EasyJet 2008 Annual Report Download - page 15

easyJet plc
Annual report and accounts 2008
Financial review
continued
Summary cash flow
2008 2007 Change
£million £million £million
Cash generated from operations 296.2 270.8 25.4
Net capital expenditure (417.6) (272.1) (145.5)
Net (decrease)/increase in loan finance (5.5) 69.1 (74.6)
Net increase in money market deposits (8.7) (197.3) 188.6
Other including the effect of exchange rates 48.7 (12.1) 60.8
Decrease in cash and cash equivalents (86.9) (141.6) 54.7
Cash and cash equivalents at
beginning of year 719.1 860.7 (141.6)
Cash and cash equivalents at end of year 632.2 719.1 (86.9)
The business generated strong operating cash flow in the year, the
decrease in profit after tax was offset by positive movements in working
capital principally due to increases in trade and other payables and
maintenance provisions. The increase in capital expenditure is largely
due to a net £118.0 million spent on the acquisition of GB Airways.
The movement in the US dollar and the euro exchange rates in the year
had a positive effect on the year end cash and cash equivalents balance.
easyJet continues to hold strong cash balances and has the benefit of
$937 million of additional aircraft financing secured in December 2007.
During the year $52 million was drawn down from this new facility
against two deliveries leaving $885 million of available funding. During the
year 13 Airbus A319 and three A321 aircraft were delivered, 13 of which
were funded from cash and three were debt financed. In addition the
Group has a $250 million undrawn revolving credit facility in place.
The increase in other non-current assets is predominately due to the fair
value of Gatwick landing rights of £72.4 million, an intangible asset arising
from the GB Airways acquisition and goodwill arising of £50.2 million
from the GB Airways acquisition, and the fair value of foreign exchange
and fuel derivative assets totalling £21.3 million that mature in more
than one year.
Net working capital reduced by £26.3 million. The assets held for sale,
net increases in the fair value of derivatives maturing in less than one
year and small increases in restricted cash and trade receivables were
offset by additional unearned revenue and trade payables as a result
of increased capacity and increased short-term maintenance provisions
as certain leased aircraft approach heavy maintenance shop visits.
The total of cash and cash equivalents and money market deposits is
£862.5 million. This represents a decrease of £50.0 million, however,
a net £118.0 million was spent on the acquisition of GB Airways in the
year. Money market deposits of £230.3 million are held in US dollars
to match US dollar denominated borrowings and provide a hedge
against interest rate re-pricings. Net cash generated from operations
was used to fund the continued investment in the fleet in addition
to the acquisition.
Excluded from the above total is £66.2 million of restricted cash
disclosed in other non-current assets and net working capital.
These amounts relate principally to operating lease deposits and
customer payments for holidays.
Borrowings have increased by £107.8 million in the year as a result
of the acquisition of loans from GB Airways of £59.1 million, new
loans to fund three of the 13 Airbus A319 purchases in the year and a
significant movement in the US dollar rate compared to 30 September
2007 offset by the repayment of loan and finance lease capital in
the year.
Other non-current liabilities include maintenance provisions for work
due to be performed in more than one year of £160.4 million, deferred
tax liabilities of £108.1 million, deferred income relating principally to
the excess of sale price over fair value for aircraft subject to sale and
leaseback of £68.8 million and some minor derivative liabilities maturing
in more than one year.
Gearing increased in the year from 20.4% to 28.7%. Cash was used to
purchase GB Airways and the acquisition resulted in taking on additional
borrowings related to owned aircraft and additional lease costs.
A strengthening US dollar in the year also contributed to increased
indebtedness and lease costs.
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