REG - Ryanair Holdings PLC - 1st Quarter Results <Origin Href="QuoteRef">RYA.I</Origin> - Part 1
06/09/2014 20:41
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Ryanair Holdings PLC
28 July 2014
RYANAIR Q1 PROFIT RISES TO E197M, AS TRAFFIC GROWS 4%
AVE. FARE RISES 9% DUE TO STRONG EASTER PERIOD
Ryanair, Europe's biggest low fares airline today (July 28) announced a Q1 Net
Profit of E197m, an increase of 152% over last year, although cautioned that
this result was distorted by the timing of a very strong Easter in Q1 with no
holiday period in the prior year comparable. Traffic grew to 24.3m as load
factors rose by 4% points to 86%. Average fare rose by 9%, boosted by a
strong Easter period, while total revenues were up 11% to E1.496bn. Unit
costs fell by 2%, excluding fuel they rose by 1%.
Quarter 1 (IFRS) June 30, 2013 June 30, 2014 % Change
Passengers(m) 23.2m 24.3m +4%
Revenue(m) E1,342m E1,496m +11%
Profit after Tax E78m E197m +152%
Basic EPS(E cent) 5.42 14.22 +162%
Ryanair's Michael O'Leary said:
"Q1 profits were boosted by a strong Easter (but are somewhat distorted by the
absence of Easter on the prior year Q1). The earlier launch of our summer
schedule and actively raising our forward bookings has delivered a 4% increase
in load factor to 86% and enabled us to better manage close-in yields.
Ancillary Revenues rose 4% in line with traffic growth, as airport and baggage
fee reductions were offset by the rising uptake of allocated seating.
New Routes and Bases.
Our 4 new bases at Athens, Brussels, Lisbon and Rome are performing strongly,
as customers switch to Ryanair's lower fares and our industry leading customer
service. Our strategy to raise forward bookings continues to drive higher
load factors and we expect to release our summer 2015 schedule in
mid-September, some 3 months earlier than last year.
This winter we will open 4 new bases in Cologne, Gdansk, Warsaw and Glasgow
(Intl.) as well as substantially increasing new routes and frequencies at
Stansted and Dublin as we invest heavily in our network to build schedules on
key city pairs to make them more attractive for business customers.
We are overrun with growth offers from primary European airports whose
incumbent flag and regional carriers continue to cut capacity and traffic.
These new airports along with our existing 69 bases offer Ryanair significant
growth opportunities as the first of our 180 new Boeing order delivers this
September. These new aircraft, with the benefit of the much weaker US$, will
drive significant cost efficiencies over the next 5 years.
Customer Experience Improvement.
Our "Always Getting Better" programme has delivered significant improvement to
the customer experience. In addition to the initiatives launched last
September which included allocated seating, free 2nd carry-on bags, and an
easier to use website with a "fare finder" facility, we launched our family
product in June. In July we released our industry leading mobile app
(including mobile boarding passes) which has been very positively reviewed by
independent commentators and our customers and has reached 1m downloads in the
10 days since its release. In September we will launch Ryanair's business
service which will include same day flight changes, bigger bag allowances,
premium seat allocation, and fast-track through security at many Ryanair
airports. This new service along with our new routes, improved schedules and
wider GDS distribution, will make Ryanair's low fares much more accessible to,
and attractive for business customers. We will continue this winter to
rapidly develop both our website and mobile platform to deliver more
innovative features and services in addition to the lowest fares to our
customers.
Fuel
We are 90% hedged for FY15 at approx. $96 p.bl, which will deliver savings of
E50m this year at current market rates. This is lower than the E70m
previously guided due to increased volumes in H2. We have also hedged 55% of
our H1 FY16 fuel needs at approx. $95 p.bl and weaker US$ which will deliver a
2% fall in our unit fuel cost at current market rates.
Bond Issue
The BBB+ rating awarded by S&P and Fitch makes Ryanair the highest rated
airline in the world. This rating reflects the strength of our Balance Sheet
and our highly cash generative business model and enabled us in June to issue
our first E850m unsecured Eurobond at a coupon of 1.875% fixed for 7 years.
This attractively priced financing (which was 7 times oversubscribed) will
further reduce our aircraft ownership costs over the next 5 years.
