REG - Ryanair Holdings PLC - Annual Financial Report <Origin Href="QuoteRef">RYA.I</Origin> - Part 10
06/09/2014 22:39
- Part 10: For the preceding part double click ID:nRSd7552Ni
Shares has been made by the holder thereof and where information which has been requested by the directors in
accordance with the Articles has not been provided within specified time periods and, secondly, have regard to the
chronological order in which details of Affected Shares have been entered in the Separate Register and, accordingly, treat
the most recently registered Affected Shares as Restricted Shares to the extent necessary. Transfers of Affected Shares to
Affiliates (as that expression is defined in the Articles) will not affect the chronological order of entry in the Separate
Register for this purpose. The directors do however have the discretion to apply another basis of selection if, in their
sole opinion, that would be more equitable. Where the directors have resolved to treat Affected Shares held by any
particular stockholder or stockholders as Restricted Shares (i) because such Affected Shares have given rise to the need to
take such action or (ii) because of a change of law or a requirement or direction of a regulatory authority necessitating
such action (see above), such powers may be exercised irrespective of the date upon which such Affected Shares were entered
in the Separate Register.
After having initially resolved to set the maximum level at 49.0%, the directors increased the maximum level to 49.9% on
May 26, 1999, after the number of Affected Shares exceeded the initial limit. This maximum level could be reduced if it
becomes necessary for the directors to exercise these powers in the circumstances described above. The decision to make any
such reduction or to change the Permitted Maximum from time to time will be published in at least one national newspaper in
Ireland and in any country in which the Ordinary Shares or ADRs are listed. The relevant notice will specify the provisions
of the Articles that apply to Restricted Shares and the name of the person or persons who will answer queries relating to
Restricted Shares on behalf of Ryanair Holdings. The directors shall publish information as to the number of shares held by
EU nationals annually.
In an effort to increase the percentage of its share capital held by EU nationals, on June 26, 2001, Ryanair Holdings
instructed the Depositary to suspend the issuance of new ADSs in exchange for the deposit of Ordinary Shares until further
notice to its shareholders. Holders of Ordinary Shares cannot convert their Ordinary Shares into ADRs during such
suspension, and there can be no assurance that the suspension will ever be lifted.
As a further measure to increase the percentage of Ordinary Shares held by EU nationals, on February 7, 2002, the Company
issued a notice to shareholders to the effect that any purchase of Ordinary Shares by a non-EU national after such date
will immediately result in the issue of a Restricted Share Notice to such non-EU national Purchaser. The Restricted Share
Notice compels the non-EU national purchaser to sell the Affected Shares to an EU national within 21 days of the date of
issuance. In the event that any such non-EU national shareholder does not sell its Ordinary Shares to an EU national within
the specified time period, the Company can then take legal action to compel such a sale. As a result, non-EU nationals are
effectively barred from purchasing Ordinary Shares for as long as these restrictions remain in place. There can be no
assurance that these restrictions will ever be lifted.
As an additional measure, to ensure the percentage of shares held by EU nationals remains at least 50.1%, at the
extraordinary general meeting held on April 19, 2012, the Company obtained a new repurchase authority which will enable the
repurchase of ADRs for up to 5% of the issued share capital of the Company traded on the NASDAQ. This authority was renewed
at the Annual General Meeting held on September 20, 2013.
Concerns about the foreign ownership restrictions described above could result in the exclusion of Ryanair from certain
stock tracking indices. Any such exclusion may adversely affect the market price of the Ordinary Shares and ADRs. See also
"Item 3. Risk Factors--Risks Related to Ownership of the Company's Shares or ADRs-EU Rules Impose Restrictions on the
Ownership of Ryanair Holdings' Ordinary Shares by Non-EU Nationals and the Company has Instituted a Ban on the Purchase of
Ordinary Shares by Non-EU Nationals" above.
As of June 30, 2014, EU nationals owned at least 52.8% of Ryanair Holdings' Ordinary Shares (assuming conversion of all
outstanding ADRs into Ordinary Shares). Ryanair continuously monitors the ownership status of its Ordinary Shares, which
changes on a daily basis.
TAXATION
Irish Tax Considerations
The following is a discussion of certain Irish tax consequences of the purchase, ownership and disposition of Ordinary
Shares or ADSs. This discussion is based upon tax laws and practice of Ireland at the date of this document, which are
subject to change, possibly with retroactive effect. Particular rules may apply to certain classes of taxpayers (such as
dealers in securities) and this discussion does not purport to deal with the tax consequences of purchase, ownership or
disposition of the relevant securities for all categories of investors.
The discussion is intended only as a general guide based on current Irish law and practice and is not intended to be, nor
should it be considered to be, legal or tax advice to any particular investor or stockholder. Accordingly, current
stockholders or potential investors should satisfy themselves as to the overall tax consequences by consulting their own
tax advisers.
Dividends. If Ryanair Holdings pays dividends or makes other relevant distributions, the following is relevant:
Withholding Tax. Unless exempted, a withholding at the standard rate of income tax (currently 20%) will apply to dividends
or other relevant distributions paid by an Irish resident company. The withholding tax requirement will not apply to
distributions paid to certain categories of Irish resident stockholders or to distributions paid to certain categories of
non-resident stockholders.
