Ryanair 2006 Annual Report Download - page 69

27 TRANSITION TO 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 from Irish GAAP during the fiscal year ended March 31, 2006. The effect of these changes is set out in the
tables below.
(a) IAS 19: Pension and other Post Retirement Benefits
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 option 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.
(b)IFRS 3: Business Combinations
The group has elected to restate the acquisition of Buzz on April 10, 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 cumulative adjustments in the periods to March 31, 2005:
(i). Reversal of goodwill amortisation since the date of the acquisition amounting to 4.5 million.
(ii). 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.
(iii). A provision for onerous leases was recognised in the balance sheet at the date the business combination was effected. On
transition to IFRS, no change was recorded to the provisional fair value of onerous leases taken over on acquisition as the impact
of discounting such amounts was 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 2005,
thereby releasing Ryanair from any remaining lease obligations at that time. Irish GAAP permitted that such an adjustment could
be made to the provisional value of the assets and liabilities acquired as part of the original business combination, provided that
the adjustment was 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 was 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 March 31, 2005.
(Continued)
Notes 69
ANNUAL REPORT & FINANCIAL STATEMENTS 2006