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2013ANNUAL
2
3
ActivityA word from the Chairman .................. 5
Governance• Our business ................................... 6
• Supervisory board............................ 6
• A benchmark European player ......... 7
• In France, 5 specialist retail chains .. 8
• European presence.......................... 8
• The management team(at 31/12/2013) ............................... 9
• Structure of the COFIDISParticipations Group(at 20/01/2014) ............................. 10
Specialist shareholders• Crédit Mutuel................................. 11
• Argosyn ......................................... 12
The COFIDIS Participations Group• Online credit, where the distance
doesn't matter ............................... 13
• Sale of credit through our retailpartners......................................... 14
• Relationship excellence awardedin three European countries ........... 14
• Committed to corporate socialresponsibility ................................. 15
• Shared human resources policy ..... 15
Cycling sponsorship• Successful season ......................... 16
• Committed cycling team ................ 17
• Laurent Thirionet, setting the goldstandard in world para-cycling....... 17
Consolidatedfinancialstatements
Structure of COFIDIS Participations ......... 20
Key figures ............................................. 21
Consolidated balance sheet .................... 22
Consolidated income statement .............. 24
Net income and gains and losses directlyrecognised in equity................................ 25
Change in shareholders' equity............... 26
Cash flow statement .............................. 28
NotesIntroduction ............................................ 32
General context ...................................... 33
Accounting principles and policies .......... 38
Notes to the consolidated balance sheet . 48
Notes to off-consolidated balance sheetitems ...................................................... 63
Notes to the consolidated incomestatement ............................................... 63
Segment information .............................. 67
Employee benefits .................................. 69
Risk exposure and hedging policy ........... 72
Contents
3
1 2 3
2013 ACTIVITY REPORT
1 Activity
A word from the Chairman .........................................................5
Governance• Our business ..........................................................................6
• Supervisory board...................................................................6
• A benchmark European player ................................................7
• In France, 5 specialist retail chains .........................................8
• European presence.................................................................8
• The management team (at 31/12/2013)..................................9
• Structure of the COFIDISParticipations Group (at 20/01/2014) ....................................10
Specialist shareholders• Crédit Mutuel........................................................................11
• Argosyn ................................................................................12
The COFIDIS Participations Group• Online credit, where the distance doesn't matter ..................13
• Sale of credit through our retail partners...............................14
• Relationship excellence awardedin three European countries ..................................................14
• Committed to corporate social responsibility .........................15
• Shared human resources policy ............................................15
Cycling sponsorship• Successful season ................................................................16
• Committed cycling team .......................................................17
• Laurent Thirionet, setting the gold standardin world para-cycling ............................................................17
4
A word fromthe ChairmanCOFIDIS Participations can be pleasedwith its annual performance, which sawa year-on-year rise in new consumercredit and further market share gains, forthe third consecutive year, although theoverall consumer credit market in Europehas declined.These results are reflected in the increasein the Group's stock of credit.
The improved performance was duenot only to the increase in the numberof customers and retail partners whocontinue to put their trust in the Group,but also to the proactive engagementof our 4,271 staff, who all work daily toensure that our customers in Europeare consistently satisfied with theirrelationship with our retail chains.
We are especially proud to have won the"Customer Service of the Year" award
this year in France and Spain, as well asthe equivalent accolade in Portugal, the"Consumer Choice" award.
2013 also saw the acquisition ofSOFEMO by COFIDIS Participations andthe development of new commercialsynergies with the Crédit Mutuel-CICGroup.
A number of developments took placeduring the year to implement thesechanges in the Group, including: thesignature of a new partnership deal inSpain with Agrupacio, an insurancecompany in the Crédit Mutuel Group; thesuccessful launch of the CIC Iberbancodirect branch with monabanq and testredemptions of receivables performeddirectly between Créatis and a smallnumber of CIC and Crédit Mutuel - Ile deFrance branches.
The IT systems for all loan activities inFrance will be converged in 2014, makingit a very significant year. The convergenceof our European subsidiaries is scheduledto take place in 2017, at which time theGroup will have a single IT system.
The successful roll-out of thisconvergence, which will mark a historicmilestone for our Group, will provide usall with good reason to be proud of theachievement.
ANNIE GAINChairman of the Board of DirectorsCOFIDIS Participations Group
5
GovernanceOperating through its four commercial brands,Cofidis, monabanq, Créatis and SOFEMO, theCOFIDIS Participations Group creates, sells andmanages a wide range of financial services,such as consumer credit, payment solutionsand banking services (current accounts,savings, online share trading and investments).
COFIDIS is backed by the experience andsolidity of its two shareholders, Crédit Mutuel,the majority shareholder, a major player inretail banking, and Argosyn*, which took overthe BtoB e-commerce and financial activitiespreviously held by the 3 Suisses InternationalGroup.
*As of 01/01/2014.
Supervisory board
COFIDIS Participations and COFIDISSA are structured as French SociétéAnonymes with a Board of Directorsand a Supervisory Board (at 01/01/2014).
Our business
Chairman:Alain FRADIN
Vice-Chairman:François MIGRAINE
Members:Nicolas THERY,Pascal LAUGEL,Stelli PREMAOR,Eric PLATIAU,Denis TERRIEN.
6 2013 ACTIVITY REPORT
7
A benchmark European player
COFIDIS France has successfully exportednot only its online credit concept, but alsothe founding values responsible for thebrand's popularity in France. High qualitycustomer relations, the focus on humanvalues, demanding professional standards
and team spirit are the hallmarks of theGroup and critical components of itssuccess in the European market. ThroughCOFIDIS, the COFIDIS ParticipationsGroup's footprint extends to eightcountries in Europe:France, Belgium, Spain, Italy, Portugal, theCzech Republic, Hungary and Slovakia.
BELGIUM
FRANCE
PORTUGAL
SPAIN
ITALY
CZECH REPUBLIC
SLOVAKIA
HUNGARY
€4,756 MILLION IN GROSSOUTSTANDING LOANS*
€2,048.1 MILLION IN FINANCING*
1,414 AVERAGE WORKFORCE
€1,559 MILLION IN GROSSOUTSTANDING LOANS*
€337.19 MILLION IN FINANCING*
250 AVERAGE WORKFORCE
€1,080 MILLION IN GROSSOUTSTANDING LOANS*
€511.57 MILLION IN FINANCING*
142 AVERAGE WORKFORCE
€280 MILLIONIN GROSSOUTSTANDING LOANS*
€36.99 MILLION IN FINANCING*
229 AVERAGE WORKFORCE
534 GROSS OUTSTANDING SAVINGS*
Italy
€143 MILLIONIN GROSSOUTSTANDING LOANS*
€101.74 MILLION IN FINANCING*
133 AVERAGE WORKFORCE
Czech Republic and Slovakia
€59 MILLIONIN GROSSOUTSTANDING LOANS*
€10.96 MILLION IN FINANCING*
102 AVERAGE WORKFORCE
Hungary
€76 MILLIONIN GROSSOUTSTANDING LOANS*
€40.09 MILLION IN FINANCING*
143 AVERAGE WORKFORCE
Belgium
€770 MILLION IN GROSSOUTSTANDING LOANS*
€470.36 MILLION IN FINANCING*
394 AVERAGE WORKFORCE
Portugal
€837 MILLION IN GROSSOUTSTANDING LOANS*
€137.80 MILLION IN FINANCING*
397 AVERAGE WORKFORCE
Spain
€1,014 MILLION IN GROSSOUTSTANDING LOANS*
€406.95 MILLION IN FINANCING*
734 AVERAGE WORKFORCE
IN FRANCE INTERNATIONAL PRESENCE
* in M€
8 2013 ACTIVITY REPORT
The management team (at 31/12/2013)
* Members of the Boardof Directors.
Annie Gain*Chairman of theBoard of Directors
Gilles Sauret*Director, COFIDIS France
Luc-Bertrand SALUSDirector, COFIDIS
International
Alain ColinDirector,
Diversified Activities
Thierry Marois*Director, Coordination
of Synergiesand Central Resources
Vincent LaurinChief Financial,
Risk and Legal Officer
Thierry Vittu*Director, Human Resources
and Communication
9
Structure of COFIDIS Participations
LEGAL ORGANISATION CHART
COFIDISSlovakia
COFIDISCzech
Republic
COFIDISBelgium
COFIDISSpain*
COFIDISItaly
COFIDISPortugal *
COFIDISHungary*
MartinterCarmen
HOLDING
BANQUE FEDERATIVEDU CREDIT MUTUEL
100%
100% 100% 100% 100% 100% 100% 100%
100%100%
100%
40.35%
5.01%
COFIDIS S.A
100 %
47.22%
7.41%
ARGOSYN
100%
at 20/1/2014
*su
ccur
sale
s
is a European Economic Interest Grouping between Cofidis (81%), monabanq (10.38%), Créatis (8.58%), Cofidis Belgium (0.01%),C2C (0.01%), Sofemo Group (0.01%) and Cofidis Italy (0.01%).
10 2013 ACTIVITY REPORT
Specialist shareholders
Crédit Mutuel is a major player in retail banking with its CICsubsidiary, with more than 5,920 branches.
The Group's strategy revolves around four priorities:
BANKING AND INSURANCEThe Group's banking and insurance business offers anintegrated product line-up to meet members' banking andinsurance needs.
MUTUALIST PHILOSOPHYOur approach and actions are based on respect and trust.Members' interests take precedence in our structure.
TECHNOLOGYWe use new technologies in the service of members and thelocal banks.
LOCAL BANKINGWe build relations with our members through• independent local banks that are part of the fabric
of the local community• the use of online banking tools.
Key figures
• 78,482 employees
• 30.4 million customers in France and in Europe
• €15.2 billion in net banking income
• €669 billion in savings
• €351.2 billion in loans
11
Argosyn took over the BtoB e-commerce and financial activitiesfrom the 3 Suisses International Group.Its retail chains are growing from strength to strength withleadership positions in their markets. They are known for theircapacity for innovation and performance.
• Financial services through its Contentia (collection) and Direxi(insurance broker) subsidiaries, and its holding in the COFIDISParticipations Group (payment solutions and banking services)
• BtoB e-commerce through Bruneau, the leading Frenchoperator in the office furniture and supplies for professionalssegment.
* Minority shareholding.
Key figures
• 1,200 staff
• Present in four countries in Europe(France, Belgium, Spain and Luxembourg)
• €400 million in revenue, excluding shareholdings
ARGOSYN is founded on strong core values,enabling us to achieve our goals together, backed bythe strength of our Group.“
Connected marketing leader,insurance broker
One of the top three collectioncompanies in France
Leading e-commerce companyin France
12 2013 ACTIVITY REPORT
The COFIDISParticipations GroupOnline credit, where the distance doesn't matter.
COFIDIS grew its business in Europe based on a uniqueconcept, Online credit. This robust business model calls forconstant innovation, not only to create new products andservices, but also to foster close customer relations and to stayabreast of technological developments.
The concept is based on the Group's capability to create Onlinerelations where the distance doesn't matter, generating closerelationships based on trust and aimed at delivering consistentlyexcellent customer relations management.
This know-how draws on our strong core values, which arefirmly embedded in the DNA of the Group and its subsidiaries:
• transparent relations with all stakeholders, deliveringperformance while safeguarding our spirit of enterprise;
• daring to share, surprise, take the initiative;
• showing consideration for colleagues, customers,shareholders and partners;
• disseminating the convictions, expertise and energy thatcharacterise the Group.
The COFIDIS Participations Group implements a developmentstrategy to support its growth in a constantly changing marketenvironment in France and internationally. To achieve theGroup's aims, this strategy is built around three major priorities:
• control of risk, notably through providing support for ourcustomers to manage their budgets;
• efficiency of IT tools, which is especially important since ourbusiness is conducted remotely;
• development of partnerships, which have always been centralto the Group's legacy and expertise.
13
Sale of credit through our retail partners
Diversification has become a strategically important challengefor the COFIDIS Participations Group. Our retail chains haveexpanded their range of products and services and offer theirexpertise to several hundred partners: telephone operators,distributors' networks, specialists and others.
These national brands have selected the expertise of theGroup's retail chains to offer financing solutions to theircustomers.
Another Group strength is its international reach, providing itwith the ability to support its partners in their plans to expandwithin Europe.
COFIDIS currently offers services to its partners throughthe Group's European subsidiaries across a rangeof distribution channels: in-store, specialist distributionnetworks, on line and door-to-door, a popular salesmethod in Spain and Hungary.
Relationship excellence awarded in three Europeancountries
The COFIDIS Participations Group's long track record ofexcellent customer relations distinguishes it from its competitors.Firmly committed to providing support to its customers for theireveryday needs, the core values championed in the Group'sretail chains are transparency, close relations, responsibility,human values and innovation to ensure that the excellence ofour customer relations is a major differentiating factor.
The hallmark of each of our retail chains is the close relationshipfostered with its customers, tailored to each application and toindividual situations, even when services are provided remotely.The relationship factor is a key differentiator.
The "Customer Service of the Year" awards in
2014 in both France and Spain bear testimony to
the confidence placed in COFIDIS by consumers.
They reward the Group's long-term commitment to
its customers and its policy of continuous service
optimisation. The Group also secured the equivalent
accolade in Portugal, the "Consumer Choice" award .
First and foremost, these awards are a tribute to the
work of our sales advisers who consistently strive to
develop personalised relations and provide a high
quality service to all customers.
*Credit Institution category - Inference Operations – Viséo Conseil research conducted from May to July 2013, using mystery customers, with 215 contacts by telephone, email, Internet and social networks.
14 2013 ACTIVITY REPORT
Committed to corporate social responsibility
The COFIDISParticipationsGroup works topromote lasting,sustainabledevelopmentand includes thethree dimensionsof sustainabledevelopment in its
business activity: Economic, Social and Environmental.