The following Irish resident stockholders are exempt from withholding if they make to the Company, in advance of payment of
any relevant distribution, an appropriate declaration of entitlement to exemption:
· Irish resident companies;
· Pension schemes approved by the Irish Revenue Commissioners ("Irish Revenue");
· Qualifying fund managers or qualifying savings managers;
· Personal Retirement Savings Account ("PRSA") administrators who receive the relevant distribution as income arising
in respect of PRSA assets;
· Qualifying employee share ownership trusts;
· Collective investment undertakings;
· Tax-exempt charities;
· Designated brokers receiving the distribution for special portfolio investment accounts;
· Any person who is entitled to exemption from income tax under Schedule F on dividends in respect of an investment in
whole or in part of payments received in respect of a civil action or from the Personal Injuries Assessment Board for
damages in respect of mental or physical infirmity;
· Certain qualifying trusts established for the benefit of an incapacitated individual and/or persons in receipt of
income from such a qualifying trust;
· Any person entitled to exemption to income tax under Schedule F by virtue of Section 192(2) Taxes Consolidation Act
("TCA") 1997;
· Unit trusts to which Section 731(5)(a) TCA 1997 applies; and
· Certain Irish Revenue-approved amateur and athletic sport bodies.
The following non-resident stockholders are exempt from withholding if they make to the Company, in advance of payment of
any dividend, an appropriate declaration of entitlement to exemption:
· Persons (other than a company) who (i) are neither resident nor ordinarily resident in Ireland and (ii) are resident
for tax purposes in (a) a country which has signed a tax treaty with Ireland (a "tax treaty country") or (b) an EU member
state other than Ireland;
· Companies not resident in Ireland which are resident in an EU member state or a tax treaty country, by virtue of the
law of an EU member state or a tax treaty country and are not controlled, directly or indirectly, by Irish residents;
· Companies not resident in Ireland which are directly or indirectly controlled by a person or persons who are, by
virtue of the law of a tax treaty country or an EU member state, resident for tax purposes in a tax treaty country or an EU
member state other than Ireland and which are not controlled directly or indirectly by persons who are not resident for tax
purposes in a tax treaty country or EU member state;
· Companies not resident in Ireland the principal class of shares of which is substantially and regularly traded on a
recognized stock exchange in a tax treaty country or an EU member state including Ireland or on an approved stock exchange;
or
· Companies not resident in Ireland that are 75% subsidiaries of a single company, or are wholly-owned by two or more
companies, in either case the principal classes of shares of which is or are substantially and regularly traded on a
recognized stock exchange in a tax treaty country or an EU member state including Ireland or on an approved stock
exchange.
In the case of an individual non-resident stockholder resident in an EU member state or tax treaty country, the declaration
must be accompanied by a current certificate of tax residence from the tax authorities in the stockholder's country of
residence. In the case of both an individual and corporate non-resident stockholder resident in an EU member state or tax
treaty country the declaration also must contain an undertaking by the individual or corporate non-resident stockholder
that he, she or it will advise the Company accordingly if he, she or it ceases to meet the conditions to be entitled to the
DWT exemption. No declaration is required if the stockholder is a 5% parent company in another EU member state in
accordance with section 831 TCA 1997. Neither is a declaration required on the payment by a company resident in Ireland to
another company so resident if the company making the dividend is a 51% subsidiary of that other company.
American Depositary Receipts. Special arrangements with regard to the dividend withholding tax obligation apply in the case
of Irish companies using ADRs through U.S. depositary banks that have been authorized by the Irish Revenue. Such banks,
which receive dividends from the company and pass them on to the U.S. ADS holders beneficially entitled to such dividends,
will be allowed to receive and pass on the gross dividends (i.e., before withholding) based on an "address system" where
the recorded addresses of such holder, as listed in the depositary bank's register of depositary receipts, is in the United
States.
Taxation on Dividends. Companies resident in Ireland other than those taxable on receipt of dividends as trading income are
exempt from corporation tax on distributions received on Ordinary Shares from other Irish resident companies. Stockholders
that are "close" companies for Irish taxation purposes may, however, be subject to a 20% corporation tax surcharge on
undistributed investment income.
Individual stockholders who are resident or ordinarily resident in Ireland are subject to income tax on the gross dividend
at their marginal tax rate, but are entitled to a credit for the tax withheld by the company paying the dividend. The
dividend will also be subject to the universal social charge. An individual stockholder who is not liable or not fully
liable for income tax by reason of exemption or otherwise may be entitled to receive an appropriate refund of tax withheld.
A charge to Irish social security taxes can also arise for such individuals on the amount of any dividend received from the
Company.
Except in certain circumstances, a person who is neither resident nor ordinarily resident in Ireland and is entitled to
receive dividends without deductions is not liable for Irish tax on the dividends. Where a person who is neither resident
nor ordinarily resident in Ireland is subject to withholding tax on the dividend received due to not benefiting from any
exemption from such withholding, the amount of that withholding will generally satisfy such person's liability for Irish
tax.
