Notes to the Consolidated Income Statement

5. Revenue

In fiscal year 2021, the agreement reached with the German Federal Police in connection with billed aviation security services in recent years had a positive effect of €57.8 million on revenue from security services in the Aviation segment. Information on revenue can be found in the management report under the chapter “Results of Operations” as well as the segment reporting (see note 42).

The Retail & Real Estate segment includes income from operating leases from renting terminal areas, offices, buildings, and properties. No purchase options have been agreed upon. When renting retail space, either minimum rents or variable, revenue-related rents apply, depending on the occurrence of contractually defined conditions. Predominantly variable rents are agreed for these areas. Overall, during the fiscal year, revenue-related rent of €127.8 million (previous year: €56.9 million) was realized. The underlying lease contracts in the Retail section for fiscal year 2022 contain contractually agreed minimum lease payments of €33.6 million (previous year: €16.6 million).

Properties were predominantly rented in the form of assigned hereditary building rights. On the reporting date, the remaining term of hereditary building rights contracts is 42 years on average (previous year: 43 years).

The acquisition and production costs of the leased buildings and land amount to €523.9 million (previous year: €522.4 million). Cumulative depreciation and amortization came to €380.2 million (previous year: €375.6 million), of which depreciation and amortization amounted to €4.3 million for the fiscal year (previous year: €4.8 million).

Revenue in the International Activities & Services segment is allocated to the Aviation and Non-Aviation sections as well as contract revenue from construction and expansion services related to airport operating projects. The Aviation revenue includes revenue, in particular, from airport charges as well as security services (€594.6 million; previous year: €316.6 million). Revenue in the Non-Aviation section was €288.1 million (previous year: €171.7 million), resulting from retail and real estate activities as well as parking. In addition, €84.5 million (previous year: €58.8 million) was attributable to infrastructure charges and ground handling services. Contract revenue from construction and expansion services related to airport operating projects in the amount of €331.1 million (previous year: €241.7 million) was attributed to Lima (€312.1 million; previous year: €190.3 million), Greece (€10.3 million; previous year: €29.9 million) as well as Fortaleza and Porto Alegre (€8.7 million; previous year: €21.5 million).

Revenue in the amount of €3,194.4 million (previous year: €2,143.3 million) resulted from €2,236.2 million (previous year: €1,484.2 million) from contracts with customers in accordance with IFRS 15. Other revenue relates to particular contract revenue from construction and expansion projects in accordance with IFRIC 12 as well as proceeds from rentals and other leases.

The total amount of future income from minimum lease payments arising from non-cancelable leases is as follows:

The future income from minimum lease payments includes the contractual unconditional minimum rental for the retail areas as well.

6. Other Internal Work Capitalized

The other internal work capitalized primarily relates to engineering, planning, and construction services and services of commercial project managers, as well as other performance work. The internal work capitalized primarily arose as part of the expansion program and for the expansion, renovation, and modernization of the existing airport infrastructure at Frankfurt Airport.

7. Other Operating Income

In the 2022 fiscal year all shares in the associated company Xi’an and in the joint venture D-Port Logistik GmbH were sold. A net income of €53.7 million (Xi’an) and €18.6 million (D-Port Logistik GmbH) resulted from the transactions.

The income from releases of valuation allowances resulted in the amount of €1.9 million from released valuation allowances on receivables from joint ventures.

Furthermore, compensation claims totaling €49.2 million were realized again in connection with Covid-19 (previous year: €320.9 million). This mainly relates to the agreements reached at Fraport Greece (€23.6 million; previous year: €92.8 million) and the two Brazilian Group companies (€18.5 million, previous year: €26.5 million). In addition, the waiver of short-term minimum lease payments at the Group companies of Fraport USA in the amount of €3.2 million (previous year: €35.2 million) had a positive effect in fiscal year 2022. In contrast, the previous year was influenced in particular by the compensation of €159.8 million granted by both the German Federal Government and the State of Hesse for the holding costs incurred in the first lockdown in 2020 at the Frankfurt site.

