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Report on Nine Months Ended September 30, 2018 for NH Hotel Group, S.A

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Report on Nine Months Ended September 30, 2018 for NH Hotel Group, S.A Report on nine months ended September 30, 2018 for NH Hotel Group, S.A. Table of Contents Summary consolidated financial statements ............................................................................1 Information regarding forward-looking statements ................................................................8 Presentation of financial and other information ......................................................................8 Other data ..................................................................................................................................10 Recent developments ................................................................................................................13 Risk factors ................................................................................................................................19 Management’s discussion and analysis of financial condition and results of operations ..66 Changes to accounting policies and new accounting standards ...........................................88 Description of certain financing arrangements ......................................................................97 Certain definitions ..................................................................................................................106 This report is the report required under the indenture dated as of September 29, 2016 governing the 3.750% Senior Secured Notes due 2023 (the “2023 Notes”). Please see “Certain definitions” for other defined terms used herein. Summary consolidated financial statements The following summary consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows as of and for the years ended December 31, 2015, 2016 and 2017, except for the footnotes included below each table and except as otherwise indicated, have been derived from the audited consolidated financial statements for such periods of the Group, which were audited by Deloitte, S.L. and have been prepared in accordance with IFRS, as of and for the nine months ended September 30, 2017 and 2018 as derived from the unaudited condensed interim consolidated financial statements of the Group for the same periods. This summary financial information is not necessarily representative of our results of operations for any future period or our financial condition at any future date. This “Summary financial and other information” should be read in conjunction with, and is qualified in its entirety by reference to, our financial statements and the accompanying notes included elsewhere in this report, and should also be read together with the information set forth in “Presentation of financial and other information”, “Use of non-IFRS financial measures”, “Other data”, “Business”, “Selected historical consolidated financial information” and “Management’s discussion and analysis of financial condition and results of operations”. The results of operations for prior years are not necessarily indicative of the results to be expected for any future period. For more information on the basis of preparation of this financial information, see “—Presentation of financial and other information” and the notes to the financial statements included elsewhere in this report. Summary consolidated statement of profit or loss and other comprehensive income For the For the year ended nine months ended December 31, September 30, 2015 2016 2017 2017 2018 (unaudited) (unaudited) (€ in millions) Net turnover................................................................ 1,376.6 1,447.9 1,546.1 1,150.6 1,183.8 Other operating income .............................................. 1.2 7.7 11.1 9.5 4.3 Net gain (loss) on disposal of non-current assets ....... (0.8) 41.5 30.1 9.8 2.1 Procurements .............................................................. (67.6) (66.9) (75.7) (56.0) (54.4) Personnel expenses ..................................................... (398.1) (415.9) (427.1) (316.3) (311.8) Depreciation allowance .............................................. (106.2) (114.2) (123.1) (83.8) (85.6) Net losses from asset impairment ............................... 30.9 (2.7) 9.0 1.9 3.3 Variation in the provision for onerous agreements..... 19.0 4.2 4.2 3.1 1.9 Other operating expenses ........................................... (787.1) (795.2) (819.2) (608.4) (625.4) Profit (loss) from entities valued through the equity method .................................................................... (0.7) 0.1 (0.3) - (0.3) Financial income ........................................................ 5.2 3.3 3.0 1.9 2.7 Change in fair value of financial instruments ............. 