Full Year Results
Ryanair Holdings PLC
05 June 2007
RYANAIR REPORTS RECORD PROFITS OF €401m,
PROFITS UP 33% AS TRAFFIC GROWS TO 42.5M
Ryanair, Europe's biggest low fares airline, today (5 June) released record net
profits of €401m, a 33% increase over the prior year figure and €11m ahead of
previous guidance. Ryanair's traffic grew by 22% to 42.5m, yields rose 7%, as
revenues grew by 32% to €2.24bn. Unit costs increased by 9% mainly due to a 50%
increase in fuel costs. Despite this significantly higher fuel bill, Ryanair
maintained an industry leading after tax margin of 18%.
Summary Table of Results (IFRS) - in Euro
Full Year Results Mar 31,2006 Mar 31, 2007 % Increase
Passengers 34.8m 42.5m 22%
Revenue €1.693bn €2.237bn 32%
Adjusted Profit after Tax Note1&2) €301.5m €401.4m 33%
Adjusted Basic EPS(EuroCents) 19.66 25.99 32%
(Note 1,2&3))
Note 1 - Excludes €5.2m Net of Tax received from an insurance claim in y/e
31.03.06
Note 2 - Excludes €34.2m due to the release of a deferred Tax Overprovision in y
/e 31.03.07
Note 3 - Adjusted by two for one stock split which occurred in February 2007
Ryanair's CEO Michael O'Leary said:
'These record profits and the strong growth in traffic, yields and revenues
during a period of much higher oil prices and intense competition is a tribute
to the strength of Ryanair's lowest fare model. The highlights of the past year
include:
•Profit growth of 33% to €401m - Up €100m on last year.
•Traffic growth of 22% to 42.5m.
•Purchase of 30 new aircraft, bringing the fleet to 133 units at year end.
•Opening 153 new routes (including 3 new bases at Marseille, Madrid and
Bremen).
•Fuel costs increased by 50% to €693m.
•Industry leading customer service and No.1 for pricing and punctuality.
•Widened the price gap between Ryanair and our competitors.
•Purchased 25.2% of Aer Lingus plc.
•Strengthened the balance sheet with year end cash of €2.2bn.
The unusual feature of these results was the 7% rise in average fares, despite
the 22% growth in traffic. This increase was largely driven by competitor fare
increases and competitor fuel surcharges, as well as our checked baggage fees
which are designed to encourage passengers to travel with carry-on luggage only.
Ancillary Revenues grew by 40% thanks to a better passenger spend, increased
penetration, and the growth of excess baggage revenues. In March we announced an
agreement with Expedia, our new hotel provider, and we expect that ancillary
revenues will continue to grow at a faster rate than scheduled traffic.
Due primarily to a 50% increase in fuel costs, unit costs rose by 9%. This was
also impacted by a one off step up in our pilot crewing ratio due to longer
sector lengths. We took advantage of recent dollar and oil price weaknesses to
extend our fuel hedges to 90% for the remainder of fiscal 2008 at an average
cost per barrel which is 10% lower than last year. This cost saving will help us
to offset significantly higher airport charges this year at Stansted (where
airport charges doubled on 1 April), and Dublin Airport, who continue to impose
unjustified price increases despite delivering a sub-standard service through a
portacabin facility. These monopoly price increases demonstrate again the abject
failure of Aviation Regulators in both Ireland and the UK to protect the
interests of consumers.
We continue to press for the break-up of the BAA airport monopoly and welcome
the recent OFT and Competition Commission investigation of the BAA. The current
BAA Stansted plan to waste almost £4bn building a second runway and terminal
(which should cost less than £1bn) provides further proof of this monopoly
abuse. Similarly at Dublin, Ryanair opposes the ludicrous plans to waste over
€800m building a 15 MPPA passenger terminal which Ryanair is willing to build
(and pay for) at a cost of less than €200m. The Irish Regulator has failed to
investigate or explain why the DAA's costs of this facility have quadrupled over
the past year without any increase in capacity. His current proposal that
Ryanair passengers who will never use T2 should pay higher airport charges to
fund it, is contrary to the 'User Pays' principle of aviation regulation. The
significant cost increases associated with these higher airport charges at
Stansted and Dublin since April, combined with Gordon Brown's decision to engage
in 'highway robbery' by doubling UK airport departure taxes has had a negative
impact on traffic and yields.
