REG - Ryanair Holdings PLC - Annual Financial Report <Origin Href="QuoteRef">RYA.I</Origin> - Part 9
06/09/2014 22:39
- Part 9: For the preceding part double click ID:nRSd7552Nh
Lingus argued that the investigation should proceed and that Ryanair's offer was in
breach of certain provisions of the UK Enterprise Act 2002.
On July 10, 2012, the Competition Commission ruled that Ryanair's bid was not in breach of the UK Enterprise Act, but
nevertheless decided that its investigation of the minority stake could proceed in parallel with the European Commission's
investigation of Ryanair's offer for Aer Lingus. In July 2012, Ryanair appealed the latter part of the Competition
Commission's ruling to the UK Competition Appeal Tribunal, and the Competition Commission's investigation became suspended
pending the appeal process. On August 8, 2012, the Competition Appeal Tribunal rejected Ryanair's appeal and found that
the Competition Commission's investigation could proceed in parallel with the European Commission's investigation, but that
the Competition Commission must avoid taking any final decision which could conflict with the European Commission's
ultimate conclusion on Ryanair's bid. In August 2012, Ryanair appealed the Competition Appeal Tribunal judgment to the UK
Court of Appeal. In December 2012, the Court of Appeal rejected Ryanair's appeal and subsequently the Competition
Commission's investigation has restarted. On December 13, 2012, Ryanair applied to the UK Supreme Court for permission to
appeal the judgment of the Court of Appeal. The Supreme Court refused permission to appeal on April 25, 2013.
On February 27, 2013 the European Commission prohibited Ryanair's bid to acquire the entire share capital of Aer Lingus on
the claimed basis that it would be incompatible with the EU internal market. Ryanair appealed this decision to the EU
General Court on May 8, 2013. The judgment of the EU General Court is expected in 2015 and may affirm or annul the decision
of the European Commission.
The timing of Ryanair's 2012 offer for Aer Lingus was influenced by; (i) the continued consolidation of European airlines,
and more recently the International Airlines Group (the parent company of British Airways) takeover of British Midland
International, where the No.1 airline at Heathrow was allowed to acquire the No. 2; (ii) the additional capacity available
at Dublin airport following the opening of Terminal 2 and the decline in traffic from 23.3 million passengers per annum in
2007 to 18.7 million in 2011, resulting in Dublin airport operating at approximately 50% capacity; (iii) the change in the
Irish government policy since 2006 in that the Irish government indicated that it had decided to sell its stake in Aer
Lingus; (iv) the fact that under the terms of the bailout agreement provided by the European Commission, European Central
bank and International Monetary Fund to Ireland, the Irish government committed to sell its stake in Aer Lingus; (v) the
fact that the ESOT (Employee Share Ownership Trust), which at the time of the unsuccessful 2006 offer controlled 15% of Aer
Lingus, had been disbanded since December 2010 and the shares distributed to the individual members, with the result that
Ryanair's new offer was, in Ryanair's view, capable of reaching over 50% acceptance either with or without government
acceptance; and (vi) the fact that Etihad, an Abu Dhabi based airline, had acquired a 3% stake in Aer Lingus and had
expressed an interest in buying the Irish government's 25% stake in Aer Lingus (the offer now provides Etihad or any other
potential bidder the opportunity to purchase the government's stake).
Ryanair offered to keep Aer Lingus as a separate company, maintain the Aer Lingus brand, and to grow its traffic from 9.5
million to over 14.5 million passengers over a five year period post acquisition, by growing Aer Lingus' short haul traffic
at some of Europe's major airports where Aer Lingus currently operates and Ryanair does not. Ryanair also intended to
increase Aer Lingus' transatlantic traffic from Ireland, which has fallen in recent years, by investing in operations. If
the offer had been accepted, the Irish government would have received E173 million in cash. The offer of E1.30 per share
represented a premium of approximately 38% over the closing price of E0.94 for Aer Lingus shares as of June 19, 2012. The
offer was conditional on competition approval by the European Commission.
Following the European Commission's decision to prohibit its offer for Aer Lingus, Ryanair actively engaged with the
Competition Commission's investigation of the minority stake. On August 28, 2013, the UK Competition Commission (UKCC)
issued its final decision in which it stated that Ryanair's shareholding "gave it the ability to exercise material
influence over Aer Lingus" and "had led or may be expected to lead to a substantial lessening of competition in the markets
for air passenger services between Great Britain and Ireland." As a result of its findings, the UKCC ordered Ryanair to
reduce its shareholding in Aer Lingus to below 5 per cent of Aer Lingus' issued ordinary shares. Ryanair appealed the
UKCC's final decision to the CAT on September 23, 2013. The CAT rejected Ryanair's appeal on March 7, 2014. On April 23,
2014, the CAT granted Ryanair permission to appeal the CAT's judgment to the Court of Appeal. Should this appeal, or any
subsequent appeal to the Supreme Court, be unsuccessful, Ryanair could suffer losses due to the negative impact on market
prices of the forced sale of such a significant portion of Aer Lingus' shares. Ryanair believes that the enforcement of
any such decision should be delayed until the outcome of Ryanair's appeal against the European Commission's February 2013
prohibition decision of Ryanair's 2012 offer for Aer Lingus, and the conclusion of any appeals against the UKCC's decision
in the UK courts. However, it is possible that the UKCC will seek to enforce any such sell-down remedy at an earlier
date.
