TIDMEZJ
RNS Number : 9174F
easyJet PLC
17 November 2015
17 November 2015
easyJet plc
Results for the twelve months ended 30 September 2015
easyJet delivers record profits and returns
2015 2014 Change
-------------------------------------- ------ ------ ------------
Total revenue (GBP million) 4,686 4,527 3.5 %
Profit before tax (GBP million) 686 581 18.1 %
Pre-tax margin (%) 14.6 12.8 +1.8 ppt
Basic earnings per share (pence) 139.1 114.5 +21.5 %
Proposed ordinary dividend per share
(pence) 55.2 45.4 +21.6 %
Return on capital employed(1) (%) 22.2 20.5 +1.7 ppt
-------------------------------------- ------ ------ ------ ----
Summary:
-- Passengers increased by 6% to 68.6 million, with a record
load factor in August of 94.4%, delivered by easyJet's proposition
of good value fares to convenient airports and leading-edge digital
platform. Annual load factor increased by 0.9 percentage points to
91.5%.
-- Total revenue increased by 3.5% to GBP4,686 million and by 6.5% on a constant currency basis.
-- Revenue per seat increased by 1.5% year-on-year on a constant
currency basis, whilst capacity grew by 5% to 75 million seats.
-- Cost per seat decrease of 3.4%, with benefit from fuel and
currency. Cost per seat at constant currency excluding fuel
increased by 3.6%. GBP46 million of sustainable savings delivered
in 2015. Pipeline of structural cost improvement in place for
future savings.
-- Profit grew to record levels for a fifth consecutive year, up
18% to GBP686 million. Pre-tax profit margin increased by 1.8
percentage points to 14.6%.
-- Return on capital employed reached a record 22.2%, an increase of 1.7 percentage points.
-- 22% increase in proposed ordinary dividend will deliver GBP219 million to shareholders.
-- Strong results and confidence in pipeline of opportunities in
our existing markets will be supported by an additional 36
aircraft, secured through the 2013 framework agreement with Airbus.
These aircraft will be delivered between 2018 and 2021 and will
give easyJet a further expected cost saving of GBP27 million by
2021.
Commenting on the results, Carolyn McCall, easyJet Chief
Executive said:
"Our outlook for the longer term is positive. We expect demand
in our markets to be sustained and for easyJet to continue to be a
winner in its markets. We will see passenger growth of 7% a year,
sustaining margins through rigorous cost control and the benefit of
fleet up-gauging, resulting in positive profit momentum. We remain
totally focused on our network advantage, digital leadership and
offering our customers great low fares and service. We continue to
invest in profitable growth, ensuring our digital advantage and
giving our customer good value fares."
For further details please contact easyJet plc:
Institutional investors and sell side analysts:
+44 (0) 7989 665
Stuart Morgan Investor Relations 484
+44 (0) 7985 890
Michael Barker Investor Relations 939
Media:
+44 (0) 7860 794
Paul Moore Corporate Communications 444
+44 (0) 207 251
Dorothy Burwell Finsbury 3801
+44 (0) 7733 294
930
There will be an analyst presentation at 9:30 am GMT on 17
November 2015 at Nomura, One Angel Lane, London, EC4R 3AB
A live webcast of the presentation will be available at
www.easyJet.com
Live conference call (Listen only):
+44 (0) 20 3003
* UK & International: 2666
* UK Toll Free Number: 0808 109 0700
* US Toll: +1 212 999 6659
* US Toll Free Number: +1 866 966 5335
Replay facility (available for 7 days):
+44 (0) 20 8196
* UK & International: 1998
* UK Toll Free Number: 0800 633 8453
* US Toll Free Number: +1 866 583 1035
* Pin: 2112238#
Overview
This has been another year of record profits and delivering our
strategy for easyJet. We carried an additional 4 million passengers
to reach 68.6 million passengers; we grew revenue to GBP4,686
million; and we increased profit before tax for the fifth
successive year to a record GBP686 million. Return on capital
employed increased to 22.2%, another record for the Company.
Our markets are strong, with favourable economic and consumer
trends. Our core leisure customer is part of a market that is
growing strongly every year as people take more holidays and city
breaks, complemented by a business travel market that prizes both
flexibility and value.
easyJet has positioned its network and product to capitalise on
these trends and has delivered again during the year. Our business
model and strategy are continuing to drive profitable growth and
increasing annual returns to shareholders.
In particular:
-- Revenue increased by 3.5% to GBP4,686 million, with passenger
volumes increasing by 6% and revenue per seat by 1.5% on a constant
currency basis to GBP64.28, offset by currency headwinds.
-- Our passengers continue to be attracted by our model of
having convenient airports and flights, available at good value. We
finished the year strongly with record load factors in both July
and August driving revenue per seat up by 3.2% in constant currency
in the fourth quarter.
-- Load factor for the full year grew by 0.9 percentage points
to 91.5% demonstrating strong demand in a competitive
environment.
-- We increased yield and revenue throughout the year with our
market-leading digital platform driving and fulfilling demand,
supported by our best-in-class Revenue Management System.
-- Our confidence both in the demand environment and our
structural growth opportunities within our markets has led us to
secure an additional 36 aircraft between 2018 and 2021, comprising
30 Next Generation A320s and 6 Current Generation A320s, all in the
186 seat configuration. This will bring flexibility and secure
further cost savings of GBP27 million.
-- Cost per seat decreased by 3.4%, with benefits from both fuel
and currency. Cost per seat at constant currency excluding fuel
increased by 3.6%. We have experienced cost pressures that include
regulated airport price increases, increased de-icing costs and
significant disruption costs. We have mitigated this through GBP46
million of sustainable savings and we have a pipeline of structural
cost improvement to deliver future savings.
-- Profit before tax grew by GBP105 million to a record GBP686
million and we increased the profit before tax margin to 14.6% from
12.8%.
-- Return on capital employed(1) increased by 1.7 percentage
points to a record 22.2% (2014 20.5%), with some benefit from our
hedge position, maintaining our strong market returns. We continue
to drive capital efficiency with rigour and discipline,
reallocating aircraft around the network to maximise return on
capital employed.
