Easyjet PLC — Annual Report 2017

Sep 30, 2017

Annual Report and Accounts

For the year ended 30 September 2017

Registered Number 03034606

Contents

		Pa ge
St gi te rt re po ra c		1
D ire s' rt ct re po or		3
ire si bi lit ie of D s' St ct at t re sp on s or em en		5
di ' In de nd rt to t re po au rs pe en		6
In st at t em en co m e		8
in of eh si St at t co m e co m pr en ve em en		9
si tio fin ci al f St at t o an po n em en		10
ui ch in of St ty at t eq an ge s em en		11
flo of sh St at t s ca w em en		12
th N to ts ot ac co un e es		13

Reports of the Directors for the year ended 30 September 2017

Strategic repor^t

Review of the business

easyJet Airline Company Limited (the Company) is incorporated in the United Kingdom and is the principal operating subsidiary of easyJet plc The Company is an airline cattier operating principally in Europe easyJet plc and all of its subsidiaries (the Group') is managed on ^a unified basis, and ^a full strategic repor^t for the year may be found on pages 2 to 46 of easyJet plc's published Annual repor^t and accounts for the year ended 30 September 2017

easylet is ^a low cost European point-to-point short-haul airline, carrying over 80 million passengers on more than 850 routes across more than 30 countries

easyJet has built one of Europe's leading short-haul airlines Our network of primary airports, routes and slots, combined with ^a clear focus on making travel easy and affordable, enables us to provide ^a friendly, efficient service with low fares for our customers This year we have made considerable investments in our business We have further strengthened our network, continued to invest in projects to deliver customer benefits and cost savings and reinforced the statement of financial position This will enable us to target long-term earnings growth and drive long-term value to our shareholders Our sustainable business model makes travel easy arid affordable and drives growth and returns for shareholders The core values underpLnning the Group's cause, to make travel easy and affordable, are

• safety,
• simplicity,
• •one team,
• integrity,
• passion, and
• pioneering

Our cause will be achieved by focusing on our strategy

• •build strong number one and two network positions,
• •^a lean cost advantage,
• customer and operational excellence,
• •data and digital,
• •grow revenue, and
• the best people

The Group delivered ^a robust financial performance this year, despite ^a challenging environment that included terrorism related events in Paris, London, Nice and Berlin The Group grew passenger numbers to ^a record 80 2 million and load factor also increased to ^a record 92 6% Total Group revenue increased by 8 1% to £5,047 million, which equated to £58 23 per seat, ^a decrease of 0 4%, and ^a headline profit before tax of £408 million decreased by £86 million from the year ended 30 September 2016 (restated) The headline measure is explained in note S to the accounts and pages 108 to 109 of easy]et plc's published Annual repor^t and accounts

The Group's headline cost per seat increased by 7 7% to £41 27, and increased by ⁰ 9% at constant currency as ^a result of continued inflationary pressures in the market, particularly at regulated airports, and higher disruption costs driven by significant industrial strike action and adverse weather conditions Cost improvements included lean programme savings of £85 million, in airport, ground handling and navigation as well as engineering and maintenance savings The Group also had foreign exchange Cost headwinds of £1 01 million

The Group increased its restated net assets by £108 million to £2,802 million at 30 September 2017 The Group holds cash and cash equivalents and money market deposits totalling £1,328 million excluding restricted cash

In October ²⁰¹⁶ the Group raised ^a second €500 million bond on industry-leading terms and retained ^a sector-leading credit rating (Standard & Poor's BBB+ stable, Moody's Baal stable)

The Group's headline ROCE was ¹¹ 9% and the Group's dividend payou^t ratio remained at 50% of headline profit after tax delivering ^a proposed ordinary dividend per share of 40 9 pence (2016 53 8 pence)

Key performance indicators

The Group uses ^a range of both financial and non-financal key performance indicators, as described on pages ²⁴ to ²⁵ of easyJet ^plc's published Annual repor^t and accounts for the year ended 30 September 2017 The Group is managed as ^a single entity and accordingly key performance indicators are monitored at Group level, rather than on an individual entity basis

Principal risks and uncertainties and financial risk managemen^t

The Group is affected by ^a number of principal risks and uncertainties as described on pages ³³ to ⁴⁰ of easy]et ^plc's published Annual repor^t and accounts for the year ended ³⁰ September ²⁰¹⁷ easyJet Airline Company Limited is expose^d to these same risks and uncertaintIes Financial risk managemen^t is described in notes 21 and 22 to the accounts and pages 118 to 123 of easyJet ^plc's published Annual repor^t and accounts

Reports of the Directors for the year ended 30 September 2017

Strategic repor^t (continued)

Results and dividends

The Company's profit after tax for the year was £242 million (2076 (restated): £297 million) which has been transferred to reserves. Net assets Increased from £1,531 million at ³⁰ September ²⁰¹⁶ (restated) to £1,587 million at ³⁰ September 2017. During the year the. Company declared an In-specie dividend of £274 million (2076: £219 million) to its immediate paren^t company, easyJet ^plc, settled by the cancellation by the sole member of the Company of par^t of ^a debt owed to the Company.

During the year, the Company incurred ^a number of material non-recurring items or items which are not considered to be reflective of the trading performance of the business. These items include an £8 million loss on disposal and ^a £6 million maintenance provision catch up - both one-off charges as ^a result of the sale and leaseback of ten A319 aircraft in December 2016, arising due to the age of the selected aircraft and maintenance provision accounting; ^a £6 million one-off charge associated with implementing an organisational review; ^a £2 million charge in relation to establishing ^a multi-Air Operator Certificate (AOC") post-Brexit structure, which includes the set-up of ^a European AOC, based in Austria, in July 2017; and ^a £24 million non-cash gain relating to balance sheet foreign exchange gains and losses.

On behalf of the board

Andrew Findlay Director .2 January ²⁰¹⁸

Hangar 89 . London Luton Airport Luton Bedfordshire LU2 9PF

Registered Number 03034606

Reports of the Directors for the year ended 30 September 2017

Directors' repor^t

The Directors presen^t the Strategic repor^t on pages ¹ and 2, the Directors' repor^t on pages 3 and 4, the Statement of Directors' responsibilities on page 5 and the audited accounts for the year ended 30 September 2017

Results and dividends

The Company's profit after tax for the year was £242 million (2016 £297 million) which has been transferred to reserves During the year the Company declared an in-specie dividend of £214 million (2016 £219 million) to its immediate paren^t company, easyJet ^plc, settled by the cancellation by the sole member of the Company of par^t of ^a debt owed to the Company No further dividends were proposed or paid during the year

Future developments

Details of future developments in the business of the Company can be found on page ¹⁷ of easyJet ^plc's published Annual repor^t and accounts for the year ended 30 September 2017

Directors

The Directors who held office during the year and up to the date of this repor^t are as follows

Carolyn McCall DBE (resigned 30 November 2017) Andrew Findlay Christopher Brocklesby Margaret Christine Browne OBE (appointed ¹ October 2016) Peter Duffy Rachel Kentleton (resigned 14 October 2016) Catherine Lynn (resigned 26 September 2017) Paul Moore Jacqueline Simmonds (resigned 31 December2077) Kyla Mullins (appointed 23 March 2017) Robert Carey (appointed 3 October 2017) Johan Lundgren (appointed 1 December 2017)

Employees

The Company is an equa^l opportunities employer It ensures that employees and applicants do not receive less favourable treatment on the basis of their age, colour, creed, disability, full or par^t time status, gender, marital status, nationality or ethnic origin, race or sexual orientation

The Company treats applicants with disabilities equally and supports current employees who become disabled This includes offering flexibility and making reasonable adjustments to the workplace to ensure they can achieve their full potential However, for easyJet's two largest communities, ^ptlots and cabin crew, there are ^a range of regulatory requirements on health and ^physical ability which all applicants and current employees must comply with

It is understood that goo^d communication within the business is vital, especially one that has such an extensive staff base The Company ensures that key issues and matters are discussed with employees so that it can react quickly and ensure that everyone remains engage^d The Company works with employee representatives and recognises ^a number of trade unions

The Company encourages the involvement of employees in its performance through the use of employee share schemes, settled in the shares of the Company's paren^t undertaking, easyJet plc

Further details are contained in the published Annual repor^t and accounts of easyJet ^plc for the year ended ³⁰ September ²⁰¹⁷

Political donations and expenditure

The Company works constructively with alt levels of governmen^t across its network, regardless of political affiliation easyJet believes in the rights of individuals to engage in the democratic process, however it is the Company's policy not to make political donations

There were no political donations made or political expenditure incurred during the ²⁰¹⁷ financial year (2016 £2,056) The expenditure incurred in ²⁰¹⁶ was in relation to ^a visit by David Cameron to the Company's headquarters This constituted political expenditure under the Companies Act 2006, as it involved the prime minister campaigning for the EU referendum

Principal subsidiaries and overseas branches

Information in respec^t of the Company's subsidiaries is ^given in note ⁹ to the accounts The Company also operates two Spanish branches (one performing self-handling and the other dealing with employment matters) and ^a Portuguese branch and an Italian branch (both dealing with employment matters)

Directors' indemnities

Details of directors' indemnities can be found on page 85 of easyJet plc's published Annual repor^t and accounts for the year ended 30 September 2017

Reports of the Directors for the year ended ³⁰ September ²⁰¹⁷

Directors' repor^t (continued)

Going concern

In adopting the going concern basis for preparing the accounts, the Directors have considered current and ongoing business activities of the Company as well as the principal risks and uncertainties.

The Company holds cash and cash equivalents and money market deposits totalling £1,327 million as at ³⁰ September 2017. Total debt of £101 million is free from financial covenants, with £8 million due for repaymen^t in the year to ³⁰ September2018.

Net current liabilities at ³⁰ September ²⁰¹⁷ were £1,665 million but included unearned revenue (payments made by customers for flights scheduled pos^t year end) of £727 million.

The business is expose^d to fluctuations in fuel prices and US dollar and Euro exchange rates, The Group's policy is to hedge between 65% and 85% of estimated exposures ¹² months in advance, and 45% and 65% of estimated exposures from ¹³ up to ²⁴ months in advance. Specific decisions may require consideration of ^a longer-term approach. Treasury strategies and actions will be driven by the need to meet treasury, financial and corporate objectives. The Group was compliant with this policy at the date of this Annual repor^t and accounts.

After making enquiries, the Directors have ^a reasonable expectation that the Company will be able to operate within the level of available facilities and cash and deposits for the foreseeable future. Accordingly, they continue to adopt the going concern basis In preparing the accounts.

Important events affecting the Company since ³⁰ September 201?

On ²⁷ October the Company signed an agreemen^t with Air Berlin's administrators, as par^t of which it will enter into leases for up to ²⁵ A320 aircraft at Berlin Tegel airport, offer employment to former Air Berlin flying crews and take over other assets including slots for ^a purchase consideration of €40 million. The transaction was completed in December 2017,

The Company purchased seven A319 aircraft in November ²⁰¹⁷ from fellow subsidiary, easyJet Leasing Limited, for proceeds of £83 million.

The Company completed the sale and leaseback of ¹⁰ A319 aircraft, including the seven aircraft above, in November 2017,. Cash proceeds were \$137 million; due to the age of the selected aircraft at the time of this transaction and easyJet's maintenance provision accounting policy, ^a one-ofl non-cash charge of £19 million (f which £11 million relates to the loss on disposal and £8 million relates to the maintenance provision catch-up) will be recognised in the first half of the ²⁰¹⁸ financial year.

Statement of disclosure of information to auditors

In accordance with the provisions of Section ⁴¹⁸ of the Companies Act 2006, each of the persons who are Directors of the Company at the date of approva^l of this repor^t confirms that:

• so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
• the Director 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.

Independent Auditors

The independent auditors, PricewaterhouseCoopers LLP, have expresse^d their willingness to continue in office.

On behalf of the board

/AJ

An drew Findlay Director 2-3, January2018

Hangar 89 London Luton Airport Luton Bedfordshire LU29PF

Registered Number 03034606

Reports of the Directors for the year ended ³⁰ September ²⁰¹⁷

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepare^d the financial statements in accordance with International Financial Reporting Standards (IFRS5) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they ^give ^a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing the financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;
• state whether applicable JFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements 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 company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.

The Directors are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In the case of each Director in office at the date the Directors' Report is approved:

• so far as the Director is aware, there is no relevant audit information of which the company's auditors are unaware; and • they have taken all the steps that they ought to have taken as ^a Director in order to make themselves aware of any relevant audit information and to establjsh that the company's auditors are aware of that information.

Andrew Findlay Director

Independent auditors' repor^t to the members of easyJet Airline Company Limited

Report on the audit of the financial statements

Opinion

In our opinion, easyJet Airline Company Limited's (the Company") financial statements:

• ^give ^a true and fair view of the state of the Company's affairs as at 30 September 2017 and of its profit and cash flows for the year then ended;
• •have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• •have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Accounts (the "Annual Report"), which comprise: the Statement of financial position as at ³⁰ September 2017; the Income statement, the Statement of comprehensive income, the Statement of cash flows, the Statement of changes in equity for the year then ended; and the notes to the financial statements, which include ^a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide ^a basis for our opinion.

