TIDMRYA
RNS Number : 8500D
Ryanair Holdings PLC
02 November 2020
RYANAIR REPORTS H1 LOSS OF EUR197M AS TRAFFIC FALLS 80% TO
17M
Ryanair Holdings plc today (2 Nov.) reported a H1 loss of
EUR197m, compared to a PY H1 profit of EUR1.15bn. Highlights of
this 6-month period include:
-- 99% of the fleet grounded from mid-March to end June.
-- Successful return to service implemented 1 July.
-- H1 traffic fell from 86m to 17m.
-- Cost reduction measures implemented across business.
-- Successful EUR1.25bn financing raised in Sep. (equity placing & eurobond).
-- Cash prioritised. Closing cash EUR4.5bn.
-- Over EUR1.5bn debt due in 2021 (incl. GBP600m UK CCFF & EUR850m Jun'14 bond).
H1 (IFRS) - Group* 30 Sep. 2019 30 Sep. 2020 Change
Customers 85.7m 17.1m -80%
------------- ------------- -------
Load Factor 96% 72% -24pts
------------- ------------- -------
Revenue EUR5.39bn EUR1.18bn -78%
------------- ------------- -------
Op. Costs EUR4.10bn EUR1.35bn -67%
------------- ------------- -------
PAT/(Net Loss) EUR1.15bn (EUR197m) n/m
------------- ------------- -------
* excl. EUR214m except. hedge ineffectiveness charge.
COVID-19:
Covid-19 grounded the Group's entire fleet from mid-March to the
end of June as EU Govts imposed flight or travel bans and
widespread population lockdowns. During this crisis, Group airlines
repatriated customers and operated rescue flights for many EU
Govts. The Group implemented extensive health measures, especially
onboard aircraft, to comply with EU guidelines (ECDC & EASA)
and on 1 July successfully resumed flights across most of our route
network operating up to 60% of prior year capacity in Q2 achieving
over 70% load factors. Passenger confidence and forward bookings
into W.20 were negatively impacted by the return of uncoordinated
EU Govt flight restrictions in Sep. and Oct. which heavily
curtailed travel to/from much of Central Europe, the UK, Ireland,
Austria, Belgium and Portugal. As a result, Ryanair recently cut
its FY21 traffic guidance to approx. 38m guests. This takes the
Group's W.20 (Nov-Mar) capacity down from the previously guided 60%
to at most 40% of prior year traffic.
Ryanair's Customer Service teams (supported by Ryanair Labs)
have cleared an unprecedented volume of customer flight changes and
Covid-19 cancellations, while processing a record backlog of
refunds caused by almost 4 months of EU Govt imposed flight
cancellations. This process was frustrated by unlicensed OTAs, many
of who provided false customer contact and fake payment details at
the time of booking. Despite the enormity of the task, almost all
non-OTA refund requests have now been dealt with either via cash
refunds or vouchers.
The Covid-19 crisis has already caused the closure of a number
of EU airlines including Flybe, Germanwings and Level as well as
deep long-term capacity reductions at many others. It has sparked a
flood of illegal State Aid from EU Governments to their flag
carriers including Alitalia, Air France/KLM, LOT, Lufthansa, SAS,
TAP and others. This illegal State Aid will distort competition and
allow failed flag carriers to engage in below cost selling for many
years. We expect intra-European air travel capacity to remain
subdued for the next few years. This will create opportunities for
Ryanair (Europe's lowest cost airline) to grow its network, and
expand its fleet, to take advantage of lower cost airport and
aircraft opportunities that will inevitably arise.
H1 BUSINESS REVIEW:
Revenue & Costs
Revenue fell by 78% to EUR1.18bn as traffic fell 80% to 17.1m.
With almost zero Q1 traffic, the vast majority of H1 revenue was
earned in Q2. Ancillary revenue performed strongly as more guests
chose priority boarding and reserved seating.
During the half-year substantial work has been undertaken to
successfully improve Ryanair's long term cost leadership. The Group
has agreed modest pay cuts with our people and their unions which
helped minimise job losses. Lauda has been completely restructured,
better terms were agreed with our maintenance providers, lessors,
marketing & other suppliers and many airport deals were
renegotiated. Our Route Development teams are working with airports
partners across Europe who have suffered steep traffic declines and
discussions are ongoing with aircraft suppliers to amend pricing to
reflect the new Covid-19 reality. Due to significantly reduced W.20
traffic forecasts and ongoing aircraft delivery delays, the Group
recorded a EUR214m ineffectiveness charge on fuel and currency
hedges in H1.
Balance Sheet & Liquidity
Ryanair's balance sheet is one of the strongest in the industry
with a BBB credit rating (S&P and Fitch) and over EUR4.5bn cash
at 30 Sep. Almost 80% of the Group's fleet is unencumbered (with a
book value of over EUR7bn). Since March, the Group lowered cash
burn by cutting costs, participating in EU Govt payroll support
schemes, cancelling share buybacks and deferring non-essential
capex. In Sep., the Group raised EUR400m of equity and a 5-year
(unsecured) EUR850m eurobond with a 2.875% coupon (both
transactions were multiple times oversubscribed and keenly priced).
Cash was also boosted by EUR250m supplier reimbursements received
in Q2. This ensures that the Group is well financed to deal with
the Covid-19 crisis and removes refinancing risk as it prepares to
repay maturing debt over the coming year (CCFF GBP600m in Mar.
& EUR850m bond in Jun. 2021). This financial strength enables
the Group to capitalise on the many growth opportunities that are
available post Covid-19.
Boeing MAX update
It is over 18-months since the Group was due to take delivery of
its first Boeing 737-MAX-200 aircraft. Boeing expect a calendar Q4
return to service for the MAX-8, allowing Ryanair to, hopefully,
accept delivery of its first MAX-200 in early 2021. We expect to
take delivery of approx. 30 MAXs before peak S.2021. While the
Group received supplier reimbursements in Q2, compensation
discussions will not be finalised or concluded with Boeing until
the MAX returns to service and revised delivery schedules can be
finalised and agreed. We remain committed to the Boeing 737,
particularly the new 200 series "gamechanger" aircraft which have
4% more seats, 16% lower fuel burn and 40% lower noise emissions.
These new aircraft will enable Ryanair to grow to 200m passengers
p.a. over the next 5 or 6 years while lowering the cost base and
significantly reducing its environmental footprint.
BREXIT:
The risk of a no-deal Brexit remains high. We hope, before the
end of the Transition Period in Dec., that the UK and Europe will
agree a trade deal to cover air travel which will allow the free
movement of people and the deregulated airline market between the
UK and Europe to continue. As an EU airline group, Ryanair should
be less affected by a no-deal Brexit than our UK registered
competitors. However, we still expect Brexit to cause adverse
trading consequences. Ryanair has put the necessary measures in
place to ensure that the Group remains majority EU owned, including
restricting voting rights of non-EU shareholders, in the event of a
"hard-Brexit". We therefore expect the Group's AOCs in Austria,
Ireland, Malta and Poland to continue to operate freely. In
addition, Ryanair's UK AOC (Ryanair UK) will be able to benefit
from any bilateral agreements negotiated between the UK and non-EU
countries while facilitating the operation of domestic UK
flights.
