ON COURSE

ANNUAL REPORT 2017-18 THE GROUP ANNUAL REPORT 2017-18

Overview His Highness Sheikh Mohammed bin Rashid Al Maktoum Emirates Vice President and Prime Minister of the UAE and Ruler of

Group 2018 marks 100 years since the birth of the late Sheikh Zayed bin Sultan Al Nahyan, the founding father of the UAE. It is an appropriate Financial Information time to reflect on his vision and legacy which has shaped and guided

Additional the journey of our nation for more than four decades. Information We are moving into a future where change will be constant and people will experience unprecedented transformation in their daily lives. More than ever, Sheikh Zayed’s values of wisdom, respect, sustainability, and human development will provide a strong compass for the UAE and Dubai’s plans to build the most advanced, inclusive and prosperous city in the world.

Every year, the UAE makes great strides in its pursuit of overall excellence. In the latest edition of the World Bank’s “Doing Business” report, we moved up five positions to rank 21st in the world for Ease of Doing Business. For the fifth year in a row, we were also the highest ranked Arab nation in the list. The UAE’s global competitiveness has been the result of our forward looking and broad-based economic diversification strategy.

From our modest beginnings as a trading post, Dubai has grown in importance as a regional hub for financial services, transport, construction and many other sectors. We have been able to achieve this position by harnessing the advantages of our geographical location and by embracing the principles of free market competition.

2 ANNUAL REPORT 2017-18 We have invested in building a best-in-class physical The Emirates Group is one of the UAE corporations that infrastructure to support a thriving and diverse economy, is closely linked to the UAE and Dubai’s development. and consciously worked towards building an open and Emirates and dnata’s relentless pursuit of excellence, inclusive society focused on the happiness and prosperity innovation and sustainability, reflect the values that have of our citizens, residents and visitors. underpinned the progress of our nation.

Our ambition is to make Dubai a global hub for They have both grown from their base in Dubai to

Overview innovation and development, through a comprehensive achieve global prominence with operations spanning transformation agenda outlined in our Dubai Plan 2021 over 84 countries and a strong reputation for quality. Emirates and Smart Dubai 2021 strategies. Expo 2020 Dubai will Embracing competition and constant change, the Group dnata offer yet another platform to connect minds across has remained successful through the years by continually Group geographical boundaries and build bridges that will investing in people, infrastructure and technology, and by

Financial contribute immensely towards our ability to adapt to having an unbroken commitment to transformation Information change and transition to a knowledge-based economy. and excellence.

Additional Information By placing the wellbeing of people at the heart of our The track record of the Emirates Group leaves me in no strategy and by giving top priority to sustainability, we are doubt that it will continue to make a strong and positive driving well-rounded growth, which in turn will increase impact on the success story of Dubai and the UAE in the opportunities, attract innovators, and deliver tangible years to come. progress and a better quality of life.

The Ghaf tree (prosopis cineraria) is the national tree of the UAE. Indigenous to the UAE, it is sturdy, evergreen and drought tolerant

3 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information Emirates is a global airline, serving 155 airports in 83 countries from its hub in Dubai,

Additional Information . Operating the world’s largest fleets of A380 and aircraft, its main activity is the provision of commercial air transportation services.

dnata is one of the largest combined air services providers in the world, serving over 300 airlines in 35 countries. dnata’s main activities are the provision of and ground handling, catering and 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 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata 6 FINANCIAL HIGHLIGHTS Group 8 CHAIRMAN’S STATEMENT Financial Information 12 LEADERSHIP Additional Information

14 EMIRATES: DELIVERING RESULTS 38 DNATA: ANOTHER OUTSTANDING YEAR 62 GROUP KEY EVENTS

20 INVESTING IN OUR STATE-OF-THE-ART FLEET 47 INDUSTRY LEADERSHIP AT WORLD’S BUSIEST 70 OUR GROWING NETWORK INTERNATIONAL HUB 22 STRENGTHENING OUR GLOBAL NETWORK 75 EMIRATES FINANCIAL COMMENTARY 51 BUILDING A QUALITY REPUTATION ACROSS OUR 24 AIR CARGO INDUSTRY LEADERSHIP 85 DNATA FINANCIAL COMMENTARY GLOBAL OPERATIONS 28 MAKING FLYING BETTER 91 EMIRATES INDEPENDENT AUDITOR’S REPORT 55 GLOBAL EXPERTS IN WORLD CUISINES 32 BUILDING OUR BRAND 96 EMIRATES CONSOLIDATED FINANCIAL STATEMENTS 59 GLOBAL PRODUCTS, SERVICES AND EXPERTISE 36 OUR PEOPLE, OUR SUCCESS 139 DNATA INDEPENDENT AUDITOR’S REPORT

142 DNATA CONSOLIDATED FINANCIAL STATEMENTS

180 ADDITIONAL INFORMATION

182 EMIRATES TEN-YEAR OVERVIEW

184 DNATA TEN-YEAR OVERVIEW

186 GROUP TEN-YEAR OVERVIEW

187 GROUP COMPANIES OF EMIRATES

188 GROUP COMPANIES OF DNATA

5 190 GLOSSARY THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Financial Highlights dnata Emirates Group Group Financial highlights 2017-18 2016-17 % change Financial Revenue and other operating income* AED m 102,409 94,706 8.1 Information Operating profit AED m 5,282 3,659 44.4 Additional Operating margin % 5.2 3.9 1.3 pts Information Profit attributable to the Owner AED m 4,113 2,460 67.2 Profit margin % 4.0 2.6 1.4 pts

Financial position Total assets** AED m 141,625 133,281 6.3 Cash assets AED m 25,365 19,066 33.0

Employee data Average employee strength number 103,363 105,746 (2.3)

* After eliminating inter company income/expense of AED 2,987m in 2017-18 (2016-17: AED 2,559m).

** After eliminating inter company receivables/payables of AED 254m in 2017-18 (2016-17: AED 324m).

Percentages and ratios are derived based on the full figure before rounding.

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 THE EMIRATES GROUP 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 ANNUAL REPORT 2017-18 17-18 92,322 17-18 2,796 17-18 13,074 17-18 1,317 16-17 85,083 16-17 1,250 16-17 12,182 16-17 1,210

15-16 85,044 15-16 7,125 15-16 10,630 15-16 1,054

14-15 88,819 14-15 4,555 14-15 9,160 14-15 906

13-14 82,636 13-14 3,254 13-14 7,565 13-14 829

Overview

Emirates dnata Emirates dnata Group Financial highlights 2017-18 2016-17 % change Financial highlights 2017-18 2016-17 % change Financial Revenue and results Revenue and results Information Revenue and other operating income AED m 92,322 85,083 8.5 Revenue and other operating income AED m 13,074 12,182 7.3 Additional Operating profit AED m 4,086 2,435 67.8 Operating profit AED m 1,196 1,224 (2.3) Information Operating margin % 4.4 2.9 1.5 pts Operating margin % 9.1 10.0 (0.9) pts EBITDAR AED m 24,970 21,248 17.5 Profit attributable to the Owner AED m 1,317 1,210 8.8 EBITDAR margin % 27.0 25.0 2.0 pts Profit margin % 10.1 9.9 0.2 pts Profit attributable to the Owner AED m 2,796 1,250 123.7 Return on shareholder's funds % 19.3 20.3 (1.0) pts Profit margin % 3.0 1.5 1.5 pts Return on shareholder's funds % 7.9 3.8 4.1 pts Financial position Total assets AED m 14,292 12,047 18.6 Financial position Cash assets AED m 4,945 3,398 45.5 Total assets AED m 127,587 121,558 5.0 Cash assets AED m 20,420 15,668 30.3 Key operating statistics Net debt (including aircraft operating Aircraft handled number 659,591 623,611 5.8 lease) to equity ratio % 216.4 237.9 (21.5) pts Cargo handled tonnes '000 3,083 2,844 8.4 Meals uplifted number '000 55,718 60,747 (8.3) Airline operating statistics Travel services: Passengers carried number '000 58,485 56,076 4.3 Total Transaction Value (TTV) AED bn 11.3 10.7 5.6 Cargo carried tonnes '000 2,623 2,577 1.8 Passenger seat factor % 77.5 75.1 2.4 pts Employee data Overall capacity ATKM million 61,425 60,461 1.6 Average employee strength number 41,007 40,978 0.1 Available seat kilometres ASKM million 377,060 368,102 2.4 Aircraft number 268 259 9 nos

Employee data Average employee strength number 62,356 64,768 (3.7)

7 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview Chairman’s statement Emirates dnata Ready to face challenges Group and maximise opportunities Financial Information Our core businesses of aviation and travel have always been vulnerable Additional to market dynamics and unexpected events, whether natural or Information man-made.

In 2017/18, we saw the gradual recovery of economic activity in key markets which drove a strong uptick in airfreight activity and, to a lesser extent, a rise in air travel and tourism demand.

Business conditions, while improved, remained tough. We saw ongoing political instability and currency volatility in Africa including massive devaluations. On the flip side, we benefitted from the relative strengthening of key currencies like the Euro and Australian dollar against the US dollar.

For Emirates, surging oil prices in the second half of our financial year increased our operating costs. But it also stoked the embers of economic recovery which contributed to better seat load factors and a modest climb in yields.

Through the year, there was continual pressure on airfares as low cost airlines began operating new aircraft capable of longer missions, and targeting the same consumer segments as us. At the same time, legacy airlines in Europe and Asia were investing more in new products, and were more aggressive in leveraging their joint ventures.

dnata was also not immune to the vagaries of global markets. Our operations at ’s Erbil International Airport faced a six- month disruption from September 2017, due to a ban imposed on international flights.

8 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information Emirates and dnata have delivered the Group’s 30th consecutive year of profit, and remain on Additional Information course for future success

In Europe, security risks contributed to a sharp drop in short-haul travel respectively. dnata also served over 55 million meals to our customers at to key European cities, while a supply shortage was experienced in 62 locations around the world, and recorded a total transaction value of secondary European destinations as a result of travellers changing their AED 11.3 billion in our travel business. travel plans. However, this was balanced by a healthy increase in long- haul travel and cruise bookings. 2017/18 was a very good year for air cargo, the traditional bellwether for economies, and both Emirates SkyCargo and dnata airport operations Competition across dnata’s business divisions remained cut-throat, reaped the fruits of investments into specialised products and facilities and we had to work even harder to grow new and existing customer that expanded our capabilities, and enabled us to offer even better relationships, not through price discounts, but by investing to deliver services to our customers. high-quality services and high standards of safety. While expanding our business and growing revenues, we also tightened Solid business growth and performance our cost discipline.

Against this backdrop, Emirates and dnata forged ahead to deliver the Across the Group, we progressed our initiatives to rebuild and Group’s 30th consecutive year of profit. streamline our back office operations with new technology, systems and processes. This year, our reduced recruitment activity, coupled Our solid business growth and strong performance has led to record with restructured ways of working gave us gains in productivity, and a Group revenues exceeding AED 100 billion for the first time, and a profit slowdown in manpower cost increases. of AED 4.1 billion, up 67% from last year. Our investments Emirates carried 58.5 million passengers, 4% more than last year, and our seat load factor improved to 77.5%. dnata handled 660,000 aircraft In 2017/18, the Group collectively invested AED 9.0 billion in new aircraft and 3.1 million tonnes of cargo, a 6% and 8% increase over 2016/17 and equipment, the acquisition of companies, modern facilities, the latest technologies, and employee initiatives.

9 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group Emirates made two significant commitments for new aircraft during the year. At the 2017 , we announced a US$ 15.1 billion Financial Information agreement for 40 Boeing 787-10 Dreamliners which will be delivered from 2022. In February, we raised our commitment to the Airbus Additional AED A380 programme with a US$ 16 billion deal for 36 additional aircraft, Information BILLION9.0 including 16 options. These orders support our long-standing strategy to operate efficient wide-body aircraft that offer the latest invested collectively across the Group on acquisitions, passenger comforts. new aircraft and equipment, modern facilities, employee initiatives and technology Through the year, we introduced product and service improvements on board and on the ground. We know that we need to continually our acquisition of Destination Asia, one of Asia’s largest destination work hard to earn our customers’ loyalty and win new fans, and these management companies operating in 11 countries across the region. investments will help us ensure that the Emirates experience remains at the leading edge. Our Catering business will enter the Canadian market when our CAD 7 million catering facility in Vancouver opens at the end of 2018. We also expanded our customer proposition through partnerships. We also invested in new catering facilities in Dublin, Ireland; and Emirates entered into significant partnerships with and Melbourne, ; and opened new marhaba lounges in Karachi, Cargolux in 2017/18, boosting our global network connectivity and the , and Melbourne, Australia. choice of air services that we offer for passenger and cargo customers respectively. We also received authorisation to extend our partnership In addition, we worked hard to consolidate our acquisitions of previous with Qantas until 2023. Emirates Skywards welcomed new partners into years with a focus on integrating efficiencies and steady organic growth. our loyalty programme, offering members even more redemption and earning opportunities. Our strategic focus on delivering safe, efficient, and high-quality services consistently across our network has been critical to our success in dnata strengthened our international footprint and capabilities with winning new ground handling and catering contracts during the year. several key investments during the year. We entered the US cargo This also speaks to our ability to build strong long-term relationships market with our acquisition of AirLogistix USA, and expanded our with our customers. cargo handling capabilities with investments in new warehouses and equipment at Gatwick, UK; Amsterdam-Schiphol, During the year, we continued to seek balanced, diverse, and innovative ; and Adelaide, Australia. In the travel space, we completed sources of funding from international markets to support our growth.

10 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group In 2018, we join the UAE in celebrating the 100th year since the birth of the late Sheikh Zayed bin Sultan Al Nahyan, the country’s founding Financial Information father. Sheikh Zayed’s values of wisdom, respect, sustainability, and human development will continue to guide the way we conduct and Additional US$ grow our business. Information BILLION4.9 RAISED using a variety of financing structures, including a US$ 600 Looking ahead, the World Travel and Tourism Council forecasts million Sukuk in March that there will be 1.8 billion international tourists by 2030, and the International Air Transport Association (IATA) expects 7.8 billion One of the highlights for 2017/18 was the successful execution of a passengers to travel in 2036, nearly double the number of air travellers US$ 600 million Sukuk, the proceeds of which are earmarked for in 2017. aircraft financing. Our dynamic hub, Dubai, already holds key spots on the global stage for On course for future success aviation and tourism. The city is also gearing up to welcome 25 million visitors for the Expo 2020 Dubai in two years’ time. Emirates and dnata have always responded to the immediate challenges of each business cycle with agility, while not losing sight of the future. Dubai’s business and tourism-friendly policies, and its infrastructure investments will continue to position our home city favourably to We continue to work closely with key partners to deliver solutions facilitate and benefit from the anticipated growth in demand for global that improve customer experience, business outcomes, and drive our connectivity and air transport services. respective industries forward. For instance, in October, we launched the world’s first Aviation Experimental (X) Lab in Dubai’s Area 2071 At Emirates and dnata, we are ready to meet the opportunities and with a consortium of partners. This initiative brings together airlines, remain on course for future success. manufacturers, ground logistics, regulators, engineers, academics, and start-ups under a single roof to seek solutions for the future of air transport that no single organisation has the resources to deliver on its own.

Over the years, we have diligently laid the foundations for a sustainable and profitable future through our ongoing investments in infrastructure, HH Sheikh Ahmed bin Saeed Al Maktoum technology, our people, and high-quality products. Chairman and Chief Executive, Emirates Airline and Group

11 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Leadership dnata

Group

Financial Information

Additional Information

HH SHEIKH AHMED BIN SIR TIM CLARK GARY CHAPMAN SAEED AL MAKTOUM President President Chairman & Chief Executive Emirates Airline Group Services & dnata Emirates Airline & Group

12 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

ADEL AHMAD AL REDHA THIERRY ANTINORI ABDULAZIZ AL ALI ALI MUBARAK AL SOORI NIGEL HOPKINS CHRISTOPH MUELLER

Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Chief Digital & Chief Operations Officer Chief Commercial Officer Human Resources Chairman’s Office, Facilities Service Departments Innovation Officer Emirates Airline Emirates Airline Emirates Group & Project Management and Emirates Group Emirates Group Non-Aircraft P&L

13 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information Emirates

14 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Delivering results dnata Emirates is the world’s largest international airline. We facilitate global travel Group and trade traffic to Dubai, and through Dubai, connecting 157 destinations on six Financial Information with high quality air travel and transport services. Over the years, Emirates Additional Information has earned a reputation for excellence with our focus on safety, efficiency, quality, and service, across all aspects of our business and operations.

In 2017/18, we delivered a solid performance despite the relentless competitive pressure and ongoing geopolitical challenges.

Emirates posted a profit of AED 2.8 billion, with revenues at AED 92.3 billion. Yields across the network improved compared to the previous financial year, however these gains were largely offset by higher fuel prices and increased competition. We closed the year with an average passenger yield of 25.3 fils, up 2.3% from last year.

15 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

16 Emirates’ new First Class cabin on a Boeing 777-300ER aircraft THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group During the year, Emirates carried a new record of 58.5 million passengers Strengthening our customer proposition and 2.6 million tonnes of cargo across our network. Our average seat Financial During 2017/18, Emirates added two new passenger and three new Information load factor was 77.5%, against a 2% increase in capacity. freighter destinations to our global network, offering our customers Additional This reflects the modest uptick in consumer confidence and travel even more travel choices. Information demand, the healthy rebound in airfreight demand, and Emirates’ continued ability to win over customers with our award-winning In addition to our own organic network growth, we also expanded our products and services - both above and below wing. global connectivity through strategic partnerships. In July, we entered a significant partnership with flydubai, which includes an extensive The year also came with its share of challenges. Higher oil prices raised codeshare agreement, integrated network collaboration, fleet our operating costs and ate into our profits. synergies, strategic schedule alignment, and initiatives to streamline the customer journey across Emirates’ and flydubai’s operations at As we began the 2017/18 financial year, the Dubai International airport. new US restrictions on electronic devices in aircraft cabins had just come into effect. At the end of March, Emirates’ customers could access 92 additional This followed the enhanced security vetting destinations on flydubai’s network. We also extended our successful procedures and new US entry requirements partnership with Qantas for a further five years until 2023, ensuring implemented at the start of 2017. customers of both airlines continue to enjoy expanded travel choices and seamless connections between Australasia and key cities in Europe, Emirates worked closely with stakeholders to Middle East and Africa, as well as reciprocal frequent flyer benefits. address the new security requirements, and by July, our US flights were no longer subject to the ‘electronics ban’. However, the raft of enhanced security measures had impacted consumers’ travel appetite, leading us to reduce services to the US for several months. It was close to year-end before we were able to restore some of our US capacity in line with the gradual recovery in demand. Through the year, we continued to lay a solid foundation for our 58.5MILLION PASSENGERS future with significant investments in our people, product, aircraft, flew on Emirates in 2017/18, and the latest infrastructure for our business. This will help extend our a new record competitive edge and ensure our long-term success.

17 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview On the cargo front, Emirates SkyCargo entered a strategic operational One of the year’s highlights was the highly anticipated launch of new partnership with Cargolux to collaborate on freighter aircraft capacity, cabin products for our Boeing 777 fleet, which include our game Emirates block space and interline, and connectivity between Dubai and changing fully-enclosed First Class suites, as well as refreshed Business dnata Luxembourg. In October, the partnership was reinforced with the Class and Economy Class cabins for our 777-300ER; and our new, wider

Group announcement of a codeshare agreement for cargo between the Business Class seats arranged in a 2-2-2 layout on our 777-200LR. two carriers. On our A380 fleet, we introduced a refreshed version of our popular Financial Information Onboard Lounge. During the year, we signed agreements worth US$ 31.1 billion for 40 Additional Boeing 787 Dreamliners and 36 additional A380s. These new aircraft, Reducing our environmental impact, contributing to the community Information which will be delivered from 2020 onwards, illustrate our long-standing strategy of operating efficient wide-body aircraft that offer the latest As an airline, fuel efficiency has always been a key focus area for our passenger comforts and features. sustainability efforts. The delivery of 17 new aircraft, and retirement of eight older aircraft in 2017/18 has enabled us to keep our average fleet We continued to invest in providing our customers with industry- age at a youthful 5.7 years. Newer aircraft are also more efficient to leading travel experiences, and a strong value for money proposition. operate, helping us reduce our emissions per ATKM.

Our efforts were rewarded by customer loyalty, as Emirates Skywards Emirates spends billions of dirhams on fuel each year, crossed a milestone of 20 million members, and by accolades including so naturally we monitor the development of biofuel “Best Airline in the World”, “Best Economy Class”, and “Best First Class” technology with great interest. One of the highlights this in the TripAdvisor Travelers’ Choice® Awards for Airlines 2017 which are year is our participation in the “Fly Green Day” at based on unbiased customer reviews. O’Hare airport in November, where we operated our first ‘official’ biofuel flight. In this initiative, the biofuel was blended into the main airport fuel supply, rather than specially tankered to the aircraft. We remain supportive of developments towards safe, cost competitive, and truly sustainable biofuels, and a commercially viable supply chain.

Through the year, our flight operations specialists continued to work closely with air traffic management providers and airports around the world to deliver more flight efficient routings and operational procedures to help reduce flight time, fuel consumption US$ and emissions. BILLION 31.1 On the ground, we implemented a range of simple yet effective commitment for new aircraft, with agreements for 40 measures to become more energy efficient and reduce our Boeing 787 Dreamliners, and 36 additional Airbus A380s environmental impact.

18 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial The Emirates Airline Foundation, our non-profit Information charity organisation, continued making a difference in the lives of disadvantaged children Additional with projects spanning from India to Africa Information

Across 30 commercial and residential buildings in the UAE where Syndrome in the UAE. The modern facility, slated to open end-2018, will Emirates conducts business or has leased employee accommodation, enable 100 more children to access special education. we organised energy usage studies, and surgically reduced the time that lights and air conditioning are kept running during non-operational In South Africa, we donated a new school bus and founded the building hours. These energy savings reduced our electricity bills by about 8% of a new garage for the Fikelela Centre, an outreach programme in the each month. Western Cape that provides care and housing for 40 children under the age of eight, who have been abandoned, orphaned, affected or infected We also replaced over 400 light fixtures at our Dubai headquarters’ by HIV/AIDS. carpark with LED luminaires, cutting our energy consumption by 80%. The new LED lights also have double the lifetime of previous fixtures, The foundation supported Australian Doctors for Africa (ADFA) in their reducing replacement costs. missions to Ethiopia and Somaliland, where they delivered training programmes, installed new equipment for hospitals, and performed Through the Emirates Airline Foundation, our non-profit advanced orthopaedic care for patients in need. We also supported charity organisation, we continued to make a difference doctors volunteering with the Italian organisation Mission Bambini in in the lives of disadvantaged children. Projects supported their travel to Zambia to provide heart surgery for paediatric patients by the foundation span from India to Africa, including suffering from congenital and rheumatic heart diseases. Sri Lanka and Bangladesh. Our aim is to increase our presence in the markets we fly to, and to strengthen local In Nairobi, Kenya, we supported the meals programme at the Little communities by investing in the future of children Prince Nursery and Primary School. Feeding the children, who are in need. from the poorest areas in the slums, keeps them at school, helps them concentrate and stay healthy. In 2017/18, the foundation helped fund the building of a new facility for Safe Centre for Autism and Asperger’s

19 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information Emirates operates a modern and efficient fleet Additional of and Boeing 777 aircraft Information

Investing in our state-of-the-art fleet

Emirates’ commitment to deliver superior comfort and an exceptional , the Airbus A380 has helped us elevate our passenger inflight experience to customers is reflected in our investment in a state- experience in the nine years since the aircraft joined our fleet. This latest of-the-art fleet, with the latest wide-body aircraft. order takes Emirates’ total commitment to the A380 programme to 178 aircraft. At the end of 2017/18, our fleet was 268 aircraft strong, including 102 Airbus A380s, 153 Boeing 777s, and 13 Boeing 777 freighters. During the 2017/18 financial year, we received 17 new aircraft - nine Emirates is currently the largest operator of the Airbus A380 and the Boeing 777s and eight Airbus A380s. This included the landmark Boeing 777 aircraft, two of the most popular and efficient aircraft delivery of our 100th Airbus A380 in November 2017. flying the skies today. We also retired eight aircraft as part of our fleet renewal strategy. In November, Emirates announced a US$ 15.1 billion commitment for Our investment in new aircraft and retirement of older 40 Boeing 787-10 Dreamliners at the 2017 Dubai Airshow. These new aircraft kept our average fleet age at a youthful 5.7 years, aircraft will enter into service from 2022 onwards, replacing older aircraft a figure that is considerably lower than the aviation that will be phased out from the fleet, allowing us to maintain efficient industry average. operations and continue delivering an unmatched travel experience to our passengers. World class fleet support

In January, Emirates announced a US$ 16 billion order for 36 additional In March, Emirates unveiled a new Business Class cabin A380 aircraft, including 16 options - to be delivered from 2020 onwards. with wider seats in a 2-2-2 configuration on the first of its The world’s largest commercial passenger aircraft and flagship of the 10 Boeing 777-200LR aircraft.

20 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group The refurbishment of the aircraft was carried out completely in-house by Sultan Al Nahyan. Demonstrating our commitment and support to Expo the Emirates Engineering team working closely with Boeing and other 2020 Dubai, Emirates also rolled out the first of 40 aircraft bearing the Financial Information suppliers, demonstrating our world-class fleet support capabilities. The special Expo 2020 Dubai liveries in three themes. Spanning 40% of the aircraft was converted to a two-class configuration and Economy Class total external surface area including the top of the aircraft, the Expo Additional Information seats were also refreshed. The remaining nine Boeing 777-200LR aircraft 2020 Dubai liveries are some of the largest decals to have been installed in the fleet will be progressively reconfigured by Emirates Engineering by the team. over the next year. As part of our mission to constantly innovate and improve In addition to the cabin reconfiguration project, our Engineering team efficiency across our operations, Emirates Engineering launched a trial completed 95 C-Checks on our fleet during the year to maintain them project to manufacture aircraft cabin components using the latest in peak condition. With cutting-edge facilities including seven heavy 3D printing technology. maintenance and four light maintenance hangars, and the expertise acquired by being the largest operator of the Airbus A380 and Boeing Using Selective Laser Sintering (SLS), we printed video monitor shrouds 777 aircraft types, Emirates Engineering has also selectively and cabin air vent grills that weigh less than components manufactured offered Maintenance, Repair and Overhaul (MRO) services traditionally. This has the potential for significant reductions in emissions to external customers. and costs when compounded over the entire fleet of Emirates aircraft. Other advantages include quicker per-part production times and In January, Emirates Engineering’s Calibration Laboratory reduced wastage of raw materials. With phase one of trials successfully became one of the first in the region to achieve ISO 17025 completed, Emirates will progress to the next project phases to certification, which ensures the accuracy and standards of incorporate SLS 3D printing into our operations. tools and equipment used in the servicing of aircraft and other components.

The Emirates Aircraft Appearance Centre – the world’s largest dedicated aircraft painting facility completed 22 paint makeovers in addition to end of lease repainting on seven aircraft. The centre also undertook 19 large and 138 small decal installation projects on our Airbus A380 and Boeing 777 aircraft. 157DECAL INSTALLATIONS As a tribute to the founding father of the UAE, 10 Emirates aircraft were and 22 paint makeovers completed in-house at fitted with a bespoke decal of the late His Highness Sheikh Zayed bin Emirates Engineering

21 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Strengthening our global network dnata

Group Emirates connects the world to, and through, our hub in Dubai - offering mutual customer and commercial benefit. This enables us to retain high quality air transport services to 155 destinations in 83 countries on control over our own destiny and respond to industry changes Financial Information six continents. with agility.

Additional We continued to grow our network organically by adding new routes Emirates’ portfolio of 22 codeshare partners in 61 countries and 130 Information and flight services in response to opportunities created by the dynamic interline partners extend the reach of our own global network, offering competitive landscape and evolving consumer demand. more flight options for our customers.

Through our strategic partnerships and codeshares, we also expanded In July, Emirates announced a significant partnership with flydubai, our network reach and relevance to customers. enabling both airline to leverage and complement each other’s networks, unlocking further growth and operational In 2017/18, we launched two new passenger destinations and three scalability. The partnership includes an extensive codeshare freighter destinations. We grew our European footprint with the addition agreement, and goes further with a strong focus on of daily services to Zagreb, Croatia. In the Far East, we started flights to integrated network collaboration, fleet synergies and Phnom Penh, Cambodia, via a linked service from Yangon, Myanmar. strategic schedule alignment. Efforts are also underway Our freighter network expanded with the addition of: Luxembourg City; to streamline the customer journey across Emirates’ and Maastricht, Netherlands; and Aguadilla, Puerto Rico. flydubai’s operations at Dubai International airport.

As we took delivery of aircraft into our fleet, Emirates was able to add At the end of March, Emirates and flydubai offered capacity to 15 existing destinations, offering customers more choice of customers access to 92 destinations on our combined flight timings and onward connections. We also expanded the number networks, and by the end of 2018, customers will be able to of destinations served by our A380s to 48 with the introduction of book travel to 157 destinations. our flagship aircraft to Nice. In addition, Emirates led one-off A380 services to Colombo, and Beirut. Our A380 product continues The partnership opened up new city-pair connections that did not exist to enjoy tremendous popularity among consumers, and over 99 million previously, allowing both Emirates and flydubai to feed traffic into each passengers have flown on the aircraft as it enters its 10th year of service other’s complementary networks, serving a bigger pool of customers in the Emirates fleet. in more cities to bring them immense value and choice, along with strengthening Dubai’s position as a global aviation hub. Strategic partnerships: more connectivity and consumer choice The new model has opened up flydubai’s robust regional networks in Rather than pursue formal alliances, it has always been Emirates’ Russia, Central Asia and the Middle East for Emirates customers. strategy to focus on targeted and strategic partnerships that deliver

22 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information Phnom Penh in Cambodia joined Emirates’ global passenger network in 2017

For flydubai customers, the new partnership has allowed for seamless Sydney, Brisbane and Adelaide, including nine daily A380 flights. Qantas connectivity to Emirates’ worldwide network spanning six continents. passengers will continue to have access to over 45 onward connections Since the first codeshare operations began at the end of October, on Emirates to Europe, the Middle East and Africa. more than 400,000 passengers have taken advantage of the seamless connectivity offered by the Emirates and flydubai partnership. These changes mean customers now have three options for travel between Europe and all Australian points on both Emirates and Qantas In March, we received reauthorisation from the Australia Competition - via Dubai, via Perth or via , and continue to enjoy reciprocal and Consumer Commission to extend our partnership with Qantas until frequent flyer benefits on both airlines. 2023. The evolution of our partnership involves network changes that deliver greater year-round frequency and expanded services to Australia The renewed partnership will also benefit customers flying between and New Zealand for Emirates customers. Australia and New Zealand with increased flight services operated by Qantas, as Emirates ceases trans-Tasman flights to Auckland, focussing More than eight million passengers have travelled on instead on our non-stop Dubai-Auckland service, and new Dubai-Bali- Emirates and Qantas’ combined network since 2013, Auckland flights which will launch in June 2018. We retain our existing demonstrating the partnership’s exceptional customer and Dubai-Sydney-Christchurch flight. connectivity proposition. In North America, Emirates enhanced its codeshare agreement with Under the renewed partnership, Qantas rerouted its JetBlue Airways to offer connections to an additional 20 routes for our Australia-Dubai-London services to operate via Singapore passengers, offering more flexibility and seamless connections in the from March 2018, in addition to operating its own non-stop US. Today, Emirates passengers can access over 97 JetBlue destinations flight from Perth to London. Customer demand for flights across the US, Caribbean and Mexico from our 12 US gateways. between Australia and Dubai will remain well-served by Emirates with 91 weekly services to Perth, Melbourne, Additionally, our partnership with Alaska Airlines provides seamless connections to 31 destinations via Seattle, Los Angeles and San Francisco in the west coast of USA and .

23 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information Emirates SkyCargo operates a dedicated freighter fleet of 13 Boeing 777s

Air cargo industry leadership

Emirates SkyCargo continues to lead the global air cargo industry as Innovative and specialised solutions the world’s largest international cargo airline measured by freight tonne kilometres flown (FTKMs). In addition to belly-hold cargo capacity This year, we launched Emirates Fresh - a bespoke solution offered on our fleet of 255 passenger aircraft, Emirates SkyCargo also for perishable commodities such as fruits, vegetables, operates 13 Boeing 777 freighters. flowers, seafood and meat which retains their freshness during the entire air transportation process. We also In 2017/18, Emirates SkyCargo achieved a revenue of AED 12.4 billion, developed the Emirates Fresh ventilated cool dolly an impressive increase of 17% over the previous year. This outstanding container to transport fresh cut flowers and ready-to-sell performance in a resurgent air freight market enabled Emirates cut fruits and vegetables. SkyCargo to contribute 14% to the airline’s total transport revenue. Emirates Pharma, our customised offering for Carrying a record 2.6 million tonnes of cargo, Emirates SkyCargo pharmaceutical industries, has met with resounding success. Since the remains an important enabler of global trade, connecting production launch in the last financial year, we saw the volume of pharma shipments and consumer markets across six continents. We successfully rode increase by 38%. the crest of the rise in demand for air freight capacity through the development of a new portfolio of transportation solutions tailored This year, we continued to advance our offering for pharma customers. to industry verticals, landmark industry partnerships, and continuous In partnership with DuPont, we introduced White Cover Xtreme, the next investment in products and facilities. generation thermal blanket that protects sensitive cargo from extreme heat and cold, and rainy conditions. We also rolled out our pharma corridors programme to offer enhanced origin-to-destination protection.

24 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group In the first phase of this programme, 12 cities across three continents in June with the aim of building up connectivity and improving the joined our pharma corridors network. seamless movement of goods between our hubs. Financial Information Our Emirates Wheels product for the automotive industry and private The success of the partnership is underpinned by Emirates SkyCargo’s Additional car collectors has also met with great success. The average number of and Cargolux’s complementary strengths in terms of fleet, network and Information cars transported on our network has grown to between 150 and 200 operations, as well as our shared values in customer service excellence. cars per month - not only in the peak summer period, but throughout the year. Emirates SkyCargo also worked in partnership with Qantas Freight to strengthen the cargo capacity offered on the Trans-Tasman route for our Emirates SkyCargo is also exploring bespoke offerings in other sectors. customers in Australia, New Zealand and across the world. In November 2017, we signed an MoU with Dubai CommerCity to develop new solutions for the e-commerce sector using Dubai as a hub. Freighter services and charter operations

First-of-its-kind partnership Emirates SkyCargo operates scheduled weekly freighter services to over 45 destinations across the globe. In addition to Luxembourg, we In May, Emirates SkyCargo and Cargolux announced a unique strategic launched freighter services to Maastricht in the Netherlands, and to operational partnership. Under this first-of-its-kind agreement between Aguadilla in Puerto Rico. a mainline cargo airline and a specialised freight operator, Emirates SkyCargo and Cargolux work together on a number of areas including freighter aircraft capacity, block space and interline, and connectivity between Dubai and Luxembourg. In October, the partnership was reinforced with the announcement of a codeshare agreement for cargo between the two carriers. AED Emirates SkyCargo has had one Cargolux Boeing 747 aircraft full time in its fleet since June 2017. This allows us to offer nose loading freighter capacity to customers for AED BILLION12.4 transporting outsized and odd shaped shipments. Through the partnership, we now offer cargo customers an extended revenue achieved in 2017/18, illustrating the resurgent air freight global reach to destinations on Cargolux’s network. We also market and Emirates SkyCargo’s success in developing innovative commenced scheduled freighter services to Luxembourg bespoke products and industry partnerships

25 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

Emirates Wheels is a bespoke solution for the automotive 26 industry and private car collectors THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group In addition, our freighter have flown to some 140 destinations on Setting standards charter operations. In all, we operated more than 362 charter operations Financial At the IATA World Cargo Symposium in March, Emirates SkyCargo Information in the financial year, carrying a variety of cargo - from Emirates Team New Zealand’s sail boat from Auckland to Bermuda for the America’s was awarded the Cargo iQ certification in recognition of our efforts Additional to provide customers with more transparency on the status of their Information Cup race, to KhalifaSat, the first satellite built completely on UAE soil from Dubai to Incheon, South Korea. shipments and to minimise any errors in the process. We have invested in setting up a dedicated 24/7 operational Cargo Operations Control Precious cargo that have been transported on Emirates SkyCargo Centre (COCC) in Dubai which uses live cargo data and Cargo iQ metrics freighters also include champion racing and eventing horses flown for to track a shipment’s journey against its ideal route map. major equine sporting events including the Dubai World Cup and the Longines Global Masters. We were also awarded the ‘Authorised Economic Operator’ (AEO) certification by the UAE Federal Customs authorities Our freighter aircraft with the unique rose decal brought cheer to in March 2018. This allows faster customs clearance of people on special occasions. The aircraft touched down in cargo travelling on Emirates SkyCargo in the UAE, leading for the Catalan festival of the Rose and in Shanghai to mark Chinese to quicker delivery times for our customers. Valentine’s Day. A special floral decoration was organised in Dubai to mark the transport of perishables around the traditional South Indian Emirates SkyCargo won a number of accolades this year in festival of Onam. recognition of our emphasis on quality and excellence in customer service. These include: ‘Best Cargo Airline Middle East’ for a record 28th time at the annual Cargo Airline of the Year 2017 awards; ‘Best Air Cargo Carrier- Middle East’ at the 2017 Asian Freight, Logistics and Supply Chain (AFLAS) Awards; ‘Best Carrier - All Services’ and ‘Best Carrier - Flown as Booked’ at the Quality Award 2016, organised by the IATA Airfreight Forwarders Association Italy (ANAMA). 28RECORD WINS With our expertise, network and customer focus, Emirates SkyCargo as the ‘Best Cargo Airline Middle East’ at the annual is in a strong position to deliver solutions that meet our customers’ Cargo Airline of the Year 2017 awards, in addition to transportation needs and add further value to their business. other accolades

27 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Making flying better dnata

Group Our customers remain at the heart of our business. We continually Ramadan. We invested more than AED 540 million in our wine and innovate and invest in what matters most to our customers, from spirits programme in 2017/18, working directly with top vineyards Financial Information product innovations to service enhancements. and distilleries around the world. Our commitment to finding the best partners and products saw a range of upgrades across our cabins, Additional This year, Emirates again raised the bar for inflight product innovation Information including inflight amenities, kids’ activity packs, and a myriad of other with the launch of our latest Boeing 777-300ER in November. We little touches to enhance our customers’ comfort. presented new interiors and enhancements across all cabin classes, including our game-changing First Class private suites. We continued to invest in onboard connectivity for our customers. Over 99% of all Emirates flights are now Wi-Fi enabled, hosting more Incorporating cutting-edge technology, Emirates’ new fully enclosed than 10.3 million internet sessions in 2017/18. In addition, 451,511 calls private suites have brought several world-firsts to market, including: were made and over 1.6 million sms messages were sent using mobile ‘virtual windows’ in the middle aisle using real-time fibre-optic camera phones on our flights. technology, a NASA-inspired ‘zero gravity’ seating position, and a personal video call service for our First Class customers. Design details During the year, we more than doubled our free Wi-Fi data offer for such as personalised lighting and climate control features within the customers in all cabin classes to 20MB, and Skywards members in suite were inspired by the luxury automotive brand Mercedes-Benz. certain tiers as well as customers in First and Business Class receive unlimited free Wi-Fi. We also signed up with Thales to give our In March, we unveiled a new Business Class cabin for our Boeing 777- customers best-in-class connectivity with speeds of up to 50Mbps on 200LR aircraft, with wider seats in a 2-2-2 layout. This US$ 150 million our aircraft due for delivery in 2020. investment will see all 10 of our existing 777-200LR aircraft refurbished to offer a two-class product of 38 Business Class seats and 264 seats in Emirates continues to provide customers across all classes a Economy Class by 2019. host of entertainment options at their fingertips with the industry’s most comprehensive inflight entertainment Our popular A380 Onboard Lounge also underwent a makeover. The system, ice. Awarded Skytrax’s “Best Inflight Entertainment” revamped social area entered service in August, delighting customers for a record 13th year, ice now offers over 3,500 channels with modern finishes, more seating options, and mood lighting amongst presented in 43 languages, including over 700 movies from other features. around the world.

We served over 110 million meals on board during the year, delighting Customer experience on ground and online our customers with regionally inspired menus, and special treats for widely celebrated events like Chinese New Year, Christmas, Diwali, and The on-ground experience has always been an integral part of the Emirates customer journey.

28 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information Emirates game changing, fully enclosed First Class private suite Additional Information inspired by Mercedes-Benz

This year, we added a new dedicated lounge in Boston for our premium flights, check-in, gate and baggage. From August to March, nearly passengers and frequent flyers, taking the number of dedicated Emirates 12 million notifications were sent via the Emirates App, and it is Lounges around the globe to 41. We also refurbished existing lounges fast becoming the preferred channel for our customers on the go. in Singapore and , and completed a US$ 11 million makeover of Our investment to offer LiveChat for customer service has also paid our lounges in Dubai airport Concourse B. off, achieving the highest satisfaction levels amongst all customer engagement channels. In 2017/18, we handled over 1 million customers We partnered with premium automotive brand BMW for on LiveChat, accounting for about 10% of all inbound queries to our an upgraded fleet of cars to chauffeur our Business Class contact centres, representing a 260% increase in volumes from the passengers in the UAE to and from the airport. We also previous year. partnered with Mercedes-Benz for a fleet of S-Class cars for our First Class passengers, providing an on-ground Through the year, we worked closely with our partners and stakeholders extension of our latest Boeing 777 First Class experience. to streamline the customer journey at our Dubai hub. This included pilot initiatives to fast-track and simplify passenger check-in, baggage drop-off During the year, we upgraded our contact centre and tracking, and the use of advanced technology within the terminal. technology platform which gave us more flexibility in routing calls to our employees, thus increasing our customer response times. We also introduced a new reservations system that makes it easier for our front line employees to serve customers, and supports continuous improvements to our system. As a result, customer satisfaction scores increased by 14 percentage points since the beginning of the year. US$ MILLION150 INVESTMENT Helping our customers enjoy a stress-free journey, we began mobile to refurbish all 10 of Emirates’ existing Boeing 777-200LR aircraft into a two-class product push notifications to send customers real-time information on their with new, wider Business Class seats, and refreshed Economy Class cabins by 2019

29 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

Premium passengers and frequent flyers enjoy access to 30 41 dedicated Emirates Lounges around the world THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group Building loyalty Emirates Skywards continued to pursue partnerships that offer relevant opportunities for our diverse membership base. We now provide access Financial This year, our loyalty programme Emirates Skywards reached a milestone Information to more than 1.8 million properties around the world through the of 20 million members worldwide. The programme’s steady growth hotel booking sites of Booking.com and Rocketmiles. We also expanded Additional over the past 18 years stems from our focus on offering members value, Information our travel and lifestyle rewards partners with the addition of marhaba choice and flexibility. Meet and Greet service in Dubai and Mileslife in Asia.

In 2017/18, Emirates Skywards members redeemed 100 million miles We launched a new partnership with Standard Chartered Bank in a day on average, on reward flights, hotel stays, retail purchases and Pakistan, taking our programme’s total number of financial partners to lifestyle experiences, including exclusive access to world-class sports and 13 and expanding our co-brand credit card presence to seven countries. cultural events supported by the airline. Flight upgrades and Cash+Miles With the addition of flydubai to the programme, we expanded by flight bookings topped the redemption categories with nearly 400,000 61 new cities the number of destinations on which members can transactions each in the past 12 months. earn miles.

We fully digitalised the Emirates Skywards card during the year, In February, we were recognised at the 10th annual Loyalty Awards removing the need for members to carry a physical card, and we 2018, organised by FlightGlobal, clinching ‘Excellence in Management’ launched a dedicated Skywards section within the Emirates App to for outstanding strategy and leadership. provide members with timely access to relevant programme information. We are also putting big data to work to deliver more personalised offers and experiences through predictive data modelling, leading to higher engagement amongst our members.

100MILLION SKYWARDS MILES redeemed per day on average

31 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information Emirates interacts with, and inspires audiences Additional around the world through creative campaigns, Information events, and its direct digital channels

Building our brand

Our strong brand is one of our most important business assets. We also stepped outside of conventional airline advertising to promote Emirates’ global brand footprint and reputation as an airline Emirates’ latest products, creating cut-through with the use of humour. synonymous with quality and excellence continues to be an important In November, we worked with TV motoring expert Jeremy Clarkson to driver for our success in sales and marketing activity, and in attracting unveil Emirates’ game-changing First Class private suites which were talent, partners and investments for our business. inspired by Mercedes-Benz. In January, we released a new campaign to promote our Economy Class and showcase our win as ‘Best Economy Emirates continued to strategically invest in our brand throughout Class” at the TripAdvisor Travellers’ Choice Awards for Airlines 2017. 2017/18, with initiatives that cut across marketing, events and sponsorships, and digital user experience. Our online brand experience

This year we continued to reach, inspire, and interact with audiences Our success in building brand familiarity and preference also drives around the world through creative and impactful marketing campaigns, more consumers to interact with Emirates on our direct digital channels. corporate and industry events, as well as our direct digital channels. That is why we invest to ensure that our customers enjoy the same high-quality Emirates brand experience online as they do inflight and One of the year’s highlights was the October launch of a US$ 15 million on the ground. campaign to promote our extensive global network. The campaign illustrates how Emirates connects the world via Dubai, while cleverly With the strong consumer shift towards using mobile devices to incorporating our inflight experience. manage travel, Emirates has focussed on providing an even better mobile user experience.

32 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group This year, we added handy new push notifications to help customers making our brand experience as relevant and engaging as possible for while they travel. This feature sends alerts to customers when check- our diverse customer base. Financial Information in opens, or if there are changes in departure times or gates; and also proactively provides information on their baggage, flight status, and Through the year, we continued to successfully use social media Additional platforms to gain positive exposure and connect with our customers. Information acceptance status if they are on standby to fly. By end-March, we had 18.1 million followers across Twitter, Facebook, Over 10 million customers have downloaded the Emirates Instagram, LinkedIn and YouTube, with highly engaged fans on all App. Across iOS and Android, more than 1 million active platforms. Today, Emirates is the most followed airline brand on users interact with our app every month. Today over half of Instagram, YouTube and LinkedIn. the airline’s online check-ins are completed via our mobile app. Importantly, our customers are telling us they love our Throughout the year, we marked special occasions such as Father’s app, with user ratings of 4.4 / 5 on Android’s Google Play Day, International Women’s Day, and widely celebrated festivals like Store and 4.5 / 5 on the UAE Apple App Store. Eid, Diwali, Lunar New Year, and Christmas, with branded content that showcased our company, our people, and our products in creative ways. This year, we rolled out our redesigned emirates.com website that ensures our customers can enjoy the same Emirates content and browsing experience, whether they are on their mobile phones, tablets or computers. In December, we launched a new homepage, which resulted in an uplift in flight searches and bookings.

During the year, we also launched new local language emirates.com websites for Croatia, Sweden, (Flemish), and Indonesian Bahasa, and a completely redesigned careers website for candidates seeking 10MILLION CUSTOMERS opportunities with the Emirates Group. have downloaded the Emirates App. Across iOS and Today, Emirates offers online content in more local languages than any Android, more than 1 million active users interact with other airline, reflecting our global footprint and also our commitment to our app every month

33 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group Sports sponsorships: global exposure and consumer engagement 2024 season. This agreement is the largest ever signed by the club and one of the biggest ever Financial Sponsorships are one of the most visible ways Emirates brings our brand Information agreed in football. Our partnership with Arsenal to life. Our sponsorships provide us the platform to reach and engage is the longest running in the Premier League and Additional with consumers, linking Emirates with sports and cultural events that Information one of the longest relationships in world sport. consumers are passionate about. Arsenal’s home ground will also continue to be known as up to 2028. This year, Emirates partnered with football clubs Real Madrid and Paris Saint Germain on a campaign using the clubs’ star players and our cabin In August, we extended our title partnership crew to highlight our shared values: teamwork, ambition, innovation, with the prestigious FA Cup through to 2021, and a passion for sports. The two videos produced for the #oneteam continuing our role as the first-ever title sponsor of this tournament. campaign have been watched over 4 million times by end-March. We also renewed our European Tour agreement for another four years. Through our partnerships with the world’s largest events and sporting The new deal includes Emirates becoming an Official Partner of the clubs, Emirates has become one of the most recognised brands in 2018 Ryder Cup. Emirates currently supports 19 events on the European global sports across football, cricket, tennis, golf, rugby, horseracing Tour International Schedule, as well as the Race to Dubai, engaging with and Formula 1®. millions of golf fans around the world.

During the year, our brand sponsored sports events were watched On the sailing front, Emirates welcomed the victorious crew of Emirates by a global television audience of 9.2 billion. A total of 1,427 events Team New Zealand in Dubai, as they celebrated their epic win of the generated 120,300 hours of dedicated Emirates branded TV broadcast prestigious 2017 America’s Cup. coverage with a media value of US$ 3.7 billion.

We also continued to strengthen our association with some of the top properties in sports.

In April, we signed one of the largest sponsorship deals in global football, when we renewed our shirt sponsorship of Real Madrid for a further five years until 2023. 9.2BILLION VIEWERS reached on global TV via broadcasts of Emirates-sponsored Emirates again made history when we extended our shirt sponsorship of sports events during the year, with 120,300 hours of dedicated Arsenal Football Club for a further five years until the end of the 2023- Emirates brand exposure

34 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

Emirates’ #oneteam campaign with Real Madrid

35 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information Dubai Fitness Challenge: our employees’ Additional physical and emotional wellbeing is one Information of our priorities

Our people, our success

Every day, our people deliver the exceptional travel experience that We celebrated the contributions made by our female employees on Emirates is known for. Our agility and our ability to rise to any challenge the occasion of Emirati Women’s Day in August and on International and come up with innovative solutions has always been thanks to our Women’s Day in March. Women have always been an important talented, passionate, and diverse multinational workforce. part of the Emirates success story.

We are committed to investing in recruiting, training and developing Our employees’ physical and emotional wellbeing is one of our talent. We believe in empowering our employees and recognising priorities. To this end, we encouraged our colleagues to take part in their contributions. the Dubai Fitness Challenge which ran for a month from 20 October. Launched by HH Sheikh Hamdan bin Mohammed bin Rashid Al We were proud this year to have been recognised by Universum as the Maktoum, Crown Prince of Dubai and Chairman of the Number 1 Employer of Choice in the UAE. Dubai Sports Council, the initiative encouraged individuals to exercise 30 minutes every day for 30 days in a row. As Recognising our stars an additional incentive, all employees who successfully In 2017/18, 12,080 employees from the Group were recognised through completed the fitness challenge were rewarded with one Najm, our rewards and recognition programme. Five outstanding free service-related ticket to travel to any destination on employees who went above and beyond their call of duty or who helped Emirates’ network. deliver a significant positive impact on the business were rewarded with As part of our commitment to keep our employees happy, the Chairman’s Najm awards. we also gave one service-related ticket for the second year in a row to all eligible employees to mark International Day of Happiness. 36 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Developing our workforce Overview

Emirates One of the year’s highlights was the official launch of the Emirates Flight Over the last year, our Group Leadership & Talent team delivered Training Academy (EFTA), our state-of-the-art training centre for cadet the equivalent of over 5,585 days of training to 13,105 employees. In dnata pilots. The Academy was officially inaugurated by His Highness Sheikh addition our employees signed up for and completed 61,642 online Group Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister courses. Using technology and online platforms allows our employees

Financial of the UAE and Ruler of Dubai in November. Our investment in the better access to training content to refresh their skills and further hone Information academy reflects Emirates’ commitment, as a global leader in aviation, their competencies.

Additional to develop career-ready pilots for our airline as well as the broader Information aviation industry. In partnership with the UK government, we rolled out a new e-learning course for our cabin crew and airport ground employees on preventing Spread over an area of nearly 200 football fields in Dubai South, human trafficking. EFTA houses 36 cutting-edge ground school classrooms, ground- based simulators, a fleet of 27 modern training aircraft, a 1,800 metre Emirates Aviation University, our Group’s academic business division, dedicated runway with modern navigation aids and lighting, an expanded its course offerings by launching five new business-centred independent air traffic control tower, rescue and firefighting service, and programmes in partnership with Coventry University. We also partnered a maintenance centre. with Boeing for seven students to take part in a mentorship programme developed by Boeing Middle East. In addition to academic The training approach followed by EFTA is also quite and career guidance, students also get a valuable opportunity to unique. Cadets move from training on the Cirrus SR 22 G6 develop their leadership skills and to get exposure to a corporate single piston-engine aircraft directly to the Very Light Jet working environment. (VLJ) Embraer Phenom 100EV aircraft. This allows cadets more training time on jet aircraft which is more relevant for Emirates Aviation University organised a career fair in February, working commercial airline pilot careers. The first batch of students with key partners such as Rolls-Royce. The University also inaugurated under our National Cadet Programme moved into the new student residences in summer 2017. facility in September 2017. EFTA also placed an order for six full motion Flight Simulation Training Devices configured for the Cirrus SR 22 G6 and Embraer Phenom 100EV aircraft.

Our National Recruitment and Development team continued to develop new career advancement opportunities for Emirati colleagues. We partnered with PwC Middle East to offer UAE National graduates a secondment opportunity with one of the world’s renowned professional services company. We also enrolled Emirati colleagues in the latest cohort of the Rolls-Royce leadership programme, bringing the total 12,080EMPLOYEES RECOGNISED number of Emirati colleagues who have benefitted from the programme through Najm, our rewards and recognition programme to 105 in the past six years.

37 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information dnata

38 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Another outstanding year dnata dnata delivered another outstanding year of robust growth in 2017/18. Profits Group

Financial rose 9% to AED 1.3 billion with revenue up 7% to AED 13.1 billion, surpassing all Information previous records. Additional Information Each of our four business divisions - UAE Airport Operations, International Airport Operations, Travel and Catering - experienced solid growth. The strong performance correlates with our focus on quality, safety, our people, and driving efficiencies across all our businesses in costs, processes, and resources.

Across our global network, we won new ground handling and catering contracts, entered into new markets and renewed existing partnerships. We invested AED 600 million in acquisitions, new facilities and equipment, leading-edge technologies and people development.

39 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group Our UAE Airport Operations completed a host of key initiatives aimed at This year, we also completed our acquisition of Destination Asia, significantly enhancing the efficiency of our processes and infrastructure one of Asia’s largest destination management companies with Financial Information in ground handling and cargo management. This positions us well to operations in 11 countries, marking dnata’s first foray into the serve Dubai International (DXB), the world’s number one airport for region’s inbound travel market. Additional Information international passenger traffic and Al Maktoum International (DWC), which, when completed, is projected to be one of the world’s largest The travel industry remains extremely competitive. Our focus is to passenger and cargo airports. stay ahead by continuously looking at new opportunities in our core business streams and in the associated travel services arena. Our International Airport Operations entered the US cargo market for the first time with the acquisition of AirLogistix USA, which included In April 2018, Catering announced an agreement to acquire Qantas’ a state-of-the-art cargo handling centre at George Bush catering business, subject to the approval of the Australian Competition Intercontinental Airport in Houston. We also opened a and Consumer Commission. Under the agreement, dnata will supply second cargo facility at Dallas Fort Worth International catering for Qantas flights for an initial period of 10 years. Qantas’ Airport and expanded our ground handling services to catering businesses include wholly-owned subsidiaries Q Catering New York’s John F. Kennedy Airport Terminal 4. Our airport Limited and Snap Fresh Pty Limited, an advanced meal production plant hospitality brand, marhaba, opened new lounges at Karachi in Queensland. If approved, this acquisition will allow us to leverage our and Melbourne airports. global network and catering expertise for Qantas.

In October 2017, we celebrated 10 years of handling the Airbus A380 aircraft, starting with the arrival of the first commercial flight from Singapore to Sydney in 2007. dnata is the world’s most experienced A380 ground handler, serving 10 operators of the world’s largest commercial jet at 18 airports.

Our Travel division saw a volatile year of trading as international security threats continued to dampen demand, particularly short-haul travel in Europe. However, this was more than offset by a healthy demand 10YEARS in long-haul travel. Demand for cruise holidays remained strong, of handling the world’s largest passenger aircraft. particularly in Australia, with Imagine Cruising, our cruise business, dnata is the most experienced A380 ground handler, reporting a strong set of results in its first year of trading in this market. serving 10 operators at 18 airports

40 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

dnata’s vision is to be the world’s most admired air travel services provider 41 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

dnata’s ground handling operations 42 span 80 airports around the world THE EMIRATES GROUP ANNUAL REPORT 2017-18

We welcomed Canada as our newest market when we won a licence to efficiently by automating processes wherever possible. Quantum will Overview provide flight catering services to airlines using Vancouver International ultimately provide us real time, consistent information, to make better Emirates Airport. We have committed to invest CAD 7 million to build a catering decisions, manage and govern our global businesses more consistently, dnata facility in Vancouver, which will open in Q4 of 2018. We also opened effectively, and provide scalability for continued growth and expansion. new catering facilities in Dublin and Melbourne, and strengthened our Phase one of this project is expected to be completed within the next Group presence in the US with the acquisition of a New York-based inflight two years and will focus on dnata’s international businesses followed by Financial catering company, 121 Inflight Catering. dnata’s UAE-based businesses, and Emirates’ operations. Information

Additional As we continue to expand our business in traditional flight catering, Industry recognition Information we are simultaneously responding with expertise and product offerings to our airline customers looking for more onboard retail to boost For the fourth consecutive year, we were named Air Cargo ancillary revenues. News’ Ground Handler of the Year. We also picked up significant awards for our Dubai ground handling operation Today, dnata operates in 35 countries where our 41,000 employees serve at the Aviation Business Awards; for our Travel division more than 300 airlines and 235,000 travellers every day. Given the scale at the World Travel Awards; for our Singapore Catering of our operations and the number of people we impact, our primary business from Pax International; and for our Cargo team goal is to invest in laying a strong foundation of sustained business from International Transport News. practices and corporate values that will generate enduring growth. Our commitment to investing in our people, in safety, In January, we announced a significant investment in Quantum, technology and the dnata brand is putting us on course to achieve our a three-year programme that will transform our processes in business vision to be the world’s most admired travel services provider. support functions like Finance, HR and Procurement to ensure that we thrive in the future business landscape and continue growing our Fostering a safety culture global presence. The latest Enterprise Resource Planning (ERP) solution Safety and doing things the right way continue to be at the heart of provided by SAP will establish the tools needed to run our businesses everything we do. 2017/18 was focused on progressing dnata towards becoming a learning organisation on safety and standards, where every incident is regarded as an opportunity to improve and to put preventive measures in place. Nearly 9,000 employees in Dubai participated in our third dnata Culture Survey to get insights on our progress and how to make an even safer place to work in. Similar surveys were rolled out to our operations internationally. IN COUNTRIES35 Our 41,000 employees serve more than 300 airlines and 235,000 travellers every day

43 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group During the year, we held leadership workshops across our network Committed to sustainable operations to introduce the Integrated Management System (IMS), which was Financial At dnata, we endeavour to effectively fulfil our environmental Information launched in 2017. The IMS is a single framework of policies, procedures and processes across our businesses covering health, safety, security, responsibility wherever we operate. With our scale of operations, Additional we recognise that even small initiatives can have a large impact. Information environment and quality management.

