financial statements - contents > > - Cyprus Airways

CYPRUS AIRWAYS 

ANNUAL REPORT 2002 

financial statements - contents 

Directors’ report 

Auditors’ report 

Consolidated profit and loss account 

Consolidated statement of recognised gains and losses 

Consolidated balance sheet 

Balance sheet 

Consolidated cash flow statement 

Notes to the financial statements 

38-39 

40 

41 

41 

42 

43 

44 

45-73 

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37



directors’ report 

The Board of Directors of Cyprus Airways Limited (the ‘Company’) presents to the members the annual report 

and the audited financial statements of the Group for the year ended 31 December 2002. 

Results 

The consolidated results for the year are summarised below: 

í’000) 

Revenue 185.432) 

Operating expenses (188.436) 

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Operating loss (3.004) 

Net financing income 561) 

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Loss before exceptional income (2.443) 

Exceptional income 37) 

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Loss before share of profit from associated company (2.406) 

Share of profit from associated company 7.100) 

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ) 

Profit before tax 4.694) 

Tax 5.784) 

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Profit after tax 10.478) 

Earning per share – cents 9,44) 

Dividend 

In accordance with article 110(2) of the Company’s Articles of Association, an amount of not less than ten percent 

of the Company’s available profits for the year shall be distributed to the shareholders as dividend. 

The Board of Directors recommends the payment of a dividend of í650.291, which corresponds to 0,586 cents 

per share, to the shareholders. The proposed dividend represents ten percent of the Company’s profits for the 

year available for distribution. 

Board of Directors 

The late Kallis Lefkaritis who was a member of the Board of Directors has passed away on 15 October 2002. 

Messrs George Kallis and Pavlos Photiades were elected as members of the Board of Directors by the separate 

General Meeting of the Company’s Private Shareholders, which took place on 26 June 2002. Messrs Kikis Lefkaritis 

and Alkis Loizides were elected as members of the Board of Directors by the extraordinary separate General 

Meeting of the Company’s Private Shareholders, which took place on 12 February 2003. Their term of office expires 

on the date of the separate General Meeting of the Private Shareholders of the Company to be held on the same 

date with the Annual General Meeting of the Company and elections will be held on that date to fill four (4) vacancies 

in the Board of Directors. 

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38



directors’ report 

Corporate Governance 

The Board of Directors is considering the Code of Corporate Governance, in consultation with the Government 

of the Republic, as the major shareholder of the Company, as well as with the representatives of the Private 

Shareholders, with the intention of commencing its gradual implementation within 2003. 

Auditors 

The auditors of the Company Messrs KPMG have expressed their willingness to continue in office and a resolution 

fixing their remuneration will be submitted at the next Annual General Meeting. 

By order of the Board 

George Spyrou 

Secretary 

Nicosia, 27 March 2003 

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39

auditors’ report 

to the members of Cyprus Airways Limited 

We have audited the financial statements on pages 41 to 73 and have obtained all the information and explanations 

we considered necessary. These financial statements are the responsibility of the Company’s Board of Directors. 

Our responsibility is to express an opinion on these financial statements based on our audit. This report is made 

solely to the Company’s members, as a body, in accordance with Section 156 of the Companies Law, Cap. 113. 

Our work has been undertaken so that we might state to the Company’s members those matters we are required 

to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do 

not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, 

for our audit work, for this report, or for the opinions we have formed. 

We conducted our audit in accordance with International Standards on Auditing. Those Standards require that 

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 

of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 

disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant 

estimates made by the Board of Directors, as well as evaluating the overall financial statement presentation. We 

believe that our audit provides a reasonable basis for our opinion. 

In our opinion proper books of account have been kept by the Company and the financial statements, which are 

in agreement therewith, give a true and fair view of the state of affairs of Cyprus Airways Limited and the Group 

as of 31 December 2002 and of the profit and cash flows of the Group for the year then ended in accordance 

with International Financial Reporting Standards and comply with the Companies Law, Cap. 113. 

KPMG 

Chartered Accountants 

Nicosia, 27 March 2003 

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consolidated profit and loss account 

Year ended 31 December 2002 

2002) 2001) 

Note í’000) í’000) 

Revenue 4 185.432) 178.268) 

Cost of sales 6 (176.628) (171.401) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Gross profit 8.804) 6.867) 

Administration expenses 6 (11.808) (11.004) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Operating loss 7 (3.004) (4.137) 

Net financing income 9 561) 662) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Loss before exceptional income (2.443) (3.475) 

Exceptional income 11 37) 901) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Loss before share of profit from associated company (2.406) (2.574) 

Share of profit from associated company 42 7.100) 6.625) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Profit before tax 4.694) 4.051) 

Tax 12 5.784) (1.675) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Profit after tax 26 10.478) 2.376) 

Earnings per share – cents 13 9,44) 2,22) 

consolidated statement of recognised 

gains and losses 

2002) 2001) 

Note í’000) í’000) 

Profit after tax 10.478) 2.376) 

Decrease arising on the revaluation of shares/depository certificates -) (10) 

Changes in the fair value of derivative financial instruments hedged 25 2.515) (2.239) 

Changes in exchange difference from translation of 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

foreign currency loans 25 2.266) (1.023) 

15.259) (896) 

The notes on pages 45 to 73 form an integral part of the financial statements. 

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consolidated balance sheet 

31 December 2002 

2002 2001) 

ASSETS Note í’000 í’000) 

NON-CURRENT ASSETS 

Fixed assets 14 125.613 100.493) 

Intangible assets 15 584 532) 

Investments held to maturity 16 157 157) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Associated companies 18 18.404 13.308) 

144.758 114.490) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

CURRENT ASSETS 

Stocks 19 3.121 2.924) 

Debtors 20 34.808 26.297) 

Investments available for sale 21 552 600) 

Cash --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

and bank balances 46.631 48.302) 

85.112 78.123) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

TOTAL ASSETS 229.870 192.613) 

EQUITY AND LIABILITIES 

CAPITAL AND RESERVES 

Share capital 22 55.520 55.520) 

Reserves 23 3.667 (1.069) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Profit and loss account 26 15.797 5.319) 

74.984 59.770) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

LONG TERM LIABILITIES 

Long term loans 27 13.203 25.804) 

Long term portion of finance lease 28 35.344 -) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Provision for deferred taxation 29 4.004 12.019) 

52.551 37.823) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

CURRENT LIABILITIES 

Bank overdrafts 24.441 19.000) 

Short term loans 27 5.617 17.707) 

Current portion of long term loans 27 12.102 12.343) 

Current portion of finance lease 28 3.366 -) 

Creditors and provisions 30 47.839 38.398) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Revenue received in advance 8.970 7.572) 

102.335 95.020) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

TOTAL EQUITY AND LIABILITIES 229.870 192.613) 

These financial statements were approved by the Board of Directors on 27 March 2003. 

