THE EMIRATES GROUP ANNUAL REPORT 2019-20 OVERVIEW
EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION HIS HIGHNESS SHEIKH MOHAMMED BIN RASHID AL MAKTOUM
ADDITIONAL Vice President and Prime Minister of the UAE and Ruler of Dubai INFORMATION
As I write this message, the world is battling with unprecedented challenges wrought by the COVID-19 pandemic. This pandemic has impacted industries and communities all around the world at a speed, scale and severity that no-one could have foreseen.
While scientists race to decode the virus and develop a vaccine, governments and businesses are working hard to find the best approach to protect lives, while protecting livelihoods.
Globally, travel and aviation are amongst the most impacted industries as countries close borders, suspend flights, and impose stringent travel restrictions as part of their pandemic containment measures.
Crises often bring out the best in people, acting as catalysts for selfless giving and collaboration across borders. In this regard, the UAE continues to do everything it can to support the international community in its fight against the COVID-19 pandemic. As of April 2020, the UAE has donated more than 450 tonnes of aid to 27 countries in Europe, Africa, Asia and the Americas.
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EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION
ADDITIONAL INFORMATION
In the UAE, we have always regarded Dubai’s aim is to create a prosperous city ourselves as part of a global community. for future generations, where everyone We’re a nation that welcomes the world can achieve their dreams and aspirations, to visit, live, work, study, or collaborate on contribute their talent and innovation, access projects that contribute to human progress. economic opportunities, and enjoy a good We firmly believe that when like-minded quality of life. This vision is laid out in our nations and institutions come together, we 50 year charter, and each year we outline key can achieve extraordinary results. initiatives to deliver on our goals.
Our lives will be different after the COVID-19 By connecting Dubai to the world, and pandemic. We don’t yet know the full extent bringing the world together through Dubai, of change, but it’s clear that the world is the Emirates Group will continue to play a already being reshaped to varying degrees. key role as we work towards our vision. This is an opportunity for us collectively to lay the groundwork to ensure a better future. I am confident that Emirates and dnata will Partnerships between the government emerge from this difficult period, strong and citizens, and between the public and and ready to reclaim their position as global private sectors will be key to achieving leaders shaping the future of the aviation, economic and social resilience, and ensuring travel and tourism industries, and to continue sustainable development. contributing outstanding services to the people and to the world.
3 OVERVIEW
EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION
ADDITIONAL INFORMATION
Emirates is a global airline, serving 155 airports in 81 countries from its hub in Dubai, United Arab Emirates.
dnata is one of the world’s largest combined air services providers in the world, serving over 320 airline customers in 37 countries. Its main activities are the provision of cargo and ground handling, catering, and travel services.
Emirates and dnata are independent entities and do not form a group as defined by International Financial Reporting Standards. However, these entities are under common management. Therefore, in the Management Review section of this document, they are together referred to as the Emirates Group.
4 OVERVIEW
EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION
ADDITIONAL INFORMATION
6 FINANCIAL HIGHLIGHTS
8 CHAIRMAN’S STATEMENT
16 LEADERSHIP
18 EMIRATES HIGHLIGHTS 63 EMIRATES FINANCIAL COMMENTARY 180 EMIRATES TEN-YEAR OVERVIEW
30 DNATA HIGHLIGHTS 73 DNATA FINANCIAL COMMENTARY 182 DNATA TEN-YEAR OVERVIEW
40 OUR PEOPLE 79 EMIRATES INDEPENDENT AUDITOR’S REPORT 184 GROUP TEN-YEAR OVERVIEW
44 OUR COMMUNITIES 86 EMIRATES CONSOLIDATED FINANCIAL STATEMENTS 185 GROUP COMPANIES OF EMIRATES
50 OUR PLANET 133 DNATA INDEPENDENT AUDITOR’S REPORT 186 GROUP COMPANIES OF DNATA
58 OUR NETWORK 136 DNATA CONSOLIDATED FINANCIAL STATEMENTS 188 GLOSSARY
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FINANCIAL INFORMATION
ADDITIONAL INFORMATION
Emirates Group Financial highlights 2019-20 2018-19 % change Revenue and other operating income* AED m 104,002 109,255 (4.8) Operating profit AED m 6,915 3,925 76.2 Operating margin % 6.6 3.6 3.0 pts Profit attributable to the Owner AED m 1,674 2,316 (27.7) Profit margin % 1.6 2.1 (0.5) pt
Financial position Total assets** AED m 188,461 142,267 32.5 Cash assets AED m 25,565 22,159 15.4
Employee data Average employee strength number 105,730 105,286 0.4
* After eliminating inter company income/expense of AED 2,730m in 2019-20 (2018-19: AED 3,071m).
** After eliminating inter company receivables/payables of AED 304m in 2019-20 (2018-19: AED 222m). FINANCIAL Percentages and ratios are derived based on the full figure before rounding.
HIGHLIGHTS The financial year of the Emirates Group is from 1 April to 31 March. Throughout this report all figures are in UAE Dirhams (AED) unless otherwise stated. The exchange rate of the Dirham to the US Dollar is fixed at 3.67.
6 OVERVIEW Revenue and operating income in AED m Profit attributable to the Owner in AED m Revenue and operating income in AED m Profit attributable to the Owner in AED m
EMIRATES 20 91,972 20 1,056 20 14,760 20 618
DNATA 8 7, 07 8 87 8 4,4 8 ,445 GROUP 7 8 2,322 7 8 2,7 6 7 8 3,074 7 8 ,3 7 FINANCIAL INFORMATION 6 7 85,083 6 7 ,250 6 7 2, 82 6 7 ,2 0 ADDITIONAL INFORMATION 5 6 85,044 5 6 7, 25 5 6 0,630 5 6 ,054
Emirates dnata Financial highlights 2019-20 2018-19 % change Financial highlights 2019-20 2018-19 % change Revenue and results Revenue and results Revenue and other operating income AED m 91,972 97,907 (6.1) Revenue and other operating income AED m 14,760 14,419 2.4 Operating profit AED m 6,408 2,647 142.1 Operating profit AED m 507 1,278 (60.3) Operating margin % 7.0 2.7 4.3 pts Operating margin % 3.4 8.9 (5.5) pts EBITDAR AED m 25,852 23,977 7.8 Profit attributable to the Owner AED m 618 1,445 (57.2) EBITDAR margin % 28.1 24.5 3.6 pts Profit margin % 4.2 10.0 (5.8) pts Profit attributable to the Owner AED m 1,056 871 21.2 Return on shareholder's funds % 7.6 19.2 (11.6) pts Profit margin % 1.1 0.9 0.2 pt Return on shareholder's funds % 3.5 2.4 1.1 pts Financial position Total assets AED m 16,703 15,091 10.7 Financial position Cash assets AED m 5,316 5,122 3.8 Total assets AED m 172,062 127,398 35.1 Cash assets AED m 20,249 17,037 18.9 Key operating statistics Net debt (including aircraft operating Aircraft handled number 680,867 698,739 (2.6) lease*) to equity ratio % 381.2 209.8 171.4 pts Cargo handled tonnes '000 2,929 3,091 (5.2) Meals uplifted number '000 93,492 70,889 31.9 Airline operating statistics Travel services: Passengers carried number '000 56,162 58,601 (4.2) Total Transaction Value (TTV) AED bn 10.8 11.5 (6.2) Cargo carried tonnes '000 2,389 2,659 (10.2) Passenger seat factor % 78.5 76.8 1.7 pts Employee data Overall capacity ATKM million 58,584 63,340 (7.5) Average employee strength number 46,211 45,004 2.7 Available seat kilometres ASKM million 367,153 390,775 (6.0) Aircraft number 270 270 -
Employee data Average employee strength number 59,519 60,282 (1.3)
*pertains to year 2018-19. From 1 April 2019, with the adoption of IFRS 16, applicable off-balance sheet leases have been capitalised on the consolidated statement of financial position and related lease liability is included in net debt. 7 OVERVIEW
EMIRATES
DNATA HH SHEIKH AHMED BIN SAEED AL MAKTOUM GROUP Chairman and Chief Executive FINANCIAL Emirates Airline & Group INFORMATION
ADDITIONAL INFORMATION
For the first 11 months of 2019-20, we were well on track to deliver against our business targets. Emirates and dnata businesses were performing strongly in line with our plans and forecast. Things changed rapidly from mid-February and through March as the COVID-19 pandemic swept across the globe, resulting in a sudden and tremendous drop in demand for international air travel as countries closed their borders and imposed stringent travel restrictions.
During that period, operational requirements evolved daily as health and aviation regulators learnt more about the new virus and implemented different strategies to contain the spread of the outbreak. Emirates and dnata took swift action to respond to the dynamic situation, always prioritising the health and safety of our people and our customers.
On 25 March, the UAE government suspended Even without a pandemic, global aviation and travel AED all scheduled passenger flights as part of demand patterns have always been vulnerable to a the country’s pandemic response. While this multitude of external factors whether competitive, suspension has hit Emirates and dnata in an geo-political, or socio-economic. Emirates and dnata unprecedented way, we are in full support of these have managed to adeptly navigate these challenges, measures which aim to safeguard the UAE and and acted quickly whenever there were opportunities. international community. bn Over the year, a further strengthening of the US dollar 1.7ND nd 32 CONSECUTIVE YEAR OF PROFIT The Emirates Group has recorded its 32 against most major currencies eroded our profits FOR THE GROUP consecutive year of profit in 2019-20, on account by AED 1 billion. Lower average oil prices however, of its solid performance during the first three provided some respite. We also saw a decline in quarters of the year. We also ended the year with a operating capacity which led to lower revenues for healthy cash balance of AED 25.6 billion. Emirates and dnata.
8 OVERVIEW Lower revenue were the result of the COVID-19
EMIRATES pandemic in the last quarter, as well as the planned 45-day southern runway closure and refurbishment at DNATA Dubai International airport (DXB) in the first quarter GROUP where Emirates had to operate a reduced flying
FINANCIAL programme, and dnata’s UAE airport operations INFORMATION similarly saw reduced traffic at DXB.
ADDITIONAL INFORMATION In 2019-20, the Group continued to build its capability with investments totalling AED 11.7 billion for new facilities, aircraft, and technology. We also built on our innovation eco-system, with active participation in programmes like Intelak, Dubai Future Accelerators, and the Aviation X Lab that support entrepreneurs, start-ups and SMEs in developing innovative solutions for the aviation and travel industry.
The diverse and talented Emirates Group workforce has always been a key ingredient to our success and we’ve continued to invest in our people through various training and professional development programmes. A highlight this year was the launch of Sehaty, our Group-wide health and wellbeing programme that aims m to foster a culture of health across our organisation. 56.2PASSENGERS CARRIED
EMIRATES AIRLINE AED Emirates carried 56.2 million passengers in 2019-20, a drop of 4% compared to the previous year. However our seat load factor rose to 78.5%, against last year’s 11.7bn 76.8%, due to the reduction and consolidation of INVESTED IN NEW capacity during the 45-day runway closure at DXB as FACILITIES, AIRCRAFT, well as more efficient capacity utilisation throughout AND TECHNOLOGY the year.
In combination with lower fuel prices, healthy demand for our award winning products and services, particularly in the second and third quarters of the year, helped drive a 21% increase in profit for the airline to AED 1.1 billion.
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EMIRATES ENDED THE YEAR WITH A Porto HEALTHY CASH BALANCE OF AED 20.2bn
10 OVERVIEW Emirates ended 2019-20 with a strong cash inflight retail offering; and innovative
EMIRATES balance of AED 20.2 billion. enhancements to our Emirates app as customers increasingly choose to interact with DNATA During the year, we’ve expanded our global us via their mobile devices. GROUP network with the launch of new routes
FINANCIAL including Mexico via Barcelona; Porto, our For our frequent flyers, we launched Skywards INFORMATION second destination in Portugal; and a daily Exclusives which offers access to Emirates’
ADDITIONAL service between Bangkok and Phnom Penh. unique, money-can’t-buy sponsorship INFORMATION In addition, we entered a codeshare partnership experiences; and Skywards Everyday, a with Spicejet that will offer our customers location based app that gives members the more connectivity options in India. In October, power to earn Skywards Miles at more than WE PLACED AN ORDER FOR 50 A350 XWBs, Emirates and flydubai marked two years of 1,000 retail, entertainment and dining outlets AND 30 BOEING 787 DREAMLINER strategic partnership with more than 5.3 million across the UAE. AIRCRAFT, WORTH passengers having benefited from seamless connections between both airlines’ networks Emirates SkyCargo carried 10% less cargo US$ to date. by volume this year, with the reduction of bellyhold capacity during the runway closure Emirates’ overall fleet remained unchanged at at DXB, and the retirement of a Boeing 777 270 units, as we received delivery of six new freighter aircraft. Airbus A380s during 2019-20, and retired six bn older aircraft. At the 2019 Dubai Air Show, we Despite lingering weakness in the air freight 24.8 placed a US$ 16 billion order for 50 Airbus A350 market for most of 2019-20, Emirates XWBs, and a US$ 8.8 billion order for 30 Boeing SkyCargo continued to win over customers 787 Dreamliner aircraft. With first deliveries with its bespoke capabilities, a result of expected in 2023, these new aircraft will add to previous years’ investments to develop custom Emirates’ current fleet mix, and provide us with products and services for key industry verticals more deployment flexibility within our long- such as pharmaceuticals, fresh produce, haul hub model. In line with our long-standing animal transport, and precious cargo. strategy to operate a modern and efficient fleet, these new aircraft will also keep our fleet age During the year, Emirates Skycargo well below the industry average. strengthened our pharma capabilities with the opening of new facilities in Chicago During the year, Emirates continued to invest and Copenhagen. In October, we launched in our products and services to offer our Emirates Delivers, an e-commerce platform customers even better experiences online, that helps individual customers and small onboard, and on the ground. Key highlights businesses consolidate online purchases in include the launch of our first remote check- the US and have them delivered in the UAE. years in terminal at Dubai’s Port Rashid to provide More origin and destination markets are being 2 OF SUCCESSFUL PARTNERSHIP BETWEEN smooth sea-air connections for cruise travellers; planned in the future, leveraging Dubai as a EMIRATES AND FLYDUBAI the launch of EmiratesRED, our revamped hub for regional e-commerce fulfilment.
11 OVERVIEW dnata operations. We expanded our passenger and ground handling operations in Houston, New EMIRATES DNATA ENDED THE YEAR WITH A For 2019-20, dnata posted a 2% increase York JFK and Washington DC on the back of DNATA HEALTHY CASH BALANCE OF in total revenue to AED 14.8 billion, which customer demand, and inaugurated new cargo GROUP reflects contributions from further business capabilities in Brussels and London Heathrow.
FINANCIAL AED growth, particularly in our catering division. INFORMATION dnata’s international business now accounts dnata’s hospitality brand, marhaba, opened
ADDITIONAL for 72% of its overall revenue. an expanded and refurbished lounge at INFORMATION Dubai International airport, and expanded its dnata reported a profit of AED 618 million, international network with a new lounge in bn which includes a AED 216 million gain from Singapore’s Changi Airport. 5.3 the sale of our minority stake in Accelya, an IT company. However, dnata saw profitability In December, we completed the UAE’s first drop 57% compared to the previous year. green turnaround of a flydubai aircraft at DXB, Without the one-time divestment of our an achievement made possible by previous stake in Accelya, profits would have dropped investments in zero-emission, electric ramp 72%. This reflects our increased cost incurred ground support equipment. as we invested in new facilities for our catering and airport operations businesses, Our catering business had an eventful year in and the challenging business landscape for 2019-20, with the launch of our first catering dnata’s Travel division. In addition, dnata saw operations in Canada in Vancouver, as well a negative currency impact of AED 54 million as new operations in Houston, Boston, Los to our bottom line. Angeles, and San Francisco. We invested in these new stations to increase our footprint We ended 2019-20 with a healthy cash and capabilities in North America, where balance of AED 5.3 billion. we saw potential growth. Unfortunately the COVID-19 pandemic in the last quarter Our airport operations division saw a slight brought these budding operations to a drop in aircraft handled (-3%) and cargo temporary halt. During the year, we also handled (-5%), with reduced flight operations announced plans for a new catering facility in at DXB during the runway closure in the first Manchester, UK, and a significant partnership quarter, and a rapid decline in passenger to manage Aer Lingus’ catering operations and flight operations across markets due to the to serve all its flights out of Dublin, Ireland. COVID-19 pandemic in the last quarter. In March, we became sole shareholder of During the year, dnata continued to Alpha LSG, bringing the UK’s biggest inflight strengthen our international airport catering, on-board retail and logistics company, fully into the dnata portfolio.
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EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION
ADDITIONAL INFORMATION
In 2019-20, dnata Catering uplifted a record 93.5 million The picture is slightly different for our Travel business in meals, up 32% from the previous year. This reflected the UAE and GCC region, where we added to our retail the full year contribution of our acquisition of Qantas’ network in the UAE with the opening of new service catering businesses in Australia last year, and our outlets. We also launched REHLATY, a new travel brand expanded operations in the US. designed by Emiratis for the Emirati traveller. 93.5m MEALS UPLIFTED BY Our Travel division has had a tough year. We saw Similar to other parts of our business, our Travel persistently weak travel demand and business division was hit in the last quarter by a sharp and DNATA CATERING, A performance, particularly in our B2C units in the UK and sudden decline in travel demand due to the COVID-19 NEW RECORD Europe. This led us to initiate a strategic business review pandemic, with corporate and retail customers seeking of our entire Travel portfolio, with a view to restructure refunds for their disrupted travel plans. our business and refocus our market proposition. Part of this review is an impairment charge of AED 132 million in our UK travel B2C brands. The review will be completed in the first quarter of 2020-21.
13 OVERVIEW SUSTAINABILITY on board our aircraft, as well as in our airport
EMIRATES lounges, catering operations, and other We’ve been publishing our environmental facilities on the ground. DNATA performance data since 2010-11. This GROUP year we took the decision to incorporate Through the Emirates Airline Foundation
FINANCIAL our Group environmental reporting into and dnata4good, we’ve partnered with INFORMATION our annual financial report. By combining organisations around the world to improve
ADDITIONAL both reports, we aim to provide a more the quality of life for children, promote wildlife INFORMATION holistic picture of our overall performance, conservation, and raise funds to support We supported communities around and to provide better context for our communities - including rebuilding efforts in the world through the Emirates environmental data. Australia after the devastating bushfires. Airline Foundation and dnata4good The Emirates Group is committed to We’ve also continued to contribute to vibrant environmental stewardship. This year, we’ve communities, and engage with our customers updated our Environmental Framework to through our sponsorships of arts, cultural focus our business-wide efforts on three and sporting events around the world. It was areas: reducing emissions, consuming a calendar year for rugby, as Emirates, the responsibly, and preserving fragile habitats Official Worldwide Partner of the Rugby World and endangered wildlife. Cup 2019, helped bring the sport closer to fans through various sponsorship activation We progressed on many of our initiatives. In December, we marked the 50th environmental initiatives in 2019-20, and anniversary of the Emirates Airline Dubai we’ve continued to reduce fuel burn and Rugby Sevens, the longest running sports emissions through the ongoing efforts event in the UAE, and one that we are proud of our fuel efficiency programme. A key to have helped grow from humble beginnings highlight for the year was the commitment to a world-class tournament and festival we’ve made to reduce single-use plastics showcase of the sport of rugby.
14 OVERVIEW OUTLOOK FOR 2020-21
EMIRATES At this time of writing, international passenger flights DNATA to and from the UAE remain suspended, most countries GROUP are still under lockdown, and strict travel restrictions
FINANCIAL remain in place. It is unclear when these restrictions will INFORMATION be eased or lifted, not only in the UAE but also in our
ADDITIONAL major markets. Most projections show that international INFORMATION air travel will resume in gradual phases and it will take at least 18 months before air traffic recovers to pre-pandemic levels.
In the last quarter of 2019-20, Emirates raised additional liquidity through term loans, revolving credit and short term trade facilities to the tune of AED 4.4 billion. This is a testament to the financial community’s confidence in the strength of our business model, and mid-longer term prospects. We will continue to tap the bank market for further liquidity in the first quarter of 2020-21 to provide a cushion for the impact of COVID-19 on business cash flows in the short term.
We remain actively engaged with regulatory and industry organisations, even as new operational protocols are being proposed and developed to assure the health and safety of our customers, and our crew and ground employees when flying resumes. Emirates and dnata have taken all necessary measures to protect EMIRATES RAISED ADDITIONAL our skilled workforce and safeguard our business, while LIQUIDITY THROUGH TERM LOANS, planning for business resumption. REVOLVING CREDIT AND SHORT TERM TRADE FACILITIES TO THE TUNE OF We stand ready to reactivate our operations to serve our customers, as soon as circumstances allow. AED
HH Sheikh Ahmed bin Saeed Al Maktoum Chairman and Chief Executive bn Emirates Airline & Group 4.4
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EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION HH SHEIKH AHMED BIN SAEED AL MAKTOUM
ADDITIONAL Chairman and Chief Executive INFORMATION Emirates Airline & Group
LEADERSHIP
SIR TIM CLARK GARY CHAPMAN
President President Emirates Airline Group Services & dnata
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EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION
ADDITIONAL INFORMATION
ADEL AHMAD AL REDHA ADNAN KAZIM ABDULAZIZ AL ALI ALI MUBARAK AL SOORI NIGEL HOPKINS
Chief Operating Officer Chief Commercial Officer Executive Vice President Executive Vice President Executive Vice President Emirates Airline Emirates Airline Human Resources Chairman’s Office, Service Departments Emirates Group Facilities & Project Emirates Group Management and Non-Aircraft P&L
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DNATA
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FINANCIAL INFORMATION
ADDITIONAL INFORMATION
EMIRATES HIGHLIGHTS
19 OVERVIEW 01 Jun
EMIRATES Emirates launches its first direct daily service between Bangkok and Phnom Penh. DNATA NETWORK AND FLEET GROUP 02 Jul During 2019-20, we added new destinations to our network, and expanded our FINANCIAL Emirates launches its new daily service to Porto, the INFORMATION global connectivity through strategic codeshare partnerships that offer our airline’s second destination in Portugal after Lisbon. ADDITIONAL customers convenient access to even more cities. In our first quarter, Emirates INFORMATION operated a reduced flying programme due to the planned 45-day runway closure and refurbishment at Dubai International airport. In our last quarter, we were also forced to adjust and cut our flying programme as the COVID-19 pandemic led to border closures and travel restrictions, until all passenger flights to and from the UAE were suspended on 25 March as directed by the UAE government.
It is Emirates’ long standing strategy to operate modern and efficient wide-body aircraft which allows us to provide the latest amenities to our customers. At the 2019 Dubai Air Show, Emirates announced a US$16 billion order for 50 Airbus A350 XWBs, and a US$8.8 billion order for 30 Boeing 787 Dreamliners. In addition, to support our future fleet and workforce, Emirates signed agreements with various suppliers and partners, including an MOU with Sanad Aerotech to collaborate on MRO services, training and dedicated repair capabilities; an MOU to extend GE Aviation’s development and leadership training programmes to UAE National 28 Oct employees at the Emirates Group; and the deployment of a new Bombardier Global Emirates and flydubai mark two years of successful 7500 full-flight simulator from CAE to expand pilot training capacity at the Emirates strategic partnership. Over 5.3 million passengers have Flight Training Academy. benefitted from seamless connectivity on the Emirates and flydubai network since both Dubai-based airlines began their partnership in October 2017. 16 Apr Emirates implements plans to ensure smooth operations during 30 Oct 45-day Dubai airport runway closure and refurbishment. Emirates Engineering unveils its fleet-wide implementation of RFID technology that enables 16 Apr the airline to scan over 180,000 inflight emergency equipment on a daily basis on over 250 aircraft with Emirates signs interline agreement with Africa World Airlines 100% data integrity and compliance, providing more (AWA), the Ghanaian airline headquartered in Accra, offering accurate inventory forecasts, greater efficiencies, and Emirates customers the ability to connect onto selected routes better maintenance of these critical items. of AWA’s network.
20 OVERVIEW 25 Nov 05 Dec
EMIRATES Emirates signs a codeshare and interline agreement Emirates announces an enhanced interline agreement with SpiceJet to give travellers to and from India with Interjet Airlines to open new routes and DNATA seamless access to a wider and a stronger route destinations for passengers travelling between Mexico, GROUP network. This is the first-ever codeshare agreement the Gulf and Middle East and beyond, with seamless
FINANCIAL signed by SpiceJet. connections on single ticket. INFORMATION
ADDITIONAL INFORMATION
09 Dec Emirates opens its newest gateway in the Americas, with the launch of flights to Mexico City via Barcelona.
25 Mar Emirates suspends all remaining scheduled passenger services as directed by the UAE government as part of national measures to contain the COVID-19 pandemic.
21 OVERVIEW 03 Apr
EMIRATES Emirates is awarded Best First Class in the world at the 2019 TripAdvisor Travelers’ Choice® awards for Airlines. DNATA CUSTOMER The airline also clinched Best Regional Business Class GROUP Middle East, Best First Class Middle East, and nabbed FINANCIAL EXPERIENCE the overall Travelers’ Choice Major Airline honour for INFORMATION the Middle East. TripAdvisor awards the world’s top ADDITIONAL In line with our ‘Fly Better’ promise, Emirates has continued to invest in enhancing carriers based on the quantity and quality of reviews INFORMATION and ratings for airlines by TripAdvisor flyers, gathered our customer products and services through the year - online, on the ground, over a 12-month period. and in the air. We’ve introduced innovative technologies that improve customer journeys, enhanced services to delight our customers, and launched new value- added benefits for our frequent flyers.
As a global airline that serves a truly global customer base, we’ve ensured that our customers can interact with our website and mobile app in 19 languages; and we’ve created bespoke culinary offerings on board and in our lounges to celebrate key festivals with our customers including Onam, Ramadan, Easter, Thanksgiving, Christmas, and Lunar New Year.
Through the year, we’ve continued winning recognition from customers and industry peers for our high quality products and services. 29 Apr Emirates sweeps five awards at the Business Traveller Middle East Awards 2019 including Best Airline Worldwide, Best First Class, Airline with the Best Economy Class, Airline with the Best Frequent Flyer Program and Best Airport Lounge in the Middle East. 02 Jun Emirates partners with Uber to offer 21 May Economy Class travellers discounted Emirates launches its mobile app in Arabic, becoming airport transfers in the UAE over summer. the only airline to offer customers all its mobile app features in 19 languages.
18 Jun Emirates’ ice entertainment system wins World’s Best Inflight Entertainment for the 15th consecutive time at the Skytrax World Airline Awards 2019.
22 OVERVIEW 11 Sep of Kidzania with aviation inspired elements, and new
EMIRATES Emirates Skywards marked a major milestone with 25 Emirates Official Store retail spots in three locations. million members enrolled as the loyalty programme DNATA grows from strength to strength. 06 Oct GROUP Emirates showcases its innovative biometrics path for FINANCIAL 11 Sep smart passenger airport journeys in partnership with INFORMATION Emirates clinched its third consecutive award for Best the General Directorate of Residency and Foreigners ADDITIONAL Entertainment at the 2020 Passenger Choice Awards Affairs in Dubai (GDRFA) at the Gulf Information INFORMATION held during the APEX EXPO in Los Angeles, USA. The Technology Exhibition (GITEX). airline was also given a Five-Star Global Airline Official Airline Rating in the first airline rating program based 03 Nov solely on verified and certified passenger feedback. In another entertainment first, Emirates streamed the highly acclaimed Seven Worlds, One Planet 26 Sep documentary live at the same time as its BBC One Emirates debuted a range of immersive experiences at broadcast in the UK. While Emirates already streams live Dubai Mall to provide international and local mall visitors news and sport on board most of its aircraft, this is the unique opportunities to interact with the Emirates brand. first time any airline has streamed a show at the same These include a refreshed Emirates A380 Experience - the time as its TV network timeslot. region’s only public A380 flight simulator, sponsorship
21 Sep 10 Nov Emirates becomes the first airline outside of America to receive Emirates launches Skywards Exclusives, offering loyalty approval for biometric boarding from the US Customs and programme members access to the airline’s unique, Border Protection (CBP), using facial recognition technology. money-can’t-buy sponsorship experiences. This enables Emirates customers flying from Dubai to any US destination to enjoy a faster and smoother boarding experience.
23 OVERVIEW 26 Nov
EMIRATES Emirates reinvents its inflight retail offering with EmiratesRED, including a dedicated shopping channel DNATA on ice called EmiratesRED TV. GROUP
FINANCIAL 05 Dec INFORMATION Emirates Skywards launches Skywards Everyday, a ADDITIONAL location based app that gives members the power to INFORMATION earn Skywards Miles anytime, every day at more than 1,000 retail, entertainment and dining outlets across the UAE.
09 Dec Emirates’ cabin crew are recognised as the World’s Leading Cabin Crew 2019 at the World Travel Awards (WTA) Grand Final Gala Ceremony. The event marked the culmination of the WTA’s annual search for the 11 Nov finest travel and tourism organisations in the world, Emirates opens its first remote check-in terminal where winners of its six regional ceremonies at Dubai’s Port Rashid to provide smooth sea-air compete for the coveted world titles. Emirates also connections for cruise travellers. won the world title for World’s Leading Airline – Economy Class.
15 Jan 12 Nov Emirates signs a strategic agreement with A new Airport Maps feature was launched in the Trip.com Group to expand its reach in China. The Emirates app, allowing customers to navigate MOU for mutual cooperation includes joint marketing seamlessly through key airports. The feature detects promotions and other marketing initiatives to boost the user’s location via Bluetooth and Wi-Fi, and Emirates’ sales via Trip.com Group’s online platforms. provides point-to-point navigation through all airport It will also explore future collaborations on customized touchpoints including check-in desks, Emirates products to suit members of both loyalty programmes. Lounges, shops, restaurants or ATMs. 28 Jan Emirates picks up ‘Best Airline in the World’ and ‘Best 13 Nov First Class’ at the prestigious 2019 ULTRAs. Voted Emirates clinches awards for Best Wi-Fi and Best by the hundreds of thousands of readers of The Food & Beverage in the Middle East at the APEX 2020 Telegraph’s luxury travel magazines Ultratravel UK and Regional Passenger Choice Awards™. Ultratravel Middle East, the awards are the industry hallmark of the world’s best luxury travel experiences.
24 OVERVIEW 25 Feb
EMIRATES Emirates’ stellar wine programme was recognised at the Business Traveller Cellars in the Sky 2019 Awards, where DNATA the airline picked up 2 Gold, 2 Silver and a Bronze GROUP award for its carefully curated wine lists. The winning
FINANCIAL wines represent Emirates’ varied offering which come INFORMATION from 12 of the main wine producing regions including In 2019
ADDITIONAL France, Australia, South Africa and Portugal. Emirates Skywards was recognised for: Best INFORMATION Frequent Flyer Programme from Business Traveller Middle East, Excellence in Management from Global 04 Mar Flight, and Middle East’s Leading Airline Rewards As the race for “share of mobile” continues, Emirates Programme from World Travel Awards. marks a major milestone with 20 million downloads of its mobile app on the back of a strong mobile and digital strategy that has led to solid consumer uptake particularly in Africa, the GCC and Asia. Amongst the highest rated airline apps in the world, the Emirates app caters to its global customer base with full features available in more languages than any other airline app in the world.
25 OVERVIEW 16 Oct
EMIRATES Emirates SkyCargo launches Emirates Delivers, an e-commerce platform that helps individual customers DNATA EMIRATES SKYCARGO and small businesses consolidate online purchases GROUP in the US and have them delivered in the UAE. More In 2019-20, we strengthened our pharma capabilities with the opening of new facilities FINANCIAL origin and destination markets are being planned INFORMATION in Chicago and Copenhagen. We also expanded our Pharma Corridors programme in the future, leveraging Dubai as a hub for regional
ADDITIONAL which protects high-value commodities with strict end-to-end control under cool-chain e-commerce fulfilment. INFORMATION handling protocols that meet or exceed the highest industry standards.
During the year, Emirates SkyCargo supported a wide-range of cargo transportation needs with our bespoke customer solutions - from fresh produce, to priceless historical artefacts to world class race horses.
As the COVID-19 pandemic swept through the world in the last quarter of 2019-20, Emirates SkyCargo ramped up operations to support the transport of medical, food and other essential goods to the UAE and around the world.
12 Nov Emirates SkyCargo moves its pharma handling 15 May operations at Copenhagen to a dedicated GDP Close to 100 horses experienced Emirates Equine, certified facility for pharmaceuticals. It also expanded its Emirates SkyCargo’s specialised product for calm and 30 Apr Pharma Corridors programme to 25 stations, by adding comfortable transportation of horses, while headed to Emirates SkyCargo transports a priceless more relevant pharma origin and destination stations to the Shanghai leg of the Longines Global Champions Tour. historical statue from Peshawar Museum the initiative. to Museum Rietberg in Zurich, and back. 06 Jun 18 Dec Emirates Skycargo opens a new purpose-built facility Emirates SkyCargo completes the operation of 9 at Chicago airport which has a total capacity of nearly freighter flights carrying 850 tonnes of cherries from 15,000 tonnes of pharmaceuticals a year. Chile to various markets in East Asia, supporting the trade of one of the South American nation’s most important fresh produce exports.
01 Feb Emirates SkyCargo debuts a series of documentary films, Connecting_Better, which celebrates the air cargo industry with stories that entertain and inform, whilst showcasing SkyCargo’s capabilities.
26 OVERVIEW 13 Feb EMIRATES Emirates SkyCargo introduces two bonded trucking ROUTE NETWORK corridors in Saudi Arabia connecting Dammam and 30 March 2020 DNATA Medina with Riyadh, providing additional capacity GROUP options for businesses overseas wanting to send cargo
FINANCIAL to Riyadh. INFORMATION
ADDITIONAL 30 Mar INFORMATION Emirates SkyCargo steps up its commitment to facilitate the flow of essential goods across markets including the UAE. With global air cargo capacity severely constrained due to pandemic-related restrictions on passenger flights, Emirates SkyCargo activates initiatives to ensure that goods such as food and medical supplies are transported to destinations where they are needed the most.
31 Mar Emirates SkyCargo carries nearly 500,000 COVID-19 testing kits to Brazil, on the first of two such flights operated to transport supplies to Sao Paulo. During the same week, Emirates also executed special charters carrying almost 200 tonnes of medical supplies such as hand sanitisers and protective face masks from Hong Kong to Sydney; pharmaceutical supplies to Karachi; close to 100 tonnes of relief material including hospital equipment to Milan; and over 55 tonnes of highly temperature sensitive pharmaceuticals to New York from Mumbai.
In 2019 Emirates SkyCargo was recognised as Best Air Cargo 04 Mar Carrier, Middle East at the Asian Freight, Logistics and Emirates SkyCargo announces that it is working with Accuity, a Supply Chain Awards (AFLAS); Diamond Award - Air leading global provider of financial crime compliance, payments Cargo Carrier - at the Air Cargo Excellence Awards by and Know Your Customer (KYC) solutions, to help automate and Air Cargo World; Safest Partner Airline at the SkyCell streamline its regulatory compliance screening operations, increase Quality Award by Skycell, a leading pharma airfreight efficiency and improve the speed of service to its customers. container provider; in addition to regional awards by airports, cargo associations and partners in Italy, Portugal, Malaysia, and India.
27 OVERVIEW 10 Apr
EMIRATES Emirates Flight Catering is named ‘Airline Caterer of the Year’ Middle East, for the fifth consecutive year at the DNATA OTHER BUSINESS PAX International Readership Awards. GROUP
FINANCIAL HIGHLIGHTS 28 Aug INFORMATION Emirates features artwork by an Emirati Mawaheb artist ADDITIONAL Emirates convened its first novel coronavirus monitoring and response meeting on on its ice inflight magazine. Meaning ‘talent’ in Arabic, INFORMATION 19 January. In February, as the COVID-19 pandemic escalated globally, this became Mawaheb is a Dubai-based art studio for adults with a full-fledged crisis response activation, with a focus on ensuring safe operations, special needs. business continuity, and the health and safety of employees and customers.
In the last quarter of 2019-20, Emirates raised additional liquidity through term loans, revolving credit and short term trade facilities to the tune of AED 4.4bn (US$ 1.2bn). It continues to tap the bank market for further liquidity in the first quarter of 2020-21 to provide a cushion for the impact of COVID-19 on the business cash flows in the short term.
03 Sep Emirates Flight Catering and Washington DC-based 28 Apr Cuisine Solutions announced they will co-invest in a Emirates unveils its “Future of Commercial joint venture to become the UAE’s sole distributor of Aviation” themed Expo 2020 Dubai sous vide products, under the name of Emirates Cuisine pavilion design and visitor experience. Solutions. Phase two of the joint venture will see the establishment of the world’s largest halal sous vide manufacturing facility in Dubai.
28 OVERVIEW
EMIRATES 29 Nov DNATA To celebrate the UAE’s 48th National Day and the ‘Year of Tolerance’, GROUP Emirates sets a Guinness World Record for most number of nationalities on an aircraft with EK2019, a special one-off flight with FINANCIAL INFORMATION 145 nationalities on board flying over the seven emirates of the UAE.
ADDITIONAL INFORMATION
04 Sep 30 Oct Emirates and the Philippines’ Department of Tourism Emirates hosts the International Air Transport sign MoU to boost inbound tourist arrivals from Europe, Association’s inaugural Global Accessibility Symposium the Middle East and other markets served by Emirates. in Dubai, bringing the industry together to advance open dialogue for a more disability-inclusive air 22 Sep transport system. Emirates Group Security hosts AVSEC Global 2019 in Dubai, a major event that brings global leaders, 30 Mar professionals and stakeholders together to share best Emirates Flight Training Academy marked significant practice, exchange information and discuss trends in milestones during the year, as its first cadets successfully aviation security. completed their solo flights, and later began flying the academy’s Embraer Phenom 100EV aircraft, marking 03 Oct their transition to training on a Very Light Jet that gives Emirates wins the Aviation 100 ‘Middle East & Africa them a head start on multi-engine commercial airline Airline of the Year’, awarded by Airline Economics operations. At the end of March, the Emirates Flight magazine. Emirates and its financing partners also Training Academy celebrated its very first graduates, as won the ‘Aviation 100 Middle East & Africa Supported eight students completed their training. Finance Deal of the Year for 2019’, for the financing of two Emirates A380 aircraft, which was the first A380 31 Mar Bpifrance (French Sovereign Export Credit Agency) Emirates Leisure Retail Group enters the US market Assurance Export backed financing that also combined through the acquisition of a majority stake in a commercial tranche sourced from Korean investors. Air Ventures Group, an F&B retail operator with a presence at 8 US airports.
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31 OVERVIEW EMIRATES AIRPORT OPERATIONS DNATA
GROUP We continued to strengthen our international airport operations in the first 11 FINANCIAL months of the year, expanding our business capabilities in the US, inaugurating INFORMATION new cargo capabilities in Brussels and London Heathrow, and achieving ADDITIONAL INFORMATION international certifications that attest to the high standards of our operations across markets.
In the UAE, dnata planned and executed smooth operations for all our airline customers during the Southern Runway closure and refurbishment at Dubai International during the first quarter. We also executed the UAE’s first green turnaround in partnership with flydubai, an achievement made possible by our skilled teams, and previous investments in eco-efficient and electric ground handling equipment.
During February and March, as the COVID-19 pandemic led to dynamic travel 07 May restrictions on international air passenger travel, our teams in the UAE and dnata expands operations in Austin, Texas, commencing a around the world responded agilely to our customers’ needs. new partnership with Lufthansa. Handling the airline’s new Frankfurt flight, dnata staff will ensure a safe and seamless travel experience for up to 70,000 passengers a year. 16 Apr dnata moves over 900 pieces of ground services 20 May equipment and 2,000 colleagues to Dubai World Central dnata becomes the first global air services provider to (DWC) to ensure smooth and safe operations of over join the Latin American and Caribbean Air Transport 3,000 relocated flights during the 45 days long southern Association (ALTA). runway rehabilitation (SRR) at Dubai International (DXB).
11 Jun 29 Apr 11 Apr DUBZ, a baggage technology and logistics company, For the 5th consecutive time, dnata is named Gerry’s dnata demonstrates high safety standards celebrates its first anniversary as part of the dnata family. ‘Ground Handler of the Year’ at the 2019 Air Cargo becoming the first ground services provider to achieve In 2018, dnata acquired a majority stake in DUBZ, two News Awards, recognised as the “Oscars” of the air IATA’s Safety Audit for Ground Operations (ISAGO) years after that latter was selected as a winner of Intelak, cargo industry. registration in Pakistan. the aviation and travel incubator programme that nurtures travel technology entrepreneurship in the UAE.
32 OVERVIEW 17 Jun 30 Jul 23 Jul EMIRATES marhaba adds Singapore to its global network by Air Dispatch, the world’s leading provider of centralised DUBZ launches remote check-in services opening a new airport lounge at Changi Airport’s load control (CLC) services, produces the five millionth DNATA at the dnata Travel store in The Dubai Mall, Terminal 3. Open 24 hours a day, the lounge features load sheet since its foundation. The milestone helping passengers make the most of their GROUP comfortable seating for over 130 guests and offers document is issued from the Prague facility, time before their flight and enjoy a seamless FINANCIAL superfast Wi-Fi and excellent international cuisine. ensuring safe and efficient operations of a INFORMATION Hong Kong-bound flight. airport experience.
ADDITIONAL INFORMATION 31 Jul marhaba, dnata’s airport hospitality brand, celebrates 28th anniversary. Founded in 1991, marhaba has over the years evolved into one of the world’s leading passenger services providers renowned globally for its customer-oriented team and uncompromising focus on service excellence.
08 Jul dnata opens a dedicated lounge for unaccompanied minors at Dubai International airport (DXB) Terminal 1. The lounge is manned by experienced, multilingual staff and equipped with games and entertainment screens to keep the young guests occupied throughout the day.
24 Jul 07 Aug dnata introduces a new management structure to marhaba expands its popular lounge at Dubai enhance operational and service excellence. Reflecting International’s (DXB) Terminal 3 by 400 square meters, its international growth, this includes the creation of increasing its capacity by 50%. three new regional CEO roles for the Asia Pacific, UK & Europe, and New & Emerging Markets.
33 OVERVIEW Europe’s largest air-cargo road feeder services (RFS)
EMIRATES operator. The partnership will see the companies develop new products and services, and enter DNATA new markets. GROUP
FINANCIAL 29 Oct INFORMATION dnata becomes the first cargo terminal operator ADDITIONAL in Australia to be awarded the World Health INFORMATION Organization’s Good Distribution Practices (GDP) certification.
04 Nov 23 Aug dnata expands operations at Washington Dulles International Airport, creating jobs with additional GTA dnata extends its collaboration with Air employees hired for its US team. Canada Cargo in Toronto to include all cool chain shipments. This includes seafood, chilled meats, fruit, vegetables, herbs and fresh flowers – all 05 Nov perishable shipments that require a comprehensive, dnata underlines its commitment to ensuring a integrated cold chain logistics approach. seamless airport journey for people of determination and showcases technology and initiatives at IATA’s AccessAbilities Expo 2019 in Dubai. 24 Sep 15 Oct dnata opens dnata City East, a new bespoke dnata renews its ISO 9001 certification for ground, export facility at London Heathrow, that cargo and catering services in Singapore. encompasses industry leading technology and significantly increases the cargo capacity at the UK’s busiest airport.
07 Oct dnata extends its partnership with Terminal One Group Association (TOGA) in New York through to 2023. The extension will see dnata continue to 05 Nov provide quality ground and passenger handling Gerry’s dnata is awarded the ‘Best Cargo Handling services to over 20 airlines, ensuring smooth Operation’ at the 2019 Pride of Ground Handling and safe operations of 50 flights a day at John F. 28 Oct Awards during the 21st Ground Handling International Kennedy International Airport’s (JFK) Terminal One. dnata strengthens its position in the cargo logistics industry by joining forces with Wallenborn Transports, Annual Conference in Amsterdam.
34 OVERVIEW 06 Nov
EMIRATES dnata gains IATA’s CEIV Pharma certification at its cargo facility at Dubai World Central (DWC). The accreditation DNATA complements dnata’s existing CEIV Pharma certification at GROUP Dubai International (DXB), demonstrating the company’s
FINANCIAL ability to move pharmaceutical products under the INFORMATION strictest standards across its operations in the UAE. 10 Dec ADDITIONAL dnata Brazil is awarded IATA’s Safety Audit INFORMATION 15 Jan for Ground Operations (ISAGO) registration dnata opens a second cargo warehouse dedicated to in Brazil, a reaffirmation of dnata’s rigorous handling imports in Brussels, Belgium. safety standards.
21 Jan dnata launches a global, internal safety campaign to further improve its excellent safety performance through employee engagement and leadership communications. 31 Mar dnata handles repatriation flights and supports 15 Mar airlines in maintaining international trade by Partnering with Etihad Airways at three airports in continually delivering best-in-class ground Pakistan, dnata’s international airport operations team handling and cargo services across the globe celebrates its 111th contract win in the financial year. amid the COVID-19 outbreak.
05 Dec dnata successfully completes the UAE’s first green turnaround of flydubai’s aircraft at Dubai International (DXB), using only zero-emission ramp ground support equipment.
35 OVERVIEW 07 May
EMIRATES dnata Catering in Australia helps Qantas operate the first ever zero-waste flight. All inflight products on DNATA CATERING board the flight are disposed of via compost, reuse GROUP or recycling. Our catering division saw a busy year with the launch of operations in Houston, FINANCIAL INFORMATION Boston, Los Angeles, San Francisco and Vancouver in tandem with customer
ADDITIONAL demand. These new stations significantly increased our footprint and INFORMATION capabilities in North America. We also announced plans for a new catering facility in Manchester, UK, and a significant partnership to manage Aer Lingus’ catering operations and to serve all its flights out of Dublin, Ireland.
In March we became sole shareholder of the UK’s biggest inflight catering, on-board retail, and logistics company, and brought Alpha LSG – previously a joint venture partner - fully into the dnata portfolio.
As COVID-19 spread across markets, our teams helped provide thousands of meals to support affected communities and organisations at the frontline of the pandemic response.
09 May dnata’s team in Romania demonstrates its event catering capabilities by delivering five-star culinary, logistics and wait staff services to high-level government representatives during the Informal Summit of Heads of State or Government of the European Union summit. 09 Apr 11 Apr dnata is voted ‘Airline Caterer of the Year, North dnata commences catering operations in Houston, 21 Jun 2 America, 2019’ by readers of PAX International, the USA, by opening a 51,000 ft facility at George Bush Alpha LSG, dnata’s UK catering business, announces it leading publication for airline industry executives. Intercontinental Airport. The launch customer is British will open a new, state-of-the-art, 102,000 ft² sustainable Airways, which operates two daily flights from Houston. building in Manchester, UK.
36 OVERVIEW
EMIRATES 15 Sep DNATA dnata opens a new, state-of-the-art catering 15 Feb
GROUP facility and starts serving British Airways at dnata invests in 39 new, advanced high-lift Boston Logan International Airport, USA . At vehicles to further enhance catering operations FINANCIAL INFORMATION full capacity the production unit will supply in Australia. The new ground support equipment up to 12,500 meals a day. will ensure efficient and safe transportation ADDITIONAL INFORMATION of catering equipment, quality inflight meals and on-board retail products between dnata’s facilities and airline customers’ aircraft.
23 Sep The 48,000 ft2 facility, which represents a multi-million dnata launches catering operations on the West dollar investment, is equipped with the latest technologies Coast of the USA by opening a facility at Los Angeles and has a capacity of up to 8,000 meals a day. International Airport. dnata’s first customer in Los Angeles is Qantas. 25 Mar dnata donates thousands of meals globally to support 01 Oct communities impacted by the COVID-19 outbreak. dnata launches catering operations and commences a new partnership with Jet Blue at San Francisco International Airport, USA.
31 Jan dnata enters into an inflight catering partnership with Aer Lingus in Ireland. The strategic partnership will see dnata provide catering services for the airline’s flights departing Dublin.
31 Mar 03 Feb dnata becomes the sole shareholder of the biggest dnata commences operations in Canada by opening a inflight catering, on-board retail and logistics company, state-of-the-art catering centre in Vancouver. Alpha LSG, in the UK.
37 OVERVIEW 15 May
EMIRATES dnata Travel opens a new store in the UAE in the City Centre Mirdif. DNATA TRAVEL GROUP With softening travel demand in many key markets, and evolving customer FINANCIAL INFORMATION expectations from travel service providers, we embarked on a strategic business
ADDITIONAL review of our entire Travel portfolio during the year, to identify opportunities INFORMATION for streamlining as well as new business segments.
In the UAE, we launched REHLATY, a new travel brand designed by Emiratis for the Emirati traveller, and expanded our retail footprint. Our destination management brand, Arabian Adventures also marked a successful year with the smooth hosting of high profile events and groups in Dubai. It also signed marketing partnership agreements which will expand its sales network to trade customers in 10 new markets.
As COVID-19 impacted global travel over February and March, our travel teams 04 Sep galvanised to support our customers with rebooking and refunds, and we also Arabian Adventures significantly expands its global initiated solutions to help our corporate customers navigate the dynamic partnership network by appointing four overseas travel environment. companies as its market representative. The partnerships will see the companies drive awareness and sales of Arabian Adventures’ premium products 28 Apr and services by promoting its comprehensive offering dnata wins four accolades at the 2019 World Travel to trade customers in a total of 10 new markets across Awards Middle East earning the titles of Middle East’s three continents. Leading Corporate Travel Company; Middle East’s Leading Airline GSA (general sales agent); United Arab 10 Oct Emirates’ Leading Travel Agency and Abu Dhabi’s Gold Medal, the largest travel consolidator in the Leading Travel Agency. Middle East, expands operations into India. Travel agents in the country can now benefit from the 04 May company’s extensive sales, marketing and operational REHLATY by dnata travel, a travel brand designed by expertise, advanced booking and reporting system, and Emiratis for the Emirati traveller, is launched in the UAE. excellent customer service.
38 OVERVIEW 10 Nov 24 Dec
EMIRATES dnata Travel launches DEALZ, a free monthly newspaper dnata divests its minority stake in IT designed for UAE travellers with the latest and most company, Accelya which was acquired by Vista DNATA attractive travel offers available on the market. The Equity Partners. GROUP publication joins the offering at the 30 plus dnata Travel FINANCIAL stores across the country to bring a new monthly staple 27 Jan INFORMATION to the reading list of the UAE’s avid traveller base. Arabian Adventures MIE wins the SITE Crystal ADDITIONAL Award, the highest honour in the incentive travel INFORMATION 28 Nov industry for the second time. Arabian Adventures’ 03 Mar dnata is named ‘World’s Leading Air Travel Service winning event saw 270 guests travel from the dnata expands its partnership with The Hertz Provider’ at the World Travel Awards. United States to the United Arab Emirates for a Corporation by adding Dollar and Thrifty to series of multi-venue experiences. its car rental portfolio. The strategic move 28 Nov allows dnata to offer a broader range of dnata Travel opens a new store in the UAE in the 15 Mar services to customers, while driving sales and Nakheel Mall. dnata’s Corporate travel team takes initiatives awareness of its partners’ quality products. to help customers navigate the challenging and 13 Dec fast-changing global travel environment. dnata is Arabian Adventures MIE delivers smooth travel and focussed on minimising the impact on customers’ event experiences in Dubai for over 9,000 participants travel budgets whilst complementing their duty of of Amway’s largest international leadership gathering. care responsibilities for their employees.
10 Feb Arabian Adventures hosts players and staff from Arsenal Football Club on a memorable ‘Sunset Desert Safari’ tour in the Dubai Desert Conservation Reserve (DDCR), ensuring a relaxed team bonding experience for the UK team’s world-class players and the entire support team during their intensive training camp in the UAE.
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40 OVERVIEW
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As the COVID-19 pandemic spread across the world in the last quarter of 2019-20, Emirates and dnata responded quickly to the dynamic situation to protect our people, customers and communities. In January, we convened our first internal committee meeting to monitor the outbreak and the latest advice and instructions from relevant health and regulatory authorities. This became a full-fledged crisis response in February as the global situation escalated.
The health and safety of our people, particularly our frontline employees, is always a priority. We ramped up employee communications to inform them of the latest health practices to stay safe, and keep them updated on critical information and instructions from the relevant authorities.
We put in place support structures for those impacted, and implemented work from home protocols for the vast majority of our workforce. We also regularly reviewed, and enhanced our operational procedures to protect our employees. For instance, implementing physical distancing protocols at their workplaces, installing thermal scanners at workplace entry points, providing our employees with masks, gloves, hand disinfectants, and other personal protective equipment.
41 OVERVIEW 20 Jun 03 Oct
EMIRATES Emirates Aviation University celebrated its 29th Emirates Group Security’s education arm, Centre of graduation ceremony, honouring more than 220 Aviation Security Studies, awarded its 14th cohort DNATA OUR students. Since 1991, the university has graduated more of graduates with diplomas for Aviation Security GROUP PEOPLE than 16,000 students across diverse disciplines and Management and for Ground Handling. The program FINANCIAL areas of study, helping to support the aviation industry. is established in partnership with Edith Cowan INFORMATION University, Australia. The talented, diverse, and ADDITIONAL INFORMATION passionate people of the Emirates Group have always been key to the company’s success.
We support our people’s safety, health and wellbeing, and professional development, and actively reward and celebrate 27 Aug their achievements. Emirati first officers at Emirates airline helped put the spotlight on women in aviation, and the advancement Our Linkedin Learning platform has of women in the UAE on Emirati Women’s Day, by been widely leveraged to support operating flights to five continents on the same day. the growth of our people with over one million hours of development 03 Oct material being consumed since its We launched Sehaty, our Group-wide health and wellbeing programme that aims to foster a culture of launch last year. 17 Oct health across the organisation. Sehaty brings together Emirates Group employees embrace fitness and the numerous existing programmes that support our wellness during the annual Dubai Fitness Challenge employees’ health, mental and emotional wellbeing. – a national initiative that encourages participants to These include our Employee Assistance Programme, engage in at least 30 minutes of activity daily, for 30 our internal wellbeing portal, sports and wellness clubs, days. Over the past two years, over 21,000 Emirates medical benefits, internal social networks focused on Group employees downloaded the Dubai Fitness wellness, and many other initiatives. app and actively participated in the 30x30 challenge, clocking in 1.5 million minutes of physical activity.
42 OVERVIEW 18 Dec economies and touching lives across the world with an initiative that follows an all-women flight deck EMIRATES Emirates joined the UAE’s Business for Wellbeing 31 Jan Council as a founding member. crew operating multi-stop cargo flights across four Emirates Group’s National Recruitment & DNATA continents on Emirates SkyCargo’s Boeing 777 freighter Development team increased slots for UAE GROUP aircraft, transporting over 300 tonnes of cargo ranging National Talent on leadership programmes from fresh flowers and fruits to pharmaceuticals. FINANCIAL by nearly fourfold. Partnerships with Airbus, INFORMATION Boeing, Microsoft and multiple global ADDITIONAL 08 Mar institutions continue to provide growth INFORMATION dnata celebrates international women’s day with experiences for our national talent. flydubai by supporting and operating a flight with an all-female crew.
30 Jan 26 top performing employees were recognised at the annual Najm Chairman’s Award, the Emirates Group’s most prestigious award, which recognises and rewards employees whose work and actions are characterised by a strong work ethic, a spirit of innovation, extraordinary acts of bravery and selfless teamwork. The Najm Awards programme recognises employees throughout the year 11 Mar for achieving outstanding work, or demonstrating Emirates Aviation University (EAU), the academic model behaviour. In 2019-20, over 14,000 Gold, Silver wing of the Emirates Group and one of the region’s and Bronze Najms were awarded to deserving most prestigious educational institutions, has been employees who went the extra mile. awarded an overall score of 5 Stars by QS Stars University Ratings for its outstanding performance and 10 Feb academic excellence across a wide range of categories. The first cohort of Emirates Group employees joined Of the 129 QS rated institutions in the Arab Region, the GE Aviation Leadership Development programme. only five are rated as 5 Stars and EAU is the only non- This is a customized programme between both Federal 5 Stars university. organisations, and it aims to develop future talent 02 Feb for the aviation industry. 22 Mar Career development efforts for our Our talent pool of UAE Nationals within the Group UAE National talent saw a total of 550 05 Mar reached a record number of 3,123, reflecting the job changes including promotions, On International Women’s Day, Emirates highlights success of our programmes to recruit, develop, rotations, and growth assignments. one aspect of how women in aviation are supporting progress, and retain Emiratis.
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44 OVERVIEW
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We aim to make a positive impact on our industry and communities. We engage in programmes that support entrepreneurship and innovation in aviation, travel and tourism. Through our sponsorship of world-class events around the world, we bring our customers and fans closer to their passion, and help inspire young people in their pursuit of sports or culture.
Through the Emirates Airline Foundation and dnata4good, we work with community organisations to make our world better. The airline foundation is a non-profit charity organisation that aims to improve the quality of life for underprivileged children, and dnata4good brings people from across the company to help build schools, protect wildlife and provide humanitarian aid.
45 OVERVIEW ENTREPRENEURS EMIRATES AND DNATA OUR INNOVATION GROUP COMMUNITIES FINANCIAL INFORMATION 08 May Emirates supports innovation and Emirates signs MoUs with three teams from Dubai ADDITIONAL INFORMATION entrepreneurship initiatives that will Future Accelerators, a programme that connects help drive progress and advancement start-ups and SMEs from around the world with for the future of aviation. public and private entities to develop innovative solutions. The selected SMEs presented proposals in the domains of B2B procurement, seamless customer experience, and an integrated system for crew duty travel. 30 Oct Emirates becomes partner of Aviation X Lab, an aviation-specific incubator under the Dubai Future 25 Feb Foundation. Located at Area 2071, Aviation X Lab Emirates Group taps on young, bright establishes a long-term partnership between Emirates and futuristic minds at Carnegie Mellon and Airbus, Collins Aerospace, GE Aviation, and Thales University in the US, as the lead sponsor of with an aim to innovate and create the next era of a varsity hackathon. As part of its internal aviation and positively impact lives. business innovation initiative, Emirates sponsored two key business challenges 27 Feb to the students at the university’s biggest The Intelak Incubator announces four finalists for its hackathon which this year attracted 7th cohort. Together with Dubai Tourism, the Emirates 400 students. Group is a principal partner of Intelak, an accelerator for start-ups focussed on aviation, tourism and travel. Since 2016, the programme has provided over AED 1.4 million in seed funding and AED 1.2 million in resources to entrepreneurs and early stage start-ups from across the UAE and internationally to launch, scale, and grow their concepts.
46 OVERVIEW HELPING OUR GLOBAL and more productive lives. The series aired on Emirates’ EMIRATES inflight entertainment system, reaching an COMMUNITIES international flying audience. DNATA
GROUP 31 May FINANCIAL The Emirates Airline Foundation supported the INFORMATION travel of 27 members of US-based Rotaplast. The ADDITIONAL multi-disciplinary team flew from the San Francisco INFORMATION to Chittagong in Bangladesh, to help 126 patients with life changing surgeries for burns, hand and facial surgeries such as cleft lips and palates.
31 Dec 28 Sep With a donation of 58 return flights throughout the Over 16,000 dnata employees year, the Emirates Airline Foundation helped volunteer in 26 countries teamed up and teachers from the UK-based University of Warwick took part in the company’s reach 12,888 students in Africa, through the “Warwick in global fundraising activity, Africa” programme which helped transform how maths dnata runs the world, raising and English are taught in 23 schools across Tanzania US$400,000 for charity. 30 Sep and South Africa. Emirates, the UAE Ministry of Health and Prevention, and Pfizer Upjohn launched a multi-faceted 15 Jan 29 Feb education campaign designed to increase health Emirates pledges contribution to the bushfire relief in 6,000 dnata employees in Australia organised literacy and public awareness on non-communicable Australia, by donating 10% of all EmiratesRED sales on various activities to support bushfire affected diseases. The campaign included a creative animated every flight for a month, and matching this dollar-for- communities through fund-raising, donations series with simple tips and messages that encourage dollar. The proceeds will go towards the recovery and and front-line volunteering. individuals to adopt preventative health behaviours and rebuilding efforts taking place in the communities habits, ultimately helping them lead longer, healthier affected across Australia.
47 OVERVIEW
EMIRATES SPORTS AND CULTURE
DNATA 29 May GROUP Emirates renews its commitment and celebrates 20 years as Premier Partner of Collingwood FINANCIAL and fans across the region. The 2019 edition of the INFORMATION Football Club in Australia. tournament was the first time in 30 years that Iraq ADDITIONAL hosted a regional event of this kind. INFORMATION
23 Dec Emirates renews its sponsorship of Emirates Team 24 Jul New Zealand for the 36th America’s Cup. Emirates will also be the ‘Official Airline’ partner of Emirates renews its partnership with the 36th America’s Cup presented by Prada which the Emirates Lions rugby team in South includes the America’s Cup World Series (ACWS), Africa, extending the airline’s team title 10 Jun sponsoring all preliminary regattas leading up to the sponsorship and naming rights for the Emirates as the Official Worldwide Partner of Rugby main event in 2021. In addition, Emirates will bring Lions home ground in Johannesburg. World Cup 2019, brings the Webb Ellis Cup to Japan, the ACWS to Portsmouth, United Kingdom, in 2020 host nation of rugby’s biggest event. as the ‘Presenting Partner’.
27 Jun 09 Feb Emirates renews its partnership with the German Emirates welcomes students aged 14 to football club Hamburg SV for another 3 seasons 18, to its headquarters for an immersive until May 2022. With a partnership that began in the session as part of the Emirates Airline 2006-07 season, Emirates is the longest jersey sponsor Festival of Literature’s Education Programme. in the club’s 130-year history. “Spotlight on careers – Come fly with me” is an extension of the airline’s support for 06 Feb the Festival, and aims to inspire the next 18 Jul Emirates becomes Official Main Sponsor of Olympique generation of aviators. Emirates signs up as Official Partner and Airline for Lyonnais, one of France’s top football clubs, in a 5-year the 9th West Asian Football Federation Championship, sponsorship deal beginning from 2020-21 season. reinforcing its commitment to supporting football
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08 Dec The 50th edition of the Emirates Airline Dubai Rugby Sevens was celebrated in style with three action-packed days of rugby, entertainment and music and over 100,000 fans in attendance. Aside from the sporting action, event highlights include two Emirates A380 flypasts over the Sevens Stadium, and an exhilarating performance by Kylie Minogue.
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50 OVERVIEW
EMIRATES
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The Emirates Group continued to make progress in the attainment of its environmental goals. In 2019-20, an updated Group Environmental Framework was signed off, refocusing company-wide initiatives under three areas: reducing emissions, consuming responsibly and preserving wildlife and habitats.
The Group Environmental Framework was shared at a townhall with employees on World Wildlife Day. The event aimed to raise workforce awareness of the role of business in environmental protection, and highlighted the company’s environmental initiatives, goals, challenges and long-term sustainability plans across key departments. This year’s guest panellists included Srdan Susic, Director of Conservation and Climate at Emirates Nature-WWF.
51 OVERVIEW REDUCING As travel restrictions tightened and borders closed due EMIRATES to the COVID-19 pandemic, Emirates had a drastically EMISSIONS reduced flying programme in March 2020 compared DNATA OUR to the previous year. This led to a commensurate drop As an airline and aviation services provider, reducing GROUP in fuel burn and related emissions, but also impacted carbon emissions is central to our environmental PLANET fuel efficiency as load factors fell on many flights. This FINANCIAL sustainability strategy. On the ground and in the air, INFORMATION impact is seen in passenger fuel efficiency results of Emirates and dnata continue to implement various Operating modern and 3.99 litres per 100 passenger kilometres for the 11 ADDITIONAL initiatives to drive fuel efficiency and reduce carbon INFORMATION fuel efficient aircraft months until the end of February, compared with 4.03 emissions. Emirates’ comprehensive fuel efficiency is Emirates’ biggest litres per 100 passenger kilometres for the full year. programme, which actively investigates and implements commitment to reducing Similarly, dnata’s airport operations around the ways to reduce unnecessary fuel burn and emissions world saw drastically reduced operations as airlines our environmental impact. wherever it is operationally feasible, helping deliver a suspended flights, and this is reflected in the 1.9% improvement in passenger fuel efficiency for environmental data for ground operations. the full year.
In the financial year 2019-20, we continued strengthening and expanding initiatives to reduce Amongst numerous initiatives, our efforts fuel consumption, which resulted in a reduction in to optimise flight plans and fuel uplift alone fuel consumption by 71,000 tonnes, equivalent to a saved an estimated 38,000 tonnes of fuel, reduction of 224,000 tonnes of CO emissions. which equates to a reduction of approximately 2
120,000 tonnes of CO2 emissions. Emirates was able to effectively reduce the amount of fuel we uplift in our flights, while taking all necessary precautions and measures to protect safety and integrity of operations. This was enabled by using evidence based, data driven methods, and by launching a fuel optimisation awareness and data sharing programme with pilots.
52 OVERVIEW CONSUMING biggest sustainability initiatives include food waste EMIRATES projects. In an effort to use the whole product, close Jun RESPONSIBLY to 500 kilogrammes of food items, including fruits, Emirates commits to reducing single-use plastic DNATA vegetables, bakery items and meat, are saved each on board its aircraft network wide. GROUP Given the scale of its worldwide operations, Emirates day to be used in small goods, or are reused for and dnata are conscious that a small change could have FINANCIAL different purposes in its retail operations. INFORMATION a major impact when it comes to resource consumption and waste reduction. This will remain an area of focus In Australia, a series of measures have also helped to ADDITIONAL INFORMATION under the refreshed Group Environmental Framework. divert from landfills over 250 tonnes of food waste produced at dnata catering. Initiatives include food Our 2019-20 figures show an increase in waste to waste being treated on-site using processes such as landfill over the previous year, largely driven by better bio-digestion. In addition, excess food is being donated data collection and reporting across more business to charities who provide meals for people in need in units. Improved data on waste generation will support both Australia and the UK. the prioritisation of efforts, and continue to play a big part of our waste reduction journey. To mark World Environment Day, Emirates transformed its old advertising billboards in South Since June, over 100 million pieces of single use plastics Africa into hundreds of reusable school bags from the have been removed from Emirates aircraft as part of PVC flex material. The bags were donated to students its long-term sustainability goals. The airline has been of a local school. Emirates partnered with a working to reduce its use of items such as salt and Soweto-based entrepreneur in this upcycling effort pepper covers, plastic menu bags, as well as plastic to spread the message of sustainability and make a wrapping for toys. Close to 15 million pieces of plastic positive impact on local communities. Oct have been diverted from landfill with just these three Emirates Flight Catering introduces This successful upcycling initiative was replicated in items. Emirates has also replaced amenity kit bag new packaging solution that cuts 750 Nigeria in September, where Emirates worked with contents, child meal cutlery, stirrers and swizzle sticks, tonnes of cardboard waste annually, the two Nigerian entrepreneurs to turn its old advertising straws and waste bags with eco-friendly alternatives. equivalent of 260,000m² (65 acres), from billboards into school bags, donated to students of its food manufacturing operations. two schools in Lagos. On the ground, over 1.1 million single use plastic bottles have been removed from Emirates’ and dnata’s ground operations and replaced with eco-friendly alternatives for employees to use. Moving away from bottled water options, marhaba lounges began providing customers with filtered water, helping further reduce waste to landfill for the millions of customers it serves in its lounges every year.
In the UAE, Emirates Flight Catering produces over 200,000 meals on an average day, and some of its
53 OVERVIEW PRESERVING WILDLIFE Emirates marked 20 years in its support EMIRATES AND HABITATS DNATA for habitat and wildlife conservation at the Dubai Desert Conservation GROUP Emirates remains committed to combatting the Reserve, a partnership that began in illegal wildlife trade, and to marshalling our resources FINANCIAL INFORMATION 1999. Last year, the reserve continued in support of this cause. We have zero tolerance on carrying banned species, hunting trophies or any ADDITIONAL to build on its successful programmes INFORMATION to track, maintain and reintroduce products associated with illegal wildlife activities. Our ground handling colleagues are trained in IATA’s native wildlife species, such as the Live Animal Regulations and our internal policies on Arabian oryx, Arabian gazelle, and carrying wildlife. Our frontline employees are trained sand gazelle. A highlight was the to recognise and report suspicious cargo. release of 250 MacQueen’s bustards in January, in conjunction with the National Aviation Research Centre and the office of HH Sheikh Mohammed bin Rashid al Maktoum.
At Emirates Wolgan Valley in Australia, the team worked closely with the local community to evacuate on-site animals as bushfires swept across the country.
