EasyJet 2012 Annual Report Download - page 99

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26 Related party transactions
The Company licences the easyJet brand from easyGroup IP Licensing Limited (“easyGroup”), a wholly owned subsidiary of easyGroup
Holdings Limited, an entity which easyJet’s founder, Sir Stelios Haji-Ioannou, holds a beneficial interest and holds 26.07% of the issued
share capital of the Company.
Under the Amended Brand Licence signed in October 2010, an annual royalty of 0.25% of total revenue (fixed at £3.95 million for the
year ended 30 September 2011 and £4.95 million for the year ended 30 September 2012) is payable for a minimum term of ten years.
The full term of agreement is 50 years.
A new brand protection protocol was also agreed. easyJet must meet the costs to protect the “easy” and “easyJet” brands alongside
easyGroup on a ratio of 10:1 respectively up to a combined cost of £1.1 million per annum. Beyond the first £1.1 million of costs, easyJet
can commit up to an aggregate £5.5 million annually to meet brand protection costs, with easyGroup continuing to meet its share of
costs on a 10:1 ratio. easyJet must meet 100% of any brand protection costs it wishes to incur above this limit.
A separate agreement has been entered with Sir Stelios (“the Comfort Letter”), dated 9 October 2010, under which, in return for certain
non-compete obligations, easyJet makes payment of a fee of £300,000, adjusted annually per the UK Retail Price index, each year for
five years (or until the expiry of the longest subsisting restriction, whichever is later). Whilst certain of those obligations have since
expired, remaining in force are the following:
→For three years from the date of the Comfort Letter, to not sell the easyJet brand or the shares in easyGroup IP Holdings Limited
to any airline licensed in any EEA country, or Switzerland, or the owner or indirect owner of such airline,
→For five years from the date of the Comfort Letter, Sir Stelios shall not use his own name (or a derivative thereof) to brand an airline
flying to or from any EEA country, or Switzerland.
The Amended Brand Licence and Comfort Letter were approved by the shareholders at a general meeting held on 10 December 2010.
The amounts included in the income statement for the year ended 30 September 2012 for these items were as follows:
2012
£ million
2011
£ million
Annual royalty 5.0 4.0
Brand protection (legal fees paid through easyGroup to third parties) 1.2 0.7
Agreement with Sir Stelios Haji-Ioannou 0.3 0.3
6.5 5.0
At 30 September 2012, £0.2 million (2011: £nil) of the above aggregate amount was included in trade and other payables.
Accounts & other information
easyJet plc
Annual report and accounts 2012 97