5th Jun 2007 07:00
Ryanair Holdings PLC05 June 2007 RYANAIR REPORTS RECORD PROFITS OF €401m, PROFITS UP 33% AS TRAFFIC GROWS TO 42.5M Ryanair, Europe's biggest low fares airline, today (5 June) released record netprofits of €401m, a 33% increase over the prior year figure and €11m ahead ofprevious guidance. Ryanair's traffic grew by 22% to 42.5m, yields rose 7%, asrevenues grew by 32% to €2.24bn. Unit costs increased by 9% mainly due to a 50%increase in fuel costs. Despite this significantly higher fuel bill, Ryanairmaintained an industry leading after tax margin of 18%. Summary Table of Results (IFRS) - in Euro Full Year Results Mar 31,2006 Mar 31, 2007 % IncreasePassengers 34.8m 42.5m 22%Revenue €1.693bn €2.237bn 32%Adjusted Profit after Tax Note1&2) €301.5m €401.4m 33%Adjusted Basic EPS(EuroCents) 19.66 25.99 32%(Note 1,2&3)) Note 1 - Excludes €5.2m Net of Tax received from an insurance claim in y/e31.03.06 Note 2 - Excludes €34.2m due to the release of a deferred Tax Overprovision in y/e 31.03.07 Note 3 - Adjusted by two for one stock split which occurred in February 2007 Ryanair's CEO Michael O'Leary said: "These record profits and the strong growth in traffic, yields and revenuesduring a period of much higher oil prices and intense competition is a tributeto the strength of Ryanair's lowest fare model. The highlights of the past yearinclude: •Profit growth of 33% to €401m - Up €100m on last year. •Traffic growth of 22% to 42.5m. •Purchase of 30 new aircraft, bringing the fleet to 133 units at year end. •Opening 153 new routes (including 3 new bases at Marseille, Madrid and Bremen). •Fuel costs increased by 50% to €693m. •Industry leading customer service and No.1 for pricing and punctuality. •Widened the price gap between Ryanair and our competitors. •Purchased 25.2% of Aer Lingus plc. •Strengthened the balance sheet with year end cash of €2.2bn. The unusual feature of these results was the 7% rise in average fares, despitethe 22% growth in traffic. This increase was largely driven by competitor fareincreases and competitor fuel surcharges, as well as our checked baggage feeswhich are designed to encourage passengers to travel with carry-on luggage only.Ancillary Revenues grew by 40% thanks to a better passenger spend, increasedpenetration, and the growth of excess baggage revenues. In March we announced anagreement with Expedia, our new hotel provider, and we expect that ancillaryrevenues will continue to grow at a faster rate than scheduled traffic. Due primarily to a 50% increase in fuel costs, unit costs rose by 9%. This wasalso impacted by a one off step up in our pilot crewing ratio due to longersector lengths. We took advantage of recent dollar and oil price weaknesses toextend our fuel hedges to 90% for the remainder of fiscal 2008 at an averagecost per barrel which is 10% lower than last year. This cost saving will help usto offset significantly higher airport charges this year at Stansted (whereairport charges doubled on 1 April), and Dublin Airport, who continue to imposeunjustified price increases despite delivering a sub-standard service through aportacabin facility. These monopoly price increases demonstrate again the abjectfailure of Aviation Regulators in both Ireland and the UK to protect theinterests of consumers. We continue to press for the break-up of the BAA airport monopoly and welcomethe recent OFT and Competition Commission investigation of the BAA. The currentBAA Stansted plan to waste almost £4bn building a second runway and terminal(which should cost less than £1bn) provides further proof of this monopolyabuse. Similarly at Dublin, Ryanair opposes the ludicrous plans to waste over€800m building a 15 MPPA passenger terminal which Ryanair is willing to build(and pay for) at a cost of less than €200m. The Irish Regulator has failed toinvestigate or explain why the DAA's costs of this facility have quadrupled overthe past year without any increase in capacity. His current proposal thatRyanair passengers who will never use T2 should pay higher airport charges tofund it, is contrary to the "User Pays" principle of aviation regulation. Thesignificant cost increases associated with these higher airport charges atStansted and Dublin since April, combined with Gordon Brown's decision to engagein "highway robbery" by doubling UK airport departure taxes has had a negativeimpact on traffic and yields. Forward bookings and yields continue to be soft and Ryanair continues to respondwith aggressive price promotions including a current offer of £20 off all returnfares on all flights. As has always been the case, Ryanair will lead and winevery fare war in Europe, because Ryanair has the lowest costs and the lowestfares. Ryanair has recently extended this price war by launching a unique "lowestprice" guarantee. Subject to the terms and conditions of this