Consolidated Financial Statements and Consolidated Management ...

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The applicable interest rate will be the three month EURIBOR rate plus a differential of 450 basis points, which may be adjusted either upward or downward on the basis of compliance with the Financial Debt/EBITDA ratio and the degree of fulfilment of the Tranche B repayment schedule. The structuring fee is 2% of the syndicated loan’s amount. Within 45 days of signing the syndicated loan, the Group must enter into a hedging agreement for no less than fifty per cent of the Tranche A1 amount drawn down and pending repayment at any time and for a term of no less than four years. The institutions which provide the hedge will have the same guarantees attached to the loan. In addition, the Group has obtained a refinancing undertaking from IMI / Banca Intesa for 75 million euros. The term for this loan is for three years, with an optional additional two years at the discretion of NH Group’s Italian subsidiary. The agreement will be signed in July once the corporate restructuring process in Italy has come to an end. The arrangement of the syndicated loan, the 14 million euro loan and the agreement reached in Italy, the joint amount of which exceeds 805 million euros, culminated the process of refinancing the Group, allowing it to focus all its efforts on continuing to improve its efficiency and results. The pro forma maturity schedule of the Group’s financial debt at 31 December 2011 once the refinancing transaction described above with its respective repayment schemes had been taken into account (amounting to 805 million euros, representing 76% of the Group’s total net financial debt), is shown in the following table: Maturities Limit Available Drawn Down 2.011 2.012 2.013 2.014 Resto Mortgage guarantee loans 194,818 893 193,925 37,942 21,792 21,318 112,873 Fixed rate 47,810 - 47,810 - 2,773 2,853 2,935 39,249 Variable Rate 147,008 893 146,115 - 35,169 18,939 18,383 73,624 Asset guarantee loans 12,297 - 12,297 - 8,517 2,780 1,000 - Fixed rate - - - - - - - - Variable Rate 12,297 - 12,297 - 8,517 2,780 1,000 - Loans against pledged shares 75,000 15,000 60,000 - 3,750 7,500 7,500 41,250 Variable Rate 75,000 15,000 60,000 - 3,750 7,500 7,500 41,250 Subordinated loans 75,000 - 75,000 - - - - 75,000 Variable Rate 75,000 - 75,000 - - - - 75,000 Syndicated loans 715,855 19,555 696,300 - - 131,586 131,586 433,129 Tranche A1 Variable Rate 315,855 - 315,855 - - 31,586 31,586 252,684 Tranche A2 Variable Rate 150,000 19,555 130,445 - - - - 130,445 Tranche B Variable Rate 250,000 - 250,000 - 100,000 100,000 50,000 Credit lines 21,600 1,595 20,005 - 20,005 - - - Variable Rate 21,600 1,595 20,005 - 20,005 - - - Arrangement expenses - - (4,812) - (1,673) (1,046) (1,046) (1,047) Debt due to interest - - 4,330 - 4,330 - - - Borrowing situation at 31/12/2011 1,094,570 37,043 1,057,045 - 72,871 162,612 160,358 661,205 Borrowing situation at 31/12/2010 1,197,397 23,818 1,171,759 507,966 514,432 22,642 18,704 108,015 (*) New arrangement expenses have not been taken into consideration until the analysis of this transaction has been conducted in accordance with IFRS 39, paragraphs 40-42 and GA 62. Assuming that the terms and conditions agreed upon with the financial institutions had been conducted in force on 31 December 2011, the consolidated balance sheet on such date would have been as follows: ASSETS Without Refinancing 12/31/11 Refinanced 12/31/11 LIABILITIES AND SHAREHOLDERS’ EQUITY Without Refinancing 12/31/11 Refinanced 12/31/11 Fixed assets and real estate investments 2,343,131 2,343,131 NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY 1,139,147 1,139,147 Non-current financial investments 182,417 182,417 Minority Interests 204,650 204,650 Deferred tax assets and other noncurrent assets 136,264 136,264 TOTAL NET ASSETS 1,343,797 1,343,797 NONCURRENT ASSETS 2,661,812 2,661,812 Subsidies 21,195 21,195 Provisions for contingencies and expenses 30,846 30,846 Debts with credit institutions 225,923 984,174 Deferred tax liabilities and other noncurrent liabilities 310,622 310,622 NONCURRENT LIABILITIES 588,586 1,346,837 Inventories 116,228 116,228 76 Trade creditors and other accounts receivable 194,223 194,223 Provisions for contingencies and expenses 1,241 1,241 Other current assets 11,364 11,364 Debts with credit institutions 831,122 72,871 Cash, bank and equivalents 91,143 91,143 Trade creditors and other accounts payable 310,024 310,024 CURRENT ASSETS 412,958 412,958 CURRENT LIABILITIES 1,142,387 384,136 TOTAL ASSETS 3,074,770 3,074,770 TOTAL LIABILITIES AND EQUITY 3,074,770 3,074,770 106 REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
31. INFORMATION ON ENVIRONMENTAL POLICY The management of the integrated water cycle within the Sotogrande development and its surroundings forms part of the operations performed by the Group through Sotogrande, S.A., which include waste water treatment and purification to minimise damage to the environment. As part of its treatment and purification operations the Group owns two wastewater treatment plants capable of serving up to 20,000 inhabitants. These plants are interconnected, so that treated effluent is discharged into the sea through an underwater outfall. These stations are intercommunicated, so that treated effluents are discharged into the sea through an underwater outfall. Likewise, the Company has built a tertiary treatment system in one of the treatment stations. This further purifies water, making it suitable to irrigate part of the Real Club de Golf de Sotogrande and the pitches of the Santa María Polo Club, with whom agreements have been signed for this purpose. The tertiary treatment plant has been in service since July 2003. The entry into service of this tertiary system has increased water resources by 300,000 m³ / year. Furthermore, the Group is currently focusing its actions on urban land with partially approved plans as part of its promotional and development activities for the Sotogrande Development. In these circumstances, no preliminary environmental impact studies need be conducted on its real estate or tourist developments. Nonetheless, the Group’s policy aims to achieve maximum respect for the environment, and for this purpose it has contracted the services of an environmental consulting firm to provide environmental diagnoses and consulting on the Company’s actions. The amount of the environmental assets described net of depreciation at 31 December 2011 amounted to 1,467,000 euros (1,523,000 euros in 2010). The Group had not allocated any provisions for environmental contingencies and claims at year-end 2011. 