EasyJet 2013 Annual Report Download - page 106

 easyJet plc Annual report and accounts 2013
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Notes to the accounts continued
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easyJet contributes to defined contribution pension schemes for the benefit of employees. easyJet has no further
payment obligations once the contributions have been paid. The assets of the schemes are held separately from those
of easyJet in independently administered funds. easyJet’s contributions are charged to the income statement in the year
in which they are incurred.
The expected cost of compensated holidays is recognised at the time that the related employees’ services are provided.
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Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company or employee benefits trust purchases the Company’s equity shares, the consideration paid
and any directly attributable incremental costs are deducted from retained earnings until the shares are cancelled or
reissued. Proceeds from re-issue are shown as a credit to retained earnings.
easyJet settles share awards under the Long Term Incentive, Sharesave and Share Incentive Plans by purchasing its own
shares on the market through employee benefit trusts. The cost of such purchases is deducted from retained earnings
in the period that the transaction occurs.
Dividend distributions to the Company’s shareholders are recognised as a liability in the period in which the dividends are
approved by the Company’s shareholders.
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easyJet has a number of equity-settled share incentive schemes. The fair value of share options granted under the
Discretionary and Sharesave scheme is measured at the date of grant using the Binomial Lattice option pricing model.
The fair value of grants under the Long Term Incentive Plan is measured at the date of grant using the Black-Scholes
model for awards based on ROCE performance targets, and the Stochastic model (also known as the Monte Carlo
model) for awards based on total shareholder return (TSR) performance targets. The fair value of all other awards
is the share price at the date of grant.
The fair value of the estimated number of options and awards that are expected to vest is expensed to the income
statement on a straight line basis over the period that employees’ services are rendered, with a corresponding increase
in shareholders’ equity. Where non market performance criteria (such as ROCE) attached to the share options and
awards are not met, any cumulative expense previously recognised is reversed. For awards with market related
performance criteria (such as TSR), an expense is recognised irrespective of whether the market condition is satisfied.
The social security obligations payable in connection with grant of the share options is an integral part of the grant itself
and the charge is treated as a cash-settled transaction.
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easyJet has one operating segment, being its route network, based on management information provided to the
Executive Management Team; which is easyJet’s Chief Operating Decision Maker. Resource allocation decisions are
made for the benefit of the route network as a whole, rather than for individual routes within the network. Performance
of the network is assessed based on the consolidated profit or loss before tax for the year.
Revenue is allocated to geographic segments on the following bases:
Revenue earned from passengers is allocated according to the location of the first departure airport on each booking;
Commission revenue earned from partners is allocated according to the domicile of each partner.
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The following standards and interpretations issued by the International Accounting Standards Board have been
implemented for the year ended 30 September 2013:
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IAS 1 Presentation of Items of Other Comprehensive Income
IAS 12 Deferred Tax (Recovery of Underlying Assets)
The adoption of these standards and interpretations has not led to any changes in accounting policies.
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The following new or revised standards and interpretations issued by the International Accounting Standards Board have
not been applied in preparing these accounts as their effective dates fall in periods beginning after 1 October 2013.
104 easyJet plc Annual report and accounts 2013