EasyJet 2009 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2009 EasyJet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

83 easyJet plc Annual report and accounts 2009
Derivatives designated as cash flow hedges
All derivatives to which hedge accounting is applied are designated as cash flow hedges, with only the intrinsic value being designated for option instruments.
Changes in fair value are recognised directly in shareholders’ funds, to the extent that they are effective, with the ineffective portion being recognised in the
income statement. Where the hedged item results in a non-financial asset or liability, the accumulated gains and losses previously recognised in shareholders’
funds are included in the carrying value of that asset or liability. Otherwise accumulated gains and losses are recognised in the income statement in the same
period in which the hedged items affects the income statement.
easyJet uses forward contracts and zero cost collars to hedge transaction currency risk, jet fuel price risk and surplus euro and Swiss franc monetary balances.
Transaction currency risk includes capital expenditure, lease payments, debt repayments and fuel payments. Where these hedges are assessed as highly
effective, gains and losses are deferred in shareholders’ funds and transferred to the income statement or cost of property, plant and equipment when
the related cash flow occurs. The cumulative net gains / (losses) deferred in shareholders’ funds and their expected maturities are as follows:
At 30 September 2009 Within 1 year
£ million
1–2 years
£ million
Total
£ million
Hedges of transaction currency risk 13.4 1.8 15.2
Hedges of jet fuel price risk (53.1) 4.7 (48.4)
(39.7) 6.5 (33.2)
Related deferred tax 9.3
Net losses (23.9)
At 30 September 2008 Within 1 year
£ million
1–2 years
£ million
Total
£ million
Hedges of transaction currency risk 86.0 15.7 101.7
Hedges of jet fuel price risk (67.3) 3.8 (63.5)
18.7 19.5 38.2
Related deferred tax (10.6)
Net gains 27.6
The amount deferred and recognised in shareholders’ funds during each financial year is disclosed in note 20.
Amounts recorded in the income statement were as follows:
2009
£ million
2008
£ million
Gains / (losses) on cash flow hedges recycled from shareholders’ funds into income statement captions:
Revenue (30.5) –
Fuel (209.3) 88.4
Maintenance 1.3 (0.2)
Other costs 1.4 –
Profit on disposal of assets held for sale (4.4) –
Aircraft lease costs 13.2 (2.2)
Undesignated portion of losses on cash flow hedges (time value) (0.3) (2.6)
(228.6) 83.4
The amount transferred to property, plant and equipment from shareholders’ funds during the period is a gain of £85.9 million (2008: gain of £0.3 million).
Changes in the fair value of options attributable to time value represent the undesignated portion of the gain or loss and are charged directly to the
income statement.