EasyJet 2010 Annual Report Download - page 96

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easyJet plc
Annual report and accounts 2010
Notes to the Company accounts
continued
94
c) Reconciliation of operating profit to cash generated from operations
2010
£ million
2009
£ million
Operating profit 8.0 264.4
Adjustments for non-cash items:
Unrealised foreign exchange differences 11.6 (8.5)
Dividends received from subsidiary undertakings – (261.7)
Changes in working capital:
Decrease in amounts due from subsidiary undertakings 112.2 217.0
Increase / (decrease) in amounts due to subsidiary undertakings 24.5 (215.8)
156.3 (4.6)
d) Guarantees and contingent liabilities
The Company has given a formal undertaking to the Civil Aviation Authority to guarantee the payment and discharge of all liabilities
of easyJet Airline Company Limited, a subsidiary of the Company. The guarantee is required 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 Airline Company Limited and easyJet Leasing Limited, both subsidiary
undertakings, in respect of their contractual obligations to Airbus SAS in respect of the supply of Airbus 320 family aircraft.
The Company has guaranteed the repayment of borrowings that financed the acquisition of aircraft by subsidiary undertakings.
The Company has also guaranteed the payment obligations for the lease of aircraft by subsidiary undertakings.
The Company has guaranteed certain letters of credit which have been issued by a bank on behalf of subsidiary undertakings.
No amount is recognised on the Company statement of financial position in respect of any of these guarantees as it is not probable that
there will be an outflow of resources.
e) Related party transactions
Transactions with subsidiary undertakings, which principally relate to the provision of funding within the Group, are carried out on an
arm’s-length basis. Outstanding balances are placed on intercompany accounts with no specified credit period, are unsecured, and bear
market rates of interest.
f) Subsequent events
On 11 October 2010 the Company announced that, subject to shareholder approval in an Extraordinary General Meeting, agreement
had been reached to resolve its ongoing dispute with easyGroup IP Licensing Ltd and Sir Stelios Haji-Ioannou over the terms and
operation of the ‘easyJet’ brand licence. Further details are given in note 27 to the consolidated accounts.