Notes to the Consolidated Financial Position

The composition and development of goodwill, investments in airport operating projects, other intangible assets, property, plant, and equipment, and investment property are shown in the Consolidated Statement of Changes in Non-Current Assets.

17. Goodwill

Goodwill arising from consolidation relates to:

The following table provides an overview of the assumptions incorporated in the main goodwill impairment tests as at December 31, 2022:

*The forecast period up to 2027 is characterized by above-average revenue growth due to the recovery of air traffic following the Covid-19 pandemic. The reported average revenue growth is adjusted for the recovery effect and reflects the average growth for the years 2027 to 2053. Over the entire forecast period, the average revenue growth is 5.1%.

The parameters used within the scope of the impairment tests are based on the current plan approved by the Executive Board. This takes account of internal empirical values and external economic framework data.

The revenue forecasts used to determine growth assumptions are based, in particular, on expected air traffic trends derived from external market forecasts.

A variation in the discount rate of +0.5 percent points results in a need for impairment of goodwill in the amount of €16.3 million, while an adjustment of the growth forecasts by -0.5 percentage points results in a need for impairment of €1.8 million.

The planning period on which the impairment test for Fraport Slovenija is based corresponds to the term of the right derived from a long-term land use contract to operate the airport in Ljubljana.

18. Investments in Airport Operating Projects

Investments in airport operating projects relate to concession rights, which comprise the following items due to the application of IFRIC 12 (see also note 4 and note 49): the initial payment and capitalized minimum concession payments of €1,845.0 million (previous year: €1,889.6 million) as well as capital expenditure of €1,870.9 million (previous year: €1,507.4 million) and prepayments of €53.2 million (previous year: €19.4 million). They relate to terminal operation at the concession airports in Greece at €1,933.0 million (previous year: €1,986.7 million), Lima at €1,094.9 million (previous year: €726.7 million), Fortaleza and Porto Alegre at €595.9 million (previous year: €551.6 million), as well as Varna and Burgas at €145.3 million (previous year: €151.5 million).

Loans that were specifically taken out to finance the expansion of the airports in Brazil were accounted for as borrowing costs in the amount of €35.8 million (previous year: €39.6 million), of which €7.6 million (previous year: €13.8 million) were capitalized. Interest rates on loans range from 7.3% and 13.1%. Amounts for loan disbursements that are not yet required for capital expenditure in the expansion of the airports were reinvested. The accrued interest income for these investments amounted to €1.2 million (previous year: €0.7 million).

As part of the expansion at Lima Airport, loans amounting to €313.8 million were raised as part of specific financing and in this context borrowing costs of €10.5 million (previous year: €3.7 million) were capitalized. The loan will accumulate interest at an interest rate of 4.97%.

19. Other Intangible Assets

The other concession and operator rights include the right derived from an existing, long-term land use contract to operate the airport in Ljubljana (€50.9 million, previous year: €52.5 million) with a remaining term of 31 years (previous year: 32 years). The concession rights in the retail area accounted for by Fraport USA (previous year: €4.9 million) were fully depreciated in the 2022 fiscal year (see note 10).

The other intangible assets as at the reporting date contain internally generated intangible assets with residual carrying amounts of €7.7 million (previous year: €8.3 million). At closing date further €2.3 million (previous year: €1.8 million) were attributable to the development phase. The depreciation and amortization is carried out on a straight-line basis taking into account the scheduled useful lives between 5 and 20 years. Depreciation and amortization in the fiscal year amounted to €1.6 million (previous year: €4.0 million).

20. Property, Plant, and Equipment

Additions in the 2022 fiscal year amounted to €779.8 million (previous year: €847.0 million). Of this, €593.7 million (previous year: €625.4 million) is attributable to the construction of Terminal 3 (“Expansion South”), as well as further projects in connection with expansion measures to meet capacity at Frankfurt Airport.

Borrowing costs were capitalized in the amount of €21.5 million (previous year: €19.4 million) for general project financing at Fraport AG. These relate to financing where it is not possible to directly attribute the borrowing costs to the acquisition, construction or production of a qualifying asset. The borrowing cost rate applied averaged around 1.5% (previous year: around 1.6%). In addition, specific project financing has been concluded for measures related to the construction of Terminal 3. In total, borrowing costs of €4.3 million (previous year: €3.6 million) were capitalized in the financial year. The average financing cost rate was around 0.6% (previous year: around 0.6%).

As at the balance sheet date, property, plant, and equipment with a carrying amount totaling €0.1 million (previous year: €0.2 million) carry mortgages.

Property, plant, and equipment of the Fraport Group comprises land, land rights, and buildings, including those on land leased by Fraport AG and is valued at €3,060.1 million (previous year: €3,129.1 million). As at the balance sheet date of 2022, land with an area of 26.1 million square meters (equivalent to approximately 10.1 sq mi) were owned by Fraport AG. Depending on the location and type of use, the market value of the land included in property, plant, and equipment varies between €1 and €720 per square meter (equivalent to approximately 10.75 sq ft) (land values published by the committees of experts for real estate values of the State of Hesse).

