Annual Report 1999 in PDF - Aer Lingus

AER LINGUS GROUP PLC3. Exceptional ItemsDetails of Exceptional Items under the captions indicated within the profit and loss account are set out below.1999 1998e000e000Continuing OperationsTurnover/Selling and Marketing Expenses- Passenger sales (a) 30,220 -Employee Participation (b) (5,993) -Profit on Disposal of Fixed Assets- Disposals of aircraft and flight equipment 10,779 -Costs of Fundamental Restructuring- Strategic alliance (c) (1,415) -Writedown of Fixed Assets- Aircraft and flight equipment (d) - (6,014)33,591 (6,014)Discontinued Operations(Loss)/Profit on Exit from Non-Core Activities- Maintenance activities (e) (56,097) -- Ground and cargo handling (f) (8,195) -- Equant NV (g) 13,059 -- GPA Group - 9,821- Fernley Airport Services - 740- Other 6,373 (196)(44,860) 10,365Net Exceptional Items (11,269) 4,351(a)(b)The Group has revised its method of estimating and recognising revenue relating to expired coupons. Included as anexceptional item in the 1999 accounts is an exceptional net credit of e30.2 million which relates to the financial years1998 and prior, resulting from the adoption of the revised methodology. In addition to the exceptional credit, theapplication of the revised methodology in 1999 has also resulted in an increase in the 1999 operating profit fromcontinuing operations of e7.1 million when compared with that calculated under the previous methodology. Had therevised method been applied in 1998, the operating profit from continuing operations for that year would have increasedby e3.9 million.Following the Irish Government announcement on 14 December, 1999 that a decision had been taken to arrange anInitial Public Offering of the Company’s shares, agreement was reached on the establishment of an Employee ShareOwnership Plan (ESOP). Part of the funding for the ESOP is the payment of the remaining balance on the existingEmployee Share Participation Scheme (e9.66 million) and full provision has been made for this amount in the 1999accounts. The amount charged in the profit and loss account is e8.55 million, being the amount to be paid e9.66million less an overprovision of e1.11 million from previous years. Of the total amount charged, e5.99 million has beenclassified as an exceptional item with the balance, e2.56 million, representing the 1999 profit share (net of theoverprovision of e1.11 million) charged to operating profit. Further details are set out in Note 20.(c) Aer Lingus was elected as a member of the oneworld alliance in December, 1999. Costs incurred to 31 December, 1999in becoming a member have been written off as an exceptional item. Further costs will be incurred in 2000 in preparingfor full participation as a member and these will be recorded in the 2000 financial statements.(d)The writedown of fixed assets in 1998 comprises a provision to reduce the carrying value of certain commuter aircraft tonet realisable value.33