2nd Quarter & Interim Results

Ryanair Holdings PLC 9 November 1999 RYANAIR ANNOUNCES SIGNIFICANTLY IMPROVED RESULTS FOR THE HALF YEAR ENDED SEPTEMBER 30, 1999 Ryanair Holdings Plc today (9 November, 1999) released record financial results for the half year ended 30 September 1999. Passengers volumes grew by 12% to 2.9 million. Average yields also increased by virtue of longer average sector length leading to total revenue growth of 17% to IR£153.2m. Well focused cost control meant that operating expenses increased by 16%, reflecting costs (primarily staff and airport costs), associated with this growth and the launch costs of 7 new routes. As a result, profit after tax has risen by 23% to IR£33.4m. Earnings per share grew by 19%. Summary of Results (Irish GAAP) Half Year September 30, September % 1999 30, 1998 Increase Passengers 2.89m 2.58m 12% Revenues IR£153.2m IR£130.5m 17% Profit after tax IR£33.4m IR£27.2m 23% Basic EPS 19.95p 16.79p 19% Commenting on these results, Ryanair's CEO, Michael O'Leary said; 'We are pleased with these results which reflect the extraordinary talent of our 1,200 people, who continue to deliver growth in traffic and profitability despite the intensely competitive market place here in Europe. During the past 6 months we have purchased five new Boeing 737-800 next generation, aircraft, introduced them successfully and profitably, and opened up seven new low fare routes from London to France, Italy, Germany and Northern Ireland. The success of our unique low fare services is such that even though we compete head to head with Europe's largest flag carriers, we have on average achieved 70% plus load factors, and profitability on these new routes from day one.' 'The Ryanair formula, and current market conditions are somewhat unusual. The ending of intra-EU duty free has not - as expected - had any material impact on our revenues or costs. However average fares and yields have been somewhat higher than we expected, even though the yields of most of our competitor flag carriers have been declining steeply. This is due to Sterling strength, our increased sector length and our self imposed constraint on capacity out of Ireland. We would not expect this phenomenon to continue as we remain committed to driving down fares and yields and offering more and more European consumers even lower fares.' 'The competitive outlook is becoming somewhat clearer. The trend towards alliances in Europe is increasing air fares. British Airways continues to cut capacity and cede traffic to the low fare sector, while GO has clearly failed to have any impact on Ryanair, despite their substantial trading losses. In Ireland, Aer Lingus has now unveiled a new strategy to the London route which will see them withdraw from Stansted and pursue a strategy of 'very significant increase in per passenger yield'. While our competitors try to increase fares, Ryanair will increase capacity and keep fares down. In January we will increase our schedule on Dublin-Stansted by 4 flights daily and we will reduce fares with a new, and lowest ever, £10 return fare. We must not allow other airlines to penalise the Irish consumer, or the potential visitors to Ireland.' 'Our campaign to launch up to 10 new low fares routes from Ireland to Continental Europe continues to attract widespread support. In recent weeks the Irish Exporters Association, the Irish Hotels Federation and the Irish Travel Agents Association have all called on the Government to back Ryanair's plans for dramatic growth in routes, visitors, jobs and tourism at both Dublin and Shannon airports. We remain confident that the Government will support our plan, because the alternative - higher fares and zero growth - will be damaging to Irish tourism and our economy.' 'If however, we are unsuccessful, investors can rest assured that our finances will not be effected. The cost base is already agreed for up to 6 new routes from the UK to Europe, and we will continue to grow profitably and with the benefit of a lower cost base, away from Ireland, as we have in the last two years. In September, just 22% of our total traffic originated in Ireland, so it is Irish tourism, not Ryanair that will suffer if the Government puts the Irish airport monopoly's interests before those of the travelling public.' 