OUTLOOK:
FY21 will continue to be a hugely challenging year for Ryanair.
Given the current Covid-19 uncertainty, Ryanair cannot provide FY21
PAT guidance at this time. The Group expects to carry approx. 38m
passengers in FY21, although this guidance could be further revised
downwards if EU Govts continue to mismanage air travel and impose
more uncoordinated travel restrictions or lock downs this winter.
The Group expects to record higher losses in H2 than in H1.
As we look beyond the Covid-19 crisis, and the emergence of
effective vaccines in early 2021, the Ryanair Group expects to have
a lower cost base, a stronger balance sheet, which will enable it
to fund lower fares, and add new lower cost aircraft to capitalise
on the many growth opportunities that will be available in all
markets across Europe, especially where competitor airlines have
substantially cut capacity or failed.
S
For further information Neil Sorahan Piaras Kelly
please contact: Ryanair Holdings plc Edelman
www.ryanair.com Tel: +353-1-9451212 Tel: +353-1-6789333
Ryanair Holdings plc, Europe's largest airline group, is the
parent company of Buzz, Lauda, Malta Air & Ryanair. Carrying
149m guests p.a. (pre Covid-19) on more than 2,100 daily flights
from 72 bases, the Group connects over 240 destinations in 40
countries on a fleet of 470 aircraft, with a further 210 Boeing
737s on order, which will enable the Ryanair Group to lower fares
and grow traffic to 200m p.a. over the next 5 or 6 years. Ryanair
has a team of over 16,000 highly skilled aviation professionals
delivering Europe's No.1 on-time performance, and an industry
leading 35-year safety record. Ryanair is Europe's greenest
cleanest airline group and customers switching to fly Ryanair can
reduce their CO emissions by up to 50% compared to the other Big 4
EU major airlines.
Certain of the information included in this release is forward
looking and is subject to important risks and uncertainties that
could cause actual results to differ materially. It is not
reasonably possible to itemise all of the many factors and specific
events that could affect the outlook and results of an airline
operating in the European economy. Among the factors that are
subject to change and could significantly impact Ryanair's expected
results are the airline pricing environment, fuel costs,
competition from new and existing carriers, market prices for the
replacement of 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, uncertainties surrounding Brexit, weather related
disruptions, ATC strikes and staffing related disruptions, delays
in the delivery of contracted aircraft, 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 and other
economics, social and political factors, global pandemics such as
Covid-19 and unforeseen security events.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Balance Sheet as at September 30,
2020 (unaudited)
At Sep 30, At Mar 31,
2020 2020
Note EURM EURM
Non-current assets
Property, plant and equipment 10 9,266.2 9,438.0
Right-of-use asset 217.7 236.8
Intangible assets 146.4 146.4
Derivative financial instruments 13 146.5 378.5
Deferred tax 12.7 53.6
----------- -----------
Total non-current assets 9,789.5 10,253.3
----------- -----------
Current assets
Inventories 3.7 3.3
Other assets 152.3 178.7
Current tax 36.0 44.5
Assets held for sale 11 72.5 98.7
Trade receivables 32.7 67.5
Derivative financial instruments 13 95.4 293.2
----------- -----------
Restricted cash 34.1 34.4
Financial assets: cash > 3 months 1,516.1 1,207.2
Cash and cash equivalents 2,952.1 2,566.4
----------- -----------
Total current assets 4,894.9 4,493.9
-----------
Total assets 14,684.4 14,747.2
----------- -----------
Current liabilities
Provisions 60.1 43.3
Trade payables 1,390.7 1,368.2
Accrued expenses and other liabilities 1,708.1 2,589.4
Current lease liability 62.6 75.0
Current maturities of debt 1,869.5 382.3
Derivative financial instruments 13 568.1 1,050.0
Total current liabilities 5,659.1 5,508.2
----------- -----------
Non-current liabilities
Provisions 30.9 36.6
Derivative financial instruments 13 63.3 180.5
Deferred tax 299.3 353.5
Non-current lease liability 151.4 170.9
Non-current maturities of debt 3,501.7 3,583.0
----------- -----------
Total non-current liabilities 4,046.6 4,324.5
----------- -----------
Shareholders' equity
Issued share capital 14 6.7 6.5
Share premium account 14 1,144.1 738.5
Other undenominated capital 14 3.5 3.5
Retained earnings 14 3,833.1 4,245.0
Other reserves (8.7) (79.0)
----------- -----------
Shareholders' equity 4,978.7 4,914.5
----------- -----------
Total liabilities and shareholders' equity 14,684.4 14,747.2
----------- -----------
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement for the Half-Year ended September 30, 2020
(unaudited)
Pre-Except. Except. IFRS IFRS
H1- Items
Sep 30, H1- H1- H1-
Sep 30, Sep 30, Sep 30,
Change 2020 2020 2020 2019
Note % EURM EURM EURM EURM
Operating revenues
Scheduled revenues -79% 790.8 - 790.8 3,735.0
Ancillary revenues -77% 385.4 - 385.4 1,654.6
Total operating revenues -78% 1,176.2 - 1,176.2 5,389.6
Operating expenses
Fuel and oil +78% 343.0 - 343.0 1,586.9
Depreciation +22% 296.5 - 296.5 381.1
Staff costs +60% 234.7 - 234.7 583.3
Airport and handling
charges +74% 169.7 - 169.7 660.2
Route charges +73% 115.3 - 115.3 426.0
Marketing, distribution
and other +64% 106.4 - 106.4 299.1
Maintenance, materials
and repairs +40% 82.6 - 82.6 137.2
Aircraft rentals +83% 4.8 - 4.8 27.5
Total operating expenses +67% 1,353.0 - 1,353.0 4,101.3
Operating (loss)/profit (176.8) - (176.8) 1,288.3
Other (expense)/income
Net finance expense +42% (15.3) - (15.3) (26.6)
Hedge
Ineffectiveness/foreign
exchange translation - (240.2) (240.2) (2.2)
Total other
income/(expenses) +12% (15.3) (240.2) (255.5) (28.8)
(Loss)/profit before tax (192.1) (240.2) (432.3) 1,259.5
Tax credit/(expense) on
(loss)/profit 4 (4.4) 26.2 21.8 (106.8)
------------ --------- --------- ---------
(Loss)/profit for the half-year
- all
attributable to equity holders
of parent (196.5) (214.0) (410.5) 1,152.7
======= ============ ========= ========= =========
(Loss)/earnings per
ordinary share
(EUR)
Basic 9 -137% (0.3752) 1.0247
Diluted 9 -137% (0.3752) 1.0204
Weighted ave. no. of
ord. shares
(in Ms)
Basic 9 1,094.0 1,124.9
Diluted 9 1,094.0 1,129.7
------------ --------- --------- ---------
*'+' is favourable and '-' is adverse year-on-year.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Income Statement for the Quarter ended September 30, 2020 (unaudited)
Pre-Except. Except. IFRS IFRS
Items
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
Sep 30, Sep 30, Sep 30, Sep
30,
Change 2020 2020 2020 2019
Note % EURM EURM EURM EURM
Operating revenues
Scheduled revenues -69% 690.1 - 690.1 2,217.7
Ancillary revenues -58% 360.9 - 360.9 859.8
Total operating revenues -66% 1,051.0 - 1,051.0 3,077.5
Operating expenses
Fuel and oil +58% 334.1 - 334.1 802.9
Depreciation +14% 162.5 - 162.5 188.2
Staff costs +42% 166.2 - 166.2 286.0
Airport and handling charges +55% 151.6 - 151.6 334.7
Route charges +48% 113.0 - 113.0 216.3
Marketing, distribution and
other +59% 64.0 - 64.0 154.5
Maintenance, materials and
repairs +33% 46.4 - 46.4 69.1
Aircraft rentals +81% 2.4 - 2.4 12.8
Total operating expenses +50% 1,040.2 - 1,040.2 2,064.5
Operating profit -99% 10.8 - 10.8 1,013.0
Other (expense)/income
Net finance expense +55% (5.9) - (5.9) (13.1)
Hedge
Ineffectiveness/foreign
exchange
translation - (227.3) (227.3) (2.3)
Total other (expense) (5.9) (227.3) (233.2) (15.4)
(Loss)/profit before tax 4.9 (227.3) (222.4) 997.6
Tax (expense) on
(loss)/profit 4 (27.5) 24.4 (3.1) (87.4)
--------
(Loss)/Profit for the quarter
- attributable
to equity holders of parent (22.6) (202.9) (225.5) 910.2
======= ============ ======== ========= ========
(Loss)/earnings per
ordinary share
(EUR)
Basic 9 -125% (0.2053) 0.8139
Diluted 9 -125% (0.2053) 0.8107
Weighted ave. no. ord.
