REG - easyJet PLC - Final Results <Origin Href="QuoteRef">EZJ.L</Origin> - Part 2
21/11/2017 07:06
- Part 2: For the preceding part double click ID:nRSU0404Xa
persisting low fuel price environment, resulting in high levels of capacity growth and a
competitive pricing environment which saw yields fall by 7.3% at constant currency. Partially offsetting these impacts was
growth in ancillary revenue which grew by 8.6% to £11.38 per seat, as initiatives and high load factors offset ticket
pricing pressures.
Headline cost per seat excluding fuel increased by 7.7% to £41.27 and increased by 0.9% at constant currency. This increase
is mainly due to continued inflationary pressures in the market, particularly at regulated airports, and higher disruption
costs as a result of a greater level of EU 261 compensation claims and an increase in welfare costs driven by significant
industrial strike action and adverse weather conditions. Disruption increased the cost per seat by £0.34 at constant
currency. These were combined with an increase in aircraft lease costs due to rent associated with the 10 aircraft sale and
leasebacks in the year, increase in depreciation due to the acquisition of new aircraft both last year and this year,
increase in wet lease charges due to three aircraft being wet leased in the year to build peak season resilience and
increase in net interest costs which is attributable to the financing costs of the two bonds. These were was partially
offset by the impact of the annualisation of reduced navigation charges, savings obtained from airport lean initiatives,
engineering and maintenance savings such as the component supply contract and the up-gauging of fleet as easyJet continues
to move from A319s to A320s.
Fuel costs fell by £52 million, and from £13.95 to £12.25 per seat. Despite an increase in the market price of fuel, the
operation of easyJet's hedging policy resulted in a reduction in the effective fuel price.
Headline profit before tax per seat decreased by 23.8% to £4.71 per seat (2016 (restated): £6.18).
Non-headline costs of £23 million were recognised in the period, consisting of a £16 million charge as a result of the sale
and leaseback of 10 A319 aircraft in December, a £6 million charge associated with our organisational review, a £2 million
charge in relation to the set-up of an EU Air Operator Certificate (AOC), a £1 million charge for fair value adjustments
associated with the bond issued in February 2016 and a £2 million gain for balance sheet revaluations.
Total costs increased by £500 million to £4,662 million, and by £1.67 to £53.78 per seat (2016 (restated): £52.11).
The tax charge for the year was £80 million. The effective tax rate for the period was 20.8% (2016 (restated): 13.8%),
higher than the standard UK rate of 19%, due to the Swiss income being taxed at a higher rate combined with the impact of
prior year adjustments.
Total profit after tax decreased from £437 million to £305 million.
Due to a change in accounting policy, to recognise the initial maintenance provision catch up on sale and leasebacks
immediately in the income statement, a change was required as a restatement of previous financial statements. Refer to note
1 of the accounts for full details. During the year the presentation of the results in the income statement was also
changed to include a measure of profit described as 'headline' to be used by the Directors to measure and monitor
underlying trading performance. The excluded items are referred to as 'non-headline' items. Refer to non-headline items
section for further details.
Earnings per share and dividends per share
2017 2016 (restated)
pence per share pence per share Change
Basic headline earnings per share 82.5 108.4 (25.9)
Basic total earnings per share 77.4 110.9 (33.5)
Diluted headline earnings per share 81.9 107.6 (25.7)
Proposed ordinary dividend 40.9 53.8 (12.9)
Basic total earnings per share decreased by 30.2% to 77.4p (2016 (restated): 110.9p). Basic headline earnings per share
decreased by 23.9% to 82.5p (2016 (restated): 108.4p) as a consequence of the £102 million decrease in the headline profit
after tax.
In line with the stated dividend policy of a pay-out ratio of 50% of headline profit after tax, the Board is recommending
an ordinary dividend of £162 million or 40.9 pence per share which is subject to shareholder approval at the Company's
Annual General Meeting on 8 February 2018. This will be paid on 23 March 2018 to shareholders on the register at close of
business on 2 March 2018.
Return on capital employed (ROCE)
2017 2016 (restated) Change
Headline ROCE 11.9% 15.0% (3.1ppt)
Total ROCE 11.3% 15.2% (3.9ppt)
Headline ROCE for the year was 11.9%, a decline of 3.1 percentage points on the restated prior year. The decrease in ROCE
was due to the decrease in headline profit for the year and a 11.1% increase in the average adjusted capital employed
including lease adjustments, primarily due to the acquisition of 23 aircraft during the year. The ROCE calculation excludes
borrowings, cash and money market deposits and includes an adjustment for the capital implicit in aircraft operating lease
arrangements. The adjustment is calculated by multiplying the annual charge for aircraft dry leasing by a factor of seven.