Forward bookings and yields continue to be soft and Ryanair continues to respond
with aggressive price promotions including a current offer of £20 off all return
fares on all flights. As has always been the case, Ryanair will lead and win
every fare war in Europe, because Ryanair has the lowest costs and the lowest
fares.
Ryanair has recently extended this price war by launching a unique 'lowest
price' guarantee. Subject to the terms and conditions of this programme, Ryanair
will refund double the difference to any passenger who can find a lower fare
from any competitor airline on any Ryanair route. Thus far we have paid
remarkably few claims, simply because no other airline can match Ryanair's low
fares.
The European Commission's review of Ryanair's proposed offer for Aer Lingus has
been ongoing for the past 6 months. The decision by DG Competition to refer this
merger to a Phase 2 review was unprecedented and a radical departure from the
Commission's long standing policy of encouraging EU airline consolidation. It is
difficult to understand how the EU can wave through precedent mergers (such as
Air France/KLM, Lufthansa/Eurowings and Lufthansa/SAS) in Phase 1 with minimal
remedies, yet in this case a merger of two Irish airlines with bases at a
peripheral European city (Dublin), which together account for less than 5% of EU
traffic, has been referred to Phase 2. Ryanair's proposed remedies now include
guaranteed fare and fuel surcharge reductions of over €100m per annum for Aer
Lingus consumers, combined with the surrender of a significant number of
Heathrow slots (the most valuable in the world) and Dublin slots. Accordingly,
any failure by the European Commission to approve this merger will be an
entirely political decision to put the narrow political interests of the Irish
Government before those of European competition and European consumers. Ryanair
will immediately refer any such prohibition to the European Courts, and given
the significant inaccuracies and omissions in the Commission's Statement of
Objection we believe that any Court challenge has a high prospect of success.
Ryanair's 'lowest fare' business model is strongly cash generative. Cash on hand
at March 31st 2007 amounted to €2.2bn. At the AGM on September 22nd 2006 the
shareholders authorised that the Directors could re-purchase Ordinary shares
('buyback') amounting to 5% of the Company's issued share capital. The Directors
have decided, in the best interests of the Company and its shareholders as a
whole, to undertake a buyback programme, under which up to €300 million would be
available for return. At the current market price of €5.20 this equates to a buy
back of approximately 3.63% of the existing issued share capital of the Company.
We anticipate starting the buyback programme on/after June 7th 2007 onward.
Ordinary shares will be repurchased under the programme in accordance with the
provisions of the Company's annual re-purchase authority and the requirements of
the Irish Stock Exchange and UK Listing Authority rules. The Company's brokers,
Davy, will conduct the share buyback programme, and shares repurchased will be
cancelled immediately. Only Ordinary shares (and no ADR's) will be repurchased.
As we indicated at the release of our April traffic statistics, we have recently
noticed a softening of market conditions which has been reflected in lower load
factors and yields. Whilst we remain confident that traffic over the coming year
will grow by 22% to over 52 million passengers, we believe that if trading
conditions continue to be soft, then yields will fall by up to 5% compared to
last year's figure. Unit costs will rise over the coming year by 6% or 7%,
largely due to longer sector lengths (+7%), substantially higher airport charges
at Stansted and Dublin and a one time increase in cabin crew ratios, although
these will be partially offset by the lower fuel costs already secured through
our hedging programme. As a result we expect profit growth over the coming year
to be more modest and to rise by approximately 5%. At this time with no
visibility of Winter bookings and yields, we believe that the Company and our
shareholders should remain cautious and conservative. We expect the seasonality
established over recent years to continue and the vast majority of our annual
profits will be generated in the first half of the fiscal year, with a
consequent reduction in profitability and maybe even small losses being recorded
during quarters 3 and 4.
Over the coming year Ryanair will increase its fleet by a net 30 aircraft as we
have commenced our planned disposal programme and have already sold 5 aircraft
delivered in 1999. We will launch at least 3 new bases (2 of which,
Dusseldorf-Niederrhein and Bristol, have been announced), and we expect to open
more than 50 new routes. We will continue to aggressively stimulate traffic
growth by promoting Ryanair's lowest fare guarantee in every market. If market
conditions continue to be soft, as is presently the case, then this ambitious
traffic growth can only be delivered by discounting fares and reducing yields.
This remains an extremely volatile and cyclical business, but over time the
price leaders such as Southwest in the U.S. and Ryanair in Europe have
repeatedly demonstrated that during periods of adverse trading conditions, the
lowest fare and lowest cost carrier makes the greatest gains. Ryanair will
continue to offer the lowest fares and the lowest costs in every market we
operate to the benefit of our passengers, our people and our shareholders.
ends.
