2013 Registration document and annual financial report - page 202

Registration Document 2013
200
Financial Statemements
5
Consolidated Financial Statements And Notes
R. Fair value
The fair value corresponds to the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction
betweenmarket participants at themeasurement date. In accordance
with IFRS 13 “Fair value measurement”, the fair value hierarchies
have the following levels:
ƒƒ
level 1: fair value measured by reference to quoted prices
(unadjusted) in active markets for identical assets or liabilities;
ƒƒ
level 2: fair value measured by reference to inputs other than
quoted prices included within Level 1 that are observable for
the asset or liability, either directly (
i.e.
as prices) or indirectly
(
i.e.
derived from prices);
ƒƒ
level 3: fair value measured by reference to inputs for the asset
or liability that are not based on observable data (unobservable
inputs).
S. Income statement and cash flow
statement presentation
S.1. Revenue
In accordance with IAS 18 “Revenue”, revenue corresponds to the
value of goods and services sold in the ordinary course of business
by fully and proportionally consolidated companies. It includes:
ƒƒ
for directly owned and leased hotels, all revenue received from
clients for accommodation, catering and other services; and
ƒƒ
for managed and franchised hotels, all management and
franchise fees.
The Group applies the guidance provided in IAS 18 to determine
whether it acts as the principal or an agent in its contractual hotel
management relationships. For the purpose of applying IAS 18, the
Group is considered as acting as the principal when it has exposure
to the significant risks and rewards associated with the rendering
of services. In this case, the revenue and related expenses are
reported separately in the income statement. When the above
criterion is not met, the Group is considered as acting as an agent
and only the remuneration corresponding to the agency fee is
recognized in revenue.
In accordance with IAS 18 “Revenue”, revenue is measured at
the fair value of the consideration received or receivable, net of
all discounts and rebates, VAT, other sales taxes and fair value of
customer loyalty programs.
Revenue from product sales is recognized when the product is
delivered and the significant risks and rewards of ownership are
transferred to the buyer.
Revenue from sales of services is recognized when the service
is rendered.
Revenue fromsales of loyalty programs is recognized on a straight-line
basis over the life of the cards in order to reflect the timing, nature
and value of the benefits provided.
When sales of products or services are covered by a customer
loyalty program, the revenue invoiced to the customer is allocated
between the product or the service sold and the award credits given
by the third party granting the loyalty points. The consideration
allocated to the award credits, which is measured by reference to
the fair value of the points granted, is deferred and recognized as
revenue when the customer redeems the award credits –
i.e.
when
an award is received in exchange for converting the loyalty points.
S.2. EBITDAR
Earnings before interest, tax, depreciation, amortization and rental
expense and share of profit of associates after tax (EBITDAR)
correspond to revenue less operating expense.
EBITDAR is used as a key management indicator.
It is also used to calculate the flow-through ratio and the reactivity
ratio. The flow-through ratio, which is used when revenue goes
up, corresponds to change in like-for-like EBITDAR/change in
like-for-like revenue. The reactivity ratio, used when revenue goes
down, is defined as 1- (change in like-for-like EBITDAR/change in
like-for-like revenue).
S.3. Rental expense and depreciation,
amortization and provision expense
Rental expense and depreciation, amortization and provision
expense reflect the operating costs of holding leased and owned
assets. For this reason, an additional sub-total has been included
in the income statement. Under this presentation:
1.
EBITDA corresponds to gross profit after the operating costs
of holding leased assets;
2.
EBIT corresponds to gross operating profit after the operating
costs of holding both leased and owned assets.This indicator is
also used as the benchmark for determining senior management
and other executive compensation, as it reflects the economic
performance of each business.
These two indicators are used regularly by the Group to analyze the
impact of the operating costs of holding assets on the consolidated
financial statements.
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