Car2018 DDR en PDF
Car2018 DDR en PDF
Car2018 DDR en PDF
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1.1 The challenges facing a global leader in retail ........................................................................................ 3
1.1.1 New eating behaviours .................................................................................................................. 3
1.1.2 Consumer behaviours transformed by digital technology .............................................................. 3
1.1.3 An agricultural industry in need of an overhaul.............................................................................. 3
1.2 Carrefour’s ambition to become the world leader in the food transition for all ........................................ 3
1.3 A year of transformation ......................................................................................................................... 4
1.3.1 Deploy a simplified and open organisation .................................................................................... 4
1.3.2 Achieve productivity and competitiveness gains ........................................................................... 5
1.3.3 Create an omni-channel universe of reference.............................................................................. 6
1.3.4 Become the world leader in the food transition for all .................................................................... 8
1.4 History of the Carrefour group .............................................................................................................. 10
1.5 Description of the Group’s business ..................................................................................................... 13
1.5.1 Geographic footprint and omni-channel deployment ................................................................... 13
1.5.2 Summary of financial performance .............................................................................................. 14
1.5.3 Carrefour in France and around the world ................................................................................... 14
1.5.4 Business environment, market challenges and competitive landscape ....................................... 16
1.5.5 Store and website operations ...................................................................................................... 17
1.5.6 Products and services ................................................................................................................. 17
1.5.7 Logistics and supply chain operations ......................................................................................... 18
1.5.8 Property management ................................................................................................................. 18
1.5.9 Simplified legal chart December 31, 2018 ................................................................................... 19
1.5.10 A business model based on creating shared value .............................................................. 19
1.6 The Carrefour group in 2018 ................................................................................................................ 21
1.6.1 Highlights of 2018 ........................................................................................................................ 21
1.6.2 Highlights of Q1 2019 .................................................................................................................. 22
1.6.3 Summary of stock market performance ....................................................................................... 22
1.6.4 Summary of CSR performance ................................................................................................... 23
1.7 Corporate governance .......................................................................................................................... 25
1.7.1 Board of Directors ....................................................................................................................... 25
1.7.2 The Group Executive Committee ................................................................................................ 26
1.8 A new "raison d'être" for Carrefour ....................................................................................................... 27
2. CORPORATE SOCIAL RESPONSIBILITY ...................................................................................................... 28
Introduction ........................................................................................................................................... 28
2.1 CSR at Carrefour .................................................................................................................................. 28
2.1.1 The food transition, a core aspect of Carrefour’s corporate social responsibility ......................... 28
2.1.2 Highlights of 2018 ........................................................................................................................ 29
2.1.3 Carrefour’s CSR methodology..................................................................................................... 30
2.2 Products ............................................................................................................................................... 38
2.2.1 Commitment to food quality ......................................................................................................... 38
2.2.2 Developing affordable organic produce ....................................................................................... 41
2.2.3 Developing agroecology .............................................................................................................. 43
2.2.4 Guaranteeing animal welfare....................................................................................................... 45
2.2.5 Promoting responsible fishing and aquaculture ........................................................................... 46
2.2.6 A circular economy for packaging ............................................................................................... 48
2.2.7 Forest protection ......................................................................................................................... 49
2.3 Stores and e-commerce ....................................................................................................................... 52
2.3.1 Combatting food waste ................................................................................................................ 52
2.3.2 Reducing and recovering waste .................................................................................................. 54
2.3.3 Reducing greenhouse gas emissions .......................................................................................... 54
2.3.4 Developing apiculture .................................................................................................................. 58
2.3.5 Biodiversity considerations in sustainable construction and renovation ...................................... 59
2.3.6 Promoting responsible water consumption .................................................................................. 60
2.3.7 E-commerce ................................................................................................................................ 60
2.3.8 Community responsibility............................................................................................................. 60
2.4 Customers and partners ....................................................................................................................... 62
2.4.1 Implementing the food transition with our customers .................................................................. 62
2.4.2 Building relationships with suppliers to support the food transition .............................................. 63
2.4.3 Promoting CSR in our supply chain ............................................................................................. 65
2.4.4 Ensuring suppliers improve working conditions ........................................................................... 66
2.4.5 Being a socially responsible retailer ............................................................................................ 69
2.5 Employees ............................................................................................................................................ 70
2.5.1 Employment ................................................................................................................................ 70
2.5.2 Developing employees’ skills....................................................................................................... 72
Internal promotion and mobility, a core aspect of the Carrefour development model ........................... 73
2.5.3 Creating an environment that helps employees to achieve fulfilment .......................................... 74
2.5.4 Encouraging diversity and equal opportunity ............................................................................... 77
2.6 Responsible business conduct ............................................................................................................. 80
2.6.1 Fair practices ............................................................................................................................... 80
2.6.2 Carrefour’s duty of care ............................................................................................................... 81
2.7 Carrefour’s non-financial results ........................................................................................................... 89
2.7.1 Non-financial indicators ............................................................................................................... 89
2.7.2 Non-Financial Information Statement cross-reference table........................................................ 90
2.7.3 GRI-G4 cross-reference table ..................................................................................................... 93
2.7.4 Detailed reporting methodology for CSR indicators ..................................................................... 94
2.7.5 Report by the independent third party on the consolidated non-financial statement included in the
Group management report................................................................................................... 96
3. CORPORATE GOVERNANCE ........................................................................................................................ 99
3.1 Corporate governance code ................................................................................................................. 99
3.2 Composition, conditions of preparation and organisation of the Board of Directors’ work .................... 99
3.2.1 The Board of Directors ................................................................................................................ 99
3.2.2 Operation of the Board of Directors ........................................................................................... 121
3.2.3 Board of Directors’ specialised Committees .............................................................................. 124
3.3 Executive Management and the Group Executive Committee ............................................................ 129
3.3.1 Executive Management ............................................................................................................. 129
3.3.2 The Group Executive Committee .............................................................................................. 130
3.4 Compensation and benefits granted to Company Officers ................................................................. 132
3.4.1 Directors’ compensation ............................................................................................................ 132
3.4.2 Compensation of Executive Officers ......................................................................................... 133
3.4.3 Breakdown of compensation and benefits granted to Executive Officers .................................. 139
3.5 “Comply or Explain” rule of the AFEP-MEDEF code........................................................................... 140
3.6 Regulated agreements and commitments referred to in Articles L. 225-38 et seq. and L. 225-42-1 of
the French Commercial Code ............................................................................................................. 141
3.7 Transactions in the Company’s shares carried out by Company Officers ........................................... 141
3.8 Statutory Auditors’ special report on related-party agreements and commitments ............................. 143
4. BUSINESS REVIEW AS OF DECEMBER 31, 2018 ...................................................................................... 146
4.1 Consolidated sales and earnings performance ................................................................................... 146
4.1.1 Main earnings indicators............................................................................................................ 146
4.1.2 Analysis of the main income statement items ............................................................................ 147
4.2 Group financial position ...................................................................................................................... 149
4.2.1 Shareholders’ equity .................................................................................................................. 149
4.2.2 Net debt ..................................................................................................................................... 149
4.2.3 Cash flows for the period and cash and cash equivalents ......................................................... 150
4.2.4 Financing and liquidity resources .............................................................................................. 150
4.2.5 Restrictions on the use of capital resources .............................................................................. 151
4.2.6 Expected sources of funding ..................................................................................................... 151
4.3 Financial outlook ................................................................................................................................. 151
4.4 Other information ................................................................................................................................ 151
4.4.1 Accounting principles ................................................................................................................ 151
4.4.2 Seasonal fluctuations in business ............................................................................................. 152
4.4.3 Significant events of the year .................................................................................................... 152
4.4.4 Impact of changes of accounting method and application of IAS 29 ......................................... 153
4.4.5 Main related-party transactions ................................................................................................. 154
4.4.6 Subsequent events .................................................................................................................... 154
4.4.7 Corporate social responsibility................................................................................................... 155
4.5 First-quarter 2019 sales ...................................................................................................................... 155
4.5.1 Carrefour 2022 transformation plan: new initiatives since the start of 2019 .............................. 155
4.5.2 First-quarter 2019 sales inc. VAT: growth of 2.7% (LFL) ........................................................... 157
4.5.3 Accounting standards ................................................................................................................ 158
4.5.4 Expansion under banners - First-quarter 2019 .......................................................................... 158
4.5.5 Store network under banners – First-quarter 2019 .................................................................... 159
4.6 Glossary of financial indicators ........................................................................................................... 159
4.7 Parent company financial review ........................................................................................................ 160
4.7.1 Business and financial review ................................................................................................... 160
4.7.2 Subsidiaries and affiliates .......................................................................................................... 161
4.7.3 Income appropriation ................................................................................................................. 161
4.7.4 Research and development....................................................................................................... 162
4.7.5 Recent developments ................................................................................................................ 162
4.7.6 Company earnings performance in the last five financial years ................................................. 162
4.8 Risk management ............................................................................................................................... 163
4.8.1 Principal risk factors .................................................................................................................. 163
4.8.2 Risk prevention and management system................................................................................. 171
4.8.3 Insurance................................................................................................................................... 172
4.8.4 Crisis management ................................................................................................................... 173
4.9 Internal control system........................................................................................................................ 173
4.9.1 Definition and objectives of the internal control system ............................................................. 174
4.9.2 Internal control organisation and parties involved ..................................................................... 174
5. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018 .............................................. 180
5.1 Consolidated income statement ......................................................................................................... 180
5.2 Consolidated statement of comprehensive income ............................................................................ 181
5.3 Consolidated statement of financial position ....................................................................................... 181
5.4 Consolidated statement of cash flows ................................................................................................ 182
5.5 Consolidated statement of changes in shareholders’ equity ............................................................... 184
5.6 Notes to the Consolidated Financial Statements ................................................................................ 185
Note 1 Basis of preparation of the Consolidated Financial Statements .............................................. 185
Note 2 Significant events of the year .................................................................................................. 187
Note 3 Scope of consolidation ............................................................................................................ 189
Note 4 Impact of changes in accounting policies ................................................................................ 192
Note 5 Restatement of comparative information ................................................................................. 195
Note 6 Segment information ............................................................................................................... 198
Note 7 Operating items ....................................................................................................................... 199
Note 8 Intangible assets, property and equipment, investment property ............................................ 207
Note 9 Investments in equity-accounted companies........................................................................... 214
Note 10 Income tax............................................................................................................................. 216
Note 11 Provisions and contingent liabilities ....................................................................................... 217
Note 12 Number of employees, employee compensation and benefits .............................................. 219
Note 13 Equity and earnings per share .............................................................................................. 225
Note 14 Financial assets and liabilities, finance costs and other financial income and expenses ...... 228
Note 15 Off-balance sheet commitments............................................................................................ 239
Note 16 Subsequent events ............................................................................................................... 240
Note 17 Fees paid to the Auditors ...................................................................................................... 240
Note 18 List of consolidated companies ............................................................................................. 240
5.7 Statutory Auditors’ Report On The Consolidated Financial Statements ............................................. 252
6. CARREFOUR SA FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 ................. 256
6.1 Balance sheet ..................................................................................................................................... 256
6.2 Income statement ............................................................................................................................... 257
6.3 Statement of cash flows ...................................................................................................................... 257
6.4 Notes to the Company Financial Statements ...................................................................................... 258
Note 1 Accounting principles .............................................................................................................. 258
Note 2 Significant events of the year .................................................................................................. 260
Note 3 Fixed assets ............................................................................................................................ 261
Note 4 Current assets, prepayments and deferred charges ............................................................... 261
Note 5 Marketable securities .............................................................................................................. 262
Note 6 Shareholders’ equity ............................................................................................................... 262
Note 7 Provisions and impairment ...................................................................................................... 263
Note 8 Borrowings .............................................................................................................................. 264
Note 9 Related parties ........................................................................................................................ 264
Note 10 Off-balance sheet commitments............................................................................................ 264
Note 11 Employees ............................................................................................................................ 265
Note 12 Tax ........................................................................................................................................ 265
Note 13 Subsequent events ............................................................................................................... 266
Note 14 Subsidiaries and affiliates...................................................................................................... 266
6.5 Statutory auditors’ report on the financial statements ......................................................................... 267
7. INFORMATION ABOUT THE COMPANY AND THE CAPITAL ..................................................................... 270
7.1 Information about the Company ......................................................................................................... 270
7.1.1 Corporate name/Trade and Companies Register ...................................................................... 270
7.1.2 Head office ................................................................................................................................ 270
7.1.3 Legal form/term ......................................................................................................................... 270
7.1.4 Main provisions of the Articles of Association............................................................................ 270
7.2 Information on the capital ................................................................................................................... 272
7.2.1 Change in share capital ............................................................................................................. 272
7.2.2 Summary of delegations of authority and powers concerning capital increases........................ 273
7.2.3 Treasury share buybacks .......................................................................................................... 274
7.3 Shareholders ...................................................................................................................................... 277
7.3.1 Main shareholders ..................................................................................................................... 277
7.3.2 Information referred to in Article L. 233-13 of the French Commercial Code............................. 278
7.3.3 Information referred to in Article L. 225-37-5 of the French Commercial Code ......................... 279
7.4 Stock market information .................................................................................................................... 279
8. ADDITIONAL INFORMATION ....................................................................................................................... 281
8.1 Publicly available documents .............................................................................................................. 281
8.2 Person responsible ............................................................................................................................. 281
8.2.1 Person responsible for the Registration Document and the annual financial report .................. 281
8.2.2 Declaration by the person responsible for the Registration Document and the annual financial
report ................................................................................................................................. 281
8.3 Person responsible for the financial information ................................................................................. 281
8.4 Persons responsible for auditing the Financial Statements ................................................................ 281
8.5 Information incorporated by reference ................................................................................................ 282
8.6 Concordance tables ............................................................................................................................ 282
8.6.1 Registration Document concordance table ................................................................................ 282
8.6.2 Annual financial report concordance table................................................................................. 284
8.6.3 Management report concordance table ..................................................................................... 284
8.6.4 Corporate governance report concordance table ...................................................................... 286
The elements of the Annual Financial Report are identified in the table of contents using the symbol
Registration
Document
2018 Annual Financial Report
Please note that this Registration Document is an English non-binding translation for information purposes only. In case of any
discrepancies between the French and English version, the French version will prevail".
This Registration Document was filed with the French financial markets
authority (Autorité des marches financiers – AMF) on April 29, 2019, in
accordance with Article 212–13 of the AMF General Regulation. It may be
used to endorse a financial transaction in conjunction with a prospectus
certified by the AMF. This document has been established by the Issuer and
is binding on its signatories. This version of the 2018 Registration Document
supersedes the previous version filed with the French financial markets
authority (Autorité des marchés financiers - AMF) on 29 April 2019 and
published on Carrefour’s website on 30 April 2019. The change made
concerns the income appropriation table presented in Section 4.7.3, page 203,
of the 2018 Registration Document.
In 2018, we engaged in a process to thoroughly revise our in-store sales proposition, by redefining our assortments
to effectively meet consumers’ emerging needs. We expanded our offering of organic, fresh, locally sourced and
ownbrand products. To drive our commitment, we have launched the Act for Food programme, a global campaign
rolled out in each of our host countries to inform consumers about the concrete initiatives we are taking to support
the food transition. These issues are all vitally important to consumers, and Carrefour is now actively positioning
itself as the market‑leading banner in each one.
We have deployed this offering in our omni-channel ecosystem, integrating physical and online stores into a
seamless, increasingly personal shopping experience that delivers benefits to all our customers. We have built a
single e-commerce website for each country, based on the carrefour.fr model. Signalling our new attractiveness,
Carrefour entered into strategic partnerships in 2018 with digital giants, such as Google and Tencent, in a
commitment to forging the retailing business of the future.
Lastly, we undertook to transform our stores, taking the space-assortment-priceservice promise to a new level, brick
by brick, region by region. Centred around customers and their needs, this process aims to make the store a multi-
faceted environment: a place that highlights our expertise in food, in keeping with our ambition, with a broader range
of healthy products at affordable prices, particularly in the organic section; a place to explore non-food options, with
a sharpened focus on selective, relevant, high-quality lines, whether at proprietary or partner-operated stores; and
a place to find new services, providing the full spectrum of our e-commerce solutions.
Thanks to the active involvement of Carrefour’s teams, the initial outcomes in 2018 were robust and encouraging,
with most of our targets met or exceeded during the year. These results put us on track to tackle the next phase of
the Carrefour 2022 plan with confidence and strengthened ambition. The Group’s current model will enable us, by
2019, to meet our customers’ three demanding needs: affordable, reasonably controlled prices; healthy,
environmentally-friendly and responsibly produced food; and diversified omni-channel services
Throughout 2018, Carrefour made significant progress in each of these four areas, for which measurable and regularly assessed targets have been
set.
A streamlined organisation
The Group achieved a major milestone in its reorganisation process in 2018 by bringing its various headquarters teams together in the one location.
In France, teams that previously worked in 12 different buildings are now united on a single site in the Paris suburb of Massy-Palaiseau, at the
Group’s new global headquarters. A voluntary redundancy plan was also initiated and carried out in 2018, involving 2,400 employees in France,
1,000 in Belgium and 1,000 in Argentina.
To take better advantage of its size, the Group enhanced synergies among its headquarters, stores, warehouses and countries, and streamlined its
organisation and its management methods for a more customer-centric approach. As a result, the support functions now operate in closer proximity
to the stores and warehouses, in a horizontal and decompartmentalised organisation structure.
As promised, Carrefour also abandoned close to 500 non-priority projects – such as the Nolim project in the video-on-demand and e-book markets
– to put an end to a certain lack of focus and return to previous levels of operating efficiency.
These measures gave the Group the resources necessary to invest heavily in digital technology and the food transition for all (detailed in Section
2.1.1), two of the priority areas in its transformation plan.
Strategic investments
While reducing its costs and improving its productivity, Carrefour also invested 1.6 billion euros in 2018 in areas that are strategic to its transformation
plan, such as:
the development of digital services and the standardisation of e-commerce solutions;
the expansion of convenience formats and the modernisation of hypermarkets;
the extension of Drives, Click & Collect and home delivery services;
stronger integration of stores in the omni-channel customer experience;
the deployment of a food offering more closely aligned with consumer expectations, in terms of quality and traceability, the increased availability
of organic products, and a broader selection of fresh produce and local products;
support for farmers and other food industry operators via long-term partnerships.
Enhanced logistics
Alongside its front-office investments, Carrefour is also taking action to ensure that its back-office operations are aligned with its food e-commerce
ambitions. The Group is building a cutting-edge industrial and logistics ecosystem, based notably on a network of automated order fulfilment centres.
In France, for example, the Aulnay-sous-Bois warehouse inaugurated in January 2018 serves 50 stores, including 16 Drives and three pedestrian
Drives. It will ultimately serve nearly all of the Drives opened by Carrefour in the Paris region, except for the pedestrian Drives, which will be
transferred over to the order fulfilment centre in Pantin in 2019. In addition to these automated warehouses, Carrefour is also developing hybrid
solutions by installing automated or semi-automated order fulfilment systems in its hypermarkets to create “dark stores”. In 2018, the Group created
dark stores in Brazil, France, Italy and Poland.
Carrefour is also strengthening its back-office operations in marketing. By 2022, 50% of the Group’s marketing expenditure will be allocated to digital
solutions (versus 8% in 2017), with priority given to harmonising its customer databases, consolidating customer relationship management (CRM)
and implementing personalised messages and offers adapted to the practices and preferences of each consumer.
1.3.4 Become the world leader in the food transition for all
Carrefour is firmly committed to promoting healthy, balanced food options produced using sustainable, environmentally responsible farming methods,
in line with new consumer expectations. Its ambition in this area has been broken down into three key objectives:
increase the selection and sale of fresh produce at a sustained pace, with a target in France of net sales growth three times higher than that of
other food products, by attracting one million new customers by 2022;
become the leader in organic products in all of the Group’s countries of operation, by generating 5 billion euros in net sales worldwide in 2022;
use own-brand products to spearhead the promotion of food quality and safety for all, with the objective of generating a third of Group sales
from own-brand products by 2022.
omni-channel deployment
As part of its omni-channel strategy, Carrefour is developing its physical network of sales outlets and pick-up points in synergy with its e-commerce
websites and apps, in order to provide consumers with simple solutions that are available to everyone, everywhere at any time, including in-store
shopping, pick-up at a Drive or via Click & Collect, and home delivery.
Carrefour is a multi-local omni-channel retailer. In every country and region, it builds an offering in line with consumers’ practices and preferences.
Each store has the independence necessary to adapt its product assortment and services portfolio to local needs and build close relationships with
its customers, while also benefiting from the strengths and resources of an international retailer. The Group’s stores all contribute to their host
community’s development in various ways, by creating direct and indirect jobs, setting up local distribution networks and sales partnerships with
local producers (SMEs, farmers, etc.), contributing to local business projects, and taking part in environmental, social and solidarity initiatives,
particularly in the areas of food donations and combatting food waste.
France
In France, the Carrefour group had 5,365 stores under its banners at year-end, in four formats: 247 Carrefour hypermarkets, 1,056 Carrefour Market
supermarkets, 3,918 convenience stores operating primarily under the Carrefour City, Carrefour Contact, Carrefour Express and Carrefour Bio
banners, and 144 Promocash cash & carry outlets. The Group has a total of 646 integrated stores: 209 hypermarkets, 420 supermarkets,
11 convenience stores and six cash & carry stores. The divestment of 273 ex-Dia stores was successfully completed in 2018.
The proportion of franchised stores within the network represented 9.9% for hypermarkets, 59.1% for supermarkets and 99.5% for convenience
stores.Franchising is capital efficient and allows the Group to draw on the engagement and local market knowledge of its partners. Carrefour
franchisees benefit from the Group’s recognised expertise in food and non-food retailing, well-known brands and banners, broad product assortment,
business methods and quality, health and safety standards.
Latin America
Carrefour has been operating in Latin America since opening its first store in Brazil in 1975 and has become one of the continent’s leading retailers.
Carrefour is expanding its banners in two growth markets: Argentina and Brazil. The network comprises 1,025 units, of which 189 hypermarkets,
147 supermarkets, 516 convenience stores and 173 cash & carry stores.
The network was expanded in 2018, with the opening of 20 new Atacadão stores in Brazil. In Argentina, 16 hypermarkets were converted to the
Maxi format.
Net sales in Latin America totalled 13.8 billion euros in 2018, after the application of IAS 29, an increase of 15.7% at constant exchange rates. Due
to an unfavourable currency effect over the year, sales declined by 13.9% at current exchange rates. Recurring operating income came to 767 million
euros in 2018, after the application of IAS 29, up 23.6% at constant exchange rates and up 7.2% at current exchange rates. The operating margin
ratio stood at 5.6% versus 4.5% in 2017. In Argentina, the implementation of a sales recovery and transformation plan enabled the Group to bring
recurring operating income back to break-even (before the application of IAS 29, which had an unfavourable impact of 33 million euros). In Brazil,
operating margin increased significantly over the year. Atacadão maintained its strong sales momentum and continued to expand at a rapid pace,
while financial services recorded solid profitability gains.
In Brazil, Carrefour operates a network of 100 hypermarkets, 49 supermarkets, 120 convenience stores and 166 cash & carry stores. Net sales in
Brazil totalled 11.9 billion euros, up 7.3% at constant exchange rates. In 2018, Carrefour benefited from a strong sales performance, the expansion
of growth formats (particularly Atacadão) and the development of e-commerce. Financial services posted significant growth, with the Atacadão card
gaining ground during the year.
Carrefour has been operating in Argentina since 1982 where it manages a local store base comprising 89 hypermarkets, 98 supermarkets,
396 convenience stores, and seven cash & carry stores. Net sales totalled 1.9 billion euros in 2018, an increase of 55.4% at constant exchange
rates.
Operational investments in Latin America amounted to 429 million euros in 2018, representing 3.1% of net sales.
Asia
Present in Asia since 1989, Carrefour has operations in China and Taiwan, as well as in Indonesia through franchising. The Group has a total of
474 stores under banners, including 372 hypermarkets, 73 supermarkets and 29 convenience stores.
A total of 35 stores were opened during the year, adding 53,000 sq.m. of sales area.
Other regions
Carrefour also operates 459 stores with local franchisee partners around the world (Africa, the Middle East, etc.) in various formats, including
124 hypermarkets, 267 supermarkets, 55 convenience stores, and 13 cash & carry stores.
In 2018, Carrefour continued to expand its banner base by supporting its partners outside Europe and in the French overseas territories, with a total
of 65 new sales outlets opened during the year. In the Middle East, for example, the Majid Al Futtaim group continued its multi-format expansion
with the opening of 15 hypermarkets and 28 supermarkets. In Africa, the CFAO Retail group inaugurated a new store in Abidjan, Ivory Coast. These
two partners also entered into an agreement with e-tailer Jumia.
1 Market share by value – Nielsen Scantrack panel of FMCG and self-service fresh produce consumers in France, over a 52-week perid
ending December 31, 2018 (hypermarkets, supermarkets, discounters, convenience stores and drive).
Source: Bloomberg.
1 Composition of Stoxx Europe 600 Retail index: Ahold Delhaize, B&M European Value Retail, Carrefour, Colruyt, Delivery Hero, Dufry,
Galenica, H&M, ICA Gruppen, Inchcape, Inditex, Jeronimo Martins, Just Eat, Kering, Kesko OYJ, Kingfisher, Marks & Spencer, Metro,
Morrison, Next, Ocado, Sainsbury, Tesco, WH Smith, Zalando.
Develop apiculture
Implement a bee plan in each country by 2020 2 countries out of 10 with a comprehensive plan
73 stores and offices fitted with beehives across the Group
* Data reported in calendar year 2018.
EMPLOYEES 2018
Employment
Permanent contracts 90.6% of employees on permanent contracts
Act as a responsible employer
Develop employees’ skills 11.4 training hours on average per employee
Develop internal promotion Internal promotion rate of 50%
Encourage diversity and equal opportunity
Encourage gender equality 41.1% of managers are women
Encourage the hiring and retention of people with disabilities 3.4% of employees have a disability
On November 7, 2018, Amélie Oudéa-Castéra stood down as Director following her appointment as Executive Director, E-Commerce, Data and
Digital Transformation for the Carrefour group.
The Board of Directors has set up specialised Committees that review any questions submitted to them for their opinion by the Board of Directors
or the Chairman of the Board of Directors. The Board of Directors’ Committees are: the Audit Committee, the Compensation Committee, the
Appointments Committee, the CSR Committee and the Strategic Committee.
To become the leader of the food transition for all, Carrefour has made commitments that are transforming its business. These ambitious
commitments will ensure that the Group is better prepared for new expectations coming from customers and society in general, as well as changing
regulations, and in this way contribute to transforming the market:
the Carrefour group announced a new goal: 100% reusable, recyclable or biodegradable packaging for Carrefour-brand products by 2025. In
addition, together with global competitors, major brands and NGOs, in December 2018 Carrefour signed the Global Declaration on Plastics
initiated by the Ellen MacArthur Foundation to make this goal a market standard (detailed in Section 2.2.6);
Carrefour published its Sustainable Forestry Purchasing Rules, replacing the Carrefour Wood Charter, governing supplies of palm oil, soy,
Brazilian beef and products made with wood or wood fibres for Carrefour-brand products (detailed in Section 2.2.7);
Carrefour’s Purchasing Rules for the social and environmental compliance of retail or non-retail certified product purchases were updated
and deployed in all host countries in 2018. These rules include a Supplier Commitment Charter, a country-by-country risk map, procedures
and standards for carrying out social audits and rules specific to sensitive production phases and raw materials;
since 2017, Carrefour has been committed to ensuring that all Carrefour-brand eggs sold in Europe (Belgium, Spain, France, Italy, Poland and
Romania) are sourced from cage-free systems; in 2018, this commitment was extended to Taiwan and Brazil (detailed in Section 2.2.4);
Carrefour is committed to animal welfare and has launched an independent audit across all the slaughterhouses supplying the Carrefour,
Carrefour Bio, and Reflets de France brands, in addition to the Carrefour Quality Lines. The audits are based on the Animal Protection standard
drawn up by the non-profit organisation Œuvre d’assistance aux bêtes d’abattoirs (OABA). Carrefour is also the first French retailer to install
cameras at its slaughterhouses in France (detailed in Section 2.2.4);
the Group has committed to provide the largest selection of products sourced from sustainable fishing by 2022. To help meet this goal, Carrefour
signed an unprecedented partnership with the Seafood Watch programme led by the Monterey Bay Aquarium ®, in order to map its fishing supply
chain in Brazil (detailed in Section 2.2.5). According to the Marine Stewardship Council (MSC) report, “Carrefour leads the field among retail
players selling own-brand products with the MSC label in France”, with more than 75 MSC-labelled items, (detailed in Section 2.2.5);
Carrefour has set a goal of generating 5 billion euros in sales of organic products by 2022. To step up the process, Carrefour France helped
farmers in 31 different product categories to make the switch to organic farming by offering them “Organic development” (Bio développement)
contracts in partnership with the World Wildlife Fund (WWF®) (detailed in Section 2.2.2);
Carrefour has set itself the goal of rolling out agroecology in its Carrefour Quality Lines (CQL) so that by 2022, 100% of CQL products sold will
carry an agroecology-specific message (detailed in Section 2.2.3). In addition to the work already begun on fruit and vegetables, Carrefour is
drawing up an Agroecology Charter for the cereals line (detailed in Section 2.2.3), a joint project with its cereal suppliers and customers;
in Belgium, Spain, France and Italy, Carrefour banned 100 controversial substances from its products in 2018, with around 30 more to follow
by 2020 (detailed in Section 2.2.1);
in 2018, Carrefour extended the initiative launched in late 2017 to promote farmers’ seeds, enlarging its selection of heirloom fruit and vegetables
grown from farmers’ seeds, with the goal of doubling its sales in that category by 2022 (detailed in Section 2.2.3);
(1) The societal challenges have been identified with respect to the risk analysis undertaken by Carrefour (detailed in Section 4.8) as well as external benchmarks
such as ISO 26000 and the UN's Sustainable Development Goals.
(2) The numbers identify the sections in which the policies relating to the various risks and challenges are described.
Stakeholder dialogue
Food Transition Advisory Committee
In 2018, Carrefour formed a Food Transition Advisory Committee, bringing together seven external well-known figures from different backgrounds
who are committed and concerned about food issues: Lucie Basch, founder of the startup Too Good To Go; Myriam Bouré, co-founder of Open
Food; Emmanuel Faber, Chairman and Chief Executive Officer of Dannon; Jean Imbert, a socially and environmentally responsible chef; François
Mandin, a farmer from the Vendée region; Caroline Robert, head of dermatology at the Gustave Roussy Cancer Centre, and Maxime de Rostolan,
founder of Fermes d’Avenir and Blue Bees.
The Committee members agreed to support Carrefour’s transformation of its production model. They participate in projects working towards the food
transition for all, share best practices, propose new ideas and lead exploratory discussions about changing food habits. The Committee meets twice
a year. The first session was held in 2018 and focussed on four food transition topics: food waste, complete food costs, soil conservation in agriculture
and new models for the food business and stores. Each of the topics will be followed by working groups involving Carrefour employees and
Committee members.
Employee relations
This approach has been accompanied by extensive social dialogue. The Group promotes union rights and the right to collective bargaining in the
countries in which it operates. Carrefour was the first retailer to sign an agreement with Union Network International which serves as the basis for
employee relations within the Group (detailed in Section 2.5.3) and was last renewed in 2018. A CSR working group within the European Consultation
and Information Committee holds meetings three times a year, so that employee representatives can participate in the development of action plans
and be consulted on innovations.
Score
2018
Products Objective 2018 Result 2018 105%
1. €5 billion in sales of organic products by 2022 €1.71 billion €1.76 billion 103%
2. 10% of Carrefour Quality Lines products within Fresh Products by 2022 6.9% 6.0% 87%
3. 50% of Carrefour seafood products sold come from responsible fishing by 2020 35% 37.3% 106%
4. Implementation of a Sustainable Forests action plan for the products linked to 50% 48.5% 97%
deforestation by 2020
5. 10,000 tonnes of packaging saved by 2025 1,438 tonnes 1,867 tonnes 130%
2018
Score
Stores Objective 2018 Result 2018 103%
6. Reduce food waste by 50% by 2025 (vs. 2016) - - -
7. Recover 100% of waste by 2025 70% 67% 95%
8. Reduce CO2 emissions by 40% by 2025 and by 70% by 2050 (vs. 2010) -26.7% -28.6% 107%
9. 2,000 employees identified as "food transition superheroes" in stores by 2020 10 superheroes 10 superheroes 100%
2018
Score
Customers Objective 2018 Result 2018 103%
10. 80% of customers identify food transition in stores by 2022 50% 63.8% 129%
11. 100% of countries roll out a program focused on local products and purchasing by 30% 20% 67%
2020
12. 100% of countries implement an annual Act For Food communication program 100% 100% 100%
13. 100% of countries roll out an Healthier Diet action plan by 2022 60% 70% 117%
2018
Score
Employees Objective 2018 Result 2018 102%
14. 40% of women account in appointments to key positions by 2025 & 100% of countries 23.1% 31%
123%
roll out GEEIS certification by 2020 67% 75%
15. 4% of disabled employees within the Group by 2025 3.38% 3.4% 101%
16. 13 training hours per Group employee by 2025 12.3 hours 11.4 hours 93%
17. 100% of countries implement an action plan on health/safety/quality of life in the 58% 67%
114%
workplace by 2020
2.2 Products
Carrefour’s business revolves around the products it sells. They are what connects Carrefour and its customers, directly reflecting its social
responsibility and providing concrete proof of its ambition to lead the way in food transition for all.
