EasyJet 2012 Annual Report Download - page 73

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Basis of consolidation
The consolidated accounts incorporate those of easyJet plc and its subsidiaries for the years ended 30 September 2011 and 2012.
A subsidiary is an entity controlled by easyJet. Control exists when easyJet has the power, directly or indirectly, to govern the financial
and operating policies of an entity so as to benefit from its activities.
Intragroup balances, transactions and any unrealised gains and losses arising from intragroup transactions are eliminated in preparing
the consolidated accounts.
Foreign currencies
The primary economic environment in which a subsidiary operates determines its functional currency. The consolidated accounts
of easyJet are presented in sterling, which is the Company’s functional currency and the Group’s presentation currency. Certain
subsidiaries have operations that are primarily influenced by a currency other than sterling. Exchange differences arising on the
translation of these foreign operations are taken to reserves until all or part of the interest is sold, when the relevant portion of the
exchange gains or losses is recognised in the income statement. Profits and losses of foreign operations are translated into sterling at
average rates of exchange during the year, since this approximates the rates on the dates of the transactions.
Transactions arising in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are translated into sterling using the rate of exchange ruling at the balance sheet date
and (except where the asset or liability is designated as a cash flow hedge) the gains or losses on translation are included in the income
statement. Non-monetary assets and liabilities denominated in foreign currencies are translated into sterling at foreign exchange rates
ruling at the dates the transactions were effected.
Revenue recognition
Revenue comprises seat revenue, being the value of airline services (net of air passenger duty, VAT and discounts), and
non-seat revenue.
Seat revenue arises from the sale of flight seats, including the provision of checked baggage, speedy (priority) boarding services,
booking, credit card and change fees. Seat revenue is recognised when the service is provided. This is generally when the flight takes
place, but in the following cases, this is at the time of booking:
→Booking and credit card fees as they are contractually non-refundable,
→Change fees as the service provided is that of allowing customers to change bookings.
Amounts paid by "no-show" customers are recognised as seat revenue when the booked service is provided as such customers are not
generally entitled to change flights or seek refunds once a flight has departed.
Unearned revenue represents flight seats, including the provision of checked baggage and speedy (priority) boarding services, sold but
not yet flown and is included in trade and other payables until it is realised in the income statement when the service is provided.
Non seat revenue arises from commissions earned from services sold on behalf of partners. Non seat revenue is recognised when the
service is provided. This is generally when the related flight takes place. In the case of commission earned from travel insurance,
revenue is recognised at the time of booking as easyJet acts solely as appointed representative of the insurance company.
During the year, the classification between seat and non-seat revenue has been revised and the comparative data has been reclassified
to conform to the current year presentation.
Business combinations
Business combinations in prior years were accounted for by applying the purchase method. The cost of the acquisition is measured
at the aggregate of the fair values, at the date of exchange, of assets given and liabilities incurred or assumed plus any costs directly
attributable to the business combination. The acquiree’s identifiable assets and liabilities are recognised at their fair values at the
acquisition date. There have been no business combinations since the effective date of IFRS 3 Business Combinations (Revised).
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over easyJet’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.
Accounts & other information
easyJet plc
Annual report and accounts 2012 71