| Financial instruments - Fair values and risk management | 11. The Company utilizes financial instruments to reduce exposures to market risks throughout its business. Borrowings, cash and cash equivalents and liquid investments are used to finance the Company’s operations. The Company uses derivative financial instruments, principally jet fuel derivatives, interest rate swaps, cross-currency interest rate swaps, options, and forward foreign exchange contracts to manage commodity risks, interest rate risks and currency exposures and to achieve the desired profile of fixed and variable rate borrowings and leases in appropriate currencies. It is the Company’s policy that no speculative trading in financial instruments shall take place. The main risks attaching to the Company’s financial instruments, the Company’s strategy and approach to managing these risks, and the details of the derivatives employed to hedge against these risks have been disclosed in this note. (a) Accounting classifications and fair values The following tables show the carrying amounts and fair values of financial assets and financial liabilities, by class and category, as at March 31, 2023, 2022 and 2021. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value (including cash and cash equivalents, financial assets: cash > 3 months, restricted cash, trade receivables, other assets, trade payables (current) and accrued expenses). The carrying value and fair value of the Company’s financial assets by class and category at March 31, 2023, 2022 and 2021 were as follows: Assets at Cash- Fair value Total Amortized Flow through Carrying Total Fair Cost Hedges Profit & Loss Value Value €M €M €M €M €M At March 31, 2023 Cash and cash equivalents 3,599.3 — — 3,599.3 — Financial asset: cash > 3 months 1,056.2 — — 1,056.2 — Restricted cash 19.5 — — 19.5 — Derivative financial instruments: - U.S. dollar currency forward contracts — 279.4 — 279.4 279.4 - Jet fuel & carbon derivative contracts — 49.6 — 49.6 49.6 - Jet fuel options — 14.1 — 14.1 14.1 - Cross-currency swaps — 3.6 — 3.6 3.6 - GBP currency swaps — — — — — Trade receivables 59.7 — — 59.7 — Total financial assets at March 31, 2023 4,734.7 346.7 — 5,081.4 346.7 Assets at Cash- Fair value Total Amortized Flow through Carrying Total Fair Cost Hedges Profit & Loss Value Value €M €M €M €M €M At March 31, 2022 Cash and cash equivalents 2,669.0 — — 2,669.0 — Financial asset: cash > 3 months 934.1 — — 934.1 — Restricted cash 22.7 — — 22.7 — Derivative financial instruments: - U.S. dollar currency forward contracts — 474.1 — 474.1 474.1 - Jet fuel & carbon derivative contracts — 956.3 — 956.3 956.3 - Jet fuel options — — 150.5 150.5 150.5 - Cross-currency swaps — 4.6 — 4.6 4.6 - GBP currency swaps — — — — — Trade receivables 43.5 — — 43.5 — Total financial assets at March 31, 2022 3,669.3 1,435.0 150.5 5,254.8 1,585.5 Assets at Cash- Fair value Total Amortized Flow through Carrying Total Fair Cost Hedges Profit & Loss Value Value €M €M €M €M €M At March 31, 2021 Cash and cash equivalents 2,650.7 — — 2,650.7 — Financial asset: cash > 3 months 465.5 — — 465.5 — Restricted cash 34.1 — — 34.1 — Derivative financial instruments: - U.S. dollar currency forward contracts — 208.9 — 208.9 208.9 - Cross-currency swaps — 3.0 — 3.0 3.0 - GBP currency swaps — 5.4 — 5.4 5.4 Trade receivables 18.6 — — 18.6 — Total financial assets at March 31, 2021 3,168.9 217.3 — 3,386.2 217.3 The carrying values and fair values of the Company’s financial liabilities by class and category were as follows: Liabilities at Fair value Total Amortized Cash-Flow through Carrying Total Fair Cost Hedges Profit & Loss Value Value €M €M €M €M €M At March 31, 2023 Current maturities of debt 1,056.7 — — 1,056.7 1,051.7 Non-current maturities of debt 2,853.2 — — 2,853.2 2,740.7 Derivative financial instruments: -U.S. dollar currency forward contracts — 48.0 — 48.0 48.0 -Jet fuel & carbon derivative contracts — 349.8 — 349.8 349.8 Trade payables (Current) 1,065.5 — — 1,065.5 — Trade payables (Non-current) — — — — — Accrued expenses 1,276.6 — — 1,276.6 — Total financial liabilities at March 31, 2023 6,252.0 397.8 — 6,649.8 4,190.2 Liabilities at Fair value Total