Interim Results

Ryanair Holdings PLC 06 November 2006 RYANAIR ANNOUNCES RECORD HALF YEAR PROFITS NET PROFIT RISES BY 39% TO €329M - TRAFFIC GROWS 23% TO 22m RAISES FULL YEAR GUIDANCE: UP 16% TO €350M. Ryanair, Europe's largest low fares airline, today (Monday, 6th November 2006) announced record half year profits of €329m. Traffic grew by 23% to 22.1m passengers, yields increased by 9% as total revenues rose by 33% to €1.256bn. Unit costs increased by 7.5% as fuel costs rose by 42% to €337m. Despite these significantly higher fuel costs, Ryanair's after tax margin for the half year rose by 1 point to 26% as half year net profits increased by 39% to €329m. Summary Table of Results (IFRS) - in Euro Half Year Ended Sept 30, 2005 Sept 30,2006 % Increase Passengers 18.0m 22.1m 23% Revenue €946.2m €1,256.4m 33% Profit after Tax (note 1) €237m €329m 39% Basic EPS (Euro Cents) (note1) 31.00 42.67 38% Note 1: Adjusted profit after tax and EPS during the half year ended 30 September 2005 excludes a receipt, net of tax, of €5.2m arising from the settlement of an insurance claim for the scribing of 6 Boeing 737-200 aircraft. Announcing these results Ryanair's CEO, Michael O'Leary, said: 'Ryanair has again, delivered record half year profits despite intense competition and very high fuel prices. The Ryanair lowest fare model has repeatedly proven that it can generate increased profitability and significant passenger growth during difficult trading conditions while many of our competitors are struggling to deliver profits or are losing money. 'Summer yields rose by 9% despite a 22% increase in seat capacity. This benign yield environment continues to be driven by the multiple fuel surcharges imposed by European flag carriers, which has widened the gap between their high fares and Ryanair's lowest fares. Our unwavering determination to avoid fuel surcharges has enabled us to deliver rapid traffic growth and generate higher profits. Load factors were up 1 point as we launched 42 new routes and 3 new bases. 'Ancillary revenues grew by 27%, again faster than the growth in passenger volumes. Need a Hotel, our online hotel provider, has decided to terminate our agreement with effect from December 31st, 2006. Whilst the terms of our agreement are confidential, we anticipate that returns for the remainder of the fiscal year will remain unaffected. We are confident that we can replace Need a Hotel without affecting the returns this business generates. We also recently launched our Bingo/Gaming website and our 15 million unique visitors each month will now be offered the lowest fares and a flutter on our Bingo/Gaming website. As we roll out our onboard mobile phone system next summer, passengers will also be able to have a flutter whilst travelling on our 437 routes across Europe. 'We introduced a new service enhancement in November that will allow all passengers to enjoy on-line check-in and/or priority boarding for just £2/€3 per flight. Passengers travelling with hand luggage only, will continue to by pass check-in queues and go directly to their boarding gate. This new service will extend the priority boarding facility to passengers travelling with checked-in luggage who will now be entitled to board the aircraft first and choose their seats. 'Unit costs increased by 7.5% primarily due to higher fuel, staff and airport and handling costs. Fuel costs rose by 42% to €337m despite being almost fully hedged during the quarter reflecting higher world fuel prices. For the remainder of this fiscal year, we are 90% hedged at rates equivalent to $73 per barrel. We have used the recent weakness in forward oil prices to hedge 50% of our requirements for the quarter from October to December 2007 at a cost which is 10% lower than comparable Q3 this year. We continue to monitor forward prices with a view to hedging our requirements for fiscal 2008 when opportunities arise. 'Our new bases at Liverpool, East Midlands and Shannon performed well over the summer, however, fares at Shannon continue to be materially lower than expected. We announced 3 new bases at Bremen, Marseille and Madrid and advance bookings at all 3 are strong. We announced a further 4 aircraft and 20 new routes at our Dublin base commencing in early 2007 and these are already booking strongly. In August we achieved another milestone and became the first European low fares airline to carry 4m passengers in one month. 'In October we exercised options for 32 Boeing 737-800 next generation aircraft to be delivered between September 2008 and June 2009 as part of our plan to double in size to over 80m passengers by 2012. We also ordered 10 more aircraft simulators (5 firm, 5 options), which will be delivered between 2008 and 2013 and will enable us to further reduce pilot training costs whilst improving safety and training. 