REG - Ryanair Holdings PLC - Half Yearly Report <Origin Href="QuoteRef">RYA.I</Origin> - Part 2
03/11/2014 08:06
- Part 2: For the preceding part double click ID:nRSC9117Va
Introduction
This financial report for the half-year ended September 30, 2014 meets the
reporting requirements pursuant to the Transparency (Directive 2004/109/EC)
Regulations 2007 and Transparency Rules of the Republic of Ireland's Financial
Regulator and the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
This interim management report includes the following:
· Principal risks and uncertainties relating to the remaining six months
of the year;
· Related party transactions; and
· Post balance sheet events.
Results of operations for the six month period ended September 30, 2014
compared to the six month period ended September 30, 2013, including important
events that occurred during the half-year, are set forth above in the
Operating and Financial Overview.
Principal risks and uncertainties
Among the factors that are subject to change and could significantly impact
Ryanair's expected results for the remainder of the year are the airline
pricing environment, fuel costs, competition from new and existing carriers,
costs associated with environmental, safety and security measures, actions of
the Irish, UK, European Union ("EU") and other governments and their
respective regulatory agencies, fluctuations in currency exchange rates and
interest rates, airport access and charges, labour relations, the economic
environment of the airline industry, the general economic environment in
Ireland, the UK, and Continental Europe, the general willingness of passengers
to travel, other economic, social and political factors and flight
interruptions caused by volcanic ash emissions or other atmospheric
disruptions.
Board of directors
Details of the members of our Board of Directors are set forth on pages 106
and 107 of our 2014 annual report.
Related party transactions
Please see note 15.
Post balance sheet events
Please see note 16.
Ryanair Holdings plc
Notes forming Part of the Condensed Consolidated
Interim Financial Statements
1. Basis of preparation and significant accounting policies
Ryanair Holdings plc (the "Company") is a company domiciled in Ireland. The
unaudited condensed consolidated interim financial statements of the Company
for the six months ended September 30, 2014 comprise the Company and its
subsidiaries (together referred to as the "Group").
These unaudited condensed consolidated interim financial statements ("the
interim financial statements"), which should be read in conjunction with our
2014 Annual Report for the year, ended March 31, 2014, have been prepared in
accordance with International Accounting Standard No. 34 "Interim Financial
Reporting" as adopted by the EU ("IAS 34"). They do not include all of the
information required for full annual financial statements, and should be read
in conjunction with the most recent published consolidated financial
statements of the Group. The consolidated financial statements of the Group as
at and for the year ended March 31, 2014, are available at www.ryanair.com.
The comparative figures included for the year ended March 31, 2014 do not
constitute statutory financial statements of the Group within the meaning of
Regulation 40 of the European Communities (Companies, Group Accounts)
Regulations, 1992. The consolidated financial statements of the Group for the
year ended March 31, 2014, together with the independent auditor's report
thereon, have been filed with the Irish Registrar of Companies following the
Company's Annual General Meeting and are also available on the Company's
Website. The auditor's report on those financial statements was unqualified.
The Audit Committee, upon delegation of authority by the Board of Directors,
approved the interim financial statements for the six month period ended
September 30, 2014 on October 31, 2014.
Except as stated otherwise below, this period's financial information has been
prepared in accordance with the accounting policies set out in the Group's
most recent published consolidated financial statements, which were prepared
in accordance with IFRS as adopted by the EU and also in compliance with IFRS
as issued by the International Accounting Standards Board.
The following new and amended standards, that have been issued by the
International Accounting Standards Board (IASB), and are effective under those
standards for the first time for the financial year beginning on or after
January 1, 2014, and have also been endorsed by the EU, have been applied by
the Group for the first time in these interim consolidated financial
statements;
· IAS 32 (amendment) "Offsetting Financial Assets and Financial
Liabilities" (effective for fiscal periods beginning on or after January 1,
2014).
· IAS 39 (amendment) "Novation of Derivatives and Continuation of Hedge
Accounting" (effective for fiscal periods beginning on or after January 1,
2014).
· IFRIC 21 "Levies" (effective for fiscal periods beginning on or after
January 1, 2014).
· IAS 36 (amendment) "Recoverable Amount Disclosures for Non-Financial
Assets" (effective for fiscal period beginning on or after January 1, 2014).
The adoption of these new or amended standards did not have a material impact
on our financial position or results from operations in the half-year ended
September 30, 2014.
The following new or revised IFRS standards and IFRIC interpretations which
have not yet been endorsed by the EU will be adopted for purposes of the
preparation of future financial statements, where applicable. We do not
anticipate that the adoption of these new or revised standards and
interpretations will have a material impact on our financial position or
results from operations.
· Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
(effective for fiscal periods
beginning on or after July 1, 2014).
· IFRS 9, "Financial Instruments" (2014) (effective for fiscal periods
beginning on or after January 1, 2018).
· "Annual Improvements to IFRSs". 2010-2012 Cycle (effective for fiscal
periods beginning on or after July 1, 2014).
· "Annual Improvements to IFRSs". 2011-2013 Cycle (effective for fiscal
periods beginning on or after July 1, 2014).
· "Annual Improvements to IFRSs". 2012-2014 Cycle (effective for fiscal
periods beginning on or after July 1, 2016).
· Amendments to IFRS 10/IAS 28 - Sales or contributions of assets between
an investor and its
associate/joint venture (effective for fiscal periods beginning on or after
January 1, 2016).
· Amendments to IFRS 11: "Accounting for Acquisitions of Interests in
Joint Operations" (effective for fiscal
periods beginning on or after January 1, 2016).
· IFRS 14, "Regulators Deferral Accounts" (effective for fiscal periods
beginning on or after January 1,
2016).
· Amendments to IAS 16 and IAS 38: "Clarification of Acceptable Methods
of Depreciation and
Amortisation" (effective for fiscal periods beginning on or after January 1,
2016).
· IAS 15, "Revenue from Contracts with Customers" (effective for fiscal
periods beginning on or after
January 1, 2017).
2. Estimates
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these consolidated financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
in the most recent published consolidated financial statements.
3. Seasonality of operations
The Group's results of operations have varied significantly from quarter to
quarter, and management expects these variations to continue. Among the
factors causing these variations are the airline industry's sensitivity to
general economic conditions and the seasonal nature of air travel.
Accordingly the first half-year typically results in higher revenues and
results.
4. Income tax expense
The Group's consolidated effective tax rate in respect of operations for the
half-year ended September 30, 2014 was 12.4% (September 30, 2013: 12.2%). The
tax charge for the half-year ended September 30, 2014 of E112.5m (September
30, 2013: E83.5m) comprises a deferred tax charge relating to the temporary
differences for property, plant and equipment recognised in the income
statement.
5. Share based payments
The terms and conditions of the share option programme are disclosed in the
most recent, published, consolidated financial statements.
The Company granted options over 10 million shares in the period, under the
terms of the 2013 Share Option Scheme approved by the Shareholders at the AGM
on September 20, 2013 ("Option Plan 2013"). The fair value of these options,
which are being recognised within the income statement in accordance with
employee services rendered, was fully offset by a credit in relation to
options that lapsed during the period under Option Plan 2003.
6. Contingencies
The Group is engaged in litigation arising in the ordinary course of its
business. The Group does not believe that any such litigation will
individually or in aggregate have a material adverse effect on the financial
condition of the Group. Should the Group be unsuccessful in these litigation
actions, management believes the possible liabilities then arising cannot be
determined but are not expected to materially adversely affect the Group's
results of operations or financial position.
7. Capital commitments
At September 30, 2014 Ryanair had an operating fleet of 299 (2013: 301) Boeing
737-800NG aircraft. Following shareholder approval at an EGM on June 18,
2013, the Group has agreed to purchase 180 new Boeing 737 800NG aircraft
during the periods Fiscal 2015 to Fiscal 2019 of which 2 aircraft were
delivered in September 2014.
In September 2014, the Group agreed to purchase up to 200 (100 firm and 100
options purchases) Boeing 737 Max 200 aircraft from The Boeing Corporation
during the period Fiscal 2019 to Fiscal 2024. This agreement is subject to
shareholder approval at an EGM on November 28, 2014.
8. Available for sale financial assets (Aer Lingus)
The movement on the available for sale financial asset from E260.3m at March
31, 2014 to E226.1m at September 30, 2014 is comprised of a loss of E34.2m,
recognised through other comprehensive income, reflecting the decrease in the
Aer Lingus share price from approximately E1.64 per share at March 31, 2014 to
approximately E1.42 per share at September 30, 2014.
9. Analysis of operating segment
The Company is managed as a single business unit that provides low fares
airline-related activities, including scheduled services, car hire, internet
income and related sales to third parties. The Company operates a single
fleet of aircraft that is deployed through a single route scheduling system.
