6th Nov 2006 07:01
Ryanair Holdings PLC06 November 2006 RYANAIR ANNOUNCES RECORD HALF YEAR PROFITS NET PROFIT RISES BY 39% TO €329M - TRAFFIC GROWS 23% TO 22m RAISES FULL YEAR GUIDANCE: UP 16% TO €350M. Ryanair, Europe's largest low fares airline, today (Monday, 6th November 2006)announced record half year profits of €329m. Traffic grew by 23% to 22.1mpassengers, yields increased by 9% as total revenues rose by 33% to €1.256bn.Unit costs increased by 7.5% as fuel costs rose by 42% to €337m. Despite thesesignificantly higher fuel costs, Ryanair's after tax margin for the half yearrose by 1 point to 26% as half year net profits increased by 39% to €329m. Summary Table of Results (IFRS) - in Euro Half Year Ended Sept 30, 2005 Sept 30,2006 % Increase Passengers 18.0m 22.1m 23% Revenue €946.2m €1,256.4m 33% Profit after Tax (note 1) €237m €329m 39% Basic EPS (Euro Cents) (note1) 31.00 42.67 38% Note 1: Adjusted profit after tax and EPS during the half year ended 30September 2005 excludes a receipt, net of tax, of €5.2m arising from thesettlement of an insurance claim for the scribing of 6 Boeing 737-200 aircraft. Announcing these results Ryanair's CEO, Michael O'Leary, said: "Ryanair has again, delivered record half year profits despite intensecompetition and very high fuel prices. The Ryanair lowest fare model hasrepeatedly proven that it can generate increased profitability and significantpassenger growth during difficult trading conditions while many of ourcompetitors are struggling to deliver profits or are losing money. "Summer yields rose by 9% despite a 22% increase in seat capacity. This benignyield environment continues to be driven by the multiple fuel surcharges imposedby European flag carriers, which has widened the gap between their high faresand Ryanair's lowest fares. Our unwavering determination to avoid fuelsurcharges has enabled us to deliver rapid traffic growth and generate higherprofits. Load factors were up 1 point as we launched 42 new routes and 3 newbases. "Ancillary revenues grew by 27%, again faster than the growth in passengervolumes. Need a Hotel, our online hotel provider, has decided to terminate ouragreement with effect from December 31st, 2006. Whilst the terms of ouragreement are confidential, we anticipate that returns for the remainder of thefiscal year will remain unaffected. We are confident that we can replace Need aHotel without affecting the returns this business generates. We also recentlylaunched our Bingo/Gaming website and our 15 million unique visitors each monthwill now be offered the lowest fares and a flutter on our Bingo/Gaming website.As we roll out our onboard mobile phone system next summer, passengers will alsobe able to have a flutter whilst travelling on our 437 routes across Europe. "We introduced a new service enhancement in November that will allow allpassengers to enjoy on-line check-in and/or priority boarding for just £2/€3 perflight. Passengers travelling with hand luggage only, will continue to by passcheck-in queues and go directly to their boarding gate. This new service willextend the priority boarding facility to passengers travelling with checked-inluggage who will now be entitled to board the aircraft first and choose theirseats. "Unit costs increased by 7.5% primarily due to higher fuel, staff and airportand handling costs. Fuel costs rose by 42% to €337m despite being almost fullyhedged during the quarter reflecting higher world fuel prices. For the remainderof this fiscal year, we are 90% hedged at rates equivalent to $73 per barrel. Wehave used the recent weakness in forward oil prices to hedge 50% of ourrequirements for the quarter from October to December 2007 at a cost which is10% lower than comparable Q3 this year. We continue to monitor forward priceswith a view to hedging our requirements for fiscal 2008 when opportunitiesarise. "Our new bases at Liverpool, East Midlands and Shannon performed well over thesummer, however, fares at Shannon continue to be materially lower than expected.We announced 3 new bases at Bremen, Marseille and Madrid and advance bookings atall 3 are strong. We announced a further 4 aircraft and 20 new routes at ourDublin base commencing in early 2007 and these are already booking strongly. InAugust we achieved another milestone and became the first European low faresairline to carry 4m passengers in one month. "In October we exercised options for 32 Boeing 737-800 next generation aircraftto be delivered between September 2008 and June 2009 as part of our plan todouble in size to over 80m passengers by 2012. We also ordered 10 more aircraftsimulators (5 firm, 5 options), which will be delivered between 2008 and 2013and will enable us to further reduce pilot training costs whilst improvingsafety and training. "We continue to oppose the BAA airport monopoly plans to build a £4bn goldplated Taj Mahal at Stansted which we believe could be built for £1bn. The BAAmonopoly continues to build facilities, which do not meet users needs. Untilthere is competition between the three London airports, airport charges willcontinue to rise and passengers will have to suffer these over