Conservation work has always been a big part of the Wolgan Valley experience, and post fires, habitat restoration work was stepped up with guests being invited to participate in helping the bushland and waterways. With their help, there is now a seed bank of over one million seeds representing 25 local native species that will now play a vital role in repopulating areas of damage. Field guides have noted native wildlife has already returned with kangaroos, wallabies, wombats, reptiles and birdlife roaming abundantly.
54 OVERVIEW
EMIRATES Apr DNATA We held a community planting event in the UAE to plant the country’s national GROUP tree, the ghaf, with the support of social FINANCIAL enterprise Goumbook. Employees and INFORMATION their families came together to plant ADDITIONAL the saplings, which are adapted to the INFORMATION UAE’s desert climate. The ghaf tree also features as a motif in Emirates’ Boeing 777 ‘Gamechanger’ aircraft cabin design.
Apr dnata signs a Memorandum of Understanding with the University of Pretoria in South Africa to We have established a dedicated reporting channel to In addition to internal campaigns to create awareness support their wildlife research and empower our people and partners to stop illegal trade amongst our workforce, Emirates also engages with rehabilitation projects. by flagging confidential information that can protect our customers by regularly featuring interviews, wildlife endangered species. programmes and films on ice, our inflight entertainment system, and articles in Open Skies our inflight magazine. Jun Recognising that the illegal wildlife trade is a problem dnata colleagues volunteer at Chimp Eden, for passenger transportation as well as cargo, Emirates’ Emirates is an active participant in various industry one of the three wildlife charities the company Airport Services team at Dubai International rolled out and international efforts to tackle the illegal wildlife supports in South Africa. an online awareness course on the illegal wildlife trade trade including United for Wildlife, ROUTES (Reducing for their team which has been completed by nearly Opportunities for Unlawful Transport of Endangered 2,600 employees. Species), and the World Travel and Tourism Council (WTTC).
55 OVERVIEW The performance indicators below cover the Group’s business operations from its hub, Dubai EMIRATES including Emirates Flight Catering operations and other group entities registered in the UAE and DNATA where Emirates or dnata have management control during the financial year ended 31 March 2020. GROUP It does not include our hotel operations, retail operations under Emirates Leisure Retail, operations
FINANCIAL of our group entities (fully or partially owned) registered outside the UAE or ground operations at INFORMATION SUSTAINABILITY locations outside the UAE. References to Scope 1 and 2 emissions below are based on definitions ADDITIONAL from the Greenhouse Gas Protocol – revised edition. INFORMATION PERFORMANCE
Priority Performance indicator Unit 2019-20 2018-19 % change (Apr19-Feb20)
Aircraft fuel Fleet age years 6.8 6.1 11.0 consumption, fuel efficiency, and Jet fuel (Total fleet including wet-leased freighters) tonnes 10,879,616 11,580,308 -6.1 1, 2 CO2 efficiency Aviation gasoline (Training aircraft) tonnes 165 44 275 Passenger fuel efficiency (Passenger fleet) L/100pkm 4.03 4.11 -1.9 (3.99) Freighter fuel efficiency (Freighter fleet excluding wet-leased freighters) L/ftk 0.1764 0.1643 7.4 (0.1727) Combined fuel efficiency (Total fleet excluding wet-leased freighters) L/tk 0.325 0.326 -0.3 (0.322)
Passenger CO2 efficiency (Passenger fleet) g CO2 / pkm 100.0 102.0 -2.0 (99.0)
Freighter CO2 efficiency (Freighter fleet excluding wet-leased freighters) g CO2 / ftk 437.6 407.6 7.4 (428.4)
Combined CO2 efficiency (Total fleet excluding wet-leased freighters) kg CO2 / tk 0.805 0.810 -0.6 (0.799)
Aircraft noise and local Fleet cumulative margin to Chapter 4 noise standards EPNdB -11.71 -11.41 -2.6 air quality Fleet cumulative margin to Chapter 4 noise standards % -6.98 -6.88 -0.10 % points Nitrogen oxide (NOx) emissions (landing and take-off cycle) tonnes < 3,000 ft 13,126 14,127 -7.1 Carbon monoxide (CO) emissions (landing and take-off cycle) tonnes < 3,000 ft 8,913 9,622 -7.4 Unburnt hydrocarbons (UHC) emissions (landing and take-off cycle) tonnes < 3,000 ft 955 1,040 -8.2 Fleet margins below regulatory limits for NOx % -10.52 -10.15 -0.37 % points Fleet margins below regulatory limits for CO % -57.03 -56.54 -0.49 % points Fleet margins below regulatory limits for UHC % -65.27 -64.56 -0.71 % points
Fuel Jettison Events 3 Total events 10 19 -47.4 Jettisoned fuel tonnes 328 568 -42.3
56 OVERVIEW
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Priority Performance indicator Unit 2019-20 2018-19 % change
Vehicle and ground Diesel litres 39,622,561 40,604,383 -2.4 service equipment fuel consumption Petrol litres 13,943,692 15,691,002 -11.1
Electricity Electricity consumption MWh 460,321 479,393 -4.0 and water 4 Water consumption ML 2,352 2,388 -1.5
Materials Waste (landfill) tonnes 69,304 57,121 21.3 and waste Material recycled tonnes 7,555 6,728 12.3
CO2 emissions 5 Scope 1 Flight operations tonnes 34,380,099 36,593,909 -6.0 Ground operations tonnes 139,330 144,593 -3.6 Total Scope 1 emissions tonnes 34,519,429 36,738,502 -6.0 Scope 2 Electricity tonnes 193,335 201,345 -4.0 Total Scope 2 emissions tonnes 193,335 201,345 -4.0
Total CO2 emissions tonnes 34,712,764 36,939,847 -6.0
Energy consumption Energy from fuel consumption TJ 479,756 510,599 -6.0 Energy from electricity consumption TJ 1,657 1,726 -4.0 Total energy consumption TJ 481,413 512,325 -6.0
1 Passengers carried includes actual uplift excluding crew on duty. Kilometres flown is the planned actual ground distance from the Emirates flight planning system, corrected for the effect of wind. 2 Payload of the aircraft in tonnes (including non-revenue cargo) multiplied by the distance flown in kilometres. 3 Fuel is only jettisoned in an in-flight emergency situation when it is necessary to lower the aircraft weight to ensure a safe landing. This includes all Emirates operated aircraft. 4 Excludes some facilities located within Dubai airports due to lack of metered data. 5 CO2 emissions are calculated using the US Environmental Protection Agency (EPA) Emission Factors for Greenhouse Gas Inventories, the ICAO standard CO2 emissions factor for jet fuel (3.16 kg CO2 per kg of Jet A/Jet A-1 fuel), and the DEWA grid emissions factor for electricity in Dubai. 6 Aircraft fuel and CO2 efficiency metrics are additionally presented for the 11-month period ended 29 February 2020 in brackets, as operations post that period were significantly impacted by COVID-19 pandemic.
57 EMIRATES NETWORK Emirates operates flights to 157* destinations in 83 countries, offering industry-leading passenger and OVERVIEW cargo air transport services.
EMIRATES We connect the world to, and through, our hub DNATA in Dubai.
GROUP *prior to temporary suspensions due to COVID-19 pandemic in March 2020. FINANCIAL INFORMATION
ADDITIONAL Emirates destinations INFORMATION NORTH AMERICA ATHENS MILAN CONAKRY DUBAI INTERNATIONAL AGUADILLA BARCELONA MOSCOW DAKAR DUBAI WORLD CENTRAL BOSTON BIRMINGHAM MUNICH DAR EL SALAAM ERBIL CHICAGO BOLOGNA NEWCASTLE DJIBOUTI JEDDAH COLUMBUS BRUSSELS NICE DURBAN KUWAIT DALLAS/FORT WORTH BUDAPEST OSLO ELDORET MEDINA FORT LAUDERDALE COPENHAGEN PARIS ENTEBBE MUSCAT HOUSTON DUBLIN PORTO HARARE RIYADH LOS ANGELES DÜSSELDORF PRAGUE JOHANNESBURG TEHRAN KABUL MEXICO CITY EDINBURGH ROME KANO KARACHI NEWARK FRANKFURT ST. PETERSBURG KHARTOUM ASIA KOCHI NEW YORK GENEVA STOCKHOLM LAGOS AHMEDABAD KOLKATA TOKYO HANEDA ORLANDO GLASGOW VENICE LILONGWE BALI KUALA LUMPUR TOKYO NARITA SAN FRANCISCO HAMBURG VIENNA LUANDA BANGKOK LAHORE SEATTLE ISTANBUL WARSAW LUSAKA BEIJING MALE AUSTRALASIA TORONTO ISTANBUL - ZAGREB MAURITIUS BENGALURU MANILA ADELAIDE WASHINGTON SABIHA GOKCEN ZARAGOZA NAIROBI CEBU MUMBAI AUCKLAND LARNACA ZURICH OUAGADOUGOU CHENNAI NEW DELHI BRISBANE SOUTH AMERICA LIEGE SEYCHELLES CLARK OSAKA CHRISTCHURCH BUENOS AIRES LISBON AFRICA TUNIS COLOMBO PESHAWAR MELBOURNE QUITO LONDON GATWICK ABIDJAN DHAKA PHNOM PENH PERTH RIO DE JANEIRO LONDON HEATHROW ABUJA MIDDLE EAST GUANGZHOU PHUKET SYDNEY SANTIAGO LONDON STANSTED ACCRA AMMAN HANOI SEOUL SAO PAULO LYON ADDIS ABABA BAGHDAD HO CHI MINH CITY SHANGHAI VIRACOPOS MADRID ALGIERS BAHRAIN HONG KONG SIALKOT MALTA CAIRO BASRA HYDERABAD SINGAPORE EUROPE MANCHESTER CAPE TOWN BEIRUT ISLAMABAD TAIPEI AMSTERDAM MAASTRICHT CASABLANCA DAMMAM JAKARTA THIRUVANANTHAPURAM
Emirates presence NORTH AMERICA AFRICA AJMAN UMM AL QUWAIN PHUKET HOBART BOSTON ARUSHA AL AIN SAMUI LAUNCESTON CLEVELAND CAPE TOWN DUBAI ASIA SINGAPORE MELBOURNE NEW YORK DAR ES SALAAM FUJAIRAH BANGKOK NEWCASTLE PITSBURGH JOHANNESBURG MUSCAT COLOMBO AUSTRALASIA PERTH WASHINGTON SEYCHELLES RAS AL KHAIMAH GALLE ADELAIDE SYDNEY SALALAH HUA HIN AUCKLAND WOLGAN VALLEY EUROPE MIDDLE EAST SOHAR KRABI BRISBANE 58 NICOSIA ABU DHABI SHARJAH MALE CANBERRA OVERVIEW
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59 DNATA NETWORK dnata’s business footprint in airport operations, catering and travel services, span 197 cities and OVERVIEW airports across the globe.
EMIRATES We aim to be the world’s most admired air DNATA services provider.
GROUP
FINANCIAL INFORMATION
ADDITIONAL dnata presence INFORMATION NORTH AMERICA CAMPINAS CARDIFF SHANNON QASSIM ATLANTA CURITIBA CATANIA SOFIA RABIGH AUSTIN FLORIANOPOLIS CHELTENHAM SOLIHULL RAS AL KHAIMAH BALTIMORE FORTALEZA CORK ST. PETERSBURG RIYADH BOSTON ILHEUS DONCASTER SWINDON SALALAH CHICAGO JOAO PESSOA DUBLIN TURIN SEEB DALLAS/FORT WORTH JUAZEIRO DO NORTE EAST MIDLANDS VENICE SHARJAH DETROIT MACAPA EDINBURGH VERONA SOHAR EL PASO MACEIÓ FRANKFURT WARSAW TAIF GRAND RAPIDS MANAUS FLORENCE WINCHESTER YANBU HOUSTON NATAL GENEVA ZURICH INDIANAPOLIS PETROLINA GENOA ASIA LAREDO PORTO ALEGRE GLASGOW AFRICA AHMEDABAD LOS ANGELES PORTO SEGURO HALIFAX CAPE TOWN BALI LUBBOCK RECIFE KINGSTON JOHANNESBURG BANGKOK MCALLEN RIO DE JANEIRO KNUTSFORD BENGALURU MILWAUKEE SALVADOR LAMEZIA TERME MIDDLE EAST CEBU NASHVILLE SANTAREM LEEDS ABU DHABI CHIANG MAI NEW YORK SAO LUIS LEIPZIG AJMAN CLARK PENANG NEWARK SAO PAULO LONDON GATWICK AL AIN DELHI / NOIDA PESHAWAR ONTARIO TERESINA LONDON HEATHROW AL KHOBAR FAISALABAD PHUKET ORLANDO LONDON STANSTED AMMAN HANOI PUNE PHILADELPHIA EUROPE LUTON BAHRAIN HO CHI MINH QUETTA SAN DIEGO ALGHERO MADRID BURAIMI HONG KONG SINGAPORE SANFORD ALTON MANCHESTER DAMMAM HYDERABAD TOKYO SAN FRANCISCO AMSTERDAM MILAN LINATE DUBAI INTERNATIONAL ISLAMABAD YOGYAKARTA TAMPA BARI MILAN MALPENSA DUBAI WORLD CENTRAL JAKARTA TORONTO BELFAST NAPLES DUQM KABUL AUSTRALASIA VANCOUVER BERGAMO NEWCASTLE ERBIL KARACHI ADELAIDE WASHINGTON BELGRADE OLBIA FUJAIRAH KOH SAMUI AUCKLAND WICHITA BIRMINGHAM OSTRAVA IBRA KOTA KINABALU BRISBANE BOLOGNA PALERMO IBRI KUALA LUMPUR CAIRNS SOUTH AMERICA BRIGHTON PISA JEDDAH KYOTO CANBERRA ARACAJU BRINDISI PRAGUE JUBAIL LAHORE COOLANGATTA BELEM BRISTOL PRESTON MAABELA MANILA / MAKATI DARWIN BOA VISTA BRUSSELS PRESTWICK MARKA MULTAN MELBOURNE BRASILIA BUCHAREST ROME FIUMICINO MUSCAT MUMBAI PERTH CAMPINA GRANDE CAGLIARI SANDYCROFT NIZWA PATTAYA SYDNEY
60 OVERVIEW
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61 OVERVIEW
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63 EMIRATES FINANCIAL COMMENTARY
73 DNATA FINANCIAL COMMENTARY
79 EMIRATES INDEPENDENT AUDITOR’S REPORT
86 EMIRATES CONSOLIDATED FINANCIAL STATEMENTS
133 DNATA INDEPENDENT AUDITOR’S REPORT
136 DNATA CONSOLIDATED FINANCIAL STATEMENTS
62 OVERVIEW
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EMIRATES FINANCIAL COMMENTARY
63 Profit attributable to the Owner in AED bn Profit margin in % Revenue trend in AED bn Revenue split in % 7.1 96.0 91.2 91.0 8.4 83.5 83.8
96% Transport 2.8 3.0 OVERVIEW 1.3 0.9 1.1 4% 0.9 1.1 EMIRATES 1.5 Non transport
DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20
GROUP
FINANCIAL Operating profit in AED bn Return on shareholder’s funds in % Revenue in AED m 2019-20 2018-19 % change 2019-20 INFORMATION as % of 8.3 revenue EMIRATES 23.8 FINANCIAL 6.4 Passenger 75,587 78,562 (3.8) 83.1 COMMENTARY Cargo 11,207 13,056 (14.2) 12.3 4.1 DNATA Excess baggage 478 444 7.7 0.5 FINANCIAL 7.9 2.4 2.6 COMMENTARY 2.4 3.5 Transport revenue 87,272 92,062 (5.2) 95.9
EMIRATES 3.8 Sale of goods 2,745 2,918 (5.9) 3.0 CONSOLIDATED Hotel operations 584 669 (12.7) 0.7 FINANCIAL 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 STATEMENTS Others 394 391 0.8 0.4
DNATA Non-transport revenue 3,723 3,978 (6.4) 4.1 CONSOLIDATED FINANCIAL Total 90,995 96,040 (5.3) 100.0 STATEMENTS
ADDITIONAL As we closed our financial year 2019-20 and profits being negatively impacted in the temporary suspensions led by the COVID-19 of opportunities, and a healthy customer INFORMATION and entered into the next one, the world month of March 2020. pandemic and a 45-day runway closure at DXB. demand for Emirates’ products helped around us had succumbed to the economic in the improvement of seat load factors. hardships brought by the global pandemic Like in previous years, we added new Our quest to find innovative ways to At the same time, a tighter rein on costs of COVID-19. Never before has the aviation destinations to our service map, expanded enhance our product offerings and service was ensured which drove better margins. and travel industry faced a crisis of this our A380 network and entered new markets levels for our customers continued. We However, our March 2020 results were breadth and scale – geographically, as well during this financial year. launched ‘Emirates Delivers’ - our new severely impacted by the suspension of dedicated e-commerce delivery platform as from a health, social, and economic New aircraft orders were announced by flights following the lock-down by countries standpoint. and ‘Skywards Everyday’ - an extension due to the spread of COVID-19. Our profits Emirates in November 2019 worth USD of our award-winning loyalty programme 24.8bn (AED 91bn) at the Dubai air show for the month were more than AED 1.5bn As a global network airline, we too find for earning Skywards miles on day-to-day worse than expected. ourselves in a situation where we cannot with Airbus and Boeing. The orders included expenditure. viably operate full passenger services until 50 Airbus 350s worth USD 16bn (AED 59bn) With reduced equity due to IFRS 16 countries re-open their borders, and travel and 30 Boeing 787-9 aircraft amounting to Effective April 2019, we implemented the adoption, our return on shareholder’s funds confidence returns. This is turning out to USD 8.8bn (AED 32bn). These aircraft will new lease accounting standard, IFRS 16, on a improved to 3.5% (2018-19: 2.4%). be the most challenging crisis in Emirates provide us the agility and flexibility as we modified retrospective basis. IFRS 16 has no history and the outlook for the financial year develop and grow our route network. cash flow or economic impact on Emirates but Revenue 2020-21 remains uncertain. does change the way expenditure is reported We continued to operate a young and in the income statement, together with how Our revenues declined to AED 91.0bn. We stepped into the financial year 2019-20 efficient fleet. 6 Airbus 380s were added leased assets, liabilities, and associated cash Transport revenue which forms almost 96% with reduced activity to support a planned and 6 older Boeing 777 aircraft were phased flows are reported in the primary financial of Emirates’ revenue decreased by 5.2% 45-day runway closure at Dubai International out this year. This assisted in enhancing statements and disclosure notes. to AED 87.3bn (2018-19: AED 92.1bn). The airport (“DXB”) and covered lost ground our seat capacity and ensured that we reduction in both passenger and cargo with strong second and third quarter continue to provide a fresh experience to Profitability revenue was primarily due to geopolitical performances. We were flying at a high our passengers. Our modern fleet of Airbus instability in key markets throughout the Our profit for the year improved from altitude against our current year financial 380 and Boeing 777 aircraft connected 157 year, runway closure and the weakening previous year and stood at AED 1.1bn (2018- targets until February 2020, when our destinations across six continents through of global currencies against the US Dollar 19: AED 0.9bn) and our profit margin moved flight path was changed by the COVID-19 our hub in Dubai, facilitating global travel - having an adverse impact of AED 2.5bn up to 1.1% (2018-19: 0.9%). outbreak and volatile oil prices. and trade, and transporting 56.2 million on our top line. Further, COVID-19 lost us passengers and carrying 2.4 million tonnes Before the outbreak of COVID-19, we over AED 3.4bn in revenues in the month of Financial year 2019-20 marked our 32nd of cargo during the year. The numbers fell in deployed our capacity to take advantage March 2020. 64 consecutive profitable year, despite revenues comparison to the previous year due to the Available seat kilometres (ASKM) and RPKM Passenger yield in fils per RPKM Passenger seat factor in % Ancilliary revenue in AED bn in AED bn and as a % of passenger revenue 3.1 2.9 377.1 390.8 78.5 368.1 367.2 77.5 2.5 333.7 26.7 2.3 26.2 26.2 25.4 24.8 76.5 76.8 1.7 75.1 4.1 OVERVIEW 3.7 3.3 3.3 2.5 EMIRATES 255.2 276.6 292.2 300.0 288.1
DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 Ancilliary revenue GROUP ASKM RPKM Ancilliary to passenger revenue
FINANCIAL Passenger numbers in millions Cargo carried in tonnes ‘000 Geographical revenue in % INFORMATION 2,659 56.1 58.5 58.6 56.2 2,509 2,577 2,623 2,389 EMIRATES 51.9 29% Europe FINANCIAL COMMENTARY 26% East Asia and Australasia 16% Americas DNATA FINANCIAL 11% West Asia and Indian Ocean COMMENTARY 10% Africa EMIRATES 8% Gulf and Middle East CONSOLIDATED FINANCIAL 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 STATEMENTS
DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Passenger revenue and seat factor and a stronger route network. We also Cargo revenue its position as the global market leader INFORMATION enhanced our existing agreement with InterJet for the air transport of temperature Our core passenger revenue (including excess SkyCargo revenue reduced by 14.2% to AED Airlines - which is set to open new routes and sensitive pharmaceuticals and expanded its baggage) reduced by 3.9% to AED 76.1bn 11.2bn (2018-19: AED 13.1bn) as the business destinations for passengers travelling between pharmaceutical network to 20 stations by (2018-19: AED 79.0bn) resulting from reduced felt the brunt of a difficult market environment Mexico, the Gulf, Middle East and beyond. entering into successful arrangements with passenger capacity and traffic. Our passenger this year. Global trade wars and elevated Further, we completed two years of our ground handling partners and other local capacity, measured in ASKMs and passenger uncertainty affected our air freight business strategic partnership with flydubai. All these stakeholders. traffic, measured in RPKMs closed at 367.2bn restricting our annual cargo tonnage to 2,389 new and existing partnerships continue to – reduction of 6% (2018-19: 390.8bn) and thousand tonnes (2018-19: 2,659 thousand provide increased destination choices to Non-transport revenue 288.1bn (2018-19: 300bn) – drop of 4%, tonnes), a reduction of 10%. our customers. respectively. This was due to the runway Our non-transport revenue which includes the FTKMs reduced by 12.4% to 12.0bn (2018-19: sale of consumer goods, catering operations, closure at the beginning of the year and We opened our first remote check-in terminal 13.7bn) and the yield per FTKM decreased by sales at F&B outlets and hotel operations significant unplanned flight disruptions due to at Port Rashid in Dubai which provides 2% over the previous year resulting from lower contributed 4.1% (2018-19: 4.1%) of our total the COVID-19 pandemic in March 2020. seamless connections for cruise passengers for fuel surcharge and a strengthening US Dollar. revenue and dropped by 6.4% to AED 3.7bn their onward Emirates departure. Demand for our world class product offerings Our freighter network saw the introduction of (2018-19: AED 4.0bn). This was due to difficult remained high as reflected by our pronounced Our award winning Skywards programme Taipei, Kano and Lagos while we suspended market conditions throughout the year, seat factor of 78.5% (2018-19: 76.8%), up by touched 25 million members this year, adding operations in Bogota, Los Angeles, exacerbated by the COVID-19 pandemic. 1.7% pts. Passenger yield stood strong at AED another feather to its achievements. The Luxembourg and Mexico City. 26.2 fils (2018-19: AED 26.2 fils) per RPKM. programme was further energised through Revenue distribution initiatives like ‘Skywards Everyday’, which Despite difficult market conditions, we Our in-flight retail offering got even better Emirates continues to benefit from a partners with retail corporates and helps continued investing towards the enrichment of with the launch of EmiratesRED, a dedicated geographically diverse revenue base, with members to earn Skywards miles on their our product by launching ‘Emirates Delivers’ - shopping channel for our customers. Our no region contributing more than 30% of day-to-day expenditure and ‘Skywards our new, fast, reliable and cost-effective on-board hospitality levels inched higher as revenue. Europe stands as our largest revenue Exclusive’, offering members access to the e-commerce shipping solution which provides we continued to refresh our luxury products contributor at 28.7% (2018-19: 29.4%). airline’s unique, money-can’t-buy sponsorship customers with purchase consolidation options helping the premium class seat factor to Americas continued to mature due to capacity experiences. in the United States prior to being delivered at further increase by 0.5% pt. growth and the Indian sub-continent too their preferred destination - currently serving showed improvement compared to last year Our ancillary offerings mainly including Along with organic growth, we continued to the UAE market. due to better customer confidence in our in-flight upgrades and paid seats generated forge partnerships to expand our offering and product. Revenue for all the other regions revenue of AED 3.1bn (2018-19: AED 2.9bn) This year, among other initiatives, SkyCargo benefit customers. We signed a codeshare declined in line with the decrease in and contributed 4.1% (2018-19: 3.7%) of total also strengthened its pharmaceuticals agreement with SpiceJet - providing travellers overall revenue. passenger revenue for the year. related logistics capabilities with the new to and from India seamless access to a wider purpose-built facility in Chicago, reinforcing 65 Total operating costs in AED bn Total cost movement in AED bn Key operating costs as % of total costs 95.3 88.2 85.6 82.6 25 25 28 29 76.7 9.7 11.7 32 4.5 10 10 Heading heading 11 10 3.1 3.2 22
97.0 65 65 61 OVERVIEW 58 90.4 49 EMIRATES
DNATA 5 6 6 7 7 8 8 20 Total cost Jet fuel Depreciation Aircraft Net Others Total cost 5 6 6 7 7 8 8 20 20 8 and operating finance 20 20 amortisation leases costs Jet fuel Others GROUP Depreciation and amortisation 2019-20 FINANCIAL Fuel volume in million barrels Unit cost in fils per ATKM INFORMATION % as % of and average price in USD per barrel Total costs in AED bn 2019-20 2018-19 change total cost 92.8 EMIRATES 88.1 90.3 87.3 81.2 Jet fuel 26.3 30.8 (14.6) 29.1 146 FINANCIAL 139 141 COMMENTARY 84 Depreciation and amortisation 19.4 9.7 100.0 21.5 76 132 132 68 DNATA 60 57 Employee 12.1 12.6 (4.0) 13.4 FINANCIAL Aircraft operating leases - 11.7 (100.0) 0.0 COMMENTARY Direct operating costs 16.4 17.5 (6.5) 18.1 97 97 98 97 96 EMIRATES Other operating costs 11.4 13.0 (12.3) 12.6 CONSOLIDATED FINANCIAL 5 6 6 7 7 8 8 20 Total operating costs 85.6 95.3 (10.2) 94.7 5 6 6 7 7 8 8 20 STATEMENTS Fuel volume Fuel average price Net finance costs 4.8 1.7 182.4 5.3 Unit Cost Unit cost excluding jet fuel DNATA Total 90.4 97.0 (6.8) 100.0 CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Expenditure Almost 20% of our jet fuel purchases were Direct operating costs Finance costs INFORMATION hedged during the year. We are vigilantly Our direct operating costs (‘DOCs’) include Net finance costs rose to AED 4.8bn (2018-19: Total costs evaluating and responding to fuel price risk on aircraft related handling, in-flight catering, AED 1.7bn), a significant jump due to the an ongoing basis. Our total costs for the year were AED 90.4bn overflying, landing & parking, crew layover adoption of IFRS 16, resulting in lease liabilities (2018-19: AED 97.0bn), showing a reduction of Depreciation and amortisation and aircraft maintenance expenses which being recognised on the balance sheet and 6.8% from previous year. reduced by 6.5%, in line with our corresponding interest expense has been With the adoption of IFRS 16 from 1 April Impact on adoption of IFRS 16 capacity reduction. recognised. The increase was partially offset 2019, our depreciation and amortisation due to Emirates’ watchful strategy of debt As required by IFRS 16, operating lease expenses have risen considerably and now Other operating costs refinancing to leverage lower interest rates form 21.5% - the second largest component - charges have been replaced by interest and Other operating costs comprise sales and prevailing in the market. of total costs (2018-19: 10%). A charge of AED depreciation expenses. IFRS 16 typically causes marketing, facilities, technology costs and 9.4bn was recognised in the current year as the profit line to be front-loaded. As projected, corporate overheads. These costs have been Other financial gains and losses depreciation of right-of-use assets in respect with Emirates operating a young aircraft fleet, successfully managed via various innovative Following the rapid global spread of of aircraft and other assets. Consequently, the adoption of IFRS 16 resulted in an adverse and sustainable cost-saving initiatives and COVID-19, we no longer expect to consume operating lease expenses reduced to Nil. income statement impact in the current year. stood at AED 11.4bn (2018-19: AED 12.7bn), a the same volume of jet fuel as initially This expense line also increased due to Since the numbers for financial year 2018-19 reduction of 12.3% compared to previous year. envisaged given the reduction in planned following; i) the delivery of 6 aircraft this year, have not been restated, income statements for operations. Consequently, the existing crude ii) staff accommodation facilities and other the two years are not directly comparable. Unit costs per ATKM oil hedge relationships were adjusted in leases added as right-of-use assets and iii) Our unit costs per ATKM showed an accordance with IFRS 9, by reforecasting Jet fuel contractual rights purchased on our aircraft improvement and stood at 141 fils (2018-19: jet fuel uplifts and the resulting hedge maintenance programme. All this was on top Jet fuel remained our single largest element 146 fils) per ATKM primarily due to reduction ineffectiveness of AED 1.1bn was recognised in of the full year depreciation impact of last of total costs at 29.1% (2018-19: 32.3%). The in fuel prices. the income statement. market prices for jet fuel remained volatile year’s aircraft deliveries and other capital fluctuating between USD 63/barrel to USD 82/ assets. Unit costs excluding fuel showed a marginal This charge was partially offset, to the tune of barrel. The average price in 2019-20 was USD decline from last year and reached 96 fils AED 0.6bn, by gains recorded on settlement of Employee cost 76/barrel, a decrease of 9% versus last year. (2018-19: 97 fils) per ATKM primarily due to currency derivatives which did not qualify for This, together with a lower fuel uplift of 6%, Employee costs at AED 12.1bn (2018-19: AED the weakening of major currencies against hedge accounting. the US Dollar having a positive impact of AED due to reduced capacity, resulted in our fuel 12.6bn) were down by 4% due to reduced These transactions are disclosed within Note 9 0.7bn on our cost base. bill dwindling by 14.6% to AED 26.3bn (2018- head count and the change in accounting for of the consolidated financial statements. 19: AED 30.8bn). As a result, fuel costs per staff accommodation related operating lease ATKM dropped to 45 fils (2018-19: AED 49 fils). costs which are now included in the right-of- use assets related depreciation charge. 66 Available tonne kilometres (ATKM) in bn Revenue tonne kilometres (RTKM) in bn Destinations in numbers Longevity of destinations in no. of years and number of aircraft 157 158 157 50 49 270 270 153 156 45 259 268 42.3 251 39.3 41.3 39.5 41 36.9 53 40 50 50 61.4 63.3 47 60.5 30 56.4 58.6 40 22 20 OVERVIEW 10 EMIRATES 0 DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 <5 6 0 20 ATKM No. of aircraft Total A380 *includes destinations suspended due to COVID-19 GROUP
FINANCIAL Overall and breakeven load factor in % A380 aircraft numbers B777 aircraft numbers Aircraft departures in thousands INFORMATION 166 115 163 161 200 205 202 203 109 156 155 189 EMIRATES 67.4 102 67.2 66.8 94 FINANCIAL 65.5 COMMENTARY 65.0 75 66.4 DNATA 65.2 64.5 FINANCIAL 63.4 COMMENTARY
EMIRATES 60.4 CONSOLIDATED FINANCIAL 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 STATEMENTS Breakeven load factor Overall load factor DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Capacity, traffic and load factor Our break-even load factor reduced to our passengers and 74% (2018-19: 76%) Conakry, Durban, Entebbe and London INFORMATION 63.4% (2018-19: 66.4%) due to lower unit of our cargo tonnage. Stansted; Our capacity reduced by 7% compared costs per ATKM resulting from lower fuel • A new daily service from our hub in to the previous year bringing the ATKMs Our Boeing fleet has played a key role price and various cost saving measures. Dubai to Phnom Penh via Bangkok; down to 58.6bn (2018-19: 63.3bn). in supporting trade and communities Consequentially, traffic loads or RTKMs Our position as the largest operator of with the transport of essential goods • New A380 services to Riyadh, Muscat dipped by 7% as well and stood at the A380 aircraft remained intact and and medical aid during the COVID-19 and Cairo; and 39.5bn (2018-19: 42.3bn). with 6 new deliveries, we now have pandemic. • Increased capacity to existing 115 superjumbos in the fleet. The high destinations with larger aircraft to These reductions were primarily the We continued to invest in enhancing seat factor on the A380 continues to Amman, Athens, Boston, Glasgow, result of heavy network suspensions that customer experience through on-board demonstrate the customer preference for Jeddah and Kuala Lampur. arose due to the COVID-19 pandemic and ground products, upgrading our this aircraft. The fleet carried 43% (2018- Our freighter network saw the related lock-downs across the globe in lounge and catering offerings; and 19: 41%) of our passengers in 2019-20 introduction of Taipei, Kano and Lagos the month of March 2020. In addition, making improvements to our network by and with 53 destinations, around 34% while we suspended operations in the planned operational suspension adding new destinations and partnering (2018-19: 32%) of the Emirates network Bogota, Los Angeles, Luxembourg and due to the DXB runway closure for with other airlines. is served by our flagship aircraft. This Mexico City. maintenance purposes at the start of the aircraft will remain the cornerstone of Our passenger network was improved by: financial year also pushed our capacity Longevity of destinations our fleet mix and product offering well and RTKMs down. Consequentially, the into the 2030s. • Introduction of two destinations – We remain steadfast in our commitment number of departures also saw a decline Porto, our second point in Portugal to build our network through improved of 7%. The B777 aircraft continues to remain after Lisbon and Mexico via Barcelona; customer experiences fostering long a strong pillar of our fleet. During the Keeping these exceptional events aside, along with the full year operations of term loyalty. Our investments continue year, we phased out 6 older aircraft, we invested sizably in our product and destinations added in the prior year in to be well-received as nearly 31% of our bringing the total fleet size to 155. We continued to attract traffic owing to the Far East and Europe; total destinations are being serviced for still remain the world’s largest Boeing our high quality service. As a result, our • Higher frequencies to several more than 10 years and 26% for more 777 operator. This fleet accounts for 57% overall load factor improved by 0.6%pt existing destinations including than 20 years. (2018-19: 59%) of the airline’s capacity, and closed at 67.4% (2018-19: 66.8%). Abuja, Barcelona, Cairo, Casablanca, carrying nearly 57% (2018-19: 59%) of 67 Primary and secondary capital expenditure Equity in AED bn in AED bn 37.0 37.7 35.1 14.7 32.4 12.3 10.6 11.3 23.6 Assets in AED bn Equity and liabilities in AED bn 7.4 OVERVIEW 172.1 172.1
EMIRATES 23.6 2.0 2.0 1.1 1.1 0.6 DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 127.4 127.4 Fleet capital expenditure Others GROUP
124.8 37.7 FINANCIAL 99.6 INFORMATION 75.3 Aircraft, engines Equity movement in AED bn EMIRATES and parts* FINANCIAL 52.2 COMMENTARY Other non current Equity 9.6 assets 1.2 5.6 DNATA 21.2 19.6 Cash assets Non current 0.1 FINANCIAL liabilities 37.7 COMMENTARY 17.0 48.9 23.6 20.2 Other current 37.5 Current liabilities EMIRATES 7.5 13.9 assets CONSOLIDATED As at Impact on Profit Other Other As at FINANCIAL 20 8 20 8 3 March adoption of for comprehensive movements STATEMENTS 3 March * includes aircraft pre-delivery payments 20 IFRS 6 the year income 2020 DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Statement of financial position reduction. Current assets, excluding 6 new A380s were delivered this year, Following the COVID-19 pandemic, INFORMATION cash assets, dropped by AED 6.4bn due in line with our strategy to keep our we have taken various measures to Emirates’ balance sheet size grew by to the adverse impact of COVID-19 on fleet young and efficient. We also navigate our business through this crisis, 35% due to the adoption of IFRS 16. our revenue related receivables which completed our 777-200LR refurbishment including compensating cost saving The new standard replaces IAS 17 showed a decline of over 50% compared programme this year and entered into a measures and reductions in discretionary and requires almost all leases to be to last year. An amount of AED 1.9bn new engine maintenance contract. capital expenditure. These measures also recognised on the balance sheet by relating to operating lease prepayments include obtaining committed support a lessee, as the distinction between was reclassified to ROU assets as part of Equity from the Government of Dubai which operating and finance leases is removed. the IFRS 16 implementation. Despite an increase in profits compared has publicly confirmed that they will Under the new standard, an asset, to previous year, Emirates’ total equity financially support Emirates during this right-of-use (“ROU”) and a financial Cash assets remained healthy at AED saw a drop of AED 14.1bn to AED 23.6bn period through a variety of measures liability to pay rentals is recognised. 20.2bn (2018-19: AED 17.0bn). (2018-19: 37.7bn) as at the year end. including additional equity injection, Leases are capitalised as ROU assets if required. by recognising the present value of Capital expenditure This decrease was due to the adoption the lease payments while obligations The investment in our fleet and of IFRS 16 and unfavourable mark-to- Liabilities to make future payments under leases, customer focused initiatives marched market (“MTM”) values on our derivative Total liabilities increased by 66% to AED previously classified as operating, are ahead this year as well. Capital intensive instruments. IFRS 16 adoption led to a 148.5bn (2018-19: AED 89.7bn) primarily now recognised as debt. Note 2 of cash outflows amounted to AED 11.9bn reduction of AED 9.6bn in our equity. due to recognition of additional lease the consolidated financial statements (2018-19: AED 13.4bn). Negative MTM values of AED 5.6bn liabilities on adoption of IFRS 16, offset provides details of the transition primarily relate to fuel related derivatives to some extent by a reduction in forward methodology used and the related Primary capital expenditure comprising maturing in the next 24 months. The sales liabilities due to the ongoing impact of IFRS 16 on our balance sheet. of aircraft spend (including pre-delivery negative mark-to-market values are due COVID-19 pandemic. payments, aircraft and engine parts), to the crash of oil prices towards the end Assets major aircraft & engine maintenance of our financial year. Total assets stood at AED 172.1bn related costs and spare engines (2018-19: AED 127.4bn), non-current represented 95% or AED 11.3bn of the In order to support Emirates during assets increased by 50% or AED total capital spend (2018-19: 92% or AED this challenging time, the shareholder 47.9bn while current assets showed a 12.3bn). decided to retain this year’s profit and hence no dividend was declared. 68 Sources of funding over last 10 years in %
44% Leased Fleet information 33% Commercial Financing Aircraft Total as at Owned* Leased Total as at Change since Future Options 16% EXIM/ECA Guaranteed Financing 31 March 31 March 31 March deliveries 2020 2019 2019 OVERVIEW 6% Bonds 1% Islamic Financing A 380-800 115 56 59 109 6 8 - EMIRATES B 777-300ER 134 66 68 138 (4) - -
DNATA B 777-200LR 10 6 4 10 - - -
GROUP B 777-300 - - - 1 (1) - - B 787-9 - - - - - 30 - FINANCIAL Number of aircraft Average fleet age in months INFORMATION B 777-X - - - - - 115 61 81 268 270 270 74 73 A 350-900 - - - - - 50 - EMIRATES 68 FINANCIAL 259 63 Passenger 259 128 131 258 1 203 61 COMMENTARY 251 B777-200LRF 11 - 11 12 (1) - - DNATA FINANCIAL Freighters 11 - 11 12 (1) - - COMMENTARY Total aircraft 270 128 142 270 - 203 61 EMIRATES Note: One A319 aircraft is used for Executive jet charters. CONSOLIDATED FINANCIAL 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 *Includes aircraft acquired on secured financing. STATEMENTS
DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Fleet acquisition and financing Emirates continues to maintain a young Since 2010, Emirates has repaid over Having raised close to AED 200bn (USD INFORMATION fleet age of 6.8 years (81 months) (2018- AED 15bn (USD 4.1bn) towards capital 54.5bn) total financing over the last 10 During the year, the airline took delivery 19: 6.0 years (73 months)), substantially markets issuances including scheduled years, Emirates has been successful in of 6 A380s from Airbus and retired 6 lower than the industry average, repayments of amortising debt as well maintaining a well-diversified financing of its older (4 B777-300ER, 1 B777-300 consisting of 155 Boeing aircraft and 115 as the UK Export Finance backed SUKUK portfolio. Tapping into various sources and 1 B777-200F) aircraft, reinforcing its twin-deck A380 aircraft. and Corporate SUKUK. of funding, both in terms of structure position as the world’s largest all wide- and geography, Emirates continues body aircraft operator. During the year, Emirates raised a total Emirates’ strength of operations and to successfully manage its long term of AED 9.3bn (2018-19: AED 14.2bn) in cash flow generation underscore the As part of its long term fleet planning, financing strategy. aircraft financing (funded through consistent ability to meet obligations in in November 2019, Emirates announced term loans). a timely manner. We continue to repay Following the outbreak of COVID-19, an order for 50 A350-900 XWB and our financing liabilities as they become we are making all efforts to maintain 30 B787-9 aircraft at list prices of USD Underpinned by our financial strength due from our cash resources. sound liquidity. In March 2020, we 24.8bn. The latest generation A350 and solid track record of business raised additional liquidity through term and B787-9 aircraft will be delivered performance, Emirates continued to Emirates and its financing associates won loans, revolving credit and short term to Emirates starting from financial year innovate and develop new financing the ‘Aviation 100 Middle East & Africa trade facilities to the tune of AED 4.4bn 2023 and the aircraft will complement techniques in partnership with the Supported Finance Deal of the Year for (USD 1.2bn) and we continue to tap the Emirates’ fleet mix, support network financial community. 2019’, resulting from the financing of two bank market for further liquidity in the growth, and give more flexibility to serve Emirates A380 aircraft, which was the first quarter of financial year 2020-21 seasonal or opportunistic demand better. As part of an initiative to reduce costs first A380 Bpifrance (French Sovereign to provide a cushion for the impact of With this, Emirates now has on order 203 and take advantage of the falling global Export Credit Agency) Assurance Export COVID-19 on the business cash flows in aircraft – 8 A380, 50 A350, 115 B777-X interest rates, we refinanced USD 673m backed financing that also combined the short term. and 30 B787-9, excluding options and and repriced USD 843m of debt in this a commercial tranche sourced from purchase rights. financial year, resulting in an estimated Korean investors. overall future cost savings of over USD 30m.
69 Cash generated from operating activities Cash assets in AED bn and Cash assets to Operating cash margin in % EBITDAR margin in % in AED bn total revenue in % 22.8 24.8 28.7 28.1 20.0 20.4 20.2 27.0 17.0 15.7 14.1 14.1 16.6 10.4 10.5 15.3 24 25.0 OVERVIEW 22 22 24.5 18 17 12.3 EMIRATES 10.8
DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 Cash assets Cash assets to revenue GROUP
FINANCIAL EBITDAR and debt service in AED bn INFORMATION Cash flow in AED bn 19 10.2 16 EMIRATES 14 FINANCIAL 22.8 12 13 COMMENTARY 9.4
DNATA 25.9 25.0 24.4 24.0 FINANCIAL 23.4 21.8 21.2 20.6
20.2 19.0 COMMENTARY 17.0 15.1 EMIRATES CONSOLIDATED Cash assets Net cash Net cash Net cash Cash assets FINANCIAL net of bank generated from used in used in net of bank 5 6 6 7 7 8 8 20 STATEMENTS overdrafts as at operating investing financing overdrafts as at 3 March activities activities activities 3 March 20 EBITDAR Debt service No. of months DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Cash position As per the new standard, the cash flows increase in profit for the year and the net in the consolidated statement of cash INFORMATION related to previously off balance sheet impact of IFRS 16 adjustments. flows and in the relevant notes to the Cash assets leases (operating leases) are disclosed in consolidated financial statements. Despite a difficult last month of FY 2019-20 investing activities rather than operating Debt service payments amounted to AED which saw our revenues and profit line activities. 23.4bn (2018-19: AED 20.6bn), an increase EBITDAR after debt service payments was severely impacted, our cash assets which of 13.6% compared to previous year AED 2.5bn and equated to 13 months include short term bank deposits were Increased cash generated from operating primarily due to the repayments for new (2018-19: 14 months) of payments. activities also meant an improvement in aircraft added to the fleet in the current at a robust AED 20.2bn (2018-19: AED EBITDAR margin at 28.1% (2018-19: 17.0bn), up by 19%. However, our cash our operating cash margin which reached and previous year. 24.8% (2018-19: 10.8%). 24.5%) was 3.6% pts. higher than last reserves will remain under pressure given The payments shown in the table below year due to a decrease in revenue the unpredictable impact of the COVID-19 EBITDAR and debt service (including those of previous years) exclude complimented by a higher EBITDAR for pandemic on our business in the financial refinancing of certain borrowings and the current year. year 2020-21. Cash profit from operations (EBITDAR) at lease liabilities at commercially better AED 25.9bn (2018-19: AED 24.0bn) was Cash assets to total revenue improved to rates. The related cash inflows and 7.8% higher than last year primarily due to 22% (2018-19: 17%) and is well within our outflows are reported at their gross values target range of 25% +/- 5%. Cash from operating activities 2019-20 2018-19 2017-18 2016-17 2015-16 Cash generation from operating activities of AED 22.8bn (2018-19: AED 10.5bn) EBITDAR in AED bn 25.9 24.0 25.0 21.2 24.4 improved by 117%. However, this is not Less: Debt service directly comparable to the prior years Repayment of borrowings and lease liabilities (18.5) (7.0) (6.0) (10.0) (5.8) due to the change in presentation of Repayment of operating lease rentals - (11.7) (11.7) (10.5) (8.1) cash flows in the consolidated financial statements upon implementation of Interest paid (4.9) (1.9) (1.3) (1.3) (1.2) IFRS 16. Total (23.4) (20.6) (19.0) (21.8) (15.1)
70 EBITDAR after debt service in AED bn 2.5 3.4 6.0 (0.6) 9.3 Debt repayment profile in AED bn Debt collateralisation in AED bn 41.3 19.2 172.1 139.1 127.6 127.4 121.6 119.2
23.6 110.2 89.4 86.9 86.0 11.3 82.8 18.3 17.0 10.3 15.2 13.6
9.7 53.0 51.1 51.0
OVERVIEW 50.1 8.5 7.1 EMIRATES 12.3 8.0 7.3 6.7 6.5 22.1 DNATA 20 2 2 22 22 23 23 24 24 25 26 and 5 6 6 7 7 8 8 20 beyond Lease liabilities Bonds and term loans Total assets Secured assets Total debt GROUP
FINANCIAL 450.00 Net debt to EBITDAR ratio in % Net debt to equity ratio in % Effective interest rate on borrowings Cash asset to net debt in % INFORMATION and lease liabilities in % 381.2 5.4 28.6 392.9 EMIRATES 406.25 FINANCIAL 4.6 25.4 4.2 COMMENTARY 347.8 3.8 3.8 362.50 22.5
DNATA 3.8 3.7 FINANCIAL 318.75 237.9 321.0 330.3 COMMENTARY 3.1 21.5 2.6 2.8 275.00 286.5 215.9 216.4 209.8 18.8 EMIRATES CONSOLIDATED FINANCIAL 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 STATEMENTS Lease liabilities Bonds and term loans DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Debt Net debt to equity ratio of AED 53.0bn. From the remaining half of our interest rate risk exposures. INFORMATION debt, 80% or AED 44.4bn is secured After taking into account the impact of Emirates’ borrowings and lease liabilities On transition to IFRS 16, lease liabilities against property, plant and equipment interest rate swaps, 69% of our total more than doubled compared to the doubled as compared to the prior year with the balance being adequately debt was on fixed interest rate basis previous year and reached AED 110.2bn and total equity dipped by almost 30%. covered against the carrying value of with the balance 31% being on floating (2018-19: AED 53.0bn). This was mainly Expectedly, and despite an increase in unencumbered assets (property, plant interest rates. due to the adoption of IFRS 16 which cash assets, the net debt to equity ratio and equipment) amounting to AED led to recognition of lease liabilities rose to 381.2% (2018-19: 209.8%). 28.9bn (2018-19: AED 29.8bn). The effective interest rate for bonds of around AED 61bn pertaining to Debt repayment profile and term loans reduced to 3.7% previously off balance sheet leases. Financial risk management (2018-19: 4.6%) as we continue to Further loans taken on delivery of six We aim to achieve a stable repayment take advantage of lower interest rates new aircraft moved the liabilities higher. profile by obtaining debt with periodic Jet fuel price risk prevailing in the market. These increases were offset by the instalments as opposed to bullet We are exposed to volatility in the The effective interest rate of 5.4% on repayments of amortising bonds, lease payments. This enables us to manage price of jet fuel. To manage this risk, lease liabilities was higher due to the liabilities and term loans. debt servicing through our operating we hedge part of our highly probable incremental borrowing rate applied on cash flows and the use of surplus cash forecast purchases of jet fuel up to 24 The non-current portion of borrowings transition to IFRS 16. for investment purposes. As at the months in advance using commodity and lease liabilities amounted to AED balance sheet date, more than 95% of futures, options and swaps, as and when 90.7 (2018-19: 45.4bn) and represented our debt was amortising in nature. opportunity arises and depending on the 91% (2018-19: 87%) of the total non- market conditions. current liabilities while the current Cash assets to net debt ratio portion of AED 19.5bn (2018-19: AED An increase in cash reserves helped us Interest rate risk 7.6bn) accounted for 40% (2018-19: improve our cash assets to net debt ratio We continue to use prudent hedging 20%) of the total current liabilities. to 22.5% (2018-19: 21.5%). solutions such as swaps to manage our Net debt to EBITDAR ratio Debt collateralisation interest rate exposures. We target a risk-managed portfolio approach, whilst The net debt to EBITDAR ratio increased Of the total debt of AED 110.2bn, taking advantage of market movements, to 347.8% (2018-19: 330.3%), due to AED 54.9bn represents lease liabilities with long-term view of hedging around higher net debt. which are supported by ROU assets 71 Currency development Capacity per airline employee in ATKM ‘000 Revenue per airline employee in AED ‘000 0% 1,975 Graph represents the quarterly % movement in 1,873 our six major currencies for the last two years 1,325 1,717 1,784 Heading heading 1,174 1,171 1,235 1,235 1,580 0%
OVERVIEW
EMIRATES 0% DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20
GROUP
ZAR INR AUD EUR GBP CNY FINANCIAL Employee strength (in numbers) 2019-20 2018-19 % change 20% INFORMATION Q Q2 Q3 Q4 Q Q2 Q3 Q4 2018-19 2019-20 UAE EMIRATES Geographical work force including subsidiaries in % Cabin crew 21,789 21,691 0.5 FINANCIAL COMMENTARY Flight deck crew 4,313 4,134 4.3 Engineering 3,316 3,330 (0.4) DNATA FINANCIAL Others 12,627 12,958 (2.6) COMMENTARY 90% UAE Total UAE 42,045 42,113 (0.2) EMIRATES Overseas stations 5,376 5,695 (5.6) CONSOLIDATED 10% FINANCIAL Total airline 47,421 47,808 (0.8) STATEMENTS Overseas
DNATA Subsidiary companies 12,098 12,474 (3.0) CONSOLIDATED FINANCIAL Average employee strength 59,519 60,282 (1.3) STATEMENTS
ADDITIONAL Currency risk The Indian Rupee recovered in the first Employee strength and • Revenue per airline employee at AED INFORMATION quarter of this financial year and was 1,873 thousand (2018-19: AED 1,975 We proactively manage currency productivity stable until Q3. However, it weakened thousand) has reduced in line with exposure generally over a period of up along with other currencies towards the The average workforce fell by 1.3% to reduction in revenue. to 12 months depending on market end of the year due to the impact of 59,519. conditions by using various hedging COVID-19 pandemic. • Capacity per airline employee is down solutions including forward contracts, The average number of employees in by 6.8% at 1,235 thousand ATKM currency swaps and natural hedges. The movements in exchange rates the airline dropped by 0.8% to 47,421. (2018-19: 1,325 thousand ATKM) Nearly 36% of our transport revenues compared to the previous year had an While the number of crew increased due to a 7% reduction in capacity are generated in US Dollar or currencies overall adverse impact of AED 1bn on by 1.1% to 26,102, there was a slight partially offset by reduction in airline pegged to USD. Emirates operating results (2018-19: reduction in other departments due to employee count. adverse impact AED 0.6bn). Excluding natural attrition. We continue to invest Currencies were highly volatile this USD or the currencies pegged to USD, in our employees’ well-being and are • The load carried per airline employee year in all our key markets. With the the following six currencies account committed to supporting them through dipped to 833 thousand RTKM (2018- continuous strengthening of US Dollar for circa 43% (2018-19: 44%) of our the ongoing COVID-19 pandemic. 19: 885 thousand RTKM), down by against other currencies for most part transport revenue: 5.9% due to a 6.6% drop in overall load of the year, our revenue generation in Overseas station employee numbers carried partially offset by reduction in the Indian subcontinent, Europe and declined by 5.6% to 5,376 (2018-19: airline workforce. Australia suffered in AED terms. Currency average rate (in AED) 5,695). We were also impacted by sizeable Workforce in the subsidiary companies currency devaluations in Africa and 2019-20 2018-19 % change also reduced compared to the prior year South America. ZAR 0.246 0.268 (8.2) given the economic slowdown. As depicted in the graph above, South AUD 2.496 2.675 (6.7) Although the airline’s employee African Rand and Australian Dollar EUR 4.077 4.243 (3.9) productivity related key performance showed a lot of volatility whereas Euro, CNY 0.526 0.546 (3.7) indicators have reduced slightly due to Chinese Yuan and Pound Sterling though various operational challenges during weakened, were relatively stable. GBP 4.658 4.808 (3.1) the year, these have remained strong: INR 0.052 0.053 (1.9) 72 OVERVIEW
EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION
EMIRATES FINANCIAL COMMENTARY
DNATA FINANCIAL COMMENTARY
EMIRATES CONSOLIDATED FINANCIAL STATEMENTS
DNATA CONSOLIDATED FINANCIAL DNATA STATEMENTS
ADDITIONAL INFORMATION FINANCIAL COMMENTARY Profit attributable to the Owner in AED m Profit margin in % Total revenue trend in AED bn Geographical revenue in % 1,445 14.4 14.8 1,317 10.1 10.0 13.1 1,210 9.9 9.9 12.2 64 66 68 70 72 1,054 10.6
618 OVERVIEW 4.2 EMIRATES 36 34 32 30 28
DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 International UAE GROUP
FINANCIAL Operating profit in AED m Operating margin in % Return on shareholder’s funds in % Acquisitions in AED m INFORMATION 1,278 664 1,224 1,196 616 20.7 EMIRATES 1,061 10.0 10.0 20.3 19.3 19.2 FINANCIAL 9.1 8.9 COMMENTARY 338 DNATA 507 FINANCIAL COMMENTARY 148 3.4 7.6 EMIRATES 20 CONSOLIDATED FINANCIAL 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 STATEMENTS
DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL The close of our financial year 2019-20 was Cash reserves at year end remain adequate In our travel line of business, we acquired the revenues from Qantas Catering and 121 Group INFORMATION wrought by the COVID-19 pandemic that to see us through the ongoing challenges of remaining 50% equity stake in Dunya Travel acquired during second half of last year. had forced more than half of humanity into COVID-19 in the short term. LLC – a prominent player in the Abu Dhabi Other operating income was consistent at AED lockdown by the end of March 2020. Aviation dnata remains undeterred in its focus on corporate travel market. 0.5bn as the gain from our HRG divestment and travel industries were amongst the first quality, safety, people and customers, and Total revenue (including other in 2018-19 was largely replaced by gain on and hardest hit. dnata, a global air and travel continues to drive efficiencies across all divestment of Accelya and recovery of a legal services provider, has been no exception and businesses in processes and resources. operating income) claim in the US. is faced with an unprecedented challenge that Our total revenue improved to AED 14.8bn Effective 1 April 2019, we adopted the new Overall, the share of geographic revenue will continue to impact it in the financial year (2018-19: AED 14.4bn). This was despite the leases accounting standard, IFRS 16, which from operations outside the UAE grew to 72% 2020-21. COVID-19 pandemic that stifled demand has no cash flow or economic impact on (2018-19: 70%) in line with dnata’s strategy across all our lines of business towards the 2019-20 saw dnata’s business coming under dnata but it does change the way lease to grow its international businesses in a end of the year as the travel industry across severe pressure due to several events like the related expenditure, assets, liabilities and cash sustainable manner. the world came to an abrupt halt and dnata’s planned closure of southern runway at Dubai flows are reported in the primary financial airline customers dramatically reduced International airport (“DXB”) for 45 days and statements and disclosure notes. Profitability operations or stopped flying completely. dnata contraction of demand in the UK travel market Profit attributable to the Owner and profit lost over AED 600m in revenues in the month (that also caused the demise of Thomas Cook) Acquisitions margin declined to AED 618m (2018-19: AED of March 2020 alone. before its revenues and profits suddenly 2019-20 was a year of integrating the 1,445m) and 4.2% (2018-19: AED 10.0%) plummeted in the month of March 2020. significant acquisitions dnata made in the Revenues from international airport operations respectively. This was primarily driven by; Despite a myriad of challenges, revenues for previous year and more focus was put to were consistent with last year at AED 3.9bn i) impairments of goodwill, contractual rights the full year remained resilient and grew by winning new customers and strengthening (2018-19: AED 4.0bn). Travel business revenues and receivables in the UK travel business, 2.4%, primarily due to significant growth in existing relationships. dropped by 3.8% or AED 141m as the growth ii) start-up costs incurred with regards to in our Emirates Holidays business was wiped our inflight catering business that benefited During the year, we acquired the remaining expansion of catering business in the US, out by challenging trading conditions in from a first full year of new acquisitions made 50% equity stake in our inflight catering Canada and Ireland, and iii) 45 days southern key markets, exacerbated by the collapse of during second half of 2018-19. dnata’s profits, joint-venture, Alpha LSG Limited, which is the runway closure at DXB. Furthermore, the Thomas Cook in the UK. Despite the southern however, were hit hard by the impairment leading provider of inflight services to some COVID-19 pandemic severely dented the runway closure at DXB, UAE airport operations charges and poor operating results particularly of the world’s largest airlines operating in the performance towards the year end, eroding revenue remained stable at AED 3.2bn (2018- in the UK travel business. To add to this, losses UK, offering a comprehensive range of inflight more than AED 250m of profit in a single 19: AED 3.2bn), spurred by the newly acquired were recognised in the last month across all catering, on-board retail and logistics services month. The cost reduction measures taken Dubai Express. Inflight catering division lines of business. dnata’s bottom line this across all of the UK’s major and regional in response to sudden fall in revenue are achieved revenue growth of 26% or AED 683m year was augmented by one-off income of airports. gradually filtering through to the bottom line. AED 216m from the divestment of our stake as it benefitted from the first full year of 74 in Accelya. Revenue by Line of Business Catering Travel services - Meals uplifted number in millions - Total Transaction Value (TTV) in AED bn Revenue in AED m 2019-20 2018-19 % change % of total 20 93.5 20 10.8 International airport operations 3,940 3,997 (1.4) 27.7 8 70.9 8 11.5 Travel services 3,537 3,678 (3.8) 24.9 UAE airport operations 3,171 3,223 (1.6) 22.3 7 8 55.7 7 8 11.3 OVERVIEW Inflight catering 3,313 2,630 26.0 23.3 6 7 60.7 6 7 10.7 EMIRATES Other services 262 360 (27.2) 1.8 Total 14,223 13,888 2.4 100.0 DNATA 5 6 57.1 5 6 11.7
GROUP
FINANCIAL International airport operations International airport operations UAE airport operations UAE airport operations INFORMATION - Aircraft handled - Cargo handled in tonnes ‘000 - Aircraft handled - Cargo handled in tonnes ‘000
EMIRATES 20 492,657 20 2,231 20 188,210 20 698 FINANCIAL COMMENTARY 8 488,225 8 2,364 8 210,514 8 727
DNATA FINANCIAL 7 8 448,553 7 8 2,352 7 8 211,038 7 8 731 COMMENTARY 6 7 407,915 6 7 2,130 6 7 215,696 6 7 714 EMIRATES CONSOLIDATED 178,228 1,367 689 FINANCIAL 5 6 5 6 5 6 211,184 5 6 STATEMENTS
DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL International airport operations Brazil was impeded by a decline in volumes in This year also saw the introduction of Priohub, Inflight catering INFORMATION other markets, chiefly Australia. Cargo volumes a technology platform for distributing and International airport operations continue to Revenue from catering activities, which formed dropped by 5.6% due to difficult trading selling activities and attraction tickets in Dubai, be the largest business segment of dnata by 23% (2018-19: 19%) of dnata’s revenue, conditions overall, particularly in the UK. through a 60% joint venture with Netherlands revenue. Our revenue was in line with last year improved by 26% to AED 3.3bn (2018-19: AED based “PrioTicket B.V.”. In partnership with at AED 3.9bn (2018-19: AED 4.0bn). Significant 2.6bn). This was due to the consolidation of We saw the impact of COVID-19 pandemic Department of Tourism and Commerce organic growth earlier in the year was checked the first full year results of Qantas Catering in on our business worsened by the day towards Marketing (“DTCM”), the platform connects by the COVID-19 pandemic in Q4. Our quality Australia and 121 Inflight Catering in the US. the end of the year. Our team reacted quickly operators with a wide network of resellers in of service and high safety standards helped us Organic growth, through new customers and to ensure safety and wellbeing of our staff real time and provide ticketing solutions to win or retain 145 contracts with key accounts expansion in new locations, was achieved in whilst taking measures to manage costs and reach customers via multiple channels. across the global network. Depreciation of preserve cash. the US, UAE, and Ireland. major currencies against the US Dollar had an UAE airport operations adverse impact of AED 128m on the top line. Travel services Our North American operations saw the UAE airport operations revenue stood at AED inauguration of several new catering facilities. We opened our eighth cargo warehouse Travel services revenue declined by 3.8% to 3.2bn (2018-19: AED 3.2bn) as the decline In the US, we added Boston, Houston, Los at London Heathrow airport and broke AED 3.5bn (2018-19: AED 3.7bn). The UK from ground handling operations at Dubai Angeles and San Francisco to our global ground on the dnata City North warehouse business experienced significant headwinds International Airport (DXB) was offset by the catering network - a combined investment in Manchester. Our new cargo warehouse not only with the collapse of Thomas Cook full year impact of Dubai Express following its of USD 50m that has increased our capacity in Brussels also completed its first full year and its impact on our B2B business but also acquisition in February 2019. The decrease in to more than 40,000 meals per day. We also of operations. The new marhaba lounge the continued trading challenges across B2C volumes for both aircraft handled to 188,210 commenced catering operations in Canada in Changi Airport’s Terminal 3 opened in brands. Towards the year-end, the COVID-19 (2018-19: 210,514) and cargo handled to 698 by opening a state-of-the-art facility at July 2019. We continue to look for further pandemic resulted in a material revenue thousand tonnes (2018-19: 727 thousand Vancouver airport. expansion opportunities for marhaba impact as large number of bookings were tonnes) was primarily driven by southern A significant reduction in flights towards the internationally. cancelled. In addition to trading losses, we runway closure at DXB and a reduction end of the year severely impacted catering recognised impairment losses on intangible in traffic in March 2020. The marhaba This year we also reorganised the management revenues. Our inflight catering business was assets and receivables this year amounting to business continued its good performance structure of international airport operations also impacted by the devaluation of Australian AED 230m. Despite tough business conditions and registered a 2% increase in guests at its into four regions: Europe, Asia Pacific, USA Dollar and Euro against USD. across our key source markets in the GCC and lounges in Dubai. and New & Emerging Markets, which will help the UK, total transaction value (TTV) decreased Meals uplifted during the financial year rose drive additional value. only marginally to AED 10.8bn (2018-19: AED by 32% to 93.5m (2018-19: 70.9m), as a direct 11.5bn). Weakening of Pound Sterling against The number of aircraft handled increased by result of the expansion activities and new USD eroded the top line by AED 106m. 0.9%, as growth in business in the US and businesses brought on-board. 75 Operating costs in AED bn Operating costs in % 14.3 13.1 11.9 11.0 41.2% Employee costs 9.6 37.0% Direct costs 6.4% Corporate overheads OVERVIEW 6.0% Depreciation and amortisation
EMIRATES 3.5% Facilities related expenditure 5.9% Others DNATA 5 6 6 7 7 8 8 20
GROUP
FINANCIAL Employee cost as % of total operating costs Operating costs in AED m 2019-20 2018-19 Change % change INFORMATION 20 41 59 Employee costs 5,875 5,386 489 9.1 EMIRATES FINANCIAL Direct costs COMMENTARY 8 41 59 - Travel services 2,534 2,476 58 2.3 - Airport operations 1,364 1,350 14 1.0 DNATA 7 8 43 57 FINANCIAL - Inflight catering 1,352 1,070 282 26.4 COMMENTARY 6 7 42 58 - Other 32 67 (35) (52.2) EMIRATES Depreciation and amortisation 853 459 394 85.8 CONSOLIDATED 5 6 40 60 FINANCIAL Facilities related expenditure 501 788 (287) (36.4) STATEMENTS Employee costs Other operating costs Sales and marketing expenses 321 370 (49) (13.2) DNATA Information technology infrastructure costs 320 246 74 30.1 CONSOLIDATED FINANCIAL Impairment of intangible assets 193 78 115 147.4 * Includes net STATEMENTS Corporate overheads* 908 851 57 6.7 impairment loss on trade and ADDITIONAL Expenditure Total operating costs 14,253 13,141 1,112 8.5 other receivables INFORMATION dnata’s operating costs, including the provision for impairment of trade Employee costs impact of Tropo’s acquisition last year ROU assets in line with IFRS 16. and other receivables, increased by Employee costs increased by 9.1% or were largely offset by the decline in The remaining increase is attributable 8.5% to AED 14.3bn (2018-19: AED AED 489m to AED 5.9bn (2018-19: AED trade in the UK business. to various tangible and intangible 13.1bn) primarily due to the full year assets acquired in the current and 5.4bn). Previous year acquisitions in the Airport operations’ costs were consistent impact of acquisitions in the catering previous years. catering business were the major factors with last year at AED 1.4bn (2018-19: business, one-time impairment charges contributing to the increase of employee AED 1.4bn) as the increase from the Facilities related expenditure went down recognised across various financial costs as 2019-20 saw the full year costs full year costs of Dubai Express were by 36.4% to AED 501m (2018-19: AED statement line items in the UK travel of more than 2,200 employees who compensated by reduced activity due to 788m) due to IFRS 16 implementation as business and on financial assets held in joined our workforce. Further, growth 45 days runway closure at DXB. lease rental expenditure is now replaced Plafond in the UAE. Weakening of global in our international airport operations by depreciation and interest expense. currencies against USD had a favourable business, primarily in the US, also Inflight catering related direct costs impact of AED 292m on total costs. contributed to the increase. increased by 26% or AED 282m to AED Impairment of intangible assets more 1.4bn (2018-19: AED 1.1bn) as a result of than doubled to AED 193m (2018-19: IFRS 16 implementation this year did not Direct costs the new acquisitions in Australia and the 78m) due to impairment of goodwill impact our bottom line but resulted in a Direct costs were 6.4% or AED 319m US last year. and contractual rights in the UK travel change of geography within the income higher than the prior year and stand at business and goodwill impairment in the statement as operating lease expense Other operating costs AED 5.3bn (2018-19: AED 5.0bn). US catering business. was replaced by depreciation of the Depreciation and amortisation expense right-of-use (“ROU”) assets and interest Direct costs for travel services were escalated by 85.8% to AED 853m (2018- Corporate overheads were up 6.7% expense on lease liabilities. broadly in line with last year at AED 19: AED 459m). Almost 90% of this to AED 908m (2018-19: AED 851m) 2.5bn (2018-19: AED 2.5bn) as increases increase was on account of first-time as a result of impairments of trade in costs from volume growth in Emirates depreciation expense recognised on receivables in the UK travel business and Holidays business and the full year Plafond in the UAE.