'We continue to oppose the BAA airport monopoly plans to build a £4bn gold plated Taj Mahal at Stansted which we believe could be built for £1bn. The BAA monopoly continues to build facilities, which do not meet users needs. Until there is competition between the three London airports, airport charges will continue to rise and passengers will have to suffer these over specified, inefficient facilities. Ryanair continues to campaign for the break up of the BAA airport monopoly. We are deeply concerned by the continuing under staffing of security at Stansted airport which has led to repeated passenger and flight delays. The management of Stansted security is inept, and the BAA has again proven that it is incapable of providing adequate or appropriate security services at Stansted. This shambles again highlights that the BAA is an inefficient, incompetent airport monopoly which should be broken up. 'The tragedy at Dublin airport continues where the DAA monopoly recently obtained planning approval for a second terminal at a cost of €750m which is 4.5 times more than the €170m cost it announced just 11 months earlier in Sept. 2005. Only a government owned monopoly would seek a cost increase of over 4 fold - with no increase in passenger capacity - prior to applying for planning permission! The DAA has recently proposed that an outrageous 60% increase in charges at Dublin Airport to recoup the inflated cost of this facility which Ryanair passengers will never use. Ryanair will continue to oppose this waste and has appealed the planning decision. 'On the 5th October, we announced a Cash Offer for Aer Lingus of €2.80 per share which valued Aer Lingus at approximately €1.48bn. We have acquired a 19.2% stake in Aer Lingus at a cost of €254m. We believe there are significant opportunities, by combining the purchasing power of Ryanair and Aer Lingus, to substantially reduce its operating costs, increase efficiencies, and pass these savings on in the form of lower fares to Aer Lingus' consumers. We plan to retain the Aer Lingus brand and the Heathrow slots, and up-grade their dated longhaul product and are committed to reducing their shorthaul fares by 2.5% per year for a minimum of 4 years. We believe the combination of Aer Lingus and Ryanair into one strong Irish airline group will be rewarding for consumers and will enable us both to vigorously compete with the mega carriers in Europe. The EU Competition Authority is currently reviewing the proposed acquisition and we anticipate that the final outcome of their regulatory review will not be known until late December, 2006. If our offer is not accepted by a majority of Aer Lingus shareholders, we will continue to be a significant minority shareholder, and will exercise whatever influence we can to encourage Aer Lingus to reduce costs and offer lower fares which is, we believe, its best strategy for the future. 'We remain cautious in our outlook for H2 as we roll out substantial capacity expansion and suffer significantly higher oil prices than the comparable period last year. However, we expect to deliver significant traffic growth as we launch 130 new routes and 3 new bases, (Marseilles, Bremen and Madrid), albeit at slightly lower load factors (down 2% monthly on last year) during H2 which should result in better yield stability. The benign yield environment continues thanks to multiple fuel surcharges of our competitors. Based on a reasonable level of visibility, it now appears likely that yields in Q3 will be +2% to +3% compared to our original forecast of a -5% decline. With little visibility in Q4, we believe that yields may be slightly lower but not as much as the -5% decline previously guided. Accordingly, we now expect yields to be flat over the winter period although our net profit for H2 will still be lower than last year. As a result, we now expect that the increase in Net Profit after tax for the fiscal year will be approx. +16% to €350m, higher than our previous guidance of approximately +11% to €335m. 'Whilst intense competition in the market continues, Ryanair's unique combination of the lowest fare in every market, lowest cost base and industry leading customer service will enable us to continue to lead the low fares revolution for the benefit of our passengers, our staff and our shareholders'. Ryanair today announced that the Board of Directors intend to seek shareholder approval for a 2 for 1 stock split at the Extraordinary General meeting to be held in December on the proposed acquisition of Aer Lingus. The purpose of the stock split is to improve the marketability and liquidity of the stock. The existing ratio of 5 ordinary shares to 1 ADR will be retained. ENDS. Monday, 6th November 2006 For further information Howard Millar Pauline McAlester please contact: Ryanair Holdings Plc Murray Consultants www.ryanair.com Tel: 353-1-8121212 Tel: 353-1-4980300 The directors of Ryanair accept responsibility for the information contained in this announcement. 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. Terms defined in the Offer Document issued by Ryanair on 23 October, 2006 have the same meaning in this announcement. 