International Airlines Regulatory News (IAG)

SIX MONTHS YEAR RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (July 29, 2016) presented Group consolidated results for the six months to June 30, 2016.

IAG period highlights on results:

· Second quarter operating profit €555 million before exceptional items (2015: operating profit of €530 million), excluding Aer Lingus €487 million

· Net foreign exchange operating profit impact for the quarter adverse €148 million

· Passenger unit revenue for the quarter down 10.2 per cent and at constant currency down 6.2 per cent (excluding Aer Lingus and at constant currency down 6.5 per cent)

· Non-fuel unit costs before exceptional items for the quarter down 1.1 per cent and at constant currency up 0.8 per cent (excluding Aer Lingus and at constant currency up 1.3 per cent)

· Fuel unit costs before exceptional items for the quarter down 31.2 per cent, down 29.3 per cent at constant currency

· Operating profit before exceptional items for the half year €710 million (2015: operating profit €555 million), up 27.9 per cent. Excluding Aer Lingus €668 million

· Cash of €6,561 million at June 30, 2016 was up €705 million on 2015 year end

· Adjusted gearing down 1 point to 53 per cent and adjusted net debt to EBITDAR improved 0.2 to 1.7 times

Performance summary:

Willie Walsh, IAG Chief Executive Officer, said:

"We're reporting another strong performance in quarter 2 with an operating profit of €555 million before exceptional items which is up from €530 million compared to last year. Excluding Aer Lingus it would be €487 million.

"Our performance this quarter saw a negative currency impact of €148 million, primarily due to the weak pound. Numerous external factors affected our airlines including the impact of terrorism, uncertainty around the UK's EU referendum and Spain's political situation and increased weakness in Latin American economies. This led to a softer than expected trading environment, especially in June. In addition, the airlines' operations have been considerably disrupted by 22 air traffic control strikes in Europe so far this year. This has impacted our passenger revenues.

"Our non-fuel unit costs fell 1.1 per cent but are up 0.8 per cent at constant currency, following the significant cost reductions achieved last year.

"In spite of the vast majority of our planned capital expenditure this year occurring in the first half, cash was €705 million higher than at the end of 2015.

"In the half year, we made an operating profit of €710 million before exceptional items compared to €555 million in 2015. Excluding Aer Lingus it was €668 million."

Trading outlook

We have continued to experience a weaker trading environment in our UK point-of-sale business, which represents around one third of total revenue. On top of this, continued pound sterling weakness would reduce pound sterling profits when translated into euros in what is traditionally the most profitable part of the year.

In addition, like other European airlines, our operations around Europe have recently suffered from significant weather and Air Traffic Control strike disruption, resulting in over a thousand flights having to be cancelled. We expect at least €80 million disruption costs to be booked in the second half of the year as a result, with the additional risk of revenue dilution. This will affect Vueling more than other operating companies, as IAG's short haul operations have had to bear the bulk of the disruption.

We continue to intensify our long-established cost control and capacity discipline. Cost initiatives currently in the planning stage will benefit our earnings from 2017. However, we also expect reductions in underlying non-fuel unit cost of around 1 per cent at constant currency in 2016 (the same as our previous guidance). This is on top of very significant fuel cost reductions as our historic hedges unwind. We have reduced our planned capacity growth for the second half of the year, and have 2017 capacity growth and capex under review.

Although visibility of revenue trends for quarter 4 remains low, we already have 74 per cent of our expected revenue booked for quarter 3. Based on current fuel price and currency levels, and given our high visibility over H2 cost reductions, we expect low double digit percentage growth in pre-exceptional operating profit in 2016.

We expect full year equity free cash flow to be within our long-term €1.5 billion to €2.5 billion range. This provides a high degree of coverage for ongoing ordinary dividends.

This announcement contains inside information and is disclosed in accordance with the Company's obligations under the Market Abuse Regulation (EU) No 596/2014.

Enrique Dupuy, Chief Financial Officer, (responsible for arranging the release of this announcement).