Capital Gains Tax. A person who is either resident or ordinarily resident in Ireland will generally be liable for Irish
capital gains tax on any gain realized on the disposal of the Ordinary Shares or ADSs. The current capital gains tax rate
is 33%. A person who is neither resident nor ordinarily resident in Ireland and who does not carry on a trade in Ireland
through a branch or agency will not be subject to Irish capital gains tax on the disposal of the Ordinary Shares or ADSs.
Irish Capital Acquisitions Tax. A gift or inheritance of the Ordinary Shares or ADSs will be within the charge to Irish
Capital Acquisitions Tax ("CAT") notwithstanding that the donor or the donee/successor in relation to such gift or
inheritance is resident outside Ireland. CAT is charged at a rate of 33% above a tax-free threshold. This tax-free
threshold is determined by the amount of the current benefit and of previous benefits taken since December 5, 1991, as
relevant, within the charge to CAT and the relationship between the donor and the successor or donee. Gifts and
inheritances between spouses (and in certain cases former spouses) are not subject to CAT.
In a case where an inheritance or gift of the Ordinary Shares or ADSs is subject to both Irish CAT and foreign tax of a
similar character, the foreign tax paid may in certain circumstances be credited in whole or in part against the Irish
tax.
Irish Stamp Duty. It is assumed for the purposes of this paragraph that ADSs are dealt in on a recognized stock exchange in
the United States (NASDAQ is a recognized stock exchange in the United States for this purpose). Under current Irish law,
no stamp duty will be payable on the acquisition of ADSs by persons purchasing such ADSs or on any subsequent transfer of
ADSs. A transfer of Ordinary Shares (including transfers effected through Euroclear U.K. & Ireland Limited) wherever
executed and whether on sale, in contemplation of a sale or by way of a gift, will be subject to duty at the rate of 1% of
the consideration given or, in the case of a gift or if the purchase price is inadequate or unascertainable, on the market
value of the Ordinary Shares. Transfers of Ordinary Shares that are not liable for duty at the rate of 1% (e.g., transfers
under which there is no change in beneficial ownership) may be subject to a fixed duty of E12.50.
The Irish Revenue treats a conversion of Ordinary Shares to ADSs made in contemplation of a sale or a change in beneficial
ownership (under Irish law) as an event subject to stamp duty at a rate of 1%. The Irish Revenue has indicated that a
re-conversion of ADSs to Ordinary Shares made in contemplation of a sale or a change in beneficial ownership (under Irish
law) will not be subject to a stamp duty. However, the subsequent sale of the re-converted Ordinary Shares will give rise
to Irish stamp duty at the 1% rate. If the transfer of the Ordinary Shares is a transfer under which there is no change in
the beneficial ownership (under Irish law) of the Ordinary Shares being transferred, nominal stamp duty only will be
payable on the transfer. Under Irish law, it is not clear whether the mere deposit of Ordinary Shares for ADSs or ADSs for
Ordinary Shares would be deemed to constitute a change in beneficial ownership. Accordingly, it is possible that holders
would be subject to stamp duty at the 1% rate when merely depositing Ordinary Shares for ADSs or ADSs for Ordinary Shares
and, consequently, the Depositary reserves the right in such circumstances to require payment of stamp duty at the rate of
1% from the holders.
The person accountable for payment of stamp duty is the transferee or, in the case of a transfer by way of a gift or for a
consideration less than the market value, all parties to the transfer. Stamp duty is normally payable within 30 days after
the date of execution of the transfer. Late or inadequate payment of stamp duty will result in liability for interest,
penalties and fines.
United States Federal Income Tax Considerations
Except as described below under the heading "Non-U.S. Holders," the following is a summary of certain U.S. federal income
tax considerations relating to the purchase, ownership and disposition of Ordinary Shares or ADRs by a holder that is a
citizen or resident of the United States, a U.S. domestic corporation or otherwise subject to U.S. federal income tax on a
net income basis in respect of the Ordinary Shares or the ADRs ("U.S. Holders"). This summary does not purport to be a
comprehensive description of all of the tax considerations that may be relevant to a decision to purchase the Ordinary
Shares or the ADRs. In particular, the summary deals only with U.S. Holders that will hold Ordinary Shares or ADRs as
capital assets and generally does not address the tax treatment of U.S. Holders that may be subject to special tax rules
such as banks, insurance companies, dealers in securities or currencies, partnerships or partners therein, entities subject
to the branch profits tax, traders in securities electing to mark to market, persons that own 10% or more of the stock of
the Company, U.S. Holders whose "functional currency" is not U.S. dollars or persons that hold the Ordinary Shares or the
ADRs as part of an integrated investment (including a "straddle") consisting of the Ordinary Shares or the ADRs and one or
more other positions.
Holders of the Ordinary Shares or the ADRs should consult their own tax advisors as to the U.S. or other tax consequences
of the purchase, ownership, and disposition of the Ordinary Shares or the ADRs in light of their particular circumstances,
including, in particular, the effect of any foreign, state or local tax laws.
For U.S. federal income tax purposes, holders of the ADRs will be treated as the owners of the Ordinary Shares represented
by those ADRs.