Legal Actions Against Monopoly Airports. Ryanair has been involved in a number of legal and regulatory actions against the
Dublin and London (Stansted) airports in relation to what Ryanair considers to be ongoing abuses of their dominant
positions in the Dublin and London (Stansted) markets. Management believes that both of these airports have been engaging
in "regulatory gaming" in order to achieve inflated airport charges under the regulatory processes in the U.K. and Ireland.
By inflating its so-called "regulated asset base" (essentially the value of its airport facilities), a regulated airport
can achieve higher returns on its assets through inflated airport charges. With respect to London (Stansted), the OFT,
following complaints from Ryanair and other airlines, has recognized that the regulatory process is flawed and provides
perverse incentives to regulated airports to spend excessively on infrastructure in order to inflate their airport charges.
The OFT referred the case to the Competition Commission which released its preliminary findings in April 2008. It found
that the common ownership by BAA of the three main airports in London affects competition and that the "light touch"
regulation by the Civil Aviation Authority was having an adverse impact on competition. In March 2009, the Competition
Commission published its final report on the BAA and ordered the breakup of the BAA, (which involved the sale of London
(Gatwick) and London (Stansted) and either Glasgow or Edinburgh Airport in Scotland). In October 2009, London (Gatwick) was
sold to Global Infrastructure Partners for £1.5 billion. In May 2009, BAA appealed the Competition Commission's decision on
the bases of apparent bias and lack of proportionality. Ryanair secured the right to intervene in this appeal in support of
the Competition Commission. The case was heard in October 2009 and in February 2010 the Competition Appeal Tribunal quashed
the Competition Commission's ruling on the basis of the "apparent bias" claim. This decision was successfully appealed by
both the Competition Commission and Ryanair before the Court of Appeal. The appeal was heard in June 2010 and the judgment
was issued in October 2010, quashing the Competition Appeal Tribunal ruling and reinstating the Competition Commission
March 2009 decision. In February 2011, the Supreme Court refused to grant the BAA permission to appeal the Court of Appeal
ruling. The Competition Commission has subsequently reconsidered the appropriateness of the remedies imposed on the BAA in
March 2009 in light of the passage of time, and confirmed in its preliminary report in April 2011 that the remedies are
still appropriate and the sale of Stansted and one of either Glasgow or Edinburgh airports should proceed. In July 2011,
the Competition Commission confirmed its March 2011 provisional decision on "possible material changes of circumstances."
It found that no material changes of circumstances (that would necessitate a change in the remedies package) had occurred
since the March 2009 decision requiring the BAA to sell London (Gatwick), London (Stansted) and one of either Glasgow or
Edinburgh airports, and that consequently the BAA should proceed to dispose of London (Stansted) and one of the Scottish
airports. The BAA appealed this decision to the Competition Appeal Tribunal, and lost on February 1, 2012. The BAA then
brought a further appeal to the Court of Appeal, which they also lost on July 26, 2012. While these appeals were ongoing,
the BAA proceeded to sell Edinburgh airport in April 2012. BAA did not appeal the Court of Appeal judgment to the UK
Supreme Court, and proceeded to complete the sale of London (Stansted) airport to Manchester Airports Group plc in March
2013.
With respect to Dublin airport, Ryanair appealed the December 2009 decision of the CAR, which set maximum charges at the
airport for 2010 through 2014, to the Appeals Panel set up by the Minister for Transport. In June 2010, the Appeals Panel
found in favor of Ryanair on the matter of differential pricing between Terminal 1 and Terminal 2, recommending that such
differential pricing be imposed by the CAR. The CAR subsequently overruled the decision of the Appeals Panel and allowed
the charges increase at Dublin Airport, with no differential pricing between Terminals 1 and 2.
Ryanair has also been trying to prevent both the BAA in London and the DAA in Dublin from engaging in wasteful capital
expenditure. In the case of London (Stansted) Airport, the BAA was planning to spend £4 billion on a second runway and
terminal, which Ryanair believes should only cost approximately £1 billion. Following the final decision of the Competition
Commission forcing BAA to sell London (Stansted) airport, Ryanair believed that it was highly unlikely that BAA's planned
£4 billion plans would proceed. The Liberal/Conservative government in the U.K. had also outlined that it would not approve
the building of any more runways in the Southeast of England. Consequently, in May 2010, the BAA announced that it would
not pursue its plans to develop a second runway at London (Stansted).
In the case of Dublin, the DAA has built a second terminal, costing over four times its initial estimate. When the DAA
first announced plans to build a second terminal ("Terminal 2") at Dublin Airport, it estimated that the proposed expansion
would cost between E170 million and E200 million. Ryanair supported a development of this scale; however, in September
2006, the DAA announced that the construction of Terminal 2 would cost approximately E800 million. Subsequently, the cost
of the new infrastructure rose in excess of E1.2 billion. Ryanair opposed expansion at what it believed to be an excessive
cost. On August 29, 2007, however the relevant planning authority approved the planning application from the DAA for the
building of Terminal 2, and other facilities, all of which went ahead. On May 1, 2010, the airport fees per departing
passenger increased by 27% from E13.61 to E17.23, and by a further 12% in 2011 following the opening of Terminal 2 in
November 2010 in accordance with the CAR's decision of December 4, 2009 in relation to airport charges between 2010 and
2014. Ryanair sought a judicial review of the planning approval, however, this appeal was unsuccessful. The increase in
charges, in combination with the introduction of the E10 Air Travel Tax (subsequently reduced to E3 in March 2011 and
eliminated entirely in April 2014) mentioned above, led to substantially reduced passenger volumes to and from Dublin
Airport. See "Item 3. Risk Factors¾Risks Related to the Company¾Ryanair's Continued Growth is Dependent on Access to
Suitable Airports; Charges for Airport Access are Subject to Increase" and "-The Company Is Subject to Legal Proceedings
Alleging State Aid at Certain Airports," as well as "Item 4. Information on the Company-Airport Operations-Airport
Charges."
