Half Year Results Announced
Ryanair Holdings PLC
05 November 2007
RYANAIR'S HALF YEAR PROFITS RISE 24% TO RECORD €408M
RAISES FULL YEAR GUIDANCE TO €470M
Ryanair, Europe's largest international airline, today (5 Nov) announced record
half year after tax profits of €408m, a 24% increase over last year. Traffic
grew by 20% to 26.6m and yields fell by 1% as revenues rose by 24% to €1,554m.
Unit costs increased by 5%, mainly due to higher fuel, staff, and airport costs.
Despite these higher costs, Ryanair maintained an industry leading after tax
margin of 26%.
Summary Table of Results (IFRS) - in Euro
Half Year Results Sep 30, 2006 Sep 30, 2007 Increase %
Passengers 22.1m 26.6m 20%
Revenue €1,256m €1,554m 24%
Profit after tax €329m €408m 24%
Basic EPS (Euro Cents) 21.33 26.61 25%
Announcing these results Ryanair's CEO, Michael O'Leary, said:
'These record profits reflect a 20% growth in passenger volumes, a 1% decline in
yields, and strong ancillary growth. Ancillary revenues grew by 54% to €252m,
due to improved penetration of car hire, hotels, travel insurance, as well as
strong onboard sales and excess baggage revenues. Ancillaries now account for
just over 16% of total revenues as we make steady progress towards our 20%
target. Our inflight mobile phone service will be tested on 25 aircraft before
the end of March 2008 which will allow passengers to make and receive calls and
texts on their mobile phones and blackberrys.
Unit costs rose by 5%, slightly lower than expected, due to the higher oil
prices, doubling of airport charges at Stansted as well as significantly higher
charges for portacabin facilities at the Dublin airport monopoly. Staff costs
rose by 29% to €146.3m due to volume growth, an employee share option charge of
€9.1m, and increased cabin crew ratios. We continue to aggressively tackle costs
and anticipate that unit costs for the remainder of the year will grow by 5%,
slightly lower than previously guided.
The UK Competition Commission's investigation of the BAA monopoly clearly
confirmed that they are responsible for the abysmal service and long security
queues which passengers are suffering at Stansted airport. This report also
highlighted the negative impact of the BAA's monopoly ownership of the main
London airports which has resulted in excessive charges and retarded their
development. We believe that the BAA's abusive monopoly should be broken up,
urgently, if the best interests of consumers are to be realised. Competition
works - airport monopolies don't. The CAA has repeatedly failed to effectively
regulate this monopoly which is why it continues to provide third world service
levels, at extortionate prices, especially at Stansted, where users'
requirements are repeatedly ignored by an airport which plans to waste £4bn
building a gold plated second terminal and runway when these facilities should
be provided at less than one quarter of this cost.
Our new routes and bases have performed well over the summer. This winter we
will open 4 new bases at Alicante and Valencia in Spain, Belfast City in
Northern Ireland, and Bristol in the UK. We will also start over 130 new routes
across Europe. Advance bookings on our new routes and bases are in line with our
winter targets. We intend to announce a further 1 or possibly 2 bases in the
coming weeks for launch during next summer's schedule.
We have recently concluded direct negotiations and a new four year agreement
with our Dublin based pilots which will significantly improve their pay and
rosters and bring them in line with the better pay and benefits previously
negotiated by pilots at our other Irish bases. Sadly, the failed attempts by the
Irish Airline Pilots Union ('IALPA') to interfere in Ryanair's direct
negotiations with our pilots has cost each of our Dublin Captains over €80k each over
the past 4 years. We are pleased that the Dublin pilots have finally recognised
the abject failure of this IALPA led campaign and have returned to talking
directly with us.
We have now launched our free web check-in/priority boarding facility for all
passengers travelling with hand luggage which allows them to avoid airport
queues and be amongst the first to board the aircraft. Passengers who do not
avail of free web check-in/priority boarding will be charged £2/€3 for using
airport check-in. As a further innovation all passengers can now purchase
priority boarding online and at airport ticket desks. These service enhancements
have been well received by passengers resulting in the doubling of passengers
using priority boarding/web check-in in the first month since its introduction.
Chancellor Alistair Darling's plans to change the basis of UK APD in 2009 from a
per passenger charge to a per flight charge fails to address the fundamental
inequity of this travel tax scam. Aviation, which accounts for less than 2% of
EU CO2 emissions (just half the figure for marine transport), is not the cause
of climate change and taxing it will not have any effect on this problem. Not one
penny of the extra £1bn raised annually by this UK travel tax scam has been
spent on environmental projects. Despite repeated requests, the UK Treasury
refuses to confirm how this money will be spent. The reality is that this is
just another Government tax on passengers and we again call on the Chancellor to
end this modern day highway robbery.
We have implemented our planned 20% reduction in Stansted aircraft numbers this
winter due to the doubling of costs by the BAA monopoly. As a result we
anticipate that full year passenger volumes will grow by approximately 19% to
50.5m. These capacity reductions will bring more stability to winter yields,
reduce operating costs and eliminate losses on non profitable winter routes at
Stansted.
Our outlook for the remainder of the fiscal year remains cautious as we have
very little visibility beyond the next two months. Shareholders should note that
the anticipated decline in Q3 yields will result in Net Profit being
significantly lower than last year's Q3 comparative which included a one off
settlement arising from an early contract termination by our hotel partner.
