EasyJet 2015 Annual Report Download - page 13

Strategic report Governance Accounts
9
www.easyJet.com
Chief Executive’s review
This has been another year of record profits
and delivering our strategy for easyJet. We
carried an additional four million passengers
to reach 68.6 million passengers; we grew
revenue to £4,686 million; and we increased
profit before tax for the fifth successive year
to a record £686 million. Return on capital
employed increased to 22.2%(1), another
record for the Company.
OVERVIEW
Our markets are strong, with favourable economic and consumer
trends. Our core leisure customer is part of a market that is
growing strongly every year as people take more holidays and
city breaks, complemented by a business travel market that
prizes both flexibility and value.
easyJet has positioned its network and product to capitalise on
these trends and has delivered again during the year. Our business
model and strategy are continuing to deliver profitable growth
and increasing annual returns to shareholders.
In particular:
• Revenue increased by 3.5% to £4,686 million, with passenger
volumes increasing by 6.0% and revenue per seat by 1.5% on a
constant currency basis to £64.28, offset by currency headwinds.
• Our passengers continue to be attracted by our model of having
convenient airports and flights, available at good value. We
finished the year strongly with record load factors in both July
and August driving revenue per seat up by 3.2% in constant
currency in the fourth quarter.
• Load factor for the full year grew by 0.9 percentage
points to 91.5%, demonstrating strong demand in a
competitive environment.
• We increased yield and revenue throughout the year with our
market leading digital platform driving and fulfilling demand,
supported by our best-in-class Revenue Management System.
• Our confidence, both in the demand environment and our
structural growth opportunities within our markets has led us
to secure an additional 36 aircraft between 2018 and 2021,
comprising 30 Next Generation A320s and 6 Current Generation
A320s, all in the 186 seat configuration. This will bring flexibility
and secure further cost savings of £27 million.
• Cost per seat decreased by 3.4%, with benefits from both fuel
and currency. Cost per seat at constant currency excluding fuel
increased by 3.6%. We have experienced cost pressures that
include regulated airport price increases, increased de-icing costs
and significant disruption costs. We have mitigated this through
£46 million of sustainable savings and we have a pipeline of
structural cost improvement to deliver future savings.
• Profit before tax grew by £105 million to £686 million and we
increased the profit before tax margin to 14.6% from 12.8%.
• Return on capital employed(1) increased by 1.7 percentage
points to a record 22.2% (2014: 20.5%), with some benefits
from our hedge positions, maintaining our strong market
returns. We continue to drive capital efficiency with rigour and
discipline, reallocating aircraft around the network to maximise
return on capital employed.
• We generated £895 million of operating cash flow, reducing
our gearing to 14%, thus further strengthening our balance sheet.
• Reflecting the strong financial performance during 2015, the
Board has recommended a dividend of 55.2 pence per share,
an increase of 21.6% from the prior year, in line with its policy
of paying 40% of annual profit after tax to shareholders.
CAROLYN MCCALL OBE, CHIEF EXECUTIVE
A year of strong performance
£686m
PROFIT BEFORE TAX (2014: £581M)
22.2%
ROCE (2014: 20.5%)
(1) Return on Capital Employed shown adjusted for leases capitalised at 7 times.