For further information Howard Millar Pauline McAlester
please contact: Ryanair Holdings Plc Murray Consultants
Tel: 353 1 812 1212 Tel: 353 1 498 0300
www.ryanair.com
The directors of Ryanair accept responsibility for the information contained in
this announcement, save that the only responsibility accepted by the directors
of Ryanair in respect of the information contained in this announcement relating
to Aer Lingus and the Aer Lingus Group, which has been compiled from published
sources, has been to ensure that such information has been correctly and fairly
reproduced or presented (and no steps have been taken by the directors of
Ryanair to verify this information). To the best of the knowledge and belief of
the directors of Ryanair (who have taken all reasonable care to ensure that such
is the case), the information contained in this announcement for which they
accept responsibility is in accordance with the facts and does not omit anything
likely to affect the import of such information.
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 487 low fare
routes across 25 countries. By the end of March 2008 Ryanair will operate a
fleet of 163 new Boeing 737-800 aircraft with firm orders for a further 99 new
aircraft (all net of planned disposals), which will be delivered over the next 5
years. Ryanair currently employs a team of 4,500 people and expects to carry
approximately 52 million scheduled passengers in the current fiscal year.
Ryanair Holdings plc and Subsidiaries
Consolidated Income Statement measured in
accordance with IFRS(unaudited)
Year Year
ended ended
Mar 31, Mar 31,
2007 2006
€'000 €'000
------- -------
Operating revenues
Scheduled revenues 1,874,791 1,433,377
Ancillary revenues 362,104 259,153
------- -------
Total operating revenues
-continuing operations 2,236,895 1,692,530
------- -------
Operating expenses
Staff costs 226,580 171,412
Depreciation 143,503 124,405
Fuel & oil 693,331 462,466
Maintenance, materials & repairs 42,046 37,417
Marketing & distribution costs 23,795 13,912
Aircraft rentals 58,183 47,376
Route charges 199,240 164,577
Airport & handling charges 273,613 216,301
Other 104,859 85,557
------- -------
Total operating expenses 1,765,150 1,323,423
------- -------
Operating profit before exceptional
items 471,745 369,107
Aircraft insurance claim - 5,939
------- -------
Operating profit after exceptional
items - continuing operations 471,745 375,046
------- -------
Other income/(expenses)
Finance income 62,983 38,219
Finance expense (82,876) (73,958)
Foreign exchange (losses) (906) (1,234)
Gains on disposal of property, plant & 91 815
equipment ------- -------
Total other income/(expenses) (20,708) (36,158)
------- -------
Profit before tax 451,037 338,888
Tax on profit on ordinary activities (49,636) (32,176)
Exceptional item - release of prior year 34,199 -
tax overprovision ------- -------
Profit for the year - all attributable
to equity holders of parent 35,600 306,712
======= =======
Basic earnings per ordinary share Euro cent 28.20 20.00
**
Diluted earnings per ordinary share Euro 27.97 19.87
cent**
*Basic adjusted earnings per ordinary share 25.99 19.66
Euro cent**
*Diluted adjusted earnings per ordinary 25.77 19.53
share Euro cent**
Number of ordinary shares (in 000's)** 1,544,457 1,533,666
Number of diluted shares (in 000's)** 1,557,503 1,543,562
*Calculated on profit for the year before exceptional items (net of tax).