We also launched the Heart and Minds programme to support Across our network and business units, we are deliberately employee behaviour and foster an organisational culture focused on investing in sustainable operations to conserve water our One dnata values of safe and reliable operations. Our Safety & and energy consumption, recycle waste, reduce Standards team commenced the development of a common standard carbon emissions and recycle materials, such as paper, for observing, reporting, managing and investigating incidents for plastic, cardboard, wood, glass, metal, used cooking and application across our operations globally. mineral oils.

In 2017/18, we invested AED 150 million to replace our fleet of Ground Support Equipment (GSE) across our airport operations, ensuring that modern, efficient equipment are being deployed. Notably in the UAE, we already run a fleet of electric GSE, with 30 baggage tractors, two conveyor belts and two pushback tractors, and have added a further 50 Prius Hybrids to the fleet.

AED In the UK, we have partnered with a local GSE manufacturer to develop MILLION150 electric trucks which could significantly reduce carbon emissions. invested to replace our fleet of Ground Support Equipment (GSE) Leading by example, dnata’s senior leadership team in Dubai has also across our airport operations, ensuring modern, efficient equipment replaced its fleet of company-provided vehicles with hybrid cars.

44 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information dnata’s fleet of hybrid vehicles at Dubai International airport

Making a positive difference in our communities in poverty-stricken communities in Malawi and Nepal, with a sixth soon to be constructed in Senegal. dnata4good is dnata’s Corporate Social Responsibility programme, designed to make a positive difference in the communities around We also actively support wildlife conservation in our operating regions us through employee engagement and community involvement. The and beyond. In 2017, dnata Dynamos, a group of cyclists led by dnata programme encourages volunteer work, philanthropic efforts and employees completed a challenging 618km cycling trek through France, fundraising activities in support of three main causes – Education, raising AED 150,000 for Rhino Revolution and Dubai Cares. Humanitarian, and Wildlife Conservation. In 2017, dnata observed Breast Cancer Awareness month for the first Our projects supporting Education aim to address the time. Our teams across the network collaborated with locally registered cycle of poverty and underlying obstacles that prevent charities to increase awareness of breast cancer and raise funds for children from receiving quality education. Our employees research into a cure for the disease. have launched initiatives to assist in the building of schools and classrooms, vocational training, school meals, dnata4good also supports three global observation days in alignment early childhood education, teacher training, curriculum with the United Nations: World Book Day, Breast Cancer Day and development, and literacy and numeracy education. Environment Day.

This year, we completed our sixth school-building trek In the nearly four years since launching dnata4good, over 100 projects to raise funds for the dnata4good schools programme. To date, more have been completed and more than 10,000 employees across our than AED 900,000 has been contributed towards this programme. In global network have participated in at least one initiative. So far, over partnership with Dubai Cares, this money has helped build five schools AED 4 million has been raised by our employees, including dnata matching funds dirham for dirham.

45 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

Safety and doing things the right way 46 remain at the heart of everything we do THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Industry leadership at world’s busiest international hub dnata

Group dnata’s UAE Airport operations manage passenger and cargo aircraft Optimising processes and resources landing at or departing Dubai. In 2017/18, revenues grew steadily by 4% Financial As our operations expand in tandem with the growth Information to AED 3.2 billion. Our teams handled over 211,000 aircraft movements, more than 89 million passengers, and in excess of 731,000 tonnes of of Dubai as an aviation hub, we rigorously challenge Additional our processes and work practices by applying leading Information cargo at Dubai International (DXB) and Al Maktoum International (DWC) at Dubai World Central. Our airport hospitality brand, marhaba, serves technology and training to improve efficiency, safety, and nearly one million passengers every year with its comprehensive range avoid unnecessary cost on a sustainable basis. In March, of airport lounges and meet and greet services. we moved into our state-of-the-art airport operations control centre, and in June, our load control centre moved We continue to be recognised in the industry for our uncompromising to a new, low-cost location off-airport. focus on operational excellence and customer service. We were named Ground Services Provider of the Year in the 2017 Aviation Business In May, we brought the maintenance of airside buses Awards. We were also named “Most Reliable Cargo Handling Company’ in-house. From this move, we expect to improve the quality of at the Logistics, Warehouse & Supply Chain Awards 2017, and were maintenance, as well as generate savings of AED 40 million over presented with the Best Safety Management (Investigation) Award the next five years. by our customer, Cathay Pacific, in recognition of our high quality We accelerated the recycling programme for our fleet of 12,000 units investigation and rectification efforts. of Ground Services Equipment (GSE) at DXB and DWC. Instead of replacing the equipment at the end of their life cycle, we now perform a mechanical overhaul to put them back in service. Over 100 units of GSEs have been renewed to-date, reducing waste generated from this category of equipment by 250 tonnes, while passing all safety and

AED quality checks and achieving savings in excess of AED 14 million.

In DWC, we began testing new equipment and processes at the passenger terminal, which has been undergoing significant expansion AED works to serve the future growth of travellers and flights. The learning MILLION40 from these tests is also being applied to enhance the efficiency of our will be saved over the next five years by taking operations at DXB. We partnered with flydubai to trial remote control the maintenance of airside buses in-house electric vehicles used to service narrow-body aircraft.

47 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group Underpinning our success and ongoing commitment to excellence is saving 200,000 litres of fuel per year, and reducing CO2 emissions by a strong culture that reflects our One dnata values. During the year, 47 tonnes per year. Financial Information we launched our LEAN academy, with its first 12 graduates. LEAN is a methodology to help eliminate waste, reduce complexity and We also embarked on a series of technology initiatives aimed at Additional transforming our processes to meet future growth. Information optimise resources to add value to our customers. We trained the entire management team in the basic principles. Our employees generated In September, we made a substantial investment in a cutting-edge over 100 ideas, which are being evaluated for implementation. cloud-based software platform that will enable freight forwarders, In November, nearly 9,000 employees completed our third Culture agents and airlines to plan all land transport processes with us more Survey, which tracks our progress on making dnata a better and safer efficiently. This solution, which will be implemented by July 2018, is the place to work. The response rate is the highest ever achieved, and the first of its kind in the aviation cargo industry. results showed a significant improvement in employee engagement and In March, we became the first ground handler to implement a global safety culture, reflected in improvements in all safety measures. roll-out of the iCargo terminal operation suite across all our stations. Transforming the future of cargo management This investment will enable us to manage our air cargo movement worldwide seamlessly and have all our operations on one cargo In line with a strong global pick-up for air cargo transport, we saw cargo management IT platform using unified processes. The system will be volumes handled increase by 2% to 731,000 tonnes during 2017/18. gradually implemented, and by 2020, will have a user base of over 5,000 Revenues from our cargo business increased by 6%. employees across 27 stations in 10 countries.

The year saw a steady delivery of initiatives started We also successfully tested the use of blockchain technology to further in 2014 to optimise our operations, covering facility streamline and simplify our cargo delivery processes from origin to final improvements, process changes, infrastructure upgrades destination. We are now able to track the paper trail of cargo containers and IT development. We opened a new customer service by digitizing the supply chain, thereby eliminating redundant data, centre and cargo integrated control centre located in improving transparency and tightening information security for the Dubai Airport Free Zone, as well as another cargo all stakeholders. warehouse, increasing our processing capacity by 25%. Throughout the year, we organised Cargo Connect, a series of forums to In addition, we completed the conversion of all diesel- demonstrate to our customers how our digital transformation roadmap powered forklifts to electric ones. This is reducing the will provide significant efficiency improvements to their business. As the carbon footprint at cargo operations in Dubai by 80%, aviation services leader in the market, we will continue to engage and collaborate with all stakeholders in the UAE aviation eco-system to drive innovation, and ultimately, deliver even better services.

48

THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

dnata was named ‘Ground Services Provider of the Year’ at the 2017 Aviation Business Awards

49 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

dnata handles the world’s largest commercial 50 passenger aircraft for 10 airlines at 18 airports THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Building a quality reputation across our global operations dnata

Group Our international ground handling operations are in 78 airports around Expanding in key markets the world, serving more than 300 airlines. Financial In the US, we received a new licence to provide ground Information dnata is one of the world’s largest providers of airport services, handling services at John F. Kennedy International Airport’s Additional supporting airline customers with aircraft appearance; load control and (JFK) Terminal 4 in New York. This strengthened our existing Information flight operations; passenger assistance; lounges; technical maintenance; operations in JFK’s terminals 1, 7 and 8, as well as for UPS cargo and ramp services. and United States Postal Service. We also commenced operations at Singapore ’s new Terminal 4 In 2017/18, we focused on integrating the new businesses we acquired with our customer, Cathay Pacific, and at JFK’s Terminal 8 the previous year and on leveraging our global network to deliver strong with Cathay Pacific and Qantas. growth. We handled 449,000 aircraft turnarounds, 2.4 million tonnes of cargo, and saw strong revenue growth of 14% to AED 3.8 billion. marhaba, our airport hospitality brand, welcomed two new lounges, at Karachi’s Jinnah International Airport in More than just size and scale, our teams are earning recognition for our Pakistan, and at Melbourne’s Tullamarine Airport Terminal 2, which is our high quality standards, and winning over customers. Through the year, first Australian passenger lounge. we won over 90 contracts with new and existing customers, including Etihad, Group, Air Canada, Airlines, Saudia and Japan During the year, our operations at Iraq’s Erbil International Airport was Airlines. In November alone, we commenced 10 new contracts in one disrupted from September 2017 to February 2018 due to a ban imposed day with six airlines at airports in Adelaide, Karachi, Islamabad, Lahore, on all international flights into and out of the Kurdistan region of Iraq. Amsterdam, Manchester, Toronto and Dallas. Despite this, we continued serving domestic flights while ensuring our readiness to recommence ground handling for international flights when The confidence our customers have placed in us reflects their they resumed. endorsement of our track record as well as the investment we have continuously made in our people, systems and processes to be a preferred provider of air services in each market. This includes investing AED 82 million on replacing our fleet of ground handling vehicles across our global network. + 90CONTRACTS won with new and existing customers, including Etihad, Lufthansa Group, Air Canada, , Saudia and Japan Airlines

51 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group Boosting cargo capability In the UK, we enlarged our cargo handling capacity at to support our growing customer base. We also expanded in Amsterdam Financial In recent years, dnata has significantly expanded its global cargo Information with the opening of an additional cargo warehouse at Schiphol Airport. offering, including the opening of new cargo facilities, as well as The 91,000 sq ft (8,500 sqm) facility has a capacity of over 80,000 Additional investing in technology and leading-edge equipment. We now handle Information tonnes of cargo break down and build up per year. In 2.4 million tonnes of cargo at 43 airports worldwide and continue to addition, dnata is the first handling company at Schiphol increase our presence in key markets. Airport to offer temperature-controlled cargo dollies to its infrastructure. The high-tech containers are specially In May, we acquired AirLogistix USA, marking our first entry into the US designed to serve the pharmaceutical industry with cargo market and a further step towards becoming a global leader in a closed temperature-controlled system for seamless the handling of perishable and pharmaceutical cargo. The acquisition delivery of temperature-sensitive goods from the includes a 30,000 sq ft, state-of-the-art cargo handling centre at George warehouse to the aircraft. Bush Intercontinental Airport, the only dedicated perishable cargo facility at Houston airport. In Australia, we opened our first airside cargo facility in Adelaide. We also enhanced our export screening As part of the same investment in AirLogistix USA, we officially opened capability for USA bound cargo, investing AU$ 1.5 million a second cargo facility in Dallas Fort Worth International airport (DFW) in new infrastructure, improved operating procedures and employee in March 2018. The 37,000 sq ft cargo centre features the only dedicated training, which will strengthen the security of our customers’ shipments. cool-chain perishable cargo at DWF and bears IATA’s CEIV accreditation for the highest international standards.

ADDITIONAL 91,000 SQ FT cargo warehouse opened at Schiphol Airport with capacity to handle over 80,000 tonnes of cargo per year

52 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional dnata invests in its people, equipment and technology to Information deliver safe, efficient and sustainable operations

Achieving efficiency and sustainability capable of operating for 16 hours a day on batteries and saving an estimated 32 tonnes of CO2 per year per truck. While managing the rapid expansion of our business footprint, we are concurrently committed to operating with a mindset of efficiency and Our commitment to excellence continues to garner industry environmental sustainability. endorsement. For the fourth consecutive year, we were named by Air Cargo News as ‘Ground Handler of the Year’. Our UK operation won In July, we opened a new 6,900 sqm maintenance base at ‘Best Air Cargo Terminal Operator - Europe’ for the third year running at Singapore Changi Airport featuring green technology. With the 2017 Asian Freight Logistics and Supply Chain Awards. three times more capacity than the first facility, the new maintenance base can handle an average of 9,000 repairs and maintenance activities annually.

To improve the maintenance operations of our ground service equipment fleet in Australia, we signed a long term agreement with Adaptalift GSE for a programme to replace, renew, and refurbish our equipment. In addition to increased utilisation, reliability and enhanced service to our airline customers, the programme will lead to more efficient operating costs. 32 In the UK, as part of our ‘Cleaning our air from the ground up’ TONNES OF CO2 philosophy, we deployed 10 electric vehicles across our operations saved per year per truck through our partnership with a GSE which contribute positively to reducing our carbon footprint. We also manufacturer in the UK to develop electric trucks that can partnered with a local GSE manufacturer to develop electric trucks operate for 16 hours a day

53 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

54 dnata’s talented and passionate chefs use the freshest local ingredients and the finest recipes to produce meals for our customers THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Global experts in world cuisines dnata

Group Every day, dnata prepares over 150,000 meals for more than 140 airlines In several markets, we expanded our in-airport service, launching the in 62 catering locations around the world. marhaba lounge brand at and catering for Emirates Financial Information and Lufthansa at their respective lounges. Our ability to deliver consistent and quality standards, our expertise in We continued to add to and enhance our airport café and restaurant Additional adding value to our customers’ business, and our ability to anticipate Information business, which now includes more than 40 outlets across our network. change and invest for sustainable growth, continue to win us new contracts and recognition in the industry. During the year, we rebranded our Australia flight catering business, Alpha Flight Services, to dnata catering. This is in line with our ambition This year, we were named ‘Airline Caterer of the Year’ Asia by to bring all our global businesses under the One dnata umbrella where readers of Pax International. We also earned accolades from our possible, to better leverage the strengths and synergies that come with customers including: ‘Best Global Caterer (Golden Spoon) 2017’ from being a group, and to provide a consistent brand experience to our Capital Airlines, and ‘Best Corporative Caterer’ 2017 from customers around the world. Xiamen Airlines. Strategic growth In 2017/18, our catering business achieved a 7% increase in revenue to AED 2.1 billion, driven by improved performance in most markets. We While we continually drive excellence and results in our ongoing uplifted more than 55 million meals to airline customers and continued operations, we also concurrently make strategic investments in markets to expand our value-added inflight services such as onboard retail. where we can add value and capitalise on growth opportunities. We won a number of new airline customers and extended existing partnerships with others, including Hainan Airlines, and Air China.

150,000MEALS served each day to over 140 airlines in 62 catering locations around the world

55 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group In Australia, we opened an AU$ 50 million state-of-the-art catering hub We strengthened our presence in the North American market with at Melbourne Airport in September. With a space of 11,000 sq ft and a the acquisition of 121 In-flight Catering, a New York-based inflight Financial Information capacity to prepare more than 750,000 meals a month, it is the largest and VIP caterer in March 2018. This is pending approval from the such facility in the southern hemisphere and attests to our ability to run Committee of Foreign Investments in the United States (CFIUS). Additional Information large-scale projects in mature markets. 121’s heritage in high-end restaurant catering aligns with our ongoing focus on culinary excellence. Alongside the experienced 121 In January, we opened our second catering facility in Ireland. The new management team, we intend to expand further in the US, starting at facility at represents a strategic investment into a market Nashville International Airport, where we will open a catering facility where we see great growth potential, with passenger traffic reaching in May 2018. 30 million annually, and an expanding base of international airlines. The new facility currently has the capacity to produce 120,000 meals a Capitalising on global trends month, which can be increased if required. With passenger traffic growth from Asia projected to outpace other In February, we entered the Canadian market when we were awarded a regions in the next two decades, we have been enhancing our licence to provide flight catering services to airlines departing Vancouver capabilities as global experts in cuisine styles for this region. International Airport. This exciting opportunity enables us to bring our expertise in global and diverse cuisine, particularly halal and Asian, Over the last five years, while building on our long-established to airlines and their passengers. We have commenced plans to invest strengths in halal and Western cuisine, we have consciously focused over CAD 7 million to build and fit-out a dedicated catering facility at on developing culinary expertise in regional Asian cuisines such as Vancouver, and expect to start operations in Q4 2018. Chinese, Japanese, and Korean.

Our chefs have proven their specialist skills, garnering top placings at Asian culinary competitions. In 2017/18, we won three silver medals and a bronze for Cantonese cuisine at the World Master Chefs Competition held in Hong Kong.

Our strategy continues to reap business results. During the year, we have expanded our presence with China 3SILVER MEDALS Southern, Hainan Airlines, Air China and Tianjin Airlines in and a bronze for Cantonese cuisine at the World Australia. We now provide inflight meals to every Chinese Master Chefs Competition held in Hong Kong airline flying into Australia.

56 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information dnata’s team of industry experts provides customers with inflight retail solutions backed Additional by the latest technological innovations Information

Our ability to identify key trends has enabled us to invest ahead Adding value to our customers and capitalise on opportunities to continue thriving in a highly competitive industry. As the airline industry continues to invest in ancillary revenue opportunities, we have been able to use our retail capability and Building for flexibility and sustainability expertise to support our customers in their onboard retail strategies.

As we upgrade, expand, or invest in new facilities, we On top of the quality products we offer for inflight sales, we also provide deliberately build for flexibility and sustainability, so that we dedicated support services, such as managing crew engagement, can respond to catering trends and customer needs with training and incentive programmes, and a suite of technology solutions agility and speed to market. Our food preparation areas, for customer marketing and management. for instance, are equipped with modular systems that can be easily reconfigured. Our dedicated product development and design business, En Route International, expanded its product partnerships in 2018 with a number Wherever possible, we have also invested in green building of leading, on-ground global brands now looking to us to launch their design, equipment, processes and technology that support products inflight. our commitment to sustainable operations. For instance, replacing diesel powered ramp vehicles with hybrid and electrical ones in the UK and UAE, using solar powered water heating systems in Italy and the , and recycling used cooking oil and packaging materials in Jordan.

57 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

dnata Travel manages Arabian Adventures, the Gulf region’s leading Destination Management Company that creates 58 memorable experiences for visitors to the UAE THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates Global products, services and expertise dnata

Group dnata’s diverse portfolio of market-leading travel businesses means that Tapping opportunities in the Middle East we are well-placed to serve customers from all segments of the travel Financial Information industry with our products, services and expertise. In the Middle East, an upswing in both inbound and outbound tourism demand presented opportunities to expand our operations in the region. Additional Our travel brands include: Congress Solutions International; dnata Information Travel; Emirates Holidays; G Travel International; Gold Medal; MMI Travel; In the UAE, we continued to see a healthy increase in the number of Netflights; Pure Luxury Worldwide Holidays; Sunmaster; The Global Travel inbound passengers. In 2017/18, 9.5 million customers who travelled to Group; Travel2; Travelbag; and Travel Republic, as well as destination or transited through Dubai, used our services, a 9.1% increase from the management companies (DMCs) Arabian Adventures and Gulf Ventures previous year. City Sightseeing Dubai, our hop-on-hop-off-tours, saw a providing in-resort services and offering ground tours and activities in healthy 12% growth in bookings with revenues rising by 11%. the UAE and . We also have strategic stakes in Imagine Cruising, Our travel management business in the UAE and in eight other countries Destination Asia, City Sightseeing Dubai, and Travel Counsellors. We across the region performed strongly, with sales growth of 14%, manage EmQuest on behalf of the Emirates Group, and we have wholly underpinned by a record number of new contracts, and achieving over 95% owned and joint venture companies in eight countries in the Middle East in customer retention rates. and Indian subcontinent region.

In November, we launched the Yalago brand as a global leisure bedbank In 2017/18, our travel division recorded solid growth, achieving a total to serve third-party customers in the leisure travel segment with transaction value of AED 11.3 billion. We purchased close to eight million accommodation bookings, and have already secured 27 external customers. room nights, a healthy increase over the previous year, as we continued We also invested significantly in a health and safety programme, partnering to optimise our centralised land purchasing function. Across our B2B and with an independent provider to regularly audit all of our hotel suppliers B2C brands, our Net Promoter Score finished at 63%, which is 10% points around the world, so that our customers have peace-of-mind when booking higher than the industry benchmark for Leisure, Travel & Tourism. their stay with us.

Emirates Holidays expanded to the US, bringing our offering of exceptional travel experiences to discerning travellers. We successfully trialled the use of artificial intelligence in the US market with a cutting-edge advertising campaign incorporating an AI-powered chatbot that interacts with customers directly, recommending destinations and vacation packages 8MILLION based on their preferences. We also expanded our online transactional room nights purchased during the year presence to more countries and introduced websites.

59 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group As the travel industry continues evolving in a very competitive Eastern Mediterranean to the Western Mediterranean and led to environment, we are forging ahead with strategic investments in subsequent supply challenges and increased prices for the consumer. Financial Information our business transformation. On the positive side, the impact was mitigated by a healthy increase in long-haul travel and cruise bookings. Additional In 2017/18, we created two travel reservation systems for Emirates Holidays Information and dnata Travel’s B2B business, to replace existing ones. The new systems Other industry challenges that we tackled during the year provide enhanced functionality and a more efficient way to serve our included: the rise in fraudulent personal travel insurance partners and customers. In our contact centres, we are close to upgrading claims, and compliance with the European General Data our entire telephony platform worldwide, which coupled with a new Protection Regulation (GDPR), which comes into force in industry leading CRM system, will allow us to provide a superior customer May 2018. experience along with far greater efficiencies. We also demonstrated our crisis management capability In December, EmQuest, Emirates’ technology distribution arm for the travel with the robust handling of natural disasters, terrorist industry, extended its partnership with global technology company Sabre activity, and company failures. For instance when Monarch for an eight-year period. This exclusive partnership in the UAE, established Airlines collapsed, disrupting the travel plans of many, we in 2009, has enabled EmQuest to be the preferred technology distributor were able to help our affected customers rebook their for travel management companies operating in the UAE. travel plans quickly, minimising their inconvenience.

On 9 February, it was announced that Hogg Robinson Group plc (HRG), in Our UK-based Imagine Cruising business completed its first year of which dnata holds a 21.85% shareholding, had received a recommended trading in Australia, where our Cruise and Stay Holidays were well cash offer from American Express Global Business Travel. On 16 March, the received. To boost growth in this market, Imagine Cruising acquired offer was approved by the shareholders of HRG. However completion of Holiday Planet, a leading travel company in Perth. the acquisition remains subject to certain conditions, including regulatory clearances. Following the expected completion of the transaction, dnata During the year, we completed our new senior management team, intends to continue to partner with HRG in the Middle East and West Asia recruiting best-in-class professionals who bring breadth and depth of where strong relationships have been developed over the past decade with travel experience to drive our growth in Europe and the Middle East. our corporate customers and agency partners. We also established a panel of external advisers, who are distinguished veterans in the travel industry, to lend their expertise and experience in Staying ahead of the pack in Europe our expansion strategy.

In Europe, the travel industry faced a challenging trading year. Customer demand shifted away from higher security risk destinations in the

60 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information dnata serves customers from all segments of the travel industry Additional through our diverse portfolio of Information products and services

Expanding in Asia Award-winning quality and service

In India, dnata won its biggest corporate travel management Our focus on quality and service continues to be valued by our contract and achieved overall growth of 20% in the year. customers and recognised by the industry.

We completed our acquisition of a stake in Destination Asia, a At the World Travel Awards Middle East 2017, dnata Travel leading DMC with presence across 11 Asian countries. This formally won triple honours. We were named ‘UAE’s Leading Travel marked our entry into South East Asia’s inbound travel market. Agency’ for the fourth consecutive year, ‘Abu Dhabi’s Leading Travel Agency’, and ‘The Middle East’s Leading Business Travel Agency’.

Arabian Adventures MICE became the first UAE-based DMC to win the prestigious ‘Crystal Award for Excellence in Incentive Travel’ from the Society for Incentive Travel Excellence (SITE).

In the UK, Emirates Holidays swept the British Travel Awards 2017 with six wins. The team was voted by the travelling British public for: Best Luxury Holiday Company, Best Family Holiday 6TROPHIES Company, Best Holiday Company to the Middle East, Best Holiday won at the British Travel Awards 2017 Company to the Indian Ocean, Best Holiday Company to Southern Asia, and Best Holiday Company to South-East Asia (Silver Award).

61 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional 02 MAY Information dnata is named Ground Handler of the Year at the 2017 Air Cargo News awards for the 4th consecutive year

1ST QUARTER

01 APRIL 10 APRIL Emirates Holidays launches operations Emirates wins ‘Best Airline in the World’ at in the USA as Emirates Vacations TripAdvisor’s Travelers’ Choice Awards for Airlines 2017

03 APRIL 10 APRIL Emirates SkyCargo launches SkyFresh, a dnata’s Catering team in Singapore range of cool chain solutions for perishables picks up the ‘Airline Caterer of the Year’ and fresh consumables award from PAX International, a leading publication for the catering industry

62 THE EMIRATES GROUP ANNUAL REPORT 2017-18 21 JUNE Emirates wins 13th consecutive ‘World’s Best Inflight Entertainment’ award at Skytrax World Airline Awards 2017

Overview

Emirates dnata 09 MAY Group dnata commences cargo operations in the USA with its acquisition of AirLogistix USA’s Financial operations in Houston Information

Additional Information

09 MAY 01 JUNE Emirates SkyCargo and Cargolux announce Zagreb, Croatia joins Emirates’ strategic operational partnership focusing on global network aircraft capacity, block space and interline, hub connectivity, and cargo handling

24 MAY 04 JUNE Emirates launches ‘Together’ initiative in dnata Travel launches Secret Stays programme, collaboration with key partners in Dubai offering the best last-minute deals in Dubai to improve the traveller experience at and Abu Dhabi Dubai International

31 MAY 12 JUNE dnata Australia enhances its export Emirates SkyCargo starts freighter services to screening capability for USA bound Luxembourg as part of its strategic partnership cargo, investing AU$ 1.5 million in new with Cargolux infrastructure, improved operating procedures, and employee training

63 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2ND QUARTER Overview

Emirates dnata 01 JULY 20 JULY Group Emirates launches daily linked service marhaba opens its first passenger from Dubai to Phnom Penh in Cambodia, lounge in Karachi’s Jinnah Financial Information via Yangon in Myanmar International Airport

Additional Information

01 JULY 01 AUGUST dnata opens its second cargo Emirates’ newly revamped A380 Onboard warehouse at Amsterdam Airport Schiphol. Lounge makes its operational debut to The brand new 8,500 sqm facility will help Kuala Lumpur the business meet customer demand

13 JULY 09 AUGUST Emirates inaugurates its 41st Emirates renews partnership with The dedicated lounge at Boston Logan Football Association (FA) for another three International Airport years. The agreement sees the tournament continuing to be named The Emirates FA Cup

17 JULY 17 AUGUST Emirates and flydubai announce an extensive Emirates SkyCargo rolls out a new white partnership, including a broad codeshare cover solution developed in collaboration agreement, schedule alignment, and network with DuPont, offering enhanced protection optimisation to provide passengers access to for temperature-sensitive cargo over 200 unique destinations

64 THE EMIRATES GROUP ANNUAL REPORT 2017-18 12 SEPTEMBER marhaba opens its first Australian passenger lounge at Melbourne’s Tullamarine Airport Terminal 2

Overview

Emirates dnata 22 AUGUST Group Emirates becomes official partner of the 2018 Ryder Cup and extends its partnership Financial with the European Tour until 2021 Information

Additional Information

24 AUGUST 15 SEPTEMBER dnata ramps up recycling programme Alpha Flight Services in Australia opens its for its fleet of 12,000 Ground Services 11,000 sq ft state-of-the-art catering hub at Equipment (GSE) at both its Dubai hubs, Melbourne Airport, the largest such facility in recycling 140 GSE units and reducing the southern hemisphere waste by 250 tonnes in 2017

06 SEPTEMBER 21 SEPTEMBER dnata digitalizes its end-to-end air cargo Emirates signs an agreement with processes in Dubai, increasing transparency Real Madrid to extend its shirt and co-ordination with freight forwarders, sponsorship until 2022 agents and airlines, via a cloud-based software platform

07 SEPTEMBER 27 SEPTEMBER Emirates Flight Training Academy takes Emirates clinches the Passenger Choice award for delivery of its first two Cirrus SR22 G6 Best Entertainment at the 2017 APEX Passenger training aircraft, the first of the 22 single- Choice Awards and is given a Five-Star Global piston engine Cirrus aircraft ordered by the Airline Official Airline Rating Academy to train ab initio pilots

65 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group 25 OCTOBER Financial dnata marks 10 years of handling the Airbus A380 aircraft, since the first commercial Information flight arrived in Sydney in 2007. dnata is the most experienced A380 ground handler, Additional serving 10 operators of the world’s largest commercial jet at 18 airports Information

3RD QUARTER

15 OCTOBER 29 OCTOBER Emirates launches US$ 15 million dnata Travel earns triple honours at the World campaign to inspire travel and promote Travel Awards Middle East 2017 - ‘UAE’s Leading its global network including its Travel Agency’ for the fourth consecutive year, home, Dubai ‘Abu Dhabi’s Leading Travel Agency’, and ‘The Middle East’s Leading Business Travel Agency’

25 OCTOBER 01 NOVEMBER Emirates and a consortium of industry Emirates unveils the first aircraft in its fleet partners announce an initiative to build emblazoned with a new livery dedicated to the world’s first Aviation X-Lab at Area Expo 2020 Dubai 2071, the experimental nucleus of the UAE’s Centennial Plan

01 NOVEMBER dnata celebrates a landmark day with 10 new contracts, starting with six different airlines at eight different stations - spanning Adelaide, Karachi, Islamabad, Lahore, Amsterdam, Manchester, Toronto and Dallas

66 THE EMIRATES GROUP ANNUAL REPORT 12 NOVEMBER 2017-18 Emirates launches new interiors for its Boeing 777 aircraft, including fully enclosed private suites in First Class inspired by Mercedes-Benz. The global campaign for its new game-changing product was fronted by motoring celebrity Jeremy Clarkson

Overview

Emirates

dnata 03 NOVEMBER 16 NOVEMBER Emirates receives its 100th Airbus A380, and Emirates Engineering announces use of Group unveils a bespoke livery as a tribute to the cutting-edge 3D printing technology to

Financial late HH Sheikh Zayed bin Sultan Al Nahyan, manufacture components for Emirates’ Information founding father of the UAE aircraft cabins

Additional Information

3RD QUARTER 12 NOVEMBER 20 NOVEMBER Emirates announces a US$ 15.1 billion Arabian Adventures launches new, revamped commitment for 40 Boeing 787-10 tours and safaris to showcase the diversity of Dreamliners, taking its total wide-body UAE’s attractions commitment with Boeing to 252 aircraft

13 NOVEMBER 23 NOVEMBER The Emirates Flight Training Academy dnata’s cargo operations marks an innovation is officially inaugurated by HH Sheikh milestone, as it successfully tests the use of Mohammed bin Rashid Al Maktoum, blockchain technology to improve efficiency, Vice President and Prime Minister of the security, and visibility for airfreight stakeholders UAE, and Ruler of Dubai in Dubai, together with partners Emirates Innovation Lab, flydubai Cargo, and IBM

15 NOVEMBER 23 NOVEMBER Emirates and Thales sign an agreement The Emirates Group publishes its seventh to equip the airline’s future Boeing annual Environmental Report outlining the 777X fleet with next generation Group’s environmental performance for the broadband inflight connectivity, using financial year 2016/17 the Inmarsat GX global network for best-in-class connectivity

67 THE EMIRATES GROUP ANNUAL REPORT 2017-18

4TH QUARTER Overview

Emirates dnata 8 JANUARY 21 JANUARY Group Emirates Group Security and Etihad dnata opens new flight catering facility at Dublin Aviation Group sign a Memorandum Airport with a capacity of 4,000 meals a day, focussed Financial Information of Understanding for cooperation on serving premium long-haul airline customers. This in aviation security is its second facility in Ireland, after Cork Additional Information

14 JANUARY 05 FEBRUARY Arabian Adventures MICE becomes the first Emirates Engineering announces agreement UAE-based DMC to win the prestigious Crystal with Qantas for aircraft maintenance, including the Award for Excellence in Incentive Travel from the stripping and repainting of eight Qantas A380 aircraft. Society for Incentive Travel Excellence (SITE) The agreement highlights Dubai as a centre of excellence for Airbus A380 maintenance

16 JANUARY 06 FEBRUARY Emirates launches ‘Upgrade your Airline’ Emirates SkyCargo expands its footprint in campaign to promote travel on its Europe with new scheduled freighter services award-winning Economy Class to Maastricht

18 JANUARY 08 FEBRUARY Emirates signs a US$ 16 billion deal for 36 The Emirates Group signs a Memorandum of additional Airbus A380 aircraft including 16 Understanding with the Andhra Pradesh options, taking its total A380 commitment Economic Development Board to establish a to 76 aircraft collaboration framework to support the development of the Indian state’s aviation sector.

68 THE EMIRATES GROUP ANNUAL REPORT 20 FEBRUARY 2017-18 dnata obtains licence to provide flight catering services at Vancouver International Airport

Overview

Emirates 15 FEBRUARY dnata Emirates SkyCargo transports KhalifaSat from Dubai to South Korea on a specially 05 MARCH Group chartered Boeing 777 freighter. KhalifaSat Emirates unveils its refurbished Boeing 777-200LR is the first satellite developed and built by Financial aircraft with two-class cabin, offering wider seats Information Emirati engineers in the UAE at in Business Class laid out in a 2-2-2 configuration, the Mohammed Bin Rashid Space and a refreshed Economy Class Additional Centre (MBRSC) Information

06 MARCH dnata opens a 37,000 sq ft cargo centre at Dallas Fort Worth International Airport, a US$ 3 million investment that includes the airport’s only dedicated cool-chain perishable cargo facility

19 FEBRUARY 22 MARCH Emirates extends its shirt partnership with Emirates closes US$ 600 million sukuk bond Arsenal Football Club for a further five years until the end of the 2023/24 season

28 FEBRUARY 23 MARCH Emirates Skywards reaches the Emirates and Qantas receive reauthorisation milestone of 20 million members from the Australian Competition and Consumer Commission to continue their partnership until 2023

69 THE EMIRATES GROUP ANNUAL REPORT 2017-18 Emirates’ growing network Emirates operates flights to 157 destinations in 84 countries, offering industry-leading passenger and cargo air transport services.

We connect the world to, and through, our hub in Dubai.

Overview

Emirates Emirates destinations dnata NORTH AMERICA BIRMINGHAM PRAGUE LAGOS BANGKOK AGUADILLA BOLOGNA ROME LILONGWE BEIJING Group BOSTON BRUSSELS ST. PETERSBURG LUANDA BENGALURU Financial CHICAGO O’HARE BUDAPEST STOCKHOLM LUSAKA CEBU Information COLUMBUS COPENHAGEN VENICE MAURITIUS CHENNAI DALLAS/FORT WORTH DUBLIN VIENNA NAIROBI CLARK Additional WARSAW OUAGADOUGOU COLOMBO Information FORT LAUDERDALE DÜSSELDORF HOUSTON FRANKFURT ZAGREB SEYCHELLES DHAKA LOS ANGELES GENEVA ZARAGOZA TUNIS GUANGZHOU MEXICO CITY GLASGOW ZURICH HANOI NEWARK HAMBURG MIDDLE EAST HO CHI MINH CITY SEOUL NEW YORK ISTANBUL AFRICA AMMAN HONG KONG SHANGHAI ORLANDO LARNACA ABIDJAN BAGHDAD HYDERABAD SIALKOT SAN FRANCISCO LIEGE ABUJA BAHRAIN ISLAMABAD SINGAPORE SEATTLE LISBON ACCRA BASRA JAKARTA TORONTO LONDON GATWICK ADDIS ABABA BEIRUT KABUL WASHINGTON LONDON HEATHROW ALGIERS DAMMAM KARACHI TOKYO HANEDA LUXEMBOURG CAIRO DUBAI INTERNATIONAL KOCHI TOKYO NARITA SOUTH AMERICA LYON CAPE TOWN DUBAI WORLD CENTRAL KOLKATA YANGON BUENOS AIRES MADRID CASABLANCA JEDDAH KUALA LUMPUR YINCHUAN CIUDAD DEL ESTE MALTA CONAKRY LAHORE ZHENGZHOU QUITO MANCHESTER DAKAR MASHHAD MALE RIO DE JANEIRO MAASTRICHT DAR EL SALAAM MEDINA MANILA AUSTRALASIA SAO PAULO MILAN DJIBOUTI MUSCAT MULTAN ADELAIDE VIRACOPOS MOSCOW DURBAN RIYADH MUMBAI AUCKLAND ELDORET TEHRAN NEW DELHI BRISBANE EUROPE NEWCASTLE ENTEBBE OSAKA CHRISTCHURCH AMSTERDAM NICE HARARE ASIA PESHAWAR MELBOURNE ATHENS OSLO JOHANNESBURG AHMEDABAD PHNOM PENH PERTH BARCELONA PARIS KHARTOUM BALI PHUKET SYDNEY

Emirates presence AFRICA MIDDLE EAST ASIA AUSTRALASIA ADDIS ABABA ABU DHABI BANGKOK ADELAIDE ARUSHA AJMAN RAS AL KHAIMAH BENGALURU AUCKLAND MELBOURNE CAPE TOWN AL AIN SALALAH COLOMBO MALE BRISBANE NEWCASTLE DAR ES SALAAM DUBAI SOHAR GALLE PHUKET CANBERRA PERTH JOHANNESBURG FUJAIRAH SHARJAH HUA HIN SAMUI HOBART SYDNEY 70 ZANZIBAR MUSCAT UMM AL QUWAIN KRABI SINGAPORE LAUNCESTON WOLGAN VALLEY THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

71 THE EMIRATES GROUP ANNUAL REPORT 2017-18 dnata’s growing network dnata’s business footprint in airport operations, catering and travel services, span 196 cities and airports across the globe.

We aim to be the world’s most admired air services provider.

Overview

Emirates dnata presence dnata NORTH AMERICA JOAO PESSOA GENOA AJMAN CHIANG MAI ATLANTA JUAZEIRO DO NORTE GLASGOW AL AIN CLARK Group AUSTIN MACAPA HALIFAX AL KHOBAR DA NANG

Financial BOSTON MACEIÓ KINGSTON AMMAN DELHI / NOIDA Information CHICAGO O’HARE MANAUS KNUTSFORD BAHRAIN FAISALABAD DALLAS/FORT WORTH NATAL LAMEZIA TERME BURAIMI GUILIN Additional DETROIT PETROLINA LEEDS DAMMAM HANOI Information EL PASO PORTO ALEGRE LONDON GATWICK DOHA HO CHI MINH GRAND RAPIDS PORTO SEGURO LONDON HEATHROW DUBAI INTERNATIONAL HONG KONG HOUSTON RECIFE LONDON STANSTED DUBAI WORLD CENTRAL HYDERABAD INDIANAPOLIS RIO DE JANEIRO LUTON DUQM INLE LAKE LAREDO SALVADOR MANCHESTER ERBIL ISLAMABAD LOS ANGELES SANTAREM MILAN LINATE FUJAIRAH JAKARTA LUBBOCK SAO LUIS MILAN MALPENSA IBRA KABUL MCALLEN SAO PAULO NAPLES IBRI KARACHI MILWAUKEE TERESINA NEWCASTLE JEDDAH KOH SAMUI NEW YORK OLBIA JUBAIL KOTA KINABALU NEWARK EUROPE PALERMO MAABELA KUALA LUMPUR ONTARIO ABERDEEN PISA MUSCAT KYOTO ORLANDO ALGHERO PRAGUE NIZWA LAHORE PHILADELPHIA ALTON PRESTON QASSIM LUANG PRABANG SAN DIEGO AMSTERDAM ROME CIAMPINO RABIGH MANDALAY SANFORD BARI ROME FIUMICINO RAS AL KHAIMAH MANILA / MAKATI SAN FRANCISCO BELFAST SANDYCROFT RIYADH MULTAN TAMPA BIRMINGHAM SOFIA SALALAH MUMBAI TORONTO BOLOGNA SOLIHULL SEEB PATTAYA WASHINGTON BRIGHTON SWINDON SHARJAH PENANG WICHITA BRINDISI TRAPANI SOHAR PESHAWAR AUSTRALASIA BRISTOL TURIN TAIF PHNOM PENH ADELAIDE SOUTH AMERICA BUCHAREST VENICE YANBU PHUKET AUCKLAND ARACAJU CAGLIARI VERONA PUNE BRISBANE BELEM CARDIFF WINCHESTER ASIA QUETTA CAIRNS BOA VISTA CATANIA ZURICH AHMEDABAD SHANGHAI CANBERRA BRASILIA CHELTENHAM BAGAN SIEM REAP COOLANGATTA CAMPINA GRANDE DONCASTER AFRICA BALI SINGAPORE DARWIN CURITIBA EAST MIDLANDS CAPE TOWN BANGKOK TOKYO MELBOURNE FLORIANOPOLIS EDINBURGH JOHANNESBURG BEIJING VIENTAINE PERTH FORTALEZA FLORENCE MIDDLE EAST BENGALURU YANGON SYDNEY ILHEUS GENEVA ABU DHABI CEBU YOGYAKARTA TOWNSVILLE

72 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Additional Information

73 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group 75 EMIRATES FINANCIAL COMMENTARY

Financial EMIRATES Information 85 dnata FINANCIAL COMMENTARY

Additional Information 91 EMIRATES INDEPENDENT AUDITOR’S REPORT

96 EMIRATES CONSOLIDATED FINANCIAL STATEMENTS

139 dnata INDEPENDENT AUDITOR’S REPORT 142 dnata CONSOLIDATED FINANCIAL STATEMENTS Financial 181 ADDITIONAL INFORMATION COMMENTARY 190 GLOSSARY

74 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial EMIRATES Information

Additional Information Financial COMMENTARY

75 Profit attributable to the Owner in AED bn Profit margin in % Revenue trend in AED bn Passenger seat factor in % 91.2 THE EMIRATES GROUP 7.1 86.7 ANNUAL REPORT 80.7 83.5 83.8 2017-18 8.4 4.6 79.4 79.6 3.3 77.5 2.8 5.1 3.0 3.9 1.3 76.5 1.5 75.1

13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18

Overview Operating profit in AED bn Return on shareholder’s funds in % Revenue in AED m 2017-18 2016-17 % change 8.3 Passenger 73,963 68,491 8.0 Emirates 23.8 Cargo 12,439 10,592 17.4 dnata 5.9 Excess baggage 433 392 10.5

Group 4.3 4.1 17.2 Transport revenue 86,835 79,475 9.3 13.6 7.9 Financial 2.4 Sale of goods 2,982 2,932 1.7 Information Hotel operations 746 738 1.1 3.8 Emirates Others 662 687 (3.6) Financial 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 Commentary Non-transport revenue 4,390 4,357 0.8 dnata Total 91,225 83,832 8.8 Financial Commentary

Emirates Consolidated Emirates continued to cruise through a net capacity growth of 1.6% to 61.4bn Operating profit Transport revenue which forms more Financial Statements the turbulent winds of competition ATKMs. We enhanced our service by The operating profit for the year was up than 95% of Emirates revenue, increased and geopolitical challenges, and investing in new aircraft cabin interiors at AED 4.1bn (2016-17: AED 2.4bn) and by 9.3% to AED 86.8bn (2016-17: AED dnata remained ‘On Course’ with its growth and lounges. 79.5bn). Consolidated operating margin increased to 4.4%, plan, providing best-in-class air Financial We transported 58.5m passengers a healthy 1.5%pts increase from the An increase in the fleet size, introduction Statements transport services to its customers. (2016-17: 56.1m) and carried 2.6m previous year (2016-17: 2.9%). of new destinations, higher frequencies Financial year 2017-18 was our Additional tonnes (2016-17: 2.6m) of cargo during to existing destinations and better load 30th consecutive profitable year. Return on shareholder’s funds Information the year. factors successfully improved passenger Our growing passenger and cargo The improved profitability ensured a numbers, RPKMs and cargo carried. capacity numbers demonstrate the Profitability 7.9% return on shareholder’s funds, popularity of our product and network. more than double the 3.8% return An improved pricing strategy and Enhanced consumer confidence further Profit attributable to the Owner achieved last year. increased demand generated strengthens our resolve to continue Our operations continued to be higher passenger and cargo yields. developing our business profitably and profitable and the profit attributable to Revenue Furthermore, the strengthening of major sustainably. Better yields, an ever- the Owner stood at AED 2.8bn. This is Revenues crossed the AED 90bn mark currencies against the US Dollar pushed improving product, higher passenger 123.7% better than last year’s profit of and stood at AED 91.2bn (2016-17: AED revenues favourably by 1% (2016-17: 3% numbers, an upsurge in cargo business AED 1.3bn. 83.8bn). unfavourable). and a weak US Dollar, all contributed to this year’s performance. Profit margin 2017-18 2016-17 % change The profit margin doubled compared to We continued with our strategy of fleet Passengers carried million 58.5 56.1 4.3 the previous year and at 3.0% (2016-17: modernisation, adding 8 A380 super- Available seat km ASKM million 377,060 368,102 2.4 jumbos and 9 B777s to our fleet while 1.5%) represented a strong result despite Passenger seat km RPKM million 292,221 276,608 5.6 phasing out 8 older aircraft. This led to higher fuel prices during the year. Passenger seat factor % 77.5 75.1 2.4 pts

76 Available seat kilometres (ASKM) in millions Passenger yield in fils per RPKM Geographical revenue in % THE EMIRATES GROUP ANNUAL REPORT 17-18 377,060 30.4 29.7 26.7 29.3% Europe 2017-18 24.8 25.3 16-17 368,102 27.9% East Asia and Australasia 14.7% Americas 15-16 333,726 10.2% Africa 14-15 295,740 9.4% Gulf and Middle East 8.5% West Asia and Indian Ocean 13-14 271,133 13-14 14-15 15-16 16-17 17-18

Overview Passenger numbers in millions Cargo carried in tonnes ‘000 56.1 58.5 2,623 2,509 2,577 51.9 2,377 Emirates 48.1 2,250 44.5 Geographical revenue in AED bn dnata Year Europe East Asia Gulf and West Asia Group and Middle and Indian Australasia Americas Africa East Ocean Total Financial 2017-18 26.7 25.4 13.4 9.4 8.5 7.8 91.2 Information 2016-17 23.9 22.6 12.5 8.7 8.7 7.4 83.8 Emirates Financial 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 % change 12% 12% 7% 8% (2%) 5% 9% Commentary dnata Financial Commentary

Emirates Consolidated Passenger revenue and seat factor economy class seat factor increased by of Emirates transport revenue (2016-17: catering operations. Non-transport Financial Statements Passenger traffic continued to grow 2.4%pts compared to the previous year. 13.3%). revenue at AED 4.4bn (2016-17: AED 4.4bn) remained unchanged compared with an RPKM increase of 5.6%. Further, Further, revenues were also boosted by The increase in belly capacity from dnata to the previous year. Consolidated passenger yield at AED 25.3 fils per the full year impact of our prior year two new passenger destinations was Financial RPKM (2016-17: AED 24.8 fils per RPKM) ancilliary offerings including paid seats complemented by three new freighter Statements Revenue distribution grew by 2.0%. Together, these factors and lounge access. destinations during the year. Overall, Emirates continued to benefit from its Additional contributed to a strong 8.0% growth cargo volumes increased by 1.8% to During the year, we entered into a strategy of having a diverse revenue Information in passenger revenue (including excess 2.6m tonnes in the current year. The codeshare agreement with flydubai in base, with no region contributing more baggage) to AED 74.4bn (2016-17: AED yields benefitted from a weak US Dollar order to leverage existing capabilities than 30% of revenues. Europe remains 68.9bn). and improved demand. of both airlines and provide more the largest revenue contributor With customer service and a higher destination choices to our customers. During the year, Emirates SkyCargo at 29.3% of Emirates revenue quality product at the heart of our entered into a strategic partnership with (2016-17: 28.5%). Revenue from Europe business, seat factor grew to 77.5% Cargo revenue Cargolux focusing on freighter aircraft and the East Asia and Australasia regions (2016-17: 75.1%). Our ASKMs grew Cargo revenue touched AED 12.4bn, capacity and connectivity between Dubai increased by 12%. Gulf and Middle by 2.4% and reached 377.1bn (2016- an impressive 17.4% increase over the and European points. East region showed a small decline 17: 368.1bn). We carried a record prior year (2016-17: AED 10.6bn). FTKM due to the ongoing political instability. 58.5 million (2016-17: 56.1 million) increased by 3.5% to 13.4bn and the Non-transport revenue Other regions also showed increases in passengers during the year, an increase yield per FTKM increased by 13.4% Non-transport business mainly comparison to the prior year. of 4.3% over last year. The premium over the previous year. As a result, comprises of the sale of consumer class seat factor was up 1.8%pts and the cargo revenue now constitutes 14.3% goods, food and beverages, hotel and

77 Operating costs in AED bn Fuel price and quantity development Employee cost as % of operating costs THE EMIRATES GROUP 88.2 82.9 82.6 140% ANNUAL REPORT 78.4 76.7 17-18 15 85 2017-18 130% Heading heading120% 16-17 16 84 110% 15-16 16 84 100% Fuel Price Volume 90% 14-15 14 86 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 13-14 14-15 15-16 16-17 17-18 Graph represents % change in average monthly fuel price and quantity in 2017-18 indexed to 2016-17 13-14 13 87 Employee Cost Other operating cost

Overview Jet fuel cost as % of operating costs Operating costs in AED m 2017-18 2016-17 % 2017-18 Unit cost in fils per ATKM change as % of Emirates operating cost 39 35 26 25 28 162 158 dnata Jet fuel 24,715 20,968 17.9 28.0 132 132 139 Employee 13,080 12,864 1.7 14.8 Group Aircraft operating leases 11,691 10,509 11.2 13.2 Financial Depreciation and amortisation 9,193 8,304 10.7 10.4 Information 97 102 97 97 98 Sales and marketing 6,404 5,698 12.4 7.3 61 65 74 75 72 Emirates Handling 5,335 5,885 (9.3) 6.0 Financial 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 Commentary In-flight catering and related costs 3,323 3,343 (0.6) 3.8 Jet fuel Other operating costs Overflying 2,891 2,851 1.4 3.3 Unit Cost Unit cost excluding jet fuel dnata Financial Facilities and IT related costs 2,485 2,470 0.6 2.8 Commentary Aircraft maintenance 2,364 2,738 (13.7) 2.7

Emirates Landing and parking 2,153 2,057 4.7 2.4 Consolidated Expenditure Cost of goods sold 1,575 1,499 5.1 1.8 the addition of 7 aircraft on finance Financial lease, more staff accommodation Statements Operating costs Crew layover 1,125 1,082 4.0 1.3 facilities and our new flight training Operating costs grew by 6.8%, closing Corporate overheads (including fx loss) 1,902 2,380 (20.1) 2.2 dnata academy, coupled with the full year Consolidated at AED 88.2bn (2016-17: AED 82.6bn). Total operating costs 88,236 82,648 6.8 100.0 impact of last year’s aircraft deliveries. Financial This increase is higher than the capacity Statements Jet fuel costs remained unhedged during of 23 aircraft taken in the prior year. growth of 1.6% measured in ATKMs, the year and we continue to manage our This increase was partially offset by the Sales and marketing costs increased Additional primarily due to fuel costs which were by 12.4% and stood at AED 6.4bn Information position by assessing our fuel price risk on phase out of 6 (2016-17: 25) aircraft on up by 17.9% owing to higher fuel prices, an ongoing basis. completion of lease terms. (2016-17: AED 5.7bn). The upside is and our ongoing capacity expansion. the result of higher spend on new and Employee costs Direct operating costs (‘DOC’) upgraded sponsorship contracts and Despite a spike in jet fuel cost and a In line with the capacity increase of 1.6%, Direct operating costs including increase in online advertising costs as we weak US Dollar, Emirates has been employee costs were up 1.7% at AED handling, in-flight catering, overflying, concluded two major online campaigns successful in reviewing its cost base 13.1bn (2016-17: 12.9bn). Our employee landing and parking, aircraft i.e., ‘Upgrade your Airline’ and ‘The and bringing efficiencies which partially numbers reduced by 3.7%, as this year maintenance and crew layover costs Game Changer’. Further, selling and reduced these adverse impacts. our reduced hiring activity, coupled with declined by 4.3%, despite capacity distribution costs accelerated in line with Jet fuel costs new and innovative ways of working growth and higher activity levels. This the increase in transport revenue. gave us gains in productivity and a decline was driven by various cost saving Jet fuel costs increased to AED 24.7bn Unit cost (2016-17: AED 21.0bn) during the year. slowdown in cost increase. initiatives, a reduction in number of With the increase in jet fuel prices, unit Average crude prices soared above USD departures and contract negotiations Aircraft operating leases cost per ATKM increased to 139 fils 60 a barrel during the second half of the across all DOC elements. Aircraft operating lease costs increased (2016-17: 132 fils) per ATKM. Unit cost year, increasing jet fuel expense by 15%, by 11.2% to AED 11.7bn (2016-17: AED Other operating costs per ATKM excluding jet fuel stands at 98 which together with a higher fuel uplift of 10.5bn). We acquired 10 new aircraft on The increase in depreciation and fils (2016-17: 97 fils) per ATKM. 3%, in line with the increased operations, operating leases during the year and amortisation charge of 10.7% or AED resulted in fuel costs per ATKM rising to were also impacted by the full year effect 889m was predominantly the result of AED 41 fils (2016-17: AED 35 fils). 78 Destinations Available tonne kilometres (ATKM) in bn Aircraft departures THE EMIRATES GROUP and number of aircraft 268 ANNUAL REPORT 17-18 157 251 259 17-18 201,858 231 2017-18 217 60.5 61.4 16-17 156 56.4 16-17 204,543 50.8 15-16 153 46.8 15-16 199,754

14-15 144 14-15 181,843

13-14 142 13-14 14-15 15-16 16-17 17-18 13-14 176,039 ATKM No. of aircraft

Overview A380 aircraft numbers Overall and breakeven load factor in % B777 aircraft numbers

Emirates 17-18 102 17-18 166 67.3 66.5 67.2 65.5 dnata 16-17 94 65.0 16-17 163 64.7 Group 64.9 65.2 15-16 75 64.5 15-16 156 Financial Information 14-15 59 14-15 144 60.4 Emirates 47 134 Financial 13-14 13-14 14-15 15-16 16-17 17-18 13-14 Commentary Breakeven load factor Overall load factor dnata Financial Commentary

Emirates Consolidated Capacity, traffic and A380 aircraft and welcomed our 20 aircraft to the fleet and phased out 6, electronic devices in aircraft cabins which Financial negatively impacted our customers’ Statements load factor millionth Skywards member. which brings the total to 166. We remain the world’s largest B777 operator and it travel appetite. However, the overall Capacity rose by 1.6% to 61.4bn ATKMs We continue to maintain our position dnata accounts for 59% (2016-17: 62%) of the passenger numbers showed a growth Consolidated (2016-17: 60.5bn) resulting from new as the largest operator of A380 aircraft airline’s capacity, carrying 59% (2016-17: which was driven by: Financial aircraft deliveries. The overall traffic load and added another 8 new aircraft into Statements 61%) of our passengers and 75% (2016- or RTKM growth was 5%, increased to the fleet. The high seat factor on the • Introduction of new passenger 17: 74%) of cargo tonnage. Additional 41.3bn (2016-17: 39.3bn). A380 fleet continued to demonstrate the services to two destinations – Zagreb Information customer preference for this aircraft and We opened our 41st dedicated airport and Phnom Penh, along with the full Our enhanced product and increased our product offering. The fleet carried lounge in Boston and refurbished year operations of destinations added demand delivered an improvement in 41% (2016-17: 37%) of our passengers in lounges in Singapore and Bangkok in the prior year in the Far East and passenger and cargo volumes during the 2017-18. With current A380 operations airports. Americas. year, passengers carried were up 4.3% to 48 destinations, 31% (2016-17: 30%) at 58.5m (2016-17: 56.1m) and cargo The aircraft departures dropped by 1.3% • Higher frequencies to several existing of all destinations across the Emirates volumes showed an increase of 1.8% to 201,858 (2016-17: 204,543) due to destinations including Brussels, network are served by an A380. (2016-17: 2.7%). the ongoing political instability in the Brisbane, Bali, Lagos, Algiers, Cairo, The B777 aircraft continues to remain Middle East and reduced services to the Khartoum and Dammam. The overall load factor increased to the pillar of our operation. We added 9 US this year owing to restrictions on 67.2% (2016-17: 65.0%) due to higher • Increased capacity to existing RTKM’s. The break-even load factor destinations with larger aircraft increased moderately to 65.2% (2016- 2017-18 2016-17 % change mainly Madrid, Shanghai, Beijing, 17: 64.5%) owing to higher unit cost per Capacity (ATKM) million 61,425 60,461 1.6 Birmingham, Moscow, Frankfurt ATKM. Load carried (RTKM) million 41,250 39,296 5.0 and Haneda. Load factor % 67.2 65.0 2.2 pts During the year, we achieved significant • New A380 services to Nice. milestones as we received our 100th Break even load factor % 65.2 64.5 0.7 pts

79 Fleet and other capital expenditure in AED bn THE EMIRATES GROUP 19.1 ANNUAL REPORT 17.8 2017-18 14.7 Heading heading 10.6 Assets in AED bn Equity and liabilities in AED bn 7.4 127.6 127.6 121.6 121.6

37.0 2.0 2.1 2.0 2.0 1.1 35.1 13-14 14-15 15-16 16-17 17-18 66.5 Fleet capital expenditure Others 67.5

