2013 Registration document and annual financial report - page 172

Registration Document 2013
2013 Review of the Year
Financial review
Funds from operations
rose to €713 million from €694 million
in 2012
. Recurring development expenditure
amounted to
€200million for the year, while
hotel maintenance and renovation
totaled €265 million, including €27 million related
to the ibis megabrand project.
Proceeds from the disposal of hotel assets increased consolidated
cash flow by €331 million during the year. Disciplined management
of the
working capital requirement
drove a €133 million
improvement, while in the second half,
cost-saving measures
had the positive effect of
reducing consolidated net debt by
€190 million to €231 million
at year-end.
As of December 31, 2013, Accor had
€1.5 billion in unused,
confirmed long-term credit lines
. The Group also optimized its
cost of debt over the year with the successful issue of €600 million
in six-year, 2.5% bonds. The proceeds facilitated the repayment
during the year of €700 million in bonds and other loan debentures
carrying an average 6.14% in interest, thereby leading to a significant
decrease in the cost of debt, to 4.28%.
Financial ratios
In general, the main financial ratios improved in 2013, reflecting
the Group’s transformation.
Net debt totaled €231 million at December 31, 2013 compared
with €421 million a year earlier, while gearing stood at 8.4%,
compared with 14.1% at December 31, 2012.
Funds from operations excluding non-recurring
transactions/Adjusted net debt
The ratio of funds from operations excluding non-recurring
transactions to adjusted net debt is calculated according to a
method used by the main rating agencies, with net debt adjusted
for the 7%
discounting of future minimum lease payments.
The ratio stood at 31.3% at December 31, 2013,
a year earlier.
It is analyzed in the consolidated financial statements.
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 14.0% in 2013,
14.0% in 2012. This
ratio is also analyzed in the consolidated financial statements.
ROCE declined to 11.0% in the Upscale and Midscale segment
and to 18.7% in the Economy segment, reflecting the acquisitions
of Mirvac and Posadas in 2012 and the capital committed to the
ibis program, in particular to roll out the ibis mega-brand and
renovate the hotels.
Value creation
Value created is calculated as follows:
of capital
Based on an ROCE after tax of 11.4%, a weighted average cost of
capital of 8.8% in 2013 and capital employed of €6.35 billion, the
Economic Value Added (EVA) created by Accor totaled €165 million
in 2013,
€164 million in 2012.
P&L Performance
To support the shift in the businessmodel tomanaged and franchised
hotels, a financial reporting system known as P&L Performance
has been used since 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:
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;
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;
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;
hotelier operations for owned and leased hotels, all of whose
revenue and earnings accrue to Accor;
unallocated operations, which primarily include the corporate
The system analyzes the following indicators:
business volume;
Targets for margin, flow-through ratio and earnings have been set
for some of these indicators.
(1) Rate used by the Standard & Poor’s rating agency.
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