Ryanair 2005 Annual Report Download - page 21

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Operating Expenses (continued)
Aircraft rentals increased by 21.9m to 33.5m reflecting
the full year cost of leasing 10 737-800 aircraft plus the
additional lease costs associated with three deliveries during
the third quarter. These costs were offset by the return of four
BAE 146s and six leased 737-300 aircraft to KLM and ILFC
respectively during the year.
Maintenance costs decreased by 13% to 37.9m reflecting
the improved reliability arising from the higher proportion of
737-800’s operated and a lower level in maintenance costs
incurred due to the return of four BAE 146 aircraft to KLM ,and
the release of maintenance overhaul provisions of 5.2m
during the year associated with the earlier than scheduled
return of six leased 737-300’s
Marketing and distribution costs increased by 22% to
19.6m due to the increases in expenditure arising from the
higher level of activity during the year.
Route charges increased by 23% to 135.7m due to an
increase in the number of sectors flown, an increase in the
average sector length and an increase in the weight of the
aircraft operated (which incur a higher charge).
Airport and handling charges increased by 21% to 178.4m
due to an increase in the number of passengers flown, and the
impact of increased costs at certain existing airports , offset by
lower charges at new airports and bases.
Other expenses increased by 24% to 97.0m, which is less
than the growth in ancillary revenues due to improved margins
on some new and existing products, and cost reductions
achieved on indirect costs.
Adjusted Operating Profits
Operating margins have remained constant at 25% due to the
reasons outlined above whilst operating profits increased by
58.6m to 329.5m during the year.
Interest Receivable
Interest receivable has increased by 4.4m due to the
combined impact of higher levels of cash and liquid resources
and an improvement in average deposit interest rates earned
in the year compared to the prior year.
Foreign Exchange (Losses)/Gains
Foreign exchange (losses)/gains has changed from a gain of
3.2m to a loss of 2.3m in the current year due principally to
the negative impact of changes in the sterling exchange rate
against the euro.
Taxation
Taxation adjusted for exceptional items has increased by 13%
during the year, reflecting the increase in profits and a slight
increase in the group’s effective tax rate.
Adjusted Earning per Share (EPS)
Basic EPS (as adjusted for exceptional items and goodwill)
increased by 18% to 35.38 euro cents and is based on
759,910,690 shares which represents the weighted average
number of ordinary shares in issue during the year.
Balance Sheet
The group’s balance sheet continues to strengthen due to the
growth in profits during the year. The Company generated cash
from operating activities of 530.5m which part funded
additional capital expenditure of 619.1m. Capital expenditure
primarily comprised of the delivery of 24 aircraft and advance
payments for future aircraft deliveries. Long Term Debt, net of
repayments increased by 461.9m, which was drawn down to
part fund aircraft deliveries during the year. Cash and liquid
resources continued to reflect the strong trading performance
of the company during the year and at March 31, 2005 stood at
1,613.6m compared to 1,257.4m at March 31, 2004.
Capital Expenditure
During the year the group’s capital expenditure amounted to
619.1m. The majority of this related to the purchase of 24
Boeing 737-800 “next generation” aircraft including 4
purchased by way of Japanese Operating Leases (with call
options), which are accounted for as finance leases, and
deposits relating to the future acquisition of additional new
Boeing 737-800s. Three new Boeing 737-800 “next
generation” aircraft were financed by way of operating lease
during the year bringing the total new aircraft operated to 27.
Further details are given in note 8.
Review of Cash Flow
Cash generated from operating activities was 530.5m,
reflecting the overall profitability of the group and working
capital movements including advance revenues. This has
enabled the group to increase its cash and liquid resources by
356.3m to 1,613.6m despite part funding capital
expenditure of 69.1m from internal cash resources. At March
31, 2005 the group had advance purchase deposits with Boeing
co. of 292.5m covering future aircraft deliveries.
(Continued)
Operating & Financial Review 11
ANNUAL REPORT & FINANCIAL STATEMENTS 2005