Ryanair 2005 Annual Report Download - page 20

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For the purpose of the Operating and Financial Review all amounts and comments
are by reference to the adjusted profit and loss account which excludes certain
exceptional costs*, and goodwill. Goodwill of 2.1m (2004 2.7m) arising from
the Buzz acquisition was amortised during the period.
*Exceptional costs in the year ended March 31, 2004 consisted of re-organisation
costs of 2.7m (net of tax) related to the closure of Buzz for one month post
acquisition to retrain staff and to realign its business with Ryanair’s, an additional
depreciation charge of 3.3m relating to an adjustment to the residual value of
six Boeing 737-200 aircraft that retired earlier than planned as a result of scratch
marks that occurred during an aircraft painting programme which in turn gave rise
to aircraft lease costs of 11.6m (net of tax). Goodwill of 2.3m arising from the
“Buzz” acquisition was amortised during the period.
Total exceptional costs and goodwill amounted to 2.1m (2004 19.9m) net of
tax.
for the year ended March 31, 2005
Operating & Financial Review
10
ANNUAL REPORT & FINANCIAL STATEMENTS 2005
Profit for the Year
Profit after tax increased by 19% to 268.9m, compared to
226.6m in the previous year ended March 31, 2004. Total
operating revenues increased by 24% to 1,336.6m, which was
faster then the 19% growth in passenger volumes, as average
fares rose by 2% and ancillary revenues grew by 39% to
208.5m. Total revenue per passenger as a result increased by
4%, whilst the successful launch of new routes and the slower
rate of growth in turn led to load factors increasing by 3 points
to 84%,
Operating Revenues
Total operating revenues increased by 24% to 1,336.6m whilst
passenger volumes increased by 19% to 27.6m. Total revenue
per passenger has increased by 4% in the year due to a
combination of higher average fares and strong ancillary revenue
growth.
Scheduled passenger revenues increased by 22% to 1,128.1m
due to a combination of a 2% improvement in average fares,
increased passenger volumes on existing routes, and the
successful launch of new bases at Rome-Ciampino and
Barcelona-Girona. The slower rate of growth in passenger
volumes is also reflected in improved load factors, which rose by
3 points to 84% in the year.
Ancillary revenues increased by 39% to 208.5m faster than
the growth in passsenger volumes reflecting a strong
performance in non-flight scheduled revenues, car hire and other
ancillary products. Ancillary revenues now account for 16% of
total revenues compared to 14% for 2004.
Operating Expenses
Total operating expenses increased by 25% to 1,007.1m due to
the increased level of activity, and the increased costs, primarily
fuel, aircraft rentals, route charges and airport & handling costs
associated with the growth of the airline. Total operating costs
were also adversely impacted by a 10% increase in the average
sector length whilst higher US$ fuel prices were partly offset by
the strength of the euro exchange rate against the US$.
Staff costs have increased by 14% to 141.0m primarily due to
a 14% increase in average employee numbers to 2,604 and the
impact of pay increases of 3% granted during the year partly
offset by savings in sterling denominated salaries due to the
weakening of the sterling to euro exchange rate.
Depreciation and amortisation increased by 1% to 98.7m due
to an increase in the size of the ‘owned’ fleet from 62 to 74
offset by lower amortisation charges due to the retirement of
the 737-200 aircraft and the positive impact of a new engine
maintenance agreement on the cost of amortisation of 737-800
aircraft. The strengthening of the euro to the US$ during the
year has also had a positive impact on the depreciation and
amortisation charge relating to new aircraft deliveries.
Fuel costs rose by 52% to 265.3m due to an increase in the
number of sectors flown, a 10% increase in the average sector
length, and a significantly higher average US$ cost per gallon
partially offset by the positive impact of the strengthening of
the Euro to the US dollar during the year.