Ryanair 2011 Annual Report Download - page 147

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4 Available-for-sale financial assets
At March 31,
2011 2010 2009
1M 1M 1M
Investment in Aer Lingus ................................................................
.........................
114.0 116.2 93.2
As at March 31, 2011 Ryanair’s total holding in Aer Lingus was 29.8% (2010: 29.8%; 2009: 29.8%).
The balance sheet value of 1114.0 million (2010: 1116.2 million; 2009: 193.2 million) reflects the market value
of this investment as at March 31, 2011. In accordance with the Company’s accounting policy, this asset is held
at fair value with a corresponding adjustment to other comprehensive income following initial acquisition. All
impairment losses are recognised in the income statement and any cumulative loss previously recognised in
other comprehensive income is transferred to the income statement once an impairment is considered to have
occurred. During the year, the Company recorded an impairment charge of nil (2010: 113.5 million; 2009:
1222.5 million) in the income statement on its Aer Lingus shareholding. All impairment losses are required to
be recognised in the income statement and may not be subsequently reversed, while gains are recognised
through other comprehensive income.
The movement on the available for sale financial asset from 1116.2m at March 31, 2010 to 1114.0
million at March 31, 2011 is comprised of a loss of 12.2 million, recognised through other comprehensive
income, reflecting the decrease in the share price from 10.73 per share at March 31, 2010 to 10.72 per share at
March 31, 2011. As noted above, all impairment losses are required to be recognised in the income statement
and are not subsequently reversed, while gains are recognised through other comprehensive income. However,
as the investment has previously been impaired to 10.50 per share, in prior periods, the loss of 12.2 million
represents a reversal of gains taken through other comprehensive income in prior periods but subsequent to the
2010 impairments and is therefore accounted for through other comprehensive income.
This investment is classified as available-for-sale, rather than as an investment in an associate, because
the Company does not have the power to exercise any influence over the entity. The Company's determination
that it does not have any influence over Aer Lingus has been based on the following factors, in particular:
(i) Ryanair does not have any representation on the Aer Lingus Board of Directors, nor does it
have a right to appoint a director;
(ii) Ryanair does not participate in Aer Lingus’ policy-making decisions, nor does it have a right
to participate in such policy-making decisions;
(iii) There are no material transactions between Ryanair and Aer Lingus, there is no interchange of
personnel between the two companies and there is no sharing of technical information between the companies;
(iv) Aer Lingus and its significant shareholder (the Irish government: 25.1%) have openly opposed
Ryanair’s investment or participation in the company;
(v) On August 13, 2007 and September 4, 2007, Aer Lingus refused Ryanair’s attempt to assert its
statutory right to requisition a general meeting (a legal right of any 10% shareholder under Irish law). The Aer
Lingus Board of Directors refused to accede to these requests (by letters dated August 31, 2007 and September
17, 2007);
(vi) On April 15, 2011, the High Court in Dublin ruled that Aer Lingus was not obliged to accede
to Ryanair’s request that two additional resolutions (on the payment of a dividend and on payments to pension
schemes) be put to vote at Aer Lingus’ AGM; and
(vii) The European Commission has formally found that Ryanair’s shareholding in Aer Lingus
does not grant Ryanair “de jure or de facto control of Aer Lingus” and that “Ryanair’s rights as a minority
shareholder…are associated exclusively to rights related to the protection of minority shareholders”
(Commission Decision Case No. COMP/M.4439 dated October 11, 2007). The European Commission’s finding
has been confirmed by the European Union's General Court which issued a decision on July 6, 2010 that the
European Commission was justified to use the required legal and factual standard in its refusal to order Ryanair