Carrefour’s product policy draws from a long-standing commitment to food quality and safety, and is driven by an increasing demand for transparency
and traceability, and an ever more current drive to improve well-being through diet. Carrefour believes that committing to the food transition means
guaranteeing a sustainable future for the food industry. This involves developing agroecology, offering affordable organic produce, while ensuring
animal welfare and promoting responsible fishing and aquaculture. Carrefour’s industry-wide endeavours also extend to climate change, biodiversity
and environmental issues, through protecting forests and developing a circular economy.
Every year, the Consumer service department commissions an independent organisation to run a survey of 1,600 customers on how their requests
are processed and identify the corrective actions needed.
Carrefour’s AlertNet international alert system provides prompt notification to all stores on product withdrawal and recall situations. The system is
available online at all times and access is free for suppliers. In the event of an alert, Carrefour immediately withdraws the products concerned.
Verification of effective withdrawal proceeds within 24 hours, and feedback on the product quantities concerned follows within three working days of
the withdrawal order.
To strengthen product withdrawal and recall procedures, Carrefour France recently reviewed all relevant in-store procedures. Carrefour has adjusted
certain procedures on matters such as management of customer returns to the store, stoppage at warehouse and store delivery, and stoppage at
the cash desk for withdrawals concerning all product batches.
2018
Number of countries running a Healthier Diet action plan 7
In Belgium, Spain, France and Italy, food additives have been analysed in the light of:
authorisation or lack of by the European Union;
opinions of national and international nutrition specialists;
the Guide to Food Additives by Maria Denil and Paul Lannoye, and the New Guide to Additives by Anne-Laure Denans of the La Nutrition collective;
scientific and media monitoring of controversial substances.
Authorised additives are examined to establish a continually updated classification divided into four categories:
black: substance already absent from all Carrefour-brand product categories or pending discontinuation by 2022;
red: substance authorised only in certain product categories (such as certain alcohol colourants);
orange: substance authorised, but to be replaced if possible;
green: substance authorised without restriction.
For each black-rated additive, Carrefour analyses the product lines concerned and works with suppliers to find a replacement solution that maintains
taste, appearance conservation and consistency qualities. For example, after titanium dioxide (E171) was downgraded from orange to black in 2017,
it was removed from all Carrefour own-brand products in 2018. As doubts arose as to the safety of this additive, Carrefour anticipated regulatory
changes by banning its use in its products.
If no replacement solutions for a black-rated substance are available, Carrefour takes the short-term measure of reducing concentrations pending
identification of a satisfactory solution. One of Carrefour’s goals for 2019 is to find a satisfactory replacement solution for the nitrites added as
bacteria inhibitors and conservation agents in ham. If it proves impossible to remove them altogether, Carrefour will reduce the concentrations of
nitrites in its own-brand cooked meats down to the levels specified for organic farming.
Act for Food – Cut out non-natural flavouring and colouring agents
Attentive to the quality of children’s food, Carrefour Belgium bans non-natural flavouring and colouring agents from all the
products in its Carrefour Kids and Carrefour Baby products lines. The ban currently runs to 200 products. Carrefour Belgium
wishes to go further and ban the use of added salt and sugar in products aimed at children.
Carrefour’s commitment to developing vegetarian product lines takes the perspective of offering an alternative to the consumption of animal proteins.
These products address both consumers concerned about animal welfare (detailed in Section 2.2.4) and flexitarians, who wish to reduce the
proportion of meat in their diets. Carrefour is attentive to the quality and nutritional profile of these products.
In France, for example, products in the Carrefour Veggie line bring nutritional benefits (as regards fibre and protein content, etc.) and are free of
GMOs and artificial colouring and flavouring agents. Packaging for all these products includes the European vegetarian or vegan label (label-V)
issued by the French Vegetarian Association (Association Végétarienne de France).
Act for Food – Ensure traceability and offer transparency to Carrefour’s customers
Carrefour is committed to extending blockchain technology across all its Carrefour Quality Lines by 2022.
Developing organic produce lines and supporting suppliers in the switch to organic
farming
Carrefour’s policy
Supply shortage is a characteristic of today’s organic produce market. Carrefour’s efforts to widen the public reach of organic produce start by
supporting the development of organically farmed production lines.
By offering producers the security of advantageous contract conditions, Carrefour helps to speed up the transition to organic farming. Carrefour
offers contracts from three to five years, with commitments on volumes and purchase prices to ease the pressure on suppliers during the switch to
organic. For example, contracts can offset the impact on farmers’ earnings of a productivity dip during the conversion period. Carrefour also draws
upon its extensive supplier support know-how to field specialist teams working to forge partnerships with the organic farming world.
Carrefour’s performance
Carrefour France has set the objective of supporting 500 farmers through conversion to organic production by 2022. In 2018, Carrefour provided
support to 210 farmers in 15 specialities.
Carrefour Belgium has undertaken to support 50 Belgian farms in the switch to organic farming by 2022, through a knowledge partnership between
organic farming experts and Belgian farmers, financial support and the guarantee of purchasing more than 20% of their production over five years.
Carrefour Taiwan is supporting more than 50 producers currently at the conversion stage and has undertaken to support 100 by 2022.
Highlights
In 2018, Carrefour ran a number of projects addressing some of the key factors involved in the development of organic farming: guaranteed fair
prices for producers and outlets, traceability for production line reliability, and customer spotlight on producers’ work. The following examples stand
as pilot models for further implementation:
Carrefour France launched a Bio développement contract with the WWF®. Through this contract, Carrefour undertakes to abide by set
purchasing volumes and pricing with producers converting to organic farming, for a period of three to five years. The products in question will be
identified in Carrefour stores with specific labelling indicating the WWF® connection. In France, Finifac, the Carrefour group’s financial services
company, pre-finances French and European aids for conversion to organic farming;
to guarantee the quality of organic cotton used in its own-brand collections, and ensure traceability of raw materials, Carrefour has set up its
own supply chain for Indian organic cotton. This uses the traceability system of social partner company Cotton Connect, which ensures that
farmers receive additional compensation with respect to conventional cotton. Compliance with Carrefour’s commitments is audited in the field by
the Organic Cotton Accelerator (OCA) organisation. The first “sustainable cotton” collection, comprising household textiles, underclothes and
baby wear will appear in spring-summer 2019. At a later stage Carrefour will include a QR Code on the label, enabling customers to track the
cotton from the field to the store shelf;
Carrefour and its Foundation have signed a partnership agreement with WWF France, the Saint-Denis-de-l’Hôtel Dairy (LSDH) and cattle farmers
in the APLBC collective. On this unique project, a retail group, an enterprise foundation, a mid-sized company, a group of farmers and an NGO
join forces to help dairy producers through the process of conversion to organic farming. The 66 dairy producers receive a supplement of
50 euros per 1,000 litres of milk. This financial support will run for two years, covering the conversion period, and help finance production of
10 million litres of milk. On completion of the conversion period, Carrefour will offer the dairy producers three-year contracts. The first cartons of
organic milk produced under this partnership will be appearing on the Carrefour store shelves in 2020. They will be easily identifiable, with specific
labelling illustrating support from WWF France.
Carrefour’s performance
Carrefour targets a substantial rise in the sale of organic products, to 5 billion euros by 2022 [CSR & Food Transition Index].
Carrefour has developed a broad range of organically sourced fresh produce, grocery products and cosmetics. Carrefour stores now sell over
3,300 certified organic food products.
* Sales figures are reported on a rolling 12-month basis (October 2017 to September 2018). Total sales (including VAT) of organic products in calendar year 2018 amounted
Carrefour possesses a unique tool for developing agroecology: the Carrefour Quality Lines. Since 1992, Carrefour has taken a cooperative approach
in encouraging partners to manufacture goods using innovative practices that protect the environment and biodiversity. Carrefour Quality Lines
producers use common production practices such as integrated pest control and crop rotation, and desist from spreading sludge from waste
treatment plants, using soil-less crop production and applying post-harvest chemical treatment on fruit and vegetables. In addition to these common
practices, specific agroecology-based criteria are phased in for different categories of product.
To pursue its objective, Carrefour fosters loyalty among the best suppliers of Carrefour Quality Lines. Some 28,000 producers are long-term partners
of the Group in over 500 Carrefour Quality Lines.
Carrefour aims to develop and promote sales of Carrefour Quality Lines and organic produce, setting targets such as having:
10% Carrefour Quality Lines products in the Produits Frais d’Ici range by 2022 [CSR & Food Transition Index];
100% of Carrefour Quality Lines products carrying an agroecology-specific message by 2022 (e.g. “fed GMO-free”, “fed without antibiotics”,
“grown without chemical treatment”, etc.).
Carrefour’s performance
In 2018, sales of Carrefour Quality Lines products were up by 10.1% on 2017.
Act for Food – Promote biodiversity by selling fruit and vegetables grown from farmers’ seeds
Carrefour France extended its range of fruit and vegetables grown from farmers’ seeds in 2018, following on from the initiative
launched in 2017 to promote these varieties. The aim is to double sales of products grown from farmers’ seeds in France by
2022.
With its Le Marché Interdit (The Forbidden Market) initiative, launched in 2017, Carrefour France supports growers in the movement to offer heritage
fruit and vegetables grown from farmers’ seeds. So far, there are some forty Carrefour stores selling these traditional fruit and vegetable varieties.
Carrefour France wishes to develop this line on a long-term basis, and has signed a partnership with two grower groups accordingly.
To challenge authorities on the recognition of traditional crop varieties and support a change in legislation that bans the sale of farmers’ seeds, in
2017 Carrefour encouraged customers to sign a petition entitled “Change the law that narrows biodiversity and our food choices!” This
contributed to a change in regulations allowing the free sale of farmers’ seeds of organic origin, which Carrefour wishes to see extended to
conventional varieties.
Performance
In France, the main products subject to development programmes for alternative farming methods are:
Highlights
Carrefour has launched an independent audit across all the slaughterhouses supplying the Carrefour, Carrefour Bio, and Reflets de France
brands, in addition to the Carrefour Quality Lines. The audit is based on the Animal Protection standard drawn up by the specialised non-profit
Œuvre d’assistance aux bêtes d’abattoirs (OABA). To accomplish this project, Carrefour has signed a tripartite agreement with OABA and Bureau
Veritas, which will carry out 84 audits in 2019.
For greater transparency with regard to the slaughterhouse animal conditions, Carrefour has stepped up its control system. The Group is to date
the sole French food retailer to have asked its suppliers to have cameras installed in their slaughterhouses.
In partnership with Humane Society International (HSI), Carrefour ran an international study tour on cage-free egg production for its suppliers,
its own and other retailers’ personnel, experts and government representatives. The 50 participants, from ten countries, on the tour discussed
cage-free alternative farming solutions and technical and regulatory issues, and worked on promoting a coalition on alternative egg production
methods.
In 2017, Carrefour committed to ensuring that all Carrefour-brand eggs sold in Europe (Belgium, Spain, France, Italy, Poland and Romania) would
be sourced from alternative cage-free systems by 2025. This commitment was extended to two further countries in 2018:
in Taiwan, Carrefour will be selling own-brand eggs from cage-free chickens from 2019, and from free-range Quality Line chickens from 2020.
It will also be supporting suppliers and customers with a view to seeing 100% of eggs from cage-free sources by 2025;
Carrefour Brazil has committed to stop selling eggs from cage-raised chickens on 100% of its own-brand products by 2025 and on 100% of all
products sold in its stores by 2028.
Carrefour’s performance
Carrefour has been phasing out sale of vulnerable species since 2007. Twelve vulnerable species have been withdrawn from sale in France.
Customers in France can count on a range of sustainably sourced seafood:
seventy percent of the fish in the frozen food section is MSC-certified, including 100% of Carrefour wild cod and hake;
in the canned fish section, specifications for Carrefour’s own-brand canned tuna stipulate fishing techniques and methods having lower ecosystem
impact;
in the fresh fish section, the responsible fishing and fish-farming programme was rolled out across all hypermarkets and 30 supermarkets in late
2018. The traditional fishmonger sections in these stores now sell 100% MSC-certified cod and 100% ASC-certified Carrefour Quality Lines
salmon, these being the two most popular fish in France. All Carrefour Quality Lines prawns from Madagascar are also ASC-certified. These
products are now available self-service in all Carrefour stores in France. Carrefour guarantees that 100% of Carrefour Quality Lines salmon is
raised GMO-free and without antibiotics.
Carrefour Italy has a special partnership with MSC to develop products from sustainable fishing practices: stores sell 16 MSC-certified Carrefour
own-brand products.
(2) Scope: Non-comparable BUs (87.72% of 2018 consolidated sales excl. VAT) - excl. AR, PO (incl. in 2017), RO (incl. in 2017) - incl. CH (excl. in 2017) and TW (excl. in
2017)..
Highlights
Carrefour signed a unique partnership with the Seafood Watch programme led by the Monterey Bay Aquarium®, a US ocean preservation NGO.
The aim is to map Carrefour Brazil’s fishing supply chain to identify ways of ensuring the sustainability of farming and fishing processes
overall. The findings will guide Carrefour’s purchasing policy in Brazil and encourage suppliers to undertake wide-reaching changes wherever
necessary. An inventory of the species with the largest consumption volumes in Brazil will also instruct public- and private-sector players on
sustainability in fishing.
The Marine Stewardship Council (MSC) has published a report on retail player commitments with regard to its sustainable fishing label.
According to this report, “Carrefour leads the field among retail players selling own-brand products with the MSC label in France”, with more
than 75 MSC-labelled items, accounting for 29% of its wild seafood products. Since 2016, “Carrefour has been the only retailer to offer MSC-
labelled fresh fish on its hypermarket shelves” (Survey on behaviour of seafood product consumers in France, Globescan 2018 for MSC).
Carrefour’s performance
2018 2017
Reduction in packaging since 2017 (in tonnes) 1,867 938
Scope: Comparable BUs (100% of 2018 consolidated sales excl. VAT).
Highlights
Carrefour has joined the New Plastics Economy Global Commitment initiated by the Ellen MacArthur Foundation in partnership with the United
Nations Environment Programme (UNEP). This seeks to bring in a new standard for plastic packaging. The elimination of unnecessary and
problematic plastics is a major point in the vision promoted by this Global Commitment. In joining the movement, Carrefour undertakes to publish
yearly figures on plastic consumption and on the progress made in eliminating and recycling plastic materials.
Carrefour France has developed many short- and medium-term operations for each part of its packaging plan, including the following:
selling produce in reusable bags at hypermarket fresh produce stands (action under way, part 1);
discontinuing plastic packaging for self-service organic fruit and vegetables, starting with bananas and cucumbers (action under way, part 2);
setting up “Lemon Tri” collection systems for PET bottles at 17 stores (part 3);
incorporating recycled plastic in Carrefour-brand soda, juice and mineral water bottles, with the aim being to reach a 50% proportion by 2022
(action under way, part 4);
making reusable Carrefour shopping bags from recycled plastic collected at warehouses and stores (action under way, part 5).
Other Group host countries have developed their own operations. Carrefour Spain has launched a biodegradable product tray. Carrefour Poland is
continuing work with own-brand suppliers on optimising packaging weight: five products were improved in 2018, with weight savings totalling 750 kg.
In Taiwan, Carrefour encourages customers to use their own bags at the delicatessen stand.
The Group is developing a packaging qualification and accounting system to record weight, recyclability of components and percentage of recycled
material for each own-brand product. This system is being rolled out in France, Spain, Italy and Belgium, prior to Group-wide application. It will
improve the management of two indicators:
the quantity of packaging per number of consumer sale units;
the proportion of recyclable packaging put on the market.
Carrefour’s policy
To preserve biodiversity, protect local populations and counter climate change, Carrefour is committed to the cause of combatting supply-chain-
related deforestation. For Carrefour, forest protection also helps ensure sustainable supplies of farming and forestry raw materials.
In 2010, Carrefour took up the Consumer Goods Forum (CGF) goal to move toward zero deforestation by 2020. Carrefour is intent on helping to
reduce deforestation related to the raw materials liable to be used in its products. It will be rolling out a Sustainable Forests action plan on
deforestation-linked products by 2020 [CSR & Food Transition Index].
Carrefour has been working with stakeholders to draw up a sustainable forests policy and action plan since 2013.
Priority raw materials under this plan have been identified through sources including the following:
raw materials indicated by Carrefour stakeholders (chiefly the WWF® and the FAO®) as being major factors in deforestation;
raw materials identified by stakeholders as being a potential source of social non-compliance;
products containing significant concentrations of raw materials.
Carrefour will be concentrating on four priority raw materials under its commitment to the goal of zero deforestation: palm oil, soy, wood/paper and
Brazilian beef.
Carrefour applies the following principles on sustainable forest management:
1. protecting of high-conservation-value (HCV) forests, peat bogs, high-carbon-stock (HCS) areas and remarkable ecosystems;
2. banning forest clearance by fire, and implementation of good practices to reduce greenhouse gas emissions in existing plantations;
3. observing of human rights and workers’ rights;
4. respecting local populations’ rights, in particular through a policy of free and informed consent, and preventing land-use conflicts;
5. supporting for small-scale producers, through inclusion in sustainable supply chains;
6. banning GMOs where possible (in particular for palm oil and wood) and the use of endangered species listed in the International Union for
Conservation of Nature (IUCN) red list or by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
7. reducing the amount of pesticides, encouraging their responsible use, and banning the most dangerous among them.
Since 2005, Carrefour has taken a comprehensive approach to reducing the amount of paper used in its publications (e.g. reducing paper grammage,
going paperless, and optimising distribution) and increasing the relative proportion of recycled or certified paper. Carrefour also works with printers
to reduce the amounts of paper used in its sales and marketing publications.
Carrefour’s performance
2018 2017
Roll-out of a Sustainable Forests action plan on deforestation-linked products by 2020 48.5% 39.8%
Scope: Comparable BUs – Beef, Wood/Paper and Soy: 100% of 2018 consolidated sales excl. VAT - Palm oil: 83.6% of 2018 consolidated sales excl. VAT (excl. AR, CH,
TW).
This composite indicator covers raw materials considered a priority in the combat against deforestation: palm oil, soy, Brazilian beef and wood and
paper. The result is the mean of four values: percentage target fulfilment for each of the four priority raw materials. This indicator is incorporated into
the CSR & Food Transition Index.
Highlights
Carrefour published its Sustainable Forests 2020 policy and specified Sustainable Forestry Purchasing Rules governing supplies of palm oil, soy,
Brazilian beef and products made with wood or wood fibres (such as writing paper, furniture, wooden products, and private label charcoal) for
Carrefour-brand products.
Carrefour also chose to join the Alliance for the Preservation of Forests.
Palm oil
Carrefour’s policy
Since 2010, Carrefour’s policy is to replace palm oil in its own-brand products when this improves the product’s nutritional quality. For those
Carrefour-brand products which still require palm oil, it is the Group’s intention to guarantee that by 2020 the palm oil contained in them will not in
any way impact deforestation. It has determined purchasing criteria for its suppliers accordingly.
Carrefour applies RSPO (Roundtable on Sustainable Palm Oil) certification as a minimum standard for the palm oil used in Carrefour-brand
products. Other certifications such as Rainforest Alliance also correspond to Carrefour’s policy requirements.
Carrefour also endeavours to ensure that it sources from suppliers capable of providing physically traceable and sustainable palm oil. It is working
with its main suppliers to map the supply chain through to the relevant guarantee point. This traceability approach also enables Carrefour to ensure
that suppliers share its procurement policy.
Carrefour’s performance
Since 2015, 100% of the palm oil used by Carrefour has been sourced from RSPO-supported suppliers.
In addition, 75% of the palm oil in its products is segregated or mass-balance, meaning it is wholly or partially monitored for sustainability throughout
the supply chain.
Carrefour has replaced palm oil in more than 500 products, keeping or improving their nutritional and taste qualities.
2018 2017
Proportion of palm oil from RSPO-supported suppliers (segregated and mass-balance)* 75.0% 72.7%
Proportion of palm oil certified sustainable and wholly monitored (RSPO segregated)* 40.7% 31.0%
Proportion of palm oil certified sustainable and partially monitored (RSPO mass-balance)* 34.3% 41.7%
* Percentage based on weight of material in products sold.
Scope: Comparable BUs (83.64% of 2018 consolidated sales excl. VAT) excl. AR, CH, TW.
Highlights
Carrefour encourages development of local vegetable proteins for livestock feed. In 2016, Carrefour and Avril announced the creation of Sojalim,
a sustainable soy production line based in south-west France. This collaborative venture involves the two cooperatives Euralis and Fipso and relies
on pooling livestock farmers common needs, Carrefour’s long-term commitment to buy the produce, and Avril’s involvement in soy planting and
processing. It now offers livestock farmers the option of locally produced animal feed. This is used, for example, to produce Carrefour Quality Lines
poultry, egg and pork products.
Carrefour is also developing a GMO-free animal feed traceable or certified to the Proterra standard. More than 350 Carrefour products sold in
France, including those in the Carrefour Quality Lines, are produced using GMO-free feed based on traceable or certified soy.
Carrefour’s performance
Since 2015, the Group has taken steps to boost sales of Carrefour PEFC and FSC products. Sales saw a steep rise in 2018.
2018 2017
Proportion of Carrefour-brand products in ten priority categories sourced from sustainable forests (in %) 16% 7%
Scope: Comparable BUs (100% of 2018 consolidated sales excl. VAT).
Highlights
Own-brand products:
100% of the wood charcoal sold in France is FSC® certified or made from wood of French origin;
100% of tropical wood (acacia and eucalyptus) garden furniture from Carrefour’s international purchasing centre is FSC®-certified;
since 2018, 100% of toilet paper for sale in France, Spain, Italy and Belgium has been certified FSC ® “Mixed”;
the articles in Carrefour’s EcoPlanet stationery range are made from 100% recycled paper.
Non-retail products: 95% of the printing paper used at the Group’s French offices is certified, and 90% is certified to FSC® or Blue Angel.
Marketing publications: Since 2014, more than 99% of the paper used by the Carrefour group for marketing publications is recycled or certified.
Packaging Carrefour has developed a policy on reduction, reuse, recycling and composting of packaging (detailed in Section 2.2.6). All cardboard
packaging used for TEX textile products is FSC® certified.
Brazilian beef
Brazilian beef production is a major factor in a number of social issues, including deforestation, ecosystem conservation and respect for human
rights.
To address the challenges involved, Carrefour Brazil has brought in a policy specifying five supply criteria applicable to the fresh beef sold in
Carrefour stores in Brazil. Supplies must not originate in regions:
1) affected by deforestation;
2) under environmental embargo;
3) in conservation units;
4) corresponding to land belonging to indigenous populations;
5) where illegal work is practised.
The Group’s objective is to ensure that 100% of the fresh Brazilian beef sold in Carrefour stores in Brazil complies with its five supply criteria
by 2020.
Carrefour’s performance
2018 2017
Percentage of geo-referenced tier 2 Brazilian beef suppliers 83.3% 80%
Scope: Comparable BUs (100% of 2018 consolidated sales excl. VAT).
Carrefour’s policy
Carrefour shares the Consumer Goods Forum (CGF) goal of achieving a 50% reduction in food waste by 2025 (compared to 2016). [CSR & Food
Transition Index]
To reach this goal, Carrefour is implementing a global policy on cutting down food waste. This involves a number of measures:
adopting a more professional approach to waste at stores, by matching stock levels to demand flows, running special offers as use-by dates
approach, devising product second-life solutions, recycling waste, and making donations to food aid charities or subsidised grocery stores;
developing solutions with suppliers, by extending the shelf life of Carrefour’s own-brand products, conducting surveys on production waste, and
selling visually defective products that are as good as non-defective ones;
running solidarity operations. All consolidated supermarkets and hypermarkets in France and all hypermarkets in Poland have contracts with food
aid charities on distribution of their unsold products, and the Carrefour Foundation is actively involved in emergency humanitarian aid and food
provision (detailed in Section 2.4.5);
promoting waste reduction among customers, by developing innovative solutions, raising awareness and offering support to make progress in
this area.
Highlights
Carrefour and the Consumer Goods Forum are assessing and consolidating in-store food waste data in a joint pioneering process with a view to
publishing the first consolidated results as soon as possible. Carrefour is finalising the development of an in-store food waste monitoring tool
which will enable it to compare percentage reductions in food waste with 2016, the base year. The indicator is calculated on the basis of the Food
Loss and Waste Accounting and Reporting Standard (FLW Standard).
Carrefour has evaluated food waste throughout the value chain in 2018, from the farm to the consumer’s table, for five of its best-selling fresh
products: avocados, cod, carrots, bread and chicken. This evaluation was carried out with direct assistance from suppliers and indirect support
from farmers and from the ADEME 2016 survey on food waste and loss.
Carrefour pushed ahead with food waste avoidance programmes for products having minor appearance defects or approaching their use-by
date, but still as good and as safe as the rest. Drawing inspiration from the Tous Antigaspi operation in France, in 2018 Carrefour Brazil launched
a programme for fruit and vegetables outside the usual size or appearance norms. These únicos (“one-offs”), as they are called, would be offered
at a discount in 74 hypermarkets and supermarkets in the state of São Paulo. Along similar lines, products approaching the use-by date are sold
at a 50% discount. This also applies to fresh meat, bakery, fish and cold meat products nearing the date limit, offered at special discounts. The
“eat now” programme in Argentina also offers discounts on products approaching their use-by dates. In Spain, Carrefour runs an annual contest
rewarding the best waste avoidance proposal. In 2018, the winning idea involved packaging fruit at different stages of ripeness together.
Carrefour and its suppliers began a joint programme in 2017 intended to extend or remove use-by and best-before dates. So far, more than
400 Carrefour own-brand products have had their use-by date and best-before date extended, while the latter has been removed from over
100 products.
Carrefour supports innovation on food waste avoidance from start-ups. Working to full-loop principles, Carrefour France partnered the start-
ups Élixir Saveurs Solidaires, J’aime Boc’oh and Sandrine Saveur on second-life solutions for unsold fruit and vegetables, in the form of
compotes, smoothies, purées, soups, jams, etc. for subsequent sale in stores.
In Argentina, Carrefour continued its wide-reaching awareness-raising campaign #NoTiresComida (“Don’t waste food”) launched in 2016 in
partnership with Unilever. Carrefour stores ran programmes across the country, and on social networks, reaching some eight million people in all.
In Poland, Carrefour partners food-bank donation operations at all hypermarkets.
All Group host countries ran food waste avoidance operations for World Food Day:
in France and Belgium, Carrefour continued its commitment to the Too Good to Go® application, which offers baskets of unsold food at low
cost and agitates for better information on “minimum durability dates”. To clarify how use-by and best-before dates are determined,
Carrefour France appealed to consumers to sign and massively share the #changetadate petition. Carrefour is in favour of a review of European
legislation, bringing in simplified wording along the lines of “best by”;
Carrefour Spain signed a partnership agreement with the Universidad Autónoma de Madrid, the Spanish Ministry of Agriculture and three
suppliers, on joint food waste avoidance operations;
in Romania, a kitchen laboratory ran an awareness-raising operation addressing students at Tartasesti University on different ways to cook
products with appearance defects or approaching their use-by dates, but with no loss of taste;
in China, waste-avoidance cooking classes have been posted nationwide on the Weibo and Wechat social networks, and hundreds of students
have learned ways to cook fruit and vegetables that would otherwise be wasted.
Carrefour’s performance
In 2018, 66.5% of waste was recovered, (73.2% on a comparable basis compared with 2017). In 2018, the reporting scope was widened thanks to
processes put in place in Brazil and Taiwan to improve the reliability of waste tracking and to train and raise awareness among employees.
The decrease in donations in 2018 can be attributed to the deployment of the food waste avoidance policy (detailed in Section 2.3.1). Initiatives put
in place to reduce the number of unsold products in stores include extending use-by dates and removing minimum durability dates from more than
500 products, matching stock levels to demand flows, running special offers as use-by dates approach and devising product second-life solutions.
Recovery of organic waste is a priority. Processes for producing biomethane as truck fuel are under development in several of the European countries
in which the Group operates (detailed in Section 2.3.3).
Highlights
In 2018, Carrefour France brought in a polystyrene collection and recycling solution covering 100% of its hypermarkets.
Carrefour Banque’s ongoing customer awareness-raising programme on digital bank statements is proving effective: by the end of 2018, 90% of
customers were receiving monthly statements for their PASS cards in digital format.
Performance
The targets it has set itself will spur Carrefour to innovate with new technologies and new concepts capable of reducing stores’ energy, refrigerant
and transport costs.
Direct and indirect CO2 emissions total 2.8 million tonnes of CO2 equivalent. As of 2018, Carrefour’s CO2 emissions have fallen by 6.2% since 2017
and by 31.2% since 2010, consistent with its target of a 40% reduction by 2025.
Carrefour measures GHG emissions from the following sources:
direct sources of GHG emissions (scope 1) such as gas and fuel consumption and use of refrigerants in cooling production plants and air
conditioning;
indirect sources of GHG emissions (scope 2), mainly electricity consumption;
indirect external sources of GHG emissions (scope 3), namely downstream goods transport.
Most GHG emissions are either scope 1 (35.8% in 2018) or scope 2 (52.1% in 2018). Downstream logistics (scope 3) operations account for 12.1%
of emissions. Owing to the geographic breakdown of the Carrefour group’s activities, greenhouse gas emissions are concentrated in Europe
(including France), which accounts for more than half of total emissions. Emissions are calculated according to the guidelines of the international
GHG Protocol, and are then subject to reasonable assurance checks by an independent third party.
According to the Organisation Environmental Footprint Sector Rules (OEFSR), the three most significant scope 3 items for retailers are:
upstream production of products (43%);
product usage (43%);
logistics (8%).
Highlights
Carrefour Belgium has announced a climate plan for a 50% reduction in CO2 emissions by 2025, compared to 2010 levels which will be implemented
starting in 2019.
Carrefour France took part in the Météo and Climat Forum run by the meteorologists and climatologists of the Météo and Climat Club, where, it
addressed the public on the climate change implications of eating in-season produce.
Carrefour’s performance
Carrefour has set itself the target of reducing energy consumption by 30% per square metre of sales area by 2025 compared to 2010.
The Antigaspi policy has brought about a total drop of 18.3% in energy consumption per square metre since 2010, achieved largely through
technologies implemented in stores.
Percentage change in energy consumption per sq.m. of sales area vs. 2010 2018 2017 Change
TOTAL -18.2% -16.3% -2 POINTS
Scope: Comparable BUs (100% of 2018 consolidated scope) - 2010 data restated.
In-store energy consumption – electricity, gas and fuel (kWh per sq.m. of
sales area) 2018 2017 Change
TOTAL 521.3 529.3 -1.5%
Scope: Comparable BUs (100% of 2018 consolidated scope).
Highlights
To speed up solar energy development, Carrefour France is carrying out a diagnostic of roofs and car parks at existing buildings capable of
accommodating photovoltaic installations by 2022. In 2018, 36 hypermarkets were selected for fitting with photovoltaic shades. The electricity
generated will be used on site, accounting for 10% to 20% of each site’s annual consumption. Carrefour France will also be examining photovoltaic
Carrefour’s performance
In 2018, Carrefour’s refrigerant-related greenhouse gas emissions were down by 48% on 2010.
% change in CO2 emissions relating to refrigerants per sq.m. vs. 2010 2018 2017 Change
TOTAL -48% -38% -10 points
Scope: Comparable BUs (100% of 2018 consolidated sales excl. VAT) – 2010 data restated.
In 2018, 346 stores were equipped with all-natural refrigerants in Carrefour’s countries of operation. In total, counting 100% natural fluid and hybrid
systems, 624 stores are currently equipped with these new technologies.
