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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Easyjet Plc | LSE:EZJ | London | Ordinary Share | GB00B7KR2P84 | ORD 27 2/7P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
5.20 | 0.98% | 538.20 | 539.00 | 539.40 | 543.60 | 538.20 | 539.60 | 2,280,874 | 16:35:18 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Air Transport, Scheduled | 8.17B | 324M | 0.4274 | 12.61 | 4.09B |
TIDMEZJ
RNS Number : 9806Q
easyJet PLC
05 December 2016
easyJet plc ("the Company")
Annual report and accounts 2016
The Company announces that a copy of the Annual report and accounts for the year ended 30 September 2016 has been submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM.
This document is also available to view on the Company's website. The direct link to download the 2016 Annual report and accounts is http://2016annualreport.easyjet.com/.
In compliance with DTR 6.3.5, the following information is extracted from the 2016 Annual report and accounts and should be read together with the Company's Final Results announcement issued on 15 November 2016 which can be found at http://otp.investis.com/clients/uk/easyjet/rns/regulatory-story.aspx?cid=2&newsid=817127.
Together these constitute the information required to be communicated to the media in unedited full text through a Regulatory Information Service. This information is not a substitute for reading the full 2016 Annual report and accounts.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The following responsibility statement is extracted from the Statement of Directors' Responsibilities on page 79 of the 2016 Annual report and accounts and is repeated here solely for the purpose of complying with DTR 6.3.5. The statement relates to the full 2016 Annual report and accounts and not the extracted information presented in this announcement or the Final Results announcement:
The Directors are responsible for preparing the Annual report, the Directors' remuneration report and the accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare accounts for each financial year. Under that law the Directors have prepared the Group and Company accounts in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group and the Company for that period. In preparing these accounts, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the EU have been followed, subject to any material departures disclosed and explained in the accounts; and
-- prepare the accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the accounts and the Directors' remuneration report comply with the Companies Act 2006 and, as regards the Group accounts, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of, amongst other things, the financial and corporate governance information provided on the easyJet website (http://corporate.easyJet.com). Legislation in the United Kingdom governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions.
The Directors consider that the Annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's and the Company's position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages 44 and 45 confirm that, to the best of their knowledge:
-- the Group and Company accounts, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and
-- the Strategic report, included in the annual report, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
In accordance with Section 418 of the Companies Act 2006, each Director in office at the date the Directors' report is approved, confirms that:
-- so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
-- he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
The annual report on pages 1 to 79 was approved by the Board of Directors and authorised for issue on 14 November 2016 and signed on its behalf by:
Carolyn McCall Chief Executive DBE Andrew Findlay Chief Financial Officer
PRINCIPAL RISKS AND UNCERTAINTIES
The risks and uncertainties set out below are extracted from the pages 25 to 31 of the 2016 Annual report and accounts and are repeated here solely for the purpose of complying with DTR 6.3.5.
The risks and uncertainties described are considered, at this point in time, to have the greatest effect on easyJet's strategic objectives. This list is not intended to be exhaustive. Whilst easyJet can monitor risks and prepare for adverse weather scenarios, the ability to affect the core drivers of many risks is not within the Group's control, for example adverse weather, pandemics, acts of terrorism, changes in government regulation and macroeconomic issues.
