Lineamiento para evaluar la propuesta

Annual financial statements of companies outside Germany denominated in foreign currencies are trans- lated on the basis of the functional currency concept in accordance with IAS 21. A distinction has to be made in this context between economically independent and economically dependent companies. The assets and liabilities of the companies consolidated are translated at the exchange rate on the balance sheet date, whereas the expenses and income are translated at average exchange rates for the year, since the companies are financially, economically and organizationally independent. Foreign currency transla- tion differences are included directly in shareholders‘ equity.

The following exchange rates were used for currency translation purposes:

Exchange rate Exchange rate

on the balance Average on the balance Average

Unit/currency sheet date exchange sheet date exchange

€ Dec. 31, 2004 rate in 2004 Dec. 31, 2003 rate in 2003

1,000,000 Turkish lire (TRL) ...0.5467 ...– ...0.5647 ...– 100 Philippine pesos (PHP) ...1.3071 ...1.4342 ...1.4347 ...1.6289 1 US dollar (USD) ...0.7342 ...0.8043 ...0.7959 ...0.8830 1 Swedish crown (SEK) ...0.1109 ...0.1096 ...0.1101 ...0.1096 1 pound sterling (GBP) ...1.4108 ...1.4738 ...1.4194 ...1.4444 1 Hong Kong dollar (HKD) ...0.0944 ...0.1033 ...0.1020 ...0.1134 1 new sol (PEN) ...0.2233 ...0.2357 ...0.2230 ...0.2539 1 Swiss franc (CHF) ...0.6477 ...0.6477 ...0.6411 ...0.6576 1 Norwegian crown (NOK) ...0.1213 ...0.1195 ...– ...– 1 yuan renminbi (CNY) ...0.0884 ...0.0970 ...– ...– Financial reporting in hyperinflationary economies

The principles for financial reporting in hyperinflationary economies (IAS 29) have been applied for our joint venture in Antalya, Turkey. The criteria for classification of Turkey as a hyperinflationary economy were fulfilled in the year under review. The Antalya financial statements have been revalued in accord- ance with the historical cost approach. The price index used as the basis (Turkish countrywide wholesale price index “WPI”) amounted to 8,403.8 on December 31, 2004 (on December 31, 2003: 7,382.1) and the relevant conversion factor was 1.1384. The Antalya financial statements have been translated at the exchange rates on the balance sheet date in the consolidated balance sheet and the consolidated income statement. The profit or loss from the balance of the monetary items is included in the interest results.

Accounting policies

Consistent accounting and measurement policies

The financial statements of the Fraport Group are based on accounting and measurement policies that are applied consistently throughout the Group.

106 Financial Report 2004 ... Consolidated financial statements

New basis for calculating the key figures EBITDA and EBIT and change in the classification of foreign currency effects

The basis for calculating the key figures EBITDA and EBIT and the classification of foreign currency effects were changed in the fiscal year. In contrast to the previous year, the income from investments and the results from investments held at equity are no longer included in EBITDA and EBIT. Foreign currency gains and losses are allocated to “Other financial results” rather than to “Other operating income” or “Other operating expenses”.

These changes were made in connection with the restructuring of the segments and help to improve the presentation of the operating result considerably. The amounts for the previous year have been adjusted accordingly to facilitate comparison.

Consolidated Consolidated income statement income statement

€ million 2004 2003

Total revenues ...2,043.7 ...1,887.7 ./. Personnel expenses ...–974.5 ...–933.9 ./. Cost of materials ...–316.2 ...–284.4 ./. Other operating expenses ...–236.8 ...–207.6 = EBITDA (new) ...516.2 ...461.8 + Income from investments ...13.7 ...30.9 + Results from investments held at equity ...1.8 ...0.6 + Balance of foreign currency effects

(see Other financial results, note 18) ...–0.3 ...10.1 = EBITDA (old) ...531.4 ...503.4 Consolidated Consolidated income statement income statement

€ million 2004 2003

Total revenues ...2,043.7 ...1,887.7 ./. Personnel expenses ...–974.5 ...–933.9 ./. Cost of materials ...–316.2 ...–284.4 ./. Other operating expenses ...–236.8 ...–207.6 ./. Depreciation and amortization of tangible

and intangible non-current assets ...–235.1 ...–258.1 = EBIT (new) ...281.1 ...203.7 + Income from investments ...13.7 ...30.9 + Results from investments held at equity ...1.8 ...0.6 + Balance of foreign currency effects

(see Other financial results, note 18) ...–0.3 ...10.1 = EBIT (old) ...296.3 ...245.3 Realization of income and expenses

Revenues and other income are included in accordance with IAS 18, when the service has been provided, when it is probable that an economic benefit will be received and when this benefit can be quantified reliably. Income and expenses from the same transactions and/or events are included in the same period according to the matching principle.

