a.2.2 Other corporate transactions
On 30 April 2012, the General Shareholders’ Meeting of Donnafugata Resort, S.r.l., resolved to reduce capital by EUR 7,082 thousand and charge it to previous years’
losses, and to subsequently increase capital by approximately EUR 6,152 thousand. Both transactions were notarised on 20 July 2012. Given that the remaining
shareholders did not participate in this capital increase, the Parent Company subscribed it entirely, thereby increasing its percentage interest from 78.00% to 88.80%.
3.-
DISTRIBUTION OF EARNINGS
At the Ordinary General Shareholders’ Meeting, the Parent Company’s directors will propose that the losses be applied to the “Previous year’s losses” account to be
offset in future financial years. In accordance with Section 273.4 of the Revised Text of the Spanish Companies Act, the directors will propose to allocate EUR 418,000
as an unavailable reserve, as stipulated by that provision, at the Ordinary General Shareholders’ Meeting and charge it to freely available reserves, because the Parent
Company has not generated any profits this year.
4.-
VALUATION STANDARDS
The main principles, accounting policies and valuation standards applied by the Group to draw up these consolidated financial statements, which comply with IFRS in
force on the date of the relevant financial statements, have been the following:
4.1
Tangible fixed assets
Tangible fixed assets are valued at their original cost. They are subsequently valued at their reduced cost resulting from cumulative depreciation and, as appropriate,
from any impairment losses they may have suffered.
Due to the transition to IFRS, the Group reappraised the value of some land to its market value on the basis of appraisals made by an independent expert for a total
amount of EUR 217 million. The reappraised cost of such land was considered as a cost attributed to the transition to the IFRS. The Group followed the criterion of not
revaluing any of its tangible fixed assets at subsequent year-ends.
Enlargement, modernisation and improvement costs entailing an increase in productivity, capacity or efficiency or a lengthening of the assets’ useful life are booked as
higher cost of such assets. Conservation and maintenance costs are charged against the consolidated comprehensive profit and loss statement for the year in which they
are incurred.
The Group depreciates its intangible fixed assets following the straight line method, distributing the cost of the assets over their estimated useful lives, in accordance
with the following table:
Estimated years of useful life
Buildings
33-50
Plant and machinery
10-30
Other plant, fixtures and furniture
5-10
Other fixed assets
4-5
4.2
Real-estate investments
These reflect the value of land, buildings and structures held either for rental or to obtain a capital gain on their sale.
Real estate investments are valued at their original cost. Buildings are valued according to the cost of the corresponding certifications of the works executed plus any
expenses associated with the project (works management, fees, architect’s fees, etc.) and depreciated on a straight-line basis depending on their useful life, which is the
same as that used in tangible fixed assets for similar elements.
Interest costs attributable to these investments are activated during the construction period up to the moment they are ready for sale and are considered as an increased
investment cost. Should financial income be obtained from temporary investment of surpluses, said income reduces the cost of the investment.
Revenue and gains or losses arising from the sale of the assets to buyers and the execution of deeds of sale, being the time at which the inherent rights and obligations are
transferred, are recognised. Rental income is attributed to the results on an accrual basis.
An accrual basis is used to recognise rental costs, charging all maintenance, management and depreciation costs of the rented assets to profit and loss.
The Group periodically determines the fair value of real estate investment elements, using appraisals performed by independent experts as a reference.
REPORT ONTHE CONSOLIDATED FINANCIAL STATEMENTS
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