Annual Report 2008-2009 - Emirates.com

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Profitability Group net profit for 2008-09 was AED 1,489 million (2007-08: AED 5,325 million) reflecting higher costs, notably fuel. Group operating profit, at AED 3,040 million, was down AED 1,656 million compared to the previous year as a result of lower than expected revenue growth and lower other operating income. Consequently, the operating margin fell to 6.7% or 4.9 percentage points below last year. Return on shareholder’s funds was lower at 7.9% in a difficult year. Revenue Total Group revenue in 2008-09 was AED 46,259 million, an increase of AED 4,342 million (10.4%) over the previous year. Group revenue consisted of operating revenue of AED 44,656 million and other income of AED 1,603 million (2007-08: AED 38,047 million and other income of AED 3,869 million). All inter company transactions in the Group have been eliminated in computing Group revenue and costs. Emirates operating revenue increased by AED 6,234 million (17.1%) to AED 42,674 million reflecting higher traffic (up by 7.7%) together with improved yields (up by 8.4%). Passenger revenues at AED 32,968 million were 17.2% higher than last year, while cargo and related revenue grew by 13.9% to AED 7,348 million. Passenger and cargo revenue (including excess baggage, courier and mail) constituted 95.3% of Emirates’ total operating revenue. Dnata’s operating revenue increased significantly by 23.7% over last year to AED 3,159 million mainly from strong growth in airport operations and cargo activities. Expenditure Group operating costs at AED 42,658 million (2007-08: AED 35,752 million) were AED 6,906 million or 19.3% up over last year. Total Group expenditure and other costs were AED 44,706 million, a rise of AED 8,170 million or 22.4% over last year. The increase in Emirates’ costs came mainly from higher fuel and oil costs (up AED 3,438 million or 31.2%), corporate overheads excluding foreign exchange translation losses (up AED 690 million or 34.9%), depreciation (up AED 497 million or 30.1%), handling costs (up AED 395 million or 18.5%), employee expenditure (up AED 386 million or 7.1%) and aircraft operating lease costs (up AED 218 million or 6.1%). Fuel cost per available tonne-kilometre increased by 18.8% and now comprises a significant 36.2% of the airlines operating costs excluding subsidiaries. Cash position Group cash generated from operating activities was AED 5,496 million. Emirates contributed AED 5,016 million of cash generation from operating activities while Dnata generated AED 480 million. Group operating cash margin stood at 12.0%. Emirates’ operating cash margin at 11.5% was down 7.4 percentage points reflecting the increase in costs mainly fuel, as well as the impact of the strengthening of the US Dollar. Emirates’ cash generated from operating activities covered 40.0% (2007-08: 53.5%) of current liabilities (trade and other payables and income tax liabilities) at 31 March 2009 while Dnata’s cash generated from operating activities covered 74.8% (2007-08: 62.2%) of current liabilities at 31 March 2009. Capital expenditure Group capital expenditure for 2008-09 was AED 10,376 million, 12.0% higher than the previous year’s level of AED 9,263 million. Aircraft, engines and parts comprised 81% of the total capital spend, including disbursements for aircraft deliveries during the year and progress payments for future deliveries. Cash flow 057 AED million Utilisation Inflow 6000 4500 3000 1500 0 1500 3000 4500 6000 Net cash provided from operating activities Net cash generated from investing activities Net cash used in financing activities Net decrease in cash and cash equivalents and short term bank deposits
The Emirates Group Financial position Group 058 At 31 March 2009, the Group’s cash funds (including held-to-maturity cash investments of AED 200 million) were AED 8,718 million (USD 2,376 million). The Group invested surplus funds in a mix of high credit quality bank deposits and liquidity funds. The overall interest income earned yielded an effective rate of 4.8% (2008: 5.2%), reflecting market rates. Group shareholder’s funds at 31 March 2009 was AED 18,963 million (USD 5,167 million), up by 1% compared to AED 18,867 million (USD 5,141 million) at 31 March 2008. Emirates At 31 March 2009, Emirates cash position (including held-to-maturity cash investments of AED 200 million) was AED 7,368 million (USD 2,008 million) compared to AED 12,619 million (USD 3,438 million) in 2007-08. Cash was recorded after funding capital outflows of AED 5,573 million (USD 1,518 million) comprising pre-delivery payments, spare engines, rotables, buildings and other capital items and also after paying dividends to the shareholder of AED 2,913 million (USD 794 million) during the year. Emirates cash balance more than adequately covers its traditional benchmark of maintaining cash balances for at least six months debt obligations and lease rentals. During the financial year, Emirates took delivery of 21 aircraft, 17 from Boeing and 4 from Airbus. Despite the challenging environment nearly USD 2.6 billion was raised during the financial year to finance these aircraft deliveries, using six different types of financing structures and 12 funding sources. This clearly establishes the firm support that Emirates has from global financial institutions. Airbus deliveries consisted of the first 4 twin deck A380 aircraft out of a total order book of 58 units. These were funded as finance leases and included one unit financed through the Dubai International Financial Centre (DIFC). Boeing aircraft comprised ten B777- 300ER, six B777-200LR and one B777-200LR freighter. Six Boeing aircraft were funded using US Ex-Im Bank support, five as pure operating leases, three through sale and lease back transactions and two as Islamic