Taxation of Dividends
Dividends, if any, paid with respect to the Ordinary Shares, including Ordinary Shares represented by ADRs, will be
included in the gross income of a U.S. Holder when the dividends are received by the holder or the Depositary. Such
dividends generally should not be eligible for the "dividends received" deduction allowed to U.S. corporations in respect
of dividends from a domestic corporation. Dividends paid in euro will be includible in the income of a U.S. Holder in a
U.S. dollar amount calculated by reference to the exchange rate in effect on the day they are received by the holder or the
Depositary. U.S. Holders generally should not be required to recognize any foreign currency gain or loss to the extent such
dividends paid in Euro are converted into U.S. dollars immediately upon receipt.
Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an
individual on or post January 1, 2013 with respect to the Ordinary Shares or ADRs will be subject to taxation at a maximum
rate of 20% if the dividends are "qualified dividends" (apart from the Medicare contribution tax referred to below), and
the individual has taxable income that exceeds certain thresholds. Dividends paid on the Ordinary Shares or ADRs will be
treated as qualified dividends if (i) the issuer is eligible for the benefits of a comprehensive income tax treaty with the
United States that the Internal Revenue Service has approved for the purposes of the qualified dividend rules and (ii) the
Company was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the
dividend is paid, a passive foreign investment company (a "PFIC"). The income tax treaty between Ireland and the United
States has been approved for the purposes of the qualified dividend rules. Effective January 1, 2013, a Medicare
contribution tax of 3.8% may also be applicable to U.S. individuals, estates and trusts. Based on the Company's audited
financial statements and relevant market data, the Company believes that it was not treated as a PFIC for U.S. federal
income tax purposes with respect to its 2013/14 taxable year. In addition, based on the Company's audited financial
statements and its current expectations regarding the value and nature of its assets, the sources and nature of its income,
and relevant market data, the Company does not anticipate becoming a PFIC for its 2014/15 taxable year.Under the
U.S.-Ireland Income Tax Treaty currently in effect, in the event the Company were to pay any dividend, the tax credit
attaching to the dividend (as used herein the "Tax Credit"; see "-Irish Tax Considerations") generally will be treated as a
foreign income tax eligible for credit against such U.S. Holder's United States federal income tax liability, subject to
generally applicable limitations and conditions. Any such dividend paid by the Company to such U.S. Holder will constitute
income from sources outside the United States for foreign tax credit purposes, and generally will constitute "passive
category" income for such purposes.
Foreign tax credits may not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions
in securities.
U.S. Holders should consult their own tax advisors concerning the implications of these rules in light of their particular
circumstances.
Distributions of Ordinary Shares that are made as part of a pro rata distribution to all stockholders generally will not be
subject to U.S. federal income tax.
Taxation of Capital Gains
Sale or Disposition of Ordinary Shares or ADRs. Gains or losses realized by a U.S. Holder on the sale or other disposition
of ADRs generally will be treated for U.S. federal income tax purposes as capital gains or losses, which generally will be
long-term capital gains or losses if the ADRs have been held for more than one year. The net amount of long-term capital
gain recognized by an individual holder post January 1, 2013 generally is subject to taxation at a maximum rate of 20%.
Effective January 1, 2013, a Medicare contribution tax of 3.8% may also be applicable to U.S. individuals, estates and
trusts. Gains realized by a U.S. Holder generally will constitute income from sources within the United States for foreign
tax credit purposes and generally will constitute "passive category" income for such purposes. The deductibility of capital
losses, in excess of capital gains, is subject to limitations.
Deposits and withdrawals of Ordinary Shares by U.S. Holders in exchange for ADRs will not result in the realization of gain
or loss for U.S. federal income tax purposes.
Non-U.S. Holders. A holder of Ordinary Shares or ADRs that is, with respect to the United States, a foreign corporation or
a nonresident alien individual (a "Non-U.S. Holder") generally will not be subject to U.S. federal income or withholding
tax on dividends received on such Ordinary Shares or ADRs unless such income is effectively connected with the conduct by
such holder of a trade or business in the United States. A Non-U.S. Holder of ADRs or Ordinary Shares will not be subject
to U.S. federal income tax or withholding tax in respect of gain realized on the sale or other disposition of Ordinary
Shares or ADRs, unless (i) such gain is effectively connected with the conduct by such holder of a trade or business in the
United States or (ii) in the case of gain realized by an individual Non-U.S. Holder, such Non-U.S. Holder is present in the
United States for 183 days or more in the taxable year of the sale and certain other conditions are met.
DOCUMENTS ON DISPLAY
Copies of Ryanair Holdings' Articles may be examined at its registered office and principal place of business at its
Corporate Head Office, Airside Business Park, Swords, County Dublin, Ireland.
Ryanair Holdings also files reports, including annual reports on Form 20-F, periodic reports on Form 6-K and other
information, with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may
read and copy any materials filed with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
GENERAL
Ryanair is exposed to market risks relating to fluctuations in commodity prices, interest rates and currency exchange
rates. The objective of financial risk management at Ryanair is to minimize the negative impact of commodity price,
interest rate and foreign exchange rate fluctuations on the Company's earnings, cash flows and equity.
