Annual Report 2015 - Globalia · Annual Report 2015. 2 GLOBALIA CORPORACIÓN EMPRESARIAL S.A. Y SOCIEDADES DEPENDIENTES Entre ellas: AIR EUROPA LÍNEAS AÉREAS, S.A.U. GLOBALIA BUSINESS

AnnualReport2015

2

GLOBALIA CORPORACIÓN EMPRESARIAL S.A.Y SOCIEDADES DEPENDIENTES

Entre ellas:AIR EUROPA LÍNEAS AÉREAS, S.A.U.GLOBALIA BUSINESS TRAVEL, S.A.U.

GLOBALIA TRAVEL CLUB SPAIN, S.L.U.WELCOME INCOMING SERVICES, S.L.U.

VIAJES HALCÓN, S.A.U.VIAJES ECUADOR, S.A.U.VIAJES TU BILLETE, S.L.BE LIVE HOTELS, S.L.U.

GLOBALIA HANDLING, S.A.U.

Centro Empresarial Globalia07620 Llucmajor (Mallorca), Baleares. España / Spain.

Tel. +34 971 178 103 · Fax +34 971 178 352www.globalia.com

Impresión: Globalia Artes GráficasDiseño y maquetación: som2.com

3

2015 ANNUAL REPORT

1. Nature, Activities and Composition of

the Group

2. Basis of Presentation

3. Application of Losses of the Parent

4. Significant Accounting Policies

5. Joint Ventures

6. Non-Current Assets Held for Sale

7. Intangible Assets

8. Goodwill, Goodwill on Consolidation

and Impairment

9. Property, Plant and Equipment

10. Investment Property

11. Finance Leases - Lessee

12. Operating Leases - Lessee

13. Risk Management Policy

14. Equity-Accounted Investees

15. Financial Assets by Category

16. Investments and Trade Receivables

17. Derivative Financial Instruments

18. Inventories

19. Prepayments

20. Cash and Cash Equivalents

21. Equity

22. Non-Controlling Interests

23. Provisions

24. Financial Liabilities by Category

25. Payables and Trade Payables

26. Late Payments to Suppliers. “Reporting

Requirement”, Third Additional Provision

of Law 15/2010 of 5 July 2010

27. Accruals

28. Taxation

29. Environmental Information

30. Related Party Balances

and Transactions

31. Income and Expense

32. Employee Information

33. Audit Fees

34. Other Contingencies

35. Other

Director’s Report 2015

Appendix

Corporate Social

Responsibility Report

Executive Letter of the 2015 Annual Report

Introduction to the 2015 Management Report

and Main Magnitudes

Audit report on the Consolidated

Annual Accounts

Consolidated Annual Accounts

Notes to the Consolidated Annual Accounts

INDEX46

14

1622

22

2425

4647

49

45

525354

55

565859

61

60

62

65

7069

7172

73

748297

4

2015 has been a decisive year for Globalia’s consolidation as the leading tourism group. During

the year, we managed to increase our turnover by 2.6% as compared to 2014, reaching the fig-

ure of 3,379 Million Euros. The excellent performance in the tourist sector, with a record 68.1

million tourists visiting Spain in 2015, no doubt contributed to these improvements.

Air Europa: over 10 million travellers carried

Globalia, the leading tourism group in Spain, is on the rise

and this is reflected not just in its turnover but also the ex-

pansion of activity in its different divisions. In 2015, apart

from increasing the number of hours of flight as compared

to previous years, with over 175,000 hours, Air Europa

also increased the number of passengers carried by 6.6%,

breaking the barrier of 10 Million. Furthermore, the global

occupancy rate in 2015 was 84%.

In 2015, the opening of new routes to Asunción and Tel Aviv

and the commencement of inter-isle flights in the Balear-

ics were fundamental milestones in our drive to continue

raising Air Europa’s presence in the sector. We can also

highlight the inauguration of the new Operations Control

Centre (OCC) in Llucmajor, equipped with the latest tech-

nology available on the market.

Air Europa flies higher every year, not just in Spain, Europe

and Latin America, but also in another strategic market: the

United States. In 2015, Air Europa saw an increase of 84% in

the number of passengers, reaching the figure of 232,459.

These good figures, together with external variables such

as the falling price of fuel, encourage us to face 2016 with

optimism and the idea that it may be a key year for the

airline. The arrival of the new 787s, the initiation of the

construction of a new hangar in Barajas Airport to support

these types of aeroplanes and the creation of new destina-

tions, such as Zurich, Bogota and Guayaquil are also inspiring optimism. Furthermore, in the

next year, we should see Air Europa’s aeroplanes updated with new livery, to adapt them to the

new corporate image that the airline created in 2015.

Retail division: more job positions

Globalia’s retail division (formed by Viajes Halcón, Viajes Ecuador and tubillete.com) increased

its turnover in 2015, surpassing 1,100 Million Euros. These figures have improved thanks to the

adjustments carried out in the previous years, to adapt to the market’s new reality. In 2015, the

redistribution of assets translated into a reduction in the number of offices, to 1,087, whilst the

average number of employees of Viajes Halcón increased: specifically by 9% as compared to

2014. In addition, with the creation of the associated agency model in 2015, Globalia expects

to duplicate the number of sales points within three years.

Presentation of the ANNUAL REPORT 2015

5

2015 ANNUAL REPORT

Again this year, we can highlight the growth of Halcón in the corporate travel segment, which al-

ready represents 30% of the total business. In 2015, Globalia’s retail division became the supplier

of travel and accommodation services for all the Spanish Public Administration organisations.

Viajes Halcón was also awarded other contracts, such as managing the travel plans of employ-

ees of different public companies. And the prospects for 2016 are even better, as the company

signed several agreements with various sports clubs at the beginning of the year. Halcón has

already been awarded the management of logistics and accommodation for 80% of the clubs

in the most important leagues in the country.

Higher turnover in the wholesale division

In 2015, the sales of the business’ wholesale division began to recover. Led by the Travelplan

tour operator, the division saw a notable rise in net turnover over the past year, with an in-

crease of 17% in respect of 2014. Likewise, in 2015 the number of passengers carried increased

as compared to the preceding year. Another highlight was the consolidation of the Latitudes

Brand in the exclusive holiday package market.

Incoming grows by 25%

The Incoming division, which includes the online ho-

tel sales platform WelcomeBeds among its assets,

registered strong progress in its business in 2015. To

be specific, it sold over 1.7 million hotel nights, 25%

more than the previous year. This confirms the up-

ward trends already detected in 2014, and the fact

that Globalia has positioned itself as a leader in this

sector in a short period of time. This growth has also

translated into an increase in the number of employees in the division.

Be Live, ready to add three hotels

The group’s hotel division registered an increase in the number of rooms booked in 2015,

surpassing 8,400, and thanks to the renovations undertaken in the preceding years, this should

continue to rise into 2016, with the addition of new hotels to the chain: Be Live Experience

Varadero (365 rooms); Be Live Family Aqua Fun Marrakech (262 rooms); and Be Live Collection

Son Antem, Mallorca (151 rooms).

Handling

2015 was a year brimming with good news for our handling division also, which operates

under the brands Globalia Handling and Groundforce in 16 airports. In this year, Globalia Han-

dling was awarded third party handling licenses, increasing the number of airports it operates

in from 7 to 12: Las Palmas, Bilbao, Zaragoza, North Tenerife, Valencia, Fuerteventura, Barce-

lona, Malaga, Madrid, Alicante, Palma and Ibiza. Likewise, the number of services carried out

increased as compared to 2014, reaching the figure of 144,355.

These figures and magnitudes, along with the rest that are explained in this annual report, re-

flect the efforts and hard work put in by the group’s over 12,000 employees in 2015. Thanks to

the intense activities, we are approaching 2016 with the sense that it is a year filled with oppor-

tunities for our divisions. We knew how to adapt and grow and now we are ready to become

the strongest leaders ever

“Excellentperformance inthe tourist sector

6

INTRODUCTIONTO THE 2015

MANAGEMENTREPORT AND MAIN

MAGNITUDESGLOBALIA CORPORACIÓN EMPRESARIAL, S.A.

AND SUBSIDIARIES

Globalia, the company founded and chaired by

Juan José Hidalgo, operates in the transport,

hotel, travel and tourism sectors, and essentially

comprises the following business units:

Globalia Corporación Empresarial S.A., the parent company and leader of the Group.

Air Division captained by Air Europa, the first

wholly Spanish-owned private airline, specialis-

ing in tourist and transatlantic travel. It is a mem-

ber of the Sky Team alliance.

Wholesale Division, headed by Travelplan,

the Spanish market leader.

In March 2003 this was added to by the com-

pany Iberotours and its Touring Club brand.

In 2007, a partnership was established with tour

operator MK Tours, based in Miami and focusing

on the North American domestic market.

Incoming Division,

The Welcome Incoming Services brand was set

up in 2010 to provide us with our own infrastruc-

ture in the most significant destinations where

Globalia currently operates. It operates two main

business lines: sale of accommodation online

and incoming services such as trips, transporta-

tion and vehicle rentals.

Retail Division, including Viajes Halcón, Viajes

Ecuador, which became part of Globalia in 2003

and Viajes Tu Billete.

The Division has the largest network of branches

operating in Spain and Portugal, giving it a lead-

ing position on the Iberian market.

Hotel Division, operating under the brand

name Be Live Hotels. Management of premium

category hotels in the Balearic and Canary Is-

lands, mainland Spain, Morocco, the Dominican

Republic and Cuba.

Handling Division, operating under the

brand name Groundforce. Providing ground ser-

vices to the Group’s airline and third-party clients

in airports in Spain and Morocco.

7

2015 ANNUAL REPORT

1971Juan José Hidalgo opens the first branch of Vi-

ajes Halcón.

1988Juan José Hidalgo sets up the tour operator

Travelplan.

1991A majority stake in Air Europa is acquired by Juan

José Hidalgo.

1993Air Europa begins scheduled domestic opera-

tions in Spain, competing with Iberia.

1999Viajes Halcón and Travelplan begin operations in

Portugal.

In May the central services move into their newly

built corporate offices of Llucmajor (Baleares).

Incorporation of the first Boeing 737-800 NG

aircraft.

2000 - 2005In May 2000, the first hotel operated by the

Group’s Hotel Division opens its doors.

In October 2001, following the events of Sep-

tember 11, the Air Division is restructured.

In the year 2003, Globalia Handling is set up and

Viajes Ecuador is acquired.

During 2005, Strong international expansion at

the Group’s Handling Division.

Air Europa and Travelplan begin to operate in

France following the creation of Globalia France.

2006 - 2007Globalia strengthens its position in two particu-

larly key areas: the Handling Division, with new

contracts won at Spanish airports, and the Hotel

Division, which now boasts more than 10,000

rooms.

Acquisition of Iberrail and a stake in MK Tours.

A contract is signed to acquire 8 Boeing 787

“Dreamliner” aircraft.

2008A contract is signed to acquire 11 Embraer 195

aircraft with 120 seats and with the most ad-

vanced technology. The Hotel Division operates

more than 11.400 rooms.

2009Viajes Halcón begins the process of expansion

through franchised branches operating under

the brand name.

Acquisition of 75% of Tubillete.com, an online trav-

el agency specialising in the sale of airline tickets.

The first four Embraer 195 aircraft begin operations.

2010International expansion of Travelplan, via the

opening of offices in Italy and France. New “Lati-

tudes” tour operator. Air Europa starts the opera-

tion of new routes to Lima and Miami.

Set up of “Welcome Incoming Services” as a new

business unit focused on incoming travel agency

activity. Air Europa becomes a full member of

SkyTeam.

2011New in-house incoming services previously

managed by third parties in Mexico, Dominican

Republic and London.

Inclusion of the Welcomebeds online platform.

2012Acquisition of the additional 50% of the tour

operator MK Tours in Miami. Sale of Globalia

Handling Mexico and Pepemobile. Major re-

structuring of all Group Divisions.

2013Restructuring of a significant number of travel

agents in the Retail Division. The Aerial Division

continues to expand its long-distance routes

and to reinforce its short and medium-distance

routes.

2014Air Europa signs a contract with Boeing to purchase

fourteen B787-9 planes with delivery expected be-

tween February 2020 and October 2022.

2015The airline Aeronova is absorbed into the Air Divi-

sion. In this same year, agreements are signed for

the purchase of twenty 737-8 MAX aeroplanes.

8

GLOBALIA IN FIGURES(Thousands of Euros)

CONSOLIDATED SHAREHOLDER’S EQUITY

2015 170,965

2011

2012

2013

2014

175,437

191,298

168,836

149,283

CONSOLIDATED FIXED ASSETS

2015 625,201

2011

2012

2013

2014

605,396

579,076

592,600

429,724

1,301

CONSOLIDATED PROFIT BEFORE TAXES AND EXTRAORDINARIES

2015

2011

2013

2014

46,779

-37,419 2012

62,685

69,864

2015 140,005

2011

2012

2013

2014

74,820

185,182

160,136

47,411

CONSOLIDATED NORMALISED EBITDA

2015 12,931

2011

2012

2013

2014

13,852

12,232

12,202

11,738

YEAR-ENDED TOTAL EMPLOYEES

2015 3,414,805

2011

2012

2013

2014

3,137,223

2,972,821

3,337,423

3,102,892

CONSOLIDATED INCOME

9

2015 ANNUAL REPORT

AIR DIVISIONAs for Globalia’s traditional businesses (Whole-

sale, Retail and Air), these have continued to

maintain their leading positions within their re-

spective market segments.

Air Europa was the country’s first privately owned

company to operate domestic scheduled flights

in Spain. It broke into the tourist sector when de-

mand was at its greatest, and its expansion and

growth have made decisive contributions to the

maturity of Spain’s commercial aviation market,

which there can be no doubt would never have

taken on the form it has today if Air Europa had

not played its pioneering role.

In its ongoing drive to achieve progress, focusing at

all times on customer satisfaction, Air Europa today

has one of the most modern fleets in the sector.

In 2007, Air Europa became an associate member

of the Sky Team alliance, alongside such airlines

as Air France, KLM, Alitalia, Continental Airlines,

Delta Airlines and Aeromexico, further consoli-

dating its market position as a scheduled airline.

In 2008 a deal was signed to purchase 11 Em-

braer 195 with 120 seats and with the most ad-

vanced technology.

The Embraer fleet allows the company to opti-

mise routes with a low passenger density.

In 2010, Air Europa became a full member of the

SkyTeam Alliance.

During 2014, the airline continued to expand and

plan new routes to South America, with desti-

nations such as Salvador de Bahía, Santiago de

Chile and Sao Paulo, and continued to bolster

its lines in Europe and its short-range flights in

Spain. New routes to Morocco and Germany

were also opened.

With an eye on adding 787-8s to its fleet from

2016, Air Europa has been operating an aircraft

with these characteristics on its Madrid-Miami

route, and using it to train its crews in 2015. In

this year, Air Europa has also been implement-

ing its own customer loyalty programme called

SUMA MILES.

9

America

Rest of Europe

Spain

Others

11%

24%

DETAILS REVENUE PER GEOGRAPHICAL MARKET 2015

64%

1%

Others

Wholesale Division

Air Division

Handling Division

45%

11%

4% 3%

Retail Division

Hotel Division

DETAILS REVENUE PERDIVISION 2015

36%

1%

10

WHOLESALE DIVISIONEver since it was set up as a wholesale travel

agency in 1986, Travelplan has been one of the

leading tour operators on the Spanish market

with regard to both its number of destinations

and number of passengers. Its offer is based on

Air Europa’s network of scheduled and charter

flights, but also covers every type of product and

destination.

As part of its expansion policy, in May 2007

Travelplan acquired a 50% stake in the US tour

operator MK Tours, based in Miami, specialising

in the Dominican Republic as a destination.

Greats advances have taken place since 2009

with the introduction of new technologies al-

lowing for the development of the Internet busi-

ness, this channel now accounting for 80% of

total sales.

The Division rolled out an international expan-

sion process with the opening of offices and sale

of tourism packages in France in 2010, along

with the launch of a new top-end line: Latitudes.

During 2012 and 2013 the Wholesale Division

underwent a substantial restructuring of its com-

panies. The remaining 50% of MK Tours was also

acquired, bringing the equity stake held to 100%.

In 2014, Touring Club consolidated its position as

the second leading Disney operator in the mar-

ket and Latitudes continued to grow as the Divi-

sion’s Premium segment.

During 2015, Globalia’s Wholesale Division, whose

brand portfolio includes Travelplan, Touring Club

and Latitudes, saw an expansion of 8% in seats sold

as compared to 2014, reinforcing its position as

the leader in the Spanish issue market, especially in

a year that was characterised by strong competi-

tion and plenty of offers for the destinations of the

Caribbean, the Canaries and the Balearic Islands.

PASSENGERS CARRIED BY AIR EUROPA

2015 10,221,104

2011

2012

2013

2014

8,744,512

8,114,059

9,586,044

8,690,044

AVERAGE FLEET AND FLIGHT TIME COMPLETED

Air fleet Flight time

20152011 2012 2013 2014

42.4

40.4 40.9

44.545.6

165,468

151,251

156,509171,959

175,490

Boeing 767

Boeing 737

Embraer E195 Airbus A330

Airbus A333

11,00 18,73 9,730,92

9,12 23,63 7,632,00

11,00 19,87 11,61

11,00 18,65 10,50

2,00

0,78

AVERAGE AIR FLEET COMPOSITION

2011

2012

2013

2014

201511,00 20,00

0,00

12,00 2,58

11

2015 ANNUAL REPORT

INCOMING DIVISIONThe Welcome Incoming Services brand was set

up in 2010 to provide us with our own infrastruc-

ture in the most significant destinations where

Globalia currently operates.

Welcome Incoming Services has been offering

comprehensive incoming services through its

network of offices in Spain: North, South and

East Coasts; Balearic and Canary Islands; Madrid

and Barcelona since 2010.

In 2011 it provided services in France, Mexico,

Dominican Republic and London, which were

previously managed by third parties. Also, during

2011 some 393,000 passengers contracted our

own incoming services, and saw the introduc-

tion of the online hotel accommodation sales

platform “WELCOMEBEDS” which will be provid-

ing services to all third parties, Travel Agencies

and Tour Operators, with a focus on markets

where our own incoming operations have a

physical presence.

In 2012 WELCOMEBEDS increased its sales and

established its position in the online market. The

Division also began to market the Coasts prod-

uct, covering the Northern, Central Eastern, Cat-

alan and Andalusian coastlines of Spain.

2014 represents the year in which the new online

accommodation sales business consolidated

with 1.4 million “room nights”.

On its 4th anniversary, Welcomebeds experienced

growth of 23% (1.8 Million Room Nights), whilst

Welcome Incoming Services, has rendered ser-

vices at destination to 10% more passengers, both

of the Group and of third parties, than in 2014.

RETAIL DIVISIONAlthough the company’s founder hailed from

Salamanca, it was in Cáceres that the first Viajes

Halcón agency opened for business in 1971. Not

long afterwards, Juan José Hidalgo set up his

company’s second branch on Paseo de Anaya, in

the city of his birth.

With the acquisition of Air Europa in 1991, Viajes

Halcón experienced its great boom.

Today, Halcón Viajes is established as the undisput-

ed leader on the Spanish holiday market in terms

of number of points of sale, creation of exclusive

products and the outstanding training of its staff.

Acquired by Globalia in 2003, Viajes Ecuador is

one of Spain’s best-represented travel agencies

OWN DESTINATION OFFICES

2011

2012

2013

2014

2015

WHOSALE DIVISION REVENUES

2015 689

2011

2012

2013

2014

649

600

591

588

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

4

4

4

4

6

6

6

66

Dominican Republic

France(Millions of Euros)

Cuba

United Kingdom

Mexico

Spain Coast

Spain

1111

46

12

thanks to its strong presence across the country,

in particular in the North. It provides its custom-

ers with comprehensive advice, guaranteeing

the utmost quality in travel and accommodation.

The Retail Division is today the undisputed Ibe-

rian market leader.

In 2009 the group acquired a 75% stake in Tubil-

lete.com, an online travel agency specialising in

the sale of airline tickets.

The Division embarked on a franchise branch ex-

pansion programme under the Viajes Halcón brand

name, making progress in the field of the “e-com-

merce”, through the following brands: halconvi-

ajes.com, viajesecuador.com and tubillete.com.

With the objective of staying in the market and

adapting to changing circumstances, 2013 has

been a year that has seen the large-scale restruc-

turing of Viajes Halcón and Viajes Ecuador, both

in terms of number of offices and number of

employees: approximately 160 sales points were

closed and 450 employees were made redundant.

Thanks to these tough and difficult measures,

the Division returned to profit in 2014.

2015 has been a year of significant growth in the

Retail Division. Apart from being a benchmark

in the holiday sector, the Division has substan-

tially increased the weight of its Corporate busi-

ness, and has consolidated itself as a benchmark

brand in the world of sport. All these factors have

allowed the Division to substantially improve its

results as compared to 2014.

HOTEL DIVISIONGlobalia started operating hotels in the year

2000, with the construction of the Hotel Palace

de Muro (Majorca) and the refurbishment of the

Hotel Orotava (Tenerife).

In 2010 the Division launched its new brand Be Live.

In 2011 Globalia’s portfolio of hotels included

22 establishments with almost 6.200 rooms,

operating in Spain (on the mainland, and in the

Balearic and Canary Islands), the Mexican Car-

ibbean, the Dominican Republic, Cuba and Mo-

rocco, with the brand Be Live Hotels.

In 2012 the Division embarked on a new business

model with two franchise hotels. It meanwhile

gave up its Mexican Caribbean operations.

In 2013 the Division took on the Luabay Hotel

Chain with a portfolio of 10 hotels under lease, 1

under management and a total of 2,262 rooms.

During that year, the Group opened its first hotel

Halcon ViagensViajes Halcón

Viajes Ecuador

YEAR-ENDED SALES OFFICES

2015 1,087

2011

2012

2013

2014

1,393

1,314

1,116

1,113

967

941

799

813

807

98

79

68

64

63

328

294

246

239

217

Business Vacacional

29%

32%

71%

68%

2015

2014

EVOLUTION BY TYPE OF BUSINESS

13

2015 ANNUAL REPORT

in Portugal under a management contract and ac-

quired ownership of the Canoa Hotel in the Do-

minican Republic. Furthermore, the works for the

extension and improvement of the hotels in the

Dominican Republic continued and consolidated.

In 2015, Be Live Hotels reorganised itself into six

brands, Collection Resorts (5 star), Be Live Expe-

rience Hotels (establishments to suit all kinds of

guests), Be Live Family Resorts (family hotels), Be

Live Adults Only (absolute relax), Be Smart Ho-

tels (more economical holidays), and Be Live City

Center (city hotels, situated at strategic points).

The objective of the brand makeover was to of-

fer customers differentiated products and the

segment that best suits their needs.

HANDLING DIVISIONGroundforce provides ground support services

for the Group’s airline and third parties.

In Spain, following the licences awarded at the

end of 2006, Groundforce has succeeded in po-

sitioning itself as the second-biggest handling

operator in terms of volume and licences award-

ed, and is the only operator with presence at the

first two Spanish airports, Madrid and Barcelona.

The Group also acquired a 100% stake in Ground-

force Cargo during 2006, providing cargo ser-

vices at Spanish airports.

In 2014 the Handling Division was operating in

7 airports in Spain and 1 in Morocco providing

passenger ground support services, while also

providing cargo services at 14 airports in Spain.

In 2015, Globalia Handling was awarded the con-

tracts for third party Handling services, increasing

the number of airports in which it operates from 7

to 12: Las Palmas, Bilbao, Zaragoza, North Tenerife,

Valencia, Fuerteventura, Barcelona, Malaga, Ma-

drid, Alicante, Palma and Ibiza. It stopped operating

in the bases of South Tenerife and Seville. It con-

tinues to operate in Casablanca Airport (Morocco).

HOTELS PORTFOLIO 31/12/2015

6 9 4

3

2

3

Leased

Owned

Management

SPAIN-MEDITERRANEAN

DOMINICAN REP.

CUBA

GROUNDFORCE WEIGHTED NUMBER OF SERVICES (% GROUP)

2015 120,114

2011

2012

2013

2014

130,891

123,186

115,197

108,999

Canary Islands

Dominican Republic

Balearic Islands

Spain-Mainland

Morocco

Cuba

Portugal 36.2%

4.9%

6.1%

4.8%8.3%

HOTEL ROOM INVENTORY BY AREA 31/12/2015

33.8%

5.8%

Mexico

Spain

Morocco

7

7

7

7

7

1

1

1

1

93

6

7

3

3

PASSENGERS GROUND HANDLING EVOLUTION AIRPORTS AND SELF-HANDLING OPERATED 2011-2015

2011

2012

2013

2014

201511

Self-handling

16

GLOBALIA CORPORACIÓN EMPRESARIAL, S.A. AND SUBSIDIARIESConsolidated Balance Sheets 31 December 2015 and 2014 (Expressed in thousands of Euros)

The accompanying notes form an integral part of the consolidated annual accounts.

