9MONTH RESULTS 2014
Meliá Doha Qatar meliahotelsinternational.com
9MONTH 2014 (Million Euros) sep-14 sep-13 REVENUES 1.155,7 1.058,6 9% EBITDAR 298,1 285,1 5% EBITDA 198,6 200,1-1% EBIT 124,7 156,4-20% TOTAL FINANCIAL PROFIT (LOSS) 70,1 107,6-35% EARNINGS BEFORE TAXES 49,8 33,4 49% RESULT FROM CONTINUING OPERATIONS 37,0 26,2 41% RESULTS FROM DISCONTINUING OPERATIONS -0,5-2,3-78% NET PROFIT 36,5 23,9 53% NET PROFIT ATTRIBUTABLE 34,9 22,4 56% EBITDA ex capital gains 183,9 153,4 20% Operational Ratios REVPAR 68,2 60,6 13% EBITDA MARGIN 17,2% 18,9% -172 bp EBITDA MARGIN (ex - capital gains) 16,1% 15,2% 96 bp Healthy RevPAR increase of 12.6% explained mostly by Average Room Rate. EBITDA excluding capital gains improved by 20%. Net Profit Attributable to Parent Company improved by +56% Business performance : healthy RevPAR growth The P&L further strengthened showing an EBITDA without capital gains from asset rotation activity that improved 20%, leading to an increase in margins of 96 bps, while Net Profit Attributable to Parent Company improved by +56% In the third quarter, RevPAR for resort hotels in Spain increased by 7.2%, fully explained by increases in prices thanks to the implementation of a Yield Management strategy as part of the company s Revenue Culture, allowing the Company to gradually recover operating margins. The successful opening of the ME Ibiza after its full renovation and rebranding was confirmed by an increase in RevPAR of 203%, with ARR increasing by 198%. With regards to city hotels in Spain, and especially cities with a mix of business and leisure travel have had a good performance, demonstrating once again Meliá s leadership and expertise in the leisure travel segment which is allowing city hotels to improve results via leisure travelers. Among the main key drivers to achieve these positive results are the consistently positive evolution of melia.com (+24%) and the contribution of Meliá loyalty program, with an increase of 18% over the previous year. Debt management: net debt decrease Net Debt decreased by 61 million Euros versus figures reported in December 2013, reaching 1.097 mn explained by the higher contribution of all business units, the cash inflows from asset disposals, the conversion of 18.5 million of Convertible Bond and the recovery of outstanding amounts with associates. Should be recalled a) the incorporation of 29 million debt held by the Company Colon Verona S.A., owner of the Gran Meliá Colon, after its consolidation the 1st of January 14 (in accordance with the IFRS 10); and b) the devaluation of the Bolívar which had an impact of 20 million. The Company maintains its commitment for 14 to deleverage the balance sheet, partially thanks to the asset rotation (by a minimum of 100-125), the improvement of the business performance and the possible conversion of the 200 Convertible Bond which matures in Dec 14. Development strategy: via low capital intensive formulas Along 2014 the Company has signed 17 new hotels. The last incorporations, the Meliá Campione (Lugano lake - Italy), the Meliá Doha (Qatar) and the Gran Meliá Bintan (Indonesia) and the last opening of Meliá Dunas Beach & Resort, (Cape Verde), all of them under management agreement, lead the Company to a total pipeline of 63 hotels (16.800 rooms). The Company is confident of achieving the goal of 25 new contracts in 2014, all them under low capital intensive formulas, with special emphasis on emerging markets. Positive outlook The positive trend of the bookings, up now, anticipate a final quarter for 2014, for Caribbean and Canarias, very positive, specially for Christmas and Year End. The strengthened of the USD will have a positive impact when translation into EUR the profit generated in dollar denominated areas, ie Latam and Caribbean. Given the positive outlook, guidance points towards a RevPAR increase for the year end of a double digit growth, more than two thirds explained by price. 3
