REG - easyJet PLC - Final Results <Origin Href="QuoteRef">EZJ.L</Origin> - Part 2
15/11/2016 07:06
- Part 2: For the preceding part double click ID:nRSO1550Pa
2016 2015
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Seat revenue 4,587 57.43 5.23 4,616 61.54 5.51
Non-seat revenue 82 1.03 0.09 70 0.94 0.08
Total revenue 4,669 58.46 5.32 4,686 62.48 5.59
Revenue per seat decreased by 6.4% to £58.46 (2015: £62.48). At constant
currency, revenue per seat fell by 6.9% to £58.16. The decrease is
attributable to the terrorist events in Egypt, Paris, Brussels, Turkey and
Nice resulting in lower demand and yield, the increasingly competitive
capacity environment associated with the lower oil prices and the impact of
the UK's vote to leave the European Union leading to a more expensive Euro for
British travellers during the summer.
Load factor increased by 0.1 percentage points to 91.6%.
Revenue per ASK decreased by 4.8% (or by 5.3% at constant currency), impacted
by a 6.4% decrease in revenue per seat, partially offset by a 1.7% decrease in
the average sector length, mainly from reduced flying to Egypt.
Costs excluding fuel
2016 2015
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Operating costs
Airports and ground handling 1,267 15.86 1.44 1,122 14.96 1.34
Crew 542 6.78 0.62 505 6.73 0.60
Navigation 336 4.21 0.38 313 4.17 0.38
Maintenance 237 2.97 0.27 229 3.06 0.27
Selling and marketing 107 1.33 0.13 102 1.36 0.12
Other costs 296 3.71 0.33 276 3.70 0.33
2,785 34.86 3.17 2,547 33.98 3.04
Ownership costs
Aricraft dry leasing 103 1.30 0.12 114 1.51 0.14
Depreciation 157 1.97 0.18 125 1.66 0.15
Amortisation 12 0.15 0.01 13 0.17 0.02
Net interest payable 6 0.08 0.01 8 0.12 -
Net exchange gains (3) (0.05) - (6) (0.09) (0.01)
275 3.45 0.32 254 3.37 0.30
Total costs excluding fuel 3,060 38.31 3.49 2,801 37.35 3.34
Cost per seat excluding fuel increased by 2.6% to £38.31 but decreased by 1.1%
per seat at constant currency.
Airports and ground handling cost per seat increased by 6.1% and by 1.5% at
constant currency. Charges at regulated airports increased as anticipated,
primarily in Italy, combined with an increase in airport and ground handling
costs at Gatwick. However, these were partially offset by volume deals,
combined with savings from renegotiated airport and ground handling
contracts.
Crew cost per seat increased by 0.7% to £6.78 but decreased by 2.2% at
constant currency. This was driven by efficiencies obtained from the
up-gauging of our fleet, combined with a 1.7% decrease in average sector
length and improved crew scheduling. This was partially offset by pay
increases.
Navigation costs increased by 0.8% per seat to £4.21 but decreased by 4.7% at
constant currency driven by a 1.7% decrease in average sector length, annual
price decreases primarily in France and Germany and a one-off £8 million
settlement with Eurocontrol in the 2015 financial year.
Maintenance costs per seat decreased by 3.0% to £2.97 and decreased by 5.3% at
constant currency. A reduction in the number of leased aircraft resulted in
reduced maintenance costs, combined with savings obtained from a new
maintenance contract.
Other costs per seat increased by 0.8% to £3.71 per seat, and decreased by
1.9% at constant currency. This was driven by a reduction in aircraft wet
leasing and savings in employee costs, which was largely offset by an increase
in disruption costs as a result of the terrorist events in Egypt, Paris,
Brussels, Turkey and Nice, combined with Air Traffic Control industrial action
and adverse weather conditions, resulting in an increase in EU261 associated
costs.
Aircraft dry leasing cost per seat decreased by 14.4% to £1.30 and by 14.3% at
constant currency. Depreciation costs increased by 18.5% on a per seat basis.
The movements are principally driven by the acquisition of twenty new aircraft
last year and a decrease in the number of leased aircraft in the fleet. The
average leased fleet decreased by 6.4% to 64 and the average owned and finance
leased fleet increased by 12.6% to 185.
