FINANCIAL REPORT AND ANALYSIS

1.0

INTRODUCTION

1.1 1.2

OBJECTIVE AIR ASIA COMPANY 1.2.1 1.2.2 1.2.3 1.2.4 VISION & MISSION AND VALUES PROFILE PRODUCT FINANCIAL STATEMENT (ANNUAL REPORT VIEW)

2-5 6 6-7 7 8

1.3

HORIZONTAL AND VERTICAL

2.0

CALCULATION AND MEASURING

2.1

RATIO ANALYSIS 2.1.1 2.1.2 PROFITABILITY RATIO SOLVENCY RATIO

3.0

CONCLUSION

4.0

REFERRENCE

4.1 4.2

COMPANY ANNUAL REPORT 2010, 2009, 2008 OTHER REFFERENCE

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FINANCIAL REPORT AND ANALYSIS

In the name of Allah, the most beneficent and merciful who gave us strength and knowledge to complete this report. This report is a part of our course Accounting Business. This has proved to be a great experience. This report is a combine effort of our group. We would like to express our gratitude to our accounting lecture Ms. Hazeline Ayoup; who gave us this opportunity to fulfil this report. We would also like to thank our colleagues who participated in a focus group session. They gave us many helpful comments which helped us a lot in preparing our report.

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FINANCIAL REPORT AND ANALYSIS

1.0

INTRODUCTION

1.1

OBJECTIVE a. General Purpose Financial Reporting

In view of the information needs of the users of general purpose financial reports identified in the preceding paragraphs, the position adopted in this Statement is that the objective of general purpose financial reporting is to provide information to users that are useful for making and evaluating decisions about the allocation of scarce resources.

When general purpose financial reports meet this objective they will also be the means by which managements and governing bodies discharge their accountability to the users of the reports. The provision of information for accountability purposes is an important function of the process of general purpose financial reporting, particularly in relation to public sector entities and non-business entities in the private sector. However, the rendering of accountability by reporting entities through general purpose financial reporting is encompassed by the broader objective of providing information useful for making and evaluating decisions about the allocation of scarce resources, since users will ultimately require the information for resource allocation decisions.

b. Types of Information Relevant to Users' Needs The particular information users require for making and evaluating resource allocation decisions will overlap since all users will be interested, to varying degrees, in assessing whether the reporting entity is achieving its objectives and is operating economically and efficiently in the process, in assessing the ability of the entity to continue to provide goods and services in the future, and in confirming that resources have been used for the purposes intended. General purpose financial reports can provide information useful for these purposes by disclosing information about the performance, financial position, and financing and investing of the reporting entity, including information about compliance. The information useful for these purposes may be both historical and prospective in nature. Paragraphs 29 to
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FINANCIAL REPORT AND ANALYSIS

40 provide examples of information that users may require for making and evaluating decisions about the allocation of scarce resources.

c. Performance Aspects of the performance of a reporting entity can be measured in financial and nonfinancial terms. Disclosure of the revenues generated by the entity during the reporting period and the expenses incurred in generating this revenue, together with the assets, liabilities and equity of the entity at the end of the reporting period, will provide users with information to assist them to assess the financial performance of the entity over the reporting period. The information will be useful in determining the cost of providing goods and services and the change in the entity's control over resources during the reporting period. In relation to business entities, users will be able to evaluate the change in the entity's control over resources by reference to the resources or funds employed by the entity in achieving the change. In terms of the purposes for which users require information, as identified in paragraphs 21 to 25, this information is relevant to the users of general purpose financial reports of business entities in predicting both the capacity of the entity to generate cash from its existing resource base and the effectiveness with which it would employ additional resources. In relation to non-business entities, the information is useful in assessing the resources necessary to enable the entity to continue to provide services in the future and the likely cost of those services.

Non-financial measures of performance may also be relevant to users for the purposes identified, particularly in relation to non-business entities. The absence of a profit or rate of return objective for these entities means that financial measures of performance are unlikely to be sufficient to assess fully the extent to which those entities have achieved their objectives, which typically include social as well as financial dimensions. The extent to which nonfinancial performance measures can be considered to fall within the scope of general purpose financial reporting will be the subject of a separate Statement of Accounting Concepts.

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FINANCIAL REPORT AND ANALYSIS

In the public sector, information about government policies that affect a reporting entity's operations may be relevant to assessments of performance. For example, it may be relevant that an entity is subject to a government policy of break-even pricing or a stipulated target rate of return on assets.

d. Financial position Disclosure of information about the financial position of the reporting entity involves disclosure of information about its control over resources, financial structure, capacity for adaptation and solvency.

The disclosure of information about the resources over which the entity has control, that is, disclosure of its assets, is relevant to users for making and evaluating decisions about the allocation of scarce resources. In terms of the purposes for which users require information, as identified in paragraphs 21 to 25, the information is useful in predicting the ability of the entity to continue to meet its objectives, whether these relate to the generation of positive cash flows in the future or the continued provision of goods and services.

The disclosure of information about the financial structure of the entity, that is, the sources, types and time patterns of finance, whether debt or equity, and the types of assets used by the entity, is relevant to users for making and evaluating decisions about the allocation of scarce resources. In particular, it is useful in predicting the future distribution of cash flows among providers of resources and the ability of the entity to attract resources in the future, and in assessing the extent to which restrictions and limitations on the uses to which the entity's resources can be put will affect the ability of the entity to meet its objectives.

