Carrefour - 2017 Registration Document

5 CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements CARREFOUR | 2017 REGISTRATION DOCUMENT 251 Carmila was set up in 2014 by the Group and its co-investment partners. Its corporate purpose is to enhance the value of the shopping centres adjacent to Carrefour hypermarkets in France, Spain and Italy. Carmila is accounted for by the equity method because the governance system established with the co-investors allows Carrefour to exercise significant influence over its financial and operating policy decisions. Up until its merger with Cardety on June 12, 2017, Carmila’s governance was organised by a shareholders’ agreement between Carrefour (owner of a 42% stake in Carmila) and other institutional investors (owner of the remaining 58% stake). This agreement specified the composition of the Board of Directors and the list of decisions requiring the Board’s prior approval (votes subject to a simple or qualified majority, depending on the importance of the matters discussed). In parallel with the merger of Carmila into Cardety (details of which are provided in Note 2.3), the entity’s corporate governance rules were adjusted, resulting in the restructuring of its administration and management bodies, and amendments to its Articles of Association and the Board of Directors’ internal rules. In light of the amended corporate governance rules, the Group considers that it has significant influence over the new entity, Carmila, which is accounted for using the equity method. The Group’s position is primarily based on the fact that the Carrefour group is not represented by a majority on the Board of Directors, which comprises 14 members, of which 8 are independent and 5 are appointed by Carrefour. Therefore, the Group cannot alone impose decisions requiring the Board’s prior consent, which partly concern the relevant activities. The following table presents key financial indicators for Carmila at December 31, 2017 and 2016 (as published in Carmila’s consolidated financial statements (1) ). (in millions of euros) 2017 2016 Revenue (rental income) 301 276 Operating income before fair value adjustment of assets 230 219 Operating income (1) 394 376 Net income from continuing operations 314 296 Total non-current assets (1) 5,521 4,916 Total current assets 513 289 of which cash and cash equivalents 329 71 Total non-current liabilities 2,158 2,200 Total current liabilities 334 354 % interest held by Carrefour 35.76% 42.42% Amount of the investment in equity-accounted company 942 895 Carrefour - Cash dividends received from Carmila 66 62 Since Carmila opted to apply the fair value model for the accounting of its investment properties, in accordance with the option provided in IAS 40, (1) the figures presented in the above table are adjusted to reflect real estate fair value corrections. Before being accounted for by the equity method in the Group financial statements, Carmila’s consolidated financial statements are therefore restated to apply the cost model applied by Carrefour. Transactions with associates (related parties) 7.3 The following table presents the main related-party transactions carried out in 2017 with companies over which the Group exercises significant influence: (in millions of euros) Carmila (France) Carrefour SA (Turkey) Provencia (France) Mestdagh (Belgium) Ulysse (Tunisia) Net sales (sales of goods) - 0 596 51 7 Franchise fees - 3 10 8 2 Property development revenue (1) 109 - - - - Sales of services 14 - - 10 - Fees and other operating expenses (7) - - - - Proceeds from the disposal of non-current assets (1)(2) - - - - - Receivables at December 31, 2017 23 1 33 7 3 Payables at December 31, 2017 (1) (4) - - - Amounts are presented before elimination of the Group’s share in the associate of revenues and proceeds arising on transactions carried out (1) between the Group and the associate. The non-current assets correspond to property and equipment, investment property and financial assets. (2)