Independence

We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

We have nothing to repor^t in respec^t of the following mailers in relation to which ISAs (UK) require us to repor^t to you when:

• • the Directors use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• • the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for ^a period of at least twelve months from the date when the financial statements are authorised for issue.

However, because not all future events or conditions can be predicted, this statement is not ^a guarantee as to the Company's ability to continue as ^a going concern.

Reporting on the other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' repor^t thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, excep^t to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparen^t material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is ^a material misstatement of the financial statements or ^a material misstatement of the other information. If, based on the work we have performed, we conclude that there is ^a material misstatement of this other information, we are requited to repor^t that fact. We have nothing to repor^t based on these responsibilities.

With respec^t to the Strategic repor^t and Directors' report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to repor^t certain opinions and matters as described below.

Strategic repor^t and Directors' repor^t

In our opinion, based on the work undertaken in the course of the audit, the information ^given in the Strategic Report and Directors' repor^t for the year ended ³⁰ September ²⁰¹⁷ is consistent with the financial statements and has been prepare^d in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic repor^t and Directors' report.

Responsibilities for the financial statements and the audit

Responsibilities of the Directors for the financial statements

As explained mote fully in the Statement of Directors' responsibilities set out on page 5, the Directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they ^give ^a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as ^a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as ^a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' repor^t that includes our opinion. Reasonable assurance is ^a high level of assurance, but is not ^a guarantee that an audit conducted in accordance with ISAs (UK) will always detect ^a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

^A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms par^t of our auditors' report.

Use of this repor^t

This report, including the opinions, has been prepare^d for and only for the Company's members as ^a body in accordance with Chapter ³ of Part ¹⁶ of the Companies Act ²⁰⁰⁶ and for no other purpose. We do not, in ^giving these opinions, accep^t or assume responsibility for any other purpose or to any other person to whom this repor^t is shown or into whose hands it may come save where expressly agree^d by our prior consent in writing.

Other required reporting

Companies Act ²⁰⁰⁶ exception reporting

Under the Companies Act ²⁰⁰⁶ we are required to repor^t to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or
• • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or
• •certain disclosures of Directors' remuneration specified by law are not made; or
• the financial statements are not in agreemen^t with the accounting records and returns.

We have no exceptions to repor^t arising from this responsibility.

Andrew Kemp (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London &—3 January2018

Income statement

For the year ended ³⁰ September ²⁰¹⁷

		20 17	20 16
			ed ) (re at st
	N ot e	ill io £ m n	ill io £ m n
Se at e re ve nu		4, 95 8	4, 58 7
N t r en ue ea ev on -s		89	82
tin le O e g as e re ve nu ra		75	59
pe l To ta e re ve nu	26	5, 12 2	47 28
el Fu		,0 62 ) (7	(1 11 4)
nd ha nd lin d A irp ts ou g or an		,4 65 ) (1	(1 26 7)
gr Cr ew		50 ) (6	(5 45 )
io N ig at n av		(3 81 )	(3 36 )
ai M nt ce en an		(3 06 )	(2 71 )
lli d ke tin Se m ar		(1 22 )	(1 07 )
ng g an O th st		(4 10 )	25 ) (3
s er co IT D A R EB		72 6	3 76
in ft dr le A irc		(2 61 )	(2 34 )
as g ra y ci io D at	8	43 ) (1	) (1 21
re n ep of ib le tis ati in ts	7	4) (1	(1 2)
A ta se on ng as rn or of it		30 8	39 5
O tin g pr pe ra
in r f in ci d he co m e		32	8
le iv ab In ot st an ng te an re re ce ci ch d r f in		(3 3)	(5 7)
bl he In st ot ng ar ge s te an e an re pa ya	2	(1 )	(4 9)
ch fin N et ar ge an ce
	3	30 7	34 7
be fo Pr of it ta x re
	5	(6 6)	(5 0)
ch Ta ge ar x
		24 2	29 7
of it fo he Pr r t ar ye

Statement of comprehensive income

For the year ended ³⁰ September ²⁰¹⁷

		20 17	20 16
			d) (re sta te
	N ot e •	io £ ill n m	£ tlh m on
it fo he Pr of r t ye ar		24 2	29 7
el fe ) th eh si in O xp en se er pr en ve co m co m
C h flo dg he as es w
lu in th Fa ir in va e ga s e ye ar		38	10
cl ed A in st at t nt to m e em en m ou s re cy co		91	34 7
nd ed pl ui G ai fe to ty t t a tra er en pr op an eq pm ns ns rr ,		(1 07 )	(2 8)
ch R el ed at ta ar ge x	5	(4 )	(6 6)
eh siv in tal he To ot e pr en e co m r c om		18	28 3
l c eh si in fo he To ta r t ye ar en ve co m e om pr		26 0	56 0

For capital expenditure cash flow hedges, the accumulated gains and losses recognised in other comprehensive income will be reclassified to the initial carrying amount of the asset acquired, within property, ^piant and equipment All other items in other comprehensive income will be reclassified to the income statement

Losses/(gains) on cash flow hedges reclassified from other comprehensive income in income statement captions are as follows

		20 17 £ ill io m n	16 20 ill io £ m n
R en ue ev		83	(7 )
el Fu		36	37 5
M ai nt en an ce		(1 1)	(8 )
dr le in Ai ft g y as rc ra		(1 5)	(1 1)
th O st er co s		(2 )	(2 )
		91	34 7

Statement of financial position

As at 30 September 2017

		20 17	20 16
			ed (re ) st at
	N ot e	£ ill io m n	£ ill io m n
N nt ts on -c ur re as se
Go od wi ll	7	36 7	36 7
in ib le O th ta ts ng as se er	7	17 9	15 2
pl nd ui Pr t ty t a op er an eq pm en ,	8	3, 11 5	27 44
In in bs id ia rie stm ts ve en su s	9	1	1
fin ci al in D iv ati str ts er ve an um en	21	94	15 4
sh Re ic d str te ca	12	7
O th et t a er no n- cu rr en ss s	10	75	11 2
		3, 83 8	3, 53 7
C nt ts ur re as se
Cu iv ab le nt ta rre x re ce		-	8
ad d he ei bl Tr ot an r r ec va es e	11	27 1	20 9
iv ati in D fin ci al str ts er ve an um en	21	13 1	26 8
M ke td its on ey m ar ep os	12	61 7	25 5
C h d sh ui le nt as an ca eq va s	12	71 0	71 3
		1,7 29	1,4 53
C lia bi lit ie nt ur re s
Tr ad d he ab le ot e r p ay s an	13	(2 ,4 51 )	(1 26 ) ,6
U d re ve nu e ne ar ne		(7 27 )	(5 68 )
Bo in rro w gs	14	(8 )	(4 5)
in D iv ati fin ci al str ts er ve an um en	21	(8 2)	(2 75 )
bl Cu t t rr en ax pa ya e		(2 5)	-
r l iab ili tie ch Pr isi fo d ov on s s an ar ge s	16	(1 04 )	(5 2)
		(3 ,3 97 )	(2 76 6)
N t l ia bl ilt ie et cu rr en s		(1 68 ) ,6	(1 ,3 13 )
N lia bi lit ie nt on -c ur re s
Bo in rro gs w	14	(9 3)	(1 86 )
iv ati fin ci al in D str ts er ve an um en	21	(5 1)	(4 9)
wi th de ki iv ati fin ci al in D rta str ts un ng s an um en gr ou p er ve	21	(5 4)	(6 1)
de fe ed in N nt rr co m e on -c ur re	15	(2 5)	(3 6)
fo r l iab ili tie d ch Pr isi s an ar ge s ov on s	16	(1 83 )	(2 00 )
ef d D ta x er re	5	(1 77 )	(1 61 )
		(5 83 )	(6 93 )
N et ts as se		1,5 87	1,5 31
ui Sh eh ol de ' ty eq ar rs
Sh pi l ta ar e ca	17	76 5	76 5
H ed gi re se rv e ng		42	24
Tr sla tio an n re se rv e		1	1
in ed in Re ta ea rn gs		77 9	74 1
ity To l e ta qu		1,5 87	1,5 31

The accounts on pages ⁸ to ³⁹ were approve^d by the Board of Directors and authorised for issue on ²³ January ²⁰¹⁸ and signed on behj,of the Board.

^< /t" )-"

Andrew Findlay /Oirector

Statement of changes in equity

For the year ended 30 September 2017

				R ai d et ne	To l ta
	Sh ar e	ed gi H ng	Tr sl io at an n	in ea rn gs	ui ty eq
	pi l ta ca	re se rv e	re se rv e	d) (r ta te es	(r d) ta te es
	£ ill io m n	ill io £ m n	£ ill io m n	ill io £ m n	£ ill io m n
20 16 At lO ob ct er	5 76	24		75 9	1,5 49
(n 1) ch tin Ef fe of in lic ot ct e an ge ac co un g po y	-	-	-	(1 8)	(1 8)
ba la 1 20 16 R d O ob ta te at ct es nc e er	76 5	24	1	74 1	1,5 31
in l c To eh siv ta co m e om pr en e	-	18	-	24 2	26 0
D iv id ds (n 6) ot en e	-	-	-	(2 14 )	(2 14 )
Sh in iv he nt ar e ce e sc m es
pl ic V al of se rv es ue em oy ee	-	-	-	10	10
A t3 0 Se be r2 01 7 pt em	76 5	42	1	77 9	1,5 87
				R ai d et ne	To l ta
	Sh ar e	H ed gi ng	Tr sla tio an n	in ea rn gs	ui ty eq
	pi l ta ca	re se rv e	re se rv e	(re d) sta te	(re d) sta te
	£ ill io m n	£ ilk m on	ill io £ m n	£ ill io m n	£ ill io m n
O ob 20 15 A ti ct er	76 5	(2 39 )	1	9 67	12 06
1) lic (n of ch in tin ot Ef fe ct po y e an ge ac co un g	-	-	-	(2 8)	(2 8)
O ob 20 15 R d ba la 1 ct ta te at er es nc e	76 5	(2 39 )	1	65 1	11 78
in To l c eh siv ta co m e om pr en e	-	26 3	-	29 7	56 0
D iv id ds (n 6) ot en e	-	-		(2 19 )	(2 19 )
in iv Sh he nt ce e ar e sc m es
ic al of pl V se rv es ue em oy ee	-	-	-	17	17
(n 5) R el ed ta ot at x e		-	-	(5 )	(5 )
be 20 16 A t 3 0 Se pt em r	76 5	24	1	74 1	1,5 31

The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments relating to highly probable transactions that are forecast to occur after the year end

Statement of cash flows

For the year ending ³⁰ September ²⁰¹⁷

ilh £ N £ ill io ot n m e m iti in tiv C h flo fr at es s er g ac as w om op 1, 08 9 62 19 io C h d fro at te er ns as ge ne ra m op (1 (9 ) he r f in cin ch id d In ot te st ge s an g ar pa re an 9 iv ed he r f in cin in In d st ot te m e re ce an g co re an (2 6) (9 Ta id x pa 1, 06 3 53 1 in tiv Iti d N sh fro at et te g ac es ne ra m op er ca ge iti sti tiv h flo fr in C es ng ac as w s om ve (4 73 (6 44 ) 8 d la ui Pu ha of t ty nt an pm en se , p eq rc pr op er (3 (4 4) 7 ha of in ib le Pu ta ts rc se ng as se 63 ) 20 (3 t d its in ke (in )/d N ep os et re as e m on ey m ar cr ea se ec 11 3 air af d in le eb k of ds le t N fro at cr et op er g as ac m sa an pr oc ee - (4 65 ) (9 38 ) sti tiv iti sh ed by In N et ng ac es ve ca us tiv iti ci C h flo fr fin es ng ac as w s om an 25 ) 20 (1 (9 k f b lo R t o ep ay m en an an s 20 (7 ) (6 of le fin le f c ita l e R ts t o m en an ce as es m en ap ep ay ic d sh in N de str te et ca se re cr ea - 32 ) (1 (9 iti fin ci tiv sh ed by fr N et es an ng ac ca us om 4 ch ch Ef fe of ct te an ge s an ge ra ex (3 ) sh d sh ui le in nt (d e) /in N s et ca ca eq va cr ea se an ec re as		20 17	20 16
			on
			5
			0)
			7
			1)
			)
			7)
			45
			8)
			)
			6
			8)
			95
			63
in be gi of C h d sh ui le nt at nn g ye ar s as an ca eq va		3 74	65 0
71 0 71 3 12 d ui le of h sh C d nt at en va s ar as ca eq ye an

Notes to the accounts

I Accounting policies1 judgements and estimates

Statement of compliance

easyJet Airline Company Limited (the Company or easy]et), ^a private Limited company, is ^a low-cost airline carrier operating principally in Europe and is incorporated and domiciled in the United Kingdom The address of its registered office is Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF, England The Company is ^a wholly owned subsidiary of easyJet ^plc, ^a public limited company whose shares are listed on the London Stock Exchange under the ticker symbol EZJ