'Current trading remains moderately ahead of our demanding targets thanks to higher than expected yields and the strength of Sterling. We expect to drive down yields through the Winter to maintain our traffic growth and prevent our flag carrier competitors from raising fares to the detriment of consumers. We believe that our trading performance will continue to be resilient, whilst most of our major competitors struggle to maintain their higher fare strategies. Finally, we remain comfortable with the present range of analysts forecasts for the full financial year.' For further information Howard Millar/Michael Cawley Jim Milton please contact: Ryanair Holdings Plc Murray Consultants Tel: 353-1-8121212 Tel: 353-1-6614666 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 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. In the fiscal year to March 2000 the airline expects to carry 6 million passengers on its 34 low fare routes between the UK, Ireland and Continental Europe. Ryanair currently employs over 1,200 people in its Irish and UK operations and operates a fleet of 21 Boeing 737-200 and 5 Boeing 737-800 next generation aircraft. Ryanair shares are quoted on the Nasdaq, London and Dublin Stock Exchanges. Ryanair Holdings plc and Subsidiaries Consolidated Profits and Loss Accounts in accordance with UK and Irish GAAP (unaudited) Half Half Quarter Quarter Year Year Ended Ended Ended Ended Sept 30, Sept 30, Sept 30, Sept 30, 1999 1998 1999 1998 IR'000 IR'000 IR'000 IR'000 Operating Revenues Scheduled revenues 78,224 63,511 136,179 114,579 Ancillary revenues 8,806 9,119 17,002 15,877 Total operating revenues continuing operations 87,030 72,630 153,181 130,456 Operating expenses Staff costs 9,584 7,898 18,566 15,487 Depreciation 8,544 7,378 16,652 14,435 Other operating expenses Fuel & Oil 8,881 8,388 16,593 15,632 Maintenance, materials and 3,257 2,801 6,237 5,164 repairs Marketing and distribution 6,689 5,512 13,039 11,358 costs Aircraft rentals 678 1,178 1,127 1,753 Route charges 5,772 4,751 10,436 8,740 Airport charges 9,621 6,745 16,997 12,842 Other 6,098 5,765 12,000 10,898 Total operating expenses 59,124 50,416 111,647 96,309 Operating profit-continuing operations 27,906 22,214 41,534 34,147 Other income/(expenses) Interest receivable and similar income 1,449 1,652 2,543 2,376 Interest payable and similar (796) (47) (1,090) (107) charges Foreign exchange 103 86 (107) 82 gains/(losses) Gains on disposal of fixed 0 15 0 21 assets Total other income/(expenses) 756 1,706 1,346 2,372 Profit on ordinary activities before taxation 28,662 23,920 42,880 36,519 Tax on profit on ordinary (6,270) (6,100) (9,484) (9,306) activities Profit for the financial 22,392 17,820 33,396 27,213 period Basic earnings per ordinary share (IR Pence) 13.37 10.75 19.95 16.79 Fully diluted earnings per ordinary share (IR pence) 13.26 10.75 19.79 16.79 Number of ordinary shares (in 167,425 165,844 167,425 162,109 000's) Ryanair Holdings plc and Subsidiaries Consolidated Balance Sheets in accordance with UK and Irish GAAP September March 30, 1999 31,1999 IR'000 IR'000 (unaudited) Fixed Assets Tangible assets 214,567 160,264 Financial assets 42 42 Total Fixed Assets 214,609 160,306 Current Assets Cash and liquid resources 184,766 124,904 Accounts receivable 18,081 14,550 Other assets 4,144 4,966 Inventories 11,216 10,173 Total current assets 218,207 154,593 Total assets 432,816 314,899 Current liabilities Accounts payable 24,555 24,229 Accrued expenses and other liabilities 64,380 61,408 Current maturities of long term debt 5,723 1,390 Short term borrowings 2,405 3,066 Total current 97,063 90,093 liabilities Other liabilities Provisions for liabilities and charges 10,445 8,881 Long Term debt 94,262 18,275 104,707 27,156 Shareholder's funds - equity Called -up share capital 6,697 6,697 Share Premium Account 102,861 102,861 Profit and loss account 121,488 88,092 Shareholder's funds - equity 231,046 197,650 Total liabilities and shareholders' funds 432,816 314,899 Ryanair Holdings plc and Subsidiaries Consolidated Cashflow Statements in Accordance with UK and Irish GAAP (unaudited) Half Half year year Ended Ended Sept 30, Sept 30, 1999 1998 IR'000 IR'000 Net cash inflow from operating 