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2012 FINANCIAL REVIEW Aer Lingus Group Plc
ANNUAL REPORT 2012
22
Dividend
On 4 May 2012, we announced a new dividend policy and indicated that the Group intends to pay a dividend for those future years in which we make
an operating profit, provided that the payment of a dividend is appropriate and prudent in the context of our financial position, strategic objectives and
prospects. We indicated that, subject to these conditions, we expected to pay a dividend of approximately three cent per share for 2011, 2012 and 2013.
Aer Lingus Group plc paid its first dividend of three cent per share, amounting to approximately €16 million, on 31 July 2012. In response to the strong
financial and operating performance of the Group in 2012, the Board will recommend the payment of a final dividend for 2012 of four cent per share to
the AGM. If approved by shareholders at the forthcoming Annual General Meeting, the dividend will be paid as soon as practicable thereafter. The level
of any dividend to be paid in respect of 2013 will be evaluated by the Board at the end of the year.
Update on capital reduction process
On 4 November 2011, Aer Lingus shareholders approved a special resolution at an Extraordinary General Meeting (“EGM”) to take the necessary steps to
seek the approval of the High Court (“the Court”) to create up to €500 million of distributable reserves on our balance sheet.
The matter was heard by the High Court in July 2012. Objections were made by the trustees of both the Irish Airlines Superannuation Scheme and the
Irish Airlines (Pilots) Superannuation Scheme. Since the judgement was issued, a hearing to allow further submissions as to the appropriate order to be
made has been adjourned on a number of occasions in order to allow progress to be made in discussions regarding the funding shortfall in the pension
schemes. On 26 February 2013, the High Court set 6 March 2013 as the date on which it would hear submissions as to the appropriate order to be made.
Submissions were made on behalf of the parties on 6 March 2013 and the High Court is expected to deliver its judgement regarding the form of the order
on 13 March 2013.
Significant balance sheet movements
The Group’s balance sheet remains strong. Gross cash balances have increased by €13.7 million to €908.5 million (2011: €894.8 million). The Group’s
net cash position increased significantly by €59.3 million to €376.9 million (2011: €317.6 million) and at 31 December 2012, the Group holds net assets
of €834.7 million (31/12/2011: €836.7 million).
The following significant balance sheet movements also occurred in 2012:
• Capital expenditure of €44.4 million was incurred, largely driven by the acquisition of aircraft engines, capitalised aircraft maintenance, facility
upgrades and other equipment costs.
• The Group acquired a 33.33% equity interest in a leasing company (“the Joint Venture”). At 31 December 2012, the fair value of the Group’s interest
in the Joint Venture was €10.8 million (equivalent to its carrying value). Refer to Note 16 for further details.
• At 31 December 2011, an A320 aircraft was classified as held for sale with a carrying value of €9.8 million. In December 2012, a management decision
was made to re-introduce the aircraft to the fleet due to operational requirements. The aircraft has therefore been reclassified to property, plant and
equipment. See Note 17 for details.
• The net derivative hedging position decreased €33.9 million year on year. The market value of the outstanding derivatives contracts has fallen in
comparison to 2011. This is mainly due to unfavourable movements in the underlying euro/US$ exchange rate.
• Other reserves decreased by €15.8 million in 2012. The decrease in Other reserves was driven by the adverse movement in the underlying euro/US$
exchange rate. This is linked to the derivative hedging position above as movements in both are being driven by the same underlying factors.
• Provisions increased by €3.4 million in 2012. The increase is due to the creation of provisions for the A330 Shannon hangar maintenance restructuring
offset by utilisation of the Greenfield provision.