REG - Intl Con Airline Grp - Final Results <Origin Href="QuoteRef">ICAG.L</Origin> - Part 4
24/02/2017 07:18
- Part 4: For the preceding part double click ID:nRSX7399Xc
39 9 (11) - 5 6 48
Total deferred tax 491 33 (243) 84 (42) (26) 297
Within tax in Other comprehensive income is a tax charge of E53 million that may be reclassified subsequently to the Income statement and a tax charge of E127 million that may not.Detailed deferred tax movement in respect of current year in the Income statement, Other comprehensive income and Statement of changes in equityFor the year to December 31, 2016
E million Income statement Othercomprehensiveincome Statement of changes inequity Total
Fixed assets (8) - - (8)
Employee leaving indemnities and other employee related provisions (99) - - (99)
Tax losses carried forward (9) - - (9)
Fair value losses recognised on cash flow hedges (5) (187) - (192)
Employee benefit plans (13) 345 - 332
Share-based payment schemes (1) - (7) (8)
Foreign exchange 6 - - 6
Deferred revenue in relation to customer loyalty programmes 1 - - 1
Other items (2) - - (2)
Total deferred tax (130) 158 (7) 21
For the year to December 31, 2015
E million Income statement Othercomprehensive income Statement ofchanges inequity Total
Fixed assets (10) - - (10)
Employee leaving indemnities and other employee related provisions (13) - - (13)
Tax losses carried forward (42) - - (42)
Fair value losses recognised on cash flow hedges 12 (53) - (41)
Employee benefit plans 2 (127) - (125)
Tax assets in relation to tax credits and deductions (1) - - (1)
Share-based payment schemes - - (4) (4)
Foreign exchange 20 - - 20
Deferred revenue in relation to customer loyalty programmes (16) - - (16)
Other items (11) - - (11)
Total deferred tax (59) (180) (4) (243)
c Reconciliation of the total tax charge in the Income statement
The tax charge is calculated at the domestic rates applicable to profits or losses in the main countries of operation. The
tax charge on the profit for the year to December 31, 2016 and 2015 is lower than the notional tax charge.
The differences are explained below:
E million 2016 2015
Accounting profit before tax 2,362 1,801
Tax calculated at 25 per cent in Spain (2015: 28 per cent), 20 per cent in the UK (2015: 20.25 per cent) and 12.5 per cent in Ireland (2015: 12.5 per cent)1 466 381
Effects of:
Non-deductible expenses - recurring items 12 6
Non-deductible expenses - non-recurring items 9 11
Current year tax assets not recognised 4 3
Tax on unremitted earnings - 3
Employee benefit plans accounted for net of withholding tax (6) (8)
Investment credit (7) (6)
Previously unrecognised tax assets (9) -
Euro preferred securities accounted for as non-controlling interests (12) (4)
Other items (2) 10
Adjustments in respect of prior years (2) (27)
Tax rate changes (43) (84)
Tax charge in the Income statement 410 285
1 The expected tax charge is calculated by aggregating the expected tax charges arising in each Group company.
d Other taxes
The Group also contributed tax and related revenues through payment of transaction and payroll related taxes and charges. A
breakdown of these other taxes and charges paid during 2016 is as follows:
E million 2016 2015
Payroll related taxes 495 455
UK Air Passenger Duty 848 923
Other ticket taxes and charges 1,626 1,583
2,969 2,961
The reduction in UK air passenger duty paid reflects foreign exchange movements and not a reduction in underlying
payments.
e Factors that may affect future tax charges
Unrecognised temporary differences - losses
E million 2016 2015
Spanish corporate income tax losses and deferred finance costs 47 35
UK capital losses arising before the change in ownership of the UK Group in 2011 34 101
UK capital losses arising after the change in ownership of the UK Group in 2011 8 10
UK capital losses arising on properties that were eligible for Industrial Buildings Allowances 296 350
Corporate income tax losses outside of the countries of main operation 170 154
Unrecognised temporary differences - investment in subsidiaries and associates
No deferred tax liability has been recognised in respect of E170 million (2015: E795 million) of temporary differences
relating to subsidiaries and associates. The Group either controls the reversal of these temporary differences and it is
probable that they will not reverse in the foreseeable future or no tax consequences would arise from their reversal.