Forward-looking statements:

Certain statements included in this report are forward-looking and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Forward-looking statements can typically be identified by the use of forward-looking terminology, such as "expects", "may", "will", "could", "should", "intends", "plans", "predicts", "envisages" or "anticipates" and include, without limitation, any projections relating to results of operations and financial conditions of International Consolidated Airlines Group S.A. and its subsidiary undertakings from time to time (the 'Group'), as well as plans and objectives for future operations, expected future revenues, financing plans, expected expenditures and divestments relating to the Group and discussions of the Group's Business plan. All forward-looking statements in this report are based upon information known to the Group on the date of this report. The Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

It is not reasonably possible to itemise all of the many factors and specific events that could cause the forward-looking statements in this report to be incorrect or that could otherwise have a material adverse effect on the future operations or results of an airline operating in the global economy. Further information on the primary risks of the business and the risk management process of the Group is given in the Annual Report and Accounts 2015; these documents are available on www.iagshares.com.

IAG Investor Relations

2 World Business Centre Heathrow

Newall Road, London Heathrow Airport

HOUNSLOW TW6 2SF

Tel: +44 (0)208 564 2900

Investor.relations@iairgroup.com

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT

Operating profit overview

IAG's operating profit for the six months to June 30, 2016 was €710 million before exceptional items, an improvement of €155 million from last year. British Airways made a profit of €631 million before exceptional items (2015: €488 million); Iberia made a loss of €6 million (2015: loss €18 million); Aer Lingus made a profit of €42 million and Vueling's loss was €54 million (2015: loss €5 million).

Operating and market environment

In the first half of 2016, the Group performance was negatively impacted by terrorist attacks, the UK referendum vote to exit the EU, operational disruption including air traffic control industrial action and adverse exchange rates (including a devaluation of the naira), partially offset by lower fuel prices.

IAG remains sensitive to economic conditions in the markets in which it operates. Deterioration in either a domestic market or the global economy may have a material impact on our financial position, while foreign exchange and interest rate movements create volatility. The risk of economic uncertainty within the UK may extend into the longer term following the UK's vote to exit the EU, as disclosed in our 2015 Annual Report and Accounts.

The UK referendum vote to remain or exit the EU resulted in economic uncertainty throughout the period and in particular quarter two. The Group experienced weak trading conditions in June leading up to and following the vote, with an emphasis in our premium cabins. The weak trading conditions together with the foreign exchange impacts have impacted the Group's profitability for quarter 2.

The vote to exit also created volatility in the foreign exchange markets. Weakening of the pound sterling impacted the translation of the Group's sterling subsidiaries and reduced the Group's profits, net assets and other reserves. Although the Group's expected profitability for 2016 has decreased, the reduction has not impacted the carrying value of its intangible assets and goodwill. The reduction in interest rates increased British Airways' employee pension accounting obligation and decreased other reserves. Sensitivities on our pension plans are included in note 32 of the 2015 Annual Report and Accounts and the impact of changes in assumptions for the six months to June 30, 2016 are included in note 17.

Following the UK's vote to exit the EU, there has been no immediate regulatory impact on the Group's ability to operate its business effectively or on its regulatory structure. Regulation of the airline industry covers many of our activities including route flying rights, airport landing rights, departure taxes, security and environmental controls. Excessive taxes or increases in regulation may impact on our operational and financial performance. The terms of the UK withdrawal from the other EU member states must be negotiated. At this stage, we do not believe it will have a significant impact on our business, as disclosed in our 2015 Annual Report and Accounts.

Throughout the period, the Group has suffered network disruption from air traffic control industrial action. Although management has plans to mitigate these risks to the extent feasible, there has been an impact on our profitability.

For further information on our economic exposure, see Foreign exchange, derivatives and hedging section.

Principal risks and uncertainties

We have continued to maintain and operate our structure and processes to identify, assess and manage risks. The impact of the UK referendum has been considered as part of the Group's overall risk assessment, and the effects are set out earlier in this report. The principal risks and uncertainties affecting us, detailed on pages 47 to 54 of the December 31, 2015 Annual Report and Accounts, remain relevant for the remaining six months of the year.

Basis of presentation

The Group's performance for the six month period to June 30, 2016 includes Aer Lingus' operations. Aer Lingus was acquired on August 18, 2015, therefore the Group's six month performance to June 30, 2015 excludes Aer Lingus.

In 2016 the Group reviewed and amended the reporting of individual line items in the consolidated Income statement to better reflect the nature of underlying transactions and improve comparability between reporting periods. For more information see note 1.

