Carrefour - 2017 Registration Document

MANAGEMENT’S DISCUSSION AND ANALYSIS AS OF DECEMBER 31, 2017 Parent company financial review 2017 REGISTRATION DOCUMENT | CARREFOUR 4. 188 Parent company financial review 4.6 Business and financial review 4.6.1 As the Group’s holding company, Carrefour (the Company) manages a portfolio of shares in French and foreign subsidiaries and affiliates. In 2017, operating income amounted to 148 million euros and essentially consisted of costs rebilled to other Group entities. Net financial expense amounted to 4,264 million euros in 2017 compared with net financial income of 204 million euros in 2016. The negative 4,468 million-euro change in this item is mainly attributable to: the recognition in 2017 of 5,292 million euros in net charges to ● provisions for impairment of financial investments versus net charges of 75 million euros in 2016, and mainly relates to the merger deficit allocated to Carrefour France shares in the amount of 4,709 million euros. Impairment testing methods and their outcomes are described in Notes 1.2 and 3 to the annual Company Financial Statements; a 521 million-euro increase in dividends received; ● an increase in the merger surplus, with a positive effect of ● 180 million euros. A merger surplus of 96 million euros was recognised in 2017 following the merger of PRM and Boedim. The Company booked a merger deficit of 84 million euros in 2016 following the transfer of On Line Carrefour’s assets and liabilities. Net non-recurring expense represented 35 million euros in 2017 and consisted mainly of charges to provisions for miscellaneous contingencies. Net loss for the year amounted to 4,160,459,740.65 euros. Other transactions On June 7, 2017 (settlement on June 14, 2017), the Company issued 500 million US dollars worth of six-year non-dilutive cash-settled convertible bonds (maturing in June 2023) to institutional investors. The issue was hedged in euros to provide the Company with the equivalent of standard euro-denominated bond financing. The issue consolidated the Company’s long-term financing, extended the average maturity of its bond debt (from 3.6 years to 3.9 years at June 7, 2017) and further reduced its borrowing costs. The Company redeemed two bond issues at maturity, one for a nominal value of 1,000 million euros and a coupon of 1.875%, the other for 250 million euros with a coupon of 4.678%. These transactions consolidated Carrefour’s long-term financing and further reduced its borrowing costs.