Aer Lingus 2012 Annual Report Download - page 93

FINANCIAL STATEMENTS Aer Lingus Group Plc
ANNUAL REPORT 2012
91
Reconciliation of depreciation charge
2012 2011
€’000 €’000
Included in accumulated depreciation in consolidated statement of financial position
Depreciation of property, plant and equipment 76,634 81,913
Amortisation of intangible assets (Note 15) 2,819 2,934
79,453 84,847
Depreciation and amortisation charged to the income statement
Depreciation and amortisation 76,079 79,808
Other revenue
1
3,041 5,039
Ground operations, catering and other operating costs
2
333 -
79,453 84,847
1
Depreciation reflected in other revenue relates to depreciation incurred on the aircraft used in the extended codeshare agreement with United
Airlines. The Group’s share of the net profit or loss associated with its extended codeshare agreement with United Airlines is reported within
Other revenue.
2
Amortisation of the licence to occupy DAA plc owned property is reported within Ground operations, catering and other operating costs. Refer
to Note 15 for further detail.
Impairment tests for items of property, plant and equipment are performed on a cash generating unit basis when impairment triggers arise. One
such impairment trigger indicated by IAS 36 Impairment of Assets is where the carrying amount of an entity’s net assets is more than its market
capitalisation. As at 31 December 2012, the market capitalisation of the Group was less than its net asset value and an impairment assessment
was performed to determine whether long-lived assets were impaired.
Assets are deemed to be impaired when their carrying value is higher than their recoverable value. The recoverable values are based on the
higher of fair value less costs to sell and value-in-use. A value-in-use basis was used by the Group to calculate recoverable value with the entire
business treated as a single cash generating unit. The Group believes that a single cash generating unit is the appropriate level at which to test
impairment on the basis that its fleet assets are interdependent and are deployed through a single route planning system. Cashflows for individual
fleet assets cannot be determined as such cashflows are dependent on how each plane is deployed and given the inter-changeability of fleet
assets, the Group has determined that, the Group as a whole represents the smallest identifiable group of assets that generate independent
cashflows. Value-in-use calculations are based on cash flow projections contained in forecasts approved by the Board of Directors for the
remaining life of the assets in question and exclude expansion capital expenditure. The cash flow projections are discounted using a discount rate
representing the Group’s estimated average cost of capital (2012: 10.24%, 2011: 10.20%). Sensitivity analysis was performed reflecting potential
variations in assumptions about future trading and the discount rate. In all cases the recoverable values calculated were in excess of the carrying
value of the cash generating unit.
No impairment charges arose during 2012 or 2011 for property, plant and equipment, other than the adjustments to the carrying value of the
owned A320 aircraft previously held for sale as described above.
Notes to the consolidated financial statements (continued)