Legal Proceedings Against Internet Ticket Touts. The Company is involved in a number of legal proceedings against internet
ticket touts (screenscraper websites) in Ireland, Germany, the Netherlands, France, Spain, Italy and Switzerland.
Screenscraper websites gain unauthorized access to Ryanair's website and booking system, extract flight and pricing
information and display it on their own websites for sale to customers at prices which include intermediary fees on top of
Ryanair's fares. Ryanair does not allow any such commercial use of its website and objects to the practice of
screenscraping also on the basis of certain legal principles, such as database rights, copyright protection, etc. The
Company's objective is to prevent any unauthorized use of its website. The Company also believes that the selling of
airline tickets by screenscraper websites is inherently anti-consumer as it inflates the cost of air travel. At the same
time, Ryanair encourages genuine price comparison websites which allow consumers to compare prices of several airlines and
then refer consumers to the airline website in order to perform the booking at the original fare. Ryanair offers licensed
access to its flight and pricing information to such websites. Ryanair also permits Travelport, a GDS operator, to provide
access to Ryanair's fares to traditional bricks and mortar travel agencies. The Company has received favorable rulings in
Ireland, Germany and The Netherlands, and unfavorable rulings in Spain, France and Italy. However, pending the outcome of
these legal proceedings and if Ryanair were to be ultimately unsuccessful in them, the activities of screenscraper websites
could lead to a reduction in the number of customers who book directly on Ryanair's website and loss of ancillary revenues
which are an important source of profitability through the sale of car hire, hotels and travel insurance etc. Also, some
customers may be lost to the Company once they are presented by a screenscraper website with a Ryanair fare inflated by the
screenscraper's intermediary fee. See Item 3. Key Information-Risk Factors-Risks Related to the Company-Ryanair Faces Risks
Related to Unauthorized Use of Information from the Company's Website."
Dividend Policy
Following shareholder approval at the September 2010 annual general meeting of shareholders, a E500 million special
dividend was paid in October 2010. Similarly, following shareholder approval at the September 2012 annual general meeting
of shareholders, a dividend of E0.34 per Ordinary Share (approximately E492 million) was paid in November 2012. The
Company may pay other dividends from time to time. On June 20, 2013 the Company detailed plans to return up to E1 billion
to shareholders over the next two years. The Company completed E481.7 million in share buybacks in fiscal year 2014 and
indicated on May 19, 2014 that it plans to pay a special dividend of up to approximately E520 million in the fourth quarter
of fiscal year 2015, subject to shareholder approval at its annual general meeting on September 25, 2014. The Company has
made no further commitments in relation to the payment of dividends, share buybacks or other shareholder distributions. Any
cash dividends or other distributions, if made, are expected to be made in euro, although Ryanair Holdings' Articles
provide that dividends may be declared and paid in U.S. dollars. In the case of ADRs, the Depositary will convert all cash
dividends and other distributions payable to owners of ADRs into U.S. dollars to the extent that, in its judgment, it can
do so on a reasonable basis, and will distribute the resulting U.S. dollar amounts (net of conversion expenses and any
applicable fees) to the owners of ADRs. See "Item 12. Description of Securities Other than Equity Securities" for
information regarding fees of the Depositary.
Share Buy-back Program
Following shareholder approval at the 2006 annual general meeting of shareholders, a E300 million share buy-back program
was formally announced on June 5, 2007. Permission was received at the annual general meeting of the shareholders held on
September 20, 2007 to repurchase a maximum of 75.6 million Ordinary Shares representing 5% of the Company's then
outstanding share capital. The E300 million share buy-back of approximately 59.5 million Ordinary Shares, representing
approximately 3.8% of the Company's pre-existing share capital, was completed in November 2007. In February 2008, the
Company announced a second share buy-back program of up to E200 million worth of Ordinary Shares, which was ratified by
shareholders at the annual general meeting of the shareholders held on September 18, 2008. 18.1 million Ordinary Shares
were repurchased under this program at a cost of approximately E46.0 million. The Company also completed share buy-backs of
E125 million in respect of 36.5 million Ordinary Shares in the 2012 fiscal year and 15 million Ordinary Shares at a cost of
approximately E68 million in the 2013 fiscal year. In fiscal year 2014, 69.5 million Ordinary Shares (including just over
6.0 million ADRs) were repurchased at a cost of approximately E481.7 million. As a result, the total amount spent on the
share buy-back programs to date was approximately E1,019.8 million with respect to the repurchase of 198.6 million Ordinary
Shares. All Ordinary Shares (including ADRs which represent five Ordinary Shares) repurchased have been cancelled.
