Aer Lingus Group PLC H1 2015 Results -6-
July 29 2015 - 2:02AM
UK Regulatory
See page 5 for US Dollar and Sterling hedging rates incurred in
Q1 and Q2 2015 and forecast hedging rates applicable for the
remainder of the year.
Overview of FX rates As at 30 June Average over 6 months
---------------------- --------------- -----------------------
Foreign currency rate 2015 2014 2015 2014
---------------------- ------- ------ ----------- ----------
euro/US Dollar 1.12 1.36 1.13 1.37
---------------------- ------- ------ ----------- ----------
euro/ UK Sterling 0.71 0.80 0.74 0.82
---------------------- ------- ------ ----------- ----------
Net exceptional items
A net exceptional credit of EUR0.4 million was incurred in H1
2015 comprising:
-- Termination costs of EUR7.9 million of which EUR7.3m relates
to the voluntary severance scheme launched during 2015.
-- EUR4.3 million costs in relation to professional and advisory
fees relating to the IASS pension solution and the IAG offer. In H1
2014 the comparative professional and advisory fees of EUR1.9
million were mainly related to the IASS pension solution.
These costs were offset by:
-- A post retirement income streaming release of EUR11.3 million.
-- A EUR1.3 million profit on the disposal of an investment.
See Note 9 for further details.
Finance income and expenses
EUR million H1 2015 H1 2014 % movement
---------------------------- ------- ------- ------------
Finance income 4.1 5.2 (21.2%)
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Finance expense (5.7) (7.2) 20.8%
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Net finance expense (1.7) (2.1) 19.0%
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Average gross cash 985.9 992.0 (0.6%)
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Average gross debt 384.9 465.4 17.3%
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Average interest rate:
---------------------------- ------- ------- ------------
Deposit 0.74% 0.92% (0.2) ppt
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Debt 2.52% 2.52% - ppt
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Net finance expense for H1 2015 was EUR1.7 million (H1 2014:
expense of EUR2.1 million) due to lower finance lease obligations
as scheduled debt repayments continued during the year with total
repayments of EUR42.5 million. Interest rates applicable to finance
leases remained at 2.5%. Finance income decreased by EUR1.1 million
mainly reflecting the impact of lower average deposit interest
rates.
Tax charge
There was a tax credit for the period of EUR2.2 million (H1
2014: EUR1.8 million) reflecting the application of the estimated
full year effective income tax rate of 14.6% to the results for the
first half.
Cash flow, cash and debt
EUR million 30-Jun-15 31-Dec-14 30-Jun-14
--------------------------------- ----------- --------- ---------
Gross cash 1,013.1 935.5 1,034.4
--------------------------------- ----------- --------- ---------
Gross debt (371.5) (390.2) (448.7)
--------------------------------- ----------- --------- ---------
Net cash 641.6 545.3 585.7
--------------------------------- ----------- --------- ---------
Significant cash flow movements in the
six months to 30 June 2015 are as follows:
Movements in gross cash EUR million
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Cash from operations (Note 24) 286.7
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FX on deposits 20.7
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Cash from operations (adjusted for FX in
deposits) 307.4
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Purchase of non-current assets- net (34.6)
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Net interest received 1.8
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Free cash flow 274.7
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Debt repayments (42.5)
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Movement in once-off pension contribution (135.1)
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Interest accrued 0.7
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Dividend paid (26.7)
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Disposal on investment 1.4
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Exchange gain on cash & cash equivalents 5.1
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Net movement on gross cash 77.6
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Gross cash at 31 December 2014 935.5
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Gross cash at 30 June 2015 1,013.1
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Overall gross cash at 30 June 2015 of EUR1,013.1million is
EUR21.3 million lower than June 2014. At 30 June 2015 EUR76.7
million of gross cash was deemed restricted (of which EUR55.6
million related to funds held in escrow for the once off pension
contribution). As at 27 July 2015 EUR53.4 million remained in
escrow. See note 19 for details.
Free cash flow of EUR274.7 million is EUR82.9 million higher
than the prior year (H1 2014: EUR191.8 million) driven
predominately by stronger working capital inflows due to advance
passenger booking revenues. Significant cash outflows in the period
included finance lease repayments of EUR42.5 million, capital
expenditure of EUR34.6 million and EUR26.7 million in respect of
dividends paid in May 2015. The Group also benefited from FX gains
on operating cash flows and US Dollar denominated cash reserves
held on deposit. During the period the Group made steady progress
in implementing the IASS pension solution with EUR135.1 million of
the EUR190.7 million once-off contribution transferred to
individuals' new defined pension scheme accounts upon execution of
waivers (see notes 19 and 21 for further details).
Movements in gross debt EUR million
------------------------------- -----------
Gross debt at 31 December 2014 390.2
------------------------------- -----------
Interest accrued 2.1
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Debt repaid (42.5)
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FX 21.7
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Gross debt at 30 June 2015 371.5
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Gross debt comprises finance leases secured on individual
aircraft. At 30 June 2015, approximately 63% of gross debt was
denominated in US Dollar. The appreciation of the US Dollar over
the euro throughout H1 2015 increased our gross debt by EUR21.7
million. At any one time, the Group holds an amount of gross cash
in US Dollar in excess of our gross debt to mitigate the potential
impact of FX on the financial statements. Scheduled finance lease
repayments led to one lease becoming unencumbered in the six
months.
Debt repayment profile
The Aer Lingus debt maturity profile extends until 2023. In H1
2015, the Group made finance lease repayments of EUR42.5 million.
In the second half of 2015, Aer Lingus expects to make further
repayments of EUR58.7 million which will result in an additional
two aircraft becoming unencumbered.The Group's finance lease
repayment schedule from 2016 through the remainder of the lease
terms (excluding interest), at the 30 June 2015 US Dollar/euro FX
rate of US Dollar $1.12 is as follows:
EUR million 2016 2017 2018 2019 2020 2021 to
2023
-------------- ---- ---- ---- ----- ---- -------
Finance lease
repayments 29.3 30.8 74.7 123.8 20.3 33.7
-------------- ---- ---- ---- ----- ---- -------
Principal risks and uncertainties
The principal risks and uncertainties to which Aer Lingus is
exposed and which are disclosed on pages 29 to 33 of the Group's
annual report for the year ended 31 December 2014 continue to
apply. They include our ability to respond to volatility in
commodity costs, investor relations risks, competition risks and
our ability to continue to deliver a product which appeals to our
customers, the risk of on-going organisational changes and
industrial relations, IT infrastructure risks, potential for
operational disruptions and fleet management risks.
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