95 / 266
95
2014 Registration Document
Corporate governance
3
Risk management
◗
Human resource management
As the largest private employer in many countries where the Group
operates, the retail profession is based on human relations and
employee commitment. In a highly competitive market for talent with
major demographic changes, the Group faces a challenge in attracting,
retaining, training, motivating, compensating and developing employees
and the top candidates.
As a responsible employer, the Group has implemented an important
system adapted to the challenges of human resources, presented in
Section 2.2.1 (Page 26 and following pages).
◗
Continuity, integrity and confidentiality
of information systems
While most of the Group’s activities and a number of its functions largely
depend on information systems developed or administered by internal
resources or outside service providers, weakness in these systems could
noticeably disrupt operations. This could result in significant impacts
on financial and operational performance, especially with regard to the
ordering, cash handling and financial reporting systems.
With information systems that are constantly changing and difficult to
grasp as a whole, along with the development of nomadic computing and
cybercrime, information systems security is also a challenge, especially
the protection of data concerning our customers and employees.
The Group Information Systems department handles the development
and consistency of all computer applications within the Group, as part of
a coordinated effort to promote synergies while taking a forward-looking
approach to incorporating technological developments.
A dedicated team, which relies on a network in all countries where the
Group operates, works to ensure information systems security through
tailored governance, shared standards and regular controls.
◗
Control and valuation of assets
Under the responsibility and coordination of the Group Assets and
Development director, who is also in charge of all Carrefour Property
activities, each country implements an asset control and valuation policy
which is tailored to its strategy.
Site quality and control of the Group’s assets are key factors in terms of
competitiveness and success. This involves determining and maintaining
an optimal level of property holdings, while remaining attentive to the
maintenance, management and value of the Group’s assets. The
completion of appraisal reports on the real estate assets may present
a number of risks related to real estate and financial market drivers.
With a significant portion of stores operated under commercial leases,
the Group’s inability to renew them under favourable terms could impact
performance. The same applies to inefficient or sub-optimal management
of tenant relations at sites owned by the Group.
For asset acquisitions or disposals, the cost of some acquisitions may
require significant financial resources, particularly external financing
which the Group cannot guarantee will be obtained in conditions that are
satisfactory to it. In addition, if the economic situation or the real estate
market should worsen, the Group may not be in a position to dispose of
its commercial real estate assets under satisfactory financial conditions
or deadlines, if such should prove necessary.
Finally, with the Group also carrying out real estate development activity
for certain sites, the risks related to that activity might incur delays or even
cancellations of investment transactions, their completion at a higher cost
than initially projected, or lower profits than those expected at the outset.
Under the direction of the Group Legal department, the Group has also
established an active and committed policy to protect all of its brands.
3.5.1.4
Financial market risks
Within the scope of its activities, the Group is exposed to financial
risk, namely liquidity, credit, foreign exchange and interest rate risk. The
Carrefour group’s financial risk management policy addresses three
primary objectives: security, liquidity and profitability. It is described in
detail in Note 36 to the Consolidated Financial Statements.
Risk is managed centrally by the Group’s cash and cash equivalent and
Financing Operations department (DTFG).
With regard to credit activities (banking and insurance), risk management
and oversight is directly managed by the concerned entity, with DTFG
ensuring proper application or rules applicable to credit activities, together
with its capital partners where applicable.
◗
Liquidity risk
Distribution of borrowings by maturity and detailed information on liquidity
risk appear in Note 36 to the Consolidated Financial Statements.
Cash and cash equivalent available at the end of 2014 (€3.11 billion)
covers bond maturities for the upcoming year.
As of the same date, the Group also had a commercial paper programme
with the capacity to issue €5 billion, and €4.45 billion in available and
undrawn syndicated loans (maturity 2017, 2018 and 2019), leading to
the conclusion that its liquidity is strong.
In 2014 the Group carried out one bond issues (€1 billion with maturity
in July 2022) simultaneously with a buyback with €0,3 billion in nominal.
The Group’s debt profile is balanced, with no peak in refinancing needs
across the remaining life of bond debt, which averages 4 years 4 months.
Since 2007, issues under the Euro Medium Term Notes (EMTN)
programme have been subject to a soft change of control clause. This
clause would apply in the event that a change of control led to Carrefour
losing its long-term investment grade rating. In such case, the debt would
not become immediately repayable but the interest rate would increase.
Loan agreements for syndicated lines of credit held by the Group include
the usual commitments and default clauses, including pari passu, negative
pledge, change of control, a clause restricting sales of substantial assets
and cross-default clauses. There is no default clause in the event of a
change in the long-term rating. On the other hand, the drawdown margin
may change in the event of a long-term rating upgrade or downgrade
(pricing grid). The contracts do not include an acceleration clause in the
event of a material adverse change, nor is there any acceleration clause
based on financial covenants.