Full Year Financial Results
Ryanair Holdings PLC
31 May 2005
RYANAIR CELEBRATES 20 YEARS OF OPERATIONS
AS NET PROFITS RISE 19% TO €268.9m
AND TRAFFIC GROWS 19% TO 27.6M
ANNOUNCES '50% OFF OUR LOWEST FARES' SEAT SALE
Ryanair, Europe's No.1 low fares airline today (Tuesday, 31 May 2005)
celebrated its 20th birthday by announcing record results for the year end
31 March 2005. Both passenger volumes and net profits grew by 19% to 27.6m
and €268.9m respectively. Yields were 2% higher than last year (partially
offsetting the 14% yield decline in 2003/04) and ancillary revenues grew by
40%, much faster than passenger volumes, which resulted in total revenues
rising by 24% to €1.337bn. Operating costs rose by 25%, fractionally faster
than the growth in revenues reflecting higher fuel costs. As a result,
Ryanair's adjusted after tax margin for the full year fell by just 1% to an
industry leading 20% as Adjusted Net Profit increased by 19% to a record
€268.9m.
Summary Table of Results (Irish GAAP) - in Euro(unaudited)
Year Ended March 31, 2004 March 31, 2005 %Increase
Passengers 23.1m 27.6m +19%
Revenue €1.074bn €1.337bn +24%
Profit after tax (Note1) €226.6m €268.9m +19%
Basic EPS (Euro Cents)(Note 1) 29.91c 35.38c 18%
Note 1:Adjusted profit after tax and EPS during the year ended 31 March
2004 excludes the non-recurring costs of €14.9m (net of tax) arising
from the earlier than planned retirement of 6 Boeing 737-200 aircraft,
the reorganisation of 'Buzz' in April '03 of €2.7m (net of tax), and a
goodwill charge of €2.3m in 2004 and €2.1m in 2005.
Announcing these results Ryanair's Chief Executive, Michael O'Leary, said:
'We can think of no better way to celebrate Ryanair's 20th birthday than to
announce another year of record traffic and record profits, with after tax
margins at an industry leading 20%. Our robust trading performance over the
past 12 months, despite intense competition and significantly higher oil
prices reaffirms the unique strength of Ryanair's lowest cost model in
Europe. While many airlines recorded losses, Ryanair increased after tax
profits for the Winter half year by 33% from €51.0m to €67.6m, while our
year end cash balances increased to €1.61 billion equating to 121% of annual
revenues.
'Contrary to initial expectations, average yields for the 12 months rose by
2%, despite a 16% increase in capacity. This is partially due to the lower
comparables last year (when yields fell by 14%), and continuing capacity
reductions by the European flag carriers in markets where they compete with
Ryanair. Most of our yield growth was due to multiple fuel surcharges
imposed by the flag carriers on short-haul passengers, which have further
widened the gap between their high fares and our low fares. Ryanair's
traffic growth and yields have benefited substantially from our refusal to
impose fuel surcharges.
'Clearly fuel costs remain high, and the market is volatile. Higher oil
prices will continue to impact our cost base over the coming 12 months. We
are unhedged for the remainder of this Summer and are benefiting from the
recent oil price declines. In order to remove some cost uncertainty during
the volatile Winter period, we have now hedged 75% of next Winter's fuel
requirement at rates equivalent to $47 per barrel. We will continue to
exploit our hedging policy where we believe it can remove uncertainty from
our business at acceptable cost levels.
'Our new routes and bases continue to perform well. We have been most
encouraged by the strong advance bookings at our new Luton and Liverpool
bases where passengers are looking for an alternative to Easyjet's high
prices. Traffic at our new Shannon base is also booking strongly, although
yields have been slightly lower than we expected. Recently we announced five
new routes from London to Poland (4) and Slovakia (1) and expect that these
will be the first in a series of new route announcements over the coming
weeks for next Winter.
'Without question, the single most important initiative of the past 12
months was the purchase of 140 additional Boeing 737-800's (comprising 70
firm and 70 options), for delivery during the period 2008 - 2012, at a
substantial discount to our previous competitively priced aircraft order.
