Ryanair 2005 Annual Report Download - page 70

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28 COMMITMENTS AND CONTINGENCIES (Continued)
Contingencies
(d) The group is engaged in litigation arising in the ordinary course of its business. Management does not believe that any such
litigation will individually or in aggregate have a material adverse effect on the financial condition of the group. Should the group
be unsuccessful in these litigation actions, management believes the possible liabilities then arising cannot be determined but are
not expected to materially adversely affect the group’s results of operations or financial position.
(e) The company has provided 116.9m in letters of guarantee to secure obligations of subsidiary undertakings in respect of loans and
bank advances.
(f) In order to avail of the exemption contained in Section 17 of the Companies (Amendment) Act, 1986, the holding company, Ryanair
Holdings plc, has guaranteed the liabilities of its subsidiary undertakings registered in Ireland. As a result, the subsidiary
undertakings have been exempted from the provisions of Section 7 of the Companies (Amendment) Act, 1986. Details of the group’s
principal subsidiaries have been included at note 31. The Irish subsidiaries of the group covered by the Section 17 exemption are
listed at note 31 also. One additional Irish subsidiary covered by this exemption which is not listed as a principal subsidiary at note
31 is Airport Marketing Services Limited.
(g) The group has also entered into a series of interest rate swaps to hedge against fluctuations in interest rates for certain floating
rate financing arrangements. Cash deposits have been set aside as collateral (subject to an agreed capped amount of 200.0m)
to mitigate certain counterparty risk of fluctuations on long-term derivative and financing arrangements (“restricted cash”). At
March 31, 2005 such collateral amounted to 200.0m (2004: 200.0m). Additional numerical information on these swaps and on
other derivatives held by the group is set out in notes 15 to 18 of the financial statements.
(h) In February 2004 the European Commission ruled that Ryanair had received illegal state aid from the Walloon regional government
in connection with its establishment of a low cost base at Brussels (Charleroi).
Subsequently Ryanair was requested by the regional government to repay all deemed illegal state aid, but in accordance with the
Commission ruling Ryanair may deduct various costs incurred in establishing its base at Brussels (Charleroi) from this amount.
Ryanair has advised the regional government that it believes no money is repayable as the cost of establishing the base exceeded
the amount determined to be illegal state aid.
Ryanair is also appealing the decision of the European Commission to the European Court of First Instance, requesting that the
Court annul the decision on the basis that Ryanair’s agreement at Brussels (Charleroi) was consistent with agreements at similar
privately owned airports and therefore did not constitute illegal state aid.
The company has placed 4m in an escrow account pending the outcome of this appeal.
29 NOTES TO CASH FLOW STATEMENT
2005 2004
(a) Reconciliation of operating profit to net cash inflow from operating activities: 000 000
Operating profit excluding goodwill amortisation 329,489 251,287
Foreign exchange (losses)/gains (2,323) 3,217
Depreciation of tangible fixed assets 98,703 101,391
(Increase) in inventories (1,629) (3,652)
Decrease/(increase) in accounts receivable (5,712) 38
(Increase) in other assets (4,855) (5,283)
Increase in accounts payable 24,182 6,332
Increase in accrued expenses and other liabilities 103,549 87,433
Decrease in Other Creditors (11,603) -
Increase in accounts payable > 1yr - 14,777
Increase in maintenance provision (note 13) 714 6,522
Net cash inflow from operating activities 530,515 462,062
(Continued)
Notes
60
ANNUAL REPORT & FINANCIAL STATEMENTS 2005