Number of stores equipped with a hybrid or 100% natural fluid system. 2018 2017 Change
100% natural fluid (HFC- or HCFC*-free) 346 257 +35%
Hybrid (a mix of HFC and natural refrigerants) 278 286 -3%
TOTAL 624 543 +15%
* Hydrochlorofluorocarbons.
Scope: Comparable BUs (86.2% of 2018 consolidated sales excl. VAT) – excl. AT, AR, (SM/PRX).
Quantity of refrigerants refilled after leaks (in kg/1,000 m2 of retail space) 2018 2017 Change
TOTAL 31.4 37.2 -16%
Scope: Comparable BUs (86.2% of 2018 consolidated sales excl. VAT) – excl. AT, AR (SM/PRX).
Carrefour’s policy
To reduce its energy consumption, CO2 emissions and transport costs, supply chain teams are working with carriers to improve truck loading,
optimise travel distances and phase in alternative transport modes.
Implementation of this Group policy is adapted to local contexts in each country. In France, it focuses on four areas:
fleet modernisation, for clean, quiet transport;
logistics optimisation and carbon footprint reduction;
responsible purchasing and cooperation with partners;
journey convenience for customers and personnel.
Carrefour’s performance
Carrefour is committed to a 30% reduction in its transport-related CO2 emissions by 2025 vs. 2010. The reduction to date stands at 43%.
CO2 emissions per shipping unit totalled 6.4 kg of CO2 per pallet, vs. 6.5 kg in 2017 – a 2.0% decrease.
CO2 emissions per shipping unit (in kg of CO2/pallet) 2018 2017 Change
TOTAL 6.41 6.55 -2%
Scope: Comparable BUs (87.6% of 2018 consolidated sales excl. VAT) - excl. AT.
Highlights
Under Carrefour France’s ongoing Conducteur Carrefour programme, delivery drivers are seen as Group ambassadors, and a guide, videos and
training have been made available to maintain good practices and operational excellence. An addition was made to this programme, regarding
opportunities in the driving profession for women and those looking to change career.
Carrefour Italy modernised its fleet, which now comprises thirty Euro 6 and three natural-gas trucks, forty electric vehicles for home deliveries and a
fleet of electric cars for office activities.
Carrefour's performance
Highlights
There are today more than 240 beehives at Carrefour sites (stores, warehouses, headquarter buildings) in Belgium, France and Poland. The honey
is collected by a local beekeeper and sold in store or donated to charities or schools. These initiatives raise awareness of the importance of preserving
biodiversity, and of the role played by bees as pollinators.
Carrefour France continued its work on bee and pollinator conservation by specifying the elimination of products harmful to pollinators and the
introduction of hives and land set aside for apiculture in plots used for producing fruit and vegetables in the Carrefour Quality Lines. Carrefour Italy
also implemented measures to protect pollinators in 13 Carrefour Quality Lines in 2018, as well as 11 partner-producers.
Carrefour launched a new Limousin honey, meeting Carrefour honey production standards. This joins the three other, Corsican, honeys in its
Carrefour Quality Lines honey range.
Carrefour sells “share products” in partnership with the Noé biodiversity preservation organisation. Its pain pour les abeilles (“Bread for bees”)
campaign finances fallow land for bee-keeping around the plots of Carrefour’s supplier farms.
At the forum on cereals run with flour mills and cooperatives in 2018, the collective decided that the Agroecology Charter for the cereals line (detailed
in Section 2.2.3) would include a section on pollinator protection.
In France, Carrefour’s specifications on apples and nectarines for Carrefour Quality Lines include specific criteria on pollinator protection.
Carrefour’s performance
Since 2014, Carrefour France has aimed to have all new shopping mall construction and expansions BREEAM Construction certified. The target
level for shopping mall expansions is “Very Good”. By December 31, 2018, 15 centres had been certified (13 in France and 2 in Spain).
Carrefour also has a certification process for the in-use phase. Five sites hold BREEAM-In-Use certification in France and 11 more sites are applying
for it.
Highlights
Eight BREEAM certifications were obtained in France, and a BREEAM certification programme has been launched in Italy.
In 2018, all site managers in France received training on management and monitoring of energy and water consumption.
Carrefour’s performance
Carrefour monitors water consumption and is rolling out action plans to save water. Stores are phasing in solutions such as rainwater recovery and
water-saving taps. To improve management of water consumption under current conditions of growing water scarcity in the country, Carrefour Brazil
conducts online monitoring of water consumption at all its stores and has started work on upgrading its water supply lines.
Given the nature of their business, stores do not produce heavily polluted wastewater. Wastewater treatment and recycling systems have been
introduced in some countries.
2.3.7 E-commerce
E-commerce operations are covered in Carrefour’s policies on reducing greenhouse gas emissions, especially as regards the optimisation of goods
transport and deliveries (see 2.3.3). Policies also cover the impact of the packaging of products sold online, as outlined above (see 2.2.6). In addition,
Carrefour runs various social responsibility operations through its online shopping platform:
home deliveries use reusable bags. Customers are invited to give them back to the delivery agent the next time. Returned bags are centralised
at the logistics platform and recycled by a specialist company. Around two million bags were processed in this circular system in 2018;
the Act for Food programme Carrefour launched in November 2018 appears on the Carrefour livré chez vous online store. This worldwide
programme highlights some of the specific operations Carrefour is running to speed up the food transition in all the countries in which it operates.
The online store highlights the products concerned by the Act for Food commitments. The point-by-point classification provides customers with a
clear and immediately understandable view of some of the specific products concerned by the Carrefour initiative;
on its Quitoque website, Carrefour offers healthy, balanced food baskets comprising quality in-season products. Recipes are monitored by
dieticians and nutritionists for balance and coverage of nutritional needs. A vegetarian option is also available. This e-shopping model thus
combines the virtues of healthy eating, convenient shopping and the pleasure of home cooking.
Act for Food: galvanising people around solutions for the food transition
Carrefour has decided to implement Act for Food. This global programme features concrete measures that Carrefour pledges to take in order to
speed up the food transition. Each measure is a tangible solution that works towards this goal. The programme aims to help customers realise the
role they can play and present the tools available to them. This gives them the power to shape the future of food and how it is produced.
*The inventory of Act for Food commitments was announced at the end of November 2018.
Carrefour’s Act for Food programme educates people about the long term and hopes to support and engage consumers in their food choices.
The Act for Food website (https://actforfood.carrefour.com/) outlines the actions and commitments taken in the Group’s 10 countries – France, Spain,
Belgium, Italy, Poland, Romania, Brazil, Argentina, Taiwan and China – with clear evidence of their accomplishments. The website is divided into
three areas – “Our initiatives”, “Why take action?” and “Our commitments” – and includes an interactive feature that lets consumers vote on one of
the two projects that they would like to see brought to completion. A version is available in each of the Group’s 10 countries to highlight local issues.
Carrefour’s target is for all countries to implement an annual Act for Food communication programme. [CSR & Food Transition Index].
2018 2017
Percentage of customers that recognised the Group’s food transition in stores* 43% 44%
Scope: Comparable BUs (92% of 2018 consolidated sales excl. VAT) - excl. CH.
Several Group host countries led communication or engagement campaigns in 2018. For example, Carrefour France promoted energy savings,
responsible fishing, biodiversity, organic products, CSR, socially responsible recycling and waste.
Carrefour Banque has implemented targeted communication actions to present to its PASS card-holder customers the Act for Food programme and
the range of organic products available in Carrefour stores in France.
With the first International Food Transition Store Challenge, Carrefour recognised its food transition champions, i.e., employees who promoted the
initiative on a daily basis and motivated other staff members and customers to eat healthier diets. The event also provided the opportunity for in-
store teams in each country to share their best practices in promoting the food transition.
Lastly, four vegetable gardens were created at Carrefour sites to teach city consumers about living things, eating better, seasonal products and the
reality of farming. In addition to integrating biodiversity into an urban environment, this programme aims to educate people and restore social
cohesion.
Highlights
The Carrefour SME Club met twice in 2018. At the first meeting, a round table was held to open the discussion on sharing between Carrefour and
SMEs. Companies requested more transparency regarding organisational structure to facilitate negotiations. At the second meeting, Carrefour
responded to their requests by providing them with direct contacts within the Company.
To maintain its local network and enhance its close relationships with suppliers, Carrefour France took part in or organised several events.
Carrefour France participated in two exhibitions open to the general public during the year: the Nouvelle-Aquitaine Salon de l’Agriculture
(agricultural show) and the Châlons-en-Champagne Foire (trade fair). The Carrefour stand at these shows highlighted local and regional partners,
the Group’s food-related professions through the presence of in-store teams, and regional bodies for listing suppliers. Carrefour also met with
SMEs and organisations active in the farming industry to discuss their needs.
The fifth Carrefour SME and innovation trade fair (Salon Carrefour des PME et de l’Innovation) featured 350 exhibition stands, of which 97 were
held by SMEs participating for the first time, and 500 by Carrefour employees. An array of innovative new food products was showcased, including
healthy snacks, organic and vegan products and products that comply with ethical standards, animal welfare and agroecology. Carrefour took
advantage of the event to present food industry trends to suppliers.
Carrefour also organised a trade fair exclusively for SMEs active in the organic sector to increase the number of organic product listings at its
stores.
Carrefour and Gourmandes et Cie were honoured at the 2018 Grés d’Or awards. This award handed out by the French Federation of Enterprises
and Entrepreneurs (FEEF) recognises partnerships between SMEs and retailers. Products are available at 700 Carrefour stores, and business
revenue between the Company and the retailer grew to 350,000 euros in 2018.
Carrefour China granted a loan of over 125,000 euros to farmers and shepherds in the Xinjiang province as part of its microcredit programme.
In application of its action plan to help very small businesses, Carrefour Belgium set a target to reach 25 million euros in revenue with products from
local and regional suppliers.
On a Group scale, the proportion of sales of Carrefour-brand food products sourced from national suppliers represented 70.7% in 2018.
% of sales of Carrefour brand food products sourced from national suppliers 2018 2017
Europe (incl. France) 70% 73%
South America 84% 96%
Asia 83% 33%
TOTAL 70.7% 74%
Scope: Comparable BUs (100% of 2018 consolidated sales excl. VAT).
Highlights
To boost customer engagement in financing local producers and putting their products in its stores, Carrefour France initiated a participatory finance
test project with Mimosa, a crowdfunding platform for farming projects. Twelve projects were selected at two shopping centres. Thirteen projects
received support, with 11 benefitting from financial assistance. Over 50,000 euros was collected for farmers, who also gained visibility through the
products featured in Carrefour stores.
In 2018, Carrefour Belgium guaranteed that 95% of milk, 95% of meat, and 75% of cold cuts that it sold were Belgian made. It also pledged to ensure
that all eggs are sourced locally as of January 1, 2019.
To support local farmers, Carrefour Poland implemented minimum purchase agreements. Eight of these agreements were signed in 2018.
Carrefour’s own-brand range, launched in partnership with MaxHavelaar® now has 25 product listings, which are also organic, in five product
categories: bananas, coffee, chocolate, honey and tea.
Supplier self-assessment
Since 2007, Carrefour has provided all of its suppliers with an online sustainable development self-assessment test, developed in conjunction with
the World Wildlife Fund (WWF®) and based on the ISO 26000 social responsibility standard. In France, at the request of suppliers and in collaboration
with four supplier associations, Carrefour has shared with its suppliers the know-how it has acquired over the last ten years in conducting self-
assessment tests and has helped to roll out a test for the entire sector, supported by the same standard, Valorise. The first shared self-assessment
campaign was conducted in 2017 in French and English. The test was translated into German and Spanish in 2018 and is used by nine retailers.
Purchasing Rules
The Purchasing Rules provide the framework for the social and environmental compliance of purchases of all certified products. In other words, all
products purchased by Carrefour, whether or not for retail sale, food or non-food, must meet specifications defined by Carrefour and undergo specific
quality checks. The purchasing rules for social and environmental compliance of retail or non-retail certified product purchases were updated in
2018, especially regarding scope of application, country risk, accepted audit standards and supply chain.
They apply to all Group entities and all production countries based on their risk level determined in the country risk map.
These rules stipulate:
that all suppliers must sign a Commitment Charter (described below);
the process and compliance rules for social audits (described below);
that all the Group’s purchasing entities must appoint a person in charge of social and environmental compliance;
an action plan to bring sensitive production phases and raw materials into compliance with specific purchasing rules (detailed in Section 2.4.3).
They apply to all production countries based on their risk level determined in the country risk map. These rules were adapted in 2018 and
disseminated in all countries where the Group operates.
1. Country risk map
To identify the countries most likely not to comply with the charter, Carrefour established a country-by-country risk map, which was revised in
2018 in line with the duty of care plan (detailed in Section 2.1.3).
The list of risk countries is based on the country-by-country risk classification defined by amfori-BSCI and on the ITUC Global Rights Index. The
country classification also takes into account recommendations from the International Federation for Human Rights and from Carrefour’s local teams.
Procurement potential and purchasing rules depend on the risk rating assigned to each country:
severe risk: production and supply are suspended in these countries;
high risk: authorisation at Group level is required for any production in these countries. Once the country is approved, Carrefour teams working
in the country approve and monitor plants;
risk: the plant is selected in strict application of the Group’s Purchasing Rules;
low risk: Purchasing Rules apply, but an audit is not required.
2. Supplier Commitment Charter
The commitment of suppliers of Carrefour-brand products to human rights is reflected first and foremost through their signature of a Supplier
Commitment Charter, which is an integral part of all purchasing contracts in all Group host countries. Initially drawn up in 2000 in partnership with
the International Federation for Human Rights, it was first called the Charter of Social and Ethical Standards. Renamed and updated in 2018 under
the duty of care plan (detailed in Section 2.1.3), the Charter now includes an ethics hotline, available online or by telephone 24 hours a day, 7 days
a week in all Group languages.
The Charter is designed to ensure that Carrefour continues to uphold and remains compliant with:
the Universal Declaration of Human Rights;
the eight core conventions of the International Labour Organization;
OECD Guidelines for Multinational Enterprises;
the ten principles of the United Nations Global Compact;
the United Nations Guiding Principles on Business and Human Rights;
the international agreement signed with the UNI Global Union.
The Charter reiterates Carrefour’s Ethics Principles (detailed in Section 2.6.2), which provide a set of guidelines for fair and transparent business
practices, and shares these principles of action with suppliers.
Lastly, the Charter stipulates that suppliers must comply with the Group’s human rights, ethics and environmental requirements, which are set out
in nine sections:
1. prohibition of forced or compulsory labour, in the form of servitude, debt bondage or prison labour;
2. prohibition of child labour;
3. respect for freedom of association and the right to collective bargaining;
4. prohibition of all forms of discrimination, harassment and violence;
5. health and safety;
The Group is continuing with its efforts to stabilise its list of suppliers. More than 58% of audits were conducted to follow up on the implementation
of action plans or as part of regular repeat audits of existing suppliers (every two years at most).
To reduce the number of supplier social audits conducted, Carrefour benefitted from audits conducted by other members of the ICS initiative in 2018,
corresponding to 25% of total audits. Conversely, other ICS members benefited from 28% of the audits conducted by Carrefour.
An alert is a critical point of non-compliance identified during the audit. In 2018, 18% of audits conducted on potential production plants generated
one or more alerts. When alerts apply to accredited suppliers, immediate action is required. Carrefour only retains suppliers once they have been
cleared by a second audit within a three-month period.
In Bangladesh, for example, 2% of all active and accredited plants were subject to an alert.
Breakdown of alerts by category (Potential production plants as a % of alerts issued) 2018 2017
Factory management system 12% 9%
Child labour 2% 3%
Forced labour 1% 0%
Discrimination and disciplinary practices 1% 1%
Freedom of association 1% 1%
Working hours 31% 33%
Compensation, benefits and conditions 28% 27%
Health and safety 24% 26%
TOTAL 100% 100%
The main occurrences of non-compliance discovered in the Carrefour supplier network related to working hours, compensation levels and workers’
health and safety. The ICS methodology applied stricter audits of working hours in 2018.
Highlights
In 2018, Carrefour set out minimum purchasing rules for cotton. These rules ban the purchase of cotton from Uzbekistan and Syria. They provide
for random traceability audits, including on-site visits by Carrefour employees and third-party audits.
Carrefour continues its involvement in the Bangladesh Transition Accord to improve safety conditions in textile factories in Bangladesh. Valid
for three years and renewable for one year, this accord should make it possible to finalise the compliance programme that was started under the
previous accord, and ensure that a locally managed organisation in Bangladesh will take the reins once the accord expires. Carrefour hopes to
achieve close to 100% implementation of remediation plans following inspections and to create an efficient Health and Safety Committee at each
factory. All plants in Bangladesh are involved in at least one CSR project (installation of solar panels, mobile app training for employees,
introduction of health insurance, etc.), while over 85% have rolled out two or more.
Carrefour’s performance
The Foundation’s budget in 2018 was 6.75 million euros, with operating expenses accounting for 7%. Below, key information is provided on the
Foundation’s activity over the year:
the Foundation supported 72 programmes in 13 countries;
the Foundation Carrefour helped 2,700 producers transition towards organic farming or more sustainable sectors, and assisted in creating
16 urban gardens;
almost 1,330 employees on integration programmes were hired by organisations supported by the Foundation in 2018;
two emergency aid actions were carried out.
Highlights
All of the Carrefour Foundation’s actions and partnerships for 2018 are described in detail in the Carrefour Foundation’s annual report and on its
website at: www.fondation-carrefour.org/fr. A selection is presented below.
Producing sustainably
The Carrefour Foundation helped finance the programme to develop organic, eco-friendly milk led by the WWF®. The project aims to support
the production of almost 70 farmers, representing 10 million litres of organic milk. In addition to supporting an organic and eco-friendly milk, this
project uses eco-friendly packaging made with renewable plant resources, promotes animal welfare and ensures production transparency through
the Carrefour blockchain (detailed in Section 2.2.1 for details on blockchain).
The Carrefour Foundation gave financial support to help small producers in Mato Grosso in partnership with IDH, the Sustainable Trade
Initiative, a foundation that promotes the development of sustainable trade. The project aims to develop “zero deforestation” cattle production and
set aside land for sustainable soy farming, to stop the massive deforestation in the state of Mato Grosso. It provides producers with training,
machinery and advanced technical assistance for managing livestock and pastures. It helps them select highly productive cattle breeds and build a
viable social and economic model. By doubling the yield of farms, it increased the income of more than 450 small beef producers.
2.5 Employees
2.5.1 Employment
In 2018, Carrefour celebrated its 60th anniversary and 40 years in the international arena.
With its 363,862 employees, the Group welcomes over 12,000 customers directly in retail stores and via digital channels in 10 countries.
Changes in headcount
Carrefour’s policy
Carrefour’s workforce decreased 4% in 2018, like-for-like compared with 2017. This was due to several factors.
In Europe, especially France and Belgium, Carrefour introduced new business models, bringing some stores under franchise or management
lease.
The Group cut back its staff, particularly at its headquarters, and sold some stores in France, Belgium and Argentina. In these three countries,
restructuring plans were always backed with a sustained social dialogue process (detailed in Section 2.1.3) and a set of measures to help
employees relocate or progress in their job search within or outside the Company.
In line with the Carrefour 2022 transformation plan, Carrefour has taken measures to increase productivity.
Carrefour is a responsible employer committed to developing flexible arrangements in terms of either work schedules or remote working. For
example, in 2018 Carrefour Romania began allowing its in-store staff to request schedule adjustments. Drawing on existing programmes in other
countries such as France, various criteria are considered, such as personal life demands, commute, etc.
The vast majority of Carrefour employees work in the store network in customer-facing roles, with the highest percentage of them at hypermarkets
(71% in 2018).
Carrefour’s performance
Breakdown by store format
The breakdown between the Carrefour group's different store formats and businesses remained stable from 2017 to 2018. The decline in the share
of the workforce at hypermarkets excluding Atacadão (57.6% in 2018 versus 59% in 2017) was offset by the increase in staff levels at Atacadão
stores recognised as hypermarkets.
The breakdown of the workforce within the different formats remained stable.
Departures
Training policy
Training is a priority for Carrefour. Every year, employees receive an average of over 11 hours of training in all Group host countries. Along with the
mandatory topics covered regarding health and safety, strategic training areas mirror the main priorities of the Carrefour 2022 transformation plan.
In 2018, Carrefour ramped up its training programmes in the following four areas in all countries where it operates:
the digital transformation;
the food transition (particularly for fresh produce);
people management;
customer-oriented culture.
2018 2017
Average number of training hours per employee 11.4 12.3
Total number of training hours over the year (in millions) 3.7 4.1
Scope: Comparable BUs (93.4% of 2018 consolidated sales excl. VAT) - excl. China.
Highlights
Google training programmes, France: about 400 ambassadors have been trained to become local representatives for employees within their
scope. An e-learning course open to all employees was also launched on the online platform.
Digital bus, France: this roaming learning centre helps in-store employees to adapt to digital technology and introduces them to internal and
external tools.
ISDI Digital Business School, Spain: the Executive Committee and employees take training through this digital institution created by Internet
experts to speed up the transformation towards a new, more competitive economic model.
Digital Academy, Belgium: training modules available in e-learning, classroom or coaching formats teach staff about how Carrefour and its
business are shifting towards digital technology, and help them develop their digital profile.
Highlights
In France, 5,000 people benefited from training that revolves around food: organic products, food hygiene, food waste, well-being, etc. These
programmes aim to:
help Carrefour gain recognition as the retailer that offers the best every day through the food transition;
understand changing eating habits to better meet customers’ needs;
combat food waste and manage waste in the workplace and at home;
share tips for eating healthier.
Brazil’s Bem Cuidar programme encourages employees to adopt a healthier lifestyle.
The Act for Food on Tour programme travelled around Italy for six weeks, stopping in Milan, Turin and Rome, to train, inform and involve as many
employees as possible from all store formats.
Highlights
LEON training programme, Poland: in stores, staff learn the basics of a customer-focused approach and its importance in standing out from the
competition. The training course lasts one day for employees and two days for managers. The programme will be implemented in waves to reach
2,500 managers and 13,000 employees by the end of 2019.
“100% customer- and employee-focused”, France: 20,800 hypermarket employees were trained on how to bring out staff energy to gain the favour
of our customers.
Highlights
In France, the internal store director graduate programme accelerates the career of hypermarket managers (level 7). In two years, this innovative
course provides them with the tools they need to become a store director. Given the programme’s success, additional classes will open in 2019.
In Argentina, Carrefour has a training school for store directors. In 2018, 1,214 employees from different store formats were enrolled. To register,
applicants must:
have a positive performance evaluation;
have served in their current position for at least one year;
inform their manager that they would like to apply for the training programme.
In all, 123 applicants were selected. They have access to e-learning courses on a variety of subjects, including 555 (customer-focused programme),
handling customer complaints, managing priorities and dealing with management, along with basic principles in supply chain and finance.
They visit other Carrefour stores over a period of two months to gain expertise in the field and meet with logistics and goods representatives at
headquarters for a week.
To wrap up their training programme, participants create a benchmark based on three competing banners. They assess their strengths and
weaknesses in several areas, such as processed fresh produce, non-food products, check-out and the customer-focused approach. Using this
analysis, they suggest best practices to implement at Carrefour stores.
In France, all permanent employees have the option of taking professional certification training in five main areas: coordination and management,
food services, logistics, product sales and commercial business. These nationally recognised certificates reflect the acquisition of specific skills.
Participants take a training course under the guidance of a mentor. Their skills are evaluated continuously through in-class and final exams.
Performance
Thanks to all the Group’s actions and programmes, employees’ average length of service has increased (8.9 years in 2018, up from 8.6 years in
2017), and 3,128 employees were promoted in 2018.
In total, 49.5% of new managers, 61.1% of new Directors and 47% of new Senior Directors were promoted internally in 2018.
International career paths within the Group created opportunities for 92 expatriates in 2018: 35% in Europe, 21% in Latin America, 38% in Asia
(including Global Sourcing) and 6% in Africa with Group partners.
2018 2017
Rate of absence due to workplace and travel-related accidents 0.61% 0.55%
Scope: Comparable BUs (88.85% of 2018 consolidated sales excl. VAT) - excl. CH and AT.
2018 2017
Workplace accident frequency rate* (number of accidents/millions of theoretical work hours) 22.8 24.5
Workplace accident severity rate** (number of days absent due to workplace accident/1,000 work
hours) 0.69 0.62
* Scope: Comparable BUs (93.40% of 2018 consolidated sales excl. VAT) - excl. CH.
** Scope: Comparable BUs (88.85% of 2018 consolidated sales excl. VAT) - excl. CH and AT.
2018 2017
Illness (including occupational illness) 4.77% 4.35%
Workplace accident 0.55% 0.50%
Travel accident 0.06% 0.06%
Scope: Comparable BUs (88.85% of 2018 consolidated sales excl. VAT) - excl. CH and AT..
Gender equality
In 2018, 208,320 women were employed by the Group, which represents 57.3% of total headcount. Carrefour implements many programmes and
commitments to ensure gender equality. As such, Carrefour pledges to provide:
a fair compensation policy;
access to training for all;
measures to facilitate work/life balance, such as flexible work arrangements with the pooling of schedules, measures for parents, etc.;
support for women in career development or promotion within the Group.
Carrefour introduced the international Women Leaders programme in 2011 to improve diversity and increase the number of women in management
positions.
The percentage of women in management positions is one of the Group’s key management indicators. In 2018, 41.1% of the Group’s managers
were women, up from 36.2% in 2012.
1 Violence against women: an EU-wide survey, European Union Fundamental Rights Agency (2014)
A strong commitment in the international agreement between Carrefour and UNI Global Union
At Carrefour’s European Consultation and Information Committee meeting on October 3, 2018, the Group’s Chairman and Chief Executive Officer,
Alexandre Bompard, and the General Secretary of the international union federation UNI Global Union, Christy Hoffman, renewed the global
agreement previously signed in September 2015.
An important section on combatting violence against women rounded out existing provisions on social dialogue (detailed in Section 2.1.3).
Performance
The percentage of Carrefour employees recognised as having a disability (3.4% in 2018) has risen since 2011 (when it was 2.6%). Given the size
of the Group, this represents a significant number of employees with disabilities: 12,253 in 2018 (CSR and Food Transition Index).
Highlights
In 2018, the Group’s entities paid a total of 1,093 million euros to discharge their tax obligations. In addition, the Group’s payroll taxes amounted to
approximately 1,909 million euros for its 360,000 employees.
In its 2018 Consolidated Financial Statements, the Group recognised an income tax expense of 539 million euros on taxable income of 496 million
euros.
In France, Carrefour is subject to more than 80 different taxes. In 2018, it paid (i) annual taxes of more than 457 million euros including 91 million
euros in respect of the Cotisation sur la valeur ajoutée des entreprises (CVAE, local business tax) and 366 million euros on factors of production
(included in pre-tax income, in particular taxes based on retail space) and (ii) payroll taxes net of the Crédit impôt compétitivité emploi (CICE, tax
credit for competitiveness and unemployment) totalling 1,034 million euros.
Anti-corruption
Carrefour is committed to fostering a culture of trust and integrity throughout the Group and with its stakeholders.
Ethics and integrity have always been part of its core values.
Carrefour will not tolerate any form of corruption and it complies with all applicable anti-corruption laws.
A global ethics system applicable to all subsidiaries and employees of the Group has been developed and rolled out since 2010 based on:
a “Code of Professional Conduct” first drawn up in 2010 based on ten principles; revised in 2014 and renamed “Our Ethics Principles” and
distributed to employees in all integrated countries;
these documents set out Carrefour’s zero-tolerance policy with respect to corruption;
governance by Ethics Committees (at Group and Country level) whose organisation, principles, role and responsibilities are described in dedicated
charters. The Group Ethics Committee is chaired by the Group Secretary General, thus providing a link with the Group’s governing bodies;
local whistleblowing arrangements and an outsourced global whistleblowing service put in place in December 2016 in all countries, available 24/7
via Internet (ethique.carrefour.com) or hotline;
sharing “Our Ethics Principles” with suppliers by means of charters.
In 2016 and 2017, all Executive Committees in countries where Carrefour operates spent three hours discussing ethics, behaviour and responsibility
issues, including corruption, with a large part of the debate devoted to practical cases.
Each country subsidiary follows local regulations as required, in particular as regards corruption, and implements suitable compliance programmes.
Over the past few years, all local subsidiaries have therefore developed and deployed procedures, training modules and systems to prevent
corruption and conflicts of interest.
More generally, the corpus of rules that forms the Group’s internal control framework is a major driver of prevention. It is evaluated by the various
entities each year and subject to control through internal audits.
Carrefour has also been a member of the NGO Transparency International (France) since 2009 and contributes to its work in this capacity.
Risk mapping
Risk mapping approach
The risk mapping approach is defined and managed by the Group Risk and Compliance department. The aim is to give management a holistic view
of the issues and risks that is as effective, objective and comprehensive as possible.
It addresses risks related to Carrefour’s business operations and activities in all countries where it operates or sources products.
It involves internal and external stakeholders in the process of identifying and reviewing the key risks according to their areas of expertise. The first
step in the risk mapping process described below therefore involves consulting with the relevant operational staff and with partner NGOs and trade
unions.
Lastly, it enables the countries and the relevant internal functions to share a structured process and an ordered view of the risks, and to take a
harmonised approach in response to the current regulatory requirements.
1. The business approach consists in cross-referencing the Carrefour process risk map (more than 400 processes mapped) with the compliance
risk database to identify “sensitive processes”, and describing the risk situations encountered in these sensitive processes.
2. The geographical approach consists of identifying country risks based on recognised external public indicators.
3. The sector approach (based on the “NAF” business sector classification used in France) consists of supplementing the operational and
geographical approaches with:
a review of incidents already encountered by the Group or companies operating in comparable or related sectors, through an in-depth analysis
of “public cases”;
internal and external consultations and appraisals;
sector and thematic reviews.
This combination of approaches is supplemented by cross-referencing with other information sources, including:
a regularly updated list of known human rights or environmental violations by companies operating in the retail industry or comparable or related
sectors;
consultations with NGOs actively involved in environmental and human rights issues, and a documented analysis of known actions taken by
NGOs that campaign for human rights and the environment in order to identify and cross-reference issues of interest and the main countries
concerned.
FIGURE 14: KEY RISKS RELATED TO HUMAN RIGHTS AND FUNDAMENTAL FREEDOMS, HEALTH, SAFETY, AND THE
ENVIRONMENT DUE TO THE COMPANY’S OPERATIONS
Measures taken to implement the duty of care plan in 2018 and preventive action taken in response to the risks identified are described in the
effectiveness report.
Formats:
combatting food waste (see Section 2.3.1);
reducing and recovering waste (see Section 2.3.2);
combatting climate change (see Section 2.3.4);
developing apiculture (see Section 2.3.4);
building and renovating sustainably while protecting
biodiversity (see Section 2.3.1);
encouraging responsible water consumption (see
Section 2.3.2).
STORES
Commitments Indicators 2018 2017
Recover waste % of waste recovered (food donations included) 66.5 (73.2) 70.0
Recycled waste (total in thousands of tons) 479.5 435.5
Recycled waste – batteries returned by customers (in thousands of tonnes) 0.68 0.6
Recycled waste – other end-of-life products returned by customers 12.4 11.1
(in thousands of tonnes)
Number of disposable plastic bags purchased (in millions) 683 775
Combat climate change % change in CO2 emissions versus 2010 -31% -24.4%
GHG emissions by source (in thousands of tonnes of CO2 equivalent) 2,868.6 3,033.8
Scope 1 (refrigerants, gas and heating oil) (in thousands of tonnes of CO2 1,025 1,190.0
equivalent)
Scope 2 (electricity) (in thousands of tonnes of CO2 equivalent) 1,494 1,494.7
Scope 3 (logistics) (in thousands of tonnes of CO2 equivalent) 348.4 348.5
% change in energy consumption per sq.m. of sales area compared -18.2% -16.3%
with 2010
In-store energy consumption (kWh per sq.m. of sales area) 521.3 529.3
% change in refrigerant-related CO2 emissions per sq.m. compared with -47% -37.6%
2010
Number of stores equipped with hybrid or all-natural refrigerant system 624 455
All-natural refrigerants (HFC- or HCFC-free) 346 200
Hybrid (a mix of HFC and natural refrigerants) 278 255
Quantity of refrigerants refilled following leaks (kg per 1,000 sq.m. of sales 31.4 37.2
area)
% change in CO2 emissions per shipping unit transported compared -8% -5.3%
with 2010
CO2 emissions per shipping unit (kg of CO2/pallet) 6.41 6.55
Amount of water consumed per sq.m. of sales area (cu.m/sq.m.) 1.63 1.65
Amount of water consumed (cu.m) 18.4 18.1
% of water saved in one year per sq.m. of sales area 1.3% 1.2%
2018 figures subject to reasonable assurance checks.
