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198 2014 Registration Document
Consolidated Financial Statements Year ended December 31, 2014
5
Notes to the Consolidated statements
36.4
CREDIT RISK
The Group’s estimated exposure to credit risk is presented below:
Exposure to credit risk
(in € millions)
December 31, 2014
December 31, 2013
Investments in non-consolidated companies
78
60
Other long-term investments
1,262
1,086
TOTAL OTHER NON-CURRENT FINANCIAL ASSETS
1,340
1,146
Consumer credit granted by the financial
services companies
5,980
5,602
Trade receivables
2,260
2,213
Other current financial assets
504
359
Other assets
(1)
551
545
Cash and cash equivalents
3,113
4,757
MAXIMUM EXPOSURE TO CREDIT RISK
13,748
14,641
(1) Excluding prepaid expenses.
36.4.1 RETAIL BUSINESS
◗
1) Trade receivables
Trade receivables correspond mainly to amounts receivable from
franchisees (for delivered goods and franchise fees), suppliers (mainly
rebates) and tenants of shopping mall units (rent). Impairment losses
are recognized where necessary, based on an estimate of the debtor’s
ability to pay the amount due and the age of the receivable.
At December 31, 2014, trade receivables net of impairment amounted
to €1,117 million (see Note 23). At that date, past due receivables
amounted to a net €129 million, with receivables over 90 days past
due representing 2.9% of total trade receivables net of impairment. No
additional depreciation has been recognized for these receivables as the
Group considers that the risk of non-recovery is very limited.
◗
2) Investments
The Group’s short-term cash management strategy focuses on acquiring
liquid investments that are easily convertible into cash and are subject
to an insignificant risk of changes in value.
Investments are made for the most part by Corporate Treasury and
Financing, in diversified instruments such as term deposits with leading
banks and mutual funds classified by the AMF as “money market” and
“short-term money market” funds without any withdrawal restrictions.
Investments made at the country level are approved by Corporate Treasury
and Financing.
Counterparty risk monitoring procedures are implemented to track
counterparties’ direct investment strategies and the underlying assets
held by mutual funds in which the Group invests. The Group’s objective
is to never hold more than 5% of a fund’s units and to never invest more
than €250 million in any single fund.
36.4.2 BANCASSURANCE BUSINESS
◗
1) Credit risk management
To protect against default by borrowers, the Group’s finance companies
have set up systems to check the quality and repayment capacity of their
customers. These include:
■
decision-making aids such as credit scoring applications, income/debt
simulation tools and credit history checking procedures;
■
interrogation of positive and negative credit history databases, where
they exist;
■
active management of collection processes;
■
credit risk monitoring and control systems.
Within each credit company, a Credit Risk department is responsible
for all of these processes, and the Board of Directors receives copies
of all Credit Risk Management Committee reports.
At Group level, a Credit Risk – Europe unit has been set up to oversee
and implement credit risk management policies in France, Spain, Belgium
and Italy.
◗
2) Provisions for non-performing consumer loans
Consumer loans are classified as non-performing when the Group
believes that there is a risk that all or part of the amount due will not be
recovered (for example, because of overdue payment).
Provision models are developed in accordance with local banking
regulations in each country, according to a two-step process:
■
classification of outstanding loans in uniform risk categories based
on the probability of default; then
■
modeling of the loss given default based on historical data.
In a certain number of countries, specific provisions are also recorded for
certain types of exposures, to comply with local central bank guidelines.