Intangible assets Note 7 75,386 66,771

- Goodwill of consolidated companies Note 8 17,565 15,527

- Concessions 2,460 2,502

- Patents, licences, trademarks and similar rights 170 464

- Goodwill Note 8 11,087 11,087

- Computer software 32,296 31,661

- Greenhouse gas emission allowances 6,065 2,925

- Other intangible assets 5,743 2,605

Property, plant and equipment Note 9 546,555 499,656

- Land and buildings 227,122 231,039

- Technical installations, machinery, equipment,

furniture and other items 260,091 246,109

- Under construction and advances 59,342 22,508

Investment property Note 10 3,261 4,273

- Land 577 798

- Buildings 2,684 3,475

Non-current investments in Group companies and associates Note 14 571 384

- Equity instruments - (9)

- Equity-accounted investees 571 393

Non-current investments Note 16 92,182 83,967

- Equity instruments 3,135 3,141

- Loans to third parties 1,571 1,156

- Other financial assets 87,476 79,670

Deferred tax assets Note 28 44,870 47,768

Total non-current assets 762,825 702,819

Non-current assets held for sale Note 6 39,170 -

Inventories Note 18 22,125 23,202

- Raw materials and other supplies 19,749 16,480

- Advances to suppliers 2,376 6,722

Trade and other receivables Note 16 299,202 292,998

- Trade receivables – current 220,330 229,439

- Other receivables 22,794 20,052

- Personnel 961 895

- Current tax assets Note 28 5,307 6,440

- Public entities, other Note 28 49,810 36,172

Current investments Note 16 135,883 96,642

- Equity instruments 194 204

- Loans to companies 80,200 37,802

- Debt securities 55 55

- Derivatives Note 17 2,999 7,042

- Other financial assets 52,435 51,539

Prepayments for current assets Note 19 15,527 15,207

Cash and cash equivalents Note 20 49,933 63,540

- Cash 49,928 58,611

- Cash equivalents 5 4,929

Total current assets 561,840 491,589

TOTAL ASSETS 1,324,665 1,194,408

ASSETS 2015note 2014

17

2015 ANNUAL REPORT



EQUITY AND LIABILITIES 2015note 2014

Capital and reserves Note 21 170,965 177,301

- Capital 16,894 16,894

- Reserves 109,728 130,850

- Reserves in consolidated companies 40,234 49,687

- Reserves in equity-accounted investees 3 (133)

- Profit/loss attributable to the Parent 4,106 (13,997)

(Interim dividend) - (6,000)

Valuation adjustments (23,001) (40,155)

- Hedging transactions Note 17 (31,860) (46,689)

- Translation differences 8,859 6,534

Non-controlling interests Note 22 1,416 1,872

Total equity 149,380 139,018

Non-current provisions Note 23 99,070 85,879

- Long-term employee benefits 180 180

- Other provisions 98,890 85,699

Non-current payables Note 25 201,769 129,450

- Loans and borrowings 94,998 30,059

- Finance lease payables 99,232 95,089

- Derivatives Note 17 95 281

- Other financial liabilities 7,444 4,021

Deferred tax liabilities Note 28 16,815 18,241

Total non-current liabilities 317,654 233,570

Liabilities associated with non-current assets held for sale Note 6 32,476 -

Current provisions 79,512 69,248

- Loyalty programmes 1,065 892

- Other provisions 78,447 68,356

Current payables Note 25 158,673 212,621


- Finance lease payables 17,693 14,897

- Derivatives Note 17 45,006 96,239

- Other financial liabilities 14,612 23,448

Trade and other payables Note 25 398,834 357,980

- Current payables to suppliers 272,643 238,255

- Other payables 14,881 17,763

- Personnel (salaries payable) 16,189 20,289

- Current tax liabilities Note 28 1,567 9,916

- Public entities, other Note 28 36,777 28,251

- Advances from customers 56,777 43,506

Current accruals Note 27 188,136 181,971

Total current liabilities 857,631 821,820

TOTAL EQUITY AND LIABILITIES 1,324,665 1,194,408

18



Revenues Note 31 3,379,019 458,894

- Services rendered 3,379,019 458,894

Changes in inventories of finished goods and work in progress (30) -

Self-constructed assets 9,344 1,457

Supplies Note 31 (1,733,538) (225,122)

- Merchandise used (1,927) (214)

- Raw materials and consumables used (1,678,803) (218,820)

- Subcontracted work (52,808) (6,088)

Other operating income 35,786 597

- Non-trading and other operating income 35,786 597

Personnel expenses (459,962) (73,092)

- Salaries and wages (359,908) (57,765)

- Employee benefits expense Note 31 (100,054) (15,327)

Other operating expenses (1,089,385) (159,874)

- Losses, impairment and changes in trade provisions Note 15 (1,514) (1,062)

- Other operating expenses (1,087,871) (158,812)

Amortisation and depreciation Notes 7, 9 and 10 (50,124) (8,129)

Impairment and losses on disposal of fixed assets (808) (8,231)

- Impairment and losses Note 9 (234) (8,018)

- Losses on disposal and other Note 31 (574) (213)

Other income/expenses Note 31 (37,962) 73

Results from operating activities 52,340 (13,427)

Finance income 2,954 695

- Marketable securities and other financial instruments

- Group companies and associates - 3

- Other 2,954 692

Finance costs (30,214) (3,612)

- Other (27,560) (3,028)

- Provision adjustments (2,654) (584)

Change in fair value of financial instruments (323) (1,165)

- Trading portfolio and other Note 16 (323) (1,165)

Exchange gains/(losses) (17,274) 184

- Other exchange gains/(losses) (17,274) 184

Impairment and gains on disposal of financial instruments 17 4

- Impairment and gains Note 16 17 4

Net finance cost (44,840) (3,894)

- Share of profit/(loss) of equity-accounted investees 178 -

Profit/(loss) before income tax 7,678 (17,321)

Income tax Note 28 (3,985) 3,356

PROFIT/(LOSS) FOR THE YEAR 3,693 (13,965)

Profit/(loss) attributable to the Parent 4,106 (13,997)

Profit/(loss) attributable to non-controlling interests Note 22 (413) 32

2015note 2014

19

2015 ANNUAL REPORT

GLOBALIA CORPORACIÓN EMPRESARIAL, S.A. AND SUBSIDIARIESConsolidated Income Statements for the years ended

31 December 2015 and 2014(Expressed in thousands of Euros)


2015 2014

Consolidated profit/(loss) for the year 3,693 (13,965)

Income and expense recognised directly in equity

- Cash flow hedges (42,103) (68,722)

- Translation differences

- Differences on translation into presentation currency 2,325 3,074

- Tax effect 10,526 19,199

Total income and expense recognised directly in consolidated equity (29,252) (46,449)

Amounts transferred to the consolidated income statement

- Cash flow hedges 64,461 -

- Tax effect (18,055) -

Total amounts transferred to the consolidated income statement 46,406 -

TOTAL CONSOLIDATED RECOGNISED INCOME AND EXPENSE 20,847 (60,414)

Total recognised income and expense attributable to the Parent 21,261 (69,446)

Total recognised income and expense attributable to non-controlling interests (413) 32

20

GLOBALIA CORPORACIÓN EMPRESARIAL, S.A. AND SUBSIDIARIESConsolidated Statements of Changes in Equity for the years

ended 31 December 2015 and 2014

A) Consolidated Statements of Recognised Income and Expense for the years ended 31 December 2015 and 2014

(Expressed in thousands of Euros)


Balance at 31

decembre 2014 16,894 180,404 (13,997) (6,000) (40,155) 1,872 139,018

Adjustments to reserves - (442) - - - - (442)

Adjusted balance at

1 January 2015 16,894 179,962 (13,997) (6,000) (40,155) 1,872 138,576

Recognised income

and expense - - 4,106 - 17,154 (413) 20,847

Transactions with

shareholders or owners

- Distribution of profit

for the period

- Reserves - (13,997) 13,997 - - - -

- Dividends - (16,000) - 6,000 - - (10,000)

Changes to businesses

or companies

(see note 2 (b) - - - - - (43) (43)

Balance at

31 December 2015 16,894 149,965 4,106 - (23,001) 1,416 149,380

Capital Total

Reserves and prior years’ profit and

loss

Profit attributable

to the Parent

Interim dividend

Valuation adjustments

Non- controlling interests

21

2015 ANNUAL REPORT

GLOBALIA CORPORACIÓN EMPRESARIAL, S.A. AND SUBSIDIARIESConsolidated Statements of Changes in Equity for the years ended 31 December 2015 and 2014

B) Statement of Total Changes in Equity for the year ended 31 December 2014(Expressed in thousands of Euros)


2015 2014Consolidated cash flows from operating activities

Consolidated loss for the period before tax 7,678 (17,321)

Consolidated adjustments for: 88,819 22,535

- Amortisation and depreciation 50,124 8,129

- Impairment 1,514 1,062

- Change in provisions 21,874 584

- Proceeds from disposals and sale of fixed assets 808 8,231

- Finance income (2,954) (695)

- Finance costs 27,560 3,028

- Exchange gains (10,320) (184)

- Change in fair value of financial instruments (17) 1,161

- Other income and expenses 408 1,219

- Share of profit/(loss) of equity accounted investees (178)

Changes in consolidated operating assets and liabilities (15,126) (53,967)

- Inventories 1,077 (2,069)

- Trade and other receivables (7,561) (13,242)

- Other current assets (37,536) 238

- Trade and other payables 49,203 (40,694)

- Other current liabilities (20,309) (12,373)

- Other non current assets and liabilities - 14,173

Other consolidated cash flows from operating activities (42,578) (2,333)

- Interest paid (27,281) (3,028)

- Interest received 2,954 695

- Income tax received (paid) (18,251)

Consolidated cash flows used in operating activities (38,793) (51,086)

Consolidated cash flows from investing activities

Payments for investments (164,545) (67,937)

- Intangible assets (21,473) (1,746)

- Property, plant and equipment (89,632) (16,972)

- Other financial assets (14,270) (49,219)

- Non-current assets held for sale (39,170)

Proceeds from sale of investments 20,158 34,645

- Intangible assets 3,034

- Property, plant and equipment 15,775 15,488

- Investment property 1,316

- Other financial assets 33 19,157

Consolidated cash flows used in investing activities (144,387) (33,292)

Cash flows from consolidated financing activities

Proceeds from and payments for financial liability instruments 101,987 63,212

- Issue 199,282 66,845


- Other 14,397 1,893

- Redemption and repayment of (97,295) (3,633)

- Loans and borrowings (84,424) (705)

- Group companies and associates (12,871) (2,928)

- Other

Dividends and interest on other equity instruments paid 10,000

- Dividends (10.000) -

Cash flows from consolidated financing activities 91,897 63,212

Net decrease in cash or cash equivalents (13,607) (21,166)

Cash and cash equivalents at beginning of the year 63,540 84,706

Cash and cash equivalents at year end 49,933 63,540

22

1. NATURE, ACTIVITIES AND COMPOSITION OF THE GROUP

Globalia Corporación Empresarial, S.A. (here-

inafter the Parent) was incorporated in Palma

de Mallorca on 14 May 1997. Its statutory activ-

ity consists of the rendering of management,

advisory and other business services as well as

the holding of fixed assets, investments, bonds,

shares and interests in other companies. In 1998

the Parent changed its name from GAE Corpo-

ración Empresarial, S.A. to its current name. The

Parent’s registered office is located in Polígono

de Son Noguera, Llucmajor, Balearic Islands.

The Globalia Group (hereinafter the Group)

operates in the transportation, travel and tour-

ism sector and basically comprises: the Parent,

as head of the Group; Air Europa Líneas Aére-

as, S.A.U., which acts as an air carrier and has a

fleet of 48 jet aircraft (45 aircraft at 31 December

2014); Globalia Business Travel, S.A.U. and Glo-

balia Travel Club Spain, S.L.U., which are present

in the tour operator sector Viajes

Halcón, S.A.U. and Viajes Ecuador

S.A.U., with 1,024 points of sale in

Spain (1,049 points of sale at 31 De-

cember 2014) and Halcón Viagens e

Turismo Lda, with 63 points of sale

in Portugal (63 points of sale at 31

December 2014), which sell tour-

ism-related products to customers;

Welcome Incoming Services, SLU,

which provides incoming services;

the Hotel division, headed by Be Live

Hotels, S.L.U. and operating a total of

27 hotels in Spain and the Caribbean

(29 hotels at 31 December 2014);

Globalia Handling, S.A.U., as head of the Han-

dling division, which provides ground handling

services at the main Spanish airports; Globalia

Autocares, S.L., which has a fleet of 43 coaches

(43 at 31 October 2014) and Globalia Manten-

imiento Aeronáutico, S.L.U., which owns and op-

erates the maintenance hangar located at Palma

de Mallorca airport. The Group also includes

other entities that provide ancillary services for

the core activities.

The Group also holds interests in associates and

jointly controlled entities and participates in sev-

eral joint ventures along with other venturers.

The administrative concessions operated by the

temporary joint ventures (UTEs), which provide

passenger handling and cargo services, have ex-

pired in 2015, except for Iberia Globalia Cargo

Barcelona U.T.E., which will expire in March 2016.

In 2015 the new concessions for handling ser-

vices in Spanish airports have been awarded (see

appendix V).

2. BASIS OF PRESENTATIONa) True and fair view The accompanying consolidated annual ac-

counts have been prepared on the basis of the

accounting records of Globalia Corporación

Empresarial, S.A. and subsidiaries. The consoli-

dated annual accounts for the year ended 31 De-

cember 2015 have been prepared in accordance

with prevailing legislation, the Spanish General

Chart of Accounts approved by Royal Decree

1514/2007 of 16 November 2007, and Royal

Decree 1159/2010 governing the preparation

NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTSGLOBALIA CORPORACIÓN EMPRESARIAL, S.A.

AND SUBSIDIARIES

23

2015 ANNUAL REPORT

of consolidated annual accounts, to give a true

and fair view of the consolidated equity and con-

solidated financial position at 31 December 2015

and consolidated results of operations, changes

in consolidated equity and consolidated cash

flows for the period then ended.

The directors of the Parent consider that these

consolidated annual accounts, authorised for is-

sue on 3 March 2016, will be approved by the

Parent’s shareholders.

As required under prevailing legislation, the con-

solidated balance sheet, consolidated income

statement, consolidated statement of changes

in equity and consolidated statement of cash

flows for 2015 include comparative figures for

the previous year, which formed part of the con-

solidated annual accounts for the two-month

period ended 31 December 2014. The notes to

the consolidated accounts also include quantita-

tive information on the prior year, except where

an accounting standard specifically states that

this is not necessary.

b) Comparative information(i) Change of financial year

At their extraordinary general meeting held on 15

December 2014 the shareholders of the Parent

agreed to change the Company’s reporting date

to 31 December of each year (previously 31 Oc-

tober). As the figures in the consolidated annual

accounts for the year ended 31 December 2014

are for a period of two months only, they are not

comparable to those of the current year.

(ii) Changes in the consolidated Group

Changes in the consolidated group for the

year ended 31 December 2015 were as fol-

lows:

- Aeronova, S.L., Eurogestion Hoteliere, S.A.R.L.

and Panamericana de Servicios Energéticos,

S.A.S. were consolidated for the first time.

Changes in the consolidated group for the

two-month period ended 31 December 2014

were as follows:

- Pepechófer, S.L.U. merged with the Group

company Globalia Handling, S.A.U. The merg-

er became effective on 1 November 2014.

Orlean, B.V. merged with its sole shareholder

Globalia Travel, B.V. as proposed by the share-

holders at their general meeting. The merger be-

came effective on 24 December 2014.

- The first-time consolidation of LLucmajor Lim-

ited, which was incorporated 15 October 2014.

Synergy Global Comex, S.L.U. merged with Glo-

balia Servicios Corporativos, S.L. The merger be-

came effective on 1 November 2014.

c) Functional and presentation currencyThe figures disclosed in the consolidated annual

accounts are expressed in thousands of Euros,

the functional and presentation currency of

the Parent and most of the Group companies,

rounded off to the nearest thousand.

d) Critical issues regarding the valua-tion and estimation of relevant uncer-tainties and judgements used when applying accounting principlesRelevant accounting estimates and judgements

and other estimates and assumptions have to

be made when applying the Group’s accounting

principles to prepare the consolidated annual

accounts. A summary of the items requiring a

greater degree of judgement or which are more

complex, or where the assumptions and esti-

mates made are significant to the preparation of

the consolidated annual accounts is as follows:

i) Relevant accounting estimates and assumptions

The Group tests goodwill for impairment on an

annual basis. The calculation of the recoverable

24

amount of a division to which goodwill has been

allocated requires the use of estimates. The re-

coverable amount is the higher of fair value less

costs to sell and value in use. The Group generally

uses cash flow discounting methods to calculate

these values. Discounted cash flow calculations

are based on five-year projections in the budg-

ets approved by the Group. The cash flows take

into consideration past experience and repre-

sent the Group’s best estimate of future market

performance. From the fifth year cash flows are

extrapolated using individual growth rates. The

key assumptions employed when determining

fair value less costs to sell and value in use in-

clude growth rates, the weighted average cost

of capital and tax rates. The estimates, including

the methodology used, could have a significant

impact on values and impairment.

Group management estimates the useful life of

assets and their residual value. Given the com-

plexity and relevance of the residual value of the

aircraft owned or held under finance leases by the

Group, management uses reports prepared by in-

dependent third parties to estimate this value.

Air Europa Líneas Aéreas, S.A.U. is subject to

regulatory processes and inspections by govern-

ment bodies in charge of air traffic. The Parent

recognises a provision if it is probable that an

obligation will exist at year end which will give

rise to an outflow of resources embodying eco-

nomic benefits and the outflow can be reliably

measured. Legal processes usually involve com-

plex legal issues and are subject to substantial

uncertainties. As a result, management uses sig-

nificant judgement when determining whether it

is probable that the process will result in an out-

flow of resources embodying economic benefits

and estimating the amount. The calculation of

provisions for major repairs is subject to a high

degree of uncertainty given that it is based on an

individual analysis of the different components

subject to review for each aircraft. Air Europa

Líneas Aéreas, S.A.U. recognises provisions for

major repairs when the total cost can be reliably

measured.

Following usual sector practice, Air Europa

Líneas Aéreas, S.A.U. prepares an estimate of the

revenues from tickets sold and not used and that

will not be used in the future.

3. APPLICATION OF LOSSES OF THE PARENT

The application of losses of the Parent for the

two-month period ended 31 December 2014,

prepared by the directors and approved by the

shareholders at their annual general meeting

held on 29 April 2015, consisted of carrying for-

ward the full amount as prior years’ losses.

The board of directors will propose to the share-

holders at their annual general meeting that

losses of the Parent for the year ended 31 De-

cember 2015 be carried forward as prior years’

losses.

At 31 December non-distributable reserves of

the Parent are as follows:

Parent reserves: Legal reserve 3,379 3,379

2015

Thousands of Euros

2014

25

2015 ANNUAL REPORT

4. SIGNIFICANT ACCOUNTING POLICIES

a) Subsidiaries Subsidiaries are entities, including special pur-

pose entities (SPE), over which the Company,

either directly or indirectly through subsidiaries,

exercises control as defined in article 42 of the

Spanish Code of Commerce. Control is the pow-

er to govern the financial and operating policies

of an entity or business so as to obtain benefits

from its activities. In assessing control, potential

voting rights held by the Company or other enti-

ties that are exercisable or convertible at the end

of each reporting period are considered.

For presentation and disclosure purposes only,

Group companies are considered to be those

controlled by one or more individuals or entities

acting jointly or under the same management

through statutory clauses or agreements.

Control may also be exercised without owner-

ship by participating in the risks and rewards of

the entity; such companies are known as Special

Purpose Entities (SPE). Llucmajor Limited, which

was incorporated on 15 October 2014 to provide

guarantees to the aircraft manufacturer and the

financial institution regarding compliance with

the contract for the acquisition of two B737-800

aircraft until their delivery to Air Europa Líneas

Aéreas, S.A.U. in 2016, has been included in the

consolidated Group. However, at 31 December

2015 the Group has not consolidated the special

purpose entities called Palma Limited, El Prin-

cipio Limited and Bellver LTD that have assumed

the contractual position for the acquisition of

eight Boeing 787-8 because they are controlled

by the future lessors, which retain the risks and

rewards of this transaction. After delivery, Air Eu-

ropa Líneas Aéreas, S.A.U. will operate these air-

craft under operating leases.

The consolidated annual accounts include the

profit/loss of a subsidiary, See Europe Tours Lim-

ited, registered in the United Kingdom, which

has availed of the exemption from the audit of

individual annual accounts provided for in article

479a of the UK Companies Act of 2006.

Subsidiaries are fully consolidated.

Information on the subsidiaries included in the

consolidated Group is presented in Appendix I.

Information on companies that have not been

consolidated because their impact on the fair

presentation of the consolidated annual ac-

counts is immaterial has been included in Ap-

pendix II.

Transactions and balances with subsidiaries and

unrealised gains or losses have been eliminated

upon consolidation. Nevertheless, unrealised

losses have been considered as an indicator of

impairment of the assets transferred.

The Parent and its subsidiaries form an integrated

group engaged in transport, travel and tourism

and therefore transactions between the airline,

tour operators and travel agencies are very sig-

nificant. All accounts and transactions between

consolidated entities, particularly the aforemen-

tioned businesses, have been eliminated on con-

solidation, including investments between these

entities, giving rise, where applicable, to the cor-

responding goodwill on consolidation.

The subsidiaries’ accounting policies have been

adapted to Group accounting policies, for like

transactions and other events in similar circum-

stances.

The timing of the annual accounts or financial

statements of subsidiaries has been harmonised

and relevant adjustments have been made to

reflect the effect of transactions and significant

events occurred between the closing date of

subsidiaries and the closing date of the Parent.

b) Non-controlling interests Non-controlling interests in subsidiaries ac-

quired after the transition date are recognised at

the acquisition date at the proportional part of

the fair value of the identifiable net assets. Non-

controlling interests in subsidiaries acquired pri-

or to the transition date were recognised at the

proportional part of the equity of the subsidiaries

at the date of first consolidation. Non-control-

ling interests are presented separately from eq-

uity attributable to the Parent in the consolidated

balance sheet within equity. Non-controlling in-

terests’ share in profit or loss for the year is also

presented separately in the consolidated income

statement.

26

assets or disposal groups held for sale are recog-

nised at fair value less costs to sell.

Details of equity-accounted investees are includ-

ed in Appendix III. The Group’s share of the profit

or loss of an associate from the date of acquisi-

tion is recognised as an increase or decrease in

the value of the investment, with a credit or debit

to share in profit/loss of equity-accounted inves-

tees in the consolidated income statement. The

Group’s share of the total recognised income and

expense of associates from the date of acquisi-

tion is recognised as an increase or decrease in

investments in associates with a balancing entry

in consolidated equity accounts. The distribution

of dividends is recognised as a decrease in the

value of the investment. The Group’s share of

profit or loss, including impairment losses rec-

ognised by the associates, is calculated based on

income and expenses arising from application of

the acquisition method.

The accounting policies of associates have been

harmonised in terms of timing and measurement,

applying the policies described for subsidiaries.


statements of associates has been harmonised

and relevant adjustments have been made to

reflect the effect of transactions and significant

events occurred between the closing date of as-

sociates and the closing date of the Parent.

(i) Impairment

The Group applies the impairment criteria set

out in the section on financial instruments to de-

termine whether additional impairment losses to

those already recognised on the net investment

in the associate, or on any other financial asset

held as a result of applying the equity method,

should be recognised.

Impairment is calculated by comparing the car-

rying amount of the net investment in the associ-

ate with its recoverable amount. The recoverable

amount is the higher of value in use and fair value

less costs to sell.

Value in use is calculated based on the Group’s

share of the present value of future cash flows

expected to be derived from ordinary activities

and from the disposal of the asset, or the esti-

The profit or loss and changes in equity of the

subsidiaries attributable to the Group and non-

controlling interests after consolidation ad-

justments and eliminations, is determined in

accordance with the percentage ownership at

year end.

The profit/loss and recognised income and ex-

pense of subsidiaries are allocated to equity at-

tributable to the Parent and to non-controlling

interests in proportion to their investments, even

if this results in a balance receivable from non-

controlling interests. Agreements entered into

between the Group and non-controlling inter-

ests are recognised as a separate transaction.

Increases and reductions in non-controlling in-

terests in subsidiaries in which control is retained

are recognised as equity instrument transactions.

Consequently, no new acquisition cost arises on

increases nor is a gain recorded on reductions;

rather, the difference between the consideration

transferred or received and the carrying amount

of the non-controlling interests is recognised in

the reserves of the Parent, without prejudice to

reclassifying consolidation reserves and reallo-

cating other income and expenses between the

Group and the non-controlling interests. When

a Group’s interest in a subsidiary increases, non-

controlling interests are recognised at their share

of the consolidated net assets, including good-

will on consolidation.

c) Associates Associates are companies over which the Parent,

either directly, or indirectly through subsidiaries,

exercises significant influence. Significant influ-

ence is the power to participate in the financial

and operating policy decisions of the investee

but is not control or joint control over those

policies. The existence of potential voting rights

that are exercisable or convertible at the end of

each reporting period, including potential vot-

ing rights held by the Group or third parties, are

considered when assessing whether an entity

has significant influence.

Investments in associates are accounted for us-

ing the equity method from the date that sig-

nificant influence commences until the date that

significant influence ceases. However, associates

classified at the acquisition date as non-current

27

2015 ANNUAL REPORT

mated cash flows expected to be received from

the distribution of dividends and the final dispos-

al of the investment.

Nonetheless, and in certain cases, unless bet-

ter evidence of the recoverable amount of the

investment is available, when estimating impair-

ment of these types of assets, the investee’s eq-

uity is taken into consideration, adjusted, where

appropriate, to generally accepted accounting

principles and standards in Spain, corrected for

any net unrealised gains existing at the measure-

ment date.

d) Joint ventures Joint ventures are those in which there is a statu-

tory or contractual agreement to share the con-

trol over an economic activity, in such a way that

strategic financial and operating decisions relat-

ing to the activity require the unanimous consent

of the Parent and the remaining venturers.

Group joint ventures adopt the form of invest-

ments in jointly controlled entities, operations

and assets.

Details of jointly controlled entities are provided

in Appendix IV.

Jointly controlled operations and assets are

those in which there is a statutory or contrac-

tual agreement to share the control over an

economic activity, in such a way that strategic

financial and operating decisions relating to the

activity require the unanimous consent of the

Group and the remaining venturers.

Information relating to jointly controlled opera-

tions, referred to as temporary joint ventures, is

presented in Appendix V.

Investments in jointly controlled entities are pro-

portionately consolidated from the date joint con-

trol is obtained until the date joint control ceases.

However, investments that are classified as non-

current assets or disposal groups held for sale at

the date joint control is obtained are recognised at

fair value less costs to sell.

The Group recognises assets controlled and li-

abilities incurred in respect of jointly controlled

operations, as well as the proportional part of

jointly controlled assets and liabilities and of

expenses incurred and income earned from

the sale of goods or services by the joint ven-

ture. The statement of changes in equity and the

statement of cash flows also include the propor-

tional part corresponding to the Group by virtue

of the agreements reached.

Reciprocal transactions, balances, income, ex-

penses and cash flows have been eliminated in

proportion to the interest held by the Group in

joint ventures. All dividends have been eliminated.

Unrealised gains and losses from non-monetary

contributions or downstream transactions in

joint ventures are recognised based on the sub-

stance of the transaction. Where the assets are

retained by the joint ventures and the Group has

transferred the significant risks and rewards of

ownership, only the portion of the gain or loss

that is attributable to the interests of the other

venturers is recognised. Unrealised losses are

not eliminated if they provide evidence of an im-

pairment loss.

The Group only recognises the portion of gains

and losses on transactions in joint ventures that

is attributable to the interests of the other ven-

turers. In the event of losses, the Group applies

the same recognition criteria as those described

in the previous paragraph.

The Group has made the necessary measure-

ment and timing harmonisation adjustments to

incorporate its joint ventures in the consolidated

annual accounts.


statements of joint ventures has been harmo-

nised and the relevant adjustments have been

made to reflect the effect of transactions and

significant events occurred between the closing

date of the joint ventures and the closing date of

the Company.

e) Foreign currency transactions, balances and cash flows

(i) Foreign currency transactions,

balances and cash flows

Foreign currency transactions have been trans-

lated into Euros using the exchange rate pre-

vailing at the transaction date. Some Spanish

28

Group companies which operate in US Dollars

recognise purchases and sales using a standard

exchange rate, in accordance with the Group

policy of contracting the appropriate finan-

cial instruments to hedge against fluctuations

in the US Dollar exchange rate. The differences

between the standard exchange rate and the

settlement or hedging rate are recognised as ex-

change gains or losses in the income statement.

Monetary assets and liabilities denominated in

foreign currencies have been translated into

Euros at the closing rate, while non-monetary

assets and liabilities measured at historical cost

have been translated at the exchange rate pre-

vailing at the transaction date.

Non-monetary assets measured at fair value have

been translated into Euros at the exchange rate at

the date that the fair value was determined.

In the consolidated statement of cash flows,

cash flows from foreign currency transactions

have been translated into Euros at the exchange

rates at the dates the cash flows occur.

(ii) Translation of foreign operations

In accordance with the exception relating to

accumulated translation differences provided

for in the second transitional provision of Roy-

al Decree 1514/2007 approving

the Spanish General Chart of Ac-

counts, translation differences

recognised in the consolidated

annual accounts generated prior

to 1 January 2008 have been clas-

sified under reserves of the inves-

tor. Consequently, the historical

exchange rate applicable to the

translation of foreign operations is

the exchange rate prevailing at the

transition date.

As of that date, foreign operations

whose functional currency is not

the currency of a hyperinflationary

economy have been translated

into Euros as follows:

- Assets and liabilities, includ-

ing goodwill and net asset adjust-

ments derived from the acquisition

of the operations are translated at the closing

rate at the reporting date;

- Income and expenses are translated at the av-

erage exchange rate for the period; and

- All resulting exchange differences are recog-

nised as translation differences in consolidated

equity.

These criteria are also applicable to the trans-

lation of the financial statements of equity-ac-

counted investees, with translation differences

attributable to the Parent recognised in consoli-

dated equity.

The translation into Euros described in the pre-

ceding paragraph using the closing exchange

rate is performed on the functional currency.

Given the economic and financial characteristics

of certain companies’ activities, the functional

currency is considered to be the US Dollar rather

than the official currency of the country where

the registered office is located.

The translation from local currency to functional

currency implies the use of historical exchange

rates for the non-monetary balance sheet and

income statement items and the exchange rate

prevailing at year end for monetary items. Cash

29

2015 ANNUAL REPORT

and those items that are representative of ac-

counts receivable and payable are considered to

be monetary items.

When the date of the financial statements of for-

eign operations differs from that of the Parent,

the assets and liabilities, including goodwill and

net asset adjustments derived from the acquisi-

tion of the operations, are translated at the rate

prevailing at the reporting date of the foreign op-

eration and any necessary adjustments are made

to balances and transactions with the Group in

respect of exchange rate fluctuations up to the

reporting date.

f) Capitalised borrowing costs As permitted by the second transitional provision

of Royal Decree 1514/2007 approving the Span-

ish General Chart of Accounts, the Group opted

to apply this accounting policy to work in pro-

gress at 01 January 2008 that will not be avail-

able for use, capable of operating or available for

sale for more than one year. Until that date, the

Group opted to recognise borrowing costs as an

expense as they were incurred.

Borrowing costs related to specific and gener-

al financing that are directly attributable to the

acquisition, construction or production of in-

tangible assets (except capitalised research and

development expenditure), property, plant and

equipment, investment property, and inventories

that will not be available for use, capable of op-

erating or available for sale for more than one

year are included in the cost of the asset.

To the extent that funds are borrowed specifical-

ly for the purpose of obtaining a qualifying asset,

the amount of borrowing costs eligible for capi-

talisation is determined as the actual borrowing

costs incurred. Non-commercial general bor-

rowing costs eligible for capitalisation are calcu-

lated as the weighted average of the borrowing

costs applicable to outstanding borrowings dur-

ing the period, other than those specifically for

the purpose of obtaining a qualifying asset and

the portion financed using consolidated equity.

The borrowing costs capitalised cannot exceed

the borrowing costs incurred during that period.

When determining borrowing costs eligible for

capitalisation, adjustments to the finance costs

corresponding to the effective portion of hedges

entered into by the Group are considered. These

calculations are based on the Group’s financial

structure.

The Group begins capitalising borrowing costs

as part of the cost of a qualifying asset when it

incurs expenditures for the asset, interest is ac-

crued, and it undertakes activities that are nec-

essary to prepare the asset for its intended use,

operation or sale, and ceases capitalising bor-

rowing costs when all or substantially all the ac-

tivities necessary to prepare the qualifying asset

for its intended use, operation or sale are com-

plete, even though the necessary administrative

permits may not have been obtained. Interrup-

tions in the active development of a qualifying

asset are not considered.

g) Intangible assets Intangible assets are measured at cost of acquisi-

tion or production, using the same criteria as for

determining the cost of production of invento-

ries. Capitalised production costs are recognised

under self-constructed assets in the consolidat-

ed income statement. Intangible assets are car-

ried at cost, less any accumulated amortisation

and impairment.