Thus the Group has adopted five major commitments, rolled outin each of the retail chains as well as at all levels of the company,from strategy to operating practices:• Building a sustainable relationship with our customers• Supporting economic development• Promoting a policy of responsible human resources• Committed to combating exclusion• Limiting the impact of our activities on the environment
Committed to human rights and all forms of diversity, theCOFIDIS Participations Group has established partnerships witha range of organisations to help people in need. At local level,retail chains thus support many organisations, either throughfinance or the involvement of teams on the ground.
For example, the retail chainsin France signed a partnershipagreement with the Frenchregional debt support network,CRESUS (Chambre REgionnale duSUrendettement Social).
CRESUS is recognised as a public interest organisation. Itcomprises 18 associations in 14 regions in France, governedby a code of ethics and forming a local network dedicatedto providing advice and support for households in debt andpreventing financial and economic exclusion
CRESUS has lobbied for the creation of a consumer creditdatabase in France for more than 25 years, a project supportedby the COFIDIS Participations Group.
The Group has introduced a range ofmeasures to reduce its environmentalfootprint, including computerisation ofdocuments, building design in line with Frenchhigh environmental quality (HQE) standards,eco-friendly use of consumables and others.
The Group and its retail chains havealso introduced initiatives to increase staff awareness ofenvironmental issues and ensure they are actively involved in thechange process.
Shared human resources policy
Because its staff represents itsmost valuable asset, the COFIDISParticipations Group has consistentlyfocused on people. It strives toprovide support for all employeesand integrate them into theGroup community to ensure theiremployability and enhance theirmobility within the Group.In the retail chains, managers areencouraged to promote close
relationships based on independence, openness and trust.
Training is a critical component of HR policy providing theopportunity for all our staff to learn new skills and expertise andenable them to take over new duties and develop their careers.
We also pay attention to providing a stimulating workenvironment for our people and to creating a corporate culturewith strong values shared by all.
15
Cycling sponsorshipSuccessful season
The COFIDIS cycling team enjoyed several successes thisseason, with ample reason to be proud of their achievements.2013 will go down as a great sporting year with NicolasEDET taking the best climber jersey in the Vuelta and DannyNAVARRO finishing 9th in the Tour de France. The COFIDIS teamalso put in a strong performance in the Paris-Nice races, (5th outof 23, and in the Tour de France (10th out of 22).
2014 has already kicked off with excellent results. Betterpreparation during the winter months and more intensive trainingsaw the cyclists take to the winners' podium once again.Notching up more victories and more places on the winners'podium, in June 2014, the team took the lead in the FrenchCycling Cup and came top of the Europe Tour classification.
Their success is enthusiastically shared by the COFIDIS fan club,the increasing number of supporters that come out to cheer onthe team throughout France, and the employees of the COFIDISParticipations Group.
16 2013 ACTIVITY REPORT
Committed cycling team
Moreover, COFIDIS has maintained its commitment to theanti-doping group in France, “Mouvement Pour un CyclismeCrédible”, formed to restore cycling's image and improve itscredibility.
COFIDIS also continues its supportfor Mécénat Chirurgie Cardiaque,which enables children fromdeveloping countries with heartmalformations to undergo surgery
in France when they lack the technical and financial means to becared for in their countries of origin.
Laurent Thirionet, setting the gold standard in worldpara-cycling
For more than 15 years, Laurent Thirionet has been a star ofworld track and road para-cycling, and has collaborated with theCOFIDIS team throughout this time.
The partnership has been an extremely fruitful one: Laurent'sstellar career includes two Paralympic titles, three goldmedals, two bronze medals, eight world titles, seven Europeanchampionship wins, a number of world records, including theworld hour record in 1999 during a 41,030 k race (a record hestill holds), as well as victories in the Cycling World Cup andFrench championship cycling.
Having achieved this remarkable record, which is practicallyunequalled in French para-sport, Laurent Thirionet decided tohang up his jersey in October 2013. Congratulations Laurentand thank you for the wonderful times!
17
2013 ACTIVITY REPORT18
2 Consolidated financial statementsat 31 December 2013
Structure of COFIDIS Participations ...............................................20
Key figures ...................................................................................21
Consolidated balance sheet ..........................................................22
Consolidated income statement ....................................................24
Net income and gains and losses directly recognised in equity .....25
Change in shareholders' equity.....................................................26
Cash flow statement ....................................................................28
1919
2013 ACTIVITY REPORT20
Structure of COFIDIS Participations
LEGAL ORGANISATION CHART
COFIDISSlovakia
COFIDISCzech
Republic
COFIDISBelgium
COFIDISSpain*
COFIDISItaly
COFIDISPortugal *
COFIDISHungary*
MartinterCarmen
HOLDING
BANQUE FEDERATIVEDU CREDIT MUTUEL
100%
100% 100% 100% 100% 100% 100% 100%
100%100%
100%
40.35%
5.01%
COFIDIS S.A
100 %
47.22%
7.41%
ARGOSYN
100%
at 20/1/2014
*su
ccur
sale
s
is a European Economic Interest Grouping between Cofidis (81%), monabanq (10.38%), Créatis (8.58%), Cofidis Belgium (0.01%),C2C (0.01%), Sofemo Group (0.01%) and Cofidis Italy (0.01%).
21
Key figures
3 110
8 532
Gross outstanding loans(in million €)
9 124 9 0809 194
9 234
2008 201220112009 2010 2008 201220112009 2010
4 251
3848
3 077
3 265
Financings
Solvency ratio(in %)
2008 201220112009 2010
9,108,91
9,50
10,00 10,05
2008 201220112009 2010
Equity incl.subordinated debts
906911
938
1 0161 067
250100 100 100
10 574
2013 2013
3 299,7
2013
9,80
2013
1 141
100100
(in million €)
(in million €)
2013 ACTIVITY REPORT22
Consolidated balance sheetBALANCE SHEET - ASSETS – In thousands of € Note 31/12/2013 31/12/2012
Cash on hand, balances at central banks IV.1 919 2,208
Financial assets recognised at fair value through profit or loss IV.2 26,840 25,724
Derivative hedging instruments IV.3 22,380 28,601
Available-for-sale financial assets IV.4 65 61
Loans and advances to credit institutions IV.5 688,783 1,417,189
Loans and advances to customers IV.6 8,969,352 7,727,554
Revaluation surplus for rate hedging portfolios IV.3 49,411 57,080
Held-to-maturity financial assets – –
Current tax assets IV.14 22,462 17,462
Deferred tax assets IV.14 104,200 113,683
Accruals and miscellaneous assets IV.7 95,274 57,484
Non-current assets intended for sale – –
Interests in affiliates – –
Investment properties – –
Tangible assets IV.8 19,769 20,451
Intangible assets IV.9 22,614 30,137
Goodwill IV.10 173,448 173,448
TOTAL ASSETS 10,195,517 9,671,081
23
LIABILITIES Note 31/12/2013 31/12/2012
Central banks – –
Financial liabilities recognised at fair value through profit or loss IV.2 – –
Derivative hedging instruments IV.3 68,327 90,366
Debts to credit institutions IV.11 7,560,560 5,469,367
Debts to customers IV.12 575,003 664,918
Debts represented by a security IV.13 470,483 2,051,044
Revaluation surplus for rate hedging portfolios IV.3 – –
Current tax liabilities IV.14 21,542 16,962
Deferred tax liabilities IV.14 13,938 20,141
Accruals and miscellaneous liabilities IV.15 197,741 165,431
Debts related to non-current assets intended for sale – –
Insurance contract technical provisions – –
Provisions IV.16 31,938 22,225
Subordinated debt – –
TOTAL LIABILITIES 8,939,532 8,500,453
Equity attributable to Group shareholders IV.17 1,255,977 1,170,601
Capital and associated reserves 116,062 68,594
Consolidated reserves 1,022,690 1,000,469
Unrealised or deferred gains / losses 2,068 – 2,036
Profit for the period 115,157 103,573
Minority interests 8 27
TOTAL EQUITY 1,255,985 1,170,628
TOTAL LIABILITIES 10,195,517 9,671,081
2013 ACTIVITY REPORT24
Consolidated income statementINCOME STATEMENT - In thousands of € Note 31/12/2013 31/12/2012
Interest and similar income 1,029,166 1,008,984
Interest and similar costs – 141,256 – 160,449
Commissions (income) 229,917 217,691
Commissions (costs) – 19,889 – 20,730
Net gains / (losses) on financial instruments
recognised at fair value through profit or loss 1,053 4,316
Net gains / (losses) on available-for-sale financial assets 886 0
Income from other activities 1,923 2,591
Costs for other activities – 863 – 268
NET BANKING INCOME VI.1 1,100,937 1,052,135
General operating costs VI.2 – 544,802 – 517,496
Amortisation expense and provisions on tangible and intangible assets VI.3 – 16,187 – 13,651
GROSS OPERATING PROFIT 539,948 520,988
Cost of risk VI.4 – 366,108 – 363,368
OPERATING PROFIT 173,840 157,620
Share of net profit/(loss) of affiliates – –
Net gains or losses on other assets VI.5 – 1,732 – 492
Variations in the value of goodwill – –
PROFIT BEFORE TAXES 172,108 157,128
Tax on profits VI.6 – 56,964 – 53,577
Net profit for the year on discontinued operations or operations beingdiscontinued
NET PROFIT 115,144 103,552
Minority interests – 12 22
NET PROFIT - ATTRIBUTABLE TO GROUP SHAREHOLDERS 115,157 103,573
Earnings per share (in €): 0.54 0.53
25
Net income and gains and losses directlyrecognised in shareholders' equity
In thousands of € 31/12/2013 31/12/2012
Net profit attributable to Group shareholders 115,157 103,573
Translation adjustments – 81 (348)
Revaluation of derivative hedging instruments 4,136 6,499
Revaluation of long-term employee benefits 49 (1,454)
Revaluation of financial assets
Total gains and losses recognised directly in equity attributable to Group shareholders 4,104 4,697
Net income and gains and losses recognised directly in equity attributable to Group shareholders 119,261 108,270
Net income and gains and losses directly recognised in equity attributable to minority shareholders 189 (75)
Net income and gains and losses recognised directly in shareholders' equity 119,450 108,195
Data are presented in the amount net of tax (if applicable).