Haris Loizides, Chairman of the Board of Directors 

Achilleas Kyprianou, Vice Chairman of the Board of Directors 

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The notes on pages 45 to 73 form an integral part of the financial statements.



balance sheet 

31 December 2002 

2002) 2001) 

ASSETS Note í’000) í’000) 

NON-CURRENT ASSETS 

Fixed assets 14 124.795) 99.951) 

Intangible assets 15 505) 446) 

Investments held to maturity 16 155) 155) 

Subsidiary companies 17 210) 210) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Associated companies 18 18.404) 13.308) 

144.069) 114.070) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

CURRENT ASSETS 

Stocks 19 2.861) 2.589) 

Debtors 20 32.212) 24.949) 

Investments available for sale 21 552) 552) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Cash and bank balances 43.564) 42.431) 

79.189) 70.521) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

TOTAL ASSETS 223.258) 184.591) 

EQUITY AND LIABILITIES 

CAPITAL AND RESERVES 

Share capital 22 55.520) 55.520) 

Reserves 23 3.684) (598) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Profit and loss account 26 13.875) 2.313) 

73.079) 57.235) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

) 

LONG TERM LIABILITIES 

Long term loans 27 13.184) 25.776) 

Long term portion of finance lease 28 35.344) -) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Provision for deferred taxation 29 4.249) 12.190) 

52.777) 37.966) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

CURRENT LIABILITIES 

Bank overdrafts 23.708) 17.830) 

Short term loans 27 5.617) 17.707) 

Current portion of long term loans 27 12.090) 12.331) 

Current portion of finance lease 28 3.366) -) 

Creditors and provisions 30 44.659) 34.941) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Revenue received in advance 7.962) 6.581) 

97.402) 89.390) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

TOTAL EQUITY AND LIABILITIES 223.258) 184.591) 

These financial statements were approved by the Board of Directors on 27 March 2003. 

Haris Loizides, Chairman of the Board of Directors 

Achilleas Kyprianou, Vice Chairman of the Board of Directors 

The notes on pages 45 to 73 form an integral part of the financial statements. 

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consolidated cash flow statement 

Year ended 31 December 2002 

2002) 2001) 

Note í’000) í’000) 

Net cash flow from operating activities 31 16.146) (3.015) 

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Taxation 

Taxation paid (546) (90) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Cash flow for investing activities 

Proceeds from sale of fixed assets 28) 36) 

Interest received 2.703) 3.369) 

Dividend received -) 280) 

Proceeds from sale of shares 40) 910) 

Acquisition of tangible fixed assets (39.020) (2.725) 

Advance payment for acquisition of aircraft -) (18.257) 

Acquisition of intangible assets (331) (285) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Investment in associated companies (34) -) 

Net cash outflow for investing activities (36.614) (16.672) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Cash flow from/(for) financing activities 

Proceeds from issue of new share capital -) 5.626) 

Proceeds from new short term loans -) 17.132) 

Proceeds from new finance lease 41.917) -) 

Repayment of long term loans (11.992) (12.304) 

Repayment of short term loans (11.471) (13.574) 

Repayment of finance lease (1.708) -) 

Interest paid (2.844) (2.914) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Dividend paid - (277) 

Net cash inflow/(outflow) from/(for) financing activities 13.902) (6.311) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Decrease in cash and cash equivalents 32/33 (7.112) (26.088) 

Cash and cash equivalents at the beginning of the year 29.302) 55.390) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Cash and cash equivalents at the end of the year 22.190) 29.302) 

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The notes on pages 45 to 73 form an integral part of the financial statements.



notes to the financial statements 

1. INCORPORATION AND PRINCIPAL ACTIVITIES 

Cyprus Airways Limited, (the Company) was established in Nicosia in 1947, as a public company (Reg. Number 

314) in accordance with the Companies Law, Cap.113. Its principal activities are the transportation of passengers 

and cargo and other airline related services. 

The subsidiary companies of Cyprus Airways are the following: 

(i) Eurocypria Airlines Limited 

It was established on 12 July 1991 in Nicosia with its main activities being the operation of chartered flights. 

It began its operations in March 1992. 

(ii) Cyprair Tours Limited 

It was established on 19 March 1970 in Nicosia and is registered as a Tour Operator in the United Kingdom. 

Its main activity is to organise inclusive holidays from large cities in the United Kingdom to Cyprus. 

(iii) Zenon NDC Limited 

It was established on 28 February 1997 in Nicosia. The company provides access to an international network of 

electronic reservations and information services, especially designed to facilitate travel agents. 

The associated companies of Cyprus Airways Limited are the following: 

Cyprus Airways (Duty-Free Shops) Limited 

It started its operations on 1 May 1996 when it took over the operation of the duty free shops at Larnaca and Paphos 

airports, on the basis of an agreement, which was signed between the company and the Government. 

Hellas Jet A.E. 

It is a new airline company, which was formed on 1 July 2002, is based in Athens and is expected to commence 

operations in the summer of 2003. 

2. BASIS OF PRESENTATION 

The financial statements have been prepared in accordance with the International Financial Reporting Standards, 

comply with the requirements of the Companies Law, Cap. 113 and the Cyprus Stock Exchange Law and Regulations 

and are presented in Cyprus pounds. 

3. SIGNIFICANT ACCOUNTING POLICIES 

The following accounting policies have been consistently applied with respect to items considered significant with 

respect to the financial statements of the Company and of the Group. 

Basis of preparation of the financial statements 

The financial statements of the Company and of the Group have been prepared under the historical cost convention 

as modified by the inclusion of certain assets at valuation. Uniform accounting policies have been applied in preparing 

the financial statements of all the Group companies. 

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3. SIGNIFICANT ACCOUNTING POLICIES (continued) 

Basis of consolidation 

The Group financial statements consolidate the financial statements of the Company and its wholly owned subsidiaries, 

Eurocypria Airlines Limited, Cyprair Tours Limited and Zenon NDC Limited, made up to 31 December 2002 and 

are expressed in Cyprus pounds. The investments in the associated companies are accounted for by using the equity 

method. Although Cyprus Airways (Duty-Free Shops) Limited is wholly owned by Cyprus Airways Limited, the 

former is treated in accordance with International Accounting Standard No.28 "Investments in Associates" as an 

associate, because the Board of Directors is appointed by the Minister of Finance. Extracts from the financial 

statements of Cyprus Airways (Duty-Free Shops) Limited are disclosed in note 42 of these financial statements. 

All transactions and balances between the parent and subsidiary companies have been eliminated on consolidation. 

Treatment of subsidiary and associated companies in the Parent’s Balance Sheet 

The investment in the subsidiary companies is stated in the Parent’s Balance Sheet at cost. The investments in 

associated companies are accounted for using the equity method. In case of permanent diminution in the value of 

the investment of the subsidiary companies the loss arising is charged to the profit and loss account. In the case 

of the associated companies any reduction in their fair value is charged to the profit and loss account. 

Aircraft maintenance 

Scheduled aircraft maintenance is the subject of service agreements entered into by the Company. The costs resulting 

from such agreements relating to routine annual maintenance are charged to the profit and loss account on the basis 

of aircraft utilisation. The costs of major aircraft maintenance (8th ‘C’ checks) are capitalised and written off through 

depreciation over a period of eight years or the remaining useful economic life of the aircraft, whichever is shorter. 

Engines’ overhaul 

Costs relating to the overhaul of engines for all types of aircraft are charged to the profit and loss account on the 

basis of hours flown. 

Foreign currency translation 

The Group as a matter of principle seeks protection against unanticipated adverse fluctuations in currencies. To 

cover its currency exposures, the Group primarily seeks to achieve natural hedging by matching as far as possible 

the currencies of its borrowings/liabilities with those of its future foreign currency revenues. 

Exchange gains or losses relating to foreign currency loans, which are drawn in foreign currency in order to hedge 

the exchange risk in relation to revenues received in the same currency, are treated as follows: 

The portion of the exchange gain or loss on the foreign currency loan that is considered to be an effective hedge 

is transferred to a hedging reserve and is only recognised in the profit and loss account as it crystallises. The portion 

of such gain or loss that relates to a foreign currency loan that is considered to be an ineffective hedge is recognised 

in the profit and loss account. The balance of the hedging reserve is adjusted in accordance with the loan balances 

outstanding in foreign currency at the end of each year. 