Property, plant, and equipment includes rights of use from leases for land and buildings. The development of the rights of use can be found in the Consolidated Statement of Changes in Non-current Assets.

Right-of-use assets as at the balance sheet date amounted to €152.0 million (previous year: €176.3 million) primarily relating to the companies of Fraport USA (International Activities & Services segment), which operates and develops commercial terminal space at various US airports as part of rental and concession contracts. Only the fixed minimum lease payments guaranteed to the lessor were included in the measurement of the lease liabilities of the companies of Fraport USA. Sales-related (variable) rental payments to be paid in addition are recognized as expenses in the respective period and are reported in the cost of materials for the companies of Fraport USA. The rental and concession agreements currently in force at Fraport USA generally have a term of ten years and some extension options of five years each, but these cannot be exercised unilaterally and therefore cannot be assessed with sufficient certainty. Therefore, only fixed terms without optional periods are taken into account as lease terms. The longest-running contract with Fraport USA as at the reporting date ends on January 31, 2029.

The variable leasing payments incurred in the fiscal year are entirely attributable to Fraport USA. Future cash outflows from variable lease payments occur if the lease payments for the fiscal year exceed the contractually defined minimum lease payments (base rents) that were included in the measurement of the lease liabilities. The exceeding part is treated as variable lease payment. The total amount of lease payments to be paid depends on the revenue received from subletting the concession areas.

As at the balance sheet date, future nominal payment obligations arising from existing leases amounting to €264.4 million. A maturity analysis of the lease liabilities is shown in note 47.

In the Fraport Group, income of €3.2 million (previous year: €35.2 million) from the application of the relief provisions to IFRS 16.46 adopted on May 28, 2020 was realized in the fiscal year (rental concessions in connection with the Covid-19 pandemic).

21. Investment Property

Investment property includes land and buildings situated in direct vicinity to Frankfurt Airport, which are classified as follows:

The undeveloped land – Level 2 is undeveloped land in the Kelsterbach district directly next to the Runway Northwest.

The fair value of the undeveloped land – Level 2 is calculated internally using the comparative value procedure pursuant to the Real Estate Valuation Regulation of December 3, 2019 (ImmoWertV) applicable in Germany based on the standard ground values published by a committee of experts. The fair value of undeveloped land – Level 3 is also determined internally using the comparative value method. However, the prices per square meter used for current land transactions in the same development area are not observable on the market. The decrease in the carrying amount is the result of necessary reclassifications to property, plant, and equipment.

The developed land – Level 3 comprises real estate leased for residential purposes from the voluntary purchase program for real estate in Flörsheim in the flight zone of Runway Northwest, the long-distance train station plot, and the parking garages in Gateway Gardens, as well as commercially leased properties.

The fair values of the developed land - Level 3 category are determined in part using the income capitalization approach in accordance with the German Real Estate Valuation Ordinance (ImmoWertV) and in part using the discounted cash flow approach by external appraisers. The main input parameters for the income capitalization approach are the multiplier, which depends on the useful life and the property interest rate, and the underlying annual rent. In the discounted cash flow method, a perpetual annuity is assumed. The main input parameters are the discount rate, the sustainable market rent, the assumed remaining useful life, forecast maintenance costs and the expected development of rents.

For major parts of the investment property, foreseeable restrictions on saleability arise from the fact that these areas are located in the immediate vicinity of Runway Northwest.

Net lease revenue from investment property during the 2022 fiscal year amounted to €6.1 million (previous year: €4.2 million). The total costs incurred for the maintenance of investment property amounted to €1.0 million (previous year: €0.9 million), classified as expenses that are not allocatable (excluding depreciation and amortization), and of which €0.1 million was incurred for property for which no lease revenue was earned during the fiscal year.

As at the balance sheet date, obligations exist for the acquisition of investment property amounting to €0.1 million (previous year: €0.4 million).

22. Investments in Companies accounted for Using the Equity Method

Companies that are Group airports outside of Frankfurt are considered to be substantial joint ventures and associated companies in the Fraport Group. This primarily applies to the airports in Antalya and Pulkovo.

Shares in joint ventures

Fraport TAV Antalya Terminal Isletmeciligi Anonim Sirketi, Antalya/ Türkiye (“Fraport TAV Antalya I”) is a joint venture of Fraport AG and TAV Havalimanlari Holding A.Ş. IC Yatirim Holding A.S. that operates the terminals at Antalya Airport as part of the concession agreement of May 22, 2007 with the Turkish airport authority (DHMI grantor). The concession for the operation of the terminals and thus the right to use all assets listed in the concession agreement runs for a total of 17 years to the end of 2024. In a letter dated February 12, 2021, the Turkish government approved the extension of the concession period for terminal operations at Antalya Airport for an additional two years, to December 31, 2026.

With regard to the authorized use of infrastructure, the company is obligated to perform maintenance and capacity expansions (as required). Distributed over the term of the concession agreement, concession fees of €2.01 billion net must be paid to DHMI. In exchange, the operator 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 grantor.

