Page 1

Grupo Barcel贸

Annual Report

2011

Corporaci贸n Empresarial


1

Index I.

The Barcelรณ Group in figures

02

II.

The Barcelรณ Group worldwide

05

III.

Presentation: letter from the Co-Chairmen

07

IV.

Milestones in 2011:

08

a.

Hotel business management

08

i. Expansion, sale of assets and cancellation of leases

08

ii. Investments in acquisitions and refurbishments

08

iii. Consolidation of new tourism segments: adults only

09

iv. Promotion through online channels and social media

09

b.

Expansion of the Travel Division

10

c.

Human Resources

12

d.

Awards

18

e.

Fundaciรณn Barcelรณ

19

V.

Organisation structure

21

2011 Consolidated Annual Accounts

22

Barcelรณ 2011 Annual Report


Barceló Viajes. Agencia c/ Princesa. Madrid

2

1

The Grupo Barceló in figures 1.1

Travel Division

There are 409 branches of Barceló Viajes, Amex Barceló Viajes and Vacaciones Barceló in 22 countries. The Travel Division has 409 agencies; under the Barceló Viajes brand, 179 are proprietary, 108 are run as a franchise, 30 are in-house services at BBVA branches and 1 is in Portugal; and under the Vacaciones Barceló brand, 30 provide reception services in the countries where Barceló Hotels & Resorts is present.

378

The Grupo Barceló’s Travel Division also operates under the Amex Barceló Viajes brand, with branches for the business sector, and it has 2 headquarters (one in Madrid and the other in Barcelona) and 59 in-house services at the main clients.

197 181

31

27 4

SPAIN

INTERNATIONAL TOTAL FRANCHISE / IN-HOUSE SERVICES PROPRIETARY

Barceló 2011 Annual Report


Barceló Brno Palace. Czech Republic

3

1.2

Hotel Division

141 hotels in 16 countries (figure at 30/04/2012)

2010

2011

186

182

176

141

2009

2008

82

61

56

24

54

BY TYPE OF CONTRACT

5 BY BRAND

PROPRIETARY

BARCELÓ PREMIUM

UNDER MANAGEMENT

BARCELÓ

RENTAL

BARCELÓ COMFORT

63 33

45

BY GEOGRAPHICAL BREAKDOWN EUROPE AND THE MEDITERRANEAN BASIN LATIN AMERICA AND THE CARIBBEAN UNITED STATES

39,340 rooms (figure at 30/04/2012)

Barceló 2011 Annual Report


Barcel贸 Aran Mantegna. Rome, Italy

4

Economic aggregates (in millions of euros)

Revenues

1,575

2011

Comparable revenues*

1,655

1,593

2010

2009

1,854

2008

1,550

2011

1,502

2010

1,364

2009

1,577

2008

Equity

883

2011

905

2010

827

2009

Net sales

874.2

2011

843

2008

1,286.1 989.1

1,014.6

2010

2009

Comparable net sales*

848.3

2008

EBITDA

2011

835.7

785.8

2010

2009

2011

2008

Net profit

10.1 118

1,009.5

114.6 2010

109.7 2009

149.2

2008

1.5 2011

2010

24.6 7.6

2009

2008

(*) For comparison purposes, the Lease and Sublease businesses in the US are not included.

Barcel贸 2011 Annual Report


Barceló Fès Medina. Fez, Morocco

5

2

The Grupo Barceló worldwide 2.1

Travel Division

There are 409 branches of Barceló Viajes, Amex Barceló Viajes and Vacaciones Barceló in 22 countries. Listed by country Country Spain

Branches under management 181

Branches under franchise 108

In-house services 89

Total 378

Argentina

1

1

Bolivia

2

2

Brasil

1

1

Colombia

1

1

2

3

Costa Rica

1

Chile Dominican Republic

5

5

1

1

Ecuador

1

1

El Salvador

2

2

Guadalupe and Martinique

1

1

Guatemala

1

1

Haiti

1

1

Honduras Mexico

1

1

1

1

2

Nicaragua

1

1

Panama

1

1

Paraguay

1

1

2

2

Peru Portugal

1

1

Uruguay

1

1

Venezuela

1

1

TOTAL

185

135

89

409

Note: data at 30/04/2012. Branches per country with different locations (indifferent whether they perform the wholesale, retail, reception and/or business travel activity). The franchises include the “Vacaciones Barceló” wholesalers, the “Barceló Hotels & Resorts” official agents and the “Barceló Viajes” associated agencies.

Barceló 2011 Annual Report


Barcel贸 B谩varo Palace Deluxe. Dominican Republic

6

2.2

Hotel Division

141 hotels in 16 countries (figure at 30/04/2012)

Area EUROPE AND THE MEDITERRANEAN BASIN

Country Bulgaria

1

Czech Republic

3

Egypt

1

Germany

2

Italy

3

Morocco

2

Spain Turkey

NORTH AMERICA

LATIN AMERICA

48 3

SUBTOTAL

63

USA

45

SUBTOTAL

45

Costa Rica

4

Cuba

5

Dominican Republic

7

Ecuador

1

Guatemala

1

Mexico Nicaragua SUBTOTAL TOTAL

No. of hotels

13 2 33 141

Barcel贸 2011 Annual Report


7

3

Presentation: letter from the Co-Chairmen The year 2011 has been especially important for the Grupo Barceló (Majorca, 1931) since we have celebrated our 80th anniversary; something which, regrettably and due mainly to the current economic situation, is increasingly less frequent in the domestic and international business scene. This has been made possible thanks to the fact that, during those years, we have maintained conservative policies in terms of cost and investment control and the search for profitability, without reducing the quality of our products. That philosophy, which is typical of most traditional family companies who focus on the long term instead of speculation and short-term profit, has guided us through the main decisions we have had to make in that difficult year. The most important decision we had to make was to cancel the 21 hotels which we had been operating under lease in the United Kingdom since 2007. It was a complicated measure, which we tried to avoid until the last minute, but the very high rent which was approved before the start of the crisis had become an unsustainable burden. Without those hotels, our Hotel Division decreased its portfolio to a total of 141 hotels, with over 39,000 rooms in 16 countries (figures at 30/04/2012). Despite this, and thanks to an improvement in the hotel business which, in 2011, increased the company’s recurring EBITDA by 20% to 113.9 million euros, compared with the 94.2 million euros in the same period of the previous year, the Grupo Barceló’s finances continue to be healthy.

Despite our strict cost control policy, 2011 was also a good year for investments, which amounted to 147 million euros. Of that amount, nearly 36 million euros were allocated to acquiring two hotels: Barceló Brno Palace in the Czech Republic and Barceló Hamburg in Germany (both inaugurated in early 2012). Nevertheless, the largest part of the investment, i.e. 106 million euros, was allocated to the renovation work carried out by Barceló Hotels & Resorts in its main hotel establishments such as Barceló Bávaro Beach Resort in the Dominican Republic, Barceló Sants in Barcelona and other hotels in Europe and Latin America, with the aim of improving the facilities. Lastly, the company allocated 5.4 million euros to the Travel Division which, in 2011, was strengthened with the creation of a new area devoted to the wholesale business, and will enter into operation in 2012 with the launch of 3 new tour operators: laCuartaIsla, Quelónea and Jolidey. Therefore, we believe that 2012 will be better than 2011, especially since the renovated hotels will be operating 100% and the results of the first quarter have been better than we expected. Nevertheless, and as usual in the last few years because of the unstable economic situation, we remain cautious and we will closely watch the market performance.

Simón Barceló Tous y Simón Pedro Barceló Vadell

Proof of this is the fact that the group met all its financial commitments and the financial institutions with which we work agreed to renew and refinance all the operations that we presented throughout the year, thus showing their confidence in Barceló.

Barceló 2011 Annual Report


Barceló Hamburg. Germany

8

4

Milestones in 2011 The year 2011 was important for the Grupo Barceló since it set the bar very high: it managed to reach its 80th anniversary as a family company during all that time, something which, especially at present, is increasingly difficult to see. It was also a very complicated year in economic terms; nevertheless,

4.1

Hotel management

After many years of fast growth, the last two years have been conservative in terms of expansion; as a result of the domestic and international economic crisis, many new projects have been stopped. Nevertheless, the complicated economic situation has generated some positive factors for Barceló Hotels & Resorts such as major renovation work was carried out, taking advantage of the fact that some hotels had less occupancy, and some investments were made to acquire hotels which seemed like interesting opportunities.

thanks to the company’s financial health and broad experience in hotel management, this has been overcome. Fortunately, the projections for 2012 are somewhat slightly more optimistic.

Expansion, sale of assets and cancellation of leases

In 2011, the chain acquired one hotel in Morocco (Barceló Fes Medina) and sold another one in that country (Barceló Casablanca), although it continues to manage the latter. Nevertheless, the main operation in this chapter was the cancellation of the 21 hotels that Barceló Hotels & Resorts leased in the United Kingdom since 2007. The group tried to reach an agreement with the owners until the last minute, but they refused to decrease the very high rent that had been agreed during the boom times, so it decided to cancel those leases and thus end the loss situation which was becoming unsustainable.

After that, Barceló Hotels & Resorts’ portfolio comprises a total of 141 hotels, with more than 39,000 rooms in 16 countries (figure at 30/04/2012).

Investments in acquisitions and refurbishments

Since some of the hotels were not operating at full capacity, Barceló Hotels & Resorts took advantage of this and carried out major renovation work. The most ambitious was the renovation of Barceló Bávaro Beach Resort in the Dominican Republic, which lasted for two years, until December 2011, and led to a major refurbishment of its facilities; from 5, it now has 2 hotels: Barceló Bávaro Palace Deluxe and Barceló Bávaro Beach. Apart from that development, which was the first one that the hotel chain opened outside Spain, the other hotel that benefited from major refurbishment was Barceló Sants in Barcelona, which will celebrate its 20th anniversary as the first city hotel in Spain of our hotel chain.

Barceló 2011 Annual Report


Barceló Sants. Barcelona, Spain

9

The investment made in 2011 to carry out both renovations, plus other ones performed on other hotels in Europe and Latin America, amounted to 106 million euros. On the other hand, and what usually happens during economic crises in which interesting investment opportunities arise, Barceló Hotels & Resorts paid 36.2 million euros in 2011 to acquire two strategic hotels: Barceló Brno Palace in the Czech Republic and Barceló Hamburg in Germany. They both opened in early 2012. The results obtained in all of them in the first quarter of 2012 appear to indicate that this is going to be a better year than 2011.

Consolidation of new tourism segments: adults only

In terms of hotel segmentation, 2011 consolidated a trend that has been unstoppable in the last few years: the adults-only hotels. After opening Barceló Jandía Club Premium in Fuerteventura and Barceló Illetas Albatros in Majorca in 2010, Barceló Hotels & Resorts closed 2011 with two new establishments of this type: Barceló Cayo Libertad Club Premium in Cuba and Barceló Bávaro Beach. In May 2012, a fifth adults-only hotel will be added: Barceló Hamilton in Minorca.

Promotion through online channels and social media

Barceló Hotels & Resorts began its focus on social media two years ago, although in 2011 it decided to decisively promote itself through the new online communication channels. It reinforced its presence mainly in the following social media: Twitter (http:// twitter.com/barcelohoteles), Flickr (www.flickr.com/ barcelohotels), Youtube (www.youtube.com/barcelohoteles) and Facebook (www.facebook.com/ barcelohotels). In this respect, the chain has been one of the first Spanish hotel companies to provide its Facebook site with the necessary tools to make bookings without having to go through the group’s website, thus making this a promising sales channel. With respect to its main online sales channel (www. barcelo.com), Barceló Hotels & Resorts devoted most of 2011 to the design of a new version, much more focused on sales, and which has been implemented in spring 2012.

Barceló 2011 Annual Report


Barceló Viajes. Agencia c/ Princesa. Madrid

10

4.2

Expansion of the Travel Division

For Barceló Viajes, the Grupo Barceló’s Travel Division, 2011 was a year in which consumers fully acknowledged it as a “travellers’ brand” and in which the brand reinforced its leading role and importance as a result of implementing strategies, initiatives and tools that have made it one of the leading companies in the sector. Moreover, at the end of 2011, the company announced that the Travel Division would be developed as a global travel operator, based on the retail distribution structure, by creating three sectorial tour operators and new online distribution channels. Again in 2011, in the midst of a very negative macroeconomic scenario, our revenues grew 8% overall with respect to 2010 to reach 521 million euros. This was due to the development and growth of the joint activity with BBVA and the good performance of the Amex Barceló Viajes business unit. The collaboration with BBVA began in 2010 and continued in 2011 with good results for both parties, offering Barceló Viajes’ product portfolio to more than 7 million customers and 29,000 employees of BBVA with very advantageous conditions through all the bank’s communication and sales channels. Our main presence with the BBVA brand can be seen on the high street, in 30 Barceló agencies located in the bank’s best branches throughout Spain, which provide all the brand’s services to customers, employees and the public in general.

The joint venture between Barceló and WRS Spain, the licence holder for the flagship National Geographic Stores in Spain, continued the trend in 2011 of the agreement signed the previous year, through the stores in Madrid and Palma de Mallorca; the former, which was warmly received by the public and customers, reached its first anniversary in November; and the latter, which is located in Palma’s golden mile in calle Jaime III, opened its doors on 17 June, receiving both local customers and tourists mainly from northern Europe. The Espacio Barceló Viajes section of both flagship National Geographic Stores sell trips of a lifetime, including the “Barceló Viajes Large Expeditions at the National Geographic Store” (for example, the American West, the Canadian Arctic, the Chicago Photography Workshop, Rwanda and Kenya in family) and the legendary “National Geographic Expeditions”. The strength of the National Geographic brand is also present in the Barceló agency network: 22 branches have a National Geographic corner that provides travellers with a complete selection of the best National Geographic products and consolidates the differentiating concept that Barceló Viajes has of Large Trips. The Barceló Collection grew in 2011 through three monthly proposals, inviting people to rediscover a cinematographic Morocco and spending a cool summer in Berlin, and provided travellers with travel products and proposals, highlighted mainly

Barceló 2011 Annual Report


Barceló Aran Blu. Rome, Italy

11

by the contemporary closeness to the best known destinations and stimuli. Created by the Travel Design Department, the Barceló Collection products constantly attract the interest of both travellers and the general and specialist media, delving into our brands’ marketing and communication strategies. The “Viajeros 2011” magazine had a print run of 300,000 copies; more than ever before, our travellers were the real protagonists of the magazine in its fifth edition. They provided their experiences, their trails, their findings, etc. Experiences which inspire your next trip. Apart from those travellers, other Spanish actors, writers and celebrities, such as Raquel Silva, Marta Robles, Imanol Arias, María Dueñas, Espido Freire and Carlos Sobera, also guided and inspired our Barceló travellers, making sure that the digital version (viajerosbarcelo. com) is a must towards www.barceloviajes.com, our direct sales website, which, in 2011, received more than 25 million visitors, with over 17 million unique users and, above all, 51 million euros in sales, accounting for 14% of total revenues at Barceló Viajes. All those figures show our strength in the B2C segment.

such as running the New York marathon with a Barceló traveller and the chef Darío Barrio, captured thousands of new and former travellers, who participated in them with their experiences, videos and images, creating value and feeding the travellers’ content of our social media, publications and website. The “From traveller to traveller” message was a reality once again and became a successful part of the company’s communication and marketing strategy. In 2011, PlanB! (the Barceló Experience product) grew satisfactorily, selling over 141,000 boxes and increasing its share of the wonderbox market to 18%. The range of PlanB! products, comprising 32 wonderboxes of various themes, is present in more than 3,500 points of sale throughout Spain.

Barceló Viajes’ creative campaign in 2011 had 5 protagonists, where the spelling of their names was joined with their travel destination: Caribeatriz, Romalberto, Tailandialex, Brasilvia and Mallorcarlos. Through Viajerosbarcelo.com, they transmitted all their travel imagination and experience, laying the foundations for our brand as the “travellers’ brand”. The campaigns carried out in 2011,

Barceló 2011 Annual Report


Barceló Aran Mantegna. Rome, Italy

12

4.3

Human resources

General data

Average total Average workforce Average workforce workforce in 2011: in the Travel Division: in the Hotel Division: 24,714 employees, 955 employees, 23,759 employees, which, compared to the 2010 data, represents a 5.58% decrease

which, compared to the 2010 data, represents a 15.47% increase

Employment / Workforce

The same datum referring to the worldwide workforce was 1.50%.

One of the Group’s policies is to constantly provide opportunities for the personal and professional development of all its workforce. As a result in 2011, 12.77% of its 2,897 employees who represent managers and middle management were promoted.

Workforce by area TOTAL TRAVEL TOTAL LATIN AMERICA TRAVEL TOTAL CORPORATE AREA

which, compared to the 2010 data, represents a 6.28% decrease, due basically to the cancellation of various hotels under management.

Employees 857

Female workers accounted for 44.42% of the total average workforce in 2011 and was practically the same as in 2010.

Men

Women

242

615

Permanent

Temporary

704

162

98

49

49

75

23

217

114

103

200

17 1,298

TOTAL HOTELS IN SPAIN

3,967

1,870

2,096

2,668

TOTAL EUROPE & INTERNATIONAL

1,089

743

345

615

474

TOTAL U.K.

1,544

662

882

464

1,080

3,117

1,340

1,777

2,910

207

TOTAL LATIN AMERICA

TOTAL U.S.A.

13,826

8,715

5,111

9,941

3,886

TOTAL AVERAGE WORKFORCE IN 2011

24,714

13,735

10,978

17,577

7,137

TOTAL TRAVEL TOTAL LATIN AMERICA TRAVEL TOTAL CORPORATE AREA TOTAL HOTELS IN SPAIN TOTAL EUROPE & INTERNATIONAL TOTAL U.K. TOTAL U.S.A. TOTAL LATIN AMERICA

Barceló 2011 Annual Report


Barceló Brno Palace. Czech Republic

13

Training in 2011

2nd 2011-2013 PDD (Manager Development Programme)

Training and development form part of our company’s culture, so we permanently foster the ongoing training of our more than 24,000 employees, orienting their training towards professional fulfilment and personal satisfaction.

In the second half of 2011, the 2nd Manager Development Programme began for both our hotel managers of Latin America and of the EMEA, in collaboration with Lausanne University in Switzerland, an avant-garde tourism school; the first module was “Service Excellence”.

Hotel manager development programmes 1st 2008-2011 PDD (Manager Development Programme) As part of our strategic training project called “Barceló B Campus”, which focuses on training our managers, 59 hotel managers of the EMEA territory completed the first edition of the 1st PDD (2008-2011), with the presentation of a Business Plan for a case study in the hotel sector in front of the board of examiners formed by professors of the San Pablo University Business School and managers from Barceló Hotels & Resorts. The presentations of the various projects, as well as the graduation ceremony, were in April 2011 at Hotel Barceló Renacimiento in Seville, with the presence of the Seville mayor as the graduation’s master of ceremonies.

The first day was oriented towards developing practical skills and preparing the participants to have the knowledge, competences and correct mentality to perfect their business performance through customer service excellence.. Executive Course on Leadership and People Management With the aim of generating a standard management style and reinforcing our group’s cohesion, the Regional Managers and some Corporate Managers received an Executive Course on Leadership and People Management, which fostered working in teams across the board, increasing their enthusiasm in order to guarantee success in the results through them and their teams. Barceló Development Programme

That programme, which lasted for about 2 years (2008-2011), dealt with subjects such as People Management, Sales and Marketing Management and, Strategic Management, Finance and Negotiation, with the final aim of training our hotel managers as managers with a more strategic view.

2011 EUROPE UK LATIN AMERICA USA TRAVEL TOTAL GROUP

Barceló focuses on internal promotion and pays special attention to our internal young people. In 2011, the group worked intensely on improving the Deputy Manager and Assistant Manager programmes with the aim of completing their field

Training hours

Participants

Cost (e)

61,698

4,706

646,656

33,929

11,038

137,991

627,496

35,078

290,941

1,469

224

6,785

17,914

53

22,394

742,506

51,099

1,104,767

Barceló 2011 Annual Report


Barceló Bávaro Palace Deluxe. Dominican Republic

14

training with onsite training, and differentiated training itineraries were created for the two management groups: an “Operational” itinerary for Assistant Managers and a “Managerial” itinerary for Deputy Managers. Based on this new approach, and in coordination with the Hotel Management School of Galicia, the following modules were developed:

all the workforce participates in the common idea shared with the business management. Within corporate training, there was also training for the hotel HR management, with an expert on the new features of the 2010 Employment Reform and the Equality Plan at the company.

Ongoing hotel training plans • Operational Module: “Food & Beverage Management” for ADH • Managerial Module: “Sales and profitability of hotel restaurants” for SDH Both itineraries were valued satisfactorily by the 50 participants who took part in the 2-day programme in Malaga in October 2011.

Corporate programmes Corporate training is understood as training which supports the lines of work of our “Reactor” strategic plan. Therefore, to meet the need of motivating the hotel middle management, the Corporate Programme focused on continuing training at the Motivation Workshop which we began in 2010. A total of 32 projects were collected until December 2011 as a result of the closure of that workshop; action plans were proposed by the Department Managers to improve the attitude detected among the hotel workforce. Many of the innovating ideas have already been implemented in the hotels, so that

One of the objectives on which we are working is to improve the detection of training needs among our workforce based on the training needs of each establishment. Through the HR departments of the Group’s hotels, the workforce’s abilities and skills have been fostered in their respective jobs. The main training areas have been in “Quality, Environment and Organisation” and in “Specific Hotel Sector Issues” (for the Spa, Food & Beverage, Reception, Technical Services, etc. departments).

