REG - easyJet PLC - Final Results <Origin Href="QuoteRef">EZJ.L</Origin> - Part 2
18/11/2014 08:01
- Part 2: For the preceding part double click ID:nRSR2648Xa
(kilometres) 1,112 1,091 1.9%
Sectors 439,943 420,311 4.7%
Block hours 849,790 799,480 6.3%
Number of aircraft owned/leased at end of year 226 217 4.1%
Average number of aircraft owned/leased during year 220.8 212.6 3.8%
Number of aircraft operated at end of year 217 209 3.8%
Average number of aircraft operated during year 210.8 199.8 5.5%
Operated aircraft utilisation (hours per day) 11.0 11.0 0.8%
Owned aircraft utilisation (hours per day) 10.6 10.3 2.4%
Number of routes operated at end of year 675 633 6.6%
Number of airports served at end of year 135 138 (2.2%)
Financial measures
Return on capital employed 20.5% 17.4% +3.1ppt
Gearing 17% 7% +10ppt
Profit before tax per seat (£) 8.12 7.03 15.6%
Profit before tax per ASK (pence) 0.73 0.64 13.4%
Revenue
Revenue per seat (£) 63.31 62.58 1.2%
Revenue per seat at constant currency (£) 63.78 62.58 1.9%
Revenue per passenger (£) 69.90 70.08 (0.3%)
Revenue per passenger at constant currency (£) 70.40 70.08 0.5%
Revenue per ASK (pence) 5.69 5.74 (0.8%)
Revenue per ASK at constant currency (pence) 5.73 5.74 0.0%
Costs
Per seat measures
Total cost per seat (£) 55.19 55.55 (0.6%)
Total cost per seat excluding fuel (£) 37.70 38.17 (1.2%)
Total cost per seat excluding fuel at constant currency (£) 38.41 38.17 0.6%
Operating cost per seat (£) 51.80 52.14 (0.6%)
Operating cost per seat excluding fuel (£) 34.31 34.76 (1.3%)
Operating cost per seat excluding fuel at constant currency (£) 34.97 34.76 0.6%
Ownership cost per seat (£) 3.39 3.41 (0.8%)
Per ASK measures
Total cost per ASK (pence) 4.96 5.10 (2.7%)
Total cost per ASK excluding fuel (pence) 3.39 3.51 (3.1%)
Total cost per ASK excluding fuel at constant currency (pence) 3.45 3.51 (1.7%)
Operating cost per ASK (pence) 4.65 4.78 (2.5%)
Operating cost per ASK excluding fuel (pence) 3.08 3.19 (3.2%)
Operating cost per ASK excluding fuel at constant currency (pence) 3.14 3.19 (1.6%)
Ownership cost per ASK (pence) 0.31 0.32 (2.7%)
K. CONDENSED FINANCIAL INFORMATION
Consolidated Income Statement
Year ended Year ended
30 September 2014 30 September 2013
Notes £ million £ million
Seat revenue 4,462 4,194
Non-seat revenue 65 64
Total revenue 4,527 4,258
Fuel (1,251) (1,182)
Airports and ground handling (1,107) (1,078)
Crew (479) (454)
Navigation (307) (294)
Maintenance (212) (212)
Selling and marketing (103) (101)
Other costs (245) (226)
EBITDAR 823 711
Aircraft dry leasing (124) (102)
Depreciation 7 (106) (102)
Amortisation of intangible assets (12) (10)
Operating profit 581 497
Interest receivable and other financing income 11 5
Interest payable and other financing charges (11) (24)
Net finance charges 3 - (19)
Profit before tax 581 478
Tax charge 4 (131) (80)
Profit for the year 450 398
Earnings per share, pence
Basic 5 114.5 101.3
Diluted 5 113.2 100.0
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 September 2014 30 September 2013
Notes £ million £ million
Profit for the year 450 398
Other comprehensive income
Cash flow hedges
Fair value losses in the year (2) (82)
Losses/(gains) transferred to income statement 50 (42)
Related tax (charge)/credit 4 (10) 27
38 (97)
Total comprehensive income for the year 488 301
All items in other comprehensive income will be re-classified to the income statement.
