Ryanair 2010 Annual Report Download - page 142

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• IAS 1 (revised) - Presentation of Financial Statements. The revised standard prohibits the presentation of
items of income and expense (that is “non-owner changes in equity”) in the statement of changes in equity,
requiring “non-owner changes in equity” to be presented separately from owner changes in equity. All
“non-owner changes in equity” are required to be shown in a performance statement. Entities can choose
whether to present one performance statement (the statement of comprehensive income) or two statements
(the income statement and the statement of comprehensive income). We have elected to present two
statements: an income statement and a statement of comprehensive income. Also, the revised standard
includes the statement of changes in shareholders’ equity as a primary statement, rather than as a note to the
financial statements. Since the change in accounting policy only impacts the presentation and disclosure
aspects of the financial statements, there is no impact on reported results or earnings per share.
• Amendment to IFRS 7, “Financial Instruments: Disclosures”. The amendment requires enhanced
disclosures about financial instrument fair-value measurement and liquidity risk. In particular, the
amendment requires disclosure of fair-value measurements reflected in the balance sheet by level, using a
fair-value measurement hierarchy. We applied the amendment to IFRS 7 from April 1, 2009 and opted not
to include the equivalent comparative information as permitted by the standard. The adoption of the
amendment has resulted in additional disclosures, but has had no impact on our financial position or results
from operations.
Basis of preparation
These consolidated financial statements are presented in euro rounded to the nearest million, the euro
being the functional currency of the parent entity and the majority of the group companies. They are prepared on
the historical cost basis, except for derivative financial instruments and available-for-sale securities which are
stated at fair value, and share-based payments, which are based on fair value determined as at the grant date of
the relevant share options. Any non-current assets classified as held for sale are stated at the lower of cost and
fair value less costs to sell.
Critical accounting policies
The preparation of financial statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. These estimates and associated assumptions are based on historical experience
and various other factors believed to be reasonable under the circumstances, and the results of such estimates
form the basis of judgements about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ materially from these estimates. These underlying assumptions are
reviewed on an ongoing basis. A revision to an accounting estimate is 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
these are also affected. Principal sources of estimation uncertainty have been set forth in the critical accounting
policies section below. Actual results may differ from estimates.
The Company believes that its critical accounting policies, which are those that require management’s
most difficult, subjective and complex judgements, are those described in this section. These critical accounting
policies, the judgements and other uncertainties affecting application of these policies and the sensitivity of
reported results to changes in conditions and assumptions are factors to be considered in reviewing the
consolidated financial statements.
Available-for-sale securities
The Company holds certain equity securities, which are classified as available-for-sale, and are
measured at fair value, less incremental direct costs, on initial recognition. Such securities are classified as
available-for-sale, rather than as an investment in an associate if the Company does not have the power to
exercise significant influence over the investee. Subsequent to initial recognition they are measured at fair value
and changes therein, other than impairment losses, are recognised directly in equity. The fair values of available-
for-sale securities are determined by reference to quoted prices at each reporting date. When an investment is
de-recognised the cumulative gain or loss in equity is transferred to the income statement.
Such securities are considered to be impaired if there is objective evidence which indicates that there
may be a negative influence on future cash flows. This includes where there is a significant or prolonged decline