programme, Ryanairwill refund double the difference to any passenger who can find a lower farefrom any competitor airline on any Ryanair route. Thus far we have paidremarkably few claims, simply because no other airline can match Ryanair's lowfares. The European Commission's review of Ryanair's proposed offer for Aer Lingus hasbeen ongoing for the past 6 months. The decision by DG Competition to refer thismerger to a Phase 2 review was unprecedented and a radical departure from theCommission's long standing policy of encouraging EU airline consolidation. It isdifficult to understand how the EU can wave through precedent mergers (such asAir France/KLM, Lufthansa/Eurowings and Lufthansa/SAS) in Phase 1 with minimalremedies, yet in this case a merger of two Irish airlines with bases at aperipheral European city (Dublin), which together account for less than 5% of EUtraffic, has been referred to Phase 2. Ryanair's proposed remedies now includeguaranteed fare and fuel surcharge reductions of over €100m per annum for AerLingus consumers, combined with the surrender of a significant number ofHeathrow slots (the most valuable in the world) and Dublin slots. Accordingly,any failure by the European Commission to approve this merger will be anentirely political decision to put the narrow political interests of the IrishGovernment before those of European competition and European consumers. Ryanairwill immediately refer any such prohibition to the European Courts, and giventhe significant inaccuracies and omissions in the Commission's Statement ofObjection we believe that any Court challenge has a high prospect of success. Ryanair's "lowest fare" business model is strongly cash generative. Cash on handat March 31st 2007 amounted to €2.2bn. At the AGM on September 22nd 2006 theshareholders authorised that the Directors could re-purchase Ordinary shares("buyback") amounting to 5% of the Company's issued share capital. The Directorshave decided, in the best interests of the Company and its shareholders as awhole, to undertake a buyback programme, under which up to €300 million would beavailable for return. At the current market price of €5.20 this equates to a buyback of approximately 3.63% of the existing issued share capital of the Company.We anticipate starting the buyback programme on/after June 7th 2007 onward. Ordinary shares will be repurchased under the programme in accordance with theprovisions of the Company's annual re-purchase authority and the requirements ofthe Irish Stock Exchange and UK Listing Authority rules. The Company's brokers,Davy, will conduct the share buyback programme, and shares repurchased will becancelled immediately. Only Ordinary shares (and no ADR's) will be repurchased. As we indicated at the release of our April traffic statistics, we have recentlynoticed a softening of market conditions which has been reflected in lower loadfactors and yields. Whilst we remain confident that traffic over the coming yearwill grow by 22% to over 52 million passengers, we believe that if tradingconditions continue to be soft, then yields will fall by up to 5% compared tolast year's figure. Unit costs will rise over the coming year by 6% or 7%,largely due to longer sector lengths (+7%), substantially higher airport chargesat Stansted and Dublin and a one time increase in cabin crew ratios, althoughthese will be partially offset by the lower fuel costs already secured throughour hedging programme. As a result we expect profit growth over the coming yearto be more modest and to rise by approximately 5%. At this time with novisibility of Winter bookings and yields, we believe that the Company and ourshareholders should remain cautious and conservative. We expect the seasonalityestablished over recent years to continue and the vast majority of our annualprofits will be generated in the first half of the fiscal year, with aconsequent reduction in profitability and maybe even small losses being recordedduring quarters 3 and 4. Over the coming year Ryanair will increase its fleet by a net 30 aircraft as wehave commenced our planned disposal programme and have already sold 5 aircraftdelivered in 1999. We will launch at least 3 new bases (2 of which,Dusseldorf-Niederrhein and Bristol, have been announced), and we expect to openmore than 50 new routes. We will continue to aggressively stimulate trafficgrowth by promoting Ryanair's lowest fare guarantee in every market. If marketconditions continue to be soft, as is presently the case, then this ambitioustraffic growth can only be delivered by discounting fares and reducing yields.This remains an extremely volatile and cyclical business, but over time theprice leaders such as Southwest in the U.S. and Ryanair in Europe haverepeatedly demonstrated that during periods of adverse trading conditions, thelowest fare and lowest cost carrier makes