2005 Full Year Results
easyJet PLC
21 November 2005
Preliminary results for the 12 months to September 2005
GOOD GROWTH REFLECTED IN 21% RISE IN PASSENGERS AND
REVENUES UP 23%
PROFITS BENEFIT FROM ACCELERATION IN COST REDUCTIONS
• Profit before tax up 11% in H2, up 9% for full year to £68m (£62m)
• Reported earnings per share up by 3% to 10.7p
• Passenger numbers up 21% to 29.6m with load factor improved to 85.2%
from 84.5%
• Total revenue per seat up 2% to £38.66
• Ancillary revenue per seat ahead by 17% reflecting our continued focus
in this area
• Fuel cost per seat up 68% in H2, up 47% for full year
• Reduction in cost base accelerated with cost per seat ex-fuel and
goodwill amortisation down 7% in H2 and 4% for the year, with reductions
achieved in all key areas.
• Network developing rapidly with 72 new routes added in last year,
giving a total of 212.
• Strong growth in continental Europe, revenue up 78% with Germany on
track
Commenting on the results and prospects, Ray Webster, Chief Executive, said:
'We've made sound progress in the year with good growth in passenger numbers and
revenue. Despite the fuel price increases we've minimised the rise in costs and,
excluding fuel, our cost base per seat has fallen by a useful 4.4%: indeed we
accelerated our reduction in ex-fuel costs during the year, clearly benefiting
our profits. I'm pleased also with the expansion of our network and with 72 new
routes added we are in good shape for future growth.
'In the current financial year we expect to deliver capacity growth, measured by
available seats, of 15%. Our strong focus on controllable costs will continue
and should result in a 3-5% reduction in cost per seat, before fuel. While we
anticipate a slight reduction in total revenue per seat, ancillary revenues will
improve with double digit percentage growth supported by a series of new
initiatives. Overall, we therefore expect to achieve mid to high single-digit
percentage profit growth.'
For further details please contact:
easyJet plc
Andrew Barker, Investor Relations +44 (0) 1582 525982
Press:
Toby Nicol, Corporate Communications +44 (0) 1582 525 339
There will be an analyst presentation at 9:00 hours GMT on 22 November 2005 at
ABN AMRO, 250 Bishopsgate, London, EC2M 4AA. A live webcast of the presentation
will be available at www.easyJet.com.
There will be an analyst and investor conference call at 14:00 hours GMT on 22
November 2005. For further details, contact Sara Freeman at Financial Dynamics
on 020 7269 7134.
Chairman's statement
During the last financial year, easyJet has begun the process of building a new
management team. Where possible, this process was conducted in a phased manner,
so as to ensure that sufficient continuity has been maintained to retain the
required focus on the business.
In 2005 our financial performance improved with a 9.1% increase in profit before
tax. This has been achieved due to a strong emphasis on revenue and cost
management. We recognise the need to continue to enhance shareholder value and
a new long term incentive plan for management based on increases in return on
equity was introduced. This received shareholder approval at the Extraordinary
General Meeting held on 15 September 2005. A key feature of this plan is the
requirement for share ownership by senior management.
In March, we welcomed Jeff Carr as Group Finance Director. Jeff's previous
experience in companies in highly competitive markets is already bringing
benefits to easyJet.
In May, Ray Webster announced he would be stepping down from the Board on 1
December 2005. Ray's contribution to the growth of easyJet over the last ten
years has been immense and he will be greatly missed. A rigorous search process
resulted in the appointment of Andrew Harrison to the Board as our new Chief
Executive Officer, and I am sure that he will make a significant contribution to
improving easyJet's performance. Andrew will take over from Ray on 1 December.
Additionally, Ed Winter, our Chief Operating Officer, and Stephen Connock, our
People Director, retired in September 2005.
Mike Szucs has been promoted from within the Group to Chief Operating Officer.
Mike has more than ten years' airline experience and has been with easyJet since
2003. Mike Campbell has joined the management team as People Director. Mike
recently held a number of senior management roles at the Waterford Wedgwood
Group.
Our search for a Chief Commercial Officer has recently concluded and I am
delighted to announce the appointment of Saad Hammad who joined the management
team on 7 November.
Managing increased profitability from easyJet's continued growth as a high
volume business necessitates the formation of a high quality senior management
group. The building of the top team along with the long term incentive plan,
with its emphasis on share ownership and its availability to our top 50
managers, give me confidence in our ability to grow shareholder returns.
As previously announced, Colin Day and Tony Illsley both stood down from the
Board on 30 September 2005, and Amir Eilon, representing easyGroup on the Board,
will not be offering himself for re-election. All three have been excellent
participants in Board deliberations and I am most grateful for their
contributions.
In May 2005, following the announcement that Amir Eilon would be stepping down,
Stelios Haji-Ioannou rejoined the Board as a Non Executive Director. We are
fortunate to have appointed as an Independent Non Executive Director David
Bennett, the Finance Director of Alliance and Leicester plc, a FTSE 100 company.
David's appointment was effective from 1 October 2005. I look forward to
David's contribution to Board matters and his stewardship of the Audit
Committee.
Despite high fuel prices, we have continued the trend from the first half and
made significant reductions in our non-fuel cost base. In highly competitive
markets, the challenge of simply improving shareholder value is unrelenting, but
the quality of our team throughout the whole Group gives me confidence in our
future. We would not have achieved what we have without the dedication of all
our staff, and on behalf of the board I offer them many thanks and much
appreciation.
Sir Colin Chandler
Chairman
21 November 2005
Chief Executive's review
When I first joined easyJet we'd set ourselves some big targets - increasing our
aircraft numbers ten-fold (to 20!), achieving our own operating licence, and
reaching profitability.
It seems a very long time since 1995 when we had two leased Boeing 737-200s and
essentially acted as a 'virtual airline' contracting everything from pilots to
check-in staff. The first booking was taken on 18 October 1995, from a small,
rented tin shed in a corner of Luton airport, called easyLand. Our concept of
eliminating travel agents was at the time radical and untested, but proved to be
successful. On 10 November 1995, when the inaugural flight took to the skies
from London Luton airport to Glasgow it was carrying 120 passengers.
The business has come a very long way in the last ten years. We acquired, with
great excitement, our first owned aircraft in 1996 and began our first
international routes in the same year. Our much prized Air Operators
Certificate was granted in 1997, the year we also reached break-even for the
first time, and placed an order for 12 brand new Boeing 737-300s for delivery by
2000.
In 1998, the first seat was sold online at easyJet.com, we introduced our 'The
web's favourite airline' strapline and led the airline industry in developing
the internet as the preferred distribution channel. In addition that year we
purchased 40% of the Swiss Charter operation, TEA Basel AG, based in Basel.
The business continued to grow, and was floated on the London Stock Exchange
five years ago on 22 November 2000. We acquired Go Fly in 2002 to create
Europe's number one low-cost airline. A well planned and successful
transformation followed. Airbus was appointed as our preferred aircraft
supplier and we ordered a massive 120 aircraft for delivery over five years.
Our first Airbus went into service in Geneva in 2003, and since that date no
other airline has taken Airbus aircraft at the rate that we have.
From our small and often difficult beginnings, we now have a huge presence
across Europe with 212 routes across 64 of Europe's best-placed and most popular
airports.
Getting there wasn't an easy ride - and not for those with weak stomachs!
easyJet was a small fish in a very large bowl. However, commitment and
determination drove our people to believe and recognise that they had a product
that would change the lives of consumers forever. Along the way, we picked
fights with bigger airlines which tried or threatened to try to use
anti-competitive behaviour to block our way. I remember with pride our battles
with KLM, British Airways and most of all Swissair, when we operated a charter
service (complete with bus ticket and a tent) to beat their monopoly on the
Geneva Barcelona service and deliver low prices to customers. I would like to
thank our employees for their professionalism and dedication to our unique
values and customer service.
Today, easyJet is still growing. During 2005 we've reached several major
milestones: we flew our 100 millionth passenger, and we took delivery of our
100th Aircraft, as well as our 50th Airbus A319. In the past ten years we have
grown to an airline which carries 30 million passengers a year: a feat which
took Ryanair twice the time to achieve. Consistent with our values of
delivering excellent service to our customers through our people, we have
celebrated our 10th birthday which has been marked by 15 parties at our 15 bases
and a number of competitions for passengers.
I am proud of having led easyJet as it shook up the industry in the last ten
years. We have provided a huge increase in the range of services available, all
at lower prices and the customer has rewarded us by travelling in numbers that
would have seemed impossible a few years ago. easyJet has led the way, but the
customer is the clear winner and they have responded by travelling more
frequently, expanding the market.
We have changed the way that people think about travel, and, in doing so, have
opened up the continent by making it cheaper for people to fly. Europe is now
available to everyone whenever they want - both for business and leisure travel.
We've been responsible for thousands of life enhancing experiences and
journeys made; made millions of introductions and forged countless friendships.
We've launched long distance love affairs; mended broken hearts and helped
people to realise their dreams. I wish easyJet and my successor, Andrew
Harrison, all the best for the future as easyJet continues to grow.
Results
I believe the airline is in good shape for Andrew. These are commendable
results in difficult conditions delivered partly through a very strong
year-round focus on costs.
Safety is our primary concern, and our internal procedures and processes ensured
that there were no significant incidents during the year. The operation has run
superbly during the year - with on-time performance remaining excellent at 80.2%
of all flights arriving within 15 minutes of scheduled arrival time.
In the year ended 30 September 2005, easyJet made a profit before tax of £67.9
million, an increase of 9.1% on the prior year. Profit before tax and goodwill
amortisation for the year was £85.3 million, an increase of 7.6% by comparison
to 2004. Basic earnings per share for the year were 10.68 pence (10.34 pence in
2004). Return on equity before goodwill amortisation was 7.4% (7.5% in 2004).
Despite increasing levels of competition, we managed to increase our revenue per
seat from £37.88 in 2004 to £38.66, with our load factor rising from 84.5% in
2004 to 85.2% in 2005. With the increasing load factor and increase in revenue
per seat, total revenues grew 23.0% to £1,341.4 million. The number of
passengers rose 21.4% to 29.6 million. The average number of aircraft operated
during the year increased 17.7% to 94.
Fuel costs were 50.5% higher on average than they were during the previous
financial year - costing us £90.0m in the year after taking growth into account.
In fact unrelenting fuel prices caused our cost per seat, before goodwill
amortisation, to increase from £35.12 in 2004 to £36.20 in 2005.
So, I am particularly pleased with the results of the very strong focus in all
other areas of the business this year. Cost per seat excluding goodwill
amortisation and fuel decreased 4.4% from £30.03 to £28.71 with a 6.7% reduction
in the second half of the year. During the year we have finalised a number of
initiatives - including the signing of a major new long term maintenance
agreement with SR Technics which is expected to lower our Airbus maintenance
costs, excluding engines, by 25% over the life of the contract. We increased
crew efficiency, reduced ground handling costs and we continue to benefit from
the introduction of the Airbus A319.
This is the result of an exceptional amount of hard work by our people. But,
despite the tangible progress, there is still more to do to provide an
improvement to the underlying performance. We continue to fight against
unjustifiable above inflation increases at airports across Europe and for lower
handling charges in Spain. While we commend the UK government for resisting
calls for a £250m subsidy from financially healthy airlines to the financially
weak, I wish that other European governments would demonstrate such
broadmindedness - too many national governments still seem intent on protecting
their national airlines - whatever the cost.
Outlook
easyJet has a new management team in place which is clearly incentivised to
deliver shareholder value through return on equity targets, as agreed by
shareholders at our EGM on 15 September 2005. In the current financial year we
expect to deliver capacity growth, measured by available seats, of 15%. Our
strong focus on controllable costs will continue and should result in a 3-5%
reduction in cost per seat, before fuel. While we anticipate a slight reduction
in total revenue per seat, ancillary revenues will improve with double digit
percentage growth supported by a series of new initiatives. Overall, we
therefore expect to achieve mid to high single-digit percentage profit growth.
Ray Webster
Chief Executive
21 November 2005
Operational and financial review
Strategy and business model
During the year, management reviewed with the Board the implementation of
easyJet's strategy and made changes to ensure that the business remains well
positioned in an increasingly competitive marketplace. The business model
required no change. It is tried and tested and has withstood the challenges of
this difficult year.
Being mindful of the business environment, our strategy has three cornerstones:
'focus on our customers', 'own our markets' and 'reduce our costs'.
Focus on our customers
We know what our customers value, and we design our core product and ancillary
services accordingly. Every year, we aim to create better value for our
customers, whilst decreasing our costs to maintain or improve competitiveness.
Own our markets
We will develop and aggressively defend our chosen markets against competitors.
This means quickly establishing a strong base, offering numerous routes with
multiple frequencies to existing and new points on the network, and establishing
a strong brand in the market.
Reduce our costs
Management is focused on increasing the return on equity. In order to achieve
this, we will continue to challenge industry norms and further reduce our cost
base through being highly productive, innovative and taking advantage of our
scale and local knowledge in procuring goods and services. For example, in the
coming year we will see benefit from the long term maintenance contract that we
signed with SR Technics in August 2005.
We will withdraw capacity from any existing markets that are poorly performing
or airports which are over priced.
We are confident that this strategy will bring clarity and focus to the efforts
of our people and will provide easyJet with its unique strength to remain best
in class, with a leading position in the growing European air travel market.
Network
We have continued to develop the network during the year in a manner that
absorbed the 18.8% growth in new capacity, measured by sectors operated, without
affecting operational performance. At 30 September 2005, the easyJet network
covered 212 routes and 64 airports, compared to 153 and 44 at the same time last
year. Thirteen routes ceased operations in the year due to their poor
performance.
During the year, we have added 21 new cities to the easyJet network: Almeria,
Asturias, Bratislava, Cagliari, Cork, Grenoble, Hamburg, Knock, Krakow,
Maastricht, Mahon, Milan, Murcia, Olbia, Pisa, Riga, Shannon, Tallinn, Turin,
Valencia, and Warsaw. Basel opened as a new base during the year.
Further growth is planned for the forthcoming season and we have already
announced four new cities: Bournemouth, Doncaster, Lisbon, and Bremen. We
announced last month the addition of a sixteenth base in Milan: our first
Italian base.
Operational and financial review (continued)
Fleet and aircraft financing
At the end of the financial year, the fleet comprised 54 Boeing 737s and 55
Airbus 319s, giving a total of 109 aircraft. The fleet at the start of the year
comprised 71 Boeing 737s and 21 Airbus A319s . Details of the fleet at 30
September 2005 are as follows:
Under Changes in Future Options
Owned operating Total year deliveries (note 1)
lease
Airbus A319s 18 37 55 34 65 120
Boeing 737-700s - 32 32 (1) - -
Boeing 737-300s (note 2) - 22 22 (16) - -
------ ------ ------ ------ ------ ------
18 91 109 17 65 120
====== ====== ====== ====== ====== ======
Notes:
1. Options may be taken as any Airbus A320 family aircraft and are valid until
2012.
2. Excludes one Boeing 737-300 which is held for sale at 30 September 2005.
A further 65 Airbus A319 aircraft are planned to be delivered through to
February 2009. This will give us a modern fleet of aircraft that will underpin
our high levels of asset utilisation and increase our operational efficiency.
The average fleet age, currently 3.0 years (2004: 4.5 years), is expected to
fall to approximately 2.3 years by 30 September 2006.
Fleet changes:
The total fleet over the period to 30 September 2008 based on contractual
commitments is as follows:
Airbus A319s Boeing 737-700s Boeing 737-300s Total aircraft
At 30 September 2004 21 33 38 92
At 30 September 2005 55 32 22 109
At 30 September 2006 87 32 3 122
At 30 September 2007 106 32 - 138
At 30 September 2008 118 31 - 149
Whilst we are very confident of growing the business at this rate, we have
contractual rights with Airbus that allow us to moderate or accelerate our
capacity growth within certain constraints.
Aircraft financing
Of the 34 aircraft that were delivered to easyJet during the year, 22 were sold
to lessors and leased back under operating leases, and 12 were financed by debt.
During the year, we continued to secure financing through mortgages and sale and
leasebacks for the majority of the Airbus delivery stream. We have now committed
facilities available for 97 of the 120 Airbus aircraft ordered. The
arrangements include facilities for deliveries in 2006 and 2007.
Our people
At 30 September 2005 there were 4,152 employees in easyJet, an increase of 11.4%
during the year from 3,727 at 30 September 2004, well below the overall growth
rate in the business. This is because of management action to increase the
efficiency of our crew, and our focus on a more efficient easyLand.
Operational and financial review (continued)
The following tables set forth certain consolidated operating and profit and
loss account data.
Internally at a company level, we look at both revenue and cost per seat flown.
Each seat flown incurs a cost of capital: we try and minimise the cost of debt
through effective financing; we incentivise our top management to deliver higher
returns on equity
We continue to publish other operating data and performance measures, to
facilitate comparison with other airlines
Selected consolidated operating data Year on year
Year ended 30 September change
(unaudited) 2005 2004 %
Key performance indicators
Return on equity before goodwill amortisation (1) 7.4% 7.5% (0.1)pp
Profit before tax and goodwill amortisation per seat (2) 2.46 2.75 (10.7)
Revenue per seat (3) £38.66 £37.88 2.1
Cost per seat excluding goodwill amortisation (4) £36.20 £35.12 3.1
Cost per seat excluding goodwill amortisation and fuel (5) £28.71 £30.03 (4.4)
Seats flown (millions) (6) 34.7 28.8 20.5
Output measures
Number of aircraft owned/leased at end of year(7) 109 92 18.5
Average number of aircraft owned/leased during year(8) 102.6 85.0 20.7
Number of aircraft operated at end of year(9) 103 90 14.4
Average number of aircraft operated during year(10) 94.0 79.9 17.7
Sectors(11) 229,068 192,742 18.8
Block hours(12) 401,588 328,074 22.4
Number of routes operated at end of year 212 153 38.6
Number of airports served at end of year 64 44 45.5
Passengers (millions)(13) 29.6 24.3 21.4
Other performance measures
Operated aircraft utilisation (hours per day)(14) 11.7 11.2 4.5
Owned/leased aircraft utilisation (hours per day)(15) 10.7 10.5 2.2
Available seat kilometres ('ASK') (millions) (16) 32,141 25,448 26.3
Load factor(17) 85.2% 84.5% 0.7pp
Revenue passenger kilometres ('RPK')(millions)(18) 27,448 21,566 27.3
Average sector length (kilometres) 926 884 4.8
Average fare(19) £42.43 £42.28 0.4
Revenue per ASK (pence)(20) 4.17 4.29 (2.7)
Cost per ASK before goodwill amortisation (pence)(21) 3.91 3.95 (1.1)
Footnotes can be found at the end of the operational and financial review.
Operational and financial review (continued)
Results of operations
(unaudited) Year ended 30 September Year
2005 2004 on year
change
£ % £ % %
million million
Passenger revenue 1,254.2 93.5 1,029.3 94.3 21.8
Ancillary revenue (22) 87.2 6.5 61.7 5.7 41.3
------- -------
Revenue(23) 1,341.4 100.0 1,091.0 100.0 23.0
Ground handling charges, including salaries (130.5) 9.7 (111.3) 10.2 17.2
Airport charges (230.1) 17.2 (191.4) 17.5 20.2
Fuel (260.2) 19.4 (146.9) 13.5 77.1
Navigation charges (108.6) 8.1 (87.7) 8.0 23.8
Crew costs (136.2) 10.2 (126.8) 11.6 7.4
Maintenance (119.2) 8.9 (102.0) 9.3 16.9
Advertising (32.8) 2.4 (30.5) 2.8 7.4
Merchant fees & incentive pay (15.6) 1.2 (13.6) 1.2 15.0
Aircraft insurance (19.3) 1.4 (19.8) 1.8 (2.6)
Other costs(24) (80.0) 5.9 (71.7) 6.6 11.6
------- -------
EBITDAR(25) 208.9 15.6 189.3 17.4 10.4
Depreciation (16.4) 1.2 (19.2) 1.8 (14.4)
Accelerated depreciation of 737-300 aircraft (2.7) 0.2 (6.1) 0.6 (55.7)
Goodwill amortisation (17.4) 1.3 (17.1) 1.6 1.7
Aircraft dry lease costs (123.7) 9.2 (96.4) 8.8 28.3
------- -------
Group operating profit (EBIT) 48.7 3.7 50.5 4.6 (3.6)
Share of operating profit of The Big Orange Handling
Company 0.2 0.0 0.2 - 15.9
Interest receivable 27.2 2.0 14.2 1.3 91.2
Interest payable (8.2) 0.6 (2.7) 0.2 202.5
------- -------
Net interest receivable 19.0 1.4 11.5 1.1 65.2
Profit before tax 67.9 5.1 62.2 5.7 9.1
Tax (25.3) 1.9 (21.1) 1.9 19.7
------- -------
Retained profit for the year 42.6 3.2 41.1 3.8 3.7
======= =======
Earnings per share (pence)
Basic 10.68 10.34 3.3
Diluted 10.43 10.11 3.1
Basic, before goodwill amortisation 15.03 14.64 2.7
Diluted, before goodwill amortisation 14.68 14.33 2.4
Footnotes can be found at the end of the operational and financial review.
Operational and financial review (continued)
Financial year 2005 compared with financial year 2004
Revenue
easyJet's revenue increased 23.0% from £1,091.0 million to £1,341.4 million,
from financial year 2004 to financial year 2005. Revenue per seat increased
2.1% from £37.88 to £38.66.
Passenger revenue, the largest component, comprises the price paid for the seat
less government taxes, such as Air Passenger Duty and VAT. It increased by
21.8% from £1,029.3 million to £1,254.2 million, driven by a 21.4% growth in
passenger numbers from 24.3 million to 29.6 million, and a 0.4% increase in
average fares. The number of passengers carried reflected a 17.7% increase in
the size of the easyJet fleet in operation from an average of 79.9 aircraft to
an average of 94.0 aircraft and a small increase in the average load factor
achieved from 84.5% to 85.2%.
Growth was particularly strong in continental Europe, with intra-European
revenues growing by 78%. The performance at our German bases was the key driver
to this growth.
Ancillary revenue includes credit card fees, excess baggage charges, sporting
equipment fees, infant fees, change fees and rescue fees, profit share from
in-flight sales of food, beverages, and boutique items, commissions received
from products and services sold such as hotel bookings, car hire bookings and
travel insurance, less chargebacks. In 2005, £87.2 million was earned from
ancillary revenues, up 41.3% from 2004. This has been driven by renegotiation
of key contractual arrangements and more consistent application of policies on
additional charges.
Ground handling charges, including salaries
easyJet's ground handling charges increased by 17.2% from £111.3 million to
£130.5 million, from financial year 2004 to financial year 2005. The increase
in ground handling charges reflects the 18.8% increase in the number of sectors
flown, set off against mix savings as a result of network expansion decisions
and our continued efforts to work with our suppliers. We exited expensive
airports such as Zurich, and expanded at lower cost locations such as Basel and
Berlin.
Airport charges
easyJet's external airport charges increased by 20.2% from £191.4 million to
£230.1 million from financial year 2004 to financial year 2005. This increase
was attributable to the growth in passengers carried of 21.4%, inflationary cost
increases at regulated airports offset by the beneficial impact of growth
centred at lower cost airports such as Basel and Berlin.
Fuel
easyJet's fuel costs increased by 77.1% from £146.9 million to £260.2 million
from financial year 2004 to financial year 2005. The increase was significantly
higher than the 22.4% increase in number of block hours flown. This change is
primarily due to a 50.5% increase in easyJet's average US dollar fuel cost per
tonne, compared with the previous year, resulting in additional costs to easyJet
of £90.0 million. The strengthening of the value of sterling against the US
dollar, the currency in which fuel prices are denominated, over the course of
financial year 2005 provided a set off benefit of approximately £8.0 million.
In addition, a 4.8% increase in sector length, the introduction of new aircraft
and increased optimisation of route planning aided the efficiency of easyJet's
fuel consumption. Benefits obtained from Group fuel hedging activities were
£12.3 million.
Navigation charges
easyJet's navigation charges increased by 23.8% from £87.7 million to £108.6
million from financial year 2004 to financial year 2005. This increase was
principally attributable to a 26.3 % increase in the ASKs flown in financial
year 2005, set off against reductions in cost per kilometre flown in Germany,
France and the UK.
Operational and financial review (continued)
Crew costs
easyJet's crew costs increased by 7.4% from £126.8 million to £136.2 million
from financial year 2004 to financial year 2005. The increase in crew costs
resulted from an increase in headcount during the financial year 2005 to service
the additional sectors and aircraft operated by easyJet during the year, the
increase in salaries, and the costs of recruitment. The increase in crew costs
is less than the rate of growth in block hours of 22.4%. This is due to more
efficient use of crew across the network, and because £6.4 million was incurred
in 2004 during the migration of certain operations from Boeing to Airbus
aircraft.
Maintenance
Maintenance expenses increased by 16.9% from £102.0 million to £119.2 million
from financial year 2004 to financial year 2005. easyJet's maintenance expenses
consist primarily of the cost of routine maintenance and spare parts and
provisions for the estimated future cost of heavy maintenance and engine
overhauls on aircraft operated by easyJet pursuant to dry operating leases. The
extent of the required annual maintenance reserve charges is determined by
reference to the number of flight hours and cycles permitted between each engine
shop visit and heavy maintenance overhaul on aircraft airframes. The increase
in maintenance costs was largely due to a 22.1% increase in the average number
of leased aircraft from 72.0 to 87.9, offset by the benefits of the new SR
Technics maintenance contract.
Advertising
Advertising costs increased by 7.4% from £30.5 million to £32.8 million from
financial year 2004 to financial year 2005. Spend per passenger was
approximately 11.7% lower than the previous year which is principally due to
maturity of markets, particularly in the UK. This set off the additional costs
incurred by entering into new markets in eastern Europe during the year. Costs
in 2004 reflected the costs of establishing the easyJet brand in Germany,
particularly in Berlin and Dortmund. While continued investment has been
required in these markets in the current year, they have been at a lower level.
Merchant fees and incentive pay
Merchant fees and incentive pay increased by 15.0% from £13.6 million to £15.6
million from financial year 2004 to financial year 2005. Merchant fees and
incentive pay includes the costs of processing fees paid for all of easyJet's
credit and debit card sales and the per-seat sold/transferred commission paid as
incentive pay to easyJet's telesales staff. The increase reflects an increase
in passenger revenues of 21.8% since 2004. This is offset by a decrease in the
number bookings made using credit cards from 72% of bookings in 2004 to 66% of
bookings in 2005 due to wider card schemes enabling purchase by debit card in
additional European countries. Incentive pay paid to telesales personnel
decreased slightly year-on-year due to the full year effect of allowing online
changes. 84% of changes were made online in 2005, compared to 73% in 2004.
Operational and financial review (continued)
Aircraft insurance
Aircraft insurance costs reduced from £19.8 million in financial year 2004 to
£19.3 million in financial year 2005, despite a 21.4% increase in passenger
numbers. This was as a result of lower rates being negotiated and also due to
the beneficial effect of the strengthening of sterling against the US dollar.