Viajes Barceló - Training In the Travel Business, training focused on Economic and Financial Management courses and specific courses on technology, information and communications.

Barceló 2011 Annual Report


Focus on training 1

1.1 million euros invested in training

15

2

3

   

51,046 participants 4

 

697,232 training hours 8.6 average training satisfaction 5

 

 

1. PDD Manager Training: presentation of one of the group’s Business Plan, 2. Graduation ceremony: presenting the CEU certificate to one of the participants, 3. Graduation photograph of the managers who completed and obtained the certificate for the 1st edition of the EMEA Management Development Programme, 4. Corporate Programme: Department Managers of the Tenerife group, 5. Corporate Programme: Department Managers of the Balearic group.

Barceló 2011 Annual Report


Barceló Bávaro Palace Deluxe. Dominican Republic

16

Selection Our Management Team grows with Barceló Barceló continues to focus on internal promotion: in 2011, 20 new ADHs joined the EMEA area, of whom 80% were working at Barceló and joined Barceló’s Development Programme to form part of the management team and grow in order to be future Barceló managers. Regarding other management in the EMEA area, of the 11 Deputy Manager positions filled, 73% were carried out with internal promotion of the employees from the Development Plan; in the same way, 50% of the Hotel Manager positions filled came from internal promotions. In Latin America, 10 employees were promoted to management positions, 8 of which were for Deputy Managers; the employees who were in middle management received internal promotion. In the US hotels, 6 employees were also promoted to management positions. Our Plan to Attract Future Managers

programme to develop their functions on a daily basis and they are tutored by the hotel manager. Our group of future managers is one of the projects in which we are fully involved. Talent management To create a good Barceló Management school, it is fundamental to create a good work base that will enable us to identify the internal talent within the Group. In 2011, we invested time and resources to define the key behaviour that our future deputy managers and assistant managers must have and which will help us to identify persons with talent using objective tools. The method that we used was to organise 3 workshops, in which the persons considered to be successful within the organisation took part; the purpose was to define the success profile of a deputy manager and assistant manager. That first phase of the project was completed in 2011 and its implementation is expected to be in 2012 by carrying out specialist interviews in order to identify the candidates who will form part of Barceló’s talent map.

In 2011, we continued our efforts to maintain a large number of students in work placements to join our PDB (Barceló Development Plan). We contacted and visited 12 Spanish and foreign schools, taking on 39 students to carry out work placements as Assistant Managers in the EMEA region. Of those students, 20% joined the company through our Development Plan (PDB). During the Plan, which lasts an average of two years, the Assistant Managers follow a training

Barceló 2011 Annual Report


Barcel贸 B谩varo Palace Deluxe. Dominican Republic

17

Work placements - A challenge for Barcel贸 At worldwide level, 3,175 students carried out work placements, of whom (excluding management and corporate work placements) 2,879 undertook placements as personnel in the various departments of hotels. We foster agreements with schools and universities in order to train our future employees right from the start, giving them the opportunity to find out and use the knowledge that they have

acquired. Our Work Placement Plan is worldwide in all our destinations. In the EMEA area, 1,159 students have carried out work placements in the hotels; the largest percentage worked in the Food & Beverage and Accommodation areas. In Latin America, a total of 1,897 students undertook placements, mainly in the Food & Beverage area.

Work placements in 2011 Regional Department

F&B

Accommodation

Mgt./Admin.

Misc.

ADH

Corporate

Total

BALEARIC ISLANDS

82

34

11

13

5

-

145

CANARY ISLANDS

59

70

22

12

8

-

171

CATALONIA CENTRAL SPAIN

9

20

6

-

-

-

35

153

113

60

17

12

-

355

NORTHERN SPAIN

27

30

5

9

1

-

72

SOUTHERN SPAIN

82

106

74

30

13

-

305

UK

41

23

10

-

2

-

76

USA

3

7

6

-

-

-

16

1,096

454

195

-

152

-

1,897

-

-

-

-

-

103

103

1,552

857

389

81

193

103

3,175

LATIN AMERICA CORPORATE TOTAL

Barcel贸 2011 Annual Report


Barceló Bávaro Palace Deluxe. Dominican Republic

18

4.4

Awards

Apart from celebrating Barceló’s 80th anniversary, 2011 was also a good year in terms of awards. The company received the 2011 Bronze Prize for Efficiency in the special Regional / Local category, which was awarded to the “Supersummer azul 2010” campaign designed by The Atomic Idea. Some time after that, this campaign was also awarded the Strategy Prize, beating companies like Mahou (Sra. Rushmore), Sony Pictures (Bungalow25), Nike (Santa Marta), Nueces de California (Grey), Skoda (Contrapunto)

and Nestlé (JWT), among others, and proving that Balearic companies’ marketing level is on a par with the biggest nationwide brands. Some company hotels also received certifications and awards of various types. The main ones were as follows: Barceló Cabo de Gata (Almeria) received ISO 14001 environmental management certification, while 4 hotels in Central America obtained the Tripadvisor’s 2011 Certificate of Excellence.

Barceló 2011 Annual Report


19

A farmer in Fantino, the Dominican Republic, who has benefited from a microcredit.

4.5

Fundación Barceló in 2011

Fundación Barceló, which was created in 1989 at the initiative of the Barceló Oliver family, works preferably in the areas of health, education, microcredits, cooperation to improve economic development and environmental protection. The priority areas are several countries in Central America, the Caribbean and Sub-Saharan Africa, where the economic and social development is low. Likewise, certain areas are also included which, although they have a more favourable position in accordance with the Human Development Index (HDI), have major shortages and needs in the Foundation’s areas of action. All of this is aimed at giving new opportunities and the necessary resources to people in vulnerable situations so that they can enjoy a better quality of life.

In 2011, the Barceló Foundation carried out 65 projects in 19 countries, benefitting a total of 171,000 people. The Foundation counted on the collaboration from 30 local partners, i.e. entities which act in the chosen areas and are in charge of executing the projects in accordance with the appropriate efficacy and efficiency criteria. The main actions in education were the projects to build and improve the educational infrastructure in Madovela (Mozambique), Ethiopia and Nsutem (Ghana), and expand the school of the Scavenger Children project in Santiago de los Caballeros (the Dominican Republic). The Foundation also funded the equipment and actions aimed at improving educational quality. Likewise, in 2011, the Foundation funded the schooling of 1,400 students in countries such as Burundi, Burkina Faso, the Ivory Coast, Guatemala, Mozambique, Venezuela and the Dominican Republic, thus enabling children to start or continue their studies. The education projects in 2011 amounted to 26, with a total expense of 361,500 euros and 7,968 beneficiaries.

Doctor Calvo attending an ophthalmologic patient in Nicaragua.

Another priority action area for the Foundation is to improve healthcare. The International Medical Aid (AMI) Programme, an in-house programme, began in the Dominican Republic in 1995 and carries out the following activities, among others: a free welfare programme for very needy people undertaken by voluntary specialist doctors, including surgical operations of various types; the provision of medical infrastructure, equipment and materials; the distribution of free medicines to people who do not have the necessary economic resources; and training programmes for local healthcare specialists so that they can help to sustain the actions in the future.

Barceló 2011 Annual Report


20

Expansion of the Scavenger Children project in Santiago de los Caballeros.

In addition to the AMI Programme, developed mainly in Guatemala, Honduras, Nicaragua and the Dominican Republic, the Foundation has funded projects to build and improve healthcare infrastructure in Cameroon, the Democratic Republic of Congo and Guatemala, provide medical equipment and carry out aid programmes to improve nutrition and food safety. A total of 19 healthcare projects were carried out, totalling 371,000 euros and benefiting 82,435 people. In the area of cooperation for productive and environmental development, the first results have been released from the Payma Project in Dosso (Niger) and projects were carried out to provide access to water by building water wells (in Niger and Cameroon) and a reservoir in Kenya. Special attention should be given to the funding of 36 Drinking Water Supply and Treatment Committees (CAPS), which are in charge of managing water access for rural communities in Nicaragua. Likewise, projects were undertaken to improve agricultural productivity, including the training of local beneficiaries so that those improvements are sustainable.

Incubator funded by the Foundation for Kanzenze Hospital in the Democratic Republic of Congo.

In 2011, the Foundation funded 10 projects in this area, totalling 187,000 euros and benefiting 62,058 people. The Foundation granted new microcredits to 2,780 beneficiaries through local institutions in Niger, Burkina Faso, Nicaragua and the Dominican Republic. They are all small amounts aimed especially at women so that they can improve their agricultural and/or cattle production or create and manage microbusinesses which provide the only family wage. In 2011, a total of 150,800 euros were devoted to these new projects. Lastly, the Foundation has maintained its cultural and arts programme both in the centre of Palma de Mallorca and at the Arts and Cultural Centre in Felanitx, focusing mainly on making Balearic authors or artists who have painted in the Balearic Islands from the 19th and 20th centuries known to the public. The Foundation also sponsored the Capella Mallorquina, a renowned polyphonic choir.

A new classroom built at Nsutem school in Ghana.

Barcel贸 2011 Annual Report


Barceló Hamilton Minorca. Spain

21

5

Organisation structure

Board of Directors María Antonia Barceló Vadell Simón Pedro Barceló Vadell Simón Barceló Tous Guillermo Barceló Tous

Co-Chairmen Simón Barceló Tous Simón Pedro Barceló Vadell

CEO EMEA Raúl González

CEO Travel Division Gabriel Subías

CEO USA James Carroll

Managing Directors Construction Managing Director Jaime Torrens Finance Managing Director Vicente Fenollar Corporate Managing Director Javier Abadía Hotel Division Managing Director for Central and South America Juan José Ribas Hotel Division Managing Director for Mexico Miguel Ángel Guardado Hotel Division Managing Director for Dominican Republic José Torres Hotel Division Managing Director for Cuba Juan Antonio Montes

Barceló 2011 Annual Report


BARCELÓ CORPORACIÓN EMPRESARIAL, S.A. AND SUBSIDIARIES Consolidated Annual Accounts at December 31, 2011

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23

Barcel贸 2011 Annual Report


24

Barcel贸 2011 Annual Report


CONSOLIDATED BALANCE SHEET

Euros

NON-CURRENT ASSETS Intangible assets (Note 4) Property, plant and equipment (Note 5)

31/12/11

31/12/10

1,878,184,466

1,864,865,642

69,073,792

66,538,830

1,624,420,311

1,587,154,763

Investment properties (Note 6)

27,175,420

27,673,410

Investments in associates (Note 7)

13,178,136

62,868,898

Other non-current financial assets (Note 8)

61,536,777

51,953,198

Deferred tax assets (Note 15)

82,800,030

68,676,543

66,197,228

51,067,010

503,297,539

524,381,375

Inventories

10,252,998

12,455,139

Trade receivables

72,139,938

69,266,059

Other receivables (Note 10)

38,773,819

42,519,745

Current tax assets (Note 15)

2,817,634

3,810,712

Other current financial assets (Note 10)

283,761,351

280,429,811

Cash and cash equivalents (Note 10.3)

83,719,556

101,191,373

Accruals (Note 11)

11,832,243

14,708,536

2,447,679,233

2,440,314,027

882,510,712

904,962,455

10,000,000

10,000,000

ASSETS HELD FOR SALE (Note 9) CURRENT ASSETS

TOTAL ASSETS EQUITY (Note 12) Equity attributable to the Parent Company Share capital Issue premium

1,226,000

1,226,000

Reserves

884,130,485

873,854,489

Conversion differences

(39,864,082)

(20,599,879)

Change in fair value of financial instruments

(12,063,291)

(7,326,259)

1,485,808

10,113,372

37,595,792

37,694,732

1,123,216,615

1,089,658,740

Result attributable to the Parent Company Equity attributable to Minority Interest NON-CURRENT LIABILITIES Grants (Note 13) Provisions (Note 14) Bank borrowings (Note 8) Other non-current liabilities (Note 8) Deferred tax liabilities (Note 15)

308,060

309,269

26,903,101

25,096,266

906,136,196

888,652,066

51,729,354

41,198,790

138,139,904

134,402,349

LIABILITIES RELATED TO ASSETS HELD FOR SALE (Note 9) CURRENT LIABILITIES

46,912,059 441,951,906

398,780,773

Bank borrowings (Note 8)

255,481,481

208,014,791

Trade creditors

142,186,634

146,493,633

34,704,772

36,044,111

Current tax liabilities (Note 15)

5,102,333

2,044,236

Provisions (Note 14)

2,394,589

5,957,407

Accruals

2,082,097

226,595

2,447,679,233

2,440,314,027

Other current financial liabilities (Note 10)

TOTAL LIABILITIES The accompanying notes form an integral part of the Consolidated Annual Accounts.

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25


CONSOLIDATED INCOME STATEMENT

Euros

Operating income (Note 16)

31/12/2011

31/12/2010

816,005,580

912,575,456

58,171,761

76,534,247

Supplies

(161,200,607)

(199,071,148)

Personnel expenses (Note 17)

(271,237,960)

(302,765,626)

Other operating and financial income (Note 16)

Amortisation and depreciation (Notes 4, 5 and 6) Other expenses (Note 18) Financial expenses (Note 19) Net result of exchange rate differences Participation in associates' results (Note 7) CONSOLIDATED RESULT BEFORE TAX Income Tax (Note 15) CONSOLIDATED RESULT FOR THE YEAR Minority interests (Note 12) RESULT ATTRIBUTABLE TO THE PARENT COMPANY

(65,071,799)

(65,270,696)

(339,491,459)

(361,136,909)

(45,055,221)

(40,929,986)

11,646,741

6,732,285

(839,529)

(14,771,267)

2,927,507

11,896,356

(607,310)

(999,003)

2,320,197

10,897,353

(834,389)

(783,981)

1,485,808

10,113,372

The accompanying notes form an integral part of the Consolidated Annual Accounts.

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

Euros 

Consolidated result for the year

2011

2010

2,320,197

10,897,353

For cash flow hedge derivatives - Fully integrated companies (Note 8)

(7,071,794)

(5,861,028)

Tax effect of cash flow hedges - Fully integrated companies (Note 15)

2,334,762

2,096,740

45,186

5,436,026

(20,594,491)

64,999,481

(22,966,140)

77,568,572

(22,515,427)

73,232,228

(450,713)

4,336,344

Income and expenses directly charged to equity

Conversion differences - Associates Conversion differences - Fully integrated companies TOTAL RECOGNISED CONSOLIDATED INCOME AND EXPENSES Attributable to the Parent Company Attributable to minority interest The accompanying notes form an integral part of the Consolidated Annual Accounts.

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STATEMENT OF CHANGES IN CONSOLIDATED EQUITY

Euros

Issued capital Balance at December 31, 2009

10,000,000

Issue premium 1,226,000

Legal reserve 2,002,464

Reserves in fully integrated companies 869,287,178

Reserves in Associates (5,765,860)

Total recognised income and expenses Acquisition minority interests

Exchange differences

Profit Fair value Fair value and loss financial financial attributable instruments - instruments to the Parent fully integrated Associates Company companies

(87,483,023)

7,556,765

268,331

66,883,144

10,113,372

(3,764,288)

(3,830,302)

711,341

28 Total

16,161,547

Others Balance at December 31, 2010

(8,604,782)

33,811,211

827,072,764

73,232,228

4,336,344

77,568,572

711,341

(711,341)

1,226,000

2,002,464

886,222,667

(14,370,642)

Total recognised income and expenses

436,909

436,909

62,601

(178,391)

(115,790)

867,267,723

37,694,732

904,962,455

(22,515,427)

(450,713)

(22,966,140)

814,000

814,000

(7,556,765)

62,601 10,000,000

(20,599,879)

10,113,372

(3,495,957)

(19,264,203)

1,485,808

(4,737,032)

(3,830,302)

Business combination (Note 3) Application of 2010 results Transfer to assets maintained for sale (Note 9)

24,884,639

(14,771,267)

(24,370,725)

24,370,725

1,690,008

(1,527,384)

888,426,589

(6,298,568)

(10,113,372) (3,830,302)

3,830,302

Dissolution/sale of companies (Note 3) Others Balance at December 31, 2011

10,000,000

1,226,000

2,002,464

Total equity

793,261,553

Business combination (Note 3) Application of 2009 results

Minority interests

(39,864,082)

1,485,808

(12,063,291)

(524,496)

(524,496)

162,624

62,269

224,893

844,914,920

37,595,792

882,510,712

The accompanying notes form an integral part of the Consolidated Annual Accounts.

Barcel贸 Consolidated Annual Accounts 2011


CONSOLIDATED CASH FLOW STATEMENT

2011

Euros

2010

OPERATING ACTIVITIES PROFIT BEFORE TAX AND MINORITY INTERESTS

2,927,507

11,896,356

- Amortisation and depreciation (Notes 4, 5 and 6)

65,071,799

65,270,696

- Financial result (Notes 16.2 and 19)

37,574,124

30,518,124

Adjustments for:

- Loss in participation of results of Associates (Note 7)

839,529

14,771,267

- Results from investing activities (Notes 16.2)

(5,751,981)

(4,902,404)

- Impairment of non-current assets (Note 5)

11,828,086

- Provisions (Note 14)

(3,224,315)

- Grants

(27,782,379)

(54,794)

(98,844)

- Changes in debtors and other current accounts receivable

(1,760,967)

24,583,321

- Changes in trade and other accounts payable

(2,329,664)

(208,886)

- Changes in other non-current liabilities - Income tax paid TOTAL CASH FLOWS FROM OPERATING ACTIVITIES

132,814

(4,676,502)

(2,796,697)

(3,608,596)

102,455,441

105,762,153

(7,526,278)

(4,727,003)

(138,628,825)

(149,765,523)

(156,954)

(3,059,331)

INVESTING ACTIVITIES - Acquisition intangible assets (Note 4) - Acquisition Property, Plant & Equipment (Note 5) - Acquisition investments in Associates (Note 7) - Acquisition investment properties (Note 6) - Acquisition other non-current financial assets (Note 8.1) - Proceeds from other non-current financial assets (Note 8.1)

(75,333)

(3,895)

(7,344,543)

(9,039,858)

1,072,172

36,244,406

- Business combinations (Note 3.1) - Proceeds from sales of Property, Plant & Equipment (Note 16.2) - Income from interest (Note 16.2)

(1,000,000) 14,104,479

15,513,016

7,674,176

9,662,602

(3,826,790)

(122,617,522)

(134,707,896)

(228,793,108)

169,660,350

168,095,196

(107,330,589)

(117,084,827)

(40,805,803)

(34,538,564)

1,839,529

(230,860)

53,585

174,139

TOTAL CASH FLOWS FROM FINANCING ACTIVITIES

23,417,072

16,415,084

Cash and cash equivalents - exchange rate variations

(8,636,434)

2,600,696

NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS

(17,471,817)

(104,015,175)

CASH AND CASH EQUIVALENTS AT JANUARY 31 (Note 10.3)

101,191,373

205,206,548

83,719,556

101,191,373

- Disposals /Proceeds from other current financial assets (Note 10.2) TOTAL CASH FLOWS FROM INVESTING ACTIVITIES FINANCING ACTIVITIES - New financing with credit entities (Note 8.2) - Amortisation and repayment of bank debt (Note 8.2) - Interest paid (Notes 8.2 and 19) - Other non-current liabilities (Note 8.3) - Grants and provisions (Note 13)

CASH AND CASH EQUIVALENTS AT DECEMBER 31 (Note 10.3) The accompanying notes form an integral part of the Consolidated Annual Accounts.

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1

Corporate Information

Barceló Corporación Empresarial, S.A., (hereinafter the “Parent Company”) was incorporated on December 22, 1962 for an indefinite period of time with limited liability in Spain, under the name of Hotel Hamilton, S.A. On June 23, 2000, the Company modified its official name to the current name. Barceló Corporación Empresarial, S.A. and its subsidiaries, which are detailed in Appendix I (part of Note 1) comprise the Barceló Group (hereinafter the Group). The Group’s activities are basically the management and operation of hotels under an ownership, leasing or management basis and the operation of retail travel agencies. The Group also promotes projects broadly related to the tourism and hotel industries, owning shares in other companies. In 2011 the Group has mainly carried out its activities in Spain, the Dominican Republic, Costa Rica, Nicaragua, the United States, Mexico, Guatemala, the Czech Republic, Turkey, Panama, the United Kingdom, Switzerland, Morocco, Portugal, Cuba, Egypt and Germany. The Group’s registered and head offices are located in C/ José Rover Motta, 27, in Palma de Mallorca (Spain).

Consolidation Perimeter Appendix I details the companies included in the consolidation perimeter. Note 3 describes the main variations in the perimeter throughout the year.

Associates excluded from the consolidation perimeter The investment in Rey Sol, S.A. and subsidiaries has been excluded from the consolidation perimeter as the influence is not relevant.