Overview Equity in AED bn and dividend payout 50.0 48.1 in % of profit 37.0 Emirates 35.1 Aircraft, engines and parts 32.4 28.3 dnata 26.9 25.5 26.2 Other non-current assets Equity Group Cash assets Non-current liabilities 20.4 15.7 48% Financial 40.6 38.4 25% 29% 36% Information Other current assets Current liabilities 0% 13.8 12.2 Emirates Financial 17-18 16-17 17-18 16-17 13-14 14-15 15-16 16-17 17-18 Commentary Equity Divident payout dnata Assets in AED bn 2017-18 2016-17 change % change Financial Commentary Aircraft, engines and parts* 66.5 67.5 (1.0) (1.5) Other non-current assets 26.9 26.2 0.7 2.7 Emirates Consolidated Statement of financial position Cash assets 20.4 15.7 4.7 30.0 AED 1bn. The equity ratio remained Financial Other current assets 13.8 12.2 1.6 13.1 stable at 29% compared to the last Statements Assets Total 127.6 121.6 6.0 5.0 financial year. dnata Emirates balance sheet continued *includes aircraft pre-delivery payments Consolidated to remain strong, with total assets The dividend pay-out ratio stood at 36% Financial (2016-17: Nil) and brings the average Statements increasing by 5% to AED 127.6bn (2016-17: AED 121.6bn). Capital expenditure The airline is also continuously investing pay-out ratio over the past five years to Additional Capital expenditure of AED 8.5bn (2016- in new technologies in its quest to 28%. Information We continued to enhance our service 17: 12.6bn) is 32.7% lower compared to enhance our customers’ experience Liabilities through investments in new aircraft the previous year driven by a reduction and bring efficiencies across business and cabin interiors. During the year, in on-balance sheet aircraft deliveries. processes. Our capital projects in Total liabilities were up 4.7% at AED we launched new cabin products for We obtained six Boeing 777s and one progress include various such initiatives. 90.6bn (2017: AED 86.5bn) due to the our 777 fleet and refreshed on-board A380 on finance lease (2016-17: 12 funds received from Sukuk financing, lounges for A380s. Other non-current Equity aircraft) during the year. Primary capital higher passenger and cargo sales in assets increased due to investments expenditure comprising of aircraft Total equity rose by 5.6% to AED 37.0bn advance and addition of the dividend in employee accommodation facilities, spend, aircraft and engine maintenance (2016-17: 35.1bn) due to higher profit liability mitigated partly by repayments our newly inaugurated flight training overhauls, spare engines and parts for the year which was partially offset of borrowings and lease liabilities. academy and major maintenance represented 87% of the total capital by dividend to the Owner amounting to overhauls. Further, advance lease rentals expenditure (2016-17: 84%). increased as 10 aircraft (2016-17: 23) were obtained on operating lease. We Secondary capital expenditure amounted also opened our 41st dedicated airport to AED 1.1bn (2016-17: AED 2.0bn), Equity and liabilities in AED bn 2017-18 2016-17 change % change lounge in Boston. of which the majority was invested in Total equity 37.0 35.1 1.9 5.6 airport lounges, training facilities and Current assets soared by 22.8% due to Non-current liabilities 50.0 48.1 1.9 3.9 staff accommodation. We also started increased cash assets of AED 20.4bn at Current liabilities 40.6 38.4 2.2 5.7 receiving trainer aircraft for our ab-initio 31 March 2018 (2016-17: AED 15.7bn). Total 127.6 121.6 6.0 5.0 80 pilot training. Cash generated from operating activities Cash assets in AED bn and Cash assets to Operating cash margin in % EBITDAR and debt service in AED bn THE EMIRATES GROUP in AED bn total revenue in % 19 ANNUAL REPORT 14.1 14.1 16 17 12.6 13.3 20.0 20.4 12 13 2017-18 10.4 16.6 16.6 16.9 15.7 15.3 24.4 25.0 23.5 20.3 21.2 21.8 17.2 15.3 15.1 24% 22% 14.9 12.8 14.4 20% 19% 18% 12.3

13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 Cash assets Cash assets to revenue EBITDAR Debt service No. of months

Overview Cash flow in AED bn EBITDAR margin in % 3.0 28.7 Emirates 14.1 6.4 27.0 dnata

20.4 25.0 Group 15.7 22.8 Financial 20.8 Information Cash assets Net cash Net cash Net cash Cash assets net of bank generated from used in used in net of bank Emirates overdrafts operating investing financing overdrafts Financial as at 31 Mar 17 activities activities activities as at 31 Mar 18 13-14 14-15 15-16 16-17 17-18 Commentary dnata Financial Commentary

Emirates Consolidated Cash position Cash from operating activities investments needed for our growth and operating profit and is at record level Financial Statements After a reduction last year, our cash strategy. of AED 25.0bn, 17.5% better than last year. Cash assets generation from operating activities With a higher growth in cash generated EBITDAR after debt service payments dnata After a reduction last year, our cash Consolidated bounced back by showing a growth of from operating activities compared to stood strong at AED 1.5bn, and equated Financial assets including short term bank 35.6% and reached a new record level growth in revenue, the operating cash to 13 months of debt service payments Statements deposits are at AED 20.4bn (2016-17: at AED 14.1bn (2016-17: AED 10.4bn). margin stands high at 15.3% (2016-17: including operating lease rentals, periodic 15.7bn). This represents surplus funds Additional This was due to higher profits and better 12.3%). principal and interest payments on finance Information left after meeting financial obligations working capital management. leases, bonds and term loans. and investment requirements. The proceeds from Sukuk financing of USD We continued to generate sizable cash EBITDAR EBITDAR margin at 27% (2016-17: 25%) 600m (AED 2.2bn) issued in the last flows from operations which are not only Cash profit from operations (EBITDAR) for the year is 2%pts up compared to quarter of the financial year have been sufficient to service financial obligations grew considerably due to higher revenues last year. invested in short term bank deposits and but also available to partly fund the will be used to finance aircraft deliveries in 2018-19. 2017-18 2016-17 2015-16 2014-15 2013-14 The cash assets to revenue and other EBITDAR in AED bn 25.0 21.2 24.4 20.3 17.2 operating income ratio has significantly Less: Debt service payments grown to 22.1% (2016-17: 18.4%) and Repayment of bonds and loans (4.0) (5.6) (1.7) (0.6) (2.5) is well within our target range of 25% Repayment of lease liabilities (6.5) (4.4) (4.1) (5.6) (2.7) +/- 5%. Operating lease rentals (11.7) (10.5) (8.1) (6.9) (6.5) Finance costs (1.3) (1.3) (1.2) (1.3) (1.1) Total (23.5) (21.8) (15.1) (14.4) (12.8)

EBITDAR after debt service payments 1.5 (0.6) 9.3 5.9 4.4 81 Sources of funding over last 10 years in % THE EMIRATES GROUP ANNUAL REPORT 2017-18 52% Operating Lease Fleet information (as at 31 March 2018) Heading heading23% Commercial Financing Aircraft Fleet of which of which Future deliveries Additional options 16% EXIM/ECA Guaranteed Financing on operating on lease finance Authorised Authorised Authorised Authorised 7% Bonds & & not & & not lease/loan contracted contracted contracted contracted 2% Islamic Financing A 380-800 102 58 44 40 20 - 16 B 777-300ER 138 78 60 12 - - - B 777-200LR 10 4 6 - - - - B 777-300 5 5 - - - - -

Overview Number of aircraft Average fleet age in months B 777-8X - - - 35 - - - 268 259 B 777-9X - - - 115 - 50 - Emirates 251 17-18 68 231 B 787-10 - - - - 40 - - dnata 16-17 63 217 Passenger 255 145 110 202 60 50 16 Group 15-16 74 B777-200LRF 13 13 - - - - - Financial Freighters 13 13 - - - - - Information 14-15 75 Total aircraft 268 158 110 202 60 50 16 Emirates 13-14 74 Note: One A319 aircraft is used for Executive jet charters Financial 13-14 14-15 15-16 16-17 17-18 Commentary dnata Financial Commentary

Emirates Consolidated Aircraft fleet and financing committed offers to finance all deliveries We have successfully refinanced and markets issuances including scheduled Financial Statements due in the forthcoming financial year. are in the process of terming out a repayments of amortizing capital In alignment with our commitment to commercial bridge facility (initially put markets issuances as well as the UK The ability to secure diverse sources of dnata maintain a young, modern and efficient in place due to non-availability of ECA Export Finance backed Sukuk. Consolidated funding from international markets for fleet, Emirates took delivery of 17 wide cover) of AED 3.8bn (USD 1.0bn) via an Financial aircraft financing and other investments Further, we also have access to standby Statements body aircraft, consisting of 9 B777- innovative finance lease structure for five is a testament to our financial bilateral credit facilities to the tune of 300ERs from Boeing and 8 A380s from A380 aircraft, accessing an institutional Additional strength and track record of business USD 500m which are available for short Airbus and simultaneously retired eight investor and bank market base from Information performance. term financing requirements. of our older aircraft during the financial Korea, Germany, the year. Emirates remains the world’s largest Emirates, working closely with the and the Middle East. We continue to repay our financing B777 operator with 166 aircraft. The financial community, has built on liabilities as they become due from our airline is also the largest A380 operator In March 2018, Emirates successfully and further developed the Japanese cash resources. with 102 twin deck units in its fleet. issued a ten-year, USD 600m (AED 2.2bn) structured financing market for the amortising Sukuk, an Islamic bond. Having raised more than AED 183.8bn Japanese Operating Lease with a Call We take extreme pride in keeping our The funds will be utilised for two A380 (USD 50.1bn) over the last 10 years, Option (JOLCO) on B777-300ER aircraft fleet age to 68 months (2016-17: 63 deliveries in the upcoming financial year. Emirates continues to maintain a well- raising funding totalling up to AED 3.7bn months), substantially lower than the diversified and evenly spread financing (USD 1.0bn) during the year. Blending Emirates’ strength of operations and industry average. We are the first and portfolio. Tapping into various sources of this important equity base with debt cash flow generation underscore the only airline in the world to operate an funding, both in terms of structure and from wide-ranging markets including consistent ability to meet obligations all Airbus A380 and Boeing B777 geography, Emirates remains On Course China, France, the United Kingdom, in a timely manner including the wide-body fleet. with its long term financing strategy. Singapore, Germany, Korea, Netherlands repayment of AED 2.8bn (USD 776m) During the year, Emirates raised a total and Japan; Emirates has now raised or 44% of the AED 6.4bn (USD 1.75bn) Augmenting our resolve to maintain of AED 17.9bn (2016-17: AED 29.1bn) over AED 23.9bn (USD 6.5bn) from the amortising senior unsecured corporate one of the world’s youngest fleet, we in aircraft financing (funded through Japanese structured financing market bond and Sukuk issued in 2013. Since will receive 16 new aircraft deliveries finance leases, operating leases and since 2014. 2010, Emirates has repaid in total AED and retire 11 older aircraft in the next term loans) and has already received 82 14bn (USD 3.8bn) towards capital financial year. Debt repayment profile in AED bn Debt collateralization in AED bn THE EMIRATES GROUP

ANNUAL REPORT 13.3 127.6 121.6 119.2 111.4

2017-18 3.3 101.6 86.9 9.0 86.0 82.8 80.5

1.4 71.6 6.5 7.0 5.7 51.0 51.1 1.4 50.1 1.4 5.1 47.8 1.2 4.5 10.0 42.4 7.6 1.2 0.9 5.1 5.6 4.5 3.9 3.6

18-19 19-20 20-21 21-22 22-23 23-24 >23-24 13-14 14-15 15-16 16-17 17-18 Lease liabilities Bonds and term loans Total assets Property, plant and equipment Total debt

Overview Net debt (including aircraft operating 450.00 Net debt (including aircraft operating Net debt (including aircraft operating Effective interest rate on borrowings leases) to equity ratio in % leases) to EBITDAR ratio in % leases) and cash assets in AED bn and lease liabilities in % Emirates 80.2 392.9 83.5 406.25 70.0 237.9 3.3 dnata 60.0 212.1 209.9 362.50 53.5 3.2 Group 215.9 216.4 318.75 310.3 3.2 Financial 321.0 Information 3.1 296.2 275.00 286.5 16.6 16.9 20.0 15.7 20.4 3.0 Emirates Financial 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 Commentary Net debt Cash Assets dnata Financial Commentary

Emirates Consolidated Debt The net debt including aircraft operating Debt maturity profile Interest rate and currency risk Financial Statements leases to equity ratio dropped to 216.4% We aim to achieve a stable repayment Emirates total borrowing and lease (2016-17: 237.9%) due to increased cash profile by obtaining debt with periodic Interest rates liabilities remained stable compared dnata assets and higher equity. instalments as opposed to bullet With our ongoing fleet acquisition, we Consolidated to the previous year at AED 51.1bn Financial payments. This enables us to manage continue to use natural hedges and (2016-17: AED 51.0bn). The non-current Net debt to EBITDAR ratio Statements debt servicing through our operating other prudent hedging solutions such portion of AED 42.1bn (2016-17: 40.2bn) The net debt including aircraft operating cash flows and the use of the surplus as swaps to manage our interest rate Additional represents 84% (2016-17: 84%) of the Information leases to EBITDAR ratio decreased to cash for investment purposes. As at the exposures. We target a risk-managed total non-current liabilities while the 321.0% (2016-17: 392.9%) as a result of balance sheet date, all of the debt is portfolio approach, whilst taking current portion of AED 9.0bn (2016-17: increase in EBITDAR and cash assets. amortising in nature. advantage of market movements, with AED 10.8bn) represents 22% (2016-17: a long-term view of hedging around 28%) of the total current liabilities. Debt service Debt collateralisation half of our interest rate risk exposures. Total borrowing and lease liabilities Debt service payments, excluding Of the total debt of AED 51.1bn, 88% Borrowings and lease liabilities (net of moved as a result of financing seven new operating leases, represent loans, or AED 45.1bn (2016-17: AED 45.4bn) cash) including the off balance sheet aircraft and the Sukuk issue of US Dollar bonds, finance lease liabilities and the is secured against property, plant and aircraft on operating lease at 31 March 600m, offset by repayments of finance related finance costs payments. During equipment. The remaining debt of AED 2018, comprise 72% on a fixed interest lease liabilities, bonds and term loans. the year, these payments amounted to 6.0bn (2016-17: AED 5.6bn) is adequately rate basis with the balance 28% on AED 11.8bn (2016-17: AED 11.3bn) up covered against the carrying value of floating interest rates. The ratio of total borrowings and lease by 4.8% or AED 0.5bn. This rise in debt unencumbered assets (property, plant liabilities to total equity improved to At 31 March 2018, borrowings and lease service payments is primarily attributable and equipment) amounting to AED 137.9% (2016-17: 145.3%) due to an liabilities carry an effective interest rate to higher lease liability payments. 27.1bn (2016-17: AED 28.8bn). increase in equity. of 3.2% (2016-17: 3.0%).

83 Currency development Graph represents the monthly % change of our six major Capacity per airline employee in ATKM ‘000 Revenue per airline employee in AED ‘000 THE EMIRATES GROUP currency rates compared with previous year (2016-17) ANNUAL REPORT 25% 17-18 1,235 17-18 1,784 2017-18 20% Heading heading 16-17 1,171 16-17 1,580 15% 15-16 1,174 15-16 1,717 10%

5% 14-15 1,141 14-15 1,939

0% 13-14 1,129 13-14 1,938 -5%

-10% Overview ZAR INR AUD EUR GBP CNY Employee strength (in numbers) 2017-18 2016-17 % change -15% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar UAE Emirates Geographical work force including subsidiaries in % Cabin crew 23,135 24,440 (5.3) dnata Flight deck crew 4,157 4,169 (0.3) Engineering 3,374 3,392 (0.5) Group Others 13,189 13,771 (4.2) Financial 89% dnata Information UAE Total UAE 43,855 45,772 (4.2) Overseas stations 5,885 5,856 0.5 Emirates 11% Financial Total Airline 49,740 51,628 (3.7) Commentary Overseas dnata Subsidiary companies 12,616 13,140 (4.0) Financial Commentary Average employee strength 62,356 64,768 (3.7)

Emirates Consolidated Currency last year, the revenue growth was sizable Employee strength and The airline’s employee productivity Financial Statements We generate a substantial net surplus in considering the underlying revenues productivity related key performance indicators Euro, Pound sterling, Australian dollar, generated in these currencies. improved as follows: dnata The average workforce dropped by 3.7% Financial Indian rupee, Chinese yuan, Swiss franc, Consolidated The movements in exchange rates to 62,356. • Revenue per airline employee rose to Financial South African rand and Japanese yen. compared to the previous financial year AED 1,784 thousand (2016-17: AED Statements COMMENTARY We proactively manage the currency had an overall positive impact of AED The average number of employees in 1,580 thousand), a 12.9% increase due Additional exposure generally over a period up 0.7bn on Emirates operating results the airline decreased by 1,888 or 3.7% to growing core revenues. Information to 12 months depending on market (2016-17: adverse AED 2.1bn). to 49,740. Employee count has dropped conditions by using prudent hedging across all segments, the largest part of • Capacity per airline employee is up solutions including forward contracts, The six major currencies account for the drop coming from our cabin crew. 5.5% at 1,235 thousand ATKM (2016- currency swaps and natural hedges. circa 44% (2016-17: 43%) of transport This is mainly through a recruitment 17: 1,171 thousand ATKM) due to a revenue while US Dollar, AED and other slowdown, natural attrition arising 1.6% increase in capacity and a 3.7% The foreign currency graph depicts Gulf currencies pegged to the US Dollar from retirements and resignations drop in airline employee count. the percentage change in average account for another 35% (2016-17: 36%) and new ways of working driven by monthly currency rates of our six major • The load carried per airline employee of transport revenue. technology, better processes and people currencies compared with previous year. improved to 829 thousand RTKM management. There is clear upward trend in exchange (2016-17: 761 thousand RTKM) due Currency average rate (in AED) rate variations this year. South African Overseas stations remained almost flat to a 5% upside on overall load carried rand (ZAR) and Euro substantially 2017-18 2016-17 % change and a drop was noted in the subsidiary complemented by a drop in airline employee count. strengthened against the UAE dirham, ZAR 0.286 0.263 8.7 companies employee count compared whereas Pound sterling (GBP) showed INR 0.057 0.055 3.6 to the prior year due to shift in strategy maximum volatility during the year. towards outsourced blue collar positions. AUD 2.846 2.763 3.0 Although the remaining three currencies showed a marginal improvement from EUR 4.325 4.017 7.7 GBP 4.907 4.784 2.6 CNY 0.557 0.545 2.2 84 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial dnata Information

Emirates Financial Commentary dnata Financial Commentary

Emirates Consolidated Financial Statements dnata Financial Consolidated Financial Statements COMMENTARY

Additional Information

85 Profit attributable to the Owner in AED m Profit margin in % Total revenue trend in AED bn Geographical revenue in % THE EMIRATES GROUP 1,317 13.1 ANNUAL REPORT 1,210 12.2 1,054 11.0 10.6 50 66 64 66 68 2017-18 906 9.2 829 10.1 7.6

9.9 9.9 9.9

50 34 36 34 32 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 International UAE

Overview Operating profit in AED m Operating margin in % Return on shareholder’s funds in % Acquisitions in AED m 664 1,224 Emirates 1,196 11.4 1,005 1,061 11.0 545 dnata 863 10.0 20.7 20.3 10.0 338 Group

Financial 19.1 19.2 19.3 114 Information 9.1 12 Emirates Financial 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 Commentary dnata Financial Commentary

Emirates Consolidated dnata has yet again delivered a robust acquisitions, which bring value to its intent to divest our minority stake in Operating profit and margin Financial Statements performance, setting new benchmarks core operations, and organic expansion. Hogg Robinson Group Plc (HRG) as part Operating profit remained stable at by hitting record levels of revenue, During the year, our global network of HRG’s global acquisition by American AED 1.2bn (2016-17: AED 1.2bn). The dnata profits and cash reserves. Each of our saw significant contract wins mainly in Express GBT. We continue to partner Consolidated operating margin reduced by 0.9%pts Financial four core business divisions – UAE the ground handling and catering lines with HRG in the Middle East and West to 9.1% (2016-17: 10.0%) due to volatile Statements airport operations, international airport of business. Further, we entered into Asia where strong synergies have been trading conditions in the travel and operations, travel services and catering - new markets, launched new brands and developed over the past decade for our Additional aviation industry. Information showed solid growth in revenues. renewed existing partnerships. corporate customers. This strong performance keeps us Total revenue Acquisitions and investment ‘On Course’ with our mission to become Profitability dnata’s total revenue grew by 7.3% or the most admired air-services provider held for sale AED 0.9bn to AED 13.1bn (2016-17: AED in the world. Our focus on quality, Profit attributable to the Owner and 12.2bn). In May 2017, we expanded our reach profit margin safety, people, customers and driving in the US cargo market with a 100% The profit attributable to the Owner for All major lines of business recorded an efficiencies across all our businesses acquisition of ALX Cargo Center IAH 2017-18 crossed AED 1.3bn (2016-17: increase in revenue, the highest growth in costs, processes, and resources is LLC (‘AirLogistix’) with a state-of-the-art AED 1.2bn), up 8.8% over the previous of 14.3% or AED 0.5bn was achieved by reaping good results. cargo handling centre at George Bush year. dnata’s UAE and International International airport operations resulting Intercontinental Airport in Houston. Total revenues crossed the AED 13bn airport operations contributed from expansion in new markets and contract wins at existing locations. mark (nearly doubled in the last six In September 2017, our Travel business significantly to this year’s profit growth. years) and stood at AED 13.1bn (2016- acquired Destination Asia by gaining The profit margin improved by 0.2%pts The share of geographic revenue from 17: AED 12.2bn), the profit attributable 100% ownership in its Singapore compared to previous year and stood at operations outside the UAE continues to to the Owner surpassed AED 1.3bn operations and a 25% beneficial interest 10.1% (2016-17: 9.9%). grow and stands at 68% (2016-17: 66%). (2016-17: AED 1.2bn) and cash assets in companies across seven other Return on shareholder’s funds This is consistent with dnata’s strategy surged to AED 4.9bn (2016-17: AED 3.4bn). countries with an option to buy the to grow the international businesses in a The return on shareholder’s funds is remaining interest in future. sustainable manner and further diversify dnata continued with its two-pronged 19.3% (2016-17: 20.3%) and represents a its customer base. 86 growth strategy of international In February 2018, we announced the healthy return on equity. Revenue by Line of Business Catering Travel services THE EMIRATES GROUP - Meals uplifted number in millions - Total Transaction Value (TTV) in AED bn ANNUAL REPORT Revenue in AED m 2017-18 2016-17 % change % of total 17-18 55.7 17-18 11.3 2017-18 International airport operations 3,803 3,328 14.3 29.4 10.7 Travel services 3,384 3,136 7.9 26.2 16-17 60.7 16-17 UAE airport operations 3,153 3,023 4.3 24.4 15-16 57.1 15-16 11.7 Catering services 2,146 2,010 6.8 16.6 Other services 445 485 (8.2) 3.4 14-15 57.7 14-15 9.8 Total 12,931 11,982 7.9 100.0 13-14 41.3 13-14 5.9

Overview International airport operations International airport operations UAE airport operations UAE airport operations - Aircraft handled - Cargo handled - in tonnes ‘000 - Aircraft handled - Cargo handled - in tonnes ‘000 Emirates 17-18 448,553 17-18 2,352 17-18 211,038 17-18 731 dnata 16-17 407,915 16-17 2,130 16-17 215,696 16-17 714 Group 15-16 178,228 15-16 1,367 15-16 211,184 15-16 689 Financial Information 14-15 109,546 14-15 937 14-15 188,752 14-15 734 Emirates 812 Financial 13-14 104,070 13-14 13-14 184,265 13-14 792 Commentary dnata Financial Commentary

Emirates Consolidated International airport operations main drivers for this increase were new expanded in Australia where our product 215,696), a decrease of 2.2% compared Financial Statements International airport operations remains contract wins, primarily in the US, offering was well-received. We officially to previous year, mainly due to the the largest business segment by revenue and Italy. During the year, dnata won or launched our Yalago bed-bank to third termination of flights between Dubai dnata extended over 90 contracts with new and parties. New corporate wins in Dubai and and . Consolidated in dnata. It recorded revenues of AED Financial 3.8bn (2016-17: AED 3.3bn). This growth existing customers. the launch of the Emirates Holidays brand Statements in the US, Ireland and China neutralized Catering is a result of integrating our sizeable new Cargo tonnage handled grew by 10.4% our challenges as international security Revenue from catering activities increased Additional businesses acquired during the previous to 2,352 thousand tonnes (2016-17: 2,130 threats continued to dampen demand, by 6.8% to AED 2.1bn (2016-17: AED Information year, leveraging our global network and thousand tonnes) driven by new contracts particularly for short-haul travel in Europe. 2.0bn) due to strong business growth in winning new contracts. The appreciation and a global upturn in air cargo volumes. Australia, , Czech Republic and of Euro, Australian dollar and Brazilian UAE airport operations real against the US dollar also contributed Travel services Sharjah. This increase was partly offset by UAE airport operations recorded revenues reduced volumes in Italy and UK, mainly positively to the revenue growth. Travel services revenue increased by of AED 3.2bn (2016-17: AED 3.0bn). due to the loss of business from certain 7.9% to AED 3.4bn (2016-17: AED 3.1bn) During the year, new cargo facilities were The 4.3% growth primarily relates to customers facing financial difficulties. primarily driven by growth in trading opened in Dallas and Adelaide whilst ground handling operations at Dubai volumes in our UK businesses despite We enhanced our operations in cargo handling capacity was enlarged at International Airport (DXB) with the challenging market conditions. Australia and Ireland with the opening London Gatwick. dnata’s aircraft cabin introduction of several new services from of a new state-of-the-art catering hub cleaning services provider in Australia The underlying travel services related the current year. Our marhaba service at Melbourne airport and opening of a scaled up operations in Perth. Further, turnover measured in Total Transaction offering continued its growth trend with second catering facility at Dublin airport. new ground handling operations were Value (TTV) increased by 5.6% to AED passenger numbers handled up by 13% established at Singapore Changi Airport 11.3bn (2016-17: AED 10.7bn). compared to the previous year. Meals uplifted during the financial year Terminal 4 and new marhaba lounges are down by 8.3% to 55.7m (2016:17 Our travel business in the UK accounts for Cargo volumes handled increased by were also opened in Karachi and 60.7m) primarily due to changes in the 83% (2016-17: 84%) of the revenue from 2.3% to 731 thousand tonnes. Melbourne. airline catering product mix. This was travel services. Growth in terms of aircraft handled was The number of aircraft handled at both mitigated by higher yields per meal. the Dubai airports was 211,038 (2016-17: 10% to 448,553 (2016-17: 407,915). The Our cruise business, Imagine Cruising, 87 Operating costs in AED bn Operating costs in % THE EMIRATES GROUP 11.9 42.6% Employee ANNUAL REPORT 11.0 18.0% Travel services direct costs 9.6 10.9% Airport operations direct costs 2017-18 8.2 7.1% In-flight catering direct costs 6.7 5.8% Rental and lease expenses 3.7% Depreciation and amortisation 3.2% Sales and marketing expenses 1.8% Information technology infrastructure costs 5.9% Corporate overheads 13-14 14-15 15-16 16-17 17-18 1.0% Other direct costs

Overview Employee cost as % of operating costs Operating costs in AED m 2017-18 2016-17 % change 2017-18 % of Emirates 17-18 43 57 operating costs dnata 16-17 42 58 Employee costs 5,055 4,654 8.6 42.6 Group Direct costs 15-16 40 60 - Travel services 2,135 1,913 11.6 18.0 Financial Information 14-15 41 59 - Airport operations 1,293 1,138 13.6 10.9 - In-flight catering 843 794 6.2 7.1 Emirates 13-14 48 52 Financial - Other 130 141 (7.8) 1.0 Commentary Employee costs Other operating costs Rental and lease expenses 688 627 9.7 5.8 dnata Depreciation and amortisation 440 423 4.0 3.7 Financial Commentary Sales and marketing expenses 381 370 3.0 3.2 Information technology infrastructure costs 210 204 2.9 1.8 Emirates Consolidated Expenditure Corporate overheads 703 694 1.3 5.9 Financial Total operating costs 11,878 10,958 8.4 100.0 Statements dnata’s operating costs were up 8.4% dnata at AED 11.9bn (2016-17: AED 11.0bn). Consolidated The increase is commensurate with the Direct costs With the international expansion of based concession fees in Sharjah and Financial Airport operations, direct costs increased Romania and the expansion of US airport Statements organic revenue growth in all existing Direct costs at AED 4.4bn are 10.4% lines of business, investments in new higher than the previous year (2016-17: by 13.6% to AED 1.3bn (2016-17: AED operations also contributed to the hike Additional and enhanced facilities and integrating AED 4.0bn). 1.1bn). in costs. Information the newly acquired companies in the The growth in our UK travel portfolio In-flight catering related direct costs Depreciation and amortisation previous and current year. The increase is particularly Emirates Holidays and at AED 843m (2016-17: AED 794m) cost stood at AED 440m (2016-17: further contributed by a depreciating US brands forming part of Stella have increased by 6.2% over the previous AED 423m), up 4.0% resulting from dollar against the major currencies. substantially contributed to the increase year due to the increased operations in investments made in ground handling Australia, Romania, Czech Republic and and catering facilities. Corporate Employee costs of 11.6% in direct costs for travel services. These costs include the cost Sharjah offset by a fall in business in the overheads at AED 703m (2016-17: AED Employee costs, being the largest for travel packages sold where dnata UK and Italy. 694m) are up 1.3% resulting primarily element of dnata’s cost base, stood at acts as the principal in a transaction and from provisions taken for receivables 43% of operating costs (2016-17: 42%). Other operating costs recognises revenue on a gross basis. from customers facing financial Employee costs increased by 8.6% to The increase in rentals and lease difficulties. AED 5.1bn (2016-17: AED 4.7bn), as a expenditure of 9.7% at AED 688m result of opening new ground handling, (2016-17: AED 627m) was driven by the cargo and catering facilities. new kitchen facilities in Melbourne and Dublin. Further, increases in revenue

88 THE EMIRATES GROUP ANNUAL REPORT

2017-18 Assets in AED m 2017-18 2016-17 change % change Assets in AED bn Equity and liabilities in AED bn 14.3 14.3 PPE, investment properties and intangible assets 4,987 4,716 271 5.7 Other non-current assets 731 656 75 11.4 12.0 12.0 5.0 Cash assets 4,945 3,398 1,547 45.5 7.3 Other current assets* 3,629 3,277 352 10.7 4.7 Total 14,292 12,047 2,245 18.6 0.7 *including asset classified as held for sale 6.7 0.6 PPE, investment Overview properties and 1.7 5.0 intangible assets Emirates 3.4 Equity and liabilities in AED m 2017-18 2016-17 change % change Other non- 1.5 Equity dnata current assets Equity 7,282 6,706 576 8.6 Cash 5.3 Non-current Non-current liabilities 1,734 1,542 192 12.5 Group assets liabilities 3.6 3.3 3.8 Current liabilities 5,276 3,799 1,477 38.9 Other current Current Financial assets liabilities Total 14,292 12,047 2,245 18.6 Information 17-18 16-17 17-18 16-17 Emirates Financial Commentary dnata Financial Commentary

Emirates Consolidated Statement of financial position Intangible assets increased by 5.9% Investments accounted for using the Liabilities Financial equity method (including those classified Statements to AED 2.8bn (2016-17: AED 2.6bn). Borrowings and lease liabilities have Assets Goodwill continues to form the as held for sale) stand at AED 519m increased by 16.7% to AED 1.2bn dnata Total assets grew by 18.6% or AED 2.3bn largest portion of the intangible asset (2016-17: AED 407m) and increased due Consolidated (2016-17: AED 1bn) due to loans taken Financial to AED 14.3bn. portfolio at 74% (2016-17: 73%) which to better returns on these investments for the new accommodation facilities Statements is validated on an annual basis through for the year. in Dubai and to meet working capital Net investment in property, plant and impairment testing. A weak US Dollar Additional Trade and other receivables, increased requirements in the UK. A weak US dollar equipment are marginally up by 0.8% has increased the intangible asset base Information by AED 300m or 9.0% compared to has also impacted the balance. to AED 1.9bn (2016-17: AED 1.8bn). by AED 169m. dnata continues to invest 2016-17, resulting from the organic dnata’s International airport operations in the latest technology to stay ahead Trade and other payables stood at AED growth across all business lines and division opened a new maintenance of its competition. During the year, 5.0bn (2016-17: AED 3.5bn), an increase slower collections in Plafond, our fit-out base at Singapore airport in July 2017 significant investments were made in of 41.4% due to the dividend declared business. and invested in new ground support cyber security related applications. Our to the parent of AED 1bn, and increased equipment in Dubai and the Americas. travel division implemented a global Equity ground handing, travel and catering New kitchens in Melbourne and Dublin telephony project to seamlessly connect operations. Total equity at AED 7.3bn (2016-17: were opened in the current year to its global operations and to provide AED 6.7bn) reflects a growth of 8.6% enhance service offerings in catering. enhanced customer experience. The over last year, which increased due to acquisition of AirLogistix also resulted in Through Transecure, its fully-controlled record profits for the year offset by a AED 14m higher goodwill and customer subsidiary, dnata invested over AED record AED 1bn dividend declared to relationships. 100m in new accommodation facilities the Owner. leased to external parties.

89 Free cash flow in AED m Operating cash margin in % Cash flow in AED m THE EMIRATES GROUP ANNUAL REPORT 1,858 2017-18 1,858 413 78 1,445 1,390

1,281 4,872

1,125 14.2 1,068 1,058 3,266

893 13.1 14.9

355 11.6 10.5

206 Cash assets Net cash Net cash Net cash Cash assets net of bank generated used in generated from net of bank overdrafts from operating investing financing overdrafts 13-14 14-15 15-16 16-17 17-18 13-14 14-15 15-16 16-17 17-18 as at 31 Mar 17* activities activities activities as at 31 Mar 18* Cash from operating activities Free cash flow * Includes the effects of exchange rate changes

Overview Geographical work force in % Revenue per employee in AED ‘000

Emirates 17-18 319 dnata 16-17 297 57% Overseas Group Employee strength (in numbers) 15-16 333 2017-18 2016-17 % change Financial 43% UAE Information International airport operations 16,138 16,324 (1.1) 14-15 399 UAE airport operations 12,336 12,161 1.4 Emirates 13-14 356 Financial Catering 4,761 4,645 2.5 Commentary Travel services 4,257 4,017 6.0 dnata Others 3,515 3,831 (8.2) Financial Commentary Average employee strength 41,007 40,978 0.1

Emirates Consolidated Cash position Financial Statements Cash from operating activities Employee strength and workforce during the year at some of our The 8.2% employee drop in Others locations partly offset by the acquisition to 3,515 (2016-17: 3,831) is due to a dnata Cash generated from operating activities productivity Consolidated of AirLogistix in the US. recruitment slowdown, natural attrition Financial increased significantly to AED 1.9bn from arising from retirements and resignations Statements last year’s figure of AED 1.3bn due to Employee strength dnata’s UAE airport operations average and new ways of working driven by record profits and a positive contribution The average workforce remained stable employee count marginally increased Additional technology, better processes and people Information from working capital movements. compared to last year and stands at by 1.4% to 12,336 (2016-17: 12,161), management. Operating cash margin is at 14.2% 41,007 (2016-17: 40,978). broadly in line with the increase in (2016-17: 10.5%) and is the result of With the growth in international operations. Productivity improved cash profit. operations, the workforce employed Workforce growth in the Catering Revenue per employee increased by Cash assets overseas is 57% (2016-17: 56%). business of 2.5% is consistent with the 7.4% to AED 319 thousand (2016-17: revenue growth. AED 297 thousand) on account of a 7.3% Cash assets continue to remain strong, International airport operations continue increase in total revenues and consistent growing by 45.5% to AED 4.9bn (2016- to be the leading business unit in dnata Average employee count for Travel employee numbers. 17: AED 3.4b). The increase is due to in terms of workforce strength with services increased by 6.0% to 4,257 healthy cash profits, limited acquisition 16,138 employees, 39% of total group (2016-17: 4,017) primarily due to the activity during the year and an improved workforce (2016-17: 40%). The 1.1% acquisition of Destination Asia and an focus on working capital management. reduction compared to the prior year increase in call centre operations at is due to a shift towards a time based Clark, .

90 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Independent Auditor’s Report to the Owner of Emirates

Overview

Emirates dnata

Group

Financial Information Our opinion Emirates In our opinion, the consolidated financial statements present fairly, in all material Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”) Financial Commentary respects, the consolidated financial position of Emirates and its subsidiaries (together and the ethical requirements that are relevant to our audit of the consolidated referred to as “Emirates”) as at 31 March 2018, and its consolidated financial financial statements in the United Arab Emirates. We have fulfilled our other ethical dnata performance and its consolidated cash flows for the year then ended in accordance responsibilities in accordance with these requirements and the IESBA Code. Financial Commentary with International Financial Reporting Standards (“IFRS”). Our audit approach Emirates What we have audited Consolidated Overview Financial Emirates’ consolidated financial statements comprise: Statements As part of designing our audit, we determined materiality and assessed the risks of ● the consolidated income statement for the year ended 31 March 2018; dnata material misstatement in the consolidated financial statements. In particular, we Consolidated ● the consolidated statement of comprehensive income for the year ended 31 March 2018; considered where management made subjective judgements; for example, in respect Financial Statements ● the consolidated statement of financial position as at 31 March 2018; of significant accounting estimates that involved making assumptions and considering ● the consolidated statement of changes in equity for the year ended 31 March 2018; future events that are inherently uncertain. As in all of our audits, we also addressed Additional the risk of management override of internal controls, including among other matters Information ● the consolidated statement of cash flows for the year ended 31 March 2018; and consideration of whether there was evidence of bias that represented a risk of material ● the notes to the consolidated financial statements, which include a summary of misstatement due to fraud. significant accounting policies. The areas, in our professional judgement, that are of most significance to the audit Basis for opinion (“Key audit matters”) and where we focused most audit effort during the year were:

We conducted our audit in accordance with International Standards on Auditing Key audit matters ● Passenger and cargo revenue recognition (“ISAs”). Our responsibilities under those standards are further described in the ● Accounting for the “Skywards” frequent flyer programme Auditor’s responsibilities for the audit of the consolidated financial statements section ● Lease classification and the related lease accounting of our report. ● Provision for aircraft return conditions We believe that the audit evidence we have obtained is sufficient and appropriate to We tailored the scope of our audit in order to perform sufficient work to enable us to provide a basis for our opinion. provide an opinion on the consolidated financial statements as a whole, taking into Independence account the structure of Emirates, the accounting processes and controls, and the industry in which Emirates operates. We are independent of Emirates in accordance with the International Ethics Standards

PricewaterhouseCoopers (Dubai Branch), License no. 102451, Emaar Square, Building 4, Level 8, P O Box 11987, Dubai - United Arab Emirates T: +971 4 304 3100, F: +971 4 346 9150, www.pwc.com/middle-east Douglas O’Mahony, Paul Suddaby, Jacques Fakhoury and Mohamed ElBorno are registered as practising auditors with the UAE Ministry of Economy 91 THE EMIRATES GROUP ANNUAL REPORT Independent Auditor’s Report to the Owner of Emirates (continued) 2017-18

Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements for 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 opinion on these matters.

Key audit matter How our audit addressed the Key audit matter Overview

Emirates Passenger and cargo revenue recognition We performed detailed end-to-end walkthroughs of the finance and operational processes surrounding the revenue system, dnata When a flight booking is made, passenger and cargo revenue is initially deferred on the utilising our understanding of the industry and Emirates, to statement of financial position and is measured based on the sales price to the customer. Revenue reassess the design effectiveness of the related key internal Group is recognised in the consolidated income statement when a passenger or the cargo has flown controls and identify changes, if any. (refer to notes 2, 3 and 5 to the consolidated financial statements). Financial We then conducted testing of the operating effectiveness of Information The determination of the amount of revenue to be recognised for each flight requires complex IT these controls to obtain sufficient, appropriate evidence that they systems and involves the exchange of information with industry systems and other airlines for a Emirates operated throughout the year as intended. Financial high volume of transactions. Commentary We tested the key IT systems, including interfaces, that impact The accounting for passenger and cargo revenue is susceptible to management override of the recognition of revenue from passenger and cargo sales along dnata controls through the recording of manual journals in the accounting records, the override of with the change control procedures and related application Financial IT systems to accelerate revenue recognition, or the manipulation of inputs used to calculate Commentary controls. revenue recorded in respect of unused revenue documents. We performed computer assisted audit techniques over Emirates The timing of revenue recognition for unused tickets requires judgement due to the timeframe Consolidated passenger and cargo revenue and appropriate substantive tests Financial over which tickets can be utilised varying due to the large number of fare types sold by Emirates. of manual journal entries posted into relevant revenue accounts Statements Management has determined the value of unused revenue documents that will not be utilised in the sub-ledger and general ledger. based on ticket terms and conditions and historical expiry trends. dnata We obtained data supporting Emirates’ historical expiry trend in Consolidated We focused on this area as a result of the complexity of the related IT systems, the potential respect of unused revenue documents. In addition to performing Financial for management to override controls and the level of judgement required by management in Statements controls based testing as described above, we tested the accuracy determining the timing of recognition of unused revenue documents. of historical expiry data and compared this data to that used Additional Information by Emirates in their calculation of the amount of revenue to recognise from unused revenue documents.

92 THE EMIRATES GROUP ANNUAL REPORT Independent Auditor’s Report to the Owner of Emirates (continued) 2017-18

Key audit matter How our audit addressed the Key audit matter

Accounting for the “Skywards” frequent flyer programme We tested management’s model supporting the calculation of Skywards deferred revenue as follows: Emirates operates a frequent flyer programme (“Skywards”) in order to encourage and incentivise loyalty from its customers. Skywards members either earn Skywards miles after a flight has been ● we understood the process and related controls by which paid for and flown, or from Skywards partners that purchase miles from Emirates to issue to their deferred revenue is calculated; Overview customers. Skywards miles can be redeemed for reductions in airfares as well as being used towards ● we tested automated controls and key interfaces around the free flights, cabin class upgrades and other non-airline rewards. systems used to initially record the Skywards miles for each Emirates member and ensured that data from the systems is accurately The fair value of unused miles issued to Skywards members when flights are flown, and recorded in the model; dnata consideration received for miles issued to Skywards members from sales to partners with a total ● we re-performed calculations within the model; value of AED 2,243 million (2017: AED 2,465 million), is recognised in the consolidated statement Group ● we tested the key assumptions within the model, including of financial position as deferred revenue (refer notes 2, 3 and 27 to the consolidated financial agreeing historical expiry trends supporting the expiry Financial statements). percentage to underlying reports, discussing known future Information The fair value per mile is calculated using a model incorporating a number of factors including changes to the Skywards programme that may impact expiry Emirates historical sector average fares, fares for upgrades, ticket and upgrade availability and redemption trends with appropriate senior management and testing ticket Financial patterns. An estimate is also made of the number of miles that will expire based on historical expiry and upgrade availability to internal supporting evidence; and Commentary patterns and known future changes to the Skywards programme. ● we performed sensitivity analysis on the key assumptions and variables used in the model. dnata This was a Key audit matter because of the significant level of judgement exercised by management Financial Commentary in determining the underlying assumptions within the model.

Emirates Consolidated Financial Lease classification and the related lease accounting We evaluated management’s assessment of lease classification Statements under IFRS to determine whether a lease is considered to be Emirates operates aircraft under both finance and operating lease arrangements and during the finance or operating in nature. dnata year has entered into sale and leaseback transactions on new aircraft deliveries (refer to notes 2, Consolidated We examined the lease agreements for aircraft deliveries during Financial 3, 20 and 23 to the consolidated financial statements). the year to identify: Statements In determining the appropriate lease classification, IAS 17 – “Leases” is applied by Emirates and ● whether the lease transfers ownership of the aircraft to Additional the substance of the transaction rather than just the legal form is considered. Factors considered Information include but are not limited to the following: Emirates by the end of the lease term; ● whether Emirates has the option to purchase the aircraft at a ● whether the lease transfers ownership of the aircraft to Emirates by the end of the lease term; price that is significantly lower than the fair value on exercise ● whether Emirates has the option to purchase the aircraft at a price that is significantly lower date; and than the fair value on exercise date; ● whether the lease term is for the major part of the economic ● whether the lease term is for the major part of the economic life of the aircraft; and life of the aircraft. ● whether the present value of the minimum lease payments amounts to substantially all of the fair value of the leased aircraft. We undertook independent calculations to assess whether the present value of the minimum lease payments amounts to Profits or losses on sale and leaseback transactions are either recognised immediately or deferred substantially all of the fair value of the leased aircraft and whether in accordance with the finance and operating leases accounting policy set out in note 2 to the the rate of return implicit in the lease is calculated reasonably. consolidated financial statements. In the case of sale and leaseback transactions on new aircraft We focused on this area because the accounting implications for leases including the resulting in an operating lease, we compared the fair values presentation within the consolidated financial statements are substantially different depending of aircraft to the purchase price and recalculated the profit or on the classification determined, and because of the inherent level of management judgement loss on these transactions. We tested whether management within the assessment of lease classification and accounting for sale and leaseback transactions, appropriately accounted for the profit or loss arising from these together with the materiality of the related balances. transactions. We tested that the related disclosures in the consolidated financial statements are consistent with the requirements of IFRS. 93 THE EMIRATES GROUP ANNUAL REPORT Independent Auditor’s Report to the Owner of Emirates (continued) 2017-18

Key audit matter How our audit addressed the Key audit matter

Provision for aircraft return conditions We obtained the aircraft return provision model prepared by management, together with a summary of the underlying Emirates operated 158 aircraft under operating lease arrangements at 31 March 2018 (2017: 154). assumptions. Under the terms of the operating lease arrangements with the lessors, Emirates is contractually We tested the completeness of the provision by ensuring that all significant return condition obligations included in aircraft Overview committed to either return aircraft and/or engines in a certain condition or to compensate the lessor based on the actual condition of the aircraft and engines at the date of return. Accordingly, operating lease contracts were included in the model. Emirates a provision of AED 3,336 million (2017: AED 3,125 million) for the cost associated with these We tested the mathematical accuracy of the calculation. aircraft return conditions is recorded during the lease term and is included within Provisions (refer dnata to notes 2, 3, 24 and 26 of the consolidated financial statements). The following key assumptions were discussed with senior engineering personnel: Group The provision is calculated using a model which incorporates a number of assumptions, requiring significant judgement, including the: ● the past and expected future utilisation and maintenance Financial patterns of the aircraft; Information ● past and expected future utilisation and maintenance patterns of the aircraft and engines; ● the expected cost of each maintenance event at the time it is Emirates ● expected cost of the maintenance at the time it is estimated to occur; and expected to occur; and Financial ● the discount rate applied to the future liability. Commentary ● discount rate applied to the future liability. We focused on this area because of the significant level of judgement exercised by management We compared historical utilisation to flying records and assessed dnata if the future utilisation assumptions were considered in light Financial in determining the underlying assumptions within the model. Commentary of past experience. Assumed maintenance costs were assessed against historical actual costs incurred and existing long term Emirates maintenance agreements. Future maintenance patterns were Consolidated assessed against internal maintenance plans. We ensured the Financial Statements discount rate applied by management to the future liability was within an acceptable range with reference to the time value of dnata money applicable to Emirates and the risks specific to the liability. Consolidated Financial Along with performing sensitivity on reasonably possible changes Statements in assumptions, we also compared provisions held for aircraft and Additional engines returned during the year to the compensation paid out to Information the lessors or actual costs incurred to establish if past provisions were reasonable.

Other information knowledge obtained in the audit, or otherwise appears preparation of consolidated financial statements that are to be materially misstated. free from material misstatement, whether due to fraud Management is responsible for the other information. or error. The other information comprises the information If, based on the work we have performed, we conclude included in the Annual Report (but does not include that there is a material misstatement of this other In preparing the consolidated financial statements, the consolidated financial statements and our auditor’s information, we are required to report that fact. We have management is responsible for assessing Emirates’ ability report thereon). nothing to report in this regard. to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going Our opinion on the consolidated financial statements Responsibilities of management and concern basis of accounting unless management either does not cover the other information and we do not intends to liquidate Emirates or to cease operations, or express any form of assurance conclusion thereon. those charged with governance for the consolidated financial statements has no realistic alternative but to do so. In connection with our audit of the consolidated financial Those charged with governance are responsible for statements, our responsibility is to read the other Management is responsible for the preparation and fair overseeing Emirates’ financial reporting process. information identified above and, in doing so, consider presentation of the consolidated financial statements whether the other information is materially inconsistent in accordance with IFRS, and for such internal control

94 with the consolidated financial statements or our as management determines is necessary to enable the THE EMIRATES GROUP ANNUAL REPORT Independent Auditor’s Report to the Owner of Emirates (continued) 2017-18

Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated We communicate with those charged with governance regarding, among other matters, financial statements as a whole are free from material misstatement, whether due to the planned scope and timing of the audit and significant audit findings, including any fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable significant deficiencies in internal control that we identify during our audit. assurance is a high level of assurance, but is not a guarantee that an audit conducted We also provide those charged with governance with a statement that we have complied in accordance with ISAs will always detect a material misstatement when it exists. Overview with relevant ethical requirements regarding independence, and to communicate with Misstatements can arise from fraud or error and are considered material if, individually them all relationships and other matters that may reasonably be thought to bear on our Emirates or in the aggregate, they could reasonably be expected to influence the economic independence, and where applicable, related safeguards. decisions of users taken on the basis of these consolidated financial statements. dnata From the matters communicated with those charged with governance, we determine As part of an audit in accordance with ISAs, we exercise professional judgement and Group those matters that were of most significance in the audit of the consolidated financial maintain professional scepticism throughout the audit. We also: statements of the current year and are therefore the Key audit matters. We describe Financial Information ● Identify and assess the risks of material misstatement of the consolidated financial these matters in our auditor’s report unless law or regulation precludes public disclosure statements, whether due to fraud or error, design and perform audit procedures about the matter or when, in extremely rare circumstances, we determine that a matter Emirates responsive to those risks, and obtain audit evidence that is sufficient and appropriate should not be communicated in our report because the adverse consequences of Financial Commentary to provide a basis for our opinion. The risk of not detecting a material misstatement doing so would reasonably be expected to outweigh the public interest benefits of resulting from fraud is higher than for one resulting from error, as fraud may involve such communication. dnata collusion, forgery, intentional omissions, misrepresentations, or the override of Financial PricewaterhouseCoopers Commentary internal control. 3 May 2018 Emirates ● Obtain an understanding of internal control relevant to the audit in order to design Consolidated audit procedures that are appropriate in the circumstances, but not for the purpose Financial Statements of expressing an opinion on the effectiveness of Emirates’ internal control. dnata ● Evaluate the appropriateness of accounting policies used and the reasonableness of Consolidated accounting estimates and related disclosures made by management. Douglas O’Mahony Financial Statements Registered Auditor Number 834 ● Conclude on the appropriateness of management’s use of the going concern basis Dubai, United Arab Emirates Additional of accounting and, based on the audit evidence obtained, whether a material Information 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 obtained up to the date of our auditor’s report. However, future events or conditions may cause Emirates to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Emirates to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Emirates audit. We remain solely responsible for our audit opinion.

95 THE EMIRATES GROUP ANNUAL REPORT Consolidated Income Statement 2017-18 Emirates forCONSOLIDATED the year INCOME endedSTATEMENT 31 March 2018 FOR THE YEAR ENDED 31 MARCH 2018 Emirates Note 2018 2017 CONSOLIDATED INCOME STATEMENT AED m AED m RevenueFOR THE YEAR ENDED 31 MARCH 2018 5 91,225 83,832 Other operating income Note6 1,0972018 1,251 2017 Operating costs 7 (88,236)(88,236)AED m(82,648)(82,648) AED m Overview OperatingRevenue profit 5 91,225 4,086 83,832 2,435 Emirates FinanceOther operating income income 86 1,097 375 1,251 281 FinanceOperating costs costs 87 (88,236)(1,593) (82,648)(1,383) dnata Finance costs 8 (1,593) (1,383) ShareOperating of results profit of investments accounted for using the equity method 13 4,086 155 2,435 157 Group ProfitFinance before income income tax 8 3,023 375 1,490 281 Financial FinanceIncome taxcosts expense 89 (1,593)(44) (1,383)(40) Information Income tax expense 9 (44) (40) ProfitShare offor results the year of investments accounted for using the equity method 13 2,979 155 1,450 157 Emirates Financial Profit attributable before income to non-controlling tax interests 3,023 183 1,490 200 Commentary ProfitIncome attributable tax expense to Emirates' Owner 9 2,796(44) 1,250(40) dnata Profit for the year 2,979 1,450 Financial Commentary CONSOLIDATEDProfit attributable STATEMENTto non-controlling OF COMPREHENSIVE interests INCOME 183 200 Profit attributable to Emirates' Owner 2,796 1,250 Emirates FOR THE YEAR ENDED 31 MARCH 2018 Consolidated Consolidated Statement of Comprehensive Income Financial Profit for the year 2,979 1,450 Statements CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME forItemsItems thatthatthe willwill notnotyear bebe reclassifiedreclassified ended toto thethe consolidatedconsolidated31 March incomeincome statement2018statement dnata FOR THE YEAR ENDED 31 MARCH 2018 Consolidated Remeasurement of retirement benefit obligations 25 (6)(6) 311 Financial ProfitItems thatfor the are year or may be reclassified subsequently to the consolidated income statement 2,979 1,450 Statements Items that are or may be reclassified subsequently to the consolidated income statement ItemsCurrency that will translation not be reclassified differences to the consolidated income statement 19 1 - Additional Information CashRemeasurement flow hedges of retirement benefit obligations 1925 155(6) 1,038 311 OtherItems thatcomprehensive are or may incomebe reclassified for the subsequentlyyear to the consolidated income statement 150 1,349 TotalCurrency comprehensive translation income differences for the year 19 3,129 1 2,799 - TotalCash comprehensive flow hedges income attributable to non-controlling interests 19 183155 1,038 200 TotalOther comprehensive comprehensive income income attributable for the year to Emirates' Owner 2,946 150 2,5991,349 Total comprehensive income for the year 3,129 2,799 TheTotal accompanying comprehensive notes income are anattributable integral part to non-controlling of these consolidated interests financial statements. 183 200 Total comprehensive income attributable to Emirates' Owner 2,946 2,599

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.1

96 THE EMIRATES GROUP ANNUAL REPORT Consolidated Statement of Financial Position 2017-18 Emiratesas at 31 March 2018 Emirates CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENTAS OFAT FINANCIAL31 March 2018 POSITION Note 2018 2017 AS AT 31 March 2018 Note 2018 2017 Note 2018 2017 AED m AED m Note 2018 2017 AED m AED m AED m AED m EQUITY AND LIABILITIES AED m AED m ASSETS EQUITY AND LIABILITIES Capital and reserves ASSETS Non-current assets Capital and reserves Capital 18 801 801 Non-current assets Property, plant and equipment 11 85,951 86,898 Capital Other reserves 18 801 19 801 15 (141) Overview Property, plant and equipmentIntangible assets 11 85,951 86,898 12 1,496 1,441 Other reserves Retained earnings 19 15 (141) 35,638 33,848 Retained earnings 35,638 33,848 IntangibleEmirates assets Investments accounted for 12 using the equity1,496 1,441 Attributable to Emirates' Owner 36,454 34,508 Investments accounted for using the equity Attributable to Emirates' OwnerNon-controlling interests 36,454 34,508 592 586 dnata method 13 662 676 Non-controlling interests Total equity 592 586 37,046 35,094 method Advance lease rentals 13 662 14 676 5,065 4,421 Group Total equity 37,046 35,094 Advance lease rentals Loans and other receivables 14 5,065 4,421 15 172 238 Financial Non-current liabilities Loans and other receivables Derivative financial instruments 15 172 35 238 60 38 Information Non-current liabilities Trade and other payables 30 123 683 Derivative financial instruments 35 60 38 Deferred income tax asset 29 11 10 Trade and other payables 30 123 683 Emirates Borrowings and lease liabilities 20 42,071 40,171 Deferred income tax asset 29 11 10 Financial 93,417 93,722 Borrowings and lease liabilitiesDeferred revenue 20 42,071 40,171 27 1,063 979 Commentary 93,417 93,722 Current assets Deferred revenue Deferred credits 27 1,063 28 979 2,621 2,227 Currentdnata assets Deferred credits 28 2,621 2,227 Financial Inventories 16 2,387 2,238 Derivative financial instruments 35 26 192 Commentary Inventories Trade and other receivables 16 2,387 2,238 17 11,354 9,922 Derivative financial instrumentsProvisions 35 26 24 192 4,067 3,825 Provisions 24 4,067 3,825 Trade andEmirates other receivables Derivative financial instruments 17 11,354 9,922 35 9 8 Deferred income tax liability 29 4 5 Consolidated Derivative financial instruments 35 9 8 Deferred income tax liability 29 4 5 49,975 48,082 Financial Short term bank deposits 33 14,745 6,706 Statements Current liabilities 49,975 48,082 Short term bank deposits Cash and cash equivalents 33 14,745 6,706 33 5,675 8,962 Current liabilities dnata Trade and other payables 30 29,303 25,193 Cash and cash equivalents 33 5,675 8,962 34,170 27,836 Consolidated Trade and other payables Income tax liabilities 30 29,303 25,193 18 19 Financial Total assets 34,170 27,836 127,587 121,558 Statements Income tax liabilities Borrowings and lease liabilities 18 20 19 9,030 10,831 Total assets 127,587 121,558 Borrowings and lease liabilities 20 9,030 10,831 Additional Deferred revenue 27 1,180 1,486 Information Deferred revenue Deferred credits 27 1,180 1,486 28 313 253 Deferred credits Derivative financial instruments 28 313 35 253 35 3 Derivative financial instrumentsProvisions 35 35 24 3 687 597 Provisions 24 687 597 40,566 38,382 40,566 38,382 The accompanying notes are an integral part of these consolidated financial statements Total liabilities 90,541 86,464 The accompanying notes are an integral part of these consolidated financial statements Total liabilities Total equity and liabilities 90,541 86,464 127,587 121,558 Total equity and liabilities 127,587 121,558

The consolidated financial statements were approved on 3 May 2018 and signed by: The consolidated financial statements were approved on 3 May 2018 and signed by: The consolidated financial statements were approved on 3 May 2018 and signed by:

Sheikh Ahmed bin Saeed Al-Maktoum Timothy Clark Sheikh Ahmed bin Saeed Al-MaktoumChairman and Chief Executive Timothy Clark President Chairman and Chief Executive President Sheikh Ahmed bin Saeed Al-Maktoum Timothy Clark Chairman and 2Chief Executive President 2 The accompanying notes are an integral part of these consolidated financial statements.

97 THE EMIRATES GROUP ANNUAL REPORT Consolidated Statement of Changes in Equity 2017-18 Emirates CONSOLIDATEDfor the yearSTATEMENT ended OF CHANGES 31 IN EQUITY March 2018 FOR THE YEAR ENDED 31 MARCH 2018 Attributable to Emirates' Owner Non- Other Retained controlling Total Capital reserves earnings Total interests equity AED m AED m AED m AED m AED m AED m 1 April 2016 801 (1,179) 32,287 31,909 496 32,405 Overview Profit for the year - - 1,250 1,250 200 1,450 Emirates Other comprehensive income - 1,038 311 1,349 - 1,349 dnata Total comprehensive income - 1,038 1,561 2,599 200 2,799

Group Dividends - - - - (110) (110) Transactions with Owners - - - - (110) (110) Financial Information 31 March 2017 801 (141) 33,848 34,508 586 35,094

Emirates Profit for the year - - 2,796 2,796 183 2,979 Financial Commentary Other comprehensive income - 156 (6) 150 - 150 Total comprehensive income - 156 2,790 2,946 183 3,129 dnata Financial Non-controlling interest on acquisition of a subsidiary - - - - (4) (4) Commentary Dividends - - (1,000) (1,000) (173) (1,173) Emirates Transactions with Owners - - (1,000) (1,000) (177) (1,177) Consolidated Financial 31 March 2018 801 15 35,638 36,454 592 37,046 Statements dnata Consolidated Financial Statements The accompanying notes are an integral part of these consolidated financial statements.

