Ryanair Holdings PLC
31 July 2007
RYANAIR ANNOUNCES RECORD Q1 PROFITS
PROFITS RISE 20% TO €139M - TRAFFIC GROWS BY 18%.
Ryanair, Europe's largest international airline, today (31 July) announced
record first quarter profits of €139m, a 20% increase over last year. Traffic
grew by 18% to 12.6m passengers and revenues rose by 22% to €693m. Unit costs
increased by 5% mainly due to higher fuel, staff, and airport costs. Despite
these higher costs, Ryanair maintained an industry leading after tax margin of
20%.
Summary Table of Results (IFRS) - in Euro
Quarter Results June 30, 2006 June 30, 2007 % Increase
Passengers 10.7m 12.6m 18%
Revenue €566.6m €693.0m 22%
Profit after Tax €115.7m €138.9m 20%
Basic EPS(EuroCents) 7.50 8.98 20%
Announcing these results Ryanair's CEO, Michael O'Leary, said:
'These record Q1 profits reflect an 18% growth in passenger volumes, flat
yields, and strong growth in ancillaries. Ancillary Revenues grew by 53% to
€117.1m, due to improved penetration of car hire, hotels, travel insurance,
onboard sales and excess baggage revenues. Ancillaries account for 17% of total
revenues and we expect this will rise to 20% over the next 3 years.
Unit costs rose by 5% due primarily to the doubling of airport charges at
Stansted and higher charges at Dublin airport. Staff costs rose by 34% to €75.9m
due to volume growth and increased cabin crewing ratios. We continue to focus
aggressively on costs and anticipate that unit costs for the remainder of the
year will grow by 5%, somewhat lower than the 6% to 7% previously guided.
We continue to oppose the BAA airport monopoly's plans to waste £4bn on building
a second runway and terminal at Stansted. BAA Stansted doubling of airport
charges since April 07 have caused traffic declines at Stansted for the first
time in 15 years. The current service provided by the BAA at Stansted is nothing
short of appalling. Many of the 17 security machines are regularly unmanned
during peak morning periods, and understaffing at passport control continues to
cause long queues and frequent passenger delays. We continue to press for the
break up of the BAA airport monopoly which provides abject facilities, a third
rate service and charges extortionate prices, particularly at Stansted. This
winter we will sit 7 of our 40 Stansted based aircraft on the ground because
Stansted's higher airport charges make it more profitable to ground these
aircraft during the winter rather than fly them.
We remain opposed to the DAA's plans to build an €800m second terminal in
Dublin, a cost which has escalated four fold over the past 18 months. This
terminal has now been identified by the regulator as being the wrong size. It is
also in the wrong location, and grossly overpriced. We have called upon the
Aviation Regulator to ensure that only those airlines who use T2 will pay for
it. Ryanair passengers cannot be expected to pay higher charges to cross
subsidise a second terminal they do not want and will never use. The DAA have
spent almost €50m on consultants reports over the past year, and now plan to
waste 'about €450m' on extending/refurbishing Terminal One, while at the same
time reducing its capacity by 40% from 25m passengers to just 15m passengers.
The proposed expenditure at Dublin is out of control and sadly the Irish
aviation regulator continues to do nothing to restrain this waste or to protect
airport users.
We intend to appeal the EU Commissions recent decision (to prohibit our offer
for Aer Lingus) to the European Court of First Instance. We are confident that
this decision will be overturned because this is the first ever prohibition
between two companies which combined will have less than 5% of the EU market.
The EU Commission has for the last 20 years been encouraging EU airlines to
merge, and they have already approved much larger mergers such as Air France/KLM
and Lufthansa/Swiss. We look forward to the European court overturning this
unprecedented, and we believe nakedly political decision.
We will continue to grow over the winter period, however, due to the softness in
yields, and the doubling of both UK APD and costs at Stansted, we plan to reduce
the number of aircraft operated ex Stansted this winter by almost 20% from 40 to
33. This will mean reduced frequency or temporary cessation of services on
routes which would be loss making due to Stansted's higher airport charges.
Consequently passenger volumes this winter will now grow at a slower rate (by
18% to 50m) than the 24% to 52m previously guided. These capacity reductions
should bring more stability to yields, whilst, at the same time, reducing
operating costs and eliminating losses on these non profitable winter routes at
Stansted.