shares (in
Ms)
Basic 9 1,098.6 1,118.3
Diluted 9 1,098.6 1,122.7
------------ -------- --------- --------
*'+' is favourable and '-' is adverse year-on-year .
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Comprehensive Income
for the Half-Year ended September 30, 2020 (unaudited )
Half-Year Half-Year
Ended Ended
Sep 30, Sep 30,
2020 2019
EURM EURM
(Loss)/profit for the half-year (410.5) 1,152.7
---------- ----------
Other comprehensive income:
Items that are or may be reclassified to profit or loss:
Movements in hedging reserve, net of tax:
Net movements in cash-flow hedge reserve 69.1 216.5
Other comprehensive income for the half-year, net of income tax 69.1 216.5
---------- ----------
Total comprehensive (loss)/income for the half-year - all attributable to equity holders of
parent (341.4) 1,369.2
---------- ----------
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Comprehensive Income
for the quarter ended September 30, 2020 (unaudited )
Quarter Quarter
Ended Ended
Sep 30, Sep 30,
2020 2019
EURM EURM
(Loss)/profit for the quarter (225.5) 910.2
--------- ---------
Other comprehensive income:
Items that are or may be reclassified to profit or loss:
Movements in hedging reserve, net of tax:
Net movement in cash-flow hedge reserve 103.1 293.2
Other comprehensive income for the quarter, net of income tax 103.1 293.2
--------- ---------
Total comprehensive (loss)/income for the quarter - all attributable to equity holders of
parent (122.4) 1,203.4
--------- ---------
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Cash Flows for the
Half-Year ended September 30, 2020 (unaudited)
Half-Year Half-Year
Ended Ended
Sep 30, Sep 30,
2020 2019
*Restated
Note EURM EURM
Operating activities
(Loss)/profit after tax (410.5) 1,152.7
Adjustments to reconcile profit after tax to net cash from operating activities
Depreciation 296.5 381.1
Increase in inventories (0.4) (2.0)
Tax (credit)/expense on profit (21.8) 106.8
Share based payments 2.1 4.0
Decrease/(increase) in trade receivables 34.5 (16.1)
Decrease/(increase) in other assets 19.1 (27.4)
(Decrease)/increase in trade payables (108.6) 168.6
(Decrease) in accrued expenses (868.8) (909.1)
Increase in provisions 11.1 0.7
Decrease in finance income 2.2 -
Increase in finance expense (14.9) (6.9)
Hedge ineffectiveness (97.4) -
Income tax paid (1.0) (49.3)
Net cash (outflow)/inflow from operating activities (1,157.9) 803.1
------------ ------------
Investing activities
Capital expenditure purchase of property, plant and equipment net of supplier
proceeds 142.5 (334.2)
Decrease in restricted cash 0.3 0.5
(Increase) in financial assets: cash > 3 months (308.9) (295.5)
Net cash (used in) investing activities (166.1) (629.2)
------------ ------------
Financing activities
Shareholder returns (net of tax) - (226.0)
Net proceeds from shares issued 14 403.5 3.6
Proceeds from long term borrowings 1,540.0 750.0
Repayments of long term borrowings (132.3) (230.8)
Lease liabilities paid (38.2) (28.1)
Net cash from in financing activities 1,773.0 268.7
------------ ------------
Increase in cash and cash equivalents 449.0 442.6
Net foreign exchange differences (63.3) -
------------ ------------
Cash and cash equivalents at beginning of the period 2,566.4 1,675.6
------------ ------------
Cash and cash equivalents at end of the period 2,952.1 2,118.2
------------ ------------
* Includes reclassification between trade payables and capital
expenditure. See note 1 for further detail.
