The bylaws of Bellon SA include a clause which restricts the sale of Bellon SA shares to non-shareholder third parties, subject to the prior approval of its Supervisory Board. Bellon SA is controlled 72.6% by Mrs. Pierre Bellon, and her four children who signed in June 2015 a 50-year agreement preventing the direct descendants of Mr. and Mrs. Pierre Bellon from freely disposing of their Bellon SA shares. The sole asset of Bellon SA being its interest in Sodexo, it can be inferred that Bellon SA does not intend to sell this interest to third parties.
These specific characteristics imply very limited liquidity for the shares that Sofinsod holds in Bellon SA. The valuation method used by management (Level 3 of the hierarchy defined by IFRS 13) incorporates this illiquidity on the one hand, as well as all of the characteristics of the holding’s ownership structure, on the other hand. This method results in a discount to net asset value on Bellon SA estimated at 40% as of August 31, 2022 and August 31, 2021.
As of August 31, 2022, the fair value of the investment is assessed at 541 million euros, and its change since the opening of the year has been recorded in other non-recyclable items of comprehensive income. Its fair value was assessed to 481 million euros as of August 31, 2021.
The Group policies and procedures adopted by the Board of Directors, the Group Chairwoman and Chief Executive Officer, and the Group Chief Financial Officer are designed to prevent speculative positions. Furthermore, under them:
As of August 31, 2022, an increase or a decrease in interest rates would have had no material impact on profit before tax or on shareholders’ equity as 96% of all liabilities at those dates were at a fixed rate of interest.
Because Sodexo has operations in 53 countries, all components of the financial statements are influenced by foreign currency translation effects, and in particular by fluctuations in the U.S. dollar. However, exchange rate fluctuations do not generate any operational risk, because each of the Group’s subsidiaries invoices its revenues and incurs its expenses in the same currency.
Sodexo S.A. uses derivative instruments to manage the Group’s risk exposure resulting from the volatility of exchange rates.
|
IMPACT OF A 10% APPRECIATION OF THE EXCHANGE RATE OF THE FOLLOWING CURRENCIES AGAINST THE EURO (in million euros) |
AUGUST 31, 2022 | AUGUST 31, 2021 | ||||||
|---|---|---|---|---|---|---|---|---|
| IMPACT ON REVENUES | IMPACT ON OPERATING PROFIT | IMPACT ON PROFIT BEFORE TAX | IMPACT ON SHAREHOLDERS’ EQUITY | IMPACT ON REVENUES | IMPACT ON OPERATING PROFIT | IMPACT ON PROFIT BEFORE TAX | IMPACT ON SHAREHOLDERS’ EQUITY | |
| U.S. dollar (USD) | 839 | 46 | 31 | 316 | 619 | 20 | 7 | 220 |
| Brazilian real (BRL) | 105 | 17 | 13 | 78 | 82 | 12 | 6 | 64 |
| Pound Sterling (GBP) | 203 | 13 | 15 | 81 | 189 | 8 | 11 | 74 |
The nature of the Group’s bank borrowings and bond issues as of August 31, 2022 is described in detail in note 12.4.
As of August 31, 2022, the same as prior year, more than 98% of the Group’s consolidated borrowings was raised on capital markets, and bank financing covered less than 2% of the Group’s financing needs. The maturity dates of the main borrowings range between Fiscal 2023 and Fiscal 2031.
Exposure to counterparty risk is limited to the carrying amount of financial assets.
Group policies and procedures are to manage and spread counterparty risk. For derivative financial instruments, each transaction with a bank is required to be based on a master contract modelled on the standard contract issued by the French Bankers’ Association (AFB) or the International Swaps and Derivatives Association (ISDA).
Counterparty risk relating to client accounts receivable is immaterial. Due to the Group’s geographic and segment spread, there is no concentration of risk on past due individual receivables for which no provision has been recorded. Given the degradation in the economic environment resulting from the Covid-19 pandemic, the Group has reinforced its credit risk tracking.
