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Annual Statements

Financial reporting

Price winner 2012 in the category non-listed

Home Annual Statements Financial Statements 2012 Notes to the consolidated financial statements Accounting policies

Accounting policies

Schiphol Group’s accounting policies on consolidation, measurement of assets and liabilities and determination of results are set out below. These policies are in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Commission, and are applied consistently to all the information presented unless otherwise indicated. The applicable statutory provisions on annual reporting contained in Part 9, Book 2 of the Netherlands Civil Code have also been complied with. Schiphol Group applies the historical cost convention for measurement, except for land and buildings in the investment property portfolio, derivative financial instruments and other financial interests, which are recognised at fair value.

New and amended standards that are mandatory with effect from 2012

There are no new or amended standards or interpretations that Schiphol Group had to apply from 1 January 2012 and which have a significant influence on the disclosures or financial information in these financial statements:

New and amended standards that are mandatory with effect from 2013 or later

Schiphol Group has not voluntarily applied in advance new or amended standards or interpretations that will not be mandatory until the financial year 2013 or later.

Schiphol Group is currently examining the consequences of the following new or amended standards or interpretations, the application of which is mandatory from the financial year 2013 or later, as stated below:

  • IFRS 1 First-time Adoption of International Financial Reporting Standards (mandatory from 1 January 2013)
  • IFRS 7 Financial Instruments: Disclosures (mandatory from 1 January 2013)
  • IFRS 9 Financial Instruments (not yet adopted, mandatory from 1 January 2015)
  • IFRS 10 Consolidated Financial Statements and amendments to IAS 27 Consolidated and Separate Financial Statements (mandatory from 1 January 2014)
  • IFRS 11 Joint Arrangements and amendments to IAS 28 Investments in Associates and Joint Ventures (mandatory from 1 January 2014)
  • IFRS 12 Disclosure of Interests in Other Entities (mandatory from 1 January 2014)
  • IFRS 13 Fair Value Measurement (mandatory from 1 January 2013)
  • IAS 1 Presenting Comprehensive Income amendment (mandatory from 1 July 2012)
  • IAS 19 Employee Benefits amendment (mandatory from 1 January 2013)
  • 2011 Annual Improvement Projects
  • IAS 32 Financial Instruments: Presentation amendment (mandatory from 1 January 2014)

Change in accounting policy as a result of amendments to IAS 19 Employee Benefits (mandatory from 1 January 2013) The European Commission adopted amendments to IAS 19 on 5 June 2012. Schiphol Group has decided to apply the amendments from 1 January 2013. The new IAS 19 Employee Benefits introduces a number of changes on recognition, presentation and disclosures that make reporting of pensions less complex and more comparable. The main changes are the elimination of the ‘corridor’ method, the expected return on investments which, like the interest charge on the interest liability, has to be calculated using the IAS 19 discount rate (which is derived from yields on high-quality corporate bonds) and significantly greater disclosure requirements, particularly in respect of specific pension risks. As virtually all pension plans qualify as defined-benefit plans, the effect on the income statement is expected to be limited. The table below sets out the changes to the current treatment in the financial statements on the basis of the new rules in IAS 19, which will be applied with effect from 1 January 2013.

(in thousands of euros)

Current IAS 19 treatment

Change

New IAS 19 treatment

Benefit obligation at 1 January 2012

27,741

2,586

30,327

Charged to income statement

2,633

- 343

2,290

Net actuarial results recognised through statement of comprehensive income

-

2,775

2,775

Payment of employees’ contributions

- 4,804

-

- 4,804

Benefit obligation at 31 December 2012

25,570

5,018

30,588

Other employee benefits

4,904

-

4,904

Total

30,474

5,018

35,492

 

The applicable statutory provisions on annual reporting contained in Part 9, Book 2 of the Netherlands Civil Code have also been complied with. Schiphol Group applies the historical cost convention for measurement, except for land and buildings in the investment property portfolio, derivative financial instruments and other financial interests, which are recognised at fair value.

Comparative figures

The comparative figures for 2011 have been restated. Firstly, a reclassification within the balance sheet in connection with the breakdown of deferred tax between tax authorities. Intercompany revenue and operating expenses for the Alliances & Participations business area have been restated as capitalised hours are no longer recognised as revenue but are deducted from operating expenses. The restatement only affects the elimination of internal revenue. 

