % (previous year: 31.40 %) held by corporate governance approach which focuses on the long-term. of Fraport AG shall be in proportion to the tasks of the position and the State of Hesse and 20.03 % held by Stadtwerke Frankfurt am Main Holding GmbH (previous year: 20.05 %) as well as the consortium Compensation is comprised as follows: agreement concluded between these shareholders on April 18/23, 2001, Fraport AG is a public-controlled enterprise. There are no control or > Non-performance-related components (fixed salary and compen- profit transfer agreements. sation in kind) > Performance-related components with a short- and mid-term The Executive Board of Fraport AG therefore compiles a report on the incentive effect (bonus) relationships with affiliated companies in accordance with Section 312 of the AktG. At the end of the report, the Executive Board made the following statement: “The Executive Board declares that under the > Performance-related components with a long-term incentive effect (Long-Term Strategy Award and Long-Term Incentive Program) circumstances known to us at the time, Fraport AG received fair and ad- Generally, the Supervisory Board has been guided by the principle that equate compensation for each and every legal transaction conducted. in the ordinary course of business, members of the Executive Board During the reporting year, measures were neither taken nor omitted shall receive a fixed annual salary, which makes up approximately 35 % at the request of or in the interests of the State of Hesse and the City of total compensation. The bonus payment should also amount to of Frankfurt am Main and their affiliated companies.” approximately 35 % of total compensation. The Long-Term Strategy Award should account for approximately 10 % of total compensation and the share of the Long-Term Incentive Program about 20 %. Fraport Annual Report 2013Group Management Report / Situation of the Group 37 In order to comply with the remuneration-related amendments of the GCGC in the version dated May 13, 2013, with effect starting in fiscal Performance-related components Without a long-term incentive effect (bonus) year 2014, a maximum limit was defined with each Executive Board The bonus is dependent on EBITDA and ROFRA of the Fraport Group member for the sum of the aforementioned respective remuneration for the respective fiscal year. EBITDA is the Group operating result, components. For the Chairman of the Executive Board this amounts to ROFRA the interest on Group assets; i.e. the total return on capital €2.3 million and €1.65 million for the other members of the Executive (“return on Fraport assets”). Both key figures (EBITDA and ROFRA) Board. This maximum limit also applies in relation to the remuneration are recognized business management parameters for measuring the that was granted during the previous fiscal years 2010 to 2013, the success of a company. components of which have not yet been fully paid out. The actual bonus for an Executive Board member is calculated by In addition to the aforementioned remuneration components, there multiplying EBITDA and ROFRA, each minus a basic allowance, by an are still stock options outstanding, issued in previous years, that have a individual multiplier for each Executive Board member, stipulated in long-term incentive effect as part of the stock options plan still running each employment contract and adding the aforementioned param- (see also Group note 45). The last time stock options were issued was eters. The bonus amount for one fiscal year is capped at 175 % of the in 2009. In addition, Executive Board members received contributions bonus paid for 2009 or if the member was appointed during the year for pension benefit commitments. The pension commitments, includ- or the employment contract was amended in 2009, an amount ex- ing performance-related contributions, are in a fixed proportion to trapolated for the entire year. For Executive Board members appointed the respective fixed gross annual salary and are therefore subject to as of 2012 the maximum bonus amount for a fiscal year is limited to implicit maximum limits. 140 % of the bonus calculated pro forma for fiscal year 2011. 50 % of anticipated bonus payments are paid out monthly during the fiscal Non-performance-related components year. The remaining bonus payments are payable within one month During the term of their employment agreement (generally five years), after the Supervisory Board has approved the respective consolidated Executive Board members, as a rule, receive a fixed annual salary for financial statements. the entire period. 50 % of the calculated bonus payments have a conditional payback The amount of the fixed annual salary is reviewed on a regular basis, provision. If EBITDA and ROFRA in the following year do not reach at generally annually, to ensure that it is appropriate. least an average of 70 % of the corresponding key figure for the fiscal year in question, the Executive Board member has to pay back 30 % The fixed annual compensation also covers any activity performed by an of the bonus to Fraport AG. Should the same apply to the second Executive Board member for companies in which Fraport AG holds an year after the relevant fiscal year, 20 % of the bonus has to be repaid. indirect or a direct interest of more than 25 % (so-called “other board A possible repayment obligation exists for each following year sepa- mandates related to Group companies”). rately and must be individually reviewed each year for compliance. If an Executive Board member has such other board mandates at If the Supervisory Board is of the opinion that the relevant business Group companies, the compensation he or she receives from such figures have decreased due to influences outside of the Executive companies is credited against the remuneration. The compensation Board’s control, it can grant a bonus at its discretion or waive the full received by Dr Zieschang for his activities performed as a member of or partial repayment, based on the Executive Board member’s per- the Supervisory Board of Flughafen Hannover-Langenhagen GmbH was formance. If an Executive Board member holds an active position for credited against his remuneration of 2013 from Fraport AG. less than one fiscal year, a pro rata bonus payment is made. In addition, the compensation for Executive Board members includes compensation in kind and other payments (ancillary benefits). Com- With a long-term incentive effect (Long-Term Strategy Award, LSA) pensation in kind is the pecuniary benefit subject to income tax from The LSA creates an additional long-term incentive effect that takes using a company car with driver. This compensation in kind is generally into reasonable consideration the long-term interests of the main available to all Executive Board members in the same way; the amount stakeholders of Fraport AG, specifically employees, customers and of compensation depends on the personal situation. shareholders. Executive Board members also receive half of the total contributions toward their pension insurance in the case of voluntary insurance and in the case of statutory insurance, half of the total statutory contributions. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 3 8 Group Management Report / Situation of the Group As part of the LSA, each Executive Board member is promised a pro- amount of time the Executive Board member actually worked for the spective financial reward for one fiscal year – the first being in 2010 for company. There is no right to payment for a three-year period which the year 2013. After three fiscal years have expired (the fiscal year in has not yet expired at the time the employment contract has been question and the two following years), the extent to which the targets legally terminated due to extraordinary circumstances that are within have been met is determined and the actual payment is calculated the control of the Executive Board member (termination by request of based on these results. The paid amount can exceed or fall below the the Executive Board member without cause pursuant to Section 626 of prospective amount but is capped at 125 % of the originally stated the German Civil Code (BGB), termination for cause within the control amount. Performance targets are customer satisfaction, sustained of the Executive Board member in accordance with Section 626 (BGB) employee development and share performance. All three targets are or if the Executive Board member has been removed from his or her equally important under the LSA. As in the previous year, for 2016 a office for cause pursuant to Section 84 (3) of the AktG. If an Executive prospective sum of € 120 thousand has been promised to the Chairman Board member joins the company during the course of a fiscal year, the of the Executive Board, while a prospective sum of € 90 thousand each Supervisory Board decides if and to what extent the Executive Board has been promised to the other members of the Executive Board. member is entitled to participate in the LSA program for this fiscal year. Michael Müller and Anke Giesen participate in the Plan Award for 2011 and 2012 on a pro rata basis. Long-Term Incentive Program (LTIP) The LTIP is a virtual stock options program. Beginning in fiscal Customer satisfaction is evaluated on an annual basis using an estab- year 2010, the Executive Board members of Fraport AG are promised lished assessment system for airlines, real estate management, retail each fiscal year a contractually stipulated amount of virtual shares within properties and passengers. Whether or not a target has been met is their employment agreements, so-called performance shares, on the determined by comparing the corresponding data (in percentage condition that and depending on whether they meet pre-defined points) at the beginning of the three-year period with the average performance targets (the so-called “target tranche”). After four fiscal achieved over the same period. If the actual result exceeds or falls below years – the performance period – it will be determined to what the target by two full percentage points, the bonus paid for customer extent these performance targets have been met and the number of satisfaction is increased or decreased correspondingly. performance shares actually due to the Executive Board member, the so-called actual tranche. The actual tranche can exceed or fall below Sustained employee development relates to employee satisfaction and the target tranche but is capped at 150 % of the target tranche. the changes in headcount. The Supervisory Board decides the extent to which the target has been met. Its decision is based on the results The two performance targets “earnings per share” (EPS) and “rank total of the employee satisfaction barometer (a survey among Fraport AG shareholder return MDAX” are relevant for deriving the actual tranche employees carried out annually or at least every two years) and the from the target tranche, with earnings per share (EPS) being weighted responsible development of headcount in view of the economic situ- at 70 % and rank total shareholder return MDAX at 30 %. For the fiscal ation of the Group. year 2013, as in the previous year, 9,000 performance shares were allocated to Dr Stefan Schulte as a target tranche, while Peter Schmitz For the share performance target, the Fraport share price development and Dr Matthias Zieschang each received 6,850 performance shares. over the corresponding three-year period is compared with the aver- For the fiscal year 2013, 6,850 performance shares were allocated to age development of the MDAX and a share basket, which includes the Anke Giesen and 3,550 were allocated to Michael Müller. shares of the operators of the Paris, Zurich and Vienna airports. The payment for this share performance target is again determined by com- In order to determine to what extent the EPS performance target has paring the reference value calculated at the beginning of the three-year been met, the weighted average target EPS during the performance period with the actual development. Positive or negative deviations period, based on the strategic development planning applicable at the increase or decrease the prospective bonus correspondingly. time of the award, is compared with the average EPS actually achieved Entitlement to LSA payments is established by approval by the Super- target has been met, the target EPS for the first fiscal year accounts visory Board of the consolidated financial statements for the last fiscal for 40 %, the second for 30 %, the third for 20 % and the fourth for during the performance period. For the evaluation to what extent the year of the performance period. 10 %. If targets have been met 100 % over the performance period, the actual tranche corresponds to the target tranche. If the actual If an Executive Board member leaves Fraport AG before the end of EPS differs from the target EPS, the number of allocated performance a three-year period, the performance targets for such an Executive shares is adjusted accordingly. If the actual EPS falls below the target Board member are not calculated until after this period has expired. EPS by more than 25 percentage points, no performance shares are The award for the entire period is then paid on a pro rata basis for the issued for the EPS performance target. If the actual EPS falls below Fraport Annual Report 2013Group Management Report / Situation of the Group 39 the target EPS by 25 percentage points, the actual tranche amounts The rules for LTIP entitlements of former Executive Board members are to 50 % of the target tranche. If the actual EPS exceeds the target EPS largely the same as for the LSA. In addition, a former Executive Board by 25 percentage points, the actual tranche amounts to 150 % of the member is not entitled to any performance shares for a target tranche target tranche. Intermediate values can be calculated using a straight- whose performance period has lasted less than twelve months at the line method. Any performance exceeding the targets by more than time the employment contract was legally terminated. The LTIP fair 25 percentage points is not taken into account. value accrual allocation resulted in the following expenses for the fiscal year: Dr Stefan Schulte € 648.8 thousand (previous year: €370.5 thou- The extent to which the rank total shareholder return MDAX perfor- sand), Anke Giesen € 233.3 thousand, Michael Müller €128.7 thousand mance target has been met is calculated by determining the weighted (previous year: €50.2 thousand), Peter Schmitz €532.6 thousand (previ- average rank of Fraport AG amongst all companies listed in the MDAX ous year: € 256.3 thousand), Dr Matthias Zieschang € 532.6 thousand in relation to the total shareholder return (share price development (previous year: € 256.3 thousand), Herbert Mai € 200.1 thousand and dividends) over the performance period. Just as with the EPS (previous year: € 112.8 thousand). performance target, the four relevant fiscal years will be weighted downwards. The actual tranche shall equal the target tranche if Pension commitments Fraport AG, during the performance period, ranks number 25 among The Executive Board members are entitled to pension benefits and total shareholder return MDAX with its weighted average. For each provision for surviving dependents. An Executive Board member is rank exceeding or falling below 25, the actual tranche is increased or generally entitled to retirement benefits if he or she becomes per- reduced by 2.5 percentage points. If Fraport AG ranks worse than 45, manently unable to work or retires from office during the duration of, no performance shares will be issued for the rank total shareholder or upon expiry of, his or her employment agreement. If an Executive return MDAX performance target; if Fraport AG ranks better than five, Board member dies, benefits are paid to his or her surviving depend- there will not be a further increase in the number of performance ents. These amount to 60 % of the retirement pension for the widow shares issued over fifth place. or widower; children entitled to receive benefits receive 12 % each. If no widow’s pension is paid, the children each receive 20 % of the The relevant share price used for calculating the LTIP payment shall retirement pension. correspond to the weighted average of the company’s closing share prices in XETRA or a similarly situated trading system at the Frankfurt Upon retirement, income from active employment as well as retirement Stock Exchange during the first 30 trading days immediately subse- pension payments from previous or, where applicable, later employ- quent to the last day of the performance period. For the performance ment relationships shall be credited against accrued retirement pay shares issued in 2013 and in previous fiscal years, the relevant share up until reaching 60 years of age, insofar as without such credit the price for calculating the LTIP payment is limited to € 60 per performance total of these emoluments and the retirement pension would exceed share. Entitlement to LTIP payments is established by the approval by 75 % of the fixed salary (100 % of the fixed salary if Fraport AG wishes the Supervisory Board of the consolidated financial statements for the the employment to be terminated or not be extended). Effective last fiscal year of the performance period. January 1 of each year, the pensions are adjusted at discretion, taking For all performance shares allocated from the fiscal year 2014 onwards, the company’s economic situation. The adjustment obligation shall be the LTIP payment is limited to 150 % of the product from the perfor- considered to be satisfied if the adjustment does not fall below the mance shares of the actual tranche multiplied by the “relevant share increase in the consumer price index for the cost of living for private into account the interests of the former Executive Board member and price at the time of issuance”. The “relevant share price at the time households in Germany. of issuance” corresponds to the weighted average of the company’s closing share prices in XETRA or a similarly situated trading system at The retirement pension of an Executive Board member is defined by the Frankfurt Stock Exchange during the month of January of the fiscal the percentage of a contractually agreed basis of assessment, with the year, in which the relevant performance period begins. percentage rising annually by 2.0 % up to a limit of 75 %, dependent Furthermore, for all LTIP performance share tranches that have already been allocated and will be in future, maximum payment amounts have As at December 31, 2013, Dr Schulte is entitled to 58.0 % of his fixed been defined, which amounts to a maximum of € 810.0 thousand for annual gross salary. Mr. Schmitz is entitled to 38.0 % of his fixed annual Dr Schulte and for the other Executive Board members € 616.5 thou- gross salary as at December 31, 2013. The basic account commitment sand per performance share tranche. (guideline 2 of the Fraport capital account plan – “Kapitalkontenplan on the duration of time an Executive Board member is appointed. Fraport” – concerning the company benefit plan for Senior Managers, dated February 26, 2002), to which Mr. Schmitz is entitled under Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20134 0 Group Management Report / Situation of the Group Fraport AG’s company benefit plan up to December 31, 2008, shall The surviving dependents of Executive Board members appointed from be credited pro rata temporis against pension payments over a period 2012 receive the following benefits: If there is no prior event giving of eight years after the employment contract has been terminated or rise to retirement benefits, the benefits for the widow or widower is expires. As at December 31, 2013, Dr Zieschang is entitled to 42.0 % the pension capital generated so far. If there is no eligible widow or of his fixed annual gross salary. widower, each half-orphan will receive 10 % and each full-orphan will receive 25 % of the pension capital generated so far as a one-time In the event of occupational disability, the pension rate for Dr Schulte, payment. If the pension capital reached is less than €600 thousand Mr. Schmitz and Dr Zieschang amounts to at least 55 % of their upon death, Fraport will increase it to this amount. The payment risk respective fixed annual gross salaries or of the contractually agreed of this increase has been covered by a term life insurance policy. If an basis of assessment. Executive Board member dies while collecting retirement benefits, the widow or widower is entitled to 60 % of the last retirement benefits For Executive Board members appointed as of 2012, the pension granted. Each half-orphan receives 10 % and each full-orphan receives benefits and provision for surviving dependents as well as provision for 25 % of the last retirement benefits granted. If there are no surviving long-term occupational disability are governed by a separate benefit dependents as set forth above, the heirs receive a one-time death agreement. This calls for a one-time pension capital or life-long retire- grant in the amount of € 8.0 thousand. ment payments after the insured event become due. The pension capital is generated when Fraport AG annually credits 40 % of the fixed Moreover, each member of the Executive Board has entered into a two- annual gross salary paid to a pension account. The pension capital year restrictive covenant. During this term, reasonable compensation in accumulated at the end of the previous year pays interest annually the form of an annual gross salary (fixed salary) pursuant to Section 90a at the interest rate used for the valuation of the pension obligations of the HGB shall be paid. Partly payments shall be made monthly. The in the German commercial balance sheet of Fraport AG at the end of compensation shall be generally credited against any retirement pay- the previous year pursuant to Section 253 (2) of the HGB, which is ments owed by Fraport AG, inasmuch as the compensation together at least 3 % and at most 6 %. This is increased by 1 % on January 1 of with the retirement payments and other generated income exceed each year for life-long retirement payments. No further adjustment 100 % of the last fixed salary received. is made. If the pension capital reached is less than € 600 thousand when retirement benefits fall due as a result of long-term occupational No other benefits have been promised to Executive Board members, disability, Fraport AG will increase it to this amount. In the event of should their employment be terminated. long-term occupational disability within the first five years of their activities performed as members of the Executive Board, it is foreseen The retirement pension entitlement of former Executive Board mem- that Executive Board members can postpone the receipt of a monthly bers is determined by a percentage of a contractually agreed fixed pension of to a maximum of five years since the start of the employment basis of assessment. contract. Until the postponed start of the pension benefit payments, they will receive a monthly benefit of € 2.5 thousand. This risk of pen- Detailed information on the compensation components and amount sion payments in the increase phase and of payments for the increase of compensation of the Executive Board members of Fraport AG in has been covered by an occupational disability insurance policy. The 2013 is shown in the following tables. full amount of all income within the meaning of the Income Tax Act from employment or self-employment is credited against the retire- Remuneration of the Executive Board 2013 ment benefits paid until the end of the month in which the Executive The following remuneration was paid to the members of the Executive Board member reaches the age of 62. Board: Remuneration of the Executive Board 2013 in €´000 Remuneration paid out in cash Total Dr Stefan Schulte Anke Giesen Michael Müller Peter Schmitz Dr Matthias Zieschang Total Non-performance-related components Fixed salary In kind and other 415.0 300.0 300.0 300.0 320.0 1,635.0 22.5 43.9 47.0 33.1 43.9 190.4 Performance- related component without long-term incentive effect Performance- related component with long-term incentive effect Bonus 674.8 476.3 296.4 476.3 523.9 2,447.7 LSA 100.0 0.0 0.0 70.0 70.0 240.0 1,212.3 820.2 643.4 879.4 957.8 4,513.1 Table 13 Fraport Annual Report 2013 Group Management Report / Situation of the Group 41 Remuneration of the Executive Board 2013 in €´000 Performance-related component with long-term incentive effect Share-related remuneration Dr Stefan Schulte Anke Giesen from Jan. 1, 2013 Michael Müller Peter Schmitz Dr Matthias Zieschang Total LTIP 346.7 263.9 136.7 263.9 263.9 1,275.1 Table 14 The bonus includes the payments on account for the fiscal year 2013 LTIP is carried at fair value as at the time of offer. and the addition to the bonus provision in 2013. The following total remuneration was paid to the members of the The Supervisory Board will decide on the final bonus for 2013 in fiscal Executive Board in 2012: year 2014. Remuneration of the Executive Board 2012 in €´000 Remuneration paid out in cash Total Dr Stefan Schulte Michael Müller from Oct. 1, 2012 Peter Schmitz Dr Matthias Zieschang Herbert Mai until Sept. 30, 2012 Total Non-performance-related components Fixed Salary In kind and other 415.0 75.0 300.0 320.0 225.0 1,335.0 22.3 10.3 37.5 40.1 30.2 140.4 Performance- related component without long-term incentive effect Bonus 662.4 72.7 467.5 514.3 350.6 2,067.5 1,099.7 158.0 805.0 874.4 605.8 3,542.9 Table 15 Remuneration of the Executive Board 2012 in €´000 Performance-related component with long-term incentive effect Share-related remuneration Dr Stefan Schulte Michael Müller from Oct. 1, 2012 Peter Schmitz Dr Matthias Zieschang Herbert Mai until Sept. 30, 2012 Total LTIP 291.8 201.8 222.1 222.1 0.0 937.8 Table 16 In accordance with IFRS 2, the stock option programs are recorded MSOP 2005, tranche 2009. These stock options were fully exer- through profit and loss and lead to an expense in the fiscal year from cised by Michael Müller in 2013, which resulted in an expense of the period-appropriate distribution of the option value: In fiscal €12.6 thousand. In the previous year, the expense for the Executive year 2013, only Michael Müller owned 1,800 stock options from Board members amounted to €42.2 thousand. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 4 2 Group Management Report / Situation of the Group Provisions for pensions and similar obligations Pension obligations to currently active Executive Board members Of the future pension obligations of € 32,105 thousand, € 24,035 thou- were as follows: sand relates to pension obligations owed to former Executive Board members and their dependents. Current pension payments amounted to € 1,740 thousand in 2013. Pension obligations to currently active members of the Executive Board in €´000 Dr Stefan Schulte Michael Müller Peter Schmitz Dr Matthias Zieschang Anke Giesen from Jan. 1, 2013 Total Obligation Dec. 31, 2012 Change 2013 Obligation Dec. 31, 2013 4,019 33 1,799 1,654 0 7,505 118 128 39 143 136 564 4,137 161 1,838 1,797 136 8,069 Table 17 Other agreements August 31, 2013. For this and other tasks, Fraport AG supplied Prof Each member of the Executive Board has entered into an obligation Dr Bender with offices, office equipment and supplies and an assistant to purchase shares in Fraport AG amounting to at least half a year’s until August 31, 2013. Prof Dr Bender did not receive any compensa- fixed gross salary (cumulative cost at the time of purchase) and hold tion from Fraport AG for his activities. Until August 31, 2011, travel them for the duration of the respective contract of employment. expenses were reimbursed upon authorization and approval of the Already existing holdings of Fraport AG shares are taken into account. trip according to the applicable company guidelines. After this time, The obligation to purchase and hold shares is reduced pro rata if the travel expenses were no longer reimbursed. employment contract has a term of less than five years. If the Executive Board member is reappointed, the equivalent value of the shares an Prof Dr Bender also received pension payments of € 252.4 thousand. Executive Board member is obliged to hold is increased to at least a Prof Dr Bender has agreed that the post-employment restrictive cov- full year’s gross salary. enant, which applies for two years after the employment agreement ends, was extended for an additional two years up to August 31, 2013. Within the context of her additional expenses for maintaining two Prof Dr Bender waived the right to compensation as set out in Section households, Anke Giesen was granted a monthly gross allowance 90a of the HGB payable by Fraport AG from January 2011. of € 2 thousand for twelve months after the start of the employment contract. Accordingly, she was granted a total of € 24.0 thousand for Other benefits 2013. In addition, relocation costs were covered by Fraport AG upon Executive Board members have as other benefits the option of private submission of relevant invoices in a total amount of € 9.5 thousand. use of a company vehicle with a driver, private use of a company cell The employment contract of Herbert Mai provides for a two-year post- 93 (2) sentence 3 of the AktG, an accident insurance and a life-time employment restrictive covenant following the end of his employment entitlement to use the VIP service of Fraport AG, as well as access to a on September 30, 2012. The compensation to be paid to Mr. Mai by parking spot at Frankfurt Airport. Fraport AG reimburses travel costs for Fraport AG as set out in Section 90a of the HGB was € 150.0 thousand company trips and other business expenses in line with the regulations phone, a D & O liability insurance with a deductible pursuant to Section for 2013. Pursuant to the employment contract, the above-mentioned in general use at Fraport AG. compensation shall be credited against the retirement payments inasmuch as the compensation together with other generated in- Disclosures pursuant to Section 15a of the WpHG come received exceeds 100 % of the last fixed annual gross payment Pursuant to Section 15a of the WpHG, members of the Fraport Execu- received. Furthermore, Mr. Mai received pension benefit payments tive Board and Supervisory Board are required to disclose transactions of € 135.0 thousand, a proportional bonus for the fiscal year 2012 of with shares of Fraport AG or any related financial instruments to the € 350.6 thousand and a proportional payment of the LSA for the fiscal company and the German Federal Financial Supervisory Authority year 2010 of € 64.2 thousand. (BaFin) within five business days. This also applies to persons who are closely related to members of the Executive Board and Supervisory The former Chairman of the Executive Board, Prof Dr Wilhelm Bender, Board as defined in Section 15a (3) of the WpHG. These transactions continued to render consulting services to Fraport AG even after have been published by Fraport in accordance with the deadlines his departure from the company. The consulting agreement, which under Section 15a of the WpHG. ended in 2011, was extended for another two years and ended on Fraport Annual Report 2013 Group Management Report / Situation of the Group 43 Remuneration of the Supervisory Board in fiscal year 2013 members of or leave the Supervisory Board during the current fiscal year receive pro rata compensation. The same holds true in the case The remuneration of the Supervisory Board is laid down in Section 12 of any change in the membership of committees. Each Supervisory of the Statutes of Fraport AG. It is provided solely as fixed remunera- Board member receives € 800 for every Supervisory Board meeting he tion. According to this, every member of the Supervisory Board shall or she attends and every committee meeting attended of which he or receive a fixed compensation of € 22.5 thousand for each full fiscal year she is a member. Accrued expenses will also be reimbursed. payable at the end of the fiscal year, the Chairman and the Chairman of the finance and audit committee shall receive twice that amount, All active members of the Supervisory Board received an aggregate the Vice Chairman and the Chairmen of the other committees shall compensation of € 889.5 thousand in 2013 (previous year: €853.4 each receive one and a half times this amount. For their membership thousand). on a committee, Supervisory Board members receive an additional, fixed compensation of € 5 thousand per committee for each full fiscal The following remuneration was paid to the members of the Supervisory year. This additional compensation is paid for a maximum of two Board for fiscal year 2013: committee memberships. Supervisory Board members that become Remuneration of the Supervisory Board 2013 in € Supervisory Board Member Fixed salary Committee remuneration Attendance fees Ismail Claudia Devrim Mario A. Uwe Hakan Kathrin Detlef Peter Dr Margarete Jörg-Uwe Erdal Lothar Dr Roland Stefan H. Michael Mehmet Arno Gabriele Dr h c Petra Gerold Hans-Jürgen Werner Edgar Christian Karlheinz Aydin Amier Arslan Bach Becker Cicek Dahnke Draths Feldmann Haase Hahn Kina Klemm Krieg Lauer Odenwald Özdemir Prangenberg Rieken Roth Schaub Schmidt Schmidt Stejskal Strenger Weimar Prof Dr-Ing Katja Windt 9,375.00 19,687.50 13,125.00 9,375.00 13,125.00 13,125.00 13,125.00 7,500.00 22,500.00 35,625.00 33,750.00 9,375.00 22,500.00 22,500.00 22,500.00 22,500.00 13,125.00 22,500.00 1,875.00 9,375.00 33,750.00 22,500.00 22,500.00 22,500.00 18,750.00 45,000.00 22,500.00 2,083.33 5,833.33 5,833.33 2,083.33 5,597.23 2,916.67 2,916.67 3,333.33 4,763.90 10,000.00 10,000.00 2,083.33 10,000.00 5,000.00 0.00 5,000.00 2,916.67 5,000.00 833.33 4,166.67 10,000.00 5,000.00 6,666.67 10,000.00 4,166.67 10,000.00 10,000.00 2,400.00 11,200.00 6,400.00 2,400.00 7,200.00 6,400.00 5,600.00 4,000.00 6,400.00 12,000.00 13,600.00 2,400,00 16,800.00 11,200.00 4,000.00 5,600.00 6,400.00 11,200.00 0.00 2,400.00 12,800.00 11,200.00 10,400.00 19,200.00 5,600.00 9,600.00 12,800.00 Total 13,858.33 36,720.83 25,358.33 13,858.33 25,922.23 22,441.67 21,641.67 14,833.33 33,663.90 57,625.00 57,350.00 13,858.33 49,300.00 38,700.00 26,500.00 33,100.00 22,441.67 38,700.00 2,708.33 15,941.67 56,550.00 38,700.00 39,566.67 51,700.00 28,516.67 64,600.00 45,300.00 Table 18 Compensation of the Economic Advisory Board in fiscal year 2013 In fiscal year 2013, aggregate compensation of the Economic Advisory Board amounted to € 90.5 thousand (previous year: € 93.0 thousand). For membership on the Economic Advisory Board, a compensation of € 2,500 is paid for every year of membership and € 2,000 per meet- ing attended, with the Chairman receiving twice that amount. Travel expenses are reimbursed independently. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 4 4 Group Management Report / Economic Report Economic Report during the course of 2013, increasing momentum in global economy could be seen. General Statement of the Executive Board Despite a slight cooling compared to the previous year, the German economy asserted itself well in a European comparison, at +0.4 % in In a volatile economic environment, Fraport reached its forecasted 2013. After a phase of weakness in winter 2012/2013 (calendar- and goals in fiscal year 2013 (see also 2012 Group management report seasonally-adjusted –0.5 % in the fourth quarter of 2012 and stagnation beginning on page 70). After a significant decline in passenger in the first quarter of 2013, each compared to the previous quarter), numbers at the Frankfurt site during the first months of 2013, a good the economic situation improved during the course of 2013 and thus booking situation during the summer months and capacity increases found its way back to moderate growth in a difficult international by the airlines during the last months of the fiscal year contributed to environment. The driver of this positive annual result was domestic the slight positive passenger growth overall of 0.9 %. In addition to consumption and particularly government and private consumer this, the increase in the airport and infrastructure charges and rising demand, which grew by a total of 0.9 % on a price-adjusted basis. retail revenue in connection with the operation of Pier A-Plus led to Exports fell by 0.2 %, while imports fell by 1.2 %. higher revenue at the Frankfurt site. At Group companies outside of the Frankfurt site in which Fraport holds an interest of at least 50 %, the In spite of the overall moderate economic development, the price passenger and result figures continued to develop positively. levels remained high on the raw materials markets, particularly for crude oil (average global market price per barrel in 2013: US-$106, As a result of the operating activity, the Group EBITDA was within the compared to around US-$107 in 2012 and 2011). The growth rate of forecasted range, at around € 880 million. Lower depreciation and global trade was again nearly 3 %. amortization than expected led to a Group EBIT of some €528 mil- lion, which was slightly above the forecast. In conjunction with the anticipated deterioration in the financial result, the Group result was Gross domestic product (GDP)/world trade lower than the value of the previous year, as expected in the forecast. Real changes compared to the previous year in % 2013 2012 Due to a continued solid supply of liquidity, the medium- to long- term oriented repayment profile as well as the positive development of free cash flow, the Executive Board again characterizes the financial position of the Fraport Group as stable at the end of fiscal year 2013. The Executive Board therefore assesses the business development in 2013 as favorable overall. Economic and industry-specific Conditions Development of the economic conditions With growth of around 3 %, the development of the global economy in the past fiscal year was within the relatively wide range of forecasts Germany Euro zone Bulgaria Turkey Peru USA Japan Great Britain Russia China India Brazil World by various banks and financial institutions of 2.4 % to 3.5 %. However, World trade 0.4 – 0.4 0.5 3.7 5.4 1.9 1.7 1.7 1.5 7.7 4.4 2.3 3.0 2.7 the development in the individual regions varied strongly. While the countries of the Euro zone as a whole suffered a drop in economic performance of approximately 0.4 % due to the continuing effects of the European debt crisis, the Asian countries – essentially Japan, China and India – and the countries of Latin America and Africa developed significantly more strongly, but lagged behind expectations. Overall, 2013 figures based on: International Monetary Fund (IMF, January 2014, partially October 2013), Organisation for Economic Co-operation and Development (OECD, November 2013), Deutsche Bank (February 2014), DekaBank (February 2014), German Federal Statistical Office (January/ February 2014), www.tecson.de (oil prices, January 2014). 2012 figures: IMF (January 2014, partially October 2013) and German Federal Statistical Office for GDP of Germany (January 2014). 0.7 – 0.7 0.8 2.2 6.3 2.8 1.4 0.3 3.4 7.7 3.2 1.0 3.1 2.7 Table 19 Fraport Annual Report 2013 Group Management Report / Economic Report 45 Development of the legal environment During the past fiscal year, there were no changes to the legal environ- Building application for Terminal 3 in Frankfurt submitted ment that had a significant influence on the business development of After the HMWVL approved the necessary changes to the detailed the Fraport Group. planning of Terminal 3 with a notification dated September 6, 2013, Fraport submitted the building application to the competent con- Development of the global aviation market struction regulatory authority of the City of Frankfurt for the terminal For the full year of 2013, the ACI reported preliminary worldwide pas- on the southern part of Frankfurt Airport on September 17, 2013. senger growth of 3.9 %. In the same period, faced with sustained low Construction of Terminal 3 is part of the airport expansion approved global economic momentum, air freight volume gained moderately by the zoning decision and creates the required long-term terminal by 1.0 %. While the passenger figure at European airports grew by capacity needed to serve Frankfurt’s projected growth in traffic. With 2.6 %, the European air freight volume was only 0.8 % above the previ- the submission of the building application, construction can begin as ous year’s level, particularly due to the continuing effects of the debt of around 2015 and the first phase can begin operation from around crisis. Also influenced by weather and strike-related flight cancellations, 2021 onwards in line with demand. German airports recorded a slight cumulative increase in passenger traffic of 0.5 %. With respect to cargo tonnage handled (air freight Terminal openings in Varna and Burgas and air mail), Germany was slightly above the previous year’s level The Group company Twin Star opened a new 20,000 m² terminal at with growth of 0.2 %. The leap year day from 2012 had a negative Varna Airport in August 2013 and a 21,000 m² terminal at Burgas Airport impact on traffic results during the 2013 reporting period by nearly in December 2013 with a similar design, which are customized to the 0.3 percentage points. respective passenger requirements. The new passenger facilities have, among other things, an arrival area that can have separate Schengen and non-Schengen areas and attractive shopping and food and bever- Passenger and cargo development by region age areas. The terminals make a significant contribution to the Group Changes compared to the previous year in % Passengers 2013 Air freight 2013 0.2 0.8 0.5 – 0.2 5.4 0.9 – 2.7 1.0 Table 20 Germany Europe North America Latin America Middle East Asia-Pacific Africa World 0.5 2.6 1.3 4.8 10.1 7.2 – 0.6 3.9 Source: ACI Passenger Flash and Freight Flash December 2013 (ACI, February 2014), ADV for Germany cargo in place of air freight (January 2014). Significant Events Zoning decision for the expansion of the airport in Frankfurt supplemented company Twin Star’s further growth potential in the passenger and retail areas. The higher depreciation, amortization and interest expenses as a result of the terminal inaugurations will initially offset the positive EBITDA effect expected in 2014 from the expansion. Terminal opened at St. Petersburg Airport Together with its partners in the Northern Capital Gateway consortium, Fraport started operations at the new terminal at Pulkovo Airport in St. Petersburg in December 2013. As a result, the airport now has an annual capacity of more than 17 million passengers and offers its guests, in addition to a significantly improved passenger experience, more retail and food and beverage shops located in an area covering 13,500 m². The necessary conditions are now in place for future passenger and retail growth of the Group company. In addition to positive operating effects, the terminal inauguration will also lead to higher depreciation, amortization and interest expenses for the Group company. Overall, therefore, the Group company anticipates a temporary negative effect on earnings from the terminal opening. In addition to the construction of the new terminal, the Northern Capital Gateway consortium has, The Hessian Ministry of Economics, Transport, Urban and Regional among other things, constructed additional apron areas, a hotel and Development (HMWVL) supplemented the zoning decision of a business center. December 18, 2007, with the zoning supplement decision of April 30, 2013 containing more stringent protection requirements for commercial properties and by the zoning supplement decision of May 10, 2013 containing an additional protection requirement with respect to wake turbulences. An explanation of the effects on the consolidated financial statements can be found in the chapter titled “Asset and Financial Position” beginning on page 53 of this report. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 4 6 Group Management Report / Economic Report New Hesse coalition agreement presented the first months of the fiscal year, a solid bookings situation during the On December 18, 2013, the parties CDU and “Bündnis’90/Die Grünen” summer months and capacity increases by the airlines during the last presented their coalition agreement for the Hesse parliamentary term months of 2013 contributed to the overall slight growth. There was a from 2014 to 2019. The coalition agreement includes, among others, negative impact not only from the absence of the leap-year day, but the following items that have an impact on Frankfurt Airport: needs- also due to the fact that various airlines reduced services as a result of related examination of the Terminal 3 construction project, introduc- continuing consolidation measures. Moreover, the cumulative result tion of a noise emission ceiling and additional measures to restrict was impacted by a large number of weather and strike-related flight aircraft noise pollution. According to the coalition agreement, these cancellations, affecting more than 360,000 passengers. measures shall primarily include restrictions from 10 p.m. to 11 p.m. and 5 a.m. to 6 a.m. with the objective of achieving regular seven-hour The disruptive events and service reductions primarily influenced breaks from noise during the night. A description of regulatory and domestic and European passenger traffic. While both traffic mar- legal risks, as well as risks in relation to the airport expansion at the kets still showed perceptible declines until the middle of the year, Frankfurt site, can be found in the “Risk and Opportunities Report” they gradually increased during the further course of the year and beginning on page 67 of this report. recorded a solid growth rate at the end of the year (domestic traffic: Business Development +0.9 %; European traffic: +1.6 %). Despite the negative base effect from the leap-year day in the previous year, intercontinental passenger traffic increased by 0.5 % in the reporting period. Development was above average particularly to and from Central America (including the General development of the airport portfolio Caribbean) and Central Africa, but also to and from North America. The Fraport Group’s airports (those in which an interest of 50 % or Sub-markets in the Far East, particularly India, China, Taiwan and more is held) handled some 103.5 million passengers in 2013 – an Malaysia, also grew perceptibly. In contrast, the political unrest in the increase of 4.1 %. The number of aircraft movements increased slightly Middle East and North Africa was reflected in the lower passenger by 0.7 % to more than 825,000. The cargo volume grew by 1.3 % to a volumes for these regions. good 2.39 million metric tons. In total, around 197.9 million passengers (+5.2 %) used Fraport airports (including minority-owned airports and At nearly 2.1 million metric tons handled, cargo tonnage exceeded the management contract at Cairo Airport). the previous year by 1.4 %, or around 28,000 tons. In line with the Development at Frankfurt Airport with an increase of +4.4 % (+9,300 metric tons). Intercontinental cargo With an increase of 0.9 % to some 58.0 million passengers, Frankfurt throughput, which has significantly higher volume at nearly 88 % of Airport exceeded the volume of the previous year by around 515,000 the total, gained by 1.3 % (around +23,600 metric tons). Domestic passengers. After a significant decline in passenger numbers during tonnage declined by nearly 10 %. passenger traffic, European volume showed the most dynamic growth 2013 passenger and cargo development at Frankfurt Airport (% change over 2012) – 4.9 0.9 0.2 – 3.4 – 1.1 4.6 – 2.2 0.1 0.4 – 0.6 0.7 3.0 – 0.7 – 0.6 3.6 1.7 3.6 0.0 3.5 3.1 3.5 4.0 2.9 2.6 in % 0 January February March April May June July August September October November December Passengers Cargo Graphic 8 Fraport Annual Report 2013Group Management Report / Economic Report 47 With a rising average aircraft size, the number of aircraft movements number of passengers was primarily more travelers from Russia. Varna and the cumulative maximum take-off weights were down by 2.0 % Airport also benefited during the reporting period from the growth and 1.7 %, respectively, due to the consolidation measures of the air- of Russian passengers, among other things, and showed an increase lines, the high number of flight cancellations and the missing leap-year of 8.0 % to some 1.3 million passengers. day. The share of transfer passengers – as in the previous year – stood at about 55 %. Delhi Airport showed an increase in traffic of 7.3 % in 2013 compared to the previous year, to around 36.7 million passengers. International Development outside of the Frankfurt site traffic recorded particularly strong growth (+15.4 %). At Antalya Airport, the number of passengers in fiscal year 2013 increased by 7.1 % to around 26.7 million. Both international traffic Xi’an Airport again achieved positive performance. Passenger volume (+6.4 % to approximately 21.7 million passengers) and domestic traffic at the end of the fiscal year stood at around 26.0 million. This represents within Turkey (+10.2 % to around 5.0 million passengers) contributed an increase of 2.6 million passengers, or 11.2 %, compared to the to the positive development. Additional passengers originated from previous year. Russia and Ukraine in particular. Lima Airport again showed strong growth of 11.9 % in 2013 to some passenger increase of 15.2 % for the full year of 2013 in comparison to 14.9 million passengers. The number of international passengers grew the previous year. International traffic continued to develop positively With around 12.9 million passengers, St. Petersburg Airport saw a by 8.8 % to around 7.0 million and the share of domestic passengers with a growth rate of just under 15 %. increased by 14.7 % to around 7.9 million. Cargo throughput was slightly above the previous year’s level at around 297 thousand metric With approximately 5.2 million passengers, the volume at Hanover tons (+1.0 %). Airport was slightly below the previous year’s level (–1.0 %). While the months of May, June and July recorded passenger growth, the With nearly 2.5 million passengers, Burgas Airport achieved growth remaining months showed declining passenger numbers. The main of 4.2 % compared to the previous year. The reason for the higher reason was declining passenger numbers at Air Berlin. Airports with a Fraport share of at least 50 % 1) Fraport share in % Passengers 2) Cargo (air freight and air mail in m. t.) Movements 2013 Change in % over 2012 2013 Change in % over 2012 2013 Change in % over 2012 Frankfurt Antalya Lima Burgas Varna Group 100.00 58,036,948 51.00/50.00 3) 26,715,971 70.01 60.00 60.00 14,913,314 2,480,099 1,319,240 103,465,572 0.9 7.1 11.9 4.2 8.0 4.1 2,094,607 n. a. 296,517 2,625 35 2,393,784 1.4 n. a. 1.0 15.1 5.5 1.3 472,692 169,488 153,122 18,447 11,516 825,265 1) In addition, Fraport holds a 100 % share in the operating company of the new Dakar Airport, which is currently under construction. 2) Commercial traffic only; in + out + transit. 3) Proportionate consolidation, 51 % voting rights and 50 % equity share. –2.0 6.4 3.2 –2.2 7.2 0.7 Table 21 Minority-owned airports or airports under management contracts 1) Fraport share in % Passengers 2) Cargo (air freight and air mail in m. t.) Movements 2013 Change in % over 2012 2013 Change in % over 2012 2013 Change in % over 2012 Delhi Xi’an Cairo St. Petersburg Hanover Total 10.00 24.50 0.00 35.50 30.00 36,712,455 26,045,593 13,577,713 12,854,366 5,234,909 94,425,036 7.3 11.2 –7.7 15.2 –1.0 6.4 595,775 178,876 n. a. n. a. 14,666 789,317 6.3 2.3 n. a. n. a. –7.6 5.1 309,074 225,099 142,251 137,480 76,060 889,964 1) Without traffic figures for the airports in Riyadh und Jeddah (management contracts). Those figures were not available until the editorial deadline. 2) Commercial traffic only; in + out + transit. 1.3 10.7 –0.3 9.4 –5.1 3.8 Table 22 Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 4 8 Group Management Report / Economic Report Comparison with the forecasted development As a result of the decline in construction activity, other internal work In comparison to the outlook for fiscal year 2013, the passenger capitalized declined from € 44.0 million to € 35.1 million (– 20.2 %). traffic in particular at the Frankfurt site slightly exceeded expectations Other operating income fell mainly due to lower releases of provi- (outlook 2013: at approximately the level of 2012). The reasons for sions, from €55.8 million to € 34.3 million (– 38.5 %). the deviation were essentially the good booking situation during the summer months and capacity increases by the airlines during the last At € 2,631.4 million total revenue achieved an increase of € 89.1 million months of the fiscal year. With a growth rate of 1.4 %, cargo tonnage or 3.5 %. When adjusted for the application of IFRIC 12, this was also moderately exceeded the forecast of stagnation or a slight rise. € 52.1 million above the corresponding value of the previous year, at The Group airports in which Fraport holds an interest of at least 50 % € 2,565.7 million (+2.1 %). developed positively, in line with the outlook. Results of Operations An increase in cost of materials mainly resulted at the Frankfurt site from higher energy supply services and utilities related to the first-time full-year operation of Pier A-Plus. Lower costs from land sales had the opposite effect. In external business, especially the recognition of Revenue and earnings development for 2013 capacitive capital expenditure in the Group companies, Twin Star and In fiscal year 2013, the Fraport Group generated revenue of Lima, in connection with the application of IFRIC 12, as well as higher € 2,561.4 million. Compared with the previous year, this corresponded traffic-related concession fees in Lima, led to a rise in cost of materials. to an increase of € 119.4 million, or 4.9 %. Adjusted for the recognition In total, cost of materials increased by € 54.9million, to € 613.0 million of capacitive capital expenditure, neutral on earnings, in the Group (+9.8 %). When adjusted for the recognition of capacitive capital companies Twin Star and Lima in connection with the application of expenditure in the Group companies Twin Star and Lima this was at IFRIC 12, revenue of € 2,495.7 million was above the corresponding € 547.3 million and therefore € 17.9 million above the adjusted previous value for the previous year by € 82.4 million (+3.4 %). year’s value (+3.4 %). At the Frankfurt site, the increase in airport and infrastructure charges Personnel expenses increased slightly by €3.9 million to €946.8 mil- and a rise in retail revenue in connection with the operation of Pier lion (+0.4 %) in the reporting period. Thus personnel expense per A-Plus, in particular, led to higher revenue. Outside of Frankfurt, posi- employee amounted to an average of €45.2 thousand (previous year: tive development was recorded particularly in the Group companies €45.0 thousand). The increase was mainly attributable to the collective Lima, Antalya and Twin Star. In the previous year, high one-time wage agreement in the public sector. proceeds from the realization of land sales at the Frankfurt site resulted in additional revenue. Other operating expenses fell slightly from € 192.6 million to € 191.4 million (– 0.6 %) mainly due to the provision created in the pre- vious year for noise abatement measures in the amount of € 10.5 million. Higher assessment and consulting costs, among other things, had an Group revenue and return on revenue € million 2,194.6 12.7 2,371.2 14.6 2,442.0 14.9 2,561.4 13.3 in % opposite effect. 0 0 2010 2011 2012 2013 Group revenue Return on revenue Graphic 9 Fraport Annual Report 2013Group Management Report / Economic Report 49 Group EBITDA and EBITDA margin Group result and earnings per share € million in % € million 710.6 32.4 802.3 33.8 848.7 34.8 880.2 34.4 271.5 2.86 250.8 2.62 251.5 2.59 235.7 2.40 0 0 0 2010 2011 2012 2013 2010 2011 2012 2013 in € 0 Group EBITDA EBITDA margin Graphic 10 Group result Earnings per share (basic) Graphic 11 Because of the positive revenue development, Group EBITDA during Due to the significant deterioration of the financial result, the Group the reporting period rose €31.5 million to € 880.2 million (+3.7 %). EBT in 2013 declined from €364.1 million to €340.7 million (– 6.4 %). Compared to the previous year, the EBITDA margin remained With a tax rate of 30.8 % (previous year: 30.9 %), the Group result at nearly the same level at 34.4 % (– 0.4 percentage points). When declined compared to the previous year by €15.8 million to €235.7 million adjusted for income and expenses from the recognition of capacitive (– 6.3 %). The basic earnings per share at €2.40 were €0.19 below capital expenditure outside of the Frankfurt site in conjunction with the 2012 value (– 7.3 %). IFRIC 12, this increased from 35.2 % to 35.3 %. Comparison with the forecasted development Depreciation and amortization in the amount of € 352.1 million Compared to the forecasted development for 2013 (see also Group (previous year: € 352.7 million) led to a Group EBIT of € 528.1 million. management report 2012 from page 72 onwards), revenue and When compared with the previous year, this corresponds to a growth expenses of the Fraport Group have developed within the scope of of 6.5 % (+€ 32.1 million). expectations. While the slightly better-than-forecasted passenger de- velopment at the Frankfurt site increased revenue, the development The financial result in the amount of – € 187.4 million deteriorated in of revenue in the Retail & Real Estate segment remained slightly below 2013 by € 55.5 million (previous year: – € 131.9 million). With a slight expectations. Correspondingly, Group EBITDA increased within the declining interest result (interest income and interest expenses) of forecasted range from € 870 million to € 890 million. Lower deprecia- – € 177.0 million (previous year: – € 174.1 million), the change in the tion and amortization than expected, which resulted, among other financial result resulted from the decline in the other financial result by things, from the reduced capital expenditure, led to Group EBIT of € 27.3 million (2013: € 3.2 million compared with 2012: € 30.5 million) € 528.1 million, which was above the expected range of up to around and a decline in the result from associated companies by € 25.3 million € 520 million. In conjunction with the forecasted deterioration of the (2013: – € 13.6 million compared with 2012: € 11.7 million). While the financial result, the Group result was below the level of fiscal year negative development of the other financial result was primarily due 2012, as anticipated. to higher proceeds in the previous year from the disposal of assets in the course of financial asset management and associated foreign currency translation effects, the decline in the result from associated companies was, in particular, the result of negative foreign currency translation effects in the Group company Pulkovo in St. Petersburg which is accounted for using the equity method. Capitalized interest expenses related to construction work had a reducing effect on the reported interest expense in fiscal year 2013, with an amount of € 18.1 million (previous year: € 28.2 million). Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20135 0 Group Management Report / Economic Report Segments Aviation € million Retail & Real Estate € million 693.9 131.6 56.4 774.9 187.8 96.1 823.4 201.9 79.6 845.2 205.4 88.1 403.1 294.7 227.9 444.7 305.3 232.1 452.9 335.2 252.8 469.0 350.7 267.9 0 0 2010 2011 2012 2013 2010 2011 2012 2013 Revenue EBITDA EBIT Graphic 12 Revenue EBITDA EBIT Graphic 13 Revenue in the Aviation segment for the fiscal year 2013 was With revenue of € 469.0 million, the Retail & Real Estate segment € 845.2 million, which corresponds to an increase of € 21.8 million recorded an improvement of € 16.1 million in 2013 compared with (+2.6 %) compared with the previous year. With a slight rise in the the previous year figure (+3.6 %). The higher revenue was essentially number of passengers, the increase in airport charges in Frankfurt by caused by the positive developments in the areas of retail and real an average of 2.9 % as of January 1, 2013 was the primary basis of the estate. Mainly thanks to the opening of Pier A-Plus, the key performance revenue growth. On the expense side, a provision for noise abatement indicator “net retail revenue per passenger” improved from € 3.32 to measures in the amount of € 10.5 million, formed in the second quarter € 3.60 (+8.4 %). In the previous year, high one-time proceeds from the of 2012, led to a positive base effect for the fiscal year 2013. Adjusted realization of land sales resulted in additional revenue. Non-staff costs for this base effect, operating expenses increased during 2013 in par- fell, primarily as a result of reduced expenses in connection with land ticular as a result of having operated Pier A-Plus, which was opened in sales, while higher expenses for energy supply services and utilities October 2012, for an entire year for the first time. acted in the opposite direction. Despite a lower volume of internal work capitalized, segment EBITDA Segment EBITDA increased by € 15.5 million to € 350.7 million (+4.6 %) improved by €3.5 million to € 205.4 million (+1.7 %) as a result of the as a result of the positive revenue development. Depreciation and increase in revenue and the base effect resulting from the provision amortization remained largely unchanged, leading to an equally formed in the previous year. Lower depreciation and amortization in considerable increase in segment EBIT of € 15.1 million (+6.0 %). connection with lower capital expenditure led to a segment EBIT of € 88.1 million. Compared with the previous year, this signified growth of € 8.5 million (+10.7 %). Fraport Annual Report 2013Group Management Report / Economic Report 51 Ground Handling € million External Activities & Services € million 658.6 44.1 11.0 655.5 54.5 20.3 649.3 37.8 –1.1 656.2 38.2 –2.3 439.0 240.2 135.6 496.1 254.7 148.1 516.4 273.8 164.7 591.0 285.9 174.4 0 0 2010 2011 2012 2013 2010 2011 2012 2013 Revenue EBITDA EBIT Graphic 14 Revenue EBITDA EBIT Graphic 15 Despite lower maximum take-off weights at the Frankfurt site, revenue The External Activities & Services segment realized an increase in revenue in the Ground Handling segment in the past fiscal year rose slightly by of € 74.6 million to € 591.0 million (+14.4 %) in the fiscal year 2013. At € 6.9 million to € 656.2 million (+1.1 %). With a slight passenger growth, € 37.0 million, a major part of the additional revenue was attributable this increase was primarily the result of price effects for infrastructure to increased capacitive capital expenditure in the Group companies charges, as well as the positive revenue effects from the performance Twin Star and Lima in connection with the application of IFRIC 12. of winter services. The performance of winter services also brought Adjusted for the application of IFRIC 12, segment revenue improved a corresponding increase in non-staff costs and personnel expenses. from € 487.7 million in the previous year to € 525.3 million (+7.7 %). Conversely, the movement of employees into the passive phase of their The positive development of revenue was essentially due to passenger partial retirement, with a correspondingly higher number of claims growth in the Lima, Antalya and Twin Star Group companies. Operating on the provisions formed in previous years, as well as an optimized expenses increased in particular due to the recognition of capacitive deployment of personnel led to a reduction in personnel expenses. capital expenditure in the Twin Star and Lima Group companies. Adjusted for the application of IFRIC 12, operating expenses increased Despite lower other operating income as a result of the negative base primarily as a result of higher traffic-related concession fees in Lima. effect from the release of a staff-related provision in 2012, segment EBITDA rose in comparison with the previous year from € 37.8 million Segment EBITDA improved by € 12.1 million to €285.9 million (+4.4 %), to € 38.2 million (+1.1 %). Higher depreciation and amortization due, mainly due to positive contributions from the Antalya, Lima and among other things, to the utilization of Pier A-Plus led to a segment Twin Star Group companies. At € 174.4 million, segment EBIT exceeded EBIT of –€ 2.3 million. Compared with the previous year, this repre- the figure of the previous year by € 9.7 million (+5.9 %). sented a deterioration of € 1.2 million. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20135 2 Group Management Report / Economic Report Development of the key Group companies the Group’s key companies with an interest of at least 50 % outside The following table shows the pre-consolidation business figures for Frankfurt: Development of the key Group companies € million Fraport share Revenue 1) EBITDA EBIT 2013 2012 2011 2010 2013 2012 2011 2010 2013 2012 2011 2010 Antalya 2) Lima Twin Star 51 %/50 % 70.01 % 60 % 320.7 208.0 101.1 301.1 191.3 63.3 293.9 266.9 276.2 259.6 254.2 216.9 177.9 161.7 158.0 122.8 159.3 135.4 62.8 40.2 71.3 28.2 65.5 25.9 53.2 23.8 49.1 21.1 57.7 20.2 52.5 18.8 42.7 17.2 37.6 13.9 Table 23 1) Revenue adjusted by IFRIC 12: Antalya 2013: €320.7 million, 2012: €301.1 million, 2011: €293.9 million, 2010: €258.3 million. Lima 2013: €193.8 million, 2012: €180.0 million, 2011: €146.0 million, 2010: €130.7 million. Twin Star 2013: €49.6 million, 2012: €45.9 million, 2011: €43.7 million, 2010: €38.0 million. 