specified,inefficient facilities. Ryanair continues to campaign for the break up of theBAA airport monopoly. We are deeply concerned by the continuing under staffingof security at Stansted airport which has led to repeated passenger and flightdelays. The management of Stansted security is inept, and the BAA has againproven that it is incapable of providing adequate or appropriate securityservices at Stansted. This shambles again highlights that the BAA is aninefficient, incompetent airport monopoly which should be broken up. "The tragedy at Dublin airport continues where the DAA monopoly recentlyobtained planning approval for a second terminal at a cost of €750m which is 4.5times more than the €170m cost it announced just 11 months earlier in Sept.2005. Only a government owned monopoly would seek a cost increase of over 4 fold- with no increase in passenger capacity - prior to applying for planningpermission! The DAA has recently proposed that an outrageous 60% increase incharges at Dublin Airport to recoup the inflated cost of this facility whichRyanair passengers will never use. Ryanair will continue to oppose this wasteand has appealed the planning decision. "On the 5th October, we announced a Cash Offer for Aer Lingus of €2.80 per sharewhich valued Aer Lingus at approximately €1.48bn. We have acquired a 19.2% stakein Aer Lingus at a cost of €254m. We believe there are significantopportunities, by combining the purchasing power of Ryanair and Aer Lingus, tosubstantially reduce its operating costs, increase efficiencies, and pass thesesavings on in the form of lower fares to Aer Lingus' consumers. We plan toretain the Aer Lingus brand and the Heathrow slots, and up-grade their datedlonghaul product and are committed to reducing their shorthaul fares by 2.5% peryear for a minimum of 4 years. We believe the combination of Aer Lingus andRyanair into one strong Irish airline group will be rewarding for consumers andwill enable us both to vigorously compete with the mega carriers in Europe. TheEU Competition Authority is currently reviewing the proposed acquisition and weanticipate that the final outcome of their regulatory review will not be knownuntil late December, 2006. If our offer is not accepted by a majority of AerLingus shareholders, we will continue to be a significant minority shareholder,and will exercise whatever influence we can to encourage Aer Lingus to reducecosts and offer lower fares which is, we believe, its best strategy for thefuture. "We remain cautious in our outlook for H2 as we roll out substantial capacityexpansion and suffer significantly higher oil prices than the comparable periodlast year. However, we expect to deliver significant traffic growth as we launch130 new routes and 3 new bases, (Marseilles, Bremen and Madrid), albeit atslightly lower load factors (down 2% monthly on last year) during H2 whichshould result in better yield stability. The benign yield environment continuesthanks to multiple fuel surcharges of our competitors. Based on a reasonablelevel of visibility, it now appears likely that yields in Q3 will be +2% to +3%compared to our original forecast of a -5% decline. With little visibility inQ4, we believe that yields may be slightly lower but not as much as the -5%decline previously guided. Accordingly, we now expect yields to be flat over thewinter period although our net profit for H2 will still be lower than last year.As a result, we now expect that the increase in Net Profit after tax for thefiscal year will be approx. +16% to €350m, higher than our previous guidance ofapproximately +11% to €335m. "Whilst intense competition in the market continues, Ryanair's uniquecombination of the lowest fare in every market, lowest cost base and industryleading customer service will enable us to continue to lead the low faresrevolution for the benefit of our passengers, our staff and our shareholders". Ryanair today announced that the Board of Directors intend to seek shareholderapproval for a 2 for 1 stock split at the Extraordinary General meeting to beheld in December on the proposed acquisition of Aer Lingus. The purpose of thestock split is to improve the marketability and liquidity of the stock. Theexisting ratio of 5 ordinary shares to 1 ADR will be retained. ENDS. Monday, 6th November 2006 For further information Howard Millar Pauline McAlesterplease contact: Ryanair Holdings Plc Murray Consultantswww.ryanair.com Tel: 353-1-8121212 Tel: 353-1-4980300 The directors of Ryanair accept responsibility for the information contained inthis announcement. To the best of the knowledge and belief of the directors ofRyanair (who have taken all reasonable care to ensure that such is the case),the information contained in this announcement for which they acceptresponsibility is in accordance with the facts and does not omit anything likelyto affect the import of such information. Terms defined in the Offer Document issued by Ryanair on 23 October, 2006 havethe same meaning in this announcement. 