REG - easyJet PLC - Half Yearly Report <Origin Href="QuoteRef">EZJ.L</Origin> - Part 3
16/05/2017 07:06
- Part 3: For the preceding part double click ID:nRSP2004Fb
The effective tax rate is lower than the standard rate of corporation tax in the United Kingdom (FY'17: 19.5%) 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
Six months ended Six months ended
31 March 2017 31 March 2016
£ million £ million
(Charge)/credit to other comprehensive income
Deferred tax on fair value movements of cash flow hedges (11) 9
(Charge)/credit to shareholders' equity
Current tax on share-based payments - 1
Deferred tax on share-based payments - (3)
- (2)
5. Loss per share
2017 2016
(restated)
£ million £ million
Headline loss for the period (172) (18)
Total loss for the period (192) (15)
2017 2016
million million
Weighted average number of ordinary shares used to calculate basic loss per share 393 394
2017 2016
(restated)
Basic loss per share pence pence
Total (48.9) (3.8)
Adjustment for non-headline 5.1 (0.8)
Headline (43.8) (4.6)
Diluted earnings per share figures are not presented for either period as the impact of potential ordinary shares is
anti-dilutive.
6. Dividends
The company paid an ordinary dividend of 53.8 pence per share, or £214 million (2016: 55.2 pence per share or £219
million).
7. Property, plant and equipment
2017 2016
£ million £ million
At 1 October 3,252 2,877
Additions 279 314
Transfer to intangible assets - (15)
Aircraft sold and leased back (125) -
Disposals (1) (2)
Transfer to maintenance provision (6) (11)
Depreciation (85) (74)
At 31 March 3,314 3,089
Net book value includes £293 million (2016: £293 million) relating to advance and option payments for future aircraft
deliveries.
At 31 March 2017 easyJet was contractually committed to the acquisition of 157 (2016: 176) Airbus A320 family aircraft,
with a total list price of US$14.1 billion (2016: US$15.5 billion) before escalations and discounts for delivery. This
includes deliveries in the second half of FY'17 (14 aircraft), in 2018 (34 aircraft) and between 2019 and 2022 (109
aircraft). 130 are new generation aircraft.
8. Reconciliation of operating loss to cash generated from operations
Six months ended Six months ended
31 March 2017 31 March 2016
(restated)
£ million £ million
Operating loss (220) (17)
Adjustments for non-cash items:
Depreciation 85 74
Loss on disposal of property, plant and equipment 11 2
Amortisation of intangible assets 7 6
Share-based payments 10 10
Changes in working capital and other items of an operating nature:
Increase in trade and other receivables (31) (20)
Decrease in trade and other payables (52) (64)
Increase in unearned revenue 730 461
Increase in provisions 19 16
Decrease in other non-current assets 2 2
Decrease / (increase) in derivative financial instruments 5 (3)
Decrease in non-current deferred income (6) (6)
Cash generated from operations 560 461
9. Reconciliation of net cash flow to movement in net cash
1 October 2016 Fair value and foreign exchange Loan issue costs Netcash flow 31 March 2017
£ million £ million £ million £ million £ million
Cash and cash equivalents 714 8 - (49) 673
Money market deposits 255 1 - 379 635
969 9 - 330 1,308
Eurobonds (435) 36 7 (451) (843)
Bank loans (210) (9) - 219 -
Finance lease obligations (111) (4) - 3 (112)
(756) 23 7 (229) (955)
Net cash 213 32 7 101 353
On 7 January 2016, the UK Listing Authority approved a prospectus relating to the establishment of a £3,000 million Euro
Medium Term Note programme issued by easyJet plc and guaranteed by easyJet Airline Company Ltd (subsequently updated on 7
October 2016 and 10 February 2017). 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%. At the same time the Group entered into cross
currency interest rate swaps to convert the E500 million fixed rate Eurobond to a £379 million floating rate exposure. The
Group designated the cross currency interest rate swaps as a fair value hedge of the interest rate and currency risks of
the E500 million Eurobond. The E500 million Eurobond and the cross currency interest rate swaps are measured at fair value
through the income statement.