Shareholder returns
In FY14 we completed E482m of share buybacks as part of our commitment to
return
E1 billion to shareholders over a 2 year period. We now plan to return
another E520m via a special dividend of 37.50 cents per ordinary share
(subject to AGM approval) to be paid in Q4 FY15. This brings the total returns
to shareholders since 2008 to over E2.5bn which is more than 4 times the E585m
originally raised from shareholders since our 1997 IPO.
Outlook
Based on these Q1 results and our strong forward bookings it is clear that we
are on track to deliver a strong H1, during which traffic will grow by 3%, and
fares will rise by 6% subject to late booking fares in Aug. and Sept. However
we would strongly caution both analysts and investors against any irrational
exuberance in what continues to be a difficult economic environment, with some
company-specific challenges in H2.
We expect H2 to be characterised by a much softer pricing environment as many
competitors are lowering fares, partly in response to Ryanair's strong forward
bookings. Added to this Ryanair will aggressively raise capacity this winter
by 8% (7% in Q3 and 10% in Q4) to take advantage of growth discounts and build
out business friendly frequencies from Dublin and Stansted in particular.
These initiatives will inevitably put downward pressure on fares and (mindful
of last winter's weak pricing environment) we continue to expect H2 yields to
fall by between 6% to 8% which will result in full year yields rising by only
2%. Unit costs (ex-fuel) for FY15 will rise by approx. 4%, which is slightly
better than the 5% increase we originally guided, due to higher H2 traffic
volumes which will be positive for unit costs.
In summary, we now expect full year traffic to grow by 5% to 86m. This
increased traffic and higher load factors, combined with a slightly improved
performance on unit costs allows us to cautiously raise our full year profit
after tax guidance (from the previous range E580m to E620m) to a range of
E620m to E650m. However this guidance, which is about a 21% rise over last
year's net profit, is heavily, reliant upon the final outturn for H2 yields
over which we currently have zero visibility".
ENDS.
For further information Howard Millar Joe Carmody
please contact: Ryanair Holdings plc Edelman
www.ryanair.com Tel: 353-1-9451212 Tel: 353-1-6789333
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, weather related disruptions, 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 favourite low fares airline, operating more than 1,600
daily flights (over 500,000 per year) from 69 bases, across 1,600 low fare
routes, connecting 186 destinations in 30 countries and operating a fleet of
297 new Boeing 737-800 aircraft. Ryanair has recently announced firm orders
for a further 180 new Boeing aircraft, which will be delivered between 2014
and 2018. Ryanair currently has a team of more than 9,500 highly skilled
professionals, will carry 86 million customers this year and has an
outstanding 30-year safety record.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Balance Sheet as at June 30, 2014 (unaudited)
At Jun 30, At Mar 31,
2014 2014
Note EM EM
Non-current assets
Property, plant and equipment 11 5,096.8 5,060.3
Intangible assets 46.8 46.8
Available for sale financial assets 8 230.9 260.3
Derivative financial instruments 11.5 0.4
Total non-current assets 5,386.0 5,367.8
Current assets
Inventories 2.5 2.5
Other assetsCurrent tax 136.9- 124.21.1
Trade receivables 55.9 58.1
Derivative financial instruments 40.7 16.7
Restricted cash 20.0 13.3
Financial assets: cash > 3months 1,890.6 1,498.3
Cash and cash equivalents 2,572.7 1,730.1
Total current assets 4,719.3 3,444.3
Total assets 10,105.3 8,812.1
Current liabilities
Trade payables 184.2 150.0
Accrued expenses and other liabilities 1,834.4 1,561.2
Current maturities of debt 465.9 467.9
Derivative financial instruments 57.0 95.4
Current tax 18.7 -
Total current liabilities 2,560.2 2,274.5
Non-current liabilities
Provisions 141.2 133.9
Derivative financial instruments 39.8 43.2
Deferred tax 385.2 368.6
Other creditors 81.5 90.4
Non-current maturities of debt 3,374.5 2,615.7