Our outlook remains cautious for the fiscal year due to the softness of traffic
and yields. Although we have little visibility beyond the next 2 months we
expect this weaker demand to continue. We anticipate that yields in Q2 will be
slightly down, and winter (H2) yields be down by as much as -5% to -10% compared
to last year. However, the reduction in capacity on non profitable winter
routes, and the significant airport cost savings this cut back will generate,
will enable us to slightly increase our previous guidance. We now expect that
Net Profit will increase by (+10%) for the fiscal year compared to (+5%)
previously guided, although, we caution that this guidance will be heavily
dependent upon the accuracy of our forecast decline in yields for the second
half of the year.
During the last two months we undertook a series of share buy backs amounting to
a total of 37.6m shares at a cost of approx. €187m. This share buy back
represents 2.5% of the pre-existing issued share capital of the company. The
shareholder authority for such a buy back expires at AGM on September 20th,
2007.
Ends.
For further information please contact:
Howard Millar Pauline McAlester
Ryanair Holdings Plc Murray Consultants
Tel: 353 1 812 1212 Tel: 353 1 498 0300
www.ryanair.com
Certain of the information included in this release is forward looking and is
subject to important risks and uncertainties that could cause actual results to
differ materially. It is not reasonably possible to itemise all of the many
factors and specific events that could affect the outlook and results of an
airline operating in the European economy. Among the factors that are subject to
change and could significantly impact Ryanair's expected results are the airline
pricing environment, fuel costs, competition from new and existing carriers,
market prices for the replacement aircraft, costs associated with environmental,
safety and security measures, actions of the Irish, U.K., European Union ('EU')
and other governments and their respective regulatory agencies, fluctuations in
currency exchange rates and interest rates, airport access and charges, labour
relations, the economic environment of the airline industry, the general
economic environment in Ireland, the UK and Continental Europe, the general
willingness of passengers to travel and other economics, social and political
factors.
Ryanair is Europe's largest low fares airline with 20 bases and 516 low fare
routes across 25 countries. By the end of March 2008 Ryanair will operate a
fleet of 163 Boeing 737-800 aircraft with firm orders for a further 99 new
aircraft (net of planned disposals), which will be delivered over the next 5
years. Ryanair currently employs a team of 4,800 people and expects to carry
circa 50 million scheduled passengers in the current fiscal year.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement measured in accordance
with IFRS (unaudited)
Period Period
ended ended
Jun-30 Jun-30
2007 2006
€'000 €'000
------- -------
Operating revenues
Scheduled revenues 575,948 490,012
Ancillary revenues 117,058 76,621
--------- -------
Total operating revenues - continuing
operations 693,006 566,633
--------- -------
Operating expenses
Staff costs 75,927 56,736
Depreciation 34,778 35,587
Fuel & oil 190,389 167,462
Maintenance, materials & repairs 12,630 10,700
Marketing & distribution costs 8,314 5,724
Aircraft rentals 18,182 12,398
Route charges 63,173 48,079
Airport & handling charges 101,807 67,875
Other 30,344 25,370
--------- -------
Total operating expenses 535,544 429,931
--------- -------
Operating profit - continuing operations 157,462 136,702
--------- -------
Other income/(expenses)
Finance income 20,056 12,854
Finance expense (22,924) (20,613)
Foreign exchange gain/(loss) 1,366 (322)
--------- -------
Total other income/(expenses) (1,502) (8,081)
--------- -------
Profit before tax 155,960 128,621
Tax on profit on ordinary activities (17,046) (12,941)
--------- --------
Profit for the year - all attributable
to equity holders of parent 138,914 115,680
========= ========
Basic earnings per ordinary share euro 8.98 7.50
cent *
Diluted earnings per ordinary share 8.88 7.46
euro cent *
Number of ordinary shares (in 000's) * 1,547,099 1,542,201
Number of diluted shares (in 000's) * 1,564,182 1,551,683
*Adjusted for Share Split of 2 for
1 which occurred on February 26th,
2007.
Page 1
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Balance Sheet
measured in accordance with IFRS (unaudited).
