Ryanair 2006 Annual Report Download - page 15

Treasury Policy, Fuel, Currency and
Interest Rate Risk Management
(Continued)
The group’s objective for interest rate risk management is to
reduce interest risk through a combination of financial
instruments which lock in interest rates on debt and by
matching a proportion of floating rate assets with floating rate
liabilities. In addition, the group aims to achieve the best
available return on investments of surplus cash - subject to
credit risk and liquidity constraints. Credit risk is managed by
limiting the aggregate amount and duration of exposure to any
one counterparty based on third party market based ratings.
In line with the above interest rate risk management strategy
the group has entered into a series of interest rate swaps to
hedge against fluctuations in interest rates for certain floating
rate financing arrangements. The group has also entered into
floating rate financing for certain aircraft which is matched
with floating rate deposits. Additionally certain cash deposits
have been set aside as collateral (subject to an agreed capped
amount of 200m) to mitigate certain counterparty risk of
fluctuations on long-term derivative and financing
arrangements(“restricted cash”). At March 31, 2006 such
restricted cash amounted to 200.0m (2005: 200.0m).
Additional numerical information on these swaps and on other
derivatives held by the group is set out in notes 3 and 15 of the
financial statements.
Additional Performance Measures
The group has referred to a number of additional performance
measures throughout this operating and financial review,
which are defined as follows:
• Adjusted profit for the year is as set out on page 9. Items
adjusted for include the financial impact of once off events
that are not normally expected to occur within the usual
operating cycle of the group.
•Adjusted operating expenses are total operating expenses as
adjusted for the items defined on page 9.
•Adjusted operating margin is the adjusted operating profit
expressed as a percentage of total revenues.
•Adjusted operating profit is the operating profit as adjusted
for the items listed on page 9 excluding the effect of taxation.
•Adjusted earnings per share relates to basic earnings per
share adjusted to take account of items listed on page 9 and as
more fully described in note 22.
International Financial Reporting
Standards
The financial statements have been prepared for the first time
for the year ended March 31, 2006 under IFRS as adopted by
the EU and in the case of the company, under IFRS as adopted
by the EU, as applied in accordance with the Companies Acts
1963 to 2005. Comparative information, which was previously
presented under Irish GAAP for the year ended March 31, 2005
has been restated under IFRS, with the exception of financial
assets and liabilities as IAS 32 and IAS 39 were adopted with
effect from April 1, 2005.
The principal changes to our financial statements arising from
this transaction were in the areas of:
•Business combinations
•Share based payments
•Pensions & employee benefits
•Financial instruments; and
•Property, plant and equipment
Further details on the financial impact of these items has been
set out in note 27 to the financial statements.
for the year ended March 31, 2006
Operating & Financial Review 15
ANNUAL REPORT & FINANCIAL STATEMENTS 2006