Total non-current liabilities 4,022.2 3,251.8
Shareholders' equity
Issued share capital 13 8.8 8.8
Share premium account 708.2 704.2
Capital redemption reserve 13 1.2 1.2
Retained earnings 13 2,663.6 2,465.1
Other reserves 141.1 106.5
Shareholders' equity 3,522.9 3,285.8
Total liabilities and shareholders' equity 10,105.3 8,812.1
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement for the quarter ended June 30,
2014 (unaudited)
Quarter Quarter
Ended Ended
Jun 30, Jun 30,
2014 2013
Note EM EM
Operating revenues
Scheduled revenues 1,125.0 985.7
Ancillary revenues 370.7 356.5
Total operating revenues - continuing operations 1,495.7 1,342.2
Operating expenses
Fuel and oil 563.8 576.6
Airport and handling charges 195.1 176.3
Route charges 154.5 155.2
Staff costs 132.7 130.4
Depreciation 96.7 90.5
Marketing, distribution and other 59.6 53.7
Maintenance, materials and repairs 35.2 29.8
Aircraft rentals 26.3 26.4
Total operating expenses 1,263.9 1,238.9
Operating profit - continuing operations 231.8 103.3
Other income/(expense)
Finance expense (19.0) (21.7)
Finance income 9.1 9.1
Foreign exchange gain/(loss) 1.7 (2.2)
Total other expense (8.2) (14.8)
Profit before tax 223.6 88.5
Tax expense on profit on ordinary activities 4 (26.8) (10.4)
Profit for the quarter - all attributable to equity holders of parent 196.8 78.1
Earnings per ordinary share (in E cent)
Basic 10 14.22 5.42
Diluted 10 14.18 5.40
Weighted average no. of ordinary shares (in Ms)
Basic 10 1,383.5 1,440.5
Diluted 10 1,387.7 1,446.6
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Comprehensive Income for the
quarter ended June 30, 2014 (unaudited)
Quarter Quarter
Ended Ended
Jun 30, Jun 30,
2014 2013
EM EM
Profit for the quarter 196.8 78.1
Other comprehensive income:
Cash flow hedge reserve movements:
Net movement in cash flow hedge reserve 65.2 (77.8)
Available for sale financial asset:
Net (decrease)/increase in fair value of available for sale financial asset (29.4) 20.0
Other comprehensive income/(loss) for the quarter, net of income tax 35.8 (57.8)
Total comprehensive income for the quarter - all attributable to equity holders of parent 232.6 20.3
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Cash Flows for the quarter ended
June 30, 2014 (unaudited)
Quarter Quarter
Ended Ended
Jun 30, Jun 30,
2014 2013
Note EM EM
Operating activities
Profit after tax 196.8 78.1
Adjustments to reconcile profit before tax to net cash provided by operating activities
Depreciation 96.7 90.5
(Increase) in inventories - (0.1)
Tax expense on profit on ordinary activities 26.8 10.4
Decrease/(increase) in trade receivables 2.2 (11.3)
(Increase)/decrease in other current assets (9.8) 2.3
Increase in trade payables 34.2 55.9
Increase in accrued expenses 270.9 313.1
(Decrease) in other creditors (8.9) (9.5)
Increase in provisions 7.3 3.3
Increase in finance expense 2.4 2.4
(Increase) in finance income (2.8) (0.4)
Share based payments 0.5 0.5
Income tax paid (0.3) -
Net cash provided by operating activities 616.0 535.2
Investing activities
Capital expenditure (purchase of property, plant and equipment) (133.2) (237.3)
(Increase)/decrease in restricted cash (6.7) 2.9
(Increase) in financial assets: cash > 3months (392.3) (37.0)
Net cash used in investing activities (532.2) (271.4)
Financing activities
Net proceeds from shares issued 4.0 1.8
Proceeds from long term borrowings 14 845.9 -
Repayments of long term borrowings (91.1) (89.4)
Shares purchased under share buy-back programme 13 - (176.6)
Net cash provided by/(used in) financing activities 758.8 (264.2)
Increase/(decrease) in cash and cash equivalents 842.6 (0.4)
Cash and cash equivalents at beginning of the period 1,730.1 1,240.9
Cash and cash equivalents at end of the period 2,572.7 1,240.5
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity
for the quarter ended June 30, 2014 (unaudited)
Other Reserves
Issued Share Capital
Ordinary Share Premium Retained Redemption Other
Shares Capital Account Earnings Reserve Hedging Reserves Total
M EM EM EM EM EM EM EM
Balance at March 31, 2013 1,447.1 9.2 687.8 2,418.6 0.8 0.5 155.7 3,272.6
Profit for the year - - - 522.8 - - - 522.8