Ryanair Holdings plc and Subsidiaries
Condensed Consolidated Interim Statement of Changes in
Shareholders' Equity for the Half-Year ended September 30, 2020
(unaudited)
Issued Share Other
Ordinary Share Premium Retained Undenom. Other
Shares Capital Account Earnings Capital Hedging Reserves Total
M EURM EURM EURM EURM EURM EURM EURM
Balance at
March 31,
2019 1,133.4 6.8 719.4 4,181.9 3.2 274.6 29.0 5,214.9
Adjustment on
initial
application
of
IFRS 16 - - - (9.7) - - - (9.7)
Adj. balance
at March 31,
2019 1,133.4 6.8 719.4 4,172.2 3.2 274.6 29.0 5,205.2
Profit for the
half-year - - - 1,152.7 - - - 1,152.7
Other
comprehensive
income
Net movements
in cash flow
reserve - - - - - 216.5 - 216.5
Total other
comprehensive
income - - - - - 216.5 - 216.5
Total
comprehensive
income - - - 1,152.7 - 216.5 - 1,369.2
--------- --------------- --------------- --------------- ------------ ------------- -----------------
Transactions
with owners of
the Company
recognised
directly in
equity
Issue of
ordinary
equity shares 0.6 - 3.6 - - - 3.6
Share-based
payments - - - - - - 4.0 4.0
Repurchase of
ordinary
equity shares - - - (226.0) - - - (226.0)
Other - - 0.9 - - - 0.9
Cancellation
of
repurchased
ordinary
shares (21.8) (0.1) - - 0.1 - - -
Transfer of
exercised and
expired share
based awards - - - 0.5 - - (0.5) -
Balance at
September 30,
2019 1,112.2 6.7 723.0 5,100.3 3.3 491.1 32.5 6,356.9
Loss for the
half-year - - - (504.0) - - - (504.0)
Other
comprehensive
income
Net movements
in cash flow
reserve - - - - - (602.4) - (602.4)
Total other
comprehensive
income - - - - - (602.4) - (602.4)
Total
comprehensive
income - - - (504.0) - (602.4) - (1,106.4)
--------- --------------- --------------- --------------- -----------------
Transactions
with owners of
the Company
recognised
directly in
equity
Issue of
ordinary
equity shares 2.4 - 15.5 - - - - 15.5
Share-based
payments - - - - - - 3.0 3.0
Repurchase of
ordinary
equity shares - - - (354.5) - - - (354.5)
Cancellation
of
repurchased
ordinary
shares (25.4) (0.2) - - 0.2 - - -
Transfer of
exercised and
expired share
based awards - - - 3.2 - - (3.2) -
Balance at
March 31,
2020 1,089.2 6.5 738.5 4,245.0 3.5 (111.3) 32.3 4,914.5
Loss for the
half-year - - - (410.5) - - - (410.5)
Other
comprehensive
income
Net movements
in cash flow
reserve - - - - - 69.1 - 69.1
Total other
comprehensive
income - - - - - 69.1 - 69.1
--------- --------------- --------------- --------------- ------------ ------------- -----------------
Total
comprehensive
income - - - (410.5) - 69.1 - (341.4)
--------- --------------- --------------- --------------- ------------ ------------- -----------------
Transactions
with owners of
the Company
recognised
directly in
equity
Issue of
ordinary
equity shares 36.1 0.2 405.6 (2.3) - - - 403.5
Share-based
payments - - - - - - 2.1 2.1
Transfer of
exercised and
expired share
based awards - - - 0.9 - - (0.9) -
Balance at
September 30,
2020 1,125.3 6.7 1,144.1 3,833.1 3.5 (42.2) 33.5 4,978.7
--------- --------------- --------------- --------------- -----------------
Ryanair Holdings plc and Subsidiaries
MD&A Half-Year Ended September 30, 2020
Introduction
For the purposes of the Management Discussion and Analysis
("MD&A") (with the exception of the balance sheet commentary
below) all figures and comments are by reference to the adjusted
results excluding the exceptional item referred to below.
Ongoing EU Government travel & flight restrictions as a
result of Covid-19 means that the Group will operate a
significantly reduced flying schedule in H2 FY21 compared to what
was originally expected. Therefore, the Group is recording an
exceptional hedge ineffectiveness charge of EUR167M (net of a tax
credit) in relation to H2 FY21 jet fuel hedges and a EUR47M charge
(net of a tax credit) in relation to ineffective currency cashflow
hedges primarily from delayed capex.
Income Statement
Scheduled revenues:
Scheduled revenues decreased by 79% to EUR790.8M due to an 80%
decline in traffic to 17M as EU Governments imposed flight and/or
travel bans due to the Covid-19 pandemic. This grounded approx. 99%
of the Group's fleet for almost 4 months (from mid-March to late
June). The Group operated approximately 50% of its normal Q2
schedule with a 72% load factor.
Ancillary revenues:
Ancillary revenues decreased by 77% to EUR385.4M due to an 80%
decline in traffic (as highlighted above) to 17M offset by a strong
performance in priority boarding and reserved seating.
Total revenues:
As a result of the above, total revenues decreased by 78% to
EUR1,176.2M.
Operating Expenses:
Fuel and oil:
Fuel and oil decreased by 78% to EUR343.0M due to a 73%
reduction in sectors flown, arising from Covid-19 fleet groundings
and improved fuel burn.
Depreciation:
Depreciation was 22% lower at EUR296.5M, primarily due to lower
amortisation as a result of reduced aircraft utilisation.
Staff costs:
Staff costs decreased by 60% to EUR234.7M due to reduced flight
hours, a recruitment freeze, Group wide pay cuts and participation
in EU Government payroll support schemes.
Airport and handling charges:
Airport and handling charges decreased by 74% to EUR169.7M due
to lower sectors and reduced charges.
Route charges:
Route charges decreased by 73% to EUR115.3M primarily due to
significantly reduced sectors arising from Covid-19 fleet
groundings
Marketing, distribution and other:
Marketing, distribution and other decreased by 64% to EUR106.4M
due to lower discretionary spending across the Group airlines and
fewer flights qualifying for EU261 compensation due to improved
on-time performance in H1 (97% OTP).
Maintenance, materials and repairs:
Maintenance, materials and repairs decreased by 40% to EUR82.6M
due to reduced aircraft utilisation.
Aircraft rentals:
Aircraft rentals fell by 83% to EUR4.8M due to 14 fewer leased
B737 aircraft in the fleet.
Other expense:
Finance expenses decreased by EUR11.3M to EUR15.3M as a result
of higher USD denominated cash on deposit and the maturity of more
expensive secured debt.
Balance sheet:
Gross cash increased by EUR694.3M to EUR4,502.3.0M at September
30, 2020.
Gross debt rose by EUR1,374.0M to EUR5,585.2M primarily due to a
EUR850M Eurobond issuance in September 2020 and GBP600M unsecured
debt under the HMT and Bank of England CCFF, offset by EUR132.3M
debt repayments and EUR38.2M lease liability payments.
Net debt was EUR1,082.9M at period end.
Shareholders' equity:
Shareholders' equity increased by EUR64.2M to EUR4,978.7M in the
period primarily due to a EUR400.0M of equity placing in September
2020 offset by a net loss of EUR410.5M and IFRS hedge accounting
unrealised gain for derivatives of EUR69.1M.
MD&A Quarter Ended September 30, 2020
Introduction
For the purposes of the Management Discussion and Analysis
("MD&A") (with the exception of the balance sheet commentary
below) all figures and comments are by reference to the adjusted
results excluding the exceptional item referred to below.
Ongoing EU Government travel & flight restrictions as a
result of Covid-19 means that the Group will operate a
significantly reduced flying schedule in H2 FY21 compared to what
was originally expected. Therefore, the Group is recording an
exceptional hedge ineffectiveness charge of EUR153M (net of a tax
credit) in relation to H2 FY21 jet fuel hedges and a EUR50M charge
(net of a tax credit) in relation to ineffective currency cashflow
hedges primarily from delayed capex.
Income Statement
Scheduled revenues:
Scheduled revenues decreased by 69% to EUR690.1M due to a 62%
decline in traffic to just 16.7M as EU Governments imposed flight
and/or travel bans due to the Covid-19 pandemic. The Group operated
approximately 50% of its normal Q2 schedule with a 72% load
factor.
Ancillary revenues:
Ancillary revenues decreased by 58% to EUR360.9M due to a 62%
decline in traffic (as highlighted above) to just 16.7M offset by a
strong performance in priority boarding and reserved seating.
Total Revenue:
As a result of the above, total revenues decreased by 66% to
EUR1,051.0M.
