2013 Registration document and annual financial report - page 137

Registration Document 2013
135
Corporate Governance
3
Risk Management
Liabilities are recognized and provided for in accordance with
the applicable accounting standards (see note 1, page 189 to the
consolidated financial statements).
Provisions for claims and litigation are recorded on receipt of a
summons, and are determined based on an assessment of the
related risk carried out jointly with the Group’s external advisers.
Details of these provisions are presented in note 33, page 257 to
the consolidated financial statements.
Financial risks
In the course of its business, the Group is exposed to various levels
of financial risk, particularly in the areas of liquidity, counterparties,
currencies and interest rates. Policies are in place to manage
these risks with the three objectives of security, liquidity and
cost-effectiveness. They are deployed centrally by the Corporate
Treasury, Finance and Credit Management Department, which
reports directly to the Chief Financial Officer, who is a member of
the Executive Committee.
Liquidity risk
Centralized cash management enables the Group to offset cash
needs and cash surpluses internally, before raising funds in the
financial markets.
Financing policies are designed to ensure that Accor has immediate,
timely access, at the lowest possible cost, to all the liquid resources
it needs to meet short-term cash requirements, finance its strategy
and fund expansion.
Short-term financing needs and liquidity resources are secured at
all times by unused long-term committed credit lines contracted
with leading financial institutions (see note 29.2. to the consolidated
financial statements, page 247). At December 31, 2013, Accor
had unused long-term committed lines in a total amount of
€1,500 million expiring in May 2016.
In addition, Accor has €1,796 million in cash investments with
an average maturity of 5 months, which are fully available at any
time (see note 29.5.3. to the consolidated financial statements,
page 250). These investments consist mainly of short-termdeposits
with leading financial institutions.
At December 31, 2013, Accor had a total of €3,296 million in
available liquidity resources.
The Group also has access to the financial markets and, depending
on its needs, can secure diversified medium and long-term financial
resources (bank borrowings, bonds, private placements, etc.) to
finance its development.
Moreover, Accor has €402 million in bonds maturing in 2014, which
are fully covered by cash and cash equivalents (see note 29.2. to
the consolidated financial statements, page 247).
Accor is not subject to any restrictions on the use of its funds that
could significantly impact its operations.
In light of the above, the Group is not exposed to any liquidity risk.
The maturities of the Group’s financial assets and liabilities were as follows at December 31, 2013:
Within one year
Between
one and three years
Beyond
three years
Total
Bonds
402
0
1,542
1,944
Bank and other borrowings
35
45
74
154
Finance lease liabilities
1
13
35
49
Derivatives
0
0
Bank overdrafts and other
76
9
85
Financial liabilities
514
58
1,660
2,232
Marketable securities
(1,796)
(1,796)
Other current financial assets
(205)
(205)
Current financial assets
(2,001)
(2,001)
NET DEBT
(1,487)
58
1,660
231
None of Accor’s loan agreements include any rating triggers.
However, certain agreements include acceleration clauses that
may be triggered in the event of a change of control,
i.e.
if a third
party acquires more than 50% of the Company’s voting rights.
Out of overall gross debt amounting to €2,103 million, a total of
€1,944 million worth is subject to such clauses. In the case of
bonds, the acceleration clause can be triggered only if the change
of control leads to Accor’s credit rating being downgraded to
non-investment grade.
For the syndicated line of credit negotiated in May 2011, the
acceleration clause can be triggered if Accor does not comply with
the leverage ratio covenant (consolidated net debt to consolidated
EBITDA).
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