UK tax rate changes
A reduction in the UK corporation tax rate was substantively enacted in the year, in addition to those enacted in 2015. The
main rate of corporation tax applicable from April 1, 2020 was reduced from 18 per cent to 17 per cent. The deferred tax on
temporary differences and tax losses at December 31, 2016 was calculated at the rate applicable to the year in which the
temporary differences and tax losses are expected to reverse.
Spanish tax law changes
Changes in Spanish corporate income tax law were made towards the end of 2016. These changes included delaying the tax
deduction for certain expenditure and delaying the offset of brought forward tax losses, both of which accelerate tax
payable by the Group. There were also changes which increased prepayments of corporate income tax (current tax asset 2016:
E228 million). These changes are not expected to affect the total future tax charge.
Tax audits
The Group files income tax returns in many jurisdictions throughout the world. Tax returns contain matters that are subject
to potentially differing interpretations of tax laws and regulations, which may give rise to queries from and disputes with
tax authorities. The resolution of these queries and disputes can take several years. The Group does not currently expect
any material impact on the Group's financial position or results of operations to arise from such resolution. The extent to
which there are open queries and disputes depends upon the jurisdiction and the issue.
11 Earnings per share
E million 2016 2015
Earnings attributable to equity holders of the parent for basic earnings 1,931 1,495
Interest expense on convertible bonds 26 25
Diluted earnings attributable to equity holders of the parent and diluted earnings per share 1,957 1,520
2016Number'000 2015Number'000
Weighted average number of ordinary shares in issue 2,075,568 2,034,197
Assumed conversion on convertible bonds 115,688 101,480
Dilutive employee share schemes outstanding 19,734 24,260
Weighted average number for diluted earnings per share 2,210,990 2,159,937
E cents 2016 2015
Basic earnings per share 93.0 73.5
Diluted earnings per share 88.5 70.4
The calculation of basic and diluted earnings per share before exceptional items is included in the Alternative performance
measures section.
12 Dividends
E million 2016 2015
Cash dividend declared
Interim dividend for 2016 of 11 E cents per share (2015: 10 E cents per share) 233 203
Final dividend for 2015 of 10 E cents per share 212 -
Proposed cash dividend
Final dividend for 2016 of 12.5 E cents per share 265
The proposed dividend would be distributed from net profit for the year to December 31, 2016.
Proposed dividends on ordinary shares are subject to approval at the annual general meeting and subject to approval are
recognised as a liability on that date.
13 Property, plant and equipment
E million Fleet Property Equipment Total
Cost
Balance at January 1, 2015 20,226 2,259 1,515 24,000
Additions 1,774 51 112 1,937
Acquired through Business combination 751 16 12 779
Disposals (1,180) (3) (56) (1,239)
Reclassifications (184) 3 (22) (203)
Exchange movements 1,488 155 90 1,733
Balance at December 31, 2015 22,875 2,481 1,651 27,007
Additions 2,739 31 123 2,893
Disposals (2,957) (5) (50) (3,012)
Reclassifications (178) - (21) (199)
Exchange movements (2,740) (297) (170) (3,207)
December 31, 2016 19,739 2,210 1,533 23,482
Depreciation and impairment
Balance at January 1, 2015 10,252 999 965 12,216
Charge for the year 1,066 70 91 1,227
Disposals (954) (3) (34) (991)
Reclassifications (99) 2 (10) (107)
Exchange movements 793 75 64 932
Balance at December 31, 2015 11,058 1,143 1,076 13,277
Charge for the year 1,016 64 89 1,169
Disposals (1,309) (5) (27) (1,341)
Reclassifications (140) - (9) (149)
Exchange movements (1,430) (149) (122) (1,701)
December 31, 2016 9,195 1,053 1,007 11,255
Net book values
December 31, 2016 10,544 1,157 526 12,227
December 31, 2015 11,817 1,338 575 13,730
Analysis at December 31, 2016
Owned 3,930 1,114 409 5,453
Finance leased 6,000 4 57 6,061
Progress payments 614 39 60 713
Property, plant and equipment 10,544 1,157 526 12,227
Analysis at December 31, 2015
Owned 4,763 1,289 460 6,512
Finance leased 6,385 16 33 6,434
Progress payments 669 33 82 784
Property, plant and equipment 11,817 1,338 575 13,730
The net book value of property comprises: E million 2016 2015
Freehold 494 561
Long leasehold improvements 331 387
Short leasehold improvements1 332 390
Property 1,157 1,338
1 Short leasehold improvements relate to property leasehold interests with duration of less than 50 years.
At December 31, 2016, bank and other loans of the Group are secured on fleet assets with a cost of E1,071 million (2015:
E1,466 million) and letters of credit of E273 million in favour of the British Airways Pension Trustees are secured on
certain aircraft (2015: E278 million).
