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Return on capital employed

Return on capital employed (ROCE), corresponding to EBITDA expressed as a percentage of fixed assets at cost plus working capital, amounted to 14% in 2012, versus 13.9% in 2011. This ratio is also analyzed in the consolidated financial statements. ROCE improved to 11.4% in the Upscale and Midscale segment, thanks to the successful deployment of the asset disposal program, and ended the year stable at 19.5% in the Economy segment, reflecting the roll-out of the ibis megabrand and the ongoing room renovation work in ibis budget hotels.

Value creation

Value created is calculated as follows:

Weighted

ROCE

average

Capitalafter – cost

× employedtax ofcapital

Based on an ROCE after tax of 11.49%, a weighted average cost of capital of 8.90% in 2012 and capital employed of €6.36billion, the Economic Value Added (EVA) created by Accor totaled €164million in 2012, versus €108million in 2011.

P&L Performance reporting system

To support the shift in the business model to managed and franchised hotels, a new financial reporting system known as P&L Performance was introduced in 2010 to analyze Accor’s performance as a network manager and hotel operator.

P&L Performance tracks income statement data based on the following profit or cost centers:

1) franchise operations, through which all of the hotels – whether owned, leased, managed or franchised – can leverage the Accor brands and their reputation in return for a management fee;

Review of the Year

FINANCIAL REVIEW

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2) management operations, through which Accor transfers its hotel operating expertise and experience to the owned, leased or managed hotels in return for a management fee;

3) sales and marketing operations, through which Accor provides all of the owned, leased, managed, and franchised hotels with services relating to distribution systems, the loyalty program, sales programs and marketing campaigns in return for a sales and marketing fee;

4) hotelier operations for owned and leased hotels, all of whose revenue and earnings accrue to Accor;

5) unallocated operations, which primarily include the corporate departments.

The system analyzes the following indicators:

Targets for margin, flow-through ratio and earnings have been
set for some of these indicators.
Business volume in the hospitality operations corresponds to

the aggregate of:
a) total revenue generated by owned and leased hotels;
b) total revenue generated by managed hotels;
c) total accommodation revenue generated by franchised hotels.
As Accor does not receive all of the above revenues, the

business volume indicator cannot be reconciled with the

indicators presented in the consolidated financial statements. However, it does provide a yardstick to measure growth in the Accor network, making it a key indicator for management.