2013 ACTIVITY REPORT26
Change in shareholders' equity
In thousands of €
Capi
tala
ndas
soci
ated
rese
rves
Cons
olid
ated
rese
rves
Tota
lgai
nsan
dlo
sses
dire
ctly
reco
gnis
edin
shar
ehol
ders
'equ
ity
Netp
rofit
attr
ibut
able
toGr
oup
shar
ehol
ders
Equi
tyat
trib
utab
leto
Grou
psh
areh
olde
rs
Equi
tyat
trib
utab
leto
min
ority
shar
ehol
ders
Tota
lsha
reho
lder
s'eq
uity
Shareholders' equity at 1 January 2012 68,593 951,700 – 7,005 130,876 1,144,164 96 1,144,260
Allocation of 2011 income 130,876 – 130,876 0 0
Repayment of perpetual subordinatedcapital securities
– 1,746 – 1,746 – 1,746
Distribution in 2012 in respect of 2011 – 67,317 – 67,317 – 67,317
Interim dividends – 12,953 – 12,953 – 12,953
Sub-total of movements linked to relationswith shareholders
0 48,860 0 – 130,876 – 82,016 0 – 82,016
Variation in gains and losses recogniseddirectly in shareholders' equity
4,697 4,697 – 75 4,622
2012 INCOME 103,573 103,573 – 22 103,551
Sub-total 0 0 4,697 103,573 108,270 – 97 108,173
Effect of acquisitions and disposals onminority interests
0 0
Other variations 183 183 28 211
Equity at 31 December 2012 68,593 1,000,743 – 2,308 103,573 1,170,601 27 1,170,628
Effect of changes in accounting methods 0 0
Effect of correcting errors – 566 240 – 326 – 326
27
In thousands of €
Capi
tala
ndas
soci
ated
rese
rves
Cons
olid
ated
rese
rves
Tota
lgai
nsan
dlo
sses
dire
ctly
reco
gnis
edin
shar
ehol
ders
'equ
ity
Netp
rofit
attr
ibut
able
toGr
oup
shar
ehol
ders
Equi
tyat
trib
utab
leto
Grou
psh
areh
olde
rs
Equi
tyat
trib
utab
leto
min
ority
shar
ehol
ders
Tota
lsha
reho
lder
s'eq
uity
Shareholders' equity at 1 January 2013 68,593 1,000,177 – 2,068 103,573 1,170,275 27 1,170,302
Increase in share capital and share premium 47,468 47,468 47,468
Allocation of 2012 income 103,573 – 103,573 0 0
Repayment of perpetual subordinatedcapital securities
– 1,270 – 1,270 – 1,270
Distribution in 2013 in respect of 2012 – 65,635 – 65,635 – 65,635
Interim dividends – 38,577 – 38,577 – 38,577
Sub-total of movements linked to relationswith shareholders
47,468 – 1,909 0 – 103,573 – 58,014 0 – 58,014
Variation in gains and losses recogniseddirectly in shareholders' equity
4,104 4,104 202 4,306
2013 INCOME 115,157 115,157 – 13 115,144
Sub-total 0 0 4,104 115,157 119,261 189 119,450
Effect of acquisitions and disposals 24,860 24,860 24,860
Other variations – 405 – 405 – 208 – 613
Equity at 31 December 2013 140,921 997,863 2,036 115,157 1,255,977 8 1,255,985
2013 ACTIVITY REPORT28
Summary cash flow tableSUMMARY CASH FLOW TABLE in thousands of € 2013 2012
EARNINGS BEFORE TAXES 172,108 157,128
Net amortisation expense on tangible and intangible assets 13,801 13,634
Depreciation of goodwill and other assets 2,385 17
Net expenses for provisions – 10,086 – 64,025
Share of income in affiliates 0 0
+/- Net loss/net gain from investing activities 845 492
Income and expenses of financing activities 0 0
Other movements – 9,080 845
Total of non-monetary items included in net earnings before tax and other adjustments – 2,133 – 49,037
Flows from transactions with credit institutions 873,970 1,411,544
Flows from transactions with customers – 233,239 91,443
Flows from other transactions allocating financial assets or liabilities – 1,626,235 – 1,157,193
Flows from other transactions allocating non-financial assets or liabilities 32,136 28,951
Tax paid – 51,846 – 48,360
Net decrease (increase) in assets and liabilities from operating activities – 1,005,214 326,385
Total net cash flow generated from operating activities (A) – 835,239 434,477
Flows from financial assets and holdings 201,693 – 4,026
Flows from investment property 0 0
Flows from tangible and intangible assets – 9,544 – 5,554
Total cash flow generated from investment activities (B) 192,149 – 9,579
Cash flow coming from or going to shareholders – 55,224 – 76,963
Other net cash flows from financing activities 0 – 550,000
Total cash flow generated from financing activities (C) – 55,224 – 626,963
Effect of exchange rate variation and scope variation (D) – 48,002 987
Net increase (decrease) in cash and cash equivalents (A+B+C+D) – 746,316 – 201,079
29
SUMMARY CASH FLOW TABLE in thousands of € 2013 2012
Total net cash flow generated from operating activities (A) – 835,239 434,477
Total cash flow generated from investment activities (B) 192,149 – 9,579
Total cash flow generated from financing activities (C) – 55,224 – 626,963
Effect of exchange rate variation and scope variation (D) – 48,002 987
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,199,316 1,400,395
Cash on hand, balances at central banks, ICP (Assets and Liabilities) - BEGINNING OFPERIOD
2,208 3,909
Demand accounts and loans/borrowing with credit institutions - BEGINNING OF PERIOD 1,197,108 1,396,486
CASH AND CASH EQUIVALENTS AT END OF PERIOD 453,000 1,199,316
Cash on hand, balances at central banks, ICP (Assets and Liabilities) - END OF PERIOD 787 2,208
Demand accounts and loans/borrowing with credit institutions - END OF PERIOD 452,213 1,197,108
VARIATION IN NET CASH – 746,316 – 201,079
2013 ACTIVITY REPORT30
3 Notesto the 2013 consolidated financial statements for COFIDISParticipations S.A
Introduction ..................................................................................32
General context ............................................................................33
Accounting principles and policies ................................................38
Notes to the consolidated balance sheet .......................................48
Notes to off-consolidated balance sheet items..............................63
Notes to the Consolidated income statement ................................63
Segment information ....................................................................67
Employee benefits ........................................................................69
Risk exposure and hedging policy .................................................72
31
I Introduction
II General context
1 – Description of the entity2 – Significant events of the accounting
period3 – Simplified organisation chart for the
COFIDIS Participations Group at 31December 2013
4 – Events after the reporting period5 – Related party disclosures6 – Consolidation scope and methods
III Accounting principles andmethods
1 – Financial instruments2 – Deferred taxes3 – Assets4 – Goodwill5 – Provisions6 – Employee benefits7 – Equity instruments: deeply subor-
dinated notes8 – Interest income and expenses9 – Net commission income
10 – Judgements and estimates used inpreparing the financial statements
IV Notes to the Consolidatedbalance sheet
1 – Cash on hand, balances at centralbanks
2 – Financial assets and liabilitiesrecognised at fair value throughprofit or loss
3 – Derivative hedging instruments4 – Available-for-sale financial assets
5 – Loans and advances to creditinstitutions
6 – Loans and advances to customers7 – Accruals and miscellaneous assets8 – Tangible assets9 – Intangible assets
10 – Goodwill11 – Debts to credit institutions12 – Debts to customers13 – Debts represented by a security14 – Current and deferred tax assets
and liabilities15 – Accruals and miscellaneous
liabilities16 – Provisions17 – Shareholders' equity18 – Summary of financial instrument
classes by accounting categories
V Notes to off-consolidatedbalance sheet items
1 – Finance and guaranteecommitments
2 – Term financial instruments
VI Notes to the Consolidatedincome statement
1 – Net banking income2 – General operating costs3 – Amortisation expense and depre-
ciation of tangible and intangibleassets
4 – Cost of risk5 – Net gains or losses on other assets6 – Taxes7 – Auditors' fees
VII Segment information
1 – Definition of activity segmentsSegment information bygeographical area: data fromincome statement
3 – Segment information bygeographical area: data frombalance sheet
VIII Employee benefits
1 – Payroll2 – Workforce for the period3 – Post-employment benefits -
defined benefit schemes4 – Other long-term benefits5 – Actuarial assumptions6 – Reconciliation of balance sheet
provisions7 – Financial hedging of the scheme8 – Sensitivity analysis
IX Risk exposureand hedging policy
1 – Credit risk2 – Counterparty risk
for financial transactions3 – Overall interest rate and liquidity
risk4 – Foreign exchange risk
31
2013 ACTIVITY REPORT32
Notes to the 2013 consolidated financialstatementsfor COFIDIS participations S.A.I – IntroductionPursuant to Regulation (EC) 1606/2002 on the application of international accounting standards and Regulation (EC) 1126/2008 on their
adoption, the consolidated financial statements for the period have been prepared in accordance with IFRS, as adopted by the European
Union as at 31 December 2013. This IFRS framework includes IAS 1 to 41, IFRS 1 to 8 and their SIC and IFRIC interpretations adopted
at this date. No standard not adopted by the European Union has been applied. Summary documents are presented in accordance with
recommendation 2013-04 of the French national accounting standards authority (Autorité des normes comptables - ANC).
All IAS/IFRS were updated on 3 November 2008 by Regulation 1126/2008, which replaced regulation 1725/2003. This framework
is available on the European Commission web site: http://ec.europa.eu/internal_market/accounting/ias/index_en.htm
Information relating to risk management required by IFRS 7 is presented in a separate chapter in the activity report.
The Group early adopted IAS 19R - Employee Benefits - in 2012.
New accounting rules applicable from 1 January 2013
Mandatory applicationdate (reporting periods
starting on)
Consequences ofapplication
Amendment to IAS 1 – Presentation of Financial Statements:Presentation of Items of Other Comprehensive Income
01/01/2013 Limited
Amendment to IFRS 7 – Financial Instruments: Disclosures: Offsettingfinancial assets and liabilities
01/01/2013 Limited
Amendment - Annual improvements to International Financial ReportingStandards - IFRS
01/01/2013 Limited
Amendment to IAS 12 (May 2012) – Income taxes - Deferred Tax:Recovery of Underlying Assets
01/01/2013 Limited
IFRS 13 Fair Value Measurement, notably regarding measurement ofderivatives, taking into account counterparty credit risk and own creditrisk (CVA and DVA)
01/01/2013 Limited
33
II – General framework
1 – Description of the entity
The principle activity of COFIDIS
Participations SA and its subsidiaries is to
grant consumer credit and personal loans,
as well as issuing and managing payment
methods.
COFIDIS Participations SA was founded in
1982 by the 3SI Group, specialist in home-
shopping. On 23 March 2009, the Banque
Fédérative du Crédit Mutuel (BFCM) took
control of COFIDIS Participations SA of
which COFIDIS SA is the direct subsidiary.
COFIDIS Participations SA, registered
under company number 378 176 291, is
a public limited company registered and
domiciled in France. Its registered head
office is located at the following address:
Parc de la haute Borne, 61 avenue Halley,
59667 Villeneuve d’Ascq, France.
The consolidated financial statements will
be submitted for shareholder approval. They
have been prepared from the accounts at
31 December 2013 for companies included
within the scope of the Group. The financial
statements are expressed in thousands of
euro, unless otherwise indicated.
2 – Significant events of the accountingperiod
Significant events during the accounting
period are as follows:
• On 17 May 2013, BFCM reclassified
the total capital and voting rights of its
subsidiary Sofémo through a contribution
in kind to COFIDIS Participations SA.
Since the transaction was conducted
between companies under common
control, the value of the contribution
was taken to be the net book value of
the shares contributed, as stated in
the financial statements of BFCM as at
31/12/2012 (namely €47,499,480.41).
In return for the contribution, BFCM
received 15,700,799 new shares
in COFIDIS Participations SA. The
difference between the value of the
contribution (i.e. €47,499,480.41) and
the total nominal amount of the increase
in COFIDIS Participations SA's capital
(€2,355,119.85) gives a contribution
premium totalling €45,144,360.56. As
a result of the transaction, COFIDIS
Participations SA's share capital was
increased to €31,794,118.35, divided into
211,960,789 shares each with a par value
of €0.15. In accordance with the capital
contribution agreement, the expenses,
duties, taxes and fees were recognised as
a reduction from the contribution premium
in the amount of €31,477.36.
• The Board of Directors of COFIDIS
Participations SA meeting on 29 May
2013 decided to pay the remaining
dividend in respect of the 2012 financial
year in the amount of €61,429,376.87,
giving a dividend per share of €0.379
(196,259,990 shares).
• The Board of Directors of COFIDIS
Participations SA meeting on 11
July 2013 decided to pay an interim
dividend totalling €38,576,863.59,
giving a dividend per share of €0.182
(211,960,789 shares).
• Ficodis SA share capital reduction by
discharge of cumulative losses at end-
2012 amounting to ARS 601,285. On
completion of the transaction, the share
capital of Ficodis SA was reduced from
ARS 1,000,000 to ARS 398,715.
Standards and interpretations adopted by the European Union and not yet applied:
Mandatory applicationdate (reporting periods
starting on)
Consequences ofapplication
Amendment to IAS 32 – Financial Instruments: Presentation:Offsetting financial assets and liabilities
01/01/2014 Limited
IFRS 10-11-12 – IAS 28 – Standards relative to consolidationand financial information on non-consolidated entities
01/01/2014 Limited
2013 ACTIVITY REPORT34
3 – Simplified organisation chart for the COFIDIS Participations Group at 31 December 2013
COFIDIS S.A.
(subsidiary)
(subsidiary) (subsidiary) (subsidiary)
FICODIS SAArgentina
Creatis
COFIDISSlovakia
COFIDISBelgium
COFIDISCzech
Republic
COFIDISSpain
GEIESynergie
COFIDISItaly
COFIDISPortugal
COFIDISHungary
MonabanqFrance
MonabanqBelgium
Sofémo
4 – Events after the reporting period
There was no noteworthy event likely to
have a significant financial impact or of a
nature to challenge continued operation
on the reporting date for the Group's
consolidated financial statements.
5 – Related party disclosures
Parties related to the COFIDIS
Participation Group are:
– the consolidated companies,
– the company controlling COFIDIS
Participations SA (Banque
Fédérative du Crédit Mutuel),
– entities controlled by the same
parent company: the other entities
in the Crédit Mutuel Group,
– other related parties: entities of the
3 Suisses International Group,
– the principal directors of
COFIDIS Participations SA or its
shareholders.
Flows with consolidated companies
under exclusive control, considered as
related parties, are eliminated from the
consolidated accounts and are therefore
not presented below:
35
Balance sheet position in K€
TOTALParent
Company
Entitiescontrolled
by the sameparent company
Otherrelated parties
Derivative hedging instruments – Assets 21,304 23 21,281 0
Loans and advances to credit institutions 610,150 579,282 30,867 0
Accruals and miscellaneous assets 4,342 0 4,151 190
Total assets 635,795 579,305 56,300 190
Derivative hedging instruments – Liabilities 48,888 4 48,884 0
Debts to credit institutions 7,531,264 7,515,856 15,408 0
Debts represented by a security 387,088 342,088 45,000 0
Accruals and miscellaneous liabilities 16,981 0 16,667 314
Total liabilities 7,984,221 7,857,948 125,959 314
Commitments received 4,071,000 0 4,071,000 0
Commitments given 0 0 0 0
Income and expenditure in K€
TOTALParent
Company
Entitiescontrolled
by the sameparent company
Otherrelated parties
Interest and similar income 16,301 3,713 12,576 12
Net gains or losses on Commissions 185,032 – 1 187,029 – 1,997
Net gains or losses on portfolios at fair value throughprofit or loss
0 0 0 0
Gains or losses on other assets – 38 0 – 106 68
Total income 201,295 3,712 199,499 – 1,917
Interest and similar expenses 100,292 61,665 38,627 0
Operating costs 51,201 0 33,419 17,782
Total expenses 151,492 61,665 72,046 17,782
Transactions with the directors of COFIDIS Participations SA are limited exclusively to employee benefits (§ VIII).
2013 ACTIVITY REPORT36
6 – Consolidation scope and methods
6.1 Scope
The consolidated financial statements
for the COFIDIS Participations Group
bring together all the companies under
exclusive control, under joint control
or under significant influence. These
companies are respectively consolidated
according to the full consolidation,
proportionate consolidation and equity
methods.
The consolidated financial statements
include the accounts of COFIDIS
Participations SA and those of all its
subsidiaries:
List of companies Country locationConsolidation
method% holding at31/12/2013
% holding at31/12/2012
COFIDIS PARTICIPATIONS France
COFIDIS SA and branches France, Spain, Portugal, Hungary Full consolidation 99.99 99.99
FICODIS SA Argentina Full consolidation 66.00 66.00
CREATIS SA France Full consolidation 99.99 99.99
COFIDIS Belgium Belgium Full consolidation 99.99 99.99
COFIDIS Ceska Czech Republic Full consolidation 99.99 99.99
COFIDIS Spa Italy Full consolidation 99.99 99.99
COFIDIS Slovakia Slovakia Full consolidation 99.99 99.99
SYNERGIE France Full consolidation 99.98 99.98
Monabanq France France Full consolidation 99.99 99.99
Monabanq Belgium Belgium Full consolidation 99.99 99.99
Sofémo France Full consolidation 99.99
Changes in method and variation in scope
Consolidation of Sofémo as at 17 May 2013.