The accounts are prepare^d in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, taking into account IFRS Interpretations Committee (IFRS1C) interpretations and those parts of the Companies Act ²⁰⁰⁶ applicable to companies reporting under IFRS

Basis of preparation

The financial statements for the year ended ³⁰ September ²⁰¹⁷ are prepare^d based on the historical cost convention excep^t for certain financial assets and liabilities including derivative financial instruments that are measured at fair value The accounting policies set out below have been applied consistently to all years presented in these accounts

easyJet's business activities together with factors likely to affect its future development and performance, are described on pages ¹ and ² and on pages ² to ⁴⁶ of the easyJet ^plc Annual repor^t and accounts for the year ended ³⁰ September ²⁰¹⁷ Note ²³ to easyjet ^plc's Annual repor^t and accounts sets out the Company's objectives, policies and procedures for managing its capital and ^gives details of the risks related to financial instruments held by the Company

The accounts have been prepare^d on the going concern basis Details on going concern are provided on page ⁴ The Company is not required, under ⁵⁴⁰⁰ of the Companies Act 2006, to prepare consolidated accounts and has not elected to do so

The use of critical accounting estimates and managemen^t judgement is required in applying the accounting policies Areas involving ^a higher degree ofjudgement or complexity, or where assumptions or estimates are significant to the financial statements, are highlighted on pages 18 to 19

Changes in accounting policies

Where an aircraft is sold and leased back, other than when first delivered to easyJet, ^a liability to undertake future maintenance activities, resulting from pas^t flying activity, arises at the point the lease agreemen^t is signed Historically this liability has been treated as par^t of the surplus or shortfall arising on the sale and leaseback and recognised in either deferred income or non-current or current assets as appropriate and amortised in the income statement on ^a straight-line basis over the expected lease term

During the year, managemen^t made ^a change to this accounting policy, to recognise the initial maintenance provision on sale and leasebacks immediately in the income statement Management believes that the new accounting policy will result in ^a more relevant and reliable accounting treatment which better reflects the economics of the lease arrangements This change requires ^a restatement of previous financial statements The following table sets out the adjustments made to certain selected line items of the previously reported comparative amounts as ^a result of the change to the above accounting policy

be r 2 01 6
ed st at re
£ ill io m n
11 2
20 9
(1 ,8 26 )
8
(3 6)
1,5 31
74 1
(2 34 )
39 6
34 7
(5 0)
29 7
65 1
29 7
74 1

Notes to the accounts

^I Accounting policies, judgements and estimates (continued)

Significant Accounting policies

The significant accounting policies applied are summarised below They have been applied consistently to both years presented The explanations of these policies focus on areas where judgement is applied or which are particularly significant in the financial statements

Foreign currencies

The accounts of the Company are presented in Sterling, rounded to the nearest £million, which is the Company's functional currency. The Company's functional currency has been determined by reference to the primary economic environment in which it operates

Transactions arising in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction Monetary assets and liabilities denominated in foreign currencies are translated into Sterling using the rate of exchange ruling at the end of ^a reporting period and (except where the asset or (lability is designated as ^a cash flow hedge) the gains or losses on translation are included in the income statement Non-monetary assets and liabilities denominated in foreign currencies are translated into Sterling at foreign exchange rates ruling at the dates the transactions were effected

Revenue recognition

Revenue comprises seat revenue, being the value of airline services (net of air passenger duty and simiLar charges, VAT and discounts), and non-seat revenue

Seat revenue arises from the sale of flight seats, tncluding the provision of checked baggage, allocated seating, administration, credit card and change fees Seat revenue is recognised when the service is provided This is generally when the flight takes ^place, but in the following cases, this is at the time of booking

• •administration and credit card fees as they are contractually non-refundable, and
• change fees as the service provided is that of allowing customers to change bookings

Amounts paid by 'no-show' customers are recognised as seat revenue when the booked service is provided as such customers are not generally entdled to change flights or seek refunds once ^a flight has departed

Unearned revenue represents flight seats, including the provision of checked baggage and allocated seating, sold but not ye^t flown and is held in the statement of financial position until it is realised in the income statement when the service is provided

Non-seat revenue arises from commissions earned from services sold on behalf of partners and is recognised when the service is provided This is generally when the related flight takes ^place In the case of commission earned from travel insurance, revenue is recognisedat the time of booking as easy]et acts solely as appointed representative of the insurance company

Operating lease revenue

Operating lease revenue represents amounts recognised from the leasing àf aircraft to other easyjet entities lease income is recognised on ^a straight line basis over the lease term

Business combinations

Business combinations in prior years were accounted for by applying the purchase method The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets ^given and liabilities incurred or assumed ^plus any costs directly attributable to the business combination The acquirees identifiable assets and liabilities are recognised at their fair values at the acquisition date There have been no business combinations since the effective date of IFRS ³ Business Combinations (Revised)

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over easyJet's interest in the net fair value of the identifiable assets acquired and the liabilities assumed

Goodwill and other Intangible assets

Goodwill is stated at cost less any accumulated impairment losses It has an indefinite expected useful life and is tested for impairment at least annually or where there is any indication of impairment

Landing rights are stated at cost less any accumulated impairment losses They are considered to have an indefinite useful life as they will remain available for use for the foreseeable future provided minimum utilisation requirements are observed, and are tested for impairment at least annually or where there is any indication of impairment

Other intangible assets are stated at cost less accumulated amortisation, which is calculated to write off their cost, less estimated residual value, on ^a straight-line basis over their expected useful lives Expected useful lives and residual values are reviewed annually

	ed ef ul lif Ex ct pe us e
ftw C te so ar e om pu r	3- 7 ye ar s
C l r ig ht tra ct on ua s	Ov th le th of th la d te nt ct co ra s er e ng e re

Notes to the accounts

^I Accounting policies,judgements and estimates (continued)

Property, plant and equipment

Property, ^plant and equipment is stated at cost less accumulated depreciation Iiepreciation is calculated to write off the cost, less estimated residual value, of assets, on ^a straight line basis over their expected useful lives Expected useful lives and residual values are reviewed annually

	Ex ed ef ul lif ct pe us e
Ai ft rc ra	23 ye ar s
Ai ft at rc ra sp es	14 ye ar s
Ai ft— ai d ai nt rc ra pr ep m en an ce	10 7- at ye s
eh ol d im Le ts as pr ov em en	if le sh 5- 10 th le th of te as e or r ye ar s or e ng
d ui Fi , f ill in t xt an eq pm en ur es gs	ed if sh of le of he ui t i te 3 le th ty us or r ye ar s as e pr op er w re eq pm en s or ng
C r h dw te om pu ar ar e	3- 5 ye ar s

Aircraft held under finance leases are depreciated over the shorter of the lease term and their expected useful lives, as shown above

Residual values, where applicable, are reviewed annually against prevailing market rates at the end of the reporting period for equivalently age^d assets and depreciation rates are adjusted accordingly on ^a prospective basis The carrying value is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable For aircraft, easy]et is dependent on Airbus as its sole supplier This ^gives rise to ^a valuation risk which crystallises when aircraft exit the fleet, where easyJet is reliant on the future demand for second-hand aircraft

An element of the cost of ^a new aircraft is attributed on acquisition to prepaid maintenance and is depreciated over ^a period ranging from seven to ten years from the date of manufacture Subsequent costs incurred which lend enhancement to future periods, such as long-term scheduled maintenance and major overhaul of aircraft and engines, are capitalised and depreciated over the length of period benefiting from these enhancements All other maintenance costs are charged to the income statement as incurred

Pre-delivery and option payments made in respec^t of aircraft are recorded in property, ^plant and equipment at cost These amounts ate not depreciated Interest attributed to pre-delivery and option payments made in respec^t of aircraft and other qualifying assets under construction are capitalised and added to the cost of the asset concerned.

Gains and losses on disposals (other than aircraft sale and leaseback transactions) are determined by comparing the net proceeds with the carrying amount and are recognised in the income statement

Other non-current assets

Payments for aircraft and engine maintenance, as stipulated in the respective operating lease agreements, have historically been made to some lessors as security for the performance of future heavy maintenance works The payments are recorded within current and non-current assets (as applicable) as receivables from the lessors until the respective maintenance event occurs and the reimbursement with the lessor is finalised Any paymen^t that is not expected to be reimbursed by the lessor is recognised immediately within operating expenses in the statement of comprehensive income

Impairment of non-current assets

An impairment loss is recognised to the extent that the carrying value exceeds the higher of the assets or cash generating unit's fair value less cost to sell and its value in use Impairment losses recognised on goodwill are not reversed Impairment losses recognised on assets other than goodwill are only reversed where changes in the estimates used result in an increase in recoverable amount

Leases

The Company enters into sale and leaseback transacticns whereby it sells either new or mid-life aircraft to ^a third party and immediately leases them back Where sale proceeds received are judged to reflect the aircraft's fair value, any gain or loss arising on disposal is recognised immediately in the income statement Where sale proceeds received do not represen^t the aircraft's fair value, are any shoritalt or surplus arising is deterred within non-current assets or liabilities respectively, and amortised in the income statement on ^a straight-line basis over the expected lease term

In some operating sale and leaseback arrangements, receipt of par^t of the proceeds is deferred until the end of the lease., the amount of which is recorded as deferred consideration within non-current or current assets as appropriate

Non-contingent operating lease rentals are charged to the income statement on ^a straight-line basis over the life of the lease ^A number of operating leases require the Company to make contingent rental payments based on variable interest rates, these are expensed as incurred

Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are recognised at the inception of the lease at the fair value of the leased asset, or, if lower, at the presen^t value of the minimum lease payments Any directly attributable costs of entering into financing sale and leasebacks are included in the value of the asset recognised Lease payments are apportioned between the finance charges and the reduction of the lease liability so as to achieve ^a constant rate of interest on the remaining balance of the liability Finance charges are included in interest payable and other financing charges

Notes to the accounts

^I Accounting policies, judgements and estimates (continued)

Financial instruments

Financial instruments are recognised when the Company becomes ^a party to the contractual provisions of the relevant instrument and derecognised when it ceases to be ^a party to such provisions

Where market values are not available, the fair value of financial instruments is calculated by discounting cash flows at prevailing interest rates and by applying year end exchange rates

Non-derivative financial assets

Non-derivative financial assets are recorded at amortised cost and include trade receivables, cash and money market deposits

Cash and cash equivalents comprise cash held in bank accounts with no access restrictions and bank deposits and tn-party repos repayable on demand or maturing within three months of inception Interest income on cash and money market deposits is recognised using the effective interest method Restncted cash compnses cash deposits which have restrictions governing their use and is classified as ^a current or non-current asset based on the estimated remaining length of the restriction

Impairment losses are recognised on financial assets carried at amortised cost where there is objective evidence that an impairment loss has been incurred The amount of the loss is measured as the difference between the asset's carrying amount and the presen^t value of future cash flows, discounted at the original effective interest rate

If, subsequently the amount of the impairment loss decreases, and the decrease can be related objectively to an event that occurred after the impairment was recognised, the appropriate portion of the loss is reversed Both impairment losses and reversals are recognised in the income statement as components of net finance charges

Non-derivative financial liabilities

Non-derivative financial liabilities are initially recorded at fair value less directly attributable transaction costs, and subsequently at amortised cost, and include trade and other payables, borrowings and provisions Interest expense on borrowings is recognised using the effective interest method

Borrowings are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least ¹² months after the reporting period date

Derivative financial instruments and hedging activities

The Company uses foreign currency forward exchange contracts to hedge foreign currency risks on transactions denominated in US dollars, Euros, Swiss francs and South African Rand These transactions primanly affect revenue, fuel and aircraft dry le2sing costs, and the carrying value of owned aircraft The Company also uses cross currency interest rate swaps to hedge currency and interest rate risk on certain borrowings, and jet fuel forward contracts to hedge fuel price risks

Derivative financial instruments are measured at fair value Hedge accounting is applied to those derivative financial instruments that are designated as cash flow hedges or fair value hedges

Derivative financial instruments with paren^t undertakings are classed as non-current to better reflect their estimated maturity

Fair value hedges ^V

Changes in the fair values of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair values of the hedged assets or liabilities that are attributable to the hedged risk

Cash flow hedges

Gains and losses arising from changes in the fair value of forward contracts are recognised in other comprehensive income and deferred in the hedging reserve to the extent that the hedges are determined to be effective All other changes in fair value are recognised immediately in the income statement

When the hedged forecast transaction relates to an item of property, ^plant and equipment, the relevant accumulated game and losses are transferred from the hedging reserve and included in the initial carrying amount of that purchased asset Otherwise they are recognised in the income statement in the same period in which the hedged transaction affects the income statement

in the event that ^a hedged forecast transaction is no longer considered highly probable, any related gains and losses are ^V immediately transferred from the hedging reserve and recognised in the income statement

Hedge accounting is discontinued when ^a hedging instrument is derecognised (e ^g through expiry or disposal), or no longer qualifies for hedge accounting Where the hedged item remains ^a highly probable forecast transaction, the related gains and losses remain deferred in the hedging reserve until the transaction takes ^place