Additional Information

3

The accompanying notes are an integral part of these consolidated financial statements.

98 THE EMIRATES GROUP ANNUAL REPORT Consolidated Statement of Cash Flows 2017-18 Emirates Note 2018 2017 forCONSOLIDATED the year STATEMENT ended OF CASH 31FLOWS March 2018 AED m AED m FOR THE YEAR ENDED 31 MARCH 2018 Investing activities Emirates Note 2018 2017 Additions to property, plantNote and equipment2018 2017 34 (3,279) (4,382) CONSOLIDATED STATEMENT OF CASH FLOWS AED m AED m Additions to intangible assets AED m AED m12 (209) (269) FOR THE YEAR ENDED 31 MARCHOperating 2018 activities Investing activities Proceeds from sale of property, plant and Profit before income taxNote 2018 2017 3,023 1,490 Additions to property, plant andequipment equipment 34 (3,279) (4,382) 98 117 Adjustments for: AED m AED m Additions to intangible assets Acquisition of subsidiaries, 12net of cash (209)acquired (269) (6) - Overview Operating activities Depreciation and amortisation 7 9,193 8,304 Proceeds from sale of property,Investments plant and in associates and joint ventures 13 (5) (137) Emirates Profit before income tax Finance costs - net 3,023 1,490 1,218 1,102 equipment Movement in short term bank deposits 98 117 (8,039) 1,117 Adjustmentsdnata for: Net loss / (gain) on sale of property, plant and Acquisition of subsidiaries, netFinance of cash income acquired (6) - 288 285 82 (23) Investments in associates and Dividendsjoint ventures from investments 13 accounted for(5) using (137) DepreciationGroup and amortisationequipment 7 9,193 8,304 the equity method 13 175 140 Finance costs - net Share of results of investments accounted 1,218 for 1,102 Movement in short term bank deposits (8,039) 1,117 Financial using the equity method 13 (155) (157) Net cash used in investing activities (10,977) (3,129) Net lossInformation / (gain) on sale of property, plant and Finance income 288 285 Net provision for impairment of trade 82 (23) Dividends from investments accounted for using equipmentEmirates receivables 17 20 23 Financing activities 13 175 140 ShareFinancial of results of investments accounted for the equity method Commentary using the equity method Provision for retirement benefit13 obligations(155) (157) 7 732 741 Net cash used in investing activitiesProceeds from bonds and term loans(10,977) (3,129)21,22 5,584 3,010 dnata Net movement on derivative financial instruments (3) 22 Repayment of bonds and term loans 21,22 (3,981) (5,626) Net provisionFinancial for impairment of trade receivablesCommentary Payments for retirement benefit 17 obligations 20 23 (617) (597) Financing activities Aircraft finance lease costs (1,157) (995)

ProvisionEmirates for retirement benefitIncome obligations tax paid 7 732 741 (66) (70) Proceeds from bonds and termOther loans finance costs 21,22 5,584 3,010 (207) (257) Consolidated Net movementFinancial on derivativeChange financial in instrumentsinventories (3) 22 (145) (132) Repayment of bonds and termRepayment loans of lease liabilities21,22 (3,981) (5,626) 23 (6,508) (4,424) Statements Payments for retirement benefitChange obligations in receivables and advance lease(617) rentals (597) (1,892) (2,146) Aircraft finance lease costs Dividend paid to Emirates' Owner (1,157) (995) - (2,100) Income dnatatax paid Change in provisions, payables, deferred(66) credits (70) Other finance costs Dividend paid to non-controlling interests(207) (257) (173) (110) Consolidated Change Financialin inventories and deferred revenue (145) (132) 2,744 1,868 Repayment of lease liabilities Net cash used in financing 23 activities(6,508) (4,424) (6,442) (10,502) Statements Change in receivables and advanceNet cash lease generated rentals from operating(1,892) activities (2,146) 14,134 10,425 Dividend paid to Emirates' Owner - (2,100) Additional Change Informationin provisions, payables, deferred credits Dividend paid to non-controllingNet interests change in cash and cash equivalents(173) (110) (3,285) (3,206) 2,744 1,868 and deferred revenue Net cash used in financing activitiesCash and cash equivalents at beginning(6,442) of year (10,502) 8,958 12,165 Net cash generated from operating activities 14,134 10,425 Effect of exchange rate changes 2 (1) The accompanying notes are an integral part of these consolidated financial statements. Net change in cash and cashCash equivalents and cash equivalents at end of(3,285) year (3,206) 33 5,675 8,958 Cash and cash equivalents at beginning of year 8,958 12,165 Effect of exchange rate changes 2 (1) The accompanying notes are an integral part of these consolidated financial statements. Cash and cash equivalents at end of year 33 5,675 8,958

4

The accompanying notes are an integral part of these consolidated financial statements. 4 99 THE EMIRATES GROUP ANNUAL REPORT Notes to the Consolidated Financial Statements 2017-18 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS New standards, amendments to published standards and interpretations that are FORfor THE the YEAR year ENDED ended31 MARCH 201831 March 2018 relevant to Emirates

Effective and adopted in the current year NOTES1. General TO information THE CONSOLIDATED FINANCIAL STATEMENTS New standards, amendments to published standards and interpretations that are

FOR THE YEAR ENDED 31 MARCH 2018 relevant to Emirates Emirates comprises Emirates and its subsidiaries. Emirates was incorporated, with limited At the date of authorisation of these consolidated financial statements, certain amendments to the existing standards were effective for the current financial year and liability, by an Emiri Decree issued by H. H. Sheikh Maktoum bin Rashid Al-Maktoum on Effective and adopted in the current year 1. General information have been adopted by Emirates. These are as follows: 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 At the date of authorisation of these consolidated financial statements, certain Emirates comprises Emirates and its subsidiaries. Emirates was incorporated, with limited  Amendments to IAS 7, Statement of Cash Flows (effective from 1 January 2017) on 25 October 1985 and is designated as the International Airline of the UAE. amendments to the existing standards were effective for the current financial year and Overview liability, by an Emiri Decree issued by H. H. Sheikh Maktoum bin Rashid Al-Maktoum on  Amendments to IFRS 12, Disclosure of Interests in Other Entities (effective from 1 have been adopted by Emirates. These are as follows: 26 June 1985 and is wholly owned by the Investment Corporation of Dubai (“the parent January 2017) Emirates Emirates is incorporated and domiciled in Dubai, UAE. The address of its registered office company”), a Government of Dubai entity. Emirates commenced commercial operations  Amendments to IAS 12, Income taxes (effective from 1 January 2017) is Emirates Group Headquarters, PO Box 686, Dubai, UAE.  Amendments to IAS 7, Statement of Cash Flows (effective from 1 January 2017) dnata on 25 October 1985 and is designated as the International Airline of the UAE.  Amendments to IFRS 12, Disclosure of Interests in Other Entities (effective from 1 These amendments did not have a material impact on the consolidated financial Group The main activities of Emirates comprise: January 2017) Emirates is incorporated and domiciled in Dubai, UAE. The address of its registered office statements. However, disclosure changes arising from amendments to IAS 7 have been  Amendments to IAS 12, Income taxes (effective from 1 January 2017) is Emirates Group Headquarters, PO Box 686, Dubai, UAE. addressed in Note 23 through presentation of changes in opening and closing balances Financial  commercial air transportation which includes passenger and cargo services Information of finance lease liabilities. The wholesalemain activities and retailof Emirates of consumer comprise: goods These amendments did not have a material impact on the consolidated financial statements. However, disclosure changes arising from amendments to IAS 7 have been Emirates  catering operations Financial addressedNot yet effective in Note and23 through have not presentation been early ofadopted changes in opening and closing balances  commercialhotel operations air transportation which includes passenger and cargo services Commentary  wholesalefood and beverage and retail sales of consumer goods of finance lease liabilities. At the date of authorisation of these consolidated financial statements, certain new dnata  catering operations Financial accounting standards have been published that are not mandatory for the financial year 2. Summaryhotel operations of significant accounting policies Not yet effective and have not been early adopted Commentary ended 31 March 2018, and have not been early adopted.  food and beverage sales

Emirates A summary of the significant accounting policies, which have been applied consistently At the date of authorisation of these consolidated financial statements, certain new Consolidated in the preparation of these consolidated financial statements are set out below. accountingManagement standards has assessed have thebeen impact published of these that accounting are not mandatory standards: for the financial year Financial 2. Summary of significant accounting policies Statements ended 31 March 2018, and have not been early adopted. IFRS 9, Financial Instruments (effective from 1 January 2018) ABasis summary of preparation of the significant accounting policies, which have been applied consistently dnata in the preparation of these consolidated financial statements are set out below. Management has assessed the impact of these accounting standards: Consolidated Emirates will adopt IFRS 9 which addresses the classification, measurement and Financial The consolidated financial statements have been prepared in accordance with Statements derecognition of financial assets and financial liabilities, introduces new rules for hedge BasisInternational of preparation Financial Reporting Standards (IFRS) and IFRS Interpretations Committee IFRS 9, Financial Instruments (effective from 1 January 2018) accounting and a new impairment model for financial assets from 1 April 2018. (IFRS IC) pronouncements. The consolidated financial statements are prepared under the Additional Information Thehistorical consolidated cost convention, financial except statements for those ha financialve been assets prepared and financialin accordance liabilities withthat Emirates will adopt IFRS 9 which addresses the classification, measurement and Emirates has reviewed the new requirements applicable to its financial assets and it does Internationalare measured Financialat fair value Reporting as stated Standards in the accounting (IFRS) and policies. IFRS Interpretations Committee derecognition of financial assets and financial liabilities, introduces new rules for hedge not expect the new guidance to affect the classification and measurement of its financial (IFRS IC) pronouncements. The consolidated financial statements are prepared under the accounting and a new impairment model for financial assets from 1 April 2018. assets. There will be no impact on Emirates’ financial liabilities as the new requirements historicalAll amounts cost are convention, presented inexcept millions for of those UAE Dirhamfinancial (“AED”). assets and financial liabilities that only affect the accounting for financial liabilities that are designated at fair value through are measured at fair value as stated in the accounting policies. Emirates has reviewed the new requirements applicable to its financial assets and it does profit or loss and Emirates does not have any such liabilities. not expect the new guidance to affect the classification and measurement of its financial

All amounts are presented in millions of UAE Dirham (“AED”). assets. There will be no impact on Emirates’ financial liabilities as the new requirements The new impairment model under IFRS 9 requires the recognition of impairment only affect the accounting for financial liabilities that are designated at fair value through profitprovisions or loss based and Emirateson expected does credit not have losses any (ECL) such rather liabilities. than only incurred credit losses as is the case under IAS 39. It applies to trade receivables and other financial assets.

TheBased new on theimpairment assessments model undertaken, under IFRS Emirates 9 requires does not the expect recognition any significant of impairment change in the loss allowance for these financial assets. provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. It applies to trade receivables and other financial assets. Based on the assessments undertaken, Emirates does not expect any significant change 5 in the loss allowance for these financial assets.

5

100 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Emirates is currently assessing the detailed financial impact of this standard on its consolidated financial statements. IFRS 9, Financial Instruments (effective from 1 January 2018) (continued) There are no other standards, amendments or interpretations, that are either effective or The new guidance has substantially reformed the existing hedge accounting rules. It not yet effective, and would be expected to have a material impact on Emirates. provides a more principles-based approach that aligns hedge accounting closely with risk management policies. Emirates does not expect any significant impact on its hedge Basis of consolidation Overview accounting under IFRS 9. Emirates Subsidiaries are those entities (including structured entities) over which Emirates has The new standard also introduces expanded disclosure requirements and changes in control. Control is exercised when Emirates is exposed to, or has rights to, variable dnata presentation, however, these are not expected to materially change the nature and returns from its involvement with the entity and has the ability to affect those returns

Group extent of Emirates disclosures about its financial instruments. through its power over that entity. Subsidiaries are fully consolidated from the date on which control is transferred to Emirates and are de-consolidated from the date that Financial IFRS 15, Revenue from Contracts with Customers (effective from 1 January 2018) control ceases. Inter-company transactions, balances and unrealised gains and losses Information arising on transactions between Emirates and its subsidiaries are eliminated. Emirates IFRS 15 replaces IAS 18 which covers contracts for sale of goods and rendering of Financial services and IAS 11 which covers construction contracts. The acquisition method of accounting is used to account for business combinations by Commentary Emirates. The consideration transferred for the acquisition of a subsidiary comprises the dnata The new standard is based on the principle that revenue is recognised when control of a fair value of the assets transferred, liabilities pertaining to the former owners of the Financial good or service transfers to a customer – so the notion of control replaces the existing subsidiary, fair value of any contingent consideration arrangements and the fair value of Commentary notion of risks and rewards. The standard provides a new five-step model that must be any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed Emirates applied to all contracts with customers. as incurred. Identifiable assets, including intangible assets acquired, liabilities and Consolidated contingent liabilities, if any, incurred or assumed in a business combination, are Financial Statements Emirates will apply the modified retrospective method on transition to the new standard measured initially at their fair values at the acquisition date. Any non-controlling interest from 1 April 2018 and the comparatives will not be restated. Emirates currently in the subsidiary is recognised on an acquisition-by-acquisition basis, either at fair value dnata recognises revenue from certain ancillary services such as administration fees at the time or at the non-controlling interest’s proportionate share of recognised amounts of Consolidated Financial of collection. IFRS 15 requires such income to be recognised when the related subsidiaries’ identifiable net assets. Statements transportation is provided. Accordingly on 1 April 2018, contract liabilities (currently disclosed as passenger and cargo sales in advance) will increase by approximately AED Contingent consideration is classified either as equity or a financial liability. Amounts Additional Information 40m with a corresponding impact on retained earnings. classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in the consolidated income statement. IFRS 16, Leases (effective from 1 January 2019) If the business combination is achieved in stages, the acquisition date carrying value of IFRS 16 removes the current distinction between operating and finance leases and Emirates’ previously held equity interest in the subsidiary is remeasured to fair value at requires recognition of an asset (the right to use the leased item) and a financial liability the acquisition date. Any gains or losses arising from such remeasurement are (the obligation to pay rentals). An optional exemption exists for short-term and low- recognised in the consolidated income statement. value leases. Emirates treats transactions with non-controlling interests that do not result in loss of The standard will have a significant impact on the Emirates consolidated financial control as transactions with the owners. A change in ownership interest results in an statements considering the number of aircraft and other operating leases in its portfolio. adjustment between the carrying amounts of the controlling and non-controlling For example, the consolidated income statement will be impacted because the total interests to reflect their relative interests in the subsidiary. Any difference between the expense is typically higher in the earlier years of a lease and lower in later years. amount of the adjustment to non-controlling interests and any consideration paid is Additionally, operating lease charges will be replaced with interest and depreciation recorded in equity. expenses. These changes will affect key ratios like profit margin, operating margin, EBITDA margin etc. Further, operating cash flows will be higher as cash payments for the principal portion of the lease liability will be classified within financing activities. 6

101 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Revenue

Basis of consolidation (continued) Passenger (including excess baggage) and cargo sales are recognised as revenue when the transportation is provided. Revenue documents (e.g. tickets or airway bills) sold but Associates are those entities in which Emirates has significant influence but not control unused are held in the consolidated statement of financial position under current or joint control, generally accompanying a shareholding between 20% and 50% of the liabilities as passenger and cargo sales in advance. Unused revenue documents are voting rights. Significant influence is the power to participate in the financial and recognised as revenue based on their terms and conditions and historical trends. Overview operating policy decisions of the investee, but is not control or joint control over those Emirates policies. Investments in associates are accounted for by applying the equity method and Revenue from the sale of consumer goods, food and beverages and catering operations include goodwill (net of accumulated impairment loss, if any) identified on acquisition, is recognised when risks and rewards of ownership are transferred to the customer and dnata after initially being recorded at cost. is stated net of discounts and returns. Group Joint ventures are contractual arrangements which establish joint control and where All other revenues, including revenue from hotel operations are recognised net of Financial Emirates has rights to the net assets of the arrangement. Joint control is the contractually discounts and taxes when services are provided. Information agreed sharing of control of an arrangement, which exists only when decisions about the Emirates relevant activities require the unanimous consent of the parties sharing control. Frequent flyer programme (‘Skywards’) Financial Investments in joint ventures are accounted for by applying the equity method and Commentary include goodwill (net of accumulated impairment loss, if any) identified on acquisition, Emirates operates a frequent flyer programme that provides a variety of awards to dnata after initially being recognised at cost. programme members based on a mileage credit for flights on Emirates and other Financial airlines that participate in the programme. Members can also accrue miles by utilising Commentary When Emirates’ share of losses in an equity-accounted investment equals or exceed its the services of non-airline programme participants. Emirates interest in the entity, including any other unsecured long term receivables, Emirates does Consolidated not recognise further losses, unless it has incurred obligations or made payments on Emirates accounts for Skywards miles as a separately identifiable component of the sales Financial Statements behalf of the other entity. transaction in which they are granted. The consideration in respect of the initial sale is allocated to Skywards miles based on their fair value, adjusted for expected expiry and is dnata All material unrealised gains and losses arising on transactions between Emirates and its accounted for as a liability (deferred revenue) in the consolidated statement of financial Consolidated Financial associates and joint ventures are eliminated to the extent of Emirates’ interest. position. The fair value is determined using estimation techniques that take into account Statements the fair value of awards for which miles could be redeemed. Miles accrued through Accounting policies of subsidiaries, associates and joint ventures have been changed utilising the services of programme partners and paid for by the participating partners Additional Information where necessary to ensure consistency with Emirates’ accounting policies. are also accounted for as deferred revenue until they are utilised.

When Emirates ceases to have control, any retained interest in the entity or business is Revenue is recognised in the consolidated income statement only when Emirates fulfils remeasured to its fair value at the date when control is lost, with the change in the its obligations by supplying free or discounted goods or services on redemption of the carrying amount recognised in the consolidated income statement. The fair value miles accrued. becomes the initial carrying amount for the purposes of subsequent accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts Finance income and costs previously recognised in other comprehensive income in respect of that entity or business are accounted for as if the related assets or liabilities have been directly Interest income and costs are recognised on a time proportion basis using the effective disposed off. This may mean that amounts previously recognised in other interest method. comprehensive income are reclassified to the consolidated income statement. If the ownership in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to the consolidated income statement where appropriate.

7

102 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Income tax

Liquidated damages The tax expense for the period comprises current and deferred tax.

Income from claims for liquidated damages on aircraft and related assets is recognised The current income tax charge is calculated on the basis of the tax laws enacted or in the consolidated income statement as other income or a reduction to operating costs substantively enacted at the end of the reporting period in the countries where Emirates when a contractual entitlement exists, amounts can be reliably measured and receipt is operates and generates taxable income. Overview virtually certain. When such claims do not relate to compensations for loss of income or Emirates are not towards incremental operating costs, the amounts are taken to the consolidated Deferred income tax is provided in full on temporary differences arising between the tax statement of financial position and recorded as a reduction in the cost of the related bases of assets and liabilities and their carrying amounts in the consolidated financial dnata asset. statements. However, deferred income tax is not recognised if it arises from initial

Group recognition of an asset or liability in a transaction other than a business combination Foreign currency translation that at the time of the transaction affects neither accounting nor taxable profit or loss. Financial Also, deferred tax liabilities are not recognised if they arise from the initial recognition of Information Emirates’ consolidated financial statements are presented in UAE Dirham (“AED”), which goodwill in a business combination. Deferred income tax is determined using tax rates Emirates is also the company’s functional currency. Subsidiaries, associates and joint ventures (and laws) that have been enacted or substantially enacted at the end of reporting Financial determine their own functional currency and items included in the financial statements period and are expected to apply when the related deferred income tax asset is realised Commentary of these companies are measured using that functional currency. or the deferred income tax liability is settled. dnata Financial Foreign currency transactions are translated into the functional currency at the exchange Deferred income tax assets are recognised only to the extent that it is probable that Commentary rates prevailing at the transaction dates. Monetary assets and liabilities denominated in future taxable profit will be available against which the temporary differences can be Emirates foreign currencies are translated into the functional currency at the exchange rates utilised. Consolidated prevailing at the end of the reporting period. The resultant foreign exchange gains and Financial Statements losses, other than those on qualifying cash flow hedges deferred in other comprehensive Property, plant and equipment income, are recognised in the consolidated income statement. dnata Property, plant and equipment is stated at cost less accumulated depreciation. Cost Consolidated Financial Where functional currencies of subsidiaries are different from AED, income and cash flow consists of purchase cost, together with any incidental expenses of acquisition. Statements statements of subsidiaries are translated into AED at average exchange rates for the year that approximate the cumulative effect of rates prevailing on the transaction dates and Subsequent costs are included in the asset’s carrying amount or recognised as a Additional Information their assets and liabilities are translated at the exchange rates ruling at the end of separate asset, as appropriate, only when it is probable that future economic benefits reporting period. The resulting exchange differences are recognised in other associated with the item will flow to Emirates and the cost can be measured reliably. comprehensive income. Repairs and maintenance are charged to the consolidated income statement during the period in which they are incurred. Share of results of investments accounted for using the equity method are translated into AED at average exchange rates for the year whereas Emirates’ share of net Land is not depreciated. Depreciation on other items of property, plant and equipment is investments is translated at the exchange rate prevailing at the end of the reporting calculated using the straight-line method to allocate their cost, less estimated residual period. Translation differences relating to investments in associates, joint ventures and values, over the estimated useful lives of the assets or the lease term, if shorter. monetary assets and liabilities that form part of a net investment in a foreign operation are recognised in other comprehensive income. When investments in associates, joint The estimated useful lives and residual values are: ventures or net investment in a foreign operation are disposed of, the related translation differences previously recorded in equity are recognised in the consolidated Aircraft – new 15 - 18 years (residual value nil - 10%) income statement as part of the gain or loss on disposal. Aircraft – used 5 years (residual value nil) Aircraft engines and parts 5 - 15 years (residual value nil - 10%) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are Buildings 15 - 40 years treated as assets and liabilities of the foreign entity and translated at the exchange rates Other property, plant and 3 - 20 years or over the lease term, if shorter prevailing at the end of reporting period. Exchange differences arising are recognised in equipment other comprehensive income. 8

103 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Finance and operating leases

Property, plant and equipment (continued) 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 Major overhaul expenditure is depreciated over the shorter of the period to the next Emirates, they are classified as finance leases. Finance leases are capitalised at the major overhaul, the remaining lease term or the useful life of the asset concerned. 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 Overview The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at included under liabilities. Lease payments are treated as consisting of capital and interest Emirates the end of each reporting period. elements. The interest element is charged to the consolidated income statement over the lease term so as to produce a constant periodic rate of interest on the remaining dnata Capital projects are stated at cost. When the asset is ready for its intended use, it is balance of the liability. Property, plant and equipment acquired under finance leases are Group transferred from capital projects to the appropriate category under property, plant and depreciated in accordance with Emirates’ policies. equipment and depreciated in accordance with Emirates’ policies. Financial Leases, where a significant portion of risks and rewards of ownership are retained by the Information An item of property, plant and equipment is derecognised upon disposal or when no lessor, are classified as operating leases. Lease rental charges, including advance rentals Emirates future economic benefits are expected from its use or disposal. Gains and losses on in respect of operating leases, are charged to the consolidated income statement on a Financial disposals are determined by comparing proceeds with the carrying amount and are straight-line basis over the period of the lease. Commentary recognised in the consolidated income statement. dnata Gains and losses arising on sale and leaseback transactions resulting in an operating Financial Borrowing costs lease and where the sale price is at fair value, are recognised immediately in the Commentary consolidated income statement. Where the sale price is below fair value, any losses are Emirates Borrowing costs directly attributable to the acquisition, construction or production of immediately recognised in the consolidated income statement, except where the loss is Consolidated qualifying assets are added to the cost of the assets until such time that the assets are compensated for by future lease payments at below market price, it is deferred and Financial Statements substantially ready for their intended use. Where funds are borrowed specifically for the amortised in proportion to the lease payments over the period for which the asset is purpose of obtaining a qualifying asset, any investment income earned on temporary expected to be used. Where the sale price is above fair value, the excess over fair value is dnata surplus funds is deducted from borrowing costs eligible for capitalisation. In the case of accounted for as a deferred credit and amortised over the period for which the asset is Consolidated Financial general borrowings, a capitalisation rate, which is the weighted average rate of general expected to be used. Statements borrowing costs, is applied to the expenditure on qualifying assets and included in the cost of the asset. Lease classification is made at the inception of the lease. Lease classification is changed Additional Information only if, at any time during the lease, the parties to the lease agreement agree to change Manufacturers' credits the provisions of the lease (without renewing it) in a way that it would have been classified differently at inception had the changed terms been in effect at that time. The Emirates receives credits from manufacturers in connection with the acquisition of revised agreement is considered as a new agreement and accounted for prospectively certain aircraft and engines. Depending on their nature, these credits are either recorded over the remaining term of the lease. as a reduction to the cost of the related aircraft and engines or reduced from ongoing operating expenses. Where the aircraft are held under operating leases, credits received relating to aircraft are deferred on the statement of financial position as deferred credits and recognised on a straight-line basis over the period of the related lease.

9

104 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Impairment of non-financial assets

Goodwill Goodwill is not subject to amortisation and is tested annually for impairment. Other non-financial assets are reviewed for impairment whenever events or changes in Goodwill represents the excess of the aggregate of the consideration transferred, circumstances indicate that the carrying amount may not be recoverable. An impairment amount of any non-controlling interest in the acquired entity and the acquisition-date loss is recognised for the amount by which the asset’s carrying amount exceeds its fair value of any previous equity interest in the acquired entity over the fair value of the recoverable amount. The recoverable amount is the higher of an asset’s fair value less Overview net identifiable assets at the date of acquisition. costs to sell and value in use. For the purpose of assessing impairment, assets are Emirates grouped at the lowest levels for which there are separately identifiable cash flows (cash Goodwill is tested for impairment annually or more frequently if events or changes in generating units). Non-financial assets other than goodwill are reviewed at the end of dnata circumstances indicate a potential impairment and is carried at cost less accumulated each reporting period for possible reversal of the impairment loss.

Group impairment losses. For the purpose of impairment testing, goodwill is allocated to cash generating units or a group of cash generating units that are expected to benefit from Loans and receivables Financial the business combination in which the goodwill arose. An impairment loss is recognised Information when the carrying value of the cash generating units or a group of cash generating units Loans and receivables are non-derivative financial assets with fixed or determinable Emirates exceeds its recoverable amount. Impairment losses on goodwill are not reversed. payments that are not quoted in an active market. Such amounts are initially recognised Financial at fair value including transaction costs and subsequrently measured at amortised cost Commentary Gains and losses on the disposal of an entity include the carrying amount of goodwill using the effective interest method. The amounts are derecognised when rights to dnata relating to the entity sold. receive cash flows have expired or have been transferred along with substantially all the Financial risks and rewards of ownership. Commentary Other intangible assets Emirates At the end of each reporting period, an assessment is made whether there is any Consolidated Intangible assets are capitalised at cost only when future economic benefits are objective evidence of impairment. Where necessary, the carrying amount is written down Financial Statements probable. Cost includes the purchase price together with any directly attributable through the consolidated income statement to the present value of expected future cash expenditure. flows discounted at the effective interest rate computed at initial recognition. dnata Consolidated Financial In the case of internally developed computer software, development expenditure is Statements capitalised if costs can be measured reliably, the product is technically and commercially feasible, future economic benefits are probable, and there exists an intent and ability to Additional Information complete the development and to use or sell the asset. Other research and development expenditure not meeting the criteria for capitalisation are recognised in the consolidated income statement as incurred.

Intangible assets are amortised on a straight-line basis over their estimated useful lives which are:

Service rights 15 years Trade names 20 years Contractual rights 15 years Computer software 3-7 years

The intangible assets’ useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

10

105 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognised immediately in the consolidated income statement. Derivative financial instruments Inventories Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Inventories are stated at the lower of cost and estimated net realisable value. Cost is Derivatives are designated as a hedge of the exposure to variability in cash flows that is determined on the weighted average cost basis. Overview attributable to a particular risk associated with a recognised asset or liability or a highly Emirates probable forecast transaction (cash flow hedge). Fair values are obtained from quoted Trade receivables market prices or dealer quotes for similar instruments, discounted cash flow models and dnata option pricing models as appropriate. All derivatives are carried as assets when the fair Trade receivables are initially recognised at fair value and subsequently measured at

Group value is positive and as liabilities when the fair value is negative. amortised cost using the effective interest method, less provision for impairment. Where there is objective evidence of amounts that are not collectible, a provision is made for Financial Emirates’ criteria to account for a derivative financial instrument as a hedge include: the difference between the carrying amount and the present value of the estimated Information future cash flows, discounted at the original effective interest rate. Emirates  formal documentation of the hedging instruments, hedged items, hedging objective, Financial strategy and basis of measuring effectiveness all of which are prepared prior to Borrowings Commentary applying hedge accounting; and dnata Borrowings are recognised initially at fair value, net of transaction costs incurred. Financial  documentation showing that the hedge effectiveness is assessed on an ongoing Borrowings are subsequently measured at amortised cost with any difference between Commentary basis and is determined to have been highly effective in offsetting the risk of the the proceeds (net of transaction costs) and the redemption value recognised in the Emirates hedged item throughout the reporting period. consolidated income statement over the period of the borrowings using the effective Consolidated interest method. Financial Statements Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that prove to be highly effective in relation to the hedged risk are Provisions dnata recognised in other comprehensive income. When the forecasted transaction results in Consolidated Financial the recognition of a non-financial asset or a non-financial liability, the gains and losses Provisions are made when an obligation exists for a future liability in respect of a past Statements previously recognised in other comprehensive income are re-classified and included in event and where the amount of the obligation can be reliably estimated. the initial carrying amount of the asset or liability. These gains and losses are ultimately Additional Information recognised in the consolidated income statement in the same period during which the Provision for aircraft return conditions 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 Provision for aircraft return conditions represents the estimate of the cost to meet the the period during which the forecasted transaction affects the consolidated income contractual lease end obligations on certain aircraft and engines held under operating statement and are presented in the same line item as the gains and losses from hedged leases. The present value of the expected cost is recognised over the lease term items. considering the existing fleet plan and long-term maintenance schedules.

When a cash flow hedging instrument expires or is sold, terminated or exercised, or when a hedge no longer meets the criteria for hedge accounting under IAS 39, any cumulative gain or loss existing in equity at that time is retained in equity and is ultimately recognised in the consolidated income statement when the forecasted transaction occurs. If a forecasted transaction is no longer expected to occur, the 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 recognised in the consolidated income statement.

11

106 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Cash and cash equivalents

Retirement benefit obligations Cash and cash equivalents comprise cash and liquid funds with an original maturity of three months or less. Other bank deposits with maturity less than one year are classified Emirates operates or participates in various end of service benefit plans, which are as short term bank deposits. Bank overdrafts are shown within current borrowings and classified either as defined contribution or defined benefit plans. lease liabilities in the consolidated statement of financial position.

Overview A defined contribution plan is a pension scheme under which Emirates pays fixed Segment reporting Emirates contributions and has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to settle the benefits relating to the employees’ Operating segments are reported in a manner consistent with the internal reporting dnata service in the current and prior periods. Contributions to the pension fund are charged provided to the chief operating decision maker. The chief operating decision maker is

Group to the consolidated income statement in the period in which they fall due. considered to be the Emirates’ leadership team who make strategic decisions and are responsible for allocating resources and assessing performance of the operating Financial A defined benefit plan is a plan which is not a defined contribution plan. The liability segments. Information recognised in the consolidated statement of financial position for a defined benefit plan Emirates is the present value of the defined benefit obligation at the end of the reporting period Offsetting of financial assets and liabilities Financial less the fair value of plan assets at that date. The defined benefit obligation is calculated Commentary by independent actuaries using the projected unit credit method. Financial assets and liabilities are offset and the net amount is reported in the dnata consolidated statement of financial position only when there is a legally enforceable Financial The present value of the defined benefit obligation is determined by discounting right to offset the recognised amounts and there is an intention to settle on a net basis Commentary estimated future cash outflows using market yields at the end of the reporting period of or realise the asset and settle the liability simultaneously. The legally enforceable right Emirates high quality corporate bonds that are denominated in currency in which the benefits will must not be contingent on future events and must be enforceable in the normal course Consolidated be paid and have terms approximating to the estimated term of the post-employment of business and in the event of default, insolvency or bankruptcy. Financial Statements benefit obligations. Dividend distribution dnata Actuarial gains and losses arising from changes in actuarial assumptions and experience Consolidated Financial adjustments are recognised in equity through the consolidated statement of Dividend distribution to Equity holders is recognised as a liability in the consolidated Statements comprehensive income in the period in which they arise. financial statements in the period in which the dividends are approved.

Additional Information Trade payables 3. Critical accounting estimates and judgements

Trade payables are recognised initially at fair value and subsequently measured at In the preparation of these consolidated financial statements, a number of estimates and amortised cost using the effective interest method. associated assumptions have been made relating to the application of accounting policies and reported amounts of assets, liabilities, income and expense. The estimates Derecognition of financial assets and financial liabilities 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 Financial assets are derecognised only when the contractual rights to the cash flows believed to be reasonable under the circumstances. The following narrative addresses expire or substantially all the risks and rewards of ownership are transferred along with the accounting policies that require subjective and complex judgements, often as a result the contractual rights to receive cash flows. Financial liabilities are derecognised only of the need to make estimates. when they are extinguished i.e. when the obligations specified in the contract are discharged or cancelled or expire.

12

107 THE EMIRATES GROUP ANNUAL REPORT 2017-18

3. Critical accounting estimates and judgements (continued) Where Emirates enters into sale and leaseback transactions for aircraft, the timing and amount of profit recognised on these transactions is subject to the fair value of the Passenger and cargo revenue recognition aircraft at the time of sale. Judgement is required to estimate the fair value due to diversity of inputs that goes into the determination of aircraft fair value which includes Passenger and cargo sales are recognised as revenue when transportation is provided. references to third party valuations. The value of unused revenue documents is held in the consolidated statement of financial position under current liabilities as passenger and cargo sales in advance. Overview Provision for aircraft return conditions Unused revenue documents are recognised in the consolidated income statement as Emirates revenue based on their terms and conditions and historical trends. The measurement of the provision for aircraft return conditions includes assumptions relating to expected costs, escalation rates, discount rates commensurate with the dnata Frequent flyer programme (‘Skywards’) expected obligation maturity and long-term maintenance schedules. An estimate is

therefore made at each reporting date to ensure that the provision corresponds to the Group Emirates accounts for Skywards miles as a separately identifiable component of the sales present value of the expected costs to be borne by Emirates. A significant level of transaction in which they are granted. The consideration in respect of the initial sale is Financial judgement is exercised by management given the long-term nature and diversity of Information allocated to Skywards miles based on their fair value and is accounted as a liability assumptions that go into the determination of the provision. No reasonably possible (deferred revenue) in the consolidated statement of financial position. Emirates change in any single assumption will result in a material change to the provision.

Financial Commentary Estimation techniques are used to determine the fair value of Skywards miles and reflect Valuation of defined benefit obligations the weighted average of a number of factors i.e. fare per sector, flight upgrades and dnata partner rewards using historical trends. Adjustments to the fair value of miles are also Financial The present value of the defined benefit obligations is determined on an actuarial basis Commentary made for miles not expected to be redeemed by members and the extent to which the using various assumptions that may differ from actual developments in the future. These demand for an award cannot be met. Emirates assumptions include the determination of the discount rate and expected salary

Consolidated increases which are reviewed at each reporting date. Due to the complexities involved in Financial A level of judgement is exercised by management due to the diversity of inputs that go the valuation and its long-term nature, defined benefit obligations are sensitive to Statements into determining the fair value of miles. No reasonably possible change in any single changes in these assumptions. A sensitivity analysis of changes in defined benefit assumption will result in a material change to the deferred revenue. dnata obligations due to a reasonably possible change in these assumptions is set out in Note Consolidated 25. Financial Useful lives and residual values of aircraft and related assets Statements

4. Fair value estimation Additional Management assigns useful lives and residual values to aircraft and related assets based Information on the intended use and the economic lives of those assets. Subsequent changes in circumstances such as technological advances or prospective utilisation of the assets The levels of fair value hierarchy are defined as follows: concerned could result in the actual useful lives or residual values differing from initial estimates. Level 1: Measurement is made by using quoted prices (unadjusted) from an active market. Aircraft finance and operating lease classification Level 2: Measurement is made by means of valuation methods with parameters derived directly or indirectly from observable market data. A lease is classified as a finance lease when substantially all the risks and rewards of Level 3: Measurement is made by means of valuation methods with parameters not ownership of an aircraft are transferred to Emirates. In determining the appropriate lease based exclusively on observable market data. classification, the substance of the transaction rather than the legal form is considered. Factors considered include but are not limited to the following: whether the lease Derivatives are the only financial instruments which are carried at fair value and fall into transfers ownership of the aircraft to Emirates by the end of the lease term; Emirates has level 2 of the fair value hierarchy (Note 35). the option to purchase the aircraft at a price that is sufficiently lower than the fair value Derivatives comprise forward exchange contracts and interest rate swaps. The forward on exercise date; the lease term is for the major part of the economic life of the aircraft exchange contracts have been fair valued using forward exchange rates that are quoted and the present value of the minimum lease payments amount to at least substantially in an active market. Interest rate swaps are fair valued using forward interest rates all of the fair value of the leased aircraft. extracted from observable yield curves.

13

108 THE EMIRATES GROUP ANNUAL REPORT 2017-18

7. Operating costs 5. Revenue 5. Revenue 7. Operating costs 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Passenger Passenger 73,963 68,491 73,963 68,491 Jet fuel Jet fuel 24,715 20,968 24,715 20,968 Cargo Cargo 12,439 10,592 12,439 10,592 Employee (see (a) below) Employee (see (a) below) 13,080 12,864 13,080 12,864 ConsumerOverview goods Consumer goods 1,625 1,638 1,625 1,638 Aircraft operating leases Aircraft operating leases 11,691 10,509 11,691 10,509

Hotel operationsEmirates Hotel operations 746 738 746 738 Depreciation and amortisationDepreciation (Notes 11 & and 12) amortisation (Notes 9,193 11 & 12) 8,304 9,193 8,304 Food and beverage Food and beverage 680 616 680 616 Sales and marketing Sales and marketing 6,404 5,698 6,404 5,698 dnata Catering operations Catering operations 677 678 677 678 Handling Handling 5,335 5,885 5,335 5,885 Group Excess baggage Excess baggage 433 392 433 392 In-flight catering and other operatingIn-flight costscatering and other operating 3,323 costs 3,343 3,323 3,343 Financial Others 662 687 Overflying 2,891 2,851 OthersInformation 662 687 Overflying 2,891 2,851 91,225 83,832 91,225 83,832 Facilities and IT related costs (seeFacilities (b) below) and IT related costs (see (b) 2,485 below) 2,470 2,485 2,470 Emirates Financial Aircraft maintenance Aircraft maintenance 2,364 2,738 2,364 2,738 Commentary 6. Other operating income 6. Other operating income Landing and parking Landing and parking 2,153 2,057 2,153 2,057 dnata Cost of goods sold Cost of goods sold 1,575 1,499 1,575 1,499 Other operatingFinancial income comprisesOther operating AED 145 m income (2017: comprises AED 312 m)AED from 145 liquidated m (2017: AED 312 m) from liquidated Commentary Crew layover 1,125 1,082 damages and other compensationdamages received and other in connection compensation with aircraft,received AED in connection 292 m with aircraft, AED 292 m Crew layover 1,125 1,082 (2017:Emirates AED 205 m) being the(2017: amortisation AED 205 of m) gain being on sale the amortisationand leaseback of of gain aircraft, on sale and leaseback of aircraft, Foreign exchange loss - net Foreign exchange loss - net - 362 - 362 Consolidated aircraftFinancial engines and parts, a netaircraft foreign engines exchange and parts, gain ofa net AED foreign 33 m (2017:exchange Nil) gain and of AED 33 m (2017: Nil) and Corporate overheads Corporate overheads 1,902 2,018 1,902 2,018 Statements income of AED 627 m (2017: AED 734 m) from ancillary services and activities income of AED 627 m (2017: AED 734 m) from ancillary services and activities 88,236 82,648 88,236 82,648 incidentaldnata to Emirates' operations.incidental to Emirates' operations. Consolidated Financial (a) Employee costs include AED 732 m (2017: AED 741 m) in respect of retirement Statements (a) Employee costs include AED 732 m (2017: AED 741 m) in respect of retirement benefit obligations (Note 25). benefit obligations (Note 25). Additional Information (b) Facilities and IT related(b) costs Facilities include and non-aircraft IT related operating costs include lease non-aircraft charges operating lease charges amounting to AED 724 m (2017:amounting AED 705 to m). AED 724 m (2017: AED 705 m).

14 14 109 THE EMIRATES GROUP ANNUAL REPORT 2017-18

8. Finance income and costs8. Finance income and costs 9. Income tax expense 9. Income tax expense 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Finance income Finance income Current income tax expense Current income tax expense 44 40 44 40 Interest income from related partiesInterest (Note income 37) from related parties (Note 216 37) 159 216 159 44 40 44 40 InterestOverview income on short termInterest bank deposits income on short term bank deposits 159 122 159 122

Emirates 375 281 375 281 Emirates has secured tax exemptionsEmirates hasby virtue secured of doubletax exemptions taxation by agreements virtue of doubleand taxation agreements and Finance costs airline reciprocal arrangementsairline in most reciprocal of the arrangements jurisdictions in in most which of it the operates. jurisdictions in which it operates. Financednata costs Therefore, the income tax expense relates only to certain overseas stations of Aircraft finance lease costs Aircraft finance lease costs (1,216) (1,019) (1,216) (1,019) Therefore, the income tax expense relates only to certain overseas stations of Group Emirates' operations and itsEmirates' subsidiaries operations where Emirates and its issubsidiaries subject to where income Emirates tax. is subject to income tax. Interest expense on bonds andInterest term loans expense on bonds and term loans(146) (147) (146) (147) Financial Providing information on effectiveProviding tax rates information is therefore on effectivenot meaningful. tax rates is therefore not meaningful. Other financeInformation costs - net Other finance costs - net (231) (217) (231) (217) (1,593) (1,383) (1,593) (1,383) Emirates Financial Commentary

dnata Financial Commentary

Emirates Consolidated Financial Statements

dnata Consolidated Financial Statements

Additional Information

110 15 15 THE EMIRATES GROUP ANNUAL REPORT 2017-18

10. Segment information 10. Segment information The segment information forThe the segment year ended information 31 March for 2018 the is year as follows: ended 31 March 2018 is as follows:

Emirates' leadership team monitorsEmirates' the leadership operating team results monitors of its business the operating units for results the of its business units for the Catering Recon-Catering Recon- purpose of making decisionspurpose about resource of making allocation decisions and about performance resource assessment.allocation and performance assessment. Airline operations OtherAirlineciliationoperations Total Other ciliation Total 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 m AED m AED m AED m passenger, cargo services andpassenger, excess baggage, cargo services is the main and reportable excess baggage, segment. is the Catering main reportable segment. Catering Overview Total segment revenue Total 88,008 segment revenue 2,709 3,085 88,008 (321) 2,709 93,481 3,085 (321) 93,481 operations 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 (2,032) (224) - - (2,032) (2,256) (224) - (2,256) cateringEmirates services. 'Other' comprisescatering of services. various businesses'Other' comprises not allocated of various to a businesses reportable not allocated to a reportable Revenue from external Revenue from external segment.dnata segment. customers customers 88,008 677 2,861 88,008 (321) 677 91,225 2,861 (321) 91,225 The performance of the airlineThe and performance catering operations of the airline is evaluated and catering based operations on segment is evaluated based on segment Group Segment profit for the Segment profit for the profit or loss and is measuredprofit consistently or loss and with is profit measured for the consistently year in the with consolidated profit for the year in the consolidated year year 2,286 260 433 - 2,979 financialFinancial statements. financial statements. 2,286 260 433 - 2,979 Information Finance income Finance 373 income 6 2 373 (6) 6 375 2 (6) 375 SegmentEmirates revenue is measuredSegment in a manner revenue consistent is measured with in that a manner in the consolidated consistent with that in the consolidated Finance costs Finance(1,592) costs - (7)(1,592) 6 - (1,593) (7) 6 (1,593) Financial incomeCommentary statement, with theincome exception statement, of notional with revenues the exception and costs of notional in the airline revenues and costs in the airline Income tax (expense) / Income tax (expense) / segment 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 credit credit (51) - 7 (51) - - (44) 7 - (44) dnata duty travelFinancial of staff and consultantsduty travel that are of staff eliminated and consultants when preparing that are the eliminated consolidated when preparing the consolidated Depreciation and Depreciation and financialCommentary statements. This adjustment is presented as a reconciling item. The breakdown financial statements. This adjustment is presented as a reconciling item. The breakdown amortisation amortisation(8,874) (126) (193)(8,874) - (126) (9,193) (193) - (9,193) of revenue from external customers by nature of business activity is provided in Note 5. Emirates of revenue from external customers by nature of business activity is provided in Note 5. Share of results of Consolidated Share of results of Financial investments accounted for investments accounted for SegmentStatements assets include inter-segmentSegment assets loans includeand receivables, inter-segment which loans are eliminated and receivables, on which are eliminated on using the equity method using the equity method consolidation. This consolidation adjustment is presented as a reconciling item. - - 155 - - - 155 155 - 155 dnata consolidation. This consolidation adjustment is presented as a reconciling item. Consolidated Segment assets Segment 119,670 assets 3,101 5,563 119,670 (747) 3,101 127,587 5,563 (747) 127,587 Financial Statements Investments accounted for Investments accounted for Additional using the equity method using the equity method Information - - 662 - - - 662 662 - 662 Additions to property, Additions to property, plant and equipment plant 8,083 and equipment 136 68 8,083 - 136 8,287 68 - 8,287 Additions to intangible Additions to intangible assets (including assets (including 193 193 5 23 - 221 acquisitions) acquisitions) 193 5 23 - 221 Additions to advance lease Additions to advance lease rentals rentals 1,286 - - 1,286 - - 1,286 - - 1,286

16 16 111 THE EMIRATES GROUP ANNUAL REPORT 2017-18

10. Segment information (continued)10. Segment information (continued) Geographical information Geographical information 2018 2017 2018 2017 The segment information forThe the segment year ended information 31 March for 2017 the is year as follows: ended 31 March 2017 is as follows: AED m AED m AED m AED m

Revenue from external customers:Revenue from external customers: Catering Recon-Catering Recon- Europe 26,727 23,906 Airline operations OtherAirlineciliationoperationsTotal Other ciliation Total Europe 26,727 23,906 Overview AED m AED m AED mAED m AED m AED m AED m AED m AED m AED m East Asia and Australasia East Asia and Australasia 25,409 22,621 25,409 22,621 Americas 13,441 12,504 Total segmentEmirates revenue Total 80,714 segment revenue 2,761 3,012 80,714 (354) 2,761 86,133 3,012 (354) 86,133 Americas 13,441 12,504 Africa 9,343 8,693 Inter-segmentdnata revenue Inter-segment - revenue (2,083) (218) - - (2,083) (2,301) (218) - (2,301) Africa 9,343 8,693 Revenue from external Revenue from external Gulf and Middle East Gulf and Middle East 8,544 8,682 8,544 8,682 Group customers customers 80,714 678 2,794 80,714 (354) 678 83,832 2,794 (354) 83,832 West Asia and Indian Ocean West Asia and Indian Ocean 7,761 7,426 7,761 7,426 SegmentFinancial profit for the Segment profit for the Information 91,225 83,832 91,225 83,832 year year 656 285 509 656 - 285 1,450 509 - 1,450 Emirates Finance Financialincome Finance 279 income 7 1 279 (6) 7 281 1 (6) 281 Revenue from inbound andRevenue outbound from airline inbound operations and outbound between the airline UAE operations and the between the UAE and the Commentary Finance costs Finance(1,382) costs - (7)(1,382) 6 - (1,383) (7) 6 (1,383) overseas point is attributed tooverseas the geographical point is attributed area in which to the the geographical respective areaoverseas in which the respective overseas Income dnatatax (expense) / Income tax (expense) / points are located. Revenuepoints from are other located. segments Revenue is reported from other based segments upon the is reported based upon the Financial credit Commentary credit(45) - 5 (45) - - (40) 5 - (40) geographical area in which salesgeographical are made orarea services in which are salesrendered. are made or services are rendered. Depreciation and Depreciation and Emirates The major revenue earning assetThe is major the aircraft revenue fleet, earning which asset is registered is the aircraft in the fleet, UAE. which Since is registered in the UAE. Since amortisationConsolidated amortisation(7,971) (140) (193)(7,971) - (140) (8,304) (193) - (8,304) Financial the aircraft fleet is deployedthe flexibly aircraft across fleet is Emirates' deployed route flexibly network, across providing Emirates' route network, providing Share ofStatements results of Share of results of information on non-current assetsinformation by geographical on non-current areas isassets not considered by geographical meaningful. areas is not considered meaningful. investments accounted for dnata investments accounted for using theConsolidated equity method using the equity method Financial - - 157 - - - 157 157 - 157 No single external customer contributesNo single external 10% or morecustomer of Emirates' contributes revenues. 10% or more of Emirates' revenues. Statements Segment assets Segment 113,388 assets 3,274 5,569 113,388 (673) 3,274 121,558 5,569 (673) 121,558 Additional InvestmentsInformation accounted for Investments accounted for using the equity method using the equity method - - - 676 - - - 676 676 - 676 Additions to property, Additions to property, plant and equipment plant 11,788 and equipment 465 110 11,788 - 465 12,363 110 - 12,363 Additions to intangible Additions to intangible assets assets 269 - - 269 - - 269 - - 269 Additions to advance lease Additions to advance lease rentals rentals 2,438 - - 2,438 - - 2,438 - - 2,438

112 17 17 THE EMIRATES GROUP ANNUAL REPORT 2017-18

11. Property, plant and equipment Other Aircraft Land property, engines and plant and Capital Aircraft and parts buildings equipment projects Total AED m AED m AED m AED m AED m AED m Overview Cost Emirates 1 April 2016 66,083 6,295 12,874 14,580 12,976 112,808 dnata Additions 5 31 9 3,363 8,955 12,363 Transfer from capital projects 10,402 992 1,149 370 (12,913) - Group Disposals / write-offs (315) (419) - (3,156) - (3,890) Financial Information Currency translation differences - - 1 (3) (1) (3)

Emirates 31 March 2017 76,175 6,899 14,033 15,154 9,017 121,278 Financial Accumulated depreciation Commentary 1 April 2016 15,567 1,848 3,377 9,180 - 29,972 dnata Financial Charge for the year 4,283 405 560 2,926 - 8,174 Commentary Disposals / write-offs (281) (409) - (3,074) - (3,764) Emirates Currency translation differences - - - (2) - (2) Consolidated Financial 31 March 2017 19,569 1,844 3,937 9,030 - 34,380 Statements Net book amount dnata Consolidated 31 March 2017 56,606 5,055 10,096 6,124 9,017 86,898 Financial Statements

Additional Information

18

113 THE EMIRATES GROUP ANNUAL REPORT 2017-18

11. Property, plant and equipment (continued) Other Aircraft Land property, engines and plant and Capital Aircraft and parts buildings equipment projects Total AED m AED m AED m AED m AED m AED m Overview Cost Emirates 1 April 2017 76,175 6,899 14,033 15,154 9,017 121,278 dnata Additions - 189 14 3,354 4,730 8,287

Group Transfer from capital projects 5,152 303 919 354 (6,728) - Disposals / write-offs (339) (300) (5) (1,968) - (2,612) Financial Information 31 March 2018 80,988 7,091 14,961 16,894 7,019 126,953

Emirates Accumulated depreciation Financial 1 April 2017 19,569 1,844 3,937 9,030 - 34,380 Commentary Charge for the year 4,808 412 598 3,210 - 9,028 dnata Financial Disposals / write-offs (310) (156) (5) (1,935) - (2,406) Commentary 31 March 2018 24,067 2,100 4,530 10,305 - 41,002 Emirates Net book amount Consolidated Financial 31 March 2018 56,921 4,991 10,431 6,589 7,019 85,951 Statements dnata The net book amount of property, plant and equipment includes AED 53,164 m (2017: AED 54,148 m) in respect of assets held under Consolidated Financial finance leases. Statements The net book amount of aircraft includes an amount of AED 5,671 m (2017: AED 3,953 m) in respect of assets provided as security against Additional term loans. Information Land of AED 922 m (2017: AED 861 m) is carried at cost and is not depreciated.

Property, plant and equipment includes interest capitalised during the year amounting to AED 163 m (2017: AED 226 m). The interest on general borrowings for qualifying assets was capitalised using an annual weighted average capitalisation rate of 4.1% (2017: 4.0%).

Capital projects include pre-delivery payments of AED 4,560 m (2017: AED 5,855 m) in respect of aircraft due for delivery between 2019 and 2028 (Note 32).

The net book amount of other property, plant and equipment includes AED 4,578 m (2017: AED 3,954 m) pertaining to aircraft and engine related overhauls.

19

114 THE EMIRATES GROUP ANNUAL REPORT 2017-18

12. Intangible assets Service Trade Contractual Computer Goodwill rights names rights software Total

AED m AED m AED m AED m AED m AED m Cost 1 April 2016 597 232 19 56 1,226 2,130 Overview Additions - 50 - - 219 269 Emirates Disposals / write-offs - - - - (97) (97) dnata Currency translation differences - - - - 3 3 Group 31 March 2017 597 282 19 56 1,351 2,305

Financial Accumulated amortisation and impairment Information 1 April 2016 - 120 6 11 676 813 Emirates Amortisation for the year - 17 2 5 106 130 Financial Commentary Disposals / write-offs - - - - (81) (81) Currency translation differences - - - - 2 2 dnata Financial 31 March 2017 - 137 8 16 703 864 Commentary Net book value Emirates Consolidated 31 March 2017 597 145 11 40 648 1,441 Financial Statements dnata Consolidated Financial Statements

Additional Information

20

115 THE EMIRATES GROUP ANNUAL REPORT 2017-18

12. Intangible assets (continued) Service Trade Contractual Computer Goodwill rights names rights software Total AED m AED m AED m AED m AED m AED m Cost 1 April 2017 597 282 19 56 1,351 2,305 Overview Additions - - - - 209 209 Emirates Acquisitions 12 - - - - 12 Disposals / write-offs - - - - (3) (3) dnata Currency translation differences - - - 1 - 1 Group 31 March 2018 609 282 19 57 1,557 2,524

Financial Accumulated amortisation and impairment Information 1 April 2017 - 137 8 16 703 864 Amortisation for the year - 19 1 5 140 165 Emirates Financial Disposals / write-offs - - - - (1) (1) Commentary 31 March 2018 - 156 9 21 842 1,028 dnata Net book value Financial Commentary 31 March 2018 609 126 10 36 715 1,496

Emirates Computer software includes an amount of AED 212 m (2017: AED 215 m) in respect of projects under implementation. Consolidated Financial For the purpose of testing goodwill impairment, the recoverable amounts for cash generating units have been determined on the basis of Statements value-in-use calculations using cash flow forecasts approved by management covering a three year period. Cash flows beyond the three dnata year period have been extrapolated using the long term terminal growth rates. The key assumptions used in the value-in-use calculations Consolidated Financial include a risk adjusted pre-tax discount rate of 12% (2017: 12%), gross margins consistent with historical trends and growth rates based on Statements management's expectations for market development. The long term growth rate does not exceed the long term average growth rate for the

Additional markets in which the cash generating units operate. Any reasonably possible changes to the assumptions will not lead to an impairment Information charge. The goodwill allocated to the cash generating unit or groups of cash generating units is as follows:

Cash generating unit Location Reportable segment Goodwill 2018 2017 AED m AED m Catering operations UAE Catering operations 369 369 Consumer goods UAE Others 212 200 Food and beverage UAE Others 25 2 5 Food and beverage Australia Others 3 3 609 597

21

116 THE EMIRATES GROUP ANNUAL REPORT 2017-18

13. Investments in subsidiaries, associates and joint ventures Country of Percentage of incorporation beneficial Percentage of and principal interest equity owned Principal activities operations Principal subsidiaries Overview Wholesale and retail of consumer

Emirates Maritime & Mercantile International L.L.C. 68.7 68.7 goods UAE Maritime & Mercantile International Holding dnata L.L.C. 100 100 Holding company UAE Group Emirates Leisure Retail Holding L.L.C. 100 100 Holding company UAE Financial Emirates Leisure Retail L.L.C. 68.7 68.7 Food and beverage operations UAE Information Emirates Leisure Retail (Singapore) Pte Ltd. 100 100 Food and beverage operations Singapore Emirates Financial Emirates Leisure Retail (Australia) Pty Ltd. 100 100 Food and beverage operations Australia Commentary Emirates Hotel L.L.C. 100 100 Hotel operations UAE dnata Emirates (Australia) Pty Ltd. 100 100 Hotel operations Australia Financial Commentary Company L.L.C. 90 90 In-flight and institutional catering UAE

Emirates None of the subsidiaries have non-controlling interests that are material to Emirates. Consolidated Financial Statements Principal joint ventures dnata Emirates-CAE Flight Training L.L.C. 50 51 Flight simulator training UAE Consolidated Financial Premier Inn Hotels L.L.C. 51 51 Hotel operations UAE Statements CAE Flight Training (India) Private Ltd. 50 50 Flight simulator training India Additional CAE Middle East Holdings Limited 50 50 Flight simulator training UAE Information Independent Wine and Spirit (Thailand) Wholesale and retail of consumer Company Limited 49 49 goods Thailand Wholesale and retail of consumer Arabian Harts International Limited 50 50 goods UAE

Premier Inn Hotels L.L.C. and Independent Wine and Spirit (Thailand) Company Limited are subject to joint control and, therefore, these investments are accounted for as joint ventures.