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Foreign currency balances, with the exception of airlines’ and agents’ balances, are translated into Cyprus pounds 

at the rates of exchange ruling at the balance sheet date. 

Foreign currency balances of airlines and agents are translated into Cyprus pounds at the IATA rates of exchange 

in force from time to time as appropriate to each transaction. 

The assets and liabilities of the associated and subsidiary companies, which prepare financial statements in foreign 

currencies, are translated into Cyprus pounds using the closing rate of exchange for monetary balances and the 

historic rate for non-monetary balances. The results for the year are translated into Cyprus pounds using the average 

rate of exchange for the year. All exchange differences arising on translation are reflected in the profit and loss 

account. 

Employee benefits 

The Group operates a number of Provident Fund schemes for its employees as described in note 37. In respect of 

defined benefit schemes the amounts included in the profit and loss account are charged in such a way as to spread 

the Provident Fund costs over the average remaining working life of the employees. In respect of defined contribution 

schemes the amounts included in the profit and loss account are the actual amounts incurred during the year. The 

year end unfunded balance is included in creditors. 

Revenue 

Passenger and cargo revenue is recognised when the transportation is provided. Unutilised passenger tickets and 

air waybills are shown as a liability in the balance sheet under "revenue received in advance". Unused tickets are 

recognised as revenue on a systematic basis. 

Commercial arrangements with other airlines 

Some of the Company’s traffic operations are the subject of commercial agreements with other airlines under which 

revenue earned by the participating airlines is shared according to predetermined formulae. 

Fixed assets and depreciation 

Freehold properties are stated at valuation after deducting accumulated depreciation. 

Expenditure for major aircraft modifications is capitalised and is depreciated to residual value over the remaining 

useful economic life of the asset. 

The remaining fixed assets are stated at cost less accumulated depreciation. 

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Depreciation and amortisation are being provided using the straight line method as follows: 

Freehold land 

Buildings on freehold property 

Buildings on leased property and 

improvements on leased property 

A310 aircraft, spares and equipment 



Other equipment 

no charge 

over 20 years 

over the life of the building 

or the life of the lease whichever is shorter 

over 16 years with 10% residual value 



over 2 to 6 years 

Gains or losses on disposal of fixed assets are recognised in the profit and loss account in the year of disposal. 

Leased Assets 

Finance Lease 

The Company has entered into finance leases for the acquisition of two new A319 aircraft and in this respect has 

adopted the accounting policy provisions of International Accounting Standard No.17 "Leases", as set out below: 

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership of the underlying 

asset are classified as finance leases. 

Assets acquired by way of finance leases are capitalised under fixed assets at the inception of the lease at the lower 

of the fair value of the leased asset or the present value of the minimum lease payments. At the inception of the 

finance lease the future lease payments that relate to the capital commitment are recognised as a long term liability. 

Each lease payment comprises the finance charge and the reduction in the capital commitment. The finance charge 

is calculated by applying the prevailing floating rate of interest on the outstanding balance of the capital commitment 

and is recognised in the profit and loss account on an accruals basis. 

Depreciation for aircraft acquired through finance leases is being provided using the straight line method over a 

period of 16 years with 10% residual value, which is consistent with the depreciation policy applied by the Group 

to aircraft which are owned. 

Operating Lease 

Leases in terms of which the Group does not assume substantially all the risks and rewards of ownership of an asset 

are classified as operating leases. 

Operating lease rentals which are paid on a monthly basis are charged to the profit and loss account on a straight 

line basis over the period of the lease. 

Intangible assets and amortisation 

Intangible assets represent the cost of computer software and are stated at cost less accumulated amortisation. 

Amortisation is being provided using the straight-line method over a period of five years. 

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Investments 

‘Investments held to maturity’ 

Investments are classified as held to maturity if the Group has both the intent and ability to hold them to maturity. 

Such investments that have a fixed maturity are carried at amortised cost using the effective interest rate method 

and those that do not have a fixed maturity are carried at cost. 

‘Investments available for sale’ 

Investments are classified as available for sale if the Group intends to hold them for an indefinite period of time, 

but may sell them in response to needs for liquidity or changes in their prices. After initial recognition these 

investments are re-measured at fair value. 

The market values prevailing at the balance sheet date are used to determine the fair value for listed securities. 

The difference between the revalued and the current value is transferred to the revaluation reserve. In case that 

the revalued amount is lower than the current value, the difference is written off from the revaluation reserve to 

the extent that the same investment led to an earlier increase in the revaluation reserve. Any additional diminution 

in value is charged to the profit and loss account. Upon disposal of revalued investments any surplus that had arisen 

on revaluation is transferred to the profit and loss account. 

Stocks 

Bonded items and catering stocks are valued at average cost. Consumable spares for aircraft are written off over 

a period of three years. 

Frequent flyer programme 

The Company operates the Sunmiles Frequent Flyer programme where frequent travellers accumulate kilometre 

credits, which entitle them to various awards including free travel. The incremental direct cost of providing free 

travel in exchange for redemption of kilometres earned by members of the Sunmiles scheme is accrued as members 

accumulate kilometres. Costs accrued include fuel, catering, insurance and other incremental passenger service 

charges and security. These costs are charged to cost of sales. 

Cash and cash equivalents 

Cash and cash equivalents include cash in hand and at bank and short maturity deposits, less overdrafts repayable 

on demand. 

Taxation 

The provision for taxation is based on legislation and rates applicable in Cyprus. 

Deferred taxation is provided for using the balance sheet liability method on all temporary differences between 

the carrying amounts for financial reporting purposes and the amounts used for taxation purposes, except differences 

relating to the initial recognition of assets or liabilities which affect neither accounting nor taxable profit or taxable 

loss. 

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Deferred taxation is estimated using the taxation rates expected to be applicable in the future. The effect on 

deferred taxation of any changes in the tax rates is included in the profit and loss account except to the extent that 

it relates to amounts previously charged or credited to reserves. 

Deferred taxation debit balances arising from negative timing differences are recognised only where it appears likely 

that sufficient tax profits will be available in the future. 

Derivative financial instruments 

The Group, as a matter of principle, seeks protection against unanticipated adverse fluctuations in currencies, interest 

rates and jet fuel prices. To hedge its exposures the Group uses various derivative financial instruments as explained 

below. 

The Group uses forward foreign exchange contracts and currency swap agreements to hedge its foreign currency 

exposure, single and cross currency interest rate swap agreements to hedge its interest rate exposure and jet fuel 

price swaps, collars and straight options to hedge its exposure to jet fuel price fluctuations. 

Derivative financial instruments are recognised initially at cost and subsequently are re-measured at fair value. 

Where a derivative financial instrument hedges the variability in cash flows of a firm commitment or a forecasted 

transaction (hedge item), the portion of any resultant gain or loss from changes in the fair value of the derivative 

financial instrument that is considered to be an effective hedge is transferred to the hedging reserve and is recognised 

in the profit and loss account as it crystallises. The portion of such gain or loss that relates to a derivative financial 

instrument that is considered to be an ineffective hedge is recognised in the profit and loss account. If the derivative 

financial instrument is no longer considered an effective hedge, the cumulative unrealised gain or loss reflected in 

the hedging reserve is transferred to the profit and loss account immediately. 

Fair values are estimated using market prices or discounted cash flow models as appropriate. All derivatives are 

carried as assets when fair value is positive and as liabilities when fair value is negative. 

Comparative figures 

Wherever needed, the comparative figures have been restated to comply with the changes made in the presentation 

of the current year. 

Geographical analysis 

Analysis by segment 

The Group presents its financial information as follows: 

Primary segment 

The Group conducts its activities from its base which is Cyprus, to and from Europe and the Middle East. The 

geographical analysis is given in note 5. 

