Annual report and accounts 2016

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114 Notes to the consolidated financial statements continued 2 Significant accounting policies continued Consolidated Income statement for the year to December 31, 2015 € million Previously reported Reclassification After reclassification Passenger revenue 20,350 (20) 20,330 Cargo revenue 1,024 70 1,094 Other revenue 1,484 (50) 1,434 Total revenue 22,858 – 22,858 Handling, catering and other operating costs 2,371 200 2,571 Property, IT and other costs 1,033 (200) 833 Other expenditure on operations 17,136 – 17,136 Total expenditure on operations 20,540 – 20,540 Operating profit 2,318 – 2,318 3 Business combination On August 18, 2015, the Group acquired 100 per cent of the issued ordinary share capital of Aer Lingus Group for €2.55 per share. The fair values of the assets and liabilities arising from the acquisition were presented in the financial statements for the year to December 31, 2015 on a provisional basis. During the twelve months to December 31, 2016 the valuation exercise was finalised, resulting in an increase of €58 million to the fair value of property, plant and equipment arising from the acquisition, a related €7 million deferred tax liability, and a corresponding decrease to goodwill. The comparative information is restated to reflect this adjustment. The goodwill is recognised as follows: € million Cash consideration 1,351 Fair value of identifiable net assets 1,079 Goodwill 272 4 Segment information a Business segments British Airways, Iberia, Vueling and Aer Lingus are managed as individual operating companies. Each airline operates its network operations as a single business unit. The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments, and has been identified as the IAG Management Committee. The IAG Management Committee makes resource allocation decisions based on network profitability, primarily by reference to the passenger markets in which the companies operate. The objective in making resource allocation decisions is to optimise consolidated financial results. Therefore, based on the way the Group treats its businesses, and the manner in which resource allocation decisions are made, the Group has four reportable operating segments for financial reporting purposes, reported as British Airways, Iberia, Vueling and Aer Lingus. Other Group companies include the head office companies. In 2016, the Avios business has been treated as a separate operating unit and is included in Other Group companies in the Business segment information. In 2015, Avios was allocated to the British Airways and Iberia operating segments according to the ownership percentage. The 2015 comparatives have been restated and Avios has been included in Other Group companies. For the year to December 31, 2016 2016 € million British Airways Iberia Vueling Aer Lingus Other Group companies Total Revenue External revenue 13,889 4,233 2,065 1,766 614 22,567 Inter-segment revenue 469 353 – – 452 1,274 Segment revenue 14,358 4,586 2,065 1,766 1,066 23,841 Depreciation, amortisation and impairment (950) (215) (19) (75) (28) (1,287) Operating profit before exceptional items 1,786 271 60 233 185 2,535 Exceptional items (note 5) (93) – – – 42 (51) Operating profit after exceptional items 1,693 271 60 233 227 2,484 Net non-operating costs (122) Profit before tax 2,362 INTERNATIONAL AIRLINES GROUP Annual Report and Accounts 2016
115 For the year to December 31, 2015 € million 2015 British Airways Iberia Vueling Aer Lingus Other Group companies Revenue External revenue 15,413 4,339 1,962 622 522 22,858 Inter-segment revenue 420 359 – – 469 1,248 Segment revenue 15,833 4,698 1,962 622 991 24,106 Depreciation, amortisation and impairment (1,045) (205) (13) (27) (17) (1,307) Operating profit before exceptional items 1,759 222 160 35 159 2,335 Exceptional items (note 5) (35) – – (3) 21 (17) Operating profit after exceptional items 1,724 222 160 32 180 2,318 Net non-operating costs (517) Profit before tax 1,801 b Geographical analysis Revenue by area of original sale € million 2016 2015 UK 7,877 8,256 Spain 3,632 3,462 USA 3,534 3,447 Rest of world 7,524 7,693 22,567 22,858 Assets by area December 31, 2016 Property, € million plant and equipment Intangible assets UK 9,608 1,196 Spain 1,877 1,236 USA 20 18 Rest of world 722 587 12,227 3,037 Total Strategic Report Corporate Governance Financial Statements Additional Information December 31, 2015 Property, € million plant and equipment Intangible assets UK 11,112 1,346 Spain 1,798 1,221 USA 26 14 Rest of world 794 614 13,730 3,195 www.iairgroup.com
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INTERNATIONAL AIRLINES GROUP The be
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Strategic report “2016 was a chal
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3 Chairman’s letter A firm focus
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5 Q A And, importantly, we have to
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7 IAG combines the leading airlines
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9 Operating highlights British Airw
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11 Business model and strategy Maxi
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13 4 5 6 Grow share of Europeto-Afr
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15 The performance indicators prese
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17 IT This year significant work ha
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19 and additional summer aircraft a
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21 This is why we have recently lau
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23 Aer Lingus Making the most of ou
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25 IAG Cargo Resilient performance
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27 Risk management and principal ri
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29 Risk Potential impact Management
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31 Risk Potential impact Management
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33 Financial overview A significant
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35 However, continued weakness in t
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37 Exchange impact before exception
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39 By supplier cost category: Handl
