Financial Statement

miércoles, 13 de noviembre de 2013

Explanations of the financial statements

These are the results of the financial statements (income statement, balance sheet, cash flow and statement of changes in equity

• ·         INCOME STATEMENT
  

Revenues: Total revenues increased by 2% (27.0 million Euros).  It is due to the fact that Revenues from the Hotels increased by 55.5 million euros, Real Estate decreased by -42.3 million euros, Club Meliá increased by 6.2 million euros, while Other Revenues increased by 9.9 million euros mainly due to higher revenues. 

Operating expenses:Raw Materials increased by 8.5 million euros mostly due to the incorporation of two resorts and the appreciation of the US dollar.

Personnel Expenses went down by -18.0 million euros affected by a change in the accounting system when recruiting staff in Mexico through employment agencies.

Other operating expenses increased by 29.0 million euros due to the changes in the scope of consolidation and the mentioned reclassification in Personnel Expenses.

Rental Expenses have increased by 3.8 million euros due to the Sale & Lease back operations and changes in the perimeter. 

Net profit:The financial result improved by 3.8 million euros mainly due to:

− Higher interest expenses, principally due to the increase in the average cost of debt

− Partially offset by higher financial income, mainly generated through: the revaluation of a minority stake in one resort in 2012, the issue of ordinary bonds and a simultaneous offer of exchange for the Preference Shares and higher interest generated by the loans to associates.

− Less Exchange Expenses given the dollar appreciation.

In conclusion, the performance of Melia Hotels has been good, although operating expenses have increased, revenues have also increased and, consequently the net profit has increased, which is obviously very positive.

• BALANCE SHEET

Assets: It is remarkable the reduction of the "Tangible assets" which is linked to the proceeds from disposals during the period, offset in one part by a higher asset’ value of the recently incorporations of two hotels and the effect of a balance sheet restatement in Venezuela.

The increase in “Investments in Associates” is due to different investments linked to the joint ventures signed last December which will manage a few resorts.

Higher “Other non-current financial assets”  is partially linked to the increase of "Long-term Loans to Associates" basically due to the loans to the owner of an hotel and the increase of “Other long term debt” mainly due to the effect of the non-customer securitization in the Club Meliá division in 2012.

Equity and liabilities:The fall of Non Current Liabilities and the parallel increase of Current Liabilities, corresponds to the reclassification of the debt between long and short term, due to the debt maturities schedule. For this reason, the item “Long term bank debt” decreased, while “Short term Bank debt” increased.

Regarding debt levels, net debt reached 1,003 million euros. Debt levels are mainly explained due to the finalization of two resorts as well as the works in an hotel. The finalization of these three hotels implied in 2012 a disbursement around 40.6 million euros.

• CASH FLOW STATEMENT
  

- Cash Flow from operating activities (156.1 million euros) includes 66.7 million euros of gross capital gains generated trough the asset rotation activity.

- Cash Flow from Investing activities have decreased. This is primarily explained by:

The investments made in fixed assets and property ; the payments to associates reaching 63.7 million euros once compensated payments and proceeds from third parties . All this partially offset by the net book value derived of the disposals made during the year.

• STATEMENT OF CHANGES IN EQUITY

In this table we can see that during the years 2010, 2011 and 2012 the amount of capital has remained constant. The share premium decreased from 2010 to 2011 from 758,180 to 696,377 and it remained the same in 2012. Other reserves increased every year, the figures of treasury shares are negative during the three years and it increased from 2010 to 2011 and remained the same in 2012. Retained earnings and translation differences increased from 2010 to 2011 but it increased in 2012 although the value of translation differences is negative. Net income of the parent company decreased in the amount of 10,002 from 2010 to 2011 and it decreased 2,807 in 2012. The minority interest increased in 2012.

And finally, total net equity increase d from 1,115,945 to 1,129,871 in 2011 and then to 1,183,879 in 2012.

• EXPLANATORY NOTES

The explanatory notes of Melia Hotels International include several information such as explanations about corporate information, accounting policies, consolidation scope, segment reporting, other income and expenses, earnings per share, intangible assets, property plant and equipment, investment property, current assets, equity, non current liabilities, trade and other payables, tax situation, etc.