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FINANCIAL STATEMENTS Aer Lingus Group Plc
ANNUAL REPORT 2012
70
• Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12). The amendments are subject to EU endorsement. The amendments
clarify the Board’s intention when first issuing the transition guidance in IFRS 10 and provide similar relief from the presentation or adjustment
of comparative information for periods prior to the immediately preceding period. (effective date: Aer Lingus financial year commencing 1
January 2014)
• IFRS 9 Financial instruments. The standard is subject to EU endorsement. IFRS introduces new requirements for classifying and measuring
financial assets and is likely to affect the Group’s accounting for its financial assets. IFRS 9 replaces the multiple classification models in
IAS 39 with a single model that has only two measurement categories: amortised cost and fair value. Classification under IFRS 9 is driven
by the entity’s business model for managing financial assets and the contractual characteristics of the financial assets. IFRS 9 removes the
requirement to separate embedded derivatives from financial asset hosts. IFRS 9 removes the cost exemption for unquoted equities (effective
date: Aer Lingus financial year commencing 1 January 2015)
Other than IFRS 9, for which the Directors have not yet had an opportunity to consider the potential impact of adoption, the above standards and
amendments are not expected to have a significant impact on the Group’s financial statements.
2.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisitions of subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given as consideration, equity instruments issued and liabilities incurred or assumed at the date of
exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over
the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair
value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Inter-company transactions and balances and unrealised gains on transactions between group companies, are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements of all subsidiaries are drawn up to the year ended 31 December. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
(b) Joint ventures
In accordance with IAS 31 Interests in Joint Ventures, the Group’s share of results and net assets of joint ventures, which are entities in which
the Group holds an interest on a long-term basis and which are jointly controlled by the Group and one or more other venturers under a
contractual arrangement, are accounted for using the equity method, from the date on which the contractual agreements stipulating joint
control are finalised, and are derecognised when joint control ceases. The Group’s single joint venture is a jointly controlled entity within
the meaning of IAS 31. The Group’s interest in the net assets of joint ventures is reported as Investment in joint venture in the consolidated
statement of financial position and its interest in their results is included in the Consolidated Income Statement, below Operating profit. In
some cases, results and net assets are incorporated in the Group’s financial statements on the basis of unaudited management accounts. See
Note 16 for further details on the Group’s investment in its Joint Venture.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified
as the Chief Executive Officer, Christoph Mueller.
Notes to the consolidated financial statements (continued)