Ryanair 2009 Annual Report Download - page 145

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4 Available-for-sale financial assets
At March 31,
2009 2008
€000 €000
Investment in Aer Lingus .......................................................................................... 93,150 311,462
During the 2009 fiscal year the Company acquired a further stake in Aer Lingus plc., an Irish airline, at
a cost of €4.2 million (2008: €58.1 million), bringing Ryanair’s total holding in Aer Lingus to 29.8% (2008:
29.3%). The balance sheet value of €93.2 million (2008: €311.5 million) reflects the market value of this
investment as at March 31, 2009. In accordance with the Company’s accounting policy, these assets are held at
fair value with a corresponding adjustment to equity following initial acquisition. All impairment losses are
recognised in the income statement and any cumulative loss previously recognised in equity is transferred to the
income statement once an impairment is considered to have occurred. During the year, the Company recorded
an impairment charge of €222.5 million (2008: €91.6 million) on its Aer Lingus shareholding reflecting the
decline in the Aer Lingus share price. 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 principal shareholders (Irish government: 25.1%; Employee Share
Ownership Plan: 14.2%) 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); and
(vi) 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 11th October 2007).
On December 1, 2008 Ryanair made a second offer to acquire 70.2% of the ordinary shares of Aer
Lingus plc that it does not already own. However, the Company was unable to secure the shareholders’ support
and accordingly on January 28, 2009 withdrew its offer for Aer Lingus.
5 Derivative financial instruments
The Audit Committee of the Board of Directors has responsibility for monitoring the treasury policies
and objectives of the Company, which include controls over the procedures used to manage the main financial
risks arising from the Company’s operations. Such risks comprise commodity price, foreign exchange and
interest rate risks. The Company uses financial instruments to manage exposures arising from these risks. These
instruments include borrowings, cash deposits and derivatives (principally jet fuel derivatives, interest rate
swaps and forward foreign exchange contracts). It is the Company’s policy that no speculative trading in
financial instruments takes place.