Amortized Cash-Flow through Carrying Total Fair Cost Hedges Profit & Loss Value Value €M €M €M €M €M At March 31, 2022 Current maturities of debt 1,224.5 — — 1,224.5 1,224.5 Non-current maturities of debt 3,714.6 — — 3,714.6 3,727.7 Derivative financial instruments: -U.S. dollar currency forward contracts — — 31.0 31.0 31.0 -Jet fuel & carbon derivative contracts — 7.6 — 7.6 7.6 Trade payables (Current) 1,029.0 — — 1,029.0 — Trade payables (Non-current) 49.2 — — 49.2 49.2 Accrued expenses 953.0 — — 953.0 — Total financial liabilities at March 31, 2022 6,970.3 7.6 31.0 7,008.9 5,040.0 Liabilities at Fair value Total Amortized Cash-Flow through Carrying Total Fair Cost Hedges Profit & Loss Value Value €M €M €M €M €M At March 31, 2021 Current maturities of debt 1,725.9 — — 1,725.9 1,725.9 Non-current maturities of debt 3,517.8 — — 3,517.8 3,630.5 Derivative financial instruments: -U.S. dollar currency forward contracts — 40.0 25.8 65.8 65.8 -Jet fuel derivative contracts — 19.8 — 19.8 19.8 Trade payables (Current) 336.0 — — 336.0 — Trade payables (Non-current) 179.9 — — 179.9 179.9 Accrued expenses 887.3 — — 887.3 — Total financial liabilities at March 31, 2021 6,646.9 59.8 25.8 6,732.5 5,621.9 (b) Measurement of fair values Valuation techniques Financial instruments measured at fair value in the balance sheet are categorized by the type of valuation method used. The different valuation levels are defined as follows: ● Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. ● Level 2: Inputs other than quoted prices included within Level 1 that are observable for that asset or liability, either directly or indirectly. ● Level 3: Significant unobservable inputs for the asset or liability. The following paragraphs describe the valuation techniques used in measuring Level 2 and Level 3 fair values for each material class of financial instruments in the consolidated balance sheet, as well as the significant unobservable inputs used. Financial instruments measured at fair value Derivatives – interest rate swaps: Derivatives – currency forwards, jet fuel forward contracts and carbon contracts: Derivatives – jet fuel call options: Financial instruments not measured at fair value Fixed-rate long-term debt: Trade payables: Level 1 Level 2 Level 3 Total €M €M €M €M At March 31, 2023 Derivative assets measured at fair value for risk management purposes U.S. dollar currency forward contracts — 279.4 — 279.4 Cross-currency swaps — 3.6 — 3.6 Jet fuel & carbon derivative contracts — 63.7 — 63.7 — 346.7 — 346.7 Derivative liabilities measured at fair value for risk management purposes U.S. currency forward contracts — 48.0 — 48.0 Jet fuel & carbon derivative contracts — 349.8 — 349.8 — 397.8 — 397.8 Financial liabilities not measured at fair value Debt — 3,792.4 — 3,792.4 Non-current trade payables — — — — — 3,792.4 — 3,792.4 Total — 4,536.9 — 4,536.9 Level 1 Level 2 Level 3 Total €M €M €M €M At March 31, 2022 Derivative assets measured at fair value for risk management purposes U.S. dollar currency forward contracts — 474.1 — 474.1 Jet fuel & carbon derivative contracts — 1,106.8 — 1,106.8 Cross-currency swaps — 4.6 — 4.6 — 1,585.5 — 1,585.5 Derivative liabilities measured at fair value for risk management purposes U.S. currency forward contracts — 31.0 — 31.0 Jet fuel & carbon derivative contracts — 7.6 — 7.6 — 38.6 — 38.6 Financial liabilities not measured at fair value Debt — 4,952.2 — 4,952.2 Non-current trade payables — 49.2 — 49.2 — 5,001.4 — 5,001.4 — 6,625.5 — 6,625.5 Level 1 Level 2 Level 3 Total €M €M €M €M At March 31, 2021 Derivative assets measured at fair value for risk management purposes U.S. dollar currency forward contracts — 208.9 — 208.9 Jet fuel derivative contracts — 5.4 — 5.4 Cross-currency swaps — 3.0 — 3.0 — 217.3 — 217.3 Derivative liabilities measured at fair value for risk management purposes U.S. currency forward contracts — 65.8 — 65.8 Jet fuel derivative contracts — 19.8 — 19.8 — 85.6 — 85.6 Financial liabilities not measured at fair value Debt — 5,356.4 — 5356.4 Non-current trade payables — 179.9 — 179.9 — 5,536.3 — 5,536.3 Total — 5,839.2 — 5,839.2 Transfers between Levels 1 and 2 and transfers out of Level 