Carrefour - 2017 Registration Document

5 CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements CARREFOUR | 2017 REGISTRATION DOCUMENT 277 Liquidity risk 12.7.1 Retail business 12.7.1.1 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. 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 programmes, mainly in euros, in order to create a balanced maturity profile. The Group’s issuance capacity under its Euro Medium-Term Notes (EMTN) programme totals 12 billion euros; using the 5 billion-euro commercial paper programme on ● 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, 2017, the Group had two undrawn syndicated lines of credit obtained from a pool of leading banks, for a total of 3.9 billion euros. Group policy consists of keeping these facilities on stand-by to support the commercial paper programme. The loan agreements for the syndicated lines of credit include the usual commitments clauses, including pari passu, negative pledge, change of control and cross-default clauses and a clause restricting substantial sales of assets. The pricing grid may be adjusted up or down to reflect changes in the long-term credit rating. In Brazil, Atacadão SA issued commercial promissory notes (notas promissórias) with maturity between 6 and 19 months during the second half of the year amounting to a total of 2 billion Brazilian reals (Note 12.2.2). The Group considers that its liquidity position is robust. It has sufficient cash reserves 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 three years and nine months. Banking and insurance business 12.7.1.2 Carrefour Banque’s liquidity risk is monitored within the framework of an Executive 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; achieve compliance with the new Basel III liquidity coverage ● ratios, through a process that is designed to deliver a sustainable improvement in asset quality by investing in a dedicated fund eligible for inclusion in the ratio calculation and extending the maturity of liabilities in order to improve the net stable funding ratio; diversify refinancing sources to include bank lines of credit, bond ● issues, securitisation programmes, money market issues and customer deposits. During 2017, Carrefour Banque took out a 400 million-euro loan from the European Central Bank to support the financing and development of its businesses (Note 5.5.2). The master trust structure allows it to dynamically manage asset-backed securities series issued by the securitisation fund. Within this structure, the 110 million-euro series was renewed for a two-year period, as from June 2016. In November 2014, Carrefour Banque secured its refinancing sources by rolling over its 750 million-euro five-year syndicated line of credit and negotiating two one-year extension options. The second of these was exercised in 2016, extending the facility’s maturity to November 2021.