8. Cost of Materials

In the context of the airport operating projects outside of Germany (see also note 49) the cost of purchased services includes accrued variable concession charges of €183.1 million (previous year: €77.9 million), as well as order costs for construction and expansion services of €331.1 million (previous year: €241.7 million), which were allocated to the cost of raw materials, consumables, supplies, and real estate inventories.

9. Personnel Expenses and Number of Employees

Additions to pension provisions and additions to obligations arising from time-account models are included in personnel expenses.

The contributions for short-time work schedules resulted in a reduction in personnel expenses of €1.9 million (previous year: €78.0 million). Of this amount, €0.5 million (previous year: €30.9 million) was attributable to social security contributions to be reimbursed.

10. Depreciation and Amortization

Regular depreciation and amortization

The useful lives of property, plant, and equipment were re-measured in the year under review, resulting in reduced depreciation and amortization of €7.4 million year on year (previous year: €12.2 million) and increased depreciation and amortization of €2.1 million (previous year: €1.1 million).

Non-regular depreciation and amortization

Non-regular depreciation and amortization relate to the Group company Fraport USA.

11. Other Operating Expenses

The expenses for damages result from the formation of provisions (see note 40). The rental and lease expenses result from existing rental and lease contracts for operating and office equipment, technical equipment and machinery as well as real estate with a contractual volume of under €0.1 million. On the grounds of materiality, no rights of use in accordance with IFRS 16 have been set aside for these contracts. As with operating leases, the contracts are recorded in expenses. The future minimum lease payments resulting from the contracts are presented in note 46. For additional comments, see note 4.

Among other things, other operating expenses include: Other administrative expenses (e.g., for office supplies), expenses from environmental protection measures, contributions and fees, as well as travel and training costs.

The consulting, legal, and audit expenses include Group auditor fees (disclosed in accordance with Section 314 (1) no. 9 HGB) amounting to €2.1 million (previous year: €2.3 million). Other key certification services provided by the external auditor for Fraport AG related, in particular, to the expert opinion on the chargeable cost basis, as well as to the audit of the non-financial statement. They are comprised as follows:

12. Interest Income and Interest Expenses

Interest income and interest expenses primarily include interest from non-current loans, promissory notes, bonds, and time deposits as well as interest expenses and interest income from interest cost added back on non-current liabilities, provisions, and non-current assets. The net interest payments of derivative financial instruments as well as interest income from securities are recorded as interest result. The increase in interest expenses of €44.8 million resulted mainly from the extensive financing measures by Fraport AG in 2021, as well as in the amount of €19.3 million from the release of the original financing as part of a refinancing in Greece.

13. Result from Companies accounted for Using the Equity Method

The result using the equity method from joint ventures (see note 22) includes, among other things, the result after taxes from the operating Group company in Antalya in the amount of +€59.8 million (previous year: +€16.7 million), as well as the expenses from a contractually agreed tax settlement payment from Fraport AG to FAR of -€8.9 million (previous year: -€6.7 million). The result from associated companies includes the write-up of the impairment loss of shares in Xi’an recognized in previous years of €20.0 million (see note 2).

14. Other Financial Result

The other financial result breaks down as follows:

Other income included in the financial result is primarily the fair value of the minority shareholder’s option to purchase further shares in the companies Fraport Regional Airports of Greece of €4.7 million (previous year: €7.1 million), which was measured until the option was exercised. The expenses of the other financial result have increased substantially due to the depreciation and amortization of the loan receivable from Thalita Trading Ltd. (see note 22).

15. Taxes on Income

Income tax expense breaks down as follows:

Current income tax expense consists of current taxes on income for the year under review (€21.9 million, previous year: €18.9 million) and taxes on income for previous years (€0.8 million, previous year: €14.5 million).

The tax expenses include corporation and trade income taxes, the solidarity surcharge of the companies in Germany, and comparable taxes on income of the foreign companies. The effective taxes result from the taxable results of the fiscal year and any revisions to previous assessment periods, to which the local tax rates of the respective Group company are applied.

