Icelandair Group Annual Report 2007

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64 Independent Auditors’ Report To the Board of Directors and Shareholders of Icelandair Group hf. Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Icelandair Group hf. and its subsidiaries, (the “Group”), which comprise the consolidated balance sheet as at December 31, 2007, and the consolidated income statement, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. We have also audited the pro forma financial information presented in the consolidated income statement and consolidated statement of cash flows and the related disclosures made in the notes to these consolidated financial statements, which have been compiled on the basis described in note 2e to these consolidated financial statements, for illustrative purposes only, to provide information about how the Group’s operations and cash flows might have been if the acquisition of Icelandair Group hf. had been effective at the beginning of the year 2006. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Management is also responsible for the preparation and fair presentation of the pro forma financial information presented in these consolidated financial statements on the basis described in note 2e to these consolidated financial statements. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to express an opinion as to the proper compilation of the pro forma financial information. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the pro forma financial information has been properly compiled on the basis stated. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Icelandair Group hf. as at 31 December 2007, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. In our opinion, the pro forma financial information has been properly compiled on the basis stated in Note 2e to these consolidated financial statements. Without qualifying our opinion, we draw attention to Note 2e, which states that the pro forma financial information is not necessarily indicative of the operations and cash flows that would have been attained if the acquisition of Icelandair Group hf. had indeed taken place at the beginning of the year 2006. Reykjavík, 21 February 2008 KPMG hf. Jón S. Helgason Guðný H. Guðmundsdóttir
Consolidated Income Statement 65 for the year 2007 Pro forma Notes 2007 2006 Operating income: Transport revenue 35,949 34,954 Aircraft and aircrew lease 15,510 10,675 Other operating revenue 12,018 10,514 Operating expenses: 63,477 56,143 Salaries and other personnel expenses 7 20,008 17,761 Aircraft fuel 9,769 9,821 Aircraft and aircrew lease 7,353 4,489 Aircraft handling, landing and communication 4,367 4,038 Aircraft maintenance expenses 5,128 3,229 Other operating expenses 11,375 10,747 58,000 50,085 Operating profit before depreciation and amortisation (EBITDA) 5,477 6,058 Depreciation and amortisation 9 ( 3,140 ) ( 2,732 ) Operating profit before net finance expense (EBIT) 2,337 3,326 Finance income 396 1,599 Finance expenses ( 2,545 ) ( 2,025 ) Net finance expense 10 ( 2,149 ) ( 426 ) Share of (loss) profit of associates, net of income tax 20 ( 59 ) 160 Profit before income tax 129 3,060 Income tax 11,12 128 ( 445 ) Profit for the year 257 2,615 Attributable to: Equity holders of the Company 251 2,621 Minority Interest 6 ( 6 ) Profit for the year 257 2,615 Earnings per share: Basic earnings per share (ISK) 29 0.25 2.62 Diluted earnings per share (ISK) 29 0.25 2.62 The notes on pages 11 to 49 are an integral part of these consolidated financial statements. Amounts are in ISK million
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Icelandair Group Annual Report 2007
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4 2007 Calendar January February Ma
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2007 Calendar 6 July August Septemb
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8 Dear Shareholder The principal ai
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10 CEO’s Comment It is both a gre
Page 15 and 16: Another charter for today. TF-FIT d
Page 17 and 18: 15 An Extraordinary Shareholders Me
Page 20 and 21: 18 Board of Directors Gunnlaugur M.
Page 23 and 24: Market Overview 21 The Aircraft Mar
Page 25 and 26: Icelandair Group Fleet 23 2 Boeing
Page 27 and 28: Financials 25 FINANCIAL INCOME AND
Page 29 and 30: Shareholder Information 27 the tota
Page 32 and 33: 30 Risk Management Risk Management
Page 34 and 35: 32 Senior Management of Icelandair
Page 36 and 37: 34 Senior Management Hjörtur Þorg
Page 38 and 39: 36 Senior Management Árni Gunnarss
Page 40 and 41: 38 Our Roots in the Community Icela
Page 42 and 43: 40 Scheduled Airline Operations Sch
Page 44 and 45: 42 Icelandair Icelandair is the lar
Page 46 and 47: 44 and New York to Keflavik and nig
Page 48 and 49: 46 Icelandair Ground Services Inter
Page 50 and 51: 48 Global Capacity Solutions Icelan
Page 52 and 53: 50 Loftleiðir Icelandic Global Cap
Page 54 and 55: 52 Bluebird Cargo Global Capacity S
Page 56 and 57: 54 Chefs at the Hilton Reykjavik No
Page 58 and 59: 56 Air Iceland Travel & Tourism Ope
Page 60 and 61: 58 Icelandair Hotels Outlook Icelan
Page 62 and 63: 60 Iceland Travel At Iceland Travel
Page 64 and 65: 62 Endorsement & Statement by the B
Page 68 and 69: 66 Consolidated Balance Sheet as at
Page 70 and 71: 68 Consolidated Statement of Cash F
Page 72 and 73: 70 Notes, contd.: 2e. contd.: begin
Page 74 and 75: 72 Notes, contd.: 3c. contd.: (iii)
Page 76 and 77: 74 Notes, contd.: 3. contd.: i. Imp
Page 78 and 79: 76 Notes, contd.: 3. contd.: p. Inc
Page 80 and 81: 78 Notes, contd.: 3t. contd.: •.
Page 82 and 83: 80 Notes, contd.: 5. contd.: Busine
Page 84 and 85: 82 Notes, contd.: Operating expense
Page 86 and 87: 84 Notes, contd.: 14. contd.: Aircr
Page 88 and 89: 86 Notes, contd.: 18. contd.: Trade
Page 90 and 91: 88 Notes, contd.: Long-term receiva
Page 92 and 93: 90 Notes, contd.: 28. contd.: Hedgi
Page 94 and 95: 92 Notes, contd.: 32. Contractual r
Page 96 and 97: 94 Notes, contd.: 35. contd.: The n
Page 98 and 99: 96 Notes, contd.: 38. contd.: Expos
Page 100 and 101: 98 Notes, contd.: 38. contd.: Expos
Page 102 and 103: 100 Notes, contd.: 38. contd.: Equi
Page 104 and 105: 102 Notes, contd.: 43. contd.: Sala
Page 106: 104 Notes, contd.: Pro forma 2007 2
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Icelandair Group Annual Report 2007

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