Expenditure on activities that contribute to in-

creasing the value of the Group’s business as a

whole, such as goodwill, trademarks and other

similar items generated internally, as well as es-

tablishment costs, are recognised as expenses

when incurred.

(i) Industrial property, patents and trademarks

Industrial property rights primarily consist of

land rights over the plot on which the Be Live

Smart Talavera Hotel was built, amounting to Eu-

ros 2,425 thousand. These land rights are valid

for 75 years starting 16 November 2005 and are

amortised over the remaining useful life of this

concession from the date on which the Group

acquired the company, that is, 70 years.

This heading also includes the Iberrail trademark,

which was acquired from Viajes Unalia, S.A. in

October 2009 and is amortised over five years.

Administrative concessions include the costs in-

curred in their procurement.

30

(ii) Goodwill on consolidation and goodwill

Goodwill on consolidation arises from the con-

solidation of subsidiaries and joint ventures.

Goodwill arises from business combinations

recognised in the individual annual accounts of

consolidated companies. Goodwill is not am-

ortised but is tested for impairment annually or

more frequently where events or circumstances

indicate that an asset may be impaired. Good-

will on business combinations is allocated to the

cash-generating units (CGUs) or groups of CGUs

which are expected to benefit from the synergies

of the business combination applying the criteria

described in section (I) (impairment). After initial

recognition, goodwill is measured at cost less any

accumulated impairment losses. In accordance

with final provision one of Audit Law 22 /2015

of 20 July 2015, as of 1 January 2016, intangible

assets, including goodwill, shall be considered

assets with a finite useful life. Where the useful

life of intangible assets cannot be estimated re-

liably, they shall be amortised over a period of

ten years. Similarly, it will be presumed that the

useful life of goodwill, unless there is evidence to

the contrary, is also ten years. As indicated pre-

viously, the Group has recognised goodwill of

Euros 28,652 thousand. At the date of authorisa-

tion for issue of the annual accounts, the Direc-

tors are evaluating the accounting implications

of the Law, specifically as regards the estimation

of the useful lives of the aforementioned assets,

to determine its impact on the Group’s equity.

At the date of authorisation for issue of the an-

nual accounts, the Royal Decree implementing

the Law and, where appropriate, regulating the

transitional regime has not yet been passed.

(iii) Computer software

Computer software acquired and produced by

the Company, including website costs, is rec-

ognised when it meets the conditions for con-

sideration as development costs. Expenditure

on developing a website to promote and ad-

vertise the Group’s own products or services is

recognised as an expense when incurred. Com-

puter software maintenance costs are charged

as expenses when incurred.

(iv) Emission allowances

Under Directive 2003/87/EC and subsequent

amendments to the Directive of the European

Parliament and of the Council, which established

a trading scheme

for greenhouse gas

emission allowances in

the European Community,

measures aimed at reducing

the impact of aviation on climate

change came into effect in 2012, requir-

ing airlines to assume certain costs for CO2

emissions from flights from or to any country in

the European Union.

On 17 November 2014, the Company received

a notification from the Spanish Ministry for Ag-

riculture, Food and the Environment, stating

that Regulation (EU) No 421/2014 introduced a

number of amendments: the European emission

allowances trading scheme for 2013 to 2016 is

only applicable to emissions in the European

Economic Area. It is not applicable to emissions

from flights operated from 2013 to 2016 between

airports in the outermost regions, as defined in

article 349 of the Treaty on the Functioning of

the European Union (TFEU), and airports located

in another region in the European Economic

Area. From 1 January 2013 until 31 December

2020, the emission allowances trading scheme

will exclude flights undertaken by operators of

non-commercial aircraft with emissions of less

than 1000 tonnes per year

In accordance with the above, the number of

allowances granted free of charge to aircraft

operators should be reduced in proportion to

the reduced scope of application of the trading

scheme for 2013 to 2016. To this end, member

states should adapt the emission allowances

granted to each aircraft operator for these an-

nual cycles

In accordance with the mandate established

in Regulation (EU) No 421/2014, through the

agreement dated 7 November 2014, the Coun-

cil of Ministers amended the free allocation of

allowances for 2013 to 2016 for aircraft opera-

tors, which had been approved by agreement of

the Council of Ministers on 16 December 2011

and subsequently corrected on 13 July 2012.

The definitive allocation of allowances exclu-

sively for 2013 to 2016 totalled 252,224, with

no amendment, as a result of this agreement, of

the amounts foreseen for the trading period, i.e.

2017 to 2020.

31

2015 ANNUAL REPORT

Upon allocation of these allowances the

Company recognised them as intangible as-

sets under “Greenhouse gas emission allow-

ances” for an amount of approximately Euros

2,013 thousand (Euros 2,925 thousand at 31

December 2014) in accordance with their fair

market value. At the date of recognition the

Company also recorded a non-refundable

capital grant for the same amount. After initial

recognition, emission allowances are carried

at the value attributed to them upon their re-

ceipt or acquisition and are not amortised.

The expenses associated with greenhouse gas

emissions for the year are recognised under

non-current provisions with a balancing entry

under other operating expenses in the consol-

idated income statement. Where allowances

for such emissions are available, these provi-

sions are measured at the amount at which the

allowances were granted or acquired. Where

allowances are not available the Group recog-

nises the best possible estimate of the cost to

be incurred to cover the shortfall.

(a) Firstly, through allocated emission allowanc-

es, which are then used to cancel actual emis-

sions in proportion to total forecast emissions

for the entire period to which they have been

allocated. The expense corresponding to this

part of the obligation is determined based on

the carrying amount of the transferred emission

allowances.

(b) Secondly, through the remaining emission al-

lowances recorded. Expenditure on this part of

the obligation is measured as the weighted aver-

age cost of the emission allowances.

Emission allowances acquired for the purpose of

being sold are classified and measured based on

the standards applicable to inventories.

The non-refundable grants associated with emis-

sion allowances received free of charge are taken

to profit and loss in line with the recognition of

the expenses derived from the gas emissions re-

lated to the subsidised allowances.

Emission allowances acquired for the purpose of

being sold are classified and measured based on

the standards applicable to inventories.

(v) Leaseholds

Leaseholds are rights to lease premises which

have been acquired through an onerous con-

tract subrogated by the Group.

(vi) Subsequent costs

Subsequent costs incurred on intangible assets

are recognised in profit and loss, unless they in-

crease the expected future economic benefits

attributable to the intangible asset.

(vii) Useful life and amortisation rates

The Group assesses whether the useful life of

each intangible asset acquired is finite or in-

definite. An intangible asset is regarded by the

Company as having an indefinite useful life when

there is no foreseeable limit to the period over

which the asset will generate net cash inflows.

Intangible assets with indefinite useful lives are not

amortised, but are instead tested for impairment

on an annual basis or whenever there is an indi-

cation that the intangible asset may be impaired.

Intangible assets with finite useful lives are amor-

tised by allocating the depreciable amount of an

asset on a systematic basis over its useful life, by

applying the following criteria:

32

The depreciable amount of intangible assets is

measured as the cost of the asset, less any re-

sidual value.

The Group considers that the residual value of the

assets is zero unless:

- There is a commitment by a third party to pur-

chase the asset at the end of its useful life.

- There is an active market for the intangible as-

set and:

- Residual value can be determined by reference

to that market; and

- It is probable that such a market will exist at the

end of the asset’s useful life.

The Group reviews the residual value, useful life

and amortisation method for intangible assets at

each financial year end. Changes to initially es-

tablished criteria are accounted for as a change in

accounting estimates.

(viii) Impairment losses

The Group measures and determines impairment

to be recognised or reversed based on the criteria

in section (h) (Impairment losses on non-financial

assets subject to amortisation or depreciation).

(h) Property, plant and equipment (i) Initial recognition

Property, plant and equipment are measured at

cost of acquisition or production, using the same

criteria as for determining the cost of production

of inventories. Capitalised production costs are

recognised under self-constructed assets in the

consolidated income statement. Property, plant

and equipment are carried at cost less any accu-

mulated depreciation and impairment.

Capitalised production costs are recognised un-

der self-constructed assets in the consolidated

income statement. Non-trading income obtained

during the trial and start-up period is recognised

as a reduction in the costs incurred. Property,

plant and equipment are carried at cost

less any accumulated depreciation and

impairment.

The cost of an item of property, plant and

equipment includes the estimated costs

of dismantling or removal and restoration

of the site on which it is located, provided

that the obligation is incurred as a conse-

quence of having used the item and for purposes

other than to produce inventories.

Spare parts used to replace similar parts in facili-

ties, equipment and machinery are measured ap-

plying the aforementioned criteria. Parts with a

warehouse cycle of less than one year are rec-

ognised as inventories. Parts with a warehouse

cycle of more than one year and which are re-

lated to certain specific assets are recognised and

depreciated on a systematic basis consistent with

the depreciation policy for the assets in question,

and those not related to specific assets are recog-

nised as other fixed assets and depreciated using

the same process as for the part to be replaced, if

this can be identified. In general, these latter spare

parts are depreciated from the date they are in-

Industrial property, patents and trademarks Straight-line 5Concessions Straight-line 6Computer software Straight-line 6Leaseholds Straight-line 10

Amortisation method

Estimated years of useful life

33

2015 ANNUAL REPORT

corporated into the asset, considering their tech-

nical obsolescence and the weighted technical or

economic useful life of the assets in which they

are to be incorporated.

Non-current investments in property held by the

Group under operating leases are classified as

property, plant and equipment. Investments are

depreciated over their useful lives, provided these

are not expected to exceed the duration of the

lease contract or the contract is renewed indefi-

nitely for a period greater than their useful lives.

(ii) Depreciation

Property, plant and equipment are depreciated

by allocating the depreciable amount of the as-

set on a systematic basis over its useful life. The

depreciable amount is the cost of an asset, less its

residual value. The Group determines the depre-

ciation charge separately for each component of

an item of property, plant and equipment with a

cost that is significant in relation to the total cost

of the asset and with a useful life that differs from

the remainder of the asset.

Property, plant and equipment are depreciated

using the following criteria:

Buildings Straight-line 20 - 50 Technical installations andmachinery (aircraft, engines, aircraftspare parts, maintenance equipmentand handling equipment) Straight-line 8 - 20 Other installations, equipmentand furniture Straight-line 8 - 12 Other property, plant and equipment Straight-line 4 - 10

Depreciationmethod


The Group reviews residual values, useful lives

and depreciation methods at each financial year

end. Changes to initially established criteria are

accounted for as a change in accounting esti-

mates. Management of the Air division determine

the residual value of the aircraft on the basis of

reports drawn up by independent experts.

For property, plant and equipment subject to

major repairs, on acquiring aircraft through

ownership or under a finance lease, the Group

separates the cost of items subject to periodic

review from that of the aircraft itself. This cost is

depreciated on a straight-line basis over the pe-

riod between the purchase of the aircraft and the

first inspection. The cost of the first inspection is

capitalised and depreciated over the period be-

tween the first inspection and the next mainte-

nance event.

(iii) Subsequent costs

Subsequent to initial recognition of the asset,

only the costs incurred which increase capacity

or productivity or which lengthen the useful life

of the asset are capitalised. The carrying amount

of parts that are replaced is derecognised. Costs

of day-to-day servicing are recognised in profit

and loss as incurred.

Replacements of property, plant and equipment

that qualify for capitalisation are recognised as

a reduction in the carrying amount of the items

replaced. Where the cost of the replaced items

has not been depreciated independently and it is

not possible to determine the respective carrying

amount, the replacement cost is used as indica-

tive of the cost of items at the time of acquisition

or construction.

(iv) Impairment

The Group measures and deter-

mines impairment to be recog-

nised or reversed based on the

criteria in section (h) (Impairment

losses on non-financial assets

subject to amortisation or depre-

ciation).

i) Investment property Investment property comprises

property, including that which is

under construction or being devel-

oped, which is earmarked totally or

partially to earn rentals or for capital appreciation

or both, rather than for use in the production or

supply of goods or services, for administrative

purposes or for sale in the ordinary course of

business.

The Group measures and recognises investment

property following the policy for property, plant

and equipment.

The Group reclassifies investment property to

property, plant and equipment when it begins to

34

use the property in the production or supply of

goods or services, or for administrative purposes.

The Group reclassifies investment property to

inventories when it commences construction

work to substantially alter the property with a

view to selling it.

The Group reclassifies property, plant and equip-

ment to investment property when it ceases to

use the building in the production or supply of

goods or services, for administrative purposes or

when it is held to earn rentals or for capital ap-

preciation or both.

The Group reclassifies inventories to investment

property when the property is leased under an

operating lease.

Investment property is depreciated applying the

following policies:

j) Non-current assets held for sale and discontinued operations

(i) Non-current assets held for sale

The Group recognises non-current assets or

disposal groups as held for sale if their carrying

amounts will be recovered principally through a

sales transaction rather than through continu-

ing use. Non-current assets or disposal groups

are classified as held for sale, provided that they

are available for immediate sale in their present

condition subject to terms that are usual and

customary for sales of such assets and that the

disposal is highly probable.

Non-current assets or disposal groups classified

as held for sale are measured at the lower of the

carrying amount and fair value less costs to sell

and are not depreciated.

Impairment losses on initial classification and

subsequent remeasurement of assets classified

as held-for-sale are recognised under profit or

loss from continuing operations in the consoli-

dated income statement, except in the case of

discontinued operations. Impairment losses on

a cash-generating unit (CGU) are allocated first

to reduce the carrying amount of goodwill and

then to reduce pro rata the carrying amounts of

other assets in the unit. Impairment of goodwill

recognised may not be reversed.

Gains due to increases in the fair value less costs

to sell are recognised in the income statement

to the extent of the cumulative impairment pre-

viously recognised due to measurement at fair

value less costs to sell or to impairment recog-

nised before classification of the asset.

The Group measures a non-current asset that

ceases to be classified as held-for-sale or to form

part of a disposal group at the lower of the car-

rying amount before the asset was classified as

held-for-sale, adjusted for any depreciation, am-

ortisation or revaluations that would have been

recognised had the asset not been classified as

held-for-sale, and its recoverable amount at the

date of reclassification. Any required adjustment

to the carrying amount of a non-current asset that

ceases to be classified as held-for-sale is included

in profit or loss from continuing operations.

k) Impairment of non-financial assets subject to amortisation or depre-ciation

The Group evaluates whether there are indica-

tions of possible impairment losses on non-finan-

cial assets subject to amortisation or depreciation

to verify whether the carrying amount of these

assets exceeds the recoverable amount. The re-

coverable amount is the higher of the fair value

less costs to sell and the value in use.

The Group tests goodwill and intangible assets

with indefinite useful lives for impairment at least

annually, irrespective of whether there is any in-

dication that the assets may be impaired.

Impairment losses are recognised in the consoli-

dated income statement.

Recoverable amount is determined for each in-

dividual asset, unless the asset does not generate

cash inflows that are largely independent of those

from other assets or groups of assets. If this is the

case, recoverable amount is determined for the

cash-generating unit to which the asset belongs.

Impairment losses for cash-generating units are

allocated first to reduce the carrying amount of

Buildings Straight-line 33

Depreciation method


35

2015 ANNUAL REPORT

goodwill allocated to the unit and then to the oth-

er non-current assets of the unit pro rata with their

carrying amounts. The carrying amount of each

asset may not be reduced below the highest of its

fair value less costs to sell, its value in use and zero.

At the end of each reporting period the Group

assesses whether there is any indication that an

impairment loss recognised in prior periods may

no longer exist or may have decreased. Impair-

ment losses on goodwill are not reversible. Im-

pairment losses on other assets are only reversed

if there has been a change in the estimates used

to calculate the recoverable amount of the asset.

A reversal of an impairment loss is recognised

in the consolidated income statement. The in-

creased carrying amount of an asset attributable

to a reversal of an impairment loss may not ex-

ceed the carrying amount that would have been

determined, net of depreciation or amortisation,

had no impairment loss been recognised.

A reversal of an impairment loss for a CGU is

allocated to the non-current assets of each

unit, except goodwill, pro rata with the carrying

amounts of those assets. The carrying amount

of an asset may not be increased above the

lower of its recoverable amount and the carrying

amount that would have been disclosed, net of

amortisation or depreciation, had no impairment

loss been recognised.

After an impairment loss or reversal of an impair-

ment loss is recognised, the depreciation (amor-

tisation) charge for the asset is adjusted in future

periods based on its new carrying amount.

However, if the specific circumstances of the

assets indicate an irreversible loss, this is recog-

nised directly in losses on the disposal of fixed

assets in the consolidated income statement.

Valuations from independent appraisers or the

cash flow discounting method have been used

to determine the recoverable amount. Discount-

ed cash flow calculations are based on five-year

projections in the budgets approved by man-

agement plus a residual value. The cash flows

take into account past experience and represent

management’s best estimate of future market

performance. The key assumptions employed

when determining value in use include growth

rates, the weighted average cost of capital and

tax rates. The discount rate applied for the im-

pairment test on the Group’s hotel assets and for

goodwill has been 10%. In order to calculate the

recoverable amount of certain hotel properties,

external valuations by renowned appraisal com-

panies have been obtained.

l) Leases (i) Lessee accounting

Leases in which, upon inception, the Group as-

sumes substantially all the risks and rewards in-

cidental to ownership are classified as finance

leases, otherwise they are classified as operat-

ing leases.

The Group assesses the economic substance of

contracts that confer the right to use certain as-

sets, to identify any implicit leases. A contract is

or contains a lease if compliance with the agree-

ment depends on the use of a specific asset or

assets. In these cases, at the inception of the

lease the Group separates future lease payments

and the consideration relating to the lease from

those for the rest of the items included in the

36

agreement, based on their fair values. Lease pay-

ments are recognised by applying the criteria set

out in this section.

The Group has the right to use aircraft, hotels,

handling equipment and travel agency offices

through lease contracts.

Financial assets and financial liabilities under

lease contracts are subject to the same derecog-

nition criteria as financial instruments.

- Finance leases

At the commencement of the lease term, the

Group recognises finance leases as assets and li-

abilities at the lower of the fair value of the leased

asset and the present value of the minimum lease

payments. Initial direct costs are added to the as-

set’s carrying amount. Minimum lease payments

are apportioned between the finance charge and

the reduction of the outstanding liability. Interest

is expensed using the effective interest method.

Contingent rents are recognised as an expense

when it is probable that they will be incurred. The

accounting policies applied to the assets used by

the Group by virtue of finance lease contracts

are the same as those set out in sections (d) and

(e) (Property, plant and equipment or Investment

property). However, if there is no reasonable

certainty that the Group will obtain ownership by

the end of the lease term, the assets are fully de-

preciated over the shorter of the lease term and

their useful lives.

- Operating leases

Lease payments under an operating lease, net

of incentives received, are recognised as an

expense on a straight-line basis over the lease

term, unless another systematic basis is more

representative of the time pattern of the lease’s

benefit.

Contingent rents are recognised as an expense

when it is probable that they will be incurred.

(ii) Sale and leaseback transactions

Asset sale and leaseback transactions that meet

the conditions for classification as a finance

lease are considered as financing operations

and, therefore, the type of asset is not changed

and no profit or loss is recognised.

m) Financial instruments (i) Classification and separation of financial in-

struments

Financial instruments are classified on initial rec-

ognition as a financial asset, a financial liability

or an equity instrument in accordance with the

economic substance of the contractual arrange-

ment and the definitions of a financial asset, a

financial liability and an equity instrument.

The Group classifies financial instruments into

different categories based on the nature of the

instruments and the Group’s intentions on initial

recognition.

(ii) Offsetting principles

A financial asset and a financial liability are off-

set only when the Group currently has the le-

gally enforceable right to offset the recognised

amounts and intends either to settle on a net

basis or to realise the asset and settle the liability

simultaneously.

(iii) Financial assets and financial liabilities held

for trading

Financial assets or financial liabilities held for

trading are those which are classified as held for

trading from initial recognition.

A financial asset or financial liability is classified

as held for trading if it:

- Originates or is acquired or incurred principally

for the purpose of selling or repurchasing it in

the near term

- Forms part of a portfolio of identified financial

instruments that are managed together and for

which there is evidence of a recent actual pat-

tern of short-term profit-taking or

- It is a derivative, except for a derivative that is

a financial guarantee contract or a designated

and effective hedging instrument.

Financial assets and financial liabilities held

for trading are initially recognised at fair value.

Transaction costs directly attributable to the ac-

quisition or issue are recognised as an expense

when incurred.

After initial recognition, they are recognised at

fair value through profit or loss. Fair value is not

reduced by transaction costs incurred on sale or

disposal. Accrual interest and dividends are rec-

ognised separately.

37

2015 ANNUAL REPORT

The Group does not reclassify any financial asset

or financial liability into or out of this category

while it is recognised in the consolidated balance

sheet, except when there is a change in the clas-

sification of hedging financial instruments.

(iv) Loans and receivables

Loans and receivables comprise trade and non-

trade receivables with fixed or determinable pay-

ments that are not quoted in an active market

other than those classified in other financial asset

categories. These assets are initially recognised

at fair value, including transaction costs, and are

subsequently measured at amortised cost using

the effective interest method.

Nevertheless, financial assets which have no es-

tablished interest rate, which mature or are ex-

pected to be received in the short term, and for

which the effect of discounting is immaterial, are

measured at their nominal amount.

(v) Held-to-maturity investments

Held-to-maturity investments are debt securities

with fixed or determinable payments and fixed

maturity traded on an active market and that

the Group has the positive intention and ability

to hold to maturity, other than those classified

in other categories. The measurement criteria

applicable to financial instruments classified in

this category are the same as those applicable to

loans and receivables.

The Group has not reclassified or sold any held-

to-maturity investments during the year.

(vi) Financial assets and financial liabilities car-

ried at cost

Investments in equity instruments for which the

fair value cannot be reliably measured and de-

rivative instruments that are linked to and must

be settled by delivery of such unquoted equity

instruments, are measured at cost less any accu-

mulated impairment. Nonetheless, if the financial

assets or liabilities can subsequently be reliably

measured on an ongoing basis, they are account-

ed for at fair value and any gain or loss is recog-

nised in accordance with their classification.

(vii) Investments in non-consolidated group com-

panies, associates and jointly controlled entities

Investments in Group companies, associates and

jointly controlled entities are initially recognised

at cost, which is equivalent to the fair value of

the consideration given, including transaction

costs in the case of investments in associates

and jointly controlled entities, and are subse-

quently measured at cost net of any accumulat-

ed impairment. The cost of investments in Group

companies acquired before 1 January 2010 in-

cludes any transaction costs incurred.

The cost of acquisition of an investment in a Group

company, associate or jointly controlled entity in-

cludes its carrying amount immediately before

classification. Amounts previously recognised in

equity are transferred to the income statement

when the investment is derecognised or when an

impairment loss is recognised or reversed.

If an investment no longer qualifies for classi-

fication under this category, it is reclassified as

available-for-sale and is measured as such from

the reclassification date.

Investments in equity instruments for which the

fair value cannot be reliably measured and de-

38

rivative instruments that are linked to and must

be settled by delivery of such unquoted equity

instruments, are measured at cost less any accu-

mulated impairment. Nonetheless, if the financial

assets or liabilities can subsequently be reliably

measured on an ongoing basis, they are account-

ed for at fair value and any gain or loss is recog-

nised in accordance with their classification.

(viii) Interest and dividends

Interest is recognised using the effective interest

method.

Dividends from investments in equity instru-

ments are recognised when the Group is enti-

tled to receive them. If the dividends are clearly

derived from profits generated prior to the ac-

quisition date because amounts higher than the

profits generated by the investment since acqui-

sition have been distributed, the carrying amount

of the investment is reduced.

(ix) Derecognition of financial assets

Financial assets are derecognised when the con-

tractual rights to the cash flows from the finan-

cial asset expire or have been transferred and the

Group has transferred substantially all the risks

and rewards of ownership.

On derecognition of a financial asset in its entire-

ty, the difference between the carrying amount

and the sum of the consideration received, net

of transaction costs, including any new asset

obtained less any new liability assumed and any

cumulative gain or loss deferred in consolidated

recognised income and expense, is recorded in

consolidated profit or loss.

(x) Impairment of financial assets

A financial asset or a group of financial assets

is impaired and impairment losses are incurred

if there is objective evidence of impairment as a

result of one or more events that occurred after

the initial recognition of the asset and the event

or events have an impact on the estimated future

cash flows of the financial asset or group of fi-

nancial assets that can be reliably estimated.

The Group recognises impairment of loans and

receivables and debt instruments when estimat-

ed future cash flows are reduced or delayed due

to debtor insolvency.

For equity instruments, objective evidence of im-

pairment exists when the carrying amount of an

asset is uncollectible due to a significant or pro-

longed decline in its fair value. In any case, the

instrument is considered to be impaired after a

decline of a year and a half or of forty percent of

its quoted price, when its value has not recovered.

Impairment of financial assets carried

at amortised cost

The amount of the impairment loss of financial

assets carried at amortised cost is measured

as the difference between the asset’s carrying

amount and the present value of estimated fu-

ture cash flows (excluding future credit losses

that have not been incurred) discounted at the

financial asset’s original effective interest rate.

For variable income financial assets, the effec-

tive interest rate corresponding to the measure-

ment date under the contractual conditions is

used. For held-to-maturity debt instruments the

Group uses the market value, providing this is

sufficiently reliable to be considered representa-

tive of the recoverable amount.

The impairment loss is recognised in profit and

loss and may be reversed in subsequent periods

39

2015 ANNUAL REPORT

if the decrease can be objectively related to an

event occurring after the impairment has been

recognised. The loss can only be reversed to the

limit of the amortised cost of the assets had the

impairment loss not been recognised.

Investments in non-consolidated Group compa-

nies, associates and jointly controlled entities and

equity instruments carried at cost.

An asset is impaired when its carrying amount

exceeds its recoverable amount, the latter of

which is understood as the higher of the asset’s

value in use and fair value less costs to sell.

(xi) Financial liabilities

Financial liabilities, including trade and other

payables, that are not classified as held for trad-

ing or as financial liabilities at fair value through

profit or loss are initially recognised at fair value

less any transaction costs directly attributable to

the issue of the financial liability. After initial rec-

ognition, liabilities classified under this category

are measured at amortised cost using the effec-

tive interest method.

Nevertheless, financial liabilities which have no

established interest rate, which mature or are

expected to be settled in the short term, and for

which the effect of discounting is immaterial, are

measured at their nominal amount.

The Group measures financial liabilities at amor-

tised cost provided that reliable estimates of cash

flows can be made based on the contractual terms.

(xii) Security deposits

Security deposits paid in relation to operating lease

contracts on aircraft, hotels and travel agencies are

measured using the same criteria as for financial

assets. The difference between the amount paid

and the fair value is classified as a prepayment and

recognised in consolidated profit or loss over the

lease term (over the period for which the service

is rendered). Non-current advances are restated

at the end of each reporting period based on the

market interest rate on initial recognition.

(xiii) Derecognition and modifications

of financial liabilities

The Group derecognises all or part of a financial

liability when it either discharges the liability by

paying the creditor, or is legally released from

primary responsibility for the liability either by

process of law or by the creditor.

n) Hedge accounting Derivative financial instruments which qualify for

hedge accounting are initially measured at fair

value, plus any transaction costs that are directly

attributable to the acquisition, or less any trans-

action costs directly attributable to the issue of

the financial instruments. Nonetheless, transac-

tion costs are subsequently recognised in profit

and loss providing they do not change the effec-

tiveness of the hedge.

The Group undertakes foreign currency (US Dol-

lar) cash flow hedges, interest rate hedges and

hedges on jet fuel prices.

At the inception of the hedge the Group for-

mally designates and documents the hedging

relationships and the objective and strategy for

undertaking the hedges. Hedge accounting is

only applicable when the hedge is expected to

be highly effective at the inception of the hedge

and in subsequent years in achieving offsetting

changes in fair value or cash flows attributable to

the hedged risk, throughout the period for which

the hedge was designated (prospective analysis),

and the actual effectiveness is within a range of

80%-125% (retrospective analysis) and can be re-

liably measured.

For cash flow hedges of forecast transactions,

the Group assesses whether these transac-

tions are highly probable and if they present an

exposure to variations in cash flows that could

ultimately affect profit or loss. The Group only

designates as hedged items assets, liabilities, firm

commitments and forecast transactions that in-

volve a party external to the Group. Neverthe-

less, the foreign currency risk of a monetary

item receivable from or payable to consolidated

foreign operations qualifies as a hedged item in

the consolidated annual accounts if it results in

an exposure to foreign exchange rate gains or

losses that are not fully eliminated on consolida-

tion. The foreign currency risk of highly probable

forecast transactions with consolidated foreign

operations qualifies as a hedged item in the

consolidated annual accounts provided that the

transaction is denominated in a currency other

than the functional currency of the entity enter-

40

ing into that transaction and the foreign currency

risk will affect the consolidated income statement.

As a result, amounts from the hedging operation

deferred in recognised income and expense are

taken to profit or loss when the transaction is car-

ried out with parties external to the Group.

(i) Cash flow hedges

The Group recognises the portion of the gain or

loss on the measurement at fair value of a hedging

instrument that is determined to be an effective

hedge in consolidated recognised income and

expense. The ineffective portion and the specific

component of the gain or loss or cash flows on

the hedging instrument, excluding the measure-

ment of the hedge effectiveness, are recognised

under change in fair value of financial instruments.

The separate component of consolidated equity

associated with the hedged item is adjusted to

the lesser of the cumulative gain or loss on the

hedging instrument from inception of the hedge

and the cumulative change in fair value or pre-

sent value of the expected future cash flows on

the hedged item from inception of the hedge.

However, if the Group expects that all or a por-

tion of a loss recognised in consolidated equity

will not be recovered in one or more future pe-

riods, it reclassifies into change in fair value of

financial instruments the amount that is not ex-

pected to be recovered.

If a hedge of a forecast transaction subsequently

results in the recognition of a financial asset or

a financial liability, the associated gains or losses

that were recognised in consolidated equity are

reclassified to profit or loss in the same period or

periods during which the asset acquired or liability

assumed affects profit or loss and under the same

caption of the consolidated income statement.

If a hedge of a forecast transaction subsequently

results in the recognition of a non-financial asset

or a non-financial liability, the Group reclassifies

the associated gains and losses that were recog-

nised in consolidated equity and includes them

in the initial cost or carrying amount of the non-

financial asset or liability.

The Group prospectively discontinues hedge ac-

counting if the foreseen circumstances affecting

fair value hedges arise. In these cases, the cumula-

tive gain or loss on the hedging instrument that

has been recognised in consolidated equity is not

recorded in profit or loss until the forecast trans-

action occurs. If the transaction is no longer ex-

pected to occur, the cumulative gain or loss that

had been recognised in consolidated equity is re-

classified from equity to consolidated profit or loss

as change in fair value of financial instruments.

However, expiration or termination of the hedg-

ing instrument does not occur if as a result of

new or prevailing laws or regulations, the Group

agrees with the counterparty that a clearing

house shall act as a counterparty for each part of

the instrument and the changes to the instrument

are limited to those required for the replacement

of the counterparty. The effects of the replace-

ment should be recognised in the measurement

of the instrument and therefore in the calculation

and measurement of its effectiveness.

o) Inventories Inventories are initially measured at cost of pur-

chase or production.

The consolidated companies measure their in-

ventories using the last invoice price, which does

not differ significantly from the cost calculated

on a FIFO basis. The valuation of slow-moving

inventories has been lowered to their estimated

probable realisable value.

When the cost of inventories exceeds net realis-

able value, materials are written down to net re-

alisable value,

p) Cash and cash equivalents Cash and cash equivalents include cash on hand

and demand deposits in financial institutions.

They also include other short-term, highly liq-

uid investments that are readily convertible to

known amounts of cash and which are subject

to an insignificant risk of changes in value. An in-

vestment normally qualifies as a cash equivalent

when it has a maturity of less than three months

from the date of acquisition.

q) Defined benefit plans In accordance with prevailing Spanish employ-

ment regulations applicable to travel agencies,

tour operators and ground transport companies,

employees are entitled to retirement bonuses

41

2015 ANNUAL REPORT

based on years of service and retirement age.

Management of these retirement bonus com-

mitments has been outsourced to non-Group

companies. This outsourcing is based on an

actuarial study of these commitments applying

the Projected Unit Credit method using PERM00

mortality tables, a capitalisation rate of 2% and an

annual salary increase of 0%.

Certain collective bargaining agreements appli-

cable to Group companies with activities other

than those mentioned in the preceding para-

graph basically establish that permanent person-

nel retiring between the age of 60 and 65 are

entitled to a long-service bonus equivalent to a

certain number of monthly payments depending

on the number of years worked. All length-of-

service bonuses have been externalised to non-

Group companies.

r) Provisions (i) General criteria

Provisions are recognised when the Group has a

present obligation (legal, contractual, construc-

tive or tacit) as a result of a past event; it is prob-

able that an outflow of resources embodying

economic benefits will be required to settle the

obligation; and a reliable estimate can be made

of the amount of the obligation.

The amount recognised as a provision is the best

estimate of the expenditure required to settle the

present obligation at the end of the reporting pe-

riod, taking into account all risks and uncertain-

ties surrounding the amount to be recognised as

a provision and, where the time value of money

is material, the financial effect of discounting

provided that the expenditure to be made each

period can be reliably estimated. The discount

rate is a pre-tax rate that reflects the time value

of money and the specific risks for which future

cash flows associated with the provision have

not been adjusted at each reporting date.

Single obligations are measured using the indi-

vidual most likely outcome. When the provision

involves a large population of identical items, the

obligation is estimated by weighting all possible

outcomes by their associated probabilities. Where

there is a continuous range of possible outcomes,

and each point in that range is as likely as any oth-

er, the mid-point of the range is used.

The financial effect of provisions is recognised as a

finance cost in the consolidated income statement.

The tax effect and gains on the expected dispos-

al of assets are not taken into account in meas-

uring a provision.

Reimbursements from third parties of the ex-

penditure required to settle a provision are rec-

ognised as a separate asset provided that it is

virtually certain that the reimbursement will be

received. The reimbursement is recognised as

income in the consolidated income statement

based on the nature of the expenditure up to the

amount of the provision.

Where a risk is externalised to a third party by

means of a legal or contractual agreement, pro-

vision is only made for the part of the risk as-

sumed by the Group.

If it is not probable that an outflow of resources

will be required to settle an obligation, the provi-

sion is reversed.

(ii) Provisions for customer loyalty programmes

Air Europa Líneas Aéreas, S.A.U. has externalised

its main customer loyalty programme, “Flying

Blue”, and recognises the cost of this programme

on a monthly basis when the supplier informs it of

the amount accrued over the period. Air Europa

Líneas Aéreas, S.A.U. recognises a provision for its

other customer loyalty programmes based on the

fair value of the liabilities accrued at the report-

ing date. This balance, amounting to Euros 1,065

thousand (Euros 892 thousand for the year ended

31 December 2014), is recognised under current

provisions (see note 23).

Air Europa Líneas Aéreas, S.A.U. recognises the

transport revenue when points from any of its pro-

grammes are redeemed on an Air Europa flight.

(iii) Provisions for termination benefits and re-

structuring costs

Termination benefits are recognised as a liability

when the Group has a detailed formal plan for

the termination and there is a valid expectation

among the affected employees that termination

will arise either because the plan has already start-

ed to be implemented or because its main char-

acteristics have been published.

42

Restructuring provisions are recognised as a li-

ability when the Group has a detailed formal plan

for the termination and there is a valid expecta-

tion among the employees that termination will

arise either because the plan has already started

to be implemented or because its main charac-

teristics have been published.

On the matter of employee transfers, under the

collective bargaining agreement governing air-

port ground handling services, on expiry of a

concession the new concession holder for the

service must assume the position of employer

of all personnel who exercise their rights and

voluntarily choose to be transferred to the new

operator. In the unlikely event that employees

voluntarily decide not to be transferred to the

new operator, the transferring operator, in this

case entities forming part of the Handling di-

vision, is obliged to indemnify them with an

amount equivalent to 21 days’ pay for each year

of service up to a maximum of 12 months’ sal-

ary. The directors of the Parent do not expect

any significant liabilities to arise in connection

with these indemnity payments given the fa-

vourable terms and conditions governing trans-

fers set forth in the aforementioned collective

bargaining agreement. Consequently, no provi-

sion has been recognised in the consolidated

annual accounts.

(iv) Provisions for major repairs on aircraft under

operating lease contracts

In accordance with the aircraft operating lease

contracts, the Group recognises a provision for

the total cost to be incurred for scheduled in-

spections of aircraft (general inspections of

aircraft, engines and components), expensing

these costs on a straight-line basis over the pe-

riod that elapses between two successive in-

spections. Under some of the contracts between

Air Europa Líneas Aéreas, S.A.U. and the aircraft

lessors, most of the inspection costs are paid

to the lessor in regular instalments. Air Europa

then settles the cost of these periodic inspec-

tions through the lessor’s reimbursement of the

amounts that were previously advanced. The

monthly amounts paid to the lessors as advanc-

es on account are recognised as other financial

assets under either non-current investments or

current investments, depending on the period in

which they are offset.

s) Revenue from the sale of goods and rendering of services

Revenue from the sale of goods or services is

measured at the fair value of the consideration

received or receivable. Volume rebates, prompt

payment and any other discounts, as well as the

interest added to the nominal amount of the

consideration, are recognised as a reduction in

the consideration.

Revenues associated with the rendering of ser-

vices are recognised in the income statement

by reference to the stage of completion at the

reporting date when revenues, the stage of com-

pletion, the costs incurred and the costs to com-

plete the transaction can be estimated reliably

and it is probable that the economic benefits de-

rived from the transaction will flow to the Group.

Following usual sector practice, Air Europa Líneas

Aéreas, S.A.U. prepares an estimate of tickets sold

and not used and that will not be used in the fu-

ture. This estimate is drawn up on the basis of his-

torical statistical information on this aspect.

Air Europa Líneas Aéreas, S.A.U. recognises rev-

enues from air transport services rendered when

the passenger has actually flown. The amount re-

ceived from tickets sold for future flights is recog-

nised under current accruals in the accompanying

consolidated balance sheet. Current accruals re-

flect the estimated liability associated with tickets

sold prior to the end of each reporting period and

not yet used at that date. The revenues from these

tickets, as well as the estimate of the tickets sold

that will not be used, are recognised on the dates

for which the flights are booked.

Viajes Halcón, S.A.U., Viajes Ecuador, S.A.U., Viajes

Tu Billete, S.L.U. and Halcón Viagens e Turismo,

Lda. provide travel agency services. Since these

companies bill customers, transactions are pre-

sented at their sales amount and cost of supplies

when the travel documents or documents for

other services to be provided are delivered to the

customer, which is when the accrual of income

and cost of supplies is deemed to take place, ir-

respective of when the customer is to travel or

when the contracted services are to be used.

Globalia Travel Club Spain, S.A.U., Globalia Busi-

ness Travel, S.A.U. and Iberotours, S.A.U. recog-

43

2015 ANNUAL REPORT

nise income and expenses on an accruals basis.

As these companies contract tourism services

as tour operators, sales and cost of supplies are

recognised when services are rendered to end

customers.

Be Live Hotels, S.L.U., Inversiones Costa Adeje,

S.L.U., Explotadora Hotelera Luabay, S.L.U., Smart

Inversiones S.A.S., Inversiones La Albufera, S.A.S.

and Intertravel, S.A.R.L. operate hotel complexes.

These companies recognise revenue from their

activity in line with their customers’ overnight

stays.

Transactions between consolidated companies

have been eliminated from the consolidation

process as explained in section a) of this note.

t) Income tax The income tax expense or tax income for the

year comprises current tax and deferred tax.

Current tax assets or liabilities are measured at the

amount expected to be paid to or recovered from

the taxation authorities, using the tax rates and tax

laws that have been enacted or substantially en-

acted at the reporting date.

Current and deferred tax are recognised as in-

come or an expense and included in profit or

loss for the year, except to the extent that the tax

arises from a transaction or event which is rec-

ognised, in the same or a different year, directly

in consolidated equity, or from a

business combination.

Government assistance pro-

vided in the form of deductions

and other tax relief applicable

to income tax payable and con-

sidered as government grants is

recognised in accordance with

the prevailing regulations.

The Company files consolidated

tax returns with other compa-

nies belonging to the Globalia

business group. This tax group is

headed by Globalia Corporación

Empresarial, S.A., as Parent, and

includes the following subsidi-

aries: Air Europa Líneas Aéreas,

S.A.U.; Viajes Halcón, S.A.U.;

Globalia Business Travel, S.A.U.;

Globalia Formación, S.L.U.; Glo-

balia Mantenimiento Aeronáu-

tico, S.L.U.; Globalia Autocares,

S.A.; Globalia Broker Services,

S.A.U.; Globalia Activos Inmobiliarios, S.A.U.; Glo-

balia Sistemas y Comunicaciones, S.L.U.; Globalia

Hotel Orotava, S.L.U.; Iberhandling, S.A.; Globalia

Call Center, S.A.U.; Be Live Hotels, S.L.U.; Globalia

Handling, S.A.U.; Globalia Hotel Talavera, S.A.U.;

Globalia Hotel Palace de Muro, S.L.U.; Media &

Design, S.A.U.; Groundforce Cargo, S.L.U.; Glo-

balia Servicios Corporativos, S.L.U.; Viajes Ecuador,

S.A.U.; Globalia Gestión Seguros, S.L.U.; Welcome

Incoming Services, S.L.U.; Globalia Travel Club

Spain, S.L.U.; Globalia Hotel La Niña, S.L.; Viajes Tu

Billete, S.L.; Globalia Trading Services, S.L.U.; Iber-

otours, S.A.U.; León Activos Aeronáuticos, S.L.U.;

Canoa Spain, S.L.U.; Explotadora Hotelera Luabay,

S.L.U.; Globalia Artes Gráficas, S.L.; Iberrail Span-

ish Railroad, S.L.; Inversiones Costa Adeje, S.A.U.;

Luabay Hoteles y Apartamentos, S.L.U.; Pepetick-

et, S.A.; Techite Inversiones 2012, S.L.U.; and Sun-

ion Proyecto y Construcción, S.L.U.

(i) Taxable temporary differences

Deferred tax liabilities derived from taxable tem-

44

porary differences are recognised in all cases ex-

cept where:

- they arise from the initial recognition of good-

will or an asset or liability in a transaction that

is not a business combination and, at the time

of the transaction, affects neither accounting

profit nor taxable income.

- they relate to investments or subsidiaries, as-

sociates and jointly controlled entities over

which the Group is able to control the timing

of the reversal of the temporary difference and

it is probable that the temporary difference will

not reverse in the foreseeable future.

(ii) Deductible temporary differences

Deferred tax assets derived from deductible tem-

porary differences are recognised provided that

it is probable that sufficient taxable profit will be

available in the future against which they can be

utilised. Assets arising from the initial recognition

of an asset or liability in a transaction that is not

a business combination and, at the time of the

transaction, affects neither accounting profit nor

taxable income, are not recognised.

- they relate to investments or subsidiaries, as-

sociates and jointly controlled entities, to the

extent that it is probable that the temporary dif-

ference will reverse in the foreseeable future and

sufficient taxable profit will be available against

which the temporary difference can be utilised.

Tax planning opportunities are only considered

when assessing the recoverability of deferred tax

assets and if the Group intends to use these op-

portunities or it is probable that they will be utilised.

The Group recognises the conversion of a de-

ferred tax asset into a receivable from public

entities when it becomes enforceable in accord-

ance with prevailing tax legislation. Likewise, the

Group recognises the exchange of a deferred tax

asset for government debt securities when it ac-

quires ownership thereof.

(iii) Measurement

Deferred tax assets and liabilities are measured

at the tax rates that are expected to apply to the

years when the asset is realised or the liability

is settled, based on tax rates and tax laws that

have been enacted or substantially enacted. The

tax consequences that would follow from the

manner in which the Group expects to recover

or settle the carrying amount of its assets or li-

abilities are also reflected in the measurement of

deferred tax assets and liabilities.

(iv) Offset and classification

The Group only offsets tax assets and liabilities

if it has a legally enforceable right to offset the

recognised amounts and intends either to settle

on a net basis or to realise the assets and settle

the liabilities simultaneously.

Deferred tax assets and liabilities are recognised

in the consolidated balance sheet under non-

current assets or liabilities, irrespective of the ex-

pected date of recovery or settlement.

u) Classification of assets and liabili-ties as current and non-current

The Group classifies assets and liabilities in the

consolidated balance sheet as current and non-

current. Current assets and liabilities are deter-

mined as follows:

- Assets are classified as current when they are

expected to be realised or are intended for

sale or consumption in the Group’s normal

operating cycle, they are held primarily for the

purpose of trading, they are expected to be re-

alised within twelve months after the reporting

date or are cash or a cash equivalent, unless

the assets may not be exchanged or used to

settle a liability for at least twelve months after

the reporting date.

- Liabilities are classified as current when they are

expected to be settled in the Group’s normal

operating cycle, they are held primarily for the

purpose of trading, they are due to be settled

within twelve months after the reporting date or

the Group does not have an unconditional right

to defer settlement of the liability for at least

twelve months after the reporting date.

- Financial liabilities are classified as current when

they are due to be settled within 12 months af-

ter the reporting date, even if the original term

was for a period longer than 12 months, and an

agreement to refinance or to reschedule pay-

ments on a long-term basis is completed after

the reporting date and before the annual ac-

counts are authorised for issue.

45

2015 ANNUAL REPORT

v) EnvironmentThe Group takes measures to prevent, reduce or

repair the damage caused to the environment by

its activities.

Expenses derived from environmental activities

are recognised as other operating expenses in

the period in which they are incurred.

See note 29 for further details on these activities.

w) Transactions between non-consol-idated Group companies Transactions between non-consolidated Group

companies, except those related to mergers, spin-

offs and non-monetary contributions, are recog-

nised at the fair value of the consideration given

or received. The difference between this value and

the amount agreed is recognised in line with the

underlying economic substance of the transaction.

5. JOINT VENTURESInformation on joint ventures in the form of jointly

controlled entities is presented in Appendix IV.

Information on joint ventures in the form of tem-

porary joint ventures is presented in Appendix V.

a) Foreign currencyThe functional currency of foreign operations is

the currency of the countries in which such op-

erations are domiciled.

6. NON-CURRENT ASSETS HELD FOR SALE

a) Assets and liabilities held for saleUnder this balance sheet heading the Group has

classified advances paid to Boeing through Lluc-

major Limited for the acquisition of two aircraft

which are due to be received in 2016 and subse-

quently sold. This item also reflects three cargo

aircraft and engines of Aeronova, S.L., acquired this

year, which will not be used for the Company’s ac-

tivity in the future, as well as the premises allocated

to Globalia Business Travel, S.L.U. for the execution

of guarantees it held for advances to suppliers.

Details of assets and liabilities held for sale are

as follows:

Assets held for sale: Advances Boeing 737 800 36,769 - Buildings 1,587 - Fairchild Metro III Heavy aircraft and engines 814 - Total assets 39,170 -Liabilities directly associated withnon-current assets held for sale: BankdebttofinanceadvancesB737-800 (32,476) - Total liabilities (32,476) -

2015

Thousands of Euros

2014

46

Cost at 1 January 2015 2,899 3,272 83,400 2,925 4,143 96,639Additions - 13 10,103 5,547 5,221 20,884Disposals - (14) (87) (2,407) (2,071) (4,579)Additions to the consolidated Group - - 217 - - 217Translation differences - - 7 - - 7

Cost at 31 December 2015 2,899 3,271 93,640 6,065 7,293 113,168

Accumulated amortisation at1 January 2015 (397) (2,809) (51,739) - (1,537) (56,482)Amortisation (42) (295) (9,475) - (13) (9,825)Disposals - 4 77 - - 81Additions to the consolidated Group - - (214) - - (214)Transfers - - (1) - - (1)Translation differences - - 8 - - 8

Accumulated amortisation at31 December 2015 (439) (3,100) (61,344) - (1,550) (66,433)

Carrying amount at31 December 2015 2,460 171 32,296 6,065 5,743 46,735

2015 TotalConcessionsComputer software

Patents, licences, trademarks and similar rights

Other intangible

assetsEmission

allowances

Thousands of Euros

7. INTANGIBLE ASSETS Details of intangible assets, excluding goodwill and goodwill of consolidated companies, and movement

are as follows:

Cost at 1 November 2014 2,899 3,271 80,966 6,777 4,833 98,746Additions - 1 371 - 1,373 1,745Effect of new EEC directive - - - (3,852) - (3,852)Transfers - - 2,063 - (2,063) -

Cost at 31 December 2014 2,899 3,272 83,400 2,925 4,143 96,639

Accumulated amortisation at1 November 2014 (386) (2,758) (50,242) - (1,534) (54,920)Amortisation (11) (51) (1,497) - (3) (1,562)Accumulated amortisation at31 December 2014 (397) (2,809) (51,739) - (1,537) (56,482)

Carrying amount at31 December 2014 2,502 463 31,661 2,925 2,606 40,157

2014 TotalConcessionsComputer software

Patents, licences, trademarks and similar rights

Other intangible

assetsEmission

allowances

Thousands of Euros

The main additions for 2015 comprise:

- Emission allowances free of charge and pur-

chased (see section a)).

- Computer software: Additions in 2015 amount

to Euros 10,163 thousand and essentially reflect

IT development for online business and business

development for the various Group divisions,

mainly the air, travel agency and tour operator

divisions and the online bed bank business.

The movements for the two-month period ended

31 December 2014 reflect additions of new com-

47

2015 ANNUAL REPORT

puter software, essentially IT development for

online business and business development for the

various Group divisions, while disposals of com-

puter software reflect IT programs that have been

substituted by those developed in recent years.

b) Emission allowancesMovement in the number of allowances is as follows:

Description Purchased TotalFree of charge

Balances at 1 November 2014 1,240,164 - 1,240,16Allowances disposed of undernew EEC Directive (694,907) - (694,907)

Balance at 31 December 2014 545,257 - 545,257

Additions 252,224 536,602 788,826Disposals (487,879) - (487,879)

Balance at 31 December 2015 (235,655) 536,602 300,947

Additions in 2015 comprise the allocation of

free-of-charge allowances under the allocation

plan explained in note 4 g iv), which amounted

to 252,224 allowances equivalent to Euros 2,013

thousand, and the acquisition of 536,602 allow-

ances equivalent to Euros 3,534 thousand.

Disposals reflect consumption in the year. Con-

sumption has been estimated as Euros 4,282

thousand at 31 December 2015 (Euros 2,632 thou-

sand at 31 December 2014), the balancing entry

of which has been recognised under Provisions

- Provision for emission allowances (see note 23).

At 31 December 2014 the Group recognised the

effect of the new agreement of the Council of

Ministers dated 7 November 2014. The Company

recognised the net effect of the derecognition

of previously granted emission allowances and

the new allocation proposed, which amounted

to 694,907 emission allowances equivalent to

Euros 3,852 thousand.

c) Fully amortised assetsThe cost of fully amortised intangible assets in

use at 31 December is as follows:

Concessions, patents andtrademarks 2,289 2,314Computer software 31,542 22,998Administrative concessions 217 217Other intangible assets 1,351 1,357

35,399 26,886

2015

Thousands of Euros

2014

8. GOODWILL, GOODWILL OF CONSOLIDATED

COMPANIES AND IMPAIRMENT

Details of goodwill and movement are as follows:

Cost at start of year 14,551 14,551Cost at year end 14,551 14,551

Accumulated impairmentat start of year (3,464) (3,464)Accumulated impairmentat year end (3,464) (3,464)

Carrying amount at year end 11,087 11,087

2015

Thousands of Euros

2014

A summary of the allocation of goodwill

is as follows:

UGE Groundforce 8,410 8,410UGE Mundosocial 8,617 8,617UGE Viajes Ecuador 4,069 4,069UGE MK Tours 2,845 2,845UGE Aeronova 2,385UGE Tu Billete 833 833Other 1,493 1,840

28,652 26,614

2015 2014

UGE

Thousands of Euros

UGE

48

Details of the goodwill of consolidated compa-

nies and movement are as follows:

Cost at start of year 15,527 15,537 Additions due to businesscombination 2,385 -Disposals (347) (10)

Cost at year end 17,565 15,527 - -Carrying amount at year end 17,565 15,527

2015

Thousands of Euros

2014

The Group tests goodwill for impairment on an

annual basis. The calculation of the recoverable

amount of a division to which goodwill has been

allocated requires the use of estimates by man-

agement. The recoverable amount is the higher

of fair value less costs to sell and value in use.

The Group generally uses cash flow discounting

methods to calculate these values. Discounted

cash flow calculations are based on five-year

projections in the budgets approved by man-

agement. The cash flows take into account past

experience and represent management’s best

estimate of future market performance. The key

assumptions used to determine fair value for

2015 are as follows:

Results from operating activities 3,500 2,094 1,091 (284) 49 614Average growth rate ofsales (%) during theprojected period (1) 8 1 12 (1) 27Discount rate (%) 10 10 10 10 10 10Terminal growth rate 1 1 1 1 1 1

UGEGroundforce

UGEMundosocial

UGE Viajes Ecuador

UGE MK Tours

UGEAeronova

UGE Viajes Tu Billete

The Groundforce and Viajes Ecuador CGUs have

reported stable earnings in recent years and have

met profit forecasts for 2015. After the restruc-

turing in 2013, Viajes Ecuador, S.A.U. has turned

to profit in line with projections.

The business of the Mundosocial CGU has been

modified as it was not awarded all the Imserso

travel packages. Therefore the business structure

is being changed and revenues are forecast to

increase in the coming years.

The goodwill of the CGU, MK Tours, presents sig-

nificant impairment as it has failed to meet the

forecasts for 2014. Nevertheless as this group is

located in Miami and specialises in the Cuban

market in Florida, given the current situation with

the lifting of trade restrictions between Cuba and

the United States, it has positive forecasts for the

coming years.

After failing to meet the targets established in the

budget, Viajes Tu Billete is amending its business

structure. Its results up to the date these annual

accounts were authorised for issue are in line

with the budget for 2016.

The activity of the Aeronova CGU, acquired in

2015, is forecast to significantly grow based on

the gradual integration of the 11 Embraer aircraft

currently operated by Air Europa for the creation

of a new airline company.

49

2015 ANNUAL REPORT

9. PROPERTY, PLANT AND EQUIPMENT Details of property, plant and equipment and movement are as follows:

Cost at 1 January 2015 59,840 250,263 441,673 59,190 22,508 36,564 870,038Additions 204 9,009 21,378 3,279 41,223 13,801 88,894Disposals - (1,045) (4,155) (24) (4,417) (10,335) (19,976)Additions to theconsolidated Group - - 89 339 - 310 738Disposals due to changesin CGU % interest - - (195) (47) - (353) (595)Translation differences 1,868 (4,344) 19,097 (579) 28 703 16,773 Cost at31 December 2015 61,912 253,883 477,887 62,158 59,342 40,690 955,872 Accumulateddepreciation at 1 January 2015 - (71,052) (221,852) (47,924) - (18,938) (359,766) Depreciations - (7,702) (27,115) (4,116) - (1,264) (40,197)Disposals - 188 3,177 23 - 283 3,671Additions to theconsolidated Group - - (39) (268) - (244) (551)Disposals due to hangesin CGU % interest - - 166 38 - 144 348Translation differences - (2,096) (775) 699 - (148) (2,320) Accumulateddepreciation at31 December 2015 - (80,662) (246,438) (51,548) - (20,167) (398,815) Accumulated impairment at 1 January 2015 (4,214) (3,798) (2,604) - - - (10,616)Impairment losses - - (234) - - - (234)Reversal of impairmentlosses - - 348 - - - 348 Accumulatedimpairment at31 December 2015 (4,214) (3,798) (2,490) - - - (10,502) Carrying amount at31 December 2015 57,698 169,423 228,959 10,610 59,342 20,523 546,555

2015 TotalLand Buildings

Technical installations

and machinery

Other installations, equipment and

furniture

Under cons-truction and

advances

Other property, plant and

equipment

50

a) GeneralAdditions mainly reflect payments in advance

for six Boeing 737-800 amounting to US Dol-

lars 25,815 thousand (equivalent to Euros 23,221

thousand), due to be delivered between June

2017 and June 2018, payments for 14 Boeing

787-9 amounting to US Dollars 16,025 thousand

(equivalent to Euros 14,600 thousand), and the

initial payment for the commitment to acquire

20 Boeing 737-8 MAX amounting to US Dollars

3,200 thousand (equivalent to Euros 2,915 thou-

sand), due to be delivered from 2021 to 2024.

Installations and machinery has been acquired

totalling approximately Euros 12,000 thousand

in relation to the new airport passenger and

cargo handling services concessions awarded.

The main movements during the year ended 31

December 2014 comprise:

Additions for the period mainly reflect the initial

payment on an order for 14 Boeing 787-9 dur-

ing the period, amounting to US Dollars 16,024

thousand (equivalent to Euros 13,243 thousand),

recognised in under construction and advances.