This new order, which also included the repricing of the balance of the
previous order, will enable Ryanair to significantly reduce our aircraft per
seat operating costs, and substantially improve our cash balances, while we
maintain a disciplined rate of passenger growth out to 2012, by which time
we expect to carry over 70m passengers per annum, making Ryanair, Europe's
largest airline. We expect to overtake British Airways' monthly traffic
later this Summer. This will be a very significant milestone for a small
Irish airline which only started flying in 1985 and yet in just over 20
years (thanks to low fares, lowest costs and brand new Boeing aircraft) has
overtaken British Airways.
'On the regulatory front, we were pleased with the recent settlement of the
fuel levy dispute with the BAA at Stansted Airport, which will reduce the
fuel levy for all airlines at Stansted for the coming 3 years. We continue
to lobby against the BAA's grandiose plans at Stansted Airport for a
gold-plated second runway. When the cost of a runway and even a second
terminal should run to no more than £400m, the BAA's proposed spend of £4
billion is gold-plating on a rip off scale, which will result in
overcharging of ordinary passengers for many decades into the future.
'If the BAA monopoly was broken up, and Stansted forced to compete with
Gatwick and Heathrow, then low cost efficient facilities would be developed
with the co-operation of user airlines like Ryanair and Easyjet. Instead we
have the truly bizarre proposal that £4 billion be wasted by Stansted,
building facilities that its airlines unanimously oppose, with part of the
cost to be subsidized by passengers at Gatwick and Heathrow (who get no
benefit from Stansted) and all of this waste is designed so that the BAA
airport monopoly can claim a return on £4 billion of capital expenditure
instead of £400 million. The CAA presently stands idly by while the BAA
ignores the stated wishes of the very airline users at Stansted who are
expected to pay for these extravagant and over specified facilities.
'In Ireland, the situation at Dublin Airport has descended into a farce. The
Dublin Airport Authority which is responsible for this third world facility
is to be rewarded for its incompetence by being allowed to build the second
terminal. This facility will not be available until 2009 at the earliest and
in the mean time passengers at Dublin will be forced to endure long queues
and intolerable overcrowding while the Government protects this failed
monopoly by blocking competition. It should be remembered that thirteen
expressions of interest to build and operate this second terminal were
received by the Irish Government as far back as October 2002, many of them
from established airport operators who were prepared to invest in and offer
genuine competition at Dublin.
'The Taoiseach (Prime Minister) recently demonstrated how hopelessly out of
touch he is by claiming that the present overcrowded terminal has the
capacity for 6 million more passengers per annum. It would appear that there
aren't any queues at the VIP escort to the Government jet. 'We have
instructed our lawyers to prepare the necessary papers to oppose this second
terminal on competition and public procurement grounds. We will also
vigorously oppose any planning application which is based on over specified
or inefficient terminal facilities, which is all that the DAA have ever
developed either here at Dublin, or Cork, or Shannon. Had the Irish
Government heeded Ryanair's calls for a competing second terminal seven
years ago, this current embarrassment for Irish tourism would have been
avoided. As always in Ireland the ordinary passengers suffer, while the
politicians fudge.
'Our outlook for the coming 12 months is more positive than it was this time
last year. We continue to budget for higher oil prices, but anticipate that
these higher costs will be partially offset by a slightly more benign yield
environment. If our competitors continue to maintain surcharges or continue
to remove capacity from our markets then yields should be more stable, even
as we continue to expand. Advance bookings for the Summer months are strong,
and we are raising our traffic growth forecast for the coming year from 34m
(+23%) to 35m (+27%). We expect that ancillary sales will continue to
significantly outstrip traffic growth. Our new aircraft pricing and new
airport deals will continue to have a downward impact on operating costs
even though fuel volatility will remain a variable.
'It is becoming increasingly clear that being the lowest cost operator is
the key competitive advantage in our industry. There is no better business
model in the short haul market. Lowest cost wins. Like Wal-mart, Tesco and
Dell in their respective markets, Ryanair's low fares cannot be matched nor
beaten by any of our competitors. As the published statistics for
punctuality, cancellations and lost bags confirm, none of our competitors
can match our customer service either. We remain confident that Ryanair's
unique combination of lowest costs, direct flights, brand new aircraft and
market leading punctuality will ensure that the travelling public continues
to fly Ryanair for the next twenty years, just as enthusiastically as they
have in our first twenty.