Capacity

IAG increased capacity (available seat kilometres or ASKs) by 12.3 per cent in the first six months of the year and traffic volumes rose 13.3 per cent, increasing seat factor to 80.0 per cent. Excluding Aer Lingus, capacity was increased by 3.9 per cent. Iberia and Vueling continued their growth patterns while British Airways' capacity increase reflects changes to its network and aircraft.

Revenue

Passenger revenue increased 4.3 per cent compared to the prior period, and excluding Aer Lingus and currency, passenger revenue was down 2.2 per cent. Passenger unit revenue (passenger revenue per ASK) was down 5.5 per cent at constant currency ('ccy') from lower yields (passenger revenue/revenue passenger kilometre) partially offset by higher volumes. Yields decreased at British Airways and Iberia with continued fare pressure on oil related routes and lower demand from economic uncertainty related to the UK referendum vote, weakening of currencies throughout Latin America, Africa and Middle East and the compounding impact of terrorist attacks. Vueling's passenger revenue performance was adversely impacted by the terrorist attacks and operational disruption including air traffic control industrial action. Aer Lingus revenue performance has been strong since acquisition, in particular across the North Atlantic. The Group has maintained its volumes in the first half of 2016 with seat factor rising 0.7 points.

Cargo revenue for the period decreased by 6.9 per cent, excluding Aer Lingus and currency down 10.7 per cent. Cargo yields are down impacted by a market capacity imbalance and from cycling over a strong base, which saw the benefits of the US port strike in quarter one last year. Cargo volumes were broadly flat excluding Aer Lingus, and up including Aer Lingus.

Other revenue was up 10.4 per cent, excluding currency benefits and Aer Lingus up 12.0 per cent. The Group saw higher activity at BA Holidays and in Iberia's third party maintenance and handling businesses. There was also an increase in Avios revenue for the period.

Costs

Employee costs increased 6.0 per cent, excluding Aer Lingus and currency up 1.6 per cent. On a unit basis the improvement was 3.3 per cent at ccy with savings from manpower initiatives and lower variable pay, partially offset by salary awards and crew training. The average number of employees rose 6.9 per cent for the Group primarily due to the addition of Aer Lingus. Productivity increased 3.6 per cent (5.1 per cent including Aer Lingus), with improvements at British Airways, Iberia and Aer Lingus.

Fuel costs decreased 18.7 per cent, with fuel unit costs at ccy down 29.8 per cent. Fuel benefited from lower average fuel prices net of hedging and efficiencies from the introduction of new fleet and improved operational procedures.

Handling, catering and other operating costs rose 11.7 per cent, excluding currency and Aer Lingus up 8.2 per cent. The increase reflects additional compensation fees and baggage claims related to operational disruption, partially due to air traffic control industrial action in France. In addition, the Group costs rose from an increase in revenue related activity. The passenger business carried 8.3 per cent more passengers (20.8 per cent including Aer Lingus) and Iberia's third party handling rose and BA Holidays' sales increased.

Landing fees and en-route charges rose 26.2 per cent, excluding currency and Aer Lingus up 8.3 per cent. The performance reflects higher overflying charges and additional volume, with ASKs up 3.9 per cent and sectors flown up 1.0 per cent. In addition, the prior period benefited from one time recoveries.

Engineering and other aircraft costs increased 15.9 per cent, excluding currency and Aer Lingus up 6.3 per cent. Increases are driven by additional third party maintenance activity at Iberia, higher flying hours and price, partially offset by the renegotiation of engine manufacturer contracts in 2015.

Property, IT and other costs increased 20.8 per cent and on an underlying basis up 10.1 per cent. Property lease costs rose following a new agreement for terminal 7 at the JFK airport and the loss of sub-leased revenues.

Selling costs increased 6.5 per cent, excluding Aer Lingus and currency impacts, broadly flat. Volume increases were offset by price savings and through other management initiatives.

Ownership costs rose 7.6 per cent, excluding Aer Lingus and currency impacts flat. Ownership costs increased from the accelerated depreciation of Iberia's Airbus A340-300s which began in the second half of 2015, while Vueling has 13 additional aircraft compared to the same period last year. Ownership costs benefited from a lower net charge related to British Airways' replacement fleet (Boeing 787s and Airbus A380s) and from a tax court ruling in Iberia resulting in a €30 million provision release.

