34 25. OTHER CREDITORS Set out below is an analysis of this item as at 31^st December 2004 and 2003 (thousand euros): 2004 2003 TAXES AND SOCIAL SECURITY CONTRIBUTIONS - Deferred tax 7,193.98 3,566.46 - Corporation tax 8,162.73 17,656.36 - VAT 435.98 4,122.53 - Personal income from capital 2,370.27 4,063.52 - Tax on income from capital 642.71 61.96 - Social Security contributions 5,439.08 3,758.56 - Other taxes 1,916.71 2,045.86 OTHER CREDITORS -Creditors for investments 7,298.21 8,977.62 - Purchase of rights of beneficial use (see note 7) 1,495.05 1,495.05 -Shareholders Panorama Hotel, S.A. 904.42 2,721.24 - Sundry creditors 34,377.21 26,677.66 70,236.35 75,146.82 26. INCOME a) SALES Set out below is an analysis of the turnover of the Group according to activities as at 31^st December 2004 and 2003 (thousand euros): 2004 2003 Room accommodation 519,468.41 528,396.51 Catering 242,683.74 243,049.80 Meeting rooms and other 36,862.50 47,526.21 Property 97,970.00 55,792.67 Golf and sport clubs 13,799.00 6,573.76 Rents and other services 39,224.19 40,225.10 950,007.84 921,564.05 Set out below is an analysis of net turnover for different geographical markets for 2004: Thousand euros Mexico 32,434.14 Mercosur (*) 15,360.60 Germany 181,748.89 Austria, Hungary and Swtzerland 36,235.84 Netherlands and Belgium 229,819.31 Spain - Hotels 356,439.30 Spain - Property 97,970.00 950,007.84 (*) Includes Argentina, Chile, Brasil and Uruguay CONSOLIDATED FINANCIAL STATEMENTS 2004

35 b) PROFIT ON DISPOSALS OF FIXED ASSETS   As at 31^st December 2003, this line recorded the capital gain made on the sale of the Hotel NH Pedralbes and the Hotel NH Sant Angelo, totalling 6.84 million euros. As at 31^st December 2004, this line essentially records the capital gain made on the sale of the Hotel NH Villacarlos, totalling 1.41 million euros. c) PROFITS ON THE SALE OF CONSOLIDATED COMPANIES In 2003 this caption recorded the capital gain on the sale of the shares in Hotel Princesa Sofía, S.L. d) EXTRAORDINARY INCOME In 2003 this caption essentially records 19.93 million euros coming from the capital gain made on the operation with Caja Madrid Group (see note 3). As at 31^st December 2004, this caption records fundamentally, 12.77 million euros for the partial reversal of the provision set up in as a result of the favourable trend in 2004, where the ordinary contribution improved 8.85%, and for the favourable outlook for 2005 (see notes 19 and 27.d) 27. EXPENSES a) PERSONNEL EXPENSES Set out below is an analysis of staff costs (thousand euros): 2004 2003 Wages, salaries and similar 225,136.12 232,583.61 Social Security contributions 52,626.02 55,988.42 Other social charge 9,222.99 14,477.23 286,985.13 303,049.26 The average number of employees in the Controlling Company and the companies that have been fully consolidated in 2004 and 2003, divided into categories, is as follows: 2004 2003 General management of the Group 7 7 Managers and Heads of Department 535 540 Technicians 548 556 Sales staff 455 464 Administrative staff 661 675 Other staff 11,765 11,876 Average number of employees 13,971 14,118 The item "Staff costs" includes the fixed and variable remuneration, linked to the performance of the Consolidated Group, of the management team of NH Hoteles, S.A., which represent, respectively, 1.09% (1.00% in 2003) of total wages and salaries. The above percentage includes the fixed and variable remuneration paid to Directors of the Company which represent, in turn, 0.36 percent of the aforementioned percentage (0.38 percent in 2003). b) OTHER OPERATING CHARGES The fees for the statutory audit performed by two auditing firms of the different companies in the NH Hoteles Group during 2004 amounted  to  1.13  million  euros,  and  are  recorded  under  the  caption  "Other  operating  charges"  (1.29  million  euros  as  at  31^st December 2003). CONSOLIDATED FINANCIAL STATEMENTS 2004