Other costs
Other costs increased by 11.6% from £71.7 million to £80.0 million from
financial year 2004 to financial year 2005. Items in this cost category include
administrative costs and operational costs not included elsewhere including some
salary expenses. This cost category also includes compensation paid to
passengers, and certain other items, such as currency exchange gains and losses
and the profit or loss on the disposal of fixed assets. The major influence of
this category of costs was the growth in the scope of the operation.
Depreciation
Depreciation charges decreased by 14.4% from £19.2 million to £16.4 million from
financial year 2004 to financial year 2005. The depreciation charge reflects
depreciation on owned aircraft and capitalised aircraft maintenance charges, and
also includes depreciation on computer systems and other assets. easyJet has
owned an average of 4.1 Boeing 737-300 aircraft and 10.6 Airbus A319 aircraft
during the financial year 2005 (2004: 8.0 Boeing 737-300 aircraft and 4.9 Airbus
A319 aircraft). Due to the relative costs of acquisition, Boeing aircraft
attract a higher absolute annual depreciation charge than Airbus aircraft. The
decrease in depreciation reflects the disposal of most of the owned Boeing
737-300 aircraft and the 3.8% improvement in the average value of sterling
against the US dollar, the currency in which the majority of easyJet's assets
are denominated, and the additional depreciation of other assets such as spares
and leasehold improvements.
Accelerated depreciation of 737-300 aircraft
In 2004, management provided £3.4 million of additional depreciation in respect
of the four oldest owned Boeing 737-300 aircraft to align the aircraft carrying
value with the residual value. These aircraft were all disposed of in the year
ended 30 September 2004.
The residual values of six owned Boeing 737-300 aircraft were reassessed in 2004
which led to an additional £2.7 million of accelerated depreciation being
recognised on these aircraft during 2004 and £2.7 million in 2005. All of the
aircraft have now been sold, with five being sold prior 30 September 2005.
Goodwill amortisation
Goodwill amortisation charges increased slightly from £17.1 million to £17.4
million from financial year 2004 to financial year 2005.
Aircraft dry lease costs
Aircraft dry lease costs increased by 28.3% from £96.4 million to £123.7 million
from financial year 2004 to financial year 2005. During the period 22 new
Airbus A319 aircraft were added to the fleet on lease agreements, and the
average number of leased aircraft during the year increased by 22.1% to 87.9.
Over the period, easyJet has been impacted by increasing US dollar interest
rates which have increased lease payments. This has been offset by the benefit
of the strengthening of the value of sterling against the US dollar, the
currency in which lease costs are denominated. As a consequence, easyJet has
seen its average leasing cost per aircraft increase by around 4.5%,
year-on-year.
Operational and financial review (continued)
Share of operating profit of The Big Orange Handling Company
The Big Orange Handling Company Limited is a joint venture company owned by
Menzies Aviation Limited and easyJet. It was set up in January 2004 to provide
ground handling services at London Luton airport. During the financial year
2005, the share (26%) of the turnover attributable to easyJet was £ 2.0 million
(2004: £1.4 million), and the share of operating profit was £0.2 million (2004:
£0.2 million).
Interest receivable
Interest receivable increased by 91.2% from £14.2 million in 2004 to £27.2
million in 2005. This increase is because of an increase in the cash balance
during the year from £510.3 million to £695.5 million and the higher sterling
interest rates, since most of the Group's cash is retained in sterling.
Interest payable
Interest payable increased 202.5% from £2.7 million to £8.2 million. This
primarily reflects an increase in bank loans from £119.8 million to £220.4
million due to the financing of new Airbus aircraft, and the increase in US
dollar and sterling interest rates.
Taxation
In financial year 2005, easyJet incurred a tax charge of £25.3 million, an
effective tax rate of 37% (2004: - £21.1 million charge, being 34% effective tax
rate). The effective tax rate is higher than the UK standard rate of tax
principally due to goodwill amortisation not being tax deductible. A more
detailed explanation may be found in note 3 to the preliminary announcement.
The deferred tax liability increased by £7.3 million from £20.2 million to £27.5
million, primarily due to capital allowances taken being in excess of
depreciation charges.
Retained profit for the year
For the reasons described above, easyJet's retained profit increased by 3.7%
from £41.1 million in financial year 2004 to £42.6 million in financial year
2005.
Earnings per share
The basic earnings per share increased by 3.3% from 10.34 pence in the financial
year 2004 to 10.68 pence in the financial year 2005.
The basic earnings per share, before goodwill amortisation, increased by 2.7%
from 14.64 pence in the financial year 2004 to 15.03 pence in the financial year
2005.
Operational and financial review (continued)
Capital expenditure
Group capital expenditure on tangible assets is set out in Note 5 to the
financial information below. Aircraft expenditure includes purchases of new
Airbus aircraft, and the cost of purchased rotable spares and aircraft
improvements. Aircraft deposits include the amount expended on pre-delivery
payments to Airbus (and in 2004 Boeing in addition). Fixtures, fittings and
equipment includes, amongst other things, IT hardware and software development
costs and office fixtures and fittings.
Total capital expenditure in the two years ended 30 September 2005 is summarised
as follows:
2005 2004
£million £million
Aircraft 159.2 262.3
Prepayments on account - aircraft deposits 83.9 103.7
Leasehold improvements - buildings 2.0 0.5
Fixtures fittings and equipment 2.8 3.9
------- -------
247.9 370.4
======= =======
In addition, aircraft spare parts totalling £8.5 million were received free of
charge during 2005.
As a result of a purchase agreement approved by shareholders in March 2003, the
Group is contractually committed to the acquisition of a further 65 new Airbus
A319 aircraft with a list price of approximately US$2.9 billon, or £1.6 billion
(before escalations, discounts and deposits already paid) (2004: 99 Airbus
A319s, US$ 4.4 billion; £ 2.4 billion). In respect of those aircraft,
prepayments on account amounting to US$262.0 million (£148.1 million) had been
made as at 30 September 2005 (2004: US$299.4 million, £165.4 million). It is
intended that these aircraft will be financed partly by cash holdings and
internal cash flow and partly through external financing including committed
facilities arranged prior to delivery. In addition certain of the aircraft will
be sold and leased back under operating leases.
Working capital
At 30 September 2005, net current assets were £495.1 million, up £125.1 million
from £370.0 million at 30 September 2004. This change principally reflects an
increase in cash, an increase in debtors due to increased sales volumes offset
by an increase in creditors, and an increase in the current portion of deferred
profits on sale and leasebacks due to an additional 22 Airbus aircraft being
sold and leased back during the year.
Unearned revenue (including Government taxes) increased from £143.0 million to
£160.3 million due to increased volumes of passenger bookings.
Operational and financial review (continued)
Cash flow
Net cash inflow from operating activities totalled £169.8 million, an increase
of £9.3 million from £160.5 million in 2004. The principal components of the
net cash inflow were the operating profit and movements in the working capital
cycle, in addition to movements in the maintenance provision of £27.1 million
and an increase in long term deferred profits on sale and leaseback of aircraft
of £27.5 million.
Net cash inflow before management of liquid resources and financing decreased
£21.1 million from £108.4 million in 2004 to £87.3 million in 2005, due to
increases in net cash inflow from operating activities offset by capital
expenditure.
Financing arrangements
The following table sets out the movements in loans for the two years ended 30
September 2005:
2005 2004
£million £million
Balance at 1 October 119.8 72.8
New loans raised 146.2 65.8
Repayment of amounts borrowed (46.9) (8.3)
Financing fees (3.2) -
Effect of exchange rates 1.4 (10.5)
-------- --------
Balance at 30 September 217.3 119.8
======== ========
34 Airbus A319s were delivered during the year. 12 of the aircraft were
financed through US dollar or sterling mortgage loans with the remaining being
sold and leased back for a period of between seven and ten years.
For the purposes of the financial statements, foreign currency debt is
translated into sterling at year-end exchange rates. Gains and losses on
translation on loans which finance US dollar denominated fixed assets are taken
to reserves, together with the differences arising on the translation of the
related assets. The debt translation loss taken to reserves in 2005 was £1.4
million (2004: gain of £10.5 million).
Share capital
The number of shares allotted, called up and fully paid on 30 September 2005 was
400.4 million (2004: 399.2 million). During 2005, 1.2 million shares were
issued on exercise of options under employee share option schemes (2004: 5.2
million).
Footnotes
(1) Represents the profit after tax and before goodwill amortisation divided
by the average shareholders' funds
(2) Represents profit before tax and goodwill amortisation divided by the
number of flown seats available for passengers
(3) Revenue per seat represents total revenues divided by the number of
seats flown available for passengers
(4) Represents the difference between total revenues less profit before tax
plus goodwill amortisation, divided by the number of seats flown available
for passengers
(5) Represents the difference between total revenues less profit before tax
plus goodwill amortisation plus fuel costs, divided by the number of seats
flown available for passengers
(6) Represents the number of seats flown available for passengers
(7) Represents the number of aircraft owned plus those held on lease
arrangements of more than one month's duration at the end of the relevant
financial year.
(8) Represents the average number of aircraft owned plus those held on lease
arrangements of more than one month's duration during the relevant
financial year.
(9) Represents the number of owned/leased aircraft in service at the end of
the relevant financial year. Owned/leased aircraft in service exclude
those in maintenance and those which have been delivered but have not yet
entered service or those out of service prior to disposal or return.
(10) Represents the average number of owned/leased aircraft in service
during the relevant financial year. Owned/leased aircraft in service
exclude those in maintenance and those, which have been delivered but have
not yet entered service or those out of service prior to disposal or
return.
(11) Represents the number of one-way revenue flights.
(12) Represents the number of hours that aircraft are in actual service,
measured from the time that each aircraft leaves the terminal at the
departure airport to the time that such aircraft arrives at the terminal
at the arrival airport.
(13) Represents the number of earned seats flown by easyJet. Earned seats
include seats that are flown whether or not the passenger turns up,
because easyJet is generally a no-refund airline and once a flight has
departed a no-show customer is generally not entitled to change flights or
seek a refund. Earned seats also include seats provided for promotional
purposes and to easyJet staff for business travel.
(14) Represents the average number of block hours per day per aircraft
operated during the relevant financial year.
(15) Represents the average number of block hours per day per aircraft
owned / leased during the relevant financial year.
(16) Represents the sum by route of seats available for passengers
multiplied by the number of kilometres those seats were flown.
(17) Represents the number of passengers as a proportion of the number of
seats available for passengers. No weighting of the load factor is carried
out to recognise the effect of varying flight (or 'stage') lengths.
(18) Represents the sum by route of passengers multiplied by the number
of kilometres those passengers were flown.
(19) Represents the passenger revenue divided by the number of passengers
carried.
(20) Represents the total revenue divided by the total number of ASK's.
(21) Represents the difference between total revenue and profit before tax,
plus goodwill amortisation, divided by the total number of ASK's.
(22) Includes credit card fees, excess baggage charges, sporting equipment fees,
infant fees, change fees and rescue fees, profit share from in-flight
sales of food, beverages, and boutique items, commissions received from
products and services sold such as hotel bookings, car hire bookings and
travel insurance, less chargebacks.
(23) When easyJet makes refunds to customers, it records refunds made in the
pre-flight period as reductions in revenue and any refunds made post-flight
as marketing expenses, included in 'Other costs'.
(24) Includes principally administrative costs and operational costs not
included elsewhere, including some salary expenses, compensation paid to
passengers, and certain other items, such as currency exchange gains and
losses and the profit or loss on the disposal of fixed assets.
(25) EBITDAR is defined by the group as earnings before interest, taxes,
depreciation, amortisation and lease payments (excluding the maintenance
reserve component of operating lease payments). Maintenance reserve
costs are charged to the cost heading, 'Maintenance'.
Consolidated profit and loss account
for the year ended 30 September
Notes 2005 2004
£ million £ million
Turnover : Group and share of joint ventures and associates 2 1,343.4 1,092.4
Less: share of turnover of joint ventures and associates (2.0) (1.4)
------- -------
Group turnover 2 1,341.4 1,091.0
Cost of sales (1,166.4) (929.3)
------- -------
Gross profit 175.0 161.7
Distribution and marketing expenses (66.5) (55.7)
Administrative expenses (59.8) (55.5)
------- -------
Group operating profit 48.7 50.5
Share of operating profit of joint venture 0.2 0.2
------- -------
Total operating profit: Group and share of joint ventures and
associates 48.9 50.7
Interest receivable and similar income 27.2 14.2
Interest payable (8.2) (2.7)
------- -------
Profit on ordinary activities before taxation 67.9 62.2
Tax on profit on ordinary activities 3 (25.3) (21.1)
Retained profit for the financial year 10 42.6 41.1
======= =======
Pence Pence
Earnings per share
Basic 4 10.68 10.34
Diluted 4 10.43 10.11
Basic, before goodwill amortisation 4 15.03 14.64
Diluted, before goodwill amortisation 4 14.68 14.33
======= =======
All activities relate to continuing operations in the current and previous year.
Consolidated balance sheet
as at 30 September
Notes
2005 2004
£ million £ million £ million £ million
Fixed assets
Intangible assets 292.2 309.6
Tangible assets 5 425.8 330.4
Investments -
Joint venture arrangements:
Share of gross assets 0.5 0.6
Share of gross liabilities
(0.3) (0.4)
------- -------
0.2 0.2
------- -------
718.2 640.2
Current assets
Debtors 197.2 174.4
Cash at bank and in hand 695.5 510.3
------- -------
892.7 684.7
Creditors: amounts falling due 6,8
within one year (397.6) (314.7)
------- -------
Net current assets 495.1 370.0
------- -------
Total assets less current
liabilities 1,213.3 1,010.2
Creditors: amounts falling 7,8
due after more than one year (276.1) (157.7)
Provisions for liabilities and
charges 9 (97.5) (63.1)
------- -------
Net assets 839.7 789.4
======= =======
Capital and reserves
Called up share capital 10 100.1 99.8
Share premium account 10 557.2 554.2
Profit and loss account 10 182.4 135.4
------- -------
Shareholders' funds - equity 839.7 789.4
======= =======
These financial statements were approved by the Board of Directors on 21
November 2005 and were signed on its behalf by:
R Webster
Director
J Carr
Director
Cash flow information
for the year ended 30 September
Reconciliation of operating profit to net cash flow from operating activities
2005 2004
£ million £ million
Group operating profit 48.7 50.5
Goodwill amortisation 17.4 17.1
Depreciation of tangible fixed assets 19.1 25.3
Loss on sale of fixed assets 2.0 -
Increase in debtors (17.0) (36.1)
Increase in creditors and provisions 99.6 103.7
------- -------
Cash flow from operating activities 169.8 160.5
======= =======
Consolidated cash flow statement
2005 2004
£ million £ million
Cash flow from operating activities 169.8 160.5
Returns on investments and servicing of finance 23.1 12.6
Dividends received from joint venture 0.2 -
Taxation 2.9 (6.2)
Capital expenditure (108.9) (61.9)
Acquisitions and disposals - 3.4
------- -------
Cash inflow before management of
liquid resources and financing 87.1 108.4
Management of liquid resources (14.2) 4.8
Financing 98.1 66.5
------- -------
Increase in cash in the year 171.0 179.7
======= =======
Financing cash flow includes £2.0 million (2004: - £8.8 million) in respect of
the exercise of employee share options.
Cash flow information (continued)
Reconciliation of net cash flow to movements in net funds
2005 2004
£ million £ million
Increase in cash in the year 171.0 179.7
Cash inflow from the increase in debt (96.1) (57.5)
Cash outflow / (inflow) for the increase / (decrease)
in liquid resources 14.2 (4.8)
------- -------
Change in net funds resulting from cash flows 89.1 117.4
Exchange difference on loans (1.4) 10.5
------- -------
Increase in net funds for the year 87.7 127.9
Net funds at the start of the year 390.5 262.6
------- -------
Net funds at the end of the year 478.2 390.5
======= =======
Net funds at the end of the year comprises:
2005 2004
£ million £ million
Cash at bank and in hand 695.5 510.3
Bank loans (217.3) (119.8)
------- -------
478.2 390.5
======= =======
£28.5 million (2004 - £14.3 million) of the cash at bank and in hand is subject
to restrictions governing its use.
Consolidated statement of total recognised gains and losses
for the year ended 30 September
2005 2004
£ million £ million
Retained profit for the year 42.6 41.1
Currency translation differences on
foreign currency net investments 5.4 (18.8)
------- -------
Total recognised gains and losses for the year 48.0 22.3
======= =======
Consolidated reconciliation of movements in shareholders' funds
for the year ended 30 September
2005 2004
£ million £ million
Retained profit for the year 42.6 41.1
Currency translation differences on
foreign currency net investments 5.4 (18.8)
Shares issued by easyJet plc 3.3 15.9
Movement in shares held by easyJet trustees 0.3 0.2
Movement in reserves for employee share scheme (1.3) (7.1)
------- -------
Net addition to shareholders' funds 50.3 31.3
Opening shareholders' funds 789.4 758.1
------- -------
Closing shareholders' funds 839.7 789.4
======= =======
Notes
(forming part of the financial statements)
1 Accounting policies
The financial information set out does not constitute the statutory
accounts for easyJet plc ('easyJet') for the two years ended 30 September
2005 but is derived from those accounts. Statutory accounts for 2004 have
been delivered to the Registrar of Companies, and those for 2005 will be
delivered following easyJet's annual general meeting. The auditors have
reported on those accounts: their reports were unqualified and did not
contain a statement under section 237(3) of the Companies Act 1985. The
consolidated financial statements comply with applicable accounting
standards (UK GAAP) and have been prepared on the basis of accounting
policies set out in easyJet's Report and Accounts.
2 Segmental information
All revenues derive from the Group's principal activity as an airline and
include scheduled services, in-flight and related sales. Substantially
all of the Group's external revenues are earned by companies incorporated
in the United Kingdom.
The geographical analysis of turnover is as follows:
2005 2004
£ million £ million
Within the United Kingdom 224.5 224.1
Between the United Kingdom and the Rest of 869.9 728.5
Europe
Within the Rest of Europe 247.0 138.4
------- -------
1,341.4 1,091.0
======= =======
All revenue from easyJet's joint venture was derived within the United Kingdom.
easyJet's share of joint venture revenue for the year was £2.0 million (2004:
£1.4 million).
All the Group's operating profit arises from airline-related activities.
The only revenue earning assets of the Group are its aircraft fleet. Since the
Group's aircraft fleet is employed flexibly across its route network, there is
no suitable basis of allocating such assets and related liabilities to
geographical segments.
Notes
3 Taxation
The taxation charge is made up as follows:
2005 2004
£ million £ million
Current taxation:
UK corporation tax
Corporation tax at 30% (2004: 30%) 13.6 13.9
Adjustments in respect of prior years 2.8 (4.7)
------- -------
16.4 9.2
Overseas taxation
Corporation tax 1.5 1.2
Adjustments in respect of prior years 0.1 -
------- -------
1.6 1.2
------- -------
Total current taxation 18.0 10.4
Deferred taxation:
Capital allowances in advance of depreciation 10.9 11.1
Future credits not taxable (1.6) 1.8
Other fixed asset timing differences (2.0) (2.2)
------- -------
Total deferred taxation 7.3 10.7
------- -------
Total taxation 25.3 21.1
======= =======
Effective tax rate 37.2% 33.9%
The standard rate of current tax for the year, based on the UK standard rate of
corporation tax is 30%. The actual current tax charge for the current and the
previous year differs from the charge as calculated using the standard rate for
the reasons set out in the following reconciliation:
2005 2004
£ million £ million
Profit on ordinary activities before tax 67.9 62.2
======= ========
Tax charge at 30% (2004: 30%) 20.4 18.6
Expenses not deductible for tax purposes 4.1 1.8
Lower tax rates in certain overseas jurisdictions (3.4) (2.3)
Movement in share option scheme deduction (0.4) 2.0
Purchased goodwill not deductible 5.2 5.1
Fixed asset timing differences (10.8) (10.1)
Adjustments in respect of prior periods 2.9 (4.7)
------- -------
Total current taxation 18.0 10.4
Deferred tax 7.3 10.7
------- -------
Total taxation 25.3 21.1
======= =======
Notes (continued)
3 Taxation (continued)
Tax losses
There are no UK tax losses available for use in future periods. The amount of
foreign tax losses available for use was less than £0.1 million in both the
current and previous financial years.
easyJet Switzerland
easyJet Switzerland, a Group member, has the benefit of an exemption from
communal and cantonal taxes in Switzerland until 1 January 2008, subject to
meeting certain conditions. The effective tax rate in Switzerland at present is
7.8%, but will rise to 27.5% from 1 January 2008 assuming that tax rates remain
unchanged.