Disposals and transfers mainly reflect the transfer

of payments in advance for two Boeing 737-800,

which the Group will receive in 2016, amount-

ing to US Dollars 16,748 thousand (equivalent to

Euros 11,969 thousand) and a transfer amounting

to US Dollars 3,372 thousand (equivalent to Euros

2,777 thousand) recognised under Current invest-

ments - loans to companies, which was collected

subsequent to the reporting date.

b) Property, plant and equipment lo-cated abroad

Details of property, plant and equipment located

abroad at 31 December are as follows:

Cost at1 November 2014 59,328 247,828 436,688 58,332 24,011 34,495 860,682Additions - 560 340 422 13,243 1,352 15,917Disposals - - (981) (23) (11,969) (297) (13,270)Transfers - - - - (2,777) - (2,777)Translation differences 512 1,875 5,626 459 - 1,014 9,486

Cost at31 December 2014 59,840 250,263 441,673 59,190 22,508 36,564 870,038

Accumulated depreciation at 1 November 2014 - (69,508) (217,758) (47,185) - (19,292) (353,743)Depreciations - (1,386) (4,428) (507) - (226) (6,547)Disposals - - 716 - - 3 719Translation differences - (158) (374) (232) - 577 (187)Other movements - - (8) - - - (8)

Accumulateddepreciationat 31 December 2014 - (71,052) (221,852) (47,924) - (18,938) (359,766)

Accumulated impairmentat 1 November 2014 - - (2,607) - - - (2,607)Impairment per losses (4,214) (3,798) (6) - - - (8,018)Transfers - - 9 - - - 9 Accumulated impairmentat 31 December 2014 (4,214) (3,798) (2,604) - - (10,616)

Carrying amount at31 December 2014 55,626 175,413 217,217 11,266 22,508 17,626 499,656

2014 TotalLand Buildings

Technical installations

and machinery

Other installations, equipment and

furniture

Under cons-truction and

advances

Other property, plant and

equipment

51

2015 ANNUAL REPORT

c) Fully depreciated assetsDetails of the cost of fully depreciated property,

plant and equipment in use at 31 December are

as follows:

d) ImpairmentThe Group has recognised Euros 8,012 thousand

of impairment on land and buildings with respect

to one of the Group’s office buildings, based on

the valuation derived from third party appraisals,

given that its cash flows supporting the value in

use are still lower than the value in use.

e) Property, plant and equipment pledged as collateralAt 31 December 2015 the Group has property,

plant and equipment with a carrying amount of

Euros 92,897 thousand (Euros 70,698 thousand

at 31 December 2014) which have been pledged

as collateral for several mortgage-backed loans

and credit facilities (see note 25 (b)).

Thousands of Euros

Hotel Be Live Punta Cana Grand 103,499 (33,154) 70,345 Aircraft and advances on aircraft 210,640 (64,591) 146,049 Hotel Canoa 83,124 (31,777) 51,347 Premises and other 7,463 (2,865) 4,598

404,726 (132,387) 272,339

Hotel Be Live Punta Cana Grand 96,449 (28,494) 67,955Aircraft and advances on aircraft 191,093 (52,258) 138,835Hotel Canoa 84,019 (24,184) 59,835Premises and other 8,001 (2,492) 5,509

379,562 (107,428) 272,134

Description Cost TotalAccumulated depreciation

2015

2014

Buildings 872 899Technical installations and machinery 76,962 70,725Other installations,equipment and furniture 26,036 28,996Other property, plant andequipment 11,420 12,061

115,290 112,681

2015

Thousands of Euros

2014

f) CommitmentsPayments made to the aircraft manufacturer for

the construction and assembly of aircraft have

been included in under construction and ad-

vances. The advances paid to date amount to US

Dollars 31,619 thousand for the fleet of 737-800

(US Dollars 5,804 thousand in the year ended 31

December 2014), US Dollars 32,049 thousand for

the fleet of 787-9 (US Dollars 16,748 thousand in

the year ended 31 December 2014) and US Dol-

lars 3,200 thousand for the fleet of 787-8 MAX,

totalling an equivalent of Euros 58,319 thousand

at 31 December 2015 (Euros 22,047 thousand

at 31 December 2014). Non-current assets held

for sale include payments made to the aircraft

manufacturer for the acquisition of two 737-800

aircraft, amounting to US Dollars 37,217 thou-

sand (equivalent to Euros 36,769 thousand) at 31

December 2015.

At 31 December 2015 there is a contract with the

aircraft manufacturer The Boeing Company for

the acquisition of eight B737-800 aircraft with

a total catalogue value of US Dollars 766 mil-

Boeing 737 800 8 8Boeing 787 9 14 14Boeing 737 8 MAX 20 3

42 25

2015

Thousands of Euros

2014

52

lion, with estimated delivery dates between June

2016 and July 2018. There is a contract for the

acquisition of 20 Boeing 737-8 MAX with a total

catalogue value of US Dollars 3,200 million (Eu-

ros 2,915 million), with estimated delivery dates

in 2021 and 2024.

On 23 December 2014 the Company signed a

contract with the aircraft manufacturer The Boe-

ing Company, for the acquisition of 14 B787-9

aircraft with a total catalogue value of US Dollars

3,599 million, with estimated delivery dates be-

tween February 2020 and October 2022.

The Company intends to finance its purchase

commitments using funds generated by the Group

and transactions that can be entered into with air-

craft lessors.

g) InsuranceThe Group has taken out insurance policies to

cover the risk of damage to its property, plant

and equipment. The coverage of these policies

is considered sufficient

10. INVESTMENT PROPERTYDetails of investment property and movement

during the year are as follows:

a) GeneralAssets mostly comprise commercial premises

and parking spaces in several locations in Spain.

b) ImpairmentAt 31 December 2015, impairment of Euros 1,070

thousand was recognised on investment proper-

Thousands of Euros

Cost at 1 January 2015 - - -Additions 798 5,417 6,215Disposals (221) (1,200) (1,421)

Cost at 31 December 2015 577 4,217 4,794

Accumulated depreciation at 1 January 2015 - (405) (405)Depreciation - (104) (104)Disposals - 104 104

Accumulated depreciation at 31 December 2015 - (405) (405)

Accumulated impairment at 1 January 2015 - (1,537) (1,537)Reversal of impairment losses - 408 408

Accumulated impairment at 31 December 2015 - (1,129) (1,129)

Carrying amount at 31 December 2015 577 2,683 3,260

Cost at 1 November 2014 - - -

Additions 798 5,418 6,216 Disposals of companies - (1) (1)

Cost at 31 December 2014 798 5,417 6,215

Accumulated depreciation at 1 November 2014 - (375) (375)Depreciation - (20) (20)Transfers - (10) (10)

Accumulated depreciation at 31 December 2014 - (405) (405)

Accumulated impairment at 1 November 2014 - (1,547) (1,547)Transfers - 10 10Accumulated impairment at 31 December 2014 - (1,537) (1,537)

Carrying amount at 31 December 2014 798 3,475 4,273

2015Description Land TotalBuildings

2014

53

2015 ANNUAL REPORT

ty, specifically commercial premises and parking

spaces in several locations in Spain (Euros 1,537

thousand at 31 December 2014).

c) InsuranceThe Group has taken out insurance policies to

cover the risk of damage to its investment pro-

perty. The coverage of these policies is conside-

red sufficient.

11. FINANCE LEASES - LESSEEThe Group has leased the following types of as-

sets under finance leases:

Initially recognised at:Fair value 223,453 223,453Accumulated depreciationand impairment losses (66,246) (66,246)Carrying amount at31 December 2015 157,207 157,207

Initially recognised at:Fair value 197,138 197,138Accumulated depreciationand impairment losses (54,879) (54,879)

Carrying amount at 31 December 2014 142,259 142,259

Other property, plant and equipment

Thousands of Euros

Total

The Group has leased assets under finance leas-

es, basically aircraft, maintenance equipment

and handling equipment. The assets acquired

under finance leases are included under prop-

erty, plant and equipment on the consolidated

balance sheet.

Future minimum lease payments are reconciled

with their present value as follows:

Details of minimum payments and the present

value of finance lease liabilities, by maturity date,

are as follows:

Future minimum payments 136,302 122,958Unaccruedfinancecosts (12,545) (12,972)

Present value 123,757 109,986

2015

Thousands of Euros

2014

Finance lease liabilities are effectively secured as

the rights to the leased assets revert to the lessor

in the event of default.

Less than one year 20,374 17,063 17,419 14,897Onetofiveyears 79,211 70,999 76,949 67,451Overfiveyears 36,717 35,574 28,590 27,638 136,302 123,636 122,958 109,986

Less current portion (20,374) (17,063) (17,419) (14,897)

Total non-current 115,928 106,573 105,539 95,089

Minimum payments

Minimum payments

Thousands of EurosPresent

valuePresent

value

54

These payments basically relate to lease com-

mitments for aircraft, hotels and travel agency

offices and other items, for Euros 607,492 thou-

sand, Euros 45,307 thousand and Euros 36,970

thousand, respectively (Euros 724,277 thousand,

Euros 100,203 thousand and Euros 43,291 thou-

sand, respectively, at 31 December 2014).

On 25 November 2015 Globalia Mantenimiento

Aeronáutico, S.L.U. signed a 35 year leasehold

right on land at Madrid Barajas airport for the

construction of an aircraft maintenance hangar.

This leasehold right stipulates the payment of an

annual levy of Euros 678 thousand for the dura-

tion of the right, which will be accrued from the

date the land certificate of delivery is issued.

13. RISK MANAGEMENT POLICY

a) Financial risk factorsThe Group’s activities are exposed to various fi-

nancial risks: market risk (including currency risk,

interest rate risk and jet fuel price risk), credit risk

and liquidity risk. The Group’s global risk man-

agement programme focuses on uncertainty in

the financial markets and aims to minimise po-

tential adverse effects on the Group’s profits. The

Group uses derivatives to mitigate certain risks.

Risks are managed by the Group’s Finance De-

partment in accordance with policies approved

by the board of directors. This department iden-

tifies, evaluates and mitigates financial risks in

close collaboration with the Group’s operational

units. The board of directors issues global risk

management policies, as well as policies for spe-

cific issues such as currency risk, interest rate

risk, liquidity risk, the use of derivatives and non-

derivative instruments, and investments of cash

surpluses.

(i) Market risk

Market risk is mainly derived from trends in the

Spanish tourist market, although to minimise this

risk the Group’s area of influence is also diversi-

fied into Europe and the USA/Canada.

(ii) Currency risk

The Group operates internationally and is there-

fore exposed to currency risk, especially with re-

gard to the US Dollar. Currency risk is associated

with future commercial transactions, recognised

assets and liabilities, and net investments in for-

eign operations.

In order to control currency risk associated

with future commercial transactions, the Group

uses forward currency contracts. Currency risk

arises when future commercial transactions are

presented in a foreign currency other than the

Group’s functional currency. The Group’s finan-

cial management is responsible for controlling

the net position of each foreign currency by en-

tering into external forward currency contracts.

Details of the amounts of transactions in foreign

currency are provided in note 31.

(iii) Credit risk

The Group is not significantly exposed to cred-

it risk. The Group has policies to ensure that

wholesale sales are only made to customers with

adequate credit records. Retail customers pay in

cash or by credit card. Derivative and cash trans-

actions are only performed with financial institu-

tions that have high credit ratings. The Group has

Future minimum payments under operating lea-

ses are as follows:

Minimum lease payments 196,418 31,311

2015

Thousands of Euros

2014

Less than one year 189,261 187,331Onetofiveyears 391,850 552,733Overfiveyears 108,658 127,708

689,769 867,772

2015

Thousands of Euros

2014

12. OPERATING LEASES - LESSEE

The Group has leased aircraft, hotels and travel

agency sales offices from third parties under

operating leases.

Operating lease payments have been recognised

as an expense for the year as follows:

55

2015 ANNUAL REPORT

policies to limit the amount of risk with any one

financial institution.

Valuation allowances for bad debts, and the re-

view of individual balances based on customers’

credit ratings, market trends and historical analy-

sis of bad debts at an aggregated level entail a

significant use of estimates. The credit rating of

the country, based on information provided by

external agencies, is used to calculate the indi-

vidual country-specific valuation allowance for

bad debts. Any decrease in the volume of out-

standing balances entails a reduction in impair-

ment resulting from an aggregate analysis of

historical bad debts, and vice versa.

Trade and other receivables from third parties

mainly comprise balances receivable from travel

agents and private clients for passenger trans-

port in the Air division, receivables from private

clients in the Travel Agency division, receivables

from airlines in the Handling division, receiva-

bles from travel agencies in the Tour Operator

division and receivables from tour operators and

travel agencies in the Hotel division. Transactions

with travel agencies in the Air division are car-

ried out using a settlement system managed by

the International Air Transportation Association

(lATA), which in each country also imposes credit

conditions involving risk hedging on travel agen-

cies using the scheme. The Group has a policy of

arranging credit insurance for most other trade

and credit transactions in each division, which

partially covers these balances.

(iv) Liquidity risk

The Group applies a prudent policy to cover its

liquidity risks, based on having sufficient cash

and marketable securities as well as sufficient fi-

nancing through credit facilities to settle market

positions. The excess of current liabilities com-

pared to current assets common among groups

operating in the travel sector reflects the differ-

ence in average collection days from custom-

ers and average payment days to suppliers. The

Finance department manages this situation by

controlling these average periods and by obtain-

ing and drawing funds from credit facilities with

financial institutions (see note 25).

One-off cash requirements of the Group compa-

nies are covered by Globalia Corporación Empre-

sarial, S.A., as the entity that manages the Group’s

cash, receives the cash surpluses and allocates

them to offset the various seasonal requirements

of the Group’s businesses.

(v) Cash flow and fair value interest rate risks

Interest rate risk arises from non-current bor-

rowings. Borrowings at variable interest rates ex-

pose the Group to cash flow interest rate risks.

The Group has taken out interest rate swaps to

partially hedge the interest rate risk derived from

bank debt (see note 17).

The Group is sensitive to fluctuations in the price

of jet fuel for the aircraft it operates. To minimise

this risk, the Group contracted short-term jet

fuel futures during the reporting period to hedge

between 60% and 70% of forecast consumption.

14. EQUITY-ACCOUNTED INVESTEES

Details of equity-accounted investees and move-

ment during the year are shown in Appendix VI.

15. FINANCIAL ASSETS BY CATEGORY

a) Classification of financial assets by category

The classification of financial assets by catego-

ry and class, as well as a comparison of the fair

value and the carrying amount, are provided in

Appendix VII.

56

16. INVESTMENTS AND TRADE RECEIVABLES

a) InvestmentsDetails of investments are as follows:

At 31 December 2015 deposits and guarantees

mainly reflect the Group’s deposits on aircraft

under operating leases for an equivalent value of


at 31 December 2014) for the non-current por-

tion, and Euros 1,771 thousand for the current

portion (Euros 0 thousand at 31 December 2014).

This heading also includes the deposits paid to

the lessors of the aircraft to secure the periodic

fleet inspections. The Group settles the cost of

these periodic inspections through the lessor’s

repayment of amounts previously paid in ad-

vance by the Group. At 31 December 2015 the

Euro values of these non-current and current

deposits are Euros 45,457 thousand and Eu-

ros 35,656 thousand, respectively (Euros 37,148

thousand and Euros 35,973 thousand at 31 De-

cember 2014).

The Group also recognises deposits amounting

to Euros 8,266 thousand for the future lease of

aircraft to be received at the end of 2016 and

start of 2017.

The Group’s fixed-term bank deposits with

short-term maturities amount to Euros 10,000

thousand at 31 December 2015.

Current loans include a loan extended by the

Group to the Venezuelan subsidiary of a mul-

tinational Spanish company amounting to Eu-

ros 72,899 thousand. The Parent has extended

a loan to a related party of the majority share-

holder amounting to Euros 7,174 thousand at the

reporting date, which matures in the short term.

During 2014 the Group acquired an 8.40% in-

terest in Ramsés Producciones, A.I.E. which has

been recognised under non-current equity in-

struments in unrelated parties.

b) Trade and other receivablesDetails of trade and other receivables are as follows:

Thousands of Euros

Unrelated partiesEquity instruments 3,135 194 3,141 204Loans 1,571 80,200 1,156 37,802Debt securities - 55 - 55Hedging derivatives (note 17) - 2,999 - 7,042Deposits and guarantees 87,476 52,435 79,670 51,539

Total 92,182 135,883 83,967 96,642

Description Non-current Non-currentCurrent Current

2015 2014

Trade receivables 270,819 290,945Other receivables 22,794 20,052Personnel 961 895Taxation authorities, income tax 5,307 6,440Public entities, other 49,810 36,172Impairment (50,489) (61,506)

Total 299,203 292,998

2015

Thousands of EurosCurrent

2014Unrelated parties

Other receivables from unrelated parties include

advances paid to suppliers by companies from the

travel agency and tour operator divisions to gua-

rantee operational capability to render services in

the coming season, as is common practice in the

sector. These advances are subsequently cancelled.

c) ImpairmentAn analysis of the changes in allowance accounts

related to impairment of financial assets measured

at amortised cost due to credit risk is as follows:

57

2015 ANNUAL REPORT

CurrentBalance at 1 January 2015 (61,506) (61,506)

Charges (1,514) (1,514)Eliminations against theaccounting balance 12,531 12,531

Balance at31 December 2015 (50,489) (50,489)

Trade receivables

Thousands of Euros

Total2015

d) Classification by maturityThe classification of financial assets by maturity

is shown in Appendix VIII.

e) Amounts denominated in foreign currenciesDetails of monetary financial assets denomina-

ted in foreign currencies are as follows:

Current Balance at1 November 2014 (60,445) (60,445)

Charges (1,062) (1,062)

Balance at31 December 2014 (61,506) (61,506)

Trade receivables

Thousands of Euros

Total2014

Non-current investmentsOtherfinancialassets 88,937 8 36 - 25 89,006

Total non-current financial assets 161,836 8 36 - 25 161,905

Trade and other receivables Trade receivables – current 27,965 138 1,288 804 2,368 32,563Trade receivables from Groupcompanies and associates – current - 2,582 - - - 2,582Other receivables 224 - 1 - 96 321

Current investmentsDebt securities 72,899 72,899

Otherfinancialassets 92 1 2 - - 95

Cash and cash equivalents Cash 8,053 118 146 1,456 - 9,773

Total current financial assets 109,233 2,839 1,437 2,260 2,464 118,233

Total financial assets 198,170 2,847 1,473 2,260 2,489 207,239

2015 TotalOther

currenciesUS DollarDominican

PesoVenezuelan

BolivarMexican

Peso

Non-current investments Otherfinancialassets 71,445 10 27 - 115 71,597

Total non-current financial assets 71,445 10 27 - 115 71,597

Trade and other receivables Trade receivables – current 21,103 221 897 875 7,694 30,790Other receivables 17 2,871 1 - 50 2,939

Current investments Otherfinancialassets 68,599 - 13 68 748 69,428

Cash and cash equivalents Cash 15,473 100 1,822 - 5,832 23,227

Total current financial assets 105,192 3,192 2,733 943 14,324 126,384

Total financial assets 176,637 3,202 2,760 943 14,439 197,981

2014 TotalOther

currenciesUS DollarDominican

PesoVenezuelan

BolivarMexican

Peso

58

Part of the withheld funds in Venezuela, derived

mainly from ticket sales in prior years, is recog-

nised as financial instruments (cash and cash

equivalents and current investments).

The Company has a loan in Venezuelan Bolivar

extended to a multinational company applying

an exchange rate to which loans were converted

and repaid in the prior year, and which is trans-

lated to Dollars at the exchange rate set con-

tractually by the Venezuelan government. This

loan is recognised in the accompanying balance

sheet for an amount of Euros 72,899 thousand.

The directors consider this loan to be recovera-

ble based on the experience of capitalising loans

in years prior to 2014.

The Company has measured the rest of liquid

cash balances in this country, using the prevail-

ing exchange rate (SIMADI), at a net amount of

Euros 1,456 thousand reflected under cash and

cash equivalents.

The directors consider that the amount outstand-

ing at 31 December 2015 will be recoverable as a

result of negotiations with the Venezuelan Gov-

ernment and other measures.

17. DERIVATIVE FINANCIAL INSTRUMENTS

Details of derivative financial instruments are as

follows:

Cash flow hedgesForeign currency swaps 259,606 2,999 - (96)Interest rate swaps 18,442 - (95) (98)Fuel futures (in Tm) 330,352 - - (44,812)Total derivatives at fair value through changes in equity 608,400 2,999 (95) (45,006)

Total hedging derivatives 608,400 2,999 (95) (45,006)

Current

Assets

Fair values

Liabilities

CurrentNon-currentNotional amount

Thousands of Euros

2015

Cash flow hedgesForeign currency swaps 257,738 7,041 - -Interest rate swaps 7,500 - (281) -Fuel futures (in Tm) 92,309 - - (96,238)Total derivatives at fair valuethrough changes in equity 357,547 7,041 (281) (96,238)

Total hedging derivatives 357,547 7,041 (281) (96,238)

Current

Assets

Fair values

Liabilities

CurrentNon-currentNotional amount

Thousands of Euros

2014

a) Interest rate swapsTo manage its interest rate risks, Globalia Activos

Inmobiliarios, S.A.U. has signed a variable-to-fixed

interest rate swap for a notional amount of Eu-

ros 7,500 thousand. The contract expires in 2016.

During the year the Globalia Group company

Hotel La Niña, S.A.U. has contracted two variable-

to-fixed interest rate swaps with two financial in-

stitutions in relation to a new syndicated loan with

a total notional amount of Euros 21,883 thousand,

which expire on 25 September 2023.

59

2015 ANNUAL REPORT

The fair value of the financial swaps is based on

the market values of equivalent derivative finan-

cial instruments at the consolidated reporting

date. All interest rate swaps are effective as cash

flow hedges.

b) Forward exchange contractsIn order to manage its currency risks, Globalia

Corporación Empresarial, S.A. and Air Europa

Líneas Aéreas, S.A.U. have mainly entered into US

Dollar forward exchange contracts.

The fair values of these forward contracts are

based on the market values of equivalent instru-

ments. All forward exchange contracts are effec-

tive as cash flow hedges.

c) Jet fuel hedgesTo hedge the risk of fuel price fluctuations Air

Europa Líneas Aéreas, S.A.U. and Globalia Cor-

poración Empresarial, S.A. have entered into a

number of jet fuel futures contracts. These con-

tracts expire in the short term. The fair values of

these forward contracts are based on the market

values of equivalent instruments. On 1 December

2015 Air Europa Líneas Aéreas, S.A.U. transferred

its contractual position to the holding company,

which recognised these contracts using hedge

accounting and recorded their assigned value of


at 31 December 2014) in consolidated equity.

The total amount of cash flow hedges recog-

nised in equity is as follows:

The total amount of cash flow hedges which has

been transferred from recognised income and ex-

pense to consolidated profit or loss is as follows:

The foreign currency futures and the interest rate

swap are transferred to the income statement

under exchange differences and finance costs,

respectively. Fuel price hedges are transferred to

supplies.

18. INVENTORIESDetails of inventories are as follows:

Exchange rate hedge (2,177) (570)Interest rate swaps 145 196Fuel price hedge 33,609 46,821Other 283 242

31,860 46,689

2015 2014

Thousands of EurosProfit/(Loss)

Exchange rate hedge 7,042 322Interest rate swaps (281) -Fuel price hedge (96,239) -

(89,478) 322

2015 2014

Thousands of EurosProfit/(Loss)

The Group’s inventories mainly comprise main-

tenance consumables, aircraft catering materials

and hotel consumables.

The Group has taken out insurance policies to co-

ver the risk of damage to its inventories. The co-

verage of these policies is considered sufficient.

19. PREPAYMENTSDetails of prepayments are as follows:

Production and distribution business Raw materials and other supplies 19,749 16,480 Advances 2,376 6,722

22,125 23,202

2015

Thousands of Euros

2014

Prepayments for operatingleases and other 7,477 7,157Prepayments for unused flighttickets 2,287 2,287Aircraft maintenance 5,763 5,763

Total 15,527 15,207

Current2015

Current2014

Thousands of Euros

60

At 31 December 2015 and 2014, the Company

has appropriated to this reserve the minimum

amount required by law.

(ii) Voluntary reserves

These reserves are freely distributable.

c) Translation differencesDetails of translation differences, by source, are as

follows:

Bajuba de MéxicoConsultores S de RL de CV 199 (66)Be Live Trading, Inc 11 8CH Marketing, Corp. (338) (339)Globalia Incoming ServicesMéxico, S. de R.L. de C.V. (311) (113)Globalia Incoming ServicesDominicana, S.A. 25 10Globalia Hotels & ResortsDominicana, S.A. (848) (415)Globalia Lease Finance, Limited 2,780 1,164Globalia Lease Finance Two, Limited 185 44Globalia Lease Finance Three, Limited 547 310Globalia Lease Finance Four, Limited 1,459 724Globalia Lease Finance Five, Limited 1,456 731Globalia Lease Finance Six, Limited 1,261 434Globalia Servicios CorporativosDominicana, S.A. (18) (18)Hotel Canoa, S.A. (2,127) 1,286Intertravel, S.R.L. (963) 437Inversiones Bávaro, S.A. 3,763 3,887Inversiones Inmobiliarias,RCJ, S.A. 106 442Inversiones La Albufera, S.A.S. 126 (400)MK Dominicana USA, INC (792) (361)MK Media Corp. (91) (115)MK Puerto Rico,S.A. (264) 6MK Tours, INC (359) (270)MK Travel & Tours, INC 309 (22)Morocco, G.H.S. 1,156 (241)Operadora Globalia de México,S.A. de C.V. 854 (837)Panamericana de ServiciosEnergéticos 13 See Europe Tours, LTD (9) Servicios D&A de R.L. de C.V. 302 (77)Smart Inversiones, S.A.S. 429 325

Total 8,859 6,534

2015

Thousands of Euros

201421. EQUITY Details of consolidated equity and movement

during the year are shown in the consolidated

statement of changes in equity.

a) CapitalAt 31 December 2015 and 2014 the share capi-

tal of Globalia Corporación Empresarial, S.A., the

Parent, is represented by 168,944,700 registered

shares of Euros 0.1 par value each, fully subscri-

bed and paid.

Mr. Juan José Hidalgo Acera owns 51.58% of the

Parent’s share capital. No legal person holds 10%

or more of the Parent’s share capital.

b) ReservesDetails of reserves and profit for the year and

movement are shown in Appendix IX.

(i) Legal reserve

The legal reserve has been appropriated in com-

pliance with article 274 of the Spanish Compa-

nies Act, which requires that companies transfer

10% of profits for the year to a legal reserve until

this reserve reaches an amount equal to 20% of

share capital.

The legal reserve is not distributable to sharehol-

ders and if it is used to offset losses, in the event

that no other reserves are available, the reserve

must be replenished with future profits.

This reserve is not distributable to shareholders

and may only be used to offset losses if no other

reserves are available. This reserve may be used

to increase share capital.

20. CASH AND CASH EQUIVALENTS

Details of cash and cash equivalents are as follows:

Cash in hand and at banks 49,928 58,611Current bank deposits 5 4,929

49,933 63,540

2015

Thousands of Euros

2014

61

2015 ANNUAL REPORT

The companies or natural persons, both related

to the Group and unrelated parties, with a direct

or indirect interest of at least 10% in the share

capital of a Group company are as follows:

Transportes Chapín, S.L. (10% interest in Globalia

Autocares, S.A.).

Mr. Francisco Manuel Rodríguez García (25% in-

terest in Viajes Tu Billete, S.L.).

Saraitsa Comercializadora, S.A. (33.33% interest

in Panamericana de Servicios Energéticos, S.A.S.)

23. PROVISIONSDetails of provisions are as follows:

The provision for major repairs includes the pro-

vision for inspections to be made in the coming

years considering the regulatory maintenance

commitments for aircraft under operating leases.

22. NON-CONTROLLING INTERESTSDetails of non-controlling interests by company and movement for the year are as follows:

Viajes Tu Billete, S.L. 671 - (25) 646Globalia Autocares, S.A. 1,141 - 58 1,199Geomoon, S.L. 29 - - 29City Transfers, S.A.S (2) - - (2)

1,839 - 33 1,872

2014

Balance at 1 January

Thousands of Euros

CompanyChanges in the

consolidated groupShare in profits/

(losses)Balance at 31

December

Viajes Tu Billete, S.L. 646 - (646) -Globalia Autocares, S.A. 1,199 - 242 1,441Geomoon, S.L. 29 (29) - -City Transfers, S.A.S (2) 2 - -Panamericana de ServiciosEnergéticos, S.A.S. - (16) (9) (25)

1,872 (43) (413) 1,416

2015Thousands of Euros

Balance at 1 JanuaryCompany

Changes in the consolidated group

Share in profits/ (losses)

Balance at 31 December

Provisionsforotheremployeebenefits 180 - 180 -Provisions for liabilities - 19,221 - -Provisions for major repairs 92,092 59,226 80,776 68,356Provisions for customer loyalty programmes - 1,065 - 892Provisions for emission allowances 6,798 - 4,922 -

Total 99,070 79,512 85,879 69,248

Current

2015 2014

CurrentNon-currentNon-current

Thousands of Euros

62

An amount of Euros 6,798 thousand (Euros 4,993

thousand at 31 December 2014) is also recog-

nised under provisions for emission allowances

in relation to the provision for greenhouse gas

emissions (see note 7).

In 2015 legal proceedings have commenced in-

volving various Group companies in respect of

the incorrect application of the tariff deductions

for scheduled air transport services for residents

in the autonomous regions of the Canary Islands,

Balearic Islands, Ceuta and Melilla. The directors

of the Parent estimate that these proceedings

will not give rise to any liability in addition to that

recognised under provisions for liabilities (see

note 31).

b) Other information on payables(i) Main characteristics of payables

The terms and conditions of loans and payables

are provided in Appendix XII.

In 2015 the Parent arranged a new loan with a

total nominal amount of Euros 5,146 thousand,

which falls due in 2023. This loan bears interest

at market rates.

Property-holding companies have arranged new

mortgage-backed loans with a total nominal

amount of Euros 44,883 thousand, which fall

due between 2023 and 2025.