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 18 bases and 437 low fareroutes across 24 countries. By the end of March 2007 Ryanair will operate anentire fleet of 134 new Boeing 737-800 aircraft with firm orders for a further117 new aircraft (net of planned disposals), which will be delivered over thenext 5 years. Ryanair currently employs a team of 3,900 people and expects tocarry approximately 42 million scheduled passengers in the current year. Ryanair Holdings plc and Subsidiaries Page 1Consolidated Income Statement in accordance Quarter Quarter Half year Half yearwith IFRS (unaudited) ended ended ended ended Sep 30, Sep 30, Sep 30, Sep 30, 2006 2005 2006 2005 •'000 •'000 •'000 •'000 ------- ------- ------- -------Operating revenuesScheduled revenues 602,089 470,495 1,092,102 816,781Ancillary revenues 87,700 71,027 164,321 129,379 ------- ------- ------- -------Total operating revenues -continuing operations 689,789 541,522 1,256,423 946,160 ------- ------- ------- ------- Operating expensesStaff costs 57,107 41,494 113,844 83,646Depreciation 36,035 29,672 71,622 61,337Operating expenses Fuel & oil 169,580 126,967 337,042 236,873 Maintenance, materials and repairs 10,613 7,625 21,313 16,775 Marketing & distribution costs 5,885 3,387 11,608 8,729 Aircraft rentals 12,996 10,679 25,394 20,737 Route charges 50,305 42,563 98,384 83,933 Airport & handling charges 71,222 55,465 139,097 110,039 Other 26,942 21,440 52,312 41,977 ------- ------- ------- -------Total operating expenses 440,685 339,292 870,616 664,046 ------- ------- ------- -------Operating profit before exceptional items 249,104 202,230 385,807 282,114Aircraft insurance claim - - - 5,939 ------- ------- ------- ------- Operating profit after exceptional items -continuing operations 249,104 202,230 385,807 288,053 ------- ------- ------- -------Other (expenses)/incomeForeign exchange (losses)/gains (908) (481) (1,229) 463(Loss) on disposal of property, plant & equipment - (16) - (16)Finance income 16,069 9,211 28,923 17,821Finance expense (20,698) (18,364) (41,311) (36,799) ------- ------- ------- -------Total other (expenses)/income (5,537) (9,650) (13,617) (18,531) ------- ------- ------- ------- Profit before taxation 243,567 192,580 372,190 269,522Tax on profit on ordinary activities (30,122) (20,046) (43,063) (27,347) ------- ------- ------- ------- Profit for the period 213,445 172,534 329,127 242,175 ======= ======= ======= ======= Earnings per ordinary share -Basic(Euro cent) 27.66 22.51 42.67 31.68 -Diluted(Euro cent) 27.45 22.35 42.39 31.47Adjusted earnings per ordinary share* -Basic(Euro cent) 27.66 22.51 42.67 31.00 -Diluted(Euro cent) 27.45 22.35 42.39 30.79Number of ordinary shares(in 000's) -Basic 771,722 766,453 771,413 764,509 -Diluted 777,491 771,875 776,456 769,603 * Calculated on profit for the year before exceptional items (net of tax). Ryanair Holdings plc and Subsidiaries Page 2Consolidated Balance Sheet in accordance with Sep 30, Mar 31,IFRS (unaudited) 2006 2006 •'000 •'000 ------- ------- Non-current assetsProperty, plant & equipment 2,550,162 2,532,988Intangible assets 46,841 46,841Available for sale financial asset 185,363 -Derivative financial instruments 3,888 763 ------- ------- Total non-current assets 2,786,254 2,580,592 ------- -------Current assetsInventories 3,627 3,422Other assets 48,842 29,453Trade receivables 24,207 29,909Derivative financial instruments 502 18,872 ------- -------Restricted cash 204,040 204,040Financial assets: cash > 3months 824,314 328,927Cash and cash equivalents 1,064,692 1,439,004 ------- ------- ------- -------Total current assets 2,170,224 2,053,627 ------- -------Total assets 4,956,478 4,634,219 =========== =========Current liabilitiesTrade payables 87,903 79,283Accrued expenses and other liabilities 519,835 570,614Current maturities of long term debt 158,049 153,311Derivative financial instruments 69,854 27,417Current tax 46,331 15,247 ------- -------Total current liabilities 881,972 845,872 ------- ------- Non-current liabilitiesProvisions 22,723 16,722Derivative financial instruments 74,864 81,897Deferred income tax liability 134,881 127,260Other creditors 68,396 46,066Long term debt 1,476,874 1,524,417 ------- -------Total non-current liabilities 1,777,738 1,796,362 ------- ------- Shareholders' equityIssued share capital 9,807 9,790Share premium account 602,664 596,231Retained earnings 1,796,750 1,467,623Other reserves (112,453) (81,659) ------- -------Shareholders' equity 2,296,768 1,991,985 ------- -------Total liabilities and shareholders' equity 4,956,478 4,634,219 =========== ========= Ryanair Holdings plc and Subsidiaries Page 3Consolidated Cashflow Statement in accordance with IFRS (unaudited) Sep 30, Sep 30, 2006 2005 •'000 •'000 ------- ------- Operating activities----------------------Profit before taxation 372,190 269,522 Adjustments to reconcile profits before taxto net cash provided by operating activitiesDepreciation 71,622 61,337(Increase) in inventories (205) (3,733)Decrease/(increase) in trade receivables 5,702 (5,286)(Increase)/decrease in other current assets (16,320) 1,342Increase/(decrease) in trade payables 8,620 (29,467)(Decrease)/increase in accrued expenses (55,320) 6,176Increase in other creditors 35,489 19,294Increase in maintenance provisions 6,001 