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2.5. Consolidation Principles Applied
2.5.1 Subsidiaries (See Appendix I)
Subsidiaries are considered as any company included within the scope of consolidation in which the Parent Company directly or indirectly controls
their management due to holding the majority of voting rights in the governance and decision-making body, with the ability to exercise control.
This ability is shown when the Parent Company has the power to direct an entity’s financial and operating policy in order to obtain profits from its
activities.
The financial statements of subsidiaries are consolidated with those of the Parent Company by applying the full consolidation method. Consequently,
all significant balances and effects of any transactions taking place between them have been eliminated in the consolidation process.
Stakes held by non-controlling shareholders in the Group’s equity and results are respectively presented in the “Non-controlling interests” item of
the consolidated balance sheet and of the consolidated comprehensive profit and loss statement.
The profit or loss of any subsidiaries acquired or disposed of during the financial year are included in the consolidated comprehensive profit and loss
statement from the effective date of acquisition or until to the effective date of disposal, as appropriate.
2.5.2 Associates (See Appendix II)
Associates are considered as any companies in which the Parent Company has the ability to exercise significant influence, though it does not
exercise either control or joint control. In general terms, it is assumed that significant influence exists when the percentage stake (direct or indirect)
held by the Group exceeds 20% of the voting rights, as long as it does not exceed 50%.
Associates are valued in the consolidated financial statements using the equity method; in other words, through the fraction of their net equity value
the Group’s stake in their capital represents once any dividends received and other equity retirements have been considered.
2.5.3 Foreign currency translation
The following criteria have been different applied for converting into euros the different items of the consolidated balance sheet and the consolidated
comprehensive profit and loss statement of foreign companies included within the scope of consolidation:
• Assets and liabilities have been converted by applying the effective exchange rate prevailing at year-end.
• Equity has been converted by applying the historical exchange rate. The historical exchange rate existing at 31 December 2003 of any
companies included within the scope of consolidation prior to the transitional date has been considered as the historical exchange rate.
• Income statement items were translated to euros at the average exchange rate for the year.
Any difference resulting from the application these criteria have been included in the “Translation differences” item under the “Equity” heading.
Any adjustments arising from the application of IFRS at the time of acquisition of a foreign company with regard to market value and goodwill are
considered as assets and liabilities of such company and are therefore converted using the exchange rate prevailing at year-end.
2.5.4 Changes in the scope of consolidation
The most significant changes in the scope of consolidation during 2014 and 2013 that affect the comparison between financial years were the
following:
a.1 Changes in the scope of consolidation in 2014
a.1.1 Disposals
On 14 November 2014, the Parent Company’s stake in Sotogrande, S.A., representing 96.997% of its share capital, was sold for €224,947 thousand.
The net amount received after deducting municipal taxes, transaction costs, net debt and financial effects was €181,110 thousand, of which €129,312
thousand corresponded to shares in Sotogrande, S.A. and €51,798 thousand to the liquidation of the intercompany account which the Parent
Company maintained with Sotogrande, S.A.
This transaction involved the transfer of the entire property business segment of Sotogrande, S.A., based in Cádiz (Spain). The transaction excluded
ownership of shares in the international assets (Capredo Investments GmbH, Sotocaribe, S.L., and Donnafugata Resort, S.r.l., see note 9), and the
rights to receivables arising from the claim against the insurance agency which provided the ten-year policy covering building work in a housing
development by Sotogrande (see Note 11.1) and the deferred payment of the sale of 15 business premises in another property development.
Before the sale, Sotogrande, S.A. acquired 504,089 and 46,865 shares in Residencial Marlin, S.L. and Los Alcornoques de Sotogrande, S.L.,
respectively, representing 50% of the share capital of both companies, for a total of €16.65 million. Thus, the Group acquired control of both
companies, which it later sold in the context of the sale of its shares in Sotogrande, S.A.
At the same time as the transfer of shares in Sotogrande, S.A., the stakes in the excluded international assets listed above were transferred to
NH at market prices, maintaining their value for accounting purposes according to the consolidated financial statements of NH Hotel Group and
Subsidiaries. A period of five years was established for transferring the stake in Sotocaribe, S.L. through reciprocal sales and purchase options,
to be exercised within the indicated period. The strike price of the option, €58.25 thousand, is equivalent to the part of the price of the stake in
Sotogrande, S.A. which the purchaser left deferred, with both items to be offset when the option is exercised. (See Notes 11 and 17).
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
