EasyJet 2015 Annual Report Download - page 119

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Strategic report Governance Accounts
115
www.easyJet.com
Market risk sensitivity analysis
Financial instruments affected by market risk include borrowings, money market deposits, trade and other receivables, trade and other
payables and derivative financial instruments. The following analysis illustrates the sensitivity of such financial instruments to changes in
relevant foreign exchange rates, interest rates and fuel prices. It should be noted that the analysis reflects the impact on profit or loss after
tax for the year and other comprehensive income on financial instruments held at the reporting date. It does not reflect changes in revenue
or costs that may result from changing currency rates, interest rates or fuel prices. Sensitivity is calculated based on all other variables
remaining constant. The analysis is considered representative of easyJet’s exposure over the 12 month period.
The currency sensitivity analysis is based on easyJet’s foreign currency financial instruments held at each statement of financial position
date taking into account forward exchange contracts that offset effects from changes in currency exchange rates.
The interest rate analysis assumes a 1% change in interest rates over the reporting year applied to end of year financial instruments.
The fuel price sensitivity analysis is based on easyJet’s fuel related derivative financial instruments held at the end of each reporting period.
The impact of a 1% increase in interest rates and a 10% increase in the fuel price is disclosed. A corresponding decrease results in an equal
and opposite impact on the income statement and other comprehensive income in both reporting periods.
Sensitivities are calculated based on a reasonably possible change in the rate applied to the value of financial instruments held at each
statement of financial position date.
Currency rates
At 30 September 2015
US dollar
+10%(1)
£ million
US dollar
-10%(2)
£ million
Euro
+10%(1)
£ million
Euro
-10%(2)
£ million
Interest rates
1% increase
£ million
Fuel price 10%
increase
£ million
Income statement impact: gain/(loss) 17 (14) 4 (3) 4 –
Impact on other comprehensive income:
increase/(decrease) 109 (89) 24 (20) – 79
Currency rates
At 30 September 2014
US dollar
+10%(1)
£ million
US dollar
-10%(2)
£ million
Euro
+10%(1)
£ million
Euro
-10%(2)
£ million
Interest rates
1% increase
£ million
Fuel price 10%
increase
£ million
Income statement impact: gain/(loss) 23 (18) 4 (3) 4 –
Impact on other comprehensive
income: increase/(decrease) 173 (142) (69) 56 – 115
(1) GBP weakened
(2) GBP strengthened
The market risk sensitivity analysis has been calculated based on spot rates for the US dollar, Euro and jet fuel at close of business on
30 September each year.
23. Leasing commitments
Commitments under operating leases
Aircraft Other
2015
£ million 2014
£ million 2015
£ million 2014
£ million
Total commitments under non-cancellable operating leases due:
Not later than one year 98 105 3 1
Later than one year and not later than five years 255 286 5 3
Later than five years 31 68 4 3
384 459 12 7
easyJet holds 67 aircraft (2014: 72 aircraft) under operating leases, with initial lease terms ranging from five to ten years. easyJet is
contractually obliged to carry out maintenance on these aircraft, and the cost of this is provided based on the number of flying hours
and cycles operated. Further details are given in the critical accounting policies section of note 1.