'To celebrate these record results, we are running a '50% off our lowest
fares' seat sale from today until midnight Thursday 2nd June for travel
during the last 2 weeks in June and first 2 weeks in July.' For more
information, see www.ryanair.com'.
ENDS. Tuesday, 31 May 2005
For results and further information please contact:
Howard Millar,Ryanair Holdings Plc Pauline McAlester,Murray Consultants
Tel: 353-1-8121212 Tel:353-1-4980300
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 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 229 low fare routes
across 20 countries. Ryanair operates a fleet of 91 aircraft, and firm
orders for up to a further 147 new 737-800's which will be delivered over
the next 7 years. Ryanair currently employs a team of 2,700 people and
expect to carry approximately 35 million scheduled passengers in the current
year.
Ryanair Holdings plc and Subsidiaries
Consolidated Profit and Loss Accounts in accordance with
UK & Irish GAAP (unaudited)
Year ended Year ended
March 31,2005 March 31,2004
Operating Revenues €'000 €'000
Scheduled revenues 1,128,116 924,566
Ancillary revenues 208,470 149,658
Total operating revenues - continuing operations 1,336,586 1,074,224
Operating expenses
Staff costs 140,997 123,624
Depreciation
and amortisation 98,703 98,130
Other operating expenses
Fuel & Oil 265,276 174,991
Maintenance, materials and repairs 37,934 43,420
Marketing and distribution costs 19,622 16,141
Aircraft rentals 33,471 11,541
Route charges 135,672 110,271
Airport and Handling charges 178,384 147,221
Other 97,038 78,034
Total operating expenses 1,007,097 803,373
Operating
profit before exceptional costs, and goodwill 329,489 270,851
Aircraft rentals - (13,291)
Buzz re-organisation costs - (3,012)
Depreciation - (3,261)
Amortisation of goodwill (2,125) (2,342)
(2,125) (21,906)
Operating
profit after exceptional costs, and goodwill 327,364 248,945
Other (expenses)/income
Foreign exchange (losses)/gains (2,323) 3,217
Gain/(loss) on disposal of fixed assets 47 (9)
Interest receivable and similar income 28,342 23,891
Interest payable and similar charges (57,499) (47,564)
Total other(expenses)/income (31,433) (20,465)
Profit before taxation 295,931 228,480
Tax on profit on ordinary activities (29,190) (21,869)
Profit for the year 266,741 206,611
Earnings per ordinary share
- Basic (Euro cent) 35.10 27.28
- Diluted (Euro cent) 34.91 27.00
Adjusted earnings per ordinary share*
- Basic (Euro cent) 35.38 29.91
- Diluted (Euro cent) 35.19 29.61
Number of ordinary shares (in 000's)
- Basic 759,911 757,447
- Diluted 764,003 765,131
* Calculated on Profit for the period before exceptional costs
(net of tax), and Goodwill.
