entidad urbanistica de conservaciÓn parques de...

ENTIDAD URBANISTICA DE CONSERVACIÓN PARQUES DE SOTOGRANDE

Abbreviated Annual Accounts

31 December 2015

(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

Inscrita en el Registro Oficial de Auditores de Cuentas con el nº.S0702, y en el Registro de Sociedades del Instituto de Censores Jurados de Cuentas con el nº.10. Reg. Mer Madrid, T. 11.961, F. 84, Sec. 8, H. M -188.007, Inscrip. 1 N.I.F. B-78510153

Independent Auditor's Report on the Abbreviated Annual Accounts

(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

To the General Assembly of Entidad Urbanística de Conservación Parques de Sotogrande

We have audited the accompanying abbreviated annual accounts of Entidad Urbanística de Conservación Parques de Sotogrande (the "Entity”), which comprise the abbreviated balance sheet at 31 December 2015, the abbreviated income statement, abbreviated statement of changes in equity and abbreviated statement of cash flows for the year then ended, and abbreviated notes. Directors' Responsibility for the Abbreviated Annual Accounts

The Members of the Governing Board are responsible for the preparation of the accompanying abbreviated annual accounts in such a way that they give a true and fair view of the equity, financial position and financial performance of Entidad Urbanística de Conservación Parques de Sotogrande in accordance with the financial reporting framework applicable to the entity in Spain, specified in note 2 to the accompanying abbreviated annual accounts, and for such internal control that they determine is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility

Our responsibility is to express an opinion on these abbreviated annual accounts based on our audit. We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in Spain. This legislation requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the abbreviated annual accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the abbreviated annual accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the abbreviated annual accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the abbreviated annual accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the abbreviated annual accounts taken as a whole.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2

Opinion

In our opinion, the accompanying abbreviated annual accounts give a true and fair view, in all material respects, of the equity and financial position of Entidad Urbanística de Conservación Parques de Sotogrande at 31 December 2015 and its financial performance for the year then ended in accordance with the applicable financial reporting framework and, in particular, with the accounting principles and criteria set forth therein.

Yours faithfully,

(Signed on the original in Spanish)

Ramón Monedero Aguilar Partner


Table of contents

Abbreviated Balance Sheets - Assets Page 2

Abbreviated Balance Sheets - Equity and Liabilities Page 3

Abbreviated Income Statements

Statements of Cash Flows Page 8

Notes to the Abbreviated Annual Accounts: Page 9

Note (1) Nature and Activities of the Entity and Composition of the Group Page 9

Note (2) Basis of Presentation Page 9

Note (3) Distribution of Profit Page 10

Note (4) Significant Accounting Policies Page 11

Note (5) Intangible Assets Page 17

Note (6) Property, Plant and Equipment Page 18

Note (7) Finance Leases – Lessee Page 20

Note (8) Operating Leases – Lessee Page 21

Note (9) Risk Management Policy Page 21

Note (10) Financial Assets by Category Page 21

Note (11) Investments and Trade Receivables Page 23

Note (12) Inventories Page 24

Note (13) Cash and Cash Equivalents Page 25

Note (14) Equity Page 25

Note (15) Other Provisions Page 25

Note (16) Financial Liabilities by Category Page 26

Note (17) Payables and Trade Payables Page 26

Note (18) Late Payments to Suppliers Page 28

Note (19) Taxation Page 28

Note (20) Environmental Information Page 29

Note (21) Related Party Balances and Transactions Page 29

Note (22) Income and Expenses Page 29

Note (26) Employee Information Page 31

Note (24) Audit Fees Page 31

Note (25) Budget Implementation Page 33

Appendix I Classification of Financial Liabilities by Maturity Page 35

Appendix II Reconciliation of net income and expenses for the year Page 37

Appendix III Details of the income tax expense/(tax income) Page 39


Abbreviated Balance Sheets

31 December 2015 and 2014

(Expressed in Euros)

The accompanying notes form an integral part of the abbreviated annual accounts.

(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) Assets Note 2015 2014 Intangible assets Note 5 1,593 - Property, plant and equipment Note 6 203,157 245,603

Total non-current assets 204,750 245,603 Inventories Note 12 5,569 3,437 Trade and other receivables Note 11 529,007 561,429 Prepayments for current assets 3,082 1,982 Cash and cash equivalents Note 13 62,128 70,293

Total current assets 599,786 637,141 Total assets 804,536 882,744


Abbreviated Balance Sheets




Equity and Liabilities Note 2015 2014 Capital and reserves Note 14 109,759 102,134 Prior years’ profit and loss 102,134 94,650 Profit for the year 7,625 7,484

Total equity 109,759 102,134 Non-current provisions Note 15 50,000 - Non-current payables Note 17 101,324 130,680 Finance lease payables 101,324 130,680

Total non-current liabilities 151,324 130,680 Current provisions Note 15 80,429 50,429 Current payables Note 17 45,311 41,067 Finance lease payables 45,311 41,067 Trade and other payables Note 17 417,713 558,434 Current payables to suppliers 262,560 418,819 Other payables 50,568 47,275 Personnel (salaries payable) 12,787 68 Public entities, other 91,798 92,272

Total current liabilities 543,453 649,930 Total equity and liabilities 804,536 882,744


Abbreviated Income Statements for the years ended




(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) Note 2015 2014 Revenues Note 22 4,249,550 4,235,613 Other operating income 22,512 21,348 Personnel expenses Note 22 (1,246,304) (1,180,700) Other operating expenses Note 22 (2,945,134) (3,012,882)