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2

2.1

Main Accounting Policies and Valuation Standards

31

Basis of Presentation

These consolidated annual accounts have been prepared from the internal accounting records of the Parent Company, Barceló Corporación Empresarial, S.A., and from the accounting records of each of the consolidated subsidiaries, duly adjusted according to the accounting principles established in the EU-IFRS. The comparative information for 2010 included in these accounts has been prepared according to the same standards. These financial statements are expressed in euro units unless otherwise specified. These consolidated financial statements have been formulated by the Board of Directors and are pending approval at the Annual Shareholders’ meeting. It is expected that they will be approved without changes. In 2012 the Company foresees a distribution of dividends for an amount of 2 million euros. This distribution will be carried to reserves for the Parent Company. The proposed distribution is pending approval at the General Shareholders Meeting. The 2011 consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow and changes in equity statements, follow the same presentation basis used for the 2010 accounts and are therefore comparable between years. Note 3 contains the breakdown of the variations which have occurred in the consolidation perimeter in the years 2010 and 2011. The accounting policies prevailing at December 31, 2011, are the same as those existing in 2010, with the exception of the following standards or interpretations which have been issued or modified:

a. Standards and interpretations approved by the European Union which are applicable for 2011 The accounting policies used to prepare the consolidated financial statements for the year ended December 31, 2011 are the same as those applied in the year ended December 31, 2010, with the exception of the following standards or interpretations which are applicable for accounting periods beginning as of and including January 1, 2011: •

IAS 32 “Classification of issue rights” The application of this amendment has not had an impact on the financial position or performance of the Group.

IAS 24 “Related party disclosures” This standard includes several amendments: The definition of a related party is clarified. In addition, the amendment introduces an exemption from the general related party disclosure requirements for transactions with government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group.

IFRIC 14 “Prepayments of a Minimum Funding requirement” This amendment is applied in specific situations when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment allows entities to treat the benefit of such an early payment as a pension asset. Since the Group has no minimum funding requirements, the application of these criteria has had no impact on the financial position or performance of the Group.

IFRIC 19 “Extinguishing financial liabilities with equity instruments” This interpretation establishes that when the terms of a financial liability are renegotiated and result in equity instruments to a creditor to extinguish all or part of the financial liability, the instruments issued are considered to be part of the consideration paid to extinguish the financial liability; such equity instruments should

Barceló 2011 Annual Report


be measured at fair value, unless it cannot be reliably measured, in which case the new equity instruments should be measured to reflect the fair value of the financial liability extinguished; and the difference between the carrying amount of the financial liability extinguished and the initial measurement amount of the equity instruments issued is included in the entity’s profit and loss for the period. The application of these criteria has had no impact on the financial position or performance of the Group. •

Improvements to IFRS (May 2010) In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies, but no impact on the financial position or performance of the Group.

·

·

·

·

IFRS 3 Business combinations: The measurement options available for non-controlling interest (NCI) were amended. Only components of NCI that constitute a present ownership interest that entitles their holder to a proportionate share of the entity’s net assets in the event of liquidation should be measured at either fair value or at the present ownership instruments’ proportionate share of the acquiree’s identifiable assets. All other components are to be measured at the acquisition date fair value. IFRS 7 Financial Instruments - Disclosures: This amendment aims to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context. The Group reflects the revised disclosure requirements in Notes 8, 10 and 22. IAS 1 Presentation of financial statements: This amendment clarifies that an entity may present an analysis of each component of other comprehensive income either in the statement of changes in equity or in the Notes to the financial statements. The Group provides this analysis in Notes 8, 14, 18 and 19. IAS 34 Interim Financial Statements: This amendment requires that condensed interim financial statements include additional disclosures on fair value and the changes in classification of financial assets, as well as changes in contingent assets and liabilities. This amendment is not applicable to the Group.

The improvements to IFRS include other amendments to the following standards, which have not had an impact on the accounting policies, financial position or results of the Group.

·

·

·

·

IFRS 3 Business combinations: Clarifies that the contingent price arising from a business combination previous to the adoption of IFRS (amended in 2008) is to be recognised in accordance with IFRS 3 (2005). IFRS 3 Business combinations: clarifies the accounting treatment in business combinations of sharebased payment awards of the acquirer replaced by the agreements with employees of the acquiree. IAS 27 Consolidated and separate financial statements: Application of the transition requirements of IAS 27 (Amended in 2008) as a result of the amended standards. IFRIC 13 Customer loyalty programmes: On determining the fair value of loyalty award credits, a company should take into account the discounts and incentives that would be offered in other cases where the customers have not received such credits.

b. Standards and interpretations approved by the European Union which are not of compulsory application this year The Group has not adopted any standard, interpretation or amendment in advance which has been published but is not yet in force. The Group is assessing the possible effect that the following standard, issued by the IASB and approved by the European Union, but which are not yet applicable, could have on its financial position and performance: •

Amendment to IFRS 7 “Disclosures – Transfer of financial assets”: Applicable to the periods beginning as of July 1, 2011.

c. Standards and interpretations published by the IASB and pending approval by the European Union At the issue date of these consolidated financial statements, the following standards, amendments and interpretations had been published by the IASB but were not of compulsory application and had not been approved by the European Union:

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• • • • • • • • • • • • •

Amendment to IAS 12 “Deferred tax– Recovery of underlying assets”: Applicable to the periods beginning as of July 1, 2012July 1, 2012. Amendments to IAS 1 “Presentation of items of other comprehensive income”: Applicable to the periods beginning as of July 1, 2012. IFRS 9 “Financial instruments” and amendments to IFRS 9 and to IFRS 7 “Mandatory effective date and transition disclosures”: Applicable to the periods beginning as of January 1, 2015. IFRS 10 “consolidated financial statements”: Applicable to the periods beginning as of January 1, 2013. IFRS 11 “Joint arrangements”: Applicable to the periods beginning as of January 1, 2013. IFRS 12 “Disclosure of interests in other entities”: Applicable to the periods beginning as of January 1, 2013. IFRS 13 “Fair value measurement”: Applicable to the periods beginning as of January 1, 2013. IAS 19 amended “Employee benefits”: Applicable to the periods beginning as of January 1, 2013. IAS 27 amended “Separate financial statements”: Applicable to the periods beginning as of January 1, 2013. IAS 28 amended “Investments in associates and joint ventures”: Applicable to the periods beginning as of January 1, 2013. IFRIC 20 “Stripping costs in the production phase of a surface mine”: Applicable to the periods beginning as of January 1, 2013. Amendments to IAS 32 “Offsetting financial assets and financial liabilities”: Applicable to the periods beginning as of January 1, 2014. Amendments to IFRS 7 “Disclosures - Offsetting financial assets and financial liabilities”: Applicable to the periods beginning as of January 1, 2013.

At present, the Group is assessing the impact of the application of these standards, amendments and interpretations. Based on the analysis undertaken to date, the Group considers that, with the exception of the accounting of multigroup companies recognised by the proportional method which will now be accounted for by the equity method, the application of these standards and amendments will not have a significant effect on the consolidated financial statements in the initial application period.

2.2.

Consolidation principles

The accompanying consolidated annual accounts of the Group include the accounts of Barceló Corporación Empresarial, S.A. and subsidiaries. The consolidation methods applied are the following: •

• •

Those subsidiaries directly or indirectly controlled by the Company are fully consolidated from the date said control is obtained until it is terminated. This method consists in aggregating the items which represent assets and liabilities, income and expenses and equity items generated after the control is effective. All intergroup transactions and balances are eliminated in the consolidation process. Associates where the Parent Company does not have direct or indirect control, but where a significant influence is held, are consolidated by the equity method. Companies which are jointly managed are proportionately consolidated.

Minority interest represents the proportion of net assets and results of the subsidiaries and is presented on a separate line in the consolidated income statement and in the Group’s consolidated equity. With regard to the acquisition of minority interest, the difference between the acquisition cost and the minority interest are considered less reserves of the Group. Appendix I includes those companies integrated by the full accounting method.

2.3

Conversion of foreign companies’ annual accounts

All the assets, rights and obligations of companies which are not in the euro zone (the Group’s functional currency) and are included in the consolidation scope are converted to euros using the end of period exchange rate. The income statement items have been converted at the weighted average exchange rate for the year.

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The difference between the amount of the foreign companies’ equity, including the income statement balance calculated as explained in the section above and converted at the historical exchange rate, and the equity situation arising from the conversion of the assets, rights and obligations at the year-end exchange rate, is recorded with a positive or negative sign, as applicable, in the consolidated balance sheet equity under the heading “Conversion differences”. In the case of a total or partial foreign investment, the part of the conversion difference included in equity relating to said investment is carried to profit and loss. The conversion differences accumulated at the transition date (January 1, 2007) have been reclassified to full integration reserves or associates according to IFRS-1.22. Therefore, the conversion differences included in the consolidated balance sheet relate to those generated since said date. The functional currency of all the subsidiaries is the official currency of the country in which they operate. None of the subsidiaries operates in a hyperinflationary economy.

2.4

Business combinations and Goodwill

Business combinations are undertaken applying the acquisition method. The acquisition cost is valued on the basis of the carrying value of the assets delivered and the liabilities incurred or assumed at the exchange date, plus the costs directly attributable to the acquisition. The identifiable assets acquired and the liabilities and contingent liabilities assumed in the business combination are initially valued at their fair value at the acquisition date regardless of any minority participation. Goodwill is initially measured at cost, i.e. the excess of the cost of the business combination over the net fair value of the acquired company’s identifiable assets, liabilities and contingent liabilities. If the cost of the acquisition is less than the fair value of the net assets of the acquired subsidiary, the difference is directly recognised in the income statement. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, as of the acquisition date, goodwill acquired in a business combination is allocated to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units.

2.5

Investments in associates

Group investments in associates are accounted for under the equity method of accounting. An associate is an entity in which the Group has significant influence but does not control. Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the net assets of the associate. The income statement reflects the share of results of operations in the associate. This is the profit attributable to the holders of the share in the associate and therefore, it is profit after tax and minority interest in the subsidiaries of the associates. When there is a change recognised directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised losses and gains arising from transactions between the Group and the associate are eliminated in proportion to the share. The associate’s financial statements have the same reporting date as the Parent Company. When required, the necessary adjustments are made so that the associate’s accounting policies conform to those used by the Group. In subsequent valuations, the Group decides whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines, at the date of each balance sheet, whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and it is recognised in the income statement.

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2.6

Investments in joint ventures

The Group has shares in joint ventures which are jointly controlled entities in which there is an agreement whereby the involved parties undertake economic activities subject to joint control. The Group recognises its interest in the joint venture using proportionate consolidation. The Group combines its participation in each of the assets, liabilities, income and expenses of the joint venture with the similar items, line by line, in its consolidated financial statements. Appendix I shows the companies integrated by the proportional, and the assets and liabilities integrated by the proportional method. The financial statements of the joint venture are prepared for the same accounting period as the Parent Company. When required, the necessary adjustments are made so that the accounting policies conform to those used by the Group. Adjustments are made in the Group’s consolidated financial statements to eliminate the Group’s interest in intragroup balances, income and expenses and profit and loss between the Group and the joint ventures.

2.7

Intangible Assets

Intangible assets are measured at acquisition or production cost. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life, whereas intangible assets with indefinite life are not amortised but are tested for impairment annually either individually or at the cash-generating unit level. Intangible assets include: •

Industrial property, licenses and similar are measured at the cost incurred and are amortised on a straight-line basis over a 3-year period. • Software is measured at acquisition cost and is amortised on a straight-line basis during a period of between three and five years. Software maintenance costs are charged to expenses when incurred. • Leaseholds mainly correspond to the valuation of the rental contracts of the hotels acquired in business combinations previous to the IFRS transition date. Leaseholds are amortised on a straight-line basis over the duration of the rental contracts which finish in 2035. • Goodwill is not amortised and is tested for impairment annually. • Other intangible assets mainly relate to the acquisition cost of or cost incurred to obtain the management contracts of hotels in the United States. They are amortised on a straight-line basis over the economic life of the contracts according to their length.

2.8

Property, Plant and Equipment

Property, plant and equipment is stated at cost, plus the financial and acquisition expenses related to the debt which finances the purchase of assets until they are put into use. In 1996, some Spanish companies revalued their tangible fixed assets in accordance with article 5 of Royal Decree Law 7/1996. The maximum revaluation coefficients were applied and all the assets items were affected with the exception of those which were totally depreciated at December 31, 1996. At transition date, the plots of land on which certain hotels are located were revalued, taking into account their fair value as an attributable cost as of the transition date as permitted in IFRS 1. The valuations of assets in Latin America were performed by American Appraisal at December 31, 2008 based on market valuation criteria by means of the discounted cash flow method using a discount rate ranging between 8% and 10% and taking into account the investment risk and the profitability required for comparable investments. The valuations of assets in Spain were performed by Eurovaloraciones, S.A. at December 31, 2008 based on market valuation criteria by calculating the net present value and the residual value. Discount rates ranging between 7% and 10% have been used. The table below shows, in thousands of euros, the increase of the attributable cost of the plots of land in accordance with the revaluations performed, at the transition date (January 1, 2007.

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Initial Cost

Increase in relation to cost

Fair value

Spain

16,970,260

159,648,883

176,619,143

Mexico

64,489,447

14,082,035

78,571,482

Dominican Republic

33,319,453

69,183,164

102,502,617

Costa Rica

249,384

7,504,171

7,753,555

Nicaragua

172,794

3,392,183

3,564,977

115,201,338

253,810,436

369,011,774

Annual depreciation and amortisation is calculated applying the straight-line method depending on the estimated useful life of the various assets, which is generally between 30 and 50 for building and renovations and between 2.5 and 18 years for furniture and fittings, machinery and other assets. Repairs and maintenance are charged to expenses when they are incurred. In 2011, the useful life of certain property, plant & equipment has been modified in order to bring the economic useful life of the items into line with the hotel maintenance policy undertaken in recent years by the Group.

2.9

Investment properties

Investment properties are accounted for at the carrying value of the real estate investments maintained in order to obtain rental income or property sale gains. These assets are measured at cost and are amortised on a straight-line basis following the same criteria used for property, plant and equipment.

2.10

Impairment of non-financial assets

The Group assesses at each closing date whether there is an indication that the carrying value of the non-financial assets may be impaired. If any such indication exists, the Group makes an estimate of the assets’ recoverable amount. An asset’s recoverable amount is the higher of the asset’s net sale price and its value in use. On assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For those assets that do not generate cash inflows that are highly independent, the recoverable amount is determined for the cashgenerating units to which the asset belongs. Due to their particular characteristics, certain hotel assets include a significant real estate component and have therefore been valued by the Group’s internal departments to determine their recoverable amount in accordance with market real estate indicators. In order to determine the value in use of the hotel assets, the Group performs internal valuations using market discount rates or contracts valuation services from independent experts. Impairment losses are recognised for all those assets or, where applicable, cash-generating units which include them, when the carrying value exceeds the corresponding recoverable amount. Impairment losses are accounted for in the consolidated income statement. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount. This reversal is recognised in the consolidated profit and loss account. In this respect, the reversal of an impairment loss cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset previously.

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2.11

Financial instruments

2.11.1 Financial instruments - assets In accordance with IAS 39, assets financial instruments are classified, depending on valuation criteria, as financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets and hedge derivatives. Financial assets are initially recognised at fair value, plus the expenses inherent to the acquisition, with the exception of financial assets at fair value through profit or loss, where said expenses are directly carried to expenses for the year.

Loans and receivables Loans and receivables relate to collection rights for a specific amount and date that are not quoted in an active market. Following initial recognition, loans and receivables are carried at amortised cost, using the effective interest rate method. Accrued interest from the loans is recognised in income in accordance with the effective rate.

Assets at fair value through profit or loss This heading includes those derivatives which are not designated as hedging instruments. This is the case of the sale options of the participations in American Express Barceló Viajes, S.L. (see Note 8.1). These assets are measured at fair value through profit or loss.

Available-for-sale financial assets Available-for-sale financial assets are those non-derivative hedges which cannot be classified under the other financial assets captions. After initial recognition, available-for-sale financial assets are valued at fair value, with the exception of investments in the equity instruments of companies which do not quote in an active market and whose fair value cannot, therefore be reliably determined. These investments are measured at cost. Changes in fair value are directly recognised in equity. When part or all of these financial assets is derecognised or the profit or loss recognised in equity is impaired, it is carried to results for the year.

2.11.2 Financial instruments - liabilities In accordance with IAS 39, liabilities financial instruments are classified, depending on valuation criteria, as financial liabilities at fair value through profit or loss and loans and other accounts payable. Financial liabilities are initially recognised at fair value, plus the expenses inherent to the acquisition, with the exception of financial assets at fair value through profit or loss, where said expenses are directly carried to expenses for the year.

Financial liabilities at fair value through profit or loss This heading only includes cash flow derivatives (SWAPs) contracted by the Group, which do not fulfil the requirements to be considered as hedge instruments and the fair value of which does not favour the Group. As indicated in the heading’s title, the financial liabilities are measured at closing for their fair value through profit or loss.

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Loans and borrowings Loans and borrowings relate to payment obligations of a determinable amount and date. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. The accrued interest from the loans is recognised in the income statement in accordance with the effective rate.

Hedge derivatives The Group has contracted interest rate hedge derivatives (interest rate swaps) to cover the fluctuation of the Euribor/Libor on certain loans linked to a variable interest rate. These derivatives contracted by the Group are cash flow hedges. These financial instrument derivatives are initially valued at fair value. Derivatives are recognised as financial assets if their value is positive and financial liabilities if their value is negative. Initially, the Group will formally designate and document the hedge relationship. Moreover, this cover must be totally effective. Derivatives which fulfil the criteria to be designated as hedges are recognised as follows: The profit or loss portion of the hedge instrument (variation of the derivatives fair value) which has been determined as effective, is recognised in equity, and is carried to income in the year or years in which the foreseen covered operation affects profit or loss.

2.11.3 Impairment of financial assets Each year-end closing, the Group determines whether there is objective evidence that its financial assets are impaired. If such evidence exists, the Group determines the amount of any impairment loss according to the following criteria:

Financial assets carried at amortised cost The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate. Short-term investments are not discounted. The amount of the loss is recognised in profit or loss for the year. Specifically, the Group undertakes a periodical analysis of the age of accounts receivable in order to determine whether there is evidence of impairment.

The Group’s provision criteria is to provide for 25% of the balances overdue for between 180 and 270 days, 50% of the balances overdue for between 270 and 365 days and 100% of the balances overdue for more than a year. Those balances which are clearly unrecoverable are considered to be failed.The Group uses a corrective account to provide for said balances.

Available-for-sale financial assets When the decrease in fair value of an available-for-sale financial asset has been directly recognised in equity and there is objective evidence that the asset is impaired, the accumulated losses that have been recorded in equity are recognised in the income statement. For this type of asset, objective evidence of impairment is considered to be a prolonged or significant decrease in the fair value to less than cost. The Group presents said impairment as a lower value of the corresponding asset.

2.12

Cash and cash equivalents

All those investments with an original maturity of three months or less and which do not have any risk of change in value are considered by the Group to be cash equivalents.

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2.13

Leases

Finance leases, which substantially transfer to the Group all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Leased assets are depreciated over their useful life. However, the investments made by the Group in assets under operating lease are amortised over the shorter of the estimated useful life of the asset and the lease term. Operating lease payments are recognised as an expense in the income statement according to the accrual principle over the lease term.

2.14

Inventories

Inventories are those assets to be used for consumption or sale during the course of the hotels’ ordinary activity (food and beverages, gift shops, maintenance) and sales and promotional items relating to the Travel Division. Inventories are valued at the lower of average cost and market value.

2.15

Non-current assets held for sale

Those assets whose carrying value will basically be recovered through their sale rather than through their continued use are classified under the heading “Non-current assets maintained for sale”, when the following requirements are fulfilled: • •

They are immediately available for sale in their present condition, subject to the normal terms of sale. The sale is highly probable.

Non-current assets held for sale are accounted for at the lower of their carrying amount and fair value less cost to sell. These assets are not amortised and, where necessary, the appropriate value adjustments are made so that the accounting value does not exceed the fair value less the costs to sell.

2.16

Income tax

Deferred tax assets and liabilities are recognised according to the future tax consequences attributable to differences between the carrying value of the existing assets and liabilities in the annual accounts and their corresponding tax base. All tax assets or liabilities are recognised, with the exception of those arising in the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects neither the accounting profit nor taxable profit. Moreover, in the case of deferred tax assets for temporary differences, the corresponding Group companies are required to obtain future taxable profit, which is sufficient to realise said asset. This condition must also be fulfilled for the deferred tax assets arising from tax losses or deductions. Deferred tax liabilities related to investments in subsidiaries are not recognised if the following two conditions are fulfilled: a. The Group is capable, at all times, of controlling the timing of the reversal of the temporary difference. b. It is probable that the temporary difference will not reverse in the foreseeable future. The Group fulfils these two conditions since it controls the dividends policy of these Group companies and does not need nor intend to distribute dividends. Deferred taxes relating to items recognised directly in equity are also recognised in equity and not in the income statement.

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Current tax assets and liabilities are measured at the amount which is expected to be recovered or paid. The applicable tax rate is that approved at closing.

2.17

Foreign currency transactions

Debit and credit balances in foreign currency are valued at the exchange rate prevailing on the corresponding transaction date and are reconverted at year-end at the rate then in effect. Exchange differences are recorded as income or expenses for the year.

2.18

Long-term commitments with employees

The Group has certain long-term commitments with its employees: In Spain for loyalty/retirement premiums related to certain labour agreements applying to the hotel and travel agency industries. In Mexico for loyalty premiums related to the country’s labour legislation. These are defined benefit commitments and are measured according to an actuarial study. The Group’s accounting policy is to recognise all actuarial profits and losses in the income statement. The subsidiaries domiciled in the USA and the United Kingdom recognise certain employee benefits. These commitments are defined contribution commitments and are therefore recognised in the income statement when the annual contribution to the plan is accrued. Note 14 contains all the information regarding these commitments.