Exchange rates
The proportion of revenue and costs denominated in currencies other than Sterling remained broadly consistent
year-on-year:
Revenue Costs
2017 2016 2017 2016
Sterling 46% 50% 30% 27%
Euro 41% 39% 37% 35%
US dollar 1% 1% 26% 32%
Other (principally Swiss franc) 12% 10% 7% 6%
Average exchange rates
2017 2016
Euro - revenue E1.19 E1.28
Euro - costs E1.15 E1.27
US dollar $1.46 $1.58
Swiss franc CHF 1.38 CHF 1.51
Revenue cash inflows occur several months before cost cash outflows, as a result revenue and costs may be recognised at
different Euro exchange rates. The net adverse impact on profit due to the year-on-year changes in exchange rates was
mainly driven by the stronger average US dollar and Euro rates:
Headline
Euro Swiss franc US dollar Other Total
Favourable/(adverse) £ million £ million £ million £ million £ million
Revenue 151 42 6 8 207
Fuel (1) - (84) - (85)
Headline costs excluding fuel (165) (28) (26) (4) (223)
Headline total (15) 14 (104) 4 (101)
Non-headline
Euro Swiss franc US dollar Other Total
Favourable/(adverse) £ million £ million £ million £ million £ million
Non-headline costs excluding prior year balance sheet revaluations (1) - 20 - 19
Prior year balance sheet revaluations (3) 1 (5) 4 (3)
Non-headline total (4) 1 15 4 16
Financial performance
Revenue
2017 2016
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Seat revenue 4,958 57.20 5.18 4,587 57.43 5.23
Non-seat revenue 89 1.03 0.09 82 1.03 0.09
Total revenue 5,047 58.23 5.27 4,669 58.46 5.32
Revenue per seat decreased by 0.4% to £58.23 (2016: £58.46), a decrease of 4.5% to £55.83 at constant currency. The
decrease is a consequence of the persisting low fuel price environment, resulting in high levels of capacity growth and a
competitive pricing environment which saw yields fall by 7.3% at constant currency. Partially offsetting these impacts was
growth in ancillary revenue which grew by 8.6% to £11.38 per seat, as initiatives and high load factors offset ticket
pricing pressures.
Average load factor for the year increased by one percentage point to 92.6%.
Revenue per ASK decreased by 1.0%, or by 5.1% at constant currency, impacted by a 0.4% decrease in revenue per seat, and a
0.6% increase in the average sector length.
easyJet currently categorises total revenue earned on the face of the income statement between seat and non-seat revenue.
From 1 October 2017, total revenue will be categorised between passenger and ancillary revenue. This change provides
greater transparency of the ancillary element of revenue and brings easyJet in line with other airlines. Under the new
presentation, total revenue would have been categorised as follows:
2017 2016
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Passenger revenue 4,061 46.85 4.24 3,832 47.98 4.37
Ancillary revenue 986 11.38 1.03 837 10.48 0.95
Total revenue 5,047 58.23 5.27 4,669 58.46 5.32
Headline costs excluding fuel
Headline cost per seat excluding fuel increased by 7.7% to £41.27 and increased by 0.9% at constant currency.
2017 2016 (restated)
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Operating costs
Airports and ground handling 1,465 16.90 1.53 1,267 15.86 1.44
Crew 645 7.44 0.67 542 6.78 0.62
Navigation 381 4.40 0.40 336 4.21 0.38
Maintenance 268 3.09 0.28 245 3.07 0.28
Selling and marketing 122 1.41 0.13 107 1.33 0.12
Other costs 371 4.28 0.38 294 3.69 0.34
3,252 37.52 3.39 2,791 34.94 3.18
Ownership costs
Aircraft dry leasing 110 1.27 0.12 91 1.15 0.11
Depreciation 181 2.09 0.19 157 1.97 0.18
Amortisation 14 0.16 0.01 12 0.15 0.01
Net interest payable 20 0.23 0.02 10 0.12 0.01
325 3.75 0.34 270 3.39 0.31
Total costs excluding fuel 3,577 41.27 3.73 3,061 38.33 3.49
Headline airports and ground handling cost per seat increased by 6.5% but decreased by 1.3% at constant currency. Savings
obtained from airport lean initiatives have offset regulatory airport uplifts.
