REG - easyJet PLC - Final Results <Origin Href="QuoteRef">EZJ.L</Origin> - Part 2
17/11/2015 07:02
- Part 2: For the preceding part double click ID:nRSQ9174Fa
passenger (£) 68.28 69.90 (2.3%)
Revenue per passenger at constant currency (£) 70.25 69.90 0.5%
Revenue per ASK (pence) 5.59 5.69 (1.8%)
Revenue per ASK at constant currency (pence) 5.75 5.69 1.0%
Costs
Per seat measures
Total cost per seat (£) 53.33 55.19 (3.4%)
Total cost per seat excluding fuel (£) 37.35 37.70 (0.9%)
Total cost per seat excluding fuel at constant currency (£) 39.07 37.70 3.6%
Operating cost per seat (£) 49.96 51.80 (3.6%)
Operating cost per seat excluding fuel (£) 33.98 34.31 (1.0%)
Operating cost per seat excluding fuel at constant currency (£) 35.57 34.31 3.7%
Ownership cost per seat (£) 3.37 3.39 (0.4%)
Per ASK measures
Total cost per ASK (pence) 4.77 4.96 (3.9%)
Total cost per ASK excluding fuel (pence) 3.34 3.39 (1.5%)
Total cost per ASK excluding fuel at constant currency (pence) 3.49 3.39 3.1%
Operating cost per ASK (pence) 4.47 4.65 (4.1%)
Operating cost per ASK excluding fuel (pence) 3.04 3.08 (1.5%)
Operating cost per ASK excluding fuel at constant currency (pence) 3.18 3.08 3.1%
Ownership cost per ASK (pence) 0.30 0.31 (1.0%)
Consolidated Income Statement
Year ended Year ended
30 September 2015 30 September 2014
Notes £ million £ million
Seat revenue 4,616 4,462
Non-seat revenue 70 65
Total revenue 4,686 4,527
Fuel (1,199) (1,251)
Airports and ground handling (1,122) (1,107)
Crew (505) (479)
Navigation (313) (307)
Maintenance (229) (212)
Selling and marketing (102) (103)
Other costs (276) (245)
EBITDAR 940 823
Aircraft dry leasing (114) (124)
Depreciation 7 (125) (106)
Amortisation of intangible assets (13) (12)
Operating profit 688 581
Interest receivable and other financing income 9 11
Interest payable and other financing charges (11) (11)
Net finance charges 3 (2) -
Profit before tax 686 581
Tax charge 4 (138) (131)
Profit for the year 548 450
Earnings per share, pence
Basic 5 139.1 114.5
Diluted 5 138.0 113.2
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 September 2015 30 September 2014
Notes £ million £ million
Profit for the year 548 450
Other comprehensive income/(expense)
Cash flow hedges
Fair value losses in the year (510) (2)
Losses transferred to income statement 229 50
Losses transferred to property, plant and equipment 3 -
Related tax credit/(charge) 4 56 (10)
(222) 38
Total comprehensive income for the year 326 488
For capital expenditure cash-flow hedges, the accumulated gains and losses
recognised in other comprehensive income will be transferred to the initial
carrying amount of the asset acquired, within property, plant and equipment.
All other items in other comprehensive income will be re-classified to the
income statement.