5,145Interest receivable (3,069) (3,654)Interest payable 4,212 (52)Retirement costs 329 289Share based payment 2,012 586Income tax 328 (1,727) ------- -------Net cash provided by operating 431,591 319,772activities ------- ------- Investing activities----------------------Capital expenditure (purchase of property, plant and equipment) (88,797) (86,814) Purchase of shares classified as available for sale (185,363) - (Investment)/reduction in financial assets: cash > 3months (495,387) 122,655 ------- -------Net cash used in investing activities (769,547) 35,841 ------- ------- Financing activities----------------------Net proceeds from shares issued 6,450 10,943Proceeds from long term borrowings 32,758 16,496Repayments of long term borrowings (75,564) (59,755) ------- -------Net cash used in financing activities (36,356) (32,316) ------- ------- (Decrease)/increase in cash and cash equivalents (374,312) 323,297 Cash and cash equivalents at beginning of period 1,437,847 871,354 Effects of exchange rates on foreign currency balances 1,157 904 ------- ------- Cash and cash equivalents at end of 1,064,692 1,195,555period ======= ======= Ryanair Holdings plc and Subsidiaries Page 4Consolidated Statement of Recognised Income and Expense Sep 30, Sep 30,in accordance with IFRS (unaudited) 2006 2005 •'000 •'000 ------- --- -------Cash flow hedge reserveNew movements into cash flow hedge reserve 9,375 58,278Movements from cash flow hedge reserve (42,181) - ------- ---- -------Net movements into cash flow hedge reserve (32,806) 58,278 ------- ---- ------- ------- ---- -------Profit for the period 329,127 242,175 ------- ---- ------- ------- ---- -------Total recognised income and expense 296,321 300,453 ======= ==== ======= Reconciliation of adjusted earnings per share (unaudited) Sep 30, Sep 30, 2006 2005 •'000 •'000 ------- --- ------- Profit for the period under IFRS 329,127 242,175 Adjustments-------------Aircraft insurance claim - (5,939)Taxation adjustment for above - 742 ------- ---- ------- Adjusted profit under IFRS 329,127 236,978 ======= ==== ======= Number of ordinary shares(in 000's) -Basic 771,413 764,509 -Diluted 776,456 769,603Adjusted earnings per ordinary share -Basic(• cent) 42.67 31.00 -Diluted(• cent) 42.39 30.79 Consolidated changes in shareholders' equity Share Ordinary premium Retained Other shares account earnings reserves Total •'000 •'000 •'000 •'000 •'000 ------- ------- ------- ------- --- ------- Balance atApril 1, 2006 9,790 596,231 1,467,623 (81,659) 1,991,985Issue of ordinary equity shares 17 6,433 - - 6,450---------------------- ------- ------- ------- ------- --- -------New movements into cash flow hedge reserve - - - 9,375 9,375Movements from cash flow hedge reserve - - - (42,181) (42,181)---------------------- ------- ------- ------- ------- --- -------Movement in reserves - - - (32,806) (32,806)---------------------- ------- ------- ------- ------- --- -------Share -based payments - - - 2,012 2,012Profit for the period - - 329,127 - 329,127 ------- ------- ------- ------- --- -------Balance at September 30, 2006 9,807 602,664 1,796,750 (112,453) 2,296,768 ======== ======= ======= ======= ==== ======= Ryanair Holdings plc and Subsidiaries Page 5Consolidated Income Statement in accordance Quarter Quarter Half year Half yearwith US GAAP (unaudited) ended ended ended ended Sep 30, Sep 30, Sep 30, Sep 30, 2006 2005 2006 2005 •'000 •'000 •'000 •'000 Operating revenuesScheduled revenues 602,089 470,495 1,092,102 816,781Ancillary revenues 87,700 71,027 164,321 129,379 ------- ------- ------- ------- Total operating revenues -continuing operations 689,789 541,522 1,256,423 946,160 ------- ------- ------- -----Operating expensesStaff costs 57,214 41,301 114,059 83,077Depreciation 36,450 29,985 72,419 61,942Operating expenses Fuel & oil 169,580 126,967 337,042 236,873 Maintenance, materials & repairs 10,613 7,625 21,313 16,775 Marketing & distribution costs 5,885 3,387 11,608 8,729 Aircraft rentals 12,996 10,679 25,394 20,737 Route charges 50,305 42,563 98,384 83,933 Airport & handling charges 71,222 55,465 139,097 110,039 Other 26,942 21,418 52,312 41,933 ------- ------- ------- -------Total operating expenses 441,207 339,390 871,628 664,038 ------- ------- ------- -------Operating profit before exceptional items 248,582 202,132 384,795 282,122 Aircraft insurance claim - - - 5,939 ------- ------- ------- -------Operating profit after exceptional items -continuing operations 248,582 202,132 384,795 288,061 ------- ------- ------- -------Other (expenses)/incomeForeign exchange (losses)/gain (908) (481) (1,229) 463(Loss) on disposal of property, plant & equipment - (16) - (16)Finance income 16,069 9,211 28,923 17,821Finance expense (17,659) (16,450) (36,073) (33,352) ------- ------- ------- -------Total other (expenses)/income (2,498) (7,736) (8,379) (15,084) ------- ------- ------- ------- Income before taxation 246,084 194,396 376,416 272,977Taxation (30,018) (20,309) (43,591) (27,849) ------- ------- ------- -------Net income 216,066 174,087 332,825 245,128 ======= ======= ======= =======Net income per ADS -Basic(Euro cent) 139.99 113.57 215.72 160.32 -Diluted(Euro cent) 138.95 112.77 214.32 159.26Adjusted net income per ADS * -Basic(Euro cent) 139.99 113.57 215.72 156.92 -Diluted(Euro cent) 138.95 112.77 214.32 155.88Weighted Average number of shares -Basic 771,722 766,453 771,413 764,509 -Diluted 777,491 771,875 776,456 769,603 * Calculated on net income before non-recurring items (net of tax).