TIDMEZJ
RNS Number : 2272Z
easyJet PLC
20 May 2021
20 May 2021
easyJet plc
Results for the six months ending 31 March 2021
easyJet's H1 2021 results are in line with expectations and it
maintains significant liquidity while also delivering Q2 cash
burn(1) slightly better than guidance.
easyJet is encouraged by the reopening of travel across much of
Europe and will maximise opportunities for European flying. easyJet
is the largest operator from the UK to Green list countries and is
looking forward to taking customers on a long-awaited holiday this
summer.
Commenting on the results, Johan Lundgren, easyJet Chief
Executive said:
"With leisure travel taking off in the UK again earlier this
week where we are the largest operator to Green list countries and
with so many European governments easing restrictions to open up
travel again, we are ready to significantly ramp up our flying for
the summer with a view to maximising the opportunities we see in
Europe. We have the ability to flex up quickly to operate 90% of
our current fleet over the peak summer period to match demand.
"We know there is pent-up demand - we saw this again when Green
list countries were released and added more than 105,000 seats -
and so we look forward to being able to help many more people to
travel this summer supported by our industry-leading flexible
customer policies which means they can book with confidence.
"Over the past six months, we have successfully undertaken a
major restructuring and cost reduction process alongside
maintaining an investment-grade balance sheet with significant
liquidity and managing our cash burn(1) better than expectations.
This has delivered results in line with guidance. Our agility,
trusted brand and famous value means we are well placed to bounce
back in the recovery."
Summary
-- In the six months ending 31 March 2021, easyJet operated a
disciplined flying programme whilst continuing to deliver a major
restructuring and cost reduction programme
-- Passenger numbers(2) for the six months ending 31 March 2021
decreased by 89.4% to 4.1 million (H1 2020: 38.6 million)
-- Capacity(3) decreased by 85.0% to 6.4 million seats,
representing 14% of H1 2019 capacity levels (H1 2020: 42.7
million)
-- Load factor(4) decreased by 26.6 percentage points to 63.7%
-- Total revenue decreased by 90% to GBP240 million (H1 2020:
GBP2,382 million) with passenger revenue decreasing by 91% to
GBP170 million and ancillary revenue decreasing by 87% to GBP70
million
-- Group headline costs excluding fuel decreased by 59% to
GBP844 million (H1 2020: GBP2,041), driven by a decrease in
capacity flown and the material savings achieved across many areas
of the business from easyJet's major cost-out programme. We
recorded a GBP24 million credit from foreign exchange, related to
the impact of stronger Sterling on our foreign currency-denominated
liabilities, which is being included within headline costs.
-- easyJet's cost-out programme aims to deliver c.GBP500 million of savings in FY'21
-- Non-headline items for the six months ending 31 March 2021
were a GBP56 million net credit before tax (H1 2020: GBP160 million
net charge) were comprised principally of gains related to sale and
leaseback transactions, with a net charge related to fuel hedge
discontinuation being largely offset by a release of restructuring
provisions
-- Headline loss before tax of GBP701 million (H1 2020: GBP193
million loss), within the guidance range of GBP690 to GBP730
million loss
-- Reported loss before tax of GBP645 million (H1 2020: GBP353 million loss)
-- Robust balance sheet strength, with total liquidity raised
during the pandemic of over GBP5.5 billion, a net debt position of
GBP2.0 billion (H1 2020: net debt of GBP467 million) and investment
grade credit ratings
Outlook
-- Based on current travel restrictions in the markets in which
we operate, easyJet expects to fly c.15% of 2019 capacity levels in
Q3 with an expectation that capacity levels will start to increase
from June onwards. Late announcements of changes to travel
restrictions will impact load factors due to late capacity
additions/cancellations to meet surges in demand, driving an even
later booking behaviour.
-- We maintain significant flexibility to ramp capacity up or
down quickly depending upon the unwinding of travel restrictions
and expected demand, with the flexibility to maximise European
opportunities. This ramp up will involve increased variable costs
during Q3 as we bring pilots and crew off furlough in readiness for
the peak summer season in Q4. We remain focused on a disciplined
schedule of cash generative flying
-- Cost-out programme to generate c.GBP500 million of savings in
FY'21 to help offset cost headwinds
-- At this stage, given the continued level of short-term
uncertainty, it would not be appropriate to provide any further
financial guidance for the 2021 financial year
H1 2021 H1 2020 Change
Favourable/(adverse)
-------------------------------------------------- -------- -------- ----------------------------
Capacity (millions of seats) 6.4 42.7 (85.0) %
Load factor (%) 63.7 90.3 (26.6) ppts
Passengers (millions) 4.1 38.6 (89.4) %
Total revenue (GBP million) 240 2,382 (89.9) %
Headline loss before tax (GBP million) (701) (193) (264.4) %
Total loss before tax (GBP million) (645) (353) (82.7) %
Headline basic loss per share (pence) (127.2) (49.4) (157.5) %
Airline revenue per seat(5) (GBP) 36.93 55.60 (33.6) %
Airline revenue per seat at constant currency(6)
(GBP) 36.00 55.60 (35.3) %
Airline headline cost per seat (GBP) 145.00 59.75 (142.7) %
Airline headline cost per seat excluding
fuel at constant currency(4) (GBP) 133.07 47.24 (181.7) %
-------------------------------------------------- -------- -------- ---------------- ----------
For further details please contact easyJet plc:
Institutional investors and analysts:
Michael Barker Investor Relations +44 (0)7985 890 939
Holly Grainger Investor Relations +44 (0)7583 101 913
Media:
Anna Knowles Corporate Communications +44 (0)7985 873 313
Edward Simpkins Finsbury +44 (0)7947 740 551 / (0)207 251
3801
Dorothy Burwell Finsbury +44 (0)7733 294 930 / (0)207 251
3801
Conference call
There will be an analyst presentation at 09.30am BST on 20 May
2021 . Given the UK Government's current restrictions on public
gatherings, we regret that it will not be possible for analysts or
investors to attend in person .
A webcast of the presentation will be available both live and
for replay. Please register on the following link:
https://webcasting.brrmedia.co.uk/broadcast/60a219078d9817323e2fbdfb
Please note that participants will not be able to ask questions
via the webcast. Should you wish to ask question, please dial in
using the details below:
+44 (0)330 336
UK & International: 9126
Confirmation code: 5065527
Overview
easyJet operated a disciplined flying programme over the winter
months whilst continuing to deliver a major restructuring and cost
reduction programme. As a result, easyJet has reported a first half
headline loss before tax of GBP701 million, which is within the
guidance range. The effects of the cost-out programme will support
improved margins and reduce the impact of seasonality for the
future. Our capacity forecasting has been accurate and disciplined
throughout the pandemic, which has allowed for strong cost control.
Our focus on cash generative flying over the winter season
minimised cash burn, with cash burn in the second quarter better
than guidance.
As at 31 March 2021 easyJet has unrestricted access to c.GBP2.9
billion of liquidity having raised over GBP5.5 billion since the
beginning of the pandemic, and is well positioned to capitalise on
the recovery of travel once restrictions are eased across the
network.
easyJet has maintained a high level of operational flexibility
to respond to rapidly-changing travel restrictions. We will
continue to operate a reduced schedule throughout much of Q3 but
are ready to ramp up our operations to match the level of demand we
see in the market and we anticipate an increase in flying from
June.
Revenue
Total revenue decreased by 90% to GBP240 million (H1 2020:
GBP2,382 million) with capacity decreased to 6.4 million seats
(2020: 42.7 million) as a result of pandemic-related travel
restrictions and national lockdowns.
Passenger revenue decreased by 91% to GBP170 million (H1 2020:
GBP1,833 million) and ancillary revenue decreased by 87% to GBP70
million (H1 2020: GBP549 million) as we flew an optimal schedule
with a focus on domestic routes.
Airline revenue per seat decreased by 34% to GBP36.93, driven
by:
-- A GBP2.11 or 3.8% decrease from external events, namely the
strong prior year comparison of H1 2020 which included the
bankruptcy of Thomas Cook
-- A GBP2.44 or 4.4% decrease in ancillary revenues, including the impact of the pandemic
-- A GBP15.05 or 27.1% decrease due to the pandemic
-- A GBP0.93 increase due to foreign exchange impacts
Analysis of revenue on a per seat basis is not meaningful when
capacity is at extremely low levels.
Costs & Cash Burn
Group headline costs excluding fuel and FX gains for the first
half decreased by 59% to GBP844 million (H1 2020: GBP2,041
million), driven by a decrease in capacity flown and the material
savings achieved across many areas of the business from easyJet's
major cost-out programme. We recorded a GBP24 million credit from
foreign exchange, related to the impact of stronger Sterling on our
foreign currency-denominated liabilities, which is being included
within headline costs.
The structural cost-out programme we announced last year,
easyJet's largest ever, is on track to achieve our targeted cost
savings and will position easyJet well to lead the recovery in
aviation. We aim to deliver c.GBP500million of savings in FY'21
from the cost-out programme.
Airline headline cost per seat increased by 148% at constant
currency to GBP148.39 (H1 2020: GBP59.75). This increase in
headline cost per seat was comprised of:
-- A GBP3.85 decrease in airports, ground handling and other
operating costs, driven by lower flying volumes
-- A GBP24.96 increase in crew costs, driven by adverse volume
productivity partially offset by use of furlough schemes
-- A GBP33.60 increase in ownership costs, driven by reduced
flying volumes and greater number of leased aircraft and additional
debt facilities, partially offset by reduced maintenance-related
depreciation
-- A GBP18.55 increase in overheads and other income, driven by
fixed costs and reduced flying volumes
-- A GBP0.12 increase in navigation costs driven by an increased
sector length, partially offset by a Eurocontrol rate reduction
-- A GBP12.45 increase in maintenance costs, driven by reduced
flying volumes offset by line maintenance benefits from insourcing
and parked fleet
-- A GBP2.81 increase in fuel costs, driven by increased effective price
easyJet maintained a disciplined approach to capacity and cash
management. As a result cash burn (on a fixed costs plus capex
basis) during the first quarter was GBP39 million per week on
average and during the second quarter was GBP38 million per week on
average, outperforming the guidance for GBP40 million per week
given at the Q1 trading update. easyJet paid a further GBP254
million of customer refunds during the first half.
Non-Headline Items
Non-headline items are material non-recurring items or are items
which do not reflect the trading performance of the business. These
costs are separately disclosed and further detail can be found in
the notes to the accounts. Non-headline items for the six months
ending 31 March 2021 were a GBP56 million net credit (H1 2020:
GBP160 million net charge) include:
-- GBP60 million gain as a result of the sale and leaseback of
35 aircraft in the period (H1 2020: GBP1 million gain)
-- GBP29 million charge related to fair value adjustment on fuel
hedge discontinuation (H1 2020: GBP164 million charge). Fair value
movements after the hedges have been marked ineffective are now
shown within Headline Items. These movements generated a GBP12m
credit in Headline Items during H1
-- GBP25 million credit arising from a release of restructuring
provisions (H1 2020: nil), following constructive negotiations with
our trade unions. These discussions have led to further
concessions, which have allowed for a reduction in the estimated
costs associated with the restructuring as at 31 March 2021
Strategy Update
easyJet has prioritised six strategic initiatives that will
continue to build on our structural advantages in the European
aviation market and enable us to lead the recovery as travel
returns.
-- Network strategy
-- Customer excellence
-- Product portfolio evolution
-- easyJet Holidays
-- Cost reduction programme
-- Sustainability
These initiatives, alongside our continued focus on our people
and on operational and digital safety, provide easyJet the tools to
achieve industry-leading returns and resilience.
Network Strategy
easyJet has a strong network of leading number one and number
two positions in primary airports, which has proven during Covid-19
to be amongst the highest yielding in the market and which enables
us to be efficient with our network choices, with an emphasis on
maximising returns. We will seek to strengthen and defend these
positions as the competitive landscape evolves. The scale and
flexibility of our network will provide us with opportunities to
take advantage of changes in the competitive landscape during the
recovery phase. easyJet will act quickly to selectively acquire
attractive slots made available in locations where the opportunity
arises.
As part of the restructuring programme easyJet has closed its
bases in Southend, Stansted and Newcastle, although Stansted and
Newcastle continue to be served on an inbound flying basis. We have
also cut capacity materially in some French and Italian bases, as
well as in Berlin. This capacity has been allocated to higher
yielding airports within our network. Further opportunities are
likely to arise at these primary airports over the coming months as
legacy carriers withdraw capacity and restructure, for example at
Paris-Orly, Milan-Linate or Amsterdam-Schipol. To better capture
summer leisure demand, easyJet is opening seasonal bases in Malaga
and Faro on 1 June 2021.
easyJet remains extremely disciplined in focusing on flying
which generates a positive contribution and during H1 easyJet flew
14% of H1 2019 capacity.
Over the last six months we have taken a number of key decisions
to further optimise our schedule development. Our schedule for the
summer '22 season went on sale far earlier than it would have done
under normal circumstances, in order to enable our customers to
easily transfer any bookings which were cancelled due to Covid-19.
This represents the first time that easyJet has ever had four
seasons available for sale at the same time and it significantly
reduced customers' propensity to request refunds.
In response to international travel restrictions we have shifted
capacity onto domestic routes, particularly in the UK, France and
Italy. We have been disciplined about focusing on cash generative
flying and many of these domestic routes are performing very well.
We have also launched new domestic leisure routes to capitalise on
the increase in staycations. These have included Belfast-Inverness,
Glasgow-Newquay, Manchester-Newquay and Gatwick-Newquay in the UK,
Bergamo-Olbia in Italy and additional capacity from mainland France
to Corsica. In order to capitalise on expected leisure demand this
summer we have opened a summer base in Birmingham served by
aircraft and crew based around Europe. We have been able to acquire
scarce slots at Milan's city centre airport, Linate and have used
these to boost our Italian domestic leisure portfolio with new
routes to Catania and Palermo.
easyJet's response to changes in demand due to travel
restrictions or competitor announcements has been extremely agile.
Within 24 hours of the UK Government's announcement of the green
list on 7 May easyJet had added 80,000 seats of additional capacity
to Portugal for early summer and also added a further 20,000 seats
within a week of the announcement. The addition of this capacity
saw a strong increase in demand. Since February we have added over
2 million seats throughout our network into new and existing
markets to respond to the evolving demand environment. To date, we
have launched 55 new routes for Summer '21, covering a range of
domestic leisure destinations, Greek Islands, Egypt and Spain
amongst others.
Our focused network strategy can be summarised as follows:
1. Lead in our Core Markets
easyJet prioritises slot-constrained airports because they are
where customers want to fly from, we are able to achieve cost
leadership and preserve our scale. We provide a balanced network
portfolio across domestic, city and leisure destinations. Our scale
enables us to provide market leading networks and schedules. We are
maintaining our focus on country leadership in the UK, France and
Switzerland and our city focus in the Netherlands, Italy and
Germany.
2. Accelerate investment in Destination Leaders
We will build on our existing leading position in Western
Europe's top leisure destinations to provide network breadth and
flexibility. This will also unlock cost benefits, enabling us to
manage seasonality and support the growth of easyJet holidays. It
also ensures that easyJet remains top of mind for customers and is
seen as the 'local airline' for governments and hoteliers looking
to lend their support.