Based on our current Q3 forward bookings and the impact of Easter in Q4, we now
anticipate that winter (H2) yields will be somewhat better than previously
forecast with the expected yield declines being towards the lower end of the -5%
to -10% range. As a result of these better winter yield forecasts and the costs
savings which we continue to realise, we now believe that full year Net Profit
will rise by 17.5% to approximately €470m, rather than the €440 previously
guided.
During the last two months we undertook a series of share buy backs amounting to
a total of 53.5m shares at a cost of €267m. The shares cancelled represent
approximately 3.5% of the company's pre-existing issued share capital.
To celebrate these record half year results today, we have launched a 4m seat sale
with fares at €10/£10 inclusive'.
- - - - - - - -
All of Ryanair's 5,000 people wish to extend their sincere and deepest
sympathies to the family and many friends of DR TONY RYAN who died on the 3rd
October 2007, after a long illness.
Dr Ryan founded Ryanair 23 years ago. He persevered when all others lost faith.
His vision, leadership and ambition inspired Ryanair's growth to become the
world's biggest international passenger airline. He was and will remain an
inspiration to all of us.
It is rare that one man in his own lifetime can transform the lives of millions.
Dr Ryan did so by pioneering competition and low fare air travel in Europe.
Ryanair is proud to bear his name and his legacy. We will miss him greatly.
Dr Ryan and the Ryan family are in our thoughts and prayers at this time. May he
rest in peace.
- - - - - - - -
Ends. Monday, 5th November 2007
For further information please contact:
Howard Millar Pauline McAlester
Ryanair Holdings Plc Murray Consultants
Tel: +353-1-812 1212 Tel: +353-1-498 0300
www.ryanair.com
Certain of the information included in this release is forward looking and is
subject to important risks and uncertainties that could cause actual results to
differ materially. It is not reasonably possible to itemise all of the many
factors and specific events that could affect the outlook and results of an
airline operating in the European economy. Among the factors that are subject to
change and could significantly impact Ryanair's expected results are the airline
pricing environment, fuel costs, competition from new and existing carriers,
market prices for the replacement aircraft, costs associated with environmental,
safety and security measures, actions of the Irish, U.K., European Union ('EU')
and other Governments and their respective regulatory agencies, fluctuations in
currency exchange rates and interest rates, airport access and charges, labour
relations, the economic environment of the airline industry, the general
economic environment in Ireland, the UK and Continental Europe, the general
willingness of passengers to travel and other economics, social and political
factors.
Ryanair is Europe's largest low fares airline with 23 bases and 563 low fare
routes across 26 countries. By the end of March 2008 Ryanair will operate a
fleet of 163 Boeing 737-800 aircraft with firm orders for a further 99 new
aircraft (net of planned disposals), which will be delivered over the next 5
years. Ryanair currently employs a team of 5,000 people and expects to carry
circa 50.5 million scheduled passengers in the current fiscal year.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Balance Sheet measured in
Accordance with IFRS (unaudited)
At Sep 30, At Mar 31,
2007 2007
€'000 €'000
Non-current assets
Property, plant & equipment 3,137,916 2,884,053
Intangible assets 46,841 46,841
Available for sale financial assets 365,968 406,075
Derivative financial instruments 1,079 -
________ ________
Total non-current assets 3,551,804 3,336,969
________ ________
Current assets
Inventories 2,886 2,420
Other assets 74,127 77,707
Trade receivables 28,903 23,412
Derivative financial instruments 43,998 52,736
Restricted cash 171,042 258,808
Financial assets: cash > 3 months 563,224 592,774
Cash and cash equivalents 1,339,182 1,346,419
________ ________
Total current assets 2,223,362 2,354,276
________ ________
Total assets 5,775,166 5,691,245
======= =======
Current liabilities
Trade payables 57,428 54,801
Accrued expenses and other liabilities 702,213 807,136
Current maturities of debt 208,919 178,918
Derivative financial instruments 81,752 56,053
Current tax 63,758 20,822
________ ________
Total current liabilities 1,114,070 1,117,730
________ ________
Non-current liabilities
Provisions 35,282 28,719
Derivative financial instruments 52,557 58,666
Deferred income tax liability 146,563 151,032
Other creditors 119,526 112,177
Non-current maturities of debt 1,689,334 1,683,148
________ ________
Total non-current liabilities 2,043,262 2,033,742
________ ________
Shareholders' equity
Issued share capital 9,545 9,822
Share premium account 595,071 607,433
Retained earnings 2,083,741 1,905,211
Other reserves (70,523) 17,307
________ ________
Shareholders' equity 2,617,834 2,539,773
________ ________
Total liabilities and 5,775,166 5,691,245
shareholders' equity
======= =======
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement measured
in accordance with IFRS (unaudited)