61,602 54,126 activities Returns on investments and servicing of finance 1,328 1,513 Taxation (11,772) (8,521) Capital expenditure (including aircraft deposits) (70,955) (38,322) Net cash inflow before financing and use of liquid resources (19,797) (8,796) Financing 80,320 46,393 (Increase)in liquid resources (45,831) (52,842) Increase in cash 14,692 2,347 Analysis of movement in liquid resources Liquid resources at beginning of period 108,715 46,197 Increase in period 45,831 52,842 Liquid resources at end of period 154,546 99,039 Analysis of movement in cash At beginning of period 13,123 3,168 Net cash inflow 14,692 2,347 Net cash at end of period 27,815 5,515 Ryanair Holdings plc and Subsidiaries Consolidated Statement of Changes in Shareholders' Funds - Equity in accordance with UK and Irish GAAP (unaudited) Ordinary Share Profit shares Premium and account loss Total account IR£'000 IR'000 IR'000 IR'000 Balance at April 1, 6,697 102,861 88,092 197,650 1999 Profit for the - - 33,396 33,396 period ------ ------ ------ ------ Balance at Sept 30, 6,697 102,861 121,488 231,046 1999 Ryanair Holdings plc and Subsidiaries Consolidated Profit and Loss Account in Accordance with US GAAP (unaudited) Quarter Quarter Half Half Ended Ended Year Year Sept Sept Sept Sept 30, 30, 30, 30, 1999 1998 1999 1998 IR'000 IR'000 IR'000 IR'000 Operating Revenues Scheduled revenues 78,224 63,511 136,179 114,579 Ancillary revenues 8,806 9,119 17,002 15,877 Total operating revenues - continuing operations 87,030 72,630 153,181 130,456 Operating expenses Staff costs 9,544 7,674 18,486 15,040 Depreciation 8,163 5,658 15,882 11,071 Other operating expenses Fuel & Oil 8,881 8,388 16,593 15,632 Maintenance, materials and 3,257 7,846 6,237 14,804 repairs Marketing and distribution costs 6,689 5,512 13,039 11,358 Aircraft rentals 678 1,178 1,127 1,753 Route charges 5,772 4,751 10,436 8,740 Airport charges 9,621 6,745 16,997 12,842 Other 6,081 5,748 11,966 10,864 Total operating expenses 58,686 53,500 110,763 102,104 Operating profit - continuing operations 28,344 19,130 42,418 28,352 Other income/(expenses) Interest receivable and similar 1,449 1,652 2,543 2,376 income Interest payable and similar (796) (47) (1,090) (107) charges Foreign exchange (losses)/gains (1,376) 984 (460) (2,390) Gains on disposal of fixed 0 15 0 21 assets Total other income/(expenses) (723) 2,604 993 4,680 Profit on ordinary activities before taxation 27,621 21,734 43,411 33,032 Tax on profit on ordinary activities (5,862) (5,219) (9,398) (7,833) Profit for the financial period 21,759 16,515 34,013 25,199 Basic earnings per ordinary share (IR Pence) 13.00 9.96 20.32 15.54 Diluted earnings per ordinary share (IR pence) 12.89 9.96 20.15 15.54 Basic earnings per ADS (IR pence)* 64.98 49.79 101.58 92.90 Diluted earnings per ADS (IR pence)* 64.45 49.79 100.75 92.90 Number of ordinary shares (in 000's) 167,425 165,844 167,425 162,109 *Each ADS represents five ordinary shares Note 1 - Restatement of Comparative Results In accordance with US accounting rules, changes in accounting policies result in a one time charge, known as a cumulative catch up adjustment, in the quarter in which the change is made. This contracts with Irish/UK accounting principles under which the impact of a change in accounting policy is recorded in the quarter and years impacted and historical financial statements are re-stated. As a result, the consolidated US GAAP profit and loss accounts of Ryanair Holdings plc & subsidiaries set out above are not comparable as the basis of accounting for maintenance impacting on maintenance expense, depreciation and taxation is significantly different in 1999 than 1998. If the US GAAP results had been re-stated for the change in accounting policy Net Income for the quarter to September 30, 1998 and for the six months to September 30, 1998 would have increased to US$19.1million and US$30.1million respectively and basic earnings per ADS (Irish pence) would have increased by IR57.58pence and IR92.90pence respectively. Ryanair Holdings plc and Subsidiaries Summary of significant differences between UK, Irish and US generally accepted accounting principles (unaudited) (A) Net Income under US GAAP Quarter Quarter Half Half Ended Ended Year Year Ended