** Adjusted for share split of 2 for 1 which occurred on February 26, 2007
Page 1
Ryanair Holdings plc and Subsidiaries
Consolidated Balance Sheet measured in accordance with
IFRS(unaudited)
Mar 31, Mar 31,
2007 2006
€'000 €'000
------- -------
Non-current assets
Property, plant and equipment 2,884,053 2,532,988
Intangible assets 46,841 46,841
Available for sale financial asset 406,075 -
Derivative financial instruments - 763
-------- ---------
Total non-current assets 3,336,969 2,580,592
-------- ---------
Current assets
Inventories 2,420 3,422
Other assets 77,707 29,453
Trade receivables 23,412 29,909
Derivative financial instruments 52,736 18,872
-------- ---------
Cash and cash equivalents 1,346,419 1,439,004
Financial assets: cash > 3months 592,774 328,927
Restricted cash 258,808 204,040
======== ========
Total current assets 2,354,276 2,053,627
-------- ---------
Total assets 5,691,245 4,634,219
======== =========
Current liabilities
Trade payables 54,801 79,283
Accrued expenses and other liabilities 807,136 570,614
Current maturities of long term debt 178,918 153,311
Derivative financial instruments 56,053 27,417
Current tax 20,822 15,247
-------- ---------
Total current liabilities 1,117,730 845,872
-------- ---------
Non-current liabilities
Provisions 28,719 16,722
Derivative financial instruments 58,666 81,897
Deferred income tax liability 151,032 127,260
Other creditors 112,177 46,066
Long term debt 1,683,148 1,524,417
-------- ---------
Total non-current liabilities 2,033,742 1,796,362
-------- ---------
Shareholders' equity
Issued share capital 9,822 9,790
Share premium account 607,433 596,231
Retained earnings 1,905,211 1,467,623
Other reserves 17,307 (81,659)
-------- ---------
Shareholders' equity 2,539,773 1,991,985
-------- ---------
Total liabilities and shareholders' 5,691,245 4,634,219
equity ======== =========
Page 2
Ryanair Holdings plc and
Subsidiaries
Consolidated Cashflow Statement measured in accordance with
IFRS(unaudited)
Mar 31, Mar 31,
2007 2006
€'000 €'000
------- -------
Operating activities
----------------------
Profit before tax 451,037 338,888
Adjustments to reconcile profits before
tax to net cash provided by operating
activities
Depreciation 143,503 124,405
Decrease/(increase) in inventories 1,002 (962)
Decrease/(increase) in trade 6,497 (9,265)
receivables
(Increase) in other current assets (30,849) (882)
(Decrease) in trade payables (24,482) (12,835)
Increase in accrued expenses 233,839 150,083
Increase in other creditors 75,351 11,402
Increase in maintenance provisions 11,997 9,486
(Gain) on disposal of fixed assets (91) (815)
Interest receivable 48 (3,959)
Interest payable 2,671 1,159
Retirement costs 589 507
Share based payment 3,935 2,921
Income tax (5,194) 437
-------- --------
Net cash provided by operating 869,853 610,570
activities -------- --------
Investing activities
----------------------
Capital expenditure (purchase of property,
plant and equipment) (494,972) (546,225)
Proceeds from sale of property, plant and
equipment 495 8,460
Purchase of equities classified as
available for sale (344,917) -
(Investment) in restricted cash (54,768) -
(Investment)/reduction in financial
assets: cash > 3months (263,847) 200,480
-------- --------
Net cash used in investing activities (1,158,009) (337,285)
-------- --------
Financing activities
----------------------
Net proceeds from shares issued 11,233 30,590
Proceeds from long term borrowings 339,409 386,809
Repayments of long term borrowings (155,071) (123,938)
-------- --------
Net cash provided by financing 195,571 293,461
activities -------- --------
(Decrease)/increase in cash and cash
equivalents (92,585) 566,746
Cash and cash equivalents at beginning of 1,439,004 872,258
year -------- --------
Cash and cash equivalents at end of 1,346,419 1,439,004
year ======== ========
Page 3
Ryanair Holdings plc and Subsidiaries
Consolidated Statement of Recognised Income and Expense
measured in accordance with IFRS (unaudited)
Mar 31, Mar 31,
2007 2006
€'000 €'000
------- -------
Net actuarial gains from
retirement benefit plans 1,988 2,327
------- -------
