REG - Ryanair Holdings PLC - Annual Financial Report <Origin Href="QuoteRef">RYA.I</Origin> - Part 1
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RNS Number : 7552N
Ryanair Holdings PLC
30 July 2014
For full version of the Annual Report with graphs and images included please view the attached PDF:
http://www.rns-pdf.londonstockexchange.com/rns/7552N_1-2014-7-30.pdf
CONTENTS
2 Financial Highlights
4 Chairman's Report
6 Chief Executive's Report
9 Summary Operating and Financial Overview
11 Directors' Report
15 Corporate Governance Report
29 Report of the Remuneration Committee on Directors' Remuneration
30 Statement of Directors' Responsibilities
32 Independent Auditor's Report
37 Presentation of Financial and Certain Other Information
39 Detailed Index*
41 Key Information
47 Principle Risks and Uncertainties
63 Information on the Company
86 Operating and Financial Review
91 Critical Accounting Policies
106 Directors, Senior Management and Employees
114 Major Shareholders and Related Party Transactions
115 Financial Information
125 Additional Information
136 Quantitative and Qualitative Disclosures About Market Risk
141 Controls and Procedures
145 Consolidated Financial Statements
201 Company Financial Statements
207 Directors and Other Information
208 Appendix
*See Index on page 39 and 40 for detailed table of contents.
Information on the Company is available online via the Internet at our website, www.ryanair.com. Information on our website
does not constitute part of this Annual Report. This Annual Report and our 20-F are available on our website.
Financial Highlights 2014EM 2013 EM Change
Operating revenue 5,036.7 4,884.0 +3%
Net profit after tax 522.8 569.3 -8%
Basic EPS (in euro cent) 36.96 39.45 -6%
Adjusted profit above for year ended March 31, 2012 excludes a one off release of ticket sales revenue of E57.8 million and
for year ended March 31, 2011 excludes estimated costs of E26.1 million relating to volcanic ash disruptions in the year.
Adjusted profit for the year ended March 31, 2010 excludes an impairment charge of E13.5m on our investment in Aer Lingus
and for year ended March 31, 2009 excludes E51.6 million relating to accelerated depreciation on aircraft disposals and a
further E222.5 million write down of our investment in Aer Lingus.
Key Statistics 2014 2013 Change
Scheduled passengers 81.7m 79.3m +3%
Year-end Fleet 297 305 -3%
Average staff 9,501 9,059 +5%
Passengers per staff member (avg.) 8,599 8,753 -2%
Chairman's Report
Dear Shareholders,
This year we delivered a net profit after tax of E523m which was a disappointing E46m decline compared to last year's
profit of E569m. However, this decline was entirely due to a 4% fall in fares, weaker sterling, and significantly higher
fuel costs which rose by E128m.
During the year Ryanair delivered a number of significant milestones:
· Our traffic grew by 3% to 81.7m passengers.
· We ordered 180 new aircraft from Boeing for delivery from 2014 to 2018.
· We opened 8 new bases and 121 new routes.
· We completed a E482m share buyback.
· We successfully improved customer service via the launch of a new website and introduced allocated seating.
· We achieved a BBB+ (stable) rating from Standard & Poor's ("S&P") and Fitch and became the highest rated airline in
the world.
During fiscal 2014 we suffered a E128m increase in our fuel bill, which accounts for 46% of our total operating costs.
Looking forward we are 90% hedged for fiscal 2015 at approximately $96 per barrel, significantly below current fuel prices,
which will deliver approximately E50m cost savings this year. We have also extended our hedging into H1 FY16 and are
already 55% hedged at prices which are just under 4% lower per passenger than fiscal 2015.
We lead the airline industry by having the lowest fares, the most on- time flights, and the youngest fleet. This year we
have focused on significantly improving our customer experience by launching a new website, a user friendly mobile app, the
My Ryanair registration service which makes it simpler, and easier for customers to book Ryanair flights. We have recently
introduced allocated seating, reduced certain fees and charges, launched a family product with discounts for children, and
enabled passengers to take a 2nd small carry-on bag on-board. These improvements have been warmly welcomed by our
customers, and we will launch further enhancements as part of our "always getting better" customer experience programme.
The earlier release of our seasonal schedules and selling these seats at lower fares will deliver a 3% increase in load
factors to 86% this year. This stronger forward booking strategy is helping us to better manage our close-in fares. We
have also made significant changes in the way we market and distribute our flights. In the spring we launched an extensive
TV and outdoor advertising campaign in key EU markets and will initiate a series of campaigns this winter to promote our
new website, mobile app and the ongoing improvements to customer service. In April we commenced distributing Ryanair
flights on the GDS's (Global Distribution Systems) used by business customers and on Google flight search. In September we
will launch our new business service which will include a same day flight change and other attractive features for business
customers such as fast track through security at many Ryanair airports. We will continue to expand our distribution to
enable more business customers to book Ryanair flights.
In 2013 we announced plans to return up to E1bn to shareholders via share buybacks and special dividends by the end of
fiscal 2015. We have already completed E482m share buybacks and the Board have now proposed a dividend in Q4 of E0.37 per
share a 10% increase on the 2013 special dividend which amounts to approximately E520m subject to shareholder approval at
the Annual General Meeting. The combination of this third special dividend (subject to AGM approval) and previous share
buybacks and dividends will mean that Ryanair has returned over E2.53bn to shareholders over the past 6 years.