The Company determines and presents operating segments based on the
information that internally is provided to the CEO, who is the Company's Chief
Operating Decision Maker (CODM). When making resource allocation decisions
the CODM evaluates route revenue and yield data, however resource allocation
decisions are made based on the entire route network and the deployment of the
entire aircraft fleet, which are uniform in type. The objective in making
resource allocation decisions is to maximise consolidated financial results,
rather than individual routes within the network.
The CODM assesses the performance of the business based on the consolidated
profit/(loss) after tax of the Company for the period.
All segment revenue is derived wholly from external customers and as the
Company has a single reportable segment, intersegment revenue is zero.
The Company's major revenue-generating asset comprises its aircraft fleet,
which is flexibly employed across the Company's integrated route network and
is directly attributable to its reportable segment operations. In addition,
as the Company is managed as a single business unit, all other assets and
liabilities have been allocated to the Company's single reportable segment.
Reportable segment information is presented as follows: Half-year Half-year
Ended Ended
Sep 30, Sep 30,
2014 2013
EM EM
External revenues 3,537.4 3,254.8
Reportable segment profit after income tax 795.0 601.9
At Sep 30, 2014EM At Mar 31, 2014EM
Reportable segment assets (excludes the available for sale financial asset) 10,075.8 8,551.8
10. Earnings per share
Half-year Half-year Quarter Quarter
Ended Ended Ended Ended
Sep-30 Sep-30 Sep-30 Sep-30
2014 2013 2014 2013
Basic earnings per ordinary share euro cent 57.44 42.04 43.21 36.80
Diluted earnings per ordinary share euro cent 57.29 41.85 43.09 36.64
Weighted average number of ordinary shares (in M's) - basic 1,384.0 1,431.9 1,384.4 1,423.4
Weighted average number of ordinary shares (in M's) - diluted 1,387.7 1,438.1 1,388.1 1,429.7
Diluted earnings per share takes account solely of the potential future
exercises of share options granted under the Company's share option schemes
and the weighted average number of shares includes weighted average share
options assumed to be converted of 3.8m (September 2013: 6.2m).
11. Property, plant and equipment
Acquisitions and disposals
Capital expenditure in the period to September 30, 2014 amounted to E292.6m
and primarily relate to aircraft pre delivery payments, the cost of 10 spare
engines purchased and two aircraft deliveries.
12. Financial instruments and financial risk management
We are exposed to various financial risks arising in the normal course of
business. Our financial risk exposures are predominantly related to commodity
price, foreign exchange and interest rate risks. The Company uses financial
instruments to manage exposures arising from these risks.
These preliminary financial statements do not include all financial risk
management information and disclosures required in the annual financial
statements, and should be read in conjunction with the 2014 Annual Report.
There have been no changes in our risk management policies in the year.
Fair value hierarchy
Financial instruments measured at fair value in the balance sheet are
categorised by the type of valuation method used. The different valuation
levels are defined as follows:
· Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities that the Group can access at the measurement date.
· Level 2: inputs other than quoted prices included within Level 1 that are
observable for that asset or liability, either directly or indirectly.
· Level 3: unobservable inputs for the asset or liability.
Fair value estimation
Fair value is the price that would be received to sell an asset, or paid to
transfer a liability, in an orderly transaction between market participants at
the measurement date. The following methods and assumptions were used to
estimate the fair value of each material class of the Company's financial
instruments:
Financial instruments measured at fair value
· Available for sale: The fair value of available for sale financial assets
is their quoted market bid price at the balance sheet date. (Level 1)
· Derivatives - interest rate swaps: Discounted cash-flow analyses have been
used to determine the fair value, taking into account current market inputs
and rates. (Level 2)
· Derivatives - currency forwards, aircraft fuel contracts and carbon swaps:
A comparison of the contracted rate to the market rate for contracts providing
a similar risk profile at September 30, 2014 has been used to establish fair
value. (Level 2)
The Group policy is to recognise any transfers between levels of the fair
value hierarchy as of the end of the reporting period during which the
transfer occurred. During the period to September 30, 2014, there were no
reclassifications of financial instruments and no transfers between levels of
the fair value hierarchy used in measuring the fair value of financial
instruments.
Financial instruments disclosed at fair value
· Fixed-rate long-term debt: The repayments which Ryanair is committed to
make have been discounted at the relevant market rates of interest applicable
(including credit spreads) at September 30, 2014 to arrive at a fair value
representing the amount payable to a third party to assume the obligations.
There were no significant changes in the business or economic circumstances
during the quarter to September 30, 2014 that affect the fair value of our
financial assets and financial liabilities.