INFORM ON OPERATIONS: EVOLUTION PER AREA In overall terms, RevPAR for owned and leased hotels increased by a healthy +12.6%, explained by a +8.8% increase in Average Room Rate (A.R.R.) and a +3.4% increase in Occupancy Rates. AMERICA Accumulated RevPAR for the first nine months rose by 19.7%, with 15% of that coming from improvements in the ARR. In the third quarter, demand in the Dominican Republic and Mexico comes from more price-sensitive travellers, to which Company strategy adapted to be more flexible on price to achieve better occupancy rates during the period. The positive trend in the two Paradisus Resorts in Playa del Carmen continues. Of note is the third quarter performance of the Paradisus La Perla, with a RevPAR increase of 36.3% mainly explained by occupancy. One of the main segments for this hotel is business groups which saw a notable increase in last minute bookings from the local market, unusual behaviour in this segment. On the other hand, the positive evolution of the Paradisus Cancún Hotel one year after its rebranding reflecting a +21% increase in RevPAR Another highlight is the Company strategy to drive sales through its direct channels which rose by 38% compared to last year in the Americas. On the evolution of the hotels under management also note the positive outlook of the Meliá Nassau Beach which is registering positive figures above expectations. Available rooms decreased by 14.5% mainly due to the disaffiliation of the Mexico Reforma (Mexico) in December 2013 and the transfer of the Meliá Puerto Vallarta and Meliá Cozumel to the Club Meliá business. ME EUROPE RevPAR in Premium Europe increased by 23.5%. This improvement in RevPAR comes as a result of the Company strategy to boost sales through online channels, especially melia.com The positive performance of ME London continues. Now in its second year of operations, in the third quarter of the year the hotel s ARR improved by 19.4% thanks to its improving positioning in the upscale segment of the London hotel scene, as well as the implementation of a sales strategy focused on maximising rates, taking full advantage of this TOP product with an excellent degree of recognition in London s hotel industry. September was a record month for ME London in terms of revenue, allowing constant improvement in market penetration via price. The hotel has recovered 10 points in RGI (RevPAR Penetration Index) when we compare with its competitive set. The evolution of ME Madrid continues its upward trend with a 20.2% improvement in RevPAR in the quarter explained by both price and occupancy. F&B continues to generate good results after the renovation. 4
As stated in a prior communication, at the end of the first quarter we announced the opening of the first two ME resorts in Europe. After the rebranding of both hotels, they have received a warm welcome from the market, proof of which is seen in the results for the quarter. Part of the success is based on a sales strategy focused on individual customers, where 90% of sales have been made through online channels with a very important role played by melia.com. Despite the bad publicity concerning Magaluf, the results of the rebranding of the ME Mallorca have been positive, demonstrating how a commitment to a superior quality product is able to attract an alternative type of customer with greater purchasing power, and resulting in an improvement of hotel RevPAR of 43.69%. The successful opening of the ME Ibiza after its full renovation was confirmed by an increase in RevPAR of 203%, with ARR increasing by 198%, making it one of the Company s resort hotels with the highest ARR (over 300 euros) in its firts year or operation with the ME brand. Available rooms increased by 59.9% mainly due to the incorporation of the ME Mallorca and ME Ibiza during the period. EMEA The positive evolution of business in the third quarter led to accumulated RevPAR growth of 4.9% up to September, 81% of which is due to price increases. Note that after some changes in the perimeter of the EMEA region in 2Q 2013, the comparable figures of EMEA are now covered by the same scope. Focusing on regions: In the UK the Company s strategy of focusing on direct sales through melia.com as well as other online channels is paying off, resulting in a significant improvement in RevPAR. Melia.com represents the 25% of the total hotels income in UK. Paris: Product improvements carried out in several hotels in Paris, as well as the strategy to enhance online sales channels, have generated an improvement in RevPAR of 9% so far this year, despite the impact of the increase in VAT which has negatively affected the whole hotel industry in Paris. Germany: After the openings of hotels such as the Innside Dusseldorf Hafen and the Innside Wolfsburg in June, as well as the celebration of importants fairs in Düsseldorf and other events as the Oktoberfest in München, has allowed the Company to maintain its positive growth (+5.2%, of which 4.9% is due to ARR and 0.3% due to occupancy), with a mix of business and leisure travellers. Austria: The positive contribution of the Meliá Vienna which during the first year of operation its achieving operating results above its feasibility plan. Italy: There has been some recovery in the third quarter after a difficult start to the year, especially at the Gran Meliá Rome, due its bias towards the leisure segment which used to stregth during the third quarter. The RevPAR for this quarter in the Gran Meliá Rome has increased +10.2%, due to the positioning strategy in mayor luxury networks as well as the important contribution of the direct channel. This year there have also been light renovations at the Meliá Milano in preparation for the hosting of Expo 2015 in the city. Also noteworthy is the inclusion of the Gran Meliá Rome in the luxury AMEX FHR (Fine Hotels & Resorts) programme. In Spain, as in the rest of Europe, there has been positive growth, of note being the Gran Meliá Don Pepe which achieved an average rate of over 400 euros in August with occupancy of over 90% thanks to a marketdiversification strategy to attract guests with high purchasing power from markets such as the Middle East and the UK, 5
as well as the introduction of new concepts such as the Möet Chandon Suite and the opening of two new concepts in F&B: TBone and Tahini. In Madrid and Barcelona, events as ESMO (European Society for Medical Oncology) in Madrid and Cardiology Congress in Barcelona during the third quarter helped achieve positive results, highlighting the Gran Meliá Fenix with a RevPAR growth of 30.9% in the third quarter. Highlight the performance of the Gran Meliá Colón, located in Seville, up to September, achieving RevPAR +14.9%, 76% which is due to price increases, allowing an important recovery at EBITDA level, thanks to the mix of leisure and business clients. The Gran Meliá Palacio de Isora continues to achieve strong results as it has done throughout the year, achieving an EBITDA of 10 million euros in the first nine months of the year, making it the largest Spanish hotel contributor to EBITDA. As part of the strategy to improve price, we can highlight: a) sales through melia.com accounting for 40% of total hotel sales and making it the best selling hotel on melia.com and b) the sales promotion of superior rooms, through the exclusive attribute the Red Level. Available rooms increased by 18.7%, mainly due to the incorporation during the period of the Innside Düsseldorf Hafen, the Meliá Vienna, the Meliá Barcelona Sky and the Innside Wolfsburg, together with the consolidation of the Gran Meliá Palacio de Isora and the Gran Meliá Colón. MEDITERRANEAN RevPAR in Spanish resorts increased by a healthy 13.7% due to the positive evolution of prices (+9.4%) and occupancy rates (+3.9%). During the third quarter, RevPAR grew by +7.2% which can be fully explained by price increases thanks to the implementation of a Yield Management strategy as part of the Company s Revenue Culture. We need to remember that the third quarter is the most important contributor of revenue in the Mediterranean division, as shown by the fact that 55% of the revenue generated by the region in 2013 came in the third quarter. By region: In the Canary Islands the upward trend see in the first 6 months of the year continues, even though it has still not reached double-digit growth. The comparable figures for September and the fourth quarter of last year were positively affected by the political and social instability in Egypt. In Mallorca, the area of Magaluf was badly affected by negative publicity, especially in the family and couples segments, as well as the fall in the number of Russian tourists due to the devaluation of the rouble and the situation in Ukraine. In spite of this, the Calvià Beach Project continues to progress as part of the commitment by Meliá to renovate the destination. Proof of which is the positive EBITDA performance of the project achieving and increase of more than 3.3 million euros versus last year. Ibiza has continued its positive growth throughout the quarter, as has the island of Menorca which once again achieved the excellent levels of previous years. The Spanish mainland coast has also enjoyed a very positive performance, especially the areas of Levante and Andalusia, and in particular the Meliá Atlántico Isla Canela with a RevPAR increase of +19% for the quarter. Regarding the hotels under management is noteworthy the opening of the Meliá Dunas Beach & Resorts hotel located in Cape Verde with 1.143 rooms. The number of available rooms (+8%) was affected by the change of management of the Wave House and the Sol Antillas Barbados. SPAIN Accumulated RevPAR to September saw an increase of 7.8%, due to a 3.9% increase in occupancy and a 3.7% increase in price. During the third quarter there was an improvement of RevPAR of 11.4%, explained by a 57% increase in price. 6