-- We generated over GBP895 million of operating cash flow,
reducing our gearing to 14%, thus further strengthening our balance
sheet.
-- Reflecting the strong financial performance during 2015, the
Board has recommended a dividend of 55.2 pence per share, an
increase of 21.6% from the prior year, in line with its policy of
paying 40% of annual profit after tax to shareholders.
External environment
easyJet operates in the short haul European aviation market,
which has seen strong underlying demand throughout the year.
easyJet's focus is primarily in Western and Northern Europe, where
there is a high propensity to travel and deep, rich markets.
Economic trends are currently favourable, with GDP growth in our
main markets. The UK is the strongest country in terms of absolute
GDP performance in 2015 and we continue to see an improving outlook
across all of our other major regions. In addition, consumer
confidence is growing in those markets, which we expect to support
growth in economic activity. These positive trends, combined with
our market positioning, are reflected in strong demand for our
services.
The total European short-haul market(2) grew by 5% year-on-year
in the 12 months to 30 September 2015, sustained in part by a
continued low fuel price. Low cost carrier share of the short haul
market increased by around one percentage point to 42%. In the same
period easyJet's competitors increased capacity by 7% in its
markets, with particularly strong growth in the UK market. Over its
financial year easyJet increased capacity by 5%, with growth of 4%
in the first half increasing to 6% in the second half.
Whilst the overall short haul market has grown over the last 10
years, the low cost carriers have taken significant market share,
as the legacy carriers have cut mainline capacity across their
networks in order to address their lack of competitiveness. At the
same time the legacy carriers are transferring capacity from their
flag airlines to lower-cost subsidiaries such as Vueling, Eurowings
and Transavia. In its 20 years of existence, easyJet has grown its
own market share as part of that low cost growth and now has an
estimated 8% of the European short haul market. We see a number of
opportunities to increase our market share.
(MORE TO FOLLOW) Dow Jones Newswires
November 17, 2015 02:00 ET (07:00 GMT)
easyJet has delivered a strong performance against this
competitive backdrop, demonstrating the strength of its model and
implementation of its strategy. With a track record of high growth
across economic cycles, strong underlying demand, as well as our
relatively low current market share, we continue to see
opportunities to deliver further growth over the medium term.
Our Strategy
easyJet is confident that through its strategy it will deliver
sustainable growth and returns for shareholders.
Build strong number one and two network positions
easyJet flies to a network of primary airports and routes that
tap into deep, wealthy markets with populations that have a high
propensity to fly. We have chosen to establish ourselves at the
right airports, serving valuable catchment areas that represent
Europe's top markets by GDP, driving both leisure and business
travel. This is also where strong markets already exist, built up
over a period of time by legacy carriers. We have the opportunity
both to capture further market share and to grow the overall
market.
Driven by strong underlying demand and an attractive customer
proposition, we will continue to invest in growing our network. We
operate more of the top 100 routes in Europe than any other airline
and our route frequencies deliver choice and flexibility for our
customers while increasing returns. Our competitive advantage is
reinforced by the overall portfolio of peak time slots at airports
where either total slot availability or availability at
customer-friendly times is constrained.
We regularly review the route network in order to maximise
returns and exploit demand opportunities in the market. During the
year we added a net 60 routes to the network, slightly more than
last year. These were allocated to new bases, such as Amsterdam,
Hamburg, Naples and Oporto and to markets where we want to
consolidate our position and grow our share, such as Switzerland
and Italy. We have recently announced new base openings in Venice
and Barcelona. Our plans for fleet expansion will help us to
capitalise on expected demand in markets that we understand.
Over time, increased route maturity and greater numbers of
frequencies have contributed to increasing profitability and
returns. We continue to establish stronger leadership positions in
all of our markets, to achieve the aim of holding the position of
number one or number two in each market. We currently have 52% of
our capacity in airports where we have the number one position by
share and 83% as one of the top two.
Progress in our main markets is as follows:
United Kingdom
easyJet is the UK's largest short-haul airline where we have a
20% market share. At year-end the UK had 134 based aircraft.
We are continuing to reinforce our already strong position in
the UK market, both London-based and regional. easyJet remains the
number one carrier by market share at almost all of its UK bases,
including its major bases of London Gatwick, London Luton, Bristol,
Belfast and Edinburgh. Our positioning, market share and airport
bases are driving both leisure and business passengers. We
increased capacity by 3% in the twelve months to 30 September 2015,
launching new routes such as London Gatwick to Stuttgart and London
Luton to Essaouira, while continuing to increase frequencies on
selected routes. Our competitors increased their capacity on our
markets by 9%.
France
easyJet is France's second largest short-haul airline with a 14%
market share. At year end France had 26 based aircraft.
We see opportunities to grow our market share in France,
leveraging our competitive market position, adding capacity at
Charles de Gaulle through up-gauging and strengthening our domestic
network (we are the number one or two carrier after Air France in
most of the airports where we operate). We increased capacity in
France by 6% in the year, against competitor growth on our markets
of 5%, launching eight new routes in the year such as Toulouse to
Seville and Paris Orly to Split.
Italy
easyJet has a 12% market share in Italy. At year end Italy had
29 based aircraft.
We continue to target increasing market share in Italy, by
reinforcing our existing strong positions and investing more in the
higher value catchment areas. We are the biggest operator at Milan
Malpensa with 22 touching aircraft, have recently opened a new base
at Naples and will open a base in Venice early in 2016 (and we are
already the number one airline at both). We are supporting this by
redeploying aircraft and crew from Rome Fiumicino, which still
remains an important part of our network with an expected two
million passengers a year. During 2015 we increased capacity in
Italy by 7% launching twenty three new routes in the year,
including Milan Malpensa to Munich, Milan Linate to Paris Charles
de Gaulle and Milan Linate to Amsterdam.
Switzerland
easyJet is Switzerland's second largest airline with a 23% total
market share. At year end Switzerland had 23 based aircraft.
easyJet is the number one operator at both Geneva and Basel
airports, with the latter also part of the Zurich catchment area.
We increased capacity by 9% in the twelve months to 30 September
2015, building and reinforcing our leading positions at both
airports. As the leading airline brand in Geneva and Basel,
easyJet's strategy is to continue to build customer preference in
the market. Competitor capacity growth on our markets was also 9%.
easyJet launched eleven new routes in the year such as Geneva to
Menorca and Basel to London Luton.
Germany
easyJet has 4% market share in Germany. At 30 September Germany
had 12 based aircraft.
Germany is a large and attractive market, although with a more
regional, federal structure than other European countries. easyJet
is focused on its two bases at Berlin Schoenefeld, where it is the
number one airline, and Hamburg, which opened in 2014. We target
continued growth in Germany, taking share from the incumbent
operators. We have increased capacity by 15% during the year.
Competitor growth on our markets was 6%. We launched sixteen new
routes in the year such as Hamburg to Lanzarote and Hamburg to
Paris Orly.
Portugal / Spain
easyJet has 13% market share in Portugal and 8% market share in
Spain. At year end Portugal had 6 based aircraft.
Portugal and Spain are principally an in-bound market for
easyJet, with strong demand on key flows to the region from the
rest of Europe. We increased capacity by 8% and 2% in Portugal and
Spain respectively, reflecting in particular the investment in a
new base in Oporto from where we launched six new routes to
Luxembourg, Nantes, Stuttgart, Manchester, Bristol and London Luton
Airports. We also announced that a new base at Barcelona would be
opening in February 2016. Competitor market growth on our markets
was 10% in Portugal and 7% in Spain.
Netherlands
easyJet is the Netherlands second largest short-haul airline
with a 9% market share. At year end the Netherlands had 3 based
aircraft.
The Netherlands is a significant opportunity for easyJet, where
we currently carry four million passengers a year. In March 2015 we
opened a new base at Schipol Airport, Amsterdam (where we are now
the second biggest operator) and we are continuing to invest in
growth of our market share. As a result we have increased capacity
by 17% during the year against competitor growth on our markets of
9%. easyJet launched nine new routes in the year such as Amsterdam
to Nice.
Drive Demand, Conversion and Yields
Alongside the quality of its network, easyJet is able to drive
profitable growth through its leading customer-focused proposition.
In particular we are driving increasing levels of loyalty and
attracting passengers through the quality and innovation of our
digital platform.
Leading Customer Offering
easyJet's strong relationship with its customers continues to
develop, with passengers increasingly likely to travel with easyJet
again after previously taking an easyJet flight. Increasing
customer loyalty helps to create more sustainable long term
revenue.
In the last year 74% of our seats were booked by returning our
customers, which is a six percentage point increase from 2010. All
easyJet markets have seen an increase in customer loyalty, with
France showing the biggest increase of 28% since 2011. The strength
of the relationship was best illustrated during the very busy
summer trading period with approximately 80% of passengers who flew
with easyJet being returning customers.
As part of the 20th Anniversary celebrations easyJet announced
the launch of its new customer loyalty programme. This aims to
recognise and retain our high value and loyal customers with a
scheme that makes travel with easyJet even easier. Very different
to legacy frequent flyer programs, which are highly expensive and
complex, we want to make the simple things easy for our customers.
The programme offers a range of benefits such as free name changes,
free booking changes and a low price promise, all reinforced by a
dedicated customer support team. This is expected to be rolled out
in early 2016.
(MORE TO FOLLOW) Dow Jones Newswires
November 17, 2015 02:00 ET (07:00 GMT)
Our combination of using primary airports in large economic
markets, alongside high frequencies and attractive flight timings,
also makes easyJet a logical choice for business passengers. We are
focused on providing a bespoke business offering through
distribution platforms, Travel Management Companies and direct to
small and medium sized enterprises. We signed up 100 corporate
customers during the year. Despite a strong comparable benefit in
2014 due to the Air France strike, we nevertheless continued to
increase the business yield premium during the year. Sales of
business products performed well, with a 58% increase in the sale
of flexible business fares when compared to 2014. Sales through
Global Distribution Systems grew by 32% in the year as easyJet
continued to leverage its relationships with the Travel Management
Companies. Bookings from corporate customers direct also went up by
30%. easyJet continues to see opportunities to sell its business
product across Europe and we have recently strengthened our
corporate sales capability through a new market, customer and
industry structure.
Innovation and digital leadership
Our digital platform is a key point of differentiation with our
competitors. We believe that we have significant advantages in the
capability of our web platform, our Customer Relationship
Management ("CRM") data and our mobile offering. During the year we
had over 500 million visits across all platforms, an 18% increase
in the last two years and we grew web conversion by 13% over the
same period.
Our CRM enables our customers to benefit from increasing levels
of personalisation across multiple channels, with examples such as
saved passport details, targeted marketing campaigns via email and
text message and bespoke offers from our affiliate partners. The
user experience has been further developed over the year, with
greater ease of interaction on the website and mobile and optimised
layouts and design.
We have put significant focus on the mobile offering over the
past two years, with an award-winning app that enables mobile
hosting through the airport, disruption notification live with the
ability to change flights, and saved personal data such as payment
details. We have seen very positive take-up of mobile as the
platform for seat sales, almost doubling as a percentage over the
last twelve months to over 8%.
The strength of the digital platform was recently demonstrated
when our summer 2016 season tickets went on sale. On the day we
were commanding 33% of all UK airline web traffic share. Across all
channels we had 2.6 million visits, up 30% on the prior year, of
which over 15% were on mobile. In the early moments we were selling
800 seats per minute, rising to a peak when we were selling out the
equivalent of an A320 every seven seconds.
We will be investing substantially in our digital capability
over the next three years, as we continue to innovate and maintain
our leadership position in the sector. Our initial focus will be on
enhancing the digital customer interface, to be delivered by summer
2016, followed by the development of support systems that will lead
to easyJet having the first fully-integrated e-commerce platform in
the airline industry. In the longer term we are committing to the
acceleration of our use of data science to improve efficiency,
increase revenue and drive greater customer satisfaction.
