Carrefour - 2017 Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements 2017 REGISTRATION DOCUMENT | CARREFOUR 5. 276 Finance costs and other financial income and expenses 12.6 Accounting principles This item corresponds mainly to finance costs. Other financial income and expenses consist for the most part of discounting adjustments and late interest payable on certain liabilities. This item breaks down as follows: (in millions of euros) 2017 2016 Interest income from loans and cash equivalents 25 27 Interest income from bank deposits 24 29 Interest income from loans 0 (1) Finance costs (342) (404) Interest expense on financial liabilities measured at amortised cost, adjusted for income and expenses from interest rate instruments (319) (378) Interest expense on finance lease liabilities (23) (26) Ineffective portion of fair value hedges of borrowings 1 - Finance costs, net (317) (377) Other financial income and expenses, net (128) (138) Actualisation cost on defined employee benefit debt (18) (30) Interest income on pension plan assets 3 5 Financial transaction tax (38) (36) Late interest due in connection with tax reassessments and employee-related litigation (37) (23) Dividends received on available-for-sale financial assets 3 2 Proceeds from the sale of available-for-sale financial assets 9 35 Cost of sold available-for-sale financial assets (2) (32) Exchange gains and losses (4) (1) Cost of bond buybacks (7) (7) Changes in the fair value of interest rate derivatives (9) (15) Other (28) (37) FINANCE COSTS AND OTHER FINANCIAL INCOME AND EXPENSES, NET (445) (515) Financial expenses (485) (583) Financial income 41 68 Risk management 12.7 The main risks associated with the financial instruments used by the Group are liquidity, interest rate, currency, credit and equity risks. The Group’s policy for managing these risks is described below. Due to the differing natures of the various businesses, financial risks arising from the banking and insurance business (including Carrefour Banque in particular) are managed separately from those related to the retail business. An organisation has been set up to track financial risks based on a cash-pooling system managed by the Corporate Treasury and Financing department. A reporting system ensures that Group Executive Management can oversee the department’s implementation of the approved management strategies. The risks associated with the consumer credit business are managed and tracked directly by the entities concerned. Corporate Treasury and Financing oversees the proper implementation of the rules governing the consumer credit business, jointly with the other investors in the business where applicable. A reporting system exists between local teams and Corporate Treasury and Financing.