The change in trend observed since the beginning of the year is now confirmed, with recovery phase detected in recent months becoming increasingly firm. August in hotels with a mix of business and leisure travel was exceptional, especially in cities such as Seville and Alicante. In Seville, it is worth mentioning the new and popular Urban Pool concept developed at the Meliá Lebreros, demonstrating once again Meliá s leadership and expertise in the leisure travel segment which is allowing city hotels to improve their results via leisure travellers. Also of note is the positive evolution of sales through direct channels with an improvement of 14.9% in Spanish clientele for Meliá hotels up to the month of September. Sales through meliá.com for Spanish city hotels increased by 12.1% up to September. This improvement is reflected in all business segments (groups and individual, leisure and business). The only segment with no improvement is aircrews and layovers, which has mainly affected hotels near Madrid airport and the Madrid suburbs. Although there has been an increased number of passengers using the Adolfo Suarez Madrid Barajas airport, the increase has mainly been generated in the low cost airlines. In September some Spanish cities, in particular Madrid, benefited from events such as the World Basketball Championship and the ESMO (European Society for Medical Oncology) congress which generated improvements in prices and occupancy throughout the capital. Available rooms in Spain fell by 1.57% due to the disaffiliation of the Tryp Las Matas and the Tryp Diana, (both underperforming hotels which did not meet brand standards, rentals with negative contributions). This was partially compensated by the addition of the Tryp Estepona Valle Romano, under management agreement, to the Company portfolio in June 2014. Meliá Vienna Austria 7
HOTEL STATISTICS OWNED & LEASED (in Euros) % Available Occupancy RevPAR A.R.R. rooms AMERICA 2.014 73,2% 83,3 113,8 1.482,4 % o/ 2013 4,1% 19,7% 15,0% -14,5% 2.013 70,3% 69,6 98,9 1.733,9 EMEA 2.014 72,7% 91,3 125,6 2.202,9 % o/ 2013 0,7% 4,9% 4,1% 18,7% 2.013 72,2% 87,1 120,6 1.856,6 PREMIUM EUROPE 2.014 72,7% 155,4 213,9 152,3 % o/ 2013 12,9% 23,5% 9,4% 59,9% 2.013 64,4% 125,9 195,5 95,3 MEDITERRANEAN 2.014 73,4% 51,4 70,1 2.446,2 % o/ 2013 3,9% 13,7% 9,4% 8,0% 2.013 70,6% 45,3 64,1 2.265,7 SPAIN 2.014 65,6% 49,8 75,9 2.480,0 % o/ 2013 3,9% 7,8% 3,7% -1,6% 2.013 63,1% 46,2 73,2 2.519,4 TOTAL 2.014 71,0% 68,2 96,1 8.763,8 % o/ 2013 3,4% 12,6% 8,8% 3,5% 2.013 68,6% 60,6 88,3 8.470,9 HOTEL REVENUES SPLIT OWNED & LEASED (Million Euros) Room F&B Total Total EBITDA Revenues and Other Revenues Expenses (*) AMERICA 2.014 112,3 142,2 254,6* 184,8 69,7 % o/ 2013-6,9% -0,8% 2,4% -0,3% 10,2% 2.013 109,3 139,2 248,6* 185,3 63,2 EMEA 2.014 201,1 81,5 282,6 242,8 39,8 % o/ 2013 24,5% 65,3% 30,9% 28,2% 50,5% 2.013 165,4 50,5 215,9** 189,4 26,5 PREMIUM EUROPE 2.014 23,7 24,6 48,3 48,0 0,2 % o/ 2013 97,4% 54,4% 70,1% 66,7% 153,1% 2.013 13,6 14,8 28,4** 28,8-0,4 MEDITERRANEAN 2.014 125,9 69,4 195,2 168,3 26,9 % o/ 2013 22,7% 14,7% 14,1% 14,3% 12,6% 2.013 109,9 61,3 171,1** 147,2 23,9 SPAIN 2.014 123,4 51,5 174,9 177,2-2,3 % o/ 2013 6,1% 7,4% 5,6% 4,3% -45,9% 2.013 116,3 49,4 165,7 169,9-4,3 TOTAL 2.014 586,4 369,2 955,6 821,2 134,4 % o/ 2013 14,3% 16,6% 15,2% 13,9% 23,4% (*) These figures (2014/2013) do not include the Gran Meliá Puerto Rico (**) (2013) Figures have been adjusted by Gran Meliá Colon, Ayosa and S Argamassa companies 2.013 514,5 315,2 829,6 720,7 108,9 8