2.19

Other provisions

Provisions are recognised when the Group has a present obligation as a result of a past event making an outflow of resources probable. Moreover, an estimate of the amount of the obligation can be made. An onerous contract is one in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable contract costs under a contract reflect the lowest net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. Before a separate provision for an onerous contract is established, the Group will recognise any impairment losses that have occurred on assets dedicated to that contract. If the Group has an onerous contract, the present obligations arising from it are recognised and measured, in the financial statements, as provisions. The main contingencies arising from the provisions recognised in the balance sheet are detailed in Note 14.

2.20

Revenue recognition

The breakdown of the Group’s revenue recognition policy for each revenue area is as follows: •

Revenue for rendering of services arising from the operation of both owned and leased hotels: These revenues are recorded depending on their accrual. The Group records the operating sales and expenses of the owned hotels and those which are leased from third parties in the profit and loss account, and assumes the rights and obligations inherent to the hotel business in its own name.

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• • •

Revenue for services rendered relating to the hotel management activity: This revenue is recorded on an accruals basis for the management fees charged. Revenue for services rendered relating to the casino operation activity: This revenue is booked on an accruals basis for the difference between the amount bet and the winnings paid out. Revenue from the Travel Division: The Travel Division is basically a travel sales intermediary. Revenue is recognised through the margin between the sale value and the cost of supplies on delivery of the travel documentation, which is the moment when all risks and benefits are transferred to the client, regardless of the date of travel and of the use of the services contracted.

41 2.21

Assessments, estimates and assumptions on the financial statements

The preparation of the present financial statements requires the management to make assessments, estimates and assumptions which affect the amount of assets, liabilities and breakdowns of contingencies.

Operating leases The Group has signed long-term lease contracts for hotels as the lessee. The Group management has determined that, on the basis of the terms and conditions of each of the contracts, no significant risks and benefits relating to the property are assumed and for this reason they are recognised as operating leases.

Impairment of non-financial assets Impairment testing on goodwill is based on calculations of the value in use that uses the discounted cash flows model. The cash flows are based on the estimated results for the next five years. The recoverable value of the goodwill is sensitive to the discount rate complying with the cash flows considered and the projected growth rates. The valuation has been performed using the value in use criteria on the cash-generating units affected by the goodwill, using a discount rate of 7.09%.

Deferred tax assets Deferred tax assets are recognised by the Group for all those unused tax loss carryforwards which are expected to be recovered against future profits. Therefore, the management bases this criterion on assessments and estimates of future results, the schedule for obtaining profit and the expiry of tax credits and future tax planning strategies. Note 15 shows the breakdown of the capitalised and uncapitalised tax bases.

Long-term commitments with employees At the date of the balance sheet, the amount of labour contingencies related to defined benefit commitments is determined using actuarial calculations. The actuarial calculations are based on a series of assessments and hypotheses which are detailed in Note 14.

Provisions The amount of provisions recognised in the liabilities side of the balance sheet are based on assessments made by the Group’s management and in accordance with advice given by attorneys and external advisors. The value of these provisions can vary depending on new evidence obtained in the future and on the discount rates used to determine the present value of these commitments.

Onerous contracts Provisions for onerous contracts arise from various rental and management contracts guaranteed in Spain. Said provisions have been calculated by updating the cash flows estimated by the Group and assessing the lowest cost possible of the various exit alternatives for each of the contracts In order to perform the cash flow updates a discount rate of 7.09% has been used.

Barceló 2011 Annual Report


Impairment of assets The Group recognises impairment losses as long as their recoverable amount has fallen below their carrying value. The recoverable amount is the greater of fair value less cost to sell and value in use. The fair value less cost to sell is based on information available on transactions in similar active market conditions or observable market values less cost to sell. The value in use is based on the cash flow discount model which is based on estimated results projections and the application of an estimated discount rate. In order to determine the recoverable value of the hotels in Spain, in 2011 the Group has requested appraisals from the independent experts Arco Valoraciones and Euroval. For the valuation the cash flow discount was performed using a discount rate of between 8.01% and 7.92%, respectively and applying the sector’s estimated growth rates. The impairment tests performed by the Group for the hotels in Spain have been undertaken by updating the cash flows expected for the next five years applying a discount rate of 7.09% plus a residual value calculated as a perpetual rent applying a perpetuity or growth rate of 1.9%. For the hotels in the United States, a discount rate of 8.90% has been applied. Real estate indicators were used to determine the recoverable value of certain hotels. The valuation criteria were as follows: • Buildings were valued using the net replacement value method, applying the prices established by the schools of architecture located in the area of each hotel adjusted by a maintenance coefficient. • The land was valued taking into account its development category and use and applying market prices. The estimates made and the methodology used can have a significant impact on the valuation of the assets.

2.22

Non-refundable grants

Monetary grants are valued at the fair value of the amount granted. They are recognised as income depending on the estimated useful life of the asset for which the grant has been received.

2.23

Classification of assets and liabilities as current and non-current

Assets and liabilities are presented in the balance sheet as current or non-current. For this purpose, assets and liabilities are classified as current when they are expected to be sold, consumed, realised or settled during said cycle, their maturity, sale or realization is expected to occur within the maximum term of one year or they are maintained for negotiations or are cash or cash equivalents whose use is not restricted for a period of more than one year. On the contrary, they are classified as non-current assets or liabilities.

2.24

Severance pay

In accordance with prevailing labour regulations, the Group is obliged to compensate those employees whose services are ceased under certain circumstances. Severance pay which is reasonably quantifiable is recognised as an expense for the year in which it is justifiably expected by the Group before the affected third parties.

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3

Changes in the consolidation perimeter

In January 2011, the sale of the Hotel Casablanca and the company Actif Hotel, S.A. which are both in Morocco was formalised for an amount of 13.1 million euros. In October 2011, the company Centre de Congressos Internacional de Palma, S. A. was dissolved and liquidated. In October 2011, the company Travelsens, S.L, was constituted. This company is a tour operator in the Travel Division. In 2011, the company Viajes Barceló Internacional, SA de CV was dissolved. This company was a travel agency located in Mexico. As of the date on which the decision was made to sell the participations in the associated companies Playa Hotels & Resorts, S.L. and Sky Morocco Hospitality SAS (April and December 2011, respectively), they have been transferred to non-current assets held for sale (See Note 9). As of said dates, the results for these companies are not included in the Group’s income statement. Instead, they are valued as explained in Note 2.15. The changes in the 2010 perimeter are shown for comparison purposes. During 2010 the following companies were dissolved: • • •

Barceló Front Marítim S.L. Barceló Gestión Hotelera Canaria, S.L. Barceló Internet, S.L.

During 2010, the following companies were sold: • •

Viajes Verger S.L. Group’s participation in the UTE Barceló Sampol Barajas (Temporary Consortium).

An amount of 0.3 million euros for the sale of Viajes Verger, S.L. was reclassified from conversion differences in equity to results for the year. The sale amounted to 0.8 million euros, 0.4 million euros of which were collected in 2010, obtaining a profit from the sale amounting to 0.3 million euros. In June 2010, 56% of the share capital of the company Barceló-WRS Spain, S.L. was acquired. A further 8% of Mundosocial, Mundosenior and Novotours was acquired for an amount of 8.7 million euros. As these companies are jointly managed, they are proportionally integrated. The difference between the price paid and the percentage of net assets at fair value acquired has amounted to 6.9 million euros all of which was allocated to goodwill in 2009. The remainder was allocated in 2010.

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3.1

Business combinations

In 2010, 56% of the company Barcel贸 WRS Spain, S.L. was acquired. The balance resulting from the business combination was as follows:

Thousands of euros Non-current assets

1,187

Current assets

5,667

Current liabilities

(5,861)

Net assets

993

Participation acquired

56%

44

556 Acquisition cost

2,756

Goodwill

2,200

At December 31, 2011, the Group has 2 million euros pending payment. The Group has reached an agreement with the vendor by virtue of which the Group will contribute this amount through the share premium subscription solely on behalf of the Barcel贸 Group and without modifying the participation percentage. No business combinations occurred in 2011.

Barcel贸 2011 Annual Report


4

Intangible assets

45

The breakdown of this caption in 2011 is as follows:

Euros

Balance at 31/12/2010

Additions

Disposals

Conversion differences

Balance at 31/12/2011

Transfers

Acquisition Cost Industrial property, licenses and similar

1,500,235

24,655

Goodwill

25,782,892

2,037,121

Leaseholds

27,545,806

1,524,890 27,820,013 (16,449)

Software

26,643,877

3,408,143

Other intangible assets

13,889,177

2,870,359

95,361,987

8,340,278

(1,192,892)

(40,138)

(47,539)

(63,988)

27,529,357 (63,936)

192,723

30,133,268

417,703

(192,107)

16,985,132

353,767

616

103,992,660

Accumulated amortisation Industrial property, licenses and similar Leaseholds Software Other intangible assets

Carrying value

(1,233,030)

(4,435,027)

(959,483)

(18,674,513)

(3,704,682)

(5,394,510)

(4,520,725)

(1,275,734)

(28,823,157)

(5,980,037)

72,502

(187,560)

(616)

(34,918,868)

66,538,830

2,360,241

8,514

166,207

-

69,073,792

72,502

34,402

(616)

(221,962)

(22,272,907) (6,018,421)

All of the goodwill relates to the Travel Division. The goodwill additions mainly arise from the participation in Barceló-WRS Spain, S.L., which amounts to 1,756,000 euros, for the allocation of the definitive cost of the business combination. The impairment test on the goodwill of the Travel Division has been performed by updating the cash flow estimated for five years, with an annual growth rate of 3%. A discount rate of 7.09% has been applied and a sensitivity analysis has been performed. Throughout its history in the hotel and travel agency sectors, the Group has developed a significant management model called “Barceló” and “Best Practices”. This Know-How constitutes a significant combination of knowledge, technical information, experts’ testimonies, skills and secret procedures which allow the improvement of the hotels operating processes, IT systems, resource management and quality and environmental systems, optimising results. No amount is recognised in the annual accounts for this concept.

Barceló 2011 Annual Report


The movement of intangible assets in 2010 was as follows:

Euros

Balance at 31/12/2009

Newly consolidated entities

Additions

Conversion differences

Disposals

Balance at 31/12/2010

Transfers

Acquisition cost Industrial property, licenses and similar

1,577,690

22,347

(99,802)

1,500,235

443,933

85,213

1,699,872

25,782,892

22,988,460

1,621

2,910,362

83,582

12,226,592

 

1,709,081

880,523

87,897,421

445,554

4,727,003

964,105

Goodwill

23,553,874

Leaseholds

27,550,805

Software Other intangible assets

(4,999)

27,545,806 659,852

26,643,877

(927,019)

 

13,889,177

(932,018)

2,259,922

95,361,987

Accumulate amortisation Industrial property, licenses and similar

(1,105,159)

(87,733)

Leaseholds

(3,480,173)

(954,602)

Software Other intangible assets

Carrying value

(1,192,892 ) (252)

(4,435,027)

(15,702,565)

(54)

(2,902,377)

(69,517)

(3,503,492)

 

(745,134)

(272,099)

 

 

(18,674,513) (4,520,725)

(23,791,388)

(54)

(4,689,846)

(341,868)

 

 

(28,823,157)

64,106,031

445,500

37,157

622,237

(932,018)

2,259,922

66,538,830

The goodwill additions correspond to the acquisition of the company Barceló-WRS Spain, S.L. The remaining goodwill existing at December 31, 2010 and 2009 relates to the purchase of the Travel Division. Under the Transfers column, 1.7 million euros relate to the final allocation of the additional 8% acquired in the entities Mundo Social, AIE, UTE Mundo Senior and UTE Novotours in 2009 to goodwill. The remainder is a transfer from Property, Plant & Equipment.

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5

Property, Plant and Equipment

47

The movement of Property, Plant and Equipment in 2011 is as follows:

Balance at 31/12/2010

Additions

Disposals

Conversion differences

Transfers

Balance at 31/12/2011

Acquisition cost Land and natural properties

498,817,239

Buildings

893,362,658

Technical plant

153,724,039 35,190,920

Machinery Tools Other installations Fittings Computer Equipment Vehicles Other assets Works in progress

(5,587,350)

(9,063,960)

484,165,929

(297,999)

(7,697,311)

90,079,972

989,324,500

5,565,620

(161,562)

(2,491,764)

30,064,846

186,701,179

1,146,486

(207,688)

(228,938)

11,147,644

47,048,424

13,877,180

1,605,938

68,519

(47,164)

(28,391)

(38,687)

1,560,215

31,867,689

2,475,795

(462,978)

(58,025)

27,685

33,850,166

193,887,291

11,822,224

(1,723,675)

(939,605)

19,202,148

222,248,383

14,656,100

931,368

(245,946)

(86,379)

(49,921)

15,205,222

6,395,215

32,285

(365,864)

(38,708)

13,285,528

19,308,456

30,948,411

2,511,345

(316,976)

66,422

(5,689,448)

27,519,754

132,712,752

99,903,941

(25,827)

(97,038)

(173,018,630)

59,475,198

1,993,168,252

138,334,763

(3,855,679)

(17,187,087)

(24,052,823)

2,086,407,426

Accumulated depreciation Buildings Technical plant and machinery Other assets

(171,705,352)

(22,864,850)

564,144

2,022,090

4,675,667

(187,308,301)

(90,149,609)

(14,303,428)

388,747

726,353

(15,235)

(103,353,172)

(144,158,528)

(21,712,092)

2,448,858

750,379

3,173,827

(159,497,556)

(406,013,489)

(58,880,370)

3,401,749

3,498,822

7,834,259

(450,159,029)

Impairment Carrying value

(11,828,086) 1,587,154,763

67,626,307

(11,828,086) (453,930)

(13,688,265)

(16,218,564)

1,624,420,311

The main additions in 2011 relate to the significant renovations in the Bรกvaro complex in the Dominican Republic, the acquisition of a hotel in Brno (Czech Republic), which will begin to operate at the beginning of 2012, the construction of a hotel in Hamburg, the refurbishment of the Hotel Barcelรณ Sants, the construction of an office block and various renovations in hotels, mainly located in Spain. Impairment mainly relates to assets incorporated to hotels under lease in the United Kingdom. Transfers mainly relate to the termination of the work on the Bรกvaro complex and correspond to transfers from works in progress to property, plant & equipment under the appropriate headings for an amount of 166 million euros and to the transfer of assets for the Hotel Barcelรณ Capella to non-current assets held for sale amounting to 17 million euros. The Group has contracted insurance policies to cover the carrying value of the property, plant & equipment.

Barcelรณ 2011 Annual Report


The movement of Property, Plant and Equipment in 2010 was as follows:

Euros

Balance at 31/12/2009

Newly consolidated entities

Additions

Conversion differences

Disposals

Transfers

Balance at 31/12/2010

Acquisition cost Land and natural properties

494,037,065

(10,580,679)

498,817,239

Buildings

854,598,099

21,236,975

41,956,993

(38,437,662)

14,008,253

893,362,658

Technical plant

142,686,907

7,995,819

3,951,079

(36,091)

(873,675)

153,724,039

30,105,499

4,339,417

770,136

(24,132)

1,416,437

236,523

13,724

(59,776)

Machinery Tools Other installations Fittings Computer Equipment Vehicles

15,360,853

35,190,920 (970)

1,605,938

28,347,622

1,057,055

1,983,132

536,385

(56,505)

183,268,506

69,569

10,176,386

6,634,727

(5,233,793)

(1,028,104)

193,887,291

14,585,656

22,656

608,674

290,041

(752,050)

(98,877)

14,656,100

34,396

292,755

(244,198) (48,169)

6,312,262

31,867,689

6,395,215

Other assets

27,513,389

1,811,346

1,744,931

Works in progress

75,624,220

100,767,777

3,039,179

149,190,445

74,590,803

(44,892,376)

(24,478,696)

(4,105,753)

5,833,755

(29,315)

1,858,495,663

1,149,280

(73,086)

30,948,411

(46,718,424)

132,712,752

(45,365,562) 1,993,168,252

Accumulated depreciation Buildings Technical plant and machinery Other assets

Carrying value

(148,925,343) (74,400,639)

(171,705,352)

(14,769,547)

(1,180,080)

24,559

176,098

(90,149,609)

(123,319,067)

(19,703)

(21,025,081)

(2,864,350)

2,437,299

632,374

(144,158,528)

(346,645,048)

(19,703)

(60,273,324)

(8,150,183)

8,295,613

779,157

(406,013,489)

1,511,850,615

1,129,577

88,917,121

66,440,620

(36,596,763)

(44,586,405) 1,587,154,763

The main additions in 2010 relate to the significant renovations in the Bรกvaro complex in the Dominican Republic. The main transfers relate to property, plant and equipment transferred to non-current assets held for sale. These transfers relate to the Palace of Congresses in Palma de Mallorca for an amount of 39.9 million euros and to the Hotel Casablanca for an amount of 4.1 million euros. The main disposal relates to the sale of Homewood Suites DC in Washington. At December 31, 2011 and 2010, the cost of the property, plant and equipment affected by the 1996 revaluation, which still exist, amounts to 8.5 and 8.5 million euros, respectively, and their accumulated depreciation to 5.8 and 5.6 million euros, respectively. Said assets belong to the Group companies, Poblados de Vacaciones, S.A., Barcelรณ Hotels Mediterrรกneo, S.L. and Barcelรณ Hotels Canarias, S.L. At December 31, 2011 and 2010 certain plots of land and buildings owned by Group companies are mortgaged, guaranteeing the repayment of bank loans amounting to 589.1 and 555.7 million euros, respectively. At December 31, 2011 and 2010, the amount of assets mortgaged amounts to 1,114.1 and 763.1 million euros, respectively. The Mexican companies have been integrated without taking into consideration the inflationary effect of the B10 locally, since it is considered that the Mexican economy is not hyperinflationary. Financial expenses capitalised in 2011 and 2010 amount to 1,783 thousand euros and 1,152 thousand euros, respectively, and correspond to loans directly attributable to the acquisition of the assets.

Barcelรณ 2011 Annual Report

48


6

Investment properties

This heading includes the carrying value of the property investments maintained in order to generate rental income or capital gains. The breakdown of investment properties held by the Group is as follows:

Balances at 31/12/2010 Shopping centres and premises Plots of land - Spain

Additions

7,039,352 6,590,679

Plots of land - Costa Rica

14,043,379

Total

27,673,410

Transfer to P,P&E

Disposals

Conversion differences

(156,939)

Depreciation/ Amortisation (211,392)

75,333

(739,302)

(156,939)

(739,302)

6,671,021 5,926,710

534,310 75,333

Balance at 31/12/2011

534,310

14,577,689 (211,392)

27,175,420

Disposals relate to the sale of premises in Barcelona (See Note 16.2). The breakdown for 2010 was as follows:

Balances at 31/12/2009 Shopping centres and premises Plots of land - Spain

7,759,886

Additions 3,895

Disposals

Conversion differences

(416,903)

Depreciation/ Amortisation (307,526)

6,590,679

Plots of land - Costa Rica

11,840,764

Total

26,191,329

Balances at 31/12/2010 7,039,352 6,590,679

2,202,615 3,895

(416,903)

2,202,615

14,043,379 (307,526)

27,673,410

Operating income generated for the Group by these investment properties amounts to 2.2 million euros. In 2010 the amount was 2.3 million euros.

Barcel贸 2011 Annual Report

49


7

Investments in Associates

50

The breakdown of investments in associates during 2011 is as follows:

Balance at 31/12/2010 Playa Hotels & Resorts

Result

Additions

Distribution of dividends

47,808,701

Transfers

Disposals

Conversion differences

Balance at 31/12/2011

(47,808,701)

-

Hotel Derek

1,878,951

(784,342)

(897)

1,093,712

TCA Block 7, LLC

1,704,976

(261,120)

34,990

1,478,846

773,295

(92,646)

Blacksburg Santa Lucía, S.A.

(85,916)

4,707,783

TV Popular, S.A.

11,093

156,954

9,715

Turyocio Viajes y Fidelización, S.A. Fidelización de Consumidores, S.A.

371,823

(9,715)

-

(294,512)

77,311

18,517

18,517

American Express Barceló Viajes, SL.

4,164,473

593,091

Sky Morocco Hospitality SAS

1,430,664

 

62,868,898

605,826 4,864,737

(421,489)

703,112

 

(1,430,664)

 

(839,529)

156,954

(507,405) (48,536,253)

5,039,187  

 

(9,715)

45,186

13,178,136

The investments in Playa Hotels & Resorts, S.L. and Sky Morocco Hospitality SAS have been transferred to noncurrent assets held for sale. See Note 9. The breakdown of investments in associates during 2010 was as follows:

 

Balance at 31/12/2009

Results

Playa Hotels & Resorts

Additions

54,897,261

(14,317,314)

Hotel Derek

1,800,853

(63,417)

TCA Block 7, LLC

1,960,317

(658,907)

709,486

8,484

Blacksburg Santa Lucía, S.A. TV Popular, S.A.

Transfers

Disposals

2,151,140 241,993

Conversion differences

Balance at 31/12/2010

5,077,614

47,808,701

141,515

1,878,951

161,573

1,704,976

55,325

773,295

5,226,347

(518,564)

4,707,783

28,724

(19,009)

9,715

Turyocio Viajes y Fidelización, S.A.

371,823

371,823

Fidelización de Consumidores, S.A.

18,517

18,517

American Express Barceló Viajes, SL.