Secondary segment 

Due to the fact that the Group’s main activity is the transportation of passengers and to a lesser extent the 

transportation of cargo, no analysis is given by activity segment. All other revenue arises from services offered 

exclusively in Cyprus. 

Dividend 

Dividend payable is recognised as a liability in the year in which it is declared. 

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4. REVENUE 

Revenue is analysed as follows: 

2002) 2001) 

í’000) í’000) 

Passenger revenue net of commissions 156.418) 147.664) 

Freight and mail revenue net of commissions 10.618) 9.538) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Other revenue 18.396) 21.066) 

185.432) 178.268) 

Other revenue includes revenue from duty free sales, third party catering sales, revenue from unused tickets, 

etc. 

5. GEOGRAPHICAL ANALYSIS 

2002) 2001) 

í’000) í’000) 

(i) Revenue net of commissions 

Europe 174.107) 167.092) 

Middle --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

East and Gulf 11.325) 11.176) 

185.432) 178.268) 

(ii) Operating loss 

Europe (22) (518) 

Middle --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

East and Gulf (2.982) (3.619) 

(3.004) (4.137) 

In arriving at the revenue and operating profit or loss by geographical area the results of individual routes to/from 

each of the two areas are aggregated. Although the Middle East and Gulf operations appear to be making an 

operating loss, they make a wider revenue contribution to the Group’s network, which is reflected in the profitability 

of European routes. There is no inter-segment pricing between Europe and Middle East and Gulf. 

Due to the fact that the Group’s aircraft are used on different routes during the year, it is not possible to prepare 

an accurate geographical analysis of the Group’s operating capital. 

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6. OPERATING EXPENDITURE 

2002 2001 

í’000 í’000 

Staff expenses 57.694 53.572 

Aircraft maintenance 28.314 25.917 

Operating lease of aircraft 3.857 3.185 

Ad hoc lease of aircraft 315 716 

Fuel cost 25.295 28.202 

En route charges, landing and handling fees 30.579 28.377 

Aircraft catering and duty free sales costs 6.872 6.762 

Depreciation of tangible fixed assets 13.861 12.372 

Amortisation of intangible assets 278 276 

Insurance cost 4.706 1.744 

Selling and promotional expenses 4.552 4.120 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Other expenses 12.113 17.162 

188.436 182.405 

Operating expenditure is analysed into: 

Cost of sales 176.628 171.401 

Administration --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

expenses 11.808 11.004 

188.436 182.405 

7. OPERATING LOSS 

Operating loss is stated after charges in respect of the following: 

2002 2001 

í’000 í’000 

Auditors' remuneration 66 58 

Directors' emoluments (note 8) 80 56 

The average number of staff employed by the Group during the year was 2.364 (2001 : 2.256). 

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8. DIRECTORS’ EMOLUMENTS 

The The 2002 2001 

Company Subsidiaries Total Total 

í í í í 

Fees 13.000 31.000 44.000) 28.500 

Other benefits 35.975 - 35.975) 27.152) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

48.975 31.000 79.975) 55.652) 

9. NET FINANCING INCOME 

2002 2001 

í’000 í’000 

Interest payable on long term loans 804) 1.907) 

Interest payable on short term loans 331) 169) 

Interest payable on bank overdrafts 451) 62) 

Interest payable on finance leases 1.071) -) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Other interest payable 187) 279) 

Total interest payable 2.844) 2.417) 

Less: interest receivable (2.703) (3.369) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

141) (952) 

Exchange (gain)/loss (note 10) (702) 290) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

(561) (662) 

10. EXCHANGE DIFFERENCES 

The exchange gain for 2002, exchange loss for 2001, relates to the repayment of foreign currency loans during 

the year and to the revaluation of foreign currency loans that are considered to be an ineffective hedge against 

future foreign currency exposure. 

11. EXCEPTIONAL INCOME 

The exceptional income for 2002 represents the profit made on the sale of France Telecom S.A. shares held by 

the subsidiary company Eurocypria Airlines Ltd. The exceptional income for 2001 also represents profit made 

on the sale of France Telecom S.A. shares that the Company held. 

The above shares were acquired following an exchange of shares held by Cyprus Airways and Eurocypria Airlines 

Limited in Equant N.V., as a result of the merger of France Telecom S.A. and Equant N.V.. Both France Telecom 

S.A. and Equant N.V. are international companies supplying network services whose shares are listed on the Paris 

and New York Stock Exchanges. 

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12. TAXATION 

2002) 2001) 

í’000) í’000) 

(i) Charge for the year 

Special contribution to the defence fund 193) 89) 

Associate's corporation tax 1.691) 1.708) 

Share of associate's contribution to the defence fund 270) 205) 

Deferred tax - credit (8.015) (297) 

Associate’s --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

deferred tax - charge/(credit) 77) (30) 

(5.784) 1.675) 

(ii) Analysis of tax charge 

Group profit before taxation 4.694) 4.051) 

Tax at 23% - 28% on the Group profit before taxation 1.312) 1.132) 

) 

Taxation treatment of the following: 

Disallowable expenditure 767) 551) 

Decrease in the opening balance of deferred taxation 

as a result of the reduction in the tax rate (7.767) -) 

Investment --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

allowance (96) (8) 

Tax for the year – (credit)/debit (5.784) 1.675) 

Due to non-eligibility of netting off of tax losses with taxable profits between Group companies, the Group taxation 

is the sum of taxation of all Group companies. 

The Company is considered as a public company for tax purposes. 

Based on the new tax legislation which became effective on 1 January 2003, various changes have arisen which 

significantly affect the results of the Group, the most important of which are set out below: 

The corporation tax rate, as from 1 January 2003, will be 10% for taxable profits up to í1,0 million and 15% for 

taxable profits exceeding í1,0 million. The new tax law also enables the carrying forward of tax losses without 

any restriction until their full utilization as well as the setting off of taxable losses with taxable profits between 

Group companies. 

> > 

54




12. TAXATION (continued) 

The deferred tax provision as at 31 December 2002 has been calculated using the new corporation tax rate, 

which will be applicable in the future based on the new tax legislation. The new corporation tax rate being used 

is 10% (2001:28%). 

The deferred tax credit arising as a result of the change in the corporation tax rates amounts to í7,8 million and 

is recognized in the profit and loss account. 

(iii) Tax losses 

The amount of tax losses available for set off against future taxable profits amount to í6,2 million. 

13. EARNINGS PER SHARE 

2002 2001 

í’000 í’000 

Profit after taxation attributable to shareholders 10.478 2.376 

Weighted average number of shares 111.040 107.097 

Basic earnings per share – cents 9,44 2,22 

Earnings per share before deferred tax credit 

as a result of the change in the corporation 

tax rate – cents 2,44 

The weighted average number of shares outstanding during the year was used for the calculation of basic earnings 

per share. During April 2001, 11.251.982 new ordinary shares were issued which resulted from the exercise of 

share warrants. 