HOTEL BUSINESS OUTLOOK In the AMERICAS division, historically the demand in October and November is not as strong as in the rest of the year, though in December demand improves due to the Christmas holiday period. The markets for the Riviera Maya, Cancun and Punta Cana are 20% above booking levels compared to the same period last year, with some facilities such as The Reserve at Paradisus Palma Real already having closed sales. For 2015, the current outlook is very positive for the first quarter, with on-the-books reservations showing 15% growth over this year and strong source markets in the USA and Canada. The trend for European cities for the last quarter remains similar to that of the first nine months of the year. For 2015, the incorporation of the Meliá La Defense in Paris will help results. However, Germany will not be hosting the same number of trade fairs as it did in 2014 which will affect results in the region. As mentioned above, 2014 and beginning 2015 was used to carry out renovations at the Meliá Milano to host the Expo 2015 in the city. Meliá remains committed to improving its positioning in the strategically important Italian market, as shown by the recent signing of the Meliá Campioni (Lugano lake) and the incorporation of the ME Milano during the second quarter of 2015. With the exception of the Canary Islands, few hotels remain open in the Mediterranean region in the last quarter of the year after closure in October. However, it is worth noting that the month of October itself will see very positive results compared to last year. For the Canary Islands, it seems that the fourth quarter will continue with a slight improvement compared to last year. This improvement is due to increases mainly by price, taking into account that the figures for the final quarter of last year were affected positively by political and social instability in Egypt. Finally, we can confirm the consolidation of the recovery of the Spanish city hotel industry. For the fourth quarter on-the-books reservations show positive signs (+3 million euros) compared to last year. Moreover, we can see evidence of a clear improvement in the group business segment, something we haven t seen since the beginning of the recession. Right now we are in the process of negotiations with Key Accounts, perceiving a trend towards a slow recovery in prices. The Company maintains its expectation of a RevPAR improvement for the full year of a double digit, more than two thirds explained by prices. Gran Meliá Don Pepe - Möet Chandon Suite Marbella, Spain 9
MANAGEMENT MODEL IN MELIÁ HOTELS INTERNATIONAL Given the focus of the Company on the asset-light model and the growing importance of Meliá s exposure to management agreements, from Year End 2013, the Company changed its reporting method to include more detail on the profitability of the overall management model. The table below reflects the income generated by Meliá as a hotel manager, including: At the revenues level: the management fees from third parties but also from Melia s owned & leased hotels. Additionally, this item includes other revenues, mainly commissions and other services. At the expenses level: mainly includes the sales, marketing, and distribution expenses, etc. It is worth mentioning that the Management fees from third parties in the 9 months of 2014 reached 37 million euros, implying near 4.2 million euros decrease versus the same period of 2013 mainly due to the impact of the consolidation of Gran Melia Palacio de Isora and Gran Meliá Colón (from January 2014) together with lower management fees in Cuba, partially offset by the positive evolution of the Meliá Nassau Beach and the better performance of Brazil. Million Euros 3Q2014 Total Rev. 161.4 Fees Owned & Leased hotels 58.1 Management Fees Third Parties 37 Other Rev. 66.3 10 Meliá Paris La Defense France
OTHER HOTEL BUSINESS This item Other hotel revenues basically includes the contribution of casinos, golf and Sol Caribe Tours, tour operator based in Latin America. Compared to 2013, the improved performance is due to the major contribution of the airport VIP lounges at the París-Orly, Madrid and México airports, both of them managed by Meliá and a higher contribution of the casinos and the Sol Caribe Tours. REAL ESTATE During the third quarter there were no additional asset disposals, meaning that the total amount of capital gains generated during the year remains at 14.7 million Euros which compares with 46.7 million Euros last year including the asset disposals up to September 2013 together with 4 million Euros asset revaluations linked to one asset in Venezuela. The Company maintains its commitment for assets sales for a minimum of 100-125 million euros in 2014 devoted to decrease the net debt levels. CLUB MELIÁ In 2014 the focus of the Club Meliá is on strengthening sales, especially taking into consideration: a) the better global economic climate which could favor the purchase of this type of product finance driven; and b) the contribution of the Paradisus Resorts in Playa del Carmen (Mexico) which are progressively reaching its cruise speed, the better performance of the resorts in