Financial guarantees

If ^a claim on ^a financial guarantee ^given to ^a third party becomes probable, the obligation is recognised at fair value For subsequent measurement, the carrying amount is the higher of initial measurement and best estimate of the expenditure required to settle the obligation at the reporting date ^V

Tax

Tax expense in the income statement consists of current and deferred tax Tax is recognised in the income statement excep^t when it relates to items credited or charged directly to other comprehensive income or shareholders' equity, in which case it is recognised in other comprehensive income or shareholders' equity The charge for current tax is based on the results for the year as adjusted for income that is exemp^t and expenses that are not deductible using tax rates that are applicable to the taxable income

Notes to the accounts

^I Accounting policies, judgements and estimates (continued)

Tax (continued)

Deferted tax is provided in full on temporary differences relating to the carrying amount of assets and liabilities, where it is probable that the recovery or settlement will result in an obligation to pay more, or ^a tight to pay less, tax in the future, with the following exceptions

• where the temporary difference arises from goodwill or from the initial recognition (other than in ^a business combination) of other assets and liabilities in ^a transaction that affects neither taxable income nor accounting profit, and
• • deferred tax arising on investments in subsidiaries is not recognised where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future

Deferred tax is calculated at the tax rates that are expected to apply in the periods in which recovery of assets and settlement of liabilities are expected to take ^place, based on tax rates or laws enacted or substantively enacted at the date of the statement of financial position

Deferred tax assets represen^t amounts recoverable in future penods in respec^t of deductible temporary differences, losses and tax credits carried forwards Deferred tax assets are recognised to the extent that it is probable that there will be suitable taxable profits from which they can be deducted

Deferred tax liabilities represen^t the amount of income taxes payable in future penods in respec^t of taxable temporary differences

Deferred tax assets and liabilities are offset when there is ^a legally enforceable right to set off current tax assets against current tax liabilities and it is the intention to settle these on ^a net basis

Aircraft maintenance provisions

The accoUnting for the cost of providing major airframe and certain engine maintenance checks for owned and finance-leased aircraft is described in the accounting policy for property, ^plant and equipment

The Company has contractual obligations to maintain aircraft held under operating leases Provisions are created over the term of the lease based on the estimated future costs of major airframe checks, engine shop visits and end of lease liabilities These costs are discounted to presen^t value

Where an aircraft is sold and leased back, other than when first delivered to the Company, ^a maintenance catch up liability resulting from pas^t flying activity arises at the point the lease agreemen^t is signed and ^a corresponding maintenance catch up charge is recognised immediately in the income statement

^A number of leases also require the Company to pay recoverable supplemental rent to the lessor The purpose of these payments is to provide the tessor with collateral should an aircraft be returned in ^a condition that does not meet the requirements of the lease This recoverable supplemental rent is included in trade and other receivables within current assets and other non-current assets, as applicable, and is refunded when qualifying heavy maintenance is performed, or is offset against the costs incurred at the end of the lease

Other provisions

Provisions are recognised when ^a presen^t legal or constructive obligation arises as ^a result of ^a pas^t event, it is probable that the Company will be required to settle that obligation and ^a reliable estimate can be made of the amount of the obligation Amounts provided for represen^t the best estimate of the consideration required to settle the presen^t obligation at the balance sheet date, taking into account all related risks and uncertainties

Provision is made for passenger compensation claims when the Company has an obligation to recompense customers under Flight Compensation Regulation 261/2004 Provisions are measured based on known eligible events, passengers impacted and historical claim rates

Employee benefits

The Company contributes to defined contribution pension schemes for the benefit of employees easyjet has no further paymen^t obligations once the contributions have been paid The assets of the schemes are held separately from those of the Company in independently administered funds The Company's contributions are charged to the income statement in the year in which they are incurred

The expected cost of compensated holidays is recognised at the time that the related employees' services are provided

Share capital and dividend distribution

Ordinary shares are classified as equity Incremental costs directly attnbutabte to the issue of new ordinary shares or options are shown in equity as ^a deduction, net of tax, from the proceeds

Dividend distributions to the Company's shareholders are recognised as ^a liability in the period in which the dividends are approve^d by the Company's shareholders

Notes to the accounts

^I Accounting policies, judgements and estimates (continued)

Share-based payments

easyJet ^plc has ^a number of equity-settled share incentive schemes, that are available to the employees of the Company The fair value of share options granted under the Save As You Earn scheme is measured at the date of gran^t using the Binomial Lattice option pricing model The fair value of grants under the Long Term Incentive Plan is measured at the date of gran^t using the Black Scholes model for awards based on ROCE performance targets, and the Stochastic model (also known as the Monte Carlo model) for awards based on TSR performance targets The fair value of alt other awards is the share price at the date of gran^t

The fair value of the estimated number of options and awards that are expected to vest is expense^d to the income statement on ^a straight-line basis over the period that employees' services are rendered, with ^a corresponding increase in shareholders' equity Where non-market performance criteria (such as ROCE) attached to the share options and awards are not met, any cumulative expense previously recognised is reversed For awards with market-related performance criteria (such as TSR), an expense is recognised irrespective of whether the market condition is satisfied

The social security obligations payable in connection with gran^t of the share options are an integral par^t of the gran^t itself and the charge is treated as ^a cash-settled transaction

Segmental disclosures

The Company has one operating segment, being its route network, based on managemen^t information provided to the Executive Management Team, which is the Company's chief operating decision maker Resource allocation decisions are made for the benefit of the route network as ^a whole, rather than for individual routes within the network Performance of the network is assessed based on the consolidated profit or loss before tax for the year

Revenue is allocated to geographic segments on the following bases

• revenue earned from passengers is allocated according to the location of the first departure airport on each booking, and
• •commission revenue earned from partners is allocated according to the domicile of each partner

Critical accounting judgemonts and estimates

The preparation of accounts in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the accounts and the reported amounts of income and expenses during the reporting period Although these amounts are based on management's best estimates, events or actions may mean that actual results ultimately differ from those estimates, and these differences may be material The estimates andthe underlying assumptions are reviewed regularly

The following are the critical judgements, apar^t from those involving estimations (which are dealt with separately below), that the Directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised and presented in the financial statements

Classification of operating and financing teases (Notes ⁸ and 23)

Management exercises judgement in determining the classification of leases as either finance or operating leases in nature at inception of the lease Management considers the liketihood of exercising break clauses or extension options in determining the lease term Where the lease term constitutes substantially all of the economic life of the asset, or where the presen^t value of minimum lease payments amount to substantially all of the fair value of the aircraft, the lease is classified as ^a finance lease All other leases are classified as operating leases

The following three critical accounting estimates involve ^a higher degree of judgement or complexity, or are areas Where assumptions are significant to the financial statements

Aircraft maintenance provisions —£249 million (Note 16)

The Company incurs liabilities for maintenance costs in respec^t of aircraft leased under operating leases during the term of the lease These arise from legal and constructive contractual obligations relating to the condition of the aircraft when it is returned to the lessor To discharge these obligations, the Company will also normally need to carry out one heavy maintenance check on each of the engines and the airframe during the lease term

^A charge is made in the income statement, based on hours or cycles flown to provide for the cost of these obligations The most critical estimates requited are considered to be the utilisation of the aircraft, the expected costs of the heavy maintenance checks at the time which they are expected to occur, the condition of the aircraft, the lifespan of life-limited parts and the rate used to discount the provision

The bases of all estimates are reviewed annually, and also when information becomes available that is capable of causing ^a matenal change to an estimate, such as renegotiation of end of lease return conditions, increased or decreased utilisation, or changes in the cost of heavy maintenance services

Notes to the accounts

I Accounting policies, judgements and estimates (continued)

Other provisions —£38 million (Note 16)

easy]et incurs liabilities for amounts payable to customers who make claims in respec^t of flight delays and cancellations, and refunds of air passenger duty or similar charges Estimates include passenger claim rates, the value of claims made and the period of time over which claims will be made The bases of all estimates are reviewed at least annually and also when information becomes available that is capable of causing ^a matenal change to the estimate

Goodwill and landing rights —£461 million (Note 7)

Goodwill and landing rights are tested for impairment at least annually easyJet has one Cash-generating unit, being its route network In making this assessment, easyJet has considered the manner in which the business is manage^d including the centralised nature of its operations and the ability to open or close routes and redeploy aircraft and crew across the whole route network

The value in use of the cash-generating unit is determined by discounting future cash flows to their presen^t value When applying this method, easyJet relies on ^a number of key estimates including its ability to meet its strategic ^plans, future fuel prices and exchange rates, long-term economic growth rates for the principal countries in which it operates, and its pre-tax weighted average cost of capital Both fuel price and exchange rates are volatile in nature, and the assumptions used are sensitive to significant changes in these rates

New and revised standards and interpretations not applied

There were no new standards or interpretations/amendments to standards applied during the year ended ³⁰ September ²⁰¹⁷ which impacted the financial statements

The following new or revised standards and interpretations issued by the International Accounting Standards Board (IASB) have not been applied in preparing these accounts as their effective dates fall in periods beginning on or after ¹ October ²⁰¹⁷ (and in some cases have not been endorsed by the EU)

IFRS 15 'Revenue from Contracts with Customers' — effective for the year ending ³⁰ September 2019

easyiet will adopt IFRS ¹⁵ on ¹ October ²⁰¹⁸ and anticipates applying the cumulative catch-up (modifled") transition method

The standard provides ^a single model for measuring and recognising revenue arising from contracts with customers It supersedes all existing revenue requirements in IFRS Under IFRS 15, revenue is recognised when customers obtain control of goods or services and so are able to direct the use, and obtain the benefits, of those goods or services

easyJet has reviewed all revenue streams as par^t of its IFRS ¹⁵ impact assessment Whilst the majority of revenues are already recognised in line with the requirements of the new standard, revenue recognition from certain ancillary streams will be delayed from the date of booking to the date of flight

This change is expected to result in ^a higher proportion of annual revenues being recognised in the second half of the financial year More speciflcally, under lAS 18, administration fees arising on bookings in the first half of the financial year for flights in the second half would be recognised in the first half of the year, under IFRS ¹⁵ these revenues will be recognised in the second half

The anticipated full year impact on adoption of the standard is expected to be immaterial

IFRS 9 'Financial Instruments'— effective for the year ending 30 September 2019

easyJet will adopt IFRS ⁹ on ¹ October ²⁰¹⁸ and anticipates applying the standard prospectively with no retrospective adjustments required

The standard removes the multiple classification and measurement models for financial assets required by lAS ³⁹ and instead introduces ^a model that has three classification categories amortised cost, fair value through the Income Statement and fair value through Other Comprehensive Income Classification of ^a debt asset instrument is driven by its cash flow characteristics and the business model in which the asset is held Accounting for financial liabilities and for derecognising financial instruments under IFRS ⁹ is materially consistent with that required by lAS ³⁹ IFRS ⁹ adds new requirements to address the impairment of financial assets and hedge accounting

easyjet does not anticipate any material change in the classification or measurement of its financial instruments or in its hedging activities on adoption of the standard

IFRS ¹⁶ 'Leases' — effective for the year ending ³⁰ September ²⁰²⁰

easyJet is currently ^planning to early adopt IFRS ¹⁶ on ¹ October 2018, bringing the timing of adoption in line with that of IFRS ⁹ and IFRS ¹⁵ easyJet anticipates applying the cumulative catch-up ("modified") transition method

The standard provides ^a single lessee accounting model, specifying how leases are recognised, measured, presented and disclosed Under IFRS 16, easyJet will capitalise all aircraft and properties currently held under operating leases Operating lease expenses will be replaced by ^a depreciation expense on Right of Use assets recognised and an interest expense as the interest rate implicit in easyJet's lease liabilities unwinds

At ³⁰ September ²⁰¹⁷ (excluding the impact of the pos^t balance sheet date Air Berlin transaction (see note 26) which has not ye^t been evaluated) easyJet anticipates that on adoption of IFRS ¹⁶ on ¹ October 2018, it will recognise £0 ³ billion of lease liabilities and £0 ³ billion of Right of Use Assets Annual operating lease expenses of £0 ^I billion, which would have been recognised under the existing leases standard, will be replaced by anticipated similar levels of depreciation and interest expense such that no material impact on profit before tax is expected in the year of transition

Notes to the accounts

^I Accounting policies, judgements and estimates (continued)

IFRS 16 Leases' — effective for the year ending 30 September 2020 (continued)

Retained earnings are expected to decrease slightly on adoption of LFRS 16, reflecting the difference in carrying value between Right of Use assets and Lease Liabilities initially recognised

Key assumptions used to calculate the tmpacts outlined above

• •easyJet anticipates the continuation of its aircraft sale and leaseback programme prior to the date of transition,
• •^a USD/GBP foreign exchange rate of ¹ 27/1 at the date of initial application and throughout year of initial application, and
• based on current aircraft financing incremental borrowing rate estimates, calculations at the date of initial application use ^a discount rate of 2 per cent