To manage these risks, Ryanair uses various derivative financial instruments, including cross currency interest rate swaps,
foreign currency forward contracts and commodity forwards. These derivative financial instruments are generally held to
maturity and are not actively traded. The Company enters into these arrangements with the goal of hedging its operational
and balance sheet risk. However, Ryanair's exposure to commodity price, interest rate and currency exchange rate
fluctuations cannot be neutralized completely.
In executing its risk management strategy, Ryanair currently enters into forward contracts for the purchase of some of the
jet fuel (jet kerosene) that it expects to use. It also uses foreign currency forward contracts intended to reduce its
exposure to risks related to foreign currencies, principally the U.S. dollar. Furthermore, it enters into interest rate
contracts with the objective of fixing certain borrowing costs and hedging principal repayments, particularly those
associated with the purchase of new Boeing 737-800s. Ryanair is also exposed to the risk that the counterparties to its
derivative financial instruments may not be creditworthy. Were a counterparty to default on its obligations under any of
the instruments described below, Ryanair's economic expectations when entering into these arrangements might not be
achieved and its financial condition could be adversely affected. Transactions involving derivative financial instruments
are also relatively illiquid as compared with those involving other kinds of financial instruments. It is Ryanair's policy
not to enter into transactions involving financial derivatives for speculative purposes.
The following paragraphs describe Ryanair's fuel hedging, foreign currency and interest rate swap arrangements and analyze
the sensitivity of the market value, earnings and cash flows of the financial instruments to hypothetical changes in
commodity prices, interest rates and exchange rates as if these changes had occurred at March 31, 2014. The range of
changes selected for this sensitivity analysis reflects Ryanair's view of the changes that are reasonably possible over a
one-year period.
FUEL PRICE EXPOSURE AND HEDGING
Fuel costs constitute a substantial portion of Ryanair's operating expenses (approximately 46.0% and 45.3% of such expenses
in fiscal years 2014 and 2013, respectively, after taking into account Ryanair's fuel hedging activities). Ryanair engages
in fuel price hedging transactions from time to time, pursuant to which Ryanair and a counterparty agree to exchange
payments equal to the difference between a fixed price for a given quantity of jet fuel and the market price for such
quantity of jet fuel at a given date in the future, with Ryanair receiving the amount of any excess of such market price
over such fixed price and paying to the counterparty the amount of any deficit of such fixed price under such market
price.
Ryanair has historically entered into arrangements providing for substantial protection against fluctuations in fuel
prices, generally through forward contracts covering periods of up to 18 months of anticipated jet fuel requirements. See
"Item 3. Key Information-Risk Factors-Risks Related to the Company-Changes in Fuel Costs and Fuel Availability Affect the
Company's Results and Increases the Likelihood that the Company May Incur Losses" for additional information on recent
trends in fuel costs and the Company's related hedging activities, as well as certain associated risks. See also "Item 5.
Operating and Financial Review and Prospects-Fiscal Year 2014 Compared with Fiscal Year 2013-Fuel and Oil." As of July 25,
2014, Ryanair had entered into forward jet fuel (jet kerosene) contracts covering approximately 90% of its estimated
requirements for the fiscal year ending March 31, 2015 at prices equivalent to approximately $950 per metric ton. In
addition, as of July 25, 2014, Ryanair had entered into forward jet fuel (jet kerosene) contracts covering approximately
55% of its estimated requirements for the first half of the fiscal year ending March 31, 2016 at prices equivalent to
approximately $950 per metric ton, and had not entered into any jet fuel hedging contracts with respect to its expected
fuel purchases beyond that period.
While these hedging strategies can cushion the impact on Ryanair of fuel price increases in the short term, in the medium
to longer-term, such strategies cannot be expected to eliminate the impact on the Company of an increase in the market
price of jet fuel. The unrealized gains on outstanding forward agreements at March 31, 2014 and 2013, based on their fair
values, amounted to E17.2 million and E34.9 million (gross of tax), respectively. Based on Ryanair's fuel consumption for
the 2014 fiscal year, a change of $1.00 in the average annual price per metric ton of jet fuel would have caused a change
of approximately E2.0 million in Ryanair's fuel costs. See "Item 3. Key Information-Risk Factors-Risks Related to the
Company-Changes in Fuel Costs and Fuel Availability Affect the Company's Results and Increase the Likelihood that the
Company May Incur Losses."
Under IFRS, the Company's fuel forward contracts are treated as cash-flow hedges of forecast fuel purchases for risks
arising from the commodity price of fuel. The contracts are recorded at fair value in the balance sheet and are re-measured
to fair value at the end of each fiscal period through equity to the extent effective, with any ineffectiveness recorded
through the income statement. The Company has considered these hedges to be highly effective in offsetting variability in
future cash flows arising from fluctuations in the market price of jet fuel because the jet fuel forward contracts
typically relate to the same quantity, time, and location of delivery as the forecast jet fuel purchase being hedged and
the duration of the contracts is typically short. Accordingly, the quantification of the change in expected cash flows of
the forecast jet fuel purchase is based on the jet fuel forward price, and in the 2014 fiscal year, the Company recorded no
hedge ineffectiveness within earnings. The Company has recorded no level of ineffectiveness on its jet fuel hedges in its
income statements to date. In the 2014 fiscal year, the Company recorded a positive fair-value adjustment of E15.0 million
(net of tax) within accumulated other comprehensive income in respect of jet fuel forward contracts, and in the 2013 fiscal
year, the Company recorded a positive fair-value adjustment of E30.6 million (net of tax) within accumulated other
comprehensive income.