Fraport holds a 51% interest in the company’s share capital, though neither party may make a decision unilaterally due to the voting system laid down in the partnership agreement. The division of the variable returns from the company is governed separately in the partnership agreement, according to which both partners are entitled to equal amounts in returns. The company accounts for 50% according to the equity method on the basis of the division of the dividend rights and the joint management and control. Since the company is not listed on a stock exchange, there is no available active market value for the shares.

In conjunction with the tender won in December 2021 for the new operating concession at Antalya Airport, Fraport AG, together with TAV Airports Holding, founded the company Fraport TAV Antalya Yatirim, Yapim ve İşletme A.Ş., Antalya, Türkiye, (“Fraport TAV Antalya II”). The operational period of the company will begin in early 2027, after the existing concession expires. Fraport AG holds 49% of the capital shares. The remaining 51% of the shares in the company are held by TAV Airports Holding. Pursuant to the contractually agreed participation rights, the company is jointly controlled by the shareholders. The concession agreement was also concluded in December 2021 between Fraport TAV Antalya Yatirim, Yapim ve İşletme A.Ş and the Turkish government. The agreement runs until 2051. The concession covers the operation of the terminals and other landside infrastructure, including retail space, parking management, and passenger controls. For the new operating concession, Fraport TAV Antalya Yatirim, Yapim ve İşletme A.Ş is required to pay fixed concession charges totaling €7.25 billion net over the term to the Turkish State (DHMI), of which 25% was paid after the conclusion of the concession agreement at the end of March 2022. In the first stage, financing of around €1.4 billion was raised for the advance payment and the expansion investments of around €765.3 million.

The reconciliation for the carrying amount in joint ventures recognized in the Group is shown in the following overview:

There are no further significant restrictions pursuant to IFRS 12.

Investments in associated companies

Thalita Trading Ltd. and its wholly owned subsidiary Northern Capital Gateway LLC (NCG) were founded as companies by Fraport AG, the Russian bank VTB, and the Greek Copelouzos Group. NCG develops and operates Pulkovo Airport (St. Petersburg, Russia) as part of a 30-year concession agreement with the city of St. Petersburg. The company is responsible for the entire airport infrastructure. Since a change in the shareholder structure in 2017, Fraport AG has held 25.0% of the shares in Thalita Trading Ltd.

Due to EU sanctions against Russia in connection with the Russian war of aggression in Ukraine, the operations of the airport in Pulkovo are currently being performed exclusively by the local management of NCG without any decisions being taken by the parent company Thalita Trading Ltd. or its shareholders. Due to the current EU sanctions, the shareholders abstain from shareholders’ meetings and resolutions. Substantial resolutions and decisions on the control of NCG/Thalita Ltd. can, however, still only be made on the basis of the company statutes and shareholder rights that are still valid. As a result, the company continues to be shown as an associated company in the consolidated financial statements. Due to accumulated losses in the past, the investment carrying amount is “zero”. In addition, the losses not recorded in the consolidated income statement were €112.3 million (previous year: €112.3 million). As the financial position and results data of the companies are therefore of no material significance for the Fraport Group, they are not presented separately below.

In connection with the financing of the “Pulkovo” operating project, the Fraport Group has a loan receivable (see note 23), and an interest receivable (see note 24) from Thalita Trading Ltd. As at June 30, 2022, the receivables in the amount of €163.3 million were fully written-off, as no further cash flows (interest and principal payments) are expected due to the current sanctions. This assessment is based, on the one hand, on a Russian presidential decree from May 2022 that prohibits the payment of Euros to the EU. On the other hand, due to the EU sanctions against Russia, it will no longer be possible to make any dividend resolutions for the foreseeable future.

NCG is not listed, there are no available active market values for the shares.

There are no significant restrictions pursuant to IFRS 12.

23. Other Financial Assets

In the year under review, investments in securities amounted to €619.9 million (previous year: €1,077.5 million), which partly were already disposed during the year. Other changes resulted from reclassifications to current other financial assets due to securities of €155.8 million maturing in 2023 (previous year: €93.9 million) and changes arising from valuation of –€64.7 million (previous year: –€8.5 million).

The fund units protected against insolvency are exclusively meant to hedge credits from the time-account models and partial retirement claims in particular of Fraport AG employees. In the 2022 fiscal year, the fund units have increased by €6.1 million (no change in the previous year). As at the reporting date, acquisition costs amounted to €68.6 million (previous year: €62.5 million). These securities are measured at fair value and credited against the corresponding obligations of €66.3 million (previous year: €67.0 million) (see also note 40). At year-end, there was an underfunding from fund units of €1.4 million (previous year: €0.7 million).

The change in other investments relates to shares in Delhi International Airport Private Ltd, New Delhi, India, for which a fair value was determined in the reporting year.

