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Senorio de Aloha – Financial Report AGM 2023 Introduction

At last year’s AGM the following observations on the Owners’ Association’s financial situation at that time were key.

The Owners’ Association depended on credit lines from various suppliers to maintain solvency and be in a position to pay daily expenses.

For years the owner fees had not been increased and income was insufficient to cover ordinary expenses for any of the recent years, this taking into account that more than 10% of owners were not paying their fees.

The Covid-19 pandemic was also a factor that contributed to this situation.

Additional significant financing was also required to carry out construction and repair works that were urgently needed to meet legal safety requirements for swimming pools, as well as to repair terraces, garages, storage units, etc. that were in poor condition.

To face these problems, owners agreed at the General Meeting to a 15% increase in fees from the third quarter of 2022 and also to contribute an extraordinary special assessment of €500,000 to initiate the process of major building repair projects that were needed.

What has happened to the finances since then?

The Owners’ Association’s short-term cash flow has stabilized thanks to the increase in fees and the income from the extraordinary special assessment.

Adenjo reports that currently approximately 90% of owners are making timely fee payments and that the collection rate for the special assessment has been approximately 85%.

Adenjo is working diligently to collect outstanding fees, whether recent or old.

We have settled debts owed to former creditors (COFER) during the year, but regarding the painting debt of €138,000 we are at a disadvantage as they have a court judgment relating to the debt.

In addition, we have also been subject to a court order from Empresa Multimalaga for approximately €50,000, a debt that was unknown to us and was not included in our books.

These two items plus another debt of some €20,000 in legal fees put us in a serious situation.

These matters are being negotiated, but will undoubtedly result in significant payments on our part at some point this year and will require an injection of funds from owners, since we do not have the cash available to meet these payments.

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Owners are aware that important progress has been made with regard to the building repair works already mentioned previously.

By the end of December 2022, we had spent €240,000 of the special assessment and since then approximately another €80,000 has been committed.

The remaining money collected from the special assessment is being held pending the result of the case against construction company FCC, where we are claiming damages in relation to construction defects in the garage insulation.

THE NUMBERS

Attached are summary tables of Income and Expenses and the statement of financial position as of 31 December 2022.

These are based on figures included in the documents submitted by Adenjo with some adjustments that are explained in the tables.

The general situation is that, although the position has improved with the increase in fees and the special assessment, we now have the problem of former creditors claiming payment.

The Owners’ Association is adequately financed for Phase I of the construction works, but there are additional works that it would be ideal to carry out as soon as possible, but which also require additional financing.

This will be dealt with in more detail at the General Meeting along with the other documents.

Gerry Burke Vice President Accounts 14 March 2023