EMPLOYEES
Commitments Indicators 2018 2017
Act as a responsible employer Workforce (total) 363,862 378,923
% of managers who are women 41.1 41.5
% of employees on permanent contracts 90.6 92.1
% of employees on part-time contracts 26.2 25.2
Rate of internal promotion (in %) 50.0 47.3
Number of new hires on permanent contracts 69,400 71,167
Rate of absence due to workplace and travel-related accidents (in %) 0.61 0.55
Number of employees with a disability 12,253 12,561
% of employees recognised as having a disability 3.4% 3.3%
Total number of training hours given over the year (in millions)(2) 3.7 4.1
Average number of training hours per employee(2) 11.4 12.3
(1) The evaluation rating system was changed in 2017.
Article R. 225-105 of the French Commercial Code Section of the Registration Document
Business model 1.5.10 A business model based on value creation and distribution
Principal risks related to the business 4.8 Risk Management
2.1.3 Carrefour’s CSR methodology
Reasonable policies and procedures to prevent, identify and 2.2 Products
mitigate risks 2.3 Stores
2.4 Customers and partners
2.5 Employees
> sections on “Carrefour’s policy”
Outcome of these policies, including Key Performance Indicators. 2.2 Products
2.3 Stores
2.4 Customers and partners
2.5 Employees
> sections on “Carrefour’s performance”
Reasons for the lack of policy addressing one or more risks All risks identified by Carrefour are covered by a policy.
2.1.3 Carrefour’s CSR methodology
Figure 4 – Mapping of the Group’s risk factors and social issues and
associated policies
Labour information
a) Employment
total workforce and breakdown of employees by gender, age 2.5.1 Employment
and geographic region Trends in headcount
Scope of reporting
Principles applied
Comprehensiveness: the Group strives to be as comprehensive as possible. Its CSR report describes the implementation of its policy in the ten
consolidated countries, and the Key Performance Indicators cover 95.7% of the Group’s consolidated sales excluding VAT.
Comparability: the scope is clearly explained next to each graph and BUs excluded from the scope are indicated. For figures and changes presented
over several years, the report indicates whether calculations are based on comparable Business Units (BUs). If non-comparable BUs are included
in the calculation, the items included or excluded compared to the previous year are specified.
Scope of HR indicators
The scope covers all of the Group's BUs and headquarters. Any BUs that were sold or closed during the reporting period are not included.
The Non-Financial Information Statement presented in this chapter encompasses Carrefour Banque and Carrefour Property Development, both of
which are covered by Carrefour SA (the parent company).
CSR Indicators
Principles applied
CSR reporting adheres to the following principles:
accuracy: the Carrefour group strives to ensure the accuracy of published data by stepping up the number of manual and automatic internal
controls;
comparability: the Group strives to maintain consistency throughout its reports. Figures presented for several years apply the same definition.
References used
The information detailed in this section complies with the requirements of French government order no. 2017-1180 of July 19, 2017 and decree
no. 2017-1265 of August 9, 2017, providing for a Non-Financial Information Statement as stipulated notably under Articles L. 225-102-1 and R. 225-
105 et seq. of the French Commercial Code (Code de Commerce). This information concerns the activities of Carrefour SA (the parent company)
and all the Group’s consolidated companies. Carrefour SA's Non-Financial Information Statement notably covers Carrefour Banque, with risks
relating to the banking sector integrated into the risk analysis presented in Section 2.1.
The 2018 management report adheres to the guidelines of the Global Reporting Initiative, the guiding principles of the OECD and the Global
Compact’s recommendations for “communication on progress” (CoP). Carrefour’s CoP is published yearly on the United Nations website
(https://www.unglobalcompact.org/) and is certified as “Advanced” (since 2014) following a peer review under the aegis of Global Compact France.
A CSR reporting manual stipulating the Group’s collection, calculation and consolidation rules is updated each reporting period and distributed to all
CSR reporting managers.
Environmental information
CO2 emissions
To evaluate the CO2 emissions related to store energy consumption (electricity, gas and heating oil) and refrigerants, conversion factors (of kWh
and kg, expressed as kg of CO2 equivalent) from recognised international bodies, such as the Intergovernmental Panel on Climate Change (IPCC)
and the International Energy Agency (IEA) are used. BUs may also use specific national indicators.
In France, the level of emissions related to electricity consumption by BUs is updated annually based on changes made to the electricity supply
agreement (50% regulated market/50% open market). In 2018, the biodiesel emission factor was also updated to provide greater precision.
Concerning logistics-related CO2 emissions, CO2 emissions related to outbound road transport (shipping of goods between warehouses and stores)
are taken into account. A conversion rate equal to 2.6667 kilogrammes of emitted CO2 per litre of fuel consumed, established with ADEME (French
environment and energy management agency), is used. This indicator counts CO 2 emissions related to the transportation of goods between
warehouses and stores. The following CO2 emissions are not taken into account:
emissions generated during the inbound transport of goods to the warehouse;
emissions generated by direct deliveries (direct “producer-to-store” transportation of goods without going through a warehouse);
emissions generated by customer and employee journeys;
emissions generated by outbound rail transport (mainly in France) and maritime transport.
Note that “store/warehouse” return trips are only taken into account for fleets hired for Carrefour’s exclusive use.
Logistics KPI (CO2 emissions per shipping unit): in the vast majority of cases, CO 2 emissions related to the transport of goods are calculated on
the basis of distance travelled since there is no actual data on service providers’ fuel consumption and average consumption by type of vehicle.
Countries where logistics are handled mainly by suppliers are also excluded from the reporting scope.
Pallets (transport units) used for backhauling are not included in the total number of pallets used in outbound transport.
Energy KPI: the quantity of energy reported corresponds to the quantity purchased and not the quantity actually consumed for heating oil and gas
(15% of the energy consumed by the stores).
Water KPI: the quantity of water reported corresponds mainly to the quantity of water purchased. Depending on the country, water collected by
some stores through drilling may not be counted when there is no charge for its withdrawal. In addition, in some cases, there is an insignificant
overvaluation of consumption (consumption of water for the shopping centre, costs related to and indissociable from the costs of water consumption).
Refrigerants KPI: any leaks that may have occurred prior to a change of equipment are not quantified in the reporting. They correspond to emissions
generated between the last maintenance operation and replacement of the unit. The impact is insignificant at Group level thanks to both regular
monitoring of the units and the staggered timetable for their replacement. Note that the mass balances are not systematically carried out each time
the fluid is reloaded or at year-end. Some BUs purchase and store refrigerants in advance and may include refrigerants still stored in containers in
year Y consumption.
Exceptionally, 2017 CO2 emissions data relating to refrigeration and the quantity of refrigerants refilled following leaks in French hypermarkets were
extrapolated based on average leakage during the reporting period for 20% of hypermarkets.
Waste KPI: the chosen reporting scope includes BUs that use waste collection companies which provide information about the tonnage of waste
removed. Generally speaking, when waste is collected directly by local authorities, no information is available. When waste is collected and grouped
at the warehouses, the corresponding quantities are not systematically included in the reporting.
Considering the methodological limitations outlined above and the difficulties in gathering data, the reporting scope may vary depending on the
indicator. For each indicator that pertains to a limited scope, the scope is specified. For analysing any changes in the indicators, we factor out all
BUs for which we lack data for one of the comparison years.
Product information
Number of listed organic products: the number of listed organic products reported pertains to the number of organic products labelled by outside
third parties found among retailer-branded products whose sales during the year were not zero. The number of Group listed products corresponds
to the sum of the listed products sold in each country. With regard to textiles, colours are differentiated but not sizes.
External audit
Principle applied: reliability
Quantified data are produced, consolidated, analysed and published. Selected data are subject to verification by an outside third party.
External audit
The reporting procedures have been verified by the external Statutory Auditor, Mazars, appointed as an independent third party. For key performance
indicators and information considered most significant, substantive tests have been conducted on the data. Indicators identified with the symbol
have been reviewed with reasonable assurance.
Conclusion
Based on the procedures performed, nothing has come to our attention that causes us to believe that the non-financial statement is not presented
in accordance with the applicable regulatory requirements and that the Information, taken as a whole, is not presented fairly in accordance with the
Guidelines, in all material respect.
Conclusion
In our opinion, the information selected by the Group and identified by the symbol √ were prepared, in all material respects, in accordance with the
Guidelines.
(1) Energy consumption in GWh and in kWh/m² (primary indicator for the GHG emissions calculation); CO2 emissions from stores energy consumption per m²; CO2 emissions
from refrigerant fluids consumption per m²; CO2 emissions per transportation unit.
(2) Key Performance Indicators : Percentage of women in management positions; % of women appointed to key positions; Frequency rate of work accidents; Severity rate
of work accidents; total number of training hours per employee; % of recycled and valorized waste (food waste included); Share of products sales derived from responsible
fishing / fish-farming; % of gross sales of top 10 families of wood/paper/pulp products from responsible forest sources; % of Brazilian beef suppliers georeferenced zero
deforestation; % of social audits with alert; % of suppliers participating in the CSR self-diagnostic.
Other information: Workforce and breakdown by gender, age, geographic region and employee category; Total number of hires; Total number of departures; Number of
employees with a disability; Sales amount of organic products (controlled and national brand); Sales amount of products from Carrefour Quality Lines; Avoided quantity of
(3) Carrefour France Hypermarkets et Supermarkets, Carrefour China Hypermarkets: all information mentioned in 1 and 2 footnotes.
Carrefour Brazil Hypermarkets and Supermarkets : Energy consumption in GWh and kWh/m² (primary indicator for the GHG emissions calculation); CO2 emissions from
stores energy consumption per m²; CO2 emissions from refrigerant fluids consumption per m²; CO2 emissions per transportation unit; % of recycled and valorized waste
(food waste included); Share of products sales derived from responsible fishing / fish-farming; % of gross sales of top 10 families of wood/paper/pulp products from
responsible forest sources; % of Brazilian beef suppliers georeferenced zero deforestation; % of non-valorized food waste; Sales amount of organic products (controlled
and nation brand); Sales amount of products from Carrefour Quality Lines; Avoided quantity of packaging waste; % of women appointed to key positions; Total number of
Carrefour Spain Hypermarkets and Supermarkets: Energy consumption in GWh and kWh/m² (primary indicator for the GHG emissions calculation); CO2 emissions from
stores energy consumption per m²; CO2 emissions from refrigerant fluids consumption per m²; CO2 emissions per transportation unit; % of recycled and valorized waste
Atacadão Brazil – Carrefour Poland Hypermarkets and Supermarkets – Carrefour Romania Hypermarkets: Energy consumption in GWh and kWh/m² (primary indicator for
the GHG emissions calculation); CO2 emissions from stores energy consumption per m²; CO2 emissions from refrigerant fluids consumption per m².
Directors, except Directors representing employees, are appointed by the Ordinary Shareholders’ Meeting upon proposal of the Board of Directors
on the recommendation of the Appointments Committee. They are appointed for a term of three years.
Independence criteria
According to the AFEP-MEDEF code, Directors are independent if they have no relationship of any kind with the Company, its Group or its
Management that could compromise their freedom of judgement. Thus, an Independent Director must not only be a Non-executive Director, i.e., one
Criterion 1 Criterion 7
Employee or Criterion 3 Criterion 6 Non-
Company Criterion 2 Significant Criterion 5 In office for executive Criterion 8
officer in the Cross- business Criterion 4 Statutory more than corporate Main
Director(1) past 5 years directorships relationships Family ties Auditors 12 years officer shareholder
Alexandre Bompard
Chairman and Chief
Executive Officer X
Philippe Houzé
Lead Director X X
Claudia Almeida e Silva(*)
Alexandre Arnault X
Bernard Arnault(2) X
Nicolas Bazire X
Jean-Laurent Bonnafé X
Thierry Breton(*)
Flavia Buarque
de Almeida X
Stéphane Courbit(*)
Abilio Diniz X
Aurore Domont(*)
Charles Edelstenne(*)
Stéphane Israël(*)
Mathilde Lemoine(*)
Patricia Moulin Lemoine X X
Amélie Oudéa-Castera(*)
(3)
Marie-Laure Sauty
de Chalon(*)
Lan Yan(*)
(1) In the table:
Lead Director
Following its decision to combine the duties of Chairman and Chief Executive Officer, the Board of Directors decided at its meeting on June 21,
2011, to create the position of Lead Director. At its meeting on June 15, 2017, and on the recommendation of the Appointments Committee, the
Board of Directors appointed Philippe Houzé as Lead Director. In its decision, the Board of Directors took into consideration the fact that Philippe
Houzé does not qualify as an Independent Director. However, given the duties conferred on the Lead Director within Carrefour, the Board of Directors
considered that Philippe Houzé was the best person to assure oversight of the Board’s practices and procedures and to represent the interests of
the shareholders due to his experience in the business sector and in corporate governance, as well as his position as representative of one of the
Company’s main shareholders.
According to the Board of Directors’ Internal Rules, the role of the Lead Director is to assist the Chairman of the Board of Directors in his duties to
ensure that the Company’s governance bodies are operating correctly. He has particular responsibility for examining situations where there is a real
or potential conflict of interest, which could affect Directors or the Chairman of the Board of Directors in respect of the interests of the business,
whether this relates to operational projects, strategic management or specific agreements.
Stéphane Courbit
Independent Director
Member of the Strategic Committee and the Compensation Committee
Born on April 28, 1965. French.
Number of Company shares owned: 7,000
Date of appointment to the Board of Directors: June 15, 2018
Term of office expires: Shareholders’ Meeting called to approve the Financial Statements for the year ending December 31, 2020
Experience and expertise
Stéphane Courbit is a graduate of ISG Paris and IUT Valence. He began his career working for French TV and radio personality
Christophe Dechavanne. In 1994, he teamed up with TV producer and anchorman Arthur and created ASP (Arthur Stéphane Production),
which produced the long-running TV show Les Enfants de la Télé. In 1998, Endemol acquired a stake in ASP, which subsequently
changed its name to Endemol France, becoming France’s leading audiovisual production company in just a few years. Stéphane Courbit
sold his stake in 2006 and left the company in 2007.
The same year, he founded Lov group, a holding company that invests in audiovisual production, luxury hotels, the Internet and energy.
The merger between Banijay group and Zodiak in February 2016 put Stéphane Courbit at the helm of one of the largest audiovisual
production companies in the world.
Stéphane Courbit is the President of Lov group, a company primarily oriented towards audiovisual production, online betting and luxury
hotels.
Stéphane Courbit brings to the Board of Directors the benefit of his extensive experience gained as an entrepreneur in the media and
Internet sectors and as the leader of a global company, as well as his skills and expertise in content production and digital media.
Aurore Domont
Independent Director
Chair of the CSR Committee and Member of the Appointments Committee
Born on December 20, 1968. French.
Number of Company shares owned: 0
Date of appointment to the Board of Directors: June 15, 2018
Term of office expires: Shareholders’ Meeting called to approve the Financial Statements for the year ending December 31, 2020
Experience and expertise
Aurore Domont holds a Master’s degree in Business Law from Paris I – Panthéon Sarbonne University. She began her career at CEP
Communication before joining the Lagardère Publicité group in 1996, where she notably held the position of Deputy Chief Executive
Officer in charge of Radio and Press.
In January 2011, Aurore Domont was appointed Executive Director of Prisma Pub, the advertising arm of the Prisma Media group. In
August 2013, she became the President of FigaroMedias and a member of the Executive Committee of the Figaro group.
Aurore Domont brings to the Board of Directors the benefit of her experience in global and omni-channel communication strategies and
in the digital transformation of businesses. Her work has also given her a solid understanding of various areas of digital technology,
including data management, social media, programming, mobile and video.
Other positions held as of December 31, 2018
In France:
President of FigaroMedias
President of Social & Stories
Director of Figaro Classified
Member of the Board of Directors of SRI
Member of the Supervisory Board of Mediasquare
Member of the Supervisory Board of Société du Figaro
Member of the Supervisory Board of Zebestof
Member of the Board of Directors of Social & Stories
Member of the Board of Directors of Touchvibes
Positions held in the last five years that expired
In France:
Member of the Supervisory Board of Mediasquare
Philippe Houzé
Lead Director
Member of the Audit Committee, Appointments Committee and Strategic Committee
Born on November 27, 1947. French.
Number of Company shares owned: 3,167
Date of appointment to the Board of Directors: June 11, 2015
Date of last renewal: June 15, 2018
Term of office expires: Shareholders’ Meeting called to approve the Financial Statements for the year ending December 31, 2020
Experience and expertise
Philippe Houzé is Chairman of the Executive Board at Galeries Lafayette, a family-owned group with 125 years of history in fashion,
business and retail with brands such as Galeries Lafayette, BHV/MARAIS, La Redoute, Louis Pion, Galeries Lafayette-Royal Quartz Paris,
Guérin Joaillerie and BazarChic.
After graduating from INSEAD Business School, Philippe Houzé began his career with Monoprix in 1969. He was appointed Chief
Executive Officer of Monoprix in 1982 and Chairman and Chief Executive Officer in 1994, holding the position until November 2012. He
was Co-Chairman of the Galeries Lafayette group from 1998 to 2004 and became Chairman of the Executive Board in 2005.
Philippe Houzé is currently Chairman and Chief Executive Officer of the Galeries Lafayette group, France’s largest chain of department
stores.
With his sales, marketing and fashion industry expertise, he used innovative concepts to transform Monoprix, making it a leading local
retailer in town and city centres. As Chairman of the Executive Board of the Galeries Lafayette group, he played a role in making Galeries
Lafayette the leading department store in Europe, with the ambition of becoming a benchmark for omni-channel, responsible and
innovative business, and promoting the French "Art of Living".
In 2014, Philippe Houzé orchestrated the acquisition of a significant stake in the Carrefour group on behalf of Motier SAS, the Galeries
Lafayette family holding company. In 2017, he led the acquisition of 51% of the share capital of La Redoute, with the goal of holding
100% of the shares by 2021. In 2015, Philippe Houzé received the “International Retailer of the Year” award on behalf of Galeries Lafayette
from the National Retail Federation (NRF), a prestigious American retail trade association bringing together key global industry players.
As a committed stakeholder in the French economy, Philippe Houzé has made a personal commitment to sustainable development: he
has been heavily involved in the regeneration of town and city centres while taking into consideration the Galeries Lafayette group’s
environmental and social responsibilities. As outlined in his book, La vie s’invente en ville, he intends to continue working on behalf of
inner city areas and help build a brighter future for the next generations. Following in the footsteps of the Group's founders, Philippe
Houzé continues to support Galeries Lafayette's commitment to contemporary art and creation.
He supported the launch of the Fondation d'entreprise Galeries Lafayette, of which he is a Director. The Fondation held its grand opening
in March 2018 in the heart of the Marais district in Paris, in a building renovated by Pritzker Prize-winning architect Rem Koolhaas.
He is Chairman of the Supervisory Committee of BHV, a Director of HSBC France and Lead Director at Carrefour. He is also a member
of the Carrefour group Audit Committee, Appointments Committee and Strategic Committee.
Martine Saint-Cricq
Director representing employees
Member of the CSR Committee
Born on April 20, 1958. French.
Date of designation by the European Works Council (Comité d’Information et de Concertation Européen Carrefour), and Information
Committee: October 4, 2017
Date of integration to the Board of Directors: October 18, 2017
Term of office expires: Shareholders’ Meeting called to approve the Financial Statements for the year ending December 31, 2019
Experience and expertise
Martine Saint-Cricq joined the Carrefour group in 1983 as an employee at the Carrefour Labège store. In 1987, she was elected employee
representative for the Force Ouvrière (FO) trade union.
After being elected to a variety of positions as representative within the Group, she held the position of secretary to the Group
Committee. She simultaneously held positions with UNI Europa Commerce, UNI Europa (Women’s Conference) and UNI Global Union
(World Congress).
Martine Saint-Cricq has also served on the Board of Directors of the Carrefour Foundation since January 19, 2009. Since October 2007,
she has been a member of the UNI Europa and UNI Global Union Women’s Committees. She has also been a member of the UNI Europa
Commerce Steering Committee since June 2011. In addition, until June 2018 she acted as secretary in charge of equality for FGTA FO,
a federation of workers in the agriculture, food and tobacco industries in France.
Martine Saint-Cricq brings to the Board of Directors the benefit of her perspective as an employee and her knowledge of the Group, its
store formats and markets. Her experience working with trade unions on a national and international level and especially her expertise
in equal rights allow her to make a valuable contribution to evaluating these subjects in a multinational environment.
Other positions held as of December 31, 2018
In France:
Director representing employees at the Carrefour Foundation (Carrefour group)
Positions held in the last five years that expired
In France:
Member of the Labège Store Committee (Expiry of term: October 2017)
Member of the Group Committee (Expiry of term: October 2017)
Member of the Carrefour European Consultation and Information Committee (ECIC) (Expiry of term: October 2017)
The Board of Directors’ Internal Rules stipulate that the Board of Directors meet at least four times a year.
In 2018, the Board of Directors held discussions without the Chairman and Chief Executive Officer’s attendance on topics related to his
compensation, in accordance with recommendation 17.3 of the AFEP-MEDEF code. The Directors did not express the need to organise additional
meetings without the Chairman and Chief Executive Officer, who is the only Executive Director among the Board of Directors’ 19 members.
corporate governance:
appointments and renewal of Directors’ terms of office: on the recommendation of the Appointments Committee, the Board of Directors
proposed the appointment of four new Independent Directors at the Shareholders’ Meeting of June 15, 2018: Amélie Oudéa-Castéra,
Aurore Domont, Stéphane Israël and Stéphane Courbit, replacing Diane Labruyère-Cuilleret, Georges Ralli and Bertrand de Montesquiou,
whose terms were not renewed, and Anne-Claire Taittinger, who announced her decision to step down from the Board of Directors to
contribute to the Board renewal process initiated at the Shareholders’ Meeting of June 15, 2017. At the same meeting, the Board also
proposed the renewal of the terms of Patricia Moulin Lemoine, Mathilde Lemoine, Alexandre Bompard, Philippe Houzé and Nicolas Bazire,
the Board of Directors also began the search for a new Independent Director to replace Amélie Oudéa-Castéra, who stepped down on
November 7, 2018 following her appointment as Executive Director, E-Commerce, Data and Digital Transformation for the Group,
Directors’ independence: in accordance with the AFEP-MEDEF code, and on the recommendation of the Appointments Committee, the
Board of Directors conducted the annual assessment of the Directors’ independence and analysed the situation of the four new Directors,
Amélie Oudéa-Castéra, Aurore Domont, Stéphane Israël and Stéphane Courbit, to qualify them as Independent Directors,
composition of the Board of Directors’ specialised Committees: following the appointment of new Directors, the composition of the
specialised Committees was changed: Aurore Domont was appointed Chair of the CSR Committee and Stéphane Israël as Chair of the
Audit Committee. Amélie Oudéa-Castéra was appointed member of the Appointments Committee and the Strategic Committee. Stéphane
Courbit was appointed member of the Compensation Committee and the Strategic Committee,
amendment of the Board of Directors’ Internal Rules: the Board of Directors updated its Internal Rules to increase the maximum number
of members per Committee from five to six, and to specify, in accordance with the AFEP-MEDEF code, that Directors representing
employees are not taken into account to calculate the proportion of Independent Directors per Committee,
market abuse regulation: the six new Directors were individually informed of the Group’s adoption of rules and measures, as established
by the EU regulation on market abuse, applicable to listed companies and their Executive Officers/Company Officers regarding inside
information. Accordingly, they were each given a Stock Market Ethics Charter in the appendix of the Directors’ Guide;
compensation of Company Officers:
compensation of Georges Plassat, Chairman and Chief Executive Officer until July 18, 2017: Georges Plassat informed that Board that,
due to the incomprehension surrounding the financial terms and conditions of his departure, he had decided to waive the benefit of his
non-compete clause and the corresponding termination payment. Following this decision, on the recommendation of the Compensation
Committee, the Board of Directors reviewed and approved an agreement with Georges Plassat retracting his non-compete benefit,
compensation of Alexandre Bompard, Chairman and Chief Executive Officer: on the recommendation of the Compensation Committee,
the Board of Directors decided on his compensation package and compensation policy for 2018. On the recommendation of the
Compensation Committee, it also approved a change to his non-compete agreement to bring it into line with the new AFEP-MEDEF code
recommendations,
Directors’ compensation: the Board of Directors decided to maintain the annual budget for Directors’ attendance fees, which was set at
1,200,000 euros at the Shareholders’ Meeting of June 15, 2017, but to change the allocation principles in order to give a much heavier
weighting to the variable portion paid to Directors based on their attendance at meetings;
CSR:
The Board of Directors considered the work of the CSR Committee throughout the year. It was informed of the 2017 CSR results, the results
of the "food transition" programmes in each country and priority issues for Carrefour, grouped into the following themes: healthy eating, local,
organic, children and babies, increasing fruit and vegetable consumption, transparency and responsible pricing. It analysed the report on
the implementation of the global Act for Food campaign and the practices, procedures and work of the Advisory Food Committee. It received
additional information on the Group's strategy to combat food waste, and lastly, it reviewed the commitments, analysis and action plans as
regards packaging;
Composition
Until November 7, 2018, 60% of the Audit Committee members qualified as Independent Directors within the meaning of the AFEP-MEDEF code
(which recommends that at least two-thirds of members be independent). The Board of Directors is satisfied with this composition given the decision
to limit the number of Committee members, with two Directors representing the main shareholders, and to enhance the effectiveness of the
Committee’s work, which requires a high level of expertise in finance and accounting. In addition, the Committee is chaired by an Independent
Director.
Following Amélie Oudéa-Castéra’s resignation as Director on November 7, 2018 upon her appointment as Executive Director, E-Commerce, Data
and Digital Transformation for the Carrefour group, at its meeting on April 24, 2019, the Board of Directors decided, on the recommendation of the
Appointments Committee, to appoint Claudia Almeida e Silva as a member of the Audit Committee in order to maintain a ratio of 60% members
defined as Independent Directors within the meaning of the AFEP-MEDEF code.
As of December 31, 2018, the composition of the Audit Committee was as follows:
Chairman: Stéphane Israël (Independent Director);
members: Nicolas Bazire, Philippe Houzé, Mathilde Lemoine (Independent Director).
Duties
The Audit Committee monitors issues relating to the preparation and verification of accounting and financial information. Its main duties are
as follows:
in respect of the review of the Financial Statements:
it ensures that the accounting methods adopted to prepare the Company and Consolidated Financial Statements are relevant and
consistent before they are submitted to the Board of Directors; it monitors the procedures used to prepare the Financial Statements and
assesses the validity of the methods used to present material transactions; it ensures that the time frame for providing the Financial
Statements and reviewing them is adequate,
it monitors the process for preparing financial information and, where applicable, makes recommendations to ensure the integrity of such
information; it is provided with the main financial communication documents,
it monitors the effectiveness of the internal control, risk management and, where applicable, Group internal audit systems relating to the
preparation and processing of accounting and financial information, without compromising its independence; it ensures that such systems
are in place and implemented, and that corrective measures are undertaken in the event that any significant failings or anomalies are
identified. To this end, the Statutory Auditors and the Group internal audit and risk control managers submit their main findings to the
Committee,
it consults the Group internal audit and risk control managers and issues its opinion on the organisation of their services. It must be kept
informed about the Group internal audit programme and must be provided with the Group internal audit reports or a regular summary of
these reports,
it examines the risks and material off-balance sheet commitments, assesses the significance of any malfunctions or failings of which it is
informed and notifies the Board of Directors thereof; to this end, the review of the Financial Statements must be accompanied by a
presentation prepared by Executive Management describing the Company’s risk exposure and its material off-balance sheet commitments,
as well as a presentation prepared by the Statutory Auditors highlighting both the key findings of their statutory audit, including any audit
adjustments and significant internal control failings identified during their engagement, and accounting options applied; it examines the
section of the report of the Chairman of the Board of Directors to the Shareholders’ Meeting covering internal control and risk management
procedures,
it regularly reviews the mapping of the Group’s main risks that may be reflected in the accounts or which have been identified by Executive
Management and may have an impact on the Financial Statements; it takes note of the main characteristics of the risk management
systems and the results of their operations, drawing in particular on the work of the internal audit and risk control managers and the
Statutory Auditors,
it examines the scope of consolidation and, where applicable, the reasons why certain companies are not included in said scope;
in respect of relations with the Statutory Auditors:
The Statutory Auditors must submit to the Audit Committee:
their general work programme and the sampling procedures used,
their proposed amendments to the Financial Statements or accounting documents and their comments on the assessment methods used,
any irregularities or inaccuracies they have identified,
the conclusions of the comments and amendments with regard to the results of the period compared with those of the previous period,
an additional audit report prepared in accordance with the regulations in force setting out the findings of the statutory audit, by no later
than the date of submission of the audit report.
The Committee consults with the Statutory Auditors, in particular during the meetings covering the review of the process for preparing the
financial information and reviewing the Financial Statements, to enable them to report on the performance and findings of their engagement.
The Statutory Auditors accordingly inform the Committee of the main areas of risk or uncertainty regarding the Financial Statements they
have identified, their audit approach and any difficulties they encountered during their engagement.
They also inform the Committee of any significant internal control failings they have identified during their engagement concerning the
procedures relating to the preparation and processing of accounting and financial information;
in respect of the rules governing the independence and objectivity of the Statutory Auditors:
it recommends the Statutory Auditor selection process to the Board of Directors and oversees said process. If a tendering procedure is
used, the Committee supervises the procedure and validates the specifications and choice of firms consulted; it submits a recommendation
to the Board of Directors on the Statutory Auditor(s) proposed by the Shareholders’ Meeting and also submits a recommendation to the
Board of Directors at the time when the terms of office of the Statutory Auditor(s) are to be renewed, in accordance with the regulations in
force,
it monitors the performance of the Statutory Auditors’ engagement; it considers the findings and conclusions of the French High Council of
Statutory Auditors (Haut Conseil du Commissariat aux Comptes) following the audits carried out in accordance with the regulations
applicable to Statutory Auditors,
it ensures that the Statutory Auditors comply with the independence conditions set out in the applicable regulations; it analyses, alongside
the Statutory Auditors, the risks to their independence, including those relating to the amount and breakdown of their fees and the measures
taken in order to protect against and mitigate these risks; it also ensures that the Statutory Auditors comply with the conditions relating to
the acceptance or the performance of their engagement and obtains from the Statutory Auditors an annual statement attesting to their
independence and detailing the amount and breakdown, by category of engagement, of the fees paid to them during the financial year,
interviews:
For all issues related to the performance of its duties, the Audit Committee may interview the Group’s audit and accounting managers, as
well as the Group internal audit and risk control managers without any other members of the Company’s Executive Management in
attendance, if it deems it appropriate. The Chairman of the Board of Directors must be informed of this in advance. The Audit Committee
may call on external experts as necessary.
2018 principal activities
During the course of the five meetings of the Audit Committee, the following main topics were reviewed:
in respect of the review of the Financial Statements:
review of the draft Company and Consolidated Financial Statements for the financial year ended December 31, 2017 and related reports,
review of the half-yearly Consolidated Financial Statements and the related report,
review of disputes and risks as part of the analysis of provisions,
results of goodwill impairment tests,
Group operations and results in 2017; impacts of reorganisation and productivity measures under the Carrefour 2022 transformation plan
on the Consolidated Financial Statements for the year ended December 31, 2017,
dividend recommendation for 2017,
progress report on IFRS 16 on leases, due to be implemented in 2019,
impacts of applying IFRS 9 on financial instruments and IFRS 15 on revenue recognition,
impacts of applying IAS 29 (hyperinflationary economies) in Argentina,
hard-close procedures,
review of the Chairman’s report on internal control and risk management procedures relating to the preparation and processing of
accounting and financial information for the year ended December 31, 2017;
in respect of internal control:
follow-up on the Group Internal audit department’s tasks,
the Group’s 2018-2019 financing policy and credit rating,
review of risk mapping, including IT risks,
strengthening of internal governance (review of the practices and procedures of the Group Investment Committee) and its roll-down to
country level;
in respect of compliance with regulations:
review of work done to ensure compliance of internal procedures with:
European Regulation No. 2016/679 on data protection (GDPR),
the “Sapin II” law on transparency, combatting corruption and modernisation of economic life;
in respect of relations with the Statutory Auditors:
follow-up on the Statutory Auditors’ audit process,
review of non-audit services provided by the Statutory Auditors, as governed by the applicable regulations.
Composition
A majority of the members of the Compensation Committee qualify as Independent Directors, in accordance with the provisions of the AFEP-MEDEF
code.
As of December 31, 2018, the composition of the Compensation Committee was as follows:
Chairman: Thierry Breton (Independent Director);
members: Nicolas Bazire, Charles Edelstenne (Independent Director), Stéphane Courbit (Independent Director) and Lan Yan (Independent
Director).