Cash flow hedge reserve
New movements into cash
flow hedge reserve 79,025 65,966
Movements from cash flow
hedge reserve (32,920) (22,960)
------- -------
Net movements into cash
flow hedge reserve 46,105 43,006
------- -------
Net change in fair value of
available for sale
financial asset 48,926 -
------- -------
Income and Expense
recognised directly in
equity 97,019 45,333
------- -------
------ -------
Profit for the period 435,600 306,712
------- -------
------- -------
Total recognised income and
expense 532,619 352,045
======= =======
Reconciliation of adjusted earnings
per share (unaudited)
Mar 31, Mar 31,
2007 2006
€'000 €'000
------- -------
Profit for the period under IFRS 435,600 306,712
Adjustments
-------------
Aircraft insurance claim - (5,939)
Taxation adjustment for
above - 742
Exceptional item - release
of prior year tax
overprovision (34,199) -
------- -------
Adjusted profit under IFRS 401,401 301,515
======= =======
Number of ordinary shares (in 000's)
-Basic 1,544,457 1,533,666
-Diluted 1,557,503 1,543,562
Adjusted earnings per ordinary share
-Basic (€ cent) 25.99 19.66
-Diluted (€ cent) 25.77 19.53
Consolidated changes in shareholders' equity
Share
Ordinary premium Retained Other
shares account earnings reserves Total
€'000 €'000 €'000 €'000 €'000
------- ------- ------- ------- -------
Balance at April 1, 2006 9,790 596,231 1,467,623 (81,659) 1,991,985
Issue of ordinary equity
shares 32 11,202 - - 11,234
---------------------------------- ------- ------- ------- ------- -------
New movements into cash
flow hedge reserve - - - 79,025 79,025
Movements from cash flow
hedge reserve - - - (32,920) (32,920)
---------------------------------- ------- ------- ------- ------- -------
Movement in reserves - - - 46,105 46,105
---------------------------------- ------- ------- ------- ------- -------
Net change in fair value of
available for sale
financial asset - - - 48,926 48,926
Share based payments - - - 3,935 3,935
Retirement benefits - - 1,988 - 1,988
Profit for the period - - 435,600 - 435,600
------- ------- ------- ------- -------
Balance at March 31, 2007 9,822 607,433 1,905,211 17,307 2,539,773
======= ======= ======= ======= =======
Page 4
Ryanair Holdings plc and Subsidiaries
Consolidated Income Statement measured in accordance
with US GAAP (unaudited)
Year Year
ended ended
Mar 31, Mar 31,
2007 2006
€'000 €'000
Operating revenues
Scheduled revenues 1,874,791 1,433,377
Ancillary revenues 362,104 259,153
------- --------
Total operating revenues
-continuing operations 2,236,895 1,692,530
------- --------
Operating expenses
Staff costs 226,770 168,921
Depreciation 145,080 125,876
Fuel & oil 693,331 462,466
Maintenance, materials & repairs 42,046 37,417
Marketing & distribution costs 23,795 13,912
Aircraft rentals 58,183 47,376
Route charges 199,240 164,577
Airport & handling charges 273,613 216,301
Other 104,859 85,494
------- --------
Total operating expenses 1,766,917 1,322,340
------- --------
Operating profit before
exceptional items 469,978 370,190
Aircraft insurance claim - 5,939
------- --------
Operating profit after exceptional
items - continuing operations 469,978 376,129
------- --------
Other income/(expenses)
Finance income 62,983 38,219
Finance expense (70,425) (65,986)
Derivative financial instruments (13,337) -
Foreign exchange (losses) (906) (1,234)
Gains on disposal of property, plant & 91 815
equipment ------- --------
Total other
income/(expenses) (21,594) (28,186)
------- --------
Income before taxation 448,384 347,943
Taxation (49,304) (33,111)
Exceptional item - release of prior year 34,199 -
tax overprovision ------- --------
Net income attributable to equity holders of
parent 433,279 314,832
======= ========
Basic earnings per ADS (Euro cent)** 140.27 102.64
Diluted earnings per ADS (Euro cent)** 139.09 101.98
*Basic adjusted earnings per ADS (Eurocent)** 129.20 100.95
*Diluted adjusted earnings per ADS (Euro cent)** 128.12 100.30
No. of ordinary shares (in 000's)** 1,544,457 1,533,666
Diluted no. of ordinary shares (in 000's)** 1,557,503 1,543,562
*Calculated on net income before non-recurring items (net of tax).