In April 2012, the Company held an extraordinary general meeting to authorize the Directors to repurchase Ordinary Shares
and ADRs for up to 5% of the issued share capital of the Company traded on the NASDAQ. Up until April 2012, shareholders
had only authorized the Directors to repurchase Ordinary Shares. As the ADRs typically trade at a premium of up to 20%
compared to Ordinary Shares, this may result in increased costs in performing share buy-backs in the future. This
authority was renewed at the Annual General Meeting held on September 20, 2013. The Company completed E481.7 million in
share buybacks in fiscal year 2014 and indicated on May 19, 2014 that it plans to pay a special dividend of up to E520
million in Quarter 4, fiscal year 2015, subject to shareholder approval at its annual general meeting on September 25,
2014. The Company has made no further commitments in relation to the payment of dividends, share buybacks or other
shareholder distributions.
See "Item 9. The Offer and Listing - Trading Markets and Share Prices" below for further information regarding share
buy-backs.
SIGNIFICANT CHANGES
On April 30, 2014, the Company agreed to purchase an additional 5 Boeing 737-800NG aircraft for delivery in fiscal 2016,
bringing the total number of aircraft to be purchased from Boeing to 180 for delivery between fiscal years 2015 and 2019.
In addition, in June 2014 Ryanair issued E850.0 million in unsecured eurobonds with a 7 year tenor at a coupon of 1.875%,
which are guaranteed by Ryanair Holdings. See "Item 5. Operation and Financial Review and Prospects - Liquidity and Capital
Resources - Capital Resources" for additional information.
Item 9. The Offer and Listing
TRADING MARKETS AND SHARE PRICES
The primary market for Ryanair Holdings' Ordinary Shares is the Irish Stock Exchange plc (the "Irish Stock Exchange");
Ordinary Shares are also traded on the London Stock Exchange. The Ordinary Shares were first listed for trading on the
Official List of the Irish Stock Exchange on June 5, 1997 and were first admitted to the Official List of the London Stock
Exchange on July 16, 1998.
ADRs, each representing five Ordinary Shares, are traded on NASDAQ. The Bank of New York Mellon is Ryanair Holdings'
depositary for purposes of issuing ADRs evidencing the ADSs. The following tables set forth, for the periods indicated, the
reported high and low closing sales prices of the ADRs on NASDAQ and for the Ordinary Shares on the Irish Stock Exchange
and the London Stock Exchange, and have been adjusted to reflect the two-for-one split of the Ordinary Shares and ADRs
effected on February 26, 2007:
*All quarterly high and low prices for ADRs and Ordinary Shares in the following tables refer to calendar year quarters and
not fiscal year quarters
ADRs
(in U.S. dollars)
High Low
2008............................................................................................................... 35.482 15.089
2009............................................................................................................... 29.586 20.779
2010............................................................................................................... 33.090 21.268
2011............................................................................................................... 31.990 24.200
2012
First Quarter............................................................................................. 36.280 27.770
Second Quarter....................................................................................... 36.890 29.330
Third Quarter........................................................................................... 32.740 27.890
Fourth Quarter......................................................................................... 36.140 31.900
2013
First Quarter............................................................................................. 43.23 34.62
Second Quarter....................................................................................... 51.53 41.36
Third Quarter........................................................................................... 54.05 44.51
Fourth Quarter......................................................................................... 51.33 43.51
2014
January 31, 2014...................................................................................... 50.930 46.990
February 28, 2014.................................................................................... 56.950 48.120
March 31, 2014........................................................................................ 58.810 55.100
April 30, 2014........................................................................................... 60.110 52.940
May 31, 2014............................................................................................ 57.100 50.980
June 30, 2014............................................................................................ 58.230 53.390
Period ending July 18, 2014....................................................................... 56.11 51.85
56.11
51.85
Ordinary Shares (Irish Stock Exchange)
(in euro)
High Low
2008............................................................................................................... 4.20 1.80
2009............................................................................................................... 3.45 2.51
2010............................................................................................................... 4.19 2.77
2011............................................................................................................... 3.98 3.13
2012
First Quarter............................................................................................. 4.48 3.68
Second Quarter....................................................................................... 4.49 3.83
Third Quarter........................................................................................... 4.48 3.86
Fourth Quarter......................................................................................... 5.00 4.43
2013
First Quarter............................................................................................. 6.16 4.76
Second Quarter....................................................................................... 7.20 5.70
Third Quarter........................................................................................... 7.47 6.00
Fourth Quarter......................................................................................... 6.45 5.33
2014
Month ending:
January 31, 2014...................................................................................... 6.88 6.30
February 28, 2014.................................................................................... 7.44 6.73
March 31, 2014........................................................................................ 7.70 7.09
April 30, 2014........................................................................................... 7.75 6.83
May 31, 2014............................................................................................ 7.32 6.35
June 30, 2014............................................................................................ 7.61 6.81
Period ending July 18, 2014....................................................................... 7.19 6.64
Ordinary Shares (London Stock Exchange)
(in euro)
High Low
2008............................................................................................................... 4.20 1.81
2009............................................................................................................... 3.45 2.50
2010............................................................................................................... 4.19 2.76
2011............................................................................................................... 3.97 3.13
2012
First Quarter............................................................................................. 4.48 3.68
Second Quarter....................................................................................... 4.49 3.84
Third Quarter........................................................................................... 4.47 3.88
Fourth Quarter......................................................................................... 5.00 4.40
2013
First Quarter............................................................................................. 6.20 4.76
Second Quarter....................................................................................... 7.18 5.80
Third Quarter........................................................................................... 7.48 5.84
Fourth Quarter......................................................................................... 6.45 5.45
Month ending:
January 31, 2014...................................................................................... 6.86 6.31
February 28, 2014.................................................................................... 7.43 6.74
March 31, 2014........................................................................................ 7.72 7.08
April 30, 2014........................................................................................... 7.75 6.83
May 31, 2014............................................................................................ 7.31 6.35
June 30, 2014............................................................................................ 7.61 6.79
Period ending July 18, 2014....................................................................... 7.20 6.65
7.61
6.79
Period ending July 18, 2014.......................................................................