Amortisation and depreciation Notes 5 and

6 (72,509) (61,623) Impairment and losses on disposal of fixed assets (330) - Other losses - (262) Results from operating activities 7,785 1,494 Finance income 5,857 12,203 Finance costs Note 16 (6,017) (6,213) Net finance cost/income (160) 5,990 Profit before income tax 7,625 7,484 Income tax - - Profit for the year 7,625 7,484


Abbreviated Statements of Changes in Equity for the years ended


A) Abbreviated Statements of Recognised Income and Expense for the years ended




(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) 2015 2014 Profit for the year 7,625 7,484 Total recognised income and expense 7,625 7,484




B) Abbreviated Statement of Total Changes in Equity for the year ended 31 December 2015




Prior years’ profit

and loss Profit for the year

Total

Balance at 31 December 2014 94,650 7,484 102,134 Recognised income and expense - 7,625 7,625 Distribution of profit 7,484 (7,484) -

Balance at 31 December 2015 102,134 7,625 109,759




B) Abbreviated Statement of Total Changes in Equity for the year ended 31 December 2014




Prior years’ profit

and loss Profit/(loss) fo

the year Total Balance at 31 December 2013 87,390 7,260 94,650 Recognised income and expense - 7,484 7,484 Distribution of profit 7,260 (7,260) - Balance at 31 December 2014 94,650 7,484 102,134


Statements of Cash Flows for the years ended




(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) 2015 2014 Cash flows from operating activities Profit for the year before tax 7,625 7,484 Adjustments for: Amortisation and depreciation 72,509 61,623 Impairment 120,086 116,263 Change in provisions 80,000 - Proceeds from disposals of fixed assets 330 - Finance income (5,857) (12,203) Finance costs 6,017 6,213 Other income and expenses - (21,348) Changes in operating assets and liabilities Inventories (2,132) 3,195 Trade and other receivables (87,664) (54,062) Other current assets (1,100) (405) Trade and other payables (140,721) (158,919) Other non-current assets and liabilities - - Other cash flows from operating activities Interest paid (6,017) (6,213) Interest received 5,857 12,203 Other amounts paid - 29,495 Other income - 21,348 Cash flows from operating activities 48,933 4,674 Cash flows from investing activities Payments for investments - - Property, plant and equipment (15,286) (5,767) Cash flows used in investing activities (15,286) (5,767)

Cash flows from financing activities

Other payables (41,812) (33,861) Cash flows used in financing activities (41,812) (33,861) Net decrease in cash and cash equivalents (8,165) (34,954)

Cash and cash equivalents at beginning of year 70,293 105,247

Cash and cash equivalents at year end 62,128 70,293


Statements of Cash Flows for the years ended





(1) Nature and Activities of the Entity and Composition of the Group

Entidad Urbanística de Conservación is the organisation foreseen by Andalusian planning legislation, Law 7/2002 of 17 December 2007 (Ley de Ordenación Urbanística de Andalucía, LOUA), and included by local councils in their General Urban Planning Ordinances for housing developments where conservation is the duty of property owners.

The San Roque General Planning Ordinance established such an organisation for the Sotogrande housing development. For this reason the statute of the Sotogrande Property Owners’ Association (Asociación de Comunidades de Sotogrande) included conversion into an Entidad Urbanística de Conservación. The Entidad Urbanística de Conservación Parques de Sotogrande (hereinafter the Entity) was finally incorporated and registered as a collaborator of the Junta de Andalucía, in April 2004. It commenced its activity on 1 January 2005 subrogating all the rights and obligations of the Property Owners’ Association.

The purpose of the Entity is to provide general services for the housing development. These services are for public roads and green areas which, given their particular importance for Sotogrande as a whole, cannot be delegated to the individual property owners' associations. Services include general security, maintenance of streets and public green areas, pavements, gardens and trees, street lighting, storm drains, pest control, pruning, road signage, and other services requested by owners. Service costs are determined by the Entity’s annual budget and distributed among all the properties in the housing development according to their designated floor areas in the General Plans and the Entity’s statutes.

Since 2009, the Entidad Urbanística de Conservación Parques de Sotogrande has billed the property owners from each of the member owner associations directly. Until 2008 owners were billed by their respective owner associations. As also occurred in previous years, the Entity is responsible for the budget execution with regard to the costs of shared general services.

At 31 December 2015, Entidad Urbanistica de Conservación Parques de Sotogrande does not form part of a decision-making unit pursuant to legislation governing the preparation of annual accounts with other companies domiciled in Spain.

(2) Basis of Presentation

(a) True and fair view

The accompanying annual accounts have been prepared on the basis of the accounting records of Entidad Urbanistica de Conservación Parques de Sotogrande. The annual accounts for 2015 have been prepared in accordance with prevailing legislation and the Spanish General Chart of Accounts to give a true and fair view of the equity and financial position at 31 December 2015 and results of operations, changes in equity, and cash flows for the year then ended.


Notes to the Abbreviated Annual Accounts

31 December 2015

(Continued)

(b) Comparative information

The abbreviated balance sheet, abbreviated income statement, abbreviated statement of cash flows and the notes thereto for 2015 include comparative figures for the previous year, which formed part of the abbreviated annual accounts for 2014. As permitted by the Spanish Accounting and Auditing Institute resolution of 29 January 2016 on disclosures in notes to financial statements of the average payment periods to suppliers in commercial transactions, note 18 does not include comparative information with regard to this new requirement.

(c) Functional and presentation currency

The figures disclosed in the abbreviated annual accounts are expressed in Euros, the Entity’s functional and presentation currency.