Fuel
2016 2015
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Fuel 1,114 13.95 1.27 1,199 15.98 1.43
Fuel cost per seat decreased by 12.7% and by 13.0% at constant currency.
During the period the average market jet fuel price fell by 32.9% to $415 per
tonne from $619 per tonne in the previous year. The operation of easyJet's
fuel and US Dollar hedging policy meant that the average effective fuel price
movement only saw a decrease of 13.4% to £479 per tonne from £553 per tonne in
the previous year.
NET CASH AND FINANCIAL POSITION
Summary net cash reconciliation
2016 2015 Change
£ million £ million £ million
Operating profit 498 688 (190)
Depreciation and amortisation 169 138 31
Net working capital movement 35 50 (15)
Net tax paid (99) (98) (1)
Net capital expenditure (586) (536) (50)
Purchase of own shares for employee share schemes (22) (92) 70
Net decrease in restricted cash 6 21 (15)
Other (including the effect of exchange rates) (4) 22 (26)
Ordinary dividend paid (219) (180) (39)
Net (decrease)/increase in net cash (222) 13 (235)
Net cash at beginning of year 435 422 13
Net cash at end of year 213 435 (222)
Net cash at 30 September 2016 was £213 million (2015: £435 million) and
comprised cash and money market deposits of £969 million (2015: £939 million)
and borrowings of £756 million (2015: £504 million). After allowing for the
impact of aircraft operating leases (seven times operating lease costs
incurred in the year), adjusted net debt increased by £145 million to £508
million.
Net capital expenditure includes the acquisition of 20 A320 aircraft (2015: 20
aircraft), the purchase of life-limited parts used in engine restoration and
pre-delivery payments relating to aircraft purchases. The number of scheduled
aircraft operating in the fleet increased from 233 at 30 September 2015 to 249
at 30 September 2016.
easyJet made net corporation tax payments totalling £99 million during the
2016 financial year (2015: £98 million).
Borrowings as at 30 September 2016 were £756 million, an increase of £252
million from 30 September 2015. During the period easyJet secured credit
ratings from Moody's (Baa1 Stable) and Standard & Poor's (BBB+ Stable) and
announced a £3,000 million Euro Medium Term Note Programme. Under this
programme, on 9 February 2016 easyJet plc issued notes amounting to E500
million for a seven year term with a fixed annual coupon rate of 1.750%. This
increase in borrowings was offset by the repayment of four finance leases and
early repayment of five loans.
In the year ending 30 September 2015 easyJet signed a $500 million revolving
credit facility with a minimum five-year term. The facility is due to mature
in February 2021.
Summary consolidated statement of financial position
2016 2015 Change
£ million £ million £ million
Goodwill 365 365 -
Property, plant and equipment 3,252 2,877 375
Derivative financial instruments 98 (297) 395
Net working capital (968) (969) 1
Restricted cash 7 12 (5)
Net cash 213 435 (222)
Current and deferred taxation (258) (219) (39)
Other non-current assets and liabilities 3 45 (42)
2,712 2,249 463
Opening shareholders' equity 2,249 2,172
Profit for the year 427 548
Ordinary dividend paid (219) (180)
Change in hedging reserve 263 (222)
Other movements (8) (69)
2,712 2,249
Net assets increased by £463 million, due to the profit generated in the
period and favourable movements on the hedging reserve, which were only
partially offset by the payment of the ordinary dividend. The movement on the
hedging reserve was primarily due to the maturity of out of the money
contracts.
The net book value of property, plant and equipment increased by £375 million
driven principally by the acquisition of 20 A320 family aircraft, and
pre-delivery payments relating to aircraft purchases.