14 Capital expenditure commitments
Capital expenditure authorised and contracted for but not provided for in the accounts amounts to E14,022 million (December
31, 2015: E16,091 million). The majority of capital expenditure commitments are denominated in US dollars, and as such are
subject to changes in exchange rates.
The outstanding commitments include E13,991 million for the acquisition of 89 Airbus A320s (from 2018 to 2022), 17 Airbus
A321s (from 2017 to 2019), 5 Airbus A330s (from 2017 to 2018), 43 Airbus A350s (from 2018 to 2022) and 18 Boeing 787s (from
2017 to 2021).
15 Non-current assets held for sale
The non-current assets held for sale of E38 million represent E15 million for the Group's investment in Propius Holdings
Limited and E23 million for five Airbus A340-300 aircraft. These are presented within the Aer Lingus and Iberia operating
segments respectively and will exit the business within 12 months of December 31, 2016.
During the year to December 31, 2016 six Airbus A340-300 aircraft were classified as held for sale. Assets held for sale
with a net book value of E19 million disposed of during the year, related to the sale of one Airbus A340-300 aircraft in
Iberia and three Boeing 737-400 airframes and nine Boeing 737-400 engines in British Airways, resulting in a gain of E1
million in British Airways.
At December 31, 2015 the non-current assets held for sale of E5 million represented three Boeing 737-400 airframes and nine
Boeing 737-400 engines that had been stood down from use and were being marketed for sale. These were presented within the
British Airways segment.
16 Intangible assets and impairment review
a Intangible assets
E million Goodwill Brand Customerloyalty programmes Landingrights1 Other2 Total
Cost
Balance at January 1, 2015 328 341 253 1,442 749 3,113
Additions - - - - 168 168
Acquired through Business combination 272 110 - 172 40 594
Disposals - - - - (114) (114)
Reclassifications - - - - 20 20
Exchange movements 5 - - 70 42 117
Balance at December 31, 2015 605 451 253 1,684 905 3,898
Additions - - - - 154 154
Disposals - - - - (19) (19)
Reclassifications - - - - 20 20
Exchange movements (7) - - (128) (100) (235)
December 31, 2016 598 451 253 1,556 960 3,818
Amortisation and impairment
Balance at January 1, 2015 249 - - 77 349 675
Charge for the year - - - 3 72 75
Disposals - - - - (78) (78)
Reclassifications - - - - 8 8
Exchange movements - - - 6 17 23
Balance at December 31, 2015 249 - - 86 368 703
Charge for the year - - - 6 98 104
Impairment charge recognised during the year3 - - - 14 - 14
Reclassifications - - - - 9 9
Exchange movements - - - (8) (41) (49)
December 31, 2016 249 - - 98 434 781
Net book values
December 31, 2016 349 451 253 1,458 526 3,037
December 31, 2015 356 451 253 1,598 537 3,195
1 The net book value includes non-EU based landing rights of E113 million (2015: E123 million) that have a finite
life. The remaining life of these landing rights is 19 years.
2 Other intangible assets consist primarily of software with a net book value of E474 million (2015: E487
million), and also include purchased emissions allowances.