Consolidated Statement of Financial Position
30 September 2015 30 September 2014
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 127 113
Property, plant and equipment 7 2,877 2,542
Derivative financial instruments 44 36
Restricted cash 6 9
Other non-current assets 130 156
3,549 3,221
Current assets
Trade and other receivables 206 200
Derivative financial instruments 128 53
Restricted cash 6 23
Money market deposits 289 561
Cash and cash equivalents 650 424
1,279 1,261
Current liabilities
Trade and other payables (495) (523)
Unearned revenue (619) (572)
Borrowings (182) (91)
Derivative financial instruments (368) (87)
Current tax payable (43) (53)
Provisions for liabilities and charges (61) (94)
(1,768) (1,420)
Net current liabilities (489) (159)
Non-current liabilities
Borrowings (322) (472)
Derivative financial instruments (101) (23)
Non-current deferred income (47) (62)
Provisions for liabilities and charges (165) (147)
Deferred tax (176) (186)
(811) (890)
Net assets 2,249 2,172
Shareholders' equity
Share capital 108 108
Share premium 659 658
Hedging reserve (239) (17)
Translation reserve 1 1
Retained earnings 1,720 1,422
2,249 2,172
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 2014 108 658 (17) 1 1,422 2,172
Total comprehensive (expense)/income - - (222) - 548 326
Dividends paid (note 6) - - - - (180) (180)
Share incentive schemes
Proceeds from shares issued - 1 - - - 1
Value of employee services - - - - 18 18
Related tax (note 4) - - - - 4 4
Purchase of own shares - - - - (92) (92)
At 30 September 2015 108 659 (239) 1 1,720 2,249
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
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 2015 30 September 2014
Notes £ million £ million
Cash flows from operating activities
Cash generated from operations 8 895 793
Ordinary dividends paid (180) (133)
Special dividends paid - (175)
Net interest and other financing charges (paid)/received (8) 5
Net tax paid (98) (96)
Net cash generated from operating activities 609 394
Cash flows from investing activities
Purchase of property, plant and equipment 7 (509) (426)
Proceeds from sale of property, plant and equipment - 1
Purchase of intangible assets (27) (23)
Other 4 3
Net cash used by investing activities (532) (445)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 1 1
Purchase of own shares for employee share schemes (92) (57)
Repayment of bank loans (80) (104)
Repayment of capital element of finance leases (11) (8)
Net decrease/(increase) in money market deposits 277 (338)
Net decrease/(increase) in restricted cash 21 (20)
Net cash generated from/(used by) financing activities 116 (526)
Effect of exchange rate changes 33 (12)
Net increase/(decrease) in cash and cash equivalents 226 (589)
Cash and cash equivalents at beginning of year 424 1,013
Cash and cash equivalents at end of year 650 424
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 2015
but is extracted from the 2015 Annual report and accounts.
The Annual report and accounts for 2014 has been delivered to the Registrar of
Companies.
The Annual report and accounts for 2015 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 three accounting policies are considered critical accounting
policies as they require a significant amount of management judgement 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.
Other provisions
easyJet incurs liabilities for amounts payable to customers who make claims in
respect of flight delays and cancellations, and refunds of air passenger duty
or similar charges. Estimates required include passenger claim history, level
of claims made and period of time over which claims are made. The bases of all
estimates are reviewed at least annually and also when information becomes
available that is capable of causing a material change to the estimate.
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
2015 2014
£ million £ million
Interest receivable and other financing income
Interest income (3) (4)
Net exchange gains on monetary assets and liabilities (6) (7)
(9) (11)
Interest payable and other financing charges
Interest payable on bank loans 5 6
Interest payable on finance lease obligations 5 5
Other interest payable 1 -
11 11
2 -
4. Tax charge
Tax on profit on ordinary activities
2015 2014
£ million £ million
Current tax
United Kingdom corporation tax 109 99
Foreign tax 6 6
Prior year adjustments (14) (7)
Total current tax charge 101 98
Deferred tax
Temporary differences relating to property, plant and equipment 28 25
Other temporary differences 2 3
Prior year adjustments 8 8
Change in tax rate (1) (3)
Total deferred tax charge 37 33
138 131
Effective tax rate 20.1% 22.5%
Current tax payable at 30 September 2015 amounted to £43 million (2014: £53
million). The current tax payable at 30 September 2015 of £43 million entirely
related to tax payable in the UK. The current tax payable at 30 September 2014
of £53 million related to £45 million of tax payable in the UK and £8 million
related to tax due in other European countries.
During the year ended 30 September 2015, net cash tax paid amounted to £98
million (2014: £96 million).
Tax on items recognised directly in other comprehensive income or shareholders' equity
2015 2014
£ million £ million
Credit/(charge) to other comprehensive income
Deferred tax on change in fair value of cash flow hedges 56 (10)
Credit/(charge) to shareholders' equity
Current tax credit on share-based payments 13 7
Deferred tax (charge)/credit on share-based payments (9) 1
4 8
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:
2015 2014
£ million £ million
Profit for the year 548 450
2015 2014
million million
Weighted average number of ordinary shares used to calculate basic earnings per share 394 393
Weighted average number of dilutive potential shares 3 5
Weighted average number of ordinary shares used to calculate diluted earnings per share 397 398
2015 2014
Earnings per share pence pence
Basic 139.1 114.5
Diluted 138.0 113.2
6. Dividends
An ordinary dividend in respect of the year ended 30 September 2015 of 55.2
pence per share, or £219 million, is to be proposed at the forthcoming Annual
General Meeting. These accounts do not reflect this proposed dividend.
An ordinary dividend of 45.4 pence per share, or £180 million in respect of
the year ended 30 September 2014 was paid in the year ended 30 September 2015.
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 ended 30 September 2014.