Consolidated Statement of Financial Position
30 September 2014 30 September 2013
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 113 102
Property, plant and equipment 7 2,542 2,280
Derivative financial instruments 36 13
Loan notes 4 7
Restricted cash 9 12
Other non-current assets 152 185
3,221 2,964
Current assets
Trade and other receivables 200 194
Derivative financial instruments 53 17
Restricted cash 23 -
Money market deposits 561 224
Cash and cash equivalents 424 1,013
1,261 1,448
Current liabilities
Trade and other payables (1,110) (1,093)
Borrowings (91) (87)
Derivative financial instruments (87) (60)
Current tax payable (53) (58)
Maintenance provisions (79) (81)
(1,420) (1,379)
Net current (liabilities)/assets (159) 69
Non-current liabilities
Borrowings (472) (592)
Derivative financial instruments (23) (41)
Non-current deferred income (62) (68)
Maintenance provisions (147) (171)
Deferred tax 4 (186) (144)
(890) (1,016)
Net assets 2,172 2,017
Shareholders' equity
Share capital 108 108
Share premium 658 657
Hedging reserve (17) (55)
Translation reserve 1 1
Retained earnings 1,422 1,306
2,172 2,017
Consolidated Statement of Changes in Equity
Share capital Share premium Hedging reserve Translation reserve Retained earnings Total
£ million £ million £ million £ million £ million £ million
At 1 October 2013 108 657 (55) 1 1,306 2,017
Total comprehensive income - - 38 - 450 488
Dividends paid (note 6) - - - - (308) (308)
Share incentive schemes
Proceeds from shares issued - 1 - - - 1
Value of employee services - - - - 23 23
Related tax (note 4) - - - - 8 8
Purchase of own shares - - - - (57) (57)
At 30 September 2014 108 658 (17) 1 1,422 2,172
Share capital Share premium Hedging reserve Translation reserve Retained earnings Total
£ million £ million £ million £ million £ million £ million
At 1 October 2012 108 656 42 1 987 1,794
Total comprehensive (expense)/income - - (97) - 398 301
Dividends paid - - - - (85) (85)
Share incentive schemes
Proceeds from shares issued - 1 - - - 1
Value of employee services - - - - 18 18
Related tax (note 4) - - - - 14 14
Purchase of own shares - - - - (26) (26)
At 30 September 2013 108 657 (55) 1 1,306 2,017
The hedging reserve comprises the effective portion of the cumulative net
change in fair value of cash flow hedging instruments relating to highly
probable transactions that are forecast to occur after the year end.
Consolidated Statement of Cash Flows
Year ended Year ended
30 September 2014 30 September 2013
Notes £ million £ million
Cash flows from operating activities
Cash generated from operations (excluding dividends) 8 793 788
Ordinary dividends paid (133) (85)
Special dividends paid (175) -
Net interest and other financing charges received/(paid) 5 (22)
Tax paid (96) (65)
Net cash generated from operating activities 394 616
Cash flows from investing activities
Purchase of property, plant and equipment 7 (426) (400)
Proceeds from sale of property, plant and equipment 1 1
Purchase of intangible assets (23) (21)
Redemption of loan notes 3 4
Net cash used by investing activities (445) (416)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 1 1
Purchase of own shares for employee share schemes (57) (26)
Repayment of bank loans (104) (273)
Repayment of capital element of finance leases (8) (10)
Net proceeds from sale and operating leaseback of aircraft - 316
Net (increase)/decrease in money market deposits (338) 41
Net (increase)/decrease in restricted cash (20) 148
Net cash (used by)/generated from financing activities (526) 197
Effect of exchange rate changes (12) (29)
Net (decrease)/increase in cash and cash equivalents (589) 368
Cash and cash equivalents at beginning of year 1,013 645
Cash and cash equivalents at end of year 424 1,013
Notes to the Accounts
1. Basis of preparation
This consolidated financial information has been prepared in accordance with
the Listing Rules of the Financial Conduct Authority.
