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«Chief Executive‟s Report 9 Summary Operating and Financial Overview Directors‟ Report 15 Corporate Governance Report Report of the Remuneration ...»

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Airline Industry Margins are Subject to Significant Uncertainty. The airline industry is capital intensive and is characterized by high fixed costs and by revenues that generally exhibit substantially greater elasticity than costs. Although fuel accounted for approximately 46% of total operating expenses in the 2014 fiscal year, management anticipates that this percentage may vary significantly in future years. See ―—Changes in Fuel Costs and Fuel Availability Affect the Company‘s Results and Increase the Likelihood of Adverse Impact on the Company‘s Profitability‖ above. The operating costs of each flight do not vary significantly with the number of passengers flown, and therefore, a relatively small change in the number of passengers, fare pricing, or traffic mix could have a disproportionate effect on operating and financial results. Accordingly, a relatively minor shortfall from expected revenue levels could have a material adverse effect on the Company‘s growth or financial performance.

See ―Item 5. Operating and Financial Review and Prospects.‖ The very low marginal costs incurred for providing services to passengers occupying otherwise unsold seats are also a factor in the industry‘s high susceptibility to price discounting. See ―Risks Related to the Company—The Company Faces Significant Price and Other Pressures in a Highly Competitive Environment‖ above.

Safety-Related Undertakings Could Affect the Company’s Results. Aviation authorities in Europe and the United States periodically require or suggest that airlines implement certain safetyrelated procedures on their aircraft. In recent years, the U.S. Federal Aviation Administration (the ―FAA‖) has required a number of such procedures with regard to Boeing 737-800 aircraft, including checks of rear pressure bulkheads and flight control modules, redesign of the rudder control system, and limitations on certain operating procedures. Ryanair‘s policy is to implement any such required procedures in accordance with FAA guidance and to perform such procedures in close collaboration with Boeing. To date, all such procedures have been conducted as part of Ryanair‘s standard maintenance programme and have not interrupted flight schedules nor required any material increases in Ryanair‘s maintenance expenses. However, there can be no assurance that the FAA or other regulatory authorities will not recommend or require other safety-related undertakings or that such undertakings would not adversely impact Ryanair‘s operating results or financial condition.

There also can be no assurance that new regulations will not be implemented in the future that would apply to Ryanair‘s aircraft and result in an increase in Ryanair‘s cost of maintenance or other costs beyond management‘s current estimates. In addition, should Ryanair‘s aircraft cease to be sufficiently reliable or should any public perception develop that Ryanair‘s aircraft are less than completely reliable, Ryanair‘s business could be materially adversely affected.

Risks Related to Ownership of the Company’s Ordinary Shares or ADRs

EU Rules Impose Restrictions on the Ownership of Ryanair Holdings’ Ordinary Shares by Non-EU Nationals, and the Company Has Instituted a Ban on the Purchase of Ordinary Shares by Non-EU Nationals. EU Regulation No. 1008/2008 requires that, in order to obtain and retain an operating license, an EU air carrier must be majority-owned and effectively controlled by EU nationals.

The regulation does not specify what level of share ownership will confer effective control on a holder or holders of Ordinary Shares. The Board of Directors of Ryanair Holdings is given certain powers under Ryanair Holdings‘ articles of association (the ―Articles‖) to take action to ensure that the number of Ordinary Shares held in Ryanair Holdings by non-EU nationals (―Affected Shares‖) does not reach a level that could jeopardize the Company‘s entitlement to continue to hold or enjoy the benefit of any license, permit, consent, or privilege which it holds or enjoys and which enables it to carry on business as an air carrier. The directors, from time to time, set a ―Permitted Maximum‖ on the number of the Company‘s Ordinary Shares that may be owned by non-EU nationals at such level as they believe will comply with EU law. The Permitted Maximum is currently set at 49.9%. In addition, under certain circumstances, the directors can take action to safeguard the Company‘s ability to operate by identifying those Ordinary Shares, American Depositary Shares (―ADSs‖) or Affected Shares which give rise to the need to take action and treat such Ordinary Shares, the American Depositary Receipts (―ADRs‖) evidencing such ADSs, or Affected Shares as ―Restricted Shares.‖ The Board of Directors may, under certain circumstances, deprive holders of Restricted Shares of their rights to attend, vote at, and speak at general meetings, and/or require such holders to dispose of their Restricted Shares to an EU national within as little as 21 days. The directors are also given the power to transfer such Restricted Shares themselves if a holder fails to comply. In 2002, the Company implemented measures to restrict the ability of non-EU nationals to purchase Ordinary Shares, and non-EU nationals are currently effectively barred from purchasing Ordinary Shares, and will remain so for as long as these restrictions remain in place. There can be no assurance that these restrictions will ever be lifted.

