Ryanair 2016 Annual Report Download - page 162

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4. Available-for-sale financial assets
At March 31,
2016
2015
2014
€M
€M
€M
Investment in Aer Lingus
—
371.0
260.3
During the year ended March 31, 2016 Ryanair disposed of its 29.8% shareholding in Aer Lingus for cash
consideration of €398.1 million or €2.50 per share, resulting in a gain in the income statement of €317.5 million, primarily
due to the reclassification of unrealised gains from other comprehensive income and reserves to the income statement. The
investment had previously been impaired to €0.50 per share in prior periods. As at March 31, 2015 Ryanair’s total
percentage shareholding was 29.8% (2014: 29.8%). The balance sheet value at March 31, 2015 of €371.0 million (2014:
€260.3 million) reflected the market value of this investment as at that time. In accordance with the Company’s accounting
policy, this asset was held at fair value with a corresponding adjustment to other comprehensive income following initial
acquisition. Any impairment losses that arose were recognised in the income statement and were not subsequently reversed.
Any cumulative loss previously recognised in other comprehensive income was transferred to the income statement once
an impairment was considered to have occurred.
During the 2007 fiscal year, the Company acquired 25.2% of Aer Lingus. The Company increased its interest to
29.3% during the 2008 fiscal year, and to 29.8% during the 2009 fiscal year at a total aggregate cost of €407.2 million.
In 2006 and 2012, Ryanair made offers to acquire the entire share capital of Aer Lingus, but both of these offers
were prohibited by the European Commission on competition grounds. In addition, from 2010 to 2013 the U.K.
competition authority investigated Ryanair’s minority stake in Aer Lingus. On August 28, 2013, it issued its decision in
which it found that Ryanair’s shareholding “gave it the ability to exercise material influence over Aer Lingus” and “had
led or may be expected to lead to a substantial lessening of competition in the markets for air passenger services between
Great Britain and Ireland”, and ordered Ryanair to reduce its shareholding in Aer Lingus to no more than five percent of
Aer Lingus’ issued ordinary shares. Ryanair appealed this decision on procedural and substantive grounds, but withdrew
the appeal in September 28, 2015, following the sale of its stake in Aer Lingus on September 1, 2015.
On June 19, 2015 IAG issued a formal offer for Aer Lingus Group plc. The offer, which was recommended by
the Board of Aer Lingus Group plc, consisted of cash consideration of €2.50 per ordinary share plus a €0.05 ordinary
dividend (already paid in May 2015). On July 10, 2015 Ryanair confirmed that the Board of Ryanair Holdings plc voted
unanimously to accept the IAG offer for Ryanair’s 29.8% shareholding in Aer Lingus Group plc, subject to that offer
receiving merger clearance from the European Commission which was subsequently granted on July 15, 2015. On
September 1, 2015 the Company received total consideration of €398.1 million for the sale of its stake in 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, cross-currency interest rate swaps and
forward foreign exchange contracts). It is the Company’s policy that no speculative trading in financial instruments takes
place.
The Company’s historical fuel risk management policy has been to hedge between 70% and 90% of the forecast
rolling annual volumes required to ensure that the future cost per gallon of fuel is locked in. This policy was adopted to
prevent the Company being exposed, in the short term, to adverse movements in global jet fuel prices. However, when
deemed to be in the best interests of the Company, it may deviate from this policy. At March 31, 2016, the Company had
hedged approximately 95% (2015; 90%, 2014; 90%) of its estimated fuel exposure for the next fiscal year and hedged
approximately 38% of its estimated fuel exposure for fiscal 2018.