Annual report and accounts 2016

144
Notes to the consolidated financial statements continued
31 Other reserves and non-controlling interests continued
For the year to December 31, 2015
€ million
Retained
earnings
Unrealised
gains and
losses 1
Other reserves
Currency
translation 2
Equity
portion of
convertible
bond 3
Merger
reserve 4
Total other
reserves
Noncontrolling
interest 5
January 1, 2015 (234) (1,086) 319 72 (2,467) (3,396) 308
Profit for the year 1,495 – – – – 1,495 21
Other comprehensive income for the year
Cash flow hedges reclassified and
reported in net profit:
Passenger revenue – 14 – – – 14 –
Fuel and oil costs – 1,474 – – – 1,474 –
Currency differences – (202) – – – (202) –
Investments – 4 – – – 4 –
Net change in fair value of cash
flow hedges – (1,104) – – – (1,104) –
Available-for-sale assets reclassified and
reported in net profit – (5) – – – (5) –
Net change in fair value
of available-for-sale financial assets – (9) – – – (9) –
Currency translation differences – – 181 – – 181 –
Remeasurements of post-employment
benefit obligations 156 – – – – 156 –
Cost of share-based payments 45 – – – – 45 –
Vesting of share-based
payment schemes (99) – – – – (99) –
Equity portion of convertible bond issued – – – 101 – 101 –
Dividend (203) – – – – (203) –
Dividend of a subsidiary – – – – – – (1)
Distributions made to holders of
perpetual securities – – – – – – (20)
December 31, 2015 1,160 (914) 500 173 (2,467) (1,548) 308
1 The unrealised gains and losses reserve records fair value changes on available-for-sale investments and the portion of the gain or loss on a hedging instrument in a cash flow hedge
that is determined to be an effective hedge.
2 The currency translation reserve records exchange differences arising from the translation of the financial statements of non-euro functional currency subsidiaries and associates into
the Group’s reporting currency of euros. The movement through this reserve in 2016 is affected by the fluctuations in the pound sterling to euro foreign exchange translation rate.
3 The equity portion of convertible bond reserve represents the equity portion of convertible bonds issued. At December 31, 2016, this related to the €500 million fixed rate 0.25 per
cent convertible bond and the €500 million fixed rate 0.625 per cent convertible bond (note 23). At December 31, 2015 this also related to the €390 million fixed rate 1.75 per cent
convertible bond. The equity portion of this bond was transferred to retained earnings on conversion during the year to December 31, 2016.
4 The merger reserve originated from the merger transaction between British Airways and Iberia. The balance represents the difference between the fair value of the Group on the
transaction date, and the fair value of Iberia and the book value of British Airways (including its reserves).
5 Non-controlling interests largely comprise €300 million of 6.75 per cent fixed coupon euro perpetual preferred securities issued by British Airways Finance (Jersey) LP. The holders of
these securities have no rights against Group undertakings other than the issuing entity and, to the extent prescribed by the subordinated guarantee, British Airways Plc. In the event
of a dividend paid by the Company, the coupon payment is guaranteed. The effect of the securities on the Group as a whole, taking into account the subordinate guarantee and other
surrounding arrangements, is that the obligations to transfer economic benefits in connection with the securities do not go beyond those that would normally attach to preference
shares issued by a UK company.
32 Employee benefit obligations
The Group operates a variety of post-employment benefit arrangements, covering both defined contribution and defined benefit
schemes. The Group also has a scheme for flight crew who meet certain conditions and therefore have the option of being placed
on reserve and retaining their employment relationship until reaching the statutory retirement age, or taking early retirement
(note 25).
Defined contribution schemes
The Group operates a number of defined contribution schemes for its employees.
Costs recognised in respect of defined contribution pension plans in Spain, UK and Ireland for the year to December 31, 2016 were
€132 million (2015: €108 million).
INTERNATIONAL AIRLINES GROUP
Annual Report and Accounts 2016