IAS 17, sale and finance leaseback, disclosures

Swisscom Ltd – Annual report – 31 December 2017

Industry: telecoms

2.2 Financial liabilities (extract)

Finance lease liabilities

Swisscom concluded two agreements in 2001 for the sale of real estate. At the same time, Swisscom entered into long-term agreements to lease back part of the real estate sold which, in part, qualify as finance leases. The gain realised on real estate classified as finance leases was deferred. As of 31 December 2017, the deferred gains totalled CHF 146 million (prior year: CHF 158 million). The deferred gains are released to other income over the term of the individual leases. The effective interest rate of the finance lease liabilities was 4.9%.

The minimum lease payments, financial liabilities and the future payment thereof, in terms of their net present value, relating to these leaseback agreements are set out in the following table: