REG - easyJet PLC - Half Yearly Report <Origin Href="QuoteRef">EZJ.L</Origin> - Part 2
15/07/2015 17:05
- Part 2: For the preceding part double click ID:nRSL8422Ma
Notes £million £million
Profit/(loss) for the period 5 (41)
Other comprehensive (loss) / income
Cash flow hedges
Fair value losses in the period (330) (38)
Losses transferred to income statement 69 16
Related tax credit 3 52 4
(209) (18)
Total comprehensive loss for the period (204) (59)
All items in other comprehensive income will be re-classified to the income statement.
Consolidated statement of financial position (unaudited)
31 March 2015 30 September 2014
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 111 113
Property, plant and equipment 6 2,720 2,542
Derivative financial instruments 96 36
Other non-current assets 150 165
3,442 3,221
Current assets
Trade and other receivables 199 200
Derivative financial instruments 151 53
Restricted cash 6 23
Money market deposits 162 561
Cash and cash equivalents 814 424
1,332 1,261
Current liabilities
Trade and other payables (1,551) (1,110)
Borrowings (156) (91)
Derivative financial instruments (361) (87)
Current tax payable (8) (53)
Maintenance provisions (60) (79)
(2,136) (1,420)
Net current liabilities (804) (159)
Non-current liabilities
Borrowings (404) (472)
Derivative financial instruments (167) (23)
Non-current deferred income (53) (62)
Maintenance provisions (150) (147)
Deferred tax (125) (186)
(899) (890)
Net assets 1,739 2,172
Shareholders' equity
Share capital 108 108
Share premium 659 658
Hedging reserve (226) (17)
Translation reserve 1 1
Retained earnings 1,197 1,422
1,739 2,172
Consolidated statement of changes in equity (unaudited)
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 income/(loss) - - (209) - 5 (204)
Dividends paid - - - - (180) (180)
Share incentive schemes
Proceeds from shares issued - 1 - - - 1
Value of employee services - - - - 8 8
Related tax (note 3) - - - - 8 8
Purchase of own shares - - - - (66) (66)
At 31 March 2015 108 659 (226) 1 1,197 1,739
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 loss - - (18) - (41) (59)
Dividends paid - - - - (308) (308)
Share incentive schemes
Proceeds from shares issued - 1 - - - 1
Value of employee services - - - - 10 10
Related tax (note 3) - - - - 13 13
Purchase of own shares - - - - (13) (13)
At 31 March 2014 108 658 (73) 1 967 1,661
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 period end.
Consolidated statement of cash flows (unaudited)
Six months ended 31 March 2015 Six months ended 31 March 2014
Notes £ million £ million
Cash flows from operating activities
Cash generated from operations (excluding dividends) 7 539 471
Ordinary dividends paid 5 (180) (133)
Special dividends paid 5 - (175)
Net interest and other financing income/charges (paid)/received (2) 4
Tax paid (48) (44)
Net cash generated from operating activities 309 123
Cash flows from investing activities
Purchase of property, plant and equipment (266) (202)
Purchase of other intangible assets (5) (16)
Redemption of loan notes 1 -
Net cash used by investing activities (270) (218)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 1 1
Purchase of own shares for employee share schemes (66) (13)
Repayment of bank loans 8 (40) (38)
Repayment of capital elements of finance leases 8 (5) (5)
Net decrease in money market deposits 8 408 54
Decrease in restricted cash 21 2
Net cash generated from financing activities 319 1
Effect of exchange rate changes 32 (14)
Net increase / (decrease) in cash and cash equivalents 390 (108)
Cash and cash equivalents at beginning of period 424 1,013
Cash and cash equivalents at end of period 8 814 905
Notes to the condensed consolidated interim financial information (unaudited)
1. Basis of preparation
The condensed consolidated interim financial information has been prepared in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority and with International Accounting Standards 34
"Interim Financial Reporting" as adopted by the European Union. It should be
read in conjunction with the Annual report and accounts for the year ended 30
September 2014, which were prepared in accordance with applicable law and
International Financial Reporting Standards as adopted by the European Union.
The interim financial information does not constitute statutory accounts
within the meaning of sections 434 and 435 of the Companies Act 2006.
Statutory accounts for the year ended 30 September 2014 were approved by the
Board of Directors on 17 November 2014, and have been delivered to the
Registrar of Companies. The report of the auditors was unqualified, and did
not contain either an emphasis of matter paragraph or any statement made under
section 498 of the Companies Act 2006.
In adopting the going concern basis for preparing this interim financial
information, the Directors have considered easyJet's business activities,
together with factors likely to affect its future development and performance,
as well as easyJet's principal risks and uncertainties. Based on easyJet's
cash flow forecasts and projections, the Board is satisfied that easyJet will
be able to operate within the level of its available facilities and cash and
deposits for the foreseeable future. For this reason easyJet continues to
adopt the going concern basis.
The significant accounting policies adopted are consistent with those
described in the Annual report and accounts for the year ended 30 September
2014.
A number of amended standards and interpretations are effective for the
current financial year, but none of them has had any material impact on the
interim financial information.
2. Seasonality
The airline industry is highly seasonal and demand and yields are
significantly higher during the summer. Accordingly revenue and profitability
are higher in the second half of the financial year. Historically, easyJet has
reported a loss for the first half of the financial year and a profit in the
second half.
3. Tax charge/(credit)
Tax on profit/(loss) on ordinary activities
2015 2014
£ million £ million
Current tax 3 3
Deferred tax (1) (15)
2 (12)
Effective tax rate 20% 22%
The effective tax rate is lower than the standard rate of corporation tax in
the United Kingdom (21%) principally due to deferred tax being provided at
lower than the standard rate.
Tax on items recognised directly in other comprehensive income or shareholders' equity
2015 2014
£ million £ million
Credit to other comprehensive income
Deferred tax on fair value movements of cash flow hedges 52 4
Credit to shareholders' equity
Current tax on share-based payments - 4
Deferred tax on share-based payments 8 9
8 13
4. Earnings/(loss) per share
2015 2014
£ million £ million
Profit/(loss) for the period 5 (41)
2015 2014
million million
Weighted average number of ordinary shares used to calculate basic earnings per share 394 393
Weighted average number of dilutive share options 3
Weighted average number of ordinary shares used to calculate diluted earnings per share 397
2015 2014
Earnings/(loss) per share pence pence
Basic 1.3 (10.4)
Diluted 1.3 -
Diluted earnings per share for the six months to 31 March 2014 is not
presented as the impact of potential ordinary shares is anti-dilutive.
5. Dividends
The company paid an ordinary dividend of 45.4 pence per share (2014: 33.5
pence per share). No special dividend was paid (2014: 44.1 pence per share). A
total dividend of £180 million was paid in the period (2014: £308 million).
6. Property, plant and equipment
2015 2014
£ million £ million
At 1 October 2,542 2,280
Additions 271 209
Transfer to intangible assets (5) (7)
Transfer to maintenance provision (30) (15)
Depreciation (58) (51)
At 31 March 2,720 2,416
Net book value includes £303 million (2014: £252 million) relating to advance
and options payments for future aircraft deliveries.
At 31 March 2015 easyJet is contractually committed to the acquisition of 167
Airbus A320 family aircraft, with a total list price of US$14.3 billion before
escalations and discounts for delivery in 2015 (11 aircraft), 2016 to 2018 (50
aircraft) and 2017 to 2023 (100 new generation aircraft).
7. Reconciliation of operating profit/(loss) to cash generated from
operations
2015 2014
£ million £ million
Operating profit/(loss) 7 (53)
Adjustments for non-cash items:
Depreciation 58 51
Amortisation of intangible assets 7 6
Share-based payments 8 10
Changes in working capital and other items of an operating nature:
Decrease in trade and other receivables 13 1
Increase in trade and other payables 443 422
Increase in provisions 2 17
Decrease in other non-current assets 11 25
Increase in derivative financial instruments (1) -
Decrease in non-current deferred income (9) (8)
539 471
8. Reconciliation of net cash flow to movement in net cash
1 October 2014 Exchange differences Netcash flow 31 March 2015
£ million £ million £ million £ million
Cash and cash equivalents 424 32 358 814
Money market deposits 561 9 (408) 162
985 41 (50) 976
Bank loans (377) (25) 40 (362)
Finance lease obligations (186) (17) 5 (198)
(563) (42) 45 (560)
Net cash 422 (1) (5) 416
9. Contingent liabilities
easyJet is involved in a number of claims, disputes and litigation which arose
in the normal course of business. The likely outcome of these claims, disputes
and litigation cannot be predicted, and in complex cases reliable estimates of
any potential obligation may not be possible.
Having reviewed the information currently available, management considers that
the ultimate resolution of these claims, disputes and litigation is unlikely
to have a material adverse effect on easyJet's results, cash flows or
financial position.