Operating Expenses:
Fuel and oil:
Fuel and oil decreased by 58% to EUR334.1M due to a 49%
reduction in sectors flown, arising from Covid-19 fleet groundings
and improved fuel burn.
Depreciation:
Depreciation is 14% lower at EUR162.5M, primarily due to lower
amortisation as a result of reduced aircraft utilisation.
Staff costs:
Staff costs decreased 42% to EUR166.2M due to reduced flight
hours, a recruitment freeze, Group wide pay cuts and participation
in EU Government payroll support schemes.
Airport and handling charges:
Airport and handling charges decreased by 55% to EUR151.6M due
to lower sectors and reduced charges.
Route charges:
Route charges decreased by 48% to EUR113.0M primarily due to
significantly reduced sectors arising from Covid-19 fleet
groundings.
Marketing, distribution and other:
Marketing, distribution and other decreased by 59% to EUR64.0M
due to lower discretionary spending across the Group airlines and
fewer flights qualifying for EU261 compensation due to improved
on-time performance in Q2 (97% OTP).
Maintenance, materials and repairs:
Maintenance, materials and repairs decreased by 33% to EUR46.4M
due to reduced aircraft utilisation.
Aircraft rentals:
Aircraft rentals fell by 81% to EUR2.4M due to 14 fewer leased
B737 aircraft in the fleet.
Other expense:
Finance expenses decreased by EUR7.2M to EUR5.9M as a result of
higher USD denominated cash on deposit and the maturity of more
expensive secured debt.
Ryanair Holdings plc and Subsidiaries
Interim Management Report
Introduction
This financial report for the half-year ended September 30, 2020
meets the reporting requirements pursuant to the Transparency
(Directive 2004/109/EC) Regulations 2007 and Transparency Rules of
the Central Bank of Ireland.
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, 2020 compared to the six month period ended September 30, 2019,
including important events that occurred during the half-year, are
set forth above in the MD&A.
Principal risks and uncertainties for the remainder of the
year
The Covid-19 pandemic and measures to reduce its spread have
had, and will likely continue to have, a material adverse impact on
the Group's business, results of operations, financial condition
and liquidity. Since February 2020, governments globally have
implemented a range of travel restrictions including lockdowns, "do
not travel" advisories, restrictions on travel from certain
international locations, enhanced airport screenings, mandatory
quarantine requirements, and other similar measures. Other
governmental restrictions and regulations in the future in response
to Covid-19 could include additional travel restrictions,
quarantines of additional populations (including the Group's
personnel), restrictions on our ability to access our facilities or
aircraft or requirements to collect additional passenger data. In
addition, governments, non-governmental organizations and entities
in the private sector have issued and may continue to issue
non-binding advisories or recommendations regarding air travel or
other social distancing measures, including limitations on the
number of persons that should be present at public gatherings. In
addition, Ryanair has incurred, and will continue to incur,
significant Covid-19 related costs for enhanced aircraft cleaning
and additional procedures to limit transmission among its personnel
and customers. Although these procedures are currently elective,
the industry may in the future be subject to further cleaning and
safety measures, which may be costly and take a significant amount
of time to implement. These measures, individually and combined,
could have a material adverse impact on the Group's business.
The full extent of the ongoing impact of Covid-19 on the Group's
longer-term operational and financial performance will depend on
future developments, many of which are outside of the Group's
control, including the duration and spread of Covid-19 and related
travel advisories and restrictions, the impact of Covid-19 on
overall long-term demand for air travel, the impact of Covid-19 on
the financial health and operations of the Group's business
partners (particularly Boeing), and future governmental actions,
all of which are highly uncertain and cannot be predicted.
Among other 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, capacity growth in
Europe, fuel costs, competition from new and existing carriers,
market prices for the replacement of aircraft, costs associated
with environmental, safety and security measures, actions of the
Irish, UK, European Union ("EU") and other governments and their
respective regulatory agencies, delays in the delivery of
contracted aircraft, weather related disruptions, ATC strikes and
staffing related disruptions, uncertainties surrounding Brexit,
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 unforeseen security events.
Board of Directors
David Bonderman and Kyran McLaughlin retired from the Board on
May 31, 2020. Stan McCarthy was appointed Chairman of the Board of
Directors following David Bonderman's retirement. Details of the
members of the Group's Board of Directors are set forth on page 17
of the Group's 2020 annual report.
Related party transactions - Please see note 15.
Post balance sheet events - Please see note 17.
Going concern
The directors, having made inquiries, including consideration of
the possible future financial effects associated with the Covid-19
pandemic, believe that the Group has adequate resources (including
the EUR1.25BN funds raised through a EUR400M share placing and an
EUR850M unsecured Eurobond in September 2020) to continue in
operational existence for at least the next 12 months and that it
is appropriate to adopt the going concern basis in preparing the
financial statements. While there is uncertainty as to the full
extent of the impact on the Ryanair Holdings plc Group, the
continued preparation of the Group's consolidated financial
statements on the going concern basis is supported by the financial
projections prepared by the Group.
Ryanair Holdings plc and Subsidiaries
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 half-year ended September 30,
2020 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 2020 Annual Report for the year ended
March 31, 2020, 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, 2020, are
available at http://investor.ryanair.com/ .
The September 30, 2020 figures and the September 30, 2019
comparative figures do not constitute statutory financial
statements of the Group within the meaning of the Companies Act,
2014. The consolidated financial statements of the Group for the
year ended March 31, 2020, together with the independent auditor's
report thereon, were 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 condensed consolidated interim financial
statements for the half-year ended September 30, 2020 on October
30, 2020.
Except as stated otherwise below, this year'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 (IASB).
Government grants
Grants that compensate the Group for expenses incurred are
recognised in the income statement on a systematic basis in the
periods in which the expenses are recognised .
New IFRS standards and amendments adopted during the year
The following new and amended IFRS standards, amendments and
IFRIC interpretations, have been issued by the IASB, and have also
been endorsed by the EU. These standards are effective for the
first time for the Group's financial year beginning on April 1,
2020 and therefore have been applied by the Group in these
condensed consolidated interim financial statements:
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective for fiscal periods beginning on or after
January 1, 2020)
-- Amendments to IFRS 3 - Definition of a Business (effective
for fiscal periods beginning on or after January 1, 2020)
-- Amendments to IAS 1 and IAS 8 - Definition of Material
(effective for fiscal periods beginning on or after January 1,
2020)
-- Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate
Benchmark Reform (effective for fiscal periods beginning on or
after January 1, 2020)
-- Amendment to IFRS 16 - Covid-19-Related Rent Concessions
(effective for fiscal periods beginning on or after January 1,
2020)
The Group has evaluated the extent to which its cashflow hedging
relationships are subject to uncertainty driven by IBOR reform as
at 31 December 2020. The Group's hedged items and hedging
instruments continue to be indexed to Euribor. These benchmark
rates are quoted each day and the IBOR cash flows are exchanged
with counterparties as usual.
The calculation methodology of Euribor changed during 2019. In
July 2019, the Belgian Financial Services and Markets Authority
granted authorisation with respect to Euribor under the European
Union Benchmarks regulation. This allows market participants to
continue to use Euribor for both existing and new contracts and the
Group expects that Euribor will continue to exist as a benchmark
for the foreseeable future.