Dominican Republic and the contribution of Gran Meliá Palacio de Isora. Additionally, the Company has gone one step further to maximize the Club Meliá revenues with the implementation of a new sales strategy which has involved the management of two hotels, the Meliá Puerto Vallarta and the Meliá Cozumel, exclusively by the Club Meliá. In both hotels, the room inventory that actually is affected to the time share business is very high, making this two hotels a perfect target to convert the hotels 100% Club Meliá. Up to September 2014, total revenues in Club Meliá improved by 28,1 million euros versus the 9 months of 2013, showing a better performance in terms of: a) The contribution of the Meliá Puerto Vallarta and Meliá Cozumel that generated near 13.5 millon Euros in revenues, now included within the Club Meliá performance. b) The number of weeks sold, even after the closure of the Meliá México Reforma where the Company had a sales office and the slowdown of sales in Puerto Rico linked to the asset disposal process which penalize Club Meliá sales. On the positive side, highlighted the increase in sales in the Dominican Republic and Playa del Carmen. c) Increases in prices was mainly possible due to the mix of sales more biased towards a Premium Product, as well as the sale of biannual weeks in all sites and the impact of the up-grades activity. d) Focus on more solid sales, higher down payments, shorter financing terms that reduced the rescissions and cancellations. OVERHEADS DEPARTMENTS Recall that this item only includes the overheads in Meliá Hotels International. The evolution versus the same period last year lies in the consolidation last September 2013 of Idiso, Meliá s distribution platform, which has become a key driver for income generation in the Company. 11
INCOME STATEMENTS Within the framework of the International Financial Reporting Standards (IFRS 10), although the consolidation of Colon Verona (owner of Gran Meliá Colón), Ayosa (operator of Sol Trinidad-Jamaica and Sol Guadalupe) and S Argamassa Hotelera (ME Ibiza) took place on January 1st 2014, reporting standards requires the release of previous fiscal year comparable figures. For the purpose of improving comparability, certain non-material adjustments have been made to 2013 figures. Revenues Total revenues increased by 9.2%. Hotel revenues increased by 12.9% thanks to a +12.6% improvement in RevPAR, while Club Meliá also reported good figures with a +10.7% improvement. The contribution of the Real Estate division (-32.8 million Euros) up to September 2014 was impacted by lower capital gains from asset disposals. Excluding changes in the scope, total revenues would have gone up by 7,6% Operating Expenses Raw materials, Personnel expenses and Other operating expenses increased by 10.6%, 12.6% and 9.5% respectively, affected by the changes in the perimeter. On the same basis, the evolution of expenses would be the following: Raw materials +4.9%, Personnel expenses +2.9% and Other operating expenses +7.6%. Rental expenses grew by 16.9% (+14.4 million euros). The most relevant facts were: a) the accounting of the Equity Inmuebles leases as operating rentals (since December 2013 considered Financial Leases); b) the reduction of the existing onerous contracts provision; c) news rentals as the Meliá Viena, Innside Wolfsburg, Sol Aloha Puerto, Me Ibiza, among others and d) the better performance of the hotel business has affected the variable lease. EBITDA All the above mentioned allowed Meliá to register an EBITDA of 198.6 million Euros (-0.7%). When excluding the capital gains in both periods (2014 14.7 million Euros / 2013 46.6 million Euros), EBITDA would have increase by 20%. In 2013 below the EBITDA level also of note was the impact of the integration of the Company Idiso in the Meliá Hotels International consolidated group, transaction generated a negative consolidation difference of 20.6 million euros. At the Profit / (loss) from Associates and JV level, the better results of Adprotel, owner of the ME London, together with better figures in Altavista Hotelera (Meliá Barcelona Sky) allowed an improvement in this item. Also impacted the consolidation of Gran Meliá Palacio de Isora and Gran Meliá Colón. 12 Meliá Jinan China