3. Build our network in Focus Cities
easyJet is building a network of key cities, broadening our
presence across Europe. This is a low-risk way of serving large
origin markets. We will base assets in Focus Cities where it makes
sense from a cost perspective.
Customer Excellence
easyJet aims to deliver a seamless and digitally enabled
customer journey at every stage:
-- Prior to travel - our 'direct is best' strategy is led by our
digital channels, with an app/mobile-first mindset. Initiatives
include rebuilding our web booking interface; driving app usage and
improving the overall experience; enhancing self-service booking
management such as changing passenger details or baggage booking;
improving online redemption management such as vouchers; developing
full pre-order capability for retail onboard; and payments
innovation.
-- In airport - moving customers from kerb to aircraft without
the need for human interaction. This involves improving boarding in
order to improve CSAT and reducing queuing, which our new cabin bag
policy is helping with; streamlining the boarding experience,
improving the automatic gates process, pushing for 100% digital
boarding passes; developing 'virtual boarding'; building the London
Gatwick 'Model Customer Journey' and expanding this to other big
cities; reducing the need for check-in.
-- In flight - our warm welcome and personal service to get you
to your destination on time. We are committed to improving On-Time
Performance (OTP) - on time, every time - by managing suppliers,
empowering crew, implementing pre-tactical planning and strategic
ATC planning, carrying out base operating reviews, building a
customer-level data view to enable targeted offers such as inflight
retail and reviewing the CRM lifecycle for more relevant customer
engagement.
-- Support - we aim to give customers the digital tools to
easily self-serve when things do not go to plan, or to engage after
their flight. As part of this initiative we will deliver
Self-Service Disruption Management (SSDM) to let customers quickly
self-serve in disruption; we are launching a new social strategy to
engage with our customers, we are building a hub of 'Voice of
Customer' insights, creating an 'always on' feedback loop and
shifting focus from CSAT to life time value of the customer.
Actions delivered in H1 as part of our customer excellence
initiative include:
-- We updated our protection promise to give customers even more flexibility this summer:
o Freedom to change: Gives the customer the ability to transfer
their flight fee free this summer, anytime up to two hours before
departure to any flights currently on sale and to any destination
on our network
o Travel Restriction Protection: If a trip is impacted by a
lockdown travel ban or mandatory hotel quarantine this summer, the
customer can transfer their flight for free to a later date,
anytime up to two hours before departure, or opt for a voucher or
refund, even if their flight is still operating
-- All easyJet flight vouchers can be redeemed online, quickly and easily when making a booking
-- Processing time of refunds has been further decreased to
ensure customers are getting their money back as quickly as
possible
-- The launch of our chatbots, giving customers the opportunity
to get answers to their queries quickly and easily without having
to pick up the phone
This focus on customer excellence has continued to drive the
strength of our brand and delivered strong customer satisfaction
scores through the first half of the year. easyJet remains first
choice low cost carrier (LCC) in the UK, France, Switzerland and
Berlin, best value airline in the UK and France ahead of LCCs and
legacy carriers and best value LCC in Italy, Switzerland and
Berlin. Our customer satisfaction for H1 was 80% which is up 3
percentage points on H1 2020.
In the six months to 31 March 2021, On Time Performance
increased by 3 percentage points to 94%. This reflects the
temporary decrease in congestion of European airspace and the
strides we are taking towards leaving 'on time, every time'.
OTP % arrivals within 15 Q1 Q2
minutes(7)
-------------------------- ---- ----
2021 Network 94% 91%
2020 Network 80% 82%
-------------------------- ---- ----
On Time Performance is crucially important for our operational
efficiency, as well as customer satisfaction. Thanks to a
relentless focus from our teams, OTP has been excellent, with D15
(doors closed within 15 minutes of scheduled departure time) across
the full day of 93% year-to-date in FY'21, compared to 84% in 2020
and 75% in 2019. Achieving D15 for the first wave of flights each
morning is vital importance (since this tends to have a knock-on
effect through the day as delays build up), so we are extremely
pleased with having reached 96% first wave D15 year-to-date in
FY'21, compared to 91% in 2020 and 89% over 2019.
Product Portfolio Evolution
easyJet recognises that the continued evolution of our product
portfolio represents a significant opportunity to increase revenue
per seat and margins in the coming years.
Earlier this year easyJet launched a new fare class called
Standard Plus which makes it easier for customers to buy a package
which includes Up front seat selection, access to easyJet Plus Bag
Drop, Speedy Boarding, one cabin bag and an additional under seat
cabin bag in one easy step on the website. We had identified a gap
in our current propositions in terms of fare offerings and during
testing the new fare class has meaningfully increased average
booking values.
We also updated our cabin bag policy in February this year. The
ability to bring a large overhead cabin bag on board is going to be
bundled with Up front and Extra legroom seating. The seating and
bag packages will be actively yield managed and will be dynamically
priced from GBP7.99 per bag per flight.
easyJet holidays
We are continuing to build on our significant opportunity within
the holidays sector, offering the most flexible holidays at the
best prices in the market through to October 2022, underpinned by
our industry leading 'Protection Promise' which has meant that we
have retained over 60% of those customers whose holidays were
affected by Covid-19 in the first half of 2021. We are also proud
to announce that easyJet holidays is now the first major tour
operator to offset the carbon emissions directly associated with
its holidays - the fuel from flights and transfers plus the energy
from hotel stays.
Our highly scalable business model ensures low fixed costs (93%
variable) with strong marginal profit contribution. We continue to
enjoy strong partnerships with leading hotels without the need for
financial commitments or inventory risk and during the first half
we signed over 40 additional flagship beach hotels which were
previously under exclusive contracts with our competitors, whilst
establishing connectivity with some of the world's largest hotel
chains including Hilton, Accor, Radisson and Intercontinental Hotel
Group to offer range to our cities offering.
Four- and five-star hotels now account for c.70% of all holidays
sold, generating a significant margin premium. Our low cost base
ensures that we are able to offer outstanding value, with c.75% of
our holidays offering the best value in the market on like-for-like
searches, whilst still providing strong marginal profit
contribution.
Holidays for Winter 2021/22 were launched in December and are
experiencing very positive demand. Bookings for Summer 2021 are
currently significantly ahead of last year, although it is evident
that many customers are looking for further certainty around
quarantine rules prior to booking.
Cost Reduction Programme
In response to the Covid-19 pandemic easyJet launched its
largest ever cost efficiency programme, which aims to deliver
c.GBP500 million in savings in FY'21, to help mitigate some of our
cost headwinds. Significant work has been done across the business
already, including a cost programme in H1'21 which delivered
savings, ahead of internal expectations. Savings have been
delivered across every cost line. This was a major factor in
outperforming our cash burn guidance, on a fixed costs and capital
expenditure basis, during Q2 and supports our confidence in the
guidance going forwards.
We have now successfully concluded trade union agreements in
every country except in Italy, where negotiations will begin
shortly and are in the process of concluding crew agreements in
Germany. As a result of highly constructive relationships with our
trade union partners and our people, we have been able to deliver
significant cost and productivity savings, including:
-- Reducing the number of full-time equivalent (FTE) crew per
aircraft in all bases (excluding Italy at this stage) for our
summer '21 flying programme. This has enabled significant
improvements in our crew ratios and productivity in preparation for
our return to flying
-- Minimised redundancy costs by agreeing innovative part-time
and seasonal contracts with our unions. This improves productivity
on a sustainable basis and allows the capacity to grow if required,
without needing to hire new people
-- Re-balancing of the number of seasonal contracts we have across the network
-- Reductions in base pay in some of our higher-cost
jurisdictions, with easements in rostering rules also being agreed
and two-year pay freeze agreements in most jurisdictions
-- Furlough agreements in all jurisdictions, which will continue to support us throughout FY21
These measures have reduced our overall cost of crew whilst
addressing structural and productivity challenges with our old crew
model. They have also enabled the investment in seasonal bases in
Faro and Malaga which open on 1 June, continuing to improve
efficiency at a lower cost base.
Airports and ground handling costs represent a major part of our
cost base and have been a particular focus. We continue in
negotiations with airports across our network, to secure the best
long-term deals. We continue to review ground handling costs on a
line-by-line basis and have renegotiated 132 major ground handling
contracts, with permanent savings achieved in Ground Operations and
Customer Management Centres. New contracts focus on driving safety
and OTP while reducing costs. We have achieved a 25% reduction in
call centre costs with new contracts to 2027 and improved customer
service.
Significant progress on costs has also been made in engineering,
whilst maintaining 95% of our aircraft in a flight-ready condition
across the winter and with safety the number one priority. easyJet
outsources the majority of heavy maintenance where it is cost
effective. We have extended our contracts to 2025 and to 2023, with
cost savings and simpler work packages. We have also extended our
low-cost engine shop visit contract out to 2023 and concluded a
cost-effective deal on Leap engines and ongoing support. Our
components deal has been extended to 2027 with additional cost
savings and a Milan parts hub. We have worked closely with Airbus
to create more efficient 6- and 12-year checks. We have completed
insourcing of line maintenance in Berlin, Glasgow, Edinburgh and
Bristol, which has delivered cost savings and higher quality. All
line maintenance at Gatwick is now done in-house, with the addition
of a completed third hangar bay in March '21.
Sustainability
Despite the impact of the pandemic, easyJet has continued to
reaffirm its commitment to sustainability, which is of significant
and growing importance to our customers. 72% of consumers say that
the sustainable behaviour of a company is now a more important
factor in a purchase decision since the global outbreak of
Covid-19. The likelihood of consumers choosing easyJet over another
airline as a direct result of our carbon offsetting policy
continues to increase steadily, rising to 45% for YTD 2021 (an
increase of 4 percentage points compared to FY20 figures). We are
also proud to announce that easyJet holidays is now the first major
tour operator to offset the carbon emissions directly associated
with its holidays - the fuel from flights and transfers plus the
energy from hotel stays.
In November 2019 we established our new Sustainability Strategy,
focused on driving down our environmental impact. Our strategy has
three pillars: tackling our carbon emissions; stimulating carbon
innovation; and going beyond carbon.
-- Tackling carbon emissions: We were the world's first major
airline to operate carbon neutral flying across our entire network,
and we continue to work tirelessly to minimise carbon emissions
across our operations. We continue to operate a fleet of modern,
fuel efficient aircraft and are always looking for more ways to be
fuel efficient and emit less carbon. Alongside our continued
efficiency efforts, we believe that radical action to address the
impact of climate change is also needed. In 2019 we became the only
major airline worldwide to offset all our organisation's direct
carbon emissions (scope 1 and 2), through programs that plant trees
or avoid the release of additional carbon dioxide. Since then we
have retired over 3 million carbon credits from high-quality
projects to provide carbon neutral flights to our customers at no
additional cost to them. We remain committed to our approach on
carbon offsetting and have continued to offset all our flights
through the pandemic. We also continue to advocate smarter
regulation for aviation that rewards carbon efficiency.
-- Stimulating carbon innovation: We are supporting the
development of new technologies to reinvent aviation as quickly as
possible. Offsetting can only be an interim solution, while zero
emissions technology is developed. We are collaborating with
several industry leaders to support technological step change:
Wright Electric in their development of 'Wright 1' - an
all-electric 186-seater; and a strategic partnership with Airbus in
their ambition to develop a zero-emission commercial aircraft by
2035. We are excited to see the growing momentum behind these
disruptive technologies such as all electric, hybrid and hydrogen.
There is significant potential for these technologies, particularly
on short-haul networks such as our own.
-- Going beyond carbon: We are constantly looking for more ways
to take action outside of carbon reductions including having taken
steps to reduce the amount of plastic used on our services but are
also now debuting new crew and pilot uniforms made from recycled
plastic, which is our latest initiative in our drive to reduce
waste. To date we have already removed over 27 million individual
items of plastic from our inflight retail. We are also aiming to
reduce waste and plastic at easyJet and within our supply chain. We
are creating a culture where employees can champion sustainability
and in the future we will focus our charitable efforts on
environmental sustainability. We are also particularly pleased that
easyJet's long-term work with our charity partner UNICEF, who we
have supported through on-board collections since 2012, will
continue with the focus of collections this summer supporting
Unicef to fund COVAX global vaccinations, with Unicef's aim being
to deliver 2 billion vaccines by the end of 2021. Hundreds of
easyJet crew members have volunteered to help at vaccination
centres across Europe, with many of them having trained to deliver
the vaccines.
Fleet
easyJet's fleet is a major component of its business model and a
competitive advantage. easyJet's total fleet as at 31 March 2021
comprised 330 aircraft (30 September 2020: 342 aircraft) with the
decrease driven principally by the redelivery to lessors of A319
aircraft. The average gauge of the fleet is now 177.6 seats per
aircraft, an increase from 177 seats at 30 September 2020. The
average age of the fleet increased slightly to 8.6 years (30
September 2020: 8.0 years).
Fleet as at 31 March 2021:
Changes Unexercised
% of since Future Purchase purchase
Owned Leased Total fleet Sep-20 deliveries options rights
A319 45 67 112 34% (10) - - -
A320 180 seat - 14 14 4% - - - -
A320 186 seat 105 48 153 47% (2) - - -
A320 neo 30 7 37 11% - 85 20 58
A321 neo 3 11 14 4% - 16 - -
----------------- ------ ------- ------ ------- -------- ------------ --------- ------------
183 147 330 (12) 101 20 58
Percentage
of total fleet 55% 45%
Our flexible fleet plan allows us to expand or contract the size
of the fleet depending upon the demand outlook. The variance
between 307 and 310 aircraft for FY2021 is due to three leased
aircraft which are due to be redelivered to lessors very close to
the end of 2021 financial year. Through the 2021 financial year,
easyJet will be storing 12 leased aircraft on behalf of their
respective lessors. These are held at zero rent unless flown and
are therefore not included within our fleet numbers. The prior plan
for 302 aircraft in FY21 was predicated on commercial negotiations
we were in at the time, which, given the current market environment
it did not make economic sense to complete on.
Number of aircraft FY20 HY 21 FY21 FY22 FY23 FY24
--------------------- ----- ------ ----- ----- ----- -----
Current contractual
minimum 342 330 307 287 282 291
Base plan 342 330 307
Current contractual
maximum 342 330 310 327 355 342
--------------------- ----- ------ ----- ----- ----- -----
Expected deliveries 0 8 7
--------------------- ----- ------ ----- ----- ----- -----
Capital Expenditure
Over the next three years easyJet's gross capital expenditure is
expected to be as follows:
Year 2021 2022 2023
---------------------------------------- ----- ------ --------
Gross capital expenditure (GBP million) 700 c.900 c.1,000
---------------------------------------- ----- ------ --------
Capex in FY'21 is comprised principally of safety- and
maintenance-related expenditure as well as lease payments. Growth
capex is set to resume from FY'22 and our capex projections assume
zero aircraft deliveries in FY'21, 8 deliveries in FY'22 and 7
deliveries in FY'23.