Headline crew cost per seat increased by 9.7% to £7.44, and by 4.2% at constant currency. This reflects pay increases,
increased disruption and additional investment into operational resilience over the summer peak period, given the level of
airport and airspace congestion. However, these were largely offset by efficiencies obtained from the up-gauging of our
fleet and savings from lean initiatives.
Headline navigation cost per seat increased by 4.4% to £4.40 but decreased by 4.0% at constant currency driven by the
annualisation of reduced charges, primarily in France and Germany.
Headline maintenance cost per seat increased by 0.7% to £3.09, but decreased by 7.2% at constant currency. This was driven
by engineering and maintenance savings such as the component supply contract, and the up-gauging of fleet as easyJet
continues to move from A319s to A320s.
Headline other operating costs per seat increased by 16.1% to £4.28 per seat, and by 12.2% at constant currency. This was
mainly driven by an increase in disruption costs due to a greater level of EU 261 compensation claims and an increase in
welfare costs driven by significant industrial strike action and adverse weather conditions. This was combined with an
increase in wet lease charges due to three aircraft being wet leased over the summer to aid operational resilience.
Headline aircraft dry leasing cost per seat increased by 11.2% to £1.27 but decreased by 0.8% at constant currency. The
favourable variance was driven by the return of four leased aircraft last year and one aircraft this year. These more than
offset the increase from the rent associated with the 10 aircraft sale and leasebacks that occurred earlier in the year.
The average number of leased aircraft increased by 9.6% to 70.
Depreciation costs have increased by 5.8% on a per seat basis driven by the acquisition of 20 new aircraft last year and 23
aircraft this year, which more than offset the decrease from the 10 aircraft sale and leasebacks and the impact of
increased capacity. The average number of owned aircraft increased by 6.9% to 197.
An increase in headline net interest costs of £0.11 per seat is attributable to the financing costs of the two bonds, as we
invest in the long-term growth of the airline.
Fuel
2017 2016
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Fuel 1,062 12.25 1.11 1,114 13.95 1.27
Fuel cost per seat decreased by 12.2% and by 19.2% at constant currency.
During the period the average market Jet fuel price increased by 20.7% to $501 per tonne from $415 per tonne in the
previous year. The operation of easyJet's hedging policy meant that the average effective fuel price movement saw a
decrease of 14.0% to £412 per tonne from £479 per tonne in the previous year.
Non-headline items
During the year the presentation of the results in the income statement was changed to include a measure of profit
described as 'headline' to be used by the Directors to measure and monitor underlying trading performance. The excluded
items are referred to as 'non-headline' items. See note 1 for further details.
2017 2016
£ million £ per seat pence per ASK £ million £ per seat pence per ASK
Sale and leaseback charge (16) (0.18) (0.02) - - -
Organisational review (6) (0.07) (0.01) (1) (0.01) -
Air Operator Certificate (2) (0.02) - (1) - -
Maintenance reserves discounting - - - 8 0.10 0.01
Balance sheet foreign exchange gain 2 0.02 - 3 0.04 -
Fair value adjustment (1) (0.01) - 4 0.04 0.01
Non-headline (charge)/credit before tax (23) (0.26) (0.03) 13 0.17 0.02
Non-headline profit before tax items of £23 million comprise:
• a £10 million loss on disposal and a £6 million maintenance provision catch-up - both one-off charges as a
result of the sale and leaseback of 10 A319 aircraft in December 2016, arising due to the age of the selected aircraft and
maintenance provision accounting;
• a £6 million one-off charge associated with implementing the organisational review ('Next Generation');
• a £2 million charge in relation to establishing a multi-AOC post-Brexit structure, which includes the set-up of
a European AOC, based in Austria, in July 2017, following the UK's referendum vote to leave the European Union (EU). This
European AOC helps secure future flying rights for the 30% of easyJet's network which remains wholly within and between EU
member states;
• a £2 million non-cash gain relating to balance sheet foreign exchange gains and losses; and
• a £1 million charge relating to fair value adjustments associated with the cross currency interest rate swaps in
place for the bond issued in February 2016.