The financial information set out in this document does not constitute
statutory accounts for easyJet plc for the two years ended 30 September 2014
but is extracted from the 2014 Annual report and accounts.
The Annual report and accounts for 2013 has been delivered to the Registrar of
Companies.
The Annual report and accounts for 2014 will be delivered to the Registrar of
Companies in due course. The auditors' report on those accounts was
unqualified and neither drew attention to any matters by way of emphasis nor
contained a statement under either section 498(2) of Companies Act 2006
(accounting records or returns inadequate or accounts not agreeing with
records and returns), or section 498(3) of Companies Act 2006 (failure to
obtain necessary information and explanations).
2. Significant judgements, estimates and critical accounting policies
The preparation of accounts in conformity with generally accepted accounting
principles requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the accounts and the
reported amounts of income and expenses during the reporting period. Although
these estimates are based on management's best knowledge of the amount, events
or actions may mean that actual results ultimately differ from those
estimates, and these differences may be material. The estimates and the
underlying assumptions are reviewed regularly.
The following two accounting policies are considered critical accounting
policies as they require a significant amount of management judgment and the
results are material to easyJet's accounts.
Aircraft maintenance provisions
easyJet incurs liabilities for maintenance costs in respect of aircraft leased
under operating leases during the term of the lease. These arise from legal
and constructive contractual obligations relating to the condition of the
aircraft when it is returned to the lessor. To discharge these obligations,
easyJet will also normally need to carry out one heavy maintenance check on
each of the engines and the airframe during the lease term.
A charge is made in the income statement, based on hours or cycles flown, to
provide for the cost of these obligations. Estimates required include the
likely utilisation of the aircraft, the expected cost of the heavy maintenance
check at the time it is expected to occur, the condition of the aircraft and
the lifespan of life-limited parts.
The bases of all estimates are reviewed annually, and also when information
becomes available that is capable of causing a material change to an estimate,
such as renegotiation of end of lease return conditions, increased or
decreased utilisation, or changes in the cost of heavy maintenance services.
Goodwill and landing rights
Goodwill and landing rights are tested for impairment at least annually.
easyJet has one cash-generating unit, being its route network. In making this
assessment, easyJet has considered the manner in which the business is managed
including the centralised nature of its operations and the ability to open or
close routes and redeploy aircraft and crew across the whole route network.
The value in use of the cash-generating unit is determined by discounting
future cashflows to their present value. When applying this method, easyJet
relies on a number of estimates including its strategic plans, fuel prices,
exchange rates, long term economic growth rates for the principal countries in
which it operates, and its pre-tax weighted average cost of capital.
3. Net finance charges
2014 2013
£ million £ million
Interest receivable and other financing income
Interest income (4) (5)
Net exchange gains on monetary assets and liabilities (7) -
(11) (5)
Interest payable and other financing charges
Interest payable on bank loans 6 9
Interest payable on finance lease obligations 5 5
Other interest payable - 2
Net exchange losses on monetary assets and liabilities - 8
11 24
- 19
4. Tax charge
Tax on profit on ordinary activities
2014 2013
£ million £ million
Current tax
United Kingdom corporation tax 99 103
Foreign tax 6 4
Prior year adjustments (7) (11)
Total current tax charge 98 96
Deferred tax
Temporary differences relating to property, plant and equipment 25 15
Other temporary differences 3 (9)
Prior year adjustments 8 6
Change in tax rate (3) (28)
Total deferred tax charge / (credit) 33 (16)
131 80
Effective tax rate 22.5% 16.7%
Legislation enacted in 2013 reduced the UK corporation tax rate to 20% from 1 April 2015. As a consequence, deferred tax
in 2013 reduced by £28 million resulting in an effective tax rate of 16.7%.
Current tax payable at 30 September 2014 amounted to £53 million (2013: £58
million). £45 million of this related to tax payable in the UK; the remaining
amount of £8 million related to tax due in other European countries.