(d) Critical issues regarding the valuation and estimation of relevant uncertainties and judgements used when applying accounting principles

Relevant accounting estimates and judgements and other estimates and assumptions have to be made when applying the Entity’s accounting principles to prepare the annual accounts. A summary of the items requiring a greater degree of judgement or which are more complex, or where the assumptions and estimates made are significant to the preparation of the annual accounts, is as follows:

(i) Relevant accounting estimates and assumptions

Valuation allowances for bad debts require a high degree of judgement by management and a review of individual balances based on customers’ credit ratings, current market trends and historical analysis of bad debts at an aggregated level.

(ii) Changes in accounting estimates

Although estimates are calculated by Entity management based on the best information available at 31 December 2015, future events may require changes to these estimates in subsequent years. Any effect on the annual accounts of adjustments to be made in subsequent years would be recognised prospectively.

(3) Distribution of Profit

The distribution of profit for the year ended 31 December 2014, approved by the General Assembly on 13 August 2015, consisted of transferring the amount to prior years' profit and loss.

The Governing Board will propose to the General Assembly that the profit for the year be transferred to prior years' profit and loss.



(Continued)

(4) Significant Accounting Policies

(a) Intangible assets

Intangible assets are measured at cost of acquisition or production, using the same criteria as for determining the cost of production of inventories. Intangible assets are carried at cost, less any accumulated amortisation and impairment.

(i) Computer software

Computer software acquired and produced by the Entity, including website costs, is recognised when it meets the conditions for consideration as development costs. Expenditure on developing a website to promote and advertise the Entity's own products or services is recognised as an expense when incurred. Computer software maintenance costs are charged as expenses when incurred.

(ii) Subsequent costs

Subsequent costs incurred on intangible assets are recognised in profit and loss, unless they increase the expected future economic benefits attributable to the intangible asset.

(iii) Useful life and amortisation rates

The Entity assesses whether the useful life of each intangible asset acquired is finite or indefinite. An intangible asset is regarded by the Entity as having an indefinite useful life when there is no foreseeable limit to the period over which the asset will generate net cash inflows.

Intangible assets with finite useful lives are amortised by allocating the depreciable amount of an asset on a systematic basis over its useful life, by applying the following criteria:

Amortisation

method

Estimatedyears of

useful life Computer software Straight-line 3

The Entity considers that the residual value of the assets is zero unless:

- There is a commitment by a third party to purchase the asset at the end of its useful life.

- There is an active market for the intangible asset and:

- Residual value can be determined by reference to that market; and

- It is probable that such a market will exist at the end of the asset's useful life.

The Entity reviews the residual value, useful life and amortisation method for intangible assets at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.



(Continued)

(b) Property, plant and equipment

(i) Initial recognition

Property, plant and equipment are measured at cost of acquisition or production, using the same criteria as for determining the cost of production of inventories.

Capitalised production costs are recognised under self-constructed assets in the income statement. Non-trading income obtained during the trial and start-up period is recognised as a reduction in the costs incurred. Property, plant and equipment are carried at cost less any accumulated depreciation and impairment.

Non-current investments in property held by the Entity under operating leases are classified as property, plant and equipment. Assets are depreciated over the shorter of the lease term and their useful life.

(ii) Depreciation

Property, plant and equipment are depreciated by allocating the depreciable amount of the asset on a systematic basis over its useful life. The depreciable amount is the cost of an asset, less its residual value. The Entity determines the depreciation charge separately for each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and with a useful life that differs from the remainder of the asset.

Property, plant and equipment are depreciated using the following criteria:

Depreciation

method

Estimatedyears of

useful life Buildings Straight-line 10 Technical installations and machinery Straight-line 8 Other installations, equipment and furniture Straight-line 7-10 Other property, plant and equipment Straight-line 6 Information technology equipment Straight-line 4

The Entity reviews residual values, useful lives and depreciation methods at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.

(iii) Subsequent costs

Subsequent to initial recognition of the asset, only the costs incurred which increase capacity or productivity or which lengthen the useful life of the asset are capitalised. The carrying amount of parts that are replaced is derecognised. Costs of day-to-day servicing are recognised in profit and loss as incurred.



(Continued)

(iv) Impairment

The Entity measures and determines impairment to be recognised or reversed based on the criteria in section (c) Impairment of non-financial assets subject to amortisation or depreciation.

(c) Impairment of non-financial assets subject to amortisation or depreciation

The Entity evaluates whether there are indications of possible impairment losses on non-financial assets subject to amortisation or depreciation to verify whether the carrying amount of these assets exceeds the recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use.

Impairment losses are recognised in the income statement.

(d) Leases

(i) Lessee accounting

Leases in which, upon inception, the Entity assumes substantially all the risks and rewards incidental to ownership are classified as finance leases, otherwise they are classified as operating leases.

- Finance leases

At the commencement of the lease term, the Entity recognises finance leases as assets and liabilities at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Initial direct costs are added to the asset’s carrying amount. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Interest is expensed using the effective interest method.

Contingent rents are recognised as an expense when it is probable that they will be incurred.

The accounting policies applied to the assets used by the Entity by virtue of finance lease contracts are the same as those set out in section (b). However, if there is no reasonable certainty that the Entity will obtain ownership by the end of the lease term, the assets are fully depreciated over the shorter of the lease term and their useful lives.

- Operating leases

Lease payments under an operating lease, net of incentives received, are recognised as an expense on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern of the lease’s benefit.