4 Earnings per share
Basic earnings per share has been calculated by dividing the profit for the year
retained for equity shareholders by the weighted average number of shares in
issue during the year after adjusting for changes to the capital structure of
the Group and shares held by the Group in employee share option trusts.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
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 period, those options are included in the calculation of
dilutive potential shares.
The earnings per share are based on the following:
2005 2004
Profit for the year retained for equity shareholders (£
million) 42.6 41.1
======= =======
Number Number
Weighted average number of ordinary shares in issue during
the year used to calculate basic earnings per share
(millions) 399.3 397.7
======= =======
Weighted average number of dilutive share options used to
calculate dilutive earnings per share (millions) 9.6 8.7
======= =======
The derivation of profit for the calculation of adjusted EPS before goodwill
amortisation is as follows. This measure has been chosen to show the
performance excluding goodwill amortisation, which is a significant non cash
balance in the profit and loss account:
2005 2004
£ million £ million
Profit for the year retained for equity shareholders 42.6 41.1
Add back: goodwill amortisation 17.4 17.1
------- -------
60.0 58.2
======= =======
Notes (continued)
5 Tangible fixed assets
Payments
on account- Leasehold Fixtures,
aircraft improvements - fittings and
Aircraft deposits buildings equipment Total
£ million £ million £ million £ million £ million
Cost
At 1 October 2004 207.6 165.4 4.0 14.8 391.8
Exchange differences 4.0 2.4 - - 6.4
Additions 167.7 83.9 2.0 2.8 256.4
Disposals (71.8) (103.6) - (0.6) (176.0)
Transfer to debtors (14.4) - - - (14.4)
------- ------- ------- ------- -------
At 30 September 2005 293.1 148.1 6.0 17.0 464.2
------- ------- ------- ------- -------
Depreciation
At 1 October 2004 48.3 - 2.3 10.8 61.4
Exchange differences - - - - -
Charge for year 15.5 - 0.7 2.9 19.1
Disposals (34.8) - - (0.2) (35.0)
Transfer to debtors (7.1) - - - (7.1)
------- ------- ------- ------- -------
At 30 September 2005 21.9 - 3.0 13.5 38.4
------- ------- ------- ------- -------
Net book value
At 30 September 2005 271.2 148.1 3.0 3.5 425.8
At 30 September 2004 159.3 165.4 1.7 4.0 330.4
======= ======= ======= ======= =======
At 30 September 2005, aircraft with a net book value of £225.5 million (2004:
£120.7 million) were mortgaged to lenders as security for loans (see note 8).
easyJet reviewed the carrying value of its aircraft at September 2003 and
concluded that the four oldest Boeing 737-300 aircraft required an acceleration
in depreciation which caused an additional depreciation charge of £3.4 million
prior to their disposal in 2004.
easyJet performed a similar residual value review of its aircraft during the
year ended 30 September 2004 and concluded that the six remaining owned Boeing
737-300 aircraft required an acceleration in depreciation. This led to an
additional charge of £2.7 million in 2005 (2004: £2.7 million). Five of these
aircraft were disposed of during the year. One Boeing 737-300 aircraft was
transferred to debtors in September 2005 as a contract had been signed for its
sale. The aircraft was delivered in November 2005.
Notes (continued)
6 Creditors: amounts falling due within one year
2005 2004
£ million £ million
Bank loans (note 8) 16.3 9.7
Trade creditors 6.6 17.6
Other taxes and social security 3.7 3.6
Other creditors 16.9 9.8
Corporation tax 38.9 18.0
Unearned revenue (including Government taxes) 160.3 143.0
Accruals and deferred income 154.9 113.0
------- -------
397.6 314.7
======= =======
7 Creditors: amounts falling due after more than one year
2005 2004
£ million £ million
Bank loans (note 8) 201.0 110.1
Accruals and deferred income 75.1 47.6
------- -------
276.1 157.7
======= =======
Accruals and deferred income includes the non-current excess of sales price over
fair value of certain assets that were subject to sale and operating leaseback
transactions. These amounts will be released to the profit and loss account
over the respective asset's lease term.
8 Loans
2005 2004
£ million £ million
Amounts falling due:
Within one year 16.3 9.7
Due within one to two years 17.0 10.1
Due in two to five years 68.4 37.2
Due after five years 118.7 62.8
------- -------
220.4 119.8
Less deferred financing costs (3.1) -
------- -------
217.3 119.8
Included within amounts falling due within one year (16.3) (9.7)
------- -------
201.0 110.1
======= =======
The bank loans financed the acquisition of certain aircraft by the Group. The
aircraft acquired with the loans are provided as security against the
borrowings.
Notes (continued)
9 Provisions for liabilities and charges
2005 2004
£ million £ million
Maintenance liabilities 70.0 42.9
Deferred taxation 27.5 20.2
------- -------
97.5 63.1
======= =======
10 Share capital and reserves
Share Profit and
Share capital premium loss account Total
£ million £ million £ million £ million
At 1 October 2004 99.8 554.2 135.4 789.4
Issue of ordinary share capital:
Share option schemes 0.3 3.0 - 3.3
Movement in shares held by - - 0.3 0.3
trustees
Movement in profit and loss - - (1.3) (1.3)
account for employee share schemes
Retained profit for the year - - 42.6 42.6
Currency translation differences
on foreign currency net
investments - - 5.4 5.4
------- ------- ------- -------
At 30 September 2005 100.1 557.2 182.4 839.7
======= ======= ======= =======
At 30 September 2005 there were no shares issued held in Employee Share Option
Trusts which have not vested unconditionally with employees. At 30 September
2004 there were 194,842 unallocated shares which were excluded from equity.
These shares are held by easyJet Trustees, the trust managing employee share
schemes.
11 Contingent liabilities
The Group is involved in various disputes or litigation in the normal course of
business. Whilst the result of such disputes cannot be predicted with certainty,
the Company believes that the ultimate resolution of these disputes will not
have a material affect on the Group's financial position or results.
In 2002, Navitaire Inc. ('Navitaire'), a former supplier of airline reservation
software to easyJet Airline Company Limited, a Group company, issued proceedings
against that Group company alleging copyright infringement in relation to
airline reservations software. In November 2005, the parties reached an
amicable agreement fully resolving the dispute, bringing the litigation to an
end.
12 Post balance sheet events
David Bennett was appointed to the Board as a Non Executive Director on 1
October 2005.
One Boeing 737-300 aircraft was transferred from fixed assets to debtors in
September 2005 as a contract had been signed for its sale. The aircraft was
delivered in November 2005.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
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