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 18 bases and 437 low fare routes across 24 countries. By the end of March 2007 Ryanair will operate an entire fleet of 134 new Boeing 737-800 aircraft with firm orders for a further 117 new aircraft (net of planned disposals), which will be delivered over the next 5 years. Ryanair currently employs a team of 3,900 people and expects to carry approximately 42 million scheduled passengers in the current year. Ryanair Holdings plc and Subsidiaries Page 1 Consolidated Income Statement in accordance Quarter Quarter Half year Half year with IFRS (unaudited) ended ended ended ended Sep 30, Sep 30, Sep 30, Sep 30, 2006 2005 2006 2005 €'000 €'000 €'000 €'000 ------- ------- ------- ------- Operating revenues Scheduled revenues 602,089 470,495 1,092,102 816,781 Ancillary revenues 87,700 71,027 164,321 129,379 ------- ------- ------- ------- Total operating revenues -continuing operations 689,789 541,522 1,256,423 946,160 ------- ------- ------- ------- Operating expenses Staff costs 57,107 41,494 113,844 83,646 Depreciation 36,035 29,672 71,622 61,337 Operating expenses Fuel & oil 169,580 126,967 337,042 236,873 Maintenance, materials and repairs 10,613 7,625 21,313 16,775 Marketing & distribution costs 5,885 3,387 11,608 8,729 Aircraft rentals 12,996 10,679 25,394 20,737 Route charges 50,305 42,563 98,384 83,933 Airport & handling charges 71,222 55,465 139,097 110,039 Other 26,942 21,440 52,312 41,977 ------- ------- ------- ------- Total operating expenses 440,685 339,292 870,616 664,046 ------- ------- ------- ------- Operating profit before exceptional items 249,104 202,230 385,807 282,114 Aircraft insurance claim - - - 5,939 ------- ------- ------- ------- Operating profit after exceptional items - continuing operations 249,104 202,230 385,807 288,053 ------- ------- ------- ------- Other (expenses)/income Foreign exchange (losses)/gains (908) (481) (1,229) 463 (Loss) on disposal of property, plant & equipment - (16) - (16) Finance income 16,069 9,211 28,923 17,821 Finance expense (20,698) (18,364) (41,311) (36,799) ------- ------- ------- ------- Total other (expenses)/income (5,537) (9,650) (13,617) (18,531) ------- ------- ------- ------- Profit before taxation 243,567 192,580 372,190 269,522 Tax on profit on ordinary activities (30,122) (20,046) (43,063) (27,347) ------- ------- ------- ------- Profit for the period 213,445 172,534 329,127 242,175 ======= ======= ======= ======= Earnings per ordinary share -Basic(Euro cent) 27.66 22.51 42.67 31.68 -Diluted(Euro cent) 27.45 22.35 42.39 31.47 Adjusted earnings per ordinary share* -Basic(Euro cent) 27.66 22.51 42.67 31.00 -Diluted(Euro cent) 27.45 22.35 42.39 30.79 Number of ordinary shares(in 000's) -Basic 771,722 766,453 771,413 764,509 -Diluted 777,491 771,875 776,456 769,603 * Calculated on profit for the year before exceptional items (net of tax). Ryanair Holdings plc and Subsidiaries Page 2 Consolidated Balance Sheet in accordance with Sep 30, Mar 31, IFRS (unaudited) 2006 2006 €'000 €'000 ------- ------- Non-current assets Property, plant & equipment 2,550,162 2,532,988 Intangible assets 46,841 46,841 Available for sale financial asset 185,363 - Derivative financial instruments 3,888 763 ------- ------- Total non-current assets 2,786,254 2,580,592 ------- ------- Current assets Inventories 3,627 3,422 Other assets 48,842 29,453 Trade receivables 24,207 29,909 Derivative financial instruments 502 18,872 ------- ------- Restricted cash 204,040 204,040 Financial assets: cash > 3months 824,314 328,927 Cash and cash equivalents 1,064,692 1,439,004 ------- ------- ------- ------- Total current assets 2,170,224 2,053,627 ------- ------- Total assets 4,956,478 4,634,219 =========== ========= Current liabilities Trade payables 87,903 79,283 Accrued expenses and other liabilities 519,835 570,614 Current maturities of long term debt 158,049 153,311 Derivative financial instruments 69,854 27,417 Current tax 46,331 15,247 ------- ------- Total current liabilities 881,972 845,872 ------- ------- Non-current liabilities Provisions 22,723 16,722 Derivative financial instruments 74,864 81,897 Deferred income tax liability 134,881 127,260 Other creditors 68,396 46,066 Long term debt 1,476,874 1,524,417 ------- ------- Total non-current liabilities 1,777,738 1,796,362 ------- ------- Shareholders' equity Issued share capital 9,807 9,790 Share premium account 602,664 596,231 Retained earnings 1,796,750 1,467,623 Other reserves (112,453) (81,659) ------- ------- Shareholders' equity 2,296,768 1,991,985 ------- ------- Total liabilities and shareholders' equity 4,956,478 4,634,219 =========== ========= Ryanair Holdings plc and Subsidiaries Page 3 Consolidated Cashflow Statement in accordance with IFRS (unaudited) Sep 30, Sep 30, 2006 2005 €'000 €'000 ------- ------- Operating activities ---------------------- Profit before taxation 372,190 269,522 Adjustments to reconcile profits before tax to net cash provided by operating