> > 

55




14. FIXED ASSETS 

THE GROUP 

Year 2002 

Fleet 

including 

spare engines 

and spares 

í’000 

Advanced 

payment 

for aircraft 

í’000 

Freehold 

property 

í’000 

Leasehold 

property 

í’000 

Equipment 

í’000 

Total 

í’000 

Cost or valuation 

1 January 273.317) 18.937) 854 4.480) 9.121) 306.709) 

Additions 36.643) - - 640) 1.737) 39.020) 

Transfers 19.016 (18.937) - - (79) -) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Disposals (152) - - - (604) (756) 

31 December 328.824 - 854 5.120 10.175) 344.973) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Depreciation 

1 January 194.948) - 110 3.785 7.373) 206.216) 

Charge for the year 12.701 - 26 222) 912) 13.861) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

On disposals (124) - - - (593) (717) 

31 December 207.525 - 136 4.007 7.692) 219.360) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Net book value 

31 December 121.299 - 718 1.113) 2.483) 125.613) 

Year 2001 

Fleet 

including 

spare engines 

and spares 

í’000 

Advanced 

payment 

for aircraft 

í’000 

Freehold 

property 

í’000 

Leasehold 

property 

í’000 

Equipment 

í’000 

Total 

í’000 


1 January 272.143 - 854 4.148) 8.642) 285.787) 

Additions 1.271 18.937 - 332) 1.122) 21.662) 

Disposals (97) - - -) (643) (740) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

31 ¢ÂÎÂÌ‚Ú›Ô˘ 273.317 18.937 854 4.480) 9.121) 306.709) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Depreciation 

1 January 183.457 - 95 3.624) 7.218) 194.394) 

Charge for the year 11.550 - 15 161) 646) 12.372) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

On disposals (59) - - -) (491) (550) 

31 December 194.948 - 110 3.785) 7.373) 206.216) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 


31 December 78.369 18.937 744 695) 1.748) 100.493) 

> > 

56




14. FIXED ASSETS (continued) 

THE COMPANY 

Year 2002 

Fleet 

including 

spare engines 

and spares 

í’000 

Advanced 

payment 

for aircraft 

í’000 

Freehold 

property 

í’000 

Leasehold 

property 

í’000 

Equipment 

í’000 

Total 

í’000 


1 January 273.317) 18.937) 634 4.242 8.306) 305.436) 

Additions 36.643) -) - 621 1.283) 38.547) 

Transfers 19.016) (18.937) - - (79) -) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Disposals (152) -) - - (545) (697) 

31 December 328.824) -) 634 4.863 8.965) 343.286) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Depreciation 

1 January 194.948) -) 69 3.720 6.748) 205.485) 

Charge for the year 12.701) -) 15 209 741) 13.666) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

On disposals (124) -) - - (536) (660) 

31 December 207.525) -) 84 3.929 6.953) 218.491) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 


31 December 121.299) -) 550 934 2.012) 124.795) 

Year 2001 

Fleet 

including 

spare engines 

and spares 

í’000 

Advanced 

payment 

for aircraft 

í’000 

Freehold 

property 

í’000 

Leasehold 

property 

í’000 

Equipment 

í’000 

Total 

í’000 


1 January 272.143) -) 634 3.993 7.890) 284.660) 

Additions 1.271) 18.937) - 249 985) 21.442) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Disposals (97) -) - - (569) (666) 

31 December 273.317) 18.937) 634 4.242 8.306) 305.436) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Depreciation 

1 January 183.457) -) 54 3.581 6.605) 193.697) 

Charge for the year 11.550) -) 15 139 573) 12.277) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

On disposals (59) -) - - (430) (489) 

31 December 194.948) -) 69 3.720 6.748) 205.485) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 


31 December 78.369) 18.937) 565 522 1.558) 99.951) 

> > 

57




14. FIXED ASSETS (continued) 

The freehold properties held by the Group, consisting of land and buildings, were revalued by independent 

revaluation experts using the open market value basis. The latest valuation occurred during 1997. The total 

revaluation surplus, which amounted to í607 thousand for the Group and í494 thousand for the Company, was 

credited to the revaluation reserve. The valuation of non-depreciable fixed assets (land) amounts to í320 thousand 

(2001: í320 thousand) for both the Group and the Company, whilst for the buildings the amount is í524 thousand 

for the Group and í304 thousand for the Company. The net book value of the land before revaluation amounted 

to í15 thousand for both the Group and the Company, whilst for the buildings it amounted to í222 thousand 

for the Group and í115 thousand for the Company. 

The carrying amount that would have been included in the financial statements of the Company and the Group 

had the properties been carried at cost less depreciation is í70 thousand (2001: í82 thousand) for the Company 

and í214 thousand (2001: í241 thousand) for the Group. 

The net book value of aircraft acquired through finance leases which are included under fixed assets amount to 

í42,1 million (2001: ízero). 

The Company has sold the four A310 aircraft and their three spare engines with delivery during the first half of 

2003. 

> > 

58




15. INTANGIBLE ASSETS 

COMPUTER SOFTWARE 

2002 2001 

THE GROUP í' 000 í' 000 

Cost 

Balance 1 January 1.393) 2.194) 

Additions 331) 285) 

Disposals (2) -) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Write-offs (5) (1.086) 

Balance 31 December 1.717) 1.393) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Depreciation 

Balance 1 January 861) 1.488) 

Charge for the year 278) 276) 

On disposals (1) -) 

Write-offs --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

(5) (903) 

Balance 31 December 1.133) 861) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Net book value 31 December 584) 532) 

2002 2001 

THE COMPANY í' 000 í' 000 

Cost 


Additions 310) 234) 

Write-offs --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

(5) (1.085) 


--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Depreciation 

Balance 1 January 806) 1.458) 

Charge for the year 251) 250) 

Write-offs --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

(5) (902) 

Balance 31 December 1.052) 806) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Net book value 31 December 505) 446) 

> > 

59




16. INVESTMENTS HELD TO MATURITY 

Investments held to maturity 

2002 

í’000 

THE GROUP 

157 

2001 

í’000 

157 

THE COMPANY 

2002 

í’000 

155 

2001 

í’000 

155 

Investments held to maturity include shares at a cost of í75 thousand in a Cyprus public company, the assets of 

which are situated in an inaccessible area. Due to the uncertainty of the prevailing political situation on the island 

it is not possible to quantify the loss, if any, that may arise from the realisation of this investment. 

They also include í81 thousand for the Group and í79 thousand for the Company relating to share investment 

certificates of SITA INC that were given to the Group and the Company respectively from SITA SC through a 

new restructuring which took place during 2000. These share investment certificates are shown at cost. 

17. SUBSIDIARY COMPANIES 

2002 

í’000 

2001 

í’000 

Cyprair Tours Limited - shares at cost 

Eurocypria Airlines Limited - shares at cost 

200 

5 

200 

5 

Zenon --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

NDC Limited - shares at cost 

5 

5 

210 

210 

Cyprair Tours Limited is a company incorporated in the Republic of Cyprus and registered as a tour operator in 

the United Kingdom. Eurocypria Airlines Limited is a company incorporated in the Republic of Cyprus, the activity 

of which is the operation of charter air transport services. Zenon NDC Limited is a company incorporated in 

the Republic of Cyprus, which was set up to improve the level of service offered to Cypriot travel agents. All 

companies are wholly owned subsidiaries of Cyprus Airways Limited. 

18. ASSOCIATED COMPANIES 

2002 

í’000 

2001 

í’000 

THE GROUP 

Net assets of associated companies 18.404 13.308 

THE COMPANY 

Investment in associated companies at cost 39 5 

Retained --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

profit of associated companies 18.365 13.303 

18.404 13.308 

> > 

60




18. ASSOCIATED COMPANIES (continued) 

The associated companies are Cyprus Airways (Duty-Free shops) Limited and Hellas Jet A.E.. 

Cyprus Airways (Duty-Free Shops) Limited is a company registered in Cyprus, with issued share capital of 5.000 

ordinary shares with nominal value of í1 each. Its entire share capital is owned by Cyprus Airways Limited. 

The company commenced its operations on 1 May 1996 by taking over the operation of the duty free shops at 

Larnaca and Paphos airports. 

