2013 Registration document and annual financial report - page 194

Registration Document 2013
Financial Statemements
Consolidated Financial Statements And Notes
Capital management
The Group’s main capital management objective is to maintain a
satisfactory credit rating and robust capital ratios in order to facilitate
business operations and maximize shareholder value.
Its capital structure is managed and adjusted to keep pace with
changes in economic conditions, by adjusting dividends, returning
capital to shareholders or issuing new shares. Capital management
objectives, policies and procedures were unchanged in 2013.
The main indicator used for capital management purposes is the
gearing or debt-to-equity ratio (corresponding to net debt divided
by equity: see Note “Key Management Ratios” and Note 30).
Group policy consists of keeping this ratio below 100%. For the
purpose of calculating the ratio, net debt is defined as all short and
long-termborrowings, including lease liabilities, derivative instruments
with negative fair values and bank overdrafts less cash and cash
equivalents, derivative instruments with positive fair values and
disposal proceeds receivable in the short-term. Long-term loans,
made primarily to hotel owners and to certain companies in which
Accor holds a minority interest with the aim of developing long-term
investments, are treated as cash flows from investing activities and
not financing activities. Consequently, they are excluded from the
net debt calculation.
Equity includes the Group’s share of reserves and retained earnings,
and unrealized gains and losses recognized directly in equity, but
excludes minority interests.
Moreover, the Group has set a target at the end of December 2013
of maintaining the Adjusted funds from ordinary activities/Adjusted
net debt ratio at more than 25%.
The main accounting methods applied are as follows:
A. Consolidation methods
The companies over which the Group exercises exclusive de jure
or de facto control, directly or indirectly, are fully consolidated.
Companies controlled and operated jointly by Accor and a limited
number of partners under a contractual agreement are proportionally
Companies over which the Group exercises significant influence
are accounted for by the equity method. Significant influence is
considered as being exercised when the Group owns between
20% and 50% of the voting rights.
In accordance with IAS 27 “Consolidated and Separate Financial
Statements”, in assessing whether control exists only potential
voting rights that are currently exercisable or convertible are taken
into account. No account is taken of potential voting rights that
cannot be exercised or converted until a future date or until the
occurrence of a future event.
B. Business combinations and loss
of control – changes in scope of
Applicable since January 1, 2010, IFRS 3 (revised) “Business
Combinations” and IAS 27 (revised) “Consolidated and Separate
Financial Statements” have led the Group to alter its accounting
treatment of business combinations and transactions with
non-controlling interests carried out on or after this date, as follows:
B.1. Business combinations
Business combinations are accounted for applying the acquisition
the acquisition cost is measured at the acquisition date at the fair
value of the consideration transferred, including all contingent
consideration. Subsequent changes in contingent consideration
are accounted for either through profit or loss or through other
comprehensive income;
identifiable assets and liabilities acquired are measured at fair
value. Fair value measurements must be completed within one
year or as soon as the necessary information to identify and value
the assets and liabilities has been obtained.They are performed
in the currency of the acquiree. In subsequent years, these fair
value adjustments follow the same accounting treatment as the
items to which they relate;
goodwill is the difference between the consideration transferred
and the fair value of the identifiable assets and liabilities assumed
at the acquisition date and is recognized as an asset in the
statement of financial position (see Note 1.C. Goodwill).
Costs related to business combinations are recognized directly
as expenses.
When a business combination is achieved in stages, the previously
held equity interest is remeasured at fair value at the acquisition
date through profit or loss. The attributable other comprehensive
income, if any, is fully reclassified in operating income.
B.2. Loss of control with residual equity interest
The loss of control while retaining a residual equity interest may
be analysed as the disposal of a controlling interest followed by
the acquisition of a non-controlling interest. This process involves,
as of the date when control is lost:
the recognition of a gain or loss on disposal, comprising:
a gain or loss resulting from the percentage ownership
interest sold,
a gain or loss resulting from the remeasurement at fair value
of the ownership interest retained in the entity;
the other comprehensive income items are reclassified in the
profit or loss resulting from the ownership interest disposed.
B.3. Purchases or disposals of non-controlling
Transactions with non-controlling interests in fully consolidated
companies that do not result in a loss of control, are accounted for
as equity transactions, with no effect on profit or loss or on other
comprehensive income.
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