7.20
6.65
Since certain of the Ordinary Shares are held by brokers or other nominees, the number of direct record holders in the
United States, which is reported as 55, may not be fully indicative of the number of direct beneficial owners in the United
States, or of where the direct beneficial owners of such shares are resident.
In order to increase the percentage of its share capital held by EU nationals, beginning June 26, 2001, Ryanair Holdings
instructed the Depositary to suspend the issuance of new ADRs in exchange for the deposit of Ordinary Shares until further
notice. Therefore, holders of Ordinary Shares cannot currently convert their Ordinary Shares into ADRs. The Depositary will
however convert existing ADRs into Ordinary Shares at the request of the holders of such ADRs. The Company in 2002
implemented additional measures to restrict the ability of non-EU nationals to purchase Ordinary Shares. As a result,
non-EU nationals are currently effectively barred from purchasing Ordinary Shares. See "Item 10. Additional
Information-Limitations on Share Ownership by Non-EU Nationals" for additional information.
The Company, at its annual general meeting of the Shareholders, has, in recent years, passed a special resolution
permitting the Company to engage in Ordinary Share buy-back programs subject to certain limits noted below. Since June 2007
(when the Company engaged in its first Ordinary Share buy-back program) the Company has repurchased the following Ordinary
Shares:
2008.................................................................................... 59.5 300.0
2009.................................................................................... 18.1 46.0
2010.................................................................................... - -
2011.................................................................................... - -
2012.................................................................................... 36.5 124.6
2013.................................................................................... 15.0 67.5
2014.................................................................................... 69.5 481.7
Period through July 18, 2014.......................................... - -
Total.................................................................................. 198.6 1,019.8
-
-
Total..................................................................................
198.6
1,019.8
All Ordinary Shares repurchased have been cancelled.
The maximum price at which the Company may repurchase Ordinary Shares, in accordance with the listing rules of the Irish
Stock Exchange and of the Financial Services Authority, is the higher of 5% above the average market value of the Company's
Ordinary Shares for the five business days prior to the day of the repurchase and the price stipulated by Article 5(1) of
Commission Regulation (EC) of December 22, 2003 (No. 2273/2003) (which is the higher of the last independent trade and the
highest current independent bid on the Irish Stock Exchange). The minimum price at which the Company may repurchase
Ordinary Shares is their nominal value, currently 0.635 euro cent per share.
At an extraordinary general meeting of Shareholders held on April 19, 2012, the Company obtained a new repurchase authority
which enables the Company to repurchase the Company's ADRs which are traded on NASDAQ. The maximum price at which Ordinary
Shares which underlie the Company's ADRs can be repurchased is 5% above one-fifth of the average market value of the
Company's ADRs as quoted on NASDAQ, for the five business days prior to the date of purchase (as one ADS represents five
Ordinary Shares). Any ADRs purchased will be converted to Ordinary Shares by the Company's brokers for subsequent
repurchase and cancellation by the Company. During fiscal 2014, the Company repurchased 6,018,800 ADRs equivalent to
30,094,000 ordinary shares at a price per ADR of $49.01 equivalent to approximately E7.41 per ordinary share.
As of June 30, 2014, the total number of options over Ordinary Shares outstanding under all of the Company's share option
plans was 4,814,391, representing 0.3% of the Company's issued share capital at that date.
Item 10. Additional Information
DESCRIPTION OF CAPITAL STOCK
Ryanair Holdings' capital stock consists of Ordinary Shares, each having a par value of 0.635 euro cent. As of March 31,
2014, a total of 1,383,237,668 Ordinary Shares were outstanding. On February 26, 2007, Ryanair effected a 2-for-1 share
split as a result of which each of its then existing Ordinary Shares, par value 1.27 euro cent, was split into two new
Ordinary Shares, par value 0.635 euro cent. Each Ordinary Share entitles the holder thereof to one vote in respect of any
matter voted upon by Ryanair Holdings' shareholders.
OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
Ryanair Holdings' shareholders approved a stock option plan (referred to herein as "Option Plan 2000"), under which all
employees and directors are eligible to receive options. Grants of options were permitted to take place at the close of any
of the ten years beginning with fiscal year 2000 only if the Company's net profit after tax for such fiscal year had
exceeded its net profit after tax for the prior fiscal year by at least 25%, or if an increase of 1% in net profit after
tax for the relevant year would have resulted in such requirement being met.
