Consolidated Financial Statements and Notes
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, determined by the components
method, from the date when they are put in service. The main depreciation periods applied are as follows:
Luxury Upscale and Midscale Hotels
Building improvements, fixtures and fittings
7 to 25 years
Capitalized construction-related costs
5 to 15 years
E.3. Borrowing costs
Borrowing costs directly attributable to the construction or production
of a qualifying asset are included in the cost of the asset. Other
borrowing costs are recognized as an expense for the period in
which they are incurred.
E.4. Leases and sale and lease back transactions
Leases are analysed based on IAS 17 “Leases”.
Leases that transfer substantially all the risks and rewards incidental
to ownership of an asset to the lessee are qualified as finance
leases and accounted for as follows:
the leased item is recognized as an asset at an amount equal
to its fair value or, if lower, the present value of the minimum
lease payments, each determined at the inception of the lease;
a liability is recognized for the same amount, under “Finance
minimum lease payments are allocated between interest expense
and reduction of the lease liability;
the finance charge is allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the
remaining balance of the liability.
The asset is depreciated over its useful life, in accordance with
Group accounting policy, if there is reasonable certainty that the
Group will obtain ownership of the asset by the end of the lease
term; otherwise the asset is depreciated by the components method
over the shorter of the lease term and its useful life.
Lease payments under operating leases are recognized as an
expense on a straight-line basis over the lease term. Future
minimum lease payments under non-cancelable operating leases
are disclosed in Note 7.
Where ‘’Sale and Lease Back” transactions result in an operating
lease and it is clear that the transaction is established at fair value,
any profit or loss is recognized immediately. Fair value for this
purpose is generally determined based on independent valuations.
E.5. Other financial investments
Other financial investments, corresponding to investments in
non-consolidated companies, are classified as “Available-for-sale
financial assets” and are therefore measured at fair value. Unrealized
gains and losses on an investment are recognized directly in equity
(in the Fair value adjustments on Financial Instruments reserve) and
are reclassified to profit when the investment is sold. A significant
or prolonged decline in the value of the investment leads to the
recognition of an irreversible impairment loss in profit.
Equity-accounted investments in associates are initially recognized
at acquisition cost, including any goodwill.Their carrying amount is
then increased or decreased to recognize the Group’s share of the
associate’s profits or losses after the date of acquisition.
An impairment test is performed whenever there is objective
evidence indicating that an investment’s recoverable amount may
be less than its carrying amount. Possible indications of impairment
include a fall in the share price if the investee is listed, evidence of
serious financial difficulties, observable data indicating a measurable
decline in estimated cash flows, or information about significant
changes with an adverse effect on the investee.Whenever there is
an indication that an investment may be impaired, an impairment
test is performed by comparing the investment’s recoverable amount
to its carrying amount.
E.6. Recoverable value of assets
In accordance with IAS 36 “Impairment of Assets”, the carrying
amounts of property, plant and equipment, intangible assets and
goodwill are reviewed and tested for impairment when there is
any indication that they may be impaired and at least once a year
for the following:
assets with an indefinite useful life such as goodwill, brands and
intangible assets not yet available for use.
Criteria used for impairment tests
For impairment testing purposes, the criteria considered as indicators
of a possible impairment in value are the same for all businesses:
15%drop in revenue, based on a comparable consolidation scope; or
30%drop in EBITDA, based on a comparable consolidation scope.
Registration Document 2014