(5 ordinary shares equal 1 ADS)
** Adjusted for share split of 2 for 1 which occurred on February 26, 2007
Page 5
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between IFRS and US generally
accepted accounting principles(unaudited)
(A) Net income under US GAAP
< ------Year ended----- >
Mar 31, Mar 31,
2007 2006
€'000 €'000
Net income in accordance with IFRS 435,600 306,712
Adjustments
Pensions (190) (430)
Share based payments - 2,921
Capitalised interest re aircraft
acquisition programme 10,874 6,501
Derivative financial instruments (13,337) -
Darley Investments Limited - 63
Taxation - effect of above adjustments 332 (935)
--------- --------
Net income in accordance with US GAAP 433,279 314,832
========= ========
(B) Consolidated cashflow statement in accordance
with US GAAP
Mar 31, Mar 31,
2007 2006
€'000 €'000
Cash inflow from operating activities 880,727 617,071
Cash (outflow) from investing (1,168,883) (343,786)
activities
Cash inflow from financing activities 195,571 293,461
--------- --------
(Decrease)/increase in cash and cash
equivalents (92,585) 566,746
Cash and cash equivalents at beginning of
period 1,439,004 872,258
--------- --------
Cash and cash equivalents at end of period 1,346,419 1,439,004
========= ========
Cash and cash equivalents under US GAAP 1,346,419 1,439,004
Restricted cash 258,808 204,040
Deposits with a maturity of > three months 592,774 328,927
--------- --------
Total Cash 2,198,001 1,971,971
========= ========
Page 6
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between
IFRS and US generally accepted accounting principles(unaudited)
(C) Shareholders' funds - equity
Mar 31, Mar 31,
2007 2006
€'000 €'000
------- -------
Shareholders' equity as reported in the
consolidated balance sheets in accordance with IFRS 2,539,773 1,991,985
Adjustments:
Pension - 9,240
Capitalised interest (net of amortisation)
regarding aircraft acquisition programme 40,322 29,448
Derivative financial instruments (8,609) -
Minimum pension liability (net of tax) - (4,295)
Tax effect of adjustments (excluding pension) (3,964) (5,931)
-------- --------
Shareholders' equity as adjusted to accord
with US GAAP 2,567,522 2,020,447
======== ========
Opening shareholders' equity under US GAAP 2,020,447 1,629,819
Comprehensive income
Minimum pension liability (net of tax) - 2,201
Unrealised (losses)/gains on derivative
financial instruments (net of tax) 50,241 43,005
Available for sale financial asset 48,926 -
Net income in accordance with US GAAP 433,279 314,832
Reserve movement in pension benefits (net of
tax) 2,178 -
Adoption of SFAS 158 (including elimination of
additional minimum liability) (2,718) -
-------- --------
Total comprehensive income 531,906 360,038
Share based payments 3,935 -
Stock issued for cash 11,234 30,590
-------- --------
Closing shareholders' equity in accordance
with US GAAP 2,567,522 2,020,447
======== ========
Page 7
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 income statement excluding the exceptional items referred to below.
Exceptional items in the year ended March 31, 2007 amounted to €34.2m which
primarily arose from the one time release of an overprovision, principally from
deferred tax. In the year ended March 31, 2006 there was also an exceptional
receipt of €5.2m (net of tax) arising from the settlement of an insurance claim
for the scribing of 6 Boeing 737-200 aircraft.
Profit after tax increased by 42% to €435.6m compared to €306.7m in the previous
year ended March 31, 2006, whilst adjusted profit after tax increased by 33% to
€401.4m
Summary Year ended March 31, 2007
Profit after tax increased by 33% to €401.4m, compared to €301.5m in the
previous year ended March 31, 2006. These results reflect a 7% increase in
average fares (including checked in baggage revenues), very strong growth in
ancillary revenues, offset by significantly higher fuel costs, which increased
by 50% to €693.3m, and a one off step up in pilot crewing ratios which resulted
in staff costs rising by 32% to €226.6m. Total operating revenues increased by
32% to €2,236.9m, which was faster than the 22% growth in passenger volumes, as
average fares rose by 7% and ancillary revenues grew by 40% to €362.1m. Total
revenue per passenger as a result increased by 8%, whilst Passenger Load Factor
decreased by 1 point to 82% during the year.
Total operating expenses increased by 33% to €1,765.2m, due to the increased
level of activity, and the increased costs, associated with the growth of the
airline. Fuel, which represents 39% of total operating costs compared to 35%
last year, increased by 50% to €693.3m due to substantial increases in the US
dollar cost per gallon, partially offset by a positive movement in the US dollar
exchange rate versus the euro and an average 3% reduction in fuel consumption
resulting from the installation of winglets on our Boeing 737-800 fleet. Unit
costs excluding fuel and staff costs remained flat. Staff costs rose by 32%
reflecting an increase in pilot crewing ratios primarily as a result of the
ongoing increases in sector length. As a result, operating margins decreased by
1 point to 21%, whilst operating profit increased by 28% to €471.7m.
Net Margins remained flat at 18% for the reasons outlined above.
Adjusted earnings per share have increased by 32% to 25.99 cent for the year.
Balance Sheet
The strong growth in profitability continues to positively impact the balance
sheet with Total Cash increasing by €226.0m to €2,198.0m despite acquiring a
25.2% stake in Aer Lingus for €344.9m and funding an additional €489.2m in
capital expenditure largely from internal resources. This cashflow part funded
the extensive aircraft delivery programme and additional aircraft advance
payments. Total debt net of repayments increased during the year by €184.3m.