We continue to see tremendous opportunities to grow our business as many of Europe's legacy and regional carriers
restructure and cut capacity. As the first of our new aircraft delivers this September we look forward to continuing to
grow the airline to carry over 110m passengers by 2019.
Our BBB+ (stable) rating by S&P and Fitch makes us the highest rated airline in the world. This rating combined with the
strength of our Balance Sheet with E3.2bn in cash at the end of fiscal 2014 enabled us to issue our first unsecured
eurobond in June for E850m at a coupon of just 1.875%. This new source of attractively priced financing will form part of
our strategy to fund our future growth as we purchase 180 aircraft over the coming years.
I would like to warmly welcome a new director Michael Cawley, who joins the board in August and will stand for election by
the shareholders at the AGM in September, 2014. I have also invited Howard Millar to join the board in July 2015, 6 months
after he steps down as CFO in December 2014.
Over the last year we have made considerable improvements to our business and the extraordinary people at Ryanair continue
to work hard on behalf of shareholders to reduce costs while at the same time delivering the lowest fares along with the
best customer service in Europe to our 86m passengers.
Yours sincerely,
David Bonderman
Chairman
Chief Executive's Report
Dear Shareholders,
We are pleased to present the 2014 report from Europe's biggest low fares airline and the world's favourite international
scheduled carrier. Over the past 12 months, Ryanair's unique low fares, low cost model, continued to deliver new route and
traffic growth, albeit at lower fares, which meant that while we carried a record 81.7m customers, our average fare fell
by 4% to E46.40 causing a disappointing 8% decline in profits from last year's record E569m, to a slightly more modest
E523m this year.
While any decline in net profits is disappointing, the fact is that this fall was not caused by a cost problem, but rather
by offering our customers even lower fares than last year. Our history has shown that customers who obtain lower air fares
and great customer service, will continue to return to Ryanair again and again as we roll out exciting plans to grow our
fleet, expand our route network, improve our flight times and frequencies, and continuously improve the customer experience
on Ryanair.
In the last year traffic rose by 3% to 81.7m customers, average fares fell by 4% (to E46.40), but ancillary revenues grew
strongly (up 17%) with the result that revenue per passenger was largely flat. Excluding fuel (which rose by 7%), sector
length adjusted unit costs fell by 3% proving again Ryanair's disciplined approach to cost containment. The key trend over
the last year is that the average fare and unit cost gap between Ryanair and our European competitor airlines widened (as
they saw their unit costs and fares rise) and it is this wider price gap which will underpin Ryanair's strong traffic and
profit growth over the coming years.
Over the last 12 months Ryanair opened 121 new routes, announced 8 new bases in Athens, Thessaloniki, Brussels (Zaventem),
Lisbon, Rome (Fiumicino), Catania, Lamezia and Palermo. We also obtained shareholder approval for our 180 new aircraft
order, deliveries of which will start in September 2014, enabling Ryanair to grow our traffic from 82m to over 110m
customers over the next 5 years.
Improving our Customer Experience
In September 2013, we announced plans to significantly improve our customer experience. For many years, success was
defined by having the lowest costs and the lowest fares in every market, which ensured that we grew rapidly establishing
enormous price (and cost) leadership over Europe's flag carriers, and so called low cost carriers, all of whom charge air
fares that are at least 50% higher than Ryanair. As our business matures, and our growth rates slow somewhat, we are
committed to improving our customer experience in addition to providing our guests with the lowest fares, the most on-time
flights, the fewest lost bags, and the fewest cancellations.
To achieve these goals we have spent a lot of the past year listening to our customers, and responding to their advice on
improving our customer experience by moving to fully allocated seating on all flights, launching a simpler, easier to use,
website with great new features which makes finding our routes, timetables and lowest fares quicker and easier than ever.
We have also restructured many long standing policies to allow customers bring a small second carry-on bag free of charge,
a 24 hour grace period to correct minor booking errors, reduced boarding card and airport bag fees, "quiet flights" on
early morning and late evening services for those customers who wish to chill out or snooze. We have also launched a
dedicated groups service, an exciting new family product which allows children to avail of discounted prices for allocated
seats, travel insurance and checked bags. In the Autumn we will launch a new business service which will allow business
customers avail of exciting new benefits including flexible tickets, fast-track through security at many airports, reserved
seating and free checked in bags, all for a small premium on our very low fares. These efforts have been complimented with
a brand new Ryanair mobile app which was launched in mid July and will make Ryanair's fares and services even more
accessible to customers on the go.
We have widened the availability and distribution of Ryanair's low fares and flights with a return to GDS distribution via
new partnerships with Travelport (the operator of the Galileo and Worldspan GDS's), with Google Flight Search feature here
in Europe, and the brilliant "fare finder" facility on our website (which allows customers to readily find our lowest
fares, our price promotions, or to enter a range of prices and we then produce the range of destinations that they can
travel to at these price points).
Our airport partnerships
Over the past year there has been a noticeable change in our airport strategy. For many years we focused our growth on low
cost services to secondary airports at primary cities, or primary airports in regional cities, where low costs and
efficient facilities were readily available.
Over the last 12 months an increasing number of major city primary airports are offering Ryanair low costs and efficient
facilities in return for new route and/or traffic growth on existing routes, in many cases to make up for traffic declines
at those primary airports by their incumbent carriers.
