Income statement

Balance cheat

IntroductionOn 25th October 1985, Emirates flew its first routes out of Dubai with just two aircrafta leased Boeing 737 and an Airbus 300 B4. Then as now, our goal was quality, not quantity, and in the years since taking those first small steps onto the regional travel scene, Emirates has evolved into a globally influential travel and tourism conglomerate known the world over for our commitment to the highest standards of quality in every aspect of our business.Though wholly owned by the Government of Dubai, Emirates has grown in scale and stature not through protectionism but through competitioncompetition with the ever-growing number of international carriers that take advantage of Dubais open-skies policy. Not only do we support that policy, but we see it as vital to maintaining our identity and our competitiveness. After making its initial start-up investment, the Government of Dubai saw fit to treat Emirates as a wholly independent business entity, and today we are thriving because of it. The airline has recorded an annual profit in every year since its third in operation.Continuing our explosive growth while continually striving to provide the best service in the industry is the secret of Emirates success. The airline's business includes: An award-winning international cargo division A full-fledged destination management and leisure division An airline IT developer.With a fleet of more than 230 aircraft, we currently fly to over 140 destinations in more than 80 countries around the world, and our network is expanding constantly. Over 1,500 Emirates flights depart Dubai each week on their way to destinations on six continents. In recent years, Emirates has made numerous significant announcements regarding the future of its already state-of-the-art fleet.In 2001, Emirates demonstrated its confidence in the industrys future growth by announcing the largest order in aviation history, valued at USD 15 billion. A staggering 58 new aircraft, a mix of Airbus and Boeing, were to join the rapidly expanding fleet.In 2005, Emirates announced the largest-ever order for the Boeing 777 family of aircraft - 42 in all in a deal worth Dhs 35.7 billion (USD 9.7 billion).At the Dubai Airshow in November 2007, Emirates announced a historic civil aviation aircraft order when it signed contracts for 120 Airbus A350s, 11 A380s, and 12 Boeing 777-300ERs, worth an estimated USD 34.9 billion in list prices. The agreement with Airbus comprises firm orders for 50 A350-900s and 20 A350-1000s, plus 50 options for the A350-900s. The first A350 will be delivered to Emirates in 2015. During 2010, in line with the airlines strategic growth plan, Emirates significantly increased its order for new aircraft. In June at the Berlin Airshow, Emirates announced an order for an additional 32 Airbus A380s and in July at the Farnborough Airshow, 30 more Boeing 777-300ERs were ordered. The combined value of these orders is USD 13.4 billion.In 2011 at the Dubai Airshow, Emirates placed the single largest aircraft order in dollar value in Boeings history when it requested an additional 50 777-300ERs, worth approximately USD 18 billion. The order also included 20 777-300 ER options valued at USD 8 billion, for a total of 70 aircraft valued at USD 26 billion.Underscoring its incredible growth, the airline is currently the worlds largest operator of both the Airbus A380 and Boeing 777.Emirates order-book stands at more than 280 aircraft, with a total value of approximately USD 138 billion as of November 2014. In combination with what is already one of the youngest and one of the most modern fleets in worldwide commercial aviation, this commitment to the future reflects our goal to develop Dubai into a comprehensive, global, long-haul aviation hub.In the financial year 2013/2014, Emirates carried 44.5 million passengers and 2.25 million tonnes of cargo. We look forward to a bright future in which we carry many millions more across a growing network of international destinations.

1- Taxation

Taxation is provided for as and when the liability arises except where management is of the opinion that exemption from such taxation will ultimately be granted by the relevant authorities in the countries concerned.

Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the end of reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

2- Operating Leases In the event of the aircraft leases being terminated prior to their expiry, penalties are payable. Had these leases been cancelled at 31 March 2010, the penalties would have been AED 1,014 m (2009: AED 970 m).

Emirates s entitled to extend certain aircraft leases for a further period of one to six years at the end of the initial lease period. Further, Emirates is entitled to purchase eighteen of one hundred and one (2009: eighteen of ninety four) aircraft under these leases.

In addition, Emirates has seven (2009: eight) Boeing aircraft contracted on operating leases for delivery between April 2010 and March 2016.

3- Revenue recognition

Passenger and cargo (which includes courier and mail) sales are recognised as revenue when the transportation is provided. Revenue documents (e.g. tickets or airway bills) sold but unused are held in the consolidated statement of financial position under current liabilities as passenger and cargo sales in advance. Unused flight documents are recognised as revenue based on their terms and conditions and historical trends.

Revenue from sale of goods is recognised when risks and rewards of ownership are transferred to the customer and are stated net of discounts and returns. Other revenue is recognised net of discounts when services are rendered.

4- Depreciation

Emirates consolidated financial statements are presented in UAE Dirhams (AED), which is also the parent companys functional currency. Subsidiaries determine their own functional currency and items included in the financial statements of these companies are measured using their functional currency.

Foreign currency transactions are translated into functional currency at exchange rates approximating to those ruling on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency at the exchange rates ruling at the end of reporting period. The resultant foreign exchange gains and losses, other than those on qualifying cash flow hedges deferred in equity, are recognized in the consolidated income statement.

Translation differences on non-monetary items classified as available-for-sale financial assets are included in a fair value reserve in equity. Income and cash flow statements of subsidiaries are translated into UAE Dirhams at average exchange rates for the year that approximate the cumulative effect of rates prevailing on the transaction dates and their assets and liabilities are translated at the exchange rates ruling at the end of reporting period. The resulting exchange differences are recognised in the translation reserve in equity.

5- Cash flowThe full fair value of the derivative instrument is classified as non-current if the remaining maturity of the hedged item is more than 12 months as at the end of the reporting period.

Net losses on account of terminated currency derivatives amounting to AED 23 m (2009: Net gains of AED 275 m) will enter into the determination of profit between 2010 and 2017.

Gains on account of terminated interest rate derivatives amounting to AED 36 m (2009: AED 53 m) will enter into the determination of profit between 2010 and 2012.

The maximum exposure to credit risk at the reporting date is the fair value of the derivative asset in the consolidated statement of financial position.

Scoring Criteriascore

Tax- rateLow variance (5)

Operating leases 5

Revenue recognition 5

Depreciation1

Cash flow1

Conclusion:In the financial year 201112, Emirates generated revenues of around AED 62 billion, which represented an increase of approximately 15% over the previous year's revenues of AED 54 billion. Passenger numbers also increased from over 31 million to around 34 million over the same period representing an increase of around 8%. In the financial year 20092010, passenger numbers reached 27.4 millionup from 22.7 million reported in 200809 representing an increase of 20.1% over the previous year. Cargo carried in 200910 also improved, by 12.2% to 1,580,000 tonnes (200809: 1,408,000 tonnes).[92] The airline's profits for the 2009/10 fiscal year rose by more than fourfold to AED 3,538 million ($964 million) up by AED 2,852 million (200809: AED 686 million) on the back of cost cutting and a nearly 21 percent rise in passengers. Its parent company saw profit up 248% for to $1.1 billion for the year to 31 March compared with a $406m profit for the previous year. The airline claims it pays market rates for its fuel, contrary to common belief, however it has a highly successful fuel-price-hedging program. As of March 2012, Emirates did not use fuel price hedging. Fuel was 45% of total costs, and may come to $1.7 billion in the year ending 31 March 2012. In November 2013, Emirates announced its half-year profits, showing a good performance despite high fuel prices and global economic pressure. For the first six months of the fiscal year the revenues reached AED 42.3 billion, an increase of 13% from 2012.