In 2015 Air Europa Líneas Aéreas, S.A.U. arranged

two loans with a total nominal amount of Euros

29,714 thousand, which fall due in 2017.

The Parent has extended guarantees to third par-

ties on behalf of Group companies amounting to


at 31 December 2014). As these are operating

guarantees, the Parent’s directors do not expect

them to generate any liabilities for the Parent.The

Group has the following credit and discount fa-

cilities at the reporting dates:

24. FINANCIAL LIABILITIES BY CATEGORY

a) Classification of financial liabilities by category

The classification of financial liabilities by category

and class and a comparison of the fair value with

the carrying amount are shown in Appendix X.

25. PAYABLES AND TRADE PAYABLES

a) PayablesDetails of payables are as follows:

Unrelated partiesLoans and borrowings 94,998 81,362 30,059 78,037Finance lease payables 99,232 17,693 95,089 14,897Hedging derivatives 95 45,006 281 96,239Otherfinancialliabilities 7,444 - 4,021 -Guarantees and deposits received - 14,612 - 23,448

Total 201,769 158,673 129,450 212,621

Current

2015 2014


Thousands of Euros

63

2015 ANNUAL REPORT

The following payables are secured as shown

below (see note 9):

c) Trade and other payablesDetails of trade and other payables are as follows:

Unrelated parties Suppliers 272,643 238,255Payables 14881 17,763Personnel 16,189 20,289Taxation authorities, income tax 1,567 9,916Public entities, other 36,777 28,251Advances from customers 56,777 43,506

Total 398,833 357,980

2015 2014

CurrentCurrent

Thousands of Euros

Credit facilities: Globalia Corporación Empresarial, S.A. 67,672 93,000 62,476 83,500Globalia Mantenimiento Aeronáutico, S.L.U. 6,353 6,545 1,065 7,610Air Europa Líneas Aéreas, S.L.U. 3,676 11,022 - -Halcón Monfobús Fisterra, UTE - 300 - 150Globalia Activos Inmobiliarios, S.A.U. - - 1,187 1,200Groundforce Barcelona UTE - - 550 2,000Monforte, Castromil, Globalia UTE - 150 - 150Globalia Handling, S.A.U. - 2,500 - 2,500Globalia Hotel Palace de Muro, S.L. - - 1,899 2,500Aeronova, S.L.U. 300 341 - -

Collection management facilitiesGlobalia Travel Club Spain, S.L.U. 12 - - 3,000

78,013 113,858 67,177 103,760

Limit

2015 2014

LimitDrawn downDrawn down

Thousands of Euros

Spanish bank Hotel Be Live La Niña 21,894 2,457Spanish bank Maintenance hangar 5,287 6,390Spanish bank Pozuelo business centre and central offices in Llucmajor 10,863 11,879Spanish bank Hotel Be Live Orotava 10,125 11,645Spanish bank Hotel Be Live Palace de Muro 23,127 -

71,296 32,371

Guarantee 2015 2014Creditor

Thousands of Euros

d) Classification by maturityThe classification of financial liabilities by matu-

rity is shown in Appendix XI.

64

e) Amounts denominated in foreign currenciesDetails of financial liabilities denominated in foreign currencies are as follows:

Non-current payables Loans and borrowings 7,887 - - - 7,887Finance lease payables 90,978 - - - 90,978Otherfinancialliabilities 2,596 - 95 - 2,691Total non-current liabilities 101,461 - 95 - 101,556

Current payables Loans and borrowings 34 - - - 34Finance lease payables 15,292 - - - 15,292Otherfinancialliabilities 510 - 95 - 605Trade and other payables Suppliers 68,382 (62) 6,155 6,131 80,606Other payables (248) 1,721 1,131 (194) 2,410

Total current liabilities 83,970 1,659 7,381 5,937 98,947

Total financial liabilities 185,431 1,659 7,476 5,937 200,503

2015 TotalUS DollarDominican

PesoMexican

Peso

Thousands of Euros

Other

Non-current payables Finance lease payables 94,405 - - - 94,405Otherfinancialliabilities 2,318 - - - 2,318Total non-current liabilities 96,723 - - - 96,723

Current payables Finance lease payables 13,352 - - - 13,352Otherfinancialliabilities 4,936 - - - 4,936Trade and other payables Suppliers 114 - - - 114Other payables 2,839 - - - 2,839

Total current liabilities 21,241 - - - 21,241

Total financial liabilities 117,964 - - - 117,964

2014 TotalUS Dollar

Thousands of Euros

65

2015 ANNUAL REPORT

26. LATE PAYMENTS TO SUPPLIERS. “REPORTING REQUIREMENT”. THIRD ADDITIONAL PROVISION OF LAW 15/2010 OF 5 JULY 2010 Details of late payments to suppliers by Span-

ish consolidated companies are as follows:

Royal Decree-Law 4/2013, of 22 February 2013,

states that if no payment date or period has been

established in the contract, payment should be

made within 30 calendar days from the date the

goods or services are received. The parties may

27. ACCRUALSDetails of accruals are as follows:

agree to extend this period but under no circum-

stances may the agreed payment period exceed 60

calendar days (according to the agreement with the

suppliers). The Group has agreements with its sup-

pliers for deferral of payment by more than 30 days.

Current accruals in the consolidated balance

sheet at 31 December 2015 primarily include pay-

ments received in advance totalling Euros 178,592

thousand (Euros 174,233 thousand at 31 Decem-

ber 2014) derived from how Air Europa Líneas Aé-

reas, S.A.U. handles scheduled flight tickets sold

and not used at that date.

28. TAXATIONDetails of balances with public entities

are as follows:

Within maximum legal period 2,242,129 90% 239,734 96%Other 253,084 10% 10,224 4%

Total payments for the year 2,495,213 100% 249,958 100%

Weighted average late payment days 35 - % 86 - %Late payments exceeding the maximumlegal period at the reporting date 32,230 - % 10,394 - %

%

2015 2014

%AmountAmount

Payments made and outstanding at the reporting date

Income received in advance (188,136) (181,971)

22,125 23,202

2015Current

Thousands of Euros

2014Current

Assets Deferred tax assets 44,870 - 47,768 -Current tax assets - 5,307 - 6,440Other - 49,810 - 36,172

44,870 55,117 47,768 42,612

Liabilities Deferred tax liabilities 16,815 - 18,241 -Current tax liabilities - 1,567 - 9,916Value added tax and similar taxes - 36,777 - 28,251

16,815 38,344 18,241 38,167

Current

2015 2014


Thousands of Euros

66

The Group has the following main applicable ta-

xes open to inspection by the Spanish taxation

authorities:

In 2011 the tax inspection of León Activos Aer-

onáuticos, S.L.U. in connection with transport

registration tax (Impuesto Especial sobre Deter-

minados Medios de Transporte) was completed.

The result was a disputed tax assessment which

proposed a settlement of Euros 893 thousand

and a penalty of Euros 592 thousand. Follow-

ing the decision handed down by the Adminis-

trative and Economic Court, this company filed

a contentious administrative claim. The Span-

ish National High Court’s ruling received on 28

January 2016 partially upheld the company’s

claim. The ruling eliminated the penalty imposed

and required the taxation authorities to modify

the settlement on the understanding that the tax

base was calculated incorrectly. As the company

disagreed with the taxation authorities’ interpre-

tation, it lodged an appeal on 11 February. These

consolidated annual accounts do not include an

accounting provision for this contingency as it is

considered probable that the Court will rule in

favour of the company. Moreover, the tax pre-

scription period for the Spanish companies that

file consolidated tax returns (which are detailed

below) has been interrupted due to the tax au-

thorities opening inspections in 2012 in con-

nection with corporate income tax for the years

2008, 2009, 2010 and 2011. They also initiated

inspections on VAT, withholdings and payments

on account for personal income tax and with-

holdings and payments on account for capital

gains tax from July 2008 until December 2011.

In the year ended 31 October 2014 the Company

signed assessments amounting to Euros 8,440

thousand plus 1,943 thousand of late-payment

interest on an uncontested basis, while it signed

assessments amounting to Euros 39,985 thou-

sand plus Euros 6,836 thousand of late-payment

interest on a contested basis. As a result of the

assessment signed on a contested basis, the

Group companies filed an economic and admin-

istrative claim. The ruling is still pending on this

claim. During the year ended 31 December 2014

a VAT assessment was contested in an amount

of Euros 1,224 thousand with regard to tax and

Euros 208 thousand with regard to late payment

interest. The only settlement agreement that has

been received is for the 2010-2011 corporate

income tax of Ibertours, S.A.U., on 10 February

2015. Like the other companies, an economic

and administrative claim has been filed.

On 11 February 2016 Globalia Corporación Em-

presarial, S.A., as head of the tax group, was

notified of the start of partial inspection and veri-

fication procedures for VAT from 2012 to 2015.

The verification is partial as it will focus on trans-

actions declared as exempt by Air Europa Líneas

Aéreas, S.A.U. On the same date Globalia Travel

Club Spain, S.L.U. and Iberotours, S.A.U. were in-

formed of the start of general inspection and ver-

ification procedures for VAT from 2012 to 2015.

The Company’s directors and tax advisers consid-

er that it is not likely that any significant liabilities

would arise as a result of the above and therefore

no provision has been recognised in this regard.

In 2011, a tax inspection began on the hotel

company located in the Dominican Republic.

The inspection relates to income tax and the in-

dustrialised goods and services tax for the years

2008 and 2009 and a tax assessment has been

issued for US Dollars 14.6 million plus charges

and late payment interest. On 15 January 2014

an agreement was reached with the Dominican

Directorate-General for Taxation (DGII) regard-

ing the 2008 and 2009 tax years as part of the

agreement on the 2010 and 2011 tax years. The

agreed amount was Dominican Republic Dollars

147,565,498, equivalent to Euros 2,674 thou-

sand, recognised in the consolidated income

statement for the year ended 31 October 2014.

In 2015 an additional amount of Dominican Re-

public Dollars 84,997,506 was paid, equivalent to

Euros 1.691 thousand, for 2013, 2014 and 2015.

Due to the treatment permitted by fiscal legisla-

tion of certain transactions, additional tax con-

tingencies could arise in the event of inspection.

Income tax 2011 - 2014Value added tax 2012 - 2015Personal income tax 2012 - 2015Capital gains tax 2012 - 2015Business activities tax 2012 - 2015Social Security 2012 - 2015Non-residents 2012 - 2015

Years open to inspectionTax

67

2015 ANNUAL REPORT

In any event, the directors of the Parent consider

that any such contingencies that could arise

would not have a significant effect on the con-

solidated annual accounts.

a) Income taxThe Group files consolidated tax returns with

the companies belonging to the Globalia busi-

ness group. This tax group is headed by Globalia

Corporación Empresarial, S.A., as Parent, and

includes the following subsidiaries: Air Europa

Líneas Aéreas, S.A.U.; Viajes Halcón, S.A.U.; Glo-

balia Business Travel, S.A.U.; Globalia Formación,

S.L.U.; Globalia Mantenimiento Aeronáutico,

S.L.U.; Globalia Autocares, S.A.; Globalia Broker

Services, S.A.U.; Globalia Activos Inmobiliarios,

S.A.U.; Globalia Sistemas y Comunicaciones,

S.L.U.; Globalia Hotel Orotava, S.L.U.; Iberhan-

dling, S.A.; Globalia Call Center, S.A.U.; Be Live

Hotels, S.L.U.; Globalia Handling, S.A.U.; Globalia

Hotel Talavera, S.A.U.; Globalia Hotel Palace de

Muro, S.L.U.; Media & Design, S.A.U.; Groundforce

Cargo, S.L.U.; Globalia Servicios Corporativos,

S.L.U.; Viajes Ecuador, S.A.U.; Globalia Gestión

Seguros, S.L.U.; Welcome Incoming Services,

S.L.U.; Globalia Travel Club Spain, S.L.U.; Globalia

Hotel La Niña, S.L.; Viajes Tu Billete, S.L.; Globalia

Trading Services, S.L.U.; Iberotours, S.A.U.; León

Activos Aeronáuticos, S.L.U.; Canoa Spain, S.L.U.;

Explotadora Hotelera Luabay, S.L.U.; Globalia Ar-

tes Gráficas, S.L.; Iberrail Spanish Railroad, S.L.;

Inversiones Costa Adeje, S.A.U.; Luabay Hoteles

y Apartamentos, S.L.U.; Pepeticket, S.A.; Techite

Inversiones 2012, S.L.U.; and Sunion Proyecto y

Construcción, S.L.U.

A reconciliation of net income and expenses for

the year and taxable income is provided in Ap-

pendix XIII.

The relationship between the tax expense and

accounting profit for the year is as follows:

Details of the tax expense/(tax income) in the

consolidated income statement are as follows:

Current tax Present year 3,936 (1,822) Foreign tax 1,858 231 Taxes derived from tax inspection 7,955 -

13,749 (1,591)

Deferred tax Source and reversal of temporary differences (9,764) (1,765)

3,985 (3,356)

2015

Thousands of Euros

2014

Accelerated depreciation and amortisation and leasing 525 626 (10,887) (11,609)Limit to deductibility of amortisation/depreciation 2,033 2,427 - -Financial hedging instruments 11,275 19,985 (750) (2,441)Tax loss carryforwards 10,939 10,954 - -Unused deductions 2,423 1,488 - -Allocation of results of temporary joint ventures 533 - - (2,687)Deferral of reinvestment - - 9 (82)Grants - - (9) (61)Provisions and other 17,142 12,288 (5,178) (1,361)

Net assets and liabilities 44,870 47,768 (16,815) (18,241)

2014

Assets Liabilities

201420152015

Thousands of Euros

68

The Group has unused tax loss carryforwards

from individual companies before they joined

the consolidated tax group, the amounts of

which are as follows:

Air Europa Líneas Aéreas, S.A.U.

Euros 111 thousand

Viajes Halcón, S.A.U.

Euros 1,522 thousand

Travelplán, S.A.U.

Euros 577 thousand

In July 2005, the taxation authorities, through

the central management unit for large com-

panies (Unidad Central de Gestión de Grandes

Empresas), notified the above companies that,

among other things, they had been refused the

right to apply the deduction set forth in section

of Two 1 (c) of the second additional provision

of Law 53/2002 to advertising and marketing ex-

penses for the period from 1 November 2003 to

31 October 2004, on the grounds that the ap-

plication for recognition of the tax benefit had

been submitted after the deadline.

As they were not in agreement with the tenor of

these rulings, the companies filed administra-

tive appeals which were overruled, first by the

National Inspection Office and subsequently by

the TEAC, forcing the entities to file appeals for

judicial review in order to have their rights rec-

ognised. These were heard and favourable rul-

ings dated 15 July 2010, 7 October 2010 and 28

October 2010 were handed down by the Judicial

Review Chamber (second section) of the Spanish

High Court.

Specifically, in every case, the Spanish High

Court overruled the contested TEAC decisions,

allowing the parties to be reimbursed for excess

amounts paid, together with the corresponding

late payment interest.

The amount pending collection on this account in-

cluding late payment interest at 31 December 2015

is Euros 4,757 thousand (Euros 5,213 thousand at

31 December 2014) and is shown under current tax

assets in the consolidated balance sheet.

b) Value added taxMost transactions by the travel agency and tour

operator divisions are subject to the special VAT

regime governing travel agencies. In accordance

with accounting regulations, the Parent applies

the following criteria with respect to the afore-

mentioned special regime:

Capitalised tax loss carryforwards amount to Eu-

ros 5,039 thousand (Euros 6,706 thousand at 31

December 2014). The Group also capitalised the

entire amount of tax loss carryforwards calculated

for 2012 for the consolidated tax group in Spain.

Tax loss carryforwards capitalised at 31 Decem-

ber 2015 amount to Euros 27,566 thousand (Euros

36,703 thousand at 31 December 2014).

The decutions to be offset were mostly gener-

ated between 2008 and 2013 and they amount

to Euros 2,935 thousand, of which Euros 2,317

thousand have been capitalised (Euros 1,488

thousand at 31 December 2014) in the consoli-

dated balance sheet.

In 2003- 2004, the Parent (Globalia Corporación

Empresarial, S.A.) and its subsidiaries Travelplán,

S.A.U., Air Europa Líneas Aéreas, S.A.U. and Viajes

Halcón, S.A.U. made outlays for advertising and

marketing covering a period of several years as

part of the activity plans and programmes ap-

proved by the Jacobean Council to celebrate the

2004 Jubilee Year, giving rise to and applying the

following income tax deductions for that year.

Globalia Corporación Empresarial, S.A

Euros 150 thousand

2000 109 109 2002 1,654 1,7002003 1,573 1,5732004 494 4942005 1,245 1.2442006 1,540 1,524 2007 640 4332008 91 312009 522 3942010 309 3032011 2,696 2,0212012 2,823 12013 5,016 5,0142014 628 -2015 1,456 -

20,796 14,841

2015

Thousands of Euros

2014Year

69

2015 ANNUAL REPORT

i) Input VAT on acquisitions of goods and ser-

vices as a part of transactions subject to the spe-

cial regime increases the amount of goods and

services acquired.

ii) Output VAT on transactions included in the

special regime is recognised together with in-

come from the transaction.

iii) The VAT amount settled in accordance with

the special regime, that is, the VAT for which the

taxable base is the Parent’s gross margin, is de-

ducted from recorded income.

The Parent files consolidated VAT returns with all

the Globalia group companies listed previously

for the corporate income tax group, except for

Iberotours, S.A.U, Be Live Hotels, S.L.U and Glo-

balia Travel Club Spain, S.L.U.

29. ENVIRONMENTAL INFORMATION

Aware of the importance of the environment in

sustainable development, in January 2006 Air Eu-

ropa Líneas Aéreas, S.A.U. became the first Span-

ish airline to receive the ISO 14001 Environmental

Management Systems certificate. In 2012 we re-

affirmed our commitment to the environment

by registering with EMAS (Eco-Management and

Audit Scheme). The Environmental Declaration is

published on our website www.aireuropa.com.

The main aim of this system is to minimise the

environmental impact of all activities, focusing

on a decrease in the consumption of natural

resources, correct waste management and the

optimisation of procedures to reduce both noise

and CO2 emissions.

Reducing air pollution as much as possible is

a priority for Air Europa Líneas Aéreas, S.A.U.,

as evidenced, among other actions, by the ef-

fort and major commitment the Company has

demonstrated by purchasing the most modern

aircraft, which unquestionably results in a more

efficient use of fuel.

The main aim of the Environmental Management

System is to implement the Company’s Envi-

ronmental Policy, ensuring its compliance with

prevailing environmental legislation, managing

environmental aspects, controlling indicators

and fulfilling the objectives proposed through

continuous improvement.

The Company has approved procedures in place

to guarantee compliance with the requirements

established in Commission Decisions 2007/589/

EC of 18 July 2007 and 2009/339/EC of 16 April

2009, which establish the directives for the mon-

itoring and reporting of greenhouse gas emis-

sions, and are in line with Law 1/2005 of 9 March

2005, which regulates the scheme for green-

house gas emission allowance trading. Directive

2003/87/EC of the European Parliament and of

the Council of 13 October 2003, establishing a

scheme for greenhouse gas emission allowance

trading, was transposed to the Spanish legal sys-

tem in Law 1/2005. Law 13/2010 of 5 July 2010

amends Law 1/2005 of 9 March 2005, perfecting

and expanding the greenhouse gas emission al-

lowance trading scheme and including the avi-

ation industry in this scheme as a result of the

publication of Directive 2008/101/EC of 19 No-

vember 2008. It also complies with the require-

ments of EMAS Regulation (EC) No.1221/2009

and, therefore, its Environmental Declaration is

audited on an annual basis.

70

Current loans to companies are the loans ex-

plained in note 16 (a), extended by the Parent.

b) Group related party transactionsThe Group’s transactions with related parties

are as follows:

IncomeNet sales Sales - - 1,498 1,498Financial instruments Financial income - - 112 112

Total Income - - 1,610 1,610

Expenses Operating lease expenses - - (5,090) (5,090)Other expenses - - (9,473) (9,473)Personnel expenses Salaries (4,801) (1,712) - (6,513) Allowances (311) - - (311)

Total expenses (5,112) (1,712) (14,563) (21,387)

2015 TotalOther related

partiesSenior manage-ment personnel

Thousands of Euros

Directors

IncomeNet sales Sales - - 366 366Financial instruments Financial income - - 39 39

Total Income - - 405 405

ExpensesOperating lease expenses - - (1,520) (1,520)Other expenses - - (288) (288)Personnel expenses Salaries (610) (235) - (845) Allowances (52) - - (52)

Total expenses (662) (235) (1,808) (2,705)

2014

Trade and other receivables Trade receivables – current 318 318Current investments Equity instruments 416 416Total current assets 7,952 7,952

Total assets 7,952 7,952

Trade and other payables Suppliers (78) (78)Total current liabilities (78) (78)

Total liabilities (78) (78)

Other related parties

Thousands of Euros

Total2014

30. RELATED PARTY BALANCES AND TRANSACTIONS

a) Related party balancesDetails of balances by category are as follows:

71

2015 ANNUAL REPORT

Operating lease expenses reflect hotel operat-

ing lease expenses and advisory fees for Carib-

bean hotel properties operated by the Group

for companies related to the Parent’s majority

shareholder.

Transactions with related parties are carried out

at arm’s length.

c) Information on the Parent’s directors and senior management personnel

Information on remuneration is provided in the

preceding section. No advances or loans have

been extended to directors or senior manage-

ment personnel.

In the years ended 31 December 2015 and 2014

the directors have not carried out any transac-

tions other than ordinary business with the Par-

ent or Group companies or applying terms that

differ from market conditions.

d) Conflicts of interest of the directors of the Parent and their related par-ties in other companies

The situations of conflict of interest of the Par-

ent’s directors are detailed in Appendix XV, which

forms an integral part of this note to the consoli-

dated annual accounts.

31. INCOME AND EXPENSEa) RevenuesDetails of revenues by category of activity and ge-

ographical market are included in Appendix XVI.

b) SuppliesDetails of merchandise, raw materials and other

supplies used are as follows:

Merchandise used Domestic purchases 1,927 214Domestic and other purchases Domestic and other purchases 1,678,803 218,820

1,680,730 219,034

2015

Thousands of Euros

2014

c) Employee benefits expense and provisions

Details of employee benefits expense and provi-

sions are as follows:

d) Gains/losses on disposal of fixed assets

Details of gains and losses on the disposal of fixed

assets are as follows:

Employeebenefitsexpense Social Security and otherbenefits 100,054 15,327

100,054 15,327

2015

Thousands of Euros

2014

Losses Intangible assets (619) (213)

(574) (213)

2015

Thousands of Euros

2014

In 2015 legal proceedings have commenced in

the Spanish National High Court involving the

Parent and other Globalia Group companies and

related parties in respect of the incorrect appli-

cation of the tariff deductions for scheduled air

transport services for residents in the autono-

mous regions of the Canary Islands, Balearic

Islands, Ceuta and Melilla. The directors of the

Parent estimate that these proceedings will not

give rise to any additional liabilities.

e) Other income/expensesDetails of other income and expenses are as follows:

Expenses Spanish National High Court grants payment (19,240) - DGAC grants payment (17,733) - Other (2,713) (63)

(39,686) (63)

Income Other 1,724 136

(37,962) 73

2015

Thousands of Euros

2014

72

This heading also reflects the amounts paid to

the Directorate General of Civil Aviation (DGAC)

for the same concept. These payments refer to

the periods from 2010 to 2015.

f) Foreign currency transactionsDetails of income and expenses denominated in

foreign currencies are as follows:

32. EMPLOYEE INFORMATION

The average headcount of the Group in 2015 and

2014, distributed by category, is as follows.

At year end the distribution by gender of person-

nel is as follows

The distribution by gender of the Group’s direc-

tors is five men and two women.

The average number of Group employees with a

disability rating of 33% or higher (or equivalent local

rating) in 2015 and 2014, was 72 and 72, respectively.

33. AUDIT FEES The auditors of the annual accounts of the Group

have invoiced the following fees and expenses

for professional services during the year ended

31 December 2015 and the two-month period

ended 31 December 2014:

Furthermore, other entities affiliated with KPMG

International have invoiced the Group the fo-

llowing fees for professional services during the

year ended 31 December 2015 and the two-

month period ended 31 December 2014:

Income Net sales 484,483 80,457 Services rendered - 403 Other services rendered 4,874 -

Expenses Net purchases (370,362) (48,801) Operating lease expenses (159,640) (25,427) Personnel expenses (16,427) (2,065) Other services received (156,440) (27,215)

(213,512) (22,648)

2015

Thousands of Euros

2014

Consolidated companies Management 109 143 Middle management 378 305 Hotel personnel 1,645 1,811 Handling personnel 2,357 2,329 Travel agency personnel 1,650 1,871 Pilots 554 560 Flight attendants 1,467 1,269 Mechanics 372 363 Drivers 179 233 Other 62 2 IT programmers 124 131 Administration 292 296 Otherofficepersonnel 1,661 1,534 Call centre operators 375 313

11,225 11,160

2015

Thousands of Euros

2014

Consolidated companies Male 6,531 6,395 Female 6,400 5,670

12,931 12,065

2015

Thousands of Euros

2014

Audit services 300 141Other tax and sundry services 20 -

320 141

2015

Thousands of Euros

2014

Audit services 82 -

2015

Thousands of Euros

2014

Fees and expenses for professional services invoi-

ced to the Group by other audit firms for the year

ended 31 December 2015 and the two-month

period ended 31 December 2014 are as follows:

Audit services 73 -

2015

Thousands of Euros

2014

73

2015 ANNUAL REPORT

34. OTHER CONTINGENCIESIn 2015 the Group company Air Europa Líneas

Aéreas, S.A.U. was notified of the resolution re-

garding the repayment in relation to the settle-

ment of tariff deductions applied to air transport

for residents in non-mainland Spain from Janu-

ary 2009 to September 2014. Despite having

paid the amount to the Directorate General of

Civil Aviation (DGAC) (see note 31), the Group

has filed an appeal as management consid-

ers that very restrictive assumptions have been

used regarding the possibility of applying these

deductions to calculate the amount repayable.

In 2015 legal proceedings have commenced in-

volving the Parent and various Globalia Group

companies in respect of the potential incorrect

application of the tariff deductions for sched-

uled air transport services for residents in the

autonomous regions of the Canary Islands,

Balearic Islands, Ceuta and Melilla. The directors

of the Parent estimate that these proceedings

will not give rise to any additional liabilities for

the Group given that the potential contingen-

cies have been recognised in the companies

where the incorrect application of the deduc-

tions originated.

The Group has various legal proceedings under-

way with employees for which, according to the

opinion of the Company’s advisors, it is unlikely

that significant liabilities arise which could affect

the annual accounts for the year.

35. OTHER INFORMATIONAt their general meeting held on 15 December

2014 the shareholders agreed to change the

reporting date to 31 December of each year

(previously 31 October). Therefore, as the the

accompanying consolidated annual accounts

for the year ended 31 December 2014 corre-

spond to a period of two months, they are not

comparable to the current year. For this reason,

a consolidated income statement for the period

from January 2014 to December 2014 has been

prepared and included in Appendix XVII.

74

1. INTRODUCTION1.1 The global economy Global growth of 3.5% is expected in 2016, com-

pared to 3.1% in 2015. These favourable forecasts

are underpinned by a lower level of macroeco-

nomic imbalance than in prior years, a monetary

environment which is still very accommodating

and cheaper average oil prices.

However, the probability of risks arising which

could cause problems with respect to growth

has increased, basically due to renewed uncer-

tainties regarding a hard landing in China and

a repeated drop in oil prices in January (a key

sector in a large number of emerging countries

which are exporters). These two elements of risk,

coupled with the possible significant impact of

the FED’s monetary policy normalisation process

and the worsening of the internal situation of

certain emerging countries, such as Brazil, could

taint worldwide growth in 2016.

1.2 EurozoneThe eurozone economy continues to grow,

mainly upheld by domestic demand. For the time

being, the deceleration of emerging economies

and financial turbulence has had a minimal im-

pact on growth in the eurozone which is sus-

tained by an accommodating monetary policy, a

neutral fiscal policy and very low oil prices. The

FMI has increased its growth forecast for the eu-

rozone by 1 decimal point in 2016 to 1.7%, de-

spite worldwide growth forecasts being lowered

due to a surge in global instability. The ECB has

also highlighted the efforts made towards recov-

ery in the eurozone, when faced with headwinds

coming from the international scenario and the

advance of internal demand.

Travel agency sales continue to grow at a year-

on-year rate of more than 2% in November, fol-

lowing the favourable trend in 2015, although this

DIRECTORS’REPORTGLOBALIA CORPORACIÓN EMPRESARIAL, S.A.

AND SUBSIDIARIES

75

2015 ANNUAL REPORT

figure is slightly lower than the average for the

year. Vehicle registration went up 13.9% in De-

cember, 5 percentage points higher than the av-

erage for 2015. These demand indicators confirm

the strong recovery of internal demand in the eu-

rozone. Investment is also progressing: industrial

production increased by a year-on-year 1.5% in

November, 2 decimal points above the average

for the year, although slightly lower than the pre-

vious month. The industrial confidence indicator

registered the best data for the year in December.