On 11 October 2016 easyJet plc issued notes amounting to E500 million for a seven year term with a fixed annual coupon rate
of 1.125% under the £3,000 million Euro Medium Term Note programme. The Group subsequently entered into cross currency
interest rate swaps on 8 November 2016 to convert the E500 million fixed rate Eurobond to a £445 million fixed rate
sterling exposure. The Group designated the cross currency interest rate swaps as a cash flow hedge of the currency risk of
the E500 million Eurobond. The E500 million Eurobond is held at amortised cost and revalued at the balance sheet date with
the spot GBP/EUR foreign exchange rate prevailing at the time, with movements being taken through the income statement. The
cross currency interest rate swaps are measured at fair value with the effective portion taken through the statement of
comprehensive income. The element of the fair value generated by the change in the spot rate is recycled to the income
statement from the statement of comprehensive income to offset the revaluation of the Eurobond.
10. Fair value
The fair values of financial assets and liabilities, together with the carrying value at each reporting date, are as
follows:
2017 2017 2016 2016
Carrying value Fair value Carrying value Fair value
£ million £ million £ million £ million
Eurobonds 843 853 435 453
Bank loans - - 210 210
Finance lease obligations 112 118 111 117
The fair value of the E500 million Eurobond issued on 9 February 2016 is classified as level 1 of the IFRS 13 'Fair Value
Measurement' fair value hierarchy.
All derivative financial instruments are classified as level 2.
The E500 million Eurobond issued on the 11 October 2016 and Finance lease obligations are held at amortised cost.
For all financial assets and financial liabilities not disclosed within the table above, the carrying value is a reasonable
approximation to fair value.
The fair values of derivatives and financial instruments have been determined by referencing observable market prices where
the instruments are traded, where available. Where market prices are not available, the fair value has been calculated by
discounting expected future cash flows at prevailing interest rates.
11. Contingent liabilities
easyJet is involved in a number of disputes and litigation which arose in the normal course of business. The likely outcome
of these 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 disputes
and litigation is unlikely to have a material adverse effect on easyJet's results, cash flows or financial position.
12. Related party transactions
The Company licenses the easyJet brand from easyGroup Ltd ('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. No
changes to the Haji-Ioannou family concert party shareholding have been disclosed to easyJet in accordance with the
Disclosure Guidance and Transparency Rules DTR 5, between 30 September 2016 and 31 March 2017.
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 the 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.
The amounts included in the income statement for these items were as follows:
Six months ended Six months ended
31 March 2017 31 March 2016
£ million £ million
Annual royalty 4.6 4.4
Brand protection (legal fees paid through easyGroup to third parties) 0.7 0.1
5.3 4.5
At 31 March 2017, £1.6 million (2016: £2.3 million) of the above aggregate amount was included in trade and other
payables.
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 2017 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 2017 and any material changes in the
related-party transactions described in the last Annual report and accounts 2016.
The Directors of easyJet plc are listed in the Annual report and accounts 2016. There have been no changes since the date
of publication. A list of current Directors is maintained on the easyJet plc website: http://corporate.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 (http://corporate.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 15 May 2017 and signed on its behalf
by:
Carolyn McCall DBE Andrew Findlay
Chief Executive Chief Financial Officer
Independent review report to easyJet plc
Report on the consolidated condensed financial statements
Our conclusion
We have reviewed easyJet plc's consolidated condensed financial statements (the "interim financial statements") in the
interim report of easyJet plc for the 6 month period ended 31 March 2017. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
· the consolidated statement of financial position as at 31 March 2017;
· the consolidated income statement and the consolidated statement of comprehensive income for the period then ended;
· the consolidated statement of cash flows for the period then ended;
· the consolidated statement of changes in equity for the period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, 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.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim report, including the interim financial statements, 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 Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. Our responsibility is to express a
conclusion on the interim financial statements 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 Guidance and
Transparency Rules sourcebook of the United Kingdom's 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.
What a review of interim financial statements 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 interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
15 May 2017
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