Consolidated Financial Statements and Consolidated Management ...
Consolidated Financial Statements and Consolidated Management ... Consolidated Financial Statements and Consolidated Management ...
THE ENVIRONMENT By 2011, NH Hoteles had already managed to meet the targets set in its Strategic Environmental Plan 2008-2012. This Plan lays down targets on energy and water efficiency, as well as on waste and CO 2 emission reductions. 20% reduction in CO 2 emissions 2012 20% reduction in energy consumption 20% reduction in water consumption 20% reduction in waste generation Aware of the importance climate change strategy has for society as well as its economic repercussion for our shareholders, reduction targets of 20% were set for the above mentioned variables, which are monitored on a quarterly basis. NH Group was the first Spanish listed company to publish the results of its environmental plan together with its economic variables as yet another element in its transparency policy for investors and society as a whole. Awareness of this policy within the company is reinforced each year through an employee training plan. The Company worked on implementing energy control procedures and systems based on the ISO 50001 international standard in 2011, and obtained certification for its energy monitoring programme in October 2011. NH Hoteles is the very first hotel chain in the world to obtain this energy efficiency certification, which was backed by the energy consumption results obtained in 2011, reflecting a 9.9% improvement in energy efficiency. More specifically, consumption per customer per night fell from 41.2 kwh/customer to 37.1 kwh/customer. This improvement in efficiency allowed the Group to present consolidated results in its strategic plan, recording a 22.7% fall in energy consumption and savings of 27.6% in water consumption, which have resulted in a clear reduction in energy costs. These energy improvements have allowed the Company to absorb the increased electricity, gas and water prices introduced in 2011. NH Hoteles’ carbon footprint fell by 40% in 2008. In 2011, NH Hoteles made progress in the transparency of its environmental management and was granted the TÜV Rhineland carbon footprint assessment certification in accordance with the standard GHG Protocol. CO 2 emission reductions since 2008 account for 40% of the average level recorded in 2007. In 2011, the Company continued its important task of conducting, together with its suppliers, environmental research and development through its innovative Sustainable NH Club project. NH Hoteles received several important awards throughout the year, such as the “Muévete Verde” award granted by the Madrid regional authority for its contribution to the promotion of electric mobility, the TRI Award which recognises NH Hoteles’ environmental policy, and the Sourcing Community Award to the Sustainable NH Club for implementing sustainable initiatives in conjunction with the Company’s suppliers. RESULTS NH Hoteles took one step further in 2011 to respond to variations in demand in a context of slow, country-variable growth through on the spot management of costs and efficiency. During the first nine months, sales growth averaging over 5% enabled the Group to post positive net results from the very first quarter. An Efficiency Plan was put in place after the second quarter, which has contributed to significant savings in Direct Management Costs and Personnel Expenses. As a result, NH Hoteles’ annual revenue in 2011 amounted to 1,428.3 million euros with year on year growth of 7.0%, while aggregated operating costs totalled 1,225.9 million euros with an annual variation of 3.3%, a substantially lower figure. This allowed annual EBITDA to reach 202.4 million euros with year on year growth of 36.9% compared to its operating profit in 2010. Hotel sales amounted to 1,339.2 million euros, a rise of 3.6% over the preceding year. RevPar increased by 4.5%, two thirds of which came from an increase in occupation levels and one third from price increases. Management income should be highlighted among hotel revenues in 2011, which amounted to 15 million euros, a 31.5% rise on the preceding year. 10 CONSOLIDATED MANAGEMENT REPORT
Revenue from Real Estate Activity, which totalled 17 million euros, also increased by 21% in relation to the figure recorded in 2010. However, the greatest growth in income came as a result of non-strategic asset sales, which made a net pre-tax contribution of 53 million euros before minority interests, the most significant of which were the sales of the Hotel Lotti in Paris and the Artos transaction. In the Artos transaction, NH Hoteles exercised a purchase option it held on ten hotels which were operated under a leasing scheme in Germany and Austria. At the same time, the Company sold five hotels to the INVESCO investment fund, with which it entered into a new operating lease agreement without a purchase option. According to this agreement, the rent became variable with a guaranteed minimum, the initial amount of which is similar to the amount the Group had been paying. The sale generated net capital gains of 32.29 million euros and also led to a temporary increase of 12 million euros in net financial debt. NH Group’s salaries and other recurrent operating costs in 2011 amounted to 899.9 million euros, 0.6% higher than in the preceding year, despite an average inflation rate of between 2% and 2.5% in the group of countries where NH operates. This growth of only 5 million euros in absolute terms is more significant when compared to the percentage increase recorded in 2010 (4%) or with the 3.6% rise in Hotel Activity revenue. Management profit amounted to 493.8 million euros, 76.2 million euros more than the figure recorded by NH Group in 2010. Lease and municipal property rates were kept at the same levels as the preceding year, 291.4 million euros and 20.4% of revenue, thanks to the renegotiation of some rental agreements, which made it possible to offset the incremental effect of a greater number of rented rooms. NH Group’s EBITDA in 2011 amounted to 202.4 million euros, a 36.9% improvement with regard to the figure recorded in the preceding year. Recurrent and no recurrent financial expenses totalled 53.2 million euros, 20.6% down from the 67.1 million euros posted in 2010. This was due to a reduction in NH Group’s borrowing and to the elimination of financial expenses or negative exchange rate differences linked to non-strategic asset sale transactions which had taken place in prior years. These two factors have had a greater impact than the rise in the average cost of NH Hoteles’ financial debt due to the increase in margins resulting from the renewal of short term credit lines, as well as the rise in the cost of its syndicated debt. NH Hoteles’ pre-tax profit in 2011 amounted to 4.3 million euros which, after Corporation Tax, which was positive due to negative tax bases, and minority interests, gave a net profit of 6.2 million euros. The improvement undergone by the Company’s activity over the last three years has allowed it to post its first net profit since 2008. CONSOLIDATED MANAGEMENT STATEMENT (Euros in millions) 2011 2010 2011/2010 M EUR. % M EUR. % VAR. % Income from Hotel Activity 1,339.2 94% 1,292.8 97% 4% Income from Real Estate Activity 17.0 1% 14.0 1% 21% Non-recurrent income 72.1 5% 28.0 2% 158% TOTAL INCOME 1,428.3 100% 1,334.8 100% 7% Cost of Real Estate Sales (2.0) (0%) (3.0) (0%) (33%) Personnel Costs (479.9) (34%) (478.3) (36%) 0% Direct Management expenses (420.0) (29%) (416.6) (31%) 1% Non-recurrent Expenses (32.6) (2%) (19.3) (1%) 69% MANAGEMENT PROFIT 493.8 35% 417.6 31% 18% Leases and property rates (291.4) (20%) (269.7) (20%) 8% EBITDA 202.4 14% 147.8 11% 37% Asset impairment provision (15.3) (1%) (9.4) (1%) 63% Depreciation (119.0) (8%) (123.2) (9%) (3%) EBIT 68.1 5% 15.2 1% 349% Financial expenses (51.3) (4%) (42.7) (3%) 20% Non-recurrent exchange rate differences (1.9) (0%) (24.4) (2%) (92%) Change in fair value of financial instruments (6.6) (0%) 0.7 0% (1,043%) Equity Method Profit (Loss) (4.0) (0%) (1.5) (0%) 167% EBT 4.3 0% (52.7) (4%) 108% Company Tax 6.2 0% 5.1 0% 21% PROFIT before Minority Interests 10.5 1% (47.6) (4%) 122% Minority Interests (4.3) (0%) 6.1 0% (170%) NET PROFIT (LOSS) 6.2 0% (41.5) (3%) 115% Note: This consolidated operating statement, on which the figures of this management report are based, was drawn up using hotel management grouping criteria that do not necessarily coincide with the accounting standards applied to the consolidated financial statements of NH Hoteles Group. CONSOLIDATED MANAGEMENT REPORT 11
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THE ENVIRONMENT<br />
By 2011, NH Hoteles had already managed to meet the targets set in its Strategic Environmental Plan 2008-2012. This Plan lays down targets on energy <strong>and</strong><br />