activities Depreciation 71,622 61,337 (Increase) in inventories (205) (3,733) Decrease/(increase) in trade receivables 5,702 (5,286) (Increase)/decrease in other current assets (16,320) 1,342 Increase/(decrease) in trade payables 8,620 (29,467) (Decrease)/increase in accrued expenses (55,320) 6,176 Increase in other creditors 35,489 19,294 Increase in maintenance provisions 6,001 5,145 Interest receivable (3,069) (3,654) Interest payable 4,212 (52) Retirement costs 329 289 Share based payment 2,012 586 Income tax 328 (1,727) ------- ------- Net cash provided by operating 431,591 319,772 activities ------- ------- Investing activities ---------------------- Capital expenditure (purchase of property, plant and equipment) (88,797) (86,814) Purchase of shares classified as available for sale (185,363) - (Investment)/reduction in financial assets: cash > 3months (495,387) 122,655 ------- ------- Net cash used in investing activities (769,547) 35,841 ------- ------- Financing activities ---------------------- Net proceeds from shares issued 6,450 10,943 Proceeds from long term borrowings 32,758 16,496 Repayments of long term borrowings (75,564) (59,755) ------- ------- Net cash used in financing activities (36,356) (32,316) ------- ------- (Decrease)/increase in cash and cash equivalents (374,312) 323,297 Cash and cash equivalents at beginning of period 1,437,847 871,354 Effects of exchange rates on foreign currency balances 1,157 904 ------- ------- Cash and cash equivalents at end of 1,064,692 1,195,555 period ======= ======= Ryanair Holdings plc and Subsidiaries Page 4 Consolidated Statement of Recognised Income and Expense Sep 30, Sep 30, in accordance with IFRS (unaudited) 2006 2005 €'000 €'000 ------- --- ------- Cash flow hedge reserve New movements into cash flow hedge reserve 9,375 58,278 Movements from cash flow hedge reserve (42,181) - ------- ---- ------- Net movements into cash flow hedge reserve (32,806) 58,278 ------- ---- ------- ------- ---- ------- Profit for the period 329,127 242,175 ------- ---- ------- ------- ---- ------- Total recognised income and expense 296,321 300,453 ======= ==== ======= Reconciliation of adjusted earnings per share (unaudited) Sep 30, Sep 30, 2006 2005 €'000 €'000 ------- --- ------- Profit for the period under IFRS 329,127 242,175 Adjustments ------------- Aircraft insurance claim - (5,939) Taxation adjustment for above - 742 ------- ---- ------- Adjusted profit under IFRS 329,127 236,978 ======= ==== ======= Number of ordinary shares(in 000's) -Basic 771,413 764,509 -Diluted 776,456 769,603 Adjusted earnings per ordinary share -Basic(€ cent) 42.67 31.00 -Diluted(€ cent) 42.39 30.79 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 17 6,433 - - 6,450 ---------------------- ------- ------- ------- ------- --- ------- New movements into cash flow hedge reserve - - - 9,375 9,375 Movements from cash flow hedge reserve - - - (42,181) (42,181) ---------------------- ------- ------- ------- ------- --- ------- Movement in reserves - - - (32,806) (32,806) ---------------------- ------- ------- ------- ------- --- ------- Share -based payments - - - 2,012 2,012 Profit for the period - - 329,127 - 329,127 ------- ------- ------- ------- --- ------- Balance at September 30, 2006 9,807 602,664 1,796,750 (112,453) 2,296,768 ======== ======= ======= ======= ==== ======= Ryanair Holdings plc and Subsidiaries Page 5 Consolidated Income Statement in accordance Quarter Quarter Half year Half year with US GAAP (unaudited) ended ended ended ended Sep 30, Sep 30, Sep 30, Sep 30, 2006 2005 2006 2005 €'000 €'000 €'000 €'000 Operating revenues Scheduled revenues 602,089 470,495 1,092,102 816,781 Ancillary revenues 87,700 71,027 164,321 129,379 ------- ------- ------- ------- Total operating revenues -continuing operations 689,789 541,522 1,256,423 946,160 ------- ------- ------- ----- Operating expenses Staff costs 57,214 41,301 114,059 83,077 Depreciation 36,450 29,985 72,419 61,942 Operating expenses Fuel & oil 169,580 126,967 337,042 236,873 Maintenance, materials & repairs 10,613 7,625 21,313 16,775 Marketing & distribution costs 5,885 3,387 11,608 8,729 Aircraft rentals 12,996 10,679 25,394 20,737 Route charges 50,305 42,563 98,384 83,933 Airport & handling charges 71,222 55,465 139,097 110,039 Other 26,942 21,418 52,312 41,933 ------- ------- ------- ------- Total operating expenses 441,207 339,390 871,628 664,038 ------- ------- ------- ------- Operating profit before exceptional items 248,582 202,132 384,795 282,122 Aircraft insurance claim - - - 5,939 ------- ------- ------- ------- Operating profit after exceptional items - continuing operations 248,582 202,132 384,795 288,061 ------- ------- ------- ------- Other (expenses)/income Foreign exchange (losses)/gain (908) (481) (1,229) 463 (Loss) on disposal of property, plant & equipment - (16) - (16) Finance income 16,069 9,211 28,923 17,821 Finance expense (17,659) (16,450) (36,073) (33,352) ------- ------- ------- ------- Total other (expenses)/income (2,498) (7,736) (8,379) (15,084) ------- ------- ------- ------- Income before taxation 246,084 194,396 376,416 272,977 Taxation (30,018) (20,309) (43,591) (27,849) ------- ------- ------- ------- Net income 216,066 174,087 332,825 245,128 ======= ======= ======= ======= Net income per ADS -Basic(Euro cent) 139.99 113.57 215.72 160.32 -Diluted(Euro cent) 138.95 112.77 214.32 159.26 Adjusted net income per ADS * -Basic(Euro cent) 139.99 113.57 215.72 156.92 -Diluted(Euro cent) 138.95 112.77 214.32 155.88 Weighted Average number of shares -Basic 771,722 766,453 771,413 764,509 -Diluted 777,491 771,875 776,456 769,603 * Calculated on net income before non-recurring items (net of tax). (5 ordinary shares equal 1 ADS) Ryanair Holdings plc and Subsidiaries Page 6 Summary of significant differences between IFRS and US generally accepted accounting principles (unaudited) (A) Net income under US GAAP <---Quarter ended---> <----Half year ended----> Sep 30, Sep 30, Sep 30, Sep 30, 2006 2005 2006 2005 €'000 €'000 €'000 €'000 Net income in accordance with IFRS 213,445 172,534 329,127 242,175 Adjustments Pensions (107) (100) (215) (17) Share based payments - 293 - 586 Capitalised interest (net of amortisation) regarding aircraft acquisition programme 2,624 1,601 4,441 2,842 Darley Investments Limited - 22 - 44 Taxation- effect of above adjustments 104 (263) (528) (502) -------- -------- ------- ------- Net income in accordance with US GAAP 216,066 174,087 332,825 245,128 ======== ======== ======= ======= (B) Consolidated cashflow statement in accordance with US GAAP Sep 30, Sep 30, 2006 2005 €'000 €'000 Cash inflow from operating activities 436,032 322,614 Cash (outflow)/inflow from investing activities (773,988) 32,999 Cash (outflow) from financing activities (36,356) (32,316) ------- ------- (Decrease)/increase in cash and cash equivalents (374,312) 323,297 Cash and cash equivalents at beginning of period 1,439,004 872,258 ------- ------- Cash and cash equivalents at end of period 1,064,692 1,195,555 ======= ======= Cash and cash equivalents under US GAAP 1,064,692 1,195,555 Restricted cash 204,040 204,040 Deposits with a maturity of between three and six months 824,314 406,752 ------- ------- Cash and liquid resources in accordance with IFRS 2,093,046 1,806,347 ======= ======= Ryanair Holdings plc and Subsidiaries Page 7 Summary of significant differences between IFRS and US generally accepted accounting principles (unaudited) (C) Shareholders' funds - equity Sep 30, Sep 30, 2006 2005 €'000 €'000 ------- ------- Shareholders' equity as reported in the consolidated balance sheets in accordance with IFRS 2,296,768 1,918,409 Adjustments: Pension 9,026 11,688 Share based payments 586 Capitalised interest (net of amortisation) regarding aircraft acquisition programme 33,889 25,789 Darley Investments Limited (19) Minimum pension liability(net of tax) (4,295) (6,496) Tax effect of adjustments( excluding pension & derivative adjustments) (6,459) (5,498) ------- ------- Shareholders' equity as adjusted to accord with US GAAP 2,328,929 1,944,459 ======= ======= Opening shareholders' equity under US GAAP 2,020,448 1,630,113 Comprehensive income Unrealised (losses)/gains on derivative financial instruments(net of tax) (32,806) 58,275 Net income in accordance with US GAAP 332,825 245,128 ------- ------- Total comprehensive income 300,019 303,403 Share based payments 2,012 - Stock issued for cash 6,450 10,943 ------- ------- Closing shareholders' equity in accordance with US GAAP 2,328,929 1,944,459 ======= ======= 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 exceptional items referred to below. Exceptional items for the half year ended September 30, 2005 consist of a 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 36% to €329.1m during the six months ended September 30, 2006 compared to last year. The adjusted profit for the half year, increased by 39% to €329.1m. Summary Half Year Ended September 30, 2006 Profit after tax increased by 36% to €329.1m, compared to €242.2m in the previous half year ended September 30, 2005. These results were achieved by strong growth in passenger volumes and continued tight cost control, excluding fuel and staff costs, which were both significantly higher than in previous periods. Total operating revenues increased by 33% to €1,256.4m, which is greater than the 23% growth in passenger volumes, as average fares rose by 9% and ancillary revenues grew by 27% to €164.3m. Total revenue per passenger as a result increased by 8% whilst Passenger Load Factor increased by 1 point to 87% during the period. Total operating expenses increased by 31% to €870.6m, 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 36% last year, increased by 42% to €337.0m due to substantial increases in the US dollar cost per gallon, partially offset by a positive movement in the US dollar exchange rate and a 2% reduction in fuel consumption due to the installation of winglets on a portion of our Boeing 