Quarter Quarter Half year Half year
ended ended ended ended
Sep 30, Sep 30, Sep 30, Sep 30,
2007 2006 2007 2006
€'000 €'000 €'000 €'000
------- ------- ------- -------
Operating revenues
Scheduled revenues 726,050 602,089 1,301,998 1,092,102
Ancillary revenues 135,272 87,700 252,330 164,321
________ ________ ________ ________
Total operating revenues
-continuing operations 861,322 689,789 1,554,328 1,256,423
________ ________ ________ ________
Operating expenses
Staff costs 70,358 57,107 146,285 113,844
Depreciation 41,285 36,035 76,063 71,622
Fuel & oil 202,348 169,580 392,737 337,042
Maintenance, materials
and repairs 14,310 10,613 26,940 21,313
Marketing & distribution
costs 6,221 5,885 14,535 11,608
Aircraft rentals 18,525 12,996 36,707 25,394
Route charges 65,802 50,305 128,975 98,384
Airport & handling charges 107,076 71,222 208,883 139,097
Other 31,426 26,942 61,770 52,312
________ ________ ________ ________
Total operating expenses 557,351 440,685 1,092,895 870,616
________ ________ ________ ________
Operating profit -
continuing operations 303,971 249,104 461,433 385,807
Other income/(expenses)
Finance income 21,438 16,069 41,494 28,923
Finance expense (21,941) (20,698) (44,865) (41,311)
Foreign exchange
gains/(losses) 121 (908) 1,487 (1,229)
________ ________ ________ ________
Total other income/(expenses) (382) (5,537) (1,884) (13,617)
________ ________ ________ ________
Profit before tax 303,589 243,567 459,549 372,190
Tax on profit on
ordinary activities (34,907) (30,122) (51,953) (43,063)
________ ________ ________ ________
Profit for the period -
all attributable to
equity holders of parent 268,682 213,445 407,596 329,127
======= ======= ======= =======
Basic earnings per ordinary
share (in euro cents) 17.72 13.83 26.61 21.33
Diluted earnings per ordinary
share (in euro cents) 17.55 13.73 26.34 21.19
Weighted average number of
ordinary shares (in 000's)* 1,515,884 1,543,444 1,531,512 1,542,826
Weighted average number of
diluted shares (in 000's)* 1,530,912 1,554,982 1,547,162 1,552,912
======= ======= ======= =======
*Adjusted for share split of 2 for 1
which occurred on February 26, 2007
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Cash Flow Statement
measured in accordance with IFRS (unaudited)
Half year ended Half Year ended
Sep 30, 2007 Sep 30, 2006
€'000 €'000
Operating activities
Profit before tax 459,549 372,190
Adjustments to reconcile profits
before tax to net cash provided by
operating activities
Depreciation 76,063 71,622
(Increase) in inventories (466) (205)
(Increase)/decrease in trade
receivables (5,491) 5,702
Decrease/(increase) in other
current assets 26,083 (16,320)
Increase in trade payables 2,627 8,620
(Decrease) in accrued expenses (103,964) (55,320)
Increase in other creditors 7,349 35,489
Increase in maintenance provisions 6,563 6,001
(Increase) in interest receivable (3,549) (3,069)
Increase in interest payable (1,617) 4,212
Retirement costs 656 329
Share based payments 9,135 2,012
Income tax (216) 328
________ ________
Net cash provided by operating
activities 472,722 431,591
________ ________
Investing activities
Capital expenditure (purchase of
property, plant and equipment) (329,926) (88,797)
Purchase of equities classified
as available for sale (57,039) (185,363)
Divestiture of restricted cash 87,766 -
Reduction/(investment) in
financial assets: cash > 3 months 29,550 (495,387)
________ ________
Net cash used in investing activities (269,649) (769,547)
________ ________
Financing activities
Cost associated with repurchase
of shares (253,075) -
Net proceeds from shares issued 6,578 6,450
Increase/(decrease) in long term
borrowings 36,187 (42,806)
________ ________
Net cash provided by financing
activities (210,310) (36,356)
________ ________
(Decrease) in cash and cash equivalents (7,237) (374,312)
Cash and cash equivalents at
beginning of the period 1,346,419 1,439,004
________ ________
Cash and cash equivalents at end of
the period 1,339,182 1,064,692
========= =========
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Recognised
Income and Expense measured in accordance with IFRS
(unaudited)
Quarter Quarter Half year Half year
ended ended ended ended
Sep 30, 2007 Sep 30, 2006 Sep 30, 2007 Sep 30, 2006
€'000 €'000 €'000 €'000
Cash flow hedge
reserve - effective
portion of fair
value changes to
derivatives:
Effective portion
of changes in fair
value of cash flow
hedges - - 25,462 115
Net change in
fair value of
cash flow hedges
transferred to the
profit and loss (32,720) (32,921) (32,720) (32,921)
________ ________ ________ ________
Net movements
(out of)/into
cashflow hedge
reserve (32,720) (32,921) (7,258) (32,806)
Net decrease in
fair value of
available for
sale assets (43,872) - (84,915) -
________ ________ ________ ________
Income and
expenditure
recognised
directly in
equity (76,592) (32,921) (92,173) (32,806)
________ ________ ________ ________
Profit for
the period 268,682 213,445 407,596 329,127
Total
recognised
income and
expense 192,090 180,624 315,423 296,321
________ ________ ________ ________
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement measured
in accordance with US GAAP (unaudited)
Quarter Quarter Half year Half year
ended ended ended ended
Sep 30, Sep 30, Sep 30, Sep 30,