(5 ordinary shares equal 1 ADS) Ryanair Holdings plc and Subsidiaries Page 6 Summary of significant differences between IFRS and US generallyaccepted accounting principles (unaudited) (A) Net income under US GAAP Sep 30, Sep 30, Sep 30, Sep 30, 2006 2005 2006 2005 •'000 •'000 •'000 •'000 Net income inaccordance withIFRS 213,445 172,534 329,127 242,175 AdjustmentsPensions (107) (100) (215) (17)Share basedpayments - 293 - 586Capitalised interest (netof amortisation)regarding aircraftacquisitionprogramme 2,624 1,601 4,441 2,842Darley InvestmentsLimited - 22 - 44Taxation- effect ofabove adjustments 104 (263) (528) (502) -------- -------- ------- -------Net income inaccordance with USGAAP 216,066 174,087 332,825 245,128 ======== ======== ======= ======= (B) Consolidated cashflow statement in accordancewith US GAAP Sep 30, Sep 30, 2006 2005 •'000 •'000 Cash inflow from operatingactivities 436,032 322,614Cash (outflow)/inflow from investingactivities (773,988) 32,999Cash (outflow) from financingactivities (36,356) (32,316) ------- ------- (Decrease)/increase in cash and cashequivalents (374,312) 323,297 Cash and cash equivalents atbeginning of period 1,439,004 872,258 ------- ------- Cash and cash equivalents at end of period 1,064,692 1,195,555 ======= ======= Cash and cash equivalents underUS GAAP 1,064,692 1,195,555 Restricted cash 204,040 204,040Deposits with a maturity of between three and sixmonths 824,314 406,752 ------- ------- Cash and liquid resources in accordance withIFRS 2,093,046 1,806,347 ======= ======= Ryanair Holdings plc and Subsidiaries Page 7 Summary of significant differences between IFRS and US generallyaccepted accounting principles(unaudited) (C) Shareholders' funds - equity Sep 30, Sep 30, 2006 2005 •'000 •'000 ------- ------- Shareholders' equity as reported in theconsolidated balancesheets in accordance with IFRS 2,296,768 1,918,409 Adjustments:Pension 9,026 11,688Share based payments 586Capitalised interest (net of amortisation)regarding aircraft acquisition programme 33,889 25,789Darley Investments Limited (19)Minimum pension liability(net of tax) (4,295) (6,496)Tax effect of adjustments( excludingpension & derivative adjustments) (6,459) (5,498) ------- ------- Shareholders' equity as adjusted to accord with US GAAP 2,328,929 1,944,459 ======= ======= Opening shareholders' equity under US GAAP 2,020,448 1,630,113 Comprehensive income Unrealised (losses)/gains on derivativefinancial instruments(net of tax) (32,806) 58,275 Net income in accordance with US GAAP 332,825 245,128 ------- -------Total comprehensive income 300,019 303,403 Share based payments 2,012 - Stock issued for cash 6,450 10,943 ------- ------- Closing shareholders' equity in accordance with US GAAP 2,328,929 1,944,459 ======= ======= 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 exceptional items referred to below. Exceptional items for the half year ended September 30, 2005 consist of areceipt 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 36% to €329.1m during the six months endedSeptember 30, 2006 compared to last year. The adjusted profit for the half year,increased by 39% to €329.1m. Summary Half Year Ended September 30, 2006 Profit after tax increased by 36% to €329.1m, compared to €242.2m in theprevious half year ended September 30, 2005. These results were achieved bystrong growth in passenger volumes and continued tight cost control, excludingfuel and staff costs, which were both significantly higher than in previousperiods. Total operating revenues increased by 33% to €1,256.4m, which isgreater than the 23% growth in passenger volumes, as average fares rose by 9%and ancillary revenues grew by 27% to €164.3m. Total revenue per passenger as aresult increased by 8% whilst Passenger Load Factor increased by 1 point to 87%during the period. Total operating expenses increased by 31% to €870.6m, due to the increased levelof activity, and the increased costs, associated with the growth of the airline.Fuel, which represents 39% of total operating costs compared to 36% last year,increased by 42% to €337.0m due to substantial increases in the US dollar costper gallon, partially offset by a positive movement in the US dollar exchangerate and a 2% reduction in fuel consumption due to the installation of wingletson a portion of our Boeing 737-800 fleet. The remaining retro-fit winglets willbe installed across the fleet by year end. Unit costs excluding fuel and staffcosts declined by 1%. Staff costs rose by 36% reflecting an increase in ourcrewing ratios primarily as a result of increases in our sector length. Despitethe significantly higher fuel and staff costs incurred, operating marginsincreased by 1 point to 31%, whilst operating profit before exceptional itemsincreased by 37% to €385.8m. Net Margins increased by 1 point