Key statistics
Operating measures 2016 2015 Increase/(decrease)
Seats flown (millions) 79.9 75.0 6.5%
Passengers (millions) 73.1 68.6 6.6%
Load factor 91.6% 91.5% 0.1ppt
Available seat kilometres (ASK) (millions) 87,724 83,846 4.6%
Revenue passenger kilometres (RPK) (millions) 81,496 77,619 5.0%
Average sector length (kilometres) 1,098 1,118 (1.7%)
Sectors 482,110 457,479 5.4%
Block hours 934,223 892,052 4.7%
Number of aircraft owned/leased at end of year 257 241 6.6%
Average number of aircraft owned/leased during year 248.7 232.6 6.9%
Number of aircraft operated at end of year 249 233 6.9%
Average number of aircraft operated during year 234.6 221.1 6.1%
Operated aircraft utilisation (hours per day) 10.4 11.1 (5.8%)
Owned aircraft utilisation (hours per day) 10.3 10.5 (2.3%)
Number of routes operated at end of year 803 735 9.3%
Number of airports served at end of year 132 136 (2.9%)
Financial measures
Return on capital employed 14.6% 22.2% (7.6ppt)
Liquidity per 100 seats (£m) 3.2 3.2 0.0%
Profit before tax per seat (£) 6.20 9.15 (32.3%)
Profit before tax per ASK (pence) 0.56 0.82 (31.1%)
Revenue
Revenue per seat (£) 58.46 62.48 (6.4%)
Revenue per seat at constant currency (£) 58.16 62.48 (6.9%)
Revenue per passenger (£) 63.83 68.28 (6.5%)
Revenue per passenger at constant currency (£) 63.50 68.28 (7.0%)
Revenue per ASK (pence) 5.32 5.59 (4.8%)
Revenue per ASK at constant currency (pence) 5.29 5.59 (5.3%)
Costs
Per seat measures
Total cost per seat (£) 52.26 53.33 2.0%
Total cost per seat excluding fuel (£) 38.31 37.35 (2.6%)
Total cost per seat excluding fuel at constant currency (£) 37.04 37.44 1.1%
Operating cost per seat (£) 48.81 49.96 2.3%
Operating cost per seat excluding fuel (£) 34.86 33.98 (2.6%)
Operating cost per seat excluding fuel at constant currency (£) 33.55 33.98 1.2%
Ownership cost per seat (£) 3.45 3.37 (2.3%)
Per ASK measures
Total cost per ASK (pence) 4.76 4.77 0.3%
Total cost per ASK excluding fuel (pence) 3.49 3.34 (4.4%)
Total cost per ASK excluding fuel at constant currency (pence) 3.36 3.35 (0.7%)
Operating cost per ASK (pence) 4.44 4.47 0.6%
Operating cost per ASK excluding fuel (pence) 3.17 3.04 (4.4%)
Operating cost per ASK excluding fuel at constant currency (pence) 3.05 3.04 (0.5%)
Ownership cost per ASK (pence) 0.32 0.30 (4.1%)
Consolidated Income Statement
Year ended Year ended
30 September 2016 30 September 2015
Notes £ million £ million
Seat revenue 4,587 4,616
Non-seat revenue 82 70
Total revenue 4,669 4,686
Fuel (1,114) (1,199)
Airports and ground handling (1,267) (1,122)
Crew (542) (505)
Navigation (336) (313)
Maintenance (237) (229)
Selling and marketing (107) (102)
Other costs (296) (276)
EBITDAR 770 940
Aircraft dry leasing (103) (114)
Depreciation 7 (157) (125)
Amortisation of intangible assets (12) (13)
Operating profit 498 688
Interest receivable and other financing income 10 9
Interest payable and other financing charges (13) (11)
Net finance charges 3 (3) (2)
Profit before tax 495 686
Tax charge 4 (68) (138)
Profit for the year 427 548
Earnings per share, pence
Basic 5 108.4 139.1
Diluted 5 107.6 138.0
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 September 2016 30 September 2015
Notes £ million £ million
Profit for the year 427 548
Other comprehensive income/(expense)
Cash flow hedges
Fair value gains/(losses) in the year 10 (510)
Losses transferred to income statement 347 229
(Losses)/gains transferred to property, plant and equipment (28) 3
Related tax (charge)/credit 4 (66) 56
263 (222)
Total comprehensive income for the year 690 326
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 reclassified to the
income statement.