Effective Tot the year ending ³⁰ September 2018 (not ye^t EU endorsed)

lAS ⁷ 'Statement of Cash flows — Amendments relating to the IASB's Disclosure Initiative intended to provide information to help investors better understand changes tn ^a company's debt

lAS ¹² 'Income Taxes' — Amendments relating to the accounting for deferred tax assets for unrealised losses on debt instruments measured at fair value

Effective for the year endIng ³⁰ September ²⁰¹⁹ (not ye^t EU endorsed)

IFRS ² 'Share-based Payment' — Amendments clarifying how to account for certain types of share-based paymen^t transactions

Notes to the accounts

2 Net finance (income)Icharge

		20 17	20 16
		ill io £ m n	£ ill io m n
iv In te st re ce re	fin ci ab le d he in ot an r an ng co m e
al in Ex te te rn re	in st co m e	(6 )	(5 )
iv id d in D en co m	e	(2 )	(3 )
ch N et ex an ge	in d lia bi lit ie ts et as se ga s m on ar y an s on	(2 4)	-
		(3 2)	(8 )
In bl te st re pa ya	d he fin ci ch ot an r an ng ar ge s e
bl In te st re pa ya e	fe llo de ki to rta w gr ou p un ng s	20	20
bl In te st pa ya re	lo ba nk e on an s	1	4
In bl te st re pa ya	le ob lig io fin at e on an ce as e ns	5	3
in O th te st re er	bl pa ya e	7	-
ch N et ex an ge	lia bi lit ie lo d et ts m on ar as se s ss es on y an		30
		33	57
ch fin N et an ce	ar ge	1	49

Of the £20 miflion of interest payable to fellow group undertakings above, £20 million (2016 £18 million) is owed to the paren^t entity

3 Profit before tax

The following have been included in arriving at profit before tax

		20 17	20 16
			d) (re sta te
		ill io £ m n	ill io £ m n
ci io la D of at ty pr op er , p ep re n	d ui t nt an eq pm en
O d ts as se w ne		13 9	11 7
he ld de r f in A et un an ce ss s	le as es	4	4
A tis io at m or n		14	12
di al of in ib Lo ta sp os ng ss on	ui nd le pl t ty t a eq pm en pr op er s, an ,	4	3
le le eb k d Lo sa as ac on an ss		8
le al O tin nt as e re s pe ra g
-d le Ai ft ry as es rc ra		26 1	23 4
O th ts as se er		6	5

Auditors' remuneration

During the year the Company obtained the following services from the Company's auditors

	20 17	20 16
	ill io £ m n	£ ill io m n
di t f C om pa ny au ee	0. 3	0 3
ci ud it th Co 's Fe fo of at as so es r a e m pa ny es	0. 1	0 1
	0. 4	04

In addition easyJet incurred non-audit services fees of £32,000 from its auditors (2016 audit related fees of £38,000)

Notes to the accounts

4 Employees

pl ed of th ly be A em oy pe rs on s m on nu m r ve ra ge		20 17	20 16
		N be um r	be N um r
Fl ig ht d nd io at gr ou op er ns an		10 ,0 61	87 09
Sa d ad in ist tio ke tin te s, an m ra n m ar g		71 2	70 2
		10 ,7 73	9, 41 1
pl Em st oy ee co s		20 17	20 16
		ill io £ m n	ill io £ m n
W d la rie ag es an sa s		50 9	42 1
So ci al rit st co s se cu y		70	61
O th io st co s er pe ns n		63	40
Sh ba d ts ar e- se pa ym en		12	18
		64 4	54 0
K io t at ey m an em en co m ns n		20 17	20 16
ag pe		ill io £ m n	£ ill io m n
Sh pl be fit t-t or er m em oy ee ne s		6	6
Sh ba d ts ar e- se pa ym en		-	4
		6	10

Share-based paymen^t charges ansing dunng the year in respec^t of grants to key managemen^t personne^l are offset by credits recognised on certain forfeitures arising from bad leavers and from downward revisions to some LTIP forecast vesting percentages

D ire s' ol ct ts or em um en	20 17	20 16
	ill io £ m n	ill io £ m n
io R at em un er n	6	6
	6	6

The members of the Executive Management Team are key managemen^t as they have coJlective authority and responsibility for ^planning directing and controlling the business All of the Directors are members of the Executive Management Team

Two (2016 two) Directors receive ^a taxable paymen^t in lieu of employer pension contributions All other Directors accrue retirement benefits under the easyJet Group defined contribution pension scheme

Three (2016 six) Directors exercised shares in the paren^t company during the year and nine (2016 ten) Directors received shares relating to the long term service ^plans

The highest paid Director received remuneration totalling £1 ⁰ million (2016 £1 ² million) The highest paid Director exercised 28,947 shares in the paren^t company during the year (2016 ⁸⁷⁹⁸⁴ shares) and received shares relating to long term service plans

Notes to the accounts

5 Tax charge

Tax on profit on ordinary activities

		20 16
	20 17	ed (re ) st at
	ill io £ m n	£ mi fli on
C nt ta ur re x
Un ite d Ki do io at ta ng m co rp or n x	53	51
in f p rio A dj t o tm ts re sp ec r y ea rs us en	-	(1 )
	53	50
ef d D ta er re x
d ui la tin la Te di ff t to ty nt an eq pm en re g pr op er , p m po ra ry er en ce s	10	25
of A dj in tm ts t pn or ye ar s us en re sp ec	3	1
17 Ch in fro fin ci al 20 20 % to ta te an ge ra an ye ar x m	(1 )	(2 6)
	12	-
l t ch To ta ar ge ax	65	50

Reconciliation of the total tax charge

The tax for the year is higher (2016 lower) than the standard rate of corporation tax in the UK as set out below

	20 17	20 16 (re d) sta te
	£ ill io m n	ill io £ m n
di tiv iti be fo Pr of it ta x or na ry ac es re on	30 7	34 7
20 Ta 19 5% (2 01 0% ) ch 6 at x ar ge	60	69
t d ed tib le fo Ex r t uc pu rp os es pe ns es no ax	3	3
Sh ba d ts pa ym en ar e- se	1	4
f p rio A dj in nt ta tm ts t o - c ur re r y ea rs x us en re sp ec	-	(1 )
- d ef d in f p A dj ta t o tm ts no r y ea rs er re x re sp ec us en	2	1
Ch in te ta ra an ge x	(1 )	(2 6)
ch To l t ta ax ar ge	65	50

ty ite ly Ta eq pr gn x on m s	20 17 £ ill io m n	20 16 ill io £ m n
in eh si C ha he to ot co m e co m pr en ve rg e r
he dg in fai al of sh flo ch D ef d ta r v ue ca w es an ge er re x on	(4 )	(6 6)
ui sh eh ol de ' C di t) (c ha e) ty to eq ar rs re rg
ed it sh ba d Cu ts t t pa ym en ax cr on ar e- se rr en	-
sh ba d D ef d ch ts ta pa ym en on ar e- se er re x ar ge	-	(6 )
	-	(5 )

Notes to the accounts

⁵ Tax charge (continued)

It is estimated that deferred tax liabilities of approximately £15 million (2016 deferred tax assets of £1 million) will reverse during Deferred tax

The net deferred tax liability in the statement of financial position is as follows

	A el ed at cc er
	pi l ta ca	lu Fa ir va e	Sh ba d ar e- se
	al lo w an ce s	in ga s	ts pa ym en	To l ta
	£ ill io m n	£ ill io m n	£ ill io m n	ill io £ m n
A ti O ob 20 16 ct er	14 8	20	(7 )	16 1
Ch d in st at t to em en ar ge co m e	12	-	-	12
in he eh siv Ch d to ot co m e r c om pr en e ar ge	-	4	-	4
A t3 0S be r2 ol 7 te ep m	16 0	24	(7 )	17 7
	A el ed at cc er
	pi l ta ca	ir lu Fa va e	Sh ba d ar e- se
	al lo an ce s w	in ga s	ts pa ym en	To l ta
	£ ill io m n	ill io £ m n	£ ill io m n	ill io £ m n
At 1 O ob 20 15 ct er	15 0	(4 7)	(1 4)	89
in fC di d) ha ed /c te to st at t co m e em en re rg	(2 )	1	1	-
eh siv in he Ch d to ot co m e r c om pr en e ar ge	-	66	-	66
ui Ch d sh eh ol de ty to eq ar ge ar rs	-	-	6	6
A t3 0 Se be r2 01 6 pt em	14 8	20	(7 )	16 1

the next financial year

Deferred tax assets and liabilities have been offset where they relate to taxes levied by the same taxation authority As ^a result the net UK deferred tax liability is £177 million (2016 £161 million) The net overseas deferred tax asset is £ni] (2016 £n,l)

6 Dividends

During the year the Company declared in-specie dividends totalling £214 million (2016 £219 million), equivalent to £0 ²⁷⁹⁷ per share (2016 £0 ²⁸⁶³ per share), settled by the cancellation by the sole member of the Company of par^t of ^a debt owed to the Company Dividend distributions are recognised as ^a liability in the period in which the dividends are approve^d by the Companys shareholders

Notes to the accounts

7 GoodwIll and other intangible assets

			O th in ta er	ib le ts as se ng
		La nd in g	C te om pu r
	G dw ill oo	ri gh ts	ftw so ar e	l To ta
	£ ill io m n	£ ill io m n	ill io £ m n	ill io £ m n
C t os
A ti O ob 20 16 ct er	36 7	94	75	16 9
A dd iti on s	-	-	44	44
D isp al os s	-	-	(4 )	(4 )
30 Se be r2 01 At 7 pt em	36 7	94	11 5	20 9
A ul ed tis io at at cc um am or n
A ti O ob 20 16 ct er	-	-	17	17
Ch he fo r t ar ge ye ar	-	-	14	14
isp al D os s	-	-	(1 )	(1 )
A t3 0S be r2 ol 7 te ep m	-	-	30	30
lu N bo ok et va e
Se be r2 01 A t3 0 7 pt em	36 7	94	85	17 9
A ti O ob 20 16 ct er	36 7	94	58	15 2
			O th in ta er	ib le ts ng as se
		nd in La g	Co te m pu r
	od wi ll Go	rig ht s	ftw so ar e	To l ta
	£ ill io m n	ill io £ m n	ilt io £ m n	£ ilt io m n
C t os
A O ob 20 15 tI ct er	36 7	94	60	15 4
A dd iti on s	-	-	37	37
isp al D os s	-	-	(2 2)	(2 2)
A t3 0 Se be r2 07 6 pt em	36 7	94	75	16 9
ul ed tis io A at at am or n cc um
A ti O ob 20 15 ct er		-	27	27
C ha ef th rg or ey ea r	-	-	12	12
isp al D os s	-		(2 2)	(2 2)
be 0f A t3 oS r2 6 te ep m	-	-	17	17
bo ok lu N et va e
Se be r2 01 A t3 0 6 pt em	36 7	94	58	15 2
ob A t1 O 20 15 ct er	36 7	94	33	12 7

Notes to the accounts

⁷ Goodwill and other intangible assets (continued)

The Company has one cash generating unit, being its route network The tecoverable amount of goodwill and other assets with indefinite expected useful lives has been determined based on value in use calculations of the route network

Pre-tax cash flow projections have been derived from the forecast cashflows presented to the Board for the period up to 2322, ustng the following key assumptions

ei gh d of pi l) ed fro di (d iv te st ta Pr ta nt te co ca m w av er ag e e- x sc ou ra er		10 %
ric e) el do lla Fu ic (U S et to pe r m nn rs pr e		55 0 00 - 6
Ex ch te ge an ra s
lla U S do r		27 1
Eu ro		10 1
Sw is fr s an c		25 1

Both fuel price and exchange rates are volatile in nature, and the assumptions used represen^t management's view of reasonable average rates Operating margins are sensitive to stgnificant changes in these rates

Cash flow projections beyond the forecast period have been extrapolated using growth rate scenarios ranging from zero up to an estimated average of long-term economic growth rates for the principal countries in which the Company operates No impairment resulted from any of these scenarios

The impairment model is sensitive to ^a sustained signiñcant adverse movement in foreign currency exchange rates

No reasonably possible combination of changes to the key assumptions above would result in the carrying value of the cashgenerating unit exceeding its recoverable amount

8 Property, plant and equipment

	A irc ft d ra an
	ar es sp	O th er	To l ta
	ill io £ n m	ill io £ m n	ill io £ n m
C t os
ob 20 18 At 1 O ct er	23 4 3,	63	3, 29 7
dd iti A on s	63 9	5	64 4
ed ck d le ba A irc ft ld an as ra so	(1 64 )	-	84 ) (1
isi sf ai Tr nt to an ce pr ov on s er m en an	(6 )	-	(6 )
isp al D os s	0) (1	(8 )	8) (1
be r2 ol 7 t3 O Se A pt em	3, 67 3	60	3, 73 3
ia tio ul ed de A at ec n um pr cc
ob 2O lS A tlO ct er		18	3 55
ef th C ha or ey ea r rg	13 8	5	14 3
le ed ba ck A irc ft ld d as ra so an	(6 1)	-	(6 1)
al D isp os s	(1 2)	(5 )	(1 7)
0l be r2 7 A t3 0S to op m	60 0	18	61 8
bo ok lu N et va e

be r2 0l 7 A t3 0S te m ep	30 73	42	3, 11 5
16 t1 O ob 20 A ct er	2, 69 9	45	27 44