Ryanair Holdings plc and Subsidiaries
Consolidated Balance Sheets in accordance with UK & Irish GAAP (unaudited)
March 31, March 31,
2005 2004
€'000 €'000
Fixed assets
Intangible Assets 30,449 44,499
Tangible assets 2,092,283 1,576,526
Total fixed assets 2,122,732 1,621,025
Current assets
Cash and liquid resources 1,613,643 1,257,350
Accounts receivable 20,644 14,932
Other assets 24,612 19,251
Inventories 28,069 26,440
Total current assets 1,686,968 1,317,973
Total assets 3,809,700 2,938,998
Current liabilities
Accounts payable 92,118 67,936
Accrued expenses and other liabilities 436,187 338,208
Current maturities of long term debt 120,997 80,337
Short term borrowings 7,938 345
Total current liabilities 657,240 486,826
Other liabilities
Provisions for liabilities and
charges 112,745 94,192
Other creditors 18,444 30,047
Long term debt 1,293,860 872,645
Total other liabilities 1,425,049 996,884
Shareholders' funds - equity
Called - up share capital 9,675 9,643
Share premium account 565,756 560,406
Profit and loss account 1,151,980 885,239
Shareholders' funds - equity 1,727,411 1,455,288
Total liabilities and shareholders'
funds 3,809,700 2,938,998
Ryanair Holdings plc and Subsidiaries
Consolidated Cashflow Statements in
accordance with UK and Irish GAAP (unaudited)
Year ended Year ended
ended ended
March 31, March 31,
2005 2004
€'000 €'000
Net cash inflow from operating
activities 530,515 462,062
Returns on investments and servicing
of finance (26,372) (20,313)
Taxation (3,581) (2,056)
Capital expenditure (including
aircraft deposits) (616,901) (331,599)
Acquisitions including onerous lease
payments (2,218) (32,696)
Net cash (outflow)/inflow before
financing
and management of liquid resources (118,557) 75,398
Financing 467,257 122,705
(Increase) in liquid resources (316,199) (249,220)
Increase/(decrease) in cash 32,501 (51,117)
Analysis of movement in liquid resources
At beginning of year 1,231,572 982,352
Increase in year 316,199 249,220
At end of year 1,547,771 1,231,572
Analysis of movement in cash
At beginning of year 25,433 76,550
Net cash inflow/(outflow) during
year 32,501 (51,117)
At end of year 57,934 25,433
Ryanair Holdings plc and Subsidiaries
Consolidated Statement of Changes in Shareholders' Funds - Equity
in accordance with UK and Irish GAAP (unaudited)
Share Profit
Ordinary premium and loss
shares account account Total
€'000 €'000 €'000 €'000
Balance at April 1, 2004 9,643 560,406 885,239 1,455,288
Issue of ordinary equity
shares 32 5,350 - 5,382
Profit for the year - - 266,741 266,741
Balance at March 31, 2005 9,675 565,756 1,151,980 1,727,411
Reconciliation of adjusted earnings per share (unaudited)
Year Year
ended Ended
March 31, March 31,
2005 2004
€'000 €'000
Profit for the year under
UK and Irish GAAP 266,741 206,611
Adjustments
Aircraft rentals - 13,291
Depreciation - 3,261
Buzz re-organisation costs - 3,012
Amortisation of goodwill 2,125 2,342
Taxation adjustment for
above - (1,966)
Adjusted profit under UK
and Irish GAAP 268,866 226,551
Number of ordinary shares (in 000's)
- Basic 759,911 757,447
- Diluted 764,003 765,131
Adjusted earnings per ordinary share
- Basic (€ cent) 35.38 29.91
- Diluted (€ cent) 35.19 29.61
Ryanair Holdings plc and Subsidiaries
Consolidated Profit and Loss Accounts in accordance with US GAAP (unaudited)
Year ended Year ended
March 31, March 31,
2005 2004
€'000 €'000
Operating Revenues
Scheduled revenues 1,128,116 924,566
Ancillary revenues 208,470 149,658
Total operating revenues - continuing operations 1,336,586 1,074,224
Operating expenses
Staff costs 141,499 123,535
Depreciation and amortisation 101,103 98,130
Other operating expenses
Fuel & Oil 265,276 174,991
Maintenance, materials and repairs 37,934 43,420
Marketing and distribution costs 19,622 16,141
Aircraft rentals 33,471 11,541
Route charges 135,672 110,271
Airport and Handling charges 178,384 147,221
Other 96,950 77,946
Total operating expenses 1,009,911 803,196
Operating
profit before exceptional items 326,675 271,028
Purchase Accounting Adjustment 11,925 -
Aircraft retirement costs - (16,552)
Buzz re-organisation costs - (3,012)
Operating profit after exceptional items 338,600 251,464
Other (expenses)/income
Foreign exchange (losses)/gains (2,323) 3,217
Gain/(loss) on disposal of fixed assets 47 (9)
Interest receivable and similar income 28,342 23,891
Interest payable and similar charges (49,654) (40,351)
Total other (expenses)/income (23,588) (13,252)
Income before taxation 315,012 238,212
Taxation (31,598) (22,782)
Net income 283,414 215,430
Net income per ADS
- Basic (Euro cent) 186.48 142.21
- Diluted (Euro cent) 185.48 140.78
Adjusted net income per ADS *
- Basic (Euro cent) 179.61 153.82
- Diluted (Euro cent) 178.65 152.28
Weighted Average number of shares
- Basic 759,911 757,447
- Diluted 764,003 765,131
* Calculated on Net Income before non-recurring items (net of tax).