737-800 fleet. The remaining retro-fit winglets will be installed across the fleet by year end. Unit costs excluding fuel and staff costs declined by 1%. Staff costs rose by 36% reflecting an increase in our crewing ratios primarily as a result of increases in our sector length. Despite the significantly higher fuel and staff costs incurred, operating margins increased by 1 point to 31%, whilst operating profit before exceptional items increased by 37% to €385.8m. Net Margins increased by 1 point to 26% for the reasons outlined above. Adjusted basic earnings per share have risen by 38% to €42.67 cent for the period. Balance Sheet The strong growth in profitability continues to positively impact the balance sheet with Total Cash increasing by €121.1m to €2,093.1m despite investing €185.4m in a 15% stake in Aer Lingus and funding an additional €88.8m in capital expenditure from internal resources. The company debt financed one Boeing 737-800 aircraft and funded additional aircraft deposits during the period. Total debt declined during the period as repayments exceeded debt drawdown by €42.8m. Shareholders' Funds at September 30, 2006 have increased by €304.8m to €2,296.8m, compared to March 31, 2006 reflecting the €329.1m increase in profitability during the period and the exercise of share options which increased shareholder funds by €6.5m, offset by a reduction of €30.8m resulting from the required IFRS accounting treatment for derivative financial instruments, pensions and stock options. Detailed Discussion and Analysis Half Year Ended September 30, 2006 Profit after tax, increased by 36% to €329.1m due to a 9% increase in average fares, strong growth in ancillary revenues, and tight cost control which was offset by fuel costs increasing by 42% to €337.0m primarily reflecting the higher US dollar cost per gallon and a one off step up in staff costs which rose by 36% to €113.8m. Operating margins, as a result, increased by 1 point to 31%, which in turn resulted in operating profit before exceptional items increasing by 37% to €385.8m compared to half year ended September 30, 2005. Total operating revenues increased by 33% to €1,256.4m due to the combination of a 23% increase in passengers carried, an improvement in average fares and the growth of ancillary revenues. Scheduled passenger revenues increased by 34% to €1,092.1m due to a 9% improvement in average fares reflecting the benign yield environment supported by competitor fuel surcharges and the positive impact of Easter in fares. Easter is not included in the prior year comparative as it occurred earlier. Passenger volumes increased by 23% to 22.1m reflecting increased passenger numbers on existing routes, the successful launch of our new routes and expansion of our bases. Load factor increased by 1 point to 87% during the period. Ancillary revenues continue to perform strongly with revenues growing by 27% to €164.3m in the period. This performance reflects the strong growth in on board sales, non-flight scheduled revenues, and other ancillary products. Ancillary revenues continue to grow at a faster rate than passenger volumes. Total operating expenses rose by 31% to €870.6m 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 costs were also adversely impacted by a 5% increase in the average sector length, whilst higher US dollar fuel prices were partly offset by the strength of the euro exchange rate against the US dollar. Staff costs have increased by 36% to €113.8m. This primarily reflects a 31% increase in average employee numbers to 3,768 and the impact of pay increases granted during the period. Employee numbers rose due to an increase in our aircraft crewing ratios as a result of continued increases in sector length. Pilots, who earn higher than the average salary, accounted for 42% of the increase in employment during the period. Depreciation increased by 17% to €71.6m. There are an additional thirteen '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 to US dollar also had a positive impact on the depreciation and amortisation charge. Fuel costs rose by 42% to €337.0m due to a 21% increase in the number of hours flown and a significant increase in the average US dollar cost per gallon of fuel partially offset by the positive impact of the strengthening of the euro to the US dollar and a 2% reduction in fuel consumption due to the installation of winglets on part of our Boeing 737-800 fleet. Maintenance costs increased by 27% to €21.3m, faster than the increase in the number of hours flown, due to an increase in the number of leased Boeing 737-800 aircraft from 17 to 24, partially offset by the improved reliability of the Boeing 737-800's operated, 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 exchange rate against the US dollar. Marketing and distribution costs increased by 33% to €11.6m due to a higher level of marketing activity and related expenditure compared to the previous year as the number of routes operated rose by 42% to 304 