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195
2014 Registration Document
Consolidated Financial Statements Year ended December 31, 2014
5
Notes to the Consolidated statements
Note 36
Risk management
The main risks associated with the financial instruments used by the
Group are liquidity, interest rate, currency, credit and equity risks. The
Group’s policy for managing these risks is described below.
Due to the differing natures of the various businesses, financial risks
arising from the bancassurance business (including Carrefour Banque
in particular) are managed separately from those related to the retail
business.
An organization has been set up around a cash-pooling system to
track financial risks. The Corporate Treasury and Financing department
based in Brussels manages the treasury and financing needs of all
retail subsidiaries, on the instructions of Group senior management.
A reporting system ensures that Group senior management can oversee
the department’s implementation of the approved management strategies.
The risks associated with the consumer credit business are managed
and tracked directly by the entities concerned. Corporate Treasury and
Financing oversees the proper implementation of the rules governing the
consumer credit business, jointly with the other investors in the business
where applicable. A reporting system exists between local teams and
Corporate Treasury and Financing.
36.1
LIQUIDITY RISK
36.1.1 RETAIL BUSINESS
Liquidity risk is the risk that Carrefour will be unable to settle its financial
liabilities when they fall due.
The Group manages its liquidity risk by ensuring, to the extent possible,
that it has sufficient liquid assets at all times to settle its liabilities when
they fall due, whatever the conditions in the market.
A Liquidity Committee meets at monthly intervals to check that the Group’s
financing needs are covered by its available resources. The meetings are
attended by the Group’s Chief Financial Officer and by a representative
of Carrefour Banque.
Corporate Treasury and Financing’s liquidity management strategy
consists of:
■
promoting conservative financing strategies in order to ensure that
the Group’s credit rating allows it to raise funds on the bond and
commercial paper markets;
■
maintaining a presence in the debt market through regular debt
issuance programs, mainly in euros, in order to create a balanced
maturity profile. The Group’s issuance capacity under its Euro Medium-
Term Notes (EMTN) program totals €12 billion. Since 2007, the loan
agreements for the EMTN program include a soft change of control
clause that would be triggered in the event that a change of control
led to Carrefour losing its investment grade rating. In this case, the
notes would not become immediately repayable but the interest rate
would increase;
■
using the €5 billion commercial paper program on NYSE Euronext
Paris, described in a prospectus filed with the Banque de France;
■
maintaining undrawn medium-term bank facilities that can be drawn
down at any time according to the Group’s needs. At December 31,
2014, the Group had three undrawn syndicated lines of credit obtained
from a pool of leading banks, for a total of €4,449 million. Group
policy consists of keeping these facilities on stand-by to support the
commercial paper program. The loan agreements for the syndicated
lines of credit include the usual commitments and default clauses,
including
pari passu,
negative pledge, change of control and cross-
default clauses and a clause restricting substantial sales of assets.
They do not include any rating trigger, although they do allow for
the pricing grid to be adjusted up or down to reflect changes in the
long-term credit rating. None of the agreements contains a material
adverse change clause.
The Group considers that its liquidity position was strong at December 31,
2014 since, at that date, it had €4.45 billion in committed syndicated
lines of credit with no drawing restrictions, expiring in 2017, 2018 and
2019. In addition, it had sufficient cash reserves at that date to meet its
debt repayment obligations in the coming year.
The Group’s debt profile is balanced, with no peak in refinancing needs
across the remaining life of bond debt, which averages four years and
four months.
36.1.2 BANCASSURANCE BUSINESS
Carrefour Banque’s liquidity risk is monitored within the framework of a
senior management-approved liquidity strategy that is part of the Group’s
overall strategy.
Carrefour Banque’s refinancing situation is assessed based on internal
standards, early warning indicators and regulatory ratios.
Liquidity risk management objectives are to:
■
ensure that refinancing needs are met, based on monthly assessments
of projected cash surpluses or shortfalls over a three-year period
performed by comparing static forecasts of committed financing
facilities with dynamic lending forecasts;