2014 Registration Document and Annual Financial Report - page 128

Corporate GOVERNANCE
Risk management
3
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, in addition to or instead of
raising funds in the financial markets.
Accor’s financing policies are designed to ensure that it 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 30.2 to the consolidated
financial statements on page 232). At December 31, 2014, Accor had
unused long-term committed lines in a total amount of €1,800 million
expiring in June 2019. At that date, Accor also had €2,549 million
in cash investments with an average maturity of 4.7 months, fully
available at any time (see note 30.5.3 to the consolidated financial
statements on page 235). These investments consisted mainly of
short-term deposits with leading financial institutions.
Consequently, at December 31, 2014,Accor had a total of €4,349million
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 no significant debt repayments due before 2017
(€965 million in 2017) (see the debt maturity schedule in note 30.2
to the consolidated financial statements on page 232).
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, 2014:
Within 1 year
Between one and
three years
Beyond
three years
Total
Bonds
0
947
1,678
2,625
Bank and other borrowings
19
41
47
107
Finance lease liabilities
10
19
43
72
Derivatives
0
0
Bank overdrafts and other
53
9
62
Financial liabilities
82
1,016
1,768
2,866
Marketable securities
(2,549)
(2,549)
Other current financial assets
(158)
(158)
Current financial assets
(2,707)
(2,707)
NET DEBT
(2,625)
1,016
1,768
159
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 €2,731 million, a total of
€2,625 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 June 2014, the
acceleration clause can be triggered if Accor does not comply with
the leverage ratio covenant (consolidated net debt to consolidated
EBITDA).
None of Accor’s loan agreements include a cross default clause
requiring immediate repayment in the event of default on another
facility. Cross acceleration clauses only concern loans with maturities
of at least three years; these clauses would be triggered only if
material amounts were concerned.
Registration Document 2014
126
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