Subsidiaries, joint ventures and associates

(a) General

Where necessary, the accounting policies of subsidiaries, joint ventures and associates are adjusted to be in line with the Schiphol Group accounting policies.

(b) Subsidiaries

The financial information of N.V. Luchthaven Schiphol and its subsidiaries is fully consolidated. Subsidiaries are those companies where N.V. Luchthaven Schiphol has control of operating and financial policy. The other shareholders’ share in consolidated equity and results is presented in the balance sheet as non-controlling interests (part of equity) and in the income statement as profit after income tax attributable to non-controlling interests. The results of subsidiaries acquired in the course of the year are consolidated from the date on which the company gains control. The financial information relating to subsidiaries disposed of in the course of the year continues to be included in the consolidation up to the date on which control ceases.

(c) Joint ventures

The financial information of associates that qualify as joint ventures is consolidated in proportion to the interest. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. The results of joint ventures formed in the course of the year are consolidated from the date on which the company gains joint control over the policy of the joint venture. The financial information relating to joint ventures disposed of in the course of the year continues to be included in the consolidation up to the date on which joint control ceases.

(d) Associates

An associate is an entity over which the company has significant influence. Investments in associates are recognised using the equity method, meaning that the investment is initially recognised at cost and subsequently adjusted for the company’s post-acquisition share in the change in the associate’s net assets. The carrying amount of these investments in associates includes purchased goodwill. The company’s share in the results of associates over which it has significant influence is recognised in the statement of income (share of results of associates). The cumulative movement in the net assets of associates is recognised in proportion to Schiphol Group’s interest under the heading of investments in associates. The company ceases to recognise its share of the results of an associate in the income statement and its share in the net asset value of that associate immediately if this would lead to the carrying amount of the investment becoming negative and if the company has not entered into any commitments or made payments on behalf of the associate. Investments in associates are recognised as other financial interests from the date on which the company ceases to have significant influence or control.

(e) Acquisition of subsidiaries, joint ventures and associates

An acquisition of a subsidiary, joint venture or associate is recognised using the purchase method under which the cost of such an acquisition is the sum of the fair values of the assets transferred by the acquirer on the acquisition date, the liabilities incurred by the acquirer to former owners of the acquiree and the equity interests issued by the acquirer and the related transaction costs. The identifiable assets, liabilities and contingent liabilities acquired are initially measured at their fair value at the acquisition date. The excess of the cost of the acquisition over the company’s interest in the net fair value of the acquired assets and liabilities is recognised as goodwill in the consolidated financial statements under intangible assets (in the case of subsidiaries and joint ventures) or as part of the carrying amount in the case of associates. If the net fair value exceeds cost, the difference is recognised immediately in the income statement. Costs relating to an acquisition are recognised directly in the income statement.

(f) Eliminations

Transactions between the company and its subsidiaries, associates and joint ventures are eliminated, in the case of joint ventures and associates in proportion to the company’s interest in those entities, along with any unrealised gains and assets and liabilities arising out of them. Unrealised losses are also eliminated unless there are indications of impairment of the asset concerned.

Company statement of income

The option of presenting the company statement of income in abridged form pursuant to Section 402 of Book 2 of the Netherlands Civil Code has been exercised.

Cash flow statement

The cash flow statement has been prepared using the indirect method.

Segment information

An operating segment is a clearly identifiable part of a company that engages in business activities with associated revenues, costs and operating results, and about which separate financial information is available that is regularly reviewed by the Management Board in order to assess the performance of the segment and make decisions about the resources to be allocated to it. Schiphol Group identifies fourteen operating segments, which have been combined into nine segments for reporting purposes in view of the size and characteristics of the operating segments. Group overhead costs are allocated to the segments largely on the basis of their relative share in the direct costs of Schiphol Group.