This has seen Ryanair announce new bases and growth at a number of primary airports last year including long-term incentive
schemes at London Stansted and Dublin (where we applaud the Irish Government's decision to scrap the damaging travel tax),
and we have also welcomed new primary airports to our network including Athens, Brussels Zaventem, Lisbon, Rome Fiumicino,
Cologne, Gdansk, Warsaw Modlin and Glasgow Intl. among others. While many of these airports are slightly more expensive
than our 186 existing airports, our experience has shown that passengers at these airports prefer Ryanair's low fares over
the much higher fares being charged by other so called low cost carriers, or flag carriers, and so they switch to Ryanair
in significant numbers to make significant savings on their travel costs.
We will continue to roll out new products, new services and new routes, as we make the customer experience when flying with
Ryanair the best in the business. We plan to reduce the cost of flying for individual customers, for families and for
businesses. We will offer more choice of services, with an increasing range of flights to/from many of Europe's primary
airports, and we will continue to offer Europe's consumers lower fares than all other airlines, as well as a better
customer experience.
Digital
While the Ryanair.com website is Europe's largest travel website, we have been slow over the past year or two to invest or
improve our website, and to address new mobile technology as it develops rapidly. As a result we have allowed higher fare
competitors to develop better websites and mobile platforms than those of Ryanair. This will not happen again. Over the
last year we have transformed the Ryanair.com website to make it easier to use, and we have launched a great new mobile app
which makes Ryanair's fares, flights and ancillary services readily available to our customers on smartphones, laptops and
other mobile devices.
We are not content to rest on these laurels. We are actively developing our Ryanair Labs team which will be charged with
developing Ryanair's presence on all digital platforms, expanding the range of services we offer, entering into
partnerships with other digital leaders, and investing in emerging trends such as wearable devices, travel package holidays
and related products and services.
Our people
Over the past year average numbers employed in Ryanair rose from 9,059 to 9,501. Of this number more than 560 people were
promoted as our growth created new opportunities for promotion, career progression and development. Despite the difficult
economic environment, and a decline in profits, we agreed a modest pay increase in April for our team. We have also
negotiated 5 year pay and condition deals with our cabin crew bases and 12 of our pilot bases, directly with our people,
when their previous 5 year deals ended in March.
We were pleased to move into our new Dublin offices in January 2014, where we have created an exciting and engaging
environment for all our people and which affords us the space to grow our team and invest in IT and digital specialists.
We are pleased that Ryanair's new offices (which were designed by our people) were recently ranked one of Ireland's top 8
"coolest office spaces" and we hope that many shareholders will take the time to visit us in our great new space over the
coming months.
Our Shareholders
Unlike other airlines, Ryanair continues to deliver substantial returns for our shareholders. Because our Board and
Management team own a significant stake in the airline, we think, we plan, we invest, and we act like shareholders because
we are significant shareholders.
Over the past year, we completed share buybacks of over E480m and, subject to shareholder approval at the forthcoming AGM,
we plan to pay a third special dividend of approx. E520m to shareholders in Q4 of this fiscal year.
We recently completed our first unsecured eurobond debt facility, raising E850m for a 7 year period at fixed interest rates
of less than 2%. We will face significant aircraft capex payments over the next 12 months, and once we have completed this
significant investment, we will look again to improve shareholder returns both by growing our profits and share price, and
by completing more share buybacks and special dividends when our net cash position allows us to do so.
Having returned over E2.5bn to our shareholders over the past 7 years, Ryanair will continue to look for opportunities to
reward our shareholders for their investment in, and support for, our airline.
I would like to sincerely thank all the team at Ryanair for their hard work and dedication over the past 12 months. I
would especially like to thank our Chairman, David Bonderman, who continues to provide strategic guidance and wise counsel.
We are extremely fortunate to have someone of David's stature and experience in the business and despite his somewhat
dodgy dress sense and musical taste I hope he will continue to chair Ryanair for many years to come.
Finally, may I close by thanking all of Ryanair's 82m customers who have flown with us over the last 12 months. We value
your business and we are honoured that you chose to fly with Ryanair. I hope we will continue to welcome you and your
families on board many more Ryanair flights in the future.
Yours sincerely,
Michael O'Leary
Chief Executive
Summary Operating and Financial Overview
Consolidated Income Statement Data
IFRS IFRS
Year Year
Ended Ended
Mar 31, Mar 31,
2014 2013
EM EM
Operating revenues
Scheduled revenues........................................................................................... 3,789.5 3,819.8
Ancillary revenues........................................................................................... 1,247.2 1,064.2
Total operating revenues- continuing operations 5,036.7 4,884.0
Operating expenses
Fuel and oil....................................................................................................... . 2,013.1 1,885.6
Airport and handling charges....................................................................... . 617.2 611.6
Route charges.................................................................................................. . 522.0 486.6
Staff costs......................................................................................................... . 463.6 435.6
Depreciation...................................................................................................... 351.8 329.6
Marketing, distribution & other.................................................................... . 192.8 197.9
Maintenance, materials and repairs............................................................... 116.1 120.7
Aircraft rentals................................................................................................. . 101.5 98.2
Total operating expenses 4,378.1 4,165.8
Operating profit - continuing operations 658.6 718.2
Other income / (expense)
Finance expense............................................................................................... (83.2) (99.3)
Finance income................................................................................................. 16.5 27.4
Foreign exchange (loss)/gain......................................................................... (0.5) 4.6
Total other expense (67.2) (67.3)
Profit before tax 591.4 650.9
Tax expense on profit on ordinary activities.............................................. .. (68.6) (81.6)
Profit for the period - all attributable to equity holders of parent 522.8 569.3
Earnings per ordinary share (in E cent)
Basic................................................................................................................. .. 36.96 39.45
Diluted.............................................................................................................. .. 36.86 39.33
Weighted avg. no. of ordinary shares (in M's)
Basic.................................................................................................................. . 1,414.6 1,443.1
Diluted.............................................................................................................. .. 1,418.2 1,447.4
Weighted avg. no. of ordinary shares (in M's)
Basic.................................................................................................................. .