The loans to joint ventures primarily relate to a loan granted to Fraport TAV Antalya Yatirim, Yapim ve İşletme A.Ş in the 2022 fiscal year. The loan to associated companies that was still outstanding in the previous year related to a loan granted to Thalita Ltd., Cyprus, which was fully written off in the fiscal year on June 30, 2022 (see note 22).

24. Non-current and Current Other Financial Receivables and Assets

Accounts receivable from associated companies in the 2021 fiscal year primarily included interest receivables from the interest cost added back pursuant to the effective interest method to the loan to Thalita Ltd. recorded under “Other loans”. There was a full write-off of the interest receivables in the 2022 fiscal year (see note 22).

Other assets include in particular compensation claims recognized in connection with the coronavirus pandemic.

25. Non-current and Current non-financial Other Receivables and Assets

The item “Refunds from passive noise abatement / wake turbulences” includes the expected full reimbursement amount from noise abatement charges from airlines for passive noise abatement and wake turbulences, 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, expenses from refund claims for reduced utilization of outdoor facilities, and roof reinforcement measures (wake turbulences). The value was determined at the present value of the estimated expenses for reimbursing the costs of noise abatement construction measures and estimated expenses for refund claims for reduced utilization of outdoor facilities.

The item developed as follows in the fiscal year:

More information about the corresponding other provisions can be found in note 40. The carrying amount of the refund claim depends on the noise abatement charges actually received, and those expected in the future. The carrying amount of the corresponding provision depends on the actual, and future expected cash outflows for passive noise abatement measures and wake turbulences.

Deferred income mainly relates to construction cost subsidies paid by Fraport AG. These are paid in particular to utility companies that set up facilities for special requirements of Fraport AG. The utility companies are the owners of the utility facilities.

26. Income Tax Receivables

Income tax receivables as at December 31, 2022 primarily comprised refund claims from the current year or previous years.

27. Deferred Tax Assets

Deferred tax assets are recognized in accordance with IAS 12. Further explanations are provided in note 15.

28. Inventories

Raw materials, consumables, and supplies mainly relate to consumables for the airport operation.

29. Trade Accounts Receivable

For 2022, as at the reporting date, the maximum default risk without taking securities into account equaled the carrying amount of €177.1 million (previous year: €152.3 million). The following table provides information on the extent of the default risk with regard to the trade accounts receivable.

As at December 31, 2022, 18% (previous year: 15%) of outstanding accounts receivable were due from two customers.

The guarantees received until the reporting date were neither sold nor passed on as security, and will be returned to the respective debtor after termination of the business relationship. The guarantees received will be used only in the event of the debtor’s default. In addition, commercial credit insurance is taken out for airlines wherever possible. Collateral is taken into account for allowance to be made.

Allowances for trade accounts receivable developed as follows:

In fiscal year 2021, the agreement reached with the German Federal Police in connection with billed aviation security services in recent years, in particular, had an effect on the development of valuation allowances. The settlement of the legal dispute is primarily reflected in increased releases of revenue-decreasing valuation allowances and claims recognized in previous years.

30. Cash and Cash Equivalents

The bank balances mainly include short-term time deposits as well as overnight deposits.

Cash and cash equivalents include time deposits of €1,619.7 million (previous year: €2,156.9 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 short notice.

In connection with financing in Greece and Brazil as well as the capital expenditure commitments of Fraport USA, €139.3 million of bank balances were subject to a drawing restriction (previous year: €74.7 million).

31. Equity Attributable to Shareholders of Fraport AG

Issued capital

Issued capital (less treasury shares) is fully paid up as at the balance sheet date.

Number of floating shares and treasury shares

As in the previous year, the issued capital consisted of 92,391,339 bearer share with no-par value, each of which accounts for €10.00 of the capital stock.

The shares issued to employees in June 2022 under the employee investment plan had been purchased on the market. The shares were issued at a price of €51.30.

Authorized capital

At the AGM on May 23, 2017 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 was 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 22, 2022 by issuing new shares in return for cash.

The Executive Board did not make use of this authorization, meaning there was no longer any authorized capital after the authorization expired on December 31, 2022. In the 2022 fiscal year, the shares for issue within the scope of the employee share program were acquired by Fraport AG on the market.

At the Annual General Meeting on June 1, 2021, new authorized capital (“Authorized Capital II”) of €458.8 million was approved. The Executive Board is entitled, with the approval of the Supervisory Board, to increase the capital stock on one or more occasions by up to a total of €458.8 million until May 31, 2026 by issuing up to 45,884,352 new no-par value bearer shares in return for cash. In principle, the shareholders are to be granted a subscription right. The new shares may also be underwritten by financial institutions with the obligation to offer them to company shareholders for subscription. The new shares will participate in the net income from the beginning of the fiscal year of their issue. To the extent legally permissible, the Executive Board, with the consent of the Supervisory Board and in deviation from Section 60 (2) AktG, can determine that the new shares will participate in net income from the beginning of a fiscal year that has already expired and for which no resolution has yet been passed by the Annual General Meeting on the appropriation of the profit earmarked for distribution at the time of their issue. The Executive Board is further authorized, also with the consent of the Supervisory Board, to exclude the subscription right of the shareholders one or more occasions, insofar as this is necessary to compensate for residual amounts.

