ExplanationofFinancial Impact

Ryanair Holdings PLC 02 August 2005 Ryanair Holdings plc Explanation of the financial impact following adoption of International Financial Reporting Standards ('IFRS'). 2 August 2005 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS TABLE OF CONTENTS Page No. Introduction 1 1. Summary reconciliation from Irish/UK GAAP to IFRS for the 2 year ended 31 March 2005 2. Principal Changes under IFRS 3 3. Basis of preparation and transition effects 5 4. Provisional accounting policies under IFRS 7 5. Restatement of 1 April 2004 and 31 March 2005 Provisional 13 Balance Sheets and Income Statements under IFRS 5.1. Date of Transition under IFRS - 1 April 2004 13 5.2. 31 March 2005 Balance Sheet restated under 14 IFRS 5.3. 31 March 2005 Income Statement restated under 15 IFRS 6. Comparative quarterly information for the year to 31 March 16 2005 6.1. Balance Sheet restated - 30 June 2004 16 6.2. Balance Sheet restated - 30 September 2004 17 6.3. Balance Sheet restated - 31 December 2004 18 6.4. Balance Sheet restated - 31 March 2005 19 6.5. Income Statement restated - 30 June 2004 20 6.6. Income Statement restated - 30 September 21 2004 6.5. Income Statement restated - 31 December 2004 22 6.5. Income Statement restated - 31 March 2005 23 7. Statement of Recognised Income and Expense from 30 June 24 2004 to 31 March 2005 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS Introduction From 1 April 2005 Ryanair Holdings plc ('Ryanair') is required to prepare its primary financial statements under International Financial Reporting Standards ('IFRS') as adopted for use in the European Union. This change applies to all financial reporting accounting periods beginning on or after 1 January 2005 and consequently, Ryanair's first results to be reported under IFRS are the interim results for the quarter ending 30 June 2005. The Group's first annual report under IFRS will be prepared for the financial year to 31 March 2006. Ryanair is required to publish comparative information from the date of transition except for certain exemptions provided by the transitional arrangements in IFRS 1 ('First Time Adoption of International Financial Reporting Standards'). Ryanair's date of transition is 1 April 2004. Information regarding the adoption by Ryanair of IFRS reporting is presented in this document as follows; 1. Summary reconciliation of Ryanair's Income Statement and Balance Sheet from Irish/UK GAAP to IFRS for the year ended and as at 31 March 2005; 2. Principal changes under IFRS; 3. Basis of preparation and transition effects; 4. Provisional accounting policies under IFRS; 5. Restatement of 31 March 2005 financial information from Irish GAAP to IFRS including date of transition balance sheet at 1 April 2004; 6. Comparative quarterly information for the year to 31 March 2005, and 7. Statement of Recognised Income and Expense for the year to 31 March 2005 The source of the historical Irish/UK GAAP financial information in this document is the audited consolidated financial statements and annual report for the year to 31 March 2004 and the unaudited consolidated financial statements for the year to 31 March 2005 included in the preliminary announcement of the Group's results made on 31 May 2005. The audited consolidated financial statements and annual report for the year to 31 March 2005 will be available in due course. Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 1. Summary Reconciliation from Irish/UK GAAP to IFRS for year ended 31 March 2005; Year Ended 31-Mar-05 €'000 Net Income (after tax) under Irish/UK GAAP 266,741 Retirement Benefits (net of tax) (260) Effect of Business Combinations 14,050 Share Based Payments (488) Preliminary Net Income (after tax) under IFRS 280,043 Earnings per Share 37c Diluted Earning per Share 37c % Variance from accounting changes 5.0% Shareholders equity under Irish GAAP 1,727,411 Retirement Benefits (9,300) Effect of Business Combinations 16,393 Preliminary Shareholders equity under IFRS* 1,734,504 % Variance from accounting changes 0.4% *At 1 April 2005 Ryanair has accounted for all of its derivatives in accordance with IAS 39, with the result that an opening charge of €146.4 million together with a related deferred tax benefit of €18.3 million has been recorded directly in opening reserves, principally relating to the company's interest rate swaps, which were entered into at a time when underlying interest rates were higher than present market rates. The company also recorded the following entries in respect of fair value hedges for firm commitments; an increase of €2.7 million in derivative financial assets held and a corresponding decrease in other creditors, with no amount of ineffectiveness recorded in the income statement. Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 2. Principal Changes under IFRS The following summary sets out the most significant changes required to Ryanair's consolidated financial statements as a result of the transition to IFRS. The effect of these changes is set out in Section 5 of this report. IAS 19: Pension and other Post Retirement Benefits (recurring change) In accordance with IAS 19 ('Employee Benefits'), the assets and liabilities of the defined benefit pension plans operated by Ryanair have been recognised, gross of deferred tax, in the balance sheet at the date of transition to IFRS in accordance with the valuation and measurement requirements of the standard. Deferred tax has been computed in respect of the Group's pension liabilities arising as a result of the application of IAS 19 and the related deferred tax assets have been included in the restatements at the various balance sheet dates. In accordance with the exemption afforded under the amendment to IFRS 1, the Group has elected to recognise all cumulative actuarial gains and losses attributable to its defined benefit pension schemes as at the transition date. Also in line with the amendment to IAS 19, actuarial gains and losses arising after the transition date are dealt with in retained income via the Statement of Recognised Income and Expense, and all other pension scheme movements have been accounted for in the Group's income statement. IFRS 3: Business Combinations The Group has elected to restate the acquisition of Buzz on 10 April 2003 (the Group's only business combination to date) in accordance with the provisions of IFRS 3 ('Business Combinations'). As the principal assets and liabilities acquired at that time related to take-off and landing slots at Stansted airport, and onerous leases for aircraft, the restatement of the business combination under IFRS 3 has given rise to the following adjustments: 1. Reversal of goodwill amortisation since the date of the acquisition amounting to €4.5 million. 