Consolidated Financial Statements and Consolidated Management ...

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
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