1,414.6
1,443.1
Diluted.............................................................................................................. ..
1,418.2
1,447.4
Summary year ended March 31, 2014
Profit after tax decreased by 8% to E522.8 million compared to E569.3 million in the year ended March 31, 2013 primarily
due to a 5% increase in total operating expenses and a 4% reduction in average fares, offset by strong ancillary revenues
and increased traffic. Total operating revenues increased by 3% to E5,036.7 million, primarily due to the 17% growth in
ancillary revenues to E1,247.2 million and a 3% rise in traffic, offset by a 4% reduction in average fares.
Total revenue per passenger, as a result, remained flat. Load Factor increased by 1% to 83% compared to the year ended
March 31, 2013.
Total operating expenses increased by 5% to E4,378.1 million, due to increased fuel prices and the higher level of
activity. Fuel, which represents 46% of total operating costs compared to 45% in the prior year, increased by 7% to
E2,013.1 million due to the higher euro price per gallon paid and increased activity in the year. Unit costs excluding
fuel increased by 1% (sector length adjusted unit costs fell by 3%) and including fuel they rose by 2%. Operating margin
decreased by 2% to 13% whilst operating profit decreased by 8% to E658.6 million.
Net margin was down 2% to 10%, compared to March 31, 2013.
Basic earnings per share for the year were 36.96 euro cent compared to basic earnings per share of 39.45 euro cent at March
31, 2013.
Directors' Report
Introduction
The directors present their Annual Report and audited consolidated and company financial statements of Ryanair Holdings plc
("the Company") a public limited company incorporated in the Republic of Ireland, and its subsidiary undertakings (with the
company and the subsidiaries being together "the Group") for the year ended 31 March 2014.
Review of business activities and future developments in the business
The Company operates an ultra low fares airline business and plans to continue to develop this activity by expanding its
successful low fares formula on new and existing routes. Information on the Company is set out on pages 63 to 86 of the
Annual Report. A review of the Company's operations for the year is set out on pages 86 to 105 of the Annual Report.
Results for the year
Details of the results for the year are set out in the consolidated income statement on page 145 of the Annual Report and
in the related notes to the financial statements.
Principle risks and uncertainties
Details of the principle risks and uncertainties facing the Company are set forth on pages 47 to 62 of the Annual Report.
Key performance indicators
Details of the key performance indicators relevant to the business are set forth on pages 46; 63 to 86; and 86 to 105 of
the Annual Report.
Financial risk management
Details of the Company's financial risk management objectives and policies and exposures to market risk are set forth in
Note 11 on pages 172 to 182 of the consolidated financial statements.
Share capital
The number of ordinary shares in issue at March 31, 2014 was 1,383,237,668 (2013: 1,447,051,752; 2012: 1,455,593,261).
Details of the classes of shares in issue and the related rights and obligations are more fully set out in Note 15 on pages
185 to 186 of the consolidated financial statements.
Accounting records
The directors believe that they have complied with the requirements of Section 202 of the Companies Act, 1990 with regard
to books of account by employing financial personnel with appropriate expertise and by providing adequate resources to the
financial function. The books of account of the Company are maintained at its registered office, Airside Business Park,
Swords, Co. Dublin, Ireland.
Company information
The Company was incorporated on August 23, 1996 with a registered number of 249885. It is domiciled in the Republic of
Ireland and has its registered offices at Airside Business Park, Swords, Co. Dublin, Ireland. It is a public limited
company and operates under the laws of Ireland.
Staff
At March 31, 2014, the Company had a team of 8,992 people. This compares to 9,137 people at March 31, 2013 and 8,388 people
at March 31, 2012.
Substantial interests in share capital
Details of substantial interests in the share capital of the Company which represent more than 3% of the issued share
capital are set forth on page 114 of the Annual Report. At March 31, 2014 the free float in shares was 96%.
Directors and company secretary
The names of the directors are listed on pages 106 and 107 of the Annual Report. The name of the company secretary is
listed on page 111 of the Annual Report. Details of the appointment and re-election of directors are set forth on page 16
of the Annual Report.
Interests of directors and company secretary
The directors and company secretary who held office at March 31, 2014 had no interests other than those outlined in Note 19
on page 189 of the consolidated financial statements in the shares of the Company or other group companies.
Directors' and senior executives' remuneration
The Company's policy on senior executive remuneration is to reward its executives competitively, having regard to the
comparative marketplace in Ireland and the United Kingdom, in order to ensure that they are properly motivated to perform
in the best interests of the shareholders. Details of total remuneration paid to senior key management (defined as the
executive team reporting to the Board of Directors) is set out in Note 27 on page 200 of the consolidated financial
statements.
