EasyJet 2011 Annual Report Download - page 104

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Notes to the Company accounts
Continued
c) Reconciliation of operating profit to cash generated from operations
2011
£ million
2010
£ million
Operating profit 2 8
Adjustments for non-cash items:
Unrealised foreign exchange differences 1 12
Changes in working capital:
(Increase) / decrease in amounts due from subsidiary undertakings (19) 112
(Decrease) / increase in amounts due to subsidiary undertakings (10) 24
(26) 156
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 its 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 to 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.
For full details of transactions and arrangements with easyJet’s largest shareholder, see note 26 of the
consolidated accounts.
102
easyJet plc
Annual report
and accounts 2011