(Million Euros) September 2014 September 2013 Revenues Split: Total HOTELS 1.154,2 1.021,2 Management Model 161,4 155,0 Hotel Business Owned & Leased 955,6 829,6 Other Hotel Business 37,2 36,5 Real Estate Revenues 28,9 61,9 Club Meliá Revenues 79,3 51,2 Overheads 66,6 51,5 Total Revenues Aggregated 1.329,0 1.185,8 Eliminations on consolidation -173,3-127,2 Total Consolidate Revenues 1155,7 1058,6 9,2% Raw Materials -145,5-131,5 Personnel expenses -331,9-294,7 Other operating expenses -380,3-347,2 Total Operating Expenses -857,6-773,4 10,9% EBITDAR 298,1 285,1 Rental expenses -99,5-85,1 EBITDA 198,6 200,1-0,7% Reestructuring -2,9 Depreciation and amortisation -73,9-61,4 Negative differences in consolidation 20,6 EBIT (OPERATING PROFIT) 124,7 156,4-20,3% Financial Expense -86,7-83,6 Other Financial Results 0,0-9,7 Exchange Rate Differences 12,1-6,2 Other Interest Expense 4,5-8,2 Total financial profit/(loss) -70,1-107,6 34,9% Profit / (loss) from Associates and JV -4,8-15,4 Profit/(loss) from ordinary activities 49,8 33,4 49,0% Extraordinary profit/(loss) 0,0 0,0 Profit before taxes and minorities 49,8 33,4 49,0% Taxes -12,7-7,2 Continuing operations 37,0 26,2 41,4% Discontinued Operations -0,5-2,3 Group net profit/(loss) 36,5 23,9 52,9% Minorities 1,6 1,4 Profit/(loss) of the parent Company 34,9 22,4 55,6% 13
FINANCIAL RESULTS AND DEBT FINANCIAL RESULT The Net Financial Result improved by 37.5 million euros versus the third quarter of 2013, due to the net effect of: a) Exchange differences has improved due to the appreciation of the USD against the euro during the last quarter. b) The increase in the interest from borrowings by 3.2 million euros due to the average higher gross debt over the third quarter 2013, partially offset by the financial spreads reductions. c) The reduction of Other financial expenses of 9.6 million euros which has been reclassified as Rentals following the agreement signed with the Company Equity Inmuebles SL. d) Lower Others Financial Incomes by 12.7 million Euros mainly due to: i. During the first nine months of 2013 the Company registered a financial expenses (12.7 million euros) due to the mark to market of the embedded derivative liked to the issue of the convertible notes. In the current year the Company will not see any impact in the P&L thanks to the decision made last December 2013 to irrevocably waive the Company s right to satisfy the conversion of the Notes in cash (cash settlement election) ii. Higher financial expenses (3.1 million Euros) due to the impact of hyperinflation in Venezuela. iii. Partially offset by higher financial incomes generated by the available cash. FINANCIAL DEBT (thousands euros) 9M 2014 9M 2013 Exchange differences 12.104 (6.187) Borrowings (86.748) (83.566) Interest Capital Markets (39.913) (30.128) Interest bank loans and others (46.835) (53.438) Other financial expenses 0 (9.679) Other financial incomes 4.529 (8.199) Change value of embedded derivatives 0 (12.696) Others financials items 4.529 4.497 Net Financial Income (70.115) (107.631) Total Net Debt decreased by 61 million Euros versus figures reported in December 2013, showing 65 million Euros decrease versus June 2014. Net debt levels reached 1.097 million Euros thanks to the better performance of the hotel business, the Sol Aloha disposal, the recovery of outstanding amounts with associates and the conversion of 18.5 million of Convertible Bond. As the Company released last quarter, should be recalled that 2014 figures have been negatively affected by: a) the incorporation of 29 million debt held by the Company Colon Verona S.A., owner of the Gran Meliá Colon (Seville), after its consolidation the 1st of January 14 (in accordance with the IFRS 10); and b) the devaluation of the Bolívar in Venezuela which had an impact of 20 million Euros. For 2014 the Company maintains its guidance to deleverage the balance sheet, partially thanks to asset rotation by a minimum of 100-125 million euros, the improvement of business performance and the possible conversion of the Convertible Bond which matures in December 2014. 14 Regarding the evolutions of the costs of debt, the forecast for the year end 2014 points below to 5%.
MELIÁ ON THE STOCK MARKET The maturity debt profile remains as following, excluding the credit facilities: Million uros MELIÁ STOCK The stock price decreased by -8,7% during the third quarter of 2014. The Ibex Medium Cap and the Ibex 35 decreased by -8,6% and -0.9% respectively. 1Q2014 2Q2014 3Q2014 9M2014 Average daily volume (thousands shares) 903,84 699,86 574,36 723,78 Meliá performance 0% -4% -9% -12% Ibex Med Cap performance 7% 2% -9% 0% Ibex 35 performance 4% 6% -1% 9% NOTE: Meliá s shares are listed on the IBEX Medium Cap and FTSE4Good Ibex index. 15