12. Financial instruments and financial risk management (continued)
The fair value of financial assets and financial liabilities, together with
the carrying amounts in the condensed consolidated financial balance sheet,
are as follows:
At Sep 30, 2014 Carrying amount At Sep 30, 2014 Fair value At Mar 31, 2014 Carrying amount At Mar 31, 2014 Fair value
EM EM EM EM
Non-current financial assets
Derivative financial instruments:-
- U.S. dollar currency forward contracts.......................................................... 114.2 114.2 - -
- Jet fuel derivative contracts.............................................................................. - - 0.4 0.4
114.2 114.2 0.4 0.4
- Available-for-sale financial assets................................................................. 226.1 226.1 260.3 260.3
340.3 340.3 260.7 260.7
Current financial assets
Derivative financial instruments:-
- U.S. dollar currency forward contracts.......................................................... 180.2 180.2 - -
- Jet fuel derivative contracts.............................................................................. - - 16.7 16.7
180.2 180.2 16.7 16.7
Trade receivables................................................................................................ 61.2 61.2 58.1 58.1
Cash and cash equivalents................................................................................ 1,299.3 1,299.3 1,730.1 1,730.1
Financial asset: cash > 3 months...................................................................... 3,057.7 3,057.7 1,498.3 1,498.3
Restricted cash.................................................................................................... 18.1 18.1 13.3 13.3
Other assets......................................................................................................... 2.4 2.4 2.6 2.6
4,618.9 4,618.9 3,319.1 3,319.1
Total financial assets............................................................................................ 4,959.2 4,959.2 3,579.8 3,579.8
At Sep 30, 2014 Carrying amount At Sep 30, 2014 Fair value At Mar 31, 2014 Carrying amount At Mar 31, 2014 Fair value
EM EM EM EM
Non-current financial liabilities
Derivative financial instruments:-
- Interest rate swaps................................................................................................. 40.8 40.8 41.4 41.4
- U.S. dollar currency forward contracts................................................................ - - 1.8 1.8
40.8 40.8 43.2 43.2
Long-term debt.......................................................................................................... 3,294.9 3,362.6 2,615.7 2,660.9
3,335.7 3,403.4 2,658.9 2,704.1
Current financial liabilities
Derivative financial instruments:-
- Interest rate swaps................................................................................................. 25.1 25.1 31.0 31.0
- Jet fuel derivative contracts.................................................................................. 119.4 119.4 - -
- U.S. dollar currency forward contracts................................................................ - - 64.4 64.4
144.5 144.5 95.4 95.4
Long-term debt.......................................................................................................... 461.8 461.8 467.9 467.9
Trade payables.......................................................................................................... 165.6 165.6 150.0 150.0
Accrued expenses..................................................................................................... 1,246.8 1,246.8 1,554.5 1,554.5
2,018.7 2,018.7 2,267.8 2,267.8
Total financial liabilities........................................................................................ 5,354.4 5,422.1 4,926.7 4,971.9
-
-
64.4
64.4
144.5
144.5
95.4
95.4
Long-term
debt..........................................................................................................
461.8
461.8
467.9
467.9
Trade
payables..........................................................................................................
165.6
165.6
150.0
150.0
Accrued
expenses.....................................................................................................
1,246.8
1,246.8
1,554.5
1,554.5
2,018.7
2,018.7
2,267.8
2,267.8
Total financial
liabilities........................................................................................
5,354.4
5,422.1
4,926.7
4,971.9
13. Share buy-back
There were no share buy-backs in the period. In the period ended September
30, 2013, the Company bought back 24.1m ordinary shares at a total cost of
E176.6m. This was equivalent to approximately 1.7% of the Company's issued
share capital. All ordinary shares repurchased were cancelled. Accordingly,
share capital decreased by 24.1m ordinary shares with a nominal value of E0.2m
and the capital redemption reserve increased by a corresponding E0.2m. The
capital redemption reserve is required to be created under Irish law to
preserve permanent capital in the Parent Company.
14. Eurobond
In June 2014, Ryanair issued a 7 year unsecured eurobond, under its EMTN (Euro
Medium Term Note) programme, with a fixed coupon of 1.875% per annum and a
notional principal of E850.0m. The issue price on the bond was 99.52%.
15. Related party transactions
We have related party relationships with our subsidiaries, directors and
senior key management personnel. All transactions with subsidiaries eliminate
on consolidation and are not disclosed.
There were no related party transactions in the period ended September 30,
2014 that materially affected the financial position or the performance of the
Company during that period and there were no changes in the related party
transactions described in the 2014 Annual Report that could have a material
effect on the financial position or performance of the Company in the same
period.