Contingent rents are recognised as an expense when it is probable that they will be incurred.



(Continued)

(e) Financial instruments

(i) Classification and separation of financial instruments

Financial instruments are classified on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the economic substance of the contractual arrangement and the definitions of a financial asset, a financial liability and an equity instrument.

The Entity classifies financial instruments into different categories based on the nature of the instruments and the Entity’s intentions on initial recognition.

(ii) Loans and receivables

Loans and receivables comprise trade and non-trade receivables with fixed or determinable payments that are not quoted in an active market other than those classified in other financial asset categories. These assets are initially recognised at fair value, including transaction costs, and are subsequently measured at amortised cost using the effective interest method.

Nevertheless, financial assets which have no established interest rate, which mature or are expected to be received in the short term, and for which the effect of discounting is immaterial, are measured at their nominal amount.

(iii) Derecognition of financial assets

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire or have been transferred and the Entity has transferred substantially all the risks and rewards of ownership.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received, net of transaction costs, including any new asset obtained less any new liability assumed and any cumulative gain or loss deferred in recognised income and expense, is recorded in profit or loss.

(iv) Impairment of financial assets

A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and the event or events have an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The Entity recognises impairment of loans and receivables and debt instruments when estimated future cash flows are reduced or delayed due to debtor insolvency.

For equity instruments, objective evidence of impairment exists when the carrying amount of an asset is uncollectible due to a significant or prolonged decline in its fair value.



(Continued)

(v) Financial liabilities

Financial liabilities, including trade and other payables, that are not classified as held for trading or as financial liabilities at fair value through profit or loss are initially recognised at fair value less any transaction costs directly attributable to the issue of the financial liability. After initial recognition, liabilities classified under this category are measured at amortised cost using the effective interest method.

Nevertheless, financial liabilities which have no established interest rate, which mature or are expected to be settled in the short term, and for which the effect of discounting is immaterial, are measured at their nominal amount.

(vi) Derecognition and modifications of financial liabilities

A financial liability, or part of a financial liability, is derecognised when the Entity either discharges the liability by paying the creditor, or is legally released from primary responsibility for the liability either by process of law or by the creditor.

(f) Inventories

Inventories are initially measured at cost of purchase or production.

The purchase price comprises the amount invoiced by the seller, after deduction of any discounts, rebates or other similar items, such as interest incorporated into the nominal amount, plus any additional costs incurred to bring the goods to a saleable condition and other costs directly attributable to the acquisition. The cost of purchase or production of the Entity’s inventories do not include borrowing costs, as they are available for sale or use in less than one year.

Inventories are measured at weighted average cost.

When the cost of inventories exceeds net realisable value, materials are written down to net realisable value. These impairment allowances are recognised as an expense in the abbreviated income statement.

(g) Cash and cash equivalents

Cash and cash equivalents include cash on hand and demand deposits in financial institutions. They also include other short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. An investment normally qualifies as a cash equivalent when it has a maturity of less than three months from the date of acquisition.

(h) Revenue from the sale of goods and rendering of services

Revenue from the sale of goods or services is measured at the fair value of the consideration received or receivable. Volume rebates, prompt payment and any other discounts, as well as the interest added to the nominal amount of the consideration, are recognised as a reduction in the consideration.



(Continued)

(i) Income tax

Current tax assets or liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantially enacted at the reporting date.

Current and deferred tax are recognised as income or an expense and included in profit or loss for the year, except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different year, directly in equity, or from a business combination.

Pursuant to section 1 of article 7 of the Revised Spanish Income Tax Law, approved by Royal Legislative Decree 4/2004 of 5 March 2004, Entidad Urbanística de Conservación Parques de Sotogrande, as a not-for-profit organisation, is subject to income tax under the tax regime for partially exempt entities regulated by chapter XV of title VII of the aforementioned legal text.

The application of the above-mentioned special regime means that, as established by article 121 of the Revised Spanish Income Tax Law, any income deriving from activities that constitute the entity's statutory activity or specific purpose will be exempt from income tax, as well as income deriving from profit-making transfers or purchases when this is obtained in the practice of entity's statutory activity or specific purpose and income obtained from onerous transfer of assets used in the performance of the statutory activity or specific purpose, when the amount obtained is used for new investments related to the statutory activity or specific purpose of the entity. EUC only performs activities that are exempt from Value Added Tax, in accordance with article 20.One.12th of the Value Added Tax Law 37/1992 of 28 December 1992.

(j) Classification of assets and liabilities as current and non-current

The Entity classifies assets and liabilities in the balance sheet as current and non-current. Current assets and liabilities are determined as follows:

- Assets are classified as current when they are expected to be realised or are intended for sale or consumption in the Entity’s normal operating cycle, they are held primarily for the purpose of trading, they are expected to be realised within twelve months after the reporting date or are cash or a cash equivalent, unless the assets may not be exchanged or used to settle a liability for at least twelve months after the reporting date.

- Liabilities are classified as current when they are expected to be settled in the Entity’s normal operating cycle, they are held primarily for the purpose of trading, they are due to be settled within twelve months after the reporting date or the Entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

- Financial liabilities are classified as current when they are due to be settled within 12 months after the reporting date, even if the original term was for a period longer than 12 months, and an agreement to refinance or to reschedule payments on a long-term basis is completed after the reporting date and before the annual accounts are authorised for issue.

(k) Environmental issues

The Entity takes measures to prevent, reduce or repair the damage caused to the environment by its activities.



(Continued)

Expenses derived from environmental activities are recognised as other operating expenses in the period in which they are incurred.