3 During the years ended March 31, 2023, 2022 and 2021 there were no transfers between Level transfers into out (c) Financial risk management Risk management framework The Audit Committee of the Board of Directors has responsibility for monitoring the treasury policies and procedures of the Group, which include controls over the procedures used to manage the main financial risks arising from the Group’s operations. Such risks comprise market risks including commodity price, foreign exchange and interest rate risks, credit risk and liquidity risk. The Group uses various derivative financial instruments to manage its exposure to market risks, including the risks relating to fluctuations in commodity prices and currency exchange rates. Ryanair uses forward contracts and call options for the purchase of its jet fuel (jet kerosene) and carbon credit (Emission Trading Scheme) requirements to reduce its exposure to commodity price risk. It also uses foreign currency forward contracts to reduce its exposure to risks related to foreign currencies, principally the U.S. dollar exposure associated with the purchase of new Boeing 737 aircraft and the U.S. dollar exposure associated with the purchase of jet fuel. At March 31, 2023 all derivatives are designated as cash flow hedges. With the exception of the time value of jet fuel call options, all gains and losses are taken to other reserves. The time value of jet fuel call options is excluded from the designated hedging instrument, with movements in time value recognised in the income statement. Market risk Ryanair is exposed to market risks relating to fluctuations in commodity prices, interest rates and currency exchange rates. The objective of financial risk management at Ryanair is to minimize the impact of commodity price, interest rate and foreign exchange rate fluctuations on the Company’s earnings, cash flows and equity. The Group uses derivatives to manage market risks. All such transactions are carried out within the guidelines set by the Audit Committee. Generally, the Group seeks to apply hedge accounting to manage volatility in profit or loss. Currency risk The Group is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies is the euro. The main currencies in which non-euro transactions occur giving rise to foreign currency risk are primarily denominated in U.S. dollars and U.K. pounds sterling. The Company manages this risk by typically matching U.K. pounds sterling revenues against U.K. pounds sterling costs. Surplus U.K. pounds sterling revenues are sometimes used to fund forward foreign exchange contracts to hedge U.S. dollar currency exposures that arise in relation to fuel, maintenance, aviation insurance, and capital expenditure costs and typically U.K. pounds sterling are converted into euro. Additionally, the Group swaps euro for U.S. dollars using forward currency contracts to cover any expected U.S. dollar outflows for these costs. From time to time, the Company also swaps U.K. pounds sterling for euro using forward currency contracts to hedge expected future surplus U.K. pounds sterling. From time to time the Group also enters into cross-currency interest rate swaps to hedge against fluctuations in foreign exchange rates and interest rates in respect of U.S. dollar denominated borrowings. Forward currency contracts are designated as cash-flow hedges of forecasted U.S. dollar payments and have been determined to be highly effective in offsetting variability in future cash flows arising from the fluctuation in the U.S. dollar and euro exchange rates for the forecasted U.S. dollar purchases. In these hedge relationships, the main sources of ineffectiveness are changes in the timing of the hedged transactions. The Group recorded a hedge ineffectiveness loss of €nil on ineffective currency cash-flow hedges for fiscal year 2023 (2022: €nil, 2021: €8m loss). Exposure to currency risk The summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group is as follows: At March 31, 2023 2022 2021 GBP U.S.$ Euro € GBP U.S.$ Euro € GBP U.S.