Ended Sept Sept Sept Sept 30, 30, 30, 30, 1999 1998 1999 1998 IR'000 IR'000 IR'000 IR'000 Profit as reported in the consolidated profit and loss accounts and in accordance with UK and Irish GAAP 22,392 17,820 33,396 27,213 Adjustments Pension 35 23 70 45 Unrealised (losses)/gains forward exchange contracts (1,479) 898 (353) 2,308 Employment grants 17 213 34 426 Depreciation on tangible fixed assets: - basis of accounting for August 1996 transaction 294 345 596 689 - basis of accounting for aircraft acquired from Northill Limited 87 87 174 174 Darley Investments Limited 17 17 34 34 Share option compensation (12) (12) (24) (24) expense Taxation effect of above 408 (291) 86 (745) Effect of changes in accounting policies: Maintenance and depreciation 0 (3,757) 0 (7,139) Tax 0 1,172 0 2,218 Net income in accordance with U.S. GAAP 21,759 16,515 34,013 25,199 (B) Consolidated Cashflow Statements in accordance with US GAAP Half Half Year Year Ended Ended Sept Sept 30, 30, 1999 1998 IR£000 IR£000 Cash Inflow from operating activities 51,158 47,118 Cashflow from investing activities (135,783) (90,050) Cashflow from financing activities 79,659 45,677 (Decrease)/Increase in cash and cash equivalents (4,966) 2,745 Cash and cash equivalents at beginning of period 76,948 43,605 Cash and cash equivalents at end of period 71,982 46,350 Cash and cash equivalents under US GAAP 71,982 46,350 Deposits with a maturity of between three and six months 112,784 59,093 Cash and liquid resources under UK and Irish GAAP 184,766 105,443 Ryanair Holdings plc and Subsidiaries Summary of significant differences between UK, Irish and US generally accepted accounting principles (continued) (unaudited) (C) Shareholders' Funds Sept 30, Sept 30, equity 1999 1998 IR'000 IR'000 Shareholders' equity as reported in the consolidated balance sheets (UK and Irish 231,046 181,562 GAAP) Adjustments: Pension 511 395 Unrealised gains on forward exchange 546 830 contracts Employment grants (494) (428) Basis of accounting for August 1996 transactions (2,182) (4,875) Basis of accounting for aircraft acquired from Northill Limited (315) (663) Darley Investments Limited (430) (498) Share option compensation expense 20 68 Investments 1,979 0 Tax effect of adjustments 320 239 Cumulative effect of change in accounting policies 0 (18,210) Effect of change in accounting policies: Maintenance and depreciation 0 (7,139) Tax 0 2,218 ------- ------- Shareholders' equity as 231,001 153,499 adjusted to accord with US GAAP Opening shareholders' equity under US GAAP 196,822 80,880 Investments 166 0 Net income in accordance with US GAAP 34,013 25,199 Stock issued for cash 0 47,420 Closing shareholder's _______ _______ equity under US GAAP 231,001 153,499 Ryanair Holdings plc Management Discussions and Analysis of Results Summary Half Year Ended September 30, 1999 Profit after tax has increased by 23% to IR£33.4m, compared to IR£27.2m in the previous half year ended September 30, 1998. Total Operating Revenues, grew by 17% to IR£153.2m, whilst passenger volumes increased by 12% to 2.9m. Total Operating Expenses increased by 16% to IR£111.6m, due to the increased level of activity, and the increased costs, primarily staff and airport costs, associated with the growth of the airline. Profit Before Tax has increased by 17% to IR£42.9m. The Corporation Tax rate for the period was 22% compared to 25% for the previous quarter, and reflects the impact of the decline in the headline rate of corporation tax in Ireland. Quarter Ended September 30, 1999 Profit after tax has increased by 26% to IR£22.4m, compared to IR£17.8m in the previous half year ended September 30, 1998. Total Operating Revenues, grew by 20% to IR£87m, whilst passenger volumes increased by 16% to 1.62m. Total Operating Expenses increased by 17% to IR£59.1m, due to the increased level of activity, and the increased costs, primarily staff and airport costs, associated with the growth of the airline. Profit Before Tax has increased by 20% to IR£28.7m. The Corporation Tax rate for the period was 22% compared to 26% for the previous quarter, and primarily reflects the impact of the decline in the headline rate of corporation tax in Ireland. Balance Sheet at September 30, 1999 Cash and Liquid Resources have