Link to strategy: 1 Build number 1 and 2 network positions 2 A lean cost advantage 3 Customer and operational experience 4 Data and digital 5 Grow revenue 6 The best people V Risks impacting the viability assessment ------------------------------------------------------------ ------------------------------------------------------------ SAFETY FIRST ------------------------------------------------------------ ------------------------------------------------------------ Risk description Mitigation ------------------------------------------------------------ ------------------------------------------------------------ Major safety incident easyJet's number one priority A major safety is the safety and security incident (such of its customers and people. as a hull loss) could adversely A Safety Committee (a committee affect easyJet's of the Board) oversees the reputation and management of easyJet's safety its operational processes and systems. and financial performance. The impact of such Turn to pages: 48-49 [of Annual an incident would Report] for further details be heightened if easyJet failed A Safety Review Board (at to react promptly Executive Management Team and deal with it level) is responsible for effectively. directing overall safety policy and governance. This is chaired Link to strategy: by the Chief Executive. 1 2 3 5 6 V Safety Action Groups from across the airline are responsible for the identification, evaluation and control of safety-related risks. easyJet operates a Safety Management System using a leading software system (SafetyNet). This is used to: * collect and analyse safety data (enabling potential areas of risk to be projected); and
* enable learning from easyJet and industry events/incidents to be captured and embedded into future risk mitigations. A robust incident reporting process and "Just Culture" are in place. Turn to page: 34 [of Annual Report] for further details easyJet has an emergency response process and performs regular crisis management exercises. Hull (all risks) and liabilities insurance (including spares) is held. easyJet has an industry-leading fatigue risk management system and has implemented the EASA Flight Time Limitations regulations. ------------------------------------------------------------ ------------------------------------------------------------ Security threat A Security Decision Group, or attack comprising the Chairman, Chief Failure to identify Executive, appropriate members or prevent a major of the Executive Management security-related Team and other senior management, threat or attack, determines whether easyJet or react immediately should continue to operate and effectively, in countries or areas affected could adversely by security-related incidents affect easyJet's or conflict. As part of that reputation and process the easyJet security its operational team work to provide the Security and financial performance. Decision Group with timely, credible and reliable information Such an incident upon which to base operational has the potential decisions. easyJet adheres to impact upon to all recommendations and easyJet's business, guidelines provided by the regardless of the authorities. location or target. The Director of Safety and The threat of further Security and the Head of Security security-related work with authorities and attacks (regardless governments around easyJet's of where they may network to assess whether occur) may impact security measures are effective the future demand and in compliance with regulatory for air travel. requirements. A significant amount of work is carried Link to strategy: out with the aim of enhancing: 1 2 3 5 6 * early identification of developing and emerging security risks; * the active management of security risks; * the methods for reducing the impact of any security-related incident; and * the Group's security culture and awareness. ------------------------------------------------------------ ------------------------------------------------------------ COMMERCIAL AND OPERATIONAL ------------------------------------------------------------ ------------------------------------------------------------ Risk description Mitigation ------------------------------------------------------------ ------------------------------------------------------------ Competition, capacity easyJet seeks to rapidly respond and industry consolidation to any such activity that The aviation market may impact its ability to is highly competitive grow the business. and easyJet operates in competition Competitor and consolidation with both flag activity is monitored, enabling carriers and other strategic decision making low-cost airlines. on key routes and positions. Excess capacity The Network Development Forum, in the market may a cross-functional panel of arise due to a senior executives, approves decrease in demand new bases and the allocation for air travel of assets around the network. and/or additional capacity as a result Fleet framework arrangements, of low fuel prices. together with the Group's This could have leasing policy, provide easyJet an adverse financial with significant flexibility impact on easyJet. in respect of scaling the fleet according to business easyJet's key competitive requirements. advantages include its network, cost Strong cost control is a key base, brand, digital behaviour across the Group, innovation and with initiatives to drive efficient and robust cost reduction and improve capital structure. efficiency in targeted areas. Failure to retain these advantages or react quickly to competitor changes could have an adverse financial impact on easyJet. Industry consolidation could also affect the competitive environment in a number of markets. This could cause a loss of market position and erosion of revenue. Link to strategy: 1 2 3 4 5 Significant network There are processes in place, disruption and clear roles and responsibilities Widespread disruption within teams across the business, to easyJet's network to plan for and manage significant may be caused by disruption. a single event or factors that A business disruption team, occur for a sustained which includes senior management period. Examples from relevant business areas, include forces determines and initiates required of nature (extreme action. weather, volcanic ash, etc.), terrorism, Board policy is to maintain air traffic management a liquidity buffer which allows issues, epidemics/pandemics the Group to better manage or the closure the impact of downturns in of a key airport. business or temporary curtailment