The digital programme will offer increasing amounts of
personalisation, introducing a more relevant booking journey based
on previous behaviour to drive higher footfall, higher conversion
rates and higher attachment rates. It will also enable greater
self-management capability through the entire journey chain, from
booking to check-in, through the airport and in the event of
disruption.
We are subsequently building an e-commerce platform that will
give us a competitive advantage for the long term. Its primary
objective is to give us significantly better flexibility and
capability than we currently have, specifically around our ability
to offer customers bespoke, attractive options.
Lastly, we have started to explore ways to innovate in other
areas across the business. In June we showcased new technology such
as engineering drones and prognostics software. Looking to the
future, we are investing in research around Artificial Intelligence
to exploit the large amounts of data generated by our
operations.
Maintain cost advantage
easyJet has a strong cost-focused culture, with a number of
structural advantages in key areas that enable it to combine the
offering of a primary airport network with good value fares. Every
year easyJet delivers substantial cost savings against underlying
cost inflation, whilst in the longer term we have a pipeline of
opportunities that will further improve our structural
competitiveness.
In 2015 cost per seat decreased by 3.4% primarily reflecting
benefits from fuel and foreign currency. On a constant currency,
ex-fuel basis cost per seat rose 3.6%. Part of this is the cost of
doing business within our successful business model; part was due
to one-off factors during the year. We have generated sustainable
savings during the year of GBP46 million.
easyJet's structural advantages are an integral part of our
business model, with established benefits in fleet, airports and
handling, engineering, pensions and overheads:
-- We operate an exclusively Airbus A320-family fleet. This
delivers operational flexibility as well as efficiencies in
engineering and maintenance, crew, ownership and fuel. As the
second-largest operator of Airbus aircraft in the world we also
benefit from significant economies of scale on acquisition. Between
2016 and 2021 we will derive a major benefit from up-gauging of our
fleet, from a majority 156-seat A319 composition to a fleet that is
over 70% 186-seat A320s. This is expected to have a 13%-14% cost
per seat benefit, which translates into over GBP110 million of
comparable savings.
-- With significant positions in our airports, we are able to
drive economies of scale from long term deals with the airport
owners and operators, as well as with ground handling agents at
those airports. We are now in our second year of a seven year
contract with Gatwick airport, as the largest operator at the
airport, and likewise at Luton airport, where we have signed a 10
year contract. In Ground Handling we signed an arrangement with GH
Italia covering all of the nine airports where we operate in Italy.
We expect to agree a number of new contracts in both areas in 2016
and 2017.
-- During 2015 we completed our new component support
arrangement with AJW Group, consolidating previous arrangements and
again leveraging our increasing scale. This has been successfully
implemented in October 2016 and we expect to drive significant
maintenance savings over the term of the contract.
-- easyJet is not encumbered with significant historic costs
that legacy carriers have. Our crew are more productive. We
maintain a lean and efficient head office and we do not have
expensive pension arrangements for current and previous employees.
We believe we can leverage this position to drive incrementally
profitable growth in the medium term.
We will relentlessly focus on delivering these initiatives in
the next few years. Our experiences in 2015 have given us the
impetus to increase our cost saving efforts. We plan to
re-invigorate what has already been a hugely successful cost saving
programme, leveraging our increasing scale and reviewing our cost
management down to the lowest level.
Disciplined use of capital
easyJet has a clear capital structure framework and a strategy
which is intended to maximise shareholder returns. The company
maintains a strong balance sheet with low gearing which gives us a
strong competitive advantage through access to a lower cost of
funding as well as operational flexibility.
Our objective is always to optimise our return on capital
employed through the allocation of aircraft and capacity across the
network, regularly moving them to airports and routes with better
opportunities. In line with this strategy, we took the decision in
June to close our base at Rome Fiumicino and will redistribute
those eight base aircraft to other bases in Italy, including the
opening of a new base in Venice. These actions reiterate our focus
on returns and will increase the return on capital employed of the
Company as a whole, as we have done regularly in the past and will
do so in the future.
As we continue to add frequencies and commit to basing aircraft
around the network in scale, we are able to maintain the very high
fleet utilisation that sets us apart. In 2015 we maintained our
asset utilisation across the network, at an average of 11 block
hours per day (2014: 11 hours).
Fleet
We manage our fleet to provide flexibility in our planning
arrangements, so that on the one hand we can maximise opportunities
in a strong demand environment, whilst being able to manage our
capacity as necessary. easyJet's total fleet as at 30 September
2015 comprised 241 aircraft and increased by a net 15 from 30
September 2014.
Over the next five years we will reduce cost by changing the
fleet mix and ownership structure. We took delivery of 20 A320
aircraft in the 12 months to 30 September 2015, which provide a per
seat cost saving of 7% to 8% over the A319 through up-gauging. Five
A319 aircraft were retired and the average age of the fleet
increased to 6.2 years (2014: 5.8 yrs).
Agreement for 36 additional aircraft
Due to our continued robust trading, high demand for easyJet
flights and the number of profitable opportunities we see in our
markets, we are pleased to have secured an agreement with Airbus to
take delivery of an additional 36 A320 aircraft between 2018 and
2021, all in the 186 seat configuration. These aircraft will offer
increased flexibility in fleet planning, including the faster
replacement of some of our A319 aircraft, lower overall unit costs
and ensure easyJet can continue to grow past 2019 to support
increasing total shareholder returns.
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November 17, 2015 02:00 ET (07:00 GMT)
easyJet is exercising rights to 30 next generation NEOs under
the existing framework agreement signed in 2013(3) . The additional
six aircraft are current generation A320 aircraft added to that
agreement. We have secured an additional 30 A320 NEO purchase
rights to replace those we are exercising. Funding is available.
easyJet's balance sheet and cash generation is strong with gearing
at 30 September at 14%, marginally below the Board's target of 15%
- 30%.
