Annual Report 1999 in PDF - Aer Lingus

AER LINGUS GROUP PLC(a) This loan, which is not repayable in the event of a winding up, was advanced by the principal shareholder (Note 23).Interest is payable thereon, as determined by the Minister for Finance from time to time, and the current rate is 4%per annum (1998 - 7.25% per annum).(b) Loan capital and lease obligations of e539 million (1998 - e285m) are secured on various assets of the Group,principally aircraft. Repayments of capital and interest in respect of loan capital of e0.04 million (1998 - e0.13m)are guaranteed by the Irish Government.(c) Loan capital and lease obligations of e368 million (1998 - e197m) at 31 December, 1999 are denominated invarious foreign currencies, including US Dollar, Sterling and Yen.16. Provisions for Liabilities and ChargesBusiness Aircraft Maintenance Deferred Aircraft Post Other TotalRepositioning Maintenance Contracts Taxation Operating EmploymentLease BenefitsEqualisation(a) (b) (c) (d) (e)e000 e000 e000 e000 e000 e000 e000 e000Beginning of year 48,203 50,056 - 659 8,641 2,579 17,147 127,285Provided during year - 37,612 56,097 122 35,121 4,537 6,613 140,102Finance charge ondiscounted provision - - 3,619 - - - - 3,619Utilised during year (3,313) (29,462) (8,723) (13) (36,223) (699) (184) (78,617)Released to exceptionalitems during year (3,809) - - - - - - (3,809)Reclassifications (f) (15,302) - 6,204 - - 6,349 2,749 -Transfers from netcurrent assets (1,060) - 3,446 - - 8,766 - 11,152Translation adjustment 321 - - - 1,443 415 1,372 3,551Other (139) - - (768) - - (158) (1,065)End of year 24,901 58,206 60,643 - 8,982 21,947 27,539 202,218(a) Business RepositioningA provision for business repositioning costs is recognised when a constructive obligation exists. The amount of theprovision is based on the terms of business repositioning measures communicated to employees and represents theDirectors’ best estimate of the cost of these measures having regard to the current status of negotiations. Theprovision is expected to be utilised within two years.(b) Aircraft MaintenanceIn accordance with the requirements of FRS12 (Provisions, Contingent Liabilities and Contingent Assets), the Grouphas changed its accounting policy for providing for the cost of major airframe and engine overhauls in respect ofowned aircraft. Costs incurred on major overhauls of owned aircraft are now treated as an addition to tangible fixedassets. Provision continues to be made on a time apportioned basis for maintenance of leased aircraft. The effect ofthe change in policy is not material. The provisions will be utilised as the major airframe and engine overhauls takeplace.(c) Maintenance ContractsA fair value provision has been made for contracts entered into as part of the disposal of the Group’s maintenanceactivities and is expected to be utilised over a period of nine years.(d) Post Employment BenefitsThis comprises a provision for post cessation of employment/retirement obligations to current and former employeesof the Group.39