FOREIGN CURRENCY EXPOSURE AND HEDGING
In recent years, Ryanair's revenues have been denominated primarily in two currencies, the euro and U.K. pound sterling.
The U.K. pound sterling and the euro accounted for approximately 25% and 63%, respectively, of Ryanair's total revenues in
both the 2014 and 2013 fiscal years. As Ryanair reports its results in euro, the Company is not exposed to any material
currency risk as a result of its euro-denominated activities. Ryanair's operating expenses are primarily denominated in
euro, U.K. pounds sterling and U.S. dollars. Ryanair's operations can be subject to significant direct exchange rate risks
between the euro and the U.S. dollar because a significant portion of its operating costs (particularly those related to
fuel purchases) is incurred in U.S. dollars, while none of its revenues are denominated in U.S. dollars. Appreciation of
the euro against the U.S. dollar positively impacts Ryanair's operating income because the euro equivalent of its U.S.
dollar operating costs decreases, while depreciation of the euro against the U.S. dollar negatively impacts operating
income. It is Ryanair's policy to hedge a significant portion of its exposure to fluctuations in the exchange rate between
the U.S. dollar and the euro. From time to time, Ryanair hedges its operating surpluses and shortfalls in U.K. pound
sterling. Ryanair matches certain U.K. pound sterling costs with U.K. pound sterling revenues and may choose to sell any
surplus U.K. pound sterling cash flows for euro.
Hedging associated with the income statement. In the 2014 and 2013 fiscal years, the Company entered into a series of
forward contracts, principally euro/U.S. dollar forward contracts to hedge against variability in cash flows arising from
market fluctuations in foreign exchange rates associated with its forecast fuel, maintenance and insurance costs and
euro/U.K. pound sterling forward contracts to hedge certain surplus U.K. pound sterling cash flows. At March 31, 2014, the
total unrealized loss relating to these contracts amounted to E51.2 million, compared to a E47.4 million unrealized gain at
March 31, 2013.
Under IFRS, these foreign currency forward contracts are treated as cash-flow hedges of forecast U.S. dollar and U.K. pound
sterling purchases to address the risks arising from U.S. dollar and U.K. pound sterling exchange rates. The derivatives
are recorded at fair value in the balance sheet and are re-measured to fair value at the end of each reporting period
through equity to the extent effective, with ineffectiveness recorded through the income statement. Ryanair considers these
hedges to be highly effective in offsetting variability in future cash flows arising from fluctuations in exchange rates,
because the forward contracts are timed so as to match exactly the amount, currency and maturity date of the forecast
foreign currency-denominated expense being hedged. In the 2014 fiscal year, the Company recorded a negative fair-value
adjustment of E86.3 million (net of tax) within accumulated other comprehensive income in respect of these contracts, as
compared to a negative adjustment of E42.3 million in the 2013 fiscal year.
Hedging associated with the balance sheet. In prior years, the Company entered into a series of cross currency interest
rate swaps to manage exposures to fluctuations in foreign exchange rates of US dollar-denominated floating rate borrowings,
together with managing the exposures to fluctuations in interest rates on these US dollar-denominated floating rate
borrowings. Cross currency interest rate swaps are primarily used to convert a portion of the Company's U.S.
dollar-denominated debt to euro and floating rate interest exposures into fixed rate exposures and are set so as to match
exactly the critical terms of the underlying debt being hedged (i.e. notional principal, interest rate settings, re-pricing
dates). These are all classified as cash-flow hedges of the forecasted U.S. dollar variable interest payments on the
Company's underlying debt and have been determined to be highly effective in achieving offsetting cash flows. Accordingly,
no ineffectiveness has been recorded in the income statement relating to these hedges.
At March 31, 2014, the fair value of the cross currency interest rate swap agreements relating to this U.S.
dollar-denominated floating rate debt was represented by a loss of E25.9 million (gross of tax) compared to a loss of E11.7
million in fiscal 2013. In the 2014 fiscal year, the Company recorded a negative fair-value adjustment of E12.4 million
(net of tax), compared to a loss of E3.7 million in fiscal 2013, within accumulated other comprehensive income in respect
of these contracts.
Hedging associated with capital expenditures. During the 2014 and 2013 fiscal years, the Company also entered into a series
of euro/U.S. dollar contracts to hedge against changes in the fair value of aircraft purchase commitments under the Boeing
contracts, which arise from fluctuations in the euro/U.S. dollar exchange rates. There were no such contracts in effect at
March 31, 2013. At March 31, 2014, the total unrealized loss relating to these contracts amounted to E15.0 million.