3 The impairment charge of E14 million relates to landing rights associated with British Airways' Openskies
operation, E11 million of which relates to landing rights in the EU that have an indefinite life.
b Impairment review
The carrying amounts of intangible assets with indefinite life and goodwill allocated to cash generating units (CGUs) of
the Group are:
E million Goodwill Landingrights Brand Customerloyalty programmes Total
2016
Iberia
January 1 and December 31, 2016 - 423 306 - 729
British Airways
January 1, 2016 56 901 - - 957
Impairment - (11) - - (11)
Exchange movements (7) (119) - - (126)
December 31, 2016 49 771 - - 820
Vueling
January 1 and December 31, 2016 28 89 35 - 152
Aer Lingus
January 1 and December 31, 2016 272 62 110 - 444
Avios
January 1 and December 31, 2016 - - - 253 253
December 31, 2016 349 1,345 451 253 2,398
E million Goodwill Landingrights Brand Customerloyalty programmes Total
2015
Iberia
January 1, 2015 - 423 306 253 982
Transfer to Avios - - - (253) (253)
December 31, 2015 - 423 306 - 729
British Airways
January 1, 2015 51 840 - - 891
Exchange movements 5 61 - - 66
December 31, 2015 56 901 - - 957
Vueling
January 1 and December 31, 2015 28 89 35 - 152
Aer Lingus
January 1, 2015 - - - - -
Acquired through Business combination 272 62 110 - 444
December 31, 2015 272 62 110 - 444
Avios
January 1, 2015 - - - - -
Transfer from Iberia - - - 253 253
December 31, 2015 - - - 253 253
December 31, 2015 356 1,475 451 253 2,535
Basis for calculating recoverable amount
The recoverable amounts of CGUs have been measured based on their value-in-use.
Value-in-use is calculated using a discounted cash flow model, with the royalty methodology used for brands. Cash flow
projections are based on the Business plan approved by the Board covering a five year period. Cash flows extrapolated
beyond the five year period are projected to increase based on long-term growth rates. Cash flow projections are discounted
using the CGU's pre-tax discount rate.
Annually the Group prepares and the Board approves five year business plans. Business plans were approved in the fourth
quarter of the year. The business plan cash flows used in the value-in-use calculations reflect all restructuring of the
business that has been approved by the Board and which can be executed by Management under existing agreements.
Key assumptions
For each of the CGUs the key assumptions used in the value-in-use calculations are as follows:
2016
Per cent British Airways Iberia Vueling Aer Lingus Avios
Lease adjusted operating margin 12-15 8-14 7-15 12-15 n/a1
Average ASK growth per annum 2 4 7 8 n/a1
Long-term growth rate 2.5 2.0 2.0 2.0 2.4
Pre-tax discount rate 8.5 9.8 10.6 7.8 9.1
2015
Per cent BritishAirways Iberia Vueling Avios
Lease adjusted operating margin 12-15 8-14 12-15 n/a1
Average ASK growth per annum 2-3 7 10 n/a1
Long-term growth rate 2.5 2.0 2.0 2.4
Pre-tax discount rate 8.6 9.7 10.3 9.1
1 Lease adjusted operating margin and ASK growth per annum assumptions are not applicable for the Avios loyalty
reward business, which conducts business with partners both within and outside IAG.
Lease adjusted operating margin is the average annual operating result, adjusted for aircraft operating lease costs, as a
percentage of revenue over the five year Business plan to 2021. It is presented as a percentage point range and is based on
past performance, Management's expectation of the market development and incorporating risks into the cash flow estimates.
ASK growth is the average annual increase over the Business plan, based on past performance and Management's expectation of
the market.
The long-term growth rate is calculated for each CGU based on the forecasted weighted average exposure in each primary
market using gross domestic product (GDP) (source: Oxford Economics). This is reviewed each year and updated as necessary
to reflect management's view on specific market risk.
Pre-tax discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration
the time value of money and underlying risks of its primary market. The discount rate calculation is based on the
circumstances of the airline industry, the Group and the CGU. It is derived from the weighted average cost of capital
(WACC). The WACC takes into consideration both debt and equity available to airlines. The cost of equity is derived from
the expected return on investment by airline investors and the cost of debt is broadly based on the Group's
interest-bearing borrowings. CGU specific risk is incorporated by applying individual beta factors which are evaluated
annually based on available market data. The pre-tax discount rate reflects the timing of future tax flows.
Summary of results
In 2016, Management reviewed the recoverable amount of each of its CGUs and concluded the recoverable amounts exceeded the
carrying values.
In 2016, British Airways recognised an impairment charge of E14 million in respect of landing rights associated with its
Openskies operation, E11 million of which related to landing rights in the EU that have an indefinite life. The impairment
has arisen as a result of changes in Business plan assumptions for the Openskies operation. At December 31, 2016 the
remaining carrying value was E12 million, representing its value-in-use.