7. Property, plant and equipment
Aircraft and spares Other Total
£ million £ million £ million
Cost
At 1 October 2014 3,035 36 3,071
Additions 500 36 536
Transfer to intangible assets - (27) (27)
Transfer to maintenance provisions (48) - (48)
Disposals (2) (2) (4)
At 30 September 2015 3,485 43 3,528
Depreciation
At 1 October 2014 517 12 529
Charge for the year 121 4 125
Disposals (2) (1) (3)
At 30 September 2015 636 15 651
Net book value
At 30 September 2015 2,849 28 2,877
At 1 October 2014 2,518 24 2,542
The net book value of aircraft includes £275 million (2014: £322 million)
relating to advance and option payments for future deliveries. This amount is
not depreciated.
Aircraft with a net book value of £583 million (2014: £597 million) are
mortgaged to lenders as loan security.
Aircraft with a net book value of £149 million (2014: £142 million) are held
under finance leases.
easyJet is contractually committed to the acquisition of 150 (2014: 170)
Airbus A320 family aircraft, with a total list price of US$13.0 billion (2014:
US$14.6 billion) before escalations and discounts for delivery in 2016 (20
aircraft), between 2017 and 2018 (30 aircraft) and between 2017 and 2022 (100
new generation aircraft).
On 16 November 2015, easyJet secured an agreement with Airbus to take delivery
of an additional 36 aircraft (of which 30 are new generation) with a total
list price of $3.2 billion, based on January 2012 list prices.
The 'other' category mainly comprises leasehold improvements, computer
hardware, and fixtures, fittings and equipment.
8. Reconciliation of operating profit to cash generated from operations
2015 2014
£ million £ million
Operating profit 688 581
Adjustments for non-cash items:
Depreciation 125 106
Loss on disposal of property, plant and equipment 1 2
Amortisation of intangible assets 13 12
Share-based payments 18 23
Changes in working capital and other items of an operating nature:
Decrease / (increase) in trade and other receivables 5 (6)
Decrease in trade and other payables (30) (5)
Increase in unearned revenue 47 25
Increase in provisions 23 30
Decrease in other non-current assets 22 33
Decrease in derivative financial instruments (2) (2)
Decrease in non-current deferred income (15) (6)
Cash generated from operations 895 793
9. Reconciliation of net cash flow to movement in net cash
1 October 2014 Exchange differences Netcash flow 30 September 2015
£ million £ million £ million £ million
Cash and cash equivalents 424 33 193 650
Money market deposits 561 5 (277) 289
985 38 (84) 939
Bank loans (377) (19) 80 (316)
Finance lease obligations (186) (13) 11 (188)
(563) (32) 91 (504)
Net cash 422 6 7 435
10. Related party transactions
The Company licenses the easyJet brand from easyGroup Limited ('easyGroup'), a
wholly owned subsidiary of easyGroup Holdings Limited, an entity in which
easyJet's founder, Sir Stelios Haji-Ioannou, holds a beneficial controlling
interest. The Haji-Ioannou family concert party shareholding (being easyGroup
Holdings Limited and Polys Holding Limited) holds, in total, 33.73% of the
issued share capital of easyJet plc as at 30 September 2015.
Under the Amended Brand Licence signed in October 2010 and approved by the
shareholders of easyJet plc in December 2010, an annual royalty of 0.25% of
total revenue is payable by easyJet to easyGroup for a minimum term of 10
years. The full term of agreement is 50 years.
easyJet and easyGroup established a fund to meet the annual costs of
protecting the 'easy' (and related marks) and the 'easyJet' brands. easyJet
contributes up to £1 million per annum to this fund and easyGroup contributes
up to £100,000 per annum. Beyond the first £1.1 million of costs, easyJet can
commit up to an aggregate £5.5 million annually to meet brand protection
costs, with easyGroup continuing to meet its share of costs on a 10:1 ratio.
easyJet must meet 100% of any brand protection costs it wishes to incur above
this limit.
A separate agreement was entered with Sir Stelios ('the Comfort Letter'),
dated 9 October 2010, under which, in return for certain non-compete
obligations, easyJet made payment of a fee of £300,000, adjusted annually per
the UK Retail Price index, each year for five years (or until the expiry of
the longest subsisting restriction, whichever is later). All of the
obligations in the Comfort Letter have now expired and no further payments
will be made under it.
The amounts included in the income statement for these items were as follows:
2015£ million 2014£ million
Annual royalty 11.7 11.3
Brand protection (legal fees paid through easyGroup to third parties) 0.9 1.0
Comfort Letter agreement with Sir Stelios Haji-Ioannou 0.3 0.3
12.9 12.6
At 30 September 2015, £1.0 million (2014: £0.8 million) of the above aggregate
amount was included in trade and other payables.
This information is provided by RNS
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