Net cash and financial position
Summary net cash reconciliation
2017 2016 Change
(restated)
£ million £ million £ million
Operating profit 404 510 (106)
Depreciation and amortisation 195 169 26
Net working capital movement 325 23 302
Net tax paid (51) (99) 48
Net capital expenditure (630) (586) (44)
Net proceeds from sale and operating leaseback of aircraft 115 - 115
Purchase of own shares for employee share schemes (10) (22) 12
Net decrease in restricted cash - 6 (6)
Other (including the effect of exchange rates) 10 (4) 14
Ordinary dividend paid (214) (219) 5
Net increase/(decrease) in net cash 144 (222) 366
Net cash at beginning of year 213 435 (222)
Net cash at end of year 357 213 144
Net cash at 30 September 2017 was £357 million (2016: £213 million) and comprised cash (excluding restricted cash) and
money market deposits of £1,328 million (2016: £969 million) and borrowings of £971 million (2016: £756 million). After
allowing for the impact of aircraft operating leases (seven times operating lease costs incurred in the year), adjusted net
debt decreased by £11 million to £413 million.
Net capital expenditure includes the acquisition of 23 A320 aircraft (2016: 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 249 at 30 September 2016 to 270 at 30 September 2017.
Borrowings as at 30 September 2017 were £971 million, an increase of £215 million from 30 September 2016. Under the £3
billion Euro Medium Term Note Programme announced in early 2016, easyJet plc issued notes in October 2016 amounting to E500
million for a seven year term with a fixed annual coupon rate of 1.125%. This increase in borrowings was partially offset
by the repayment of mortgages on aircraft amounting to £220 million in the period.
Summary consolidated statement of financial position
2017 2016 (restated) Change
£ million £ million £ million
Goodwill 365 365 -
Property, plant and equipment 3,525 3,252 273
Derivative financial instruments 92 98 (6)
Net working capital (1,270) (981) (289)
Restricted cash 7 7 -
Net cash 357 213 144
Current and deferred taxation (284) (253) (31)
Other non-current assets and liabilities 10 (7) 17
2,802 2,694 108
Opening shareholders' equity 2,694 2,221
Profit for the year 305 437
Ordinary dividend paid (214) (219)
Change in hedging reserve 14 263
Other movements 3 (8)
2,802 2,694
Net assets increased by £108 million, due to the profit generated in the period and favourable movements on the hedging
reserve, which were partially offset by the payment of the ordinary dividend. The movement on the hedging reserve was
predominantly due to the favourable mark-to-market movement on both Jet fuel and US Dollar forward contracts.
The net book value of property, plant and equipment increased by £273 million driven principally by the acquisition of 23
A320 family aircraft, and pre-delivery payments relating to aircraft purchases.
Key statistics
2017 2016 (restated) Increase/ (decrease)
Operating measures
Seats flown (millions) 86.7 79.9 8.5%
Passengers (millions) 80.2 73.1 9.7%
Load factor 92.6% 91.6% 1.0ppt
Available seat kilometres (ASK) (millions) 95,792 87,724 9.2%
Revenue passenger kilometres (RPK) (millions) 89,685 81,496 10.0%
Average sector length (kilometres) 1,105 1,098 0.6%
Sectors 516,902 482,110 7.2%
Block hours 1,009,572 934,223 8.1%
Number of aircraft owned/leased at end of year 279 257 8.6%
Average number of aircraft owned/leased during year 267.3 248.7 7.5%
Number of aircraft operated at end of year 270 249 8.4%
Average number of aircraft operated during year 253.2 234.6 7.9%
Operated aircraft utilisation (hours per day) 10.9 10.9 0.4%
Owned aircraft utilisation (hours per day) 10.3 10.3 0.8%
Number of routes operated at end of year 862 803 7.3%
Number of airports served at end of year 138 132 4.5%
Financial measures
Headline return on capital employed 11.9% 15.0% (3.1ppt)
Liquidity per 100 seats (£m) 3.6 3.2 12.5%
Total profit before tax per seat (£) 4.45 6.35 (30.0%)
Headline profit before tax per seat (£) 4.71 6.18 (23.8%)
Total profit before tax per ASK (pence) 0.40 0.58 (30.4%)
Headline profit before tax per ASK (pence) 0.43 0.56 (24.3%)
Revenue
Revenue per seat (£) 58.23 58.46 (0.4%)
Revenue per seat at constant currency (£) 55.83 58.46 (4.5%)
Revenue per ASK (pence) 5.27 5.32 (1.0%)
Revenue per ASK at constant currency (pence) 5.05 5.32 (5.1%)
Costs
Per seat measures
Headline cost per seat (£) 53.52 52.28 2.4%
Non-headline cost per seat (£) 0.26 (0.17) 260.7%
Headline cost per seat excluding fuel (£) 41.27 38.33 7.7%
Headline cost per seat excluding fuel at constant currency (£) 38.69 38.33 0.9%
