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4.15 Obligations to Employees
Spanish hotel companies are obliged to make a specific number of monthly salary payments to those employees who leave the company due to
retirement, permanent disability or upon reaching a certain age and having a certain number of years of service and fulfilling certain pre-established
requirements.
In this regard and in compliance with Royal Decree-Law 16/2005, the Group has outsourced its pension obligations for its employees’ pension plans.
Also, in accordance with Italian law, employees of Italian companies have the right to compensation if they resign or are dismissed.
Therefore, to provide for these obligations to future payments to personnel, the Group has recognised a liability under “Provisions for Risks and
Charges” (Note 19).
Its obligations to personnel also include those arising from contracting pension funds for certain employees, which in the Group, mainly affects the
business units of Italy and the Netherlands. The liability associated with these obligations is also recognised under “Provisions for Risks and Charges”.
4.16 Onerous Contracts
The Group considers onerous agreements to be those in which the inevitable costs of fulfilling the obligations they entail exceed the economic
benefits expected from them.
The Group follows the principle of recording a provision at the present value of the aforementioned differences between the costs and benefits of
the contract, or the compensation foreseen for abandonment of the contract, if such is decided.
The pre-tax discount rates used reflect the current market value of money, as well as the specific risks associated with these agreements. More
specifically, a rate of between 6.35% and 14% has been used.
4.17 Share-Based Remuneration Schemes
These schemes are valued at the time of granting, using a financial method based on a binomial model which takes into consideration the strike price,
volatility, the exercise period, the expected dividends, the risk-free interest rate and the assumptions made concerning the financial year.
In accordance with IFRS 2, the above-mentioned valuation is recognised in profit or loss under personnel expenses during the period established
as a requirement for the employee to remain in the company before exercising the option. Said value is recognised on a straight-line basis in the
consolidated comprehensive profit and loss statement from the date the option is granted until the date on which it is exercised.
Plans settled in shares
The expense for the year is recognised directly in equity. On each subsequent closing date, the Group reviews the estimates regarding the number
of options expected to be exercisable, adjusting the equity figure if necessary.
Cash-settled plans
The valuation obtained is recognised with a corresponding entry as a liability in favour of employees. Similarly, the Group re-estimates the initial
valuation mentioned above every year, recognising in the year’s profit or loss both the part corresponding to the year in question and that
corresponding to previous years.
Subsequently, the difference between the settlement price and the recognised liability, as described above, for any transactions settled, is recognised
in the consolidated comprehensive profit and loss statement once the period during which the employee is required to remain has elapsed. Ongoing
transactions at year-end are likewise charged to the consolidated comprehensive profit and loss statement for the amount of the difference between
the recognised liability to date and the corresponding updated value.
28 May 2013 marked the end of the last period for cash settlement of the equity swap, and since then no Cash-settled Plan has been introduced.
4.18 Treasury Shares
Pursuant to IAS 32, treasury shares are presented by reducing the Group’s equity.
4.19 Provisions
The Group follows the policy of provisioning for the estimated amounts arising from ongoing litigation, indemnities or obligations, as well as for any
sureties or guarantees granted by Group companies which could involve the Group in a payment obligation (either legal or implicit), provided the
amount can be reliably estimated.
4.20 Termination Benefits
In accordance with current employment regulations and certain employment contracts, the Group is obliged to pay indemnities to employees who
are dismissed under certain conditions. The Group recognised expenses of €9,043 thousand for this item in 2014 (€5,838 thousand in 2013).
The consolidated balance sheet at 31 December 2014 includes, pursuant to IFRS (IAS 37), a provision of €4,721 thousand for this item (€4,864
thousand at 31 December 2013).
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