of activities. Significant disruption to the network In addition, easyJet holds could adversely business disruption insurance. affect easyJet's reputation and its operational and financial performance. Link to strategy: 1 2 3 4 5 6 Continuity of services Critical systems are hosted easyJet is dependent either across two data centres on a number of or within third party provider key IT systems locations. Recovery arrangements, and processes. including failover between the two data centres, are A loss of critical in place for all locations systems or access holding critical systems. to facilities, including the website, An IT incident management may lead to significant team is in place to respond disruption and rapidly to any unforeseen could have an adverse incidents that may arise. operational, reputational and financial impact. IT disaster recovery plans are tested regularly to identify Link to strategy: areas for improvement in resilience. 2 3 Business continuity plans ensure easyJet is prepared in the event of loss of facilities, including alternative sites for the relocation of critical staff. ------------------------------------------------------------ ------------------------------------------------------------ Third-party service There is a defined procurement providers process, led by a centralised easyJet has entered procurement team, which ensures into agreements a competitive and robust selection with third party of suppliers. As part of the service providers process, alternative service for services covering providers are identified and a significant proportion assessed against balanced of its operational evaluation criteria within and cost base. the major markets in which easyJet operates. Failure to manage third party performance Any specific supplier risks adequately may are identified and assessed adversely affect during the procurement process easyJet's reputation and controls and risk mitigation and its operational measures are included in the and financial performance. contracts entered into with the supplier. Link to strategy: 2 3 4 5 6 Contracts are managed according to easyJet's supplier relationship management framework, with key principles covering defined ownership and accountability, a governance framework and effective communication. Supplier performance is monitored through regular business reviews, including achievement of service level agreements and key performance indicators. Robust transition plans are agreed in the event of switching suppliers to enable an acceptable level of service to be maintained. ------------------------------------------------------------ ------------------------------------------------------------ Industrial action As easyJet operates across easyJet, and the Europe there are 19 unions aviation industry and nine representative bodies in general, has across eight countries which a significant number its crew are members of. easyJet of employees who seeks to maintain positive are members of working relationships with trade unions. Industrial all trade unions and other action taken by representative bodies. easyJet employees, or by the employees Each of the countries in which of key third-party easyJet operates has localised service providers, employment terms and conditions. could impact on This mitigates the risk of easyJet's ability large scale internal industrial to maintain its action occurring at the same flight schedules. time. This could adversely Processes are in place to affect easyJet's adapt to disruptions as a reputation and result of industrial action. its operational and financial performance. Link to strategy: 2 3 6 ------------------------------------------------------------ ------------------------------------------------------------ Single fleet risk The Board considers that the easyJet is dependent efficiencies achieved by operating on Airbus as its a single fleet type outweigh sole supplier for the risks associated with aircraft. easyJet's single fleet strategy. There are significant The Airbus A320 family (which cost and efficiency includes the A319) is one advantages of a of the two primary fleets single fleet, however, used for short-haul travel, there are two main the other being the Boeing associated risks: B737 family. There are approximately * technical or mechanical issues that could ground the 6,800 A320 family aircraft full fleet, or part of the fleet, which could cause operating with a proven track negative perception; and record for safety and reliability. easyJet operates a rigorous * valuation risks which crystallise when aircraft exit established aircraft maintenance the fleet. The main exposure at this time is with the programme. ageing A319 fleet, where easyJet is reliant on the future demand for second- hand aircraft. To mitigate the potential valuation risks, easyJet regularly reviews the second-hand market and has a number of different