3,904,586

Mundo Social AIE

259,887

4,164,473

1,439,872

(1,439,872)

-

Novotours AIE

260,000

(260,000)

-

Sky Morocco Hospitality SAS

764,466

 

666,198

 

 

 

1,430,664

71,382,251

(14,771,267)

3,059,331

(1,699,872)

(537,573)

5,436,027

62,868,898

The additions for Playa Hotels & Resorts, S.L correspond to the acquisition of an additional 2% of the participation in the share capital of this company. The amount recorded under transfers relates to the final allocation of the additional 8% acquired in the entities Mundo Social, AIE, UTE Mundo Senior and UTE Novotours in 2009 to goodwill (see Note 4).

Barceló 2011 Annual Report


The main magnitudes of the associates’ balance sheets and the profit and loss accounts for 2011 are as follows:

    Joint Venture Amex Barceló

Currency 35% Thousand Euros

Assets Total 47,910

Equity 5,502

result results Net result Net Rest of Liabilities Revenues NetLocal attributLiabilities Total Total to the currency in Euros able Group 42,408

47,910

441,646

2,421

2,421

593

Hotel Derek

15%

Thousand USD

66,401

9,434

56,967

66,401

16,385

(681)

(488)

(784)

Virginia Beach

30%

Thousand USD

33,536

(3,691)

37,227

33,536

10,938

(914)

(654)

(261)

BSE/AH Blacksburg Hotel, LLC

24%

Thousand USD

15,530

3,266

12,264

15,530

3,694

(208)

(149)

(93)

Turyocio Viajes y Fidelización, S.A. 25% Thousand Euros

367

230

137

367

742

(5)

(5)

(295)

Santa Lucía ,S.A.

50%

Thousand USD

12,762

12,588

174

12,762

-

-

-

-

TV Popular, S.A

25% Thousand Euros

29

(185)

213

29

4

(196)

(196)

-

The main magnitudes of the associates’ balance sheets and the profit and loss accounts for 2010 were as follows:

    Playa Hotels & Resorts, S.L.

Currency

Assets Total

23% Thousand Euros 1,020,533

Equity 214,124

result results Net result Net Rest of Liabilities Revenues NetLocal attributLiabilities Total Total to the currency in Euros able Group 806,410 1,020,533

247,266

(57,242)

(57,242)

(14,317)

Joint Venture Amex Barceló

35% Thousand Euros

70,016

4,809

65,207

70,016

363,348

1,748

1,748

260

Hotel Derek

15%

73,600

16,738

56,862

73,600

15,069

100

76

(63)

Thousand USD

Virginia Beach

30%

Thousand USD

35,180

(2,773)

37,953

35,180

10,100

(2,126)

(1,612)

(659)

BSE/AH Blacksburg Hotel, LLC

24%

Thousand USD

16,758

4,305

12,453

16,758

3,521

90

68

8

348

234

113

348

796

(65)

(65)

-

Santa Lucía ,S.A.

Turyocio Viajes y Fidelización, S.A. 25% Thousand Euros 50%

Thousand USD

12,760

12,588

172

12,760

-

-

-

-

TV Popular, S.A

25% Thousand Euros

246

39

207

246

36

(223)

(223)

-

Barceló 2011 Annual Report

51


8

8.1

Other financial assets and liabilities

52

Other non-current financial assets

At December 31, 2011 and 2010, the breakdown of other non-current financial assets is as follows:

  Credits to associates Long-term guarantees and deposits Available-for-sale financial assets Derivatives Assets linked to labour liabilities Loans to third parties Other long-term credits

Balance at 31/12/2011

Balance at 31/12/2010

14,388,522

8,188,322

7,382,784

8,323,939

14,855,079

15,628,982

9,060,026

9,136,670

1,798,821

2,658,328

13,527,653

7,492,653

523,892

524,305

61,536,777

51,953,198

Credits to associates The associates balance mainly consists of the issue of a debt convertible in participations for an amount of 35 million USD, subscribed by the main shareholders of Playa Hotels & Resorts, S.L. in proportion to their participation in the company’s share capital. The Barceló Group subscribed an amount of 9.1 million USD. Maturity is in June 2020, but the debt can be amortised in advance between January 2012 and June 2020. The loan accrues interest at an annual interest rate of 15% and is exchangeable for shares at any time for a predetermined exercise price. The value of the swap option is difficult to quantify since the shares of this company are not quoted on the stock exchange. Nonetheless, the Group’s management considers that the fair value is insignificant. The Group has no intention of exercising the swap option and plans to collect the credit on maturity. In the balance with Playa Hotels & Resorts, S.L., which matures in May 2013, 4.9 million euros have been transferred from short-term to long-term.

Long-term guarantees and deposits The long-term guarantees and deposits primarily relate to the lease agreements for the leased hotels. Their fair value is similar to the accounting cost.

Available-for-sale assets The balance of available-for-sale financial assets is mainly made up of: a) The participation of 15% in the company Punta Umbría Turística, S.A., with registered address in Huelva, Spain, for an amount of 11.2 million euros (10.8 million euros in 2010), acquired in 2008. This company is the owner of Barceló Punta Umbría Resort. The Group has no significant influence in this company. This participation has been valued taking into account an agreed sales price in two years time for an amount of 12 million euros. b) The shareholding in Rey Sol, S.A., where the Group’s influence is not relevant, has been measured at the value of the sale option owned by the Group. In 2011, the sale option over Rey Sol, S.A. owned by the Group in 2010 has been cancelled. For this redemption the Group has received an amount of 1.6 million euros in January 2012. A new sale option, exercisable in 2015, was immediately formulated. The fair value of the sale option amounted to 1.8 million euros.

Barceló 2011 Annual Report


c) A 0.5% participation in the company World Retail Store, S.L., for an amount of 1 million euros.

Derivatives The derivatives balance is mainly made up of the valuation of the put option of the participation in the company American Express Barceló Viajes, S.L. for an amount of 9.1 million euros (9.1 million in 2010). In order to value this put option, its sale in 6 years time has been considered for an amount of 20 million euros at a discount rate of 6%. The investment and the derivative on this company are considered to be a hybrid instrument for which, on one hand the equity method is recorded on the 35% participation in American Express Barceló Viajes, S.L., arising from the significant influence in said company, and on the other, the derivative is valued for the difference between the value of the equity method (see Note 7), which is equal to fair value at closing and the present value to exercise the option with the abovementioned hypothesis.

Loans to third parties The loans to third parties balance corresponds to a credit line granted to the company Punta Umbría Turística, S.A. which owns a hotel for which the Group has signed a management contract with the acquired commitment of covering the cash shortages of this company with the guarantee of the hotel owned by the Company. The credit line matures in the long-term and its maturity will coincide with the sale date of the hotel or the end of the management contract. Interest is accrued at a market rate.

8.2

Bank borrowings

The breakdown of these accounts, at December 31, 2011, classified by type and maturity, is as follows:

2011 Long-term maturities

Short-term maturities

Personal loans

300,482,880

91,306,614

Mortgage loans

531,711,427

57,408,464

73,941,889

100,376,333

-

6,390,070

906,136,196

255,481,481

Credit lines Interest Total Bank borrowings

The breakdown of these accounts, at December 31, 2010, classified by type and maturity, was as follows:

2010 Long-term maturities

Short-term maturities

Personal loans

323,435,654

48,429,617

Mortgage loans

528,821,261

26,917,023

36,395,151

128,890,139

-

3,778,012

888,652,066

208,014,791

Credit lines Interest Total Bank borrowings

The mortgage loans balance includes loans in US dollars amounting to 237.9 million US dollars (163.85 million US dollars at December 31, 2010). The bank debts accrue interest at a variable rate, linked to Euribor or Libor plus a market differential.

Barceló 2011 Annual Report

53


The credit facilities maturing in the short-term are renewed periodically and accrue variable interest linked to the Euribor or Libor rates plus a market differential. All are denominated in euros. The limit of said credit facilities for 2011 and 2010 amounts to 109.5 million euros and 130 million euros, respectively. The credit facilities maturing in the long-term accrue variable interest linked to the Euribor or Libor rates plus a market differential, in euros. The limit of said long-term credit facilities amounts to 75.4 million euros in 2011 (39 million euros in 2010). At December 31, 2011, the mortgage loans, with an amount of 589.1 million euros, pending repayment, are guaranteed by land and buildings owned by Group companies and which are recorded for an accounting value of 1,114.1 million euros. At December 31, 2010, the amount pending repayment was 555.7 and the accounting value of the assets which guaranteed said loans amounted to 763.1 million euros. With the exception of an amount of 127 million euros at a fixed interest rate (90.5 million in 2010), all the bank loans and credits are referenced to a variable market interest rate and, therefore, the fair value of said loans is similar to their accounting cost. The Barceló Group has I.C.O. loan operations amounting to 138.3 million euros, broken down in the following lines:

I.C.O. Renove

11.6 million euros

I.C.O. Liquidez

63 million euros

I.C.O. Future

21.6 million euros

I.C.O. Internacional

38.7 million euros

I.C.O. Crecimiento Empresarial

3.4 million euros

8.3

Other non-current financial liabilities

The breakdown is as follows:

2011 Guarantees and deposits Long-term loans Labour liabilities Derivatives Others Other non-current financial liabilities - Total

2010

1,064,890

1,095,886

32,514,525

30,674,995

3,574,476

4,309,843

13,429,860

5,114,217

1,145,603

3,849

51,729,354

41,198,790

The long-term loans account at December 31, 2011 includes the loans granted by Fundación Barceló amounting to 12.6 million euros remunerated at interest rates which range between 5% and 4%, and credits granted by various members of the Barceló family for an amount of 19.9 million euros (including an amount of 3.8 million USD) and remunerated at the average interest rate of the Group’s bank borrowings. At December 31, 2010, the balance includes the loan granted by Fundación Barceló which amounted to 11.2 million euros and credits from the Barceló Family amounting to 19.5 million euros. The fair value of these loans is similar to their accounting value. These loans are renewed annually and are presented in the long-term due to the express acceptance of the lenders for their extension. The labour liabilities correspond to defined contribution commitments accrued in the USA. See Note 14.1.1. The derivatives correspond to the part of the long-term fair value of the cash flow derivatives (interest rate swap) for an amount of 13.4 million euros. 2.8 million euros of this amount cannot be designated as hedge derivatives as they do not fulfil the necessary conditions. Note 8.5 contains more information regarding this matter.

Barceló 2011 Annual Report

54


8.4

Maturity of financial liabilities

The breakdown of maturities regarding long-term financial liabilities at December 31, 2011, is as follows:

2013

2014

2015

2017 and successive years

2016

Personal loans

91,291,052

82,841,853

79,203,763

42,592,715

4,553,497

Mortgage loans

69,502,738

79,690,738

69,955,052

64,133,489

255,187,595

Credit facilities

73,941,889

-

-

-

-

Formalisation expenses

(892,146)

(881,872)

(902,155)

(966,902)

(3,115,110)

Total Bank borrowings

233,843,533

161,650,719

148,216,660

105,759,302

256,625,982 1,064,890

-

-

-

-

Other long-term credits

Guarantees and deposits

32,514,525

-

-

-

Labour liabilities - USA

208,671

208,671

208,671

208,671

2,739,793

Derivatives

7,064,506

3,329,444

1,533,183

831,332

671,394

Other financial liabilities

1,145,603

-

-

-

-

40,933,305

3,538,115

1,741,854

1,040,003

4,476,077

Other long-term liabilities - Total

The breakdown of maturities regarding long-term financial liabilities at December 31, 2010, was as follows:

2012

2013

2014

2015

2016 and successive years

Personal loans

50,528,320

63,191,622

64,174,072

65,473,746

289,946,114

Mortgage loans

66,870,210

73,433,675

71,067,157

67,830,575

44,620,817

Credit facilities

36,395,151

-

-

-

-

Formalisation expenses

(541,571)

(533,606)

(549,331)

(599,527)

(3,015,358)

Total Bank borrowings

153,252,110

136,091,691

134,691,898

132,704,794

331,551,573

-

-

-

1,095,886

-

30,674,995

-

-

-

Guarantees and deposits Other long-term credits Labour liabilities - USA Derivatives Other financial liabilities Other long-term liabilities - Total

178,117

178,117

3,953,609

-

-

6,687,693

1,339,231

(395,425)

(609,499)

(1,907,783)

3,850

-

-

-

-

6,869,660

32,192,343

3,558,184

(609,499)

(811,897)

Barcel贸 2011 Annual Report

55


8.5

Financial instruments

The breakdown of financial instruments at December 31, 2011 and 2010 is as follows:

Financial assets Equity instruments (Euros)

2011

Credits, derivatives and other

2010

2011

2010

Total 2011

56

2010

Long-term financial assets Assets at fair value through profit or loss Available for sale assets Loans and receivables

-

-

9,060,026

9,136,670

9,060,026

9,136,670

14,855,079

15,628,982

-

-

14,855,079

15,628,982

-

-

37,621,671

27,187,546

37,621,671

27,187,546

14,855,079

15,628,982

46,681,697

36,324,216

61,536,776

51,953,198

-

-

394,675,108

392,215,616

394,675,108

392,215,616

Short-term financial assets Loans and receivables Available for sale assets

 TOTAL

-

-

-

-

-

-

-

-

394,675,108

392,215,616

394,675,108

392,215,616

14,855,079

15,628,982

441,356,805

428,539,833

456,211,884

444,168,814

Although the 14.8 million euros of financial assets available for sale are equity instruments by nature, given their characteristics an amount of 13.0 million euros (See Note 8.1) are measured as debt instruments.

The amount of short-term financial assets includes the “trade receivables”, “other receivables” and “other current financial assets” headings.

Financial liabilities Total  (Euros)

2011

2010

Long-term financial liabilities Hedge derivatives

10,570,415

3,450,076

Liabilities at fair value through profit or loss

2,859,444

1,667,990

Financial liabilities valued at amortised cost

944,435,692

924,732,790

957,865,551

929,850,856

Short-term financial liabilities Hedge derivatives

3,020,667

2,906,277

Liabilities at fair value through profit or loss

94,800

1,207,370

Financial liabilities valued at amortised cost

429,257,418

386,438,889

432,372,885

390,552,536

1,390,238,436

1,320,403,392

TOTAL

The Group has contracted hedge derivatives (interest rate swaps) in euros and in USD with a notional value, at December 31, 2011, of 311.7 million euros and 134.7 million US dollars, respectively. The maturity of said contracts ranges between August 2014 and October 2020 and the fixed interest rate contracted ranges between 1.95% and 2.98% on the Euribor and 2.95% on the Libor.

Barceló 2011 Annual Report


The Group has contracted a derivative according to which, if the Euribor at 12 months exceeds 5%, the Group will pay the bank the difference between the Euribor and 3.08%, on an initial notional value of 88.8 million euros, which would be decreased annually until maturity in October 2020. The fair value at December 31, 2011, is negative for the Group for an amount of one million euros. This amount has been carried to results as it cannot be considered as a hedge derivative. The breakdown of the maturity of the notional amounts is as follows:

Maturity

57

Notional amount

2011

415,855,060

2012

335,051,327

2013

279,693,118

2014

154,973,974

2015

109,687,637

2016

80,376,307

2017

61,284,711

2018

28,029,011

2019

9,864,444

The Group has recognised hedge derivatives at fair value through equity. Non-hedge derivatives have been recognised at fair value through results. In both cases the cash flow discount method has been used. In 2011, an amount of 0.8 million euros has been recognised under the finance expenses heading of the income statement for “Adjustments for the change in value of non-hedge derivatives� (2.9 million euros in 2010) and an amount of 0.8 million euros has been recognised as finance income for the change in value of hedge derivatives. The amount recognised against equity for the variation of the fair value of the hedge instruments has been of 7.0 million euros (5.9 million in 2010). The Group classifies the valuations at fair value using a hierarchy reflecting the relevancy of the variables used in the valuations, according to the following levels: a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). b) Variables different to the quoted prices included in Level 1 which are observable for the asset or liability, either directly (i.e. such as prices) or indirectly (i.e. arising from the prices) (Level 2), and c) Variables, used for the asset or liability, which are not based on observable market data (non-observable variables) (Level 3).

2011

2010

Level 1 Level2 (fair value derivatives) Level 3 (Sale option AMEX and Rey Sol Note 8.1)

(16,545,328)

(9,227,865)

10,823,273

12,499,918

BarcelĂł 2011 Annual Report


9

Assets and liabilities related to non-current assets maintained for sale

58

The breakdown is as follows:

  Non-current assets maintained for sale Non-current liabilities related to non-current assets maintained for sale Total

Balance at 31/12/2011

Balance at 31/12/2010

66,197,228

51,067,010

-

(46,912,059)

66,197,228

4,154,951

Non-current assets held for sale in 2011 relate to the investment in the Sky Morocco Hospitality SAS fund, amounting to 1.4 million euros, the Hotel Barceló Capella (Dominican Republic) for an amount of 17 million euros and the participation in Playa Hotels & Resorts, S.L. for an amount of 47.8 million euros. The breakdown of the conversion differences and the adjustments for changes in fair value of financial instruments included in equity relating to entities which are considered to be assets held for sale in 2011 is as follows:

Conversion differences Barceló Capella Playa Hotels & Resorts, SL

Financial instruments

(1,210,122) 1,869,035

(4,062,379)

658,913

(4,062,379)

Non-current assets held for sale related to the Hotel Casablanca (Morocco) the sale of which has been formalised in January 2011. According to the Public Works resolution agreement signed in February 2011, the Group has also disposed of the 46.9 million euros from a group of assets held for sale corresponding to the Palace of Congresses in Palma de Mallorca. In 2010, an impairment loss of 1.6 million euros was recognised on this asset. Of all the assets, a total of 44.0 correspond to property, plant & equipment. In 2010, the amount of non-current liabilities related to the group of non-current assets held for sale, which amounted to 46.9 million euros, completely corresponded to the Palace of Congresses in Palma de Mallorca. The total liabilities related to a grant of 30 million euros and the remainder to trade receivables. Both assets and their related liabilities have been disposed of in 2011.

Barceló 2011 Annual Report


10

Other current financial assets and liabilities

The fair value of all current financial assets and liabilities are coincident with the amortised cost as their maturities are close to the closing date.

10.1

Other accounts receivable

The breakdown is as follows:

 

Balance at 31/12/2011

Balance at 31/12/2010

13,116,590

16,475,480

2,049,083

4,175,774

Accounts receivable Advances to suppliers Tax receivables

13,797,733

3,994,335

VAT

2,044,455

3,695,461

Withholdings

3,543,559

7,252,908

Receivables from related parties (Note 20)

4,222,399

6,925,788

38,773,819

42,519,745

Balance at 31/12/2011

Balance at 31/12/2010

283,581,944

276,810,382

168,934

664,184

10,473

2,955,245

283,761,351

280,429,811

TOTAL

10.2

Other current financial assets

The breakdown is as follows:

  Guarantees and deposits Interest Other credits TOTAL

The balance of deposits and guarantees basically relates to fixed-term bank deposits maturing between 3 and 12 months as of their formalisation date, the profitability of which is referenced to Euribor or Libor. An amount of 212.1 million euros (197.5 million euros in 2010) over the total amount of deposits has been pledged in guarantee of credit repayment.

10.3

Cash and other cash equivalents

At December 31, 2011, the balance of the bank accounts was of 67.2 million euros. The remaining amount related to bank deposits under 3 months. At closing 2010, the balance was 91.1 million euros and the remainder related to bank deposits under 3 months.

Barceló 2011 Annual Report

59


10.4

Other current financial liabilities

The breakdown is as follows:

 

Balance at 31/12/2011

Balance at 31/12/2010

Tax payable

8,363,393

6,198,870

Payable to Social Security

2,958,319

3,046,354

17,815,739

20,547,852

Remunerations pending payment Other accounts payable

84,309

41,201

Guarantees and deposits received

2,367,544

2,096,187

Hedge derivatives (Note 8.5)

3,115,468

4,133,647

34,704,772

36,064,111

TOTAL

60

Barceló 2011 Annual Report


11

Short-term accruals

This caption includes payments made for unaccrued concepts and basically relates to hotel rental fees and insurance paid in advance.

Barcel贸 2011 Annual Report

61


12

12.1

Equity

62

Share capital

At December 31, 2011, the share capital is represented by 10,000,000 fully subscribed and paid up registered shares of 1 euro par value each. All the shares are of the same class and have the same rights. The shares are not listed.

12.2

Issue Premium

The issue premium is freely distributable.

12.3

Parent Company Reserves

The Parent Company’s reserves are as follows: Legal reserve Spanish companies are obliged to transfer 10% of the profits for the year to a legal reserve until said reserve reaches an amount equal to at least 20% of the share capital. This reserve is not distributable to shareholders and may only be used to offset losses if no other reserves are available. Moreover, under certain circumstances, the legal reserve may be used to increase share capital provided that the reserve’s remaining balance is at least 10% of the nominal value of the total share capital after the increase. Voluntary reserves (other reserves) These reserves are freely distributable. Reserves in companies integrated by the full method and associates This caption includes the contribution to consolidated net equity deriving from profits generated by the Group companies since their integration. As stated in Note 2.3, the conversion differences accumulated up to the IFRS transition date are also recorded under this caption.

12.4

Conversion differences

These differences are generated through the translation of the financial statements of foreign companies from the local currency to the consolidation currency applying the exchange rate prevailing at year-end closing (See Note 2.3).

12.5

Dividends distribution

No dividends have been distributed in 2011 and 2010.