at the period end and the number of bases increased by 1 to 15. Aircraft rental costs increased by 23% to €25.4m reflecting an additional 7 aircraft on operating lease during the period. Route charges rose by 17% to €98.4m due to an increase in the number sectors flown, and a longer average sector length, offset by a reduction in enroute charges in certain EU countries. Airport and handling charges increased by 26% to €139.1m. This is higher than the growth in passenger volumes and reflects the impact of increased costs at some of our airports and in particular at our Dublin base, which has a significantly higher cost per passenger, offset by lower costs at new airports and bases (excluding Dublin), and the positive impact of the euro/sterling exchange rate during the period. Other expenses increased by 25% to €52.3m, which is less than the growth in ancillary revenues due to improved margins on some new and existing products, and cost reductions achieved on certain indirect costs. Operating margins have increased by 1 point to 31% for the period due to the reasons outlined above which has resulted in operating profits increasing by 37% to €385.8m. Interest receivable has increased by 62% to €28.9m due to a combination of higher levels of cash and cash equivalents and increases in average deposit rates earned in the period. Interest payable increased by €4.5m due to the drawdown of debt to part fund the purchase of new aircraft during the period and higher floating interest rates. The Company's Balance Sheet continues to strengthen due to the strong growth in profits during the period. The Company generated cash from operating activities of €431.6m which part funded the investment in financial assets of €185.4m and capital expenditure during the period with the balance reflected in Total Cash of €2,093.0m. Capital expenditure of €88.8m primarily comprised of the delivery of one aircraft and advance payments for future aircraft deliveries. Long term debt, net of repayments decreased by €42.8m during the period. Shareholders' Equity at September 30, 2006 has increased by €304.8m to €2,296.8m, compared to March 31, 2006 reflecting the €329.1m increase in profitability during the period and the exercise of share options which increased shareholder funds by €6.5m, offset by a reduction of €30.8m resulting from the IFRS accounting treatment for derivative financial instruments, pensions and stock options. Detailed Discussion and Analysis Quarter Ended September 30, 2006 Profit after tax, increased by 24% to €213.4m due to average fares improving by 6% and strong ancillary revenue growth, which was offset by fuel costs which rose 34% to €169.6m reflecting the higher US dollar cost per gallon and the one off step up in staff costs which rose by 38% to €57.1m. Operating margins, as a result of these higher costs, fell by 1 point to 36%. Strong cost control on other line items coupled with increases in total operating revenues resulted in operating profit increasing by 23% to €249.1m compared to the previous quarter ended September 30, 2005. Total operating revenues increased by 27% to €689.8m whilst passenger volumes increased by 21% to 11.5m. Total revenue per passenger increased by 5% in the quarter due to a combination of higher average fares, and strong ancillary revenue growth. Scheduled passenger revenues increased by 28% to €602.1m due to a combination of higher passenger numbers on existing routes, the successful launch of new routes and a 6% improvement in average fares. Ancillary revenues increased 23% to €87.7m, a faster growth rate than passenger volumes, reflecting a strong performance in non-flight scheduled revenues, on-board sales and other ancillary products Total operating expenses increased by 30% to €440.7m due to the increased level of activity, and in particular higher fuel and staff costs. Total operating costs were also adversely impacted by an 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 and lower fleet burn resulting from the newly installed winglets. Staff costs have increased by 38% to €57.1m primarily due to a 30% increase in average employee numbers to 3,881 in the quarter and the impact of pay increases granted. Employee numbers rose due to an increase in our aircraft crewing ratios as a result of continued increases in average sector length. Pilots, who earn higher than the average salary, accounted for 43% of the increase in employment during the period. Depreciation increased by 21% to €36.0m due to an increase in the size of the 'owned' fleet from 74 to 87, offset by a lower amortisation charge due to the retirement of Boeing 737-200 aircraft and the positive impact of a new engine maintenance deal on the cost of aircraft amortisation. The strengthening of the euro to US dollar also had a positive impact on the depreciation and amortisation charge relating to new aircraft deliveries. Fuel costs rose by 34% to €169.6m due to an increase in the number of sectors flown, a 6% increase