Download Complete PDF - Informe Anual 2012

Similarly, the owners’ associations of the “Ribera del Marlin” development filed a €2.5 million claim against a subsidiary in which the Group owns a 50% stake
for repairs as a result of contractual non-performance, defects and shortcomings in shared elements of said housing development.
In the opinion of the Parent Company Directors and legal advisers, the Group is not expected to incur any significant capital losses from the foregoing
disputes.
32. 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 the treated tributary is discharged into the sea through an underwater outfall. Likewise, the Company has built a tertiary treatment
system in one of the treatment plants. 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
implementation 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 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 foregoing environmental assets, net of depreciation, at 31 December 2012 was €1,384 thousand (€1,467 thousand in 2011).
The Group had not allocated any provisions for environmental contingencies and claims at year-end 2012.
33. EXPOSURE TO RISK
The Group financial risk management is centralised at the Corporate Finance Division. This Division has established the necessary measures in place to control
exposure to changes in interest and exchange rates, on the basis of the Group 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 policies are described below:
Credit risk
The Group main financial assets include cash and cash equivalents (see Note 15), as well as trade and other accounts receivable (see Note 13). In general
terms, the Group holds its cash and cash equivalents in entities with a high credit rating 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 financial assets and liabilities are exposed to fluctuations in interest rates, which 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 36% of net financial debt is indexed
to fixed interest rates.
In accordance with 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, based on these requirements. The Group concluded the process of refinancing its debt through a syndicated loan of €805
million, and, as part of its strategy, has covered 39% of refinanced debt through a hedging instrument (IRS).
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. The effects of changes in the interest rates on efficient derivatives are booked
against equity, while the effects on inefficient derivatives 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 face 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
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 115