Ryanair 2006 Annual Report Download - page 54

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(Continued)
Notes
54
ANNUAL REPORT & FINANCIAL STATEMENTS 2006
15 FINANCIAL INSTRUMENTS (Continued)
Group: (Continued)
(d) Fair values
Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and
willing parties, other than as part of a forced liquidation sale. The following methods and assumptions were used to estimate the
fair value of each material class of the group's financial instruments:
- Cash and liquid resources: carrying amount approximates to fair value due to the short term nature of these instruments.
- Fixed rate long term debt: the repayments which Ryanair is committed to make have been discounted at the relevant rates
of interest applicable at March 31, 2006 and March 31, 2005, which would be payable to a third party to assume the obligation.
- Derivative - interest rate swaps: discounted cash flow analyses have been used to determine the estimated amount Ryanair
would receive or pay to terminate the contracts. Discounted cash flow analyses are based on estimated future interest rates.
- Derivative - currency forward and aircraft fuel contracts: a comparison of the contracted rate to the market rate for contracts
providing similar risk management profile at March 31, 2006 and at March 31, 2005 has been made.
The fair value of the group’s financial instruments at March 31, 2006 and March 31, 2005 was as follows:
2006 2006 2005 2005
Carrying amount Fair value Carrying amount Fair value
000 000 000 000
Cash and liquid resources
Cash and cash equivalents 1,439,004 1,439,004 872,258 872,258
Cash > 3 months 328,927 328,927 529,407 529,407
Restricted cash 204,040 204,040 204,040 204,040
Debt Instruments
Long term debt (1,677,728) (1,703,431) (1,414,857) (1,457,124)
Derivative instruments
Interest rate swaps (loss) (109,314) (109,314) - (151,926)
US dollar currency forward contracts gain* 19,837 19,837 -1,785
Sterling currency forward contracts (loss)/gain (202) (202) -666
Aircraft fuel price contracts gain ---5,851
*This includes fair value hedge gain amounting to 7.5m. See note 3 for further details.