in sector length, and a significantly higher average US dollar cost per gallon of fuel. The increased costs were partially offset by the positive impact of the strengthening of the euro to the US dollar during the year and a 2% reduction in fuel consumption due to the installation of winglets on part of our Boeing 737-800 fleet. Maintenance costs increased by 39% to €10.6m faster than the increase in the number of hours flown due to an increase in the number of leased Boeing 737-800 aircraft from 17 to 24, partially offset by the improved reliability of the Boeing 737-800's operated, 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 exchange rate against the US dollar. Marketing and distribution costs increased by 39% to €5.9m due to a higher level of marketing activity and related expenditure compared to the previous year as the number of routes operated rose by 42% to 304 at the period end and the number of bases increased by 1 to 15. Aircraft rental costs increased by 22% to €13.0m reflecting an additional 3 aircraft on operating lease during the period. Route charges rose by 18% to €50.3m 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 28% to €71.2m, which was higher than the growth in passenger volumes and reflects the impact of increased costs at certain existing airports, specifically at our Dublin base which has a much higher average cost per passenger, offset by lower costs at new airports and bases, and the positive euro/sterling exchange rate. Other expenses increased by 26% to €26.9m, which is higher than the growth in ancillary revenues due to improved margins on some existing products and cost increases on some indirect costs. Operating margins have fallen by 1 point to 36% due to the reasons outlined above whilst operating profits have increased by 23% to €249.1m during the quarter. Interest receivable has increased by 74% to €16.1m in the quarter due to the combined impact of higher levels of cash and cash equivalents and increases in average deposit rates earned compared to the same period last year. Interest payable increased by 13% to €20.7m due to the drawdown of debt to part fund the purchase of new aircraft and higher floating interest rates. Notes to the Financial Statements 1. •Accounting Policies This period'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, 2006, which were prepared in accordance with International Financial Reporting Standards ('IFRS') as endorsed by the EU. The comparative financial information for the six month period ended September 30, 2005 has been restated on a consistent basis. 2. •Approval of the Preliminary Announcement The Audit Committee approved the consolidated financial statements for the half year ended September 30, 2006 on November 3, 2006. 3. •Generally Accepted Accounting Policies The Management Discussion and Analysis of Results for the half year ended September 30, 2006 and the comparative period are based on the results reported under the group's IFRS accounting policies, as adjusted for certain exceptional items. 4. •Available for Sale Securities During the period the company acquired a €185.4m stake in Aer Lingus representing 15% of its share capital at September 30, 2006. 5. •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 periods have not been restated to reflect the impact of the revised standard. In this period's financial information, the Company has, as a result of the adoption of SFAS No. 123R, recorded incremental share-based compensation expense of €2.012 million 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 three month period ended September 30, 2005, reported income under US GAAP would have changed from €174.087 million to €173.796 million with resulting Net income per ADS, basic and diluted, of 113.57 Euro cents and 112.77 Euro cents respectively. Independent review report to Ryanair Holdings plc for the six months ended September 30, 2006 Introduction We have been engaged by the Company to review the financial information which comprises the consolidated balance sheet of Ryanair Holdings plc at September 30, 2006 and the related consolidated statements of income, statement of recognised income & expense and cash flows for the six month period then ended and the related notes as set out on pages 1 to 7. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Listing Rules of the Irish Stock Exchange and the UK Financial Services Authority. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where there are any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of Interim Financial Information' issued by the Auditing Practices Board for use in Ireland and the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented at and for the six months ended September 30, 2006. KPMG November 3, 2006 Chartered Accountants Dublin, Ireland This information is provided by RNS The company news service from the London Stock Exchange

Companies

Ryanair Holdings (CDI) (0RYA)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today