Notes to the accounts

8 Property, plant and equipment (continued)

	Ai ft d rc ra an
	sp ar es	O th er	To l ta
	mi lli £ on	£ ill io m n	£ ill io m n
C t os
At I O ob 20 15 ct er	2, 80 4	44	28 48
A dd iti on s	45 1	22	47 3
fe llo de ki Tr sf rta to w un ng an er gr ou p	(2)	-	(2 )
Tr sf ai isi to nt an er pr ov on s m en an ce	(9)	-	(9 )
isp al D os s	(1 0)	(3 )	(1 3)
Se be 20 16 At 30 pt em r	3, 23 4	63	3, 29 7
de ia tio A ul ed at pr ec n cc um
ob A tI O 20 15 ct er	42 9	13	44 2
C ha ef th t rg or ey ea	11 6	5	12 1
isp al D os s	(1 0)	-	(7 0)
A t 3 0 Se be 20 16 pt em r	53 5	18	55 3
lu bo ok N et va e
30 Se be 20 16 At pt em r	26 99	45	2, 74 4

At I October 2015 2375 31 2,406

The net book value of aircraft includes £300 million (2016 £280 million) relating to advance and option payments for future deliveries of aircraft This amount is not depreciated

Aircraft with ^a net book value of £nil million (2016 £201 million) are mortgaged to lenders as loan security

The Company holds five (2016 five) aircraft under finance leases, with ^a net book value of77 million (2016 £76 million)

The Company is contractually committed to the acquisition of ¹⁴³ (2016 166) Airbus A320 family aircraft, with ^a total list price of US\$140 billion (2016 US\$148 billion) before escalations and discounts for delivery in financial years ²⁰¹⁶ (36 aircraft), in ²⁰¹⁹ (21 aircraft), in ²⁰²⁰ (23 aircraft), in ²⁰²¹ (35 aircraft) and in ²⁰²² (28 aircraft)

The 'other category mainly comprises leasehold improvements, computer hardware, and fixtures, fittings and equipment

9 Investments in subsidiaries

	20 17	20 16
	ill io £ m n	£ ill in m n
d 30 Se be At 1 O ob at pt ct an em r er	j	I

^A list of the Company's subsidiaries is detailed below, including addresses in the footnotes

C of in io nt at ou ry co rp or n	Pr in ci l tiv ity pa ac	of Pe ta rc en ge di sh or na ry ar es he ld
M alt a	ol di H ng co m pa ny	10 0
M alt a	G ph ic de sig ra n	10 0

(TJ Sterling Buildings, The Penthouse, Enrico Mizzi Street, Ta' )(biex, XBX 1453, Malta

10 Other non-current assets

		20 16
	20 17	(re d) sta te
	£ ill io m	£ ill io n m n
t l de sit he ld by air af id io d D ef d at es so rs po s cr co ns er n an er re	66	95
sh tfa ll le d le eb k ed air af Le t - or sa an as ac as cr on		6 -
lla l) le l r t ( pl ed d ab le te R ta as co ra su pp m en en ge ec ov er		6 7
O th er		3 4
	75	17 2

Notes to the accounts

11 Trade and other receivables

	20 11	20 16
		ed ) (re st at
	ill io £ n m	£ ill io m n
iv ab le ad Tr s e re ce	95	62
isi fo r i irm Le t en ss pr ov on m pa	(4 )	(5 )
—	91	57
d d in Pr ts en an cr ue co m e ep ay m ac	11 6	97
ll le d eb k Le ed air af sh tfa le t - sa as ac as cr or on an	5	8
lla l) l r t ( pl ed d ab le le te R ta as ra en en ge co er su pp m ec ov	28	5
ab le Cu iv t t en rr ax re ce	-	8
th iv ab le O er re ce s	31	42
	27 1	21 7

Trade and other receivables of19m (2016 £24m) are up to three months pas^t due but not impaired

With respec^t to trade receivables that are neither impaired nor pas^t due, there are no indications at the reporting date that the paymen^t obligations will not be met Amounts due from trade receivables are short-term in nature and largely comprise credit card receivables due from financial institutions with credit ratings of at least ^A and, accordingly, the possibility of significant default is considered to be unlikely

12 Cash and money market deposits

	11 20	20 16
	ill io £ m n	£ ill io m n
th th s) le th h d sh ui le (o rig in al ty C nt at re e m on s m un ss an ca eq va as an	71 0	71 3
th s) its th ke t d (o rig in al rit th M atu re e os m or e an m on ar ep m y on ey m	61 7	25 5
d sh ic N te nt str re re ca on -c ur	7	7
—	13 34	97 5

Interest rates on money market deposits and restricted cash are re-priced within ¹⁸⁵ days based on prevailing market rates of interest Carrying value is not significantly different from fair value

Restricted cash comprises

	20 17	16 20
	ill io £ n m	£ ill io m n
th ird rti d Pl ed lla l t te pa es o ge as co ra
de sit in le A irc ft at s po op er g as e ra	7	7

13 Trade and other payables

	20 17	20 76
		d) (re sta te
	ill io £ m n	£ ill io m n
bl Tr ad es e pa ya	19 6	11 4
de ki ed A rta nt to ng s un s ow gr ou p m ou	1,7 50	72 1,2
al A s cc ru	40 5	34 5
eb k le d le af lu Le ed air t - ac sa as cr su rp s on an as	9	11
ci al rit d Ta so se cu y xe s an	19	17
bl O th pa ya es er	72	67
	2, 45 1	1, 82 6

Notes to the accounts

14 Borrowings

	C nt ur re ill io £	N nt on -c ur re ill io £ m n	l To ta £ ill io m n
be r 2 01 7 At 30 Se pt em	m n
le ob lig io Fi at as e ns na nc e	8	93	10 1
	8	93	10 1
	Cu t rc en	N nt on -c ur re	To l ta
20 16 At 30 Se be pt em r	ill io £ m n	ill io £ m n	ill io £ m n
lo Ba nk an s	37	83	12 0
le ob lig io Fi at as e ns na nc e	8	10 3	71 1
	45	18 6	23 1

All bank loans have been repaid during the year

Finance lease obligations relate to aircraft and beat interest partly at fixed rates and partly at variable rates linked to USD LIBOR

The maturity profile of borrowings is set out in note ²²

on ¹⁰ February ²⁰¹⁵ the Company signed ^{a 500} million revolving credit facility with ^a minimum five-year term As at ²³ January ²⁰¹⁸ no amounts had been drawn down under this facility The facility is due to mature in February ²⁰²²

15 Non-current deferred income

The balance comprises the non-current surplus of sale proceeds over fair value of aircraft that have been sold and leased back under operating leases This balance will be realised in the income statement over the next six years

16 Provisions for liabilities and charges

	M ai nt en an ce isi pr ov on s £ ill io m n	O th er isi pr ov on s £ ill io m n	tal To £ ill io m n
A tI O ob 20 16 ct er	22 3	29	25 2
ad ju Ex ch stm ts en an ge	(7 )	-	(7 )
Ch d in st at t to em en co m e ar ge	58	12 5	18 3
nd ui sf d pl Tr fro t ty t a eq pm en pr op er an an er re m	(6 )	-.	(6 )
Ut ili d se	(1 9)	(1 16 )	(1 35 )
20 17 30 Se be At pt em r	24 9	38	28 7

Amounts transferred from property, ^plant and equipment relate to aircraft life-limited parts used in engine restoration in the year

Other provisions comprise liabilities for amounts payable to customers who make claims in respec^t of fltght delays and cancellations, and refunds of air passenger duty or similar charges

Provisions are analysed as follows

	20 17	20 16
	ill io £ m n	ill io £ m n
Cu t rr en	70 4	52
N nt on -c ur re	18 3	20 0
	28 7	25 2

Maintenance provisions are expected to be utilised within six years Other provisions are expected to be utilised within one year

Notes to the accounts

17 Share capital

			iim br N		in al N lu om va e
		20 17	20 16	20 17	20 16
		ill io m n	ill io m n	£ ill io m n	ii ir ç m
llo d, lle d d fu lly id A tte ca up an pa	rd in sh of £1 ch - O ar ar es ea y
d O ob 20 At I O ob 20 15 1 ct ct an er er	16	76 5	5 76	76 5	5 76
30 30 Se be 20 16 d Se At pt em r an	be 20 17 pt em r	76 5	76 5	76 5	76 5

18 Share incentive schemes

The Company operates the following share incentive schemes, all of which are settled in the equity of its parent, easyJet ^plc Further details are ^given in easyiet ^pics published Annual repor^t and accounts for the year ended 30 September 2017

The change in the number of awards outstanding and weighted average exercise prices during the year, and the number exercisable at each year end were as follows

	1 O ob ct er 20 16	ed G nt ra	Fo rfe ite d	ci d Ex er se	30 Se be pt em r 20 17
G da nt te ra	ill io m n	ill io m n	ill io m n	ill io m n	ill io m n
In iv Pl Lo Te nt ce e an ng rm
18 D be r 2 01 2 ec em	03	-	-	(0 3)
l7 nb 2O l3 D ec er er	05	-	(0 3)	(0 1)	0. 1
19 D be r 2 01 4 ec em	07	-	(0 2)	-	0. 5
18 D be r2 01 5 ec em	07	-	(0 2)	-	0. 5
19 D be r2 01 6 ec em	-	1 0	(0 2)	-	0. 8
Pl tri ed Sh R ct es ar e an
be D r2 01 6 19 ec em	-	01	-	-	0. 1
A Ea he Sa Y s rn sc m e ve ou
1] ul y2 O l3	02		(0 1)	(0 1)	-
1 Ju ly 20 14	0 5	-	(0 2)	-	0. 3
ly 20 15 1 Ju	0 8	-	(0 4)	-	0. 4
1 ly 20 16 Ju	1 1	-	(0 5)	-	0. 6
20 17 1 Ju ly	-	2 2	-	-	2. 2
Sh iv Pl In nt ar e ce e an	4 2	04	(0 3)	(0 8)	3. 5
	90	37	(2 4)	(1 3)	9. 0

Weighted average exercise prices are as follows

	1 O ob ct er			30 Se be pt em r
	20 16	G ed nt ra	Fo rfe ite d	Ex ci d er se	20 17
	£	£	£	£	£
he Sa Yo Ea A sc m e ve u rn s	12 44	96 9	12 43	96 9	10 .8 0

The exercise price of all awards, save those disclosed in the above table, is £nil

The number of awards exercisable at each year end and their weighted average exercise price are as follows

		ic Pr () e	N	be r ( ill io n) um m
	20 17	20 16	20 17	20 16
ln nf i Pl Lo Te ce an ng rm	-	-	0. 1	03
Sh Pl R ed tn ct ar e an es	-	-		-
he Sa Ea A Yo sc m e ve rn s u	13 .3 0	96 9	0. 3	0 2
			0. 4	05

Notes to the accounts

18 Share incentive schemes (continued)

The weighted average remaining contractual life for each class of share at ³⁰ September ²⁰¹⁷ is as follows

	Y ea rs
Te ln iv Pl Lo nt ng rm ce an	3 8
Sh Pl R tri ed ct ar e es an	2 9
Sa A Ea he ve s yo u rn sc m e	2 7

Long Term Incentive Plan

The ^plan is open, by invitation, to Executive Directors and senior management, and provides for annual awards of Performance Shares worth up to 250% (200% up to ³¹ December 2014) of salary each year For awards granted from the ²⁰¹⁵ financial year onwards, the vesting of these shares is dependent on return on capital employed (ROCE) targets and total shareholder return (TSR) targets compare^d to FTSE ranked companies at the start of the performance period All awards have ^a three year vesting period, ²⁰¹⁷ awards are assessed on performance conditions measured over the three financial years ended ³⁰ September ²⁰¹⁹

Restricted Share Plan

Granted for the first time in December 2016, the ^plan is open by invitation to certain senior managers, and provides for an annual award of Performance Shares The vesting of these shares is dependent on remaining in employment for ^a period of two years

Save As You Earn scheme

The scheme is open to all employees on the UK payroll Participants may elect to save up to £500 per month under ^a three year savings contract An option is granted by the Company to buy shares at ^a discount of 20% from market price at the time of the gran^t At the end of the savings period, the option becomes exercisable fora period of six months Employees who are not paid through the UK payroll may participate in the scheme under similar terms and conditions, albeit without the same tax benefits

Share Incentive Plans

The ^plan is open to all employees on the UK payroll Participants may invest up to £1,800 of their pre-tax salary each year to purchase partnership shares in easyJet For each partnership share acquired, easylet purchases ^a matchIng share up to ^a maximum value of £1600 per annum Employees must remain with easyJet for three years from the date of purchase of each partnership share in order to qualify for the matching share, and for five years for the shares to be transferred to them tax free The employee is entitled to dividends on shares purchased, and to vote at shareholder meetings