Foreign currency

(a) Functional currency and presentation currency

The primary economic environment of Schiphol Group is the Netherlands and so the euro is both its functional currency and presentation currency. Financial information is presented in thousands of euros unless otherwise indicated.

b) Transactions, assets and liabilities

Transactions (capital expenditure, income and expenses) denominated in foreign currencies are accounted for at the settlement rate of exchange. Monetary assets and liabilities (receivables, payables and cash and cash equivalents) denominated in foreign currencies are translated at the rate prevailing on the reporting date. Exchange differences arising on translation and settlement of these items are recognised in the statement of income in financial income and expenses, as are the exchange differences on non-monetary assets and liabilities unless these items are recognised directly in equity, in which case the exchange differences are also recognised in equity. An exception to the above concerns exchange differences on financial instruments denominated in foreign currencies against which derivative financial instruments are held with the object of hedging exchange risks on future cash flows. Exchange differences on these financial instruments are recognised directly in equity provided the hedge is determined to be highly effective. The ineffective portion is recognised in the income statement under financial income and expenses.

(c) Subsidiaries, joint ventures and associates

Income and expenses denominated in foreign currencies are translated at average exchange rates. Assets and liabilities are translated at the rate prevailing on the reporting date. Goodwill and changes in fair value arising on the acquisition of investments in associates are treated as assets and liabilities of the entity concerned and are similarly translated at the rate prevailing on the reporting date. Exchange differences arising on the translation of balance sheets and income statements of subsidiaries, joint ventures and associates outside the euro zone are recognised directly in equity under the exchange differences reserve. On disposal of subsidiaries, joint ventures and associates outside the euro zone, the accumulated translation differences initially recognised in the exchange differences reserve are recognised in the income statement as part of the result on disposal.

Total revenue

Many of Schiphol Group’s activities generate revenue that qualifies as revenue from the provision of services (airport charges, concession fees, rents and leases and parking charges). This revenue is recognised in proportion to the service supplied at the reporting date, provided that the result can be reliably estimated. Revenue from retail sales is generated by the sales of goods and is recognised when these transactions take place.Total revenue represents the income from the services provided less discounts and tax (VAT and excise duty). Revenue equals total revenue less the revenue from intra-group transactions. Costs are recognised in the income statement in the year in which the related revenue is recognised.

Financial income and expenses

Interest income and expense is recognised on a time-proportionate basis that takes into account the effective yield on the loans granted or liabilities. Royalties are recognised on an accrual basis. Dividends are recognised when Schiphol Group’s right to receive payment is established.

Earnings per share

Undiluted earnings per share are calculated by dividing the profit attributable to holders of ordinary shares by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share are equal to the undiluted earnings per share since there are currently no shares to be issued in connection with options or convertible bonds that could potentially lead to dilution of the earnings per share.

Intangible assets

Intangible assets include the cost of purchased goodwill, contract-related assets and software. Goodwill arising on the acquisition of subsidiaries and interests in joint ventures is recognised in intangible assets. Goodwill arising on the acquisition of associates is recognised in the carrying amount of the associate, using the equity method. Goodwill is initially recognised at cost, being the difference between the cost of acquisition and the company’s share in the fair value of the assets and liabilities acquired. The carrying amount of goodwill is subsequently reduced by accumulated impairment losses. Goodwill is not amortised. Goodwill is allocated to the cash-generating unit (subsidiary, joint venture or associate) to which it relates. This allocation is explained in greater detail in the note on intangible assets. Contract-related assets are contracts acquired upon the acquisition of activities from third parties. These contracts are measured at fair value on the acquisition date less accumulated amortisation and impairment. Contracts are amortised over the remaining contract period. Software is software licences and internally-developed automation applications. Internally-developed software is capitalised at the cost of internal and external hours spent on the development and implementation stages of ICT projects as recorded on the time sheets. Time spent in the proposal and definition stages is not capitalised. Software is amortised on a straight-line basis over its useful life.

Assets under construction or development

All capital expenditure except for that relating to intangible assets is initially recognised as assets under construction or development if it is probable that Schiphol Group will derive future economic benefits and the amount can be measured reliably. There are three categories of these assets:

(a) assets under construction or development for future operating activities;

(b) assets under construction or development as future investment property;

(c) assets under construction or development by order of third parties.