As explained in note 3 of the financial statements, although Cyprus Airways (Duty-Free Shops) Limited share 

capital is wholly owned by Cyprus Airways Limited, the former is treated in accordance with International 

Accounting Standard No.28 "Investments in Associates" as an associated company because the Board of Directors 

is appointed by the Minister of Finance. Extracts from its financial statements are disclosed in note 42. 

Hellas Jet A.E. is a company registered in Greece, based in Athens. Cyprus Airways Limited owns 49% of the 

share capital of Hellas Jet A.E., whereas the rest of the share capital is owned by Omega Bank A.E. and AEF 

European Capital Investments B.V. (100% subsidiary of Alpha Equity Fund A.E.) holding 26% and 25% respectively. 

The principal activity of the company, which is expected to commence its operations in the summer of 2003, will 

be the transportation of passengers. 

19. STOCKS 

THE GROUP 

THE COMPANY 

2002 2001 2002 2001 

í’000 í’000 í’000 í’000 

Consumable spares 1.941 1.731 1.941 1.731 

Main bonded warehouse 416 502 231 249 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Other 764 691 689 609 

3.121 2.924 2.861 2.589 

20. DEBTORS 

THE GROUP 

THE COMPANY 

2002 2001 2002 2001 

í’000 í’000 í’000 í’000 

Trade debtors 18.779 15.625 18.348 15.395 

Subsidiary companies - - 1.801 1.537 

Associated companies 121 - 121 - 

Corporation tax 265 2 263 263 

Provision to safeguard the value 

of the Provident Fund - 1.086 - 1.085 

Derivatives 676 - 511 - 

Other debtors, prepayments 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

and accrued income 14.967 9.584 11.168 6.669 

34.808 26.297 32.212 24.949 

All the amounts above are receivable within one year. Other debtors include, amongst others, amounts for prepaid 

expenses, deposits for future services, as well as taxes (V.A.T.) receivable. 

> > 

61




21. INVESTMENTS AVAILABLE FOR SALE 

THE GROUP THE COMPANY 

2002 2001 2002 2001 

í’000 í’000 í’000 í’000 

Shares of a public company 

not listed on the Cyprus Stock Exchange 552 552 552 552) 

Shares/depository certificates 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

in France Telecom S.A. - 48 - -) 

552 600 552 552) 

The investment in shares in a public company not listed on the Cyprus Stock Exchange is shown in the balance 

sheet based on the last available market value of these shares. 

22. SHARE CAPITAL 

THE GROUP AND THE COMPANY 

2002 2001 

í’000 í’000 

Authorised: 

150.000.000 ordinary shares of a nominal value of í0,50 each 75.000 75.000) 

Issued and fully paid: 

111.039.500 ordinary shares of a nominal value of í0,50 each 55.520 55.520) 

Balance 1 January 55.520 49.894) 

Issue of new shares - 5.626) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Balance 31 December 55.520 55.520) 

On 30 April 2001 the issued share capital of the Company increased from í49.893.759 divided into 99.787.518 

ordinary shares of a nominal value of í0,50 each to í55.519.750 divided into 111.039.500 ordinary shares of a 

nominal value of í0,50 each. 

The increase in the issued share capital resulted from the exercise of warrants, which were payable on 30 April 

2001, based on the approval of the Cyprus Stock Exchange given on 29 February 2000 for the issue of 18.181.818 

warrants. 

23. RESERVES 

THE GROUP 

THE COMPANY 

2002 2001) 2002 2001 

Note í’000 í’000) í’000 í’000 

Capital reserve 983 983) 983 983) 

Revaluation reserve 24 1.165 1.210) 1.083 1.083) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Hedging reserve 25 1.519 (3.262) 1.618 (2.664) 

Balance 31 December credit/(debit) 3.667 (1.069) 3.684 (598) 

> > 

62




24. REVALUATION RESERVE 

THE GROUP 

THE COMPANY 

2002 2001 2002 2001 

í’000 í’000 í’000 í’000 

(i) Investments available for sale 

Balance 1 January 577) 1.881) 531 1.825) 

Decrease arising on the revaluation 

of shares -) (10) - -) 

Profit arising from sale of shares 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

transferred to profit and loss account (45) (1.294) - (1.294) 

Balance 31 December 532) 577) 531 531) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

(ii) Fixed assets 

Balance 1 January & 31 December 633) 633) 552 552) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Total revaluation reserve 1.165) 1.210) 1.083 1.083) 

The revaluation reserve is not available for distribution. 

25. HEDGING RESERVE 

2002 2001 

í’000 í’000 

THE GROUP 

Fair value changes of derivative financial instruments 276 (2.239) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Exchange difference from translation of foreign currency loans 1.243 (1.023) 

Balance 31 December – credit/(debit) 1.519 (3.262) 

2002 2001 

í’000 í’000 

THE COMPANY 

Fair value changes of derivative financial instruments 375 (1.641) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Exchange difference from translation of foreign currency loans 1.243 (1.023) 

Balance 31 December – credit/(debit) 1.618 (2.664) 

The hedging reserve is not available for distribution. 

26. PROFIT AND LOSS ACCOUNT 

THE GROUP 

THE COMPANY 

2002 2001 2002 2001 

í’000 í’000 í’000 í’000 

Balance 1 January 5.319 3.220) 2.313 (276) 

Profit for the year 10.478 2.376) 11.562 2.866) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Dividend paid - (277) - (277) 

Balance 31 December 15.797 5.319) 13.875 2.313) 

> > 

63




27. LOANS 

a) LONG TERM LOANS 

Foreign Local 

currency currency 2002 2001 

loans loans Total Total 

THE GROUP í’000 í’000 í’000 í’000 

Incidence of repayments 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Within one year 12.090 12 12.102 12.343 

After more than one year: 

Between one and two years 12.090 12 12.102 12.343 

Between two and three years 1.094 7 1.101 8.975 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Between three and four years - - - 4.486 

13.184 19 13.203 25.804 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Total 25.274 31 25.305 38.147 

Foreign Local 

currency currency 2002 2001 

loans loans Total Total 

THE COMPANY í’000 í’000 í’000 í’000 

Incidence of repayments 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Within one year 12.090 - 12.090 12.331 

After more than one year: 

Between one and two years 12.090 - 12.090 12.331 

Between two and three years 1.094 - 1.094 8.963 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Between three and four years - - - 4.482 

13.184 - 13.184 25.776 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Total 25.274 - 25.274 38.107 

Foreign currency loans, which are repayable in six monthly instalments, bear interest rates between 0,93% and 

7,51%, depending on the currency and the nature of the loan (fixed or floating). Loans in Cyprus pounds bear 

an average interest rate of 7,20% and are repaid in monthly instalments. 

All foreign currency loans are guaranteed by the Government of the Republic of Cyprus. No assets of the Group 

have been pledged as security against loans from Cypriot or foreign financial institutions. 

b) SHORT TERM LOANS 

Short term loans, which are not guaranteed, bear interest rates between 1,80% and 3,99%, depending on the 

currency of each loan. 

> > 

64




28. FINANCE LEASES 

The Group and the Company 

The Group has acquired through finance leases two new A319 aircraft in April and July 2002 respectively. 

The capital commitment arising under the finance leases is disclosed in the balance sheet and is repayable as 

follows: 

Total 

Finance 

payments Capital charge 

í’000 í’000 í’000 

Within one year 4.944 3.366 1.578) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Between two and five years 18.706 13.464 5.242) 

More than five years 25.287 21.880 3.407) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

43.993 35.344 8.649) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Total 48.937 38.710 10.227) 

The finance charge presented above has been calculated on the basis of interest rates applicable at the balance 

sheet date. These interest rates are floating as a result of which the final finance charge may vary according to 

the fluctuation of the relevant interest rates. 