37
6.2 Concepts of control
In accordance with international
standards, all entities under exclusive
control, joint control or significant
influence are consolidated.
Exclusive control is presumed to exist
when COFIDIS Participations SA holds,
directly or indirectly through subsidiaries,
more than half the voting rights of an
entity, except if, under exceptional
circumstances, it can be clearly
demonstrated that this holding does not
allow control. Exclusive control also exists
when COFIDIS Participations SA, holding
half or less than half of the voting rights in
an entity, has the majority of power in the
management bodies.
Joint control is exercised in joint
companies, under which two or more joint
businesses are related by a contractual
holding establishing joint control.
Significant influence is usually evidenced
by the power to participate in the financial
and operational policies of a company,
without holding control. COFIDIS
Participations SA is presumed to have
significant influence when it directly or
indirectly holds 20% or more of the voting
rights in an entity.
6.3 Consolidation methods
Consolidation methods are fixed
respectively by standards IFRS 3 revised,
IAS 27 revised, IAS 28 and 31 and result
from the type of control exercised by
COFIDIS Participaionts SA over entities
that may be consolidated, regardless of
the nature of their business and their legal
personality:
– full consolidation, for exclusively
controlled entities, including entities
with different accounts structures,
even if their activity is not an
extension of the activity of COFIDIS
Participations SA. Full consolidation
consists of recognising the value
of each subsidiary's assets and
liabilities instead of the value of the
securities. The share of minority
interests in shareholders' equity and
in profit/(loss) appears separately
in the balance sheet and the
consolidated income statement.
– Proportionate consolidation, for
jointly controlled entities, including
entities with different accounts
structures, even if their activity is
not an extension of the activity
of COFIDIS Participations SA.
Under proportionate consolidation,
the representative fraction of its
interests in the balance sheet and in
the profit/(loss) of the consolidated
company is substituted for the
value of the securities in the parent
company’s accounts;
– the equity method, for entities
under significant influence or jointly
controlled entities. When a jointly
controlled entity is consolidated
using the equity method, the
information is disclosed in
the Notes. Under the equity
method, the Group's share in the
shareholders' equity and profit/(loss)
of the company is substituted for
the value of the securities.
6.4 Foreign currency transactions
The financial statements of COFIDIS
Participations Group are prepared in
euros. The balance sheet for foreign
subsidiaries and branches whose
functional currency is not the euro is
translated into euro at the exchange
rate on the reporting date. Items in the
income statement are translated using the
average rate for the accounting period.
Foreign currency translation adjustments
are shown for consolidated companies
that are not part of the euro zone
(COFIDIS Argentina, COFIDIS Hungary,
and COFIDIS Ceska).
For the Group's interests, foreign
currency translation adjustments are
included in shareholders' equity under
"Translation adjustments" and for third
party interests under "Minority interests".
The following parities were used to
translate the financial statements of
foreign subsidiaries and branches:
2013 ACTIVITY REPORT38
6.5 Treatment of acquisitionsand goodwill
Goodwill is the difference between the
acquisition price and the acquirer's
interest share in the fair value of the
identifiable assets and liabilities at the
acquisition date. On this date, this
difference is entered in the acquirer's
assets if it is positive and is recognised
in profit if it is negative. Goodwill is
recognised in the functional currency of
the acquired company and is converted
at the current exchange rate on the
reporting date. In accordance with revised
IFRS 3, goodwill is not depreciated but is
tested for impairment. The procedures for
performing these tests are described in
Note III.4 of the accounting principles.
Pursuant to revised IAS 27, increases
in the percentage holding in an entity
already controlled are recognised in
equity.
III - Accounting principles andmethods
1 – Financial instruments
In the 2013 consolidated financial
statements, financial assets and liabilities
are treated in accordance with the
provisions of IAS 39, as adopted by the
European Commission on 19 November
2004 and supplemented by regulations
1751/2005 dated 25 October 2005 and
1864/2005 dated 15 November 2005,
relating to the use of the "fair value
option", and by regulation 1004/2008
dated 15 October 2008, relating to the
transfer of financial assets.
Fair value is defined as the amount for
which an asset could be exchanged, or a
liability settled, between knowledgeable,
willing parties in an arm's length
transaction. The existence of quotations
published on an active market gives the
best indication of fair value for financial
instruments. In the absence of such
quotations, fair value is determined by
applying recognised valuation techniques
using "observable market data".
1.1 Securities
1.1.1 Classification of financial instru-ments
These are classified according to four
categories of assets applicable to
securities defined by IAS 39:
– financial assets at fair value through
profit or loss,
– held-to-maturity investments,
– available-for-sale financial assets,
– loans and advances.
1.1.1.1 Financial assets at fair value throughprofit or loss.
According to IAS 39, this portfolio
comprises securities where classification
as a financial asset recognised at fair
value through profit or loss results either
in a real intention to trade or an option
taken by the COFIDIS Participations
Group under the conditions described by
the standard.
Average rate 2013 Rate at end of periodRate at beginning of
periodAverage rate 2012
Argentine Peso 0.1353922 0.1112359 0.1541521 0.1692718
Czech Crown 0.0384806 0.0364604 0.0397599 0.0397683
Hungarian Florin 0.0033677 0.0033665 0.0034211 0.0034563
39
Financial assets or liabilities recognised
at fair value through profit or loss are by
nature assets or liabilities acquired or
generated principally for the purpose of
making a profit associated with short-
term price fluctuations or an arbitrage
margin.
Securities classified as financial assets
recognised at fair value through profit or
loss are initially recognised at fair value,
excluding transaction costs directly
attributable to the acquisition (which
are passed directly to profit or loss) and
including accrued coupons. They are
valued at their fair value and variations in
fair value are recognised in profit or loss.
1.1.1.2 Held-to-maturity investments
The category "Held-to-maturity
investments" includes securities with
fixed or determinable payments that the
COFIDIS Participations Group intends
and is able to hold to maturity, other than:
– those that the COFIDIS
Participations Group designates
on initial recognition as assets
recognised at fair value through
profit or loss,
– those that the COFIDIS
Participations Group designates as
available for sale,
– those that meet the definition of
loans and advances.
Securities held to maturity are initially
recognised at their acquisition price,
including transaction costs directly
attributable to the acquisition and
accrued coupons. These securities
are later recognised according to the
amortised cost method at the effective
interest rate.
If there is an objective indicator of
impairment, a depreciation is recorded
for the difference between the carrying
amount and the estimated discounted
recoverable amount at the original
effective interest rate. If it improves later,
the surplus provision is written back.
The COFIDIS Participations Group does
not hold securities falling within the "Held-
to-maturity investments" category.
1.1.1.3 Securities in the "Loans andAdvances" portfolio
The "Loans and Advances" categoryrecognises unquoted financial assetswith fixed or determinable payments.Securities are recognised at amortisedcost using the effective interest ratemethod corrected for any impairmentprovisions.
If there is an objective indicator ofimpairment loss, a depreciation mustbe recorded for the difference betweenthe carrying amount and the estimatedrecoverable amount discounted at theoriginal effective interest rate.
The COFIDIS Participations Group doesnot hold securities falling within the"Loans and Advances" category.
1.1.1.4 Available-for-sale financial assets
The "Available-for-sale financial assets"
category is defined by IAS 39 as the
default category.
According to the provisions of IAS 39,
the accounting principles for securities
classified as "Available-for-sale financial
assets" are as follows:
– securities available for sale
are initially recognised at their
acquisition price, including
transaction costs directly
attributable to the acquisition and
accrued coupons,
– accrued interest on available-for-
sale securities are carried over to
the attached advances account in
compensation for profit or loss,
– variations in fair value are
recognised in equity. In the event
of disposal, these variations are
reversed and recorded in profit
or loss. Depreciation over time of
any higher / lower value for fixed
payment securities is recognised
in profit or loss according to the
effective interest rate method,
– in the event of an objective sign
of significant or long-lasting
depreciation for equity securities,
2013 ACTIVITY REPORT40
and realised by a credit risk arising
for debt securities, the unrealised
capital loss recognised in equity is
reversed and recognised in profit
or loss for the period. If it improves
later, this depreciation is written
back through profit or loss for debt
instruments only. On the other
hand, for equity instruments, if
written back, the positive variation
in fair value is recognised in a
recyclable equity account.
1.1.2 Valuation of securities
Fair value is the valuation method
selected for all financial instruments
classified in the "Financial assets at fair
value through profit or loss" or "Available-
for-sale financial assets" categories.
Prices quoted on an active market form
the basic valuation method. By default,
the COFIDIS Participations Group uses
recognised valuation methods by referring
particularly to recent transactions.
When there is no quoted price for an
equity security and there is no recognised
valuation technique, the COFIDIS
Participations Group chooses techniques
based on objective and verifiable
indications such as determination of the
re-valued net asset or any other valuation
method for equity securities.
If no technique is able to give satisfaction,
or if the various techniques used give
estimates that are too dissimilar, the
security remains valued at cost and is
maintained in the "Available-for-sale
financial assets" category. However, if
such a case arises, information will be
provided in the notes.
1.1.3 Depreciation of securities
Depreciation is recorded where there are
objective signs of impairment loss for
assets other than those classified as "Fair
value through profit or loss".
It is realised through a lasting or
significant fall in value of the security for
equity securities, or by the appearance of
a significant deterioration in the credit risk
evidenced by a risk of non-collection for
debt securities.
A provision is only constituted to the
extent that the depreciation will result in a
probable loss of all or part of the amount
invested.
1.2 Credit activity
Credits are allocated to the "Loans and
Advances" category. Thus, in accordance
with IAS 39, they are initially valued at
fair value, and later at amortised cost
according to the effective interest rate
method. The effective interest rate is the
rate that exactly discounts the future cash
flows to the original net outstanding loan.
This rate includes losses in value as well
as income and transaction costs included
in the effective interest rate, if appropriate.
Accrued interest on advances is carried
over to the attached advances account in
compensation for profit or loss.
In accordance with IAS 39, advances
allocated to "Loans and Advances"
are depreciated when they present
one or more loss events occurring
after realisation of these advances.
Depreciation is thus constituted for
customer advances with a proven
credit risk matching one of the following
situations:
– when there are one or more
unpaid debts given the special
characteristics of these credits,
– when the situation of a counterparty
has characteristics such that
independently of the existence of
any unpaid loans, a proven risk can
be said to exist,
– if dispute proceedings exist
between the institution and the
counterparty.
Depreciation is equal to the difference
between the carrying amount of the
loans (amortised cost) and the sum of the
estimated future flows, discounted at the
original effective interest rate for revolving
credits. Calculation of depreciation is
based on:
– a statistical approach by
homogeneous portfolio of
41
advances, given the insignificant
nature of the advances taken
individually and their common
characteristics in terms of credit
risk,
– the probabilities of default and
losses based on the risk level
of each of the categories of
outstanding loans (number of
late monthly payments, specific
reasons, etc.).
The amount of depreciation is obtained by
applying statistical modelling of collection
and loss flows by including all possible
movements between the different layers,
based on observed historical data. In
accordance with the provisions of ISA
39, cash inflows used in the statistical
models are discounted. Depreciation
calculated on a debt presenting a proven
credit risk is recognised in cost of risk.
Counting from depreciation of the debt,
the "interest and similar income" entry
in the income statement recognises the
repayment of the net carrying amount of
the debt, calculated at the rate used to
discount the recoverable flows.
1.3 Financial liabilities
IAS 39 adopted by the European Union
recognises two categories of financial
liabilities:
– financial liabilities valued by type
at fair value in compensation for
profit or loss. Their variations in fair
value affect profit or loss at the end
of accounting periods. However
it is noted that the COFIDIS
Participations Group does not hold
liabilities at fair value through profit
or loss.
– other financial liabilities: this
category includes all other financial
liabilities. This portfolio is recognised
at original fair value (including
income and transaction costs) then
recognised later at amortised cost
according to the effective interest
rate method.
1.4 Derivative instruments
Derivative instruments are financial assets
or liabilities and are recognised on the
balance sheet at the original fair value
of the transaction. At the end of each
accounting period, these derivatives
are measured at fair value whether they
are held for trading or they are part of a
hedging relationship.
The counterpart of the revaluation of
derivatives on the balance sheet is
recognised in the income statement
(except in the special case of a cash flow
hedging relationship)
The objective of fair value hedging is to
reduce the risk of changes in the fair value
of a financial asset or liability.
The objective of cash flow hedging is to
reduce the inherent risk in variability of
future cash flows on financial instruments.
As part of a micro-hedging management
intention, the following conditions must
be met in order to benefit from hedge
accounting:
– eligibility of the hedging instrument
and the instrument hedged,
– documentation formalised from
the start, particularly including
the individual designation and
characteristics of the hedged item,
the hedging instrument, the nature
of the hedging relationship and the
nature of the risk being hedged,
– demonstration of the hedging
effectiveness, at the start and
retrospectively.
The revaluation of the derivative is
recognised in the accounts as follows:
– fair value hedge: revaluation of the
derivative is recognised in profit or
loss symmetrically to the revaluation
of the hedged item up to the limit
of the hedged risk and only any
ineffectiveness of hedging appears
as net value through profit or loss,
– cash flow hedge: revaluation of
the derivative is carried over to
the balance sheet as counterpart
to a specific recyclable equity
account and the inefficient part of
the hedging is recognised through
2013 ACTIVITY REPORT42
profit or loss, as appropriate.