Sensitivities
Sensitivities have been considered for each CGU. No reasonable possible change in the key assumptions for any of the Groups
CGUs would cause the carrying amounts to exceed the recoverable amounts.
17 Investments
a Investments in subsidiaries
The Group's principal subsidiaries at December 31, 2016 are listed in the Group investments section.
All subsidiary undertakings are included in the consolidation. There have been no significant changes in ownership
interests of subsidiaries during the year.
The total non-controlling interest at December 31, 2016 is E308 million which largely comprises E300 million of 6.75 per
cent fixed coupon euro preferred securities issued by British Airways Finance (Jersey) L.P. (note 31).
British Airways Employee Benefit Trustee (Jersey) Limited, a wholly-owned subsidiary of British Airways, governs the
British Airways Plc Employee Share Ownership Trust (the Trust). The Trust is not a legal subsidiary of IAG; however, it is
consolidated within the Group results.
b Investments in associates and joint ventures
The share of assets, liabilities, revenue and profit of the Group's associates and joint ventures, which are included in
the Group's financial statements, are as follows:
E million 2016 2015
Total assets 88 100
Total liabilities (61) (64)
Revenue 52 75
Profit for the year 6 6
The detail of the movement in Investment in associates and joint ventures is shown as follows:
E million 2016 2015
At beginning of year 41 27
Share of retained profits 6 6
Acquired through Business combination - 17
Disposals - (1)
Reclassification1 (15) -
Exchange movements - 1
Dividends received (3) (9)
29 41
1 During the year the Group's 33.33 per cent equity interest in the share capital of Propius Holdings Limited was
classified as held for sale.
At December 31, 2016 there are no restrictions on the ability of associates or joint ventures to transfer funds to the
parent and there are no related contingent liabilities.
At December 31, 2016 the investment in Handling Guinea Ecuatorial, S.A. exceeded 50 per cent ownership by the Group (51 per
cent) and is treated as an associate as the local partner controls its activities.
18 Available-for-sale financial assets
Available-for-sale financial assets include the following:
E million 2016 2015
Listed securities
Comair Limited 15 9
Unlisted securities 58 65
73 74
The net gain relating to available-for-sale financial assets was E4 million (2015: E5 million).
19 Trade and other receivables
E million 2016 2015
Amounts falling due within one year
Trade receivables 1,469 1,280
Provision for doubtful receivables (64) (84)
Net trade receivables 1,405 1,196
Prepayments and accrued income 717 925
Other non-trade debtors 182 310
2,304 2,431
Amounts falling due after one year
Prepayments and accrued income 313 173
Other interest-bearing deposits (greater than one year) 114 104
Other non-trade debtors 72 88
499 365
Movements in the provision for doubtful trade receivables were as follows:
E million 2016 2015
At beginning of year 84 97
Provision for doubtful receivables 7 8
Unused amounts reversed (1) (3)
Receivables written off during the year (23) (20)
Exchange movements (3) 2
64 84
The ageing analysis of net trade receivables is as follows:
E million 2016 2015
Neither past due date nor impaired 1,017 986
< 30 days 235 117
30 - 60 days 96 77
> 60 days 57 16
Net trade receivables 1,405 1,196
Trade receivables are generally non-interest-bearing and on 30 days terms (2015: 30 days).
20 Cash, cash equivalents and other current interest-bearing deposits
E million 2016 2015
Cash at bank and in hand 2,021 2,230
Short-term deposits falling due within three months 1,316 679
Cash and cash equivalents 3,337 2,909
Other current interest-bearing deposits maturing after three months 3,091 2,947
Cash, cash equivalents and other interest-bearing deposits 6,428 5,856
Cash at bank is primarily held in AAA money market funds and bank deposits. Short-term deposits are made for periods up to
three months depending on the cash requirements of the Group and earn interest based on the floating deposit rates.
At December 31, 2016 the Group had no outstanding bank overdrafts (2015: nil).
Other current interest-bearing deposits are made for periods in excess of three months with maturity typically within 12
months and earn interest based on the market rates available at the time the deposit was made.
At December 31, 2016 Aer Lingus held E47 million of restricted cash (2015: E49 million) within interest-bearing deposits
maturing after more than three months to be used for employee related obligations.
