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Annual Statements

Home Annual Statements Financial Statements 2013 Notes to the consolidated financial statements Critical judgements and estimates

Critical judgements and estimates

The preceding pages provide a comprehensive description of Schiphol Group’s accounting policies. Management’s judgement will be decisive in determining the way in which they are applied in certain situations. Preparation of the financial statements means that judgements, estimates and assumptions by management influence the amounts recognised for assets, liabilities, revenue and expenses.

Judgements

Management’s judgements in applying IFRS that have a significant effect on the financial statements concern the classification of associates as subsidiaries, joint ventures or associates and the assessment of investment property.

Estimates

The fair value of the land recognised under ‘investment property’ is measured annually by external and in-house valuers. A different part of the land holdings is appraised by independent external valuers each year. The best evidence of fair value is the current price of similar investment property and other contracts in an active market. In the absence of such information, Schiphol Group determines the amount within a range of reasonable fair value estimates.

In view of the limited publicly available information, the complexity of the property appraisals and the considerable reliance on independent external valuers, Schiphol Group believes that investment property qualifies as level 3. The table on the next page sets out the elements used in the measurement for the areas Schiphol and Rotterdam.

Other estimates relates particularly to:

  • impairment of goodwill and other non-current assets;
  • useful life and residual value of assets used for operating activities;
  • deferred tax assets;
  • actuarial assumptions with regard to employee benefit provisions;
  • assets and liabilities with regard to claims and disputes.

Further information is presented in the notes on these items. No other critical assumptions on measurement were made in applying the accounting policies except for those disclosed in the notes to the financial statements. Estimates and the related assumptions are based on management’s experience and insights and developments in external factors which can be regarded as reasonable. Judgements and estimates are subject to change as facts and insights change and may be different in another reporting period. The differences in outcome are recognised through the balance sheet or income statement depending on the nature of the item. Actual results could differ from previously reported results based on estimates and assumptions.

(in thousands of euros)

Fair value as at 31 December 2013

Valuation technique

Unobservable inputs

Range (average) in euros

Offices

523,409

Capitalised rental value

Net initial yield

5,96%-10,59% (7,75%)

DCF Method

Gross initial yield

7,10%-14,01% (10,55%)

Rental value per m²

115-353 (197)

Management expenses (% of rental value)

8,59%-12,94% (10,21%)

Commercial space

262,253

Capitalised rental value

Net initial yield

6,60%-9,20% (7,28%)

DCF Method

Gross initial yield

5,22%-12,59% (9,25%)

Rental value per m²

70-132 (102)

Management expenses (% of rental value)

8,16%-15,43% (11,03%)

Land:

Offices

347,522

Residual land value (developed)

Gross initial yield

6,75%-8,00% (7,42%)

Construction cost per m² (gross floor area )

1.000-1.600 (1.267)

Residual land value per m² (gross floor area)

296 - 949 (586)

Commercial space

-

Gross initial yield

7,75%-8,25% (8,00%)

Construction cost per m² (gross floor area ) /ppl

400 - 750 (567)

Residual land value per m² (gross floor area)

159 - 500 (335)

Other

1,803

Gross initial yield

6,8%-8,25% (7,67%)

Construction cost per m² (gross floor area ) /ppl

50 - 1.675 (802)

Residual land value per m² (gross floor area)

31 - 650 (272)

Total of property investments

1,134,987