Composition
Until November 7, 2018, a majority of the members of the Appointments Committee qualified as Independent Directors and there were no Executive
Officers, in accordance with the provisions of the AFEP-MEDEF code.
Following Amélie Oudéa-Castéra’s resignation as Director on November 7, 2018 upon her appointment as Executive Director, E-Commerce, Data
and Digital Transformation for the Carrefour group, only 50% of the members qualify as Independent Directors.
As of December 31, 2018, the composition of the Appointments Committee was as follows:
Chairman: Charles Edelstenne (Independent Director);
members: Flavia Buarque de Almeida, Philippe Houzé, Aurore Domont (Independent Director), Thierry Faraut (Director representing employees).
During the first half of 2018, Alexandre Bompard, Chairman and Chief Executive Officer was involved in the work carried out by the Appointments
Committee in particular regarding the appointment and renewal of terms of Directors for the June 15, 2018 Shareholders’ Meeting.
Composition
A majority of the members of the CSR Committee qualify as Independent Directors within the meaning of the AFEP-MEDEF code.
At its meeting of April 24, 2019, the Board of Directors decided, on the recommendation of the Appointments Committee, to appoint Claudia Almeida
e Silva to the CSR Committee.
As of December 31, 2018, the composition of the CSR Committee was as follows:
Chair: Aurore Domont (Independent Director);
members: Patricia Moulin Lemoine, Marie-Laure Sauty de Chalon (Independent Director) and Martine Saint-Cricq (Director representing
employees).
Composition
As of December 31, 2018, the composition of the Strategic Committee was as follows:
Chairman: Alexandre Bompard;
Vice-Chairman: Abilio Diniz;
members: Nicolas Bazire, Philippe Houzé, Stéphane Courbit (Independent Director).
Duties
The Strategic Committee prepares the Board of Directors’ work on the Group’s strategic objectives and the key topics of interest, including:
development priorities and opportunities for diversifying the Group’s operations;
strategic investments and significant partnership projects.
2018 principal activities
The Directors were asked to address the preparation and monitoring of the transformation plan.
Alexandre Bompard
Information on Alexandre Bompard’s educational background and work experience is described in Section 3.2.1.4 of this Registration Document.
Pascal Clouzard
Pascal Clouzard is a graduate of the ENSTA ParisTech institute of advanced engineering and of the Entrepreneur Master’s programme at HEC
Business School. After beginning his career in consulting with A.T. Kearney – where he spent eight years at the Lisbon, Madrid and Paris offices –
he joined Carrefour in 1999 as Group Director of Food Purchases, and subsequently became Group Director of Non-Food Purchases. He joined
Carrefour Spain in 2006, serving as Marketing Director, Merchandise Director and Executive Director for Hypermarkets. He was appointed Chief
Executive Officer of Carrefour Spain in 2011. Since 2014, Pascal Clouzard has also served as the Group’s lead coordinator for digital. Since
October 2, 2017, he has held the position of Executive Director for France.
Guillaume de Colonges
Guillaume de Colonges holds a university degree in Economics and completed an advanced management course at Harvard Business School in
the United States. He began his career as a floor manager at Carrefour Anglet in 1992, before taking on various operational posts in hypermarkets
in France and Poland. Subsequently, he acquired operational experience as Commercial and Supply Chain Director, and from 2000 to 2008 as
Director of supermarket and hypermarket operations in Turkey and Taiwan. He then became Managing Director of Carrefour in Asia in Malaysia and
in Singapore in 2009 and at Carrefour Turkey in 2011. In 2014, Guillaume de Colonges became Executive Director Poland. Since October 2, 2017,
he has been Executive Director, Northern and Eastern Europe (Belgium, Poland and Romania). He directly oversees the operations of Carrefour
Belgium.
Noël Prioux
Noël Prioux has a technical qualification in accountancy. He began his career with Carrefour in 1984, holding various operational positions within
the West Regional Division for Carrefour France Hypermarkets. In 1996, Noël Prioux was appointed Director of Financial Services in France, then
Executive Director, Turkey. From 2001 to 2003, he was in charge of Carrefour hypermarkets in France. Subsequently, he managed Group
international subsidiaries in Colombia, South Asia and Spain from 2004 to 2011. In June 2011, he became Executive Director, France. Since
October 2, 2017, Noël Prioux has been Executive Director, Latin America (Argentina and Brazil). He directly oversees the operations of Grupo
Carrefour Brasil.
Éric Uzan
Éric Uzan holds a degree in Business Management and Public Administration. He began his career at Carrefour in 1981 and rose through the ranks
to become Managing Director for northwest France in 1996. From 1998, he served in turn as Executive Director, Greece, Mexico, Brazil, Argentina,
Thailand and Indonesia. In 2013, he became Executive Director, Italy. Frédéric Haffner serves as Executive Director, Spain.
Gérard Lavinay
Gérard Lavinay began his career at Euromarché in 1980, holding several positions both in-store and in the logistics department in that hypermarket
chain which was taken over by Carrefour in 1991. From 1998 onwards, he held various positions at Carrefour in Greece before joining Carrefour
Chile’s Executive Management team in 2003. He returned to France in 2004 and served as Group Supply Chain Director and Group Managing
Director for IT and Supply Chain. In 2008, he was appointed Executive Director for Supermarkets in France. Gérard Lavinay joined Carrefour Belgium
in 2009 as Executive Director and Managing Director. In 2013, he supervised Carrefour’s operations in Northern Europe (Belgium, Poland and
Romania) and international merchandise support and coordination teams. Gérard Lavinay was appointed Executive Director, Merchandise, Supply
and Formats in 2017. Since October 1, 2018, he has served as Executive Director, Italy.
Amélie Oudéa-Castéra
Amélie Oudéa-Castéra is a graduate of Institut d’Études Politiques de Paris, ESSEC business school and École Nationale de l’Administration (ENA).
She has been the President of non-profit sports organisation Rénovons le Sport Français since early 2018. She held various positions with the AXA
group from 2008 to 2017, including Chief Marketing & Digital Officer and Deputy Head of AXA France’s retail business. On November 12, 2018,
Amélie Oudéa-Castéra was appointed Executive Director, E-Commerce, Data and Digital Transformation.
Marie Cheval
Marie Cheval is a graduate of Institut d’Études Politiques de Paris and École Nationale de l’Administration (ENA). In 1999, she joined the French
General Inspectorate of Finance. From 2002 to 2011, she held a number of positions with the La Poste group: Director of Financial Services Strategy
for La Poste and later for La Banque Postale, Marketing and Sales Director (2006-2009), then Director of Operations (2009-2011). In 2011, Marie
Cheval joined the Société Générale group as Director of Global Transactions and Payment Services. She was appointed Chief Executive Officer of
Boursorama in 2013. On October 2, 2017, Marie Cheval joined the Carrefour group as Executive Director, Customers, Services and Digital
Transformation for the Group and France. On September 14, 2018, she was appointed Executive Director, Financial Services and Hypermarkets
France.
Jacques Ehrmann
Jacques Ehrmann is a graduate of HEC Business School. He began his career as General Secretary of Le Méridien Hotels in 1989 before moving
on to General Management of Euro Disney (1995-1997) and Club Méditerranée (1997-2002). He joined the Casino group in 2003 as Managing
Director for Property and Development, where he led the creation of Mercialys and was part of the General Management team for seven years. In
2013, Jacques Ehrmann joined Carrefour group’s Executive Management as Executive Director for Assets, Development and New Activities. In
April 2014, he was also appointed Chairman and Chief Executive Officer of Carmila, a company specialised in the revitalisation of shopping centres
adjacent to Carrefour hypermarkets. Since October 2, 2017, Jacques Ehrmann has held the position of Executive Director for Assets, International
Development and Innovation. He serves as Chairman and Chief Executive Officer of Carmila.
François-Melchior de Polignac
François-Melchior de Polignac is a graduate of HEC Business School and holds a Master’s degree in international relations from the University of
Cambridge. He began his career as a financial controller at L’Oréal before moving to the Boston Consulting group where he spent three years. He
joined Carrefour’s Mergers and Acquisitions department in 2000 before becoming Director of a hypermarket. He then took over as Director of
supermarkets in Poland. He was then tasked with a transformation project across the Group before taking over as Executive Director, Romania. In
2013, he was appointed Managing Director of Carrefour Belgium. In 2017, he became Executive Director, Transformation, Merchandise and
Partnerships and since October 1, 2018, he has been Executive Director, Merchandise, Supply and Formats.
Matthieu Malige
Matthieu Malige is a graduate of HEC Business School and École des Travaux Publics and holds a Master of Science degree from UCLA. He started
his career at Lazard Frères. From 2003 to 2011, he held various positions within the Carrefour group: Director of Strategy and Development, Chief
Financial Officer of Carrefour Belgium and Chief Financial Officer of Carrefour France. In 2011, he joined the Fnac group as Chief Financial Officer
and on July 20, 2016 following the Company’s acquisition of Darty, he became Chief Financial Officer of the Fnac Darty group. On October 16, 2017,
Matthieu Malige was appointed Chief Financial Officer of the Carrefour group.
Laurent Vallée
Laurent Vallée is a graduate of ESSEC Business School, Institut d’Études Politiques de Paris and École Nationale de l’Administration (ENA). He
began his career at the Conseil d’État, France’s administrative Supreme Court, where he served in particular as Government Commissioner and
Constitutional Advisor to the Government’s Secretary General. From 2008 to 2010, Laurent Vallée was a lawyer with the Clifford Chance law firm,
before being appointed Director of Civil Affairs at the Ministry of Justice in April 2010. He was then General Corporate Secretary of the Canal+ group
from 2013 to 2015. Since March 2015, he has served as Secretary General of the Conseil Constitutionnel, France’s constitutional council. On
August 30, 2017, Laurent Vallée joined the Executive Management team as General Secretary of the Carrefour group.
Dominique Benneteau-Wood
Dominique Benneteau-Wood holds a degree in industrial economics and a Master’s degree in economics. She joined the Carrefour group on
August 20, 2018 as Executive Director, Communications for the Group and France. From March 2017, she was Communications Director of Air
France-KLM and Deputy Managing Director of Air France in charge of brands and communications. From January 2014, she was Communications
Director of Transdev, a leader in mobility and public transport and subsidiary of Caisse des Dépôts and Veolia, where she was also acting company
secretary from July to December 2016. Dominique Benneteau-Wood spent a large part of her career with the Havas group at W&Cie, where she
was general manager from 2010 to 2014. Before joining W&Cie in 2001, she was a strategic planner at Euro RSG Design (1989-1992), a consultant
at Bracq Gauvin Design (1992-1993), an independent consultant (1994-1999) and senior consultant at Piaton & Associés (2000-2001).
Frédéric Haffner
Frédéric Haffner is a graduate of HEC Business School. In 1999, he joined Rothschild & Cie, where he led a number of mergers and acquisitions
and financing transactions to support the international development of major French and European corporations. He joined Carrefour in 2014 as
Director of M&A. In 2017, he coordinated the IPO of Carmila and Grupo Carrefour Brasil. Since October 2, 2017, Frédéric Haffner has served as
Executive Director, Strategy and M&A.
I/ Principles for determining the compensation of the Chairman and Chief Executive Officer
The rules and principles used in determining the compensation and other benefits of the Chairman and Chief Executive Officer are approved by the
Board of Directors on the recommendation of the Compensation Committee; the Board of Directors refers in particular to the AFEP-MEDEF code.
The principles used in determining the compensation of the Chairman and Chief Executive Officer are as follows:
Balance
The Board of Directors ensures that no component of compensation is disproportionate. It also ensures that each component of compensation is
relevant to the Company’s interests.
Consistency
The compensation policy for the Chairman and Chief Executive Officer seeks to reward the Group’s operating performance, as well as the Chairman
and Chief Executive Officer’s individual performance.
The policy reflects the responsibilities, experience, performance and potential of the Chairman and Chief Executive Officer.
II/ Criteria for determining, allocating and awarding the components of compensation of the Chairman and
Chief Executive Officer
The Board of Directors, on the recommendation of the Compensation Committee, set the components of the Chairman and Chief Executive Officer's
compensation as follows (detailed in Section 3.4.2.2 of this Registration Document):
Annual fixed and variable compensation
Annual compensation comprises a fixed portion and a variable portion. This compensation reflects the responsibilities, experience and skills of the
Chairman and Chief Executive Officer, as well as market practices.
Fixed compensation
Annual fixed compensation is reviewed at relatively long intervals although it may be re-examined by the Board of Directors in certain cases,
particularly when the Chairman and Chief Executive Officer’s term is up for renewal. It has not changed since the Chairman and Chief Executive
Officer was first appointed.
Termination payment
As announced at the Shareholders' Meeting on June 15, 2018, the Chairman and Chief Executive Officer, Alexandre Bompard, informed the Board
of Directors of his decision to waive the benefit of the termination payment agreed by the Board on July 18, 2017. He is therefore no longer eligible
for this termination payment.
Non-compete commitment
The Board of Directors may also decide to enter into a non-compete commitment with the Chairman and Chief Executive Officer.
The non-compete commitment entered into upon Alexandre Bompard's appointment as Chairman and Chief Executive Officer was amended by the
Board of Directors on July 26, 2018 to bring it into line with the new AFEP-MEDEF recommendations. The amended commitment will be submitted
to the Shareholders Meeting of June 14, 2019 for approval.
The purpose of the new commitment is to prohibit the Chairman and Chief Executive Officer from working for a competitor within a number of
specified businesses operating in the retail food industry for a period of 24 months.
The non-compete payment will apply for a period of 24 months from the date of termination.
The payment is set at the equivalent of 12 months' fixed and maximum annual variable compensation. The non-compete payment will be made in
instalments.
The Board of Directors may waive the implementation of the non-compete commitment upon the Chief Executive Officer's termination.
The commitment also provides that the non-compete payment will not be made if the Chief Executive Officer has claimed his pension benefits. No
payment will be made after the age of 65.
Amounts in € Presentation
Fixed compensation 1,500,000 euros At its meeting on April 24, 2019, the Board of Directors maintained the amount of
annual fixed compensation at 1,500,000.
Annual variable compensation Up to 165% of fixed Annual variable compensation could represent up to 165% of annual fixed
compensation compensation if objectives are achieved at 130%.
Type of criteria Weighting Comments
Quantitative criteria (financial and
non-financial) 20%
Annual variable compensation is subject to the fulfilment of quantified financial and non-
Sales 20%
financial quantified objectives, for 80%, and qualitative objectives, for 20%. These
Recurring operating income 20%
objectives are defined by the Board of Directors.
Free cash flow 20%
CSR
The expected level of achievement of the objectives used to determine annual variable
Qualitative criteria
compensation is established precisely by the Board of Directors but is not disclosed for
Quality of corporate governance 20%
confidentiality purposes.
Total 100%
Long-term incentive plan Value representing On February 27, 2019, the Board of Directors decided to award the long-term incentive
(performance shares) 47.5% of the gross plan for 2019 to the Chairman and Chief Executive Officer in the form of performance
maximum shares, for a value representing 47.5% of his gross maximum compensation (i.e.,
compensation (fixed €3,596,428).
annual, target This award is made under the 14th resolution adopted by the Shareholders’ Meeting of
variable and long- May 17, 2016.
term variable) The shares are entirely subject to performance conditions, and will vest on February 28,
2022 if both of the following conditions are met: achievement of the performance criteria
to be assessed on February 27, 2021, and continuing service with the Group as of
February 27, 2022.
The Board of Directors set out the following performance criteria: recurring operating income, adjusted free cash flow, total shareholder return
(based on a panel of retail companies) and corporate social responsibility (based on Carrefour’s index).
Each criterion has a weighting of 25%. The rate of achievement of each criterion will range from a minimum of 50% and a maximum of 150% of a
target objective set at 100%. The progression of the achievement rate will be linear between the minimum and maximum. The total number of
shares vested will however be limited to 100% of the number of shares awarded by the Board of Directors.
Benefits in kind The Chairman and Chief Executive Officer has a company car.
Directors’ attendance fees Attendance fees are paid in accordance with the rules applicable to Directors, as
described in Section 3.4.1 of this Registration Document.
As detailed in Section 3.4.2.3 of this Registration Document, the 2018-2019 long-term incentive plan will be paid in 2020 further to its approval by the Shareholders' Meeting
called to approve the Financial Statements for the year ending December 31, 2019, subject to continuing service and performance conditions. The amount thereof will be
determined on the basis of objectives assessed for 2018 and 2019, up to a maximum of 3,252,000 euros.
3.4.2.3 Compensation due or paid to the Chairman and Chief Executive Officer,
Alexandre Bompard, in respect of 2018
The Shareholders’ Meeting of June 15, 2018 approved the principles and criteria for determining, allocating and awarding the fixed, variable and
exceptional components of the total compensation and benefits in kind that may be awarded to the Chairman and Chief Executive Officer, Alexandre
Bompard, in accordance with Article L. 225-37-2 of the French commercial code.
The table below summarises the components of compensation due or paid to Alexandre Bompard in respect of 2018 in his capacity as Chairman
and Chief Executive Officer.
The payment of the variable and exceptional components of compensation due in respect of the 2018 financial year is subject to the approval of the
Shareholders’ Meeting of June 14, 2019, in accordance with Article L. 225-100, paragraph 6 of the French commercial code.
(2) This amount corresponds to the 2017-2018 long-term cash incentive plan. It will be paid after approval by the Shareholders’ Meeting held on June 14, 2019.
(3) Period from July 18, 2017 to July 31, 2017 for 2017 attendance fees, and from August 1, 2017 to July 31, 2018 for 2018 attendance fees.
The components of compensation due or paid to the Chairman and Chief Executive Officer, Alexandre Bompard, in 2018 are as follows:
Annual compensation
Alexandre Bompard received annual compensation comprising a fixed portion and a variable portion.
Annual fixed compensation
For 2018, Alexandre Bompard's annual fixed compensation amounted to 1,500,000 euros, unchanged on an annual basis.
Annual variable compensation
Alexandre Bompard’s annual variable compensation was based on the fulfilment of objectives and could represent up to 165% of his annual fixed
compensation, depending on the extent to which objectives were achieved. The achievement of his objectives at 100% would entitle him to annual
variable compensation amounting to 100% of his annual fixed compensation. The achievement of his objectives at 120% would entitle him to annual
variable compensation amounting to 165% of his annual fixed compensation. Between the lower and upper targets, variable compensation increases
on a straight-line basis.
Benefits in kind
Alexandre Bompard has a company car with a driver, corresponding to a gross benefit in kind of 3,055 euros.
Termination payment
As announced at the Shareholders' Meeting on June 15, 2018, the Chairman and Chief Executive Officer, Alexandre Bompard, informed the Board
of Directors of his decision to waive the benefit of the termination payment agreed by the Board on July 18, 2017. He is therefore no longer eligible
for this termination payment.
Non-compete commitment
The non-compete commitment entered into upon Alexandre Bompard's appointment as Chief Executive Officer was amended by the Board of
Directors on July 26, 2018 to bring it into line with the new AFEP-MEDEF recommendations.
No amount is due or was paid in this respect in 2018.
STOCK OPTIONS GRANTED DURING THE FINANCIAL YEAR TO EACH EXECUTIVE OFFICER BY THE ISSUER OR A
GROUP COMPANY
None.
STOCK OPTIONS EXERCISED DURING THE FINANCIAL YEAR BY EACH EXECUTIVE OFFICER
None.
PERFORMANCE-BASED SHARES GRANTED TO EACH EXECUTIVE OFFICER BY THE ISSUER OR A GROUP COMPANY
None.
PERFORMANCE-BASED SHARES WHICH BECAME AVAILABLE DURING THE FINANCIAL YEAR FOR EACH
EXECUTIVE OFFICER
None.
Name and position of the Executive Officer Plan 2017 financial year 2018 financial year
Alexandre Bompard 2017-2018 compensation
Chairman and Chief Executive Officer since July 18, 2017 plan N/A 3,252,000
Until November 7, 2018, 60% of Audit Committee members qualified as Independent Directors within the
meaning of the AFEP-MEDEF code. The Board of Directors is satisfied with this composition given the
decision to limit the number of Committee members, with two Directors representing main shareholders,
and to enhance the effectiveness of the Committee’s work, which requires a high level of expertise in
finance and accounting. In addition, the Committee is chaired by an Independent Director.
Independent Directors must make up at
Following Amélie Oudéa-Castéra’s resignation as Independent Director on November 7, 2018 upon her
least two-thirds of the Audit Committee
appointment as Executive Director, E-Commerce, Data and Digital Transformation for the Carrefour
(Article 15.1)
group, this proportion temporarily fell to 50% pending the appointment of a new Audit Committee
member qualifying as an Independent Director. At its meeting on April 24, 2019, the Board of Directors
decided, on the recommendation of the Appointments Committee, to appoint Claudia Almeida e Silva as
a member of the Audit Committee in order to maintain a ratio of 60% members defined as Independent
Directors within the meaning of the AFEP-MEDEF code.
Until November 7, 2018, a majority of the members of the Appointments Committee qualified as
Independent Directors, in accordance with the provisions of the AFEP-MEDEF code.
Following Amélie Oudéa-Castéra’s resignation as Independent Director on November 7, 2018 upon her
The majority of the Appointments
appointment as Executive Director, E-Commerce, Data and Digital Transformation for the Carrefour
Committee members must be
group, only 50% of the members qualify as Independent Directors, in accordance with the provisions of
Independent Directors (Article 16.1)
the AFEP-MEDEF code. The Board of Directors considers this composition to be satisfactory given the
balance of Independent Directors and Directors representing shareholders, the presence of a Director
representing employees and the position of Chair being held by an Independent Director.
The Compensation Committee should
comprise a Director representing After reviewing their wishes, Martine Saint-Cricq and Thierry Faraut, Directors representing employees,
employees (Article 17.1) joined the CSR Committee and Appointments Committee, respectively.
First
name/last
name or Office held at the Price per
Transaction corporate Company on the Financial share (in Transaction
date name transaction date Transaction type instrument euros) amount (in euros)
Alexandre Chairman and Chief
04/12/2018 Bompard Executive Officer Acquisition Shares 15.9650 399,125.00
Forward
Cervinia A legal entity linked to agreement
05/17/2018 Europe SARL Bernard Arnault, Director Sale (shares) N/A 19,983,699.00
A legal entity linked to Forward
Groupe Arnault Bernard Arnault and agreement
05/17/2018 SE Nicolas Bazire, Directors Sale (shares) N/A 1,590,873.00
A legal entity linked to
Patricia Moulin Lemoine Forward
and Philippe Houzé, agreement
05/17/2018 Galfa SAS Directors Sale (shares) N/A N/A
A legal entity linked to
Patricia Moulin Lemoine
and Philippe Houzé, Stock
05/17/2018 Galfa SAS Directors N/A options N/A N/A
Stéphane
06/28/2018 Courbit Director Acquisition Shares 14.09 98,630.00
Cervinia A legal entity linked to Acquisition by opting to receive
07/03/2018 Europe SARL Bernard Arnault, Director payment of the dividend in shares Shares 13.72 18,109,371.00
A legal entity linked to
Groupe Arnault Bernard Arnault and Acquisition by opting to receive
07/03/2018 SE Nicolas Bazire, Directors payment of the dividend in shares Shares 13.72 1,441,656.44
A legal entity linked to
Patricia Moulin Lemoine
and Philippe Houzé, Acquisition by opting to receive
07/04/2018 Galfa SAS Directors payment of the dividend in shares Shares 13.72 35,638,139.04
Acquisition by opting to receive
07/13/2018 Abilio Diniz Director payment of the dividend in shares Shares 13.72 466.48
Flavia Buarque Acquisition by opting to receive
07/13/2018 de Almeida Director payment of the dividend in shares Shares 13.72 452.76
A legal entity linked to Transfer of 1,770,602 shares for no
Stanhore Abilio Diniz and Flavia consideration under a structured
International Buarque de Almeida, financing arrangement disclosed to
07/13/2018 Trading SARL Directors the AMF on March 30, 2016 Shares N/A N/A
Executive Director, Acquisition by opting to receive
07/13/2018 Eric Uzan Southern Europe payment of the dividend in shares Shares 13.72 1,317.12
Executive Director, Acquisition by opting to receive
07/13/2018 Gérard Lavinay Merchandise payment of the dividend in shares Shares 13.72 4,335.52
Agreements and commitments authorized in previous years with no effect during the year
We have been informed that the following agreements and commitments, authorized in previous years by the Shareholders’ Meeting, have had no
effect during the year.
Commitments given by the Company in favor of Mr. Alexandre Bompard, Chairman and Chief Executive Officer,
concerning the supplementary defined benefit pension plan.
Person concerned:
Mr. Alexandre Bompard, Chairman and Chief Executive Officer.
% change at
constant
(in millions of euros) 2018 2017 restated % change exchange rates
Net sales 76,000 78,315 (3.0)% 3.4%
Gross margin from recurring operations 17,067 18,081 (5.6)% 1.6%
in % of net sales 22.5% 23.1%
Sales, general and administrative expenses and amortisation (15,162) (15,946) (4.9)% 2.5%
Recurring operating income 1,905 2,135 (10.8)% (5.1)%
Recurring operating income before depreciation 3,469 3,735 (7.1)% (1.8)%
Recurring operating income after net income from companies
accounted for by the equity method 1,919 2,139 (10.3)% (4.6)%
Non-recurring operating income and expenses, net (1,161) (1,162) (0.1)% 9.2%
Finance costs and other financial income and expenses, net (262) (445) (41.1)% (43.7)%
Income tax expense (539) (618) (12.8)% (1.5)%
Net income from continuing operations - Group share (259) (254) 2.0% 29.8%
Net income from discontinued operations - Group share (301) (277) 8.7% 8.8%
NET INCOME - GROUP SHARE (561) (531) 5.6% 18.9%
FREE CASH FLOW(1) 636 503
NET DEBT AT DECEMBER 31, 2018 3,785 3,743
Net sales totalled 76.0 billion euros in 2018, an increase of 3.4% at constant exchange rates.
Recurring operating income before depreciation and amortisation came in at 3,469 million euros (down 1.8% at constant exchange rates).
Recurring operating income fell by 5.1% at constant exchange rates, to 1,905 million euros.
Non-recurring operating income and expenses represented a net expense of 1,161 million euros, including reorganisation costs of 727 million
euros resulting from decisions made on announcement of the 2022 transformation plan.
Finance costs and other financial income and expenses, net, stood at 262 million euros. The 182 million-euro improvement compared with 2017
was attributable to a decrease in the Group’s net debt and the favourable impact of applying IAS 29 to operations in Argentina from January 1,
2018 (Section 4.4.3).
Income tax expense amounted to 539 million euros, representing an effective tax rate of 109% as a result of non-recurring items recorded in
2018.
The Group reported a net loss from continuing operations of 259 million euros, an amount that was comparable to the restated loss for 2017.
Discontinued operations generated a net loss – Group share of 301 million euros versus a 277 million-euro loss in 2017, reflecting the termination
of the Group’s integrated convenience stores business in France.
Taking into account all of these items, the Group ended the year with a net loss – Group share of 561 million euros, versus a net loss of 531 million
euros in 2017.
Free cash flow1 came to 636 million euros, versus restated free cash flow of 503 million euros in 2017.
1 Free cash flow corresponds to cash flow from operating activities before net finance costs, and after the change in working capital, less
net cash from/(used in) investing activities.
% change at constant
(in millions of euros) 2018 2017 restated % change exchange rates
France 35,615 35,253 1.0% 1.0%
Rest of Europe 21,076 21,112 (0.2)% 0.0%
Latin America 13,809 16,042 (13.9)% 15.7%
Asia 5,501 5,907 (6.9)% (4.1)%
TOTAL 76,000 78,315 (3.0)% 3.4%
The Group generated net sales of 76.0 billion euros in 2018, up 3.4% at constant exchange rates. Despite highly competitive markets in Europe and
France, growth accelerated in all regions in the second half of the year. The Group also benefited from significantly higher net sales in Brazil across
all formats, reflecting strong business momentum, ongoing expansion of the Atacadão store network and development of the financial services
business.
sales in France grew 1% to 35.6 billion euros. All formats contributed to the increase, led by the supermarkets and convenience stores. The main
growth drivers were food, organic offers and e-commerce, which continued to enjoy a strong growth dynamic. Non-food sales continued to decline.
sales in the rest of Europe were stable, despite a loss of momentum in Italy where markets are under pressure. The decline in Italy was offset by
higher sales in Romania and Poland, where marketing initiatives in the second half limited the effects of legislation restricting Sunday opening.
The environment also remained difficult in Spain and Belgium, where competition remained tough.
in Latin America, sales climbed 15.7% at constant exchange rates. In Brazil, the Group recorded organic growth of 8% in 2018, helped by strong
marketing performances, development of the e-commerce business, sustained expansion of cash & carry operations and significant advances in
financial services. In Argentina, in a challenging macro-economic environment, sales growth was supported by successful marketing initiatives
leading to higher volumes.
in Asia, 2018 sales were down 4.1% at constant exchange rates, due to lower volumes in China. The Group is continuing to adapt its business
model, in particular by reducing and re-allocating selling space and developing offerings in the fresh product and e-commerce segments, which
grew sharply over the year. The downtrend in China was partly offset by continued strong momentum in Taiwan.
At constant exchange rates, the portion of consolidated net sales generated outside France continued to rise, representing 56% in 2018, versus
55% in 2017.
Recurring operating income contracted by 5.1% at constant exchange rates, to 1,905 million euros. Part of the decline was due to the 33 million-
euro negative impact of applying IAS 29 to operations in Argentina as from January 1, 2018.
In France, recurring operating income came to 466 million euros, down 43.3% compared with 2017 (restated to reflect the reclassification of ex-Dia
stores in accordance with IFRS 5). Operating margin narrowed to 1.3% of net sales from 2.3% in 2017. The decline reflects:
still weak growth in sales;
a competitive market environment;
investments made to boost competitiveness, carried out ahead of cost-cutting initiatives (whose effects have taken more time to be felt than
outside France);
As in 2017, gains on disposals of assets in 2018 primarily related to sales of various individually non-material assets, mainly in France and Italy.
Restructuring costs recognised in 2018 result from plans to streamline operating structures launched as part of the transformation plan. The expense
included in non-recurring items relates chiefly to severance paid or payable within the scope of:
the voluntary redundancy plan implemented in France and affecting 2,400 jobs;
restructuring measures launched in Belgium and affecting around 1,000 employees;
the voluntary redundancy plan implemented in Argentina and affecting some 1,000 jobs.
Restructuring costs recorded in 2017 primarily concerned France (particularly costs relating to the overhaul of supply chains), Italy, Argentina, China
(store closure plan), and Spain (plan to integrate the hypermarkets acquired from Eroski).
Other non-recurring income and expenses recorded in 2018 mainly concerned France and Brazil.
Impairment losses of 97 million euros were recognised in 2018 against fixed assets other than goodwill to take account of the difficulties experienced
by certain stores, particularly in France, Italy and China, and 82 million euros’ worth of assets were written off during the year.
In 2017, impairment tests led the Group to recognise a 700 million-euro impairment loss against goodwill allocated to its Italian operations.
A description of non-recurring income and expenses is provided in Note 7.3 to the Consolidated Financial Statements.
Operating income
The Group ended 2018 with operating income of 758 million euros, versus 978 million euros in 2017.
Finance costs, net fell by 84 million euros to 233 million euros, reflecting the reduction in Group debt over the year and the refinancing arranged on
more favourable terms.
Other financial income and expenses represented a net expense of 29 million euros, compared with a net expense of 128 million euros in 2017.
Part of the improvement was due to the 53 million-euro positive adjustment recorded in “Other financial income” upon first-time application of IAS 29
– Financial Reporting in Hyperinflationary Economies to operations in Argentina as from January 1, 2018 (Notes 4.3 and 14.6 to the Consolidated
Financial Statements). Another contributing factor was the 16 million-euro reduction in the Argentine tax on financial transactions compared with
2017, due to the fall in the peso.
At December 31, 2018, the Group’s liquidity position was underpinned by 3.9 billion euros’ worth of committed syndicated lines of credit with no
drawing restrictions expiring in 2022 and 2023.
Cash and cash equivalents totalled 4,300 million euros at December 31, 2018 compared with 3,593 million euros at December 31, 2017,
representing an increase of 707 million euros.