At constant currency non-fuel unit costs increased 0.7 per cent, excluding Aer Lingus and adjusted for BA Holidays flat. Improvements were made at all carriers with the exception of Vueling. Vueling non-fuel unit costs were adversely impacted by a maintenance provision release in the base, additional compensation costs related to disruption and from higher employee costs, with a 22.5 per cent rise in employees.

Exceptional items

The Group made changes to the US PRMB (Post-Retirement Medical Benefits) during 2016 to bring the level of benefits in line with national trends in the US. These changes resulted in recognition of a one-off gain in employee costs of €51 million during the year and a related tax charge of €10 million.

Under the Business combination standard, gains or losses on cash flow hedges acquired should not be recycled to the income statement but recognised in equity. Following the acquisition of Aer Lingus, IAG continued to unwind the cash flow fuel hedges acquired in the before exceptional items column. A credit was recognised in the exceptional items column reversing the impact of unwinding the cash flow hedges to reach the total Fuel, oil costs and emissions charges.

Non-operating items

The net non-operating cost was €101 million for the six months compared to €143 million for the same period last year. Net currency retranslation charges on long-term provisions reduced by €25 million with less euro to US dollar volatility than last year. The net financing credit for pensions improved €14 million, with an equal offset in net financing costs.

Taxation

The tax charge for the six months to June 30, 2016 is €134 million after exceptional items (2015: €80 million charge) with an effective tax rate of 20 per cent.

Profit after tax and exceptional items

The profit after tax for the six month period to June 30 was €554 million (2015: €332 million).

Foreign exchange, derivatives and hedging

For the six months to June 30, 2016, the average pound sterling exchange rate weakened against both the US dollar and the euro, while the euro weakened against the US dollar, resulting in a net negative impact on the operating profit for the Group of €210 million.

Transaction exchange impact

From a transaction perspective, the Group's financial performance is impacted by fluctuations in exchange rates, primarily from the US dollar, euro and pound sterling. The Group generates a surplus in most currencies in which it does business, with the exception of the US dollar, as capital expenditure, debt repayments and fuel purchases paid in US dollars typically create a deficit. The Group hedges its transaction exposures; note 26 of IAG's 2015 Annual Report and Accounts outlines the Group's approach to financial risk management.

For the six months to June 30, 2016, the transactional exchange rate impact for the Group was favourable €134 million on revenues, adverse €312 million on costs, including a €22 million charge for the devaluation of the naira. The net adverse impact on transactions was €178 million, impacted by the strengthening of the US dollar.

At June 30, 2016, the Group's net US dollar exposure to cash flows (excluding capital expenditure) was around $1.9 billion for the remainder of the year, of which 75 per cent was hedged; and around $2.4 billion and 49 per cent for the twelve months to December 31, 2017.

The Group's euro functional subsidiaries' (Aer Lingus, Iberia, and Vueling) remaining exposure to the pound sterling was less than £40 million, and British Airways' net euro surplus was approximately €150 million.

Translation exchange impact

IAG's results are also impacted by exchange rates used for the translation of British Airways' and Avios' financial results from sterling to the Group's reporting currency of euro. In the six months to June 30, 2016, the Group earned all (2015: all) of its operating profit in pound sterling. For the full year 2015, 82 per cent of the Group's operating profit was in pound sterling.

For the six months, the net impact of translation exchange on operating profit was €32 million adverse, with a decrease in revenues of €321 million and decrease in cost of €289 million.

Fuel

During the period, oil prices maintained an upward trend, but were down significantly versus last year. At June 30, 2016, the Group's hedged fuel price position was 74 per cent on average for the remainder of the year, and 43 per cent on average for the twelve months to December 31, 2017.

Cash

The Group's cash position was €6,561 million up €705 million from December 31, 2015 with adverse foreign exchange of €501 million. British Airways' cash position was €2,961 million, Iberia €1,178 million, Aer Lingus €1,030 million, Vueling €750 million and the parent and other Group companies €642 million. 

Compared to December 31, 2015 the Group's adjusted net debt decreased by €621 million to €7,889 million and adjusted net debt to EBITDAR improved 0.2 points to 1.7 times. Adjusted gearing improved by one point to 53 per cent.

INTERNATIONAL CONSOLIDATED AIRLINES GROUP S.A.