$ Euro € £M $M €M £M $M €M £M $M €M Monetary assets U.K. pounds sterling cash and liquid resources 78.1 — 88.8 28.3 — 33.6 8.1 — 9.5 U.S. Dollar cash and liquid resources — 671.3 619.3 — 386.8 349.6 — 506.7 432.0 78.1 671.3 708.1 28.3 386.8 383.2 8.1 506.7 441.5 At March 31, 2023 2022 2021 GBP U.S.$ Euro € GBP U.S.$ Euro € GBP U.S.$ Euro € £M $M €M £M $M €M £M $M €M Monetary liabilities U.S. dollar long term debt — 280.8 * 259.1 — 311.3 * 281.3 — 95.7 81.6 U.K. GBP debt — — — — — — 597.3 — 701.8 Pre-delivery payments due to Boeing — 669.2 617.4 — 296.2 267.7 — 517.3 441.1 — 950.0 876.5 — 607.5 549.0 597.3 613.0 1,224.5 *During the year ended March 31, 2022, the Group issued promissory notes to the value of approximately €230m (U.S.$250m) with maturity dates of 31 October 2023. The notes were issued in settlement of certain aircraft trade payables and are non-interest bearing. The carrying value of the promissory notes is not considered to be materially different from its fair value. The following exchange rates have been applied: At March 31, 2023 2022 2021 € € € USD 1.0000 1.0839 1.1065 1.1728 GBP 1.0000 0.8791 0.8422 0.8510 The notional principal amounts of forward foreign exchange contracts are as follows: At March 31, 2023 2022 2021 €M €M €M Within Year 1 5,873.1 4,607.7 1,506.9 Greater than 1 Year 1,203.5 2,097.8 1,562.4 Total 7,076.6 6,705.5 3,069.3 The notional principle amount of outstanding forward foreign exchange contracts at March 31, 2023 are treated as cash flow hedges to hedge jet fuel, capital expenditure and maintenance contracts in U.S. dollars. As at March 31, 2023 the hedged U.S. dollar rate is approximately U.S.$1.13 to €1.00. Sensitivity analysis If the rate fell by 10% outstanding foreign currency-denominated financial assets and financial liabilities at March 31, 2023 would have a positive impact of €46m on the income statement (net of tax) (2022: €26m; 2021: €40m) and a negative impact of €38m on the income statement (net of tax) (2022: €2m; 2021: €33m) if the rate increased by 10%. The same movement of 10% in foreign currency exchange rates would have a positive €677m impact (net of tax) on equity if the rate fell by 10% and a negative €554m impact (net of tax) if the rate increased by 10% (2022: €695m positive or €588m negative; 2021: €304m positive or €372m negative). Interest rate risk The Group’s objective for interest rate risk management is to reduce interest-rate risk through a combination of financial instruments, which lock in interest rates on debt and by matching a proportion of floating rate assets with floating rate liabilities. In line with the above interest rate risk management strategy, the Group has entered into a series of interest rate swaps to hedge against fluctuations in interest rates for certain floating rate financial arrangements and certain other obligations. The Group also utilizes cross currency interest rate swaps to manage exposures to fluctuations in foreign exchange rates of U.S. dollar denominated floating rate borrowings, together with managing the exposures to fluctuations in interest rates on these U.S. dollar denominated floating rate borrowings. Cross currency interest rate swaps are primarily used to convert a portion of the Group’s U.S. dollar denominated debt to euro and floating rate interest exposures into fixed rate exposures and are set so as to match exactly the critical terms of the underlying debt being hedged (i.e. notional principal, interest rate settings, re-pricing dates). These are all designated in cash-flow hedges of the forecasted U.S. dollar variable interest payments on the Group’s underlying debt and have been determined to be highly effective in achieving offsetting cash flows. Accordingly, no ineffectiveness has been recorded in the income statement relating to these hedges in the current year. Floating interest rates on financial liabilities are referenced to European interbank interest rates (EURIBOR). Secured long-term debt and interest rate swaps typically re-price on a quarterly basis. The Group uses current interest rate settings on existing floating rate debt at each year-end to calculate contractual cash flows. Fixed interest rates on financial liabilities are fixed for the duration of the underlying structures. Exposures to interest rate risk The following was the maturity profile of the Group’s financial liabilities (excluding aircraft provisions, trade payables and accrued expenses). Weighted average 2028 - rate 2024 2025 2026 2027 2031 Total At March 31, 2023 (%) €M €M €M €M €M €M Fixed rate Secured debt 2.43% 16.2 12.3 — — — 28.5 Unsecured debt 1.39% 1,040.5 * 46.0 846.1 1,198.8 — 3,131.4 Debt 1.39% 1,056.7 58.3 846.1 1,198.8 — 3,159.9 Lease liabilities - right of use 4.37% 43.2 38.4 31.8 32.2 60.7 206.3 Total fixed rate debt 1,099.9 96.7 877.9 1,231.0 60.7 3,366.2 Floating rate Unsecured long term debt 3.45% — 750.0 ** — — — 750.0 Total floating rate debt 3.45% — 750.0 — — — 750.0 Total financial liabilities 1,099.9 846.7 877.9 1,231.0 60.7 4,116.2 * Includes promissory notes amounting to approx. €230 m ** Refinanced post year end (May 2023) with unsecured RCF at lower margin maturing May 2028 Weighted average 2027 - rate 2023 2024 2025 2026 2028 Total At March 31, 2022 (%) €M €M €M €M €M €M Fixed rate Secured debt 2.43% 62.9 52.2 12.0 — — 127.1 Unsecured debt 1.31% 1,140.9 * 807.7 47.8 847.0 1,197.9 4,041.3 Debt 1.35% 1,203.8 859.9 59.8 847.0 1,197.9 4,168.4 Lease liabilities - right of use 2.33% 56.9 51.0 26.2 3.1 1.1 138.3 Total fixed rate debt 1,260.7 910.9 86.0 850.1 1,199.0 4,306.7 Floating rate Secured long term debt 0.14% 20.7 — — — — 20.7 Unsecured long term debt 0.75% — — 750.0 — — 750.0 Total floating rate debt 0.73% 20.7 — 750.0 — — 770.7 Total financial liabilities 1,281.4 910.9 836.0 850.1 1,199.0 5,077.4 * Includes promissory notes amounting to approx. €226 m Weighted average 2026 - rate 2022 2023 2024 2025 2027 Total At March 31, 2021 (%) €M €M €M €M €M €M Fixed rate Secured debt 2.47% 63.5 61.4 51.3 11.3 — 187.5 Unsecured debt 1.46% 1,617.4 916.2 808.9 49.0 849.0 4,240.5 Debt 1.50% 1,680.9 977.6 860.2 60.3 849.0 4,428.0 Lease liabilities - right of use 2.39% 52.5 53.8 48.1 24.8 3.9 183.1 Total fixed rate debt 1,733.4 1,031.4 908.3 85.1 852.9 4,611.1 Floating rate Secured long term debt 0.70% 45.0 20.7 — — — 65.7 Unsecured long term debt — — — 750.0 — 750.0 Total floating rate debt 0.70% 45.0 20.7 — 750.0 — 815.7 Total financial liabilities 1,778.4 1,052.1 908.3 835.1 852.9 5,426.8 The Group holds significant cash balances that are invested on a short-term basis. At March 31, 2023, all of the Group’s cash and liquid resources attracted a weighted average interest rate of 3.02% (2022: -0.31%; 2021: -0.26%). Interest rates on cash and liquid resources are generally based on the appropriate EURIBOR or bank rates dependent on the principal amounts on deposit. At March 31, 2023 2022 2021 Within Within Within 1 year 1 year 1 year Financial assets €M €M €M Cash and cash equivalents 3,599.3 2,669.0 2,650.7 Cash > 3 months 1,056.2 934.1 465.5 Restricted cash 19.5 22.7 34.1 Total financial assets 4,675.0 3,625.8 3,150.3 Derivative financial instruments – Interest rate risk exposure The Group has cross currency swaps to swap fixed rate U.S. dollar denominated debt of U.S.$30.9m (2022: U.S.$48.1m; 2021: U.S.$65m) into a fixed rate euro debt of €24.5m (2022: €38m; 2021: €52m). As at March 31, 2023 the hedged euro fixed interest rate varies between 1.54% to 1.79% depending on the various tranches. Sensitivity analysis Based on the levels of and composition of year-end interest bearing assets and liabilities, including derivatives, at March 31, 2023, a plus one percentage point movement in interest rates would result in a respective increase of approximately €92m (net of tax) in net finance expense (2022: decrease €19m, 2021: increase €6m) and a minus one percentage point movement in interest rates would result in a respective decrease of approximately €49m in net finance expense in the income statement (2022: increase €33m; 2021: increase €48m) and a nil increase or decrease in equity (2022: nil; 2021: nil). All of the Group’s interest rate swaps (to the extent that it has any) are used to swap variable rate debt to fixed rate debt; consequently, any changes in interest rates would have an equal and opposite income statement effect for both the interest rate swaps and the debt. Jet fuel and carbon credits price risk The Group’s historical fuel risk management policy has