Headline operating cost per seat (£) 49.77 48.89 1.8%
Headline operating cost per seat excluding fuel (£) 37.52 34.94 7.4%
Headline operating cost per seat excluding fuel at constant currency (£) 35.08 34.94 0.4%
Headline ownership cost per seat (£) 3.75 3.39 10.8%
Per ASK measures
Headline cost per ASK (pence) 4.84 4.76 1.8%
Non-headline cost per ASK (pence) 0.03 (0.02) 259.7%
Headline cost per ASK excluding fuel (pence) 3.73 3.49 7.0%
Headline cost per ASK excluding fuel at constant currency (pence) 3.50 3.49 0.3%
Headline operating cost per ASK (pence) 4.50 4.45 1.2%
Headline operating cost per ASK excluding fuel (pence) 3.39 3.18 6.7%
Headline operating cost per ASK excluding fuel at constant currency (pence) 3.17 3.18 (0.2%)
Headline ownership cost per ASK (pence) 0.34 0.31 10.1%
Consolidated Income Statement
Year ended 30 September
2017 2017 2017 2016 2016 2016
(restated) (restated) (restated)
Headline Non-headline (note 4) Total Headline Non-headline (note 4) Total
Notes £ million £ million £ million £ million £ million £ million
Seat revenue 4,958 - 4,958 4,587 - 4,587
Non-seat revenue 89 - 89 82 - 82
Total revenue 5,047 - 5,047 4,669 - 4,669
Fuel (1,062) - (1,062) (1,114) - (1,114)
Airports and ground handling (1,465) - (1,465) (1,267) - (1,267)
Crew (645) - (645) (542) - (542)
Navigation (381) - (381) (336) - (336)
Maintenance (268) (6) (274) (245) 8 (237)
Selling and marketing (122) - (122) (107) - (107)
Other costs (371) (18) (389) (294) (2) (296)
EBITDAR 733 (24) 709 764 6 770
Aircraft dry leasing (110) - (110) (91) - (91)
Depreciation 8 (181) - (181) (157) - (157)
Amortisation of intangible assets (14) - (14) (12) - (12)
Operating profit/(loss) 428 (24) 404 504 6 510
Interest receivable and other financing income 3 8 2 10 7 3 10
Interest payable and other financing charges 3 (28) (1) (29) (17) 4 (13)
Net finance (charges)/income (20) 1 (19) (10) 7 (3)
Profit/(loss) before tax 408 (23) 385 494 13 507
Tax (charge)/credit 5 (83) 3 (80) (67) (3) (70)
Profit/(loss) for the year 325 (20) 305 427 10 437
Earnings per share, pence
Basic 6 77.4 110.9
Diluted 6 76.8 110.1
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 September 2017 30 September 2016
(restated)
Notes £ million £ million
Profit for the year 305 437
Other comprehensive income/(expense)
Cash flow hedges
Fair value gains in the year 28 10
Losses transferred to income statement 97 347
Gains transferred to property, plant and equipment (107) (28)
Related tax charge 5 (4) (66)
14 263
Total comprehensive income for the year 319 700
Consolidated Statement of Financial Position
30 September 2017 30 September 2016 (restated)
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 179 152
Property, plant and equipment 8 3,525 3,252
Derivative financial instruments 87 154
Restricted cash 7 7
Other non-current assets 74 112
4,237 4,042
Current assets
Trade and other receivables 275 205
Derivative financial instruments 131 268
Money market deposits 617 255
Cash and cash equivalents 711 714
1,734 1,442
Current liabilities
Trade and other payables (714) (565)
Unearned revenue (727) (568)
Borrowings (8) (92)
Derivative financial instruments (82) (275)
Current tax payable (35) (16)
Provisions for liabilities and charges (104) (53)
(1,670) (1,569)
Net current assets/(liabilities) 64 (127)
Non-current liabilities
Borrowings (963) (664)
Derivative financial instruments (44) (49)
Non-current deferred income (25) (36)
Provisions for liabilities and charges (218) (235)
Deferred tax (249) (237)
(1,499) (1,221)
Net assets 2,802 2,694
Shareholders' equity
Share capital 108 108
Share premium 659 659
Hedging reserve 38 24
Translation reserve 1 1
Retained earnings 1,996 1,902
2,802 2,694
Consolidated Statement of Changes in Equity
Share capital Share premium Hedging reserve Translation reserve Retained earnings Total
(restated)
£ million £ million £ million £ million £ million £ million
At 1 October 2016 108 659 24 1 1,920 2,712
Effect of change in accounting policy - - - - (18) (18)
Restated balance at 1 October 2016 108 659 24 1 1,902 2,694
Total comprehensive income - - 14 - 305 319
Dividends paid (note 7) - - - - (214) (214)
Value of employee services - - - - 13 13
Related tax - - - - - -
Purchase of own shares - - - - (10) (10)
At 30 September 2017 108 659 38 1 1,996 2,802
Share capital Share premium Hedging reserve Translation reserve Retained earnings Total
(restated)
£ million £ million £ million £ million £ million £ million
At 1 October 2015 108 659 (239) 1 1,720 2,249
Effect of change in accounting policy - - - - (28) (28)