the greatest gains. Ryanair willcontinue to offer the lowest fares and the lowest costs in every market weoperate to the benefit of our passengers, our people and our shareholders. ends. For further information Howard Millar Pauline McAlesterplease contact: Ryanair Holdings Plc Murray Consultants Tel: 353 1 812 1212 Tel: 353 1 498 0300 www.ryanair.com The directors of Ryanair accept responsibility for the information contained inthis announcement, save that the only responsibility accepted by the directorsof Ryanair in respect of the information contained in this announcement relatingto Aer Lingus and the Aer Lingus Group, which has been compiled from publishedsources, has been to ensure that such information has been correctly and fairlyreproduced or presented (and no steps have been taken by the directors ofRyanair to verify this information). To the best of the knowledge and belief ofthe directors of Ryanair (who have taken all reasonable care to ensure that suchis the case), the information contained in this announcement for which theyaccept responsibility is in accordance with the facts and does not omit anythinglikely to affect the import of such information. Certain of the information included in this release is forward looking and issubject to important risks and uncertainties that could cause actual results todiffer materially. It is not reasonably possible to itemise all of the manyfactors and specific events that could affect the outlook and results of anairline operating in the European economy. Among the factors that are subject tochange and could significantly impact Ryanair's expected results are the airlinepricing environment, fuel costs, competition from new and existing carriers,market prices for the replacement aircraft, costs associated with environmental,safety and security measures, actions of the Irish, U.K., European Union ("EU")and other governments and their respective regulatory agencies, fluctuations incurrency exchange rates and interest rates, airport access and charges, labourrelations, the economic environment of the airline industry, the generaleconomic environment in Ireland, the UK and Continental Europe, the generalwillingness of passengers to travel and other economics, social and politicalfactors. Ryanair is Europe's largest low fares airline with 20 bases and 487 low fareroutes across 25 countries. By the end of March 2008 Ryanair will operate afleet of 163 new Boeing 737-800 aircraft with firm orders for a further 99 newaircraft (all net of planned disposals), which will be delivered over the next 5years. Ryanair currently employs a team of 4,500 people and expects to carryapproximately 52 million scheduled passengers in the current fiscal year. Ryanair Holdings plc and SubsidiariesConsolidated Income Statement measured inaccordance with IFRS(unaudited) Year Year ended ended Mar 31, Mar 31, 2007 2006 •'000 •'000 ------- -------Operating revenues Scheduled revenues 1,874,791 1,433,377 Ancillary revenues 362,104 259,153 ------- -------Total operating revenues-continuing operations 2,236,895 1,692,530 ------- ------- Operating expenses Staff costs 226,580 171,412 Depreciation 143,503 124,405 Fuel & oil 693,331 462,466 Maintenance, materials & repairs 42,046 37,417 Marketing & distribution costs 23,795 13,912 Aircraft rentals 58,183 47,376 Route charges 199,240 164,577 Airport & handling charges 273,613 216,301 Other 104,859 85,557 ------- ------- Total operating expenses 1,765,150 1,323,423 ------- -------Operating profit before exceptionalitems 471,745 369,107 Aircraft insurance claim - 5,939 ------- ------- Operating profit after exceptionalitems - continuing operations 471,745 375,046 ------- -------Other income/(expenses) Finance income 62,983 38,219 Finance expense (82,876) (73,958) Foreign exchange (losses) (906) (1,234) Gains on disposal of property, plant & 91 815 equipment ------- ------- Total other income/(expenses) (20,708) (36,158) ------- ------- Profit before tax 451,037 338,888 Tax on profit on ordinary activities (49,636) (32,176) Exceptional item - release of prior year 34,199 - tax overprovision ------- ------- Profit for the year - all attributableto equity holders of parent 35,600 306,712 ======= ======= Basic earnings per ordinary share Euro cent 28.20 20.00 ** Diluted earnings per ordinary share Euro 27.97 19.87 cent** *Basic adjusted earnings per ordinary share 25.99 19.66 Euro cent** *Diluted adjusted earnings per ordinary 25.77 19.53 share Euro cent** Number of ordinary shares (in 000's)** 1,544,457 1,533,666 Number of diluted shares (in 000's)** 1,557,503 1,543,562 *Calculated on profit for the year before exceptional items (net of tax). ** Adjusted for share split of 2 for 1 which occurred on February 26, 2007 Page 1 Ryanair Holdings plc and SubsidiariesConsolidated Balance Sheet measured in accordance