Executive director's service contract
Ryanair entered into an employment agreement with its only executive director, Michael O'Leary on July 1, 2002 for a one
year period to June 30, 2003. Thereafter, the agreement continues for successive annual periods but may be terminated with
12 months notice by either party. Mr. O'Leary is subject to a covenant not to compete with the Company within the EU for a
period of one year after the termination of his employment with the Company. Michael O'Leary's employment agreement
contains no provisions providing for compensation on its termination.
Dividend policy
Details of the Company's dividend policy are disclosed on page 121 of the Annual Report.
Share buy-back
On June 20, 2013 the Company detailed plans to return up to E1.0 billion to shareholders over the following two years. At
March 31, 2014 E481.7 million has been returned via share buybacks and the balance (in special dividends) is to be
completed in the fiscal year 2015 (subject to profitability and shareholder approval at the AGM on September 25, 2014).
In the year ended March 31, 2014 the Company bought back 69.5 million ordinary shares (including just over 6.0 million
American Depositary Receipts (ADR's), which each represented five ordinary shares) at a total cost of E481.7 million. This
is equivalent to approximately 4.8% of the Company's issued share capital at March 31, 2013. All ordinary shares
repurchased were cancelled. Accordingly, share capital decreased by 69.5 million ordinary shares with a nominal value of
E0.4 million and the capital redemption reserve increased by a corresponding E0.4 million. The capital redemption reserve
is required to be created under Irish law to preserve permanent capital in the Parent Company.
Accountability and audit
The directors have set out their responsibility for the preparation of the financial statements on page 30 to 31. They have
also considered the going concern position of the Company and their conclusion is set out on page 28. The Board has
established an Audit Committee whose principal tasks are to consider financial reporting and internal control issues. The
Audit Committee, which consists exclusively of independent non-executive directors, meets at least quarterly to review the
financial statements of the Company, to consider internal control procedures and to liaise with internal and external
auditors. In the year ended March 31, 2014 the Audit Committee met on five occasions. On a quarterly basis the Audit
Committee receives an extensive report from the internal auditor detailing the reviews performed in the year, and a risk
assessment of the Company. This report is used by the Audit Committee and the Board of Directors, as a basis for
determining the effectiveness of internal control. The Audit Committee regularly considers the performance of internal
audit and how best financial reporting and internal control principles should be applied.
In addition, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the
independent auditor. The Audit Committee pre-approves all audit and permissible non-audit services provided by the
independent auditor.
Social, environmental and ethical report
See pages 112 to 113 of the Annual Report for details of employee and labour relations.
See pages 83 to 85 of the Annual Report for details on environmental matters.
See page 143 of the Annual Report for details of Ryanair's Code of Ethics.
Air safety
Commitment to air safety is a priority of the Company. See page 73 of the Annual Report for details.
Critical accounting policies
Details of the Company's critical accounting policies are set forth on pages 91 to 92 of the Annual Report.
Subsidiary companies
Details of the principal subsidiary undertakings are disclosed in Note 27 on page 200 of the consolidated financial
statements.
Political contributions
During the financial years ended March 31, 2014, 2013 and 2012 the Company made no political contributions which require
disclosure under the Electoral Act, 1997.
Corporate Governance Statement
The Corporate Governance Statement on pages 15 to 28 forms part of the Directors' Report.
Post balance sheet events
Details of significant post balance sheet events are set forth in Note 26 on page 199 of the consolidated financial
statements.
On April 30, 2014, the Company agreed to purchase an additional 5 Boeing 737 800 "Next Generation" aircraft for delivery in
fiscal 2016, bringing the total number of aircraft to be purchased from Boeing to 180 for delivery between fiscal year 2015
and 2019.
In the first quarter fiscal year 2015, the Company entered into 8 short-term leases between May and September 2014 to
support the capacity requirements prior to delivery of new aircraft in September 2014.
On May 19, 2014, the Company indicated that it plans to pay a special dividend of up to E520 million in the fourth quarter
of fiscal year 2015, subject to shareholder approval at its annual general meeting on September 25, 2014.
On June 10 2014 the Company issued an unsecured E850.0 million eurobond at 1.875%, fixed for 7 years. This is Ryanair's
first ever eurobond debt issuance and is part of its plans to access the debt capital markets to source low cost financing
for its new 180 Boeing 737-800 New Generation order, deliveries of which commence in September 2014.
Auditor
In accordance with Section 160(2) of the Companies Act 1963, the auditor KPMG, Chartered Accountants, will continue in
office.
Annual General Meeting
The Annual General Meeting will be held on September 25, 2014 at 9a.m. in the Radisson Blu Hotel, Dublin Airport, Co.
Dublin, Ireland.
On behalf of the Board
David Bonderman Michael O' Leary
Chairman Chief Executive
July 25, 2014
Corporate Governance Report
Ryanair has its primary listing on the Irish Stock Exchange, a standard listing on the London Stock Exchange and its
American Depositary Shares are listed on the NASDAQ. The directors are committed to maintaining the highest standards of
corporate governance and this statement describes how Ryanair has applied the main and supporting principles of the 2012 UK
Corporate Governance Code (the 2012 Code). This Report also covers the disclosure requirements set out in the corporate
governance annex to the listing rules of the Irish Stock Exchange, which supplements the 2012 Code with additional
corporate governance provisions and is also applicable to Ryanair.