21 Trade and other payables
E million 2016 2015
Trade creditors 1,776 2,043
Other creditors 910 1,031
Other taxation and social security 218 186
Accruals and deferred income 401 543
3,305 3,803
Average payment days to suppliers - Spanish Group companies
Days 2016 2015
Average payment days for payment to suppliers 31 42
Ratio of transactions paid 30 42
Ratio of transactions outstanding for payment 53 47
E million 2016 2015
Total payments made 4,600 4,272
Total payments outstanding 86 84
22 Other long-term liabilities
E million 2016 2015
Non-current trade creditors 4 5
Accruals and deferred income 234 218
238 223
23 Long-term borrowings
a Current
E million 2016 2015
Bank and other loans 149 576
Finance leases 777 556
926 1,132
b Non-current
E million 2016 2015
Bank and other loans 1,764 2,176
Finance leases 5,825 5,322
7,589 7,498
During the year all holders of the E390 million 1.75 per cent convertible bond exercised their options to exchange their
convertible bonds for ordinary shares in the Company, resulting in the issuance of 92,910,220 shares during the year.
Banks and other loans are repayable up to the year 2027. Bank and other loans of the Group amounting to E613 million (2015:
E813 million) are secured on aircraft. Finance leases are all secured on aircraft or property, plant and equipment.
c Bank and other loans
Bank and other loans comprise the following:
E million 2016 2015
E500 million fixed rate 0.25 per cent convertible bond 20201 463 454
E500 million fixed rate 0.625 per cent convertible bond 20221 441 431
Floating rate euro mortgage loans secured on aircraft2 304 328
E200 million fixed rate unsecured bonds3 200 147
Floating rate euro syndicate loan secured on investments4 176 192
Fixed rate US dollar mortgage loans secured on aircraft5 157 174
Fixed rate Chinese yuan mortgage loans secured on aircraft6 87 102
Floating rate pound sterling mortgage loans secured on aircraft7 53 55
Fixed rate unsecured euro loans with the Spanish State (Department of Industry)8 18 15
Floating rate US dollar mortgage loans secured on aircraft9 12 52
European Investment Bank sterling loans secured on certain property10 2 7
E390 million fixed rate 1.75 per cent convertible bond 201811 - 350
£250 million fixed rate 8.75 per cent unsecured Eurobonds 201612 - 343
Fixed rate pound sterling mortgage loans secured on aircraft13 - 102
1,913 2,752
Less current instalments due on bank and other loans (149) (576)
1,764 2,176
1 Two senior unsecured bonds convertible into ordinary shares of IAG were issued by the Group in November 2015;
E500 million fixed rate 0.25 per cent raising net proceeds of E494 million and due in 2020, and
E500 million fixed rate 0.625 per cent raising net proceeds of E494 million and due in 2022. The Group holds an option to
redeem each convertible bond at its principal amount, together with accrued interest, no
earlier than two years prior to the final maturity date. The equity portion of the convertible bond issue of E39 million
and E62 million respectively is included in Other reserves (note 31). The bonds contain
dividend protection, and a total of 72,417,846 options related to the bonds were outstanding from issuance and at December
31, 2016.
2 Floating rate euro mortgage loans are secured on specific aircraft assets of the Group and bear interest of
between 0.29 and 1.50 per cent. The loans are repayable between 2024 and 2027.
3 E200 million fixed rate unsecured bonds between 2.5 to 3.75 per cent coupon repayable between 2018 and 2027.
During the year, the Group issued bonds totalling E49 million.
4 Floating rate euro syndicate loan secured on investments is secured on specific assets of the Group and bears
interest of 1.375 per cent plus 3 month EURIBOR. The loan is repayable in 2020.
5 Fixed rate US dollar mortgage loans are secured on specific aircraft assets of the Group and bear interest of
between 3.81 and 4.76 per cent. The loans are repayable between 2021 and 2026.
6 Fixed rate Chinese yuan mortgage loans are secured on specific aircraft assets of the Group and bears interest
of 5.20 per cent. The loans are repayable in 2022.
7 Floating rate pound sterling mortgage loans are secured on specific aircraft assets of the Group and bear
interest of 1.10 per cent. The loans are repayable between 2018 and 2019.