29. PROVISION FOR DEFERRED TAXATION 

The provision for deferred taxation is made up as follows: 

THE GROUP 

THE COMPANY 

2002 2001 2002 2001 

í’000 í’000 í’000 í’000 

Temporary timing differences 

between depreciationÈ 

and capital allowances 4.602) 13.341) 4.611) 13.366) 

Revaluation of property 69) 90) 58) 58) 

Tax losses (617) (1.272) (370) (1.094) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Other temporary differences (50) (140) (50) (140) 

Total 4.004) 12.019) 4.249) 12.190) 

The reduction in the provision for deferred taxation arose from the reduction in the corporation tax rate, which 

was the result of the new tax legislation which came into effect from 1 January 2003. The deferred tax credit, 

arising from the change in the corporation tax rate, is recognised in the profit and loss account. 

> > 

65




30. CREDITORS AND PROVISIONS 

THE GROUP 

THE COMPANY 

2002 2001 2002 2001 

í’000 í’000 í’000 í’000 

Trade creditors 11.557 10.845 9.369) 8.575) 

Subsidiary company - - 75) 417) 

Associated company - 1 -) 1) 

Provision for maintenance of aircraft 10.916 6.774 10.916) 6.774) 

Special contribution to the defence fund 12 102 -) 52) 

Accrued staff related costs 1.654 1.756 1.654) 1.756) 

Provision to safeguard the value of the 

Provident Fund schemes 787 693 787) 693) 

Derivative liability 399 2.239 136) 1.640) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Other provisions and accruals 22.514 15.988 21.722) 15.033) 

47.839 38.398 44.659) 34.941) 

The above amounts are all payable within one year. Other creditors and provisions include, amongst others, 

provisions for services not invoiced yet, taxes (V.A.T.) payable, as well as amounts received as guarantees from 

debtors. 

31. RECONCILIATION OF LOSS BEFORE TAXATION 

TO NET CASH FLOW FROM OPERATING ACTIVITIES 

2002 2001 

í’000 í’000 

Loss before taxation and before share of profit from 

the associated company (2.406) (2.574) 

Depreciation of tangible fixed assets 13.861) 12.372) 

Amortisation of intangible assets 278) 276) 

Loss on disposal of fixed assets 11) 154) 

Loss on disposal of intangible assets 1) -) 

Profit on sale of shares (37) (901) 

Exchange (gain)/loss on foreign currency loans: 

- on long term loans (44) 270) 

- on short term loans (619) 20) 

- on finance lease (39) -) 

Interest payable 2.844) 2.417) 

Interest receivable (2.703) (3.369) 

(Increase)/decrease in stocks (197) 16) 

Increase in debtors (7.572) (3.362) 

Increase /(decrease) in creditors and provisions 11.370) (7.021) 

Increase/(decrease) --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

in revenue received in advance 1.398) (1.313) 

Net cash flow from operating activities 16.146) (3.015) 

> > 

66




32. ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS 

OF THE GROUP DURING THE YEAR 

2002 2001 

í’000 í’000 


Cash outflow (7.112) (26.088) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 


33. ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS 

AS SHOWN IN THE CONSOLIDATED BALANCE SHEET 

2002 2001 Change 

í’000 í’000 í’000 

Cash in hand and at bank 46.631) 48.302) (1.671) 

Bank overdrafts (24.441) (19.000) (5.441) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

22.190) 29.302) (7.112) 

34. CONTINGENT LIABILITIES 

2002 2001 

í’000 í’000 

Guarantees given 2.573) 3.349) 

Included in contingent liabilities is an amount of í2,3 million (2001: í2,9 million) relating to a guarantee placed 

with the U.K. Civil Aviation Authority (CAA) in order for Cyprair Tours Limited to obtain its Tour Operator’s 

Licence. It may be called upon to execute any outstanding obligations towards customers’ travel arrangements, 

in case of financial difficulties of Cyprair Tours Limited. An amount of í0,3 million (2001: í0,3 million) is also 

included in contingent liabilities relating to a letter of undertaking given to the department of Civil Aviation in 

Cyprus in relation to the operation of flights by Eurocypria Airlines during the 2002/2003 winter season. 

35. CAPITAL COMMITMENTS 

Capital commitments for which no provision has been made in the financial statements at 31 December 2002 

amounted to í260 thousand (2001: í50,4 million). These comprise aircraft related capital expenditure. The 

comparative figure for 2001 includes capital commitments for the acquisition of two A319 aircraft, one spare 

engine and related spare parts. 

According to the plans for the capitalisation of Hellas Jet A.E., the Company will invest 9,8 million Euro during 

the first six months of 2003, to increase the share capital of Hellas Jet A.E., maintaining its holding at 49%. 

> > 

67




35. CAPITAL COMMITMENTS (continued) 

Rental commitments 

In addition, there are commitments resulting from future payments under aircraft operating lease agreements 

and rental agreements for immovable property, which are not included above, and are as follows: 

2002 2001 

í’000 í’000 

Within one year 11.185 4.818 

Between two and five years 68.737 92.342 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

In five years or more 17.902 25.321 

97.824 122.481 

The rents paid during the year amounted to í1,1 million (2001: í1,1 million) and these related entirely to rentals 

of immovable property. 

Derivatives 

(a) Forward foreign exchange contracts 

The Group uses forward foreign exchange contracts to hedge its foreign currency exposure. 

Forward exchange rate contracts are irrevocable agreements to purchase or sell a specific amount of foreign 

currency at an agreed exchange rate with payment and delivery at a specified future time. 

At 31 December 2002 the Group had outstanding forward exchange rate contracts for the sale of 2,0 million 

Sterling and the purchase of 10,0 million US dollars (Company: sale of 2,0 million Sterling). All forward contracts 

mature during 2003 (2001: Group: sale 6,0 million Sterling and 22,9 million US dollars, Company: sale 3,0 million 

Sterling and 22,9 million US dollars). 

(b) Jet fuel price swaps 

The Group also uses jet fuel price swaps to hedge its exposure to jet fuel price fluctuations. 

A jet fuel price swap is an agreement between two parties to exchange a fixed price for a floating price over a 

specified period. The agreement defines the volume, duration and fixed reference price. 

> > 

68




35. CAPITAL COMMITMENTS (continued) 

At 31 December 2002 the Group had outstanding jet fuel price swaps to hedge fuel purchases at the nominal 

amount of 8,2 million US dollars (2001: 25,4 million US dollars) and the Company 6,0 million US dollars (2001: 

18,0 million US dollars). These swaps mature during 2003. 

(c) Interest rate swaps 

The Group uses interest rate swap agreements in order to hedge its direct exposure to movement in interest 

rates. 

An interest rate swap is an agreement between two parties to exchange fixed rate and floating rate interest by 

means of periodic payments based upon a notional principle amount and the interest rate defined in the contract. 

At 31 December 2002 the Group maintained the following interest rate swap agreements converting floating 

interest rates to fixed: 

Interest rate swaps 

Notional Amount Payable Receivable 

Currency 2002 2001 Rate Rate 

Sterling 874.000 1.748.000 7,51% LIBOR 

Euro 4.404.414 8.808.829 5,51% LIBOR 

These agreements, which are linked to the repayment of a specific loan of the Company, will mature in 2003. 

The Group’s policy is not to trade in derivatives but to use these instruments to hedge anticipated exposures. 