76 Assets in AED bn Equity and liabilities in AED bn Assets in AED m 2019-20 2018-19 change % change 16.7 16.7 PPE, ROU assets, investment OVERVIEW 15.1 15.1 property & intangible assets 7,297 5,424 1,873 34.5 Other non-current assets 846 772 74 9.6 EMIRATES 7.3 Cash assets 5,316 5,122 194 3.8 5.4 8.3 DNATA Other current assets 3,244 3,773 (529) (14.0) 8.0 GROUP Total 16,703 15,091 1,612 10.7 PPE, ROU assets, 0.9 0.8 FINANCIAL investment INFORMATION property and 5.1 intangible assets 4.1 Equity and liabilities in AED m 2019-20 2018-19 change % change EMIRATES 5.3 Other non 2.1 Equity FINANCIAL current assets Equity 8,302 8,027 275 3.4 COMMENTARY Cash assets Non current Non-current liabilities 4,109 2,126 1,983 93.3 4.3 5.0 liabilities DNATA 3.8 Current liabilities 4,292 4,938 (646) (13.1) FINANCIAL 3.2 Other current Current COMMENTARY assets liabilities Total 16,703 15,091 1,612 10.7
EMIRATES 20 8 20 8 CONSOLIDATED FINANCIAL STATEMENTS
DNATA CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL Statement of financial position IFRS 16 implementation resulted in A strong US Dollar reduced the value navigate our business through this crisis, INFORMATION recognition of ROU assets amounting to of PPE, ROU and intangible assets by including compensating cost saving Assets AED 2bn. Additions in the year due to new AED 278m. measures, reductions in discretionary Total assets increased by 10.7% to AED leases taken in airport operations and capital expenditure and availing support 16.7bn (2018-19: AED 15.1bn). catering businesses were largely offset by Investments accounted for using the from governments where such support the depreciation charge. equity method grew by 9.5% to AED 551m is available. Property, plant and equipment (‘PPE’), ROU (2018-19: AED 503m) due to additional assets, investment property and intangible Intangible assets of AED 2.8bn (2018-19: investment in Alpha LSG, offset partly by Liabilities assets combined stood at AED 7.3bn (2018- AED 3.0bn) form 34% of dnata’s non- dividends and impact of IFRS 16 adoption Borrowings and lease liabilities increased 19: AED 5.4bn), showing an increase of current assets. Goodwill continues to form by associates and joint ventures. by 143.5% to AED 3.9bn (2018-19: AED 34.5% due to the first-time recognition of the largest portion of the intangible asset 1.6bn). This is driven by recognition of AED ROU assets upon adoption of IFRS 16. portfolio at 69% (2018-19: 72%) which Trade and other receivables reduced by 2.1bn worth of lease liabilities following is validated on an annual basis through 18.6% to AED 3.0bn (2018-19: AED 3.7bn) PPE increased marginally to AED 2.1bn IFRS 16 adoption. Term loans that make impairment testing. This year, goodwill as a result of impairments, transfer of (2018-19: AED 2.0bn) as the reduction up the majority of the remaining balance, pertaining to the US catering and UK travel prepayments related to Emirates Holidays in assets due to depreciation charge increased marginally to AED 1.5bn (2018- businesses were partially impaired by AED business from dnata to Emirates and a was offset by additions across all lines 19: AED 1.4bn) as repayments of AED 298m 164m as future cash flows struggled to general reduction in business activity of business. In international airport in the year were countered by additional support the carrying value. Thomas Cook’s in March. operations, we made several investments loans of AED 412m taken to fund new demise led to an impairment of contractual including; Ground Support Equipment Equity investments in our catering and airport rights in the UK travel business. Alpha LSG (‘GSE’) at New York–JFK and Washington operations businesses in the US. acquisition, however, increased intangible Total equity at AED 8.3bn (2018-19: AED Dulles international airports, new cargo assets by AED 131m. 8.0bn) reflects an increase of 7.6% in Trade and other payables declined by facilities at London Heathrow, Manchester retained earnings due to profits for the 23.9% to AED 3.5bn (2018-19: AED 4.6bn) and Brussels airports, and a new marhaba dnata continues to invest in the year, partly offset by the equity impact of primarily due to the settlement of previous lounge at Singapore Changi Airport. In latest technology to stay ahead of its IFRS 16 adoption (Note 2 includes details of year’s dividend amounting to AED 500m, our catering business, we made significant competition, making sizable additions in transition methodology used). In order to the transfer of Emirates Holidays business investments in new state-of-the-art kitchen cyber security, financial systems, our travel support dnata during this challenging time, payables to Emirates and the decline in facilities in the US (Boston, Los Angeles, related websites and other technological the Owner decided to retain this year’s business activity in March following the Houston, Newark and San Francisco) and developments. profit and hence no dividend was declared. COVID-19 pandemic. Canada (Vancouver). The acquisition of Our net assets remain under pressure Alpha LSG increased our PPE by AED 137m. and we have taken various measures to 77 Free cash flow in AED m Operating cash margin in % Cash flow in AED m 299 1,393 899 42 1,858 1,445 1,390 1,417 1,393 1,281 14.2 5,027 5,180 1,094 13.1 893 856 OVERVIEW 9.8 9.4 10.5 Cash assets Net cash Net cash Net cash Effects of Cash assets EMIRATES 206 net of bank generated used in used in exchange net of bank overdrafts as from operating investing financing rate changes overdrafts as DNATA 5 6 6 7 7 8 8 20 5 6 6 7 7 8 8 20 at 3 March activities activities activities at 3 March 20
GROUP Cash from operating activities Free cash flow
FINANCIAL Geographical work force in % Total revenue per employee in AED ‘000 INFORMATION 20 319 EMIRATES FINANCIAL COMMENTARY 8 320 63% Overseas Employee strength (in numbers) DNATA 7 8 319 FINANCIAL 2019-20 2018-19 % change COMMENTARY 37% UAE International airport operations 18,949 17,959 5.5 6 7 297 EMIRATES UAE airport operations 12,519 12,785 (2.1) CONSOLIDATED 5 6 333 FINANCIAL Inflight catering 7,181 7,041 2.0 STATEMENTS Travel services 5,197 4,548 14.3 DNATA Others 2,365 2,671 (11.5) CONSOLIDATED FINANCIAL Average employee strength 46,211 45,004 2.7 STATEMENTS
ADDITIONAL Cash position Our inflight catering business continued INFORMATION to consolidate this year as it focused on Cash from operating activities activities included investments in PPE With the sizable growth in labour integrating the acquisitions in US and of AED 0.5bn and intangibles of AED intensive international airport Cash generated from operating activities Australia that had significantly expanded 0.1bn, partly offset by proceeds from operations, the workforce employed and operating cash margins remained our workforce last year. Our catering the sale of Accelya of AED 0.2bn and overseas now forms 63% (2018-19: 61%) consistent at AED 1.4bn (2018-19: workforce showed a marginal increase of interest income of AED 0.1bn. Significant of the total workforce of dnata. AED 1.4bn) and 9.4% (2018-19: 9.8%) 2% to 7,181 (2018-19: 7,041). cash outflows from financing activities respectively. However, this is not directly International airport operations employs comprised the dividend payment of Staff numbers in ‘Others’ decreased comparable to the prior years due to the 41% of our group workforce (2018-19: AED 0.5bn to the Owner and payments by 11.5% to 2,365 (2018-19: 2,671) change in presentation of cash flows in 40%) and continues to be the largest for term loans and lease liabilities as a result of a reduction in Plafond the consolidated financial statements business division of dnata in terms of amounting to AED 0.4bn. workforce. upon implementation of IFRS 16. As per workforce with an employee count of the new standard, the cash flows related Employee strength and 18,949 (2018-19: 17,959). The increase is Productivity to previously off-balance sheet leases attributable to expansion of operations (operating leases) are disclosed productivity Revenue per employee was consistent in Americas and Europe. with last year at AED 319k (2018-19: in investing activities rather than Employee strength operating activities. UAE airport operations’ workforce AED 320k) as dnata integrates the newly The average workforce increased by reduced by 2% to 12,519 (2018-19: acquired businesses and continues its 2.7% to 46,211 (2018-19: 45,004) driven Cash assets 12,785) as a result of a reduction of staff organic growth journey at the manpower by expansions in our international Cash assets increased to AED 5.3bn at DXB. intensive airport operations. airport business. (2018-19: AED 5.1bn) as cash generated Average employee count for the travel from operating activities, owing to We continue to invest in our employees’ business jumped by 14% to 5,197 better working capital management, well-being and are committed to (2018-19: 4,548) primarily due to the was utilised to fund investing activities supporting them through the ongoing strengthening of our workforce at the of AED 0.3bn and financing activities of COVID-19 pandemic. AED 0.9bn. Cash flows from investing contact centres to manage third party businesses.
78 OVERVIEW INDEPENDENT AUDITOR’S REPORT EMIRATES
DNATA TO THE OWNER OF EMIRATES
GROUP
FINANCIAL INFORMATION
EMIRATES FINANCIAL COMMENTARY
DNATA Our opinion Independence FINANCIAL COMMENTARY In our opinion, the consolidated financial statements present fairly, in all material We are independent of Emirates in accordance with the International Ethics Standards respects, the consolidated financial position of Emirates and its subsidiaries (together Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”) EMIRATES referred to as “Emirates”) as at 31 March 2020, and its consolidated financial and the ethical requirements that are relevant to our audit of the consolidated CONSOLIDATED performance and its consolidated cash flows for the year then ended in accordance financial statements in the United Arab Emirates. We have fulfilled our other ethical FINANCIAL STATEMENTS with International Financial Reporting Standards (“IFRS”). responsibilities in accordance with these requirements and the IESBA Code.
DNATA CONSOLIDATED What we have audited Our audit approach FINANCIAL STATEMENTS Emirates’ consolidated financial statements comprise: Overview ● the consolidated income statement for the year ended 31 March 2020; ADDITIONAL INFORMATION ● the consolidated statement of comprehensive income for the year ended 31 Key audit matters ● Passenger and cargo revenue recognition March 2020; ● Accounting for the “Skywards” frequent flyer programme ● the consolidated statement of financial position as at 31 March 2020; ● Lease accounting and the impact of transition to IFRS 16 ● the consolidated statement of changes in equity for the year ended 31 March 2020; ● Accounting for hedge ineffectiveness on jet fuel hedging ● the consolidated statement of cash flows for the year ended 31 March 2020; and instruments ● the notes to the consolidated financial statements, which include a summary of ● Provision for aircraft return conditions significant accounting policies. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we Basis for opinion considered where management made subjective judgements; for example, in respect We conducted our audit in accordance with International Standards on Auditing of significant accounting estimates that involved making assumptions and considering (“ISAs”). Our responsibilities under those standards are further described in the future events that are inherently uncertain. As in all of our audits, we also addressed Auditor’s responsibilities for the audit of the consolidated financial statements section the risk of management override of internal controls, including among other matters of our report. consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of Emirates, the accounting processes and controls, and the industry in which Emirates operates.
PricewaterhouseCoopers (Dubai Branch), License no. 102451, Emaar Square, Building 4, Level 8, P O Box 11987, Dubai - United Arab Emirates T: +971 (0)4 304 3100, F: +971 (0)4 346 9150, www.pwc.com/me Douglas O’Mahony, Rami Sarhan, Jacques Fakhoury and Mohamed ElBorno are registered as practising auditors with the UAE Ministry of Economy 79 INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF EMIRATES (CONTINUED)
OVERVIEW Key audit matters EMIRATES Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate DNATA opinion on these matters. GROUP
FINANCIAL Key audit matter How our audit addressed the Key audit matter INFORMATION
EMIRATES Passenger and cargo revenue recognition We performed detailed end-to-end walkthroughs of the finance and FINANCIAL operational processes surrounding the revenue systems, utilising our COMMENTARY When a flight booking is made, passenger and cargo revenue is measured based on understanding of the industry and Emirates, to assess the design effectiveness the sales price to the customer and allocated to each performance obligation under of the related key internal controls and identify changes, if any, that have DNATA the contract. Revenue is initially deferred on the consolidated statement of financial FINANCIAL occurred during the current year. COMMENTARY position and subsequently recognised in the consolidated income statement when the related performance obligation has been fulfilled (typically when a passenger We tested the operating effectiveness of these key controls to obtain sufficient, EMIRATES or the cargo has flown) (refer to notes 2, 3, 5 and 24 to the consolidated financial CONSOLIDATED appropriate evidence that they operated throughout the year as intended. We FINANCIAL statements). also tested the key IT systems, including interfaces that impact the recognition STATEMENTS of revenue from passenger and cargo sales along with the IT change control The determination of the amount of revenue to be recognised for each flight DNATA procedures and related application controls. CONSOLIDATED requires complex IT systems and involves the exchange of information with industry FINANCIAL systems and other airlines for a high volume of transactions. We performed computer assisted audit techniques over passenger and STATEMENTS cargo revenue to identify and test unexpected entries and correlate revenue The accounting for passenger and cargo revenue is susceptible to management ADDITIONAL movements during the year to accounts receivables and cash. We substantively INFORMATION override of controls through the recording of manual journals in the accounting tested a sample of revenue from passenger and cargo sales at a booking and records, the override of IT systems to accelerate revenue recognition, or the flight level to validate occurrence and cut-off of revenue. We tested manual manipulation of inputs used to calculate revenue recorded in respect of unused journal entries posted into relevant revenue accounts in the sub-ledgers and revenue documents. the general ledger.
The timing of revenue recognition for unused revenue documents requires We obtained data supporting Emirates’ historical expiry trend in respect of judgement due to the timeframe over which revenue documents can be utilised unused revenue documents. In addition to performing controls based testing as and the large number of fare types sold by Emirates. Management has determined described above, we tested the accuracy of historical expiry data and compared the value of unused revenue documents that will not be utilised based on their this data to that used by Emirates in their calculation of the amount of revenue terms and conditions and historical expiry trends. to recognise from unused revenue documents.
We focused on this area as a result of the complexity of the related IT systems, the We assessed whether the related disclosures in notes 2, 3, 5 and 24 to the potential for management override of controls and the level of judgement required consolidated financial statements are consistent with the requirements of IFRS. by management in determining the timing of recognition of unused revenue documents.
80 INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF EMIRATES (CONTINUED)
OVERVIEW Key audit matter How our audit addressed the Key audit matter EMIRATES
DNATA Accounting for the “Skywards” frequent flyer programme We tested management’s model supporting the calculation of Skywards deferred revenue as follows: GROUP Emirates operates frequent flyer programmes in order to encourage and incentivise loyalty from ● we updated our understanding of the process and related its customers, with “Skywards” being the biggest programme of this type. Skywards members controls by which deferred revenue is calculated; FINANCIAL either earn Skywards miles after a flight has been paid for and flown or from Skywards partners ● we tested automated controls and key interfaces between the INFORMATION who purchase miles from Emirates to issue to their customers. Skywards miles can be redeemed IT systems used to initially accrue and subsequently redeem for reductions in airfares as well as being used towards free flights, cabin class upgrades and EMIRATES the Skywards miles for each member; FINANCIAL other non-airline rewards. COMMENTARY ● we reconciled the Skywards miles issued and redeemed during the year, and the closing miles balance in the model to the The fair value of unused miles issued to Skywards members when flights are flown, and the DNATA underlying IT systems; FINANCIAL consideration received for miles issued to Skywards members from sales to partners with a total COMMENTARY value of AED 1,842 million as at 31 March 2020 is recognised in the consolidated statement ● we tested the mathematical accuracy of management’s model; of financial position as deferred revenue (refer notes 2, 3 and 24 to the consolidated financial ● we tested the key assumptions within management’s model, EMIRATES CONSOLIDATED statements). Revenue is recognised in the consolidated income statement when the miles are including agreeing historical expiry trends supporting the FINANCIAL redeemed by a customer and the underlying performance obligation relating to the redeemed expiry percentage, historical sector average fares and historical STATEMENTS miles is fulfilled. fares for upgrades to underlying reports, discussing anticipated future changes to the Skywards programme that may impact DNATA CONSOLIDATED The fair value per mile is based on a relative standalone selling price calculated using a model expiry trends with appropriate senior management and testing FINANCIAL incorporating a number of factors including historical sector average fares, historical fares for ticket and upgrade availability to internal supporting evidence; STATEMENTS upgrades, ticket and upgrade availability and redemption patterns. An estimate is also made of and ADDITIONAL the number of miles that will expire based on historical expiry patterns and any known future ● we performed a sensitivity analysis on the key assumptions and INFORMATION changes to the Skywards programme. variables used in management’s model.
We focused on this area because of the significant level of judgement exercised by management We assessed whether the disclosures in notes 2, 3 and 24 to in determining the underlying assumptions within the model. the consolidated financial statements are consistent with the requirements of IFRS.
81 INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF EMIRATES (CONTINUED)
OVERVIEW Key audit matter How our audit addressed the Key audit matter EMIRATES
DNATA Lease accounting and the impact of transition to IFRS 16 We updated our understanding of leases held by Emirates, including Emirates’ process of identifying lease contracts GROUP Emirates adopted the new accounting standard IFRS 16 ‘Leases’ from 1 April 2019. The new standard and other contracts that contain lease elements. We replaces IAS 17 and requires almost all leases to be recognised on the balance sheet by a lessee, as obtained an understanding of the processes around the new FINANCIAL the distinction between operating and finance leases has been removed. Under IFRS 16, an asset INFORMATION IT system implemented and determined that a substantive (right-of-use) and a financial liability to pay rentals is recognised. Leases are capitalised as right-of-use approach to testing of leases was to be adopted. EMIRATES assets based on the present value of the lease payments and are typically depreciated over the lease FINANCIAL term. Interest on the outstanding financial liability to pay rentals is recognised at a constant rate over We tested the calculation of the initial recognition of the COMMENTARY the lease term. right-of-use assets and lease liabilities by reference to DNATA a sample of leases, agreeing the lease terms (including FINANCIAL Emirates applied the modified retrospective approach for the conversion to IFRS 16 and accordingly, advance lease rentals, deferred credits, pre-delivery COMMENTARY the comparative figures were not restated. The cumulative effect of the adoption of the new standard payments, initial direct costs, fixed payments, variable was recognised as an adjustment to opening retained earnings as at 1 April 2019. EMIRATES payments, residual value guarantees and termination CONSOLIDATED costs) back to the lease contract and re-performing the FINANCIAL The first-time application of IFRS 16 resulted in material effects on the opening consolidated statement STATEMENTS calculation of the opening adjustment. We also assessed the of financial position including recognising right-of-use assets of AED 60,936 million and lease liabilities appropriateness of the discount rate applied at the date of DNATA of AED 60,765 million (refer to note 2 of the consolidated financial statements for full details). initial application (the incremental borrowing rate). CONSOLIDATED FINANCIAL Accounting for leases under IFRS 16 involves the use of judgements, estimates and assumptions STATEMENTS We tested a sample of leases entered into during the year that impact the amounts recognised as right-of-use assets, lease liabilities and provisions for return and assessed the accounting impact of new leases by ADDITIONAL conditions. Key amongst these assumptions and estimates are the: agreeing the lease terms used in the computations back to INFORMATION ● assessment of lease term and extension options; the lease contract. We also assessed the appropriateness of ● discount rate used to determine the lease liability; the discount rates applied (either the incremental borrowing ● application of clauses for cancellations or modifications; and rate or the interest rate implicit in the lease, where ● estimate of the provision for aircraft return conditions. determinable).
Emirates has established processes and controls for the complete and accurate recording of leases. We tested the interest expense generated by the lease Furthermore, the first-time application required an IT system to be implemented to report information liabilities and the depreciation of the right-of-use assets. on these leases. We assessed whether the related disclosures in notes 2, We focused on this area because of the significant judgement involved in determining the assumptions 3, 13 and 22 to the consolidated financial statements are being applied under IFRS 16 and the sensitivity of the amounts recorded in the consolidated financial consistent with the requirements of IFRS. statements from changes in these assumptions and estimates.
82 INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF EMIRATES (CONTINUED)
OVERVIEW Key audit matter How our audit addressed the Key audit matter EMIRATES
DNATA Accounting for hedge ineffectiveness on jet fuel We tested management’s expected forecast of jet fuel usage and the resulting calculation hedging instruments of fuel hedge ineffectiveness through discussions with senior operational and finance GROUP management to understand the basis of their projections including evaluating whether: Emirates’ risk management objectives are designed to identify, FINANCIAL evaluate and hedge financial risks. Emirates has used crude oil INFORMATION ● expected fuel usage related to projected passenger and cargo flight schedules (“the forward contracts to hedge the element of crude oil commodity price schedules”) was reasonable compared to various internal, industry and economic forecasts; risk arising from its highly probable forecast purchases of jet fuel in EMIRATES ● sufficient flights were available in the Emirates reservation system to support the FINANCIAL accordance with IFRS 9. COMMENTARY schedules; and ● the expected usage of jet fuel in April 2020 was consistent with the actual jet fuel As a result of the COVID-19 pandemic, Emirates no longer expects DNATA consumption level. FINANCIAL to consume the same volume of jet fuel as initially envisaged given COMMENTARY the reduction in planned operations. Consequently, management has re-forecast its expected jet fuel usage in order to adjust the existing We recalculated the hedge ineffectiveness and sensitivities presented within note 3 to the EMIRATES consolidated financial statements that arose from the revisions to forecast volumes. CONSOLIDATED fuel hedges and to calculate the resulting hedge ineffectiveness in FINANCIAL accordance with IFRS 9. STATEMENTS We assessed whether the disclosures in notes 2, 3, 9, 30 and 33 to the consolidated financial statements including appropriate sensitivities are consistent with the requirements of IFRS. DNATA We focused on this area because of the significant level of judgement CONSOLIDATED exercised by management in determining the revised estimates of jet FINANCIAL fuel usage and the resulting calculations of hedge ineffectiveness. STATEMENTS
ADDITIONAL INFORMATION
83 INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF EMIRATES (CONTINUED)
OVERVIEW Key audit matter How our audit addressed the Key audit matter EMIRATES
DNATA Provision for aircraft return conditions We obtained the aircraft return provision model prepared by management, together with a summary of the underlying assumptions. GROUP Emirates operated 142 aircraft under lease arrangements at 31 March 2020 (2019: 148). We tested the completeness of the provision by ensuring that all significant return condition FINANCIAL obligations included in aircraft lease contracts were included in the model. INFORMATION Under the terms of the lease arrangements with the lessors, Emirates EMIRATES is contractually committed to either return the aircraft and/or engines We reperformed the calculations within the model to test the mathematical accuracy. FINANCIAL in a certain condition or to compensate the lessor based on the COMMENTARY actual condition of the aircraft and/or engines at the date of return. To understand the methodology used by management, the following key assumptions were DNATA Accordingly, a provision of AED 6,211 million is recorded at lease discussed with senior engineering and finance personnel: FINANCIAL commencement for the present value of the expected cost associated ● the past and expected future utilisation and maintenance patterns of the aircraft; COMMENTARY with these contractual return conditions and is recognised in the ● the expected cost of each maintenance event at the time it is expected to occur; and consolidated statement of financial position within provisions (refer to EMIRATES ● the discount rate applied to calculate the present value of the future liability. CONSOLIDATED notes 2, 3 and 23 of the consolidated financial statements). FINANCIAL STATEMENTS The provision is calculated using a model which incorporates a We compared historical utilisation of the aircraft to flying records and assessed if the future utilisation assumptions were considered reasonable in light of past experience. Assumed DNATA number of assumptions, requiring significant judgement, including CONSOLIDATED the: maintenance costs were assessed against historical actual costs incurred and existing long FINANCIAL ● past and expected future utilisation and maintenance patterns of term maintenance agreements. Future maintenance patterns were assessed against internal STATEMENTS the aircraft and engines; maintenance plans. We verified that the discount rate applied by management to the future liability was within an acceptable range with reference to the time value of money applicable ADDITIONAL ● expected cost of the maintenance at the time it is estimated to to Emirates and the risks specific to the liability. INFORMATION occur; and ● discount rate applied to calculate the present value of the future Along with performing a sensitivity analysis on reasonably possible changes in assumptions, liability. we also compared provisions held for aircraft and engines returned during the year to the compensation paid out to the lessors or actual costs incurred to establish if past provisions We focused on this area because of the significant level of judgement were reasonable. exercised by management in determining the underlying assumptions within the model and the sensitivity of the amounts recorded in the We assessed whether the related disclosures in notes 2, 3 and 23 to the consolidated consolidated financial statements from changes in these assumptions. financial statements are consistent with the requirements of IFRS.
Other information Management is responsible for the other information. The other information comprises is to read the other information identified above and, in doing so, consider whether the the information included in the Annual Report (but does not include the consolidated other information is materially inconsistent with the consolidated financial statements financial statements and our auditor’s report thereon). or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
Our opinion on the consolidated financial statements does not cover the other If, based on the work we have performed, we conclude that there is a material information and we do not express any form of assurance conclusion thereon. misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. In connection with our audit of the consolidated financial statements, our responsibility
84 INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF EMIRATES (CONTINUED)
OVERVIEW Responsibilities of management and those charged with governance for the consolidated financial statements EMIRATES Management is responsible for the preparation and fair presentation of the assessing Emirates’ ability to continue as a going concern, disclosing, as applicable, consolidated financial statements in accordance with IFRS, and for such internal control matters related to going concern and using the going concern basis of accounting DNATA as management determines is necessary to enable the preparation of consolidated unless management either intends to liquidate Emirates or to cease operations, or has GROUP financial statements that are free from material misstatement, whether due to fraud no realistic alternative but to do so. or error. FINANCIAL Those charged with governance are responsible for overseeing Emirates’ financial INFORMATION In preparing the consolidated financial statements, management is responsible for reporting process. EMIRATES FINANCIAL COMMENTARY
DNATA Auditor’s responsibilities for the audit of the consolidated ● Evaluate the overall presentation, structure and content of the consolidated financial FINANCIAL financial statements statements, including the disclosures, and whether the consolidated financial COMMENTARY statements represent the underlying transactions and events in a manner that EMIRATES achieves fair presentation. CONSOLIDATED Our objectives are to obtain reasonable assurance about whether the consolidated ● Obtain sufficient appropriate audit evidence regarding the financial information FINANCIAL financial statements as a whole are free from material misstatement, whether due to STATEMENTS of the entities or business activities within Emirates to express an opinion on the fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable consolidated financial statements. We are responsible for the direction, supervision DNATA assurance is a high level of assurance, but is not a guarantee that an audit conducted and performance of the Emirates audit. We remain solely responsible for our audit CONSOLIDATED in accordance with ISAs will always detect a material misstatement when it exists. FINANCIAL opinion. STATEMENTS Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic We communicate with those charged with governance regarding, among other matters, ADDITIONAL decisions of users taken on the basis of these consolidated financial statements. INFORMATION the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with ● Identify and assess the risks of material misstatement of the consolidated financial them all relationships and other matters that may reasonably be thought to bear on our statements, whether due to fraud or error, design and perform audit procedures independence, and where applicable, related safeguards. responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement From the matters communicated with those charged with governance, we determine resulting from fraud is higher than for one resulting from error, as fraud may involve those matters that were of most significance in the audit of the consolidated financial collusion, forgery, intentional omissions, misrepresentations, or the override of statements of the current year and are therefore the Key audit matters. We describe internal control. these matters in our auditor’s report unless law or regulation precludes public disclosure ● Obtain an understanding of internal control relevant to the audit in order to design about the matter or when, in extremely rare circumstances, we determine that a matter audit procedures that are appropriate in the circumstances, but not for the purpose should not be communicated in our report because the adverse consequences of of expressing an opinion on the effectiveness of Emirates’ internal control. doing so would reasonably be expected to outweigh the public interest benefits of ● Evaluate the appropriateness of accounting policies used and the reasonableness of such communication. accounting estimates and related disclosures made by management. ● Conclude on the appropriateness of management’s use of the going concern basis PricewaterhouseCoopers of accounting and, based on the audit evidence obtained, whether a material 7 May 2020 uncertainty exists related to events or conditions that may cast significant doubt on Emirates’ ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence Douglas O’Mahony obtained up to the date of our auditor’s report. However, future events or conditions Registered Auditor Number 834 may cause Emirates to cease to continue as a going concern. Dubai, United Arab Emirates 85 CONSOLIDATED INCOME STATEMENT FOREmirates THE YEAR ENDED 31 MARCH 2020 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2020 OVERVIEW Emirates Note 2020 2019 EMIRATES CONSOLIDATED INCOME STATEMENT AED m AED m
DNATA FORRevenue THE YEAR ENDED 31 MARCH 2020 5 90,995 96,040 GROUP Other operating income Note6 2020 977 1,867 2019 AED m AED m FINANCIAL Operating costs 7 (85,564) (95,260) INFORMATION OperatingRevenue profit 5 90,995 6,408 96,040 2,647 EMIRATES FinanceOther operating income income 86 592977 1,867 497 FINANCIAL COMMENTARY OperatingFinance costs costs 87 (85,564)(5,361) (95,260)(2,173)
DNATA OtherOperating financial profit gains / (losses) 9 6,408 (497) 2,647 - FINANCIAL COMMENTARY FinanceShare of income results of investments accounted for using the equity method 158 592112 497116 Finance costs 8 (5,361) (2,173) EMIRATES Profit before income tax 1,254 1,087 CONSOLIDATED OtherIncome financial tax expense gains / (losses) 109 (497)(66) (57) - FINANCIAL STATEMENTS ProfitShare offor results the year of investments accounted for using the equity method 15 1,188 112 1,030 116 DNATA Profit attributable before income to non-controlling tax interests 1,254 132 1,087 159 CONSOLIDATED FINANCIAL ProfitIncome attributable tax expense to Emirates' Owner 10 1,056 (66) 871(57) STATEMENTS Profit for the year 1,188 1,030 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ADDITIONAL Profit attributable to non-controlling interests 132 159 INFORMATION FOR THE YEAR ENDED 31 MARCH 2020 CONSOLIDATEDProfit attributable to Emirates' STATEMENTOwner OF COMPREHENSIVE INCOME 1,056 871 FORProfit for THE the year YEAR ENDED 31 MARCH 2020 1,188 1,030 ItemsCONSOLIDATED that will not STATEMENT be reclassified OF COMPREHENSIVEto the consolidated INCOME income statement FORRemeasurement THE YEAR ENDED of retirement31 MARCH benefit 2020 obligations 23 (a) 55 (60) ItemsProfit thatfor the are year or may be reclassified subsequently to the consolidated income statement 1,188 1,030 ItemsCurrency that will translation not be reclassified differences to the consolidated income statement 21 (11) (4) CashRemeasurement flow hedges of retirement benefit obligations 23 (a)21 (5,630) 55 (71)(60) OtherItems thatcomprehensive are or may incomebe reclassified for the subsequentlyyear to the consolidated income statement (5,586) (135) TotalCurrency comprehensive translation income differences for the year 21 (4,398)(11) 895(4) TotalCash comprehensive flow hedges income attributable to non-controlling interests 21 (5,630) 132 159(71) TotalOther comprehensive comprehensive income income attributable for the year to Emirates' Owner (4,530)(5,586) (135) 736 Total comprehensive income for the year (4,398) 895 The accompanying notes are an integral part of these consolidated financial statements. Total comprehensive income attributable to non-controlling interests 132 159 Total comprehensive income attributable to Emirates' Owner (4,530) 736
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
86 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASEmirates AT 31 MARCH 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Note 2020 2019 AS AT 31 MARCH 2020 AED m AED m EmiratesOVERVIEW CONSOLIDATED STATEMENT OF FINANCIAL POSITION Note Note 2020 2019 EQUITY AND LIABILITIES 2020 2019 EMIRATES AS AT 31 MARCH 2020 AED m AED m AED m AED m Capital and reserves DNATA Note ASSETS 2020 2019 EQUITY AND LIABILITIES Capital 20 801 801 AED m AED m GROUP Non-current assets Capital and reserves Other reserves 21 (5,701) (60) Capital Retained earnings 20 801 801 27,878 36,408 ASSETSFINANCIAL Property, plant and equipment 12 86,084 89,431 Non-currentINFORMATION assets Right-of-use assets 13 52,992 - Other reserves Attributable to Emirates' 21 Owner (5,701) (60) 22,978 37,149 Retained earnings Non-controlling interests 27,878 36,408 609 594 Property,EMIRATES plant and equipmentIntangible assets 12 86,084 89,431 14 4,373 1,574 FINANCIAL Investments accounted for using the equity Attributable to Emirates' OwnerTotal equity 22,978 37,149 23,587 37,743 Right-of-useCOMMENTARY assets 13 52,992 - Non-controlling interests 609 594 Intangible assets method 14 4,373 1,574 15 691 683 DNATA Non-current liabilities Investments accounted for usingAdvance the equity lease rentals 16 - 4,619 Total equity 23,587 37,743 FINANCIAL Trade and other payables 27 116 155 methodCOMMENTARY Trade and other receivables 15 691 683 18 192 139 Non-current liabilities Borrowings and lease liabilities 22 90,728 45,433 AdvanceEMIRATES lease rentals Derivative financial instruments 16 - 4,619 30 - 24 Trade and other payables Deferred credits 27 116 155 25 - 2,437 Trade andCONSOLIDATED other receivables Deferred income tax assets 18 192 139 26 25 13 FINANCIAL Borrowings and lease liabilitiesDerivative financial instruments 22 90,728 45,433 30 1,697 81 DerivativeSTATEMENTS financial instruments 30 - 24 144,357 96,483 Deferred credits Provisions 25 - 2,437 23 7,039 4,081 Deferred income tax assets 26 25 13 DNATA Current assets Derivative financial instrumentsDeferred income tax liabilities 30 1,697 81 26 3 3 CONSOLIDATED FINANCIAL Inventories 144,357 96,483 17 2,670 2,525 Provisions 23 7,039 4,081 99,583 52,190 STATEMENTS Current assets Advance lease rentals 16 - 602 Deferred income tax liabilitiesCurrent liabilities 26 3 3 Trade and other payables 27 12,880 14,822 InventoriesADDITIONAL Trade and other receivables 17 2,670 2,525 18 4,783 10,740 99,583 52,190 INFORMATION Deferred revenue 24 10,672 13,982 Advance lease rentals Derivative financial instruments 16 - 602 30 3 11 Current liabilities Trade and other payables Borrowings and lease liabilities 27 12,880 14,822 22 19,429 7,606 Trade and other receivables Short term bank deposits 18 4,783 10,740 19 12,017 11,974 Deferred revenue Deferred credits 24 10,672 13,982 25 - 322 Derivative financial instrumentsCash and cash equivalents 30 3 11 19 8,232 5,063 Borrowings and lease liabilitiesDerivative financial instruments 22 19,429 7,606 30 5,067 20 Short term bank deposits 19 12,017 11,974 27,705 30,915 Deferred credits Provisions 25 - 322 23 786 678 Cash and cash equivalents 19 8,232 5,063 Total assets 172,062 127,398 Derivative financial instrumentsIncome tax liabilities 30 5,067 20 58 35 27,705 30,915 Provisions 23 786 678 48,892 37,465 Total assets 172,062 127,398 Income tax liabilities Total liabilities 58 35 148,475 89,655 Total equity and liabilities 48,892 37,465 172,062 127,398 Total liabilities The consolidated financial statements 148,475 were approved 89,655 on 7 May 2020 and signed by: Total equity and liabilities 172,062 127,398
The accompanying notes are an integral part of these consolidated financial statements The consolidated financial statements were approved on 7 May 2020 and signed by: The consolidated financial statements were approved on 7 May 2020 and signed by: Sheikh Ahmed bin Saeed Al-Maktoum Timothy Clark Chairman and Chief Executive President The accompanying notes are an integral part of these consolidated financial statements Sheikh Ahmed bin Saeed Al-Maktoum Timothy Clark Chairman and Chief Executive President Sheikh Ahmed bin Saeed Al-Maktoum Timothy Clark Chairman and Chief Executive President
The accompanying notes are an integral part of these consolidated financial statements.
87 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOREmirates THE YEAR ENDED 31 MARCH 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2020 OVERVIEW Attributable to Emirates' Owner EMIRATES Non- DNATA Other Retained controlling Total Capital reserves earnings Total interests equity GROUP AED m AED m AED m AED m AED m AED m FINANCIAL INFORMATION 31 March 2018 801 15 35,638 36,454 592 37,046
EMIRATES Impact on adoption of IFRS 15 - - (41) (41) - (41) FINANCIAL COMMENTARY 1 April 2018 801 15 35,597 36,413 592 37,005 Profit for the year - - 871 871 159 1,030 DNATA FINANCIAL Other comprehensive income - (75) (60) (135) - (135) COMMENTARY Total comprehensive income for the year - (75) 811 736 159 895 EMIRATES CONSOLIDATED Dividends - - - - (157) (157) FINANCIAL STATEMENTS Transactions with Owners - - - - (157) (157)
DNATA 31 March 2019 801 (60) 36,408 37,149 594 37,743 CONSOLIDATED FINANCIAL Impact on adoption of IFRS 16 (Note 2) - - (9,641) (9,641) (3) (9,644) STATEMENTS Adjusted 1 April 2019 801 (60) 26,767 27,508 591 28,099 ADDITIONAL Profit for the year - - 1,056 1,056 132 1,188 INFORMATION Other comprehensive income - (5,641) 55 (5,586) - (5,586) Total comprehensive income for the year - (5,641) 1,111 (4,530) 132 (4,398) Non-controlling interests on acquisition of subsidiaries (Note 34) - - - - 4 4 Dividends - - - - (124) (124) Capital contributions - - - - 6 6 Transactions with Owners - - - - (114) (114) 31 March 2020 801 (5,701) 27,878 22,978 609 23,587
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
88 CONSOLIDATED STATEMENT OF CASH FLOWS Emirates FOR THE YEAR ENDED 31 MARCH 2020 Note 2020 2019 CONSOLIDATED STATEMENT OF CASH FLOWS AED m AED m FOR THE YEAR ENDED 31 MARCH 2020 Emirates EmiratesOVERVIEW Investing activities Note Note 2020 2019 Note 2020 2019 CONSOLIDATEDEMIRATES STATEMENT OF CASH FLOWS Additions to property, plant & equipment2020 and 2019 CONSOLIDATED STATEMENT OF CASH FLOWS AED m AED m AED m AED m FOR THE YEAR ENDED 31 MARCH 2020 right-of-use assets AED m AED m (8,921) (4,545) FOR THEDNATA YEAR ENDED 31 MARCH 2020 Operating activities Investing activities Additions to intangible assets (1,749) (259) Note Investing activities Note 2020 2019 GROUP 2020 2019 1,254 1,087 Additions to property, plant &Proceeds equipment from and sale of property, plant & Profit before income tax AED m AED m Additions to property, plant & equipment and AED m AED m right-of-use assets equipment (8,921) (4,545) 36 42 FINANCIAL Adjustments for: right-of-use assets (8,921) (4,545) OperatingINFORMATION activities Additions to intangible assetsAcquisition of a subsidiary (1,749) (259) 34 (167) - Operating activities Depreciation and amortisation 7 19,444 9,680 Additions to intangible assets (1,749) (259) Profit before income tax 1,254 1,087 Proceeds from sale of property,Investments plant & in associates and joint ventures 15 (21) (74) Profit beforeEMIRATES income tax Finance costs - net 1,254 1,087 8 4,769 1,676 Proceeds from sale of property, plant & equipment 36 42 FINANCIAL Proceeds from sale of investments accounted 36 42 AdjustmentsCOMMENTARY for: Net loss on disposals / write-offs of property, equipment Adjustments for: Acquisition of a subsidiary 34 (167) - - 84 Acquisition of a subsidiary for using the equity method 34 (167) - Depreciation and amortisationplant & equipment and intangible7 19,444 assets 9,680 115 95 DepreciationDNATA and amortisation 7 19,444 9,680 Investments in associates andMovement joint ventures in short term bank15 deposits (21) (74) (43) 2,771 Finance costs - net 8 4,769 1,676 Investments in associates and joint ventures 15 (21) (74) FinanceFINANCIAL costs - net Share of results of investments 8 accounted 4,769 for 1,676 Proceeds from sale of investmentsInterest accounted received 521 495 Net lossCOMMENTARY on disposals / write-offs of property, Proceeds from sale of investments accounted Net loss on disposals / write-offsusing of the property, equity method 15 (112) (116) for using the equity method Dividends from investments accounted for- 84 for using the equity method - 84 plant EMIRATES& equipment and intangible assets 115 95 plant & equipment and intangible assets Movement in short term bankusing deposits the equity method (43) 2,771 15 113 126 CONSOLIDATED Gain on sale of investments accounted 115 for 95 Movement in short term bank deposits (43) 2,771 Share of results of investments accounted for ShareFINANCIAL of results of investmentsusing accounted the equity for method - (33) Interest received Net cash used in investing activitie s 521 495 (10,231) (1,360) STATEMENTS Interest received 521 495 using the equity method 15 (112) (116) Dividends from investments accounted for using the equity method Net provision for impairment 15 of trade(112) and (116) Dividends from investments accounted for Gain onDNATA sale of investments accounted for using the equity method Financing activities 15 113 126 Gain on sale of investments accountedother receivables for 7 41 26 using the equity method 15 113 126 CONSOLIDATED Proceeds from term loans 22 (b) 14,116 8,268 using FINANCIALthe equity method - (33) Net cash used in investing activities (10,231) (1,360) using the equity method Provision for retirement benefit obligations- (33) 7 762 742 Net cash used in investing activities (10,231) (1,360) STATEMENTS Repayment of bonds and term loans 22 (b),(c) (10,381) (5,512) Net provision for impairment Unrealisedof trade and exchange gains (250) - Net provision for impairment of trade and Financing activities Principal elements of lease payments other ADDITIONALreceivables Other financial (gains) / losses7 41 26 9 497 - Financing activities other INFORMATIONreceivables 7 41 26 Proceeds from term loans (2019: Principal elements22 of (b) finance lease14,116 8,268 Provision for retirement benefitNet movementobligations on other derivative 7 financial 762 742 Proceeds from term loans 22 (b) 14,116 8,268 Provision for retirement benefit obligations 7 762 742 Repayment of bonds and term loans 22 (b),(c) (10,381) (5,512) Repayment of bonds and termpayments) loans 22 (b),(c) (10,381) (8,706) (9,490) Unrealised exchange gains instruments (250) - (3) (3) (5,512) Unrealised exchange gains (250) - Principal elements of lease paymentsInterest paid (4,878) (1,916) Other financial (gains) / lossesPayments of retirement benefit 9 obligations 497 - (665) (648) Principal elements of lease payments Other financial (gains) / losses 9 497 - (2019: Principal elements of financeProceeds lease from settlement of derivatives 9 601 - Net movement on other derivativeIncome financial tax paid (59) (70) (2019: Principal elements of finance lease Net movement on other derivative financial payments) Dividend paid to Emirates' Owner (8,706) (9,490) - (1,000) instruments Change in inventories (3) (3) (145) (138) payments) (8,706) (9,490) instruments (3) (3) Interest paid Dividend paid to non-controlling interests(4,878) (1,916) (124) (157) Payments of retirement benefitChange obligations in advance lease rentals, trade (665)and (648) Interest paid (4,878) (1,916) Payments of retirement benefit obligations (665) (648) Proceeds from settlement of derivativesCapital contributed by non-controlling 9 interests601 - 6 - Income tax paid other receivables (59) (70) 4,219 530 Proceeds from settlement of derivatives 9 601 - Income tax paid (59) (70) Dividend paid to Emirates' OwnerNet cash used in financing activities - (1,000) (9,366) (9,807) Change in inventories Change in provisions, trade and other payables,(145) (138) Dividend paid to Emirates' Owner - (1,000) Change in inventories (145) (138) Dividend paid to non-controlling interests (124) (157) Change in advance lease rentals, trade and Dividend paid to non-controlling interests (124) (157) Change in advance lease rentals,deferred trade creditsand and deferred revenue (7,069) (2,300) Capital contributed by non-controllingNet change interests in cash and cash equivalents 6 - 3,201 (639) other receivables 4,219 530 Capital contributed by non-controlling interests 6 - other receivables Net cash generated from operating 4,219 activities 530 22,798 10,528 Net cash used in financing activitieCash ands cash equivalents at beginning(9,366) of the year(9,807) 5,034 5,675 Change in provisions, trade and other payables, Net cash used in financing activities (9,366) (9,807) Change in provisions, trade andThe other accompanying payables, notes are an integral part of these consolidated financial statements Effect of exchange rate changes on cash and deferred credits and deferred revenue (7,069) (2,300) Net change in cash and cashcash equivalents equivalents 3,201 (639) (3) (2) deferred credits and deferred revenue (7,069) (2,300) Net change in cash and cash equivalents 3,201 (639) Net cash generated from operating activities 22,798 10,528 Cash and cash equivalents at Cashbeginning and cashof the equivalents year at end of 5,034 the year 5,675 19 8,232 5,034 Net cash generated from operating activities 22,798 10,528 Cash and cash equivalents at beginning of the year 5,034 5,675 The accompanying notes are an integral part of these consolidated financial statements Effect of exchange rate changes on cash and The accompanying notes are an integral part of these consolidated financial statements Effect of exchange rate changes on cash and cash equivalents (3) (2) cash equivalents (3) (2) Cash and cash equivalents at end of the year 19 8,232 5,034 Cash and cash equivalents at end of the year 19 8,232 5,034
The accompanying notes are an integral part of these consolidated financial statements.
89 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020
OVERVIEW 1. General information Emirates entered this crisis in a strong position, having previously reported profits for the past 32 years and available cash assets of AED 20.2 bn as at 31 March 2020. EMIRATES Emirates comprises Emirates and its subsidiaries. Emirates was incorporated, with limited Emirates has taken various measures to manage the business through this crisis, DNATA liability, by an Emiri Decree issued by H. H. Sheikh Maktoum bin Rashid Al-Maktoum on including compensating cost saving measures, reductions to discretionary capital expenditure and agreeing additional working capital facilities. These measures also GROUP 26 June 1985 and is wholly owned by the Investment Corporation of Dubai (“the parent company”), a Government of Dubai entity. Emirates commenced commercial operations include obtaining committed support from the Government of Dubai which has publicly FINANCIAL on 25 October 1985 and is designated as the International Airline of the UAE. confirmed that they will financially support Emirates during this period through a variety INFORMATION of measures including an additional equity injection, if required.
EMIRATES Emirates is incorporated and domiciled in Dubai, UAE. The address of its registered Based on this statement of support and other measures Emirates has taken, management FINANCIAL office is Emirates Group Headquarters, PO Box 686, Dubai, UAE. COMMENTARY has prepared these consolidated financial statements on a going concern basis.
DNATA FINANCIAL The main activities of Emirates are: Further, due to the impact of COVID-19 on Emirates, an impairment test was performed COMMENTARY with no resulting impairment charge. Refer to Notes 12 and 13 for further details. Management continues to closely monitor the COVID-19 situation as part of its on- EMIRATES • commercial air transportation which includes passenger and cargo services CONSOLIDATED • wholesale and retail of consumer goods going impact assessment. FINANCIAL STATEMENTS • catering operations All amounts are presented in millions of UAE Dirham (“AED m”). • hotel operations DNATA CONSOLIDATED • sale of food and beverages New standards, amendments to published standards and interpretations that are FINANCIAL STATEMENTS relevant to Emirates 2. Summary of significant accounting policies ADDITIONAL At the date of authorisation of these consolidated financial statements, certain new INFORMATION A summary of the significant accounting policies, which have been applied consistently standards, amendments to the existing standards and interpretations have become in the preparation of these consolidated financial statements are set out below. mandatory for the year ended 31 March 2020. Except for IFRS 16, as explained below, no other new standards, amendments or interpretations, whether effective or not, are expected to have a material impact on Emirates. Basis of preparation
IFRS 16 Leases The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the The new standard replaces IAS 17 and requires almost all leases to be recognised on IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. the balance sheet by a lessee, as the distinction between operating and finance lease is The consolidated financial statements have been prepared under the historical cost removed. Under the new standard, an asset (right-of-use) and a financial liability to pay convention, except for those financial assets and financial liabilities (including derivative rentals is recognised. Leases are capitalised as right-of-use assets by recognising the instruments) that are measured at fair value, as stated in the accounting policies. present value of the lease payments, adjusted for prepayments, initial direct costs and restoration costs (return conditions), and are depreciated over the lease term except in The COVID-19 outbreak has developed rapidly in 2020, with a significant number of cases where the underlying asset will be acquired by the lessee at the end of the lease infections being recorded globally. Measures taken to contain and slow the spread term, in which case the right-of-use asset is depreciated over the useful life of the asset. of the virus have significantly impacted global economic activity including limiting In respect of the consolidated income statement, the operating lease expense has been movements of people and restricting flights. The worldwide aviation market has been replaced with depreciation of the right-of-use asset and interest on the lease liability, significantly disrupted in the short term. This disruption is expected to be followed by resulting in total expense being higher in the earlier years of a lease and lower in later years. a gradual recovery as travel restrictions are lifted. As a global network airline, Emirates has been unable to viably operate its normal full passenger services and Emirates’ In accordance with the transitional provisions of IFRS 16, Emirates applied the new revenue will therefore be negatively impacted as a result of the outbreak, although the standard from 1 April 2019 (‘transition date’) by adopting the modified retrospective full impact and the time period of the disruption is not possible to predict with certainty. approach, under which the cumulative effect of initial application is recognised in retained earnings at the transition date, and comparatives are not restated.
90 OVERVIEW 2.2. Summar Summary ofy of significant significant accounting accounting policies policies (continue(continued) TheThe carrying carrying amount amount of ofthe the right-of-use right-of-use asset asset and andlease lease liability liability as at as the at transition the transition date date EMIRATES pertainingpertaining to to leases leases previously previously classified classified as finance as finance leases leases applying applying IAS 17 IAS remains 17 remains IFRSIFRS 16 16 Leases Leases (continued) (continued) unchanged.unchanged. Such Such assets, assets, except except for forassets assets subject subject to financing to financing arrangements arrangements which which are are DNATA ‘in-substance‘in-substance purchases’ purchases’ (refer (refer accounting accounting policy policy on leases)on leases) have ha beenve been re-classified re-classified from from LeaseLease liabilities liabilities are are measured measured at at the the present present valuevalue ofof the remainingining leaselease payments. payments. The The property,property, plant plant and and equipment equipment to right-of-useto right-of-use assets assets in the in conthe solidatedconsolidated statement statement of of GROUP discountdiscount rate rate used used to to value value the the lease lease liability liability corresponds, corresponds, forr each each lease lease portfolio, portfolio, to to financialfinancial position. position. FINANCIAL Emirates’Emirates’ incremental incremental borrowing borrowing rate rate for for similarsimilar assetsassets as at thethe transitiontransition date. date. Emirates Emirates Emirates has opted not to apply IFRS 16 to intangible assets. INFORMATION chose,chose, on on a lease-by-leasea lease-by-lease basis basis, ,to to measure measure thethe right-of-useright-of-use aassetsset atat either:either: Emirates has opted not to apply IFRS 16 to intangible assets. UponUpon adoption adoption of ofthe the new new standard standard on 1on April 1 April 2019, 2019, Emirates’ Emirates’ cons coolidatednsolidated statement statement of of EMIRATES a) it’s carrying amount as if the new rules had always been applied since the lease FINANCIAL a) it’s carrying amount as if the new rules had always been applied since the lease financialfinancial position position was was impacted impacted as follows:as follows: COMMENTARY commencementcommencement date date but but discounted discounted usingusing Emirates' Emirates' incremental incremental boborrowingrrowing rate rate at the transition date i.e. the cumulative depreciation impact from the at the transition date i.e. the cumulative depreciation impact from the As reportedAs reported IFRS IFRS16 16As adjustedAs adjusted DNATA commencement date to the date of transition is reflected in the initial recognition As reported IFRS 16 As adjusted FINANCIAL commencement date to the date of transition is reflected in the initial recognition 31 March 2019 adjustment 1 April 2019 of the right-of-use asset. This has been applied for a significant proportion of the 31 March 2019 adjustment 1 April 2019 COMMENTARY of the right-of-use asset. This has been applied for a significant proportion of the Note AED mAED m AEDAED m m AEDAED m m portfolio of leased assets; primarily aircraft, aircraft engines and land and buildings. Note AED m AED m AED m portfolio of leased assets; primarily aircraft, aircraft engines and land and buildings. ASSETS EMIRATES The present value of the provision for aircraft return conditions (restoration costs) ASSETS The present value of the provision for aircraft return conditions (restoration costs) CONSOLIDATED is recognised as part of the right-of-use asset at the inception of lease, and is Property, plant and equipment 12 89,431 (2,448) 86,983 FINANCIAL is recognised as part of the right-of-use asset at the inception of lease, and is Property, plant and equipment 12 89,431 (2,448) 86,983 STATEMENTS depreciated over the lease term. The associated un-winding of the discount in depreciated over the lease term. The associated un-winding of the discount in Right-of-use assets 13 - 60,936 60,936 depreciatedrespect of the over restoration the lease costs term. is Thecharged associated to the consolidated un-winding ofincome the discountstatement in Right-of-use assets 13 - 60,936 60,936 DNATA respectwithin of‘Other the restorationfinance costs’ costs over is the charged lease term; to the or consolidated income statement Investments accounted for CONSOLIDATED within ‘Other finance costs’ over the lease term; or Investments accounted for FINANCIAL using the equity method 15 683 (10) 673 STATEMENTS b) an amount equal to the lease liability, adjusted by the amount of any prepaid or using the equity method 15 683 (10) 673 b) anaccrued amount leaseequal payments to the lease relating liability, to thatadjusted lease by recognised the amount in theof any consolidated prepaid or Advance lease rentals 16 5,221 (5,221) - Advance lease rentals 16 5,221 (5,221) - ADDITIONAL accruedstatement lease of payments financial position relating immediately to that lease prior recognised to the date in of the transition. consolidated This Trade and other receivables 10,879 (1,891) 8,988 INFORMATION statementmeasurement of financial has been position applied immediatelyto a smaller portfolio prior to of the leases. date of transition. This Trade and other receivables 10,879 (1,891) 8,988 measurement has been applied to a smaller portfolio of leases. Impact on assets 51,366 The right-of-use assets are presented as a separate line item in the consolidated Impact on assets 51,366 Thestatement right-of-use of financial assets areposition presented and the as related a separate lease line liabiliti itemes are in the included consolidated within EQUITY AND LIABILITIES statement‘Borrowings of and financial lease liabilities’ position (Noteand the22). related lease liabilities are included within EQUITYEQUITY AND LIABILITIES ‘Borrowings and lease liabilities’ (Note 22). EQUITY On transition to IFRS 16, Emirates applied the practical expedient and elected not to re- Retained earnings 36,408 (9,641) 26,767 Onassess transition which to contractualIFRS 16, Emirates arrangements applied qualify the practical as leases expedi underent I FRSand 16.elected It applied not to the re- Non-controllingRetained earnings interests 59436,408 (3)(9,641) 59126,767 transition rules of IFRS 16 only to contracts that were previously identified as leases as assess which contractual arrangements qualify as leases under IFRS 16. It applied the Non-controlling interests 594 (3) 591 Impact on equity (9,644) transitionper IAS rules17 or ofIFRIC IFRS 4. 16The only definition to contracts of a lease that under were IFRSpreviou 16 slywas identified applied to as contracts leases as perentered IAS 17 into or IFRICor changed 4. The on definition or after theof atransition lease under date. IFRSFurthe 16r, wasEmirates applied has appliedto contracts the Impact on equity (9,644) LIABILITIES enteredfollowing into permitted or changed practical on or expedientsafter the transition on a lease-by-lease date. Furthe bar,sis: Emirates has applied the following permitted practical expedients on a lease-by-lease basis: TradeLIABILIT and otherIES payables 14,977 (567) 14,410 a single discount rate has been applied to a portfolio of leases with reasonably similar characteristics; BorrowingsTrade and and other lease payables liabilities 22 53,03914,977 60,765(567) 113,80414,410 a single discount rate has been applied to a portfolio of leases with reasonably the new lease measurement rules have not been applied to leases (excluding aircraft DeferredBorrowings credits and lease liabilities 25 22 2,75953,039 (2,759)60,765 113,804- similar characteristics; Borrowings and lease liabilities 22 53,039 60,765 113,804 and aircraft engine related leases) which expire within 12 months of the transition the new lease measurement rules have not been applied to leases (excluding aircraft ProvisionsDeferred credits 23 25 4,7592,759 3,571(2,759) 8,330 - date and are accounted for as short term leases; Deferred credits 25 2,759 (2,759) - and aircraft engine related leases) which expire within 12 months of the transition initial direct costs associated with the lease have been excluded from the ImpactProvisions on liabilities 23 4,759 61,0103,571 8,330 datemeasurement and are accounted of the right-of-use for as short asset; term and leases; Impact on equityequity andand liabilitiesliabilities initialhindsight direct has costs been associated used in with determining the lease the have lease been term excludfor contred acts from w ith the Impact on liabilities 51,36661,010 measurement of the right-of-use asset; and extension/termination options. Impact on equity and liabilities hindsight has been used in determining the lease term for contracts with 51,366 extensionextension/termination / termination opti options.ons.
91 OVERVIEW 2. Summary of significant accounting policies (continued) retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity or EMIRATES Basis of consolidation business are accounted for as if the related assets or liabilities have been directly DNATA disposed off. This may mean that amounts previously recognised in other The acquisition method of accounting is used to account for business combinations by comprehensive income are reclassified to the consolidated income statement. GROUP Emirates. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, liabilities incurred, fair value of any contingent FINANCIAL Associates are those entities in which Emirates has significant influence but not control INFORMATION consideration arrangements and the fair value of any pre-existing equity interest in the or joint control, generally accompanying a shareholding between 20% and 50% of the subsidiary. voting rights. Significant influence is the power to participate in the financial and EMIRATES FINANCIAL operating policy decisions of the entity, but is not control or joint control over those COMMENTARY Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities policies. Investments in associates are accounted for by applying the equity method and and contingent liabilities, if any, incurred or assumed in a business combination, are include goodwill (net of accumulated impairment loss, if any) identified on acquisition, DNATA FINANCIAL measured initially at their fair values at the acquisition date. Any non-controlling interest after initially being recorded at cost. COMMENTARY in the subsidiary is recognised on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of recognised amounts of Joint ventures are contractual arrangements which establish joint control and where EMIRATES CONSOLIDATED subsidiaries’ identifiable net assets. Emirates has rights to the net assets of the arrangement. Joint control is the contractually FINANCIAL agreed sharing of control of an arrangement, which exists only when decisions about the STATEMENTS Contingent consideration is classified either as equity or a financial liability. Amounts relevant activities require the unanimous consent of the parties sharing control. DNATA classified as a financial liability are subsequently remeasured to fair value with changes in Investments in joint ventures are accounted for by applying the equity method and CONSOLIDATED fair value recognised in the consolidated income statement. include goodwill (net of accumulated impairment loss, if any) identified on acquisition, FINANCIAL STATEMENTS after initially being recognised at cost. If the business combination is achieved in stages, the acquisition date carrying value of ADDITIONAL Emirates’ previously held equity interest in the investment is remeasured to fair value at When Emirates’ share of losses in an equity-accounted investment equals or exceed its INFORMATION the acquisition date. Any gains or losses arising from such remeasurement are interest in the entity, including any other unsecured long term receivables, Emirates does recognised in the consolidated income statement. not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Subsidiaries are those entities (including structured entities) over which Emirates has If the ownership in a joint venture or an associate is reduced but joint control or control. Control is exercised when Emirates is exposed to, or has rights to, variable significant influence is retained, only a proportionate share of the amounts previously returns from its involvement with the entity and has the ability to affect those returns recognised in other comprehensive income are reclassified to the consolidated income through its power over that entity. Subsidiaries are fully consolidated from the date on statement where appropriate. which control is transferred to Emirates and are de-consolidated from the date that control ceases. Inter-company transactions, balances and unrealised gains and losses All material unrealised gains and losses arising on transactions between Emirates and its arising on transactions between Emirates and its subsidiaries are eliminated. associates and joint ventures are eliminated to the extent of Emirates’ interest.
Emirates treats transactions with non-controlling interests that do not result in loss of Accounting policies of subsidiaries, associates and joint ventures have been changed control as transactions with the owners. A change in ownership interest results in an where necessary to ensure consistency with Emirates’ accounting policies. adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid is recorded in equity.
When Emirates ceases to have control, any retained interest in the entity or business is remeasured to its fair value at the date when control is lost, with the change in the carrying amount recognised in the consolidated income statement. The fair value becomes the initial carrying amount for the purposes of subsequent accounting for the
92 OVERVIEW 2. Summary of significant accounting policies (continued) Liquidated damages
EMIRATES Revenue Income from claims for liquidated damages on aircraft and related assets is recognised DNATA in the consolidated income statement as other income or a reduction to operating costs Passenger (including excess baggage) and cargo sales are recognised as revenue when when a contractual entitlement exists, amounts can be reliably measured and receipt is GROUP each performance obligation for the transportation service is fulfilled and is presented virtually certain. When such claims do not relate to compensations for loss of income or net of discounts and taxes. The transaction price is allocated to each performance FINANCIAL are not towards incremental operating costs, the amounts are taken to the consolidated INFORMATION obligation based on the relative stand-alone selling price related to each performance statement of financial position and recorded as a reduction in the cost of the related obligation. Revenue documents (e.g. tickets or airway bills) sold but unused are held in asset. EMIRATES the consolidated statement of financial position under current liabilities as passenger FINANCIAL and cargo sales in advance within ‘Deferred revenue’. Passenger ticket related breakage COMMENTARY Finance income and costs is estimated based on historical trends and recognised in the consolidated income DNATA statement proportionally with each transfer of service to the customer. FINANCIAL Interest income and costs are recognised on a time proportion basis using the effective COMMENTARY Where Emirates acts as an agent between the service provider and the end customer, interest method. EMIRATES the net commission is recognised as revenue on satisfaction of the performance CONSOLIDATED obligation (which typically is the date of sale). Foreign currency translation FINANCIAL STATEMENTS Revenues from the sale of consumer goods, food and beverages and catering operations Emirates’ consolidated financial statements are presented in UAE Dirham (“AED”), which DNATA is recognised when the control of goods is transferred to the customer and are stated is also the entity’s functional currency. Subsidiaries, associates and joint ventures CONSOLIDATED net of discounts, taxes and returns. determine their own functional currency related to the primary economic environment in FINANCIAL STATEMENTS which they operate. All other revenues, including revenue from hotel operations, are recognised net of ADDITIONAL discounts and taxes, when the respective performance obligations are satisfied. Foreign currency transactions are translated into the functional currency at the exchange INFORMATION rates prevailing at the transaction dates. Monetary assets and liabilities denominated in Frequent flyer programme (‘Skywards’) foreign currencies are translated into the functional currency at the exchange rates prevailing at the end of the reporting period. The resulting foreign exchange gains and Emirates operates a frequent flyer programme that provides a variety of awards to losses, other than those on qualifying cash flow hedges deferred in other comprehensive programme members based on a mileage credit for flights on Emirates and other income, are recognised in the consolidated income statement. airlines that participate in the programme. Members can also accrue miles by utilising the services of non-airline programme participants. For the purpose of consolidation, where functional currencies of subsidiaries are different from AED, income, comprehensive income and cash flow statements of Emirates accounts for Skywards miles (predominantly accrued through sale of flight subsidiaries are translated into AED at average exchange rates for the year that tickets or purchase of miles by programme partners) as a separately identifiable approximate the cumulative effect of rates prevailing on the transaction dates and their component of the sales transaction in which they are granted. The consideration in assets and liabilities are translated at the exchange rates ruling at the end of reporting respect of the initial sale allocated to Skywards miles is based on their relative stand- period. The resulting exchange differences are recognised in other comprehensive alone selling price, adjusted for expected expiry and the extent to which the demand for income. an award cannot be met, and is recorded under current liabilities as deferred revenue. The stand-alone selling price is determined based on an adjusted market assessment Share of results of investments accounted for using the equity method are translated approach, using estimation techniques and taking into consideration the various into AED at average exchange rates whereas Emirates’ share of net investments is redemption options available to Skywards members. Marketing income earned from translated at the exchange rate prevailing at the end of the reporting period. Translation partners associated with the programme is recognised when the miles are issued. differences relating to investments in associates, joint ventures and monetary assets and liabilities that form part of a net investment in a foreign operation are recognised in Revenue from redemption of miles is recognised in the consolidated income statement other comprehensive income. only when Emirates fulfils its obligations by supplying free or discounted goods or services on redemption of the miles accrued.
93 OVERVIEW 2. Summary of significant accounting policies (continued) Property, plant and equipment
EMIRATES Foreign currency translation (continued) Property, plant and equipment is stated at cost less accumulated depreciation and DNATA impairment. Cost consists of the purchase cost, together with any incidental expenses of When investments in subsidiaries, associates or joint ventures are disposed of, the acquisition. Where Emirates receives credits from manufacturers in connection with the GROUP related translation differences previously recorded in equity are then recognised in the acquisition of certain aircraft and engines, these credits are recorded as a reduction to FINANCIAL consolidated income statement as part of the gain or loss on disposal. the cost of the related assets. INFORMATION Goodwill and fair value adjustments arising on the acquisition of a foreign entity are Subsequent costs are included in the asset’s carrying amount or recognised as a EMIRATES FINANCIAL treated as assets of the foreign entity and translated at the exchange rates prevailing at separate asset, as appropriate, only when it is probable that future economic benefits COMMENTARY the end of reporting period. Exchange differences arising are recognised in other associated with the item will flow to Emirates and the cost can be measured reliably. comprehensive income. Repairs and routine maintenance are charged to the consolidated income statement DNATA FINANCIAL during the period in which they are incurred. COMMENTARY Income tax Land is not depreciated. Depreciation on other items of property, plant and equipment is EMIRATES CONSOLIDATED The tax expense for the year comprises current and deferred tax. calculated using the straight-line method to allocate their cost, less estimated residual FINANCIAL values, over the estimated useful lives of the assets or the lease term, if shorter. STATEMENTS The current income tax charge is calculated on the basis of the tax laws enacted or DNATA substantively enacted at the end of the reporting period in the countries where Emirates The estimated useful lives and residual values are: CONSOLIDATED operates and generates taxable income. FINANCIAL STATEMENTS Aircraft 1515 –– 1818 yearsyears (residual(residual valuevalue nilnil -- 10%)10%) Deferred income tax is provided in full on temporary differences arising between the tax Aircraft spare engines and parts 55 –– 1515 yearsyears (residual(residual valuevalue nilnil -- 10%)10%) ADDITIONAL base of assets and liabilities and their carrying amounts in the consolidated financial Buildings 1515 –– 4040 yearsyears INFORMATION statements. However, deferred income tax is not recognised if it arises from initial Other property, plant and equipment 3 3 – – 20 20 years years or or over over the the lease lease term, term, if if shorter shorter recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Costs for aircraft and engine related major overhaul events are capitalised and Also, deferred tax liabilities are not recognised if they arise from the initial recognition of depreciated over the shorter of the period to the next major overhaul, the remaining goodwill in a business combination. lease term or the useful life of the asset concerned. All other costs relating to asset maintenance (including maintenance provided under ‘pay-as-you-go’ contracts) are Deferred income tax is determined using tax rates (and laws) that have been enacted or charged to the consolidated income statement as incurred. substantively enacted at the end of reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. The assets’ residual values and useful lives are reviewed at least annually, and adjusted if appropriate. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be Capital projects are stated at cost. When the asset is ready for its intended use, it is utilised. transferred from capital projects to the appropriate category under property, plant and equipment and depreciated in accordance with Emirates’ policies. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred taxes relate to the same income tax authority.