4.2.3 Cash flows for the period and cash and cash equivalents
Net debt increased by 42 million euros over the year, after decreasing by 788 million euros in 2017. The change is analysed in the simplified
statement of cash flows presented below:
Free cash flow came to 636 million euros in 2018, compared with restated free cash flow of 503 million euros in 2017, and mainly comprised:
cash flow from operating activities of 2,107 million euros;
the change in trade working capital, which amounted to 44 million euros in 2018 versus 248 million euros in 2017;
operational investments in an amount of 1,611 million euros, compared with 2,369 million euros in 2017. The significant decrease reflects changes
in the Group’s investment strategy and the more selective approach adopted during the second half of 2017 and the whole of 2018, which is
designed to make capex projects more productive.
The Group is currently analysing the potential impacts of applying IFRS 17. It does not expect the application of the other standards, amendments
or interpretations to have a material impact on its Consolidated Financial Statements.
Key consolidated income statement figures for integrated convenience stores in France classified in accordance with IFRS 5 in 2018 and 2017 are
as follows:
Total variation(2)
At constant exchange
Sales inc. VAT (€m) LFL(1) At current exchange rates rates
France 9,034 +1.0% -3.3% -3.3%
Europe 5,358 -1.5% -3.3% -2.8%
Latin America (pre-IAS 29) 3,880 +14.5% -2.5% +15.6%
Asia 1,744 -3.4% -1.5% -3.5%
GROUP (PRE-IAS 29) 20,016 +2.7% -3.0% +0.5%
IAS 29 (3) (29)
GROUP (POST-IAS 29) 19,987
(1) Excluding petrol and calendar effects and at constant exchange rates.
(2) Variations presented in relation to the restated 2018 sales, i.e. excluding sales of ex-Dia stores that exited the Group’s scope.
4.5.1 Carrefour 2022 transformation plan: new initiatives since the start of
2019
After launching a powerful transformation dynamic in 2018, establishing itself as the leader in the food transition for all, making significant commercial
investments and attaining a sustained pace of cost reductions, Carrefour is continuing its initiatives in 2019.
Hypermarket revamp:
In February, Carrefour announced that it will systematise and internationalise the logic of adapting hypermarkets to the specificities of each catchment
area, in order to offer a more fluid customer path and a better shopping experience. The Group is continuing to reduce underproductive sales area,
mainly non-food (global target of 400,000 sq.m. reduction by 2022).
Further sales area reduction, notably in favor of Drive, outlets and shopping malls;
Reopening of the Avignon store on April 4 (reduction of sales area and assortments, racking, lower prices, etc.), inspired by Maxi in Argentina;
Adjustment of the hypermarket model in Italy, with planned sales area reductions in five hypermarkets.
In the first quarter of 2019, Carrefour's pre-IAS 29 gross sales totaled 20,016 million euros, up 0.5% at constant exchange rates. After taking into
account an unfavourable exchange rate effect of 3.4%, mainly due to the depreciation of the Brazilian real and the Argentine peso, sales were down
3.0% at current exchange rates. After application of IAS 29, the Group’s Q1 2019 consolidated sales inc. VAT totaled 19,987 million euros. On a
like-for-like basis (LFL), sales rose 2.7% in the quarter. Total growth at constant exchange rates (0.5%) also includes a calendar effect marked by
Easter (-1.6%), the contribution of gasoline sales (-1.0%), as well as openings (+1.2%) and scope and other effects (-0.9%).
In France, in a new regulatory context (EGALIM law), Carrefour’s like-for-like sales rose by 1.0%, driven by a satisfactory performance in food (up
2.0% LFL), while non-food remains difficult (down 5.4% LFL).
Price investments have been made in all formats and channels with the new Primes programs launched in February. Initiatives are continuing
with the launch in April of the "Unbeatable prices" on ten fruits and vegetables that are part of the daily diet;
Growth momentum in organic products, e-commerce and convenience formats is solid;
Carrefour continued to reduce underproductive sales areas in hypermarkets.
The market context remains difficult in Europe (-1.5% LFL):
In Spain (-2.8% LFL), the environment remains very competitive. Performance was impacted by closures on Sunday in the Levante region (new
regulations). Following a clean-up in inventory, destocking operations of non-food products are less significant than in 2018. Actions launched
in 2018 (strengthening digital, fresh, organic products and Carrefour-branded products) should accelerate in 2019;
In Italy (-3.8% LFL), in a market under pressure, the trend over the quarter remained similar to that of 2018 (-4.0% LFL). The Carrefour Italy
transformation plan, unveiled in February 2019, is getting underway;
In Belgium (-0.4% LFL), in a persistently competitive market, Carrefour posted an improvement over the fourth quarter of 2018 (-3.1% LFL);
Growth continues in Romania (+3.3% LFL) and in Poland (+3.0% LFL) where commercial initiatives limited the impact of the law imposing store
closures on certain Sundays.
Strong momentum continued in Latin America (+14.5% LFL):
In Brazil, Carrefour posted significant growth of 6.6% on a like-for-like basis, in a market that benefited from further food inflation:
Atacadão (+6.8% LFL) continued its expansion with the opening of four new stores;
The acceleration at Carrefour Retail (+6.1% LFL) continued, notably reflecting the solid performance in proximity formats, strong e-commerce
growth and double-digit non-food sales in hypermarkets;
Application of IAS 29 - Accounting treatment of hyperinflation for Argentina as from July 1st, 2018,
effective January 1st, 2018
In Argentina, the cumulative inflation rate over the last three years is greater than 100%, according to a combination of indices used to measure the
country's inflation (inflation of wholesale prices and consumer prices having exceeded the 100% threshold), and no significant decrease in inflation
is expected in 2019 in a context in which, moreover, the Argentine peso has depreciated.
As a result, the criteria of the IAS 29 norm are fulfilled and according to a consensus shared by the AMF and ESMA, Argentina is considered a
hyperinflationary economy within the meaning of IFRS as of July 1, 2018. Thus, the terms of IAS 29 relating to financial reporting in hyperinflationary
economies become applicable from January 1, 2018 as if Argentina had always been in hyperinflation.
The impact on Q1 2019 revenue is presented in the table below:
2019 at
2019 at 2019 at current
Scope constant current exchange
Sales inc. Calendar effect and Petrol exchange exchange rates post-
VAT (€m) 2018(1) LFL(2) effect others effect rates Currencies rates IAS 29(3) IAS 29
Q1 20,626 +2.7% -1.6% +0.3% -1.0% 20,722 -3.4% 20,016 (29) 19,987
(1) Restated for IFRS 5.
(2) Excluding petrol and calendar effects and at constant exchange rates.
Variations ex calendar and ex petrol are presented in relation to the restated 2018 sales, i.e., excluding sales of ex-Dia stores that exited the Group’s
scope.
Other transactions
On March 22, 2018, Carrefour issued 500 million US dollars’ worth (nominal amount) of non-dilutive six-year cash-settled convertible bonds
(maturing in March 2024) to institutional investors.
The issue was hedged in euros to provide the Company with the equivalent of standard euro-denominated bond financing (see a description of the
related accounting treatment in Note 14.2 to the Consolidated Financial Statements).
Carrefour also issued bonds to institutional investors on two separate occasions as part of its Euro Medium-Term Notes (EMTN) programme. The
first issue was carried out on June 5, 2018, and settled on June 12, 2018, for 500 million euros’ worth of 5-year 0.875% bonds maturing on June 12,
2023, and the second was carried out on November 26, 2018, and settled on December 4, 2018, for another 500 million euros’ worth of 7-year 1.75%
bonds maturing on May 4, 2026.
The issues consolidated the Company’s long-term financing, extended the average maturity of its bond debt (to 3.6 years) at December 31, 2018
and further reduced its borrowing costs.
Year ended Article D. 441 I-1: Unpaid and overdue incoming invoices Article D. 441 I-2: Unpaid and overdue outgoing invoices
December 31, at the reporting datev at the reporting date
2018 Total (1 Total (1
(in thousands of 1 - 30 31 - 60 61 - 90 91 + day or 1 - 30 31 - 60 61 - 90 91 + day or
euros) 0 days days days days days more) 0 days days days days days more)
(A) BY AGEING CATEGORY
Number of invoices 2 26 19 4 69* 118 0 1 1 2 14 21*
Total amount
(including VAT) of
the invoices 74 824 419 23 1 179* 2 444 0 54 24 2 175 15 248 17 501*
Percentage of total
amount of
purchases
(including VAT)
over the period 0% 0% 0% 0% 1% 1%
Percentage of
revenue (including
VAT) over the
period 0% 0% 2% 12 % 14 %
(B) INVOICES EXCLUDED FROM (A) RELATING TO DOUBTFUL OR UNRECOGNISED PAYABLES AND RECEIVABLES
Number of invoices
excluded none none
Total amount of
invoices excluded 0 0
((C) STANDARD PAYMENT DEADLINES USED (CONTRACTUAL OR LEGAL DEADLINES - ARTICLE L. 441-6 OR ARTICLE L. 443-1 OF
THE FRENCH COMMERCIAL CODE)
The amount of retained earnings after appropriation of 2018 net income was increased by the amount of the 2017 dividends that were not paid on
treasury shares.
In the event of a change in the number of shares eligible for dividends with respect to the 789,252,839 shares comprising the share capital at
December 31, 2018, the total dividend amount would be adjusted and the amount allocated to retained earnings would be determined on the basis
of the dividends actually paid.
The total dividend amount of €358,705,838, which represents a dividend of 0.46€ per share before payroll taxes and the 21% withholding tax
(prélèvement obligatoire non libératoire) stipulated in Article 117 quater of the French general tax code (Code général des impôts), qualifies, for
individuals who are resident in France for tax purposes, for the 40% tax relief described in Article 158-3-2 of the French general tax code.
Dividends eligible for 40% tax Dividends not eligible for 40%
Financial year Gross dividend paid relief tax relief
2015 €0.70 €0.70 -
2016 €0.70 €0.70 -
2017 €0.46 €0.46
Financial risk
Strategy and governance Operations Business environment management Financial services
Strategy definition, Relevance and Political and social Liquidity risk Liquidity risk
adjustment and performance of economic environment Interest-rate risk Credit risk
Implementation and business models Enconomic environment Currency risk
Compliance and fair Operational and financial and market volatility Credit risk
practices control of growth and Environment, regulatory Equity risk
Corporate social expansion pressure and Quality of financial
responsibility Partnerships and developments management, budgets
Environment franchising Changes in the industry and reporting
Disputes and litigation Control of the supply and the competitive
chain environment
Product quality, Natural disasters and
compliance and safety climate change
Safety of people and Terrorism and crime
property
Human resource
management
Continuity, integrity and
confidentiality of
information systems
Control and valuation of
assets
Risk management
In October 2016, the Group distributed its Ethics Principles, providing employees with a set of guidelines on how to conduct themselves in the
workplace on a daily basis. The Ethics Principles are shared with suppliers and service providers under Ethics Charters as described in the Group’s
regulatory framework. Procedures are currently being implemented to assess the position of customers, key suppliers and intermediaries based on
the risk map.
A whistleblowing system introduced in 2016 can be used to report any breaches of the Ethics Principles, particularly with regard to corruption and
conflicts of interest. Information, and in particular the whistleblower’s identity, is guaranteed to be kept confidential throughout the entire process. No
disciplinary action may be taken against an employee who reports an ethics issue in good faith.
The Group has tracked the measures that were implemented in 2017 to comply with the Sapin II law. Similarly, it has performed monitoring
procedures in connection with the government order of December 1, 2016 strengthening French legislation on anti-money laundering and counter-
terrorism financing, which implements in French law the European Directive of May 20, 2015 as described in Section 4.7.2 of the Company’s
Registration Document on the risk prevention and management system.
Environment
Description of the risk
In the scope of its activities, the Group may be exposed to a wide range of environmental risks related to product design and sale, the transport of
goods and the operation of its stores and warehouses. These activities can have an impact on the environment through commodity production
methods, choice of packaging, and consumption of fuel, energy and refrigerants.
Risk management
Assessment of environmental risks and issues aims to improve our knowledge and our understanding of the related challenges and to enable the
Group to better address risks in order to protect its business, employees and customers.
Environmental protection and preservation is considered by the Group, along with industrial risks, with a focus on prevention through study and
analysis, but also through the operational implementation of prevention or treatment systems. All initiatives intended to reduce the environmental
footprint of our business activities and measures taken to mitigate the impacts of climate change are presented in the Company’s Registration
Document in Section 2 on Corporate Social Responsibility. While environmental regulations are tightening in many countries and consumers are
becoming increasingly aware of the need to protect the environment, particular attention is paid to natural resource management (wood, fishery
resources, water, etc.).
4.8.1.2 Operations
Relevance and performance of economic and business models
Description of the risk
In a highly competitive environment with very unstable markets, it is essential for economic and business models to be relevant and rapidly adaptable
to changing consumption habits and patterns, such as the development of e-commerce and changing eating behaviours. Likewise, efficient and
effective purchasing can have a material impact on the Group’s operational, non-financial and financial performance, in terms of both organisation
and design of purchasing models and the ability to deploy them in-store.
Risk management
Adapting business models to customer expectations is a major challenge for the development and design teams, which is why the Group leverages
a forward-looking approach, ongoing assessments and constant monitoring. For example, effective processes driving the food transition for all
programme enable the economic model to be adapted to new consumer demands, such as the development of food safety standards and quality,
and responsible purchasing and production. The social impacts of Carrefour’s business operations are also taken into account to adjust its economic
model, for example by limiting food waste, recycling waste and reducing greenhouse gases.
Risk management
Partner risks are analysed when considering a new partnership or monitoring existing ones. As part of the implementation and execution of franchise
and partnership agreements, support documentation for business operations is provided to franchisees and partners. This documentation covers
the Group’s business and financial methods, its quality, health and safety standards, the Ethics Charter and the Graphic Charter. The documents
are periodically updated, and franchise advisers offer support for their implementation through regular visits to partners and franchisees. Purchasing
partnerships for the largest national brands are also entered into with other market operators, such as Système U, Tesco, Fnac-Darty and Cora.
They are monitored specifically and appropriate protection measures taken.
Risk management
Given that purchasing is a key way of standing out from the competition, the Group’s organisation is adapted to its international scope while
capitalising on its knowledge of local markets and relying on entities dedicated to sourcing new products. Risk mapping of the purchasing function
describes the purchasing processes, identifies purchasing risks and classifies identified risks in terms of source, position in the process, cause and
effect.
Particular care is paid to the risk of disruption in the supply chain. This involves identifying a warehouse’s exposure to risk, classifying and quantifying
the potential impacts of the risk of disruption in the supply chain and prioritising investment to improve the level of control.
Over a number of years, the Group has developed expertise which ensure the flow of supplies to its stores, relying on integrated logistics platforms
and service providers, along with business continuity plans in the event of an unusual situation.
In response to the radical changes in the sector driven by changing consumer behaviour and available technologies, Carrefour has launched a
cross-functional programme in France called “Appro 360°”, which aims to increase supply chain agility. The interchange between technology and
processes in the programme has strengthened the supply chain’s ability to adapt to fast, far-reaching changes driven by the Group’s strategic
objectives set out in the “Carrefour 2022” plan. The programme’s objectives are to maximise service level, optimise flows and control costs.
This has resulted in shorter distances between the warehouse and the store, fleet sharing, optimised delivery rounds and loading time gains, lower
inventory levels because of a reduced number of stocking locations and improved in-store service rates.
Risk management
An appropriate crisis management system in case of a major event is an important part of limiting its potentially significant negative consequences,
especially with regard to business continuity.
The Group’s risk prevention organisation ensures the personal safety of employees and customers and the security of property at all Group sites by
using human, technical and organisational resources appropriate to the risks. Risks associated with the safety and security of property and people
are mapped.
A detailed assessment of health risks is performed at Group level for local and expatriate employees.
Coordinated by Executive Management and the country Safety departments, each country has a specific organisation and tools to report information
quickly in the event of an incident and deploy the appropriate resources.
Risk management
The Group is implementing a number of measures to ensure continuity of operations and the protection of sensitive data. Data confidentiality,
integrity, availability and traceability are guaranteed by an information management system.
An information management system designed to ensure internal data confidentiality, integrity, availability and traceability covers the following risks:
fraudulent use of data and systems, racist, sexual or offensive statements, discrimination or harassment, illegal downloads, illegal use of equipment,
software or data, publication of confidential information, misuse of passwords, and use of personal, identifiable information.
Risk management
Under the responsibility and coordination of the Executive Director for Assets, Development and Innovation, who is notably in charge of all Carrefour
Property activities, each country implements an asset control and valuation policy tailored to its strategy. Activities are monitored and optimised
using tools such as software, external reports and analyses.
Cargo Property Assets (previously Cargo Property Holding), a property company dedicated to the Group’s supply chain assets in France, ensures
control over the logistics centres, which are key property assets. Cargo is 32%-owned by the Group alongside co-investors and holds around one-
third of the Group’s distribution centres in France. The Group manages and is the sole tenant of Cargo.
Risk management
During the past several years, the Group has developed a global monitoring system and country-specific risk mapping which take into account a
number of indicators. These tools are regularly updated and provide a forward-looking method of tracking. They are updated annually and provide
forward-looking monthly tracking, in order to support decision making in the context of the Group’s international growth. For example, some countries
where the Group operates through franchise partners, as in the Middle East and Tunisia, are experiencing social tensions or political instability,
leading the Group to carefully monitor these developing situations over the long term. All proposals or plans to operate in a new country and all
security risks related to stores in a particular geographic area are carefully reviewed and assessed to ensure an insightful decision-making process.
In addition, analyses are carried out at local level to assess the strength of the Group's foothold in its host communities (see Section 2.3.8).
Risk management
Due to the nature of its activities, the Group pays particular attention to monitoring and taking into account the changing economic climate and future
outlooks in the countries where it operates, specifically through a number of studies and exchanges. Given the interdependence of activities and the
price sensitivity for Group customers, changes in market prices are also taken into consideration at various levels, especially purchases of goods
and general and administrative expenses. The Group pays close attention to the economic climate in its countries of operation and more particularly
in certain emerging countries, such as in Latin America.
Key economic indicators in countries where the Group operates are tracked monthly (particularly country risk) and taken into account in both strategic
planning and project assessments. Specific reports drawn up by specialists in certain geographical areas are used to support the analysis work. As
part of this tracking process, the Group may call upon a panel of experts and on specialist studies dealing with commodity-related issues. It leverages
effective tools to obtain a forward-looking view of food and non-food commodity prices.
Risk management
The changing competitive environment is monitored and addressed at country level, and handled at Group level by Executive Management and
Strategic Management, in an effort to foresee and identify growth opportunities or decisions to be made.
Liquidity risk
Description of the risk
A schedule of borrowings by maturity and detailed information on liquidity risk appear in Note 14.7 to the Consolidated Financial Statements.
Liquidity risk is the risk that Carrefour will be unable to settle its financial liabilities when they fall due.
The Group manages its liquidity risk by ensuring, to the extent possible, that it has sufficient liquid assets at all times to settle its liabilities when they
fall due, whatever the market conditions.
Interest-rate risk
Description of the risk
Interest rate risk is the risk of a change in interest rates leading to an increase in the Group’s net borrowing costs. Detailed information on interest-
rate risk appears in Note 14.7 to the Consolidated Financial Statements.
Risk management
Interest rate risk is managed at headquarters level by Corporate Treasury and Financing, which reports monthly to an Interest Rate Risk Committee
responsible for recommending hedging strategies and methods to be used to limit interest rate exposures and optimise borrowing costs.
Long-term borrowings are generally at fixed rates of interest and do not therefore give rise to any exposure to rising interest rates.
Various financial instruments are nonetheless used to hedge borrowings against the risk of changes in interest rates. These are mainly basic swaps
and options. Hedge accounting is applied in all cases where the required criteria are met.
Variable rate long-term borrowings are hedged using financial instruments that cap rises in interest rates over all or part of the life of the debt.
Currency risk
Detailed information on currency risk appears in Note 14.7 to the Consolidated Financial Statements.
Risk management
Currency transaction risk: The Group conducts its international operations through subsidiaries that operate almost exclusively in their home
country, such that purchases and sales are denominated in local currency. As a result, the Group’s exposure to currency risk on commercial
transactions is naturally limited and mainly concerns imported products. Currency risk related to import transactions (i.e., goods purchases billed in
foreign currencies) covered by firm commitments is hedged by forward purchases of the payment currency. Currency hedges are generally for
periods of less than 12 months.
Currency translation risk: The translation risk on foreign operations outside the eurozone mainly concerns the Brazilian real, Argentine peso and
Chinese renminbi. For example, changes in the average exchange rates used in 2018 compared with those for 2017 decreased consolidated net
sales by 4,960 million euros, or 6.5%, and recurring operating income by 121 million euros, or 6.4%.
Lastly, when financing is arranged locally, it is generally denominated in local currency.
Credit risk
1) Trade receivables
Description of the risk
Trade receivables correspond mainly to rebates and commercial income receivable from suppliers, amounts receivable from franchisees in respect
of delivered goods and franchise fees, shopping mall rental receivables and receivables relating to the property development business. Trade
receivables are measured at amortised cost (see Note 14 to the Consolidated Financial Statements). They are recognised for the initial invoice
amount, less a loss allowance recorded in accordance with the simplified impairment model based on expected losses defined in IFRS 9 – Financial
Instruments (see Note 14.7.4 to the Consolidated Financial Statements).
Risk management
At December 31, 2018, trade receivables net of impairment (excluding receivables from suppliers) amounted to 1,424 million euros (see Note 7.4.3
to the Consolidated Financial Statements). At that date, past due receivables amounted to a net 188 million euros, of which 51 million euros were
over 90 days past due (3.6% of total trade receivables net of impairment excluding receivables from suppliers). No impairment has been recognised
for these receivables as the Group considers that the risk of non-recovery is very limited.
Risk management
Counterparty risk monitoring procedures are implemented to track counterparties’ direct investment strategies and the underlying assets held by
mutual funds in which the Group invests. The Group’s objective is to never hold more than 5% of a fund’s units and the fund’s total net assets must
be more than 250 million euros.
Equity risk
Description of the risk
Equity risk corresponds to the potential impact of changes in the Carrefour share price on its share-based payment commitments and on treasury
shares.
Risk management
Group policy is to avoid taking positions on its own shares or those of other companies, except in response to particular circumstances or needs.
Marketable securities portfolios and other financial investments held by the Group consist for the most part of money market instruments that do not
expose the Group to any material equity risk.
From time to time, the Group buys back its shares on the market or purchases call options on its shares.
These shares are mainly used to cover stock option and performance share plans. At December 31, 2018, shares held by the Group covered its
total commitments under past and existing plans.
The equity risk associated with the conversion options embedded in the bonds issued by the Group in June 2017 and March 2018 is fully hedged
by symmetrical options contracted with banks. The derivatives are recognised as assets and liabilities in the statement of financial position in a total
amount of 31.4 million euros.
Risk management
The organisation and procedures for financial and accounting matters are set forth in the Group’s Reference Guide to Corporate Rules, which applies
to all subsidiaries.
The procedures and tools used are intended to control financial flows in all countries where the Group operates, to verify that budgets and forecasts
best reflect observed trends, to prepare a realistic estimate of future performance, and to ensure that the Consolidated Financial Statements provide
a true and fair view of the Group’s financial position and results.
Liquidity risk
A schedule of borrowings by maturity and detailed information on liquidity risk appear in Note 14.7 to the Consolidated Financial Statements.
Description of the risk
Liquidity risk, or the risk of being unable to settle financial liabilities when they fall due, is monitored by Carrefour Banque within the framework of an
Executive Management-approved liquidity strategy that is part of the Group’s overall strategy. Carrefour Banque’s refinancing situation and its access
to sufficient liquid assets are assessed based on internal standards, early warning indicators and regulatory ratios.
Risk management
The objectives of liquidity risk management are to:
ensure that refinancing needs are met, based on monthly assessments of projected cash surpluses or shortfalls over a three-year rolling period
performed by comparing static forecasts of committed financing facilities with dynamic lending forecasts;
achieve compliance with the Basel III liquidity coverage ratios, through a process that is designed to deliver a sustainable improvement in asset
quality by investing in a dedicated fund eligible for inclusion in the ratio calculation and thus extending the maturity of liabilities in order to improve
the net stable funding ratio;
diversify refinancing sources to include confirmed bank lines of credit, bond issues, securitisation programmes, money market issues and
customer deposits. During 2018, Carrefour Banque carried out a 400 million-euro four-year bond issue in addition to regular issuance of negotiable
debt securities.
The master trust structure for revolving credit securitisation enables dynamic, agile management of the series of asset-backed securities issued by
the securitisation fund. A 300 million-euro series is currently being issued under the Master Credit Card Pass securitisation programme.
In November 2014, Carrefour Banque secured its refinancing sources by rolling over its 750 million-euro five-year syndicated line of credit and
negotiating two one-year extension options. The second extension option was exercised in 2016, extending the facility’s maturity to November 2021.
Liquidity back-up, including confirmed lines of credit, stands at 2.1 billion euros.
Risk management
Carrefour Banque has a risk management procedure and a map of processes for managing credit risk.
Carrefour Banque has defined materiality thresholds for incidents uncovered through internal control procedures.
To protect against default by borrowers, the Group’s finance companies have set up systems to check the quality and repayment capacity of their
customers. These include:
decision-making aids such as credit scoring, budget simulation and credit history checking tools which establish the credit quality of the
counterparty;
interrogation of positive and negative credit history databases, where they exist;
active management of collection processes;
credit risk monitoring and control systems.
Within each credit company, a Credit Risk department is responsible for all of these processes, and the Board of Directors receives copies of all
Credit Risk Management Committee reports.
At Group level, a Credit Risk - Europe unit has been set up to oversee and implement credit risk management policies in France, Spain, Belgium
and Italy.
Detailed information on the Group’s exposure to credit risk appears in Note 14.7 to the Consolidated Financial Statements (detailed table provided).
4.8.3 Insurance
For the past several years, the Group’s insurance strategy has focused on providing the best possible protection for people and assets.
Worldwide programmes
The Carrefour group has implemented comprehensive, worldwide programmes (especially for property damage and business interruption and civil
liability policies) that provide uniform coverage for all formats (consolidated stores only), wherever the stores are located (except in countries where
regulations prohibit this type of arrangement).
Thus, the Group has a solid understanding of the limits of the coverage in place, and the certainty that its insurance programmes have been taken
out with leading global insurers.
Prevention policy
The Group’s insurance policy requires that risk prevention measures be monitored by the Group Risks & Compliance department in coordination
with local Group liaisons in each country, as well as with the Group’s insurers.
Mandatory insurance
The Group takes out different insurance programmes in accordance with local law, including:
auto insurance;
construction insurance (building defects, ten-year builder liability, etc.);
professional liability insurance related to its activities:
banking,
insurance,
travel.
Scope
The internal control system presented in this report is implemented in the Company and all its fully-consolidated subsidiaries, and covers a larger
scope than the procedures relating to the preparation and processing of accounting and financial information.
B. At country level
The Country Executive Director is responsible for setting up, running and supervising the internal control system at country level. The country
internal controllers support the Country Executive Director by:
helping to define the country internal control system, particularly by ensuring that the Group internal control framework is properly rolled out;
ensuring that procedures defined by the country and the Group are properly applied.
Basic earnings per share (in euros) 2018 2017 restated % change
Loss from continuing operations per share (0.34) (0.34) (0.2)%
Loss from discontinued operations per share (0.39) (0.37) 6.4%
Basic loss per share – Group share (0.73) (0.70) 3.2%
Diluted earnings per share (in euros) 2018 2017 restated % change
Diluted loss from continuing operations per share (0.34) (0.34) (0.2)%
Diluted loss from discontinued operations per share (0.39) (0.37) 6.4%
Diluted loss per share – Group share (0.73) (0.70) 3.2%
(1) The available-for-sale financial assets category no longer exists under IFRS 9 – Financial Instruments, applied by the Group with effect from January 1, 2018 (see
Note 4).
(2) Changes in the fair value of debt instruments classified as financial assets at fair value through other comprehensive income as from January 1, 2018 pursuant to IFRS 9,
(3) In both 2018 and 2017, exchange differences on translating foreign operations mainly reflect the decline of the Brazilian real and, to a lesser extent, the Argentine peso.
(4) Changes in the fair value of equity instruments (shares and other securities) which the Group has irrevocably elected to classify as financial assets at fair value through
other comprehensive income as from January 1, 2018 pursuant to IFRS 9, with no subsequent reclassification to profit or loss (see Note 4).
(3) Acquisitions mostly include operational investments in fast-growing formats, the Group’s digitisation and the roll-out of a leading omni-channel offering; the decrease in
this caption reflects the Group’s investment strategy, as well as the oversight measures that were put in place in second-half 2017 and were fully operational in 2018
(4) This item mainly relates to the acquisition of a minority interest in the share capital of Showroomprivé and a majority interest in the capital of Quitoque (transactions
described in Note 3.2.1). In 2017, it chiefly related to the acquisition of stores in Spain.
(5) In 2018, proceeds from share issues to non-controlling interests mainly correspond to the share capital of Cargo Property Assets (formerly Cargo Property Holding)
subscribed and paid up during the period by third-party investors (non-controlling interests). In 2017, in addition to Cargo Property Assets, this item corresponded mainly to
the cash capital increase carried out by Grupo Carrefour Brasil in connection with the July 2017 IPO, as described in Note 3.2.2 (primary offering of 840 million euros, net
(6) Changes in this item in 2017 primarily result from the sale by the Group of 139,834,428 Grupo Carrefour Brasil shares in connection with the secondary offering of the
IPO for the Group’s Brazilian operations and the exercise of the call option by Península (see Note 3.2.2).
(7) Dividends paid by Carrefour (parent company) correspond to cash dividends paid to shareholders who chose not to reinvest their dividends (see Note 2.4).
(8) Note 14.2 provides a breakdown of total borrowings. Changes in liabilities arising from financing activities are detailed in Note 14.4.
– the effective portion of changes in the fair value of cash flow hedges;
– the financial asset fair value reserve (changes in the fair value of financial assets carried at fair value through other comprehensive income).
(3) The 2016 dividend, totalling 523 million euros, was paid:
– in new shares for 372 million euros (corresponding to the aggregate par value of the new shares for 46 million euros and premiums for 326 million euros).
Dividends paid to non-controlling interests in 2017 for 103 million euros mainly concern Spanish, French and Brazilian subsidiaries.
– in new shares for 200 million euros (corresponding to the aggregate par value of the new shares for 36 million euros and premiums for 164 million euros).
Dividends paid to non-controlling interests in 2018 came to 90 million euros and related mainly to the Group’s Brazilian and French subsidiaries.
(4) Changes in capital and additional paid-in capital and other movements in 2017 mainly reflect the July 2017 Grupo Carrefour Brasil IPO: the primary offering of 840 million
euros generated (i) an increase of 370 million euros in non-controlling interests and (ii) an increase of 470 million euros in shareholders’ equity, Group share corresponding
to the dilution gain; Carrefour’s sale of 139,834,428 Grupo Carrefour Brasil shares within the context of the secondary offering and following Península’s exercise of its
call option resulted in (i) a 274 million-euro disposal gain net of tax and directly related selling costs recorded within “Shareholders’ equity, Group share” and (ii) the
Changes in capital and additional paid-in capital in 2018 primarily concern the share issue by Cargo Property Assets to third-party investors (non-controlling interests) in
(5) The Group applied IFRS 9 – Financial Instruments for the first time as of January 1, 2018. In light of the Group’s chosen transition approach, comparative data have not
been restated and the impact (net of tax) resulting from the first-time application of IFRS 9 (detailed in Note 4) has been recognised in equity at January 1, 2018.
(6) The Group applied IAS 29 – Financial Reporting in Hyperinflationary Economies for the first time as of January 1, 2018. In accordance with IAS 21, comparative data
have not been restated and the impact (net of tax) resulting from the first-time application of IAS 21 (detailed in Note 4) has been recognised in equity at January 1, 2018.
The Group is currently analysing the potential impacts of applying IFRS 17. It does not expect the application of the other standards, amendments
or interpretations to have a material impact on its Consolidated Financial Statements.
Acquisition of Quitoque
On March 15, 2018, Carrefour acquired a majority stake in the Quitoque start-up, a leading player in home-delivered meal kits and a French pioneer
in the Foodtech industry. In accordance with IFRS 3 – Business Combinations, the Group measured the assets acquired and liabilities assumed at
the acquisition date. Based on these provisional measurements, provisional goodwill in the amount of 36 million euros was recognised in the
consolidated statement of financial position as of December 31, 2018 in respect of the Quitoque acquisition. The revenue and profit attributable to
Quitoque recorded in the consolidated statement of comprehensive income for the period was not material.
This acquisition enables Carrefour to expand its e-commerce offer in the food segment. It is consistent with the Group’s aim of building a benchmark
omni-channel model and becoming the world leader in the food transition for all.
Acquisition of So.bio
On July 18, 2018, Carrefour announced that it had acquired So.bio, a chain of retail stores specialised in organic products. As of December 31,
2018, this acquisition remained subject to approval by the relevant anti-trust authorities.