Jun-30 Mar-31
2007 2007
€'000 €'000
------- -------
Non-current assets
Property, plant and equipment 2,945,897 2,884,053
Intangible assets 46,841 46,841
Available for sale financial assets 354,151 406,075
Derivative financial instruments 989 -
----------- -----------
Total non-current assets 3,347,878 3,336,969
----------- -----------
Current assets
Inventories 2,260 2,420
Other assets 76,292 77,707
Trade receivables 25,335 23,412
Derivative financial instruments 56,258 52,736
---------- -----------
Restricted cash 327,092 258,808
Financial assets: cash > 3 months 617,184 592,774
Cash and cash equivalents 1,345,064 1,346,419
----------- ------------
Total current assets 2,449,485 2,354,276
----------- ------------
Total assets 5,797,363 5,691,245
=========== ============
Current liabilities
Trade payables 48,744 54,801
Accrued expenses and other
liabilities 846,011 807,136
Current maturities of debt 221,422 178,918
Derivative financial instruments 42,208 56,053
Current tax 33,901 20,822
---------- -----------
Total current liabilities 1,192,286 1,117,730
---------- -----------
Non-current liabilities
Provisions 31,014 28,719
Derivative financial instruments 49,724 58,666
Deferred income tax liability 147,569 151,032
Other creditors 125,239 112,177
Non-current maturities of debt 1,617,413 1,683,148
---------- -----------
Total non-current liabilities 1,970,959 2,033,742
---------- -----------
Shareholders' equity
Issued share capital 9,829 9,822
Share premium account 610,414 607,433
Treasury shares (40,053) -
Retained earnings 2,044,125 1,905,211
Other reserves 9,803 17,307
---------- -----------
Shareholders' equity 2,634,118 2,539,773
---------- -----------
Total liabilities and shareholders'
equity 5,797,363 5,691,245
========== ===========
Page 2
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Cashflow
Statement measured in accordance with IFRS (unaudited)
June-30 Jun-30
2007 2006
€000 €000
------ ------
Operating activities
Profit before tax 155,960 128,621
Adjustments to reconcile
profits before tax to net cash
provided by operating activities
Depreciation 34,778 35,587
Decrease/(increase) in inventories 160 (812)
(Increase)/decrease in trade
receivables (1,923) 2,699
Decrease in other current assets 10,313 7,111
(Decrease) in trade payables (6,057) (27,503)
Increase in accrued expenses 36,260 92,271
Increase in other creditors 13,062 25,215
Increase in maintenance provisions 2,295 2,930
(Increase) in interest receivable (7,096) (315)
Increase in interest payable 2,468 2,014
Retirement costs 147 165
Share based payments 8,076 1,043
Income tax (186) (51)
--------- -----------
Net cash provided by operating
activities 248,257 268,975
--------- -----------
Investing activities
Purchase of property, plant and (96,622) (21,277)
equipment
(Investment) in restricted (68,284) -
cash
(Investment)/reduction in financial (24,410) (609,025)
assets: cash > 3 months
--------- -----------
Net cash used in investing activities (189,316) (630,302)
--------- -----------
Financing activities
Cost associated with repurchase (40,053) -
of shares
Net proceeds from shares 2,988 1,038
issued
Decrease in long term debt (23,231) (36,346)
--------- -----------
Net cash provided by financing
activities (60,296) (35,308)
--------- -----------
(Decrease) in cash and cash
equivalents (1,355) (396,635)
Cash and cash equivalents
at beginning of year 1,346,419 1,439,004
--------- -----------
Cash and cash equivalents
at end of period 1,345,064 1,042,369
========= ===========
Page 3
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Recognised Income
and Expense measured in accordance with IFRS (unaudited)
June-30 Jun-30
2007 2006
€'000 €'000
------- -------
Cash flow hedge reserve
Effective portion of changes
in fair value of cash flow hedges 25,463 5,715
------- --------
Net movements into cash flow hedge
reserve 25,463 5,715
------- --------
Net change in fair value of available for
sale financial asset (41,043) -
------- --------
Income and expense recognised directly
in equity (15,580) 5,715
------- --------
------- --------
Profit for the period 138,914 115,680
------- --------
------- --------
Total recognised income and expense 123,334 121,395
======= ========
Other items
Condensed Consolidated Interim changes in shareholders' equity