A copy of the 2012 Code can be obtained from the Financial Reporting Council's website, www.frc.org.uk. The Irish Corporate
Governance Annex is available on the Irish Stock Exchange's website, www.ise.ie.
The Board of Directors (the Board)
Roles
The Board of Ryanair is responsible for the leadership, strategic direction and oversight of management of the Group. The
Board's primary focus is on strategy formulation, policy and control. It has a formal schedule of matters specifically
reserved to it for its attention, including matters such as approval of the annual budget, large capital expenditure, and
key strategic decisions.
Other matters reserved to the Board include treasury policy, internal control, audit and risk management, remuneration of
the non-executive Directors and Executive management and Corporate Governance.
The Board has delegated responsibility for the management of the Group to the Chief Executive and executive management.
There is a clear division of responsibilities between the Chairman and the Chief Executive, which is set out in writing and
has been approved by the Board.
Chairman
David Bonderman has served as the chairman of the Board since December 1996. The Chairman's primary responsibility is to
lead the Board, to ensure that it has a common purpose, is effective as a group and at individual director level and that
it upholds and promotes high standards of integrity and corporate governance. He ensures that Board agendas cover the key
strategic issues confronting the Group; that the Board reviews and approves management's plans for the Group; and that
directors receive accurate, timely, clear and relevant information.
The Chairman is the link between the Board and the Company. He is specifically responsible for establishing and maintaining
an effective working relationship with the Chief Executive, for ensuring effective and appropriate communications with
shareholders and for ensuring that members of the Board develop and maintain an understanding of the views of
shareholders.
While David Bonderman holds a number of other directorships (See details on page 106), the Board considers that these do
not interfere with the discharge of his duties to Ryanair.
Senior Independent Director
The Board has appointed James Osborne as the Senior Independent Director. James Osborne is available to shareholders who
have concerns that cannot be addressed through the Chairman, Chief Executive or Chief Financial Officer and leads the
annual Board review of the performance of the Chairman.
Company Secretary
The appointment and removal of the Company Secretary is a matter for the Board. All directors have access to the advice and
services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are complied with.
Membership
The Board consists of one executive and nine non-executive directors. It is the practice of Ryanair that a majority of the
Board comprises non-executive directors, considered by the Board to be independent, and that the Chairman is non-executive.
The Board considers the current size, composition and diversity of the Board to be within a range which is appropriate.
The composition of the Board and the principal Board Committees are set out in the table below. Brief biographies of the
directors are set out on pages 106 and 107. The Board, with the assistance of the Nomination Committee, keeps Board
composition under review to ensure that it includes the necessary mix of relevant skills and experience required to perform
its role.
Each director has extensive business experience, which they bring to bear in governing the Company. The Board considers
that, between them, the directors bring the range of skills, knowledge and experience, including international experience,
necessary to lead the Company. The Company has a Chairman with an extensive background in this industry, and significant
public company experience. Historically, the Company has always separated the roles of Chairman and Chief Executive for the
running of the business and implementation of the Board's strategy and policy.
Committees
Name Role Independent Years on board Audit Remuneration Nomination Executive Air Safety
David Bonderman Chairman Yes 18 - - Chair Chair -
Michael Horgan Non Executive Yes 13 - - - - Chair
Charles McCreevy Non Executive Yes 4 Member - - - -
Declan McKeon Non Executive Yes 4 Chair - - - -
Kyran McLaughlin Non Executive Yes 13 - Member Member -
Dick Milliken(i) Non Executive Yes 1 Member - - - -
Michael O'Leary Chief Executive No 18 - - Member Member -
Julie O'Neill Non Executive Yes 1 - Member - - -
James Osborne(ii) Senior Independent Yes 18 - Chair - Member -
Louise Phelan Non Executive Yes 1 - Member - - -
(i) Dick Milliken was appointed to the Audit Committee effective from August 5, 2013
(ii) James Osborne retired from the Audit Committee effective August 5, 2013.
Appointment
Directors can only be appointed following selection by the Nomination Committee and approval by the Board and must be
elected by the shareholders at the Annual General Meeting following their appointment. The focus of the Board, through the
Nomination Committee, is to maintain a Board comprising the relevant expertise, quality and experience required by Ryanair
to advance the Company and shareholder value. Ryanair recognise the benefits of gender diversity. Ryanair's Articles of
Association require that all of the directors retire and offer themselves for re-election within a three-year period. One
third (rounded down to the next whole number if it is a fractional number) of the directors (being the directors who have
been longest in office) will retire by rotation and be eligible for re-election at every Annual General Meeting.
Accordingly David Bonderman, James Osborne and Michael O'Leary will be offering themselves for re-election at the AGM on
September 25, 2014. In addition, Michael Cawley, who was Ryanair's Chief Operating Officer up to March 2014 will also
offer himself for appointment to the Board of Directors at the next Annual General Meeting.
In accordance with the recommendations of the 2012 Code, Declan McKeon is Chairman of the Audit Committee and James
Osborne, the senior non-executive director, is Chairman of the Remuneration Committee.
Senior Management regularly briefs the Board, including new members, in relation to operating, financial and strategic
issues concerning the Company. The Board also have direct access to senior management as required in relation to any issues
they have concerning the operation of the Company. The terms and conditions of appointment of non-executive directors are
set out in their letters of appointment, which are available for inspection at the Company's registered office during
normal office hours and at the Annual General Meeting of the Company.