Contingent capital

On June 1, 2021, the Annual General Meeting also resolved to conditionally increase the share capital by up to €120.2 million by issuing up to 12,020,931 new no-par value bearer shares (“contingent capital”). The contingent capital serves exclusively to grant shares to the holders or creditors of convertible bonds and/or bonds with warrants or a combination of all these instruments, which, are issued by the company in accordance with the authorization up to May 31, 2026 resolved by the Annual General Meeting on June 1, 2021 and grant a conversion or option right to new no-par value bearer shares in the company or determine a conversion or option obligation or a right to tender and insofar as the issue takes place in return for cash. The new shares are issued at the conversion or option price to be determined according to the previously mentioned authorization resolution. The contingent capital increase is only to be carried out to the extent that conversion or option rights are exercised, or the conversion/option obligation is satisfied, or shares are tendered, and no other forms of fulfillment are used. The new shares will participate in the profits from the beginning of the fiscal year in which they are created by exercising conversion or option rights or through the fulfillment of corresponding obligations (fiscal year of origin); in deviation from this, the new shares will participate in the profits from the beginning of the fiscal year preceding the fiscal year in which they were created if the Annual General Meeting has not yet passed a resolution on the utilization of the profit earmarked for distribution from the fiscal year preceding the fiscal year in which they were created. The Executive Board is authorized, with the consent of the Supervisory Board, to determine the further details of the implementation of conditional capital increases.

Capital reserve

The capital reserve contains the premium from the issue of Fraport AG 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. Furthermore, the revenue reserves include reserves for currency translation differences and financial instruments.

The derivative valuation reserve is –€8.0 million as at the balance sheet date (previous year: –€9.5 million). The reserve for the equity and debt instruments measured at fair value totals €48.4 million (previous year: €69.9 million).

Pursuant to Section 253 (6) sentence 1 of the HGB and in accordance with Section 268 (8) of the HGB, a total of €344.9 million of the shareholders’ equity attributable to Fraport AG’s shareholders (previous year: €353.9 million) is subject to a distribution block. However, the distribution block did not take effect insofar as sufficient free reserves were available.

In view of the economic consequences of the Covid-19 pandemic, the Executive Board has proposed not to pay a dividend for the past fiscal year.

32. Non-controlling Interests

Non-controlling interests related to allocated shareholders’ equity and earnings of Fraport Twin Star Airport Management AD, FraCareServices GmbH, FraSec Aviation Security GmbH, Media Frankfurt GmbH, Lima Airport Partners S.R.L., and the Fraport Group companies Fraport Greece A, Fraport Greece B and Fraport Regional Airports of Greece Management Company.

33. Non-current and Current Financial Liabilities

In the course of the year, promissory note loans in the amount of €539.4 million (previous year: €1,056.5 million) were issued. For more information, please refer to the presentation of finance management and the asset and financial position in the combined management report for additional explanations of financial liabilities.

34. Trade Accounts Payable

Trade accounts payable include liabilities in connection with compensation measures in connection with nature protection law in the amount of €13.7 million (previous year: €15.2 million). The liabilities relate to the contractual obligations to carry out environmental compensation measures based on the finished work to clear the forest south of the airport and near the Runway Northwest, as was necessary for the airport expansion.

35. Non-current and Current Other Financial Liabilities

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 Greece, Lima, Fortaleza, Porto Alegre, Varna, and Burgas.

36. Non-current and Current Other Non-financial Liabilities

The remaining non-financial other liabilities, inter alia, consist wage and church taxes and other taxes and personnel-related liabilities.

37. Deferred Tax Liabilities

Deferred tax liabilities were recognized in compliance with IAS 12 using the temporary concept. Further explanations of deferred tax liabilities can be found under note 15.

38. 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.

Pension obligations primarily include 18 (previous year: 18) vested pension benefits promised in individual pension commitments to members of the Fraport AG Executive Board and their surviving dependents. A reinsurance was already obtained in 2005 to reduce actuarial risks and 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 correspond to the total achievable retirement, occupational disability, and widow’s/widower's benefits in accordance with the pension commitments. Reinsurance benefits are recognized at the active value reported by the insurance company to the value of €24.0 million (previous year: €24.5 million), of which €1.0 million (previous year: €1.0 million) is attributable to reserved trust assets. The reinsurance is not traded on an active market. Plan assets are invested in shares, real estate, fixed-interest securities, and other assets. In addition, €0.04 million (previous year: €0.0 million) were paid in the reinsurance in fiscal year 2022 through deferred compensation. The average weighted term of the members of the Executive Board’s defined benefit plans is 12.2 years (previous year: 14.2 years) for pensions with reinsurance and 6.9 years (previous year: 8.1 years) for pensions without reinsurance.

The Executive Board members are entitled to pension benefits and provision for surviving dependents. An Executive Board member is generally entitled to a retirement pension if he or she becomes permanently unable to work or retires from office during the term 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 widower or widow; 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 retirement 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 is 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% up to a limit of 75%, dependent on the duration of time an Executive Board member is appointed.