Unaudited Condensed Consolidated Interim Financial Statements

January 1, 2016 - June 30, 2016

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

CONSOLIDATED BALANCE SHEET

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

1. Corporate Information AND BASIS OF PREPARATION

International Consolidated Airlines Group S.A. (hereinafter 'International Airlines Group', 'IAG' or the 'Group') is a leading European airline group, formed to hold the interests of airline and ancillary operations. IAG is a Spanish company registered in Madrid and was incorporated on April 8, 2010. On January 21, 2011 British Airways Plc and Iberia Líneas Aéreas de España S.A. Operadora (hereinafter 'British Airways' and 'Iberia' respectively) completed a merger transaction becoming the first two airlines of the Group. Vueling Airlines S.A. ('Vueling') was acquired on April 26, 2013, and Aer Lingus Group Plc ('Aer Lingus') on August 18, 2015.

IAG shares are traded on the London Stock Exchange's main market for listed securities and also on the stock exchanges of Madrid, Barcelona, Bilbao and Valencia (the 'Spanish Stock Exchanges'), through the Spanish Stock Exchanges Interconnection System (Mercado Continuo Español).

The condensed consolidated interim financial statements were prepared in accordance with IAS 34 and authorised for issue by the Board of Directors on July 28, 2016. The condensed consolidated interim financial statements herein are not the Company's statutory accounts and are unaudited. The Directors consider that the Group has adequate resources to remain in operation for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the interim financial statements.

The basis of preparation and accounting policies set out in the IAG Annual Report and Accounts for the year to December 31, 2015 have been applied in the preparation of these condensed consolidated interim financial statements, except as disclosed in note 2. IAG's financial statements for the year to December 31, 2015 have been filed with the Registro Mercantil de Madrid, and are in accordance with the International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and with those of the Standing Interpretations issued by the IFRS Interpretations Committee of the International Accounting Standards Board (IASB). The report of the auditors on those financial statements was unqualified.

On May 6, 2016 IAG announced that it had exercised its option to redeem all of its outstanding €390 million 1.75 per cent convertible bonds due in 2018. As an alternative to the redemption of the bonds, the bondholders had the option under the terms and conditions to exchange bonds for ordinary shares in the Company. In June 2016, all remaining bondholders exercised their option to exchange their convertible bonds for ordinary shares, resulting in the issue of 91,981,118 new shares.

The financial statements for the prior year include reclassifications that were made to conform to the current year presentation.

In 2016 the Group reviewed and amended the reporting of individual line items in the consolidated Income statement to better reflect the nature of underlying transactions and improve comparability between reporting periods. As a result, for the year to December 31, 2015, revenue previously reported as Other revenue has been reclassified to Passenger revenue and Cargo revenue. Expenditure in respect of certain subcontracted services, previously allocated to Property, IT and other costs, has been reclassified to Handling, catering and other operating costs. These reclassifications have not affected reported total revenue, expenditure or operating profit for 2015. Details of these adjustments are provided in the table below.

2. Accounting Policies

The Group has adopted the following standards, interpretations and amendments for the first time in the six months to June 30, 2016:

IAS 1 (Amendment) 'Presentation of financial statements' disclosure initiative; effective for periods beginning on or after January 1, 2016. The amendments clarify guidance in IAS 1 on materiality and aggregation, the presentation of subtotals, the structure of financial statements, and the disclosure of accounting policies. The adoption of the amendments has not resulted in a significant change to the presentation and disclosures in the Group's financial statements.

IAS 19 (Amendment) 'Defined Benefit plans: Employee contributions'; effective for periods beginning on or after February 1, 2015. The amendments clarify the application of IAS 19 'Employee Benefits' (2011) to plans that require employees or third parties to contribute towards the cost of benefits. The amendments have not resulted in a change to the financial position or performance of the Group.

Other amendments resulting from improvements to IFRSs did not have any impact on the accounting policies, financial position or performance of the Group. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

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 six months to June 30, 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, and a related €7 million deferred tax liability.

The goodwill is recognised as follows:

4. Exceptional items

(1) Revision in US past service cost benefits

During the period the Group made changes to the US PRMB (Post-Retirement Medical Benefits) to further bring the level of benefits in line with national trends seen in the US. This scheme is accounted for in a similar way to a defined benefit plan, so any reduction in benefit results in the recognition of a past service gain when the plan amendment occurs. This change has resulted in a one-off gain in employee costs of €51 million in the six months to June 30, 2016, and a related tax charge of €10 million.