Share
Ordinary premium Retained Treasury Other
shares account earnings Shares reserves Total
€'000 €'000 €'000 €'000 €'000 €'000
------- ------- --------- ------- ------- ----------
Balance at April 1, 2007 9,822 607,433 1,905,211 - 17,307 2,539,773
Repurchase of ordinary equity
shares - - - (40,053) - (40,053)
Issue of ordinary equity shares 7 2,981 - - - 2,988
Effective portion of changes in
fair value of cash flow hedges - - - - 25,463 25,463
Net change in fair value of
available for sale financial
asset - - - - (41,043) (41,043)
Share based payments - - - - 8,076 8,076
Profit for the period - - 138,914 - - 138,914
------- ------- --------- ------- ------- ----------
Balance at June 30, 2007 9,829 610,414 2,044,125 (40,053) 9,803 2,634,118
======= ======= ========= ======= ======= ==========
Page 4
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement
measured in accordance with US GAAP (unaudited)
Period Period
ended ended
Jun-30 Jun-30
2007 2006
€000 €000
Operating revenues
Scheduled revenues 575,948 490,012
Ancillary revenues 117,058 76,621
--------- ---------
Total operating revenues
-continuing operations 693,006 566,633
--------- ---------
Operating expenses
Staff costs 75,927 56,844
Depreciation 35,325 35,969
Fuel & oil 190,389 167,462
Maintenance, materials & repairs 12,630 10,700
Marketing & distribution costs 8,314 5,724
Aircraft rentals 18,182 12,398
Route charges 63,173 48,079
Airport & handling charges 101,807 67,875
Other 30,344 25,371
--------- ---------
Total operating expenses 536,091 430,422
--------- ---------
Operating profit - continuing operations 156,915 136,211
--------- ---------
Other income/(expenses)
Finance income 20,056 12,854
Finance expense (18,426) (18,414)
Derivative financial instruments (2,738) -
Foreign exchange gain/(loss) 1,366 (321)
--------- ---------
Total other income/(expenses) 258 (5,881)
--------- ---------
Income before taxation 157,173 130,330
Taxation (17,196) (13,155)
--------- ---------
Net income attributable to equity
holders of parent 139,977 117,175
========= =========
Basic earnings per ADS (euro cent)* 45.24 37.99
Diluted earnings per ADS (euro cent)* 44.74 37.76
No. of ordinary shares (in 000's)* 1,547,099 1,542,201
Diluted no. of ordinary shares
(in 000's)* 1,564,182 1,551,683
(5 ordinary shares equal 1 ADS) Page 5
*Adjusted for share split of 2 for 1 which
occurred on February 26, 2007
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between IFRS and US generally
accepted accounting principles(unaudited)
(A) Net income under US GAAP
<------Quarter ended---->
Jun-30 Jun-30
2007 2006
€'000 €'000
Net income in accordance with IFRS 138,914 115,680
Adjustments
Pensions - (108)
Capitalised interest re aircraft
acquisition programme 3,952 1,817
Derivative financial instruments (2,738) -
Taxation- effect of above adjustments (151) (214)
-------- --------
Net income in accordance with US GAAP 139,977 117,175
======== ========
(B) Consolidated cashflow statement in
accordance with US GAAP
Jun-30 Jun-30
2007 2006
€'000 €'000
Cash inflow from operating activities 252,209 270,792
Cash (outflow) from investing activities (193,268) (632,119)
Cash (outflow) from financing activities (60,296) (35,308)
---------- ----------
(Decrease) in cash and cash equivalents (1,355) (396,635)
Cash and cash equivalents at beginning of
period 1,346,419 1,439,004
---------- ----------
Cash and cash equivalents at end of period 1,345,064 1,042,369
========== ==========
Cash and cash equivalents under US GAAP 1,345,064 1,042,369
Restricted cash 327,092 204,040
Deposits with a maturity of > three months 617,184 937,952
---------- ----------
Total cash 2,289,340 2,184,361
========== ==========
Page 6
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between IFRS and US generally
accepted accounting principles(unaudited)
(C) Shareholders' funds - equity
Jun-30 Jun-30
2007 2006
€'000 €'000
------- -------
Shareholders' equity as reported in the
consolidated balance sheets in accordance
with IFRS 2,634,118 2,109,861
Adjustments:
Pension - 9,134
Capitalised interest (net of amortisation)
regarding aircraft acquisition programme 44,273 31,265
Derivative financial instruments (16,078) -
Minimum pension liability (net of tax) - (4,295)
Tax effect of adjustments (excluding (3,525) (6,145)
pension)
--------- ---------
Shareholders' equity as adjusted to accord
with US GAAP 2,658,788 2,139,820
========= =========
Opening shareholders' equity under US GAAP 2,567,522 2,020,449
Comprehensive income
Unrealised gains on derivative financial
instruments (net of tax) 21,321 115
Available for sale financial asset (41,043) -
Net income in accordance with US GAAP 139,977 117,175
--------- ---------
Total comprehensive income 120,255 117,290
Share based payments 8,076 1,043
Stock issued for cash 2,988 1,038
Repurchase of stock (40,053) -
--------- ---------
Closing shareholders' equity in accordance
with US GAAP 2,658,788 2,139,820
========= =========
Page 7
Ryanair Holdings plc
Management Discussion and Analysis of Results
Quarter ended June 30, 2007
Profit after tax increased by 20% to €138.9m, compared to €115.7m in the quarter
ended June 30, 2006. These results reflect an 18% increase in passenger numbers,
flat fares (including checked in baggage revenues) and very strong growth in
ancillary revenues. The growth in revenues was offset by a combination of
increased airport costs which rose by 50% to €101.8m arising from the doubling
of airport charges at Stansted and higher charges at Dublin Airport and a one
off step up in staff costs, due to higher cabin crewing ratios, which rose by
34% to €75.9m. Total operating revenues increased by 22% to €693.0m, which was
faster than the 18% growth in passenger volumes, as average fares remained flat
and ancillary revenues grew by 53% to €117.1m. Total revenue per passenger as a
result increased by 4%, whilst Passenger Load Factor decreased by 2 points to
82% during the quarter.
Total operating expenses increased by 25% to €535.5m, due to the increased level
of activity, and the increased costs, associated with the growth of the airline.
Fuel, which represents 36% of total operating costs compared to 39% last year,
increased by 14% to €190.4m due to a decrease in the US dollar cost per gallon,
a positive movement in the US dollar exchange rate versus the euro and a
reduction in fuel consumption arising from the installation of winglets. Staff
costs rose by 34% reflecting an increase in cabin crewing ratios and Airport and
Handling charges increased by 50% to €101.8m arising from the doubling of
airport charges at Stansted and higher charges at Dublin Airport. As a result
unit costs increased by 5% and operating margins decreased by 1 point to 23%,
whilst operating profit increased by 15% to €157.5m.
Net Margins remained flat at 20% for the reasons outlined above.
Earnings per share have increased by 19.7% to 8.98 cent for the quarter.
Balance Sheet
The strong growth in profitability continues to positively impact the balance
sheet with Total Cash increasing by €91.3m to €2,289.3m despite funding a €40m
share buy-back programme and an additional €96.6m in capital expenditure largely
from internal resources. Total debt net of repayments decreased during the
quarter by €23.2m. Shareholders' Equity at June 30, 2007 increased by €94.3m to
€2,634.1m, compared to March 31, 2007 due to the €138.9m increase in
profitability during the quarter, the €2.9m exercise of share options and a
further €7.5m arising from the impact of the IFRS accounting treatment for
derivative financial assets, pensions and stock options offset by the share
buyback of €40m.
Detailed Discussion and Analysis Quarter ended June 30, 2007
Profit after tax, increased by 20% to €138.9m due to an 18% increase in
passenger numbers, flat fares (including checked in baggage revenues) and strong
growth in ancillary revenues. The growth in revenues was offset by a combination
of increased airport costs which rose by 50% to €101.8m arising from the
doubling of airport charges at Stansted and higher charges at Dublin Airport and
a one off step up in staff costs, due to higher cabin crewing ratios, which rose
by 34% to €75.9m. Operating margins, as a result, decreased by 1 point to 23%,
which in turn resulted in operating profit increasing by 15% to €157.5m compared
to quarter ended June 30, 2006.
Total operating revenues increased by 22% to €693.0m whilst passenger volumes
increased by 18% to 12.6m. Total revenue per passenger increased by 4% due to
strong ancillary revenue growth.
Scheduled passenger revenues increased by 18% to €575.9m due to an 18% increase
in traffic reflecting increased passenger numbers on existing routes and the
successful launch of our new routes and bases. During the quarter average fares
(including checked baggage revenues) were flat reflecting the soft yield
environment. Load factor decreased by 2 points to 82% during the quarter due to
a combination of softer market conditions and the 21% increase in seat capacity.
Ancillary revenues continue to grow faster than passenger volumes with revenues
increasing by 53% to €117.1m in the quarter. This performance reflects the
strong growth in on board sales, excess baggage revenues, non-flight scheduled
revenues, and other ancillary products.
Total operating expenses rose by 25% to €535.5m due to the increased level of
activity, and the increased costs associated with the growth of the airline
particularly higher airport charges and staff costs. Total operating expenses
were also adversely impacted by a 6% increase in average sector length.
Staff costs have increased by 34% to €75.9m. This primarily reflects a 29%
increase in average employee numbers to 4,726, the impact of pay increases
granted during the quarter and a €7m charge for a share option grant made to
eligible employees. Employee numbers rose due to an increase in cabin crewing
ratios as a result of a new EU working directive. Pilots, who earn higher than
the average salary, accounted for 34% of the increase in employees whilst cabin
crew accounted for 56% of the increase during the quarter.
Depreciation and amortisation decreased by 2% to €34.8m. This reflects the
addition of 16 lower cost 'owned' aircraft in the fleet this quarter compared to
June 30, 2006, offset by a revision in the residual value of our fleet to
reflect current market valuations and the positive impact on amortisation of the
stronger euro versus the US dollar.
Fuel costs rose by 14% to €190.4m due to a 29% increase in the number of hours
flown offset by a 10% decrease in the average US dollar cost per gallon of fuel
hedged and the positive impact of the strengthening of the euro versus the US
dollar in addition to a reduction in fuel consumption due to the installation of
winglets on our entire Boeing 737-800 fleet.
Maintenance costs increased by 18% to €12.6m, due to a combination of the
increase in the number of leased aircraft from 21 to 35, and the positive impact
of the strengthening of the euro versus the US dollar exchange rate.
Marketing and distribution costs increased by 45% to €8.3m due to the growth of
the airline and the number of routes operated which rose by 54% to 441 at the
quarter end and the number of bases which increased by 4 to 20.
Aircraft rental costs increased by 47% to €18.2m reflecting an additional 14
leased aircraft operating during the quarter compared to the same period last
year.
Route charges rose by 31% to €63.2m due to an increase in the number of sectors
flown and an increase of 6% in the average sector length.
Airport and handling charges increased by 50% to €101.8m. This is higher than
the growth in passenger volumes and reflects the impact of the doubling of costs
at Stansted Airport and higher charges at Dublin Airport, offset by lower costs
at new airports and bases.
Other expenses increased by 20% to €30.3m, which is lower than the growth in
ancillary revenues due to improved margins on some existing products and cost
reductions on some indirect costs.
Operating margins have declined by 1 point to 23% due to the reasons outlined
above whilst operating profits have increased by 15% to €157.5m during the
quarter.
Interest receivable has increased by 56% to €20.1m for the quarter due to a
combination of higher levels of cash on hand and increases in average deposit
rates earned in the quarter.
Interest payable increased by 11% to €22.9m due to the drawdown of further debt
to part fund the purchase of new aircraft and the adverse impact of higher
interest rates.
Foreign exchange gains during the quarter of €1.4m are primarily due to the
positive impact of changes in the US dollar exchange rate against the euro.
The Company's Balance Sheet continues to strengthen due to the strong growth in
profits during the quarter. The Company generated cash from operating activities
of €248.3m which part funded our €40m share buy back programme and capital
expenditure incurred during the quarter with the balance reflected in Total Cash
of €2,289.3m. Capital expenditure amounted to €96.6m which largely consisted of
advance aircraft payments for future aircraft deliveries and the delivery of one
aircraft. Long term debt, net of repayments, decreased by €23.2m during the
quarter.
Shareholders' Equity at June 30, 2007 increased by €94.3m to €2,634.1m, compared
to March 31, 2007 due to the €138.9m increase in profitability during the
quarter, the €2.9m exercise of share options and a further €7.5m arising from
the impact of the IFRS accounting treatment for derivative financial assets,
pensions and stock options offset by the share buyback of €40m.