Ryanair Holdings' shareholders approved a stock option plan (referred to herein as "Option Plan 2003") established in
accordance with a then tax-favorable share option scheme available under Irish law, so that employees would not be subject
to income tax on the exercise of options (subject to certain conditions). Option Plan 2003 was approved by the Revenue
Commissioners on July 4, 2003 for the purposes of Chapter 4, Part 17, of the Irish Taxes Consolidation Act, 1997 and
Schedule 12C of that Act. Following the publication of the Irish National Recovery Plan: 2011-2014 (the "NRP") on November
24, 2010, Revenue approved share option plans, such as Option Plan 2003, no longer qualified for favorable tax treatment
from that date. All employees and full-time directors were eligible to participate in the plan, under which grants of
options could be made at the close of any of the ten years beginning with fiscal year 2002 only if the Company's net profit
after tax for such fiscal year had exceeded its net profit after tax for the prior fiscal year by at least 25%, or if an
increase of 1% in net profit after tax for the relevant year would have resulted in such requirement being met.
Under Option Plan 2000, 20 senior managers (including seven of the current executive officers) were granted 10,500,000
share options, in the aggregate, at a strike price of E3.21 in July 2005. Not all of the vesting conditions were met, and
as a result only 80% of the options granted that satisfied the conditions were exercisable between August 1, 2011 and
August 31, 2013. The Company recognized a credit of E2.5 million in relation to the options that did not vest in June
2011. Also, under Option Plan 2000, each of the non-executive directors were granted 25,000 share options, at a strike
price of E4.96, during the 2008 fiscal year. These options are exercisable between June 2012 and June 2014. In addition, 39
senior managers (including five of the current executive officers) were granted 10,000,000 share options, in the aggregate,
under Option Plan 2000, at a strike price of E2.56, on September 18, 2008. These options are exercisable between September
18, 2013 and September 17, 2015, but only for managers who continued to be employed by the Company through September 18,
2013.
During fiscal year 2014, Ryanair Holdings' shareholders approved a stock option plan at the Company's annual general
meeting on September 20, 2013 (referred to herein as "Option Plan 2013"), under which all employees and directors are
eligible to receive options. Grants of options were permitted to take place at the close of any of the ten years beginning
with fiscal year 2014. All options will be subject to a five year performance period beginning with the year in which a
grant occurs. The Remuneration Committee has discretion to determine the financial performance targets that must be met
with respect to the financial year. Those targets will relate directly to the achievement of certain year-on-year growth
targets in the Company's profit after tax figures for each of the financial years of the performance period and/or certain
share price targets. The Option Plan 2013 will replace two stock options plans previously approved by shareholders (Option
Plan 2000 and Option Plan 2003) for all future grants, as both of these plans have expired, although any subsisting options
granted under Option Plan 2000 or Option Plan 2003 that have not yet lapsed will continue to be governed by all terms of
those plans, as applicable.
The aggregate of 4,814,391 Ordinary Shares that would be issuable upon exercise in full of the options that were
outstanding as of June 30, 2014 under Company's option plan represent approximately 0.3% of the issued share capital of
Ryanair Holdings as of such date. Of such total, options in respect of an aggregate of 1,397,500 Ordinary Shares were held
by the directors and executive officers of Ryanair Holdings. For further information, see notes 15 and 19 to the
consolidated financial statements included herein.
ARTICLES OF ASSOCIATION
The following is a summary of certain provisions of the Articles of Association of Ryanair Holdings. This summary does not
purport to be complete and is qualified in its entirety by reference to the complete text of the Articles, which are
included as an exhibit to this annual report.
Objects. Ryanair Holdings' objects, which are detailed in its Articles, are broad and include carrying on business as an
investment and holding company. Ryanair Holdings' Irish company registration number is 249885.
Directors. Subject to certain exceptions, directors may not vote on matters in which they have a material interest. The
ordinary remuneration of the directors is determined from time to time by ordinary resolutions of the shareholders. Any
director who holds any executive office, serves on any committee or otherwise performs services, which, in the opinion of
the directors, are outside the scope of the ordinary duties of a director, may be paid such extra remuneration as the
directors may determine. The directors may exercise all the powers of the Company to borrow money. These powers may be
amended by special resolution of the shareholders. The directors are not required to retire at any particular age. There is
no requirement for directors to hold shares. The Articles of Association provide that one-third of the directors retire and
offer themselves for re-election at each annual general meeting of the Company. The directors to retire by rotation are
those who have been longest in office since their last appointment or reappointment. As between persons who became or were
appointed directors on the same date, those to retire are determined by agreement between them or, otherwise, by lot. All
of the shareholders entitled to attend and vote at the annual general meeting of the Company may vote on the re-election of
directors.
Annual and General Meetings. Annual and extraordinary meetings are called upon 21 days' advance notice. At Ryanair's annual
general meeting, held on September 22, 2010, the Company's Articles of Association were amended by special resolution to
reflect the implementation of the Shareholders' Rights (Directive 2007/36/EC) Regulations 2009 to allow all Ryanair
shareholders to appoint proxies electronically to attend, speak, ask questions and vote on behalf of them at annual general
meetings and to reflect certain other provisions of those Regulations. All holders of Ordinary Shares are entitled to
attend, speak at and vote at general meetings of the Company, subject to limitations described below under "-Limitations on
the Right to Own Shares."