Barceló 2011 Annual Report


13

Grants

Capital grants have been received for the acquisition or construction of hotel assets which are allocated to results on the basis of the useful lives of the granted assets. Movement in 2011 is the following:

Balance at 31/12/2010 Grants

Additions

Allocation to results

Balance at 31/12/2011

309,269

53,585

(54,794)

308,060

309,269

53,585

(54,794)

308,060

During 2011, 54,794 euros has been allocated to results.

Movement in 2010 was as follows:

Balance at 31/12/2009 Grants

Additions

Allocation to results

Balance at 31/12/2010

233,976

174,137

(98,844)

309,269

233,976

174,137

(98,844)

309,269

During 2010, 98,844 euros was allocated to results.

Barcel贸 2011 Annual Report

63


14

14.1

Provisions

64

Non-current provisions

The breakdown of provisions in 2011 is as follows:

(Euros)

Provisions for loyalty premiums

Balance at 31/12/10

Additions

Transfers to short-term

Disposals

Financial effect

3,852,182

569,864

(110,848)

Provisions for liabilities

10,385,445

250,755

(1,949,093)

Provisions for l/term onerous contracts

10,858,639

2,370,428

(383,180)

(556,556)

1,633,867

25,096,266

3,191,047

(2,443,121)

(556,556)

1,633,867

(3,972,242)

556,556

Provisions for s/term onerous contracts Total provisions

5,957,407 31,053,673

3,191,047

Conversion differences

Balance at 31/12/11 4,311,198

(18,402)

(6,415,362)

8,668,705 13,923,198

1,633,867

(18,402)

26,903,101

(147,132)

2,394,589

(165,534)

29,297,690

The breakdown of provisions in 2010 was as follows:

(Euros)

Balances at 31/12/09

Additions

Disposals

Transfers

Transfers to short-term

Financial effect

Conversion Balances at differences 31/12/10

Provisions for loyalty premiums

3,822,133

178,044

(147,995)

-

-

-

-

3,852,182

Provisions for liabilities

4,595,871

6,183,432

(269,464)

(135,277)

-

-

10,883

10,385,445

Provisions for long-term onerous contracts

33,013,173

8,652,971 (33,859,706)

135,277

772,190

479,275

1,665,459

10,858,639

Long-term provisions

41,431,178

15,014,447 (34,277,165)

-

772,190

479,275

1,676,342

25,096,266

Provisions for short-term onerous contracts

15,304,054

(8,574,457)

-

(772,190)

-

-

5,957,407

Total provisions

56,735,231

15,014,447 (42,851,622)

-

-

479,275

1,676,342

31,053,673

-

14.1.1 Commitments with employees The provision for loyalty premiums covers the liabilities accrued for these commitments according to certain collective labour agreements applicable to the hotel and travel agencies sectors in Spain. Loyalty Premium in Spain: In accordance with the prevailing collective labour agreement conditions applying to the hotel industry in Spain, the Group companies dedicated to said industry in Spain are obliged to pay retirement premiums to those employees who have been in the Group for a certain number of years. These premiums depend on the number of years of service and the age of the employee upon retirement and are calculated based on each employee’s basic salary and supplementary payments. The travel agencies collective labour agreement in Spain, also establishes the payment of a retirement premium after an agreement between the employee and the company. During 2011 and 2010 the necessary provisions for this concept have been made according to the corresponding collective labour agreement. The liabilities accrued for these defined benefit plan are measured according to an actuarial study. During 2011 and 2010 the provision has been calculated by applying the “Projected Unit Credit” calculation method based on the PER2000 table, applying an interest rate of 4.0%, a salary increase of 2.5% and the hypothesis of staff rotation. The net variation of the loyalty premiums provision is included under the personnel expenses heading in the income statement. Said provision has no financial effect since there have been no variations in this variable of the loyalty premium calculation.

Barceló 2011 Annual Report


Loyalty Premium in Mexico: The seniority premium is an obligation established by the Mexican Federal Labour Law. The liabilities related to this defined benefit plan are measured according to an actuarial study. In 2011 and 2010 the Mexican seniority premium has been calculated by applying the OP84 mortality table, applying a discount rate of 7.60% with a salary increase of 5.04%. No accounting provision exists for this commitment since it is insignificant at year end closing.

Other defined contribution commitments

65

Long-term remunerations for business executives in the USA The subsidiary Barceló Crestline has established a Long-term Incentive Plan for executives who meet certain conditions. The Plan is discretionary and can be modified and/or cancelled by the Board of Directors at any time. For this reason, the amount for this concept is defined and not based on actuarial studies. Contributions recorded for this concept have amounted to 0.8 million USD and 0.7 million USD for the years ending December 31, 2011 and 2010, respectively. The amount to be paid in the short-term is of 0.8 million USD (0.7 million USD in 2010) and is included under the “Remunerations pending payment” caption in the current liabilities side of the balance sheet. The amount to be paid in the long-term, of 1.5 million USD (1.4 million USD in 2010) is recorded under “Other non-current liabilities” in the accompanying consolidated balance sheet. Said plan was created in 2004 with the following breakdown of provisions (figures in thousands of USD):

Expiry date

Allowance 2011

2012

Allowance 2010

Allowance 2009

Allowance 2008

Total

235

248

247

730

248

2013

270

235

2014

270

235

2015

270

TOTAL

810

753 505 270

705

496

247

2,258

This same company has also approved retirement and savings plans and other retribution plans for employees who meet certain requirements. The plans generally require a determined minimum of contributions from the employees plus an additional contribution defined on a yearly basis by Barceló Crestline. The costs incurred by Barceló Crestline for these plans amounted to 0.13 million USD and 0.15 million USD for the years ending December 31, 2011 and 2010, respectively. Finally, Barceló Crestline has an executive plan intended to grant additional benefits upon retirement for a select group of Barceló Crestline’s management who have the possibility of partially or totally deferring such benefits. The amounts contributed to these plans by Barceló Crestline and the participants, together with the profit and losses attributed to said amounts are transferred to a trust. The sole owner of this trust is Barceló Crestline, upon demand of the creditors of Barceló Crestline, until the payment to the participant employee or his/her beneficiary is made. At December 31, 2011 and 2010, the amount payable for this plan was equivalent to the assets of said plan owned by Barceló Crestline. The amount deposited is recorded under the “Other non-current financial assets” and “Other non-current liabilities” captions. Pension plans for employees in the United Kingdom The United Kingdom only has defined contribution plans. The amount incurred for this concept in 2011 amounts to 96 thousand GBP (96 thousand GBP in 2010).

14.1.2 Provisions for liabilities Provisions for liabilities cover all types of risks and contingencies arising from the Group’s operations. They mainly cover the potential repayment of grants.

Barceló 2011 Annual Report


14.1.3 Onerous contracts The provisions for onerous contracts derive from various rental agreements in Spain. In 2010, the rental agreements of the hotels in the USA were also included. These contracts have ended in 2011. Said provisions are calculated by updating the cash flow estimated by the Group and measuring the lowest possible cost among the various exit alternatives for each of the contracts. The cash flow updating is performed by using a discount rate of 7.09% (in 2010 between 8.14% and 9.12%). Additions in 2011 relate to hotels in Spain. In 2010, due to changes in the future cash flow estimates in accordance with the new contract conditions and the market trend, provisions for onerous contracts were withdrawn, including the contract for a hotel in Spain for an amount of 24 million euros. Additions in 2010 related to the update of the onerous contracts of three hotels located in Spain due to the variation of the expected results.

14.2

Short-term provisions

The balance of provisions as of December 31, 2011, amounts to 2,394,589 euros and relates to the short-term portion of the onerous contracts (5,957,407 euros at December 31, 2010).

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66


15

Taxes

The companies are obliged to file Corporation Tax declarations annually. In 2011, the Spanish companies’ profits, determined in accordance with tax legislation, are subject to a 30% tax rate. The remaining Group companies are subject to tax rates ranging between 19% and 40%, except those companies based in Switzerland whose applicable tax rate is 8%. Certain deductions may be made from the resulting tax basis. Since January 1, 2008, certain Spanish Group companies file consolidated tax returns in respect of Corporate Income Tax. As provided by the tax consolidation regime, the taxable basis of the tax group is not based on the consolidated accounting results, but the results of each of the companies integrated in said group, determined according to the individual tax regime. Results arising from internal transactions which are integrated in said individual taxable basis are eliminated and those eliminated in prior years which are considered to be realised by the group during the tax period are included. The Spanish Group companies have tax losses to be offset against future tax credits amounting to 380.8 million euros. Of said amount, 1.3 million euros of losses expire in the period from 2015 to 2017, 14.3 million euros expire between 2018 and 2020, 110.8 million euros expire between 2021 and 2023, 215.7 million expire between 2024 and 2026 and 38.6 million euros expire between 2027 and 2030. At December 31, 2011, of this amount tax losses capitalised amount to 156 million euros and the corresponding deferred tax asset amounts to 46.8 million euros. The recovery of the remainder of the tax losses is considered unlikely before the permitted period expires. In addition, there are various deductions pending application by the Spanish Group companies, generated in prior years and during 2011, for a total amount of 8.9 million euros, according to the following detail: •

Deductions for double taxation: 3.3 million euros for which the last year of prescription is 2021.

Other deductions: 5.5 million euros of which: 1,5 million euros relate to a deduction for reinvestment of extraordinary profits corresponding to Barceló Hoteles Mediterráneo, S.L., which will prescribe in 2016; 2.5 million euros relate to a deduction for fixed assets in the Canary Islands for which the last year of prescription is 2016; 0.6 million euros relate to a deduction for technological innovation, for which the last year of prescription is 2026, and 0.9 million euros relating to the remaining deductions.

At December 31, 2011, of the total deductions pending application, an amount of 8.8 million euros has been recorded as deferred tax assets. At December 31, 2011, the Group company Barceló Hotels Canarias, S.L. has certain investment commitments for the forthcoming years, amounting to 5.4 million euros which derive from the application of the Reserve for Investments in the Canary Islands stated by Law 19/1994 on Investments in the Canary Islands. The Group’s foreign subsidiaries in the United States, the United Kingdom, Mexico and Germany have significant tax losses or deductions pending application. The details of the tax situation in said countries are as follows. In the Dominican Republic, the Group companies are subject to the higher of two taxes: (i) Tax on Assets, the rate of which is 1%, for which all assets are taken into account less equity investments, prepaid taxes and rural properties and (ii) Income Tax, which is calculated on the tax profit based on the accounting results with certain adjustments arising from different accounting and tax criteria, at 29% (25% in 2010). The Group companies domiciled in the Dominican Republic have had a provision for expenses in concept of Tax on Assets amounting to 1.8 million euros in 2011. In 2011, the Group companies with registered address Mexico are subject to (i) IETU, the Mexican Flat Tax, on revenues reduced by certain deductions and credits at 17.5% and (ii) Income Tax, on the accounting results adjusted by the inflationary effects with respect to cash assets and liabilities and depreciation, at 30%. IETU is a Minimum Tax against which the Income Tax is creditable and the taxpayers pay the higher of Income Tax or the IETU tax. Tax losses from previous years pending offset amount to 3.3 million euros. All tax losses have been capitalised. The compensation period is of ten years subsequent to the generation of the tax losses.

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67


In the USA, the Group companies are subject to the Corporate Income Tax, at a 40% rate on tax profit, according to the applicable tax legislation. In 2010, tax losses amounting to 18.8 million euros โ€“ between ordinary losses and capital losses, which can be compensated with future profits over the next twenty years. The majority of the operating losses (approximately 13 million euros) have been capitalised. The Group companies located in the United Kingdom are subject to Corporate Income Tax, at 26% according to the tax legislation. Up to and including 2011, losses amount to 28 million euros, which can be compensated with future profit. There is no time limit for their compensation. The losses in 2011 have not resulted in the recognition of a deferred tax asset. In Germany, tax losses which are eligible for compensation in future years amount to 7.7 million euros. These losses have no time limit for their compensation; in 2011, the losses have resulted in the recognition of a deferred tax asset for an amount of 0.26 million euros. Those tax losses and deductions whose recovery is probable have been capitalised. In accordance with the legal regulations prevailing in Spain, tax returns cannot be considered final until they have been inspected by the tax authorities or the four-year inspection period has elapsed. At December 31, 2011, the Spanish Group companies are open to inspection for all applicable taxes since January, 1, 2008, with the exception of Corporation Tax, for which it is open to inspection since January 1, 2007. The exceptions are Barcelรณ Corporaciรณn Empresarial, S.A. and Inmuebles de Baleares, S.L. which are open to inspection for Corporation Tax since January 1, 2006. At present, the following companies are involved in contentious administrative claims:

ENTITY Viajes Barcelรณ, S.L.

YEAR

TAX

STAGE OF CLAIM

2002/2006

Corporation Tax

TEAC

Inmuebles de Baleares, S.L.

2006

Corporation Tax

TEAC

Uniรณn Hotelera Barcelรณ, S.L.

2007

Corporation Tax /VAT

Pending TEAC

Barcelรณ Corporaciรณn Empresarial, S.A.

2010

I.T.P. and A.J.D.

TEAR

YEAR

TAX

STAGE OF CLAIM

The following companies are under inspection:

ENTITY Barcelรณ Corporaciรณn Empresarial, S.A.

2007

I.T.P. and A.J.D.

VERIFYING

Barcelรณ Corporaciรณn Empresarial, S.A.

2006/2007

Corporation Tax

VERIFYING

The Directors of the Parent Company do not expect any material liabilities to arise as a result of any of these cases.

Barcelรณ 2011 Annual Report

68


Reconciliation between the consolidated accounting result and the aggregate tax base

 

2011

2010

Results before taxes

2,927,507

11,896,359

Results from companies integrated by the equity method

(839,530)

(14,771,267)

Results from fully consolidated companies

3,767,037

26,667,626

30%

30%

1,130,111

8,000,288

Parent Company tax rate Parent Company tax rate expense For different tax rate

767,865

(6,848,025)

(809,714)

(602,847)

Deductions applied in the year - capitalised or applied

(3,738,977)

(1,237,250)

Deductions applied in previous years - not capitalised

(572,529)

(22,519)

Tax losses from prior years, not capitalised and applied

(2,849,976)

(201,070)

5,753,472

4,504,703

Permanent differences (non-deductible expenses and non-taxable income)

Tax losses for the year which are not capitalised Tax losses from prior years capitalised in the present year

69

(1,396,766)

Temporary differences not capitalised

197,843

1,500,000

Tax on Assets – Dominican Republic

1,778,328

758,020

Other differences due to effect of inflation in Mexico and Dominican Republic

(802,051)

(4,727,721)

Change of subsidiary’s tax rate

906,080

Others

243,624

(124,575)

Accounting expense

607,310

999,003

Deferred tax assets and liabilities

  Onerous contracts

31/12/2010 5,384,435

Impairment of equity instruments Start-up expenses Tax deductions Tax losses Property, Plant and Equipment and intangible assets

Results (430,246)

Conversion differences

Adjustment for change in value

(58,853)

4,895,336

7,071,940 332,869

(70,943)

3,058,263

5,731,279

48,881,824

4,594,507

31/12/2011

7,071,940 (14,070)

247,856

(229,029)

53,247,302

8,789,542

373,297

373,297

Hedge derivatives

2,105,433

Exchange differences

2,779,382

(2,779,382)

Others

5,761,040

(2,061,504)

(65,715)

68,676,543

12,055,651

(266,926)

8,586,535

320,018

(18,420)

8,888,133

113,617,812

(877,148)

(2,059,115)

110,681,549

6,001,846

(6,001,846)

Total deferred tax assets Intangible Assets Property, Plant and Equipment Lease contracts USA

100,741

2,334,762

4,540,936 3,633,821

2,334,762

82,800,030

Impairment of equity instruments

3,748,457

6,328,133

10,076,590

Others

2,447,699

6,045,932

8,493,632

Deferred tax liabilities total

134,402,349

5,815,090

(2,077,535)

 

138,139,904

Deferred tax - Net

(65,725,806)

6,240,561

1,810,609

2,334,762

(55,339,873)

Barceló 2011 Annual Report


31/12/2009

Conversion differences

Results

Adjustment for Reclassification change in value

31/12/2010

Onerous contracts

14,422,649

(9,524,294)

486,080

Start-up expenses

289,714

(71,121)

46,653

2,983,895

74,368

3,058,263

Tax deductions Tax losses

5,384,435 67,623

332,869

51,236,169

(2,354,345)

48,881,824

Property, Plant and Equipment and intangible assets

530,707

(157,410)

373,297

Hedge derivatives

784,663

Exchange differences

17,382

1,303,388

2,779,382

Others Deferred tax assets total Intangible Assets Property, Plant and Equipment

2,779,382

1,535,205

5,772,301

(128,394)

(1,418,072)

 

5,761,040

71,783,001

(3,481,119)

421,721

(1,350,449)

1,303,388

68,676,543

9,655,158

(1,119,774)

325,394

(274,243)

8,586,535

(503,872)

113,617,812

111,584,540

(1,136,913)

3,674,057

Lease contracts USA

9,768,068

(4,204,981)

438,759

Portfolio provision

2,588,388

381,954

Hedge derivatives

793,354

Others

2,105,433

6,001,846 778,115

3,748,457 (793,354)

1,623,596

2,174,552

 

(1,350,449)

 

2,447,699

Deferred tax liabilities total

136,013,104

(3,905,162)

4,438,210

(1,350,449)

(793,354)

134,402,349

Deferred tax - Net

(64,230,102)

424,043

(4,016,489)

 

2,096,742

(65,725,806)

The “Onerous contracts” caption corresponds to those costs which exceed the economic profit expected from such contracts. The tax expense will be realised in the fiscal year in which the loss is materialised. The impairment of both assets and liabilities for equity instruments relates to Spanish companies, and arises from the different tax and accounting criteria used for the recognition of the impairment in the participation in subsidiaries which are not included in the consolidated tax declaration, and in the case of the assets, that the subsidiary does not any tax credits capitalised by tax losses. The “Intangible Assets” caption mainly relates to the leasehold interest on the Hotel Barceló Sants, allocated through a business combination previous to the transition date to IFRS to the rights over the hotel management contracts in the United States. Deferred tax liabilities for “Property, Plant and Equipment” correspond to the recognition at fair value of property, plant and equipment acquired through business combinations and at the deemed cost of certain plots of land owned by the Group at the transition date.

Income Tax expense

 

2.011

2.010

Current tax expense

6,847,871

1,423,046

Deferred tax expense

(6,240,561)

(424,043)

607,310

999,003

Total Income Tax expense

Barceló 2011 Annual Report

70


16

Operating income and other operating and finance income

16.1

Operating income

71

This balance relates to the revenues from hotel services and management, as well as the activity as a travel sales intermediary undertaken by the Travel Division. The amount corresponding to the Travel Division for the years 2011 and 2010 is of 104.5 and 110.7 million euros, respectively. The amount corresponding to the Hotel Division is of 711.5 and 801.8 million euros, respectively. In 2011, the operating income, by geographical market, is as follows: 404.2 million euros in Spain, 76.1 million euros in the USA, 198.5 million euros in Latin America, 97.1 million euros in the United Kingdom and 40.1 million euros in the remaining areas. In 2010, sales were as follows: 380.8 million euros in Spain, 212.2 million euros in the USA, 172.0 million euros in Latin America, 104.9 million euros in the United Kingdom and 42.06 million euros in the remaining areas. The decrease in operating revenue in 2011 has arisen due to the lease and sub-lease contracts in the USA (see Note 21). These contracts have ended in the middle of 2011 and 2010, respectively. Operating revenue recognised in 2011, arising from lease contracts amounts to 25.8 million euros. In 2010, revenue from lease and sub-lease contracts in the USA amounted to 153.4 million euros. The comparative operating income for 2010 and 2011, excluding these transactions, amounts to 790.2 million euros and 759.2 million euros, respectively, representing a 4.1% increase.

16.2

Other operating and finance income

In 2011, The amount of finance income included under this heading amounts to 7.6 million euros, 3.5 million euros of which have been generated by bank deposits, 1.3 million euros are related to financial advisory services rendered to Playa Hotels & Resorts, S.L., 0.6 million euros arising from the valuation of the sale option of the participation in American Express Barcel贸 Viajes, S.L, 0.8 million euros for the change in fair value of the derivatives which cannot be considered as hedges and 0.4 million euros for dividends received from American Express Barcel贸 Viajes, S.L. In 2011, extraordinary expenses include the sale of the Hotel Casablanca and of the company Actif Hotel, S.A., for an amount of 14.1 million euros, obtaining a profit of 5.5 million euros. At the date of sale, the balance sheet of the company Actif Hotel, S.A. included a cash balance of 3.2 million euros. Moreover, the balance sheet also includes the profit from the sales of a premises in Barcelona for an amount of 0.8 million euros. In 2010, the amount of finance income included under this heading was 9.1 million euros, 5.4 million of which are generated by bank deposits, 2.5 million euros are related to financial advisory services rendered to Playa Hotels & Resorts, S.L. and 1.0 million euros arise from the valuation of the sale option of the participation in the company American Express Barcel贸 Viajes, S.L. In 2010, this heading included extraordinary income related to the profit generated by the sale of the Hotel Homewood Suites DC in Washington, for an amount of 8.3 million euros and the sale of the company Viajes Verger, S.L. for an amount of 0.3 million euros.