2. Reallocation of all of the fair value of assets acquired at the time (being €46.8 million) from goodwill to intangible assets, represented by take-off and landing rights ('slots') at Stansted airport. This adjustment was required to recognise the fair value of assets required to be recognised under the provisions of IFRS 3 and IAS 38 'Intangible Assets'. This asset is considered to be indefinite lived because the slots do not expire as long as they continue to be utilised and it is Ryanair's intention to utilise these slots for the foreseeable future. Accordingly, the slots acquired have not been amortised. The slots acquired have also been subsequently reviewed for impairment in accordance with the provisions of IAS 36 'Impairment of Assets' and no impairment of this asset is considered to have occurred since the date of acquisition. 3. No change has been recorded to the provisional fair value of onerous leases taken over on acquisition as the impact of discounting such amounts is not considered to be material in the context of the Group's results. Subsequent to the acquisition, however, Ryanair renegotiated the terms and conditions of these leases and agreed to return the aircraft to the lessors in late 2004, thereby releasing Ryanair from any remaining lease obligations at that time. Irish GAAP permits that such an adjustment can be made to the provisional value of the assets and liabilities acquired as part of the original business combination, provided that the adjustment is made either in the reporting period that the combination took place or in the first full financial period following the transaction. IFRS 3, however, only allows such an adjustment to be made in the 12 month period following the acquisition, and accordingly, as the event occurred more than 12 months after the acquisition date, under IFRS this adjustment is made to the Group's income statement instead. This gives rise to a credit of €11.9m to the income statement in the period to 31 March 2005. IFRS 2: Share Based Payments (recurring change) IFRS 2 ('Share Based Payment') requires the Group to recognise any share based payments made to employees during a reporting period as a charge to the income statement over the vesting period of the options, together with a corresponding increase in equity. The charge of €0.5 million for the year ended 31 March 2005 for share option grants has been computed using the Binomial Lattice methodology. A similar charge will recur quarterly over the vesting period of the existing options and there may be additional charges as further share options are granted. Ryanair has availed of the transition provisions in IFRS 1 for share based payments by only applying the fair value calculation to share option grants that were made after 7 November 2002 but which had not vested by 1 January 2005 . Had Ryanair recognised all vested grants of shares between 7 November 2002 and 1 January 2005, the Group's equity at 31 March 2005 would have increased by €9.4m with a corresponding reduction in retained earnings. IAS 39: Derivative Financial Instruments (recurring change) IAS 39 ('Financial Instruments: Recognition and Measurement') requires that all financial instruments are recorded at fair value or amortised cost dependant on the nature of the financial asset or financial liability. Derivatives are always measured at fair value with changes in value arising from fluctuations in interest rates, foreign exchange rates or commodity prices. Under Irish GAAP, where the derivatives form part of a hedging agreement, these are not initially measured on the balance sheet and any related gains or losses arising are deferred until the underlying hedged item impacts on the financial statements. Ryanair has taken advantage of the exemption from the requirement to restate comparative information for IAS 39 contained in IFRS 1. As a result of this exemption the information presented for all periods up to 31 March 2005 has been accounted for in accordance with Irish/UK GAAP. At 1 April 2005 Ryanair has accounted for all of its derivatives in accordance with IAS 39, with the result that an opening charge of €146.4 million together with a related deferred tax benefit of €18.3 million has been recorded directly in opening reserves, principally relating to the company's interest rate swaps, which were entered into at a time when underlying interest rates were higher than present market rates. The company also recorded the following entries in respect of fair value hedges for firm commitments; an increase of €2.7 million in derivative financial assets held and a corresponding decrease in other creditors, with no amount of ineffectiveness recorded in the income statement. Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 3. Basis of preparation and transition effects. Basis of Preparation EU law (IAS Regulation EC 1606/2002) requires that the annual consolidated financial statements of the company, for the year ending 31 March 2006, be prepared in accordance with accounting standards adopted for use in the European Union (EU) further to the IAS Regulation (EC 1606/2002) ('accounting standards adopted by the EU'). This preliminary financial information comprising the consolidated preliminary balance sheets of the company and its subsidiaries at 1 April 2004 and 31 March 2005 and the consolidated preliminary income statement at 31 March 2005 and the related explanatory notes have been prepared on the basis of the recognition and measurement requirements of IFRSs in issue that either are adopted by the EU and effective (or available for early adoption) at 31 March 2006 or are expected to be adopted and effective (or available for early adoption) at 31 March 2006, the Group's first annual reporting date at which it is required to use accounting standards adopted by the EU. Based on these recognition and measurement requirements, management has made assumptions about the accounting policies expected to be applied, which are as set out below, when the first annual financial statements are prepared in