As at December 31, 2022, Dr. Schulte is entitled to a retirement pension of 75% and thus the maximum and Prof. Dr. Zieschang a claim of 60% of the respective contractually agreed basis of assessment.

In the event of occupational disability, the pension rate for Dr Schulte and Prof Dr Zieschang amounts to at least 55% of their respective fixed annual gross salaries or of the contractually agreed basis of assessment.

For Executive Board members appointed from 2012 onwards, the pension benefits, provision for surviving dependents, and provision for long-term occupational disability are governed by a separate benefit agreement. This calls for the payment of a one-time pension capital or lifelong retirement pension after the insured event. 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 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 lifelong 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 retirement pension payment by a maximum of five years from 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. The risk of pension payments in the increase phase and of payments for the increase has been reinsured by an occupational disability insurance policy. The full amount of all income pursuant to the Income Tax Act from employment or self-employment is credited against the retirement pension paid until the end of the month in which the Executive Board member reaches the age of 62.

Benefits for surviving dependents of Executive Board members appointed from 2012 onwards are regulated as follows: If there is no prior event giving rise to retirement benefits, the widow or widower receives the pension capital generated so far. If there is no widow or widower entitled to benefits, each half-orphan receives 10% and each full orphan receives 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 reinsured by a term life insurance policy. If an Executive Board member dies while collecting retirement pensions, the widow or widower is entitled to 60% of the last retirement pensions paid. Half-orphans receive 10% and full orphans receive 25% of the last retirement pensions paid. 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 post-contractual restrictive covenant. For this period, appropriate ex gratia compensation in the amount of 50% of the contractual benefits last received by the member of the Executive Board is granted (within the meaning of Section 74 (2) of the HGB); when calculating compensation, the performance-based remuneration components shall be taken into account according to the average of the last three completed fiscal years. If the current remuneration system has not existed for three fiscal years at the end of the contract, the average performance-based remuneration is determined based on the duration of the contract in accordance with the current remuneration system (within the meaning of Section 74b (2) of the HGB). Payment shall be made in monthly installments. The compensation shall be generally credited against any retirement pension owed by Fraport AG. In the case of Executive Board members appointed before 2012, this applies if the compensation together with the retirement pension and other income generated exceeds 100% of the last fixed annual salary. In the case of Executive Board members appointed since 2012, the full amount of the compensation counts toward the retirement pension up to the end of the month in which the member reaches the age of 62 or 65. Payments on the occasion of premature termination of the membership on the Executive Board are credited to the compensation for the period of.

No other benefits have been promised to Executive Board members should their employment be terminated.

The retirement pension payments entitlement of former Executive Board members is determined by a percentage of a contractually agreed fixed basis of assessment.

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 benefits 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 said limited pension benefits and benefits for surviving dependents, there exists a supplementary company retirement benefit for these persons. Accordingly, Fraport AG makes an annual contribution in the amount of 13% of the eligible income as capital components into an individually managed pension account. The period of contribution began on January 1, 1998 for employees who entered into an employment not covered by a collective bargaining agreement before January 1, 2000. Furthermore, this applies to employees who changed from an employment covered by a collective bargaining agreement to one not covered by a collective bargaining agreement after December 31, 1997 or who entered into an employment not covered by a collective bargaining agreement after December 31, 1997, effective as at the time of the change in status. There were 667 benefits (of which 641 vested) as at the end of the year. The present value of the non-vested benefits amounted to €0.0 million (previous year: €0.1 million); the present value of the vested benefits amounted to €12.5 million in the 2022 annual financial statements (previous year: €14.5 million). Future obligations amount to €8.2 million for active employees and €4.3 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 term of 8.0 years (previous year: 9.3 years).

Furthermore, senior managers not covered by collective bargaining have had the opportunity to participate in an employee-financed company pension scheme (“deferred compensation”). The employee contribution 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 24 vested pension commitments totaling €7.4 million (previous year: €8.4 million). Obligations amount to €6.0 million for active employees (previous year: €6.5 million); obligations amount to €1.5 million for former and retired employees (previous year: €1.9 million). The average weighted term of the employee-financed company pension scheme was 7.0 years (previous year: 8.3 years).

Guidelines nos. 2 and 3 as well as company agreement BV 47 were replaced with a new version of company agreement BV 47 and an amalgamated guideline 2 effective January 1, 2017. The new version differs from the previously valid version in that the interest on contributions from January 1, 2017 is no longer accrued at a fixed interest rate of 6% nor is direct interest attributed based on age factors but rather at an annual rate based on the market rate, which is no less than 2% p.a. and no more than 6% p.a. Contributions that have been paid in by December 31, 2016 still accrue interest according to the previous version.

