Annual Report 2008-2009 - Emirates.com

Emirates
1. Establishment and operations
076 Notes to the consolidated financial statements
for the year ended 31 March 2009
Emirates comprises Emirates and its subsidiaries. Emirates was incorporated, with limited liability, by an Emiri Decree issued by H. H.
Sheikh Maktoum bin Rashid Al-Maktoum on 26 June 1985 and is wholly owned by the Investment Corporation of Dubai, a Government
of Dubai entity. Emirates commenced commercial operations on 25 October 1985 and is designated as the International Airline of the
UAE.
Emirates is incorporated and domiciled in Dubai, UAE. The address of its registered office is Emirates Group Headquarters, PO Box 686,
Dubai, UAE.
The main activities of Emirates comprise:
commercial air transportation which includes passenger, cargo and postal carriage services
wholesale and retail of consumer goods
in-flight and institutional catering
hotel operations
2. Summary of significant accounting policies
A summary of the significant accounting policies, which have been applied consistently, is set out below.
Basis of preparation
The consolidated financial statements have been prepared in accordance with and comply with International Financial Reporting
Standards (IFRS). The consolidated financial statements are prepared under the historical cost convention except for those financial
assets and financial liabilities that are measured at fair value as stated in the accounting policies below.
Standards, interpretations and amendments to published standards that are not yet effective, have not been early adopted and
are relevant to Emirates’ operations
At the date of authorisation of these financial statements, certain new standards, interpretations and amendments to the existing
standards have been published that are mandatory for accounting periods commencing on or after 1 Jan 2009. Management is
currently assessing the following standards, interpretations and amendments which are likely to have an impact on Emirates’ operations:
IFRS 3 (Revised), Business combinations (effective from 1 July 2009)
IFRS 8, Operating segments (effective from 1 January 2009)
IAS 1 (Revised), Presentation of financial statements (effective from 1 January 2009)
IAS 19 (Amendment), Employee benefits (effective from 1 January 2009)
IAS 27 (Revised), Consolidated and separate financial statements (effective from 1 July 2009)
IAS 28 (Amendment), Investments in associates (effective from 1 January 2009)
IAS 36 (Amendment), Impairment of assets (effective from 1 January 2009)
IAS 38 (Amendment), Intangible assets (effective from 1 January 2009)
IAS 39 (Amendment), Financial instruments (effective from 1 January 2009)
IFRIC 13, Customer loyalty programmes (effective from 1 July 2008)
Management is in the process of estimating the impact of IFRIC 13, Customer loyalty programmes (effective from 1 July 2008) which will
be adopted effective from 1 April 2009. IFRIC 13 requires that where goods or services are sold together with a customer loyalty
incentive (for example, loyalty points redeemable for future services), the arrangement is a multiple-element arrangement and the
consideration receivable is allocated between the components of the arrangement using fair values. Therefore, the accounting policy for
Emirates frequent flyer programme will be changed to a deferred revenue model effective 1 April 2009, with revenue being recognised
when loyalty points are redeemed and Emirates fulfils its obligations to provide goods or services. Frequent flyer miles are currently
accounted on an incremental direct cost basis as a provision and an operating expense, while revenue from miles accrued through
utilising the services of programme partners is recorded as other operating income. In line with the guidance provided in IAS 8, the
change in the accounting policy will be applied retrospectively.
Basis of consolidation
Subsidiaries are those entities (including special purpose entities) in which Emirates has the power to govern the entity’s operating and
financial policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are consolidated from the
date on which control is transferred to Emirates and are de-consolidated from the date that control ceases. Inter-company transactions,
balances and unrealised gains and losses arising on transactions between Emirates and its subsidiaries are eliminated.