Accrued interest from the derivative
is recognised through profit or
loss symmetrically to the hedged
transactions.
As regards macro-hedging (portfolio
hedging), the Group documents
transactions as cash flow hedges for
variable rate loans and as fair value
hedges for the depreciable loans portfolio.
Since the 2009 reporting date, the Group
has been using provisions relating to fair
value hedging of a portfolio of interest rate
items.
For portfolios of depreciable assets
(fixed-rate assets), the Group verifies that
there is no over-hedging by applying the
provisions of IAS 39 Carve Out.
After a cash flow or fair value macro-
hedge has been documented, the
revaluation of the derivative is recognised
in the accounts according to the same
principles as those described for micro-
hedging.
The variation in fair value of portfolios
of fair-value hedged instruments is
recognised on a specific line of the
balance sheet, "Revaluation difference for
portfolios hedged by rate", through the
counterpart of the income statement.
1.5 Derecognitionof financial instruments
A financial asset (or Group of financial
assets) is derecognised in whole or part:
– when the contractual rights to the
cash flows associated with it expire
or are transferred, and
– when nearly all the risks and
benefits associated with this
financial asset are transferred.
When the contractual rights to cash flows
are transferred but only a part of the
risks and benefits, as well as control, are
retained, the entity continues to recognise
the financial asset to the extent that it is
involved in this asset.
2 – Deferred taxes
IAS 12 requires recognition of deferred
taxes under the following conditions:
– a deferred tax liability must
be recognised for all taxable
temporary differences, between
the accounting value of an asset or
liability on the balance sheet and its
tax base, except to the extent that
the deferred tax liability is generated
by: initial recognition of goodwill,
or initial recognition of an asset or
a liability in a transaction that is not
a business combination and that
affects neither the accounting profit
nor the taxable profit (tax loss) on
the date of the transaction.
– a deferred tax asset must be
recognised for all deductible
temporary differences, between
the carrying value of an asset or
liability on the balance sheet and
its tax base, to the extent that it
is likely that a taxable profit, on
which these deductible temporary
differences could be charged, will
be available, unless the deferred
tax asset was not generated by the
initial recognition of an asset or a
liability in a transaction that is not
a business combination and that
affects neither the accounting profit
nor the taxable profit (tax loss) on
the date of the transaction.
– a deferred tax asset must also be
recognised for carrying forward
unused tax losses and tax credits,
to the extent that it is likely that
there will be future taxable profit to
which these unused tax losses and
tax credits may be charged.
Deferred tax assets and liabilities are
measured at the tax rates that are
expected to apply when the asset is
realised or the liability is settled, to
the extent that these rates have been
adopted at the reporting date.
Gains on equity securities, as defined
by the French General Tax Code and
falling within the long-term tax system,
are exempt for the fiscal years starting
43
from 1 January 2007. Therefore,
unrealised capital gains recorded on the
reporting date do not generate temporary
differences giving rise to the recognition of
deferred taxes.
Deferred tax is recognised in the net profit
or loss for the period except to the extent
that the tax is generated:
– either by a transaction or an event
that is recognised directly in equity,
in the same period or a different
period, in which case it is directly
debited or credited in equity,
– or by a business combination.
Deferred tax assets and liabilities are
offset if and only if:
– the entity has a legally enforceable
right to offset due tax assets and
liabilities, and
– the deferred tax assets and
liabilities relate to taxes on profits
levied by the same tax authority,
either on the same taxable entity,
or on different taxable entities that
have the intention, either to settle
the due tax assets and liabilities
based on their net amount, or to
realise the assets and settle the
liabilities simultaneously, during
each future accounting period in the
course of which it is expected that
significant amounts of deferred tax
assets or liabilities will be settled or
recovered.
Calculations of deferred taxes are not
discounted.
3 – Assets
In compliance with IAS 16, when a fixed
asset is structured through components
with different useful lives, these are
recognised and depreciated as distinct
items. The depreciable base takes
account of any residual value of fixed
assets.
When it appears from the terms of a
lease contract in which the COFIDIS
Participations Group is lessee that
practically all the risks and benefits
inherent in ownership are transferred
by the lessor to the lessee, the
corresponding assets are recorded at
the time of first recognition as tangible
assets on the COFIDIS Participations
Group's balance sheet, in an amount
equal to the fair value of the leased asset
or the discounted value of the minimum
payments made in respect of the lease, if
this is lower. This sum is then reduced by
depreciation and impairment recorded.
The financial commitments arising from it
are entered in financial debts.
Fixed assets are depreciated by the linear
method over the foreseeable useful life of
the assets. Principal useful lives selected:
– Land, landscaping, utility services:
15-30 years
– Constructions – carcass structure:
20-80 years (depending on the type
of building concerned)
– Constructions – equipment: 10-40
years
– Fixtures and fittings: 5-15 years
– Furniture and office equipment:
5-10 years
– Safety equipment: 3-10 years
– Movable equipment: 3-5 years
– Computer equipment: 3-5 years
– Software acquired or created
internally: 1-10 years
– Acquired client base: 9-10 years
(if acquiring customer contract
portfolio)
In accordance with IAS 36 "Impairmentof assets", when events or changes inthe market environment indicate a riskof impairment of intangible and tangibleassets, they must be reviewed in detailto determine if their carrying amount islower than their recoverable value, thisbeing defined as the higher of the fairvalue (reduced by the disposal cost)and the value in use. The value in use isdetermined by discounting future cashflows expected from the use of the assetand its disposal.
Where the recoverable amount wouldbe less than the carrying amount, animpairment loss is recognised for thedifference between these two amounts.Impairment losses relating to intangibleassets can be reversed subsequently ifthe recoverable value becomes greater
2013 ACTIVITY REPORT44
than the carrying amount (up to the limitof the initially recognised depreciation).
Based on the information on fixedasset values available to it, the COFIDISParticipations Group can conclude thatimpairment testing would not result inmodifying the values recorded on thebalance sheet at 31 December 2013.
4 - Goodwill
4.1 Initial recognition
Assets and liabilities acquired as part of
a business combination are recognised
according to the acquisition method:
assets and liabilities are then recorded at
fair value. The residual difference between
the acquisition price and the re-valued
assets and liabilities is recognised under
"Goodwill", if necessary).
4.2 Impairment testsand Cash Generating Units
In accordance with revised standard IFRS
3 "Business combinations", goodwill
is not longer subject to systematic
annual depreciation: the net value of
intangible items is actually subject to
periodic analysis based on discounting
future financial flows corresponding to
the most probably assumptions made
by Management. This impairment test
is based on assumptions in terms of
growth rate, discount rate and tax rate.
The selected assumptions are based
on business plans for future years. This
valuation is carried out on an annual
basis or when a significant event requires
it. Depreciation is recognised when the
valuation reveals undervaluing of the
intangible items assessed.
To perform this impairment test, goodwill
must be allocated to each of the Cash-
Generating Units, forming a unified Group
jointly generating identifiable cash flows
and which are largely independent from
the cash inflows generated by other asset
Groups. The value in use of these units
is determined by reference to discounted
net future cash flows. When the carrying
amount of the CGU is greater than
the value in use, an impairment loss is
recognised for the difference and charged
in the first instance to goodwill.
As part of its transition to IFRS, the
Group considered that the legal entities
constituted CGUs.
5 – Provisions
The COFIDIS Participations Group has
identified all its obligations (legal or
implicit), resulting from a past event,
for which it is likely that settlement
is expected to result in an outflow of
resources, for which the timing or amount
are uncertain but for which the estimate
can be determined reliably.
In respect of these obligations, the
COFIDIS Participations Group has
constituted provisions that in particular
cover:
– company commitments,
– legal risks.
These provisions are estimated according
to their nature, taking account of the most
likely assumptions. The amount of the
obligation, whether it is legal, regulatory
or contractual, is discounted to determine
the amount of the provision, once such
discounting represents a significant
feature.
6 – Employee benefits
6.1 – Employee benefits
Under IAS 19, employee benefits are
grouped into four categories:
– short-term employee benefits,
– post-employment benefits
– long-term benefits
– termination benefits.
From 1 January 2012, they are
recognised in accordance with IAS 19R,
which is applied in advance. The new
provisions result in:
– defined post-employment benefits,
by the immediate recognition
of actuarial gains and losses in
unrealised gains or losses or
deferred and recognised in equity,
and the changes to the plan in
45
income, the application to the plan
assets, of the discount rate for debt
and improved disclosures;
6.1.1 Short-term employee benefits
Short-term employee benefits include:
– salaries, remuneration and social
security contributions,
– short-term paid absences
(particularly annual leave and sick
leave),
– profit sharing and bonuses,
– non-monetary benefits (medical
aid, housing, company cars,
etc.) granted to staff in active
employment.
All of these short-term benefits are
recognised as costs for the period.
6.1.2 Post-employmentbenefits
Post-employment benefits essentially
relate to retirement and are governed
by arrangements classified into two
categories:
– defined contribution plans:
those under which the Group's
commitment is limited only to
paying a contribution, but includes
no commitment for the Group on
the level of benefits provided. The
contributions paid are recognised
as costs in the accounting period.
– defined benefit plans: these are
schemes for which the Group is
committed formally or by implicit
obligation to an amount or a level of
benefits and therefore assumes the
medium or long-term risk.
The principle is that the cost of the post-
employment benefits must be recognised
as costs during the employee's period
of employment and not at the time they
effectively receive these benefits:
– in a defined contributions scheme,
the company is discharged from
any obligation once it has paid its
contributions to the funds. The
cost of post-employment benefits
therefore corresponds quite simply
to the contributions over the period,
– in a defined benefits scheme, the
cost of post-employment benefits
depends partly on the variation
in the amount of the company's
commitments during the accounting
period and partly on the change in
the value of the fund's assets.
A provision is recognised in the balance
sheet liabilities to cover all retirement
commitments. The valuation performed
on a minimum annual basis incorporates
demographic assumptions, early
retirements, increases in salaries and
discount and inflation rates.
When these schemes are financed
by external funds meeting the assets
definition of the scheme, the provision
intended to cover the relevant
commitments is reduced by the amount
of the fair value of these funds.
The differences generated by changes
in these assumptions and by differences
between previous assumptions and what
has actually occurred constitute actuarial
gains and losses. When the plan has
assets, they are measured at fair value
and their expected return is recognised in
profit or loss. The difference between the
actual return and the expected return is
also an actuarial gain or loss.
Actuarial gains and losses are posted to
unrealised or deferred gains or losses
and recognised in equity. Plan reductions
and liquidations result in a change in the
commitment, which is recognised in profit
or loss for the period.
6.1.3 Termination benefits
These benefits are recognised if and
only if the company is "demonstrably
committed" to terminate the employment
of one or more members of staff before
the normal retirement age, or to provide
these benefits following an offer made to
encourage voluntary redundancy.
IAS 19 states that the company
is "demonstrably committed" to a
termination when, and only when it has
a detailed formal plan for the termination
and is without realistic possibility of
withdrawal. It adds that such a plan must,
as a minimum, indicate:
2013 ACTIVITY REPORT46
– the location, function and
approximate number of people
affected,
– the benefits provided for each
function or professional grade,
– the date on which the plan will be
implemented.
These benefits are subject to a provision
at the end of the accounting period.
7– Equity instruments: deeplysubordinated notes
7.1 Characteristics of super-subordinated equity
The French Financial Security Law
of 2003 introduced the possibility of
issuing securities qualified as "deeply
subordinated". These securities are
perpetual and are therefore issued for
a unlimited period, no repayment date
being contractually established. In the
event of the issuer going into official
receivership, the eligibility of holders of
such securities ranks lower than that of
all other categories of bonds. Usually, the
issuer has a repayment option starting
from a given maturity date and is bound
to pay interest to bearers of the securities
when it proceeded to pay dividends
during the accounting period.
7.2 Accounting treatment:nominal and interest charges
IAS 32 and IAS 39, relating to the
presentation and recognition of financial
instruments, distinguish between debt
instruments and equity instruments, in
particular based on the substance of the
instruments' contractual characteristics.
According to IAS 32, a financial
instrument for which repayment is not
provided in own shares is an equity
instrument if there is no contractual
obligation to settle in cash or another
financial asset under potentially
unfavourable conditions for the issuer.
When repayment of the capital is at
the sole discretion of the issuer, the
classification of issued securities as debt
instruments or as equity instruments is
determined on the basis of other rights
attached to them. When repayment of the
securities is at the discretion of the issuer,
the securities are equity instruments.
Non-redeemable deeply subordinated
notes, except at the issuer's initiative, and
for which the payment of a coupon is not
obligatory, constitute consolidated equity
and are therefore recognised for the cash
amount received.
The coupons attaching to them are
entered as financial expenses for the
accounting period in the individual
financial statements of the issuer and,
in the consolidated financial statements,
are carried over to reduce equity by the
amount paid net of tax.
8 – Interest income and expenses
Interest income and expenses are
recognised in the income statement for all
financial instruments valued at amortised
cost using the effective interest rate
method.
The effective interest rate is the rate
used to discount future cash inflows or
outflows over the estimated lifetime of the
financial instrument so as to obtain the
carrying amount of the financial asset or
liability. To determine the effective interest
rate, the Group estimates the cash
flows taking contractual procedures into
consideration. This calculation includes
the commissions paid or received
between the parties to the contract or
intermediaries once they are linked to the
yield from the financial instrument, as well
as the transaction costs and losses.
Once a financial asset or a group
of similar financial assets has been
depreciated following an impairment loss,
subsequent interest income is recognised
in the income statement under "Interest
and similar income" based on the original
effective interest rate.
