4.7.4
Equity instruments
An equity instrument represents a residual interest in the equity of the Parent Company once all its liabilities are subtracted.
Equity instruments issued by the Parent Company are booked in equity for the amount received, net of the issue expenses.
4.8
Inventories
The criteria followed to value the different elements that comprise inventories are as follows:
Real estate operations (through Sotogrande, S.A.)
All costs incurred are identified by area and product in order to determine the cost of each element at the moment it is sold. This method assigns to
the cost of the sale a proportional part of the total value of the land and of the development costs based on the percentage the square metres sold
represents of the total square metres available for sale in each area.
All land and plots held for sale are classified under current assets though their construction and sale period may exceed one year.
i) Undeveloped land: Undeveloped land is valued at original cost, which includes any legal expenses for deeds of sale, registration and any taxes
not directly recoverable from the Inland Revenue.
ii) Developed land: Developed land is valued at cost or market value, whichever is lower. The cost mentioned above includes the cost of land,
development costs and the cost of technical projects. Taking into consideration the peculiar characteristics of this activity (development and sale
of a property measuring approximately 16 million square metres over a period of approximately 50 years), the value of developed land includes
the personnel expenses and overheads incurred by the technical department in connection with the development and design of the different
projects. In 2012, there were no personnel expenses directly attributable to projects. In 2011, however, they amounted to €29,000.
iii) Buildings constructed and under construction: These are valued at cost price, which includes the proportional part of the cost of land and
infrastructures and any costs directly incurred in connection with the different promotions (projects, building licences, certifications of works,
declaration of new works, registration at registry, etc.). The Group takes into account the market value and the term for realising the sales of its
finished products, making the necessary value adjustments whenever needed.
Hotel operations
Catering edible products are valued at original cost or at realisation value, whichever is lower.
4.9
Transactions and balances in foreign currency
The Group’s functional currency is the euro. Consequently, any transactions in currencies other than the euro are considered as “foreign currency”
and are booked according to the prevailing exchange rate on the date the transactions are performed.
Cash assets and liabilities denominated in foreign currencies are converted into the functional currency at the prevailing exchange rate on the
date of each consolidated balance sheet. Any gains or losses thus revealed are directly attributed to the consolidated comprehensive profit and
loss statement.
4.10
Classification of financial assets and debts into current and non-current
In the attached consolidated balance sheet, financial assets and debts are classified on the basis of their maturity; in other words, those
with a maturity date equivalent to or less than twelve months are classified as current and those with a maturity date exceeding this are
non-current.
As such, on 31 December 2012, current liabilities included mortgage loans associated with real-estate inventories, whose initial maturity schedule
includes maturities beyond 12 months worth €3,102 thousand (€7,468 thousand at 31 December 2011, see Note 17).
4.11
Income and expenses
Income and expenses are booked on an accrual basis, i.e., when the real flow of goods and services they represent occurs irrespective of the
moment when the monetary or financial flows arising from them arise.
More specifically, income is calculated at the fair value of the consideration to be received and represents the amounts to be charged for the
goods and services delivered within the ordinary framework of operations, subtracting any discounts and taxes.
Income and expenses arising from interest are accrued on the basis of a financial timing criterion depending on the outstanding principal to be
charged for or paid and the effective interest rate that applies.
In accordance with IAS 18, the Group follows the criterion of booking sales of real estate under construction and, consequently, any profits from
the same at the moment the significant risks and benefits of such real property are transferred to the buyer and the buyer has taken effective
control over the property.
As a general rule and following the principle of correlation between income and expenses, any commission fees for sales staff and others of a
general nature (sales representatives, advertising, etc.) not specifically attributable to real estate developments, though solely connected to the
same, incurred from the moment the developments are initiated up to the moment the sales are booked are entered into the books under the
“
Other current assets” item of the assets side of the consolidated balance sheet, so that they may be attributed to expenses at the moment the
sales are booked, provided the margin from the sale agreements entered into pending entry into the books exceeds the amount of such costs at
the end of each year.
REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS
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