4.8
Investments in associates
Investments in companies over which the Parent exercises significant influence or are jointly controlled are accounted for using the equitymethod. The book value of the
investment in the associate includes the goodwill and the consolidated statement of comprehensive income includes the share in the results of the associate’s operations.
If the associate recognises gains or losses directly in equity, the Group also recognises its share in such items directly in equity.
At each year-end, the existence of indicators of a potential impairment of the investment in the associate is assessed in order to recognise the related impairment loss,
where appropriate In order to determine the recoverable amount of the investments in companies whose sole asset consists of property inventories, appraisals were
obtained from the same independent valuer that appraised the Group’s inventories (Note 12). In the case of the other companies, discounted cash flow valuations
performed internally similar to those described in Note 4.5.
4.9
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 of 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 specific 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 2013, costs attributable directly to said projects amounted to
EUR 38 thousand (no amount was attributed in 2012).
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 themarket 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.
4.10
Foreign currency transactions and balances
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.
4.11
Classification of financial assets and debts into current and non-current
In the consolidated balance sheet attached, financial assets and debts are classified on the basis of their maturity; that is to say, those whose maturity date is equivalent to
or less than twelve months are classified as current and those whose maturity date exceeds such period as non-current.
4.12
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.
REPORT ONTHE CONSOLIDATED FINANCIAL STATEMENTS
70