water efficiency, as well as on waste <strong>and</strong> CO 2<br />
emission reductions.<br />
20%<br />
reduction in CO 2<br />
emissions<br />
2012<br />
20%<br />
reduction in<br />
energy consumption<br />
20%<br />
reduction in<br />
water consumption<br />
20%<br />
reduction in<br />
waste generation<br />
Aware of the importance climate change strategy has for society as well as its economic repercussion for our shareholders, reduction targets of 20% were<br />
set for the above mentioned variables, which are monitored on a quarterly basis. NH Group was the first Spanish listed company to publish the results of its<br />
environmental plan together with its economic variables as yet another element in its transparency policy for investors <strong>and</strong> society as a whole. Awareness of<br />
this policy within the company is reinforced each year through an employee training plan.<br />
The Company worked on implementing energy control procedures <strong>and</strong> systems based on the ISO 50001 international st<strong>and</strong>ard in 2011, <strong>and</strong> obtained<br />
certification for its energy monitoring programme in October 2011. NH Hoteles is the very first hotel chain in the world to obtain this energy efficiency<br />
certification, which was backed by the energy consumption results obtained in 2011, reflecting a 9.9% improvement in energy efficiency. More specifically,<br />
consumption per customer per night fell from 41.2 kwh/customer to 37.1 kwh/customer.<br />
This improvement in efficiency allowed the Group to present consolidated results in its strategic plan, recording a 22.7% fall in energy consumption <strong>and</strong><br />
savings of 27.6% in water consumption, which have resulted in a clear reduction in energy costs. These energy improvements have allowed the Company to<br />
absorb the increased electricity, gas <strong>and</strong> water prices introduced in 2011. NH Hoteles’ carbon footprint fell by 40% in 2008.<br />
In 2011, NH Hoteles made progress in the transparency of its environmental management <strong>and</strong> was granted the TÜV Rhinel<strong>and</strong> carbon footprint assessment<br />
certification in accordance with the st<strong>and</strong>ard GHG Protocol. CO 2<br />
emission reductions since 2008 account for 40% of the average level recorded in 2007.<br />
In 2011, the Company continued its important task of conducting, together with its suppliers, environmental research <strong>and</strong> development through its innovative<br />
Sustainable NH Club project. NH Hoteles received several important awards throughout the year, such as the “Muévete Verde” award granted by the Madrid<br />
regional authority for its contribution to the promotion of electric mobility, the TRI Award which recognises NH Hoteles’ environmental policy, <strong>and</strong> the<br />
Sourcing Community Award to the Sustainable NH Club for implementing sustainable initiatives in conjunction with the Company’s suppliers.<br />
RESULTS<br />
NH Hoteles took one step further in 2011 to respond to variations in dem<strong>and</strong> in a context of slow, country-variable growth through on the spot management<br />
of costs <strong>and</strong> efficiency. During the first nine months, sales growth averaging over 5% enabled the Group to post positive net results from the very first<br />
quarter. An Efficiency Plan was put in place after the second quarter, which has contributed to significant savings in Direct <strong>Management</strong> Costs <strong>and</strong> Personnel<br />
Expenses. As a result, NH Hoteles’ annual revenue in 2011 amounted to 1,428.3 million euros with year on year growth of 7.0%, while aggregated operating<br />
costs totalled 1,225.9 million euros with an annual variation of 3.3%, a substantially lower figure. This allowed annual EBITDA to reach 202.4 million euros with<br />
year on year growth of 36.9% compared to its operating profit in 2010.<br />
Hotel sales amounted to 1,339.2 million euros, a rise of 3.6% over the preceding year. RevPar increased by 4.5%, two thirds of which came from an increase<br />
in occupation levels <strong>and</strong> one third from price increases. <strong>Management</strong> income should be highlighted among hotel revenues in 2011, which amounted to 15<br />
million euros, a 31.5% rise on the preceding year.<br />
10 CONSOLIDATED MANAGEMENT REPORT
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