22

117 THE EMIRATES GROUP ANNUAL REPORT 2017-18

13. Investments in subsidiaries,13. Investments associates and in subsidiaries,joint ventures associates (continued) and joint ventures (continued) No individual joint venture isNo material individual to Emirates. joint venture The aggregate is material financial to Emirates. information The aggregate financial information of joint ventures is set out below:of joint ventures is set out below:

Movement of investments accountedMovement for of usinginvestments the equity accounted method for using the equity method 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Share of results of joint venturesShare of results of joint ventures 70 63 70 63 Overview Balance brought forward Balance brought forward 676 522 676 522 Share of total comprehensiveShare income of total of joint comprehensive ventures income 70of joint ventures 63 70 63 InvestmentsEmirates during the year Investments during the year 5 137 5 137

Share ofdnata results Share of results 155 157 155 157 Aggregate carrying valueAggregate of investments carrying in value joint of investments in joint Dividends Dividends (175) (140) (175) (140) ventures ventures 612 621 612 621 Group Currency translation differencesCurrency translation differences 1 - 1 - Financial BalanceInformation carried forward Balance carried forward 662 676 662 676 14. Advance lease rentals 14. Advance lease rentals 2018 2017 2018 2017 Emirates No individualFinancialassociate is materialNo individual to Emirates. associate The aggregate is material financial to Emirates. information The aggregate of financial information of AED m AED m AED m AED m Commentary associates is set out below: associates is set out below: Balance brought forward Balance brought forward 4,901 2,886 4,901 2,886 dnata Financial Additions during the year Additions during the year 1,286 2,438 1,286 2,438 Commentary 2018 2017 2018 2017 Charge for the year Charge for the year (536) (423) (536) (423) AED m AED m AED m AED m Emirates Balance carried forward Balance carried forward 5,651 4,901 5,651 4,901 Consolidated Share of results of associates Share of results of associates 85 94 85 94 Financial Advance lease rentals will be Advancecharged tolease the rentalsconsolidated will be charged to the consolidated Statements Share of total comprehensiveShare income of total of associates comprehensive income 85of associates 94 85 94 income statement as follows:income statement as follows: dnata Within one year (Note 17) Within one year (Note 17) 586 480 586 480 Consolidated AggregateFinancial carrying value ofAggregate investments carrying in associates value of investments 50 in associates 55 50 55 Over one year Over one year 5,065 4,421 5,065 4,421 Statements

Additional Advance lease rentals are non-refundableAdvance lease inrentals the event are non-refundable of the related in lease the being event of the related lease being Information terminated prior to its expiry.terminated prior to its expiry.

Advance lease rentals includeAdvance AED 275 lease m (2017: rentals AED include 314 AEDm) related 275 m to (2017: a company AED 314 m) related to a company under common control. under common control.

118 23 23 THE EMIRATES GROUP ANNUAL REPORT 2017-18

15. Loans and other receivables15. Loans and other receivables 16. Inventories 16. Inventories 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Related parties (Note 37) Related parties (Note 37) 8 11 8 11 In-flight consumables In-flight consumables 1,247 1,065 1,247 1,065 Other receivables Other receivables 64 93 64 93 Engineering Engineering 495 572 495 572 Overview 72 104 72 104 Consumer goods Consumer goods 477 449 477 449 PrepaymentsEmirates Prepayments 100 134 100 134 Others Others 168 152 168 152

dnata 172 238 172 238 2,387 2,238 2,387 2,238 The amounts (excluding prepayments)The amounts are receivable(excluding asprepayments) are receivable as Group follows: follows: In-flight consumables includeIn-flight AED 836 consumables m (2017: AED include 648 m) AED relating 836 m to (2017: items AED which 648 m) relating to items which Financial Between 2 and 5 years 72 104 are not expected to be consumedare not within expected twelve to months be consumed after the within reporting twelve period. months after the reporting period. BetweenInformation 2 and 5 years 72 104 72 104 72 104 Emirates 17. Trade and other receivables17. Trade and other receivables Loans andFinancial other receivablesLoans (excluding and otherprepayments) receivables are (excluding prepayments) are denominatedCommentary in the followingdenominated currencies: in the following currencies: 2018 2017 2018 2017 AED m AED m UAE Dirhamdnata UAE Dirham 67 81 67 81 AED m AED m Financial US DollarCommentary US Dollar 1 15 1 15 Trade receivables - net of provisionTrade receivables - net of provision 5,743 4,644 5,743 4,644 Prepayments Prepayments 3,081 2,748 3,081 2,748 Others Emirates Others 4 8 4 8 Consolidated Related parties (Note 37) Related parties (Note 37) 229 199 229 199 Financial The fairStatements value of loans and otherThe receivables fair value of (excluding loans and prepayments) other receivables amounts (excluding to AED prepayments) amounts to AED Advance lease rentals (Note 14)Advance lease rentals (Note 14) 586 480 586 480

71 m (2017:dnata AED 103 m). Fair71 value m (2017: is determined AED 103 by m). discounting Fair value is projected determined cash by flows discounting projected cash flows Operating lease and other depositsOperating lease and other deposits 779 896 779 896 Consolidated using the interest rate yield curve for the remaining term to maturity and currencies using theFinancial interest rate yield curve for the remaining term to maturity and currencies Other receivables Other receivables 1,108 1,193 1,108 1,193 Statements based on credit spreads applicable at the end of each reporting period. The fair value based on credit spreads applicable at the end of each reporting period. The fair value 11,526 10,160 11,526 10,160 of loans and other receivablesof falls loans into and level other 2 of receivables the fair value falls hierarchy. into level 2 of the fair value hierarchy. Additional Less: Receivables over one yearLess: (Note Receivables 15) over one year (Note 15)(172) (238) (172) (238) Information 11,354 9,922 11,354 9,922 The maximum exposure to creditThe maximumrisk at the exposure reporting to date credit is the risk carrying at the reporting value of the date is the carrying value of the loans and other receivablesloans (excluding and other prepayments). receivables At (excluding the end of prepayments). the reporting At the end of the reporting period, loans and other receivablesperiod, loans(excluding and other prepayments) receivables were (excluding neither past prepayments) due were neither past due Prepayments include an amountPrepayments of AED 68 include m (2017: an amount AED 52 of m) AED paid 68 to m companies (2017: AED 52 m) paid to companies nor impaired. nor impaired. under common control. under common control.

The carrying amount of tradeThe and carrying other amount receivables of trade (excluding and other prepayments receivables and (excluding prepayments and advance lease rentals) approximatesadvance their lease fair rentals) value approximates which falls into their level fair 2 valueof the which fair falls into level 2 of the fair value hierarchy. value hierarchy.

24 24 119 THE EMIRATES GROUP ANNUAL REPORT 2017-18

17. Trade and other receivables17. Trade (continued) and other receivables (continued) 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: 2018 2017 2018 2017 Movements in the provision forMovements impairment in theof trade provision receivables for impairment are as follows: of trade receivables are as follows: AED m AED m AED m AED m 2018 2017 2018 2017 Below 3 months Below 3 months 677 398 677 398 AED m AED m AED m AED m 3-6 months 3-6 months 51 63 51 63 BalanceOverview brought forward Balance brought forward 83 104 83 104 Above 6 months Above 6 months 47 24 47 24 Charge Emiratesfor the year Charge for the year 74 63 74 63 775 485 775 485

Unuseddnata amounts reversed Unused amounts reversed (54) (40) (54) (40) For further details on credit riskFor management, further details refer on credit to Note risk 38. management, refer to Note 38. Amounts written off as uncollectibleAmounts written off as uncollectible (24) (39) (24) (39) Group Currency translation differencesCurrency translation differences 2 (5) 2 (5) Financial BalanceInformation carried forward Balance carried forward 81 83 81 83

Emirates The impairmentFinancial charge on tradeThe impairment receivables charge recognised on trade in the receivables consolidated recognised income in the consolidated income Commentary statement during the year mainlystatement relates during to ticketing the year agents mainly who relates are to in unexpectedticketing agents who are in unexpected difficultdnata economic situations anddifficult are economicunable to situationsmeet their and obligations are unable under to meet the IATA their obligations under the IATA Financial agencyCommentary programme. This chargeagency is included programme. in operating This charge costs. is includedAmounts in charged operating to costs. Amounts charged to the provision account are writtenthe provisionoff when accountthere is noare expectation written off whenof further there recovery. is no expectation of further recovery. Emirates Consolidated The otherFinancial classes of trade andThe other other receivables classes of do trade not andcontain other impaired receivables assets. do not contain impaired assets. Statements

The maximumdnata exposure to creditThe maximum risk of trade exposure and other to credit receivables risk of at trade the and reporting other receivables at the reporting date isConsolidated the carrying value ofdate each is class the carrying of receivable value (excludingof each class prepayments of receivable and (excluding prepayments and Financial advanceStatements lease rentals). advance lease rentals).

Additional Information

120 25 25 THE EMIRATES GROUP ANNUAL REPORT 2017-18

18. Capital

Capital represents the permanent capital of Emirates.

19. Other reserves

Overview Cash flow Translation hedge reserve reserve Total Emirates AED m AED m AED m dnata 1 April 2016 (1,181) 2 (1,179) Group Net gain on fair value of cash flow hedges 478 - 478

Financial Transferred to the consolidated income statement 560 - 560 Information 31 March 2017 (143) 2 (141) Emirates Currency translation differences - 1 1 Financial Commentary Net gain on fair value of cash flow hedges 54 - 54 dnata Transferred to the consolidated income statement 101 - 101 Financial 31 March 2018 12 3 15 Commentary

Emirates Consolidated The amounts transferred to the consolidated income statement have been (debited)/credited to the following line items: Financial Statements 2018 2017 dnata Consolidated AED m AED m Financial Statements Revenue - (41) Operating costs 2 (359) Additional Information Finance costs (103) (160) (101) (560)

26

121 THE EMIRATES GROUP ANNUAL REPORT 2017-18

20. Borrowings and lease liabilities20. Borrowings and lease liabilities 21. Bonds 21. Bonds 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Non-current Non-current Balance brought forward Balance brought forward 4,187 8,878 4,187 8,878 Bonds (Note 21) Bonds (Note 21) 4,821 3,561 4,821 3,561 Additions during the year Additions during the year 2,203 - 2,203 - Term loansOverview (Note 22) Term loans (Note 22) 4,448 3,443 4,448 3,443 Repayments during the year Repayments during the year (610) (4,682) (610) (4,682) Lease liabilitiesEmirates (Note 23) Lease liabilities (Note 23) 32,802 33,167 32,802 33,167 Currency translation differencesCurrency translation differences - (9) - (9)

dnata 42,071 40,171 42,071 40,171 Balance carried forward Balance carried forward 5,780 4,187 5,780 4,187 Current Current Less: Transaction costs Less: Transaction costs (29) (20) (29) (20) Group Bonds (Note 21) 930 606 Bonds (Note 21) 930 606 5,751 4,167 5,751 4,167 Term loansFinancial (Note 22) Term loans (Note 22) 528 1,514 528 1,514 Information Bonds are repayable as follows:Bonds are repayable as follows: Lease liabilities (Note 23) 7,572 8,707 Lease liabilities (Note 23) 7,572 8,707 Within one year (Note 20) Within one year (Note 20) 930 606 930 606 Emirates Bank overdraft (Note 33) - 4 Bank overdraftFinancial (Note 33) - 4 Between 2 and 5 years Between 2 and 5 years 3,261 2,429 3,261 2,429 Commentary 9,030 10,831 9,030 10,831 After 5 years After 5 years 1,560 1,132 1,560 1,132 dnata 51,101 51,002 Financial 51,101 51,002 Total over one year (Note 20)Total over one year (Note 20) 4,821 3,561 4,821 3,561 BorrowingsCommentary and lease liabilitiesBorrowings are denominated and lease in theliabilities are denominated in the following currencies: Bonds are fixed interest rate bondsBonds and are arefixed denominated interest rate in bonds USD. and are denominated in USD. followingEmirates currencies: Consolidated US Dollar 47,599 47,283 US DollarFinancial 47,599 47,283 The fair value of the bonds isThe AED fair 5,740 value m of (2017: the bonds AED 4,244is AED m) 5,740 based m on(2017: listed AED 4,244 m) based on listed UAE DirhamStatements UAE Dirham 3,502 3,719 3,502 3,719 prices and falls into level 1 of theprices fair and value falls hierarchy. into level 1 of the fair value hierarchy.

dnata Consolidated The effectiveFinancial interest rate perThe annum effective on lease interest liabilities rate per was annum 3.1% (2017: on lease 2.8%), liabilities term was 3.1% (2017: 2.8%), term loans wasStatements 3.2% (2017: 3.1%) andloans bonds was 3.2%was 4.3% (2017: (2017: 3.1%) 4.5%). and bonds was 4.3% (2017: 4.5%).

Additional Information

122 27 27 THE EMIRATES GROUP ANNUAL REPORT 2017-18

22. Term loans 22. Term loans 23. Lease liabilities 23. Lease liabilities 2018 2017 2018 2017 AED m AED m AED m AED m Finance leases Finance leases Balance brought forward Balance brought forward 5,031 2,965 5,031 2,965 2018 2017 2018 2017 Additions during the year Additions during the year 3,381 3,010 3,381 3,010 AED m AED m AED m AED m RepaymentsOverview during the year Repayments during the year (3,371) (944) (3,371) (944) Balance brought forward Balance brought forward 41,874 38,317 41,874 38,317

BalanceEmirates carried forward Balance carried forward 5,041 5,031 5,041 5,031 Additions Additions 5,008 7,981 5,008 7,981 Less: Transaction costs Less: Transaction costs (65) (74) (65) (74) dnata Repayments Repayments (6,508) (4,424) (6,508) (4,424) 4,976 4,957 4,976 4,957 Balance carried forward Balance carried forward 40,374 41,874 40,374 41,874 Group Loans are repayable as follows:Loans are repayable as follows: Financial Within one year (Note 20) 528 1,514 Within oneInformation year (Note 20) 528 1,514 Gross lease liabilities: Gross lease liabilities: Between 2 and 5 years Between 2 and 5 years 1,832 1,528 1,832 1,528 Within one year Within one year 8,793 9,906 8,793 9,906 Emirates After 5 yearsFinancial After 5 years 2,616 1,915 2,616 1,915 Between 2 and 5 years Between 2 and 5 years 22,415 22,503 22,415 22,503 Commentary Total over one year (Note 20)Total over one year (Note 20) 4,448 3,443 4,448 3,443 After 5 years After 5 years 15,236 15,642 15,236 15,642 dnata Loans areFinancial denominated in theLoans following are denominatedcurrencies: in the following currencies: 46,444 48,051 46,444 48,051 Commentary US Dollar US Dollar 4,686 4,540 4,686 4,540 Future interest Future interest (6,070) (6,177) (6,070) (6,177) UAE DirhamEmirates UAE Dirham 290 417 290 417 Present value of finance leasePresent liabilities value of finance lease liabilities 40,374 41,874 40,374 41,874 Consolidated Financial The present value of finance leaseThe presentliabilities value is of finance lease liabilities is Statements Contractual repricing datesContractual are set at three repricing to six dates month are intervals. set at three Term to loans six month intervals. Term loans repayable as follows: repayable as follows: amountingdnata to AED 4,751 m (2017:amounting AED 3,512 to AED m) 4,751are secured m (2017: on AEDaircraft. 3,512 m) are secured on aircraft. Within one year (Note 20) Within one year (Note 20) 7,572 8,707 7,572 8,707 Consolidated Financial Between 2 and 5 years Between 2 and 5 years 19,168 19,122 19,168 19,122 The fairStatements value of the term loansThe amounts fair value to of AED the 5,016 term loansm (2017: amounts AED 4,947 to AED m). 5,016 The m (2017: AED 4,947 m). The After 5 years After 5 years 13,634 14,045 13,634 14,045 fair valueAdditional is determined by discountingfair value is projected determined cash by flows discounting using the projected interest cash rate flows using the interest rate Total over one year (Note 20)Total over one year (Note 20) 32,802 33,167 32,802 33,167 yield curveInformation for the remainingyield term curve to maturities for the remaining and currencies term toadjusted maturities for credit and currencies adjusted for credit The present value of finance leaseThe presentliabilities value is of finance lease liabilities is spread. The fair value of the termspread. loans The falls fair into value level of 2the of termthe fair loans value falls hierarchy. into level 2 of the fair value hierarchy. denominated in the following denominatedcurrencies: in the following currencies: US Dollar US Dollar 37,162 38,576 37,162 38,576 UAE Dirham UAE Dirham 3,212 3,298 3,212 3,298

Lease liabilities amounting toLease AED 38,978 liabilities m (2017: amounting AED 40,596 to AED m) 38,978 are secured m (2017: on AED the 40,596 m) are secured on the related aircraft and aircraft engines.related aircraft and aircraft engines.

28 28 123 THE EMIRATES GROUP ANNUAL REPORT 2017-18

23. Lease liabilities (continued)23. Lease liabilities (continued) 24. Provisions 24. Provisions 2018 2017 2018 2017 The fair value of lease liabilitiesThe amounts fair value to of AED lease 39,738 liabilities m (2017: amounts AED 41,302 to AED m). 39,738 The m (2017: AED 41,302 m). The AED m AED m AED m AED m fair value is determined by discountingfair value is projected determined cash by flows discounting using the projected interest cash rate flows using the interest rate Non-current Non-current yield curve for the remainingyield term curve to maturities for the remaining and currencies term toadjusted maturities for credit and currencies adjusted for credit Retirement benefit obligationsRetirement (Note 25) benefit obligations (Note 1,418 25) 1,297 1,418 1,297 spread. The fair value of leasespread. liabilities The falls fair into value level of 2lease of the liabilities fair value falls hierarchy. into level 2 of the fair value hierarchy. Overview Provision for aircraft return conditionsProvision (Notefor aircraft 26) return conditions 2,649 (Note 26) 2,528 2,649 2,528 Some leaseEmirates agreements provideSome for lease variable agreements lease payments provide to for the variable extent lease that paymentsthe to the extent that the 4,067 3,825 4,067 3,825 interest portion is linked to market interest rates, normally the LIBOR. interest dnataportion is linked to market interest rates, normally the LIBOR. Current Current Provision for aircraft return conditionsProvision (Notefor aircraft 26) return conditions 687 (Note 26) 597 687 597 Group 687 597 687 597 Financial Operating leases OperatingInformation leases 4,754 4,422 4,754 4,422 2018 2017 2018 2017 Emirates Financial AED m AED m AED m AED m Commentary Future minimum lease paymentsFuture are minimumas follows: lease payments are as follows: dnata Aircraft fleet 82,449 80,266 Aircraft fleetFinancial 82,449 80,266 Others Commentary Others 2,995 2,504 2,995 2,504 Emirates 85,444 82,770 85,444 82,770 Consolidated Financial Statements Within one year Within one year 11,845 10,913 11,845 10,913 dnata Between 2 and 5 years 39,962 37,508 BetweenConsolidated 2 and 5 years 39,962 37,508 After 5 yearsFinancial After 5 years 33,637 34,349 33,637 34,349 Statements 85,444 82,770 85,444 82,770 Additional Information The future minimum lease paymentsThe future include minimum AED lease 5,232 payments m (2017: include AED 6,077 AED m) 5,232 m (2017: AED 6,077 m) related to a company underrelated common to a control. company Such under payments common are control. on normal Such payments are on normal commercial terms. commercial terms.

Emirates is entitled to extendEmirates certain aircraft is entitled leases to forextend a further certain period aircraft of leasesone to for six a further period of one to six years at the end of the initial leaseyears period. at the end of the initial lease period.

Some lease agreements provideSome for lease variable agreements lease payments provide to for the variable extent lease that paymentsthe to the extent that the interest portion is linked to marketinterest interest portion rates, is linked normally to market the LIBOR. interest rates, normally the LIBOR.

124 29 29 THE EMIRATES GROUP ANNUAL REPORT 2017-18

25. Retirement benefit obligations25. Retirement benefit obligations (i) Funded scheme (i) Funded scheme

In accordance with the provisionsIn accordance of IAS 19, with management the provisions has carried of IAS out19, management an exercise has carried out an exercise Senior employees based in theSenior UAE participateemployees in based a defined in the benefit UAE participate provident in scheme a defined benefit provident scheme to assess the present value ofto its assess defined the present benefit obligations value of its at defined 31 March benefit 2018 obligations in at 31 March 2018 in to which Emirates contributesto a which specified Emirates percentage contributes of basic a specified salary based percentage upon the of basic salary based upon the respect of employees' endrespect of service of employees' benefits payable end of under service relevant benefits local payable under relevant local employee’s grade and durationemployee’s of service. grade Amounts and duration contributed of service. are invested Amounts in acontributed are invested in a regulationsOverview and contractual arrangements.regulations and The contractual assessment arrangements. assumed expected The assessment salary assumed expected salary trustee administered schemetrustee and administered accumulate along scheme with and returns accumulate earned along on with returns earned on increases averaging 3.0% (2017:increases 3.0%) andaveraging a discount 3.0% rate (2017: of 3.0%) 4.0% (2017: and a 4.25%) discount per rate of 4.0% (2017: 4.25%) per investments. Contributions areinvestments. made on Contributions a monthly basis are made irrespective on a monthlyof fund basis irrespective of fund Emirates annum. The present values ofannum. the defined The present benefit values obligations of the at defined 31 March benefit 2018 obligations were at 31 March 2018 were performance and are not pooled,performance but are andseparately are not identifiable pooled, but and are attributable separately toidentifiable and attributable to computeddnata using the actuarial computedassumptions using set theout actuarialabove. assumptions set out above. each participant. The fund compriseseach participant. a diverse The mix fund of managed comprises funds a diverse and investment mix of managed funds and investment decisions are controlled directlydecisions by the areparticipating controlled employees. directly by the participating employees. The liabilitiesGroup recognised in theThe consolidated liabilities recognised statement in of the financial consolidated position statement are: of financial position are: Financial Benefits receivable under the provident scheme are subject to vesting rules, which Information 2018 2017 2018 2017 Benefits receivable under the provident scheme are subject to vesting rules, which are dependent upon a participating employee's length of service. If at the time an AED m AED m AED m AED m are dependent upon a participating employee's length of service. If at the time an Emirates employee leaves employment,employee the accumulated leaves employment, vested amount, the accumulated including investment vested amount, including investment FundedFinancial scheme Funded scheme Commentary returns, is less than the end ofreturns, service is benefits less than that the would end of have service been benefits payable that to thatwould have been payable to that Present value of defined benefitPresent obligations value of defined benefit obligations 2,581 2,316 2,581 2,316 employee under relevant local regulations, Emirates pays the shortfall amount dnata employee under relevant local regulations, Emirates pays the shortfall amount Less: FairFinancial value of plan assets Less: Fair value of plan assets (2,577) (2,309) (2,577) (2,309) directly to the employee. However,directly if to the the accumulated employee. However, vested amount if the accumulated exceeds the vested amount exceeds the Commentary 4 4 7 4 7 end of service benefits that wouldend of have service been benefits payable that to anwould employee have been under payable relevant to an employee under relevant UnfundedEmirates scheme Unfunded scheme local regulations, the employeelocal receives regulations, either the seventy employee five or receives one hundred either seventy percent five or one hundred percent Consolidated of their fund balance depending on their length of service. Vested assets of the Present Financialvalue of defined benefitPresent obligations value of defined benefit obligations 1,414 1,290 1,414 1,290 of their fund balance depending on their length of service. Vested assets of the Statements scheme are not available to Emiratesscheme orare its not creditors available in anyto Emirates circumstances. or its creditors in any circumstances.

dnata Liability recognised in the consolidatedLiability recognised in the consolidated Consolidated The liability of AED 4 m (2017:The AED liability 7 m) of represents AED 4 m (2017: the amount AED 7 that m) represents will not be the amount that will not be statementFinancial of financial positionstatement of financial position 1,418 1,297 1,418 1,297 Statements settled from plan assets andsettled is calculated from plan as the assets excess and of is the calculated present as value the of excess the of the present value of the defined benefit obligation fordefined an individual benefit obligation employee for over an the individual fair value employee of the over the fair value of the The aboveAdditional liability is presentedThe as above a non-current liability is provisionpresented within as a non-current the consolidated provision within the consolidated Information employee's plan assets at the employee'send of the reportingplan assets period. at the end of the reporting period. statement of financial positionstatement as Emirates of financial expects position to settle as this Emirates liability expects over a long to settle this liability over a long The movement in the fair value of the plan assets is as follows: term period. term period. The movement in the fair value of the plan assets is as follows: 2018 2017 2018 2017 AED m AED m AED m AED m Balance brought forward Balance brought forward 2,309 2,037 2,309 2,037 Contributions received Contributions received 300 302 300 302 Benefits paid Benefits paid (194) (153) (194) (153) Change in fair value Change in fair value 162 123 162 123 Balance carried forward Balance carried forward 2,577 2,309 2,577 2,309

30 30 125 THE EMIRATES GROUP ANNUAL REPORT 2017-18

25. Retirement benefit obligations25. Retirement (continued) benefit obligations (continued) (iii) Defined contribution plans(iii) Defined contribution plans

Emirates pays fixed contributionsEmirates to certain pays fixed defined contributions contribution to planscertain and defined has no contribution plans and has no Contributions received includeContributions the transfer received of accumulated include benefits the transfer from of unfunded accumulated benefits from unfunded legal or constructive obligationlegal to or pay constructive further contributions obligation to to pay settle further the benefits contributions to settle the benefits schemes. Emirates expects toschemes. contribute Emirates approximately expects AED to contribute 302 m for approximately existing plan AED 302 m for existing plan relating to employees' service relatingin the current to employees' and prior service periods. in the current and prior periods. members during the year endingmembers 31 March during 2019. the year ending 31 March 2019. The total amount recognised inThe the total consolidated amount recognised income statement in the consolidated is as follows: income statement is as follows: ActuarialOverview gains and losses andActuarial the expected gains returnand losses on plan and assets the expected are not return calculated on plan assets are not calculated given that investment decisionsgiven relating that investmentto plan assets decisions are under relating the direct to plan control assets of are under the direct control of Emirates 2018 2017 2018 2017 participating employees. participating employees. dnata AED m AED m AED m AED m

(ii) UnfundedGroup schemes (ii) Unfunded schemes Defined benefit plan Defined benefit plan Funded scheme Funded scheme Financial End ofInformation service benefits forEnd employeesof service who benefits do not for participate employees in the who provident do not participate in the provident Contributions expensed Contributions expensed 296 294 296 294 scheme or other defined contributionscheme or plans other follow defined relevant contribution local regulations, plans follow which relevant local regulations, which Emirates Net change in the present valueNet of change defined in benefit the present value of defined benefit are mainlyFinancial based on periodsare of mainly cumulative based service on periods and levels of cumulative of employees’ service final and levels of employees’ final obligations over plan assets obligations over plan assets (3) (30) (3) (30) Commentary basic salaries. The liability recognisedbasic salaries. in the The consolidated liability recognised statement in theof financial consolidated statement of financial 293 264 293 264 positiondnata is the present valueposition of the definedis the present benefit value obligation of the at defined the end benefit of the obligation at the end of the Financial Unfunded scheme Unfunded scheme reporting period. reporting period. Commentary Current service cost Current service cost 172 206 172 206 The movementEmirates in the defined Thebenefit movement obligation in the is as defined follows: benefit obligation is as follows: Interest cost Interest cost 55 59 55 59 Consolidated Financial 227 265 227 265 Statements 2018 2017 2018 2017 Defined contribution plan Defined contribution plan AED m AED m AED m AED m dnata Contributions expensed Contributions expensed 212 212 212 212 BalanceConsolidated brought forward Balance brought forward 1,290 1,427 1,290 1,427 Financial Current Statementsservice cost Current service cost 172 206 172 206 Recognised in the consolidatedRecognised income statementin the consolidated income 732 statement 741 732 741 Interest Additionalcost Interest cost 55 59 55 59 Information Remeasurement Remeasurement - changes in experience / demographic- changes assumptionsin experience / demographic(23) assumptions13 (23) 13 - changes in financial assumptions- changes in financial assumptions 29 (324) 29 (324) Payments made during the yearPayments made during the year (109) (91) (109) (91) Balance carried forward Balance carried forward 1,414 1,290 1,414 1,290

Payments made during the yearPayments include made transfer during of accumulated the year include benefits transfer to Emirates’ of accumulated benefits to Emirates’ funded scheme. funded scheme.

126 31 31 THE EMIRATES GROUP ANNUAL REPORT 2017-18

26. Provision for aircraft return conditions 25. Retirement benefit obligations25. Retirement (continued) benefit obligations (continued) 26. Provision for aircraft return conditions

2018 2017 The sensitivity of the unfundedThe scheme sensitivity to changes of the unfunded in the principal scheme assumptions to changes is in set the principal assumptions is set 2018 2017 out below: out below: AED m AED m AED m AED m Assumption Assumption Change Effect on Change Effect on Balance brought forward Balance brought forward 3,125 2,803 3,125 2,803 unfunded Overview unfunded Charge for the year Charge for the year 714 797 714 797 scheme scheme Emirates Unwinding of discount - net Unwinding of discount - net 159 156 159 156 AED m AED m Utilised on return of aircraft & aircraft engines (459) (475) dnata Utilised on return of aircraft & aircraft engines (459) (475) + 0.5% (80) + 0.5% (80) Discount rate Discount rate Unutilised amounts reversed Unutilised amounts reversed (203) (156) (203) (156) Group - 0.5% 89 - 0.5% 89 Balance carried forward Balance carried forward 3,336 3,125 3,336 3,125 + 0.5% 92 Financial + 0.5% 92 The provision is expected to be used as follows: ExpectedInformation salary increases Expected salary increases The provision is expected to be used as follows: - 0.5% (83) - 0.5% (83) Within one year (Note 24) Within one year (Note 24) 687 597 687 597 Emirates The aboveFinancial sensitivity analysisThe is basedabove on sensitivity a change analysis in an assumption is based on while a change holding in allan assumption while holding all Over one year (Note 24) Over one year (Note 24) 2,649 2,528 2,649 2,528 Commentary other assumptions constant. Inother practice, assumptions this is unlikely constant. to occur, In practice, and changes this is unlikely in some to occur, and changes in some of the assumptionsdnata may be correlated.of the assumptions In calculating may bethe correlated. above sensitivity In calculating analysis, the above sensitivity analysis, 27. Deferred revenue 27. Deferred revenue Financial the present value of the defined benefit obligation has been calculated using the the presentCommentary value of the defined benefit obligation has been calculated using the 2018 2017 2018 2017 projected unit credit method atprojected the end unitof the credit reporting method period. at the end of the reporting period. Emirates AED m AED m AED m AED m Consolidated The weighted average durationThe of weighted the unfunded average scheme duration is 14 of years the unfunded(2017: 14 years).scheme is 14 years (2017: 14 years). Financial Balance brought forward Balance brought forward 2,465 2,912 2,465 2,912 Statements Additions during the year Additions during the year 1,558 1,446 1,558 1,446 Through its defined benefit plans Emirates is exposed to a number of risks, the most Throughdnataits defined benefit plans Emirates is exposed to a number of risks, the most Recognised during the year Recognised during the year (1,780) (1,893) (1,780) (1,893) significantConsolidated of which are detailedsignificant below: of which are detailed below: Financial Balance carried forward 2,243 2,465 Statements Balance carried forward 2,243 2,465 a) Change in discount rate:a) Retirement Change in benefit discount obligations rate: Retirement will increase benefit due obligations to a will increase due to a Deferred revenue is expected Deferredto be recognised revenue asis expected to be recognised as Additional decrease in market yields of high quality corporate bonds. decrease in market yields of high quality corporate bonds. follows: Information follows: Within one year 1,180 1,486 b) Expected salary increases:b) TheExpected present salary value increases: of the defined The present benefit value obligation of the is defined benefit obligation is Within one year 1,180 1,486 calculated by reference to thecalculated future salaries by reference of plan participants. to the future As salaries such, an of planincrease participants. As such, an increase Over one year Over one year 1,063 979 1,063 979 in the salary of the plan participantsin the salarywill increase of the planthe retirement participants benefit will increase obligations. the retirement benefit obligations. Deferred revenue relates to Deferredthe frequent revenue flyer relatesprogramme to the and frequent represents flyer theprogramme fair and represents the fair value of outstanding Skywardsvalue miles of . outstandingRevenue is Skywardsrecognised miles when. Revenue Emirates is fulfils recognised when Emirates fulfils its obligations by supplying freeits obligations or discounted by supplyinggoods or freeservices or discounted on the redemption goods or services on the redemption of the Skywards miles. of the Skywards miles.

Deferred revenue is classifiedDeferred within currentrevenue andis classified non-current within liabilities current based and non-currenton liabilities based on expected redemption patterns.expected redemption patterns.

32 32 127 THE EMIRATES GROUP ANNUAL REPORT 2017-18

28. Deferred credits 28. Deferred credits 30. Trade and other payables30. Trade and other payables 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Balance brought forward Balance brought forward 2,480 1,229 2,480 1,229 Trade payables and accruals Trade payables and accruals 15,095 13,910 15,095 13,910 Additions during the year Additions during the year 746 1,456 746 1,456 Passenger and cargo sales in advancePassenger and cargo sales in advance 12,349 10,878 12,349 10,878 RecognisedOverview during the year Recognised during the year (292) (205) (292) (205) Related parties (Note 37) Related parties (Note 37) 982 1,088 982 1,088

BalanceEmirates carried forward Balance carried forward 2,934 2,480 2,934 2,480 Dividend payable Dividend payable 1,000 - 1,000 -

Deferreddnata credits will be recognisedDeferred as follows: credits will be recognised as follows: 29,426 25,876 29,426 25,876 Within one year Within one year 313 253 313 253 Less: Payables over one year Less: Payables over one year (123) (683) (123) (683) Group Over one year Over one year 2,621 2,227 2,621 2,227 29,303 25,193 29,303 25,193 Financial Information 29. Deferred income tax 29. Deferred income tax The carrying value of trade andThe other carrying payables value ofover trade one and year other approximate payables to over their one year approximate to their Emirates Financial fair value. fair value. Commentary Deferred tax assets and liabilitiesDeferred are offset tax assets when and there liabilities is a legally are offset enforceable when there right is a legally enforceable right to offsetdnata current tax assets againstto offset current current tax tax liabilities assets and against when current the deferred tax liabilities taxes and when the deferred taxes 31. Guarantees 31. Guarantees Financial relate toCommentary the same income taxrelate authority. to the The same offset income amounts tax authority.are as follows: The offset amounts are as follows: 2018 2017 2018 2017

Emirates AED m AED m AED m AED m Consolidated Performance bonds and lettersPerformance of credit provided bonds andby letters of credit provided by Financial 2018 2017 2018 2017 Statements banks in the normal course ofbanks business in the normal course of business 464 383 464 383 AED m AED m AED m AED m Deferreddnata income tax asset Deferred income tax asset 11 10 11 10 Consolidated Performance bonds and lettersPerformance of credit bonds include and AED letters 136 m of (2017: credit AEDinclude 94 AED m) 136 m (2017: AED 94 m) DeferredFinancial income tax liability Deferred income tax liability (4) (5) (4) (5) Statements provided by companies underprovided common by control companies on normal under commercial common control terms. on normal commercial terms. 7 5 7 5 The movementsAdditional in deferred taxesThe movementsare as follows: in deferred taxes are as follows: Information Balance brought forward Balance brought forward 5 (1) 5 (1) Tax consolidation settlementsTax consolidation settlements 2 6 2 6 Balance carried forward Balance carried forward 7 5 7 5

128 33 33 THE EMIRATES GROUP ANNUAL REPORT 2017-18

32. Commitments 32. Commitments 33. Short term bank deposits33. and Short cash term and bankcash equivalentsdeposits and cash and cash equivalents 2018 2017 2018 2017 Capital commitments Capital commitments AED m AED m AED m AED m 2018 2017 2018 2017 Bank deposits Bank deposits 18,138 12,034 18,138 12,034 AED m AED m AED m AED m Cash and bank Cash and bank 2,282 3,634 2,282 3,634 AuthorisedOverview and contracted: Authorised and contracted: Cash and bank balances Cash and bank balances 20,420 15,668 20,420 15,668

Aircraft Emirates Aircraft 194,020 210,064 194,020 210,064 Less: Short term bank depositsLess: - over Short 3 months term bank deposits - over(14,745) 3 months (6,706) (14,745) (6,706)

Non-aircraftdnata Non-aircraft 1,076 1,663 1,076 1,663 Cash and cash equivalents asCash per andthe consolidatedcash equivalents as per the consolidated Joint ventures Joint ventures 14 38 14 38 statement of financial positionstatement of financial position 5,675 8,962 5,675 8,962 Group 195,110 211,765 195,110 211,765 Bank overdraft (Note 20) Bank overdraft (Note 20) - (4) - (4) Financial Cash and cash equivalents asCash per andthe consolidatedcash equivalents as per the consolidated AuthorisedInformation but not contracted:Authorised but not contracted: statement of cash flows statement of cash flows 5,675 8,958 5,675 8,958 Aircraft Aircraft 48,693 - 48,693 - Emirates Non-aircraftFinancial Non-aircraft 2,228 2,827 2,228 2,827 Commentary Cash and bank balances earnedCash an and effective bank balances interest rate earned of 3.0% an effective (2017: 2.6%) interest per rate of 3.0% (2017: 2.6%) per Joint ventures Joint ventures 11 17 11 17 dnata annum. annum. Financial 50,932 2,844 50,932 2,844 Commentary 246,042 214,609 246,042 214,609 Cash and bank balances includeCash AEDand bank12,348 balances m (2017: include AED 10,014 AED 12,348 m) held m (2017:with AED 10,014 m) held with Emirates companies under common control.companies under common control. Consolidated CommitmentsFinancial have been enteredCommitments into for havethe purchase been entered of aircraft into for thedelivery purchase as of aircraft for delivery as Statements follows: follows: 34. Cash outflow on property,34. plant Cash andoutflow equipment on property, plant and equipment Financialdnata year Financial year Aircraft Aircraft Consolidated 2018-19Financial 2018-19 16 16 For the purposes of the consolidatedFor the purposes statement of the of cash consolidated flows, cash statement outflow of on cash flows, cash outflow on Statements Beyond 2018-19: Beyond 2018-19: property, plant and equipmentproperty, is analysed plant as andfollows: equipment is analysed as follows: Additional AuthorisedInformation and contracted Authorised and contracted 186 186 2018 2017 2018 2017 Authorised but not contractedAuthorised but not contracted 60 60 AED m AED m AED m AED m Additions to property, plant andAdditions equipment to property, (Note 11) plant and equipment 8,287 (Note 12,363 11) 8,287 12,363 In the event that delivery ofIn certain the event aircraft that are delivery not taken, of certain penalties aircraft are payable are not bytaken, penalties are payable by Less: Assets acquired under financeLess: Assets leases acquired (Note 23) under finance(5,008) leases (Note 23)(7,981) (5,008) (7,981) Emirates to the extent of AED Emirates1,416 m (2017:to the extentAED 1,858 of AED m). 1,416 m (2017: AED 1,858 m). 3,279 4,382 3,279 4,382

Operational commitments Operational commitments 2018 2017 2018 2017 AED m AED m AED m AED m Sales and marketing Sales and marketing 4,249 2,036 4,249 2,036

34 34 129 THE EMIRATES GROUP ANNUAL REPORT 2017-18

35. Derivative financial instruments 35. Derivative financial instruments The notional principal amounts outstanding include AED 2,012 m (2017: AED 2,293 m) Description 2018 2017 against derivatives entered withThe companies notional principalunder common amounts control. outstanding include AED 2,012 m (2017: AED 2,293 m) DescriptionTerm AED m Term2018 AED m 2017 against derivatives entered with companies under common control. The full fair value of the derivative instrument is classified as non-current if the Cash flow hedge Term AED m Term AED m remaining maturity of the hedgedThe full item fair is morevalue than of the 12 derivative months as instrument at the end isof classifiedthe as non-current if the Non-current assets Cash flow hedge reporting period. remaining maturity of the hedged item is more than 12 months as at the end of the Interest Overviewrate swaps Non-current2019-2028 assets 60 2018-2028 3 8 reporting period. Emirates Interest rate swaps 60 2019-2028 3 8 60 2018-2028 3 8 The maximum exposure to credit risk at the reporting date is the fair value of the

Currentdnata assets 60 3 8 derivative assets in the consolidatedThe maximum statement exposure of financial to creditposition. risk at the reporting date is the fair value of the Currency forwards Current assets 9 8 derivative assets in the consolidated statement of financial position. Group Currency forwards 9 8 9 8 Financial Cash flowInformation hedge 9 8 Non-current liabilities Cash flow hedge Emirates Interest Financialrate swaps Non-current2019-2023 liabilities (26) 2018-2023 (192) Commentary Interest rate swaps (26) 2019-2023(192) (26) 2018-2023 (192) dnata CurrentFinancial liabilities (26) (192) Commentary Interest rate swaps Current liabilities (35) (2) CurrencyEmirates forwards Interest rate swaps - (1)(35) (2) Consolidated Financial Currency forwards (35) (3) - (1) Statements (35) (3) dnata The notionalConsolidated principal amounts outstanding are: Financial Statements The notional principal amounts outstanding2018 are: 2017 AED m AED m 2018 2017 Additional Interest Informationrate contracts 5,432 6,626 AED m AED m Currency contracts Interest rate contracts 929 868 5,432 6,626 Currency contracts 929 868

35

130 35 THE EMIRATES GROUP ANNUAL REPORT 2017-18

36. Classification of financial instruments

The accounting policies for financial instruments have been applied to the line items below:

Financial Derivative liabilities at Overview Loans and financial amortised Emirates Description receivables instruments cost Total dnata AED m AED m AED m AED m

Group 2018 Assets Financial Information Loans and other receivables (excluding prepayments) 72 - - 72 Derivative financial instruments - 69 - 69 Emirates Financial Trade and other receivables (excluding prepayments and advance lease rentals) 7,787 - - 7,787 Commentary Short term bank deposits 14,745 - - 14,745 dnata Financial Cash and cash equivalents 5,675 - - 5,675 Commentary Total 28,279 69 - 28,348 Emirates Consolidated Financial Liabilities Statements Borrowings and lease liabilities - - 51,101 51,101 dnata Provision for aircraft return conditions - - 3,336 3,336 Consolidated Financial Trade and other payables (excluding passenger and cargo sales in advance) - - 17,077 17,077 Statements Derivative financial instruments - 61 - 61 Additional Information Total - 61 71,514 71,575

36

131 THE EMIRATES GROUP ANNUAL REPORT 2017-18

36. Classification of financial instruments (continued)

Financial Derivative liabilities at Loans and financial amortised Overview Description receivables instruments cost Total

Emirates AED m AED m AED m AED m dnata 2017 Assets Group Loans and other receivables (excluding prepayments) 104 - - 104 Financial Information Derivative financial instruments - 46 - 46 Trade and other receivables (excluding prepayments and advance lease rentals) 6,828 - - 6,828 Emirates Financial Short term bank deposits 6,706 - - 6,706 Commentary Cash and cash equivalents 8,962 - - 8,962 dnata Total 22,600 46 - 22,646 Financial Commentary

Emirates Liabilities Consolidated Financial Borrowings and lease liabilities - - 51,002 51,002 Statements Provision for aircraft return conditions - - 3,125 3,125 dnata Trade and other payables (excluding passenger and cargo sales in advance) - - 14,998 14,998 Consolidated Financial Derivative financial instruments - 195 - 195 Statements Total - 195 69,125 69,320 Additional Information

37

132 THE EMIRATES GROUP ANNUAL REPORT 2017-18

37. Related party transactions and balances 37. Related party transactions and balances 2018 2017 Emirates transacts with associates, joint ventures and companies controlled by 2018 2017 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 AED m AED m Emirates and its parent within the scope of its ordinary business activities. Other transactions: Emirates and dnata share central corporate functions such as information technology, (i) Finance income Other transactions: Emirates and dnata share central corporate functions such as information technology, facilities, human resources, finance, treasury, cash management, legal and other Companies under common control(i) Finance income 214 157 functions.Overview Where such functionsfacilities, are shared, human the resources, costs are finance,allocated treasury, between cash Emirates management, legal and other Joint ventures Companies under common control 2 2 214 157 functions. Where such functions are shared, the costs are allocated between Emirates and dnataEmirates based on activity levels. Joint ventures 2 2 and dnata based on activity levels. 216 159 dnata (ii) Compensation to key management personnel 216 159 Other than these shared service arrangements, the following transactions have taken (ii) Compensation to key management personnel place onGroup an arm's length basis.Other than these shared service arrangements, the following transactions have taken Salaries and short term employee benefits 156 104 place on an arm's length basis. Post-employment benefits Salaries and short term employee benefits 14 15 156 104 Financial 2018 2017 Post-employment benefits 14 15 Information AED m AED m 2018 2017 Termination benefits 1 1 AED m AED m Termination benefits 1 1 TradingEmirates transactions: 171 120 Financial Trading transactions: 171 120 (i) Sale Commentaryof goods and services (i) Sale of goods and services Emirates also uses a number of public utilities provided by Government controlled Sale of goodsdnata - Companies under common control 309 276 Financial Sale of goods - Companies under common control 309 276 entities for its operations in Dubai,Emirates where also these uses a entities number are of the public sole utilitiesproviders provided of the by Government controlled Sale of goodsCommentary - Joint ventures 37 24 relevant services. This includesentities the forsupply its operations of electricity, in Dubai, water where and airport these services.entities are the sole providers of the Sale of goods - Associates Sale of goods - Joint ventures 64 44 37 24 Emirates relevant services. This includes the supply of electricity, water and airport services. Sale of goods - Associates 64 44 Transactions falling in these expense categories are individually insignificant and were ServicesConsolidated rendered - Companies under common control 490 426 carried out on an arm's lengthTransactions basis. falling in these expense categories are individually insignificant and were Financial Services rendered - Companies under common control 490 426 ServicesStatements rendered - Joint ventures 14 15 carried out on an arm's length basis. Services rendered - Joint ventures 14 15 Frequentdnata flyer miles sales - Companies under common control Consolidated Frequent flyer miles sales - Companies under304 common 300 Financial 304 300 Statements control 1,218 1,085 1,218 1,085 (ii) PurchaseAdditional of goods and services Information Purchase of goods - Companies(ii) underPurchase common of goods control and services 5,595 4,768 Purchase of goods - AssociatesPurchase of goods - Companies under common243 control 241 5,595 4,768 Services received - CompaniesPurchase under common of goods control - Associates 3,314 3,132 243 241 Services received - Joint venturesServices received - Companies under common 6 control 15 3,314 3,132 Purchase of goods - Joint venturesServices received - Joint ventures 7 - 6 15 Purchase of goods - Joint ventures 9,165 8,156 7 - 9,165 8,156

38 38 133 THE EMIRATES GROUP ANNUAL REPORT 2017-18

37. Related party transactions and balances (continued) 37. Related party transactions and balances (continued) Receivables from and loans to companies under common control relate to 2018 2017 Receivables from and loans to companies under common control relate to 2018 2017 government entities, which are unrated. Management is of the opinion that the AED m AED m government entities, which are unrated. Management is of the opinion that the AED m AED m amounts are fully recoverable. Year end balances amounts are fully recoverable. Year end balances (i) Receivables - sale of goods and services 2018 2017 (i) Receivables - sale of goods and services 2018 2017 Associates 10 8 AED m AED m Overview Associates 10 8 AED m AED m Joint ventures 31 17 (iv) Loans and advances to key management personnel Emirates Joint ventures 31 17 (iv) Loans and advances to key management personnel Companies under common control 99 80 Balance brought forward 6 8 Companies under common control 99 80 Balance brought forward 6 8 Receivablednata within one year 140 105 Additions during the year 7 5 Receivable within one year 140 105 Additions during the year 7 5 Group Repayments during the year (7) (7) Repayments during the year (7) (7) Balance carried forward 6 6 (ii) ReceivablesFinancial - other transactions (ii) Receivables - other transactions Balance carried forward 6 6 CompaniesInformation under common control 74 75 Receivable within one year 3 3 Companies under common control 74 75 Receivable within one year 3 3 ReceivableEmirates within one year 74 75 Receivable over one year (Note 15) 3 3 Financial Receivable within one year 74 75 Receivable over one year (Note 15) 3 3 Commentary The amounts outstanding at year end are unsecured and will be settled in cash. No dnata The amounts outstanding at year end are unsecured and will be settled in cash. No impairmentFinancial charge has been recognised during the year in respect of amounts owed 2018 2017 Commentary 2018 2017 by related parties. impairment charge has been recognised during the year in respect of amounts owed AED m AED m by related parties. AED m AED m Emirates (v) Payables - purchase of goods and services (Note 30) Consolidated (v) Payables - purchase of goods and services (Note 30) Financial 2018 2017 Associates 6 3 Statements 2018 2017 Associates 6 3 AED m AED m Companies under common control 958 1,064 dnata AED m AED m Companies under common control 958 1,064 (iii) LoansConsolidated receivable 964 1,067 Financial (iii) Loans receivable 964 1,067 Joint venturesStatements 9 13 (vi) Other payables (Note 30) Joint ventures 9 13 (vi) Other payables (Note 30) 9 13 Companies under common control 18 21 Additional 9 13 Companies under common control 18 21 MovementInformation in the loans were as follows: 18 21 Movement in the loans were as follows: 18 21 Balance brought forward 13 26 Balance brought forward 13 26 Repayments during the year (4) (13) Repayments during the year (4) (13) Balance carried forward 9 13 Balance carried forward 9 13 Receivable within one year 4 5 Receivable within one year 4 5 Receivable over one year (Note 15) 5 8 Receivable over one year (Note 15) 5 8

39 134 39 THE EMIRATES GROUP ANNUAL REPORT 2017-18

38. Financial risk management38. Financial risk management Emirates manages limits andEmirates controls manages concentrations limits and of controls risk wherever concentrations they are of risk wherever they are 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 counterparties are similarly limitedcounterparties to high credit are similarly quality limited financial to institutions. high credit Exposure quality financial institutions. Exposure Emirates is exposed to a varietyEmirates of financial is exposed risks whichto a variety involve of the financial analysis, risks evaluation, which involve the analysis, evaluation, 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 Overview aim is, therefore, to achieveaim an is, appropriate therefore, balance to achieve between an appropriate risk and return balance and between risk and return and where appropriate. Approximatelywhere 92% appropriate. (2017: 86%) Approximately of cash and 92% bank (2017: balances 86%) are of held cash and bank balances are held minimiseEmirates potential adverse effectsminimise on Emirates' potential financial adverse performance.effects on Emirates' financial performance. with financial institutions basedwith in financialthe UAE. institutions based in the UAE.

Emirates'dnata risk management proceduresEmirates' risk are management designed to identify procedures and analyseare designed these to risks, identify and analyse these risks, The sale of passenger andThe cargo sale oftransportation passenger and is largely cargo achieved transportation through is largely achieved through to set appropriateGroup risk limitsto and set controls, appropriate and riskto monitor limits and the controls, risks and and adherence to monitor to the risks and adherence to International Air Transport AssociationInternational (IATA) Air Transport approved Association sales agents (IATA) and online approved sales. sales agents and online sales. 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 meetAll a minimum IATA agents financial have to criteria meet applicable a minimum to financial their country criteria of applicable to their country of Financial risk managementInformation 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.operation Adherence to remain to the accredited. financial criteria Adherence is monitored to the financial on an criteria is monitored on an emerging best practice. Emiratesemerging uses derivative best practice. financial Emirates instruments uses derivative to hedge financial certain instruments to hedge certain ongoing basis by IATA throughongoing their basis Agency by Programme.IATA through The their credit Agency risk Programme.associated The credit risk associated Emirates risk exposures.Financial risk exposures. with such sales agents and thewith related such balances sales agents within and trade the related receivables balances is therefore within trade low receivables is therefore low Commentary and further reduced by their diverseand further base. reduced by their diverse base. A risk management programmeA risk is carried management out under programme guidelines is carriedthat are out approved under guidelines by a that are approved by a steeringdnata group comprising seniorsteering management. group comprising Identification, senior evaluationmanagement. and Identification, hedging evaluation and hedging Financial 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 financialCommentary 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. management is also responsiblemanagement for the review is also of responsible risk management for the reviewand the of control risk management and the control Emirates environment.Consolidated 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 presentsterm bank an deposits analysis and of short bank term balances bank by deposits and bank balances by Financial Statements rating agency designation atrating the end agency of the designation reporting at period the end based of theon Standard reporting & period based on Standard & (i) Credit risk (i) Credit risk Poor's ratings or its equivalentPoor's for Emirates' ratings ormain its equivalentbanking relationships: for Emirates' main banking relationships: dnata Consolidated EmiratesFinancial 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 2018 2017 2018 2017 Statements financial loss to Emirates byfinancial failing to loss discharge to Emirates an obligation. by failing toFinancial discharge assets an that obligation. Financial assets that AED m AED m AED m AED m potentiallyAdditional subject Emirates topotentially credit risk subject consist Emirates principally to creditof deposits risk consist with banks principally and of deposits with banks and Information AA- to AA+ AA- to AA+ 378 315 378 315 other financial institutions, derivativeother financial counterparties institutions, as well derivative as receivables counterparties from agents as well as receivables from agents A- to A+ A- to A+ 16,849 12,578 16,849 12,578 selling commercial air transportation.selling commercial Emirates uses air transportation. external ratings Emirates such as usesStandard external & ratings such as Standard & BBB+ BBB+ 2,584 1,696 2,584 1,696 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 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+ 11 56 11 56 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 517 694 517 694 factors. factors.

40 40 135 THE EMIRATES GROUP ANNUAL REPORT 2017-18

38. Financial risk management38. (continued)Financial risk management (continued) Interest rate risk Interest rate risk

(ii) Market risk (ii) Market risk Emirates is exposed to the effectsEmirates of fluctuations is exposed in to the the prevailing effects of levels fluctuations of interest in the rates prevailing levels of interest rates on borrowings and investments.on borrowings Exposure arises and investments. from interest Exposure rate fluctuations arises from in the interest rate fluctuations in the 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 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 flows of a financial instrumentflows will of fluctuate a financial because instrument of changes will fluctuate in market because prices. of changes in market prices. obligations, operating lease rentalsobligations, and interest operating income lease on rentals its cash and surpluses. interest income The key on its cash surpluses. The key Market 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 Overview reference rates based on whichreference interest rates costs based are determined on which interest are LIBOR costs for are US determined dollar, are LIBOR for US dollar, rate risk. rate risk. EIBOR for UAE Dirham and EURIBOREIBOR for for UAE Euro. Dirham Summarised and EURIBOR quantitative for Euro. data Summarised is available quantitative data is available Emirates in Note 20 for interest cost exposures.in Note 20 for interest cost exposures. Jet fuel price risk Jet fuel price risk dnata Emirates is exposed to volatilityEmirates in the is price exposed of jet to fuel volatility and closely in the monitors price of jetthe fuel actual and closely monitors the actual Borrowings taken at variableBorrowings rates expose taken Emirates at variable to cash rates flow expose interest Emirates rate risk to while cash flow interest rate risk while Group cost against the forecast cost.cost To againstmanage the the forecast price risk, cost. Emirates To manage considers the price the use risk, of Emirates considers the use of borrowings issued at fixed ratesborrowings expose Emirates issued at to fixed fair value rates interestexpose Emirates rate risk. to Emirates fair value interest rate risk. Emirates commodityFinancial futures, options andcommodity swaps to futures, achieve options a level ofand control swaps over to achieve higher a jet level fuel of control over higher jet fuel targets a balanced portfoliotargets approach, a balanced whilst neverthelessportfolio approach, taking advantagewhilst nevertheless of taking advantage of Information costs so that profitability is notcosts adversely so that affected. profitability is not adversely affected. opportune market movementsopportune using appropriate market movements hedging solutions using appropriate including interest hedging solutions including interest Emirates rate swaps. Variable rate debtrate and swaps. cash Variable surpluses rate are debt mainly and denominated cash surpluses in areUAE mainly denominated in UAE CurrencyFinancial risk Currency risk Commentary Dirham and US Dollar. Dirham and US Dollar. Emirates is exposed to theEmirates effects of is fluctuation exposed to in the the effects prevailing of fluctuation foreign currency in the prevailing foreign currency dnata Sensitivity analysis of marketSensitivity risk analysis of market risk exchangeFinancial rates on its financialexchange position rates and on cash its financial flows. Exposure position arises and cash due flows. to Exposure arises due to exchangeCommentary rate fluctuations betweenexchange the rate UAE fluctuations Dirham and between other currencies the UAE Dirham generated and other currencies generated The following sensitivity analysis,The following relating to sensitivity existing financial analysis, instruments, relating to existing shows how financial instruments, shows how from Emirates'Emirates revenue earningfrom activities. Emirates' Long revenue term earning debt obligations activities. Long are mainly term debt obligations are mainly profit and equity would changeprofit if the and market equity riskwould variables change had if the been market different risk variablesat the had been different at the denominatedConsolidated 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. end of the reporting periodend with of all the other reporting variables period held with constant all other and variables has been held constant and has been Financial Additionally,Statements some operatingAdditionally, lease liabilities some are operating denominated lease in liabilities Euro, Pound are denominated Sterling in Euro, Pound Sterling computed on the basis of assumptionscomputed on and the indices basis of used assumptions and considered and indices by other used and considered by other and Japanese Yen to provideand a Japanese natural hedge Yen to against provide revenue a natural inflows hedge in against these revenue inflows in these market participants. market participants. dnata 2018 2017 2018 2017 currencies.Consolidated Senior managementcurrencies. monitors Senior currency management positions on monitors a regular currency basis. positions on a regular basis. Financial Effect on Effect on Effect Effect on Effecton Effect on on Effect on Effect on Statements Emirates is in a net payer positionEmirates with is respectin a net to payer the USposition Dollar with and respect in a net to surplus the US Dollar and in a net surplus profit equity profitprofit equity equity profit equity positionAdditional for other currencies.position Currency for surpluses other currencies. are converted Currency to US surpluses Dollar and are UAE converted to US Dollar and UAE AED m AED m AED mAED m AED m AED m AED m AED m Information Dirham funds. Currency risksDirham arise mainly funds. from Currency Emirates' risks revenue arise mainly earning from activities Emirates' in revenue earning activities in Interest cost Interest cost Euro, Pound Sterling, AustralianEuro, Dollar, Pound Indian Sterling, Rupee, Australian Chinese Dollar, Yuan, SwissIndian Franc, Rupee, South Chinese Yuan, Swiss Franc, South - 25 basis points - 25 basis points African Rand and Japanese Yen.African Currency Rand risks and areJapanese hedged Yen. using Currency forwards risks and are options, hedged using forwards and options, UAE Dirham UAE Dirham 5 5 6 5 6 5 6 6 as appropriate, as well as byas way appropriate, of a natural as hedge well as between by way foreign of a natural currency hedge inflows between foreign currency inflows US Dollar US Dollar 71 40 70 71 26 40 70 26 and outflows. and outflows. 76 45 76 76 32 45 76 32 + 25 basis points + 25 basis points Emirates is also subject to theEmirates risk that is countriesalso subject in whichto the it risk may that earn countries revenues in maywhich it may earn revenues may UAE Dirham UAE Dirham (5) (5) (6)(5) (6) (5) (6) (6) impose restrictions or prohibitionimpose on restrictions the export or of prohibition those revenues. on the Emirates export seeks of those to revenues. Emirates seeks to US Dollar US Dollar (71) (40) (70)(71) (26) (40) (70) (26) minimise this risk by repatriatingminimise surplus this funds risk toby the repatriating UAE on a surplus monthly funds basis. to Cash the UAE and on a monthly basis. Cash and cash equivalents for the currentcash year equivalents include forAED the 182 current m (2017: year AED include 230 AEDm) held 182 in m (2017: AED 230 m) held in (76) (45) (76)(76) (32) (45) (76) (32) countries where exchange controlscountries and whereother restrictionsexchange controls apply. and other restrictions apply.