Consolidated Statement of Financial Position
30 September 2016 30 September 2015
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 152 127
Property, plant and equipment 7 3,252 2,877
Derivative financial instruments 154 44
Restricted cash 7 6
Other non-current assets 121 130
4,051 3,549
Current assets
Trade and other receivables 217 206
Derivative financial instruments 268 128
Restricted cash - 6
Money market deposits 255 289
Cash and cash equivalents 714 650
1,454 1,279
Current liabilities
Trade and other payables (564) (495)
Unearned revenue (568) (619)
Borrowings (92) (182)
Derivative financial instruments (275) (368)
Current tax payable (21) (43)
Provisions for liabilities and charges (53) (61)
(1,573) (1,768)
Net current liabilities (119) (489)
Non-current liabilities
Borrowings (664) (322)
Derivative financial instruments (49) (101)
Non-current deferred income (35) (47)
Provisions for liabilities and charges (235) (165)
Deferred tax (237) (176)
(1,220) (811)
Net assets 2,712 2,249
Shareholders' equity
Share capital 108 108
Share premium 659 659
Hedging reserve 24 (239)
Translation reserve 1 1
Retained earnings 1,920 1,720
2,712 2,249
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 2015 108 659 (239) 1 1,720 2,249
Total comprehensive income - - 263 - 427 690
Dividends paid (note 6) - - - - (219) (219)
Share incentive schemes
Value of employee services - - - - 19 19
Related tax - - - - (5) (5)
Purchase of own shares - - - - (22) (22)
At 30 September 2016 108 659 24 1 1,920 2,712
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 - - - - 4 4
Purchase of own shares - - - - (92) (92)
At 30 September 2015 108 659 (239) 1 1,720 2,249
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 2016 30 September 2015
Notes £ million £ million
Cash flows from operating activities
Cash generated from operations 8 724 895
Ordinary dividends paid (219) (180)
Net interest and other financing charges paid (19) (8)
Net tax paid (99) (98)
Net cash generated from operating activities 387 609
Cash flows from investing activities
Purchase of property, plant and equipment 7 (549) (509)
Purchase of intangible assets (37) (27)
Net decrease in money market deposits 45 277
Other - 4
Net cash used by investing activities (541) (255)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital - 1
Purchase of own shares for employee share schemes (22) (92)
Proceeds from Eurobond issue 379 -
Repayment of bank loans and other borrowings (142) (80)
Repayment of capital element of finance leases (98) (11)
Net decrease in restricted cash 6 21
Net cash generated from financing activities 123 (161)
Effect of exchange rate changes 95 33
Net increase in cash and cash equivalents 64 226
Cash and cash equivalents at beginning of year 650 424
Cash and cash equivalents at end of year 714 650
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 2016
but is extracted from the 2016 Annual report and accounts.
The Annual report and accounts for 2015 has been delivered to the Registrar of
Companies.
The Annual report and accounts for 2016 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 amounts are based on management's best estimates 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 rates, level of
claims that will be made and the period of time over which claims will be
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 cash flows 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
2016 2015
£ million £ million
Interest receivable and other financing income
Interest income (4) (3)
Dividend income (3) -
Net exchange gains on monetary assets and liabilities (3) (6)
(10) (9)
Interest payable and other financing charges
Interest payable on bank and other borrowings 8 5
Interest payable on finance lease obligations 4 5
Other interest payable 1 1
13 11
Net finance charges 3 2
4. Tax charge
Tax on profit on ordinary activities
2016 2015
£ million £ million
Current tax
United Kingdom corporation tax 77 109
Foreign tax 4 6
Prior year adjustments (2) (14)
Total current tax charge 79 101
Deferred tax
Temporary differences relating to property, plant and equipment 23 28
Other temporary differences (1) 2
Prior year adjustments 3 8
Change in tax rate from FY17 to 19% (2015: 20%) (14) (1)
Change in tax rate from FY20 to 17% (22) -
Total deferred tax (credit) / charge (11) 37
68 138
Effective tax rate 13.7% 20.1%
Current tax payable at 30 September 2016 amounted to £21 million (2015: £43
million). The current tax payable at 30 September 2016 of £21 million related
to £24 million of tax payable in the UK and £3 million related to tax
recoverable in other European countries. The current tax payable at 30
September 2015 of £43 million entirely related to tax payable in the UK.
During the year ended 30 September 2016, net cash tax paid amounted to £99
million (2015: £98 million).