Additionally, these foreign ownership restrictions could result in Ryanair‘s exclusion from certain stock tracking indices. Any such exclusion may adversely affect the market price of the Ordinary Shares and ADRs. On April 19, 2012, the Company obtained shareholder approval to repurchase ADRs as part of its general authority to repurchase up to 5% of the issued share capital in the Company.

During fiscal 2014, the Company repurchased 6,018,800 ADRs equivalent to 30,094,000 ordinary shares at a price of $49.01 per ADR, equivalent to approximately €7.41 per ordinary share. See ―Item

10. Additional Information—Limitations on Share Ownership by Non-EU Nationals‖ for a detailed discussion of restrictions on share ownership and the current ban on share purchases by non-EU nationals.

As of June 30, 2014, EU nationals owned at least 52.8% of Ryanair Holdings‘ Ordinary Shares (assuming conversion of all outstanding ADRs into Ordinary Shares).

Holders of Ordinary Shares are Currently Unable to Convert those Shares into American Depositary Receipts. In an effort to increase the percentage of its share capital held by EU nationals, on June 26, 2001, Ryanair Holdings instructed The Bank of New York Mellon, the depositary for its ADR program (the ―Depositary‖), to suspend the issuance of new ADRs in exchange for the deposit of Ordinary Shares until further notice. Holders of Ordinary Shares cannot convert their Ordinary Shares into ADRs during this suspension, and there can be no assurance that the suspension will ever be lifted.

See also ―—EU Rules Impose Restrictions on the Ownership of Ryanair Holdings‘ Ordinary Shares by Non-EU nationals and the Company has Instituted a Ban on the Purchase of Ordinary Shares by NonEU Nationals‖ above.

The Company’s Results of Operations May Fluctuate Significantly. The Company‘s results of operations have varied significantly from quarter to quarter, and management expects these variations to continue. See ―Item 5. Operating and Financial Review and Prospects—Seasonal Fluctuations.‖ Among the factors causing these variations are the airline industry‘s sensitivity to general economic conditions, the seasonal nature of air travel, and trends in airlines‘ costs, especially fuel costs. Because a substantial portion of airline travel (both business and personal) is discretionary, the industry tends to experience adverse financial results during general economic downturns. The Company is substantially dependent on discretionary air travel.

The trading price of Ryanair Holdings‘ Ordinary Shares and ADRs may be subject to wide fluctuations in response to quarterly variations in the Company‘s operating results and the operating results of other airlines. In addition, the global stock markets from time to time experience extreme price and volume fluctuations that affect the market prices of many airline company stocks. These broad market fluctuations may adversely affect the market price of the Ordinary Shares and ADRs.

Ryanair Holdings May or May Not Pay Dividends. Since its incorporation as the holding company for Ryanair in 1996, Ryanair Holdings has only occasionally declared special dividends on both its Ordinary Shares and ADRs. The directors of the Company declared on June 1, 2010 that Ryanair Holdings intended to pay a special dividend of approximately €500 million, and following shareholder approval at its annual general meeting on September 22, 2010 this special dividend was paid on October 1, 2010. Directors of the Company also declared on May 21, 2012 that Ryanair Holdings intended to pay a special dividend of €0.34 per ordinary share (approx. €492 million) and following shareholder approval at the annual general meeting on September 21, 2012 this special dividend was paid on November 30, 2012. The Company may pay other dividends from time to time.

