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96 2014 Registration Document
Corporate governance
3
Risk management
Carrefour Banque’s liquidity risk is monitored under a ‘liquidity policy’
approved by general management with the following objectives:
■
refinancing security;
■
gradual compliance with the new Basel III liquidity ratios;
■
diversification of refinancing sources.
During 2014, Carrefour Banque completed two major public transactions
to finance and expand its activities:
■
a bond issue in March 2014 (€500 million for four years);
■
a securitisation transaction in November 2014, raising €110 million.
This total refinancing of €610 millions is fully in line with the goal of
complying with the Basel III liquidity ratios through a significant lengthening
of the original term and a perfect match of asset and liability cash flows.
In November 2014, Carrefour Banque secured its refinancing sources
by rolling over its €750 million five-year syndicated line of credit and
negotiating two one-year extension options, one year ahead of the facility’s
December 2015 expiry date.
◗
Interest-rate risk
Interest rate risk management is centrally handled by the DTFG, which
reports on its operations each month, reviewed by a rate committee
which establishes a hedging strategy and methods of application in an
effort to limit interest rate risk exposure and optimise financing costs.
Long-term debt is primarily incurred at fixed rates, protecting the Group
against rate increases.
However, Carrefour holds various financial instruments which are intended
to hedge the Group’s financial debt against the risk of interest rate
changes. They are primarily swaps (vanilla) and interest rate options
(vanilla caps and floors).
When issued at a variable rate, long-term debt is hedged through financial
instruments which cap interest rate increases for some or all of the period.
A sensitivity analysis of rate changes is presented in Note 36 to the
Consolidated Financial Statements.
◗
Foreign-exchange risk
The Group’s operations throughout the world are conducted by
subsidiaries operating primarily in their own countries (with purchases
and sales in local currencies). As a result, the Group’s exposure to
exchange-rate risk in commercial operations is naturally limited and
primarily concerns imports. Risk related to fixed import transactions
(purchase of goods in foreign currency) is hedged
via
forward currency
purchases.
Translation risk which burdens transactions conducted in countries
outside the euro zone concerns Brazilian real and Argentine Peso. For
example, the impact of average exchange rate fluctuations used in 2014
as compared with 2013 affected Group sales by -€2,356 million (3.2%
of 2014 sales) and operating income by -€74 million (2.9% of 2014
operating income).
Finally, when local financing is used, transactions are generally conducted
in the local currency.
◗
Equity risk
Detailed information on equity risk appears in Note 36 of the Notes to
the Consolidated Financial Statements.
Within the context of the stock option plans, the Group purchases its
own shares and stock options. A breakdown of these plans is provided
in Note 28.1 to the Consolidated Financial Statements.
◗
Quality of financial management, budgets and
reporting
The organisation and procedures for financial and accounting matters
are set forth in the Group’s Reference Guide to Corporate Rules, which
applies to all subsidiaries.
Procedures and tools used are intended to control financial flows in all
countries where the Group operates, to verify that budgets and forecasts
best reflect observed trends, to constitute a realistic estimate of future
performance, and to ensure that the Consolidated Financial Statements
provide a true and fair view of the Group’s financial position and its results.
3.5.1.5
Financial services
Financial services distribute consumer credit, savings products, insurance
products and payment services, exposing them to classic financial risks
(risks of providing financing and insurance, risk related to financial ratios,
liquidity risk) along with regulatory obligations to which financial and
banking institutions are subject, specifically systems to fight money
laundering and terrorism financing.
In 2014, Carrefour Banque has updated his risk management policy.
Also, Carrefour Banque has finalised the map process in relation to
credit risk management.
Carrefour Banque has defined materiality thresholds for incidents
uncovered through internal control procedures.