The conditions for the application of revenue and profit realization in long-term construction contracts (IAS 11) are not met in the Fraport Group.

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Intangible assets

Intangible assets (IAS 38) including goodwill are capitalized at acquisition costs and are amortized over their probable useful life by the straight-line method. Borrowing costs are recognized directly as an ex- pense (IAS 23).

The conditions for capitalization of development costs (IAS 38) are not met in the Fraport Group. Property, plant and equipment

Property, plant and equipment (IAS 16) are valued at acquisition or production costs minus scheduled depreciation by the straight-line method. The production costs essentially include all costs that can be allocated directly. Borrowing costs are recognized directly as an expense (IAS 23).

Real estate is investigated to determine whether investment properties as defined by IAS 40 are involved. The volume of investment properties is insignificant, so IAS 40 is not applied.

Asset-based government grants are included in liabilities and are released by the straight-line method over the useful life of the asset for which the grant has been made. Success-based grants are included as other operating income (IAS 20).

Impairment write-downs

Impairment write-downs are made with respect to intangible assets and property, plant and equipment on the balance sheet date when the recoverable amount of the asset has decreased to below the book value. The recoverable amount is defined as the higher of the net selling price and the value in use. The value in use is the present value of the estimated future cash flows of funds from the use and subsequent disposal of the asset.

Since it is not generally possible at Fraport AG to allocate cash flows to individual assets, what are known as cash-generating units are formed. A cash-generating unit is defined as the smallest identifiable group of assets that generates cash flows that can be separated. Formation of the cash-generating units is based fundamentally on the segment structure at Fraport AG. The Group companies and investments held at equity allocated to the segments each form an independent cash-generating unit.

Finance leasing

Economic ownership of leased assets is attributed to the lessee according to IAS 17 if the lessee has essen- tially all the risks and opportunities associated with ownership of the leased assets. If economic ownership can be attributed to the Fraport Group as lessee, capitalization is carried out at the time when the con- tract is concluded with the present value of the leasing payments plus any incidental costs that are paid. The depreciation methods and useful lives correspond to those of comparable, bought assets. If economic ownership cannot be attributed to the Fraport Group as lessor, a receivable equivalent to the present value of the leasing payments is included.

Investments held at equity

Investments held at equity are included in the accounts with the relevant proportion of the shareholders‘ equity plus goodwill.

Other financial assets

The other financial assets include securities in non-current assets, loans and other investments. Other financial assets are capitalized at acquisition costs on the date when the asset is created or transferred. Long-term low-interest or interest-free loans are included at their present value.

The loans are valued at amortized costs on the balance sheet date. Financial assets that are available for sale are valued at fair value. However, if the latter cannot be determined reliably, these assets are valued at their acquisition costs too. Changes in value are included in shareholders‘ equity for the first time in the fiscal year. The insignificant changes in value in the previous years were included in the other financial results (IAS 39).

108 Financial Report 2004 ... Consolidated financial statements

Inventories

Inventories are valued at acquisition or production costs on the basis of the average method. The produc- tion costs include direct costs and appropriate overheads. If necessary, the inventories are valued at the lower net realizable value. If a write-down made in previous periods is no longer necessary, the write- down is reversed (IAS 2).

Receivables and other assets

Receivables and other assets are initially stated with their acquisition costs on the date when economic ownership starts or is transferred. Long-term low-interest or interest-free receivables are posted with their present value at the time when they are issued or acquired.

In subsequent measurement, the receivables and other assets are measured at amortized costs, provided they are not kept for trading purposes. Write-downs that are necessary in view of the probable risk of de- fault are made. Receivables in foreign currencies are translated at the exchange rate on the balance sheet date.

Checks, cash and bank balances

This item is included at updated acquisition costs. Amounts in foreign currencies are translated at the exchange rate on the balance sheet date.

Shareholders‘ equity instruments

Treasury shares that are bought back are deducted from the subscribed capital and the capital reserves (SIC-16).

Deferred taxes

We determine deferred taxes by the liability method (IAS 12). According to this method, deferred tax items are formed for all accounting and valuation differences between the IFRS values and the tax values, provided they cancel each other out in the course of time (temporary differences). If asset items in IFRS accounts are valued more highly than in the tax balance sheet (non-current assets depreciated by the straight-line method, for example) and if temporary differences are involved, a deferred tax liability item is formed. Deferred tax assets from balance sheet differences and benefits from the future use of tax losses carried forward are capitalized under IFRS rules, provided it is probable that taxable earnings will be gen- erated in future.