accordance with accounting standards adopted by the EU for the financial year ending 31 March 2006. In particular, management has assumed that the following IFRS's issued by the International Accounting Standards Board and IFRIC Interpretations issued by the International Financial Reporting Interpretations Committee will be adopted by the EU such that they will be available for use in the annual IFRS financial statements for the year ending 31 March 2006: Amendment to IAS 19: Actuarial Gains and Losses, Group Plans and Disclosures. In addition, the accounting standards adopted by the EU that will be effective (or available for early adoption) in the annual financial statements for the year ending 31 March 2006 are still subject to change and to additional interpretations and therefore cannot be determined with certainty. Accordingly, the accounting policies for that annual period will be determined finally only when the annual financial statements are prepared for the year ending 31 March 2006. The unaudited Group results for the three months to 30 June 2005 and the comparative quarterly information in the prior periods, also included in this report, have been prepared on a basis consistent with the IFRS accounting policies as set out herein. These quarterly financial statements have been prepared under the historical cost convention, except in respect of certain financial instruments, which have been fair valued in accordance with the requirements of IAS 39. Transition Effects IFRS 1 permits those companies adopting IFRS for the first time to avail of certain exemptions from the full requirements of IFRS on transition. Ryanair intends to avail of the following key exemptions: •Pensions and post retirement benefits: At the transition date Ryanair has re-evaluated its defined benefit pension plans in accordance with IAS 19, and all cumulative actuarial gains and losses have been recognised in the opening balance sheet within pension assets or pension liabilities, and adjusted against retained income. •Financial instruments: Financial instruments in the comparative periods are recorded using the existing Irish/UK GAAP basis, rather than being restated in accordance with IAS 32, Financial Instruments: Disclosure and Presentation, and IAS 39, Financial Instruments: Recognition and Measurement. The requirements of IAS 32 and 39 will instead be applied from 1 April 2005, as permitted by IFRS 1. •Share-based payments: IFRS 2 has been adopted from the transition date and is only being applied to equity settled share options granted on or after 7 November 2002 which had not vested by 1 January 2005. Ryanair has elected to avail of the option not to apply full retrospective application of the standard. •Business combinations: Ryanair has elected to restate its only business combination (the acquisition of Buzz on 10 April 2003) to comply with IFRS 3 'Business Combinations', and has also applied the provisions of IAS 36 'Impairment of Assets' and IAS 38 'Intangible Assets' from the same date. Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 4. Provisional accounting policies under IFRS Basis of Consolidation The restated financial information includes the financial statements of the company and all subsidiary undertakings drawn up to the relevant period end. The results of subsidiary undertakings acquired or disposed of in the period are included in the consolidated income statement from the date on which control is transferred to or from the Group. Control exists when the Group has the power, either directly or indirectly to govern the financial and operating policies of an entity so as to obtain economic benefit from its activities. Estimates and Uncertainties The preparation of consolidated financial information requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Intangible Assets - Landing Rights Intangible assets acquired are recognised to the extent it is considered probable that expected future benefits will flow to the Group and the associated costs can be measured reliably. Landing rights acquired as part of a business combination are capitalised at fair value at that date and are not amortised, where those rights are considered to be indefinite. The carrying value of these rights are reviewed for impairment at each reporting date and are subject to impairment testing when events or changes in circumstances indicate that carrying values may not be recoverable. No impairment to the carrying values of the Group's intangible assets has been recorded to date. Revenues Scheduled revenues comprise the invoiced value of airline and other services, net of government taxes. Revenue from the sale of flight seats is recognised in the period in which the service is provided. Unearned revenue represents flight seats sold but not yet flown and is included in accrued expenses and other liabilities. It is released to the income statement as passengers fly. Unused tickets are recognised as revenue on a systematic basis. Miscellaneous fees charged for any changes to flight tickets are recognised as revenue immediately. Ancillary revenues are recognised in the income statement in the period the ancillary services are provided. Foreign Currency Translation Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The consolidated financial statements are presented in Euro, which is the functional currency of each of the Group's entities. Transactions arising in foreign currencies are recorded at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange prevailing at the balance sheet date and all related exchange gains or losses are accounted for through the income statement. Non-monetary assets and liabilities denominated in foreign currencies are translated to euro at foreign exchange rates ruling at the dates the transactions were effected. Pensions and Other Post Retirement Obligations The Group provides employees with post retirement benefits in the form of pensions. The Group operates a number of defined contribution and defined benefit pension schemes. Costs arising in respect of the Group's defined contribution pension schemes are charged to the income statement in the period in which they are incurred. For defined contribution schemes, the Group recognises contributions due in respect of the accounting period in the income statement. Any contributions unpaid at the balance sheet date are included as a liability. The liabilities and