2012 Registration Document - Groupe Casino

2
Presentation
of the Casino Group
Management
report
2.7. Risk factors and insurance
Consolidated
financial statements
Parent company
financial statements
Corporate
governance
General
Meeting
Additional
information
2.7. Risk factors and insurance
Risk management is an integral part of the day-to-day operational
and strategic management of the business and is organised
at several levels (for further details, see “Chairman’s report on
internal control and risk management” as of page 215 of this
Registration Document).
The Group has reviewed the main risks that could have a material
impact on its operations, financial position or results. These risks
are described below.
2.7.1. Market risks
The Group has set up an organisation to oversee its financial risks
(liquidity, currency and interest rate risks) and where appropriate
manage them on a centralised basis. The Corporate Finance
Department, which reports to the Group Chief Financial Officer,
is responsible for managing these risks and has the necessary
expertise and tools to fulfil this task. The Corporate Finance
Department operates on the main financial markets according
to guidelines that guarantee the highest levels of efficiency and
security. A regular reporting system has been set up, allowing
Group management to sign off on the policies followed, which
are based on strategies approved in advance by management.
Interest rate risk
Detailed information about interest rate risk is provided in note 32
to the consolidated financial statements. The Casino Group
uses various financial instruments to manage interest rate risk,
particularly swaps. These instruments are used solely for hedging
purposes. Details of hedging positions are provided in note 32 to
the consolidated financial statements.
Currency risk
Information about currency risk is provided in notes 32 and 32.2.2
to the consolidated financial statements. The Casino Group uses
various financial instruments to manage currency risks, particularly
swaps and forward purchases and sales of foreign currencies.
These instruments are used solely for hedging purposes.
Liquidity risk
The breakdown of debt and confirmed lines of credit by maturity
and currency is provided in note 32.4 to the consolidated financial
statements, together with additional information concerning debt
covenants which, if breached, would trigger early repayment
obligations.
The Group’s liquidity position appears to be very satisfactory.
Upcoming repayments of short-term financial liabilities and
seasonal working capital requirements are comfortably covered
by cash, cash equivalents and undrawn confirmed bank lines.
The Group’s policy is to continuously monitor and forecast its
liquidity position in order to ensure that it always has sufficient
liquid assets to settle its liabilities as they fall due, in either normal
or impaired market conditions.
The Group’s cash and cash equivalents present no liquidity or
value risk.
Its loan and bond agreements issues include the customary
covenants and default clauses, including pari passu, negative
pledge and cross-default clauses.
Casino, Guichard-Perrachon’s bond issues on the euro market and
its commercial paper programmes do not include any covenants
related to financial ratios.
Most of the Group’s other loan agreements contain financial
covenants and mainly concern subsidiaries in France, Brazil and
Thailand.
In the event of a change of control of Casino, Guichard-Perrachon
(within the meaning of article L. 233-3 of the French Commercial
Code [Code de commerce]), most loan agreements include
an option for the lenders, at the discretion of each, to request
immediate repayment of all sums due and, where applicable,
the cancellation of any credit commitments entered into with
the Company.
In addition, some bond issues made by Casino, Guichard-
Perrachon contain an acceleration clause at the investors’
discretion should its long-term senior debt rating be downgraded
to non-investment grade due to a change of majority shareholder.
The loan agreements do not give the lenders the option to
accelerate repayment if the Group’s credit ratings are downgraded.
Commodity risk
Given the nature of its business, the Company is not exposed to
any material commodity risk.
Equity risk
Pursuant to the share buyback programme authorised by the
shareholders (see “Share capital and share ownership”), the
Company is exposed to a risk related to the value of the treasury
shares it holds. Sensitivity to a 10% decrease in the Casino
share price is shown in note 18 to the parent company financial
statements. The Group’s portfolio of marketable securities (see
42 / Casino Group / registration document 2012