4.7 0.4 — - - Financial expenses ...................................................... (73.6) (72.3) (76.7) (55.5) (27.1) Net exchange rate differences .................................... 2.1 (3.6) (6.4) (5.7) 2.5 Gain (loss) on disposal of financial investments ........ 4.8 9.9 (1.9) - (1.3) Pre-tax profit (loss) from continuing operations ... 10.3 44.4 73.0 51.1 94.8 Corporate tax .............................................................. (13.1) (7.9) (33.5) (24.1) (38.7) Profit (loss) from continuing operations ................. (2.8) 36.4 39.5 27.0 56.1 Profit (loss) for the year from discontinued operations net of tax ............................................... 6.1 (2.3) (0.3) 0.1 54.5 Profit (loss) for the financial year ........................... 3.3 34.1 39.2 27.1 110.6 Non-controlling interests ............................................ 2.4 3.4 3.7 2.7 3.9 Profit (loss) attributable to shareholders of the Issuer ..................................................................... 0.9 30.8 35.5 24.5 106.7 1 Summary consolidated statement of financial position As of As of December 31, September 30, 2015 2016 2017 2017 2018 (unaudited) (unaudited) (€ in millions) Assets Tangible fixed assets .................................... 1,724.2 1,701.4 1,583.2 1,655.8 1,612.2 Intangible assets ........................................... 238.1 244.2 262.8 265.9 258.3 Non-current investments .............................. 177.4 101.7 85.3 95.0 84.5 Other non-current assets ............................... 182.1 171.3 154.4 157.3 152.5 Total non-current assets ............................ 2,321.8 2,218.6 2,085.7 2,174.0 2,107.5 Non-current assets classified as held for 44.3 43.4 sale ........................................................... 45.0 46.7 109.2 Inventories .................................................... 9.5 9.9 9.8 9.9 9.9 Receivables .................................................. 242.4 200.7 175.4 205.1 182.0 Cash and cash equivalents ............................ 77.7 136.7 80.2 144.7 273.3 Other current assets ...................................... 14.5 14.6 11.4 11.2 12.7 Total current assets .................................... 389.1 408.6 386.0 415.2 521.3 Total assets .................................................. 2,710.9 2,627.2 2,471.7 2,589.2 2,628.8 Shareholders’ equity and liabilities Shareholders’ equity .................................. 1,126.1 1,155.9 1,152 1,150.6 1,484.7 Debentures and other marketable securities . 471.9 763.6 387.7 735.5 382.9 Debts with credit institutions ........................ 336.2 72.7 71.2 72.1 74.3 Non-current provisions ................................. 48.7 52.9 50.4 50.3 50.5 Deferred tax liabilities .................................. 196.7 175.0 167.4 166.5 178.7 Other non-current liabilities ......................... 101.5 35.5 51.5 52.2 45.6 Total non-current liabilities ....................... 1,155.0 1,099.7 728.2 1,076.6 732.0 Liabilities associated with non-current 2.4 2.7 assets classified as held for sale................ — 2.7 2.4 Debentures and other marketable securities . 3.6 2.2 246.2 0.8 4.0 Debts with credit institutions ........................ 75.3 23.2 11.7 14.4 5.1 Trade creditors and other accounts payable . 251.1 229.8 223.0 226.0 259.5 Current provisions ........................................ 5.3 11.5 9.0 9.2 7.4 Other current liabilities ................................. 94.5 102.2 99.2 109.2 133.4 Total current liabilities .............................. 429.8 371.6 591.5 362.0 412.1 Total shareholders’ equity and liabilities . 2,710.9 2,627.2 2,471.7 2,589.2 2,628.8 2 Summary consolidated statement of cash flows For the year ended As of December 31, September 30, 2015 2016 2017 2017 2018 (unaudited) (€ in millions) Total net cash flow from operating activities .......................... 90.3 176.6 229.6 173.7 179.2 Total net cash flow from investment activities ........................ (216.9) (23.7) (42.3) (57.4) 90.2 Financial income ................................................................. 4.8 2.0 1.3 0.8 0.2 Investments .......................................................................... (254.1) (145.0) (104.0) (91.0) (85.1) Group companies, joint ventures and associated (20.3) (1.0) companies .................................................................... (0.3) (5.6) (22.3) Tangible and intangible assets and real-estate (70.7) (83.5) investments .................................................................. (176.1) (139.4) (81.8) Non-current assets classified as held for sale .................. — — — - - Non-current financial investments ................................... (77.7) — — - (0.7) Disposals ............................................................................. 32.4 119.3 60.4 32.8 175.1 Total net
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