Rights, Preferences and Dividends Attaching to Shares. The Company has only one class of shares, Ordinary Shares with a par
value of 0.635 euro cent per share. All such shares rank equally with respect to payment of dividends and on any winding-up
of the Company. Any dividend, interest or other sum payable to a shareholder that remains unclaimed for one year after
having been declared may be invested by the directors for the benefit of the Company until claimed. If the directors so
resolve, any dividend which has remained unclaimed for 12 years from the date of its declaration shall be forfeited and
cease to remain owing by the Company. The Company is permitted under its Articles to issue redeemable shares on such terms
and in such manner as the Company may, by special resolution, determine. The Ordinary Shares currently in issue are not
redeemable. The liability of shareholders to invest additional capital is limited to the amounts remaining unpaid on the
shares held by them. There are no sinking fund provisions in the Articles of the Company.
Action Necessary to Change the Rights of Shareholders. The rights attaching to shares in the Company may be varied by
special resolutions passed at meetings of the shareholders of the Company.
Limitations on the Rights to Own Shares. The Articles contain detailed provisions enabling the directors of the Company to
limit the number of shares in which non-EU nationals have an interest or the exercise by non-EU nationals of rights
attaching to shares. See "-Limitations on Share Ownership by Non-EU Nationals" below. Such powers may be exercised by the
directors if they are of the view that any license, consent, permit or privilege of the Company or any of its subsidiaries
that enables it to operate an air service may be refused, withheld, suspended or revoked or have conditions attached to it
that inhibit its exercise and the exercise of the powers referred to above could prevent such an occurrence. The exercise
of such powers could result in non-EU holders of shares being prevented from attending, speaking at or voting at general
meetings of the Company and/or being required to dispose of shares held by them to EU nationals.
Disclosure of Share Ownership. Under Irish law, the Company can require parties to disclose their interests in shares. The
Articles of the Company entitle the directors to require parties to complete declarations indicating their nationality and
the nature and extent of any interest which such parties hold in Ordinary Shares before allowing such parties to transfer
such Ordinary Shares. See, also "-Limitations on Share Ownership by non-EU nationals" below. Under Irish law, if a party
acquires or disposes of Ordinary Shares so as to bring his interest above or below 5% of the total issued share capital of
the Company, he must notify the Company of that. The Irish Stock Exchange must also be notified of any acquisition or
disposal of shares that brings the shareholding of a party above or below certain specified percentages - i.e., 10%, 25%,
50% and 75%.
Other Provisions of the Articles of Association. There are no provisions in the Articles:
(i) delaying or prohibiting a change in the control of the Company, but which operate only with respect to a merger,
acquisition or corporate restructuring;
(ii) discriminating against any existing or prospective holder of shares as a result of such shareholder owning a
substantial number of shares; or
(iii) governing changes in capital,
in each case, where such provisions are more stringent than those required by law.
MATERIAL CONTRACTS
On March 19, 2013, the Company announced that it had entered into an agreement with Boeing to purchase 175 Boeing 737-800NG
aircraft, with a list value of over $13.8 billion, over a five year period from fiscal 2015 to 2019 in accordance with the
terms of the contract. The contract was approved by the shareholders of the Company at an extraordinary general meeting on
June 18, 2013. On April 30, 2014, the Company agreed to purchase an additional 5 Boeing 737-800NG aircraft for delivery in
fiscal 2016, bringing the total number of aircraft to be purchased from Boeing to 180 for delivery between fiscal years
2015 and 2019, with a list value of approximately $14.1 billion.
EXCHANGE CONTROLS
Except as indicated below, there are no restrictions on non-residents of Ireland dealing in Irish securities (including
shares or depositary receipts of Irish companies such as the Company). Dividends and redemption proceeds also continue to
be freely transferable to non-resident holders of such securities.
Under the Financial Transfers Act 1992 (the "1992 Act"), the Minister for Finance of Ireland may make provision for the
restriction of financial transfers between Ireland and other countries. Financial transfers are broadly defined, and the
acquisition or disposal of the ADRs, which represent shares issued by an Irish incorporated company, the acquisition or the
disposal of Ordinary Shares and associated payments may fall within this definition. Dividends or payments on the
redemption or purchase of shares and payments on the liquidation of an Irish-incorporated company would fall within this
definition.
The 1992 Act prohibits financial transfers involving the late Slobodan Milosevic and certain associated persons, President
Lukashenko, the Belarusian leadership and certain other officials of Belarus, Burma (Myanmar), certain persons indicted by
the International Criminal Tribunal for the former Yugoslavia, certain persons and entities associated with the now
deceased Usama Bin Laden, the Al-Qaeda network and the Taliban of Afghanistan, the Democratic Republic of Congo, certain
persons in Egypt, certain activities, persons and entities in Eritrea, the Republic of Guinea, the Democratic People's
Republic of Korea (North Korea), Iraq, Côte d'Ivoire, certain activities in Lebanon, certain activities in Liberia and the
former Liberian President Charles Taylor, his immediate family and close associates, Libya, certain persons in Tunisia,
certain activities and persons in Zimbabwe, certain persons and activities in Sudan and South Sudan, Somalia, certain
activities, persons and entities in Syria and Iran, certain persons, entities and bodies in the Republic of Guinea-Bissau,
certain known terrorists and terrorist groups, and countries that harbor certain terrorist groups, without the prior
permission of the Central Bank of Ireland.
Any transfer of, or payment in respect of, an ADS involving the government of any country that is currently the subject of
United Nations sanctions, any person or body controlled by any of the foregoing, or any person acting on behalf of the
foregoing, may be subject to restrictions pursuant to such sanctions as implemented into Irish law. The Company does not
anticipate that Irish exchange controls or orders under the 1992 Act or United Nations sanctions implemented into Irish law
will have a material effect on its business.