Property, plant and equipment acquired for long-term use by the Entity to minimise the environmental impact of its activity and protect and improve the environment, including the reduction and elimination of future pollution from the Entity’s activities, are recognised as assets applying the measurement, presentation and disclosure criteria described in section (b) property, plant and equipment.

(5) Intangible Assets

Details of intangible assets and movement are as follows: Euros

2015 Computer software Total

Cost at 1 January 2015 2,552 2,552 Additions 2,377 2,377 Cost at 31 December 2015 4,929 4,929 Accumulated amortisation at 1 January 2015 (2,552) (2,552) Amortisation (784) (784) Accumulated amortisation at 31 December 2015 (3,336) (3,336) Carrying amount at 31 December 2015 1,593 1,593 Euros

2014 Computer software Total

Cost at 1 January 2014 2,552 2,552 Cost at 31 December 2014 2,552 2,552 Accumulated amortisation at 1 January 2014 (2,552) (2,552) Accumulated amortisation at 31 December 2014 (2,552) (2,552) Carrying amount at 31 December 2014 - -

(a) General

The addition for the year reflects a software licence.



(Continued)

(b) Fully amortised assets

The cost of fully amortised intangible assets in use at 31 December is as follows:

Euros 2015 2014

Computer software 2,552 2,552

(6) Property, Plant and Equipment

Details of property, plant and equipment and movement are as follows: Euros

2015 Buildings

Technical installations

and machinery

Other installations, equipment

and furniture

Other property, plant and

equipment Total Cost at 1 January 2015 25,512 32,487 49,159 500,741 607,899 Additions - 17,595 8,652 3,362 29,609 Disposals - - (599) (7,906) (8,505) Cost at 31 December 2015 25,512 50,082 57,212 496,197 629,003

Accumulated depreciation at 1 January 2015 (15,237) (20,838) (40,458) (285,763) (362,296)

Depreciation (2,551) (5,658) (3,188) (60,328) (71,725) Disposals - - 269 7,906 8,175

Accumulated depreciation at 31 December 2015 (17,788) (26,496) (43,377) (338,185) (425,846)

Carrying amount at 31 December 2015 7,724 23,586 13,835 158,012 203,157



(Continued)

Euros

2014 Buildings

Technical installations

and machinery

Other installations, equipment

and furniture

Other property, plant and

equipment Total Cost at 1 January 2014 25,512 32,487 45,874 308,936 412,809 Additions - - 3,969 191,805 195,774 Disposals - - (684) - (684) Cost at 31 December 2014 25,512 32,487 49,159 500,741 607,899

Accumulated depreciation at 1 January 2014 (12,686) (18,654) (37,806) (232,211) (301,357)

Depreciation (2,551) (2,184) (3,336) (53,552) (61,623) Disposals - - 684 - 684

Accumulated depreciation at 31 December 2014 (15,237) (20,838) (40,458) (285,763) (362,296)

Carrying amount at 31 December 2014 10,275 11,649 8,701 214,978 245,603

(a) General

Additions in 2015 mainly reflect the investment in technical installations with the acquisition of a security and video surveillance system under finance lease (see note 6).

(b) Fully depreciated assets

Details of the cost of fully depreciated property, plant and equipment in use at 31 December are as follows:

Euros 2015 2014 Technical installations and machinery 14,286 14,286 Other installations, equipment and furniture 32,885 25,814 Other property, plant and equipment 251,821 150,068 298,992 190,168



(Continued)

(7) Finance Leases – Lessee

The Entity has leased the following types of assets under finance leases: Euros

Motor

vehicles Technical

installations Total Initially recognised at: Present value of minimum lease payments 216,128 16,700 232,828 Accumulated depreciation and impairment losses (62,461) (3,340) (65,801) Carrying amount at 31 December 2015 153,667 13,360 167,027 Initially recognised at: Present value of minimum lease payments 216,128 - 216,128 Accumulated depreciation and impairment losses (34,531) - (34,531) Carrying amount at 31 December 2014 181,597 - 181,597

Future minimum lease payments are reconciled with their present value as follows: Euros 2015 2014 Future minimum payments 156,163 185,594 Unaccrued finance costs (9,528) (13,847) Present value 146,63 171,747

Details of minimum payments and the present value of finance lease liabilities, by maturity date, are as follows:

Euros 2015 2014

Minimum payments Present value

Minimum payments Present value

Less than one year 52,739 45,311 47,162 41,067 One to five years 103,424 101,324 138,432 130,680 156,163 146,635 185,594 171,747 Less current portion (52,739) (45,311) (47,162) (41,067) Total non-current 103,424 101,324 138,432 130,680



(Continued)

(8) Operating Leases – Lessee

The Entity’s head office is located in the Mar y Sol building in Sotogrande, in the municipality of San Roque (Cadiz). These premises are rented under a ten-year operating lease, renewable on expiry, which was signed in November 2008.

However, at the end of each year, the renewal of the lease is optional for the lessee and compulsory for the lessor. During any year of the lease term, the lessee may duly inform the lessor in writing of its intention not to renew the lease with 30 days' prior notice.

Operating lease payments have been recognised as an expense for the year as follows:

Euros 2015 2014 Lease payments 32,995 34,114

Future minimum payments under non-cancellable operating leases are as follows:

Euros 2015 2014 Less than one year 30,000 30,000

(9) Risk Management Policy

(a) Financial risk factors

(i) Credit risk

Valuation allowances for bad debts, the review of individual balances based on customers’ credit ratings, market trends and the historical analysis of bad debts at an aggregated level all require a high degree of judgement by management.