(5 ordinary shares equal 1 ADR)
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between UK, Irish
& US generally accepted accounting principles
(unaudited)
(A) Net income under US GAAP
Year ended
March 31, March 31,
2005 2004
€'000 €'000
Profit as reported in the consolidated
profit and loss accounts in accordance with UK
and Irish GAAP 266,741 206,611
Adjustments
Pension (502) 89
Purchase Accounting
Adjustment 11,925 -
Amortisation of
goodwill 2,125 2,342
Capitalised interest (net of amortisation)
regarding aircraft
acquisition programme 5,445 7,213
Darley Investments
Limited 88 88
Taxation- effect of
above adjustments (2,408) (913)
Net income under US
GAAP 283,414 215,430
(B) Consolidated Cashflow Statements in accordance with US GAAP
March 31, March 31,
2005 2004
€'000 €'000
Cash inflow from
operating activities 500,562 439,694
Cash (outflow) from
investing activities (839,821) (354,299)
Cash inflow from
financing activities 474,850 121,734
Increase in cash and
cash equivalents 135,591 207,129
Cash and cash
equivalents at
beginning of year 744,605 537,476
Cash and cash
equivalents at end of year 880,196 744,605
Cash and cash
equivalents under US GAAP 880,196 744,605
Restricted cash 204,040 200,000
Deposits with a
maturity of between
three and six months 529,407 312,745
Cash and liquid resources under UK and Irish GAAP 1,613,643 1,257,350
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between UK,
Irish and US generally accepted accounting
principles (unaudited)
(C) Shareholders' funds - equity
March 31, March 31,
2005 2004
€'000 €'000
Shareholders' equity as reported in the
consolidated balance
sheets (UK and Irish GAAP) 1,727,411 1,455,288
Adjustments:
Pension 2,698 3,200
Purchase Accounting
Adjustment 11,925 -
Amortisation of goodwill 4,467 2,342
Capitalised interest
(net of amortisation) regarding aircraft
acquisition programme 22,947 17,502
Darley Investments Limited (63) (151)
Minimum pension liability (net of tax) (6,496) (2,631)
Unrealised losses on
derivative financial
instruments (net of tax) (128,074) (116,681)
Tax effect of adjustments
(excluding pension & derivative adjustments) (4,996) (2,588)
Shareholders' equity as adjusted to accord
with US GAAP 1,629,819 1,356,281
Opening shareholders'
equity under US GAAP 1,356,281 1,177,187
Comprehensive Income
Minimum pension liability (net of tax) (3,865) 25
Unrealised (losses) on derivative
financial instruments (net of tax) (11,393) (43,310)
Net income in
accordance with US GAAP 283,414 215,430
Total Comprehensive Income 268,156 172,145
Stock issued for cash 5,382 6,949
Closing shareholders'
equity under US GAAP 1,629,819 1,356,281
Ryanair Holdings plc
Management Discussion and Analysis of Results
Introduction
For the purposes of the MD&A all figures and comments are by reference to
the adjusted profit and loss account excluding the exceptional costs and
goodwill referred to below.
Exceptional costs in the year ended March 31,2004 consisted of
re-organisation costs of €2.7m (net of tax), €11.6m in lease costs (net of
tax), and an additional depreciation charge of €3.3m relating to an
adjustment to the residual value of six Boeing 737-200 aircraft that were
retired earlier than planned (Note 4). Goodwill of €2.1m was amortised in
this financial year compared to €2.3m in the year ended March 31, 2004.
Profit after tax increased by 29% to €266.7m compared to €206.6m in the
previous year ended March 31,2004. The adjusted profit for the year,
excluding exceptional costs and goodwill, increased by 19% to €268.9m.