to 26% for the reasons outlined above. Adjusted basic earnings per share have risen by 38% to €42.67 cent for theperiod. Balance Sheet The strong growth in profitability continues to positively impact the balancesheet with Total Cash increasing by €121.1m to €2,093.1m despite investing€185.4m in a 15% stake in Aer Lingus and funding an additional €88.8m in capitalexpenditure from internal resources. The company debt financed one Boeing737-800 aircraft and funded additional aircraft deposits during the period.Total debt declined during the period as repayments exceeded debt drawdown by€42.8m. Shareholders' Funds at September 30, 2006 have increased by €304.8m to€2,296.8m, compared to March 31, 2006 reflecting the €329.1m increase inprofitability during the period and the exercise of share options whichincreased shareholder funds by €6.5m, offset by a reduction of €30.8m resultingfrom the required IFRS accounting treatment for derivative financialinstruments, pensions and stock options. Detailed Discussion and Analysis Half Year Ended September 30, 2006 Profit after tax, increased by 36% to €329.1m due to a 9% increase in averagefares, strong growth in ancillary revenues, and tight cost control which wasoffset by fuel costs increasing by 42% to €337.0m primarily reflecting thehigher US dollar cost per gallon and a one off step up in staff costs which roseby 36% to €113.8m. Operating margins, as a result, increased by 1 point to 31%,which in turn resulted in operating profit before exceptional items increasingby 37% to €385.8m compared to half year ended September 30, 2005. Total operating revenues increased by 33% to €1,256.4m due to the combination ofa 23% increase in passengers carried, an improvement in average fares and thegrowth of ancillary revenues. Scheduled passenger revenues increased by 34% to €1,092.1m due to a 9%improvement in average fares reflecting the benign yield environment supportedby competitor fuel surcharges and the positive impact of Easter in fares. Easteris not included in the prior year comparative as it occurred earlier. Passengervolumes increased by 23% to 22.1m reflecting increased passenger numbers onexisting routes, the successful launch of our new routes and expansion of ourbases. Load factor increased by 1 point to 87% during the period. Ancillary revenues continue to perform strongly with revenues growing by 27% to€164.3m in the period. This performance reflects the strong growth in on boardsales, non-flight scheduled revenues, and other ancillary products. Ancillaryrevenues continue to grow at a faster rate than passenger volumes. Total operating expenses rose by 31% to €870.6m due to the increased level ofactivity, and the increased costs associated with the growth of the airlineparticularly higher fuel and staff costs. Total operating costs were alsoadversely impacted by a 5% increase in the average sector length, whilst higherUS dollar fuel prices were partly offset by the strength of the euro exchangerate against the US dollar. Staff costs have increased by 36% to €113.8m. This primarily reflects a 31%increase in average employee numbers to 3,768 and the impact of pay increasesgranted during the period. Employee numbers rose due to an increase in ouraircraft crewing ratios as a result of continued increases in sector length.Pilots, who earn higher than the average salary, accounted for 42% of theincrease in employment during the period. Depreciation increased by 17% to €71.6m. There are an additional thirteen'owned' Boeing 737-800 aircraft in the fleet this year compared to last year.The resultant higher depreciation charge was offset by a combination of loweramortisation due to the retirement of Boeing 737-200 aircraft and the positiveimpact of a new engine maintenance deal on the cost of amortisation of Boeing737-800 aircraft. The strengthening of the euro to US dollar also had a positiveimpact on the depreciation and amortisation charge. Fuel costs rose by 42% to €337.0m due to a 21% increase in the number of hoursflown and a significant increase in the average US dollar cost per gallon offuel partially offset by the positive impact of the strengthening of the euro tothe US dollar and a 2% reduction in fuel consumption due to the installation ofwinglets on part of our Boeing 737-800 fleet. Maintenance costs increased by 27% to €21.3m, faster than the increase in thenumber of hours flown, due to an increase in the number of leased Boeing 737-800aircraft from 17 to 24, partially offset by the improved reliability of theBoeing 737-800's operated, a lower level of maintenance costs incurred due tothe retirement of the Boeing 737-200's and the positive impact of thestrengthening of the euro exchange rate against the US dollar. Marketing and distribution costs increased by 33% to €11.6m due to a higherlevel of marketing activity and related expenditure compared to the previousyear as the number of routes operated rose by 42% to 304 at the period end andthe number of bases increased by 1 to 15. Aircraft rental costs increased by 23% to €25.4m reflecting an additional 7aircraft on operating lease during the period. Route charges rose