The adoption of these new or amended standards did not have a
material impact on the Group's financial position or results from
operations in the half-year ended September 30, 2020.
New IFRS standards and amendments issued but not yet
effective
The following new or revised IFRS standards and IFRIC
interpretations will be adopted for the purposes of the preparation
of future financial statements, where applicable. While under
review, we do not anticipate that the adoption of the other new or
revised standards and interpretations will have a material impact
on our financial position or results from operations:
-- IFRS 17 - Insurance Contracts (effective for fiscal periods
beginning on or after January 1, 2023)
-- Amendments to IAS 1 - Classification of Liabilities as
Current or Non-Current (effective for fiscal periods beginning on
or after January 1, 2023)
-- Amendments to IFRS 3 - Reference to the Conceptual Framework
(effective for fiscal periods beginning on or after January 1
2022)
-- Amendments to IAS 16 - Property, Plant and Equipment -
Proceeds before Intended Use (effective for fiscal periods
beginning on or after January 1, 2022)
-- Amendments to IAS 37 - Onerous Contracts - Costs of
Fulfilling a Contract (effective for fiscal periods beginning on or
after January 1, 2022)
-- Annual Improvements to IFRS Standards 2018-2020 (effective
for fiscal periods beginning on or after January 1, 2022)
-- Amendments to IFRS 17 (effective for fiscal periods beginning on or after January 1, 2023)
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -
Interest Rate Benchmark Reform (effective for fiscal periods
beginning on or after January 1, 2021)
Statement of Cash Flows restatement
Operating cash inflows and investing cash outflows for the six
month period ended 30 September 2019 have been reclassified. They
both have been reduced by EUR274M to reflect accrued supplier
payables which had previously been presented as capital expenditure
in the consolidated cash flows.
2. Judgements and estimates
In preparing these condensed interim financial statements,
management has made judgements and estimates 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 condensed consolidated interim financial
statements, the significant judgements and key sources of
estimation uncertainty were the same as those that applied in the
most recent published consolidated financial statements.
Derivative financial instruments
The Group uses various derivative financial instruments to
manage its exposure to market risks, including the risks relating
to fluctuations in commodity prices and currency exchange rates.
Ryanair uses forward contracts for the purchase of its jet fuel
(jet kerosene) requirements to reduce its exposure to commodity
price risk. It also uses foreign currency forward contracts to
reduce its exposure to risks related to foreign currencies,
principally the U.S. dollar exposure associated with the purchase
of new Boeing 737 aircraft and the U.S. dollar exposure associated
with the purchase of jet fuel.
The Group recognises all derivative instruments as either assets
or liabilities in its consolidated balance sheet and measures them
at fair value. At September 30, 2020, a net liability of EUR601.5M
(2019 net asset EUR73.5M) was recognised on balance sheet in
respect of the Group's jet fuel derivative instruments and a net
asset of EUR226.6M (2019 net asset EUR508.8M) was recognised in
respect of its foreign currency derivative instruments associated
with future aircraft purchases.
In determining the hedge effectiveness of derivative instruments
used to hedge Ryanair's fuel requirements, there is significant
judgement involved in assessing whether the volumes of jet fuel
hedged are still expected to be highly probable forecast
transactions. Specifically, significant judgement is required in
respect of the assumptions related to the timing of the full
removal of flight restrictions imposed by governments relating to
the Covid-19 pandemic, the expected recovery of passenger demand
and the subsequent flight schedules. All of these assumptions
impact upon forecast fuel consumption, and minor changes to these
assumptions could have a significant effect on the assessment of
hedge effectiveness.
At March 31, 2020 the Group expected to operate much of its
normal Winter 2020/2021 schedule. The Group now believes it will
operate approximately 40% of its Winter 2020/2021 schedule.
In respect of foreign currency hedge effectiveness for future
aircraft purchases, there is a high degree of judgement involved in
assessing whether the future aircraft payments are still considered
highly probable of occurring, and the timing of these future
payments for aircraft. The timing of future payments for aircraft
is dependent on the aircraft manufacturer's ability to meet
forecast aircraft delivery schedules.
The Boeing 737-MAX was grounded in 2019, Boeing are currently
working with the FAA and EASA regarding a return to service. At
March 31, 2020 the aircraft was expected to return to service in
the United States in the third quarter of 2020, the current
expectation is that the aircraft will return to service in the
United States in the fourth quarter of 2020 with a return to
service in Europe a number of months thereafter.
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
has traditionally resulted 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, 2020 was 5.0%
(September 30, 2019: 8.5%). The tax credit for the half-year ended
September 30, 2020 of EUR21.8M (tax charge September 30, 2019:
EUR106.8M) comprises a current tax charge of EUR9.5M and, a
deferred tax credit of EUR31.3M primarily relating to the temporary
differences for property, plant and equipment and net operating
losses.
5. Share based payments
The terms and conditions of the Group's share based remuneration
programmes are disclosed in the most recent, published,
consolidated financial statements. The charge of EUR2.1M in the
half-year ended September 30, 2020 (September 30, 2019: EUR4.0M) is
the fair value of options granted in prior periods, which is being
recognised within the income statement in accordance with employee
services rendered.
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, 2020 the Group had an operating fleet of 438
(2019: 455) Boeing 737 and 28 (2019: 21) Airbus A320 aircraft. The
Group has agreed to purchase up to 210 (135 firm and 75 options)
Boeing 737-MAX-200 aircraft from the Boeing Corporation which will
deliver (subject to EASA & FAA regulatory approval) over the
next five or more years.
8. Analysis of operating revenues and segmental analysis
The Group determines and presents operating segments based on
the information that internally is provided to the Group CEO, who
is the Chief Operating Decision Maker (CODM).
The CODM assesses the performance of the business based on the
profit/(loss) after tax of each airline for the reporting period.
Resource allocation decisions for all airlines are based on airline
performance for the relevant period, with the objective in making
these resource allocation decisions being to optimize consolidated
financial results.
Ryanair DAC ("Ryanair") is a reportable segment for financial
reporting purposes. Buzz, Lauda and Malta Air do not exceed the
quantitative thresholds for reporting purposes and accordingly have
been presented on an aggregate basis in the table below.
There are varying levels of integration between the operating
segments. Inter-segment revenue is not material and thus not
subject to separate disclosure.