47
9– Net commission income
The Group recognises commission
income and expenses on services
through profit or loss based on the nature
of the services to which they are related.
Commission remunerating continuous
services is spread through profit or loss
over the duration of the service rendered.
Commissions remunerating occasional
services, such as penalties on payment
incidents, are fully recognised through
profit or loss, under "Commission
income", when the service is delivered.
10 – Judgements and estimates used inpreparing the financial statements
In preparing the financial statements as
at 31 December 2013, management is
required to make valuations, which by
their nature, require making assumptions
and include risks and uncertainties
regarding their future realisation.
These can be influenced by many factors,
particularly:
– activities in national and
international markets,
– fluctuations in interest and
exchange rates,
– the economic and political situation
in some business segments or
countries,
– changes in regulations or in
legislation.
This list is not exhaustive.
Accounting estimates that require
assumptions to be made are used
principally for the following valuations:
10.1 Financial instrumentsmeasured at fair value
The fair value is the amount for which an
asset could be exchanged, or a liability
settled, between knowledgeable, willing
parties in an arm's length transaction.
The fair value selected to measure a
financial instrument is firstly the quoted
market price for the financial instrument
when it is listed on an active market.
If a market for a financial instrument is
not active, fair value is then determined
using valuation techniques. A financial
instrument is considered as listed on
an active market if prices are easily and
regularly available from a stock exchange,
broker, trader or regulatory agency, and
these prices represent actual transactions
and take place regularly in arm's length
transactions on the market.
When a financial instrument is handled
on different markets and the Group has
immediate access to these markets, the
fair value of the financial instrument is
represented by the market price. When
there are no listings for a given financial
instrument but the components of this
financial instrument are listed, the fair
value is equal to the sum of the prices
listed for the different components of
the financial instrument including the
purchase and sale price of the net
position.
If a market for a financial instrument is not
active, its fair value is determined using
valuation techniques. Depending on the
financial instrument, these include using
data from recent transactions, fair values
of comparable financial instruments and
valuation models based on discounting
future cash flows.
10.2 Retirement schemes and otherfuture financial benefits
Calculations relating to expenses
associated with pensions and future
financial benefits are based on
assumptions for discount rates, staff
turnover or rates of growth for salary and
social security contributions, made by
management. If the actual figures differ
from the assumptions used, the expense
associated with pensions can increase
or decrease during future accounting
periods.
Management also estimates the
predicted yield rate for assets in these
schemes. Estimated yields are based on
the predicted yield from fixed payment
securities, particularly the yield from
bonds.
2013 ACTIVITY REPORT48
10.3 Depreciation of customer advances
The value of the "Loans and advances"
entry is adjusted using a provision relating
to depreciated advances when there is
a proven risk of non-recovery for these
debts.
The value of this provision is estimated
on a discounted basis depending on a
certain number of factors. It is possible
that future credit risk evaluations
may differ significantly from current
evaluations, which could necessitate an
increase or reduction in the amount of the
provision.
10.4 – Provisions
The measurement of other provisions
may also be the subject of estimates,
particularly provisions for legal risks
that result from Management's best
assessment, given the information in its
possession at the year-end.
10.5 Depreciation of goodwill
Goodwill is subject to depreciation
tests at least once a year. Selected
assumptions in terms of business growth
and discount rates for future financial
flows may influence the amount of any
impairment losses to be recognised.
A description of the method applied is
detailed in the section "Consolidation
principles and methods".
IV - Notes to the consolidated balance sheet
1 - Cash on hand, balances at central banks (in thousands of €)
31/12/2013 31/12/2012
Accounts open at central banks 0 0
Cash and cash equivalents 919 2,208
Total 919 2,208
49
2 - Financial assets and liabilitiesrecognised at fair value through profitor loss
At 31 December 2013, financial assets
recognised at fair value through the
income statement stood at €26,840 k. The
Group does not hold financial liabilities at
fair value through the income statement.
Financial assets at fair value through the
income statement exclusively comprise
debt securities with a 100% capital
guarantee at maturity.
3 – Derivative instruments
3.1 - Derivative hedging instruments
At 31 December 2013, financial
instrument interest rate swaps amounted
to €22,380 k in assets and €68,327 k in
liabilities. The portfolio is broken down as
follows:
– swaps paying a fixed rate used to
hedge the risks associated with
financing fixed rate outstanding
debts,
– swaps receiving a fixed rate used
to hedge the risks associated with
loans granted at variable rates,
– interest rate options (particularly CAP
guaranteeing a ceiling rate) used to
guard against a rise in the financing
cost for variable rate loans arising
from a large increase in rates.
– Currency swaps paying a fixed rate
in Hungarian florins used to hedge
the risk associated with refinancing
the Hungarian branch.
Derivative hedging instruments – asset fair value (in thousands of €)
2013
< 1 year> 1 year
and < 5 years> 5 years
Total in marketvalue
31/12/2012
Swaps 2,817 7,699 11,794 22,309 28,601
Options 71 0 0 71 0
Total 2,888 7,699 11,794 22,380 28,601
31/12/2013 31/12/2012
Derivative cash flow hedging instruments 20,038 28,568
Derivative fair value hedging instruments (1) 2,342 33
Total 22,380 28,601
2013 ACTIVITY REPORT50
Derivative hedging instruments – liability fair value (in thousands of €)
2013
< 1 year> 1 year
and < 5 years> 5 years
Total in marketvalue
31/12/2012
Swaps 11,960 43,336 9,105 64,402 85,270
Options 175 3,751 0 3,926 5,095
Total 12,135 47,088 9,105 68,327 90,366
31/12/2013 31/12/2012
Derivative cash flow hedging instruments 10,022 26,641
Derivative fair value hedging instruments (1) 58,306 63,724
Total 68,327 90,366
The strategy for using hedging instruments is explained in detail in note IX "Risk exposure and hedging policy".
(1) For fair value hedging, refer to § III.1.4.
3.2 Fair value hierarchy for financialinstruments
There are three levels of fair value for
financial instruments, according to the
definitions in IFRS 7:
– Level 1: prices quoted on active
markets for identical assets or
liabilities;
– Level 2: data other than Level 1
quoted prices for the relevant asset
or liability, observable either directly
(i.e. prices) or indirectly (i.e. price-
derived data);
– Level 3: data not based
on observable market data
(unobservable data).
51
Level 1 Level 2 Level 3 TotalTransfers Transfers
L1 => L2 L2 => L1
Financial assets
Available-for-sale assets 65 65
Assets recognised at fair value through profitor loss
26,840 26,840
Derivative hedging instruments 22,380 22,380
Loans and advances to credit institutions 688,783 688,783
Loans and advances to customers 8,969,352 8,969,352
Total 0 738,068 8,969,352 9,707,420 0 0
Financial liabilities
Derivative hedging instruments 0 68,327 0 68,327 0 0
Total 0 68,327 0 68,327 0 0
3.3 Revaluation surplus for rate hedging portfolios
Fair value2013
Fair value2012
Changein fair value
Fair value of interest rate risk by portfolios
• of financial assets 49,411 57,080 – 7,669
• financial liabilities 0 0 0
4 - Available-for-sale financial assets
31/12/2013 31/12/2012
Accrued interest FCT Cofititrisation 0 0
Certificates of membership of deposit guarantee funds 65 61
Total of available-for-sale securities 65 61
2013 ACTIVITY REPORT52
2013Fair Value of non-
depreciated assetsFair Value of depre-
ciated assetsNet
carrying amount
Central administration – – –
Credit institutions 65 0 65
Institutions not credit institutions – – –
Large companies – – –
Retail customers – – –
Total 65 0 65
5 - Loans and advances to credit institutions (in thousands of €)
31/12/2013 31/12/2012
Accounts and loans 688,104 1,416,719
Associated advances 679 471
Total of loans and advances to credit institutions 688,783 1,417,189
The "Loans and advances to credit institutions" entry does not include depreciation.
6 - Loans and advances to customers (in thousands of €)
In thousands of €31/12/2013
Dt Sofemoin 2013
31/12/2012
Advances to customers 10,574,349 1,078,907 9,234,163
Depreciation 1,604,997 82,335 1,506,609
Total of loans and advances to customers 8,969,352 996,571 7,727,554
Breakdown of loans and advances to customers by due date (in thousands of €)
2013
Less than one year More than one year Total
Loans and advances to customers 2,226,220 6,743,131 8,969,352
53
2012
Less than one year More than one year Total
Loans and advances to customers 1,962,412 5,765,141 7,727,554
Breakdown of loans and advances to customers by quality of credit (in thousands of €)
2013
SoundDepreciated
assetsGross value
Impairment Total
Loans and advances to customers 8,069,750 2,504,598 1,604,997 8,969,352
For information, restructured outstanding loans amounted to €476,449 thousand (before discount). They are presented with the
sound loans for an amount net of discount (discounted differential of cash inflows).
2012
SoundDepreciated
assetsGross value
Impairment Total
Loans and advances to customers 6,848,642 2,385,521 1,506,609 7,727,554
For information, restructured outstanding loans amounted to €485,154 thousand.
Depreciation of loans and advances
31/12/2012Charges
Write-backsScope entry Other 31/12/2013
Depreciation of loans and advances to customers 1,506,609 21,658 78,340 (1,611) 1,604,997
2013 ACTIVITY REPORT54
7 - Accruals and miscellaneous assets
31/12/2013 31/12/2012
Miscellaneous debtors 41,494 19,494
Others 4,887 4,891
Total miscellaneous assets 46,381 24,385
Income receivable 10,124 6,608
Prepaid expenses 7,162 6,808
Others 31,608 19,684
Total Settlement accounts 48,893 33,099
Total miscellaneous assets and settlement accounts 95,274 57,484
8 – Tangible assets
Variations in the gross values of tangible assets and accrued depreciation are represented in the following table (in thousands of €):
31/12/2012 Increases Decreases Scope entry Other 31/12/2013
Land 3,931 6,592 (232) 0 0 10,291
Computer equipment 30,207 273 (5,554) 0 (17) 24,909
Office equipment 9,957 167 (371) 457 (7) 10,204
Improvements to buildings 17,175 136 (1,389) 0 (28) 15,894
Other tangible assets 5,954 126 (422) 0 (29) 5,630
Gross valueof tangible assets
67,224 7,293 (7,967) 457 (80) 66,927
Land 1,568 294 (199) 0 (0) 1,663
Computer equipment 23,234 1,469 (4,642) 0 (13) 20,048
Office equipment 7,683 493 (296) 231 (12) 8,100
Improvements to buildings 10,740 1,453 (1,322) 0 (39) 10,832
Other tangible assets 3,549 1,220 (959) 0 (0) 3,809
Depreciationof tangible assets
46,773 4,929 (7,419) 231 (63) 44,451
Provisions for tangible assets 2,707 2,707
Net value of tangible assets 20,451 (342) (548) 226 (17) 19,769
55
9 – Intangible assets
Variations in the gross values of tangible assets and accrued depreciation are represented in the following table (in thousands of €):
31/12/2012 Increases Decreases Scope entry Other 31/12/2013
Lease premium 228 20 0 0 0 247
Trademarks acquired as part ofgrouping
11,333 1 (6) 0 0 11,328
Set-up costs 53 0 0 0 – 4 49
Software purchased 48,844 1,249 (8,018) 0 66 42,141
Software produced internally 14,812 878 0 0 0 15,691
Advances and deposits 279 139 (188) 0 (117) 113
Other intangible assets 213 78 0 47 – 19 319
Gross value of intangibleassets
75,762 2,366 (8,213) 47 (73) 69,889
Lease premium 23 1 0 0 0 24
Set-up costs 53 0 0 0 – 4 49
Software purchased 36,712 6,103 (6,890) 0 – 17 35,908
Software produced internally 8,683 3,809 (1,397) 0 0 11,094
Other intangible assets 154 35 – 23 47 – 13 200
Depreciation and provisionsfor intangible assets
45,624 9,948 (8,310) 47 (34) 47,275
Net value of intangible assets 30,137 (7,582) 98 0 (40) 22,614
10 - Goodwill (in thousands of €)
The change in and breakdown of goodwill are presented as follows:
2012 IncreasesImpairment
losses2013
Net value of goodwill 173,448 0 0 173,448
Impairment tests carried out in 2013, in accordance with the procedures described in Note III 4.2, did not result in impairment of
goodwill recognised on the balance sheet.
2013 ACTIVITY REPORT56
11 - Debts to credit institutions (in thousands of €)
31/12/2013Dt Sofemo
in 201331/12/2012
Ordinary demand accounts 28,696 9,575 11,018
Ordinary term accounts 7,521,734 943,200 5,453,443
Other debts 10,130 4,165 4,906
Total debts to credit institutions 7,560,560 956,940 5,469,367
12 - Debts to customers (in thousands of €)
31/12/2013 31/12/2012
Ordinary accounts 44,132 42,749
Special savings accounts 497,770 586,301
Term creditor accounts 21,024 20,999
Other sums due 12,078 14,869
Total debts to customers 575,003 664,918
31/12/2013
Less than one year More than one year Total
Debts to customers 574,426 577 575,003
13 - Debts represented by a security (in thousands of €)
31/12/2013 31/12/2012
Negotiable debt instruments 70,000 1,650,000
Bond issues 400,000 400,000
Deposit receipts and savings bonds 0 0
Accrued interest 483 1,044
Total debts represented by a security 470,483 2,051,044
57
Negotiable debt instruments
Negotiable debt instruments are securities
representing a lien for a fixed period and
are negotiable on a regulated or private
market. Group financing for this category
of debt is made up of:
– medium-term negotiable notes, where
the term is greater than one year,
- short-term securities, where the term is
less than one year, such as certificates of
deposit.
