Ryanair 2004 Annual Report Download - page 60

28 COMMITMENTS AND CONTINGENCIES (Continued)
Contingencies (Continued)
(g) Ryanair Holdings plc has given a guara n tee to the Civil Aviation Au t h o r i ty re g a rding the pay m e nt and disc h a rge of all liabilities of
Bu z z Sta n sted Limited, a subs i d i a ry of the gro u p. The guara n tee amounts to Stg £12m and is re q u i red by the Civil Aviation Au t h o r i t y
( CA A) for Bu zz Sta n sted Limited to obtain and maintain an operating lice n ce in the United Kingdom.
(h) The group has also ente red into a se r i es of inte rest ra te swa p s to hedge against fl u c tuations in inte rest ra tes for ce rtain fl o a t i n g
ra te financing arra n g e m e n ts. Cash depos i ts have been set aside as co l l a te r al (subject to an agreed capped amount 20 0.0 m) to
m i t i g a te ce rtain co u n te r p a rty risk of fl u c t uations on long-term deriva t i ve and financing arra n g e m e n ts (“rest r i c ted ca s h ”). At
M a rch 31, 2004 rest r i c ted cash amounted to 20 0 .0m (20 03: 1 20.9 m ). Additional numerical information on these swa ps and on
other deriva t i ves held by the group is set out in notes 15 to 18 of the financial sta te m en t s.
(i) In Fe b r u a ry 2004 the Eu ro p ean Co m m i ssion ruled that Ryanair had re ce i ved illegal sta te aid from the Walloon regional gove r n m e n t
in connection with its establishment of a low cost base at Brussels (C h ar l e ro i ) .
Su bsequently Ryanair was re q u e sted by the regional government to re p ay all deemed illegal sta te aid, but in acco rd a n c e with the
Co m m i ssion ruling Ryanair may deduct various costs incu r red in establishing its base at Brussels (C h a r l e roi) from this amount.
Ryanair has advised the re g i onal government that i tb e l i eves no money is re p ayable as the cost of establishing the base exce e d e d
the amount determined to be illegal sta te aid.
Ryanair is also appealing the decision of the Eu ro p ean Co m m i ss i on to the Eu ro p ean Co u rt of First Insta n ce, re q u esting t h a t t h e
Co u rt annul the decision on the basis that Rya n a i r’s a g re e m e n t at Brussels (C h a r l e r oi) was co n s i stent with a g re e m e n ts at similar
p r i va tely owned airpo rts and therefo re did not co n st i tu te illegal sta t e aid.
(j) In July 20 0 4, Ryanair filed pro ceedings in the High Co u rt in London for the re cove ry of ove rc h a rg i n g on fuel lev i es by BAA plc, the
monopoly opera tor of Lo n d o n’s three major airports. The action re l ates to a fuel levy that BAA has unilate rally imposed on Rya n a i r
and other airlines at Sta n sted Airport. Des p i te re p rese n tations by BAA that the fuel levy was imposed to re cover its original ca p i ta l
invest m e n t , and further re p r ese n tations that the fuel levy would be re d u ced once the ca p i tal costs had been re co ve red and as fuel
u p l i ft vo l u m es increa se, BAA has failed to re d u c e the fuel levy in circum sta n c es where it has now re co ve red its original ca p i ta l
i nvestment some three times over and where the vo l u m es of fuel uplifted at Sta n sted Airport have increa sed dra m a t i ca l l y. Rya n a i r
h a s claimed damages and other re l i ef against BAA for brea c h es of sta tu to ry duty and abuse of dominant position arising out of
BA A’s ove rc h a rging in respect of the fuel levy and BA A’s continuing fa i l u r e to provide tra n sp a r ent information about the fuel lev y.
BAA has responded by filing a se p a ra t e action against Rya n a ir alleging that Ryanair has re p u d i a ted its co n t ract with BAA and
claiming payment of airport charg es withheld by Rya n a i r. Th ese sums we re withheld by Ryanair as a result of, and in res p o n se to,
BA A’s a l l e g e d a b u ses in relation to the fuel lev y . The amount in dispute in BA A’s claim against Ryanair is approx i m a t ely 1.5m (o r
roughly 3% of the total aero n a u t i cal charg es that Ryanair paid BA A). BAA furt h e r claims that it is now no longer bound by the
Ag reement ente red into with Ryanair in relation to airp o rt charg es and that it can instead charge Ryanair the published airport ta r i f f
as opposed to the am o u n ts previously agreed between the part i es. Ryanair denies all of BA A’s claims and has co u n te rc l a i m e d
ag a i n s t BAA for breach of co n t ra c t, brea c h es of sta tu to ry duty, abuse of dominant position and misre p rese n t ation in relation to the
fuel lev y.
29 NOTES TO CASH FLOW STATEMENT
2004 2003
(a) Reconciliation of operating profit to net cash inflow from operating activities: 000 000
Operating profit excluding goodwillamortisation 251,287 263,474
Foreign exchange gains 3,217 628
Depreciation of tangible fixed assets 101,391 76,865
(Increase) in inventories (3,652) (5,663)
Decrease/(increase) in accounts receivable 38 (4,639)
(Increase) in other assets (5,283) (4,143)
Incease in accounts payable 6,332 14,825
Increase in accrued expenses and other liabilities 87,433 22,069
Increase in accounts payable > 1 year 14,777 (12,413)
Increase in maintenance provision (note 13) 6,522 -
Net cash inflow from operating activities 462,062 351,003
(Continued)
Notes
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A N N U A L R E P O RT & F I N A N C I A L S T A T E M E N T S 2 0 0 4