Reportable segment information is presented as follows:
Ryanair Other Total Ryanair Other Total
DAC DAC
Half-year At Sep 30, At Sep 30, At Sep 30, At Sep 30, At Sep 30, At Sep 30,
ended 2020 2020 2020 2019 2019 2019
EURM EURM EURM EURM EURM EURM
Segment
revenue 1,160.6 15.6 1,176.2 5,149.0 240.6 5,389.6
------------- -------------- ------------- -------------- -------------- -------------
Segment
(loss)/PAT (317.9) (92.6) (410.5) 1,209.2 (56.5) 1,152.7
------------- -------------- ------------- -------------- -------------- -------------
Other segment
information:
Depreciation 264.2 32.3 296.5 356.0 25.1 381.1
Capex net
of supplier
proceeds (142.5) - (142.5) 334.2 - 334.2
------------- -------------- ------------- -------------- -------------- -------------
Ryanair Other Total Ryanair Other Total
DAC DAC
Quarter ended At Sep 30, At Sep 30, At Sep 30, At Sep 30, At Sep 30, At Sep 30,
2020 2020 2020 2019 2019 2019
EURM EURM EURM EURM EURM EURM
Segment
revenue 1,039.3 11.7 1,051.0 2,934.3 143.2 3,077.5
------------- -------------- ------------- -------------- -------------- -------------
Segment
(loss)/PAT (190.9) (34.6) (225.5) 931.4 (21.2) 910.2
------------- -------------- ------------- -------------- -------------- -------------
Other segment
information:
Depreciation 146.8 15.7 162.5 174.8 13.4 188.2
Capex net
of supplier
proceeds (279.9) - (279.9) 97.6 - 97.6
------------- -------------- ------------- -------------- -------------- -------------
At Sep 30, At Sep 30, At Sep 30, At Mar 31, At Mar 31, At Mar 31,
2020 2020 2020 2020 2020 2020
------------- -------------- ------------- -------------- -------------- -------------
EURM EURM EURM EURM EURM EURM
Segment assets 14,100.7 583.7 14,684.4 14,194.5 552.7 14,747.2
Segment
liabilities 8,780.3 925.4 9,705.7 8,995.2 837.5 9,832.7
------------- -------------- ------------- -------------- -------------- -------------
9. Earnings per share
Half-Year Half-Year Quarter Quarter
Ended Ended Ended Ended
Sep 30, Sep 30, Sep 30, Sep 30,
2020 2019 2020 2019
Basic (loss)/earnings per ordinary share
(EUR) (0.3752) 1.0247 (0.2053) 0.8139
Diluted earnings per ordinary share (EUR) (0.3752) 1.0204 (0.2053) 0.8107
Weighted average number of ordinary shares
(in M's) - basic 1,094.0 1,124.9 1,098.6 1,118.3
Weighted average number of ordinary shares
(in M's) - diluted 1,094.0 1,129.7 1,098.6 1,122.7
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 4.1M
(2019: 2.8M) and weighted issued share capital of 4.8M (2019:
Nil).
10. Property, plant and equipment
Acquisitions and disposals
Capital expenditure in the half-year ended September 30, 2020
amounted to a credit of EUR143M this includes EUR250M supplier
proceeds and capital expenditure of EUR108M that primarily relates
to heavy maintenance checks.
11. Assets held for sale
In August 2019, the Group entered into an agreement to sell 10
Boeing 737 aircraft in the years ending March 31, 2020 and 2021. 3
of these aircraft were sold during the year ended March 31, 2020. A
further 2 aircraft were sold during the half-year ended September
30, 2020. The remaining 5 aircraft are presented as assets held for
sale as at September 30, 2020 and are stated at the lower of their
carrying amount and fair value less costs to sell.
12. Derivative financial instruments
As a result of the widespread grounding of aircraft due to the
Covid-19 pandemic, the Group expects to operate a significantly
reduced flying schedule for the year ending March 31, 2021 compared
to what was originally expected. Accordingly, as at September 30,
2020, the Group's exposures for jet fuel and foreign currency were
significantly reduced, causing a proportion of derivative financial
instruments which previously qualified for hedge accounting to
become ineffective, resulting in the discontinuance of certain
cash-flow hedge arrangements. A net expense of EUR214M was
recognised within the income statement for the half-year ended
September 30, 2020, comprising a charge of EUR167M (net of tax) in
respect of jet fuel exposures and a charge of EUR47M (net of tax),
primarily associated with ineffective currency cash-flow hedges for
fiscal year 2021 jet fuel and delayed capital expenditure. As of
September 30, 2020, a balance of EUR153M (loss) is recognised in
the cash flow reserve in respect of continuing hedges and EUR111M
(gain) in respect of hedging relationships for which hedge
accounting is no longer applied
13. Financial instruments and financial risk management
The Group is exposed to various financial risks arising in the
normal course of business. The Group's financial risk exposures are
predominantly related to commodity price, foreign exchange and
interest rate risks. The Group uses financial instruments to manage
exposures arising from these risks.
These interim 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
2020 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: significant 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 Group's financial instruments:
Financial instruments measured at fair value
-- 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
EUA contracts: A comparison of the contracted rate to the market
rate for contracts providing a similar risk profile at September
30, 2020 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 quarter ended
September 30, 2020, 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 not measured at fair value
-- Long-term debt: The repayments which the Group is committed
to make have been discounted at the relevant market rates of
interest applicable (including credit spreads) at September 30,
2020 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 ended September 30, 2020 that
affect the fair value of our financial assets and financial
liabilities.
13. 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
balance sheet, are as follows:
At Sep 30, At Sep 30, At Mar 31, At Mar 31,
2020 2020 2020 2020
Carrying Fair Carrying Fair
Amount Value Amount Value
----------- ----------- ----------- -----------
Non-current financial assets EURM EURM EURM EURM
Derivative financial instruments:
- U.S. dollar currency forward contracts 144.0 144.0 372.5 372.5
- Interest rate swaps 2.5 2.5 6.0 6.0
----------- ----------- ----------- -----------
146.5 146.5 378.5 378.5
Current financial assets
Derivative financial instruments:
- U.S. dollar currency forward contracts 87.2 87.2 291.2 291.2
- Interest rate swaps 1.1 1.1 2.0 2.0
- EUA Assets 7.1 7.1 - -
95.4 95.4 293.2 293.2
Trade receivables* 32.7 67.5
Cash and cash equivalents* 2,952.1 2,566.4
Financial asset: cash > 3 months* 1,516.1 1,207.2
Restricted cash* 34.1 34.4
Other assets* 0.1 2.3
----------- ----------- ----------- -----------
4,630.5 95.4 4,171.0 293.2
----------- ----------- ----------- -----------
Total financial assets 4,777.0 241.9 4,549.5 671.7
----------- ----------- ----------- -----------
At Sep 30, At Sep 30, At Mar 31, At Mar 31,
2020 2020 2020 2020
Carrying Fair Carrying Fair
Amount Value Amount Value
----------- ----------- ----------- -----------
Non-current financial liabilities EURM EURM EURM EURM
Derivative financial instruments:
- U.S. dollar currency forward contracts 4.5 4.5 - -
- Jet fuel contracts 58.8 58.8 180.5 180.5
----------- ----------- ----------- -----------
63.3 63.3 180.5 180.5
----------- ----------- ----------- -----------
Long-term debt 1,061.2 1,068.9 1,138.9 1,148.5
Bonds 2,440.5 2,380.4 2,444.1 1,965.0
----------- ----------- ----------- -----------
3,565.0 3,512.6 3,763.5 3,294.0
----------- ----------- ----------- -----------
Current financial liabilities
Derivative financial instruments:
- Jet fuel & carbon derivative contracts 498.8 498.8 1,047.8 1,047.8
- U.S. dollar currency forward contracts 44.0 44.0 2.2 2.2
- GBP currency swap 25.3 25.3 - -
568.1 568.1 1,050.0 1,050.0
Current maturities of debt 1,869.5 1,869.5 382.3 382.3
Trade payables* 1,390.7 1,368.2
Accrued expenses* 1,139.7 1,553.1
----------- ----------- ----------- -----------
4,968.0 2,437.6 4,353.6 1,432.3
----------- ----------- ----------- -----------
Total financial liabilities 8,533.0 5,950.2 8,117.1 4,726.3
=========== =========== =========== ===========
*The fair value of each of these financial instruments
approximate their carrying values due to the short-term nature of
the instruments
13. Financial instruments and financial risk management (continued)
In April 2020, the Group raised approximately GBP600M unsecured
debt for general corporate purposes under the HMT and Bank of
England CCFF.
