As a result of applying the IFRS 16 accounting standard, the Group has recognised a short-term liability corresponding to the current value of the lease payment commitments to be made in the next twelve months that, at 31 December 2021, amounted to 252,335 thousand euros (250,619 thousand euros at December 2020) meaning that, at 31 December 2021, current liabilities are 210,978 thousand euros higher than current assets (84,279 thousand euros at December 2020). Given that this effect is caused by a purely accounting (non-financial) approach, this does not prevent the business’s normal development. It is noteworthy that in December 2020 the syndicated credit line for 236 million euros was fully drawn down. This was repaid in 2021, given the improvement to the Group’s liquidity position (Note 17).
As a consequence of the situation caused by Covid-19, government measures taken worldwide to mitigate the spread of the pandemic have had a significant impact on the Group. These measures resulted in the temporary closure of establishments in the majority of its locations for a period of time, in both the 2020 and 2021 financial years, as well as significant falls in the business’s operations and the uncertainties associated with how the situation evolves. These consolidated annual accounts have been prepared in accordance with the going concern principle as the Group has implemented crisis management organisational and liquidity strengthening measures to ensure business continuity, both individually (management of contagion or isolation situations), and collectively (Note 1).
These measures include actions focused on the temporary downsizing of existing resources as well as renegotiating lease contracts and other actions focused on minimising the impacts of the situation.
Furthermore, in order to strengthen liquidity, during 2021 NH Hotel Group proactively carried out a battery of initiatives to reinforce the Group’s capital structure: Amongst these, a highlight was the receipt from the majority shareholder, Minor International, of a subordinated loan convertible into shares for 100 million euros, which was capitalised with a capital increase for all shareholders in September 2021; the extension of the ICO syndicated loan for 250 million euros from 2023 to 2026; the issue of senior bonds, guaranteed for 400 million euros and maturing in July 2026 with the relevant amortisation of the senior bond for 357 million euros, maturing in 2023; and the extension to the revolving credit facility (RCF) for 242 million euros until March 2026, which, at the end of the 2021 financial year, is not totally drawn down (Note 18).
Therefore, assuming a gradual reactivation of the business and scientific progress in relation to COVID-19 that facilitates a gradual return to normality during 2022 and subsequent years, the Group considers it has sufficient resources to meet future obligations in the next 12 months.
The Directors have prepared the Consolidated Annual Statements bearing in mind the going concern principle as they understand that the future perspectives of the Group’s business will allow positive results and positive cash flows to be obtained in the next financial years.