Consolidated Financial Statements and Consolidated Management ...

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The Group’s real estate investments mainly correspond to real estate to be operated under rental agreements. The use of said investments is broken down as follows: Square metres 2011 2010 Offices 219 219 Sports centre 11,215 11,215 Terrazas R. Marlin 2,778 2,778 Public car park 11,272 11,272 Educational centre 5,445 5,445 30,929 30,929 The fair value of the Group’s real estate investments at 31 December 2011, calculated on the basis of appraisals made by independent third parties, amounted to approximately 12.9 million euros (12.5 million euros in 2010). Rental income from the Group’s real estate investments amounted to 379,000 euros in 2011 (370,000 euros in 2010). Likewise, operating expenses directly connected with real estate investments amounted to 34,000 euros (19,000 euros in 2010). At year-end 2011, there was no constraint on making new real estate investments to collect the corresponding income or on the resources that could be obtained from a possible disposal. The Group has taken out insurance policies to cover any possible risks to which the different elements of its real estate investments are subject, as well as to cover any possible claims that may be filed against it in the course of its activities. It is understood that such policies sufficiently cover the risks to which the Group is exposed. 10. INVESTMENTS VALUED USING THE EQUITY METHOD The movements under this heading of the consolidated balance sheet during 2011 and 2010 were as follows: Company Net Balance at 31/12/09 Inclusions Write-offs Assignments Profit (Loss) 2010 Currency translation difference Net Balance at 31/12/10 Sotocaribe, S.L. - 7 - 42,587 (2,226) 5,749 46,117 Desarrollos Isla Poniente, S.L. 27,815 - - (27,815) - - - Desarrollos Isla Blanca, S.L. 14,772 - - (14,772) - - - Capredo Investments GmbH 15,941 - - - 589 1,831 18,361 Promociones Marina Morelos, S.A. de C.V. 7,428 - (7,428) - - - - Inmobiliaria 3 Puente, S.A. de C.V. 1,582 - - - 155 231 1,968 Palacio de la Merced, S.A. 1,113 - - - 154 1,267 Mil Novecientos Doce, S.A. de C.V. 1,618 - - - (15) 233 1,836 Consorcio Grupo Hotelero T2, S.A. de C.V. 464 - - - (107) 66 423 Fonfir1, S.L. 20 - - - - - 20 Losan Investment Ltd. - - - - - - - Harrington Hall Hotel Ltd. - - - - - - - Total 70,753 7 (7,428) - (1,450) 8,110 69,992 Company Net Balance at 31/12/09 Inclusions Write-offs Assignments Profit (Loss) 2011 Currency translation difference Net Balance at 31/12/11 Sotocaribe, S.L. 46,117 - - - (1,171) (1,433) 43,513 Capredo Investments GmbH 18,361 - - - (66) (1,264) 17,031 Varallo Comercial, S.A. - 5,964 - 7,956 (3,013) (2,808) 8,099 Inmobiliaria 3 Puente, S.A. de C.V. 1,968 - - - 177 (266) 1,879 Palacio de la Merced, S.A. 1,267 - - - 55 - 1,322 Mil Novecientos Doce, S.A. de C.V. 1,836 68 - - 41 (237) 1,708 Consorcio Grupo Hotelero T2, S.A. de C.V. 423 - (242) - (8) (18) 155 Fonfir1, S.L. 20 - - - - - 20 Losan Investment Ltd. - - - - - - - Harrington Hall Hotel Ltd. - - - - - - - Total 69,992 6,032 (242) 7,956 (3,985) (6,026) 73,727 After initiating its activity, NH Group consolidated Varallo Comercial, S.A. by reclassifying its balance from the “Other non-current financial investments” item as from 1 January 2011 (Note 11.2). Despite the fact that NH Group holds a 14.30% shareholding in this company, it exercises significant influence over the company through the appointment of a director, as well as through its participation in determining how the profits obtained by this company are to be distributed. NH Group likewise exercises significant influence over Consorcio Grupo Hotelero T2, S.A. de C.V., as it actively participates in determining how the profits obtained by this company are to be distributed. 80 REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
NH Hoteles Group’s policy on interests in associate companies consists of the Group ceasing to recognise losses in these companies if the associate’s consolidated losses attributable to the Group are equivalent to or exceed the cost of its interest in them, provided there are no additional contingencies or guarantees connected with already incurred losses. The interests in the companies Harrington Hall Hotel Ltd. and Losan Investment Ltd. are in this situation. The most relevant financial information on the main stakes held in joint ventures is set out in Annex III of this consolidated annual report. 11. NON-CURRENT FINANCIAL INVESTMENTS 11.1. Loans and accounts receivable not available for trading The breakdown of this item at 31 December 2011 and 2010 is as follows: Thousand euros 2011 2010 Subordinated loans to companies owning hotels operated by the Group through leases (*) 40,472 86,633 Other collection rights 10,433 - Credits to staff (Note 27) 6,123 14,458 Loans to joint ventures (Note 27) - 16,037 Lease advance payments 7,173 7,291 Accounts receivable from joint ventures (Note 27) 4,469 4,469 Loans to associated companies (Note 27) (*) 2,250 2,250 Long-term deposits and surety 11,492 9,997 Others 13,772 14,472 Total 96,184 155,607 (*) These loans’ will mature in 2016 and subsequent years, and will accrue an average interest rate of between 1.3% and 4.89%. The “Subordinated loans to companies owning hotels operated by the Group through leases” item includes a series of loans granted by NH Hoteles Group to companies which own hotel real estate in countries such as Germany, Austria, Luxembourg, the Netherlands, Italy and Spain, and which are operated by the Group under a leasing agreement. These transactions, which are mainly aimed at refinancing and reducing rents, are currently being used for the Group’s growth. The main features of these agreements are as follows: - Hotel rents are not subject to evolution of the inflation rate or to that of any other index. - The above mentioned subordinated loans accrue interest at a fixed rate of 3% per year (1.89 million euros in 2011 and 2.48 million euros in the preceding year). - New rental agreements establish a purchase right on properties subject to agreements that, as a general rule, may be executed in the fifth, tenth and fifteenth year from the entry into force of the agreement. - The model used for these rental agreements has been analysed and independent experts consider them to be operating leases. Certain purchase options on ten hotels were exercised in 2011, thereby reducing the outstanding balance of these loans. The “Other collection rights” item reflects the claim filed against the insurance company of the ten year building works insurance. The amount claimed corresponds to the repair works performed and yet to be carried out on a housing unit development belonging the subsidiary Sotogrande S.A. The “Lease advance payments” item includes advance payments made to the owners of certain hotels operated under a rental scheme for the purchase of decoration and furniture; these are discounted from future rental payments. 11.2. Other non-current financial investments This item of the consolidated balance sheet comprised the following interests valued at cost at 31 December 2011 and 2010: Company Thousand euros 2011 2010 Varallo Comercial, S.A. (Note 10) - 7,956 Hotelera del Mar, S.A. 4,645 4,947 NH Panama 3,539 3,269 Others investments 5,104 6,054 Other provisions (782) (782) Total 12,506 21,444 These companies were not consolidated at 31 December 2011 as they were inactive on such date. REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 81
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Lamps which create a special atmosp
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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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End customers, who are even more de
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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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A.3. Complete the following tables
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B. STRUCTURE OF THE COMPANY’S COR
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B.1.7. Identify, as applicable, the
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Process for determining the remuner
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For the purposes of this definition
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State and explain, as applicable, w
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