«Chief Executive‟s Report 9 Summary Operating and Financial Overview Directors‟ Report 15 Corporate Governance Report Report of the Remuneration ...»
Hedging associated with capital expenditures. During the 2014 and 2013 fiscal years, the Company also entered into a series of euro/U.S. dollar contracts to hedge against changes in the fair value of aircraft purchase commitments under the Boeing contracts, which arise from fluctuations in the euro/U.S. dollar exchange rates. There were no such contracts in effect at March 31, 2013. At March 31, 2014, the total unrealized loss relating to these contracts amounted to €15.0 million.
Under IFRS, the Company generally accounts for these contracts as either cash-flow hedges or fairvalue hedges. Fair-value hedges are recorded in the balance sheet at fair value. Any gains or losses arising on these instruments, as well as the related gain or loss on the underlying aircraft purchase commitment, are recorded in the balance sheet. Any related ineffectiveness is measured by the amount by which these adjustments to earnings do not match. Cash-flow hedges are recorded at fair value in the balance sheet and are re-measured to fair value at the end of the financial period through equity to the extent effective, with any ineffectiveness recorded through the income statement. The Company has found these hedges to be highly effective in offsetting changes in the fair value of the aircraft purchase commitments arising from fluctuations in exchange rates because the forward exchange contracts are always for the same amount, currency and maturity dates as the corresponding aircraft purchase commitments.
At March 31, 2014, the total unrealized losses relating to these contracts amounted to €15.0 million, while at March 31, 2013 unrealized gains amounted to €nil. Under IFRS, the Company recorded fair-value adjustments of €13.1 million and fair-value adjustments of €nil for cash-flow hedges in the 2014 and 2013 fiscal years, respectively. No amounts were recorded for such fair-value hedges from other accumulated comprehensive income in the 2014 and 2013 fiscal years.
Holding other variables constant, if there were an adverse change of 10% in relevant foreign currency exchange rates, the market value of Ryanair‘s foreign currency contracts outstanding at March 31, 2014 would decrease by approximately €294.0 million (net of tax), all of which would ultimately impact earnings when such contracts mature.
INTEREST RATE EXPOSURE AND HEDGING
The Company‘s purchase of 246 of the 297 Boeing 737-800 aircraft in the fleet as of March 31, 2014 has been funded by bank financing in the form of loans supported by a loan guarantee from Ex-Im Bank (with respect to 210 aircraft), JOLCOs and commercial debt. With respect to these 246 aircraft, at March 31, 2014, the Company had outstanding cumulative borrowings under these facilities of €3,083.6 million with a weighted average interest rate of 2.49%. See ―Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Resources‖ for additional information on these facilities and the related swaps, including a tabular summary of the ―Effective Borrowing Profile‖ illustrating the effect of the swap transactions (each of which is with an established international financial counterparty) on the profile of Ryanair‘s aircraftrelated debt at March 31, 2014. At March 31, 2014, the fair value of the interest rate swap agreements relating to this floating rate debt was represented by a loss of €72.4 million (gross of tax), as compared with a loss of €81.9 million at March 31, 2013. See Note 11 to the consolidated financial statements included in Item 18 for additional information.
If Ryanair had not entered into such derivative agreements, a plus or minus one percentage point movement in interest rates would impact the fair value of this liability by approximately €16.7 million. The earnings and cash-flow impact of any such change in interest rates would have been approximately plus or minus €18 million in the 2014 fiscal year.
Item 12. Description of Securities Other than Equity Securities
Holders of ADSs are required to pay certain fees and expenses. The table below sets forth the fees and expenses which, under the deposit agreement between the Company and The Bank of New York Mellon, holders of ADRs can be charged or be deducted from dividends or other distributions on the deposited shares.
The Company and The Bank of New York Mellon have also entered into a separate letter agreement, which has the effect of reducing some of the fees listed below.
$0.02 (or less) per ADS per calendar year. Depositary services.
A fee equivalent to the fee that would be Distribution of securities distributed by the issuer to the holders payable if securities distributed to the of common securities, which are distributed by the depositary to holder of ADSs had been shares and the ADS holders.
shares had been deposited for issuance of ADSs.
Taxes and other governmental charges the As necessary.
depositary or the custodian have to pay on any ADSs or common shares underlying ADSs (for example, stock transfer taxes, stamp duty or withholding taxes).
Any charges incurred by the depositary or As necessary.
its agents for servicing the deposited securities.
Reimbursement of Fees From April 1, 2013 to June 30, 2014 the Depositary collected annual depositary services fees equal to approximately $3.0 million from holders of ADSs, net of fees paid to the Depositary by the Company.
The Company has carried out an evaluation, as of March 31, 2014, under the supervision and with the participation of the Company‘s management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of the Company‘s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon the Company‘s evaluation, the chief executive officer and chief financial officer have concluded that, as of March 31, 2014, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported as and when required, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the Company‘s management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
MANAGEMENT‟S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTINGThe Company‘s management is responsible for establishing and maintaining adequate internal control over financial reporting, (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company‘s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.