increased from IR£125.0m. at March 31, 1999 to IR£184.8m at September 30, 1999, reflecting the increased cash flows from the profitable trading performance. During the half year the company incurred capital expenditure of IR£71.0m primarily financed by an increase in the level of debt. Shareholder's Funds at September 30, 1999 have increased to IR£231.1m, compared to IR£197.7m at March 31, 1999. Discussion and Analysis Half Year Ended September 30, 1999 Profit after tax has increased by 23% to IR£33.4m, compared to IR£27.2m in the previous half year ended September 30, 1998. Total Operating Revenues, grew by 17% to IR£153.2m, whilst passenger volumes increased by 12% to 2.9m. Scheduled Passenger Revenues increased by 19% to IR£136.2m due to an increase in passenger volumes of 12%, and an increase in the average yield per passenger, primarily due to the higher yields on the longer European routes. Ancillary Revenues increased by 7% to IR£17.0m which was lower than the growth in passenger volumes, and reflects the reduction in average spend per passenger post the cessation of duty free, being offset by, increased revenues from other ancillary activities. Total Operating Expenses increased by 16% to IR£111.6, due to the increased level of activity, and the increased costs primarily staff and airport costs associated with the growth of the airline. Staff Costs have increased by 20% to IR£18.6m. The increase in staff costs reflects a 16% increase in average employment to 1,242. Staff costs also rose due to the impact of a pay increase granted, which at 3%, was ahead of the level set by the national wage agreement. Depreciation increased by 15% to IR£16.7m, reflecting the impact of the acquisition of five new Boeing 737-800 next generation aircraft, and the amortisation of capitalised maintenance costs. Fuel Costs rose by 6% to IR£16.6m. This reflects the impact of a 10% increase in the number of sectors flown, being offset by a reduction in the average cost per gallon of fuel primarily reflecting the impact of the forward hedging contracts entered into during 1998. Maintenance Costs increased by 21% to IR£6.2m, reflecting the increase in the number of sectors flown, and the increased line maintenance costs associated with the expansion of our Stansted base. Marketing and Distribution Costs have increased by 15% to IR£13.0m, due to a combination of an increase in passenger volumes, and the increased costs associated with the launch of seven new routes. Aircraft Rental Costs decreased by IR£0.6m to IR£1.1m reflecting the continued decline in the need to rent additional seat capacity. Route Charges increased by 19% to IR£10.4m due to a 10% increase in the number of sectors flown, and an increase in the average sector length. Airport Charges increased by 32% to IR£17m, due to an increase in the number of passengers flown, and the impact of increased airport charges on some existing routes, offset by, lower charges on the new routes from the UK to Europe. Other Expenses increased by 10% to IR£12m, which was lower than the growth of passenger volumes and reflects the lower level of ancillary costs post the cessation of duty free. Operating Profits have increased by 22% to IR41.5m for the reasons outlined above. Interest Receivable increased by IR£0.1m to IR£2.5.m due to the increase in cash and liquid resources being offset by lower Euro interest. Interest Payable increased by IR£1.0m due to the increased level of debt arising from the acquisition of the five new aircraft. Corporation Tax for the half year was 22% compared to 25% in the previous quarter and primarily reflects the impact of the decline in the headline rate of corporation tax in Ireland. The Company's Balance Sheet continues to highlight the impact of the profitable trading performance during the half year. Cash and liquid resources increased from IR£125.0m at March 31, 1999 to IR£184.8m reflecting the strong cashflows during the half year. The company incurred further capital expenditure of IR£71.0m during the half year which was primarily financed by an increase in the level of debt. The four Boeing 737-800 next generation aircraft were all delivered, as scheduled, during the half year. Shareholder's Funds at September 30, 1999 have increased