Assets under construction or development for future operating activities (category a) are carried at historical cost including:

  • interest during construction of all capital projects, i.e. interest payable to third parties on borrowings attributable to the project; and
  • time charged at cost to capital projects by Schiphol Group employees during the construction stage.

Assets under construction or development for future operating activities are not depreciated although it may be necessary to recognise impairment losses. The same applies to assets under construction or development as future investment property (category b) until the time that the fair value can be measured reliably. At that time, these assets are recognised at fair value through profit or loss under ‘fair value gains and losses on property’. When assets in category a are handed over and ready for use, they are transferred at historical cost to ‘assets used for operating activities’, which is also when the straight-line depreciation commences. Assets in category b are transferred on completion to ‘investment property’ at fair value. See the accounting policies for these items for the way in which investment property is subsequently recognised. Assets under construction or development by order of third parties (category c) are recognised using the percentage-of-completion method. Revenues and costs relating to such assets are recognised in the income statement under ‘sales of property’ and ‘cost of sales of property’ respectively, in proportion to the completion stage of the project activities on the reporting date.

Assets used for operating activities

Assets used for operating activities include runways, taxiways, aprons, car parks, roads, buildings, installations and other assets. These assets are recognised at historical cost less investment grants received, straight-line depreciation and impairment losses. Subsequent expenditure is added to the carrying amount of these assets if it is probable that Schiphol Group will derive future economic benefits and the amount can be measured reliably.Assets used for operating activities, with the exception of land, are depreciated on a straight-line basis over the useful life of the asset concerned, which depends on its nature and its components. Useful lives and residual values are re-evaluated each year-end.

The net result on the disposal of assets used for operating activities is recognised in the income statement as revenue from other activities. Day-to day maintenance expenses are recognised in the income statement and planned major maintenance of a long-term nature is capitalised.

Depreciation and amortisation

Intangible assets and assets used for operating activities are amortised and depreciated on a straight-line basis according to the schedule below. Goodwill is not amortised and investment property, assets under construction and land are not depreciated.

Contract-related assets

5 years

ICT hours charged to application development

5 years

Software licences

5 years

Runways and taxiways

15-60 years

Aprons

30-60 years

Paved areas etc.:

- Car parks

30 years

- Roads

30 years

- Tunnels and viaducts

40 years

- Drainage systems

20-40 years

Buildings

20-40 years

Installations

5-30 years

Other assets

5-20 years

Impairment

The carrying amounts of financial and non-current assets are tested periodically against their recoverable amounts if there are indications of impairment. Goodwill is tested annually, regardless of any such indications. The recoverable amount is the higher of an asset's net realisable value and its value in use. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Value in use is the present value of the estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. These tests are performed at cash-generating unit level.

If the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in the statement of income and the carrying amount of the asset is reduced to the recoverable amount. Where applicable, the straight-line depreciation over the remaining useful life of the asset concerned is adjusted accordingly. If circumstances indicate the need to reverse an impairment loss, the carrying amount of the asset is increased to the recoverable amount. Impairment losses on goodwill purchased on the acquisition of subsidiaries and joint ventures are not reversed.

Investment property

Investment property is recognised at fair value, even while it forms part of the assets under construction or development, provided that the fair value can be measured reliably at that time. If this is not possible, the property is recognised at historical cost. On completion, the property is transferred at fair value to ‘investment property’. Any difference between fair value and historical cost is recognised in the income statement under ‘fair value gains and losses on property’.

Property purchased from outside Schiphol Group is initially recognised at cost less transaction costs. Expenditure after property has been commissioned is capitalised if it can be measured reliably and it is probable that future economic benefits will flow to Schiphol Group. Other expenditure is recognised immediately in the income statement.

All of the properties in the portfolio are appraised at least once a year by independent valuers. To prevent double counting, the fair value of investment property as presented in the balance sheet takes account of the lease incentives included in the balance sheet. Gross rental revenues from operating leases are recognised on a time-proportionate basis over the period of the lease. Rent holidays, discounts on rent and other lease incentives are recognised as an integral part of the gross rental revenues. Service charges relate to the costs of energy, concierges, maintenance and so forth, which may be passed on to the tenant under the lease. The portion of the service charges not passed on relates chiefly to property investments which have not been let and is recognised in the income statement. The costs and recharges are not presented separately in the income statement.