The Company‘s internal control over financial reporting includes those policies and procedures that:
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company‘s assets that could have a material effect on the financial statements.
The Company‘s management evaluated the effectiveness of the Company‘s internal control over financial reporting as of March 31, 2014, based on the criteria established in the 1992 Framework in ―Internal Control — Integrated Framework,‖ issued by the Committee of Sponsoring Organizations of the Treadway Commission (―COSO‖). Based on the evaluation, management has concluded that the Company maintained effective internal control over financial reporting as of March 31, 2014.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTINGThere has been no change in the Company‘s internal control over financial reporting during the 2014 fiscal year that has materially affected, or is reasonably likely to materially affect, the Company‘s internal control over financial reporting.
Item 16. Reserved Item 16A.
Audit Committee Financial Expert The Company‘s Board of Directors has determined that Declan McKeon qualifies as an ―audit committee financial expert‖ within the meaning of this Item 16A. Mr. McKeon is ―independent‖ for purposes of the listing rules of NASDAQ.
Item 16B. Code of Ethics The Company has adopted a broad Code of Business Conduct and Ethics that meets the requirements for a ―code of ethics‖ as defined in Item 16B of Form 20-F. The Code of Business Conduct and Ethics applies to the Company‘s chief executive officer, chief financial officer, chief accounting officer, controller and persons performing similar functions, as well as to all of the Company‘s other officers, directors and employees. The Code of Business Conduct and Ethics is available on Ryanair‘s website at http://www.ryanair.com. (Information appearing on the website is not incorporated by reference into this annual report.) The Company has not made any amendment to, or granted any waiver from, the provisions of this Code of Business Conduct and Ethics that apply to its chief executive officer, chief financial officer, chief accounting officer, controller or persons performing similar functions during its most recently completed fiscal year.
Item 16C. Principal Accountant Fees and Services
The following table sets forth the fees billed or billable to the Company by its independent auditors,
KPMG, during the fiscal years ended March 31, 2014, 2013 and 2012:
Audit fees in the above table are the aggregate fees billed or billable by KPMG in connection with the audit of the Company‘s annual financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, including the provision of comfort letters, statutory audits, discussions surrounding the proper application of financial accounting and reporting standards and services provided in connection with certain regulatory requirements including those under the Sarbanes-Oxley Act of 2002.
Tax fees include fees for all services, except those services specifically related to the audit of financial statements, performed by the independent auditor‘s tax personnel, work performed in support of other taxrelated regulatory requirements and tax compliance reporting.
Audit Committee Pre-Approval Policies and Procedures The audit committee expressly pre-approves every engagement of Ryanair‘s independent auditors for all audit and non-audit services provided to the Company.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table details purchases by the Company of its Ordinary shares in the 2014 fiscal year.
(a) The Ordinary Share purchases in the table above have not been made pursuant to publicly announced plans or programs, and consist of open-market transactions conducted within defined parameters pursuant to the Company‘s repurchase authority from shareholders granted via a special resolution. The Ordinary Share purchases in the table above include the purchase during fiscal year 2014 of just over 6.0 million ADRs. Each ADR purchased represents five Ordinary Shares.
See ―Item 8. Financial Information—Other Financial Information—Share Buy-Back Program‖ and ―Item 9. The Offer and Listing—Trading Markets and Share Prices‖ for further information regarding the Company‘s Ordinary Share buy-back program, pursuant to which all of the shares purchased by the Company and disclosed in the table above were purchased.
Item 16F. Change in Registrant’s Certified Accountant
Item 16G. Corporate Governance See ―Item 6. Directors, Senior Management and Employees—Directors—Exemptions from NASDAQ Corporate Governance Rules‖ for further information regarding the ways in which the Company‘s corporate governance practices differ from those followed by domestic companies listed on NASDAQ.
Item 16H. Mine Safety Disclosure
Consolidated Balance Sheet of Ryanair Holdings plc at March 31, 2014
Consolidated Income Statement of Ryanair Holdings plc for the Year ended March 31, 2014
Consolidated Statement of Comprehensive Income of Ryanair Holdings plc for the year ended March 31, 2014
Consolidated Statement of Changes in Shareholders‘ Equity of Ryanair Holdings plc for the years ended March 31, 2014
Consolidated Statement of Cash Flow of Ryanair Holdings plc for the years ended March 31, 2014
Company Balance Sheet of Ryanair Holdings plc at March 31, 2014
Company Statement of Cash Flows of Ryanair Holdings plc for the year ended March 31, 2014
Company Statement of Changes in Shareholders‘ Equity of Ryanir Holdings plc for the year ended March 31, 2014
Notes forming part of Company Financial Statements
Directors and other Information
Profit after tax