Restated balance at 1 October 2015 108 659 (239) 1 1,692 2,221
Total comprehensive income - - 263 - 437 700
Dividends paid (note 7) - - - - (219) (219)
Value of employee services - - - - 19 19
Related tax - - - - (5) (5)
Purchase of own shares - - - - (22) (22)
At 30 September 2016 108 659 24 1 1,902 2,694
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 2017 30 September 2016
(restated)
Notes £ million £ million
Cash flows from operating activities
Cash generated from operations 9 949 724
Ordinary dividends paid 7 (214) (219)
Net interest and other financing charges paid (30) (26)
Interest and other financing income received 9 7
Net tax paid (51) (99)
Net cash generated from operating activities 663 387
Cash flows from investing activities
Purchase of property, plant and equipment 8 (586) (549)
Purchase of intangible assets (44) (37)
Net (increase)/decrease in money market deposits 10 (363) 45
Net proceeds from sale and operating leaseback of aircraft 115 -
Net cash used by investing activities (878) (541)
Cash flows from financing activities
Purchase of own shares for employee share schemes (10) (22)
Proceeds from Eurobond issue 10 451 379
Repayment of bank loans and other borrowings 10 (220) (142)
Repayment of capital element of finance leases 10 (7) (98)
Net decrease in restricted cash - 6
Net cash generated from financing activities 214 123
Effect of exchange rate changes (2) 95
Net (decrease)/increase in cash and cash equivalents (3) 64
Cash and cash equivalents at beginning of year 714 650
Cash and cash equivalents at end of year 711 714
Notes to the Accounts
1. Significant accounting policies
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 2017 but is extracted from the 2017 Annual report and accounts.
The Annual report and accounts for 2016 has been delivered to the Registrar of Companies.
The Annual report and accounts for 2017 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).
Changes in accounting policies
During the year, a change was made to the accounting policy in respect of the presentation of headline and non-headline
items (see Critical accounting judgements and estimates section). This provides a relevant and reliable measure for
assessing the underlying trading performance of the business by identifying material non-recurring items or items which are
not considered to be reflective of the trading performance of the business. This presentational change has been made for
the first time in the current year, and the comparative financial statements have been restated.
Where an aircraft is sold and leased back, other than when first delivered to easyJet, a liability to undertake future
maintenance activities, resulting from past flying activity, arises at the point the lease agreement is signed.
Historically this liability has been treated as part of the surplus or shortfall arising on the sale and leaseback and
recognised in either deferred income or non-current or current assets as appropriate and amortised in the income statement
on a straight-line basis over the expected lease term.
During the year, the accounting policy was changed to recognise the initial maintenance provision catch-up on sale and
leasebacks immediately in the income statement. The new accounting policy will result in a more relevant and reliable
accounting treatment which better reflects the economics of the lease arrangements.
This change requires a restatement of previous financial statements.
The following table sets out the adjustments made to certain selected line items of the previously reported comparative
amounts as a result of the change to the initial maintenance provision catch-up on sale and leasebacks accounting policy.
Year ended 30 September 2016
Impacted lines As reported As restated
£ million £ million
Statement of financial position
Other non-current assets 121 112
Trade and other receivables 217 205
Trade and other payables (564) (565)
Current tax payable (21) (16)
Non-current deferred income (35) (36)
Net assets 2,712 2,694
Shareholders' equity - retained earnings 1,920 1,902
Income statement
Aircraft dry leasing (103) (91)
Operating profit 498 510
Profit before tax 495 507
Tax charge (68) (70)
Profit for the period 427 437
Earnings per share (pence)
Basic 108.4 110.9
Diluted 107.6 110.1
Statement of changes in equity
Retained earnings at 1 October 2015 1,720 1,692
Result for the period 427 437
Retained earnings at 30 September 2016 1,920 1,902
2. Critical accounting judgements and estimates
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
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