2007 2006 2007 2006
€'000 €'000 €'000 €'000
Operating revenues
Scheduled revenues 726,050 602,089 1,301,998 1,092,102
Ancillary revenues 135,272 87,700 252,330 164,321
________ ________ ________ ________
Total operating
revenues - continuing
operations 861,322 689,789 1,554,328 1,256,423
________ ________ ________ ________
Operating expenses
Staff costs 70,406 57,214 146,333 114,059
Depreciation 41,891 36,450 77,216 72,419
Fuel & oil 202,348 169,580 392,737 337,042
Maintenance, materials
and repairs 14,310 10,613 26,940 21,313
Marketing & distribution 6,221 5,885 14,535 11,608
costs
Aircraft rentals 18,525 12,996 36,707 25,394
Route charges 65,802 50,305 128,975 98,384
Airport & handling charges 107,076 71,222 208,883 139,097
Other 31,426 26,942 61,770 52,312
________ ________ ________ ________
Total operating expenses 558,005 441,207 1,094,096 871,628
________ ________ ________ ________
Operating profit -
continuing operations 303,317 248,582 460,232 384,795
Other income/(expenses)
Finance income 21,438 16,069 41,494 28,923
Finance expense (16,409) (17,659) (34,835) (36,073)
Derivative financial
instruments 4,331 - 1,593 -
Foreign exchange
gains/(losses) 121 (908) 1,487 (1,229)
________ ________ ________ ________
Total other income/
(expenses) 9,481 (2,498) 9,739 (8,379)
________ ________ ________ ________
Profit before tax 312,798 246,084 469,971 376,416
Tax on profit on
ordinary activities (36,058) (30,018) (53,254) (43,591)
________ ________ ________ ________
Profit for the period -
all attributable to
equity holders of parent 276,740 216,066 416,717 332,825
======= ======= ======= =======
Basic earnings per ADS
(in euro cents) 91.28 69.99 136.05 107.86
Diluted earnings per ADS
(in euro cents) 90.38 69.48 134.67 107.16
Weighted average number
of ordinary shares
(in 000's)* 1,515,884 1,543,444 1,531,512 1,542,826
Weighted average number
of diluted shares (in
000's)* 1,530,912 1,554,982 1,547,162 1,552,912
======= ======= ======= =======
(Five ordinary shares equal 1 ADS)
*Adjusted for share split of 2 for 1
which occurred on February 26, 2007
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between IFRS and US
generally accepted principles (unaudited)
(a) Net income under US GAAP
Quarter ended Quarter ended Half year ended Half year ended
Sep 30, Sep 30, Sep 30, Sep 30,
2007 2006 2007 2006
€'000 €'000 €'000 €'000
Net income in
accordance
with IFRS 268,682 213,445 407,596 329,127
Adjustments
Pensions (48) (107) (48) (215)
Capitalised
interest re
aircraft
acquisition
programme 4,926 2,624 8,878 4,441
Derivative
financial
instruments 4,331 - 1,593 -
Taxation -
effect of
above
adjustments (1,151) 104 (1,302) (528)
________ _______ ________ ________
Net income in
accordance
with U.S. GAAP 276,740 216,066 416,717 332,825
======= ====== ======= =======
(b) Shareholders' equity in accordance with U.S. GAAP
At Sep 30, At Sep 30,
2007 2006
€'000 €'000
Shareholders' equity as reported in the
consolidated balance sheets and in accordance IFRS 2,617,834 2,296,768
Adjustments:
Pensions (48) 9,026
Capitalised interest re:
aircraft acquisition
program, net 49,200 33,889
Minimum pension
liability (net of tax) - (4,295)
Unrealised (losses) on
derivative financial
instruments (10,392) -
Tax effect of adjustments
(excluding pension) (4,845) (6,459)
_______ _______
Shareholders' equity as
adjusted in accordance with
U.S. GAAP 2,651,749 2,328,929
======= =======
The movements in shareholders' equity in accordance with
U.S. GAAP are summarized as follows:
Opening shareholders' equity under
U.S. GAAP 2,567,522 2,020,448
Comprehensive Income:
Unrealised (losses) on
derivative financial
instruments (net of tax) (10,213) (32,806)
Unrealised (losses) on
available for sale financial
assets (84,915) -
Net income in accordance
with U.S. GAAP 416,717 332,825
________ ________
Total comprehensive income 321,589 300,019
Share based payments 9,135 2,012
Stock issued for cash 6,578 6,450
Repurchase of stock (253,075) -
________ ________
Closing shareholders' equity under
U.S. GAAP 2,651,749 2,328,929
======= =======
(c) Total assets in accordance with U.S. GAAP
At Sept 30, At Mar 31,
2007 2007
€000 €000
Total assets as reported in
the Consolidated balance sheets
and in accordance with IFRS adjustments: 5,775,166 5,691,245
Capitalized interest re aircraft acquisition
program 49,200 40,322
________ ________
Total assets as adjusted in
accordance with U.S. GAAP 5,824,366 5,731,567
======= =======
Ryanair Holdings plc and Subsidiaries
Operating and Financial Overview
Summary Half Year Ended September 30, 2007
Profit after tax increased by 24% to €407.6m, compared to €329.1m in the
previous half year ended September 30, 2006 reflecting a 20% increase in
passenger numbers, a 1% decrease in fares (including checked in baggage
revenues) and strong growth in ancillary revenues. The growth in revenues was
offset by a combination of higher fuel, airport and staff costs. Total operating
revenues increased by 24% to €1,554.3m, which was faster than the 20% growth in
passenger volumes, as average fares decreased by 1% and ancillary revenues grew
by 54% to €252.3m. Total revenue per passenger as a result increased by 3%,
whilst Passenger Load Factor decreased by 1 point to 86% during the period.
Total operating expenses increased by 26% to €1,092.9m, due to the increased
level of activity, and the increased costs, associated with the growth of the
airline. Fuel, which represents 36% of total operating costs compared to 39%
last year, increased by 17% to €392.7m due to an increase in the number of hours
flown, offset by, a decrease in the US dollar cost per gallon, a positive
movement in the US dollar exchange rate versus the euro, and a reduction in fuel
consumption arising from the installation of winglets. Staff costs rose by 29%
reflecting the growth in the airline, a share option charge of €9.1m, and an
increase in cabin crew ratios. Excluding the charge of €9.1m for the share
option grant, staff costs would have increased by 21% Airport and Handling
charges increased by 50% to €208.9m arising from the doubling of airport charges
at Stansted and higher charges at Dublin Airport. As a result unit costs
increased by 5% and operating margins decreased by 1 point to 30%, whilst
operating profit increased by 20% to €461.4m.
Net Margins remained flat at 26% for the reasons outlined above.
Earnings per share increased by 25% to 26.61 cent for period.
Balance Sheet
Total costs decreased by €124.5m to €2,073.4m as the growth in profitability was
offset by the funding of a €253.1m share buy back programme, €57.0m increased
investment in Aer Lingus and €329.9m in capital expenditure largely from
internal resources. Total debt, net of repayments, increased during the period
by €36.2m. Shareholders' Equity at September 30, 2007 increased by €78.1m to
€2,617.8m, compared to March 31, 2007 due to the €407.6m increase in
profitability during the period and by €6.6m due to the exercise of share
options, offset by, €83.0m due to the impact of IFRS accounting treatment for
derivative financial assets, available for sale financial assets, stock options
and a share buy back of €253.1m.
Detailed Discussion and Analysis Half Year Ended September 30, 2007
Profit after tax, increased by 24% to €407.6m due to a 20% increase in passenger
numbers, a 1% decrease in fares (including checked in baggage revenues) and
strong growth in ancillary revenues. The growth in revenues was offset by a
combination of increased airport costs which rose by 50% to €208.9m arising from
the doubling of airport charges at Stansted, higher charges at Dublin Airport,
and increased staff costs, primarily due to higher cabin crewing ratios, which
rose by 29% by €146.3m. Operating margins, as a result, decreased by 1 point to
30%, which in turn resulted in operating profit increasing by 20% to €461.4m
compared to the previous half year ended September 30, 2006.
Total operating revenues increased by 24% to €1,554.3m whilst passenger volumes
increased by 20% to 26.6m. Total revenue per passenger increased by 3% due to
strong ancillary revenue growth.
Scheduled passenger revenues increased by 20% to €1,302.0m reflecting a 1%
decrease in fares and a 20% increase in traffic due to increased passenger
numbers on existing routes and the successful launch of new routes and bases.
Load factor decreased by 1 point to 86% during the period due to a combination
of softer market conditions and a 21% increase in seat capacity.
Ancillary revenues continue to outpace the growth of passenger volumes and rose
by 54% to €252.3m in the period. This performance reflects the strong growth in
onboard sales, excess baggage revenues, non-flight scheduled revenues, and other
ancillary products.
Total operating expenses rose by 26% to €1,092.9m due to the increased level of
activity, and the increased costs associated with the growth of the airline,
particularly higher airport charges and staff costs. Total operating expenses
were also adversely impacted by a 7% increase in average sector length.
Staff costs have increased by 29% to €146.3m. This primarily reflects a 29%
increase in average employee numbers to 4,875, the impact of pay increases
granted during the period, and a €9.1m charge for a share option grant made to
eligible employees. Excluding the charge of €9.1m for the share option grant,
staff costs would have increased by 21%. Employee numbers rose due to the growth
of the business and an increase in cabin crewing ratios as a result of a new EU
working directive.
Depreciation and amortisation increased by 6% to €76.1m. This reflects an
additional 22 lower cost 'owned' aircraft in the fleet this period compared to
September 30, 2006, offset by a revision of the residual value of the fleet to
reflect current market valuations and the positive impact on amortisation of the
stronger euro versus the US dollar.
Fuel costs rose by 17% to €392.7m due to a 29% increase in the number of hours
flown offset by a 10% decrease in euro equivalent cost per gallon of fuel hedged
in addition to a reduction in fuel consumption due to the installation of
winglets.
Maintenance costs increased by 26% to €26.9m, due to a combination of the
increase in the number of leased aircraft from 24 to 35, and the positive impact
of a stronger euro versus the US dollar exchange rate.
Marketing and distribution costs increased by 25% to €14.5m due to a combination
of the growth of the airline, and the increased commissions payable to airports
arising from the growth in baggage revenues.
Aircraft rental costs increased by 45% to €36.7m reflecting an additional 11
leased aircraft operating during the period compared to the same period last
year.
Route charges rose by 31% to €129.0m due to an increase in the number of sectors
flown and a 7% increase in the average sector length.
Airport and handling charges increased by 50% to €208.9m, significantly higher
than the growth in passenger volumes, and reflects the impact of the doubling of
unit costs at Stansted Airport and higher charges at Dublin Airport, offset by
lower costs at new airports and bases.
Other expenses increased by 18% to €61.8m, 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 30% due to the reasons outlined
above whilst operating profits have increased by 20% to €461.4m during the
period.
Interest receivable has increased by 43% to €41.5m for the period primarily due
to the increase in average deposit rates earned in the period, partially offset
by a lower average cash balance.
Interest payable increased by 9% to €44.9m due to the drawdown of debt to part
fund the purchase of new aircraft and the adverse impact of higher interest
dates.
Foreign exchange gains during the period of €1.5m are primarily due to the
positive impact of changes in the US dollar exchange rate against the euro.
The Company's Balance Sheet continues to strengthen due to the strong growth in
profits during the period. The Company generated cash from operating activities
of €472.7m which part funded the €253.1m share buy back programme, €57.0m
increased investment in Aer Lingus, and capital expenditure incurred during the
period with the remaining balance reflected in Total Cash of €2,073.4m. Capital
expenditure amounted to €329.9m which largely consisted of advance aircraft
payments for future aircraft deliveries and the delivery of eight aircraft and
two simulators. Long term debt, net of repayments, increased by €36.2m during
the period.
Shareholders' Equity at September 30, 2007 increased by €78.1m to €2,617.8m,
compared to March 31, 2007 due to the €407.6m increase in profitability during
the period, €6.6m arising from the exercise of share options, offset by €83.0m
reflecting the impact of IFRS accounting treatment for derivative financial
assets, available for sale financial assets, stock options and share buy back of
€253.1m.
Detailed Discussion and Analysis Quarter Ended September, 30 2007
Profit after tax, increased by 26% to €268.7m due to a 22% increase in passenger
numbers, a 1% decrease in fares (including checked in baggage revenues) and
strong growth in ancillary revenues. The growth in revenues was offset by a
combination of increased airport costs which rose by 50% to €107.1m arising from
the doubling of airport charges at Stansted and higher charges at Dublin
Airport, and a one off step up in staff costs, primarily due to higher cabin
crewing ratios, which rose by 23% to €70.4m. Operating margins, as a result,
decreased by 1 point to 35%, which in turn resulted in operating profit
increasing by 22% to €304.0m compared to the previous quarter ended September
30, 2006.
Total operating revenues increased by 25% to €861.3m whilst passenger volumes
increased by 22% to 14.0m. Total revenue per passenger increased by 3% due to
strong ancillary revenue growth.
Scheduled passenger revenues increased by 21% to €726.1m due to a 22% increase
in traffic reflecting increased passenger numbers on existing routes and the
successful launch of new routes and bases. During the period average fares
(including checked baggage revenues) were down by 1% whilst load factor remained
flat at 89% during the quarter.
Ancillary revenues continue to grow faster than passenger volumes with revenues
increasing by 54% to €135.3m in the quarter. This performance reflects the
strong growth in on board sales, excess baggage revenues, non-flight scheduled
revenue and other ancillary products.
Total operating expenses rose by 26% to €557.3m due to the increased level of
activity, and the increased costs associated with the growth of the airline
particularly higher airport charges and staff costs. Total operating expenses
were also adversely impacted by a 7% increase in average sector length.
Staff costs have increased by 23% to €70.4m. This primarily reflects a 29%
increase in average employee numbers to 5,024 and the impact of pay increases
granted during the year. Employee numbers rose due to an increase in cabin
crewing ratios as a result of a new EU working directive.
Depreciation and amortisation increased by 15% to €41.3m. This reflects an
additional 22 lower cost 'owned' aircraft in the fleet this quarter compared to
September 30, 2006, offset by a revision of the residual value of the fleet to
reflect current market valuations and the positive impact on amortisation of the
stronger euro versus the US dollar.
Fuel costs rose by 19% to €202.3m due to a 30% increase in number of hours flown
offset by a 10% decrease in the average euro equivalent cost per gallon of fuel
hedged and a reduction in fuel consumption due to the installation of winglets.
Maintenance costs increased by 35% to €14.3m, due to a combination of the
increase in the number of leased aircraft from 24 to 35, and the positive impact
of a stronger euro versus the US dollar exchange rate.
Marketing and distribution costs increased by 6% to €6.2m due to the growth of
the airline and the increased commissions payable to airports arising from the
growth in baggage revenues.
Aircraft rental costs increased by 43% to €18.5m reflecting an additional 11
leased aircraft operating during the quarter compared to the same quarter last
year.
Route charges rose by 31% to €65.8m due to an increase in the number of sectors
flown and an increase of 7% in the average sector length.
Airport and handling charges increased by 50% to €107.1m. This is higher than
the growth in passenger volumes and reflects the impact of the doubling of costs
at Stansted Airport and higher charges at Dublin Airport, offset by lower costs
at new airports and bases.
Other expenses increased by 17% to €34.1m, 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 fell by 1 point to 35% for to the reasons outlined above
whilst operating profits have increased by 22% to €304.0m during the quarter.
Interest receivable has increased by 33% to €21.4m for the quarter primarily due
to the increase in average deposit rates earned in the period, offset somewhat
by a lower average cash balance.
Interest payable increased by 6% to €21.9m due to the drawdown of further debt
to part fund the purchase of new aircraft and the adverse impact of higher
interest rates.
Statement of the directors in respect of the half-yearly financial report
We confirm our responsibility for the half yearly financial statements and that
to the best of our knowledge:
* the condensed set of financial statements comprising the condensed income
statement, the condensed statement of recognised income and expense, the
condensed balance sheet and the related notes have been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU;
* the interim management report includes a fair review of the information
required by:
a. Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations
2007, being an indication of important events that have occurred during the
first six months of the financial year and their impact on the condensed set
of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b. Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations
2007, being related party transactions that have taken place in the first
six months of the current financial year and that have materially affected
the financial position or performance of the entity during that period; and
any changes in the related party transactions described in the last annual
report that could do so.
On behalf of the Board
David Bonderman Michael O'Leary
Chairman Chief Executive
November 5, 2007
Ryanair Holdings plc and Subsidiaries
Notes
1. Reporting entity
Ryanair Holdings plc (the 'Company') is a company domiciled in Ireland. The
condensed consolidated interim financial statements of the Company for the
six months ended September 30, 2007 comprise the Company and its
subsidiaries (together referred to as the 'Group').
The consolidated financial statements of the Group as at and for the year
ended March 31, 2007 are available at www.ryanair.com.
2. Statement of compliance
These unaudited condensed consolidated interim financial statements ('the
interim financial statements') have been prepared in accordance with
International Accounting Standards ('IAS') 'Interim Financial Reporting' as
endorsed by the European Union. They do not include all of the information
required for full annual financial statements, and should be read in
conjunction with the most recent published consolidated financial statements
of the Group.
The comparative figures included for the year ended March 31, 2007 do not
constitute statutory financial statements of the Group within the meaning of
regulation 40 of the European Communities (companies, group accounts)
regulations, 1992. Statutory financial statements for the year ended March
31, 2007 have been filed with the companies' office. The auditors' report on
these financial statements was unqualified.
The Audit Committee approved the interim financial statements for the half
year ended September 30, 2007 on November 2, 2007.
3. Significant accounting policies
Except as stated otherwise below, this quarter's financial information has
been prepared in accordance with the accounting policies set out in the
Group's most recent published consolidated financial statements, which were
prepared in accordance with International Financial Reporting Standards
('IFRS') as adopted by the EU.
4. Generally Accepted Accounting Policies
The Management Discussion and Analysis of Results (Operating and Financial
Overview) for the half year ended September 30, 2007 and the comparative
half year are based on the results reported under the Group's IFRS
accounting policies.
5. Estimates
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates.
Except as described below, in preparing these consolidated financial
statements, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty
were the same as those that applied in the most recent published
consolidated financial statements.
During the period ended September 30, 2007 management reassessed its
estimates of the recoverable amount of aircraft residual values following
certain recent aircraft disposals and trends in the market.
6. Seasonality of operations
The Group's results of operations have varied significantly from quarter to
quarter, and management expects these variations to continue. Among the
factors causing these variations are the airline industry's sensitivity to
general economic conditions and the seasonal nature of air travel.
Accordingly the first half-year typically results in higher revenues and
results.
7. Income tax expense
The Group's consolidated effective tax rate in respect of operations for the
six months ended September 30, 2007 was approximately 11.5 percent, in line
with the same period last year.
8. Capital and reserves
Share buy back programme.
The Company commenced a share buy back programme in June 2007. To date 53.5m
shares, at an approximate cost of €267m, have been purchased for
cancellation. This represents approximately 3.5% of the pre existing share
capital of the Company. The shareholder authority to complete the balance of
the buy back of approximately €33m was extended by AGM on September 20, 2007
for a period of one year.
9. Share based payments
The terms and conditions of the share option programme are disclosed in the
most recent published consolidated financial statements. In June 2007 a
further grant on similar terms was made to eligible employees, with a
consequent charge to the income statement in the period of approximately
€9.1m.
10. Contingencies
The Group is engaged in litigation arising in the ordinary course of its
business. The Group does not believe that any such litigation will
individually or in aggregate have a material adverse effect on the financial
condition of the Group. Should the Group be unsuccessful in these litigation
actions, management believes the possible liabilities then arising cannot be
determined but are not expected to materially adversely affect the Group's
results of operations or financial position.
11. Capital commitments
During the half year ended September 30, 2007 the Group announced the
purchase of 27 additional Boeing 737-800s. This brings Ryanair's total firm
orders for B737-800s to 308 and the total fleet size (net of planned
disposals) to 262 by 2012. These additional aircraft are due for delivery in
financial year ended March 31, 2010.
12. Available for sale financial assets (Aer Lingus)
The following is the movement in available for sale financial assets in the
six month period.
€000
Balance at April 1, 2007 406,075
Purchase of equities 57,039
Reversal of Capital Gains tax provision (12,231)
Net change in fair value (84,915)
________
Balance at September 30, 2007 365,968
=======
As of September 30, 2007 the average cost per share of Aer Lingus was €2.58
and the market value was €2.35, a decline of 9% Accordingly the view at this
time under accounting rules is that this is neither 'significant' nor
'prolonged' and therefore these is no impairment loss.
However in the event that the asset becomes impaired the difference between
the cost of the shares and the market value is recorded as an impairment
loss in the profit and loss. At September 30, 2007 this amounted to €35.9m.
The Group will review this matter at the end of each quarter.