1.3 Spanish economyIn 2015 the Spanish economy has reported GDP

growth of 3.2%. The dynamic nature of the con-

sumer indicators illustrates that internal demand

continued to be the main driver behind growth,

sustained by an improvement in the employ-

ment market.

The outlook for 2016 is positive, despite the ex-

istence of relevant risks. According to estimates

from various economic studies, the Spanish

economy will grow by approximately 2.8% per

annum. The good progress forecast for eco-

nomic activity is underpinned by the same fac-

tors which supported growth in 2015, low oil

prices, lower tax rates, an expansive monetary

policy and the depreciation of the Euro, and ap-

pears to be going to continue this year, although

to a lesser extent, leading to an ongoing boost

consumption and investment. However, the un-

certainties hovering over the global economy

and which could have a negative effect on the

economy’s growth should not be forgotten. The

Spanish economy continues to be very vulnera-

ble to change in international investor sentiment,

due to its raised international debtor position and

the existing imbalance in public accounts.

Job creation was vigourous in the fourth quarter,

with a quarterly variation of 0.7% (compared to 0.6%

in the third quarter) in terms of deseasonalisation,

which meant that 2015 ended with the creation of

525,100 jobs (3% per year), exceeding the 433,900

jobs created in 2014. The rise in employment in

the fourth quarter and the unforeseen drop in the

working population has led to a fall in unemploy-

ment rates of up to 3 decimal points, to 20.9%.

Increased employment improves households’

gross disposable income. In the third quarter of

2015 the gross disposable income of households

increased year-on-year by 2.1% (accumulated

amount for four quarters) driven by the remu-

neration of employees, which can be explained

by the rise in employment, as the salaries re-

mained stable and also by the rise in gross oper-

ating surplus of self-employed workers.

In this favourable context, the demand for credit

continues to increase. The efforts to reorganise

and restructure the Spanish banking sector appear

to lead to the start of a recovery in bank credit.

Recovery of the real estate sector continues,

bolstered by the sharp rise in demand for credit

to purchase housing. An example of this is the

growth in house sales and purchases, which rose

in November by 11.7% year-on-year (accumu-

lated for 12 months).

On the other hand, the excellent performance in

the tourism sector contributed very positively to

the good performance of the services balance.

The record number of 68.1 million tourists visit-

ing Spain in 2015, 4.9% up on 2014, reinforces

this vision.

2. INTERNATIONAL SCENARIO IN WHICH THE GROUP HAS CARRIED OUT ITS ACTIVITY

2.1 Euro-Dollar exchange ratesThe impact of fluctuations in the Euro-Dollar ex-

change rate is highly significant for the Company,

as almost all of its aircraft lease costs and engine

and spare part expenses are denominated in US

Dollars, as well as the costs of insurance and jet

fuel. The average annual Euro-Dollar exchange

rates for the past five years were as follows:

Year

2011

2012

2013

2014

2014 (nov-dec)

2015

1,393

1,292

1,318

1,349

1,240

1,110

US Dollar-Euro

76

Average basic prices of jet fuel in 2015 have

dropped by 45% compared to the prior year.

Variations in average monthly basic jet fuel prices

during 2015 compared to the prior year are as

follows:

US Dollar/tonne

November - - 983,11

December - - 1,013,31

January 527,39 - 981,67

February 601,05 - 983,89

March 567,44 - 959,96

April 583,75 - 962,75

May 619,07 - 967,23

June 605,93 - 978,19

July 539,58 - 965,85

August 477,13 - 945,19

September 488,64 - 902,51

October 475,15 - 831,48

November 455,41 779,46 -

December 385,35 641,83 -

Average for the year 527,16 710,65 956,26

2015 2014 (nov-dec) 2014

2.2 Jet fuel pricesAverage basic jet fuel prices (CIF North-

west Europe Cargoes market) for the past

five years have been as follows:

Year

2011

2012

2013

2014

2014 (nov-dec)

2015

980.24

1,026.55

992.13

956.26

710.65

527.16

US Dollar/tonne

The average exchange rates in 2015 and 2014

were as follows:

2015 2014 (nov-dec) 2014

November - - 1,349

December - - 1,370

January 1,162 - 1,361

February 1,135 - 1,366

March 1,084 - 1,382

April 1,078 - 1,381

May 1,115 - 1,373

June 1,121 - 1,359

July 1,100 - 1,354

August 1,114 - 1,332

September 1,122 - 1,290

October 1,124 - 1,267

November 1,074 1,247 -

December 1,088 1,233 -

Average for the year 1,110 1,240 1,349

US Dollar/Euro

On average, the US Dollar has grown by 18%

against the Euro in 2015 in comparison to the

prior year.

77

2015 ANNUAL REPORT

The Group continues to invest in a modern and

efficient fleet of aircraft, improving the service to

our customers and the airline’s operating capacity.

The flight hours carried out by Air Europa Líneas

Aéreas, S.A.U. in 2015 compared to the two pre-

vious years were as follows:

3. GROUP BUSINESS PERFORMANCE DURING THE YEAR

3.1 Air divisionThe average number of aircraft in service during

the year compared to the prior year is as follows:

Average number of aircraft

Embraer 195 11.00 11.00 11.00

Boeing 737 - 800 20.00 20.00 19.87

Airbus 330 - 200 12.00 12.00 11.61

Airbus 333 2.58 2.00 2.00

45.58 45.00 44.48

2015 2014 (nov-dec) 2014Fleet

Flight hours

Embraer 195 31,209 4,756 29,963 24,220

Boeing 737-300/400/800 71,200 11,097 69,894 68,811

Boeing B767/A330 73,081 11,990 72,102 63,478

175,490 27,844 171,959 156,509

2015 2014 (nov-dec) 2014Fleet 2013

The total number of passengers (charter and sche-

duled flights) carried by the Group’s Air Division

over the past five years has been as follows:

Year

2011

2012

2013

2014

2014 (nov-dec)

2015

8,744,512

8,114,059

8,690,044

9,586,044

1,463,023

10,221,104

Number of passengers carried

78

Below we list the number of seats for sale, the number of

passengers carried and the resulting load factor for schedu-

led flights in 2015 compared with prior years:

Balearic Islands 794,357 662,677 83.4%Canary Islands 4,071,162 3,501,756 86.0%Domestic 502,679 347,082 69.0%International 15,576,543 13,188,915 84.7%

TOTAL 2013 20,944,740 17,700,430 84.5%

Percentage variation 5.4% 9.0% 2.8% Balearic Islands 869,023 716.160 82.4%Canary Islands 3,967,076 3.342.756 84.3%Domestic 814,086 536.959 66.0%International 18,835,766 15,919,570 84.5%

TOTAL 2014 24,485,950 20,515,445 83.8%

Percentage variation 16.9% 15.9% -0.9% Balearic Islands 127,088 98,930 77.8%Canary Islands 616,799 495,414 80.3%Domestic 158,661 108,807 68.6%International 3,269,776 2,591,061 79.2%

TOTAL 2014 (nov-dec) 4,172,324 3,294,212 79.0% Balearic Islands 1,039,063 811,248 78.1%Canary Islands 3,933,852 3,184,886 81.0%Domestic 906,533 660,726 72.9%International 20,799,259 17,761,927 85.4%

TOTAL 2015 26,678,707 22,418,788 84.0%

Percentage variation 9.0% 9.3% 0.3%

Year/Market AKO’000 PKT000% Load Factor

The number of employees of the Air Division over the past five years, not including

personnel corresponding to the Group’s airport handling concessions, was as follows:

Average headcount

Direct employees 1.914 2.194 2.043 1.822 1.797 1.828

Indirect employees 800 784 749 672 687 797

2.714 2.978 2.791 2.494 2.484 2.625

Own ground handling division 266 271 277 252 271 367

Total 2.980 3.249 3.068 2.746 2.755 2.992

2015 2014 (nov-dec) 2014 2013 2012 2011

3.2 Tour operator divisionThe Tour Operator Division has felt the effects of

the slump in Spain’s domestic consumer spend-

ing, but sales have begun to recover in 2015 and

demand for Latitudes branded products in the

exclusive holiday package market is also worthy

of note. The Division has continued with its drive

to consolidate traditional areas of the tour op-

erator market, concentrating particularly on the

launch of new middle- and long-distance desti-

79

2015 ANNUAL REPORT

3.3 Incoming divisionThe Globalia Group Incoming Division was set up in

November 2010 under the “Welcome Incoming Ser-

vices” brand, and its economic activity centres mainly

on the provision of excursions and transfer services,

hotel reservations and car hire. Its main supplier is the

Globalia Group Tour Operator Division.

The second phase of its implementation saw the

introduction of an online hotel accommodation

sales platform, “WELCOMEBEDS”, which pro-

vides services to third parties, travel agencies and

tour operators with no geographic restrictions,

but with a focus on markets where our incoming

operations have a physical presence.

The average number of employees in this Divi-

sion since 2011 has been as follows:

The preceding passenger figures do not include

customers of the Division’s incoming area.

Aggregate revenues of the Tour Operator Division

over the last five years are as follows:

nations in conjunction with the Group’s Air Divi-

sion, with a view to strengthening its position in

those market segments.

The Division has made considerable advances in

and consolidated its E-Commerce B2B business

over recent years, via the incorporation of new

technologies developed by the Group’s systems

department. Particularly noteworthy is the new

Online sales system linked to the Group operating

system, the implementation of which has facilitat-

ed and increased the agility and effectiveness of

its reservations management system, and permit-

ted interconnection with the different Group and

independent travel agents. As a result, approxi-

mately 90% of travel agent reservations are made

automatically via this channel, with no need for

any telephone contact or other communication.

The number of passengers carried by the Divi-

sion in the year ended 31 December 2015 and

the four prior years is as follows:

3.4 Travel agency divisionIn a context of declining travel demand in the

Spanish and Portuguese markets, the Travel

Agency Division has continued to adapt to the

market, reducing the number of own offices

open to the public by closing those that were

not contributing positively to the Group’s con-

solidated income statement.

On the other hand, the Division has continued with

the franchising process, with a significant increase

in the number of offices operated in this way.

The Division has continued to promote its E.

Commerce B2C business line, under the hal-

conviajes.com, viajesecuador.com and tubillete.

com brands, assigning new technical and hu-

man resources to this priority development area.

The high level of technological development

and internal control in the Division, the strength

of its brands and the maturity of its professionals

are all cause for confidence in the future attain-

ment of its business objectives.

The number of offices (both own offices and

franchises) operating at the end of each of the

last five years was as follows:

Year

2011

2012

2013

2014

2014 (nov-dec)

2015

1,096,705

903,082

585,860

531,411

39,886

570,812

Passengers

Year

2011

2012

2013

2014

2014 (nov-dec)

2015

204

238

210

211

216

236

Average Headcount

Year

2011

2012

2013

2014

2014 (nov-dec)

2015

648

545

588

591

51

689

Millions of Euros

80

Occupancy and average prices have re-

mained high in hotels currently in ope-

ration, in spite of the current crisis.

Group Management implemented

specific measures in previous years to

strengthen its hotel management sys-

tem and support the Divisional sales

team. In 2015 these measures are ma-

terialising in an improved income state-

ment for the Group’s hotel business.

3.6 Handling divisionIn 2015, the Group continued with its

policy of consolidating the Handling di-

vision, having obtained almost full co-

verage of operations at Spanish airports

since 1997. The Division’s handling ope-

rating hubs in Spain are as follows:

Alicante (Groundforce)

Barcelona (Groundforce)

Bilbao (Groundforce)

Fuerteventura (Groundforce)

Ibiza (Groundforce)

La Coruña (Self-handling)

Las Palmas (Groundforce)

Madrid (Groundforce)

Málaga (Groundforce)

Mahón (Self-handling)

Melilla (Self-handling)

Palma de Mallorca (Groundforce)

Tenerife Norte (Groundforce)

Valencia (Groundforce)

Zaragoza (Groundforce)

Revenue in the Travel Agency Division over

the last five years is as follows:

2011

2012

2013

2014

2014 (nov-dec)

2015

967

941

799

813

817

807

328

294

246

239

232

217

1,393

1,314

1,113

1,116

1,112

1,087

98

79

68

64

63

63

Year TotalViajes

Halcón S.A.Grupo Viajes

EcuadorHalcon Viagens e Turismo, Lda

2011

2012

2013

2014

2014 (nov-dec)

2015

1.018

930

859

917

115

977

201

169

148

142

14

136

1,265

1,134

1,041

1,093

132

1,148

46

35

34

34

3

35

Year TotalViajes

Halcón S.A.Grupo Viajes

EcuadorHalcon Viagens e Turismo, Lda

Millions of Euros

The average number of employees of the main

company in the Travel Agency Division, Viajes

Halcón, S.A.U. over the last five years is as follows:

3.5 Hotel divisionThe number of rooms and hotels operated by the Division

compared with the end of the previous year is as follows:

2015 2015 2015 20152014 2014 2014 2014TotalCuba

Spain Mediterranean

DominicanRepublic

Rooms 4,958 5,227 3,055 2,740 416 416 8,429 8,383

Hotels 19 21 6 6 2 2 27 29

Year % increase

2011

2012

2013

2014

2014 (nov-dec)

2015

-3%

-5%

-14%

-18%

3%

5%

2,250

2,139

1,834

1,507

1,554

1,637

Average number employees

81

2015 ANNUAL REPORT

2011

2012

2013

2014

2014 (nov-dec)

2015

91.91%

91.72%

92.07%

91.26%

91.53%

90.26%

51,085

41,831

47,254

55,279

8,850

59,630

Year

% Handling operations carried out in Spanish airports by the Group’s

own Handling Division

Total number of handling operations carried out by the

own Handling Division

Over the last five years, the level of autonomy of the Air Division with respect to

Handling services has developed as follows:

Apart from Air Europa, Groundforce clients include leading airlines.

4. PROFIT FOR THE YEAR AND CONCLUSIONSThe Group’s consolidated net revenue totalled

Euros 3,379 million for the year ended 31 De-

cember 2015, which is not comparable to the Eu-

ros 459 million obtained for the 2-month period

ended 31 December 2014 (Euros 3,292 million

obtained for the year ended 31 October 2014).

Consolidated profit after tax amounted to Euros

3.7 million for 2015, compared to consolidate

losses after tax of Euros 13.9 million obtained

for the 2- months period ended 31 December

2014 ( Euros 27.9 million consolidated profit af-

ter tax for the year ended 31 October 2014).

5. RISK MANAGEMENTThe Company’s activities are exposed to vari-

ous financial risks: market risk, credit risk, li-

quidity risk and interest rate risk in cash flows.

The global risk management programme of the

Globalia Group, which includes the Company,

focuses on uncertainty in the financial markets

and aims to minimise potential adverse effects

on the Company’s profits.

The Company, which is the head of the Globalia

Group’s Air Division, implements its risk man-

agement policy as a whole, which can be sum-

marised as follows:

1- Market risk. The Company has diversified

market risk by increasing its international pres-

ence, thereby reducing the impact of domestic

demand on its business.

2- Risks arising from exchange rate fluctuations.

Risks arising from exchange rate fluctuations

are hedged through the hedging contracts the

Company has with its subsidiaries.

3- Risks arising from variations in fuel prices. The

Air Division has a hedging policy for fluctuations

in fuel prices, to hedge the price of part of the

fuel consumed by its aircraft, which is managed

by Group Management.

4- Liquidity risks. Globalia is an integrated trans-

port, travel and tourism group with a number of

lines of business (air transport, tour operators

and travel agents, passenger ground handling

service, hospitality, etc). The Parent, as the head

of the Group, manages all of the cash generated

by Group companies to cover potential liquidity

risks resulting from the various business cycles

of the entities forming part of the Group.

6. OTHERThe Group does not hold own shares or equity

holdings or shares in the Parent. No research or

development activity was conducted during the

year ended 31 December 2015, although cer-

tain Group companies have undertaken tech-

nological innovation projects. No events have

taken place after the end of the reporting period

which have not been mentioned in the attached

notes which could have a significant effect on

the annual accounts for the year ended 31 De-

cember 2015.

82

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF INVESTMENTS IN SUBSIDIARIES FOR THE YEAR ENDED 31 DECEMBER 2014

APPENDIX 1


Globalia Business Travel, S.A.U.

Globalia Handling, S.A.U.


Be Live Hotels, S.L.U.

Globalia Lease Finance, Limited (2)

Globalia Lease Finance Two, Limited (2)

Globalia Lease Finance Three, Limited (2)

Globalia Lease Finance Four, Limited (2)

Globalia Lease Finance Five, Limited (2)

Globalia Lease Finance Six, Limited (2)

Globalia Lease Finance Seven, Limited (2)

Globalia Servicios Corporativos, S.L.U.

Globalia Hotel La Niña, S.L.

Globalia Call Center, S.A.U.

Welcome Incoming Services, S.L.U.

Media & Design, S.A.U.

Globalia Gestión de Seguros, S.L.U.

Globalia Hotel Talavera, S.A.U.

Registered office Company Activity Auditor

Group company holding the interest % ownership

% effective interest of the

GroupThousands

of Euros

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Puerto de la Cruz (Spain)

Dublin (Ireland)

Dublin (Ireland)

Dublin (Ireland)

Dublin (Ireland)

Dublin (Ireland)

Dublin (Ireland)

Dublin (Ireland)

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Airline company

Tour operator

Ground handling services

Travel agency

Hotel management

Aircraft owner

Aircraft owner

Aircraft owner

Aircraft owner

Aircraft owner

Aircraft owner

Aircraft owner

General services

Real estate

Call Center

Incoming services

Communication and advertising

Insurance brokerage

Hotel owner

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

KPMG

-

-

-

Globalia Corporación Empresarial, S.A.



















100

100

100

100

100

100

100

100

100

100

100

100

100

99.99

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

18.260

4.546

13.200

32.335

111.060

100

100

100

100

100

100

100

2.586

19.047

61

16.730

153

185

4.662

Investment

(1) The company’s reporting date is at 31 December. (2) The company’s reporting date is at 30 June.This appendix forms an integral part of note 4 to the consolidated financial statements,

in conjunction with which it should be read.

83

2015 ANNUAL REPORT

Globalia Sistemas y Comunicaciones, S.L.U.

Globalia Formación, S.L.U.

Globalia Activos Inmobiliarios, S.A.U.

Pipa Holding, B.V.

Globalia Hotel Palace de Muro, S.L.U.

Iberotours, S.A.U.

Globalia Autocares, S.A.

Globalia Hotel Orotava, S.L.U.

Viajes Unalia, S.A.U.

Globalia Broker Services, S.A.U.

Globalia Mantenimiento Aeronaútico, S.L.U.

Globalia France, S.A.S.

Pepeticket, S.A.

Marhandling, S.A.

Iberhandling, S.A.

Halcon Viagens e Turismo, Lda.

Geomoon, S.L.

Intertravel, S.A.R.L.

Viajes Ecuador, S.A.U.



% effectiveinterest of the

GroupThousands

of Euros

Llucmajor (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Amsterdam (Holland)

Llucmajor (Spain)

Tenerife (Spain)

Salamanca (Spain)

Tenerife (Spain)

Madrid (Spain)

Llucmajor (Spain)

Llucmajor (Spain)

Paris (France)

Llucmajor (Spain)

Marrakech (Morocco)

Llucmajor (Spain)

Lisbon (Portugal)

Madrid (Spain)

Luxembourg

Llucmajor (Spain)

IT services

Training

Real estate

Holding company

Hotel owner

Tour operator

Passenger transport

Hotel owner

Tour operator

Aircraft broker

Maintenance

Travel agency

Sales of items



Travel agency

Travel agency

Hotel management

Travel agency

KPMG

-

KPMG

-

-

KPMG

KPMG

-

-

-

KPMG

Auditeurs & Conseils Ass

-

KPMG

-

KPMG

-

-

KPMG




Be Live Hotels, S.L.














Globalia Travel, B.V.


100

100

100

100

100

100

90

100

100

100

100

100

51

100

95

100

100

100

100

100

100

100

100

100

100

90

100

100

100

100

100

51

100

95

100

100

100

100

3.004

670

14.774

55.811

26.697

649

1.661

13.434

63

1.205

3.000

29

3.247

571

4.747

59

12

13.700

Investment




APPENDIX 1

84

Globalia Artes Gráficas, S.L.

Eurogestion Hoteliere, S.A.R.L.

Viajes Tu Billete, S.L.

CH Marketing, Corp

Operadora Globalia de México, S.R. de C.V.

Bajuba de México Consul-tores, S de R.L. de C.V.

D & A Servicios Integra-les, S. de E.L. de C.V.

GHR Dominicana, S.A.S.


Globalia Trading Services, S.L.U.

Groundforce Cargo, S.L.U.

Globalia Travel Club Spain, S.L.U.

Be Live Trading, INC

Smart Inversiones, S.A.S.

Inversiones La Albufera, S.A.S.

“Globalia Servicios Corporativos Dominicana, S.A.(1)”

Inversiones Bávaro, S.A.(1)

Inversiones Inmobiliarias RCJ, S.A.(1)

Travelplan Italia, S.R.L.

Salamanca (Spain)

Casablanca (Morocco)

Tenerife (Spain)

Panama

México D.F. (Mexico)

Cancún (Mexico)

Cancún (Mexico)

Santo Domingo (Dominican Rep.)

Amsterdam (Holland)

Llucmajor (Spain)

Llucmajor (Spain)

Tenerife (Spain)

Miami (United States)



Santo Domingo (Dominican

Rep.)


Santo Domingo (Dominican

Rep.)

Milan (Italy)

Printing

Hotel management

Travel agency

Hotel management

Hotel operation

Rendering of per-sonnel services

Rendering of per-sonnel services

Hotel operation

Holding of assets

Tour operator

Handling

Tour operator

Holding of shares

Hotel operation

Hotel operation

General services

Hotel owner

Real estate

Tour operator

KPMG

-

KPMG

-

Baker Tilly Mexico

Baker Tilly Mexico

Baker Tilly Mexico

Urrutia Liriano & Asoc.

-

KPMG

KPMG

KPMG

-

-

-

Urrutia Liriano &

Asoc.

Urrutia Liriano & Asoc.

Urrutia Liriano &

Asoc.

-






Media & Design, S.A.

Media & Design, S.A.









Globalia Servicios Corporativos,

S.L.U.

Pipa Holding, B.V

Pipa Holding, B.V


100

100

75

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

75

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

1.730

5

1.600

1

-

-

9.787

4

12.312

180

7

0

0

23.080

1.401




APPENDIX 1




GroupThousands

of Euros

Investment

85

2015 ANNUAL REPORT

Travelplán Portugal, Agencia de Viagens e Turismo, Sociedade Unipessoal Lda.

Globalia Incoming Services Mexico, S.R.L. de C.V.

Globalia Incoming Ser-vices Dominicana, S.A.

See Europe Tours Limited

MK Media Corp.

MK Puerto Rico, S.A.

MK Tours, Inc.

MK Tours Dominicana USA INC.

MK Travel & Tours, INC

Sunion Proyecto y Construcción, S.L.U.

Canoa Spain, S.L.

Hotel Canoa, S.A.

Explotadora Hotelera Luabay, S.L.U.

Luabay Hoteles y Apartamentos, S.L.U.

Inversiones Costa Adeje, S.A.U.

Techite Inversiones 2012, S.L.U.

Aeronova, S.L.U.

Panamericana de Servi-cios Energéticos, S.A.S.

León Activos Aeronáuticos, S.L.

Lisbon (Portugal)

Cancún (Mexico)


London (United Kingdom)






Llucmajor (Spain)

Llucmajor (Spain)


Llucmajor (Spain)

Llucmajor (Spain)

Puerto de la Cruz (Spain)

Llucmajor (Spain)

Valencia (Spain)


Llucmajor (Spain)

Tour operator

Incoming services

Incoming services

Incoming services

Tour operator

Tour operator

Tour operator

Tour operator

Tour operator

Corporate services

Hotel business

Hotel business

Hotel business

Hotel business

Hotel business

Hotel business

Airline company

Energy services

Airline company

Pinto Leite & Machado Vaz- SROC,

Lda.

Baker Tilly Mexico

Urrutia Liriano & Asoc. (R.D.)

-

-

-

-

-

-

-

-

-

KPMG

-

KPMG

-

KPMG

-

-

Globalia Corporación Empresarial,

S.A.

Welcome Incoming

Services, Slu

Welcome Incoming Services, Slu

Welcome Incoming Services, Slu

MK Tours, S.A.



MK Tours, S.A.

MK Tours, S.A.



Canoa Spain, S.L.


Techite Inversiones 2012, Sl.U.






100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

66,66

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

66,66

100

51

22

731

1

5.487

1

1

50

44.428

17.771

2.316

3.364

62

3.503




APPENDIX 1




GroupThousands

of Euros

Investment

86

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIESFOR THE YEAR ENDED 31 DECEMBER 2015

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF INTERESTS IN ASSOCIATES FOR THE YEAR ENDED 31 DECEMBER 2015(EXPRESSED IN THOUSANDS OF EUROS)

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF INTERESTS IN JOINTLY CONTROLLED ENTITIES FOR THE YEAR ENDED 31 DECEMBER 2015 (EXPRESSED IN THOUSANDS OF EUROS)

APPENDIX 2

APPENDIX 3

APPENDIX 4

Globalia Tunesie, S.A.R.L.

ReservesCompany ActivityGroup

companyRegistered

office%

ownership

Capital and share premium Other equity Total

Tunisia (89)In liquidation Globalia Corporación Empresarial, S.A.

100.00 (89) (5,554) (5,732)

Investment Thousands of Euros

This appendix forms an integral part of note 5 to the annual accounts, in conjunction with which it should be read.



Maintenance of Equipment on Tarmac Service, S.A

Palacio de Congresos de Tenerife Sur

Mundo Social, A.I.E

Ocio y Turismo Novotours, A.I.E.

Company

Company

Activity

Activity

Auditor

Auditor

Group company

Registered office

Group company

Registered office

%ownership

%ownership

Effective % ownership of the

Company

Effective % ownership of the

Company

Amount of interest

Amount of interest

Madrid (Spain)

Tenerife (Spain)

Palma de Mallorca (Spain)


Maintenance and Handling

Dormant

Travel agency

Travel agency

Unaudited

Unaudited

Moya Auditores

Moya Auditores





49.0

49.0

50

50

49.0

49.0

50

50

310

72

1,762

427

Investment

Investment

87

2015 ANNUAL REPORT

Globalia Corporación Empresarial, S.A. and subsidiariesINFORMATION ON JOINTLY-CONTROLLED ECONOMIC ACTIVITIES FOR THE YEAR ENDED 31 DECEMBER 2015

APPENDIX 5

Groundforce Barcelona temporary joint venture (UTE)

Groundforce Madrid temporary joint venture (UTE)

Groundforce Tenerife temporary joint venture (UTE)

Groundforce Tenerife Norte temporary joint venture (UTE)

Groundforce Las Palmas temporary joint venture (UTE)

Groundforce Seville temporary joint venture (UTE)

Groundforce Bilbao temporary joint venture (UTE)

Iberia Globalia Cargo Bcn, temporary joint venture (UTE)

Groundforce AGP 2015, temporary joint venture (UTE)

Groundforce ALC 2015, temporary joint venture (UTE)

Groundforce BCN 2015, temporary joint venture (UTE)

Groundforce BIO 2015, temporary joint venture (UTE)

Groundforce FUE 2015, temporary joint venture (UTE)

Groundforce IBZ 2015, temporary joint venture (UTE)

Groundforce LPA 2015, temporary joint venture (UTE)

Groundforce MAD 2015, temporary joint venture (UTE)

Groundforce PMI 2015, temporary joint venture (UTE)

Groundforce TFN 2015, temporary joint venture (UTE)

Groundforce VLC 2015, temporary joint venture (UTE)

Company Activity AuditorRegistered

office % ownership


Group

Group companyholding the

interestThousands

of Euros

Barcelona (Spain)

Madrid (Spain)

Tenerife (Spain)

Tenerife (Spain)

Las Palmas de Gran Canaria (Spain)

Seville (Spain)

Bilbao (Spain)

Barcelona (Spain)

Malaga (Spain)

Alicante (Spain)

Barcelona (Spain)

Bilbao (Spain)

Fuerteventura (Spain)

Ibiza (Spain)

Las Palmas de Gran Canaria (Spain)

Madrid (Spain)


Tenerife (Spain)

Valencia (Spain)

Ground han-dling services







Freight ser-vices












KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.

KPMG, S.L.




















68

95

80

80

80

95

95

50

80

80

80

80

80

80

80

80

80

80

80

68

100

80

80

80

100

100

50

100

100

100

100

100

100

100

100

100

100

100

3,672

8,645

923

207

706

1,140

1,140

250

488

200

800

160

140

180

488

1,600

540

140

280

Investment

(1) The company’s reporting date is at 31 August.The appendix forms an integral part of note 5 to the consolidated financial statements,

in conjunction with witch it should be read.