The valuation of pension obligations is based on the provisions of IAS 19. The pension obligations as at December 31, 2022 were calculated on the basis of actuarial opinions. Changes to the obligations outlined above were as follows:

Offsetting

Pension obligations are offset against the plan assets reserved for insolvency insurance below:

The significant actuarial assumptions relate to the pension obligations of the Fraport Group. All pension obligations largely have the same assumptions where the adjustment to pensions is only calculated on pension obligations of the Executive Board members.

Sensitivity analysis

The sensitivity analysis is based on changes in the assumptions while 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 method for determining the sensitivity analysis did not change. The pension provision would vary by the following amounts in the event of a change in assumptions:

The retirement age has no influence on the pensions received by members of the Executive Board and was only calculated for other pensions. Due to the structure of the respective pension plans, the salary adjustment has no effect on pension obligations.

In connection with the defined benefit plans, the Group is exposed to the actuarial risks mentioned above as well as the interest rate risk. Due to the liquidity available in the Group, there is no risk with regard to fulfillment of non- reinsured obligations.

Multi-employer plans

Fraport AG has insured its employees for purposes of granting a 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 7.0% on compensation liable to top-up pension payments; thereof, the employer pays 5.3%, with the contribution paid by the employee amounting to 1.7%. In addition, a tax-free restructuring fee of 1.4% of the remuneration 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 9.0% is paid for some employees included in the statutory social security insurance scheme (generally employees exempted from collective bargaining agreements and Senior Managers) for the consideration subject to ZVK that, according to Section 38 ATV-K, exceeds the upper limit defined in the collective bargaining agreement. The amounts subject to contributions amounted to €349.5 million. The obligations carried out via the ZVK are indirect pension obligations for which no provisions have been established pursuant to Article 28 (1) sentence 2 of the Introductory Act to the German Commercial Code (EGHGB).

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. Reference is also made to the collective bargaining agreement risks arising from the ZVK insurance in the Risk and Opportunities Report in the management report.

The ZVK insurance is generally to be classified as a defined benefit plan (IAS 19.30). Because there is not sufficient information on the plan and the company also covers the risks of other insuring companies with its contributions (IAS 19.34), only the current contributions are accounted for as if it were a defined contribution plan. Due to its structure, the ZVK does not provide 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 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, €22.0 million (previous year: €19.2 million) was recorded as contributions to defined contribution plans for ZVK. Furthermore, due to statutory provisions, contributions are also made to state-administered pension funds in Germany. Contributions in the amount of €24.2 million are expected for the following financial year.

In addition, contributions are paid to state pension insurance institutions in Germany on the basis of statutory provisions. The current contributions are shown as expense for the respective year. Employer contributions made by the Fraport Group to statutory insurance schemes totaled €71.6 million (previous year: €68.4 million).

39. Non-current and Current Income Tax Provisions

Tax provisions amounting to €101.7 million (previous year: €113.1 million) were accrued for unassessed corporation tax and trade taxes, as well as for tax audit risks.

40. Non-current and Current Other Provisions

The development in the non-current and current provisions is shown in the following tables.

In addition to the provisions in connection with the “Zukunft FRA – Relaunch 50” program, the personnel provisions related in particular to partial retirement arrangements, as well as provisions for variable wage and salary components, such as profit distribution for the employees of Fraport AG. The partial retirement provisions are recognized pursuant to IAS 19. The credit for partial retirement is offset against the fund units (see also note 23).

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. As at December 31, 2022, estimated cash outflows (present value) amounted to €1.9 million within one year (previous year: €2.4 million), €9.1 million after one to five years (previous year: €10.0 million), and €24.2 million after five years (previous year: €26.8 million).

The “passive noise abatement” provision includes obligations to refund the passive noise abatement expenses of owners of private and commercial land and obligations to pay outdoor living and commercial area compensation. The obligations result from the planning approval notice made by the Hessian Ministry of Economics, Energy, Transport and Living (HMWEVW) on December 18, 2007 in conjunction with the Act for Protection against Aircraft Noise (Aircraft Noise Act), and the planning approval notice of April 30, 2013. The application deadline for measures from the program was October 13, 2021. Invoices for measures requested by the deadline could still be submitted until October 12, 2022. The provision remaining as at December 31, 2022 in the amount of €1.8 million relates to invoices submitted by the deadline and still being processed. For all obligations reported under "passive noise abatement" there is a corresponding reimbursement right at the reporting date, which is reported under other receivables (see also Note 25). The carrying amount of the refund claim depends on the actually collected, and future expected noise abatement charges. The carrying amount of the corresponding provision depends on the actual, and future expected cash outflows for passive noise abatement measures and wake turbulences. As the application deadline expired in October 2022, the excess amount of the provision was released against the corresponding asset without affecting profit or loss.

A provision for environmental protection compensating measures was created in 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. As at December 31, 2022, estimated cash outflows (present value) amounted to €0.1 million within one year (previous year: €0.8 million), €3.4 million after one to five years (previous year: €3.2 million), and €7.6 million after five years (previous year: €10.0 million). In the fiscal year, there was a reassessment of the expected cash outflows that led to a release of €0.5 million with no affect to profit or loss.