Land in the investment property portfolio is measured at fair value. Land is appraised by external and in-house valuers. A different part of the land holdings is appraised by independent external valuers each year. The market value of land let on long lease is calculated by discounting the value of the future annual ground rents and the residual value under the contracts concerned (DCF method).

Fair value gains and losses on investment property are recognised in the statement of income in the year in which they arise. Gains or losses realised on disposal of assets, i.e. differences between carrying amount and net selling price, are recognised through the income statement. Investment property is not depreciated.

Income tax

Income tax on the result represents income tax payable and recoverable and deferred tax for the reporting period. These are computed on the basis of applicable tax rates and laws. Income taxes include all taxes based on taxable profits and losses including non-deductible taxes payable by subsidiaries, associates or joint ventures. Income taxes are recognised in the income statement unless they relate to items credited or charged directly to equity, in which case the tax is charged or credited directly to equity. Current tax payable or recoverable in respect of the reporting period is the tax that is expected to be paid on the taxable profit for the reporting period and adjustments to the tax payable for prior periods.

Deferred tax assets and liabilities are recognised in respect of temporary differences between the carrying amount of assets and liabilities according to tax rules and the accounting policies used in preparing these financial statements.

Deferred tax assets, including those arising from tax loss carry-forwards, are recognised if it is probable that there will be sufficient future taxable profits against which tax losses can be set off, allowing the assets to be utilised.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, joint ventures and associates unless Schiphol Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amounts of deferred tax assets and liabilities are calculated at the tax rates expected to be applicable to the period in which an asset is realised or a liability is settled, using the tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date.

Leases

(a) Classification

Assets where the company or one of its subsidiaries has beneficial ownership under a lease contract are classified as finance leases. The company, or a subsidiary, has beneficial ownership if substantially all the risks and rewards incidental to ownership are transferred to it. Leases where beneficial ownership of the asset remains with third parties are classified as operating leases. Whether a lease is a finance lease or an operating lease depends on the economic reality (substance of the transaction rather than the form of the contract).

(b) Schiphol Group as lessee in a finance lease

These assets are recognised as either assets used for operating activities or investment property. The borrowings associated with such lease contracts are accounted for as lease liabilities. The related assets and liabilities are initially recognised at the lower of the fair value of the leased assets and the present value of the minimum lease payments at the inception of the lease. The assets are depreciated, using a method consistent with that used for identical assets owned by the company. The depreciation period may be shorter if the lease term is shorter, if it cannot be extended and if ownership will not be obtained. The lease payments are apportioned between the finance charge and the reduction of the outstanding liability so as to present a constant periodic effective rate of interest on the remaining balance.

(c) Schiphol Group as lessee in an operating lease

Leases where beneficial ownership is held by a third party are only recognised as the lease payments in equal instalments, allowing for lease incentives, as expenses in the income statement.

(d) Schiphol Group as lessor in a finance lease

Assets leased out on a contract that qualifies as a finance lease are recognised in the balance sheet as a lease receivable at the present value of the minimum lease payments receivable at the inception of the lease. The lease payments receivable are apportioned between the finance income and the reduction of the outstanding receivable so as to present a constant periodic effective rate of interest on the remaining balance.

(e) Schiphol Group as lessor in an operating lease

Assets leased out on a contract that qualifies as an operating lease are recognised in the balance sheet and measured according to the type of asset. The lease payments receivable under such leases are recognised as income in equal instalments, allowing for lease incentives, in the income statement.

Loans to associates and other loans

Loans to associates and other loans are initially recognised at cost, being the fair value of the loans granted less transaction costs, and subsequently measured at amortised cost, with differences between the redemption value and the carrying amount being amortised over the remaining term to maturity using the effective interest method.

Other financial interests

The company has neither control nor significant influence over other financial interests. These are generally interests of less than 20%. Such interests are measured at fair value derived from quoted market prices or, if the entity is not listed, other valuation methods. If it is not possible to determine the fair value of an other investment reliably using valuation methods, owing to a lack of information or up-to-date information, it is carried at cost. Changes in the fair value of these other financial interests are recognised through total comprehensive income in the other financial interests reserve included in equity in the year in which the movement occurs. Dividends received from these interests and, in the event of disposal of such interests, the difference between net selling price and cost are recognised in the income statement under financial income and expenses.