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17

Personnel expenses

72

The breakdown of personnel expenses as of December 31, 2011 and 2010 is as follows:

31/12/2011 Wages, salaries and similar expenses

31/12/2010

214,326,674

246,033,940

Severance pays

5,662,584

4,369,155

Social Security

38,803,094

35,092,201

Other welfare expenses

12,445,608

17,270,331

271,237,960

302,765,626

The average number of employees in the Group, by categories, is as follows:

2011

2010

Engineers, graduates and managers

2,490

2,449

Clerks

6,769

6,524

Auxiliary staff

5,117

4,820

14,376

13,793

At December 31, 2011 and 2010, the distribution of employees by gender is as follows:

2011

2010

Male

7,709

7,669

Female

6,445

6,068

14,154

13,737

The information relating to the staff of the hotels managed in the USA, which are leased to Marriott International and Hospitality Properties Trust is not included.

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Other expenses

73

The breakdown of “Other operating expenses” is as follows:

2011

2010

Sundry rentals and fees

92,505,862

129,968,650

Repairs and maintenance

23,801,227

28,855,200

Independent professional services

12,111,861

9,130,471

7,026,585

10,889,839

Advertising and promotion

29,383,946

29,098,494

Supplies

42,626,955

39,123,820

Insurance

Commissions – Travel Division Other

11,401,617

10,131,065

120,633,406

103,939,371

339,491,459

361,136,909

The “Others” caption includes applications net of provisions and the impairment of assets recognised for an amount of 11.8 million euros.

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Financial expenses

In 2011, this caption includes an amount of 1.6 million euros in concept of financial costs for the update of onerous contracts. In 2010 the amount recorded for this concept amounted to 0.5 million euros. In 2011, an amount of 0.8 million euros was carried to results for Adjustments for Changes in Value for non-hedge derivatives (2.9 million euros in 2010). In 2011, an amount of 7.2 million euros arising from the settlement of the hedge contracts contracted by the Group was charged to the finance expenses account. The remaining finance expenses relate to financial instruments valued at amortised cost. In 2010, an amount of 1.2 million euros was recognised as finance expenses for the update of the valuation of the Group’s participation in the company Punta Umbría Turística S.A. This update was detailed in Note 8.1 and measured as a debt instrument.

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20

Transactions with related parties

The main transactions undertaken by the Parent Company or subsidiaries with related companies are as follows:

 

2011

2010

Playa Hotels & Resorts, SL

9,730,748

10,611,465

American Express Barceló Viajes

4,468,497

3,462,103

14,199,245

14,073,568

TOTAL

Within the total amount invoiced to Playa Hotels & Resorts, S.L. 5.4 million euros relate to hotel management contracts, 1.1 million euros to asset management contracts and 3.0 million euros to advisory services for obtaining financing. All intercompany transactions are performed at market rate. The breakdown, by company, of trade accounts receivable from associated companies included under “Other accounts receivable” in the balance sheet is as follows:

Balance at 31/12/2011

Balance at 31/12/2010

2,631,747

5,511,695

American Express Barceló Viajes

677,418

1,414,093

Mundosocial, AIE

913,234

 

4,222,399

6,925,788

Playa Hotels & Resorts, SL

Total

The balances relating to financial transactions are detailed in Notes 8 and 10. An amount of 4.9 million euros has been transferred from the short-term balance of Playa Hotels & Resorts, S.L. to the long-term balance. See Note 8.1.

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21

Operating leases

The Group has operating leases through which it is committed to pay certain fixed instalments and, in some cases, variable instalments depending on invoicing or the operating margin. Most of these instalments are increased on a yearly basis linked to the CPI. The most relevant issues deriving from the different leases, according to type of contract or region, as well as their minimum future payments are detailed below. Hotel Leases in Europe and Africa: The future payments for the next five years and until the termination date of the lease contracts of the accrued minimum instalments are as follows:

Spain 2012

Turkey

Germany

Egypt

25,274,175

3,241,894

3,205,200

1,128,863

Total 32,850,132

2013 - 2016

108,774,014

13,969,762

6,701,753

4,864,424

134,309,953

2017 onwards

295,658,980

6,138,849

-

11,637,059

313,434,888

TOTAL EUROS

429,707,169

23,350,505

9,906,953

17,630,346

480,594,973

United Kingdom 2012

33,048,818

2013 - 2016

130,632,101

2017 onwards

836,401,238

Total Pounds sterling

1,000,082,157

In Spain the Group has 18 hotels leased under contracts maturing between 2016 and 2057 including all possible extensions contained in the contracts. The majority of rental expenses are reviewed on an annual basis depending on the CPI and certain hotels have variable rental clauses linked to the EBITDA generated by the hotels. In Germany the Group has leased a hotel. The lease matures in 2027, although the contract can be unilaterally terminated as of December 31, 2014. The rent consists of a fixed minimum amount plus a percentage of the hotel’s EBITDA which varies depending on the year and the compliance of certain conditions. The Group has lease contracts on 3 hotels in Turkey with maturity between 2016 and 2020. The rent is fixed and pre-established. The Group has leased a hotel in Egypt with a contact which matures in 2024. The Group has lease contracts on 20 hotel establishments in the UK. Said contracts mature in 2042, although the possibility of terminating the contracts exists in 2017 under certain conditions. Barceló also has a call option on said assets. At the end of 2011, the Group has begun negotiating with the owners of the hotels in the UK in order to improve the economic conditions of the lease contract. At the formulation date of these annual accounts, no definitive agreement has been reached, although the lessor has accepted a temporary reduction in the rent during the negotiation period.

Leases in the USA Subleases with Host Marriot Corporation (“Host”): Host has subleased 71 limited service hotels under the brands Residence Inn and Courtyard by Marriott (Host-HTPs) to Hospitality Properties Trust, Inc (“HPT”). The “Host-HTP leases” were in effect until 2012, in the case of the Courtyard and until 2010 in the case of the Residence Inn. Barceló Crestline and subsidiaries, a Group subsidiary, established the sublease contracts with Host, effective as of January 1, 1999, for these limited service hotels (“the subleases”).

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On June 6, 2010, Host cancelled the sublease contract alleging that the Group had breached the equity commitment. In February 2011, Host sent a letter demanding the payment of the unpaid rent and other amounts related to the cancellation of the contract, alleging that the initial demand notes for 30 million USD are completely available in order to pay these amounts. Crestline maintained that its obligations are limited to the deposits and assets in the subleased companies. Following the cancellation of the contract, the subleased companies’ accounts held an amount of 0.4 million USD in cash and a rental guarantee for an amount of 2.6 million USD. Said amounts have been completely impaired. Moreover, a balance of 2.4 million USD was maintained under liabilities as a guarantee for future payments related to this contract. During 2011, Crestline has made the payment to Host for the amount of 2.4 million USD provided for in 2009 as a guarantee of future payments, as well as a cash payment of 0.4 million USD held by the sub-lessees. On December 30, 2011, an agreement has been reached by virtue of which the Host’s claim against Crestline is considered to be settled. This agreement finalises the sublease contract and frees both parties from any further claims relating to this contract. This agreement establishes the payment of 6 million USD by Crestline in a two-year period and ensures the management of two hotels by Crestline. The payment, to be made in 2013, amounts to 1 million USD with the present calculation hypothesis, although the variation in the hypothesis could result in a payment of between 1 and 3 million USD. Limited service hotels subleases with HPT: On June 9, 2000, a subsidiary of Barceló Crestline subscribed a lease agreement with HPT for 19 limited service hotels under long-term lease agreements. HPT acquired the hotels from Marriott International, which is still managing the hotels under long-term management agreements held with Barceló Crestline. The hotels were operated under the brands Courtyard by Marriott, Residence Inn, Spring Hill Suites by Marriott and Towne Place Suites by Marriott. In 2011 HPT notified of the voluntary termination of the lease contract. Georgia Tech and Barceló’s Headquarters in the USA In October, 2001, Barceló Crestline signed an operating lease agreement for the Georgia Tech Hotel and the Convention Center which opened in August, 2003. The initial lease period is 30 years, renewable for 10 years. By virtue of this agreement, Barceló Crestline has to pay a rent equivalent to: i) a minimum fixed rent plus ii) an additional rent based on a determined percentage of revenues as long as certain income thresholds are surpassed. Barceló Crestline also guarantees fixed revenues up to a total of 8.2 million USD. In addition, the Company signed an operating lease agreement on its headquarters until April 2013 which establishes monthly instalments with a tiered annual increase of 4%. The contract contains an option for the renewal of two 5-year periods. Penalties have been established in the case that these renewal options are not exercised. An operating lease contract has also been signed for the offices in the Hotel Virginia Beach until 2017. The future obligations for minimum rental payments for these office contracts, the rental of the Georgia Tech Hotel and the Convention Center at December 31, 2011, are as follows:

USD 2012

5,434

2013 – 2016

22,416

2017 onwards

76,661

Total

104,511

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22

Financial risk management policies and objectives

During the ordinary course of the business, the Company is exposed to the credit risk, interest rate risk, exchange rate risk and liquidity risk. The main financial risks to which the Group is exposed are the interest rate risk and exchange rate risk. The Group management reviews and authorises the risk management policies, as explained below:

Credit risk: Most of the financial instruments exposed to the credit risk relate to the balances receivable from clients. Such accounts receivable are generated by the sale of services to clients. The Group’s policies intend to mitigate this risk by establishing a credit limit based on the client’s volume and credit quality. The approval of the managers of each hotel and each travel agency is required in order to increase the initially established credit. Periodically, each hotel reviews the debt seniority and those balances which are doubtful. The Company maintains a provision for potential losses based on the assessment by the management of the client’s financial position, historical payment data and debt seniority. Historically, losses deriving from this risk are within the range expected by the managers, which is not relevant. Moreover, in order to minimise a possible negative influence from the payment behaviour of our debtors, the Group has subscribed credit insurance policies which render prevention services. In order to grant such insurance, the insurance company performs a solvency study of the clients and if the cover is accepted, guarantees the collection of the insured credit if it is unpaid. The insurance company deals with the collection management and if the process is unsuccessful will pay the indemnity within the predetermined period. Currently, there are no significant risk concentrations. The Company’s maximum exposure to risk is the carrying value. With regard to the credit risk deriving from other financial assets, which include cash balances and short-term deposits, such credit risk arises from the failure of a counterparty (financial entities) with a maximum risk equivalent to the carrying value of said instruments included under the headings of “Cash and cash equivalents” and “Other current financial assets”, for an amount of 367.4 million euros in 2010 (381.6 million euros in 2010). The balance of the provision for insolvencies at December 31, 2011, amounted to 22.4 million euros. At December 31, 2010, the balance amounted to 16.3 million euros. Provisions from the accounts receivable balance charged in have amounted to 2.2 million euros. The age of the debtor balances overdue at year end are as follows:

2011 Less than 90 days More than 90 days and less than 180

2010 27,516

19,943

2,422

2,394

More than 180 and less than 360

723

603

More than 360 days

877

3,022

31,538

25,962

The balance of accounts receivable for over 360 days and part of the balance for over 180 days are totally provided for.

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Market risk Interest rate risk: The risk of changes in the market interest rates mainly have an effect on the debt contracted at variable interest rate. At December 31, in the case that the existing interest rates in the period were 50 basic points lower, with all other variables held constant, profit before taxes for the year would have been increased by 3,062 thousand euros. On the contrary, in the case that the variable interest rate was 50 basic points over the existing ones, with all other variables held constant, profit before taxes would have been decreased by 3,062 thousand euros. At December 31, 2010, in the case that the existing interest rates in the period were 50 basic points lower, with all other variables held constant, profit before taxes for the year would have been increased by 3,462 thousand euros. On the contrary, in the case that the variable interest rate was 50 basic points over the existing ones, with all other variables held constant, profit before taxes would have been decreased by 3,462 thousand euros. The Group has signed interest rate hedge contracts to cover the fluctuation of the Libor and the Euribor. See Note 8.5.

Exchange rate risk: As the Group has a great volume of investments in hotels located abroad, the consolidated results could be affected by the fluctuations in the exchange rates. The interest generated by the indebtedness is denominated in a currency which is similar to that generated by the cash flows from the hotel operations, basically the euro, in such way that it is considered a hedge for costs deriving from borrowings, sales and purchases. The income statements of the hotels located in countries where the local currency is not the euro are affected by the exchange rates in respect of the USD and the euro. The analysis of sensitivity for the years 2011 and 2010 on the income statement is based on the results before taxes in the local currency of the most relevant countries by volume of business, calculating the net effect of a variation of 5% and 10% (both up and down) in respect of each currency. The analysis of sensitivity for the year 2011 is as follows:

Variation %

Usa and Latin America

United Kingdom

Other

+10%

847,473

(1,591,568)

(360,398)

+5%

401,434

(753,901)

(170,715)

-5%

(363,203)

682,101

154,456

-10%

(693,387)

1,302,192

294,871

The analysis of sensitivity for the year 2010 is as follows:

Variation %

Usa and Latin America

United Kingdom

Other

+10%

2,306,228

(1,033,035)

83,963

+5%

1,092,424

(489,332)

39,772

-5%

(988,384)

442,729

(35,984)

-10%

(1,886,914)

845,210

(68,697)

Liquidity risk: The Group manages its exposure to liquidity risk ensuring the permanent liquidity availability to meet its payment obligations under ordinary business activity, without incurring unacceptable losses which might deteriorate the Company’s reputation.

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The Group reviews its liquidity requirements according to the cash budgets, taking into account the maturity dates of the balances payable and receivable and the projected cash flows. In general, the Group has sufficient liquidity to cover the operational cost deriving from the clients’ hotel stays, including debt servicing; but excluding the impact caused by extreme circumstances which cannot be reasonably anticipated, such as natural disasters. At December 31, 2011, the Group’s consolidated balance sheet presents positive working capital amounting to 61.3 million euros (125.6 million euros at December 31, 2010).

Capital management The Group manages its capital maintaining an adequate indebtedness ratio which ensures financial stability and looking for investments with optimal profitability rates with the aim of generating a greater stability and profitability for the Group. As can be observed in the balance sheet, most of the debt is recorded in the long-term. These ratios show that capital management follows certain prudent valuation criteria since the cash flows expected for the forthcoming years and the Group’s equity situation will cover the debt service.

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23

Contingent assets and liabilities

The Group has granted a put option to the company Playa Hotels & Resorts, S.L. Playa Hotels & Resorts, S.L. (Playa) on the shares of three hotel properties. If Barceló or Playa do not find a buyer for these companies, Playa can exercise said put option on May 31, 2013 for an amount of 230 million USD plus the working capital of the three companies. In December 2011, the exercise term of this put option has been extended from October 2011 to May 2013 and Barceló guarantees that the operating result of these three hotels managed by the Group will reach a minimum amount which will allow the three owner companies to cover all of the expenses related to the ownership and operation of said hotels. Barceló also guarantees the bank debts of these three companies for an amount equal to the option’s exercise price. The Group measures this option at its acquisition cost which is zero, since, due to its conditions and characteristics, the option is on non-financial assets and is not included in the scope of IAS 39 in order to be measured at fair value, although this value is also closet o zero. The company Royal Mediterránea, S.A., in which the Group holds a minority participation, has a loan on which the Group has granted a guarantee for an amount of 15 million euros. A hotel owned by the Group is affected by the process to regularise the zoning status of the Marbella Town Council. Since the change in the General Plan for Urban Zoning (PGOU) initially legalises the hotel’s status, the execution of previous rulings is not considered possible. Moreover, the Group has certain lawsuits open, from which it is expected that no loss or liability might arise against the Group.

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24

Information on the delays of payments made to third parties. Additional 3rd provision. “Duty of disclosure” of Law 15/2010, dated July 5.

In conformity with Law 15/2010, of July 5, which amends Law 3/2004 of December 29 establishing measures to be taken in combating arrears in commercial transactions, the table below includes a breakdown of the total payments made to suppliers during the year, specifying those which have exceeded the legal deferment limit, the weighted average days past due and the amount of the balance pending payment to suppliers which exceed the legal payment limit at year-end:

2011 Amount Within the legal limit Remainder Total payments in the year Weighted average days past due Deferments which exceed the legal limit at year-end

%

242,460,397

71%

97,141,505

29%

339,601,902

100%

46,99 4,017,219

At December 31, 2010, balances with suppliers and trade creditors which are more than 85 days overdue amount to 4,358,533 euros.

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25

Post-balance sheet events

In January 2012, the participation in Sky Morocco Hostitality SAS has been sold for an amount of 1.4 million euros (See Note 9).

26

Environmental information

The Parent Company’s Directors consider that the environmental risks which may derive from the Group’s activity is minimal, and in any event adequately covered. They also believe that no material liability related to said risks will arise. During 2011 and 2010, the Group has neither incurred expenses nor received grants relating to environmental risks.

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27

Information regarding Directors and Managers

In 2011, retributions paid to the members of the Board of Directors of the Parent Company and Group’s top management, in concept of salaries and per diems, have amounted to a total of 0.6 and 0.6 million euros, respectively. In 2010, said retributions amounted to 0.6 and 1.5 million euros, respectively. In 2011 and 2010, the Board members have given loans to the Group amounting to 10.4 and 8.6 million euros, respectively. In accordance with article 231 of the Capital companies Act, with the exception of those mentioned in Appendix III, neither the Parent Company’s directors nor any related individuals hold equity investments in companies whose activity is identical, similar or complementary to that of the Group nor hold positions and carry out duties in companies with identical, similar or complementary activities to those of the Group, notwithstanding any of their diligence and loyalty duties or the existence of potential conflicts of interest in the context of article 229 of the consolidated text of the Capital Company Act.

28

Other information

During the years ended December 31, 2011 and 2010, the companies responsible for auditing the Group’s consolidated and individual annual accounts have accrued an amount of 620 thousand euros and 614 thousand euros, respectively. These amounts include the total fees relating to the 2011 and 2010, regardless of when the invoice is generated. Furthermore, companies associated with the Company auditors have invoiced an amount of 165 thousand euros and 278 thousand euros in 2011 and 2010, respectively. As a result of the entities included in the Appendix II being consolidated in Barceló Corporación Empresarial, S.A. accounts, “Barceló Hotels General Partner Ltd” and “Barceló Stirling General Partner Ltd” are taking advantage of the exemption in section 228 of “Company Act 1985” and are not preparing UK consolidated accounts. For the Limited Partnerships included in Appendix II and consolidated in these accounts, advantage has been taken of the exemption conferred by Regulation 7 of the Partnership and Unlimited Companies (Accounts) Regulations 1993. This exempts these limited partnerships from the requirements of Regulations 4 to 6 of the Partnership and Unlimited Companies (Accounts) Regulations 1993 and thereby removes the need for these limited partnerships to prepare, audit, file and publish accounts.

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29

Explanation added for translation to English

These annual accounts are presented on the basis of accounting principles generally accepted in Spain. Certain accounting practices applied by the Company that conform with generally accepted accounting principles in Spain may not conform with generally accepted accounting principles in other countries.

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Appendix I

Company

Consolidation perimeter December 31, 2011

Registered Address

Activity

Closing date

% Direct stake

% Indirect stake

Consolidation method

Holder

Auxiliair, S.A.

Spain

Holding co.

31/12/11

94.84

Full integration

Grubarges Inversión Hotelera, S.L.

2 Dsp S.R.O.

Czech Republic

Holding co.

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Barceló Arrendamientos Turísticos, S.L.

Spain

Hotel trade

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Barceló Arrendamientos Hoteleros, S.L. Barceló Arrendamientos Inmobiliarios, S.L. Barceló Bahía de la Luz, S.L.

Spain

Hotel trade

31/12/11

94.85

Full integration

Grupo Turístico Barceló, S.L.

Spain

Hotel trade

31/12/11

100.00

Full integration

Barceló Títulos y Valores, S.L.

Spain

Idle

31/12/11

94.85

Full integration

Barceló Hotels Mediterráneo, S.L.

Barceló Business, S.L.

Spain

Retailer

31/12/11

35.78

Barceló Business World, S.L.

Spain

Retailer

31/12/11

100.00

Barceló Condal, S.A.

Spain

Barceló Crestline Corporation & Subsidiaries USA

Hotel trade

31/12/11

56.60

Hotel trade

31/12/11

100.00

Barceló División Central, S.L.

Spain

Management services 31/12/11

Barceló Expansión Global, S.L.

Spain

Idle

31/12/11

Barceló Gestión Tunisia

Tunisia

Management Co.

31/12/11

Barceló Gestión Hotelera, S.L.

Spain

Management Co.

31/12/11

100.00 100.00

64.22 41.16

Full integration

Barceló Business World, S.L.

Full integration

Barceló Corporación Empresarial, S.A.

Full integration

Barceló Clavel Hoteles, S.A

Full integration

Barceló Corporación Empresarial, S.A.

100.00

Full integration

Viajes Barceló, S.L.

94.83

Full integration

Unión Hotelera Barceló, S.L.

100.00

Barceló Gestión Hotelera, S.A.

Guatemala

Hotel trade

31/12/11

Barceló Gestión Hotelera Marruecos

Morocco

Management Co.

31/12/11

99.95

Full integration

Barceló Gestión Hotelera, S.L.

Full integration

Barceló Corporación Empresarial, S.A.

Full integration

Barceló Corporación Empresarial, S.A.

Full integration

Barceló Gestión Hotelera, S.L.

Barceló Hospitality USA Inc

USA

Idle

31/12/11

100.00

Full integration

Barceló Gestión Hotelera, S.L.

Barceló Hotels Canarias, S.L.

Spain

Hotel trade

31/12/11

94.85

Full integration

Barceló Hotels Spain, S.L.

Barceló Hotels Mediterráneo, S.L.

Spain

Hotel trade

31/12/11

94.85

Full integration

Barceló Hotels Spain, S.L.