During the year ended 30 September 2014, tax paid amounted to £96 million
(2013: £65 million).
Tax on items recognised directly in other comprehensive income or shareholders' equity
2014 2013
£ million £ million
(Charge)/credit to other comprehensive income
Deferred tax on fair value movements of cash flow hedges (10) 27
Credit to shareholders' equity
Current tax credit on share-based payments 7 3
Deferred tax credit on share-based payments 1 11
8 14
5. Earnings per share
Basic earnings per share has been calculated by dividing the profit for the
year by the weighted average number of shares in issue during the year after
adjusting for shares held in employee benefit trusts.
To calculate diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive
potential shares. Share options granted to employees where the exercise price
is less than the average market price of the Company's ordinary shares during
the year are considered to be dilutive potential shares. Where share options
are exercisable based on performance criteria and those performance criteria
have been met during the year, these options are included in the calculation
of dilutive potential shares.
Earnings per share is based on:
2014 2013
£ million £ million
Profit for the year 450 398
2014 2013
million Million
Weighted average number of ordinary shares used to calculate basic earnings per share 393 393
Weighted average number of dilutive share options 5 5
Weighted average number of ordinary shares used to calculate diluted earnings per share 398 398
2014 2013
Earnings per share pence Pence
Basic 114.5 101.3
Diluted 113.2 100.0
6.Dividends
An ordinary dividend in respect of the year ended 30 September 2014 of 45.4
pence per share, or £180 million is to be proposed at the forthcoming Annual
General Meeting. These accounts do not reflect this proposed dividend.
An ordinary dividend of 33.5 pence per share, or £133 million, and a special
dividend of 44.1 pence per share, or £175 million, in respect of the year
ended 30 September 2013 were both paid in the year ending 30 September 2014.
7. Property, plant and equipment
Aircraft and spares Other Total
£ million £ million £ million
Cost
At 1 October 2013 2,674 31 2,705
Additions 419 17 436
Transfer to intangible assets - (10) (10)
Transfer to maintenance provision (55) - (55)
Disposals (3) (2) (5)
At 30 September 2014 3,035 36 3,071
Depreciation
At 1 October 2013 415 10 425
Charge for the year 103 3 106
Disposals (1) (1) (2)
At 30 September 2014 517 12 529
Net book value
At 30 September 2014 2,518 24 2,542
At 1 October 2013 2,259 21 2,280
The net book value of aircraft includes £322 million (2013: £196 million)
relating to advance and option payments for future deliveries. This amount is
not depreciated.
Aircraft with a net book value of £597 million (2013: £664 million) are
mortgaged to lenders as loan security.
Aircraft with a net book value of £142 million (2013: £147 million) are held
under finance leases.
easyJet is contractually committed to the acquisition of 170 (2013: 144)
Airbus A320 family aircraft, with a total list price of US$14.6 billion (2013:
US$12.4 billion) before escalations and discounts, for delivery between 2015
and 2018 (35 aircraft) and 2017 and 2022 (100 new generation aircraft).
The 'other' category mainly comprises leasehold improvements, computer
hardware, and fixtures, fittings and equipment.
8. Reconciliation of operating profit to cash generated from operations
2014 2013
£ million £ million
Operating profit 581 497
Adjustments for non-cash items:
Depreciation 106 102
Loss on disposal of property, plant and equipment 2 -
Amortisation of intangible assets 12 10
Share-based payments 23 18
Changes in working capital and other items of an operating nature:
(Increase) / decrease in trade and other receivables (6) 74
Increase in trade and other payables 18 64
Increase in provisions 32 29
Decrease in other non-current assets 33 8
(Decrease) / increase in derivative financial instruments (2) -
Decrease in non-current deferred income (6) (14)
793 788
9. Reconciliation of net cash flow to movement in net cash
1 October 2013 Exchange differences Loan issue costs Netcash flow 30 September 2014
£ million £ million £ million £ million £ million
Cash and cash equivalents 1,013 (12) - (577) 424
Money market deposits 224 (1) - 338 561
1,237 (13) - (239) 985
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