2) Proportionate consolidation with 51 % voting interests and 50 % equity share. Values correspond to 100 % figures before proportionate consolidation. Comparison with the forecasted development Due primarily to the fact that earnings development of the Group Compared with the forecast for the fiscal year 2013 (see also Group company Antalya was stronger than expected, EBITDA and EBIT in the management report 2012, beginning on page 72), the development External Activities & Services segment were higher than the forecast of the Fraport segments over the past fiscal year was as follows: for the fiscal year 2013, which anticipated segment EBITDA and EBIT remaining at approximately the same level as the previous year. In the Aviation segment, both revenue and segment EBIT were slightly higher than expected for the fiscal year 2013. This positive develop- ment was due to the slightly better passenger development on the Segment contributions to Group revenue and EBITDA 2013 one hand and lower depreciation and amortization expenses on the The significant increase in revenue in the External Activities & Services other hand. segment, which was among others also due to increased capacitive capital expenditure in the Twin Star and Lima Group companies in With a growth of 3.6 %, the increase in revenue in the Retail & Real connection with the application of IFRIC 12, was also manifested in Estate segment remained slightly below the expected “significant” the fiscal year 2013 in the segment’s higher contribution to Group increase that was forecasted for 2013. This more modest increase in revenue (share 2013: 23.1 % compared to 2012: 21.2 %). Due to the revenue was due to lower income from energy supply services on the comparatively strong revenue development in the External Activities & one hand and lower than expected revenue from the retail business Services segment, the contribution to Group revenue in 2013 of the on the other hand. Expenses resulting from land sales were also lower, Aviation, Retail & Real Estate and Ground Handling segments was meaning that both segment EBITDA and EBIT rose considerably, in slightly lower (– 0.7, – 0.2 and – 1.0 percentage points, respectively). line with the forecast. The development of the Ground Handling segment was also in line with the forecast, as a slightly more negative development in maximum take-off weights was offset by a better passenger development. Segment contribution to Group revenue 2013 Segment contribution to Group EBITDA 2013 in % 4 3 AVIATION 1 Aviation 1 2 Retail & Real Estate 3 Ground Handling 4 External Activities & Services 33.0 18.3 25.6 23.1 in % 4 3 2 2 1 AVIATION 1 Aviation 2 Retail & Real Estate 3 Ground Handling 4 External Activities & Services 23.3 39.9 4.3 32.5 Graphic 16 Graphic 17 Fraport Annual Report 2013 Group Management Report / Economic Report 53 With a share of 39.9 %, the Retail & Real Estate segment remained the At €372.3 million, the greater part of capital expenditure for property, driver behind the Group-wide EBITDA development in the fiscal year plant and equipment related to Fraport AG (previous year: €578.4 million). 2013 (+0.3 percentage points). At 32.5 %, the External Activities & Capital expenditure for property, plant and equipment was focused on Services segment also increased its contribution to Group EBITDA (+0.2 expanding Frankfurt Airport’s capacity, settling the costs of Pier A-Plus percentage points). Despite an absolute growth in EBITDA, the Aviation and modernizing the terminals and taxiways. With regard to financial and Ground Handling segments recorded a slightly lower contribution assets, investments were primarily made in securities. to Group EBITDA (– 0.5 and – 0.1 percentage points, respectively). The following graphic shows capital expenditure for the fiscal year 2013 broken down by segment: Asset and Financial Position Capital expenditure Capital expenditure by segments The Fraport Group recorded capital expenditure of €661.9 million during the fiscal year 2013 and thus €397.8 million less than in 2012 € million (previous year: €1,059.7 million). In the reporting period, €395.1 million 4 was used for property, plant and equipment (previous year: €602.9 mil- lion), €186.6 million in financial assets (previous year: €400.1 million), 3 €14.4 million in capital expenditure for investment property (previous year: €12.2 million) and €65.8 million in capital expenditure for intangible assets and airport operating projects (previous year: €44.5 million). Capitalized interest expenses related to construction 2 work amounted to €18.1 million in 2013 (previous year: €28.2 million). AVIATION 1 Aviation 2 Retail & Real Estate 1 3 Ground Handling 297.5 192.7 66.3 4 External Activities & Services 105.4 Multi-year overview of capital expenditure € million Airport operating projects Intangible assets Property, plant and equipment Investment property Financial assets Total 2013 57.1 8.7 395.1 14.4 186.6 661.9 2012 39.1 5.4 602.9 12.2 400.1 2011 51.1 10.0 876.1 62.6 440.4 1,059.7 1,440.2 Graphic 18 2010 23.2 6.0 781.5 0.1 223.1 1,033.9 Table 24 Statement of cash flows At €574.8 million, cash flow from operating activities (operating cash flow) for the past fiscal year was up by €21.8 million compared with the previous year (+3.9 %). This increase is primarily due to the fact that less income tax was paid. The lower cash outflow led to a positive free cash flow of €73.1 million. Compared with the previous year, this represented an improvement of €235.5 million (previous year: – €162.4 million). Including cash outflows for investments in cash deposits and securities, the cash flow used in investing activities in the past fiscal year was Cash flow used in investing activities without investments in €280.0 million (previous year: €779.2 million). cash deposits and securities decreased from €736.2 million to €492.8 million, primarily due to significantly lower capital expenditure for property, plant and equipment. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 5 4 Group Management Report / Economic Report The cash flow used in financing activities of €255.1 million (previ- In connection with the financing for the portion of the Antalya con- ous year: cash inflow of €218.2 million) was mainly attributable to cession attributable to Fraport, €105.3 million of bank deposits were the change in loans. Loans taken up in 2012 resulted in a cash inflow, subject to drawing restrictions as at December 31, 2013. Cash and whereas in the past fiscal year loans were repaid, which resulted in cash equivalents as at the statement of cash flows therefore came to a cash outflow. €167.4 million as at December 31, 2013 (previous year: €127.1 million). The following table shows a reconciliation to the cash and cash equiva- lents as shown on the consolidated statement of financial position: Reconciliation to the cash and cash equivalents as at the consolidated statement of financial position € million December 31, 2013 December 31, 2012 Cash and cash equivalents as at the consolidated statement of cash flows Cash and cash equivalents with a duration of more than three months Restricted cash Cash and cash equivalents as at the consolidated statement of financial position 167.4 332.4 105.3 605.1 127.1 584.0 110.8 821.9 Table 25 Summary of the statement of cash flows and reconciliation to the Group liquidity (changes to the previous year) € million 127.1 (– 5.7) 574.8 (+21.8) – 492.8 (+243.4) 212.8 (+255.8) – 255.1 (– 473.3) 0.6 (– 1.7) 167.4 1) (+40.3) 1,318.9 (– 217.1) 1,486.3 (– 176.8) 0 Cash and cash equivalents as at January 1, 2013 Cash flow from operating activities Cash flow used in investing activities without investments in cash deposits and securities Cash flow from/used in cash deposits and securities Cash flow used in/from financing activities Foreign currency translation effects and change in restricted cash Cash and cash equivalents as at December 31, 2013 Short-term realizable assets Group liquidity as at December 31, 2013 1) The difference to cash and cash equivalents as at the consolidated financial position is due to the cash and cash equivalents with a duration of more than three month and restricted cash. Graphic 19 Asset and capital structure mental protection requirements resulting from the zoning supplement In comparison with December 31, 2012, total assets of the Fraport decisions concerning commercial properties and wake turbulences Group as at the 2013 balance sheet date decreased by €117.2 million (see also the chapter titled “Significant Events” beginning on page 45). to € 9,523.4 million (– 1.2 %), mainly due to lower current assets and The increase in the item “other receivables and financial assets” was non-current liabilities. essentially the result of the capitalization of expenses in connection with the obligation to make compensatory payments for outdoor Non-current assets rose from € 8,140.8 million to € 8,220.9 million living areas in the amount of € 48.3 million on the basis of the Act for (+1.0 %) in particular as a result of the increase in the items “property, Protection against Aircraft Noise (Gesetz zum Schutz gegen Fluglärm, plant and equipment” and “other receivables and financial assets”. FluLärmG). Current assets showed a significant decline of 13.2 % to The increase in the item “property, plant and equipment” was mainly € 1,302.5 million. While the cash outflows for capital expenditure, the due to capital expenditure activities at the Frankfurt site. The capital dividend distribution and the payment of the annual Antalya conces- expenditure at the Frankfurt site also included expenses in the amount sion lowered the cash and cash equivalents, an increase in the item of € 32.8 million, capitalized as production costs in connection with “other receivables and financial assets”, due mainly to the reporting the capacity expansion that was conducted on the basis of the supple- date, caused an increase in current assets. Fraport Annual Report 2013 Group Management Report / Economic Report 55 Structure of the consolidated financial position as at December 31 € million 2013 2012 2011 2010 Assets Liabilities & Equity Assets Liabilities & Equity Assets Liabilities & Equity Assets Liabilities & Equity Non-current assets Current assets Shareholders’ equity Non-current liabilities Current liabilities 3,098.8 2,948.2 2,859.9 2,739.3 8,220.9 8,140.8 5,523.3 5,893.1 9,523.4 1,302.5 901.3 1,499.8 9,640.6 799.3 7,765.6 1,458.8 6,777.0 5,503.5 5,608.4 2,393.5 861.0 822.8 9,224.4 9,170.5 Graphic 20 Despite the dividend distribution, shareholders’ equity increased Neither company acquisitions and disposals nor increases and de- by € 150.6 million in comparison with the 2012 balance sheet date to creases in shareholdings had a material effect on the development € 3,098.8 million (+5.1 %). The primary reason for the increase was the of the asset and capital structure in the past fiscal year. Changes in positive Group result of € 235.7 million. The equity ratio (shareholders’ inflation rates as well as the fair value of financial instruments also had equity less non-controlling interests and profit earmarked for distribution) no significant impact. increased by 1.8 percentage points to 30.8 % (December 31, 2012: 29.0 %). Financing analysis Fraport’s finance management can basically be separated into that Non-current liabilities fell from € 5,893.1 million to € 5,523.3 million of Fraport AG, the Group companies in Germany and the Group (– 6.3 %) in particular as a result of lower financial liabilities and other companies abroad in which Fraport holds an interest of at least 50 %. liabilities. While there was a drop in financial liabilities – despite a new In 2013, financial management for Fraport AG continued to pursue private placement in the amount of € 50.0 million – in connection with balanced funding via operating cash flow and a broad diversified debt the repayment of loans, other liabilities fell, essentially as a result of financing base. At the end of the past fiscal year, the source of funds was lower concession liabilities and lower negative market valuations of split more or less equally across four financing sources: Bilateral loans derivatives. In connection with the obligations resulting from the zoning (24.5 %), bonds (23.3 %), loan financing from public loan institutions supplement decisions and the obligation for compensatory payments (21.1 %) and promissory note loans (31.1 %). Overall, the financing of outdoor living areas, provisions were formed in the total amount instruments at year-end 2013 had an average remaining term of 5.6 years of € 81.1 million. Current liabilities increased by €102.0 million with an average fixed interest period of 3.9 years. to € 901.3 million (+12.8 %) mainly as a result of additional current financial liabilities. As at December 31, 2013, gross debt stood at € 4,461.7 million, a €135.9 million decrease from the level on December 31, 2012 (– 3.0 %). After deducting the Group’s liquidity of € 1,486.3 million (December 31, 2012: € 1,663.1 million), the net financial debt of € 2,975.4 million was 1.4 % higher in comparison with the 2012 balance sheet date. The gearing ratio attained a value of 101.3 % (December 31, 2012: 104.9 %). Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20135 6 Group Management Report / Economic Report To reduce interest rate risks from borrowing with floating interest rates, The majority of the Group companies in Germany are integrated into interest rate hedges were concluded in some cases for the financial the Fraport AG cash pool, so that acquiring funding comparable to liabilities relating to Fraport AG. The nominal value of these hedges Fraport AG financial management is not necessary. The majority of was around € 1,260 million at the end of the year 2013. Taking into the foreign Group companies in which Fraport holds an interest of account the hedged floating rate borrowing, the floating rate portion at least 50 % mainly obtain standard market funding through project of the gross debt of Fraport AG was nearly 40 % and the fixed portion financing arrangements. around 60 % (floating portion in the previous year: nearly 40 %, fixed portion: around 60 %). The cost of debt after hedging measures was The key features of the Group financing instruments with regard to 3.6 % (previous year: 3.6 %). type, maturity, currency and interest rate structures are presented in the following table: Financial debt structure Type Promissory note loans Public loans EIB/ WIBank Bond issue Private placement Bilateral loans Group companies abroad in which an interest of at least 50 % is held/project financing Year of origin Nominal volume in € million Maturity Repayment structure Interest Interest rate 2008 2009 2010 2012 2012 2013 2009 2009 2009 463 257 86 14 35 300 60 50 2015 2017 2014 2017 2020 2020 2022 2030 2020 2022 2028 860 2013 – 2019 end of term end of term floating 6-months-EURIBOR + margin floating 6-months-EURIBOR + margin end of term mainly floating 6-months-EURIBOR + margin end of term mainly floating 6-months-EURIBOR + margin end of term end of term floating 6-months-EURIBOR + margin mainly fixed 6-months-EURIBOR + margin end of term end of term ongoing repayment during the term of the loans fixed fixed 2.74 % p. a. 3.06 % p. a. 4.0 % p. a. floating 6-months-EURIBOR + margin 800 150 2019 2029 end of term end of term fixed fixed 2014 – 2028 mainly end of term mainly floating 5.25 % p. a. 5.875 % p. a. 3/6/12-months- EURIBOR + margin 2019 – 2022 ongoing repayment during the term of the loans mainly floating 6-months-EURIBOR + margin, 6.88 % p. a. Table 26 1993 – 2012 2007 1,046 (mainly denominated in €) 317 (mainly €, also US-$) The contractual agreements for the financial liabilities of Fraport AG Independent project financing arrangements of Group companies with included two customary non-financial covenants consisting of a an interest of at least 50 % contain a series of credit clauses typical for negative pledge and a pari passu clause. Only the loan financing this type of financing. These clauses include inter alia regulations under from public institutions included commonly accepted credit clauses which certain debt coverage ratios and indicators for debt ratio and regarding, among other things, changes in shareholder structure and loan periods must be complied with. Failure to comply with the agreed in the control of the company (so-called change-of-control clause). credit clauses may lead to restrictions on the distribution of dividends If these should have a proven negative effect on the borrowing capacity and/or to the early redemption of loans or to the additional payment of Fraport AG, the creditors have – above a certain threshold – the of equity. Compliance with these criteria is examined on an ongoing right to call the loans due ahead of time. basis. As at the 2013 balance sheet date, these were complied with. Fraport Annual Report 2013 Group Management Report / Economic Report 57 Liquidity analysis Fraport AG has continued to pursue its strategy of broad diversifica- As in the financing side, the liquidity analysis is to be separated into tion of investments in corporate bonds in the fiscal year 2013. The key the liquidity of Fraport AG, the Group companies in Germany and characteristics of Fraport AG’s investment instruments in terms of type, the foreign Group companies in which Fraport holds an interest of maturity and interest structure are presented in the following table: at least 50 %. Asset structure of Fraport AG Investment type Promissory note loans Overnight deposits Time deposits Bonds thereof government bonds thereof financials thereof insurances thereof industrials Commercial paper 1) As a result of roundings, there can be discrepancies when summing-up. Market value 1) in € million Maturity in years Interest rate 27.5 37.8 137.4 195.0 189.3 486.6 10.4 169.3 100.3 21.0 20.0 354.9 139.9 2.9 1.6 – 0.4 0.9 2.9 3.4 1.2 2.5 1.8 0.6 3.0 0.2 floating fixed fixed fixed floating fixed fixed floating fixed fixed floating fixed fixed Table 27 As at December 31, 2013, industrial promissorry note loans, industrial The ratings of all investment types used in financial management are bonds and industrial commercial paper were distributed across the presented in the graphic. Commercial paper is assigned to the long- following industry sectors (market value: € 520.2 million): term rating equivalent of the issuers. Allocation of industrial assets Rating structure of assets 0 20 40 60 in % 9 8 7 6 1 2 3 5 4 AVIATION 1 Food and beverages 2 Telecommunications 3 Automotives 4 Industrials 5 Chemicals 6 Transport and logistics 7 Infrastructure 8 Pharma and healthcare 9 Sectors < 5 % 13.6 12.5 12.2 10.5 10.3 9.7 5.8 5.4 20.0 in % AAA AA A BBB Not rated 1.3 12.4 60.2 26.1 0.0 Graphic 21 Graphic 22 In 2013, no investments were made in non-rated bonds. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 5 8 Group Management Report / Economic Report As part of asset management, a yield of over 1 % was realized with the As it is partly subject to drawing restrictions arising from the conditions Fraport AG securities portfolio. The cost of carry, which is calculated stipulated in the project financing agreements, it is not a part of the using a (tiered-statement) maturity-matching principle, was 0.27 % asset management at Fraport AG. (€3.2 million) as at December 31, 2013. Those Group companies that are included in the cash pool of Fraport AG do not require their own Balanced finance structure at the balance sheet date asset management strategy because any available liquidity is transfer- The maturity profile of the Fraport Group’s financial debt showed a red to Fraport AG and is therefore part of the asset management of balanced medium-term repayment structure as at the balance sheet Fraport AG. Liquidity in the foreign Group companies with an interest date (debt in foreign currencies translated with the balance sheet of at least 50 % is €250.7 million (previous year: €218.7 million). date price). Repayment profile as at December 31, 2013 € million 1,486.3 294.1 507.3 499.3 413.4 561.1 1,172.9 234.7 19.2 411.3 323.8 0 Liquidity as at December 31, 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023++ Repayments (nominal value) Graphic 23 The maturity profile of the floating financial debt taking into account derivatives (nominal volume: about €1,430 million) is listed below: Maturity profile of the floating financial debt and derivatives 121 79 489 246 401 229 381 235 501 166 563 261 137 185 0 0 263 0 0 30 € million 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023++ Floating financial debt Derivatives Graphic 24 Based on the expected cash outflows as part of planned capital still provides for these financial assets to be kept until the end of their expenditure, liquid funds in the Fraport Group are invested mainly term. If a temporary requirement for liquidity arises, Fraport AG can rely on a short- to medium-term basis. Due to the delay in the start of on different sources, such as available free credit lines or time deposits, construction work on Terminal 3, an ongoing high level of liquidity is among other things. Alternatively, the loan maturity can also be settled expected. This liquidity will continue to be invested in accordance with from the free cash flow from economic activity. conservative investment requirements. The rolling liquidity planning Fraport Annual Report 2013Group Management Report / Economic Report 59 Significance of off-balance-sheet financial instruments for the financial position as forecasted, around €450 million. This was primarily due to the delay in the start of construction of Terminal 3. As a result of the lower capital Fraport focuses on the products presented in the “Financing analysis” expenditure at the Frankfurt site and the volume of investments in air- section for financing its activities. Off-balance-sheet financing instru- port operating projects, which was at the lower end of the forecasted ments are of no significance in Fraport’s financing mix. range of €100 million to €150 million, the free cash flow developed Rating In light of Fraport’s always very healthy liquidity supply combined with significantly better than expected (forecast 2013: improvement, but still negative; value 2013: €73.1 million). its comfortable portfolio of free, approved credit lines, there has not Contrary to expectation, total assets also declined, mainly as a result been a need for an external rating so far. of higher loan repayments than planned. In connection with this, the Comparison with the forecasted development at the end of the fiscal year 2012. As a result of the positive develop- Compared with the forecast for the fiscal year 2013 (see also Group ment of the free cash flow, net financial debt rose more slowly than Management Report 2012, beginning on page 72), the asset and shareholders’ equity and not, as expected, more quickly. This meant financial position showed the following deviations: Capital expenditure that the gearing ratio was also lower than forecasted at the end of the in the fiscal year at the Frankfurt site was below €400 million and not, fiscal year (forecast 2013: approximately 110 %; value 2013: 101.3 %). equity ratio was also above and not, as forecasted, below the value as Value Management Development of the value added 2013 € million Fraport Group Aviation Retail & Real Estate Ground Handling External Activities & Services 1) 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 EBIT Fraport assets 528.1 496.0 88.1 79.6 267.9 252.8 5,545.3 5,152.3 2,208.0 2,045.4 1,787.8 1,636.2 Costs of capital before taxes Value added before taxes ROFRA 526.8 1.3 9.5 % 489.5 6.6 9.6 % 209.8 194.3 – 121.7 – 114.7 169.8 98.1 155.4 97.4 – 2.3 584.1 55.5 – 57.8 – 1.1 549.0 52.2 – 53.3 159.9 175.2 1,143.2 1,118.6 108.6 51.3 106.3 68.9 4.0 % 3.9 % 15.0 % 15.5 % – 0.4 % – 0.2 % 14.0 % 15.7 % 1) EBIT and Fraport assets are adjusted by the results from associated and other investments allocated to the segment. As a result of the adjustment on segment level, there can be discrepancies when summing-up to the Group level. In the fiscal year 2013, the Fraport Group generated positive value Group value added before taxes and ROFRA added of €1.3 million (previous year: €6.6 million). The value added € million of the Aviation segment declined from – €114.7 million to – €121.7 mil- lion. This was due mainly to the significant increase in Fraport assets, and a resulting increase in the cost of capital before taxes, which was mainly related to the utilization of Pier A-Plus for an entire year for the first time. The value added of the Ground Handling segment declined from – €53.3 million to – €57.8 million due to the decline in EBIT de- velopment. There was a decrease in the value added by the External Activities & Services segment from €68.9 million to €51.3 million. This 0 49.0 10.7 74.1 11.2 6.6 9.6 1.3 9.5 Table 28 in % 9.5 was a result of negative foreign currency translation effects from the 2010 2011 2012 2013 Group company Pulkovo, which is accounted for using the equity method. The Retail & Real Estate segment increased its value added from €97.4 million to €98.1 million. This increase was due to the seg- ment’s disproportionately higher EBIT development compared with the cost of capital before taxes. At 9.5 %, the Fraport Group’s ROFRA was equal to Fraport’s WACC of 9.5 %. Group value added before taxes ROFRA Graphic 25 Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 6 0 Group Management Report / Economic Report Comparison with the forecasted development Punctuality rate There were no differences in the fiscal year 2013 compared with the In the past fiscal year, the additional capacity from Runway Northwest forecasted development of Group and segment value added (see and terminal extension A-Plus continued to support the punctuality also Group Management Report 2012, beginning on page 72). As rate. With a punctuality rate of 82.3 %, the strong performance of the expected, Group value added in 2013 was lower than in the fiscal year previous year was exceeded by an additional 2.0 percentage points 2012. While the Retail & Real Estate and External Activities & Services (previous year: 80.3 %). Compared to fiscal year 2012, virtually all segments continued to make positive value added as forecasted, the months showed a positive trend. Only the months of January and Aviation and Ground Handling segments recorded negative value March 2013, strongly affected by the weather, recorded a significantly added. lower punctuality rate of 76.8 % and 78.2 % respectively (previous year: Non-financial Performance Indicators Customer satisfaction and product quality Global satisfaction As a result of the measures of the “Great to have you here!” service initiative taken in the past fiscal year (see also chapter titled “Strategy” beginning on page 29) global satisfaction of passengers at the Frankfurt site matched the previous year’s level of 80 %, with rising passenger numbers. In this context, the perceived quality ratings for internet availability developed in particular positively, even if potential still exists for improvement. At the Antalya site, customer satisfaction was 0.7 percentage points above the previous year at 79.1 % (previous year: 78.4 %). The airport in Lima again achieved a high level of satisfied passengers of 98.5 % (previous year: 95.0 %). The level of satisfaction at the airports in Varna and Burgas improved from 83.7 % to 86.5 %. 84.0 % and 85.8 % respectively). Punctuality rate at Frankfurt Airport 1) in % 2013 2012 2011 2010 65.0 70.0 75.0 80.0 85.0 82.3 80.3 74.5 78.8 1) Figures according to IATA definition. Graphic 27 Baggage connectivity To ensure a high level of baggage connectivity, ongoing measures Global satisfaction at Frankfurt Airport were carried out together with airlines in Frankfurt in the past fiscal 65 70 75 80 85 in % 2013 2012 2011 2010 year. As part of the dialog campaigns, in which operating departments of Deutsche Lufthansa, among others, were involved, ideas were collated in order to achieve a further improvement of the high level of connectivity. In the past fiscal year, connectivity at the Frankfurt site amounted to 98.4 % and was therefore 0.2 percentage points above the previous year’s figure. 80 80 77 Baggage connectivity at Frankfurt Airport 70 in % Graphic 26 97.0 97.5 98.0 98.5 99.0 2013 2012 2011 2010 98.4 98.2 98.6 98.1 Graphic 28 Fraport Annual Report 2013Group Management Report / Economic Report 61 Equipment availability rate Employee safety and health management At 94.8 %, the equipment availability rate in the past fiscal year was In connection with employee safety measures taken, the total num- lower than the previous year level of 95.0 %, primarily as a result of ber of work accidents in the 2013 fiscal year fell from 1,445 to 1,346 the lower availability of elevators (average annual availability of 95.0 % (– 6.9 %). compared to 95.8 % in the previous year). In contrast, escalators avail- ability improved considerably from 91.0 % in 2012 to 92.2 % in 2013. Total number of work accidents Equipment availability rate at Frankfurt Airport 0 500 1,000 1,500 in % 2013 2012 2011 2010 85.0 90.0 95.0 100.0 2013 94.8 2012 95.0 2011 97.7 2010 98.7 Graphic 29 1,346 1,445 1,475 1,601 Graphic 31 Attractiveness as an employer Employee satisfaction Comparison to the forecasted development As Fraport has applied GAS 20 to the 2013 consolidated financial statements for the first time, a forecast is made for the non-financial performance indicators for the first time for fiscal year 2014. The environment in which last year’s employee survey took place was dominated by a high degree of uncertainty with regard to traffic devel- opment at Frankfurt Airport and amendments to internal processes, Employees particularly at the Frankfurt site. Due to the unfavorable conditions, overall employee satisfaction declined from the average grade of Development of headcount 2.76 in the 2011 fiscal year to an average grade of 3.02 in 2013. The Compared with the previous year, the average number of employees negative trend was magnified due to a statistical effect: in 2013, two (employees excluding apprentices and employees on leave) of the additional Group companies participated in the survey, compared to Fraport Group in 2013 remained largely constant at 20,947 (previ- 2011. Employee satisfaction at these companies received a comparably ous year: 20,963). In Germany, there was an increased demand for low rating. When adjusted for these, the index value would be at 2.93. personnel at the Frankfurt site, in particular in the Group company Employee satisfaction Average grade 4.0 3.0 2.0 2013 2012 1) 2011 2010 APS Airport Personal Service (+223 employees). This was due to the performance of winter services and the positive traffic development in the second half of 2013. In addition, the number of employees in the Group company FraCareServices also increased by 42 employees due to an increase in client care as well as the fact that Pier A-Plus was operated for an entire year for the first time. The reduction in headcount at Fraport AG (– 310 employees) was attributable, among other things, to the shifting of employees to the Group companies FRA - Vorfeldkontrolle and FRA - Vorfeldaufsicht. As of July 1, 2013, the employees of the Group company FRA - Vorfeldaufsicht were reinte- grated into Fraport AG. Outside Germany, the headcount decreased, in particular at the Group companies Lima (– 54 employees) and Twin Star (– 42 employees). 3.02 2.76 2.94 1) In connection with evaluating the results of the 2011 employee survey and implementing the resulting improvement proposals, no employee satisfaction survey was carried out in the 2012 fiscal year. Graphic 30 With regard to permanent staff, the staff turnover rate of 9.9 % was slightly higher than the rate of 9.7 % in the previous fiscal year. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20136 2 Group Management Report / Economic Report Average number of employees Fraport Group thereof Fraport AG thereof Group companies thereof in Germany thereof abroad Employees as at the balance sheet date 1) 1) Figures according to Global Reporting Initiative (GRI). Average number of employees per segment Aviation Retail & Real Estate Ground Handling External Activities & Services 2013 20,947 10,992 9,955 19,009 1,938 21,986 2013 6,194 648 9,017 5,088 2012 20,963 11,302 9,661 18,939 2,024 22,276 2012 6,298 629 8,924 5,112 Change Change in % – 16 – 310 294 70 – 86 – 290 – 0.1 – 2.7 3.0 0.4 – 4.2 – 1.3 Table 29 Change Change in % – 104 19 93 – 24 – 1.7 3.0 1.0 – 0.5 Table 30 Whereas the reduced number of employees in the Aviation segment Additional key figures for diversity developed as follows in the fiscal was due primarily to falling employment within Fraport AG, the slight year 2013: The average age of Group employees increased from 41.2 growth in the Retail & Real Estate segment was essentially the result of to 41.8 years, despite a high number of trainees which remained an increase in the number of employees in Fraport AG. In the Ground nearly constant at 359 (previous year: 381). 19.7 % of employees had Handling segment, the number of employees increased in particular foreign citizenship (excluding German citizens with an immigration as a result of the previously mentioned demand for personnel in the background) (previous year: 20.1 %). The percentage of persons with Group companies APS Airport Personal Service and FraCareServices. In major disabilities reached 7.5 % on a Group-wide basis (previous year: the External Activities & Services segment, the number of employees 7.3 %). The number of training days fell considerably in the fiscal year fell primarily because of decreased employment in the Group com- 2013 from an average of 5.7 days in the previous year to 3.8 days. The panies Lima and Twin Star. reason for the decline in training days was, among other things, lower turnover and thus fewer newly-hired employees in training-intensive Development in personnel structure positions, such as aviation security. Fraport values the diversity of its employees. This diversity helps the Group to better understand the concerns of its customers, develop innovative solutions and remain competitive in a global economy. Employees and percentage of women as at December 31 Diversity management is therefore a central component of its personnel strategy. It is based on a Group agreement that includes among others the establishment of principles of anti-discrimination, advancement of women into management positions and diversity. These principles form part of recruitment decisions and training measures. The percentage of women, one of the main key figures for diversity, was at 23.2 % in fiscal year 2013 and was therefore virtually unchanged to the previous year’s value of 23.4 %. The reason for the slight decline in the percentage was, among other things, the lower number of employees Group-wide with a simultaneous increase in headcount 0 20,905 23.2 21,445 23.3 22,276 23.4 21,986 23.2 2010 2011 2012 2013 in % 0 for the physically work-intensive Ground Handling segment. At a Employees Percentage of women Graphic 32 level of 27.6 % (previous year: 29.4 %), the percentage of women in management positions exceeded the aforementioned Group-wide percentage of women again in 2013. Fraport Annual Report 2013 Group Management Report / Economic Report 63 Research and Development policy of the European and American central banks and the associated low level of interest rate for savings also increased the attractiveness of Fraport, as a service-sector group, does not engage in research and shares as financial investments. In this market environment, the German development in the strict sense, so further disclosures in accordance leading index DAX showed notable growth of 25.5 %, ending the year with IAS 38.8 does not apply. For Fraport, however, improvement at 9,552 points and thus at the highest closing level in its history. The proposals and innovations from employees serve as factors to improve MDAX, in which the Fraport share is included, also closed the fiscal the quality of the Group’s own products and thus to increase customer year 2013 with a historical year-end level of 16,574 points, a rise of satisfaction and retain competitiveness (see also chapter titled “Risk 39.1 % compared to the fiscal year 2012. and Opportunities Report” beginning on page 67). The Fraport share ended the fiscal year 2013 with a price of € 54.39 While Fraport consistently utilizes its own employees’ potential within and an increase of 23.8 % compared to the previous year’s closing the framework of its Group-wide idea management, the Group specifi- price of € 43.94. Taking into account the dividend payment on June 3, cally carries out networking within innovation management, among 2013 of €1.25 per share, the annual performance of the share was other things, in the sense of “open innovation”, with companies in its at 26.6 %. The Fraport share therefore developed at around the level own value-added chain as well as “best practice” companies in other of the DAX, but clearly underperformed the MDAX. While the share sectors. In this way, Fraport ensures that trends are spotted early on closed the first quarter almost unchanged at € 43.73 (– 0.5 %), the and transferred to the company. Product potential outside the airport price improved in the second quarter by 6.3 % to € 46.48 and by site and the delivery of existing expertise to new customer groups is another 11.6 % in the third quarter of 2013 to € 51.88. The reasons also examined. for the positive development in the second and third quarter were mainly a more favorable market environment and the positive traffic In the 2013 fiscal year, innovation management focused, in particular, development at the Frankfurt site during the summer season. In the on passenger services and mobility. Here, especially, Fraport was able final quarter, the Fraport share reached its highest price in 2013 on to set the tone by continuing the PASS project (Personalized Assistance October 30 of € 57.41. Its lowest price was recorded on January 16 System and Services for Mobility into Advanced Age) and awarding the at € 42.33. However, due to profit-taking and uncertainties related to Group innovation prize. The “idea day”, which was hosted for the first the coalition negotiations in Hesse, the Fraport share fell slightly as the time in 2012, took place again in the past fiscal year and thus became a fourth quarter continued and closed the fiscal year at € 54.39. core component of Group idea management. Overall, 1,125 ideas were submitted and 74 ideas implemented in the past fiscal year (previous The market capitalization of Fraport at the end of the year was year: 817 ideas, 85 implementations). € 5.0 billion (previous year: € 4.1 billion) and ranked 15th among the Share and Investor Relations 50 MDAX shares (previous year: 12th place). Measured by traded stock exchange volume (XETRA trade), the Fraport share was ranked 42nd (previous year: 31st place). With an average daily trading volume of 118,554 shares, the trading volume of the Fraport share fell by 24.3 % Share performance from January 1 to December 31, 2013 in 2013 compared to the previous year’s level of 156,604 shares. The The stock exchange in 2013 was shaped by more positive economic share was therefore less volatile than most of the MDAX securities and development, compared to 2012, and a more optimistic assessment of reflected the generally lower trading volume. the future economic situation. The continued expansive money market Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20136 4 Group Management Report / Economic Report Development of the share 2013 Opening price in € Closing in € Change 1) Change in % 2) Highest price in € (daily closing price) Lowest price in € (daily closing price) Average price in € (daily closing prices) Q1 2013 Q2 2013 Q3 2013 Q4 2013 2013 2012 43.94 43.73 – 0.21 – 0.5 45.55 42.33 44.13 43.73 46.48 2.75 6.3 47.53 43.00 45.11 46.48 51.88 5.40 11.6 52.40 46.19 49.43 51.88 54.39 2.51 4.8 57.41 52.50 54.60 43.94 54.39 10.45 23.8 57.41 42.33 48.38 38.00 43.94 5.94 15.6 49.37 38.41 44.70 Average trading volume per day (number) 132,650 155,378 96,421 89,318 118,554 156,604 Market capitalization in € million (Quarterly-/annual closing prices) 4,033 4,289 4,788 5,020 5,020 1) Change including dividend payment: Q2 2013: +€ 4.00, FY 2013: +€ 11.70, FY 2012: +€ 7.19. 2) Change including dividend payment: Q2 2013: +9.1%, FY 2013: +26.6 %, FY 2012: +18.9 %. 4,052 Table 31 The shares of the European competitors developed in 2013 as fol- lows: Aéroports de Paris +41.3 %, Vienna Airport +41.9 % and Zurich Airport +23.4 %. Development of the Fraport share compared to the market and European competitors in % (index base 100) 150 100 90 January 1, 2013 Fraport AG DAX MDAX Aéroports de Paris Vienna Airport Zurich Airport Source: Bloomberg December 31, 2013 Graphic 33 Fraport Annual Report 2013 Group Management Report / Economic Report 65 Multi-year overview of the Fraport share The following table shows the key information about the Fraport share: Fraport share key figures and data Fraport AG capital stock Total number of shares as at December 31 Number of floating shares 1) as at December 31 Number of floating shares (weighted average of period under review) Absolute share of capital stock Annual performance (including dividend) Beta relative to the MDAX Earnings per share (basic) Earnings per share (diluted) Price-earnings ratio Dividend per share 2) Profit earmarked for distribution Dividend yield as at December 31 2) ISIN Security identification number (WKN) Reuters ticker code Bloomberg ticker code € million number number number per share, € % € € € € million % 1) Total numbers of shares as at the balance sheet date less treasury shares. 2) Proposed dividend (2013). 2013 2012 2011 2010 922.9 92,289,654 92,212,289 922.1 92,211,756 92,134,391 919.6 91,955,867 91,878,502 919.2 91,915,588 91,838,223 92,173,637 92,012,909 91,858,474 91,808,388 10.00 26.6 0.80 2.40 2.39 22.7 1.25 115.4 2.3 10.00 18.9 0.95 2.59 2.58 17.0 1.25 115.5 2.8 10.00 – 16.8 0.88 2.62 2.60 14.5 1.25 115.4 3.3 10.00 33.2 0.82 2.86 2.85 16.5 1.25 115.6 2.7 DE 000 577 330 3 577330 FRAG.DE FRA GR Table 32 Development of the Fraport share compared to the market and European competitors as a multi-year overview in % (index base 100) 240 100 60 January 1, 2010 January 1, 2011 January 1, 2012 January 1, 2013 December 31, 2013 Fraport AG DAX MDAX Aéroports de Paris Vienna Airport Zurich Airport Graphic 34 Source: Bloomberg Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 6 6 Group Management Report / Economic Report Development in shareholder structure There were no changes to Fraport AG’s shareholder structure in the Dividend for the fiscal year 2013 (recommendation for the appropriation of profit) past fiscal year. As at December 31, 2013, the shareholder structure The Executive Board intends to recommend the same dividend as adjusted to the current total number of voting rights was as follows: the previous year of € 1.25 per share to the 2014 AGM. Compared to Shareholder structure as at December 31, 2013 1) for this purpose of € 115.4 million (previous year: € 115.5 million) the share closing price in 2013 of €54.39, this would correspond to a dividend yield of 2.3 % (previous year: 2.8 %). The profit earmarked in % 6 5 4 3 1 2 would therefore – in relation to Fraport AG’s result for the year 2013 of €1 73.8 million – correspond to a pay-out ratio of 66.4 % (previous year: 65.6 %) or – in relation to the Group result attributable to shareholders’ of Fraport AG of € 221.0 million – of 52.2 % (previous year: 48.5 %). AVIATION 1 State of Hesse 31.37 2 Stadtwerke Frankfurt am Main Holding GmbH 20.03 3 Deutsche Lufthansa AG 8.46 4 Lazard Asset Management LLC 5 RARE Infrastructure Limited 6 Free Float Dividend per share and dividend yield 1) in € in % 1.25 2.7 1.25 3.3 1.25 2.8 1.25 2.3 3.16 3.06 33.92 Graphic 35 1) The relative ownership interests were adjusted to the current total number of shares as at December 31, 2013, and therefore may differ from the figures given at the time of reporting or from the respective shareholders’ own disclosure. Interests below 3 % are classified under “Free Float”. As far as was known as at December 31, 2013, the Fraport shares held 2010 2011 2012 2013 0 0 in free float were distributed across the following countries: Dividend per share Dividend yield Graphic 37 1) 2013: dividend proposal and thereof resulting yield. Allocation of free float 1) in % 9 1 AVIATION 1 Australia 2 USA 3 Canada 2 4 Germany 3 4 5 67 8 5 Great Britain 6 Norway 7 Denmark 8 Finland 18.8 10.3 4.5 4.0 3.5 1.8 1.7 1.3 9 Countries < 1 % and unknown 54.2 Investor Relations (IR) In the 2013 fiscal year, Fraport’s IR activities again focused on proactive communication with investors and analysts. In more than 300 one-on- ones, the strategy and the current and forecasted business develop- ment of the Fraport Group were explained to interested parties. The focus remained on traffic developments at the Group sites as well as the planning of Terminal 3 at the Frankfurt site. Other focal points were Group capital expenditure, the development of free cash flow, the impact on earnings connected to the at equity accounting of the Group company Antalya from the 2014 fiscal year onwards and poten- tial acquisition projects in the External Activities & Services segment. 1) Free float without shares of State of Hesse, Stadtwerke Frankfurt am Main Holding GmbH and Deutsche Lufthansa AG. Source: own estimates Fraport AG. Graphic 36 The activities of the IR department in the past fiscal year were rounded off by the AGM, an analyst conference on the publication of preliminary full-year results, three conference calls regarding the additional quarterly publications, the provision of current information on the IR homepage www.meet-ir.com and investor meetings at the Frankfurt site. Fraport Annual Report 2013 Group Management Report / Significant Events after the Balance Sheet Date / Outlook Report 67 Significant Events after the Balance Sheet Date Risk and Opportunities Report The Fraport Group has a comprehensive, Group-wide risk management and opportunities system, which makes it possible for Fraport to identify There were no significant events for the Fraport Group after the balance and analyze risks at an early stage, and to control and limit those risks sheet date. Outlook Report using appropriate measures, as well as, take advantage of opportunities. This results in the early identification of potential material risks that could jeopardize the Fraport Group. Fraport regards risks as future develop- ments or events that can have a negative impact on the achievement of operational planning and strategic targets. Opportunities are regarded as future developments or events that can lead to a positive forecast General Statement of the Executive Board deviation or strategic target deviation. The expected growth of the global economy will have a positive impact Risk strategy and targets on Group-wide passenger development in the forecasted period. At With the further development of Fraport, within the context of the the Frankfurt site, the increase in airport and infrastructure charges in integrated strategy and planning process, it is always ensured that particular, as well as additional revenue in the Retail and Real Estate the risks associated with the opportunities are in an appropriate divisions, will also have a revenue-increasing effect. Furthermore, due relationship to each other. This is ensured through comprehensive to higher contributions from the Group companies Lima and Twin Star, risks and opportunities management, which guarantees that risks and the Executive Board is expecting a rise in Group EBITDA and EBIT. Due opportunities are identified at an early stage, are evaluated, controlled to a changed accounting standard, among others, the Group company and monitored in a standardized manner and are transparently com- Antalya, which has until now been proportionately consolidated in the municated using systematic reporting. Group, will as of the start of fiscal year 2014 be accounted for using the equity method. Accordingly, this company’s result will only be The following principles are derived from this objective: recognized in the Group financial result, which will lead to a significant 1. Even as part of the strategic planning processes, a comparison is change in the results for 2014. made with the opportunities and risks strategy, which results from the anticipated business development. This way, Fraport avoids For the Group result, the Executive Board anticipates sustainable im- risks that are not directly related to the original business purpose. provement despite the difficulty in forecasting the financial result due 2. The centralized Risk Management unit is responsible for the imple- to future changes in interest and currency exchange rates. mentation and further development of the risk management system and links this with the opportunities management process. The Executive Board continues to examine opportunities for ongoing 3. Risks and opportunities management is a key function of the respective optimization of the asset and financial position of Fraport Group. No business, service and central units that are responsible for their business significant risks that might jeopardize the Group as a going concern processes; this involves material risks being managed using appropriate are apparent. With regard to the external business, the objective of measures and being reduced to an acceptable level, as well as actively the Executive Board remains to expand this and to further improve utilizing opportunities. the existing portfolio with a focus on earnings. As they are difficult 4. Through standardized and comprehensive processes, early identi- to predict, material acquisitions and disposals of businesses are not fication, standardized analysis, centralized control and monitoring, included in the forecasted period. The Executive Board continues to as well as systematic and transparent reporting take place regarding assess the financial situation in the forecasted period as stable. all material risks and opportunities. 5. All employees are encouraged to actively become involved in risks and opportunities management in their area of activity. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20136 8 Group Management Report / Outlook Report Risk managment system Risk strategy and objectives Organization of risk management Risk control and monitoring Risk reporting Risk analysis Risk monitoring > Definition of tasks and responsibilities > Monitoring by RMC and RMC office Risk control > Preventative and reactive measures > Cost/benefit analysis > Controlling of measures > Internal risk reporting > Risk reporting to Supervisory Board/ finance and audit committee > Management report to capital market Risk aggregation > Qualitative determination of total risk position (risk map) > Reporting of material risks to Executive Board Documentation, risk management software Risk identification > Definition of risk areas > Risk inventory: bottom-up and top-down process Risk evaluation > Evaluation by impact level and probability of occurrence (risk portfolio) > Evaluation of scenarios > Prioritization by material risks Graphic 38 The Fraport Executive Board bears the overall responsibility for an The risk management system is documented in a policy and closely effective risk management system, through which comprehensive and interlinked with the ICS. It follows the “COSO II” (Committee of the standardized management of all material risks is ensured. In this con- Sponsoring Organizations of the Treadway Commission) framework text, it has approved the risk strategy and risk objectives for the Group. and covers risks in the areas of strategy, operational business, financial The Executive Board appoints the members of the Risk Management reporting and compliance. Committee (RMC), approves the rules of procedure for the RMC and is the addressee for the quarterly reporting of relevance to the Group Process-integrated and process-independent monitoring measures and ad hoc reports in the risk management system. form the elements of the internal monitoring system. The central Group Internal Audit unit is integrated into the internal monitoring system of The RMC is the highest executive body in the risk management system the Fraport Group with process-independent audit activities. below the Executive Board and is made up of Senior Managers from the company’s operating and supporting units. The management of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesell- the RMC has been transferred to the newly created Risk Management schaft (PwC) has examined the risk early-warning system of Fraport AG and Internal Control System department. The management of the RMC within the context of the annual financial statement audit with regard is responsible for the organization, maintenance and further develop- to stock corporation law requirements. It fulfils all of the legal require- ment of the Group-wide risk management and internal control system ments that apply to such a system. (ICS), as well as the regular updating and implementation of the risk management and ICS policy in the Fraport Group. The RMC reports to The Supervisory Board of Fraport AG has the function of supervising the Executive Board on a quarterly basis immediately after its meetings. the effectiveness of the internal control and risk management system in accordance with Section 107 (3) of the AktG. This responsibility is executed by the finance and audit committee of the Supervisory Board. Fraport Annual Report 2013 Group Management Report / Outlook Report 69 Risk transfer through the purchase of insurance policies is controlled rolling 24-month-period. However, this does not mean that the persons by the Group company Airport Assekuranz Vermittlungs-GmbH. responsible for assessing risks only analyze from a short-term perspec- tive; possible infrastructural risks are in particular monitored in accord- So far, the Fraport risk management system has only covered risks, not ance with their long-term impact. During the evaluation process, the opportunities. However, an opportunities consultation takes place potential impact (= impact level) is divided into three categories: “low”, quarterly within the context of the RMC meeting. “medium” and “high”. The impact level is evaluated according to how Risk management of Group companies liquidity). Furthermore, qualitative factors, which could be important The policy for the Fraport risk management system also includes rules for Fraport’s reputation and which also determine the risks, are included for Fraport Group companies, which are incorporated to a varying extent in the analysis. The probability of occurrence for individual risks is also in the risk management system depending on their importance for divided into three categories: “low”, “possible” and “likely”. the risks impact the relevant detection variable (EBIT, financial result or the asset, financial and earnings position of Fraport. The separate policy used for investments specifies the organizational structure and The risk evaluation is conservative, i.e., the greatest possible impact for process of the risk management system and commits the companies Fraport is assessed. A distinction is made between a gross evaluation and to the same risk reporting cycles and ad hoc reporting, as determined net evaluation. The gross risk is the greatest possible negative (financial) by Fraport AG. impact prior to risk-minimizing measures. The net risk represents the expected residual (financial) impact after initiation or implementation Risk management process of risk-minimizing measures. The risk management process is comprised of the following steps. In order to support the entire process, Fraport has introduced an integrated Risks that jeopardize the company as an ongoing concern or risks that risk management software solution. exceed defined thresholds in relation to the potential level of (financial) impact and the probability of their occurrence are considered to be 1) Identification and reporting of risks “material” and these are reported to the finance and audit commitee, Material risks are identified using various instruments primarily by the the Executive Board as well as the RMC (see also the reporting matrix operational business, service and central units of Fraport AG, as well on page 70 of this report). as the Group companies. The risk identification methods used range from market and competition analysis, to the evaluation of customer 3) Risk control surveys, information about suppliers and institutions, right through to Risk officers are tasked with developing and implementing suitable monitoring risk indicators from the regulatory, economic and political measures to minimize and control risk. The risk officers must draft a environment. Division Managers are responsible for the accuracy of strategy and/or measures to deal with the risks identified, which can the information received from their units, which is processed in the also include the transfer of risk to a third party (through insurance poli- risk management system. They are obligated to constantly monitor cies, for example). The decision regarding the implementation of the and manage risk areas and report on all risks in their divisions and their relevant strategy and/or measures also considers the costs in relation integrated investments to the Risk Management and Internal Control to the effectiveness of potential risk-minimizing measures. The Risk System department on a quarterly basis. Outside of regular quarterly Management and Internal Control System department works closely reporting, newly identified material risks must be immediately reported with the risk officers in order to monitor the progress of risk-minimizing on an ad hoc basis. 2) Evaluation of risks measures and to evaluate their effectiveness from a Group perspective. 4) Risk aggregation and reporting The systematic evaluation of risks determines the extent of the identi- The risk management is intended to ensure a transparent presentation fied risks and makes it possible to estimate the extent to which the of the Fraport Group’s risk situation. For this, the Risk Management and individual risks could jeopardize the corporate objectives and strategy Internal Control System department aggregates the risk reports from of the Fraport Group, or which risks will most likely, due to their nature, the divisions and Group companies and provides these to the RMC jeopardize the company’s existence. For this purpose, the financial for assessing the risk situation using a “Risk Map”. Risks are reported to impact (impact level or – if possible – a quantitative evaluation) and its the Executive Board when they are classified from a net risk perspec- probability of occurrence is ascertained by the responsible business, tive as “material” according to systematic evaluation standards used service and central units (= risk officers). The reference basis is the Group-wide. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20137 0 Group Management Report / Outlook Report In the event of significant changes to previously reported risks or newly Twice a year, the Executive Board reports the “material” risks, including identified “material” risks, reporting also takes place outside of the their changes, in the finance and audit committee of the Supervisory regular quarterly reporting, as ad hoc reporting. Board. The following graphic shows the addressees of the risk reporting depending on the net evaluation of the risks: Reporting matrix Likely ≥ 50 % Possible ≥ 10 % – 50 % Low up to 10 % e c n e r r u c c o f o y t i l i l b a b o r P Strategic business, service and central units/ Group companies Finance and audit committee/ Executive Board, Risk Management Committee Finance and audit committee/ Executive Board, Risk Management Committee Strategic business, service and central units/ Group companies Strategic business, service and central units/ Group companies Low ≥ €0.5 million Impact level Risk Management Committee Finance and audit committee/ Executive Board, Risk Management Committee Risk Management Committee Finance and audit committee/ Executive Board, Risk Management Committee Medium ≥ €2.5 million High ≥ €10.0 million Graphic 39 This process ensures the early detection of risks that could jeopardize Board and Supervisory Board. The relevant Group companies are the Fraport Group as a going concern. included on the basis of legal requirements, as well as on the basis of qualitative and quantitative risk assessment criteria. An integral component of Fraport’s risk management system is monitor- ing financial risks, whereby the presentation of financial instruments Furthermore, an integrated risk management software has been overall and in particular hedging transactions in accounting, are moni- introduced to record all event-related risks and material process risks. tored and controlled. This process is described in the financial risks This creates more comprehensive transparency regarding the material section (“risk report”). At Fraport, this process represents a subsection risks existing in the Group, and establishes a closed “risk workflow”. of the accounting-related internal control system. Further development of the risk management system in 2013 ment area, particularly the conception of a refined Group-wide risk catalog, the further development of the risk management and ICS At the beginning of 2013, the existing risk management system was policy and the further development of standardized Group evalua- For 2014, further developments are also planned in the risk manage- linked to the internal control system (ICS) and combined with the com- tion methods. pliance management system into an integrated system. Furthermore, a centralized ICS organization was established, the primary tasks of which include ensuring standardized methodology and reporting, as well as Accounting-related internal control system in accordance with Section 315 (2) no. 5 of the HGB Group-wide standardization of the ICS. The central ICS organization With regard to the Group accounting process, Fraport regards the provides support with the implementation of the ICS and determines internal control and risk management system as a process that is annually, within the context of a scope procedure, which Group com- embedded in the Group-wide internal control and risk management panies should be included in a documentation and self-assessment system. Fraport’s Group accounting system covers the processing of process (Control Self-Assessment) regarding the effectiveness of the transactions, records for the documentation of assets and liabilities and main controls and the subsequent annual reporting to the Executive processes for the consolidation of the separate financial statements of Fraport Annual Report 2013 Group Management Report / Outlook Report 71 parent/subsidiary companies and joint ventures and for the inclusion Quality assurance is carried out by Fraport Group Accounting for of associated companies and the recording of the required information complex accounting issues or basic questions, as well as at local com- for the disclosures in the Group notes and Group management report. panies included in the consolidated financial statements. The company applies principles, processes and measures aimed at safe- guarding the effectiveness and compliance of the Group’s accounting The consolidated financial statements are prepared by Fraport AG system, which Fraport designed to conform to “COSO” standards, in Group Accounting. The reporting process for the consolidated financial an effort to ensure that the recognition, measurement and presenta- statements is laid down in a schedule detailing each individual step, tion of assets and liabilities is in line with the legal guidelines and the including deadlines and responsibilities. Group Accounting monitors principles of proper accounting. progress, reporting deadlines and the completeness of the Group Group accounting at Fraport is generally organized on a local basis. reporting process. The reconciliation of the local individual financial statements of the In the run-up to the preparation of the consolidated financial state- parent company and subsidiaries (trade balance sheet I) to the indi- ments, a Group questionnaire is sent to all consolidated companies vidual financial statements prepared in accordance with Group-wide in order to identify any issues relevant to the accounting process in accounting and valuation methods (trade balance sheet II) is done good time. The consolidated companies are also questioned about locally at the respective companies. In individual cases, the bookkeeping any events after the balance sheet date so that these can be recorded and preparation of financial statements for Group companies at the in detail. Frankfurt site is carried out by the accountants of the Group parent company Fraport AG within the framework of service agreements. In so Liabilities, expenses and income are consolidated and information doing, separation on an organizational and system level from the parent relevant to segment reporting is processed in the SAP BPC system. company Fraport AG is ensured. To ensure consistent Group-wide Prior to consolidating liabilities, internal balances are reconciled. Capital accounting policies, Fraport has developed a policy on IFRS Group- consolidation, including the updating of the valuation of investments accounting principles, on the basis of which the companies included in associated companies, the elimination of intercompany profits and in the consolidated financial statements perform the reconciliation losses and the preparation of the statement of cash flows as well as the of trade balance sheet I to trade balance sheet II. The effectiveness statement of changes in equity are mainly carried out manually with and compliance of the Group accounting process with the relevant the help of the system. Capital consolidation is entered in SAP BPC policies are confirmed by the companies included in the consolidated after the system-supported manual implementation. Deferred and financial statements within the framework of an internal statement of accrued taxes are calculated and recognized by Group Accounting in completeness. coordination with the Group Tax department. The SAP BPC system is primarily used for the accounting-related Group Group policies, which are available to all consolidated companies, reporting process between the companies included in the consoli- ensure that consolidation processes and the reconciliation of internal dated financial statements and the Group parent company, Fraport AG. balances are carried out properly. The accounts to be consolidated are recognized in this system, as is required information for tax accruals and for the Group notes. Access Assets and liabilities from the acquisition or sale of shares in compa- authorization on the level of the consolidated companies is awarded nies are generally measured on the basis of an external value analysis and administered by Fraport on the basis of a user authorization con- prepared by experts (e.g., calculation of acquisition costs or purchase cept. Group reporting in SAP BPC is adapted by Group Accounting price allocation). on a regular basis to the changes in accounting-relevant legal regula- tions. A Group chart of accounts in the SAP BPC system is set up and Hidden reserves and liabilities (purchase price allocations) uncovered administered by Group Accounting. during initial consolidation are updated through Group Accounting Accounting-related internal controls are, as far as possible, carried out within the SAP BPC system. Manual application and monitoring controls, especially regarding completeness and quality of the reported data, are carried out in the context of the operating accounting pro- cesses in Group Accounting. centrally. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20137 2 Group Management Report / Outlook Report The Group notes are prepared by the Group Accounting as part of the Functions in the departments involved in the accounting process Group financial reporting process. Once the Group notes have been are separated on a system, personnel and organizational level. A SAP drawn up, the information given in them is verified by central or local authorization concept is used for issuing and administering access departments, where required. authorization for accounting-related systems. The central units Finance and Investor Relations, as well as, Corporate The aim of the controls carried out within the framework of account- Compliance, Risk and Values Management are generally responsible ing is to ensure completeness, correctness, existence, ownership for preparing the Group management report. They consolidate the and presentation of the assets and liabilities and items in the income information provided by the relevant departments. Consolidated statement recorded in the accounting process. information is verified by the relevant departments. The Group parent company Fraport AG prepares its own individual division, subsequent and mainly manual controls are carried out for financial statements in accordance with German commercial and stock the purpose of ensuring the completeness and correctness of items market regulations. Fraport AG has developed an HGB accounting recognized in the sub-ledgers. Preventative, system-aided controls and policy to ensure that its financial statements are prepared consistently a dual control (four eyes) principle are implemented as subsequent and in accordance with the principles of compliant accounting. controls of closing entries in order to achieve the purposes of the During the preparation of the financial statements by the Accounting monitoring mentioned. Accounting at the Group parent company Fraport AG is, as far as possible, kept local through sub-ledgers (for creditors, debtors, as- In order to ensure that all financial statements are complete, the Group set accounting, treasury, accounts of local departments). During the parent company Fraport AG has implemented a contract management preparation of financial statements, the Accounting division/Group process that evaluates contracts recognized in the financial state- Accounting creates any closing entries in the general ledger which ments to obtain a complete and correct view of all facts relevant to cannot be entered by local departments. The Accounting division also the accounting process. In addition, the head of Group Accounting performs internal controls in the framework of preparation of financial is a member of the RMC. As a result it is generally ensured, that issues statements for important local accounting processes. identified during the risk management process are assessed for their effect on the financial statements and reported, if applicable. The con- In order to ensure standardized procedures, important operational tract management and risk management processes are both regulated processes of the sub- and general ledgers have been documented in a separate policy. (including policies, process descriptions, manuals and guidelines). The effectiveness and compliance of the sub-ledger processes with the A special process monitors risks associated with the recognition of relevant policies are verified by the responsible departments, which financial instruments in the accounting system, particularly hedging issue an internal declaration of completeness. transactions. The Group parent company Fraport AG uses the SAP R3 system for The reporting process for the financial statements of the Group parent preparing its accounts. Accounting-related internal controls are car- Fraport AG is laid down in a schedule detailing each individual step, ried out where possible with the help of the SAP R3 system. Manual including deadlines and responsibilities. Group Accounting monitors application and monitoring controls are carried out during the opera- the progress and schedule system-assisted. tional accounting processes in the sub-ledgers and also during the preparation of the financial statements by the Accounting division. The major steps in the reporting process are the closing of the sub- ledgers, which in the case of the receivables accounting process includes the valuation of receivables, i.e., the creation of allowances. In asset accounting, the closed sub-ledger reflects scheduled depre- ciation and impairment losses on property, plant and equipment. The Treasury department is responsible for the operational processes of its own sub-ledger (including cash pooling) for providing the information required for recognizing financial instruments in the general ledger. Fraport Annual Report 2013Group Management Report / Outlook Report 73 After the closing of the sub-ledgers, the Accounting division/Group Despite positive economic forecasts overall for fiscal year 2014 (see also Accounting of Fraport AG carries out the necessary closing entries, the “Business Outlook” chapter beginning on page 84), the risks that which also includes carrying out subsequent manual monitoring con- could arise from the economic and financial policy conditions remain trols. This mainly relates to other provisions and personnel provisions, unchanged. Another flare-up of the European debt crisis, for example financial assets and instruments, equity and expense and income as a result of insolvency in the banking sector, an escalation of political accruals. The Tax department calculates and posts income taxes and protests against reform measures and the Euro, the abandonment of performs manual application and monitoring controls. deficit targets and reform measures introduced, turbulences in emerg- ing countries or renewed general uncertainty among businesses or Fraport regularly uses external service providers within the framework consumers could halt the slight upward trend in Europe and trigger of the preparation of the annual financial statements for evaluating another recession in Europe. The global economy would also be provisions, mainly personnel provisions as well as financial instruments affected in this case, which would result in further weakened growth. and assets. The negative consequences for global and regional air traffic develop- ment, including Fraport, would also be considerable. The Internal Auditing department regularly assesses major sub- processes of the accounting process, including accounting-related The budget debate regarding debt limits in the USA that surfaces internal controls. Business risks again in early 2014 (political stalemate; threat of expenditure freezes), which led to uncertainty even outside of the USA in October 2013, represents a risk, albeit a comparably lower one. The risks in China The risks which could have a material effect on the business activities of as well as various emerging countries discussed in the media could Fraport are explained in the following description. In this description, have a dampening effect on the global economy and, as a result, they are aggregated more intensively than they are used for internal Germany’s export-based economy, which would also affect Fraport’s control; however, the risks are classified according to the same risk airport business. categories, which are also used in the internal risk management report- ing system. Unless specified otherwise, the risks described relate to all The economic risks may become more manifest, impairing develop- segments, to varying extents (Aviation, Retail & Real Estate, Ground ment in air traffic, which would have a negative effect on the asset, Handling and External Activities & Services). financial and earnings position of Fraport. For this reason, Fraport closely monitors the development of supply and demand in air traffic Fraport AG is the parent company of the Fraport Group and is com- so that reasonable countermeasures can be introduced if required. prised of all of the segments described. Therefore, it is also subject to Particularly in the personnel area, Fraport has agreements with the the risks described, directly or indirectly. employee representative body in order to be able to intervene with Strategic risks General economic risks countermeasures. An increasingly unstable geopolitical situation in the Middle East and The development of the global economy has yet to gather momentum, North Africa in the form of new oil and kerosene price rises could and the aftermath of the financial and debt crisis varies widely. Industrial also have an impact on the supply and demand development of air nations have expanded their production since the start of 2013, but transport. their economic activities remain burdened by structural problems. Economic momentum in emerging countries is still comparably high but has weakened significantly in recent years, which is particularly important due to the increasing significance of China and India in the global economy. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 7 4 Group Management Report / Outlook Report As an international air traffic hub, Frankfurt Airport benefited in the The amount of transfer traffic also varies depending on the availability past from the fact that airlines tended to return to their local bases and and attractiveness of direct intercontinental flights offered. concentrate their business on hubs in times of crisis. Fraport has been able to at least compensate for the effects of crises in a relatively short Due to the increasing market and competitive pressure, the potential time. However, experiences with the most recent economic crises risk also exists that future capital costs from planned capital expenditure could indicate that it may take increasingly longer to return to a growth may only be capable of being priced into the achievable charges to path. Furthermore, structural changes in business travel (e.g. reduction a limited extent. in the number of business trips) could have a direct or indirect impact on Fraport’s business. Currency rate fluctuations, unemployment and Frankfurt Airport is not only in competition with established European changes in consumer behavior which influence passengers’ shopping competitors. It is also faced increasingly with a continuous stream habits, can also impact the earnings of the Fraport Group, particularly of new competitors. Political and regulatory decisions on regional, in the retail business. The buildings and areas that Fraport currently national and European level have an impact on the market and there- lets are mainly used by airlines or companies whose business largely depends on the development of air traffic at Frankfurt Airport. This sec- tor of the real estate business is therefore not directly tied to general real estate market developments. fore competition in the form of taxes, fees and regulations, such as aviation tax, EU emissions trading, CO2 regulations, noise protection requirements and bans on nighttime flights. There is therefore the risk of airlines using alternative sites and routes outside Frankfurt for the medium-term. Fraport sees more medium-term risks in the form of a Given the difficult situation described, Fraport estimates the potential weaker competitive advantage among European airlines and conse- impact level of the macroeconomic factors as still “high” overall. The quently among European airports. probability that negative macroeconomic developments can have such an impact on Fraport’s asset, financial and earnings position is assessed Moreover, the creation of new or the development of existing hub as being “possible”. systems in the Middle East may lead to a shift in the global flows of Market, competitive and regulatory risks transfer passengers. In addition to an attractive infrastructure, the success of a world air- Fraport counters these risks through continuous market monitoring for port is dependent on its airline customer structure and the associ- prompt identification of potential changes with negative consequences ated global and dense route network, the fleet structure and the fares for the business, the recruitment of appropriate compensation offers by offered by the airlines. Sales Management but also through a balanced, needs-based expan- sion planning. In view of the dynamic market environment, Fraport The dampened global economic development, high fuel costs and the assesses the potential impact (impact level) of these risks as “high” and increasing competitive pressure in all transport sectors, to which the the probability of occurrence as “possible”. The traffic assumptions European airlines are particularly exposed, have led to consolidations underlying the 2014 Business Plan, with a growth assumption of only and also some insolvencies in the past, which also cannot be ruled 1%, for example, for the passenger traffic, were thus conservative. out in future. Changes to the alliance systems repeatedly modify the customer and supply structure, also associated with the reorientation Fraport has reported continually in recent years that the European of the supply at other airport locations. Ticket price campaigns influ- Commission plans to further liberalize ground handling services ence the flow of transfer passengers. If these special fares were to be and the legislative process. On November 30, 2011, the European limited, passenger traffic would suffer. Commission presented the draft regulation. This was adopted by the European Parliament on April 16, 2013. The draft includes, inter alia, that with a maximum transition period of six years, an additional third-party ground handling company must be approved in the case of airports with more than 15 million passengers. The possibility of awarding sub-contracts for self-handlers is equivalent to unrestricted opening-up of the market and is assessed negatively. Stricter social Fraport Annual Report 2013 Group Management Report / Outlook Report 75 regulations, such as the requirement to transfer employees, are also If additional restrictions of airport operation – demanded in some included. The draft is currently with the European Council for voting. cases in the political discussion – were implemented into law, a further weakening of the competitive position of Frankfurt Airport could result, For risk minimization, comprehensive lobbying and efficiency-increas- which would have a considerable impact on traffic volume, as well as ing measures are being carried out. Possible losses of market share are traffic structure, at the Frankfurt site. However, it must be considered being counteracted by Fraport through agreements concluded to that these restrictions (for example, extended night flight ban, maxi- safeguard competition. The potential impact (impact level) from this mum noise limits) would have to overcome high legal hurdles. risk is assessed as being “high” and the adoption of the regulations continues to be “likely”. The aforementioned rulings by the German Federal Administrative High Court mean that legal recourse in the test cases is now concluded. In relation to the operation of Take-off Runway West and the existing, However, it is impossible to completely exclude the possibility of parallel take-off and landing runway system, based on investigation residual legal risks to the airport expansion, in light, inter alia, of the results due to anticipated official orders, capital expenditure of up to filed constitutional complaints and possible appeals to the European €300 million (previous year: up to €130 million) may become neces- Court of Justice and/or the European Court of Human Rights as well sary in qualified drainage systems. A notification regarding the Take- as the still outstanding decisions in the non-test-case proceedings, off Runway West area from the Darmstadt Regional Council has been which are now being continued. Fraport counters these risks through available since November 19, 2013. Further conditions (for example, comprehensively following the proceedings, in legal and technical additional measuring points) were formulated in this, which make aspects. Furthermore, Fraport is committed to active noise protection the drainage of the northern section of Take-off Runway West likely in and noise research. the medium-term. The notification does not contain any conditions for the realization of qualified drainage for the parallel runway system. The total volume of capital expenditure in the airport expansion so far An evaluation of the probability of occurrence for the described risks has increased to approximately €2,270 million as at December 31, 2013 is not possible due to the status of the process currently under way due to the advancing building and contract award activity, as well as by the authorities. the capital expenditure to be made due to the supplemental planning zoning decisions dated April 30, 2013 (noise protection for commer- Risks in connection with the airport expansion cial property) and May 10, 2013 (protection requirements regarding With its appellate decision, issued on April 4, 2012, the German Federal wake turbulences). Administrative High Court essentially confirmed that the zoning decision and thus the airport expansion complied with legal require- In view of the initiated and upcoming measures (for example, compre- ments in several test cases. Insofar as it objected to the night flight hensive roof reinforcement program, particularly in the municipalities policy, the HMWVL, as the responsible zoning authority, adapted the of Raunheim and Flörsheim) and the evaluation of the legal situation, zoning decision on May 29, 2012, imposing a complete ban on all Fraport estimates the probability of occurrence of the risk of a rescission scheduled flights between 11 p. m. and 5 a. m. and for the hours im- of the zoning decision regarding the expansion of Frankfurt Airport mediately before and after the night flight ban, from 10 p. m. to 11 p. m. as being “low”. However, if the risk should be realized, the impact and from 5 a. m. to 6 a. m. the number of aircraft movements was (impact level) of the risk would be “high”. limited to an annual average of 133 take-offs and landings per night. There is the risk that the existing night flight ban will have a long- term impact on the conditions for the development of the site. It cannot be ruled out that the momentum of the traffic development, in particular in the cargo sector, will weaken, with the possibility of reductions in cargo traffic. On the other hand, Deutsche Lufthansa/ Lufthansa Cargo, as the main cargo customer, has committed itself to the Frankfurt site and intends to expand its cargo center, according to the current state of affairs. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20137 6 Group Management Report / Outlook Report Financial risks “Risk report” according to Section 315 (2) no. 2 of the HGB Credit risks for Fraport stem on the one hand from primary financial instruments. Such risks arise, for example, upon the purchase of securi- ties in the framework of asset management and comprise the default With regard to its balance sheet items and planned transactions, Fraport risk of the issuer. On the other hand, credit risks arise in connection is subject in particular to credit risks, interest rate and foreign exchange with derivative financial instruments with a positive fair value and the rate risks and other price risks. Fraport counters interest and foreign current risk that the counterparty will not be able to meet the obliga- exchange rate risks mainly by establishing naturally hedged positions, tions that are advantageous for Fraport. This risk is generally countered in which the values or cash flows of primary financial instruments off- by using financial assets and concluding derivatives only with issuers set each other in their timing and amount and/or by using derivative and counterparties who have an investment-grade rating. Since the financial instruments to hedge the business transactions. The scope, beginning of 2013, investments without ratings have also been possible responsibilities and controls for the use of derivatives are stipulated in individual cases, within narrowly defined limits. If the credit rating in a binding internal policy. The existence of a risk which needs to be is downgraded to non-investment grade during the asset’s holding hedged is the prerequisite for using derivatives. Derivatives are not period or the term of the derivative, a decision is made on a case-by- used for trading or speculative purposes. To monitor the risk posi- case basis on the further progress of the asset or derivative, taking into tions, simulations are regularly carried out by Risk Controlling using account the remaining term. various worst-case and market scenarios. The Chief Financial Officer is regularly informed about the results. The Fraport AG Treasury depart- The issuers’ ratings and those of issues are regularly monitored, as ment is responsible for efficient market risk management. Generally, are the credit default spreads (CDS) of the counterparties. Moreover, only risks which affect the Group’s cash flows are managed. There the upper limits are continually adjusted to the credit-rating develop- can only be open derivative positions in connection with hedging ment and where necessary reduced and financial assets are diversified transactions in which the underlying transaction is cancelled or is not further under risk considerations. In consideration of the previously carried out as planned. described measures, Fraport classifies the potential financial impact (impact level) of credit risks as “low” and their probability of occurrence Interest rate risks arise in particular from the capital requirements as “possible”. associated with capital expenditure and from existing floating inter- est rate financial liabilities and assets. As part of the interest rate risk Other price risks result from the fair value measurement of financial management policy, in order to limit the interest rate risk for the ma- assets. This, however, does not affect cash flows at the time of measure- jority of the debt financing, interest derivatives were concluded and ment. Financial assets with a fixed maturity are assumed to be subject financing was concluded with fixed-interest rate agreements. Following to temporary market fluctuations which reverse automatically by the the commitment to these interest rate hedging positions, there is still end of the products’ maturities, since a repayment in the full nominal the risk that the market interest rate level will decrease and as a result amount is expected. there will be a negative fair value of the interest rate hedging instru- ments or that a negative value will be intensified. These changes can Even without specific measures, Fraport assesses the probability of have an impact on the result, within the income statement, or also on occurrence of other price risks as “low”, and the impact level as “low”. the shareholders’ equity, depending on the classification of the deriva- tive. Fraport assesses the probability of occurrence of the risk as being Regarding further information about the nature of risks arising from “low” and the potential impact (impact level) as “high”. the use of financial instruments and the scope of risks from open risk positions in the context of financial instruments, please see Group Foreign currency risks mainly arise from revenue planned in foreign notes 40 and 47. currencies which is not covered by expenses in matching currencies. Such risks are hedged, to the extent necessary, by entering into cur- Other financial risks rency forward transactions. Due to the hedging that has taken place Risks for Fraport’s asset, financial and earnings position may arise from or is planned, Fraport assesses the probability of occurrence of foreign the current financial market situation and its effects on the overall currency risks as “low” and their possible financial impact (impact economy, particularly on liquidity and future bank lending practices. level) as “medium”. As a countermeasure, Fraport has as part of its “pre-financing” strategy already secured a further portion of the planned borrowing for future capital expenditure through external financing in the last few years, most recently in the second half of 2012. This capital is still available. Fraport Annual Report 2013Group Management Report / Outlook Report 77 Legal risks and compliance risks the demands of the Philippine government are unfounded. The oral pro- As a Group that operates internationally, Fraport is subject to numer- ceedings of the first stage of the process took place in September 2013 ous national and international laws and regulations, as well as their in Washington D.C., which dealt with the jurisdiction of the arbitration amendments, through which the future business success of Fraport court, Fraport’s claims and counterclaims. The outcome of the pro- could be negatively influenced. In addition to the industry-specific ceedings remains to be seen. To protect its own interests, Fraport is regulations of air traffic law, planning and environmental law and safety- represented by two renowned law firms experienced in investment related regulations, the general provisions of capital market law, cartel disputes before the ICSID. law and employment law are also of material importance. The Legal Affairs departments of Fraport and its Group companies keep abreast In the proceedings initiated by the Philippine government against of the legal developments, including the relevant case law, inform Philippine International Air Terminals Co., Inc. (PIATCO) in 2004 for the affected business units about changes and are actively involved the expropriation of the terminal, the Court of Appeals rejected the in limiting any resulting risks. appeal of all parties on October 29, 2013 and confirmed its decision from August 2013 that the full compensation due to PIATCO for the Furthermore, the risk exists that bodies and/or employees may violate expropriation of Terminal 3 in Manila (including interest accrued by laws, internal guidelines or standards of good corporate governance July 31, 2013) should amount to US-$371.4 million. This decision is not that are recognized by Fraport, with the consequence that Fraport yet legally binding and was contested by all parties with appeals before could suffer asset losses and/or reputational damage. Fraport is actively the Supreme Court. Mediation proceedings carried out between the working to counter these potential risks, through the establishment of parties of the expropriation proceedings has not yet led to tangible a Group-wide compliance organization, and the implementation of results. Fraport is not a party in the expropriation proceedings nor a a compliance program, inter alia through the code of conduct that is party in the related mediation proceedings. However, a conclusive binding for all employees, their training and constant further develop- decision in the expropriation proceedings regarding the payment of ment of the ICS. In addition to this, Fraport has implemented various compensation also affects Fraport as a shareholder in PIATCO. whistle-blower systems, which employees and external parties can turn to confidentially and anonymously. In consideration of the previously At the beginning of 2003, the shareholders and directors of PIATCO described, implemented measures, the probability of occurrence of – against Fraport’s votes and those of the PIATCO directors it ap- a compliance violation having a “high” potential impact (impact level) pointed – resolved to prepare a complaint for damages against Fraport is assessed as being “low”. and its directors for alleged improper and harmful action against the company. Fraport denies these allegations. Moreover, it is disputed Manila project (segment External Activities & Services) whether these resolutions are legally valid. PIATCO has not further The investment in Manila, the capital of the Philippines, to build and op- pursued the claims asserted. erate an airport terminal (NAIA IPT3 project) was written off completely in the financial statements for the year ended December 31, 2002. The As has already been reported in previous years, the Philippine Depart- ongoing material risks and legal disputes in relation to the project are ment of Justice ordered an arraignment in the suit against various described in the following. persons associated with the Fraport Group in 2011 due to a suspected violation of the “Anti-Dummy Law”. The corresponding arraignment As has already been reported in previous years, Fraport’s arbitration took place in September 2013. Declarations of exemption were then proceedings are continuing against the Republic of the Philippines provided to affected persons. The outcome of these proceedings could before the International Centre for Settlement of Investment Disputes put the legality of Fraport’s investment in the Philippines in question (ICSID) based on the investment protection treaty between the Federal and could, in the case of conviction, serve as the basis for proceed- Republic of Germany and the Republic of the Philippines. In these ings to seize Fraport’s assets in the Philippines. With reference to the arbitration proceedings, Fraport is claiming compensation for the ex- allegations made in the proceedings, to the extent they are known, propriation of the investment project at Manila Airport in the amount Fraport is still of the opinion that these allegations are false. of approximately US-$425 million plus interest. The Republic of the Philippines disputes the competency of the court of arbitration and The probabilities of occurrence of the risks described so far regarding the merits of the complaint and furthermore has raised a contingent the Manila investment are currently not assessable. However, if the risks counterclaim against Fraport, which is partially in unstated amount. should be realized, their impact would be “material”. Fraport is of the opinion that the investments were lawfully made and Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20137 8 Group Management Report / Outlook Report As reported, one Philippine law firm as well as one former Philippine minister filed claims for damages against Fraport, two former board Operating risks Risks from capital expenditure projects members and two Philippine attorneys of Fraport for alleged defama- Fraport AG’s capital expenditure plan covers a period of ten years and tion for PHP 100 million (around €1.6 million) each. Accordingly, is subject to various risks. Increases in construction costs, suppliers motions to seize Fraport assets on the Philippines were initially granted. going out of business, changes in planning figures, or weather-related To avoid the seizures, Fraport, as reported earlier, deposited guaran- delays could all lead to extra costs. These risks are assessed by means tees as collateral, whereupon the responsible courts revoked these. of the clustering and weighting of the individual construction invest- Furthermore, exemption declarations were issued to the Philippine ments in three phases. In this respect, Fraport differentiates between lawyers. In order to cover the existing risk, a provision in the amount of projects in conception (requested), projects in planning and projects €3.5 million was already formed in 2005. The main suits are still pending, in implementation. A Fraport-specific percentage that represents the but in the meantime the claim in one of the two suits has been rejected risk assessment is applied to the construction investments as divided in without possibility of appeal to the extent it was directed against the this manner. Project-specific monitoring measures are implemented so Philippine lawyers of Fraport. These complaints against Fraport were that these potential risks can be confronted appropriately, thus assur- rejected as well. The plaintiffs have filed appeals against these rulings, ing that cost-reducing countermeasures can be introduced early on. which have not yet been decided. In the same matter, the plaintiffs filed a complaint leading to public charges in three proceedings. The Fraport estimates the potential damage at around €300 million and, court has already rejected the charges in all three proceedings, in two taking the project-related monitoring measures into account, the of the three cases in the court of appeal. In all the cases, appeals are probability of the risk materializing as “possible”. pending at various levels in which no final decisions have been made to date. A fourth suit is still in preliminary proceedings. Fraport rejects Risks attributable to investments and projects these allegations. The probabilities of occurrence of the risk described Investment companies and airport operating projects, like Fraport AG at is currently not assessable. the Frankfurt site itself, are subject to general economic and company- specific risks as well as industry-specific market risks. In addition, there All of the legal risks described are counteracted by Fraport appointing are general political risks at individual locations abroad. experienced law firms with its representation. Other legal risks In principle, Fraport‘s investments outside of the Frankfurt site can be distinguished from one another as capital-intensive expenditure, There is the risk of back tax payments in connection with tax audits such as the acquisition of long-term concessions or the acquisition of that are still to be carried out. The probabilities of occurrence of such shares in airports, or in business models with no capital investment potential back tax payments are currently not assessable. or only a small amount, such as the conclusion of service contracts (management contracts). Fraport is also active in countries, such as China and Russia, which can basically hold higher risks for investors than is the case for capital expenditure in Germany. These risks typi- cally include country, market and foreign exchange risks, which can lead to a significant impairment of the future earnings outlook, right up to a total loss of the investment. For reasons of bidding strategy, as well as risk minimization, Fraport often works in cooperation with a local partner who has experience with the relevant typical national regulations and customs. Within the context of major capital expenditure, Fraport aims for project financing that allows no recourse or only limited recourse to Fraport AG as the capital provider. This type of project financing, which are also referred to as non-recourse or limited-recourse, are used here for risk reduction. Fraport Annual Report 2013Group Management Report / Outlook Report 79 Notwithstanding this, the subscribed equity capital of the relevant pro- In view of terrorist attacks against military and police establishments ject company and shareholder loans granted by Fraport are exposed to and political unrest in the past (mainly in the urban centers of Istanbul a default risk. In order to minimize these risks, Fraport uses investment and Ankara) and conflicts in the border area with Iraq and Syria, secu- protection insurance, wherever possible and economically meaningful. rity measures throughout the country remain at a high level. To this extent there continues to be a latent risk of terrorist activity in all parts Particularly in emerging countries, political instability and/or economic of Turkey. So far, neither the conflicts in the Middle East or in North fluctuations can occur at any time. Therefore, Fraport relies on long- Africa, nor the political unrest in Turkey have had a noticeable negative term growth with these investments, in order to participate in continu- impact on the development of the country‘s tourism. Nevertheless, ing positive performance. Overall, the countries in which Fraport is it appears “possible” that such an escalation could influence tourism, active show a significantly stronger long-term growth forecast for their which would, in turn, imply “medium” negative consequences for the economy than is the case for Central Europe, even if this is currently business performance of Antalya Airport. subject to uncertainties, for example, with Russia and Turkey. On the basis of existing contracts between Fraport AG, Fraport Group Risks in connection with the existing airport operating projects, which companies and various principals, such as foreign airport operators and are generally long-term, arise primarily in connection with the estima- aviation authorities, guarantees exist from Fraport AG and respectively, tion of future development of air traffic. A possible lack of growth and/ guarantees for operated airports. In the event of poor performance or downturn in air traffic could have a significant negative effect on or non-performance of contractually owed services, these guarantees the earnings development of concessionary companies, which could can be claimed upon. For risk minimization, these potential payment also result in “material” risks to project financing. Unforeseen official obligations are reduced in proportion to the service provided on a interventions in the fare, tax and levy structure of the airports to the regular basis, where possible. Nevertheless, depending on the circum- detriment of the airport operators can also cause risks. Additional stances of the respective project – the possibility exists that until the risks, such as delays in connection with the construction of airport end of the relevant contractual term, a claim under such collateral by infrastructure, which as a rule adheres to a contractually stipulated the contractor can be initiated to the detriment of Fraport AG. schedule, may also implicitly occur from this. Personnel risks For the Jorge Chávez Airport in Lima, Peru, operated by Lima Airport Fraport intends to continue utilizing the growth in global air traffic to Partners (LAP), various risks currently exist regarding the planned ex- create sustainable and attractive jobs at all Group sites. Fraport is aware pansion of the airport: the handover of land by the government and that the current demographic shift will intensify the competition for the ground quality holds possible risks. Furthermore, the timetable for high quality professionals and managers, particularly at the Frankfurt relocating a main road is still uncertain. While the associated deviations site. This relates to the acquisition of new professionals and managers, regarding the expansion costs and/or the timetable can be classified as as well as retaining existing employees. In order to deal with this risk “likely”, if this occurs, this would result in a suspected “high” impact adequately, Fraport has taken measures in the fields of qualification, level. In order to adequately counter the risk, the management of LAP commitment and work satisfaction. In the qualification field, airport- is establishing a cost optimization approach for the implementation specific and universal qualification programs for its employees and of the expansion projects. managers, trainee programs and short- and medium-term assign- ments at Fraport’s foreign sites are offered. In the commitment field, Fraport operates the airport in Antalya in Turkey, in cooperation with a Fraport offers attractive company benefits, the material participation Turkish partner. One of the main foundations of the Turkish economy of employees in the company‘s success and concrete measures for is the tourism sector, which has continuously been expanded in good compatibility of work and family life. In the work satisfaction recent years. This is particularly reflected in a relatively high share of field, the training and sensitization of the managers to the reduction high-quality hotel facilities at an attractive price-performance ratio. As and minimization of work and health risks play an important role. a result, Turkey has already become a serious competitor to traditional Furthermore, in-depth employee surveys are conducted every one or holiday destinations in the Mediterranean or the Canary Islands. two years in all Group companies with a substantial workforce. They provide Fraport with important insights and opportunities to improve the working environment on all levels. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20138 0 Group Management Report / Outlook Report On the basis of the initiated measures, the potential impact (impact Risks of unusual disruptions level) of the risk is assessed as “low” and the probability of occurrence Operations in Frankfurt and other Group airports may be impaired as “possible”. by local events such as accidents, terrorist attacks, fires or technical malfunctions, as well as events that influence the operation of national As a result of the change to the German Temporary Employment Act as and international air traffic (such as natural disasters, extreme weather of December 1, 2011 and the case law that has been cited in the mean- events, armed conflicts and epidemics). time, within the context of assigning employees through temporary employment, the risk now exists that the number of employees to be Fraport has taken a series of measures in order to minimize or counteract used in future must be reduced. Furthermore, the coalition agreement such negative effects. In order to protect the IT infrastructure and the at the federal level includes the plan to limit temporary employment critical operating systems from significant negative effects, Fraport and contracts to a maximum of 18 months in future, in relation to the the other Group airports have developed plans for maintaining critical function, as well as the person performing temporary employment. business and operating processes (business continuity and emergency Therefore, the risk exists for Fraport that the use of personnel through teams), as well as the restoration of the IT services. Furthermore, a temporary employment contracts may not be admissible in some central crisis team is established in Frankfurt which coordinates all of cases in future, compared to the current situation. Without alterna- the necessary processes airport-wide in the event of emergencies. In tive solutions, the required scope of work would need to be covered order to verify the adequacy of these plans and to continuously improve with Fraport‘s own personnel, which would lead to additional costs them, malfunction scenarios are set up and exercises are carried out estimated at €16 million to €18 million per annum on a Group-wide on a regular basis. basis. In view of this situation, it is now already being investigated whether adequate options can be found for an alternative structure. In addition to these preventative measures, Fraport AG‘s insurance The advantages and disadvantages of possible structuring options protection covers the risks that are usually insurable with airport com- are currently being examined and considered. On the basis of the panies. It particularly includes loss events that result from the loss of or initiated measures, Fraport assesses the probability of occurrence of damage to assets, including resulting business interruptions, as well as this risk as “possible”. the statutory liability of Fraport AG from all business capacities, legal situations and activities in relation to operating Frankfurt Airport, as well Fraport AG has insured its employees for purposes of granting a as all additional risks that are conventional or necessary in the business company pension under the statutory insurance scheme based on or industry, as well as in the operation. Insurance protection regularly a collective bargaining agreement with the Zusatzversorgungskasse also covers the risks from terrorism regarding property and third-party (top-up provision insurance scheme) in Wiesbaden (ZVK). As with liability. Fraport AG and the domestic Group companies in which an the statutory insurance scheme, this is currently structured as a soli- interest of at least 50% is held are covered against risks of environmental darity model. In view of the demographic change, the ZVK has the damage from accidents, for statutory and public-law claims. problem that the current levies for financing the benefits are not suf- ficient. Therefore, a so-called “restructuring fee” is now already being Foreign Group companies generally cover the aforementioned risks collected in addition to the levies. Furthermore, the ZVK‘s solidarity using separate local insurance policies. model provides for personnel who leave to be replaced by new levy payers. If the requirement for work performance declines, in addition In spite of possible insurance protection, if one of the described risks to the demographic development, the number of employees for whom should occur, this can have a “high” financial impact (impact level), levies and restructuring charges are paid will fall. Because of this, the depending on the seriousness. This assessment takes account of the coverage gap grows continuously in the company pension plan. far-reaching consequences for the Fraport business, for example, from Therefore, it cannot be ruled out that the ZVK could charge further natural disasters or terrorist attacks. As unusual disruptions tend to be compensation amounts in order to cover the compensation coverage rare, Fraport assesses the probability of occurrence as “low”. gap. In order to counter this risk of financing capability of the company pension plan, alternative solutions are being sought – also in discus- sions with the ZVK – regarding how to switch the current structure of the company pension plan to a capital-covered model at an accept- able cost. In view of the high complexity of the issue and unclarified legal questions, a precise assessment of the potential financial impact (impact level) is not currently possible; the probability of occurrence is assessed as “possible”. Fraport Annual Report 2013Group Management Report / Outlook Report 81 IT risks Within the context of the planning process, Fraport assesses market and All of Fraport‘s important business and operating processes require competitive analysis, as well as environmental scenarios and deals with IT systems and IT components. A serious system failure or material loss the orientation of the product and service portfolio, the cost drivers of data could lead to serious business disruptions and security risks. In and the critical success factors of the industry. Furthermore, Fraport addition to this, attacks by viruses and hackers could lead to system monitors the identifiable trends at its competitors, customers – such failure and ultimately to the loss of business-critical and/or confidential as airlines, passengers and tenants – as well as in businesses outside of data. All of the IT systems of critical importance to the company are the industry, which have an impact on air transport in general and the configured redundantly and are optionally housed at separate loca- operation of airports in particular. Fraport aims to further develop and tions. The possibility of residual risks resulting from the architecture expand the value-creating business fields that are already part of its and operation of the IT facilities cannot be completely ruled out due operations. Furthermore, Fraport invests in business fields and business to their nature. ideas in which the company can establish sufficient expertise in order to operate these to create value over the long-term. Due to the ongoing development of new technologies and the growing threat of cyber attacks, there is an underlying risk potential In addition to the opportunities management by the business units for IT systems. Fraport takes account of this situation with active and and the Group‘s central units, Fraport also uses the expertise of the preventative IT security management, which particularly focuses on the entire workforce. With a variety of instruments, Fraport aims to identify business-critical IT systems and their availability. The requirements for opportunities that the employees develop. In addition to the tradi- IT security are specified in the IT security policy and security guidelines tional Group ideas management program, these include the “FRAnk” which must be followed throughout the Group. Compliance with these innovation prize, which awards particularly innovative ideas at Frankfurt guidelines is monitored regularly. Furthermore, compliance with data Airport and targeted creative workshops with employees, in which protection regulations is ensured. In addition to this, residual risks from new business ideas are sought. failures that occur are additionally covered by specific IT insurance policies, where this is economically meaningful. Fraport basically aims for a balanced relationship between opportuni- ties and risks, where its aim is to increase the added value for customers IT systems are highly important to all of Fraport’s business and opera- and shareholders by analyzing and using new market potential and tional processes. Due to the preventative and proactive measures opportunities. introduced, the potential effects (impact level) of an IT failure lasting several hours are assessed as “medium” and the probability of occur- Where it is likely that the opportunities will occur, these have already rence is “low”. Opportunities report The opportunities management system The opportunities management system of the Fraport Group has the been included in the 2014 forecast and respectively, in the medium- term outlook. Therefore, the following section concentrates on future developments or events that can lead to a positive deviation from the outlook and medium-term prospects for Fraport. aim of identifying and evaluating opportunities at the earliest pos- Unless specified otherwise, the opportunities described relate to all sible stage and initiating appropriate measures so that opportunities segments, to varying extents (Aviation, Retail & Real Estate, Ground are taken and lead to commercial success. Opportunities should be Handling and External Activities & Services). assessed for existing business, as well as from new business fields. The identification and recording of opportunities takes place by the prised of all of the described segments. Therefore, it is also subject to operating units/segments and the supporting Group units throughout the opportunities described, directly or indirectly. Fraport AG is the parent company of the Fraport Group and is com- the year, within the context of the company‘s operational management and the annual revolving medium-term planning process. While the Overall economic opportunities short-term result monitoring is aimed at opportunities that mainly Since early summer of 2011, the European debt crisis has led to the relate to the current fiscal year, in the medium-term planning process, growth momentum of the global economy and particularly also opportunities which are of strategic importance for the Group are worldwide air cargo transport declining and resulted in a recession focused on. in the Euro zone economy in the years 2012 and 2013. In contrast to this, the German economy remained comparatively robust and was able to achieve moderate growth in both years. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20138 2 Group Management Report / Outlook Report The debt crisis led to a considerable slow-down in demand for trans- As an internationally operating airport operator that is represented in port. The airlines, which were strongly impacted by this in some cases, virtually all parts of the world, Fraport can take advantage of this region- reacted to the excess capacities and financial imbalance with consolida- ally varied growth potentials through investments and management tion measures, which led, inter alia, to a significant reduction of services agreements. Also in future, Fraport will continue to expand selectively and lower volumes at the airports in general, as well as in Frankfurt. and on a success-orientated basis in international business. Certain signs of saturation in the demand for air transport in western countries, Experience with the growth cycles has shown that market turbulences which also affect the Frankfurt site, can be compensated with this. can generally only interrupt the upward development of world air traffic temporarily. The possibility of a degree of dragging out of the Opportunities in corporate strategy volume expectations cannot be ruled out, however catch-up effects Through the completion of Runway Northwest and Pier A-Plus, Fraport after times of crisis can also not be ruled out. was able to significantly increase the airside as well as landside capaci- ties at the Frankfurt site in the past two years and thus create the basis The forecasted, economic momentum, which is picking up again (see for a dynamic development of passenger volume. Fraport is therefore also the chapter “Business Outlook”, beginning on page 84) could – able to handle traffic volumes that go beyond the traffic forecasts used in conjunction with an improved financial situation of the established as the short-term planning basis. Frankfurt Airport is thus one of the airlines – end the consolidation in the airline industry more quickly, few large European passenger airports that has sufficient infrastructure stop route reductions, create new airline services and exceed the capacities over the longer term and can possibly make use of capac- traffic forecasts that still tend to be conservative. The ACI forecast for ity bottlenecks of other airports to its advantage at appropriate good 2014 from June 2013 is at 2.4% for all European airports and at 4.5% market development. worldwide. Fraport has deliberately estimated the business planning conservatively with passenger growth of 1% for the Frankfurt site, With the far-advanced planning for Terminal 3, Fraport also has the but is currently assuming a volume increase in 2014 within a range possibility of providing additional capacities for passenger traffic in of 2% to 3%. the foreseeable future. On the basis of the zoning decision, a building application has already been submitted for the first construction level of Largely independent of the current dampened economic situation, the Terminal 3. This will be realized on the basis of the traffic development, international integration of the globalized world economy continues so that Fraport has the opportunity to provide sufficient capacity at to increase. There is no foreseeable change in the trend of purchasing, the appropriate time. The inauguration of Terminal 3 is not presently production and sales being distributed across the entire globe. Global planned within the medium-term planning period. air traffic provides the key infrastructure required for continuing the internationalization process. This trend is supported by development The discontinuation of the regulatory measures that distorted com- in various developing and emerging countries with lasting, favorable growth potential. The rise in the standard of living in these countries is key to the disproportionately high growth of air travel, not least because ground-side transport infrastructure is often underdeveloped in these petition, such as the aviation tax and a competition-neutral approach, such as with the CO2 regulation or emissions trading, can result in increased traffic. areas. Compared to Central Europe and North America, economic de- On top of that, Fraport has identified the following significant growth velopment in these countries was far less impacted by the last financial engines for the future: and economic crises and the current debt crisis. Airport retail Extending and modernizing the retail, food and beverage and service areas in the terminals, in particular on the airside, continue to be central elements for increasing retail revenue. With the opening of 12,000m² of retail space in Pier A-Plus, Fraport created an essential foundation in 2012 for further retail growth at Frankfurt Airport. The focus in addition lies on the development and implementation of sales- promoting measures for the passengers who have an extraordinarily high purchasing power. In view of this, Fraport is intensively examining the buying behavior of passengers, in order to increase the revenue Fraport Annual Report 2013Group Management Report / Outlook Report 83 per passenger over and above the planning estimates. Fraport is also Opportunities for improving the processes not only result from within monitoring general trends in the retail sector, in order to derive future the Group, but also in cooperation with customers and suppliers. new business opportunities for the company. Therefore, Fraport also aims to review the processes at these junctures External business Fraport’s know-how is now represented on four continents. In addition on a regular basis and leverage further potential, which will have a positive impact on the corporate result and the quality delivered. to Frankfurt, four further airports are operated or managed through Overall, Fraport regards the potential impact of the organizational and Group companies in which Fraport holds an interest of at least 50%. process-related improvements as being material for the company’s The Group rounds out its portfolio with minority-owned airports or future development. Therefore, Fraport has focused specifically on through management contracts in numerous airports. The profit contri- setting additional impulses here during the past fiscal year. The aim bution of external business to the overall profit of the Fraport Group is is to take account of the specific challenges of an integrated business set to continue to perform in the next years in the existing investment model in the Group, as well as the importance of the Group in terms portfolio. In addition, Fraport‘s clear objective is to expand the external of social and regional policy. business. Opportunities for expanding the external business present themselves on a regular basis, through new airports and development projects placed on the market. Also in future, Fraport will submit bids Financial opportunities Favorable changes on the financial markets in attractive tenders which meet the internal return requirements and Favorable exchange rate and interest developments can have a positive offer adequate security for the investment. impact on the Group’s financial result. The Financing department is Airport city monitoring the development on the financial markets in order to iden- tify and utilize opportunities. Exchange rate effects from the conversion Around the world, hub airports are developing into airport cities. of results that are not denominated in €, into the functional currency of Fraport recognized this trend at an early stage and identified sites that the Group, the €, can have a positive impact on the Group’s financial are worth considering for real estate development. For instance, Fraport result. Overall, Fraport holds the view that advantageous changes on is intensively developing and marketing attractive commercial space the financial markets could have a material impact and in view of the in direct proximity to Frankfurt Airport (such as the Mönchhof site or volatility of the financial markets and the exchange rate developments, Gateway Gardens). Another project involves an expansion of CargoCity Fraport regards it as “possible” to profit from it. South to meet the high demand for additional logistics space at the Frankfurt site. Depending on the particular project, Fraport decides if and to what extent the Group will participate in the development of the real estate. Overall assessment of the opportunities and risks by the company management Fraport consolidates and aggregates all of the risks and opportunities reported by the various company units and Group companies, which Through the complete acquisition of the Ticona site as at Decem- are reported within the context of the quarterly risk analysis process. ber 31, 2013, Fraport has an additional area, which can be developed Furthermore, the risks and opportunities are discussed within the con- within the context of the airport city and is available for airport-affiliated text of the regular planning processes. In the opinion of the Executive services. Board, the risks described before are not of a nature, individually or in their entirety, that might jeopardize the company as a going concern in Opportunities in conjunction with organizational and process-related improvements consideration of their respective risks of occurrence and their financial impact, as well as in view of the stable balance sheet structure and A continuous optimization of key business processes and constant cost anticipated business development. The Executive Board continues to control are of essential importance for ensuring stable profitability and be optimistic that the Group‘s financial strength forms a solid basis for capital return. Fraport holds the view that the possibilities for further future business development and provides the necessary resources to optimization of the cost structures within the Group are not yet fully effectively pursue and utilize opportunities that present themselves utilized. The functions of good corporate management include con- to the Group. tinuously investigating the organization to determine how it can be structured more effectively and efficiently. In individual cases, projects are initiated to use the identified optimization potential. Through this continuous process, it should be possible to achieve additional earn- ings potential over and above the planning. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20138 4 Group Management Report / Outlook Report In comparison to the previous year, the estimate of probability of Risks and opportunities that do not form part of the business out- occurrence and/or financial impact of individual risk classes has not look and may lead to significant negative or positive changes to the changed significantly. This is also reflected in the negligible percentage forecasted development can be found in the chapter titled “Risk and change of the risks classified as being “material” or “moderate” in the Opportunities Report” starting on page 67. risk matrix. In relation to the total number of all identified risks, the risks at the “material” risk level were at 20.7 % at year-end (previous year: 23.8 %), the risks of the “moderate” risk level were at 17.1 % (previous Forecasted situation of the Group for 2014 Development of Group structure year: 21.1 %). The Executive Board is convinced that the change of the Compared with the 2013 fiscal year, the Executive Board does not individual risks has no significant impact on the overall risk profile of expect any fundamental changes to the legal and organizational Fraport, which essentially remains unchanged in comparison to the Group structure in 2014. Furthermore, the Executive Board expects previous year. Business Outlook the competitive situation at the key Group sites to remain unchanged in comparison with 2013. Efforts will still be made to expand the external business with new airport investments. These will generally be acquired as part of a public tender procedure and cannot therefore be forecasted. Similarly, the disposals of companies are just as difficult Information about reporting to predict and thus do not form part of the forecast. The business outlook is based on the assumption that the international economy and air traffic will not be impaired by external shocks such as Development of Group control terrorist attacks, wars, epidemics, natural catastrophes, or additional Compared with the 2013 fiscal year, the Executive Board does not turbulences on the financial markets. expect any fundamental changes in 2014 to the financial and non- Moreover, statements concerning the anticipated asset, financial and derived from the Group strategy. Furthermore, the Executive Board earnings position reflect the accounting standards to be applied in the does not expect any fundamental changes to the Group strategy and EU at the start of the 2014 fiscal year. Deviations from the standards the strategic focus of finance management in 2014. financial performance indicators, which are used for Group control and used in the 2013 fiscal year arise as a result of the first-time application of IFRS 11 “Joint arrangements”, which stipulates that joint ventures that have until now been proportionately consolidated in the consolidated financial statements must be valued and consolidated using the equity Forecasted economic and industry-specific conditions for 2014 Development of economic conditions method as of January 1, 2014. For Fraport, this has a particular impact Based on the improved economic development during 2013, financial on the Group companies Antalya as well as N*ICE Aircraft Services & institutions and leading economic institutes expect the global economy Support GmbH, Medical Airport Service GmbH and AirIT Systems to expand further in the 2014 fiscal year. With growth of 3.4 % to GmbH. An overview of all joint ventures that were proportionately 3.8 %, the pace of the global economic development is forecasted to included in the consolidated financial statements of the 2013 fiscal exceed the level of 2013 significantly (2013 figure: about 3 %). Global year can be found in the Group notes to this report in Group note 55. trade will rise by around 4.5 % in 2014, according to current forecasts. To compare the 2014 forecasted asset, financial and earnings position US-$ exchange rate, it is presumed that the € in 2014 will on average with the figures in the 2013 financial statements, Fraport has prepared remain broadly unchanged with a value of US-$1.34. Overall, inflation is expected to be moderate. With regard to the € to “pro forma” figures which adjust the 2013 financial statements to the new accounting standard. A reconciliation of the 2013 figures For 2014, relatively stable global oil prices at an average of US-$105 is provided before the respective chapters of the business outlook. to 110 per barrel are expected, which is a forecast at the level of the last three years. On the one hand, the oil production boom in the USA will put pressure on prices. On the other hand, due to the economic momentum, a rise in demand for raw materials is also anticipated. Fraport Annual Report 2013Group Management Report / Outlook Report 85 Regionally, due to a lower debt burden on private households and an Development of the global aviation market improving real-estate sector, positive economic development (about On the basis of the expected development of economic conditions 2.5 % to 3 %) is expected, among others, in the USA. In general, only as well as taking into account the financial situation of the airlines, the a recovery and not an upturn is anticipated in the Euro zone, which ACI anticipates growth in passenger volume of 3.2 % for European will still be burdened with increased uncertainty regarding financial airports and 1.5 % in freight tonnage for 2014. Conversely – based on policy. Following – 0.4 % in the 2013 fiscal year, this figure is expected passenger kilometers – IATA forecasts an increase in the global aviation to be about 1 % in 2014. Germany should continue to develop more market of 6 % in 2014 under very different growth rates in the regions, positively. After achieving growth of 0.4 % in the 2013 fiscal year, it is with Europe seeing 4.7 %. The unchanged high crude oil price that expected to achieve growth of 1.7 % in 2014. is forecasted will have neither a positive nor negative impact on the The good development should be supported primarily by domestic demand, the improving global economic environment and a higher volume of investments. Positive stimulus continues to be expected from growth rate in comparison with the previous year. Source: ACI Press Release February 6, 2014, IATA Industry Financial Forecast, December 2013. private consumption. While a slight decline in economic momentum Forecasted business development 2014 is anticipated in Japan due to lower economic policy stimulus and Taking the economic and industry-specific conditions into account, the consolidation of public finances, the growth rates for emerging the Executive Board expects better development for fiscal year 2014 countries are again expected to significantly exceed those for industrial at the Frankfurt site than in the previous year. It forecasts a growth countries. For countries with Group airports in which Fraport has an rate in passenger traffic of between 2 % and 3 %. While the generally interest of at least 50 %, the following growth rates are expected: Peru more favorable economic environment will have a positive impact on +5.5 %, Turkey +3.5 %, Bulgaria +1.7 %. passenger business, there will be further uncertainty from the airlines’ Sources: Consensus of the leading German economic research institutions (October 2013), IMF (October 2013), OECD (November 2013), Deutsche Bank Research (January 2014), DekaBank (January 2014), World Bank (January 2014). short-term yield and capacity management. With regard to cargo ton- nage handled, the Executive Board expects rather a moderate growth rate for the Frankfurt site within the context of market growth. Based on the still high proportion of cargo handled on North American and Development of the legal environment Asian connections and the volatile economic prospects of both regions, The following changes to the legal environment will come into effect the cargo outlook is subject to increased uncertainty. in the 2014 fiscal year: On the basis of positive economic assumptions and a sustained opti- In September 2009, the European Commission adopted a resolution mistic outlook for tourism, an increase in passenger numbers over the expanding its influence on airports and aircraft movements/air traffic coming years is expected for the Group airports with a Fraport share control. Based on this resolution, the competence to develop the of at least 50 %: Antalya, Lima, Varna and Burgas. It is anticipated legal foundation for the certification of airports was transferred to that growth rates will be around 5 % on average. As in past fiscal years, the European Aviation Safety Agency (EASA). From 2014, the EASA the political situation in North Africa and the Gulf Region can affect is responsible for the safety supervision of the licensing authorities Antalya, Varna and Burgas over and above their organic growth. In for all European airports. In order to guarantee uniformly high safety Lima, in addition to the international traffic, the increase in domestic standards in all EU member states and thus realize a partial aspect of traffic will also have an impact on the increase in volume. the Single European Sky (SES) program, national legislation and regula- tions with regard to the operation and licensing of airports, air traffic management and air traffic controlling services shall be supplemented or replaced in part by unified EU legislation. To ensure that general legal conditions build on one another and a functioning European air traffic system can be created, the European Commission plans to create new principles for the harmonization and better meshing of the legislative projects with the SES II+ program. The resulting changes do not have a significant impact on the forecasted business development for the Fraport Group in the 2014 fiscal year. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 20138 6 Group Management Report / Outlook Report Forecasted results of operations for 2014 Reconciliation of the 2013 business figures to IFRS 11: Group € million Revenue EBITDA EBIT EBT Group result Value added 2013 reported figures Figures adjusted to IFRS 11 Change Change in % 2,561.4 2,378.2 880.2 528.1 340.7 235.7 1.3 733.3 439.0 331.6 235.7 – 41.5 – 183.2 – 146.9 – 89.1 – 9.1 0.0 – 42.8 – 7.2 – 16.7 – 16.9 – 2.7 – – Table 33 The expected positive business development will be reflected in an between approximately € 780 million and some € 800 million. With increase in Group revenue in 2014. At the Frankfurt site, the increase slightly higher depreciation and amortization, growth of up to around in airport and infrastructure charges in particular, as well as additional € 500 million is forecasted for the Group EBIT. revenue in the Retail and Real Estate divisions, will also have a revenue- increasing effect over and above the traffic development. Conversely, Primarily due to the difficulty in predicting interest and exchange rates particularly lower capacitive capital expenditure in the Group company effects, the forecast for the Group EBT and result for fiscal year 2014 Twin Star in connection with the application of IFRIC 12 will lead to is subject to uncertainty. The Executive Board currently assumes that a reduction in reported Group revenue. Due to a correspondingly the Group financial result will deteriorate in comparison with 2013, lower cost of materials, however, this effect will not have any impact resulting in values forecasted for the Group EBT and Group result that on Group EBITDA. In total, the Executive Board expects an increase in are slightly above the previous year. revenue up to a level of approximately € 2.45 billion. Adjusted for the effects of the application of IFRIC 12, the Executive Board intends to hold the dividend per share at least stable for the Board expects growing expenses in fiscal year 2014, which will result fiscal year 2014 at € 1.25. The 2014 Group value added will be slightly from higher traffic-related concessions payments in the Group company above that of 2013, but remain negative. In view of the long-term positive outlook for earnings, the Executive Lima and an expected tariff increase in wages and salaries. In summary, the Executive Board expects the increase in revenue will be above Forecasted segment development for 2014 the expense development, meaning that the Group EBITDA will lie Reconciliation of 2013 segment figures to IFRS 11: Aviation € million Revenue EBITDA EBIT Value added Retail & Real Estate € million Revenue EBITDA EBIT Value added 2013 reported figures Figures adjusted to IFRS 11 Change Change in % 845.2 205.4 88.1 – 121.7 845.6 205.4 88.1 – 121.7 0.4 0.0 0.0 0.0 0.0 – – – Table 34 2013 reported figures Figures adjusted to IFRS 11 Change Change in % 469.0 350.7 267.9 98.1 467.9 350.6 267.8 101.0 – 1.1 – 0.1 – 0.1 2.9 – 0.2 0.0 0.0 3.0 Table 35 Fraport Annual Report 2013 Group Management Report / Outlook Report 87 Ground Handling € million Revenue EBITDA EBIT Value added External Activities & Services € million Revenue EBITDA EBIT Value added 2013 reported figures Figures adjusted to IFRS 11 Change Change in % 656.2 38.2 – 2.3 – 57.8 649.0 32.6 – 6.0 – 60.2 – 7.2 – 5.6 – 3.7 – 2.4 – 1.1 – 14.7 – – Table 36 2013 reported figures Figures adjusted to IFRS 11 Change Change in % 591.0 285.9 174.4 51.3 415.7 144.7 89.1 30.1 – 175.3 – 141.2 – 85.3 – 21.2 – 29.7 – 49.4 – 48.9 – 41.3 Table 37 The positive passenger development at the Frankfurt site will be well as price increases for infrastructure charges. The Executive Board reflected in an increase of up to 5 % in revenue in the Aviation seg- anticipates that segment EBITDA and EBIT will remain at approximately ment in 2014. The increase in airport charges by an average of 2.9 % the same level as the previous year. The value added of the segment will on January 1, 2014 in particular will have a revenue-increasing effect be on the previous year’s level and thus remain once again negative. over and above the traffic development. The higher revenue will impact the EBITDA and EBIT of the segment, for which growth of up to about In connection with the positive anticipated business developments €20 million is forecasted. In 2014, the value added of the segment at the Group sites outside Frankfurt, an organic growth in revenue is will be slightly above the previous year’s level, but remain negative. expected in 2014 for the segment External Activities & Services. Conversely, lower capacitive capital expenditure in the Group com- The Retail & Real Estate segment will also benefit in 2014 from the pany Twin Star in connection with the application of IFRIC 12 will have higher passenger number, which will primarily impact the develop- a particular impact and lead to a decline in the reported segment ment of revenue in the Retail division. Over and above this, the higher revenue of up to 5 %. Due to the corresponding lower cost of materi- parking revenue will have a revenue-increasing effect. Conversely, als, however, this effect will not have any impact on segment EBITDA. lower proceeds are planned from the realization of land sales. In total, As a result of the positive organic development of revenue, increases in a slight increase is expected in revenue, EBITDA and EBIT in 2014. the single digit million € range are expected for the segment’s EBITDA In 2014, the value added of the segment will remain at approximately and EBIT in 2014. The 2014 value added is anticipated to be slightly the same level as the previous year. lower than the level of 2013. There will be a slight increase in revenue in 2014 in the Ground Forecasted asset and financial position for 2014 Handling segment as a result of the expected traffic development as Reconciliation of 2013 asset and financial position to IFRS 11: Asset and financial position € million 2013 reported figures Figures adjusted to IFRS 11 Change Change in % Cash flow used in airport operating projects, other intangible assets, property, plant and equipment and investment property Operating cash flow Free cash flow Total assets Shareholders’ equity Net financial debt Gearing ratio 501.7 574.8 73.1 9,523.4 3,098.8 2,975.4 101.3 % 437.0 454.1 17.1 8,835.8 3,116.7 2,870.6 97.1 % – 64.7 – 120.7 – 56.0 – 687.6 17.9 – 104.8 – – 12.9 – 21.0 – 76.6 – 7.2 0.6 – 3.5 – Table 38 Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 8 8 Group Management Report / Outlook Report The asset and financial position of the Fraport Group in the 2014 fiscal In the 2014 fiscal year, the Executive Board again aims to enhance year will be characterized by a slight decline in capital expenditure employee satisfaction in the attractiveness as an employer category. volume as well as the repayment of long-term financial liabilities. The The objective is to achieve an average grade of better than 3.0. In capital expenditure focus will continue to be on modernization and addition, the Executive Board aims to further reduce the number of maintenance measures as well as preparations for Terminal 3. The work accidents. Executive Board continues to examine opportunities for ongoing improvement of the asset and financial position of Fraport Group. Medium-term outlook Fraport expects a sustained recovery of the global economy in the As a result of the expected positive business development and lower medium-term as well as an improvement in the economic situation in cash flow used in investing activities, a slightly improved free cash the Euro zone in particular. Positive development is also anticipated in flow is expected in 2014 compared with 2013. Despite the positive the aviation market, which will also be positive for the Fraport Group’s development of the free cash flow, the Group’s liquidity in 2014 – airports. Correspondingly, the Executive Board forecasts positive due to the dividend distribution for the 2013 fiscal year – is expected operating performance in all segments in the medium-term. In the to decline slightly, which will lead to a slight increase in net financial long-term, the situation in the Ground Handling segment must be debt. The gearing ratio, however, is forecasted to be slightly below closely monitored in connection with plans for the further liberali- the level of 2013. This will be due to the increase in shareholders’ zation of ground handling services (see also the chapter “Risk and equity as a result of additions to revenue reserves. The total assets in Opportunities Report” beginning on page 67). 2014 are expected to be slightly lower than the 2013 figure primarily owing to the repayment of long-term financial liabilities. The Group interest expenses are expected to fall in connection with If, in the course of its efforts, Fraport should expand external business term, the Executive Board therefore anticipates an increase in the in fiscal year 2014 and carry out relatively large acquisitions, the actual Group EBT, Group result and value added, in addition to the positive development of the asset, financial and earnings position could deviate development of EBITDA and EBIT. the planned decrease in long-term financial liabilities. In the medium- significantly from the aforementioned forecast. In connection with the forecasted business development, the Executive Forecasted non-financial performance indicators for 2014 Board expects a positive development of the free cash flow at least until In the 2014 fiscal year, Fraport will continue to focus on the devel- the start of the construction work on Terminal 3 from around 2015. The opment of non-financial performance indicators as well as financial additional liquidity from the free cash flow will first be used to repay development. In the area of customer satisfaction and product long-term financial liabilities. In connection with the Group result ris- quality, the expectation of the Executive Board is still to achieve global ing in the medium-term and the resulting additions to shareholders’ satisfaction of at least 80 % at the Frankfurt site. While the punctuality equity, the Executive Board expects a reduction in the gearing ratio rate is forecasted at an unchanged, high level, the Executive Board to a value between 80 % and 100 %. projects baggage connectivity of above 98.5 %. The goal is to achieve sustainable baggage connectivity of over 98.5 %. A value significantly The Executive Board aims on the one hand to achieve dividend conti- above 90 % is expected for equipment availability. nuity for the dividend payment, in the sense of a minimum dividend, and on the other hand a participation in Fraport AG’s growing results for the years. Furthermore, the focus remains on the development of non-financial performance indicators. The objective is still to achieve a high level of customer satisfaction and product quality as well as attractiveness as an employer. The aforementioned medium-term outlook is subject to relatively large acquisition projects in external business. Fraport Annual Report 2013Group Management Report / Outlook Report 89 Aggregation of key figures of the business outlook Value 2013 1) Outlook 2014 Medium-term outlook Passengers Frankfurt: 58.0 million Increase between 2 % and 3 % Positive development Antalya: 26.7 million, Lima: 14.9 million, Burgas: 2.5 million, Varna: 1.3 million Growth in Antalya, Lima, Burgas and Varna Growth in Antalya, Lima, Burgas and Varna compared with 2014 Group earnings Revenue: €2.38 billion EBITDA: €733.3 million EBIT: €439.0 million Result: €235.7 million Increase up to a level of approximately €2.45 billion Between approximately €780 million and some €800 million Growth compared with 2014 Growth compared with 2014 Growth up to around €500 million Growth compared with 2014 Slightly above the previous year Growth compared with 2014 Fraport segments Asset and financial position Value added: –€41.5 million Slight increase, but still negative Growth compared with 2014 Aviation: Revenue: €845.6 million, EBITDA: €205.4 million, EBIT: €88.1 million Increase in revenue of up to 5 %, EBITDA and EBIT increase of up to approximately €20 million Growth in revenue, EBITDA and EBIT in comparison with 2014 Retail & Real Estate: Revenue: €467.9 million, EBITDA: €350.6 million, EBIT: €267.8 million Revenue, EBITDA and EBIT each with slight increase compared with 2013 Growth in revenue, EBITDA and EBIT in comparison with 2014 Ground handling: Revenue: €649.0 million, EBITDA: €32.6 million, EBIT: –€6.0 million Slight increase in revenue, EBITDA and EBIT each approximately on previous year’s level Growth in revenue, EBITDA and EBIT in comparison with 2014 External Activities & Services: Revenue: €415.7 million, EBITDA: €144.7 million, EBIT: €89.1 million Organic growth in revenue and increase in EBITDA and EBIT in the single digit million € range Organic growth in revenue, EBITDA and EBIT in comparison with 2014 Cash flow used in airport operating projects, other intangible assets, property, plant and equipment and investment property: €437.0 million Decline in capital expenditure volume Free cash flow: €17.1 million Slight improvement Gearing ratio: 97.1 % Slight decline Moderate development until the start of construction work on Terminal 3 from around 2015 Improvement until the start of construction work on Terminal 3 from around 2015 Decline at least until the start of construction work on Terminal 3 Non-financial performance indicators Global satisfaction of 80 % At least 80 % At least 80 % Punctuality rate of 82.3 % Aim to remain at a high level Remain at a high level Baggage connectivity of 98.4 % Over 98.5 % Over 98.5 % Equipment availability of 94.8 % Significantly above 90 % Significantly above 90 % Employee satisfaction of 3.02 Better than 3.0 Better than 3.0 1,346 work accidents Further reduction aimed for Further reduction aimed for 1) In connection with the first-time application of IFRS 11 from January 1, 2014 onwards, the values of the asset, financial and earnings position in 2013 were adjusted to the new accounting regulation on a pro forma basis. Table 39 Frankfurt am Main, March 4, 2014 Fraport AG Frankfurt Airport Services Worldwide The Executive Board Dr Schulte Giesen Müller Schmitz Dr Zieschang Where the statements made in this document relate to the future rather than the past, these statements are based on a number of assumptions about future events and are subject to a number of uncertainties and other factors, many of which are beyond the control of Fraport AG Frankfurt Airport Services Worldwide and which could have the effect that the actual results will differ materially from these statements. These factors include, among others, but are not limited to, the competitive environment in deregulated markets, regula- tory changes, the success of business operations and a substantial deterioration in basic economic conditions in the markets in which Fraport AG Frankfurt Airport Services Worldwide and its Group companies operate. Readers are cautioned not to rely to an inappropriately large extent on statements made about the future. Consolidated Financial StatementsGroup Management ReportFraport Annual Report 2013 9 09 0 Fraport Annual Report 2013 Consolidated Financial Statements Fraport Annual Report 2013 Consolidated Financial Statements 91 91 Ground Handling About 27,500,000 baggage items... Almost every passenger travels with a suitcase. If Fraport takes only departing and transferring passengers into consideration, this amounted to about 27,500,000 baggage items at Frankfurt in 2013. Once passengers have checked in their baggage at one of the some 420 check-in desks or baggage drop-off machines, or transfer baggage has been sent to the baggage conveyor system, the suitcases are screened completely automatically and transported to the departure loading point via the 81-kilometer baggage conveyor system. Baggage already checked in the evening before or belonging to passengers who do not have an immediate connecting flight is stored temporarily in the early bag storage area. s t n e m e t a t S l a i c n a n i F d e t a d i l o s n o C Further Information 9 09 0 Fraport Annual Report 2013 Consolidated Financial Statements ...loaded minute by minute Once the suitcases and bags to be loaded have reached the departure loading point near the respective aircraft positions, they are removed from the baggage containers by Fraport employees. Thereby the employees sort first and priority class baggage, as well as transfer baggage and baggage of passengers, who have reached their destination after the flight, into separate loading units. Fraport loads about 75 baggage items a minute, calculated on the basis of an average day and the operating times of the airport. On busy days during the summer months, the figure increases to about 100. Fraport Annual Report 2013 Consolidated Financial Statements 91 91 Further InformationConsolidated Financial Statements9 2 Consolidated Financial Statements / Consolidated Income Statement Consolidated Financial Statements for the Fiscal Year 2013 Consolidated Income Statement € million Revenue Change in work-in-process Other internal work capitalized Other operating income Total revenue Cost of materials Personnel expenses Depreciation and amortization Other operating expenses Operating result Interest income Interest expenses Result from associated companies Other financial result Financial result Result from ordinary operations Taxes on income Group result thereof profit attributable to non-controlling interests thereof profit attributable to shareholders of Fraport AG Earnings per € 10 share in € basic diluted EBIT ( = Operating result) EBITDA ( = EBIT + Depreciation and amortization) Notes 2013 2012 adjusted (5) (6) (7) (8) (9) (10) (11) (12) (13) (13) (14) (15) (16) (17) 2,561.4 2,442.0 0.6 35.1 34.3 0.5 44.0 55.8 2,631.4 2,542.3 – 613.0 – 946.8 – 352.1 –191.4 528.1 38.8 – 215.8 –13.6 3.2 –187.4 340.7 –105.0 235.7 14.7 221.0 2.40 2.39 528.1 880.2 – 558.1 – 942.9 – 352.7 –192.6 496.0 52.6 – 226.7 11.7 30.5 –131.9 364.1 –112.6 251.5 13.3 238.2 2.59 2.58 496.0 848.7 Table 40 Fraport Annual Report 2013 Consolidated Financial Statements / Consolidated Statement of Comprehensive Income 93 Consolidated Statement of Comprehensive Income € million Group result Remeasurements of defined benefit pension plans (Deferred taxes related to those items Items that will not be reclassified subsequently to profit or loss Fair value changes of derivatives Changes directly recognized in equity thereof realized gains (+)/losses (–) (Deferred taxes related to those items Fair value changes of financial instruments held for sale Changes directly recognized in equity thereof realized gains (+)/losses (–) (Deferred taxes related to those items Currency translation of foreign Group companies Income and expenses from associated companies accounted for using the equity method directly recognized in equity (Deferred taxes related to those items Items that will be reclassified subsequently to profit or loss Other result after deferred taxes Comprehensive income thereof attributable to non-controlling interests thereof attributable to shareholders of Fraport AG 2013 235.7 1.9 –1.2 0.7 17.0 – 38.1 55.1 –16.2 – 6.8 0.0 – 6.8 1.0 – 4.1 1.7 – 0.6 30.1 30.8 266.5 14.1 252.4 2012 adjusted 251.5 – 7.1 0.8) – 6.3 – 62.0 – 29.7 – 32.3 9.6) 14.8 26.6 –11.8 2.4) – 3.1 – 8.2 1.5) – 41.9 – 48.2 203.3 13.0 190.3 Table 41 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 9 4 Consolidated Financial Statements / Consolidated Statement of Financial Position Consolidated Statement of Financial Position as at December 31, 2013 Assets € million Non-current assets Goodwill Investments in airport operating projects Other intangible assets Property, plant and equipment Investment property Investments in associated companies Other financial assets Other receivables and financial assets Income tax receivables Deferred tax assets Current assets Inventories Trade accounts receivable Other receivables and financial assets Income tax receivables Cash and cash equivalents Total Liabilities and Equity € million Shareholders’ equity Issued capital Capital reserve Revenue reserves Equity attributable to shareholders of Fraport AG Non-controlling interests Non-current liabilities Financial liabilities Trade accounts payable Other liabilities Deferred tax liabilities Provisions for pensions and similar obligations Provisions for income taxes Other provisions Current liabilities Financial liabilities Trade accounts payable Other liabilities Provisions for income taxes Other provisions Notes December 31, 2013 December 31, 2012 adjusted January 1, 2012 adjusted (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) (25) (26) (30) 38.6 1,006.1 57.8 5,988.1 47.7 121.2 727.6 169.8 20.3 43.7 38.6 1,031.2 44.2 5,927.3 34.4 136.6 742.7 117.1 19.5 49.2 38.6 1,067.1 43.6 5,643.8 74.6 138.0 648.6 33.5 29.6 48.2 8,220.9 8,140.8 7,765.6 75.3 181.6 438.4 2.1 605.1 1,302.5 9,523.4 77.7 180.0 385.2 35.0 821.9 1,499.8 9,640.6 81.4 163.9 280.2 6.2 927.1 1,458.8 9,224.4 Notes December 31, 2013 December 31, 2012 adjusted January 1, 2012 adjusted (31) (31) (31) (31) (32) (33) (34) (35) (36) (37) (38) (39) (33) (34) (35) (38) (39) 922.1 590.2 1,540.8 3,053.1 45.7 3,098.8 4,146.8 50.8 889.4 120.4 26.7 54.1 235.1 921.3 588.0 1,403.2 2,912.5 35.7 2,948.2 4,401.0 64.4 1,006.4 102.5 27.4 80.2 211.2 918.8 584.7 1,327.0 2,830.5 29.4 2,859.9 4,034.0 64.9 1,001.0 110.8 22.9 68.1 201.8 5,523.3 5,893.1 5,503.5 314.9 162.4 178.4 8.1 237.5 901.3 196.6 214.4 163.2 5.3 219.8 799.3 219.9 228.9 187.4 2.4 222.4 861.0 9,224.4 Table 42 Total 9,523.4 9,640.6 Fraport Annual Report 2013 Consolidated Financial Statements / Consolidated Statement of Cash Flows 95 Consolidated Statement of Cash Flows € million Notes 2013 2012 adjusted Profit attributable to shareholders of Fraport AG Profit attributable to non-controlling interests Adjustments for Taxes on income Depreciation and amortization Interest result Gains/losses from disposal of non-current assets Others Fair value changes in associated companies Changes in inventories Changes in receivables and financial assets Changes in liabilities Changes in provisions Operating activities Financial activities Interest paid Interest received Taxes on income paid Cash flow from operating activities Investments in airport operating projects Capital expenditure for other intangible assets Capital expenditure for property, plant, and equipment Investment property Dividends from associated companies Loans to affiliated companies 1) Proceeds from disposal of non-current assets Cash flow used in investing activities without investments in cash deposits and securities Financial investments in securities and promissory note loans Proceeds from disposal of securities and promissory note loans Decrease of time deposits with a duration of more than three months Cash flow used in investing activities Dividends paid to shareholders of Fraport AG Dividends paid to non-controlling interests Capital increase Cash inflow from long-term financial liabilities Repayment of long-term financial liabilities Changes in short-term financial liabilities Cash flow used in/from financing activities Change in restricted cash Change in cash and cash equivalents Cash and cash equivalents as at January 1 (16) (11) (13) (14) (28) (25) (34 – 35) (37 – 39) (42) (19) (20) (21) (22) (23) (23) (24) (30) (42) (31) (31) (33) (42) (30) Foreign currency translation effects on cash and cash equivalents Cash and cash equivalents as at December 31 (42)(30) 1) This refers to joint ventures, associated companies and investments. 221.0 14.7 105.0 352.1 177.0 5.1 5.8 13.6 2.4 25.0 – 87.3 – 27.3 807.1 – 167.3 21.0 – 86.0 574.8 – 107.4 – 8.7 – 362.3 – 23.3 3.0 0.0 5.9 238.2 13.3 112.6 352.7 174.1 – 33.2 1.7 – 11.7 3.7 – 20.6 – 42.7 21.7 809.8 – 167.3 31.8 – 121.3 553.0 – 89.4 – 5.4 – 598.6 – 22.0 6.4 – 31.2 4.0 – 492.8 – 736.2 – 484.6 445.8 251.6 – 280.0 – 563.0 424.0 96.0 – 779.2 – 115.2 – 114.8 – 4.1 2.5 55.1 – 189.4 – 4.0 – 255.1 5.5 45.2 127.1 – 4.9 167.4 – 6.7 2.3 652.7 – 163.7 – 151.6 218.2 3.5 – 4.5 132.8 – 1.2 127.1 Table 43 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 9 6 Consolidated Financial Statements / Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity € million Notes Issued capital Capital reserve Balance as at January 1, 2013 adjusted Foreign currency translation effects Income and expenses from associated companies directly recognized in equity Remeasurements of defined benefit plans Fair value changes of financial assets held for sale Fair value changes of derivatives Other result Issue of shares for employee investment plan Management Stock Options Plan Capital increase for exercise of subscription rights Distributions Group result Consolidation activities/other changes Balance as at December 31, 2013 Balance as at December 31, 2011 Effects of retrospectively adopting IAS 19R Balance as at January 1, 2012 adjusted Foreign currency translation effects Income and expenses from associated companies directly recognized in equity Remeasurements of defined benefit plans Fair value changes of financial assets held for sale Fair value changes of derivatives Other result Issue of shares for employee investment plan Management Stock Options Plan Capital increase for exercise of subscription rights Value of performed services (fair value) Distributions Group result Consolidation activities/other changes Balance as at December 31, 2012 921.3 588.0 –117.0 1,403.2 2,912.5 2,948.2 – – – – – 0.0 0.6 0.2 – – – – – – – – 0.0 1.9 0.3 – – – (31), (32) 922.1 590.2 3.7 – 81.3 918.8 – 584.7 – 918.8 584.7 – – – – – 0.0 0.5 2.0 – – – – – – – – – 0.0 1.8 1.3 0.2 – – – (31), (32) 921.3 588.0 8.4 –117.0 Revenue reserves Foreign currency Financial Revenue reserves Equity Non-controlling Equity (total) reserve instruments (total) interests attributable to shareholders of Fraport AG 0.4 – 4.7 – 6.3 – 3.1 8.4 – 3.6 –1.1 11.5 – 11.5 – 2.8 – 0.3 – – – – – – – – – – – – – – – – – 1,511.8 – 0.4 0.8 –115.2 221.0 0.4 1,618.4 1,384.9 9.1 1,394.0 – 6.3 – – – – – – – – – – – – –114.8 238.2 0.7 1,511.8 2.6 – – – 5.8 38.9 35.7 – 78.5 – – 6.4 – 9.4 – 22.7 – 38.5 – – – – – – – – – – – – – – 3.6 1.1 0.8 – 5.8 38.9 31.4 – – –115.2 221.0 0.4 1,540.8 1,317.9 9.1 – 2.8 – 6.7 – 6.3 – 9.4 – 22.7 – 47.9 – – – –114.8 238.2 0.7 1,403.2 – 3.6 1.1 0.8 – 5.8 38.9 31.4 2.5 0.5 –115.2 221.0 0.4 3,053.1 2,821.4 9.1 – 2.8 – 6.7 – 6.3 – 9.4 – 22.7 – 47.9 2.3 3.3 0.2 – 114.8 238.2 0.7 2,912.5 – 78.5 1,327.0 2,830.5 35.7 – 0.5 – 0.1 – 0.6 – 4.1 14.7 45.7 29.4 – 29.4 – 0.3 – 0.3 – 6.7 13.3 35.7 – – – – – – – – – – – – – – – 4.1 1.1 0.7 – 5.8 38.9 30.8 2.5 0.5 –119.3 235.7 0.4 3,098.8 2,850.8 9.1 2,859.9 – 3.1 – 6.7 – 6.3 – 9.4 – 22.7 – 48.2 2.3 3.3 0.2 –121.5 251.5 0.7 2,948.2 Table 44 Fraport Annual Report 2013 Consolidated Statement of Changes in Equity € million Notes Issued capital Capital reserve Income and expenses from associated companies directly recognized in equity 921.3 588.0 Balance as at January 1, 2013 adjusted Foreign currency translation effects Remeasurements of defined benefit plans Fair value changes of financial assets held for sale Fair value changes of derivatives Other result Issue of shares for employee investment plan Management Stock Options Plan Capital increase for exercise of subscription rights Distributions Group result Consolidation activities/other changes Balance as at December 31, 2013 Balance as at December 31, 2011 Effects of retrospectively adopting IAS 19R Balance as at January 1, 2012 adjusted Foreign currency translation effects Remeasurements of defined benefit plans Fair value changes of financial assets held for sale Fair value changes of derivatives Other result Issue of shares for employee investment plan Management Stock Options Plan Capital increase for exercise of subscription rights Value of performed services (fair value) Distributions Group result Consolidation activities/other changes Balance as at December 31, 2012 Income and expenses from associated companies directly recognized in equity (31), (32) 922.1 590.2 918.8 584.7 918.8 584.7 – – – – – – – – – – – – – – – – – – 0.0 0.6 0.2 0.0 0.5 2.0 – – – – – – – – – – – – – – – – – 0.0 1.9 0.3 0.0 1.8 1.3 0.2 (31), (32) 921.3 588.0 Consolidated Financial Statements / Consolidated Statement of Changes in Equity 97 Revenue reserves Foreign currency reserve Financial instruments Revenue reserves (total) Equity attributable to shareholders of Fraport AG Non-controlling interests Equity (total) –117.0 1,403.2 2,912.5 1,511.8 – – 0.4 0.8 – – 0.4 – – –115.2 221.0 0.4 1,618.4 1,384.9 9.1 1,394.0 – – – 6.3 – – – 6.3 – – – –114.8 238.2 0.7 1,511.8 8.4 – 3.6 –1.1 – – – – 4.7 – – – – – – 2.6 – – 5.8 38.9 35.7 – – – – – 3.7 – 81.3 11.5 – 11.5 – 2.8 – 0.3 – – – – 3.1 – – – – – – – 78.5 – – 78.5 – – 6.4 – – 9.4 – 22.7 – 38.5 – – – – – – 8.4 –117.0 – 3.6 1.1 0.8 – 5.8 38.9 31.4 – – –115.2 221.0 0.4 1,540.8 1,317.9 9.1 – 3.6 1.1 0.8 – 5.8 38.9 31.4 2.5 0.5 –115.2 221.0 0.4 3,053.1 2,821.4 9.1 1,327.0 2,830.5 – 2.8 – 6.7 – 6.3 – 9.4 – 22.7 – 47.9 – – – –114.8 238.2 0.7 1,403.2 – 2.8 – 6.7 – 6.3 – 9.4 – 22.7 – 47.9 2.3 3.3 0.2 – 114.8 238.2 0.7 2,912.5 35.7 – 0.5 – – 0.1 – – – 0.6 – – – 4.1 14.7 – 45.7 29.4 – 29.4 – 0.3 – – – – – 0.3 – – – – 6.7 13.3 – 35.7 2,948.2 – 4.1 1.1 0.7 – 5.8 38.9 30.8 2.5 0.5 –119.3 235.7 0.4 3,098.8 2,850.8 9.1 2,859.9 – 3.1 – 6.7 – 6.3 – 9.4 – 22.7 – 48.2 2.3 3.3 0.2 –121.5 251.5 0.7 2,948.2 Table 44 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 9 8 Consolidated Financial Statements / Consolidated Statement of Changes in non-current Assets Consolidated Statement of Changes in non-current Assets (Notes 18 to 24) € million Goodwill Investments in aiport operating projects Other intangible assets Lands, land rights and buildings, including buildings on leased lands Technical equipment and machinery Other equipment, operating and office equipment Aquisition/production costs Balance as at January 1, 2013 135.2 1,354.5 140.3 5,699.5 2,939.6 Foreign currency translation effects Additions Disposals Reclassifications – 15.0 57.1 Balance as at December 31, 2013 135.2 1,396.6 Accumulated depreciation and amortization Balance as at January 1, 2013 96.6 Foreign currency translation effects Impairment losses in accordance with IAS 36 Additions Disposals Reclassifications Write-ups 323.3 – 5.6 72.8 – 0.3 8.7 – 20.3 16.0 144.4 96.1 – 0.3 10.9 – 20.1 113.9 – 62.0 106.0 103.4 – 131.8 98.3 5,857.4 3,009.5 2,132.8 1,416.1 148.5 – 52.9 86.7 – 109.1 436.6 – 0.6 27.3 – 50.7 3.8 416.4 274.1 – 0.5 32.4 – 46.6 Balance as at December 31, 2013 96.6 390.5 86.6 2,228.4 1,393.7 259.4 1.1 3,882.6 6.9 70.7 0.0 61.5 Carrying amounts Balance as at December 31, 2013 38.6 1,006.1 57.8 3,629.0 1,615.8 157.0 586.3 5,988.1 47.7 121.2 59.5 517.3 0.0 123.2 27.6 727.6 Aquisition/production costs Balance as at January 1, 2012 135.2 1,322.3 136.4 5,273.4 2,567.7 Foreign currency translation effects Additions Disposals Reclassifications – 6.9 39.1 – 0.1 5.4 – 5.4 4.0 232.8 – 5.1 198.4 86.3 – 40.8 326.4 Balance as at December 31, 2012 135.2 1,354.5 140.3 5,699.5 2,939.6 Accumulated depreciation and amortization Balance as at January 1, 2012 96.6 Foreign currency translation effects Impairment losses in accordance with IAS 36 Additions Disposals Reclassifications Write-ups 255.2 – 2.9 71.0 92.8 1,975.0 1,367.2 8.6 – 5.3 154.5 – 2.7 6.0 85.2 – 37.2 0.9 395.7 – 0.2 53.5 – 24.7 12.3 436.6 265.6 – 0.1 32.9 – 24.3 Balance as at December 31, 2012 96.6 323.3 96.1 2,132.8 1,416.1 274.1 1.1 3,824.1 70.7 0.0 61.5 Carrying amounts Balance as at December 31, 2012 38.6 1,031.2 44.2 3,566.7 1,523.5 162.5 674.6 5,927.3 34.4 136.6 63.0 497.0 0.9 128.4 53.4 742.7 1) This refers to joint ventures, associated companies and investments. Construc- tion in progress Property, plant and equipment (total) Investment Investments Other Available At fair value Loans to Other loans property in associated investments companies for sale securities securities affiliated companies 1) Other financial assets (total) 675.7 9,751.4 40.5 52.4 486.1 0.9 189.9 71.8 207.3 – 1.1 3.4 – 17.7 – 0.1 191.9 52.3 168.2 – 149.0 505.3 – 0.9 0.0 – 5.2 184.7 1.1 3,824.1 70.7 –10.6 –10.9 0.0 61.5 18.4 58.4 150.5 –15.0 – 223.8 587.4 230.3 – 11.5 – 559.0 675.7 – 0.6 395.1 – 259.5 –15.7 9,870.7 – 0.5 0.0 267.6 – 208.6 0.0 0.0 – 0.2 602.9 – 82.1 – 21.9 9,751.4 – 0.1 0.0 272.6 – 64.2 6.9 0.0 14.4 – 0.3 54.6 6.1 0.5 0.3 12.2 – 59.2 40.5 0.3 0.2 – 6.9 – 0.4 6.1 3.4 – 7.2 0.8 –1.9 – 12.0 34.2 1.4 – 19.2 – 10.9 – 2.7 – 10.6 1,015.9 9,252.7 87.5 208.7 52.4 418.9 0.9 161.8 62.1 – 0.3 12.1 – 6.8 – 6.4 318.1 –101.5 –149.4 486.1 207.3 52.4 0.9 189.9 1.1 3,608.9 12.9 70.7 – 7.9 – 27.3 0.0 64.2 18.5 15.0 – 2.1 – 40.2 44.5 – 1.5 16.9 38.7 – 0.8 – 28.2 71.8 – 0.1 18.4 31.2 – 3.1 – 2.7 801.1 0.0 183.2 – 7.4 – 190.1 786.8 0.0 0.0 0.0 0.0 0.8 0.0 59.2 696.1 0.0 388.0 – 105.4 – 177.6 801.1 47.5 0.0 0.0 0.0 31.5 1.4 – 22.0 58.4 Table 45 Fraport Annual Report 2013 Consolidated Financial Statements / Consolidated Statement of Changes in non-current Assets 99 Other financial assets (total) 801.1 0.0 183.2 – 7.4 – 190.1 786.8 Consolidated Statement of Changes in non-current Assets (Notes 18 to 24) € million Goodwill Investments Other Lands, land Technical Other in aiport operating projects intangible assets rights and buildings, including buildings on leased lands equipment equipment, and machinery operating and office equipment Construc- tion in progress Property, plant and equipment (total) Investment property Investments in associated companies Other investments Available for sale securities At fair value securities Loans to affiliated companies 1) Other loans Aquisition/production costs Foreign currency translation effects Additions Disposals Reclassifications Accumulated depreciation and amortization Foreign currency translation effects Impairment losses in accordance with IAS 36 Additions Disposals Reclassifications Write-ups Carrying amounts Aquisition/production costs Foreign currency translation effects Additions Disposals Reclassifications Accumulated depreciation and amortization Foreign currency translation effects Impairment losses in accordance with IAS 36 Additions Disposals Reclassifications Write-ups Carrying amounts – 15.0 57.1 323.3 – 5.6 72.8 – 6.9 39.1 255.2 – 2.9 71.0 – 0.3 8.7 – 20.3 16.0 144.4 96.1 – 0.3 10.9 – 20.1 – 0.1 5.4 – 5.4 4.0 8.6 – 5.3 113.9 – 62.0 106.0 103.4 – 131.8 98.3 148.5 – 52.9 86.7 – 109.1 232.8 – 5.1 198.4 86.3 – 40.8 326.4 154.5 – 2.7 6.0 85.2 – 37.2 0.9 436.6 – 0.6 27.3 – 50.7 3.8 416.4 274.1 – 0.5 32.4 – 46.6 395.7 – 0.2 53.5 – 24.7 12.3 436.6 265.6 – 0.1 32.9 – 24.3 Balance as at January 1, 2013 135.2 1,354.5 140.3 5,699.5 2,939.6 675.7 9,751.4 40.5 Balance as at December 31, 2013 135.2 1,396.6 5,857.4 3,009.5 150.5 –15.0 – 223.8 587.4 – 0.6 395.1 – 259.5 –15.7 9,870.7 Balance as at January 1, 2013 96.6 2,132.8 1,416.1 1.1 3,824.1 – 0.5 0.0 267.6 – 208.6 0.0 0.0 14.4 – 0.3 54.6 6.1 0.5 0.3 Balance as at December 31, 2013 96.6 390.5 86.6 2,228.4 1,393.7 259.4 1.1 3,882.6 6.9 70.7 207.3 – 1.1 3.4 – 17.7 – 0.1 191.9 52.3 52.4 486.1 0.9 189.9 71.8 168.2 – 149.0 505.3 – 0.9 0.0 – 5.2 184.7 15.0 – 2.1 – 40.2 44.5 70.7 –10.6 –10.9 0.0 61.5 18.4 58.4 3.4 – 7.2 0.8 –1.9 – 12.0 0.0 61.5 – 1.5 16.9 0.0 0.0 0.0 0.0 0.8 0.0 59.2 Balance as at December 31, 2013 38.6 1,006.1 57.8 3,629.0 1,615.8 157.0 586.3 5,988.1 47.7 121.2 59.5 517.3 0.0 123.2 27.6 727.6 Balance as at January 1, 2012 135.2 1,322.3 136.4 5,273.4 2,567.7 1,015.9 9,252.7 87.5 208.7 52.4 418.9 0.9 161.8 62.1 Balance as at December 31, 2012 135.2 1,354.5 140.3 5,699.5 2,939.6 230.3 – 11.5 – 559.0 675.7 – 0.2 602.9 – 82.1 – 21.9 9,751.4 12.2 – 59.2 40.5 – 0.3 12.1 – 6.8 – 6.4 207.3 52.4 318.1 –101.5 –149.4 486.1 31.2 – 3.1 0.9 189.9 38.7 – 0.8 – 28.2 71.8 Balance as at January 1, 2012 96.6 92.8 1,975.0 1,367.2 1.1 3,608.9 12.9 70.7 – 7.9 – 27.3 0.0 64.2 18.5 Balance as at December 31, 2012 96.6 323.3 96.1 2,132.8 1,416.1 274.1 1.1 3,824.1 – 0.1 0.0 272.6 – 64.2 6.9 0.0 0.3 0.2 – 6.9 – 0.4 6.1 70.7 – 2.7 – 10.6 34.2 1.4 – 19.2 – 10.9 – 2.7 0.0 61.5 – 0.1 18.4 696.1 0.0 388.0 – 105.4 – 177.6 801.1 47.5 0.0 0.0 0.0 31.5 1.4 – 22.0 58.4 Balance as at December 31, 2012 38.6 1,031.2 44.2 3,566.7 1,523.5 162.5 674.6 5,927.3 34.4 136.6 63.0 497.0 0.9 128.4 53.4 742.7 1) This refers to joint ventures, associated companies and investments. Table 45 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 0 0 Consolidated Financial Statements / Segment Reporting Aviation Retail & Real Estate Ground Handling External Activities & Services Adjust- ments Segment Reporting (Note 41) € million Revenue 2013 2012 2013 Other income 2012 adjusted Third-party revenue 2012 adjusted 2013 Inter-segment revenue 2013 2012 2013 Total revenue 2012 adjusted Segment result EBIT 2012 adjusted 2013 Depreciation and amortization of segment assets 2013 2012 2013 EBITDA 2012 adjusted Share of result from associated companies accounted for using the equity method Book value of segments assets 2013 2012 2013 2012 845.2 823.4 28.0 40.4 873.2 863.8 76.2 73.1 949.4 936.9 88.1 79.6 117.3 122.3 205.4 201.9 0.0 0.0 469.0 452.9 13.0 14.4 482.0 467.3 235.6 217.3 717.6 684.6 267.9 252.8 82.8 82.4 350.7 335.2 0.0 0.0 4,083.5 2,678.5 4,142.0 2,670.9 Segment liabilities 2012 adjusted 2,678.9 1,857.2 2013 2,598.4 1,770.7 Acquisition cost of additions to property, plant and equipment, investments in airport operating projects, goodwill, intangible assets and investment property Other significant non-cash effective expenses Share of associated companies accounted for using the equity method 2013 2012 2013 2012 2013 2012 207.3 290.6 131.4 64.2 0.0 0.0 127.2 199.4 31.3 32.7 0.0 0.0 656.2 649.3 13.0 18.0 669.2 667.3 34.6 31.4 703.8 698.7 – 2.3 – 1.1 40.5 38.9 38.2 37.8 0.9 1.2 744.0 777.6 550.0 566.9 45.4 86.5 11.2 8.3 2.6 2.6 591.0 516.4 16.0 27.5 607.0 543.9 347.3 338.6 954.3 882.5 174.4 164.7 111.5 109.1 285.9 273.8 – 14.5 10.5 1,951.3 1,946.4 1,322.9 1,401.4 95.4 83.1 6.0 3.7 118.6 134.0 – – – – – – – 693.7 – 660.4 – 693.7 – 660.4 0.0 0.0 – – – – – – 66.1 103.7 182.6 188.0 – – – – – – Group 2,561.4 2,442.0 70.0 100.3 2,631.4 2,542.3 – – 2,631.4 2,542.3 528.1 496.0 352.1 352.7 880.2 848.7 – 13.6 11.7 9,523.4 9,640.6 6,424.6 6,692.4 475.3 659.6 179.9 108.9 121.2 136.6 Table 46 Fraport Annual Report 2013 Consolidated Financial Statements / Segment Reporting 101 Geographical information € million Revenue 2013 2012 2013 Other income 2012 adjusted Third-party revenue 2012 adjusted 2013 Book value of segment assets Acquisition cost of additions to property, plant and equipment, investments in airport operating projects, goodwill, intangible assets and investment property 2013 2012 2013 2012 Germany Rest of Europe Asia Rest of World Adjust- ments Group 2,037.9 2,000.9 68.2 89.5 2,106.1 2,090.4 7,813.7 7,889.6 110.2 69.8 0.6 0.3 110.8 70.1 410.8 377.9 188.7 164.8 1.0 6.6 189.7 171.4 893.9 926.4 224.6 206.5 0.2 3.9 224.8 210.4 338.9 343.0 – – – – – – 66.1 103.7 411.8 614.6 44.4 27.9 6.0 6.3 13.1 10.8 – – 2,561.4 2,442.0 70.0 100.3 2,631.4 2,542.3 9,523.4 9,640.6 475.3 659.6 Table 47 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 0 2 Group Notes / Notes to the Consolidation and Accounting Policies Group Notes for the Fiscal Year 2013 Notes to the Consolidation and Accounting Policies 1 Basis for the preparation of the consolidated financial statements Fraport AG Frankfurt Airport Services Worldwide, Frankfurt am Main (hereinafter: Fraport AG), has prepared its con- solidated financial statements as at December 31, 2013 in accordance with the standards issued by the International Accounting Standards Board (IASB). Fraport AG applied the International Financial Reporting Standards (IFRS) for the consolidated financial statements and the interpretations about them issued by the International Financial Reporting Committee (IFRC) as adopted in the European Union (EU), in force on the balance sheet date, completely and without any restriction in accounting, measurement and disclosure in the 2013 consolidated financial statements. Pursuant to Section 315a (1) of the German Commercial Code (HGB), the supplementary disclosures in the notes to the financial statements were provided applying Sections 313, 314 of the HGB. As the capital market-oriented parent company of the Fraport Group, Fraport AG must prepare its consolidated financial statements in accordance with IFRS pursuant to Directive (EC) No. 1606/2002 of the European Parliament and the Council dated July 19, 2002 (new version dated April 9, 2008), regarding the application of IFRS. The consolidated income statement is prepared according to the nature of expenditure method. The consolidated financial statements are prepared in Euros (€). All figures are in € million unless stated otherwise. The business activities and the organization of the Fraport Group are presented in the management report. The consolidated financial statements of Fraport AG for the 2013 fiscal year were approved for publication by the Executive Board on March 4, 2014. 2 Companies included in consolidation and balance sheet date Companies included in consolidation and balance sheet date Fraport AG and all affiliated companies are included in the consolidated financial statements in full and joint ventures are consolidated on a proportionate basis. Associated companies are in the consolidated financial statements accounted for using the equity method. Companies whose financial and business policies can be determined by Fraport AG are considered as affiliated com- panies. Inclusion in the consolidated financial statements commences on the date when control is obtained. Joint ventures are directly or indirectly managed by Fraport AG in conjunction with other partners. Associated companies are Group companies in which Fraport AG has invested and where it is able to exercise major influence on financial and business policies. The fiscal year of Fraport AG and all consolidated companies is the calendar year. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 103 The consolidated financial statements of Fraport AG are dominated by the parent company. The companies included in the consolidated financial statements changed as follows during the fiscal year 2013: Companies included in consolidation Fraport AG Fully consolidated subsidiaries Dec. 31, 2012 Additions Disposals Dec. 31, 2013 Joint ventures using proportionate consolidation Dec. 31, 2012 Additions Disposals Dec. 31, 2013 Companies consolidated excluding associates on Dec. 31, 2012 Companies consolidated excluding associates on Dec. 31, 2013 Investments in associated companies accounted for using the equity method Dec. 31, 2012 Additions Disposals Dec. 31, 2013 Companies consolidated including associates on Dec. 31, 2012 Companies consolidated including associates on Dec. 31, 2013 Germany Other countries Total 1 24 0 0 24 7 0 0 7 32 32 3 0 0 3 35 35 0 13 2 0 15 6 0 – 1 5 19 20 3 0 0 3 22 23 1 37 2 0 39 13 0 – 1 12 51 52 6 0 0 6 57 58 Table 48 The additions to subsidiaries relate to the acquisition of an additional 90 % of the shares in Afriport S.A. and its sub- sidiary, Daport S.A., which in future will operate Dakar Airport in Senegal. The acquisition and inclusion in the Group of the capital shares of the companies took place in two steps: as at January 8, 2013, 50 % had been acquired and as at July 16, 2013, the remaining 40 % had been acquired. The total purchase price of €90 thousand equated to the fair value of the shares. The inclusion of the companies that are still inactive into the Fraport Group has no material impact on the consolidated financial statements. The disposal in the consolidation of the joint ventures relates to the merger, which took place in December 2013, of IC Ictas Uluslararasi Insaat Sanayi ve Ticaret Anonim Sirketi, Ankara/Turkey, into Fraport IC Ictas Havalimani Isletme Anonim Sirketi, Antalya/Turkey. The Group-internal process has no impact on the consolidated financial statements. The companies GCS Gesellschaft für Cleaning Service mbH & Co. Airport Frankfurt/Main KG, Frankfurt am Main, and FSG Flughafen-Service GmbH, Frankfurt am Main, in which Fraport AG holds 40 % and 33.33 %, respectively, have been included in the consolidated financial statements as affiliated companies. Due to contractual stipulations, Fraport AG has actual control over these companies. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 0 4 Group Notes / Notes to the Consolidation and Accounting Policies Fraport AG holds a 52 % capital share of the company N*ICE Aircraft Services & Support GmbH, Frankfurt am Main. The company is only included in the consolidated financial statements on a proportionate basis of 52 % due to joint management and control, which were contractually agreed. A complete list of shareholdings for the Fraport Group pursuant to Section 313 (2) of the HGB is found at the end of the Group notes. The joint ventures have the following proportional impact on the consolidated financial position and the consolidated income statement (before consolidation adjustments): Joint ventures € million Non-current assets Current assets Shareholders’ equity Non-current liabilities Current liabilities Income Expenses 2013 2012 551.7 187.1 34.6 612.8 91.4 237.4 172.0 599.8 152.9 –7.2 667.1 92.8 191.0 161.6 Table 49 3 Consolidation principles Capital consolidation of all business combinations uses the purchase method. All identifiable acquired assets and the acquired liabilities, including contingent liabilities, are recorded at fair value on the acquisition date. The acquisition costs for corporate acquisitions correspond to the fair value of the transferred assets and liabilities. Incidental acquisition costs are recorded as expenses as they are incurred. Conditional purchase price payments are recorded at fair value on the acquisition date. Subsequent changes in the fair value of a conditional consideration which is deemed to be an asset or a liability will be recognized either through profit or loss or as a change in other income. Non-controlling interests are valued at fair value or the corresponding proportion of the identifiable net assets of the acquired company. In the case of step-by-step company acquisitions, the shares already held in the acquired company are revalued through profit or loss at fair value on the date that control is obtained. Goodwill is recorded insofar as the sum of the consideration that is transferred, the amount of all non-controlling interests in the acquired company and an equity that was previously held and revalued on the acquisition date is higher than the balance of the acquired and revalued identifiable assets and the revalued acquired liabilities. If the comparison results in a lower amount, a gain on acquisition at a price below the fair value is recorded after the assigned values are reviewed. Fraport has included its share of the assets, liabilities and shareholders’ equity (after consolidation) and the income and expense items of joint ventures using proportionate consolidation in the consolidated financial statements. Associated companies are in the consolidated financial statements accounted for using the equity method. Initial meas- urements of associated companies are carried out at fair value at the time of acquisition, similarly to capital consolidation for subsidiaries and joint ventures. Subsequent changes in the shareholders’ equity of the associated companies and the follow-up of the difference from initial valuation change the amount accounted for at equity. Fraport Annual Report 2013 Group Notes / Notes to the Consolidation and Accounting Policies 105 Inter-company profits and losses on trade accounts payable between companies included in the consolidated financial statements were minimal. Elimination was waived based on immateriality, since the impact on the asset and earnings position of the Group would have been negligible. Loans, receivables and liabilities, contingencies and other financial commitments between companies included in the consolidated financial statements, internal expenses and income as well as income from Group investments are eliminated. Currency translation Annual financial statements of companies outside Germany denominated in foreign currencies are translated on the basis of the functional currency concept in accordance with IAS 21. The assets and liabilities of the consolidated companies are translated at the exchange rate on the balance sheet date and equity at the historical exchange rate, whereas simplifying the expenses and income are translated at annual average exchange rates, since the companies are financially, economically and organizationally independent. Foreign currency translation differences are included directly in equity without affecting profit or loss. The following material exchange rates were used for the currency translation: Exchange rates Unit/Currency in € 1 US Dollar (US-$) 1 Turkish New Lira (TRY) 1 Renminbi Yuan (CNY) 1 Hong Kong Dollar (HKD) 1 New Sol (PEN) 100 Russian Roubels (RUB) Exchange rate Dec. 31, 2013 Average exchange rate 2013 Exchange rate Dec. 31, 2012 Average exchange rate 2012 0.7264 0.3395 0.1198 0.0937 0.2597 2.2093 0.7530 0.3947 0.1225 0.0971 0.2785 2.3620 0.7579 0.4246 0.1216 0.0978 0.2971 2.4796 0.7783 0.4322 0.1234 0.1003 0.2948 2.5046 Table 50 Business transactions in foreign currencies are accounted at the exchange rate on the date of the business transaction. Measurement of the resulting assets and liabilities that are nominally bound in the foreign currency on the balance sheet date takes place at the exchange rate on the balance sheet date. Translation differences were generally recorded through profit or loss. 4 Accounting principles Uniform accounting measurement policies The financial statements of the Fraport Group are based on accounting and measurement policies that are applied consistently throughout the Group. The consolidated financial statements are drafted on the basis of historic acquisition and production costs, with the exception of the fair value of financial assets available for sale and the recognition through profit and loss of the fair value of original and derivative financial instruments. Recognition of income and expenses Revenue and other income are recognized in accordance with IAS 18 when the goods have been delivered or the service rendered, when it is reasonably probable that an economic benefit will be received and when this benefit can be quantified reliably. In addition, the significant opportunities and risks must have been transferred to the buyer. Income and expenses from the same transactions and/or events are recognized in the same period. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 0 6 Group Notes / Notes to the Consolidation and Accounting Policies Traffic charges for the provision of the airport infrastructure are divided into those subject to regulation (according to Section 19b (1) of the German Air Traffic Act [LuftVG]), which include, among others, landing and take-off charges, parking charges, passenger and security charges and other charges not subject to regulation, such as ground handling services and ground handling infrastructure. In addition, the Fraport Group mainly generates revenue from revenue-based payments, renting, parking and security services. In the context of the airport operating projects in other countries (see also note 49), income and expenses from the operation of airport infrastructure and the provision of construction and expansion services are generated. Revenue from the operation of airport infrastructure is recognized in accordance with IAS 18 when the services have been rendered, when it is reasonably probable that an economic benefit will be received and when this benefit can be quantified reliably. Income and expenses from the provision of construction and expansion services are recorded pursuant to IAS 11. The order costs are expensed as incurred according to IAS 11.32, since the result of production orders cannot be estimated reliably. Proceeds from production are recorded in the amount of the incurred order costs expected to be recovered. Judgment and uncertainty of estimates The presentation of the asset, financial and earnings position in the consolidated financial statements depends on accounting and valuation methods as well as assumptions and estimates. Actual amounts may deviate from the estimates. The listed material estimates as well as the uncertainties associated with the accounting and valuation methods selected are essential in order to understand the underlying risks of financial reporting as well as the impacts these estimates, assumptions and uncertainties may have on the consolidated financial statements. These assumptions and estimates relate, among other things, to accounting policies and the measurement of provi- sions. Material valuation parameters for the measurement of provisions for pensions and similar obligations are the discount factor as well as trend factors (see also note 37). When an acquired company is consolidated for the first time, all identifiable assets, liabilities and contingent liabilities are to be recognized at their fair value at the time of acquisition. One of the main estimates relates to the determina- tion of the fair value of these assets and liabilities at the time of acquisition. The measurement is usually based on independent expert reports. Marketable assets are recognized at market or stock exchange prices. If intangible assets are identified, the fair value is usually measured by an independent external expert using appropriate measurement methods which are primarily based on future expected cash flows. These measurements are considerably influenced by assumptions about the developments of future cash flows as well as the applied discount rates. The impairment test for goodwill and other assets within the scope of IAS 36 is based on assumptions about future developments. Fraport AG carries out these tests annually as well as when there are reasons to believe that goodwill has been impaired. In the case of cash generating units, the recoverable amount is determined. This corresponds to the higher of fair value less costs to sell and value in use. The measurement of the value in use includes adjustments and estimates regarding the forecasting and discounting of future cash flows. The underlying assumptions could change on account of unforeseeable events and may therefore impact the asset, financial and earnings positions. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 107 In connection with the write-down on items of property, plant and equipment in the Ground Handling segment carried out in previous years (in the amount of € 20.0 million), it may be possible for the underlying assumptions to change in the future, which would make it necessary to considerably adjust the carrying amounts of these assets. Deferred tax assets are recognized if it is probable that future tax benefits can be realized. The actual tax earnings situation in future fiscal years and therefore the actual usability of deferred tax assets could differ from the forecasts at the time the deferred tax assets are recognized. In addition, material estimates and assumptions are each presented in relation to the accounting and valuation methods for specific end-of-year items listed subsequently. Goodwill After the initial recognition of goodwill acquired in the course of a business merger (see also note 3), it is measured at acquisition costs less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in the course of a business merger is assigned to the cash generating units of the Group on the acquisition date. The Group companies within the Fraport Group constitute inde- pendent cash generating units to which goodwill is allocated. Goodwill impairment testing is performed by comparing the recoverable amount of a cash generating unit to its carrying amount, including goodwill. The recoverable amount corresponds to the higher amount of the fair value less costs to sell and the value in use. Since net selling prices for the cash generating units in the Fraport Group cannot be reliably determined, the value in use is based on a company valuation model (discounted cash flow method). All goodwill items are tested for impairment at least once a year in accordance with IAS 36.88 – 99. In case of an impairment, an impairment loss is recognized. Goodwill is not written up when the reasons for impairment are eliminated. Goodwill is not subject to regular depreciation and amortization. Investments in airport operating projects To allow for better transparency, investments in airport operating projects are presented separately. These consist of concessions for the operations of the airports in Varna and Burgas (Bulgaria), Lima (Peru) and Antalya (Turkey) acquired within the scope of service concession agreements (see also note 49). The service concession agreements for the airport and/or terminal operating projects fall under IFRIC 12.17 and are recognized according to the intangible asset model, since Fraport receives the right in each case to charge airport users a charge in exchange for the obligation to pay concession fees and provide construction and expansion services. The contractual obligations to pay concession fees that are not variable but are fixed in the amount based on the contract are recorded as financial liabilities. These liabilities are initially recognized at fair value using a risk-adjusted discount rate. Airport operation rights received as consideration are recorded as intangible assets at the same amount and reported under investments in airport operat- ing projects. The rights received as consideration for construction and expansion services are recognized at the cost of productions for the period in which the production costs are incurred. Income and expenses from construction and expansion services are generally recorded pursuant to IFRIC 12.14 and in accordance with IAS 11. The recognized financial liabilities are subsequently measured at amortized cost using the effective interest method. Subsequent measurement of the capitalized rights is at the cost of acquisition or production less cumulative regular depreciation and amortization over the term of the concessions. Where necessary, impairment losses are recognized in accordance with IAS 36. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 0 8 Group Notes / Notes to the Consolidation and Accounting Policies Intangible assets Acquired intangible assets (IAS 38) are recognized at acquisition cost. Their useful life is limited. They are amortized over their useful lives using straight-line depreciation and amortization. Where necessary, impairment losses are recognized in accordance with IAS 36. If the recoverable amount of the asset later exceeds the carrying amount after an impairment loss has been recognized, the asset is written up to a maximum of the recoverable amount. The write-up through profit or loss is limited to the amortized carrying amount that would have resulted if no impairment loss had been recognized in the past. Property, plant and equipment Property, plant and equipment (IAS 16) are recognized at the cost of acquisition or production less straight-line depreciation and amortization and any impairment losses according to IAS 36, where applicable. If the recoverable amount of the asset later exceeds the carrying amount after an impairment loss has been recognized pursuant to IAS 36, the asset is written up to a maximum of the recoverable amount. The write-up through profit or loss is limited to the amortized carrying amount that would have resulted if no impairment losses had been recognized in the past. Subsequent acquisition costs are capitalized. Production costs essentially include all direct costs including appropri- ate overheads. Borrowing costs of property, plant and equipment that constitute qualifying assets are recognized (see “borrowing costs”). Each part of an item of property, plant and equipment with an acquisition cost that is significant in relation to the total value of the item is measured and depreciated separately with regard to its useful life and the appropriate deprecia- tion method. Government grants and third-party grants related to assets are included in liabilities and are released straight-line over the useful life of the asset for which the grant has been given. Grants related to income are included as other operating income through profit or loss (IAS 20). Investment property Investment property (IAS 40) includes property held to earn long-term lease revenue or capital appreciation, which is not owner-occupied; it also consists of land held for a currently undetermined future use. If land as yet held for an undetermined use is now defined as being held for sale and development has begun, it is transferred to inventories; if it is intended for owner-occupation, it is transferred to property, plant and equipment. Investment property is measured initially at the cost of acquisition or production. Subsequent measurement is at the cost of acquisition or production less regular straight-line depreciation and amortization and impairment losses according to IAS 36, where applicable. Borrowing costs of investment properties that constitute qualifying assets are recognized (see “borrowing costs”). Borrowing costs Borrowing costs (IAS 23) that relate to the acquisition, construction or production of a qualifying asset are required to be capitalized as part of the acquisition/production cost of such assets. Due to the scope of Fraport’s capital expendi- ture, qualifying assets are determined on the basis of planned investment measures. If the volume of the planned measures exceeds €25 million and if the construction period is more than one year, all assets produced as part of the measure are recognized as qualifying assets. Fraport includes interest, financing charges in respect to finance leases and currency differences in borrowing costs to the extent that they are regarded as an adjustment to interest costs. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 109 Regular depreciation and amortization Regular depreciation and amortization is determined by the straight-line method on the basis of the following useful lives, which apply throughout the Group: Regular depreciation and amortization Years Investments in aiport operating projects Other intangible assets Buildings (structural sections) Technical buildings Building equipment Ground equipment Flight operating areas Take-off/landing runways Aprons Taxiway bridges Taxiways Other technical equipment and machinery Vehicles Other equipment, operating and office equipment 17 – 35 3 – 25 30 – 80 20 – 40 12 – 38 5 – 50 20 50 80 20 3 – 33 4 – 20 4 – 25 Table 51 The expected useful life of investment property corresponds to the expected useful life of the property which is part of property, plant and equipment. Impairment losses according to IAS 36 Impairment losses on assets are recognized according to IAS 36. Assets are tested for impairment in case of indica- tions of an impairment loss. An impairment loss is recognized for assets when the recoverable amount of the asset has fallen below its carrying amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. The value in use is the present value of the estimated future cash inflows and outflows from the use and subsequent disposal of the asset. Regardless of indicators for possible impairment losses, assets are subject to an annual impairment test pursuant to IAS 36. Since it is not generally possible in the Fraport Group to allocate cash flows to individual assets, so-called cash generating units are recognized. A cash generating unit is defined as the smallest identifiable group of assets that generates seperate cash inflows and outflows. Leasing Agreements that transfer the right to use a specific asset for a specified period of time in exchange for compensation are deemed to be leases. Fraport is both a lessor and a lessee. A decision as to whether economic ownership is assigned to the lessor (operate lease) or the lessee (finance lease) is made based on which party bears the opportunities and risks associated with the respective leased asset. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 1 0 Group Notes / Notes to the Consolidation and Accounting Policies Finance lease If economic ownership can be attributed to the Fraport Group as lessee, the lease is capitalized at the inception of the lease at the present value of the minimum lease payments plus any incidental costs that are paid or at the fair value of the lease object if this value is lower. This asset is depreciated straight-line over its useful life or the lease term, if this is shorter. Impairment losses are recorded against the carrying amount of the capitalized leased asset. If economic ownership cannot be attributed to the Fraport Group as the lessor, a receivable equivalent to the present value of the lease payments is recognized. Operate lease If economic ownership of the leased assets remains with the lessor and Fraport AG assumes the role of the lessee, lease payments are considered on a linear basis over the lease term. If Fraport assumes the role of the lessor, leased assets are capitalized at the cost of acquisition or production and amortized accordingly. Lease revenue is generally recognized on a linear basis over the lease term. Investments in associated companies Investments in associated companies are recognized at the pro rata share of equity, including goodwill. Other financial assets Other financial assets include securities, loans with a remaining maturity of more than one year and other investments. Other financial assets are recognized at fair value on the settlement date, i.e. at the time the asset is created or trans- ferred plus transaction costs. Non-current low interest or interest-free loans are recognized at their present value. The securities virtually exclusively constitute debt instruments. The subsequent measurement of financial assets depends on the respective category according to IAS 39 (see also note 40). Loans are assigned to the “loans and receivables” category. These financial instruments are measured at amortized costs using the effective interest method. Other investments are assigned to the “available for sale” category on the balance sheet date. Due to a lack of an active market, they are generally measured at acquisition cost. They will be assigned at fair values as long as they can be reliably calculated and the gains or losses are included directly in equity without affecting profit or loss. Other securities are assigned to the “available for sale” category. Subsequent measurement is at fair value, taking into account the effective interest method and changes in value are included directly in equity without affecting profit or loss. Inventories Inventories include work-in-process, raw materials, consumables and supplies and property held for sale within the normal operating cycle. Work-in-process and raw materials, consumables and supplies are measured at the lower of acquisition or production cost or net realizable value. Acquisition or production costs are generally calculated using the average cost method. Production costs include direct costs and adequate overheads. Property held for sale within the ordinary course of business is also measured at the lower of acquisition or production cost or net realizable value. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 111 The subsequent production cost required for land development is estimated for the entire marketable land area on the basis of specific cost unit rates for individual development measures. Depending on the land sales recognized in the respective reporting year, the development costs are allocated on a pro rata basis to the remaining land area to be sold. Net realizable value is the estimated selling price less the costs incurred until the time of sale, discounted over the planned selling period. The opinion of an external expert regarding the fair value of the land being sold, as well as information about previous land sales, forms the basis for the calculation of the estimated selling price. Where the inventories constitute qualifying assets (see “borrowing costs”), the borrowing costs are recognized. If a write-down made in previous periods is no longer necessary, a write-up is recognized (IAS 2). Receivables and other assets Receivables and other assets mainly consist of trade accounts receivable, receivables from banks, other receivables, derivatives and marketable short-term securities. These assets are initially recognized at aqcuistion cost, which is usually the same as fair value, on the settlement date, i.e. at the time the asset is created or economic ownership is transferred. Non-current low interest or non-interest bearing receivables are recognized at their present value at the time of origination or acquisition. Trade accounts receivable, receivables from banks and all other financial receivables with fixed or ascertainable payments that are not listed in an active market are assigned to the “loans and receivables” category. Subsequent measurement is carried out at amortized cost, based on the effective interest method. Receivables in foreign currencies are translated at the exchange rate on the balance sheet date. Securities are allocated to the “available for sale” category. The financial debt instruments are measured at fair value, according to the effective interest method. Changes of value are included directly in equity without affecting profit or loss. Impairment losses of financial assets On each balance sheet date, the carrying amounts of financial assets which are not measured at fair value through profit or loss are assessed to see whether there is any objective evidence (such as considerable financial difficulties of the debtor, high probability of insolvency proceedings against the debtor, a permanent decline of the fair value below amortized cost) that the asset may be impaired. In general, impairment losses are recognized by directly reducing the carrying amount of the receivable or the financial asset. The impairment loss of trade accounts receivable is recognized in an item-by-item allowance account through profit or loss. If there is an indication in subsequent periods that the reasons for an impairment loss no longer exist, a write- up is recognized through profit or loss. If a receivable already impaired is designated as non-recoverable, the asset is derecognized. Cash and cash equivalents Cash and cash equivalents basically include cash, cash accounts and short-term cash assets with banks maturing in three months or less. Cash and cash equivalents with a maturity of more than three months from the time of acquisition are recorded in this item if their values do not fluctuate significantly and they can be liquidated at any time without deduction for risk. Cash and cash equivalents are recognized at nominal value. Cash in foreign currencies is translated at the exchange rate on the balance sheet date. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 1 2 Group Notes / Notes to the Consolidation and Accounting Policies Treasury shares Repurchased treasury shares are deducted from the issued capital and the capital reserve (IAS 32). Recognition of income taxes Income taxes are recognized using the liability method according to IAS 12. All tax expenses and refunds directly related to income are recorded as income taxes. These also include penalties and interest on arrears from the date it appears probable that a reduction of taxes will be denied. Current taxes are recognized on the date when the liability for income taxes is incurred. Deferred taxes are accounted according to IAS 12 using the liability method based on temporary differences on a case by case basis. Deferred taxes are recognized for temporary differences between the IFRS and tax financial positions of the single entities and differences arising from unused loss carry-forwards and consolidation transactions. The recognition of goodwill that is not deductible for tax purposes does not lead to deferred taxes. If the carrying amount of an asset in the IFRS financial position exceeds its tax base (e.g. non-current assets depreciated on a linear basis) and if the difference is temporary, a deferred tax liability is recognized. According to the IFRS deferred tax assets are recognized for financial position differences and for unused tax loss carry-forwards, to the extent that it is probable that taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Deferred taxes are calculated at future tax rates insofar as these have already been legally established and/or the legis- lative process is largely completed. Changes in deferred taxes on the financial position generally lead to deferred tax income or expense. When transactions resulting in a change to deferred taxes are recorded directly in equity without affecting profit or loss, the change to deferred taxes is also included directly in equity without affecting profit or loss. Provisions for pensions and similar obligations The provisions for pensions relate to defined benefit plans and have been calculated in accordance with IAS 19 under the application of actuarial methods and an interest rate of 3.60 % (previous year: 3.17 %). For the calculation of the interest expense from the defined benefit plans and the income from plan assets, the same interest rate is used as a basis. In comparison to the previous year, changes occurred to the standard due to IAS 19 (revised 2011). Net interest expense/income was introduced, which prescribes the use of the same interest rate for the interest expense and for income from plan assets. At Fraport, the same interest rate was already used for calculating the interest expense and income from plan assets in previous years. Remeasurements, which result from the change of the discount factor or from the difference between actual and com- puted income from plan assets, for example, are recognized in other comprehensive income (OCI) as non-reclassifiable. The present value of the defined benefit obligation (DBO) is calculated annually by an independent actuary using the projected unit credit method. The calculation takes place by discounting the future estimated cash outflows with the interest rate from industry bonds of the highest creditworthiness. The industry bonds are denominated in the currency of the distribution amounts and show the relevant maturities of the pension liabilities. If benefit claims from the defined benefit plans are covered by plan assets in the form of reinsurance, the fair value of the plan assets is netted with the DBO. Benefit claims that are not covered by plan assets are recognized as a pension obligation. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 113 As in the previous year, the calculations did not include salary increases for the active members of the Executive Board. For former members of the Executive Board pensions are valued in accordance of the “Gesetz über die Anpassung von Dienst- und Versorgungsbezügen in Bund und Ländern 2003/2004” (BBVAnpG). The calculation of provisions for pensions was based on the 2005G mortality tables of Professor Heubeck. The service cost and net interest are recognized in personnel expense. With regard to the description of the various plans, reference is made to note 37 and note 52. Provisions for taxes Provisions for current taxes are recognized for tax expected to be payable in the reporting year and/or previous years taking into account anticipated risks. Other provisions Other provisions are recognized in the amount required to settle the obligations. They are recognized to the extent that there is a current commitment to third parties. In addition, they must be the result of a past event, lead to a future cash outflow and more likely than not be needed to settle the obligation (IAS 37). Refund claims towards third parties are capitalized separately from the provisions as “other receivables”, provided that their realization is virtually certain. Non-current provisions with terms of more than one year are discounted at a capital market interest rate with a matching maturity, taking future cost increases into account, provided that the interest effect is material. The provision for partial retirement is recognized according to IAS 19R. The recognition of the liability from step-ups starts at the time when Fraport can legally and factually no longer withdraw from the liability. The step-up amounts are added to the obligation in installments until the end of the active phase. The utilization begins with the passive phase. Liabilities Liabilities are recognized in the amount of the consideration received and the received consideration, respectively. Liabilities in foreign currencies are translated at the exchange rate on the balance sheet date. Non-current low interest or non-interest-bearing liabilities are carried at their present value at the time of addition. Finance lease liabilities are reported at the lower value of the present value of the minimum lease payments and the fair value of the leased asset. Subsequent measurement of financial liabilities is based on the effective interest method at amortized cost. Derivative financial instruments, hedging transactions The Fraport Group basically uses derivative financial instruments to hedge existing and future interest and exchange rate risks. Derivative financial instruments with positive or negative market values are measured at fair value in accord- ance with IAS 39. Changes of value on cash flow hedges are recorded in the reserve for financial instruments without affecting profit or loss. Corresponding to this, deferred taxes on the fair values of cash flow hedges are also included in shareholders’ equity without affecting profit or loss. The effectiveness of the cash flow hedges is assessed on a regular basis. Ineffective cash flow hedges are recorded in the income statement through profit or loss. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 1 4 Group Notes / Notes to the Consolidation and Accounting Policies If the criteria for a cash flow hedge are not met, the derivative financial instruments are allocated to the “held for trading” category. In this case, the changes in the fair value and the related deferred taxes are recognized through profit or loss in the income statement. Derivative financial instruments are recognized at the trade date. Stock options The subscription rights issued on shares of Fraport AG in connection with the contingent capital have been recog- nized and measured in accordance with IFRS 2. Performance takes place by issuing shares. The measurement of the share-based payments is based on fair value on the date the option is granted. The cost of the payment is allocated as personnel expense over the period during which employees have an unrestricted claim to the instruments. Virtual stock options Virtual stock options are being issued since January 1, 2010 as part of compensation for the Executive Board and Senior Managers. This virtual stock options program (“Long-term Incentive Program”) replaces the previous stock options program (Fraport Management Stock Options Plan 2005). They are paid out in cash immediately at the end of the performance period of four years. The measurement of virtual shares is at fair value according to IFRS 2. Up to the end of the performance period, the fair value is determined on each reporting date and on the date of performance and is recorded in personnel expense on a pro rata basis. New standards, interpretations and changes Of the new standards, interpretations and changes, Fraport generally applies those for which application was man- datory; i.e. those applicable to fiscal years beginning on or before January 1, 2013. On June 16, 2011, the IASB published changes to IAS 1 “Presentation of Financial Statements”. Therefore, the way other result is presented in the statement of comprehensive income is to be changed. Going forward, the other result items that will be subsequently reclassified to profit and loss (recycling) should be kept separate from the other result items that will not be reclassified. If the items are shown gross i.e., without netting with an effect on deferred taxes, the deferred taxes may no longer be shown as one total; instead, they should be allocated to both groups of items. The amendment was adopted under EU law on June 6, 2012 and is applicable for the first time for fiscal years starting on or after July 1, 2012. On June 16, 2011, the IASB published a revised version of IAS 19 “Employee Benefits”. The amendments were adopted under EU law on June 6, 2012 and are applicable for the first time for fiscal years starting on or after January 1, 2013. The previous option of recognizing actuarial gains and losses between immediate recognition in the profit and loss statement, in other income or delayed recognition according to the corridor approach, was abolished. With the revision of IAS 19, the actuarial gains and losses must be reported directly under other comprehensive income (OCI) as remeasurements. According to the amended standard, return on plan assets is recognized on the basis of standardized interest on the plan assets at the level of the current discount rate of the pension obligations and recognized together as net interest expense/net interest income. The calculation of the interest expense and interest income from the plan assets with the same interest rate was already applied at Fraport AG. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 115 Furthermore, on the basis of the amendments to IAS 19, the step-up payments of the partial retirement provisions may no longer be recognized as “Termination Benefits”, but as “Long-Term Employee Benefits”. The recognition of the liability from step-ups starts at the time when Fraport can legally and factually no longer withdraw from the liability. The step-up amounts are added to the liability in installments until the end of the active phase. With regard to the comprehensive additional disclosure duties of the new IAS 19, see note 37. The adjustments to the opening financial position and the previous year’s financial statement resulting from the retro- active initial application of IAS 19 are shown in the table below. The initial application of the revised version of IAS 19 takes place in compliance with the transition regulations. Effects of the retrospective application of IAS 19R € million Dec. 31, 2012 Dec. 31, 2012 Adjustment Jan. 1, 2012 Jan. 1, 2012 Adjustment reported adjusted reported adjusted 214.8 106.9 1,317.9 2,821.4 201.8 110.8 1,327.0 2,830.5 – 13.0 3.9 9.1 9.1 Adjustments in consolidated financial position Other provisions non-current Deferred tax liabilities Revenue reserves Equity attributable to shareholders of Fraport AG Adjustments in consolidated income statement Other operating income Personnel expenses Taxes on income Group result 215.1 101.3 1,400.5 2,909.8 62.7 – 947.8 – 114.5 251.6 211.2 102.5 1,403.2 2,912.5 55.8 – 942.9 – 112.6 251.5 thereof profit attributable to shareholders of Fraport AG 238.3 238.2 Earnings per €10 share in € basic diluted Adjustments in consolidated statement of comprehensive income Remeasurements of defined benefit plans thereof deferred taxes Items that will not be reclassified subsequently to profit or loss Comprehensive income thereof attributable to shareholders of Fraport AG 2.59 2.58 2.59 2.58 0.0 0.0 0.0 209.7 196.7 – 7.1 0.8 – 6.3 203.3 190.3 – 3.9 1.2 2.7 2.7 – 6.9 4.9 1.9 – 0.1 – 0.1 0.0 0.0 – 7.1 0.8 – 6.3 – 6.4 – 6.4 For fiscal year 2013, the differences between IAS 19R and the old version of IAS 19, which is no longer used, are of subordinated significance. The remeasurements of performance-based pension plans that are presented in the state- ment of comprehensive income would have continued to be recognized in the profit and loss statement according to the old version. Table 52 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 1 6 Group Notes / Notes to the Consolidation and Accounting Policies On December 16, 2011, the IASB published amendments to IAS 32 and IFRS 7. The amendment to IAS 32 clarified the requirements for the offsetting of financial instruments. The definition of the current legal right to offsetting has been explained and clarified by the amendment. It sets out which gross settlement procedures (in relation to standards) can be accounted for as net settlements. Given this clarification, the regulations regarding the disclosures in notes have also been expanded in IFRS 7. The amendments to IAS 32 are to be first applied to fiscal years starting on or after January 1, 2014. The amendment to IAS 32 will not have a material impact on the reporting of the asset, financial and earnings position of the Fraport Group. The amendments to IFRS 7 are to be first applied to fiscal years starting on or after January 1, 2013. The adoption of both amendments under EU law took place on December 29, 2012. The application of the amendments to IFRS 7 did not have an impact on the reporting of the asset, financial and earnings position of the Fraport Group. The standard IFRS 13 “Fair Value Measurement” was published on May 12, 2011. IFRS 13 sets out, in a single standard, uniform measurement bases to measure fair value. There will be further regulations only for IAS 17 and IFRS 2. According to IFRS 13, fair value is defined as the price that would be received through selling an asset or the price paid to transfer a liability. As currently known from the fair value hierarchy of IFRS 7, a three-tiered hierarchy system will be introduced, that will be ranked according to observable market prices. The new fair value measurement may lead to different values compared to the previous system. The new standard is to be first applied to fiscal years starting on or after January 1, 2013. The application of IFRS 13 did not have a material impact on the reporting of the asset, financial and earnings position of the Fraport Group. On May 17, 2012, the IASB published the “Improvements to IFRS 2009 – 2011” (Annual Improvements), which amended five International Financial Reporting Standards (IFRSs). These changes affect the following regulations: IFRS 1 relating to borrowing costs, IAS 1 for details of comparative information from previous years, IAS 16 regarding the accounting principles for spare parts and maintenance equipment, IAS 32 regarding the accounting principles for tax effects on distributions to equity shareholders and transaction costs of an equity transaction and IAS 34 regarding segment information for the total assets and liabilities within the interim financial reporting. The amendments came into force for the reporting year that begins on or after January 1, 2013. The Improvements to IFRS 2009 – 2011 did not have a material impact on the reporting of the asset, financial and earnings position of the Fraport Group. On December 20, 2010, the IASB published amendments to IAS 12 “Income Taxes”. This is an amendment in regard to calculating deferred taxes on investment property recognized at fair value (IAS 40.33). The amendments are to be first applied in fiscal years starting on or after January 1, 2013. In the Fraport Group, investment property is recognized according to the acquisition cost model (IAS 40.56). The amendments to IAS 12 do not impact the asset, financial and earning position of the Fraport Group. On May 29, 2013, the IASB published “Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)”. With the amendments, on the one hand, with IFRS 13, fair value measurement, recently introduced disclosure requirements in IAS 36 will be corrected, while on the other hand, minor adjustments will take place to the disclosures required when an impairment loss or write-up exists and the recoverable amount has been determined on the basis of the fair value less disposal costs. The amendments to IAS 36 are to be first applied on a mandatory basis in fiscal years starting on or after January 1, 2014, however earlier application is permitted. The application must take place retrospectively, however, only for reporting periods in which IFRS 13 already applies. The amendment was first adopted into EU law on December 20, 2013. The amendments will not have a material impact on the reporting of the net asset, financial and earnings position of the Fraport Group. The change was voluntarily applied in the Fraport Group as at January 1, 2013. The amendments have not had an impact on the reporting of the asset, financial and earnings position of the Fraport Group. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 117 Standards which have not been applied prematurely For the following new or amended standards and interpretations, which the Fraport Group is not obliged to adopt until future fiscal years, there will be no early application. Unless otherwise specified, the effects on the Fraport Group’s financial statements are assessed presently. Standards, interpretations and amendments published and accepted into European law by the EU Commission On May 12, 2011, the IASB published five new and revised standards that amend the regulations on the consolidation and accounting of associated companies and joint venture investments and the associated disclosures. These are as follows: IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Arrangements”, IFRS 12 “Disclosure of Interests in Other Entities”, IAS 27 “Separate Financial Statements” (revised 2011) and IAS 28 “Investments in Associates and Joint Ventures” (revised 2011). On December 29, 2012, the EU Commission adopted IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Arrangements”, IFRS 12 “Disclosure of Interests in Other Entities”, IAS 27 “Separate Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” into EU law. The standards are to be first applied in fiscal years starting on or after January 1, 2014. (Voluntary) Early application would be permitted for these new consolidation standards after EU endorsement. The mandatory initial application for EU IFRS adopters therefore deviates from the IASB effective date of January 1, 2013. IFRS 10 replaces the consolidation guidelines in the IAS 27 “Consolidated and Separate Financial Statements” and SIC 12 “Consolidation – Special Purpose Entities”. In the future, the new IAS 27 “Separate Financial Statements” (revised 2011) will only contain the regulations on accounting for subsidiaries, joint ventures and associated companies in separate financial statements under IFRS. In the revised IFRS 10, the term “control” has been comprehensively redefined. It now states that control is given if the potential parent company holds the decision-making power over the subsidiary, based on voting or other rights, it participates from positive or negative variable returns from the subsidiary and can influence these returns with its decision-making powers. From this standard, effects on the extent of the scope of consolidation including, among other things, special purpose entities can arise. In the Fraport Group, no changes to the scope of consolidation will result from the future application of IFRS 10. While adopting IFRS 11 “Joint Arrangements”, adjustments were also made to IAS 28. Like before, IAS 28 continues to regulate the application of the equity method. However, the adoption of IFRS 11 will significantly increase its scope, as in the future all joint ventures and not just investments in associated companies will have to be accounted for using the equity method. The use of proportionate consolidation for joint ventures is therefore inapplicable. There are specific transition rules for the transition from proportionate con- solidation to the equity method. Currently, all joint ventures have been included proportionally in the Fraport Group. The abolishment of proportionate consolidation and the compulsory use of the equity method for joint ventures will have a significant impact on the future reporting of the asset, financial and earnings position. The effects of the future application of IFRS 11 are covered in the report “influence of joint ventures on the consolidated financial statements” (see note 2) as well as in the business outlook in the management report’s Outlook Report. IFRS 12 “Disclosure of Interests in Other Entities” summarizes the disclosure regulations for subsidiaries, joint ventures and associated companies as well as unconsolidated structured entities. The required disclosures are considerably more extensive compared to the previous requirements of IAS 27, IAS 28 and IAS 31. The objective of IFRS 12 is to allow the users of financial statements to find the quantitative and qualitative information they require to evaluate the nature of and risks associated with and the interests in other entities as well as the effects of those interests on the asset, financial and earnings position. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 1 8 Group Notes / Notes to the Consolidation and Accounting Policies On June 28, 2012, IASB published amendments to the transitional provisions of IFRS 10, 11 and 12. The amendment clarifies that the date of the initial application of IFRS 10 is the start of the reporting period in which the standard is first applied. In addition, the mandatory disclosures of IFRS 12 are only applicable to the immediately preceding period. Structured companies that are not consolidated are released from the obligation to disclose comparative information for periods prior to the first application of IFRS 12. The amendments are to be applied in fiscal years starting on or after January 1, 2014. The amendments were first adopted into EU law on April 5, 2013. On October 31, 2012, the IASB published the standard “Investment Entities” as a further amendment to IFRS 10, IFRS 12 and IAS 27. The amendments include the definition of terms for investment entities, exempt these investment companies from the scope of IFRS 10 and provide for mandatory disclosures for investment entities. Investment companies are exempted from the mandatory inclusion of the companies controlled by them in their consolidated financial statements. Instead, the shareholdings held for investment purposes shall be valued at fair value through profit and loss. The new regulations are to be first applied in fiscal years starting on or after January 1, 2014. Earlier application is permitted. The amendments were first adopted into EU law on November 21, 2013. The amendments will not have an impact on the reporting of the asset, financial and earnings position of the Fraport Group. On June 27, 2013, the IASB published amendments to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting”. The new regulations envisage that a change of the contracting party of a hedging instrument to a central counterparty or a member of a central counterparty does not lead to a termination of the hedge accounting under certain circumstances. Therefore, the hedging relationship can now also be maintained in the event of novation as a result of the introduction of laws. The application of the new regulations is mandatory for fiscal years beginning on or after January 1, 2014, retrospectively. Earlier application is permitted. The amendment was first adopted into EU law on December 20, 2013. The amendments will not have an impact on the reporting of the asset, financial and earnings position of the Fraport Group. Standards, interpretations and amendments that have been published but not yet adopted into European law by the EU Commission On November 12, 2009, the IASB published IFRS 9 “Financial Instruments: Classification and Measurement” and on October 28, 2010, it released amendments to the standard. The accounting and measurement of financial instruments according to IFRS 9 will replace IAS 39. In the future, financial assets will be categorized and measured in two groups only: at amortized cost and fair value. The amortized cost group of financial assets comprises those financial assets that are only expected to give rise to interest and redemption payments on specified dates and that will, in addition, be held in the context of a business model with the objective of retaining assets. All other financial assets will form the fair value group. Under certain circumstances, financial assets in the first category may – as before – instead be designated as fair value (fair value option). Value changes of financial assets in the fair value group are to be generally recognized in profit or loss. For particular equity instruments, it is possible to exercise the right to recognize value changes under other income. Claims for dividends from these financial assets are, however, to be recognized in profit or loss. The regulations for financial liabilities are covered principally by IAS 39. The most significant difference concerns the reco- gnition of value changes in designated financial liabilities measured at fair value. In the future, these will be divided as follows: The part apportionable to own credit risk is to be recognized under other income, while the remaining part of value changes is to be recognized in profit or loss. Subject to its adoption into EU law, IFRS 9 is to be first applied in fiscal years starting on or after January 1, 2015. Fraport Annual Report 2013Group Notes / Notes to the Consolidation and Accounting Policies 119 On December 16, 2011, the IASB published the amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date and Transition Disclosures”. There are to be no adjustments to previous year figures in the first-time application of IFRS 9. The simplification leads to additional disclosures having to be made in the notes to the annual financial statements in accordance with IFRS 7 at the time of transition. This should make it possible for investors to assess the effects of the first-time application of IFRS 9 to the recognition and valuation of financial instruments. Subject to their adoption into EU law, the amendments are to be first applied to fiscal years starting on or after January 1, 2015. On November 19, 2013, the IASB published changes to IFRS 9 “Financial Instruments”. The amendments in IFRS 9 contain new regulations regarding hedge accounting in the form of a new general model for accounting for hedging relationships. Furthermore, IASB has revoked the point in time previously contained in IFRS 9 for its initial application starting on or after January 1, 2015. A new time for initial application will only be defined once the full standard is available. An endorsement by the EU is also only anticipated at that time. The effects of the new IFRS 9 regulation on the consolidated financial statements of Fraport AG are currently still being assessed. On May 20, 2013, the IASB published an interpretation on accounting for public levies, IFRIC 21. The interpretation regulates accounting for payment liabilities for public levies, which are not levies in the sense of IAS 12 “Income Taxes”. According to IFRIC 21, a liability is recognized in the annual financial statements as soon as the event occurs, which gives rise to the payment liability. Subject to its adoption into EU law, IFRIC 21 is to be first applied to fiscal years starting on or after January 1, 2014. The amendments will not have an impact on the reporting of the asset, financial and earnings position of the Fraport Group. On November 21, 2013, the IASB published changes to IFRS 19 “Defined Benefit Plans: Employee Contributions”. This clarifies how contributions that are paid by the employees (or third parties) themselves for the service components are recorded in the accounting by the company issuing the commitment. In the past, with the application of IAS 19 (old version), the nominal amount of employee contributions was frequently deducted in the period from the service cost that was rendered in the respective period of service. This accounting practice can be maintained if the amount of the contributions is independent from the number of years of service. For example, these include amounts that are defined as a fixed percentage rate of annual salary. The amendments are to be applied to fiscal years starting on or after July 1, 2014. Earlier application is permitted. The amendments will not have a material impact on the reporting of the asset, financial and earnings position of the Fraport Group. On December 12, 2013, the IASB published the “Improvements to IFRS 2010 – 2012” and “Improvements to IFRS 2011 – 2013” (Annual Improvements), which will amend a total of eleven IFRSs. The amendments to the “Improvement of the IFRS 2010 – 2012” relate to the following in detail: IFRS 1 regarding the definition of “vesting conditions”, IFRS 3 regarding the accounting of conditional purchase price payments for company acquisitions, IFRS 8 regarding notes disclosures in relation to the merger of business segments and regarding the reconciliation of segment assets to Group assets, IFRS 13 regarding the omission of discounting current receivables and liabilities, IAS 16 regarding the proporti- onal adjustment of cumulative depreciation when using the remeasurement method, IAS 24 regarding the definition of “related companies” and its influence on the interpretation of the term “members of management in key positions” and IAS 38 regarding the proportional adjustment of cumulative depreciation when using the remeasurement method. The amendments to the “Improvement of the IFRS 2011 – 2013” relate to the following in detail: IFRS 1 regarding the definition in IFRS 1.7 of “all IFRS that are valid at the end of the reporting period”, IFRS 3 in respect of the exception from the application scope for joint ventures, IFRS 13 in relation to the application scope of what is known as the portfolio exception, and IFRS 40 regarding answering the question of whether the acquisition of investment property constitutes a merger combination, with the regulations of IFRS 3 being relevant. The amendments come into force for the reporting years that begin on or after January 1, 2014. The impact of the new regulations on the consolidated financial statements of Fraport AG are currently being assessed. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 2 0 Group Notes / Notes to the Consolidated Income Statement Notes to the Consolidated Income Statement 5 Revenue Revenue € million Aviation Aiport charges Security services Other revenue Total Retail & Real Estate Real Estate Retail Parking Other revenue Total Ground Handling Ground handling services Infrastructure charges Total External Activities & Services Total 2013 2012 697.2 97.9 50.1 845.2 180.2 198.5 75.1 15.2 469.0 393.7 262.5 656.2 591.0 673.6 98.3 51.5 823.4 175.2 179.8 73.5 24.4 452.9 393.3 256.0 649.3 516.4 2,561.4 2,442.0 Table 53 Information on revenue can be found in the management report under chapter “Results of Operations” as well as the segment reporting (see also note 41). The segment Retail & Real Estate includes revenue from operate leases. The revenue-related surface rentals recognized in the fiscal year amount to € 167.6 million (previous year: € 175.5 million). The operate leases mainly relate to the leasing of buildings, land, terminal areas and offices. The contract periods end in 2070 or earlier. No purchase options have been agreed upon. As in the previous year, the residual term of hereditary building rights contracts was 46 years on average. No purchase options exist for these, either. The acquisition and production costs of the leased buildings and land amount to € 418.7 million (previous year: € 423.2 million). Accumulated depreciation and amortization total € 285.1 million (previous year: € 275.7 million) and the depreciation and amortization for the 2013 fiscal year amount to € 9.4 million (previous year: € 6.8 million). Revenue in the External Activities & Services segment includes contract revenue from construction and expansion services related to airport operating projects abroad in the amount of € 65.7 million (previous year: € 28.7 million). Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Income Statement 121 The total amount of future income from minimum lease payments arising from non-cancellable leases was as follows: Minimum lease payments € million < 1 year 1 – 5 years > 5 years Residual term Total 2013 Minimum lease payments 85.6 186.3 856.4 1,128.3 € million < 1 year 1 – 5 years > 5 years Residual term Minimum lease payments 76.3 157.4 861.6 Total 2012 1,095.3 Table 54 6 Change in work-in-process Change in work-in-process € million Change in work-in-process 7 Other internal work capitalized Other internal work capitalized € million Other internal work capitalized 2013 2012 0.6 0.5 Table 55 2013 2012 35.1 44.0 Table 56 The other internal work capitalized primarily relates to engineering, planning and construction services, procured services of employees and services of commercial project managers, as well as other performance work. The other internal work capitalized was incurred essentially in connection with the extension, remodeling and modernization of the terminal buildings at Frankfurt Airport and their fire protection systems. Other internal work also related to the airport expansion program and the expansion of the airport infrastructure at Frankfurt Airport. 8 Other operating income Other operating income € million Release of provisions Gains from disposal of non-current assets Income from compensation payments Release of allowances Release of special items for investment grants Passive noise abatement Other items Total 2013 2012 adjusted 8.5 3.6 2.6 2.3 1.3 0.0 16.0 34.3 23.4 1.1 1.7 0.8 2.2 8.1 18.5 55.8 Table 57 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 2 2 Group Notes / Notes to the Consolidated Income Statement The release of provisions mainly relates to current provisions for rebates and refunds as well as personnel-related provisions. The income from compensation payments mainly relates to proceeds from insurance claims. 9 Cost of materials Cost of materials € million Cost of raw materials, consumables, supplies and properties held as inventories Cost of purchased services Total 2013 2012 – 100.4 – 512.6 – 613.0 – 103.4 – 454.7 – 558.1 Table 58 Among other things, the cost of raw materials, consumables and supplies and properties held as inventories includes production costs for finished property. The already realized proceeds are included under the real estate revenue. In connection with the airport operating projects abroad (see also note 49), the expenses of purchased services includes revenue-related concession fees incurred of € 96.1 million (previous year: € 87.7 million), as well as order costs for construction and expansion services in the amount of € 65.7 million (previous year: € 28.7 million). 10 Personnel expenses and average number of employees Personnel expenses and average number of employees € million Wages and salaries Social security and welfare expenses Pension expenses Total 2013 2012 adjusted –766.7 –137.3 –42.8 –946.8 –764.2 –137.1 –41.6 –942.9 Average number of employees 2013 2012 Permanent staff Temporary staff (interns, students and scholars) Total 19,766 1,181 20,947 19,793 1,170 20,963 Table 59 The average number of staff employed during the 2013 fiscal year (excluding apprentices and employees on leave) was 20,481 in the fully consolidated companies (previous year: 20,535) and 466 in the companies accounted for using proportionate consolidation (previous year: 428). Additions to pension provisions and additions to obligations arising from time-account models are included in personnel expenses. Fraport Annual Report 2013 11 Depreciation and amortization Depreciation and amortization € million Composition of depreciation and amortization Investments in airport operating projects Other intangible assets Property, plant and equipment Investment property regular non-regular Total Group Notes / Notes to the Consolidated Income Statement 123 2013 2012 – 72.8 – 10.9 – 267.6 – 0.3 – 0.5 – 352.1 – 71.0 – 8.6 – 272.6 – 0.2 – 0.3 – 352.7 Table 60 Regular depreciation and amortization The useful lives of some assets were remeasured in the year under review, resulting in net reduced depreciation and amortization of € 0.4 million (previous year: increased depreciation and amortization of € 15.5 million). Impairment losses according to IAS 36 Impairment tests according to IAS 36 conducted during the year under review resulted in an impairment loss of € 0.5 million (previous year: € 0.3 million). All of this is related to investment property. Please refer to note 22 for more information. The valuation of assets reflects future earnings expectations. The recoverable amount is the higher of the value in use or the fair value less cost to sell. Only the value in use was applied in the year under review. The value in use is determined by the entity applying the discounted cash flow method, as the fair value less cost to sell cannot be reliably determined. Determination of the future cash flows of the cash generating units is based on the planning figures. The value in use is generally determined based on the future cash flows estimated on the basis of the current planning figures for the years between 2014 to 2019 as approved by the Executive Board and in effect at the time the impairment tests are made (in December of the year under review), and on the basis of the current long-term plans until 2025 or over the respective contractual periods in the case of investments in airport operating projects. These forecasts are based on past experiences and the expected market performance. A growth rate (of between 0.0 % and 2.0 %) based on the planning assumptions is taken into account in the perpetual annuity. The discount factor was a country-specific, weighted average cost of capital (WACC) of between 6.43 % and 11.33 % (previous year: between 6.2 % and 10.18 %). Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 2 4 Group Notes / Notes to the Consolidated Income Statement 12 Other operating expenses Other operating expenses € million Insurances Consulting, legal and auditing expenses Rental and lease expenses Costs for advertising and representation Write-downs of trade accounts receivable Losses from disposal of non-current assets Other taxes Expenses from obligations to environmental and local areas Other items Total 2013 2012 – 25.5 – 23.7 – 21.4 – 17.0 – 12.3 – 7.0 – 9.7 – 3.8 – 71.0 – 191.4 – 26.1 – 18.9 – 24.7 – 18.5 – 2.0 – 5.5 – 5.8 – 21.0 – 70.1 – 192.6 Table 61 Rental and lease expenses include minimum lease payments in the amount of € 14.9 million (previous year: € 14.6 million). There were no conditional lease payments in the 2013 fiscal year (previous year: € 3.0 million). The obligations to environmental and local areas during the previous year included, in particular, provisions for the financial involvement of Fraport AG in the regional fund launched as part of the Alliance for Noise Abatement 2012, as well as provisions for promoting environmental projects. The remaining other operating expenses include travel costs, office supplies, course and seminar fees, entertainment expenses, administration fees, postage and costs for additions to various provisions. The consulting, legal and auditing expenses include for the respective Group auditor’s (disclosed in accordance with Section 314 (1) no. 9 of the HGB) fees amounting to € 2.3 million (previous year: € 1.9 million). They are comprised as follows: Group auditor fees € million Audit services Other certification services Tax audit services Other services Total 2013 Consolidated companies 2012 Consolidated companies Fraport AG Fraport AG 1.1 0.4 0.0 0.4 1.9 0.4 0.0 0.0 0.0 0.4 1.1 0.2 0.1 0.1 1.5 0.4 0.0 0.0 0.0 0.4 Table 62 13 Interest income and interest expenses Interest income and interest expenses € million Other interest and similar income Other interest and similar expenses 2013 2012 38.8 –215.8 52.6 –226.7 Table 63 Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Income Statement 125 Interest income and interest expenses include interest from non-current loans and time deposits as well as interest expenses and interest income from interest cost added back on non-current liabilities and provisions and on non- current assets. The net interest payments of derivative financial instruments as well as interest income from securities are recorded as interest result. Interest from financial instruments measured at fair value directly recognized in equity € million Interest income from financial instruments Interest expenses from financial instruments 14 Result from associated companies The result from associated companies breaks down as follows: Result from associated companies € million Thalita Trading Ltd./Northern Capital Gateway LLC Xi’an Xianyang International Airport Co., Ltd. Airmail Center Frankfurt GmbH ASG Airport Service Gesellschaft mbH Flughafen Hannover-Langenhagen GmbH Total 15 Other financial result The other financial result breaks down as follows: Other financial result € million Income Foreign currency rate gains, unrealized Foreign currency rate gains, realized Valuation of derivatives Gains from disposal of financial assets Others Total Expenses Foreign currency rate losses, unrealized Foreign currency rate losses, realized Valuation of derivatives Others Total Total other financial result 2013 2012 35.9 – 207.6 49.7 – 218.5 Table 64 2013 2012 – 16.4 2.5 0.6 0.3 – 0.6 – 13.6 8.1 2.8 0.7 0.5 – 0.4 11.7 Table 65 2013 2012 2.6 0.8 11.7 0.0 0.5 15.6 – 8.4 – 2.4 0.0 – 1.6 – 12.4 3.2 1.1 15.1 0.4 23.2 4.9 44.7 – 2.8 – 1.1 – 10.0 – 0.3 – 14.2 30.5 Table 66 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 2 6 Group Notes / Notes to the Consolidated Income Statement 16 Taxes on income Income tax expense breaks down as follows: Taxes on income € million Current taxes on income Deferred taxes on income Total 2013 2012 adjusted – 98.9 – 6.1 – 105.0 – 109.6 – 3.0 – 112.6 Table 67 Current income tax expense consists of current income tax for the year under review and income tax for previous years. Most of the income tax expense results from the activities of Fraport AG. Current income tax expense for Fraport AG for the 2013 fiscal year amounts to € 70.6 million (previous year: € 80.4 million). This includes the item “taxes relating to previous years” in the amount of € 0.1 million (previous year: gain of € 6.8 million). The tax expenses include the corporation and trade income taxes as well as the solidarity surcharge of the companies in Germany and comparable taxes on income of the foreign companies. The actual taxes result from the taxable results of the fiscal year and any revisions to previous assessment periods, to which the local tax rates of the respective Group company are applied. Deferred taxes are generally measured on the basis of the tax rate applicable in the respective country. A combined income tax rate of around 31 % including trade tax has been applied to German companies. Deferred taxes are recognized for all temporary differences between the tax and IFRS financial statements and for the carry-forwards of unused tax losses. The Fraport Group had unused tax losses carried forward in the amount of some € 7.9 million as at December 31, 2013, based on current information, cannot be used (previous year: € 4.8 million). Loss carry-forwards that are not expected to be utilizable are mainly due to Fraport Immobilienservice und -entwicklungs GmbH & Co. KG and Fraport Cargo Services GmbH and can be carried forward indefinitely. Essentially for the evaluation of the recoverability of deferred tax assets is the probability of the future use of the losses carried forward. This depends on whether future taxable profits will be available in the periods in which the carry forward of unused tax losses can be utilized. No deferred tax liabilities were recognized for temporary differences in connection with shares in subsidiaries, joint ventures and associated companies in the amount of € 145.2 million (previous year: € 144.0 million), as Fraport can control the timing of the reversal and it is not expected that these differences will reverse in the foreseeable future. These deferred tax liabilities are, however, limited to 1.55 % of the difference as well as local withholding taxes in the case of future dividend payments from certain foreign subsidiaries. The amounts are not material from the Group’s point of view. In addition, deferred taxes also result from consolidation measures. Pursuant to IAS 12, no deferred tax is recognized with respect to goodwill capitalized or any impairment loss of goodwill. Deferred tax assets and liabilities are netted insofar as these tax claims and liabilities relate to the same tax authority and to the same taxable entity or a group of different taxable entities that, however, are assessed jointly for income tax purposes. Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Income Statement 127 Deferred taxes resulting from temporary differences between tax bases and assets/liabilities accounted according to IFRS are assigned to the following financial position items: Allocation of deferred taxes € million 2013 Deferred tax assets Deferred tax liabilities Deferred tax assets Property, plant and equipment including investments in airport operating projects Financial assets Receivables and other assets Accruals Provisions for pensions and similar obligations Other provisions Liabilities Derivatives Losses carried forward Total individual financial statements Offsetting Consolidation measures Consolidated statement of financial position 2.0 0.2 34.0 31.1 4.6 58.3 156.9 36.7 1.1 324.9 – 281.4 0.2 43.7 – 280.5 – 0.8 – 29.3 – 2.1 0.0 – 53.9 – 15.1 – 2.9 0.0 – 384.6 281.4 – 17.2 – 120.4 2.4 0.0 22.8 31.3 3.9 49.1 165.6 51.5 1.3 327.9 – 278.7 0.0 49.2 2012 Deferred tax liabilities (adjusted) – 282.0 0.0 – 18.9 – 0.7 0.0 – 41.7 – 14.1 – 4.2 0.0 – 361.6 278.7 – 19.6 – 102.5 Table 68 In the fiscal year, deferred taxes decreasing equity in the amount of € 15.2 million (previous year: deferred taxes increasing equity in the amount of € 12.0 million) from the change in the fair values of derivatives and securities were recognized directly in equity without affecting profit or loss. Further equity-decreasing deferred taxes amounting to € 1.2 million (previous year: equity-increasing deferred taxes amounting to € 0.8 million) resulted from the remeasure- ment of defined benefit plans. The following reconciliation shows the relationship between expected tax expense and tax expense in the consolidated income statement: Tax reconciliation € million Earnings before taxes on income Expected tax income/expense 1) Tax effects from differences in foreign tax rates Taxes on non-deductible operating expenses Taxes relating to previous years Permanent differences including non-deductible tax provisions Tax effects on tax-free and taxable income from other periods First-time application of deferred taxes on losses carried forward Trade tax and other effects from local taxes Others Taxes on income according to the income statement 1) Expected tax rate around 31 %, for corporation tax 15.0 % plus solidarity surcharge 5.5 % and trade tax of around 15.5 %. The consolidated tax rate for the 2013 fiscal year is 30.8 % (previous year: 30.9 %). 2013 2012 adjusted 340.7 – 105.6 12.7 – 1.5 0.0 – 6.0 – 1.7 0.0 – 5.3 2.4 – 105.0 364.1 – 112.9 11.0 – 2.4 – 6.8 – 12.2 15.2 – 0.1 – 5.2 0.8 – 112.6 Table 69 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 2 8 Group Notes / Notes to the Consolidated Income Statement / Notes to the Consolidated Financial Position 17 Earnings per share Earnings per share 2013 2012 adjusted 2012 reported Basic Diluted Basic Diluted Basic Diluted Group result attributable to shareholders of Fraport AG (€ million) 221.0 221.0 238.2 238.2 238.3 238.3 Weighted average number of shares 92,173,637 92,532,887 92,012,909 92,443,382 92,012,909 92,443,382 Earnings per €10 share in € 2.40 2.39 2.59 2.58 2.59 2.58 Table 70 The basic earnings per share for the 2013 fiscal year were calculated using the weighted average number of floating shares corresponding to a € 10 share of the capital stock each. Due to the capital increase, the number of floating shares during the period rose from 92,134,391 to 92,212,289 as at December 31, 2013. With a weighted average number of 92,173,637 shares, the basic earnings per € 10 share amounted to € 2.40. As a result of the rights granted to employees to buy shares (authorized capital) within the scope of the employee investment plan and of the issue of subscription rights in connection with the stock options plan (contingent capital), the diluted number of shares amounts to 92,532,887 (weighted average) and the diluted earnings per € 10 share are therefore € 2.39. Notes to the Consolidated Financial Position A breakdown and the development of the individual non-current asset items can be found in the consolidated statement of changes in non-current assets. 18 Goodwill Goodwill arising from consolidation developed as follows: Goodwill € million Antalya Group FraSec Media Total Carrying amount Dec. 31, 2013 Carrying amount Dec. 31, 2012 15.9 22.4 0.3 38.6 15.9 22.4 0.3 38.6 Table 71 Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 129 19 Investments in airport operating projects Investments in airport operating projects € million Dec. 31, 2013 Dec. 31, 2012 Investments in airport operating projects 1,006.1 1,031.2 Table 72 Investments in airport operating projects comprise concession payments capitalized due to the application of IFRIC 12 (see also note 4 and note 49) of € 807.0 million (previous year: € 785.0 million) and incurred capital expenditure of € 199.1 million (previous year: € 246.2 million). They relate to the terminal operation at Antalya Airport at € 548.0 million (previous year: € 597.8 million) and the concession airports in Lima at €2 62.8 million (previous year: € 274.7 million) and in Varna and Burgas at € 195.3 million (previous year: € 158.7 million). 20 Other intangible assets Other intangible assets € million Other intangible assets Other intangible assets essentially relate to software. 21 Property, plant and equipment Property, plant and equipment € million Land, land rights and buildings, including buildings on leased lands Technical equipment and machinery Other equipment, operating and office equipment Construction in progress Total Dec. 31, 2013 Dec. 31, 2012 57.8 44.2 Table 73 Dec. 31, 2013 Dec. 31, 2012 3,629.0 1,615.8 157.0 586.3 5,988.1 3,566.7 1,523.5 162.5 674.6 5,927.3 Table 74 Additions to property, plant and equipment in the 2013 fiscal year amounted to € 395.1 million, of which €179.5 million was from projects related to the capacitive expansion of Frankfurt Airport and € 56.9 million related to Pier A-Plus, which opened in October 2012, and its associated infrastructure. Borrowing costs totaling € 17.5 million were capitalized (previous year: € 27.4 million). Of this amount, € 15.6 million was used for capital expenditure whose financing could not be clearly classified for the purpose of creating a specific qualifying asset (previous year: € 18.2 million). The cost of debt for general project financing was approximately 4.3 % on average (previous year: approximately 4.7 %). Borrowing costs were mainly incurred for projects relating to the capacitive expansion of Frankfurt Airport. Borrowing costs of € 1.9 million were recognized for the specific financing of the New Passenger Terminals and the runways in Varna and Burgas (previous year: € 1.0 million). The average cost of debt for this project was around 4.2 % (previous year: 3.8 %). Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 3 0 Group Notes / Notes to the Consolidated Financial Position As at the balance sheet date, property, plant and equipment with a carrying amount totaling € 18.7 million carry mortgages (previous year: € 22.9 million). Assets from finance lease contracts amounting to € 57.0 million were recognized in property, plant and equipment, as well as other intangible assets, in the year under review (previous year: € 69.5 million): Finance lease contracts (2013) € million Carrying amount Jan. 1, 2013 Additions Disposals Depreciation and amortization Carrying amount Dec. 31, 2013 Other intangible assets Land, land rights and buildings, including buildings on leased lands Technical equipment and machinery Other equipment, operating and office equipment Total Finance lease contracts (2012) 0.1 24.9 44.2 0.3 69.5 0.0 0.3 0.0 3.6 3.9 0.0 0.0 6.4 0.0 6.4 0.1 2.6 7.1 0.2 10.0 0.0 22.6 30.7 3.7 57.0 Table 75 € million Carrying amount Jan. 1, 2012 Additions Disposals Depreciation and amortization Carrying amount Dec. 31, 2012 Other intangible assets Land, land rights and buildings, including buildings on leased lands Technical equipment and machinery Other equipment, operating and office equipment Total 0.2 27.4 47.1 0.4 75.1 0.0 0.0 4.3 0.0 4.3 0.0 0.0 0.0 0.0 0.0 0.1 2.5 7.2 0.1 9.9 0.1 24.9 44.2 0.3 69.5 Table 76 Other intangible assets include an agreement on the use of software licenses which become the property of Fraport AG after the contract expires. The contract expired in 2013. Land, land rights and buildings, including buildings on leased lands, include an energy plant located on the premises of Fraport AG. Given the exclusive use by Fraport AG and the existence of a special lease contract, Fraport AG is considered to be the beneficial owner of the plant. The contract expires in 2020. This item also includes a cargo handling and office building leased by Fraport Cargo Services GmbH to the end of the year 2023. The contract includes two options to extend the term of the lease for five additional years each. Since virtually all economic rights and obligations have been transferred and the contract term exceeds the material portion of the useful life, beneficial ownership of the building is assigned to the tenant. Technical equipment and machinery includes an IT service agreement with the operational services GmbH & Co. KG for the provision of an IT structure on the Frankfurt Airport site and related services. As the network is located on the premises of Fraport AG and is of no reasonable commercial use to any other party, Fraport AG is considered to be the beneficial owner. Technical equipment and machinery also includes another IT service agreement with operational services GmbH & Co. KG for the provision of server and data storage capacities. The computer center required for this purpose is located on the premises of Fraport AG and Fraport AG is the sole recipient of the server and data storage services. Both contracts run until 2018. After an inventory taken at the lessor in the 2013 fiscal year, the quantity of infrastructure supplied during the year under review declined, so the leases were adjusted accordingly. Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 131 Most of the remaining lease contracts relate to special vehicles. They expire between 2014 and 2015. In the fiscal year, outstanding liabilities of some special vehicles were repaid early, which led to a disposal of € 2.8 million, as it was contractually agreed that the transfer of the property would take place on full settlement. The additions of € 3.6 million in other equipment, operating and office equipment result from a sale and lease back transaction with nine special vehicles with SüdLeasing GmbH, Stuttgart, in the fiscal year. Upon the sale of the special vehicles acquired in 2012 to SüdLeasing GmbH, they are leased back until April 30, 2023. As the minimum lease term covers the most of the remaining useful life, the agreement has been classified as a finance lease. 