withIFRS(unaudited) Mar 31, Mar 31, 2007 2006 •'000 •'000 ------- ------- Non-current assetsProperty, plant and equipment 2,884,053 2,532,988Intangible assets 46,841 46,841Available for sale financial asset 406,075 -Derivative financial instruments - 763 -------- --------- Total non-current assets 3,336,969 2,580,592 -------- --------- Current assetsInventories 2,420 3,422Other assets 77,707 29,453Trade receivables 23,412 29,909Derivative financial instruments 52,736 18,872 -------- --------- Cash and cash equivalents 1,346,419 1,439,004 Financial assets: cash > 3months 592,774 328,927 Restricted cash 258,808 204,040 ======== ======== Total current assets 2,354,276 2,053,627 -------- --------- Total assets 5,691,245 4,634,219 ======== ========= Current liabilitiesTrade payables 54,801 79,283Accrued expenses and other liabilities 807,136 570,614Current maturities of long term debt 178,918 153,311Derivative financial instruments 56,053 27,417Current tax 20,822 15,247 -------- --------- Total current liabilities 1,117,730 845,872 -------- ---------Non-current liabilitiesProvisions 28,719 16,722Derivative financial instruments 58,666 81,897Deferred income tax liability 151,032 127,260Other creditors 112,177 46,066Long term debt 1,683,148 1,524,417 -------- --------- Total non-current liabilities 2,033,742 1,796,362 -------- ---------Shareholders' equityIssued share capital 9,822 9,790Share premium account 607,433 596,231Retained earnings 1,905,211 1,467,623Other reserves 17,307 (81,659) -------- ---------Shareholders' equity 2,539,773 1,991,985 -------- --------- Total liabilities and shareholders' 5,691,245 4,634,219equity ======== ========= Page 2 Ryanair Holdings plc andSubsidiaries Consolidated Cashflow Statement measured in accordance withIFRS(unaudited) Mar 31, Mar 31, 2007 2006 •'000 •'000 ------- -------Operating activities----------------------Profit before tax 451,037 338,888 Adjustments to reconcile profits beforetax to net cash provided by operatingactivitiesDepreciation 143,503 124,405Decrease/(increase) in inventories 1,002 (962)Decrease/(increase) in trade 6,497 (9,265)receivables(Increase) in other current assets (30,849) (882)(Decrease) in trade payables (24,482) (12,835)Increase in accrued expenses 233,839 150,083Increase in other creditors 75,351 11,402Increase in maintenance provisions 11,997 9,486(Gain) on disposal of fixed assets (91) (815)Interest receivable 48 (3,959)Interest payable 2,671 1,159Retirement costs 589 507Share based payment 3,935 2,921Income tax (5,194) 437 -------- -------- Net cash provided by operating 869,853 610,570activities -------- -------- Investing activities----------------------Capital expenditure (purchase of property,plant and equipment) (494,972) (546,225)Proceeds from sale of property, plant andequipment 495 8,460Purchase of equities classified asavailable for sale (344,917) -(Investment) in restricted cash (54,768) -(Investment)/reduction in financialassets: cash > 3months (263,847) 200,480 -------- -------- Net cash used in investing activities (1,158,009) (337,285) -------- -------- Financing activities----------------------Net proceeds from shares issued 11,233 30,590Proceeds from long term borrowings 339,409 386,809Repayments of long term borrowings (155,071) (123,938) -------- -------- Net cash provided by financing 195,571 293,461activities -------- -------- (Decrease)/increase in cash and cashequivalents (92,585) 566,746 Cash and cash equivalents at beginning of 1,439,004 872,258year -------- -------- Cash and cash equivalents at end of 1,346,419 1,439,004year ======== ======== Page 3 Ryanair Holdings plc and SubsidiariesConsolidated Statement of Recognised Income and Expense measured in accordance with IFRS (unaudited) Mar 31, Mar 31, 2007 2006 •'000 •'000 ------- ------- Net actuarial gains fromretirement benefit plans 1,988 2,327 ------- ------- Cash flow hedge reserveNew movements into cashflow hedge reserve 79,025 65,966 Movements from cash flowhedge reserve (32,920) (22,960) ------- ------- Net movements into cashflow hedge reserve 46,105 43,006 ------- ------- Net change in fair value ofavailable for salefinancial asset 48,926 - ------- -------Income and Expenserecognised directly inequity 97,019 45,333 ------- ------- ------ -------Profit for the period 435,600 306,712 ------- ------- ------- -------Total recognised income andexpense 532,619 352,045 ======= ======= Reconciliation of adjusted earningsper share (unaudited) Mar 31, Mar 31, 2007 2006 •'000 •'000 ------- ------- Profit for the period under IFRS 435,600 306,712 Adjustments-------------Aircraft insurance claim - (5,939)Taxation adjustment forabove - 742 Exceptional item - releaseof prior year taxoverprovision (34,199) - ------- ------- Adjusted profit under IFRS 401,401 301,515 ======= =======Number of ordinary shares (in 000's) -Basic 1,544,457 1,533,666 -Diluted 1,557,503 1,543,562 Adjusted earnings per ordinary share -Basic (• cent) 25.99 19.66 -Diluted (• cent) 25.77 19.53 Consolidated changes in shareholders' equity Share Ordinary premium Retained Other shares account earnings reserves Total •'000 •'000 •'000 •'000 •'000 ------- ------- ------- ------- ------- Balance at April 1, 2006 9,790 596,231 1,467,623 (81,659) 1,991,985 Issue of ordinary equityshares 32 11,202 - - 11,234---------------------------------- ------- ------- ------- ------- -------New movements into cashflow hedge reserve - - - 79,025 79,025Movements from cash flowhedge reserve - - - (32,920) (32,920)---------------------------------- ------- ------- ------- ------- -------Movement in reserves - - - 46,105 46,105---------------------------------- ------- ------- ------- ------- -------Net change in fair value ofavailable for salefinancial asset - - - 48,926 48,926 Share based payments - - - 3,935 3,935Retirement benefits - - 1,988 - 1,988Profit for the period - - 435,600 - 435,600 ------- ------- ------- ------- ------- Balance at March 31, 2007 9,822 607,433 1,905,211 17,307 2,539,773 ======= ======= ======= ======= ======= Page 4 Ryanair Holdings plc and SubsidiariesConsolidated Income Statement measured in accordancewith US GAAP (unaudited) Year Year ended ended Mar 31, Mar 31, 2007 2006 •'000 •'000 Operating revenues Scheduled revenues 1,874,791 1,433,377 Ancillary revenues 362,104 259,153 ------- -------- Total operating revenues-continuing operations 2,236,895 1,692,530 ------- -------- Operating expenses Staff costs 226,770 168,921 Depreciation 145,080 125,876 Fuel & oil 693,331 462,466 Maintenance, materials & repairs 42,046 37,417 Marketing & distribution costs 23,795 13,912 Aircraft rentals 58,183 47,376 Route charges 199,240 164,577 Airport & handling charges 273,613 216,301 Other 104,859 85,494 ------- --------Total operating expenses 1,766,917 1,322,340 ------- --------Operating profit beforeexceptional items 469,978 370,190 Aircraft insurance claim - 5,939 ------- -------- Operating profit after exceptionalitems - continuing operations 469,978 376,129 ------- -------- Other income/(expenses) Finance income 62,983 38,219 Finance expense (70,425) (65,986) Derivative financial instruments (13,337) - Foreign exchange (losses) (906) (1,234) Gains on disposal of property, plant & 91 815 equipment ------- -------- Total otherincome/(expenses) (21,594) (28,186) ------- -------- Income before taxation 448,384 347,943 Taxation (49,304) (33,111) Exceptional item - release of prior year 34,199 - tax overprovision ------- -------- Net income attributable to equity holders ofparent 433,279 314,832 ======= ======== Basic earnings per ADS (Euro cent)** 140.27 102.64Diluted earnings per ADS (Euro cent)** 139.09 101.98*Basic adjusted earnings per ADS (Eurocent)** 129.20 100.95*Diluted adjusted earnings per ADS (Euro cent)** 128.12 100.30 No. of ordinary shares (in 000's)** 1,544,457 1,533,666 Diluted no. of ordinary shares (in 000's)** 1,557,503 1,543,562 *Calculated on net income before non-recurring items (net of tax).(5 ordinary shares equal 1 ADS) ** Adjusted for share split of 2 for 1 which occurred on February 26, 2007 Page 5 Ryanair Holdings plc and SubsidiariesSummary of significant differences between IFRS and US generallyaccepted accounting principles(unaudited) (A) Net income under US GAAP < ------Year ended----- > Mar 31, Mar 31, 2007 2006 •'000 •'000Net income in accordance with IFRS 435,600 306,712 AdjustmentsPensions (190) (430)Share based payments - 2,921Capitalised interest re aircraftacquisition programme 10,874 6,501Derivative financial instruments (13,337) -Darley Investments Limited - 63Taxation - effect of above adjustments 332 (935) --------- --------Net income in accordance with US GAAP 433,279 314,832 ========= ======== (B) Consolidated cashflow statement in accordancewith US GAAP Mar 31, Mar 31, 2007 2006 •'000 •'000Cash inflow from operating activities 880,727 617,071 Cash (outflow) from investing (1,168,883) (343,786)activitiesCash inflow from financing activities 195,571 293,461 --------- --------(Decrease)/increase in cash and cashequivalents (92,585) 566,746Cash and cash equivalents at beginning ofperiod 1,439,004 872,258 --------- --------Cash and cash equivalents at end of period 1,346,419 1,439,004 ========= ======== Cash and cash equivalents under US GAAP 1,346,419 1,439,004Restricted cash 258,808 204,040Deposits with a maturity of > three months 592,774 328,927 --------- --------Total Cash 2,198,001 1,971,971 ========= ======== Page 6 Ryanair Holdings plc and Subsidiaries Summary of significant differences betweenIFRS and US generally accepted accounting principles(unaudited) (C) Shareholders' funds - equity Mar 31, Mar 31, 2007 2006 •'000 •'000 ------- ------- Shareholders' equity as reported in theconsolidated balance sheets