Subject to Group performance, easyJet also issues free shares to UK employees under an approve^d share incentive ^plan of up to £3,000 per annum in value There is ^a similar unapprove^d free shares scheme for international employees

The fair value of grants under the Save As You Earn scheme are calculated by applying the Binomial Lattice option pricing model The fair value of grants under the TSR based Long Term Incentive Plan is estimated under the Stochastic model (also known as the Monte Carlo model) The fair value of grants under all other schemes is the share price on the date of gran^t The following assumptions are used

	Sh ar e	Ex ci er se	ed Ex ct pe	Op tio n	Ri sk -fr ee	ir Fa
	ic pr e	ic pr e	lat ili ty vo	lif e	in te st te ra re	lu va e
da G te nt ra	£	£	%	at ye s	%	£
pl in iv Lo te nt an rm ce e ng
l8 be r2 O l2 O C D -R E ec em	73 7	-	-	-	-	69 2
l8 D be r2 O l2 -T SR ec em	73 7	-	33	30	04 4	51 6
l7 be l3 D r2 O -R O C E ec em	14 99	-	-	-	-	14 99
SR be r 2 01 3 -T 17 D ec em	14 99	-	31	3 0	07 6	9 63
l9 D be r2 O l4 -R O C E ec em	16 52		-	-	-	16 52
l9 be r2 O l4 SR D -T ec em	16 52		29	30	07 8	11 65
l8 be r2 O l5 O C D -R E ec em	17 13		-	-	-	17 13
l8 be r2 O l5 SR D -T ec em	17 13		29	30	08 1	96 9
l9 be r2 O O C D J6 -R E ec em	10 63	-	-	-	-	10 43
TS R 19 D be r 2 01 6- ec em	10 43		35	3 0	1 40	5 21
Sh Pl R tri ed ct an es ar e
be 19 D r2 01 6 ec em	10 43	-		-	-	10 43
he A Y Ea Sa sc m e s ou rn ve
lJ ul y2 O l3	12 11	96 9	34	35	03 2	35 4
lJ ul y2 O l4	16 62	13 30	33	35	16 4	50 3
1] u1 y2 01 5	16 54	13 23	31	35	09 5	44 2
lJ ul y2 O l6	14 98	11 98	35	35	02 0	42 8
1J ul y2 O l7 —	12 fl	96 9	31	35	04 2	28 4

Notes to the accounts

18 Share incentive schemes (continued)

Share price for LTIPs is the closing share price from the last working day prior to the date of gran^t

Exercise price for the Save As You Earn scheme is set at ^a 20% discount from the share price at gran^t date

Expected volatility is based on historical volatility over ^a period comparable to the expected life of each type of option

Levels of early exercises and forfeitures are estimated using historical averages

The weighted average fair value of matching shares granted under the Share Incentive Plan during the year was LII ²³ (2016 £1504)

For grants under the Save As You Earn scheme, the dividend ^yield assumption ts calculated based on the actual ^yield at the date of gran^t For the options granted in ²⁰¹² to 2014, the dividend ^yield assumption was 2% and this increased to 275% in 2015, to 35% in 2016 and to 4 2% in 2017

19 Reconciliation of operating profit to cash generated from operations

	20 17	20 16
	ill io £ m n	(re d) sta te £ ill io m n
tin O of it pe ra g pr	30 8	39 6
fo h ite A dj tm ts r n on -c as m s: us en
D ci io at ep re n	14 3	12 1
la d ui in ib le Lo di al of nt t ta ty eq pm en ng s, pr op er , p an ss on sp os	4	3
le le eb k Lo d on sa as ac ss an	8
in ib le A tis ati of ts ta as se ng m or on	14	12
Sh ba d ts ar e- se pa ym en	10	17
of in C ha in pi l d he ite tu ki at ta ot na re : an op er g ng es ca an r m s w or ng
de iv ab le (ln de in d he )! tra ot re ce s an r cr ea se cr ea se	(5 8)	8
he ab le in de d In ot tra r p ay s cr ea se an	40 9	11 1
in ed ln /( de ) un ea rn re ve nu e cr ea se cr ea se	15 9	(5 1)
in isi In pr ov on s cr ea se	45	35
he / ( in ) in D ot nt ts r n on -c ur re as se ec re as e cr ea se	37	(1 0)
de riv ati fin ci al in In /f de ) in str ts ve an um en cr ea se cr ea se	21	(5 )
t d ef d in D in er re co m e ec re as e no n- cu rr en	(1 1)	(1 2)
	1,0 89	62 5

20 Reconciliation of net cash flow to movement in net cash

	O ob 1 ct er 20 16 £ ill io m n	Ex ch an ge di ff er en ce s ill io £ m n	sh N et ca flo w £ ill io m n	30 Se be pt em r 20 17 £ ill io m n
ui le d sh nt C h eq va s an ca as	71 3	4	(7 )	71 0
ke t d its M ep os on ey m ar	25 5	(1 )	36 3	61 7
	96 8	3	35 6	1,3 27
nk lo Ba an s	(1 20 )	(5 )	12 5	-
ob lig ati Fi le on s na nc e as e	(1 11 )	3	7	(1 01 )
	(2 31 )	(2 )	13 2	(1 01 )
sh N et ca	73 7	1	48 8	1,2 26

Notes to the accounts

21 Financial instruments

Carrying value and fair value of financial assets and liabilities

The fair values of financial assets and liabilities, together with the carrying value at each reporting date are as follows

	A tis ed st ot co m		H el d at		fa ir lu va e
30 Se be 20 17 pt em r	d Lo an an s iv ab le re ce s ill io £ m n	Fi ia l na nc lia bi lit ie s ill io £ m n	ir lu Fa va e he dg es £ ill io m n	h flo C as w he dg 11 1 es ill io £ m n	O th er £ ill io m n	C in ar ry g lu va e ili lo £ m n	ir Fa lu va e £ ill io m n
O th t er no n- cu rr en ts as se	73	-			2	75	75
d he Tr ad ot an r e iv ab le re ce s	20 5				66	27 1	27 1
ad d he Tr ot an r e bl pa ya es		(2 ,3 44 )	-	-	(1 07 )	(2 ,4 51 )	(2 ,4 51 )
D iv ati fin ci al er ve an in str ts um en		-	-	38	54	92	92
D iv ati fin ci al er ve an wi th in str ts um en de ki te nt rta pa un ng			-	-	(5 4)	(5 4)	(5 4)
sh R tri ed ct ca es	7	-	-	-		7	7
ke M t m ar on ey de sit po s	61 7	-	-		-	61 7	61 7
C h d sh as an ca ui le nt eq va s	71 0	-	-	-	-	71 0	71 0
le Fi na nc e as e ob lig io at ns		(1 01 )	-	-	-	(1 01 )	05 (1 )

		tis ed A m or st co		ld fa ir He at lu va e
	Lo d an s an iv ab le re ce s	Fi ia l na nc lia bi lit ie s	Fa ir lu va e he dg es	h flo C as w he dg es	O th er	Ca in rry g lu va e	Fa ir lu va e
30 Se be 20 16 pt em r	ill io £ m n	£ ill io m n	ill io £ m n	£ ill io m n	£ ill io m n	ill io £ m n	£ ill io m n
O th t er no n- cu rr en ts as se	93	-	-	-	19	11 2	11 2
T de do th ra an er iv ab le re ce s	14 6	-	-	-	71	21 7	21 7
ad d he Tr ot an r e bl pa ya es	-	(1 ,7 29 )	-	-	(9 7)	(1 82 6)	(1 ,8 26 )
fin ci al D iv ati an er ve in str ts um en	-	-	-	37	61	98	98
fin ci al D iv ati an er ve wi th in str ts um en de ki rta nt un ng pa re	-	-	-	-	61	61	61
R tri ed sh ct es ca	7	-	-	-	-	7	7
ke M t on ey m ar de sit po s	25 5	-	-	-	-	25 5	25 5
C ha nd sh as ca ui le nt eq va s	71 3	-	-	-	-	71 3	71 3
Fi le na nc e as e ob lig io at ns	-	(l ii )	-	-	-	fi ll )	(1 17 )
in Bo rro w gs	-	(1 20 )	-	-	-	(1 20 )	(1 20 )

On ²¹ and ²² September2017 foreign exchange forward contracts were de-designated from cash flow hedge relationships when the fair value of these trades was ^a liability of4 ⁶ million This amount is held in other comprehensive income to be recycled to the income statement once the hedged item impacts the profit and loss Foreign exchange forward contracls designated at fair value through profit or loss offsetting these derivatives were entered into at the point of de-designetion and as such derivatives held at fair value through profit and loss on the balance sheet total ^a net liability oI4 5 million as at 30 September2017

Derivative financial instruments held in the 'other' category above do not have hedge relationships in ^place

Notes to the accounts

21 Financial instruments (continued)

Fair value of derivative financial instruments

For the financial instruments for which fair value is disclosed in the tables above, the fair value is classified as level ² of the IFRS 13 'Fair Value Measurement fair value hierarchy Level ² is defined as being the fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) which are determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates If all significant inputs requited to fair value an instrument are observable, the instrument is classified as level 2

Amounts disclosed in the 'Other column are items that do not meet the definition of ^a financial instrument They are disclosed to facilitate reconciliation of the carrying values of financial instruments to line items presented in the statement of financial position

Fair value calculation methodology

The fair values of derivatives and financial instruments have been determined by reference to observable market prices where the instruments are traded, where available Where market prices are not available, the fair value has been estimated by discounting expected future cash flows at prevailing interest rates and by applying year end exchange rates

	Q ity nt ua	No t cu rr en n- ts as se	C nt ur re ts as se	C nt re ur lit ie lia bi s	N nt -c ur re on bi lit ie lia s	l To ta
30 be f 7 Se 20 pt em r	ill io n m	ill io £ m n	ill io £ n m	ill io £ m n	ill io £ m n	ill io £ m n
d dg ig sh flo he D te es es na as ca w
U S do lla r	2, 53 7	-	50	(2 5)	(2 9)	(4 )
Eu ro	18 5 2,	I	22	(4 9)	(5 )	(3 1)
Sw is fr s an c	38 9	5	3	(6 )	-	2
nd So h A fri ut ca n ra	33 5	3	1	-	-	4
Je t f l ue	3	16	55	(2 )	(2 )	67
h of it d lu th D ig fa ir te an na as va e ro ug pr es	d lo ss
in Cr st te te en cy ap s os s cu rr re ra sw	1,6 48	69	-	-	(6 9)	-
		94	13 1	(8 2)	05 ) (1	38
		N nt re on -c ur	Cu t rr en	Cu t rr en	N nt -c ur re on
	Qu tit an y	ts as se	ts as se	lia bi lit ie s	lia bi lit ie s	To l ta
be r2 01 6 Se 30 pt em	ill io m n	£ ill io m n	ill io £ m n	ill io £ m n	£ ill io m n	mi lli £ on
d sh flo he dg ig D te w es es na as ca
do lla U S r	2, 31 1	56	15 2	-	-	8 20
Eu ro	1,7 00	14	10 7	(6 7)	(2 9)	25
fr Sw is an c s	35 6	-	-	(1 9)	(1 1)	(3 0)
nd So h A fri ut ca n ra	42 8	3	1	-	-	4
Je t f l ue	3	20	8	(1 89 )	(9 )	70 ) (1
h of it fa ir lu th ig d D te an va e ro ug pr na as es	d lo ss
Cr in te te st ap s cy re ra sw os s cu rr en	37 9	61	-	-	(6 1)	-

For foreign currency forward exchange contracts and exchange swap contracts, quantity represents the nominal value of currency contracts held, disclosed in the contract currency The cross currency interest rate swap contracts are represented at the gross sterling notional For jet fuel forward contracts, quantity represents contracted metric tonnes

The majority of hedged foreign exchange and jet fuel transactions are expected to occur on various dates within the next ²⁴ months The foreign exchange and )et fuel contracts are designated as cash flow hedges and the accumulated gains or losses deferred in the hedging reserve will be recognised in the income statement in the periods that the hedged transaction affects the income statement Where the gain or loss is included in the initial amount recognised for the purchase of an aircraft recognition in the income statement will be over ^a period of up to ²³ years in the form of depreciation of the purchased asset

The Company maintains cross-currency interest rate swap contracts on fixed rate debt issuance as par^t of its approac^h to currency and interest rate risk managemen^t The cross-currency interest rate swap contracts have offsetting notional and fair value amounts meaning the net impact at ^a company level is nit

Notes to the accounts

21 Financial instruments (continued)

Fair value of derivative financial instruments

The following derivative financial instruments are subject to offsetting, enforceable master netting arrangements