136 41 41 THE EMIRATES GROUP ANNUAL REPORT 2017-18

38. Financial risk management38. (continued)Financial risk management (continued) (iii) Liquidity risk (iii) Liquidity risk 2018 20172018 2017 Liquidity risk is the risk thatLiquidity Emirates risk is is unable the risk to that meet Emirates its payment is unable obligations to meet its payment obligations Effect on Effect on Effect Effect on Effecton Effect on on Effect on Effect on associated with its financial liabilitiesassociated when with they its fallfinancial due and liabilities to replace when funds they whenfall due they and to replace funds when they profit equity profitprofit equity equity profit equity are withdrawn. are withdrawn. AED m AED m AED mAED m AED m AED m AED m AED m Emirates' liquidity managementEmirates' process liquidity as monitored management by senior process management, as monitored includes by senior management, includes Interest Overviewincome Interest income the following: the following: - 25 basis points - 25 basis points (13) - (5)(13) - - (5) - Emirates  Day to day funding, managed Day by to monitoring day funding, future managed cash flows by monitoring to ensure that future cash flows to ensure that + 25 basis points + 25 basis points 13 - 5 13 - - 5 - dnata requirements can be met.requirements This includes can replenishment be met. This of funds includes as replenishment they of funds as they mature. mature. Currency - Pound Sterling Currency - Pound Sterling Group  Maintaining rolling forecasts Maintaining of Emirates’ rolling liquidity forecasts position of on Emirates’ the basis liquidity of position on the basis of + 1% + 1% 1 (1) 1 1 - (1) 1 - expected cash flows. expected cash flows. Financial - 1% Information - 1% (1) 1 (1) (1) - 1 (1) -  Monitoring liquidity ratios andMonitoring net current liquidity assets against ratios and internal net current standards. assets against internal standards.  Maintaining debt financing plans.Maintaining debt financing plans. CurrencyEmirates - Euro Currency - Euro  Maintaining diversified creditMaintaining lines including diversified stand-by credit linescredit including facility stand-by credit facility Financial + 1% Commentary + 1% 1 (1) 3 1 - (1) 3 - Sources of liquidity are regularlySources reviewed of liquidity by senior are regularly management reviewed to bymaintain senior a management to maintain a - 1% dnata - 1% (1) 1 (3) (1) - 1 (3) - Financial diversification by geography, diversificationprovider, product by geography, and term. provider, product and term. Commentary Currency - Australian Dollar Currency - Australian Dollar + 1% Emirates + 1% 1 (1) 1 1 (1) (1) 1 (1) Consolidated - 1% Financial - 1% (1) 1 (1) (1) 1 1 (1) 1 Statements

Currencydnata - Chinese Yuan Currency - Chinese Yuan + 1% Consolidated + 1% 2 2 - 2 - 2 - - Financial - 1% Statements - 1% (2) (2) - (2) - (2) - -

Additional Information

42 42 137 THE EMIRATES GROUP ANNUAL REPORT 2017-18

38. Financial risk management38. (continued)Financial risk management (continued) 39. Acquisitions 39. Acquisitions

Summarised below in the tableSummarised is the maturity below profile in the oftable financial is the liabilities maturity andprofile net- of financial liabilities and net- In May 2017, Emirates acquiredIn May 63% 2017, of the Emirates business acquired of Brand 63% 2 Consumer of the business Co (Pty) of Ltd. Brand 2 Consumer Co (Pty) Ltd. 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 (South Africa) for a purchase(South consideration Africa) for of a AED purchase 5 m and consideration 90% of Seyvine of AED Limited 5 m and 90% of Seyvine Limited reporting period to the contractualreporting maturity period to date. the The contractual amounts maturity disclosed date. are The the amounts disclosed are the (Seychelles) for a purchase(Seychelles) consideration for of a AED purchase 1 m consideration through its wholly of AED owned 1 m through its wholly owned contractual undiscounted cashcontractual flows. undiscounted cash flows. subsidiary Maritime and Mercantilesubsidiary International Maritime and Holding Mercantile LLC. The International principal activities Holding LLC. The principal activities Overview of these companies are wholesaleof these and companies retail of consumer are wholesale goods. and Revenue retail of and consumer profit goods. Revenue and profit Emirates Less than 2 - 5 OverLess than 2 - 5 Over from the date of acquisition tofrom 31 March the date 2018 of acquisitionis not material. to 31 March 2018 is not material. 1 year years 5 years1 year Totalyears 5 years Total dnata AED m AED m AED mAED m AED m AED m AED m AED m 40. Capital management 40. Capital management Group 2018 2018 Financial Emirates' objective when managingEmirates' capital objective is to when safeguard managing its ability capital to continueis to safeguard as a its ability to continue as a Borrowings and lease liabilitiesBorrowings and 10,635 lease liabilities 28,514 19,943 10,635 59,092 28,514 19,943 59,092 Information going concern in order to providegoing concernreturns for in order its Owner to provide and to returns maintain for an its optimal Owner and to maintain an optimal Derivative financial instrumentsDerivative financial 35instruments 26 - 35 61 26 - 61 Emirates capital structure to reduce thecapital cost of structure capital. to reduce the cost of capital. Financial Commentary Emirates monitors the returnEmirates on Owner's monitors equity, the whichreturn is on defined Owner's as equity, the profit which is defined as the profit Provision for aircraft return conditionsProvision for aircraft 704 return conditions 1,980 1,331 704 4,015 1,980 1,331 4,015 dnata attributable to the Owner expressedattributable as to a the percentage Owner expressed of average as Owner's a percentage equity. of average Owner's equity. Financial Emirates seeks to provide a betterEmirates return seeks to the to provide Owner by a better borrowing return and to thetaking Owner aircraft by borrowing and taking aircraft Trade andCommentary other payables (excludingTrade and other payables (excluding on operating leases to meeton its operatinggrowth plans. leases In to2018, meet Emirates its growth achieved plans. a In return 2018, on Emirates achieved a return on passenger and cargo sales in advance)passenger and 16,954cargo sales in advance) 123 - 16,954 17,077 123 - 17,077 Emirates Owner's equity funds of 7.9% Owner's(2017: 3.8%). equity funds of 7.9% (2017: 3.8%). Consolidated 28,328 30,643 21,274 28,328 80,245 30,643 21,274 80,245 Financial 2017 Statements 2017 Emirates also monitors capitalEmirates on the basis also monitors of a gearing capital ratio on which the basis is calculated of a gearing as the ratio which is calculated as the ratio of borrowings and leaseratio liabilities, of borrowings net of cash and assets lease to liabilities, total equity. net of In cash 2018, assets this to total equity. In 2018, this Borrowingsdnata and lease liabilitiesBorrowings and 12,319 lease liabilities 27,257 19,143 12,319 58,719 27,257 19,143 58,719 Consolidated ratio is 82.8% (2017: 100.7%)ratio and is if aircraft82.8% (2017: operating 100.7%) leases and are if included, aircraft operating the ratio leases is are included, the ratio is Derivative financial instrumentsDerivative financial 105 instruments 69 - 105 174 69 - 174 Financial 216.4% (2017: 237.9%). 216.4% (2017: 237.9%). Statements

ProvisionAdditional for aircraft return conditionsProvision for aircraft 630 return conditions 1,991 1,205 630 3,826 1,991 1,205 3,826 Information

Trade and other payables (excludingTrade and other payables (excluding passenger and cargo sales in advance)passenger and 14,315 cargo sales in advance)683 - 14,315 14,998 683 - 14,998 27,369 30,000 20,348 27,369 77,717 30,000 20,348 77,717

138 43 43 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Independent Auditor’s Report to the Owner of dnata

Overview

Emirates dnata

Group

Financial Information Our opinion Independence Emirates In our opinion, the consolidated financial statements present fairly, in all material We are independent of dnata in accordance with the International Ethics Standards Financial Commentary respects, the consolidated financial position of dnata and its subsidiaries (together Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”) referred to as “dnata”) as at 31 March 2018, and its consolidated financial performance and the ethical requirements that are relevant to our audit of the consolidated dnata and its consolidated cash flows for the year then ended in accordance with International financial statements in the United Arab Emirates. We have fulfilled our other ethical Financial Commentary Financial Reporting Standards (“IFRS”). responsibilities in accordance with these requirements and the IESBA Code.

Emirates What we have audited Consolidated Our audit approach Financial dnata’s consolidated financial statements comprise: Statements Overview ● the consolidated income statement for the year ended 31 March 2018; As part of designing our audit, we determined materiality and assessed the risks of dnata Consolidated ● the consolidated statement of comprehensive income for the year ended 31 March 2018; material misstatement in the consolidated financial statements. In particular, we Financial considered where management made subjective judgements; for example, in respect Statements ● the consolidated statement of financial position as at 31 March 2018; of significant accounting estimates that involved making assumptions and considering ● the consolidated statement of changes in equity for the year ended 31 March 2018; Additional future events that are inherently uncertain. As in all of our audits, we also addressed Information ● the consolidated statement of cash flows for the year ended 31 March 2018; and the risk of management override of internal controls, including among other matters ● the notes to the consolidated financial statements, which include a summary of consideration of whether there was evidence of bias that represented a risk of material significant accounting policies. misstatement due to fraud. Basis for opinion The area that in our professional judgement, is of most significance to the audit (“Key audit matter”) and where we focused most audit effort during the year was: We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Key audit matter ● Impairment of goodwill Auditor’s responsibilities for the audit of the consolidated financial statements section We tailored the scope of our audit in order to perform sufficient work to enable us to of our report. provide an opinion on the consolidated financial statements as a whole, taking into We believe that the audit evidence we have obtained is sufficient and appropriate to account the structure of dnata, the accounting processes and controls, and the industry provide a basis for our opinion. in which dnata operates.

PricewaterhouseCoopers (Dubai Branch), License no. 102451, Emaar Square, Building 4, Level 8, P O Box 11987, Dubai - United Arab Emirates T: +971 4 304 3100, F: +971 4 346 9150, www.pwc.com/middle-east Douglas O’Mahony, Paul Suddaby, Jacques Fakhoury and Mohamed ElBorno are registered as practising auditors with the UAE Ministry of Economy 139 THE EMIRATES GROUP ANNUAL REPORT Independent Auditor’s Report to the Owner of dnata (continued) 2017-18

Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements for 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 opinion on these matters.

Key audit matter How our audit addressed the Key audit matter Overview

Emirates Impairment of goodwill We understood and tested management’s impairment models. In particular we tested the appropriateness of the key assumptions within the models as follows: dnata As at 31 March 2018, the carrying value of goodwill was AED 2,065 million (2017: AED 1,909 million). Refer to notes 2, 3 and 10 to the consolidated financial ● we used our internal valuation specialists to perform an independent Group statements. calculation of the discount rates used with particular reference to comparable Financial companies and compared this to the discount rates used by management. Information Goodwill is not subject to amortisation and in accordance with IAS 36 “Impairment of assets” is required to be tested annually for impairment. ● we tested the mathematical accuracy of the model. Emirates Financial ● we agreed the cash flows used in management’s impairment models to Commentary dnata determines the recoverable amount of goodwill for each of its cash generating units or groups of cash generating units as the higher of fair value less formally approved budgets. We compared future expected revenue growth dnata costs of disposal and value in use. The value in use is determined by calculating rates and profit margins used in the formally approved budgets and beyond Financial the discounted cash flows of each cash generating unit or groups of cash the period of the formally approved budgets to historical trends and reviewed Commentary generating units. whether management’s estimates made in prior periods were reasonable Emirates compared to actual performance. Consolidated We considered this as a Key audit matter because management’s assessment Financial of whether or not goodwill within a cash generating unit was impaired, involves ● we also compared the long term growth rates to external sources of Statements complex and subjective judgements including assumptions about the future information including economic forecasts. dnata discounted cash flows of cash generating units or groups of cash generating units Consolidated at dnata. ● we performed sensitivity analysis over each of the significant assumptions and Financial considered the appropriateness of the related disclosures in note 10 to the Statements The impairment models prepared by management in respect of the cash consolidated financial statements. Additional generating units containing goodwill determined that adequate headroom Information existed not to result in the need for an impairment charge in reasonably possible scenarios.

Other information Responsibilities of management and those charged with Management is responsible for the other information. The other information comprises governance for the consolidated financial statements the information included in the Annual Report (but does not include the consolidated Management is responsible for the preparation and fair presentation of the financial statements and our auditor’s report thereon). consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated Our opinion on the consolidated financial statements does not cover the other financial statements that are free from material misstatement, whether due to fraud information and we do not express any form of assurance conclusion thereon. or error. In connection with our audit of the consolidated financial statements, our responsibility In preparing the consolidated financial statements, management is responsible for is to read the other information identified above and, in doing so, consider whether the assessing dnata’s ability to continue as a going concern, disclosing, as applicable, other information is materially inconsistent with the consolidated financial statements matters related to going concern and using the going concern basis of accounting or our knowledge obtained in the audit, or otherwise appears to be materially misstated. unless management either intends to liquidate dnata or to cease operations, or has no If, based on the work we have performed, we conclude that there is a material realistic alternative but to do so. misstatement of this other information, we are required to report that fact. We have Those charged with governance are responsible for overseeing dnata’s financial nothing to report in this regard. 140 reporting process.

THE EMIRATES GROUP ANNUAL REPORT Independent Auditor’s Report to the Owner of dnata (continued) 2017-18

Auditor’s responsibilities for the audit of the consolidated financial statements We communicate with those charged with governance regarding, among other matters, Our objectives are to obtain reasonable assurance about whether the consolidated the planned scope and timing of the audit and significant audit findings, including any financial statements as a whole are free from material misstatement, whether due to significant deficiencies in internal control that we identify during our audit. fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable We also provide those charged with governance with a statement that we have complied assurance is a high level of assurance, but is not a guarantee that an audit conducted with relevant ethical requirements regarding independence, and to communicate with Overview in accordance with ISAs will always detect a material misstatement when it exists. them all relationships and other matters that may reasonably be thought to bear on our Misstatements can arise from fraud or error and are considered material if, individually independence, and where applicable, related safeguards. Emirates or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. From the matters communicated with those charged with governance, we determine dnata those matters that were of most significance in the audit of the consolidated financial As part of an audit in accordance with ISAs, we exercise professional judgement and Group statements of the current year and are therefore the Key audit matters. We describe maintain professional scepticism throughout the audit. We also: these matters in our auditor’s report unless law or regulation precludes public disclosure Financial about the matter or when, in extremely rare circumstances, we determine that a matter Information ● Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures should not be communicated in our report because the adverse consequences of Emirates responsive to those risks, and obtain audit evidence that is sufficient and appropriate doing so would reasonably be expected to outweigh the public interest benefits of Financial such communication. Commentary 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 fraud may involve PricewaterhouseCoopers dnata Financial collusion, forgery, intentional omissions, misrepresentations, or the override of 3 May 2018 Commentary internal control.

Emirates ● Obtain an understanding of internal control relevant to the audit in order to design Consolidated audit procedures that are appropriate in the circumstances, but not for the purpose Financial Statements of expressing an opinion on the effectiveness of dnata’s internal control. dnata ● Evaluate the appropriateness of accounting policies used and the reasonableness of Consolidated accounting estimates and related disclosures made by management. Douglas O’Mahony Financial Registered Auditor Number 834 Statements ● Conclude on the appropriateness of management’s use of the going concern basis Dubai, United Arab Emirates Additional of accounting and, based on the audit evidence obtained, whether a material Information uncertainty exists related to events or conditions that may cast significant doubt 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.

● Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within dnata to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the dnata audit. We remain solely responsible for our audit opinion.

141 THE EMIRATES GROUP ANNUAL REPORT Consolidated Income Statement 2017-18 dnata forCONSOLIDATED the year INCOME ended STATEMENT 31 March 2018 FOR THE YEAR ENDED 31 MARCH 2018

Note 2018 2017 dnata AED m AED m CONSOLIDATED INCOME STATEMENT Revenue 5 12,931 11,982 FOR THE YEAR ENDED 31 MARCH 2018 Other operating income 143 200 Operating costs Note6 (11,878) 2018(10,958) 2017 Overview Operating profit AED 1,196 m AED 1,224 m Emirates Finance income 98 66 Revenue 5 12,931 11,982 Finance costs (31) (35) dnata Other operating income 143 200 Share of results of investments accounted for using the equity method 11 126 78 Group Operating costs 6 (11,878) (10,958) Profit before income tax 1,389 1,333 Operating profit 1,196 1,224 Financial Income tax expense 7 (37) (82) Information Finance income 98 66 Profit for the year 1,352 1,251 Finance costs (31) (35) Emirates Profit attributable to non-controlling interests 35 41 Financial Share of results of investments accounted for using the equity method 11 126 78 Commentary Profit attributable to dnata's Owner 1,317 1,210 Profit before income tax 1,389 1,333 dnata CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Financial Income tax expense 7 (37) (82) Commentary ProfitFOR THE for YEARthe year ENDED 31 MARCH 2018 1,352 1,251 Emirates ProfitConsolidatedProfit attributable for the year to non-controlling Statement interests of Comprehensive Income 1,352 35 1,251 41 Consolidated Profit attributable to dnata's Owner 1,317 1,210 Financial Items that will not be reclassified to the consolidated income statement Statements CONSOLIDATEDfor Remeasurementthe year STATEMENT of endedretirement OF COMPREHENSIVE benefit 31 obligations March INCOME net of 2018 deferred tax 2 124 dnata FOR THEShare YEAR of otherENDED comprehensive 31 MARCH 2018 income of investments accounted for using the equity method Consolidated net of deferred tax 11 42 (43) Financial Profit for the year 1,352 1,251 Statements Items that are or may be reclassified subsequently to the consolidated income statement Items that will not be reclassified to the consolidated income statement Currency translation differences 218 (159) Additional Remeasurement of retirement benefit obligations net of deferred tax 2 124 Information Cash flow hedges (7) (8) Share of other comprehensive income of investments accounted for using the equity method Net investment hedge 22 (9) 4 net of deferred tax 11 42 (43) Share of other comprehensive income of investments accounted for using the equity method Items that are or may be reclassified subsequently to the consolidated income statement net of deferred tax 11 7 21 Currency translation differences 218 (159) Other comprehensive income for the year 253 (61) Cash flow hedges (7) (8) Total comprehensive income for the year 1,605 1,190 Net investment hedge 22 (9) 4 Total comprehensive income attributable to non-controlling interests 49 40 Share of other comprehensive income of investments accounted for using the equity method Total comprehensive income attributable to dnata's Owner 1,556 1,150 net of deferred tax 11 7 21 OtherThe accompanying comprehensive notes income are an forintegral the year part of these consolidated financial statements. 253 (61) Total comprehensive income for the year 1,605 1,190 Total comprehensive income attributable to non-controlling interests 49 40 Total comprehensive income attributable to dnata's Owner 1,556 1,150

The accompanying notes are an integral part of these consolidated financial statements. The accompanying notes are an integral part of these consolidated financial statements.

142 THE EMIRATES GROUP dnata ANNUAL REPORT Consolidateddnata Statement of Financial Position CONSOLIDATED2017-18 STATEMENT OF FINANCIAL POSITION asCONSOLIDATED at 31 STATEMENTMarch OF 2018 FINANCIAL POSITION AS AT 31 MARCH 2018 AS AT 31 MARCH 2018

Note 2018 2017 Note 2018 2017 Note 2018 2017Note 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m ASSETS ASSETS EQUITY AND LIABILITIES EQUITY AND LIABILITIES Non-current assets Non-current assets Capital and reserves Capital and reserves Property, plant and equipment 8 1,861 1,847 Property, plant and equipment 8 1,861 1,847 Capital Capital 15 63 63 15 63 63 InvestmentOverview property 9 338 237 Investment property 9 338 237 Capital reserve Capital reserve (60) (66) (60) (66) Intangible assets 10 2,788 2,632 Emirates Intangible assets 10 2,788 2,632 Other reserves Other reserves 16 (157) (355) 16 (157) (355) Investments accounted for using the equity Investments accounted for using the equity Retained earnings Retained earnings 7,257 6,897 7,257 6,897 methoddnata 11 473 407 method 11 473 407 Attributable to dnata's OwnerAttributable to dnata's Owner 7,103 6,539 7,103 6,539 AdvanceGroup lease rentals 12 43 40 Advance lease rentals 12 43 40 Non-controlling interests Non-controlling interests 179 167 179 167 Deferred income tax assets 24 81 62 Financial Deferred income tax assets 24 81 62 Total equity Total equity 7,282 6,706 7,282 6,706 Trade andInformation other receivables Trade and other receivables 14 134 147 14 134 147 5,718 5,372 Emirates 5,718 5,372 Non-current liabilities Non-current liabilities CurrentFinancial assets Trade and other payables 17 163 193 Commentary Current assets Trade and other payables 17 163 193 Inventories 13 87 87 Inventories 13 87 87 Borrowings and lease liabilitiesBorrowings and lease liabilities 21 867 654 21 867 654 Trade anddnata other receivables 14 3,493 3,180 Financial Trade and other receivables 14 3,493 3,180 Deferred income tax liabilitiesDeferred income tax liabilities 24 142 148 24 142 148 DerivativeCommentary financial instruments 29 - 5 Derivative financial instruments 29 - 5 Provisions Provisions 18 562 547 18 562 547 Income tax asset 3 5 Emirates Income tax asset 3 5 1,734 1,542 1,734 1,542 Short termConsolidated bank deposits 28 3,760 2,016 Current liabilities Financial Short term bank deposits 28 3,760 2,016 Current liabilities Cash andStatements cash equivalents 28 1,185 1,382 Cash and cash equivalents 28 1,185 1,382 Trade and other payables Trade and other payables 17 4,848 3,351 17 4,848 3,351 8,528 6,675 dnata 8,528 6,675 Income tax liabilities Income tax liabilities 64 61 64 61 Asset classifiedConsolidated as held for sale 11 46 - Borrowings and lease liabilities 21 292 339 Financial Asset classified as held for sale 11 46 - Borrowings and lease liabilities 21 292 339 8,574 6,675 Statements 8,574 6,675 Provisions Provisions 18 47 45 18 47 45 Total assets 14,292 12,047 Derivative financial instruments 29 25 3 Additional Total assets 14,292 12,047 Derivative financial instruments 29 25 3 Information 5,276 3,799 5,276 3,799 Total liabilities Total liabilities 7,010 5,341 7,010 5,341 Total equity and liabilities Total equity and liabilities 14,292 12,047 14,292 12,047

The consolidated financial statements statementsThe consolidated were were approved approved financial on onstatements 3 May3 May 2018 2018 were and and approvedsigned signed by: onby: 3 May 2018 and signed by:

The accompanying notes are anThe integral accompanying part of these notes consolidated are an integral financial part of statements. these consolidated financial statements.

Sheikh Ahmed bin Saeed Al-Maktoum Gary Chapman Chairman and Chief Executive President

The accompanying notes are an integral part of these consolidated financial statements.

143 THE EMIRATES GROUP ANNUAL REPORT Consolidated Statement of Changes in Equity 2017-18 dnata forCONSOLIDATED the year STATEMENT ended OF CHANGES 31 IN EQUITYMarch 2018 FOR THE YEAR ENDED 31 MARCH 2018 Attributable to dnata's Owner Non- Capital Other Retained controlling Total Note Capital reserve reserves earnings Total interests equity AED m AED m AED m AED m AED m AED m AED m

Overview 1 April 2016 63 (67) (216) 5,607 5,387 167 5,554 Profit for the year - - - 1,210 1,210 41 1,251 Emirates Other comprehensive income for the year - - (141) 81 (60) (1) (61) dnata Total comprehensive income for the year - - (141) 1,291 1,150 40 1,190 Non-controlling interest on acquisition of subsidiaries 33 - - - - - 11 11 Group Acquired from non-controlling interest - 2 - - 2 (2) - Financial Dividends - - - - - (53) (53) Information Option to acquire non-controlling interest 33 - (1) - - (1) - (1) Emirates Financial Transfer from retained earnings - - 2 (2) - - - Commentary Capital contribution - - - - - 4 4 dnata Transactions with Owners - 1 2 (2) 1 (40) (39) Financial Share of other equity movements of investments Commentary accounted for using the equity method 11 - - - 1 1 - 1 Emirates 31 March 2017 63 (66) (355) 6,897 6,539 167 6,706 Consolidated Financial Profit for the year - - - 1,317 1,317 35 1,352 Statements Other comprehensive income for the year - - 195 44 239 14 253 dnata Total comprehensive income for the year - - 195 1,361 1,556 49 1,605 Consolidated Financial Acquired from non-controlling interest - 5 - - 5 (4) 1 Statements Dividends - - - (1,000) (1,000) (44) (1,044)

Additional Transfer from retained earnings - 1 - (1) - - - Information Dilution of interest in a subsidiary - - - - - 11 11 Transactions with Owners - 6 - (1,001) (995) (37) (1,032) Share of other equity movements of investments accounted for using the equity method 11 - - 3 - 3 - 3 31 March 2018 63 (60) (157) 7,257 7,103 179 7,282

The capital reserve includes the difference between the carrying value of the non-controlling interest acquired and the fair value of the consideration paid. It also 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.

The accompanying notes are an integral part of these consolidated financial statements.

144 THE EMIRATES GROUP ANNUAL REPORT Consolidateddnata Statement of Cash Flows 2017-18 dnata forCONSOLIDATED the year STATEMENT ended OF CASH 31FLOWS March 2018 CONSOLIDATED STATEMENTFOR OF THECASH YEAR FLOWS ENDED 31 MARCH 2018 Note 2018 2017 FOR THE YEAR ENDED 31 MARCH 2018 Note 2018 2017 Note 2018 2017 AED m AED m Note 2018 2017 AED m AED m Investing activities AED m AED m Additions to property, plant and equipment 8 (308) (479) Operating activities AED m AED m Investing activities Additions to investment property 9 (111) (73) Operating activities Profit before income tax 1,389 1,333 Additions to property, plant and equipment 8 (308) (479) Additions to intangible assets 10 (92) (55) Profit before income tax Adjustments for: 1,389 1,333 Additions to investment property 9 (111) (73) Overview Proceeds from sale of property, plant and Adjustments for: Depreciation and amortisation 6 531 524 Additions to intangible assets 10 (92) (55) equipment 8 58 DepreciationEmirates and amortisationFinance income - net 6 531 524 (67) (31) Proceeds from sale of property, plant and Amortisation of advance lease rentals 12 3 3 equipment Investments in associates and joint ventures 8 58 11 (5) (28) Financednata income - net (67) (31) Dividends from investments accounted for using Amortisation of advance leaseShare rentals of results of investments12 accounted 3 for 3 Investments in associates and joint ventures 11 (5) (28) Group the equity method 11 31 28 Share of results of investmentsusing accounted the equity for method 11 (126) (78) Dividends from investments accounted for using Acquisition of subsidiaries, net of cash acquired 33 (12) (582) using Financialthe equity method Loss / (gain) on sale of property,11 plant(126) and (78) the equity method 11 31 28 Information Loans to related parties - net 31 12 19 Loss / (gain) on sale of property,equipment plant and and intangibles 3 (1) Acquisition of subsidiaries, net of cash acquired 33 (12) (582) Movement in short term bank deposits (1,744) 114 equipmentEmirates and intangibles Net provision for impairment of trade 3 (1) Loans to related parties - net 31 12 19 Financial Finance income 75 39 Net provisionCommentary for impairment ofreceivables trade 14 86 28 Movement in short term bank deposits (1,744) 114 Acquired from non-controlling interest (11) (2) receivables Provision for retirement 14benefit obligations 86 28 6 259 253 Finance income 75 39 dnata Net cash used in investing activities (2,157) (961) ProvisionFinancial for retirement benefitNet obligations movement on derivative6 financial 259 253 Acquired from non-controlling interest (11) (2) Commentary instruments Net cash used in investing activities Net movement on derivative financial 17 32 Financing activities (2,157) (961) instrumentsEmirates Payments for retirement benefit obligations 17 32 (231) (221) Consolidated Financing activities Proceeds from loans 22 475 515 Income tax paid (86) (69) PaymentsFinancial for retirement benefit obligations (231) (221) Repayment of loans 22 (306) (192) Statements Proceeds from loans 22 475 515 Income tax paid Change in inventories (86) (69) 4 (4) Repayment of loans Net movement in lease liabilities 22 (306) (192) (9) 4 Change in trade and other receivables (213) (578) Change dnatain inventories 4 (4) Finance costs (29) (20) Consolidated Net movement in lease liabilities (9) 4 Change in provisions, trade and other payables 289 90 Change Financialin trade and other receivables (213) (578) Dividends paid to dnata's Owner - (400) Statements Finance costs (29) (20) Change in provisions, trade andNet other cash payables generated from operating activities 289 90 1,858 1,281 Dividends paid to dnata's OwnerDividends paid to non-controlling interests- (400) (53) (53) Net cashAdditional generated from operating activities 1,858 1,281 Net cash generated from / (used in) financing activities 78 (146) Information Dividends paid to non-controlling interests (53) (53) Net cash generated from / (used in) financing activities 78 (146) Net change in cash and cash equivalents (221) 174 Net change in cash and cash equivalents (221) 174 Cash and cash equivalents at beginning of year 1,250 1,190 Cash and cash equivalents at beginningEffects of exchange of year rate changes 1,250 1,190 83 (114) The accompanying notes are an integral part of these consolidated financial statements. Effects of exchange rate changesCash and cash equivalents at end of year 83 (114)28 1,112 1,250 The accompanying notes are an integral part of these consolidated financial statements. Cash and cash equivalents at end of year 28 1,112 1,250

The accompanying notes are an integral part of these consolidated financial statements.

145 THE EMIRATES GROUP ANNUAL REPORT Notes to the Consolidated Financial Statements 2017-18 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS New standards, amendments to published standards and interpretations that are FORfor THE the YEAR year ENDED ended31 MARCH 201831 March 2018 relevant to dnata

NOTES1. Gene rTOal informatio THE CONSOLIDATEDn FINANCIAL STATEMENTS NewEffective standards, and adopted amendments in the current to published year standards and interpretations that are FOR THE YEAR ENDED 31 MARCH 2018 relevant to dnata dnata comprises dnata and its subsidiaries. dnata was incorporated in the Emirate of At the date of authorisation of these consolidated financial statements, certain amendments to the existing standards were effective for the current financial year and 1.Dubai, Gene UAEral informatiowith limitedn liability, under an Emiri Decree issued by H.H. Sheikh Maktoum Effective and adopted in the current year bin Rashid Al-Maktoum on 4 April 1987. On that date, the total assets and liabilities of have been adopted by dnata. These are as follows: dnataDubai comprisesNational Air dnata Travel and Agency its subsidiaries. were transferred dnata was to dnata,incorporated with effect in the from Emirate 1 April of At the date of authorisation of these consolidated financial statements, certain  Amendments to IAS 7, Statement of Cash Flows (effective from 1 January 2017) Dubai,1987, forUAE nil with consideration. limited liability, dnata under is wholly an Emiri owned Decree by issuedthe Investment by H.H. Sheikh Corporation Maktoum of amendments to the existing standards were effective for the current financial year and Overview  Amendments to IFRS 12, Disclosure of Interests in Other Entities (effective from 1 binDubai Rashid (“the Al-Maktoum parent company”), on 4 April a Government 1987. On ofthat Dubai date, entity. the total assets and liabilities of have been adopted by dnata. These are as follows: January 2017) Emirates Dubai National Air Travel Agency were transferred to dnata, with effect from 1 April  Amendments to IAS 12, Income taxes (effective from 1 January 2017) 1987,dnata foris incorporated nil consideration. and domiciled dnata is inwholly Dubai, owned UAE. The by addressthe Investment of its registered Corporation office of is  Amendments to IAS 7, Statement of Cash Flows (effective from 1 January 2017) dnata DubaiDnata (“theTravel parent Centre, company”), PO Box 1515, a Government Dubai, UAE. of Dubai entity.  Amendments to IFRS 12, Disclosure of Interests in Other Entities (effective from 1 These amendments did not have a material impact on the consolidated financial Group January 2017) statements. However, disclosure changes arising from amendments to IAS 7 have been dnataThe main is incorporated activities of dnataand domiciled comprise: in Dubai, UAE. The address of its registered office is  Amendments to IAS 12, Income taxes (effective from 1 January 2017) Financial addressed in Note 23 through presentation of changes in opening and closing balances Information Dnata Travel Centre, PO Box 1515, Dubai, UAE.  Ground and cargo handling services Theseof lease amendments liabilities. did not have a material impact on the consolidated financial Emirates The Travemain lactivities services of dnata comprise: statements. However, disclosure changes arising from amendments to IAS 7 have been Financial  Inflight catering addressedNot yet effective in Note and23 through have not presentation been early ofadopted changes in opening and closing balances Commentary  Ground and cargo handling services of lease liabilities. At the date of authorisation of these consolidated financial statements, certain new dnata 2. SummarTravel servicey of significants accounting policies Financial Notaccounting yet effective standards and have notbeen been published early adopted that are not mandatory for the financial Commentary  Inflight catering A summary of the significant accounting policies, which have been applied consistently reporting year ended 31 March 2018, and have not been early adopted. Emirates 2.in the Summar preparationy of significant of these consolidated accounting financialpolicies statements, are set out below. At the date of authorisation of these consolidated financial statements, certain new Consolidated accountingManagement standards has assessed have the been impact published of these that accounting are not standards:mandatory for the financial Financial Statements ABasis summary of preparation of the significant accounting policies, which have been applied consistently reporting year ended 31 March 2018, and have not been early adopted. IFRS 9, Financial Instruments (effective from 1 January 2018) in the preparation of these consolidated financial statements, are set out below. dnata The consolidated financial statements have been prepared in accordance with Management has assessed the impact of these accounting standards: Consolidated dnata will adopt IFRS 9 which addresses the classification, measurement and Financial BasisInternational of preparation Financial Reporting Standards (IFRS) and IFRS Interpretations Committee Statements (IFRS IC) pronouncements. The consolidated financial statements are prepared under the IFRSderecognition 9, Financial of financialInstruments assets (effective and financia froml liabilities,1 January introduces 2018) new rules for hedge historical cost convention, except for those financial assets and financial liabilities that accounting and a new impairment model for financial assets from 1 April 2018. Additional The consolidated financial statements have been prepared in accordance with Information Internationalare measured Financial at fair value Reporting as stated Standards in the accounting (IFRS) and policies. IFRS Interpretations Committee dnata will adopt IFRS 9 which addresses the classification, measurement and dnata has reviewed the new requirements applicable to its financial assets and it does (IFRS IC) pronouncements. The consolidated financial statements are prepared under the derecognition of financial assets and financial liabilities, introduces new rules for hedge not expect the new guidance to affect the classification and measurement of its financial historicalAll amounts cost are convention, presented inexcept millions for ofthose UAE fi Dirhamnancial (“AED”).assets and financial liabilities that accounting and a new impairment model for financial assets from 1 April 2018. assets. There will be no impact on dnata’s financial liabilities as the new requirements are measured at fair value as stated in the accounting policies. dnataonly affect has reviewedthe accounting the new for requirements financial liabiliti applices thatable are to designatedits financial at assets fair value and through it does profit or loss and dnata does not have such liabilities of a significant value. All amounts are presented in millions of UAE Dirham (“AED”). not expect the new guidance to affect the classification and measurement of its financial assets. There will be no impact on dnata’s financial liabilities as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and dnata does not have such liabilities of a significant value.

146 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) IFRS 16, Leases (effective from 1 January 2019)

IFRS 9, Financial Instruments (effective from 1 January 2018) (continued) IFRS 16 removes the current distinction between operating and finance leases and requires recognition of an asset (the right to use the leased item) and a financial liability The new impairment model under IFRS 9 requires the recognition of impairment (the obligation to pay rentals). An optional exemption exists for short-term and low- provisions based on expected credit losses (ECL) rather than only incurred credit losses value leases. as is the case under IAS 39. It applies to trade receivables and other financial assets. Overview Based on the assessments undertaken, dnata does not expect any significant change in The standard will have significant impact on dnata's consolidated financial Emirates the loss allowance for these financial assets. statements considering the size of operating leases in its portfolio. For example, the consolidated income statement will be impacted because the total expense is typically dnata The new guidance has substantially reformed the existing hedge accounting rules. It higher in the earlier years of a lease and lower in later years. Additionally, operating

Group provides a more principles-based approach that aligns hedge accounting closely with lease charges will be replaced with interest and depreciation expenses. This will affect risk management policies. dnata does not expect any significant impact on its hedge key ratios like profit margin, operating margin, EBITDA margin etc. Further, Financial accounting under IFRS 9. operating cash flows will be higher as cash payments for the principal portion of the Information lease liability will be classified within financing activities. dnata is currently assessing Emirates The new standard also introduces expanded disclosure requirements and changes in the detailed financial impact of this standard on its consolidated financial statements. Financial presentation, however, these are not expected to materially change the nature and Commentary extent of dnata’s disclosures about its financial instruments. There are no other standards, amendments or interpretations that are either effective or dnata not yet effective, and would be expected to have a material impact on dnata. Financial IFRS 15, Revenue from Contracts with Customers (effective from 1 January 2018) Commentary Basis of consolidation Emirates IFRS 15 replaces IAS 18 which covers contracts for sale of goods and rendering of Consolidated services and IAS 11 which covers construction contracts. Subsidiaries are those entities over which dnata has control. Control is exercised when Financial Statements dnata is exposed to, or has rights to, variable returns from its involvement with the entity The new standard is based on the principle that revenue is recognised when control of a and has the ability to affect those returns through its power over the entity. Subsidiaries dnata good or service transfers to a customer – so the notion of control replaces the existing are fully consolidated from the date on which control is transferred to dnata and are de- Consolidated Financial notion of risks and rewards. The standard provides a new five-step model that must consolidated from the date on which control ceases. Inter-company transactions, Statements be applied to all contracts with customers. balances and unrealised gains and losses arising on transactions between dnata and subsidiaries are eliminated. Additional Information dnata will adopt the modified retrospective method on transition to the new standard from 1 April 2018 and the comparatives will not be restated. The following change to The acquisition method of accounting is used to account for business combinations by revenue recognition has been identified on the adoption of IFRS 15: dnata. The consideration transferred for the acquisition of a subsidiary comprises the fair value of assets transferred, liabilities pertaining to the former owners of the ・ Revenue from travel services – Where dnata acts as principal on sale of holiday subsidiary, fair value of any contingent consideration arrangements and the fair value of packages, IFRS 15 requires that the total consideration received must be allocated to the any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed separate performance obligations based on relative stand-alone selling prices and as incurred. Identifiable assets, including intangible assets acquired, liabilities and revenue should be recognised on satisfaction of each performance obligation within a contingent liabilities, if any, incurred or assumed in a business combination, are single contract with the customer. Currently, dnata recognises full revenue on such travel measured initially at their fair values at the acquisition date. Any non-controlling interest packages at the time of departure. dnata expects an immaterial impact on its revenue in the subsidiary is recognised on an acquisition-by-acquisition basis, either at fair value and profits due to this change in recognition on adoption of IFRS 15 on 1 April 2018. or at the non-controlling interest’s proportionate share of the recognised amounts of subsidiaries’ identifiable net assets.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured at fair value with changes in fair value recognised in the consolidated income statement.

147 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) When dnata 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 Basis of consolidation (continued) carrying amount recognised in the consolidated income statement. The fair value becomes the initial carrying amount for the purposes of subsequently accounting for the If the business combination is achieved in stages, the acquisition date carrying value of retained interest as an associate, joint venture or financial asset. In addition, any amounts the dnata’s previously held equity interest in the subsidiary is remeasured at fair value at previously recognised in other comprehensive income in respect of that entity or the acquisition date. Any gains or losses arising from such remeasurement are business are accounted for as if the related assets and liabilities have been directly Overview recognised in the consolidated income statement. disposed of. This may mean that amounts previously recognised in other comprehensive Emirates income are reclassified to the consolidated income statement. If the ownership in a joint dnata treats transactions with non-controlling interests that do not result in loss of venture or an associate is reduced but joint control or significant influence is retained, dnata control as transactions with the owners. A change in ownership interest results in an only a proportionate share of the amounts previously recognised in other Group adjustment between the carrying amounts of the controlling and non-controlling comprehensive income are reclassified to the consolidated income statement where interests to reflect their relative interests in the subsidiary. appropriate. Financial Information Any difference between amount of the adjustment to non-controlling interests and any Revenue Emirates consideration paid is recorded in equity. Financial Revenue is measured at fair value of the consideration received or receivable, and Commentary Associates are those entities in which dnata has significant influence but not control or represents amounts receivable for goods supplied or services provided, stated net of dnata joint control generally accompanying a shareholding between 20% and 50% of the discounts, returns and value added tax. Financial voting rights. Significant influence is the power to participate in the financial and Commentary operating policy decisions of the investee, but is not control or joint control over those Revenue from airport operations which includes ground handling and cargo services is Emirates policies. Investments in associates are accounted for by applying the equity method and recognised on the performance of services. Consolidated include goodwill (net of accumulated impairment loss, if any) identified on acquisition Financial Statements after initially being recognised at cost. Revenue from travel services includes inclusive tours and agency commission earned from the sale of third-party travel products. Revenue relating to inclusive tours is dnata Joint ventures are contractual arrangements which establish joint control and where recognised on departure, while agency commission is recognised on the completion of Consolidated Financial dnata has rights to the net assets of the arrangement. Joint control is the contractually sale. Where dnata acts as principal, revenue is stated at the contractual value of services Statements agreed sharing of control of an arrangement, which exists only when decisions about the provided and where dnata acts as an agent between the service provider and the end relevant activities require the unanimous consent of the parties sharing control. customer, revenue is presented on a net basis. Additional Information Investments in joint ventures are accounted for by applying the equity method and include goodwill (net of accumulated impairment loss, if any) identified on acquisition Revenue from the sale of goods (including inflight catering) is recognised when the after initially being recognised at cost. risks and rewards of ownership are transferred to the customer.

When dnata’s share of losses in an equity-accounted investment equals or exceed its Finance income and costs interest in the entity, including any other unsecured long term receivables, dnata does not recognise further losses, unless it has incurred obligations or made payments on Interest income and costs are recognised on a time proportion basis using the effective behalf of the other entity. interest method.

All material unrealised gains and losses arising on transactions between dnata and its Foreign currency translation associates and joint ventures are eliminated to the extent of dnata’s interest. dnata’s consolidated financial statements are presented in UAE Dirham (“AED”), which is Accounting policies of subsidiaries, associates and joint ventures have been changed also the parent company’s functional currency. Subsidiaries, associates and joint ventures where necessary to ensure consistency with dnata’s accounting policies. determine their own functional currency and items included in the financial statements of these companies are measured using that functional currency.

148 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Land is not depreciated. Depreciation on other items of property, plant and equipment is calculated using the straight line method to allocate their cost, less estimated residual Foreign currency translation (continued) values, over the estimated useful lives of the assets or lease term, if shorter. The estimated useful lives are: Foreign currency transactions are translated into the functional currency, at the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in Buildings 15 - 33 years foreign currencies are translated into the functional currency at exchange rates Leasehold property shorter of useful life or lease term Overview prevailing at the end of the reporting period. The resultant foreign exchange gains and Plant and machinery 4 - 15 years Emirates losses, other than those on qualifying net investment hedges and net investment in Office equipment and furniture 3 - 6 years foreign operations deferred in other comprehensive income, are recognised in the Motor vehicles 5 -7 years dnata consolidated income statement.

Group The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at Where functional currencies of subsidiaries are different from AED, income and cash flow the end of each reporting period. Financial statements of subsidiaries are translated into AED at average exchange rates for the year Information that approximate the cumulative effect of rates prevailing on the transaction dates and Capital projects are stated at cost. When the asset is ready for its intended use, it is Emirates their assets and liabilities are translated at the exchange rates prevailing at the end of transferred from capital projects to the appropriate category under property, plant and Financial the reporting period. The resulting exchange differences are recognised in other equipment and depreciated in accordance with dnata’s policies. Commentary comprehensive income. dnata An item of property, plant and equipment is derecognised upon disposal or when no Financial Share of results of investments accounted for using the equity method are translated future economic benefits are expected from its use or disposal. Gains and losses on Commentary into AED at average exchange rates for the year whereas dnata’s share of net disposal are determined by comparing proceeds with the carrying amount and are Emirates investments is translated at the exchange rate prevailing at the end of the reporting recognised in the consolidated income statement. Consolidated period. Translation differences relating to investments in associates, joint ventures and Financial Statements monetary assets and liabilities that form part of a net investment in a foreign operation Investment property are recognised in other comprehensive income. When investments in associates, joint dnata ventures or net investment in a foreign operation are disposed of, the related Property held for long term rental yields or for capital appreciation or both, and not Consolidated Financial translation differences previously recorded in equity are recognised in the consolidated occupied by dnata, is classified as investment property. Statements income statement as part of the gain or loss on disposal. Investment property comprises land and buildings. Investment property is measured Additional Information Goodwill and fair value adjustments arising on the acquisition of a foreign entity are initially at its cost, including related transaction costs and borrowing costs. The carrying treated as assets and liabilities of the foreign entity and translated at the exchange rates amount of an investment property includes the cost of replacing part of an existing prevailing at the end of the reporting period. Exchange differences arising are investment property when incurred if the recognition criteria are met and excludes cost recognised in other comprehensive income. of day-to-day servicing.

Property, plant and equipment Investment property is measured at cost less accumulated depreciation. Land is not depreciated. Depreciation on investment property is charged on a straight line basis over Property, plant and equipment is stated at cost less accumulated depreciation. Cost the estimated useful lives of such assets as follows: consists of purchase cost, together with any incidental expenses of acquisition. Buildings 20 years Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits The assets’ useful life is reviewed, and adjusted if appropriate, at the end of each associated with the items will flow to dnata and the cost can be reliably measured. reporting period. Repairs and maintenance are charged to the consolidated income statement during the period in which they are incurred.

149 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Intangible assets are amortised on a straight-line basis over their estimated useful life. The useful lives of intangible assets are: Investment property (continued) Computer software 3 - 5 years An item of investment property is derecognised upon disposal or when no future Trade names 10 years economic benefits are expected from its use or disposal. Gains and losses on disposal Customer relationships 3 - 10 years are determined by comparing proceeds with the carrying amount and are recognised in Contractual rights over the expected term of the rights Overview the consolidated income statement. Emirates The intangible assets’ useful lives are reviewed, and adjusted if appropriate, at the end of Goodwill each reporting period. dnata

Group Goodwill represents the excess of the aggregate of the consideration transferred, Impairment of non-financial assets amount of any non-controlling interest in the acquired entity and the acquisition-date Financial fair value of any previous equity interest in the acquired entity over the fair value of the Goodwill is not subject to amortisation and is tested annually for impairment. Other non- Information net identifiable assets at the date of acquisition. financial assets are reviewed for impairment whenever events or changes in Emirates circumstances indicate that the carrying amount may not be recoverable. An impairment Financial Goodwill is tested for impairment annually or more frequently if events or changes in loss is recognised for the amount by which the asset’s carrying amount exceeds its Commentary circumstances indicate a potential impairment and is carried at cost less accumulated recoverable amount. The recoverable amount is the higher of an asset’s fair value less dnata impairment losses, if any. For the purpose of impairment testing, goodwill is allocated to costs to sell and value in use. For the purpose of assessing impairment, assets are Financial cash generating units or group of cash generating units that are expected to benefit grouped at the lowest levels for which there are separately identifiable cash flows (cash Commentary from the business combination in which the goodwill arose. An impairment loss is generating units). Non-financial assets other than goodwill are reviewed at the end of Emirates recognised when the carrying value of the cash generating unit or group of cash each reporting period for possible reversal of the impairment loss. Consolidated generating units exceeds its recoverable amount. Impairment losses on goodwill are not Financial Statements reversed. Loans and receivables dnata Gains and losses on disposal of an entity include the carrying amount of goodwill Loans and receivables are non-derivative financial assets with fixed or determinable Consolidated Financial relating to the entity sold. payments that are not quoted in an active market. Such amounts are initially recognised Statements at fair value including transaction costs and subsequently measured at amortised cost Other intangible assets using the effective interest method. The amounts are derecognised when rights to Additional Information receive cash flows have expired or have been transferred along with substantially all the Computer software is capitalised at cost only when future economic benefits are risks and rewards of ownership. probable. Cost includes purchase price together with any directly attributable expenditure. At the end of each reporting period, an assessment is made as to whether there is any objective evidence of impairment. Where necessary the carrying amount is written down In the case of internally developed computer software, development expenditure is through the consolidated income statement to the present value of expected future cash capitalised if costs can be measured reliably, the product is technically and commercially flows discounted at the effective interest rate computed at initial recognition. feasible, future economic benefits are probable, and there exists an intent and ability to complete the development and to use or sell the asset. Other research and development Finance and operating leases expenditure not meeting the criteria for capitalisation are recognised in the consolidated income statement as incurred. 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 Trade names, customer relationships and contractual rights are recognised on dnata, they are classified as finance leases. acquisition at fair values. Contractual rights also include licenses to operate in certain airports.

150 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Borrowings

Finance and operating leases (continued) Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost with any difference between Finance leases are capitalised at the commencement of the lease at the lower of the the proceeds (net of transaction costs) and the redemption value recognised in the present value of the minimum lease payments or the fair value of the leased asset. The consolidated income statement over the period of the borrowings using the effective corresponding lease obligations are included under liabilities. Lease payments are interest method. Overview treated as consisting of capital and interest elements. The interest element is charged to Emirates the consolidated income statement over the lease term so as to produce a constant Provisions periodic rate of interest on the remaining balance of the liability. Property, plant and dnata equipment acquired under finance leases are depreciated in accordance with dnata’s Provisions are recognised when dnata has a present legal or constructive obligation as a

Group policies. result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the Financial Leases, where a significant portion of risks and rewards of ownership are retained by the present value of the expenditures expected to settle the obligation using a pre-tax rate Information lessor are classified as operating leases. Lease rental charges, including advance rentals that reflects current market assessments of the time value of money and risks specific to Emirates in respect of operating leases, are charged to the consolidated income statement on a the obligation. The increase in the provision due to passage of time is recognised as an Financial straight-line basis over the period of the lease. interest expense. Commentary dnata Inventories Retirement benefit obligations Financial Commentary Inventories are stated at the lower of cost and estimated net realisable value. Cost is dnata operates or participates in various end of service benefit plans, which are classified Emirates determined on the weighted average cost basis except for food and beverage inventory either as defined contribution or defined benefit plans. Consolidated which is determined on a first-in-first-out basis. Financial Statements A defined contribution plan is a pension scheme under which dnata pays fixed Trade receivables contributions and has no legal or constructive obligation to pay further contributions if dnata the fund does not hold sufficient assets to settle the benefits relating to the employees Consolidated Financial Trade receivables are initially recognised at fair value and subsequently measured at service in the current and prior periods. Contributions to the pension fund are charged Statements amortised cost using the effective interest method less provision for impairment. Where to the consolidated income statement in the period in which they fall due. there is objective evidence of amounts that are not collectible, a provision is made for Additional Information the difference between the carrying amount and the present value of estimated future A defined benefit plan is a plan which is not a defined contribution plan. The liability cash flows discounted at the original effective interest rate. 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 Cash and cash equivalents less the fair value of plan assets at that date. The defined benefit obligation is calculated by independent actuaries using the projected unit credit method. Cash and cash equivalents comprise all cash and liquid funds with an original maturity of three months or less. Other bank deposits with a maturity of less than a year are The present value of the defined benefit obligation is determined by discounting classified as short term bank deposits. Bank overdrafts are shown within current estimated future cash outflows using market yields of high quality corporate bonds at borrowings and lease liabilities in the consolidated statement of financial position. the end of the reporting period that are denominated in currency in which the benefits will be paid and have terms approximating to the estimated term of the post- employment benefit obligations.

Actuarial gains and losses arising from changes in actuarial assumptions and experience adjustments are recognised in equity through other comprehensive income in the period in which they arise.

151 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2.2. SummarySummary ooff significantsignificant accountingaccounting policiespolicies (continued)(continued) OffsettingOffsetting ofof financialfinancial assetsassets andand liabilitiesliabilities

IncomeIncome taxtax FinancialFinancial assetsassets andand liabilitiesliabilities areare offsetoffset andand thethe netnet amountamount reportedreported inin thethe consolidatedconsolidated statementstatement ofof financialfinancial positionposition onlyonly whenwhen thertheree isis aa legallylegally enforceableenforceable rightright toto offsetoffset thethe TheThe taxtax expenseexpense forfor thethe yearyear compricomprisesses curcurrentrent andand deferreddeferred tax.tax. recognisedrecognised amountsamounts andand therethere isis anan intentionintention toto settlesettle onon aa netnet basisbasis oror realiserealise thethe assetasset andand settlesettle thethe liabilityliability simultaneously.simultaneously. TheThe legallylegally enforceableenforceable rightright mustmust notnot bebe TheThe currentcurrent incomeincome taxtax chargecharge isis calculatedcalculated onon thethe basisbasis ofof thethe taxtax lawslaws enactedenacted oror contingentcontingent onon futurefuture eventsevents andand mustmust bebe enforceableenforceable inin thethe normalnormal coursecourse ofof businessbusiness Overview substantivelysubstantively enactedenacted atat thethe endend ofof thethe reportingreporting periodperiod inin thethe countriescountries wherewhere dnata’sdnata’s andand inin thethe eventevent ofof default,default, insolvencyinsolvency oror bankruptcy.bankruptcy. Emirates subsidiariessubsidiaries operateoperate andand generategenerate taxabletaxable income.income. DerivativeDerivative financialfinancial instrumentsinstruments dnata DeferredDeferred incomeincome taxtax isis recognisedrecognised inin full,full, usingusing thethe liabilityliability method,method, onon temporarytemporary Group differencesdifferences arisingarising betweenbetween thethe taxtax basesbases ofof assetsassets andand liabilitiesliabilities andand theirtheir carryingcarrying DerivativeDerivative financialfinancial instrumentsinstruments areare initiallinitiallyy recognisedrecognised atat fairfair valuevalue onon thethe datedate aa amountsamounts inin thethe consolidatedconsolidated financialfinancial statemstatements.ents. However,However, deferreddeferred incomeincome taxtax isis notnot derivativederivative contractcontract isis enteredentered intointo andand areare subsequentlysubsequently remeasuredremeasured atat theirtheir fairfair value.value. Financial accountedaccounted forfor ifif itit arisesarises fromfrom initialinitial recognrecognitionition ofof anan assetasset oror liabilityliability inin aa transactiontransaction DerivativesDerivatives areare designateddesignated asas aa hedgehedge ofof thethe exexposureposure toto variabilityvariability inin cashcash flowsflows thatthat isis Information otherother thanthan aa businessbusiness combinationcombination thatthat atat thethe timetime ofof thethe transactiontransaction affectsaffects neitherneither attributableattributable toto aa particularparticular riskrisk associatedassociated withwith aa recognisedrecognised assetasset oror liabilityliability oror aa highlyhighly Emirates accountingaccounting nornor taxabletaxable income.income. AlsoAlso deferreddeferred taxtax liabilitiesliabilities areare notnot recognisedrecognised ifif theythey probableprobable forecastforecast transactiontransaction (cash(cash flowflow hedghedge).e). FairFair valuesvalues areare obtainedobtained fromfrom quotedquoted Financial arisearise fromfrom thethe initialinitial recognitionrecognition ofof goodwillgoodwill inin aa businessbusiness combination.combination. DeferredDeferred incomeincome marketmarket pricesprices oror dealerdealer quotesquotes forfor similarsimilar instruments,instruments, discounteddiscounted cashcash flowflow modelsmodels andand Commentary taxtax isis determineddetermined usingusing taxtax ratesrates (and(and lawslaws)) thatthat havehave beenbeen enactedenacted oror substantivelysubstantively optionoption pricingpricing modelsmodels asas appropriate.appropriate. AllAll derivativesderivatives areare carriedcarried asas assetsassets whenwhen thethe fairfair dnata enactedenacted inin thethe jurisdictionjurisdiction ofof thethe individualindividual companiescompanies byby thethe endend ofof thethe reportingreporting valuevalue isis positivepositive andand asas liabilitiesliabilities whenwhen thethe fairfair valuevalue isis negative.negative. Financial periodperiod andand areare expectedexpected toto applyapply whenwhen thethe relatedrelated deferreddeferred incomeincome taxtax liabilityliability isis Commentary settledsettled oror thethe deferreddeferred incomeincome taxtax assetasset isis realised.realised. dnata’sdnata’s criteriacriteria toto accountaccount forfor aa derivativederivative financialfinancial instrumentinstrument asas aa hedgehedge include:include: Emirates Consolidated Deferred income tax is recognised on temporary differences arising on investments in  formalformal documentationdocumentation ofof thethe hedginghedging instruments,instruments, hedgedhedged items,items, hedginghedging objective,objective, Financial Deferred income tax is recognised on temporary differences arising on investments in Statements subsidiariessubsidiaries andand associates,associates, exceptexcept wherewhere thethe timingtiming ofof thethe reversalreversal ofof thethe temporarytemporary strategystrategy andand basisbasis ofof measuringmeasuring effectivenesseffectiveness allall ofof whichwhich areare preparedprepared priorprior toto differencedifference isis controlledcontrolled byby dnatadnata andand itit isis prprobableobable thatthat thethe temporarytemporary differencedifference willwill notnot applyingapplying hedgehedge accounting;accounting; andand dnata reverse in the foreseeable future.  documentationdocumentation showingshowing thatthat thethe hedgehedge effectivenesseffectiveness isis assessedassessed onon anan ongoingongoing Consolidated reverse in the foreseeable future. Financial basisbasis andand isis determineddetermined toto havehave beenbeen highlyhighly effectiveeffective inin offsettingoffsetting thethe riskrisk ofof thethe Statements DeferrDeferreded incomeincome taxtax assetsassets areare rrecognisedecognised toto thethe extentextent thatthat itit isis probableprobable thatthat futurefuture hedgedhedged itemitem throughoutthroughout thethe reportingreporting period.period.