88

Globalia Corporación Empresarial, S.A. and subsidiariesINFORMATION ON JOINTLY-CONTROLLED ECONOMIC ACTIVITIES FOR THE YEAR ENDED 31 DECEMBER 2015

APPENDIX 5

Groundforce ZAZ 2015, temporary joint venture (UTE)

Monforte Castromil Globalia temporary joint venture (UTE)

Globalia Monbús, temporary joint venture (UTE)

Globalia Chapin, temporary joint venture (UTE)

La Hispano, Monforte, Castro-mil, Globalia temporary joint venture (UTE)

Mombus Globalia Barcelona temporary joint venture (UTE)

Ecuador GBT Air Europa Autocares temporary joint venture (UTE)

Mundosenior 2011-2012 tem-porary joint venture (UTE)(1)

Halcón Monfobus Fisterra temporary joint venture (UTE)

Air Europa Swiftair, emporary joint venture (UTE)

Air Europa Swiftair, tempo-rary joint venture (UTE) 2015

Zaragoza (Spain)

Lugo (Spain)

Madrid (Spain)

Madrid (Spain)

Madrid (Spain)

Madrid (Spain)

Llucmajor (Spain)


A Coruña (Spain)

Madrid (Spain)

Madrid (Spain)


Airport passenger transport services






Travel agency

Convention centre man-agement and operation

Passenger air transport

Passenger air transport

KPMG, S.L.

-

-

-

-

-

-

-












80

50

40

80

45

45

100

50

40

51

51

100

50

40

80

45

45

100

50

40

51

51

40

100

4

2

36

5

10

450

32

5

5

(1) The company’s reporting date is at 31 August.The appendix forms an integral part of note 5 to the consolidated financial statements,

in conjunction with witch it should be read.


Maintenance of Equipment on Tarmac Service, S.A.

Palacio de Congresos Tenerife Sur

CompanyBalance at 1

January 2015 Share in profit/(loss)Balance at 31

December 2015

423

(30)

393

601

(30)

571

178

-

178

2015

Thousands of Euros

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF EQUITY-ACCOUNTED INVESTEES BY COMPANY AND MOVEMENT FOR THE YEAR ENDED 31 DECEMBER 2015 (EXPRESSED IN THOUSANDS OF EUROS)

APPENDIX 6

Company Activity AuditorRegistered

office % ownership


Group

Group companyholding the

interestThousands

of Euros

Investment

89

2015 ANNUAL REPORT

Carrying amount

At amortised cost or cost

Non-current


Current

Carrying amount2015 Fair value Fair valueTotal Total

Thousands of Euros


Globalia Corporación Empresarial, S.A. and subsidiariesCLASSIFICATION OF FINANCIAL ASSETS BY CATEGORYFOR THE YEAR ENDED 31 DECEMBER 2015

APPENDIX 7

Assets held for trading Equity instruments Unquoted 3,013 3,013 3,013 194 194 194Debt securities Unquoted - - - 55 55 55

Total 3,013 3,013 3,013 249 249 249 Loans and receivables Loans, derivatives and other Variable rate 1,571 1,571 1,571 80,200 80,200 80,200 Other financial assets 87,476 87,476 87,476 52,435 52,435 52,435 Trade receivables - - - 220,330 219,563 220,330 Trade and other receivables - - - 23,755 23,755 23,755

Total 89,047 89,047 89,047 376,720 375,953 376,720 Assets available for sale Equity instruments Unquoted 122 122 122 - - -

Total 122 122 122 - - - Hedging derivatives Traded on organised markets - - - 2,999 2,999 2,999

Total financial assets 92,182 92,182 92,182 379,968 379,201 379,968

90

Globalia Corporación Empresarial, S.A. and subsidiariesCLASSIFICATION OF FINANCIAL ASSETS BY MATURITYFOR THE YEAR ENDED 31 DECEMBER 2015

APPENDIX 8


2016 2017 2018 2019 2020Subsequent

yearsLess current

portionTotal

non-current

31/12/2015

Thousands of Euros

Investments Loans to third parties 80,200 - - - - - (80,200) - Debt securities 55 - - - - - (55) - Derivatives 2,999 - - - - 1,571 (2,999) 1,571 Other financial assets 52,435 26,720 7,120 17,098 8,659 27,879 (52,435) 87,476 Other investments 194 - - - - 3,135 (194) 3,135 Trade and other receivables Trade receivables 220,330 - - - - - (220,330) - Other receivables 22,794 - - - - - (22,794) - Personnel 961 - - - - - (961) - Total 379,968 26,720 7,120 17,098 8,659 32,585 (379,968) 92,182


Balance at 31 December 2014 3,379 29,221 98,250 49,687 (133) 180,404

Adjustments for changes in criteria 2014 and prior years - - (442) - - (442)

Corrections of errors 2014 and prior years - - (2,919) 2,919 - -

Adjusted balance at 1 January 2015 3,379 29,221 94,889 52,606 (133) 179,962

Application of losses for the year ended 31 December 2014 Reserves - - - (13,997) - (13,997)Transfer of retained earnings October 2014 - (29,221) 21,460 1,625 136 (6,000)Dividends paid - - (10,000) - - (10,000)

Balance at 31 December 2015 3,379 - 106,349 40,234 3 149,965

Legal and statutory reserve

Reserves in equity-accounted

investeesPrior years’

lossesVoluntary reserves

Reserves in consolidated companies Total

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF RESERVES AND PROFIT AND LOSS AND MOVEMENT FOR THE YEAR ENDED 31 DECEMBER 2015 (EXPRESSED IN THOUSANDS OF EUROS)

APPENDIX 9

91

2015 ANNUAL REPORT

Globalia Corporación Empresarial, S.A. and subsidiariesCLASSIFICATION OF PAYABLES AND TRADE PAYABLES BY MATURITYFOR THE YEARS ENDED 31 DECEMBER 2015 AND 2014

APPENDIX 11



2016 2017 2018 2019 2020Subsequent

yearsLess current

portionTotal

non-current

2015

Thousands of Euros

Payables Loans and borrowings 81,362 33,810 10,008 10,113 10,230 30,837 (81,362) 94,998 Finance lease payables 17,693 15,801 16,263 16,738 17,226 33,204 (17,693) 99,232 Derivatives 45,006 - - - - 95 (45,006) 95 Other financial liabilities 14,612 - - - - 7,444 (14,612) 7,444

Trade and other payables Suppliers 272,643 - - - - - (272,643) - Payables 14,881 - - - - - (14,881) - Personnel 16,189 - - - - - (16,189) - Advances from customers 56,777 - - - - - (56,777) -

Total financial liabilities 519,163 49,611 26,271 26,851 27,456 71,580 (519,163) 201,769

Carrying amount


Non-current


Current

Carrying amount2015 Fair value Fair valueTotal Total

Thousands of Euros

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF FINANCIAL LIABILITIES BY CATEGORYFOR THE YEAR ENDED 31 DECEMBER 2015

APPENDIX 10

Debts and payables Loans and borrowings Variable rate 94,998 94,998 94,998 81,362 81,362 81,362

Finance lease payables 99,232 99,232 99,232 17,693 17,693 17,693Other financial liabilities 7,444 7,444 7,444 14,612 14,612 14,612

Trade and other payables Suppliers - - - 272,643 272,643 272,643 Other payables - - - 87,847 87,847 87,847

Hedging derivatives Traded on organised markets 95 95 95 45,006 45,006 45,006

Total financial liabilities 201,769 201,769 201,769 519,163 519,163 519,163

92

Credit facilities 1 USD Market 2016 10,749 3,676 Credit facilities 2 EUR Market 2016 93,000 67,672 Credit facilities 3 EUR Market 2021 6,545 1,080 5,273Credit facilities 4 EUR Market 2016 341 310 Credit facilities 6 USD Market 2016 459 230 Other credit facilities EUR Market 2016 3,423

Total credit facilities 114,517 72,968 5,273

Finance lease 1 EUR Market 2022 - 428 2,623Finance lease 2 EUR Market 2022 - 111 717Finance lease 3 EUR Market 2022 - 250 1,597Finance lease 4 EUR Market 2022 - 493 3,241Finance lease 5 EUR Market 2016 - 44 Finance lease 6 EUR Market 2017 - 445 77Finance lease 7 EUR Market 2016 - 121 Finance lease 8 USD Market 2022 - 4,527 23,725Finance lease 9 USD Market 2022 - 4,582 25,459Finance lease 10 USD Market 2023 - 6,692 41,793

Total finance leases 17,693 99,232

Loan 1 EUR Market 2017 7,800 1,560 910Loan 2 EUR Market 2021 13,500 1,876 8,383Loan 3 EUR Market 2023 5,146 589 3,610Loan 4 EUR Market 2023 21,883 1,520 20,374Loan 5 EUR Market 2016 1,000 52 Loan 6 USD Market 2017 14,454 7,887Loan 7 EUR Market 2017 15,260 34 15,260Loan 8 EUR Market 2025 23,000 1,174 21,953Loan 9 EUR Market 2024 15,000 1,295 9,567Loan 10 EUR Market 2019 1,958 112 1,782

Total loans 119,001 8,212 89,726

Collection management facilities 12 Other 171

Total 114,517 99,056 194,231

Globalia Corporación Empresarial, S.A. and subsidiariesMAIN CHARACTERISTICS OF PAYABLES FOR THE YEARENDED 31 DECEMBER 2014

APPENDIX 12

CurrencyType of debt Effective rate Maturity Nominal amount Current Non-current

This appendix forms an integral part of note 25 to the consolidated financial statements,in conjunction with which it should be read.

93

2015 ANNUAL REPORT

Globalia Corporación Empresarial, S.A. and subsidiariesRECONCILIATION BETWEEN NET INCOME AND EXPENSE FOR THE YEAR AND TAXABLE INCOME OF THE SPANISH CONSOLIDATED TAX GROUPFOR THE YEAR ENDED 31 DECEMBER 2015

Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF THE INCOME TAX EXPENSE RELATED TO PROFIT OF THE CONSOLIDATED TAX GROUP IN SPAIN FOR THE YEAR ENDED 31 DECEMBER 2015

APPENDIX 13

APPENDIX 14


Increases Increases

Consolidated income statement

Income and expense recognised in consolidated equity

2015 Decreases DecreasesNet Net Total

Consolidated income and expense for the period 16,364 - 16,364

Income tax (1,138) - (1,138)

Consolidated profit before income tax 15,226 - 15,226

Permanent differences: Individual companies 8,391 27,440 (19,049) - - - (19,049)

Temporary differences: Individual companies originating in current year and prior years 13,028 2,428 10,600 - - - 10,600

Offset of tax loss carryforwards - 1,694 (1,694) - - - (1,694)

Taxable income 5,083 - 5,083

31/12/2014Thousands of Euros


Consolidated income and expense before tax (7,278) - (7,278)Tax at 28% (2,038) - (2,038)Non-taxable income (3,416) - (3,416)Non-deductible expenses (997) - (997)Effect of differences in tax rates (391) - (391)Deductions and discounts for the current year 163 - 163Tax deductions applied and not recognised in prior years 737 - 737

Consolidated income tax expenseContinuing operations (5.942) - (5.942)

Consolidated profit or loss

Consolidated equity Total

Thousands of euros

94

Globalia Corporación Empresarial, S.A. and subsidiariesCONFLICTS OF INTEREST OF DIRECTORS FOR THE YEARENDED 31 DECEMBER 2015

APPENDIX 15

(1) Indirect ownershipThis appendix forms an integral part of note 30 to the consolidated financial statements,


D. Juan José Hidalgo Acera





D. Juan Antonio Hidalgo Acera

Dª. María José Hidalgo Gutiérrez

Dª. María José Hidalgo Gutiérrez

D. Francisco Javier Hidalgo Gutiérrez




Dª. Cristina Hidalgo Gutiérrez



Sra. Avelina Gutiérrez Saiz

Sra. Avelina Gutiérrez Saiz

D. Abel Matutes Juan




JJH Capital & Asset Management S.L.U.

Covilla, S.L. (1)

Beach Resorts, S.L. (1)

JJH Activos Inmobiliarios S.L.U. (1)

JJH Capital Inversiones Exteriores S.L.U. (1)

Fondo de Alquileres

Covilla, S.L.

Beach Resorts, S.L.

Covilla, S.L.

Beach Resorts, S.L.

MCJ Inversiones S.L.

Pepeworld S.L. (1)

Covilla, S.L.

Beach Resorts, S.L.

MCJ Inversiones, S.L.

Covilla, S.L.

Beach Resorts, S.L.

Fiesta Holtels & Resort, S.L.

FST Hotels, S.L.

Balearia Eurolíneas Marítimas, S.A.

Residencial Marina, S.L.

Management of investments and real estate assets










Management of investments andrealestateassets

Holding company



Management of investments andrealestateassets



Hotel activity

Hotel activity

Sea transport

Hotel activity

Sole director

Sole director

Chairman of the board

Sole director

Sole director

-

-

Vice-chairman of the board

-

Member of the board

Joint Director

Board member

-

Member of the board

Joint and several manager

-

Member of the board

Chairman

Chairman

Member of the board

Member of the board

100.00%

80.00%

20.00%

100.00%

100.00%

-

5.00%

20.00%

5.00%

20.00%

33.33%

50.00%

5.00%

20.00%

33.33%

5.00%

20.00%

-

-

-

43.98%

DirectorPercentage ownership

Position and dutiesCompany Statutory activity

95

2015 ANNUAL REPORT


Globalia Corporación Empresarial, S.A. and subsidiariesDETAILS OF REVENUES BY CATEGORY OF ACTIVITY AND GEOGRAPHICAL MARKET FOR THE YEARS ENDED 31 DECEMBER 2015 AND 2014 (EXPRESSED IN THOUSANDS OF EUROS)

APPENDIX 16

Air division 473,082 74,436 310,648 58,090 707,446 98,548 33,839 15,037 1,525,015 246,111

Travel agency division 1,181,793 139,233 34,889 3,217 - - - - 1,216,682 142,450

Tour operator division 325,615 27,152 19,975 880 14,823 992 - - 360,413 29,024

Hotel division 46,784 5,425 - - 81,892 11,764 - - 128,676 17,189

Handling division and other 142,666 24,120 - - 3,634 - 1,933 - 144,599 24,120

2015 2015 2015 2015 20152014 2014 2014 2014 2014

Domestic Rest of European Union Americas Other Total

96

Globalia Corporación Empresarial, S.A. and subsidiariesINCOME STATEMENT FOR THE YEAR BETWEEN 1 JANUARY 2014 AND 31 DECEMBER 2014 (EXPRESSED IN THOUSANDS OF EUROS)

APPENDIX 17

A) CONTINUING OPERATIONS1. Revenues a) Sales b) Services rendered2. Changes in inventories of finished goods and work in progress3. Self-constructed assets4. Supplies a) Merchandise used b) Raw materials and consumables used c) Subcontracted work d) Impairment of merchandise, raw materials and other supplies5. Other operating income a) Non-trading and other operating income b) Operating grants taken to income6. Personnel expenses a) Salaries and wages b)Employeebenefitsexpense c) Provisions7. Other operating expenses a) Losses, impairment and changes in trade provisions b)Otheroperatingexpenses c)Taxes8. Amortisation and depreciation9. Non-financial and other capital grants10. Provision surpluses11. Impairment and losses on disposal of fixed assets a) Impairment and losses b) Losses on disposal and other12. Impairment and gains/losses on disposal of consolidated investments13. Loss on consolidated companies14. Extraordinary income and expenseA.1) RESULTS FROM OPERATING ACTIVITIES (1+2+3+4+5+6+7+8+9+10+11+12+13+14)15. Finance income a) Dividends b)Marketablesecuritiesandotherfinancialinstruments16. Finance costs a) Other b) Provision adjustments17. Change in fair value of financial instruments a) Trading portfolio and other b)Proceedsfromavailable-for-salefinancialassets18. Exchange losses19. Impairment and losses on disposal of financial instruments a) Impairment and losses b) Gains on disposal and otherA.2) NET FINANCE INCOME/(COST) (15+16+17+18+19)20. Share of profits of equity-accounted investees21. Impairment and gains/(losses) on disposal of equity-accounting investments 22. Profit/loss on equity-accounted investeesA.3) PROFIT BEFORE INCOME TAX (A.1+A.2+20+21+22)23. Income taxA.4) PRIOR YEARS’ PROFIT FROM CONTINUING OPERATIONS (A.3+23)

B) DISCONTINUED OPERATIONS24. Profit/Loss from discontinued operations, net of income tax

A.5) CONSOLIDATED PROFIT FOR THE YEAR (A.4+24)

3,334,134 1,193,591 2,140,543

0 11,587

(1,705,853)(1,508)

(1,664,995)(39,306)

(43)36,988 36,988

(453,075)(357,787)

(95,288)0

(1,049,482)(4,694)

(1,039,867)(4,920)

(53,984)0 0

(28,881)(15,468)(13,413)

00

1,211 92,646 1,850

(1,986)3,836

(29,849)(26,909)

(2,940)(31,796)(31,796)

0 (935)1,481 (288) 1,768

(59,249)136

33,533

(20,730)12,803

0 0

12,803

(Debit) Credit01/01/2014-31/12/2014 (12 months)

Grupo Globalia has reinforced its CSR values in

its corporate culture once again this year. During

this year, we have consolidated the projects that

we began in previous years, showing our utmost

confidence in them and their results with con-

crete actions.

The Group’s Directors, fully conscious of the

Group’s commitments to its customers and to the

environment, continue with their general objec-

tive of implementing and maintaining a Quality

and Environment Management System based on

sustainability, ongoing improvement, customer

satisfaction and the participation of all the em-

ployees. The objective is to obtain external rec-

ognition of Grupo Globalia’s efforts, not only in

the sense of the Quality of the services it provides,

but also of the ongoing improvement of its work-

ing methods, its customer service and its respect

for the environment; for us, no detail is too small.

All the actions carried out in this area during 2015

can be classified into two large groups: environ-

mental measures and social measures.

ENVIRONMENTGlobalia, and each of its divisions in particular, is

fully committed to sustainable economic prosper-

ity for society as a whole. For this reason, at Glo-

balia, we have adopted the following principles:

1.- We are responsible for our financial results

and we guarantee transparency in the informa-

tion we provide.

2.- We form associations with local, national and

international bodies to help build and strength-

en the communities that we serve through the

creation of employment and economic growth.

3.- We act with integrity and put every effort into

earning and deserving the trust of our customers.

4.- Globalia considers Operational Security and

Quality top priorities and puts them at the centre

of the company’s culture.

SOCIAL RESPONSIBILITYLikewise, Globalia is fully committed to promot-

ing social responsibility:

1.- Globalia offers job security and motivating

working conditions, all in accordance with the

applicable legislation.

2.- At Globalia, we believe in internal promotion

and ensuring equality of opportunity among all

employees.

3.- We undertake to respect and fulfil all employ-

ment laws in all the places in which we operate

and to ensure that our suppliers and subcontrac-

tors likewise follow our principles.

DECLARATION OF INTENT1.- To use all resources necessary to guaran-

tee that the service we offer is safe, reliable and

strictly in fulfilment of all the specific Quality

Management System requirements (Standards

OPS 1.035, EASA Part M. A. 712 and UNE-EN-ISO

9001:2008), as well as the rest of the regulations

applicable to the sector (OPS1, EASA, IATA, OACI,

etc.), and in respect of the Environment (UNE-

EN-ISO 14001:2004 and all applicable legal re-

quirements).

2.- To develop ongoing improvement programmes

for all processes and services and for our customer

services, with the underlying objective being to

ensure customer satisfaction, whilst taking into ac-

count the quality-to-cost ratio.

3.- To ensure that quality, ongoing improvement

and pollution prevention are keystones in our

corporate culture.

4.- To establish actions and programmes focused

on the prevention and not just detection of prob-

lems. To prevent the pollution that may be caused

by our activities, by identifying, verifying and con-

trolling all the derived environmental aspects.

5.- To continuously improve both our environ-

mental behaviour and the efficiency of our pro-

cesses, by regularly setting and meeting targets.

6.- To establish permanent training programmes

that allow us to have highly qualified personnel

prepared to carry out the activities that fall within

the scope of the Quality and Environment System.

7.- To keep in constant contact with our cus-

tomers, so that we can continuously improve

the service provided and evaluate their degree of

satisfaction with us.

8.- To optimise the global activities of the air di-

vision, Air Europa, by means of a strategy orient-

ed toward maintaining leadership in the sector.

CORPORATESOCIAL RESPONSIBILITY REPORTGLOBALIA CORPORACIÓN EMPRESARIAL, S.A.

AND SUBSIDIARIES

97

98

The Directors will establish, within Air Europa’s

Quality and Environment System, the plans and

resources necessary to achieve the objectives

established by the Quality and Environment

Committee.

The Quality Manual is the document that sets out

the Quality System’s philosophy and guidelines.

All Air Europa personnel must comply with the

contents of the Manual.

AIR EUROPA MAINTAINS ITS EMAS CERTIFICATIONAir Europa has its Environmental Declaration, is-

sued in Palma de Mallorca, on 30 June 2014, vali-

dated by virtue of the provisions of article 4 of EC

Regulation No. 1221/2009, through the Spanish

Association for Standardisation and Certification

(AENOR). To read the Environmental Declaration,

please click on the following link to our website:

http://www.aireuropa.com/waeam/es/estati-

cos/informacion/calidad.html

Well aware of the growing environmental con-

cerns in society, and ahead of the rest of the

Spanish airlines, Air Europa obtained certification

ISO 14001:2004 for Environmental Management

Systems in January 2006, supported by its Quality

Management System, already in place since 2001.

The essential objective of this system is to mini-

mise the environmental impact caused by all the

company’s activities, with a focus on decreasing

the natural resources consumed (paper, water,

electricity, fuel, etc.), proper waste management

(recovery, reuse and recycling), and optimisation

of procedures to reduce both the noise and CO2

emissions from the aeroplanes.

We have made great investments in technologies

that reduce CO2 emissions, with the installation

of “winglets” in the aeroplanes in the B737-800

fleet when the configuration so permits. These

aerodynamically efficient devices, placed at the

end of the wings, have allowed us to reduce CO2

emissions by 2.5% as compared to the aero-

planes that do not have these devices.

SOLIDARITY EFFORTSGlobalia’s 2015 Corporate Social Responsibility

Report covers the activities, achievements and

results of our corporate activities as pertains to

CSR and Social Actions.

International cooperation and a firm commitment

to the needs detected in today’s society have giv-

en rise to new lines of cooperation with associa-

tions, foundations and NGOs, which translate our

best intentions into tangible and positive results in

the different areas of activity.

During 2015, we expanded our social respon-

sibility initiatives, cooperating with different or-

ganisations. Again this year, we can highlight the

participation of our company’s employees in the

“AEA Solidaria” association, created by a group

of workers of the airline, with the support of the

General Directors. For the fifth consecutive year,

“AEA Solidaria” has continued cooperating with

the projects that had already begun, without for-

getting the new solidarity challenges, both na-

tional and international.

In Bolivia, they help the children’s homes “Niños

de Santa Cruz” and “Virgen de Fátima” and in the

Dominican Republic, the foster home “Pasitos de

Jesús” and the “Los Cocos” Neighbourhood.

The support given to these projects is described

in our 2014 CSR report. “AEA Solidaria” is heav-

ily involved with each of the homes, delivering

diverse humanitarian supplies, which could not

happen without Air Europa’s generosity, as it

fills the holds of its aeroplanes with boxes full of

clothes, shoes, school materials, medicines, etc.

“AEA Solidaria” collects and selects the items that

each home needs the most, and delivers them in

person. Our co-workers do not just deliver the

materials; they also visit each of the homes regu-

larly, checking to see what they need and sharing

with the children whilst they stay at each of the

destinations (Santo Domingo and Bolivia).

“AEA Solidaria” has a key partner in Santo Do-

mingo, “Be Live Hotels”. The Be Live Experience

Hamaca Hotel continues to work with us deliv-

ering food every week to the “Pasitos de Jesús”

Foster Home. The Be Live Experience Hamaca

Hotel is committed to the cause and project of

“AEA Solidaria”, cooperating daily by helping our

co-workers distribute humanitarian aid and hav-

ing other activities in the hotel installations.

99

2015 ANNUAL REPORT

In September, the auditorium of the Ágora Por-

tals Schools in Mallorca hosted the presentation

of the “Sueños que Vuelan” (“Dreams that Fly”)

Documentary. The Documentary, produced by

Luz del Norte Films, shows the experiences of

the volunteers of “AEA Solidaria”.

During this presentation,

the “AEA Solidaria” team was

accompanied by several of

the people that benefit from

the solidarity initiatives in

Santo Domingo and Bolivia,

who explained and thanked

the team personally for the

invaluable help and sup-

port they receive every day

from our co-workers. There

were over 250 attendees

during the emotive event,

including authorities from

the Municipality of Calviá,

celebrities from the Balearic

sports world, the local me-

dia, etc.

“AEA Solidaria” continues to

collect funds through the

Solidarity Breakfasts that

they hold on the first Tuesday of each month, in

the installations of the Globalia building in LLuc-

major and in the offices of Firms in the Adolfo Su-

arez Madrid Barajas Airport.

Again this year, “AEA Solidaria” wanted to help all

the children in their projects in Bolivia and Santo

Domingo live the magic of Christmas. Therefore,

Santa Claus visited the “Santa Cruz” Children’s

Home, delivering a present to each of the children.

Santo Domingo also enjoyed Santa Claus and

the presents he brought. As it did last year, the Be

Live Experience Hamaca Hotel prepared a party

for the children of the Deaf Person’s School of

Boca Chica and for the children of the Los Cocos

neighbourhood.

“AEA Solidaria” works extensively in the projects

of the Indig Foundation. Among these, we can

highlight the case of Jorge, a 21-year-old who

has travelled to Spain with the help of both or-

ganisations. He has been able to make his dreams

come true and is currently studying in the Palma

de Mallorca Tourism College. Jorge is receiving

professional training, with the objective of be-

ing able to find a good job when he goes back

to Bolivia, which will allow him to form his own

family. This is but one of the many stories we can

recall from this past year.

ORGANISATIONS

WE WORK WITH International cooperation and a firm commitment

to the needs we detect in today’s society have

given rise to our lines of cooperation with asso-

ciations and NGOs, which make our best inten-

tions translate into positive and tangible results in

the different areas in which each of them works.

During this year, we have cooperated with or

started or renewed cooperation agreements

with the following organisations:

Acoger y Compartir - Ariños da Terra – AENA

V Evento Solidario – Asociación de Familiares

de Enfermos de Alzheimer (Alzheimer Suffer-

ers Family Association)- Federación Española

de Enfermos Neuromusculares (Spanish Fed-

eration of Neuromuscular Diseases)– Asociación

Española Contra el Cáncer (Spanish Association

Against Cancer) – Bomberos Unidos Sin Fron-

teras (Firemen Without Borders) - CODESPA

- Cruz Roja (The Red Cross)- Fundación Ciru-

100

janos Plásticos Mundi (Mundi Plastic Surgeons

Foundation) - Fundación Deporte Joven (Young

Sports Foundation)- Fundación Integra - Fun-

dación Pequeño Deseo - Fundación Respiralia

- Infancias Sin Fronteras - Make a Wish Spain -

Fundación Mensajeros de la Paz – Fundación La

Caixa proyecto Gavi-Alliance – Fundación Irene

Villa – Fundación Sonrisa Médica – UNICEF.

Because of the importance and magnitude of

the respective projects, in this year 2015 we want

to highlight a very special partnership. We have

signed an agreement with SCHOLAS OCUR-

RENTES, of which we are especially proud and to

which we are truly committed.

Scholas Ocurrentes is an international non-profit

public welfare entity, which works with schools

and educational communities, both public and

private, of all religious faiths and especially those

that are in a vulnerable situation, with the ob-

jective of building a world without exclusion.

It was inspired by His Holiness Pope Francisco

to promote a bond between all the schools in

the world. In fact, the Pope received Enrique

Palmeyro, the Global Director of Scholas, and

Juan José Hidalgo, President of Globalia, in

Santa Marta (City of the Vatican) last November.

They both handed over the agreement signed by

both institutions to The Holy Father.

RETAIL DIVISION Our commitment to service quality and respect

for the environment has led us to implement an

integrated management system in the corporate

area of Viajes Halcón and Viajes Ecuador, under

Standards ISO 9001 and 14001, which was cer-

tified by Bureau Veritas in 2010, including the

Companies, Public Tenders and Events depart-

ments.

Since its implementation, the integrated system

contributes to the ongoing improvement of our

processes, helping us to determine the expectations

of our customers and focus our efforts on satisfying

them, whilst empowering the efforts of the entire

human team to achieve the common objectives.

With regard to the preservation of our environ-

ment, the implemented system promotes the

improvement of our environmental performance,

whilst we adopt the commitment of ensuring that

the activities of our organisation are respectful of

the environment and cause the minimum possible

impact. Our Environmental Declaration is avail-

able on our website, at the following link: http://

www.halconviajes.com/upload/promociones//

fotoPromocionWeb84079.pdf

In 2013, we renewed the three-year certification,

surpassing the objectives that had been set.

Department of RSC Globalia.

Annual Report 2015 - Globalia · Annual Report 2015. 2 GLOBALIA CORPORACIÓN EMPRESARIAL S.A. Y SOCIEDADES DEPENDIENTES Entre ellas: AIR EUROPA LÍNEAS AÉREAS, S.A.U. GLOBALIA BUSINESS

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