EasyJet 2008 Annual Report Download - page 81

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easyJet plc
Annual report and accounts 2008
d) Reconciliation of net loss to net cash flow from operating activities
2008 2007
£million £million
Cash generated from operations
Profit/(loss) for the year 15.2 (1.7)
Adjustments for:
Interest income (5.3) (5.7)
Unrealised foreign exchange differences (10.1) 6.9
Changes in working capital:
Decrease/(increase) in amounts owed by subsidiary undertakings 538.2 (270.6)
(Decrease)/increase in amounts owed to subsidiary undertakings (550.5) 224.0
(12.5) (47.1)
e) Guarantee and contingent liabilities
The Company has given a formal undertaking to the Civil Aviation Authority (“CAA”) to guarantee the payment and discharge of all liabilities of easyJet
Airline Company Limited, a subsidiary of the Company. The guarantee is required by the CAA for that company to maintain its operating licence under
Regulation 3 of the Licensing of Air Carriers Regulations 1992.
The Company has issued a guarantee in favour of easyJet Airline Company Limited, a subsidiary undertaking in relation to the processing of credit card
transactions, and also in respect of hedging transactions carried out according to treasury policy.
The Company has guaranteed the contractual obligations of easyJet Leasing Limited, a subsidiary undertaking, in respect of its contractual obligations
to Airbus GIE in respect of the supply of Airbus 320 family aircraft.
The Company has guaranteed the repayment of borrowings that financed the acquisition of aircraft of certain subsidiary undertakings. The Company
has also guaranteed the payment obligations for the lease of aircraft by certain subsidiaries.
The Company has guaranteed certain letters of credit which have been issued by a bank on behalf of certain Group subsidiaries.
f) Related party transactions
Transactions with subsidiaries are carried out on an arm’s-length basis. Outstanding trading balances are placed on intercompany accounts with no
specified credit period. Intercompany balances owed to and from the Company by subsidiary undertakings bear market rates of interest in accordance
with intercompany loan agreements.
79
OverviewDirectors’ reportReport on Directors’ remunerationFinancial informationOther information
Notes to the
Company balance
sheet and cash flow
statement
continued