in accordance with IFRS 2,539,773 1,991,985 Adjustments:Pension - 9,240 Capitalised interest (net of amortisation)regarding aircraft acquisition programme 40,322 29,448 Derivative financial instruments (8,609) -Minimum pension liability (net of tax) - (4,295) Tax effect of adjustments (excluding pension) (3,964) (5,931) -------- -------- Shareholders' equity as adjusted to accordwith US GAAP 2,567,522 2,020,447 ======== ======== Opening shareholders' equity under US GAAP 2,020,447 1,629,819 Comprehensive incomeMinimum pension liability (net of tax) - 2,201Unrealised (losses)/gains on derivativefinancial instruments (net of tax) 50,241 43,005Available for sale financial asset 48,926 -Net income in accordance with US GAAP 433,279 314,832Reserve movement in pension benefits (net oftax) 2,178 -Adoption of SFAS 158 (including elimination ofadditional minimum liability) (2,718) - -------- --------Total comprehensive income 531,906 360,038 Share based payments 3,935 -Stock issued for cash 11,234 30,590 -------- -------- Closing shareholders' equity in accordancewith US GAAP 2,567,522 2,020,447 ======== ======== Page 7 Ryanair Holdings plc Management Discussion and Analysis of Results Introduction For the purposes of the MD&A all figures and comments are by reference to theadjusted income statement excluding the exceptional items referred to below. Exceptional items in the year ended March 31, 2007 amounted to €34.2m whichprimarily arose from the one time release of an overprovision, principally fromdeferred tax. In the year ended March 31, 2006 there was also an exceptionalreceipt of €5.2m (net of tax) arising from the settlement of an insurance claimfor the scribing of 6 Boeing 737-200 aircraft. Profit after tax increased by 42% to €435.6m compared to €306.7m in the previousyear ended March 31, 2006, whilst adjusted profit after tax increased by 33% to€401.4m Summary Year ended March 31, 2007 Profit after tax increased by 33% to €401.4m, compared to €301.5m in theprevious year ended March 31, 2006. These results reflect a 7% increase inaverage fares (including checked in baggage revenues), very strong growth inancillary revenues, offset by significantly higher fuel costs, which increasedby 50% to €693.3m, and a one off step up in pilot crewing ratios which resultedin staff costs rising by 32% to €226.6m. Total operating revenues increased by32% to €2,236.9m, which was faster than the 22% growth in passenger volumes, asaverage fares rose by 7% and ancillary revenues grew by 40% to €362.1m. Totalrevenue per passenger as a result increased by 8%, whilst Passenger Load Factordecreased by 1 point to 82% during the year. Total operating expenses increased by 33% to €1,765.2m, due to the increasedlevel of activity, and the increased costs, associated with the growth of theairline. Fuel, which represents 39% of total operating costs compared to 35%last year, increased by 50% to €693.3m due to substantial increases in the USdollar cost per gallon, partially offset by a positive movement in the US dollarexchange rate versus the euro and an average 3% reduction in fuel consumptionresulting from the installation of winglets on our Boeing 737-800 fleet. Unitcosts excluding fuel and staff costs remained flat. Staff costs rose by 32%reflecting an increase in pilot crewing ratios primarily as a result of theongoing increases in sector length. As a result, operating margins decreased by1 point to 21%, whilst operating profit increased by 28% to €471.7m. Net Margins remained flat at 18% for the reasons outlined above. Adjusted earnings per share have increased by 32% to 25.99 cent for the year. Balance Sheet The strong growth in profitability continues to positively impact the balancesheet with Total Cash increasing by €226.0m to €2,198.0m despite acquiring a25.2% stake in Aer Lingus for €344.9m and funding an additional €489.2m incapital expenditure largely from internal resources. This cashflow part fundedthe extensive aircraft delivery programme and additional aircraft advancepayments. Total debt net of repayments increased during the year by €184.3m.Shareholders' Equity at March 31, 2007 have increased by €547.8m to €2,539.8m,compared to March 31, 2006 due to the €401.4m increase in profitability duringthe year, the exercise of share options which increased shareholder funds by€11.2m and the impact of the IFRS accounting treatment for derivative financialinstruments, financial assets, pensions and stock options are accounted forwithin equity and which also increased shareholders funds by €99.0m. Detailed Discussion and Analysis Year ended March 31, 2007 Profit after tax, increased by 33% to €401.4m due to a 7% increase in averagefares (including checked in baggage revenues), strong growth in ancillaryrevenues, offset by increased fuel costs which rose by 50% to €693.3m primarilyreflecting the