16. Post balance sheet events
In October 2014, Michael O'Leary (Chief Executive Officer) signed a new 5 year
contract which commits him to the Company until September 2019. This new
contract replaces a rolling 12 month arrangement under which Mr O'Leary has
worked as Chief Executive of the airline since Ryanair Holdings Plc first
floated in 1997. Otherwise, there were no significant post balance sheet
events.
Ryanair Holdings plc
Responsibility Statement
Statement of the directors in respect of the interim financial report
Each of the directors, whose names and functions are listed in our 2014 Annual
Report, confirm that, to the best of each person's knowledge and belief:
1) The unaudited condensed consolidated interim financial statements for the
six months ended September 30, 2014, comprising the condensed consolidated
interim balance sheet, the condensed consolidated interim income statement,
the condensed consolidated interim statement of comprehensive income, the
condensed consolidated interim statement of cash flows and the condensed
consolidated interim statement of changes in shareholders' equity and the
related notes thereto, have been prepared in accordance with IAS 34 as adopted
by the European Union, being the international accounting standard
applicable.
2) The interim management report includes a fair review of the information
required by:
(i) Regulation 8(2) of the Transparency (Directive 2004/109/EC) Regulations
2007, being an indication of important events that have occurred during the
six months ended September 30, 2014 and their impact on the condensed
consolidated interim financial statements; and a description of the principal
risks and uncertainties for the six months ending March 31, 2014; and
(ii) Regulation 8(3) of the Transparency (Directive 2004/109/EC) Regulations
2007, being related party transactions that have taken place in the six months
ended September 30, 2014 and that have materially affected the financial
position or performance of the Company during that period; and any changes in
the related party transactions described in the 2014 Annual Report that could
do so.
On behalf of the Board
David Bonderman Michael
O'Leary
Chairman
Chief Executive
October 31, 2014
Independent review report of KPMG to Ryanair Holdings plc
Introduction
We have been engaged by Ryanair Holdings plc ("the Company") to review the
condensed consolidated interim financial statements for the six months ended
September 30, 2014, which comprise the condensed consolidated interim balance
sheet, the condensed consolidated interim income statement, the condensed
consolidated interim statement of comprehensive income, the condensed
consolidated interim statement of cash flows, the condensed consolidated
interim statement of changes in shareholders' equity and the related notes.
We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed consolidated
interim financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
Transparency (Directive 2004/109/EC) Regulations 2007 and the Transparency
Rules of the Central Bank of Ireland and the Disclosure and Transparency Rules
of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been
undertaken so that we might state to the Company those matters we are required
to state to it in this report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company for our review work, for this report, or for the conclusions
we have reached.
Directors' responsibilities
The half-yearly financial report, including the condensed consolidated interim
financial statements contained therein, is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
interim report in accordance with the Transparency (Directive 2004/109/EC)
Regulations 2007 and the Transparency Rules of the Central Bank of Ireland and
the Disclosure and Transparency Rules of the UK FCA.
As disclosed in note 1 - basis of preparation, the annual consolidated
financial statements of the Company are prepared in accordance with
International Financial Reporting Standards ('IFRS') as issued by the
International Accounting Standards Board and as adopted by the European Union
('EU'). The directors are responsible for ensuring that the condensed
consolidated interim financial statements included in this half-yearly
financial report have been prepared in accordance with IAS 34, "Interim
Financial Reporting," as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
consolidated interim financial statements in the half-yearly financial report,
based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 - Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated interim financial statements in the
half-yearly financial report for the six months ended September 30, 2014 are
not prepared, in all material respects, in accordance with IAS 34 as adopted
by the EU, the Transparency (Directive 2004/109/EC) Regulations 2007 and the
Transparency Rules of the Central Bank of Ireland and the Disclosure and
Transparency Rules of the UK FCA.
Sean O'Keefe
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
October 31, 2014
1 Stokes Place
St Stephens Green
Dublin 2
Ireland
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Ryanair Holdings
See all newsREG - Ryanair Holdings PLC Ryanair Holdings-RYA - Transaction in Own Shares
AnnouncementREG - Ryanair Holdings PLC Ryanair Holdings-RYA - RYANAIR FEB TRAFFIC GROWS 6% TO 13.3M GUESTS
AnnouncementREG - Ryanair Holdings PLC Ryanair Holdings-RYA - Total Voting Rights
AnnouncementREG - Ryanair Holdings PLC Ryanair Holdings-RYA - Transaction in Own Shares
AnnouncementREG - Ryanair Holdings PLC Ryanair Holdings-RYA - Transaction in Own Shares
Announcement