36. DIVIDEND 

The Board of Directors recommends the payment of a dividend of í650.291, which corresponds to 0,586 cents 

per share, to the shareholders. The proposed dividend represents 10% of the Company’s profits for the year 

available for distribution. 

> > 

69




37. PROVIDENT FUND SCHEMES 

The Group operates a number of retirement benefit plans for its employees as follows: 

1. The Cyprus Airways Employees' Provident Fund 

All staff of Cyprus Airways Limited (excluding pilots) based in Cyprus is eligible to join this defined benefit 

scheme. The scheme is funded and all its assets are held separately from the funds of the Group. 

Actuarial valuations are carried out on a regular basis. The most recent actuarial valuation, which was carried 

out by a professional firm of actuaries as at 31 December 2001, using the Projected Unit method, was completed 

during 2002. For the purposes of assessing pension costs under International Accounting Standard No.19 "Employee 

Benefits" the principal assumption adopted was that the long term return on all investments of the fund would 

be 1,5% higher than the annual increase in earnings. 

At 31 December 2001, the market value of the scheme's assets was í35,52 million whereas the actuarial value 

of the promised benefits at the same date was í35,56 million. The Company on the recommendation of the 

actuaries is making additional provisions in order to eliminate the shortfall over the average remaining working 

lives of its employees. 

The funding of the Provident Fund is performed on a discontinuance basis. The difference between the amount 

provided for and the amount funded is included in creditors. 

The amount recognised as an expense during the year which represents current service is í1,5 million (2001: 

í1,3 million). 

2. Provident Fund of pilots and flight engineers of Cyprus Airways Limited 

All Cyprus Airways Limited pilots are eligible to join this defined contribution scheme. The amount recognised 

as an expense during the year is í434 thousand (2001: í393 thousand). 

3. Cyprus Airways Limited - Staff based outside Cyprus 

a) Greece and Italy 

Cyprus Airways Limited staff based in Greece and Italy is eligible to join this defined benefit scheme. The scheme 

is unfunded and provisions are made in the Company's records on a discontinuance basis. The amount recognised 

as an expense during the year is í84 thousand (2001: í51 thousand). The total amount of the unfunded balance 

included in creditors amounts to í776 thousand (2001: í692 thousand). 

b) All other staff 

All Cyprus Airways Limited staff based outside Cyprus, other than those based in Greece and Italy, are eligible 

to join schemes of a defined contribution type. The total amount recognised as an expense in the profit and loss 

account during the year is í142 thousand (2001: í128 thousand). 

> > 

70




37. PROVIDENT FUND SCHEMES (continued) 

4. The Eurocypria Airlines Employees' Provident Fund 

All Eurocypria Airlines Limited staff is eligible to join this defined contribution scheme. The amount recognised 

as an expense during the year is í170 thousand (2001: í147 thousand). 

5. The Cyprair Tours Employees' Provident Fund 

All Cyprair Tours Limited staff is eligible to join this defined contribution scheme. The amount charged to the 

profit and loss account as an expense during the year is í22 thousand (2001: í14 thousand). 

Reconciliation of movement in the net liability recognised in the balance sheet: 

2002 2001 

í’000 í’000 

Balance 1 January (393) (117) 

Provision for the year 1.180) (276) 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Balance 31 December - credit/(debit) 787) (393) 

38. FINANCIAL INSTRUMENTS 

(i) Fair value 

The fair value of all financial assets and liabilities shown in the financial statements at the balance sheet date are 

not materially different from their carrying amounts. 

(ii) Credit risk 

The credit risk is limited as debtors, which results from a large number of customers, are stated net of provisions 

for doubtful debts. 

(iii) Interest rate risk, foreign exchange risk, jet fuel price risk and derivative financial instruments 

See note 3, derivative financial instruments and note 35, capital commitments. 

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39. PARTICIPATION OF DIRECTORS IN THE SHARE CAPITAL OF THE COMPANY 

The number of shares and the percentage of the issued share capital of the Company held by members of the 

Board of Directors directly or indirectly as at 31 December 2002 was: 

Number 

of Shares 

Issued 

Share 

Capital 

% 

Haris Loizides 382.700 0,345 

George Kallis 4.727.689 4,258 

Costakis Ioannou 116.500 0,105 

Costas Costantinides 3.332 0,003 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Andreas Michaelides 10.000 0,009 

5.240.221 4,720 

During the period between 31 December 2002 and 30 days prior to the notice of the Annual General Meeting, 

the number of shares and the percentage of the issued share capital of the Company held by members of the 

Board of Directors have changed as follows: 

Number 

of Shares 

Issued 

Share 

Capital 

% 

Haris Loizides 382.700 0,345 

George Kallis 4.727.689 4,258 

Costakis Ioannou 122.000 0,110 

Costas Costantinides 3.332 0,003 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Andreas Michaelides 10.000 0,009 

5.245.721 4,725 

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40. SHAREHOLDERS’ HOLDING MORE THAN 5% OF THE SHARE CAPITAL 

The only shareholder holding more than 5% of the Company’s issued share capital at 31 December 2002 as well 

as 30 days prior to the notice of the Annual General Meeting was the Government of the Republic of Cyprus. 

The respective holding was 69,62% on both dates. 

41. RELATED PARTY DISCLOSURES 

The Group has transactions with directors and connected persons, which are conducted in the normal course 

of business. The total value of these transactions effected during the year, all of which were at arm’s length, 

amounted to í460 thousand. 

Connected persons include spouses, minor children and companies in which a director holds (directly or indirectly) 

at least 20% of the voting shares. 

42. EXTRACTS FROM THE FINANCIAL STATEMENTS OF CYPRUS AIRWAYS 

(DUTY-FREE SHOPS) LIMITED 

(a) PROFIT AND LOSS ACCOUNT 

For the year ended 31 December 2002 2002 2001 

í’000 í’000 

Revenue 55.308 51.571 

Profit after tax 5.061 4.741 

The profit after tax is stated after charges in respect of the following: 

Depreciation 195 386 

Net financing income 1.606 1.452 

Directors’ fees 9 5 

Auditors’ remuneration 5 5 

(b) BALANCE SHEET 

31 December 2002 2002 2001 

í’000 í’000 

Fixed Assets 122 73 

Deferred Taxation 105 182 

Current --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

Assets 31.435 25.356 

TOTAL ASSETS 31.662 25.611 

Capital and Reserves 18.370 13.308 

Current Liabilities 13.292 12.303 

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 

TOTAL EQUITY AND LIABILITIES 31.662 25.611 

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glossary of terms 

Available Tonne Kilometers 

The product of the tonnes available for the carriage of passengers, baggage, freight and mail and the distance over 

which they are carried. 

Revenue Tonne Kilometers 

The product of revenue load in tonnes and the distance over which it is carried. 

Available Seat Kilometers 

The product of seats offered for sale and the distance over which they are carried. 

Revenue Passenger Kilometers 

The product of revenue passengers carried and the distance over which they are carried. 

Load Factor 

The percentage relationship of revenue load carried to capacity provided. The Overall Load Factor relates Revenue 

Tonne Kilometres to Available Tonne Kilometres, the Passenger Load Factor relates Revenue Passenger Kilometres 

to Available Seat Kilometres. 

Note referring to statistical information 

Passenger and capacity calculations have been made in accordance with the new International Civil Aviation 

Organisation definitions. For comparison purposes, figures given for previous years have been adjusted accordingly. 

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Design/Supervision: !eye CREATIVE COMMUNICATIONS 0470/03 

Colour Separations and Printing: J.G. Cassoulides & Son Ltd 

Photos: Christos Panayides & Cyprus Airways archives

financial statements - contents > > - Cyprus Airways

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