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Senorio de Aloha – FINANCIAL REPORT AGM 2023

INTRODUCTION

At last year’s AGM, the following observations about the community’s financial situation at that time were key. The community relied on credit grants from various suppliers to maintain solvency and be in a position to pay daily expenses. For years, the quotas had not been increased and income was insufficient to cover ordinary expenses of any of the recent years, this notwithstanding that more than 10% of owners were not paying their quotas. The Covid-19 pandemic was also a factor that contributed to this situation. Significant additional financing was also required to carry out construction and repair works that were urgently needed to comply with legal safety requirements for pools, as well as to repair terraces, garages, storage rooms, etc. that were in poor condition.

To address these problems, owners agreed at a General Meeting on a 15% increase in quotas starting in the third quarter of 2022 and to contribute with an extraordinary special assessment of €500.000 to initiate the process of major building repair projects needed.

What has happened with finances since then?

The community’s short-term cash flow has stabilized thanks to the quota increase and extraordinary special assessment income. Adenjo reports that currently approximately 90% of owners comply with prompt payment of quotas and that the collection rate of the special assessment has been approximately 85%. Adenjo is working hard to collect overdue quotas, whether recent or long-standing. We settled debts of old creditors (COFER) during the year, but the situation regarding the €138.000 painting debt is disadvantageous as they have a court judgment relating to the debt. Additionally, we have also been subject to a judicial 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 approximately €20.000 in legal fees place us facing a serious problem. These matters are being negotiated, but they will certainly result in significant payments on our part at some point this year and will require an injection of funds from owners, as we do not have cash available to meet these payments.

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Owners are aware that significant progress has been made with respect to the building repair works mentioned earlier. At the end of December 2022, we had spent €240.000 from 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 outcome of the case against constructor FCC, where we are claiming damages in relation to construction defects in the insulation of the garages.

THE NUMBERS

Attached are summary tables of Income and Expenses and the statement of financial position at 31 December 2022. These are based on figures included in documents sent by Adenjo with some adjustments that are explained in the tables. The overall situation is that, although the position has improved with the quota increase and special assessment, we now have the problem of old creditors demanding payment. The community is adequately financed for Phase I of the construction works, but there are additional works that would ideally be carried 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 parts of the documents.

Gerry Burke Vice President Treasurer 14 March 2023