Under IFRS, the Company generally accounts for these contracts as either cash-flow hedges or fair-value hedges. Fair-value
hedges are recorded in the balance sheet at fair value. Any gains or losses arising on these instruments, as well as the
related gain or loss on the underlying aircraft purchase commitment, are recorded in the balance sheet. Any related
ineffectiveness is measured by the amount by which these adjustments to earnings do not match. Cash-flow hedges are
recorded at fair value in the balance sheet and are re-measured to fair value at the end of the financial period through
equity to the extent effective, with any ineffectiveness recorded through the income statement. The Company has found these
hedges to be highly effective in offsetting changes in the fair value of the aircraft purchase commitments arising from
fluctuations in exchange rates because the forward exchange contracts are always for the same amount, currency and maturity
dates as the corresponding aircraft purchase commitments.
At March 31, 2014, the total unrealized losses relating to these contracts amounted to E15.0 million, while at March 31,
2013 unrealized gains amounted to Enil. Under IFRS, the Company recorded fair-value adjustments of E13.1 million and
fair-value adjustments of Enil for cash-flow hedges in the 2014 and 2013 fiscal years, respectively. No amounts were
recorded for such fair-value hedges from other accumulated comprehensive income in the 2014 and 2013 fiscal years.
Holding other variables constant, if there were an adverse change of 10% in relevant foreign currency exchange rates, the
market value of Ryanair's foreign currency contracts outstanding at March 31, 2014 would decrease by approximately E294.0
million (net of tax), all of which would ultimately impact earnings when such contracts mature.
INTEREST RATE EXPOSURE AND HEDGING
The Company's purchase of 246 of the 297 Boeing 737-800 aircraft in the fleet as of March 31, 2014 has been funded by bank
financing in the form of loans supported by a loan guarantee from Ex-Im Bank (with respect to 210 aircraft), JOLCOs and
commercial debt. With respect to these 246 aircraft, at March 31, 2014, the Company had outstanding cumulative borrowings
under these facilities of E3,083.6 million with a weighted average interest rate of 2.49%. See "Item 5. Operating and
Financial Review and Prospects-Liquidity and Capital Resources-Capital Resources" for additional information on these
facilities and the related swaps, including a tabular summary of the "Effective Borrowing Profile" illustrating the effect
of the swap transactions (each of which is with an established international financial counterparty) on the profile of
Ryanair's aircraft-related debt at March 31, 2014. At March 31, 2014, the fair value of the interest rate swap agreements
relating to this floating rate debt was represented by a loss of E72.4 million (gross of tax), as compared with a loss of
E81.9 million at March 31, 2013. See Note 11 to the consolidated financial statements included in Item 18 for additional
information.
If Ryanair had not entered into such derivative agreements, a plus or minus one percentage point movement in interest rates
would impact the fair value of this liability by approximately E16.7 million. The earnings and cash-flow impact of any such
change in interest rates would have been approximately plus or minus E18 million in the 2014 fiscal year.
Item 12. Description of Securities Other than Equity Securities
Holders of ADSs are required to pay certain fees and expenses. The table below sets forth the fees and expenses which,
under the deposit agreement between the Company and The Bank of New York Mellon, holders of ADRs can be charged or be
deducted from dividends or other distributions on the deposited shares. The Company and The Bank of New York Mellon have
also entered into a separate letter agreement, which has the effect of reducing some of the fees listed below.
Persons depositing or withdrawing ADSs must pay: For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs). Issuance of ADSs, including issuances resulting from a distribution of common shares or rights or other property.
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates.
$0.02 (or less) per ADS. Any cash distribution to the holder of the ADSs.
$0.02 (or less) per ADS per calendar year. Depositary services.
A fee equivalent to the fee that would be payable if securities distributed to the holder of ADSs had been shares and the shares had been deposited for issuance of ADSs. Distribution of securities distributed by the issuer to the holders of common securities, which are distributed by the depositary to ADS holders.
Registration or transfer fees. Transfer and registration of shares on our share register to or from the name of the depositary or its agent when the holder of ADSs deposits or withdraws common shares.
Expenses of the depositary. Cable, telex and facsimile transmissions (when expressly provided for in the deposit agreement).
Expenses of the depositary in converting foreign currency to U.S. dollars.
Taxes and other governmental charges the depositary or the custodian have to pay on any ADSs or common shares underlying ADSs (for example, stock transfer taxes, stamp duty or withholding taxes). As necessary.
Any charges incurred by the depositary or its agents for servicing the deposited securities. As necessary.
As necessary.
Reimbursement of Fees
From April 1, 2013 to June 30, 2014 the Depositary collected annual depositary services fees equal to approximately $3.0
million from holders of ADSs, net of fees paid to the Depositary by the Company.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15. Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
The Company has carried out an evaluation, as of March 31, 2014, under the supervision and with the participation of the
Company's management, including the chief executive officer and chief financial officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures,
including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly,
even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control
objectives. Based upon the Company's evaluation, the chief executive officer and chief financial officer have concluded
that, as of March 31, 2014, the disclosure controls and procedures were effective to provide reasonable assurance that
information required to be disclosed in the reports the Company files or submits under the Exchange Act is recorded,
processed, summarized and reported as and when required, within the time periods specified in the applicable rules and
forms, and that it is accumulated and communicated to the Company's management, including the chief executive officer and
chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company's management is responsible for establishing and maintaining adequate internal control over financial
reporting, (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company's internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with IFRS. The Company's internal control over
financial reporting includes those policies and procedures that:
· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and directors; and
· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company's assets that could have a material effect on the financial statements.