Sale and Leaseback Transactions
Sale and leaseback transactions on 23 aircraft were concluded
during H2 2020, raising GBP608 million gross proceeds and adding
c.GBP50 million to pro forma per annum headline costs. During H1
2021 transactions were concluded on 35 aircraft, raising GBP842
million gross proceeds and adding a further c.GBP90 million to pro
forma per annum headline costs. We retain ownership of 55% of the
total fleet, with 41% unencumbered.
Liquidity
easyJet has taken swift and decisive action successfully raising
over GBP5.5 billion in liquidity since the beginning of the
pandemic, from a diversified range of funding sources: c.GBP0.4
billion from drawing down a Revolving Credit Facility, c.GBP0.4
billion from two term loans, GBP0.6 billion from the Covid
Corporate Financing Facility, c.GBP1.4 billion from sale and
leaseback transactions, c.GBP0.4 billion from an equity placing,
c.GBP1.4 billion from the UK Export Finance facility and a c.GBP1.0
billion bond. The EUR1.2 billion bond (c.GBP1.0 billion) issued in
March by easyJet's subsidiary easyJet FinCo B.V. under our Euro
Medium Term Note (EMTN) programme matures in March 2028 and has a
coupon of 1.875%. There was good market appetite for the bond,
which was heavily oversubscribed. The Revolving Credit Facility,
term loans and first GBP300 million tranche of the CCFF have been
repaid. easyJet continues to maintain access to a diverse range of
funding sources and continues to review its debt maturity
profile.
As at 31 March 2021 easyJet has unrestricted access to c.GBP2.9
billion of liquidity, comprising cash and cash equivalents plus the
undrawn portion of the UKEF facility. The first GBP300 million
tranche of easyJet's borrowings from the CCFF was repaid in March
2021 and the remaining GBP300 million is due in November 2021.
easyJet has no other debt maturities outstanding until the 2023
financial year.
As previously indicated, easyJet will continue to review its
liquidity position on a regular basis and will continue to assess
further funding opportunities.
Balance Sheet
easyJet's funding position remains solid with net debt at 31
March 2021 of GBP2,015 million (H1 2020: GBP467 million), which
comprised cash and cash equivalents of GBP2,335 million (H1 2020:
GBP1,388 million), borrowings of GBP3,323 million (H1 2020:
GBP1,319 million) and lease liabilities of GBP1,027 million (2020:
GBP536 million).
Liquidity per 100 seats was GBP5.2 million (H1 2020: GBP3.2
million), representing material headroom compared to our target of
a liquidity buffer of GBP2.6 million per 100 seats, defined as cash
plus Business Interruption insurance.
Headline return on capital employed (ROCE) for the six months
ending 31 March 2021 fell to negative 16.8% (H1 2020: negative
4.8%). Total ROCE fell to negative 14.7% (H1 2020: negative
4.8%).
Fuel & FX
Due to the sustained lower capacity during the Covid-19
pandemic, easyJet saw hedge ratios moving over 100% from both a Jet
Fuel and FX perspective. easyJet has taken action to close out
over-hedged positions, to manage its exposure to volatility in the
fair value of discontinued hedges. easyJet continues to hedge
contractual exposures (such as leases and capex) and has decreased
the amount of operational hedging that is taken out for future
periods until there is greater clarity over demand. As noted in the
'Non-Headline Items' section above, a GBP28 million net charge was
recognised in H1'21 for fair value adjustments related to the
discontinuation of hedge accounting (H1 2020: GBP164 million
charge). Additionally there was further fair value movement on
discontinued hedges in H1 2021 up until the point these positions
were closed out. This movement resulted in a GBP12 million credit
to headline items.
Board
During the period Stuart Birrell joined the Airline Management
Board as Chief Data & Information Officer and Sophie Dekkers
was promoted to the AMB as Chief Commercial Officer.
David Robbie joined the Board in November 2020 and Kenton Jarvis
in February 2021 as Chief Financial Officer. Anastassia Lauterbach,
Charles Gurassa and Moya Greene stood down from the Board in
December 2020.
John Barton will have served nine years as Chairman in May 2022,
which is the recommended maximum under UK corporate governance. As
a result the Board will take appropriate steps to identify
potential successors and will provide further updates as
appropriate. John remains fully committed to easyJet.
EU Ownership
On 23 December 2020, easyJet announced that the Board had passed
resolutions as part of its contingency plan to ensure continued
compliance with EU ownership and control requirements following the
end of the Brexit transition period on 31 December 2020.
Accordingly, and in line with its contingency plan, easyJet
announced on 4 January 2021 that it had commenced steps to suspend
voting rights in respect of certain shares held by relevant persons
in accordance with easyJet's articles of association, so that a
majority of the voting rights in easyJet are held by EU persons(8)
. As at 20 May 2021, a majority of the voting rights in easyJet are
held by EU persons.
Outlook
Based on current travel restrictions in the markets in which we
operate, easyJet expects to fly c.15% of 2019 capacity levels in Q3
with an expectation that capacity levels will start to increase
from June onwards. Late announcements of changes to travel
restrictions will impact load factors due to late capacity
additions/cancellations to meet surges in demand, driving an even
later booking behaviour.
We maintain significant flexibility to ramp capacity up or down
quickly depending upon the unwinding of travel restrictions and
expected demand, with the flexibility to maximise European
opportunities. This ramp up will involve increased variable costs
during Q3 as we bring pilots and crew off furlough in readiness for
the peak summer season in Q4. We remain focused on a disciplined
schedule of cash generative flying.
Our cost-out programme is expected to generate c.GBP500 million
of savings in FY'21 to help offset the cost headwinds related to
the lower volume of flying and increased ownership and financing
costs.
At this stage, given the continued level of short-term
uncertainty, it would not be appropriate to provide any further
financial guidance for the 2021 financial year. Customers are
booking closer to departure and visibility remains limited.
Footnotes
(1) On a fixed cost and capital expenditure basis.
(2) Represents the number of earned seats flown. Earned seats
include seats which are flown whether or not the passenger turns
up, as easyJet is 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 staff for business travel.
(3) Capacity based on actual number of seats flown.
(4) 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
"sector") lengths.
(5) easyJet holidays forms a separate operating segment to the
Airline. Therefore all per seat metrics are for the Airline
business only, as the inclusion of hotel-related revenue and costs
from the Holidays business will distort the revenue per seat and
cost per seat metrics as these are not directly correlated to the
seats flown by the Airline business
(6) Constant currency is calculated by comparing 2021 financial
year performance translated at the 2020 financial year effective
exchange rate to the 2020 financial year reported performance,
excluding foreign exchange gains and losses on balance sheet
revaluations.
(7) On-time performance is defined as the percentage of flights
which arrive within 15 minutes of the scheduled arrival time and is
measured by internal easyJet systems
(8) ' EU persons' refers to nationals of EU member states plus
Switzerland, Norway, Iceland, Liechtenstein, but excludes the
UK.
PRINCIPAL RISKS AND UNCERTAINTIES
easyJet faces a range of risks that, if they materialise, could
impact delivery of our corporate and strategic objectives. A risk
identification, assessment and monitoring framework is imperative
for any organisation to manage its risks and achieve its set goals
and objectives. The easyJet Board is responsible for determining
the nature of these risks and ensuring appropriate mitigating
actions are in place to manage them.
easyJet has adopted a scenario analysis led risk management
approach to ensure risks are identified, assessed, monitored and
appropriately treated. easyJet can monitor existing and emerging
risks and be prepared for scenarios outside of the corporate and
strategic plan, the root causes of many risks are not within
easyJet's control, for example adverse weather, pandemics, acts of
terrorism, changes in government regulation and macroeconomic
issues.
The principal risks and uncertainties set out in the 2020 Annual
Report and Accounts have not changed materially, and include the
following types of risks:
-- Asset Efficiency & Effectiveness
-- Environment & Sustainability
-- Legislative / Regulatory Landscape
-- Macro-economic & Geopolitical
-- People
-- Safety, Security, and Operations
-- Technology & Cyber
For the second half of FY21, the Directors consider that the
principal risks and uncertainties detailed in the 2020 Annual
Report and Accounts remain representative of the potential impacts
on the Group's performance. In addition to the 2020 Annual Report
and Accounts disclosure, there are three risks areas the Board
continues to monitor, and the current position is set out
below.
Brexit: risks and uncertainties develop alongside the new
relationship between the UK and EU. The focus remains to limit the
impact of Brexit, and the success of our planning was evident by
the lack of operational issues from 1 January 2021. The cross
functional Brexit programme continues to oversee the evolving
impacts of Brexit and will monitor the risks and uncertainties as
the flying schedule expands in line with the reopening of European
airspace.
Covid-19: the global crisis created by the Pandemic has impacted
every aspect of business in general and the effects continue into
H2 2021. Since 1 October 2020, easyJet has operated a significantly
reduced flying schedule as it navigates the uncertainty caused by
the spread of Covid-19 and associated flying restrictions. Safety
of our passengers and employees remains the highest priority, and
our measures outlined on page 67 of the 2020 Annual Report and
Accounts remain in place.
The risk of a prolonged recovery from the impacts of Covid-19
without any sector specific support and the potential of limited
access to financial markets may impact our liquidity position. In
response, easyJet has acted decisively. The largest cost efficiency
programme in easyJet's history was launched, removing costs at
every level of the business. Fleet flexibility has been retained,
at the same time as reducing Capex, allowing further responses to
any risks and opportunities as they arise. In addition to the
GBP4.5 billion in liquidity raised by January 2021, easyJet
announced in February 2021 it had raised a further EUR1.2 billion
from a seven-year bond issue. These actions strengthen our balance
sheet. This is in addition to retained ownership, as at 31 March
2021, of 55% of the total fleet with 41% of the total fleet
unencumbered. During the pandemic, the market for aircraft
transactions has slowed significantly. However, asset recoverable
amounts, based on value in use, exceed the carrying values as at 31
March 2021. Management will continue to keep these valuations under
review.
In adopting the going concern basis of preparation for these
interim financial statements, the Directors have considered
easyJet's liquidity position, financial forecasts, stress testing
of principal risks and uncertainties and the committed funding
facilities. The Directors have a reasonable expectation that the
Group has sufficient resources to continue in operation for the
foreseeable future and therefore continue to adopt the going
concern basis of accounting in preparing the Group financial
statements. In the unlikely event that the risks outlined combine
to result in the low levels of flying experienced in the last 12
months to be repeated and also impact forward bookings for summer
2022, the Group will need to secure additional funding. This
represents a material uncertainty at the date of this report that
could cast significant doubt upon the Group's ability to continue
as a going concern (see Going Concern in Note 1).
A level of unpredictability remains as the flying programme
restarts due to the risk of further waves of infection. Each
country within the easyJet network has developed their own approach
to dealing with the effects of the pandemic. This variation in
approach, including from a legislative perspective, increases
complexity and the risk of regulatory action. The requirements for
customer COVID testing is increasing the cost of air travel, which
conflicts with our ethos of providing affordable, accessible travel
for all. There is a risk of easyJet not having the ability to be
flexible and missing the opportunity to meet the pent up customer
demand. These risks are being actively managed through the business
and several measures have been introduced to ensure, where
possible, easyJet can service customers wishing to visit friends
and family, and taking a much deserved holiday. These measures
include lobbying governments and policymakers across our network on
both the use of tests and their affordability, increasing resources
to understand and ensure government restrictions and requirements
are adhered to, retaining flexibility in the fleet programme,
increasing the number of aircraft on standby, operating a dynamic
planning and capacity management process and maintaining crew
recency through continuation of the training programme. In addition
to ensuring our own people are prepared for the restart, plans have
been implemented to reduce the risk around third party
preparedness. easyJet identified that, due to use of furlough
schemes and reduced flying schedules, inactivity within our supply
chain has the potential to cause an increase in safety and
disruption events and the risks and uncertainties, including
supplier insolvency, needed to be closely managed. Pre- and
post-event plans are in place and include comprehensive risk
assessments detailing hazard states associated with returning to
historic movement levels, collaborating with industry peers and
regulators, continual assessment and validation of third party
plans and monitoring post event procedures to ensure efficacy. All
activity is tracked through internal safety meetings, including the
Summer 2021 Readiness Forum on a fortnightly basis.
At the time of writing, many of our people are on furlough or
equivalent, or working remotely. This has increased our people and
wellbeing risk. Measures implemented in response to these risks are
still in place and detailed on page 67 of the 2020 Annual Report
and Accounts.
Data Breach: On 19 May 2020, easyJet announced that it had been
the target of a cyber-attack from a highly sophisticated source.
The email address and travel details of approximately 9 million
customers were accessed and for a very small subset of customers
(2,208), credit card details were accessed. The Information
Commissioner's Office (ICO) has opened an investigation into the
cyber-attack, and a class action law firm has filed a claim against
easyJet in the High Court. The merit, likely outcome and potential
impact on easyJet of both the investigation by the ICO, and the
class action claim are subject to a number of significant
uncertainties and, therefore, any assessment of the likely outcome
or quantum cannot be made at the date of this disclosure.
OUR FINANCIAL RESULTS
Headline loss before tax increased from GBP193 million for the
six months ended 31 March 2020 to GBP701 million for the six months
ended 31 March 2021. This was mainly driven by the continued impact
of Covid-19 resulting in reduced commercial flying as travel
restrictions across Europe have been in place, to varying levels,
throughout the period. easyJet flew only 4.1 million passengers (H1
2020: 38.6 million), down 89.4% on the prior period. At constant
currency, headline loss before tax for the six months ended 31
March 2021 was GBP728 million, giving a favourable foreign exchange
impact of GBP27 million compared to last year.
Total loss before tax increased from GBP353 million for the six
months ended 31 March 2020 to GBP645 million for the six months
ended 31 March 2021. Included in total loss before tax was a sale
and leaseback gain of GBP60 million (H1 2020: GBP1 million), a
restructuring provision release of GBP25 million (H1 2020: GBPnil)
and a fair value charge of GBP29 million (H1 2020: GBP164
million).
Our easyJet Holidays business forms a separate operating segment
to the Airline. All per seat metrics are for the Airline business
only, as the inclusion of hotel-related revenue and costs from the
Holidays business will distort the RPS and CPS metrics as these are
not directly correlated to the seats flown by the Airline business.
The segmental note within the abbreviated consolidated financial
statements shows the contribution of each operating segment towards
the Group's performance. All seats flown directly relate to the
Airline business and are therefore included in total for the per
seat metrics. The overall contribution of the Holidays segment to
the financial performance of the consolidated Group for the six
months ended 31 March 2021 is not significant. In presenting the
Airline-only financial performance metrics below this does not
materially distort the financial performance of the Group as a
whole.
Amounts presented at constant currency are an alternative
performance measure and not determined in accordance with
International Financial Reporting Standards but provide relevant
and comparative reporting for users.