to IR£231.0m compared to IR£197.7m at March 31, 1999. Ryanair Holdings plc Management Discussion and Analysis of Results Quarter Ended September 30, 1999 Profit after tax has increased by 26% to IR£22.4m, compared to IR£17.8m in the previous quarter ended September 30, 1998. Total Operating Revenues, grew by 20% to IR£87.0m, whilst passenger volumes increased by 16% to 1.62m. Scheduled Passenger Revenues increased by 23% to IR£78.2 due to an increase in passenger volumes of 16%, and an increase in the average yield per passenger, primarily due to the higher yields on the longer European routes. Ancillary Revenues declined by 3% to IR£8.8m reflecting the reduction in average spend per passenger due to the cessation of duty free sales, being offset, by increased revenues from other ancillary activities. Total Operating Expenses increased by 17% to IR£59.1m, due to the increased level of activity, and the increased costs primarily staff and airport costs associated with the growth of the airline. Staff Costs have increased by 21% to IR£9.6m. The increase in staff costs reflects a 16% increase in average employment to 1,282. Staff costs also rose due to the impact of a pay increase granted, which at 3%, was ahead of the level set by the national wage agreement. Depreciation increased by 16% to IR£8.5m, reflecting the increased depreciation costs arising from the acquisition of five new Boeing 737-800 next generation aircraft, and the amortisation of capitalised maintenance costs. Fuel Costs rose by 6% to IR£8.9m. This reflects the impact of an 11% increase in the number of sectors flown, being offset by a reduction in the average cost per gallon of fuel primarily reflecting the impact of the forward hedging contracts entered into during 1998. Maintenance Costs increased by 16% to IR£3.3m, reflecting the increase in the number of sectors flown, and the increased line maintenance costs associated with the expansion of the Stansted base. Marketing and Distribution Costs have increased by 21% to IR£6.7m, due to a combination of an increase in passenger volumes, and the increased costs associated with the launch of seven new routes. Aircraft Rental Costs declined by IR£0.5m to IR£0.7m reflecting the continued decline in the need to rent additional seat capacity. Route Charges increased by 21% to IR£5.8m due to an 11% increase in the number of sectors flown, and an increase in the average sector length. Airport Charges increased by 43% to IR£9.6m, due to an increase in the number of passengers flown, and the impact of increased airport charges on some existing routes, offset by, lower charges on the new routes from the UK to Europe. Other Expenses increased by 6% to IR£6.1m, which was lower than the growth in passenger volumes and reflects the lower level of ancillary costs post the cessation of duty free. Operating Profits have increased by 26% to IR£27.9m for the reasons outlined above. Interest Receivable declined by 12% to IR£1.4m reflecting the impact of the reduction in Euro interest rates. Interest Payable increased to IR£0.8m due to the increased level of debt arising from the acquisition of the five new aircraft. Corporation Tax rate for the quarter was 22% compared to 26% in the previous quarter and primarily reflects the impact of the decline in the headline rate of corporation tax in Ireland. The Company's Balance Sheet continues to highlight the impact of the profitable trading performance during the period. Cash and liquid resources increased from IR£125.0m at March 31, 1999 to IR£184.8m reflecting the strong cashflows during the period. The company incurred further capital expenditure of IR£71m primarily financed by an increase in the level of debt. During the quarter the fourth and fifth Boeing 737-800 next generation aircraft were both delivered, as scheduled, in mid and late August, respectively. Shareholder's Funds at September 30, 1999 have increased to IR£231.0m compared to IR£197.7m at March 31 1999. Notes to the Financial Statements 1. Percentage of Shares held by EU Nationals The company has undertaken to notify the shareholders twice yearly of the percentage of ordinary shares held by EU nationals. Accordingly, on September 30, 1999 not less than 52.1% of the ordinary shares were held by EU nationals. 