Barceló Hotels Spain, S.L.

Spain

Holding co.

31/12/11

94.85

Full integration

Grupo Turístico Barceló, S.L.

Barceló Pyramids LLC

Egypt

Hotel trade

31/12/11

94.85

Full integration

Barceló Arrendamientos Hotelers

Barceló Raval, S.L

Spain

Hotel trade

31/12/11

94.85

Full integration

Grupo Turístico Barceló, S.L.

Barceló Servicios Turísticos

Guatemala

Personnel services

31/12/11

Barceló Switzerland, S.A.

Switzerland

Holding co.

31/12/11

99.80 100.00

Barceló Títulos y Valores, S.L.

Spain

Holding co.

31/12/11

Barceló Turizm Otelcilik Limited

Turkey

Hotel trade

31/12/11

Barceló Gestión Global S.L.

Spain

Barcelo Grundstrück Berlín GMBH&CO KG Germany

99.99

Management Co.

31/12/11

Idle

31/12/11

5.00 100.00

Grundstrückgesellschaft Hamburg Gmbh Germany

Hotel trade

31/12/11

Barceló Cologne GMBH

Hotel trade

31/12/11

Germany

100.00

Barceló Werwaltungs Gbhm

Germany

Hotel trade

31/12/11

Barceló WRS SP

Spain

Travel Agency

31/12/11

Bávaro Holding Limited

United Kingdom

Holding co.

31/12/11

BCE BCC LLC

USA

Hotel trade

31/12/11

Full integration

Barceló Gestión Hotelera, S.L.

Full integration

Barceló Corporación Empresarial, S.A.

Full integration

Barceló Corporación Empresarial, S.A.

Full integration

Barceló Gestión Hotelera, S.L.

94.83

Full integration

Inversiones Turística Global, S.L.

95.00

Full integration

Barceló Corporación Empresarial, S.A.

Full integration

Barceló Corporación Empresarial, S.A.

100.00

Full integration

Grundstrückgesellschaft Hamburg Gmbh

Full integration

Barceló Corporación Empresarial, S.A.

56.00

Full integration

Viajes Barceló, S.L.

100.00 94.83 100.00

Full integration

Turavia Holding Limited

Full integration

Barceló Corporación Empresarial, S.A.

Caribbean Hotels Agency, S.A.

Switzerland

Trade co.

31/12/11

92.94

Full integration

Grubarges Inversión Hotelera, S.L.

Casino Mar, S.A.

Dominican Rep.

Casino

31/12/11

98.09

Full integration

Casino Dorado, S.A., and others

Corporación Algard, S.A.

Costa Rica

Hotel trade

31/12/11

94.85

Full integration

Grupo Turístico Barceló, S.L.

Corporación Vonderball, S.A.

Costa Rica

Management Co.

31/12/11

100.00

Full integration

Marina Punta Piedra Amarilla, S.A

Escalatur Viagens, Lda.

Portugal

Travel Agency

31/12/11

100.00

Full integration

Barceló Business World, S.L.

Expansión Inversora Global, S.L.

Spain

Idle

31/12/11

Expansión Turística Barceló, S.L.

Spain

Holding co.

31/12/11

94.83

Full integration

Barceló Expansión Global, S.L.

0.09

94.75

Full integration

Unión Hotelera Barceló, S.L. and others

99.93

Full integration

Flamingo Cartera S.L.

99.82

Full integration

Grupo Turístico Barceló, S.L. Barcelo Corporación Empresarial, S.A. and others Barceló Hotels Mediterráneo, S.L.

Flamingo Bávaro, S.L.

Spain

Holding co.

31/12/11

Flamingo Cartera S.L.

Spain

Holding co.

31/12/11

0.11 43.26

Formentor Urbanizadora, S.A.

Spain

Holding co.

31/12/11

Gran Hotel Aranjuez, S.L.

Spain

Hotel trade

31/12/11

Grubar Hoteles, S.L.

Spain

Grubarges Gestión Hotelera Integral, S.L. Spain

53.82

Full integration

94.85

Full integration

Holding co.

31/12/11

94.84

Full integration

Expansión Turística Barceló, S.L.

Management Co.

31/12/11

94.84

Full integration

Grubar Hoteles, S.L. and others

Barceló 2011 Annual Report

86


Company

Registered Address

Activity

Closing date

% Direct stake

% Indirect stake

Consolidation method

Holder

Grubarges Gestión Hotelera Mexicana

Méjico

Management Co.

31/12/11

94.84

Full integration

Grubarges Gestión Hotelera Integral, S.A.

Grubarges Inversión Hotelera, S.L.

Spain

Trade co.

31/12/11

94.84

Full integration

Grubar Hoteles, S.L. and others

Grubarges Inversión Hotelera Canarias, S.L. Spain

Idle

31/12/11

94.84

Full integration

Grubarges Inversión Hotelera, S.L.

Grupo MA. S.R.O.

Hotel trade

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Czech Republic

Grupo Turístico Barceló, S.L.

Spain

Hotel trade

31/12/11

Hermes Villa 539, S.A.

Costa Rica

Holding co.

31/12/11

0.30

94.55

Full integration

Unión Hotelera Barceló, S.L. and others

94.85

Full integration

Barceló Hotels Mediterráneo, S.L.

Hotel Campos de Guadalmina S.L.

Spain

Hotel trade

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Hotel De Badaguas, S.L.

Spain

Hotel trade

31/12/11

94.85

Full integration

Barceló Hotels Mediterráneo, S.L.

Hotel El Toyo, S.L.

Spain

Hotel trade

31/12/11

94.85

Full integration

Barceló Hotels Mediterráneo, S.L.

Hotel Fuerteventura Mar, S.L.

Spain

Hotel trade

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Hotel Fuerteventura Playa, S.L

Spain

Hotel trade

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Hotel Isla Cristina. S.L

Spain

Hotel trade

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Hotel Four Pack, LLC

USA

Hotel trade

31/12/11

100.00

Full integration

Barceló Crestline Corporation & Subsidiaries

Hotel Montelimar, S.A.

Nicaragua

Hotel trade

31/12/11

93.94

Full integration

Bávaro Holding Limited

Hotelera Bávaro S.A.

Dominican Rep.

Hotel trade

31/12/11

98.09

Full integration

Grupo Turístico Barceló, S.L. and others

Hotel Trading Internacional Inc

Panama

Trade co.

31/12/11

99.80

Full integration

Barceló Switzerland, S.A. Barceló Corporación Empresarial, S.A. and others Barceló Corporación Empresarial, S.A.

Inmobiliaria Formentor, S.A.

Spain

Hotel trade

31/12/11

36.88

Inmuebles de Baleares S.L.

Spain

Holding co.

31/12/11

100.00

60.63

Full integration Full integration

Inmuebles en Desarrollo, S.L.

Spain

Holding co.

31/12/11

100.00

Full integration

Barceló Hotels Mediterráneo, S.L.

Inversiones Turística Global, S.L.

Spain

Idle

31/12/11

94.83

Full integration

Barceló Expansión Global, S.L.

Madreselva S.A.

Dominican Rep.

Idle

31/12/11

94.77

Full integration

Grupo Turístico Barceló, S.L. and others

Marina Punta Piedra Amarilla, S.A

Costa Rica

Hotel trade

31/12/11

96.39

Full integration

Grupo Turístico Barceló, S.L. and others

Mestský dvur, sro

Czech Republic

Holding co.

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L

Monitoreo Maya, SA de CV

Mexico

Personnel services

31/12/11

94.83

Full integration

Promotora QVB, SA de CV and others

Montecastillo Sport Catering, S.L.

Spain

Hotel trade

31/12/11

100.00

Full integration

Barceló Hotels Mediterráneo, S.L.

Naugolequi, S.L.

Spain

Idle

31/12/11

97.51

Full integration

Inmobiliaria Formentor, S.A.

Naviera Tambor, S.A.

Costa Rica

Shipping company

31/12/11

38.56 (*)

Full integration

Marina Punta Piedra Amarilla, S.A.

Operadora de Servicios Varios

Guatemala

Personnel services

31/12/11

100.00

Full integration

Barceló Gestión Hotelera, S.L. Grupo Turístico Barceló, S.L. and others

Poblados de Bávaro S.L.

Spain

Holding co.

31/12/11

0.11

92.84

Full integration

Poblados de Vacaciones, S.A.

Spain

Hotel trade

31/12/11

0.12

58.69

Full integration

Barceló Hotels Mediterráneo, S.L. and others

Promotora QVB, SA de CV

Mexico

Holding co.

31/12/11

94.83

Full integration

Grubarges Inversión Hotelera, S.L.

Quiroocan, SA de CV

Mexico

Hotel trade

31/12/11

94.83

Full integration

Promotora QVB, SA de CV

Restaurante Lina CxA

Dominican Rep.

Hotel trade

31/12/11

95.87

Full integration

Bávaro Holding Limited

Servicios de Construcciones Maya

Mexico

Personnel services

31/12/11

94.83

Full integration

Quiroocan, SA de CV

Tenedora Inmobiliaria El Salado, SRL

Dominican Rep.

Real Estate Agency

31/12/11

94.91

Full integration

Restaurante Lina, CxA

Títulos Bávaro, S.L.

Spain

Holding co.

31/12/11

92.96

Full integration

Poblados de Bávaro S.L.

Trapecio S.A.

Dominican Rep.

Holding co.

31/12/11

94.85

Full integration

Grupo Turístico Barceló, S.L and others

Travelsens, S.L

Spain

Tour Operator

31/12/11

100.00

Full integration

Viajes Barceló, S.L.

Turavia Holding Limited

United Kingdom

Holding co.

31/12/11

94.83

Full integration

Turavia International Holidays, S.L.

Turavia International Holidays, S.L.

United Kingdom

Holding co.

31/12/11

94.83

Full integration

Unión Hotelera Barceló, S.L.

Turiempresa CxA

Dominican Rep.

Hotel trade

31/12/11

93.71

Full integration

Trapecio S.A.

Full integration

Barceló Corporación Empresarial, S.A.

94.83

Full integration

Barceló Expansión Global, S.L.

Unión Hotelera Barceló, S.L.

Spain

Holding co.

31/12/11

Unión Inversora Global, S.L.

Spain

Idle

31/12/11

94.83

Vacaciones Barceló, SA

Dominican Rep.

Travel Agency

31/12/11

99.90

Full integration

Viajes Barceló, S.L. and others

Vacaciones Barceló CR, S.A.

Costa Rica

Travel Agency

31/12/11

100.00

Full integration

Viajes Barceló, S.L.

Vacaciones Barceló México, S.A.

Mexico

Travel Agency

31/12/11

Viajes Barceló, S.L.

Spain

Travel Agency

31/12/11

100.00 100.00

Full integration

Viajes Barceló, S.L. and others

Full integration

Barceló Corporación Empresarial, S.A.

Viajes Interopa, S.A.

Spain

Travel Agency

31/12/11

100.00

Full integration

Viajes Barceló, S.L.

Barceló Experience

Spain

Travel Agency

31/12/11

100.00

Full integration

Viajes Barceló, S.L.

Volcada limited

United Kingdom

Trade co.

31/12/11

94.83

Full integration

Turavia Holding Limited

Viajes Barceló Internacional SA de CV

Mexico

Travel Agency

31/12/11

100.00

Full integration

Barceló Business World, S.L.

Paramount Hotels General Partner Limited

United Kingdom

Hotel trade

31/12/11

100.00

Full integration

Barceló Corporación Empresarial, S.A.

Paramount Stirling General Partner Limited y sociedades dependientes

United Kingdom

Hotel trade

31/12/11

100.00

Full integration

Barceló Corporación Empresarial, S.A.

(*) Companies controlled through indirect stakes

Barceló 2011 Annual Report

87


Registered Address

Company

Activity

Closing date

% Direct stake

% Indirect stake

Consolidation method

Holder

Multigroup companies Integration by Viajes Barceló, S.L. proportion method Integration by 33.00 Viajes Barceló, S.L. proportion method Integration by 33.00 Viajes Barceló, S.L. proportion method

Mundosocial AIE (1)

Spain

Travel Agency

30/08/11

33.00

UTE Mundo Senior (1)

Spain

Travel Agency

31/12/11

Novotours AIE (1)

Spain

Travel Agency

30/08/11

Hotel Derek, LLC (2)

USA

Hotel trade

31/12/11

15.00

Virginia Beach

USA

Hotel trade

31/12/11

30.00

BSE/AH Blacksburg Hotel, LLC

USA

Hotel trade

31/12/11

24.00

Santa Lucía, S.A.

Cuba

Idle

31/12/11

50.00

TV Popular, S.A.

Spain

TV Services

31/12/11

25.00

Fidelización de Consumidores, S.A.

Spain

Promotion services

31/12/11

20.00

Turyocio Viajes y Fidelización, S.A.

Spain

Travel Agency

31/12/11

24.90

American Express Barceló Viajes, S.L.

Spain

Travel Agency

31/12/11

35.00

Associates Integration by equity method Integration by equity method Integration by equity method Integration by equity method Integration by equity method Integration by equity method Integration by equity method Integration by equity method

Barceló Crestline Corporation and Subsidiaries Barceló Crestline Corporation and Subsidiaries Barceló Crestline Corporation and Subsidiaries Unión Hotelera Barceló, S.L. Barceló Corporación Empresarial, S.A. Viajes Barceló SL Viajes Barceló SL Viajes Barceló SL

(1) External shareholders: Viajes Halcón, Viajes Iberia (2) In spite of the Group only owning a 15% participation in Hotel Derek, consolidation is by the equity method because the Group has significant influence.

The balance sheet of the UTES and AIEs integrated at December 31, 2011 is detailed below (in euros):

  Non-current assets

2011

2010 454,901

519,529

Current assets

18,421,643

19,872,902

TOTAL ASSETS

18,876,544

20,392,431

Equity

10,453,803

10,919,307

Non-current liabilities Current liabilities TOTAL LIABILITIES TOTAL SALES

3,926 8,422,741

9,469,198

18,876,544

20,392,431

127,235,409

140,119,950

Barceló 2011 Annual Report

88


Appendix II

Consolidation Perimeter UK

Name of Entity

Company Number

Barceló Hotels General Partner Ltd.

6326407

Barceló Corporación Empresarial, S.A. (Spain)

England and Wales

Ordinary shares

100%

Investment Company

Barceló Stirling General Partner Ltd.

6340173

Barceló Corporación Empresarial, S.A. (Spain)

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels Great Britain Ltd

6309241

Barceló Corporación Empresarial, S.A. (Spain)

England and Wales

Ordinary shares

100%

Dormant

Barceló Hotels UK Ltd

6257214

Barceló Corporación Empresarial, S.A. (Spain)

England and Wales

Ordinary shares

100%

Hotel trade

Barceló Hotels No 1 LP Ltd.

6326429

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 2 LP Ltd.

6326444

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 3 LP Ltd.

6326463

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 4 LP Ltd.

6326476

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 5 LP Ltd.

6326492

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 6 LP Ltd.

6326534

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 7 LP Ltd.

6326549

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 8 LP Ltd.

6340317

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 9 LP Ltd.

6340156

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 10 LP Ltd.

6340162

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 11 LP Ltd.

6340169

Barceló Hotels General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 12 LP Ltd.

6340170

Barceló Stirling General Partner Ltd.

England and Wales

Ordinary shares

100%

Investment Company

Barceló Hotels No 1 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 1 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 2 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 2 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 3 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 3 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 4 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 4 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 5 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 5 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 6 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 6 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 7 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 7 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 8 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 8 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 9 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 9 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 10 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 10 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 11 LP (*)

99% Barceló Hotels General Partner Ltd. 1% Barceló Hotels No 11 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Barceló Hotels No 12 LP (*)

99% Barceló Stirling General Partner Ltd. 1% Barceló Hotels No 12 LP Ltd.

England and Wales

Share of partnership

100%

Hotel trade

Parent Company

Country of Registration

Holding

% Holding

Nature of business

(*) See Note 27

Barceló 2011 Annual Report

89


Appendix III

Posts held by the Board of Directors in Group companies

COMPANY 

90

POSITION Chairman

Vicechairman

Secretary

PLAYA POCHOTE

SBT

SPBV

GBT

TURISTICA BAHIA BALLENAS S.A.

SBT

SPBV

GBT

Explanatory Notes: * SPBV = Simón Pedro Barceló Vadell * SBT = Simón Barceló Tous * GBT = Guillermo Barceló Tous

Barceló 2011 Annual Report


Consolidated Management Report

Barcel贸 Informe de Gesti贸n 2011

91


During 2011, the Barceló Group has obtained a consolidated net profit of 1.5 million euros. The Profit before taxes, without taking into account the impairment of assets (mainly originating in the United Kingdom), amounts to 14.7 million euros, representing a 23% improvement in comparison to 2010. In 2011, all commitments with financial entities have been fulfilled regarding the payment of interest and the amortisation of principal. Working capital in 2011 amounts to 61.3 million euros.

1 1.1

Relevant matters with regard to 2011 Hotel activity

In 2011, the Group has managed a total of 42,152 rooms in 155 hotels located in Latin America, the United States, Europe and North Africa. Of the total number of rooms, the Group owns 15,208, manages 18,551 and rents 8,393 rooms. The most relevant investment undertaken in 2011 is the renovation of the Bávaro complex in the Dominican Republic with an investment of more than 50 million euros. At the end of 2011, the Bávaro complex is now completely reformed and operational. As well as this investment, the Barceló Group has acquired a hotel in Brno (Czech Republic), has completed the work on a new hotel in Hamburg which has been inaugurated in March 2012 and has continued renovating hotels in order to improve the standard of quality and to be able to offer more modern, comfortable and environmentallyfriendly establishments to our clients. In Europe and North Africa occupancy has been 69.3%, which is a 5.3% improvement on last year and the total Revpar has been 74.1 euros, which is a 6.6% rise in comparison to 2010. In Latin America occupancy has been 70.8% which is a 4.3% improvement on last year and the total Revpar has been 105 USD, representing a 12.6% rise in comparison to 2010. In the USA we have had an average occupancy of 67.5% which is a rise of 2.6% with regard to the previous year and the total Revpar has been 118.6 USD representing a 4.9% with regard to 2010.

1.2

Activity of the Travel Division

The Group has more than 300 travel agencies, including self-owned and franchised agencies, as well as a 35% participation in a Joint Venture with American Express for jointly managing the corporate travel business. In 2011, the new tour operator division has been created. This division is made up of two general tour operators, Quelónea and Jolidey, and a tour operator for long-distance travel, called Lacuartaisla. This specialist tour operator will begin to operate in the first quarter of 2012 and the other two will begin operating in the summer of 2012. In 2011, gross turnover has been of 371 million euros (excluding sales by American Express/Barceló Viajes).

Barceló Informe de Gestión 2011

92


The main brand names under which the Travel Division carries out its activity are the following:

• • •

Barceló Viajes American Express-Barceló Viajes Vacaciones Barceló (in Latin America)

The Travel Division is continuing with its strategy of specialising and differentiating the brand, which is generating very positive results.

93 2

Consolidated results for the year

The Group’s consolidated Net Profit has been positive for an amount of 1.5 million euros. The Consolidated result before tax amounts to 2.9 million euros in comparison to 11.9 million euros in 2010. This decrease is mainly due to the impairment of assets recognised in 2011 for an amount of 11.8 million euros. For comparative purposes, excluding impairment, the Consolidated result before tax in 2011 amounts to 14.7 million euros in comparison to 11.9 million euros in 2010, representing an increase of 23.5%. Operating Income amounts to 816 million euros. It is worth noting that in the middle of 2011 and 2010, the lease and sublease contracts of the hotels in the USA have ended (see Note 21). This means that the operating income figure is not comparative since, in 2010, the total annual income from the lease contracts and half a year’s income from the subleases were recognised, whereas in 2011 only six months of income for the lease contracts have been recognised. For comparative purposes, without taking into account the income arising from these contracts, the Operating Income in 2011 amounts to 790.2 million euros in comparison with 759.2 million euros in 2010, representing an increase of 4.1%. In 2011 we would like to highlight the new investments and improvements which have been undertaken in the Hotel Division (over 138 million euros). We are certain that these improvements will generate more positive results in forthcoming years. In 2011 we also disposed of hotels for an amount of 14 million euros. A strong point on the consolidated balance sheet is the cash position (positive working capital amounting to 61.3 million euros) which allows the 2012 commitments to be easily fulfilled and the renovation projects in our hotels to be undertaken. The financial risk management objectives and policies are explained in Note 22 of the consolidated annual accounts.

3

Forecast for 2012

For this year we foresee an improvement in all the geographical areas where we are present. The data relating to the first months of 2012 are showing a tendency of improvement in occupancy, rates and Revpar for the whole year. The aim for 2012 is to reach an Ebitda of around 164.4 million euros and a net profit of 12.5 million euros. During the month of January we have sold our participation in the Sky Morocco Hospitality SAS fund, recovering the investment made. Moreover, we plan to dispose of various non-strategic assets with the aim of reducing our debt. The strong position of our Balance Sheet will allow us to access interesting investment projects and the possibility of working in other hotels on a lease and/or management basis.

4

Other information

Neither the subsidiaries nor the Parent Company have any treasury stock or shares in their Parent Company, nor did they undertake any research and development activity in 2011. Except for those mentioned in the annual accounts, no events which might affect the 2011 accompanying consolidated annual accounts have taken place subsequent to year-end.

Barceló Informe de Gestión 2011


Grupo Barceló Annual Report 2011  

Grupo Barceló Annual Report 2011

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