FINANCIAL OVERVIEW
GBP million (Reported) -- Group H1 2021 H1 2020
================================= ========= ========
Group revenue 240 2,382
Headline costs excluding fuel
and balance sheet FX gain (868) (2,041)
Balance sheet foreign exchange 24 -
gain
Fuel (97) (534)
Group headline loss before tax (701) (193)
================================== ========= ========
Non-headline items 56 (160)
================================== ========= ========
Group total loss before tax (645) (353)
================================== ========= ========
Taxation 96 29
================================== ========= ========
Group total loss after tax (549) (324)
================================== ========= ========
GBP per seat -- Airline only H1 2021 H1 2020
================================= ========= ========
Airline revenue 36.93 55.60
Headline costs excluding fuel
and balance sheet FX gain (133.61) (47.24)
Balance sheet foreign exchange 3.69 -
gain
Fuel (15.08) (12.51)
================================== ========= ========
Airline headline loss before
tax (108.07) (4.15)
================================== ========= ========
Non-headline items 8.77 (3.77)
================================== ========= ========
Airline total loss before tax (99.30) (7.92)
================================== ========= ========
Taxation 15.07 0.62
================================== ========= ========
Airline total loss after tax (84.23) (7.30)
================================== ========= ========
The total number of passengers carried decreased by 89.4% to 4.1
million (H1 2020: 38.6 million), which was driven by an 85%
reduction in seats flown to 6.4 million seats (H1 2020: 42.7
million seats) and a 26.6 percentage point reduction in load factor
to 63.7% (H1 2020: 90.3%). This reflects the travel restrictions
imposed across Europe and the continued softness in macro-level
customer demand as a result of Covid-19.
Total revenue decreased by 89.9% to GBP240 million (H1 2020:
GBP2,382 million) and decreased by 90.2% at constant currency.
Airline revenue per seat decreased by 33.6% to GBP36.93 (H1 2020:
GBP55.60) and decreased by 35.3% at constant currency. The decrease
in Airline revenue per seat is a consequence of reduced loads,
reflecting the continued softness in macro-level demand, driven by
the continued travel restrictions across Europe. However, we have
proactively managed our capacity and yields to maintain a balance
between ensuring we are competitive on key routes, whilst
protecting yields to ensure our flying remains contribution
positive.
Headline Airline cost per seat excluding fuel increased by
175.0% to GBP129.92 (H1 2020: GBP47.24), and increased by 181.7% at
constant currency. The Airline cost per seat excluding fuel
increase is mainly as a result of reduced flying as fixed operating
costs are being spread across less flying capacity. Cost increases
were partially offset by decisive action taken by management in
order to remove cost and non-critical expenditure from the business
which is being delivered through our cost-out programme.
Airline fuel cost per seat increased by 20.5% to GBP15.08 (H1
2020: GBP12.51) and by 22.5% at constant currency, primarily as a
result of the sale of EU ETS credits in H1 2020, which resulted in
the remeasurement of the ETS liability and reduced H1 2020 fuel
costs in the income statement by GBP55 million.
A non-headline gain of GBP56 million (H1 2020: GBP160 million
loss) was recognised in the period consisting of a GBP60 million
gain as a result of the sale and leaseback of 35 aircraft (H1 2020:
10) in the period and a GBP25 million release in relation to our
restructuring provision as agreements with unions progress. This
was partially offset by a GBP29 million net fair value adjustment
for hedge discontinuation. Hedge discontinuation occurred as a
result of actual and estimated requirements for fuel volumes
falling below the amount that was hedged. During H1 2021 foreign
exchange gains or losses arising from the re-translation of
monetary assets and liabilities held on the balance sheet have been
recognised as headline items, and will no longer be reported as
non-headline items (see note 1 to the abbreviated back half).
Corporate tax has been recognised at a statutory effective rate
of 14.9% (H1 2020: 8.3%) based on the anticipated tax rate for the
full year ending 30 September 2021, resulting in a tax credit of
GBP96 million (H1 2020: GBP29 million credit) during the
period.
Loss per share and dividends per share
H1 2021 H1 2020 Change
pence pence pence
per share per share per share
============================================= =========== =========== ===========
Basic headline loss per share (126.9) (49.4) (77.5)
Basic total loss per share (121.2) (82.4) (38.8)
Ordinary dividend per share paid during the
period - 43.9 (43.9)
============================================== =========== =========== ===========
Basic headline loss per share increased by 77.5 pence and basic
total loss per share increased by 38.8 pence as a consequence of
the GBP381 million increase in the headline loss after tax and a
GBP225 million increase in the total loss after tax in the six
months to 31 March 2021 respectively.
In line with easyJet's dividend policy of a pay-out ratio of 50%
of headline profit after tax, the board did not recommend the
payment of a dividend in respect of the year to 30 September 2020.
No dividend payments have been made in the period (H1 2020: 43.9
pence per share).
EXCHANGE RATES
The proportion of revenue and costs denominated in currencies
other than Sterling are outlined below:
Revenue Costs
================== ====================
H1 2021 H1 2020 H1 2021 H1 2020
================================= ======== ======== ========= =========
Sterling 30% 42% 67% 33%
Euro 54% 48% 5% 32%
US dollar 0% 1% 22% 28%
Other (principally Swiss franc) 16% 9% 6% 7%
================================== ======== ======== ========= =========
Average exchange rates H1 2021 H1 2020
================================= ======== ======== ========= =========
Euro - revenue EUR1.10 EUR1.14
Euro - costs EUR1.11 EUR1.17
US dollar $1.30 $1.32
Swiss franc CHF 1.33 CHF 1.29
================================== ======== ======== ========= =========
The Group's foreign currency risk management policy aims to
reduce the impact of fluctuations in exchange rates on future cash
flows.
As a result of the significantly reduced flying programme, and
lower expected capacity going forward, the Group's near term
foreign currency exposures reduced, relating specifically to fuel
cost and foreign currency revenues. This caused a proportion of
previously hedge accounted derivative financial instruments to be
recorded as discontinued as a result of the hedge no longer being
effective based on projections of future demand. The fair value of
these trades at the time of discontinuation has been recognised as
a non-headline item.
Subsequent fair value movements on discontinued hedges have been
recorded as headline items. easyJet actively closes out
discontinued hedges to minimise its exposure to fair value movement
through the headline income statement.
easyJet continues to hedge contractual exposures (lease, capex)
but has decreased the amount of operational hedging that is taken
out for future periods until there is greater clarity over
demand.
During the period there was a GBP24 million gain arising from
foreign exchange movements from the prior year revaluations. This
is in addition to the foreign exchange impacts shown below.
Headline exchange rate impact Euro Swiss franc US dollar Total
Favourable/(adverse) GBP million GBP million GBP million GBP million
=============================== ============ ============ ============ ============
Total revenue 4 2 - 6
Fuel (1) - 2 1
Headline costs excluding
fuel (8) (1) 5 (4)
================================ ============ ============ ============ ============
Headline loss before tax (5) 1 7 3
================================ ============ ============ ============ ============
Non-Headline exchange rate Euro Swiss franc US dollar Total
impact
Favourable/(adverse) GBP million GBP million GBP million GBP million
=============================== ============ ============ ============ ============
Non-headline items 9 - (21) (12)
================================ ============ ============ ============ ============
Non-headline items before
tax 9 - (21) (12)
================================ ============ ============ ============ ============
FINANCIAL PERFORMANCE
Revenue
GBPm Group H1 2021 H1 2020
====================== ======== ========
Passenger revenue 170 1,833
Ancillary revenue 70 549
Total revenue 240 2,382
======================= ======== ========
GBP Airline per seat H1 2021 H1 2020
====================== ======== ========
Passenger revenue 26.47 42.93
Ancillary revenue 10.46 12.67
Total revenue 36.93 55.60
======================= ======== ========
The total number of passengers carried decreased by 89.4% to 4.1
million (H1 2020: 38.6 million), which was driven by an 85%
reduction in seats flown to 6.4 million seats (H1 2020: 42.7
million seats) and a 26.6 percentage point reduction in load factor
to 63.7% (H1 2020: 90.3%). This reflects the travel restrictions
imposed across Europe and the continued softness in macro-level
customer demand as a result of Covid-19.
Total revenue decreased by 89.9% to GBP240 million (H1 2020:
GBP2,382 million) and decreased by 90.2% at constant currency.
Revenue from the Holidays segment has been very minimal, mainly due
to the UK lockdown from early January.
Airline revenue per seat decreased by 33.6% to GBP36.93 (H1
2020: GBP55.60) and decreased by 35.3% at constant currency. The
decrease in Airline revenue per seat is a consequence of reduced
loads, reflecting the continued softness in macro-level demand,
driven by the continued travel restrictions across Europe. This was
mitigated by proactively thinned poorer performing routes,
maintaining a balance between ensuring we are competitive on key
routes, whilst protecting yields on remaining flights to ensure our
flying remains contribution positive.
Q1 2021 saw frequent changes in travel restrictions and then
positive vaccine announcements in early November. Since
mid-December, a new virus variant resulted in further restrictions
being imposed across much of the UK, followed by a full lockdown
announced on 4 January 2021, with international travel only
permitted for exceptional reasons. This UK lockdown continued
throughout Q2 2021 alongside a third wave of the virus spreading
across Europe resulting in a further tightening of travel
restrictions across parts of Europe during March.
During the period yields have been pro-actively managed to
ensure price competitiveness on key routes, whilst optimising
yields where demand has been inelastic to maintain a profitable
flying programme.
Ancillary revenue per seat decreased by 17.4% to GBP10.46 (H1
2020: GBP12.67) and decreased 19.5% at constant currency, impacted
by lower loads. Cabin bags initiatives including the new Standard
Plus fare, are performing ahead of expectations in H1 2021.
Headline costs excluding fuel
H1 2021 H1 2020
=============================== ========================= =====================
Airline Airline
Cost Cost per
per seat Group seat
Group GBP per GBP GBP per
GBP million seat million seat
=============================== ============= ========== ========= ==========
Operating costs/(income)
Airports, ground handling and
other operating costs 86 13.14 715 16.65
Crew 224 34.87 398 9.32
Navigation 25 3.84 152 3.57
Maintenance 109 17.01 191 4.47
Selling and marketing 17 2.54 78 1.57
Other costs 158 23.72 241 5.45
Other income (7) (1.03) (15) (0.36)
================================ ============= ========== ========= ==========
612 94.09 1,760 40.67
============= ========== ========= ==========
Ownership costs
Aircraft dry leasing 2 0.24 - -
Depreciation 204 31.80 254 5.95
Amortisation 11 1.44 8 0.17
Net finance charges 15 2.35 19 0.45
================================ ============= ========== ========= ==========
232 35.83 281 6.57
============= ========== ========= ==========
Headline costs excluding fuel 844 129.92 2,041 47.24
================================ ============= ========== ========= ==========
Group headline cost per seat excluding fuel increased by 175% to
GBP129.92 (H1 2020: GBP47.24), and increased by 181.7% at constant
currency.
Included within the Group headline costs excluding fuel of
GBP844 million, GBP12 million related to the Holidays business
mainly driven by headcount and hotel costs for those holidays which
proceeded.
Operating costs and income
Group headline airports, ground handling and other operating
costs decreased by 88% to GBP86 million, and Airline cost per seat
decreased by 21.1% to GBP13.14 (H1 2020: GBP16.65), and by 23.2% at
constant currency. Airport charges were reduced as a result of the
lower flown load factors in the period, partially offset by ground
handling costs which have increased as a result of our cost base
servicing a reduced schedule due to the impact of the travel
restrictions seen across Europe.
Group headline crew costs decreased by 43.7% to GBP224 million
(H1 2020: GBP398 million), and Airline cost per seat increased by
274.1% to GBP34.87, and by 268.0% at constant currency. This cost
per seat increase was primarily due to reductions in flying volumes
impacting on crew productivity as well as fixed payroll costs being
spread over lower flying capacity, partially offset by furlough
schemes which have been utilised where available.
Group headline navigation costs decreased by 83.5% to GBP25
million, and Airline cost per seat increased by 7.6% to GBP3.84 (H1
2020: GBP3.57) and by 3.8% at constant currency, as a result of an
increase in sector length of our commercial flying compared to the
comparative period.
Group headline maintenance costs decreased by 42.9% to GBP109
million, and Airline cost per seat increased by 280.5% to GBP17.01
(H1 2020: GBP4.47), and increased by 278.7%% at constant currency.
This cost per seat increase was driven by the fixed element of our
maintenance costs which have been spread over a much reduced
capacity in the period.
Group headline other costs decreased by 34.4% to GBP158 million,
and Airline cost per seat increased by 335.2% to GBP23.72 (H1 2020:
GBP5.45), and by 334.8% at constant currency. The significant
driver in the increase in the cost per seat is a result of fixed
costs being spread over lower flown capacity.
Ownership costs
Depreciation costs have decreased from GBP254 million in H1 2020
to GBP204 million in H1 2021. This decrease was driven by reduced
maintenance-related depreciation as a result of lower flying
volumes, and a larger benefit arising from discounting the
maintenance provision due to changes in underlying interest rates
during the six months ended 31 March 2021.
Net finance charges have decreased from GBP19 million in H1 2020
to GBP15 million in H1 2021. Foreign exchange gains/losses from the
revaluation of monetary assets and liabilities have been
reclassified from non-headline to headline items in the current
period, which has resulted in a GBP26 million gain within headline
net finance charges (see note 1 for further details). Additionally
there was further fair value movement on discontinued hedges in H1
2021 up until the point these positions were closed out. This
resulted in a GBP12 million gain which is reflected in Net finance
charges above (H1 2020 nil). These more than offset the increased
interest payable from additional debt facilities and increased
leased aircraft resulting in higher lease-related interest.
Fuel costs
H1 2021 H1 2020
======================== ========================
Group Airline Group Airline
GBP million GBP per GBP million GBP per
seat seat
====== ============= ========= ============= =========
Fuel 97 15.08 534 12.51
======= ============= ========= ============= =========
Fuel costs of GBP97 million were GBP437 million lower than H1
2020. Fuel cost per seat of GBP15.08 was 20.5% higher than last
year, and increased by 22.5% at constant currency.
During the first half of the year the average market price for
jet fuel decreased by 32% to $382 per tonne from $563 per tonne in
H1 2020. The effective fuel price movement for the first half of
the year saw an increase of 5% to GBP502 per tonne (H1 2020:
GBP476). The increase in effective rate was due to a one-off credit
of GBP55 million in H1 2020, which came from the sale of EU ETS
credits that resulted in a remeasurement of the ETS liability and a
reduction in fuel costs in H1 2020. easyJet was unable to benefit
from the fall in market prices as it was hedged at a higher price
than the market and because the reduction in flying had resulted in
a greater proportion of fuel being hedged, than would have been the
case under normal operating conditions.
The Group uses jet fuel derivatives to hedge against sudden and
significant increases in jet fuel prices to mitigate volatility in
the income statement in the short term. In order to manage the risk
exposure, jet fuel derivative contracts are used in line with the
Board approved policy to hedge between 65% and 85% of estimated
exposures up to 12 months in advance, and to hedge between 45% and
65% of estimated exposures from 13 up to 24 months in advance.
As a result of the significant grounding of fleet and a lower
expected flying capacity for the period, the Group's near term
exposures for jet fuel and foreign currency reduced, causing a
proportion of previously hedge accounted derivative financial
instruments to be recorded as discontinued. Fair value associated
with these financial instruments at the time of discontinuation,
have been recognised as non-headline items.
Non-headline items
H1 2021 H1 2020
GBP million GBP million
===================================== ============ ============
Sale and leaseback gain 60 1
Restructuring 25 -
Balance sheet foreign exchange gain - 3
Fair value adjustments charge (29) (164)
====================================== ============ ============
Non-headline gain/(loss) before tax 56 (160)
====================================== ============ ============
Non-headline gain before tax of GBP56 million (H1 2020: GBP160
million loss) comprises:
-- A GBP60 million gain as a result of the sale and leaseback of
35 aircraft in the period (H1 2020: GBP1 million gain as a result
of the sale and leaseback of 10 aircraft);
-- A GBP25 million credit in relation to the restructuring,
which was started in H2 2020, as the programme continues to
progress (H1 2020: nil charge);
-- The re-translation of monetary assets and liabilities held on
the balance sheet have been recognised as headline items in H1 2021
(H1 2020: GBP3 million gain); and
-- A fair value adjustment for hedge discontinuation of GBP28
million net charge (H1 2020: GBP163 million net charge). Due to the
reduced commercial flying as a result of Covid-19, easyJet was in a
significantly over-hedged position from both a jet fuel and FX
perspective, with a loss recognised in the period. In addition,
there is a GBP1 million charge (H1 2020: GBP1 million charge) for
hedge ineffectiveness on Cross Currency Interest Rate Swaps hedging
Eurobond debt.
NET DEBT AND FINANCIAL POSITION
Summary net debt reconciliation
The table below presents cash flows on a net debt basis. This is
different to the GAAP presentation of the statement of cash flows
in the condensed financial information.
H1 2021 H1 2020 Change
GBP million GBP million GBP million
================================================ ============ ============ ============
Operating loss (601) (173) (428)
Depreciation and amortisation 215 262 (47)
Unearned revenue movement 48 (95) 143
Other net working capital movement (731) 460 (1,191)
Net tax paid (5) (20) 15
Net capital expenditure (73) (452) 379
Net proceeds from sale and operating leaseback
of aircraft 810 114 696
Purchase of own shares for employee share
schemes (3) (6) 3
Repayment of capital element of leases (174) (111) (63)
Foreign exchange impact (114) (19) (95)
Net funding activities (148) - (148)
Other (114) 73 (187)
Ordinary dividend paid - (174) 174
================================================= ============ ============ ============
Net debt at the beginning of the period (1,125) (326) (799)
================================================= ============ ============ ============
Net debt at the end of the period (2,015) (467) (1,548)
================================================= ============ ============ ============
Net debt as at 31 March 2021 was GBP2,015 million (31 March
2020: GBP467 million) and comprised cash and cash equivalents of
GBP2,335 million (31 March 2020: GBP1,388 million), borrowings of
GBP3,323 million (31 March 2020: GBP1,319 million) and lease
liabilities of GBP1,027 million (31 March 2020: GBP536
million).
Debt has increased by GBP1,548 million largely driven by two new
sources of debt. A new five-year term loan facility of $1.87
billion (c.GBP1.4 billion) was entered into, underwritten by a
syndicate of banks and supported by a partial guarantee from UK
Export Finance under their Export Development Guarantee scheme.
easyJet drew down $1.05 billion of this in the period. In addition,
a EUR1.2 billion 7 year bond was issued in the period under the
Euro Medium Term Note (EMTN) programme. The bond was issued out of
easyJet FinCo BV registered in the Netherlands and was guaranteed
by easyJet Airline Company Limited (EACL) and easyJet PLC.
The unearned revenue movement has increased by GBP143 million,
largely driven by the significant decrease of the balance in H1
2020 due to the entire fleet being fully grounded for 11 weeks at
the start of the pandemic.
Other working capital movement has decreased by GBP1,191 million
due largely to a decrease in trade payables of GBP448 million (H1
2020: GBP603 million increase) driven by the settlement of invoices
from suppliers on delayed payment plans.
Net capital expenditure includes pre-delivery payments relating
to aircraft purchases There were no final delivery payments for the
acquisition aircraft in the period (H1 2020: eight aircraft). The
sale and leaseback of 35 aircraft in H1 2021 (H1 2020: 10 aircraft)
resulted in a net cash inflow of GBP810 million (H1 2020: GBP114
million).
easyJet made corporation tax payments totalling GBP5 million
during the period (H1 2020: GBP20 million).
Summary consolidated statement of financial position
31 March 30 September Movement
2021 2020
GBP million GBP million GBP million
========================================== ============ ============= ============
Goodwill and other intangible assets 589 597 (8)
Property, plant and equipment (excluding
RoU assets) 3,733 4,409 (676)
Right of use assets 1,078 644 434
Derivative financial instruments (58) (327) 269
Equity investments 33 33 -
Other assets (excluding cash and cash
equivalents) 403 364 39
Unearned revenue (662) (614) (48)
Trade and other payables (801) (1,242) 441
Other liabilities (excluding debt) (718) (840) 122
=========================================== ============ ============= ============
Capital employed 3,597 3,024 573
=========================================== ============ ============= ============
Cash and cash equivalents 2,335 2,316 19
Debt (excluding lease liabilities) (3,323) (2,731) (592)
Lease liabilities (1,027) (710) (317)
Net assets 1,582 1,899 (317)
=========================================== ============ ============= ============
Net debt (2,015) (1,125) (890)
=========================================== ============ ============= ============
* excludes restricted cash
The net book value of property, plant and equipment excluding
right of use assets has decreased by GBP676 million due to the sale
and leaseback of 35 aircraft during the year. The closing balance
of right of use assets was GBP1,078 million, an increase of GBP434
million reflecting the additions as a result of the sale and
leasebacks, partially offset by leased aircraft returns.
Derivative financial instruments as at 31 March 2021 were in a
GBP58 million net liability position, a GBP269 million movement
from the GBP327 million net liability position as at 30 September
2020. This movement is largely down to derivatives maturing and
increases in jet fuel prices.
The equity investment of GBP33 million (2020: GBP33 million)
represents a 13.2% shareholding in a non-listed entity, The Airline
Group Limited, which has a shareholding of 41.9% in NATS Holdings
Limited - the provider of UK air traffic control services for the
UK. This investment is held at fair value, with movements
recognised in other comprehensive income.
Other assets have increased by GBP39 million, mainly driven by
increased current intangible assets relating to our carbon
offsetting scheme.
Unearned revenue increased by GBP48 million which is expected
given the seasonality of bookings, but was further enhanced by
Summer 2022 flights being on sale.
In January easyJet drew $1.05 billion from a new five-year term
loan facility for $1.87 billion (c.GBP1.4 billion) which was
underwritten by a syndicate of banks and supported by a partial
guarantee from UK Export Finance under their Export Development
Guarantee scheme. These funds were used to repay and cancel the
fully drawn $500 million Revolving Credit Facility and to repay
term loans of $245 million and GBP200 million.
In March, a 7 year bond of EUR1.2 billion under the Euro Medium
Term Note programme was issued. In addition, the Government Covid
Corporate Finance Facility of GBP300 million was repaid with the
remaining GBP300 million to be repaid in November 2021.
Trade and other payables have decreased by GBP441 million as a
result of reduced number of suppliers on payment plans and fewer
cancellations being owed back to customers at H1 2021 compare to H1
2020.
Other liabilities have decreased by GBP120 million primarily due
to reduced maintenance and restructuring provisions.
Return on Capital Employed (ROCE)
ROCE Calculation
Reported GBPm H1 2021 H1 2020
======================================= ======== ========
Headline loss before interest and tax (686) (174)
UK corporation tax rate 19% 19%
======================================== ======== ========
Normalised headline operating loss
after tax (NOPAT) (556) (141)
======================================== ======== ========
Average shareholders' equity 1,741 2,539
Average net debt 1,570 397
======================================== ======== ========
Average adjusted capital employed 3,311 2,936
======================================== ======== ========
Headline Return on capital employed (16.8%) (4.8%)
======================================== ======== ========
Total Return on capital employed (14.7%) (4.8%)
======================================== ======== ========
Headline ROCE for the period was (16.8)%, a worsening of 12
percentage points on the prior period, driven by an increase in the
loss for the period. Total ROCE for the period was (14.7)%, a
worsening of 9.9 percentage points on the prior year. The total
reported operating loss before interest and tax was favourable to
the headline loss due to the inclusion of the sale and leaseback
gains, and the restructuring provision release.
ROCE is calculated by taking operating loss/profit, less tax at
the prevailing UK corporation tax rate at the end of the period,
divided by average capital employed. Capital employed is
Shareholders' equity plus net debt.
KEY STATISTICS
OPERATING MEASURES
Increase/
H1 2021 H1 2020 (decrease)
----------------------------------------------- --------- -------- ------------
Seats flown (millions) 6.41 42.7 (85.0%)
Passengers (millions) 4.09 38.6 (89.4%)
Load factor 63.7% 90.3% (26.6ppt)
Available seat kilometres (ASK) (millions) 8,088 46,753 (82.7%)
Revenue passenger kilometres (RPK) (millions) 5,136 42,920 (88.0%)
Average sector length (kilometres) 1,261 1,095 15.2%
Sectors 35,100 244,235 (85.6%)
Block hours 73,311 474,082 (84.5%)
Number of aircraft owned/leased at end of
period 330 337 (2.1%)
Average number of aircraft owned/leased
during period 338 333.4 1.4%
Number of aircraft operated at end of period 36 302 (88.1%)
Average number of aircraft operated during
period 58 294.7 (80.3%)
Number of routes operated at end of period 918 1,104 (16.8%)
Number of airports served at end of period 151 161 (6.2%)
------------------------------------------------ --------- -------- ------------
FINANCIAL MEASURES
Increase/
H1 2021 H1 2020 (decrease)
----------------------------------------------- --------- -------- ------------
Total return on capital employed (14.7%) (4.8%) (9.9ppt)
Headline return on capital employed (16.8%) (4.8%) (12.0ppt)
Liquidity per 100 seats (GBPm) 5.2 3.2 62.5%
Total Airline loss before tax per seat (GBP) (99.30) (7.92) 1,153.3%
Headline Airline loss before tax per seat
(GBP) (108.07) (4.15) 2,504.1%
Total Airline loss before tax per ASK (pence) (7.87) (0.72) 987.9%
Headline Airline loss before tax per ASK
(pence) (8.57) (0.38) 2,157.0%
------------------------------------------------ --------- -------- ------------
Revenue
----------------------------------------------- --------- -------- ------------
Airline revenue per seat (GBP) 36.93 55.60 (33.6%)
Airline revenue per seat at constant currency
(GBP) 36.00 55.60 (35.3%)
Airline revenue per ASK (pence) 2.93 5.08 (42.3%)
Airline revenue per ASK at constant currency
(pence) 2.91 5.08 (42.6%)
Airline revenue per passenger (GBP) 57.96 61.56 (5.8%)
Airline revenue per passenger at constant
currency (GBP) 57.70 61.56 (6.3%)
------------------------------------------------ --------- -------- ------------
Costs
----------------------------------------------- --------- -------- ------------
Per seat measures
Airline headline cost per seat (GBP) (145.00) (59.75) 142.7%
Airline non-headline per seat (GBP) 8.77 (3.77) (332.6%)
Airline total cost per seat (GBP) (136.23) (63.52) 114.5%
Airline headline cost per seat excluding
fuel (GBP) (129.92) (47.24) 175.0%
Airline headline cost per seat excluding
fuel at constant currency (GBP) (133.07) (47.24) 181.7%
Airline total cost per seat excluding fuel
(GBP) (121.15) (51.01) 137.5%
Airline total cost per seat excluding fuel
at constant currency (GBP) (122.48) (51.01) 140.1%
Per ASK measures
Airline headline cost per ASK (pence) (11.49) (5.45) 110.8%
Airline non-headline cost per ASK (pence) 0.70 (0.34) (304.4%)
Airline total cost per ASK (GBP) (10.80) (5.80) 86.2%
Airline headline cost per ASK excluding
fuel (pence) (10.30) (4.32) 138.4%
Airline headline cost per ASK excluding
fuel at constant currency (pence) (10.55) (4.32) 144.2%
Airline total cost per ASK excluding fuel
(pence) (9.61) (4.66) 106.1%
Airline total cost per ASK excluding fuel
at constant currency (pence) (9.71) (4.66) 108.4%
------------------------------------------------ --------- -------- ------------
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
Condensed consolidated income statement (unaudited)
Six months ended 31 March
2021 2020
---------------------------------------- -----------------------------------------
Non-headline Non-headline
(note (note
Headline 3) Total Headline 3) Total
----------- ------------- ------------ ------------ ------------- ------------
GBP
Notes million GBP million GBP million GBP million GBP million GBP million
----------------- ------- ----------- ------------- ------------ ------------ ------------- ------------
Passenger revenue 170 - 170 1,833 - 1,833
Ancillary revenue 70 - 70 549 - 549
------------------ ------- ----------- ------------- ------------ ------------ ------------- ------------
Total revenue 240 - 240 2,382 - 2,382
Fuel (97) - (97) (534) - (534)
Airports, ground handling
and other
operating costs (86) - (86) (715) - (715)
Crew (224) - (224) (398) - (398)
Navigation (25) - (25) (152) - (152)
Maintenance (109) - (109) (191) - (191)
Selling and
marketing (17) - (17) (78) - (78)
Other costs (158) 17 (141) (241) 1 (240)
Other income 7 68 75 15 - 15
------------------ ------- ----------- ------------- ------------ ------------ ------------- ------------
EBITDAR (469) 85 (384) 88 1 89
Aircraft dry
leasing (2) - (2) - - -
Depreciation 8 (204) - (204) (254) - (254)
Amortisation of
intangible
assets (11) - (11) (8) - (8)
------------------ ------- ----------- ------------- ------------ ------------ ------------- ------------
Operating
(loss)/profit (686) 85 (601) (174) 1 (173)
Interest receivable and
other financing
income 26 25 51 8 69 77
Interest payable
and other
financing
charges (41) (54) (95) (27) (230) (257)
------------------ ------- ----------- ------------- ------------ ------------ ------------- ------------
Net finance
charge (15) (29) (44) (19) (161) (180)
(Loss)/profit
before tax (701) 56 (645) (193) (160) (353)
Tax
(charge)/credit 4 126 (30) 96 (1) 30 29
(Loss)/profit for the
period (575) 26 (549) (194) (130) (324)
--------------------------- ----------- ------------- ------------ ------------ ------------- ------------
Loss per share,
pence
Basic 5 (121.2) (82.4)
------------------ ------- ----------- ------------- ------------ ------------ ------------- ------------
Condensed consolidated statement of comprehensive income
(unaudited)
Six months Six months
ended ended
31 March 2021 31 March 2020
Notes GBP million GBP million
--------------------------------------------- ------ -------------- --------------
Loss for the period (549) (324)
Other comprehensive loss
Items that may be reclassified to the
income statement
Cash flow hedges
Fair value gains/(losses) in the period 281 (572)
Gains transferred to income statement (27) (66)
Related tax (charge)/credit 4 (53) 91
Hedge discontinuation losses/(gains)
transferred to income statement 28 163
Cost of hedging (2) (4)
Items that will not be reclassified
to the income statement
Remeasurement of post-employment benefit
obligations (2) 8
Related deferred tax charge 4 (1) (1)
Fair value loss on equity investment - (15)
---------------------------------------------- ------ -------------- --------------
224 (396)
Total comprehensive loss for the period (325) (720)
---------------------------------------------- ------ -------------- --------------
Condensed consolidated statement of financial position
(unaudited)
31 March
30 September
2021 2020
Notes GBP million GBP million
---------------------------------------- ------ ------------ -------------
Non-current assets
Goodwill 365 365
Other intangible assets 224 232
Property, plant and equipment 8 4,811 5,053
Derivative financial instruments 104 89
Equity investments 33 33
Restricted cash 4 5
Other non-current assets 137 133
----------------------------------------- ------ ------------ -------------
5,678 5,910
Current assets
Trade and other receivables 150 193
Intangible assets 100 12
Derivative financial instruments 33 21
Current tax assets 3 7
Restricted cash 9 14
Money market deposits - 32
Cash and cash equivalents 2,335 2,284
----------------------------------------- ------ ------------ -------------
2,630 2,563
Current liabilities
Trade and other payables (801) (1,242)
Unearned revenue (609) (614)
Borrowings 9 (300) (987)
Lease liabilities (194) (224)
Derivative financial instruments (129) (352)
Provisions for liabilities and charges 10 (307) (407)
----------------------------------------- ------ ------------ -------------
(2,340) (3,826)