(2) Derivatives and financial instruments

Under IFRS 3 Business combinations, gains or losses on cash flow hedges acquired should not be recycled to the income statement but recognised in equity. Following the acquisition of Aer Lingus, IAG continued to unwind the cash flow fuel hedges acquired in reported fuel expense. For the six months to June 30, 2016, a credit of €28 million was recognised as an exceptional item, reversing the impact of unwinding the cash flow hedges to arrive at the total Fuel, oil costs and emissions charges. A related tax charge of €4 million was also recognised.

5. SEASONALITY

The Group's business is highly seasonal with demand strongest during the summer months. Accordingly higher revenues and operating profits are usually expected in the latter six months of the financial year than in the first six months.

6. SEGMENT INFORMATION

a. Business segments

British Airways, Iberia, Vueling, Aer Lingus and Avios 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 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 (2015: three) reportable operating segments for financial reporting purposes, reported as British Airways, Iberia, Vueling and Aer Lingus.

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; it is not a separate reportable segment. In 2015, Avios was part of the British Airways and Iberia operating segments based on ownership. The 2015 comparatives have been restated to reflect this change.

Other Group companies include Avios and the head office companies IAG, IAG GBS and IAG Cargo.

6. SEGMENT INFORMATION

b. Geographical analysis

Revenue by area of original sale

Assets by area

7. FINANCE COSTS AND INCOME

8. Tax

The tax charge for the six months to June 30, 2016 is €134 million (2015: €80 million charge), and the effective tax rate is 20 per cent.

The UK corporation tax rate is reducing from 20 per cent to 19 per cent effective from April 1, 2017 and from 19 per cent to 18 per cent effective from April 1, 2020. A further reduction to 17 per cent effective from April 1, 2020 has been announced and is expected to be enacted later in 2016. The effect of the corporation tax rate reduction is expected to be a deferred tax credit of €42 million through the income statement.

9. EARNINGS PER SHARE AND SHARE CAPITAL

During the six months to June 30, 2016 the Company issued 92,910,220 ordinary shares as a result of the conversion of the €390 million 1.75 per cent convertible bonds due in 2018, resulting in a €46 million increase of Issued share capital and a €344 million increase in Share premium. The ordinary shares issued have the same rights as the other shares in issue.

The number of shares in issue at June 30, 2016 was 2,132,988,743 (June 30, 2015: 2,040,078,523) ordinary shares with a par value of €0.50 each.

10. DIVIDENDS

The Directors do not propose a dividend be paid for the six months to June 30, 2016 (June 30, 2015: nil).

The final dividend of 10 € cents per share for the year to December 31, 2015 was approved at the annual general meeting on June 16, 2016. This final dividend, amounting to €212 million, has been recognised as a liability at June 30, 2016 and was paid from July 4, 2016.

11. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

Capital expenditure authorised and contracted but not provided for in the accounts amounts to €14,307 million (December 31, 2015: €16,091 million). The majority of capital expenditure commitments are denominated in US dollars, and as such are subject to changes in foreign exchange rates.

12. IMPAIRMENT REVIEW

Goodwill and intangible assets with indefinite lives are tested for impairment annually (in the fourth quarter) and when circumstances indicate the carrying value may be impaired. The key assumptions used to determine the recoverable amount for the different cash generating units are disclosed in the IAG Annual Report and Accounts for the year to December 31, 2015. For the six months to June 30, 2016, following consideration of the impact of the UK referendum, the Group has concluded that there are no indicators that the carrying value may exceed the recoverable amount.

13. NON-CURRENT ASSETS HELD FOR SALE

The non-current assets held for sale of €13 million represent one Boeing 737-400 engine and one Airbus A340-300 aircraft. These are presented within the British Airways and Iberia operating segments respectively and will exit the business within 12 months of June 30, 2016.

Assets held for sale with a net book value of €4 million were disposed of during the six months to June 30, 2016, related to the sale of three Boeing 737-400 airframes and eight Boeing 737-400 engines, resulting in a profit of €2 million.

At December 31, 2015 the non-current assets held for sale of €5 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.

14. FINANCIAL INSTRUMENTS

a. Financial assets and liabilities by category

The detail of the Group's financial instruments at June 30, 2016 and December 31, 2015 by nature and classification for measurement purposes is as follows: