14.- EQUITY

14.1 Subscribed share capital

NH Hotel Group, S.A. share capital at the end of 2017 comprised 350,271,788 fully subscribed and paid up bearer shares with a par value of €2 each. All these shares carry identical voting and economic rights and are traded on the Continuous Market of the Spanish Stock Exchanges.

According to the latest notifications received by the Parent Company and the notices given to the National Securities Market Commission before the end of every financial year, the shareholders with shareholdings above 3% at 31 December 2017 and 2016 were as follows:

	2017	2016
HNA Group Co Limited	29,35%*	29,50%
Oceanwood Capital Management LLP	12,06%	11,97%
Grupo Hesperia	9,27%**	9,27%

* Although in the CNMV Records it is recorded that the shareholding of Grupo HNA in NH is 29.50% at 31 December 2017, Grupo HNA reported a decrease to 29.35% in its shareholding in NH to the CNMV on 27 February 2017. In addition, on 3 November 2017, Grupo HNA notified the CNMV of the signing of a sales contract and repurchase agreement through which it would transfer NH shares representing approximately 1.14% of the share capital. Depending on whether the sale has been formalised and the terms and conditions of it, Grupo HNA’s shareholding in NH could reach 28.20% of the share capital. Finally, on 19 January 2018, it notified the CNMV of the engagement to review its shareholding in NH, including identify potential buyers of its shareholding.
** The shareholding of Grupo Hesperia consists of the direct shareholding held by Grupo Inversor Hesperia, S.A. (9.10%) and Eurofondo (0.17%).

At year-end 2017 and 2016, the members of the Board of Directors were the holders or proxies of shareholdings representing approximately 21.38% and 21.28% of the share capital, respectively.

The main aims of the Group’s capital management are to ensure short-term and long-term financial stability, a positive trend for NH Hotel Group, S.A. share prices, and suitable funding for investments and indebtedness. All the above is geared towards ensuring that the Group maintains its financial strength and the strength of its financial ratios, enabling it to maintain its businesses and maximise value for its shareholders.

During recent years, the evolution of the business has allowed to reduce the ratio of accounting financial leverage from 0.63x to 0.55x. The ratios of accounting financial leverage at 31 December 2017 and 2016 are the following:

	Thousands of Euros
	2017	2016
Bonds and other marketable securities (Note 15)	633.910	765.870
Bank borrowings and other financial liabilities (Note 15)	82.970	95.946
Gross accounting debt	716.880	861.816
Cash and cash equivalents (Note 13)	80.249	136.733
Liquid assets	80.249	136.733
Total net accounting debt	636.631	725.083
Total equity	1.151.976	1.155.876
Accounting financial leverage	0,55x	0,63x

On 29 June 2017, the General Shareholders’ Meeting approved the distribution of a dividend at 5 cents per outstanding share, charged to 2016 profits. The total amount of dividends paid in 2017 amounted to 17 million euros.

14.2 Parent Company Reserves

i) Legal reserve

In accordance with the Consolidated Text of the Corporate Enterprises Act, 10% of the net profit for each year must be allocated to the legal reserve until it reaches at least 20% of share capital. The legal reserve may be used to increase capital provided the remaining balance does not fall below 10% of the increased capital amount. With the exception of the aforementioned purpose, and when it does not exceed 20% of share capital, this reserve may be used only to offset losses, provided no other reserves are available for this purpose.

At 31 December 2017 and 2016, the parent company’s legal reserve was not fully constituted..

ii) Share premium

The Consolidated Text of the Corporate Enterprises Act expressly allows the balance of this reserve to be used to increase capital and imposes no restrictions on its availability.

14.3 Treasury shares and shareholdings

At the end of the year, NH Hotel Group, S.A. had 9,416,368 treasury shares on its balance sheet, whose main composition and movements are broken down as follows:

• Securities loan linked to the convertible bonds issue dated 8 November 2013. On 4 November 2013, the Spanish National Securities Market Commission (CNMV) was notified of the loan of 9,000,000 of own shares to the three financial institutions involved in the placement of the convertible bonds or bonds exchangeable for shares of NH Hotel Group S.A. amounting to 250 million euros. The purpose of this loan was to allow said financial entities to offer the shares to subscribers to the convertible debentures requesting them.

At 31 December 2017, the financial entities have returned 7,615,527 of those 9,000,000 shares, which are thus now held by NH Hotel Group S.A., but which according to the terms of securities lending, continue to be available to the financial entities, who can borrow them at any time, until the convertible bonds are cancelled or amortised (see Note 15).

• In August 2016, the Company purchased 600,000 treasury shares.
• In 2017 the first cycle of the long-term incentive plan corresponding to the year ended 31 December 2016 was settled. This plan was settled in March, April and July with the delivery of 183,632 shares valued at 733 thousand euros on the settlement dates.

14.4 Non-controlling interests

The movements in this item in 2017 and 2016 are summarised below:

	Thousands of Euros
	2017	2016
Opening balance	43.967	37.963
Comprehensive profit (loss) attributable to external stakeholders	1.001	3.614
Changes in percentage shareholdings and purchase/sales	-	2.589
Dividends paid to non-controlling interests	(1.496)	(1.056)
Other movements	-	857
Closing balance	43.472	43.967

The 2017 “Dividends paid to non-controlling interests” item mainly reflects the dividends paid out in 2017 to the following companies: NH Marín, S.A., for 475 thousand euros, NH Las Palmas, S.A. for 265 thousand euros and various companies in Latin America for 756 thousand euros.