higher US dollar cost per gallon and a one off step up in staffcosts, due to higher pilot crewing ratios, which rose by 32% to €226.6m.Operating margins, as a result decreased by 1 point to 21%, which in turnresulted in Operating profit increasing by 28% to €471.7m compared to year endedMarch 31, 2006. Total operating revenues increased by 32% to €2,236.9m whilst passenger volumesincreased by 22% to 42.5m. Total revenue per passenger increased by 8% in theyear due to higher average fares and strong ancillary revenue growth. Scheduled passenger revenues increased by 31% to €1,874.8m due to a 7% increasein average fares (including checked baggage revenues) reflecting the benignyield environment during the year supported by competitor fuel surcharges.Passenger volumes increased by 22% to 42.5m reflecting increased passengernumbers on existing routes, the successful launch of our new routes and bases.Load factor decreased by 1 point to 82% during the year due to the 23% increasein seat capacity. Ancillary revenues continue to grow faster than passenger volumes with revenuesincreasing by 40% to €362.1m in the year. This performance reflects the stronggrowth in on board sales, non-flight scheduled revenues including excess baggagerevenue. On March 22, 2007 we announced a new five year hotel partnership withExpedia. Total operating expenses rose by 33% to €1,765.2m due to the increased level ofactivity, and the increased costs associated with the growth of the airlineparticularly higher fuel and staff costs. Total operating expenses were alsoadversely impacted by a 6% increase in the average sector length, whilst higherUS dollar fuel prices were partially offset by the strength of the euro exchangerate against the US dollar. Staff costs have increased by 32% to €226.6m. This primarily reflects a 30%increase in average employee numbers to 4,462 and the impact of pay increasesgranted during the year. Employee numbers rose due to an increase in pilotcrewing ratios as a result of continued increases in sector length. Pilots, whoearn higher than the average salary, accounted for 43% of the increase inemployees during the year. Depreciation and amortisation increased by 15% to €143.5m. There are anadditional 19 'owned' Boeing 737-800 aircraft in the fleet this year compared tolast year. The resultant higher depreciation charge was offset by a combinationof lower amortisation due to the retirement of Boeing 737-200 aircraft and thepositive impact of a new engine maintenance deal on the cost of amortisation ofBoeing 737-800 aircraft. The strengthening of the euro versus the US dollar alsohad a positive impact on the depreciation and amortisation charge. Fuel costs rose by 50% to €693.3m due to a 25% increase in the number of hoursflown and a 28% increase in the average US dollar cost per gallon of fuelpartially offset by the positive impact of the strengthening of the euro versusthe US dollar and a 3% reduction in fuel consumption due to the installation ofwinglets on our Boeing 737-800 fleet. Maintenance costs increased by 12% to €42.0m, reflecting improved reliability ofthe Boeing 737-800's operated, due to a combination of the rise in the number ofleased Boeing 737-800 aircraft from 17 to 32, a lower level of maintenance costsincurred due to the retirement of the Boeing 737-200's, and the positive impactof the strengthening of the euro versus the US dollar exchange rate. Marketing and distribution costs increased by 71% to €23.8m due to a higherlevel of marketing activity and related expenditure compared to the previousyear as the number of routes operated rose by 67% to 428 at the year end and thenumber of bases increased by 3 to 18. Aircraft rental costs increased by 23% to €58.2m reflecting an additional 15leased aircraft during the year. Route charges rose by 21% to €199.2m due to an increase in the number of sectorsflown and an increase of 6% in the average sector length, offset by a reductionin enroute charges in certain EU countries. Airport and handling charges increased by 27% to €273.6m. This is higher thanthe growth in passenger volumes and reflects the impact of increased costs atcertain existing airports, particularly at our Dublin base, which has grownsignificantly this year and has a much higher average cost per passenger, offsetby lower costs at new airports and bases. Other expenses increased by 23% to €104.9m, which is lower than the growth inancillary revenues due to improved margins on some existing products and costreductions on some indirect costs. Operating margins have declined by 1 point to 21% due to the reasons outlinedabove whilst operating profits have increased by 28% to €471.7m during the year. Interest receivable has increased by 65% to €63.0m for the year due to thecombined impact of higher levels of cash and cash equivalents and increases inaverage deposit