Net current assets/ (liabilities) 290 (1,263)
Non-current liabilities
Unearned revenue (53) -
Borrowings 9 (3,023) (1,744)
Lease liabilities (833) (486)
Derivative financial instruments (66) (85)
Non-current deferred income (4) (5)
Post-employment benefit obligations (37) (45)
Provisions for liabilities and charges 10 (361) (332)
Deferred tax (9) (51)
----------------------------------------- ------ ------------ -------------
(4,386) (2,748)
Net assets 1,582 1,899
----------------------------------------- ------ ------------ -------------
Shareholders' equity
---------------------------------------- ------ ------------ -------------
Share capital 125 125
Share premium 1,051 1,051
Hedging reserve (8) (236)
Cost of hedging reserve (1) 1
Translation reserve 1 (2)
Retained earnings 414 960
----------------------------------------- ------ ------------ -------------
Total Equity 1,582 1,899
----------------------------------------- ------ ------------ -------------
Condensed consolidated statement of cash flows (unaudited)
Six months Six months
ended ended
31 March 31 March
2021 2020
Notes GBP million GBP million
---------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Cash (used)/generated from operations 12 (1,118) 472
Ordinary dividends paid 7 - (174)
Interest and other financing charges
paid (71) (25)
Interest and other financing income received - 34
Net tax paid (5) (20)
----------------------------------------------- ------ ------------ ------------
Net cash (used)/generated from operating
activities (1,194) 287
Cash flows from investing activities
Purchase of property, plant and equipment (71) (392)
Purchase of non-current intangible assets (2) (60)
Net increase in money market deposits 32 118
Net proceeds from sale and leaseback
of aircraft 810 114
Net cash (used)/generated from investing
activities 769 (220)
Cash flows from financing activities
Purchase of own shares for employee share
schemes (3) (6)
Proceeds from Eurobond issue and UKEF 1,804 -
Repayment of bank loans and other borrowings (1,043) -
Repayment of capital element of leases (174) (111)
Net decrease in restricted cash 6 -
---------------------------------------------- ------ ------------ ------------
Net cash (used)/generated by financing
activities 590 (117)
Effect of exchange rate changes (114) (19)
Net decrease in cash and cash equivalents 51 (69)
Cash and cash equivalents at beginning
of period 2,284 1,285
Cash and cash equivalents at end of period 2,335 1,216
----------------------------------------------- ------ ------------ ------------
Condensed consolidated statement of changes in equity
(unaudited)
Cost
Share Share Hedging of hedging Translation Retained
capital premium reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
million million million million GBP million million million
--------------- ---------- ----------- ----------- ----------- ------------ ----------- -----------
At 1 October
2020 125 1,051 (236) 1 (2) 960 1,899
Loss for the
period - - - - - (549) (549)
Other
comprehensive
expense - - 228 (2) - (2) 224
Total
comprehensive
loss - - 228 (2) - (551) (325)
Dividends paid
(note
7) - - - - - - -
Share
incentive
schemes
Value of
employee
services - - - - - 8 8
Purchase of
own shares - - - - - (3) (3)
Currency
translation
differences - - - - 3 - 3
--------------- ---------- ----------- ----------- ----------- ------------ ----------- -----------
At 31 March
2021 125 1,051 (8) (1) 1 414 1,582
--------------- ---------- ----------- ----------- ----------- ------------ ----------- -----------
Cost
Share Share Hedging of hedging Translation Retained
capital premium reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
million million million million GBP million million million
--------------- ---------- ----------- ----------- ----------- ------------ ----------- -----------
At 1 October
2019 108 659 (4) 8 (1) 2,215 2,985
Loss for the
period - - - - - (324) (324)
Other
comprehensive
expense - - (384) (4) - (8) (396)
Total
comprehensive
loss - - (384) (4) - (332) (720)
Dividends paid
(note
7) - - - - - (174) (174)
Share
incentive
schemes
Value of
employee
services - - - - - 8 8
Purchase of
own shares - - - - - (6) (6)
Currency
translation
differences - - - - (1) - (1)
--------------- ---------- ----------- ----------- ----------- ------------ ----------- -----------
At 31 March
2020 108 659 (388) 4 (2) 1,711 2,092
--------------- ---------- ----------- ----------- ----------- ------------ ----------- -----------
The hedging reserve comprises the effective portion of the
cumulative net change in fair value of cash flow hedging
instruments relating to highly probable transactions that are
forecast to occur after the period end.
Notes to the condensed consolidated interim financial
information (unaudited)
1. General information
easyJet plc (the Company) is a Company registered in England
(Company no. 03959649) domiciled in the United Kingdom (UK). The
condensed consolidated interim financial information of the Company
as at and for the six months ended 31 March 2021 comprise the
Company and its interest in its subsidiaries (together referred to
as the Group). Its principal business is that of a low-cost airline
carrier operating principally in Europe. The consolidated financial
statements of the Group as at and for the year ended 30 September
2020 are available upon request to the Company Secretary from the
Company's registered office at Hangar 89, London Luton Airport,
Luton, Bedfordshire, LU2 9PF or are available on the corporate
website at corporate.easyJet.com.
Basis of preparation
The condensed consolidated interim financial information has
been prepared in accordance with IAS 34 Interim Financial Reporting
(IAS 34) adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority. It
should be read in conjunction with the Annual Report and Accounts
for the year ended 30 September 2020, which were prepared in
accordance with applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
The annual financial statements for the Group for the year ended
30 September 2021 will be prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and in accordance with IFRSs adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
The interim financial information does not constitute statutory
accounts within the meaning of sections 434 and 435 of the
Companies Act 2006. Statutory accounts for the year ended 30
September 2020 were approved by the Board of Directors on 17
November 2020, and have been delivered to the Registrar of
Companies. The report of the auditors was unqualified.
The Group's financial risk management objectives and policies
are materially consistent with that disclosed in the consolidated
financial statements as at and for the year ended 30 September
2020.
Going concern
In adopting the going concern basis for preparing these interim
financial statements, the Directors have considered easyJet's
business activities, together with factors likely to affect its
future development and performance, as well as easyJet's principal
risks and uncertainties.
Unprecedented levels of travel restrictions continue to be
imposed by governments across our markets as a result of the
COVID-19 pandemic. The speed of vaccine programmes, efficacy of
vaccines, along with differing governmental quarantine and testing
requirements and travel restrictions (including the implementation
and ongoing changes to the new traffic light system in the UK), are
expected to negatively impact customer demand and load factors in
the short term when compared to historical levels of flying prior
to the pandemic.
Since the start of the pandemic, the Group has successfully
raised over GBP5.5 billion liquidity through a diverse range of
funding sources. During the six months to 31 March 2021 this
includes raising over $1.1 billion of sale and leaseback proceeds,
securing UK export financing of $1.9 billion with a five year term,
and issuing a seven year bond of EUR1.2 billion. Term loans of
GBP400 million and the $500 million revolving credit facility were
repaid and cancelled in the period resulting in an overall increase
in the debt maturity profile. The bond issuance was heavily
oversubscribed which demonstrates external confidence in the
easyJet business model and balance sheet. Cash collateralisation
triggers for key credit card acquirers have been renegotiated to
reduce the risk of collateralisation.
As at 31 March 2021 easyJet has unrestricted access to c. GBP2.9
billion of liquidity and has retained ownership of 55% of the total
fleet with 41% being unencumbered. This presents an improved
liquidity position of GBP0.6 billion since 30 September 2020 year
end.
Management's base case forecasts assumes a much delayed and
phased return to flying activity levels which represent a
significant reduction to historical revenue levels until summer
2022, together with cost saving measures. After reviewing the
current liquidity position, financial forecasts, further stress
testing of potential risks and considering the uncertainties
described above and the committed funding facilities, the Directors
have a reasonable expectation that the Group has sufficient
resources to continue in operation for the foreseeable future. For
these reasons the Directors continue to adopt the going concern
basis of accounting in preparing the Group financial
statements.
In modelling the impact of severe but plausible downside risks,
the Directors have considered travel restrictions including
government lockdowns and international travel bans, leading to a
prolonged recovery period, reduction in revenue yield, lower load
factors, cash collateralisation of unearned revenue by card
acquirers, and a reduction to anticipated forward bookings.
Individually the risks and scenarios identified are unlikely to
require significant additional management actions to support the
business.
In the unlikely event that the risks outlined above combine to
result in the low levels of flying experienced in the last 12
months to be repeated and also impact forward bookings for summer
2022, the Group will need to secure additional funding. This could
include the use of unencumbered aircraft to support further
financing together with further access to bond and equity markets.
The Group's ability to obtain sufficient additional funding in the
event of the combined severe downside scenarios represents a
material uncertainty at the date of this report that could cast
significant doubt upon the Group's ability to continue as a going
concern.
The financial statements do not include the adjustments that
would result if the Group were unable to continue as a going
concern.
Accounting policies
The accounting policies adopted are consistent with those
described in the Annual report and accounts for the year ended 30
September 2020.
New and revised standards and interpretations
A number of amended standards became applicable during the
current reporting period. The Group did not have to change its
accounting policies or make retrospective adjustment's as a result
of adopting these standards. For the amendments that became
applicable for annual reporting periods commending on or after 1
January 2020, and did not have a material impact were:
-- IAS 1 Presentation of Financial Statements & IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors -
Definition of material;
-- IFRS 3 Business Combinations - Definition of business;
-- IFRS 16 Leases - Amendments in relation to Covid-19 related rent concessions; and
-- Revised conceptual framework for financial reporting.
The Group early adopted IFRS 9 Financial instruments, IAS 39
Financial instruments: Recognition and Measurement & IFRS 7
Financial Instruments: Disclosures - Interest rate benchmark reform
(phase 1) and applied this retrospectively from 1 September 2019 as
reported within the Annual report and accounts for the year ended
30 September 2020. There was a limited impact on the accounts.
There are no standards that are issued but not yet effective
that would be expected to have a material impact on the entity in
the current or future reporting periods and on foreseeable future
transactions.
Estimates and judgements
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
amounts are based on management's best estimates, 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.
In preparing these condensed consolidated interim financial
statements, the key judgements and estimates are the same as those
that applied in the most recent published consolidated financial
statements, except for the following amendments.
The restructuring provision is a critical accounting estimate
which involves a higher degree of judgement and complexity, the
amount recognised has been updated to reflect the current best
estimate as at 31 March 2021.
The Group has concluded that the deferred tax assets will be
recoverable against the unwind of the taxable temporary differences
and the future taxable income based on the strategic plans of the
Group. The losses can be carried forward indefinitely and have no
expiry date, but it is expected that the deferred tax asset would
be recovered within a seven year time horizon.
For the period ended 31 March 2021 foreign exchange gains and
losses arising from the revaluation of monetary assets and
liabilities have been categorised as headline items within the
financial statements. No reclassification has been made to the
prior year due to the immaterial value.
2. Seasonality
The airline industry is highly seasonal and demand and yields
are significantly higher during the summer. Accordingly revenue and
profitability are usually higher in the second half of the
financial year. Historically, easyJet has reported a loss/low
profit for the first half of the financial year which the pandemic
has exacerbated in the current period.
3. Non-headline profit measures
The Group seeks to present a measure of underlying performance
which is not impacted by material non-recurring items or items
which are not considered to be reflective of the trading
performance of the business. This measure of profit is described as
'headline' and is used by the Directors to measure and monitor
performance. The excluded items are referred to as 'non-headline'
items.
Non-headline items may include impairments, amounts relating to
acquisitions and disposals, expenditure on major restructuring
programmes, the income or expense resulting from the initial
recognition of sale and leaseback transactions, fair value
adjustments on financial instruments and other particularly
significant or unusual non-recurring items. Items relating to the
normal trading performance of the business will always be included
within the headline performance.
An analysis of the amounts presented as 'non-headline' is given
below:
Six months Six months ended
ended
31 March 2021 31 March 2020
GBP million GBP million
------------------------------------------------ -------------- -----------------
Sale and leaseback gain (60) (1)
Restructuring release (25) -
Recognised in operating loss (85) (1)
------------------------------------------------- -------------- -----------------
Balance sheet foreign exchange gain - (3)
Fair value adjustments charge 29 164
------------------------------------------------- -------------- -----------------
Total non-headline (credit)/ charge before tax (56) 160
------------------------------------------------- -------------- -----------------
Tax on non-headline items 30 (30)
------------------------------------------------- -------------- -----------------
Total non-headline (credit)/ charge after tax (26) 130
------------------------------------------------- -------------- -----------------
Sale and leaseback
During the period, easyJet completed the sale and leaseback of 7
A319 (H1 2020: 10), 24 A320 (H1 2020: nil) and 4 A321 (H1 2020:
nil). The Income Statement impact of the 35 sale and leasebacks was
a GBP68 million gain recognised in Other income offset by a GBP8m
loss recognised in Other costs (H1 2020: GBP1 million gain).
Restructuring
Due to the change in demand environment as a result of Covid-19
the business has undertaken a restructuring process during 2020.
During the period the estimate was updated to reflect ongoing
discussions with unions which resulted in a GBP25 million credit
(H1 2020: nil). The programme is expected to complete in the
financial year 2022.
Fair value adjustments
This relates to hedge accounting ineffectiveness for items
currently held in fair value and cash flow hedge relationships, and
the fair value of financial derivatives at the time that they were
discontinued from a previous hedge relationship.
In accordance with IFRS 9, hedge effectiveness testing is
performed on a regular, periodic basis. For cash flow hedges this
includes an assessment of highly probable future cash exposures
with the amount compared to the notional value of derivatives held
in a hedge relationship. Where derivative contracts exceed the
amount of projected exposures and the forecast is no longer
expected to occur (e.g. for foreign currency or jet fuel), these
amounts no longer qualify for hedge accounting. Fair valuation
related of these ineffective derivatives held in Other
Comprehensive Income is then immediately recorded in the income
statement.
Due to the reduced commercial flying as a result of COVID-19,
easyJet was in a significantly over-hedged position from both a jet
fuel and FX perspective. Primarily as a result of this, a GBP28
million net charge was recognised in the period for fair value
adjustments related to the discontinuation of hedge accounting
(2020: GBP163 million loss).