Bond issues:
COFIDIS SA has issued all the
various bonds carried by the COFIDIS
Participations Group. The main features
of these bond issues are as follows (in
thousands of €):
Issuing bank Issue date Due dateType
of rateInterest rate Nominal
Calyon-Natixis 11/07/2007 11/07/2014 VariableEuribor 3M+ 0.220 %
400,000
Current and deferred tax assets and liabilities (in thousands of €)
14.1 - Changes in current and deferred tax assets and liabilities
Current tax assets and liabilities
31/12/2012 Net variation 31/12/2013
Current tax assets 17,462 5,000 22,462
Current tax liabilities 16,962 4,580 21,542
Net current tax assets 500 421 920
Current tax assets are principally tax credits. The liabilities correspond to the balance of corporation tax to be paid at the end of the
accounting period as well as miscellaneous taxes.
2013 ACTIVITY REPORT58
14.2 Origin of deferred taxes
2013 2012 2013 2012
Assets Liabilities Assets Liabilities Net Net
Temporary differences 104,200 13,938 113,683 20,141 90,262 93,542
Non-deductible provisions 86,308 89 91,731 0 86,218 91,731
Organic, Employee contributions 488 0 702 0 488 702
Assets and depreciation 1 101 1 1,435 (99) (1,434)
Employee benefits 1,688 75 1,591 10 1,613 1,581
Regulated provisions 1,501 0 2,121 (1,501) (2,121)
IAS 39 reclassifications 4,107 6,324 8,736 9,421 (2,217) (685)
Other 11,608 5,848 10,921 7,154 5,760 3,768
Tax deficits carried forward 0 0 0 0 0 0
Offsetting assets/liabilities 0 0 0 0 0 0
Total deferred taxation 104,200 13,938 113,683 20,141 90,262 93,542
Deferred taxes in France are calculated at a rate of 34.43 %. For foreign subsidiaries, tax was calculated at the local rate. Offsetting
of assets and liabilities was performed for each entity.
15 - Accruals and miscellaneous liabilities
31/12/2013 31/12/2012
Miscellaneous creditors 77,611 65,947
Miscellaneous company debts 33,971 35,449
Total miscellaneous assets 111,582 101,397
Expenses to be paid 59,154 46,556
Deferred income 6,512 1,082
Others 20,488 16,396
Total Settlement accounts 86,154 64,034
Total settlement accounts and miscellaneous liabilities 197,736 165,431
59
16 – Provisions
31/12/2012Provi-sions
Write-backs used
Write-backsnot used
Scope entry Other 31/12/2013
Company commitments: pensions 5,068 2,201 (949) (886) 0 (92) 5,342
Company commitments: long-service awards
954 182 0 (15) 0 54 1,174
Legal and tax risk 0 0 0 0 0 0 0
Provision for restructuring 0 0 0 0 0 0 0
Provisions for subsidiary risks 70 0 0 0 0 0 70
Provision for costs andprocedural risk
2,000 4,041 0 (1,824) 5,756 1,513 11,486
Miscellaneous risks and expenses 14,132 6,076 (3,568) (1,202) 0 (1,573) 13,866
Total provisions 22,225 12,500 (4,517) (3,927) 5,756 (98) 31,938
17 – Shareholders' equity
17.1 Composition of share capital
The share capital of COFIDIS
Participations SA comprises 211,960,789
fully paid-up ordinary shares, of the same
rank, at a par value of €0.15 per share,
for a total of €31,794,118.3.
17.2 Management of share capital
For information only, COFIDIS
Participations SA declared a European
solvency ratio greater than 8% in 2012.
17.3 Perpetual deeply subordinatednotes
Consolidated reserves include a perpetual
deeply subordinated note of €100 million
issued in October 2006 by COFIDIS
SA. Interest paid is carried forward as a
deduction from consolidated reserves.
17.4 Change in the cash flow hedge reserve
– at 31 December 2013 (in thousands of €)
In thousands of €
Balance at31/12/2012
Change in fairvalue of derivatives
RecyclingBalance at31/12/2013
Cash flow hedge reserve 348 6,547 – 818 6,077
Note: The data shown in this table are gross of deferred taxes.
The effect of deferred tax on changes during FY 2013 is –€1,588 k.
2013 ACTIVITY REPORT60
The cash flow hedge reserve relating to
derivative instruments designated as fair
value hedge at 1 January 2009 stood at
(€4,473 k) at beginning of period and at
(€2,677 k) at the close. Depreciation for
the period, recognised through profit or
loss, was €1,796 k.
– at 31 December 2012 (in thousands of €)
In thousands of €
Balance at31/12/2011
Change in fairvalue of derivatives
RecyclingBalance at31/12/2012
Cash flow hedge reserve – 10,476 11,539 – 715 348
Note: The data shown in this table are
gross of deferred taxes.
The effect of deferred tax on changes
during FY 2012 is –€523 k.
The cash flow hedge reserve relating to
derivative instruments designated as fair
value hedge at 1 January 2009 stood at
(€7,554 k) at beginning of period and at
(€4,473 k) at the close. Depreciation for
the period, recognised through profit or
loss, was €3,081 k.
18 – Summary of financial instrument classes by accounting categories
– at 31 December 2013 (in thousands of €)
Financial instrument classes
Assetsvalued atfair valuethrough
profit/(loss)(fair value
option)
Available-for-saleassets
Held-to-maturityassets
Loans andreceivables
Derivativehedging
instruments
Liabilitiesat
amortisedcost
Totalnet carrying
amount
Debt instruments 26,840 65 26,904
Loans and advances tocredit institutions
688,783 688,783
Loans to customers 8,969,352 8,969,352
Hedging derivatives 22,380 22,380
Derivatives 0
Other advances 0
Financial assets 26,840 65 0 9,658,135 22,380 0 9,707,420
Negotiable debt instruments 70,000 70,000
61
Financial instrument classes
Assetsvalued atfair valuethrough
profit/(loss)(fair value
option)
Available-for-saleassets
Held-to-maturityassets
Loans andreceivables
Derivativehedging
instruments
Liabilitiesat
amortisedcost
Totalnet carrying
amount
Bond issues 400,000 400,000
Securitisation 0
Accrued interest 483 483
Ordinary and demandaccounts
0
Debts to credit institutions 7,560,560 7,560,560
Other debts to creditinstitutions
0
Debts to customers 575,003 575,003
Other debts to customers 0
Subordinated liabilities 0
Hedging derivatives 68,327 68,327
Derivatives 0
Borrowings and financialdebts
0 0 0 0 68,327 8,606,046 8,674,373
2013 ACTIVITY REPORT62
– at 31 December 2012 (in thousands of €)
Financial instrument classes
Assetsvalued atfair valuethrough
profit/(loss)(fair value
option)
Available-for-saleassets
Held-to-maturityassets
Loans andreceivables
Derivativehedging
instruments
Liabilitiesat
amortisedcost
Totalnet carrying
amount
Debt instruments 25,724 61 25,784
Loans and advances tocredit institutions
1,417,189 1,417,189
Loans to customers 7,727,554 7,727,554
Hedging derivatives 28,601 28,601
Derivatives 0
Other advances 0
Financial assets 25,724 61 0 9,144,743 28,601 0 9,199,128
Negotiable debt instruments 1,650,000 1,650,000
Bond issues 400,000 400,000
Securitisation 0
Accrued interest 1,044 1,044
Ordinary and demandaccounts
0
Debts to credit institutions 5,469,367 5,469,367
Other debts to creditestablishments
0
Debts to customers 664,918 664,918
Other debts to customers 0
Subordinated liabilities 0
Hedging derivatives 90,366 90,366
Derivatives 0
Borrowings and financialdebts
0 0 0 0 90,366 8,185,329 8,275,695
63
FINANCE COMMITMENTS
Commitments made to credit institutions 0 2,000
Commitments received from credit institutions 5,100 11,064
Commitments made to customers 3,090,785 3,144,011
GUARANTEE COMMITMENTS
Guarantees, sureties, and other guarantees on the request ofcredit institutions
650 650
Guarantees, sureties and other guarantee bonds received fromcredit institutions
621 3,772
Guarantees on request from customers 40,812 45,013
Guarantees received from customers 33,431 44,078
1- Finance and guaranteecommitments
The lending that the Group has
irrevocably undertaken to grant to its
customers, on their request (in the
context of opening revolving credit
facilities) amounted to €3,091 million at
31 December 2013.In thousands of €
V - Notes to off-consolidated-balance sheet items
2 - Term financial instruments
In accounting terms, all transactions are
considered from their conclusion, even if
the period covered is deferred.
VI – Notes to the consolidatedincome statementNo pro-forma restatements were
performed on the income statement post
the acquisition of SOFEMO. SOFEMO's
data in 2013 is disclosed for each line on
the income statement.
2013 ACTIVITY REPORT64
1 - Net banking income (in thousands of €)
2013Dt Sofemo
in 20132012
Income from interest on advances to credit institutions 5,517 180 8,152
Income from interest on advances to customers 1,003,876 43,244 977,303
Income from interest on available-for-sale assets 0 0 0
Income from interest on hedging derivatives 19,773 839 23,530
Interest and similar income 1,029,165 44,263 1,008,984
Interest expenses paid on liabilities to credit institutions 62,078 10,934 63,219
Interest expenses paid to customers 14,612 0 13,652
Interest expenses on debts represented by a security and subordinated debt 2,691 0 24,840
Interest expenses on hedging derivatives 61,875 7,802 58,738
Interest and similar expenses 141,256 18,735 160,449
Commissions (Income) 229,917 18,336 217,691
Commissions (Expenses) 19,889 1,949 20,730
Net gains or losses on Commissions 210,028 16,387 196,960
Net gains or losses from portfolios at fair value through profit or loss 1,053 0 4,316
Net gains or losses on available-for-sale financial assets 886 0 0
Income from other activities 1,923 159 2,591
Costs for other activities 863 494 268
Net gains or losses on Other activities 1,060 – 336 2,323
Net banking income 1,100,937 41,579 1,052,135
2 - General operating costs (in thousands of €)
31/12/2013 Dt Sofemo in 2013 31/12/2012
Payroll (1) 213,469 5,862 210,177
Taxes and levies 11,881 1,014 12,038
Other operating costs 319,452 8,151 295,281
Total general operating costs 544,802 15,027 517,496
(1) Payroll expenses are detailed in Note VIII "Employee benefits"
65
3- Amortisation expense and depreciation of tangible and intangible assets (in thousands of €)
31/12/2013 Dt Sofemo in 2013 31/12/2012
Provision for depreciation of intangible assets 9,948 0 8,580
Provision for depreciation of tangible assets 7,635 25 5,077
Total amortisation expense and depreciation of assets 17,584 25 13,657
Write-back of provisions on intangible assets 1,397 0 6
Amortisation expense/Write-backs and provisions ontangible and intangible assets
16,187 25 13,651
4 - Cost of risk (in thousands of €)
31/12/2013 Dt Sofemo in 2013 31/12/2012
Net provisions for depreciation 15,863 3,619 (64,254)
Recovery of depreciated advances (34,431) (50) (33,545)
Transfer to losses 382,460 8,854 461,168
Change in operating risk provisions 2,217 3,731
Cost of customer risk 366,108 16,154 363,368
5 - Net gains or losses on other assets (in thousands of €)
31/12/2013 Dt Sofemo in 2013 31/12/2012
Income from asset disposals (50) 0 (63)
Capital loss on asset disposals 1,781 0 555
Gains or losses on other assets (1,732) 0 (492)
2013 ACTIVITY REPORT66
6 - Taxes (in thousands of €)
6.1 Tax expense
31/12/2013 Dt Sofemo in 2013 31/12/2012
Current tax expense 51,764 3,922 53,150
Deferred tax expense 5,200 (317) 427
Tax expense for the period 56,964 3,605 53,577
6.2 Tax analysis
Reconciliation between the theoretical tax expense and the tax expense entered in the income statement for the Group is detailed
as follows (in millions of euro):
31/12/2013 31/12/2012
Consolidated profit or loss before taxes 172 157.1
Current tax rate in France 38.00 % 36.10%
Theoretical tax at current French tax rate 65.4 56.7
Effect of permanent differences – 4.1 – 3.9
Differences in foreign tax rates – 9.7 – 6.4
Effect of unrecognised tax assets (1) 1.8 2.6
Rate change 2.2 0.9
Tax on dividends 3.0 3.0
Others – 1.7 0.7
Group tax charge 57.0 53.6
Effective tax rate 33.10 % 34.10 %
(1) Unrecognised tax assets notably concern the non-activation of deficits, and for Cofidis Italy, the non-recognition of deferred tax
assets on customer depreciation.
67
7 - Auditors' fees
In thousands of € before VAT
2013
TotalFees
KPMG MAZARS PWC Other
Certification 1,074 825 96 136 16
Ancillary missions
TOTAL 1,074 825 96 136 16
In thousands of € before VAT
2012
TotalFees
KPMG MAZARS PWC Other
Certification 1,009 793 86 131 0
Ancillary missions
TOTAL 1,009 793 86 131 0
VII – Segment information
1 - Definition of activity segments
The entities in the COFIDIS Participations
Group conduct business in a single
segment of activity, namely consumer
credit to private individuals. Accordingly,
in application of IFRS 8 relating to
operating segments, we are required to
disclose information on the geographical
breakdown of the areas in which we
operate, which is the only segment
information provided by the Group.
There are three regions in the
geographical breakdown, namely France,
Southern Europe and Belgium & Eastern
Europe.
2- Segment information bygeographical area:data from income statement (inthousands of €)
Transactions between business centres
are concluded under market conditions
and segment assets are determined
based on the accounting items making
up the balance sheet for each business
centre.
