Carrefour - 2017 Registration Document

COMPANY FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017 Notes to the Company Financial Statements 2017 REGISTRATION DOCUMENT | CARREFOUR 6. 304 Income tax 1.7 Carrefour SA is the head company of a tax group. Under the terms of the agreement between the companies in the tax group, each company records in its accounts the income tax expense or benefit that it would have paid or received if it had been taxed on a stand-alone basis. The tax saving or additional tax charge corresponding to the difference between the sum of the taxes payable by the companies in the tax group and the tax expense or benefit calculated on the basis of the tax group’s consolidated profit or loss is recorded by Carrefour SA. The corporate income tax rate in France is 33.33% and companies are also required to pay a surtax (contribution additionnelle) corresponding to 3.3% of their tax liability beyond the first 763,000 euros, bringing the total tax rate to 34.43%. Tax credits deductible from income tax expense are reported in the income statement under “Income tax benefit”. Provisions 1.8 A provision is recorded when (i) the Company has an obligation towards a third party, (ii) the amount of the obligation can be reliably estimated, (iii) it is probable that an outflow of resources will be necessary to settle the obligation and (iv) no equivalent economic benefit is expected to be received in return. obligation to deliver existing shares to grantees and (iii) it is probable or certain that an outflow of resources will be necessary to settle the obligation without any equivalent economic benefit being received in return. When the free shares or stock option rights may only be exercised at the end of a specified period of employee service, the liability is recognised as a provision that is reduced over A liability is recognised when (i) the decision has been made to set the vesting period as the employee service is received. up a stock option or free share plan, (ii) the Company has an Risk information 1.9 Interest rate and foreign exchange risk 1.9.1 Interest rate hedging instruments are used mainly to limit the effects of changes in exchange rates on the Company’s variable-rate borrowings. The main instruments are interest rate swaps and options and forward foreign exchange purchase and sale contracts, purchased over-the-counter from leading banking counterparties. Gains and losses on hedging instruments are recognised on a symmetrical basis with the loss or gain on the hedged item. A provision is booked at the year-end for unrealised losses on outstanding derivative instruments not in a hedging relationship. Details of derivative instruments outstanding at December 31, 2017 are presented in Note 10. Equity risk 1.9.2 Equity risk concerns Carrefour shares acquired for allocation upon exercise of stock options. When their market price is less than the option exercise price, the shares are reclassified as “Shares available for allocation” in the marketable securities account, and an impairment loss is recognised for the difference between their purchase price and the average Carrefour share price for the month of December. See Note 5 for details.