Other comprehensive income
Net actuarial losses from retirement benefit plans - - - (1.6) - - - (1.6)
Net movements in cash flow reserve - - - - - (83.7) - (83.7)
Net change in fair value of available for sale financial asset - - - - - - 39.1 39.1
Total other comprehensive income - - - (1.6) - (83.7) 39.1 (46.2)
Total comprehensive income/(expense) - - - 521.2 - (83.7) 39.1 476.6
Transactions with owners of the Company recognised directly in equity
Issue of ordinary equity shares 5.7 - 16.4 - - - - 16.4
Share-based payments - - - - - - 1.9 1.9
Dividend paid - - - - - - - -
Repurchase of ordinary equity shares - - - (481.7) - - - (481.7)
Cancellation of repurchased ordinary shares (69.5) (0.4) - - 0.4 - - -
Transfer of exercised and expired share based awards - - - 7.0 - - (7.0) -
Balance at March 31, 2014 1,383.3 8.8 704.2 2,465.1 1.2 (83.2) 189.7 3,285.8
Profit for the period 196.8 196.8
Other comprehensive income
Net movements in cash flow reserve - - - - - 65.2 - 65.2
Net change in fair value of available for sale financial asset - - - - - - (29.4) (29.4)
Total other comprehensive income - - - - - 65.2 (29.4) 35.8
Total comprehensive income/(expense) - - - 196.8 - 65.2 (29.4) 232.6
Transactions with owners of the Company recognised directly in equity
Issue of ordinary equity shares 1.0 - 4.0 - - - - 4.0
Share-based payments - - - - - - 0.5 0.5
Transfer of exercised and expired share based awards - - - 1.7 - - (1.7) -
Balance at June 30, 2014 1,384.3 8.8 708.2 2,663.6 1.2 (18.0) 159.1 3,522.9
1.7
-
-
(1.7)
-
Balance at June 30, 2014
1,384.3
8.8
708.2
2,663.6
1.2
(18.0)
159.1
3,522.9
Ryanair Holdings plc and Subsidiaries
Operating and Financial Overview
Detailed Discussion and Analysis for the quarter ended June 30, 2014
Profit after tax increased by 152% to E196.8m primarily due to a 9% increase
in average fares and a stronger load factor (up 4 points to 86%), partially
offset by a 2% increase in total operating expenses. Total operating revenues
increased by 11% to E1,495.7m, primarily due to a 14% increase in scheduled
revenues to E1,125.0m, driven by the 9% increase in average fare, due to the
timing of Easter in this quarter and its absence in the prior year comparative
along with a strong increase in load factor. Ancillary revenue was up 4%, in
line with the growth in passenger numbers, to E370.7m. Fuel, which represents
45% of total operating costs in the current quarter and 47% in the comparative
quarter, decreased by 2% to E563.8m due to a lower euro price per gallon paid.
Unit costs excluding fuel rose by 1%, however, including fuel unit costs fell
by 2%. Operating margin, as a result of the above, increased by 7 points to
15% whilst operating profit increased by 124% to E231.8m.
Total operating revenues increased by 11% to E1,495.7m primarily due to a 9%
increase in average fare, boosted by the timing of Easter, the strength of
sterling against the euro and a 4% increase in traffic to 24.3m. Ancillary
revenues grew in line with the increase in passenger numbers.
Total revenue per passenger rose by 7%, primarily due to the strong growth in
scheduled revenues.
Scheduled passenger revenues increased by 14% to E1,125.0m due to a 9% rise in
average fares, partially due to the timing of Easter and its absence in the
prior year comparative along with the strength of sterling to the euro. Load
factor rose by 4 points to 86%.
Ancillary revenues increased by 4% to E370.7m, in line with the 4% increase in
passenger numbers.
Total operating expenses increased by 2% to E1,263.9m due to the increased
costs associated with the growth of the airline offset by a 2% reduction in
fuel costs.
Fuel & oil costs decreased by 2% to E563.8m due to a lower euro fuel price per
gallon in the quarter.
Airport & handling charges increased by 11%, as planned, to E195.1m, due to
the mix of new routes and bases launched at primary airports, a 4% increase in
passenger numbers and the strengthening of sterling against the euro.
Route charges were down E0.7m as sectors flown remained flat.
Staff costs increased by 2% to E132.7m in line with the 2% pay increase
granted in April 2014.