Summary Year ended March 31, 2005
Profit after tax increased by 19% to €268.9m, compared to €226.6m in the
previous year ended March 31, 2004. Total operating revenues increased by
24% to €1,336.6m, which was faster than the 19% growth in passenger volumes,
as average fares rose by 2% and ancillary revenues grew by 39% to €208.5m.
Total revenue per passenger as a result increased by 4%, whilst the
successful launch of new routes and the slower rate of growth in turn led to
load factors increasing by 3 points to 84%.
Total operating expenses increased by 25% to €1,007.1m, due to the increased
level of activity, and the increased costs, primarily fuel, route charges
and airport & handling costs associated with the growth of the airline.
Fuel, our largest cost item, increased by 52% due to substantial increases
in the US$ cost per gallon, partially offset by the strengthening of the
Euro to the US dollar.
Despite the sharp rise in fuel costs Operating margins have been maintained
at 25%, which in turn resulted in Operating profit increasing by 22% to
€329.5m. Profit before tax increased by 19%, less than the increase in
operating profit due to the higher net interest charge arising from the
increased level of debt, and foreign exchange losses which arose from the
translation of sterling and US$ bank balances to euro at the year end
exchange rates. Net Margins have declined by 1 point to 20% for the reasons
outlined above.
Adjusted earnings per share have increased by 18% to 35.4 cent for the year.
Balance Sheet
The Company's profit growth continues to generate strong cashflow from
operations, which for the year to March 31, 2005 amounted to €530.5m. This
cashflow part funded the extensive aircraft delivery programme, additional
aircraft deposits, whilst the balance remaining is reflected in the €356.3m
increase in Cash and Liquid Resources since March 31, 2004. Capital
expenditure net of sales proceeds amounted to €616.9m during the year whilst
Long Term Debt, net of repayments, increased by €461.9m. Shareholders' Funds
at March 31, 2005 have increased by €272.2m to €1,727.4m, compared to March
31, 2004.
Detailed Discussion and Analysis Year ended March 31, 2005
Profit after tax, increased by 19% to €268.9m due to a 2% increase in
average fares, and strong ancillary revenue growth which was partly offset
by fuel costs increasing by 52% reflecting the higher US$ cost per gallon.
Operating margins have remained constant at 25%, which has resulted in
Operating profit increasing by €58.6m to €329.5m compared to last year.
Total operating revenues increased by 24% to €1,336.6m whilst passenger
volumes increased by 19% to 27.6m. Total revenue per passenger has increased
by 4% in the year due to a combination of higher average fares and strong
ancillary revenue growth.
Scheduled passenger revenues increased by 22% to €1,128.1m due to a
combination of a 2% improvement in average fares, increased passenger
volumes on existing routes, and the successful launch of new bases at
Rome-Ciampino, and Barcelona-Girona. The slower growth in passenger volumes
is also reflected in improved load factors, which rose by 3 points to 84% in
the year.
Ancillary revenues increased by 39% to €208.5m, faster than the growth in
passenger volumes, reflecting a strong performance in non-flight scheduled
revenues, car hire and other ancillary products. Ancillary revenues now
account for 16% of total revenues compared to 14% for 2004.
Total operating expenses increased by 25% to €1,007.1m due to the increased
level of activity, and the increased costs primarily fuel, aircraft rentals,
route charges, and airport and handling costs associated with the growth of
the airline. Total operating costs were also adversely impacted by a 10%
increase in the average sector length whilst higher US$ fuel prices were
partly offset by the strength of the euro exchange rate against the US$.
Staff costs have increased by 14% to €141.0m primarily due to a 14% increase
in average employee numbers to 2,604 and the impact of pay increases of 3%
granted during the year partly offset by savings in sterling denominated
salaries due to the weakening of the sterling to euro exchange rate.
Depreciation and amortisation increased by 1% to €98.7m. Depreciation
charges increased due to an increase in the size of the 'owned' fleet from
62 to 74, offset by lower amortisation charges due to the retirement of
737-200 aircraft and the positive impact of a new engine maintenance
agreement on the cost of amortisation of 737-800 aircraft. The strengthening
of the euro to US$ during the year also had a positive impact on the
depreciation and amortisation charge relating to new aircraft deliveries.
