Consolidated Financial Statements and Consolidated Management ...

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