costs associated with the Group's defined benefit pension schemes are assessed on the basis of the projected unit credit method by professionally qualified actuaries and are arrived at using actuarial assumptions based on market expectations at the balance sheet date. The discount rates employed in determining the present value of each scheme's liabilities are determined by reference to market yields at the balance sheet date of high quality corporate bonds in the same currency and term that is consistent with those of the associated pension obligations. The net surplus or deficit arising on the Group's defined benefit schemes is shown within non-current assets or liabilities on the balance sheet. The deferred tax impact of any such amount is disclosed separately within deferred tax. IAS 19 requires separate recognition of the operating and financing costs of defined benefit pensions (and similarly funded employee benefits) in the income statement. The standard permits a number of options for the recognition of actuarial gains and losses. In accordance with the exemption granted under IFRS 1, IAS 19 has not been applied retrospectively in preparing the Group's transition balance sheet to IFRS. All cumulative actuarial gains and losses as at the transition date (1 April 2004) have therefore been recognised in retained income at that date. Share Based Payments The Group engages in equity settled share-based payment transactions in respect of services received from certain of its employees. The fair value of the services received is measured by reference to the fair value of the share options granted on the date of the grant. The cost of the employee services received in respect of the share options granted is recognised in the income statement over the period that the services are received, which is the vesting period with a corresponding credit to equity. The fair value of the options granted is determined using the Binomial Lattice option pricing model, which takes into account the exercise price of the option, the current share price, the risk free interest rate, the expected volatility of the Ryanair Holdings plc share price over the life of the option and other relevant factors. Vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of employee services so that ultimately, the amount recognised in the income statement reflects the number of vested shares or share options In accordance with the transition provisions in IFRS 1, Ryanair has applied this fair value calculation to share option grants that were made after 7 November 2002, but which had yet to vest by 1 January 2005. Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS Income taxes, including Deferred Income Taxes Income tax payable on taxable profits is recognised as an expense in the period in which the profits arise. Income tax recoverable on tax allowable losses is recognised as an asset only to the extent that it is probable that it will be recovered by offset against current or future taxable profits. Income tax is recognized in the income statement except to the extent that relates to items recognized directly in equity (derivative financial instruments and pensions and other post retirement obligations), in which case it is recognized in equity. Deferred income tax is provided in full, using the liability method, on temporary timing differences arising from the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates and legislation enacted or substantially enacted by the balance sheet date and expected to apply when the deferred tax asset is realised or the deferred tax liability is settled. The following temporary differences are not provided for: the initial recognition of assets and liabilities that effect neither accounting nor taxable profit and differences relating to investments in subsidiaries to the extent that it is probable they will not reverse in the future. Deferred and current tax assets and liabilities are only offset when they arise in the same tax reporting Group and where there is both the legal right and the intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Leases Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership have transferred to the Group, are capitalised in the balance sheet and are depreciated over their estimated useful lives. The asset is recorded at the lower of its fair value, less accumulated depreciation, and the present value of the minimum lease payments at the inception of the finance lease. The present values of the future lease payments are recorded as obligations under finance leases and the interest element of the lease obligation is charged to the income statement over the period of the lease in proportion to the balances outstanding. Expenditure arising under operating leases (being leases where the lessor retains substantially all the risks and rewards of ownership) is charged to the income statement as incurred. The Group also enters into sale and leaseback transactions whereby it sells the rights to acquire aircraft to a third party and subsequently leases the aircraft back, by way of operating lease. Any profit on the disposal, where the price achieved on the disposal of the aircraft is not considered to be at fair value, is spread over the lease term. The profit or loss amount deferred is included within other creditors and analysed into its components of greater or less than one year. Aircraft Maintenance Costs The accounting for the cost of providing major airframe and certain engine maintenance checks for owned aircraft is described in the accounting policy for tangible fixed assets and depreciation. With respect to the Group's operating lease agreements, where the Group has a commitment to maintain the aircraft, provision is made during the lease term for the obligation based on estimated future costs of major airframe and certain engine maintenance checks by making appropriate charges to the income statement calculated by reference to the number of hours or cycles operated during the year. All other maintenance costs are expensed as incurred. Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS Property, Plant and Equipment Aircraft Type No. of Owned Useful Life Residual Value at Aircraft 31 March 2005 Boeing 9 20 Years from date of €500,000 737-200 manufacture Boeing 65 23 years from date of 15% of original 737-800 manufacture cost Rates of Depreciation Plant and Equipment 20 - 33.3% Fixtures and Fittings 20% Motor Vehicles 33.3% Buildings 5% Property, plant and equipment is stated at historical cost less accumulated depreciation and provisions for impairments, if any. Depreciation is calculated so as to write off the cost, less estimated residual value of assets, on a straight line basis over their expected useful lives at the annual rates in the table above. Aircraft are depreciated over their estimated useful lives to estimated residual values as detailed in the table above. An element of the cost of an acquired aircraft is attributed on acquisition to its service potential reflecting the maintenance condition of its engines and airframe. This cost, which can equate to a substantial element of the total aircraft cost, is amortised over the shorter of the period to the next check (usually between 8 and 12 years for Boeing 737-800 'next generation' aircraft) or the remaining life of the aircraft. The costs of subsequent major airframe and engine maintenance checks are capitalised and amortised over the shorter of the period to the next check or the remaining useful life of the aircraft. Advance and option payments made in respect of aircraft purchase commitments and options are recorded at cost and separately disclosed as part of tangible fixed assets. On acquisition of the related aircraft these payments are included as part of the cost of aircraft and are depreciated from that date. Cash and Cash Equivalents Cash represents cash held at bank and available on demand, offset by bank overdrafts. Cash equivalents are current asset investments (other than cash) that are readily convertible into known amounts of cash. Cash equivalents include investments in commercial paper, certificates of deposit and cash deposits of more than one day, but less than three months. Deposits with a maturity of greater than three months are recognised as short term investments. Inventories Inventories, principally representing rotable aircraft spares, are stated at the lower of cost and net realisable value. Cost is based on invoiced price on a weighted average basis for all stock categories. Net realisable value is calculated as estimated selling price net of estimated selling costs. Trade and Other Receivables and Payables Trade and other receivables and payables are stated at cost less impairment losses, which approximates to fair value given the short dated nature of these assets and liabilities. Derivative Financial Instruments Ryanair is exposed to market risks relating to fluctuations in commodity prices, interest rates and currency exchange rates. The objective of financial risk management at Ryanair is to minimize the impact of commodity price, interest rate and foreign exchange rate fluctuations on the Group's earnings, cash flows and equity. To manage these risks, Ryanair uses various derivative financial instruments, including interest rate swaps, foreign currency forward contracts and commodity contracts. These derivative financial instruments are generally held to maturity and are not actively traded. The Group enters into these arrangements with the goal of hedging its operational and balance sheet risk. However, Ryanair's exposure to commodity price, interest rate and currency exchange rate fluctuations cannot be neutralized completely. From 1 April 2005, the company has applied the provisions of IAS 39 in accounting for its derivatives. Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative financial instruments are stated at fair value. Recognition of any resultant gain or loss depends on the nature of the item being hedged. The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties. The fair value of forward exchange contracts and jet fuel contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price. Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. When the forecasted transaction results in the recognition of an asset or liability, the cumulative gain or loss is removed from equity and included in the initial measurement of the asset or liability. Otherwise the cumulative gain or loss is removed from equity and recognised in the income statement at the same time as the hedged transaction. The ineffective part of any hedging transaction and the gain or loss therein is recognised in the income statement immediately. When a hedging instrument or hedge relationship is terminated but the hedged transaction still is expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised in the income statement immediately. Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability or an unrecognised firm commitment, any gain or loss on the hedging instrument is recognised in the income statement. The hedged item also is stated at fair value in respect of the risk being hedged, with any gain or loss also being recognised in the income statement. Under Irish GAAP and as applied in the periods to 31 March 2005, Ryanair's fuel forward contracts, foreign currency forward contracts and interest rate swaps were treated as hedges, and any unrealised gains or losses arising on those contracts were deferred and recognized as an offset to the related expenses, when realized. Business Combinations The purchase method of accounting is employed in accounting for the acquisition of businesses. In accordance with IFRS 3, the cost of a business combination is measured as the aggregate of the fair values at the date of exchange of assets given and liabilities incurred or assumed in exchange for control, together with any directly attributable expenses. The assets and liabilities and contingent liabilities of the acquired entity are measured at their fair values at the date of acquisition. When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values allocated are made within twelve months of the acquisition date and are effected prospectively from that date. Interest Bearing Loans and Borrowings All loans and borrowings are initially recorded at cost, being the fair value of the consideration received, net of attributable transaction costs. Subsequent to initial recognition, non-current interest bearing loans are measured at amortised cost, using the effective interest yield methodology. Financial Assets Financial assets comprise cash deposits of greater than three months maturity. All are classified as held to maturity as there is a significant financial disincentive from redeeming such amounts at an earlier stage. Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 5. Restatement of 1 April 2004 and 31 March 2005 provisional balance sheets and income statements under IFRS This section sets out the impact of the preliminary adjustments required in transitioning to IFRS. 5.1. Date of Transition under IFRS - 1 April 2004 Irish/UK Retirement Business Share Total IFRS GAAP Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 Non-Current Assets Intangible Assets 44,499 2,342 2,342 46,841 Tangible Assets 1,576,526 1,576,526 Deferred tax asset - 615 615 615 Total Non-Current Assets 1,621,025 615 2,342 2,957 1,623,982 Current Assets Inventories 26,440 26,440 Other 19,251 Assets 19,251 Accounts Receivable 14,932 14,932 Restricted Cash 200,000 200,000 Financial assets - cash held to maturity > 3 months 312,745 312,745 Cash andcash equivalents 744,260 744,260 Total Current Assets 1,317,628 1,317,628 Total Assets 2,938,653 615 2,342 2,957 2,941,610 Current Liabilities Accounts Payable 67,936 67,936 Accrued expenses and other liabilities 324,963 324,963 Current Maturities of long term debt 80,337 80,337 Current tax 13,245 13,245 Total Current Liabilities 486,481 486,481 Other liabilities Provisions for liabilities and charges 6,522 6,522 Deferred tax 87,670 87,670 Other creditors 30,047 4,922 4,922 34,969 Long term debt 872,645 872,645 Total Other Liabilities 996,884 4,922 4,922 1,001,806 Shareholders funds Called up share capital 9,643 9,643 Share premium account 560,406 560,406 Profit and loss account 885,239 (4,307) 2,342 (1,965) 883,274 Shareholders funds - equity 1,455,288 (4,307) 2,342 (1,965) 1,453,323 Total liabilities and shareholders funds 2,938,653 615 2,342 2,957 2,941,610 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 5.2. 31 March 2005 Balance Sheet restated under IFRS 31-Mar-05 01-Apr-04 Retirement Business Share Total 31-Mar-05 Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 Non-Current Assets Intangible Assets 30,449 2,342 14,050 16,392 46,841 Tangible Assets 2,092,283 2,092,283 Deferred tax asset - 615 713 1,328 1,328 Total Non-Current Assets 2,122,732 2,957 713 14,050 17,720 2,140,452 Current Assets Inventories 28,069 28,069 Other 24,612 24,612 Assets Accounts Receivable 20,644 20,644 Restricted Cash 204,040 204,040 Financial assets - cash held to maturity > 3 months 529,407 529,407 Cash and cash equivalents 872,258 872,258 Total Current Assets 1,679,030 1,679,030 Total Assets 3,801,762 2,957 713 14,050 17,720 3,819,482 Current Liabilities Accounts Payable 92,118 92,118 Accrued expenses and other liabilities 414,997 414,997 Current Maturities of long term debt 120,997 120,997 Current tax 21,190 21,190 Total Current Liabilities 649,302 649,302 Other liabilities Provisions for liabilities and charges 7,236 7,236 Deferred tax 105,509 105,509 Other Creditors 18,444 4,922 5,706 10,628 29,072 Long term 1,293,860 1,293,860 debt Total Other Liabilities 1,425,049 4,922 5,706 10,628 1,435,677 Shareholders funds Called up share capital 9,675 9,675 Share premium account 565,756 565,756 Profit and loss account 1,151,980 (1,965) (4,993) 14,050 (488) 6,604 1,158,584 Equity Reserve 488 488 488 Shareholders funds - equity 1,727,411 (1,965) (4,993) 14,050 7,092 1,734,503 Total liabilities and shareholders funds 3,801,762 2,957 713 14,050 17,720 3,819,482 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 5.3. 31 March 2005 Income Statement restated under IFRS Consolidated Profit and Loss Account IRGAAP PY Adj IFRS 31-Mar-05 01-Apr-04 Retirement Business Share Total 31-Mar-05 Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 €'000 Operating revenue Scheduled Revenue 1,128,116 1,128,116 Ancillary revenue 208,470 208,470 Total operating revenue 1,336,586 1,336,586 Operating expenses Staff costs (140,997) (188) (488) (676) (141,673) Depreciation & amortisation(98,703) (98,703) Fuel & oil (265,276) (265,276) Maintenance, materials and repairs (37,934) (37,934) Marketing (19,622) (19,622) Aircraft rentals (33,471) (33,471) Route charges (135,672) (135,672) Airport & handling (178,384) (178,384) costs Other costs (97,038) (97,038) Total operating expenses (1,007,097) (188) (488) (676) (1,007,773) Operating profit - before amortisation of goodwill 329,489 (188) (488) (676) 328,813 Goodwill (2,125) 2,125 2,125 - Operating profit after amortisation of goodwill 327,364 (188) 2,125 (488) 1,449 328,813 Other (expenses)/ income Foreign exchange gains (2,323) 21 21 (2,302) (Loss) on disposal of fixed assets 47 47 Interest receivable and similar income 28,342 28,342 Interest payable and similar charges (57,499) (130) (130) (57,629) Purchase accounting adjustment 11,925 11,925 11,925 Total other (expenses)/ income (31,433) (109) 11,925 11,816 (19,617) Profit on ordinary activities 295,931 (297) 14,050 (488) 13,265 309,196 Tax (29,190) 37 37 (29,153) Profit after tax 266,741 (260) 14,050 (488) 13,302 280,043 Earnings per Share 0.35 0.37 Diluted Earnings Per Share 0.35 0.37 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6. Comparative quarterly information for the year to 31 March 2005 6.1. Balance Sheet restated - 30 June 2004 Irish/UK Prior Retirement Business Share Total Restated GAAP Adj. Benefits Combination Based Effect Under Payment IFRS €'000 €'000 €'000 €'000 €'000 €'000 Non Current Assets Intangible Assets 43,914 2,342 586 2,928 46,842 Tangible Assets 1,612,800 1,612,800 Deferred tax asset - 615 178 793 793 Total Non-current assets 1,656,714 2,957 178 586 3,721 1,660,435 Current Assets Inventories 27,116 27,116 Other Assets 19,269 19,269 Accounts Receivable 14,002 14,002 Restricted cash 200,000 200,000 Financial assets - cash held to maturity > 3 months 157,427 157,427 Cash and cash equivalents 967,948 967,948 Total Current Assets 1,385,762 1,385,762 Total Assets 3,042,476 2,957 178 586 3,721 3,046,197 Current Liabilities Accounts Payable 79,341 79,341 Accrued expenses and other liabilities 378,329 378,329 Current Maturities of long term debt 81,350 81,350 Current tax 13,793 13,793 Total current liabilities 552,813 552,813 Non-current liabilities Provisions for liabilities and charges 8,008 8,008 Deferred tax 92,010 92,010 Other creditors 29,529 4,922 1,426 6,348 35,877 Long term debt 852,119 852,119 Total other liabilities 981,666 4,922 1,426 6,348 988,014 Equity Called up share capital 9,644 9,644 Share premium account 560,559 560,559 Profit and loss account 937,794 (1,965) (1,248) 586 (2,627) 935,167 Shareholders funds - equity 