been to hedge up to approximately 90% of the forecast fuel consumption to ensure that the future cost per gallon of fuel is locked in. This policy was adopted to prevent the Group 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 Group, the Group does not necessarily hedge up to this limit. At March 31, 2023, the Group had entered into forward hedging covering approximately 81% of the Group’s estimated fuel exposure for fiscal year 2024 and 8% of the Group’s estimated fuel exposure for fiscal year 2025. The Group utilizes jet fuel forward contracts and jet fuel call options to manage exposure to jet fuel prices. These are used to hedge the Group’s forecasted fuel purchases and are arranged so as to match as closely as possible against forecasted fuel delivery and payment requirements. These contracts are designated as 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. The Group has entered into jet fuel forward contracts with a number of counterparties to hedge jet fuel purchases over a period of up to 18 to 24 months. The notional amount of these contracts are €3.3bn (2022: €1.8bn; 2021: €609m) at an average hedged rate of approximately U.S.$885 per metric tonne. (2022: U.S.$640; 2021: U.S.$545). In these hedging relationships the main sources of ineffectiveness are changes in the timing of the hedged transactions. The Group recorded a hedge ineffectiveness charge of €nil in fiscal year 2023 (2022: €nil, 2021: €219m) in relation to jet fuel hedges (€nil in relation to jet fuel swaps, and €nil in relation currency forward contracts). The European Union Emissions Trading System (“EU-ETS”) is applicable to airlines from January 1, 2012. Ryanair recognizes the cost associated with the purchase of carbon credits as part of the EU-ETS as an expense in the income statement. This expense is recognized in line with fuel consumed during the fiscal year as the Group’s carbon emissions and fuel consumptions are directly linked. The Group’s fuel risk management policy includes hedging of the Group’s EU-ETS and UK-ETS (carbon) exposures. This policy was adopted to prevent the Group being exposed, in the short term, to adverse movements in carbon credit prices. However, when deemed to be in the best interests of the Group, it may deviate from this policy. At March 31, 2023, the Group had hedged approximately 54% of the Group’s estimated carbon exposure for fiscal year 2024 at approximately €75 per EUA (2022: fiscal year 2023 was 85% hedged at €48) and £72 per UKA (2022: £75). Sensitivity Analysis A plus or minus change of 10% in the price of jet fuel at March 31, 2023 would have a -€7m impact (2022: -€40m) on the income statement (net of tax) if the price fell by 10% and an +€4m impact (2022: +€47m) if the price increased by 10%. The same movement of 10% in the price of jet fuel at March 31, 2023 would have a -€258m impact (2022: -€234m) on equity if the price fell by 10% and a +€258m impact (2022: +€234m) if the price increased by 10%. A plus or minus change of 10% in the price of carbon at March 31, 2023 would have a €nil impact (2022: nil) on the income statement (net of tax) if the price fell by 10% and a €nil impact (2022: nil) if the price increased by 10%. The same movement of 10% in the price of carbon at March 31, 2023 would have a -€32m impact (2022: -€26m) on equity if the price fell by 10% and a +€32m impact (2022: +€26m) if the price increased by 10%. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from trade receivables, cash and cash equivalents, derivatives and guarantees. Trade receivables The Group’s revenues derive principally from airline travel on scheduled services, internet income and in-flight and related sales. Revenue is primarily derived from European routes. No individual customer accounts for a significant portion of total revenue. At March 31, 2023, €5.1m (2022: €3.6m; 2021: €1.0m) of the accounts receivable balance were past due, of which €nil (2022: €nil; 2021: €nil) was impaired and €5.1m (2022: €3.6m; 2021: €1.0m) was considered past due but not impaired for which the expected credit loss was considered immaterial. Cash and cash equivalents The Group holds significant cash balances, which