94 OVERVIEW 2. Summary of significant accounting policies (continued) Emirates acquires the right to purchase aircraft and related assets which are
EMIRATES manufactured as per bespoke specifications and design, and are delivered through Property, plant and equipment (continued) various financing arrangements. Where it is certain that the title of these assets will DNATA eventually be transferred to Emirates at the end of the financing term, these fall within An item of property, plant and equipment is derecognised upon disposal or when no the definition of “in-substance purchases” and are hence accounted as property, plant GROUP future economic benefits are expected from its use or disposal. Gains and losses on and equipment under IAS 16. Accordingly, the related liabilities are treated as term loans FINANCIAL derecognition are determined by comparing proceeds with the carrying amount and are under IFRS 9. INFORMATION recognised in the consolidated income statement. Emirates uses two exemptions as permitted under IFRS 16 for not capitalising the leased EMIRATES asset i.e. short-term leases (with a lease term of 12 months or less) and lease contracts FINANCIAL Borrowing costs COMMENTARY for which the value of the underlying asset is materially low (primarily comprising of Borrowing costs directly attributable to the acquisition, construction or production of office space and equipment). For these leases, none of which relate to aircraft, the lease DNATA qualifying assets are added to the cost of the assets until such time that the assets are rental charges are recognised as an operating expense on a straight-line basis over the FINANCIAL COMMENTARY substantially ready for their intended use. Borrowing costs capitalised are calculated at period of the lease. the weighted average rate of general borrowing costs and applied to the expenditure on EMIRATES qualifying assets, except to the extent that funds are borrowed specifically for the At the lease commencement date, the lease liability is measured at the present value of CONSOLIDATED the future lease payments (including payments for reasonably certain extension options), FINANCIAL purpose of obtaining a qualifying asset. Where this occurs, actual borrowings costs STATEMENTS incurred on these specific borrowings less any investment income earned on temporary discounted using the interest rate implicit in the lease or, if that rate cannot be readily surplus funds are capitalised as part of the qualifying asset. determined, Emirates’ incremental borrowing rate for borrowing funds necessary to DNATA obtain an asset of similar value to the right-of-use asset in a similar economic CONSOLIDATED FINANCIAL Leases (applicable from 1 April 2019) environment with similar terms, security and conditions. The future lease payments STATEMENTS comprise fixed payments, variable payments that are dependent on an index (e.g. LIBOR) Right-of-use assets are capitalised at the commencement of the lease and recognised at less any lease incentives receivable. All other variable lease payments are not included in ADDITIONAL cost, comprising of the present value of payments to be made to the lessor, any INFORMATION the lease liability measurement and are charged to the consolidated income statement prepayments or advance lease rentals made at inception, together with the initial direct as and when due. costs incurred by Emirates in respect of acquiring the lease and the present value of an estimate of costs to be incurred to meet the contractual restoration obligations, less any Subsequent changes resulting from reassessments or lease modifications that are not lease incentives received. accounted for as separate leases (together referred as ‘remeasurements’) are accounted as adjustments to the carrying value of the lease liability with a corresponding impact to For contracts which contain one or more lease or non-lease components, the the related right-of-use asset. consideration in the contract has been allocated to each component on the basis of the relative stand-alone price of the component determined on the basis of estimated Sale and leaseback transactions are tested under IFRS 15 at the date of the transaction, observable information. and if the transaction qualifies as a sale, the underlying asset is derecognised and a right-of-use asset with a corresponding liability is recognised equal to the retained Right-of-use assets are depreciated over the useful life or lease term (whichever is interest in the asset. Any gain or loss is recognised immediately in the consolidated lower), unless the underlying lease contract provides an option to Emirates to acquire income statement for the interest in the asset transferred to the lessor. If the transaction the asset at the end of the lease term and it is highly certain for Emirates to exercise that does not qualify as sale under IFRS 15, a financial liability equal to the sale value is option. In such cases, the right-of-use asset is depreciated over the useful life in recognised in the consolidated financial statements as ‘Term loans’ within 'Borrowings accordance with Emirates' policies with regards to property, plant and equipment. and lease liabilities'.
95 OVERVIEW 2. Summary of significant accounting policies (continued) Goodwill is tested for impairment annually or more frequently if events or changes in
EMIRATES circumstances indicate a potential impairment and is carried at cost less accumulated Leases (applicable till 31 March 2019) impairment losses. For the purpose of impairment testing, goodwill is allocated to cash DNATA generating units or a group of cash generating units that are expected to benefit from Where property, plant and equipment has been financed by lease agreements under the business combination in which the goodwill arose. An impairment loss is recognised GROUP which substantially all of the risks and rewards incidental to ownership are transferred to when the carrying value of the cash generating units or a group of cash generating units FINANCIAL Emirates, they are classified as finance leases. Finance leases are capitalised at the exceeds its recoverable amount. Impairment losses on goodwill are not reversed. INFORMATION commencement of the lease at the lower of the present value of the minimum lease payments or the fair value of the leased asset. The corresponding lease obligations are Gains and losses on the disposal of an entity include the carrying amount of goodwill EMIRATES FINANCIAL included under liabilities. Lease payments are treated as consisting of capital and interest relating to the entity sold. COMMENTARY elements. The interest element is charged to the consolidated income statement as finance costs over the lease term so as to produce a constant periodic rate of interest on Other intangible assets DNATA FINANCIAL the remaining balance of the liability. Property, plant and equipment acquired under COMMENTARY finance leases are depreciated in accordance with Emirates’ policies. Intangible assets are capitalised at cost only when future economic benefits are probable. Cost includes the purchase price together with any directly attributable EMIRATES Leases, where a significant portion of risks and rewards of ownership are retained by the CONSOLIDATED expenditure. FINANCIAL lessor, are classified as operating leases. Lease rental charges, including advance rentals STATEMENTS in respect of operating leases, are charged to the consolidated income statement on a Trade names and contractual rights acquired in a business combination are recognised straight-line basis over the period of the lease. at fair value at the acquisition date. They have a finite useful life and are subsequently DNATA carried at cost less accumulated amortisation and impairment losses. CONSOLIDATED FINANCIAL Gains and losses arising on sale and leaseback transactions resulting in an operating In the case of internally developed computer software, development expenditure is STATEMENTS lease and where the sale price and subsequent future lease payments are at fair value, capitalised if costs can be measured reliably, the product is technically and commercially are recognised immediately in the consolidated income statement. Where the sale price ADDITIONAL feasible, future economic benefits are probable, and there exists an intent and ability to INFORMATION is below fair value, any losses are immediately recognised in the consolidated income complete the development and to use or sell the asset. Other research and development statement, except where the loss is compensated for by future lease payments at below expenditure not meeting the criteria for capitalisation are recognised in the consolidated market price, it is deferred and amortised in proportion to the lease payments over the income statement as incurred. period for which the asset is expected to be used. Where the sale price is above fair value, the excess over fair value is accounted for as a deferred credit and amortised over Intangible assets are generally amortised on a straight-line basis over their estimated the period for which the asset is expected to be used. useful lives which are:
Lease classification is made at the inception of the lease. Lease classification is changed Service rights 15 years only if, at any time during the lease, the parties to the lease agreement agree to change Trade names 20 years the provisions of the lease (without renewing it) in a way that it would have been Contractual rights Up to 15 years, or based on the usage pattern of the classified differently at inception had the changed terms been in effect at that time. The underlying contract revised agreement is considered as a new agreement and accounted for prospectively Computer software 3-7 years over the remaining term of the lease. The intangible assets’ useful lives are reviewed at least annually, and adjusted if appropriate. Goodwill An intangible asset is derecognised upon disposal or when no future economic benefits Goodwill represents the excess of the aggregate of the consideration transferred, the are expected from its use or disposal. Gains and losses on derecognition are determined amount of any non-controlling interest in the acquired entity and the acquisition-date by comparing proceeds with the carrying amount and are recognised in the consolidated fair value of any previous equity interest in the acquired entity over the fair value of the income statement. net identifiable assets at the date of acquisition.
96 OVERVIEW 2. Summary of significant accounting policies (continued) Cash and cash equivalents
EMIRATES Impairment of non-financial assets Cash and cash equivalents comprise cash and liquid funds with an original maturity of DNATA three months or less. Other bank deposits with maturities of less than one year are Non-financial assets other than goodwill are reviewed for impairment whenever events classified as short term bank deposits. Bank overdrafts are shown within current GROUP or changes in circumstances indicate that the carrying amount may not be recoverable. ‘Borrowings and lease liabilities’ in the consolidated statement of financial position. FINANCIAL An impairment loss is recognised for the amount by which the asset’s carrying amount INFORMATION exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair Inventories value less costs to sell and value in use. For the purpose of assessing impairment, non- EMIRATES aircraft related assets are grouped at the lowest levels for which there are separately Inventories are stated at the lower of cost and estimated net realisable value. Cost is FINANCIAL determined on the weighted average cost basis. COMMENTARY identifiable cash flows (cash generating units). In respect of aircraft and related assets, (including right-of-use-assets), these assets are assessed for impairment at Emirates’ Derivative financial instruments DNATA FINANCIAL network level. Non-financial assets other than goodwill are reviewed at the end of each COMMENTARY reporting period for possible reversals of historic impairment losses. Following the Derivative financial instruments are initially recognised at fair value on the date a outbreak of COVID-19, Emirates has performed an analysis to consider whether any derivative contract is entered into and are subsequently remeasured at their fair value at EMIRATES the end of the reporting period. Derivatives are mostly designated as a hedge of the CONSOLIDATED material impairment of non-financial assets (including right-of-use assets) existed at the FINANCIAL balance sheet date. Based on this analysis, no impairments were noted as at 31 March exposure to variability in cash flows that is attributable to a particular risk associated STATEMENTS 2020. with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge). Fair values are obtained from quoted market prices or dealer quotes for similar DNATA Financial assets CONSOLIDATED instruments, discounted cash flow models and option pricing models as appropriate. All FINANCIAL derivatives are carried as assets when the fair value is positive and as liabilities when the Financial assets are classified in accordance with IFRS 9 as ‘Financial assets at amortised STATEMENTS fair value is negative. cost’ which consists of financial assets that are debt instruments and are intended to be ADDITIONAL held to maturity on the basis of Emirates’ business model. Furthermore, these INFORMATION Emirates’ criteria to account for a derivative financial instrument as a hedge include: instruments have fixed payment terms and meet the criteria for cash flow characteristics the hedging relationship consists only of eligible hedging instruments and eligible i.e. contractual payments of principal and interest. This category includes trade and other hedged items; and receivables (excluding prepayments), short term bank deposits and cash and cash equivalents. They are classified as non-current or current assets according to their at the inception of the hedging relationship there is a formal designation and remaining maturity at the reporting date. documentation of the hedging relationship, including Emirates’ risk management objective and strategy for undertaking the hedge, identification of the hedging Trade receivables instrument, the hedged item, the nature of the risk being hedged, and how Emirates Trade receivables are recognised initially at the amount of consideration that is will assess the hedging instrument's effectiveness; and unconditional, unless they contain significant financing components when they are there is an economic relationship between the hedged item and the hedging recognised at fair value. They are subsequently measured at amortised cost using the instrument; and effective interest method, less provision for impairment. Emirates applies simplified approach which uses lifetime expected loss allowances to calculate the impairment the effect of credit risk does not “dominate the value changes” that results from the provisions on trade receivables. Specific loss allowances are also recognised when economic relationship. The hedge ratio of the hedging relationship is the same as Emirates become aware of a customer experiencing financial difficulty. Trade receivables that resulting from the quantity of hedged item that Emirates actually hedges and are written off once management has determined that such amount will not be the quantity of the hedging instrument that Emirates actually uses to hedge that recovered. quantity for hedged item.
97 2. Summary of significant accounting policies (continued) OVERVIEW 2. Summary of significant accounting policies (continued) Provisions Derivative financial instruments (continued) Provisions EMIRATES Provisions are recognised when Emirates has a present legal or constructive obligation as Derivative financial instruments (continued) a result of past events, it is probable that an outflow of resources will be required to DNATA Changes in the fair value of derivatives that are designated and qualify as cash flow Provisions are recognised when Emirates has a present legal or constructive obligation as settle the obligation and the amount can be reliably estimated. Changeshedges and in the that fair prove value to of be derivatives highly effective that are designatedin relation anto d the qualify hedged as cash risk flow are a result of past events, it is probable that an outflow of resources will be required to GROUP recognised in other comprehensive income. When the forecasted transaction results in settle the obligation and the amount can be reliably estimated. hedges and that prove to be highly effective in relation to the hedged risk are Provision for aircraft return conditions therecognised recognition in other of a comprehensivenon-financial asset income. or a Whennon-financial the forecasted liability, ttheransaction gains and results losses in FINANCIAL Provision for aircraft return conditions INFORMATION thepreviously recognition recognised of a non-financial in other comprehensive asset or a non-financial income are liare-clasbility,sified the gainsand includedand losses in Provision for aircraft return conditions (restoration obligations) represents the estimate previouslythe initial carrying recognised amount in other of the comprehensive asset or liability. income These are ga re-clasins andsified losses and are included ultimately in Provisionof the cost for to aircraftmeet the return contractual conditions lease (restoration end obligations obligatio on ns)certain represents aircraft theand estimate engines EMIRATES FINANCIAL therecognised initial carrying in the consolidatedamount of the income asset orstatement liability. Thesein the gasameins andperiod losses during are whichultimately the ofat the costtime toof meet re-delivery. the contractual At lease leasecommencement, end obligations the onpresent certain value aircraft of the and expected engines COMMENTARY recognisedasset or liability in the affects consolidated profit or incomeloss. In allstatement other cases, in the amounts same perpreviouslyiod during recognised which the in atcost the considering time of re-delivery. the existing At lease fleet commencement, plan and long-term the present maintena valuence of the schedules expected is assetother or comprehensive liability affects income profit or are loss. transferred In all other to cases, the consolidated amounts previously income recognised statement in costrecognised considering as a provision the existing and fleet are capitalised plan and as long-term part of the maintena right-of-usence schedules asset and is DNATA FINANCIAL otherthe period comprehensive during which income the are forecasted transferred transaction to the consolidated affects the consolidatedincome statement income in recogniseddepreciated asover a the provision lease term. and are capitalised as part of the right-of-use asset and COMMENTARY thestatement period and during are presented which the in forecasted the same line transaction item as the affects gains the and consolidated losses from hedged income depreciated over the lease term. Retirement benefit obligations statementitems. and are presented in the same line item as the gains and losses from hedged EMIRATES Retirement benefit obligations CONSOLIDATED items. FINANCIAL When a cash flow hedging instrument expires or is sold, terminated or exercised, or Emirates operates or participates in various end of service benefit plans, which are STATEMENTS Emiratesclassified either operates as defined or participates contribution in various or defined end benefit of service plans. ben efit plans, which are Whenwhen a a hedge cash flow no longerhedging meets instrument the criteria expires for or hedge is sold, accounting terminate underd or exercised, IFRS 9, any or whencumulative a hedge deferred no longergain or meets loss existing the criteria in equity for at hedge that tim accountinge is retained under in equity IFRS 9,and any is classified either as defined contribution or defined benefit plans. DNATA A defined contribution plan is a pension scheme under which Emirates pays fixed CONSOLIDATED cumulativeultimately deferred recognised gain in or theloss existing consolidated in equity income at that statementtime is retained when in theequity forecast and is Acontributions defined contribution and has no plan legal isor a constructive pension scheme obligation under to whichpay further Emirates contributions pays fixed if FINANCIAL ultimatelytransaction recognisedor part of a volume in the of consolidated a forecast transaction income statementoccurs. If a whenforecast the transaction forecast STATEMENTS contributionsthe fund does and not hashold no sufficient legal or assetsconstructive to settle obligation the benefits to pa relatingy further to contributionsthe employees’ if transactionis no longer or expected part of ato volume occur, theof acumulative forecast transaction gain or loss occur thats. was If a reportedforecast transactionin equity is theservice fund in does the currentnot hold and sufficient prior periods. assets toContributions settle the benefits to the relatingpension tofund the are employees’ charged ADDITIONAL isimmediately no longer expectedtransferred to tooccur, the consolidatedthe cumulative income gain or statement. loss that wasThe reportedgain or lossin equity on any is toservice the consolidated in the current income and prior statement periods. in theContributions period in which to the the pensiony fall due. fund are charged INFORMATION immediatelyhedge ineffectiveness transferred is torecognised the consolidated in the consolidated income statement. income Tstatementhe gain or within loss on‘Other any to the consolidated income statement in the period in which they fall due. hedgefinancial ineffectiveness gains / (losses)’. is recognised in the consolidated income statement within ‘Other A defined benefit plan is a plan which is not a defined contribution plan. The liability financial gains / (losses)’. recognisedA defined benefitin the consolidated plan is a plan statement which is of not financial a defined position contrib foruti a ondefined plan. benefit The liability plan Hedge relationships are sometimes rebalanced for the purposes of maintaining a hedge isrecognised the present in thevalue consolidated of the defined statement benefit of obligation financial positionat the end for of a thedefined reporting benefit period plan Hedgeratio which relationships is consistent are sometimes with Emirates’ rebalanced risk for management the purposes object of maintainingives. Any resultinga hedge isless the the present fair value value of ofplan the assets defined at thatbenefit date. obligation The defined at the be nefitend ofobligation the reporting is calculated period ratioineffectiveness which is consistentupon rebalancing with Emirates’ is also risk recognised management under object ‘Otherives. financial Any resulting gains / lessby independent the fair value actuaries of plan assetsusing theat thatprojected date. Theunit definedcredit method benefit. obligation is calculated ineffectiveness(losses)’. upon rebalancing is also recognised under ‘Other financial gains / by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting (losses)’. Theestimated present future value cash of outflows the defined using benefitmarket yields obligation at the isend determin of the edreporting by discounting period of Changes in the fair value of derivative instruments that do not qualify for hedge estimatedhigh quality future corporate cash outflowsbonds that using are marketdenominated yields atin thethe endcurren of cythe in reporting which the period benefits of Changesaccounting in and the are fair entered value into of derivative as economic instruments hedges are that recognis do noted immediately qualify for hedgein the highwill bequality paid corporate and have bonds terms that approximating are denominated to the in estimatedthe curren termcy in which of the the retirement benefits accountingconsolidated and income are entered statement into within as economic ‘Other financial hedges aregains recognis / (losses)’.ed immediately in the willbenefit be obligations. paid and have terms approximating to the estimated term of the retirement consolidated income statement within ‘Other financial gains / (losses)’. benefit obligations. Borrowings Actuarial gains and losses arising from changes in actuarial assumptions and experience Borrowings adjustments are recognised in equity through the consolidated statement of Borrowings are recognised initially at fair value, net of transaction costs incurred. Actuarial gains and losses arising from changes in actuarial assumptions and experience comprehensiveadjustments are income recognised in the period in equity in which through they arise. the consolidated statement of Borrowings are are subsequently recognised initially measured at at fair amortised value, net cost of with trans anyaction difference costs incurred.between comprehensive income in the period in which they arise. Borrowingsthe proceeds are (net subsequently of transaction measured costs) at and amortised the redemption cost with valuanye difference recognised between in the Trade payables theconsolidated proceeds income (net of statement transaction over costs) the and period the of redemption the borrowings value using recognised the effective in the Trade payables consolidatedinterest method. income statement over the period of the borrowings using the effective Trade payables are recognised initially at fair value and subsequently measured at interest method. Tradeamortised payables cost using are recognisedthe effective initiallyinterest atmethod. fair value and subsequently measured at amortised cost using the effective interest method.
98 OVERVIEW 2. Summary of significant accounting policies (continued) Passenger and cargo revenue recognition
EMIRATES Passenger and cargo sales are recognised as revenue when each performance obligation Derecognition of financial assets and financial liabilities DNATA for the transportation service is fulfilled. The value of unused revenue documents is held Financial assets are derecognised only when the contractual rights to the cash flows in the consolidated statement of financial position under current liabilities as passenger GROUP expire or substantially all the risks and rewards of ownership are transferred along with and cargo sales in advance within deferred revenue. Passenger ticket related breakage is the contractual rights to receive cash flows. Financial liabilities are derecognised only estimated based on historical trends and recognised in the consolidated income FINANCIAL when they are extinguished i.e. when the obligations specified in the contract are INFORMATION statement proportionally with each transfer of service to the customer. A 5% change to discharged or cancelled or expire. the breakage percentage will not result in a material change to passenger and cargo EMIRATES revenue. FINANCIAL Offsetting of financial assets and liabilities COMMENTARY Frequent flyer programme (‘Skywards’) DNATA Financial assets and liabilities are offset and the net amount is reported in the FINANCIAL consolidated statement of financial position only when there is a legally enforceable Emirates accounts for Skywards miles (predominantly accrued through sale of flight COMMENTARY right to offset the recognised amounts and there is an intention to settle on a net basis tickets or purchase of miles by programme partners) as a separately identifiable component of the sales transaction in which they are granted. The consideration in EMIRATES or realise the asset and settle the liability simultaneously. The legally enforceable right CONSOLIDATED must not be contingent on future events and must be enforceable in the normal course respect of the initial sale allocated to Skywards miles is based on their stand-alone value FINANCIAL and is recorded under current liabilities as ‘Deferred revenue’ (Note 24). STATEMENTS of business and in the event of default, insolvency or bankruptcy. The stand-alone selling price is determined using the adjusted market assessment DNATA Segment reporting CONSOLIDATED approach. This approach involves estimation techniques to determine the stand-alone FINANCIAL selling price of Skywards miles and reflect the weighted average of a number of factors STATEMENTS Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is i.e. fare per sector, flight upgrades and partner rewards based on historical trends. ADDITIONAL considered to be Emirates’ leadership team who make strategic decisions and are Adjustments to the stand-alone selling price of miles are also made for miles not INFORMATION responsible for allocating resources and assessing performance of the operating expected to be redeemed by members and the extent to which the demand for an segments. award cannot be met.
Dividend distribution A level of judgement is exercised by management due to the diversity of inputs that go into determining the stand-alone selling price of miles. A reasonably possible change to Dividend distribution to equity holders is recognised as a liability in the consolidated any single assumption will not result in a material change to the deferred revenue. financial statements in the period in which the dividends are approved. Useful lives and residual values of aircraft and related assets 3. Critical accounting estimates and judgements Management assigns useful lives and residual values to aircraft and related assets based on the intended use and the economic lives of those assets. Subsequent changes in In the preparation of these consolidated financial statements, a number of estimates and circumstances such as technological advances or prospective utilisation of the assets associated assumptions have been made relating to the application of accounting concerned could result in the actual useful lives or residual values differing from initial policies and reported amounts of assets, liabilities, income and expense. The estimates estimates. and associated assumptions are assessed on an ongoing basis and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The following narrative addresses the accounting policies that require subjective and complex judgements, often as a result of the need to make estimates.
99 OVERVIEW 3. Critical accounting estimates and judgements (continued) no longer expects to consume the same volume of jet fuel as initially envisaged given
EMIRATES the reduction in planned operations. The resulting hedge ineffectiveness charge of AED Leases 1,098 m has been recognised in the consolidated income statement within ‘Other DNATA financial gains / (losses)’. If the fuel uplifts were to be up to 10% points lower than the On adoption of IFRS 16 from 1 April 2019, while determining the lease term, highly probable forecast as at 31 March 2020, this would have resulted in an GROUP management considers all facts and circumstances that create an economic incentive to additional hedge ineffectiveness charge of AED 445 m. exercise an extension option, or not to exercise a termination option. Extension options FINANCIAL (or periods after termination options) are only included in the lease term if the lease is INFORMATION 4. Fair value estimation reasonably certain to be extended (or not terminated). EMIRATES FINANCIAL The levels of fair value hierarchy are defined as follows: COMMENTARY To ascertain whether it is reasonably certain for Emirates to exercise these options, management takes into consideration any lease termination penalties that would be Level 1: Measurement is made by using quoted prices (unadjusted) from an active DNATA incurred, leasehold improvements that are estimated to have significant remaining value, market. FINANCIAL COMMENTARY historical lease durations and the cost associated to business disruption caused by Level 2: Measurement is made by means of valuation methods with parameters replacing the leased asset. derived directly or indirectly from observable market data. EMIRATES Level 3: Measurement is made by means of valuation methods with parameters not CONSOLIDATED FINANCIAL Provision for aircraft return conditions based exclusively on observable market data. STATEMENTS The measurement of the contractual provision for aircraft return conditions includes Derivatives are the only financial instruments which are carried at fair value and fall into DNATA level 2 of the fair value hierarchy (Note 30). CONSOLIDATED assumptions relating to expected costs, escalation rates, discount rates commensurate FINANCIAL with the expected obligation maturity and long-term maintenance schedules. An Derivatives comprise forward exchange contracts and interest rate swaps. The forward STATEMENTS estimate is therefore made at each reporting date to ensure that the provision exchange contracts have been fair valued using forward exchange rates that are quoted ADDITIONAL corresponds to the present value of the expected costs to be borne by Emirates. A in an active market. Interest rate swaps are fair valued using forward interest rates INFORMATION significant level of judgement is exercised by management given the long-term nature extracted from observable yield curves. Commodity forward exchange contracts are fair and diversity of assumptions that go into the determination of the provision. A valued using a future contract price quoted in an active market. reasonably possible change in any single assumption will not result in a material change to the provision.
Valuation of defined benefit obligations
The present value of the defined benefit obligations is determined on an actuarial basis using various assumptions that may differ from actual developments in the future. These assumptions include the determination of the discount rate and expected salary increases which are reviewed at each reporting date. Due to the complexities involved in the valuation and its long-term nature, defined benefit obligations are sensitive to changes in these assumptions. A sensitivity analysis of changes in defined benefit obligations due to a reasonably possible change in these assumptions is set out in Note 23.
Ineffectiveness on fuel hedge derivatives
As part of its risk management strategy (as explained in more detail within Note 33), Emirates plans a monthly schedule of its highly probable forecast purchases of jet fuel and hedges a portion of these purchases. Emirates generally hedges the crude oil element of jet fuel by entering into net cash settled crude oil forward contracts of the same maturity. Following the outbreak and rapid global spread of COVID-19, Emirates
100 5. RevenueOVERVIEW 5. Revenue 7. Operating costs 7. Operating costs EMIRATES 2020 2019 2020 2019 2020 2019 2020 2019 AED m AED m AED m AED m DNATA AED m AED m AED m AED m Passenger 75,587 78,562 Jet fuel Jet fuel 26,260 30,768 26,260 30,768 GROUP Passenger 75,587 78,562 Depreciation and amortisationDepreciation (see (a) below) and amortisation (see 19,444 (a) below) 9,680 19,444 9,680 Cargo Cargo 11,207 13,056 11,207 13,056 FINANCIAL Employee (see (b) below) Employee (see (b) below) 12,058 12,623 12,058 12,623 ConsumerINFORMATION goods Consumer goods 1,472 1,591 1,472 1,591 Sales and marketing Sales and marketing 5,516 6,137 5,516 6,137 Catering operations 637 654 EMIRATES Catering operations 637 654 Handling 5,274 5,544 FINANCIAL Handling 5,274 5,544 Food andCOMMENTARY beverage 636 673 Food and beverage 636 673 In-flight catering In-flight catering 3,182 3,519 3,182 3,519 Hotel operations 584 669 DNATA Hotel operations 584 669 Overflying Overflying 2,537 2,761 2,537 2,761 Excess baggageFINANCIAL 478 444 COMMENTARY Excess baggage 478 444 Aircraft maintenance Aircraft maintenance 2,162 2,413 2,162 2,413 Others 394 391 Facilities and IT related costs 2,156 2,626 EMIRATES Others 394 391 Facilities and IT related costs 2,156 2,626 CONSOLIDATED 90,995 96,040 Landing and parking Landing and parking 2,155 2,231 2,155 2,231 FINANCIAL 90,995 96,040 STATEMENTS Cost of goods sold Cost of goods sold 1,431 1,588 1,431 1,588 Crew layover 1,026 1,094 6. OtherDNATA operating income Crew layover 1,026 1,094 CONSOLIDATED 6. Other operating income Foreign exchange loss - net - 333 FINANCIAL Foreign exchange loss - net - 333 Other operating income comprises AED 239 m (2019: AED 906 m) from liquidated STATEMENTS Other operating income comprises AED 239 m (2019: AED 906 m) from liquidated Aircraft operating leases Aircraft operating leases - 11,650 - 11,650 damages and other compensationsdamages received and other in connection compensations with receivedaircraft and in connection related with aircraft and related Other operating costs 394 314 ADDITIONAL Other operating costs 394 314 operationalINFORMATION matters, AED 153operational m (2019: Nil) matters, being AED a net 153 foreign m (2019: exchange Nil) being gain, a Nil net foreign exchange gain, Nil Corporate overheads (see (c) below)Corporate overheads (see (c) below) 1,969 1,979 1,969 1,979 amortisation of gains on saleamortisation and leaseback of gains of aircraft, on sale aircraft and leaseback engines and of aircraft, parts aircraft engines and parts 85,564 95,260 85,564 95,260 (2019: AED 324 m) and income(2019: of AED AED 324 585 m) m and (2019: income AED 637 of AED m) from 585 m ancillary (2019: AED 637 m) from ancillary services and activities incidental to Emirates' operations. services and activities incidental to Emirates' operations. (a) Depreciation and amortisation(a) Depreciation includes depreciation and amortisation expense includes of AED depreciation 9,602 m expense of AED 9,602 m (2019: AED 9,500 m) on property,(2019: plant AED and 9,500 equipment m) on property, and AED plant 9,392 and m equipment on right-of- and AED 9,392 m on right-of- use assets and the amortisationuse charge assets of and AED the 450 amortisation m (2019: AED charge 180 of m) AED on intangible450 m (2019: AED 180 m) on intangible assets. assets.
(b) Employee costs include AED(b) Employee 762 m (2019: costs AED include 742 AEDm) in 762 respect m (2019: of retirement AED 742 m) in respect of retirement benefit obligations (Note 23 (a)).benefit obligations (Note 23 (a)).
(c) Corporate overheads include(c) Corporate a net charge overheads of AED include 41 m a(2019: net charge AED 26 of m) AED in 41 m (2019: AED 26 m) in respect of impairment losses forrespect trade of receivables impairment (Note losses 18). for trade receivables (Note 18).
(d) Operating costs include expenses(d) Operating related costs to short include term expenses leases of related AED 337 to short m, non term leases of AED 337 m, non index based variable lease paymentsindex based of AED variable 83 m leaseand low payments value leases of AED of 83AED m 63 and m. low value leases of AED 63 m.
101 8. FinanceOVERVIEW income and costs 9. Other financial gains / (losses) 8. Finance income and costs 9. Other financial gains / (losses) EMIRATES 2020 2019 2020 2019 Other financial gains / (losses) comprise of AED 601 m (2019: Nil) of realised gains on AED m AED m Other financial gains / (losses) comprise of AED 601 m (2019: Nil) of realised gains on DNATA AED m AED m currency derivatives not qualifying for hedge accounting and AED 1,098 m (2019: Nil) currency derivatives not qualifying for hedge accounting and AED 1,098 m (2019: Nil) Finance income of losses relating to hedge ineffectiveness on jet fuel forward contracts designated as GROUP Finance income of losses relating to hedge ineffectiveness on jet fuel forward contracts designated as Interest income on bank deposits: cash flow hedges. Interest income on bank deposits: cash flow hedges. FINANCIAL Related parties (Note 32) 341 305 INFORMATION Related parties (Note 32) 341 305 Others 251 191 10. Income tax expense EMIRATES Others 251 191 10. Income tax expense FINANCIAL 2020 2019 COMMENTARY 2020 2019 Other interest income: AED m AED m Other interest income: AED m AED m DNATA Interest income from Joint ventures (Note 32) - 1 FINANCIAL Interest income from Joint ventures (Note 32) - 1 Current income tax expense 78 59 COMMENTARY Current income tax expense 78 59 592 497 Deferred income tax (Note 26) (12) (2) 592 497 Deferred income tax (Note 26) (12) (2) EMIRATES Finance costs 66 57 CONSOLIDATED Finance costs 66 57 Interest FINANCIALexpense on lease liabilities: STATEMENTS Interest expense on lease liabilities: Aircraft (2,977) (1,450) Emirates has secured tax exemptions by virtue of double taxation agreements and DNATA Aircraft (2,977) (1,450) Emirates has secured tax exemptions by virtue of double taxation agreements and Non-aircraftCONSOLIDATED (166) (70) airline reciprocal arrangements in most of the jurisdictions in which it operates. Non-aircraft (166) (70) airline reciprocal arrangements in most of the jurisdictions in which it operates. FINANCIAL Therefore, the income tax expense relates only to certain overseas stations of STATEMENTS Therefore, the income tax expense relates only to certain overseas stations of Emirates' operations and its subsidiaries where Emirates is subject to income tax. The Interest ADDITIONALexpense on bonds and term loans (1,838) (455) Emirates' operations and its subsidiaries where Emirates is subject to income tax. The Interest expense on bonds and term loans (1,838) (455) respective tax charges are consistent with the statutory tax rate in these jurisdictions. INFORMATION respective tax charges are consistent with the statutory tax rate in these jurisdictions. Providing detailed information on effective tax rates is therefore not meaningful. Other finance costs (380) (198) Providing detailed information on effective tax rates is therefore not meaningful. Other finance costs (380) (198) (5,361) (2,173) (5,361) (2,173) Finance costs - net (4,769) (1,676) Finance costs - net (4,769) (1,676)
Interest expense on bonds and term loans includes interest on borrowings related to Interest expense on bonds and term loans includes interest on borrowings related to assets subject to financing agreements which are 'in-substance purchases' as defined assets subject to financing agreements which are 'in-substance purchases' as defined in Emirates' accounting policies. The prior year expense of AED 1,450 m was in Emirates' accounting policies. The prior year expense of AED 1,450 m was presented within interest expense on lease liabilities in the year ended 31 March 2019 presented within interest expense on lease liabilities in the year ended 31 March 2019 as the related balances are presented within lease liabilities in the consolidated as the related balances are presented within lease liabilities in the consolidated statement of financial position as at 31 March 2019. See (Note 22 (b)) for further statement of financial position as at 31 March 2019. See (Note 22 (b)) for further details. details.
Finance costs include an amount of AED 239 m (2019: AED 10 m) on borrowings and Finance costs include an amount of AED 239 m (2019: AED 10 m) on borrowings and lease liabilities from companies under common control (Note 32). lease liabilities from companies under common control (Note 32).
102 11. SegmentOVERVIEW information 11. Segment information The segment information forThe the segment year ended information 31 March for 2020 the isyear as follows:ended 31 March 2020 is as follows:
EMIRATES Emirates' leadership team monitorsEmirates' theleadership operating team results monitors of its business the operating units forresults the of its business units for the DNATA Catering Recon-Catering Recon- purpose of making decisionspurpose about resource of making allocation decisions and about performance resource allocationassessment. and performance assessment. Airline operations OtherAirlineciliationoperations Total Other ciliation Total GROUP The airline business unit, whichThe airline provides business commercial unit, which air transportation provides commercial including air transportation including AED m AED m AED mAED m AED m AED m AED AEDm m AED m AED m passenger,FINANCIAL cargo services andpassenger, excess baggage, cargo services is the main and reportable excess baggage, segment. is the Catering main reportable segment. Catering Total segment revenue Total 88,138 segment revenue 2,667 2,762 88,138 (293) 2,667 93,274 2,762 (293) 93,274 operationsINFORMATION is another reportableoperations segment is another which provides reportable in-flight segment and which institutional provides in-flight and institutional Inter-segment revenue Inter-segment - revenue(2,030) (249) - - (2,030)(2,279) (249) - (2,279) cateringEMIRATES services. 'Other' comprisescatering of services. various 'Other' businesses comprises not allocated of various to a businesses reportable not allocated to a reportable Revenue from external Revenue from external segmentFINANCIAL primarily in relationsegment to hotel operationsprimarily in and relation the sale to hotel of consumer operations goods, and the food sale of consumer goods, food COMMENTARY customers customers 88,138 637 2,513 88,138 (293) 637 90,995 2,513 (293) 90,995 and beverages. and beverages. DNATA Segment profit for the year Segment 801 profit for the184 year 203 801 - 184 1,188 203 - 1,188 FINANCIAL The performanceCOMMENTARY of the airlineThe and performance catering operations of the airline is evaluated and catering based operations on segment is evaluated based on segment Finance income Finance 588 income 8 - 588 (4) 8 592 - (4) 592 revenue and profit or loss. Segmentrevenue profit and profit or loss or is loss. measured Segment consistently profit or loss with is profit measured for consistently with profit for EMIRATES Finance costs Finance(5,344) costs (2) (19)(5,344) 4 (2) (5,361) (19) 4 (5,361) the yearCONSOLIDATED in the consolidated financialthe year statements. in the consolidated financial statements. Income tax (expense) / Income tax (expense) / FINANCIAL STATEMENTS credit credit (81) - 15 (81) - - (66) 15 - (66) Segment revenue is measuredSegment in a manner revenue consistent is measured with in that a manner in the consolidatedconsistent with that in the consolidated Depreciation and Depreciation and incomeDNATA statement, with theincome exception statement, of notional with revenues the exception and costs of notional in the airline revenues and costs in the airline CONSOLIDATED amortisation amortisation(18,942) (195) (307)(18,942) - (195)(19,444) (307) - (19,444) segmentFINANCIAL arising from the usagesegment of transportation arising from services the usage e.g. of leave transportation passage of services staff and e.g. leave passage of staff and STATEMENTS Share of results of Share of results of duty travel of staff and consultantsduty travel that areof staff eliminated and consultants when preparing that are the eliminated consolidated when preparing the consolidated investments accounted for investments accounted for financialADDITIONAL statements. This adjustmentfinancial is statements. presented This as a adjustment reconciling is item. presented The breakdown as a reconciling item. The breakdown INFORMATION using the equity method using the - equity method - 112 - - - 112 112 - 112 of revenue from external customersof revenue by nature from externalof business customers activity byis provided nature of in business Note 5. activity is provided in Note 5. Segment assets Segment 163,460 assets 3,098 6,202 163,460 (698) 3,098 172,062 6,202 (698) 172,062 Segment assets include inter-segmentSegment assets loans include and receivables, inter-segment which loans are eliminated and receivables, on which are eliminated on Investments accounted for Investments accounted for consolidation. This consolidationconsolidation. adjustment This is presented consolidation as a reconcilingadjustment item.is presented as a reconciling item. using the equity method using the - equity method - 691 - - - 691 691 - 691 Additions to property, plant Additions to property, plant and equipment and equipment 8,687 69 71 8,687 - 69 8,827 71 - 8,827 Additions to right-of-use- Additions to right-of-use- assets assets 1,748 - 4 8 1,748 - - 1,796 4 8 - 1,796 Additions to intangible Additions to intangible assets assets 3,023 5 15 3,023 - 5 3,043 15 - 3,043
See Note 13 for details aboutSee theNote impact 13 offor adoption details about of IFRS the 16 impact on the of segment adoption assets of IFRS 16 on the segment assets as at 31 March 2020. as at 31 March 2020.
103 11. SegmentOVERVIEW information (continued)11. Segment information (continued) Geographical information Geographical information EMIRATES 2020 2019 2020 2019 The segment information forThe the segment year ended information 31 March for 2019 the yearis as endedfollows: 31 March 2019 is as follows: AED m AED m DNATA AED m AED m Revenue from external customers:Revenue from external customers: GROUP Catering Recon-Catering Recon- Airline operations Other ciliation Total Europe Europe 26,121 28,258 26,121 28,258 FINANCIAL Airline operations Other ciliation Total INFORMATION AED m AED m AED AEDm m AED m AED m AED AED m m AED m AED m East Asia and Australasia East Asia and Australasia 24,134 26,599 24,134 26,599
Total segmentEMIRATES revenue Total 92,953 segment revenue 2,820 2,979 92,953 (302) 2,820 98,450 2,979 (302) 98,450 Americas Americas 14,632 14,453 14,632 14,453 FINANCIAL Inter-segmentCOMMENTARY revenue Inter-segment - revenue(2,166) (244) - -(2,166)(2,410) (244) - (2,410) West Asia and Indian Ocean West Asia and Indian Ocean 9,764 9,364 9,764 9,364 Revenue from external Revenue from external DNATA Africa Africa 8,691 9,074 8,691 9,074 customersFINANCIAL customers 92,953 654 2,735 92,953 (302) 654 96,040 2,735 (302) 96,040 COMMENTARY Gulf and Middle East Gulf and Middle East 7,653 8,292 7,653 8,292 Segment profit for the year Segment 486 profit for the 208 year 336 486 - 208 1,030 336 - 1,030 9 0,995 90,995 96,040 90,995 96,040 FinanceEMIRATES income Finance 492 income 8 2 492 (5) 8 497 2 (5) 497 CONSOLIDATED FinanceFINANCIAL costs Finance(2,172) costs - (6)(2,172) 5 - (2,173) (6) 5 (2,173) STATEMENTS Revenue from inbound andRevenue outbound from airline inbound operations and outbound between airline the UAE operations and the between the UAE and the Income tax (expense) / Income tax (expense) / overseas point is attributedoverseas to the geographical point is attributed area in to which the geographicalthe respective area overseas in which the respective overseas credit DNATA credit (68) - 11 (68) - - (57) 11 - (57) CONSOLIDATED points are located. Revenuepoints from are other located. segments Revenue is reported from other based segments upon the is reported based upon the DepreciationFINANCIAL and Depreciation and STATEMENTS geographical area in which salesgeographical are made area or services in which are sales rendered. are made or services are rendered. amortisation amortisation(9,355) (146) (179)(9,355) - (146)(9,680) (179) - (9,680) ADDITIONAL Share ofINFORMATION results of Share of results of The major revenue earning assetThe major is the revenueaircraft fleet, earning which asset is registered is the aircraft in the fleet, UAE. which Since is registered in the UAE. Since investments accounted for investments accounted for the aircraft fleet is deployedthe aircraft flexibly fleet across is Emirates' deployed route flexibly network, across providing Emirates' route network, providing using the equity method using the - equity method - 116 - - - 116 116 - 116 information on non-current assetsinformation by geographical on non-current areas assets is not byconsidered geographical meaningful. areas is not considered meaningful. Segment assets Segment 119,489 assets 3,072 5,522 119,489 (685) 3,072 127,398 5,522 (685) 127,398 Investments accounted for Investments accounted for No single external customer Nocontributes single external 10% or customer more of Emirates'contributes revenues. 10% or more of Emirates' revenues. - - 683 - 683 using the equity method using the equity method - - 683 - 683 Prior year numbers have been reclassifed to conform with the current year presentation Prior year numbers have beenPrior reclassified year numbers to conform have been with reclassifedthe current to year conform presentation with the current year presentation Additions to property, plant Additions to property, plant and in line withwith internalinternal organisationorganisationand in line structure. structure. with internal organisation structure. and equipment and 12,915equipment 191 72 12,915 - 191 13,178 72 - 13,178 Additions to intangible Additions to intangible assets assets 253 3 3 253 - 3 259 3 - 259 Additions to advance lease Additions to advance lease rentals rentals 169 - - 169 - - 169 - - 169
104 OVERVIEW 12. Property, plant and equipment
EMIRATES Aircraft Aircraft and Other DNATA spare engine Land property,
GROUP engines overhaul and plant and Capital Aircraft and parts events buildings equipment projects Total FINANCIAL AED m AED m AED m AED m AED m AED m AED m INFORMATION Cost EMIRATES FINANCIAL 31 March 2019 91,837 7,002 11,412 16,352 7,239 3,339 137,181 COMMENTARY Assets held under leases transferred to right-of-use assets (Note 13) - - - (2,768) - - (2,768) DNATA FINANCIAL Adjusted 1 April 2019 (Note 2) 91,837 7,002 11,412 13,584 7,239 3,339 134,413 COMMENTARY Additions - 197 1,450 22 195 6,963 8,827 EMIRATES CONSOLIDATED Acquisitions (Note 34) - - - - 64 23 87 FINANCIAL STATEMENTS Transfer from capital projects 6,849 160 - 28 197 (7,234) - Disposals / write-offs - (222) (1,888) - (395) - (2,505) DNATA CONSOLIDATED Currency translation differences - - - (47) (2) - (49) FINANCIAL STATEMENTS 31 March 2020 98,686 7,137 10,974 13,587 7,298 3,091 140,773
ADDITIONAL Accumulated depreciation INFORMATION 31 March 2019 29,054 2,285 6,201 5,163 5,047 - 47,750 Assets held under leases transferred to right-of-use assets (Note 13) - - - (320) - - (320) Adjusted 1 April 2019 (Note 2) 29,054 2,285 6,201 4,843 5,047 - 47,430 Charge for the year 5,669 542 2,409 443 539 - 9,602 Acquisitions (Note 34) - - - - 29 - 29 Disposals / write-offs - (88) (1,886) - (379) - (2,353) Currency translation differences - - - (18) (1) - (19) 31 March 2020 34,723 2,739 6,724 5,268 5,235 - 54,689 Net book amount 31 March 2020 63,963 4,398 4,250 8,319 2,063 3,091 86,084
The net book amount of aircraft includes an amount of AED 57,233 m (2019: AED 57,218 m) in respect of assets provided as security against financing obligations.
Land of AED 568 m (2019: AED 983 m) is carried at cost and is not depreciated. On adoption of IFRS 16, land of AED 413 m was transferred to right-of-use assets.
105 OVERVIEW 12. Property, plant and equipment (continued)
EMIRATES Property, plant and equipment includes interest capitalised during the year amounting to AED 35 m (2019: AED 121 m). The interest on general DNATA borrowings for qualifying assets was capitalised using an annual weighted average capitalisation rate of 4.1% (2019: 4.0%).
GROUP Capital projects include pre-delivery payments of AED 2,165 m (2019: AED 2,579 m) in respect of aircraft due for delivery between 2021 and FINANCIAL 2030. INFORMATION Additional categories within property, plant and equipment have been presented in the year ended 31 March 2020, comparative balances for EMIRATES FINANCIAL the year ended 31 March 2019 have also been presented in a consistent format, there is no change to the overall net book amount of property, COMMENTARY plant and equipment as at 31 March 2019. DNATA FINANCIAL Aircraft Aircraft and Other COMMENTARY spare engine Land property, EMIRATES engines overhaul and plant and Capital CONSOLIDATED FINANCIAL Aircraft and parts events buildings equipment projects Total STATEMENTS AED m AED m AED m AED m AED m AED m AED m DNATA CONSOLIDATED Cost FINANCIAL 1 April 2018 STATEMENTS 1 April 2018 80,988 7,091 9,884 14,961 7,010 7,019 126,953 Additions - 205 3,304 54 223 9,392 13,178 ADDITIONAL INFORMATION Transfer from capital projects 11,069 75 - 1,370 558 (13,072) - Disposals / write-offs (220) (369) (1,783) (6) (542) - (2,920) Currency translation differences - - 7 (27) (10) - (30) 31 March 2019 91,837 7,002 11,412 16,352 7,239 3,339 137,181 Accumulated depreciation 1 April 20182018 24,067 2,100 5,305 4,530 5,000 - 41,002 Charge for the year 5,207 444 2,633 645 571 - 9,500 Disposals / write-offs (220) (259) (1,737) (2) (519) - (2,737) Currency translation differences - - - (10) (5) - (15) 31 March 2019 29,054 2,285 6,201 5,163 5,047 - 47,750 Net book amount 31 March 2019 62,783 4,717 5,211 11,189 2,192 3,339 89,431
106 OVERVIEW 13. Right-of-use assets
EMIRATES Aircraft spare Land and DNATA Aircraft engines buildings Others Total 13. Right-of-use assets GROUP AED m AED m AED m AED m AED m Aircraft Net book amount of right-of-use assets recognised on adoption of FINANCIAL spare Land and INFORMATION IFRS 16 55,955 146 2,364 23 58,488 Aircraft engines buildings Others Total Net book amount of assets held under leases transferred from EMIRATES AED m AED m AED m AED m AED m FINANCIAL property, plant and equipment (Note 12) - - 2,448 - 2,448 COMMENTARY Net book amount of right-of-use assets recognised on adoption of IFRSNet book16 amount at 1 April 2019 (Note 2) 55,95555,955 146 4,812 2,364 23 60,93658,488 DNATA FINANCIAL NetAdditions book amount of assets held under leases transferred from - - 1,796 - 1,796 COMMENTARY property,Remeasurements plant and equipment (Note 12) (430) - 33 - 2,448 49 - 2,448(348) EMIRATES NetDepreciation book amount charge at for 1 Aprilthe year 2019 (Note 2) 55,955(8,182) 146 (91) (1,114)4,812 23 (5) 60,936 (9,392) CONSOLIDATED FINANCIAL AdditionsNet book amount at 31 March 2020 47,343 - 88 - 5,5431,796 18 - 52,992 1,796 STATEMENTS Remeasurements (430) 33 49 - (348) DNATA Emirates leases aircraft, aircraft spare engines, land and buildings, vehicles and airport equipment among other assets. In terms of land and CONSOLIDATED Depreciation charge for the year (8,182) (91) (1,114) (5) (9,392) FINANCIAL buildings, Emirates mainly leases airport infrastructure assets, including lounges and office space, as well as other buildings used for office, STATEMENTS Net book amount at 31 March 2020 47,343 88 5,543 18 52,992 retail and staff accommodation purposes. ADDITIONAL INFORMATION EmiratesNo depreciation leases aircraft, is charged aircraft on land spare amounting engines, land to AED and 454 buildings, m (2019: vehicles AED 413 and m airport presented equipment in Note among 12) as the other legal assets. title willIn terms be transferred of land and to buildings,Emirates upon Emirates completion mainly leasesof the airportlease term. infrastructure assets, including lounges and office space, as well as other buildings used for office, retail and staff accommodation purposes. Following the outbreak of COVID-19, Emirates conducted an impairment review in respect of property, plant and equipment and right-of- The net book amount of right-of-use assets pertains to the following segments: Nouse depreciationassets. For impairment is charged testing on land purposes amounting discounted to AED 454 cash m flows (2019: AEDhave 413taken m into presented account in the Note period 12) as that the Emirates legal title expects will be to transferred be impacted to by COVID-19 followed by long term growth rate not exceeding 2%. A discount rate of 7% has been applied to the cash flows. A reasonably Emirates upon completion of the lease term. possible change in any of the key assumptions would not lead to an impairment 2020 charge. AED m The net book amount of right-of-use assets pertains to the following segments: Airline 52,691 Catering operations 2020 28 Other AED AED 273 m m Airline 52,99252,691 Catering operations 28 Other 273 52,992
107 OVERVIEW 14. Intangible assets
EMIRATES
DNATA Service Trade Contractual Computer Goodwill rights names rights software Total GROUP AED m AED m AED m AED m AED m AED m
FINANCIAL Cost INFORMATION 1 April 2019 609 282 19 56 1,816 2,782 EMIRATES Additions - - - 2,821 222 3,043 FINANCIAL Aquisitions (Note 34) COMMENTARY Acquisition (Note 34) 209 - - - - 209 Disposals - - - (1) (11) (12) DNATA FINANCIAL Currency translation differences - - - - (2) (2) COMMENTARY 31 March 2020 818 282 19 2,876 2,025 6,020
EMIRATES Accumulated amortisation CONSOLIDATED 1 April 2019 FINANCIAL 1 April 2019 - 175 10 26 997 1,208 STATEMENTS Amortisation for the year - 15 1 223 211 450
DNATA Disposals - - - (1) (9) (10) CONSOLIDATED Currency translation differences - - - - (1) (1) FINANCIAL STATEMENTS 31 March 2020 - 190 11 248 1,198 1,647 Net book value ADDITIONAL INFORMATION 31 March 2020 818 92 8 2,628 827 4,373
Computer software includes an amount of AED 221 m (2019: AED 291 m) in respect of projects under implementation.
For the purpose of testing goodwill impairment, the recoverable amounts for cash generating units have been determined on the basis of value-in-use calculations using cash flow forecasts approved by management covering a three year period, adjusted for Emirates' view of the impact of COVID-19 on the results of the cash generating units. Cash flows beyond the three year period have been extrapolated using long term terminal growth rates. The key assumptions used in the value-in-use calculations include a risk adjusted pre-tax discount rate of 12% (2019: 12%), gross margins consistent with historical trends and growth rates based on management's expectations for market development. The long term terminal growth rate of 2% (2019: 2%) does not exceed the long term average growth rate for the markets in which the cash generating units operate. Any reasonably possible change to the assumptions will not lead to an impairment charge.
108 OVERVIEW 14. Intangible assets (continued)
EMIRATES The goodwill allocated to the cash generating unit or groups of cash generating units is as follows: DNATA
GROUP Cash generating unit Location Reportable segment Goodwill 2020 2019 FINANCIAL INFORMATION AED m AED m Catering operations UAE Catering operations 369 369 EMIRATES FINANCIAL Consumer goods UAE Other 212 212 COMMENTARY Food and beverage USA Other 209 - DNATA Food and beverage UAE Other 25 25 FINANCIAL COMMENTARY Food and beverage Australia Other 3 3 818 609 EMIRATES CONSOLIDATED FINANCIAL STATEMENTS Service Trade Contractual Computer
DNATA Goodwill rights names rights software Total CONSOLIDATED AED m AED m AED m AED m AED m AED m FINANCIAL STATEMENTS Cost
ADDITIONAL 11 AprilApril 20182018 609 282 19 57 1,557 2,524 INFORMATION Additions - - - - 259 259 Currency translation differences - - - (1) - (1) 31 March 2019 609 282 19 56 1,816 2,782 Accumulated amortisation 11 AprilApril 20182018 - 156 9 21 842 1,028 Amortisation for the year - 19 1 5 155 180 31 March 2019 - 175 10 26 997 1,208 Net book value 31 March 2019 609 107 9 30 819 1,574
109 OVERVIEW 15. Investments in subsidiaries, associates and joint ventures EMIRATES Country of Percentage of incorporation DNATA beneficial Percentage of and principal GROUP interest equity owned Principal activities operations
FINANCIAL Principal subsidiaries INFORMATION Emirates Flight Catering Company L.L.C. 90 90 In-flight and institutional catering UAE EMIRATES Wholesale and retail of consumer FINANCIAL COMMENTARY Maritime & Mercantile International L.L.C. 68.7 68.7 goods UAE
DNATA Emirates Leisure Retail L.L.C. 68.7 68.7 Food and beverage operations UAE FINANCIAL COMMENTARY Emirates Leisure Retail (Singapore) Pte Ltd. 100 100 Food and beverage operations Singapore Emirates Leisure Retail (Australia) Pty Ltd. 100 100 Food and beverage operations Australia EMIRATES CONSOLIDATED Emirates Hotel L.L.C. 100 100 Hotel operations UAE FINANCIAL STATEMENTS Emirates Hotels (Australia) Pty Ltd. 100 100 Hotel operations Australia
DNATA Acquired during the year: CONSOLIDATED FINANCIAL Air Ventures LLC. 75 75 Food and beverage operations USA STATEMENTS None of the subsidiaries have non-controlling interests that are material to Emirates. ADDITIONAL INFORMATION Principal joint ventures Emirates-CAE Flight Training L.L.C. 50 51 Flight simulator training UAE Premier Inn Hotels L.L.C. 51 51 Hotel operations UAE Wholesale and retail of consumer Arabian Harts International Limited 50 50 goods UAE
Premier Inn Hotels L.L.C. is subject to joint control and is therefore accounted for as a joint venture.
110 15. Investments in subsidiaries,15. Investmentsassociates and in subsidiaries,joint ventures associates (continued) and joint ventures (continued) OVERVIEW 15. Investments in subsidiaries, associates and joint ventures (continued) 16. Advance lease rentals 16. Advance lease rentals 16. Advance lease rentals EMIRATES 2020 2019 Movement of investments accountedMovement for of usinginvestments the equity accounted method for using the equity method 2020 2019 2020 2019 DNATA Movement of investments accounted for using the equity method AED m AED m AED m AED m 2020 2019 2020 2019 AED m AED m 2020 2019 GROUP AED m AED m AED m AED m Balance brought forward Balance brought forward 5,221 5,651 5,221 5,651 AED m AED m Balance brought forward 5,221 5,651 Impact on adoption of IFRS 16 (Note 2) (5,221) - BalanceFINANCIAL brought forward Balance brought forward 683 662 683 662 Impact on adoption of IFRS 16 (Note 2) (5,221) Impact on adoption of IFRS 16 (Note 2) (5,221) INFORMATION Balance brought forward 683 662 Adjusted 1 April 2019 - 5,651 Impact on adoption of IFRS 16Impact (Note on2) adoption of IFRS 16 (Note 2) (10) - (10) - Adjusted 1 April 2019 - 5,651 Adjusted 1 April 2019 - 5,651 EMIRATES Impact on adoption of IFRS 16 (Note 2) (10) - Additions during the year - 169 Adjusted 1 April 2019 Adjusted 1 April 2019 673 662 673 662 Additions during the year - 169 FINANCIAL Additions during the year - 169 COMMENTARY Adjusted 1 April 2019 673 662 Charge for the year - (599) Investments during the year Investments during the year 21 74 21 74 Charge for the year - (599) Charge for the year - (599) DNATA Investments during the year 21 74 Balance carried forward - 5,221 Share of results Share of results 112 116 112 116 Balance carried forward - 5,221 FINANCIAL Balance carried forward - 5,221 COMMENTARY Share of results 112 116 Dividends Dividends (113) (126) (113) (126) Dividends (113) (126) DisposalsEMIRATES during the year Disposals during the year - (38) - (38) CONSOLIDATED Disposals during the year - (38) CurrencyFINANCIAL translation differencesCurrency translation differences (2) (5) (2) (5) STATEMENTS Currency translation differences (2) (5) Balance carried forward Balance carried forward 691 683 691 683 DNATA Balance carried forward 691 683 CONSOLIDATED No individualFINANCIAL associate is materialNo individual to Emirates. associate The aggregate is material financial to Emirates. information The aggregate of financial information of STATEMENTS No individual associate is material to Emirates. The aggregate financial information of associates is set out below: associates is set out below: ADDITIONAL associates is set out below: INFORMATION 2020 2019 2020 2019 2020 2019 AED m AED m AED m AED m AED m AED m Share of results of associates Share of results of associates 64 70 64 70 Share of total comprehensiveShare income ofof resultstotal of associate comprehensive of associatess income 64of associate s 70 64 70 Share of total comprehensive income of associates 64 70 Aggregate carrying value ofAggregate investments carrying in associates value of investments 48 in associates 48 48 48 Aggregate carrying value of investments in associates 48 48 No individual joint venture isNo materialindividual to Emirates. joint venture The aggregate is material financial to Emirates. information The aggregate financial information No individual joint venture is material to Emirates. The aggregate financial information of joint ventures is set out below:of joint ventures is set out below: of joint ventures is set out below: 2020 2019 2020 2019 2020 2019 AED m AED m AED m AED m AED m AED m Share of results of joint venturesShare of results of joint ventures 48 46 48 46 Share of results of joint ventures 48 46 Share of total comprehensiveShare income of total of joint comprehensive ventures income 48of joint ventures 46 48 46 Aggregate carrying value ofAggregateShare investments of total carrying incomprehensive joint value of investments income of joint in joint ventures 48 46 Aggregate carrying value of investments in joint ventures ventures 643 635 643 635 ventures 643 635
111 18. Trade and other receivables OVERVIEW 17. Inventories 18. Trade and other receivables 17. Inventories 2020 2019 EMIRATES 2020 2019 2020 2019 2020 2019 AED m AED m DNATA AED m AED m AED m AED m AED m AED m Trade receivables - net of provision 2,296 5,770 GROUP In-flight consumables 1,401 1,378 Trade receivables - net of provision 2,296 5,770 In-flight consumables 1,401 1,378 Prepayments 944 2,886 Consumer goods 639 540 Prepayments 944 2,886 ConsumerFINANCIAL goods 639 540 Related parties (Note 32) 146 187 INFORMATION Engineering 484 453 Related parties (Note 32) 146 187 Engineering 484 453 Lease and other deposits 302 508 EMIRATES Others 146 154 Lease and other deposits 302 508 Others FINANCIAL 146 154 Other receivables 1,287 1,528 COMMENTARY 2,670 2,525 Other receivables 1,287 1,528 2,670 2,525 4,975 10,879 DNATA 4,975 10,879 FINANCIAL In-flight consumables include AED 974 m (2019: AED 964 m) relating to items which Less: Receivables over one year (192) (139) In-flightCOMMENTARY consumables include AED 974 m (2019: AED 964 m) relating to items which Less: Receivables over one year (192) (139) are not expected to be consumed within twelve months after the reporting period. 4,783 10,740 are not expectedEMIRATES to be consumed within twelve months after the reporting period. 4,783 10,740 CONSOLIDATED Prepayments include Nil amount (2019: AED 55 m) paid to companies under common FINANCIAL Prepayments include Nil amount (2019: AED 55 m) paid to companies under common STATEMENTS control. control. DNATA The carrying amounts of trade, related party and other receivables approximate their CONSOLIDATED The carrying amounts of trade, related party and other receivables approximate their FINANCIAL fair values which falls into level 3 of the fair value hierarchy. Any change to the STATEMENTS fair values which falls into level 3 of the fair value hierarchy. Any change to the valuation method will not result in a significant change to the fair value of these valuation method will not result in a significant change to the fair value of these ADDITIONAL receivables. INFORMATION receivables. Receivables over one year include prepayments and other receivables. Receivables over one year include prepayments and other receivables. Movements in the provision for impairment of trade receivables are as follows: Movements in the provision for impairment of trade receivables are as follows: 2020 2019 2020 2019 AED m AED m AED m AED m Balance brought forward 69 81 Balance brought forward 69 81 Charge for the year 82 68 Charge for the year 82 68 Unused amounts reversed (41) (42) Unused amounts reversed (41) (42) Amounts written off as uncollectible (13) (32) Amounts written off as uncollectible (13) (32) Currency translation differences (3) (6) Currency translation differences (3) (6) Balance carried forward 94 69 Balance carried forward 94 69
112 18. TradeOVERVIEW and other receivables (continued) 18. Trade and other receivables (continued) 19. Short term bank deposits19. and Short cash term and bankcash equivalentsdeposits and cash and cash equivalents EMIRATES The net provision for impairment losses for trade receivables AED 41 m (2019: AED 26 The net provision for impairment losses for trade receivables AED 41 m (2019: AED 26 2020 2019 2020 2019 m) is includedDNATA in operating costs (Note 7). m) is included in operating costs (Note 7). AED m AED m AED m AED m GROUP Bank deposits Bank deposits 16,661 14,413 16,661 14,413 For the purpose of calculatingFor expected the purpose credit of losses, calculating Emirates expected categorises credit its losses, trade Emirates categorises its trade FINANCIAL Cash and bank 3,588 2,624 receivablesINFORMATION by IATA agents, creditreceivables card service by IATA providers agents, credit and others. card service Expected providers credit and others. Expected credit Cash and bank 3,588 2,624 loss allowances are less than 1.5%loss allowancesacross these are categories. less than 1.5% across these categories. Cash and bank balances Cash and bank balances 20,249 17,037 20,249 17,037 EMIRATES FINANCIAL Less: Short term bank depositsLess: - with Short original term maturitybank deposits of - with original maturity of The impairmentCOMMENTARY charge on tradeThe impairment receivables chargerecognised on trade in the receivables consolidated recognised income in the consolidated income more than 3 months more than 3 months (12,017) (11,974) (12,017) (11,974) statement during the year primarily relates to ticketing agents who are in unexpected DNATA statement during the year primarily relates to ticketing agents who are in unexpected Cash and cash equivalents asCash per andthe consolidatedcash equivalents as per the consolidated difficultFINANCIAL economic situations anddifficult are unableeconomic to meetsituations their and obligations are unable under to meet the IATA their obligations under the IATA COMMENTARY statement of financial positionstatement of financial position 8,232 5,063 8,232 5,063 agency programme. This chargeagency is included programme. in operating This charge costs. is Amountsincluded in charged operating to costs. Amounts charged to Bank overdraft (Note 22) - (29) the provisionEMIRATES account are writtenthe provisionoff when thereaccount is no are expectation written off ofwhen further there recovery. is no expectation of further recovery. Bank overdraft (Note 22) - (29) CONSOLIDATED Cash and cash equivalents as per the consolidated FINANCIAL Cash and cash equivalents as per the consolidated STATEMENTS statement of cash flows statement of cash flows 8,232 5,034 8,232 5,034 Expected credit losses for relatedExpected party credit and other losses receivables for related are party less and than other 1% asreceivables the are less than 1% as the balancesDNATA are held with companiesbalances with are high held credit with ratings companies and are with short high term credit in natureratings and are short term in nature Cash and bank balances earnedCash an and effective bank balances interest earnedrate of an3.4% effective (2019: interest3.4%) per rate of 3.4% (2019: 3.4%) per CONSOLIDATED and noFINANCIAL significant balancesand are no overdue. significant These balances receivables are overdue.are presented These net receivables of are presented net of annum. annum. provision.STATEMENTS provision. Cash and bank balances includeCash and AED bank 8,352 balances m (2019: include AED 11,338 AED 8,352 m) held m (2019: with AED 11,338 m) held with ADDITIONAL companies under common control. The maximumINFORMATION exposure to creditThe maximum risk of trade, exposure related to party credit and risk other of trade, receivables related at party and other receivables at companies under common control. the reporting date is the carryingthe reportingvalue of each date class is the of carrying receivable. value of each class of receivable.
The ageing of trade receivablesThe that ageing are past of trade due butreceivables not impaired that are is aspast follows: due but not impaired is as follows:
2020 2019 2020 2019 AED m AED m AED m AED m
Below 3 months Below 3 months 564 352 564 352 3-6 months 3-6 months 56 57 56 57 Above 6 months Above 6 months 39 27 39 27 659 436 659 436
For further details on credit riskFor management, further details refer on creditNote 33.risk management, refer Note 33.
113 OVERVIEW 20. Capital
EMIRATES Capital represents the permanent capital of Emirates. DNATA
GROUP 21. Other reserves
FINANCIAL Cash flow Translation INFORMATION hedge reserve reserve Total EMIRATES AED m AED m AED m FINANCIAL COMMENTARY 1 April 2018 12 3 15 DNATA Currency translation differences - (17) (17) FINANCIAL COMMENTARY Net loss on fair value of cash flow hedges (102) - (102)
EMIRATES Transferred to the consolidated income statement upon settlement 31 13 44 CONSOLIDATED FINANCIAL 31 March 2019 (59) (1) (60) STATEMENTS Currency translation differences - (11) (11) DNATA CONSOLIDATED Net loss on fair value of cash flow hedges (6,499) - (6,499) FINANCIAL STATEMENTS Hedge ineffectiveness transferred to the consolidated income statement 1,098 - 1,098 Transferred to the consolidated income statement upon settlement (229) - (229) ADDITIONAL INFORMATION 31 March 2020 (5,689) (12) (5,701)
The amounts transferred to the consolidated income statement upon settlement have been (debited) / credited to the following line items:
2020 2019 AED m AED m
Revenue 1 - Operating costs 236 - Finance costs (8) (31) Other operating income - (13) 229 (44)
114 22. BorrowingsOVERVIEW and lease liabilities22. Borrowings and lease liabilities 22 (a). Lease liabilities 22 (a). Lease liabilities
EMIRATES 2020 2019 2020 2019 2020 2019 2020 2019 DNATA AED m AED m AED m AED m AED m AED m AED m AED m
Non-currentGROUP Non-current Balance brought forward Balance brought forward 39,510 40,374 39,510 40,374 Lease liabilities (Note 22 (a)) Lease liabilities (Note 22 (a)) 46,333 34,050 46,333 34,050 FINANCIAL Impact on adoption of IFRS 16Impact (Note on2) adoption of IFRS 16 (Note 60,765 2) - 60,765 - INFORMATION Term loans (Note 22 (b)) Term loans (Note 22 (b)) 41,204 7,377 41,204 7,377 Transferred to term loans (NoteTransferred 22 (b)) to term loans (Note 22 (b))(37,995) - (37,995) - Bonds (NoteEMIRATES 22 (c)) Bonds (Note 22 (c)) 3,191 4,006 3,191 4,006 Adjusted 1 April Adjusted 1 April 62,280 40,374 62,280 40,374 FINANCIAL COMMENTARY 90,728 45,433 90,728 45,433 Additions Additions 1,702 8,633 1,702 8,633 Current Current DNATA Interest Interest 3,143 - 3,143 - Lease liabilitiesFINANCIAL (Note 22 (a)) Lease liabilities (Note 22 (a)) 8,570 5,460 8,570 5,460 COMMENTARY Remeasurements Remeasurements (251) - (251) - Term loans (Note 22 (b)) Term loans (Note 22 (b)) 10,044 1,302 10,044 1,302 EMIRATES Repayments Repayments (11,777) (9,490) (11,777) (9,490) Bonds (NoteCONSOLIDATED 22 (c)) Bonds (Note 22 (c)) 815 815 815 815 FINANCIAL Currency translation differencesCurrency translation differences (194) (7) (194) (7) Bank overdraftSTATEMENTS (Note 19) Bank overdraft (Note 19) - 29 - 29 Balance carried forward Balance carried forward 54,903 39,510 54,903 39,510 DNATA 19,429 7,606 19,429 7,606 CONSOLIDATED Gross lease liabilities: Gross lease liabilities: FINANCIAL 110,157 53,039 110,157 53,039 STATEMENTS Within one year Within one year 11,291 6,913 11,291 6,913 Borrowings and lease liabilitiesBorrowings are denominated and lease in liabilitiesthe are denominated in the followingADDITIONAL currencies: following currencies: Between 2 and 5 years Between 2 and 5 years 35,617 22,822 35,617 22,822 INFORMATION US Dollar US Dollar 95,112 49,427 95,112 49,427 After 5 years After 5 years 19,227 17,244 19,227 17,244 66,135 46,979 66,135 46,979 UAE Dirham UAE Dirham 5,601 3,139 5,601 3,139 Future interest Future interest (11,232) (7,469) (11,232) (7,469) Euro Euro 4,547 444 4,547 444 Present value of lease liabilitiesPresent value of lease liabilities 54,903 39,510 54,903 39,510 Japanese Yen Japanese Yen 2,424 - 2,424 - The present value of lease liabilitiesThe present relate value to: of lease liabilities relate to: Pound Sterling Pound Sterling 2,157 29 2,157 29 Aircraft Aircraft 50,367 37,995 50,367 37,995 Others Others 316 - 316 - Non-aircraft Non-aircraft 4,536 1,515 4,536 1,515
The effective interest rate perThe annum effective on lease interest liabilities rate per was annum 5.4%, term on lease loans liabilities was 3.7% was 5.4%, term loans was 3.7% Repayable as follows: Repayable as follows: (2019: 4.6% and 3.8% for erstwhile(2019: finance 4.6% and leases) 3.8% and for bondserstwhile was finance 4.4% (2019: leases) 4.5%). and bonds was 4.4% (2019: 4.5%). Within one year (Note 22) Within one year (Note 22) 8,570 5,460 8,570 5,460 Between 2 and 5 years Between 2 and 5 years 28,847 19,092 28,847 19,092 After 5 years After 5 years 17,486 14,958 17,486 14,958 Total over one year (Note 22)Total over one year (Note 22) 46,333 34,050 46,333 34,050
115 OVERVIEW 22 (a). Lease liabilities (continued)22 (a). Lease liabilities (continued) 22 (b). Term loans 22 (b). Term loans EMIRATES 2020 2019 2020 2019 2020 2019 2020 2019 AED m AED m DNATA AED m AED m AED m AED m AED m AED m Denominated in the followingDenominated currencies: in the following currencies: GROUP Balance brought forward Balance brought forward 8,732 5,041 8,732 5,041 US Dollar US Dollar 43,175 35,940 43,175 35,940 Transferred from lease liabilities (Note 22 (a)) 37,995 - FINANCIAL Transferred from lease liabilities (Note 22 (a)) 37,995 - UAE Dirham UAE Dirham 3,994 3,126 3,994 3,126 INFORMATION Adjusted 1 April Adjusted 1 April 46,727 5,041 46,727 5,041 Euro Euro 2,837 444 2,837 444 EMIRATES Additions during the year Additions during the year 14,116 8,268 14,116 8,268 JapaneseFINANCIAL Yen Japanese Yen 2,424 - 2,424 - Acquisitions (Note 34) Acquisitions (Note 34) 37 - 37 - Pound SterlingCOMMENTARY Pound Sterling 2,157 - 2,157 - Repayments during the year (9,562) (4,577) Others DNATA Others 316 - 316 - Repayments during the year (9,562) (4,577) FINANCIAL Currency translation differencesCurrency translation differences (24) - (24) - COMMENTARY Lease liabilities include AEDLease 3,156 liabilities m (2019: include Nil) payable AED 3,156 for leases m (2019: from Nil) companies payable for leases from companies Balance carried forward Balance carried forward 51,294 8,732 51,294 8,732 under commonEMIRATES control on normalunder commercial common control terms. on normal commercial terms. CONSOLIDATED Less: Transaction costs Less: Transaction costs (46) (53) (46) (53) FINANCIAL ReconciliationSTATEMENTS of operating Reconciliationlease commitments of operating applying lease IAS commitments17 to applying IAS 17 to 51,248 8,679 51,248 8,679 lease liabilitiesDNATA measured underlease IFRS liabilities 16 at 1measured April 2019: under IFRS 16 at 1 April 2019: CONSOLIDATED FINANCIAL Term loans are repayable as follows:Term loans are repayable as follows: STATEMENTS AED m AEDAED mm Within one year (Note 22) Within one year (Note 22) 10,044 1,302 10,044 1,302 OperatingADDITIONAL lease commitments Operating disclosed lease as at commitments31 March disclosed as at 31 March Between 2 and 5 years Between 2 and 5 years 22,437 3,813 22,437 3,813 2019 applyingINFORMATION IAS 17: 2019 applying IAS 17: 75,005 75,005 After 5 years After 5 years 18,767 3,564 18,767 3,564 Less: Short-term leases Less: Short-term leases (103) (103) Total over one year (Note 22)Total over one year (Note 22) 41,204 7,377 41,204 7,377 Less: Leases for which the underlyingLess: Leases asset for is whichof low thevalue underlying asset(16) is of low value (16) Term loans are denominated Termin the loans following are denominated currencies: in the following currencies: Less: Leases which expire withinLess: 12 L monthseases which of transition expire within 12 months of transition date and the short-term leasedate practical and the expedient short-term has beenlease practical expedient has been US Dollar US Dollar 47,931 8,666 47,931 8,666 applied applied (35) (35) Euro Euro 1,710 - 1,710 - UAE Dirham UAE Dirham 1,607 13 1,607 13 74,851 74,851 Discounted using the Emirates'Discounted incremental using borrowing the Emirates' rate incremental borrowing rate at 1 April 2019 at 1 April 2019 60,765 60,765 The weighted average Emirates'The incrementalweighted average borrowing Emirates' rate applied incremental to borrowing rate applied to lease liabilities recognised inlease the liabilities consolidated recognised statement in the of financial consolidated statement of financial position at 1 April 2019 is 5.4%.position at 1 April 2019 is 5.4%.
116 22 (b). TermOVERVIEW loans (continued)22 (b). Term loans (continued) 22 (c). Bonds 22 (c). Bonds
EMIRATES Contractual repricing datesContractual are set at repricingthree to sixdates month are set intervals. at three Term to loans six month intervals. Term loans 2020 2019 2020 2019 amountingDNATA to AED 44,427 m (2019:amounting AED 6,213 to AED m) 44,427 are secured m (2019: on aircraft.AED 6,213 m) are secured on aircraft. AED m AED m AED m AED m Balance brought forward Balance brought forward 4,845 5,780 4,845 5,780 BorrowingsGROUP related to assetsBorrowings subject to related financing to assets arrangements subject to which financing are 'in- arrangements which are 'in- Repayments during the year Repayments during the year (819) (935) (819) (935) substanceFINANCIAL purchases' as definedsubstance in Emirates' purchases' accounting as defined policies in Emirates' applicable accounting to leases policies applicable to leases are disclosedINFORMATION as term loans andare disclosed the balances as term held loans as at and 31 March the balances 2019 have held been as at 31 March 2019 have been Balance carried forward Balance carried forward 4,026 4,845 4,026 4,845 transferredEMIRATES to term loans as attransferred 1 April 2019 to from term leaseloans liabilities as at 1 April . There 2019 is from no impact lease liabilitieson . There is no impact on Less: Transaction costs Less: Transaction costs (20) (24) (20) (24) the presentationFINANCIAL of balancesthe in thepresentation consolidated of balances statement in ofthe financial consolidated position statement as of financial position as COMMENTARY 4,006 4,821 4,006 4,821 both term loans and leaseboth liabilities term are loans presented and lease within liabilities 'Borrowings are presented and lease within 'Borrowings and lease DNATA Bonds are repayable as follows:Bonds are repayable as follows: liabilities'.FINANCIAL liabilities'. COMMENTARY Within one year (Note 22) Within one year (Note 22) 815 815 815 815 The fair value of the term loansThe amounts fair value to of AED the 51,564 term loans m (2019: amounts AED to 8,729 AED m). 51,564 The m (2019: AED 8,729 m). The EMIRATES Between 2 and 5 years Between 2 and 5 years 2,569 2,915 2,569 2,915 fair valueCONSOLIDATED is determined by discountingfair value is projected determined cash by flows discounting using the projected interest cash rate flows using the interest rate FINANCIAL After 5 years After 5 years 622 1,091 622 1,091 yield curveSTATEMENTS for the remainingyield term curve to maturities for the remaining and currencies term to adjusted maturities for andcredit currencies adjusted for credit spread. The fair value of the termspread. loans The fall fair into value level of 2 the of theterm fair loans value fall hierarchy. into level 2 of the fair value hierarchy. Total over one year (Note 22)Total over one year (Note 22) 3,191 4,006 3,191 4,006 DNATA CONSOLIDATED Bonds are fixed interest rate bondsBonds and are arefixed denominated interest rate inbonds USD. and are denominated in USD. FINANCIAL Term loans include AED 2,536 m (2019: AED 803 m) provided by financial institutions Term loansSTATEMENTS include AED 2,536Term m (2019: loans 803 include m) provided AED 2,536 by m financial (2019: institutions803 m) provided under by financial institutions under under common control on normal commercial terms. The fair value of the bonds isThe AED fair 3,763 value m (2019:of the AEDbonds 4,812 is AED m) 3,763 based m on (2019: listed AED prices 4,812 m) based on listed prices common control on normal commercialcommon control terms. on normal commercial terms. ADDITIONAL and falls into level 1 of the fairand value falls hierarchy. into level 1 of the fair value hierarchy. INFORMATION
23. Provisions 23. Provisions 2020 2019 2020 2019 AED m AED m AED m AED m Non-current Non-current
Retirement benefit obligationsRetirement (Note 23 (a))benefit obligations (Note 1,61423 (a)) 1,572 1,614 1,572 Aircraft return conditions (NoteAircraft 23 (b)) return conditions (Note 23 (b)) 5,425 2,509 5,425 2,509 7,039 4,081 7,039 4,081 Current Current Aircraft return conditions (NoteAircraft 23 (b)) return conditions (Note 23 (b)) 786 678 786 678 786 678 786 678 7,825 4,759 7,825 4,759
117 23 (a). Retirement benefit obligations OVERVIEW 23 (a). Retirement benefit obligations (i) Funded scheme (i) Funded scheme In accordanceEMIRATES with the provisions of IAS 19, management has carried out an exercise to assess the present valueIn of accordance its defined with benefit the obligations provisions of at IAS 31 19, March management 2020 in has carried out an exercise Senior employees based in the UAE participate in a defined benefit provident scheme DNATA Senior employees based in the UAE participate in a defined benefit provident scheme respect of employees' end ofto service assess benefits the present payable value under of relevant its defined local benefit regulations obligations at 31 March 2020 in to which Emirates contributes a specified percentage of basic salary based upon the to which Emirates contributes a specified percentage of basic salary based upon the and contractualGROUP arrangements.respect The of assessment employees' assumed end of service expected benefits salary payable increases under relevant local regulations employee’s grade and duration of service. Amounts contributed are invested in a employee’s grade and duration of service. Amounts contributed are invested in a averagingFINANCIAL 2.0% (2019: 3.0%) andand a contractual discount rate arrangements. of 3.0% (2019: The 3.75%) assessment per annum. assumed The expected salary increases trustee administered scheme and accumulate along with returns earned on INFORMATION trustee administered scheme and accumulate along with returns earned on present values of the definedaveraging benefit obligations 2.0% (2019: at 3.0%) 31 March and a discount 2020 were rate computed of 3.0% (2019: 3.75%) per annum. The investments. Contributions are made on a monthly basis irrespective of fund investments. Contributions are made on a monthly basis irrespective of fund using theEMIRATES actuarial assumptionspresent set out values above. of the defined benefit obligations at 31 March 2020 were computed performance and are not pooled, but are separately identifiable and attributable to FINANCIAL using the actuarial assumptions set out above. each participant. The fund comprisesperformance a diverse and aremix not of funds pooled, and but investment are separately decisions identifiable and attributable to COMMENTARY are controlled directly by the eachparticipating participant. employees. The fund comprises a diverse mix of funds and investment decisions The liabilitiesDNATA recognised in the consolidated statement of financial position are: are controlled directly by the participating employees. FINANCIAL The liabilities recognised in the consolidated statement of financial position are: COMMENTARY Benefits receivable under the provident scheme are subject to vesting rules, which are 2020 2019 Benefits receivable under the provident scheme are subject to vesting rules, which are 2020 2019 dependent upon a participating employee's length of service. If at the time an EMIRATES AED m AED m dependent upon a participating employee's length of service. If at the time an CONSOLIDATED AED m AED m employee leaves employment, the accumulated vested amount, including investment FundedFINANCIAL scheme returns, is less than the end ofemployee service benefits leaves employment, that would have the accumulated been payable vested to that amount, including investment STATEMENTS Funded scheme returns, is less than the end of service benefits that would have been payable to that Present value of defined benefit obligations 2,711 2,703 employee under relevant local regulations, Emirates pays the shortfall amount directly DNATA Present value of defined benefit obligations 2,711 2,703 to the employee. However,employee if the accumulated under relevant vested local amount regulations, exceeds Emirates the end pays of the shortfall amount directly Less: FairCONSOLIDATED value of plan assets (2,705) (2,699) to the employee. However, if the accumulated vested amount exceeds the end of FINANCIAL Less: Fair value of plan assets (2,705) (2,699) service benefits that would have been payable to an employee under relevant local STATEMENTS 6 4 regulations, the employee receivesservice either benefits seventy that five would or one have hundred been payable percent to of an their employee under relevant local 6 4 UnfundedADDITIONAL scheme fund balance depending onregulations, their length the of service. employee Vested receives assets either of the seventy scheme five areor one hundred percent of their INFORMATION Unfunded scheme Present value of defined benefit obligations 1,608 1,568 not available to Emirates or itsfund creditors balance in any depending circumstances. on their length of service. Vested assets of the scheme are Present value of defined benefit obligations 1,608 1,568 not available to Emirates or its creditors in any circumstances. The liability of AED 6 m (2019: AED 4 m) represents the amount that will not be settled Provision recognised in the consolidated from plan assets and is calculatedThe liability as the of excess AED 6 of m (2019:the present AED 4 value m) represents of the defined the amount that will not be settled statement of financial positionProvision recognised in the consolidated 1,614 1,572 from plan assets and is calculated as the excess of the present value of the defined statement of financial position 1,614 1,572 benefit obligation for an individual employee over the fair value of the employee's plan assets at the end of the reportingbenefit obligation period. for an individual employee over the fair value of the employee's The above liability is presented as a non-current provision within the consolidated plan assets at the end of the reporting period. statement of financial positionThe as above Emirates liability expects is presented to settle this as a liability non-current over a provision long within the consolidated term period. statement of financial position as Emirates expects to settle this liability over a long term period.
118 23 (a). Retirement benefit obligations (continued) OVERVIEW 23 (a). Retirement benefit obligations (continued) (ii) Unfunded schemes (ii) Unfunded schemes EMIRATES The movement in the fair value of the plan assets is as follows: End of service benefits for employees who do not participate in the provident scheme DNATA The movement in the fair value of the plan assets is as follows: End of service benefits for employees who do not participate in the provident scheme or other defined contribution plans follow relevant local regulations, which are mainly 2020 2019 or other defined contribution plans follow relevant local regulations, which are mainly GROUP 2020 2019 based on periods of cumulative service and levels of employees’ final basic salaries. AED m AED m based on periods of cumulative service and levels of employees’ final basic salaries. AED m AED m The liability recognised in the consolidated statement of financial position is the FINANCIAL The liability recognised in the consolidated statement of financial position is the BalanceINFORMATION brought forward 2,699 2,577 present value of the defined benefit obligation at the end of the reporting period. Balance brought forward 2,699 2,577 present value of the defined benefit obligation at the end of the reporting period. ContributionsEMIRATES received 317 308 FINANCIAL Contributions received 317 308 The movement in the defined benefit obligation is as follows: BenefitsCOMMENTARY paid (193) (201) The movement in the defined benefit obligation is as follows: Benefits paid (193) (201) Change in fair value (118) 15 DNATA Change in fair value (118) 15 2020 2019 BalanceFINANCIAL carried forward 2,705 2,699 2020 2019 COMMENTARY AED m AED m Balance carried forward 2,705 2,699 AED m AED m EMIRATES Balance brought forward 1,568 1,414 Contributions received include the transfer of accumulated benefits from unfunded Balance brought forward 1,568 1,414 CONSOLIDATED Contributions received include the transfer of accumulated benefits from unfunded schemes.FINANCIAL Emirates expects to contribute approximately AED 324 m for existing plan Current service cost 204 169 STATEMENTS schemes. Emirates expects to contribute approximately AED 324 m for existing plan Current service cost 204 169 members during the year ending 31 March 2021. Interest cost 57 57 members during the year ending 31 March 2021. Interest cost 57 57 DNATA Remeasurement CONSOLIDATED Remeasurement ActuarialFINANCIAL gains and losses and the expected return on plan assets are not calculated - changes in experience / demographic assumptions - 10 Actuarial gains and losses and the expected return on plan assets are not calculated given thatSTATEMENTS investment decisions relating to plan assets are under the direct control of - changes in financial assumptions- changes in experience / demographic(55) assumptions50 - 10 given that investment decisions relating to plan assets are under the direct control of - changes in financial assumptions (55) 50 participatingADDITIONAL employees. Payments made during the year (166) (132) INFORMATION participating employees. Payments made during the year (166) (132) Balance carried forward 1,608 1,568 Balance carried forward 1,608 1,568 Payments made during the year include transfer of accumulated benefits to Emirates’ Payments made during the year include transfer of accumulated benefits to Emirates’ funded scheme. funded scheme.
119 23 (a). Retirement benefit obligations (continued) OVERVIEW (iii) Defined contribution plans23 (a). Retirement benefit obligations (continued) The sensitivity of the unfunded scheme to changes in the principal assumptions is set out below: EMIRATES (iii) Defined contribution plans The sensitivity of the unfunded scheme to changes in the principal assumptions is set Emirates pays fixed contributions to certain defined contribution plans and has no DNATA Assumption out below: Change Effect on legal or constructive obligation to pay further contributions to settle the benefits Emirates pays fixed contributions to certain defined contribution plans and has no Assumption unfunded Change Effect on relating GROUPto employees' service in the current and prior periods. legal or constructive obligation to pay further contributions to settle the benefits scheme unfunded FINANCIAL relating to employees' service in the current and prior periods. AED m scheme The totalINFORMATION amount recognised in the consolidated income statement in respect of all AED m post-employment benefit plansThe is total as follows: amount recognised in the consolidated income statement in respect of all + 0.5% (64) EMIRATES Discount rate FINANCIAL post-employment benefit plans is as follows:2020 2019 - 0.5% 70 + 0.5% (64) COMMENTARY Discount rate AED m AED m 2020 2019 + 0.5% 71 - 0.5% 70 DNATA Expected salary increases DefinedFINANCIAL benefit plan AED m AED m - 0.5% (60) + 0.5% 71 COMMENTARY Expected salary increases Funded scheme Defined benefit plan The above sensitivity analysis is based on a change in an assumption while holding all - 0.5% (60) EMIRATES ContributionsCONSOLIDATED expensed Funded scheme 301 297 other assumptions constant.The In practice,above sensitivity this is unlikely analysis to occur, is based and on changes a change in insome an assumption while holding all FINANCIAL of the assumptions may be correlated. In calculating the above sensitivity analysis, the Net changeSTATEMENTS in the present valueContributions of defined benefitexpensed 301 297 other assumptions constant. In practice, this is unlikely to occur, and changes in some present value of the defined benefit obligation has been calculated using the obligations over plan assets Net change in the present value of defined 2 benefit - of the assumptions may be correlated. In calculating the above sensitivity analysis, the DNATA projected unit credit method at the end of the reporting period. CONSOLIDATED obligations over plan assets 303 297 2 - present value of the defined benefit obligation has been calculated using the FINANCIAL projected unit credit method at the end of the reporting period. UnfundedSTATEMENTS scheme 303 297 The weighted average duration of the unfunded scheme is 10 years (2019: 15 years). The weighted average duration of the unfunded scheme is 10 years (2019: 15 years). Current ADDITIONALservice cost Unfunded scheme 204 169 INFORMATION Through its defined benefit plans Emirates is exposed to a number of risks, the most Interest cost Current service cost 57 57 204 169 significant of which are detailedThrough below:its defined benefit plans Emirates is exposed to a number of risks, the most Interest cost 261 226 57 57 significant of which are detailed below: Defined contribution plan 261 226 a) Change in discount rate: Retirement benefit obligations will increase due to a decrease in market yields of higha) Change quality corporate in discount bonds. rate: Retirement benefit obligations will increase due to a Contributions expensed Defined contribution plan 198 219 decrease in market yields of high quality corporate bonds. Recognised in the consolidatedContributions income statement expensed 762 742 198 219 b) Expected salary increases: The present value of the defined benefit obligation is Recognised in the consolidated income statement 762 742 calculated by reference to theb) futureExpected salaries salary of plan increases: participants. The present As such, value an increase of the defined benefit obligation is in the salary of the plan participantscalculated above by reference the expected to the rate future ofsalaries salary increases of plan participants. will As such, an increase increase the retirement benefitin obligations. the salary of the plan participants above the expected rate of salary increases will increase the retirement benefit obligations.
120 23 (b). Aircraft return conditions OVERVIEW 23 (b). Aircraft return conditions 24 (b). Frequent flyer programme 2020 2019 24 (b). Frequent flyer programme EMIRATES AED m AED m 2020 2019 2020 2019 2020 2019 BalanceDNATA brought forward 3,187 3,336 AED m AED m AED m AED m Balance brought forward 3,187 3,336 Balance brought forward 2,009 2,243 AED m AED m Impact onGROUP adoption of IFRS 16 (Note 2) 3,571 - Balance brought forward 2,009 2,243 Impact on adoption of IFRS 16 (Note 2) 3,571 Additions during the year 1,203 1,577 Adjusted 1 April 6,758 3,336 - FINANCIAL Additions during the year 1,203 1,577 INFORMATION Recognised during the year (1,370) (1,811) Charge for the year Adjusted 1 April - 549 6,758 3,336 Recognised during the year (1,370) (1,811) Balance carried forward 1,842 2,009 UnwindingEMIRATES of discount for theCharge year for the year 347 165 - 549 FINANCIAL Balance carried forward 1,842 2,009 Utilised COMMENTARYon return of aircraft &Unwinding aircraft engines of discount for the year (477) (662) 347 165 Deferred revenue with respect to the frequent flyer programme represents the fair Utilised on return of aircraft & aircraft engines (477) (662) Deferred revenue with respect to the frequent flyer programme represents the fair UnutilisedDNATA amounts reversed (320) (201) value of outstanding award credits. Revenue is recognised when Emirates fulfils its FINANCIAL obligations by supplying freevalue or discounted of outstanding goods award or services credits. on Revenue the redemption is recognised of when Emirates fulfils its RemeasurementsCOMMENTARY Unutilised amounts reversed (97) - (320) (201) the award credits. obligations by supplying free or discounted goods or services on the redemption of Remeasurements (97) - BalanceEMIRATES carried forward 6,211 3,187 the award credits. CONSOLIDATED Balance carried forward 6,211 3,187 The provisionFINANCIAL is expected to be used as follows: 25. Deferred credits STATEMENTS The provision is expected to be used as follows: Within one year (Note 23) 786 678 25. Deferred credits 2020 2019 DNATA Within one year (Note 23) 786 678 AED m AED m 2020 2019 Over oneCONSOLIDATED year (Note 23) 5,425 2,509 FINANCIAL Over one year (Note 23) 5,425 2,509 AED m AED m STATEMENTS Balance brought forward 2,759 2,934 Impact on adoption of IFRS 16Balance (Note 2) brought forward (2,759) - 2,759 2,934 24. DeferredADDITIONAL revenue INFORMATION Impact on adoption of IFRS 16 (Note 2) (2,759) - 24. Deferred revenue Adjusted 1 April - 2,934 2020 2019 Adjusted 1 April - 2,934 AED m AED m 2020 2019 Additions during the year - 149 AED m AED m Additions during the year - 149 Passenger and cargo sales in advance (Note 24 (a)) 8,830 11,973 Recognised during the year - (324) Recognised during the year - (324) Frequent flyer programme (NotePassenger 24 (b)) and cargo sales in advance 1,842 (Note 24 (a)) 2,009 8,830 11,973 Balance carried forward - 2,759 Frequent flyer programme (Note 24 (b)) 1,842 2,009 Balance carried forward - 2,759 10,672 13,982 10,672 13,982 24 (a). Passenger and cargo sales in advance 24 (a). Passenger and cargo sales in advance Passenger and cargo sales in advance represents revenue documents sold but unused as at the reporting date. RevenuePassengerPassenger is recognised and and cargo when sales Emirates in advance performs represents its obligations revenuerevenue documentsdocuments soldsold butbut unusedunused for the respective transportationasas at at services. the the reporting These date. performance Revenue obligations is recognised are whenwhen expected EmiratesEmirates performsperforms itsits obligationsobligations for the respective transportation services. These performance obligations are expected to be fullfilled within the next foryear. the respective transportation services. These performance obligations are expected to be fulfilled within the next year. to be fullfilled within the next year.
121 26. DeferredOVERVIEW income tax 26. Deferred income tax 28. Guarantees 28. Guarantees EMIRATES 2020 2019 2020 2019
DeferredDNATA tax assets and liabilitiesDeferred are offset tax assets when and there liabilities is a legally are offset enforceable when there right tois a legally enforceable right to AED m AED m AED m AED m offset current tax assets againstoffset current current tax tax liabilities assets against and when current the tax deferred liabilities taxes and when the deferred taxes Guarantees and letters of creditGuarantees provided and by banks letters in of the credit provided by banks in the GROUP relate to the same income tax authority. The offset amounts are as follows: relate to the same income tax authority. The offset amounts are as follows: normal course of business normal course of business 881 815 881 815 FINANCIAL INFORMATION 2020 2019 2020 2019 Guarantees and letters of creditGuarantees include and AED letters 166 m of (2019: credit AED include 197 AEDm) provide 166 md (2019: by AED 197 m) provided by EMIRATES AED m AED m AED m AED m companies under common controlcompanies on normal under commercial common control terms. on normal commercial terms. FINANCIAL DeferredCOMMENTARY income tax asset Deferred income tax asset 25 13 25 13
DeferredDNATA income tax liability Deferred income tax liability (3) (3) (3) (3) 29. Commitments 29. Commitments FINANCIAL 22 10 22 10 COMMENTARY Capital commitments Capital commitments The movements in deferred taxesThe movementsare as follows: in deferred taxes are as follows: EMIRATES 2020 2019 2020 2019 BalanceCONSOLIDATED brought forward Balance brought forward 10 7 10 7 FINANCIAL AED m AED m AED m AED m CreditedSTATEMENTS to the consolidated Creditedincome statement to the consolidated (Note 10) income statement 12 (Note 10) 2 12 2 Aircraft (contracted and non-contracted)Aircraft (contracted and non-contracted) 142,260 187,035 142,260 187,035 CurrencyDNATA translation differencesCurrency translation differences - 1 - 1 CONSOLIDATED Non-aircraft Non-aircraft 373 592 373 592 BalanceFINANCIAL carried forward Balance carried forward 22 10 22 10 STATEMENTS Joint ventures Joint ventures 60 4 60 4 142,693 187,631 142,693 187,631 ADDITIONAL 27. TradeINFORMATION and other payables27. Trade and other payables 2020 2019 2020 2019 Commitments have been enteredCommitments into for have the purchasebeen entered of aircraft into for for the delivery purchase as of aircraft for delivery as AED m AED m AED m AED m follows: follows: Financial year Financial year Aircraft Aircraft Trade payables and accruals Trade payables and accruals 12,162 14,031 12,162 14,031 2020-21 2020-21 3 3 Related parties (Note 32) Related parties (Note 32) 834 946 834 946 Beyond 2020-21 Beyond 2020-21 200 200 12,996 14,977 12,996 14,977 In the event that delivery ofIn certain the event aircraft that are delivery not taken, of certain penalties aircraft are are payable not taken, by penalties are payable by Less: Payables over one year Less: Payables over one year (116) (155) (116) (155) Emirates to the extent of AEDEmirates 257 m (2019: to the AED extent 257 of m). AED 257 m (2019: AED 257 m). 12,880 14,822 12,880 14,822 Operational commitments Operational commitments The carrying amounts of tradeThe and carrying other amountspayables ofapproximate trade and othertheir fair payables value whichapproximate their fair value which 2020 2019 2020 2019 fall into level 3 of the fair valuefall hierarchy. into level Any 3 of change the fair to value the hierarchy. valuation methodAny change will notto the valuation method will not AED m AED m AED m AED m result in a significant change resultto the infair a significantvalue of these change payables. to the fair value of these payables. Sales and marketing Sales and marketing 3,296 3,055 3,296 3,055
122 OVERVIEW 30. Derivative financial instruments 30. Derivative financial instruments 2020 2019 2020 2019 EMIRATES AED m AED m AED m AED m DescriptionDNATA Description 2020 2019 2020 2019 Interest rate swaps Interest rate swaps Term AED m TermTerm AED AED m m Term AED m GROUP Change in fair value of outstandingChange hedging in fair value instruments of outstanding hedging instruments Cash flow hedge since 1 April (561) (102) Cash flowFINANCIAL hedge since 1 April (561) (102) INFORMATION Non-current assets Non-current assets Hedge ratio Hedge ratio 1:1 1:1 1:1 1:1 Interest EMIRATESrate swaps Interest rate swaps - 2021-2028 24 - 2021-2028 24 Weighted average hedged rateWeighted average hedged rate 2.1% 2.8% 2.1% 2.8% FINANCIAL COMMENTARY - - 24 - 24 No ineffectiveness on the interestNo ineffectiveness rate swaps was on recognised the interest in ratethe currentswaps was and recognised prior in the current and prior CurrentDNATA assets Current assets year. year. FINANCIAL Interest COMMENTARYrate swaps Interest rate swaps - 6 - 6 The notional principal amountsThe outstanding notional principal are: amounts outstanding are: CurrencyEMIRATES forwards Currency forwards 3 5 3 5 CONSOLIDATED 2020 2019 2020 2019 FINANCIAL 3 11 3 11 STATEMENTS AED m AED m AED m AED m Cash flow hedge Cash flow hedge DNATA Jet fuel forward contracts Jet fuel forward contracts 17,811 - 17,811 - Non-currentCONSOLIDATED liabilities Non-current liabilities FINANCIAL - Interest rate contracts Interest rate contracts 12,137 7,238 12,137 7,238 Jet fuel forwardSTATEMENTS contracts Jet fuel forward2022 contracts (1,118) 2022 - (1,118) - Currency contracts 48 1,203 Interest rate swaps 2022-2032 (579) 2021-2028 (81) Currency contracts 48 1,203 Interest ADDITIONALrate swaps 2022-2032 (579) 2021-2028 (81) INFORMATION (1,697) (81)(1,697) (81) The notional principal amountsThe outstanding notional principal include amounts AED 3,939 outstanding m (2019: AED include 2,413 AED m) 3,939 m (2019: AED 2,413 m) Current liabilities Current liabilities against derivatives entered withagainst companies derivatives under entered common with control. companies under common control. Jet fuel forward contracts Jet fuel forward contracts(5,024) (5,024) - - The maximum exposure to credit risk at the reporting date is the fair value of the Interest rate swaps Interest rate swaps (43) (20)(43) (20) The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the consolidatedderivative statement assets in of the financial consolidated position. statement of financial position. (5,067) (20)(5,067) (20)
2020 2019 2020 2019 AED m AED m AED m AED m Jet fuel forward contracts Jet fuel forward contracts Change in fair value of outstandingChange hedging in fair value instruments of outstanding hedging instruments since 1 April since 1 April (5,906) - (5,906) - Hedge ratio Hedge ratio 1:1 - 1:1 - Weighted average hedged rateWeighted (in USD averageper barrel) hedged rate (in USD 55per barrel) - 55 - Ineffectiveness of AED 1,098 m (2019: Nil) related to our jet fuel hedging level of 45% Ineffectiveness of AED 1,098 mIneffectiveness (2019: Nil) was of recognisedAED 1,098 min (2019:the current Nil) was year recognised (Note 9). in the current year (Note 9). for the period to 31 March 2022 was recognised in the current year (Note 9).
123 OVERVIEW 31. Classification of financial instruments
EMIRATES
DNATA The accounting policies for financial instruments have been applied to the line items below:
GROUP Financial Financial FINANCIAL INFORMATION assets at Derivative liabilities at amortised financial amortised EMIRATES FINANCIAL Description cost instruments cost Total COMMENTARY AED m AED m AED m AED m
DNATA 2020 FINANCIAL COMMENTARY Assets
EMIRATES Derivative financial instruments - 3 - 3 CONSOLIDATED FINANCIAL Trade and other receivables (excluding prepayments) 4,031 - - 4,031 STATEMENTS Short term bank deposits 12,017 - - 12,017 DNATA Cash and cash equivalents 8,232 - - 8,232 CONSOLIDATED FINANCIAL Total 24,280 3 - 24,283 STATEMENTS
ADDITIONAL INFORMATION Liabilities Borrowings and lease liabilities - - 110,157 110,157 Provision for aircraft return conditions - - 6,211 6,211 Trade and other payables - - 12,996 12,996 Derivative financial instruments - 6,764 - 6,764 Total - 6,764 129,364 136,128
124 OVERVIEW 31. Classification of financial instruments (continued)
EMIRATES
DNATA Financial Financial GROUP assets at Derivative liabilities at FINANCIAL amortised financial amortised INFORMATION Description cost instruments cost Total EMIRATES AED m AED m AED m AED m FINANCIAL COMMENTARY 2019
DNATA Assets FINANCIAL COMMENTARY Derivative financial instruments - 35 - 35 Trade and other receivables (excluding prepayments) 7,993 - - 7,993 EMIRATES CONSOLIDATED Short term bank deposits 11,974 - - 11,974 FINANCIAL STATEMENTS Cash and cash equivalents 5,063 - - 5,063
DNATA Total 25,030 35 - 25,065 CONSOLIDATED FINANCIAL STATEMENTS Liabilities ADDITIONAL INFORMATION Borrowings and lease liabilities - - 53,039 53,039 Provision for aircraft return conditions - - 3,187 3,187 Trade and other payables - - 14,977 14,977 Derivative financial instruments - 101 - 101 Total - 101 71,203 71,304
125 32. Related party transactions and balances OVERVIEW 32. Related party transactions and balances Emirates transacts with associates, joint ventures and companies controlled by 2020 2019 EMIRATES 2020 2019 Emirates and its parent withinEmirates the scope transacts of its ordinary with business associates, activities. joint ventures and companies controlled by AED m AED m DNATA Emirates and its parent within the scope of its ordinary business activities. AED m AED m Other transactions: Other transactions: EmiratesGROUP and dnata (a company under common control) share central corporate (i) Finance income functions such as informationEmirates technology, and facilities, dnata (a human company resources, under finance, common treasury, control) share central corporate (i) Finance income FINANCIAL Companies under common control (Note 8) 341 305 functions such as information technology, facilities, human resources, finance, treasury, cash management,INFORMATION legal and other functions. Where such functions are shared, the Companies under common control (Note 8) 341 305 Joint ventures (Note 8) - 1 costs are allocated between Emiratescash management, and dnata based legal on and activity other levels. functions. Where such functions are shared, the EMIRATES Joint ventures (Note 8) - 1 FINANCIAL costs are allocated between Emirates and dnata based on activity levels. 341 306 COMMENTARY 341 306 Other than these shared service arrangements, the following transactions have taken (ii) Finance cost DNATA Other than these shared service arrangements, the following transactions have taken (ii) Finance cost place onFINANCIAL an arm's length basis. Companies under common control (Note 8) 239 10 COMMENTARY place on an arm's length basis. Companies under common control (Note 8) 239 10 2020 2019 EMIRATES 2020 2019 CONSOLIDATED AED m AED m (iii) Compensation to key management personnel FINANCIAL AED m AED m (iii) Compensation to key management personnel TradingSTATEMENTS transactions: Salaries and short term employee benefits 102 107 Salaries and short term employee benefits 102 107 Trading transactions: Post-employment benefits 14 16 (i) Sale DNATAof goods and services Post-employment benefits 14 16 CONSOLIDATED (i) Sale of goods and services Termination benefits 2 - Sale of goodsFINANCIAL - Companies under common control 330 339 STATEMENTS Sale of goods - Companies under common control 330 339 Termination benefits 2 - Sale of goods - Joint ventures 39 42 118 123 Sale of goods - Joint ventures 39 42 118 123 Sale of goodsADDITIONAL - Associates 50 59 INFORMATION Sale of goods - Associates 50 59 Effective 31 March 2020, beneficial ownership of the Emirates Holidays and its Services rendered - Companies under common control 547 547 Effective 31 March 2020, beneficial ownership of the Emirates Holidays and its Services rendered - Companies under common control 547 547 subsidiaries were transferred to Emirates from dnata for consideration of AED 9m Services rendered - Joint ventures 18 15 subsidiaries were transferred to Emirates from dnata for consideration of AED 9m Services rendered - Joint ventures 18 15 which was equal to carrying value of assets and liabilities transferred. Sale of frequent flyer miles - Companies under common which was equal to carrying value of assets and liabilities transferred. control Sale of frequent flyer miles - Companies 394 under common 350 Emirates also uses number of public utilities provided by Government controlled control 394 350 Emirates also uses number of public utilities provided by Government controlled 1,378 1,352 entities for its operations in Dubai, where these entities are the sole providers of the 1,378 1,352 relevant services. This includesentities thefor supply its operations of electricity, in Dubai, water where and airport these entitiesservices. are the sole providers of the (ii) Purchase of goods and services relevant services. This includes the supply of electricity, water and airport services. (ii) Purchase of goods and services Transactions falling in these expense categories are individually insignificant and Purchase of goods - Companies under common control 6,671 6,973 carried out on an arm's lengthTransactions basis. falling in these expense categories are individually insignificant and Purchase of goods - Companies under common control 6,671 6,973 Purchase of goods - Associates 78 229 carried out on an arm's length basis. Purchase of goods - Associates 78 229 Services received - Companies under common control 2,879 3,307 Services received - Companies under common control 2,879 3,307 Services received - Joint ventures - 11 Services received - Joint ventures - 11 9,628 10,520 9,628 10,520
126 OVERVIEW Receivables from and loans to companies under common control relate to 32. Related party transactions32. and Related balances party (continued) transactions and balances (continued) Receivables from and loans to companies under common control relate to government owned entities, which are unrated. Management is of the opinion that the EMIRATES government owned entities, which are unrated. Management is of the opinion that the 2020 2019 2020 2019 amounts are fully recoverable.amounts are fully recoverable. DNATA AED m AED m AED m AED m 2020 2019 2020 2019 Year endGROUP balances Year end balances AED m AED m AED m AED m (i) ReceivablesFINANCIAL - sale of goods(i) and Receivables services - sale of goods and services INFORMATION (iv) Loans and advances to key(iv) management Loans and advances personnel to key management personnel Companies under common controlCompanies under common control 69 101 69 101 EMIRATES Balance brought forward Balance brought forward 7 6 7 6 Joint venturesFINANCIAL Joint ventures 37 32 37 32 COMMENTARY Additions during the year Additions during the year 9 8 9 8 Associates Associates 7 13 7 13 Repayments during the year (8) (7) DNATA Receivable within one year 113 146 Repayments during the year (8) (7) ReceivableFINANCIAL within one year 113 146 COMMENTARY Balance carried forward Balance carried forward 8 7 8 7 Receivable within one year Receivable within one year 4 3 4 3 (ii) ReceivablesEMIRATES - other transactions(ii) Receivables - other transactions CONSOLIDATED Receivable over one year Receivable over one year 4 4 4 4 CompaniesFINANCIAL under common controlCompanies under common control 22 31 22 31 STATEMENTS Receivable within one year Receivable within one year 22 31 22 31 DNATA CONSOLIDATED 2020 2019 The amountsFINANCIAL outstanding atThe year amounts end are outstanding unsecured and at year will be end settled are unsecured in cash. No and will be settled in cash. No 2020 2019 STATEMENTS AED m AED m impairment charge has beenimpairment recognised duringcharge the has year been in recognised respect of during amounts the owed year in respect of amounts owed AED m AED m by relatedADDITIONAL parties. by related parties. INFORMATION (v) Payables - purchase of goods(v) Payables and services - purchase (Note of 27) goods and services (Note 27) Companies under common controlCompanies under common control 798 918 798 918 2020 2019 2020 2019 Associates Associates 24 13 24 13 AED m AED m AED m AED m 822 931 822 931 (iii) Other receivables (iii) Other receivables (vi) Other payables (Note 27)(vi) Other payables (Note 27) Joint ventures Joint ventures 3 3 3 3 Companies under common controlCompanies under common control 12 15 12 15 3 3 3 3 12 15 12 15 Movement in other receivablesMovement were as follows: in other receivables were as follows: Balance brought forward Balance brought forward 3 9 3 9 Additions during the year Additions during the year - 1 - 1 Repayments during the year Repayments during the year - (7) - (7) Balance carried forward Balance carried forward 3 3 3 3 Receivable within one year Receivable within one year - - - - Receivable over one year Receivable over one year 3 3 3 3
127 OVERVIEW 33. Financial risk management33. Financial risk management Emirates manages limits andEmirates controls manages concentrations limits and of controls risk wherever concentrations they are of risk wherever they are EMIRATES identified. In the normal courseidentified. of business, In the Emirates normal course places of significant business, deposits Emirates with places significant deposits with Financial risk factors Financial risk factors high credit quality bankshigh and financial credit quality institutions. banks Transactions and financial with institutions. derivative Transactions with derivative DNATA counterparties are similarly limitedcounterparties to high credit are similarly quality limitedfinancial to institutions. high credit Exposure quality financial institutions. Exposure Emirates is exposed to a varietyEmirates of financialis exposed risks which to a variety involve of the financial analysis, risks evaluation, which involve the analysis, evaluation, GROUP to credit risk is also managedto through credit risk regular is also analysis managed of the through ability regular of counterparties analysis of the ability of counterparties acceptance and managementacceptance of some degree and management of risk or combination of some degree of risks. of Emirates' risk or combination of risks. Emirates' and potential counterpartiesand to meet potential their counterparties obligations and to bymeet changing their obligations their limits and by changing their limits aim is,FINANCIAL therefore, to achieveaim an is, appropriate therefore, balance to achieve between an appropriate risk and return balance and between risk and return and INFORMATION where appropriate. Approximatelywhere appropriate. 90% (2019: 93%) Approximately of cash and 90% bank (2019: balances 93%) areof cash and bank balances are minimise potential adverse effectsminimise on Emirates' potential financial adverse performance.effects on Emirates' financial performance. EMIRATES held with financial institutionsheld based with in financialthe UAE. institutions based in the UAE. FINANCIAL The sale of passenger and cargo transportation is largely achieved through Emirates'COMMENTARY risk management proceduresEmirates' risk are management designed to identify procedures and analyseare designed these torisks, identify and analyse these risks, The sale of passenger and cargo transportation is largely achieved through International Air Transport AssociationInternational (IATA) Air Transport approved Association sales agents (IATA) and online approved sales. sales agents and online sales. to set appropriateDNATA risk limitsto and set controls, appropriate and torisk monitor limits and the controls, risks and and adherence to monitor to the risks and adherence to FINANCIAL All IATA agents have to meet a minimum financial criteria applicable to their country of limits by means of reliable andlimits up-to-date by means information. of reliable and Emirates up-to-date regularly information. reviews its Emirates regularly reviews its All IATA agents have to meet a minimum financial criteria applicable to their country of COMMENTARY operation to remain accredited. Adherence to the financial criteria is monitored on an risk management proceduresrisk and management systems to reflect procedures changes and in systems markets, to products reflect changes and in markets, products and operation to remain accredited. Adherence to the financial criteria is monitored on an EMIRATES emerging best practice. Emirates uses derivative and non-derivative financial ongoing basis by IATA throughongoing their basis Agency by Programme.IATA through The their credit Agency risk associatedProgramme. The credit risk associated emergingCONSOLIDATED best practice. Emirates uses derivative and non-derivative financial with such sales agents and the related balances within trade receivables is therefore instrumentsFINANCIAL to hedge certain instrumentsrisk exposures. to hedge certain risk exposures. with such sales agents and the related balances within trade receivables is therefore STATEMENTS low and further reduced bylow their and diverse further base reduced and credit by their risk diverseanalytics base performed and credit by risk analytics performed by
A risk managementDNATA programmeA risk is carried management out under programme guidelines is carriedthat are out approved under guidelines by a that are approved by a Emirates. Emirates. CONSOLIDATED steeringFINANCIAL group comprising seniorsteering management. group comprising Identification, senior evaluation management. and Identification, hedging evaluation and hedging Significant balances in otherSignificant receivables balances are held in with other companies receivables given are a held high with credit companies given a high credit financialSTATEMENTS risks is done infinancial close cooperation risks is done with in the close operating cooperation units. with Senior the operating units. Senior rating by leading internationalrating rating by agencies. leading international rating agencies. managementADDITIONAL is also responsiblemanagement for the review is also of responsible risk management for the andreview the of control risk management and the control environment.INFORMATION The various financialenvironment. risk elements The various are discussed financial below: risk elements are discussed below: The table below presents an analysisThe table of below short termpresents bank an deposits analysis and of short bank term balances bank by deposits and bank balances by rating agency designation atrating the end agency of the designation reporting at period the end based of theon Standard reporting & period based on Standard & Poor's ratings or its equivalentPoor's for Emirates' ratings or main its equivalentbanking relationships: for Emirates' main banking relationships: (i) Credit risk (i) Credit risk
Emirates is exposed to creditEmirates risk, which is exposed is the risk to credit that a risk, counterparty which is the will risk cause that a a counterparty will cause a 2020 2019 2020 2019 financial loss to Emirates byfinancial failing to loss discharge to Emirates an obligation. by failing Financialto discharge assets an that obligation. Financial assets that AED m AED m AED m AED m potentially subject Emirates topotentially credit risk subject consist Emirates principally to ofcredit deposits risk consist with banks principally and of deposits with banks and AA- to AA+ AA- to AA+ 440 485 440 485 other financial institutions, derivativeother financial counterparties institutions, as well derivative as receivables counterparties from agents as well as receivables from agents selling commercial air transportation.selling commercial Emirates uses air transportation. external ratings Emirates such as Standarduses external & ratings such as Standard & A- to A+ A- to A+ 18,388 14,664 18,388 14,664 Poor's and Moody's or theirPoor's equivalent and in Moody's order to or measure their equivalent and monitor in order its credit to measure risk and monitor its credit risk BBB+ BBB+ 1,061 1,623 1,061 1,623 exposures to financial institutions.exposures In the to absence financial of institutions. independent In ratings,the absence credit of quality independent ratings, credit quality Lower than BBB+ Lower than BBB+ 28 18 28 18 is assessed based on the counterparty'sis assessed based financial on position, the counterparty's past experience financial and position, other past experience and other Unrated Unrated 321 229 321 229 factors. factors.
128 OVERVIEW 33. Financial risk management33. (continued) Financial risk management (continued) Currency risk Currency risk EMIRATES Emirates is exposed to the effectsEmirates of is fluctuation exposed to in the the effects prevailing of fluctuation foreign currency in the prevailing foreign currency The loss allowances for financialThe loss assets allowances are based for on financial assumptions assets about are based the risk on of assumptions about the risk of DNATA exchange rates on its financialexchange position rates and on cash its financial flows. Exposure position arises and cash due flows. to Exposure arises due to default and expected loss rates.default Emirates and expecteduses judgement loss rates. in making Emirates these uses assumptions judgement in making these assumptions exchange rate fluctuations betweenexchange the rate UAE fluctuations Dirham and between other currencies the UAE Dirham generated and other currencies generated and selectingGROUP inputs to theand impairment selecting calculation inputs to based the impairment on past history, calculation existing based on past history, existing from Emirates' revenue earningfrom activities. Emirates' Long revenue term earning debt obligations activities. Long are mainly term debt obligations are mainly market conditions as well asmarket forward-looking conditions estimates as well as at forward-looking the end of each estimates reporting at the end of each reporting FINANCIAL denominated in UAE Dirhamdenominated or in US Dollar in UAE to which Dirham the or UAE in US Dirham Dollar is to pegged. which the UAE Dirham is pegged. period.INFORMATION These judgements haveperiod. been These reassessed judgements in the have wake been of reassessed the COVID-19 in the wake of the COVID-19 Additionally, some lease liabilitiesAdditionally, are denominated some lease liabilitiesin Euro, Poundare denominated Sterling and in Euro, Pound Sterling and outbreak. As of 31 March 2020,outbreak. the provision As of 31 for March impairment 2020, the of provision trade and for other impairment of trade and other EMIRATES Japanese Yen to provide a naturalJapanese hedge Yen against to provide revenue a natural inflows hedge in these against currencies. revenue inflows in these currencies. receivablesFINANCIAL amounts to AEDreceivables 94 m (2019: amounts AED 69 to m) AED and 94 has m been (2019: disclosed AED 69 under m) and has been disclosed under COMMENTARY Senior management monitorsSenior currency management positions on monitors a regular currency basis. positions on a regular basis. Note 18. Note 18. DNATA FINANCIAL While cash assets are also subject to the impairment requirements of IFRS 9, the While cashCOMMENTARY assets are also subject to the impairment requirements of IFRS 9, the Emirates is in a net payer positionEmirates withis respect in a net to payer the US position Dollar withand UAE respect Dirham to the and US in Dollar and UAE Dirham and in identified loss allowance on theseidentified balances loss wasallowance immaterial. on these balances was immaterial. a net surplus position for othera net currencies. surplus position Currency for surpluses other currencies. are converted Currency to US surpluses are converted to US EMIRATES CONSOLIDATED Dollar and UAE Dirham funds.Dollar Currency and UAE risks Dirham arise mainly funds. Currencyfrom Emirates' risks arise revenue mainly from Emirates' revenue (ii) Market risk (ii) MarketFINANCIAL risk earning activities in Euro, Poundearning Sterling, activities Australian in Euro, Dollar, Pound Indian Sterling, Rupee, Australian Chinese Dollar, Yuan Indian Rupee, Chinese Yuan STATEMENTS Emirates is exposed to marketEmirates risk, which is exposed is the risk to market that the risk, fair which value is or the future risk cash that the fair value or future cash and South African Rand. Currencyand South risks African are hedged Rand. dynamically Currency risks using are forwards hedged and dynamically using forwards and DNATA options, as appropriate, as welloptions, as through as appropriate, natural hedges as well of as foreign through currency natural inflows hedges of foreign currency inflows flows ofCONSOLIDATED a financial instrumentflows will of fluctuate a financial because instrument of changes will fluctuate in market because prices. of changes in market prices. MarketFINANCIAL risk comprises three typesMarket of risk risk comprises - jet fuel price three risk, types currency of risk risk- jet and fuel interest price risk, currency risk and interest and outflows. and outflows. STATEMENTS rate risk. rate risk. Emirates is also subject to the risk that countries in which it may earn revenues may ADDITIONAL Emirates is also subject to the risk that countries in which it may earn revenues may INFORMATION impose restrictions or prohibition on the export of those revenues. Emirates seeks to Jet fuel price risk Jet fuel price risk impose restrictions or prohibition on the export of those revenues. Emirates seeks to minimise this risk by repatriatingminimise surplus this funds risk by to repatriating the UAE on surplus a monthly funds basis. to the Cash UAE on a monthly basis. Cash Emirates is exposed to the volatility in the price of jet fuel (which is primarily driven by Emirates is exposed to the volatility in the price of jet fuel (which is primarily driven by and cash equivalents for the currentand cash year equivalents include AED for 379the current m (2019: year AED include 396 m) AED held 379 in m (2019: AED 396 m) held in the movement in ICE Brent crude oil and the jet fuel refining margin (crack spread) as the movement in ICE Brent crude oil and the jet fuel refining margin (crack spread) as countries where exchange controlscountries and whereother restrictionsexchange controls apply. and other restrictions apply. its two significant components)its two and significant closely monitors components) the actual and closely cost against monitors the the actual cost against the Interest rate risk forecast cost. To manage theforecast price risk, cost. Emirates' To manage has formulated the price risk, its risk Emirates' management has formulated its risk management Interest rate risk objective and strategy according to which Emirates hedges part of its highly probable objective and strategy according to which Emirates hedges part of its highly probable Emirates is exposed to the effectsEmirates of is fluctuations exposed to in the the effects prevailing of fluctuations levels of interest in the prevailing levels of interest forecast purchases of jet fuel up to 24 months in advance using commodity futures, forecast purchases of jet fuel up to 24 months in advance using commodity futures, rates on borrowings and investments.rates on borrowings Exposure arises and frominvestments. interest Exposure rate fluctuations arises from in interest rate fluctuations in options and swaps, as and when opportunity arises and depending on the market options and swaps, as and when opportunity arises and depending on the market the international financial marketsthe international with respect financial to interest markets cost with on its respect long term to interest debt cost on its long term debt conditions. Emirates maintains monthly schedules of its highly probable forecast conditions. Emirates maintains monthly schedules of its highly probable forecast obligations, lease liabilities andobligations, interest income lease liabilities on its bank and deposits. interest incomeThe key on reference its bank deposits. The key reference purchases of jet fuel and usually hedges the crude oil element of jet fuel by entering purchases of jet fuel and usually hedges the crude oil element of jet fuel by entering rates based on which interestrates costs based are determined on which interest are LIBOR costs for are US determined Dollar, EIBOR are for LIBOR for US Dollar, EIBOR for into net cash settled crude oil forward contracts of the same maturity. Both purchases into net cash settled crude oil forward contracts of the same maturity. Both purchases UAE Dirham and EURIBOR forUAE Euro. Dirham Summarised and EURIBOR quantitative for Euro. data Summarised is available quantitativein Note data is available in Note and derivatives are generally denominated in USD which is pegged to AED, therefore and derivatives are generally denominated in USD which is pegged to AED, therefore 22 for interest cost exposures.22 for interest cost exposures. there is no foreign currency exposure.there is no foreign currency exposure.
129 OVERVIEW 2020 2019 33. Financial risk management (continued) 2020 2019 33. Financial risk management (continued) Effect on Effect on Effect on Effect on EMIRATES Effect on Effect on Effect on Effect on Borrowings taken at variable rates expose Emirates to cash flow interest rate risk while profit equity profit equity BorrowingsDNATA taken at variable rates expose Emirates to cash flow interest rate risk while profit equity profit equity borrowings issued at fixed rates expose Emirates to fair value interest rate risk. Emirates AED m AED m AED m AED m borrowings issued at fixed rates expose Emirates to fair value interest rate risk. Emirates AED m AED m AED m AED m GROUP targets a balanced portfolio approach, whilst nevertheless taking advantage of Currency risk targets a balanced portfolio approach, whilst nevertheless taking advantage of Currency risk opportune market movements using appropriate hedging solutions including interest - Euro opportuneFINANCIAL market movements using appropriate hedging solutions including interest - Euro INFORMATION rate swaps. Variable rate debt and cash surpluses are mainly denominated in UAE + 1% 1 (44) 8 (1) rate swaps. Variable rate debt and cash surpluses are mainly denominated in UAE + 1% 1 (44) 8 (1) Dirham and US Dollar. - 1% (1) 44 (8) 1 DirhamEMIRATES and US Dollar. - 1% (1) 44 (8) 1 FINANCIAL COMMENTARY Sensitivity analysis of market risk - Pound Sterling Sensitivity analysis of market risk - Pound Sterling DNATA The following sensitivity analysis, relating to existing financial instruments, shows how + 1% 3 (18) 5 3 The followingFINANCIAL sensitivity analysis, relating to existing financial instruments, shows how + 1% 3 (18) 5 3 profit and equity would change if the market risk variables had been different at the - 1% (3) 18 (5) (3) profit andCOMMENTARY equity would change if the market risk variables had been different at the - 1% (3) 18 (5) (3) end of the reporting period with all other variables held constant and has been end ofEMIRATES the reporting period with all other variables held constant and has been - Australian Dollar computed on the basis of assumptions and indices used and considered by other - Australian Dollar computedCONSOLIDATED on the basis of assumptions and indices used and considered by other FINANCIAL market participants. + 1% - (1) 2 1 market STATEMENTSparticipants. + 1% - (1) 2 1 - 1% - 1 (2) (1) - 1% - 1 (2) (1) DNATA 2020 2019 2020 2019 CONSOLIDATED Effect on Effect on Effect on Effect on - Indian Rupee FINANCIAL Effect on Effect on Effect on Effect on - Indian Rupee STATEMENTS profit equity profit equity + 1% 1 1 4 4 profit equity profit equity + 1% 1 1 4 4 AED m AED m AED m AED m ADDITIONAL AED m AED m AED m AED m - 1% (1) (1) (4) (4) INFORMATION Interest rate risk - 1% (1) (1) (4) (4) Interest rate risk -Chinese Yuan Interest cost -Chinese Yuan Interest cost + 1% 1 1 1 1 - 25 basis points + 1% 1 1 1 1 - 25 basis points UAE Dirham 3 3 4 4 - 1% (1) (1) (1) (1) UAE Dirham 3 3 4 4 - 1% (1) (1) (1) (1) US Dollar 81 (26) 81 32 - South African Rand US Dollar 81 (26) 81 32 - South African Rand Euro - - 1 1 + 1% - - 1 1 Euro - - 1 1 + 1% - - 1 1 84 84 (23) 86 37 84 84 (23) 86 37 - 1% - - (1) (1) + 25 basis points - 1% - - (1) (1) + 25 basis points - Japanese Yen UAE Dirham (3) (3) (4) (4) - Japanese Yen UAE Dirham (3) (3) (4) (4) US Dollar (81) 26 (81) (32) + 1% - (24) - - US Dollar (81) 26 (81) (32) + 1% - (24) - - Euro - - (1) (1) - 1% - 24 - - Euro - - (1) (1) - 1% - 24 - - (84) 23 (86) (37) (84) 23 (86) (37) Interest income Interest income - 25 basis points (17) (17) (9) (9) - 25 basis points (17) (17) (9) (9) + 25 basis points 17 17 9 9 + 25 basis points 17 17 9 9
130 OVERVIEW Emirates expects a significantly adverse impact on its liquidity due to COVID-19 33. Financial risk management33. (continued) Financial risk management (continued) Emirates expects a significantly adverse impact on its liquidity due to COVID-19 outbreak. Management has taken several steps in protecting cash flows through EMIRATES outbreak. Management has taken several steps in protecting cash flows through compensating cost saving measures, reductions to discretionary capital expenditure 2020 20192020 2019 compensating cost saving measures, reductions to discretionary capital expenditure DNATA and agreeing additional working capital facilities. Effect on Effect on Effect Effect on onEffect Effect on on Effect on Effect on and agreeing additional working capital facilities. GROUP profit equity profitprofit equityequity profit equity Summarised below in the tableSummarised is the maturity below profile in the of table financial is the liabilities maturity and profile net- of financial liabilities and net- FINANCIAL AED m AED m AED mAED m AED mAED m AED m AED m settled derivative financial liabilitiessettled derivative based on financial the remaining liabilities period based at on the the end remaining of period at the end of INFORMATION Jet fuel price risk Jet fuel price risk reporting period to the contractualreporting maturity period to date. the The contractual amounts maturity disclosed date. are Thethe amounts disclosed are the + USD 5EMIRATES on price + USD 5 on price 156 1,461 - 156 - 1,461 - - contractual undiscounted cashcontractual flows. undiscounted cash flows. FINANCIAL - USD 5COMMENTARY on price - USD 5 on price(158) (1,532) - (158) - (1,532) - -
DNATA Less than 2 - 5 OverLess than 2 - 5 Over FINANCIAL (iii) Liquidity risk 1 year years 5 years Total (iii) LiquidityCOMMENTARY risk 1 year years 5 years Total AED m AED m AED m AED m Liquidity risk is the risk that Emirates is unable to meet its payment obligations AED m AED m AED m AED m LiquidityEMIRATES risk is the risk that Emirates is unable to meet its payment obligations CONSOLIDATED associated with its financial liabilities when they fall due and to replace funds when 2020 2020 associatedFINANCIAL with its financial liabilities when they fall due and to replace funds when they are withdrawn. they areSTATEMENTS withdrawn. Borrowings and lease liabilitiesBorrowings and 23,641 lease liabilities 64,014 41,322 23,641 128,977 64,014 41,322 128,977 Derivative financial instruments 5,081 1,528 143 6,752 DNATA Emirates' liquidity management process as monitored by senior management, includes Derivative financial instruments 5,081 1,528 143 6,752 Emirates'CONSOLIDATEDliquidity management process as monitored by senior management, includes Provision for aircraft return conditions 813 4,260 2,745 7,818 the following:FINANCIAL the following: Provision for aircraft return conditions 813 4,260 2,745 7,818 STATEMENTS Day to day funding is managed• Day toDay byday to monitoring funding day funding is futuremanaged is managed cash by flows monitoring by to monitoring ensure future that future cash cash flows flows to toensure ensure that that Trade and other payables Trade and other 12,880 payables 116 -12,880 12,996 116 - 12,996 ADDITIONAL requirementsrequirements can be can met. be This met. includes This includes replenishment replenishment of funds ofas they funds mature. as they requirements can be met. This includes replenishment of funds as they 42,415 69,918 44,210 156,543 mature.INFORMATION mature. 42,415 69,918 44,210 156,543 • MaintainingMaintaining rolling rolling forecasts forecasts of Emirates’ of Emir liquidityates' liquidity position position on the onbasis the of basexpectedis of Maintaining rolling forecasts of Emirates' liquidity position on the basis of 2019 expected cash flows. cashexpected flows. cash flows. 2019 Monitoring liquidity ratios and net current assets against internal standards. Monitoring liquidity ratios• Monitoring and net current liquidity assets ratios against and net internal current stan assetsdards. against internal standards. Borrowings and lease liabilities 9,725 31,423 22,777 63,925 Maintaining debt financing plans.Maintaining debt financing plans. Borrowings and lease liabilities 9,725 31,423 22,777 63,925 • MaintainingMaintaining debt financing diversified plans. credit lines, including stand-by credit facility Maintaining diversified credit lines, including stand-by credit facility Derivative financial instrumentsDerivative financial 19 instruments 27 25 19 71 27 25 71 arrangements. • Maintainingarrangements. diversified credit lines, including stand-by credit facility arrangements. Provision for aircraft return conditionsProvision for aircraft 693 return 1,811conditions 1,298 693 3,802 1,811 1,298 3,802 Trade and other payables Trade and other 14,822 payables 155 -14,822 14,977 155 - 14,977 25,259 25,259 33,416 24,100 25,259 82,775 33,416 24,100 82,775
131 34. Acquisitions OVERVIEW 34. Acquisitions The financial effects of the acquired business are set out below. The financial effects of the acquired businessAED m are set out below. On 31 MarchEMIRATES 2020, Emirates through its wholly owned subsidiary Air Ventures Holding Acquisition related costs 4 On 31 March 2020, Emirates through its wholly owned subsidiary Air Ventures Holding Inc acquired 75% of the business of Air Ventures LLC and Air Ventures LGA, LLC ("Air Acquisition related costs 4 DNATA If the acquisition had taken place at Ventures Group"). The principalInc activities acquired of 75% Air of Ventures the business Group of are Air retail Ventures salesof LLC food and Air Ventures LGA, LLC ("Air the beginning of the year If the acquisition had taken place at GROUP Ventures Group"). The principal activities of Air Ventures Group are retail sales of food and beverage products in the United States of America. the beginning of the year Revenue 145 FINANCIAL and beverage products in the United States of America. Revenue 145 Assets andINFORMATION liabilities arising from and recognised on acquisition have been measured Profit / (loss) (3) Assets and liabilities arising from and recognised on acquisition have been measured Profit / (loss) (3) on provisionalEMIRATES basis, pending the fair valuation of acquired net assets. FINANCIAL on provisional basis, pending the fair valuation of acquired net assets. 35. Capital management COMMENTARY Air 35. Capital management DNATA Ventures Air FINANCIAL Emirates' objective when managing capital is to safeguard its ability to continue as a Ventures COMMENTARY Group going concern in order to provideEmirates' returnsobjective for its when Owner managing and to capital maintain is to an safeguard optimal its ability to continue as a Group going concern in order to provide returns for its Owner and to maintain an optimal EMIRATES AED m capital structure to reduce the cost of capital. CONSOLIDATED AED m capital structure to reduce the cost of capital. Property,FINANCIAL plant and equipment (Note 12) 58 STATEMENTS Property, plant and equipment (Note 12) 58 Emirates monitors the return on Owner's equity, which is defined as the profit Other current assets 5 Emirates monitors the return on Owner's equity, which is defined as the profit Other current assets 5 attributable to the Owner expressed as a percentage of average Owner's equity. Cash andDNATA cash equivalents 2 CONSOLIDATED Emirates seeks to provide a betterattributable return to the the Owner Owner by expressed borrowing as funds a percentage and taking of average Owner's equity. Cash and cash equivalents 2 FINANCIAL Emirates seeks to provide a better return to the Owner by borrowing funds and taking Current STATEMENTSliabilities (14) aircraft on leases to meet its growth plans. In 2020, Emirates achieved a return on Current liabilities (14) Borrowings and lease liabilities (Note 22 (b)) (37) Owner's equity funds of 3.5%aircraft (2019: 2.4%). on leases to meet its growth plans. In 2020, Emirates achieved a return on ADDITIONAL Borrowings and lease liabilities (Note 22 (b)) (37) Owner's equity funds of 3.5% (2019: 2.4%). Fair valueINFORMATION of assets acquired 14 Fair value of assets acquired 14 Less: Non-controlling interest (4) Emirates also monitors capital on the basis of a gearing ratio which is calculated as the Less: Non-controlling interest (4) ratio of borrowings and leaseEmirates liabilities, also net monitors of cash assetscapital to on total the basis equity. of In a gearing 2020, this ratio which is calculated as the Emirates' share of net assets acquired 10 ratio of borrowings and lease liabilities, net of cash assets to total equity. In 2020, this Emirates' share of net assets acquired 10 ratio is 381.2% (2019: 209.8%). The prior year value includes the impact of off-balance Goodwill (Note 14) 209 sheet leases. Effective 1 Aprilratio 2019 is with 381.2% the adoption (2019: 209.8%). of IFRS The 16,such prior leases year value have includes been the impact of off-balance Goodwill (Note 14) 209 Total purchase consideration 219 captalised and the related leasesheet liability leases. is Effective a part 1of April 'Borrowings 2019 with and the lease adoption liabilities' of IFRS 16, such leases have been Total purchase consideration 219 captalised and the related lease liability is a part of 'Borrowings and lease liabilities' Less: Cash and cash equivalents acquired (2) (Note 22). Less: Cash and cash equivalents acquired (2) (Note 22). Less: Deferred consideration (25) Less: Deferred consideration (25) Less: Contingent consideration (25) Less: Contingent consideration (25) Cash outflow on acquisition 167 Cash outflow on acquisition 167 Goodwill is attributed to the expected synergies, revenue growth and future market development of the acquired Goodwillbusiness. is attributed to the expected synergies, revenue growth and future market development of the acquired business.
132 OVERVIEW INDEPENDENT AUDITOR’S REPORT EMIRATES
DNATA TO THE OWNER OF DNATA
GROUP
FINANCIAL INFORMATION
EMIRATES FINANCIAL COMMENTARY
DNATA Our opinion FINANCIAL Independence COMMENTARY In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of dnata and its subsidiaries (together We are independent of dnata in accordance with the International Ethics Standards EMIRATES referred to as “dnata”) as at 31 March 2020, and its consolidated financial performance Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”) CONSOLIDATED and its consolidated cash flows for the year then ended in accordance with International FINANCIAL and the ethical requirements that are relevant to our audit of the consolidated STATEMENTS Financial Reporting Standards (“IFRS”). financial statements in the United Arab Emirates. We have fulfilled our other ethical
DNATA responsibilities in accordance with these requirements and the IESBA Code. CONSOLIDATED What we have audited FINANCIAL STATEMENTS dnata’s consolidated financial statements comprise: Our audit approach
ADDITIONAL ● the consolidated income statement for the year ended 31 March 2020; Overview INFORMATION ● the consolidated statement of comprehensive income for the year ended Key audit matter ● Impairment of goodwill 31 March 2020; ● the consolidated statement of financial position as at 31 March 2020; As part of designing our audit, we determined materiality and assessed the risks of ● the consolidated statement of changes in equity for the year ended 31 March 2020; material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect ● the consolidated statement of cash flows for the year ended 31 March 2020; and of significant accounting estimates that involved making assumptions and considering ● the notes to the consolidated financial statements, which include a summary of future events that are inherently uncertain. As in all of our audits, we also addressed significant accounting policies. the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material Basis for opinion misstatement due to fraud. We conducted our audit in accordance with International Standards on Auditing We tailored the scope of our audit in order to perform sufficient work to enable us to (“ISAs”). Our responsibilities under those standards are further described in the provide an opinion on the consolidated financial statements as a whole, taking into Auditor’s responsibilities for the audit of the consolidated financial statements section account the structure of dnata, the accounting processes and controls, and the industry of our report. in which dnata operates. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
PricewaterhouseCoopers (Dubai Branch), License no. 102451, Emaar Square, Building 4, Level 8, P O Box 11987, Dubai - United Arab Emirates T: +971 (0)4 304 3100, F: +971 (0)4 346 9150, www.pwc.com/me Douglas O’Mahony, Rami Sarhan, Jacques Fakhoury and Mohamed ElBorno are registered as practising auditors with the UAE Ministry of Economy 133 INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF DNATA (CONTINUED)
OVERVIEW Key audit matters EMIRATES Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate DNATA opinion on these matters. GROUP Key audit matter How our audit addressed the Key audit matter FINANCIAL INFORMATION Impairment of goodwill We obtained an understanding of management’s impairment models and EMIRATES key assumptions. We then tested these impairment models, in particular, with FINANCIAL As at 31 March 2020, the carrying value of goodwill was AED 1,934 million. Refer to COMMENTARY regard to the appropriateness of the key assumptions used within the models, notes 2, 3 and 11 to the consolidated financial statements. as follows: DNATA FINANCIAL Goodwill is not subject to amortisation and, as a result, in accordance with IAS 36 COMMENTARY ● we utilised our internal valuation specialists to perform independent “Impairment of assets” is required to be tested annually for impairment. calculations of the discount rates, with particular reference to comparable EMIRATES companies and compared these to the discount rates used by management; CONSOLIDATED The recoverable amount attributable to dnata’s cash generating units to which ● we agreed the base case cash flows used in management’s impairment FINANCIAL goodwill is allocated, is determined as being the higher of the fair values of those STATEMENTS models to approved budgets, including management’s assessment of the cash generating units less costs of disposal and their values in use. The recoverable impact of the COVID-19 pandemic; DNATA amount is compared to the carrying value of the cash generating units to which ● we compared future expected revenue growth rates and profit margins, used CONSOLIDATED goodwill is allocated in order to assess whether an impairment exists. The value in FINANCIAL in the formally approved budgets and beyond the period of the formally use is determined by calculating the discounted cash flows of the cash generating STATEMENTS approved budgets, to historical trends as well as future economic outlook units. ADDITIONAL and reviewed whether management’s estimates made in prior periods were INFORMATION reasonable compared to actual performance; The calculation of value in use incorporates key assumptions including expected revenue growth rates, profit margins, long term growth rates and discount rates. ● using our professional judgement and a variety of available economic analyses we assessed whether management’s forecast of the impact of The impairment model prepared by management in respect of two cash generating COVID-19 on the cash generating units, including estimates of revenue, cost units containing goodwill determined that an impairment was required which was and the COVID-19 forecast time horizon were reasonable; recorded by management in the consolidated financial statements. ● we compared the long term growth rates to external sources of information including economic forecasts; The impairment models prepared by management for the remaining cash ● we performed a sensitivity analysis over each of the significant assumptions generating units determined that adequate headroom existed not to result in the within the value in use calculations and considered the appropriateness of need for an impairment charge under management’s base case scenarios, being the impairment charge recognised; and their most likely expected outturns. ● we tested the mathematical accuracy of the models.
We focused on this area because the determination of whether an impairment loss We assessed whether the related disclosures in notes 2, 3 and 11 to the should be recognised is inherently complex and required management to exercise consolidated financial statements are consistent with the requirements of IFRS. significant judgement over the calculation of value in use.
Other information In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the Management is responsible for the other information. The other information comprises other information is materially inconsistent with the consolidated financial statements the information included in the Annual Report (but does not include the consolidated or our knowledge obtained in the audit, or otherwise appears to be materially misstated. financial statements and our auditor’s report thereon). If, based on the work we have performed, we conclude that there is a material Our opinion on the consolidated financial statements does not cover the other misstatement of this other information, we are required to report that fact. We have information and we do not express any form of assurance conclusion thereon. 134 nothing to report in this regard. INDEPENDENT AUDITOR’S REPORT TO THE OWNER OF DNATA (CONTINUED)
OVERVIEW Responsibilities of management and those charged with In preparing the consolidated financial statements, management is responsible for assessing dnata’s ability to continue as a going concern, disclosing, as applicable, EMIRATES governance for the consolidated financial statements matters related to going concern and using the going concern basis of accounting DNATA unless management either intends to liquidate dnata or to cease operations, or has no Management is responsible for the preparation and fair presentation of the realistic alternative but to do so. GROUP consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated Those charged with governance are responsible for overseeing dnata’s financial FINANCIAL INFORMATION financial statements that are free from material misstatement, whether due to fraud reporting process. or error. EMIRATES FINANCIAL COMMENTARY Auditor’s responsibilities for the audit of the consolidated financial statements DNATA FINANCIAL Our objectives are to obtain reasonable assurance about whether the consolidated ● Obtain sufficient appropriate audit evidence regarding the financial information COMMENTARY financial statements as a whole are free from material misstatement, whether due to of the entities or business activities within dnata to express an opinion on the fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable consolidated financial statements. We are responsible for the direction, supervision EMIRATES CONSOLIDATED assurance is a high level of assurance, but is not a guarantee that an audit conducted and performance of the dnata audit. We remain solely responsible for our audit FINANCIAL in accordance with ISAs will always detect a material misstatement when it exists. opinion. STATEMENTS Misstatements can arise from fraud or error and are considered material if, individually
DNATA or in the aggregate, they could reasonably be expected to influence the economic We communicate with those charged with governance regarding, among other matters, CONSOLIDATED decisions of users taken on the basis of these consolidated financial statements. the planned scope and timing of the audit and significant audit findings, including any FINANCIAL STATEMENTS significant deficiencies in internal control that we identify during our audit. As part of an audit in accordance with ISAs, we exercise professional judgement and ADDITIONAL maintain professional scepticism throughout the audit. We also: We also provide those charged with governance with a statement that we have complied INFORMATION ● Identify and assess the risks of material misstatement of the consolidated financial with relevant ethical requirements regarding independence, and to communicate with statements, whether due to fraud or error, design and perform audit procedures them all relationships and other matters that may reasonably be thought to bear on our responsive to those risks, and obtain audit evidence that is sufficient and independence, and where applicable, related safeguards. appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as From the matters communicated with those charged with governance, we determine fraud may involve collusion, forgery, intentional omissions, misrepresentations, or those matters that were of most significance in the audit of the consolidated financial the override of internal control. statements of the current year and are therefore the Key audit matters. We describe ● Obtain an understanding of internal control relevant to the audit in order to design these matters in our auditor’s report unless law or regulation precludes public disclosure audit procedures that are appropriate in the circumstances, but not for the purpose about the matter or when, in extremely rare circumstances, we determine that a matter of expressing an opinion on the effectiveness of dnata’s internal control. should not be communicated in our report because the adverse consequences of ● Evaluate the appropriateness of accounting policies used and the reasonableness of doing so would reasonably be expected to outweigh the public interest benefits of accounting estimates and related disclosures made by management. such communication. ● Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material PricewaterhouseCoopers uncertainty exists related to events or conditions that may cast significant doubt 7 May 2020 on dnata’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause dnata to cease to continue as a going concern. Douglas O’Mahony ● Evaluate the overall presentation, structure and content of the consolidated Registered Auditor Number 834 financial statements, including the disclosures, and whether the consolidated Dubai, United Arab Emirates financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 135 CONSOLIDATED INCOME STATEMENT dnata
FORCONSOLIDATED THE INCOMEYEAR STATEMENT ENDED 31 MARCH 2020 FOR THE YEAR ENDED 31 MARCH 2020 OVERVIEW dnata Note 2020 2019 EMIRATES CONSOLIDATED INCOME STATEMENT AED m AED m
DNATA RevenueFOR THE YEAR ENDED 31 MARCH 2020 5 14,223 13,888
GROUP Other operating income Note 2020 537 2019 531 Net impairment loss on trade and other receivables 15 (139) (67) FINANCIAL AED m AED m INFORMATION Operating costs 6 (14,114) (13,074) Revenue 5 14,223 13,888 Operating profit 507 1,278 EMIRATES Other operating income 537 531 FINANCIAL Finance income 162 143 COMMENTARY Net impairment loss on trade and other receivables 15 (139) (67) Finance costs (144) (45) Operating costs 6 (14,114) (13,074) DNATA Share of results of investments accounted for using the equity method 12 12 131 FINANCIAL Operating profit 507 1,278 COMMENTARY Profit before income tax 537 1,507 Finance income 162 143 Income tax credit / (expense) 7 68 (26) EMIRATES Finance costs (144) (45) CONSOLIDATED Profit for the year 605 1,481 FINANCIAL Share of results of investments accounted for using the equity method 12 12 131 STATEMENTS Profit / (loss) attributable to non-controlling interests (13) 3 6 Profit before income tax 537 1,507 Profit attributable to dnata's Owner 618 1,445 DNATA Income tax credit / (expense) 7 68 (26) CONSOLIDATED FINANCIAL CONSOLIDATEDProfit for the year STATEMENT OF COMPREHENSIVE INCOME 605 1,481 STATEMENTS FORProfit THE / (loss) YEAR attributable ENDED 31 to MARCH non-controlling 2020 interests (13) 3 6 ADDITIONAL CONSOLIDATEDProfit attributable to dnata's Owner STATEMENT OF COMPREHENSIVE INCOME 618 1,445 INFORMATION Profit for the year 605 1,481 FORItemsCONSOLIDATED that THE will not STATEMENTYEAR be reclassified ENDED OF COMPREHENSIVEto the consolidated 31 MARCH INCOME income statement 2020 FOR THERemeasurement YEAR ENDED of 31 retirement MARCH 2020benefit obligations - net of deferred tax 19 4 Share of other comprehensive income of investments accounted for using the equity method - Profit for the year 605 1,481 net of deferred tax 2 - Items that will not be reclassified to the consolidated income statement Items that are or may be reclassified subsequently to the consolidated income statement Remeasurement of retirement benefit obligations - net of deferred tax 19 4 Currency translation differences (94) (171) Share of other comprehensive income of investments accounted for using the equity method - Cash flow hedges 7 5 net of deferred tax 2 - Net investment hedge (3) 4 Items that are or may be reclassified subsequently to the consolidated income statement Share of other comprehensive income of investments accounted for using the equity method - Currency translation differences (94) (171) net of deferred tax (16) - Cash flow hedges 7 5 Other comprehensive income for the year (85) (158) Net investment hedge (3) 4 Total comprehensive income for the year 520 1,323 Share of other comprehensive income of investments accounted for using the equity method - Total comprehensive income attributable to non-controlling interests (18) 2 2 net of deferred tax (16) - Total comprehensive income attributable to dnata's Owner 538 1,301 Other comprehensive income for the year (85) (158) The accompanying notes are an integral part of these consolidated financial statements. Total comprehensive income for the year 520 1,323 1 Total comprehensive income attributable to non-controlling interests (18) 2 2 Total comprehensive income attributable to dnata's Owner 538 1,301 The accompanying notes are an integral part of these consolidated financial statements. 1 The accompanying notes are an integral part of these consolidated financial statements.
136 dnata dnataCONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENTCONSOLIDATEDAS OF FINANCIALAT 31 STATEMENTMARCHPOSITION OF 2020 FINANCIAL POSITION AS AT 31 MARCH 2020 AS AT 31 MARCH 2020
OVERVIEW Note 2020 2019Note 2020 2019 Note 2020 2019Note 2020 2019 EMIRATES AED m AED m AED m AED m AED m AED m AED m AED m ASSETSDNATA ASSETS EQUITY AND LIABILITIES EQUITY AND LIABILITIES
Non-currentGROUP assets Non-current assets Capital and reserves Capital and reserves Property, plant and equipmentProperty, plant and equipment 8 2,162 2,040 8 2,162 2,040 Capital Capital 16 63 63 16 63 63 FINANCIAL Right-of-useINFORMATION assets Right-of-use assets 9 1,963 - 9 1,963 - Capital reserve Capital reserve (70) (70) (70) (70)
InvestmentEMIRATES property Investment property 10 387 345 10 387 345 Other reserves Other reserves 17 (412) (311) 17 (412) (311) FINANCIAL IntangibleCOMMENTARY assets Intangible assets 11 2,785 3,039 11 2,785 3,039 Retained earnings Retained earnings 8,678 8,229 8,678 8,229 Investments accounted for usingInvestments the equity accounted for using the equity Attributable to dnata's OwnerAttributable to dnata's Owner 8,259 7,911 8,259 7,911 DNATA method FINANCIAL method 12 551 503 12 551 503 Non-controlling interests Non-controlling interests 43 116 43 116 COMMENTARY Advance lease rentals Advance lease rentals 13 - 45 13 - 45 Total equity Total equity 8,302 8,027 8,302 8,027 Trade andEMIRATES other receivables Trade and other receivables 15 15 114 15 15 114 CONSOLIDATED DeferredFINANCIAL income tax assets Deferred income tax assets21 280 110 21 280 110 Non-current liabilities Non-current liabilities STATEMENTS 8,143 6,196 8,143 6,196 Trade and other payables Trade and other payables 18 211 198 18 211 198 Current DNATAassets Current assets Borrowings and lease liabilitiesBorrowings and lease liabilities20 2,961 1,177 20 2,961 1,177 CONSOLIDATED InventoriesFINANCIAL Inventories 14 156 143 14 156 143 Provisions Provisions 19 682 598 19 682 598 STATEMENTS Trade and other receivables Trade and other receivables 15 3,018 3,611 15 3,018 3,611 Deferred income tax liabilitiesDeferred income tax liabilities21 255 153 21 255 153 DerivativeADDITIONAL financial instrumentsDerivative financial instruments 25 15 -25 15 - INFORMATION 4,109 2,126 4,109 2,126 Income tax assets Income tax assets 55 19 55 19 Current liabilities Current liabilities Short term bank deposits Short term bank deposits 24 3,700 3,121 24 3,700 3,121 Trade and other payables Trade and other payables 18 3,257 4,359 18 3,257 4,359 Cash and cash equivalents Cash and cash equivalents 24 1,616 2,001 24 1,616 2,001 Borrowings and lease liabilitiesBorrowings and lease liabilities20 957 432 20 957 432 8,560 8,895 8,560 8,895 Derivative financial instrumentsDerivative financial instruments 25 - 11 25 - 11 Total assets Total assets 16,703 15,091 16,703 15,091 Provisions Provisions 19 57 90 19 57 90 Income tax liabilities Income tax liabilities 21 46 21 46 4,292 4,938 4,292 4,938 Total liabilities Total liabilities 8,401 7,064 8,401 7,064 Total equity and liabilities Total equity and liabilities 16,703 15,091 16,703 15,091
The accompanying notes are anThe integral accompanying part of these notes consolidated are an integral financial part of statements. these consolidated financial statements. The consolidated financialfinancial statements statementsThe consolidated were were approved approved financial on onstatements 7 May7 May 2020 2020 were and and approvedsigned signed by: onby: 7 May 2020 and signed by:
Sheikh Ahmed bin Saeed Al-Maktoum Gary Chapman Chairman and Chief Executive President Sheikh Ahmed bin Saeed Al-MaktoumSheikh Ahmed bin Saeed Al-Maktoum Gary Chapman Gary Chapman 2 Chairman and Chief2 ExecutiveChairman and Chief Executive President President
The accompanying notes are an integral part of these consolidated financial statements.
137 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FORdnata THE YEAR ENDED 31 MARCH 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2020 OVERVIEW Attributable to dnata's Owner EMIRATES Non- Capital Other Retained controlling Total DNATA Note Capital reserve reserves earnings Total interests equity GROUP AED m AED m AED m AED m AED m AED m AED m FINANCIAL INFORMATION 1 April 2018 63 (60) (157) 7,257 7,103 179 7,282 Impact on adoption of IFRS 9 (Notes 12 and 15) - - - (14) (14) - (14) EMIRATES FINANCIAL Adjusted 1 April 2018 63 (60) (157) 7,243 7,089 179 7,268 COMMENTARY Profit for the year - - - 1,445 1,445 36 1,481
DNATA Other comprehensive income for the year - - (148) 4 (144) (14) (158) FINANCIAL COMMENTARY Total comprehensive income for the year - - (148) 1,449 1,301 22 1,323 Non-controlling interest on acquisition of subsidiaries 29 - - - - - 8 8 EMIRATES CONSOLIDATED Acquired from non-controlling interest - 4 2 - 3 1 73 (55) 18 FINANCIAL STATEMENTS Dividends - - - (500) (500) (38) (538) Option to acquire non-controlling interest - (52) - - (52) - (52) DNATA CONSOLIDATED Transfer to retained earnings - - (6) 6 - - - FINANCIAL STATEMENTS Transactions with Owners - (10) (6) (463) (479) (85) (564) 31 March 2019 63 (70) (311) 8,229 7,911 116 8,027 ADDITIONAL INFORMATION Impact on adoption of IFRS 16 (Note 2) - - - (192) (192) (6) (198) Adjusted 1 April 2019 63 (70) (311) 8,037 7,719 110 7,829 Profit / (loss) for the year - - - 618 618 (13) 605 Other comprehensive income for the year - - (101) 21 (80) (5) (85) Total comprehensive income for the year - - (101) 639 538 (18) 520 Acquired from non-controlling interest - - - 2 2 (2) - Dividends - - - - - (47) (47) Transactions with Owners - - - 2 2 (49) (47) 31 March 2020 63 (70) (412) 8,678 8,259 43 8,302
The capital reserve includes the fair value of the options issued by dnata to acquire the non-controlling interest in subsidiaries.
The accompanying notes are an integral part of these consolidated financial statements.
3
The accompanying notes are an integral part of these consolidated financial statements.
138 CONSOLIDATEDdnata STATEMENT OF CASH FLOWS dnata CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENTFOR OF CASH THE FLOWS YEAR ENDED 31 MARCH 2020 FOR THE YEAR ENDED 31 MARCH 2020 FOR THE YEAR ENDED 31 MARCH 2020 OVERVIEW Note 2020 2019 Note 2020 2019 Note 2020 2019 Note 2020 2019 EMIRATES AED m AED m AED m AED m AED m AED m AED m AED m Investing activities DNATA Operating activities Investing activities Operating activities Additions to property, plant and equipment 8 (545) (427) Profit before income tax 537 1,507 Additions to property, plant and equipment 8 (545) (427) Profit beforeGROUP income tax 537 1,507 Additions to investment property 10 (17) (20) Adjustments for: Additions to investment property 10 (17) (20) Adjustments for: FINANCIAL Additions to intangible assets 11 (122) (226) Depreciation, amortisation and impairment 6 1,128 624 Additions to intangible assets 11 (122) (226) Depreciation,INFORMATION amortisation and impairment 6 1,128 624 Investments in associates and joint ventures 12 (117) (26) Finance income - net (18) (98) Investments in associates and joint ventures 12 (117) (26) FinanceEMIRATES income - net (18) (98) Dividends from investments accounted for using FINANCIAL Amortisation of advance lease rentals 13 - 4 Dividends from investments accounted for using AmortisationCOMMENTARY of advance lease rentals 13 - 4 the equity method 12 64 67 Share of results of investments accounted for the equity method 12 64 67 Share of results of investments accounted for Acquisition of subsidiaries, net of cash acquired 29 (18) (480) DNATA using the equity method 12 (12) (131) Acquisition of subsidiaries, net of cash acquired 29 (18) (480) using the equity method 12 (12) (131) FINANCIAL Proceeds from sale of property, plant and COMMENTARY Gain on sale of investments accounted for Proceeds from sale of property, plant and Gain on sale of investments accounted for equipment 27 10 using the equity method 12 (216) (3) equipment 27 10 using the equity method EMIRATES 12 (216) (3) Proceeds from sale of investments accounted for CONSOLIDATED Gain on sale of investment held for sale - net - (321) Proceeds from sale of investments accounted for Gain on sale of investment held for sale - net - (321) FINANCIAL using the equity method 186 18 STATEMENTS Gain on fair value remeasurement of using the equity method 186 18 Gain on fair value remeasurement of Proceeds from sale of held for sale investment - 412 investments accounted for using the equity Proceeds from sale of held for sale investment - 412 investmentsDNATA accounted for using the equity Loans to related parties - net 27 94 - CONSOLIDATED method 12 (38) - Loans to related parties - net 27 94 - method 12 (38) - FINANCIAL Movement in short term bank deposits - over 3 STATEMENTS Bargain on acquisition of subsidiary 29 (11) - Movement in short term bank deposits - over 3 Bargain on acquisition of subsidiary 29 (11) - months original maturity (579) 639 Net loss on disposals / write-offs of property, months original maturity (579) 639 Net lossADDITIONAL on disposals / write-offs of property, Interest received 149 136 INFORMATION plant and equipment 3 1 Interest received 149 136 plant and equipment 3 1 Acquired from non-controlling interest - (25) Net provision for impairment of trade and Acquired from non-controlling interest - (25) Net provision for impairment of trade and Net cash (used in) / generated from investing activities (878) 7 8 other receivables 15 139 67 Net cash (used in) / generated from investing activities (878) 7 8 other receivables 15 139 67 Provision for retirement benefit obligations 6 323 259 Financing activities Provision for retirement benefit obligations 6 323 259 Financing activities Net movement in derivative financial Proceeds from term loans 20 (a) 412 613 Net movement in derivative financial Proceeds from term loans 20 (a) 412 613 instruments (26) (7) Repayment of term loans 20 (a) (298) (156) instruments (26) (7) Repayment of term loans 20 (a) (298) (156) Payments of retirement benefit obligations (287) (220) Principal element of lease payments (2019: Payments of retirement benefit obligations (287) (220) Principal element of lease payments (2019: Income tax paid - (63) Principal element of finance lease payments) (337) (16) Income tax paid - (63) Principal element of finance lease payments) (337) (16) Change in inventories 7 (7) Interest paid (129) (46) Change in inventories 7 (7) Interest paid (129) (46) Change in advance lease rentals, trade and other Dividend paid to dnata's Owner (500) (1,000) Change in advance lease rentals, trade and other 256 (161) Dividend paid to dnata's Owner (500) (1,000) receivables 256 (161) Dividends paid to non-controlling interests (47) (38) receivables Dividends paid to non-controlling interests (47) (38) Change in trade and other payables and other Net cash used in financing activities (899) (643) Change in trade and other payables and other (392) (34) Net cash used in financing activities (899) (643) provisions (392) (34) Net change in cash and cash equivalents (384) 852 provisions Net change in cash and cash equivalents (384) 852 Net cash generated from operating activities 1,393 1,417 Cash and cash equivalents at beginning of the year 1,906 1,112 Net cash generated from operating activities 1,393 1,417 Cash and cash equivalents at beginning of the year 1,906 1,112 Effects of exchange rate changes (42) (58) Effects of exchange rate changes (42) (58) The accompanying notes are an integral part of these consolidated financial statements. Cash and cash equivalents at end of the year 24 1,480 1,906 The accompanying notes are an integral part of these consolidated financial statements. Cash and cash equivalents at end of the year 24 1,480 1,906
4 4
The accompanying notes are an integral part of these consolidated financial statements.
139
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTESFOR TOTHE THE YEARCONSOLIDATED ENDED FINANCIAL 31 MARCH STATEMENTS 2020 dnata entered this crisis in a strong position, having previously reported profits for the FOR THE YEAR ENDED 31 MARCH 2020 past many years and an available cash balance of AED 5.3 bn as at 31 March 2020. dnata has taken various measures to manage the business through this crisis, including OVERVIEW 1.NOTES General TO information THE CONSOLIDATED FINANCIAL STATEMENTS compensatingdnata entered this cost crisis saving in a measures, strong position, reductions having to previous discretionaryly reported capital profits expenditure, for the availingpast many support years and from an available governments cash balance where suchof AED support 5.3 bn as is at availab 31 Marchle and 2020. securing dnata EMIRATES FOR THE YEAR ENDED 31 MARCH 2020 additional external debt facilities. dnata comprises dnata and its subsidiaries. dnata was incorporated in the Emirate of has taken various measures to manage the business through this crisis, including DNATA Dubai,1. General UAE informationwith limited liability, under an Emiri Decree issued by H.H. Sheikh Maktoum compensating cost saving measures, reductions to discretionary capital expenditure, availing support from governments where such support is available and securing bin Rashid Al-Maktoum on 4 April 1987. On that date, the total assets and liabilities of Based on dnata’s cash flow forecasts for the 12 month period following the approval of GROUP additional external debt facilities. Dubaidnata comprisesNational Air dnata Travel and Agency its subsidiaries. were transferred dnata was to dnata, incorpora wittedh effect in the from Emirate 1 April of these financial statements dnata expects to have sufficient liquidity to meet its FINANCIAL 1987,Dubai, forUAE nil with consideration. limited liability, dnata under is wholly an Emiri owned Decree by issued the Investment by H.H. Sheikh Corporation Maktoum of obligations and accordingly management has prepared the financial statements on a INFORMATION Dubai (“the parent company”), a Government of Dubai entity. bin Rashid Al-Maktoum on 4 April 1987. On that date, the total assets and liabilities of goingBased concernon dnata’s basis. cash flow forecasts for the 12 month period following the approval of
EMIRATES Dubai National Air Travel Agency were transferred to dnata, with effect from 1 April these financial statements dnata expects to have sufficient liquidity to meet its dnata is incorporated and domiciled in Dubai, UAE. The address of its registered office is FINANCIAL 1987, for nil consideration. dnata is wholly owned by the Investment Corporation of Allobligations amounts andare presented accordingly in managementmillions of UAE has Dirham prepared (“AED the m”). financi al statements on a COMMENTARY Dnata Travel Centre, PO Box 1515, Dubai, UAE. Dubai (“the parent company”), a Government of Dubai entity. going concern basis.
DNATA New standards, amendments to published standards and interpretations that are FINANCIAL Thednata main is incorporated activities of dnataand domiciled comprise: in Dubai, UAE. The address of its registered office is relevantAll amounts to dnataare presented in millions of UAE Dirham (“AED m”). COMMENTARY Dnata Travel Centre, PO Box 1515, Dubai, UAE.
Ground and cargo handling services EMIRATES AtNew the standards, date of authorisation amendments of to these published consolidated standards financial and interpreta statements,tions certain that new are CONSOLIDATED The Inflightmain activities catering of dnata comprise: standards,relevant to amendmentsdnata to the existing standards and interpretations have become FINANCIAL Travel services STATEMENTS mandatory for the year ended 31 March 2020. Except for IFRS 16, as explained below, no Ground and cargo handling services otherAt the new date standards, of authorisation amendments of these or consolidated interpretations, financial whether statements, effective certainor not, neware DNATA 2. SummaryInflight catering of significant accounting policies expectedstandards, to amendmentshave a material to impact the existing on dnata. standards and interpretations have become CONSOLIDATED Travel services FINANCIAL mandatory for the year ended 31 March 2020. Except for IFRS 16, as explained below, no STATEMENTS A summary of the significant accounting policies, which have been applied consistently IFotherRS 16, new Leases standards, amendments or interpretations, whether effective or not, are in2. the Summary preparation of significant of these consolidated accounting financialpolicies statements are set out below. expected to have a material impact on dnata. ADDITIONAL INFORMATION Th e new standard replaces IAS 17 and requires almost all leases to be recognised on the BasisA summary of preparation of the significant accounting policies, which have been applied consistently balanceIFRS 16, sheetLeases by a lessee, as the distinction between operating and finance lease is in the preparation of these consolidated financial statements are set out below. removed. Under the new standard, an asset (right-of-use) and a financial liability to pay The consolidated financial statements have been prepared in accordance with rentalsThe new is standard recognised. replaces Leases IAS are 17 capitalisedand requires as almost right-of-use all leases assets to be by recognised recognising on the InternationalBasis of preparation Financial Reporting Standards (IFRS) and interpretaions issued by the IFRS presentbalance value sheet of by the a lessee,lease payments, as the distinction adjusted between for prepayments, operating initial and direct finance costs lease and is Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The restorationremoved. Under costs, the and new are standard, depreciated an asset over (right-of-use) the lease term and exce a financialpt in cases liability where to pay the consolidatedThe consolidated financial financial statements statements have have been been prepared prepared under in the acc historicalordance withcost underlyingrentals is recognised. asset will be Leases acquired are by capitalised the lessee asat the right-of-use end of the a ssetslease byterm, recognising in which case the convention,International exceptFinancial for Reporting those financialStandards assets(IFRS) and and interpre liabilitiestaions (including issued by derivative the IFRS thepresent right-of-use value of assetthe lease is depreciated payments, over adjusted the useful for prepayments, life of the asset. initial In direct respect costs of andthe instruments)Interpretations that Committee are measured (IFRS at IC) fair applicable value as stated to companies in the accounting reporting policies. under IFRS. The consolidatedrestoration costs, income and statement, are depreciated the operating over the lease lease chargeterm exce haspt b ineen cases replaced where with the consolidated financial statements have been prepared under the historical cost depreciationunderlying asset of right-of-use will be acquired asset by and the interest lessee onat thelease end liabil of ity,the resultinglease term, in totalin which expense case convention, except for those financial assets and liabilities (including derivative The COVID-19 outbreak has developed rapidly in 2020, with a significant number of beingthe right-of-use higher in the asset earlier is depreciated years of a lease over and the lower useful in lifelater of years. the asset. In respect of the instruments) that are measured at fair value as stated in the accounting policies. infections being recorded globally. Measures taken to contain and slow the spread of consolidated income statement, the operating lease charge has been replaced with
the virus have significantly impacted global economic activity including limiting Indepreciation accordance of with right-of-use the transitional asset and provisions interest of on IFRS lease 16, liabil dnatity,a appliedresulting the in newtotal standard expense movementsThe COVID-19 of people outbreak and has restricting developed flights. rapidly in 2020, with a significant number of frombeing 1higher April in 2019 the ('transitionearlier years date') of a lease by adopting and lower the in modifiedlater years. retrospective approach, infections being recorded globally. Measures taken to contain and slow the spread of under which the cumulative effect of initial application is recognised in retained the virus have significantly impacted global economic activity including limiting earnings,In accordance and comparativeswith the transitional are not provisionsre-stated. of IFRS 16, dnata applied the new standard The worldwide aviation and travel markets have been significantly disrupted in the short movements of people and restricting flights. from 1 April 2019 ('transition date') by adopting the modified retrospective approach, term, this disruption is expected to be followed by a gradual recovery as travel under which the cumulative effect of initial application is recognised in retained restrictions are lifted. dnata’s revenue will therefore be negatively impacted as a result of earnings, and comparatives are not re-stated. theThe outbreak.worldwide aviation and travel markets have been significantly disrupted in the short
term, this disruption is expected to be followed by a gradual recovery as travel
restrictions are lifted. dnata’s revenue will therefore be negatively impacted as a result of 5
the outbreak.
5
140 OVERVIEW 2.2. SummarySummary ofof significantsignificant accountingaccounting policiespolicies (continued)(continued) TheThe carrying carrying amount amount of of the the right-of-use right-of-use asset asset and and lease lease liabili liabilityty as as at at transition transition date date pertaining to leases previously classified as finance leases applying IAS 17 remains EMIRATES pertaining to leases previously classified as finance leases applying IAS 17 remains IFRSIFRS 16,16, LeasesLeases (continued)(continued) unchangedunchanged andand thesethese assetsassets areare nownow re-classifiedre-classified fromfrom 'propert'property,y, plantplant andand equipment'equipment' DNATA toto right-of-useright-of-use assetsassets inin thethe coconsolidatednsolidated statementstatement ofof financifinancialal position.position. LeaseLease liabilitiesliabilities areare measuredmeasured atat thethe presentpresent valuevalue ofof thethe remaremainingining leaselease payments.payments. TheThe GROUP discountdiscount rate rate used used to to value value the the lease lease liability liability corresponds, corresponds, fo forr each each lease lease portfolio, portfolio, to to dnatadnata hashas optedopted notnot toto applyapply IFRSIFRS 1616 toto intangibleintangible assets.assets. FINANCIAL dnata’sdnata’s incremental incremental borrowing borrowing rate rate for for similar similar assets assets as as at at the the transition transition date. date. dnata dnata INFORMATION chosechose onon aa lease-by-leaselease-by-lease basis,basis, toto measuremeasure thethe right-of-useright-of-use asassetset atat either:either: UponUpon adoptionadoption ofof thethe newnew standardstandard onon 11 AprilApril 2019,2019, dnata’sdnata’s consconsolidatedolidated statementstatement ofof financialfinancial positionposition hashas beenbeen impactedimpacted asas follows:follows: EMIRATES FINANCIAL a.)a.) itsits carrying carrying amount amount as as if if the the new new rules rules had had always always been been applied applied sincesince thethe leaselease COMMENTARY commencementcommencement date date but but discounted discounted using using dnata’s dnata’s incremental incremental borr borrowingowing rate rate at at AsAs reportedreported AdjustedAdjusted thethe transitiontransition datedate i.e.i.e. thethe cumulativecumulative depreciationdepreciation impactimpact frofromm thethe commencementcommencement 3131 MarchMarch IFRSIFRS 1616 1 April DNATA 1 April FINANCIAL datedate toto thethe datedate ofof transitiontransition isis reflectedreflected inin thethe initialinitial recorecognitiongnition ofof thethe right-of-useright-of-use 20192019 adjustmentadjustment 20192019 COMMENTARY asset.asset. ThisThis hashas beenbeen appliedapplied toto aa significantsignificant portfolioportfolio ofof dnatdnata’sa’s leasesleases primarilyprimarily landland NoteNote AEDAED mm A AEEDD mm AED AED mm andand building;building; oror EMIRATES ASSETSASSETS CONSOLIDATED Property,Property, plantplant andand equipmentequipment 8 8 2,0402,040 (78)(78) 1,9621,962 FINANCIAL b.)b.) anan amount amount equal equal to to the the lease lease liability, liability, adjusted adjusted by by the the amount amount ofof any any prepaid prepaid or or STATEMENTS Right-of-useRight-of-use assetasset 99 -- 1,9721,972 1,9721,972 accruedaccrued lease lease payments payments relating relating to to that that lease lease recognised recognised in in the the consolidated consolidated InvestmentInvestment propertyproperty 1010 345345 4141 386386 DNATA statementstatement of of financial financial position position immediately immediately prior prior to to the the date date o off transition. transition. This This Investments accounted for CONSOLIDATED measurementmeasurement hashas beenbeen appliedapplied toto aa smallersmaller portfolioportfolio ofof leases.leases. Investments accounted for FINANCIAL usingusing thethe equityequity methodmethod 1212 503503 (47)(47) 456456 STATEMENTS Advance lease rentals 13 48 (48) - TheThe right-of-use right-of-use assets assets are are presented presented as as a a separate separate line line item item i inn the the consolidated consolidated Advance lease rentals 13 48 (48) - ADDITIONAL statementstatement of of financial financial position position andand the the related related lease lease liabiliti liabilitieses are are included included within within DeferredDeferred taxtax assetsassets 2121 128128 152152 280280 INFORMATION ‘Borrowings‘Borrowings andand leaselease liabilities’liabilities’ (Note(Note 2020 (b)).(b)). TradeTrade andand otherother receivablesreceivables 3,725 1616 3,741 ImpactImpact onon assetsassets 2,0082,008 OnOn transition transition to to IFRS IFRS 16, 16, dnata dnata applied applied the the practical practical expedient expedient and and elected elected not not to to re- re- assessassess which which contractual contractual arrangements arrangements qualify qualify as as leases leases under under I IFRSFRS 16. 16. It It applied applied the the EQUITYEQUITY ANDAND LIABILITIESLIABILITIES transitiontransition rulesrules ofof IFRSIFRS 1616 onlyonly toto contractscontracts thatthat werewere previoupreviouslysly identifiedidentified asas leasesleases asas EQUITYEQUITY perper IASIAS 1717 oror IFRICIFRIC 4.4. TheThe definitiondefinition ofof aa leaselease underunder IFRSIFRS 1616 waswas appliedapplied toto contractscontracts RetainedRetained earningsearnings 7,9117,911 (192)(192) 7,7197,719 enteredentered intointo oror changedchanged onon oror afterafter thethe transitiontransition date.date. FurtheFurther,r, dnatadnata hashas appliedapplied thethe followingfollowing permittedpermitted practicalpractical expedientsexpedients onon aa lease-by-leaselease-by-lease babasis:sis: Non-controllingNon-controlling interestsinterests 116116 (6)(6) 110110 ImpactImpact onon equityequity (198)(198) singlesingle discountdiscount raterate hashas beenbeen appliedapplied toto aa portfolioportfolio ofof leasesleases withwith reasonablyreasonably similarsimilar LIABILITIESLIABILITIES characteristics;characteristics; TradeTrade andand otherother payablespayables 4,557 (14)(14) 4,543 thethe newnew leaselease measurementmeasurement rulesrules havehave notnot beenbeen appliedapplied toto leasesleases expiringexpiring withinwithin 1212 BorrowingsBorrowings andand leaselease liabilitiesliabilities 20 20 6969 2,0912,091 2,1602,160 monthsmonths ofof thethe transitiontransition datedate anandd areare accountedaccounted forfor asas shortshort tetermrm leases;leases; DeferredDeferred taxtax liabilitiesliabilities 2121 171171 129129 300300 initialinitial direct direct costs costs associated associated with with the the lease lease have have been been exclud excludeded from from the the Impact on liabilities 2,206 measurementmeasurement ofof thethe right-of-useright-of-use asset;asset; andand Impact on liabilities 2,206 hindsighthindsight has has been been used used in in determining determining the the lease lease term term for for contr contractsacts having having ImpactImpact on on equity equity and and extension/terminationextension/termination options.options. liabilitiesliabilities 2,0082,008
66
141 OVERVIEW 2. Summary of significant accounting policies (continued) When dnata ceases to have control, any retained interest in the entity entity or or business business is is remeasured to its fair value at the date when control is lost, with the change in the EMIRATES remeasured to its fair value at the date when control is lost, with the change in the Basis of consolidation carrying amount recognised in the consolidated income statement.. The The fair fair value value DNATA becomes the initial carrying amount for the purposes of subsequent accounting for the The acquisition method of accounting is used to account for businessiness combinationscombinations byby retained interest as an associate, joint venture or financial asset. In addition, any GROUP dnata. The consideration transferred for the acquisition of a subsidiary comprises the fair amounts previously recognised in otherother comprehensivecomprehensive incomeincome inin respect of that entity FINANCIAL value of the assets transferred, liabilities acquired, fair value of any contingent or business are accounted for as if the related assets or liabilitieslities have have been been directly directly INFORMATION consideration arrangements and the fair value of any pre-existing equity interest in the disposed off. This may mean that amounts previously recognised inin other other subsidiary. comprehensive income are reclassified to the consolidated income statement. EMIRATES FINANCIAL COMMENTARY Acquisition-related costs are expensed as incurred. Identifiable assets, including Associates are those entities in which dnata has significant influence but not control or intangibleintangible assets assets acquired, acquired, liabilities liabilities and and contingent contingent liabilit liabilities,ies, if if any, any, incurred incurred or or jointjoint control control generally generally accompanying accompanying a a shareholding shareholding between between 20% 20% andand 50%50% ofof thethe DNATA FINANCIAL assumed in a business combination, are measured initially at their fair values at the voting rights. Significant influence is the power to participate in the financial and COMMENTARY acquisition date. Any non-controlling interest in the subsidiary is recognised on an operating policy decisions of the entity, but is not control or joint joint control control over over those those acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s policies. Investments in associates are accounted for by applying the equity method and EMIRATES CONSOLIDATED proportionate share of recognised amounts of subsidiaries’ identifiable net assets. includeinclude goodwill goodwill (net (net of of accumulatedaccumulated impairmentimpairment loss, loss, if if any)any) i identified on acquisition FINANCIAL after initially being recorded at cost. STATEMENTS Contingent consideration is classified either as equity or a financial liability. Amounts DNATA classified as a financial liability are subsequently remeasured toto fairfair valuevalue withwith changeschanges inin Joint ventures are contractual arrangements which establish joint control and where CONSOLIDATED fair value recognised in the consolidated income statement. dnata has rights to the net assets of the arrangement. Joint control is the contractually FINANCIAL STATEMENTS agreed sharing of control of an arrangement, which exists only when decisions about the IfIf thethe businessbusiness combinationcombination isis achievedachieved inin stages,stages, thethe acquisitacquisitionion datedate carryingcarrying valuevalue ofof relevant activities require the unanimous consent of the parties sharing control. ADDITIONAL dnata’s previously held equity interest in the subsidiary is remeasured at fair value at the InvestmentsInvestments in in joint joint ventures ventures are are accounted accounted for for by by applying applying the the equity equity method method and and INFORMATION acquisition date. Any gains or losses arising from such remeasurement are recognised in includeinclude goodwill goodwill (net (net of of accumulated accumulated impairment impairment loss, loss, if if any) any) i identified on acquisition the consolidated income statement. after initially being recognised at cost.
Subsidiaries are those entities over which dnata has control. Control is exercised when When dnata’s share of losses in an equity-accounted investment equals or exceed its dnata is exposed to, or has rights to, variable returns from its involvement with the entity interestinterest inin thethe entity,entity, includingincluding anyany otherother unsecuredunsecured longlong termterm receivablesreceivables inin thethe naturenature and has the ability to affect those returns through its power over that entity. Subsidiaries of an investment, dnata does not recognise further losses, unless it has incurred are fully consolidated from the date on which control is transferred to dnata and are de- obligations or made payments on behalf of the other entity. consolidated from the date on which control ceases. Inter-company transactions, balances and unrealised gains and losses arising on transactions between dnata and its IfIf the the ownership ownership in in a a joint joint venture venture or or an an associate associate is is reduced reduced but joint control or subsidiaries are eliminated. significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to the consolidated income dnata treats transactions with non-controlling interests that do not result in loss of statement where appropriate. control as transactions with the owners. A change in ownership interestinterest results results in in an an adjustment between the carrying amounts of the controlling and non-controlling All material unrealised gains and losses arising on transactions between dnata and its interestsinterests to to reflect reflect their their relative relative interests interests in in the the subsidiary subsidiary.. Any Any difference difference between between associates and joint ventures are eliminated to the extent of dnata’s interest. amount of the adjustment to non-controlling interests and any consideration paid is recorded in equity. Accounting policies of subsidiaries, associates and joint ventures have been changed where necessary to ensure consistency with dnata’s accounting policies.
7
142 OVERVIEW 2. Summary of significant accounting policies (continued) For the purposes of consolidation, where functional currencies of subsidiaries are EMIRATES different from AED, income, other comprehensive income and cash flow statements of Revenue subsidiaries are translated into AED at average exchange rates for the year that DNATA approximate the cumulative effect of rates prevailing on the transaction dates and their Revenue is measured at the fair value of the consideration received or receivable, and assets and liabilities are translated at the exchange rates ruling at the end of reporting GROUP represents amounts receivable for goods supplied or services provided, stated net of period. The resulting exchange differences are recognised in other comprehensive FINANCIAL discounts, returns and value added tax. income. INFORMATION
EMIRATES Revenue from airport operations which includes ground and cargo handling services is Share of results and share of movement in other comprehensive income of investments FINANCIAL recognised on the performance of the related service obligation. accounted for using the equity method are translated into AED at average exchange COMMENTARY rates whereas dnata’s share of net investments is translated at the exchange rate
DNATA Revenue from travel services includes the sale of travel holiday packages and individual prevailing at the end of the reporting period. Translation differences relating to FINANCIAL travel component bookings. Where dnata acts as principal in the arrangement, the total investments in associates, joint ventures and monetary assets and liabilities that form COMMENTARY consideration received is treated as revenue and allocated to separate performance part of a net investment in a foreign operation are recognised in other comprehensive
EMIRATES obligations based on relative stand-alone selling prices. The allocated revenue from such income. CONSOLIDATED contracts is recognised on satisfaction of each performance obligation within a single FINANCIAL contract with the customer. Where dnata acts as an agent between the service provider When investments in subsidiaries, associates, joint ventures or net investment in a STATEMENTS and the end customer, net commission is recognised as revenue on satisfaction of the foreign operation are disposed of, the related translation differences previously recorded DNATA performance obligation, i.e., on confirmation of the travel booking taking place. in equity are then recognised in the consolidated income statement as part of the gain CONSOLIDATED or loss on disposal. FINANCIAL STATEMENTS Revenue from the sale of goods (including in-flight catering) is recognised when the control of goods is transferred to the customer. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are ADDITIONAL treated as assets and liabilities of the foreign entity and translated at the exchange rates INFORMATION Finance income and costs prevailing at the end of the reporting period. Exchange differences arising are recognised in other comprehensive income. Interest income and costs are recognised on a time proportion basis using the effective interest method. Property, plant and equipment
Foreign currency translation Property, plant and equipment is stated at cost less accumulated depreciation and impairment. Cost consists of the purchase cost, together with any incidental expenses of dnata’s consolidated financial statements are presented in UAE Dirham (“AED”), which is acquisition. also the entity’s functional currency. Subsidiaries, associates and joint ventures determine their own functional currency related to the primary economic environment in Subsequent costs are included in the asset’s carrying amount or recognised as a which they operate. separate asset, as appropriate, only when it is probable that future economic benefits associated with the items will flow to dnata and the cost can be measured reliably. Foreign currency transactions are translated into the functional currency, at the exchange Repairs and maintenance are charged to the consolidated income statement during the rates prevailing at the transaction dates. Monetary assets and liabilities denominated in period in which they are incurred. foreign currencies are translated into the functional currency at the exchange rates prevailing at the end of the reporting period. The resulting foreign exchange gains and Land is not depreciated. Depreciation on other items of property, plant and equipment is losses, other than those on qualifying net investment hedges and net investment in calculated using the straight line method to allocate their cost, less estimated residual foreign operations which are deferred in other comprehensive income, are recognised in values, over the estimated useful lives of the assets or the lease term, if shorter. the consolidated income statement.
8
143 OVERVIEW 2. Summary of significant accounting policies (continued) dnata uses two exemptions as permitted under IFRS 16 for not capitalising the leased
EMIRATES asset i.e. short-term leases (with a lease term of 12 months or less) and lease contracts Property, plant and equipment (continued) for which the value of the underlying asset is materially low (primarily comprising of DNATA office space and equipment). For these leases, the lease rental charges are recognised as The estimated useful lives are: an operating expense on a straight-line basis over the period of the lease. GROUP
FINANCIAL Buildings 15 - 33 years At lease commencement date, lease liability is measured at the present value of the INFORMATION Leasehold property shorter of useful life or lease term future lease payments, discounted using the interest rate implicit in the lease or, if that Plant and machinery 4 - 15 years rate cannot be readily determined, dnata’s incremental borrowing rate for borrowing EMIRATES FINANCIAL Office equipment and furniture 3 - 6 years funds necessary to obtain an asset of similar value to the right-of-use asset in a similar COMMENTARY Motor vehicles 5 -10 years economic environment with similar terms, security and conditions. The future lease payments comprise of fixed payments, variable payments that are dependent on an DNATA FINANCIAL The assets’ residual values and useful lives are reviewed at least annually, and adjusted if index (e.g. LIBOR) less any lease incentives receivable. All other variable lease payments COMMENTARY appropriate. are charged to the consolidated income statement as and when due.
EMIRATES CONSOLIDATED Capital projects are stated at cost. When the asset is ready for its intended use, it is Subsequent changes resulting from reassessments or lease modifications that are not FINANCIAL transferred from capital projects to the appropriate category under property, plant and accounted for as separate leases (together referred as ‘remeasurements’) are accounted STATEMENTS equipment and depreciated in accordance with dnata’s policies. as adjustments to the carrying value of the lease liability and corresponding impact to DNATA the related right-of-use asset. CONSOLIDATED An item of property, plant and equipment is derecognised upon disposal or when no FINANCIAL STATEMENTS future economic benefits are expected from its use or disposal. Gains and losses on Sale and leaseback transactions are tested as sale under IFRS 15 at the date of the derecognition are determined by comparing proceeds with the carrying amount and are transaction, and if qualified as sale, the underlying asset is derecognised and a right-of- ADDITIONAL recognised in the consolidated income statement. use asset with a corresponding liability is recognised equal to the retained interest in the INFORMATION asset. Any gain or loss is recognised immediately in the consolidated income statement Leases (applicable from 1 April 2019) for the interest in the asset transferred to the lessor. If the transaction does not qualify as sale under IFRS 15, a financial liability equal to the sale value is recognised in the Right-of-use assets are capitalised at the commencement of the lease and recognised at consolidated financial statements as “Term Loans” under 'Borrowings and lease cost, comprising of the present value of payments to be made to the lessor, any advance liabilities'. lease rentals made at inception, together with the initial direct costs incurred by dnata in respect of acquiring the lease and the present value of an estimate of costs to be Leases (applicable till 31 March 2019) incurred to meet the contractual lease-end restoration obligations less any lease incentives received. Where property, plant and equipment has been financed by lease agreements under which substantially all of the risks and rewards incidental to ownership are transferred to For contracts which contain one or more lease components, the consideration in the dnata, they are classified as finance leases. contract has been allocated to each component on the basis of the relative stand-alone price of the component determined on the basis of estimated observable information. Finance leases are capitalised at the commencement of the lease at the lower of the present value of the minimum lease payments or the fair value of the leased asset. The Right-of-use assets are depreciated over the useful life or lease term (whichever is corresponding lease obligations are included under liabilities. Lease payments are lower), unless the underlying lease contract provides an option to dnata to acquire the treated as consisting of capital and interest elements. The interest element is charged to asset at the end of the lease term and it is highly certain for dnata to exercise that the consolidated income statement as finance costs over the lease term so as to produce option. In such cases, the right-of-use asset is depreciated over the useful life in a constant periodic rate of interest on the remaining balance of the liability. Property, accordance with dnata's policies applicable to property, plant and equipment. Right-of- plant and equipment acquired under finance leases are depreciated in accordance with use assets held for generating rental income are classified under Investment property in dnata’s policies. the consolidated statement of financial position.
9
144 OVERVIEW 2. Summary of significant accounting policies (continued) Goodwill is tested for impairment annually or more frequently if events or changes in
EMIRATES 2. Summary of significant accounting policies (continued) circumstancesGoodwill is tested indicate for impairment a potential annually impairment or more and is frequently carried at i f cost events less or accumulated changes in Leases (applicable till 31 March 2019) (continued) impairmentcircumstances losses. indicate For the a potenti purposeal impairmentof impairment and testing, is carried goodw at costill is lessallocated accumulated to cash DNATA Leases (applicable till 31 March 2019) (continued) generatingimpairment unitlosses. or groupFor the of purpose cash generating of impairment units thattesting, are expegoodwctedill isto allocatedbenefit from to cash the Leases, where a significant portion of risks and rewards of ownership are retained by the businessgenerating combination unit or group in of which cash thegenerating goodwill units arose. that An are impairment expected to loss benefit is recognised from the GROUP lessorLeases, are where classified a significant as operating portion leases. of risks Lease and rewardsrental charges of own, ershipincluding are advanceretained rentalsby the whenbusiness the combinationcarrying value in of which the cash the goodwillgenerating arose. unit Anor group impairment of cash loss generating is recognised units FINANCIAL inlessor respect are classifiedof operating as operating leases, are leases. charged Lease to therental consolidated charges, including income advancestatement rentals on a exceedswhen the its carrying recoverable value amount. of the cashImpairment generating losses unit on orgoodwill group aofre cashnot reversed.generating units INFORMATION straight-linein respect of basis operating over the leases, period are of charged the lease. to the consolidated income statement on a exceeds its recoverable amount. Impairment losses on goodwill are not reversed. straight-line basis over the period of the lease. EMIRATES Gains and losses on disposal of an entity include the carrying amount of goodwill FINANCIAL Investment property relatingGains and to the losses entity on sold. disposal of an entity include the carrying amount of goodwill COMMENTARY Investment property relating to the entity sold.
DNATA Property held for long term rental yields or for capital appreciation or both, and not Other intangible assets FINANCIAL occupiedProperty heldby dnata, for longis classified term rental as investment yields or property. for capital appreciation or both, and not Other intangible assets COMMENTARY occupied by dnata, is classified as investment property. Intangible assets are capitalised at cost only when future economic benefits are Intangible assets are capitalised at cost only when future economic benefits are EMIRATES Investment property comprises land and buildings. Investment property is measured probable. Cost includes purchase price together with any directly attributable CONSOLIDATED initiallyInvestment at its property cost, including comprises related land and transaction buildings. costs. Investment The carrying property amount is measured of an expenditure.probable. Cost includes purchase price together with any directly attributable FINANCIAL investmentinitially at its property cost, including includes related the cost transaction of replacing costs. part The of carrying an existing amount investment of an expenditure. STATEMENTS propertyinvestment when property incurred includes if the recognition the cost ofcriteria replacing are met part and of excludes an existing cost investmentof day-to- In the case of internally developed computer software, development expenditure is DNATA dayproperty servicing. when incurred if the recognition criteria are met and excludes cost of day-to- Incapitalised the case if ofcosts internally can be measureddeveloped reliably, computer the productsoftware, is developmtechnicallyent and expenditure commercially is CONSOLIDATED day servicing. feasible,capitalised future if costs economic can be benefitsmeasured are reliably, probable, the andproduct there is existechnicallyts an intent and andcommercially ability to FINANCIAL STATEMENTS Capital projects relate to buildings under construction and are stated at cost. When the completefeasible, future the development economic benefits and to areuse probable,or sell the andasset. there Other exis retssearch an intent and anddevelopment ability to assetCapital is projectsready for relate its intended to buildings use, itunder is transferred construction from and capital are projectsstated at to cost. buildings When andthe expenditurecomplete the not development meeting the and criteria to use for or capitalisation sell the asset. are Other recognised research in and the developmentconsolidated ADDITIONAL depreciatedasset is ready in for accordance its intended with use, dnata’s it is transferredpolicies. from capital projects to buildings and incomeexpenditure statement not meeting as incurred. the criteria for capitalisation are recognised in the consolidated INFORMATION depreciated in accordance with dnata’s policies. income statement as incurred. Investment property is measured at cost less accumulated depreciation. Land is not Intangible assets acquired in a business combination are recognised at fair values on the Investmentdepreciated. property Depreciation is measured on buildings at cost is less charged accumulated on a straight deprec lineiation. basis Land over is notthe acquisitionIntangible assets date. Contractualacquired in ria ghtsbusiness also includecombination licenses are to recogn operateised in at certain fair values airports. on the estimateddepreciated. useful Depreciation life of 20 years. on buildings is charged on a straight line basis over the Intangibleacquisition assetsdate. Contractualare amortised rights on alsoa straight-line include licenses basis toover operate their estimatedin certain airports.useful lives
estimated useful life of 20 years. whichIntangible are: assets are amortised on a straight-line basis over their estimated useful lives The assets’ useful life is reviewed, and adjusted if appropriate, at the end of each which are: reportingThe assets’ period. useful life is reviewed, and adjusted if appropriate, at the end of each Computer software 3 - 7 years reporting period. TradeComputer names software 310 - years7 years An item of investment property is derecognised upon disposal or when no future CustomerTrade names relationships 310 - years15 years economicAn item of benefits investment are property expected is from derecognised its use or upon disposal. disposal Gains or whenand losses no future on ContractualCustomer relationships rights over3 - 15 the years expected term of the rights derecogntioneconomic benefits are determined are expected by comparing from its proceeds use or with disposal. the carr Gainsying amountand losses and are on Contractual rights over the expected term of the rights recognisedderecogntion in theare consolidateddetermined by income comparing statement. proceeds with the carrying amount and are The intangible assets’ useful lives are reviewed at least annually, and adjusted if recognised in the consolidated income statement. Theappropriate. intangible assets’assets’ useful useful lives lives are are reviewed reviewed at at least least annually, annually, and and adjusted adjusted if appropriate. if Investment property also include right-of-use assets that meet the definition of appropriate. investmentInvestment property property and also is measured include right-of-useas per dnata’s assets policies that applicable meet theto “Leases”. definition of An intangible asset is derecognised upon disposal or when no future economic benefits investment property and is measured as per dnata’s policies applicable to “Leases”. areAn intangibleexpected fromasset its is usederecogni or disposal.sed upon Gains disposal and losses or when on dere no cognitionfuture economic are determined benefits Goodwill byare expected comparing from proceeds its use or with disposal. the Gains carrying and losses amount on anddere cognition are recognis are determineded in the Goodwill consolidatedby comparing income proceeds statement. with the carrying amount and are recognised in the Goodwill represents the excess of the aggregate of the consideration transferred, consolidated income statement. amountGoodwill of represents any non-controlling the excess interest of the in aggregatethe acquired of entity the consider and theation acquisition-date transferred,
amount of any non-controlling interest in the acquired entity and the acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the netfair identifiablevalue of any assets previous at the equity date interestof acquisition. in the acquired entity over the fair value of the
net identifiable assets at the date of acquisition.
10 10 145 OVERVIEW 2. Summary of significant accounting policies (continued) Cash and cash equivalents
EMIRATES Borrowing costs Cash and cash equivalents comprise all cash and liquid funds with an original maturity of DNATA three months or less. Other bank deposits with maturities of less than a year are Borrowing costs (finance costs) directly attributable to the acquisition, construction or classified as short term bank deposits. Bank overdrafts are shown within current GROUP production of qualifying assets are added to the cost of the assets until such time that borrowings and lease liabilities in the consolidated statement of financial position. FINANCIAL the assets are substantially ready for their intended use. Where funds are borrowed INFORMATION specifically for the purpose of obtaining a qualifying asset, any investment income Inventories earned on temporary surplus funds is deducted from borrowing costs eligible for EMIRATES FINANCIAL capitalisation. Inventories are stated at the lower of cost and estimated net realisable value. Cost is COMMENTARY determined on the weighted average cost basis except for food and beverage inventory which is determined on a first-in-first-out basis. DNATA Impairment of non-financial assets FINANCIAL COMMENTARY Non-financial assets other than goodwill are reviewed for impairment whenever events Borrowings
EMIRATES or changes in circumstances indicate that the carrying amount may not be recoverable. CONSOLIDATED An impairment loss is recognised for the amount by which the asset’s carrying amount Borrowings are recognised initially at fair value, net of transaction costs incurred. FINANCIAL exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair Borrowings are subsequently measured at amortised cost with any difference between STATEMENTS value less costs to sell and value in use. For the purpose of assessing impairment, these the proceeds (net of transaction costs) and the redemption value recognised in the DNATA assets are grouped at the lowest levels for which there are separately identifiable cash consolidated income statement over the period of the borrowings using the effective CONSOLIDATED flows (cash generating units). Non-financial assets other than goodwill are reviewed at interest method. FINANCIAL STATEMENTS the end of each reporting period for possible reversals of historic impairment losses. Retirement benefit obligations ADDITIONAL INFORMATION Financial assets dnata operates or participates in various end of service benefit plans, which are classified Financial assets are classified in accordance with IFRS 9 as ‘Financial assets at amortised either as defined contribution or defined benefit plans. cost’ which consists of financial assets that are debt instruments and are intended to be held to maturity on the basis of dnata’s business model. Furthermore, these instruments A defined contribution plan is a pension scheme under which dnata pays fixed have fixed payment terms and meet the criteria for cash flow characteristics i.e. contributions and has no legal or constructive obligation to pay further contributions if contractual payments of principal and interest. This category includes trade and other the fund does not hold sufficient assets to settle the benefits relating to the employees’ receivables (excluding prepayments), short term bank deposits and cash and cash service in the current and prior periods. Contributions to the pension fund are charged equivalents. They are classified as non-current or current assets according to their to the consolidated income statement in the period in which they fall due. remaining maturity at the reporting date. A defined benefit plan is a plan which is not a defined contribution plan. The liability Trade receivables recognised in the consolidated statement of financial position for a defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period Trade receivables receivables are arerecognised recognised initially initially at the amount at the of amount consideration of consideration that is unconditional, that is less the fair value of plan assets at that date. The defined benefit obligation is calculated unconditional,unless they contain unless significant they contain financing significant components financing when they compon are entsrecognised when at theyfair value. are by independent actuaries using the projected unit credit method. recognisedThey are subsequently at fair value. measured They and at subsequently amortised cost measured using the at effectiveamortised interest cost using method, the effectiveless provision interest for method, impairment. less dnata provision applies for the impairment. simplified dnata approach applies which the simplified uses lifetime The present value of the defined benefit obligation is determined by discounting approachexpected loss which allowances uses lifetime to calculate expected the impairment loss allowances provision to on calcul tradeate receivables. the impairment Specific estimated future cash outflows using market yields of high quality corporate bonds at provisionloss allowances on trade are alsoreceivables. recognised Specific when loss dnata allowances become awareare al soof arecognised customer experiencingwhen dnata the end of the reporting period that are denominated in currency in which the benefits becomefinancial awaredifficulty. of aTrade customer receivables experiencing are written financial off once difficulty. management Trade has receivables determined arethat will be paid and have terms approximating to the estimated term of the post- writtensuch amount off once will managementnot be recovered. has determined that such amount will not be recovered. employment benefit obligations.
11
146 OVERVIEW 2. Summary of significant accounting policies (continued) Deferred income tax assets and liabilities are offset when there is a legally enforceable
EMIRATES right to offset current income tax assets against current income tax liabilities and when Retirement benefit obligations (continued) the deferred income tax assets and liabilities relate to income taxes levied by the same DNATA taxation authority on either the same taxable entity or different taxable entities where Actuarial gains and losses arising from changes in actuarial assumptions and experience there is an intention to settle the balances on a net basis. GROUP adjustments are recognised in equity through other comprehensive income in the period FINANCIAL in which they arise. Trade payables INFORMATION Other provisions Trade payables are recognised initially at fair value and subsequently measured at EMIRATES FINANCIAL amortised cost using the effective interest method. COMMENTARY Provisions other than retirement benefit obligations are recognised when dnata has a present legal or constructive obligation as a result of past events, it is probable that an Dividend distribution DNATA FINANCIAL outflow of resources will be required to settle the obligation and the amount can be COMMENTARY reliably estimated. Such provisions are measured at the present value of the Dividend distribution to equity holders is recognised as a liability in the consolidated expenditures expected to settle the obligation using a pre-tax rate that reflects current financial statements in the period in which the dividends are approved. EMIRATES CONSOLIDATED market assessments of the time value of money and risks specific to the obligation. FINANCIAL Offsetting of financial assets and liabilities STATEMENTS Income tax DNATA Financial assets and liabilities are offset and the net amount reported in the consolidated CONSOLIDATED The tax expense for the year comprises current and deferred tax. statement of financial position only when there is a legally enforceable right to offset the FINANCIAL STATEMENTS recognised amounts and there is an intention to settle on a net basis or realise the asset The current income tax charge is calculated on the basis of the tax laws enacted or and settle the liability simultaneously. The legally enforceable right must not be ADDITIONAL substantively enacted at the end of the reporting period in the countries where dnata’s contingent on future events and must be enforceable in the normal course of business INFORMATION subsidiaries operate and generate taxable income. and in the event of default, insolvency or bankruptcy.
Deferred income tax is recognised in full, using the liability method, on temporary Derecognition of financial assets and financial liabilities differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not Financial assets are derecognised only when the contractual rights to the cash flows accounted for if it arises from initial recognition of an asset or liability in a transaction expire or substantially all the risks and rewards of ownership are transferred along with other than a business combination that at the time of the transaction affects neither the contractual rights to receive cash flows. Financial liabilities are derecognised only accounting nor taxable income. Also deferred tax liabilities are not recognised if they when they are extinguished i.e. when the obligations specified in the contract are arise from the initial recognition of goodwill in a business combination. discharged or cancelled or expire.
Deferred income tax is determined using tax rates (and laws) that have been enacted or Derivative financial instruments substantively enacted in the jurisdiction of the individual companies by the end of the reporting period and are expected to apply when the related deferred income tax Derivative financial instruments instruments are are initially initially recognised recognised at fa irat fairvalue value on the on date the a datea liability is settled or the deferred income tax asset is realised. derivative contract isis enteredentered intointo and and are are subsequently subsequently remeas remeasuredured at at their their fair fair value value at atthe the end end of of the the reporting reporting period.. period. Derivatives Derivatives are are mostlymostly designdesignatedated asas a hedge of the the Deferred income tax is recognised on temporary differences arising on investments in exposure to variability in cash flows flows thatthat is attributableattributable toto aa particularparticular risk associatedassociated subsidiaries and associates, except where the timing of the reversal of the temporary with a recognised asset or liabilityliability oror aa highlyhighly probableprobable forecastforecast transactiontransaction (cash(cash flowflow difference is controlled by dnata and it is probable that the temporary difference will not hedge). Fair values are obtainedobtained from quotedquoted marketmarket pricesprices oror dealerdealer quotesquotes forfor similarsimilar reverse in the foreseeable future. instruments, discounteddiscounted cashcash flow flow models models and and option option pricing pricing mod modelsels as appropriate.as appropriate. All Allderivatives derivatives are arecarried carried as assetsas assets when when the thefair fairvalue value is positi is positiveve and and as liabilitiesas liabilities when when the Deferred income tax assets are recognised to the extent that it is probable that future thefair valuefair value is negative. is negative. taxable profits will be available against which the temporary differences can be utilised.
12
147 OVERVIEW 2. Summary of significant accounting policies (continued) 3. Critical accounting estimates and judgements
EMIRATES Derivative financial instruments (continued) In the preparation of the consolidated financial statements, a number of estimates and DNATA associated assumptions have been made relating to the application of accounting dnata’s criteria to account for a derivative financial instrument as a hedge include: policies and reported amounts of assets, liabilities, income and expenses. The estimates GROUP and associated assumptions are assessed on an ongoing basis and are based on FINANCIAL the hedging relationship consists only of eligible hedging instruments and eligible historical experience and other factors, including expectations of future events that are INFORMATION hedged items; and believed to be reasonable under the circumstances. The following narrative addresses the accounting policies that require subjective and complex judgements, often as a result EMIRATES at the inception of the hedging relationship there is a formal designation and FINANCIAL documentation of the hedging relationship, including dnata risk management of the need to make estimates. COMMENTARY objective and strategy for undertaking the hedge, identification of the hedging
DNATA instrument, the hedged item, the nature of the risk being hedged and how dnata will Valuation of intangible assets on acquisition FINANCIAL assess the hedging instrument's effectiveness; and COMMENTARY there is an economic relationship between the hedged item and the hedging For each acquisition, management assesses the fair value of intangible assets acquired. Where an active market does not exist to value an intangible asset, fair values are EMIRATES instrument; and CONSOLIDATED established using established valuation techniques that use estimates of future cash the effect of credit risk does not “dominate the value changes” that results from the FINANCIAL flows and the useful life related to the asset based on management’s experience and STATEMENTS economic relationship. The hedge ratio of the hedging relationship is the same as expectation at the time of acquisition. Discount rates applied to future cash flows are that resulting from the quantity of hedged item that dnata actually hedges and the DNATA also subject to judgement. Disclosure of the significant acquisitions undertaken by dnata quantity of the hedging instrument that dnata actually uses to hedge that quantity CONSOLIDATED is given in Note 29 to these consolidated financial statements. FINANCIAL for hedged item.
STATEMENTS Impairment of goodwill Changes in the fair value of derivatives that are designated and qualify as cash flow ADDITIONAL INFORMATION hedges and that prove to be highly effective in relation to the hedged risk are Determining whether goodwill is impaired requires an estimation of the value-in-use of recognised in other comprehensive income. When the forecasted transaction results in the cash generating units or group of cash generating units to which goodwill has been the recognition of a non-financial asset or a non-financial liability, the gains and losses allocated. The value-in-use calculation requires management to estimate the future cash previously recognised in other comprehensive income are re-classified and included in flows expected to arise from the cash generating unit and use a suitable discount rate in the initial carrying amount of the asset or liability. These gains and losses are ultimately order to calculate present value. The estimates made in arriving at the value-in-use recognised in the consolidated income statement in the same period during which the calculation and associated sensitivities are set out in Note 11. asset or liability affects profit or loss. In all other cases, amounts previously recognised
in other comprehensive income are transferred to the consolidated income statement in Valuation of defined benefit obligations the period during which the forecasted transaction affects the consolidated income
statement and are presented in the same line item as the gains and losses from hedged The present value of the defined benefit obligations is determined on an actuarial basis items. using various assumptions that may differ from actual developments in the future. These
assumptions include the determination of the discount rate and expected salary When a cash flow hedging instrument expires or is sold, terminated or exercised, or increases which are reviewed at each reporting date. Due to the complexities involved in when a hedge no longer meets the criteria for hedge accounting under IFRS 9, any the valuation and its long-term nature, defined benefit obligations are highly sensitive to cumulative gain or loss existing in equity at that time is retained in equity and is changes in these assumptions. A sensitivity analysis of changes in defined benefit ultimately recognised in the consolidated income statement when the forecasted obligations due to a reasonably possible change in these assumptions are set out in transaction occurs. If a forecasted transaction is no longer expected to occur, the Note 19. cumulative gain or loss that was reported in equity is immediately transferred to
the consolidated income statement. The gain or loss on the ineffective portion is
immediately recognised in the consolidated income statement.
Changes in the fair value of derivative instruments that do not qualify for hedge
accounting are recognised immediately in the consolidated income statement.
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148 OVERVIEW 3. Critical accounting estimates and judgements (continued) 4. Fair value estimation
EMIRATES Leases The levels of fair value hierarchy are defined as follows: DNATA On adoption of IFRS 16 from 1 April 2019, while determining the lease term, Level 1: Measurement is made by using quoted prices (unadjusted) from the active GROUP management considers all facts and circumstances that create an economic incentive to market. FINANCIAL exercise an extension option, or not to exercise a termination option. Extension options Level 2: Measurement is made by means of valuation methods with parameters INFORMATION (or periods after termination options) are only included in the lease term if the lease is derived directly or indirectly from observable market data. reasonably certain to be extended (or not terminated). Level 3: Measurement is made by means of valuation methods with parameters not EMIRATES FINANCIAL based exclusively on observable market data. COMMENTARY ToTo ascertainascertain whetherwhether it it is is reasonably reasonably certain certain for for dnata dnata to toexer exercisecise the these these options, options, thethe managementmanagement takestakes intointo consideration any lease termination penalties penalties that would be be Derivatives, contingent consideration and option liabilities are carried at fair value. DNATA FINANCIAL incurred,incurred, leasehold leasehold improvements improvements that that are areestimated estimated to have to have significant significant remaining remaining value, Derivatives fall into level 2 of the fair value hierarchy whereas contingent consideration COMMENTARY historicalvalue, historical lease durationslease durations and the and cost the cost associated associated to business to business disruption disruption caused caused by and option liabilities fall into level 3 of the fair value hierarchy. replacingby replacing the theleased leased asset. asset. EMIRATES CONSOLIDATED Derivatives comprise forward exchange contracts. The forward exchange contracts are FINANCIAL fair valued using forward exchange rates that are quoted in an active market. STATEMENTS
DNATA The fair values of contingent consideration and option liabilities are determined by using CONSOLIDATED valuation techniques based on entity specific estimates. These estimates are not based FINANCIAL STATEMENTS on observable market data and hence classified under level 3 of the fair value hierarchy.
ADDITIONAL The changes in the fair value of level 3 instruments are set out in Note 18. INFORMATION
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149 OVERVIEW 5. Revenue5. Revenue 5. Revenue5. Revenue 7. Income7. Income tax expense tax expense 7. Income7. Incometax expense tax expense EMIRATES 20202020 2019 2019 20202020 2019 2019 2020 2020 2019 2019 2020 2020 2019 2019 AED mAED m AED m AED m AED mAED m AED m AED m AED mAED m AED m AED m AED mAED m AED m AED m DNATA ServicesServices ServicesServices CurrentCurrent income income tax (credit) tax (credit)/ expenseCurrent / expense Currentincome taxincome (credit) tax /(credit) expense / expense(3) (3) 3 8 3 8 (3) (3) 3 8 3 8 GROUP InternationalInternational Airport AirportOperations OperationsInternationalInternational Airport OperationsAirport Operations 3,940 3,940 3,997 3,997 3,940 3,940 3,997 3,997 DeferredDeferred income income tax credit tax creditDeferred Deferred income taxincome credit tax credit (65) (65) (12) (12) (65) (65) (12) (12) Travel ServicesTravelFINANCIAL Services Travel ServicesTravel Services 3,537 3,537 3,678 3,678 3,537 3,537 3,678 3,678 (68) (68) 26 26 (68) (68) 26 26 INFORMATION UAE AirportUAE AirportOperations Operations UAE AirportUAE OperationsAirport Operations 3,171 3,171 3,223 3,223 3,171 3,171 3,223 3,223 The incomeThe income tax expense tax expense for theThe for year theincome canThe year be taxincome can reconciled expense be taxreconciled expense to for the to year for the can year be reconciled can be reconciled to to Others Others 262 262 360 360 Others OthersEMIRATES 262 262 360 360 the accountingthe accounting profit before profit income before taxincome as follows: tax as follows: FINANCIAL the accountingthe accounting profit before profit beforeincome income tax as follows: tax as follows: COMMENTARY 10,910 10,910 11,258 11,258 10,910 10,910 11,258 11,258 Profit beforeProfit beforeincome income tax taxProfit beforeProfit income before taxincome tax 537 537 1,507 1,507 537 537 1,507 1,507 Sale ofSale goods of goods Sale of goodsSale of goods DNATA Inflight CateringInflight Catering 3,106 3,106 2,444 2,444 InflightInflight CateringFINANCIAL Catering 3,106 3,106 2,444 2,444 COMMENTARY Others Others 207 207 186 186 Others Others 207 207 186 186 Tax calculatedTax calculated at domestic at domestic taxTax rates calculatedtax applicable Taxrates calculated applicable at domesticto at to domestic tax rates tax applicable rates applicable to to 3,313 3,313 2,630 2,630 EMIRATES 3,313 3,313 2,630 2,630 profitsprofits in respective in respective tax jurisdictions taxprofits jurisdictions inprofits respective in respective tax jurisdictions tax jurisdictions(66) (66) 22 22 (66) (66) 22 22 CONSOLIDATED 14,223 14,223 13,888 13,888 14,223 14,223 13,888 13,888 Effect ofEffect non-deductible of non-deductible expenses expenses 23 23 6 6 FINANCIAL Effect ofEffect non-deductible of non-deductible expenses expenses 23 23 6 6 STATEMENTS Effect ofEffect income of income exempt exempt from tax Effectfrom taxofEffect income of exemptincome fromexempt tax from(32) tax (32) (7) (7) (32) (32) (7) (7) 6. Operating6. Operating costs costs 6. Operating6. Operating costs costs DNATA Re-measurementRe-measurement of deferred of deferred taxRe-measurement - effect taxRe-measurement - of effect changes of of changes deferred in tax of indeferred tax tax - effect tax of- effect changes of changes in tax in tax 20202020 2019 2019 20202020 2019 2019 CONSOLIDATED rates rates rates rates (2) (2) - - (2) (2) - - FINANCIAL AED mAED m AED m AED m AED mAED m AED m AED m STATEMENTS Effect ofEffect other of items other items Effect ofEffect other ofitems other items 9 9 5 5 9 9 5 5 IncomeIncome tax (credit) tax (credit) / expense / expenseIncome Incometax (credit) tax (credit)/ expense / expense(68) (68) 26 26 (68) (68) 26 26 EmployeeEmployeeADDITIONAL costs (see costs (a)) (see (a)) EmployeeEmployee costs (see costs (a)) (see (a)) 5,875 5,875 5,386 5,386 5,875 5,875 5,386 5,386 INFORMATION Direct costsDirect costs Direct costsDirect costs The taxThe rates tax used rates for used the for reconciliationreconciliation theThe reconciliation taxThe rates aboveabove tax used rates areabove are for thethe used the are ratesrates reconciliation forthe applicableapplicable the rates reconciliation applicable abovetoto thethe areprofits toprofits above the the profits ratesarein the the applicable rates applicable to the profits to the profits - Travel- Services Travel Services - Travel Services- Travel Services 2,534 2,534 2,476 2,476 2,534 2,534 2,476 2,476 respectivein the respectivein the tax respective jurisdictions. tax jurisdictions. tax jurisdictions.in the respectivein the respective tax jurisdictions. tax jurisdictions. - Airport- AirportOperations Operations - Airport- Operations Airport Operations 1,364 1,364 1,350 1,350 1,364 1,364 1,350 1,350 - Inflight- InflightCatering Catering - Inflight- Catering Inflight Catering 1,352 1,352 1,070 1,070 1,352 1,352 1,070 1,070 - Others- Others - Others- Others 32 32 67 67 32 32 67 67 DepreciationDepreciation and amortisation and amortisation (seeDepreciation (b)) (seeDepreciation (b)) and amortisation and amortisation (see (b)) 853 (see 853 (b)) 459 459 853 853 459 459 FacilitiesFacilities related relatedexpenditure expenditure Facilities Facilities related expenditurerelated expenditure 501 501 788 788 501 501 788 788 Sales andSales marketing and marketing expenses expenses Sales and Sales marketing and marketing expenses expenses 321 321 370 370 321 321 370 370 InformationInformation technology technology infrastructure infrastructureInformation costsInformation technology costs technology infrastructure infrastructure 320 costs 320 costs 246 246 320 320 246 246 ImpairmentImpairment of intangible of intangible assetsImpairment assets Impairment of intangible of intangible assets assets 193 193 78 78 193 193 78 78 CorporateCorporate overheads overheads CorporateCorporate overheads overheads 769 769 784 784 769 769 784 784 14,114 14,114 13,074 13,074 14,114 14,114 13,074 13,074
(a) Employee(a) Employee costs include costs include AED(a)323 Employee AEDm(a)323 (2019: Employee m costs AED(2019: include 259 costs AED m) includeAED 259 in respect m)323 AEDin m respect of(2019:323 retirementm AEDof (2019: retirement 259 AED m) in 259 respect m) in of respect retirement retirement of retirement benefit benefit benefitobligations obligations (Note 19 (Note (a)).benefitobligations 19 (a)). obligationsbenefit (Note obligations 19 (Note (a)). 19 (Note (a)). 19 (a)). (b) Depreciation(b) Depreciation and amortisation and amortisation(b) Depreciation Depreciation of AED(b) of Depreciation 82 AED m and and (2019: 82 amortisation amortisation m AED(2019: and amortisation87 AED m) of of AED is 87 AED included m) 82 82 of ism AEDincluded m(2019: under (2019: 82 AED m under AED (2019: 87 m) 87 is AED m) included is 87 included m) under is included under information under informationinformation technology technology infrastructure infrastructureinformationtechnology costs.information infrastructuretechnology costs. technology infrastructure costs. infrastructure costs. costs. (c) Operating(c) Operating costs include costs include expenses(c) Operating expenses related(c) Operating costs related costs to short-term include include to costs short-term expenses includeexpenses leases expensesof leases related related AED of 65 to to AEDrelated mshort-term short-term and 65 to m short-term and leases leases of of AED leases AED 65 65of m AED mand and low-value 65 m and low-valuelow-value leases ofleases AED of15 AED m. low-value15leases m. oflow-value AED leases 15 of m. leases AED 15 of m.AED 15 m.
15 15 150 15 15 8. Property, plant and equipment OVERVIEW 8. Property, plant and equipment 8. Property, plant and equipment
EMIRATES Land, Land, Land, DNATA buildings Office buildings Officebuildings Office GROUP and Plant equipment and Plant equipment and Plant equipment
FINANCIAL leasehold and and MotorleaseholdCapital and leaseholdand Motor Capital and and Motor Capital INFORMATION property machinery furniture vehiclespropertyprojectsmachinery Total furniture propertyvehicles projects Total machinery furniture vehicles projects Total
EMIRATES AED m AED m AED m AED mAED m AED mAED m AED m AED m AED m AED mAED AED m m AED m AED m AED m AED m AED m FINANCIAL Cost COMMENTARY Cost Cost 31 March 2019 31 March 2019 31 March 2019 1,223 2,241 1,507 185 1,223 117 2,241 5,273 1,507 185 1171,223 5,273 2,241 1,507 185 117 5,273 DNATA Assets held under leases transferred to right-of-useFINANCIAL Assets held under leases transferred to right-of-useAssets held under leases transferred to right-of-use COMMENTARY assets (Note 9) assets (Note 9) assets (Note 9) (6) (95) - (15)(6) - (95) (116) - (15) - (116) (6) (95) - (15) - (116) Adjusted 1 April 2019 EMIRATES Adjusted 1 April 2019 Adjusted 1 April 1,217 2019 2,146 1,507 170 1,217 117 2,146 5,157 1,507 170 1171,217 5,157 2,146 1,507 170 117 5,157 CONSOLIDATED Acquisitions (Note 29) FINANCIAL Acquisitions (Note 29) Acquisitions (Note 29)53 75 5 2 53 2 75 137 5 2 2 137 53 75 5 2 2 137 Additions STATEMENTS Additions Additions 61 114 79 29 61 262 114 545 79 29 262 545 61 114 79 29 262 545
Transfer from capital projects DNATA Transfer from capital projects Transfer from capital 150 projects 117 34 5 150 (306) 117 - 34 5 (306) - 150 117 34 5 (306) - CONSOLIDATED Disposals / write-offs FINANCIAL Disposals / write-offs Disposals / write-offs(4) (56) (82) (14)(4) - (56) (156) (82) (14) - (156) (4) (56) (82) (14) - (156) Currency translation differences STATEMENTS Currency translation differences Currency translation(65) differences (87) (2) (1)(65) (4) (87) (159) (2) (1) (4) (159) (65) (87) (2) (1) (4) (159)
31 March 2020 ADDITIONAL 31 March 2020 31 March 2020 1,412 2,309 1,541 191 1,412 71 2,309 5,524 1,541 191 71 1,412 5,524 2,309 1,541 191 71 5,524 INFORMATION Accumulated depreciation Accumulated depreciation Accumulated depreciation 31 March 2019 31 March 2019 31 March 2019 541 1,349 1,239 104 541 - 1,349 3,233 1,239 104 - 3,233 541 1,349 1,239 104 - 3,233 Assets held under leases transferred to right-of-useAssets held under leases transferred to right-of-useAssets held under leases transferred to right-of-use assets (Note 9) assets (Note 9) assets (Note 9) (2) (29) - (7)(2) - (29) (38) - (7) - (38) (2) (29) - (7) - (38) Adjusted 1 April 2019 Adjusted 1 April 2019 Adjusted 1 April 539 2019 1,320 1,239 97 539 - 1,320 3,195 1,239 97 - 3,195 539 1,320 1,239 97 - 3,195 Charge for the year Charge for the year Charge for the year 70 170 119 19 70 - 170 378 119 19 - 378 70 170 119 19 - 378 Disposals / write offs Disposals / write offs Disposals / write offs(3) (53) (77) (6)(3) - (53) (139) (77) (6) - (139) (3) (53) (77) (6) - (139) Currency translation differences Currency translation differences Currency translation(19) differences (50) (3) - (19) - (50) (72) (3) - - (72) (19) (50) (3) - - (72) 31 March 2020 31 March 2020 31 March 2020 587 1,387 1,278 110 587 - 1,387 3,362 1,278 110 - 3,362 587 1,387 1,278 110 - 3,362 Net book amount at Net book amount at Net book amount at 31 March 2020 31 March 2020 31 March 2020 825 922 263 81 825 71 922 2,162 263 81 71 2,162 825 922 263 81 71 2,162
The net book amount of property, plant and equipmentThe net book amount of of property, property, plant plant and and equipment equipmentThe net includes book includes amount an an amount amount of property, of of AED AED plant7 7m m (2019: and (2019: equipment AED AED 22 22 m) includes m) includes in inrespect respect an of amount ofassets assets ofprovided provided AED 7 mas as (2019:security AED against 22 m) term in respectloans. of assets provided as an amount of AED 7 m (2019: AED 22 m) in respect of assets provided as security against term loans. security against term loans. security against term loans. Land of AED 37 m (2019: AED 20 m) is carried at cost and is not depreciated. Land of AED 37 m (2019: AED 20 m) is carried atLand of AED 37 m (2019:cost AED 20 m) is carried atLand cost ofand AED is not 37 mdepreciated. (2019:and AED 20 m) is carried at cost and is not depreciated.is not depreciated.
16 16 16
151 OVERVIEW 8. Property, plant and equipment (continued)
EMIRATES
DNATA Land, buildings Office GROUP and Plant equipment FINANCIAL leasehold and and Motor Capital INFORMATION property machinery furniture vehicles projects Total EMIRATES AED m AED m AED m AED m AED m AED m FINANCIAL COMMENTARY Cost 1 April 2018 1,115 2,168 1,421 175 36 4,915 DNATA Acquisitions 113 51 6 1 10 181 FINANCIAL COMMENTARY Additions 11 99 110 17 224 461 Transfer from capital projects 31 94 19 6 (150) - EMIRATES CONSOLIDATED Disposals / write-offs (7) (90) (24) (9) (1) (131) FINANCIAL Currency translation differences (40) (81) (25) (5) (2) (153) STATEMENTS 31 March 2019 1,223 2,241 1,507 185 117 5,273 DNATA Accumulated depreciation CONSOLIDATED FINANCIAL 1 April 2018 511 1,287 1,164 92 - 3,054 STATEMENTS Charge for the year 61 184 120 20 - 385
ADDITIONAL Disposals / write-offs (6) (84) (23) (8) - (121) INFORMATION Currency translation differences (25) (38) (22) - - (85) 31 March 2019 541 1,349 1,239 104 - 3,233 Net book amount at 31 March 2019 682 892 268 81 117 2,040
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152 OVERVIEW 9. Right-of-use9. 9.Right-of-useassets Right-of-use assets assets
EMIRATES
DNATA Land and PlantLandLand and and PlantPlant and and buildings machinerybuildingsbuildingsmachinerymachinery Others OthersTotal Others TotalTotal GROUP AED m AEDAED m m AED AED m m AED AED m m AED AED m m FINANCIAL Net book amountNetNet book of book right-of-use amount amount of ofassetsright-of-use right-of-use recognised assets assets on recognised adoptionrecognised on on adoption adoption INFORMATION of IFRS 16 of ofIFRS IFRS 16 16 1,744 1,744 1481,744 148 1482 1,894 2 2 1,894 1,894 EMIRATES Net book amountNetNet bookof bookassets amount amount held ofunder ofassets assets leases held held transferred under under leases leases from transferred transferred from from FINANCIAL COMMENTARY property, plantproperty, andproperty, equipment plant plant and (Noteand equipment equipment 8) (Note (Note 8) 8) 4 66 4 4 66 8 66 78 8 8 78 78 Net book amountNetNet book at book 1 Aprilamount amount 2019 at at(Note1 April1 April 2) 2019 2019 (Note (Note 2) 2) 1,748 1,748 2141,748 214 10 214 1,972 10 10 1,972 1,972 DNATA FINANCIAL Acquisitions (NoteAcquisitionsAcquisitions 29) (Note (Note 29) 29) 122 122 - 122 - - 122 - - 122 122 COMMENTARY Additions AdditionsAdditions 334 334 39 334 11 39 39 384 11 11 384 384 EMIRATES RemeasurementsRemeasurementsRemeasurements (51) (51) 1(51) - 1 1 (50) - - (50) (50) CONSOLIDATED FINANCIAL Depreciation chargeDepreciationDepreciation for the charge year charge for for the the year year (300)(300) (44)(300) (44)(5) (44) (349)(5)(5) (349) (349) STATEMENTS Lease terminationsLeaseLease terminations terminations (6) (6)(6)(6)(2) (6) (6) (14)(2)(2) (14) (14) DNATA Currency translationCurrencyCurrency differences translation translation differences differences (86) (16)(86)(86) (16) - (16) (102) - - (102) (102) CONSOLIDATED FINANCIAL Net book amountNetNet book at book 31 amount March amount 2020at at31 31 March March 2020 2020 1,761 1,761 1881,761 188 14 188 1,963 14 14 1,963 1,963 STATEMENTS
ADDITIONAL Right-of-useRight-of-use assetsRight-of-useRight-of-use primarily primarily assets assets consist consist primarily primarily of of airport airport consist consist infrastructure infrastructure of of airport airport assets, infrastructure assets, infrastructure ground ground assets, support assets,support ground equipment ground equipment support support and and equipment office equipment office space space and and for foroffice office spacecommercial space for for and INFORMATION commercialadministrative andcommercial purposes. commercialadministrative and and administrative purposes. administrative purposes. purposes.
18 1818
153 OVERVIEW 10. Investment property
EMIRATES
DNATA Land Buildings Total AED m AED m AED m GROUP Cost FINANCIAL INFORMATION 1 April 2018 99 270 369 Additions - 2 0 20 EMIRATES FINANCIAL 31 March 2019 99 290 389 COMMENTARY Accumulated depreciation DNATA 1 April 2018 - 3 1 31 FINANCIAL COMMENTARY Charge for the year - 1 3 13
EMIRATES 31 March 2019 - 44 44 CONSOLIDATED Net book amount at FINANCIAL STATEMENTS 31 March 2019 99 246 345
DNATA Cost CONSOLIDATED 1 April 2019 FINANCIAL 99 290 389 STATEMENTS Impact on adoption of IFRS 16 (Note 2) - 5 2 52
ADDITIONAL Adjusted 1 April 2019 99 342 441 INFORMATION Additions - 1 7 17 31 March 2020 99 359 458 Accumulated depreciation 1 April 2019 - 4 4 44 Impact on adoption of IFRS 16 (Note 2) - 1 1 11 Adjusted 1 April 2019 - 5 5 55 Charge for the year - 1 6 16 31 March 2020 - 7 1 71 Net book amount at 31 March 2020 99 288 387
Buildings include right-of-use assets with a net book amount of AED 39 m as at 31 March 2020. The remaining investment property is pledged as security against term loans (Note 20 (a)). Investment property comprises rental property in Dubai. The fair value of investment property as at 31 March 2020 is AED 486 m (2019: AED 455 m), which was determined based on internal valuations as there is no active market for such properties. The fair value has been computed by discounting the contractual future lease rental income at a discount rate of 6% (2019: 6%) commensurate to the borrowing rate. These estimates are not based on observable market data and hence are classified under level 3 of the fair value hierarchy. Revenue from rental income earned during the year amounting to AED 43 m (2019: AED 31 m) is recognised in the consolidated income statement as revenue from 'Services-Others'.
154 19 OVERVIEW 11. Intangible assets 11. Intangible assets EMIRATES Computer Trade Customer Contractual Computer Trade Customer Contractual DNATA Goodwill software names relationship rights Total Goodwill software names relationship rights Total AED m AED m AED m AED m AED m AED m GROUP AED m AED m AED m AED m AED m AED m Cost Cost FINANCIAL 1 April 2018 2,065 588 124 521 660 3,958 INFORMATION 1 April 2018 2,065 588 124 521 660 3,958 Acquisitions 320 26 4 54 - 404 Acquisitions 320 26 4 54 - 404 EMIRATES Additions - 226 - - - 226 FINANCIAL Additions - 226 - - - 226 COMMENTARY Disposals / write-offs - (1) - - - (1) Disposals / write-offs - (1) - - - (1) Currency translation differences (119) (10) (10) (18) (33) (190) DNATA Currency translation differences (119) (10) (10) (18) (33) (190) FINANCIAL 31 March 2019 2,266 829 118 557 627 4,397 COMMENTARY 31 March 2019 2,266 829 118 557 627 4,397 Accumulated amortisation and impairment Accumulated amortisation and impairment EMIRATES 1 April 2018 - 390 51 158 571 1,170 CONSOLIDATED 1 April 2018 - 390 51 158 571 1,170 Charge for the year - 69 11 45 23 148 FINANCIAL Charge for the year - 69 11 45 23 148 STATEMENTS Impairment loss 66 - - 12 - 78 Impairment loss 66 - - 12 - 78 Currency translation differences - (2) (3) (6) (27) (38) DNATA Currency translation differences - (2) (3) (6) (27) (38) CONSOLIDATED 31 March 2019 66 457 59 209 567 1,358 FINANCIAL 31 March 2019 66 457 59 209 567 1,358 STATEMENTS Net book amount at 31 March 2019 2,200 372 59 348 60 3,039 Net book amount at 31 March 2019 2,200 372 59 348 60 3,039 Cost ADDITIONAL Cost INFORMATION 1 April 2019 2,266 829 118 557 627 4,397 1 April 2019 2,266 829 118 557 627 4,397 Acquisitions (Note 29) - 4 - 108 18 130 Acquisitions (Note 29) - 4 - 108 18 130 Additions - 122 - - - 122 Additions - 122 - - - 122 Disposals / write-offs - (40) - - - (40) Disposals / write-offs - (40) - - - (40) Currency translation differences (89) (11) (6) (17) (5) (128) Currency translation differences (89) (11) (6) (17) (5) (128) Reclassification (18) - - 18 - - Reclassification (18) - - 18 - - 31 March 2020 2,159 904 112 666 640 4,481 31 March 2020 2,159 904 112 666 640 4,481 Accumulated amortisation and impairment Accumulated amortisation and impairment 1 April 2019 66 457 59 209 567 1,358 1 April 2019 66 457 59 209 567 1,358 Charge for the year - 115 11 47 19 192 Charge for the year - 115 11 47 19 192 Disposals / write-offs - (20) - - - (20) Disposals / write-offs - (20) - - - (20) Impairment loss 164 - 3 - 26 193 Impairment loss 164 - 3 - 26 193 Currency translation differences (5) (7) (4) (8) (3) (27) Currency translation differences (5) (7) (4) (8) (3) (27) 31 March 2020 225 545 69 248 609 1,696 31 March 2020 225 545 69 248 609 1,696 Net book amount at 31 March 2020 1,934 359 43 418 31 2,785 Net book amount at 31 March 2020 1,934 359 43 418 31 2,785 Computer software includes an amount of AED 101 m (2019: AED 209 m) in respect of projects under implementation. Computer software includes an amount of AED 101 m (2019: AED 209 m) in respect of projects under implementation. The carrying amounts of Travel Services - B2C CGU in the UK and Inflight Catering CGU in the US have been reduced to their recoverable The carrying amounts of Travel Services - B2C CGU in the UK and Inflight Catering CGU in the US have been reduced to their recoverable amounts through recognition of impairment loss against goodwill. The loss is included in operating costs in the consolidated income amounts through recognition of impairment loss against goodwill. The loss is included in operating costs in the consolidated income statement. statement. 20 20
155 OVERVIEW 11. Intangible assets (continued)
EMIRATES For the purpose of carrying out the impairment test of goodwill, the recoverable amounts for cash generating units or groups of cash
DNATA generating units have been determined on the basis of value-in-use calculations using cash flow forecasts approved by management covering a three year period, adjusted for dnata's view of the impact of the COVID-19 outbreak on the results of the cash generating units. GROUP Cash flows beyond the three year period have been extrapolated using terminal growth rates stated below. The key assumptions used in the FINANCIAL value-in-use calculations include a risk adjusted pre-tax discount rate, gross margins consistent with historical trends and growth rates INFORMATION based on management's expectations for market development. The terminal growth rate does not exceed the long term average growth rate EMIRATES for the markets in which the cash generating units or groups of cash generating units operate. The goodwill allocated to cash generating FINANCIAL COMMENTARY units or groups of cash generating units and the key assumptions used in the value-in-use calculations are as follows:
DNATA FINANCIAL Cash generating unit / Group of cash Location Goodwill Discount Terminal COMMENTARY generating units 2020 2019 rate growth rate
EMIRATES AED m AED m % % CONSOLIDATED Airport operations USA 308 308 9.0 2.0 FINANCIAL STATEMENTS Airport operations Switzerland 259 250 8.5 2.5
DNATA Airport operations Singapore 87 92 7.0 2.5 CONSOLIDATED Airport operations Netherlands 58 59 8.8 1.5 FINANCIAL STATEMENTS Airport operations Brazil 35 43 16.0 2.5 Airport operations Australia 23 26 10.0 2.5 ADDITIONAL INFORMATION Airport operations Czech Republic 20 20 8.5 1.5 Inflight catering Australia 276 316 9.0 1.5 Inflight catering Romania 108 111 10.0 1.5 Inflight catering Italy 118 120 8.0 1.5 Inflight catering USA 16 40 8.0 1.5 Travel services - B2C UK 308 461 9.0 1.5 Travel services - B2B UK 145 153 9.0 1.5 Travel services Germany 42 42 8.0 2.0 Others Various 131 159 9.0 - 12.0 1.5 - 3.0 1,934 2,200
Goodwill pertaining to Airport Operations, USA includes AED 300 m (2019: AED 300 m) for Ground Services International Inc. / Metro Air Service Inc. and AED 8 m (2019: AED 8 m) for ALX Cargo Centre IAH LLC. The key assumptions used in the value-in-use calculations for both these cash generating units are similar.
The recoverable value of cash generating units or group of cash generating units would not fall materially below their carrying amount with a 1% reduction in the terminal growth rate or a 1% increase in the discount rate.
21
156 OVERVIEW 12. Investments in subsidiaries, associates and joint ventures
EMIRATES Principal subsidiaries DNATA Percentage Country of
GROUP of equity incorporation owned Principal activities and principal operations FINANCIAL INFORMATION dnata Inc. 100 Ground handling services Philippines
EMIRATES Ground, cargo handling and catering FINANCIAL dnata Singapore Pte Ltd 100 services Singapore COMMENTARY Dnata Switzerland AG 100 Ground and cargo handling services Switzerland DNATA FINANCIAL dnata Limited 100 Ground and cargo handling services United Kingdom COMMENTARY Alpha Flight Services Pty Ltd 100 Inflight catering services Australia
EMIRATES Alpha In-Flight US LLC 100 Inflight catering services United States of America CONSOLIDATED dnata srl 100 Inflight catering services Italy FINANCIAL STATEMENTS dnata Catering s.r.l. 64.2 Inflight catering services Romania
DNATA dnata International Pvt Ltd 100 Travel agency India CONSOLIDATED Travel Republic Limited 100 Online travel services United Kingdom FINANCIAL STATEMENTS En Route International Limited 100 Bakery and food solutions United Kingdom
ADDITIONAL Gold Medal Travel Group Limited 100 Travel agency United Kingdom INFORMATION dnata Travel Inc 100 Travel services Philippines Travel 2 Limited 100 Travel agency United Kingdom Travelbag Limited 100 Travel agency United Kingdom The Global Travel Group Limited 100 Travel agency United Kingdom dnata Airport Services Pty Ltd 100 Ground and cargo handling services Australia dnata BV 100 Ground and cargo handling services The Netherlands RM Servicos Auxiliares de Transporte Aereo Ltda 70 Ground handling services Brazil Airport Handling SpA 70 Ground handling services Italy Airport Handling Services Australia Pty Ltd 100 Ground handling services Australia Transecure LLC 100 Investment property United Arab Emirates Ground Services International Inc. 100 Ground handling services United States of America Metro Air Service Inc. 100 Mail handling services United States of America ALX Cargo Centre IAH LLC 100 Cargo handling services United States of America Air Dispatch (CLC) s.r.o 95 Load control services Czech Republic Air Dispatch (CLC) Spolka z.o.o 95 Load control services Poland Oman United Agencies Travel LLC 76.9 Travel agency Oman
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157 OVERVIEW 12. Investments in subsidiaries, associates and joint ventures (continued)
EMIRATES Percentage Country of DNATA of equity incorporation
GROUP owned Principal activities and principal operations
FINANCIAL Principal subsidiaries (continued) INFORMATION Acquired during the previous year:
EMIRATES Tropo GmbH 100 Travel services Germany FINANCIAL COMMENTARY BD4travel Limited 82.3 Travel technology services Germany 121 Group International LLC 85 Inflight catering services United States of America DNATA FINANCIAL Qantas Catering Group Ltd 100 Inflight catering services Australia COMMENTARY Snap Fresh Pty Ltd 100 Inflight catering services Australia EMIRATES Acquired during the year: CONSOLIDATED FINANCIAL Dunya Travel LLC 100 Travel agency United Arab Emirates STATEMENTS Alpha LSG Ltd 100 Inflight catering services United Kingdom DNATA Disposed during the year: CONSOLIDATED FINANCIAL dnata Travel (UK) Limited 100 Travel agency United Kingdom STATEMENTS
ADDITIONAL None of the subsidiaries have non-controlling interests that are material to dnata. INFORMATION Principal associates Gerry's Dnata (Private) Ltd 50 Aircraft and cargo handling services Pakistan Guangzhou Baiyun International Airport Ground Handling Services Co. Ltd 20 Aircraft handling services P. R. China Disposed during the year: Canary Topco Ltd 9.1 Information technology services United Kingdom Principal joint ventures Super Bus Tourism LLC (see (a) below) 75 Travel services United Arab Emirates dnata Travel Company Limited (see (a) below) 70 Travel agency Saudi Arabia Transguard Group LLC 50 Security services United Arab Emirates Imagine Enterprises Limited (see (a) below) 51 Travel agency United Kingdom
(a) Although the percentage of equity owned in Super Bus Tourism LLC, dnata Travel Company Limited and Imagine Enterprises Limited is 75%, 70% and 51% respectively, they are subject to joint control.
23
158 12. InvestmentsOVERVIEW in subsidiaries, associates and joint ventures (continued) 12. Investments in subsidiaries, associates and joint ventures (continued) No individual associate is materialNo individual to dnata. associate The aggregate is material financial to dnata. information The aggregate of financial information of EMIRATES associates is set out below: associates is set out below: Movement of investments accountedMovement for of usinginvestments the equity accounted method for using the equity method DNATA 2020 2019 2020 2019 2020 2019 2020 2019 AED m AED m GROUP AED m AED m AED m AED m AED m AED m Share of results of associates 4 (5) FINANCIAL Share of results of associates 4 (5) Balance brought forward 503 473 INFORMATION Balance brought forward 503 473 Share of total comprehensiveShare income of total of associates comprehensive income of 4 associates (5) 4 (5) Impact on adoption of IFRS 9 Impact on adoption of IFRS 9 - (5) - (5) EMIRATES Impact on adoption of IFRS 16 (47) - FINANCIAL Impact on adoption of IFRS 16 (47) - Aggregate carrying value of investments in associates 29 13 COMMENTARY Aggregate carrying value of investments in associates 29 13 Adjusted 1 April 2019 Adjusted 1 April 2019 456 468 456 468 AdditionsDNATA 117 26 No individual joint venture is material to dnata. The aggregate financial information of FINANCIAL Additions 117 26 No individual joint venture is material to dnata. The aggregate financial information of Share ofCOMMENTARY results Share of results 12 131 12 131 joint ventures is set out below:joint ventures is set out below: Share of other comprehensive income 2 - EMIRATES Share of other comprehensive income 2 - 2020 2019 CONSOLIDATED 2020 2019 Dividends Dividends (64) (67) (64) (67) FINANCIAL AED m AED m AED m AED m DisposalsSTATEMENTS Disposals 19 (20) 19 (20) Share of results of joint ventures 8 136 Reclassification due to change in ownership interest Share of results of joint ventures 8 136 DNATA Reclassification due to change in ownership 16 interest (23) 16 (23) CONSOLIDATED Share of other comprehensiveShare income of other comprehensive income 2 - 2 - Currency translation differencesCurrency translation differences (7) (12) (7) (12) FINANCIAL Share of total comprehensive income of joint ventures 10 136 STATEMENTS Share of total comprehensive income of joint ventures 10 136 Balance carried forward Balance carried forward 551 503 551 503 ADDITIONAL INFORMATION Aggregate carrying value ofAggregate investments carrying in value of investments in Change in the ownership interestChange of in joint the venturesownership interest of joint ventures joint ventures joint ventures 522 490 522 490 During the year, dnata acquiredDuring the the remaining year, dnata 50% acquiredinterest in the a joint remaining venture, 50% Dunya interest in a joint venture, Dunya Travel LLC, to increase its shareholdingTravel LLC, to to 100%. increase The its step shareholding acquisition to did 100%. not result The step in acquisition did not result in 13. Advance lease rentals any significant fair value gain anyor loss. significant fair value gain or loss. 13. Advance lease rentals 2020 2019 dnata also acquired the remainingdnata also 50% acquired interest in the a jointremaining venture, 50% Alpha interest LSG in Ltd, a joint to venture, Alpha LSG Ltd, to 2020 2019 AED m AED m increase its shareholding toincrease 100%. The its shareholding step acquisition to 100%. resulted The in step a fair acquisition value resulted in a fair value AED m AED m remeasurement gain of AED 38 m, which is included in other operating income. remeasurement gain of AED 38 m, which is included in other operating income. Balance brought forward Balance brought forward 48 46 48 46 Impact on adoption of IFRS 16Impact (Note on2) adoption of IFRS 16 (Note 2) (48) - (48) - Disposal of an associate duringDisposal the year of an associate during the year Adjusted 1 April 2019 Adjusted 1 April 2019 - 4 6 - 4 6 During the year, dnata sold itsDuring common the andyear, preference dnata sold equity its common interest and in an preference associate, equity interest in an associate, Additions during the year Additions during the year - 6 - 6 Accelya Topco Ltd (previouslyAccelya known Topco as Canary Ltd (previouslyTopco Ltd) knownfor a consideration as Canary Topco of AED Ltd) for a consideration of AED Charge for the year Charge for the year - (4) - (4) 260 m. A net gain of AED 216 260m is m. included A net gain in other of AED operating 216 m is income. included in other operating income. Balance carried forward Balance carried forward - 4 8 - 4 8 Advance lease rentals will be chargedAdvance to lease the rentalsconsolidated will be charged to the consolidated income statement as follows: income statement as follows: Within one year (Note 15) Within one year (Note 15) - 3 - 3 Over one year Over one year - 4 5 - 4 5
24 24 159 OVERVIEW Movements in the provision for impairment of trade receivables are as follows: 14. Inventories 14. Inventories Movements in the provision for impairment of trade receivables are as follows: EMIRATES 2020 2019 2020 2019 2020 2019 2020 2019 DNATA AED m AED m AED m AED m AED m AED m AED m AED m GROUP Food and beverages Food and beverages 119 101 119 101 Balance brought forward Balance brought forward 162 129 162 129 FINANCIAL Spares and consumables 29 32 Impact on adoption of IFRS 9 - 9 Spares andINFORMATION consumables 29 32 Impact on adoption of IFRS 9 - 9 Other Other 8 10 8 10 Adjusted 1 April 2019 Adjusted 1 April 2019 162 138 162 138 EMIRATES FINANCIAL 156 143 156 143 Charge for the year Charge for the year 146 76 146 76 COMMENTARY Unused amounts reversed Unused amounts reversed (7) (9) (7) (9) 15. Trade and other receivables15. Trade and other receivables DNATA Amounts written off as uncollectibleAmounts written off as uncollectible (68) (39) (68) (39) FINANCIAL COMMENTARY Currency translation differences (4) (4) 2020 2019 2020 2019 Currency translation differences (4) (4) Balance carried forward 229 162 EMIRATES AED m AED m AED m AED m Balance carried forward 229 162 CONSOLIDATED FINANCIAL The maximum exposure toThe credit maximum risk of exposure trade and to other credit receivables risk of trade (excluding and other receivables (excluding Trade receivablesSTATEMENTS - net of provisionTrade receivables - net of provision 1,532 1,980 1,532 1,980 prepayments) at the reportingprepayments) date is the carrying at the reportingvalue of each date class is the of carrying receivable. value of each class of receivable. Prepayments Prepayments 365 524 365 524 DNATA Related CONSOLIDATEDparties (Note 27) Related parties (Note 27) 362 424 362 424 FINANCIAL The ageing of trade receivablesThe that ageing are past of trade due receivablesbut not impaired that are is aspast follows: due but not impaired is as follows: AdvanceSTATEMENTS lease rentals (Note 13)Advance lease rentals (Note 13) - 3 - 3 Deposits and other receivables 774 794 2020 2019 DepositsADDITIONAL and other receivables 774 794 2020 2019 INFORMATION 3,033 3,725 3,033 3,725 AED m AED m AED m AED m Less: Receivables over one year (15) (114) Less: Receivables over one year (15) (114) Below 3 months Below 3 months 1,163 943 1,163 943 3,018 3,611 3,018 3,611 3-6 months 3-6 months 128 167 128 167 Above 6 months 266 179 dnata uses the lifetime expecteddnata loss uses allowance the lifetime to measure expected the loss expected allowance credit to measure losses the expected credit losses Above 6 months 266 179 on its trade receivables. The impairmenton its trade charge receivables. on trade The receivablesimpairment recognised charge on trade in the receivables recognised in the 1,557 1,289 1,557 1,289 consolidated income statementconsolidated during the income year primarily statement relates during to the travel year agencies, primarily relates to travel agencies, For further details on credit riskFor management, further details refer on credit to Note risk 28. management, refer to Note 28. airlines and other customers whoairlines are and in difficult other customers economic who situations are in anddifficult are unableeconomic to situations and are unable to meet their obligations. Amountsmeet charged their obligations. to the provision Amounts account charged are writtento the provision off when account are written off when there is no expectation of furtherthere recovery. is no expectation of further recovery.
Expected credit losses for allExpected financial assets credit within losses trade for all and financial other assets receivables within are trade less and other receivables are less than 1% as the balances are heldthan with 1% as companies the balances with are high held credit with ratings companies and are with short high credit ratings and are short term in nature and no significantterm in naturebalances and are no overdue. significant These balances receivables are overdue. are These receivables are presented net of provision. presented net of provision.
25 160 25 16. Capital OVERVIEW 16. Capital 18. Trade and other payables 18. Trade and other payables EMIRATES Capital represents the permanent capitalCapital of dnata.represents the permanent capital of dnata. 2020 2019 2020 2019 DNATA AED m AED m AED m AED m 17. Other reservesGROUP 17. Other reserves Trade payables and accruals Trade payables and accruals 2,702 2,763 2,702 2,763 FINANCIAL Translation Translation INFORMATION Deferred revenue Deferred revenue 393 847 393 847 reserve Other Total reserve Other Total Employee leave pay Employee leave pay 200 229 200 229 EMIRATES AED m AED m AED m AED m AED m AED m FINANCIAL Related parties (Note 27) Related parties (Note 27) 45 70 45 70 1 April 2018 COMMENTARY 1 April 2018 (164) 7 (157) (164) 7 (157) Customer advances Customer advances 32 43 32 43 Currency translation differences Currency translation(197) differences - (197) (197) - (197) DNATA Dividend payable Dividend payable - 500 - 500 Net investment FINANCIALhedge (Note 20 (a)) Net investment hedge 4 (Note 20 (a)) - 4 4 - 4 COMMENTARY Other payables Other payables 96 105 96 105 Cash flow hedges Cash flow hedges - (1) (1) - (1) (1) EMIRATES 3,468 4,557 3,468 4,557 Transferred to consolidatedCONSOLIDATED income Transferred to consolidated income Less: Payables over one year Less: Payables over one year (211) (198) (211) (198) statement FINANCIAL statement 40 6 46 40 6 46 STATEMENTS 3,257 4,359 3,257 4,359 Recognised in other comprehensiveRecognised in other comprehensive DNATA income (153) 5 (148) income CONSOLIDATED (153) 5 (148) Revenue recognised during the yearRevenue includes recognised AED 797 during m which the wasyear included includes in AED 797 m which was included in FINANCIAL Transfer to retainedSTATEMENTS earnings Transfer to retained earnings- (6) (6) - (6) (6) 'Deferred revenue' and 'Customer advances''Deferred as revenue' at 31 March and 2019.'Customer advances' as at 31 March 2019. 31 March 2019 31 March 2019 (317) 6 (311) (317) 6 (311) ADDITIONAL INFORMATION Currency translation differences (89) - (89) Currency translation differences (89) - (89) The payables over one year includeThe the payables non current over portion one year of deferredinclude the revenue, non current the portion of deferred revenue, the Net investment hedge (Note 20 (a)) Net investment hedge(3) (Note 20 (a))- (3) (3) - (3) acquisition related deferred / contingentacquisition consideration related deferred and the / fair contingent value of consideration options and the fair value of options Cash flow hedges Cash flow hedges - 2 2 - 2 2 issued to acquire additional interestsissued in subsidiaries. to acquire additional interests in subsidiaries. Transferred to consolidated income Transferred to consolidated income - 5 5 - 5 5 The movements in contingent considerationThe movements and options in contingent to acquire consideration non-controlling and options to acquire non-controlling statement statement interests is as follows: interests is as follows: Share of other comprehensive incomeShare of of other comprehensive income of investments accounted for using the investmentsequity accounted for using the equity 2020 2019 2020 2019 method, net of deferred tax method, net of deferred(16) tax - (16) (16) - (16) AED m AED m AED m AED m Recognised in other comprehensiveRecognised in other comprehensive Balance brought forward Balance brought forward 69 17 69 17 income income (108) 7 (101) (108) 7 (101) Interest charge Interest charge 2 - 2 - 31 March 2020 31 March 2020 (425) 13 (412) (425) 13 (412) Remeasurement gain Remeasurement gain (4) - (4) - Currency translation differences Currency translation differences (2) - (2) - Additions Additions - 5 2 - 5 2 Balance carried forward Balance carried forward 65 69 65 69
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26 26 19. Provisions OVERVIEW 19. Provisions Funded schemes Funded schemes
EMIRATES a) Parent company a) Parent company 2020 2019 2020 2019 DNATA AED m AED m AED m AED m Senior employees based in the UAESenior participate employees in a defined based benefit in the UAE provident participate scheme in a defined benefit provident scheme GROUP to which dnata contributes a specifiedto which percentage dnata contributes of basic salary a specified based upon percentage the of basic salary based upon the Non-current Non-current employee’s grade and duration ofemployee’s service. Amounts grade contributedand duration are of invested service. Amounts in a contributed are invested in a Retirement benefitFINANCIAL obligations (Note 19Retirement (a)) benefit obligations (Note 595 19 (a)) 582 595 582 INFORMATION trustee administered scheme andtrustee accumulate administered along with scheme returns and earned accumulate on along with returns earned on Other provisions (Note 19 (b)) Other provisions (Note 19 (b)) 87 16 87 16 investments. Contributions are madeinvestments. on a monthly Contributions basis irrespective are made on of afund monthly basis irrespective of fund EMIRATES FINANCIAL 682 598 682 598 performance and are not pooled, butperformance are separately and are identifiable not pooled, and butattributable are separately to identifiable and attributable to COMMENTARY Current Current each participant. The fund compriseseach a diverse participant. mix of The funds fund and comprises investment a diverse decisions mix of funds and investment decisions Other provisionsDNATA (Note 19 (b)) Other provisions (Note 19 (b)) 57 90 57 90 are controlled directly by the participatingare controlled employees. directly by the participating employees. FINANCIAL COMMENTARY 57 90 57 90 Benefits receivable under the providentBenefits scheme receivable are subject under to the vesting provident rules, scheme which are are subject to vesting rules, which are EMIRATES 739 688 739 688 CONSOLIDATED dependent upon a participating employee'sdependent length upon a of participating service. If at employee's the time lengthan of service. If at the time an 19 (a). Retirement benefit obligations19 (a). Retirement benefit obligations FINANCIAL employee leaves employment, the accumulatedemployee leaves vested employment, amount, including the accumulated investment vested amount, including investment STATEMENTS In accordance with the provisions of IASIn accordance 19, management with the has provisions carried out of an IAS exercise 19, management to has carried out an exercise to returns is less than the end of servicereturns benefits is less that than would the have end of been service payable benefits to that that would have been payable to that DNATA employee under relevant local regulations,employee dnata under pays relevant the shortfall local regulations, amount directly dnata to pays the shortfall amount directly to assess the presentCONSOLIDATED value of its definedassess benefit the obligations present value at 31 of March its defined 2020 benefit in respect obligations at 31 March 2020 in respect of retirement benefitFINANCIAL obligations underof retirement relevant benefitlocal regulations obligations and under contractual relevant local regulations and contractual the employee. However, if the accumulatedthe employee. vested However,amount exceeds if the accumulated the end of service vested amount exceeds the end of service STATEMENTS arrangements. arrangements. benefits that would have been payablebenefits to an employee that would under have relevantbeen payable local regulations,to an employee under relevant local regulations, ADDITIONAL the employee receives either seventythe five employee or one hundred receives percent either seventy of their five fund or balance one hundred percent of their fund balance INFORMATION The liabilities recognised in the consolidatedThe liabilities statement recognised of financial in the position consolidated are: statement of financial position are: depending on their length of service.depending Vested assets on their of the length scheme of service. are not Vested available assets to of the scheme are not available to dnata or its creditors in any circumstances.dnata or its creditors in any circumstances. 2020 2019 2020 2019 AED m AED m AED m AED m The present value of obligations and Thefair valuepresent of valueplan assets of obligations are as follows: and fair value of plan assets are as follows: Funded schemes Funded schemes Present value of defined benefit obligations 735 704 Present value of defined benefit obligations 735 704 2020 2019 2020 2019 Less: Fair value of plan assets (654) (652) Less: Fair value of plan assets (654) (652) AED m AED m AED m AED m 81 52 81 52 Present value of funded defined benefitPresent obligations value of funded defined benefit138 obligations 143 138 143 Unfunded schemes Unfunded schemes Less: Fair value of plan assets Less: Fair value of plan assets (137) (142) (137) (142) Present value of defined benefit obligationsPresent value of defined benefit 514 obligations 530 514 530 1 1 1 1
Provision recognised in consolidatedProvision statement recognised of in consolidated statement of The assessment of the present valueThe of defined assessment benefit of the obligations present valueassumed of defined expected benefit obligations assumed expected financial position financial position 595 582 595 582 salary increases averaging 2.0% (2019:salary 3.0%) increases and a discount averaging rate 2.0% of 3.0%(2019: (2019: 3.0%) 3.8%) and a discount rate of 3.0% (2019: 3.8%) per annum. The present values of theper defined annum. benefit The present obligations values at of 31 the March defined 2020 benefit obligations at 31 March 2020 were computed using the actuarial assumptionswere computed set out using above. the actuarial assumptions set out above.
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27 27 19 (a). RetirementOVERVIEW benefit obligations (continued) 19 (a). Retirement benefit obligations (continued) The movement in the present value ofThe defined movement benefit in obligationsthe present of value the Swissof defined plan is:benefit obligations of the Swiss plan is: EMIRATES The liability of AED 1 m (2019: AED 1The m) liability represents of AED the 1amount m (2019: that AED will 1 not m) berepresents settled the amount that will not be settled 2020 2019 from plan assetsDNATA and is calculated asfrom the plan excess assets of the and present is calculated value asof the excessdefined of the present value of the defined 2020 2019 AED m AED m benefit obligation for an individual employeebenefit obligation over the fair for anvalue individual of that employee'semployee over plan the fair value of that employee's plan AED m AED m GROUP assets at the end of the reporting period. assets at the end of the reporting period. Balance brought forward 254 264 FINANCIAL Balance brought forward 254 264 Contributions received include the transfer of accumulated benefits from unfunded INFORMATION Contributions received include the transfer of accumulated benefits from unfunded Current service cost Current service cost 15 14 15 14 schemes. schemes. EMIRATES Interest cost Interest cost 1 2 1 2 Actuarial gainsFINANCIAL and losses and expected returns on plan assets are not calculated given Remeasurement loss / (gain) 18 (7) COMMENTARY Actuarial gains and losses and expected returns on plan assets are not calculated given Remeasurement loss / (gain) 18 (7) that investment decisions relating to plan assets are under the direct control of that investment decisions relating to plan assets are under the direct control of Employee contributions Employee contributions 9 8 9 8 participating employees.DNATA participating employees. FINANCIAL Benefits paid Benefits paid (65) (19) (65) (19) COMMENTARY The movement in the fair value of theThe plan movement assets is: in the fair value of the plan assets is: Currency translation differences Currency translation differences 9 (8) 9 (8) EMIRATES 2020 2019 Balance carried forward Balance carried forward 241 254 241 254 CONSOLIDATED 2020 2019 FINANCIAL AED m AED m AED m AED m STATEMENTS The movement in the fair value of the plan assets of the Swiss plan is: Balance brought forward 142 139 The movement in the fair value of the plan assets of the Swiss plan is: DNATA Balance brought forward 142 139 Contributions receivedCONSOLIDATED 21 20 2020 2019 FINANCIAL Contributions received 21 20 2020 2019 STATEMENTS AED m AED m Change in fair value Change in fair value (14) (1) (14) (1) AED m AED m Benefits paid (12) (16) ADDITIONAL Benefits paid (12) (16) Balance brought forward 216 208 INFORMATION Balance brought forward 216 208 Balance carried forward Balance carried forward 137 142 137 142 Expected return on plan assets Expected return on plan assets 1 1 1 1 Remeasurement b) Subsidiaries b) Subsidiaries Remeasurement - Return on plan assets - Return on plan assets 6 15 6 15 (i) Swiss plan (i) Swiss plan Employer contributions Employer contributions 11 11 11 11 Employees of a subsidiary in SwitzerlandEmployees participate of a subsidiary in a defined in Switzerland benefit plan participate ("the in a defined benefit plan ("the Employee contributions Employee contributions 9 8 9 8 Swiss plan"). The Swiss plan is fundedSwiss by way plan"). of contributions The Swiss plan to isan funded insurance by waypolicy. of contributions to an insurance policy. Benefits paid Benefits paid (65) (19) (65) (19) Currency translation differences Currency translation differences 8 (8) 8 (8) The present value of obligations and fair value of plan assets are as follows: The present value of obligations and fair value of plan assets are as follows: Balance carried forward Balance carried forward 186 216 186 216 2020 2019 2020 2019 AED m AED m AED m AED m Present value of funded defined benefitPresent obligations value of funded defined benefit241 obligations 254 241 254 Less: Fair value of plan assets Less: Fair value of plan assets (186) (216) (186) (216) 55 38 55 38
The actuarial valuation for the SwissThe planactuarial includedvaluation assumptions for the relating Swiss to plan the included discount assumptions relating to the discount rate of 0.3% (2019: 0.8%) and expected salary increases of 1.0% (2019: 1.0%) per annum. rate of 0.3% (2019: 0.8%) and expected salary increases of 1.0% (2019: 1.0%) per annum.
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28 28 19 (a). Retirement benefit obligations (continued) OVERVIEW 19 (a). Retirement benefit obligations (continued) The movement in the fair value of the plan assets of the Netherlands plan is: The movement in the fair value of the plan assets of the Netherlands plan is: (ii) NetherlandsEMIRATES plan 2020 2019 (ii) Netherlands plan 2020 2019 Employees of a subsidiary in Netherlands participate in a defined benefit plan ("the AED m AED m DNATA Employees of a subsidiary in Netherlands participate in a defined benefit plan ("the AED m AED m Netherlands plan"). The Netherlands plan is funded by way of contribution to an Balance brought forward 294 314 GROUP Netherlands plan"). The Netherlands plan is funded by way of contribution to an Balance brought forward 294 314 insurance policy. Expected return on plan assets 6 5 insurance policy. Expected return on plan assets 6 5 FINANCIAL Remeasurement The present valueINFORMATION of obligations and fair value of plan assets are as follows: Remeasurement The present value of obligations and fair value of plan assets are as follows: - Return on plan assets 43 2 - Return on plan assets 43 2 EMIRATES 2020 2019 Employer contributions (2) 4 FINANCIAL 2020 2019 Employer contributions (2) 4 COMMENTARY AED m AED m Employee contributions 2 2 AED m AED m Employee contributions 2 2 Benefits paid (5) (5) Present value ofDNATA funded defined benefit obligations 356 307 Benefits paid (5) (5) FINANCIAL Present value of funded defined benefit obligations 356 307 Less: Fair value of plan assets (331) (294) Currency translation differences (7) (28) COMMENTARY Less: Fair value of plan assets (331) (294) Currency translation differences (7) (28) Balance carried forward 331 294 25 13 Balance carried forward 331 294 EMIRATES 25 13 dnata expects to contribute, in respect of existing plan members of all its funded CONSOLIDATED dnata expects to contribute, in respect of existing plan members of all its funded The actuarial valuationFINANCIAL for the Netherlands plan included assumptions relating to the schemes, approximately AED 35 m during the year ending 31 March 2021. STATEMENTS The actuarial valuation for the Netherlands plan included assumptions relating to the schemes, approximately AED 35 m during the year ending 31 March 2021. discount rate of 1.1% (2019: 1.9%) and expected salary increases of 1.0% (2019: 1.0%) discount rate of 1.1% (2019: 1.9%) and expected salary increases of 1.0% (2019: 1.0%) Unfunded schemes per annum. DNATA Unfunded schemes per annum. CONSOLIDATED End of service benefits for employees who do not participate in the provident scheme, The movementFINANCIAL in the present value of defined benefit obligations of the Netherlands End of service benefits for employees who do not participate in the provident scheme, STATEMENTS The movement in the present value of defined benefit obligations of the Netherlands defined benefit plans or other defined contribution plans follow relevant local plan is: defined benefit plans or other defined contribution plans follow relevant local plan is: regulations, which are mainly based on periods of cumulative service and levels of ADDITIONAL regulations, which are mainly based on periods of cumulative service and levels of INFORMATION 2020 2019 employees’ final basic salary. The liability recognised in the consolidated statement of 2020 2019 employees’ final basic salary. The liability recognised in the consolidated statement of AED m AED m financial position is the present value of the defined benefit obligation at the end of the AED m AED m financial position is the present value of the defined benefit obligation at the end of the reporting period. Balance brought forward 307 328 reporting period. Balance brought forward 307 328 The movement in the present value of defined benefit obligation is: Current service cost 5 8 The movement in the present value of defined benefit obligation is: Current service cost 5 8 2020 2019 Interest cost 6 6 2020 2019 Interest cost 6 6 AED m AED m Remeasurement gain AED m AED m Remeasurement gain 48 - 48 - Balance brought forward 530 479 Employee contributions 2 2 Balance brought forward 530 479 Employee contributions 2 2 Acquisitions - 7 Benefits paid (5) (5) Acquisitions - 7 Benefits paid (5) (5) Current service cost 63 55 Currency translation differences (7) (32) Current service cost 63 55 Currency translation differences (7) (32) Interest cost 19 20 Interest cost 19 20 Balance carried forward 356 307 Remeasurement Balance carried forward 356 307 Remeasurement - changes in experience / demographic assumptions (8) (3) - changes in experience / demographic assumptions (8) (3) - changes in financial assumptions (21) 1 7 - changes in financial assumptions (21) 1 7 Payments made during the year (67) (43) Payments made during the year (67) (43) Currency translation differences (2) (2) Currency translation differences (2) (2) Balance carried forward 514 530 Balance carried forward 514 530 Payments made during the year include transfer of accumulated benefits to dnata’s Payments made during the year include transfer of accumulated benefits to dnata’s funded scheme. funded scheme.
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29 29 19 (a). RetirementOVERVIEW benefit obligations (continued) The sensitivity of the defined benefit obligation to changes in the principal assumptions 19 (a). Retirement benefit obligations (continued) The sensitivity of the defined benefit obligation to changes in the principal assumptions are set out below: Defined contributionEMIRATES plans are set out below: Defined contribution plans DNATA dnata pays fixed contributions to certain defined contribution plans and has no legal or Assumption Change Effect on defined dnata pays fixed contributions to certain defined contribution plans and has no legal or Assumption Change Effect on defined constructive obligationGROUP to pay further contributions to settle the benefits relating to the benefit obligation constructive obligation to pay further contributions to settle the benefits relating to the benefit obligation employee's service in the current and prior periods. Subsidiaries Parent FINANCIAL employee's service in the current and prior periods. Subsidiaries Parent INFORMATION AED m AED m AED m AED m The total amountEMIRATES recognised in the consolidated income statement in respect of all the + 0.5% (52) (23) FINANCIAL The total amount recognised in the consolidated income statement in respect of all the Discount rate + 0.5% (52) (23) plans is as follows: Discount rate - 0.5% 55 25 COMMENTARY plans is as follows: - 0.5% 55 25 + 0.5% 6 25 DNATA 2020 2019 Expected salary increases + 0.5% 6 25 2020 2019 Expected salary increases FINANCIAL AED m AED m - 0.5% (6) (21) COMMENTARY AED m AED m - 0.5% (6) (21) Defined benefit plans The weighted average durations of the defined benefit obligations are set out below: EMIRATES Defined benefit plans The weighted average durations of the defined benefit obligations are set out below: Funded schemesCONSOLIDATED FINANCIAL Funded schemes 2020 2019 Contributions expensedSTATEMENTS 40 42 2020 2019 Contributions expensed 40 42 Years Years 40 42 Years Years DNATA 40 42 Funded scheme - Swiss plan 16.5 16.5 Unfunded schemesCONSOLIDATED Funded scheme - Swiss plan 16.5 16.5 FINANCIAL Unfunded schemes Funded scheme - Netherlands plan 20.4 20.5 Service cost STATEMENTS 63 55 Funded scheme - Netherlands plan 20.4 20.5 Service cost 63 55 Interest cost 19 20 Unfunded scheme 9.7 13.7 ADDITIONAL Interest cost 19 20 Unfunded scheme 9.7 13.7 INFORMATION 82 75 82 75 Through its defined benefit plans dnata is exposed to a number of risks, the most Defined contribution plans Through its defined benefit plans dnata is exposed to a number of risks, the most Defined contribution plans significant of which are detailed below: Contributions expensed 201 142 significant of which are detailed below: Contributions expensed 201 142 a) Change in discount rate: Retirement benefit obligations will increase due to a Recognised in the consolidated income statement 323 259 a) Change in discount rate: Retirement benefit obligations will increase due to a Recognised in the consolidated income statement 323 259 decrease in market yields of high quality corporate bonds. decrease in market yields of high quality corporate bonds.
b) Expected salary increases: The present value of the defined benefit obligation is b) Expected salary increases: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase of calculated by reference to the future salaries of plan participants. As such, an increase of the salary of the plan participants above the expected rate of salary increase will the salary of the plan participants above the expected rate of salary increase will increase the retirement benefit obligations. increase the retirement benefit obligations.