Fuel costs rose by 52% to €265.3m due to an increase in the number of
sectors flown, a 10% increase in the average sector length, and a
significantly higher average US$ cost per gallon of fuel partially offset by
the positive impact of the strengthening of the Euro to the US dollar during
the year.
Maintenance costs decreased by 13% to €37.9m reflecting the improved
reliability arising from the higher proportion of 737-800's operated and a
lower level of maintenance costs incurred due to the return of four BAE 146
aircraft to KLM and the release of maintenance overhaul provisions of €5.2m
during the year associated with the earlier than scheduled return of six
leased 737-300's.
Marketing and distribution costs increased by 22% to €19.6m due to increases
in expenditure arising from the higher level of activity during the year.
Aircraft rental costs increased by €21.9m to €33.5m reflecting the full year
cost of leasing 10 737-800 aircraft plus the lease costs associated with
three deliveries during the third quarter. These costs were offset by the
return of four BAE 146s and six leased 737-300 aircraft to KLM and ILFC
respectively during the year.
Route charges increased by 23% to €135.7m due to an increase in the number
sectors flown, an increase in the average sector length and an increase in
the weight of the aircraft operated (which incur a higher charge).
Airport and handling charges increased by 21% to €178.4m, due to an increase
in the number of passenger flown, and the impact of increased costs at
certain existing airports offset by lower costs at new airports.
Other expenses increased by 24% to €97.0m, which is less than the growth in
ancillary revenues due to improved margins on some new and existing
products, and cost reductions achieved on indirect costs.
Operating margins have remained constant at 25% due to the reasons outlined
above whilst operating profits increased by €58.6m to €329.9m during the
year.
Interest receivable has increased by €4.4m due to the combined impact of
higher levels of cash and liquid resources and an improvement in average
deposit interest rates earned in the year compared to last year.
Interest payable increased by €9.9m due to the drawdown of debt to part fund
the purchase of new aircraft.
Foreign exchange gains/(losses) has changed from a gain of €3.2m to a loss
of €2.3m in the current year due to the negative impact of changes in the
sterling exchange rate against the euro.
The Company's Balance Sheet continues to strengthen due to the growth in
profits during the year. The Company generated cash from operating
activities of €530.5m, which part funded additional capital expenditure of
€616.9m. Capital expenditure primarily comprised of the delivery of 24
aircraft and advance payments for future aircraft deliveries. Long term
Debt, net of repayments increased by €461.9m, which was drawn down to part
fund aircraft deliveries during the year. Cash and liquid resources
continued to reflect the strong trading performance of the company during
the year and at March 31, 2005 stood at €1,613.6m compared to €1,257.4 at
March 31, 2004.
Shareholders' Funds at March 31, 2005 have increased to €1,727.4m compared
to €1,455.3m at March 31, 2004.
Notes to the Financial Statements
1. Accounting Policies
The accounting policies followed in the preparation of these consolidated
financial statements for the year ended March 31, 2005 are consistent with
those set out in the financial statements for the year ended March 31, 2004.
2. Approval of the Preliminary Announcement
The Board of Directors approved the preliminary announcement document, which
will form the basis of the Group's consolidated financial statements for the
year ended March 31, 2005 on May 27, 2005.
3. Generally Accepted Accounting Policies
The Management Discussion and Analysis of Results for the year ended March
31, 2005 are based on the results reported under Irish and UK GAAP.
4. Aircraft retirement costs
Six aircraft were retired earlier than projected in 2003 due to the
detection of scratch marks ('scribing') that occurred during an
aircraft painting programme on these aircraft in 1995. It had been
determined that the cost of repairing these aircraft was uneconomic
due to the short remaining life of the aircraft. Accordingly the
Company had determined that the residual value of US$1m (€794k) for
these aircraft was excessive and as a result reduced it to €250k per
aircraft. The cost of this adjustment charge for five aircraft was
reflected in the results for the quarter ended September 30,2003,
and the charge for a sixth aircraft was expensed in quarter ended
December 31, 2003.
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