are classified as either cash and cash equivalents or financial assets >3 months. These deposits and other financial instruments (principally certain derivatives and loans as identified above) give rise to credit risk on amounts due from counterparties. Credit risk is managed by limiting the aggregate amount and duration of exposure to any one counterparty through regular review of counterparties’ market-based ratings, Tier 1 capital level and credit default swap rates and by taking into account bank counterparties’ systemic importance to the financial systems of their home countries. The Group limits the concentration of risk in relation to any one institution for cash and cash equivalents. Deposits are entered into with parties that have high investment grade credit ratings from the main rating agencies, including Standard & Poor’s (“S&P”), Moody’s and Fitch ratings. The Group also monitors where counterparty credit default swaps are trading. The maximum exposure arising in the event of default on the part of the counterparty is the carrying value of the relevant financial instrument. The Group is authorized to place funds on deposit for periods up to 18 months. Derivatives In line with the Group’s policies and procedures, derivatives are entered into with parties that have high investment grade credit ratings from the main rating agencies, including Standard & Poor’s (“S&P”), Moody’s and Fitch ratings. The Group also avoids concentration of risk in relation to derivative counterparties. Guarantees At March 31, 2023, the Group has provided approximately €4.12bn (2022: €5.09bn; 2021: €5.43bn) in letters of guarantee to secure obligations of subsidiary undertakings in respect of loans, bank advances and long dated foreign currency transactions. In order to avail itself of the exemption contained in Section 357 of the Companies Act, 2014, the holding company, Ryanair Holdings plc, has guaranteed the liabilities and commitments of its subsidiary undertakings registered in Ireland. As a result, the subsidiary undertakings have been exempted from the requirement to annex their statutory financial statements to their annual returns. Liquidity risk and capital management Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial activities that are settled by delivering cash or another financial asset. The Group’s objective when managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when they fall due and to provide adequately for contingencies. The Group’s cash and liquid resources comprise cash and cash equivalents, short-term investments and restricted cash. The Group defines the capital that it manages as the Group’s long-term debt and equity. The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to maintain sufficient financial resources to mitigate against risks and unforeseen events. In addition, the Group aims to achieve the best available return on investments of surplus cash – subject to credit risk and liquidity constraints. The Group finances its working capital requirements through a combination of cash generated from operations, bank loans and debt capital market issuances for general corporate purposes including the acquisition of aircraft. The Group had cash and liquid resources at March 31, 2023 of €4,675m (2022: €3,626m; 2021: €3,150m). During the year, the Group had a net cash outflows of €1,782m in relation to property, plant and equipment (2022: outflow of €957m; 2021: inflow of €195m). Cash generated from operations has been the principal source for these cash requirements during the year. The Group repaid an €850m 1.125% Eurobond under EMTN programme in March 2023 and repaid €51m of Ex-Im debt early. The Board of Directors periodically reviews the capital structure of the Group, considering the cost of capital and the risks associated with each class of capital. The Board approves any material adjustments to the capital structure in terms of the relative proportions of debt and equity. Management believes that the working capital available to the Group is sufficient for its present requirements and will be sufficient to meet its anticipated requirements for capital expenditures and other cash requireme |
