Registration Document 2013
Consolidated Financial Statements And Notes
N.2. Derivative financial Instruments
Derivative financial instruments such as interest rate and currency
swaps, caps and forward purchases of foreign currencies, are
used solely to hedge exposures to changes in interest rates and
They are measured at fair value. Changes in fair value are recognized
in profit, except for instruments qualified as cash flow hedges
(hedges of variable rate debt) for which changes in fair value are
recognized in equity.
The fair value of interest rate derivatives is equal to the present value
of the instrument’s future cash flows, discounted at the interest
rate for zero-coupon bonds.
The fair value of currency derivatives is determined based on the
forward exchange rate at the period-end.
N.3. Financial liabilities hedged by derivative
Financial liabilities hedged by derivative instruments qualify for hedge
accounting. The derivative instruments are classified as either fair
value hedges or cash flow hedges.
Financial liabilities hedged by fair value hedges are measured at fair
value, taking into account the effect of changes in interest rates.
Changes in fair value are recognized in profit and are offset by
changes in the fair value of the hedging instrument.
Financial liabilities hedged by cash flow hedges are measured at
amortized cost. Changes in the fair value of the hedging instrument
are accumulated in equity and are reclassified into profit in the same
period or periods during which the financial liability affects profit.
N.4. Bank borrowings
Interest-bearing drawdowns on lines of credit and bank overdrafts
are recognized for the amounts received, net of direct issue costs.
N.5. Convertible bonds
Convertible bonds are qualified as hybrid instruments comprising
a host contract, recognized in debt, and an embedded derivative,
recognized in equity.
The carrying amount of the host contract or debt component is
equal to the present value of future principal and interest payments,
discounted at the rate that would be applicable to ordinary bonds
issued at the same time as the convertible bonds, less the value
of the conversion option calculated at the date of issue.
The embedded derivative or equity component is recognized in
equity for an amount corresponding to the difference between
the nominal amount of the issue and the value attributed to the
Costs are allocated to both components based on the proportion
of the total nominal amount represented by each component. The
difference between interest expense recognized in accordance with
IAS 39 and the interest paid is added to the carrying amount of the
debt component at each period-end, so that the carrying amount at
maturity of unconverted bonds corresponds to the redemption price.
N.6. Other financial liabilities
Other financial liabilities are measured at amortized cost. Amortized
cost is determined by the effective interest method, taking into
account the costs of the issue and any issue or redemption premiums.
O. Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand, and
short-term investments in money market instruments. These
instruments have maturities of less than three months and are
readily convertible into known amounts of cash; their exposure to
changes in value is minimal.
P. Liabilities associated with assets
classified as held for sale
In accordance with IFRS 5 “Non-Current Assets Held for Sale
and Discontinued Operations”, this item includes all the liabilities
(excluding equity) related to assets or a disposal group classified
as held for sale or to a discontinued operation (see Note 1.E.7).
Q. Put Options granted by Accor
IAS 32“Financial Instruments: disclosures and presentation” requires
that the value of the financial commitment represented by put options
granted by Accor to minority interests in subsidiaries, be recognized
as a debt.The difference between the debt and the related minority
interests in the statement of financial position, corresponding to
the portion of the subsidiary’s net assets represented by the shares
underlying the put, is recognized as goodwill. When the exercise
price is equal to the fair value of the shares, the amount of the debt
is determined based on a multiple of the EBITDA reflected in the
5-year business plan of the subsidiary concerned and is discounted.
For put options granted before January 1, 2010, changes in the debt
arising from business plan adjustments are recognized in goodwill.
Discounting adjustments are recognized in financial expense.
For put options granted on or after January 1, 2010, changes in the
debt are treated as reclassifications in equity and therefore have no
impact on profit, in accordance with IAS 27 (revised).