rates earned in the year. Interest payable increased by 12% to €82.9m due to the drawdown of further debtto part fund the purchase of new aircraft and the adverse impact of higherinterest rates. Foreign exchange losses have decreased during the year to €0.9m due to thepositive impact of changes in the US dollar exchange rates against the eurocompared to last year. The gain on disposal of fixed assets of €0.1m arises from the disposal ofvarious plant & equipment. The Company's Balance Sheet continues to strengthen due to the strong growth inprofits during the year. The Company generated cash from operating activities of€869.9m which part funded the investment in financial assets (Aer Lingus) of€344.9m and capital expenditure incurred during the year with the balancereflected in Total Cash of €2,198.0m. Capital expenditure amounted to €494.9mwhich largely consisted of advance payments for future aircraft deliveries andthe delivery of fifteen aircraft. Long term debt, net of repayments increased by€184.3m during the year. Shareholders' Equity at March 31, 2007 has increased by €547.8m to €2,539.8m,compared to March 31, 2006 reflecting the €401.4m increase in profitabilityduring the year and the exercise of share options which increased shareholderfunds by €11.2m and the impact of the IFRS accounting treatment for derivativefinancial instruments, financial assets, pensions and stock options which areaccounted for within equity and which also increased shareholders funds by€99.0m. Notes to the Financial Statements IFRS 1. •Accounting Policies This year's financial information has been prepared in accordance with the accounting policies set out in Ryanair's consolidated financial statements for the year ended March 31, 2007, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the EU. 2. •Approval of the Preliminary Announcement The Audit Committee approved the consolidated financial statements for the half year ended March 31, 2007 on June 01, 2007. 3. •Available for Sale Securities During the year the company acquired a 25.2% stake in Aer Lingus at a cost of €344.9m. This is reflected at market value at March 31, 2007 at €406.1m. US GAAP 4. •Accounting for Share-Based Payments Under SFAS No. 123R, which was adopted by the Company on April 1, 2006, the Company is required to account for share-based employee compensation using a fair value based method. The Company has elected to use the Binomial Lattice option pricing model to determine the fair-value of share-based awards under SFAS No. 123R, consistent with that previously used for pro forma disclosures under SFAS No. 123 ("Accounting for Stock-Based Compensation"). The Company has elected to use the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior years have not been restated to reflect the impact of the revised standard. In this year's financial information, the Company has, as a result of the adoption of SFAS No. 123R, recorded incremental share-based compensation expense of €3.9m in its US GAAP income statement. Prior to the adoption of SFAS No. 123R, the Company measured compensation expense for its employee share-based compensation plans using the intrinsic method prescribed by APB Opinion No. 25. The Company applied the disclosure provisions of SFAS No. 123, as if the fair value based method has been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of the Group's employee share options was equal to the market price of the underlying share on the date of grant, no compensation expense was recognised. If the Company had applied the fair value recognition provisions of SFAS No. 123 to share-based compensation during the year ended March 31, 2006, reported income under US GAAP would have changed from €314.8 million to €311.9 million with resulting Net income per ADS, basic and diluted, of 101.69 Euro cents and 101.04 Euro cents respectively. 5. • Accounting for Pensions - US GAAP The Company also adopted the provisions of SFAS No. 158 "Employers' Accounting for Defined Benefit Pension and other Postretirement Plans" in the year to 31 March 2007. This requires the full fair value of the group's defined benefit pension obligations to be recognised within the group's US GAAP balance sheet, whereas previously, under SFAS No. 87 "Employers Accounting for Pensions" such obligations were permitted to be partially recognised in certain circumstances using the "Corridor Method". The adoption of this standard had no effect on the consolidated income statement of the group however, resulted in a net decrease of €2.7m in the group's shareholders' equity in accordance with US GAAP in the year to March 31, 2007 only. In accordance with the transition provisions of that standard shareholders' equity as previously reported for the year to March 31, 2006 remains unchanged. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
RYA.L