Derivative financial instruments

The company classifies financial instruments in the following categories: receivables and liabilities, at fair value through profit or loss and assets held for sale. The company only uses derivative financial instruments to hedge the risk of changes in future cash flows connected with periodic interest payments and repayments or funding resulting from movements in market interest rates and exchange rates. The instruments used to hedge these rrisks are interest-rate swaps and currency swaps.

Derivative financial instruments are initially recognised at fair value on the date when the derivative contract is concluded and then at the fair value at each reporting date. The method for recognition of the result depends on whether hedge accounting is applied and if so, if the hedging relationship is effective. If the hedging relationship is effective, hedge accounting is applied to those derivatives.

At the inception of a hedge, the hedging relationship is formally documented. The effectiveness of hedging transactions is measured periodically to determine whether the hedge has been effective over the preceding period and whether it is probable that it will be effective over the period ahead.

If a hedging instrument expires, is sold, ends, is exercised or ceases to satisfy the hedge accounting criteria, hedge accounting is discontinued immediately. The fair value gains and losses accumulated up to that date continue to be carried in the hedging transactions reserve and are subsequently recognised in the statement of income simultaneously with the realisation of the hedged cash flow.

Other non-current receivables

In the case of prepaid ground rents, the amount paid to buy out the leasehold is included as a lease asset in the balance sheet and recognised as an expense in the statement of income in equal instalments over the lease term.

Assets held for sale

Non-current assets are presented as held for sale if the carrying amount will be recovered through sale and the sale will take place in the short term. Land falling into this category is measured at the lower of cost and fair value less costs to sell. Historical cost also includes the costs associated with acquiring the land and site preparation costs. Assets held for sale are not depreciated.

Trade and other receivables

Trade and other receivables are measured at fair value and subsequently measured at amortised cost less a provision for doubtful debts. Amounts added to and released from this provision are recognised in the statement of income.

Cash and cash equivalents

Cash and cash equivalents comprise current account credit balances with banks and deposits. Bank overdrafts are recognised in trade and other payables. Cash and cash equivalents are carried at fair value, which is normally the same as face value.

Equity

(a) Issued share capital

The issued share capital is the amount paid up on the shares issued, up to their nominal value.

(b) Share premium reserve

The share premium reserve is the amount paid up on the shares issued in excess of their nominal value.

(c) Retained earnings

Retained earnings are the net results (i.e. that part of the result attributable to shareholders) accumulated in previous years.

(d) Other reserves

Other reserves comprise the hedging transactions reserve, the other financial interests reserve and the exchange difference reserve.

The other financial interests reserve is increased or reduced through comprehensive income for changes in the fair value of Schiphol Group’s other financial interests. On disposal of an other financial interest, the accumulated fair value gains and losses on that interest are recognised in the income statement as part of the result on disposal.

The policies on the hedging transactions reserve are disclosed in ‘derivative financial instruments’. The policies on the exchange difference reserve are disclosed under (c) in the policy on ‘foreign currency’.

Borrowings

This item relates to bonds, private placements and amounts owed to credit institutions. Borrowings are initially recognised at fair value less transaction costs, and subsequently measured at amortised cost, with differences between the redemption value and carrying amount being amortised over the remaining term to maturity using the effective interest method.

Borrowings expected to be repaid within a year of the reporting date are recognised as current liabilities.

Employee benefits

There are four categories of employee benefits:

(a) short-term employee benefits;

(b) post-employment benefits;

(c) other long-term employee benefits;

(d) and termination benefits.

These categories are defined below along with brief descriptions of the Schiphol Group employee benefits falling into them.

(a) Short-term employee benefits

Short-term employee benefits are benefits payable within a year of the end of the year in which the employee rendered the service. At Schiphol Group, this category includes wages and salaries (including holiday pay) and fixed and variable allowances, social security contributions, paid sick leave, profit sharing and variable short-term remuneration. The costs of these employee benefits are recognised in the income statement when the service is rendered or the rights to benefits are accrued (e.g. holiday pay).