10. Related party transactions
The Company licenses the easyJet brand from easyGroup Ltd., previously known
as easyGroup IP Licensing Limited, ('easyGroup'), a wholly owned subsidiary of
easyGroup Holdings Limited, an entity in which easyJet's founder, Sir Stelios
Haji-Ioannou, holds a beneficial interest. The Haji-Ioannou family concert
party shareholding (being easyGroup Holdings Limited and Polys Holding
Limited) holds, in total, 34.34% of the issued share capital of easyJet plc as
at 31 March 2015.
Under the Amended Brand Licence signed in October 2010, an annual royalty of
0.25% of total revenue is payable for a minimum term of ten years. The full
term of agreement is 50 years.
A new brand protection protocol was also agreed in 2010, under which easyJet
contributes up to £1 million per annum to meet the costs of protecting the
'easy' and 'easyJet' brands 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 separate agreement has been entered with Sir Stelios ('the Comfort Letter'),
dated 9 October 2010, under which, in return for certain non-compete
obligations, easyJet makes 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). Whilst certain of
those obligations have since expired, remaining in force are the following:
· For five years from the date of the Comfort Letter, Sir Stelios shall
not use his own name (or a derivative thereof) to brand an airline flying to
or from any EEA country, or Switzerland.
The Amended Brand Licence and Comfort Letter were approved by the shareholders
at a general meeting held on 10 December 2010. The amounts included in the
income statement for the six months ended 31 March 2015 for these items were
as follows:
2015£ million 2014£ million
Annual royalty 4.4 4.3
Brand protection (legal fees paid through easyGroup to third parties) 0.3 0.5
Agreement with Sir Stelios Haji-Ioannou 0.2 0.2
4.9 5.0
As at 31 March 2015, an amount of £2.3 million (2014: £1.9 million) was
prepaid in relation of the Brand Licence and included in trade and other
receivables.
Statement of Directors' responsibilities
The Directors are responsible for preparing the interim report in accordance
with applicable law and regulations.
The Directors confirm that the condensed consolidated interim financial
information has been prepared in accordance with International Accounting
Standard 34 ('Interim Financial Reporting') as adopted by the European Union.
The interim management report includes a fair review of the information
required by the Disclosure and Transparency Rules paragraphs 4.2.7 and 4.2.8,
namely:
· an indication of important events that have occurred during the six
months ended 31 March 2015 and their impact on the condensed set of financial
information, and a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
· material related-party transactions during the six months ended 31
March 2015 and any material changes in the related-party transactions
described in the last Annual report and accounts 2014.
The Directors of easyJet plc are listed in the Annual report and accounts
2014. There have been no changes since the date of publication. A list of
current Directors is maintained on the easyJet plc website: www.easyjet.com.
The Directors are responsible for the maintenance and integrity of, amongst
other things, the financial and corporate governance information as provided
on the easyJet website (www.easyJet.com). Legislation in the United Kingdom
governing the preparation and dissemination of financial information may
differ from legislation in other jurisdictions.
The interim report was approved by the Board of Directors and authorised for
issue on 11 May 2015 and signed on its behalf by:
Carolyn McCall OBE Chris Kennedy
Chief Executive Chief Financial Officer
Independent review report to easyJet plc
Report on the condensed consolidated interim financial information
Our conclusion
We have reviewed the condensed consolidated interim financial information,
defined below, in the interim report of easyJet plc for the six months ended
31 March 2015. Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim financial
information is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
This conclusion is to be read in the context of what we say in the remainder
of this report.
What we have reviewed
The condensed consolidated interim financial information, which is prepared by
easyJet plc, comprises:
· the consolidated statement of financial position as at 31 March 2015;
· the consolidated income statement for the period then ended;
· the consolidated statement of comprehensive income for the period then
ended;
· the consolidated statement of changes in equity for the period then
ended;
· the consolidated statement of cash flows for the period then ended;
and
· the explanatory notes to the condensed consolidated interim financial
information.
As disclosed in note 1, the financial reporting framework that has been
applied in the preparation of the full annual financial statements of the
group is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
The condensed consolidated interim financial information included in the
interim report has been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the European Union
and the Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
What a review of condensed consolidated financial information involves
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and, consequently,
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed consolidated interim
financial information.
Responsibilities for the condensed consolidated interim financial information
and the review
Our responsibilities and those of the Directors
The interim report, including the condensed consolidated interim financial
information, is the responsibility of, and has been approved by, the
Directors. The Directors are responsible for preparing the interim report in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on the condensed
consolidated interim financial information in the interim report based on our
review. This report, including the conclusion, has been prepared for and only
for the company for the purpose of complying with the Disclosure and
Transparency Rules of the Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
11 May 2015
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