Notes to the Financial Statements
1. Statement of compliance
These condensed consolidated interim financial statements have been prepared
in accordance with International Financial Reporting Standard (IFRS) IAS 34
Interim Financial Reporting. They do not include all of the information
required for full annual financial statements, and should be read in
conjunction with the most recent published consolidated financial statements
of the Group.
The Audit Committee approved the consolidated financial statements for the
quarter ended June 30, 2007 on July 27, 2007.
2. Significant accounting policies
Except as stated otherwise below, this quarter's financial information has
been prepared in accordance with the accounting policies set out in
Ryanair's most recent published consolidated financial statements, which
were prepared in accordance with International Financial Reporting Standards
('IFRS') as endorsed by the EU.
3. Generally Accepted Accounting Policies
The Management Discussion and Analysis of Results for the quarter ended June
30, 2007 and the comparative year are based on the results reported under
the group's IFRS accounting policies.
4. Estimates
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates.
Except as described below, in preparing these consolidated financial
statements, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty
were the same as those that applied in the most recent published
consolidated financial statements.
During the quarter ended June 30, 2007 management reassessed its estimates
of the recoverable amount of aircraft residual values following certain
recent aircraft disposals.
5. Seasonality of operations
The Company's results of operations have varied significantly from quarter
to quarter, and management expects these variations to continue. Among the
factors causing these variations are the airline industry's sensitivity to
general economic conditions and the seasonal nature of air travel.
Accordingly the first half-year typically results in higher revenues and
results.
6. Income tax expense
The Group's consolidated effective tax rate in respect of operations for the
three months ended June 30, 2007 was approximately 11 percent, in line with
the same period last year.
7. Capital and reserves
Share buy back programme.
During the last two months we completed a share buy back of 37.6m shares at
a cost of approx. €187m. This share buy back represents 2.5% of the
pre-existing issued share capital of the company. The shareholder authority
for such a buy back expires at AGM on September 20, 2007.
8. Share based payments
The terms and conditions of the share option programme are disclosed in the
most recent published consolidated financial statements. In June 2007 a
further grant on similar terms was made to eligible employees, with a
consequent charge to the income statement in the quarter of approximately
€7.0m.
9. Contingencies
The Group is engaged in litigation arising in the ordinary course of its
business. Management does not believe that any such litigation will
individually or in aggregate have a material adverse effect on the financial
condition of the Group. Should the Group be unsuccessful in these litigation
actions, management believes the possible liabilities then arising cannot be
determined but are not expected to materially adversely affect the Group's
results of operations or financial position.
Capital commitments
During the quarter ended June 30, 2007 the Group announced the purchase of
27 more Boeing 737-800s. This brings Ryanair's total firm orders for
B737-800s to 308 and the total fleet size (including planned disposals) to
262 by 2012. These additional aircraft are due for delivery in financial
year ending March 31, 2010.
10. Post balance sheet events
Aer Lingus Appeal
Ryanair is in the process of preparing an appeal to the European Court of
First instance against a decision by the European Commission prohibiting its
proposed acquisition of Aer Lingus, following the partial floatation of the
Irish flag carrier airline. In October 2006, Ryanair notified the European
Commission that it had acquired 19.16% of the ordinary share capital in Aer
Lingus (this was subsequently increased to 25.2%). Ryanair offered remedies
to the Commission in the first phase of the Commission's merger
investigation, something that has not been done in other previous airline
mergers-including Air France/KLM. Despite demonstrating that the merger of
these two airlines would have significant consumer benefits and
efficiencies, and despite offering substantial remedies - including
guaranteed fare and fuel levy reductions/eliminations, and large numbers of
slot surrenders - the Commission nevertheless prohibited the merger in June
2007. Ryanair has two months from the date of decision to submit an appeal.
11. Loans and borrowings
The following is the movement in loans and borrowings (non-current and
current) during the quarter.
€'000
Balance at April 1, 2007 1,862.1
Decrease in long term debt (23.2)
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Balance at June 30, 2007 1,838.9
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12. Fin 48 'Accounting for uncertainty in income taxes' (US GAAP)
The Company adopted the provisions of FIN 48 on April 1, 2007. The
implementation of FIN 48 did not have a material impact on the Company's
financial
statements.
This information is provided by RNS
The company news service from the London Stock Exchange