The Group issued senior, unsecured bonds with a face value of
EUR850M on September 15, 2020. The bond has a coupon rate of 2.875%
and a maturity date of September 15, 2025
14. Shareholders equity and shareholder returns
In September 2020, 35.2M ordinary shares were issued via an
ordinary share placing at a price of EUR11.35 per share generating
EUR400M proceeds.
During the period 0.9M ordinary shares were issued at a strike
price between EUR6.25 and EUR6.74 per share following the exercise
of vested options.
There were no shareholder returns during the half-year ended
September 30, 2020.
In FY20 the Company bought back 47.2M shares at a total cost of
EUR581M. This buyback was equivalent to approximately 4.2% of the
Company's issued share capital at March 31, 2020. All of these
repurchased ordinary shares were cancelled at March 31, 2020.
As a result of the share buybacks in the year ended March 31,
2020, share capital decreased by 47.2M ordinary shares with a
nominal value of EUR581M and the other undenominated capital
reserve increased by a corresponding EUR0.3M. The other
undenominated capital reserve is required to be created under Irish
law to preserve permanent capital in the Parent Company.
15. Related party transactions
The Company's related parties comprise its 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 quarter ended
September 30, 2020 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 2020
Annual Report that could have a material effect on the financial
position or performance of the Company in the same period.
16. Government grants and assistance
During the six months to September 30, 2020, many European
countries in which the Ryanair Group operates made available
payroll support schemes. The Ryanair Group utilised a number of
these employment retention schemes to protect jobs within the
Group. These schemes were a mix of short term Covid-19 specific
programmes and long term schemes linked to social security that
existed pre Covid-19. The total amount of payroll supports received
by the Group under the various schemes amounted to approximately
EUR44M and are offset against staff costs in the Consolidated
Income Statement.
In April 2020, the Group raised GBP600M unsecured (12 months)
debt for general corporate purposes under the HMT and Bank of
England CCFF. The 0.44% interest rate was the prevailing rate for
strong BBB rated companies.
17. Post balance sheet events
On 15 October the Group reduced its Winter schedule (November to
March 2021) taking capacity down from 60% to 40% of prior year.
18. Going concern
Due to its ongoing cost reductions, recent EUR1.25BN fundraising
which underpinned the Group's strong BBB rated balance sheet, and
cost preservation measures, the Board are satisfied that it remains
appropriate to adopt the going concern concept.
Ryanair Holdings plc and Subsidiaries
Responsibility Statement
Statement of the Directors in respect of the interim financial
report
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Transparency (Directive
2004/109/EC) Regulations 2007 ("Transparency Directive"), and the
Transparency Rules of the Central Bank of Ireland.
In preparing the condensed set of consolidated interim financial
statements included within the half-yearly financial report, the
Directors are required to:
-- prepare and present the condensed set of financial statements
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU, the Transparency Directive and the Transparency Rules of
the Central Bank of Ireland;
-- ensure the condensed set of financial statements has adequate disclosures;
-- select and apply appropriate accounting policies; and
-- make accounting estimates that are reasonable in the circumstances.
The Directors are responsible for designing, implementing and
maintaining such internal controls as they determine is necessary
to enable the preparation of the condensed set of financial
statements that is free from material misstatement whether due to
fraud or error.
We confirm that to the best of our knowledge:
(1) the condensed set of consolidated interim financial
statements included within the half-yearly financial report of
Ryanair Holdings plc for the six months ended September 30, 2020
("the interim financial information") which comprises 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 explanatory notes, have been presented and prepared in
accordance with IAS 34, Interim Financial Reporting, as adopted by
the EU, the Transparency Directive and Transparency Rules of the
Central Bank of Ireland.
(2) The interim financial information presented, as required by
the Transparency Directive, includes:
a. an indication of important events that have occurred during
the first 6 months of the financial year, and their impact on the
condensed set of consolidated interim financial statements;
b. a description of the principal risks and uncertainties for
the remaining 6 months of the financial year
c. related parties' transactions that have taken place in the
first 6 months of the current financial year and that have
materially affected the financial position or the performance of
the enterprise during that period; and
d. any changes in the related parties' transactions described in
the last annual report that could have a material effect on the
financial position or performance of the enterprise in the first 6
months of the current financial year.
On behalf of the Board
Stan McCarthy Michael O'Leary
Chairman Chief Executive
October 30, 2020
Independent review report to Ryanair Holdings plc and
Subsidiaries
Introduction
We have been engaged by the Company to review the condensed set
of consolidated interim financial statements in the half-yearly
financial report for the six months ended September 30, 2020 which
comprises 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 explanatory notes. Our review
was conducted having regard to the Financial Reporting Council's
("FRCs") International Standard on Review Engagements ("ISRE") (UK
and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of consolidated interim
financial statements in the half-yearly report for the six months
ended September 30, 2019 is not prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the EU, the
Transparency (Directive 2004/109/EC) Regulations 2007
("Transparency Directive"), and the Transparency Rules of the
Central Bank of Ireland.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Transparency Directive and the Transparency Rules of the
Central Bank of Ireland. As disclosed in note 1, the annual
financial statements of the Company are prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board and as adopted by the EU.
The Directors are responsible for ensuring that the condensed set
of consolidated interim financial statements included in this
half-yearly financial report has 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 set of consolidated interim financial statements in
the half-yearly financial report based on our review.
Scope of review
We conducted our review having regard to the Financial Reporting
Council's International Standard on Review Engagements (UK and
Ireland) 2410 Review of Interim Financial Information Performed by
the Independent Auditor of the Entity. 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 (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.
We read the other information contained in the half-yearly
financial report to identify material inconsistencies with the
information in the condensed set of consolidated interim financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If
we become aware of any apparent material misstatements or
inconsistencies, we consider the implications for our report.
The purpose of our review work and to whom we owe our
responsibilities
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 and the Transparency
Rules of the Central Bank of Ireland. 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.
Sean O'Keefe
October 30, 2020
For and on behalf of
KPMG
Chartered Accountants
1 Stokes Place,
St Stephen's Green,
Dublin 2,
Ireland
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END
IR BCBDBRBGDGGB
(END) Dow Jones Newswires
November 02, 2020 02:00 ET (07:00 GMT)
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