Independence
The Board has carried out its annual evaluation of the independence of each of its non-executive directors, taking account
of the relevant provisions of the 2012 Code, namely, whether the directors are independent in character and judgement and
free from relationships or circumstances which are likely to affect, or could appear to affect, the directors' judgment.
The Board regards all of the directors as independent and that no one individual or one grouping exerts an undue influence
on others.
The Board has considered Kyran McLaughlin's independence given his role as Deputy Chairman and Head of Capital Markets at
Davy Stockbrokers. Davy Stockbrokers are one of Ryanair's corporate brokers and provide corporate advisory services to
Ryanair from time to time. The Board has considered the fees paid to Davy Stockbrokers for these services and believe that
they are immaterial to both Ryanair and Davy Stockbrokers given the size of each organisation's business operations and
financial results. Having considered this relationship, the Board has concluded that Kyran McLaughlin continues to be an
independent non-executive director within the spirit and meaning of the 2012 Code Rules.
The Board has also considered the independence of David Bonderman given his shareholding in Ryanair Holdings plc. As at
March 31, 2014, David Bonderman had a beneficial shareholding in the Company of 7,655,671 ordinary shares, equivalent to
0.55% of the issued share capital. Having considered this shareholding in light of the number of issued shares in Ryanair
Holdings plc and the financial interest of the director, the Board has concluded that the interest is not so material as to
breach the spirit of the independence rule contained in the 2012 Code.
The Board has further considered the independence of Messrs. David Bonderman, James Osborne, Kyran McLaughlin and Michael
Horgan as they have each served more than nine years on the Board. The Board considers that each of these directors is
independent in character and judgment as each has other significant commercial and professional commitments and each brings
his own level of senior experience gained in their fields of international business and professional practice. When
arriving at this decision, the Board has taken into account the comments made by the FRC in their report dated December,
2009 on their review of the impact and effectiveness of the Code, in particular their comment that independence is not the
primary consideration when assessing the composition of the Board, and that the over-riding consideration should be that
the Board is fit for purpose. For these reasons, and also because each director's independence is considered annually by
the Board, the Board considers it appropriate that these directors have not been offered for annual re-election as is
recommended by the 2012 Code. The Nominations Committee have confirmed to the Board that they consider the directors
offering themselves for re-election at the 2014 AGM to be independent and that they continue to effectively contribute to
the work of the Board. The Nominations Committee recommends that the Company accept the re-election of the directors.
Board Procedures
All directors have access to the advice and services of the Company Secretary and the Board has established a procedure
whereby directors wishing to obtain advice in the furtherance of their duties may take independent professional advice at
the Company's expense.
Directors meet with key executives with a particular focus on ensuring non-executive directors are fully informed on issues
of relevance to Ryanair and its operations. Extensive papers on key business issues are provided to all directors in
connection with the Board meetings. All directors are encouraged to update and refresh their skills and knowledge, for
example, through attending courses on technical areas or external briefings for non-executive directors.
The Company has Directors & Officers liability insurance in place in respect of any legal actions taken against the
directors in the course of the exercise of their duties. New non-executive directors are encouraged to meet the executive
director and senior management for briefing on the Company's developments and plans.
Meetings
The Board meets at least on a quarterly basis and in the year to March 31, 2014 the Board convened meetings on nine
occasions. Individual attendance at these meetings is set out in the table on page 24. Detailed Board papers are circulated
in advance so that Board members have adequate time and information to be able to participate fully at the meeting.
The holding of detailed regular Board meetings and the fact that many matters require Board approval, show that the running
of the Company is firmly in the hands of the Board. The non-executive directors meet periodically without executives being
present. Led by the senior independent director, the non-executive directors will meet without the Chairman present at
least annually to appraise the Chairman's performance and on such other occasions as are deemed appropriate.
Remuneration
Details of remuneration paid to the directors are set out in Note 19 to the consolidated Financial Statements on pages 189
to 191. Also, please see the Report of the Remuneration Committee on Directors' Remuneration on page 29.
Non-executive directors
Non-executive directors are remunerated by way of directors' fees. A number of non-executive directors have share options.
While the 2012 Code notes that the remuneration of the non-executive director should not include share options, the Board
believes that the quantum of options granted to non-executive directors is not so significant as to raise any issue
concerning their independence. Michael Horgan is remunerated on a consultancy basis on safety issues and also by way of
share options.
Full details are disclosed in Note 19(b) and 19(d) on pages 190 to 191 of the consolidated financial statements.
Executive director remuneration
The Chief Executive of the Company is the only executive director on the Board. In addition to his base salary he is
eligible for a performance bonus of up to 100% of salary and other bonuses dependent upon the achievement of certain
financial targets and a pension. It is considered that the significant shareholding of the Chief Executive acts to align
his interests with those of shareholders and gives him a keen incentive to perform to the highest levels.
Full details of the executive director's remuneration are set out in Note 19(a) on page 190 of the consolidated financial
statements.
Share Ownership and Dealing
Details of the directors' interests in Ryanair shares are set out in Note 19(d) on page 191 of the consolidated financial
statements.
The Board has adopted The Model Code, as set out in the Listing Rules of the Irish Stock Exchange and the UK Listing
Authority, as the code of dealings applicable to dealings in Ryanair shares by directors and relevant Company employees.