So.bio currently has ten stores in southwest France.
ASSETS
IAS 39 IFRS 9
Carrying Carrying
amount amount
Category Category
(in millions of (in millions of
Financial assets at January 1, 2018 euros) euros)(1)
Investments in non-consolidated Available-for-sale financial assets (FVOCI/Historical FVOCI (option) 78
101
companies cost) FVPL 23
FVOCI 249
425
Other long-term investments Available-for-sale financial assets (FVOCI) FVPL 177
Loans and receivables (amortised cost) 841 Amortised cost 841
Other non-current financial assets 1,367 1,367
Consumer credit granted by the
financial services companies Loans and receivables (amortised cost) 6,321 Amortised cost 6,321
Trade receivables Loans and receivables (amortised cost) 2,750 Amortised cost 2,750
Available-for-sale financial assets (FVOCI) 70 FVOCI 70
Loans and receivables (amortised cost) 64 Amortised cost 64
Derivative instruments - FVPL 11 FVPL 11
Other current financial assets Derivative instruments - Cash flow hedges (FVOCI) 16 FVOCI 16
Other assets(2) Loans and receivables (amortised cost) 506 Amortised cost 506
Cash and cash equivalents Fair value 3,593 FVPL 3,593
ASSETS 14,698 14,698
(1) Excluding the impact of IFRS 9, topics 2 and 3 set out below.
More detailed information on the Group’s approach to classifying and measuring its financial assets is provided in Note 14 (see the section on
accounting policies along with 14.1 “Financial instruments by category”).
The only impact of IFRS 9 on the Group’s financial liabilities results from the change in the accounting for financial liabilities with renegotiated terms
(when the renegotiated terms are not considered substantial): IFRS 9 requires the original effective interest rate to be applied and the impact of the
renegotiated terms to be recognised immediately in profit or loss. This change, applied retrospectively to bonds renegotiated in 2014, is reflected in
the Group’s Consolidated Financial Statements by:
a 17 million-euro increase in consolidated reserves (excluding deferred taxes) at January 1, 2018;
additional annual interest expense of approximately 3.6 million euros over the residual term of the renegotiated liabilities (i.e., up to 2022).
IFRS 5
(in millions of euros) 2017 published reclassification 2017 restated
Net sales 78,897 (582) 78,315
Loyalty program costs (644) 2 (642)
Net sales net of loyalty program costs 78,253 (580) 77,673
Other revenue 2,722 (3) 2,719
Total revenue 80,975 (583) 80,392
Cost of sales (62,760) 449 (62,311)
Gross margin from recurring operations 18,214 (133) 18,081
Sales, general and administrative expenses, depreciation and amortisation (16,209) 263 (15,946)
Recurring operating income 2,006 130 2,135
Net income from equity-accounted companies 4 - 4
Recurring operating income after net income from equity-accounted
companies 2,010 130 2,139
Non-recurring income and expenses, net (1,310) 148 (1,162)
Operating income 700 278 978
Finance costs and other financial income and expenses, net (445) - (445)
Finance costs, net (317) - (317)
Other financial income and expenses, net (128) - (128)
Income before taxes 255 278 533
Income tax expense (618) - (618)
Net loss from continuing operations (363) 278 (85)
Net income/(loss) from discontinued operations 1 (278) (277)
NET INCOME/(LOSS) FOR THE PERIOD (362) - (362)
Group share (531) - (531)
of which net loss from continuing operations (531) 278 (254)
of which net income/(loss) from discontinued operations 1 (278) (277)
Attributable to non-controlling interests 169 - 169
Latin Global
2018 (in millions of euros) Total France Europe America Asia Functions
Net sales 76,000 35,615 21,076 13,809 5,501 0
Other revenue 2,656 843 695 756 298 65
Recurring operating income before depreciation and
amortisation 3,469 1,095 1,122 983 204 64
Recurring operating income(1) 1,905 466 664 767 45 (38)
Capital expenditure 1,611 537 385 429 94 166
Depreciation and amortisation expense(2) (1,564) (629) (458) (216) (159) (102)
Latin Global
2017 restated (in millions of euros) Total France Europe America Asia Functions
Net sales 78,315 35,253 21,112 16,042 5,907 0
Other revenue 2,719 868 692 802 300 56
Recurring operating income before depreciation and
amortisation 3,735 1,482 1,136 936 182 (2)
Recurring operating income 2,135 822 677 715 4 (83)
Capital expenditure 2,369 894 636 526 164 150
Depreciation and amortisation expense(2) (1,599) (661) (459) (221) (178) (81)
(1) Recurring operating income in Latin America takes into account a 33 million-euro negative adjustment resulting from the application of IAS 29 in Argentina as from
January 1, 2018.
(2) Including the depreciation and amortisation relating to logistics equipment included in the cost of sales.
Latin Global
December 31, 2018 (in millions of euros) Total France Europe America Asia Functions
Assets
Goodwill 7,983 4,901 2,508 467 107 1
Other intangible assets 1,461 268 503 161 34 495
Property and equipment 12,637 5,448 3,642 2,677 863 7
Investment property 389 9 137 120 122 -
Other segment assets 16,999 8,743 3,135 3,633 863 626
Total segment assets 39,470 19,370 9,925 7,057 1,989 1,129
Unallocated assets 7,908
TOTAL ASSETS 47,378
Liabilities (excluding equity)
Segment liabilities 23,756 11,195 5,553 4,440 2,085 483
Unallocated liabilities 12,336
TOTAL LIABILITIES 36,092
Latin Global
December 31, 2017 (in millions of euros) Total France Europe America Asia Functions
Assets
Goodwill 7,977 4,814 2,518 537 106 1
Other intangible assets 1,364 275 451 157 27 453
Property and equipment 13,097 5,670 3,896 2,574 946 11
Investment property 410 4 160 120 126 -
Other segment assets 17,839 9,158 3,402 3,808 923 549
Total segment assets 40,686 19,921 10,427 7,195 2,128 1,015
Unallocated assets 7,127
TOTAL ASSETS 47,813
Liabilities (excluding equity)
Segment liabilities 24,655 11,658 5,781 4,616 2,137 462
Unallocated liabilities 11,000
TOTAL LIABILITIES 35,654
Excluding the currency effect, 2018 net sales amounted to 80,960 million euros versus 78,315 million euros the previous year, an increase of 3.4%.
Changes in exchange rates reduced net sales by 4,960 million in 2018, and for the most part concerned the Latin America segment.
(2) Corresponding to the sale price of properties developed by the Group for resale. After deducting development costs recorded in “Cost of sales”, the property development
margin amounted to 30 million euros in 2018 (including 13 million euros from the specialty leasing business) compared with 20 million euros the previous year.
(3) Other revenue includes sales commissions, commissions received from suppliers, revenue from ticket/travel agency sales and in-store advertising fees.
Accounting principles
Recurring operating income is an earnings indicator disclosed in order to help users of the Consolidated Financial Statements to better
understand the Group’s underlying operating performance. It corresponds to operating income (defined as earnings from continuing
operations before interest and tax) before material items that are unusual in terms of their nature and frequency and are reported under “Non-
recurring income” or “Non-recurring expenses” (see Note 7.3).
Accounting principles
Cost of sales corresponds to the cost of purchases net of rebates and commercial income, changes in inventory (including impairments),
discounting revenue, exchange gains and losses on goods purchases, logistics costs and other costs (primarily the cost of products sold by
the financial services companies and the production costs of the property development business).
Rebates are calculated based on immediate or deferred discount rates on purchases, as specified in the contractual terms negotiated each
year. Rebates can be:
7.2.2 Sales, general and administrative expenses, and depreciation and amortisation
Restructuring costs
Restructuring costs recognised in 2018 resulted from plans to streamline operating structures launched as part of the first pillar of the transformation
plan described in Note 2.1. The expense included in non-recurring items relates chiefly to severance paid or payable within the scope of:
the voluntary redundancy plan implemented in France and affecting 2,400 jobs;
restructuring measures launched in Belgium and affecting around 1,000 employees;
the voluntary redundancy plan implemented in Argentina and affecting some 1,000 jobs.
A provision was accrued at June 30, 2018 for the amount which the Group estimates it will have to pay in severance in respect of these restructuring
plans.
The expense recognised in 2017 primarily included the costs relating to the overhaul of supply chains in France as well as the plan to integrate the
hypermarkets acquired in Spain.
Working capital, like all other items in the statement of cash flows, is translated at the average exchange rate for the period (except for working
capital in Argentina, see Note 4).
7.4.2 Inventories
Accounting principles
In accordance with IAS 2 – Inventories, goods inventories and the inventories of the property development business (properties under construction)
are measured at the lower of cost and net realisable value.
The cost of goods inventories corresponds to the latest purchase price plus all related expenses. This method is appropriate given the rapid inventory
turnover, and the resulting values are close to those obtained by the first in-first out (FIFO) method. The cost of goods inventories includes all
components of the purchase cost of goods sold (with the exception of exchange gains and losses) and takes into account the rebates and commercial
income negotiated with suppliers.
Net realisable value corresponds to the estimated selling price in the ordinary course of business, less the estimated additional costs necessary to
make the sale.
Accounting principles
Trade receivables correspond for the most part to rebates and commercial income receivable from suppliers, amounts receivable from franchisees,
shopping mall rental receivables and receivables of the property development business.
Trade receivables are measured at amortised cost (see Note 14). They are recognised for the initial invoice amount, less a loss allowance recorded
in accordance with the simplified impairment model based on expected losses defined in IFRS 9 – Financial Instruments (see Note 14.7.4).
Certain Group subsidiaries operate receivables discounting programmes. In accordance with IFRS 9, receivables sold under these programmes are
derecognised when substantially all of the related risks and rewards (i.e., mainly default, late payment and dilution risks) are transferred to the buyer.
Accounting principles
Suppliers and other creditors correspond primarily to trade payables. They also include payables that suppliers have transferred to financial
institutions as part of reverse factoring programmes. These programmes are set up by the Group to enable suppliers to receive payment for the
Group’s purchases in advance of the normal payment terms. The Group’s analyses show that there is no substantial difference in the nature or
terms of the liabilities before and after factoring (the payment and other contractual terms are unchanged) and they therefore continue to be classified
as trade payables.
Suppliers and other creditors as of December 31, 2018 included reverse factored payables for a total of 2.0 billion euros (December 31, 2017:
1.9 billion euros).
Suppliers and other creditors are classified in the category of “Financial liabilities measured at amortised cost”, as defined in IFRS 9 – Financial
Instruments (see Note 14). They are initially recognised at their nominal amount, which represents a reasonable estimate of fair value in light of their
short maturities.
Tax receivables
demonstrate that substantially all the risks and rewards of ownership of the tax credits had been transferred to the buyer and the credits were therefore de recognised by
analogy with the principle in IFRS 9 concerning the derecognition of financial assets. The cost of this discounting transaction amounted to 1.5 million euros (2017: 1.6 million
Tax payables
of January 1, 2018.
(2) These correspond to tax credits expected to be collected in over 12 months. At December 31, 2018, the total amount of the Brazilian ICMS tax credits, mainly attributable
to favourable rulings handed down by the Brazilian Supreme Court, represented 713 million euros. This amount has been written down by 374 million euros (resulting in a
net receivable of 339 million euros) to reflect the market value of the tax credits, which the Company intends to use over a period not exceeding three years. In the income
statement, the total amount of the Brazilian ICMS tax credits for the year are recorded in recurring operating income and those for prior years are recorded in non-recurring
income.
December 31, 2017 to 6,028 million euros as of January 1, 2018. The 293 million-euro decrease concerned short-term financing for 233 million euros and long-term financing
Accounting principles
The impairment model for consumer credit granted by the financial services companies was adjusted in line with the requirements of IFRS 9 –
Financial Instruments using a two-step process:
classification of outstanding loans in uniform risk categories based on the probability of default; then
modelling of the probability of credit losses over a 12-month period or at maturity (representing the remaining term of the financial instrument),
based on the classification of the instrument.
Classification of consumer credit
Consumer credit is divided into three categories, based on an analysis of potentially significant increases in credit risk:
category 1: credit granted to consumers whose credit risk has not significantly increased since the credit was initially recognised;
category 2: credit granted to consumers whose financial situation has worsened (significant increase in credit risk) since the credit was initially
recognised but for which no objective evidence of impairment (default) of a specific credit has yet been identified;
category 3: credit granted to consumers in default.
(i) Significant increase in credit risk
The main criteria applied by the Group to identify a significant increase in credit risk since initial recognition and where necessary, to reclassify
category 1 assets within category 2, are as follows:
late payment criterion: payments more than 30 days past due (non-rebuttable presumption under IFRS 9);
renegotiation criterion: credit with renegotiated terms with payment less than 30 days past due.
The Group determines whether there has been a significant increase in credit risk for each of its contracts and applies the “contagion” principle,
whereby reclassification of a given credit granted to a consumer will lead to all credit granted to that consumer to be reclassified accordingly.
(ii) Objective evidence of impairment (default)
Carrefour considers that there is objective evidence of impairment if any of the following criteria are met:
late payment criterion: payments more than 90 days past due (non-rebuttable presumption under IFRS 9);
renegotiation criterion: credit with renegotiated terms (not considered substantial) owing to significant difficulties of the debtor, with payment more
than 30 days past due;
litigation criterion: credit in dispute at the reporting date;
“contagion” criterion: if a given credit granted to a consumer meets the aforementioned criteria, all credit granted to that consumer is also deemed
to meet those criteria.
The consumer credit concerned is classified in category 3.
To protect against default by borrowers, the Group’s financial services companies have set up systems to check the quality and repayment capacity
of their customers. These include:
decision-making aids such as credit scoring applications, income/debt simulation tools and credit history checking procedures;
interrogation of positive and negative credit history databases, where they exist;
active management of collection processes;
credit risk monitoring and control systems.
Within each credit company, a Credit Risk department is responsible for all of these processes, and the Board of Directors receives copies of all
Credit Risk Management Committee reports.
At Group level, a Credit Risk – Europe unit has been set up to oversee and implement credit risk management policies in France, Spain, Belgium
and Italy.
As of December 31, 2018, 68% of the gross value of consumer credit granted by the financial services companies was classified in category 1, 18%
in category 2 and 14% in category 3.
Goodwill, which constitutes the main intangible asset, is reported separately from other intangible assets in the statement of financial position.
8.1.1 Goodwill
The recoverable amount of goodwill is generally monitored at the level of the cash-generating units (CGUs) represented by the countries in which
the Group conducts its business through its integrated store networks.
The total carrying amount of goodwill as of December 31, 2018 was very close to the year-earlier amount (6 million euros higher), because goodwill
recognised on acquisitions for the year in France was offset by negative translation adjustments, primarily on goodwill recognised in Brazil and
Argentina.
Accounting principles
Property and equipment mainly comprise buildings, store fixtures and fittings and land.
Initial recognition
In accordance with IAS 16 – Property, Plant and Equipment, land, buildings and equipment are stated at cost less accumulated depreciation and
any accumulated impairment losses. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised as part of the cost of the asset. Qualifying assets are defined in IAS 23 – Borrowing Costs as assets that necessarily take
a substantial period of time to get ready for their intended use or sale, corresponding in the Group’s case to investment properties, hypermarkets
and supermarkets for which the construction period exceeds one year.
Assets under construction are recognised at cost less any identified impairment losses.
Useful lives
Depreciation of property and equipment begins when the asset is available for use and ends when the asset is sold, scrapped or reclassified as
held for sale in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations.
Land is not depreciated. Other property and equipment, or each significant part of an item of property or equipment, are depreciated by the
straight-line method over the following estimated useful lives:
Building 40 years
Buildings Site improvements 10 to 20 years
Car parks 6 to 10 years
Equipment, fixtures and fittings 4 to 8 years
Other 3 to 10 years
In light of the nature of its business, the Group considers that its property and equipment have no residual value.
Depreciation periods are reviewed at each year-end and, where appropriate, adjusted prospectively in accordance with IAS 8 – Accounting
Policies, Changes in Accounting Estimates and Errors.
Leases
New long-term leases – particularly property leases – are analysed in accordance with IAS 17 – Leases to determine whether they represent
finance leases, i.e., leases that transfer substantially all the risks and rewards incidental to ownership of the asset to the lessee, or operating
leases. For property leases, the analysis is performed separately for the land on the one hand and the building on the other.
Finance leases are accounted for as follows:
the leased assets are recognised in the statement of financial position at fair value or, if lower, the present value of the minimum lease
payments. They are depreciated over their useful life, in the same way as assets owned outright, or, if shorter, over the lease term;
the liability for the future lease payments is recognised in the statement of financial position under “Long-term borrowings” and “Short-term
borrowings” (see Note 14.2.1);
lease payments are apportioned between the finance charge and the reduction of the outstanding liability.
Leases that do not transfer substantially all the risks and rewards incidental to ownership of the asset to the lessee are classified as operating
leases. Operating lease payments are recognised in the income statement (under “recurring operating expenses”) on a straight-line basis over
the life of the lease (see Note 7.2.2).
develop the store network, along with investments made by Cargo Property, the real estate entity dedicated to logistics that was created in 2016. The decrease in acquisitions
reflects the changes in the Group’s investment strategy and the more selective approach adopted during the second half of 2017 and the whole of 2018.
8.3.1.1 Countries for which the recoverable amount of goodwill was close to the carrying amount
In the impairment tests carried out at December 31, 2018, the recoverable amount of the Italy and Poland CGUs was found to be close to – but still
greater than – the carrying amount. Consequently, no impairment was recognised but sensitivity analyses were performed for both countries.
Italy
An impairment loss of 700 million euros was recorded against Italian goodwill in 2017 to reflect the significant decline in the value in use of the
Group’s operations in this country. The indications of impairment prompted the Group to carry out an in-depth analysis to determine the Italian
operations’ fair value. This analysis adopted a multi-criteria valuation approach which took into account multiples observed for comparable companies
in the retail sector in Europe, and the market value of Italian real estate assets, determined based on independent appraisals.
The multi-criteria approach was also used to test Italian goodwill for impairment at December 31, 2018. The resulting fair value represented Executive
Management’s best estimate and confirmed that the 251 million-euro carrying amount of goodwill at December 31, 2018 was reasonable.
A 50 bp decrease in the EBITDA margin (recurring operating income before depreciation and amortisation as a proportion of net sales) assumption
used to determine the terminal value would not have changed the conclusions of the impairment test.
2018 2017
After-tax discount Perpetual After-tax discount Perpetual
Country rate growth rate rate growth rate
France 5.9% 1.6% 6.3% 1.8%
Spain 6.5% 2.1% 6.8% 2.1%
Italy 6.7% 1.7% 6.7% 1.7%
Belgium 6.0% 1.8% 6.2% 1.8%
Poland 7.9% 2.7% 8.4% 3.0%
Romania 9.4% 3.1% 9.0% 2.6%
Brazil 12.5% 4.6% 12.3% 4.4%
Argentina 25.3% 13.3% 16.2% 7.4%
China 9.2% 2.3% 9.7% 2.4%
Taiwan 6.8% 1.8% 7.2% 1.9%
Rental revenue generated by investment property, reported in the income statement under “Other revenue”, totalled 73.8 million euros in 2018 (2017:
76.6 million euros). Operating costs directly attributable to the properties amounted to 16.0 million euros in 2018 (2017: 12.3 million euros).
The estimated fair value of investment property at December 31, 2018 was 982 million euros (December 31, 2017: 988 million euros). Changes in
fair values in the various countries were not individually material.
Lease commitments at December 31, 2018 (in millions of euros) Total Within one year In one to five years Beyond five years
Minimum future lease payments 486 42 158 285
Discounted present value 307 40 126 141
Rental expense and rental revenue from subleases recorded in the income statement are as follows:
Lease payments and revenue from subleases (in millions of euros) 2018 2017
Minimum lease payments made during the year (35) (40)
Contingent lease payments made during the year - (0)
Revenue from subleases received during the year 16 17
The future minimum sublease payments expected to be received under non-cancellable subleases amounted to 21 million euros at December 31,
2018 (December 31, 2017: 14 million euros).
Lease commitments at December 31, 2018 (in millions of euros) Total Within one year In one to five years Beyond five years
Minimum future lease payments 3,569 1,100 1,618 851
Discounted present value 2,872 1,027 1,289 557
Lease payments and revenue from subleases (in millions of euros) 2018 2017
Minimum lease payments made during the year (1,213) (1,217)
Contingent lease payments made during the year (10) (12)
Revenue from subleases received during the year 245 255
The future minimum sublease payments expected to be received under non-cancellable subleases amounted to 78 million euros at December 31,
2018 (December 31, 2017: 197 million euros).
As of December 31, 2018, the two main associates were Carmila with a carrying amount of 908 million euros (December 31, 2017: 942 million euros)
and Provencia with a carrying amount of 122 million euros (December 31, 2017: 118 million euros). These two associates represented 75% of the
total value of equity-accounted companies at end-2018.
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.
the associate.
Tax proof
Theoretical income tax for 2018 and 2017 has been calculated by multiplying consolidated income before tax by the standard French corporate
income tax rate. For 2018, theoretical income tax expense amounted to 171 million euros compared with actual net income tax expense of 539 million
euros, as follows:
withholding taxes and changes in provisions for tax risks (see Note 11.2.1). It also includes the tax effect associated with the net profits or losses of discontinued operations
(2) Deferred tax assets recognised in 2018 on prior years’ tax losses primarily concerned Belgium. In 2017, they mainly concerned Brazil.
(3) Valuation allowances recorded on deferred tax assets mainly concerned France, China and Argentina.
Change
Changes in
Adjustments consolidation
on first-time Income tax on scope,
application other translation
December 31, of IFRS 9 At January 1, Income comprehensive adjustment, December 31,
(in millions of euros) 2017 and IAS 29 2018 statement income (OCI) other 2018
Tax loss carryforwards 1,108 1,108 289 - (135) 1,262
Property and equipment 205 205 (72) - (1) 131
Non-deductible provisions 738 738 93 (14) (37) 779
Goodwill amortisation allowed for tax
purposes 247 247 67 - 1 315
Other intangible assets 4 4 (0) - (0) 4
Inventories 172 172 (17) - (4) 151
Financial instruments 5 127 133 2 1 (0) 136
Other temporary differences 118 118 (83) - (58) (23)
Deferred tax assets before netting 2,597 127 2,725 280 (13) (235) 2,756
Effect of netting deferred tax assets
and liabilities (508) (508) 0 - 24 (484)
Deferred tax assets after netting 2,090 127 2,217 280 (13) (211) 2,272
Valuation allowances on deferred tax
assets (1,454) (4) (1,457) (290) - 197 (1,550)
Net deferred tax assets 636 124 760 (10) (13) (14) 723
Property and equipment (208) (77) (285) (14) - 50 (250)
Provisions recorded solely for tax
purposes (413) (413) 18 - (0) (394)
Goodwill amortisation allowed for tax
purposes (171) (171) (2) - 17 (157)
Other intangible assets (1) (1) 0 - 0 (1)
Inventories (19) (19) 3 - - (16)
Financial instruments (7) (4) (12) 7 (7) (2) (14)
Other temporary differences (177) (177) 1 - (18) (193)
Deferred tax liabilities before
netting (997) (81) (1,078) 14 (7) 46 (1,025)
Effect of netting deferred tax assets
and liabilities 508 508 0 - (24) 484
Deferred tax liabilities after netting (489) (81) (570) 14 (7) 22 (541)
NET DEFERRED TAXES 147 42 190 5 (20) 8 182
(2) Provisions relating to the banking and insurance businesses include provisions for credit risk on loan commitments (off-balance sheet) recognised in accordance with
IFRS 9 (see Notes 4 and 7.5.1), and provisions set aside to cover insurance underwriting risk.
Group companies are involved in a certain number of claims and legal proceedings in the normal course of business. They are also subject to tax
audits that may result in reassessments. The main claims and legal proceedings are described below. In each case, the risk is assessed by Group
management and their advisors.
At December 31, 2018, the claims and legal proceedings in which the Group was involved were covered by provisions totalling 1,290 million euros
(December 31, 2017: 1,280 million euros). No details are provided because the Group considers that disclosure of the amount set aside in each
case could be seriously detrimental to its interests.
2017 (in millions of euros) France Belgium Italy Other countries Group total
Service cost(1) 31 12 0 1 44
Interest cost (discount effect) 11 6 2 1 18
Return on plan assets (0) (3) - (0) (3)
Other items (1) - - - (1)
EXPENSE (INCOME) FOR 2017 40 15 2 1 58
2018 (in millions of euros) France Belgium Italy Other countries Group total
Service cost(1) (42) (8) (0) 1 (50)
Interest cost (discount effect) 13 6 2 1 22
Return on plan assets (0) (3) - (0) (3)
Other items (1) - - 0 (1)
EXPENSE (INCOME) FOR 2018 (31) (5) 1 1 (33)
(1) The following table presents details of service cost:
2017 (in millions of euros) France Belgium Italy Other countries Group total
Current service cost 57 17 0 1 74
Past service cost (plan amendments and curtailments) 1 (4) - (0) (3)
Settlements and other (26) - (0) - (26)
Total Service cost 2017 31 12 0 1 44
2018 (in millions of euros) France Belgium Italy Other countries Group total
Current service cost 52 16 0 1 68
Past service cost (plan amendments and curtailments) 0 (24) - - (24)
Settlements and other (93) - (1) - (94)
Total Service cost 2018 (42) (8) (0) 1 (50)
(in millions of euros) France Belgium Italy Other countries Group total
Defined benefit obligation 889 450 128 42 1,509
Fair value of plan assets (16) (230) - (7) (253)
PROVISION AT DECEMBER 31, 2017 873 221 128 35 1,256
Defined benefit obligation 770 398 115 42 1,326
Fair value of plan assets (6) (217) - (8) (231)
PROVISION AT DECEMBER 31, 2018 764 181 115 35 1,095
Other
(in millions of euros) France Belgium Italy countries Group total
Provision at December 31, 2016 858 253 136 32 1,279
Movements recorded in the income statement 40 15 2 1 59
Benefits paid directly by the employer (7) (12) (9) (0) (28)
Effect of changes in scope of consolidation (5) - - - (5)
Change in actuarial gains and losses(1) (13) (28) (1) 4 (38)
Other (0) (8) - (2) (10)
Provision at December 31, 2017 873 221 128 35 1,256
Movements recorded in the income statement (31) (5) 1 1 (33)
Benefits paid directly by the employer (18) (12) (12) (0) (42)
Effect of changes in scope of consolidation (8) - - - (8)
Change in actuarial gains and losses(1) (51) (13) (2) 2 (64)
Other (1) (10) (0) (3) (14)
Provision at December 31, 2018 764 181 115 35 1,095
(1) This line breaks down as follows:
Other
2017 (in millions of euros) France Belgium Italy countries Group total
Actuarial (gain)/loss due to experience 6 - 1 2 9
Actuarial (gain)/loss due to demographic assumption changes (6) - (0) 1 (5)
Actuarial (gain)/loss due to financial assumption changes (12) (20) (2) 0 (34)
Return on plan assets (greater)/less than discount rate (1) (8) - 0 (9)
Changes in actuarial gains and losses 2017 (13) (28) (1) 4 (38)
Other
2018 (in millions of euros) France Belgium Italy countries Group total
Actuarial (gain)/loss due to experience (24) - 0 0 (24)
Actuarial (gain)/loss due to demographic assumption changes (11) - - 1 (10)
Actuarial (gain)/loss due to financial assumption changes (16) (15) (2) 0 (32)
Return on plan assets (greater)/less than discount rate (0) 1 - (0) 1
Changes in actuarial gains and losses 2018 (51) (13) (2) 2 (64)
Other
(in millions of euros) France Belgium Italy countries Group total
Fair value at December 31, 2016 53 227 - 7 286
Return on plan assets 0 3 - 0 3
Benefits paid out of plan assets (31) (16) - 7 (40)
Actuarial gain/(loss) 1 8 - (0) 9
Other (6) 8 - (7) (5)
Fair value at December 31, 2017 16 230 - 7 253
Return on plan assets 0 3 - 0 3
Benefits paid out of plan assets (11) (24) - (3) (38)
Actuarial gain/(loss) 0 (1) - 0 (1)
Other - 10 - 3 13
Fair value at December 31, 2018 6 217 - 8 231
All bonds and equities held in plan asset portfolios are listed securities.
2018 2017
Retirement age 62-67 62-67
Rate of future salary increases 1.9% to 2.5% 1.9% to 2.5%
Inflation rate 1.9% 1.9%
Discount rate 1.6% 1.4%
At December 31, 2018, a discount rate of 1.60% was used for France, Belgium and Italy (December 31, 2017: 1.44%). The discount rate is based
on an index of AA-rated corporate bonds with maturities similar to the estimated duration of the defined benefit obligation.
In 2018, the average duration of the defined benefit obligation under French, Belgian and Italian plans was 11.6 years, 8.2 years and 8.5 years
respectively (2017: 11.3 years, 9 years and 9.2 years respectively).
Sensitivity tests show that:
a 25-bps increase in the discount rate would reduce the defined benefit obligation under the French, Belgian and Italian plans by around 31 million
euros;
a 25-bps increase in the inflation rate would increase the defined benefit obligation under the French, Belgian and Italian plans by around 24 million
euros.
The cost of share-based payment plans for 2018 recorded under “Employee benefits expense” in recurring operating income was 6.3 million euros,
with a corresponding increase in equity (2017: 13.1 million euros).
Details of the stock option and performance share plans set up for Executive Management and selected employees are presented below.
2018 2017
Options outstanding at January 1 - 1,823,200
of which, exercisable options - 1,823,200
Options granted during the year(1) - -
Options exercised during the year - -
Options cancelled or that expired during the year(2) - (1,823,200)
Options outstanding at December 31 - -
of which, exercisable options - -
(1) The Compensation Committee decided not to grant any Carrefour SA stock options in 2017 or 2018.
(2) The 2010 plans expired in July 2017. The 1,823,200 options that had not been exercised as of that date were cancelled.
On March 21, 2017, the Board of Directors of Atacadão decided to award options on existing or new Atacadão shares. This stock option plan was
approved by Atacadão’s Shareholders’ Meeting held on the same date. Options awarded under this plan represent a maximum number of
9,283,783 shares, or 0.47% of Atacadão’s share capital. The options are subject to the following vesting conditions:
one-third of the options vest at the date of the Company’s IPO;
one-third of the options will vest 12 months after the date of the IPO;
one-third of the options will vest 24 months after the date of the IPO.
The options may be exercised up to March 21, 2023 at a price of 11.7 reals.
The table below shows the main assumptions used to calculate the fair value of the options awarded in 2017.
Fair value of the options at the grant date Brazil 2017 “Pre-IPO” Plan
Exercise price (in R$) 11.7
Estimated fair value of the share (in R$) 11.7
Volatility (in %) 29.02%
Dividend growth (in %) 1.35%
Risk-free interest rate (in %) 10.25%
Expected life of share option (years) 2.72
Model Binomial
Fair value option at grant date (in R$) 3.73
Movements during the period in the stock option plan were as follows:
2018
Options outstanding at January 1 7,838,783
of which, exercisable options 2,612,928
Options granted during the year 500,000
Options exercised during the year (2,391,617)
Options cancelled or that expired during the year (2,094,279)
Options outstanding at December 31 3,852,887
of which, exercisable options 1,284,296
(2) The shares will vest only if the grantee remains with the Group until the end of the vesting period and several performance conditions are met.
(3) The Carrefour share price on the grant date (reference price) adjusted for estimated dividends not received during the vesting period.
2018 2017
Shares allotted at January 1 1,739,450 1,942,150
of which, vested shares 8,000 -
Shares granted during the year - -
Shares delivered to the grantees during the year (12,000) (3,500)
Shares cancelled during the year (210,900) (199,200)
Shares allotted at December 31 1,516,550 1,739,450
of which, vested shares 0 8,000
the 14 members of the Group’s Executive Committee (as from October 2, 2017). In 2018, the management team’s fixed compensation was calculated on a full-year basis
group until July 18, 2017, in respect of the 2014/2015 and 2016/2017 long-term incentive plans.
(3) Note that Mr Georges Plassat decided to waive the application of the non-compete clause that had been granted to him, and consequently waived payment of the
2018 2017
Senior Directors 489 522
Directors 2,222 2,267
Managers 40,978 42,575
Employees 317,241 330,790
AVERAGE NUMBER OF GROUP EMPLOYEES 360,930 376,154
NUMBER OF GROUP EMPLOYEES AT THE YEAR-END 363,862 378,923
The increase during the year corresponded to new shares issued to shareholders who chose to reinvest their 2017 dividend (see Notes 2.4 and 13.3).