22 Investment property Investment property includes land and buildings situated in direct vicinity to the airport, which are classified as follows: Investment property € million Undeveloped land – Level 2 Undeveloped land – Level 3 Developed land – Level 3 Total Carrying amount Dec. 31, 2013 Carrying amount Dec. 31, 2012 Fair value Dec. 31, 2013 Fair value Dec. 31, 2012 3.0 8.1 36.6 47.7 3.0 8.1 23.3 34.4 3.0 9.3 43.0 55.3 3.0 9.0 29.7 41.7 Table 77 Undeveloped land – level 2 is agricultural land in the Kelsterbach district which is partly located in a bird sanctuary. The fair value of the land is calculated internally using the comparative value procedure pursuant to the Real Estate Valuation Regulation of May 19, 2010 (ImmoWertV) applicable in Germany based on the standard ground values published by a committee of experts. The fair value of the undeveloped land – level 3 is also calculated internally using the comparative value procedure. The square meter prices of real estate transactions currently being carried out in the same land-use area are, however, not observable on the market. The land is in the immediate vicinity of Frankfurt Airport. The developed land – level 3 comprises real estate leased for residential purposes from the voluntary purchase pro- gram for real estate in Flörsheim in the flight zone of Runway Northwest and commercially leased real estate with low flight altitude in Kelsterbach. In addition, this class includes commercially used real estate with third-party hereditary building rights. The fair values are calculated by independent assessors partly using the capitalization of earnings method pursuant to ImmoWertV and partly using the discounted cash flow method. As key input parameters in the capitalization of earn- ings method can be mentioned the multiplier, depending on the useful life and property yields, and the underlying annual rent. The fair value of two buildings was below their carrying amount in the fiscal year, meaning that impairment losses totaling € 0.5 million were recognized (previous year: € 0.3 million). With regard to the valuation of the purchase program for real estate, the discounted cash flow method is used based on a perpetual annuity. The key input parameters here are the discount rate, the sustainable market rent, the assumed remaining useful life, predicted maintenance costs and the anticipated development in rents. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 3 2 Group Notes / Notes to the Consolidated Financial Position The additions for the year under review were primarily from the voluntary purchase program for real estate in Flörsheim at € 14.4 million. Foreseeable restrictions on the disposal of major parts of the investment property arise from the fact that these areas are located in the immediate vicinity of Runway Northwest. Lease revenue from investment property during the 2013 fiscal year amounted to € 2.1 million (previous year: € 1.2 million). The total costs incurred for the maintenance of investment property totaled € 0.9 million (previous year: € 0.6 million), of which € 0.2 million (previous year: € 0.2 million) was incurred for property for which no lease revenue was earned during the fiscal year. Obligations for the acquisition of investment property amounted to € 1.4 million at the balance sheet date (previous year: € 1.5 million). 23 Investments in associated companies Investments in associated companies € million Dec. 31, 2013 Dec. 31, 2012 Xi’an Xianyang International Airport Co., Ltd. Flughafen Hannover-Langenhagen GmbH Airmail Center Frankfurt GmbH (ACF) ASG Airport Service Gesellschaft mbH Thalita Trading Ltd./Northern Capital Gateway LLC Tradeport Hong Kong Ltd. Total 104.2 14.4 1.8 0.8 0.0 0.0 121.2 104.8 15.2 1.7 0.9 14.0 0.0 136.6 Table 78 The additions in the consolidated statement of changes in non-current assets include not only shareholdings acquired, but also positive results of Group companies; the disposals include dividend distributions (in 2013: Xi’an with € 2.0 million, ASG with € 0.5 million and ACF with € 0.5 million) and negative results. For Tradeport Hong Kong Ltd., Hong Kong, the cumulative amount of unrecorded pro-rata losses was – € 1.8 million as at December 31, 2013 (previous year: – € 2.4 million). The proportionate result in the reporting period total + € 0.5 million (previous year: + € 0.5 million). At Northern Capital Gateway LLC, further proportionate losses of € 0.6 million were no longer recognized in the reporting year. Additional summarized financial information regarding the associated companies is found in the following table. This information refers to 100 % of the shares in associated companies. Financial information regarding associated companies € million Assets Shareholders’ equity Liabilities Total income Result of the period Dec. 31, 2013 Dec. 31, 2012 2,389.8 552.2 1,837.6 938.1 – 35.0 2,163.3 596.5 1,566.8 910.5 37.8 Table 79 Fraport Annual Report 2013 24 Other financial assets Other financial assets € million Available for sale financial assets Securities of non-current assets Other investments Fair value option Securities Loans Loans to affiliated companies Other loans Total Group Notes / Notes to the Consolidated Financial Position 133 Dec. 31, 2013 Dec. 31, 2012 517.3 59.5 497.0 63.0 0.0 0.9 123.2 27.6 727.6 128.4 53.4 742.7 Table 80 Financial investments of € 168.2 million in securities which were classified as available for sale were made in the year under review. Other changes resulted from reclassifications to current other financial assets due to securities of € 149.1 million maturing in 2014 and changes arising from measurement of – € 1.9 million. Investment securities include fund units that have been acquired exclusively for the insolvency protection of credits from the time-account models and partial retirement claims in particular of employees of Fraport AG. In fiscal year 2013, fund units were decreased by € 7.1 million (previous year: increase of € 5.7 million), bringing the total acquisition cost to € 57.6 million (previous year: € 64.0 million). These securities are measured at fair value and credited against the corresponding provisions in the amount of € 54.2 million (previous year: € 65.9 million) (see also note 39). At year end, there was an overfunding from fund units of € 4.6 million (previous year: € 2.5 million). The change in other investments of the “available for sale” category relates to shares in Delhi International Airport Private Ltd., New Delhi, India, for which there was a newly derived price as fair value in the year under review. Changes in other loans mainly relate in the amount of € 15.0 million to additions resulting from financial investments in promissory note loans. Maturing promissory note loans in the amount of € 40.2 million were reclassified under current other financial assets. As in the previous year, loans to affiliated companies of € 120.3 million relate to a shareholder loan to Northern Capital Gateway LLC (NCG), St. Petersburg, Russia. The Federal Republic of Germany has assumed a guarantee for direct invest- ments abroad for this shareholder loan. Should the loan be canceled prior to maturity, the interests of the Federal Republic of Germany must be considered in order to protect the guarantee claims. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 3 4 Group Notes / Notes to the Consolidated Financial Position 25 Non-current and current other receivables and financial assets Non-current and current other receivables and financial assets € million Residual term Total Residual term Total up to 1 year over 1 year Dec. 31, 2013 up to 1 year over 1 year Dec. 31, 2012 Receivables from joint ventures Receivables from associated companies Receivables from other investments Financial assets available for sale Refunds from “Passive noise abatement” Other assets Accruals Total thereof financial assets 0.3 0.7 0.6 304.0 12.7 107.0 13.1 438.4 376.4 4.7 29.6 – – 109.5 1.7 24.3 169.8 36.0 5.0 30.3 0.6 304.0 122.2 108.7 37.4 608.2 412.4 3.6 0.8 2.2 265.4 12.0 90.7 10.5 385.2 328.7 – 18.1 – – 73.5 – 25.5 117.1 18.1 3.6 18.9 2.2 265.4 85.5 90.7 36.0 502.3 346.8 Table 81 Accruals essentially relate to grants given for construction costs. At Fraport AG, grants given for construction costs are mainly awarded to utility companies installing facilities to meet the specialized requirements of Fraport AG. The utility companies own the utility equipment. The financial assets in the available for sale category include securities with a remaining maturity of up to one year. The change resulted both from reclassification from other financial assets based on maturity and from additions amount- ing to around € 448.0 million as well as disposals of the securities which matured in the reporting year amounting to around € 390.0 million. Other assets include promissory note loans with a remaining maturity of up to one year amounting to around € 40.1 million (previous year: € 28.1 million). No effects arose from changes in credit ratings as the credit ratings of the issuers and issues did not change. The item refunds from “Passive noise abatement” includes the expected full reimbursement amount from noise abate- ment charges from the airlines, which was recognized as other assets in compliance with IAS 37.53 in connection with the provisions created for the obligation of Fraport AG to reimburse costs for noise abatement construction measures. The value was determined based on the estimated expenses for reimbursing the costs of noise abatement construction measures. In fiscal year 2013, due to the adoption of the draft of the third regulation for the execution of the Act for Protection against Aircraft Noise (Außenwohnbereichsentschädigungs-Verordnung), there was a present value increase in the refund claim of € 48.3 million. More information about the corresponding present value increase in other provisions can be found in note 39. Where applicable, the appropriate allowance was recognized for other receivables and financial assets as at the reporting date. The allowance made in this fiscal year was € 5.7 million (previous year: € 0.1 million). There are no other material past due items. 26 Income tax receivables Income tax receivables € million Residual term Total Residual term Total up to 1 year over 1 year Dec. 31, 2013 up to 1 year over 1 year Dec. 31, 2012 Income tax receivables 2.1 20.3 22.4 35.0 19.5 54.5 Table 82 Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 135 The major item in income tax receivables relates to the corporation tax credit capitalized in the 2006 fiscal year. On December 12, 2006, the revised Section 37 of the German Corporation Tax Act (KStG) became legally effective in connection with amendments to the law based upon the departmental draft of SE-Introductory Legislation (SEStEG). According to Section 37 (4) of the KStG (new version), the corporation tax credit of Fraport AG had last to be estab- lished on December 31, 2006. In accordance with Section 37 (5) of the KStG (new version), Fraport AG is entitled to a refund of its corporation tax credit in ten equal annual installments during a payout period from 2008 to 2017. The refund claim accrued after the end of December 31, 2006 and is non-interest bearing. The first installment was refunded in 2008 and is payable on September 30 of each year. The corporation tax credit totaled € 24.4 million as at December 31, 2013 (previous year: € 30.5 million), which was discounted at a rate of 3.75 % due to its long-term nature. The present value of this claim to a tax refund amounts to € 20.3 million as at the balance sheet date (previous year: € 24.9 million). Economically, this refund claim is an overpay- ment within the meaning of IAS 12.12. 27 Deferred tax assets Deferred tax assets € million Deferred tax assets Dec. 31, 2013 Dec. 31, 2012 43.7 49.2 Table 83 Deferred tax assets are recognized in accordance with IAS 12. Further explanations are given in the “taxes on income” section (see note 16). 28 Inventories Inventories € million Land and buildings for sale Raw materials, consumables and supplies Work-in-process Other Total Dec. 31, 2013 Dec. 31, 2012 55.1 17.0 2.6 0.6 75.3 57.4 17.3 2.0 1.0 77.7 Table 84 Land and buildings includes properties at the Gateway Gardens site in the immediate vicinity of Frankfurt Airport, which are intended for sale, amounting to € 31.0 million (previous year: € 30.3 million) and at the Mönchhof site amounting to € 24.1 million (previous year: € 27.1 million). Based on the ongoing development of the property held for sale, € 2.3 million was capitalized in the year under review (previous year: € 3.6 million). Carrying amount reductions of €4.6 million (previous year: € 7.6 million) were the result of property sale transactions. Borrowing costs totaling € 0.6 million were recognized (previous year: € 0.7 million). The cost of debt was between around 1.3 % and 2.8 % (previous year: between around 1.7 % and 3.1 %). Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 3 6 Group Notes / Notes to the Consolidated Financial Position The net realizable value of the property held for sale was calculated using the discounted cash flow method over the remaining planned selling period, with a discount rate adequate for the risk and related to the term. This ranged from 4.5 % (Gateway Gardens site) to 5.3 % for the Mönchhof site after tax (previous year: 5 % in each case). When calculating the discount rate, further discounts were applied in addition to the general sector risk premium, particularly for as yet unknown environmental and selling risks. When calculating the net realizable value, the selling prices of sales which have already taken place and expenses planned for further development and selling are taken into account. As was the case last year, the net realizable values were higher than the carrying amounts. Additional costs incurring up to the date of sale mainly relate to expenses for the further development of the property held for sale comprising the Mönchhof and the Gateway Gardens sites. Sales of property with a carrying amount of around € 7.3 million are planned for 2014 (previous year: around € 8.1 million). The sale of other land and buildings for sale (€ 47.8 million) shall be realized in 2015 and later. The development areas of Grundstücksgesellschaft Gateway Gardens GmbH carry mortgages. Expenses for the maintenance of real estate inventories during the year under review were minor. Selling costs mainly consist of personnel expenses incurred by Fraport Immobilienservice und -entwicklungs GmbH & Co. KG and Grundstücksgesellschaft Gateway Gardens GmbH. Raw materials, consumables and supplies mainly relate to consumables for the airport operation. 29 Trade accounts receivable Trade accounts receivable € million From third parties Dec. 31, 2013 Dec. 31, 2012 181.6 180.0 Table 85 For 2013, the maximum default risk without taking guarantees into account equaled the carrying amount of € 181.6 million as at the reporting date. The following table provides information on the extent of the default risk. Default risk analysis € million Carrying amount Thereof not overdue or impaired Thereof in stated term overdue and not impaired < 30 days 30 – 180 days > 180 days Dec. 31, 2013 Dec. 31, 2012 181.6 180.0 91.4 95.4 36.7 44.9 19.2 9.7 34.3 30.0 Table 86 With regard to trade accounts receivable which are neither impaired nor in default, there is no indication as at the reporting date for 2013 that the debtors will not meet their payment obligations. There are no risk concentrations of open trade accounts receivable. Cash security in the amount of € 6.5 million (previous year: € 8.8 million) and non-cash guarantee (mainly loan guaran- tees) in the nominal amount of € 24.8 million (previous year: € 22.7 million) were accepted as guarantee for unsettled trade accounts receivable. The guarantee received until the reporting date was neither sold nor passed on as security Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 137 and will be returned to the respective debtor after termination of the business relationship. The guarantee received will be used only in the event of the debtor’s default. As at the balance sheet date, trade accounts receivable of € 1.6 million were pledged as securities for financial liabilities (previous year: € 6.8 million). Allowances for trade accounts receivable developed as follows in the fiscal year: Allowances € million Balance as at January 1 Expenses from allowances Releases Availments Exchange rate differences Balance as at December 31 2013 2012 35.1 12.3 – 2.3 – 10.1 0.0 35.0 31.9 9.3 – 0.7 – 5.4 0.0 35.1 Table 87 Net additions include expenses from allowances amounting to € 12.3 million (previous year: € 2.0 million) shown in other operating expenses, as well as revenue-reducing individual allowances and reversals. 30 Cash and cash equivalents Cash and cash equivalents € million Cash in hand, bank balances and checks Dec. 31, 2013 Dec. 31, 2012 605.1 821.9 Table 88 The bank balances mainly include short-term time deposits as well as overnight deposits. Cash and cash equivalents include time deposits of € 332.4 million (previous year: € 584.0 million) with a term of more than three months from the time of acquisition. These funds are not subject to any significant fluctuations in value and can be realized at any time. In connection with financing the concession in Antalya, € 105.3 million of bank balances are subject to a drawing restriction (previous year: € 110.8 million). 31 Equity attributable to shareholders of Fraport AG Equity attributable to shareholders of Fraport AG € million Issued capital Capital reserve Revenue reserves Total Dec. 31, 2013 Dec. 31, 2012 adjusted 922.1 590.2 1,540.8 3,053.1 921.3 588.0 1,403.2 2,912.5 Table 89 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 3 8 Group Notes / Notes to the Consolidated Financial Position Issued capital Issued capital (less treasury shares) increased by € 0.8 million in fiscal year 2013 and is fully paid up as at the balance sheet date. At € 0.6 million, this increase relates to the partial use of the authorized capital – following the capital increase in exchange for cash contributions – to issue shares in connection with the employee investment plan. Furthermore, contingent capital was used to acquire additional shares totaling € 0.2 million during the fiscal year to serve stock options from the Fraport Management Stock Options Plan 2005 (MSOP 2005). Number of floating shares and treasury shares The issued capital consisted of 92,289,654 (previous year: 92,211,756) bearer shares with no par value, each of which accounts for € 10.00 of the capital stock. Development of the floating and treasury shares according to Section 160 of the AktG Issued capital Number Floating shares Number Number Treasury shares Amount of capital stock in € Share in capital stock in % Balance as at Jan. 1, 2013 92,211,756 92,134,391 77,365 773,650 0.0839 Management Stock Options Plan 2005 Capital increases 2013 22,600 22,600 Employee investment plan Capital increase (June 27, 2013) 55,298 55,298 Balance as at Dec. 31, 2013 92,289,654 92,212,289 77,365 773,650 0.0838 Issued capital Number Floating shares Number Number Treasury shares Amount of capital stock in € Share in capital stock in % Balance as at Jan. 1, 2012 91,955,867 91,878,502 77,365 773,650 0.0841 Management Stock Options Plan 2005 Capital increases in 2012 201,650 201,650 Employee investment plan Capital increase (June 28, 2012) 54,239 54,239 Balance as at Dec. 31, 2012 92,211,756 92,134,391 77,365 773,650 0.0839 Table 90 The new shares created under the employee investment plan were issued to the employees at a price of € 45.00 each on June 27, 2013. Authorized capital Pursuant to Sections 202 et seqq. of the AktG, the Executive Board was authorized by resolution of the AGM held on May 27, 2009 to increase the capital stock by up to €5.5 million on one or more occasions until May 26, 2014 with the approval of the Supervisory Board. It was possible to exclude the statutory subscription rights of the shareholders. In 2013, a total of € 552,980 of authorized capital was used for issuing shares within the scope of the employee invest- ment plan. At the AGM of May 31, 2013, the existing authorized capital was canceled and new authorized capital of € 3.5 million was approved, which can be used for issuing shares to employees of Fraport AG and companies controlled by Fraport AG. The Executive Board is now entitled, with the approval of the Supervisory Board, to increase the capital stock on one or more occasions by up to a total of € 3.5 million until May 30, 2018, by issuing new shares in return for cash. The statutory subscription rights of the shareholders may be excluded. Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 139 Therefore, € 3.5 million of authorized capital remained as at December 31, 2013, which can be used for issuing shares to employees of Fraport AG and companies controlled by the Fraport AG. The subscription rights of the shareholders may be excluded. Contingent capital A contingent capital increase of € 13.9 million was approved according to the Sections 192 et seqq. of the AktG at the AGM held on March 14, 2001. The purpose of the contingent capital was expanded at the AGM on June 1, 2005. The contingent capital increase also serves to fulfill subscription rights under the approved Fraport MSOP 2005. The Executive Board and Supervisory Board were authorized to issue up to a total of 1,515,000 stock options to beneficiaries entitled to subscribe until August 31, 2009, in accordance with more detailed provisions in this regard. Some of the shares which were issued to members of the Executive Board as part of performance-related remuneration until 2010 are subject to a vesting period of twelve or 24 months. Contingent capital total € 3.4 million as at December 31, 2013. In 2013, € 0.2 million (22,600 options) of the options granted in the fifth tranche of the MSOP 2005 were exercised. The capital increase within the framework of the MSOP 2005 is only carried out to the extent that the holders of subscription rights exercise their subscription rights granted under the MSOP 2005 on the basis of the authorization referred to above and the company does not serve the stock options using treasury shares, the transfer of shares by a third party, or a cash payment. A total of 2,016,150 subscription rights had been issued under the MSOP 2001 and 2005 until the balance sheet date. Capital reserve The capital reserve contains the premium from the issuing of Fraport AG shares. Of the € 2.2 million increase in the capital reserve, € 1.9 million results from the excess in the issue amount (€ 35.00 per share) of new shares issued under the employee investment plan (55,298 shares in total) and € 0.3 million resulted from the excess in the issue amount (€ 13.59) of new shares issued from contingent capital to serve stock options (22,600 shares). Revenue reserves The revenue reserves consist not only of the reserves of Fraport AG (including the statutory reserve of € 36.5 million), but also the revenue reserves and retained earnings of the Group companies included in the consolidated financial statements, as well as effects of consolidation adjustments. Currency translation differences total € 3.7 million (previous year: € 8.4 million). This figure includes currency transla- tion differences of – € 9.2 million for the Philippine companies accounted for using the equity method, which are not charged to the Group result until the companies are disposed of in accordance with IAS 21. The derivative valuation reserve was – € 103.2 million as at the balance sheet date (previous year: – € 144.7 million). The reserve for the fair value valuation of financial assets available for sale total € 21.9 million (previous year: € 27.7 million). The Executive Board and the Supervisory Board of Fraport AG will propose the distribution of € 115.4 million out of the profit earmarked for distribution of Fraport AG to the AGM. This equates to € 1.25 per share. In the 2013 fiscal year, the AGM of May 31, 2013 decided to pay a dividend of € 1.25 per no-par value share entitled to dividend. The distributed amount thus came to € 115.2 million (previous year: € 114.8 million). Further InformationConsolidated Financial StatementsFraport Annual Report 20131 4 0 Group Notes / Notes to the Consolidated Financial Position 32 Non-controlling interests Non-controlling interests € million Non-controlling interests (excluding the attributable Group result) Group result attributable to non-controlling interests Total Dec. 31, 2013 Dec. 31, 2012 31.0 14.7 45.7 22.4 13.3 35.7 Table 91 The non-controlling interests comprise allocated equity and earnings of Fraport Twin Star Airport Management AD, FraCareServices GmbH, Fraport Peru S.A.C., FSG Flughafen-Service GmbH, FPS Frankfurt Passenger Services GmbH, Media Frankfurt GmbH and Lima Airport Partners S.R.L. 33 Non-current and current financial liabilities Non-current and current financial liabilities € million Residual term Total Residual term Total up to 1 year over 1 year Dec. 31, 2013 up to 1 year over 1 year Dec. 31, 2012 Financial liabilities 314.9 4,146.8 4,461.7 196.6 4,401.0 4,597.6 Table 92 There is a general interest rate risk for fixed-interest loans that are extended on expiry. The fixed-rate loans include also those floating-interest rate loans whose interest rate was fixed by contracting an interest rate hedge. Please refer to the presentation of the finance management and the asset and financial position in the Group management report for additional explanations regarding the financial liabilities. 34 Trade accounts payable Trade accounts payable € million Residual term Total Residual term Total up to 1 year over 1 year Dec. 31, 2013 up to 1 year over 1 year Dec. 31, 2012 To third parties 162.4 50.8 213.2 214.4 64.4 278.8 Table 93 Trade accounts payable include liabilities in connection with compensation measures according to the nature protection law in the amount of € 30.6 million (previous year: € 32.5 million). The liabilities relate to the contractual obligations to carry out environmental compensation measures based on the finished work to clear the forrest south of the airport and near the Northwest Runway as was necessary for the airport expansion. Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 141 35 Non-current and current other liabilities Non-current and current other liabilities € million Residual term Total Residual term Total up to 1 year over 1 year Dec. 31, 2013 up to 1 year over 1 year Dec. 31, 2012 Prepayment for orders To joint ventures To associated companies To investments Investment grants for non-current assets Other accruals 2.1 4.3 0.9 2.1 1.3 7.6 Liabilities in connection with concession obligations 72.4 Negative fair values of derivative financial instruments Other liabilities Total thereof primary financial liabilities – 87.7 178.4 109.2 – – – – 13.4 60.4 570.0 176.5 69.1 889.4 578.2 2.1 4.3 0.9 2.1 14.7 68.0 642.4 176.5 156.8 1,067.8 687.4 2.1 2.4 0.8 1.7 2.2 7.3 76.5 – 70.2 163.2 104.5 – – – – 13.4 65.0 598.3 244.2 85.5 2.1 2.4 0.8 1.7 15.6 72.3 674.8 244.2 155.7 1,006.4 1,169.6 614.1 718.6 Table 94 Investment grants to the non-current assets include, in particular, investments grants for additional services provided by Fraport AG, which are billed to the users. Investment grants include government grants of € 8.7 million (previous year: € 9.2 million) and other grantors of € 6.0 million (previous year: € 6.4 million). The government grants relate, in particular, to capital expenditure incurred for baggage controls at Frankfurt Airport. The special items are linearly released according to the useful life of the granted assets. Other accruals are income received and relating to future periods. The liabilities in connection with concession obligations relate to obligations to pay fixed and variable airport operation concession fees for the airport operating projects in Antalya, Lima, Varna and Burgas. The remaining other liabilities consist essentially of lease liabilities, wage and church taxes, outstanding social security contributions, liabilities from accrued interest and liabilities to company employees. The following lease payments are due from the lease contracts: Maturity of lease payments € million Lease payments Discount amounts Present value € million Lease payments Discount amounts Present value up to 1 year 1 – 5 years over 5 years Dec. 31, 2013 Residual term Total 12.4 3.2 9.1 45.3 7.3 38.0 18.9 4.1 14.9 76.6 14.6 62.0 up to 1 year 1 – 5 years over 5 years Dec. 31, 2012 Residual term Total 13.9 4.0 9.9 53.0 9.9 43.2 25.0 4.5 20.5 91.9 18.4 73.6 Table 95 Discount rates are between 3.0 % and 8.6 % (previous year: between 5.0 % and 8.6 %). Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 4 2 Group Notes / Notes to the Consolidated Financial Position 36 Deferred tax liabilities Deferred tax liabilities € million Deferred tax liabilities Dec. 31, 2013 Dec. 31, 2012 adjusted 120.4 102.5 Table 96 Deferred tax liabilities were recognized in compliance with IAS 12 using the temporary concept. Further explanations of deferred tax liabilities can be found in note 16 “taxes on income”. 37 Provisions for pensions and similar obligations Defined benefit plans Within the Fraport Group, there are pension obligations for the members of the Executive Board of Fraport AG and their surviving dependents as well as obligations for Senior Managers and employees not covered by collective bargaining agreements. The pension obligations essentially include 20 (previous year: 20) vested pension benefits promised in individual contractual pension commitments to the members of the Fraport AG Executive Board and their surviving dependents. A reinsurance policy was already obtained in 2005 to reduce actuarial risks and to protect pension obligations for the former and current (in some cases still active) members of the Executive Board against insolvency. This is a group insurance policy with an annual, constant minimum insurance amount for the entire group. The pension benefits from the reinsurance policy correspond to the total achievable retirement, disability and widow’s benefits in accordance with the pension commitments. The reinsurance benefits are recognized at the active value reported by the insurance company in the amount of € 19.3 million (previous year: € 18.3 million). The reinsurance is not traded on an active market (see also note 52). Reinsurance installments of € 1.2 million have been paid for 2013 (previous year: € 1.2 million) and € 1.2 million is expected for the next year. The average weighted duration of the members of the Executive Board’s defined benefit plans is 15.7 years for pensions with reinsurance and 8.7 years for pensions without reinsurance. Offsetting € million Reconciliation to assets and liabilities recognized in the financial position Present value of obligations funded through a reinsurance policy Fair value of plan assets Overfunding (not included in the net liability)/underfunding Present value of obligations not funded through a reinsurance policy (Net) liabilities recognized in the financial position 2013 2012 18.5 – 19.3 – 0.8 26.7 26.7 18.9 – 18.3 0.6 26.8 27.4 Table 97 For Senior Managers and employees not covered by collective bargaining agreements who joined the company as Senior Managers or employees not covered by collective bargaining agreements after December 31, 1997 or who will join in future, the pension benefits and provision for surviving dependents on the monthly compensation liable to top-up pension payments, for which contributions are payable, are restricted to the upper limit defined in Section 38 of the ATV-K in the amount of 1.133 times of the payment group 15 level 6 of the collective bargaining agreement for civil servants (TVöD). In addition to the said limited pension benefits and provision for surviving dependents, there exists a supplementary operational pension for these persons. Hereafter, Fraport AG makes an annual contribution in the amount of 13 % of the eligible income as capital components into an individually managed pension account. Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 143 The period of contribution began on January 1, 1998 for employees who entered into an employment relationship not covered by a collective bargaining agreement before January 1, 2000. Furthermore, this applies for employees who changed from an employment relationship covered by collective bargaining agreements to one not covered by collective bargaining agreements after December 31, 1997 or who entered into a relationship not covered by collective bargaining agreements after December 31, 1997, effective as of the time of the change in status. There were 366 benefits (of which 196 vested) as at the end of the year. The present value of the non-vested benefits amounts to € 0.7 million (previous year: €0.8 million); the present value of the vested benefits amounted to € 5.6 million in the 2013 annual financial statements. Future obligations amount to € 5.3 million for active employees and € 1.0 million for former and retired employees. No significant provision amounts were paid this fiscal year due to the young age structure. The obligations for Senior Managers and employees not covered by collective bargaining agreements had an average weighted duration of 10.2 years. Furthermore, Senior Managers have had the opportunity to participate in an employee-financed company pension scheme (“deferred compensation”) since 1996. The employee portion is generated through converting a portion that can be chosen freely each year. This portion is converted into an insured sum and is accumulated by Fraport AG and accrues interest. At the end of the fiscal year, there were 15 vested pension commitments totaling € 4.0 million (previous year: € 4.0 million). Obligations amount to € 3.5 million for active employees and € 0.5 million for former and retired employees. The average weighted duration of the employee-financed company pension scheme was 6.6 years in fiscal year 2013. The valuation of pension obligations is based on the provisions according to IAS 19. The pension obligations as at December 31, 2013, were calculated on the basis of actuarial opinions of December 17 and 23, 2013. Changes in obligations were as follows: Pension obligations (2013) € million As at January 1, 2013 Service cost Current service cost Past service cost Gains and losses on settlement Total service cost Net interest income/expense Interest income and interest expenses Remeasurements Return on plan assets, excluding interest Actuarial gains and losses from changes in demographic assumptions Actuarial gains and losses from the adjustment of the obligation based on experience Actuarial gains and losses from changes in financial assumptions Total remeasurements Impacts of exchange rate differences Contributions of the employer to the plan Contributions of the employee to the plan Payments from the plan Overfunding As at December 31, 2013 Present value of the obligation Plan assets Total 45.8 – 18.3 27.4 2.2 0.0 0.0 2.2 1.4 0.0 0.0 0.1 – 2.2 – 2.1 0.0 0.0 0.0 – 2.0 0.0 45.3 0.0 0.0 0.0 0.0 – 0.6 0.2 0.0 0.0 0.0 0.2 0.0 – 1.2 0.0 0.6 0.0 – 19.3 2.2 0.0 0.0 2.2 0.8 0.2 0.0 0.1 – 2.2 – 1.9 0.0 – 1.2 0.0 – 1.4 0.8 26.7 Table 98 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 4 4 Group Notes / Notes to the Consolidated Financial Position Pension obligations (2012) € million As at January 1, 2012 Service cost Current service cost Past service cost Gains and losses on settlement Total service cost Net interest income/expense Interest income and interest expenses Remeasurements Return on plan assets excluding interest Actuarial gains and losses from changes in demographic assumptions Actuarial gains and losses from the adjustment of the obligation based on experience Actuarial gains and losses from changes in financial assumptions Total remeasurements Impacts of exchange rate differences Contributions of the employer to the plan Contributions of the employee to the plan Payments from the plan Overfunding As at December 31, 2012 Significant actuarial assumptions Interest rate Adjustment of pensions Retirement age Present value of the obligation Plan assets Total 37.6 –16.9 20.7 0.0 0.0 0.0 0.0 – 0.4 0.1 0.0 0.0 0.0 0.1 0.0 – 1.1 0.0 0.0 0.0 –18.3 1.7 0.0 0.0 1.7 1.7 0.0 0.0 0.7 6.3 7.0 0.0 0.0 0.0 – 2.2 0.0 45.8 2013 3.60 % 2.50 % 1.7 0.0 0.0 1.7 1.3 0.1 0.0 0.7 6.3 7.1 0.0 –1.1 0.0 –2.2 0.0 27.4 Table 99 2012 3.17 % 2.50 % Termination of contract period, earliest pensionable age in pension commitments Termination of contract period, earliest pensionable age in pension commitments Table 100 The significant actuarial assumptions refer to the pension obligations of the members of the Executive Board, because these are the major obligations. All other pension obligations largely have the same assumptions. Sensitivity analysis The sensitivity analysis is based on changes in the assumptions while the other factors remained constant. In practice, it is unlikely that only one actuarial assumption would change. Changes in actuarial assumptions may correlate with other actuarial assumptions. The pension provision would vary by the following amounts in the event of a change in assumptions: Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 145 Sensitivity analysis as at December 31, 2013 € million Interest rate Inflation Mortality Retirement age Decrease of interest rate by 0.5 % Increase of interest rate by 0.5 % 2.6 – 2.4 Decrease of inflation by 0.25 % Increase of inflation by 0.25 % – 0.8 0.8 Reduction by one year 1.3 Increase by one year 0.1 Table 101 The analysis of inflation includes both the change in amounts and pension trends. The retirement age has no influence on the pensions received by members of the Executive Board and was only calculated for other pensions. In connection with defined benefit plans, the Group is exposed to general actuarial risks as well as the interest rate risk. Some pension benefits are tied to inflation and higher inflation will lead to higher obligations. Due to the liquidity available in the Group, there is no risk with regard to fulfillment for non-reinsured obligations. Multi-employer plans Fraport AG has insured its employees for purposes of granting a defined-benefit company pension under the statutory insurance scheme based on a collective bargaining agreement (Altersvorsorge-TV-Kommunal [ATV-K]) with the Zusatzversorgungskasse for local authority and municipal employers in Wiesbaden (ZVK). The contributions are collected based on a pay-as-you-go model. As in the previous year, the contribution rate of the ZVK is 6.2 % on compensation liable to top-up pension payments; thereof, the employer pays 5.7 %, with the contribution paid by the employee amounting to 0.5 %. In addition, a tax-free restructuring charge of 2.3 % of the compensation liable to top-up pension payments is levied by the employer in accordance with Section 63 of the ZVK Statutes (ZVKS). An additional contribution of 9 % is paid for some employees included in the statutory social security insurance scheme (generally employees not covered by collective bargaining agreements and Senior Managers) for the consideration subject to ZVK that, according to Section 38 of the ATV-K, exceeds the upper limit defined in the collective bargaining agreement. This plan is a multi-employer plan (IAS 19.8), since the companies involved share the risk of the investment and also the biometric risk. The ZVK insurance is generally to be classified as a defined benefit plan (IAS 19.30). Since the plan is a defined benefit plan, the company has to account for its proportionate share of its benefit obligations in the total obligations and for the exact share in the total assets of ZVK according to IAS 19.32. If there is not sufficient information on the plan and a company also covers the risks of other insuring companies with its contributions (IAS 19.34b), only the current contributions are accounted for as if it was a defined contribution plan. Due to its structure, the ZVK does not pro- vide any information to participating companies that would allow the allocation of obligations, plan assets, service costs and, if applicable, over- or underfunding or the extent of Fraport’s participation in the plan. In the consolidated financial statements of Fraport, the consideration of contributions corresponds to defined-contribution pension commitments. Along with the remaining member companies, Fraport AG is obliged to finance accrued obligations not Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 4 6 Group Notes / Notes to the Consolidated Financial Position covered by assets as well as future obligations. The precise share of the remaining extent of the obligation cannot be determined. In the event of Fraport AG withdrawing from the multi-employer plan (for example through terminating the agreement), compensation in the amount of the present value of the obligation at the point of the membership being terminated is to be paid to the ZVK. This amount cannot be determined due to only insufficient information being available. Should the multi-employer plan be dissolved by a resolution of the administrative committee, no share in any possible remaining overfunding will be due to Fraport. In the fiscal year, € 28.1 million (previous year: € 26.8 million) was recorded as contributions to defined contribution plans. Contributions of €29.4 million are expected for the next fiscal year. Furthermore, due to statutory provisions, contributions are also made to state-administered pension funds in Germany. The current contributions are shown as expense for the respective year. Employer contributions made by the Fraport Group to state-administered pension funds totaled € 66.0 million (previous year: € 71.7 million). 38 Non-current and current income tax provisions Non-current and current income tax provisions € million Residual term Total Residual term Total up to 1 year over 1 year Dec. 31, 2013 up to 1 year over 1 year Dec. 31, 2012 Income tax provisions 8.1 54.1 62.2 5.3 80.2 85.5 Table 102 Tax provisions amounting to € 62.2 million (previous year: € 85.5 million) were accrued for unassessed corporation tax and trade tax, as well as for tax audit risks. The decline in income tax provisions is the result of the cessation of the 2003 – 2005 audit at Fraport AG in 2013. 39 Non-current and current other provisions The development in the non-current and current provisions are shown in the following tables: Non-current and current personnel-related provisions € million Personnel thereof non-current thereof current Jan. 1, 2013 adjusted 75.8 12.1 63.7 Use Release Additions Dec. 31, 2013 – 49.7 – 3.2 62.2 85.1 8.9 76.2 Table 103 A large part of the personnel-related provisions were recognized for partial retirement, incentive schemes for the employees of Fraport AG, as well as for time account credits. The partial retirement provisions have been recognized according to IAS 19R since January 1, 2013. Retroactive application was implemented in accordance with IAS 8 (see note 4). The credit for partial retirement and claims from time account credits are offset against the fund units (see also note 24). Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 147 Other provisions € million Jan. 1, 2013 Use Release Additions Interest effect Dec. 31, 2013 Environment Passive noise abatement Nature protection law compensation Other Total thereof non-current thereof current 37.6 91.0 57.9 168.7 355.2 199.1 156.1 – 5.1 – 4.3 – 0.3 – 43.5 – 53.2 0.0 0.0 – 23.8 – 5.3 – 29.1 3.3 57.6 0.0 56.8 117.7 – 0.7 – 1.2 – 0.6 – 0.6 – 3.1 35.1 143.1 33.2 176.1 387.5 226.2 161.3 Table 104 The environmental provisions have been formed largely for probable restructuring costs for the elimination of groundwater contamination on the Frankfurt Airport site in Frankfurt/Main, as well as for environmental pollution in the southern section of the airport. The present value of the provision formed in 2011 for the obligation to compensate passive noise abatement expenses for privately used properties was increased by € 57.6 million in fiscal year 2013. Of this, € 48.3 million was accounted for by the adoption of the draft of the third regulation for the execution of the Act for Protection against Aircraft Noise (Fluglärm-Außenwohnbereichsentschädigungs-Verordnung). The obligation results from the zoning decision of December 18, 2007 and was made specific through the enactment of the regulation above in the fiscal year. There is a refund claim for this amount indicated under other receivables (see also note 25). The remaining € 9.3 million is due to the HMWVL zoning supplement decision of April 30, 2013, according to which Fraport AG is obliged to refund passive noise abatement expenses for commercially used properties. This amount was recognized as production costs in connection with the capacity expansion accounted for under property, plant and equipment. A provision for environmental protection compensating measures was created in the previous years due to the long- term obligation to implement ecological compensating measures resulting from the work performed to clear the land in the southern part of the airport and in the area of Runway Northwest required for the airport expansion. Other provisions include the provision of € 9.6 million (previous year: € 19.4 million) for the purchase and compensa- tion program for residential properties (Fraport Casa) as well as additions for obligations from the zoning supplement decision of May 10, 2013 regarding wake turbulences in the amount of € 23.5 million, which was recognized in the same amount as production costs in connection with the capacity expansion accounted for under property, plant and equipment. In addition, other provisions include provisions established mainly for rebates and refunds, legal disputes and claim events. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 4 8 Group Notes / Notes to the Consolidated Financial Position 40 Financial instruments Disclosures on carrying amounts and fair values The following tables present the carrying amounts and fair values of the financial instruments as at December 31, 2013 and December 31, 2012, respectively: Financial instruments as at December 31, 2013 € million Measured at amortized cost Measured at fair value Dec. 31, 2013 Recognized in profit or loss Measurement category according to IAS 39 Nominal volume Loans and receivables Fair value option Held for trading Available for sale Hedging derivative Total fair value Liquid funds Carrying amount Fair value Carrying amount 1) Carrying amount 1) Carrying amount 1) Carrying amount 1) Assets Cash and cash equivalents 605.1 Trade accounts receivable Other financial receivables and assets Other financial assets Securities Other investments Loans to investments Other loans Derivative financial assets Hedging derivative Other derivatives 181.6 181.6 108.4 108.4 123.2 27.6 123.2 27.6 304.0 517.3 59.5 605.1 181.6 412.4 517.3 59.5 123.2 27.6 0.0 0.0 Total assets 605.1 440.8 440.8 0.0 0.0 880.8 0.0 1,926.7 Other financial liabilities Fair value option Held for trading IAS 17 liability Hedging derivative Total fair value Carrying amount Fair value Carrying amount 1) Carrying amount 1) Carrying amount Fair value Carrying amount 1) Liabilities and equity Trade accounts payable Other financial liabilities 213.2 687.4 217.0 764.4 Financial liabilities 4,461.7 4,541.1 Liabilities from finance leases Derivative financial liabilities Hedging derivative Other derivatives Total liabilities and equity 5,362.3 5,522.5 0.0 33.5 33.5 62.0 67.5 143.0 217.0 764.4 4,541.1 67.5 143.0 33.5 62.0 67.5 143.0 5,766.5 1) The carrying amount equals the fair value of the financial instruments. Table 105 Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 149 Financial instruments as at December 31, 2012 € million Measured at amortized cost Measured at fair value Dec. 31, 2012 Recognized in profit or loss Measurment category according to IAS 39 Nominal volume Loans and receivables Fair value option Held for trading Available for sale Hedging derivative Total fair value Liquid funds Carrying amount Fair value Carrying amount 1) Carrying amount 1) Carrying amount 1) Carrying amount 1) Assets Cash and cash equivalents 821.9 Trade accounts receivable Other financial receivables and assets Other financial assets Securities Other investments Loans to investments Other loans Derivative financial assets Hedging derivative Other derivatives 180.0 180.0 81.4 81.4 128.4 53.4 128.4 53.4 0.9 265.4 497.0 63.0 821.9 180.0 346.8 497.9 63.0 128.4 53.4 0.0 0.0 Total assets 821.9 443.2 443.2 0.9 0.0 825.4 0.0 2,091.4 Other financial liabilities Fair value option Held for trading IAS 17 liability Carrying amount Fair value Carrying amount 1) Carrying amount 1) Carrying amount Fair value Total fair value Hedging derivative Carrying amount 1) Liabilities and equity Trade accounts payable Other financial liabilities 278.8 718.6 284.8 752.7 Financial liabilities 4,597.6 4,791.3 Liabilities from financial leases Derivative financial liabilities Hedging derivative Other derivatives Total liabilities and equity 5,595.0 5,828.8 0.0 45.2 45.2 73.6 85.1 199.0 284.8 752.7 4,791.3 85.1 199.0 45.2 73.6 85.1 199.0 6,158.1 1) The carrying amount equals the fair value of the financial instruments. Table 106 Given the short maturities for cash and cash equivalents, trade accounts receivable and other financial receivables and assets, the carrying amounts as at the reporting date correspond to the fair value. The valuation of unlisted securities was based on market data applicable on the valuation date using reliable and specialized sources and data providers. The values are determined using established valuation models. The derivative financial instruments mainly relate to interest rate hedging transactions. The fair values of these financial instruments are determined on the basis of discounted future expected cash flows, using market interest rates cor- responding to the terms to maturity. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 5 0 Group Notes / Notes to the Consolidated Financial Position In order to determine the fair value of financial liabilities, the future expected cash flows are determined and discounted based on the yield curve on the reporting date. The market risk premium for the term and respective borrower on the reporting date is added to the cash flows. The fair values of listed securities are identical to the stock market prices on the reporting date. There is no price quotation or market price for shares in partnerships and other unlisted investments, as there is no active market for them. The carrying amount is assumed to equal the fair value, since the fair value cannot be determined reliably. These assets are not intended for sale as at the 2013 balance sheet date. The carrying amounts of other loans and loans to affiliated companies correspond to the respective fair values. Some of the other loans are subject to a market interest rate and their carrying amounts therefore represent a reliable valua- tion for their fair values. Another part of the other loans is reported at present value on the balance sheet date. Here, it is also assumed that the present value corresponds to the fair value. The other remaining loans are promissory note loans with a remaining term of less than four years. Due to the lack of an active market, no information is available on the risk premiums of their respective issuers. As a result, their carrying amounts were used as the most reliable value for their fair values. These are not intended for sale as at the 2013 balance sheet date. Non-current liabilities are recognized at their present value. Interest rates with similar terms on the date of addition are used as a basis for discounting future cash outflows. To determine fair value, the respective cash outflows are discounted at interest rates with similar terms and with the Fraport credit risk on the reporting date. The carrying amounts of current liabilities are equal to the fair value. The fair values of financial instruments belong to the measurement categories of the hierarchy within the meaning of IFRS 7.27A: Measurement categories according to IFRS 7.27A (2013) € million Assets Other financial receivables and financial assets Dec. 31, 2013 Level 1 Level 2 Level 3 Quoted prices Derived prices Prices that cannot be derived Available for sale Loans and receivables Other financial assets Securities available for sale Other investments Loans to investments Other loans Total assets Liabilities and equity Trade accounts payable Other financial liabilities Financial liabilities Liabilities from finance leases Derivative financial liabilities Derivatives without hedging relationships Derivatives with hedging relationships Total liabilities and equity 304.0 108.4 517.3 59.5 123.2 27.6 304.0 0.0 517.3 0.0 0.0 0.0 1,140.0 821.3 217.0 764.4 4,541.1 67.5 33.5 143.0 5,766.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 108.4 0.0 59.5 123.2 27.6 318.7 217.0 764.4 4,541.1 67.5 33.5 143.0 5,766.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Table 107 Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 151 As at December 31, 2012, the financial instruments recognized at fair value in the statement of financial position belonged to the following measurement categories of the hierarchy within the meaning of IFRS 7.27A: Measurement categories according to IFRS 7.27A (2012) € million Assets Other financial receivables and financial assets Dec. 31, 2012 Level 1 Level 2 Level 3 Quoted prices Derived prices Prices that cannot be derived Available for sale Loans and receivables Other financial assets Securities available for sale Securities fair value option Other investments Loans to investments Other loans Total assets Liabilities and equity Trade accounts payable Other financial liabilities Financial liabilities Liabilities from finance lease Derivative financial liabilities Derivatives without hedging relationships Derivatives with hedging relationships Total liabilities and equity Net results of the measurement categories € million Financial assets Loans and receivables Fair value option Held for trading Available for sale Financial liabilities At amortized cost Held for trading 265.4 81.4 497.0 0.9 63.0 128.4 53.4 265.4 0.0 497.0 0.0 0.0 0.0 0.0 1,089.5 762.4 284.8 752.7 4,791.3 85.1 45.2 199.0 6,158.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 81.4 0.0 0.9 63.0 128.4 53.4 327.1 284.8 752.7 4,791.3 85.1 45.2 199.0 6,158.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Table 108 2013 2012 – 7.1 0.0 0.0 4.0 – 9.3 11.7 1.1 0.0 0.0 49.3 – 2.8 – 10.0 Table 109 The net result consists of changes in fair values, impairment losses and write-ups recognized through profit or loss, foreign currency translation changes and gains and losses of disposals. Interest and dividend income to which the fair value option applies, or which are available for sale, are also included in the computation of the net result. Interest and dividend income of the other categories are not included in the net result disclosed. Gains from the valuation at fair value of financial instruments in the “available for sale” category in the amount of – € 6.8 million (previous year: € 14.8 million) were recorded directly in equity without affecting profit or loss during the year under review. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 5 2 Group Notes / Notes to the Consolidated Financial Position In addition to the recognized fair value changes, losses on financial liabilities in the “held for trading” category also in- clude the fair values of two interest rate swaps for which there were no hedged items in the course of the 2013 fiscal year. Derivative financial instruments With regard to the items in its statement of financial position and planned transactions, Fraport is, in particular, subject to interest rate and currency exchange risks. Fraport covers interest rate and currency risks by establishing naturally hedged positions, in which the values or cash flows of primary financial instruments offset each other in their timing and amount and/or by using derivative financial instruments to hedge the business transactions. Derivatives are not used for trading or speculative purposes. Interest rate risks arise in particular from the capital requirements associated with capital expenditure and from exist- ing floating interest rate financial liabilities and assets. As part of the interest rate risk management policy, interest rate derivatives were concluded in order to limit the interest rate risk arising from financial instruments with floating interest rates and assure planning security. Within the Group, foreign currency risks mainly arise from revenue in foreign currencies, which are not covered by expenses in matching currencies. This results in a cash flow risk between foreign currency revenue and the functional currency. Fraport hedges such risks by entering into currency forwards. As was the case in the previous year, the Group holds 50 interest rate swaps as at the reporting date. Furthermore, as was the case in the previous year, options were sold on five interest rate swaps in order to optimize financing costs. The value of the options was taken into account in the fair value of the interest rate swaps. Furthermore, there are four (previous year: nine) currency forwards. Derivative financial instruments € million Nominal volume Fair value Credit risk Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012 Interest rate swaps 1,430.2 1,447.5 –176.2 –243.9 thereof hedge accounting thereof trading Interest rate/ currency swap Currency forwards 1,205.2 225.0 0.0 1.5 1,222.5 225.0 15.0 3.9 –142.7 –33.5 0.0 –0.3 –198.7 –45.2 –0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Table 110 A credit risk (counterparty risk) arises from positive fair values of derivative transactions that have been concluded. The total of all the positive fair values of the derivatives is also simultaneously equal to the maximum default risk of these business transactions. In accordance with financial risk guidelines, derivative contracts are only concluded with counterparties that have an investment grade rating in order to minimize the default and credit risks. The fair values of the derivative financial instruments are recorded as follows in the statement of financial position: Fair values of derivative financial instruments € million Other assets Other liabilities Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012 Interest rate swaps – cash flow hedges Interest rate swaps – trading Interest rate/currency swap – cash flow hedges Currency forwards – cash flow hedges 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 142.7 33.5 0.0 0.3 198.7 45.2 0.3 0.0 Table 111 Fraport Annual Report 2013 Group Notes / Notes to the Consolidated Financial Position 153 43 of the interest rate swaps are still assigned to existing floating-interest-rate liabilities. As was the case in the previous year, a total of 43 interest rate swaps and the currency forwards are accounted for as cash flow hedges in accordance with IAS 39. Changes in the fair values of these instruments are recorded in an equity sub-account without affecting profit or loss. The effectiveness of these cash flow hedges has been verified and is confirmed and documented at regular intervals. As was the case in the previous year, seven interest rate swaps were classified as “held for trading”. All gains or losses resulting from this classification are recorded through profit or loss. The payments under the cash flow hedges become due in the following years. This is also the time when the respective hedged item affects profit or loss. Interest rate swaps (hedge accounting) € million Beginning of term 2005 2006 2007 2007 2007 2007 2007 2007 2008 2009 2009 2009 2009 2010 2010 2010 2011 Total Currency forwards € million Maturity 2014 End of term Nominal volume Fair value 2014 2016 2014 2015 2016 2017 2018 2019 2018 2015 2016 2017 2019 2015 2017 2020 2015 60.0 70.0 18.8 16.1 28.6 89.9 36.0 40.8 115.0 45.0 100.0 25.0 220.0 85.0 100.0 85.0 70.0 – 0.1 – 6.1 – 2.5 – 2.2 – 3.9 – 11.5 – 4.9 – 5.5 – 16.3 – 2.7 – 8.8 – 3.1 – 36.6 – 5.2 – 12.9 – 16.6 – 3.8 1,205.2 – 142.7 Table 112 Nominal volume Fair value 1.5 – 0.3 Table 113 Unrealized gains of € 17.0 million were recorded in equity from the change in fair value of derivatives in the 2013 fiscal year (previous year: losses of € 62.0 million). During the year under review, losses of € 38.1 million were transferred from equity to the financial result. In the previous year, losses of € 30.7 million were transferred to the financial result and € 1.0 million of gains were transferred to the operating result. In addition, the ineffectiveness of the interest rate swaps amounting to € 0.1 million was recorded through profit and loss as in the previous year. The interest rate and currency swap, included in the previous year, expired and came off in December 2013. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 5 4 Group Notes / Notes to the Segment Reporting Notes to the Segment Reporting 41 Notes to the segment reporting Segment reporting in the Fraport Group according to IFRS 8 is based on internal reporting to the Executive Board as the primary decision-maker. The same accounting principles as those used in the consolidated financial statements underlie segment reporting. The strategic business units of Fraport AG in Frankfurt are clearly assigned to the Aviation, Retail & Real Estate and Ground Handling segments. In addition, these segments include Group companies integrated in the business processes at the Frankfurt site. The Aviation segment incorporates the strategic business units “Airside and Terminal Management, Corporate Safety and Security” and “Airport Security Management” at the Frankfurt site. Furthermore, FraSec Fraport Security Services GmbH and FRA - Vorfeldkontrolle GmbH are assigned to this segment. The Retail & Real Estate segment consists of the strategic business unit “Retail and Properties”, comprising the retailing activities, parking facility management and the rental and marketing of real estate at the Frankfurt site. In addition, the Group companies integrated into these activities on the Frankfurt site are allocated to the segment. The Ground Handling segment combines the “Ground Services” strategic business unit and the Group companies involved in these operations at the Frankfurt site. The External Activities & Services segment encompasses the internal service units of “Facility Management” and “Central Infrastructure Management”, as well as “Information and Telecommunications” and their Group companies. Group companies that are not integrated in the processes at the Frankfurt site and Group companies that carry out their business operations outside of Frankfurt are also allocated to the External Activities & Services segment. Corporate data at Fraport AG is divided into market-oriented business and service units on the one hand and into central units on the other hand. All the business and service units are allocated clearly to one segment each. The central units are categorized appropriately. The data about the Group companies that are not integrated in the processes at the Frankfurt site and Group companies that carry out their business operations outside the Frankfurt site are allocated to the External Activities & Services segment during reporting. The Group companies that are integrated in the processes at the Frankfurt site are allocated to the relevant segment according to their business operations. Inter-segment revenue is primarily generated by the inter-company allocation of rent for land, buildings and space, as well as maintenance services and energy supply by Fraport AG. The corresponding assets are allocated to the Retail & Real Estate segment. The relevant units are charged on the basis of the costs incurred, including imputed interest. Inter-segment revenue also reflects revenue that has been generated between the companies included from different segments. Goodwill from business mergers and the appropriate impairment losses, where applicable, have been allocated clearly to a segment according to the segment structure. Fraport Annual Report 2013Group Notes / Notes to the Segment Reporting / Notes to the Consolidated Statement of Cash Flows 155 The “adjustment” column of the segment assets/segment liabilities includes the income tax assets/liabilities (including the deferred tax assets/liabilities) of the Group. In the additional disclosures “Geographical Information”, allocation is according to the current main areas of operation: Germany, rest of Europe, Asia and rest of the world. The figures shown under Asia relate mainly to Turkey and the People’s Republic of China. The figures shown under rest of the world relate mainly to the USA and Peru. Depreciation and amortization for the segment assets include impairment losses according to IAS 36 in the amount of € 0.5 million (previous year: €0.3 million). Impairment losses are charged to the Aviation segment (previous year: Retail & Real Estate segment). Segment assets of the Retail & Real Estate segment include real estate inventories of € 55.1 million (previous year: € 57.4 million). During the fiscal year 2013, revenue of € 871.4 million was generated in all four segments from one customer (previous year: € 861.0 million). Further explanations about segment reporting can be found in the management report. Notes to the Consolidated Statement of Cash Flows 42 Notes to the consolidated statement of cash flows Cash flow from operating activities Cash flow from operating activities of € 574.8 million (previous year: € 553.0 million) resulted with € 807.1 million (previous year: € 809.8 million) from operating activities, with € 146.3 million (previous year: € 135.5 million) from financial activities and with € 86.0 million (previous year: € 121.3 million) from cash outflows for income taxes. Cash flow used in investing activities Cash flow used in investing activities without investments in cash deposits and securities amounted to € 492.8 million in the reporting period, a decrease of € 243.4 million year-on-year. Major capital expenditure on property, plant and equipment was made as part of the airport expansion program and the extension projects at Frankfurt Airport. The proceeds from the disposal of non-current and current securities and promissory note loans, investment of the free liquid funds in new financial assets and changes to cash and cash equivalents with a duration of more than three months resulted in cash flow used in investing activities of € 280.0 million, which was considerably below the previous year (€ 779.2 million). Cash flow used in (from) financing activities Cash outflow from financing activities of € 255.1 million mainly resulted from the repayment of non-current financial liabilities (previous year: cash inflow in the amount of € 218.2 million). Reconciliation to the cash and cash equivalents as at the consolidated statement of financial position € million Dec. 31, 2013 Dec. 31, 2012 Cash and cash equivalents as at the consolidated statement of cash flows Cash and cash equivalents with a duration of more than three months Restricted cash Cash and cash equivalents as at the consolidated statement of financial position 167.4 332.4 105.3 605.1 127.1 584.0 110.8 821.9 Table 114 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 5 6 Group Notes / Other Disclosures Other Disclosures 43 Guarantees and other commitments Guarantees and other commitments € million Guarantees Warranty contracts thereof performance guarantees Others Total Dec. 31, 2013 Dec. 31, 2012 26.4 175.0 113.3 12.2 213.6 4.7 186.0 127.3 13.4 204.1 Table 115 The primary warranties and performance guarantees are explained below. A performance guarantee, excluding recourse against Fraport AG, was signed between GMR Holdings Private Ltd., Fraport AG and ICICI Bank Ltd. to the amount of € 35.1 million (INR 3,000 million) to modernize, expand and operate Delhi Airport (India). If, however, the party to the contract, GMR Holdings Private Ltd., fails to meet its contractual obligations, Fraport AG’s liability may not be excluded given the fact that Fraport AG is party to the contract. In connection with the terminal operation at Antalya Airport (Turkey), Fraport AG assumed a contract performance guarantee of € 35.6 million for the investment in the Antalya operating company. In the context of operating the airports in Varna and Burgas (Bulgaria), Fraport AG guaranteed the contractual per- formance of its Group company Fraport Twin Star Airport Management AD, established in 2006, to the amount of € 9.0 million. The existing performance guarantee related to the concession agreement for the operation of the airport in Lima, Peru, amounts to € 8.2 million (US-$11.3 million) as at the 2013 balance sheet date. The performance guarantees include a joint and several liability to the Hong Kong Airport Authority in connection with the Tradeport Hong Kong Ltd. investment project amounting to € 3.8 million (US-$5.2 million). The other warranties mainly include guarantees assumed by Fraport AG in connection with the contractual financing arrangements signed by the Antalya operating company. As a result, the Fraport Group incurred other commitments to the amount of € 29.5 million. The other commitments include that Fraport AG is held liable to the amount of € 12.2 million for rentals payable by Lufthansa Cargo Aktiengesellschaft to Tectum 26. Vermögensverwaltungs GmbH, if Lufthansa Cargo Aktiengesellschaft exercises an extraordinary right to terminate the contract. Fraport Annual Report 2013 44 Other financial obligations and contingent liabilities Order commitments € million Orders for capital expenditure in property, plant and equipment, intangible assets and investment property/others Orders for energy supply Total Operate leases € million Rental and leasing contracts up to 1 year more than 1 up to 5 years more than 5 years Total Group Notes / Other Disclosures 157 Dec. 31, 2013 Dec. 31, 2012 222.2 65.4 287.6 359.3 83.0 442.3 Table 116 Dec. 31, 2013 Dec. 31, 2012 9.4 8.7 28.9 47.0 10.4 10.6 26.3 47.3 Table 117 Other financial obligations include future expenses arising from rental agreements and leases. The contracts entered into relate to building rental agreements and the lease of equipment. The equipment leases showed an average remaining term of one year on the 2013 reporting date. The building rental agreements can generally be terminated at short notice. In view of their economical content, the relevant leases qualify as operate leases, i.e. the leased asset is attributable to the lessor. In addition, there are other financial obligations in the amount of € 159.1 million (previous year: € 181.7 million). In addition to obligations from a long-term supply contract for the provision of cooling and heating (€ 84.8 million), these mainly consist of other financial obligations from a loan commitment to Northern Capital Gateway LCC to finance the development and modernization of Pulkovo Airport in St. Petersburg to the amount of € 45.4 million, as well as capital contribution obligations to finance capital expenditure for Delhi Indira Gandhi International Airport in India to the amount of € 17.6 million. As at the balance sheet date, there were contingent liabilities at Lima from tax risks in the amount of € 11.0 million (previous year: € 10.7 million) as well as at Twin Star from penalties for obligations for capital expenditure in arrears in the amount of € 10.1 million (previous year: € 10.3 million). Revenue-related concession fees and additional obligations for capital expenditure of unspecified amounts on airport infrastructure have been agreed based on the existing concession agreements related to the operation of the airports in Varna and Burgas, Bulgaria (term until 2041) and Lima, Peru (minimum term until 2031) (see also note 49). 45 Stock options Fraport Management Stock Options Plan 2005 In order to meet the requirements for variable compensation paid to Senior Managers, the Supervisory Board and the Executive Board resolved during fiscal year 2005 to submit a proposal to the AGM of Fraport AG for a new stock options plan (“Fraport Management Stock Options Plan 2005”, “MSOP 2005”). Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 5 8 Group Notes / Other Disclosures On June 1, 2005, the AGM of Fraport AG passed a resolution to adopt the main points of this MSOP 2005 proposal and the necessary capital measures to implement the plan. On the whole, it was possible to issue a total volume not exceeding 1,515,000 stock options to all eligible employees until August 31, 2009 within the scope of the MSOP 2005. The stock options could be granted to eligible beneficiaries once a year in up to five annual tranches. The prerequisite for participation in the MSOP 2005 was the direct investment in shares by employees entitled to participate (blocked deposit). In accordance with the aforementioned resolution, the subscription rights can be satisfied either with shares issued on the basis of contingent capital or with treasury shares or by cash settlement. The subscription rights for the MSOP 2005 can only be exercised after a vesting period of three years within a further period of two years. The stock options under the MSOP 2005 can only be exercised if the closing price of the Fraport share on the trading day that immediately precedes the day of exercise (“valuation day”) exceeds the original exercise price by at least 20 %. In contrast to the previous plan, the new plan not only includes an absolute exercise limit but also a relative exercise limit linked to the performance of a specific stock basket. The amount of the resulting profit attributable to the benefi- ciary arising from the exercise of stock options is also limited. Thus, 150 % of the original exercise price for each stock option must not be exceeded. The conditions to exercise the first tranche of the MSOP 2005 were first met in the 2008 fiscal year, when 44,700 options were drawn. In fiscal year 2010, 132,700 options expired because the exercise limit was not reached, while 20,900 options expired during the entire exercise period due to job terminations. The vesting period for the second tranche of the MSOP 2005 ended on April 18, 2009. However, the requirements for exercising this tranche were not met, also as a result of the exercise limit. 148,300 options therefore expired in fiscal year 2011. Another 68,100 options expired in the exercise period due to job terminations. The vesting period for the third tranche of the MSOP 2005 ended on April 17, 2010. However, in common with the previous tranche, the requirements for exercising this tranche were not met, also as a result of the exercise limit. 187,150 options therefore expired in fiscal year 2012. Another 32,800 options expired in the exercise period due to job terminations. The vesting period for the fourth tranche of the MSOP 2005 ended on June 3, 2011. The requirements for exercising this tranche were not met, also as a result of the exercise limit. 188,350 options therefore expired in fiscal year 2013. Another 61,600 options already expired in the exercise period in the previous year due to job terminations. The vesting period for the fifth tranche of the MSOP 2005 ended on April 10, 2012. The requirements for exercising this tranche were met. 224,250 options have been exercised so far, of which 22,600 in fiscal year 2013. 25,000 options have already expired in previous years due to job terminations and so there are currently 9,250 options left. This is approximately 3.6 % of the options originally issued. As the authorization to issue subscription rights expired in 2009, no further stock options were issued in the years 2010 to 2013. For more information on contingent capital, see note 31. Fraport Annual Report 2013Group Notes / Other Disclosures 159 Development of the subscription rights issued Total number Weighted average of exercise price in € Thereof to Executive Board members Thereof to Directors of affiliated companies Thereof to Senior Managers of Fraport AG Rights issued as at January 1, 2013 Exercised in 2013 Expired in 2013 Rights issued as at December 31, 2013 220,200 –22,600 –188,350 9,250 30.87 23.59 40.81 24.35 54,000 –1,800 –52,200 0 29,350 –5,000 –23,100 1,250 136,850 –15,800 –113,050 8,000 Table 118 Since the exercise period of the fourth tranche from MSOP 2005 ended in 2013, the remaining 188,350 subscription rights that have not been exercised have expired. Of these, 52,200 subscription rights relate to the Executive Board, 113,050 to Senior Managers and 23,100 to Directors of affiliated companies. 9,250 of the outstanding options can be exercised in the fifth tranche (previous year: 31,850). The weighted average share price for fiscal year 2013 was € 48.38 (previous year: € 44.67). The key conditions for the MSOP tranches issued in the years 2005 to 2009 are shown in the table below: Conditions of the MSOP tranches Grant date End of vesting period End of exercise period Exercise threshold in € Exercise price in € Fair value 2) in € Tranche 2005 June 6, 2005 June 6, 2008 March 25, 2010 Tranche 2006 April 18, 2006 April 18, 2009 March 26, 2011 Tranche 2007 April 17, 2007 April 17, 2010 March 24, 2012 Tranche 2008 June 3, 2008 June 3, 2011 June 3, 2013 Tranche 2009 April 10, 2009 April 10, 2012 March 28, 2014 39.49 75.60 66.12 54.30 30.20 32.91 1) 63.00 1) 55.10 1) 45.25 1) 25.17 1) 1) Original exercise price at the grant date, subject to an adjustment by the relative performance target. 2) At the grant date. 10.96 19.27 18.42 13.40 8.55 Table 119 Personnel expenses in the amount of € 0.2 million were ultimately incurred through the MSOP 2005 in 2012. This amount was recognized in the capital reserve. Recognition of the stock options through profit or loss is based on the fair value of each option of a tranche. A Monte Carlo simulation is used to determine fair value. In the process, the log-normal distributed processes of the Fraport share price and the MSOP basket price are simulated to mirror, based on the performance targets, the respective performance of the Fraport share and the comparative index and the increase in the closing price of the Fraport share by at least 20 % versus the original exercise price. The computation of whether the Fraport share outperforms or underperforms the index is made on the basis of a total shareholder return; i.e. on the basis of the respective share performance, taking into account cash dividends, subscription rights, capital adjustments and other exceptional rights. In addition, the Monte Carlo simulation allows for taking into account, an early exercise, taking into account the blocked periods and the early exercise procedure for those entitled. The fair value of all options to be measured in fiscal year 2013 was computed on the following basis. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 6 0 Group Notes / Other Disclosures Interest rate The basis of the computations on the valuation date was a continuous zero interest rate. The interest rates were computed from the interest rate structures of government bonds maturing between one and ten years. Dividends Discrete dividends are used in the Monte Carlo simulation. The computation basis for future dividend payments is public estimates made by ten banks. The arithmetic mean of these estimates is taken to determine the dividends. Volatilities and correlation To ensure an objective procedure, historic data is used to measure volatilities and correlations. They are determined on the basis of the daily XETRA closing prices of the Fraport share and the daily prices of the MSOP basket index. The price history of the index was computed using the current weighting of the index as at the grant date and taking into consideration the historical closing prices of the index components. The time frame for determining volatilities and correlations is the remaining maturity of the options. The fair values at the time of issue are as follows: Fair value of the MSOP tranches Tranche 2005 Tranche 2006 Tranche 2007 Tranche 2008 Tranche 2009 Grant date Fair value in € Closing price in € June 6, 2005 April 18, 2006 April 17, 2007 June 3, 2008 April 10, 2009 10.96 19.27 18.42 13.40 8.55 33.00 58.15 55.92 43.40 27.93 Table 120 The following volatilities and correlations were used for the computation as at the respective issue date: Volatilities and correlations Tranche 2005 Tranche 2006 Tranche 2007 Tranche 2008 Tranche 2009 Grant date Volatility Fraport Volatility MSOP basket Correlation Fraport/ MSOP basket June 6, 2005 April 18, 2006 April 17, 2007 June 3, 2008 April 10, 2009 34.04 % 32.34 % 29.69 % 27.69 % 33.75 % 22.55 % 20.78 % 21.18 % 15.03 % 20.38 % 0.2880 0.2925 0.3095 0.4215 0.5382 Table 121 The computation for measuring the first tranche of the MSOP 2005 was made using a continuous zero interest rate of 2.57 % as at the issue date. Dividends were estimated to be € 0.86 in 2006 and € 0.94 in 2007. The computation for measuring the second tranche of the MSOP 2005 was made using a continuous zero interest rate of 3.65 % as at the issue date. Dividend estimates were € 1.00 for 2007 and € 1.10 for 2008. Fraport Annual Report 2013 Group Notes / Other Disclosures 161 The computation for measuring the third tranche of the MSOP 2005 was made using a continuous zero interest rate of 4.06 % as at the issue date. Dividend estimates were € 1.16 for 2008 and €1.17 for 2009. The computation for measuring the fourth tranche of the MSOP 2005 was made using a continuous zero interest rate of 4.25 % as at the issue date. Dividend estimates were € 1.14 for 2009 and €1.15 for 2010. The computation for measuring the fifth tranche of the MSOP 2005 was made using a continuous zero interest rate of 2.51 % as at the issue date. Dividend estimates were € 1.15 for 2010 and €1.18 for 2011. An annual increase of € 0.01 was expected for the years to come. 46 Long-Term Incentive Program (LTIP) The LTIP for the Executive Board and Senior Managers was introduced effective January 1, 2010, to replace the previous MSOP 2005. A certain number of virtual shares (so-called performance shares) is allocated annually depending on certain perfor- mance objectives. Target achievement is measured over four years (performance period); payment in cash takes place immediately at the end of the four year performance period. The number of virtual shares actually allocated depends on the extent to which the performance targets are met: > Earnings per share (EPS) (target weighting 70%) This internal performance target is determined by comparing the actual average EPS in the performance period with the weighted average plan EPS at the time of awarding. > Rank total shareholder return MDAX (TSR) (target weighting 30 %) The TSR measures the development of shares over a certain period of time subject to dividends and share price developments. Therefore, it constitutes a market-dependent performance target. The amount of the actual tranche is limited to 150 % of the target tranche (virtual shares awarded). A total of 82,850 virtual shares were issued in the 2013 fiscal year. A provision for the LTIP in the amount of € 12.0 million (previous year: € 5.9 million) is reported as at December 31, 2013. Expense reported in fiscal year 2013 amount to €6.1 million (previous year: € 3.0 million). Development of virtual shares issued Tranche Issued Thereof Executive Board Thereof Senior Managers of Fraport AG Thereof Directors of affiliated companies Thereof expired Additional options issued Balance at Dec. 31, 2013 Fair value Dec. 31, 2013 Fiscal year 2010 Fiscal year 2011 Fiscal year 2012 Fiscal year 2013 Amount of issued virtual shares as at Dec. 31, 2013 94,185 77,825 79,225 82,850 29,550 29,550 29,550 33,100 51,585 37,650 38,800 38,250 13,050 10,625 10,875 11,500 14,216 14,451 14,792 3,450 4,250 12,051 13,547 3,164 84,219 75,425 77,980 82,564 73.01 56.51 45.07 50.12 334,085 121,750 166,285 46,050 46,909 33,012 320,188 Table 122 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 6 2 Group Notes / Other Disclosures Virtual share conditions The virtual shares in the 2013 tranche were issued on January 1, 2013. Their term is four years up to December 31, 2016. The payout per virtual share corresponds to the weighted average closing price of the Fraport share in XETRA trading on the first 30 stock market trading days immediately following the last day of the performance period. Entitlement to LTIP payments is established by the approval by the Supervisory Board of the consolidated financial statements for the last fiscal year of the performance period. Payments are then made within one month. The valuation of the virtual shares takes place on the basis of the fair value per share for a tranche. A Monte Carlo simulation is used to determine the fair value. In the process, the log-normal distributed processes of the Fraport share price are simulated to determine the relevant payment according to the respective performance targets. The fair value of virtual shares to be measured in the 2010 to 2013 fiscal years was calculated based on the following assumptions: The basis of the computations on the respective valuation date was a continuous zero interest rate. The interest rates were computed from the interest rate structures of government bonds maturing between one and ten years. The computation basis for future dividend payments is public estimates made by ten banks. The arithmetic mean of these estimates is taken to determine the dividends. Historic volatility is used for the calculations. The calculations are based on the daily XETRA closing price for Fraport AG. The remaining term of the LTIP is used as the time horizon to determine volatility. Measurement parameters (LTIP) Tranche 2013 Tranche 2012 Tranche 2011 Tranche 2010 Jan. 1, 2013 Dec. 31, 2013 Jan. 1, 2012 Dec. 31, 2013 Jan.1, 2011 Dec. 31, 2013 Jan. 1, 2010 Dec. 31, 2013 Fair value €38.52 €50.12 €32.42 €45.07 €42.34 €56.51 €31.68 €73.01 Target achievement earnings per share Rank total shareholder return MDAX Interest rate end of period share price Interest rate at time of payment Dividend 2011 Dividend 2012 Dividend 2013 Dividend 2014 Dividend 2015 Dividend 2016 Dividend 2017 100.00 % 99.65 % 100.00 % 91.75 % 100.00 % 105.54 % 100.00 % 200.59 % 25.0 25.0 25.0 27.0 25.0 26.5 25.0 26.0 0.19 % 0.44 % 0.59 % 0.23 % 1.60 % 0.14 % 2.23 % 0.03 % 0.21 % 0.47 % 0.63 % 0.25 % 1.65 % 0.15 % 2.28 % 0.07 % €1.26 €1.31 €1.41 €1.26 €1.25 €1.33 €1.43 €1.50 €1.27 €1.31 €1.49 €1.56 €1.56 €1.56 €1.26 €1.25 €1.33 €1.43 €1.50 €1.15 €1.17 €1.18 €1.15 €1.18 €1.23 €1.24 €1.26 €1.25 €1.33 €1.43 €1.50 €1.26 €1.25 €1.33 €1.43 €1.50 Volatility Fraport 31.55 % 25.43 % 37.66 % 22.00 % 37.83 % 17.89 % 38.55 % 13.84 % Table 123 Fraport Annual Report 2013 Group Notes / Other Disclosures 163 47 Risk management Fraport is exposed to market price risks mainly due to changes in exchange rates and interest rates. The Group is additionally exposed to credit risks. There are also liquidity risks arising in connection with credit and market price risks or resulting from a worsening of the operating business or disturbances on the financial markets. It is the objective of financial risk management to limit these risks by current operating and finance-related activities. Depending on a risk assessment, selected hedging instruments are used. In general, Fraport hedges only those risks that affect the Group’s cash flows. Derivative financial instruments are used as hedging instruments; i.e. they are not used for trading purposes. Reporting to the Executive Board of risk positions is made once per quarter as part of the early risk recognition system. In addition, updated reporting of all material financial risk positions is provided in the monthly finance report to the Chief Financial Officer (CFO) and in the monthly Treasury Committee Meeting held between the Treasury, Financial Risk Controlling and the CFO. Fraport has prepared internal guidelines that deal with the processes of risk control and regulate the use of financial instruments; they include the unambiguous segregation of functions in respect of operating financial activities, their settlement and accounting and the controlling of the financial instruments. The guidelines, which are the basis of the risk management processes, aim to limit and control the risks appropriately and monitor them. Both the guidelines and the systems are regularly reviewed and adjusted to current market and product developments. Credit risk Fraport is subject to default risks from its operating business and certain financial positions. The default risks arising from financial positions are controlled by a broad diversification of counterparties and issuers, as well as regular verification of their credit ratings. It is Fraport’s risk policy that financial assets and derivative transactions are only carried out with issuers and counterparties with an investment grade credit rating. If the credit rating is downgraded to non-investment grade during the asset’s holding period or the term of the derivative, a decision will be made on a case-by-case basis on how to deal with the asset or derivative in future, taking into account the remaining term. The maximum credit risk on the balance sheet date is mainly reflected by the carrying amounts of the assets reported in the financial position. The credit risk on securities and promissory note loans in non-current and current assets is equal to the amount of debt instruments. As at the 2013 balance sheet date, the breakdown of the securities was as follows: Classification of securities € million Equity instruments Debt instruments Dec. 31, 2013 Dec. 31, 2012 0.0 883.9 0.0 841.1 Table 124 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 6 4 Group Notes / Other Disclosures Securities and promissory note loans have the following long-term issuer ratings: Issuer ratings of securities (2013) € million AAA AA + AA AA – A + A A – BBB + BBB BBB – Total In 2012, the securities and promissory note loans had the following issuer ratings: Issuer ratings of securities (2012) € million AAA AA + AA AA – A + A A – BBB + BBB BBB – BB+ Total Dec. 31, 2013 15.6 22.2 30.1 70.0 192.4 141.3 191.3 62.0 92.9 66.1 883.9 Table 125 Dec. 31, 2012 15.7 48.5 0.0 29.0 165.1 140.5 158.3 91.5 97.2 85.3 10.0 841.1 Table 126 Fraport Annual Report 2013 Group Notes / Other Disclosures 165 The credit risk on liquid funds applies solely with regard to banks. Current cash investments are maintained with banks. The banks where liquid funds are deposited have the following long-term issuer ratings: Issuer ratings liquid funds (2013) € million AAA AA + AA AA – A + A A – BBB + BBB BBB – BB + Not rated Total Dec. 31, 2013 0.0 0.0 0.0 55.2 5.5 141.2 135.9 100.6 18.7 4.9 138.8 4.3 605.1 Table 127 In 2012, the banks where liquid funds were deposited had the following issuer ratings (based on short-term issuer ratings): Issuer ratings liquid funds (2012) € million A –1+ A –1 A – 2 A – 3 P –1 P – 2 P – 3 F –1+ Not rated Total Dec. 31, 2012 113.6 314.0 3.4 0.0 132.3 229.5 2.3 1.0 25.8 821.9 Table 128 Liquidity risk Fraport generates financial funds mainly through its operating business and external financing. The funds are primarily used to finance capital expenditure for items of property, plant and equipment. The operating cash flows, the available liquid funds (including cash and cash equivalents and short-term realizable securities and other financial instruments), as well as current and non-current credit lines and loan commitments, give sufficient flexibility to ensure the liquidity of the Fraport Group. Given the diversity both of the financing sources and the liquid funds and financial assets, there is no risk of concentration in the liquidity. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 6 6 Group Notes / Other Disclosures The operating liquidity management comprises a cash concentration process, which, on a daily basis, combines the liquid funds of most of the Group companies headquartered in Germany. This allows optimum control of liquidity surpluses and requirements in line with the needs of individual Group companies. Short and medium-term liquidity management includes the maturities of financial assets and financial liabilities and estimates of the operating cash flow. The following list of maturities shows how the liability cash flows as at December 31, 2013 influence the Group’s future liquidity. Liquidity profile as at December 31, 2013 € million Total 1) Interest 2014 Repay- ment 2015 2016 – 2020 2021 – 2025 2026 et seqq. Interest Repay- ment Interest Repay- ment Interest Repay- ment Interest Repay- ment Primary financial instruments Financial liabilities 5,294.8 117.3 294.1 111.9 507.3 465.7 2,879.0 103.0 438.5 62.1 315.9 Finance leases Concessions payable 76.6 1,159.0 3.3 42.8 9.1 29.7 Trade accounts payable 223.4 0.9 184.1 Derivative financial instruments Interest rate swaps thereof trading 185.1 33.9 thereof hedge accounting 151.2 55.7 8.4 47.3 2.7 41.0 0.9 47.4 7.6 39.8 9.7 5.8 35.2 1.7 3.2 1.1 4.8 27.5 172.4 173.8 103.1 199.9 154.4 214.4 5.4 4.2 12.3 2.4 7.5 0.6 5.1 80.9 16.8 64.1 1.1 1.1 0.0 0.0 0.0 0.0 Currency forwards Incoming payments Outgoing payments 1) Total of interest and repayments. 1.9 1.5 1.9 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Table 129 The liquidity profile as at December 31, 2012 was as follows: Liquidity profile as at December 31, 2012 € million Total 1) Interest 2013 Repay- ment 2014 2015 – 2019 2020 – 2024 2025 et seqq. Interest Repay- ment Interest Repay- ment Interest Repay- ment Interest Repay- ment Primary financial instruments Financial liabilities 5,505.8 117.5 157.8 114.6 284.9 519.1 3,185.1 114.3 673.4 70.0 269.0 Finance leases 92.0 4.0 9.9 3.4 Concessions payable 1,242.4 45.0 31.5 Trade accounts payable 288.1 1.1 214.4 Loan commitments 45.5 35.5 Derivative financial instruments Interest rate swaps thereof trading 253.1 45.3 thereof hedge accounting 207.8 58.3 8.5 49.8 43.4 1.0 56.4 8.5 47.9 10.1 29.2 38.8 10.0 8.0 43.5 1.8 4.9 1.2 5.2 186.8 161.0 118.9 235.5 173.5 217.6 4.1 12.4 2.4 0.0 0.6 8.2 0.0 5.1 0.0 133.6 24.9 108.7 4.6 3.2 1.4 0.2 0.2 0.0 Currency forwards Incoming payments Outgoing payments 1) Total of interest and repayments. 3.9 3.8 3.9 3.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Table 130 Fraport Annual Report 2013 Group Notes / Other Disclosures 167 All financial instruments that are subject to contractual agreements as at the 2013 reporting date were included to determine the undiscounted payments. If a contractual partner can release a payment at different points of time, the earliest deadline was taken into account. The respective forward interest rates derived from the interest rate as at the balance sheet date were used to determine the interest payments on primary financial liabilities bearing interest at floating rates and the net payments on derivative financial instruments. Interest and redemption payments in foreign currency are converted into the respective forward rate valid as at the balance sheet date. For payments in connection with currency forwards, the corresponding fixed reference prices as at the balance sheet date were used. Financial liabilities of certain Group companies abroad arising from independent project financing with a nominal value of € 317.3 million include numerous of credit clauses that are typical for this type of financing. These clauses include inter alia regulations under which certain debt service coverage ratios and key figures for debt ratios and credit periods must be complied with. Failure to comply with the agreed credit clauses may lead to restrictions on the distribution of dividends and/or to the early redemption of loans or to the additional payment of equity. Additionally, there are contractually agreed credit clauses for specific earmarked and/or project-related public loans issued by public business development banks and taken out by Fraport AG in the amount of € 1,110.0 million. These clauses relate, among other things, to changes in the shareholder structure and control of the company. If these have a proven effect on the borrowing capacity of Fraport AG, the creditors have the right to recall the loans early. There are currently no indications of any failure to comply with the essential agreed borrowing terms and conditions. Currency risk The international focus of the Fraport Group makes its operating business, the financial results reported and the cash flows subject to foreign currency fluctuation risks. Only the transaction risks affecting cash flows are actively controlled. These mainly apply between the € and Turkish New Lira (TRY) or Saudi Riyal (SAR), as well as between the US Dollar (US-$) and Peruvian New Sol (PEN). Transaction risks primarily originate from business operations when cash receipts from revenue are not offset by expenditure in matching currencies. To reduce the foreign currency effects in the op- erating business, the transaction risk is assessed on an ongoing basis and hedged in part by using derivative financial instruments. Entering into financial instrument transactions is the responsibility of the Group companies in close coordination with the Treasury of Fraport AG. Hedging mainly involves the use of currency forwards. Transaction risks are assessed by means of sensitivity analysis. The calculation rates on which the analysis are based are the result of the mean value for the respective exchange rate in the period under review, less or in addition to a standard deviation. Taking these assumptions as a basis, the profit for the period would have been affected in the year under review as follows: Currency rate sensitivity € million €/TRY US-$/PEN €/SAR Dec. 31, 2013 Dec. 31, 2012 Gain 0.50 0.55 0.07 Loss 0.57 0.59 0.07 Gain 0.15 0.27 0.07 Loss 0.16 0.28 0.07 Table 131 There are no essential sensitivities in relation to shareholders’ equity. In addition, there are effects in the Group from the translation of foreign currency assets or liabilities in € and/or from the consolidation of Group companies not accounted for in €. These translational risks are met as far as possible by applying natural hedging. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 6 8 Group Notes / Other Disclosures Interest rate risk The Fraport Group is exposed to interest rate risks on a variety of primary and derivative financial assets and liabilities, as well as future planned capital requirements. In regard to assets and liabilities that are currently held, the objective of refinancing at matching maturities is generally pursued. The interest rate risk arising in the next twelve months is relevant for control. Therefore, it is assessed every quarter and reported to the financial risk committee. Sensitivity analyses are prepared to determine the risk. These show the effects of changes in market interest rates on interest payments, interest income and expenses, other profit or loss portions and shareholders’ equity. Interest rate changes are defined to be the maximum fluctuation of the key interest rate in the past for the respective currency and the respective period of time and/or the maximum fluctuation of the ten year swap rate in the past. The deviation in absolute terms is taken into consideration. To limit the interest rate risks, derivative financial instruments, such as interest rate swaps and swaptions, are used. The sensitivity analyses are based on the following assumptions: Changes in market interest rates of primary financial instruments with fixed interest rates affect profit or loss, or equity, only if the instruments are measured at fair value. The sensitivity analysis for these financial instruments assumes a parallel shift of the interest rate by 169 basis points over a period of twelve months. The financial instruments measured at amortized cost with fixed interest rates do not affect profit or loss for the period or the equity of the Fraport Group. Market interest rate changes of primary floating-rate financial instruments, which are not designated hedged items in a cash flow hedge of interest rate exposures, affect the interest result and are therefore included in the calculation of profit or loss related sensitivities. The respective net financial position for each currency is taken into account in the process. The interest rate sensitivity analyses are based on the following assumptions: €: 3.25 percentage points; US-$: 4.75 percentage points; TRY: 10.25 percentage points; Swiss francs (CHF): 2.50 percentage points; PEN: 7.10 percentage points; SAR: 4.50 percentage points; Canadian Dollar (CAD): 3.75 percentage points; Bulgarian Lew (BGN): 5.22 percentage points. The individual sensitivities are then aggregated to become one profit or loss related sensitivity in €. Changes in market interest rates of financial instruments which were designated as hedging instruments in an interest rate related cash flow hedge affect equity and are therefore included in the equity-related sensitivity computations. The maximum variability is taken to be a parallel shift of the interest rate curve by 169 basis points over a period of twelve months. Changes in market interest rates of interest rate derivatives, which are not part of a hedging relationship according to IAS 39, affect the other financial result and are therefore included in the profit or loss related sensitivities. The maximum variability is taken to be a parallel shift of the interest rate curve by 169 basis points over a period of twelve months. Based on the portfolios and the structure of the consolidated financial position as at December 31, 2013 and the assumptions made, the profit or loss related sensitivity is €0.4 million in the event of an increase (decrease) in the market interest rate (previous year: € 8.1 million). This means that the financial result could hypothetically have increased (decreased) by € 0.4 million. This hypothetical effect on profit or loss would have resulted from the potential effects of interest rate derivatives of € 20.2 million (previous year: € 25.3 million) and an increase (decrease) in the interest result from primary floating-rate net financial positions of – € 19.8 million (previous year: –€ 17.2 million). Fraport Annual Report 2013Interest sensitivity € million Interest sensitivity thereof derivative financial instruments thereof primary financial instruments Group Notes / Other Disclosures 169 Dec. 31, 2013 Dec. 31, 2012 0.4 20.2 – 19.8 8.1 25.3 – 17.2 Table 132 The equity-related sensitivity is € 46.2 million (previous year: € 73.3 million). By applying the assumptions made, an increase (decrease) in interest rates would have resulted in an increase (decrease) in equity of € 46.2 million. Capital management The Group’s objectives with a view to capital management are ensuring the company’s continued existence and a sustained increase in the company’s value. As a capital market-oriented company with continuing capital expenditure requirements, Fraport monitors the development of its financial debt using ratios, which relate EBITDA to net financial debt and/or interest expense. As long as the company remains within the following margins, Fraport’s present view is that there is sufficient access to debt capital sources at reasonable costs. The components of the control indicators are defined as follows: Components of the control indicators Net financial debt EBITDA Interest expense Current financial liabilities + Non-current financial liabilities – Liquid funds – Current realizable assets in “other financial assets” and “other receivables and financial assets” Operating result + depreciation and amortization Interest expense Table 133 The financial ratios developed as follows in the period under review: Financial debt ratios Net financial debt/EBITDA EBITDA/interest expense 48 Related party disclosures Corridor Dec. 31, 2013 Dec. 31, 2012 max. 4 – 6 x min. 3 – 4 x 3.4 4.1 3.4 3.8 Table 134 According to IAS 24 (related party disclosures), Fraport must disclose relationships with related parties, unless they are already included as consolidated companies in the consolidated financial statements of Fraport AG. Relationships with related parties and the State of Hesse Alongside the Group companies included in the consolidated financial statements, in the context of the course of ordinary business operations, the Group is also related to parties that are not included as well as associated companies and joint ventures, which are parties related to the Group according to IAS 24. Thus, Fraport AG has numerous business relationships with the state of Hesse and the City of Frankfurt and their majority-owned investments. Related companies and authorities with which major business relationships are maintained include Landesbetrieb Hessen-Forst, Mainova AG and Messe Frankfurt Venue GmbH & Co. KG. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 7 0 Group Notes / Other Disclosures All transactions with related parties have been concluded under conditions customary in the market as between unrelated third parties. The services rendered to authorities are generally based on cost prices. The following table shows the scope of the respective business relationships: Relationships with related parties and the State of Hesse € million Majority shareholders Stadtwerke Frankfurt am Main Holding GmbH State of Hesse Joint ventures Associated companies Companies controlled and significantly influenced by majority shareholders Revenue Purchased goods and services Interest Accounts receivable Loans Accounts payable 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 1.6 1.6 14.6 2.4 – 0.9 – 0.9 0.4 – – – 24.9 26.3 0.2 0.2 9.3 8.2 – – – – – – – – 3.6 3.1 8.3 7.9 0.2 0.3 0.3 0.2 2.8 8.0 4.3 2.5 5.9 6.1 13.2 13.5 11.5 10.4 30.3 19.0 120.3 120.3 9.1 0.8 14.7 13.3 102.8 92.5 – – 0.1 0.5 – – 40.1 26.6 Table 135 Relationships with related persons In accordance with IAS 24, Fraport AG also reports business transactions with persons related to it and their family members. The Executive Board, Supervisory Board and their family members are defined as related persons pursuant to IAS 24. Remuneration for management in key positions in accordance with IAS 24 comprises the remuneration of the active Executive Board and Supervisory Board. These were compensated as follows: Remuneration of management € million Salaries and other short-term employee benefits Termination benefits Post-employment benefits Other long-term benefits Share-based remuneration Total 2013 2012 5.1 0.0 1.0 0.2 2.3 8.6 4.4 0.0 1.1 0.2 1.0 6.7 Table 136 Information regarding salaries and other short-term employee benefits for employee representatives on the Supervisory Board exclusively includes remuneration for their Supervisory Board activities. Services following the end of the employment include service costs from pension provisions for the active members of the Executive Board. Fraport Annual Report 2013 Group Notes / Other Disclosures 171 The expense for the Long-Term Strategy Award (LSA, see also note 52) is accounted for as other long-term employee benefits in fiscal year 2013. The statement of share-based remuneration includes the expense for the Long-Term Incentive Program (LTIP, see also note 52) realized in the fiscal year. 49 Operating permit and service concession agreements The following Group companies in the Fraport Group have been granted service concessions or similar permits, which give the public access to important economic and social facilities: Fraport AG In agreement with the German Federal Minister of Transport, the Minister of Labor, Economics and Transport for the State of Hesse approved operations at Frankfurt am Main Airport in accordance with Section 7 as amended on August 21, 1936, of the German Air Traffic Act on December 20, 1957. This permit does not expire at any specific time and was last amended by the decision of October 29, 2012 based on the outcome of the zoning decision process for the expansion of the airport, in particular regarding the Northwest Landing Runway, taking into account the relevant ruling of the German Federal Administrative High Court. The right to operate the airport is linked to various obligations that are specified in the permit. Fraport AG is required, among other things, to keep the airport in good operating condition at all times, to provide and maintain the equipment and signs needed to monitor and control air traffic at the airport and to guarantee the availability of fire prevention and protection systems that take account of the special operating conditions. The restrictions on night flights that were initially imposed in 1971 and subsequently updated have been tightened by the aforementioned amendment and extension to the permit. Daytime operational restrictions on aircraft for civil aviation purposes at Frankfurt Main Airport that do not comply with the International Civil Aviation Organization (ICAO) noise protection regulations have been further tightened. Furthermore, there are statutory requirements for passive noise abatement and outdoor living area compensation as a result of the construction work for the airport expansion and the Northwest Landing Runway. The company charges airlines that fly to Frankfurt Main Airport what are known as “traffic charges” for provision of the transport infrastructure. These traffic charges are broken down into airport charges that require approval and other charges that do not require approval. > The airport charges that require approval according to Section 19b of the German Air Traffic Law (LuftVG) are divided into take-off and landing charges, including noise components and emission charges, parking charges and passenger and security charges as well as charges for the financing of passive noise abatement measures (noise surcharges). The amount of the charges is specified in a related charge table. Already on February 19, 2010, an agreement was reached on airport charges for 2012 to 2015 by Fraport AG and airline representatives. The contract stipulates an annual charge increase by 2.9 % for each year until 2015. If passenger development exceeds or falls below the forecasted figures, the contract calls for a bonus/malus approach to be used. The charge table effective January 1, 2013 was approved by the HMWVL and published in the Air Transport Bulletin (NfL). In addition, charges for the financing of passive noise abatement measures (noise surcharges) have been levied since July 1, 2012 (see also note 25). Airport charges accounted for 35.67 % (previous year: 35.48 %) of Fraport AG’s revenue in the year under review. Furthermore, Fraport proposed an incentive program for the years 2014 and 2015, which was approved by the HMWVL on December 4, 2013. It provides for retroactive discounts per departing passenger when the airlines have reached a minimum passenger quantity as well as a minimum level of growth and when the passenger travels via low-noise aircraft. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 7 2 Group Notes / Other Disclosures > The remaining charges not subject to approval are classified as charges for central ground handling infrastructure facilities and ground handling charges. In accordance with EU regulations, ground services on the apron were opened up to competition on November 1, 1999 (opened up in practice on April 15, 2000), by issuing a permit to another third-party ground handling company along with Fraport AG. The services in the area of central ground handling infrastructure facilities continue to be excluded from competition (monopoly sector) and are completely segregated from the ground handling services when they are offset with the airlines. Of Fraport AG’s revenue in 2013, 16.52 % (previous year: 17.18 %) was generated by ground handling services and 13.51 % (previous year: 13.53 %) by infrastructure charges. Above and beyond the traffic charges, Fraport AG generates revenue essentially from revenue-based payments, renting and parking and security services. The proceeds from these operations – which do not require approval – accounted for 34.30 % (previous year: 33.81 %) of Fraport AG’s entire revenue in the year under review. Fraport IC Ictas Antalya Airport Terminal Investment and Management Inc. (franchisee) In April 2007, the consortium in which Fraport AG holds an interest won the bidding procedure to operate the ter- minals at Antalya Airport for 17 years. The consortium and the Turkish airport authority (DHMI – franchisor) signed the concession agreement on May 22, 2007. Since September 14, 2007, Fraport AG and IC Yatirim Holding A.S. have been jointly managing the International Terminal 1 previously managed by Fraport AG, as well as the domestic and CIP terminals. On September 23, 2009, the Fraport consortium also took over operation of the second international terminal previously operated by IC Holding and Celebi Holding. The concession for the operation of all three terminals and the right to use all assets listed in the concession agreement extends to the end of 2024. The franchisee is obliged in this context to provide terminal services in compliance with international standards, as well as the procedures and principles specified in the concession agreement. With regard to the authorized use of infrastructure, the franchisee is obligated to perform maintenance and capacity expansions (as required). Distributed over the term of the concession agreement, the franchisee also pays a concession fee of € 2.01 billion net. In exchange, the franchisee receives the right to use the existing and future terminal infrastructure to operate the airport and the right to generate revenue from passenger charges paid by the airlines and from other services related to terminal operations. Passenger charges are regulated by the franchisor. At the end of the concession term, the franchisee is required to return all assets specified in the concession agreement to the franchisor in proper operating condition. In accordance with the concession agreement, the franchisee deposited a performance bond amounting to € 142.8 million at the beginning of the concession period for the benefit of the franchisor. This performance bond was issued by a Turkish bank, secured in part by corporate guarantees given by the shareholders. The proportion guaran- teed to the bank by Fraport AG in the form of a corporate guarantee was € 35.7 million. Following official approval of the new domestic terminal (Terminal 3) by the franchisor, the performance bond was reduced to € 142.3 million as agreed. The proportion guaranteed by Fraport AG thus amounts to € 35.6 million. Fraport Twin Star Airport Management AD Fraport Twin Star Airport Management AD (franchisee) and the Republic of Bulgaria (franchisor), represented by its Minister of Transport, signed a concession agreement on September 10, 2006, for the operation and management of the Bulgarian airports in Varna and Burgas on the Black Sea. According to the concession agreement, the franchisee is obligated to render various airport services and to improve services in line with international standards, national laws and the provisions stipulated in the concession agreement. In addition, the franchisee is obligated to invest € 243.3 million in the expansion and a capacity increase of the airports in Varna and Burgas and to maintain the assets ceded for use. In addition, the franchisee pays an annual concession fee of 19.2 % of total revenue, at least 19.2 % of BGN 57 million (€ 29.1 million), adjusted for the development of the Fraport Annual Report 2013Group Notes / Other Disclosures 173 national inflation rate, to the franchisor. The franchisee paid an additional non-recurring concession fee in the amount of € 3.0 million to the franchisor after the agreement was signed. In return, the franchisee receives the right to use the existing and future infrastructure for airport operations and the right to generate revenue, in particular through airport charges (passenger, landing and parking charges) and for ground handling services. Airport charges are regulated by the franchisor. The concession agreement started on November 10, 2006 and has a duration of 35 years. The franchisee is obligated to furnish the franchisor with a performance bond issued by a bank rated BB – or higher, in the annual amount of € 15.0 million in the first ten years and in the annual amount of € 7.5 million during the remaining term of the agreement. At the end of the concession term, the infrastructure pursuant to the contract that is essential for airport operations must be returned to the franchisor in proper operating condition without receiving any consideration in return. Lima Airport Partners S.R.L. (LAP) On February 14, 2001, LAP (franchisee) and the Peruvian Government (franchisor), represented by its Minister of Transportation (MTC), signed the concession agreement for Jorge Chávez International Airport for the operation, expansion, maintenance and use of the Jorge Chávez International Airport in Lima (Peru). The term of the concession agreement is 30 years. The contract may be renewed for another ten years. Further renewals are possible under certain conditions; the overall concession term must not exceed 60 years, however. In addition to operating and maintaining the airport infrastructure, the franchisee is obligated vis-a-vis the franchisor to invest at least US-$100 million for the remodeling of the airport, in particular, the terminal and to build a second landing runway. The contractual amount of US-$100 million has been invested already. Construction work on the second landing runway has not yet begun. The franchisee is also obligated to pay concession fees. The concession fee is the higher of two amounts: either the contractually fixed minimum payment (basic payment of US-$15 million per year, adjusted for inflation by US CPI) or 46.511 % of total revenue after deduction and transfer to Corpac (Aviation Regulatory Authority) of 50 % of the landing charges and 20 % of the international passenger charges (TUUA). In addition, a regulatory charge of 1 % of the same assessment basis is payable. In return, the franchisee receives the right to use the existing and future infrastructure for airport operations and the right to generate revenue, in particular through airport charges (passenger, landing and parking charges) and for ground handling and other services. Airport charges are regulated by the franchisor. At the end of the contract term, the infrastructure pursuant to the contract that is essential for airport operations must be returned to the franchisor by the franchisee in the contractually defined operational condition. The franchisee has the right to have the residual carrying amount of said infrastructure reimbursed by the franchisor for a limited period of time. This does not apply if the concession agreement is terminated early. 50 Information on shareholdings pursuant to the German Securities Trading Act (WpHG) Fraport AG did not receive any notifications pursuant to Section 21 (1) of the WpHG in fiscal year 2013. As at December 31, 2013, the shareholder structure of Fraport AG was as follows: The total voting rights in Fraport AG held by the State of Hesse and Stadtwerke Frankfurt am Main Holding GmbH calculated in accordance with Section 22 (2) of the WpHG amounted to 51.40 % as at December 31, 2013. At that time, they were attributed as follows: State of Hesse 31.37 % and Stadtwerke Frankfurt am Main Holding GmbH 20.03 %. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 7 4 Group Notes / Other Disclosures The voting rights in Fraport AG owned by the City of Frankfurt am Main are held indirectly via the Stadtwerke Frankfurt am Main Holding GmbH subsidiary. According to the last official report in accordance with the WpHG or individual disclosures by the shareholders, the other voting rights in Fraport AG were attributable as follows (as at December 31, 2013): Deutsche Lufthansa AG 8.46 % Lazard Asset Management LLC 3.16 % and RARE Infrastructure Limited 3.06 %. The relative ownership interests were adjusted to the current total number of shares as at the balance sheet date and may therefore differ from the figures given at the time of reporting or from the respective shareholders’ own disclosures. There are no reports for the remaining 33.92 % (free float). 51 Statement issued by the Executive Board and the Supervisory Board of Fraport AG pursuant to Section 161 of the AktG On December 17, 2013, the Executive Board and the Supervisory Board of Fraport AG issued the Statement of Compliance with the Corporate Governance Code pursuant to Section 161 of the AktG and made it available to the public on a permanent basis on the Group’s website www.fraport.com in the The Fraport Group/Corporate Compliance section. 52 Information concerning the Executive Board, Supervisory Board and Economic Advisory Board Remuneration Report The following remuneration report describes the main features of the remuneration system for the Executive Board and Supervisory Board of Fraport AG in accordance with the statutory regulations and the recommendations of the German Corporate Governance Code (GCGC) as amended on May 13, 2013. It summarizes which principles apply in determining the total compensation of the members of the Executive Board and explains the structure and amount of the remuneration of the Executive Board and Supervisory Board members. Remuneration of the Executive Board members in fiscal year 2013 Remuneration system Executive Board remuneration is set by the Supervisory Board upon the recommendation of its executive committee and is reviewed on a regular basis. The remuneration of the Executive Board members of Fraport AG shall be in propor- tion to the tasks of the position and the company’s situation and in line with a transparent and sustainable corporate governance approach which focuses on the long-term. Compensation is comprised as follows: > Non-performance-related components (fixed salary and compensation in kind) > Performance-related components with a short- and mid-term incentive effect (bonus) > Performance-related components with a long-term incentive effect (Long-Term Strategy Award and Long-Term Incentive Program) Generally, the Supervisory Board has been guided by the principle that in the ordinary course of business, members of the Executive Board shall receive a fixed annual salary, which makes up approximately 35 % of total compensation. The bonus payment should also amount to approximately 35 % of total compensation. The Long-Term Strategy Award should account for approximately 10 % of total compensation and the share of the Long-Term Incentive Program about 20 %. In order to comply with the remuneration-related amendments of the GCGC in the version dated May 13, 2013, with effect starting in fiscal year 2014, a maximum limit was defined with each Executive Board member for the sum of the aforementioned respective remuneration components. For the Chairman of the Executive Board this amounts to € 2.3 million and € 1.65 million for the other members of the Executive Board. This maximum limit also applies in relation Fraport Annual Report 2013Group Notes / Other Disclosures 175 to the remuneration that was granted during the previous fiscal years 2010 to 2013, the components of which have not yet been fully paid out. In addition to the aforementioned remuneration components, there are still stock options outstanding, issued in previous years, that have a long-term incentive effect as part of the stock options plan still running (see also note 45). The last time stock options were issued was in 2009. In addition, Executive Board members received contributions for pension benefit commitments. The pension commitments, including performance-related contributions, are in a fixed proportion to the respective fixed gross annual salary and are therefore subject to implicit maximum limits. Non-performance-related components During the term of their employment agreement (generally five years), Executive Board members, as a rule, receive a fixed annual salary for the entire period. The amount of the fixed annual salary is reviewed on a regular basis, generally annually, to ensure that it is appropriate. The fixed annual compensation also covers any activity performed by an Executive Board member for companies in which Fraport AG holds an indirect or a direct interest of more than 25 % (so-called “other board mandates related to Group companies”). If an Executive Board member has such other board mandates at Group companies, the compensation he or she receives from such companies is credited against the remuneration. The compensation received by Dr Zieschang for his activities performed as a member of the Supervisory Board of Flughafen Hannover-Langenhagen GmbH was credited against his remuneration of 2013 from Fraport AG. In addition, the compensation for Executive Board members includes compensation in kind and other payments (ancillary benefits). Compensation in kind is the pecuniary benefit subject to income tax from using a company car with driver. This compensation in kind is generally available to all Executive Board members in the same way; the amount of compensation depends on the personal situation. Executive Board members also receive half of the total contributions toward their pension insurance in the case of voluntary insurance and in the case of statutory insurance, half of the total statutory contributions. Performance-related components Without a long-term incentive effect (bonus) The bonus is dependent on EBITDA and ROFRA of the Fraport Group for the respective fiscal year. EBITDA is the Group operating result, ROFRA the interest on Group assets; i.e. the total return on capital (“return on Fraport assets”). Both key figures (EBITDA and ROFRA) are recognized business management parameters for measuring the success of a company. The actual bonus for an Executive Board member is calculated by multiplying EBITDA and ROFRA, each minus a basic allowance, by an individual multiplier for each Executive Board member, stipulated in each employment contract and adding the aforementioned parameters. The bonus amount for one fiscal year is capped at 175 % of the bonus paid for 2009 or if the member was appointed during the year or the employment contract was amended in 2009, an amount extrapolated for the entire year. For Executive Board members appointed as of 2012 the maximum bonus amount for a fiscal year is limited to 140 % of the bonus calculated pro forma for fiscal year 2011. 50 % of anticipated bonus payments are paid out monthly during the fiscal year. The remaining bonus payments are payable within one month after the Supervisory Board has approved the respective consolidated financial statements. 50 % of the calculated bonus payments have a conditional payback provision. If EBITDA and ROFRA in the following year do not reach at least an average of 70 % of the corresponding key figure for the fiscal year in question, the Executive Board member has to pay back 30 % of the bonus to Fraport AG. Should the same apply to the second year after the relevant fiscal year, 20 % of the bonus has to be repaid. A possible repayment obligation exists for each following year separately and must be individually reviewed each year for compliance. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 7 6 Group Notes / Other Disclosures If the Supervisory Board is of the opinion that the relevant business figures have decreased due to influences outside of the Executive Board’s control, it can grant a bonus at its discretion or waive the full or partial repayment, based on the Executive Board member’s performance. If an Executive Board member holds an active position for less than one fiscal year, a pro rata bonus payment is made. With a long-term incentive effect (Long-Term Strategy Award, LSA) The LSA creates an additional long-term incentive effect that takes into reasonable consideration the long-term interests of the main stakeholders of Fraport AG, specifically employees, customers and shareholders. As part of the LSA, each Executive Board member is promised a prospective financial reward for one fiscal year – the first being in 2010 for the year 2013. After three fiscal years have expired (the fiscal year in question and the two following years), the extent to which the targets have been met is determined and the actual payment is calculated based on these results. The paid amount can exceed or fall below the prospective amount but is capped at 125 % of the originally stated amount. Performance targets are customer satisfaction, sustained employee development and share performance. All three targets are equally important under the LSA. As in the previous year, for 2016 a prospec- tive sum of € 120 thousand has been promised to the Chairman of the Executive Board, while a prospective sum of € 90 thousand each has been promised to the other members of the Executive Board. Michael Müller and Anke Giesen participate in the Plan Award for 2011 and 2012 on a pro rata basis. Customer satisfaction is evaluated on an annual basis using an established assessment system for airlines, real estate management, retail properties and passengers. Whether or not a target has been met is determined by comparing the corresponding data (in percentage points) at the beginning of the three-year period with the average achieved over the same period. If the actual result exceeds or falls below the target by two full percentage points, the bonus paid for customer satisfaction is increased or decreased correspondingly. Sustained employee development relates to employee satisfaction and the changes in headcount. The Supervisory Board decides the extent to which the target has been met. Its decision is based on the results of the employee satisfaction barometer (a survey among Fraport AG employees carried out annually or at least every two years) and the responsible development of headcount in view of the economic situation of the Group. For the share performance target, the Fraport share price development over the corresponding three-year period is compared with the average development of the MDAX and a share basket, which includes the shares of the opera- tors of the Paris, Zurich and Vienna airports. The payment for this share performance target is again determined by comparing the reference value calculated at the beginning of the three-year period with the actual development. Positive or negative deviations increase or decrease the prospective bonus correspondingly. Entitlement to LSA payments is established by approval by the Supervisory Board of the consolidated financial state- ments for the last fiscal year of the performance period. If an Executive Board member leaves Fraport AG before the end of a three-year period, the performance targets for such an Executive Board member are not calculated until after this period has expired. The award for the entire period is then paid on a pro rata basis for the amount of time the Executive Board member actually worked for the company. There is no right to payment for a three-year period which has not yet expired at the time the employment contract has been legally terminated due to extraordinary circumstances that are within the control of the Executive Board member (termination by request of the Executive Board member without cause pursuant to Section 626 of the German Civil Code (BGB), termination for cause within the control of the Executive Board member in accordance with Section 626 (BGB) or if the Executive Board member has been removed from his or her office for cause pursuant to Section 84 (3) of the AktG. If an Executive Board member joins the company during the course of a fiscal year, the Supervisory Board decides if and to what extent the Executive Board member is entitled to participate in the LSA program for this fiscal year. Fraport Annual Report 2013 Group Notes / Other Disclosures 177 Long-Term Incentive Program (LTIP) The LTIP is a virtual stock options program. Beginning in fiscal year 2010, the Executive Board members of Fraport AG are promised each fiscal year a contractually stipulated amount of virtual shares within their employment agreements, so-called performance shares, on the condition that and depending on whether they meet pre-defined performance targets (the so-called “target tranche”). After four fiscal years – the performance period – it will be determined to what extent these performance targets have been met and the number of performance shares actually due to the Executive Board member, the so-called actual tranche. The actual tranche can exceed or fall below the target tranche but is capped at 150 % of the target tranche. The two performance targets “earnings per share” (EPS) and “rank total shareholder return MDAX” are relevant for deriving the actual tranche from the target tranche, with earnings per share (EPS) being weighted at 70 % and rank total shareholder return MDAX at 30 %. For the fiscal year 2013, as in the previous year, 9,000 performance shares were allocated to Dr Stefan Schulte as a target tranche, while Peter Schmitz and Dr Matthias Zieschang each received 6,850 performance shares. For the fiscal year 2013, 6,850 performance shares were allocated to Anke Giesen and 3,550 were allocated to Michael Müller. In order to determine to what extent the EPS performance target has been met, the weighted average target EPS during the performance period, based on the strategic development planning applicable at the time of the award, is compared with the average EPS actually achieved during the performance period. For the evaluation to what extent the target has been met, the target EPS for the first fiscal year accounts for 40 %, the second for 30 %, the third for 20 % and the fourth for 10 %. If targets have been met 100 % over the performance period, the actual tranche corresponds to the target tranche. If the actual EPS differs from the target EPS, the number of allocated performance shares is adjusted accordingly. If the actual EPS falls below the target EPS by more than 25 percentage points, no performance shares are issued for the EPS performance target. If the actual EPS falls below the target EPS by 25 percentage points, the actual tranche amounts to 50 % of the target tranche. If the actual EPS exceeds the target EPS by 25 percentage points, the actual tranche amounts to 150 % of the target tranche. Intermediate values can be calculated using a straight-line method. Any performance exceeding the targets by more than 25 percentage points is not taken into account. The extent to which the rank total shareholder return MDAX performance target has been met is calculated by determining the weighted average rank of Fraport AG amongst all companies listed in the MDAX in relation to the total shareholder return (share price development and dividends) over the performance period. Just as with the EPS performance target, the four relevant fiscal years will be weighted downwards. The actual tranche shall equal the target tranche if Fraport AG, during the performance period, ranks number 25 among total shareholder return MDAX with its weighted average. For each rank exceeding or falling below 25, the actual tranche is increased or reduced by 2.5 percentage points. If Fraport AG ranks worse than 45, no performance shares will be issued for the rank total shareholder return MDAX performance target; if Fraport AG ranks better than five, there will not be a further increase in the number of performance shares issued over fifth place. The relevant share price used for calculating the LTIP payment shall correspond to the weighted average of the company’s closing share prices in XETRA or a similarly situated trading system at the Frankfurt Stock Exchange dur- ing the first 30 trading days immediately subsequent to the last day of the performance period. For the performance shares issued in 2013 and in previous fiscal years, the relevant share price for calculating the LTIP payment is limited to € 60 per performance share. Entitlement to LTIP payments is established by the approval by the Supervisory Board of the consolidated financial statements for the last fiscal year of the performance period. Further InformationConsolidated Financial StatementsFraport Annual Report 20131 7 8 Group Notes / Other Disclosures For all performance shares allocated from the fiscal year 2014 onwards, the LTIP payment is limited to 150 % of the product from the performance shares of the actual tranche multiplied by the “relevant share price at the time of issuance”. The “relevant share price at the time of issuance” corresponds to the weighted average of the company’s closing share prices in XETRA or a similarly situated trading system at the Frankfurt Stock Exchange during the month of January of the fiscal year, in which the relevant performance period begins. Furthermore, for all LTIP performance share tranches that have already been allocated and will be in future, maximum payment amounts have been defined, which amounts to a maximum of € 810.0 thousand for Dr Schulte and for the other Executive Board members € 616.5 thousand per performance share tranche. The rules for LTIP entitlements of former Executive Board members are largely the same as for the LSA. In addition, a former Executive Board member is not entitled to any performance shares for a target tranche whose performance period has lasted less than twelve months at the time the employment contract was legally terminated. The LTIP fair value accrual allocation resulted in the following expenses for the fiscal year: Dr Stefan Schulte € 648.8 thousand (previous year: € 370.5 thousand), Anke Giesen €233.3 thousand, Michael Müller € 128.7 thousand (previous year: € 50.2 thousand), Peter Schmitz € 532.6 thousand (previous year: € 256.3 thousand), Dr Matthias Zieschang € 532.6 thousand (previous year: € 256.3 thousand), Herbert Mai € 200.1 thousand (previous year: € 112.8 thousand). Pension commitments The Executive Board members are entitled to pension benefits and provision for surviving dependents. An Executive Board member is generally entitled to retirement benefits if he or she becomes permanently unable to work or retires from office during the duration of, or upon expiry of, his or her employment agreement. If an Executive Board member dies, benefits are paid to his or her surviving dependents. These amount to 60 % of the retirement pension for the widow or widower; children entitled to receive benefits receive 12 % each. If no widow’s pension is paid, the children each receive 20 % of the retirement pension. Upon retirement, income from active employment as well as retirement pension payments from previous or, where applicable, later employment relationships shall be credited against accrued retirement pay up until reaching 60 years of age, insofar as without such credit the total of these emoluments and the retirement pension would exceed 75 % of the fixed salary (100 % of the fixed salary if Fraport AG wishes the employment to be terminated or not be extended). Effective January 1 of each year, the pensions are adjusted at discretion, taking into account the interests of the former Executive Board member and the company’s economic situation. The adjustment obligation shall be considered to be satisfied if the adjustment does not fall below the increase in the consumer price index for the cost of living for private households in Germany. The retirement pension of an Executive Board member is defined by the percentage of a contractually agreed basis of assessment, with the percentage rising annually by 2.0 % up to a limit of 75 %, dependent on the duration of time an Executive Board member is appointed. As at December 31, 2013, Dr Schulte is entitled to 58.0 % of his fixed annual gross salary. Mr. Schmitz is entitled to 38.0 % of his fixed annual gross salary as at December 31, 2013. The basic account commitment (guideline 2 of the Fraport capital account plan – “Kapitalkontenplan Fraport” – concerning the company benefit plan for Senior Managers, dated February 26, 2002), to which Mr. Schmitz is entitled under Fraport AG’s company benefit plan up to December 31, 2008, shall be credited pro rata temporis against pension payments over a period of eight years after the employment contract has been terminated or expires. As at December 31, 2013, Dr Zieschang is entitled to 42.0 % of his fixed annual gross salary. In the event of occupational disability, the pension rate for Dr Schulte, Mr. Schmitz and Dr Zieschang amounts to at least 55 % of their respective fixed annual gross salaries or of the contractually agreed basis of assessment. Fraport Annual Report 2013Group Notes / Other Disclosures 179 For Executive Board members appointed as of 2012, the pension benefits and provision for surviving dependents as well as provision for long-term occupational disability are governed by a separate benefit agreement. This calls for a one-time pension capital or life-long retirement payments after the insured event become due. The pension capital is generated when Fraport AG annually credits 40 % of the fixed annual gross salary paid to a pension account. The pension capital accumulated at the end of the previous year pays interest annually at the interest rate used for the valuation of the pension obligations in the German commercial balance sheet of Fraport AG at the end of the previous year pursuant to Section 253 (2) of the HGB, which is at least 3 % and at most 6 %. This is increased by 1 % on January 1 of each year for life-long retirement payments. No further adjustment is made. If the pension capital reached is less than € 600 thousand when retirement benefits fall due as a result of long-term occupational disability, Fraport AG will increase it to this amount. In the event of long-term occupational disability within the first five years of their activities performed as members of the Executive Board, it is foreseen that Executive Board members can postpone the receipt of a monthly pension of to a maximum of five years since the start of the employment contract. Until the postponed start of the pension benefit payments, they will receive a monthly benefit of € 2.5 thousand. This risk of pension payments in the increase phase and of payments for the increase has been covered by an occupational disability insurance policy. The full amount of all income within the meaning of the Income Tax Act from employment or self-employment is credited against the retirement benefits paid until the end of the month in which the Executive Board member reaches the age of 62. The surviving dependents of Executive Board members appointed from 2012 receive the following benefits: If there is no prior event giving rise to retirement benefits, the benefits for the widow or widower is the pension capital gen- erated so far. If there is no eligible widow or widower, each half-orphan will receive 10 % and each full-orphan will receive 25 % of the pension capital generated so far as a one-time payment. If the pension capital reached is less than € 600 thousand upon death, Fraport will increase it to this amount. The payment risk of this increase has been covered by a term life insurance policy. If an Executive Board member dies while collecting retirement benefits, the widow or widower is entitled to 60 % of the last retirement benefits granted. Each half-orphan receives 10 % and each full-orphan receives 25 % of the last retirement benefits granted. If there are no surviving dependents as set forth above, the heirs receive a one-time death grant in the amount of € 8.0 thousand. Moreover, each member of the Executive Board has entered into a two-year restrictive covenant. During this term, reasonable compensation in the form of an annual gross salary (fixed salary) pursuant to Section 90a of the HGB shall be paid. Partly payments shall be made monthly. The compensation shall be generally credited against any retire- ment payments owed by Fraport AG, inasmuch as the compensation together with the retirement payments and other generated income exceed 100 % of the last fixed salary received. No other benefits have been promised to Executive Board members, should their employment be terminated. The retirement pension entitlement of former Executive Board members is determined by a percentage of a contractually agreed fixed basis of assessment. Detailed information on the compensation components and amount of compensation of the Executive Board members of Fraport AG in 2013 is shown in the following tables. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 8 0 Group Notes / Other Disclosures Remuneration of the Executive Board 2013 The following remuneration was paid to the members of the Executive Board: Remuneration of the Executive Board 2013 in €´000 Remuneration paid out in cash Total Non-performance-related components Fixed salary In kind and other Performance- related component with- out long-term incentive effect Performance- related component with long-term incentive effect Bonus LSA Dr Stefan Schulte Anke Giesen Michael Müller Peter Schmitz Dr Matthias Zieschang Total 100.0 1,212.3 415.0 300.0 300.0 300.0 320.0 22.5 43.9 47.0 33.1 43.9 674.8 476.3 296.4 476.3 523.9 0.0 0.0 70.0 70.0 1,635.0 190.4 2,447.7 240.0 820.2 643.4 879.4 957.8 4,513.1 Table 137 Remuneration of the Executive Board 2013 in €´000 Performance-related component with long-term incentive effect Share-related remuneration Dr Stefan Schulte Anke Giesen from Jan. 1, 2013 Michael Müller Peter Schmitz Dr Matthias Zieschang Total LTIP 346.7 263.9 136.7 263.9 263.9 1,275.1 Table 138 The bonus includes the payments on account for the fiscal year 2013 and the addition to the bonus provision in 2013. The Supervisory Board will decide on the final bonus for 2013 in fiscal year 2014. LTIP is carried at fair value as at the time of offer. The following total remuneration was paid to the members of the Executive Board in 2012: Remuneration of the Executive Board 2012 in €´000 Remuneration paid out in cash Total Non-performance-related components Fixed Salary In kind and other 415.0 75.0 300.0 320.0 225.0 22.3 10.3 37.5 40.1 30.2 Performance- related compo- nent without long-term incen- tive effect Bonus 662.4 72.7 467.5 514.3 350.6 1,335.0 140.4 2,067.5 1,099.7 158.0 805.0 874.4 605.8 3,542.9 Table 139 Dr Stefan Schulte Michael Müller from Oct. 1, 2012 Peter Schmitz Dr Matthias Zieschang Herbert Mai until Sept. 30, 2012 Total Fraport Annual Report 2013 Group Notes / Other Disclosures 181 Remuneration of the Executive Board 2012 in €´000 Performance-related component with long-term incentive effect Share-related remuneration Dr Stefan Schulte Michael Müller from Oct. 1, 2012 Peter Schmitz Dr Matthias Zieschang Herbert Mai until Sept. 30, 2012 Total LTIP 291.8 201.8 222.1 222.1 0.0 937.8 Table 140 In accordance with IFRS 2, the stock option programs are recorded through profit and loss and lead to an expense in the fiscal year from the period-appropriate distribution of the option value: In fiscal year 2013, only Michael Müller owned 1,800 stock options from MSOP 2005, tranche 2009. These stock options were fully exercised by Michael Müller in 2013, which resulted in an expense of € 12.6 thousand. In the previous year, the expense for the Executive Board members amounted to € 42.2 thousand. Provisions for pensions and similar obligations Of the future pension obligations of € 32,105 thousand, €24,035 thousand relates to pension obligations owed to former Executive Board members and their dependents. Current pension payments amounted to € 1,740 thousand in 2013. Pension obligations to currently active Executive Board members were as follows: Pension obligations to currently active members of the Executive Board in €´000 Dr Stefan Schulte Michael Müller Peter Schmitz Dr Matthias Zieschang Anke Giesen from Jan. 1, 2013 Total Other agreements Obligation Dec. 31, 2012 Change 2013 Obligation Dec. 31, 2013 4,019 33 1,799 1,654 0 7,505 118 128 39 143 136 564 4,137 161 1,838 1,797 136 8,069 Table 141 Each member of the Executive Board has entered into an obligation to purchase shares in Fraport AG amounting to at least half a year’s fixed gross salary (cumulative cost at the time of purchase) and hold them for the duration of the respective contract of employment. Already existing holdings of Fraport AG shares are taken into account. The obli- gation to purchase and hold shares is reduced pro rata if the employment contract has a term of less than five years. If the Executive Board member is reappointed, the equivalent value of the shares an Executive Board member is obliged to hold is increased to at least a full year’s gross salary. Within the context of her additional expenses for maintaining two households, Anke Giesen was granted a monthly gross allowance of € 2 thousand for twelve months after the start of the employment contract. Accordingly, she was granted a total of € 24.0 thousand for 2013. In addition, relocation costs were covered by Fraport AG upon submission of relevant invoices in a total amount of € 9.5 thousand. Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 8 2 Group Notes / Other Disclosures The employment contract of Herbert Mai provides for a two-year post-employment restrictive covenant following the end of his employment on September 30, 2012. The compensation to be paid to Mr. Mai by Fraport AG as set out in Section 90a of the HGB was € 150.0 thousand for 2013. Pursuant to the employment contract, the above-mentioned compensation shall be credited against the retirement payments inasmuch as the compensation together with other generated income received exceeds 100 % of the last fixed annual gross payment received. Furthermore, Mr. Mai received pension benefit payments of € 135.0 thousand, a proportional bonus for the fiscal year 2012 of € 350.6 thousand and a proportional payment of the LSA for the fiscal year 2010 of € 64.2 thousand. The former Chairman of the Executive Board, Prof Dr Wilhelm Bender, continued to render consulting services to Fraport AG even after his departure from the company. The consulting agreement, which ended in 2011, was extended for another two years and ended on August 31, 2013. For this and other tasks, Fraport AG supplied Prof Dr Bender with offices, office equipment and supplies and an assistant until August 31, 2013. Prof Dr Bender did not receive any compensation from Fraport AG for his activities. Until August 31, 2011, travel expenses were reimbursed upon authorization and approval of the trip according to the applicable company guidelines. After this time, travel expenses were no longer reimbursed. Prof Dr Bender also received pension payments of € 252.4 thousand. Prof Dr Bender has agreed that the post-employment restrictive covenant, which applies for two years after the employment agreement ends, was extended for an additional two years up to August 31, 2013. Prof Dr Bender waived the right to compensation as set out in Section 90a of the HGB payable by Fraport AG from January 2011. Other benefits Executive Board members have as other benefits the option of private use of a company vehicle with a driver, private use of a company cell phone, a D & O liability insurance with a deductible pursuant to Section 93 (2) sentence 3 of the AktG, an accident insurance and a life-time entitlement to use the VIP service of Fraport AG, as well as access to a parking spot at Frankfurt Airport. Fraport AG reimburses travel costs for company trips and other business expenses in line with the regulations in general use at Fraport AG. Disclosures pursuant to Section 15a of the WpHG Pursuant to Section 15a of the WpHG, members of the Fraport Executive Board and Supervisory Board are required to disclose transactions with shares of Fraport AG or any related financial instruments to the company and the German Federal Financial Supervisory Authority (BaFin) within five business days. This also applies to persons who are closely related to members of the Executive Board and Supervisory Board as defined in Section 15a (3) of the WpHG. These transactions have been published by Fraport in accordance with the deadlines under Section 15a of the WpHG. Remuneration of the Supervisory Board in fiscal year 2013 The remuneration of the Supervisory Board is laid down in Section 12 of the Statutes of Fraport AG. It is provided solely as fixed remuneration. According to this, every member of the Supervisory Board shall receive a fixed compensation of € 22.5 thousand for each full fiscal year payable at the end of the fiscal year, the Chairman and the Chairman of the finance and audit committee shall receive twice that amount, the Vice Chairman and the Chairmen of the other committees shall each receive one and a half times this amount. For their membership on a committee, Supervisory Board members receive an additional, fixed compensation of € 5 thousand per committee for each full fiscal year. This additional compensation is paid for a maximum of two committee memberships. Supervisory Board members that become members of or leave the Supervisory Board during the current fiscal year receive pro rata compensation. The same holds true in the case of any change in the membership of committees. Each Supervisory Board member receives € 800 for every Supervisory Board meeting he or she attends and every committee meeting attended of which he or she is a member. Accrued expenses will also be reimbursed. Fraport Annual Report 2013Group Notes / Other Disclosures 183 All active members of the Supervisory Board received an aggregate compensation of € 889.5 thousand in 2013 (previous year: € 853.4 thousand). The following remuneration was paid to the members of the Supervisory Board for fiscal year 2013: Remuneration of the Supervisory Board 2013 in € Supervisory Board Member Fixed salary Committee remuneration Attendance fees Ismail Claudia Devrim Mario A. Uwe Hakan Kathrin Detlef Peter Dr Margarete Jörg-Uwe Erdal Lothar Dr Roland Stefan H. Michael Mehmet Arno Gabriele Dr h c Petra Gerold Hans-Jürgen Werner Edgar Christian Karlheinz Aydin Amier Arslan Bach Becker Cicek Dahnke Draths Feldmann Haase Hahn Kina Klemm Krieg Lauer Odenwald Özdemir Prangenberg Rieken Roth Schaub Schmidt Schmidt Stejskal Strenger Weimar Prof Dr-Ing Katja Windt 9,375.00 19,687.50 13,125.00 9,375.00 13,125.00 13,125.00 13,125.00 7,500.00 22,500.00 35,625.00 33,750.00 9,375.00 22,500.00 22,500.00 22,500.00 22,500.00 13,125.00 22,500.00 1,875.00 9,375.00 33,750.00 22,500.00 22,500.00 22,500.00 18,750.00 45,000.00 22,500.00 2,083.33 5,833.33 5,833.33 2,083.33 5,597.23 2,916.67 2,916.67 3,333.33 4,763.90 2,400.00 11,200.00 6,400.00 2,400.00 7,200.00 6,400.00 5,600.00 4,000.00 6,400.00 10,000.00 12,000.00 10,000.00 13,600.00 2,083.33 2,400,00 10,000.00 16,800.00 5,000.00 11,200.00 0.00 5,000.00 2,916.67 5,000.00 833.33 4,166.67 4,000.00 5,600.00 6,400.00 11,200.00 0.00 2,400.00 10,000.00 12,800.00 5,000.00 6,666.67 11,200.00 10,400.00 10,000.00 19,200.00 4,166.67 10,000.00 5,600.00 9,600.00 10,000.00 12,800.00 Total 13,858.33 36,720.83 25,358.33 13,858.33 25,922.23 22,441.67 21,641.67 14,833.33 33,663.90 57,625.00 57,350.00 13,858.33 49,300.00 38,700.00 26,500.00 33,100.00 22,441.67 38,700.00 2,708.33 15,941.67 56,550.00 38,700.00 39,566.67 51,700.00 28,516.67 64,600.00 45,300.00 Table 142 Compensation of the Economic Advisory Board in fiscal year 2013 For membership on the Economic Advisory Board, a compensation of € 2,500 is paid for every year of membership and € 2,000 per meeting attended, with the Chairman receiving twice that amount. Travel expenses are reimbursed independently. In fiscal year 2013, aggregate compensation of the Economic Advisory Board amounted to € 90.5 thousand (previous year: € 93.0 thousand). Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 8 4 Group Notes / Other Disclosures 53 Executive Board Mandates of the Executive Board Members of the Executive Board Chairman of the Executive Board Dr Stefan Schulte Executive Director Ground Handling Anke Giesen Executive Director Labor Relations Michael Müller Executive Director Operations Peter Schmitz Executive Director Controlling & Finance Dr Matthias Zieschang 54 Supervisory Board Mandates of the Supervisory Board Members of the Supervisory Board Chairman Karlheinz Weimar Former Finance Minister of the State of Hesse Head of the Bundesanstalt für Finanzmarktstabilisierung (Compensation 2013: €64,600; 2012: €64,600) Vice Chairman Gerold Schaub Regional Director Traffic ver.di Hessen (Compensation 2013: €56,550; 2012: €54,950) Claudia Amier Chairperson of the Works Council (from May 31, 2013) (Compensation 2013: €36,720.83) Memberships in mandatory Supervisory Boards and comparable control bodies Member of the Supervisory Board: > Deutsche Post AG Chairman of the Supervisory Board: > APS Airport Personal Service GmbH (until March 19, 2013) > FraSec Fraport Security Services GmbH Member of the Shareholders’ Meeting: > Airport Cater Service GmbH > Medical Airport Service GmbH > Terminal for Kids gGmbH (from May 6, 2013) Chairman of the Supervisory Board: > Flughafen Hannover-Langenhagen GmbH Vice Chairman of the Supervisory Board: > Shanghai Frankfurt Airport Consulting Services Co., Ltd. Member of the Supervisory Board: > Fraport IC Ictas Antalya Havalimani Terminal Yatirim ve Isletmeciligi Anonim Sirketi Member of the Shareholders’ Meeting: > Flughafen Hannover-Langenhagen GmbH Member of the Administrative Board: > Frankfurter Sparkasse Table 143 Memberships in mandatory Supervisory Boards and comparable control bodies Member of the Advisory Board: > Höchster Porzellan-Manufaktur GmbH Member of the University Council: > University Frankfurt am Main Vice Chairman of the Supervisory Board: > LSG Lufthansa Service Holding AG > APS Airport Personal Service GmbH > LSG Sky Chefs Frankfurt ZD GmbH Devrim Arslan Chairman of the Works Council APS Airport Personal Service GmbH (from May 31, 2013) Member of the Supervisory Board: > APS Airport Personal Service GmbH (Compensation 2013: €25,358.33) Ismail Aydin Vice Chairman of the Works Council (until May 31, 2013) (Compensation 2013: €13,858.33; 2012: €35,500) Fraport Annual Report 2013 Mandates of the Supervisory Board Members of the Supervisory Board Uwe Becker City Treasurer of the City of Frankfurt am Main (from May 31, 2013) (Compensation 2013: €25,922.23) Mario A. Bach Team Leader of Group Idea Management Fraport AG (until May 31, 2013) (Compensation 2013: €13,858.33; 2012: €7,225) Hakan Cicek Member of the Works Council (from May 31, 2013) (Compensation 2013: €22,441.67) Kathrin Dahnke Member of the Executive Board Wilh. Werhahn KG (from May 31, 2013) (Compensation 2013: €21,641.67) Detlev Draths Member of the Works Council relieved of duty (from February 1, 2013 until May 31, 2013) (Compensation 2013: €14,833.33) Peter Feldmann Lord Mayor of the City of Frankfurt am Main (Compensation 2013: €33,663.90; 2012: €9,900) Group Notes / Other Disclosures 185 Memberships in mandatory Supervisory Boards and comparable control bodies Membership in mandatory control bodies: > Stadtwerke Verkehrsgesellschaft Frankfurt am Main mbH (Chairman) > ABG FRANKFURT HOLDING Wohnungsbau- und Beteiligungsgesellschaft mbH > Frankfurter Aufbau-Aktiengesellschaft > Mainova AG (Chairman) > Messe Frankfurt GmbH > Stadtwerke Frankfurt am Main Holding GmbH > Süwag Energie AG Membership in comparable control bodies: > AVA Abfallverbrennungsanlage Nordweststadt Gesellschaft mit beschränkter Haftung > Hafenbetriebe der Stadt Frankfurt am Main > Kommunale Kinder-, Jugend- und Familienhilfe Frankfurt am Main > Marktbetriebe der Stadt Frankfurt am Main > Stadtentwässerung Frankfurt am Main > Kita Frankfurt > Städtische Kliniken Frankfurt am Main-Höchst > Volkshochschule Frankfurt am Main > Dom Römer GmbH > Erdgas Westthüringen Beteiligungsgesellschaft mbH > Gas-Union GmbH (Chairman) > Gateway Gardens Projektentwicklungs-GmbH > Gemeinnützige Kulturfonds Frankfurt RheinMain GmbH > Nassauische Sparkasse > Klinikum Frankfurt Höchst GmbH > Sparkassenzweckverband Nassau > Sportpark Stadion Frankfurt am Main Gesellschaft für Projektentwicklungen mbH > Tourismus- und Congress GmbH Frankfurt am Main > Wirtschaftsförderung Frankfurt – Frankfurt Economic Development – GmbH > Zentrale Errichtungsgesellschaft mit beschränkter Haftung Member of the Works Commission: > Kommunale Wohnungsgesellschaft Ginsheim-Gustavsburg Member of the Supervisory Board: > Younicos AG Chairman of the Supervisory Board: > ABG FRANKFURT HOLDING Wohnungsbau- und Beteiligungsgesellschaft mbH > Messe Frankfurt GmbH > Stadtwerke Frankfurt am Main Holding GmbH Membership in Supervisory Boards and comparable control bodies of business enterprises: > Alte Oper Frankfurt Konzert- und Kongresszentrum GmbH > FrankfurtRheinMain GmbH International Marketing of the Region > Gas Union GmbH (from November 6, 2013) > Nassauische Heimstätte Wohnungsbau- und Entwicklungsgesellschaft mbH > Rhein-Main-Verkehrsverbund GmbH (from April 30, 2013) > Schirn Kunsthalle Frankfurt am Main GmbH > Tourismus- und Congress GmbH Frankfurt am Main (from November 1, 2013) > Wirtschaftsförderung Frankfurt – Frankfurt Economic Development – GmbH > Landesbank Hessen Thüringen (Helaba) (from March 13, 2013) Member of the Executive Board: > Sparkassenzweckverband Nassau Member of the Advisory Board: > Thüga AG Table 144 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 8 6 Group Notes / Other Disclosures Mandates of the Supervisory Board Members of the Supervisory Board Karl Ulrich Garnadt Chairman of the Executive Board Lufthansa Cargo AG (from February 13, 2014) Dr Margarete Haase Member of the Executive Board DEUTZ AG (Compensation 2013: €57,625; 2012: €42,698.91) Memberships in mandatory Supervisory Boards and comparable control bodies Vice Chairman of the Supervisory Board: > Österreichische Luftverkehrs-Holding GmbH Member of the Supervisory Board: > Austrian Airlines AG Membership in comparable control bodies within the meaning of Section 125 of the AktG: > DEUTZ (Dalian) Engine Co. Ltd. > Deutz Engines (Shandong) Co. Ltd. (Chairperson) > Deutz Engines (China) Ltd. Co. (Chairperson) (from November 21, 2013) Member of the Supervisory Board: > ElringKlinger AG > ZF Friedrichshafen AG Jörg-Uwe Hahn Former Hessian Minister of Justice, for Integration and Europe Vice Chairman of the Supervisory Board: > ALEA Hoch- und Industriebau AG (Compensation 2013: €57,350; 2012: €54,150) Erdal Kina Member of the Works Council (until May 31, 2013) (Compensation 2013: €13,858.33; 2012: 35,500) Lothar Klemm Former Hessian State Minister (Compensation 2013: €49,300; 2012: €49,300) Dr Roland Krieg Head of the service unit Information and Telecommunications (Compensation 2013: €38,700; 2012: €15,758.35) Member of the Supervisory Board: > HA Hessen Agentur GmbH > hr-Senderservice GmbH > WV Energie AG Member of the Advisory Board: > ÖD-Beirat DBV-Winterthur Chairman of the Supervisory Board: > Dietz AG > Variolog AG Member of the Supervisory Board: > IQB Career Services AG Chairman of the Supervisory Board: > AirIT Services AG > operational services GmbH & Co. KG Stefan H. Lauer (until December 31, 2013) (Compensation 2013: €26,500; 2012: €25,700) Member of the Supervisory Board: > FraSec Fraport Security Services GmbH (from September 1, 2013) Member of the Shareholders’ Meeting: > AirITSystems GmbH > operational services GmbH & Co. KG Chairman of the Board (BoD): > Air-Transport IT Services, Inc. (USA) (until August 31, 2013) Chairman of the Supervisory Board: > Austrian Airlines AG (until June 27, 2013) > Lufthansa Flight Training GmbH (until June 30, 2013) Member of the Supervisory Board: > LSG Lufthansa Service Holding AG (until June 30, 2013) > Lufthansa Cargo AG > Pensions-Sicherungs-Verein VVaG (until June 30, 2013) > ESMT European School of Management and Technology GmbH (until May 28, 2013) Member of the Administrative Board: > Landesbank Hessen-Thüringen Girozentrale Vice Chairman of the Administrative Board: > Swiss International Air Lines AG (until September 30, 2013) Member of the Board of Directors: > Aircraft Maintenance and Engineering Corp. (Vice Chairman) > SN Airholding SA/NV (until July 1, 2013) > Günes Ekspres Havacilik A.S. (Sun Express) (Vice Chairman) Michael Odenwald State Secretary of the German Federal Ministry for Transport and Digital Infrastructure (Compensation 2013: €33,100; 2012: €2,312.10) Chairman of the Supervisory Board: > DFS Deutsche Flugsicherung GmbH Member of the Supervisory Board: > Deutsche Bahn AG > DB Mobility Logistics AG Fraport Annual Report 2013Group Notes / Other Disclosures 187 Mandates of the Supervisory Board Members of the Supervisory Board Mehmet Özdemir Member of the Works Council (from May 31, 2013) (Compensation 2013: €22,441.67) Arno Prangenberg Auditor, Tax Consultant (Compensation 2013: €38,700; 2012: €37,900) Gabriele Rieken Member of the Works Council (until January 31, 2013) (Compensation 2013: €2,708.33; 2012: €43,700) Dr h c Petra Roth Former Lord Mayor of the City of Frankfurt am Main (until May 31, 2013) (Compensation 2013: €15,941.67; 2012: €42,900) Memberships in mandatory Supervisory Boards and comparable control bodies Chairperson of the Supervisory Board: > Mainova AG (Group mandate) (until May 30, 2013) Member of the Supervisory Board: > Thüga Holding GmbH & Co. KGaA > AXA Konzern AG, Köln Membership in comparable control bodies of business enterprises: > Gas-Union GmbH > Grontmij A & T GmbH > Eurex Zürich AG (from February 5, 2013) Member of the Advisory Board: > Deutsche Vermögensberatung AG > Thüga AG Hans-Jürgen Schmidt 1. State Vice Chairman komba gewerkschaft Hessen Chairman komba gewerkschaft Kreisverband Flughafen Frankfurt/Main (Compensation 2013: €38,700; 2012: €37,900) Werner Schmidt Member of the Works Council (Compensation 2013: €39,566.67; 2012: €35,500) Chairman of the Executive Board: > Arbeitsgemeinschaft unabhängiger Flughafenbeschäftigter (AUF e. V.) Vice Chairman of the Executive Board: > komba gewerkschaft, Kreisverband Flughafen Frankfurt/Main Edgar Stejskal Chairman of the Group Works Council (Compensation 2013: €51,700; 2012: €48,500) Christian Strenger (until May 31, 2013) (Compensation 2013: €28,516.67; 2012: €67,800) Prof Dr-Ing Katja Windt Professor of Global Production Logistics Jacobs University Bremen gGmbH (Compensation 2013: €45,300; 2012: €17,837.02) Member of the Supervisory Board: > FraSec Fraport Security Services GmbH Member of the Supervisory Board: > Airmail Center Frankfurt GmbH Chairman of the Supervisory Board: > The Germany Funds (USA) Member of the Supervisory Board: > DWS Investment GmbH > Evonik Industries AG (until March 11, 2013) > TUI AG Member of the Executive Board: > Bundesvereinigung Logistik (BVL) e. V. Member of the Supervisory Board: > Deutsche Post AG Member of the Advisory Board: > BLG LOGISTICS GROUP AG & Co. KG Member of the Scientific Board: > Bundesvereinigung Logistik (BVL) e. V. Table 144 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 8 8 Group Notes / Other Disclosures 55 Disclosure of shareholding according to Section 313 (2) of the HGB Subsidiaries Name and registered office Shareholding in % Equity (according to IFRS) in €’000 Result (according to IFRS) in €’000 Afriport S.A., Luxemburg/Luxemburg AirlT Services AG, Lautzenhausen Airport Assekuranz Vermittlungs-GmbH, Frankfurt am Main Airport Cater Service GmbH, Frankfurt am Main Air-Transport IT Services, Inc., Orlando/USA Antalya Havalimani Uluslararasi Terminal Isletmeciligi Anonim Sirketi, Istanbul/Turkey APS Airport Personal Service GmbH, Frankfurt am Main Daport S.A., Dakar/Senegal Energy Air GmbH, Frankfurt am Main Flughafen Frankfurt Main (Greece) Monoprosopi EPE, Athens/Greece FraCareServices GmbH, Frankfurt am Main Fraport Asia Ltd., Hong Kong/China Fraport Cargo Services GmbH, Frankfurt am Main Fraport Casa GmbH, Neu-Isenburg Fraport Casa Commercial GmbH, Neu-Isenburg Fraport Immobilienservice und -entwicklungs GmbH & Co. KG, Flörsheim am Main Fraport Malta Business Services Ltd., St. Julians/Malta Fraport Malta Ltd., St. Julians/Malta Fraport Objekte 162 163 GmbH, Flörsheim am Main Fraport (Philippines) Services, Inc., Manila/Philippines Fraport Peru S.A.C., Lima/Peru FPS Frankfurt Passenger Services GmbH, Frankfurt am Main 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 100 3.24 100 100 100 100 100 100 100 100 100 100 100 100 100 3.24 100 100 100 100 51 51 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 99.99 99.99 99.99 99.99 51 51 1,436 1,476 2,233 2,019 144,015 135,703 26 26 5,873 5,673 40,478 47,028 1,401 1,276 591 1,010 2,060 3,485 54 66 1,262 1,343 87,503 89,017 17,265 31,753 40,531 20,824 1,251 28 11,535 11,863 100,757 77,243 103,569 80,450 25 24 – 3,180 – 3,494 368 424 657 443 – 40 – 39 355 326 8,301 8,461 0 0 438 744 3,339 – 226 851 726 – 103 1) – 265 1) 1,961 3,387 – 11 1) – 12 1) 119 116 1,696 4,394 – 3,542 3,963 300 – 155 – 1 11) 0 4,030 2) 3) 5,718 2) 3) 1,875 1,745 3,080 3,489 1 1 0 1) 0 1) 212 165 307 210 Fraport Annual Report 2013 Group Notes / Other Disclosures 189 Subsidiaries Name and registered office Fraport Objekt Mönchhof GmbH, Flörsheim am Main Fraport Real Estate Mönchhof GmbH & Co. KG, Flörsheim am Main Fraport Real Estate Verwaltungs GmbH, Flörsheim am Main Fraport Real Estate 162 163 GmbH & Co. KG, Flörsheim am Main Fraport Saudi Arabia for Airport Management and De- velopment Services Company Ltd., Riyadh/Saudi Arabia FraSec Fraport Security Services GmbH, Frankfurt am Main FRA - Verkehrszentrale GmbH, Neu-Isenburg FRA - Vorfeldaufsicht GmbH, Neu-Isenburg FRA - Vorfeldkontrolle GmbH, Neu-Isenburg Fraport Twin Star Airport Management AD, Varna/Bulgaria FSG Flughafen-Service GmbH, Frankfurt am Main GCS Gesellschaft für Cleaning Service mbH & Co. Airport Frankfurt/Main KG, Frankfurt am Main International Aviation Security (UK) Ltd., London/Great Britain International Aviation Security, Lda., Lisbon/Portugal Lima Airport Partners S.R.L., Lima/Peru Media Frankfurt GmbH, Frankfurt am Main VCS Verwaltungsgesellschaft für Cleaning Service mbH, Frankfurt am Main Shareholding in % Equity (according to IFRS) in €’000 Result (according to IFRS) in €’000 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 60 60 33.33 33.33 40 40 100 100 100 100 70.01 70.01 51 51 100 100 25 24 4,389 4,698 29 27 5,094 4,903 9,059 8,419 6,718 6,584 28 28 89 42 350 13 68,278 54,623 148 155 3,597 3,231 0 0 0 0 46,131 32,277 7,249 6,603 39 38 1 1 2,116 2) 3) 4,115 2) 3) 2 2 2,020 2) 3) 1,715 2) 3) 4,775 4,148 133 1,203 0 1) 0 1) 47 15 97 – 15 13,668 12,424 73 80 2,469 3) 2,083 3) 0 1) 0 1) 0 1) 0 1) 26,378 24,523 2,195 1,544 1 0 Table 145 Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 9 0 Group Notes / Other Disclosures Joint ventures Name and registered office AirITSystems GmbH, Hanover Fraport IC Ictas Havalimani Isletme Anonim Sirketi, Antalya/Turkey Fraport IC Ictas Antalya Havalimani Terminal Yatirim ve Isletmeciligi Anonim Sirketi, Antalya/Turkey Fraport IC Ictas Havalimani Yer Hizmetleri Anonim Sirketi, Antalya/Turkey Gateway Gardens Projektentwicklungs-GmbH, Frankfurt am Main Grundstücksgesellschaft Gateway Gardens GmbH, Frankfurt am Main Medical Airport Service GmbH, Kelsterbach Multi Park II Mönchhof GmbH, Walldorf (Baden) N*ICE Aircraft Services & Support GmbH, Frankfurt am Main Pantares Tradeport Asia Ltd., Hong Kong/China Shanghai Frankfurt Airport Consulting Services Co., Ltd., Shanghai/China Terminal for Kids gGmbH, Frankfurt am Main Associated companies Name and registered office Airmail Center Frankfurt GmbH, Frankfurt am Main ASG Airport Service Gesellschaft mbH, Frankfurt am Main Flughafen Hannover-Langenhagen GmbH, Hanover Xi’an Xianyang International Airport Co., Ltd., Xianyang City/China Thalita Trading Ltd., Lakatamia/Cyprus; Northern Capital Gateway LLC, St. Petersburg/Russia Tradeport Hong Kong Ltd., Hong Kong/China Shareholding in % Equity (according to IFRS) in €’000 Result (according to IFRS) in €’000 50 50 50 50 50 50 50 50 16.66 16.66 33.33 33.33 50 50 50 50 52 52 50 50 50 50 50 50 2,995 3,214 78,998 23,050 – 51,699 – 74,400 231 275 262 211 4,119 3,312 6,090 5,381 80 761 19,937 17,031 6,438 5,713 310 299 1,951 1,460 794 999 55,627 – 39 66,338 54,436 – 40 1) – 89 1) 51 – 19 801 – 256 1,169 1,054 599 – 34 4,311 1,404 962 964 15 13 491 322 Table 146 Shareholding in % Equity (according to IFRS) in €’000 Result (according to IFRS) in €’000 40 40 49 49 30 30 24.5 24.5 35.5 35.5 18.75 18.75 4,535 4,274 1,573 1,946 133,306 136,166 425,437 427,634 – 2,912 39,391 – 9,725 – 12,781 1,402 1,683 700 1,073 – 2,084 – 1,344 10,273 11,417 – 47,893 22,293 2,592 10) 2,606 10) Table 147 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 Fraport Annual Report 2013 Group Notes / Other Disclosures 191 Shareholding in % Equity (according to local regulation) in €’000 Result (according to local regulation) in €’000 2013 2012 2013 2012 2013 2012 2013 2007 2013 2007 2013 2007 2013 2007 2013 2012 2013 2012 2013 2012 2013 2012 2013 2005 2013 2005 2013 2005 2013 2005 2013 2012 35 35 10 10 13.51 13.51 20 20 20 20 20 20 20 20 50 50 0 0 10 10 4 4 40 40 40 40 40 40 30 30 2.2 2.4 – – 153,498 144,130 2 2 – – 575 – – 1,282 – 871 – 1,642 12,941 9,364 – 1,510 – 1,186 – 1,341 – – 1,590 – – 2,937 – 4,533 – 98,747 – – 1) 4) 5) – 1) 4) 5) 1,037 6) – 156,948 6) – 1) – 1) – 1) 7) – 786 1) 4) 5) – 1) 5) 7) – 2,604 1) 4) 5) – 1) 5) 7) 270 1) 4) 5) – 1) 5) 7) – 762 1) 4) 5) 3,577 8) 2,668 8) – 4) 9) 1,382 – 4) 214 4) – 4) 456 4) – 1) 4) 5) 833 – 1) 4) 5) 1,390 – 1) 4) 5) 9 – 1) 4) 5) 4,761 – 3) 4) – 565,131 – 67,812 3) Table 148 Other investments Name and registered office Compañía de Economia Mixta de Valor y Seguridad CIVAS EQUADOR, Quito/Ecuador Delhi International Airport Private Ltd., New Delhi/India Gateways for India Airports Private Ltd., Bangalore/India Ineuropa Handling Alicante, U.T.E., Madrid/Spain Ineuropa Handling Madrid, U.T.E., Madrid/Spain Ineuropa Handling Mallorca, U.T.E., Madrid/Spain Ineuropa Handling Teneriffa, U.T.E., Madrid/Spain operational services GmbH & Co. KG, Frankfurt am Main Perishable-Center Frankfurt GbR, Frankfurt am Main Perishable-Center Verwaltungs-GmbH Zentrum für verderbliche Güter Frankfurt, Frankfurt am Main Perishable-Center Verwaltungs-GmbH Zentrum für verderbliche Güter Frankfurt GmbH & Co. Betriebs-KG, Frankfurt am Main Philippine Airport and Ground Services Terminals Holdings, Inc., Pasay City/Philippines (PTH) Philippine Airport and Ground Services Terminals, Inc., Manila/Philippines (PTI) Philippine Airport and Ground Services, Inc., Manila/Philippines (PAGS) Philippine International Air Terminals Co., Inc., Pasay City/Philippines (PIATCO) THE SQUAIRE GmbH & Co. KG, Frankfurt am Main 1) Company inactive or in liquidation. 2) IFRS result before consolidation. 3) In the equity of commercial partnerships, capital shares as well as shares in profit and loss of the limited partners are recognized (according to IAS 32, these represent debt). 4) Current financial statements not yet available. 5) There is no influence on financial and business policies. 6) Fiscal year of the company ends on March 31. 7) Equity has been largely or wholly repaid. 8) A control and profit transfer agreement is in place between the company and the other shareholders; Fraport has no influence on financial and business policies. 9) Company without cash contributions. 10) Pantares Tradeport Asia Ltd. holds in total 37.5 % of capital shares of Tradeport Hong Kong Ltd. 11) Former FRA - Positionsaufsicht GmbH. Frankfurt am Main, March 4, 2014 Fraport AG Frankfurt Airport Services Worldwide The Executive Board Dr Schulte Giesen Müller Schmitz Dr Zieschang Further InformationConsolidated Financial StatementsFraport Annual Report 2013 1 9 2 Fraport Annual Report 2013 Further Information Fraport Annual Report 2013 Further Information 193 External Activities & Services More than 1,300,000 square meters... 570,000 passengers started their vacation on just one weekend at the beginning of the 2013 summer vacation. Added to this are those collecting passengers, employees and visitors to the airport. As the owner, Fraport operates Frankfurt Airport around the clock, 365 days a year. A good indoor climate is essential for ensuring that the passen- gers’ stay at the airport is of the highest quality. Spread out over a gross surface area of more than 1,300,000 square meters – an area bigger than the Frankfurt city center – some 3,000 fans provide a pleasant air quality. To achieve this, the air-conditioning systems circulate around 5,400,000 cubic meters of air every hour. n o i t a m r o f n I r e h t r u F 1 9 2 Fraport Annual Report 2013 Further Information ...with fresh air To operate the air-conditioning system Fraport requires a softer water hardness level than regular mains water. For this reason, Fraport filters about 25,000 liters an hour into a special water-softening osmosis plant. The absence of this processing would result in the air-conditioning system becoming blocked and the average temperature in the terminals would rise. After about three days, the pollution of the air-conditioning technology would be so far advanced that the system would fail and individual sections of the terminals would have to be shut down. Regular maintenance and testing of the osmosis plant are therefore essential for Fraport. Fraport Annual Report 2013 Further Information 193 n o i t a m r o f n I r e h t r u F 1 9 4 Further Information / Responsibility Statement Responsibility Statement To the best of our knowledge and in accordance with the applicable accounting principles, the consolidated financial statements give a true and fair view of the assets, financial and earnings position and profit or loss of the Group. Furthermore, the management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group. Frankfurt am Main, March 4, 2014 Fraport AG Frankfurt Airport Services Worldwide The Executive Board Dr Schulte Giesen Müller Schmitz Dr Zieschang Fraport Annual Report 2013Further Information / Auditor’s Report 195 Auditor’s Report We have audited the consolidated financial statements prepared by the Fraport AG Frankfurt Airport Services World- wide, Frankfurt / Main, comprising the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity, and the group notes, together with the group management report for the business year from January 1 to December 31, 2013. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs, as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) of the HGB [Handelsgesetzbuch “German Commercial Code”] are the responsibility of the parent company’s Executive Board. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with Section 317 of the HGB and German generally accepted standards for the audit of financial statements promulgated by the IDW [Institut der Wirtschaftsprüfer “Institute of Public Auditors in Germany”]. Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Executive Board, as well as evaluating the overall presentation of the consolidated financial statements and group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs, as adopted by the EU, the additional requirements of German commercial law pursuant to Section 315a (1) of the HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development. Frankfurt am Main, March 4, 2014 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft Klaus-Dieter Ruske Klaus Jäcker German Public Auditor German Public Auditor n o i t a m r o f n I r e h t r u F Further InformationFraport Annual Report 2013 1 9 6 Further Information / Seven-Year-Overview Seven-Year-Overview 1) Consolidated income statement € million Revenue Change in work-in-process Other internal work capitalized Other operating income Total revenue Cost of materials Personnel expenses Other operating expenses EBITDA Depreciation and amortization Operating result/EBIT Interest result Result from associated companies Income from investments Write-down on financial assets Other financial result Financial result Result from ordinary operations/EBT Taxes on income Group result thereof profit attributable to non-controlling interests thereof profit attributable to shareholders of Fraport AG Earnings per €10 share in € (basic) Earnings per €10 share in € (diluted) 2013 2012 2011 2010 2009 2008 2007 2,561.4 2,442.0 2,371.2 2,194.6 2,010.3 2,101.6 2,329.0 0.6 35.1 34.3 0.5 44.0 55.8 0.4 40.3 40.9 0.4 36.9 52.1 0.9 39.1 45.3 0.4 33.8 66.1 0.5 24.6 71.7 2,631.4 2,542.3 2,452.8 2,284.0 2,095.6 2,201.9 2,425.8 – 613.0 – 946.8 – 191.4 880.2 – 352.1 528.1 – 177.0 – 13.6 0.0 0.0 3.2 – 187.4 340.7 – 105.0 235.7 14.7 221.0 2.40 2.39 – 558.1 – 942.9 – 192.6 848.7 – 352.7 496.0 – 174.1 11.7 0.0 0.0 30.5 – 131.9 364.1 – 112.6 251.5 13.3 238.2 2.59 2.58 – 541.1 – 906.3 – 203.1 802.3 – 305.7 496.6 – 144.4 11.5 0.0 0.0 – 16.4 – 149.3 347.3 – 96.5 250.8 10.4 240.4 2.62 2.60 – 491.1 – 880.4 – 201.9 710.6 – 279.7 430.9 – 137.7 7.0 0.0 0.0 – 21.5 – 152.2 278.7 – 7.2 271.5 8.6 262.9 2.86 2.85 – 471.6 – 866.9 – 187.4 569.7 – 268.8 300.9 – 99.7 4.3 0.1 – 7.2 – 3.9 – 106.4 194.5 – 42.5 152.0 5.6 146.4 1.60 1.59 – 471.1 – 461.4 – 925.6 – 1,143.3 – 204.5 600.7 – 241.5 359.2 – 71.0 – 15.1 0.1 0.0 24.2 – 61.8 297.4 – 100.5 196.9 7.2 189.7 2.07 2.05 – 240.6 580.5 – 245.2 335.3 – 25.3 2.5 5.3 0.0 0.9 – 16.6 318.7 – 90.5 228.2 5.0 223.2 2.44 2.42 Key figures 2013 2012 2011 2010 2009 2008 2007 EBITDA margin in % EBIT margin in % Return on revenue in % Fraport assets in € million ROFRA in % Year-end closing price of the Fraport share in € Dividend per share in € Financial position key figures Profit earmarked for distribution in € million Net financial debt in € million Capital employed in € million Gearing ratio in % Debt-to-equity ratio in % Dynamic debt ratio in % Working capital in € million 34.4 20.6 13.3 34.8 20.3 14.9 33.8 20.9 14.6 32.4 19.6 12.7 28.3 15.0 9.7 28.6 17.1 14.2 24.9 14.4 13.7 5,545.3 5,152.3 4,447.3 4,019.7 3,820.2 3,419.1 3,075.0 9.5 54.39 1.25 2) 9.6 43.94 1.25 11.2 38.00 1.25 10.7 47.16 1.25 7.9 36.28 1.15 10.5 30.91 1.15 10.9 53.87 1.15 Balance at Dec. 31, 2013 Balance at Dec. 31, 2012 Balance at Dec. 31, 2011 Balance at Dec. 31, 2010 Balance at Dec. 31, 2009 Balance at Dec. 31, 2008 Balance at Dec. 31, 2007 115.4 2,975.4 5,913.1 101.3 31.2 517.6 910.9 115.5 2,934.5 5,731.5 104.9 30.4 530.7 1,057.8 115.4 2,647.0 5,362.1 97.5 28.7 427.8 977.6 115.6 2,024.4 4,626.9 77.8 22.1 356.7 106.2 1,614.5 4,043.5 66.5 18.2 378.5 1,878.4 2,030.0 105.6 925.6 105.3 338.0 3,328.0 2,734.5 38.5 14.1 187.9 919.7 14.1 5.9 67.6 218.0 1) Due to new accounting policies or shifts in Group definitions figures reported in previous years may differ. 2) Proposed dividend. Fraport Annual Report 2013 Consolidated statement of financial position € million Goodwill Investments in airport operating projects 1,006.1 1,031.2 1,067.1 1,073.4 1,098.4 38.6 38.6 38.6 38.6 40.0 Further Information / Seven-Year-Overview 197 Balance at Dec. 31, 2013 Balance at Dec. 31, 2012 Balance at Dec. 31, 2011 Balance at Dec. 31, 2010 Balance at Dec. 31, 2009 Balance at Dec. 31, 2008 Balance at Dec. 31, 2007 22.7 597.6 33.3 22.7 570.3 43.9 57.8 44.2 43.6 32.4 34.0 5,988.1 5,927.3 5,643.8 5,013.3 4,486.4 3,968.6 3,628.6 47.7 121.2 727.6 169.8 20.3 43.7 34.4 136.6 742.7 117.1 19.5 49.2 74.6 138.0 648.6 33.5 29.6 48.2 34.0 97.1 394.6 20.9 29.6 43.1 34.7 72.9 474.7 20.0 23.6 68.3 9.0 72.4 205.4 42.4 26.6 30.4 10.1 37.1 252.2 58.5 33.5 7.2 8,220.9 8,140.8 7,765.6 6,777.0 6,353.0 5,008.4 4,664.1 75.3 181.6 438.4 2.1 605.1 77.7 180.0 385.2 35.0 821.9 81.4 163.9 280.2 6.2 77.9 178.3 319.2 5.5 54.0 158.4 492.2 5.3 47.4 154.9 205.1 7.8 927.1 1,812.6 1,802.3 1,154.8 – – – – – – 39.5 154.6 76.6 13.2 651.3 165.6 1,302.5 1,499.8 1,458.8 2,393.5 2,512.2 1,570.0 1,100.8 922.1 590.2 1,540.8 3,053.1 45.7 3,098.8 4,146.8 50.8 889.4 120.4 26.7 54.1 235.1 921.3 588.0 1,403.2 2,912.5 35.7 2,948.2 4,401.0 64.4 918.8 584.7 1,327.0 2,830.5 29.4 2,859.9 4,034.0 64.9 1,006.4 1,001.0 102.5 27.4 80.2 211.2 110.8 22.9 68.1 201.8 918.4 582.0 1,217.7 2,718.1 21.2 2,739.3 4,256.6 60.0 949.2 105.5 22.1 68.0 147.0 917.7 578.3 1,039.2 2,535.2 22.6 2,557.8 4,126.9 114.7 904.7 143.9 20.3 135.0 129.9 916.1 573.1 1,018.8 2,508.0 60.2 2,568.2 1,685.3 192.9 514.8 123.5 19.0 170.0 101.0 914.6 565.2 1,022.0 2,501.8 33.0 2,534.8 830.6 365.6 451.7 108.3 19.4 163.0 136.2 5,523.3 5,893.1 5,503.5 5,608.4 5,575.4 2,806.5 2,074.8 314.9 162.4 178.4 8.1 237.5 196.6 214.4 163.2 5.3 219.8 219.9 228.9 187.4 2.4 222.4 151.8 274.6 180.5 12.9 203.0 118.9 219.8 147.7 6.7 238.9 555.5 393.8 63.6 1.9 188.9 367.8 441.5 75.7 14.2 185.3 70.8 n o i t a m r o f n I r e h t r u F Other intangible assets Property, plant and equipment Investment property Investments in associated companies Other financial assets Other receivables and financial assets Income tax receivables Deferred tax assets Non-current assets Inventories Trade accounts receivable Other receivables and financial assets Income tax receivables Cash and cash equivalents Non-current assets held for sale Current assets Issued capital Capital reserve Revenue reserves Equity attributable to shareholders of Fraport AG Non-controlling interests Shareholders’ equity Financial liabilities Trade accounts payable Other liabilities Deferred tax liabilities Provisions for pensions and similar obligations Provisions for income taxes Other provisions Non-current liabilities Financial liabilities Trade accounts payable Other liabilities Provisions for income taxes Other provisions Liabilities in the context of assets held for sale – – – – – – Current liabilities Total assets Change over the previous year in % Non-current assets Shareholders‘ equity (less non-controlling interests and profit earmarked for distribution) Share of total assets in % Non-current assets Shareholders’ equity ratio 901.3 799.3 861.0 822.8 732.0 9,523.4 9,640.6 9,224.4 9,170.5 8,865.2 1,203.7 6,578.4 1,155.3 5,764.9 Balance at Dec. 31, 2013 Balance at Dec. 31, 2012 Balance at Dec. 31, 2011 Balance at Dec. 31, 2010 Balance at Dec. 31, 2009 Balance at Dec. 31, 2008 Balance at Dec. 31, 2007 1.0 5.0 86.3 30.8 4.8 3.0 84.4 29.0 14.6 4.3 84.2 29.4 6.7 7.1 73.9 28.4 26.8 1.1 71.7 27.4 7.4 0.2 76.1 36.5 36.4 6.7 80.9 41.6 Table 149 Further InformationFraport Annual Report 2013 1 9 8 Further Information / List of Graphics and Tables List of Graphics and Tables List of Graphics Group Management Report Page Graphic 24 25 25 27 28 28 29 46 48 49 49 50 50 51 51 52 52 53 54 55 57 57 58 58 59 60 60 60 61 61 61 62 64 65 66 66 66 68 70 1 Passenger development at Group airports in which an interest of at least 50 % is held 2 Development of Group revenue, Group EBITDA and Group result 3 Development of key figures of the consolidated statement of cash flows and the consolidated statement of financial position 4 5 6 7 8 Segment structure Revenue by region Employees by region Agenda 2015 2013 passenger and cargo development at Frankfurt Airport 9 Group revenue and return on revenue 10 Group EBITDA and EBITDA margin 11 Group result and earnings per share 12 13 Aviation Retail & Real Estate 14 Ground Handling 15 16 17 External Activities & Services Segment contribution to Group revenue 2013 Segment contribution to Group EBITDA 2013 18 Capital expenditure by segments 19 20 21 22 23 Summary of the statement of cash flows and reconciliation to the Group liquidity Structure of the consolidated financial position as at December 31 Allocation of industrial assets Rating structure of assets Repayment profile as at December 31, 2013 24 Maturity profile of the floating financial debt and derivatives 25 Group value added before taxes and ROFRA 26 Global satisfaction at Frankfurt Airport 27 28 29 30 31 32 Punctuality rate at Frankfurt Airport Baggage connectivity at Frankfurt Airport Equipment availability rate at Frankfurt Airport Employee satisfaction Total number of work accidents Employees and percentage of women as at December 31 33 Development of the Fraport share compared to the market and European competitors 34 Development of the Fraport share compared to the market and European competitors as a multi-year overview Shareholder structure as at December 31, 2013 Allocation of free float 35 36 37 Dividend per share and dividend yield 38 39 Risk managment system Reporting matrix List of Tables Cover Page Table C2 C2 C2 C3 C3 C3 C3 1 Financial performance indicators 2 Non-financial performance indicators 3 4 5 6 7 Employees Fraport Segments – Aviation Fraport Segments – Retail & Real Estate Fraport Segments – Ground Handling Fraport Segments – External Activities & Services To our Shareholders Page Table 19 20 8 Composition of the Supervisory Board 9 Committees of the Supervisory Board Group Management Report Page Table 25 26 29 40 41 41 41 42 43 44 45 47 47 52 53 54 56 57 59 62 62 64 65 86 86 86 87 87 87 89 10 Target/actual comparison of major forecasts for 2013 11 Composition of the Supervisory Board 12 13 14 15 16 17 Forecasts for the long-term development of global air traffic Remuneration of the Executive Board 2013 Remuneration of the Executive Board 2013 Remuneration of the Executive Board 2012 Remuneration of the Executive Board 2012 Pension obligations to currently active members of the Executive Board 18 Remuneration of the Supervisory Board 2013 19 Gross domestic product (GDP)/world trade 20 21 Passenger and cargo development by region Airports with a Fraport share of at least 50 % 22 Minority-owned airports or airports under management contracts 23 Development of the key Group companies 24 Multi-year overview of capital expenditure 25 26 27 Reconciliation to the cash and cash equivalents as at the consolidated statement of financial position Financial debt structure Asset structure of Fraport AG 28 Development of the value added 2013 29 30 Average number of employees Average number of employees per segment 31 Development of the share 2013 32 33 34 35 36 37 38 39 Fraport share key figures and data Reconciliation – Group Reconciliation – Aviation Reconciliation – Retail & Real Estate Reconciliation – Ground Handling Reconciliation – External Activities & Services Reconciliation – Asset and financial position Aggregation of key figures of the business outlook Consolidated Financial Statements Page Table 92 93 94 95 96 98 100 101 40 Consolidated Income Statement 41 Consolidated Statement of Comprehensive Income 42 Consolidated Statement of Financial Position as at December 31, 2013 43 Consolidated Statement of Cash Flows 44 Consolidated Statement of Changes in Equity 45 Consolidated Statement of Changes in Non-current Assets 46 Segment Reporting 47 Geographical information Fraport Annual Report 2013Further Information / List of Graphics and Tables 199 Group Notes Page Table Group Notes Page Table 103 104 105 109 115 120 121 121 121 121 122 122 123 124 124 124 125 125 125 126 127 127 128 128 129 129 129 130 130 131 132 132 133 134 134 135 135 136 136 137 137 137 138 140 140 140 141 141 142 142 143 144 144 145 146 48 Companies included in consolidation 49 50 51 52 53 Joint ventures Exchange rates Regular depreciation and amortization Effects of the retrospective application of IAS 19R Revenue 54 Minimum lease payments 55 Change in work-in-process 56 Other internal work capitalized 57 Other operating income 58 Cost of materials 59 Personnel expenses and average number of employees 60 Depreciation and amortization 61 Other operating expenses 62 Group auditor fees 63 64 Interest income and interest expenses Interest from financial instruments measured at fair value directly recognized in equity 65 Result from associated companies 66 Other financial result 67 68 69 70 Taxes on income Allocation of deferred taxes Tax reconciliation Earnings per share 71 Goodwill 72 Investments in airport operating projects 73 Other intangible assets 74 75 76 77 78 79 Property, plant and equipment Finance lease contracts (2013) Finance lease contracts (2012) Investment property Investments in associated companies Financial information regarding associated companies 80 Other financial assets 81 Non-current and current other receivables and financial assets 82 Income tax receivables 83 Deferred tax assets 84 85 Inventories Trade accounts receivable 86 Default risk analysis 87 Allowances 88 Cash and cash equivalents 89 Equity attributable to shareholders of Fraport AG 90 Development of the floating and treasury shares according to Section 160 of the AktG 91 Non-controlling interests 92 Non-current and current financial liabilities 93 Trade accounts payable 94 Non-current and current other liabilities 95 Maturity of lease payments 96 Deferred tax liabilities 97 Offsetting 98 99 100 101 Pension obligations (2013) Pension obligations (2012) Significant actuarial assumptions Sensitivity analysis as at December 31, 2013 102 Non-current and current income tax provisions 146 147 148 149 150 151 151 152 152 153 153 155 156 157 157 159 159 160 160 161 162 163 164 164 165 165 166 166 167 169 169 169 170 170 180 180 180 181 181 183 184 184 188 190 190 191 196 103 Non-current and current personnel-related provisions 104 Other provisions 105 106 Financial instruments as at December 31, 2013 Financial instruments as at December 31, 2012 107 Measurement categories according to IFRS 7.27A (2013) 108 Measurement categories according to IFRS 7.27A (2012) 109 Net results of the measurement categories 110 Derivative financial instruments 111 112 Fair values of derivative financial instruments Interest rate swaps (hedge accounting) 113 Currency forwards 114 Reconciliation to the cash and cash equivalents as at the consolidated statement of financial position 115 Guarantees and other commitments 116 Order commitments 117 Operate leases 118 Development of the subscription rights issued 119 Conditions of the MSOP tranches 120 121 Fair value of the MSOP tranches Volatilities and correlations 122 Development of virtual shares issued 123 Measurement parameters (LTIP) 124 Classification of securities 125 126 127 128 129 130 Issuer ratings of securities (2013) Issuer ratings of securities (2012) Issuer ratings liquid funds (2013) Issuer ratings liquid funds (2012) Liquidity profile as at December 31, 2013 Liquidity profile as at December 31, 2012 131 Currency rate sensitivity 132 Interest sensitivity 133 Components of the control indicators 134 135 136 137 138 139 140 141 Financial debt ratios Relationships with related parties and the State of Hesse Remuneration of management Remuneration of the Executive Board 2013 Remuneration of the Executive Board 2013 Remuneration of the Executive Board 2012 Remuneration of the Executive Board 2012 Pension obligations to currently active members of the Executive Board 142 Remuneration of the Supervisory Board 2013 143 Mandates of the Executive Board 144 Mandates of the Supervisory Board 145 146 147 Subsidiaries Joint ventures Associated companies 148 Other investments 149 Seven-Year-Overview n o i t a m r o f n I r e h t r u F Further InformationFraport Annual Report 2013 2 0 0 Glossary Capital employed Gearing ratio Net financial debt + shareholders’ equity 1) Net financial debt/shareholders’ equity 1) Debt-to-equity ratio Net financial debt/total assets Liquidity Cash and cash equivalents (as at financial position) + short-term realizable items in “other financial assets” and “other receivables Dividend yield Dividend per share/year-end closing price of the share and financial assets” Market capitalization Dynamic debt ratio Year-end closing price of the Fraport share × number of shares Net financial debt/cash flow from operating activities Net financial debt EBIT Non-current financial liabilities + current financial liabilities – liquidity Abbreviation for: earnings before interest and taxes EBIT margin EBIT/revenue EBITDA Abbreviation for: earnings before interest, taxes, depreciation and amortization EBITDA margin EBITDA/revenue EBT Personnel expense per employee Personnel expense/average number of employees Price-earnings ratio Year-end closing price of the Fraport share/earnings per share (basic) Return on revenue EBT/revenue Return on shareholders’ equity Profit attributable to shareholders of Fraport AG/shareholders’ equity 1) Abbreviation for: earnings before taxes ROCE EURIBOR Abbreviation for: European Interbank Offered Rate = Interest rate ROFRA used by European banks, when trading fixed-term deposits with Abbreviation for: return on Fraport assets = EBIT/Fraport assets Abbreviation for: return on capital employed = EBIT/capital employed each other. It is one of the most important reference interest rates, among European bonds, bearing floating interest payments Shareholders’ equity ratio Shareholders’ equity 1)/total assets Fraport assets Capital required for operations = Goodwill + other intangible Working capital assets at cost/2 + investments in airport operating projects at cost/2 Current assets – trade accounts payable – other current liabilities + property, plant and equipment at cost/2 + inventories + trade accounts receivable – construction in progress at cost/2 – current Yearly performance of the Fraport share trade accounts payable (Year-end closing price of the Fraport share + dividend per share)/ previous year-end closing price Free cash flow Cash flow from operating activities – investments in airport operating projects – capital expenditure for other intangible assets – capital expenditure for property, plant and equipment – investment property 1) Shareholders’ equity less non-controlling interests and profit earmarked for distribution. Fraport Annual Report 2013Financial Calendar 2014 Thursday, May 8, 2014 Group Interim Report January 1 to March 31, 2014 Monday, June 2, 2014 Dividend payment Online publication, conference call Thursday, August 7, 2014 with analysts and investors Group Interim Report January 1 to June 30, 2014 Friday, May 30, 2014 Online publication, conference call Annual General Meeting 2014 with analysts and investors Frankfurt am Main, Jahrhunderthalle Traffic Calendar 2014 (Online publication) Thursday, November 6, 2014 Group Interim Report January 1 to September 30, 2014 Online publication, press conference and conference call with analysts and investors Thursday, April 10, 2014 March 2014/3M 2014 Tuesday, August 12, 2014 Wednesday, December 10, 2014 July 2014 November 2014 Tuesday, May 13, 2014 Wednesday, September 10, 2014 Thursday, January 15, 2015 April 2014 August 2014 December 2014/FY 2014 Thursday, June 12, 2014 May 2014 Monday, October 13, 2014 September 2014/9M 2014 Thursday, July 10, 2014 June 2014/6M 2014 Wednesday, November 12, 2014 October 2014 Imprint Publisher Fraport AG Contact Investor Relations Printing Stefan J. Rüter Eberl Print GmbH, Immenstadt i. Allgäu Frankfurt Airport Services Worldwide Head of Finance and Investor Relations 60547 Frankfurt am Main Germany Telephone: + 49 69 690-74840 Fax: + 49 69 690-74843 Publication Date March 27, 2014 Telephone: +49 (0) 1806 3724636 1) Website: www.meet-ir.com Website: www.fraport.com E-mail: investor.relations@fraport.de Editorial Deadline 1) 20 Cents (€) per call within German landline network; mobile phone rates may vary, maximum 60 Cents (€) within Germany. Concept und Design heureka GmbH, Essen March 4, 2014 Disclaimer Photography In case of any uncertainties which arise due to errors in translation, the German version of the Michael Gernhuber, Essen Annual Report is the binding one.

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