Depreciation and amortisation increased by 7% to E96.7m due to the purchase of
9 additional spare engines in the period and the higher level of maintenance
activity during the quarter.
Marketing, distribution & other costs, which include ancillary costs,
increased by 11% to E59.6m, due to higher marketing spend to support the
customer experience improvements and the launch of new routes and bases.
Maintenance costs increased by E5.4m, to E35.2m, primarily due to the
inclusion in the prior year comparative of a one off credit of E3.7m arising
from the renegotiation of maintenance contracts, and the remainder of the
increase is due to higher line maintenance costs arising from the launch of
new bases.
Aircraft rental costs remained relatively flat at E26.3m, reflecting a lower
number of leased aircraft in the quarter (June 30, 2014: 51) compared to the
prior year (June 30, 2013: 57), offset by short term summer leases (June 30,
2014: 5).
Operating margin increased by 7 points to 15% due to the reasons outlined
above and operating profits have increased by 124% to E231.8m.
Finance expense decreased by 13% to E19.0m due to lower interest rates on our
floating rate debt and new, low cost, borrowings.
Finance income remained flat at E9.1m as higher cash deposits were offset by
lower interest rates.
Balance sheet
Gross cash increased by E1,241.6m since March 31, 2014 to E4,483.3m and Gross
debt rose by E756.8m to E3,840.4m. The Group generated E616.0m cash from
operating activities and approx. E846m from its debut eurobond issuance in
June 2014 (see note 14). This funded net capital expenditure of E133.2m and
debt repayments of E91.1m. As a result the Group had a stronger net cash
position of E642.9m at period end (March 31, 2014: E158.1m).
Shareholders' equity increased by E237.1m to E3,522.9m in the period due to
the net profit after tax of E196.8m and the impact of IFRS accounting
treatment for derivatives.
Ryanair Holdings plc
Notes forming Part of the Condensed Consolidated
Interim Financial Statements
1. Basis of preparation and significant accounting policies
Ryanair Holdings plc (the "Company") is a company domiciled in Ireland. The
unaudited condensed consolidated interim financial statements of the Company
for the three months ended June 30, 2014 comprise the Company and its
subsidiaries (together referred to as the "Group").
These unaudited condensed consolidated interim financial statements ("the
interim financial statements"), which should be read in conjunction with our
2013 Annual Report for the year, ended March 31, 2013, have been prepared in
accordance with International Accounting Standard No. 34 "Interim Financial
Reporting" as adopted by the EU ("IAS 34"). 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 consolidated financial statements of the Group as
at and for the year ended March 31, 2013, are available at www.ryanair.com.
The comparative figures included for the year ended March 31, 2013 do not
constitute statutory financial statements of the Group within the meaning of
Regulation 40 of the European Communities (Companies, Group Accounts)
Regulations, 1992. The consolidated financial statements of the Group for the
year ended March 31, 2013, together with the independent auditor's report
thereon, have been filed with the Irish Registrar of Companies following the
Company's Annual General Meeting and are also available on the Company's
Website. The auditor's report on those financial statements was unqualified.
The Audit Committee, upon delegation of authority by the Board of Directors,
approved the interim financial statements for the quarter ended June 30, 2014
on July 25, 2014.
Except as stated otherwise below, this period'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 IFRS as adopted by the EU and in compliance with IFRS as
issued by the International Accounting Standards Board.
The following new and amended standards, that have been issued by the
International Accounting Standards Board (IASB), and are effective under those
standards for the first time for the financial year beginning on or after
January 1, 2014, and have also been endorsed by the EU, have been applied by
the Group for the first time in the consolidated financial statements;
· IAS 32 (amendment) "Offsetting Financial Assets and Financial
Liabilities" (effective for fiscal periods beginning on or after January 1,
2014).
· IAS 39 (amendment) "Novation of Derivatives and Continuation of Hedge
Accounting" (effective for fiscal periods beginning on or after January 1,
2014).
· IFRIC 21 "Levies" (effective for fiscal periods beginning on or after
January 1, 2014).
The adoption of these new or amended standards did not have a material impact
on our financial position or results from operations in the quarter ended June
30, 2014.
The following new or revised IFRS standards and IFRIC interpretations will be
adopted for purposes of the preparation of future financial statements, where
applicable. We do not anticipate that the adoption of these new or revised
standards and interpretations will have a material impact on our financial
position or results from operations.