Shareholders' Equity at March 31, 2007 have increased by €547.8m to €2,539.8m,
compared to March 31, 2006 due to the €401.4m increase in profitability during
the year, the exercise of share options which increased shareholder funds by
€11.2m and the impact of the IFRS accounting treatment for derivative financial
instruments, financial assets, pensions and stock options are accounted for
within equity and which also increased shareholders funds by €99.0m.
Detailed Discussion and Analysis Year ended March 31, 2007
Profit after tax, increased by 33% to €401.4m due to a 7% increase in average
fares (including checked in baggage revenues), strong growth in ancillary
revenues, offset by increased fuel costs which rose by 50% to €693.3m primarily
reflecting the higher US dollar cost per gallon and a one off step up in staff
costs, due to higher pilot crewing ratios, which rose by 32% to €226.6m.
Operating margins, as a result decreased by 1 point to 21%, which in turn
resulted in Operating profit increasing by 28% to €471.7m compared to year ended
March 31, 2006.
Total operating revenues increased by 32% to €2,236.9m whilst passenger volumes
increased by 22% to 42.5m. Total revenue per passenger increased by 8% in the
year due to higher average fares and strong ancillary revenue growth.
Scheduled passenger revenues increased by 31% to €1,874.8m due to a 7% increase
in average fares (including checked baggage revenues) reflecting the benign
yield environment during the year supported by competitor fuel surcharges.
Passenger volumes increased by 22% to 42.5m reflecting increased passenger
numbers on existing routes, the successful launch of our new routes and bases.
Load factor decreased by 1 point to 82% during the year due to the 23% increase
in seat capacity.
Ancillary revenues continue to grow faster than passenger volumes with revenues
increasing by 40% to €362.1m in the year. This performance reflects the strong
growth in on board sales, non-flight scheduled revenues including excess baggage
revenue. On March 22, 2007 we announced a new five year hotel partnership with
Expedia.
Total operating expenses rose by 33% to €1,765.2m due to the increased level of
activity, and the increased costs associated with the growth of the airline
particularly higher fuel and staff costs. Total operating expenses were also
adversely impacted by a 6% increase in the average sector length, whilst higher
US dollar fuel prices were partially offset by the strength of the euro exchange
rate against the US dollar.
Staff costs have increased by 32% to €226.6m. This primarily reflects a 30%
increase in average employee numbers to 4,462 and the impact of pay increases
granted during the year. Employee numbers rose due to an increase in pilot
crewing ratios as a result of continued increases in sector length. Pilots, who
earn higher than the average salary, accounted for 43% of the increase in
employees during the year.
Depreciation and amortisation increased by 15% to €143.5m. There are an
additional 19 'owned' Boeing 737-800 aircraft in the fleet this year compared to
last year. The resultant higher depreciation charge was offset by a combination
of lower amortisation due to the retirement of Boeing 737-200 aircraft and the
positive impact of a new engine maintenance deal on the cost of amortisation of
Boeing 737-800 aircraft. The strengthening of the euro versus the US dollar also
had a positive impact on the depreciation and amortisation charge.
Fuel costs rose by 50% to €693.3m due to a 25% increase in the number of hours
flown and a 28% increase in the average US dollar cost per gallon of fuel
partially offset by the positive impact of the strengthening of the euro versus
the US dollar and a 3% reduction in fuel consumption due to the installation of
winglets on our Boeing 737-800 fleet.
Maintenance costs increased by 12% to €42.0m, reflecting improved reliability of
the Boeing 737-800's operated, due to a combination of the rise in the number of
leased Boeing 737-800 aircraft from 17 to 32, a lower level of maintenance costs
incurred due to the retirement of the Boeing 737-200's, and the positive impact
of the strengthening of the euro versus the US dollar exchange rate.
Marketing and distribution costs increased by 71% to €23.8m due to a higher
level of marketing activity and related expenditure compared to the previous
year as the number of routes operated rose by 67% to 428 at the year end and the
number of bases increased by 3 to 18.
Aircraft rental costs increased by 23% to €58.2m reflecting an additional 15
leased aircraft during the year.
Route charges rose by 21% to €199.2m due to an increase in the number of sectors
flown and an increase of 6% in the average sector length, offset by a reduction
in enroute charges in certain EU countries.
Airport and handling charges increased by 27% to €273.6m. This is higher than
the growth in passenger volumes and reflects the impact of increased costs at
certain existing airports, particularly at our Dublin base, which has grown
significantly this year and has a much higher average cost per passenger, offset
by lower costs at new airports and bases.