LIMITATIONS ON SHARE OWNERSHIP BY NON-EU NATIONALS
The Board of Directors of Ryanair Holdings is given certain powers under the Articles to take action to ensure that the
number of Ordinary Shares held in Ryanair Holdings by non-EU nationals does not reach a level which could jeopardize the
Company's entitlement to continue to hold or enjoy the benefit of any license, permit, consent or privilege which it holds
or enjoys and which enables it to carry on business as an air carrier (a "License"). In particular, EU Regulation 2407/92
requires that, in order to obtain and retain an operating license, an EU air carrier must be majority-owned and effectively
controlled by EU nationals. The regulation does not specify what level of share ownership will confer effective control on
a holder or holders of shares. As described below, the directors will, from time to time, set a "Permitted Maximum" on the
number of Ordinary Shares that may be owned by non-EU nationals at such level as they believe will comply with EU law. The
Permitted Maximum is currently set at 49.9%.
Ryanair Holdings maintains a separate register (the "Separate Register") of Ordinary Shares in which non-EU nationals,
whether individuals, bodies corporate or other entities, have an interest (such shares are referred to as "Affected Shares"
in the Articles). Interest in this context is widely defined and includes any interest held through ADRs in the shares
underlying the relevant ADRs. The directors can require relevant parties to provide them with information to enable a
determination to be made by the directors as to whether Ordinary Shares are, or are to be treated as, Affected Shares. If
such information is not available or forthcoming or is unsatisfactory then the directors can, at their discretion,
determine that Ordinary Shares are to be treated as Affected Shares. Registered holders of Ordinary Shares are also obliged
to notify the Company if they are aware that any Ordinary Share which they hold ought to be treated as an Affected Share
for this purpose. With regard to ADRs, the directors can treat all of the relevant underlying shares as Affected Shares
unless satisfactory evidence as to why they should not be so treated is forthcoming.
In the event that, inter alia, (i) the refusal, withholding, suspension or revocation of any License or the imposition of
any condition which materially inhibits the exercise of any License (an "Intervening Act") has taken place, (ii) the
Company receives a notice or direction from any governmental body or any other body which regulates the provision of air
transport services to the effect that an Intervening Act is imminent, threatened or intended or (iii) an Intervening Act
may occur as a consequence of the level of non-EU ownership of Ordinary Shares or an Intervening Act is imminent,
threatened or intended because of the manner of share ownership or control of Ryanair Holdings generally, the directors can
take action pursuant to the Articles to deal with the situation. They can, inter alia, (i) remove any directors or change
the chairman of the Board of Directors, (ii) identify those Ordinary Shares, ADRs or Affected Shares which give rise to the
need to take action and treat such Ordinary Shares, ADRs, or Affected Shares as Restricted Shares (see below) or (iii) set
a "Permitted Maximum" on the number of Affected Shares which may subsist at any time (which may not, save in the
circumstances referred to below, be lower than 40% of the total number of issued shares) and treat any Affected Shares (or
ADRs representing such Affected Shares) in excess of this Permitted Maximum as Restricted Shares (see below).
In addition to the above, if as a consequence of a change of law or a direction, notice or requirement of any state,
authority or person it is necessary to reduce the total number of Affected Shares below 40% or reduce the number of
Affected Shares held by any particular stockholder or stockholders in order to overcome, prevent or avoid an Intervening
Act, the directors may resolve to (i) set the Permitted Maximum at such level below 40% as they consider necessary in order
to overcome, prevent or avoid such Intervening Act, or (ii) treat such number of Affected Shares (or ADRs representing
Affected Shares) held by any particular stockholder or stockholders as they consider necessary (which could include all of
such Affected Shares or ADRs) as Restricted Shares (see below). The directors may serve a Restricted Share Notice in
respect of any Affected Share, or any ADR representing any ADS, which is to be treated as a Restricted Share. Such notices
can have the effect of depriving the recipients of the rights to attend, vote at and speak at general meetings, which they
would otherwise have as a consequence of holding such Ordinary Shares or ADRs. Such notices can also require the recipients
to dispose of the Ordinary Shares or ADRs concerned to an EU national (so that the relevant shares (or shares underlying
the relevant ADRs) will then cease to be Affected Shares) within 21 days or such longer period as the directors may
determine. The directors are also given the power to transfer such Restricted Shares, themselves, in cases of
non-compliance with the Restricted Share Notice.
To enable the directors to identify Affected Shares, transferees of Ordinary Shares are generally required to provide a
declaration as to the nationality of persons having interests in those shares. Stockholders are also obliged to notify
Ryanair Holdings if they are aware that any shares, which they hold, ought to be treated as Affected Shares for this
purpose. Purchasers or transferees of ADRs need not complete a nationality declaration because the directors expect to
treat all of the Ordinary Shares held by the Depositary as Affected Shares. ADS holders must open ADR accounts directly
with the Depositary if they wish to provide to Ryanair Holdings nationality declarations or such other evidence as the
directors may require in order to establish to the directors' satisfaction that the Ordinary Shares underlying such
holder's ADRs are not Affected Shares.
In deciding which Affected Shares are to be selected as Restricted Shares, the directors can take into account which
Affected Shares have given rise to the necessity to take action. Subject to that they will, insofar as practicable, firstly
view as Restricted Shares those Affected Shares in respect of which no declaration as to whether or not such shares are
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