(b) Post-employment benefits

These are employee benefits that may be due after completion of employment. They include pensions and other retirement benefits, job-related early retirement benefits, payment of healthcare insurance costs for pensioners and supplementary disability benefits.

Schiphol Group’s pension plan is administered by the Algemeen Burgerlijk Pensioenfonds (ABP). The pension plan is regarded as a group scheme involving more than one employer that qualifies as a defined-benefit plan. ABP is not currently in a position to supply Schiphol Group with the information necessary to treat the pension plan as a defined-benefit plan and so it is recognised as a defined-contribution plan.

Accordingly, in measuring the obligations arising from the pension plan, Schiphol Group merely recognises the pension contributions payable as an expense in the income statement. The information needed to recognise the defined-benefit pension plans of certain subsidiaries and joint ventures as such is, however, available. In these cases, a net asset or liability is recognised in the balance sheet, comprising:

  1. the present value of the defined-benefit obligation at the reporting date measured using the projected unit credit method, under which the present value of the pension obligations for each member is determined on the basis of the number of active years of service prior to the reporting date, the estimated salary level at the expected date of retirement and the market interest rate;
  2. plus any actuarial gains and less any actuarial losses not yet recognised in the income statement. Actuarial gains and losses are not recognised in the income statement unless their accumulated amount falls outside the higher of a range of 10% of the present value of the obligation under the scheme and the fair value of the associated investments. The part which is not within the range is credited or debited to the income statement over the remaining years of service of the plan members (corridor method);
  3. less any past service cost not yet recognised. If, owing to changes in the pension plans, the expected obligations based on future salary levels with respect to prior years of service (past service costs) increase, the amount of the increase is not recognised in full in the period in which the rights are granted but is charged to the income statement over the remaining years of service; and
  4. less the fair value at the reporting date of plan assets (if any) out of which the obligations are to be settled directly.

The other provisions for employee benefits covering job-related early retirement benefit, payment of healthcare insurance costs for pensioners and supplementary disability benefits are calculated according to actuarial principles and accounted for using the method described in 1–4 above.

(c) Other long-term employee benefits

These are employee benefits which do not fall wholly due within a year of the end of the period in which the employees render the related service. At Schiphol Group, this includes long-term variable remuneration for the members of the Management Board and senior executives in charge of corporate staff departments and the business areas, supplementary income for employees in receipt of disability benefits, long-service awards and paid sabbatical leave.

The long-term variable remuneration is performance-related remuneration which is conditional on the recipient having satisfied certain performance criteria (economic profit) cumulatively over a period of three years (the reference period) from the time of award of the variable remuneration. Payment is only made if the recipient is still employed by the company at the end of that period. If the contract of employment is ended by agreement, the award is made on a pro rata basis. An estimate is made of the variable remuneration payable at the end of the three-year period at each year-end. A proportionate part is charged each year to the result for the relevant year during the reference period.

The expected costs of income supplements for employees in receipt of disability benefits are recognised in full in the statement of income from the date on which an employee is declared disabled. A provision for paid sabbatical leave entitlements is recognised in the balance sheet, the costs being recognised in the year in which the leave entitlements are granted. Obligations for long-service awards are recognised at present value. Other long-term employee benefit obligations are not discounted.

(d) Termination benefits

These are employee benefits payable as a result of either a decision by Schiphol Group to terminate an employee’s employment before the normal retirement date or an employee’s decision to accept voluntary redundancy in exchange for such benefits. Benefits under the scheme supplementing the statutory amount of unemployment benefit are an example of a termination benefit. The costs are recognised in full in the income statement as soon as such a decision is made. Benefits are recognised at the present value of the obligation.

Other provisions

Provisions are made for legally enforceable or constructive obligations existing on the reporting date when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Other provisions are included at the present value of the obligation, if the effect of the time value of money is material and can be measured reliably.

Other non-current liabilities

In the case of surrendered ground rents, the amount paid to buy out the leasehold is included as a lease liability in the balance sheet and recognised as income in the income statement in equal instalments over the lease term.

Trade and other payables

Trade and other payables are carried at fair value and subsequently measured at amortised cost.