32. EXPOSURE TO RISK The Group’s financial risk management is centralised at the Corporate Finance Division. This Division has put the necessary measures in place to control exposure to changes in interest and exchange rates on the basis of the Group’s structure and financial position, as well as credit and liquidity risks. If necessary, hedges are made on a case-by-case basis. The main financial risks faced by the Group’s policies are described below: Credit risk The Group’s main financial assets include cash and cash equivalents (see Note 14), as well as trade and other accounts receivable (see Note 13). In general terms, the Group holds its cash and cash equivalents in institutions with a high level of creditworthiness and part of its trade and other accounts receivable are guaranteed through guarantees, surety and advance payments by tour operators. The Group has no significant concentration of third-party credit risk due to the diversification of its financial investments as well as to the distribution of trade risks with short collection periods among a large number of customers. Interest rate risk The Group’s financial assets and liabilities are exposed to fluctuations in interest rates, and this may have an adverse effect on its results and cash flows. In order to mitigate this risk, the Group has established policies and contracted financial instruments to ensure that approximately 27% of net financial debt is indexed to fixed interest rates. In accordance with the reporting requirements set forth in IFRS 7, the Group has conducted a sensitivity analysis on possible interest rate fluctuations in the markets in which it operates. On the basis of said requirements. The Group is in the process of refinancing its debt through a syndicated loan amounting to 758 million euros, and part of its strategy resides in covering at least 25% of the refinanced debt through a hedging instrument yet to be designated (IRS or Collar). Aside from the impact any changes in the interest rates could have on financial assets and liabilities which comprise the net cash position, changes could arise in the valuation of the financial instrument contracted by the Group (see Note 19). The effects of changes in the interest rates on efficient derivatives are booked against equity, while the effects on inefficient derivates are booked in the consolidated comprehensive profit and loss statement. The Group has chosen to exclude the temporary value of designating hedges in order to improve their efficiency. Note 19 of the consolidated annual report attached hereto sets out the sensitivity analysis conducted on the above mentioned derivatives in the faces of changes in interest rates. Lastly, the long-term financial assets set out in Note 11 of this annual report are also subject to interest rate risks. Exchange rate risk The Group is exposed to exchange rate fluctuations that may affect its sales, results, equity and cash flows. These mainly arise from: - Investments in foreign countries (essentially Mexico, Argentina, the Dominican Republic, Colombia, Panama and the United States). - Transactions made by Group companies operating in countries whose currency is other than the euro (essentially Mexico, Argentina, the Dominican Republic, Venezuela and the United States). In order to ensure these risks are mitigated, the Group has established policies and contracted certain financial derivatives (see Note 19). More specifically, the Group endeavours to align the composition of its financial debt with cash flows in the different currencies. Likewise, financial instruments are contracted in order to reduce exchange rate differences from transactions denominated in foreign currencies. The Group has conducted a sensitivity analysis on the possible exchange rate fluctuations that might occur in the markets in which it operates. For this analysis, the Group has taken into consideration fluctuations in the main currencies with which it operates other than its functional currency (the US dollar, the Argentine peso, the Mexican peso and the Colombian peso). On the basis of this analysis, the Group considers that a 5% depreciation in the corresponding currencies would have the following impact on equity: Thousand euros Shareholders’ Equity Profit (Loss) US dollar (637) (22) Argentine peso (4,263) (359) Mexican peso (3,981) (136) Colombian peso (1,061) 82 REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 107
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ANNUAL REPORT 2011 CONSOLIDATED FIN
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10. INVESTMENTS VALUED USING THE EQ
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INDEPENDENT AUDITORS’ REPORT ON C
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Revenue from Real Estate Activity,
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The level of consolidated net finan
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SUBSEQUENT DISCLOSURES The process
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C. RELATED-PARTY TRANSACTIONS C.1.
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D. RISK CONTROL SYSTEMS D.1. Genera
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