· IFRS 9, "Financial Instruments" (2009, as amended in 2011 and 2013)
(effective date to be determined).
· "Improvements to IFRSs". 2010-2012 Cycle (effective for fiscal periods
beginning on or after July 1, 2014).
· "Improvements to IFRSs". 2011-2013 Cycle (effective for fiscal periods
beginning on or after July 1, 2014).
· IFRS 14, "Regulators Deferral Accounts" (effective for fiscal periods
beginning on or after January 1, 2016).
· Amendments to IAS 16 and IAS 38: "Clarification of Acceptable Methods of
Depreciation and Amortisation" (effective for fiscal periods beginning on or
after January 1, 2016).
· Amendments to IFRS 11: "Accounting for Acquisitions of Interests in
Joint Operations" (effective for fiscal periods beginning on or after January
1, 2016).
· IAS 15, "Revenue from Contracts with Customers" (effective for fiscal
periods beginning on or after January 1, 2017).
2. 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.
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.
3. 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.
4. Income tax expense
The Group's consolidated effective tax rate in respect of operations for the
quarter ended June 30, 2014 was 12.0% (June 30, 2013: 11.7%). The tax charge
for the quarter ended June 30, 2014 of E26.8m (June 30, 2013: E10.4m)
comprises a deferred tax charge relating to the temporary differences for
property, plant and equipment recognised in the income statement.
5. Share based payments
The terms and conditions of the share option programme are disclosed in the
most recent, published, consolidated financial statements. The charge of
E0.5m is the fair value of various share options granted in prior periods,
which are being recognised within the income statement in accordance with
employee services rendered.
6. 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.
7. Capital commitments
At June 30, 2014 Ryanair had an operating fleet of 297 (2013: 303) Boeing
737-800NG aircraft. Following shareholder approval at an EGM on June 18,
2013, the Group has agreed to purchase 180 new Boeing 737 800NG aircraft
during the periods Fiscal 2015 to Fiscal 2019.
8. Available for sale financial assets (Aer Lingus)
The movement on the available for sale financial asset from E260.3m at March
31, 2013 to E230.9m at March 31, 2014 is comprised of a loss of E29.4m,
recognised through other comprehensive income, reflecting the decrease in the
Aer Lingus share price from approximately E1.64 per share at March 31, 2014 to
approximately E1.45 per share at June 30, 2014.
9. Analysis of operating segment
The Company is managed as a single business unit that provides low fares
airline-related activities, including scheduled services, car hire, internet
income and related sales to third parties. The Company operates a single
fleet of aircraft that is deployed through a single route scheduling system.
The Company determines and presents operating segments based on the
information that internally is provided to the CEO, who is the Company's Chief
Operating Decision Maker (CODM). When making resource allocation decisions
the CODM evaluates route revenue and yield data, however resource allocation
decisions are made based on the entire route network and the deployment of the
entire aircraft fleet, which are uniform in type. The objective in making
resource allocation decisions is to maximise consolidated financial results,
rather than individual routes within the network.
The CODM assesses the performance of the business based on the consolidated
profit/(loss) after tax of the Company for the period.
All segment revenue is derived wholly from external customers and as the
Company has a single reportable segment, intersegment revenue is zero.
The Company's major revenue-generating asset comprises its aircraft fleet,
which is flexibly employed across the Company's integrated route network and
is directly attributable to its reportable segment operations. In addition,
as the Company is managed as a single business unit, all other assets and
liabilities have been allocated to the Company's single reportable segment.
Reportable segment information is presented as follows: Quarter Quarter
Ended Ended
Jun 30, Jun 30,
2014 2013
EM E'M
External revenues 1,495.7 1,342.2
Reportable segment profit after income tax 196.8 78.1
At Jun 30, 2014EM At Mar 31, 2014EM
Reportable segment assets (excludes the available for sale financial asset) 9,874.4 8,551.8
10. Earnings per share
Quarter Quarter
Ended Ended
Jun 30, Jun 30,
2014 2013
Basic earnings per ordinary share (E cent) 14.22 5.42
Diluted earnings per ordinary share (E cent) 14.18 5.40
Weighted average number of ordinary shares (in M's) - basic 1,383.5 1,440.5
Weighted average number of ordinary shares (in M's) - diluted 1,387.7 1,446.6
Diluted earnings per share takes account solely of the potential future
exercises of share options granted under the Company's share option schemes
and the weighted average number of shares includes weighted average share
options assumed to be converted of 4.2m (2013: 6.1m).