Additional taxabletaxable pprofitsrofits wwillill bebe avavailableailable agagainstainst whichwhich ththee temporarytemporary didifferencesfferences cacann bebe uutilised.tilised. Information ChangesChanges inin thethe fairfair valuevalue ofof derivativesderivatives thatthat areare designateddesignated andand qualifyqualify asas cashcash flowflow DeferredDeferred incomeincome taxtax assetsassets andand liabilitiesliabilities areare offsetoffset whenwhen therethere isis aa legallylegally enforceableenforceable hedgeshedges andand thatthat proveprove toto bebe highlyhighly effectiveeffective inin relationrelation toto thethe hedgedhedged riskrisk areare rightright toto offsetoffset currentcurrent incomeincome taxtax assetsassets againstagainst currentcurrent incomeincome taxtax liabilitiesliabilities andand whenwhen recognisedrecognised inin otherother comprehensivecomprehensive income.income. WhWhenen thethe forecastedforecasted transactiontransaction resultsresults inin thethe deferreddeferred incomeincome taxtax assetsassets andand liabilitiesliabilities relaterelate toto incomeincome taxestaxes leviedlevied byby thethe samesame thethe recognitionrecognition ofof aa non-financialnon-financial assetasset oror aa non-financialnon-financial liability,liability, thethe gainsgains andand losseslosses taxationtaxation authorityauthority onon eithereither thethe samesame taxabltaxablee entityentity oror differentdifferent taxabletaxable entitiesentities wherewhere previouslypreviously recognisedrecognised inin otherother comprehensivcomprehensivee incomeincome areare re-classifiedre-classified andand includedincluded inin therethere isis anan intentionintention toto settlesettle thethe balancesbalances onon aa netnet basis.basis. thethe initialinitial carryingcarrying amountamount ofof thethe assetasset oror liabliability.ility. TheseThese gainsgains andand losseslosses areare ultimatelyultimately recognisedrecognised inin thethe consolidatedconsolidated incomeincome statementstatement inin thethe samesame periodperiod duringduring whichwhich thethe TradeTrade payablespayables assetasset oror liabilityliability affectsaffects profitprofit oror loss.loss. InIn allall otherother cases,cases, amountsamounts previouslypreviously recognisedrecognised inin otherother comprehensivecomprehensive incomeincome areare transferredtransferred toto thethe consolidatedconsolidated incomeincome statementstatement inin TradeTrade payablpayableses areare recognisedrecognised iinitiallynitially atat fairfair valuevalue andand subsequentsubsequentlyly measuredmeasured atat thethe periodperiod duringduring whichwhich thethe forecastedforecasted transactiontransaction affectsaffects thethe consolidatedconsolidated incomeincome amortisedamortised costcost ususinging ththee effectiveeffective intinteresterest mmethod.ethod. statementstatement andand areare presentedpresented inin thethe samesame lineline itemitem asas thethe gainsgains andand losseslosses fromfrom hedgedhedged items.items. DividendDividend distdistributionribution

DividendDividend distrdistributionibution toto equiequityty holdersholders isis rerecognisedcognised asas aa liabilityliability inin thethe coconsolidatednsolidated financialfinancial statementsstatements inin thethe pperioderiod inin whichwhich thethe ddividendsividends araree approapproved.ved.

152 THE EMIRATES GROUP ANNUAL REPORT 2017-18

2. Summary of significant accounting policies (continued) Valuation of defined benefit obligations

Derivative financial instruments (continued) 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 When a cash flow hedging instrument expires or is sold, terminated or exercised, or assumptions include the determination of the discount rate and expected salary when a hedge no longer meets the criteria for hedge accounting under IAS 39, any increases which are reviewed at each reporting date. Due to the complexities involved in cumulative gain or loss existing in equity at that time is retained in equity and is the valuation and its long-term nature, defined benefit obligations are highly sensitive to Overview ultimately recognised in the consolidated income statement when the forecasted changes in these assumptions. A sensitivity analysis of changes in defined benefit Emirates transaction occurs. If a forecasted transaction is no longer expected to occur, the obligations due to a reasonably possible change in these assumptions are set out in cumulative gain or loss that was reported in equity is immediately transferred to Note 19. dnata the consolidated income statement. The gain or loss on the ineffective portion is

Group recognised in the consolidated income statement. 4. Fair value estimation

Financial Changes in the fair value of derivative instruments that do not qualify for hedge The levels of fair value hierarchy are defined as follows: Information accounting are recognised immediately in the consolidated income statement. Emirates Level 1: Measurement is made by using quoted prices (unadjusted) from the active Financial 3. Critical accounting estimates and judgements market. Commentary Level 2: Measurement is made by means of valuation methods with parameters dnata In the preparation of the consolidated financial statements, a number of estimates and derived directly or indirectly from observable market data. Financial associated assumptions have been made relating to the application of accounting Level 3: Measurement is made by means of valuation methods with parameters not Commentary policies and reported amounts of assets, liabilities, income and expenses. The estimates based exclusively on observable market data. Emirates and associated assumptions are assessed on an ongoing basis and are based on Consolidated historical experience and other factors, including expectations of future events that are Derivatives, contingent consideration and option liabilities are carried at fair value. Financial Statements believed to be reasonable under the circumstances. The following narrative addresses Derivatives fall into level 2 of the fair value hierarchy whereas contingent consideration the accounting policies that require subjective and complex judgements, often as a result and option liabilities fall into level 3 of the fair value hierarchy. dnata of the need to make estimates. Consolidated Financial Derivatives comprise forward exchange contracts. The forward exchange contracts are Statements Valuation of intangible assets on acquisition fair valued using forward exchange rates that are quoted in an active market.

Additional Information For each acquisition management assesses the fair value of intangible assets acquired. The fair values of contingent consideration and option liabilities are determined by using Where an active market does not exist to value an intangible asset, fair values are valuation techniques based on entity specific estimates. These estimates are not based established using valuation techniques e.g. discounting future cash flows expected from on observable market data and hence classified under level 3 of the fair value hierarchy. the asset. In the process, estimates are made of the future cash flows, the useful life and the discount rate based on management’s experience and expectation at the time of The changes in the fair value of level 3 instruments are set out in Note 17. acquisition.

Impairment of goodwill / cash generating units

Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash generating units or group of cash generating units to which goodwill has been allocated. The value-in-use calculation requires management to estimate the future cash flows expected to arise from the cash generating unit and use a suitable discount rate in order to calculate present value. The estimates made in arriving at the value-in-use calculation are set out in Note 10.

153 THE EMIRATES GROUP ANNUAL REPORT 2017-18

5. Revenue 5. Revenue 7. Income tax expense 7. Income tax expense

2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Services Services The components of income taxThe expense components are: of income tax expense are: International Airport OperationsInternational Airport Operations 3,803 3,328 3,803 3,328 Current income tax expense Current income tax expense 98 104 98 104 Travel ServicesOverview Travel Services 3,384 3,136 3,384 3,136 Deferred income tax credit (NoteDeferred 24) income tax credit (Note 24) (61) (22) (61) (22) UAE Airport Operations UAE Airport Operations 3,153 3,023 3,153 3,023 Emirates Others Others 445 485 445 485 37 82 37 82 dnata 10,785 9,972 10,785 9,972

Sale of Groupgoods Sale of goods The income tax expense for theThe year income can tax be expensereconciled for to the year can be reconciled to Inflight Catering Inflight Catering 1,991 1,861 1,991 1,861 the accounting profit before incomethe accounting tax as follows: profit before income tax as follows: Financial Others Information Others 155 149 155 149 Profit before income tax Profit before income tax 1,389 1,333 1,389 1,333 2,146 2,010 2,146 2,010 Emirates Financial 12,931 11,982 12,931 11,982 Commentary Tax calculated at domestic taxTax ratescalculated applicable at domestic to tax rates applicable to 6. Operatingdnata costs 6. Operating costs profits in respective tax jurisdictionsprofits in respective tax jurisdictions 74 78 74 78 Financial Commentary 2018 2017 2018 2017 Effect of non-deductible expensesEffect of non-deductible expenses (5) 5 (5) 5 AED m AED m AED m AED m Re-measurement of deferred Re-measurementtax - effect of changes of deferred in tax tax - effect of changes in tax Emirates Consolidated rates rates (25) - (25) - EmployeeFinancial costs (see (a) below)Employee costs (see (a) below) 5,055 4,654 5,055 4,654 Statements Tax losses for which no deferredTax taxlosses asset for is which recognised no deferred tax asset- is recognised 1 - 1 Direct costs Direct costs Effect of other items Effect of other items (7) (2) (7) (2) - Traveldnata Services - Travel Services 2,135 1,913 2,135 1,913 Consolidated Income tax expense Income tax expense 37 82 37 82 - AirportFinancial Operations - Airport Operations 1,293 1,138 1,293 1,138 Statements - Inflight Catering - Inflight Catering 843 794 843 794 The tax rates used for the reconciliationThe tax rates above used are for the the rates reconciliation applicable above to the are profits the rates in applicable to the profits in - OthersAdditional - Others 130 141 130 141 the respective tax jurisdictions.the respective tax jurisdictions. Information Rental and lease expenses Rental and lease expenses 688 627 688 627 Depreciation and amortisationDepreciation (see (b) below) and amortisation (see (b) below)440 423 440 423 Sales and marketing expensesSales and marketing expenses 381 370 381 370 Information technology infrastructureInformation costs technology infrastructure costs 210 204 210 204 Corporate overheads Corporate overheads 703 694 703 694 11,878 10,958 11,878 10,958

(a) Employee costs include AED(a) Employee 259 m (2017: costs AED include 253 AED m) in 259 respect m (2017: of retirement AED 253 m) in respect of retirement benefit obligations (Note 19).benefit obligations (Note 19). (b) Depreciation and amortisation(b) Depreciation of AED 91 andm (2017: amortisation AED 101 of m) AED is included 91 m (2017: under AED 101 m) is included under information technology infrastructureinformation costs. technology infrastructure costs.

154 THE EMIRATES GROUP ANNUAL REPORT 2017-18

8. Property, plant and equipment

Land, buildings Office and Plant equipment leasehold and and Motor Capital Overview property machinery furniture vehicles projects Total

Emirates AED m AED m AED m AED m AED m AED m Cost dnata 1 April 2016 912 1,679 1,568 112 90 4,361 Group Acquisitions 1 148 5 32 - 186

Financial Additions 30 206 105 31 107 479 Information Transfer from capital projects 36 20 29 - (85) -

Emirates Disposals / write-offs (3) (40) (224) (8) (3) (278) Financial Currency translation differences (16) (33) (23) (1) (6) (79) Commentary 31 March 2017 960 1,980 1,460 166 103 4,669 dnata Accumulated depreciation Financial Commentary 1 April 2016 397 993 1,221 53 - 2,664 Acquisitions - 56 3 13 - 72 Emirates Consolidated Charge for the year 53 151 131 19 - 354 Financial Statements Disposals / write-offs (3) (42) (176) (6) - (227) Currency translation differences (5) (16) (18) (2) - (41) dnata Consolidated 31 March 2017 442 1,142 1,161 77 - 2,822 Financial Statements Net book amount at 31 March 2017 518 838 299 89 103 1,847 Additional Information

155 THE EMIRATES GROUP ANNUAL REPORT 2017-18

8. Property, plant and equipment (continued)

Land, buildings Office and Plant equipment leasehold and and Motor Capital Overview property machinery furniture vehicles projects Total

Emirates AED m AED m AED m AED m AED m AED m Cost dnata 1 April 2017 960 1,980 1,460 166 103 4,669 Group Acquisitions (Note 33) - 1 - - - 1

Financial Additions 52 160 62 17 43 334 Information Transfer from capital projects 65 24 21 - (110) -

Emirates Disposals / write-offs (6) (48) (147) (10) - (211) Financial Currency translation differences 44 52 25 2 - 123 Commentary 31 March 2018 1,115 2,169 1,421 175 36 4,916 dnata Accumulated depreciation Financial Commentary 1 April 2017 442 1,142 1,161 77 - 2,822 Acquisitions (Note 33) Emirates - 1 - - - 1 Consolidated Charge for the year 59 165 123 21 - 368 Financial Statements Disposals / write-offs (6) (46) (142) (6) - (200) Currency translation differences 16 26 22 - - 64 dnata Consolidated 31 March 2018 511 1,288 1,164 92 - 3,055 Financial Statements Net book amount at 31 March 2018 604 881 257 83 36 1,861 Additional Information The net book amount of property, plant and equipment includes AED 55 m (2017: AED 35 m) in respect of plant and machinery held under finance leases, of which AED 26 m (2017: AED 11 m) was acquired during the year (Note 23).

The net book amount of plant and machinery includes an amount of AED 27 m (2017: Nil) in respect of assets provided as security against term loans.

Land of AED 7 m (2017: AED 6 m) is carried at cost and is not depreciated.

156 THE EMIRATES GROUP ANNUAL REPORT 2017-18

9. Investment property

Land Buildings Total AED m AED m AED m Cost Acquisition 62 123 185 Overview Additions - 73 73 Emirates 31 March 2017 62 196 258 dnata Accumulated depreciation Acquisition - 14 14 Group Charge for the year - 7 7 Financial Information 31 March 2017 - 21 21 Net book amount at Emirates Financial 31 March 2017 62 175 237 Commentary Cost dnata 1 April 2017 62 196 258 Financial Commentary Additions 37 74 111 31 March 2018 99 270 369 Emirates Consolidated Accumulated depreciation Financial 1 April 2017 Statements - 21 21 Charge for the year - 10 10 dnata Consolidated 31 March 2018 - 31 31 Financial Net book amount at Statements 31 March 2018 99 239 338 Additional Information Investment property is pledged as security against term loans (Note 22).

Investment property comprise of rental property in Dubai. The fair value of investment property as at 31 March 2018 is AED 461 m (2017: AED 267 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% (2017: 6%) commensurate to the borrowing rate. These estimates are not based on observable market data and hence classified under level 3 of the fair value hierarchy.

Revenue from rental income earned during the year amounting to AED 23 m (2017: AED 15 m) is recognised in the consolidated income statement as revenue from 'Services-Others'.

157 THE EMIRATES GROUP ANNUAL REPORT 2017-18

10. Intangible assets

Computer Customer Contractual Goodwill software Trade names relationships rights Total AED m AED m AED m AED m AED m AED m Cost

Overview 1 April 2016 1,707 464 127 200 658 3,156 Acquisitions 306 - - 293 - 599 Emirates Additions - 55 - - - 55 dnata Disposals / write-offs - (28) - - - (28) 10 10 - - (1) - 9 Group Others Currency translation differences (114) (11) (17) (5) (45) (192) Financial 31 March 2017 1,909 480 110 487 613 3,599 Information Accumulated amortisation Emirates 1 April 2016 - 310 28 63 467 868 Financial Commentary Charge for the year - 51 12 46 54 163 dnata Disposals / write off - (22) - - - (22) Financial Currency translation differences - (7) (5) (3) (27) (42) Commentary 31 March 2017 - 332 35 106 494 967 Emirates Net book value at 31 March 2017 1,909 148 75 381 119 2,632 Consolidated Financial Cost Statements 1 April 2017 1,909 480 110 487 613 3,599 dnata Acquisitions (Note 33) 9 - - 5 - 14 Consolidated Financial Additions - 92 - 16 - 108 Statements Disposals / write-offs - (2) - - - (2)

Additional Others 15 3 - - - 18 Information Currency translation differences 132 15 14 13 47 221 31 March 2018 2,065 588 124 521 660 3,958 Accumulated amortisation 1 April 2017 - 332 35 106 494 967 Charge for the year - 52 11 48 42 153 Disposals / write-offs - (2) - - - (2) Currency translation differences - 8 5 4 35 52 31 March 2018 - 390 51 158 571 1,170 Net book value at 31 March 2018 2,065 198 73 363 89 2,788

158 THE EMIRATES GROUP ANNUAL REPORT 2017-18

10. Intangible assets (continued)

Computer software includes an amount of AED 40 m (2017: AED 18 m) in respect of projects under implementation.

The addition of AED 16 m to 'Customer relationships' arises from non-monetary consideration received against a dilution of an interest in a subsidiary during the year.

Overview For the purpose of carrying out the impairment test of goodwill, the recoverable amounts for cash generating units or groups of cash generating units have been determined on the basis of value-in-use calculations using cash flow forecasts approved by management Emirates covering a period of three years. Cash flows beyond such period have been extrapolated using terminal growth rates stated below. The key dnata assumptions used in the value-in-use calculations include a risk adjusted pre-tax discount rate, gross margins consistent with historical trends and growth rates based on management's expectations for market development. The long term growth rate does not exceed the Group long term average growth rate for the markets in which the cash generating units or groups of cash generating units operate. The goodwill Financial allocated to cash generating units or groups of cash generating units and the key assumptions used in the value-in-use calculations are as Information follows: Emirates Cash generating unit / Group Goodwill Financial Location Discount Terminal Commentary of cash generating units 2018 2017 rate growth rate AED m AED m %% dnata Financial Airport operations USA 308 285 10.0 2.0 Commentary Airport operations 260 250 6.0 1.5 Emirates Airport operations Singapore 95 89 7.0 3.0 Consolidated Financial Airport operations Netherlands 65 57 8.5 1.5 Statements Airport operations Brazil 49 49 16.0 2.5 dnata Airport operations Australia 28 28 10.0 2.5 Consolidated Airport operations Czech Republic 22 19 8.5 1.5 Financial Statements Inflight catering group UK 505 478 9.0 1.5 Online travel services UK 481 423 9.0 1.5 Additional Information Travel services UK 183 162 9.0 1.5 Travel services UAE 3 3 -- Others UAE 66 66 12.0 1.0 2,065 1,909

Goodwill pertaining to Airport Operations, USA includes AED 300 m (2017: AED 285 m) for Ground Services International Inc / Metro Air Service Inc. and AED 8 m (2017: Nil ) for ALX Cargo Centre IAH LLC. The key assumptions used in the value-in-use calculations for both these cash generating units are similar. Goodwill pertaining to Travel services, UK includes AED 130 m (2017: AED 115 m) for the Gold Medal group (Gold Medal Travel Group plc and Airline Network plc) and AED 53 m (2017: AED 47 m) for the Stella Travel group (Stella Travel Services (UK) Ltd and Stella Global UK Ltd). The key assumptions used in the value-in-use calculations for both these groups of cash generating units are similar.

The recoverable value of cash generating units or group of cash generating units would not fall below their carrying amount with a 5% reduction in the gross margin, a 1% reduction in the terminal growth rate or a 1% increase in the discount rate.

159 THE EMIRATES GROUP ANNUAL REPORT 2017-18

11. Investments in subsidiaries, associates and joint ventures

Principal subsidiaries Percentage Country of of equity incorporation owned Principal activities and principal operations Overview dnata Travel (UK) Limited 100 Travel agency United Kingdom dnata Inc. 100 Ground handling services Philippines Emirates Dnata International Airport Services Pte Ltd 100 Holding company Singapore dnata Ground, cargo handling and catering

Group Pte Ltd 100 services Singapore Maritime and Mercantile International Travel LLC 100 Travel agency United Arab Emirates Financial Dnata Switzerland AG 100 Ground and cargo handling services Switzerland Information dnata Travel & Tourism WLL 100 Travel agency Bahrain Emirates Cleopatra International Travel WLL 100 Travel agency Bahrain Financial Commentary Dnata Aviation Services Ltd 100 Holding company United Kingdom dnata Limited 100 Ground and cargo handling services United Kingdom dnata Dnata for Airport Services Ltd 80 Ground and cargo handling services Iraq Financial Commentary Dnata Catering Services Limited 100 Holding company United Kingdom Alpha Flight Services Pty Ltd 100 Inflight catering services Australia Emirates Consolidated dnata Catering Ireland Ltd 100 Inflight catering services Ireland Financial Alpha Flight a.s 80 Inflight catering services Czech Republic Statements Alpha In-Flight US LLC 100 Inflight catering services United States of America dnata dnata srl 100 Inflight catering services Italy Consolidated dnata Catering s.r.l. 64.2 Inflight catering services Romania Financial Statements Alpha Flight Services UAE LLC (see (a) below) 49 Inflight catering services United Arab Emirates Jordan Flight Catering Company Ltd (see (a) below) 35.9 Inflight catering services Jordan Additional dnata International Pvt Ltd 100 Travel agency India Information dnata World Travel Limited 100 Holding company United Kingdom Travel Republic Limited 100 Online travel services United Kingdom Airline Cleaning Services Pty Ltd 100 Aircraft cleaning services Australia En Route International Limited 100 Bakery and food solutions United Kingdom Najm Travel LLC 100 Travel agency United Arab Emirates dnata Travel Holdings UK Limited 100 Holding company United Kingdom Gold Medal Travel Group plc 100 Travel agency United Kingdom Airline Network plc 100 Travel agency United Kingdom dnata Travel Inc 100 Travel services Philippines Travel Partners LLC 100 Travel services United Arab Emirates Stella Travel Services (UK) Limited 100 Holding company United Kingdom Stella Global UK Limited 100 Holding company United Kingdom Travel 2 Limited 100 Travel agency United Kingdom

160 THE EMIRATES GROUP ANNUAL REPORT 2017-18

11. Investments in subsidiaries, associates and joint ventures (continued)

Principal subsidiaries (continued) Percentage Country of of equity incorporation owned Principal activities and principal operations

Overview Travelbag Limited 100 Travel agency United Kingdom The Global Travel Group Limited 100 Travel agency United Kingdom Emirates Sunmaster Limited 100 Travel agency United Kingdom dnata dnata Airport Services Pty Ltd 100 Ground and cargo handling services Australia dnata BV 100 Ground and cargo handling services The Netherlands Group RM Services Auxilliares de Transporte Aero S/A 70 Ground handling services Brazil

Financial Plafond Fit Out LLC 100 MEP contracting United Arab Emirates Information Airport Handling SpA (see (a) below) 30 Ground handling services Italy dnata Aviation Services US Inc. 100 Holding company United States of America Emirates Financial Incorporated during the year: Commentary Dnata Catering Canada Limited 100 Inflight catering services Canada dnata Travel Partners Iberian, Sociedad Limitada 100 Travel services Spain Financial Commentary dnata Aviation USA Inc. 100 Holding company United States of America Incorporated during the previous year: Emirates Consolidated dnata Aviation Services Canada Ltd 100 Holding company Canada Financial dnata Pty Ltd 100 Holding company Australia Statements Airport Handling Services Australia Pty Ltd 100 Ground handling services Australia dnata Travel Partners (London) Limited 100 Travel services United Kingdom Consolidated Financial Acquired during the year: Statements Destination Asia (Singapore) Pte Ltd 100 Travel services Singapore

Additional ALX Cargo Centre IAH LLC 100 Cargo handling services United States of America Information Acquired during the previous year: 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 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 Sama Travel and Services International LLC 76.9 Travel agency Oman Moon Travel LLC (see (a) below) 38 Travel agency Oman

(a) Alpha Flight Services UAE LLC, Jordan Flight Catering Company Ltd, Airport Handling SpA and Moon Travel LLC qualify as subsidiaries as overall control is exercised by dnata, therefore the results of these companies are consolidated.

None of the subsidiaries have non-controlling interests that are material to dnata.

161 THE EMIRATES GROUP ANNUAL REPORT 2017-18

11. Investments in subsidiaries, associates and joint ventures (continued) Percentage Country of of equity incorporation owned Principal activities and principal operations Principal associates Dubai Express LLC 50 Freight clearing and forwarding United Arab Emirates Overview Gerry's Dnata (Private) Ltd 50 Ground and cargo handling services Pakistan Emirates Guangzhou Baiyun International Airport Ground dnata Handling Services Co. Ltd 20 Aircraft handling services P. R. China Canary Topco Ltd 9.1 Information technology services United Kingdom Group Principal joint ventures

Financial Super Bus Tourism LLC (see (b) below) 75 Travel services United Arab Emirates Information dnata Travel Company Limited (see (b) below) 70 Travel agency

Emirates Travel Counsellors LLC (see (c) below) 51 Travel agency United Arab Emirates Financial Dnata-PWC Airport Logistics LLC 50 Freight clearing and forwarding United Arab Emirates Commentary Transguard Group LLC 50 Security services United Arab Emirates dnata Dunya Travel LLC 50 Travel agency United Arab Emirates Financial Najm LLC 50 Travel agency Commentary Al Tawfeeq Travel (Dnata Travel) WLL 50 Travel agency Qatar Emirates dnata Newrest (Pty) Ltd 50 In-flight catering services South Africa Consolidated Financial Alpha LSG Ltd 50 In-flight catering services United Kingdom Statements Bollore Logistics LLC (formerly SDV UAE LLC) dnata (see (b) below) 25.5 Freight clearing and forwarding United Arab Emirates Consolidated Imagine Enterprises Limited (see (b) below) 51 Travel agency United Kingdom Financial Statements Acquired during the year: Destination Asia Group (see (d) below) 51 Travel services Asia Pacific Additional Information Acquired during the previous year: G.T.A. Dnata Ground Handling Limited 50 Aircraft handling services Canada G.T.A. Dnata World Cargo Limited 50 Cargo handling services Canada Incorporated during the previous year: G Travel International LLC (see (c) below) 51 Travel services United Arab Emirates

(b) Although the percentage of equity owned in Super Bus Tourism LLC, dnata Travel Company Limited, Bollore Logistics LLC (formerly SDV UAE LLC) and Imagine Enterprises Limited is 75%, 70%, 25.5% and 51% respectively, they are subject to joint control. (c) dnata's beneficial interest in Travel Counsellors LLC and G Travel International LLC is 50% and they are subject to joint control. (d) During the year dnata acquired 25% beneficial interest in a number of entities forming part of Destination Asia Group operating in 9 countries in the Asia Pacific region.

162 THE EMIRATES GROUP ANNUAL REPORT 2017-18

11. Investments in subsidiaries,11. Investments associates and in subsidiaries, joint ventures associates (continued) 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 associates is set out below: associates is set out below: Movement of investments accountedMovement for of investmentsusing the equity accounted method for using the equity method 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m

Share of results of associatesShare of results of associates 32 (1) 32 (1) BalanceOverview brought forward Balance brought forward 407 385 407 385 Additions Additions 8 28 8 28 Share of other comprehensiveShare income of other of associates comprehensive income of associates 52 (21) 52 (21) Emirates Share of results Share of results 126 78 126 78 Share of total comprehensiveShare income of total of associates comprehensive income of 84associates (22) 84 (22) Share ofdnata other comprehensiveShare income of other comprehensive income 49 (22) 49 (22) Aggregate carrying value ofAggregate investments carrying in associates value of investments 57 in associates 57 Share ofGroup other equity movementsShare of other equity movements 3 1 3 1 21 21 Dividends Dividends (89) (28) (89) (28) Financial No individual joint venture isNo material individual to dnata. joint venture The aggregate is material financial to dnata. information The aggregate of financial information of De-recognitionInformation due to changeDe-recognition in ownership due to change in ownership joint ventures is set out below:joint ventures is set out below: interest (see below) interest (see below) - (16) - (16) Emirates CurrencyFinancial translation differencesCurrency translation differences 15 (19) 15 (19) 2018 2017 2018 2017 Commentary Reclassification to Asset held Reclassificationfor sale (see below) to Asset held for sale (see below)(46) - (46) - AED m AED m AED m AED m Balancednata carried forward Balance carried forward 473 407 473 407 Financial Share of results of joint venturesShare of results of joint ventures 94 79 94 79 Commentary Share of other comprehensiveShare income of other of a joint comprehensive venture income of a joint(3) venture (1) (3) (1) Reclassification to Asset heldReclassification for sale to Asset held for sale Emirates Share of total comprehensiveShare income of total of joint comprehensive ventures income of 91joint ventures 78 91 78 In FebruaryConsolidated 2018, dnata receivedIn February an offer 2018, from dnata Global received Business an Travel offer fromHoldings Global Limited Business Travel Holdings Limited ("GBT")Financial to buy all the shares("GBT") of one to of buy its associate, all the shares Hogg of Robinson one of its Group associate, (“HRG”) Hogg plc Robinson Group (“HRG”) plc Statements for cash as part of the GBT acquisitionfor cash as of part HRG of the Plc ("the GBT acquisition Scheme"). dnata of HRG has Plc provided ("the Scheme"). dnata has provided Aggregate carrying value ofAggregate investments carrying in value of investments in irrevocablednata undertaking to voteirrevocable in favor undertaking of the scheme to vote provided in favor certain of the conditions scheme are provided certain conditions are joint ventures joint ventures 416 386 416 386 Consolidated met. TheFinancial transaction is expectedmet. to The complete transaction within is expected the second to quartercomplete of within financial the year second quarter of financial year Statements 2018-19 subject to regulatory2018-19 and competition subject to commissionregulatory and clearance. competition Accordingly, commission the clearance. Accordingly, the investmentAdditional in HRG is classifiedinvestment as an asset in heldHRG for is classified sale. as an asset held for sale. Information Change in the ownership interestChange of in a thejoint ownership venture during interest the of previous a joint venture year during the previous year During the previous year, dnataDuring acquired the previous the remaining year, dnata 50% acquiredinterest inthe a remainingjoint venture, 50% interest in a joint venture, Transecure LLC, to increase Transecureits shareholding LLC, toto increase a 100% itsinterest shareholding (Note 33). to aThe 100% step interest (Note 33). The step acquisition did not result in anyacquisition significant did fair not value result gain in any or loss. significant fair value gain or loss. During the previous year, dnataDuring acquired the previous an additional year, dnata 26.9% acquired interest anin additionalthe associate, 26.9% interest in the associate, Oman United Agencies TravelOman LLC, toUnited increase Agencies its shareholding Travel LLC, toto aincrease 76.9% interest its shareholding (Note to a 76.9% interest (Note 33). The retained interest in 33).the associateThe retained at the interest acquisition in the date associate was remeasured at the acquisition to fair date was remeasured to fair value resulting in a net gain ofvalue AED resulting 7 m. in a net gain of AED 7 m. The resultant gain is includedThe under resultant other gainoperating is included income under in the other consolidated operating income income in the consolidated income statement. statement.

163 THE EMIRATES GROUP ANNUAL REPORT 2017-18

12. Advance lease rentals 12. Advance lease rentals The impairment charge on tradeThe impairment receivables charge recognised on trade in the receivables consolidated recognised income in the consolidated income statement during the year mainlystatement relates during to travel the year agency, mainly airline relates and to other travel customers agency, airline and other customers 2018 2017 2018 2017 who are in unexpected difficultwho areeconomic in unexpected situations difficult and are economic unable to situations meet their and are unable to meet their AED m AED m AED m AED m obligations. This charge isobligations. included in This operating charge costs. is included Amounts in charged operating to costs. the Amounts charged to the Balance brought forward Balance brought forward 42 22 42 22 provision account are written provisionoff when accountthere is noare expectation written off whenof further there recovery. is no expectation of further recovery. Acquisition Acquisition - 19 - 19 Overview Movements in the provision for impairment of trade receivables are as follows: Additions during the year Additions during the year 6 6 6 6 Movements in the provision for impairment of trade receivables are as follows: Charge forEmirates the year Charge for the year (3) (3) (3) (3) 2018 2017 2018 2017 Currency translation differences 1 (2) Currencydnata translation differences 1 (2) AED m AED m AED m AED m Balance carried forward Balance carried forward 46 46 42 Group 42 Advance lease rentals will be chargedAdvance tolease the rentalsconsolidated will be charged to the consolidated Balance brought forward Balance brought forward 55 38 55 38 Financial income statement as follows: Acquisition Acquisition - 1 - 1 income Informationstatement as follows: Charge for the year 95 50 Within one year (Note 14) Within one year (Note 14) 3 2 3 2 Charge for the year 95 50 Emirates Over one year 43 Unused amounts reversed Unused amounts reversed (9) (22) (9) (22) Over oneFinancial year 43 40 40 Commentary Amounts written off as uncollectibleAmounts written off as uncollectible (16) (9) (16) (9) 13. Inventories 13. Inventories Transfer - (1) dnata Transfer - (1) Financial 2018 2017 Currency translation differencesCurrency translation differences 4 (2) 4 (2) Commentary 2018 2017 AED m AED m AED m AED m Balance carried forward Balance carried forward 129 55 129 55 Emirates Consolidated Food and beverage 45 42 The other classes of trade andThe other other receivables classes of do trade not andcontain other impaired receivables assets. do not contain impaired assets. Food andFinancial beverage 45 42 Spares andStatements consumables Spares and consumables 31 27 31 27 The maximum exposure to creditThe maximum risk of current exposure trade to and credit other risk receivables of current (excluding trade and other receivables (excluding

Other dnata Other 11 18 11 18 prepayments) at the reportingprepayments) date is the at carrying the reporting value of date each is class the carrying of receivable value of each class of receivable Consolidated 87 87 87 87 mentioned above. Financial mentioned above. Statements 14. Trade and other receivables14. Trade and other receivables 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: Additional Information 2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Below 3 months Below 3 months 883 704 883 704 Trade receivables - net of provisionTrade receivables - net of provision 1,950 1,696 1,950 1,696 3-6 months 3-6 months 118 73 118 73 Deposits and other receivablesDeposits and other receivables 661 588 661 588 Above 6 months Above 6 months 230 234 230 234 Prepayments Prepayments 529 485 529 485 1,231 1,011 1,231 1,011 Related parties (Note 31) Related parties (Note 31) 484 556 484 556 Advance lease rentals (Note 12)Advance lease rentals (Note 12) 3 2 3 2 For further details on credit riskFor mana furthergement, details refer on credit to Note risk 32. management, refer to Note 32. 3,627 3,327 3,627 3,327 Less: Receivables over one yearLess: Receivables over one year (134) (147) (134) (147) 3,493 3,180 3,493 3,180

164 THE EMIRATES GROUP ANNUAL REPORT 2017-18

15. Capital 15. Capital 17. Trade and other payables17. Trade and other payables Capital represents the permanent capital of dnata. Capital represents the permanent capital of dnata. 2018 2017 2018 2017 AED m AED m AED m AED m 16. Other reserves 16. Other reserves Trade payables and accruals Trade payables and accruals 2,758 2,357 2,758 2,357 Translation Translation Overview Deferred revenue Deferred revenue 793 734 793 734 reserve Other reserveTotal Other Total Employee leave pay Employee leave pay 236 227 236 227 Emirates AED m AED m AEDAED m m AED m AED m Related parties (Note 31) Related parties (Note 31) 102 77 102 77 1 April 2016 1 April 2016 (233) 17 (216)(233) 17 (216) dnata Customer deposits Customer deposits 52 55 52 55 Currency translation differencesCurrency translation differences(158) - (158)(158) - (158) Dividend payable Dividend payable 1,000 9 1,000 9 Net investmentGroup hedge (Note 22)Net investment hedge (Note 22)4 - 4 4 - 4 Other payables Other payables 70 85 70 85 Cash flowFinancial hedges Cash flow hedges - (33) (33)- (33) (33) Information 5,011 3,544 5,011 3,544 Transferred to consolidated incomeTransferred statement to consolidated income- statement25 25- 25 25 Less: Payables over one year Less: Payables over one year (163) (193) (163) (193) Share ofEmirates other comprehensiveShare income of other of comprehensive income of Financial 4,848 3,351 4,848 3,351 investmentsCommentary accounted for usinginvestments the equity accounted for using the equity method, net of deferred tax method, net of deferred tax 21 - 2121 - 21 The payables over one year representThe payables the non-current over one year portion represent of the the acquisition non-current related portion of the acquisition related dnata deferred / contingent consideration and the fair value of options issued to acquire RecognisedFinancial in other comprehensiveRecognised income in other comprehensive(133) income(8) (141)(133) (8) (141) deferred / contingent consideration and the fair value of options issued to acquire Commentary additional interests in subsidiaries.additional It also interests includes in subsidiaries. the non-current It also portion includes of the the non-current portion of the Transfer from retained earningsTransfer from retained earnings- 2 2 - 2 2 deferred revenue. 31 MarchEmirates 2017 31 March 2017 (366) 11 (355)(366) 11 (355) deferred revenue. Consolidated CurrencyFinancial translation differencesCurrency translation differences 204 - 204 204 - 204 The movements in fair valuesThe of contingent movements consideration in fair values and of contingent options to consideration acquire non- and options to acquire non- Statements Net investment hedge (Note 22)Net investment hedge (Note(9) 22) - (9)(9) - (9) controlling interests are as follows:controlling interests are as follows: Cash flow hedges - 1 1 dnata Cash flow hedges - 1 1 2018 2017 2018 2017 TransferredConsolidated to consolidated income statement - (8) (8) Financial Transferred to consolidated income statement - (8) (8) AED m AED m AED m AED m Share ofStatements other comprehensiveShare income of other of comprehensive income of Balance brought forward 13 54 investmentsAdditional accounted for usinginvestments the equity accounted for using the equity Balance brought forward 13 54 Information Payments (13) (17) method, net of deferred tax method, net of deferred tax 7 - 7 7 - 7 Payments (13) (17) Remeasurement gain - (18) Recognised in other comprehensiveRecognised income in other comprehensive 202 income(7) 195 202 (7) 195 Remeasurement gain - (18) Currency translation differences - (6) Share of other equityShare movement of other of equity movement of Currency translation differences - (6) Balance carried forward - 13 investments accounted for usinginvestments the equity accounted for using the equity Balance carried forward - 13 method - 3 3 method - 3 3 The remeasurement gain in theThe previous remeasurement year represents gain in the a decrease previous in year the represents contingent a decrease in the contingent 31 March 2018 (164) 7 (157) 31 March 2018 (164) 7 (157) consideration payable. This gainconsideration is recognised payable. in the This consolidated gain is recognised income instatement the consolidated income statement under other operating income.under other operating income. The translation reserve includesThe a translationloss of AED reserve 39 m pertaining includes a to loss an ofinvestment AED 39 m in pertaining an to an investment in an associate which has been reclassifiedassociate as which Asset hasheld been for sale reclassified as at 31 asMarch Asset 2018 held (Note for sale as at 31 March 2018 (Note 11). 11).

165 THE EMIRATES GROUP ANNUAL REPORT 2017-18

18. Provisions 18. Provisions Funded schemes Funded schemes a) Parent company a) Parent company 2018 2017 2018 2017 AED m AED m AED m AED m Senior employees based in theSenior UAE participate employees in based a defined in the benefit UAE participate provident in scheme a defined to benefit provident scheme to which dnata contributes awhich specified dnata percentage contributes of basica specified salary percentage based upon of the basic salary based upon the Non-current Non-current employee’s grade and durationemployee’s of service. grade Amounts and duration contributed of service. are invested Amounts in contributed a are invested in a Retirement benefit obligationsRetirement (Note 19) benefit obligations (Note 19) 549 523 549 523 Overview trustee administered scheme andtrustee accumulate administered along scheme with returns and accumulate earned on alonginvestments. with returns earned on investments. Other provisions (Note 20) Other provisions (Note 20) 13 24 13 24 Emirates Contributions are made on aContributions monthly basis are irrespective made on ofa monthly fund performance basis irrespective and are of fund performance and are 562 547 562 547 not pooled, but are separatelynot identifiable pooled, but and are attributable separately to identifiable each participant. and attributable The fund to each participant. The fund Current dnata Current comprises a diverse mix of managedcomprises funds a diverse and mixinvestment of managed decisions funds are and controlled investment decisions are controlled Other provisions (Note 20) Other provisions (Note 20) 47 45 47 45 Group directly by the participating employees.directly by the participating employees. 47 45 47 45 Financial 609 592 Information 609 592 Benefits receivable under theBenefits provident receivable scheme underare subject the provident to vesting scheme rules, which are subject are to vesting rules, which are 19. Retirement benefit obligations dependent upon a participating employee's length of service. If at the time an employee 19. RetirementEmirates benefit obligations dependent upon a participating employee's length of service. If at the time an employee Financial leaves employment, the accumulatedleaves employment, vested amount, the accumulated including investment vested amount, returns including is investment returns is In accordanceCommentary with the provisionsIn accordance of IAS 19, with management the provisions has carried of IAS out 19, managementan exercise to has carried out an exercise to less than the end of service benefitsless than that the would end of have service been benefits payable that to would that employee have been payable to that employee assess the present value of itsassess defined the benefit present obligations value of its at defined 31 March benefit 2018 obligationsin respect of at 31 March 2018 in respect of dnata under relevant local regulations,under dnata relevant pays local the regulations, shortfall amount dnata directlypays the to shortfall the amount directly to the employees'Financial end of serviceemployees' benefits payable end of under service relevant benefits local payable regulations under and relevant local regulations and Commentary employee. However, if the accumulatedemployee. However, vested amount if the accumulated exceeds the vested end of amount service exceeds the end of service contractual arrangements. contractual arrangements. benefits that would have beenbenefits payable that to an would employee have been under payable relevant to local an employee regulations, under relevant local regulations, Emirates The liabilitiesConsolidated recognised in theThe consolidated liabilities recognised statement in of the financial consolidated position statement are: of financial position are: the employee receives either seventythe employee five or receives one hundred either percentseventy offive their or one fund hundred balance percent of their fund balance Financial depending on their length ofdepending service. Vested on their assets length of the of schemeservice. Vestedare not assets available of the to scheme are not available to Statements 2018 2017 2018 2017 dnata or its creditors in any circumstances. AED m AED m dnata or its creditors in any circumstances. dnata AED m AED m Consolidated Funded schemes Funded Financialschemes The present value of obligationsThe and present fair value value of of plan obligations assets are and as fair follows: value of plan assets are as follows: Present valueStatements of defined benefitPresent obligations value of defined benefit obligations 731 648 731 648 Less: Fair value of plan assets (661) (581) 2018 2017 2018 2017 Less: FairAdditional value of plan assets (661) (581) AED m AED m AED m AED m Information 70 67 70 67 Present value of funded defined benefit obligations 139 129 Unfunded schemes Unfunded schemes Present value of funded defined benefit obligations 139 129 Less: Fair value of plan assets (139) (128) Present value of defined benefitPresent obligations value of defined benefit obligations 479 456 479 456 Less: Fair value of plan assets (139) (128) - 1 - 1

Liability recognised in consolidatedLiability statementrecognised of in consolidated statement of The assessment of the presentThe value assessment of defined of the benefit present obligations value of assumed defined expectedbenefit obligations assumed expected financial position financial position 549 523 549 523 salary increases averaging 3.0%salary (2017: increases 3.0%) and averaging a discount 3.0% rate (2017: of 4.00% 3.0%) and(2017: a discount 4.25%) rate of 4.00% (2017: 4.25%) per annum. The present valuesper of annum. the defined The presentbenefit obligations values of the at defined 31 March benefit 2018 obligationswere at 31 March 2018 were The above liability is presentedThe asabove a non-current liability is presented provision within as a non-current the consolidated provision within the consolidated computed using the actuarial computedassumptions using set outthe actuarialabove. assumptions set out above. statement of financial positionstatement as dnata of expects financial to positionsettle this as liability dnata expects over a long to settle term this liability over a long term period. period.

166 THE EMIRATES GROUP ANNUAL REPORT 2017-18

19. Retirement benefit obligations (continued) 19. Retirement benefit obligations (continued) The movement in the presentThe value movement of defined in benefit the present obligations value of of defined the Swiss benefit plan is:obligations of the Swiss plan is: The liability of AED 1 m in theThe previous liability of year AED represents 1 m in the the previous amount yearthat willrepresents not be the amount that will not be 2018 2017 settled from plan assets andsettled is calculated from plan as the assets excess and of is the calculated present as value the excess of the of the present value of the 2018 2017 AED m AED m AED m AED m defined benefit obligation fordefined an individual benefit obligation employee for over an the individual fair value employee of the over the fair value of the employee's plan assets at the end of the reporting period. employee's plan assets at the end of the reporting period. Balance brought forward Balance brought forward 238 231 238 231 Overview Service cost Service cost 14 13 14 13 Contributions received includeContributions the transfer received of accumulated include the benefits transfer from of unfunded accumulated benefits from unfunded Interest cost 2 2 schemes.Emirates schemes. Interest cost 2 2 Remeasurement loss Remeasurement loss 1 1 1 1 Actuarial gains and losses andActuarial expected gains returns and on losses plan and assets expected are not returns calculated on plan given assets are not calculated given dnata Employee contributions 8 8 that investment decisions relatingthat investment to plan assets decisions are relating under the to plan direct assets control are of under the direct control of Employee contributions 8 8 Group Benefits paid (9) (10) participating employees. participating employees. Benefits paid (9) (10) Currency translation differencesCurrency translation differences 10 (7) 10 (7) The movementFinancial in the fair valueThe of movementthe plan assets in the is: fair value of the plan assets is: Information Balance carried forward Balance carried forward 264 238 264 238 2018 2017 2018 2017 Emirates AED m AED m Financial AED m AED m The movement in the fair value of the plan assets of the Swiss plan is: Commentary The movement in the fair value of the plan assets of the Swiss plan is: Balance brought forward Balance brought forward 128 118 128 118 dnata 2018 2017 Contributions received 18 18 2018 2017 Financial Contributions received 18 18 AED m AED m Commentary AED m AED m Change in fair value Change in fair value 14 7 14 7 Balance brought forward 184 179 BenefitsEmirates paid Benefits paid (21) (15) (21) (15) Balance brought forward 184 179 Consolidated Expected return on plan assets 1 1 BalanceFinancial carried forward Balance carried forward 139 128 139 128 Expected return on plan assets 1 1 Statements Employer contributions Employer contributions 11 10 11 10 Employee contributions 8 8 b) Subsidiariesdnata b) Subsidiaries Employee contributions 8 8 Consolidated Benefits paid (9) (10) Financial Benefits paid (9) (10) (i) Swiss plan (i) Swiss plan Statements Currency translation differencesCurrency translation differences 8 (4) 8 (4) Employees of a subsidiary in Switzerland participate in a defined benefit plan ("the Swiss Remeasurement Additional Employees of a subsidiary in Switzerland participate in a defined benefit plan ("the Swiss Remeasurement plan"). The Swiss plan is funded by way of contribution to an insurance policy. Information plan"). The Swiss plan is funded by way of contribution to an insurance policy. - Return on plan assets - Return on plan assets 5 - 5 - Balance carried forward Balance carried forward 208 184 208 184 The present value of obligationsThe and present fair value value of of plan obligations assets are and as fair follows: value of plan assets are as follows: 2018 2017 2018 2017 AED m AED m AED m AED m Present value of funded definedPresent benefit value obligations of funded defined benefit obligations264 238 264 238 Less: Fair value of plan assets Less: Fair value of plan assets (208) (184) (208) (184) 56 54 56 54

The actuarial valuation for theThe Swiss actuarial plan included valuation assumptions for the Swiss relating plan included to the discount assumptions relating to the discount rate of 0.7% (2017: 0.7%) and rateexpected of 0.7% salary (2017: increases 0.7%) and of 1.0% expected (2017: salary 1.0%) increases per annum. of 1.0% (2017: 1.0%) per annum.

167 THE EMIRATES GROUP ANNUAL REPORT 2017-18

19. Retirement benefit obligations19. Retirement (continued) benefit obligations (continued) The movement in the fair valueThe of movement the plan assets in the of fair the value Netherlands of the plan plan assets is: of the Netherlands plan is: 2018 2017 (ii) Netherlands plan (ii) Netherlands plan 2018 2017 AED m AED m AED m AED m Employees of a subsidiary inEmployees Netherlands of aparticipate subsidiary in in a Netherlands defined benefit participate plan ("the in a defined benefit plan ("the Balance brought forward 269 251 Netherlands plan"). The NetherlandsNetherlands plan plan"). is funded The Netherlands by way of contributionplan is funded to byan way of contribution to an Balance brought forward 269 251 Expected return on plan assets 5 7 insurance policy. insurance policy. Expected return on plan assets 5 7 Remeasurement Remeasurement Overview 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: - Return on plan assets - Return on plan assets (2) 22 (2) 22 Emirates Employer contributions 4 4 2018 2017 2018 2017 Employer contributions 4 4 Employee contributions 2 2 dnata AED m AED m AED m AED m Employee contributions 2 2 Benefits paid Benefits paid (4) (4) (4) (4) Present Groupvalue of funded definedPresent benefit value obligations of funded defined benefit obligations 328 281 328 281 Currency translation differences 40 (13) Less: Fair value of plan assets (314) (269) Currency translation differences 40 (13) Less: FairFinancial value of plan assets (314) (269) Balance carried forward Balance carried forward 314 269 314 269 Information 14 12 14 12 dnata expects to contribute,dnata in respectexpects ofto existing contribute, plan inmembers respect of of all existing its funded plan members of all its funded The actuarialEmirates valuation for theThe Netherlands actuarial valuation plan included for the assumptions Netherlands relating plan included to the assumptions relating to the Financial schemes, approximately AED schemes,35 m during approximately the year ending AED 3135 Marchm during 2019. the year ending 31 March 2019. discountCommentary rate of 1.9% (2017: 1.85%)discount and rate expected of 1.9% salary (2017: increases 1.85%) and of 1% expected (2017: salary 1%) per increases of 1% (2017: 1%) per Unfunded schemes annum. Unfunded schemes annum. dnata End of service benefits for employees who do not participate in the provident scheme, The movementFinancial in the presentThe value movement of defined in the benefit present obligations value of of defined the Netherlands benefit obligations of the Netherlands End of service benefits for employees who do not participate in the provident scheme, Commentary defined benefit plans or other defined contribution plans follow relevant local plan is: plan is: defined benefit plans or other defined contribution plans follow relevant local Emirates regulations, which are mainlyregulations, based on which periods are of mainly cumulative based service on periods and levels of cumulative of service and levels of 2018 2017 2018 2017 Consolidated employees’ final basic salary. The liability recognised in the consolidated statement of Financial AED m AED m AED m AED m employees’ final basic salary. The liability recognised in the consolidated statement of Statements financial position is the presentfinancial value of position the defined is the benefit present obligation value of the at defined the end benefit of the obligation at the end of the Balance brought forward 281 261 Balancednata brought forward 281 261 reporting period. reporting period. Service costConsolidated Service cost 5 5 5 5 The movement in the present value of defined benefit obligation is: Financial The movement in the present value of defined benefit obligation is: Interest Statementscost Interest cost 6 7 6 7 2018 2017 2018 2017 Remeasurement (gain) / loss Remeasurement (gain) / loss (4) 23 (4) 23 AED m AED m AED m AED m Additional EmployeeInformation contributions Employee contributions 2 2 2 2 Balance brought forward Balance brought forward 456 558 456 558 Benefits paid (4) (4) Benefits paid (4) (4) Acquisition (Note 33) Acquisition (Note 33) - 3 - 3 Currency translation differences 42 (13) Currency translation differences 42 (13) Service cost Service cost 53 66 53 66 Balance carried forward 328 281 Balance carried forward 328 281 Interest cost Interest cost 20 23 20 23 Remeasurement Remeasurement - changes in experience / demographic- changes inassumptions experience / demographic (11)assumptions (10) (11) (10) - changes in financial assumptions- changes in financial assumptions 14 (116) 14 (116) Benefits paid Benefits paid (53) (57) (53) (57) - Transfers Transfers - (11) (11) Balance carried forward Balance carried forward 479 456 479 456

Payments made during thePayments year include made transfer during of the accumulated year include benefits transfer to ofdnata’s accumulated benefits to dnata’s funded scheme. funded scheme.

168 THE EMIRATES GROUP ANNUAL REPORT 2017-18

The sensitivity of the defined benefit obligation to changes in the principal assumptions 19. Retirement benefit obligations19. Retirement (continued) benefit obligations (continued) The sensitivity of the defined benefit obligation to changes in the principal assumptions are set out below: are set out below: Defined contribution plans Defined contribution plans Assumption Assumption Change Effect on definedChange Effect on defined dnata pays fixed contributionsdnata to certain pays fixed defined contributions contribution to plans certain and defined has no contribution legal or plans and has no legal or benefit obligation benefit obligation constructive obligation to payconstructive further contributions obligation to to settle pay further the benefits contributions relating to to settle the the benefits relating to the Unfunded Unfunded employees service in the currentemployees and prior service periods. in the current and prior periods. Overview Subsidiaries schemes Subsidiaries schemes AED m AED m Emirates AED m AED m The total amount recognised Thein the total consolidated amount recognised income statement in the consolidated in respect ofincome all the statement in respect of all the + 0.5% (48) (28) Discount rate + 0.5% (48) (28) plans is dnataas follows: plans is as follows: Discount rate - 0.5% 54 - 0.5%31 54 31 Group 2018 2017 2018 2017 + 0.5% 7 + 0.5%32 7 32 Expected salary increases Expected salary increases AED m AED m AED m AED m - 0.5% (7) (29) Financial - 0.5% (7) (29) DefinedInformation benefit plans Defined benefit plans The above sensitivity analysisThe is based above on sensitivity a change analysis in an assumption is based on while a change holding in an all assumption while holding all Funded schemes Funded schemes Emirates other assumptions constant. Inother practice, assumptions this is unlikely constant. to occur, In practice, and changes this is unlikely in some to of occur, and changes in some of Service andFinancial interest cost - netService and interest cost - net 39 38 39 38 Commentary the assumptions may be correlated.the assumptions In calculating may be the correlated. above sensitivity In calculating analysis, the the above sensitivity analysis, the Net change in the present value of defined benefit Net change in the present value of defined benefit present value of the defined benefit obligation has been calculated using the projected dnata present value of the defined benefit obligation has been calculated using the projected obligations over plan assets obligations over plan assets - (5) - (5) Financial unit credit method at the endunit of the credit reporting method period. at the end of the reporting period. Commentary 39 33 39 33 Unfunded schemes UnfundedEmirates schemes The weighted average durationsThe of weighted the defined average benefit durations obligations of the are defined set out benefit below: obligations are set out below: Consolidated Service cost 53 66 Service costFinancial 53 66 Statements Interest cost 20 23 Interest cost 20 23 2018 2017 2018 2017 73 89 dnata 73 89 Years Years Years Years DefinedConsolidated contribution plans Defined contribution plans Funded scheme - Swiss plan 17.0 17.1 Financial Funded scheme - Swiss plan 17.0 17.1 Contributions expensed 147 131 ContributionsStatements expensed 147 131 Funded scheme - NetherlandsFunded plan scheme - Netherlands plan 21.0 21.0 21.0 21.0 Recognised in the consolidated income statement 259 253 RecognisedAdditional in the consolidated income statement 259 253 Unfunded scheme Unfunded scheme 12.9 12.5 12.9 12.5 Information

Through its defined benefitThrough plans dnataits defined is exposed benefit to a plans number dnata of is risks, exposed the most to a number of risks, the most significant of which are detailedsignificant below: of which are detailed below:

a) Change in discount rate:a) Retirement Change in benefit discount obligations rate: Retirement will increase benefit due obligations to a will increase due to a decrease in market yields of highdecrease quality in corporatemarket yields bonds. of high quality corporate bonds.

b) Expected salary increases:b) TheExpected present salary value increases: of the defined The present benefit value obligation of the is defined benefit obligation is calculated by reference to thecalculated future salaries by reference of plan participants. to the future As salaries such, ofan plan increase participants. of As such, an increase of the salary of the plan participantsthe salary will increase of the plan the retirementparticipants benefit will increase obligations. the retirement benefit obligations.