There was further fair value movement on discontinued hedges in
H1 2021 up until the point these positions were closed out. This
resulted in a GBP12 million gain in the income statement and has
been reflected in the headline result.
Additionally, fair value adjustments may also be recorded
related to hedge relationships that continue to be effective. This
arises as the value of hedged items are adjusted for changes in
fair value attributable to the hedged risks, which are not
perfectly offset by the fair value change on the hedging
instruments due to factors such as in counterparty credit risk,
cash flow timing or amount changes. Included in this number is GBP1
million charge (2020: GBP1 million charge) relating to Cross
Currency Interest Rate Swaps hedging Eurobond debt in the period.
These items continue in a strong hedge accounting relationship and
ineffective amounts are unrelated to the reduced flying programme.
The impact of this is a GBP1 million charge (2020: GBP1 million
charge).
4. Tax credit
Tax on loss on ordinary activities:
Six months Six months
ended ended
31 March 31 March
2021 2020
GBP million GBP million
------------------------------------------------- ------------ ------------
Current tax 1 3
Deferred tax (97) (32)
-------------------------------------------------- ------------ ------------
(96) (29)
------------------------------------------------- ------------ ------------
Effective tax rate 14.9% 8.3%
-------------------------------------------------- ------------ ------------
Effective tax rate excluding rate change impact 14.9% 18.6%
-------------------------------------------------- ------------ ------------
The forecast effective tax rate (using currently enacted rates)
is lower than the standard rate of corporation tax in the United
Kingdom (19%) principally due to permanent tax differences and
differences in tax rates in jurisdictions where easyJet has a
taxable presence outside the UK. The permanent tax costs are as a
result of the sale and leaseback transactions (disclosed within
note 3). The forecast effective tax rate has been determined on the
premise that the tax loss as at H1 2021 is recoverable in full.
In the Spring Budget 2021, the Government announced that from 1
April 2023 the corporation tax rate will increase to 25%. As the
proposal to increase the rate to 25% had not been substantively
enacted at the balance sheet date, its effects are not included in
these financial statements. However, it is likely that the overall
effect of the change, had it been substantively enacted by the
balance sheet date and all deferred tax balances re-measured at the
future rate, would be to increase the closing deferred tax
liability at 31 March 2021 to GBP12 million.
Tax on items recognised directly in other comprehensive income
Six months Six months
ended ended
31 March 31 March
2021 2020
GBP million GBP million
----------------------------------------------- ------------ ------------
(Charge)/credit to other comprehensive income
Deferred tax charge on defined benefit scheme (1) (1)
Deferred tax on fair value movements of cash
flow hedges (53) 91
------------------------------------------------ ------------ ------------
Total (charge)/credit to other comprehensive
income (54) 90
There was no tax on items recognised directly in shareholders' equity
in the period (H1 2020: GBPnil).
5. Loss per share
Six months Six months
ended ended
31 March 2021 31 March 2020
GBP million GBP million
-------------------------------------------- -------------- --------------
Headline loss for the period (575) (194)
Total loss for the period (549) (324)
--------------------------------------------- -------------- --------------
Six months Six months
ended ended
31 March 2021 31 March 2020
million million
-------------------------------------------- -------------- --------------
Weighted average number of ordinary shares
used to calculate basic loss per share 453 393
--------------------------------------------- -------------- --------------
Six months Six months
ended ended
31 March 2021 31 March 2020
Basic loss per share pence pence
-------------------------------------------- -------------- --------------
Total (121.2) (82.4)
Adjustment for non-headline (5.7) 33.0
--------------------------------------------- -------------- --------------
Headline (126.9) (49.4)
--------------------------------------------- -------------- --------------
Diluted earnings per share figures are not presented for either
period as the impact of potential ordinary shares is
anti-dilutive.
6. Segmental Reporting
H1 2021
--------------------------- -----------------------------------------------------
Airline Holidays Intra-group Group
transactions
GBP GBP million GBP million GBP million
million
--------------------------- --------- ------------ -------------- ------------
Revenue 237 4 (1) 240
Operating costs excl fuel (604) (10) 1 (613)
Fuel (97) - - (97)
Ownership costs (229) (2) - (231)
---------------------------- --------- ------------ -------------- ------------
Headline loss before tax (693) (8) - (701)
---------------------------- --------- ------------ -------------- ------------
Non-headline items 56 - - 56
---------------------------- --------- ------------ -------------- ------------
Total loss before tax (637) (8) - (645)
---------------------------- --------- ------------ -------------- ------------
H1 2020
--------------------------- -----------------------------------------------------
Airline Holidays Intra-group Group
transactions
GBP GBP million GBP million GBP million
million
--------------------------- --------- ------------ -------------- ------------
Revenue 2,374 11 (3) 2,382
Operating costs excl fuel (1,737) (26) 3 (1,760)
Fuel (534) - - (534)
Ownership costs (280) (1) - (281)
---------------------------- --------- ------------ -------------- ------------
Headline loss before tax (177) (16) - (193)
---------------------------- --------- ------------ -------------- ------------
Non-headline items (161) 1 - (160)
---------------------------- --------- ------------ -------------- ------------
Total loss before tax (338) (15) - (353)
---------------------------- --------- ------------ -------------- ------------
The intra-group transaction column represents intercompany costs
from Airline to Holidays which are recorded at arm's length and are
eliminated on consolidation. Individual cost lines are not reported
separately as these are not key metrics reported to the Chief
Operating Decision Maker (CODM). Assets and liabilities are not
allocated to individual segments and are not separately reported to
or reviewed by the CODM, and therefore these have not been
disclosed. Interest income and expenditure are not allocated to
segments as this activity is driven by the central treasury
function which manages the cash position of the group.
7. Dividends
In line with easyJet's dividend policy of a pay-out ratio of 50%
of headline profit after tax, the board did not recommend the
payment of a dividend in respect of the six months ended 31 March
2021. No dividend payments have been made in the period (H1 2020:
43.9 pence per share)
8. Property, plant and equipment
Right of use assets
held under leasing
Owned assets arrangements Total
------------------------------------- ------------------------- -----------
Aircraft
and Land and Aircraft
spares buildings Other and spares Other Total
---------- ----------- ----------- ----------- ------------ -----------
GBP GBP GBP GBP GBP GBP
million million million million million million
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Cost
At 1 October
2020 5,520 44 44 1,692 37 7,337
Additions 52 - 19 9 - 80
Aircraft sold
and
leased back (795) - - 559 - (236)
Transfers 80 - (16) (64) - -
Disposals (28) - (1) - - (29)
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 31 March
2021 4,829 44 46 2,196 37 7,152
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Depreciation
At 1 October
2020 1,187 - 12 1,062 23 2,284
Charge for
the period 108 - 3 90 3 204
Transfers 23 - - (23) - -
Aircraft sold
and
leased back (120) - - - - (120)
Disposals (27) - - - - (27)
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 31 March
2021 1,171 - 15 1,129 26 2,341
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Net book
value
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 31 March
2021 3,658 44 31 1,067 11 4,811
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 1 October
2020 4,333 44 32 630 14 5,053
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Right of use assets
held under leasing
Owned assets arrangements Total
------------------------------------- ------------------------- -----------
Aircraft
and Land and Aircraft
spares buildings Other and spares Other Total
---------- ----------- ----------- ----------- ------------ -----------
GBP GBP GBP GBP GBP
million million million million GBP million million
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Cost
At 1 October
2019 5,720 34 76 1,298 34 7,162
Additions 559 - 100 64 3 726
Transfers 107 10 (113) (41) - (37)
Aircraft sold
and
leased back (851) - - 371 - (480)
Disposals (15) - (19) - - (34)
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 30
September
2020 5,520 44 44 1,692 37 7,337
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Depreciation
At 1 October
2019 1,147 - 18 818 16 1,999
Charge for
the period 251 - 5 222 7 485
Transfers 15 - - (15) - -
Impairment - - - 37 - 37
Aircraft sold
and
leased back (220) - - - - (220)
Disposals (6) - (11) - - (17)
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 30
September
2020 1,187 - 12 1,062 23 2,284
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Net book
value
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 30
September
2020 4,333 44 32 630 14 5,053
-------------- ---------- ----------- ----------- ----------- ------------ -----------
At 1 October
2019 4,573 34 58 480 18 5,163
-------------- ---------- ----------- ----------- ----------- ------------ -----------
Net book value includes GBP312 million (H1 2020: GBP300 million)
relating to advance and option payments for future aircraft
deliveries. This amount is not depreciated.
At 31 March 2021 easyJet was contractually committed to the
acquisition of 101 (H1 2020: 107) Airbus A320 family aircraft, with
a total list price of US$12.31 billion (H1 2020: US$12.9 billion)
before escalations and discounts for delivery. It is expected that
nil aircraft will be delivered for the remainder of FY 2021 and 8
aircraft deliveries in FY 2022.
9. Borrowings
Current Non-current Total
GBP million GBP million GBP million
------------------------------------------------- ------------ ------------ ------------
At 31 March 2021
Eurobonds - 2,280 2,280
Commercial Paper (UK Export Finance) - 743 743
Commercial Paper (Covid Corporate Financing
Facility) 300 - 300
300 3,023 3,323
------------ ------------ ------------
At 30 September 2020
Eurobonds - 1,356 1,356
Drawn down amounts on Revolving Credit Facility 387 - 387
Commercial Paper (Covid Corporate Financing
Facility) 600 - 600
Bank loans - 388 388
-------------------------------------------------- ------------ ------------ ------------
987 1,744 2,731
------------ ------------ ------------
Amounts above are shown net of issue costs or discounted amounts
which are amortised at the effective interest rate over the life of
the debt instruments.
Lease obligations relate to aircraft and bear interest partly at
fixed rates and partly variable rates linked to USD LIBOR.
On 7 January 2016, the UK Listing Authority approved a
prospectus relating to the establishment of a GBP3,000 million Euro
Medium Term Note Programme of easyJet plc. Under this programme, on
9 February 2016 easyJet plc issued notes amounting to EUR500
million for a seven-year term with a fixed annual coupon rate of
1.750%. On 18 October 2016 easyJet plc issued additional notes
amounting to EUR500 million for a seven-year term with a fixed
annual coupon rate of 1.125%. On 11 June 2019 easyJet plc issued
additional notes amounting to EUR500 million for a six-year term
with a fixed annual coupon rate of 0.875%.
The three EUR500 million Eurobonds issued on 9 February 2016, 18
October 2016 and 11 June 2019 are discussed within note 11.
On 10 February 2015 easyJet signed a $500 million revolving
credit facility with a minimum five-year term. The facility is due
to mature in February 2022. On 9 April 2020 easyJet fully drew down
this $500 million Revolving Credit Facility, secured against
aircraft assets.
On 6 April 2020 easyJet issued a GBP600 million Commercial Paper
through the Covid Corporate Financing Facility (CCFF). This is an
unsecured, short term paper issued at a discount, of which GBP300
million was repaid in March 2021 and the remaining GBP300 million
is due to be repaid in November 2021. On 16 April 2020 easyJet
secured two term loans with separate counterparty banks for GBP200
million and $245 million respectively. Both loans are secured
against aircraft assets and were due to mature in February 2022,
but have since been repaid as set out below.
In January 2021 easyJet entered into a new five-year term loan
facility of $1.87 billion underwritten by a syndicate of banks and
supported by a partial guarantee from UK Export Finance under their
Export Development Guarantee scheme.
easyJet drew down a $1.05 billion loan from the UKEF backed
facility in January, utilising these funds to repay and cancel the
fully drawn $500 million Revolving Credit Facility and repaying
term loans of $245 million and GBP200 million.
easyJet issued a EUR1.2 billion 7 year bond at a rate of 1.875%
in March 2021, under its Euro Medium Term Note (EMTN) programme.
The bond was issued out of easyJet FinCo BV registered in the
Netherlands and was guaranteed by easyJet Airline Company Limited
(EACL) and easyJet PLC.
10. Provisions for liabilities and charges
Provisions
Maintenance for customer Other Total
provisions claims Restructuring Provisions provisions
GBP million GBP million GBP million GBP million GBP million
--------------
At 1 October 2020 597 39 101 2 739
Exchange adjustments (34) - - - (34)
Charged/(credited) to
income statement 12 (3) (25) - (16)
Related to aircraft sold
and leased back 131 - - - 131
Unwinding of leased back
discount (21) - - - (21)
Utilised (113) (3) (15) - (131)
--------------
At 31 March 2021 572 33 61 2 668
-------------- ------------
Maintenance provisions comprise of maintenance costs arisen from
legal and constructive obligations relating to the condition of the
aircraft when returned to the lessor. Provisions for customer
claims comprise amounts payable to customers who make claims in
respect of flight delays and cancellations, and refunds of air
passenger duty or similar charges. Restructuring and other
provisions include amounts in respect of potential liabilities for
employee-related matters.
31 March 30 September
2021 2020
GBP million GBP million
------------ ------------
Current (307) (407)
Non-current (361) (332)
------------ ------------
(668) (739)
------------ ------------
The split of the current / non-current maintenance provision is
based on the current expected maintenance event timings. If actual
aircraft usage varies from expectation the timing of the
utilisation of the maintenance provision could result in a material
change in the classification between current and non-current.
Maintenance provisions are expected to be utilised within ten
years. Provisions for customer claims, restructuring, and other
provisions are generally expected to be utilised within one
year.
11. Financial instruments
Carrying value and fair value of financial assets and
liabilities
The fair values of financial assets and liabilities, together
with the carrying value at each reporting date, are as follows:
Amortised cost Held at fair value
Fair Cash Other
Financial Financial value flow financial Other Carrying Fair
assets liabilities hedges hedges instruments (1) value value
At 31 March GBP GBP GBP GBP GBP GBP
2021 million GBP million million million GBP million million million million
-------- -------- -------- --------
Other
non-current
assets 137 - - - - - 137 137
Trade and
other
receivables 34 - - - - 116 150 150
Trade and
other
payables - (472) - - - (329) (801) (801)
Derivative
financial
instruments - - 50 (63) (45) - (58) (58)
Restricted
cash 13 - - - - 13 13
Cash and
cash
equivalents 1,275 - - - 1,060 - 2,335 2,335
Eurobonds
(3),(4),(5)
,(6) - (2,280) - - - - (2,280) (2,295)
Other
Borrowings - (1,043) - - - - (1,043) (1,043)
Lease
liabilities - (1,027) - - - - (1,027) (1,027)
Equity
Investments
(2) - - - - 33 - 33 33
Amortised cost Held at fair value
Fair Cash Other
Financial Financial value flow financial Other Carrying Fair
assets liabilities hedges hedges instruments (1) value value
At 30
September GBP GBP GBP GBP GBP GBP
2020 million GBP million million million GBP million million million million
Other
non-current
assets 133 - - - - - 133 133
Trade and
other
receivables 53 - - - - 140 193 193
Trade and
other
payables - (837) - - - (405) (1,242) (1,242)
Derivative
financial
instruments - - 82 (310) (99) - (327) (327)
Restricted
cash 19 - - - - - 19 19
Money market
deposits 32 - - - - - 32 32
Cash and
cash
equivalents 1,467 - - - 817 - 2,284 2,284
Eurobonds
(3),(4),(5) - (1,356) - - (1,356) (1,173)
Other
Borrowings - (1,375) - - - - (1,375) (1,375)
Lease
liabilities - (710) - - - - (710) (710)
Equity
Investments
(2) - - - - 33 - 33 33
(1). Amounts disclosed in the 'Other' column are items that do
not meet the definition of a financial instrument. They are
disclosed to facilitate reconciliation of the carrying values of
financial instruments to line items presented in the statement of
financial position.
(2). The equity investment of GBP33 million represents a 13.2%
shareholding in a non-listed entity, The Arline Group Limited.
Valuation movements are designated as being fair valued through
other comprehensive income due to the nature of the investment
being held for strategic purposes.
(3). In February 2016, easyJet Plc issued a EUR500 million bond
under the GBP3,000 million Euro Medium Term Note Programme
guaranteed by easyJet Airline Company Limited. The Eurobond pays an
annual fixed coupon of 1.750%. At the same time the Group entered
into three cross-currency interest rate swaps to convert the entire
EUR500 million fixed rate Eurobond to a Sterling floating rate
exposure. All three swaps pay floating interest (three-month LIBOR
plus a margin) quarterly, receive fixed interest annually, and have
maturities matching the Eurobond. The Group designated all three
cross-currency interest rate swaps as a fair value hedge of the
interest rate and currency risks on the EUR500 million Eurobond.
The swaps are measured at fair value through profit or loss with
any gains or losses being taken immediately to the income statement
(except where related to timing differences related to-cross
currency basis amortisation). The carrying value of the Eurobond is
adjusted for changes in fair value attributable to the risks being
hedged. This net carrying value differs to the swap's fair value
depending on movements in the Group's credit risk and
cross-currency basis. The carrying value of the fixed rate Eurobond
net of the cross-currency interest rate swap at 31 March 2021 was
GBP380 million. This value does not include capitalised set-up
costs incurred in the issuing of the bond.
(4). In October 2016 easyJet plc issued EUR500 million bond
under the GBP3,000 million Euro Medium Term Note Programme
guaranteed by easyJet Airline Company Limited. The Eurobond pays an
annual fixed coupon of 1.125%. Shortly after the issuance of the
EUR500 million bond the Group entered into three cross-currency
interest rate swaps to convert the entire EUR500 million fixed rate
Eurobond to a Sterling fixed rate exposure. The cross-currency
interest rate swaps were executed on 8 November 2016 with
settlement and notional exchange occurring on 14 November 2016. All
three swaps pay fixed interest semi-annually, receive fixed
interest annually, and have maturities matching the Eurobond. The
Group designated all three cross-currency interest rate swaps as a
cash flow hedge of the currency risk on the EUR500 million
Eurobond. The cross-currency interest rate swaps are measured at
fair value with the effective portion taken through the statement
of comprehensive income. The element of the fair value generated by
the change in the spot rate is recycled to the income statement
from the statement of comprehensive income to offset the
revaluation of the Eurobond. The carrying value of the fixed rate
Eurobond net of the cross-currency interest rate swap at 31 March
2021 was GBP449 million. This value does not include capitalised
set-up costs incurred in the issuing of the bond.
(5). In June 2019 easyJet plc issued EUR500 million bond under
the GBP3,000 million Euro Medium Term Note Programme guaranteed by
easyJet Airline Company Limited. The Eurobond pays an annual fixed
coupon of 0.875%. At the same time the Group entered into three
cross-currency interest rate swaps to convert the entire EUR500
million fixed rate Eurobond to a Sterling fixed rate exposure. All
three swaps pay fixed interest semi-annually, receive fixed
interest annually, and have maturities matching the Eurobond. The
Group designated all three cross-currency interest rate swaps as a
cash flow hedge of the currency risk on the EUR500 million
Eurobond. The cross-currency interest rate swaps are measured at
fair value with the effective portion taken through the statement
of comprehensive income. The element of the fair value generated by
the change in the spot rate is recycled to the income statement
from the statement of comprehensive income to offset the
revaluation of the Eurobond. The carrying value of the fixed rate
Eurobond net of the cross-currency interest rate swap at 31 March
2021 was GBP448 million. This value does not include capitalised
set-up costs incurred in the issuing of the bond.
(6) In March 2021 easyJet Finco issued EUR1,200 million bond
under the GBP3,000 million Euro Medium Term Note Programme
guaranteed by easyJet Airline Company Limited. The Eurobond pays an
annual fixed coupon of 1.875%.
Fair value calculation methodology
Where available the fair values of derivatives and financial
instruments have been determined by reference to observable market
prices where the instruments are traded. Where market prices are
not available, the fair value has been estimated by discounting
expected future cash flows at prevailing interest rates and by
applying year end exchange rates (excluding the Airline Group
Limited equity investment).
The fair values of the four Eurobonds are classified as level 1
of the IFRS 13 'Fair Value Measurement' fair value hierarchy
(valuations taken as the closing market trade price for each
respective Eurobond as on 31 March 2021). Apart from the equity
investment, the remaining financial instruments for which fair
value is disclosed in the table above, and derivative financial
instruments, are classified as level 2.
The equity investment is classified as level 3 due to the use of
forecast cash flows which are discounted to present value. Though
there are other level 2 inputs to the valuation, the discounted
cash flow is a significant input which is not based on observable
market data. The fair value is assessed at each reporting date
based on the discounted cash flows and two other valuations
calculated using a market approach and level 2 inputs. If the level
3 forecast cash flows were 10% higher or lower the fair value would
not increase / decrease by a significant amount.
The fair values of derivatives are calculated using observable
market forward curves (e.g. forward foreign exchange rates, forward
interest rates or forward jet fuel prices) and discounted to
present value using risk free rates. The impacts of counterparty
credit, cross-currency basis and market volatility is also included
where appropriate as part of the fair valuation.
Fair value hierarchy levels
The fair value measurement hierarchy levels have been defined as
follows;
-- Level 1, fair value of financial instruments based on quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
-- Level 2, fair value of financial instruments in an active
market (for example, over the counter derivatives) which are
determined using valuation techniques which maximise the use of
observable market data and rely as little as possible on entity
specific estimates.
-- Level 3, fair value of financial instruments that are not
based on observable market data (i.e. unobservable inputs).
12. Reconciliation of operating loss to cash (used in)/generated
from operations
Six months Six months
ended ended
31 March 2021 31 March 2020
GBP million GBP million
Operating loss (601) (173)
Adjustments for non-cash items:
Depreciation 204 254
Amortisation of intangible assets 11 8
Loss on disposal of property, plant and
equipment and intangibles 3 12
Gain on sale and leaseback (60) (1)
Share-based payments 8 7
Changes in working capital and other items
of an operating nature:
(Increase)/decrease in trade and other receivables 31 (29)
Increase in current intangible assets (88) (86)
Increase/(decrease) in trade and other payables (448) 603
Increase/(decrease) in unearned revenue 48 (95)
Decrease in post-employment benefit contribution (6) (5)
Decrease in provisions (71) -
(Increase)/decrease in other non-current
assets (4) 15
Decrease in derivative financial instruments (144) (37)
Decrease in non-current deferred income (1) (1)
Cash (used in)/generated from operations (1,118) 472
13. Government Grants and assistance
During the period, easyJet Airline Company Limited utilised the
Coronavirus Job Retention Scheme implemented by the United Kingdom
government, where those employees designated as being 'furloughed
workers' are eligible to have 80 per cent of their wage costs paid
up to a maximum amount of GBP2,500 per month. In the same period,
easyJet Group (companies) utilised similar schemes provided by
governments in Portugal, Germany, Netherlands, France, Italy and
Switzerland.
The total amount of such relief received by the Group amounted
to GBP73 million (H1 2020: nil) and is offset within employee costs
in the Income statement. There are no unfulfilled conditions or
contingencies relating to these schemes.
On 6 April 2020, easyJet issued a commercial paper through the
Covid Corporate Finance Facility (CCFF) implemented by the
government of the United Kingdom. Under the CCFF, easyJet received
GBP600 million, with interest incurred at the prevailing market
rate. The facility is classified within Borrowings in the Balance
sheet. On 5 March 2021 easyJet repaid GBP300 million of the CCFF
liability, with the remaining GBP300 million due to be repaid in
November 2021.
On 8 January 2021 easyJet signed a five-year term loan facility
of $1.87 billion, underwritten by a syndicate of banks and
supported by a partial guarantee from UK Export Finance under their
Export Development Guarantee Scheme. T he Export Development
Guarantee scheme for commercial loans is available to qualifying UK
companies, does not carry preferential rates or require state aid
approval, and contains some restrictive covenants including
dividend payments, however these are compatible with easyJet's
existing dividend policy (note 7).
14. Contingent liabilities and commitments
easyJet is involved in a number of disputes and litigation which
arose in the normal course of business. The likely outcome of these
disputes and litigation cannot be predicted, and in complex cases
reliable estimates of any potential obligation may not be
possible.
On 19 May 2020, easyJet announced that it had been the target of
a cyber-attack from a highly sophisticated source. The email
address and travel details of approximately 9 million customers
were accessed and for a very small subset of customers (2,208),
credit card details were accessed. Discussions continue to be held
with the Information Commissioner's Office (ICO) and no provision
has been recognised in the financial period. The merit, likely
outcome and potential impact on easyJet of the investigation by the
ICO, and legal claims, including potential class actions, are still
subject to a number of significant uncertainties and, therefore,
any assessment of the likely outcome or quantum cannot be made at
the date of this disclosure.
At 31 March 2021 easyJet had outstanding letters of credit and
performance bonds totalling GBP72 million (2020: GBP120 million),
of which GBP43 million (2020: GBP89 million) expires within one
year. The fair value of these instruments at each year end was
negligible.
No amount is recognised in the statement of financial position
in respect of any of these financial instruments as it is not
probable that there will be an outflow of resources
As part of the commitment to voluntary carbon offsetting,
easyJet currently has contractual commitments to purchase Verified
Emission Reductions worth GBP22 million (H1 2020: GBP29 million) in
total over the next two years.
15. Related party transactions
The Company licenses the easyJet brand from easyGroup Ltd
('easyGroup'), a wholly owned subsidiary of easyGroup Holdings
Limited, an entity in which easyJet's founder, Sir Stelios
Haji-Ioannou, holds a beneficial controlling interest. The
Haji-Ioannou family concert party shareholding (being easyGroup
Holdings Limited and Polys Holding Limited) holds, in total,
approximately 26.7% of the issued share capital of easyJet plc as
at 31 March 2021.
Under the Amended Brand Licence signed in October 2010 and
approved by the shareholders of easyJet plc in December 2010, an
annual royalty of 0.25% of total revenue is payable by easyJet to
easyGroup. The full term of the agreement is 50 years.
easyJet and easyGroup established a fund to meet the annual
costs of protecting the 'easy' (and related marks) and the
'easyJet' brands. easyJet contributes up to GBP1 million per annum
to this fund and easyGroup contributes GBP100,000 per annum. If
easyJet contributes more than GBP1 million per annum, easyGroup
will match its contribution in the ration of 1:10 up to a limit of
GBP5 million contributed by easyJet and GBP500,000 contributed by
easyGroup.
Three side letters have been entered into: (i) a letter dated 29
September 2016 in which easyGroup consented to easyJet acquiring a
portion of the equity share capital in Founders Factory Limited;
(ii) a letter dated 26 June 2017 in which the easyJet's permitted
usage of the brand was slightly extended; and (iii) a letter dated
02 February 2018 in which easyGroup agreed that certain affiliates
of easyJet have the right to use the brand.
The amounts included in the income statement for these items
were as follows:
Six months Six months
ended ended
31 March 31 March
2021 2020
GBP million GBP million
------------ ------------
Annual royalty 0.1 5.9
Brand protection (legal fees paid through easyGroup
to third parties) 0.1 0.3
0.2 6.2
-----------------------------------------------------
At 31 March 2021, GBP4.6 million (H1 2020: GBP3.5 million) of
related party balances were held in trade and other receivables and
payables (net receivable).
16. Events after the balance sheet date
Subsequent to 31 March 2021, discussions with union
representatives resulted in a further release of c. GBP25 million
from the restructuring provision. This was due to a change in the
nature of the restructuring activities which are now expected to
take place. During H2 2021, a provision of a materially equivalent
value may be recognised in light of different restructuring
activities with later recognition criteria for the employees
impacted by this change in circumstance.
Statement of Directors' responsibilities
The Directors are responsible for preparing the interim report
in accordance with applicable law and regulations. The Directors
confirm that the condensed consolidated interim financial
information has been prepared in accordance with IAS 34 Interim
Financial Reporting adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union and in accordance
with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
The interim management report includes a fair review of the
information required by the Disclosure and Transparency Rules
paragraphs 4.2.7 R and 4.2.8 R, namely:
-- an indication of important events that have occurred during
the six months ended 31 March 2021 and their impact on the
condensed set of financial information, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related-party transactions during the six months
ended 31 March 2021 and any material changes in the related-party
transactions described in the Annual report and Accounts 2020.
The Directors of easyJet plc are listed in the Annual Report and
Accounts 2020, however please note that since the year end, Andrew
Findlay resigned on 3 February 2021 and Alistair Kenton Jarvis was
appointed. A list of current Directors is maintained on the easyJet
plc website: http://corporate.easyJet.com .
The Directors are responsible for the maintenance and integrity
of, amongst other things, the financial and corporate governance
information as provided on the easyJet website
(http://corporate.easyJet.com). Legislation in the United Kingdom
governing the preparation and dissemination of financial
information may differ from legislation in other jurisdictions.
The interim report was approved by the Board of Directors and
authorised for issue on 20 May 2021 and signed on its behalf
by:
Johan Lundgren Alistair Kenton Jarvis
Chief Executive Chief Financial Officer
Independent review report to easyJet plc
Report on the consolidated interim financial statements
Our conclusion
We have reviewed easyJet plc's consolidated interim financial
statements (the "interim financial statements") in the interim
report of easyJet plc for the 6 month period ended 31 March 2021
(the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Emphasis of matter
Without modifying our conclusion on the interim financial
statements, we have considered the adequacy of the disclosure made
in note 1 to the interim financial statements concerning the
Group's ability to continue as a going concern.
The Group's base case forecast and projections assume a phased
return to flying activity levels which represent a reduction to
historical revenue levels, until summer 2022, together with cost
saving measures. This base case demonstrates significant headroom
relative to current facilities. However, given the ongoing
uncertain outlook, in the event there are travel restrictions,
leading to a prolonged recovery period, reduction in revenue yield,
lower load factors, cash collateralisation of unearned revenue by
card acquirers, and a reduction to anticipated forward booking, it
is plausible that the Group may require further financing.
As described in note 1, the possible occurrence of such severe
events and the lack of certainty regarding the availability of
additional financing represents a material uncertainty that could
cast significant doubt upon the Group's ability to continue as a
going concern. The interim financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at 31 March 2021;
-- the condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then
ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report
of easyJet plc have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim report, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the interim report in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Watford
20 May 2021
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IR ZZGMKFLNGMZZ
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