(ii) Liquidity risk

The Entity applies a prudent policy to cover its liquidity risks based on having sufficient cash and marketable securities.

(10) Financial Assets by Category

(a) Classification of financial assets by category

All financial assets are classified as loans and receivables for measurement purposes and are measured at cost, which is representative of their fair value.



(Continued)

(i) Net losses and gains by category of financial asset

Net losses and gains by category of financial asset are as follows: Euros

2015 Loans and receivables Total

Finance income at amortised cost 5,857 5,857 Impairment losses (161,420) (161,420) Impairment reversals 41,334 41,334

Net losses in profit and loss (114,229) (114,229)

Total (114,229) (114,229)

Euros

2014 Loans and receivables Total

Finance income at amortised cost 12,203 12,203 Impairment losses (154,628) (154,628) Impairment reversals 38,365 38,365

Net losses in profit and loss (104,060) (104,060)

Total (104,060) (104,060)



(Continued)

(11) Investments and Trade Receivables

(a) Trade and other receivables

Details of trade and other receivables are as follows: Euros 2015 2014 Current Current Unrelated parties Association fees 1,345,723 1,260,341 Other receivables 58,898 56,001

Taxation authorities, income tax

(note 19) 195 810 Impairment (875,809) (755,723) Total 529,007 561,429



(Continued)

(b) Impairment

An analysis of the changes in allowance accounts related to impairment of financial assets measured at amortised cost due to credit risk is as follows:

Euros 2015

Association

fees Total Current Balance at 1 January 2015 (755,723) (755,723) Charges (161,420) (161,420) Reversals 41,334 41,334 Balance at 31 December 2015 (875,809) (875,809) Euros 2014

Association

fees Total Current Balance at 1 January 2014 (639,460) (639,460) Charges (154,628) (154,628) Reversals 38,365 38,365 Balance at 31 December 2014 (755,723) (755,723)

(12) Inventories

Details of inventories are as follows: Euros 2015 2014 Production and distribution business Goods for resale (fuel) 5,569 3,437 5,569 3,437



(Continued)

(13) Cash and Cash Equivalents

Details of cash and cash equivalents are as follows: Euros 2015 2014

Cash in hand and at banks 62,128 70,293

Cash and cash equivalents reflect only cash at 31 December 2015 and 2014.

(14) Equity

Details of equity and movement during the year are shown in the statement of changes in equity.

(15) Other Provisions

Movement in other provisions is as follows: Euros

Provisions for other

commercial transactions

Provision for liabilities Total

At 1 January 2015 429 50,000 50,429 Charges - 80,000 80,000 At 31 December 2015 429 130,000 130,429

(a) Provisions for taxes

At 31 December 2015 and 2014 provisions for taxes include Euros 429 estimated to cover liabilities, where applicable, that may result from the treatment permitted by fiscal legislation.

(b) Provision for other liabilities

At 31 December 2015 the provision for other liabilities includes the following items: Amount payable to the security manager in respect of agreed termination benefits of Euros 80,000. The Entity classified Euros 30,000 payable in 2016 as current, and the remaining amount payable in subsequent years as non-current. Euros 50,000 committed by the Entity by virtue of the collaboration agreement signed with the San Roque town council on 23 April 2013 for breakwater construction work. The construction work was completed at the end of the year, and therefore payment is expected in the short term.



(Continued)

(16) Financial Liabilities by Category

(a) Classification of financial liabilities by category

All financial liabilities are classified as debts and payables for measurement purposes and are measured at nominal amount, which is representative of their fair value.

(i) Net losses and gains by financial liability category

Net losses and gains by financial liability category are as follows: Euros

2015 Debts and payables Total

Finance costs at amortised cost 6,017 6,017 Net gains in profit and loss 6,017 6,017

Total 6,017 6,017 Euros

2014 Debts and payables Total

Finance costs at amortised cost 6,213 6,213 Net gains in profit and loss 6,213 6,213 Total 6,213 6,213

(17) Payables and Trade Payables

(a) Payables

Details of payables are as follows: Euros 2015 2014 Non-current Current Non-current Current Unrelated parties Finance lease payables 101,324 45,311 130,680 41,067



(Continued)

(b) Trade and other payables

Details of trade and other payables are as follows: Euros 2015 2014 Current Current Unrelated parties Suppliers 262,560 418,819 Payables 50,568 47,275 Personnel 12,787 68 Public entities, other (note 19) 91,798 92,272 Total 417,713 558,434

Suppliers mainly include the Entity's balance payable to the company that provides security services to the housing development, the company that provides road maintenance, and other operating services.

(c) Classification by maturity

The classification of financial liabilities by maturity is shown in Appendix I.



(Continued)

(18) Average Payment Period for Suppliers. “Reporting Requirement”, Third Additional Provision of Law 15/2010 of 5 July 2010

Details of the average payment period for suppliers are as follows: Days Average supplier payment period 74

(19) Taxation

Details of balances with public entities are as follows: Euros 2015 2014 Current Current Assets Withholdings 195 810 195 810 Liabilities Social Security 30,471 29,387 Withholdings 61,327 62,885 91,798 92,272

In accordance with current legislation, taxes cannot be considered definitive until they have been inspected and agreed by the taxation authorities or before the inspection period of four years has elapsed. At 31 December 2015 the Entity has open to inspection by the taxation authorities all main applicable taxes since 1 January 2012, except income tax, open to inspection since 2011.