Fleet as at 30 September 2015:
Future
committed
% of fleet deliveries Unexercised
Operating Finance Changes at 16 November purchase
Owned leases leases Total in year 2015 rights
A319 93 49 6 148 61% (5) - -
A320 70 18 5 93 39% 20 56 -
A320neo - - - - - 130 100
------ ---------- -------- ------ ------------ --------- ---------------- ------------
163 67 11 241 15 186 100
Culture, People and Platform
easyJet is passionate about its people and we believe that it is
what sets us apart. In particular we believe that our
customer-facing employees are the best in the industry and
contribute significantly to the positive experience that our
passengers enjoy, which in turn drives their loyalty and repeat
business.
It is our people who continue to deliver the strategy for the
business and will drive future success. Internally we continue to
focus on recruiting the right people, helping them to understand
the Company's values and their role in the business and then giving
them the tools to develop a high-performance culture.
In line with the rest of the business, we recruited during the
year to help support our growth, adding over 290 pilots and 1,300
cabin crew, as well as 390 people within the management,
administration, engineering and maintenance departments. Retention
rates remain good with employee turnover of 6.6% (2014: 6.7%).
Delivering shareholder returns
Our high revenue growth and good cost control have driven strong
profit growth and this year we have recorded record profit for the
fifth consecutive year. Our cash generation is also strong. We
generated GBP895 million in operating cash, before investing GBP532
million, principally in the acquisition of 20 aircraft. easyJet
ended the year with net cash of GBP435 million and gearing of 14%,
marginally below the bottom end of the Board's target range.
Return on capital employed increased to 22.2% from 20.5% last
year, as the increase in profit more than made up for the increase
in fleet. As we embark on a new phase of fleet acquisition we
expect this to reduce slightly in the next few years, whilst
remaining among the higher performers in the market.
As we look forward, we expect that our ability to grow revenue
and the renewed focus on cost will deliver strong earnings momentum
and significant returns to shareholders.
Hedging positions
easyJet operates under a clear set of treasury policies agreed
by the Board. The aim of easyJet's hedging policy is to reduce
short term earnings volatility. Therefore, easyJet hedges forward,
on a rolling basis, between 65% and 85% of the next 12 months
anticipated fuel and currency requirements and between 45% and 65%
of the following 12 months anticipated requirements.
Details of current hedging arrangements are set out below:
Percentage of anticipated Fuel requirement US Dollar Euro CHF
requirement hedged requirement surplus surplus
------------------------------- ----------------- ------------- --------- --------
Six months to 31 March
2016 85% 89% 75% 69%
$852 /
Average rate metric tonne $1.62 EUR1.20 CHF 1.46
------------------------------- ----------------- ------------- --------- --------
Full year ending 30 September
2016 83% 81% 80% 67%
$830 /
Average rate metric tonne $1.63 EUR1.22 CHF 1.46
------------------------------- ----------------- ------------- --------- --------
Full year ending 30 September
2017 60% 61% 54% 51%
$664 /
Average rate metric tonne $1.55 EUR1.33 CHF1.43
------------------------------- ----------------- ------------- --------- --------
Sensitivities
-- A $10 movement per metric tonne impacts the FY'16 fuel bill by $3.5 million.
-- A one cent movement in GBP/$ impacts the FY'16 profit before tax by GBP1.5 million.
-- A one cent movement in GBP/EUR impacts the FY'16 profit before tax by GBP0.7 million.
-- A one cent movement in GBP/CHF impacts the FY'16 profit before tax by GBP0.4 million.
Outlook
We remain confident in our ability to deliver growth and returns
for shareholders as we continue to execute our strategy. For the
year to 30 September 2016 we plan to increase capacity by c.7% and
by c.8% in the first half of the year as we invest in profitable
growth. We will continue to expand in our new bases of Hamburg,
Amsterdam and Oporto as well as consolidating our strong market
positions in the UK, Switzerland, France and Italy. Demand remains
resilient and with forward bookings in line with last year, we view
the future with confidence.
Based on current market fuel prices we expect the unit fuel(4)
bill to decline by between GBP140 million and GBP160 million during
the year to 30 September 2016. As you would expect, passengers will
continue to benefit from the lower fuel cost and therefore we
expect a slight decline in revenue per seat at constant currency
during the first half of the year.
We expect a slight decline in total cost per seat at constant
currency including fuel for the full year of approximately 1%,
based on jet fuel prices within a range of $450 metric tonne to
$550 metric tonne. Cost per seat excluding fuel and currency is
expected to increase by approximately 2% for the full year. This
will be weighted towards the first six months to 31 March 2016,
primarily reflecting further increases in regulated airports costs
and navigation charges, disruption costs and an expected cold
winter.
Exchange rate movements(5) are likely to have an adverse impact
of approximately GBP15 million in the first half year compared to
the six months to 31 March 2015 and GBP40 million for the 12 months
to 30 September 2016 compared to the 12 months to 30 September
2015. Consequently market expectations are in line within the
Board's expectations for the full year.
We continue to see significant longer term opportunities to grow
revenue, profit and shareholder returns. We expect market demand to
remain strong and easyJet's unique model and strategy are
well-positioned to capture significant value from favourable trends
in both leisure and business markets.
Footnotes:
(1) Return on capital employed shown adjusted for leases with leases
capitalised at 7 times.
(2) Capacity and market share figures from OAG. Size of European market
based on internal easyJet definition. Historical data based on 12
month period from October 2014 to September 2015.
(3) The aircraft list prices based on the relevant price catalogue in
January 2012, is US$76,260,569 for the current generation A320 aircraft
and US$92,346,946 for the new generation A320 NEO aircraft (being
the sum of the airframe list price, engine option list price and
the price of certain assumed specification change notices). Therefore
the total list price for the 36 aircraft is approximately US$3,227,971,794.
(4) Unit fuel calculated as the difference between latest estimate of
FY'16 fuel costs less FY'15 fuel cost per seat multiplied by FY'16
seat capacity.
(5) US $ to GBP sterling 1.522, euro to GBP sterling 1.4106. Currency
and fuel increases are shown net of hedging impact
OUR FINANCIAL RESULTS
In the 2015 financial year ("2015"), easyJet flew 68.6 million
passengers (2014: 64.8 million) and grew profit before tax by 18.1%
to GBP686 million. Profit after tax was GBP548 million, an increase
of 21.8% over last year.
Basic earnings per share increased 21.5% to 139.1 pence.
Financial overview
2015 2014
------------ -------- ---------- ------------ -------- ----------
GBP per pence per GBP per pence per
GBP million seat ASK GBP million seat ASK
------------------- ------------ -------- ---------- ------------ -------- ----------
Total revenue 4,686 62.48 5.59 4,527 63.31 5.69
Costs excluding
fuel (2,801) (37.35) (3.34) (2,695) (37.70) (3.39)
Fuel (1,199) (15.98) (1.43) (1,251) (17.49) (1.57)
------------------- ------------ -------- ---------- ------------ -------- ----------
Profit before tax 686 9.15 0.82 581 8.12 0.73
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November 17, 2015 02:00 ET (07:00 GMT)
Tax charge (138) (1.84) (0.17) (131) (1.83) (0.16)
------------------- ------------ -------- ---------- ------------ -------- ----------
Profit after tax 548 7.31 0.65 450 6.29 0.57
------------------- ------------ -------- ---------- ------------ -------- ----------
Operating profit* 688 9.18 0.82 581 8.12 0.73
------------------- ------------ -------- ---------- ------------ -------- ----------
* Operating profit represents profit
before interest and tax
Year on year seats flown grew by 4.9%. Total revenue per seat
fell by 1.3% to GBP62.48. At constant currency, revenue per seat
grew by 1.5% to GBP64.28.
Excluding fuel, cost per seat decreased by 0.9% to GBP37.35, and
increased by 3.6% at constant currency. This increase includes
higher disruption costs following French ATC strikes in April and
the impact of two fires at Rome Fiumicino airport. There were also
additional costs due to increased airport charges, the early
recruitment of crew in the winter to provide a resilient operation
ahead of three crew base openings, and a one-off settlement of GBP8
million with Eurocontrol in the second half of the year.
Fuel costs decreased by GBP52 million, and from GBP17.49 to
GBP15.98 per seat, primarily driven by the significant reduction in
market price.
Profit before tax per seat increased 12.6% to GBP9.15 per seat
(2014: GBP8.12).
The tax charge for the year was GBP138 million. The effective
tax rate for the period was 20.1% (2014: 22.5%), slightly lower
than the standard UK rate of 20.5%, reflecting the impact of net
prior year adjustments of GBP6 million.
Earnings per share and dividends per share
2015 2014
pence per pence per
share share Change
---------------------------- ---------- ---------- -------
Basic earnings per share 139.1 114.5 21.5%
Proposed ordinary dividend 55.2 45.4 21.6%
---------------------------- ---------- ---------- -------
Reflecting the increased profit after tax, basic earnings per
share were 139.1 pence.
In line with the stated dividend policy of a payout ratio of 40%
of profit after tax, the Board is recommending an ordinary dividend
of GBP219 million or 55.2 pence per share which is subject to
shareholder approval at the Company's Annual General Meeting on 11
February 2016. This will be paid on 18 March 2016 to shareholders
on the register at close of business on 26 February 2016.
Return on capital employed (ROCE) and capital
structure
2015 2014 Change
----------------------------------------------- ------ ------ -------
ROCE 22.2% 20.5% 1.7ppt
Gearing 14% 17% (3ppt)
----------------------------------------------- ------ ------ -------
ROCE for the year was 22.2%, an improvement of 1.7 percentage
points on the prior year. The impact of hedging reserve movements
on capital employed represents 0.8 percentage points of this
increase. The acquisition of twenty aircraft during the year
contributed to an overall 9.1% increase in capital employed which
was more than compensated for by the increase in profit for the
year.
The combined effect of the profit for the year and the lower
lease adjustment following the return of five leased aircraft,
offset the impact of capital expenditure and the ordinary dividend
payment, resulting in gearing of 14% (2014: 17%) which is
marginally outside the target range of 15% to 30%.
Exchange rates
The strong performance of UK beach routes and the strengthening
of sterling against euro year-on-year resulted in an increase in
the proportion of sales denominated in sterling. The relative
weakness in the euro was observable to a greater extent in cost
than revenues due to the timing of the revenue and cost cash
flows.
Revenue Costs
------------ --------------------
2015 2014 2015 2014
--------------------------------- ----- ----- --------- ---------
Sterling 49% 47% 27% 26%
Euro 40% 42% 32% 33%
US dollar 1% 1% 35% 35%
Other (principally Swiss franc) 10% 10% 6% 6%
--------------------------------- ----- ----- --------- ---------
Average exchange rates
2015 2014
--------------------------------- ----- ----- --------- ---------
Euro - revenue EUR1.29 EUR1.21
Euro - costs EUR1.35 EUR1.22
US dollar $1.58 $1.59
Swiss franc CHF 1.48 CHF 1.49
--------------------------------- ----- ----- --------- ---------
The net adverse impact on profit due to the year-on-year changes
in exchange rates was mainly driven by the weaker average euro
rate:
Favourable / (adverse)
Euro Swiss franc US dollar Other Total
GBP million GBP million GBP million GBP million GBP million
------------------------ ------------ ------------ ------------ ------------ ------------
Revenue (131) (1) 4 (7) (135)
Fuel - - (6) - (6)
Costs excluding fuel 127 (3) 5 - 129
------------------------ ------------ ------------ ------------ ------------ ------------
Total (4) (4) 3 (7) (12)
------------------------ ------------ ------------ ------------ ------------ ------------
Financial performance
Revenue
2015 2014
------------ -------- ---------- ------------ -------- ----------
GBP per pence per GBP per pence per
GBP million seat ASK GBP million seat ASK
------------------ ------------ -------- ---------- ------------ -------- ----------
Seat revenue 4,616 61.54 5.51 4,462 62.40 5.61
Non-seat revenue 70 0.94 0.08 65 0.91 0.08
------------------ ------------ -------- ---------- ------------ -------- ----------
Total revenue 4,686 62.48 5.59 4,527 63.31 5.69
------------------ ------------ -------- ---------- ------------ -------- ----------
Revenue per seat decreased by 1.3% to GBP62.48 (2014: GBP63.31),
again impacted by the weak euro, with an increase of 1.5% at
constant currency.