11. Property, plant and equipment
Acquisitions and disposals
Capital expenditure in the period to June 30, 2014 amounted to E133.2m and is
primarily aircraft pre delivery payments and the cost of spare engines
purchased.
12. Financial instruments and financial risk management
We are exposed to various financial risks arising in the normal course of
business. Our financial risk exposures are predominantly related to commodity
price, foreign exchange and interest rate risks. The Company uses financial
instruments to manage exposures arising from these risks.
These preliminary financial statements do not include all financial risk
management information and disclosures required in the annual financial
statements, and should be read in conjunction with the 2013 Annual Report.
There have been no changes in our risk management policies in the year.
Fair value hierarchy
Financial instruments measured at fair value in the balance sheet are
categorised by the type of valuation method used. The different valuation
levels are defined as follows:
· Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities that the Group can access at the measurement date.
· Level 2: inputs other than quoted prices included within Level 1 that are
observable for that asset or liability, either directly or indirectly.
· Level 3: unobservable inputs for the asset or liability.
Fair value estimation
Fair value is the price that would be received to sell an asset, or paid to
transfer a liability, in an orderly transaction between market participants at
the measurement date. The following methods and assumptions were used to
estimate the fair value of each material class of the Company's financial
instruments:
Financial instruments measured at fair value
· Available for sale: The fair value of available for sale financial assets
is their quoted market bid price at the balance sheet date. (Level 1)
· Derivatives - interest rate swaps: Discounted cash-flow analyses have been
used to determine the fair value, taking into account current market inputs
and rates. (Level 2)
· Derivatives - currency forwards, aircraft fuel contracts and carbon swaps:
A comparison of the contracted rate to the market rate for contracts providing
a similar risk profile at June 30, 2014 has been used to establish fair value.
(Level 2)
The Group policy is to recognise any transfers between levels of the fair
value hierarchy as of the end of the reporting period during which the
transfer occurred. During the quarter to June 30, 2014, there were no
reclassifications of financial instruments and no transfers between levels of
the fair value hierarchy used in measuring the fair value of financial
instruments.
Financial instruments disclosed at fair value
· Fixed-rate long-term debt: The repayments which Ryanair is committed to
make have been discounted at the relevant market rates of interest applicable
(including credit spreads) at June 30, 2014 to arrive at a fair value
representing the amount payable to a third party to assume the obligations.
There were no significant changes in the business or economic circumstances
during the quarter to June 30, 2014 that affect the fair value of our
financial assets and financial liabilities.
12. Financial instruments and financial risk management (continued)
The fair value of financial assets and financial liabilities, together with
the carrying amounts in the condensed consolidated financial balance sheet,
are as follows:
Carrying amount Fair value
At June 30, 2014 EM EM
Non-current financial assets
Derivative financial instruments:-
- Jet fuel derivative contracts................................................................................................... 6.2 6.2
- U.S. dollar currency forward contracts................................................................................. 5.3 5.3
11.5 11.5
- Available-for-sale financial assets........................................................................................ 230.9 230.9
242.4 242.4
Current financial assets
Derivative financial instruments:-
- Jet fuel derivative contracts................................................................................................... 40.7 40.7
40.7 40.7
Trade receivables....................................................................................................................... 55.9 55.9
Cash and cash equivalents....................................................................................................... 2,572.7 2,572.7
Financial asset: cash > 3 months............................................................................................. 1,890.6 1,890.6
Restricted cash........................................................................................................................... 20.0 20.0
Other assets................................................................................................................................ 5.5 5.5
4,585.4 4,585.4
Total financial assets at June 30, 2014.................................................................................... 4,827.8 4,827.8
Carrying amount Fair value
At June 30, 2014 EM EM
Non-current financial liabilities
Derivative financial instruments:-
- Interest rate swaps.................................................................................................................. 39.8 39.8
39.8 39.8
Long-term debt........................................................................................................................... 3,374.5 3,424.2
3,414.3 3,464.0
Current financial liabilities
Derivative financial instruments:-
- Interest rate swaps.................................................................................................................. 30.1 30.1
- U.S. dollar currency forward contracts................................................................................. 26.9 26.9
57.0 57.0
Long-term
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