Other expenses increased by 23% to €104.9m, 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 21% due to the reasons outlined
above whilst operating profits have increased by 28% to €471.7m during the year.
Interest receivable has increased by 65% to €63.0m for the year due to the
combined impact of higher levels of cash and cash equivalents and increases in
average deposit rates earned in the year.
Interest payable increased by 12% to €82.9m 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 losses have decreased during the year to €0.9m due to the
positive impact of changes in the US dollar exchange rates against the euro
compared to last year.
The gain on disposal of fixed assets of €0.1m arises from the disposal of
various plant & equipment.
The Company's Balance Sheet continues to strengthen due to the strong growth in
profits during the year. The Company generated cash from operating activities of
€869.9m which part funded the investment in financial assets (Aer Lingus) of
€344.9m and capital expenditure incurred during the year with the balance
reflected in Total Cash of €2,198.0m. Capital expenditure amounted to €494.9m
which largely consisted of advance payments for future aircraft deliveries and
the delivery of fifteen aircraft. Long term debt, net of repayments increased by
€184.3m during the year.
Shareholders' Equity at March 31, 2007 has increased by €547.8m to €2,539.8m,
compared to March 31, 2006 reflecting the €401.4m increase in profitability
during the year and the exercise of share options which increased shareholder
funds by €11.2m and the impact of the IFRS accounting treatment for derivative
financial instruments, financial assets, pensions and stock options which are
accounted for within equity and which also increased shareholders funds by
€99.0m.
Notes to the Financial Statements
IFRS
1. •Accounting Policies
This year's financial information has been prepared in accordance with the
accounting policies set out in Ryanair's consolidated financial statements
for the year ended March 31, 2007, which were prepared in accordance with
International Financial Reporting Standards ('IFRS') as endorsed by the EU.
2. •Approval of the Preliminary Announcement
The Audit Committee approved the consolidated financial statements for the
half year ended March 31, 2007 on June 01, 2007.
3. •Available for Sale Securities
During the year the company acquired a 25.2% stake in Aer Lingus at a cost
of €344.9m. This is reflected at market value at March 31, 2007 at €406.1m.
US GAAP
4. •Accounting for Share-Based Payments
Under SFAS No. 123R, which was adopted by the Company on April 1, 2006, the
Company is required to account for share-based employee compensation using a
fair value based method. The Company has elected to use the Binomial Lattice
option pricing model to determine the fair-value of share-based awards under
SFAS No. 123R, consistent with that previously used for pro forma
disclosures under SFAS No. 123 ('Accounting for Stock-Based Compensation').
The Company has elected to use the modified prospective transition method as
permitted by SFAS No. 123R and accordingly prior years have not been
restated to reflect the impact of the revised standard. In this year's
financial information, the Company has, as a result of the adoption of SFAS
No. 123R, recorded incremental share-based compensation expense of €3.9m in
its US GAAP income statement.
Prior to the adoption of SFAS No. 123R, the Company measured compensation
expense for its employee share-based compensation plans using the intrinsic
method prescribed by APB Opinion No. 25. The Company applied the disclosure
provisions of SFAS No. 123, as if the fair value based method has been
applied in measuring compensation expense. Under APB Opinion No. 25, when
the exercise price of the Group's employee share options was equal to the
market price of the underlying share on the date of grant, no compensation
expense was recognised. If the Company had applied the fair value
recognition provisions of SFAS No. 123 to share-based compensation during
the year ended March 31, 2006, reported income under US GAAP would have
changed from €314.8 million to €311.9 million with resulting Net income per
ADS, basic and diluted, of 101.69 Euro cents and 101.04 Euro cents
respectively.
5. • Accounting for Pensions - US GAAP
The Company also adopted the provisions of SFAS No. 158 'Employers'
Accounting for Defined Benefit Pension and other Postretirement Plans'
in the year to 31 March 2007. This requires the full fair value of the
group's defined benefit pension obligations to be recognised within the
group's US GAAP balance sheet, whereas previously, under SFAS No. 87
'Employers Accounting for Pensions' such obligations were permitted to
be partially recognised in certain circumstances using the 'Corridor
Method'. The adoption of this standard had no effect on the consolidated
income statement of the group however, resulted in a net decrease of
€2.7m in the group's shareholders' equity in accordance with US GAAP in
the year to March 31, 2007 only. In accordance with the transition
provisions of that standard shareholders' equity as previously reported
for the year to March 31, 2006 remains unchanged.
This information is provided by RNS
The company news service from the London Stock Exchange
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