The wake turbulence protection program concerns the protection of roofs in the defined entitlement areas to protect against damage to roof cladding due to gusts of wind caused by wake turbulences. The obligations result from the corresponding supplementation decision dated May 10, 2013 and May 26, 2014. As at December 31, 2022, estimated cash outflows (present value) amounted to €3.7 million within one year (previous year: €1.2 million), €10.0 million after one to five years (previous year: €8.1 million), and €6.4 million after five years (previous year: €7.6 million). The additions in the fiscal year were made in full against the corresponding asset without affecting profit or loss (see note 25).

The remaining provisions include provisions for rebates and refunds of €62.0 million (previous year: €25.1 million), which in the 2022 fiscal year include revenue-decreasing additions of €52.5 million, provisions for possible claims settlements in connection with the strong recovery in traffic and passenger numbers in the fiscal year of €36.9 million (previous year: €3.5 million), provisions for interest related to expected back tax payments of €7.3 million (previous year: €16.8 million), provisions for development measures still to be implemented in connection with the sale of real estate inventories (also see note 28) of €5.2 million (previous year: €5.7 million). Cash flow used in the other provisions are primarily expected within one year.

41. Financial Instruments

Disclosures on Carrying Amounts and Fair Values

The following table presents the carrying amounts, fair values and measurement categories of the hierarchy pursuant to IFRS 13 of the financial instruments as at December 31, 2022:

The following table presents the carrying amounts, fair values and measurement categories of the hierarchy pursuant to IFRS 13 of the financial instruments as at December 31, 2021:

Given the short terms, the carrying amounts of cash and cash equivalents, trade accounts receivable, and current other financial receivables and assets as at the reporting date correspond to the fair value.

The fair values of listed securities are identical to the stock market prices on the reporting date. 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 fair values of loans to joint ventures and associated companies, as well as other non-current financial assets, are determined as the present value of future cash flows. Discounting was applied using the current maturity-linked interest rate as at the balance sheet date.

The carrying amounts of other loans correspond to the respective fair values. The other loans are subject to a market interest rate, and their carrying amounts therefore represent a reliable valuation for their fair values. Part of the other loans are promissory note loans with a remaining term of more than one year. Due to the lack of an active market, no information is available on the risk premiums of their respective issuers. As the promissory note loans are mainly floating interest rate loans, their carrying amounts were used as the most reliable value for their fair values.

Non-current liabilities are recognized at their present value. To determine fair value, the respective cash outflows are discounted at interest rates with similar terms and with the Fraport credit risk as at the reporting date. The carrying amounts of current liabilities are equal to the fair value. There is a general interest rate risk for fixed-interest loans that are extended at the ends of their terms.

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-driven and maturity-linked risk premium of the respective borrower as at the reporting date is added to the cash flows.

The derivative financial instruments relate to interest rate hedging transactions. In the 2022 fiscal year, the two interest rate swaps related to the commitment in Greece were terminated prematurely as part of a refinancing.

The other investments categorized as Level 3 relate to the shares in Delhi International Airport Private Ltd. The fair value is determined based on the discounted cash flow valuation. The equity option in relation to up to 8.4% of the shares in Fraport Greece A and Fraport Greece B, reported as Level 3 in the previous year, was fully exercised in December 2022.

The substantial non-observable input factors for the shares in Delhi International Airport Private Ltd., for determining the fair value, are the forecast cash flows, which are based on the company’s future earnings and planned capital expenditure, as well as the discount factor that is applied. The discount factor used was the WACC (country-specific, weighted average capital cost after taxes).

The following amounts generated from the fair value in the event of changes in assumptions are:

The following table shows the net result for 2022 and 2021 according to IFRS 9:

The net result consists of changes in fair values recognized through profit or loss, impairment losses, and write-ups recognized through profit or loss, exchange rate changes, and gains and losses of disposals.

Interest and dividend income from financial instruments held at FVOCI are also included in the calculation of the net result. Interest and dividend income of the other categories are not included in the net result disclosed.

In addition to the recognized fair value changes, gains on financial liabilities FVTPL also include the fair values of an interest rate swap for which there were no hedged items in the course of the 2022 fiscal year. In addition, the recognized change in the equity option before it was exercised was included in this

Derivative financial instruments and hedge accounting

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 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 existing floating interest rate financial liabilities and assets. As part of the interest rate risk management policy, interest swaps and interest swaps with embedded floors were concluded in order to limit the interest rate risk arising from financial instruments with floating interest rates and assure planning security.

The derivatives existing in connection with the refinancing of the Greek companies in the previous year were prematurely liquidated in the 2022 fiscal year as part of a refinancing that took place. The valuation results of the derivatives were recognized in other income during the term and, in the course of disposal, led to a recycling of income in the amount of €8.3 million, which is reported in the financial result.

The Group holds one interest rate swap as at the reporting date (previous year: three).

The fair values of the derivative financial instruments are recorded as follows in the statement of financial position:

One interest rate swap (previous year: one) is classified as FVTPL. All changes in value resulting from this classification are recorded through profit or loss.