In June 2013, the Company detailed plans to return up to €1 billion to shareholders over the next two years. The Company completed €481.7 million in share buybacks in the fiscal year 2014 (including just over 6.0 million ADR buybacks) and indicated on May 19, 2014 that it plans to pay a special dividend of up to approximately €520 million in the fourth quarter of fiscal year 2015, subject to shareholder approval at its annual general meeting on September 25, 2014. The Company has made no further commitments in relation to the payment of dividends, share buybacks or other shareholder distributions. See ―Item 8. Financial Information—Other Financial Information—Dividend Policy.‖ As a holding company, Ryanair Holdings does not have any material assets other than the shares of Ryanair.

Increased Costs for Possible Future ADR and Share Repurchases. In April 2012, the Company held an extraordinary general meeting (―EGM‖) to authorize the directors to repurchase Ordinary Shares and ADRs for up to 5% of the issued share capital of the Company traded on the NASDAQ Stock Market (―NASDAQ‖). Up until April 2012, shareholders had only authorized the directors to repurchase Ordinary Shares. As the ADRs typically trade at a premium of 15% to 20% compared to Ordinary Shares, this may result in increased costs in performing share buy-backs in the future. In fiscal 2014, the Company bought back 6,018,800 ADRs for cancellation, which is equivalent to 30,094,000 Ordinary Shares, as part of its overall share buyback during fiscal year 2014 of 69.5 million Ordinary Shares. On June 20, 2013 the Company detailed plans to return up to €1 billion to shareholders over the next two years. The Company completed €481.7 million in share buybacks in the fiscal year 2014. On May 19, 2014 the Company indicated that it plans to pay a special dividend of up to approximately €520 million in the fourth quarter of fiscal year 2015, subject to shareholder approval at its annual general meeting on September 25, 2014. However, there can be no assurance that such amount will be returned to shareholders, as the Company‘s plans are subject to shareholder approval, its continuing profitability, and the economic environment, as well as its obligations for capital expenditures and other commitments. The Company has made no further commitments in relation to the payment of dividends, share buybacks or other shareholder distributions.

Item 4. Information on the Company

–  –  –

Ryanair Holdings was incorporated in 1996 as a holding company for Ryanair Limited. The latter operates an ultra-low cost, scheduled-passenger airline serving short-haul, point-to-point routes between Ireland, the U.K., Continental Europe, and Morocco. Incorporated on November 28, 1984, Ryanair Limited began to introduce a low-fares operating model under a new management team in the early 1990s. See ―Item 5. Operating and Financial Review and ProspectsHistory.‖ As of June 30, 2014, Ryanair had a principal fleet of 297 Boeing 737-800 aircraft and 5 additional leased aircraft acquired on short term leases for the summer of 2014 to provide extra capacity, Ryanair Limited offered over 1,600 scheduled short-haul flights per day serving approximately 186 airports largely throughout Europe. See ―Route System, Scheduling and FaresRoute System and Scheduling‖ for more details of Ryanair‘s route network. See ―Item 5. Operating and Financial Review and ProspectsSeasonal Fluctuations‖ for information about the seasonality of Ryanair‘s business.

Ryanair recorded a profit on ordinary activities after taxation of €522.8 million in the 2014 fiscal year, as compared to a profit on ordinary activities after taxation of €569.3 million in the 2013 fiscal year. This decrease of approximately 8% was primarily attributable to an increase in fuel costs of approximately 7% from €1,885.6 million to €2,013.1 million, and a reduction of approximately 4% in average fares, offset by strong ancillary revenues growth and increased traffic. Ryanair generated an average booked passenger load factor of approximately 83% in fiscal 2014, compared to 82% in fiscal 2013, and average booked passenger fare of €46.40 per passenger in the 2014 fiscal year, down from €48.20 in the prior fiscal year. The Company has focused on maintaining low operating costs (€53.61 per passenger in the 2014 fiscal year, an increase from €52.56 in fiscal 2013).

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