Tax on items recognised directly in other comprehensive income or shareholders' equity
2016 2015
£ million £ million
(Charge)/credit to other comprehensive income
Deferred tax on change in fair value of cash flow hedges (66) 56
Credit/(Charge) to shareholders' equity
Current tax credit on share-based payments 1 13
Deferred tax charge on share-based payments (6) (9)
(5) 4
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:
2016 2015
£ million £ million
Profit for the year 427 548
2016 2015
million million
Weighted average number of ordinary shares used to calculate basic earnings per share 394 394
Weighted average number of dilutive potential shares 3 3
Weighted average number of ordinary shares used to calculate diluted earnings per share 397 397
Earnings per share pence pence
Basic 108.4 139.1
Diluted 107.6 138.0
6. Dividends
An ordinary dividend in respect of the year ended 30 September 2016 of 53.8
pence per share, or £214 million, is to be proposed at the forthcoming Annual
General Meeting. These accounts do not reflect this proposed dividend.
An ordinary dividend of 55.2 pence per share, or £219 million in respect of
the year ended 30 September 2015 was paid in the year ending 30 September
2016. 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.
7. Property, plant and equipment
Aircraft and spares Other Total
£ million £ million £ million
Cost
At 1 October 2015 3,485 43 3,528
Additions 526 23 549
Transfer to maintenance provision (14) - (14)
Disposals (26) (3) (29)
At 30 September 2016 3,971 63 4,034
Depreciation
At 1 October 2015 636 15 651
Charge for the year 152 5 157
Disposals (25) (1) (26)
At 30 September 2016 763 19 782
Net book value
At 30 September 2016 3,208 44 3,252
At 1 October 2015 2,849 28 2,877
The net book value of aircraft includes £280 million (2015: £275 million)
relating to advance and option payments for future deliveries. This amount is
not depreciated.
Aircraft with a net book value of £381 million (2015: £583 million) are
mortgaged to lenders as loan security.
Aircraft with a net book value of £76 million (2015: £149 million) are held
under finance leases.
easyJet is contractually committed to the acquisition of 166 (2015: 150)
Airbus A320 family aircraft, with a total list price of US$14.8 billion (2015:
US$13 billion) before escalations and discounts for delivery in 2017 (21
aircraft), in 2018 (15 aircraft) and between 2017 and 2022 (130 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
2016 2015
£ million £ million
Operating profit 498 688
Adjustments for non-cash items:
Depreciation 157 125
Loss on disposal of property, plant and equipment 3 1
Amortisation of intangible assets 12 13
Share-based payments 19 18
Changes in working capital and other items of an operating nature:
Decrease in trade and other receivables 8 5
Increase / (decrease) in trade and other payables 44 (30)
(Decrease) / increase in unearned revenue (51) 47
Increase in provisions 44 23
Decrease in other non-current assets 9 22
Decrease in derivative financial instruments (7) (2)
Decrease in non-current deferred income (12) (15)
Cash generated from operations 724 895
9. Reconciliation of net cash flow to movement in net cash
1 October 2015 Fair value and foreign exchange Loan issue costs Netcash flow 30 September 2016
£ million £ million £ million £ million £ million
Cash and cash equivalents 650 95 - (31) 714
Money market deposits 289 11 - (45) 255
939 106 - (76) 969
Eurobond - (58) 2 (379) (435)
Bank loans (316) (35) (1) 142 (210)
Finance lease obligations (188) (21) - 98 (111)
(504) (114) 1 (139) (756)
Net cash 435 (8) 1 (215) 213
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 Holdings Limited) holds, in total, 33.73% of the
issued share capital of easyJet plc as at 30 September 2016.
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
£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 side letter to the Brand Licence was entered with easyGroup, dated 29
September 2016, under which, in return for easyGroup consenting to easyJet
acquiring a portion of the equity share capital in Founders Factory Limited,
easyJet made a payment of £1.
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, within Other Costs, for these
items were as follows:
2016 2015
£ million £ million
Annual royalty 11.7 11.7
Brand protection (legal fees paid through easyGroup to third parties) 1.0 0.9
Comfort letter agreement with Sir Stelios Haji-Ioannou - 0.3
12.7 12.9
At 30 September 2016, £nil million (2015: £1 million) of the above aggregate
amount was included in trade and other payables.
This information is provided by RNS
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