The code of dealing also includes provisions which are intended to ensure compliance with US securities laws and
regulations of the NASDAQ National market. Under the policy, directors are required to obtain clearance from the Chairman
or Chief Executive before dealing in Ryanair shares, whilst relevant Company employees must obtain clearance from
designated senior management and are prohibited from dealing in the shares during prohibited periods as defined by the
Listing Rules and at any time at which the individual is in possession of inside information (as defined in the Market
Abuse (Directive 2003/6/EC) Regulations 2005).
Board Succession and Structure
The Board plans for its own succession with guidance from the Nomination Committee. The Nomination Committee regularly
review the structure, size and composition (including the skills, knowledge and experience) required of the Board compared
to its current position with regard to the strategic needs of Ryanair and recommends changes to the Board. There is a
formal, thorough and transparent procedure for the appointment of new directors to the Board. The Nominations Committee
identifies and selects candidates on merit against objective criteria, to ensure that the Board have the skills, knowledge
and expertise required.
The Board currently comprises of ten directors, Chief Executive Officer, Michael O' Leary, is the only executive director.
The nine non-executive directors include Chairman David Bonderman. Biographies of all current directors are set out on
pages 106 of this report. Ryanair considers that the Board has the correct balance and depth of skills, knowledge,
expertise and experience to optimally lead the Company and that all directors give adequate time to the performance of
their duties and responsibilities.
Ryanair considers that all directors discharge their directorial duties with the objectivity and impartiality they have
demonstrated since commencing their respective roles and has determined that each of the non-executive directors is
independent. In reaching that conclusion, Ryanair considered the character, judgement, objectivity and integrity of each
director and had due regard for the 2012 Code. Ryanair continually endeavors to maintain the quality and independence of
its Board.
Board Committees
The Board of Directors has established a number of committees, including the following:
Executive Committee
The Board of Directors established the Executive Committee in August 1996. The Executive Committee can exercise the powers
exercisable by the full Board of Directors in circumstances in which action by the Board of Directors is required but it is
impracticable to convene a meeting of the full Board of Directors. Messrs. David Bonderman, Michael O'Leary, Kyran
McLaughlin and James Osborne are the members of the Executive Committee.
Audit Committee
The Board of Directors established the Audit Committee in September 1996.
Names and qualifications of members of the Audit Committee
The Audit Committee currently comprises three independent, for purposes of the listing rules of the NASDAQ and the U.S.
federal securities laws, non-executive directors, Mr Declan McKeon (Chairman), Mr Charles McCreevy and Mr Richard Milliken.
The Board has determined that Mr Declan McKeon is the Committee's financial expert. It can be seen from the directors'
biographies appearing on page 106, that the members of the committee bring to it a wide range of experience and expertise,
much of which is particularly appropriate for membership of the Audit Committee.
Number of Audit Committee meetings
The Committee met five times during the year ended March 31, 2014. Individual attendance at these meetings is set out in
the table on page 24. The Chief Financial Officer, Finance Director, Financial Controller and the Head of Internal Audit
normally attend meetings of the Committee. The external auditors attend as required and have direct access to the
Committee Chairman at all times. The Committee also meets separately at least once a year with the external auditors and
with the Head of Internal Audit without executive management being present. The Head of Internal Audit has direct access
to the Audit Committee Chairman at all times.
Summary of the role of the Audit Committee
The role and responsibilities of the Audit Committee are set out in its written terms of reference, which are available on
the Company's website www.ryanair.com, and include:
· monitoring the integrity of the financial statements of the Group and any formal announcements relating to the
Group's financial performance, profit guidance and reviewing significant financial reporting judgments contained in them;
· considering significant issues in relation to the financial statements, having regard to matters communicated to it
by the auditors;
· reviewing the interim and annual financial statements and annual report before submission to the Board, including
advising the Board whether, taken as a whole, the content of the annual report and Form 20F is fair balanced and
understandable and provides the information necessary for shareholders to assess the company's performance, business model
and strategy;
· reviewing the effectiveness of the Group's internal financial controls and risk management systems;
· reviewing Turnbull Risk Management reports completed by management;
· monitoring and reviewing the effectiveness of the Group's Internal auditors;
· considering and making recommendations to the Board in relation to the appointment, reappointment and removal of the
external auditors and approving their terms of engagement;
· reviewing with the external auditors the plans for and scope of each annual audit, the audit procedures to be
utilised and the results of the audit;
· approving the remuneration of the external auditors, for audit and non audit services and ensuring the level of fees
is appropriate to enable an adequate audit to be conducted;
· assessing annually the independence and objectivity of the external auditors and the effectiveness of the audit
process, taking into consideration relevant professional and regulatory requirements and the relationship with the external
auditors as a whole, including the provision of any non audit services;
· reviewing the Group's arrangements for its employees to raise concerns, in confidence, about possible wrongdoing in
financial reporting or other matters and ensuring that these arrangements allow proportionate and independent investigation
of such matters and appropriate follow up action.
· The terms of Reference of the Audit Committee are reviewed annually.
These responsibilities of the Committee are discharged in the following ways:
· The Committee reviews the interim and annual reports as well as any formal announcements relating to the financial
statements and guidance before submission to the Board. The review focuses particularly on any changes in accounting policy
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