1,507,997 (1,965) (1,248) 586 (2,627) 1,505,370 Total liabilities and shareholders funds 3,042,476 2,957 178 586 3,721 3,046,197 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6.2. Balance Sheet restated - 30 September 2004 Irish Prior Retirement Business Share Total Restated GAAP Adj. Benefits Combination Based Effect Under Payment IFRS €'000 €'000 €'000 €'000 €'000 €'000 €'000 Non Current Assets Intangible Assets 43,327 2,928 586 3,514 46,841 Tangible Assets 1,738,458 1,738,458 Deferred tax asset - 793 178 971 971 Total Non-current assets 1,781,785 3,721 178 586 4,485 1,786,270 Current Assets Inventories 26,469 26,469 Other Assets 21,259 21,259 Accounts Receivable 16,806 16,806 Restricted cash 200,000 200,000 Financial assets - cash held to maturity > 3 months 668,224 668,224 Cash and cash equivalents552,822 552,822 Total Current Assets 1,485,580 1,485,580 Total Assets 3,267,365 3,721 178 586 4,485 3,271,851 Current Liabilities Accounts Payable 75,362 75,362 Accrued expenses and other liabilities 334,596 334,596 Current Maturities of long term debt 91,932 91,932 Current tax 22,361 22,361 Total current liabilities 524,251 524,251 Non-current liabilities Provisions for liabilities 9,885 9,885 and charges Deferred tax 98,095 98,095 Other Creditors 27,551 6,348 1,426 7,774 35,325 Long term debt 951,985 951,985 Total other lia- bilities 1,087,516 6,348 1,426 7,774 1,095,290 Equity Called up share capital 9,644 9,644 Share premium account 560,605 560,605 Profit and loss account 1,085,349 (2,627) (1,248) 586 (3,289) 1,082,060 Shareholders funds - equity 1,655,598 (2,627) (1,248) 586 (3,289) 1,652,309 Total liabilities and shareholders funds 3,267,365 3,721 178 586 4,485 3,271,851 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6.3. Balance Sheet restated - 31 December 2004 Irish Prior Retirement Business Share Total Restated GAAP Adj. Benefits Combination Based Effect Under Payment IFRS €'000 €'000 €'000 €'000 €'000 €'000 €'000 Non Current Assets Intangible Assets 30,872 3,514 12,455 15,969 46,841 Tangible Assets 1,845,452 1,845,452 Deferred tax asset - 971 178 1,149 1,149 Total Non-current assets 1,876,324 4,485 178 12,455 17,118 1,893,442 Current Assets Inventories 27,160 27,160 Other Assets 18,608 18,608 Accounts Receivable 14,467 14,467 Restricted cash 204,040 204,040 Financial assets - cash held to maturity > 3 months 143,287 143,287 Cash and cash equivalents 1,098,198 1,098,198 Total Current Assets 1,505,760 1,505,760 Total 3,382,084 4,485 178 12,455 17,118 3,399,202 Assets Current Liabilities Accounts Payable 89,439 89,439 Accrued expenses and other liabilities 290,280 290,280 Current Maturities of long term debt 106,841 106,841 Current tax 26,769 26,769 Total current liabilities 513,329 515,329 Non-current liabilities Provisions for liabilities and charges 5,416 5,416 Deferred tax 102,325 102,325 Other Creditors 22,958 7,774 1,426 9,200 32,158 Long term debt 1,046,546 1,046,546 Total other liabilities 1,177,245 7,774 1,426 9,200 1,186,445 Equity Called up share capital 9,652 9,652 Share premium account 562,015 562,015 Profit and loss account 1,119,843 (3,289) (1,248) 12,455 (195) 7,723 1,127,566 Equity Reserve - 195 195 195 Shareholders funds - equity 1,691,510 (3,289) (1,248) 12,455 7,918 1,699,428 Total liabilities and shareholders funds 3,382,084 4,485 178 12,455 17,118 3,399,202 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6.4. Balance Sheet restated - 31 March 2005 31-Mar-05 Prior Retirement Business Share Total 31-Mar-05 Adj. Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 €'000 Non-Current Assets Intangible Assets 30,449 15,969 423 16,392 46,841 Tangible Assets 2,092,283 2,092,283 Deferred tax asset - 1,149 179 1,328 1,328 Total Non-Current Assets 2,122,732 17,118 179 423 17,720 2,140,452 Current Assets Inventories 28,069 28,069 Other 24,612 24,612 Assets Accounts Receivable 20,644 20,644 Restricted Cash 204,040 204,040 Financial assets - cash held to maturity > 3 months 529,407 529,407 Cash and cash equivalents 872,258 872,258 Total Current Assets 1,679,030 1,679,030 Total Assets 3,807,375 17,118 179 423 17,720 3,819,482 Current Liabilities Accounts Payable 92,118 92,118 Accrued expenses and other liabilities 414,997 414,997 Current Maturities of long term 120,997 120,997 debt Current tax 21,190 21,190 Total Current Liabilities 649,302 649,302 Other liabilities Provisions for liabilities and charges 7,236 7,236 Deferred tax 105,509 105,509 Accounts payable due after one year 18,444 9,200 1,428 10,628 29,072 Long term debt 1,293,860 1,293,860 Total Other Liabilities 1,425,049 9,200 1,428 10,628 1,435,677 Shareholders funds Called up share capital 9,675 9,675 Share premium account 565,756 565,756 Profit and loss account 1,151,980 7,723 (1,249) 423 (293) 6,604 1,158,584 Equity 195 293 488 488 Reserve Shareholders funds - equity 1,727,411 7,918 (1,249) 423 7,092 1,734,503 Total liabilities and shareholders funds 3,807,375 17,118 179 423 17,720 3,819,482 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6.5 Quarterly Income Statement restated - 30 June 2004 Irish/UK Prior Retirement Business Share Total IFRS GAAP Adj. Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 €'000 Operating revenue Scheduled Revenue 259,059 259,059 Ancillary revenue 43,689 43,689 Total operating revenue 302,748 302,748 Operating expenses Staff (34,075) (47) (47) (34,122) costs Depreciation & amortisation (23,571) (23,571) Fuel & oil (51,842) (51,842) Maintenance, materials and repairs (14,073) (14,073) Marketing (7,266) (7,266) Aircraft rentals (8,084) (8,084) Route charges (33,205) (33,205) Airport & handling costs (44,270) (44,270) Other costs (21,574) (21,574) Total operating expenses (237,960) (47) (47) (238,007) Operating profit - before amortisation of goodwill 64,788 (47) (47) 64,741 Goodwill (586) 586 586 0 Operating profit after amortisation of goodwill 64,202 (47) 586 539 64,741 Other (expenses)/ income Foreign exchange 115 5 5 120 gains Profit on disposal of fixed assets 6 6 Interest receivable and 6,059 6,059 similar income Interest payable and similar charges (12,630) (32) (32) (12,662) Purchase accounting adjustment Total other (expenses)/ income (6,450) (27) (27) (6,477) Profit on ordinary activities 57,752 (74) 586 512 58,264 Tax (5,197) 9 9 (5,188) Profit after tax 52,555 (65) 586 521 53,076 Basic earnings 0.07 0.07 per share Diluted earnings per share 0.07 0.07 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6.6.Quarterly Income Statement restated - 30 September 2004 Irish/UK Prior Retirement Business Share Total IFRS GAAP Adj. Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 Operating revenue Scheduled Revenue 617,644 617,644 Ancillary revenue 103,448 103,448 Total operating revenue 721,092 721,092 Operating expenses Staff (69,259) (47) (47) (94) (69,353) costs Depreciation & (44,904) (44,904) amortisation Fuel & oil (113,750) (113,750) Maintenance, materials and (24,898) 24,898) repairs Marketing (10,775) (10,775) Aircraft rentals (16,236) (16,236) Route (67,926) (67,926) charges Airport & handling (90,322) (90,322) costs Other (47,505) (47,505) costs Total operating expenses (485,575) (47) (47) (94) (485,669) Operating profit - before amortisation of goodwill 235,517 (47) (47) (94) 235,423 Goodwill (1,172) 586 586 1,172 0 Operating profit after amortisation of goodwill 234,345 539 (47) 586 1,078 235,423 Other (expenses)/ income Foreign exchange (759) 5 5 10 (749) gains Profit on disposal of fixed assets 6 6 Interest receivable and 12,818 12,818 similar income Interest payable and similar charges (25,921) (32) (32) (64) (25,985) Total other (expenses)/ income (13,856) (27) (27) (54) (13,910) Profit on ordinary activities 220,489 512 (74) 586 1,024 221,513 Tax (20,379) 9 9 18 (20,361) Profit after tax 200,110 521 (65) 586 1,042 201,152 Basic earnings per Share 0.26 0.26 Diluted earnings per share 0.26 0.26 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6.7. Quarterly Income Statement restated - 31 December 2004 Irish/UK Prior Retirement Business Share Total IFRS GAAP Adj. Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 €'000 Operating revenue Scheduled Revenue 864,356 864,356 Ancillary revenue 151,180 151,180 Total operating revenue 1,015,536 1,015,536 Operating expenses Staff (104,083) (94) (47) (195) (336) (104,419) costs Depreciation & amortisation (70,960) (70,960) Fuel & oil (186,236) (186,236) Maintenance, materials and repairs (27,221) (27,221) Marketing (13,400) (13,400) Aircraft rentals (23,636) (23,636) Route (101,315) (101,315) charges Airport & handling costs (134,565) (134,565) Other costs (69,933) (69,933) Total operating expenses (731,349) (94) (47) (195) (336) (731,685) Operating profit - before Amortization of goodwill 284,187 (94) (47) (195) (336) 283,851 Goodwill (1,702) 1,172 530 1,702 - Operating profit after Amortization of goodwill 282,485 1,078 (47) 530 (195) 1,366 283,851 Other (expenses)/ income Foreign exchange (2,835) 10 5 15 (2,820) gains Profit on disposal of fixed assets 6 6 Interest receivable and similar 20,197 20,197 income Interest payable and similar charges (40,992) (64) (32) (96) (41,088) Purchase accounting adjustment 11,925 11,925 11,925 Total other (expenses)/ income (23,624) (54) (27) 11,925 11,844 (11,780) Profit on ordinary activities 258,861 1,024 (74) 12,455 (195) 13,210 272,071 Tax (24,257) 18 9 28 (24,230) Profit after tax 234,604 1,042 (65) 12,455 (195) 13,237 247,841 Basic earnings per share 0.31 0.33 Diluted earnings per share 0.31 0.32 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 6.8 Quarterly Income Statement restated - 31 March 2005 Irish/UK Prior Retirement Business Share Total IFRS GAAP Adj. Benefits Combination Based Effect Payment €'000 €'000 €'000 €'000 €'000 €'000 €'000 Operating revenue Scheduled Revenue 1,128,116 1,128,116 Ancillary revenue 208,470 208,470 Total operating revenue 1,336,586 1,336,586 Operating expenses Staff costs (140,997) (336) (47) (293) (676) (141,673) Depreciation & amortisation (98,703) (98,703) Fuel & oil (265,276) (265,276) Maintenance, materials and (37,934) (37,934) repairs Marketing (19,622) (19,622) Aircraft rentals (33,471) (33,471) Route (135,672) (135,672) charges Airport & handling costs (178,384) (178,384) Other (97,038) (97,038) costs Total operating expenses (1,007,097) (336) (47) (293) (676)(1,007,773) Operating profit - before amortisation of goodwill 329,489 (336) (47) (293) (676) 328,813 Goodwill (2,125) 1,702 423 2,125 0 Operating profit after amortisation of goodwill 327,364 1,366 (47) 423 (293)1,449 328,813 Other (expenses)/ income Foreign exchange gains (2,323) 15 6 21 (2,302) Profit on disposal of fixed assets 47 0 0 47 Interest receivable and similar income 28,342 0 0 28,342 Interest payable and similar charges (57,499) (96) (34) (130) (57,629) Purchase accounting adjustment 11,925 11,925 11,925 Total other (expenses)/ income (31,433) 11,844 (28) 11,816 (19,617) Profit on ordinary activities 295,931 13,210 (75) 423 (293) 13,265 309,196 Tax (29,190) 27 10 37 (29,153) Profit after tax 266,741 13,237 (65) 423 (293) 13,302 280,043 Basic earnings per share 0.35 0.37 Diluted earnings per share 0.35 0.37 Ryanair Holdings plc Explanation of the financial impact following adoption of IFRS 7. Statement of Recognised Income and Expense Irish/UK Prior Retirement Business Share Total Restated GAAP Adj. Benefits Combination Based Effect Under Payment IFRS €'000 €'000 €'000 €'000 €'000 €'000 €'000 Statement of Recognised Income and Expense 30-Jun-04 Profit for the period 52,555 (65) 586 521 53,076 Actuarial gains/ losses on defined benefit plans (1,352) (1,352) (1,352) Deferred tax on Actuarial gains and losses on DB plans 169 169 169 Profit and Loss Account at end of period 52,555 (1,248) 586 (662) 51,893 30-Sep-04 Profit for the period 200,110 521 (65) 586 1,042 201,152 Actuarial gains/ losses on defined benefit plans (1,352) (1,352) (2,704) (2,704) Deferred tax on Actuarial gains and losses on DB plans 169 169 338 338 Profit and Loss Account at end of period 200,110 (662) (1,248) 586 (1,324) 198,786 31-Dec-04 Profit for the period 234,604 1,042 (65) 12,455 (195) 13,237 247,841 Actuarial gains/ losses on defined benefit plans (2,704) (1,352) (4,056) (4,056) Deferred tax on Actuarial gains and losses on DB plans 338 169 507 507 Profit and Loss Account at end of period 234,604 (1,324) (1,248) 12,455 (195) 9,688 244,292 31-Mar-05 Profit for the period 266,741 13,237 (65) 423 (293) 13,302 280,043 Actuarial gains/ losses on defined benefit plans (4,056) (1,353) (5,409) (5,409) Deferred tax on Actuarial gains and losses on DB plans 507 169 676 676 Profit and Loss Account at end of period 266,741 9,688 (1,249) 423 (293) 8,569 275,310 This information is provided by RNS The company news service from the London Stock Exchange ND MSCEANPFEDDSEFE
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