36 Furthermore, the fees for other professional services provided to the NH Hoteles Group by the different auditors of the company amounted,  in  2004,  to  0.70  million  euros  (0.42  million  euros  as  at  31^st  December  2003),  arising  fundamentally  from  the  advisory services for coming into line with the International Financial Reporting Standards (IFRS) that must be complied with as from 2005). c) LOSS ON DISPOSAL OF FIXED ASSETS As at 31^st December 2003 this caption includes 1.77 million euros for capital losses on the sale of the hotels Lord Charles (South Africa), Hotel Champery (Switzerland), a piece of land at the Hotel Stephanie (Belgium) and 2.01 million euros for disposals of assets of the “Marina La Torre Golf Course”. In 2004 this caption essentially records 2.87 million euros coming from the capital loss between the book value and market value of the Hotel NH Hilton Guadalajara in Mexico. d) INTEREST EXPENSE As  at  31^st  December  2004,  the  NH  Group  has  a  number  of  interest-rate  collar  and  swap  contracts  that  originally  hedged  the syndicated loan granted in 1999 to NH The Netherlands, B.V. and which was cancelled in 2004. The effect of these contracts on the operating account amounted to 0.71 million euros, recorded as a lower interest expense. e) EXTRAORDINARY EXPENSES AND LOSSES In 2003, this section recorded 39.35 million euros as the effect in the accompanying Consolidated Profit and Loss Account set up to cover the exposure to the economic situation in Germany and Austria (see notes 19 and 26). As at 31^st December 2004, this section records, fundamentally, the severance payments made to staff by the Group, which totalled 12.76 million euros (6.3 million euros in 2003). 28. TAX NOTE NH Hoteles, S.A. is the Controlling Company of a group that has been consolidated for tax purposes, made up of the following companies: NH Logroño, S.A. Lenguados Vivos, S.L. NH Sarria, S.A. Grufir, S.L. NH University, S.L. NH Santander, S.A. NH Málaga, S.A. Hotelera Onubense, S.A. NH Hotel Rallye, S.A. NH Ciutat de Reus, S.A. Hotel Albar Ciudad de Albacete, S.L. Hotel Palacio de Castilla, S.A. NH Pamplona, S.A. Gran Círculo de Madrid, S.A. Retail Invest, S.A. Casino Club de Golf, S.L. Cofir, S.L. Sotogrande, S.A. Inversores y Gestores Asociados, S.A. NH Hoteles, S.A. NH Aranzazu Donosti, S.A. Iberinterbrokers, S.L. Hoteles Express, S.L. Corporation Tax is calculated on the basis of the financial or book profit obtained in accordance with general accepted accounting principles, which is not necessarily the same as the figure for taxable income used as a basis for assessing the tax. CONSOLIDATED FINANCIAL STATEMENTS 2004

37 Set out below is the reconciliation between the reported and taxable profit for Corporation Tax for the Tax Consolidated Group headed by NH Hoteles, S.A. (in thousand euros): 2004 REPORTED PROFIT/(LOSS) FOR THE YEAR (after Tax and before outside shareholders) 64,323.98 Corporation tax 6,512.70 70,836.68 Permanent differences (10,829.44) Timing differences 25,024.57 Consolidation adjustments (16,985.39) PRIOR TAXABLE INCOME 68,046.42 Tax loss carryforwards offset (50.46) BASIS OF ASSESSMENT 67,995.96 As at 31^st December 2004, the Tax Consolidated Group had no tax loss carryforwards. The only tax loss carryforwards currently in effect relate to the companies Retail Invest, S.A., Casino Club de Golf, S.L. and Hotelera Onubense, S.A. They may only be offset against profits made by said companies. They are as follows (thousand euros): Year of origin Amount Limit for offsetting 1993 218.73 2008 1994 188.34 2009 1995 3,402.75 2010 1996 4,132.34 2011 1997 11,235.82 2012 1998 4,648.44 2013 1999 326.17 2014 2000 88.60 2015 The years that the Tax Consolidated Group has opened to inspection are: Tax Periods outstanding Corporate Income Tax 2000 to 2004 VAT 2001 to 2004 Personal income tax 2001 to 2004 For the years open to inspection there may be contingent liabilities that cannot be objectively quantified. In the opinion of Group management, they are not significant. This year, the Tax Consolidated Group has applied deductions amounting to 8,178.75 thousand euros which were essentially for the deduction for investing in export business. It has tax incentives yet to be used totalling 22.035,54 thousand euros under the same heading. They must be used by 2011. When calculating Corporation Tax, no amount has been deducted for investing in measures aimed at reducing the environmental impact. CONSOLIDATED FINANCIAL STATEMENTS 2004

38 Specifically, set out below are the deductions that the Tax Consolidated Group has yet to apply (thousand euros): Year of origin Item Amount 2001 Investment in export business 22,035.53 2002 Investment in export business 216.16 2003 Investment in training expenses 22.42 2003 Investment in export expenses 75.47 2004 Investment in training expenses 25.50 2004 Investment in export expenses 44.67 For  all  the  other  consolidated  companies  that  have  not  been  included  in  the  consolidated  tax  system  mentioned  above,  the Corporation Tax expense has been considered in accordance with the law currently in force in the relevant countries. It is as follows for each company (thousand euros): Company Amount NH Marín, S.A. 447.86 NH Ciutat de Mataró, S.A. 132.15 NH Numancia, S.A. 252.38 NH Lagasca, S.A. 263.36 NH Las Palmas, S.A. 231.08 Group NH Participaties, N.V. 8,034.76 Group NH Central Europe GmbH & KG (2,365.98) Group Latinoamericana de Gestión Hotelera 1,176.55 Group NH Italia 3,567.93 Other 133.21 11,873.30 In the same way, the Tax Consolidated Group made use, in the past, of the "Deferral for reinvesting extraordinary income". Set out below are the main features of this reinvestment): Year Rent Qualifying Amount included in the Basis of Assessment Amount Final year Of origin Deferral Prior years Year 2004 Outstanding Deferral 1996 8,514.42 6,081.74 1,216.35 1,216.33 2005 1997 9,399.16 4,028.21 1,342.74 4,028.21 2007 1998 1,624.88 464.25 232.13 928.50 2008 1999 75,144.84 8,745.88 6,547.14 59,851.82 2009 2000 3,737.40 - 533.92 3,203.48 2010 2001 4,335.35 - - 4,335.35 2011 The reinvestment of all this income took the form of various different financial holdings, except for the one that appeared in 1999, which was reinvested in acquiring properties. CONSOLIDATED FINANCIAL STATEMENTS 2004