leases syndicated by global financial institutions. The freighter aircraft was financed as a pure operating lease from Dubai Aviation Enterprises (DAE). Emirates cash profit from operations (or EBITDAR) for the year ended 31 March 2009 was 16.4% of operating revenue or AED 6,986 million. EBITDAR for the year equated to more than 15 months of debt service and lease rentals, including periodic principal and interest payments on aircraft financing and bond issues. Emirates continued to target a balanced portfolio approach, whilst still taking advantage of market movements, of hedging around half of its interest rate and currency risk exposures, using prudent hedging solutions including interest swaps and options. Emirates borrowings and lease liabilities (net of cash) after including operating leases, at 31 March 2009, comprised 61% on a fixed interest rate basis with the balance 39% on floating interest rates. A one percentage point increase in interest rates would increase the interest charges and the operating lease charges (net of interest income) during the next financial year by AED 109 million (2007-08: AED 57 million). At 31 March 2009, Emirates borrowings and lease liabilities carried a weighted average interest rate of circa 3.52% (2007-08: 5.21%). Emirates proactively managed its currency exposure by using prudent hedging solutions including currency swaps, options and natural hedges through outflows denominated in Pound sterling, Euro, Japanese yen and Australian dollar. For the year ended 31 March 2009, net annual Australian dollars receipts were fully hedged, while hedging coverage for Pound sterling, Euro, New Zealand dollar and Japanese yen were 56%, 29%, 76% and 38% respectively. Shareholder’s funds (AED million) 20000 16000 12000 8000 4000 0 Shareholder’s funds 2004-05 2005-06 2006-07 2007-08 2008-09 Shareholder’s funds (AED million) Net profit 5250 4500 3750 3000 2250 1500 750 0 Net profit (AED million) Emirates shareholder’s funds at 31 March 2009 was AED 16,410 million (USD 4,471 million), compared to AED 16,687 million (USD 4,547 million) in the previous year. For the financial year ending 31 March 2009, Emirates long term borrowings and lease liabilities was AED 15,140 million (USD 4,125 million). Emirates long term borrowings and lease liabilities (net of cash) / shareholders’ funds ratio was 49% (2007-08: 1%). After including operating leases, the same ratio was 138.5% (2007-08: 82.0%). Dnata At 31 March 2009, Dnata cash balance was AED 1,350 million (USD 368 million). This balance was recorded after funding capital outflows of AED 172 million during the year. Dnata shareholder’s funds at 31 March 2009 was AED 2,553 million (USD 696 million), up by 17.1 % compared to AED 2,180 million (USD 594 million) in the previous year. Dnata long term debt was AED 412 million (USD 112 million) at 31 March 2009, a net decrease of AED 116 million over 31 March 2008.
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Annual Report 2008-2009 The Emirate
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The Emirates Group Emirates is the
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4 The Emirates Group Chairman and C
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Page 32 and 33: coordination between them. This has
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Page 46 and 47: external agencies such as Dubai Imm
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Page 54 and 55: Contents Financial Report 2008-2009
Page 56 and 57: Consolidated financial statements T
Page 60 and 61: Value added Value added is a measur
Page 62 and 63: Fuel and oil 14,443 Employee (see (
Page 64 and 65: Capacity, traffic, load factor and
Page 66 and 67: At 31 Mach 2009: Fleet information
Page 68 and 69: Expenditure 067 2008-09 2007-08 AED
Page 70 and 71: Employee strength and productivity
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Page 74 and 75: Consolidated balance sheet as at 31
Page 76 and 77: Consolidated cash flow statement fo
Page 78 and 79: 2. Summary of significant accountin
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Page 86 and 87: 4. Revenue (continued) Transport re
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Page 96 and 97: 18. Capital Capital represents the
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Page 102 and 103: 27. Trade and other payables Trade
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35. Financial risk management Finan
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35. Financial risk management (cont
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36. Capital risk management Emirate
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Consolidated income statement for t
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1 April 2007 62,615 Currency transl
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1. Establishment and operations Not
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2. Summary of significant accountin
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2. Summary of significant accountin
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8. Property, plant and equipment Co
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10. Investments in subsidiaries, as
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12. Trade and other receivables Tra
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14. Employee end of service benefit
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17. Trade and other payables Less t
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23. Related party transactions The
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24. Financial risk management Dnata
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24. Financial risk management (cont
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