SOL MELIA ANNUAL REPORT 00 COMP
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SOL MELIA ANNUAL REPORT 00 COMP

SOL MELIA ANNUAL REPORT 00 COMP SOL MELIA ANNUAL REPORT 00 COMP

melia.com
22.01.2015 Views

ACCOUNTING PRINCIPLES 5.14 Capital grants Capital grants are not repayable and are recorded for the amount received at the time of the grant as deferred income, which is released to results using the straight-line method over the useful life of the assets thereby financed (See Note 20). 5.15 Provisions for pensions and similar obligations Certain Collective Wage Agreements prevailing and applicable in 2000 establish that the permanent staff retiring between 60 and 65 years of age will be entitled to a cash premium equivalent to a number of monthly salaries proportional to the number of years of service. During the year an evaluation of these commitments was performed in accordance with the actuarial assumptions contained in the externalization Regulations, by applying the calculation method known as the “projected unit credit” and the population assumptions corresponding to the GRM95-GRF95 tables. According to this study, the commitments accrued at December 31, 2000 in accordance with the Externalization Regulations amount to Ptas. 2,701 million. The provision for liabilities and charges covers these commitments as well as the commitments acquired with six executives of the company absorbed in 1999. 5.16 Provisions for liabilities and charges In addition to the accounting provisions for potential insolvencies (estimated) relating to accounts receivable, the Group also books long-term provisions in the balance sheet liabilities, estimated according to the principle of prudence and following conservative criteria, to cover the different risks and contingencies due to the different possible interpretation of the prevailing fiscal rulings, contingent risks for bank and other guarantees given, legal claims and lawsuits under way and other possible liabilities arising from operations. At year end, provisions are applied to the respective concepts. 5.17 Non-trade debts Both short and long-term non-trade debts are recorded at their repayment value. The difference between this value and the amount received is accounted for under the assets heading “Deferred expenses”, and released to results on a yearly basis according to a financial criteria (See Note 22). 5.18 Short and long-term classification The short and long-term classification depends on the expected term of maturity, disposal or cancellation of the Company’s obligations and rights. A period of more than 12 months as from the year-end closing date is considered long-term. 5.19 Income and expenses Income and expenses are recorded according to the accruals principle, regardless of when actual payment or collection occurs (See Note 25). S OL M ELIÁ A NNUAL R EPORT 2000 94

ACCOUNTING PRINCIPLES 5.20 Corporation Tax Corporation Tax is calculated according to the results for the year and taking into account the differences between the accounting and fiscal results (taxable income) and their “permanent” and “temporary” nature in order to determine the corporation tax for the year. Fiscal credits deriving from the carryforward tax losses are recorded for an amount no higher than the deferred taxation figure accounted for at that date and do not imply, therefore, any cash outlay. The deferred tax liabilities balance maintained in the balance sheet relates mainly to differences arising from the fiscal treatment applied to financial leasing contracts and to the deferral of taxation for capital gains from reinvestments. The eventual deferred taxation which would relate to the revaluation recorded according to Law 29/1991 is not accounted for since the sale of the revalued buildings is not included in the Company’s corporate purpose. The tax criteria applied to financial leasing contracts signed after January 1, 1996 consist of applying amortisation rates which are twice the maximum rates established in the tax charts. The effect of this temporary difference is reflected in the corporation tax expense (See Note 23). 5.21 Transactions in foreign currency Debit and credit balances in foreign currency are valued at the exchange rate prevailing on the corresponding transaction date and are converted at year end at the rate then in force. Unrealised foreign currency losses are considered as expense of the year in which they are incurred while unrealised foreign currency gains are considered when arising as deferred income. Nevertheless, if unrealised foreign currency losses were recorded during the year or in previous years, the unrealised foreign currency gains would be considered income of the period for the same amount of unrealised foreign currency losses. Remaining unrealised foreign currency gains would be accounted for as deferred income. 5.22 Severance payments In accordance with the prevailing labour agreements in some countries where the Group operates, the companies are obliged to pay severance to employees dismissed without due cause. Given that there is no staff reduction plan, no provision is deemed necessary for this concept. 5.23 Parent company shares The own shares held by Sol Meliá, S.A. are valued at the lower of the acquisition or purchase price and the quotation price at December 31, 2000. The Options Programmes for executives, establishing their right to purchase up to 200,000 old shares of Sol Meliá, S.A., in 1999 (50,000 shares) and in the year 2000 (150,000 shares), have been cancelled during the year. S OL M ELIÁ A NNUAL R EPORT 2000 95

ACCOUNTING PRINCIPLES<br />

5.14 Capital grants<br />

Capital grants are not repayable and are recorded for the amount received at the time of the grant as deferred income, which<br />

is released to results using the straight-line method over the useful life of the assets thereby financed (See Note 20).<br />

5.15 Provisions for pensions and similar obligations<br />

Certain Collective Wage Agreements prevailing and applicable in 2<strong>00</strong>0 establish that the permanent staff retiring between<br />

60 and 65 years of age will be entitled to a cash premium equivalent to a number of monthly salaries proportional to the<br />

number of years of service.<br />

During the year an evaluation of these commitments was performed in accordance with the actuarial assumptions contained<br />

in the externalization Regulations, by applying the calculation method known as the “projected unit credit” and the<br />

population assumptions corresponding to the GRM95-GRF95 tables. According to this study, the commitments accrued<br />

at December 31, 2<strong>00</strong>0 in accordance with the Externalization Regulations amount to Ptas. 2,701 million. The provision<br />

for liabilities and charges covers these commitments as well as the commitments acquired with six executives of the company<br />

absorbed in 1999.<br />

5.16 Provisions for liabilities and charges<br />

In addition to the accounting provisions for potential insolvencies (estimated) relating to accounts receivable, the Group<br />

also books long-term provisions in the balance sheet liabilities, estimated according to the principle of prudence and following<br />

conservative criteria, to cover the different risks and contingencies due to the different possible interpretation of the<br />

prevailing fiscal rulings, contingent risks for bank and other guarantees given, legal claims and lawsuits under way and other<br />

possible liabilities arising from operations. At year end, provisions are applied to the respective concepts.<br />

5.17 Non-trade debts<br />

Both short and long-term non-trade debts are recorded at their repayment value. The difference between this value and the<br />

amount received is accounted for under the assets heading “Deferred expenses”, and released to results on a yearly basis<br />

according to a financial criteria (See Note 22).<br />

5.18 Short and long-term classification<br />

The short and long-term classification depends on the expected term of maturity, disposal or cancellation of the Company’s<br />

obligations and rights. A period of more than 12 months as from the year-end closing date is considered long-term.<br />

5.19 Income and expenses<br />

Income and expenses are recorded according to the accruals principle, regardless of when actual payment or collection<br />

occurs (See Note 25).<br />

S OL<br />

M ELIÁ<br />

A NNUAL R EPORT 2<strong>00</strong>0<br />

94

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