169 THE EMIRATES GROUP ANNUAL REPORT 2017-18

20. Other provisions 20. Other provisions 21. Borrowings and lease liabilities21. Borrowings and lease liabilities

2018 2017 2018 2017 2018 2017 2018 2017 AED m AED m AED m AED m AED m AED m AED m AED m Balance brought forward Balance brought forward 69 33 69 33 Non-current Non-current Additions Additions 14 42 14 42 Term loans (Note 22) Term loans (Note 22) 828 630 828 630 Overview Acquisition (Note 33) Acquisition (Note 33) - 4 - 4 Lease liabilities (Note 23) Lease liabilities (Note 23) 39 24 39 24 Utilised Emiratesduring the year Utilised during the year (30) (4) (30) (4) 867 654 867 654 Current Current Unutiliseddnata amounts reversed Unutilised amounts reversed (9) (3) (9) (3) Currency translation differencesCurrency translation differences 16 (3) 16 (3) Term loans (Note 22) Term loans (Note 22) 207 198 207 198 Group Balance carried forward Balance carried forward 60 69 60 69 Lease liabilities (Note 23) Lease liabilities (Note 23) 12 9 12 9 Financial Bank overdrafts (Note 28) Bank overdrafts (Note 28) 73 132 73 132 Information Provisions are expected to beProvisions used as follows: are expected to be used as follows: 292 339 292 339 Emirates 2018 2017 2018 2017 1,159 993 1,159 993 Financial Commentary AED m AED m AED m AED m Within one year (Note 18) Within one year (Note 18) 47 45 47 45 Borrowings and lease liabilitiesBorrowings are denominated and lease in liabilitiesthe following are denominated currencies: in the following currencies: dnata Over oneFinancial year (Note 18) Over one year (Note 18) 13 24 13 24 Commentary 2018 2017 2018 2017 31 March 2018 31 March 2018 60 69 60 69 Emirates AED m AED m AED m AED m Consolidated Pound Sterling Pound Sterling 312 224 312 224 The provisionsFinancial include AEDThe 8 m provisions (2017: AED include 6 m) AED related 8 m to (2017: dilapidations AED 6 m) which related to dilapidations which Statements 271 278 271 278 represents an estimate of therepresents costs of an restoring estimate certain of the leasehold costs of properties restoring certain to their leasehold properties to their US Dollar US Dollar 213 151 213 151 original dnatacondition at the end oforiginal the lease condition term. at the end of the lease term. UAE Dirham UAE Dirham Consolidated Swiss Franc Swiss Franc 121 126 121 126 Financial Statements Australian Dollar Australian Dollar 117 79 117 79 Singapore Dollar Singapore Dollar 55 57 55 57 Additional Information Euro Euro 33 33 33 33 Others Others 37 45 37 45

170 THE EMIRATES GROUP ANNUAL REPORT 2017-18

22. Term loans Term loans are denominated in the following currencies: 22. Term loans Term loans are denominated in the following currencies: 2018 2017 2018 2017 2018 2017 AED m AED m 2018 2017 AED m AED m AED m AED m Pound Sterling 292 224 AED m AED m Pound Sterling 292 224 US Dollar 271 278 US Dollar 271 278 Balance brought forward 829 491 UAE Dirham 183 116 Balance brought forward 829 491 UAE Dirham 183 116 Overview Acquisitions (Note 33) - 52 Swiss Franc 100 99 Acquisitions (Note 33) - 52 Swiss Franc 100 99 Additions 475 515 Australian Dollar 95 78 AdditionsEmirates 475 515 Australian Dollar 95 78 Repayments (306) (192) Singapore Dollar 55 - Repaymentsdnata (306) (192) Singapore Dollar 55 - Currency translation differences 38 (37) Euro 33 33 Currency translation differences 38 (37) Euro 33 33 Group 1,036 829 Others 6 - 1,036 829 Others 6 - Less: Transaction costs (1) (1) Less: TransactionFinancial costs (1) (1) Contractual repricing dates are set at three to six month intervals. The effective interest Information Balance carried forward 1,035 828 Contractual repricing dates are set at three to six month intervals. The effective interest Balance carried forward 1,035 828 rate on the term loans was 2.4% (2017: 2.5%) per annum. The carrying amounts of the rate on the term loans was 2.4% (2017: 2.5%) per annum. The carrying amounts of the Emirates Term loans are repayable as follows: term loans approximate their fair value. The fair value is determined by discounting Term loansFinancial are repayable as follows: term loans approximate their fair value. The fair value is determined by discounting Commentary Within one year 207 198 projected cash flows using the interest rate yield curve applicable to different maturities Within one year 207 198 projected cash flows using the interest rate yield curve applicable to different maturities Between 2 and 5 years 680 591 and currencies adjusted for credit spread and falls within level 2 of the fair value Betweendnata 2 and 5 years 680 591 and currencies adjusted for credit spread and falls within level 2 of the fair value Financial After 5 years 148 39 hierarchy. After 5 yearsCommentary 148 39 hierarchy. Total over one year 828 630 Total over one year 828 630 The term loan in Swiss Francs is designated as a hedge of the net investment in dnata Emirates The term loan in Swiss Francs is designated as a hedge of the net investment in dnata Switzerland AG. The foreign exchange gain or loss on translation of the loan at the end Consolidated Switzerland AG. The foreign exchange gain or loss on translation of the loan at the end Financial of the reporting period is recognised in the translation reserve through other Statements of the reporting period is recognised in the translation reserve through other comprehensive income. comprehensive income. dnata Consolidated Financial Statements

Additional Information

171 THE EMIRATES GROUP ANNUAL REPORT 2017-18

23. Lease liabilities 23. Lease liabilities The present value of lease liabilities is denominated in the following currencies: Finance Lease 2018 2017 The present value of lease liabilities is denominated in the following currencies: Finance Lease AED m AED m 2018 2017 2018 2017 AED m AED m AED m AED m 2018 2017 AED m AED m Swiss Franc 21 23 Balance brought forward 33 24 Australian Dollar Swiss Franc 22 1 21 23 Acquisitions Balance brought forward - 6 33 24 Australian Dollar 8 22 1 AdditionsOverview Acquisitions 26 11 - 6 Others 9 8 Additions 26 11 Others 9 RepaymentsEmirates (9) (7) Lease liabilities are secured on the related plant and machinery. Currency translation differencesRepayments 1 (1) (9) (7) Lease liabilities are secured on the related plant and machinery. dnata The carrying amount of lease liabilities approximate to their fair values. The fair value is Currency translation differences 1 (1) Balance carried forward 51 33 determined by discounting projectedThe carrying cash amount flows using of lease the liabilities interestrate approximate yield curve to theirfor fair values. The fair value is Group Balance carried forward 51 33 the remaining term to maturitiesdetermined and currencies by discounting adjusted projected for credit cash spread flows usingand falls the interest rate yield curve for Gross leaseFinancial liabilities: within level 2 of the fair value thehierarchy. remaining term to maturities and currencies adjusted for credit spread and falls Within oneInformation year Gross lease liabilities: 13 10 within level 2 of the fair value hierarchy. Within one year 13 10 BetweenEmirates 2 and 5 years 28 25 After 5 yearsFinancial Between 2 and 5 years 12 1 28 25 Commentary After 5 years 53 36 12 1 dnata 53 36 Future interestFinancial (2) (3) Present Commentaryvalue of lease liabilitiesFuture interest 51 33 (2) (3) Present value of lease liabilities 51 33 Emirates The presentConsolidated value of lease liabilities is repayable as follows: Financial Within oneStatements year The present value of lease liabilities is repayable12 as follows:9 Within one year 12 9 Betweendnata 2 and 5 years 27 23 After 5 yearsConsolidated Between 2 and 5 years 12 1 27 23 Financial Total overStatements one year After 5 years 39 24 12 1 Total over one year 39 24 Additional Information

172 THE EMIRATES GROUP ANNUAL REPORT 2017-18

The movements in deferred tax assets and liabilities during the year, without taking into 24. Deferred income tax 24. Deferred income tax The movements in deferred tax assets and liabilities during the year, without taking into consideration the offsettingconsideration of balances within the offsetting the same of tax balances jurisdiction, within are the as same follows: tax jurisdiction, are as follows: Deferred tax assets and liabilitiesDeferred are tax offset assets when and there liabilities is a arelegally offset enforceable when there right is ato legally enforceable right to offset current tax assets againstoffset current current tax tax liabilities assets against and when current the tax deferred liabilities taxes and relate when the deferred taxes relate Deferred income tax liabilitieDeferreds income tax liabilities to the same income tax authority.to the same The offset income amounts tax authority. are as follows: The offset amounts are as follows: Property, Property, plant and Intangible plant and Intangible Overview 2018 2017 2018 2017 equipment assetsequipment Other Totalassets Other Total AED m AED m Emirates AED m AED m AED m AED m AEDAED m m AED AED m m AED m AED m

Deferreddnata income tax assets Deferred income tax assets 81 62 81 62 1 April 2016 1 April 2016 (39) (86) (1)(39) (126) (86) (1) (126) Acquisition (1) (90) - (91) Deferred income tax liabilitiesDeferred income tax liabilities (142) (148) (142) (148) Acquisition (1) (90) - (91) Group Credited to the consolidatedC redited to the consolidated (61) (86) (61) (86) Financial income statement income statement - 2 8 - - 2 8 2 8 - 2 8 The movement in the deferredThe taxmovement account inis asthe follows: deferred tax account is as follows: Information Currency translation differencesCurrency translation differences2 4 - 2 6 4 - 6 Balance brought forward Balance brought forward (86) (34) (86) (34) 31 March 2017 31 March 2017 (38) (144) (1)(38) (183) (144) (1) (183) Emirates Acquisition (Note 33) (2) (91) AcquisitionFinancial (Note 33) (2) (91) Acquisition (Note 33) Acquisition (Note 33)- (2) - - (2)(2) - (2) Commentary Credited to the consolidatedCredited income to statement the consolidated (Note 7 )income statement 61 (Note 7 ) 22 61 22 Credited to the consolidatedCredited income to the consolidated income Othersdnata Others (31) 12 (31) 12 statement statement 5 47 - 5 5 2 47 - 5 2 Financial Currency translation differences (3) 5 Currency translation differences (2) (6) - (8) CurrencyCommentary translation differences (3) 5 Currency translation differences (2) (6) - (8) Balance carried forward Balance carried forward (61) (86) (61) (86) Others Others (18) (4) (1)(18) (23) (4) (1) (23) Emirates 31 March 2018 (53) (109) (2) (164) Consolidated 31 March 2018 (53) (109) (2) (164) Financial Deferred income tax assets Statements Deferred income tax assets Tax losses ProvisionsTax Other losses Provisions Total Other Total dnata AED m AED m AED m AED m Consolidated AED m AED m AED m AED m Financial Statements 1 April 2016 1 April 2016 48 21 23 48 92 21 23 92 (Charge) / credited to the (Charge) / credited to the Additional consolidated income statement (6) (3) 3 (6) Information consolidated income statement (6) (3) 3 (6) Currency translation differencesCurrency translation differences(3) - 2(3) (1) - 2 (1) Others Others (23) 23 12 (23) 12 23 12 12 31 March 2017 31 March 2017 16 41 40 16 97 41 40 97 (Charge) / credited to the (Charge) / credited to the consolidated income statementconsolidated income (4)statement 6 7(4) 9 6 7 9 Currency translation differencesCurrency translation differences2 2 12 5 2 1 5 Others Others - (11) 3 - (8)(11) 3 (8) 31 March 2018 31 March 2018 14 38 51 14 103 38 51 103

173 THE EMIRATES GROUP ANNUAL REPORT 2017-18

25. Operating leases 25. Operating leases 28. Short term bank deposits,28. Shortcash andterm cash bank equivalents deposits, cash and cash equivalents

Future minimum lease paymentsFuture under minimum non-cancellable lease payments operating under leases non-cancellable are as follows: operating leases are as follows: 2018 2017 2018 2017 AED m AED m AED m AED m

2018 2017 2018 2017 Bank deposits Bank deposits 4,054 2,479 4,054 2,479 AED m AED m AED m AED m Overview Cash and bank Cash and bank 891 919 891 919

Less thanEmirates 1 year Less than 1 year 396 322 396 322 Cash and bank balances Cash and bank balances 4,945 3,398 4,945 3,398 Between 2 and 5 years Between 2 and 5 years 1,232 866 1,232 866 Less: Short term bank depositsLess: over Short 3 months term bank deposits over 3 months(3,760) (2,016) (3,760) (2,016) dnata After 5 years After 5 years 1,003 802 1,003 802 Group 2,631 1,990 2,631 1,990 Cash and cash equivalentsCash as per and the cash equivalents as per the

Financial consolidated statement ofconsolidated financial position statement of financial position 1,185 1,382 1,185 1,382 Information 26. Capital commitments 26. Capital commitments Bank overdrafts (Note 21) Bank overdrafts (Note 21) (73) (132) (73) (132) Emirates 2018 2017 2018 2017 Cash and cash equivalentsCash as per and the cash equivalents as per the Financial Commentary AED m AED m AED m AED m consolidated statement ofconsolidated cash flows statement of cash flows 1,112 1,250 1,112 1,250

Authoriseddnata and contracted: Authorised and contracted: Financial Short term bank deposits, cashShort and term cash bank equivalents deposits, cashyield and an effective cash equivalents interest rate yield of an effective interest rate of dnata Commentary dnata 373 142 373 142 2.8% (2017: 2.5%) per annum.2.8% (2017: 2.5%) per annum.

Joint venturesEmirates Joint ventures 12 14 12 14 Consolidated 385 156 385 156 Financial 29. Derivative financial instruments29. Derivative financial instruments Statements Authorised but not contracted:Authorised but not contracted: dnata 2018 2017 2018 2017 dnata Consolidated dnata 594 429 594 429 Financial AED m AED m AED m AED m Statements 979 585 979 585

27. GuaranteesAdditional 27. Guarantees Current assets Current assets Information Currency swaps and forwardsCurrency swaps and forwards - 5 - 5 2018 2017 2018 2017 - 5 - 5 AED m AED m AED m AED m Current liabilities Current liabilities Currency swaps and forwardsCurrency swaps and forwards 25 3 25 3 Guarantees and letters of creditGuarantees provided and by letters of credit provided by 25 3 25 3 banks in the normal course ofbanks business in the normal course of business 396 333 396 333

The notional principal amountsThe outstandingnotional principal are: amounts outstanding are: Guarantees and letters of creditGuarantees include and AED letters 45 m of (2017: credit AEDinclude 51 AED m) provided 45 m (2017: by AED 51 m) provided by 2018 2017 2018 2017 companies under common controlcompanies on normal under commercialcommon control terms. on normal commercial terms. AED m AED m AED m AED m

Currency contracts Currency contracts 1,000 834 1,000 834

174 THE EMIRATES GROUP ANNUAL REPORT 2017-18

30. Classification of financial instruments

The accounting policies for financial instruments have been applied to the following: Assets and Financial Derivative liabilities at fair liabilities at Loans and financial value through amortised receivables instruments profit and loss cost Total Overview AED m AED m AED m AED m AED m Emirates 2018 Assets dnata Trade and other receivables (excluding prepayments Group and advance lease rentals) 3,095 - - - 3,095 Financial Short term bank deposits 3,760 - - - 3,760 Information Cash and cash equivalents 1,185 - - - 1,185 Emirates Total 8,040 - - - 8,040 Financial Commentary Liabilities dnata Borrowings and lease liabilities - - - 1,159 1,159 Financial Commentary Trade and other payables (excluding deferred revenue and customer deposits) - - - 4,166 4,166 Emirates Consolidated Derivative financial instruments - 25 - - 25 Financial Total - 25 - 5,325 5,350 Statements dnata Consolidated 2017 Financial Assets Statements Derivative financial instruments - 5 - - 5 Additional Trade and other receivables (excluding prepayments Information and advance lease rentals) 2,840 - - - 2,840 Short term bank deposits 2,016 - - - 2,016 Cash and cash equivalents 1,382 - - - 1,382 Total 6,238 5 - - 6,243

Liabilities Borrowings and lease liabilities - - - 993 993 Trade and other payables (excluding deferred revenue and customer deposits) - - 13 2,742 2,755 Derivative financial instruments - 3 - - 3 Total - 3 13 3,735 3,751

Except as otherwise stated, the carrying amounts of financial assets and financial liabilities approximate their fair values.

175 THE EMIRATES GROUP ANNUAL REPORT 2017-18

31. Related party transactions31. and Related balances party transactions and balances dnata uses a number of publicdnata utilities uses provided a number by of Government public utilities controlled provided entities by Government for controlled entities for its operations in Dubai, whereits these operations entities in are Dubai, the where sole providers these entities of the are relevant the sole providers of the relevant dnata transacts with associates,dnata joint transacts ventures with and associates, companies joint controlled ventures by and dnata companies and controlled by dnata and services. This includes the supplyservices. of electricity, This includes water the and supply airport of services. electricity, Transactions water and airport services. Transactions its parent within the scope of itsits parentordinary within business the scope activities. of its ordinary business activities. falling in these expense categoriesfalling are in these individually expense insignificant categories and are individuallywere carried insignificant out and were carried out dnata and Emirates share centraldnata corporate and Emirates functions share such central as information corporate functions technology, such as information technology, on an arm's length basis. on an arm's length basis. facilities, human resources,facilities, finance, treasury, human resources, cash management, finance, treasury, legal and cash other management, legal and other Overview functions. Where such functionsfunctions. are shared Where the such costs functions are allocated are shared between the dnata costs and are allocated between dnata and 2018 2017 2018 2017 AED m AED m EmiratesEmirates based on activity levels.Emirates based on activity levels. AED m AED m Year end balances Year end balances Other thandnata these shared servicesOther arrangements than these shared the following services transactions arrangements have the taken following transactions have taken (i) Receivables-sale of goods(i) and Receivables-sale services (Note of 14) goods and services (Note 14) place on an arm's length basis.place on an arm's length basis. Group Companies under common controlCompanies under common control 287 360 287 360 2018 2017 2018 2017 Financial Associates Associates 38 43 38 43 Information AED m AED m AED m AED m Joint ventures Joint ventures 46 42 46 42 Trading transactions Trading transactions Emirates (i) Sale of goods and services 371 445 371 445 (i) Sale Financialof goods and services Sale of goodsCommentary - Companies underSale commonof goods control- Companies under common 434 control 339 434 339 (ii) Payables-purchase of goods(ii) Payables-purchase and services (Note of 17) goods and services (Note 17) Joint ventures Joint ventures 44 58 44 58 Servicesdnata rendered - CompaniesServices under renderedcommon control- Companies under 2,262 common control 2,004 2,262 2,004 ServicesFinancial rendered - Joint venturesServices rendered - Joint ventures 53 40 53 40 Companies under common controlCompanies under common control 55 19 55 19 Commentary Services rendered - AssociatesServices rendered - Associates 13 17 13 17 Associates Associates 3 - 3 - Emirates 2,762 2,400 102 77 102 77 Consolidated 2,762 2,400 (ii) PurchaseFinancial of goods and services(ii) Purchase of goods and services (iii) Borrowings (iii) Borrowings Statements Purchase of goods - CompaniesPurchase under commonof goods control- Companies under 114common control 98 114 98 Companies under common controlCompanies under common control 184 147 184 147 Purchasednata of goods - AssociatesPurchase of goods - Associates - 2 - 2 Consolidated ServicesFinancial received - CompaniesServices under common received control- Companies under common 499 control 446 499 446 (iv) Loans - receivable (Note(iv) 14) Loans - receivable (Note 14) Statements Services received - Joint venturesServices received - Joint ventures 220 236 220 236 Joint ventures Joint ventures 113 111 113 111 Additional 833 782 833 782 Information Other transactions Other transactions Movement in the loans were asMovement follows: in the loans were as follows: (i) Finance income (i) Finance income Balance brought forward Balance brought forward 111 147 111 147 Companies under common controlCompanies under common control 74 42 74 42 Additions Additions 12 1 12 1 Joint ventures Joint ventures 4 3 4 3 Repayments Repayments (24) (20) (24) (20) 78 45 78 45 Currency translation differencesCurrency translation differences 14 (17) 14 (17) Balance carried forward Balance carried forward 113 111 113 111 (ii) Finance cost (ii) Finance cost Companies under common controlCompanies under common control 5 4 5 4 The loans earned effective interestThe loans of 2.9% earned (2017: effective 2.8%) perinterest annum. of 2.9% (2017: 2.8%) per annum.

(iii) Compensation to key management(iii) Compensation personnel to key management personnel Salaries and short-term employeeSalaries benefits and short-term employee benefits 49 32 49 32 Post-employment benefits Post-employment benefits 5 5 5 5 54 37 54 37

176 THE EMIRATES GROUP ANNUAL REPORT 2017-18

32. Financial risk management32. Financial risk management Currency risk Currency risk

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 dnata has limited exposure todnata financialhas riskslimited by exposure virtue of theto financial nature of risks its operations.by virtue of In the nature of its operations. In outside the source market.outside These subsidiaries the source manage market. such These risks subsidiaries through manage currency such risks through currency the areas where financial risksthe exist, areas the where aim financial is to achieve risks exist, an appropriate the aim is balance to achieve an appropriate balance forwards. forwards. between risk and return and minimisebetween riskpotential and return adverse and effects minimise on dnata’s potential consolidated adverse effects on dnata’s consolidated financial position. financial position. dnata is exposed to the effectsdnata of fluctuationsis exposed to in theprevailing effects foreign of fluctuations currency in exchange prevailing foreign currency exchange Overview rates on its long term debt obligations denominated in Swiss Franc, Euro, Pound dnata’s risk management proceduresdnata’s risk are managementdesigned to identify procedures and analyse are designed these risks,to identify to and analyse these risks, to rates on its long term debt obligations denominated in Swiss Franc, Euro, Pound Emirates Sterling, Singapore Dollar and Australian Dollar. Cash flows from the Switzerland, Italy, set appropriate risk limits andset controls appropriate and to risk monitor limits the and risks controls and andadherence to monitor to limits the risks and adherence to limits Sterling, Singapore Dollar and Australian Dollar. Cash flows from the Switzerland, Italy, United Kingdom and Australian operations are adequate to meet the repayment by meansdnata 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 United Kingdom and Australian operations are adequate to meet the repayment procedures and systems on a regular basis to reflect changes in markets, products and schedules. A 1% change inschedules. exchange A rate 1% for change these in currencies exchange would rate for not these have currenciesa would not have a proceduresGroup and systems on a regular basis to reflect changes in markets, products and significant impact on profit or equity. At dnata parent level these liabilities provide a emerging best practice. emerging best practice. significant impact on profit or equity. At dnata parent level these liabilities provide a Financial natural hedge to its foreign currencynatural investmentshedge to its inforeign these currencycountries. investments in these countries. Information Risk management proceduresRisk are management approved by procedures a steering group are approved comprising by a of steering senior group comprising of senior (ii) Credit risk (ii) Credit risk management.Emirates Their identification,management. evaluation Their and identification, hedging of evaluation financial risksand hedging are of financial risks are Financial performed in close cooperation with the operating units. Senior management is also dnata is exposed to credit risk, which is the risk that the counterparty will cause a performedCommentary in close cooperation with the operating units. Senior management is also dnata is exposed to credit risk, which is the risk that the counterparty will cause a responsible for the review of riskresponsible management for the and review the control of risk management environment. and The the various control environment. The various financial loss to dnata by failingfinancial to loss discharge to dnata an byobligation. failing to Financial discharge assets an thatobligation. Financial assets that dnata financial risk elements are discussed below. financialFinancial risk elements are discussed below. potentially subject dnata topotentially credit risk consist subject principally dnata to credit of deposits risk consist with banks principally and of deposits with banks and Commentary trade receivables. dnata usestrade external receivables. ratings such dnata as uses Standard external & Poor's, ratings Moody's such as Standard or & Poor's, Moody's or (i) Market risk (i) Market risk Emirates their equivalent in order to measuretheir equivalent and monitor in order its credit to measure risk exposures and monitor to financial its credit risk exposures to financial Market riskConsolidated is the risk that theMarket fair value risk or is future the risk cash that flows the fair of a value financial or future instrument cash flows will of a financial instrument will institutions. In the absence ofinstitutions. independent In theratings, absence credit of quality independent is assessed ratings, based credit on quality is assessed based on Financial fluctuateStatements because of changesfluctuate in market because prices. of changes Market risks in market relevant prices. to dnata's Market risks relevant to dnata's the counterparty's financial position,the counterparty's past experience financial and position,other factors. past experience and other factors. operations are interest rate riskoperations and currency are interestrisk. rate risk and currency risk. dnata Consolidated dnata manages limits and controlsdnata manages concentration limits of and risk controls wherever concentration they are identified. of risk wherever they are identified. InterestFinancial rate risk Interest rate risk Statements 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 dnata is exposed to the effectsdnata of fluctuationsis exposed to in the prevailing effects levels of fluctuations of interest in rates prevailing on levels of interest rates on also managed through regularalso analysis managed of the through ability regular of counterparties analysis of the and ability potential of counterparties and potential Additional borrowingsInformation and investments.borrowings Exposure arises and investments. from interest Exposure rate fluctuations arises from in interest the rate fluctuations in the counterparties to meet their obligationscounterparties and to by meet changing their their obligations limits where and by appropriate. changing their limits where appropriate. 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 Approximately AED 3,418 m (2017:Approximately 1,753 m) AED of short 3,418 term m (2017: bank deposits1,753 m) and of short cash term and bank deposits and cash and obligations and interest incomeobligations on its bank and deposits. interest income on its bank deposits. bank balances are held with financialbank balances institutions are held under with common financial control. institutions under common control.

Borrowings obtained at variableBorrowings rates expose obtained dnata at to variable cash flow rates interest expose rate dnata risk. to No cash flow interest rate risk. No Policies are in place to ensurePolicies that sales are in are place made to to ensure customers that sales with are an appropriatemade to customers with an appropriate hedging cover is obtained duehedging to the stablecover is interest obtained rate due environment to the stable that interest exists in rate the environment that exists in the credit history failing which ancredit appropriate history level failing of which security an is appropriate obtained, where level of necessary security is obtained, where necessary countries where the loans are countriescontracted. where the loans are contracted. sales are made on cash terms.sales Credit are made limits on are cash also terms. imposed Credit to cap limits exposure are also to imposed a to cap exposure to a customer. The key reference rates basedThe on whichkey reference interest rates costs based are determined on which interest are USD costs LIBOR are for determined are USD LIBOR for customer. United States Dollar, CHF LIBORUnited for Swiss States Franc, Dollar, GBP CHF LIBOR LIBOR for for Pound Swiss Sterling, Franc, GBP BBSY LIBOR for for Pound Sterling, BBSY for Australian Dollar, EURIBOR forAustralian Euro and Dollar, SIBOR EURIBOR for Singapore for Euro Dollar. and ASIBOR 25 basis for Singapore point Dollar. A 25 basis point change in these interest rates changewould not in these have interesta significant rates impact would onnot profit have ora significant equity. impact on profit or equity.

177 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Summarised below in the table is the maturity profile of financial liabilities based on the 32. Financial risk management32. Financial (continued) risk management (continued) Summarised below in the table is the maturity profile of financial liabilities based on the remaining period at the endremaining of the reporting period at period the end to of the the contractual reporting maturity period to date. the contractual maturity date. The table below presents anThe analysis table below of short presents term bank an analysis deposits of and short bank term balances bank deposits by and bank balances by The amounts disclosed are Thethe contractualamounts disclosed undiscounted are the cash contractual flows. undiscounted cash flows. rating agency designationrating at the agency end of designation the reporting at the period end based of the on reporting Standard period & based on Standard & Poor's ratings or its equivalentPoor's for ratings the main or itsbanking equivalent relationships: for the main banking relationships: Less than 1 2 - 5 LessOver than 5 1 2 - 5 Over 5 year years years Total 2018 2017 2018 2017 year years years Total Overview AED m AED m AED m AED m AED m AED m AED m AED m AED m AED m AED m AED m Emirates AA- to AA+ 156 153 AA- to AA+ 156 153 2018 2018 A- to A+ 3,891 2,276 A- todnata A+ 3,891 2,276 Borrowings and lease liabilitiesBorrowings and lease324 liabilities 763 169 324 1,256 763 169 1,256 BBB+ BBB+ 377 568 377 568 Derivative financial instruments 25 - - 25 Group Derivative financial instruments 25 - - 25 Lower than BBB+ 509 396 Lower than BBB+ 509 396 Trade and other payables Trade and other payables UnratedFinancial Unrated 2 1 2 1 (excluding deferred revenue and Information (excluding deferred revenue and customer deposits) 4,096 70 - 4,166 (iii) Liquidity risk (iii) Liquidity risk customer deposits) 4,096 70 - 4,166 Emirates 4,445 833 169 5,447 Financial 4,445 833 169 5,447 Liquidity risk is the risk thatLiquidity dnata is risk unable is the to risk meet that its dnata payment is unable obligations to meet associated its payment obligations associated Commentary 2017 2017 with its financial liabilitieswith when its they financial fall due liabilities and towhen replace they funds fall due when and they to replace are funds when they are dnata Borrowings and lease liabilitiesBorrowings and lease 361 liabilities 660 361 42 1,063 660 42 1,063 withdrawn. withdrawn. Financial Derivative financial instrumentsDerivative financial 3instruments - - 3 3- - 3 Commentary dnata’s liquidity management process is monitored by senior management and includes dnata’s liquidity management process is monitored by senior management and includes Trade and other payables Trade and other payables the following:Emirates the following: (excluding deferred revenue and Consolidated (excluding deferred revenue and FinancialDay to day funding, managed Day by to monitoringday funding, future managed cash byflows monitoring to ensure future that cash flows to ensure that customer deposits) customer deposits) 2,670 85 2,670 - 2,755 85 - 2,755 Statements requirements can be met.requirements This includes can replenishment be met. This of includes funds as replenishment they of funds as they 3,034 745 3,034 42 3,821 745 42 3,821 mature. dnatamature. ConsolidatedMaintaining rolling forecasts Maintaining of dnata’s rolling liquidity forecasts position of dnata’son the liquiditybasis of position on the basis of Financial expected cash flows. Statementsexpected cash flows.  Monitoring liquidity ratiosMonitoring against liquidity internal ratios and external against regulatory internal and external regulatory Additionalrequirements. requirements. InformationMaintaining debt financing Maintaining plans. debt financing plans.  Maintaining diversified creditMaintaining lines, diversified including stand-by credit lines, credit including facility stand-by credit facility

Sources of liquidity areSources regularly of reviewed liquidity as are required regularly by reviewed senior management as required to by senior management to maintain a diversification bymaintain geography, a diversification provider, product by geography, and term. provider, product and term.

178 THE EMIRATES GROUP ANNUAL REPORT 2017-18

33. Acquisitions 33. Acquisitions 34. Capital management34. Capital management

2018 2018 dnata monitors the returndnata on equity monitors which the is definedreturn on as equity profit whichfor the is year defined expressed as profit as afor the year expressed as a percentage of average equity. dnata seeks to provide a higher return to the Owner by On 9th May 2017, dnataOn acquired 9th May a 100% 2017, shareholding dnata acquired in ALXa 100% Cargo shareholding Center IAH in LLC ALX Cargo Center IAH LLC percentage of average equity. dnata seeks to provide a higher return to the Owner by resorting to borrowings to finance its acquisitions. In 2018, dnata achieved a return on ("ALX"), through its wholy("ALX"), owned throughsubsidiary its dnata wholy Aviation owned subsidiaryServices US dnata Inc. at Aviation a purchase Services US Inc. at a purchase resorting to borrowings to finance its acquisitions. In 2018, dnata achieved a return on equity of 19.3% (2017: 20.3%). consideration of AED 12 m,consideration paid in cash. of ALX AED primarily 12 m, paid operates in cash. a perishable ALX primarily cargo operates facility a perishable cargo facility equity of 19.3% (2017: 20.3%). basedOverview at Houston Airportbased (“IAH”). at The Houston purchase Airport consideration (“IAH”). The is purchase attributable consideration to customer is attributable to customer relationshipsEmirates and goodwill.relationships and goodwill.

Duringdnata the year, dnata alsoDuring acquired the year,100% dnata ownership also acquired of Destination 100% ownershipAsia (Singapore) of Destination Pte Asia (Singapore) Pte Limited, the purchase considerationLimited, the and purchase the assets consideration and liabilities and the arising assets from and and liabilities arising from and Group recognised on this acquisitionreco aregnised not onsignificant. this acquisition are not significant. Financial 2017Information 2017

In theEmiratesprevious year, dnataIn throughthe previous its wholly year, dnataowned through subsidia itsry Dnatawholly Aviation owned subsid Servicesiary Dnata Aviation Services Financial Limited,Commentary acquired 100% ownershipLimited, acquired of Ground 100% Services ownership International of Ground Inc. Services (GSI) and International Metro Inc. (GSI) and Metro Air Service Inc and 95% ownershipAir Service of Inc Air and Dispatch 95% ownership (CLC) s.r.o. of Through Air Dispatch a step (CLC) acquisition s.r.o. Through a step acquisition dnata dnataFinancial also obtained 100%dnata control also of obtained a joint venture, 100% control Transecure of a LLC joint and venture, 76.9% Transecure control of LLC and 76.9% control of its associateCommentary Oman United itsAgencies associate Travel Oman LLC. United Agencies Travel LLC.

TheEmirates assets and the liabilities arising from and recognised on the acquisition of the Consolidated The assets and the liabilities arising from and recognised on the acquisition of the subsidiariesFinancial were as follows:subsidiaries were as follows: Statements dnata dnata dnata Consolidated Aviation Aviation Financial Transecure Services Transecure Services Statements LLC US Inc. OthersLLC US Total Inc. Others Total Additional AED m AED m AED m AED m Information AED m AED m AED m AED m Fair value of net assets acquiredFair value of net assets acquired62 229 50 62 341 229 50 341 Less: Non-controlling interestLess: Non-controlling interest- - (11)- (11) - (11) (11) dnata's share of net assetsdnata's share of net assets acquired acquired 62 229 39 62 330 229 39 330 Goodwill (Note 10) Goodwill (Note 10) - 285 21 - 306 285 21 306 Total purchase considerationTotal purchase consideration 62 514 60 62 636 514 60 636 Less: Cash and cash equivalentsLess: Cash and cash equivalents acquired acquired (3) (5) (5)(3)(13) (5) (5) (13) Less: Fair value of retainedLess: interest Fair value of retained interest (Note 11) (Note 11) (7) - (16)(7)(23) - (16) (23) Less: Contingent considerationLess: Contingent consideration- (18) - - (18)(18) - (18) Cash outflow on acquisitionCash outflow on acquisition 52 491 39 52 582 491 39 582

179 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Overview

Emirates dnata

Group

Financial Information

Emirates Financial Commentary dnata Financial Commentary

Emirates Consolidated Financial Statements dnata Additional Consolidated Financial Statements INFORMATION

Additional Information

180 THE EMIRATES GROUP ANNUAL REPORT 2016-172017-18

Overview

Emirates dnata

Group 182 EMIRATES TEN-YEAR OVERVIEW

Financial Information 184 dnata TEN-YEAR OVERVIEW

Emirates Financial 186 GROUP TEN-YEAR OVERVIEW Commentary dnata 187 GROUP COMPANIES OF EMIRATES Financial Commentary

Emirates 188 GROUP COMPANIES OF dnata Consolidated Financial Statements 190 GLOSSARY dnata Consolidated Financial Statements

Additional Information

181 THE EMIRATES GROUP ANNUAL REPORT Emirates ten-year overview 2017-18 Emirates Ten-year overview Consolidated income statement 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Revenue and other operating income AED m 92,322 85,083 85,044 88,819 82,636 73,113 62,287 54,231 43,455 43,266

Operating costs AED m 88,236 82,648 76,714 82,926 78,376 70,274 60,474 48,788 39,890 40,988 - of which jet fuel AED m 24,715 20,968 19,731 28,690 30,685 27,855 24,292 16,820 11,908 14,443 - of which employee costs AED m 13,080 12,864 12,452 11,851 10,230 9,029 7,936 7,615 6,345 5,861

Overview Operating profit AED m 4,086 2,435 8,330 5,893 4,260 2,839 1,813 5,443 3,565 2,278

Emirates Profit attributable to the Owner AED m 2,796 1,250 7,125 4,555 3,254 2,283 1,502 5,375 3,538 686 dnata Consolidated statement of financial position Group Non-current assets AED m 93,417 93,722 87,752 83,627 74,250 59,856 51,896 43,223 36,870 31,919 Current assets AED m 34,170 27,836 31,427 27,735 27,354 34,947 25,190 21,867 18,677 15,530 Financial Information - of which cash assets AED m 20,420 15,668 19,988 16,885 16,561 24,572 15,587 13,973 10,511 7,168 Total assets AED m 127,587 121,558 119,179 111,362 101,604 94,803 77,086 65,090 55,547 47,449 Emirates Financial Commentary Total equity AED m 37,046 35,094 32,405 28,286 25,471 23,032 21,466 20,813 17,475 15,571 dnata - of which equity attributable to the Owner AED m 36,454 34,508 31,909 27,886 25,176 22,762 21,224 20,606 17,274 15,412 Financial Non-current liabilities AED m 49,975 48,082 48,250 48,595 43,705 40,452 30,574 22,987 19,552 17,753 Commentary Current liabilities AED m 40,566 38,382 38,524 34,481 32,428 31,319 25,046 21,290 18,520 14,125 Emirates Consolidated Financial Consolidated statement of cash flows Statements Cash flow from operating activities AED m 14,134 10,425 14,105 13,265 12,649 12,814 8,107 11,004 8,328 5,016 dnata Cash flow from investing activities AED m (10,977) (3,129) (2,361) (6,411) (4,257) (15,061) (10,566) (5,092) (577) 1,896 Consolidated Cash flow from financing activities AED m (6,442) (10,502) (7,975) (6,264) (7,107) 1,240 (201) (5,046) (2,982) (5,085) Financial Statements Net change in cash and cash equivalents AED m (3,285) (3,206) 3,769 590 1,285 (1,007) (2,660) 866 4,769 1,827

Additional Information Other financial data Net change in cash assets AED m 4,752 (4,320) 3,103 324 (8,011) 8,985 1,614 3,462 3,343 (3,192) Emirates Ten-Year EBITDAR AED m 24,970 21,248 24,415 20,259 17,229 13,891 10,735 13,437 10,638 8,286 Overview dnata Ten Year Borrowings and lease liabilities AED m 51,101 51,002 50,105 47,808 42,431 40,525 30,880 23,230 19,605 16,512 Overview Less: Cash assets AED m 20,420 15,668 19,988 16,885 16,561 24,572 15,587 13,973 10,511 7,368 Group Ten-Year Net debt AED m 30,681 35,334 30,117 30,923 25,870 15,953 15,293 9,257 9,094 9,144 Overview

Group Companies Capital expenditure AED m 8,496 12,632 16,723 19,873 21,142 13,378 13,644 12,238 8,053 10,178 of Emirates

Group Companies Notes : of dnata

Glossary 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.Notes 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. 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.

182 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Key ratios 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Operating margin % 4.4 2.9 9.8 6.6 5.2 3.9 2.9 10.0 8.2 5.3 Profit margin % 3.0 1.5 8.4 5.1 3.9 3.1 2.4 9.9 8.1 1.6 Return on shareholder's funds % 7.9 3.8 23.8 17.2 13.6 10.4 7.2 28.4 21.6 4.4 EBITDAR margin % 27.0 25.0 28.7 22.8 20.8 19.0 17.2 24.8 24.5 19.2

Cash assets to revenue and other operating income % 22.1 18.4 23.5 19.0 20.0 33.6 25.0 25.8 24.2 17.0

Net debt to equity ratio % 82.8 100.7 92.9 109.3 101.6 69.3 71.2 44.5 52.0 58.7 Overview Net debt (incl. aircraft operating leases) to equity ratio % 216.4 237.9 215.9 212.1 209.9 186.4 162.1 127.6 158.5 167.0 Emirates Net debt (incl. aircraft operating leases) to EBITDAR % 321.0 392.9 286.5 296.2 310.3 309.1 324.1 197.6 260.3 313.9 Effective interest rate on borrowings and lease liabilities % 3.2 3.0 3.1 3.3 3.2 3.1 3.0 2.7 2.5 3.5 dnata Fixed to floating debt mix 72:28 75:25 92:8 85:15 94:6 90:10 89:11 89:11 83:17 61:39

Group Airline Operating Statistics Performance Indicators Financial Yield Fils per RTKM 213 204 218 245 250 249 251 232 211 254 Information Unit cost Fils per ATKM 139 132 132 158 162 167 166 147 136 163 Emirates Unit cost excluding jet fuel Fils per ATKM 98 97 97 102 97 99 97 95 94 104 Financial Breakeven load factor % 65.2 64.5 60.4 64.7 64.9 66.9 65.9 63.6 64.4 64.1 Commentary Fleet dnata Aircraft number 268 259 251 231 217 197 169 148 142 127 Financial Commentary Average fleet age months 68 63 74 75 74 72 77 77 69 64

Emirates Production Consolidated Destination cities number 157 156 153 144 142 133 123 112 102 99 Financial Overall capacity ATKM million 61,425 60,461 56,383 50,844 46,820 40,934 35,467 32,057 28,526 24,397 Statements Available seat kilometres ASKM million 377,060 368,102 333,726 295,740 271,133 236,645 200,687 182,757 161,756 134,180 dnata Aircraft departures number 201,858 204,543 199,754 181,843 176,039 159,892 142,129 133,772 123,055 109,477 Consolidated Financial Traffic Statements Passengers carried number '000 58,485 56,076 51,853 48,139 44,537 39,391 33,981 31,422 27,454 22,731 Passenger seat kilometres RPKM million 292,221 276,608 255,176 235,498 215,353 188,618 160,446 146,134 126,273 101,762 Additional Information Passenger seat factor % 77.5 75.1 76.5 79.6 79.4 79.7 80.0 80.0 78.1 75.8 Cargo carried tonnes '000 2,623 2,577 2,509 2,377 2,250 2,086 1,796 1,767 1,580 1,408 Emirates Ten-Year Overall load carried RTKM million 41,250 39,296 36,931 34,207 31,137 27,621 23,672 22,078 19,063 15,879 Overview Overall load factor % 67.2 65.0 65.5 67.3 66.5 67.5 66.7 68.9 66.8 65.1 dnata Ten Year Employee Overview Average employee strength-EK number 62,356 64,768 61,205 56,725 52,516 47,678 42,422 38,797 36,652 35,812 Group Ten-Year Average employee strength-airline number 49,740 51,628 48,023 44,571 41,471 38,067 33,634 30,258 28,686 28,037 Overview Revenue per airline employee AED '000 1,784 1,580 1,717 1,939 1,938 1,868 1,796 1,738 1,459 1,492

Group Companies of Emirates 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 Group Companies adopted on the effective dates applicable to Emirates. of 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. 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 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.

183 THE EMIRATES GROUP ANNUAL REPORT dnata ten-year overview 2017-18

Consolidated income statement 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Revenue and other operating income AED m 13,074 12,182 10,630 9,160 7,565 6,622 5,755 4,406 3,160 3,181

Operating costs AED m 11,878 10,958 9,569 8,155 6,702 5,807 4,971 3,906 2,601 2,714 - of which employee costs AED m 5,055 4,654 3,847 3,351 3,251 2,771 2,488 2,032 1,387 1,347 - of which travel services direct costs AED m 2,135 1,913 1,951 1,458 84 n/a n/a n/a n/a n/a - of which airport operations direct AED m 1,293 1,138 949 824 883 798 699 582 442 391 Overview costs

Emirates - of which in-flight catering direct cost AED m 843 794 715 735 663 601 451 241 35 40 dnata Operating profit AED m 1,196 1,224 1,061 1,005 863 815 784 500 559 467

Group Profit attributable to the Owner AED m 1,317 1,210 1,054 906 829 819 808 576 613 507

Financial Information Consolidated statement of financial position Non-current assets AED m 5,718 5,372 4,590 4,219 4,364 3,594 3,759 3,072 1,934 1,984 Emirates Financial Current assets AED m 8,574 6,675 6,388 5,427 4,303 3,977 3,360 3,328 2,704 1,963 Commentary - of which cash assets AED m 4,945 3,398 3,465 3,148 2,434 2,396 1,999 2,083 1,982 1,350 dnata Total assets AED m 14,292 12,047 10,978 9,646 8,667 7,571 7,119 6,400 4,638 3,947 Financial Commentary Total equity AED m 7,282 6,706 5,554 4,853 4,756 4,097 3,683 3,282 3,194 2,553 Emirates - of which equity attributable to the Owner AED m 7,103 6,539 5,387 4,788 4,674 4,028 3,614 3,209 3,194 2,553 Consolidated Financial Non-current liabilities AED m 1,734 1,542 1,362 1,213 1,386 1,351 1,275 1,115 672 697 Statements Current liabilities AED m 5,276 3,799 4,062 3,580 2,525 2,123 2,161 2,003 772 697 dnata Consolidated Consolidated statement of cash flows Financial Statements Cash flow from operating activities AED m 1,858 1,281 1,390 1,058 1,125 1,162 1,167 901 764 481 Cash flow from investing activities AED m (2,157) (961) (1,076) (697) 316 (1,910) (431) (1,333) 391 (71) Additional Information Cash flow from financing activities AED m 78 (146) (496) (344) (443) (343) (718) (96) (73) (68) Net change in cash and cash equivalents AED m (221) 174 (182) 17 998 (1,091) 18 (528) 1,082 342 Emirates Ten-Year Overview Other financial data dnata Ten Year Overview Cash assets AED m 4,945 3,398 3,465 3,148 2,434 2,396 1,999 2,083 1,982 1,350

Group Ten-Year Notes : Overview 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 Group Companies adopted on the effective dates applicable to dnata. of 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 3. Travel services direct costs are arising from the acquisitions of Stella Travel in 2014-15 and Gold Medal Travel Group in 2013-14 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. 3. Travel services direct costs are arising from the acquisitions of Stella Travel in 2014-15 and Gold Medal Travel Group in 2013-14.

184 THE EMIRATES GROUP ANNUAL REPORT 2017-18

Key ratios 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Operating margin % 9.1 10.0 10.0 11.0 11.4 12.3 13.6 11.3 17.7 14.7 Profit margin % 10.1 9.9 9.9 9.9 11.0 12.4 14.0 13.1 19.4 15.9 Return on shareholder's funds % 19.3 20.3 20.7 19.2 19.1 21.4 23.7 18.0 21.3 21.4

Employee Overview Average employee strength number 41,007 40,978 34,117 27,428 22,980 20,229 18,356 17,971 13,298 12,434

Emirates Revenue per employee AED '000 319 297 333 399 356 327 322 323 266 256 dnata Performance Indicators Group Airport Financial Aircraft handled number 659,591 623,611 389,412 298,298 288,335 264,950 253,434 232,585 192,120 177,495 Information Cargo handled tonnes '000 3,083 2,844 2,056 1,671 1,604 1,570 1,543 1,494 1,121 1,003 Emirates Catering Financial Commentary Meals uplifted number '000 55,718 60,747 57,062 57,687 41,275 28,584 26,708 11,743 dnata Travel services Financial Total transaction value (TTV) AED m 11,281 10,687 11,747 9,782 5,892 5,357 2,630 1,610 1,559 Commentary

Emirates Consolidated Financial Statements dnata Consolidated Financial Statements Notes : Additional Information 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. Emirates Ten-Year Overview 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. 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

185 THE EMIRATES GROUP ANNUAL REPORT Group ten-year overview 2017-18

Financial highlights 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Revenue and other operating income* AED m 102,409 94,706 92,896 96,053 87,766 77,536 66,149 57,224 45,405 45,231 Operating costs* AED m 97,127 91,047 83,505 89,155 82,643 73,882 63,552 51,281 41,281 42,486 Operating profit AED m 5,282 3,659 9,391 6,898 5,123 3,654 2,597 5,943 4,124 2,745 Operating margin % 5.2 3.9 10.1 7.2 5.8 4.7 3.9 10.4 9.1 6.1 Profit attributable to the Owner AED m 4,113 2,460 8,179 5,461 4,083 3,102 2,310 5,951 4,151 1,193

Overview Profit margin % 4.0 2.6 8.8 5.7 4.7 4.0 3.5 10.4 9.1 2.6 Dividend AED m 2,000 - 2,500 2,569 1,026 1,000 850 2,208 1,556 2,001 Emirates dnata Financial position

Group Total assets** AED m 141,625 133,281 129,989 120,886 110,100 102,188 84,127 71,402 60,147 51,358 Cash assets AED m 25,365 19,066 23,453 20,033 18,995 26,968 17,586 16,056 12,493 8,718 Financial Information

Emirates Employee data Financial Average employee strength number 103,363 105,746 95,322 84,153 75,496 67,907 60,778 56,768 49,950 48,246 Commentary * After eliminating inter company income/expense of the year dnata ** After eliminating inter company receivables/payables as at year end Financial Commentary

Emirates Consolidated Financial Statements dnata Consolidated Financial Statements

Additional Information

Emirates Ten-Year Overview dnata Ten Year Overview

Group Ten-Year Notes : Overview 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 Group Companies existing IFRS have been adopted on the effective dates applicable to the Emirates Group. of 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 Group Companies have not been amended. 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.

186 THE EMIRATES GROUP ANNUAL REPORT Group companies of Emirates 2017-18 Hotel operations, food and Air transportation and related services Catering services Consumer goods beverage operations and others Emirates Emirates Emirates Emirates

100% Maritime and Mercantile International 100% The High Street LLC (UAE) 90% Emirates Flight Catering Co. (LLC) (UAE) Holding LLC (UAE) 100% Emirates Hotels (Australia) Pty Ltd

100% Maritime and Mercantile International 100% Transguard Aviation Security LLC (UAE) Maldives Pvt Ltd 100% Emirates Hotel LLC (UAE)

100% Emirates Land Development Services LLC 50% CAE Flight Training (India) Pvt Ltd 63% Prembev International FZE (UAE) (UAE)

Overview 100% Brand 2 Consumer (Pty) Ltd 100% Emirates Leisure Retail (Holding) LLC 50% CAE Middle East Holdings Ltd (UAE) (South Africa) (UAE) Emirates 50% CAE Simulation Training Pvt Ltd (India) 100% Queen OS Trading FZE (UAE) 100% Emirates Leisure Retail (Australia) Pty Ltd dnata

Group 50% Emirates - CAE Flight Training LLC (UAE) 90% Seyvine Ltd (Seychelles) 100% ELRA Properties Pty Ltd (Australia) 100% Hudcom Pty Ltd (Australia) Financial 68.7% Maritime and Mercantile International 100% Hudsons Pty Ltd (Australia) Information LLC (UAE) 100% Hudsons Airport Launceston Pty Ltd (Australia) 100% Hudsons Albury Pty Ltd (Australia) Emirates 100% Hudsons Bendigo Pty Ltd (Australia) Financial 100% Duty Free Dubai Ports FZE (UAE) Commentary 100% Hudsons Bourke Spring Pty Ltd (Australia) 100% Hudsons Elizabeth (Melb) Pty Ltd (Australia) 100% Harts International LLC (UAE) dnata 100% Hudsons Epworth Richmond Pty Ltd (Australia) Financial 100% Hudsons Gawler Pty Ltd (Australia) Commentary 100% Golden Globe (BVI) Ltd 100% Hudsons George (Bris) Pty Ltd (Australia) 100% Hudsons Grenfell Currie Pty Ltd (Australia) Emirates 100% Hudsons Hospital Australia Pty Ltd (Australia) Consolidated 50% Arabian Harts International Ltd Financial (BVI)* 100% Hudsons Hospitals Nth Adelaide Pty Ltd (Australia) Statements 100% Hudsons Hospitals S.A. Pty Ltd (Australia) 100% Harts International Retailers (Middle East) FZE (UAE) 100% Hudsons Hospitals Victoria Pty Ltd (Australia) dnata 100% Hudsons King William Pty Ltd (Australia) Consolidated 100% Maritime and Mercantile International 100% Hudsons Launceston Pty Ltd (Australia) Financial FZE (UAE) Statements 100% Hudsons Little Collins Flinders Pty Ltd (Australia) 100% Hudsons Liverpool Pty Ltd (Australia) Additional 70% Oman United Agencies LLC 100% Hudsons Murray Pty Ltd (Australia) Information 100% Hudsons Myer Stores Pty Ltd (Australia) 92.5% Sohar Catering & Supplies LLC 100% Hudsons Shepparton Pty Ltd (Australia) Emirates Ten-Year (Oman) 100% Hudsons WA Airports Pty Ltd (Australia) Overview 100% Hudsons William Pty Ltd (Australia) 67.1% Onas Trading LLC (Oman) dnata Ten Year Overview 100% Emirates Leisure Retail (Singapore) Pte Ltd 50% Sirocco FZCO (UAE) Group Ten-Year 100% Emirates Leisure Retail (New Zealand) Overview 49% Fujairah Maritime and Mercantile Pte Ltd International LLC (UAE) Group Companies of Emirates 68.7% Emirates Leisure Retail LLC (UAE) 50% Focus Brands Ltd (BVI) Group Companies 100% Community Club Management FZE (UAE) of dnata 50% MMI Tanzania Ltd

Glossary 51% Premier Inn Hotels LLC (UAE) 49% Independent Wine & Spirit (Thailand) Co. Ltd 49% Premier Inn Hotels Qatar WLL 40% Zanzibar Maritime and Mercantile Note: Percentages indicate beneficial interest in the company, legal shareholdings may be different. International Co. Ltd (Tanzania) The country of incorporation is same as country of principal operations. *Country of principal operations is UAE. 187 THE EMIRATES GROUP ANNUAL REPORT Group companies of dnata 2017-18 Airport Operations Catering dnata dnata

100% Dnata Aviation Services Limited (UK) 100% dnata, Inc. (Philippines) 100% Dnata Catering Services Limited (UK)

100% Airline Cleaning Services Pty Ltd (Australia) 100% dnata Clark Inc. (Philippines) 100% Alpha Flight Group Ltd (UK) 100% En Route International Ltd (UK)

100% Dnata International Airport Services Pte 100% Alpha Flight Services Pty Ltd 100% dnata Aviation Services US Inc. (USA) Ltd (Singapore) (Australia) 100% En Route International Australia Pty Ltd Overview 100% ALX Cargo Centre IAH LLC (USA) 100% CIAS International Pte Ltd (Singapore) 100% Alpha ATS Pty Ltd (Australia) 100% En Route International General Trading LLC (UAE) Emirates 100% dnata Aviation USA Inc. 100% dnata Singapore Pte Ltd (Singapore)* 100% Alpha Flight US Inc. 100% En Route International Japan Ltd dnata

Group 100% Ground Services International Inc. 20% Guangzhou Baiyun International 100% Alpha In-flight US LLC 100% En Route International Limited (USA) Airport Ground Handling Services Co. Ltd (Hong Kong) (P. R. China) Financial 100% Dnata Catering Canada Limited 100% En Route International South Africa Information 100% Metro Air Service Inc. (USA) 75% Guangzhou Baiyun International (Canada) (Pty) Ltd Airport Facilities Management & Emirates Operation Corp Ltd (P. R. China) 100% dnata Catering Ireland Ltd Financial 100% dnata BV (The Netherlands) (Ireland) 100% En Route International USA, Inc. Commentary 70% Guangzhou Baiyun International 100% dnata Limited (UK) 100% dnata srl (Italy) 50% Mountainfield Investments (Pty) Ltd Airport Cleaning Services Corp Ltd (South Africa) dnata (P. R. China) Financial Commentary 100% dnata Cargo Limited (UK) 80% Alpha Flight a.s. (Czech Republic) 100% dnata Newrest (Pty) Ltd (South Africa) 95% Air Dispatch (CLC) s.r.o. (Czech Republic) Emirates Consolidated 100% dnata Ground Limited (UK) 64.2% dnata Catering srl (Romania) Financial 100% Air Dispatch (CLC) Spolka z.o.o. (Poland) Statements 22.6% Airports Bureau Systems Ltd (UK) 80% Dnata Airport Services Kurdistan 50% Alpha LSG Ltd (UK) dnata (Cayman Islands) Consolidated Financial 100% dnata Pty Ltd (Australia) 100% Dnata for Airport Services Ltd 100% Alpha Flight UK Ltd Statements (Kurdistan, Iraq) 100% dnata Airport Services Pty Ltd. 49% Alpha Flight Services UAE LLC Additional (Australia) 50% Gerry’s Dnata (Private) Ltd (Pakistan) Information 100% Airport Handling Services Australia 35.9% Jordan Flight Catering Company Ltd Emirates Ten-Year Pty Ltd Overview 100% dnata Aviation Services Canada Limited 28.7% Silver Wings OOD (Bulgaria) dnata Ten Year Overview 50% G.T.A. Dnata Ground Handling Limited 99.2% Consortium Alpha DZZD (Canada) (Bulgaria) Group Ten-Year Overview 50% G.T.A. Dnata World Cargo Limited (Canada) Group Companies of Emirates 100% Dnata Switzerland AG Group Companies of dnata 30% GVAssistance SA (Switzerland)

Glossary 70% RM Servicos Auxilliares de Transporte Aereo S/A (Brazil)

30% Airport Handling SpA (Italy) Note: Percentages indicate beneficial interest in the company, legal shareholdings may be different. The country of incorporation is same as country of principal operations. 188 * Also provides catering services THE EMIRATES GROUP ANNUAL REPORT Group companies of dnata 2017-18 Travel services Freight forwarding services dnata / dnata World Travel dnata / dnata World Travel dnata

100% Cleopatra International Travel WLL 100% Maritime and Mercantile International (Bahrain) Travel LLC (UAE) 100% dnata Aviation Services Holdings Limited 50% Dnata-PWC Airport Logistics LLC (UAE)

100% dnata International Private Ltd (India) 76.9% Oman United Agencies Travel LLC 100% Destination Asia (Singapore) Pte Limited 50% Dubai Express LLC (UAE)

100% Sama Travel & Services International 100% dnata Marketing Services Pvt Ltd (India) LLC (Oman) 45% PT Destinasi Asia Indonesia 50% Freightworks Logistics LLC (UAE)

Overview 100% dnata Travel and Tourism WLL 29% Destination Asia Destination (Bahrain) 50% Moon Travel LLC (Oman) Management Sdn Bhd (Malaysia) 25.5% Bolloré Logistics LLC (UAE) Emirates 100% dnata Travel Holdings UK Limited 100% Najm Travel LLC (UAE)* 25% Destination Asia Ltd (Hong Kong) dnata Others Group 25% Destination Group Asia (Hong Kong) 100% Gold Medal International Limited (UK) 100% Travel Partners LLC (UAE) Limited dnata Financial 100% Travel Partners Iberian, Sociedad 100% Plafond Fit Out LLC (UAE) Information 100% Airline Network plc (UK) Limitada (Spain) 25% PT Destination Asia (Indonesia)

Emirates 25% DMC Management Asia Services Limited 100% Transecure LLC (UAE) Financial 100% Gold Medal Travel Group plc (UK) 100% Travel Partners (London) Limited (UK) (Hong Kong) Commentary 100% Gold Medal Transport Ltd (UK) 75% Super Bus Tourism LLC (UAE) 25% Destination Asia (Thailand) Limited 50% Transguard Group LLC (UAE) dnata Financial Commentary 70% dnata Travel Company Limited (Saudi 100% CASS International General Trading LLC 100% Stella Global UK Limited Arabia) 25% Destination Asia (Vietnam) Limited (UAE) Emirates Consolidated 100% The Global Travel Group Limited (UK) 50% G Travel International LLC (UAE) 25% Huan Ya Feng Jing International 50% Transguard Cash LLC (UAE) Financial Company Limited (China) Statements 100% Personalised Travel Services Limited 25% DMC Asia Management Services Limited 100% Transguard Group International LLC (UK) 51% Imagine Enterprises Limited (UK) (Hong Kong) (UAE) dnata Consolidated 100% Holiday Planet PTY Ltd 100% Transguard Group Cash KSA LLC (UAE) Financial 100% Sunmaster Limited (UK) (Australia) 25% Destination Asia Japan Limited Statements 51% Transguard Group International LLC Additional 100% Stella Travel Services (UK) Limited 100% Imagine Cruising Limited (UK) (Oman) Information 100% Travel 2 Limited (UK) 100% Imagine Transport Limited (UK) 9.1% Canary Topco Ltd (UK) Emirates Ten-Year Overview 100% Travelbag Limited (UK) 100% Imagine Cruising Pty Ltd (Australia) dnata Ten Year Overview 100% Imagine Cruising (Pty) Ltd (South 100% dnata Travel Inc. (Philippines) Africa) Group Ten-Year Overview 50% Al Tawfeeq Travel (Dnata Travel) WLL 100% Dnata Travel (UK) Limited (Qatar) Group Companies of Emirates 100% dnata World Travel Limited (UK) 50% Dunya Travel LLC (UAE) Group Companies of dnata 100% Travel Technology Investments Limited (UK) 100% Dunya Air Services LLC (UAE) Glossary 100% Travel Republic Holdings Limited (UK) 50% Najm Travels LLC (Afghanistan)

100% Travel Republic Limited (UK) 50% Travel Counsellors 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. 22% Hogg Robinson Group Plc (UK) *Country of principal operations is Iraq. 189 THE EMIRATES GROUP ANNUAL REPORT Glossary 2017-18

A E O T

Acquisitions – The sum of purchase EBITDAR – Operating profit before Operating cash margin – Cash Total revenue – Sum of revenue and 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 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 Overview 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 Emirates Traffic – see RTKM seats available multiplied by the distance revenue and other operating income. Equity ratio – Total equity divided by dnata flown. Transport revenue – The sum of total assets. Overall load factor – RTKM divided by passenger, cargo and excess baggage Group ATKM (Available Tonne Kilometre) ATKM. revenue. – Overall capacity measured in tonnes F Financial available for carriage of passengers P Information U and cargo load multiplied by the Fixed to floating debt mix – Ratio of fixed rate debt to floating rate debt. Passenger seat factor – RPKM divided Emirates distance flown. Unit cost (Fils per ATKM) – Operating costs Financial The ratio is based on net debt including by ASKM. (airline only) incurred per ATKM. Commentary aircraft operating leases. B Passenger yield (Fils per RPKM) – dnata Free cash flow – Cash generated from Passenger revenue divided by RPKM. Y Financial Breakeven load factor – The load factor Commentary operating activities less cash used in at which revenue will equal operating Profit margin – Profit attributable to the investing actvities adjusted for the Yield (Fils per RTKM) – Revenue (airline costs. Owner expressed as a percentage of sum Emirates movement in short term bank deposits. only) earned per RTKM. Consolidated of revenue and other operating income. Financial Statements C Freight yield (Fils per FTKM) – Cargo revenue divided by FTKM. R dnata Capacity – see ATKM Consolidated FTKM - Cargo tonnage uplifted Return on shareholder’s funds – Profit Financial Capital expenditure – The sum multiplied by the distance carried. attributable to the Owner expressed as a Statements of additions to property, plant and percentage of shareholder’s funds. equipment and intangible assets Additional N Information excluding goodwill. RPKM (Revenue Passenger Kilometre) Net debt – Borrowings and lease – Number of passengers carried Emirates Ten-Year Capitalised value of aircraft operating liabilities (current and non-current) net multiplied by the distance flown. Overview lease costs – 60% of future minimum of cash assets. dnata Ten Year lease payments for aircraft on operating RTKM (Revenue Tonne Kilometre) – Overview lease. Net debt to equity ratio – Net debt in Actual traffic load (passenger and cargo) relation to total equity. carried measured in terms of tonnes Group Ten-Year Cash assets – The sum of short term multiplied by the distance flown. Overview bank deposits and cash and cash Net debt including aircraft operating equivalents. Group Companies leases - The sum of net debt and the S of Emirates capitalised value of aircraft operating D lease costs. Shareholder’s funds – Average of Group Companies of dnata opening and closing equity attributable Dividend payout ratio – Dividend to the Owner. Glossary accruing to the Owner divided by profit attributable to the Owner.

190 Emirates P.O. Box 686, Dubai, United Arab Emirates, emirates.com dnata P.O. Box 1515, Dubai, United Arab Emirates, dnata.com

ekgroup.com