Due to different possible interpretations of prevailing tax legislation, additional tax liabilities could arise in the event of inspection. In any event, the Entity's management does not consider that any such liabilities that could arise would have a significant effect on the annual accounts.

(a) Income tax

A reconciliation of net income and expenses for the year with the taxable income (tax loss) is detailed in Appendix II.

The relationship between the tax expense/(tax income) and accounting profit/(loss) for the year is shown in Appendix III.



(Continued)

The Entity has not recognised the tax effect of unused tax loss carryforwards as deferred tax assets, the amounts of which are as follows:

Euros Year 2015 2014 Final year 2013 24,800 24,800 2031 2014 14,307 16,920 2032 39,107 41,720

(20) Environmental Information

At 31 December 2015 and 2014 the Entity has no significant assets for protecting and improving the environment nor has it incurred any expenses of an environmental nature during the year.

At 31 December 2015 and 2014, the General Assembly considered that there were no significant contingencies concerning the environment and, accordingly, no provision has been made in this regard.

(21) Related Party Balances and Transactions

(a) Related party balances

Total remuneration received by the Entity’s manager during 2015 amounts to Euros 99,859 (Euros 89,726 in 2014). Total remuneration received by the Entity’s former manager during 2014 amounted to Euros 12,599 in respect of wages and salaries and Euros 19,360 corresponding to the partial retirement agreement.

The Entity’s manager has not received any loans or advances and the Entity has not extended any guarantees on behalf of the manager during the years ended 31 December 2015 and 2014. The Entity has not contracted any commitments with respect to life insurance or supplementary pension plans.

(22) Income and Expenses

(a) Revenues

Details of revenues by category of activity are as follows:

Euros Domestic 2015 2014

Members’ fees 4,246,907 4,226,487 Other 2,643 9,126

4,249,550 4,235,613



(Continued)

(b) Personnel expenses

Details of personnel expenses are as follows: Euros 2015 2014

Personnel expenses Salaries and wages 988,182 905,977 Social Security payable by the Entity 246,719 260,886 Other employee benefits expenses 11,403 13,837 1,246,304 1,180,700

(c) Other operating expenses

Details of other operating expenses during the twelve-month periods ended 31 December 2015 and 2014 are as follows:

Euros 2015 2014 Security 1,365,338 1,335,284 Road maintenance 368,126 620,600 Green area maintenance 26,144 32,540 Gardens 238,342 227,283 Collection of garden waste 387,019 285,150 Pest control 41,547 41,026 Street lighting 140,898 124,546 Advisory 114,327 90,960 Office expenses 79,131 77,815 Overheads 64,176 61,415 Changes in provision for impairment of receivables (note 11 b) 120,086 116,263 2,945,134 3,012,882



(Continued)

(23) Employee Information

The average headcount of the Entity in 2015 and 2014, distributed by category, is as follows.

Number 2015 2014

Administration 7 8 Security 1 1 Garden maintenance 13 12 Road maintenance 3 3 Green area maintenance 1 1 Cleaning 1 1 26 26

At 2015 and 2014 year ends the distribution by gender of Entity personnel is as follows: Number 2015 2014 Female Male Female Male Administration 3 4 4 4 Security - 1 - 1 Garden maintenance - 13 - 12 Road maintenance - 3 - 3 Green area maintenance - 1 - 1 Cleaning 1 - 1 - 4 22 5 21

(24) Audit Fees

The auditors of the abbreviated annual accounts of the Entity, and other individuals and companies related to the auditors as defined by Audit Law 19/1988 of 12 July 1988, have invoiced the Entity the following net fees for professional services during 2015 and 2014:

Euros 2015 2014

Audit services 9,175 9,175

The amounts detailed in the above table include the total fees for services rendered in 2015 and 2014, irrespective of the date of invoice.



(Continued)

Furthermore, other entities affiliated with KPMG International have invoiced the Entity the following fees and expenses for professional services during the years ended 31 December 2015 and 2014:

Euros 2015 2014

Tax advisory services 3,630 3,630



(Continued)

(25) Budget Implementation

(*) In accordance with the 2015 budget approved at the General Assembly on 13 August 2014, the annual depreciation cost for property, plant and equipment corresponding to the street sweeper is charged to road maintenance. (**)In accordance with the 2015 budget approved at the General Assembly on 13 August 2014, charges for association fees are recognised as finance income, whereas they are booked as other operating income in the income statement.

Operating income Actual Budget Absolute variation

Relative variation

Income from the Entity’s own activity 4,249,550 4,258,157 (8,607) -0,2%

Finance income (**) 28,369 10,000 18,369 184%

Total income 4,277,918 4,268,157 9,761 0.2%

Difference Difference

Operating expenses Actual Budget Absolute Relative

Administration personnel expenses1 (464,880) (482,302) 17,422 3.6%

Security 2 (1,494,431) (1,405,480) (88,951) -6.3%

Collection of garden waste (387,018) (385,836) (1,182) -0.3%

Road maintenance (*)3 (542,909) (672,256) 129,347 19.2%

Green area maintenance (80,127) (77,159) (2,968) -3.8%

Garden maintenance (674,773) (680,952) 6,179 0.9%

Pest control (41,547) (41,399) (147) -0.4%

Street lighting 4 (140,896) (135,000) (5,896) -4.4%

Office expenses5 (90,017) (101,468) 11,452 11.3%

Audit and advisory6 (114,327) (79,410) (34,917) -44.0%

Overheads (64,175) (60,894) (3,281) -5.4%

Amortisation and depreciation (*) (49,091) (45,000) (4,091) -9%

Total operating expenses (4,144,190) (4,167,157) 22,967 0.6%

Changes in provision for impairment of receivables7 (120,086) (100,000) (20,086) -20.1%

Total activity expenses (4,264,276) (4,267,157) 2,881 0.1%

Interest expense and similar charges (6,017) (1,000) (5,017) -501.7%

Prior years’ losses - - - -

Total expenses (4,270,293) (4,268,157) (2,136) -0.1%

Surplus for the year 7,625 - 7,625 100.0%



(Continued)

(a) Main budget deviations

The main budget deviations in 2014 have been as follows:

(1) Administration personnel expenses: Administration personnel expenses are 3.6% down (Euros 17,422) on the approved budget. This cost-cut is because of the voluntary resignation of a member of the administration department on 31 July 2015.