by 17% to €98.4m due to an increase in the number sectorsflown, and a longer average sector length, offset by a reduction in enroutecharges in certain EU countries. Airport and handling charges increased by 26% to €139.1m. This is higher thanthe growth in passenger volumes and reflects the impact of increased costs atsome of our airports and in particular at our Dublin base, which has asignificantly higher cost per passenger, offset by lower costs at new airportsand bases (excluding Dublin), and the positive impact of the euro/sterlingexchange rate during the period. Other expenses increased by 25% to €52.3m, which is less than the growth inancillary revenues due to improved margins on some new and existing products,and cost reductions achieved on certain indirect costs. Operating margins have increased by 1 point to 31% for the period due to thereasons outlined above which has resulted in operating profits increasing by 37%to €385.8m. Interest receivable has increased by 62% to €28.9m due to a combination ofhigher levels of cash and cash equivalents and increases in average depositrates earned in the period. Interest payable increased by €4.5m due to the drawdown of debt to part fund thepurchase of new aircraft during the period and higher floating interest rates. The Company's Balance Sheet continues to strengthen due to the strong growth inprofits during the period. The Company generated cash from operating activitiesof €431.6m which part funded the investment in financial assets of €185.4m andcapital expenditure during the period with the balance reflected in Total Cashof €2,093.0m. Capital expenditure of €88.8m primarily comprised of the deliveryof one aircraft and advance payments for future aircraft deliveries. Long termdebt, net of repayments decreased by €42.8m during the period. Shareholders' Equity at September 30, 2006 has increased by €304.8m to€2,296.8m, compared to March 31, 2006 reflecting the €329.1m increase inprofitability during the period and the exercise of share options whichincreased shareholder funds by €6.5m, offset by a reduction of €30.8m resultingfrom the IFRS accounting treatment for derivative financial instruments,pensions and stock options. Detailed Discussion and Analysis Quarter Ended September 30, 2006 Profit after tax, increased by 24% to €213.4m due to average fares improving by6% and strong ancillary revenue growth, which was offset by fuel costs whichrose 34% to €169.6m reflecting the higher US dollar cost per gallon and the oneoff step up in staff costs which rose by 38% to €57.1m. Operating margins, as aresult of these higher costs, fell by 1 point to 36%. Strong cost control onother line items coupled with increases in total operating revenues resulted inoperating profit increasing by 23% to €249.1m compared to the previous quarterended September 30, 2005. Total operating revenues increased by 27% to €689.8m whilst passenger volumesincreased by 21% to 11.5m. Total revenue per passenger increased by 5% in thequarter due to a combination of higher average fares, and strong ancillaryrevenue growth. Scheduled passenger revenues increased by 28% to €602.1m due to a combination ofhigher passenger numbers on existing routes, the successful launch of new routesand a 6% improvement in average fares. Ancillary revenues increased 23% to €87.7m, a faster growth rate than passengervolumes, reflecting a strong performance in non-flight scheduled revenues,on-board sales and other ancillary products Total operating expenses increased by 30% to €440.7m due to the increased levelof activity, and in particular higher fuel and staff costs. Total operatingcosts were also adversely impacted by an increase in the average sector length,whilst higher US dollar fuel prices were partially offset by the strength of theeuro exchange rate against the US dollar and lower fleet burn resulting from thenewly installed winglets. Staff costs have increased by 38% to €57.1m primarily due to a 30% increase inaverage employee numbers to 3,881 in the quarter and the impact of pay increasesgranted. Employee numbers rose due to an increase in our aircraft crewing ratiosas a result of continued increases in average sector length. Pilots, who earnhigher than the average salary, accounted for 43% of the increase in employmentduring the period. Depreciation increased by 21% to €36.0m due to an increase in the size of the'owned' fleet from 74 to 87, offset by a lower amortisation charge due to theretirement of Boeing 737-200 aircraft and the positive impact of a new enginemaintenance deal on the cost of aircraft amortisation. The strengthening of theeuro to US dollar also had a positive impact on the depreciation andamortisation charge relating to new aircraft deliveries. Fuel costs rose by 34% to €169.6m due to an increase in the number of sectorsflown, a 6% increase in sector length, and a significantly higher average USdollar cost per gallon of fuel. The increased costs were partially offset by thepositive impact of the strengthening of the euro to the US dollar during theyear and a 2% reduction in fuel consumption due to the installation of wingletson part of our