Deferred taxes are valued on the basis of the current and/or announced tax rate of the country in ques- tion. A combined income tax rate of 40% has been applied in Germany, which is made up of the corpora- tion tax rate plus solidarity surcharge and trade income tax.

Claims to corporation tax credits due to the appropriation of profits are not recognized until the year in which the profits are distributed in accordance with IAS 12. In view of the current moratorium in Ger- many, no corporation tax credits due to distribution can be recognized up to and including 2005. Provisions for pensions and similar obligations

The pension obligations are valued in accordance with IAS 19, applying actuarial methods (projected unit credit method) and an interest rate of 4.9% p.a. (in the previous year: 5.5% p.a.). The calculations are based on an assumption agreed with the Supervisory Board about future salary developments. At the cur- rent time, a rate of 2.0% p.a. has been specified for active members of the Executive Board. As far as for- mer members of the Executive Board are concerned, pension increase assumptions are based on German legislation about the adjustment of salary and pension payments by the federal and state governments for 2003/2004 (BBVAnpG).

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Tax liabilities

Tax liabilities are formed according to the risks anticipated. Other provisions and accruals

Other provisions and accruals are formed according to the risks anticipated. They are included to the extent that there is a current commitment to third parties. It is also required that they are the result of a past event and that an outflow of funds is more likely than not to be needed to meet the commitment (IAS 37).

Provisions for internal costs are not recognized.

Long-term provisions with a remaining term of more than one year are discounted to their present value at a capital market interest rate that is adequate in view of the term involved, taking future cost increases into account, provided that the interest effect is material.

Liabilities

Liabilities are included with the amount of the payment goods or service received. Subsequent valuation is at amortized costs. Liabilities in foreign currencies are translated at the exchange rate on the balance sheet date.

Finance leasing liabilities are stated at the present value of the leasing payments. Derivative financial instruments, hedging transactions

Fraport AG only uses derivative financial instruments to hedge existing and future interest and exchange rate risks. Derivative financial instruments are valued at fair value in accordance with IAS 39. Whereas changes in the value of fair value hedges are included in income, the changes in the value of cash flow hedges are included directly in a separate shareholders‘ equity item. Corresponding to this, deferred taxes on the fair values of cash flow hedges are also included directly in shareholders‘ equity.

Stock options

There are currently no specific accounting requirements requiring application in IFRS for options issued on Fraport AG’s shares in connection with the restricted authorized capital.

Hence, consistent with the previous year and in accordance with IAS 1.22 c), Fraport AG has made re- course to existing standards issued by other standard setters. APP 25 of US GAAP permits stock options to be recorded at their intrinsic value. IFRS 2, which was approved in 2004, covers the accounting of stock options and has to be applied from January 1, 2005 onwards.

New standards

Standards that were issued in the context of the “Improvements to International Accounting Standards” in December 2003 and standards and interpretations that were published in 2004 and only have to be applied from January 1, 2005 onwards have not yet been applied in these annual financial statements.

IFRS 3 “Business Combinations” in connection with IAS 36 “Impairment of Assets” (revised in 2004) and IAS 38 “Intangible Assets” (revised in 2004) now have to be applied to corporate mergers with a contract date after March 31, 2004. IFRS 3 is only being applied to goodwill acquired in earlier corporate mergers from fiscal 2005 onwards.

110 Financial Report 2004 ... Consolidated financial statements Revenues € million 2004 2003 Aviation Airport fees ...491.1 ...448.5 Security services ...115.2 ...82.5 Other revenues ...19.9 ...20.7 ...626.2 ...551.7 Retail & Properties

Real estate ...173.4 ...175.3 Retailing ...113.3 ...107.5 Parking ...49.0 ...48.6 Other revenues ...38.2 ...37.6 ...373.9 ...369.0 Ground Handling

Ground handling services ...414.5 ...395.2 Infrastructure fees ...183.8 ...166.6 Other revenues ...9.8 ...8.9 ...608.1 ...570.7 External Activities ...389.9 ...342.9 ...1,998.1 ...1,834.3 Further explanatory notes can be found in the segment reporting (note 41).

Change in finished goods and work-in-process

€ million 2004 2003

Change in finished goods and work-in-process ...0.0 ...–0.1

Other internal work capitalized

€ million 2004 2003

Other internal work capitalized ...21.8 ...18.0 The other internal work capitalized relate primarily to engineering, planning, construction and associated services. The other internal work capitalized at Fraport AG were incurred essentially in connection with the extension, remodelling and modernization of the terminal buildings and their fire protection systems. Other internal work also related to the expansion program, the expansion of the airport infrastructure and the optimization of the aircraft movement operations.

Explanatory notes about the consolidated