(2) Security: Security expenses are 6.3% higher (Euros 82,165) because of a provision made for personnel adjustments.

(3) Road maintenance: Road maintenance expenses are 19.620% lower (Euros 82,165) because investments in this respect were down on budget.

(4) Street lighting: Street lighting expenses are 4.4% up (Euros 5,896) on the approved budget. This excess is due to repairs and maintenance work and improvements to street lighting.

(5) Office expenses: These expenses are 11.3% (Euros 11,452) below the approved budget. This deviation is mainly because of cuts in office supplies and postage and telephone costs.

(6) Advisory: Advisory fees are 44% (Euros -34,917) up on budget mainly because of fees for legal advisory services required in legal claims.

(7) Changes in provision for impairment of receivables:

In 2015 the Entity reversed Euros 41,334 from the provision made in 2014 and recognised a provision of Euros 161,420 for aged balances in 2015, resulting in a net expense in 2015 of Euros 120,086.



(Continued)

Appendix I 1 of 2


Classification of Financial Liabilities by Maturity For the years ended

31 December 2015 and 2014 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

Euros 2015

2016 2017 2018 2019 2020 Less current

portion Total non-

current

Payables Finance lease payables 45,311 41,652 43,301 13,693 2,678 (45,311) 101,324 Trade and other payables Suppliers 262,650 - - - - (262,650) - Other payables 50,568 - - - - (50,568) - Personnel 12,787 - - - - (12,787) - Total financial liabilities 371,316 41,652 43,301 13,693 2,678 (371,316) 101,324

This appendix forms an integral part of note 17 to the abbreviated annual accounts, in conjunction with which it should be read.

Appendix I 2 of 2


Classification of Financial Liabilities by Maturity for the years ended

31 December 2015 and 2014 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

Euros 2014

2015 2016 2017 2018 2019 Less current

portion Total non-

current

Payables Finance lease payables 41,067 41,753 38,462 39,983 10,482 (41,067) 130,680 Trade and other payables Suppliers 418,819 - - - - (418,819) - Other payables 47,275 - - - - (47,275) - Personnel 68 - - - - (68) - Total financial liabilities 507,229 41,753 38,462 39,983 10,482 (507,229) 130,680


Appendix II 1 of 2


Reconciliation of net income and expenses for the year with the taxable income (tax loss) for the year ended 31 December 2015


Euros Income statement

2015 Increases Decreases Net Total

Income and expenses for the period 7,625 7,625 Profit before income tax 7,625 7,625 Permanent differences Non-deductible expenses 5,040 - 5,040 5,040 Regime for partially exempt entities 4,300,641 4,310,693 (10,052) (10,052) Temporary differences with unrecognised tax effect: Offset of tax loss carryforwards - 2,613 (2,613) (2,613) Taxable income/(Tax loss)


Appendix II 2 of 2


Reconciliation of net income and expenses for the year with the taxable income (tax loss) for the year ended 31 December 2014


Euros Income statement

2014 Increases Decreases Net Total

Income and expenses for the period 7,484 7,484 Profit before income tax 7,484 7,484 Permanent differences Non-deductible expenses 4,930 - 4,930 4,930 Regime for partially exempt entities 4,288,546 4,297,760 (9,214) (9,214) Temporary differences: Offset of tax loss carryforwards - 3,200 (3,200) (3,200) Taxable income/(Tax loss)


Appendix III 1 of 2


Relationship between the tax expense/(tax income) and accounting profit/(loss) for the year ended 31 December 2015


Euros

Profit and

loss Total

Income and expenses before income tax for the period 7,625 7,625 Tax at 25% (1,906) (1,906) Non-deductible expenses Donations (1,260) (1,260) Effect of differences in tax rates 2,513 2,513 Previously unrecognised tax credits applied 653 653 Income tax expense/(income) Continuing operations


Appendix III 2 of 2


Relationship between the tax expense and accounting profit for the year ended 31 December 2014


Euros

Profit and

loss Total

Income and expenses for the period 7,484 7,484 Tax at 25% (1,871) (1,871) Non-deductible expenses Donations (1,232) (1,232) Permanent differences due to regime for partially exempt entities 2,303 2,303

Previously unrecognised tax credits applied 800 800 Income tax expense/(income) Continuing operations



On 22 March 2016 the Governing Board of Entidad Urbanística de Conservación Parques de Sotogrande authorised the issue of the abbreviated annual accounts for the year from 1 January 2015 to 31 December 2015. The abbreviated annual accounts comprise the documents that precede this certification.

Signed:

Mr. Cristóbal Espín Mr. Julian Triay Mr. Claus Rohleder

Mr. Antonio Sancho Mr. Juan José Gortázar Mr. José María Ulrich

Mr. Gerard O´Malley

entidad urbanistica de conservaciÓn parques de...

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