2. Accounting Policies The accounting policies followed in the preparation of these interim consolidated financial statements have not changed from those set out in the Annual Report for the year ended March 31, 1999. 3. Approval of the Financial Statements The consolidated financial statements for the Half Year and Quarter ended were approved by the Audit Committee on November 5, 1999. 4. Generally Accepted Accounting Policies The Management Discussion and Analysis of Results for the Half Year and Quarter ended September 30, 1999 are based on the results reported under Irish and UK GAAP. 5. Year 2000 Compliance The company established a senior management working team to review the ability of the Company's information systems processing to continue operating unimpaired in the year 2000 and thereafter. A number of the Company's key information systems (including the operations, engineering and primary financial systems) were replaced over the course of the last three years and the Company has completed the testing and any applicable upgrading of those systems. The Company anticipates that incremental costs of related external assistance and system enhancements (including technical staff time and the rental of testing equipment) in relation to the Year 2000 issue will be approximately $550,000 and will be funded through cash flows from operations. This estimated level of expenditures is based on the fact that Ryanair has expended significant resources (approximately $900,000) in replacing or upgrading its systems and hardware over the last three years to be Year 2000 compliant. Ryanair also has received documentation from Boeing identifying which Boeing manufactured equipment Boeing regards as not being Year 2000 compliant, none of which is currently installed on Ryanair's fleet or proposed to be installed on the 737-800 aircraft scheduled for delivery in the future. The Company is also evaluating the extent to which systems which are material to its business and which are provided by third-parties are Year 2000 compliant or, if not, when and if such compliance will be achieved. However, the Company has no control over compliance of these systems which include, among others, air traffic control and airport related systems, and computer reservation and ticketing systems. Failure of these types of third-party systems to achieve Year 2000 compliance would have a material adverse effect on the Company's financial condition and results of operations before and after December 31, 1999 and, in the worst case, could result in aircraft accidents involving serious injury or death. In relation to the Company's host reservation systems (BABS), the Company has already completed testing and confirmed that the system is Year 2000 compliant. The Company has substantially completed the testing and, where applicable, has upgraded or replaced its key information systems in order for them to be Year 2000 compliant. Testing and any necessary upgrading of the Company's other systems will be completed by mid- November 1999. The Company is also preparing a contingency plan in the event of a Year 2000-related failure of any of its key information systems. In the event the Company does not complete any additional phases of its evaluation or if third-parties are not Year 2000 compliant by December 31, 1999, the most reasonable worst case scenario would be a reduction in or suspension of operations, which could have a material adverse impact on the Company's business, results of operations and financial condition. Disruptions in the economy generally resulting from Year 2000 issues could also materially adversely effect the Company. The Company could be subject to litigation for computer systems failure, equipment shutdown or failure to properly date business records. The amount of potential liability and lost revenue cannot be reasonably estimated at this time. In addition, there can be no assurance that public concern over airline safety related to Year 2000 will not develop. Should this concern develop, it could have a materially adverse effect on the number of passengers the Company carries and on its financial condition and results of operations.

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