165
30 30 OVERVIEW 19 (b). Other provisions 19 (b). Other provisions 20. Borrowings and lease liabilities20. Borrowings and lease liabilities EMIRATES 2020 2019 2020 2019 2020 2019 2020 2019 DNATA AED m AED m AED m AED m AED m AED m AED m AED m GROUP Balance brought forward Balance brought forward 106 60 106 60 Non-current Non-current Charge for the yearFINANCIAL Charge for the year 52 53 52 53 Term loans (Note 20 (a)) Term loans (Note 20 (a)) 1,129 1,125 1,129 1,125 INFORMATION Acquisitions (Note 29) Acquisitions (Note 29) 42 49 42 49 Lease liabilities (Note 20 (b)) Lease liabilities (Note 20 (b)) 1,832 52 1,832 52 EMIRATES 2,961 1,177 2,961 1,177 Utilised during FINANCIALthe year Utilised during the year (39) (45) (39) (45) Unutilised amountsCOMMENTARY reversed Unutilised amounts reversed (6) (5) (6) (5) Current Current Term loans (Note 20 (a)) 416 320 Currency translationDNATA differences Currency translation differences (11) (6) (11) (6) Term loans (Note 20 (a)) 416 320 FINANCIAL Lease liabilities (Note 20 (b)) Lease liabilities (Note 20 (b)) 405 17 405 17 Balance carriedCOMMENTARY forward Balance carried forward 144 106 144 106 Bank overdrafts (Note 24) Bank overdrafts (Note 24) 136 95 136 95 Provisions are expectedEMIRATES to be used asProvisions follows: are expected to be used as follows: CONSOLIDATED 957 432 957 432 2020 2019 FINANCIAL 2020 2019 3,918 1,609 STATEMENTS 3,918 1,609 AED m AED m AED m AED m Within one yearDNATA (Note 19) Within one year (Note 19) 57 90 57 90 CONSOLIDATED Borrowings and lease liabilities are denominatedBorrowings andin the lease following liabilities currencies: are denominated in the following currencies: Over one year FINANCIAL(Note 19) Over one year (Note 19) 87 16 87 16 STATEMENTS 2020 2019 2020 2019 ADDITIONAL AED m AED m INFORMATION AED m AED m Pound Sterling Pound Sterling 1,009 263 1,009 263 US Dollar US Dollar 936 444 936 444 Australian Dollar Australian Dollar 798 480 798 480 UAE Dirham UAE Dirham 487 185 487 185 Euro Euro 262 33 262 33 Singapore Dollar Singapore Dollar 156 50 156 50 Swiss Franc Swiss Franc 149 107 149 107 Philippine Peso Philippine Peso 32 - 32 - Others Others 89 47 89 47
166
31 31 20 (a). Term loansOVERVIEW 20 (a). Term loans 20 (b). Lease liabilities 20 (b). Lease liabilities EMIRATES 2020 2019 2020 2019 2020 2019 2020 2019 AED m AED m DNATA AED m AED m AED m AED m AED m AED m Balance brought forward 69 51 Balance broughtGROUP forward Balance brought forward 1,447 1,036 1,447 1,036 Balance brought forward 69 51 Transferred to Lease liabilities (Note 20 (b)) (17) - Impact on adoption of IFRS 16 (Note Impact2) on adoption of IFRS 16 (Note2,091 2) - 2,091 - FINANCIAL Transferred to Lease liabilities (Note 20 (b)) (17) - Transferred from Term loans (Note 20 (a)) 17 - Adjusted 1 AprilINFORMATION 2019 Adjusted 1 April 2019 1,430 1,036 1,430 1,036 Transferred from Term loans (Note 20 (a)) 17 - Acquisitions (Note 29) 68 9 Adjusted 1 April 2019 2,177 51 EMIRATES Acquisitions (Note 29) 68 9 Adjusted 1 April 2019 2,177 51 Additions FINANCIAL 412 613 Acquisitions (Note 29) Acquisitions (Note 29) 188 3 188 3 COMMENTARY Additions 412 613 Additions 384 34 Repayments Repayments (298) (156) (298) (156) Additions 384 34 Currency translationDNATA differences (65) (55) Interest Interest 82 - 82 - FINANCIAL Currency translation differences (65) (55) Repayments (414) (16) COMMENTARY 1,547 1,447 1,547 1,447 Repayments (414) (16) Remeasurement (50) - Less: TransactionEMIRATES costs Less: Transaction costs (2) (2) (2) (2) Remeasurement (50) - Balance carriedCONSOLIDATED forward 1,545 1,445 Termination of contracts Termination of contracts (14) - (14) - FINANCIAL Balance carried forward 1,545 1,445 Currency translation differences (116) (3) Term loans are repayableSTATEMENTS as follows: Term loans are repayable as follows: Currency translation differences (116) (3) Within one year 416 320 Balance carried forward Balance carried forward 2,237 69 2,237 69 DNATA Within one year 416 320 Between 2 and CONSOLIDATED5 years Between 2 and 5 years 1,075 1,019 1,075 1,019 Gross lease liabilities: FINANCIAL Gross lease liabilities: After 5 years STATEMENTS After 5 years 54 106 54 106 Within one year Within one year 470 19 470 19 Total over one year 1,129 1,125 Between 2 and 5 years 1,170 39 ADDITIONAL Total over one year 1,129 1,125 Between 2 and 5 years 1,170 39 INFORMATION After 5 years After 5 years 974 19 974 19 Term loans are denominated in the following currencies: Term loans are denominated in the following currencies: 2,614 77 2,614 77 US Dollar 614 444 US Dollar 614 444 Future interest Future interest (377) (8) (377) (8) Australian Dollar 336 444 Australian Dollar 336 444 Present value of lease liabilities Present value of lease liabilities 2,237 69 2,237 69 Pound Sterling Pound Sterling 278 232 278 232 UAE Dirham 93 157 UAE Dirham 93 157 The present value of lease liabilities isThe repayable present as value follows: of lease liabilities is repayable as follows: Swiss Franc Swiss Franc 87 90 87 90 Within one year Within one year 405 17 405 17 Singapore Dollar 48 50 Singapore Dollar 48 50 Between 2 and 5 years Between 2 and 5 years 997 34 997 34 Euro 72 25 Euro 72 25 After 5 years After 5 years 835 18 835 18 Others Others 17 3 17 3 Total over one year Total over one year 1,832 52 1,832 52 Contractual repricing dates are set atContractualthree to six repricing month intervals. dates are The set averageat three effective to six month intervals. The average effective The present value of lease liabilities isThe denominated present value in theof lease liabilities is denominated in the interest rate on the term loans was 3.0%interest (2019: rate 3.1%) on the per term annum. loans The was carrying 3.0% (2019: amounts 3.1%) per annum. The carrying amounts following currencies: following currencies: of the term loans approximate theirof fair the values. term loans The fairapproximate values are their determined fair values. by The fair values are determined by Pound Sterling Pound Sterling 710 1 710 1 discounting projected cash flows usingdiscounting the interest projected rate cash yield flows curve using applicable the interest to rate yield curve applicable to Australian Dollar Australian Dollar 443 36 443 36 different maturities and currencies adjusteddifferent for maturities credit spread and currencies and falls within adjusted level for 2 credit of spread and falls within level 2 of UAE Dirham UAE Dirham 366 - 366 - the fair value hierarchy. the fair value hierarchy. US Dollar US Dollar 322 3 322 3 Euro Euro 180 - 180 - The term loan in Swiss Franc is designatedThe term as loana hedge in Swiss of the Franc net is investment designated in as dnata a hedge of the net investment in dnata Singapore Dollar Singapore Dollar 108 - 108 - Switzerland AG. The foreign exchangeSwitzerland movement AG. on The translation foreign ofexchange the loan movement at the end on translation of the loan at the end Philippine Peso Philippine Peso 32 - 32 - of the reporting period is a loss of AEDof the 3 m reporting (2019: gain period of AED is a 4 loss m), of recognised AED 3 m in(2019: the gain of AED 4 m), recognised in the Swiss Franc 31 17 translation reserve through other comprehensivetranslation reserve income. through other comprehensive income. Swiss Franc 31 17 Others Others 45 12 45 12 167
32 32 OVERVIEW 20 (b). Lease liabilities (continued)20 (b). Lease liabilities (continued) 21. Deferred income tax 21. Deferred income tax EMIRATES Reconciliation of operating leaseReconciliation commitments applyingof operating IAS 17lease to commitmentslease liabilities applying IAS 17 to lease liabilities Deferred tax assets and liabilities areDeferred offset when tax assets there isand a legally liabilities enforceable are offset right when to there is a legally enforceable right to measured underDNATA IFRS 16 at 1 Aprilmeasured 2019: under IFRS 16 at 1 April 2019: offset current tax assets against currentoffset tax current liabilities tax and assets when against the deferred current taxes tax liabilities relate and when the deferred taxes relate GROUP AED m AED m to the same income tax authority. Theto offsetthe same amounts income are tax as authority.follows: The offset amounts are as follows:
Operating leaseFINANCIAL commitments disclosedOperating as at lease 31 March commitments 2019 disclosed as at 31 March 2019 2020 2019 INFORMATION 2020 2019 applying IAS 17: applying IAS 17: 2,428 2,428 AED m AED m AED m AED m Less: Short-termEMIRATES leases Less: Short-term leases (131) (131) FINANCIAL Less: Leases forCOMMENTARY which the underlyingLess: asset Leases is of lowfor whichvalue the underlying asset is of low(6) value (6) Deferred income tax assets Deferred income tax assets 280 110 280 110 Deferred income tax liabilities Deferred income tax liabilities (255) (153) (255) (153) Less: Leases whichDNATA expire within 12 monthsLess: Leases of transition which expire date andwithin short- 12 months of transition date and short- term lease practicalFINANCIAL expedient has beenterm applied lease practical expedient has been applied (39) (39) 25 (43) 25 (43) COMMENTARY Add: Adjustments as a result of a differentAdd: Adjustments treatment of as extension a result of and a different treatment of extension and Movements in the deferred tax accountMovements are as follows: in the deferred tax account are as follows: EMIRATES Balance brought forward Balance brought forward (43) (61) (43) (61) termination optionsCONSOLIDATED under IFRS 16 termination options under IFRS 16 253 253 FINANCIAL Impact on adoption of IFRS 16 Impact on adoption of IFRS 16 23 - 23 - STATEMENTS 2,505 2,505 Discounted using dnata's incrementalDiscounted borrowing using rate atdnata's 1 April incremental 2019 borrowing 2,091 rate at 1 April 2019 2,091 Adjusted 1 April 2019 Adjusted 1 April 2019 (20) (61) (20) (61) DNATA CONSOLIDATED Acquisitions Acquisitions (21) 9 (21) 9 FINANCIAL Credited to the consolidated income Creditedstatement to the consolidated income 65 statement 12 65 12 The weightedSTATEMENTS average dnata's incrementalThe weighted borrowing average rate dnata's applied incremental to lease liabilities borrowing rate applied to lease liabilities recognised in the consolidated statementrecognised of financial in the positionconsolidated at 1 April statement 2019 isof 4.2%. financial position at 1 April 2019 is 4.2%. Currency translation differences Currency translation differences (3) (3) (3) (3) ADDITIONAL INFORMATION Others Others 4 - 4 - Balance carried forward Balance carried forward 25 (43) 25 (43)
168
33 33 OVERVIEW 21. Deferred income tax (continued) EMIRATES The movements in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances DNATA within the same tax jurisdiction, are as follows:
GROUP Deferred income tax assets FINANCIAL INFORMATION Lease Tax losses Provisions liabilities Other Total EMIRATES FINANCIAL AED m AED m AED m AED m AED m COMMENTARY 1 April 2018 14 38 - 5 1 103 DNATA Acquisition - - - 32 32 FINANCIAL COMMENTARY (Charged) / credited to the consolidated income statement (8) 12 - 2 6
EMIRATES Currency translation differences (1) (5) - (7) (13) CONSOLIDATED Others 8 (5) - (3) - FINANCIAL STATEMENTS 31 March 2019 13 40 - 7 5 128
DNATA Impact on adoption of IFRS 16 - - 152 - 152 CONSOLIDATED FINANCIAL Adjusted 1 April 2019 13 40 152 75 280 STATEMENTS Additions - - 6 - 6 ADDITIONAL (Charged) / credited to the consolidated income statement 30 2 (8) 11 35 INFORMATION Currency translation differences (2) (5) (14) (6) (27) Others 2 35 (1) (26) 10 31 March 2020 43 72 135 54 304
34 169 OVERVIEW 21. Deferred income tax (continued) EMIRATES Deferred income tax liabilities DNATA Property, GROUP plant and Intangible Right-of- FINANCIAL equipment assets use assets Other Total INFORMATION AED m AED m AED m AED m AED m EMIRATES FINANCIAL 1 April 2018 (53) (109) - (2) (164) COMMENTARY Acquisitions - (23) - - (23)
DNATA Credited to the consolidated income statement (9) 1 5 - - 6 FINANCIAL COMMENTARY Currency translation differences 1 9 - - 10 Others 2 (2) - - - EMIRATES CONSOLIDATED 31 March 2019 (59) (110) - (2) (171) FINANCIAL STATEMENTS Impact on adoption of IFRS 16 - - (129) - (129) Adjusted 1 April 2019 (59) (110) (129) (2) (300) DNATA CONSOLIDATED Acquisitions (Note 29) - (21) - - (21) FINANCIAL STATEMENTS Additions - - (6) - (6)
ADDITIONAL (Charged) / credited to the consolidated income statement (3) 22 10 1 30 INFORMATION Currency translation differences - 1 0 13 1 24 Others - (4) - (2) (6) 31 March 2020 (62) (103) (112) (2) (279)
170 35 OVERVIEW 22. Capital commitments 22. Capital commitments 24. Short term bank deposits,24. cash Short and term cash bank equivalents deposits, cash and cash equivalents EMIRATES 2020 2019 2020 2019 2020 2019 2020 2019 DNATA AED m AED m AED m AED m AED m AED m AED m AED m dnata GROUP dnata 126 657 126 657 Bank deposits Bank deposits 4,166 4,318 4,166 4,318 Joint venturesFINANCIAL Joint ventures 8 9 8 9 INFORMATION Cash and bank Cash and bank 1,150 804 1,150 804 134 666 134 666 EMIRATES Cash and bank balances Cash and bank balances 5,316 5,122 5,316 5,122 FINANCIAL Less: Short term bank depositsLess: - over Short 3 months term bank original deposits - over 3 months original 23. GuaranteesCOMMENTARY 23. Guarantees maturity maturity (3,700) (3,121) (3,700) (3,121) DNATA FINANCIAL Cash and cash equivalents asCash per andthe consolidatedcash equivalents as per the consolidated COMMENTARY 2020 2019 2020 2019 statement of financial positionstatement of financial position 1,616 2,001 1,616 2,001 AED m AED m AED m AED m EMIRATES Bank overdrafts (Note 20) Bank overdrafts (Note 20) (136) (95) (136) (95) CONSOLIDATED GuaranteesFINANCIAL and letters of creditGuarantees provided byand banks letters in of the credit provided by banks in the Cash and cash equivalents asCash per andthe cash equivalents as per the STATEMENTS normal course of business normal course of business 414 442 414 442 consolidated statement of cashconsolidated flows statement of cash flows 1,480 1,906 1,480 1,906 DNATA CONSOLIDATED Short term bank deposits, cashShort and term cash bank equivalents deposits, yield cash an and effective cash equivalents interest rate yield of an effective interest rate of GuaranteesFINANCIAL and letters of creditGuarantees include and AED letters 41 m of (2019: credit AED include 53 m) AED provided 41 m (2019:by AED 53 m) provided by STATEMENTS 3.4% (2019:(Mar 2019: 3.3%) 3.3%) per annum.per annum.3.4% (Mar 2019: 3.3%) per annum. companies under common controlcompanies on normal under commercial common control terms. on normal commercial terms. ADDITIONAL INFORMATION 25. Derivative financial instruments25. Derivative financial instruments
2020 2019 2020 2019 AED m AED m AED m AED m Current assets Current assets Currency swaps and forwards Currency swaps and forwards 15 - 15 - 15 - 15 - Current liabilities Current liabilities Currency swaps and forwards Currency swaps and forwards - 11 - 11 - 1 1 - 1 1
The notional principal amountsThe outstanding notional principal are: amounts outstanding are: 2020 2019 2020 2019 AED m AED m AED m AED m
Currency contracts Currency contracts 1,595 902 1,595 902
36 36 171 OVERVIEW 26. Classification of financial instruments EMIRATES The accounting policies for financial instruments have been applied to the following:
DNATA Financial Assets and Financial
GROUP assets at Derivative liabilities at fair liabilities at amortised financial value through amortised FINANCIAL INFORMATION cost instruments profit or loss cost Total AED m AED m AED m AED m AED m EMIRATES FINANCIAL 2020 COMMENTARY Assets DNATA Trade and other receivables (excluding prepayments) 2,668 - - - 2,668 FINANCIAL COMMENTARY Derivative financial instruments - 1 5 - - 15 Short term bank deposits 3,700 - - - 3,700 EMIRATES CONSOLIDATED Cash and cash equivalents 1,616 - - - 1,616 FINANCIAL STATEMENTS Total 7,984 15 - - 7,999
DNATA Liabilities CONSOLIDATED FINANCIAL Borrowings and lease liabilities - - - 3,918 3,918 STATEMENTS Trade and other payables (excluding deferred revenue and ADDITIONAL customer advances) - - 65 2,978 3,043 INFORMATION Total - - 65 6,896 6,961 2019 Assets Trade and other receivables (excluding prepayments and advance lease rentals) 3,198 - - - 3,198 Short term bank deposits 3,121 - - - 3,121 Cash and cash equivalents 2,001 - - - 2,001 Total 8,320 - - - 8,320
Liabilities Borrowings and lease liabilities - - - 1,609 1,609 Trade and other payables (excluding deferred revenue and customer advances) - - 69 3,598 3,667 Derivative financial instruments - 1 1 - - 11 Total - 1 1 69 5,207 5,287 Except as otherwise stated, the carrying amounts of financial assets and financial liabilities approximate their fair values and fall into level 3 of the fair value hierarchy.
37
172 27. RelatedOVERVIEW party transactions27. and Related balances party transactions and balances Effective 31 March 2020, theEffective beneficial 31 March ownership 2020, of the Emirates beneficial Holidays ownership and its of Emirates Holidays and its
EMIRATES subsidiaries were transferredsubsidiaries to Emirates were for consideration transferred to of Emirates AED 9 mfor which consideration was of AED 9 m which was dnata transacts with associates,dnata joint transacts ventures with and associates, companies joint controlled ventures by and dnata companies and controlled by dnata and equal to carrying value of assetsequal and to liabilities carrying transferred.value of assets and liabilities transferred. its parentDNATA company within theits scope parent of companyits ordinary within business the scope activities. of its ordinary business activities. dnata uses public utilities provideddnata uses by number public utilities of Government provided controlled by number entities of Government for controlled entities for GROUP dnata and Emirates (a companydnata under and Emirates common (a control) company share under central common corporate control) share central corporate its operations in Dubai, whereits these operations entities in areDubai, the where sole providers these entities of the are relevant the sole providers of the relevant functionsFINANCIAL such as informationfunctions technology, such as facilities, information human technology, resources, facilities, finance, human resources, finance, services. This includes the supplyservices. of electricity,This includes water the and supply airport ofservices. electricity, Transactions water and airport services. Transactions INFORMATION treasury, cash management,treasury, legal and cash other management, functions. Where legal and such other functions functions. are Where such functions are falling in these expense categoriesfalling are in these individually expense insignificant categories and are individuallycarried out on insignificant an and carried out on an shared theEMIRATES costs are allocatedshared between the dnata costs andare allocatedEmirates basedbetween on dnataactivity and levels. Emirates based on activity levels. arm's length basis. arm's length basis. FINANCIAL Other thanCOMMENTARY these shared servicesOther arrangements than these shared the following services transactions arrangements have the taken following transactions have taken 2020 2019 2020 2019 place onDNATA an arm's length basis.place on an arm's length basis. AED m AED m AED m AED m FINANCIAL Year end balances Year end balances COMMENTARY 2020 2019 2020 2019 AED m AED m AED m AED m (i) Receivables-sale of goods(i) and Receivables-sale services (Note of 15) goods and services (Note 15) EMIRATES TradingCONSOLIDATED transactions Trading transactions Companies under common controlCompanies under common control 314 237 314 237 (i) Sale FINANCIALof goods and services(i) Sale of goods and services STATEMENTS Joint ventures Joint ventures 17 47 17 47 Sale of goods - Companies underSale ofcommon goods -control Companies under common 363 control 424 363 424 Associates Associates 24 36 24 36 DNATA ServicesCONSOLIDATED rendered - Companies Services under renderedcommon -control Companies under 1,988 common control 2,285 1,988 2,285 355 320 355 320 FINANCIAL ServicesSTATEMENTS rendered - Joint venturesServices rendered - Joint ventures 72 55 72 55 (ii) Payables-purchase of goods(ii) Payables-purchase and services (Note of 18) goods and services (Note 18) Services rendered - AssociatesServices rendered - Associates 12 15 12 15 Companies under common controlCompanies under common control 38 51 38 51 ADDITIONAL INFORMATION 2,435 2,779 2,435 2,779 Joint ventures Joint ventures 7 16 7 16 (ii) Purchase of goods and service(ii) Purchases of goods and services Associates Associates - 3 - 3 Purchase of goods - CompaniesPurchase under ofcommon goods -control Companies under 111 common control 136 111 136 45 70 45 70 Services received - CompaniesServices under commonreceived -control Companies under common 541 control 586 541 586 (iii) Borrowings (iii) Borrowings Services received - Joint venturesServices received - Joint ventures 179 218 179 218 Companies under common controlCompanies under common control 67 157 67 157 831 940 831 940 (iv) Loans - receivable (Note(iv) 15) Loans - receivable (Note 15) Other transactions Other transactions Joint ventures Joint ventures - 97 - 97 (i) Finance income (i) Finance income Associates Associates 7 7 7 7 Companies under common controlCompanies under common control 132 120 132 120 7 104 7 104 Joint ventures Joint ventures 2 3 2 3 Movements in the loans wereMovements as follows: in the loans were as follows: 134 123 134 123 Balance brought forward Balance brought forward 104 113 104 113 (ii) Finance cost (ii) Finance cost Additions Additions 12 7 12 7 Companies under common controlCompanies under common control - 1 - 1 Repayments Repayments (106) (7) (106) (7) Currency translation differencesCurrency translation differences (3) (9) (3) (9) (iii) Compensation to key management(iii) Compensation personnel to key management personnel Balance carried forward Balance carried forward 7 104 7 104 Salaries and short-term employeeSalaries benefits and short-term employee benefits 30 28 30 28 Receivable within one year Receivable within one year 7 8 7 8 Retirement benefits Retirement benefits 5 6 5 6 Receivable over one year Receivable over one year - 9 6 - 9 6 35 34 35 34 The loans earned average effectiveThe loans interest earned rate average of 2.9% effective(2019: 3.0%) interest per rateannum. of 2.9% (2019: 3.0%) per annum.
38 38 173 OVERVIEW 28. Financial risk management28. Financial risk management Currency risk Currency risk EMIRATES dnata is exposed to a varietydnata of financial is exposed risks through to a variety its operations. of financial In risks the through areas where its operations. In the areas where Certain subsidiaries of dnataCertain are exposed subsidiaries to currency of dnata risk are on exposed purchase to of currency services risk on purchase of services financialDNATA risks exist, the aim isfinancial to achieve risks an exist, appropriate the aim balance is to achieve between an appropriate risk and return balance between risk and return outside the source market.outside These subsidiaries the source manage market. These such risks subsidiaries through manage currency such risks through currency and minimise potential adverse effects on dnata’s financial performance. forwards. forwards. and minimiseGROUP potential adverse effects on dnata’s financial performance. dnata is exposed to the effectsdnata of isfluctuations exposed to in theprevailing effectsforeign of fluctuations currency in exchangeprevailing foreign currency exchange dnata’sFINANCIAL risk management proceduresdnata’s risk are management designed to identify procedures and areanalyse designed these to risks, identify to and analyse these risks, to set appropriateINFORMATION risk limits andset controls appropriate and to risk monitor limits and the riskscontrols and and adherence to monitor to limits the risks and adherence to limits rates on its long term debtrates obligations on its long denominated term debt in obligations Swiss Franc, denominated Euro, Pound in Swiss Franc, Euro, Pound Sterling, Singapore Dollar and Australian Dollar. Cash flows from the Switzerland, Italy, by meansEMIRATES of reliable and up-to-dateby means information. of reliable and dnata up-to-date reviews its information. risk management dnata reviews its risk management Sterling, Singapore Dollar and Australian Dollar. Cash flows from the Switzerland, Italy, proceduresFINANCIAL and systems on aprocedures regular basis and to systems reflect changeson a regular in markets, basis to products reflect changes and in markets, products and United Kingdom and AustralianUnited operations Kingdom areand adequate Australian to operations meet the are repayment adequate to meet the repayment COMMENTARY emerging best practice. dnataemerging uses derivative best practice. and non-derivative dnata uses derivative financial and instruments non-derivative financial instruments schedules. A 1% change inschedules. exchange A rate 1% for change these in currencies exchange would rate for not these have currencies a would not have a to hedgeDNATA certain risk exposures.to hedge certain risk exposures. significant impact on profit orsignificant equity. At impact the dnata on profit parent or level equity. these At liabilitiesthe dnata provide parent alevel these liabilities provide a FINANCIAL natural hedge to its foreignnatural currency hedge investments to its foreign in these currency countries. investments Senior in these countries. Senior Risk managementCOMMENTARY proceduresRisk are management approved by procedures a steering aregroup approved comprising by a of steering senior group comprising of senior management monitors currencymanagement positions onmonitors a regular currency basis. positions on a regular basis. management.EMIRATES The identification,management. evaluation The and identification, hedging of financial evaluation risks and are hedging performed of financial risks are performed in closeCONSOLIDATED cooperation with thein operating close cooperation units. Senior with management the operating is units. also responsible Senior management is also responsible FINANCIAL (ii) Credit risk (ii) Credit risk for theSTATEMENTS review of risk managementfor the and review the of control risk management environment. and The the various control financial environment. The various financial dnata is exposed to creditdnata risk, which is exposed is the torisk credit that the risk, counterparty which is the will risk cause that the a counterparty will cause a risk elementsDNATA are discussed below.risk elements are discussed below. CONSOLIDATED financial loss to dnata byfinancial failing to loss discharge to dnata an by obligation. failing to Financial discharge assets an obligation. that Financial assets that (i) MarketFINANCIAL risk (i) Market risk potentially subject dnata to credit risk consist principally of deposits with banks and STATEMENTS potentially subject dnata to credit risk consist principally of deposits with banks and trade receivables. dnata usestrade external receivables. ratings such dnata as uses Standard external & ratings Poor's, such Moody's as Standard or & Poor's, Moody's or Market risk is the risk that theMarket fair value risk or is futurethe risk cash that flows the fair of avalue financial or future instrument cash flows will of a financial instrument will ADDITIONAL their equivalent in order to measuretheir equivalent and monitor in order its to credit measure risk exposures and monitor to financial its credit risk exposures to financial fluctuateINFORMATION because of changesfluctuate in market because prices. of changes Market risks in market relevant prices. to dnata's Market risks relevant to dnata's institutions. In the absence ofinstitutions. independent In the ratings, absence credit of quality independent is assessed ratings, based credit on quality is assessed based on operations are interest rate riskoperations and currency are interest risk. rate risk and currency risk. the counterparty's financial position,the counterparty's past experience financial and position, other factors. past experience and other factors. Interest rate risk Interest rate risk dnata manages limits and controlsdnata manages concentration limits of and risk controls wherever concentration they are identified. of risk wherever they are identified. dnata is exposed to the effectsdnata of is fluctuations exposed to in the prevailing effects oflevels fluctuations of interest in rates prevailing on levels of interest rates on dnata places significant depositsdnata with places high significant credit quality deposits banks. with Exposure high credit to credit quality risk banks. is Exposure to credit risk is borrowings and investments.borrowings Exposure and arises investments. from interest Exposure rate fluctuations arises from in interest the rate fluctuations in the also managed through regularalso analysis managed of throughthe ability regular of counterparties analysis of the and ability potential of counterparties and potential international financial marketsinternational with respect financial to interest markets cost with on respect its long to term interest debt cost on its long term debt counterparties to meet their obligationscounterparties and to by meet changing their obligations their limits where and by appropriate. changing their limits where appropriate. obligations and lease liabilitiesobligations and interest and income lease liabilities on its ba andnk deposits. interest income on its bank deposits. Approximately AED 4,299 mApproximately (Mar 2019: 3,591 AED m) 4,299 of short m (Mar term 2019: bank 3,591 deposits m) ofand short cash term bank deposits and cash and bank balances are held withand financialbank balances institutions are held in the with UAE financial under institutionscommon control. in the UAE under common control. Borrowings obtained at variableBorrowings rates expose obtained dnata at variableto cash flow rates interest expose rate dnata risk. to No cash flow interest rate risk. No hedging cover is obtained duehedging to the cover stable is interest obtained rate due environment to the stable that interest exists ratein the environment that exists in the Policies are in place to ensurePolicies that salesare in are place made to ensureto customers that sales with are an made appropriate to customers with an appropriate countries where the loans arecountries contracted. where the loans are contracted. credit history failing which ancredit appropriate history failinglevel of which security an appropriateis obtained, wherelevel of necessary security is obtained, where necessary The key reference rates basedThe on key which reference interest rates costs based are determined on which interest are USD costs LIBOR are for determined are USD LIBOR for sales are made on cash terms.sales Credit are limits made are on also cash imposed terms. Credit to cap limits exposure are also to imposed certain to cap exposure to certain United States Dollar, CHF LIBORUnited for SwissStates Franc, Dollar, GBP CHF LIBOR LIBOR for for Pound Swiss Sterling,Franc, GBP BBSY LIBOR for for Pound Sterling, BBSY for customers. customers. Australian Dollar, EURIBOR forAustralian Euro and Dollar, SIBOR EURIBOR for Singapore for Euro Dollar. and SIBOR A 25 basis for Singapore point Dollar. A 25 basis point change in these interest rateschange would notin these have interest a significant rates impactwould noton profithave aor significant equity. impact on profit or equity.
174 39 39 28. FinancialOVERVIEW risk management (continued) 28. Financial risk management (continued) dnata expects a significantlydnata adverse expects impact a significantly on its liquidity adverse due impact to the on COVID-19 its liquidity due to the COVID-19 EMIRATES outbreak. Management has taken several steps in protecting cash flows through The table below presents an analysisThe table of below short presentsterm bank an deposits analysis and of short bank term balances bank bydeposits and bank balances by outbreak. Management has taken several steps in protecting cash flows through compensating cost saving measures, reductions to discretionary capital expenditure and rating agencyDNATA designation atrating the end agency of the designation reporting at period the end based of the on Standard reporting & period based on Standard & compensating cost saving measures, reductions to discretionary capital expenditure and agreeing additional working capital facilities. Poor's ratings or its equivalentPoor's for dnata's ratings main or its banking equivalent relationships: for dnata's main banking relationships: agreeing additional working capital facilities. GROUP Summarised below in the table is the maturity profile of financial liabilities based on the 2020 2019 2020 2019 Summarised below in the table is the maturity profile of financial liabilities based on the FINANCIAL remaining period at the end of the reporting period to the contractual maturity date. INFORMATION AED m AED m AED m AED m remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows. AA- to AA+ 292 288 The amounts disclosed are the contractual undiscounted cash flows. EMIRATES AA- to AA+ 292 288 A- to A+FINANCIAL A- to A+ 4,532 3,780 4,532 3,780 COMMENTARY Less than 1 2 - 5 LessOver than 5 1 2 - 5 Over 5 BBB+ 190 639 BBB+ 190 639 year years yearsyear Total years years Total Lower thanDNATA BBB+ 293 404 FINANCIAL Lower than BBB+ 293 404 AED m AED m AEDAED m m AED AED m m AED m AED m COMMENTARY The loss allowances for financial assets are based on assumptions about the risk of 2020 2020 EMIRATES The loss allowances for financial assets are based on assumptions about the risk of Borrowings and lease liabilities 1,058 2,298 1,030 4,386 default andCONSOLIDATED expected loss rates.default dnata and uses expected judgement loss in rates. making dnata these uses assumptions judgement in and making these assumptions and Borrowings and lease liabilities 1,058 2,298 1,030 4,386 FINANCIAL selectingSTATEMENTS inputs to the impairmentselecting calculation inputs to based the impairment on past history, calculation existing based market on past history, existing market Trade and other payables Trade and other payables conditions as well as forward-lookingconditions estimates as well as at forward-looking the end of each estimates reporting at period. the end of each reporting period. (excluding deferred revenue and(excluding deferred revenue and DNATA These judgementsCONSOLIDATED have beenThese reassessed judgements in the have wake been of the reassessed COVID-19 in outbreak the wake. As of of the COVID-19 outbreak. As of customer advances) customer advances) 2,947 96 2,947 - 3,043 96 - 3,043 31 MarchFINANCIAL 2020, the provision for impairment of trade and other receivables amounts to STATEMENTS 31 March 2020, the provision for impairment of trade and other receivables amounts to 4,005 2,394 1,030 4,005 7,429 2,394 1,030 7,429 AED 229 m (2019: AED 162 m)AED and 229 has m been (2019: disclosed AED 162 under m) and Note has 15. been disclosed under Note 15. 2019 2019 ADDITIONAL While cashINFORMATION assets are alsoWhile subject cash to the assets impairment are also subjectrequirements to the of impairment IFRS 9, the requirements of IFRS 9, the Borrowings and lease liabilitiesBorrowings and 480 lease liabilities 1,144 129 480 1,753 1,144 129 1,753 identified loss allowance on theseidentified balances loss wasallowance immaterial. on these balances was immaterial. Derivative financial instrumentsDerivative financial 11 instruments - - 11 11 - - 11 Trade and other payables Trade and other payables (iii) Liquidity risk (iii) Liquidity risk (excluding deferred revenue and(excluding deferred revenue and Liquidity risk is the risk that dnata is unable to meet its payment obligations associated Liquidity risk is the risk that dnata is unable to meet its payment obligations associated customer advances) customer advances) 3,562 105 3,562- 3,667 105 - 3,667 with its financial liabilities when they fall due and to replace funds when they are with its financial liabilities when they fall due and to replace funds when they are 4,053 1,249 129 4,053 5,431 1,249 129 5,431 withdrawn. withdrawn. dnata’s liquidity managementdnata’s process liquidity is monitored management by senior process management is monitored and includes by senior management and includes the following: the following:
Day to day funding is• managed Day Day to by day to monitoring day funding funding is future ismanaged managed cash flows by by monitoring monitoringto ensure that future cash cash flows flows to ensureto ensure that that requirements can be met.requirementsrequirements This includes can be can replenishment met. be This met. includes This of funds includesreplenishment as replenishment they of funds as of they funds mature. as they mature. • Maintainingmature. rolling forecasts of dnata’s liquidity position on the basis of expected cash flows. Maintaining rolling forecasts Maintaining of dnata’s rolling liquidity forecasts position of on dna theta’s basis liquidityof position on the basis of expected cash flows. • Monitoringexpected liquidity cash flows.ratios against internal and external regulatory requirements. Monitoring liquidity ratios against internal and external regulatory • Maintaining Monitoring debt financing liquidity plans. ratios against internal and external regulatory requirements. requirements. Maintaining diversified credit lines, including stand-by credit facility agreements. Maintaining debt financing• plans.Maintaining debt financing plans. Maintaining diversified creditMaintaining lines, including diversified stand-by credit lines, credit including facility stand-by credit facility agreements. agreements.
175 40 40 29. Acquisitions OVERVIEW 29. Acquisitions The assets and the liabilities arising from and recognised on the acquisition of the 2020 EMIRATES subsidiaries were as follows: The assets and the liabilities arising from and recognised on the acquisition of the 2020 subsidiaries were as follows: Alpha LSGDNATA Limited Alpha LSG Dunya In March 2020 dnata through its wholly owned subsidiary Alpha Flight Group Limited GROUP Alpha LSG Limited Limited Travel LLC Alpha Total LSG Dunya acquired the remaining 50% equityIn March stake 2020 in Alpha dnata LSG through Limited, its wholly subsequently ownedrenamed subsidiary Alpha Flight Group Limited as dnataFINANCIAL Catering UK Limited. AED m AED m AED Limitedm Travel LLC Total INFORMATION acquired the remaining 50% equity stake in Alpha LSG Limited, subsequently renamed Property, plant and equipment as dnata Catering UK Limited. AED m AED m AED m Dunya Travel LLC EMIRATES (Note 8) Property, plant and137 equipment - 137 In May 2019,FINANCIAL dnata acquired the remaining 50% equity stake in Dunya Travel LLC, a COMMENTARY Dunya Travel LLC Right-of-use assets (Note 9) (Note 8) 122 - 122 137 - 137 travel agency business based inIn Abu May Dhabi, 2019, UAE. dnata acquired the remaining 50% equity stake in Dunya Travel LLC, a DNATA Intangible assets (Note 11) Right-of-use assets 130 (Note 9) - 130 122 - 122 travel agency business based in Abu Dhabi, UAE. FINANCIAL Other current assets 146 46 192 COMMENTARY Intangible assets (Note 11) 130 - 130 Cash and cash equivalents Other current assets 3 (11) (8) 146 46 192 EMIRATES CONSOLIDATED Deferred income tax liabilities Cash and cash equivalents 3 (11) (8) FINANCIAL (Note 21) STATEMENTS Deferred income(21) tax liabilities - (21) Borrowings and lease liabilities(Note 21) (256) - (256) (21) - (21) DNATA CONSOLIDATED Provisions (Note 19 (b)) Borrowings and (40)lease liabilities(2) (42)(256) - (256) FINANCIAL STATEMENTS Current liabilities Provisions (Note(195) 19 (b)) (17) (212) (40) (2) (42) Fair value of net assets acquiredCurrent liabilities 26 16 42 (195) (17) (212) ADDITIONAL INFORMATION Bargain purchase Fair value of net(10) assets acquired (1) (11) 26 16 42 Total purchase considerationBargain purchase 16 15 31 (10) (1) (11) Less: Cash and cash equivalentsTotal purchase consideration 16 15 31 acquired Less: Cash and cash 3 equivalents (11) (8) Less: Fair value of retained interestacquired 13 8 21 3 (11) (8) Cash outflow on acquisitionLess: Fair value of - retained interest1 8 18 13 8 21 Cash outflow on acquisition - 1 8 18
41
176 41 29. AcquisitionsOVERVIEW (continued)29. Acquisitions (continued) The assets and the liabilitiesThe arisingassets from and and the recognised liabilities arising on the from acquisition and recognised of the on the acquisition of the
EMIRATES subsidiaries were as follows: subsidiaries were as follows: The financial effects of the acquiredThe financial businesses effects are of set the out acquired below: businesses are set out below: DNATA Qantas 121 Qantas 121 Alpha LSG Dunya Alpha LSG Dunya GROUP Catering Group OthersCatering TotalGroup Others Total Limited Travel LLC TotalLimited Travel LLC Total AED m AED m AED AEDm m AED AEDm m AED m AED m FINANCIAL INFORMATION AED m AED m AED AEDm m AED m AED m Fair value of net assets acquiredFair value of net 185 assets acquired 13 80 185 278 13 80 278 Acquisition-related costs Acquisition-related 2 costs - 2 2 - 2 EMIRATES Less: Non-controlling interestLess: Non-controlling- interest (5) (3) - (8) (5) (3) (8) ContributionFINANCIAL from acquired Contribution from acquired COMMENTARY dnata's share of net assets dnata's share of net assets businesses businesses acquired acquired 185 8 77 185 270 8 77 270 RevenueDNATA from acquisition dateRevenue to 31 from acquisition date to 31 FINANCIAL Goodwill (Note 11) Goodwill (Note 11)193 41 86 193 320 41 86 320 March 2020COMMENTARY March 2020 - 1 4 14 - 1 4 14 Total purchase considerationTotal purchase 378 consideration 49 163 378 590 49 163 590 Profit fromEMIRATES acquisition date toProfit 31 from acquisition date to 31 Less: Cash and cash equivalentsLess: Cash and cash equivalents March 2020CONSOLIDATED March 2020 - 3 3 - 3 3 FINANCIAL acquired acquired - - (67) - (67) - (67) (67) STATEMENTS If the acquisition had taken Ifplace the acquisition had taken place Less: Fair value of retained interestLess: Fair value of - retained interest - (40) - (40) - (40) (40) at the beginningDNATA of the yearat the beginning of the year Less: Deferred consideration Less: Deferred consideration - - (3) - (3) - (3) (3) RevenueCONSOLIDATED Revenue 1,302 15 1,317 1,302 15 1,317 FINANCIAL Cash outflow on acquisitionCash outflow on 378 acquisition 49 53 378 480 49 53 480 Profit / (loss)STATEMENTS Profit / (loss) (94) 3 (91) (94) 3 (91)
ADDITIONAL INFORMATION 30. Capital management 30. Capital management 2019 2019 In the previous year, dnata acquiredIn the previous 100% ownership year, dnataofacquiredQantas Catering 100% ownership Group Ltdof Qantas Catering Group Ltd dnata monitors the return ondnata equity monitors which is definedthe return as on profit equity for thewhich year is expresseddefined as as profit for the year expressed as (subsequently renamed as dnata(subsequently Catering renamed Australia Subsidiaryas dnata Catering 1 Pty Ltd) Australia and Snap Subsidiary 1 Pty Ltd) and Snap a percentage of average equity.a percentage dnata seeks of to average provide equity. a higher dnata return seeks to to the provide Owner a higher return to the Owner Fresh Pty Ltd, 85% ownershipFresh of 121 Pty Group Ltd, 85% International ownership LLC of 121(subsequently Group International renamed LLC (subsequently renamed by resorting to borrowings toby finance resorting its acquisitions. to borrowings In 2020,to finance dnata its achieved acquisitions. a return In 2020, dnata achieved a return as dnata Catering US LLC) andas other dnata smaller Catering entities US LLC) presented and other in Others. smaller entities presented in Others. on equity of 7.6% (2019: 19.2%).on equity of 7.6% (2019: 19.2%).
42 42 177 OVERVIEW
EMIRATES
DNATA
GROUP
FINANCIAL INFORMATION
EMIRATES FINANCIAL COMMENTARY
DNATA FINANCIAL COMMENTARY 180 EMIRATES TEN-YEAR OVERVIEW EMIRATES CONSOLIDATED FINANCIAL STATEMENTS 182 DNATA TEN-YEAR OVERVIEW
DNATA CONSOLIDATED FINANCIAL 184 GROUP TEN-YEAR OVERVIEW STATEMENTS
ADDITIONAL 185 GROUP COMPANIES OF EMIRATES INFORMATION
186 GROUP COMPANIES OF DNATA
188 GLOSSARY
179 EMIRATES TEN-YEAR OVERVIEW
Consolidated income statement 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 OVERVIEW Revenue and other operating income AED m 91,972 97,907 92,322 85,083 85,044 88,819 82,636 73,113 62,287 54,231
EMIRATES Operating costs AED m 85,564 95,260 88,236 82,648 76,714 82,926 78,376 70,274 60,474 48,788 DNATA - of which jet fuel AED m 26,260 30,768 24,715 20,968 19,731 28,690 30,685 27,855 24,292 16,820 GROUP - of which depreciation and amortisation AED m 19,444 9,680 9,193 8,304 8,000 7,446 6,421 5,136 4,134 3,677
FINANCIAL - of which employee costs AED m 12,058 12,623 13,080 12,864 12,452 11,851 10,230 9,029 7,936 7,615 INFORMATION Operating profit AED m 6,408 2,647 4,086 2,435 8,330 5,893 4,260 2,839 1,813 5,443 EMIRATES FINANCIAL Profit attributable to the Owner AED m 1,056 871 2,796 1,250 7,125 4,555 3,254 2,283 1,502 5,375 COMMENTARY
DNATA FINANCIAL Consolidated statement of financial position COMMENTARY Non-current assets AED m 144,357 96,483 93,417 93,722 87,752 83,627 74,250 59,856 51,896 43,223 EMIRATES Current assets AED m 27,705 30,915 34,170 27,836 31,427 27,735 27,354 34,947 25,190 21,867 CONSOLIDATED FINANCIAL - of which cash assets AED m 20,249 17,037 20,420 15,668 19,988 16,885 16,561 24,572 15,587 13,973 STATEMENTS Total assets AED m 172,062 127,398 127,587 121,558 119,179 111,362 101,604 94,803 77,086 65,090
DNATA CONSOLIDATED Total equity AED m 23,587 37,743 37,046 35,094 32,405 28,286 25,471 23,032 21,466 20,813 FINANCIAL STATEMENTS180 - of which equity attributable to the Owner AED m 22,978 37,149 36,454 34,508 31,909 27,886 25,176 22,762 21,224 20,606 Non-current liabilities AED m 99,583 52,190 49,975 48,082 48,250 48,595 43,705 40,452 30,574 22,987 ADDITIONAL INFORMATION Current liabilities AED m 48,892 37,465 40,566 38,382 38,524 34,481 32,428 31,319 25,046 21,290
EMIRATES TEN- YEAR OVERVIEW Consolidated statement of cash flows DNATA TEN-YEAR Cash flow from operating activities AED m 22,798 10,528 14,134 10,425 14,105 13,265 12,649 12,814 8,107 11,004 OVERVIEW Cash flow from investing activities AED m (10,231) (1,360) (10,977) (3,129) (2,361) (6,411) (4,257) (15,061) (10,566) (5,092) GROUP TEN-YEAR Cash flow from financing activities AED m (9,366) (9,807) (6,442) (10,502) (7,975) (6,264) (7,107) 1,240 (201) (5,046) OVERVIEW Net change in cash and cash equivalents AED m 3,201 (639) (3,285) (3,206) 3,769 590 1,285 (1,007) (2,660) 866 GROUP COMPANIES OF EMIRATES Other financial data GROUP COMPANIES OF DNATA Net change in cash assets AED m 3,212 (3,383) 4,752 (4,320) 3,103 324 (8,011) 8,985 1,614 3,462 EBITDAR AED m 25,852 23,977 24,970 21,248 24,415 20,259 17,229 13,891 10,735 13,437 GLOSSARY
Borrowings and lease liabilities AED m 110,157 53,039 51,101 51,002 50,105 47,808 42,431 40,525 30,880 23,230 Less: Cash assets AED m 20,249 17,037 20,420 15,668 19,988 16,885 16,561 24,572 15,587 13,973 Net debt AED m 89,908 36,002 30,681 35,334 30,117 30,923 25,870 15,953 15,293 9,257
Capital expenditure AED m 11,870 13,437 8,496 12,632 16,723 19,873 21,142 13,378 13,644 12,238
Notes : 1. The ten-year overview has been extracted from the audited financial statements which have been drawn up in compliance with IFRS. New Standards and amendments to existing IFRS have been adopted on the effective dates applicable to Emirates. 180 2. Comparative figures are restated, where applicable, according to IFRS rules i.e. only the immediately preceding year’s figures are restated and figures beyond that year have not been amended. EMIRATES TEN-YEAR OVERVIEW
Key Ratios 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 OVERVIEW Operating margin % 7.0 2.7 4.4 2.9 9.8 6.6 5.2 3.9 2.9 10.0
EMIRATES Profit margin % 1.1 0.9 3.0 1.5 8.4 5.1 3.9 3.1 2.4 9.9 Return on shareholder's funds % 3.5 2.4 7.9 3.8 23.8 17.2 13.6 10.4 7.2 28.4 DNATA EBITDAR margin % 28.1 24.5 27.0 25.0 28.7 22.8 20.8 19.0 17.2 24.8
GROUP Cash assets to revenue and other operating income % 22.0 17.4 22.1 18.4 23.5 19.0 20.0 33.6 25.0 25.8 FINANCIAL INFORMATION Net debt to equity ratio % 381.2 95.4 82.8 100.7 92.9 109.3 101.6 69.3 71.2 44.5 Net debt (incl. aircraft operating leases*) to equity ratio % 381.2 209.8 216.4 237.9 215.9 212.1 209.9 186.4 162.1 127.6 EMIRATES FINANCIAL Net debt (incl. aircraft operating leases*) to EBITDAR % 347.8 330.3 321.0 392.9 286.5 296.2 310.3 309.1 324.1 197.6 COMMENTARY Effective interest rate on borrowings and lease liabilities % 4.6 4.0 3.2 3.0 3.1 3.3 3.2 3.1 3.0 2.7
DNATA Fixed to floating debt mix 69:31 65:35 72:28 75:25 92:8 85:15 94:6 90:10 89:11 89:11 FINANCIAL COMMENTARY Airline Operating Statistics
EMIRATES Performance Indicators CONSOLIDATED Yield Fils per RTKM 222 219 213 204 218 245 250 249 251 232 FINANCIAL STATEMENTS Unit cost Fils per ATKM 141 146 139 132 132 158 162 167 166 147 Unit cost excluding jet fuel Fils per ATKM 96 97 98 97 97 102 97 99 97 95 DNATA Breakeven load factor % 63.4 66.4 65.2 64.5 60.4 64.7 64.9 66.9 65.9 63.6 CONSOLIDATED FINANCIAL STATEMENTS Fleet Aircraft numbers 270 270 268 259 251 231 217 197 169 148 ADDITIONAL INFORMATION Average fleet age months 81 73 68 63 74 75 74 72 77 77
EMIRATES TEN- Production YEAR OVERVIEW Destination cities number 157 158 157 156 153 144 142 133 123 112 DNATA TEN-YEAR Overall capacity ATKM million 58,584 63,340 61,425 60,461 56,383 50,844 46,820 40,934 35,467 32,057 OVERVIEW Available seat kilometres ASKM million 367,153 390,775 377,060 368,102 333,726 295,740 271,133 236,645 200,687 182,757 Aircraft departures number 189,081 203,281 201,858 204,543 199,754 181,843 176,039 159,892 142,129 133,772 GROUP TEN-YEAR OVERVIEW Traffic GROUP COMPANIES Passengers carried number '000 56,162 58,601 58,485 56,076 51,853 48,139 44,537 39,391 33,981 31,422 OF EMIRATES Passenger seat kilometres RPKM million 288,148 299,967 292,221 276,608 255,176 235,498 215,353 188,618 160,446 146,134 GROUP COMPANIES Passenger seat factor % 78.5 76.8 77.5 75.1 76.5 79.6 79.4 79.7 80.0 80.0 OF DNATA Cargo carried tonnes '000 2,389 2,659 2,623 2,577 2,509 2,377 2,250 2,086 1,796 1,767
GLOSSARY Overall load carried RTKM million 39,505 42,304 41,250 39,296 36,931 34,207 31,137 27,621 23,672 22,078 Overall load factor % 67.4 66.8 67.2 65.0 65.5 67.3 66.5 67.5 66.7 68.9
Employee Average employee strength-EK number 59,519 60,282 62,356 64,768 61,205 56,725 52,516 47,678 42,422 38,797 Average employee strength-airline number 47,421 47,808 49,740 51,628 48,023 44,571 41,471 38,067 33,634 30,258 Revenue per airline employee AED '000 1,873 1,975 1,784 1,580 1,717 1,939 1,938 1,868 1,796 1,738 *pertains to year 2018-19 and earlier. From 1 April 2019, with the adoption of IFRS 16, applicable off-balance sheet leases have been capitalised on the consolidated statement of financial position and related lease liability is included in net debt.
Notes : 1. The ten-year overview has been extracted from the audited financial statements which have been drawn up in compliance with IFRS. New Standards and amendments to existing IFRS have been adopted on the effective dates applicable to Emirates. 2. Comparative figures are restated, where applicable, according to IFRS rules i.e. only the immediately preceding year’s figures are restated and figures beyond that year have not been amended. 181 DNATA TEN-YEAR OVERVIEW
Consolidated income statement 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 OVERVIEW Revenue and other operating income AED m 14,760 14,419 13,074 12,182 10,630 9,160 7,565 6,622 5,755 4,406 EMIRATES Operating costs* AED m 14,253 13,141 11,878 10,958 9,569 8,155 6,702 5,807 4,971 3,906 DNATA - of which employee costs AED m 5,875 5,386 5,055 4,654 3,847 3,351 3,251 2,771 2,488 2,032 GROUP - of which travel services direct costs AED m 2,534 2,476 2,135 1,913 1,951 1,458 84 n/a n/a n/a
FINANCIAL - of which airport operations direct costs AED m 1,364 1,350 1,293 1,138 949 824 883 798 699 582 INFORMATION - of which inflight catering direct cost AED m 1,352 1,070 843 794 715 735 663 601 451 241
EMIRATES FINANCIAL Operating profit AED m 507 1,278 1,196 1,224 1,061 1,005 863 815 784 500 COMMENTARY Profit attributable to the Owner AED m 618 1,445 1,317 1,210 1,054 906 829 819 808 576 DNATA FINANCIAL COMMENTARY Consolidated statement of financial position EMIRATES Non-current assets AED m 8,143 6,196 5,718 5,372 4,590 4,219 4,364 3,594 3,759 3,072 CONSOLIDATED FINANCIAL Current assets AED m 8,560 8,895 8,574 6,675 6,388 5,427 4,303 3,977 3,360 3,328 STATEMENTS - of which cash assets AED m 5,316 5,122 4,945 3,398 3,465 3,148 2,434 2,396 1,999 2,083 DNATA Total assets AED m 16,703 15,091 14,292 12,047 10,978 9,646 8,667 7,571 7,119 6,400 CONSOLIDATED FINANCIAL STATEMENTS182 Total equity AED m 8,302 8,027 7,282 6,706 5,554 4,853 4,756 4,097 3,683 3,282
ADDITIONAL - of which equity attributable to the Owner AED m 8,259 7,911 7,103 6,539 5,387 4,788 4,674 4,028 3,614 3,209 INFORMATION Non-current liabilities AED m 4,109 2,126 1,734 1,542 1,362 1,213 1,386 1,351 1,275 1,115 EMIRATES TEN-YEAR Current liabilities AED m 4,292 4,938 5,276 3,799 4,062 3,580 2,525 2,123 2,161 2,003 OVERVIEW
DNATA TEN-YEAR OVERVIEW Consolidated statement of cash flows Cash flow from operating activities AED m 1,393 1,417 1,858 1,281 1,390 1,058 1,125 1,162 1,167 901 GROUP TEN-YEAR OVERVIEW Cash flow from investing activities AED m (878) 78 (2,157) (961) (1,076) (697) 316 (1,910) (431) (1,333) Cash flow from financing activities AED m (899) (643) 78 (146) (496) (344) (443) (343) (718) (96) GROUP COMPANIES OF EMIRATES Net change in cash and cash equivalents AED m (384) 852 (221) 174 (182) 17 998 (1,091) 18 (528)
GROUP COMPANIES OF DNATA Other financial data GLOSSARY Cash assets AED m 5,316 5,122 4,945 3,398 3,465 3,148 2,434 2,396 1,999 2,083 * includes net impairment loss on trade and other receivables.
Notes : 1. The ten-year overview has been extracted from the audited financial statements which have been drawn up in compliance with IFRS. New Standards and amendments to existing IFRS have been adopted on the effective dates applicable to dnata. 2. Comparative figures are restated, where applicable, according to IFRS rules i.e. only the immediately preceding year’s figures are restated and figures beyond that year have not been amended.
182 DNATA TEN-YEAR OVERVIEW
Key ratios 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 OVERVIEW Operating margin % 3.4 8.9 9.1 10.0 10.0 11.0 11.4 12.3 13.6 11.3 EMIRATES Profit margin % 4.2 10.0 10.1 9.9 9.9 9.9 11.0 12.4 14.0 13.1 Return on shareholder's funds % 7.6 19.2 19.3 20.3 20.7 19.2 19.1 21.4 23.7 18.0 DNATA
GROUP Employee
FINANCIAL Average employee strength number 46,211 45,004 41,007 40,978 34,117 27,428 22,980 20,229 18,356 17,971 INFORMATION Revenue per employee AED '000 319 320 319 297 333 399 356 327 322 323
EMIRATES FINANCIAL Performance Indicators COMMENTARY Airport DNATA FINANCIAL Aircraft handled number 680,867 698,739 659,591 623,611 389,412 298,298 288,335 264,950 253,434 232,585 COMMENTARY Cargo handled tonnes '000 2,929 3,091 3,083 2,844 2,056 1,671 1,604 1,570 1,543 1,494 EMIRATES CONSOLIDATED Catering FINANCIAL STATEMENTS Meals uplifted number '000 93,492 70,889 55,718 60,747 57,062 57,687 41,275 28,584 26,708 11,743
DNATA Travel services CONSOLIDATED FINANCIAL Total transaction value (TTV) AED m 10,751 11,459 11,281 10,687 11,747 9,782 5,892 5,357 2,630 1,610 STATEMENTS
ADDITIONAL INFORMATION
EMIRATES TEN-YEAR OVERVIEW
DNATA TEN-YEAR OVERVIEW
GROUP TEN-YEAR OVERVIEW
GROUP COMPANIES OF EMIRATES
GROUP COMPANIES OF DNATA
GLOSSARY
Notes : 1.The ten-year overview has been extracted from the audited financial statements which have been drawn up in compliance with IFRS. New Standards and amendments to existing IFRS have been adopted on the effective dates applicable to dnata. 2.Comparative figures are restated, where applicable, according to IFRS rules i.e. only the immediately preceding year’s figures are restated and figures beyond that year have not been amended
183 GROUP TEN-YEAR OVERVIEW
Financial highlights 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 OVERVIEW Revenue and other operating income* AED m 104,002 109,255 102,409 94,706 92,896 96,053 87,766 77,536 66,149 57,224 EMIRATES Operating costs* AED m 97,087 105,330 97,127 91,047 83,505 89,155 82,643 73,882 63,552 51,281 Operating profit AED m 6,915 3,925 5,282 3,659 9,391 6,898 5,123 3,654 2,597 5,943 DNATA Operating margin % 6.6 3.6 5.2 3.9 10.1 7.2 5.8 4.7 3.9 10.4 GROUP Profit attributable to the Owner AED m 1,674 2,316 4,113 2,460 8,179 5,461 4,083 3,102 2,310 5,951 FINANCIAL Profit margin % 1.6 2.1 4.0 2.6 8.8 5.7 4.7 4.0 3.5 10.4 INFORMATION Dividend to the Owner AED m - 500 2,000 - 2,500 2,569 1,026 1,000 850 2,208 EMIRATES FINANCIAL COMMENTARY Financial position Total assets** AED m 188,461 142,267 141,625 133,281 129,989 120,886 110,100 102,188 84,127 71,402 DNATA FINANCIAL Cash assets AED m 25,565 22,159 25,365 19,066 23,453 20,033 18,995 26,968 17,586 16,056 COMMENTARY
EMIRATES Employee data CONSOLIDATED FINANCIAL Average employee strength number 105,730 105,286 103,363 105,746 95,322 84,153 75,496 67,907 60,778 56,768 STATEMENTS * after eliminating inter company income/expense of the year. ** after eliminating inter company receivables/payables as at year end. DNATA CONSOLIDATED FINANCIAL STATEMENTS184
ADDITIONAL INFORMATION
EMIRATES TEN-YEAR OVERVIEW
DNATA TEN-YEAR OVERVIEW
GROUP TEN-YEAR OVERVIEW
GROUP COMPANIES OF EMIRATES
GROUP COMPANIES OF DNATA
GLOSSARY
Notes : 1. The ten-year overview has been extracted from the audited financial statements which have been drawn up in compliance with IFRS. New Standards and amendments to existing IFRS have been adopted on the effective dates applicable to the Emirates Group. 2. Comparative figures are restated, where applicable, according to IFRS rules i.e. only the immediately preceding year’s figures are restated and figures beyond that year have not been amended.
184 GROUP COMPANIES OF EMIRATES Hotel operations, food and Air transportation related services Consumer goods beverage operations and others Emirates Emirates Emirates OVERVIEW 100% Maritime and Mercantile International 100% Dnata Travel (UK) Limited 100% Emirates Hotels (Australia) Pty Ltd EMIRATES (Holding LLC) (UAE)
100% DN Travel ApS (Denmark) 100% MMI Tanzania PVT Ltd 50% Lanka Premium Beverage PVT Limited 100% Emirates Hotel LLC (UAE) DNATA (Sri Lanka)
GROUP 100% DS Travel GmbH (Germany) 100% Queen OS Trading FZE (UAE) 49% Independent Wine & Spirit (Thailand) 100% Emirates Land Development Services LLC Co. Ltd (UAE) FINANCIAL INFORMATION 100% Emirates Leisure Retail (Holding) LLC 100% Emirates Vacations LLC (United States) 90.8% Prembev International FZE (UAE) 40% Cooperhouse Asia Pte. Ltd (Singapore) (UAE) EMIRATES FINANCIAL 100% Brand 2 Consumer (Pty) Ltd 40% Diamond Wines & Spirits PTE. Ltd 100% The High Street LLC (UAE) (South Africa) 100% Air Ventures Holding, Inc. (USA) COMMENTARY (Singapore)
100% Transguard Aviation Security LLC (UAE) 90% Seyvine Ltd (Seychelles) 40% Platinum Wines & Spirits Pte. Ltd 75% Air Ventures, LLC (USA) DNATA (Singapore) FINANCIAL COMMENTARY 50% Emirates - CAE Flight Training LLC (UAE) 68.7% Maritime and Mercantile International 40% Royalton Wine & Spirits Private Ltd 100% Air Ventures LGA, LLC (USA) LLC (UAE) (Singapore) EMIRATES CONSOLIDATED 50% CAE Middle East Pilot Services LLC (UAE) 100% Duty Free Dubai Ports FZE (UAE) 40% Titanium International Wines & Spirits 100% Emirates Leisure Retail (Australia) Pty Ltd FINANCIAL PTE. Ltd (Singapore) STATEMENTS 100% Harts International LLC (UAE) 15% Savero Distributors Ltd (Cyprus) 100% ELRA Properties Pty Ltd (Australia) DNATA 100% Hudcom Pty Ltd (Australia) CONSOLIDATED Catering services 100% Hudsons Adelaide Airport Pty Ltd (Australia) FINANCIAL 100% Golden Globe (BVI) Ltd STATEMENTS Emirates 100% Hudsons Airport Launceston Pty Ltd (Australia) 100% Hudsons Albury Pty Ltd (Australia) 50% Arabian Harts International Ltd ADDITIONAL 90% Emirates Flight Catering Co. (LLC) (UAE) 100% Hudsons Bendigo Pty Ltd (Australia) INFORMATION (BVI)* 100% Hudsons Bourke Spring Pty Ltd (Australia) 100% Harts International Retailers (Middle 100% Hudsons Elizabeth (Melb) Pty Ltd (Australia) EMIRATES TEN-YEAR 65% Emirates Cuisine Solutions LLC (UAE) East) FZE (UAE) OVERVIEW 100% Hudsons Epworth Richmond Pty Ltd (Australia) 100% Maritime and Mercantile International 100% Hudsons Gawler Pty Ltd (Australia) 60% Emirates Crop One (LLC) (UAE) DNATA TEN-YEAR FZE (UAE) 100% Hudsons George (Bris) Pty Ltd (Australia) OVERVIEW 100% Hudsons Grenfell Currie Pty Ltd (Australia) 70% Oman United Agencies LLC 100% Hudsons Hospital Australia Pty Ltd (Australia) GROUP TEN-YEAR OVERVIEW 100% Hudsons Hospitals Nth Adelaide Pty Ltd (Australia) 92.5% Sohar Catering & Supplies Co. LLC 100% Hudsons Hospitals S.A. Pty Ltd (Australia) GROUP COMPANIES (Oman) 100% Hudsons Hospitals Victoria Pty Ltd (Australia) OF EMIRATES 100% Hudsons King William Pty Ltd (Australia) 67.1% Onas Trading LLC (Oman) 100% Hudsons Launceston Pty Ltd (Australia) GROUP COMPANIES OF DNATA 100% Hudsons Little Collins Flinders Pty Ltd (Australia) 50% Sirocco FZCO (UAE) 100% Hudsons Liverpool Pty Ltd (Australia) GLOSSARY 100% Hudsons Murray Pty Ltd (Australia) 49% Fujairah Maritime and Mercantile 100% Hudsons Shepparton Pty Ltd (Australia) International LLC (UAE) 100% Hudsons WA Airports Pty Ltd (Australia) 100% Hudsons William Pty Ltd (Australia) 50% Focus Brands Ltd (BVI) 100% Emirates Leisure Retail (Singapore) Pte Ltd
100% Emirates Leisure Retail (New Zealand) Pte Ltd
68.7% Emirates Leisure Retail LLC (UAE)
Note: Percentages indicate beneficial interest in the company, legal shareholdings may be different. The country of incorporation is same as country of principal operations. 51% Premier Inn Hotels LLC (UAE) *Country of principal operations is UAE. 185 GROUP COMPANIES OF DNATA
Airport Operations Catering dnata dnata OVERVIEW 100% Dnata Aviation Services Limited (UK) 100% dnata, Inc. (Philippines) 100% Dnata Catering Services Limited (UK) EMIRATES 100% Airline Cleaning Services Pty Ltd DNATA (Australia) 100% dnata Clark Inc. (Philippines) 100% Alpha Flight Group Limited (UK) 100% En Route International Limited (UK)
GROUP 100% Dnata International Airport Services Pte 100% Alpha Flight Services Pty Ltd 100% dnata Aviation Services Canada Limited Ltd (Singapore) (Australia) 100% En Route Belgium NV FINANCIAL INFORMATION 50% G.T.A. Dnata Ground Handling Limited (Canada) 100% CIAS International Pte Ltd (Singapore) 100% Alpha ATS Pty Ltd (Australia) 100% En Route International Australia Pty, Ltd EMIRATES 50% G.T.A. Dnata Ground Handling YVR 100% dnata Catering Australia 100% En Route International General Trading FINANCIAL 100% dnata Singapore Pte Ltd (Singapore)* Limited (Canada) 1 LLC (UAE) COMMENTARY Subsidiary 2 Pty Ltd 50% G.T.A. Dnata World Cargo Limited 20% Guangzhou Baiyun International 100% dnata Catering Australia 100% En Route International Limited DNATA (Canada) Airport Ground Handling Services Co. Ltd Subsidiary 1 Pty Ltd 2 (Hong Kong) FINANCIAL (P. R. China) COMMENTARY 100% dnata Aviation Services US Inc. (USA) 100% Snap Fresh Pty Ltd (Australia) 100% En Route International South Africa (Pty) Ltd EMIRATES 100% Dubai Express LLC (UAE) CONSOLIDATED FINANCIAL 100% ALX Cargo Centre IAH LLC (USA) 100% Alpha Flight US, Inc. 100% En Route International USA, Inc. STATEMENTS 100% Freightworks Logistics LLC (UAE) 100% dnata Aviation USA Inc. 100% Alpha In flight US, LLC DNATA CONSOLIDATED 95% Air Dispatch (CLC) s.r.o. (Czech Republic) 100% dnata Catering UK Limited FINANCIAL 100% Ground Services International Inc. 85% dnata Catering US, LLC (USA) STATEMENTS186 (USA) (England) 3 100% Air Dispatch (CLC) Spolka z.o.o. (Poland) ADDITIONAL 100% Metro Air Service Inc. (USA) 100% 121 Group Holdings LLC (USA) 100% Alpha Flight UK Ltd INFORMATION 80% Dnata Airport Services Kurdistan (Cayman Islands) EMIRATES TEN-YEAR 100% dnata BV (The Netherlands) 100% 121 at BNA LLC (USA) 100% dnata s.r.l (Italy) OVERVIEW 100% Dnata for Airport Services Ltd (Kurdistan, Iraq) DNATA TEN-YEAR 100% dnata NV (Belgium) 100% 121 at Oxford LLC (USA) 80% Alpha Flight a.s. (Czech Republic) OVERVIEW 70% Dubz Holding Limited (BVI) 100% dnata US Inflight Catering 100% dnata Limited (UK) 64.2% dnata Catering SRL (Romania) GROUP TEN-YEAR 100% Delivering Your Bags Passenger LLC (USA) OVERVIEW Luggage Delivery LLC (UAE) 100% dnata Cargo Limited (UK) 100% North Salem Deli LLC (USA) 49% Alpha Flight Services UAE LLC GROUP COMPANIES 51% Bolloré Logistics LLC (UAE) OF EMIRATES 100% dnata Ground Limited (UK) 100% Dnata Catering Canada Limited 35.9% Jordan Flight Catering Company Ltd GROUP 51% Dnata PW Airport Logistics LLC (UAE) COMPANIES OF DNATA 35.7% Airports Bureau Systems Ltd (UK) 100% dnata Catering Ireland Ltd 28.7% Silver Wings OOD (Bulgaria) 50% Gerry’s Dnata (Private) Ltd (Pakistan) GLOSSARY 100% dnata Pty Ltd (Australia) 99.2% Consortium Alpha DZZD (Bulgaria)
100% dnata Airport Services Pty Ltd. (Australia) 100% Dnata Switzerland AG
100% Airport Handling Services Australia Pty Ltd 30% GVAssistance SA (Switzerland)
70% Airport Handling SpA (Italy)
70% RM Servicos Auxilliares de Transporte 1 Previously Qantas Catering Group Limited Aereo Ltda (Brazil) Note: Percentages indicate beneficial interest in the company, legal shareholdings may be different. 2 Previously Q Catering Limited The country of incorporation is same as country of principal operations. 3 186 Previously Alpha LSG Ltd * Also provides catering services. GROUP COMPANIES OF DNATA
Travel services Others dnata / dnata World Travel dnata / dnata World Travel dnata OVERVIEW 100% Cleopatra International Travel WLL 100% Destination Asia LLC 100% Travel Partners LLC (UAE) 100% Plafond Fit Out LLC (UAE) EMIRATES (Bahrain)
100% dnata Travel Inc. (Philippines) 100% Travel Partners Iberian, Sociedad 100% Transecure LLC (UAE) DNATA 100% Destination Asia Limited (UAE) Limitada (Spain)
GROUP 100% Destination Asia (Singapore) Pte Limited 100% dnata World Travel Limited (UK) 100% Travel Partners (London) Limited (UK) 50% Transguard Group LLC (UAE)
FINANCIAL INFORMATION 29% Destination Asia Destination 100% Travel Technology Investments Limited 100% CASS International General Trading LLC Management Sdn Bhd (Malaysia) (UK) 100% Tropo GmbH (Germany) (UAE) EMIRATES FINANCIAL 25% Destination Asia Japan Limited 100% Travel Republic Holdings Limited (UK) 75% Super Bus Tourism LLC (UAE) 50% Transguard Cash LLC (UAE) COMMENTARY
100% dnata d.o.o. Beograd (Serbia) 70% dnata Travel Company Limited (Saudi DNATA 25% Destination Asia Ltd (Hong Kong) Arabia) 100% Transguard Cash Services LLC (UAE) FINANCIAL COMMENTARY 100% Maritime and Mercantile International 100% dnata Aviation Services Company 100% Transguard Group International LLC 25% Destination Asia (Thailand) Limited Travel LLC (UAE) Limited (Saudi Arabia) (UAE) EMIRATES CONSOLIDATED FINANCIAL 25% Destination Asia (Vietnam) Limited 76.9% Oman United Agencies Travel LLC 60% Priohub LLC (UAE) 100% Transguard Group Cash KSA LLC (UAE) STATEMENTS 100% Sama Travel & Services International 25% Destination Group Asia (Hong Kong) 51% Imagine Enterprises Limited (UK) 51% Transguard Group International LLC DNATA Limited LLC (Oman) (Oman) CONSOLIDATED FINANCIAL 25% DMC Management Asia Services Limited 50% Moon Travel LLC (Oman) 100% Imagine Cruising GmbH (Germany) STATEMENTS (Hong Kong)
ADDITIONAL 25% PT Destination Asia (Indonesia) 100% Dunya Travel LLC (UAE) 100% Imagine Cruising Limited (UK) INFORMATION
EMIRATES TEN-YEAR 100% dnata International Private Ltd (India) 100% Dunya Air Services LLC (UAE) 100% Imagine Transport Limited (UK) OVERVIEW
DNATA TEN-YEAR 100% dnata Marketing Services Pvt Ltd (India) 100% Najm Travel LLC (UAE)* 100% Imagine Cruising Pty Ltd (Australia) OVERVIEW 100% dnata Travel and Tourism WLL 100% Imagine Cruising (Pty) Ltd (South Africa) GROUP TEN-YEAR (Bahrain) OVERVIEW 100% dnata Travel Holdings UK Limited 100% Imagine Cruising (WA) Pty Ltd GROUP COMPANIES (Australia) OF EMIRATES 100% Airline Network Limited (UK) 100% The Global Travel Group Limited (UK) 50% G Travel International LLC (UAE) GROUP COMPANIES OF DNATA 100% Gold Medal International Limited (UK) 100% Travel 2 Limited (UK) 50% Najm Travels LLC (Afghanistan)
GLOSSARY 100% Gold Medal Travel Group Ltd (UK) 100% Travelbag Limited (UK) 50% Travel Counsellors LLC (UAE)
100% Gold Medal Transport Ltd (UK) 100% Travel Republic Ltd (UK)
100% Personalised Travel Services Limited (UK) 82.28% BD4 Travel Limited (UK)
100% Stella Global UK Limited 100% BD4 GmbH (Germany)
14.29% Travel Technology Initiative Limited 100% Stella Travel Services (UK) Limited (UK) Note: Percentages indicate beneficial interest in the company, legal shareholdings may be different. The country of incorporation is same as country of principal operations. 100% Sunmaster Limited (UK) *Country of principal operations is Iraq. 187 GLOSSARY
OVERVIEW A E O T EMIRATES Acquisitions – The sum of purchase EBITDAR – Operating profit before Operating cash margin – Cash Total revenue – Sum of revenue and DNATA consideration for acquisition of depreciation, amortisation and aircraft generated from operating activities other operating income. subsidiaries and investments made in operating lease rentals. expressed as a percentage of the sum of GROUP Total transaction value – The sum of associates and joint ventures. revenue and other operating income. EBITDAR margin – EBITDAR expressed gross revenue from agency and package FINANCIAL INFORMATION ASKM (Available Seat Kilometre) – as a percentage of the sum of revenue Operating margin – Operating profit sales, net of government taxes. Passenger seat capacity measured in and other operating income. expressed as a percentage of the sum of Traffic – see RTKM EMIRATES seats available multiplied by the revenue and other operating income. FINANCIAL Equity ratio – Total equity divided by distance flown. Transport revenue – The sum of COMMENTARY total assets. Overall load factor – RTKM divided passenger, cargo and excess ATKM (Available Tonne Kilometre) by ATKM. DNATA baggage revenue. FINANCIAL – Overall capacity measured in tonnes F COMMENTARY available for carriage of passengers P U and cargo load multiplied by the Fixed to floating debt mix – Ratio of EMIRATES fixed rate debt to floating rate debt. The Passenger seat factor – RPKM divided CONSOLIDATED distance flown. Unit cost (Fils per ATKM) – Operating costs FINANCIAL ratio is based on net debt (including by ASKM. (airline only) incurred per ATKM. STATEMENTS aircraft operating leases for financial B Passenger yield (Fils per RPKM) – years 2018-19 and before). DNATA Passenger revenue divided by RPKM. Y CONSOLIDATED Breakeven load factor – The load FINANCIAL Free cash flow – Cash generated from factor at which revenue will equal Profit margin – Profit attributable to the STATEMENTS188 operating activities less cash used in Yield (Fils per RTKM) – Revenue (airline operating costs. Owner expressed as a percentage of sum investing activities adjusted for the only) earned per RTKM. ADDITIONAL of revenue and other operating income. INFORMATION C movement in short term bank deposits.
EMIRATES TEN-YEAR Freight yield (Fils per FTKM) – Cargo R Capacity – see ATKM OVERVIEW revenue divided by FTKM. Return on shareholder’s funds – Profit Capital expenditure – The sum DNATA TEN-YEAR FTKM - Cargo tonnage uplifted attributable to the Owner expressed as a OVERVIEW of additions to property, plant and multiplied by the distance carried. percentage of shareholder’s funds. equipment and intangible assets. GROUP TEN-YEAR RPKM (Revenue Passenger Kilometre) OVERVIEW Capitalised value of aircraft operating N – Number of passengers carried lease costs – 60% of future minimum GROUP COMPANIES Net debt – Borrowings and lease multiplied by the distance flown. OF EMIRATES lease payments for aircraft on operating liabilities (current and non-current) net lease (applicable to financial years 2018- RTKM (Revenue Tonne Kilometre) – GROUP COMPANIES of cash assets. OF DNATA 19 and before). From 1 April 2019, with Actual traffic load (passenger and cargo) the adoption of IFRS 16, the related lease Net debt to equity ratio – Net debt in carried measured in terms of tonnes GLOSSARY liabilities are included in net debt. relation to total equity. multiplied by the distance flown. Cash assets – The sum of short Net debt including aircraft operating S term bank deposits and cash and leases – The sum of net debt and the cash equivalents. capitalised value of aircraft operating Shareholder’s funds – Average of lease costs. opening and closing equity attributable D to the Owner. Dividend payout ratio – Dividend accruing to the Owner divided by profit attributable to the Owner.
188 Emirates P.O. Box 686, Dubai, United Arab Emirates, emirates.com dnata P.O. Box 1515, Dubai, United Arab Emirates, dnata.com
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