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41 Capacity 21% 11% 8% 60% Operatin
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43 Cash flow € million 2016 2015
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45 Sustainability Committed to our
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47 UN Sustainable Development Goals
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49 Aspect and link to SDGs Noise Wa
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51 Air quality - electric tug trial
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“2016 has really tested the Group
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55 I think we can be very proud tha
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57 James Lawrence Non-Executive Dir
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59 The Group operating companies Av
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61 The Board Secretary is Álvaro L
Page 65 and 66: 63 Induction programme New director
Page 67 and 68: 65 Other statutory information Dire
Page 69 and 70: 67 The significant shareholders of
Page 71 and 72: 69 Report of the Audit and Complian
Page 73 and 74: 71 ICFR, which is a Spanish Corpora
Page 75 and 76: 73 The Committee’s responsibiliti
Page 77 and 78: 75 Report of the Safety Committee D
Page 79 and 80: 77 Despite a growth in share price
Page 81 and 82: 79 The table below summarises the m
Page 83 and 84: 81 Malus and Clawback Provisions Th
Page 85 and 86: 83 Service contracts and exit payme
Page 87 and 88: 85 Annual Remuneration Report Commi
Page 89 and 90: 87 Additional explanations in respe
Page 91 and 92: 89 IAG PSP Award 2014 The IAG PSP a
Page 93 and 94: 91 Statement of Voting The table be
Page 95 and 96: 93 IAG’s total shareholder return
Page 97 and 98: 95 The second performance condition
Page 99 and 100: 97 Incentive Award Deferral Plan Th
Page 101 and 102: Strategic Financial Statements Repo
Page 103 and 104: 101 Consolidated statement of other
Page 105 and 106: 103 Consolidated cash flow statemen
Page 107 and 108: 105 Consolidated statement of chang
Page 109 and 110: 107 the Income statement. All other
Page 111 and 112: 109 b Other interest-bearing deposi
Page 113 and 114: 111 Employee leaving indemnities an
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Page 119 and 120: 117 7 Auditors’ remuneration The
Page 121 and 122: 119 For the year to December 31, 20
Page 123 and 124: 121 c Reconciliation of the total t
Page 125 and 126: 123 13 Property, plant and equipmen
Page 127 and 128: 125 16 Intangible assets and impair
Page 129 and 130: 127 Basis for calculating recoverab
Page 131 and 132: 129 19 Trade and other receivables
Page 133 and 134: 131 2 Floating rate euro mortgage l
Page 135 and 136: 133 depending on whether the employ
Page 137 and 138: 135 At December 31, 2016 the Group
Page 139 and 140: 137 27 Financial instruments a Fina
Page 141 and 142: 139 The carrying amounts and fair v
Page 143 and 144: 141 December 31, 2015 Financial ins
Page 145 and 146: 143 31 Other reserves and non-contr
Page 147 and 148: 145 Defined benefit schemes i. APS
Page 149 and 150: 147 d Fair value of scheme assets A
Page 151 and 152: 149 e Present value of scheme liabi
Page 153 and 154: 151 33 Contingent liabilities and g
Page 155 and 156: Spanish corporate governance report
Page 157 and 158: 155 Indicate the most significant m
Page 159 and 160: 157 Explain any significant changes
Page 161 and 162: 159 B. SHAREHOLDERS’ MEETING B.1
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165 When reviewing board appointmen
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167 C.1.10 Indicate what powers, if
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169 Selection of directors In ident
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171 C.1.20 ter List any business re
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173 C.1.31 Indicate whether the con
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175 C.1.36 No Outgoing auditor Indi
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177 C.1.42 Indicate and, where appr
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179 C.2 Board committees C.2.1 Give
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181 f. To establish the appropriate
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183 F. Other responsibilities: a. T
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185 c) Steps taken during the year:
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187 C.2.2 b) Functions The main fun
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189 D.4 List any relevant transacti
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191 E.2 Identify the bodies respons
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193 Main risk Government interventi
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195 Audit and Compliance Committee
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197 The financial risk assessment i
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199 F.3.2 Internal control policies
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201 F.4.2 Mechanisms in standard fo
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203 6. Listed companies drawing up
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205 21. The board of directors shou
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207 37. When an executive committee
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209 52. The terms of reference of s
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211 IAG Remuneration Policy complie
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213 Director Enrique Dupuy de Lôme
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215 Strategic Report Corporate Gove
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217 Name and address Principal acti
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219 Associates Name and address Han
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221 Strategic Report Corporate Gove
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223 Operating margin Overall load f
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225 In 2015, the definition of inve
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227 Sustainability indicators Indic
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Shareholder information Registered
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