2013 ACTIVITY REPORT68
31/12/2013
France Southern EuropeBelgium
& Eastern EuropeTotal
Income statement items
Interest income 654,235 275,147 99,784 1,029,166
Interest expenses 126,812 11,219 3,225 141,256
Net banking income 666,903 310,191 123,843 1,100,937
OPERATING PROFIT 49,743 95,788 28,309 173,840
Tax on profits 23,191 30,226 3,548 56,964
31/12/2012
France Southern EuropeBelgium
& Eastern EuropeTotal
Income statement items
Interest income 634,734 266,980 107,269 1,008,984
Interest expenses 137,230 14,607 8,612 160,449
Net banking income 626,421 295,361 130,352 1,052,135
OPERATING PROFIT 43,061 80,594 33,964 157,620
Tax on profits 20,631 26,360 6,586 53,577
Segment information by geographical area: data from balance sheet
31/12/2013
France Southern EuropeBelgium
& Eastern EuropeTotal
Balance sheet items
Loans and advances to customers 6,619,588 1,520,439 829,325 8,969,352
Loans and advances to banking institutions: 639,198 27,714 21,872 688,783
Total 7,258,785 1,548,153 851,197 9,658,135
69
31/12/2012
France Southern EuropeBelgium
& Eastern EuropeTotal
Balance sheet items
Loans and advances to customers 5,452,053 1,464,052 811,449 7,727,554
Loans and advances to banking institutions: 1,356,112 26,613 34,464 1,417,189
Total 6,808,165 1,490,665 845,913 9,144,743
VIII – Employee benefits
1 - Payroll
31/12/2013 Dt Sofemo in 2013 31/12/2012
Salaries 137,773 3,410 133,953
Social security contributions 54,670 1,484 56,974
Profit sharing 8,443 387 8,811
Others 12,582 580 10,439
Total payroll (1) 213,469 5,862 210,177
(1) Including €1,943 k in Competitiveness and Employment Tax Credit (CICE), effective on 1 January 2013 (Art 66 LFR 2012) and
recognised as a credit to the staff costs account.
2 - Workforce for the period
The average workforce and the workforce on the reporting date are as follows:
Workforce at end of period at 31 December 2013
31/12/2013 31/12/2012
Managers Supervisors Employees Total Total
Women 579 218 2,034 2,831 2,802
Men 575 97 871 1,543 1,334
Total workforce at end of period 1,154 315 2,905 4,374 4,136
2013 ACTIVITY REPORT70
3 - Post-employment benefits - definedbenefit schemes
All French and Belgian entities are
concerned by the defined benefits
scheme. For the main schemes, an
actuarial valuation is performed every
year. These defined-benefit schemes
relate to end-of-career benefits.
4 - Other long-term benefits
Employee benefits that do not fall due
and are not paid in full within twelve
months after the end of the accounting
period. These benefits concern long-
service awards.
5 – Actuarial assumptions
The main actuarial assumptions have
been determined for each country.
The rates used to estimate the obligations
are as follows:
31/12/2013 31/12/2012
Discount rate 3.00% 2.90%
Expected rate of salary increase 2.68% 2.55%
6 - Reconciliation of balance sheet provisions
The following balance sheet variations in pension provisions and similar commitments were recognised (in thousands of €):
Commitment
31/12/2012 7,998Current service cost 790
Financial cost 236
Actuarial gains and losses – 80
Payment to beneficiaries – 268
Other (business combinations, liquidation) – 86
31/12/2013 8,589
Average workforce at 31 December 2013
31/12/2013 31/12/2012
Managers Supervisors Employees Total Total
Women 574 228 1,930 2,732 2,839
Men 541 104 788 1,432 1,393
Total average workforce 1,115 332 2,718 4,164 4,232
71
Scheme assets
31/12/2012 2,929Actuarial gains and losses 13
Return on scheme assets 91
Contributions to the scheme 475
Payment to beneficiaries – 260
Other (business combinations, liquidation) 0
31/12/2013 3,248
Provision
31/12/2012 5,068Current service cost 790
Financial cost 144
Contributions to the scheme – 475
Actuarial gains and losses – 92
Payment to beneficiaries – 8
Other (business combinations, liquidation) – 86
31/12/2013 5,342
7 - Financial hedging of the scheme
Financial hedging of the scheme can be analysed as follows:
31/12/2013 31/12/2012
Debt securities 2,715 2,271
Equity instruments 114 162
Property 388 342
Others 30 154
8 - Sensitivity analysis
Financial hedging of the scheme can be analysed as follows:
Discount rate: + 0.5% 7,767
Discount rate: - 0.5% 9,529
2013 ACTIVITY REPORT72
IX - Risk exposure and hedgingpolicy
The risks incurred by the COFIDIS
Participations Group are those of a credit
institution offering revolving, redeemable
and credit card type consumer credit, in
its own name or through its network of
partners.
Credit operations are conducted directly
through customer relations centres or
Internet sites, as well as through partners.
Bank and private cards are provided
to customers. The internal control
mechanisms in place have been gradually
adapted to deliver satisfactory solutions
to the challenges of controlling new risks
incurred.
1 - Credit risk
1.1 - General remarks on credit risks
A credit risk occurs when a counterparty
is unable to meet its obligations and
these obligations have a positive inventory
value in the company's ledgers. For the
COFIDIS Participations Group, the bulk
of credit risk relates to loans granted to
individuals, and this risk is spread over a
large number of customers with limited
individual commitment.
1.2 Credit riskmanagement procedures
In particular, the methods used to control
credit risk are based on resources
dedicated to:
– risk studies and applying scores
and acceptance rules,
– operational teams responsible for
the outstanding payment chain,
– risk management audit to ensure
it is monitored and applied, and to
support it with adequate provision.
The system for controlling this risk uses a
number of tools to implement preventive,
corrective and strategic actions.
The forecasting system is based on:
– a system of scores and acceptance
rules that enable us to anticipate
customer behaviour and
safeguard the future profitability of
transactions,
– the three-year budget plan,
prepared at the end of the
third quarter, establishing
strategic objectives. Two budget
extrapolations are performed
annually.
The monthly credit risk monitoring
dashboard is used to to monitor changes
in customer risk according to multiple
criteria: product, history of outstanding
payments, account opening generation or
recruitment channel. Information collected
in this dashboard is used to monitor and
analyse the cost of risk, and to implement
a customer risk provisioning policy. In
addition, the COFIDIS Participations
information system has the capability
to provide information on outstanding
loans under management and to compile
inventories by risk level categories.
COFIDIS Participations has also set up
a curative management system to back
its credit risk preventive management
system and has thus developed collection
sequences that the organisation varies
according to maturity and market
practices. These sequences can include
the following phases and features:
pre-collection, amicable collection, pre-
litigation, over-indebtedness and legal
recovery. After these internal collection
procedures, disputed outstanding
debts can be outsourced to an external
management contractor, or sold.
A monthly "Credit Dashboard" report
provides information on the cost of risk as
well as its proportion of total outstanding
debt from month to month. It is produced
by the Management Audit department
and is circulated to members of the
executive committee, managing directors
and managers and heads of the relevant
departments.
The provisioning system is generally
based on the definition and statistical use
of average rates of movement from one
category of unpaid outstanding debt to
73
another from one month to another. The
calculation for each category is based
on statistical observation of the change
in unpaid outstanding debt and actual or
probable losses, for each of the products.
Scoring systems, acceptance and
collection rules, as well as provisioning
systems must be open-ended and are
reviewed as required from time to time.
In this way, the organisation ensures that
all outstanding debt categories, process
developments, behavioural or regulatory
changes are taken into account by the
system. Similarly, the provisioning method
is reviewed by adjusting the provisioning
rates by category of outstanding debt
to environmental needs (markets,
customers, regulators).
The maximum credit risk exposure
accepted by the Group at 31 December
2013 is detailed as follows (in thousands
of €):
Analysis of outstanding assets:
A financial asset is considered as
outstanding when a counterparty has not
made a payment at the contractual due
date. The provisioning policy applied by
the Group is to make individual provision
on the statistical basis of outstanding
loans from the first default event.
2 – Counterparty riskfor financial transactions
COFIDIS Participations SA is exposed
to a counterparty risk in the context of
cash flow management and implementing
loan and hedging transactions (rates in
the main). Banking counterparties are
assessed by the CM CIC Group on a
regular basis. Based on this assessment,
counterparties are classified according
to a number of criteria and related
procedures, which could lead to the
closure of the account.
Note that flows of French companies are
centralised in accounts opened with the
CM CIC Group. Surplus liquidity of foreign
entities is centralised preferentially, or
allocated to CM CIC Group accounts in
France, or to related company accounts
outside France.
31/12/2013 31/12/2012
Financial assets designated at Fair Value through profit or loss 26,840 25,724
Held-to-maturity assets – –
Derivative hedging instruments - assets 22,380 28,601
Available-for-sale financial assets 65 61
Loans and advances to credit institutions 688,783 1,417,189
Loans and advances to customers 8,969,352 7,727,554
Other advances 221,937 188,629
Firm loan commitments 3,090,785 3,144,011
Total 13,020,141 12,531,768
2013 ACTIVITY REPORT74
Moreover, loan and rate hedging
transactions are preferentially handled
with CM-CIC Group.
Potential new bank counterparties must
be approved by the CM CIC Group.
3- Overall interest rate risk, liquidityrisk and foreign exchange risk
3.1 Overall interest rate risk
3.1.1 Intervention strategy
The Treasury Management department
of Cofidis Participations Group manages
the refinancing and rate risk for the whole
scope of Cofidis Participations.
Rate risk relates to:
– fixed-rate customer credit for which
the Central Treasury provides a
strict hedge for outstanding loans
by following changes in new credits,
– on revisable rate credits for which
the short-term aim of the hedging
policy is to limit the exposure of
COFIDIS Participations Group
entities to any rate rises or
reductions and their repercussions
on customer rates within a longer or
shorter time frame.
3.1.2 – Instruments and practices
Private instruments used, traded on
markets, are firm or optional: rate swaps,
caps, floors and collars.
The bulk of our refinancing is variable
rate, based mainly on Euribor and on
Eonia.
3.2 - Liquidity riskAs a credit institution, COFIDIS
Participations is structurally a borrower.
BFCM, which is the sole company
involved in capital markets for the
CM-CIC Group, handles the operating
financing requirements for companies
in the COFIDIS Participations Group,
ensuring the Group has the liquidity
required for its business.
Besides daily management of liquidity
needs, Group Central Treasury approves
future needs based on forecast
outstanding loans for renewable and
redeemable products and the refinancing
needs expressed by entities in the Group.
The details of the repayment schedule
for debts at 31 December 2013 are as
follows (in millions of euro): Data in the
table entered by the conso
31/12/2013Less
than oneyear
1 to 2 years 2 to 5 yearsMore than
5 years31/12/2012
Bond issues 400 400 – – – 400
Securitisation 0 – – – – 0
TCN 70 50 20 – – 1,651
Short- medium term lines 7,531 4,250 758 2,294 229 5,458
Ordinary demand accounts 29 29 – – – 11
Total debts 8,030 4,728 778 2,294 229 7,519
75
3.3 - Foreign exchange risk
Group policy includes management of
foreign exchange risk.
Entities borrow in currencies from local
bank counterparties or from COFIDIS
SA. COFIDIS SA finances intra-group
borrowing in currencies or in euro
converted into currencies, with no foreign
exchange risk.
Purchases in foreign currencies are limited
to current operating costs.
Currency positions are monitored and
swiftly unwound.
4 – Control of transactions
At each month-end, a monitoring
dashboard is prepared covering liquidity,
rate, forex and counterparty risk for each
entity.
It is used to formally check the
compliance of transactions handled
during the past month relative to
objectives.
During its monthly meeting, based
on events in the previous month and
the needs expressed by entities in the
COFIDIS Participations Group, the
Treasury Committee defines hedging
requirements (margin for manoeuvre in
terms of volume and duration, according
to market conditions and developments),
as well as new market intervention
strategies. This committee comprises
the team in charge of monitoring risks,
its Director, the Group's Chief Financial
Officer and monabanq's Chief Financial
Officer.
ontactsContac
COFIDIS FranceCOFIDIS FParc de la Haute Borne61 avenue Halley59667 VILLENEUVE-D’ASCQ CedexTel: +33 3 28 09 20 00www.cofidis.fr
monabanq.Parc de la Haute Borne61 avenue Halley59667 VILLENEUVE-D’ASCQ CedexTel: +33 3 20 28 34 34www.monabanq.com
CréatisParc de la Haute Borne61 avenue Halley59667 VILLENEUVE-D’ASCQ CedexTel: +33 3 28 09 20 00www.creatis.fr
COFIDIS PortugalAvenida de Berna - 521069 046 LISBOATel: +35 1 21 761 18 00www.cofidis.pt
COFIDIS SpainPl. de la pau s/nEdificio1 - WTC Almeda Park08 940 Cornella de LlobregatTel: +34 9 3 253 56 00www.cofidis.es
COFIDIS BelgiumRue du Glategnies, n° 4BP 7500 TOURNAITel: +32 69 25 12 70www.cofidis.be
COFIDIS ItalyVia A Bono Cairoli, 3420 127 MILANOTel: +39 02 366 16 1www.cofidis.it
COFIDIS Czech RepublicBucharova 1423/6158 00 PRAGUE 5CZECH REPUBLICTel: +42 0 234 120 120www.cofidis.cz
COFIDIS HungaryBudapest, 1066Mozśar u.16HUNGARY - MagyarorsźagTel: +36 1 354 50 01www.cofidis.hu
COFIDIS CompétitionZAC de Ravennes les Francs6 avenue Poincaré59910 BONDUESTel: +33 3 20 66 23 00www.equipe-cofidis.com
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