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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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During the year, the Company funded €505.8 million in purchases of property, plant and equipment (2013:

€310.7 million; 2012: €317.6 million). Cash generated from operations has been the principal source for these cash requirements, supplemented primarily by aircraft-related financing structures.

The Board of Directors periodically reviews the capital structure of the Company, considering the cost of capital and the risks associated with each class of capital. The Board approves any material adjustments to the capital structure in terms of the relative proportions of debt and equity.

Ryanair has generally been able to generate sufficient funds from operations to meet its non-aircraft acquisition-related working capital requirements. Management believes that the working capital available to the Company is sufficient for its present requirements and will be sufficient to meet its anticipated requirements for capital expenditures and other cash requirements for the 2014 fiscal year.

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(i) Interest rate risk: Based on the levels of and composition of year-end interest bearing assets and liabilities, including derivatives, at March 31, 2014, a plus or minus one-percentage-point movement in interest rates would result in a respective increase or decrease of €18.0 million (net of tax) in net interest income and expense in the income statement (2013: €18.3 million; 2012: €18.3 million) and €16.7 million in equity (2013: €28.8 million: 2012: €36.9 million). All of the Group‘s interest rate swaps are used to swap variable rate debt to fixed rate debt; consequently any changes in interest rates would have an equal and opposite income statement effect for both the interest rate swaps and the debt.

(ii) Foreign currency risk: A plus or minus change of 10% in relevant foreign currency exchange rates, based on outstanding foreign currency-denominated financial assets and financial liabilities at March 31, 2014 would have a respective positive or negative impact on the income statement of €3.0 million (net of tax) (2013: €2.6 million; 2012: €1.8 million) and on equity of €288.2 million (net of tax) (2013: €183.1 million;

2012: €176.3 million).

(iii) Equity price risk: An increase/decrease of 10% in the Aer Lingus share price as of March 31, 2014 would result in an increase/decrease of €26.0 million in the fair value of the available-for-sale financial assets (2013: €22.1 million; 2012: €15.0 million). The increase/decrease would be recognised in other comprehensive income.

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Total deferred tax liabilities (net)

Total tax liabilities (net)

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The charge in the year to March 31, 2014 consisted of temporary differences of a charge of €37.5 million for property, plant and equipment recognised in the income statement and a credit of €15.2 million for derivatives and a credit of €0.2 million for pensions, all recognised in other comprehensive income. The charge in the year to March 31, 2013 consisted of temporary differences of a charge of €41.3 million for property, plant and equipment recognised in the income statement, a credit of €19.0 million for derivatives and a credit of €0.2 million for pensions, all recognised in other comprehensive income. New temporary differences arising in the year to March 31, 2012 consisted of temporary differences of a charge of €41.4 million for property, plant and equipment recognised in the income statement, a credit of €15.2 million for derivatives and a credit of €0.9 million for pensions, all recognised in other comprehensive income.

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The majority of current and deferred tax recorded in each of fiscal 2014, 2013 and 2012 relates to domestic tax charges and there is no expiry date associated with these temporary differences. In fiscal 2014, the Irish corporation tax rate remained at 12.5%.

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At March 31, 2014, 2013 and 2012, the Company recognised all required deferred tax assets and liabilities. No deferred tax has been provided for on the un-remitted earnings of overseas subsidiaries because there is no intention to remit these to Ireland.

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During the 2014 fiscal year, the Company returned 8 aircraft held under operating lease to the lessors.

The expected timing of the outflows of economic benefits associated with the provision at March 31, 2014, 2013 and 2012 are as follows:

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See Note 21 to the consolidated financial statements for further details.

14 Other creditors This consists of deferred gains arising from the sale and leaseback of aircraft. During fiscal year 2014, Ryanair returned 8 sale-and-leaseback aircraft but did not enter into sale-and-leaseback arrangements for any new Boeing 737-800 ―next generation‖ aircraft (2013: 4; 2012: 11). Total sale-and-leaseback aircraft at March 31, 2014 was 51.

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The movement in the share capital balance year-on-year principally relates to 5.7 million (2013: 6.5 million; 2012: 2.5 million) new shares issued due to the exercise of share options, less the cancellation of 69.5 million shares relating to share buy-backs (2013: 15.0 million; 2012: 36.5 million).

The share capital of Ryanair consists of one class of stock, the ordinary equity shares. The ordinary equity shares do not confer on the holders thereof the specific right to be paid a dividend out of profits.

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(c) Share options and share purchase arrangements The Company has adopted a number of share option plans, which allow current or future employees or executive directors to purchase shares in the Company up to an aggregate of approximately 5% (when aggregated with other ordinary shares over which options are granted and which have not yet been exercised) of the outstanding ordinary shares of Ryanair Holdings plc, subject to certain conditions. All grants are subject to approval by the Remuneration Committee. These are exercisable at a price equal to the market price of the ordinary shares at the time options are granted. The key terms of these option plans include the requirement that certain employees remain in employment with the Company for a specified period of time and that the Company achieves certain net profit targets and/or share price targets. These share options schemes are cash settled.

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The mid-market price of Ryanair Holdings plc‘s ordinary shares on the Irish Stock Exchange at March 31, 2014 was €7.61 (2013: €5.95; 2012: €4.48). The highest and lowest prices at which the Company‘s shares traded on the Irish Stock Exchange in the 2014 fiscal year were €7.70 and €5.33, respectively (2013: €6.16 and €3.83, respectively; 2012: €4.48 and €2.82, respectively). There were 5.8 million options exercisable at March 31, 2014 (2013: 2.1 million; 2012: 6.2 million). The average share price for the year was €6.59 (2013: €4.65;

2012: €3.58).

The weighted average share price (as of the dates of exercises) for all options exercised during the 2014 fiscal year was €6.67 (2013: €4.94; 2012: €3.69).

At March 31, 2014 the range of exercise prices and weighted average remaining contractual life of

outstanding and exercisable options was as follows:

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The Company has accounted for its share option grants to employees at fair value, in accordance with IFRS 2, using a binomial lattice model to value the option grants. This has resulted in a charge of €1.9 million to the income statement (2013: €1.9 million charge; 2012: €0.7 million credit) being recognised within the income statement in accordance with employee services rendered.

16 Other equity reserve

The total share based payments reserve at March 31, 2014 was €9.1 million (2013: €14.2 million; 2012:

€21.6 million). The available-for-sale financial asset reserve at March 31, 2014 was €180.6 million (2013:

€141.5 million; 2012: €70.0 million). The total cash-flow hedge reserve amounted to negative €83.2 million at March 31, 2014 (2013: €0.5 million; 2012: €138.6 million). Further details of the group‘s derivatives are set out in Notes 5 and 11 to the consolidated financial statements.

17 Analysis of operating revenues and segmental analysis

The Company is managed as a single business unit that provides low fares airline-related services, including scheduled services, internet and other related services to third parties across a European route network. The Company operates a single fleet of aircraft that is deployed through a single route scheduling system.

The Company determines and presents operating segments based on the information that internally is provided to Michael O‘Leary, CEO, who is the Company‘s Chief Operating Decision Maker (CODM). When making resource allocation decisions the CODM evaluates route revenue and yield data, however resource allocation decisions are made based on the entire route network and the deployment of the entire aircraft fleet, which are uniform in type. The objective in making resource allocation decisions is to maximise consolidated financial results, rather than results on individual routes within the network.

The CODM assesses the performance of the business based on the consolidated adjusted profit/(loss) after tax of the Company for the year. This measure excludes the effects of certain income and expense items, which are unusual, by virtue of their size and incidence, in the context of the Company‘s ongoing core operations, such as the impairment of a financial asset investment, accelerated depreciation related to aircraft disposals and one off release of ticket sale revenue.

All segment revenue is derived wholly from external customers and, as the Company has a single reportable segment, inter-segment revenue is zero.

The Company‘s major revenue-generating asset class comprises its aircraft fleet, which is flexibly employed across the Company‘s integrated route network and is directly attributable to its reportable segment operations. In addition, as the Company is managed as a single business unit, all other assets and liabilities have been allocated to the Company‘s single reportable segment.

There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss since the prior year.

Reportable segment information is presented as follows:

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Other segment information:


(351.8) (329.6) (309.2) Finance income

Finance expense

Capital expenditure

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(i) Excludes the available-for-sale financial asset.

Reconciliation of reportable segment profit or loss to consolidated profit after income tax is as follows:

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The exceptional item in fiscal year 2012, relates to a one-off release of ticket sales revenue of €57.8 million, net of tax, (a) due to a change in accounting estimates relating to the timing of revenue recognition for unused passenger tickets which was made as a result of the availability of more accurate and timely data obtained through system enhancements.

Entity-wide disclosures:

Geographical information for revenue by country of origin is as follows:

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Non-flight scheduled revenue arises from the sale of rail and bus tickets, hotel reservations, car hire and other sources, including excess baggage charges and administration fees, all directly attributable to the lowfares business.

All of the Company‘s operating profit arises from low-fares airline-related activities, its only business segment. The major revenue earning assets of the Company are its aircraft, which are registered in Ireland and therefore profits accrue principally in Ireland. Since the Company‘s aircraft fleet is flexibly employed across its route network in Europe, there is no suitable basis of allocating such assets and related liabilities to geographical segments.

18 Staff numbers and costs The average weekly number of staff, including the executive director, during the year, analysed by

category, was as follows:

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9,501 9,059 8,438

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Costs in respect of defined-contribution benefit plans and other pension arrangements were €2.6 million in 2014 (2013:

(a) €2.1 million; 2012: €1.9 million) partially offset by a net credit of €1.1 million associated with defined-benefit plans in 2014 (2013: costs of €0.8 million; 2012: costs of €0.7 million). (See Note 21 to the consolidated financial statements).

The net credit to the income statement in 2012 of approximately €0.7 million comprises a €2.5 million reversal of (b) previously recognised share-based compensation expense for awards that did not vest, offset by a charge of €1.8 million for the fair value of various share options granted in prior periods, which are being recognised in the income statement in accordance with employee services rendered.

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Auditor‟s remuneration:

- Audit services (i)

- Tax advisory services (ii)

Total fees

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Audit services comprise audit work performed on the consolidated financial statements. In 2014, €1,000, (2013:

(i) €1,000; 2012: €1,000) of audit fees relate to the audit of the Parent Company.

(ii) Tax services include all services, except those services specifically related to the audit of financial statements, performed by the independent auditor‘s tax personnel, supporting tax-related regulatory requirements, and tax compliance and reporting.

(a) Fees and emoluments - executive director

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