Ryanair 2009 Annual Report Download - page 140

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the extent that service is provided prior to the grant measurement date, the fair value of the share options is
initially estimated and re-measured at each balance sheet date until the grant measurement date is achieved. The
fair value of the options granted is determined using a binomial lattice option-pricing model, which takes into
account the exercise price of the option, the current share price, the risk-free interest rate, the expected volatility
of the Ryanair Holdings plc share price over the life of the option and other relevant factors. Non-market vesting
conditions are taken into account by adjusting the number of shares or share options included in the
measurement of the cost of employee services so that ultimately, the amount recognised in the income statement
reflects the number of vested shares or share options.
On transitioning to IFRS for the first time in the 2006 fiscal year the Company made use of the
transition provisions in IFRS 1 for share-based payments by only applying the fair value calculation to share
option grants that were made after November 7, 2002, but which had not vested by January 1, 2005.
Pensions and other post-retirement obligations
The Company provides certain employees with post-retirement benefits in the form of pensions. The
Company operates a number of defined contribution and defined benefit pension schemes.
Costs arising in respect of the Company’s defined contribution pension schemes (where fixed
contributions are paid into the scheme and there is no legal or constructive obligation to pay further amounts)
are charged to the income statement in the period in which they are incurred. Any contributions unpaid at the
balance sheet date are included as a liability.
A defined benefit plan is a post-employment benefit plan other than a defined-contribution plan. The
liabilities and costs associated with the Company’s defined benefit pension schemes are assessed on the basis of
the projected unit credit method by professionally qualified actuaries and are arrived at using actuarial
assumptions based on market expectations at the balance sheet date. The discount rates employed in determining
the present value of each scheme’s liabilities are determined by reference to market yields at the balance sheet
date of high quality corporate bonds in the same currency and term that is consistent with those of the associated
pension obligations. The net surplus or deficit arising on the Company’s defined-benefit schemes is shown
within non-current assets or liabilities on the balance sheet. The deferred tax impact of any such amount is
disclosed separately within deferred tax.
The Company separately recognises the operating and financing costs of defined-benefit pensions in
the income statement. IFRS permits a number of options for the recognition of actuarial gains and losses. The
Company has opted to recognise all actuarial gains and losses within equity.
Income taxes including deferred income taxes
Income tax on the profit or loss for a year comprises current and deferred tax. Income tax is recognised
in the income statement except to the extent that it relates to items recognised directly in equity (such as certain
derivative financial instruments, available-for-sale assets, pensions and other post-retirement obligations).
Current tax payable on taxable profits is recognised as an expense in the period in which the profits arise using
tax rates enacted or substantively enacted at the balance sheet date.
Deferred income tax is provided in full, using the balance sheet liability method, on temporary
differences arising from the tax bases of assets and liabilities and their carrying accounts in the consolidated
financial statements. Deferred income tax is determined using tax rates and legislation enacted or substantively
enacted by the balance sheet date and expected to apply when the temporary differences reverse.
The following temporary differences are not provided for: (i) the initial recognition of assets and
liabilities that effect neither accounting nor taxable profit and (ii) differences relating to investments in
subsidiaries to the extent that it is probable they will not reverse in the future.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be
available against which temporary differences can be utilised. The carrying amounts of deferred tax assets are
reviewed at each balance sheet date and reduced to the extent that it is no longer probable that a sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be realised.