Deferred taxes are generally measured using the applicable tax rate of the respective country. For domestic companies, a combined income tax rate of around 31%, which includes trade tax, is applied, unchanged from the previous year.

Deferred taxes are recognized for all temporary differences between the tax and IFRS financial statements, for utilizable carry-forwards of unused tax losses, as well as for carry-forwards of tax-deductible interest.

The assessment of the recoverability of deferred tax assets is based on the probability that the tax loss carryforwards and interest carryforwards will be utilized. This depends on the generation of future taxable profits during the periods in which the tax loss carryforwards/interest carryforwards can be utilized.

As at December 31, 2022, based on current information, the Fraport Group had non-utilizable trade tax losses carried forward of €5.4 million and corporation tax losses carried forward of €0.3 million attributable to taxes (previous year: €5.3 million related to trade taxes and €0.5 million to corporation taxes). The loss carryforwards that are not expected to be utilized result from Fraport Immobilienservice und -entwicklungs GmbH & Co. KG and FraSec Fraport Security Services GmbH and can be carried forward indefinitely.

The Fraport Group has utilizable loss carryforwards in Germany of €618.4 million (corporation taxes; previous year: €613.2 million) and €715.3 million (trade taxes; previous year: €679.8 million) as well as utilizable losses carried forward aboard of €97.1 million (previous year: €23.0 million).

As at December 31, 2022, the Fraport Group no longer has any interest carry-forwards (previous year: €184.6 million). The interest carry-forwards from the previous year resulted from Fraport Greece A and Fraport Greece B exclusively.

For temporary differences in connection with shares in subsidiaries amounting to €678.8 million (previous year: €529.6 million), no deferred tax liabilities were recognized, as Fraport can control the timing of the reversal and it is not expected that these differences will reverse in the foreseeable future. These potential tax liabilities are, however, limited to 1.55% of the difference as well as local withholding taxes in the case of future dividend payments from certain foreign subsidiaries.

In addition, deferred taxes result from consolidation measures. Pursuant to IAS 12, no deferred tax is recognized in the context of initial consolidation with respect to goodwill capitalized or any impairment losses of goodwill.

Deferred tax assets and liabilities are netted insofar as these income tax claims and liabilities relate to the same tax authority and to the same taxable entity or a group of different taxable entities that, however, are assessed jointly for income tax purposes.

Deferred taxes resulting from temporary differences between tax financial valuation and assets/liabilities accounted according to IFRS are assigned to the following financial position items:

The vast majority of the deferred tax assets and liabilities result from non-current assets (investments in airport operating projects, other intangible assets, property, plant, and equipment) and non-current liabilities (primarily concession liabilities), as well as utilizable losses and interest carried forward.

Over the fiscal year, equity-increasing deferred taxes of €18.2 million (previous year: equity-decreasing deferred taxes of €0.4 million) from the change in the fair values of financial derivatives and securities were recognized directly in shareholders’ equity without affecting profit or loss. The equity-decreasing deferred taxes resulted primarily from the revaluation of defined benefit plans to the value of €3.4 million (previous year: equity-decreasing deferred taxes to the value of €2.0 million).

The following reconciliation shows the relationship between expected tax expense and tax expense in the consolidated income statement:

The consolidated tax rate for the 2022 fiscal year is 28.8% (previous year: 21.1%).

16. Earnings per Share

The basic earnings per share were calculated using the weighted average number of floating shares (the same number of shares as in the previous year), each corresponding to a €10 share of the capital stock. With a weighted average number of 92,391,339 shares in the 2022 fiscal year, the basic earnings per €10 share amounted to €1.43.

The rights to purchase shares acquired by employees under the employee share program (MAP) (authorized capital) result in a diluted number of shares of 92,529,395 (weighted average) and thus diluted earnings per €10 share of €1.43. The authorized capital as part of the employee investment plan expired on May 22, 2022 and was therefore taken into account pro rata in the calculation of the diluted earnings.