Link to strategy: options when looking at fleet 2 3 V exit strategies. Sale and leaseback facilitates the exit of A319 aircraft from the fleet by transferring residual value risk, and also provides flexibility in managing the fleet size. ------------------------------------------------------------ ------------------------------------------------------------ FINANCIAL ------------------------------------------------------------ ------------------------------------------------------------ Risk description Mitigation ------------------------------------------------------------ ------------------------------------------------------------ Financial risk The Finance Committee (a committee easyJet is exposed of the Board) oversees the to various financial Group's treasury and funding risks which could policies and activities. give rise to adverse pressure on the Turn to page: 55 [of the Annual financial performance Report] for further details of the Group, e.g. costs, revenue The role of the Committee and cash flow. includes: * maintaining and implementing a treasury policy * Market risks - easyJet's business model is sensitive setting out Board-approved strategies for foreign to a sustained significant adverse movement in exchange and fuel hedging, along with liquidity, foreign currency exchange rates, jet fuel prices or interest rate management, counterparties' limits; and interest rates, which can't be mitigated. * reviewing and reporting on compliance with Board * Counterparty risk - non-performance of counterparties treasury policies. used for depositing surplus funds (e.g. money market funds, bank deposits) and hedging. The policy is to hedge revenue * Liquidity risk - misjudgement of the level of and costs within a percentage liquidity resulting in the inability to meet band for a rolling 24-month contractual/contingent financial obligations or the period. inability to fund the business when needed. Board policy is to maintain a liquidity buffer including cash and a $500 million five Link to strategy: year revolving credit facility 2 provided by a group of 12 relationship banks. This allows the Group to better manage the impact of downturns in business or temporary curtailment of activities. The basis for the liquidity policy was revised in 2016 to cover peak unearned revenue, with a minimum position of GBP2.6 million per 100 aircraft seats. A strong balance sheet supports the business through fluctuations in the economic conditions and the Group has access to diverse sources of funding to support liquidity requirements. ------------------------------------------------------------ ------------------------------------------------------------ Delivery of projects The Executive Management Team supporting the meets monthly to review progress business strategy made on the portfolio of programmes The business is and solve issues that require undertaking a number escalation. of key projects and programmes Key IT projects or programmes to deliver key have additional oversight elements of the through the IT Governance strategy. and Oversight Committee (a committee of the Board). Failure to deliver the planned business Turn to page: 55 [of the Annual benefits and cost Report] for further details savings from these projects may result Each project or programme in under achievement has its own steering group of easyJet's planned which provides challenge to financial results. the project, monitors progress and ensures that decisions Link to strategy: are made at the appropriate 1 2 3 4 5 6 level. A portfolio management office is in place to oversee delivery of projects and programmes, and track budgets and realisation of benefits. A project management framework, which sets out governance requirements, key processes and controls, is followed by all projects and programmes. "Lessons learnt" reviews are undertaken to ensure continuous improvement to this approach. ------------------------------------------------------------ ------------------------------------------------------------ PEOPLE ------------------------------------------------------------ ------------------------------------------------------------ Risk description Mitigation ------------------------------------------------------------ ------------------------------------------------------------ Attraction and There is a recruitment strategy retention of talent for pilots and cabin crew. easyJet's current This includes pilot sponsorship and future success and the Amy Johnson Flying is reliant on having Initiative to attract more the right people female pilots. In addition, with the right easyJet has developed a coherent capabilities. employment brand to attract and retain top talent. Increased competition in the recruitment An annual survey is undertaken market may impact to measure staff engagement easyJet's ability and identify any areas for
to attract and further management attention. retain key talent. This could adversely easyJet's aim is to develop affect the delivery talent from within. There of strategic objectives. are several talent development programmes in place for individuals Link to strategy: who have been identified for 6 fast-tracking into more senior roles as vacancies arise. Alongside this there is an annual succession planning process to ensure there are clear successors for all key business roles. ------------------------------------------------------------ ------------------------------------------------------------ COMPLIANCE AND REGULATORY ------------------------------------------------------------ ------------------------------------------------------------ Risk description Mitigation ------------------------------------------------------------ ------------------------------------------------------------ Impact of EU exit An internal working group Following the outcome has been established to review of the UK referendum all aspects of easyJet's operations. to leave the EU, there remains uncertainty easyJet is actively engaging as to how this with regulators, the UK Government will affect easyJet's and the EU to secure European current market flying rights through the access rights. continuation of a liberalised If easyJet is unable and deregulated aviation market to continue to across Europe. fly its intra-EU network this would As a mitigant, easyJet is have a significant in the process of registering operational and an Air Operator Certificate financial impact. in an EU territory to enable access to the European aviation Link to strategy: market in as similar a way 1 2 3 4 5 6 V as today in a post-Brexit