Boeing 737-800 fleet. Maintenance costs increased by 39% to €10.6m faster than the increase in thenumber of hours flown due to an increase in the number of leased Boeing 737-800aircraft from 17 to 24, partially offset by the improved reliability of theBoeing 737-800's operated, a lower level of maintenance costs incurred due tothe retirement of the Boeing 737-200's, and the positive impact of thestrengthening of the euro exchange rate against the US dollar. Marketing and distribution costs increased by 39% to €5.9m due to a higher levelof marketing activity and related expenditure compared to the previous year asthe number of routes operated rose by 42% to 304 at the period end and thenumber of bases increased by 1 to 15. Aircraft rental costs increased by 22% to €13.0m reflecting an additional 3aircraft on operating lease during the period. Route charges rose by 18% to €50.3m 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 28% to €71.2m, which was higher thanthe growth in passenger volumes and reflects the impact of increased costs atcertain existing airports, specifically at our Dublin base which has a muchhigher average cost per passenger, offset by lower costs at new airports andbases, and the positive euro/sterling exchange rate. Other expenses increased by 26% to €26.9m, which is higher than the growth inancillary revenues due to improved margins on some existing products and costincreases on some indirect costs. Operating margins have fallen by 1 point to 36% due to the reasons outlinedabove whilst operating profits have increased by 23% to €249.1m during thequarter. Interest receivable has increased by 74% to €16.1m in the quarter due to thecombined impact of higher levels of cash and cash equivalents and increases inaverage deposit rates earned compared to the same period last year. Interest payable increased by 13% to €20.7m due to the drawdown of debt to partfund the purchase of new aircraft and higher floating interest rates. Notes to the Financial Statements 1. •Accounting Policies This period'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, 2006, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the EU. The comparative financial information for the six month period ended September 30, 2005 has been restated on a consistent basis. 2. •Approval of the Preliminary Announcement The Audit Committee approved the consolidated financial statements for the half year ended September 30, 2006 on November 3, 2006. 3. •Generally Accepted Accounting Policies The Management Discussion and Analysis of Results for the half year ended September 30, 2006 and the comparative period are based on the results reported under the group's IFRS accounting policies, as adjusted for certain exceptional items. 4. •Available for Sale Securities During the period the company acquired a €185.4m stake in Aer Lingus representing 15% of its share capital at September 30, 2006. 5. •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 periods have not been restated to reflect the impact of the revised standard. In this period's financial information, the Company has, as a result of the adoption of SFAS No. 123R, recorded incremental share-based compensation expense of €2.012 million 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 three month period ended September 30, 2005, reported income under US GAAP would have changed from €174.087 million to €173.796 million with resulting Net income per ADS, basic and diluted, of 113.57 Euro cents and 112.77 Euro cents respectively. Independent review report to Ryanair Holdings plc for the six months endedSeptember 30, 2006 Introduction We have been engaged by the Company to review the financial information whichcomprises the consolidated balance sheet of Ryanair Holdings plc at September30, 2006 and the related consolidated statements of income, statement ofrecognised income & expense and cash flows for the six month period then endedand the related notes as set out on pages 1 to 7. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Irish Stock Exchange and the UK Financial Services Authority. Ourreview has been undertaken so that we might state to the Company those matterswe are required to state to it in this report and for no other purpose. To thefullest extent permitted by law, we do not accept or assume responsibility toanyone other than the Company, for our review work, for this report, or for theconclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual accounts except where there are any changes, and the reasonsfor them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in Ireland and the United Kingdom. A review consists principally ofmaking enquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with Auditing Standards and therefore provides a lower level ofassurance than an audit. Accordingly we do not express an audit opinion on thefinancial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented at and for the sixmonths ended September 30, 2006. KPMG November 3, 2006Chartered AccountantsDublin, Ireland This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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