Carrefour - 2017 Registration Document

6 COMPANY FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2017 Notes to the Company Financial Statements CARREFOUR | 2017 REGISTRATION DOCUMENT 305 Significant events of the year Note 2 Financial income (expense), net 2.1 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 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 merger of On Line Carrefour. Issuance of USD 500 million worth of non-dilutive cash-settled convertible 2.2 bonds maturing in June 2023 On June 7, 2017 (settlement on June 14, 2017), Carrefour issued USD 500 million worth of six-year cash-settled convertible bonds (maturing in June 2023) to institutional investors. The bonds were issued at 98.25% of their nominal value, and do not bear interest as they are zero-coupon bonds. The resulting initial conversion price is 27.7536 euros, including a conversion premium of 20% over the Carrefour reference share price. They may be converted into cash only and will not give rise to the issuance of new shares or carry rights to existing shares. In parallel with the bond issue, Carrefour purchased cash-settled call options on its own shares in order to hedge its economic exposure relating to cash payments due on bonds in the event that investors exercise their conversion rights. The above operations, for which a EUR/USD cross currency swap was arranged in euros, provide Carrefour with the equivalent of standard euro-denominated bond financing. The issue consolidated Carrefour’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. Securing Carrefour’s long-term financing 2.3 In December 2016, Carrefour exercised its option to extend its 2,500 million-euro credit facility by one year. The extension was effective in January 2017 and the facility will now mature in January 2022. extension options from a pool of eight banks. This new facility will replace the facility of the same amount expiring in April 2019. On May 2, 2017, Carrefour obtained a new 1,400 million-euro five-year bank facility (expiring in May 2022) with two one-year These operations contribute to the ongoing strategy to secure Carrefour’s long-term financing sources by maintaining the average maturity of its facilities (which has risen from 4.1 years as of December 31, 2016 to 4.2 years as of December 31, 2017). Realisation of the CICE tax credit 2.4 Carrefour sold its CICE (Crédit impôt compétitivité emploi) tax Related fees and discount charges amounted to 1.6 million euros credit receivables for an aggregate amount of 197 million euros. and were recorded in “Interest and other financial expenses”.