8 Fixed rate unsecured euro loans with the Spanish State (Department of Industry) bear interest of between nil and
5.68 per cent and are repayable between 2017 and 2026.
9 Floating rate US dollar mortgage loans are secured on specific aircraft assets of the Group and bear interest of
3.66 per cent. The loans are repayable in 2017.
10 European Investment Bank pound sterling loan is secured on certain property assets of the Group and bears
interest of 0.50 per cent. The loan is repayable in 2017.
11 E390 million fixed rate 1.75 per cent convertible bond issued by the Group, in May 2013, raising net proceeds of
E386 million, convertible into ordinary shares at the option of the holder before or upon maturity in May 2018. The
conversion price was set at a premium of 35 per cent on the Group's share price on the date of issuance. The Group held an
option to redeem the convertible bond at its principal amount, together with accrued interest, upon fulfilment of certain
pre-determined criteria.
In early 2016 certain bondholders requested conversion, resulting in the issuance of 929,102 shares. Following the
announcement by the Group that it had exercised its option to redeem all of its outstanding
E390 million 1.75 per cent convertible bonds due 2018, in June 2016 all remaining bondholders exercised their option to
exchange their convertible bonds for ordinary shares, resulting in the issuance of
91,981,118 new shares.
At December 31, 2016 there were no options outstanding (2015: 91,758,228).
12 £250 million fixed rate 8.75 per cent unsecured eurobonds 2016 were repaid in August 2016.
13 Fixed rate pound sterling mortgage loans were converted into floating rate sterling mortgage loans during the
year. These loans are now included within part 7 above.
d Total loans and finance leases
Million 2016 2015
Loans
Bank:
US dollar $176 $246
Euro E498 E536
Pound sterling £47 £119
Chinese yuan CNY 623 CNY 716
E809 E1,027
Fixed rate bonds:
Euro E1,104 E1,381
Pound sterling - £250
E1,104 E1,725
Finance leases
US dollar $3,246 $3,464
Euro E2,343 E1,458
Japanese yen ¥63,614 ¥44,599
Pound sterling £527 £656
E6,602 E5,878
E8,515 E8,630
e Obligations under finance leases
The Group uses finance leases principally to acquire aircraft. These leases have both renewal and purchase options, at the
option of the Group. Future minimum finance lease payments under finance leases are as follows:
E million 2016 2015
Future minimum payments due:
Within one year 905 692
After more than one year but within five years 3,339 3,084
In five years or more 3,070 2,769
7,314 6,545
Less: finance charges (712) (667)
Present value of minimum lease payments 6,602 5,878
The present value of minimum lease payments is analysed as follows:
Within one year 777 556
After more than one year but within five years 2,938 2,723
In five years or more 2,887 2,599
6,602 5,878
24 Operating lease commitments
The Group has entered into commercial leases on certain properties, equipment and aircraft. These leases have durations
ranging from less than one year to 14 years for aircraft and less than one year to 22 years for property, plant and
equipment with the exception of one ground lease which has a remaining lease of 129 years. Certain leases contain options
for renewal.
The aggregate payments, for which there are commitments under operating leases, fall due as follows:
2016 2015
E million Fleet Property,plant and equipment Total Fleet Property,plant and equipment Total
Within one year 975 158 1,133 778 179 957
Between one and five years 2,970 233 3,203 2,184 384 2,568
Over five years 1,918 2,060 3,978 1,206 2,456 3,662
5,863 2,451 8,314 4,168 3,019 7,187
Sub-leasing
Sub-leases entered into by the Group relate to surplus rental properties and aircraft assets held under non-cancellable
leases to third parties. These leases have remaining terms of one to 21 years and the assets are surplus to the Group's
requirements. Future minimum rentals receivable under non-cancellable operating leases are E12 million (2015: E16 million)
with E7 million (2015: E9 million) falling due within one year, E5 million (2015: E5 million) between one and five years
and nil (2015: E2 million) over five years.
25 Provision for liabilities and charges
E million Restorationandhandbackprovisions Restructuring Employeeleavingindemnitiesand otheremployeerelatedprovisions Legal claimsprovisions Otherprovisions Total
Net book value January 1, 2016 1,013 744 579
- More to follow, for following part double click ID:nRSX7399XeRecent news on International Consolidated Airlines SA
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Announcement