13. Post balance sheet events
Disposal of Aircraft
In October 2007 the Group disposed of three Boeing 737-800 aircraft under
its planned disposal programme. Agreements in relation to the forward sale
of a further seventeen Boeing 737-800 aircraft have been signed. The group
continue to market additional aircraft in line with its planned disposal of
up to forty six aircraft.
14. Loans and borrowings
The following is the movement in loans and borrowings (non-current and
current) during the half year.
€000
Balance at April 1, 2007 1,862,066
Loans raised to finance aircrafts/simulator purchase 144,054
Repayments of amounts borrowed (107,867)
________
Balance at September 30, 2007 1,898,253
=======
15. Changes in shareholders' equity
Other Reserves
Share Capital
Ordinary premium Retained Treasury redemption Other
shares account earnings shares reserve reserves Total
€000 €000 €000 €000 €000 €000 €000
Balance
at March 31,
2006 9,790 596,231 1,467,623 - - (81,659) 1,991,985
_______ _______ _______ _______ _______ _______ _______
Issue of
ordinary
equity shares 32 11,202 - - - - 11,234
Effective
portion of
changes in
fair value
of cash flow
hedges - - - - - 46,105 46,105
Net change in
fair value of
available for
sale assets - - - - - 48,926 48,926
Share-based
payments - - - - - 3,935 3,935
Profit for the
financial year - - 435,600 - - - 435,600
Retirement
benefits - - 1,988 - - - 1,988
_______ _______ _______ _______ _______ _______ _______
Balance at
March 31, 2007 9,822 607,433 1,905,211 - - 17,307 2,539,773
_______ _______ _______ _______ _______ _______ ________
Repurchase of
ordinary equity
shares - - (229,066) (24,009) - - (253,075)
Issue of
ordinary equity
shares 16 6,562 - - - - 6,578
Capital
redemption
reserve fund (293) (18,924) - - 19,217 - -
Effective
portion of
changes in fair
value of cash
flow hedges - - - - - (7,258) (7,258)
Net change in
fair value of
available for
sale assets - - - - - (84,915) (84,915)
Share-based
payments - - - - - 9,135 9,135
Profit for
the period - - 407,596 - - - 407,596
_______ _______ _______ _______ _______ _______ _______
Balance at
September 30,
2007 9,545 595,071 2,083,741 (24,009) 19,217 (65,731) 2,617,834
_______ _______ _______ _______ _______ _______ _______
16. Fin 48 'Accounting for uncertainty in income taxes' (US GAAP)
The Group adopted the provisions of FIN 48 on April 1, 2007. The
implementation of FIN 48 did not have a material impact on the Group's
financial statements.
17. Analysis of operating revenues and segmental analysis
All revenues derive from the Group's principal activity and business segment
as a low fares airline and includes scheduled services, car hire, internet
income and related sales to third parties.
Revenue is analysed by geographical area (by country of origin) as follows:
Half year ended Half year ended
Sep 30, Sept 30,
2007 2006
€000 €000
United Kingdom 645,046 584,236
Other European countries 909,280 672,187
________ _______
1,554,328 1,256,423
======= =======
All of the Group's operating profit arises from low fares airline-related
activities, its only business segment. The major revenue earning assets of
the Group are comprised of its aircraft fleet, which is registered in
Ireland and therefore principally all profits accrue in Ireland. Since the
Group's aircraft fleet is flexibly employed across its route network in
Europe, there is no suitable basis of allocating such assets and related
liabilities to geographical segments. Internet income comprises revenue
generated from Ryanair.com, excluding internet car hire revenue, which is
included under the heading car hire. Non-flight scheduled revenue arises
from the sale of rail and bus tickets, hotel reservations and other revenues
generated, including excess baggage charges, all directly attributable to
the low fares business.
18. Property, plant and equipment
Acquisitions and disposals
During the six months ended September 30, 2007, the Group acquired
assets with a cost of €329.9m (six months ended September 30, 2006:
€88.7 million). There were no assets disposed of during the six month
period.
Independent review report to Ryanair Holdings plc
Introduction
We have been engaged by Ryanair Holdings plc ('Ryanair', 'the Company')
to review the condensed set of financial statements in the half-yearly
financial report for the six months ended September 30, 2007, which
comprises the condensed consolidated interim balance sheet at September
30, 2007 and the related condensed consolidated interim statements of
income, cash flows and recognised income and expense, for the six-month
period then ended, and the related notes to the interim financial
statements.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing
the half-yearly financial report in accordance with the Transparency
(Directive 2004/109/EC) Regulations 2007 and the Transparency Rules of
the Republic of Ireland's Financial Regulator.
As disclosed in note 3, the annual financial statements of the Company
are prepared in accordance with International Financial Reporting
Standards, as adopted by the European Union. The condensed set of
financial statements included in this half-yearly financial report has
been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity', issued
by the Auditing Practices Board for use in the UK and Ireland. A review
of interim financial information consists of making enquiries, primarily
of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended September 30, 2007
is not prepared, in all material respects, in accordance with
International Accounting Standard 34, as adopted by the European Union
and the Transparency (Directive 2004/109/EC) Regulations 2007 and the
Transparency Rules of the Republic of Ireland's Financial Regulator.
KPMG
Chartered Accountants
Dublin
November 5, 2007.
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