Ryanair 2005 Annual Report Download - page 85

The following summary sets out the most significant changes required to Ryanair’s consolidated financial statements as a
result of the transition to IFRS. The effect of these changes is set out on pages 77 to 79.
(a) IAS 19: Pension and other Post Retirement Benefits (recurring change)
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 exemption 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 10 April 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 adjustments:
(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). No change has been recorded to the provisional fair value of onerous leases taken over on acquisition as the impact of
discounting such amounts is 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
2004, thereby releasing Ryanair from any remaining lease obligations at that time. Irish GAAP permits that such an
adjustment can be made to the provisional value of the assets and liabilities acquired as part of the original business
combination, provided that the adjustment is 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 is 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 31 March 2005.
Principal Changes under IFRS 75
ANNUAL REPORT & FINANCIAL STATEMENTS 2005