	G ro ss	A nt m ou	N et
30 Se be 20 17 pt em r	nt am ou	of f t t no se	nt am ou
iv ati D fin ci al in str ts er ve an um en	£ ill io m n	£ ill io m n	£ ill io m n
A et ss s	22 5	(1 02 )	12 3
Li ab ili tie s	(1 87 )	10 2	(8 5)
	38	-	38
	G ro ss	A nt m ou	N et
be 30 Se 20 16 pt em r	nt am ou	of f t s et no	nt am ou
D iv ati fin ci al in str ts er ve an um en	£ ill io m n	ill io £ m n	£ ill io m n
A et ss s	42 2	(2 64 )	15 8
Li ab ili tie s	(3 85 )	26 4	(1 21 )
	37	-	37

All financial assets and liabilities are presented gross on the face of the statement of financial position as the conditions for netting specified in lAS 32 'FinancIal Instruments Presentation' are not met

²² Financial risk and capital management

All financial risk managemen^t activities are carried out at Group level according to policies approved by the Board of Directors of easyJet pic and are described on pages 121 to 123 of easyJet plc's published Annual repor^t and accounts for the year ended 30 September 2017 The Company is exposed to the same financial risks as the Group

The maturity profile of the Company's financial liabilities based on undiscounted gross cash flows and contractual maturities is as follows

t 3 0 Se be r 2 01 A 7 pt em	W ith in 1 ye ar ill io £ m n	1- 2 ye ar s £ ill io m n	2- 5 ye ar s £ ill io m n
in Bo rro w gs	12	12	89
Tr ad d he ab le ot e an r p ay s	2, 34 4	-	-
iv ati ei D nt ct pt er ve co ra s - r ec s	(2 ,9 69 )	(1 ,0 ) 96	(6 6)
D iv ati ts nt ct - p ay m en er ve co ra s	2, 97 3	1,' t 0 5	62
	W ith in I ye ar	1-2 ye ar s	2- 5 ye ar s
A t 3 0 Se be 20 16 pt em r	£ ill io m n	£ ill io m n	ill io £ m n
Bo in rr ow gs	50	52	14 8
d ab le Tr ad he ot e an r p ay s	1,7 25	-	-
ei D iv ati pt nt ct co ra s - r ec s er ve	(2 38 4)	(1 ,1 23 )	(6 1)
iv ati D ts nt ct - p ay m en er ve co ra s	2, 39 4	1,0 86	54

The maturity profile has been calculated based on spo^t rates for the US dollar, Euro, Swiss franc, South African rand and jet fuel at the close of business on 30 September each year

Market risk sensitivity analysis

Financial assets and liabilities affected by market risk include borrowings, deposits, trade and other receivables, trade and other payábles and derivative financial instruments The following analysis illustrates the sensitivity of changes in relevant foreign exchange rates, interest rates and fuel prices It should be noted that the analysis reflects the impact on profit or toss after tax for the year and other comprehensive income on financial instruments in ^a cash flow hedge relationship held at the reporting date The sensitivities are calculated based on all other variables remaining constant The analysis is considered representative of easyJet's exposure over the next 12 month period

The sensitivity analysis is based on easylet's financial assets and liabilities and financial instruments held as at ³⁰ September 2017

The currency exchange rate analysis assumes ^a +1-10% change in both US dollar and Euro exchange rates

The interest rate analysis assumes ^a 1% increase in interest rates over the next 12 months

The fuer price analysis assumes ^a 10% increase in fuel price over the next ¹² months

Notes to the accounts

22 Financial risk and capital managemen^t (continued)

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

	C te ur re nc ra s y
	do lla U S r +l hh 0% )	US do lla r 10 %	Eu ro +1 O% thi	Eu ro I 0 %	In te st te re ra s 1% in Se cr ea	el ic Fu pr e 10 % in cr ea se
At 30 20 17 Se be pt em r	£ ill io m n	I i m	£ ill io m n	ill io £ m n	£ ill io m n	£ ill io m n
I f In t i in lo ) st at ct em en co m e m pa ga ss	7	(6 )	(2 4)	20	7
he eh siv in Im ct ot pa on r c om pr en e co m e in l( de ) cr ea se cr ea se	13 2	(1 08 )	40	(3 2)	-	98

		Cu te ra s rr en cy
	US do lla r +1 O% u1 )	US do lla r (2) 10 %	Eu ro +1 0% ni	Eu ro 10 % (2i	In te st te re ra s 1% in cr ea se	Fu el ic pr e 10 % in cr ea se
At 30 Se be 20 16 pt em r	£ ill io m n	£ ill io m n	£ ill io m n	£ ill io m n	ill io E m n	£ ill io m n
In t i in I ( lo ) st at ct co m e em en m pa ga ss	26	(2 1)	10	(8 )	6	-
he eh siv in Im ct ot pa on r c om pr en e co m e in l( de ) cr ea se cr ea se	13 9	(1 13 )	-	-		83

(1) GBP weakened

(2) GOP strengthened

The market risk sensitivity analysis has been calculated based on spo^t 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

		Ai ft rc ra		th O er
	20 17 £ ill io m n	20 16 £ mi lli on	20 17 £ ill io m n	20 16 £ ill io m n
el la bl le l itm de in To ta ts at no n- ca nc e co m m en un r op er g	du as es e:
N la ha ot te rt no ne ye ar	17 3	19 2	3	2
ha d t l th La fiv r t at te n on e ye ar an no er an e ye ar s	49 1	61 2	8	6
fiv La rth te e an ye ar s	93	18 7	2	2
	75 7	1 99	13	10

The Company holds 102 aircraft (2016 100 aircraft) under operating leases, including those with other group undertakings, with initial lease terms ranging from five to sixteen years (2016 five to ten years) It 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 cntical accounting policies section of note ^I

Commitments under finance leases

	20 17	20 16
	£ ill io m n	£ ill io m n
le Il du fo llo al of in im Pr ts t v as e pa ym en ra e as w s: es en ue m um
No t l th at ye ar er an on e	12	12
t l th fiv La ha d at te r t no er an e n ye ar an ye ar s on e	10 0	11 4
	11 2	12 6
fin ch Fu tu an ce ar ge s re	(1 1)	(1 5)
	10 1	11 1

The Company holds five aircraft (2016 five aircraft) under finance leases with ten year initial terms Further details are ^given in note 14

Notes to the accounts

24 Contingent liabilities

The Company ts involved in ^a number of disputes and litigation which arose in the normal course of business The likely outcome of these disputes and litigation cannot be predicted, and in complex cases reliable estimates of any potential obligation may not be possible

Having reviewed the information currently available, managemen^t considers that the ultimate resolution of these claims, disputes and litigation is unlikely to have ^a material effect on the Company's results, cash flows or financial position

As at ³⁰ September ²⁰¹⁷ the Company had agreements with thtrd parties for which fees were contingent upon the completion of acquisition activities totalling £4 million (2016 £nil)

At ³⁰ September ²⁰¹⁷ the Company had outstanding letters of credit, guarantees and performance bonds totalling £44 miNion (2016 £49 million), of which £21 million (2016 £38 million) expires within one year The fair value of these instruments at each year end was negligible

No amount is recognised in the statement of financial position in respec^t of any of these financial instruments as it is not probable that there will be an outflow of resources

easyJet ^plc has ^given ^a formal undertaking to the Civil Aviation Authority to guarantee the paymen^t and discharge of all liabilities of the Company The guarantee is required for the Company to maintain its operating license under Regulation 3 of the Licensing of Air Carriers Regulations 1992

easyJet ^plc has also issued guarantees in favour of the Company relating to

• processing of credit card transactions,
• •hedging transactions in derivative financial instruments,
• •contractual obligations to Airbus SAS in respec^t of the supply of aircraft,
• repaymen^t of borrowings financing the acquisition of aircraft,
• •paymen^t obligations for the lease of aircraft from lessors outside of the Group,
• bank letters of credit;
• \$500m revolving credit facility, and
• brand licence agreemen^t with easyGroup Limited (approved by the shareholders of easylet ^plc on ¹⁰ December 2010)

Under the Euro Medium Term Note Programme, on ¹⁸ October 2016, easyJet ^plc issued notes amounting to €500 million for ^a seven year term with ^a fixed annual coupon rate of ¹ 125% On the same date an intercompany loan was issued by easyJet ^plc to easyJet Airline Company Limited for the same amount and under the same conditions In November ²⁰¹⁶ easylet Airline Company Limited then entered into ^a cross currency interest rate swap to swap the EUR cash flo'Ns with ^a fixed interest rate to GBP cash flows with ^a floating interest rate

25 Related party transactions

Transactions with easyJet Group undertakings are carned out on an arm's length basis Outstanding balances are ^placed on intercompany accounts (note 13) with no specified credit period, are unsecured, and bear market rates of interest

Significant transactions are as follows

• •dry lease and other operating costs for leasing aircraft,
• dry lease revenue from sub-leasing aircraft, and
• statement of financial position hedges

Notes to the accounts

25 Related party transactions (continued)

Charges for the years ended 30 September 2017 and 2016 are as follows

	20 17 £ ill io m n	20 16 £ ill io m n
Pa nt re
A ed Je lc nt to t p m ou s ow ea sy	(1 ,5 71 )	(1 ,1 19 )
Ex al di vi de nd id be ha tf of Je lc te tp rn pa on ea sy	27 4	21 9
ds iv ed Je lc Bo nd fro t p pr oc ee re ce ea sy m	(4 51 )	(3 79 )
bs id ia ri Fe llo G su es w ro up
Sa le fe llo G bs id ia rie to s w ro up su s	(7 5)	(5 9)
fe llo bs id ia rie Pu ha fro G su s rc se s m w ro up	28 6	26 3
A ed fe llo G bs id ia rie nt to m ou s ow ro up su s w	(1 ) 79	(1 52 )
Sa le d le eb k ds id fe llo Gr bs id ia rie to an as ac pr oc ee pa w ou p su s	86
bs id ia rie th In ci di vi de nd iv ed fro fe llo G bl tit to nt su s e pa re -s pe e re ce m w ro up pa ya e en y	(1 2)	(4 0)
A irc ft id be ha lf of fe llo G bs id ia rie tg ra m or ag es pa on ro up su s w	12 0
O th er s
th iv ed its in t i Ai rli rin th Co di vi de nd fro th G Du stm e re ce ve en n ne g ye ar e m pa ny s m e ro up	(2 )	(3 )
itm de in le C ts at un r op er g as es om m en

The company has the following commiitments under operating leases to fellow group subsidiaries

	Ai ft rc ra
	20 17 £ ill io m n	20 16 ill io £ m n
du l c itm de el la bl in le To ta ts at e: om m en un r no n- ca nc e op er g as es
la ha N ot te r t n on e ye ar	76	98
d t l th fiv La ha at te r t ye ar an no er an e ye ar s n on e	29 6	39 4
ha fiv La te r t n e ye ar s	92	17 6
	46 4	66 8

During the current year, there were no amounts relating to aircraft life-limited parts transferred at net book value to easylet Switzerland SA (2016 £2 million)

Amounts included in the income statement for the year ended 2017 due under the Brand Licence and other agreements with easyGroup Limited and others, detailed within note 27 to the Group accounts, amounted to £14 million (2016 £13 million) Royalty payments within this total were £13 million (2016 £12 million)

At 30 September 2017, £1 million (2016 £nil million) was included in trade and other payables in relation to the Brand Licence and other agreements

On 18 October2016 easylet plc provided easyiet Airline Company Limited ^a loan of €500 million The Loan is interest bearing, with ^a fixed interest rate of 1 125% The loan is repayable within five working days of ^a written demand of repaymen^t

26 Geographical revenue

			20 17 £ ill io m n	20 16 £ ill io m n
U ni d Ki do te ng m			2, 25 7	2, 24 3
So he Eu ut rn ro pe			1,5 68	13 76
N th Eu or er n ro pe			22 3 7,	1,0 43
O th er			74	66
			5, 12 2	4, 72 8

Southern Europe comprises countries lying wholly or mainly south of the border between Italy and Switzerland, ^plus France

27 Subsequent events

On ²⁷ October the Company signed an agreemen^t with Air Berlins administrators, as par^t of which twill enter into leases for up to ²⁵ A320 aircraft at Berlin Tegel airport, offer employment to former Air Berlin flying crews and take over other assets including slots for ^a purchase consideration of €40 million The transaction was completed in December ²⁰¹⁷

The Company purchased seven A319 aircraft in November ²⁰¹⁷ from fellow subsidiary easyJet Leasing Limited, for proceeds of £83 million

The Company completed the sale and leaseback of ¹⁰ A319 aircraft in November2017 Cash proceeds were \$137 million, due to the age of the selected aircraft at the time of this transaction and easyJets maintenance provision accounting policy, ^a one-off, noncash charge of approximately £19 million (of which £11 million relates to the loss on disposal and £8 million relates to the maintenance provision catch-up) will be recognised in the first halt of the ²⁰¹⁸ financial year

28 Ultimate controlling company

The Companys immediate paren^t and ultimate controlling company is easyJet ^plc, incorporated in England and Wales, registered number 03959649

The only group in which the results of the Company are consolidated is headed by easyJet ^plc, the Annual repor^t and accounts of which can be obtained from easyJet ^plc, Hangar 89, London Luton Airport Luton Bedfordshire, LU2 9PF and at www corporate easyjet corn