Load factor increased by 0.9 percentage points to 91.5%.
Average sector length increased 0.5% year-on-year contributing
to a reduction in revenue per ASK of 1.8% (increased by 1.0% at
constant currency).
Costs excluding fuel
2015 2014
------------ -------- ---------- ------------ -------- ----------
GBP per Pence per GBP per Pence per
GBP million seat ASK GBP million seat ASK
----------------------- ------------ -------- ---------- ------------ -------- ----------
Operating costs
Airports and ground
handling 1,122 14.96 1.34 1,107 15.48 1.39
Crew 505 6.73 0.60 479 6.70 0.60
Navigation 313 4.17 0.38 307 4.30 0.39
Maintenance 229 3.06 0.27 212 2.97 0.27
Selling and marketing 102 1.36 0.12 103 1.45 0.13
Other costs 276 3.70 0.33 245 3.41 0.30
----------------------- ------------ -------- ---------- ------------ -------- ----------
2,547 33.98 3.04 2,453 34.31 3.08
----------------------- ------------ -------- ---------- ------------ -------- ----------
Ownership costs
Aircraft dry leasing 114 1.51 0.14 124 1.73 0.16
Depreciation 125 1.66 0.15 106 1.49 0.13
Amortisation 13 0.17 0.02 12 0.17 0.02
Net interest payable 8 0.12 - 7 0.10 0.01
Net exchange (gains)
/ losses (6) (0.09) (0.01) (7) (0.10) (0.01)
----------------------- ------------ -------- ---------- ------------ -------- ----------
254 3.37 0.30 242 3.39 0.31
----------------------- ------------ -------- ---------- ------------ -------- ----------
Total costs excluding
fuel 2,801 37.35 3.34 2,695 37.70 3.39
----------------------- ------------ -------- ---------- ------------ -------- ----------
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Cost per seat excluding fuel decreased by 0.9% to GBP37.35 but
increased by 3.6% per seat at constant currency.
Airports and ground handling cost per seat decreased by 3.4% but
increased by 2.4% at constant currency. This increase reflects
higher charges at regulated airports, primarily in Italy, partially
offset by savings from renegotiated airport contracts. Higher
levels of de-icing costs in the first half of the year also
contributed to the uplift.
Crew cost per seat rose by 0.6% to GBP6.73, and by 3.8% at
constant currency. This was driven by early recruitment of crew in
the winter to provide a resilient operation ahead of three crew
base openings together with the cost of regular pay increases.
Navigation costs decreased by 2.8% to GBP4.17 per seat but were
up by 5.1% at constant currency due to annual price increases and a
one-off GBP8 million settlement with Eurocontrol.
Maintenance cost per seat increased by 3.1% to GBP3.06, and by
3.8% at constant currency. The 2014 financial year benefited from a
reduction in the cost of heavy maintenance following a revised
engine contract, a significant proportion of this reduction was
one-off in nature and did not recur this year. This impact was
partially offset by the reduced maintenance from the return of five
leased aircraft during the year, and some benefits of a reduced
maintenance contract in the year.
Other costs per seat increased by 8.2% to GBP3.70 per seat, and
by 9.6% at constant currency. There were increased disruption costs
during the year due to the French ATC strikes in April and the two
fires at Rome Fiumicino airport. Investment in the development of
our digital customer proposition also contributed to the increased
cost per seat.
Aircraft dry leasing cost per seat fell by 12.6% to GBP1.51 and
by 9.7% at constant currency due to the return of five leased
aircraft during the year and the extension of 12 aircraft leases at
lower monthly rentals.
Depreciation costs have increased by 11.8% on a per seat basis.
The increase is principally driven by the acquisition of 20 new
A320 aircraft, which increased the average number of owned fleet by
9.7% from 150 in 2014 to 164 in 2015.
Fuel
2015 2014
------------ -------- ---------- ------------ -------- ----------
GBP per pence per GBP per pence per
GBP million seat ASK GBP million seat ASK
-------- ------------ -------- ---------- ------------ -------- ----------
Fuel 1,199 15.98 1.43 1,251 17.49 1.57
-------- ------------ -------- ---------- ------------ -------- ----------
Fuel cost per seat decreased by 8.6% and by 9.1% at constant
currency.
During the period the average market Jet fuel price fell by
36.4% to $619 per tonne from $973 per tonne in the previous year.
The operation of easyJet's fuel hedging policy meant that the
average effective fuel price movement only saw a decrease of 10.7%
to $872 per tonne from $977 per tonne in the previous year.
Cost per seat including fuel decreased by 3.4% to GBP53.33 and
decreased by 0.4% at constant currency.
Net cash and financial position
Summary net cash reconciliation
2015 2014 Change
GBP million GBP million GBP million
------------------------------------------------ ------------ ------------ ------------
Operating profit 688 581 107
Depreciation and amortisation 138 118 20
Net working capital movement 50 69 (19)
Net tax paid (98) (96) (2)
Net capital expenditure (536) (449) (87)
Purchase of own shares for employee share
schemes (92) (57) (35)
Net decrease/(increase) in restricted cash 21 (20) 41
Other (including the effect of exchange rates) 22 26 (4)
Ordinary dividend paid (180) (133) (47)
Special dividend paid - (175) 175
------------------------------------------------ ------------ ------------ ------------
Net increase/(decrease) in net cash 13 (136) 149
------------------------------------------------ ------------ ------------ ------------
Net cash at beginning of year 422 558 (136)
Net cash at end of year 435 422 13
------------------------------------------------ ------------ ------------ ------------
Net cash at 30 September 2015 was GBP435 million (2014: GBP422
million) and comprised cash and money market deposits of GBP939
million (2014: GBP985 million) and borrowings of GBP504 million
(2014: GBP563 million). After allowing for the impact of aircraft
operating leases, adjusted net debt has decreased by GBP83 million
to GBP363 million. As a result, gearing has decreased by three
percentage points to 14% at 30 September 2015.