The Company's management evaluated the effectiveness of the Company's internal control over financial reporting as of March
31, 2014, based on the criteria established in the 1992 Framework in "Internal Control - Integrated Framework," issued by
the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on the evaluation, management has
concluded that the Company maintained effective internal control over financial reporting as of March 31, 2014.
Changes in Internal Control over Financial Reporting
There has been no change in the Company's internal control over financial reporting during the 2014 fiscal year that has
materially affected, or is reasonably likely to materially affect, the Company's internal control over financial
reporting.
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
The Company's Board of Directors has determined that Declan McKeon qualifies as an "audit committee financial expert"
within the meaning of this Item 16A. Mr. McKeon is "independent" for purposes of the listing rules of NASDAQ.
Item 16B. Code of Ethics
The Company has adopted a broad Code of Business Conduct and Ethics that meets the requirements for a "code of ethics" as
defined in Item 16B of Form 20-F. The Code of Business Conduct and Ethics applies to the Company's chief executive officer,
chief financial officer, chief accounting officer, controller and persons performing similar functions, as well as to all
of the Company's other officers, directors and employees. The Code of Business Conduct and Ethics is available on Ryanair's
website at http://www.ryanair.com. (Information appearing on the website is not incorporated by reference into this annual
report.) The Company has not made any amendment to, or granted any waiver from, the provisions of this Code of Business
Conduct and Ethics that apply to its chief executive officer, chief financial officer, chief accounting officer, controller
or persons performing similar functions during its most recently completed fiscal year.
Item 16C. Principal Accountant Fees and Services
Audit and Non-Audit Fees
The following table sets forth the fees billed or billable to the Company by its independent auditors, KPMG, during the
fiscal years ended March 31, 2014, 2013 and 2012:
Year ended March 31,
2014 2013 2012
(millions)
Audit fees........................................................ E0.5 E0.5 E0.4
Tax fees............................................................ E0.3 E0.3 E0.4
Total fees......................................................... E0.8 E0.8 E0.8
Total fees.........................................................
E0.8
E0.8
E0.8
Audit fees in the above table are the aggregate fees billed or billable by KPMG in connection with the audit of the
Company's annual financial statements, as well as work that generally only the independent auditor can reasonably be
expected to provide, including the provision of comfort letters, statutory audits, discussions surrounding the proper
application of financial accounting and reporting standards and services provided in connection with certain regulatory
requirements including those under the Sarbanes-Oxley Act of 2002.
Tax fees include fees for all services, except those services specifically related to the audit of financial statements,
performed by the independent auditor's tax personnel, work performed in support of other tax-related regulatory
requirements and tax compliance reporting.
Audit Committee Pre-Approval Policies and Procedures
The audit committee expressly pre-approves every engagement of Ryanair's independent auditors for all audit and non-audit
services provided to the Company.
Item 16D. Exemptions from the Listing Standards for Audit Committees
None.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table details purchases by the Company of its Ordinary shares in the 2014 fiscal year.
Month / Period Total Number of Ordinary Shares Purchased (a) Average Price Paid Per Ordinary Share
(Millions) (E)
April 1, 2013 to April 30, 2013 - -
May 1, 2013 to May 31, 2013 - -
June 1, 2013 to June 30, 2013 24.1 7.23
July 1, 2013 to July 31, 2013 - -
August 1, 2013 to August 31, 2013 - -
September 1, 2013 to September 30, 2013 - -
October 1, 2013 to October 31, 2013 10.0 7.38
November 1, 2013 to November 30, 2013 10.0 5.75
December 1, 2013 to December 31, 2013 15.5 6.66
January 1, 2014 to January 31, 2014 4.7 6.55
February 1, 2014 to February 28, 2014 3.8 6.79
March 1, 2014 to March 31, 2014 1.4 7.31
Total (Year-end) 69.5 6.93
Total (Year-end)
69.5
6.93
(a) The Ordinary Share purchases in the table above have not been made pursuant to publicly announced plans or
programs, and consist of open-market transactions conducted within defined parameters pursuant to the Company's repurchase
authority from shareholders granted via a special resolution. The Ordinary Share purchases in the table above include the
purchase during fiscal year 2014 of just over 6.0 million ADRs. Each ADR purchased represents five Ordinary Shares.
See "Item 8. Financial Information-Other Financial Information-Share Buy-Back Program" and "Item 9. The Offer and
Listing-Trading Markets and Share Prices" for further information regarding the Company's Ordinary Share buy-back program,
pursuant to which all of the shares purchased by the Company and disclosed in the table above were purchased.
Item 16F. Change in Registrant's Certified Accountant
Not applicable.
Item 16G. Corporate Governance
See "Item 6. Directors, Senior Management and Employees-Directors-Exemptions from NASDAQ Corporate Governance Rules" for
further information regarding the ways in which the Company's corporate governance practices differ from those followed by
domestic companies listed on NASDAQ.
Item 16H. Mine Safety Disclosure
Not applicable.
PART III
Item 17. Financial Statements
Not applicable.
Item 18. Financial Statements
RYANAIR HOLDINGS PLC
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