Ryanair 2016 Annual Report Download - page 165

Download and view the complete annual report

Please find page 165 of the 2016 Ryanair annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 205

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205

165
ineffectiveness has been recorded for these foreign currency forward contracts in the current or preceding years (the
underlying hedged items and hedging instruments have been consistently closely matched).
The Company also utilises jet fuel forward contracts to manage exposure to jet fuel prices. These are used to
hedge the Company’s forecasted fuel purchases, and are arranged so as to match as closely as possible against forecasted
fuel delivery and payment requirements. These are designated in cash-flow hedges of forecasted fuel payments and have
been determined to be highly effective in offsetting variability in future cash flows arising from fluctuations in jet fuel
prices. No ineffectiveness has been recorded on these arrangements in the current or preceding years.
The European Union Emissions Trading System (EU ETS) began operating for airlines on January 1, 2012. In
order to manage the risks associated with the fluctuation in the price of carbon emission credits, the Company entered into
swap arrangements to fix the cost of a portion of its forecasted carbon emission credit purchases. The Company can forecast
its requirement for carbon credits as they are directly linked to its consumption of jet fuel. These instruments have been
designated in cash-flow hedges and no ineffectiveness has been recorded in the current year.
The (gains)/losses on the aircraft firm commitments are recognised as part of the capitalised cost of aircraft
additions, within property, plant and equipment. The (gains)/losses on interest rate swaps, commodity forward contracts
and forward currency contracts (excluding aircraft firm commitments) are recognised in the income statement when the
hedged transaction occurs.
The following table indicates the amounts that were reclassified from other comprehensive income into the
income statement, analysed by income statement category, in respect of cash-flow hedges realised during the year:
Year ended March 31,
2016
2015
2014
€M
€M
€M
Commodity forward contracts
Reclassification adjustments for (gains)/losses recognised in fuel and oil operating
expenses, net of tax
(891.4)
135.4
0.7
Interest rate swaps
Reclassification adjustments for (gains)/losses recognised in finance expense, net of tax
(15.4)
18.9
24.0
Foreign currency forward contracts
Reclassification adjustments for (gains) recognised in fuel and oil operating expenses, net
of tax
(28.4)
(86.0)
(0.3)
(935.2)
68.3
24.4
The following table indicates the amounts that were reclassified from other comprehensive income into the
capitalised cost of aircraft additions within property, plant and equipment, in respect of cash-flow hedges realised during
the year:
Year ended March 31,
2016
2015
2014
€M
€M
€M
Foreign currency forward contracts
Recognised in property plant and equipment – aircraft additions
(39.6)
(40.0)
(0.1)
(39.6)
(40.0)
(0.1)