Net capital expenditure includes the acquisition of 20 aircraft
(2014: nine aircraft), the purchase of life-limited parts used in
engine restoration and pre-delivery payments relating to aircraft
purchases.
easyJet made net corporation tax payments totalling GBP98
million during the 2015 financial year (2014: GBP96 million).
Cash and money market deposits as at 30 September 2015 were
GBP939 million, a reduction of GBP46 million from the end of the
prior financial year. At 30 September 2015, GBP619 million (2014:
GBP572 million) of cash and money market deposits represented
unearned revenue in relation to flight seats sold but not yet
flown.
On 10 February 2015 easyJet signed a $500 million revolving
credit facility with a minimum five-year term, and continues to
have available funds in excess of its liquidity objective of GBP4
million per aircraft.
Summary consolidated statement of financial
position
2015 2014 Change
GBP million GBP million GBP million
--------------------------------------------- ------------ ------------ ------------
Goodwill 365 365 -
Property, plant and equipment 2,877 2,542 335
Derivative financial instruments (297) (21) (276)
Unearned revenue (619) (572) (47)
Net working capital (350) (417) 67
Restricted cash 12 32 (20)
Net cash 435 422 13
Current and deferred taxation (219) (239) 20
Other non-current assets and liabilities 45 60 (15)
--------------------------------------------- ------------ ------------ ------------
2,249 2,172 77
--------------------------------------------- ------------ ------------ ------------
Opening shareholders' equity 2,172 2,017
Profit for the year 548 450
Ordinary dividend paid (180) (133)
Special dividend paid - (175)
Change in hedging reserve (222) 38
Other movements (69) (25)
--------------------------------------------- ------------ ------------
2,249 2,172
--------------------------------------------- ------------ ------------
Net assets increased by GBP77 million, with the adverse movement
on the hedging reserve and the payment of the ordinary dividend
more than offset by the profit and cash generated in the period.
The movement on the hedging reserve was due to the adverse
mark-to-market movement on Jet fuel forward contracts offset to an
extent by favourable movements on foreign currency forward
contracts.
The net book value of property plant and equipment increased by
GBP335 million driven principally by the acquisition of 20 A320
family aircraft, and pre-delivery payments relating to aircraft
purchases.
Key statistics
Operating measures 2015 2014 Change
------------------------------------------------ --------- --------- --------
Seats flown (millions) 75.0 71.5 4.9%
Passengers (millions) 68.6 64.8 6.0%
Load factor 91.5% 90.6% +0.9ppt
Available seat kilometres (ASK) (millions) 83,846 79,525 5.4%
Revenue passenger kilometres (RPK) (millions) 77,619 72,933 6.4%
Average sector length (kilometres) 1,118 1,112 0.5%
Sectors 457,479 439,943 4.0%
Block hours 892,052 849,790 5.0%
Number of aircraft owned/leased at end of
year 241 226 6.6%
Average number of aircraft owned/leased during
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November 17, 2015 02:00 ET (07:00 GMT)
year 232.6 220.8 5.3%
Number of aircraft operated at end of year 233 217 7.4%
Average number of aircraft operated during
year 221.1 210.8 4.9%
Operated aircraft utilisation (hours per
day) 11.1 11.0 0.5%
Owned aircraft utilisation (hours per day) 10.5 10.6 (0.9%)
Number of routes operated at end of year 735 675 8.9%
Number of airports served at end of year 136 135 0.7%
Financial measures
------------------------------------------------ --------- --------- --------
Return on capital employed 22.2% 20.5% +1.7ppt
Gearing 14% 17% -3ppt
Profit before tax per seat (GBP) 9.15 8.12 12.6%
Profit before tax per ASK (pence) 0.82 0.73 12.0%
Revenue
Revenue per seat (GBP) 62.48 63.31 (1.3%)
Revenue per seat at constant currency (GBP) 64.28 63.31 1.5%
Revenue per passenger (GBP) 68.28 69.90 (2.3%)
Revenue per passenger at constant currency
(GBP) 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 (GBP) 53.33 55.19 (3.4%)
Total cost per seat excluding fuel (GBP) 37.35 37.70 (0.9%)
Total cost per seat excluding fuel at constant
currency (GBP) 39.07 37.70 3.6%
Operating cost per seat (GBP) 49.96 51.80 (3.6%)
Operating cost per seat excluding fuel (GBP) 33.98 34.31 (1.0%)
Operating cost per seat excluding fuel at
constant currency (GBP) 35.57 34.31 3.7%
Ownership cost per seat (GBP) 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 30 September
2015 2014
Notes GBP million GBP 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 30 September
2015 2014
Notes GBP million GBP 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 30 September
2015 2014
Notes GBP million GBP 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)
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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 Hedging Translation Retained
capital Share premium reserve reserve earnings Total
GBP million GBP million GBP million GBP million GBP million GBP 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 Hedging Translation Retained
capital Share premium reserve reserve earnings Total
GBP million GBP million GBP million GBP million GBP million GBP 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 30 September
2015 2014
Notes GBP million GBP 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.
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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
GBP million GBP 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
GBP million GBP 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 GBP43
million (2014: GBP53 million). The current tax payable at 30
September 2015 of GBP43 million entirely related to tax payable in
the UK. The current tax payable at 30 September 2014 of GBP53
million related to GBP45 million of tax payable in the UK and GBP8
million related to tax due in other European countries.
During the year ended 30 September 2015, net cash tax paid
amounted to GBP98 million (2014: GBP96 million).
Tax on items recognised directly in other comprehensive
income or shareholders' equity
---------------------------------------------------------- ------------ ------------
2015 2014
GBP million GBP 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
GBP million GBP 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
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