landscape. ------------------------------------------------------------ ------------------------------------------------------------ Legislative and easyJet has an in-house legal regulatory risks team to advise on legal issues The airline industry and developments, and to monitor is heavily regulated compliance with formal regulatory and there is a requirements. It also has continual need a panel of external legal to keep well informed advisers both in the UK and and adapt to (as in key easyJet markets, who required) any legislative are briefed to keep easyJet or regulatory changes informed of any changes or across the jurisdictions new legislation and to assist in which easyJet easyJet in developing appropriate operates. responses to such legislation. Failure to comply In addition, a Head of Compliance with legislative has recently been appointed and regulatory to develop and lead internal requirements (or compliance programmes. interpretations thereof), such The Regulatory Affairs Group as local consumer co-ordinates easyJet's role laws, legal decisions in influencing future and or policy changes existing policy and regulations in relation to that affect the airline industry passenger compensation, and will work with industry environmental and bodies to assist in this, airport regulation, as appropriate. in the jurisdictions in which easyJet Country Review Boards are operates, could established for easyJet's have an adverse main markets, raising awareness reputational and of in-country issues, and financial impact. providing a forum in which to highlight any potential Link to strategy: legislative changes and impacts 2 3 5 6 in the different countries. ------------------------------------------------------------ ------------------------------------------------------------ REPUTATIONAL ------------------------------------------------------------ ------------------------------------------------------------ Risk description Mitigation ------------------------------------------------------------ ------------------------------------------------------------ Major shareholder easyJet has an active shareholder and brand owner engagement programme led by relationship its investor relations team. easyJet has two As part of that programme major shareholders easyJet engages with easyGroup (easyGroup Holdings Holdings Limited on a regular Limited and Polys basis alongside its other Holdings Limited) major shareholders. which, as a concert party, control In addition, the Company has 33.73% of its ordinary a relationship agreement with shares. easyGroup and Polys Holdings in line with the controlling Shareholder activism shareholder regime as set on their part could out in the Financial Conduct adversely impact Authority's Listing Rules. the reputation of easyJet and Representatives from the Board cause a distraction and senior management take to management. collective responsibility for addressing issues arising easyJet does not from any activist approach own its company adopted by the major shareholders. name or branding The objective is to address which is licensed issues when they arise and from easyGroup anticipate and plan for potential Ltd. The licence future activism. includes certain minimum service The brand licence agreement levels that easyJet with easyGroup Ltd provides must meet in order for the regular meeting of to retain the right senior representatives from to use the name both sides to actively manage
and brand. The brand-related issues as they easyJet brand could arise. Such meetings occur also be impacted on a quarterly basis and have through the actions proven effective. easyJet of easyGroup or also monitors compliance with other easyGroup brand licence service levels licensees. and has a right to take steps to remedy any instance of Link to strategy: non-compliance. 2 5 ------------------------------------------------------------ ------------------------------------------------------------ Cyber threat and An Information Security Steering information security Group, chaired by the General easyJet receives Counsel, oversees any developments most of its revenue in data threats and controls through credit and determines whether appropriate card transactions responses are being taken and operates as to them. an e-commerce business. It faces both external There are dedicated information cyber threats and security teams that monitor internal risks threats and ensure that the to its data and design, implementation and systems. operation of easyJet systems are secure. This is through A security breach the following: could negatively * achieving "secure by design" through a dedicated impact easyJet's security architecture capability; reputation and have an adverse operational and * monitoring of secure systems against unauthorised financial impact. access; Link to strategy: 2 3 4 6 * reviewing the security of external and internal systems and easyJet.com through periodic vulnerability scanning; * considering information security risks within procurement processes and the introduction of new systems and IT services; * reviewing and refreshing information acceptable use policies; and * maintaining staff security awareness and education through a Security Champions network, online traini ng materials and periodic awareness campaigns. Given the nature of this risk the appropriateness of the controls is under continuous review. ------------------------------------------------------------ ------------------------------------------------------------
End
5 December 2016
For further details please contact easyJet plc:
Institutional investors and sale side analysts:
+44 (0) 7989 665 Stuart Morgan Investor Relations 484 +44 (0) 7985 890 Michael Barker Investor Relations 939
Media:
+44 (0) 7860 794 Paul Moore Corporate Communications 444 +44 (0) 207 251 Edward Simpkins RLM Finsbury 3801 +44 (0) 7947 740 551
This information is provided by RNS
The company news service from the London Stock Exchange
END
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