The disclosure of information about the capacity of the reporting entity to modify the composition of the resources under its control is relevant to making and evaluating decisions about the allocation of scarce resources. Such modification may be required by changes in the environment within which the entity operates or in response to directives from controlling
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FINANCIAL REPORT AND ANALYSIS

bodies. In this respect, disclosure of information on the location, realisable value and current state of repair of the entity's assets would be relevant to users, as would disclosure of any restrictions that may have been imposed on the entity regarding its use of the assets.

Information about the solvency of the entity, that is, information about the availability of assets to meet financial commitments as they fall due, is relevant for making and evaluating decisions about the allocation of scarce resources. This information, such as disclosure of the liquidity of the entity's assets and the availability of cash from sources external to the entity, is useful in predicting the ability of the entity to meet its financial commitments as they fall due and, therefore, in predicting the ability of the entity to continue to provide goods and services in the future.

In the public sector, the ability of an entity to continue to provide goods and services in the future will, in addition to the dimensions of financial position outlined in paragraph 32, be influenced by government policy objective

e. Financing and investing Information about financing and investing, for example, disclosure of the sources and applications of funds during the reporting period, is relevant for making and evaluating decisions about the allocation of scarce resources. This information indicates the way in which the reporting entity has financed its operations and invested its resources during the reporting period. It is useful to users in confirming that resources have been used for the purposes intended and, as an input to assessing the solvency of the entity and analysing the change in the entity's financial position, it is useful in assessing the ability of the reporting entity to continue to provide goods and services in the future and in assessing whether the reporting entity is achieving its objectives.

UNIVERSITY UTARA MALAYSIA |COB

FINANCIAL REPORT AND ANALYSIS

1.2

AIR ASIA COMPANY

After discuss in our group project, we were choosing the Air Asia company. This company is a type of services business and become very popular among the world in nowadays. This company is one of the best and cheapest fare airlines in this Malaysia and also they had wins many reward and recognition. Air Asia is one of big company and very well-known around the world. The motto of Now Everyone Can Fly thats means these Air Asia airline compared with other airlines, the fare cost are at the very lowest and cheapest that capable by every people to buy. It does also provide various destinations to go off all over the country also around the world.

1.3

COMPANY VISION & MISSION AND VALUES

Vision
To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares.

Mission

To be the best company to work for whereby employees are treated as part of a big family

Create a globally recognized ASEAN brand To attain the lowest cost so that everyone can fly with Air Asia Maintain the highest quality product, embracing technology to reduce cost and enhance service levels

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FINANCIAL REPORT AND ANALYSIS

Values
Make the low fare model possible through the implementation of the following key strategies,

Safety First: Partnering with the worlds most renowned maintenance providers and complying with the with world airline operations.

High Aircraft Utilisation: Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity.

Low Fare, No Frills: Providing guests with the choice of customizing services without compromising on quality and services.

Streamline Operations: Making sure that processes are as simple as possible.

Lean Distribution System: Offering a wide and innovative range of distribution channels to make booking and travelling easier.

Point to Point Network: Applying the point-to-point network keeps operations simple and costs low.

1.4

COMPANY PROFILE

Asias leading airline was established with the dream of making flying possible for everyone. Since 2001, Air Asia has swiftly broken travel norms around the globe and has risen to become the worlds best. With a route network that spans through more than 20 countries, Air Asia continues to pave the way for low-cost aviation through their innovative solutions, efficient processes and a passionate approach to business. Together with their associate companies, Air Asia X, Thai Air Asia and Indonesia Air Asia, Air Asia is set to take low-cost flying to an all new high with our belief, "Now Everyone Can Fly".

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FINANCIAL REPORT AND ANALYSIS

1.5

COMPANY PRODUCT

Air Asia is a low cost airline based in Kuala Lumpur, Malaysia. It operates scheduled domestic and international flights and is Asias largest low fare, no frills airlines. Air Asia pioneered low cost travelling in Asia. It is also the first airline in the region to implement fully ticketless travel and unassigned seats. Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai Air Asia and Indonesia Air Asia fly from Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport, Indonesia, respectively.

The airlines established in 1993 and started operations on 18 November 1996. It was originally founded by a government-owned conglomerate DRB Hicom. On December 2, 2001 the heavily indebted airlines was purchased by the former Time Warner executive Tony Fernandess company Tune Air Sdn Bhd for the token sum of one ringgit. Fernandes proceeded to engineer a remarkable turnaround, turning a profit in 2002 and launching new routes from its hub in Kuala Lumpur International Airport at breakneck speed, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as RM1 (US $ 0.29).

Air Asia operates with the worlds lowest unit cost of US$0.023/ASK and a passenger breakeven load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines and achieves an average aircraft utilization rate of 13 hours a day.

Air Asia currently is the main customer of the Airbus A 320. The company has placed an order of 175 units of the same plane to service its routes and at least 50 of these A320 will be operational by 2013. The first unit of the plane arrived on 8 December, 2005.

UNIVERSITY UTARA MALAYSIA |COB

FINANCIAL REPORT AND ANALYSIS

2.0

CALCULATION AND MEASURING

UNIVERSITY UTARA MALAYSIA |COB