Accounting principles
Treasury stock is recorded as a deduction from shareholders’ equity, at cost. Gains and losses from sales of treasury stock (and the related
tax effect) are recorded directly in shareholders’ equity without affecting net income for the year.
At December 31, 2018, a total of 9,457,539 shares were held in treasury (December 31, 2017: 11,719,539 shares).
The shares held in treasury are intended notably for the Group’s stock option and performance share plans, or for the liquidity agreement set up in
July 2016 with Rothschild & Cie Banque (which replaced the 2014 agreement with Oddo Corporate Finance).
All rights attached to these shares are suspended for as long as they are held in treasury.
13.3 Dividends
At the Annual Shareholders’ Meeting held on June 15, 2018, the shareholders decided to set the 2017 dividend at 0.46 euros per share with a
dividend reinvestment option.
At the end of the option period on July 4, 2018, shareholders owning 56.93% of Carrefour’s shares had elected to reinvest their 2017 dividend.
July 13, 2018 was set as the date for:
settlement/delivery of the 14,575,028 new shares corresponding to reinvested dividends, representing a total capital increase including premiums
of 200 million euros;
payment of the cash dividend to shareholders who chose not to reinvest their dividends, representing a total payout of 152 million euros.
2018 2017
Group share (in millions of euros) Pre-tax Tax Net Pre-tax Tax Net
Effective portion of changes in the fair value of cash flow
hedges 5 (7) (2) (29) 10 (19)
Changes in the fair value of available-for-sale financial
assets N/A N/A N/A (2) 1 (1)
Changes in the fair value of debt instruments through
other comprehensive income (4) 1 (4) N/A N/A N/A
Exchange differences on translating foreign operations (333) 0 (333) (349) 0 (349)
Items that may be reclassified subsequently to profit
or loss (332) (7) (339) (380) 11 (369)
Remeasurements of defined benefit plans obligation 65 (14) 50 39 (29) 11
Changes in the fair value of equity instruments through
other comprehensive income 0 (0) 0 N/A N/A N/A
Items that will not be reclassified to profit or loss 65 (14) 51 39 (29) 11
TOTAL OTHER COMPREHENSIVE LOSS - GROUP
SHARE (267) (21) (288) (340) (18) (358)
2018 2017
Non-controlling interests (in millions of euros) Pre-tax Tax Net Pre-tax Tax Net
Effective portion of changes in the fair value of cash flow
hedges (1) 0 (1) 4 (1) 2
Changes in the fair value of available-for-sale financial
assets N/A N/A N/A (3) 1 (2)
Changes in the fair value of debt instruments through
other comprehensive income (3) 1 (2) N/A N/A N/A
Exchange differences on translating foreign operations (112) 0 (112) (124) 0 (124)
Items that may be reclassified subsequently to profit
or loss (116) 1 (115) (123) (0) (124)
Remeasurements of defined benefit plans obligation (0) 0 0 (1) 1 (0)
Statement of financial position (in millions of euros) December 31, 2018 December 31, 2017
Non-current assets 4,235 4,313
Current assets 4,027 4,222
Non-current liabilities (excluding shareholders’ equity) 1,332 1,122
Current liabilities 3,766 4,102
Dividends paid to non-controlling interests 58 57
dividends paid in shares on July 13, 2018 (retrospective adjustment of the effect of the 10% discount on shares issued in payment of dividends, determined by the treasury
stock method).
Since the Group recorded a loss from continuing operations in 2018, performance shares are not considered to have a dilutive impact.
Note 14 Financial assets and liabilities, finance costs and other financial
income and expenses
Accounting principles
Non-derivative financial assets
In accordance with IFRS 9 – Financial Instruments, the main financial assets are classified in one of the following three categories:
financial assets at amortised cost;
financial assets at fair value through other comprehensive income (FVOCI);
financial assets at fair value through profit or loss (FVPL).
Their classification determines their accounting treatment. Financial assets are classified by the Group upon initial recognition, based on the
characteristics of the contractual cash flows and the objective behind the asset’s purchase (business model).
Purchases and sales of financial assets are recognised on the trade date, defined as the date on which the Group is committed to buying or selling
the asset.
(i) Financial assets at amortised cost
Financial assets at amortised cost are debt instruments (mainly loans and receivables) that give rise to contractual cash flows that are solely
payments of principal and interest on the principal amount outstanding and that are held within a business model whose objective is to hold assets
to collect contractual cash flows.
They are initially recognised at fair value and are subsequently measured at amortised cost by the effective interest method. For short-term
receivables with no specified interest rate, fair value is considered to be equal to the original invoice amount.
These assets are impaired as described below.
Financial assets at amortised cost include trade receivables, other loans and receivables (reported under “Other financial assets”), deposits and
guarantees, and consumer credit granted by the financial services companies.
(ii) Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income are debt instruments that give rise to contractual cash flows that are solely
payments of principal and interest on the principal amount outstanding and that are held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets. Available-for-sale financial assets are measured at fair value, with changes in fair
value recognised in “Other comprehensive income”, under “Changes in the fair value of debt instruments at fair value through other comprehensive
income” until the underlying assets are sold, at which time they are transferred to profit or loss.
This category also includes investments in equity instruments (primarily shares) that the Group has irrevocably elected to classify in this category.
In this case, when the shares are sold, the unrealised gains or losses previously carried in equity (other comprehensive income) will not be
reclassified to profit or loss; only dividends will be transferred to the income statement.
This category notably includes investments in non-consolidated companies which the Group has elected to recognise at fair value through other
comprehensive income (an option generally chosen by the Group).
The fair value of listed securities corresponds to their market price. For unlisted securities, fair value is determined first and foremost by reference
to recent transactions or by using valuation techniques based on reliable and observable market data. However, where there is no observable market
data for comparable companies, the fair value of unlisted securities is usually measured based on the present value of future estimated cash flows
or on the revised net asset value, as calculated by reference to internal inputs (level 3 of the fair value hierarchy).
(iii) Financial assets at fair value through profit or loss
This category includes all debt instruments that are not eligible to be classified as financial assets at amortised cost or at fair value through other
comprehensive income, as well as investments in equity instruments such as shares which the Group has chosen not to measure at fair value
through other comprehensive income.
They are measured at fair value with changes in fair value recognised in the income statement, under financial income or expense.
Impairment
Trade receivables and other current financial assets (other than consumer credit granted by the financial services companies) carried at amortised
cost are impaired based on the total lifetime expected losses resulting from a payment default, pursuant to the simplified approach allowed under
IFRS 9. Impairment is calculated using a provision matrix which is applied to receivables past due and not yet past due (provision rates based on
the length of time past due, as calculated for each country and each receivable with similar characteristics).
For consumer credit granted by the financial services companies and other non-current financial assets carried at amortised cost, impairment is
determined using the general approach available under IFRS 9 and corresponds:
on initial recognition of the asset, to expected losses over the next 12 months;
Breakdown by category
Financial
assets at Financial Debt
fair value Available- liabilities hedged
through for-sale at by fair
Carrying profit or financial Loans and amortised value Derivative
At December 31, 2017 (in millions of euros) amount loss assets receivables cost hedges instruments Fair value
Investments in non-consolidated companies 101 - 101 - - - - 101
Other long-term investments 1,266 - 425 841 - - - 1,266
Other non-current financial assets 1,367 - 526 841 - - - 1,367
Consumer credit granted by the financial
services companies 6,321 - - 6,321 - - - 6,321
Trade receivables 2,750 - - 2,750 - - - 2,750
Other current financial assets 161 - 70 64 - - 27 161
Other assets(1) 506 - - 506 - - - 506
Cash and cash equivalents 3,593 3,593 - - - - - 3,593
ASSETS 14,698 3,593 596 10,483 - - 27 14,698
Total long- and short-term borrowings 7,497 - - - 7,419 - 78 7,878
Total consumer credit financing 5,478 - - - 5,468 - 10 5,478
Suppliers and other creditors 15,082 - - - 15,082 - - 15,082
Other payables(2) 2,695 - - - 2,695 - - 2,695
LIABILITIES 30,751 - - - 30,663 - 88 31,133
(1) Excluding prepaid expenses.
December 31, 2018 (in millions of euros) Level 1 Level 2 Level 3 Total
Investments in non-consolidated companies - 12 80 92
Other long-term investments 404 - - 404
Other current financial assets - FVOCI 67 - - 67
Other current financial assets - Derivative instruments recorded in
current financial assets - 86 - 86
Cash and cash equivalents 4,300 - - 4,300
Consumer credit financing - Derivative instruments recorded in liabilities - (12) - (12)
Borrowings - Derivative instruments recorded in liabilities - (49) (1) (50)
December 31, 2017 (in millions of euros) Level 1 Level 2 Level 3 Total
Investments in non-consolidated companies - - 101 101
Other long-term investments 425 - - 425
Other current financial assets - Available-for-sale 70 - - 70
Other current financial assets - Derivative instruments recorded in
current financial assets - 27 - 27
Cash and cash equivalents 3,593 - - 3,593
Consumer credit financing - Derivative instruments recorded in liabilities - (10) - (10)
Borrowings - Derivative instruments recorded in liabilities - (76) (2) (78)
Book value
Face value of the debt
December Translation December December
(in millions of euros) Maturity 31, 2017 Issues Repayments adjustments 31, 2018 31, 2018
Public placements(1) 6,196 1,406 (279) 50 7,373 7,207
Euro Bond Fixed rate, EUR, 7 years,
5.25% 2018 279 - (279) - - -
EMTN, EUR, 6 years, 1.75% 2019 1,000 - - - 1,000 1,000
EMTN, EUR, 10 years, 4.00% 2020 1,000 - - - 1,000 999
EMTN, EUR, 11 years, 3.875% 2021 1,000 - - - 1,000 995
EMTN, EUR, 8 years, 1.75% 2022 1,000 - - - 1,000 957
Cash-settled convertible bonds,
USD 500 million, 6 years, 0% 2023 417 - - 20 437 396
EMTN, EUR, 8 years, 0.750% 2024 750 - - - 750 745
EMTN, EUR, 10 years, 1.25% 2025 750 - - - 750 746
Cash-settled convertible bonds, 6 years,
0% 2024 - 406 - 31 437 378
EMTN, EUR, 5 years, 0.88% 2023 - 500 - - 500 496
EMTN, EUR, 7.5 years, 1.75% 2026 - 500 - - 500 496
Placements(2) 504 351 (465) (52) 338 338
Notas promissorias comerciais, BRL
500 million, 6 months, 102% CDI 2018 126 - (117) (9) - -
Notas promissorias comerciais, BRL
500 million, 8 months, 102.25% CDI 2018 126 - (117) (9) - -
Notas promissorias comerciais, BRL
500 million, 14 months, 102.3% CDI 2019 126 - (117) (9) - -
Notas promissorias comerciais, BRL
500 million, 19 months, 103.25% CDI 2019 126 - (114) (12) - -
Debentures, BRL 500 million, 5 years,
105.75% CDI 2023 - 117 - (5) 113 113
Debentures, BRL 1,000 million, 3 years,
104.4% CDI 2021 - 234 - (9) 225 225
TOTAL BONDS AND NOTES 6,700 1,758 (744) (2) 7,711 7,545
(1) Issues carried out by Carrefour SA.
On March 22, 2018, Carrefour issued 500 million US dollars’ worth of six-year cash-settled convertible bonds. The bonds, which do not bear interest,
may be converted into cash only and will not give rise to the issuance of new shares or carry rights to existing shares.
In accordance with IFRS 9 – Financial Instruments, conversion options on the bonds qualify as embedded derivatives and are therefore accounted
for separately from inception. Subsequent changes in the fair value of these options are recognised in income and set off against changes in the fair
value of the call options purchased on Carrefour shares in parallel with the bond issue.
The bonds are recognised at amortised cost, excluding the conversion feature.
Two EUR/USD cross-currency swaps for 250 million US dollars were arranged at the inception of the transaction for the same maturity. The swaps
have been accounted for as a cash flow hedge and had a positive fair value of 33 million euros at December 31, 2018.
The fair value in euros of the currency swap for 500 million US dollars set up in 2017 to hedge bonds redeemable in cash issued on June 7, 2017
(classified as a cash flow hedge for accounting purposes) was a negative 5 million euros at December 31, 2018.
Accounting principles
Cash includes cash on hand and demand deposits.
Cash equivalents are highly liquid investments with an original maturity of less than three months that are readily convertible to a known amount of
cash and are subject to an insignificant risk of changes in value.
There are no material restrictions on the Group’s ability to recover or use the assets and settle the liabilities of foreign operations, except for those
resulting from local regulations in its host countries. The local supervisory authorities may require banking subsidiaries to comply with certain capital,
liquidity and other ratios and to limit their exposure to other Group parties.
The above analysis by currency concerns borrowings including the impact of currency swaps.
Euro-denominated borrowings represented 92% of total borrowings (excluding derivative instruments recorded in liabilities) at December 31, 2018
(December 31, 2017: 88%).
Total Liabilities
arising from
Other current financing
(in millions of euros) financial assets Borrowings activities
At December 31, 2017 (161) 7,497 7,336
IFRS 9 first application adjustments 2 (17) (16)
At January 1, 2018 (159) 7,479 7,320
Changes from financing cash flows (11) 899 888
Change in current financial assets (11) - (11)
Issuance of bonds - 1,758 1,758
Repayments of bonds - (744) (744)
Net financial interest paid - (245) (245)
Other changes in borrowings - 130 130
Non-cash changes (19) (104) (123)
Effect of changes in foreign exchange rates 8 (122) (114)
Effect of changes in scope of consolidation 0 6 6
Changes in fair values (11) (5) (16)
Finance costs, net - 233 233
Other changes (16) (215) (232)
At December 31, 2018 (190) 8,275 8,085
reassessments challenged by the Group) pending final court rulings, as well as security deposits paid to lessors under property leases.
(2) The first-time application of IFRS 9 as from 2018 had the effect of reducing other non-current financial assets from 1,367 million euros as of December 31, 2017 to
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.
The following table shows the effect of an increase/decrease in exchange rates on currency instruments:
Currency translation risk is the risk of an unfavourable change in exchange rates reducing the value of the net assets of a subsidiary whose functional
currency is not the euro, after conversion into euros for inclusion in the Group’s consolidated statement of financial position.
The consolidated statement of financial position and income statement are exposed to a currency translation risk: consolidated financial ratios are
affected by changes in exchange rates used to translate the income and net assets of foreign subsidiaries operating outside the eurozone.
The translation risk on foreign operations outside the eurozone mainly concerns the Brazilian real, Argentine peso and Chinese renminbi. For
example, changes in the average exchange rates used in 2018 compared with those for 2017 decreased consolidated net sales by 4,960 million
euros, or -6.5%, and recurring operating income by 121 million euros, or -6.4%.
Lastly, when financing is arranged locally, it is generally denominated in local currency.
By maturity
Due within Due in 1 to Due beyond
Commitments given (in millions of euros) December 31, 2018 1 year 5 years 5 years December 31, 2017
Related to cash management transactions 11,381 10,452 851 78 11,606
Financial services companies 11,171 10,353 817 1 11,403
Other companies 210 99 34 77 203
Related to operations/real estate/expansion 2,671 1,534 1,055 82 2,672
Related to purchases and sales of securities 130 49 16 65 159
Related to leases 3,569 1,100 1,618 851 3,712
TOTAL 17,750 13,134 3,541 1,076 18,149
By maturity
Due within Due in 1 to Due beyond
Commitments received (in millions of euros) December 31, 2018 1 year 5 years 5 years December 31, 2017
Related to cash management transactions 6,383 822 4,688 873 6,351
Financial services companies 1,848 252 725 871 1,799
Other companies 4,535 570 3,963 2 4,552
Related to operations/real estate/expansion 1,204 311 739 154 1,321
Related to purchases and sales of securities 330 240 54 36 323
Related to leases 627 272 289 66 671
TOTAL 8,544 1,646 5,769 1,129 8,666
Other services provided by Carrefour SA’s auditors include mainly services in relation to the issuance of certificates and agreed-upon procedures
on financial information and internal control.
Opinion
In compliance with the engagement entrusted to us by your Shareholders’ Meetings, we have audited the accompanying consolidated financial
statements of Carrefour for the year ended December 31, 2018.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group
as at 31 December 2018 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards
as adopted by the European Union.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Independence
We conducted our audit engagement in compliance with independence rules applicable to us, for the period from January 1, 2018 to the date of our
report and specifically we did not provide any prohibited non-audit services referred to in Article 5 of Regulation (EU) No 537/2014 or in the French
Code of ethics (code de déontologie) for statutory auditors.
In Brazil, the Group is involved in tax risks, in particular, on the tax on the distribution of goods and services (ICMS) and to the corresponding tax
credits recorded, on the federal contributions related to the social integration programme and to the financing of the social security system (Pis-
Cofins) and on the tax amortization of goodwill recognised in 2007 in the context of the acquisition of Atacadão.
The assessment of the risk related to each tax litigation is regularly reviewed by the Group’s tax department and the subsidiary’s Management, with
the support of its external counsels for the most significant tax litigations in order to determine the need of recording a provision or not, and in the
case where a provision should be recorded, to estimate the amount of the provision.
We considered the tax risk of the brazilian subsidiaries, for both the estimation of the provisions and the information disclosed in the financial
statement as a key audit matter due to the amount and the number of tax risks, to the complexity of the tax legislation especially for retail companies
in Brazil and the level of management judgment in the assessment of the outcome of the ongoing litigations and the amount of the provision to be
booked.
We have obtained an understanding of the internal controls implemented by the Group to identify tax risks in the brazilian subsidiaries.
In order to appreciate if the provisions for tax risks in for brazilian subsidiaries have been correctly estimated, we performed the following procedures,
with the assistance of our tax experts:
Conducted interviews with the tax department in order to assess the current state of the risks identified, the investigations and reassessments
made by the tax authorities and monitor the development of ongoing tax disputes;
Analysed the opinion of the external counsels of the entities of the Group on the ongoing tax disputes and the information on ongoing procedures
and their potential financial impacts that have been provided by the external counsels in response to our written confirmation requests;
Performed a review of the estimates and positions adopted by the management to measure the provisions booked;
Assessed the information disclosed in notes 11.2.1 and 11.3 of the consolidated financial statements.
The Group enters into a significant number of purchase agreements with suppliers which include:
Commercial discounts based on the purchase volumes or on other contractual terms such as the achievement of threshold or the increase of
purchase volumes (« rebates ») ;
Revenues from services provided to suppliers by the Group (« service agreements »).
Rebates and service agreements received from suppliers by the Group are estimated based on the contractual terms agreed in the purchase
agreement with suppliers and are recorded as a reduction of cost of sales.
Given the significant number of agreements and the specificities of each agreement, the correct measurement and recognition of rebates and service
agreements in accordance with contractual terms and purchase volumes represent a key audit matter.
We have obtained an understanding on the internal controls implemented by the Group on the measurement and the recognition of rebates and
service agreements. We assessed their design and implementation and we tested their effectiveness through a sample of agreements.
Our other procedures consisted mainly, for a sample of rebates and service agreements of :
Matching the data used for the calculations of rebates and service agreements with the contractual terms mentioned in the agreements signed
with the suppliers;
Comparing last year’s estimates with actual figures in order to assess the reliability of the rebates and service agreement measurement’s process
(review of the release of prior year’s rebates) ;
Matching the purchase volumes used for the calculation of the expected rebates and service agreements for the year ended December 31, 2018
with the purchase volumes recorded in the Group’s procurement system;
Performing substantive analytical procedures to ensure the consistency of rebates and service agreements variation and performing additional
analysis in case of significant variations are identified.
Specific Verifications
As required by legal and regulatory requirements law we have also verified in accordance with professional standards applicable in France the
information pertaining to the Group presented in the management report of the Board of Directors.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
Assets
December 31, 2018 December 31, 2017
Amortisation,
depreciation and
(in millions of euros) Notes Total impairment Net Net
Intangible fixed assets 19 13 6 9
Tangible fixed assets 2 2 - -
Financial investments 37,098 7,255 29,843 30,071
Fixed assets 3 37,119 7,270 29,849 30,080
Accounts receivable 4 1,257 221 1,036 536
Cash and marketable securities 5 234 81 153 276
Current assets 1,490 302 1,188 812
Prepayments and deferred charges 4 84 - 84 45
TOTAL ASSETS 38,693 7,572 31,121 30,937
1.8 Provisions
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.
A liability is recognised when (i) the decision has been made to set up a stock option or free share plan, (ii) the Company has an 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 the vesting period as the employee service is received.
(3) Corresponding to the value of shares in Raise Investissement sold in December 2018.
(4) Mainly corresponding to the impairment of the merger deficit allocated to Carrefour Nederland BV and Norfin Holder shares in an amount of 45 million euros and 92 million
euros, respectively:
° The impairment test consists in calculating the difference between value in use and the net carrying amount of the shares, including any allocated merger deficits;
° The value in use used for the test is based on the valuations carried out in November 2018 on all owned land.
The carrying amount of Carrefour France S.A.S. shares, including allocated merger losses, represented 6,222 million euros at December 31, 2018.
No impairment losses or reversals were recognised as a result of the impairment tests performed on the merger deficit allocated to Carrefour France shares at
° The impairment test consists in calculating the difference between value in use, determined based on future cash flow projections, and the net carrying amount of the
° Value in use is estimated using the sum of discounted future cash flows for a period generally not exceeding five years, plus a terminal value calculated by projecting
data for the final year to perpetuity at a perpetual growth rate. A specific discount rate by country is used for the calculation. Cash flows used in the impairment tests in
2018 were estimated based on the financial trajectories defined by the Executive Management teams at country level and approved by the Group’s Executive
Management.
The main financial assumptions used for the purposes of Carrefour France S.A.S.’s impairment testing are as follows:
Prepayments and deferred charges mainly include bond redemption premiums for 36 million euros and bond issuance costs for 11 million euros,
which are amortised over the life of the corresponding bonds.
The market value of Carrefour shares held at December 31, 2018, based on the final quoted price for the year of 14.91 euros per share, was
141 million euros.
Other reserves,
Issue and retained Total
merger earnings and shareholders’
(in millions of euros) Share capital premiums net income equity
Shareholders’ equity at December 31, 2017 including net income for
the year 1,937 16,693 1,882 20,512
Distribution of dividends(1)
Decided at the 2018 Annual Shareholders’ Meeting - - (356) (356)
Issuance of new shares as part of the 2017 dividend 36 164 - 200
Change in premiums, reserves and retained earnings - - 4 4
Shareholders’ equity at December 31, 2018 before net income for
the year 1,973 16,856 1,530 20,359
Net income for 2018 1,485
SHAREHOLDERS’ EQUITY AT DECEMBER 31, 2018 INCLUDING NET
INCOME FOR THE YEAR 1,973 16,856 1,530 21,844
(1) The 2017 dividend was paid in July 2018, in cash for 152 million euros and in Carrefour shares for 200 million euros, resulting in the issuance of 14,575,028 new shares.
Dividends not paid on Carrefour shares held in treasury on the ex-dividend date, in the amount of 4 million euros, were credited to retained earnings.
Reversals
(in millions of euros) December 31, 2017 Increases Used Surplus December 31, 2018
Obligations to deliver shares 25 - - (5) 20
Pension obligations 82 8 - (17) 73
Other(1) 188 232 - (65) 356
Provision for contingencies and charges 295 240 - (87) 449
On financial investments 7,023 234 - (3) 7,255
On accounts receivable 203 18 - - 221
On other items (marketable securities) 59 24 - (2) 81
Impairment 7,285 276 - (4) 7,557
TOTAL PROVISIONS AND IMPAIRMENT 7,580 516 - (91) 8,006
Analysis
Movements recorded in operating income and expense 21 - (30)
Movements recorded in financial income and expense 362 - (13)
Movements recorded in non-recurring income and
expense 133 - (48)
TOTAL 516 - (91)
(1) “Other” relates to provisions for risks related to subsidiaries and affiliates and provisions for miscellaneous contingencies and disputes.
The main characteristics of the performance share plan in progress at December 31, 2018 are presented below:
(2) The shares will vest only if the grantee remains with the Group until the end of the vesting period and several performance conditions are met.
(3) The Carrefour share price on the grant date (reference price) adjusted for estimated dividends not received during the vesting period.
Movements in performance shares under the plan in progress were as follows in 2018:
o/w accrued
(in millions of euros) December 31, 2017 Increases Decreases December 31, 2018 interest
Bonds 6,283 1,456 279 7,460 87
TOTAL FINANCIAL LIABILITIES 6,283 1,456 279 7,460 87
Due in
Due Due in more
Maturities of liabilities (excluding dividends payable) within 1 to than
(in millions of euros) December 31, 2018 1 year 5 years 5 years
Bonds 7,460 1,087 3,937 2,436
Trade payables 17 17 - -
Accrued taxes and payroll costs 63 63 - -
Other miscellaneous liabilities(1) 1,277 1,275 2 -
Translation gains 10 10 - -
TOTAL 8,828 2,452 3,939 2,436
(1) Liabilities due within one year essentially correspond to borrowings from subsidiaries.
Rent guarantees given or received under real estate leases: the guarantee corresponds to the future minimum payments due under non-cancellable real estate leases.
(2) At December 31, 2018, the Company had two undrawn syndicated lines of credit obtained from a pool of leading banks totalling 3,900 million euros, of which 2,500 million
Note 11 Employees
11.1 Average number of employees
2018 2017
Managerial 6 7
TOTAL EMPLOYEES 6 7
11.2 Compensation
Details of management compensation are provided in the business review.
Note 12 Tax
12.1 Unrecognised deferred taxes
The amount of 250 million euros corresponds to deferred taxes following share contribution transactions qualifying for preferential tax treatment
under Article 210 B of the French Tax Code (Code général des impôts).
Gross
amount of Net
Reserves merger merger
and losses losses Last Last
Share retained % Investment Investment allocated allocated published published Dividends
(in millions of euros) capital earnings interest at cost net to shares to shares income revenue received
A- DETAILED INFORMATION
1. Subsidiaries (over 50% owned)
France
CARMA 23 64 50.0% 44 44 - - 6 - -
CARREFOUR BANQUE 101 543 60.0% 124 124 - - 45 345 -
CARREFOUR FRANCE 1,995 3,131 99.6% 3,979 3,979 6,952 2,243 (305) 40 -
CARREFOUR MANAGEMENT 0 0 100.0% 23 0 - - 0 - -
CARREFOUR SYSTEMES
D’INFORMATION 164 (11) 100.0% 168 76 - - (85) 421 -
CRFP 8 3,381 282 74.8% 2,528 2,528 - - 4 - 101
CRFP 13 863 514 38.0% 385 385 - - 39 - -
GUYENNE ET GASCOGNE 106 15 100.0% 428 428 - - (4) 16 -
HYPARLO 63 146 100.0% 450 450 180 155 28 0 28
TOTAL 8,128 8,014 7,132 2,398 (271) 823 129
International
CARREFOUR ASIA 117 (165) 100.0% 124 0 -
CARREFOUR NEDERLAND 2,259 2,519 100.0% 3,603 3,603 767 675 1,210
NORFIN HOLDER 2 4,352 79.9% 3,177 3,177 2,872 2,688 205
CAPARBEL 6,334 0 100.0% 6,334 6,334 636 636 9
TOTAL 13,239 13,114 4,275 3,998 0 0 1,423
2. Affiliates (10%-50% owned)
International
ATACADÃO 1,710 1,023 32.8% 251 251 - - 51
CARREFOUR FINANCE 6,823 342 25.0% 1,668 1,668 - - -
CARREFOUR ITALIA 1,917 (876) 30.0% 2,072 80 - - -
TOTAL 3,991 1,999 0 0 0 0 51
B- AGGREGATE INFORMATION
1. Other subsidiaries
France 23 23 0 0 255
International 2 1 0 0 29
2. Other investments
France 56 46 0 0 0
International 248 243 0 0 24
C- GENERAL INFORMATION ABOUT INVESTMENTS
French subsidiaries (total) 8,151 8,037 7,132 2,398 384
International subsidiaries (total) 13,240 13,116 4,275 3,998 1,452
French affiliates (total) 56 46 0 0 0
International affiliates (total) 4,239 2,243 0 0 75
TOTAL 25,686 23,441 11,407 6,397 1,911
The columns “Share capital”, “Reserves and retained earnings”, “Last published income” and “Last published revenue” correspond to information
for 2017 since the 2018 data have not yet been authorised for issue by the appropriate governance bodies.
Opinion
In compliance with the engagement entrusted to us by your Shareholders’ Meetings, we have audited the accompanying financial statements of
Carrefour for the year ended December 31, 2018.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as of
December 31, 2018 and of the results of its operations for the year then ended in accordance with French accounting principles.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Independence
We conducted our audit engagement in compliance with independence rules applicable to us, for the period from January 1, 2018 to the date of our
report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No. 537/2014 or in the
French Code of ethics (code de déontologie) for statutory auditors.
Other information
In accordance with French law, we have verified that the required information concerning the purchase of investments and controlling interests
identity of the shareholders and holders of the voting rights has been properly disclosed in the management report.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with French accounting principles,
and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the Company or
to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management
systems and, where applicable, its internal audit, regarding the accounting and financial reporting procedures.
The financial statements were approved by the Board of Directors.
Statutory Auditors’ Responsibilities for the Audit of the Financial Statements
7.1.4.7 Provision of the issuer’s Articles of Association that would delay, postpone or
prevent a change in its control
None.
recommendation, the Board of Directors decided at its meeting on July 27, 2016 to grant performance shares (new or existing) to 950 Group employees. The plan
provided for the grant of a maximum of 1,950,000 shares (representing 0.26% of the share capital). The shares will vest only if the grantee remains with the Group until
the end of the vesting period and several performance conditions are met.
Change in the
Event number of shares Capital (in euros)
Position at June 30, 1999 233,069,544 582,673,860.00
Capital increase in payment for the exchange offer initiated on the shares of Promodès 109,427,940
Capital increases following the exercise of stock options 4,866
Position at December 31, 1999 342,502,350 856,255,875.00
Capital increase in payment for the takeover merger of Promodès 6,387,126
Cancellation of 15,000 CDVs in connection with the above merger (15,000)
Allotment of free shares (at a rate of one new share per old share) 348,874,476
Capital increases following the exercise of stock options 6,600
Capital increases following the exercise of stock purchase warrants 8,412
Capital increases following bond conversions 1,062,032
Capital increase reserved for employees 12,317,444
Position at December 31, 2000 711,143,440 1,777,858,600.00
Capital increases following the exercise of stock options 12,300
Capital increase following the exercise of stock purchase warrants 84
Capital increase following bond conversions 30
Position at December 31, 2001 711,155,854 1,777,889,635.00
Capital increases following the exercise of stock options 9,000
Capital increase following bond conversions 72
Capital increase in payment for the takeover merger of Bontemps 4,535,604
Cancellation of the shares received in connection with the above merger (4,535,604)
Capital increase in payment for the exchange offer initiated on the shares of Centros 4,976,845
Comerciales Carrefour (Spain)
Position at December 31, 2002 716,141,771 1,790,354,427.50
Share buybacks
The Shareholders’ Meeting held on June 15, 2018, deliberating pursuant to Article L. 225-209 of the French Commercial Code, authorised the Board
of Directors to purchase Company shares, enabling it to use the option of dealing in treasury shares, to:
engage in market making activities in the secondary market or ensure the liquidity of Company shares through an investment services provider,
under the terms of a liquidity agreement that complies with the professional rules of the French financial markets association (Association française
des marchés financiers – AMAFI) approved by the AMF, and in accordance with the market practices accepted by the AMF;
implement any Company stock option plan or any similar plan, in accordance with the provisions of Articles L. 225-177 et seq. of the French
Commercial Code;
allocate or transfer shares to employees for their investment in the Company’s development and/or to implement any savings plan as provided
for by law, in particular Articles L. 3332-1 et seq. of the French labour code (Code du travail);
allocate free shares under the provisions of Articles L. 225-197-1 et seq. of the French Commercial Code;
in general, meet all obligations relating to stock option plans or other allocation of Company shares to employees and/or Company officers of the
Group or of related companies;
deliver shares upon the exercise of rights attached to securities giving access to share capital by means of redemption, conversion, exchange,
exercise of a warrant or any other means;
cancel some or all of the shares thus repurchased; or
Percentage of capital held directly and indirectly by the Company (in shares and as a percentage) at the
beginning of the previous programme on May 31, 2018 9,568,539/1.27%
Number of shares cancelled over the past 24 months
Number of shares held at May 31, 2018 (in shares and as a percentage) 9,623,039/1.24%
Gross book value of the portfolio (in euros) 236,029,168
Market value of the portfolio (in euros) 148,435,377
Grant of options
There were no longer any Carrefour SA stock option plans outstanding at December 31, 2018, since the 2010 plans based on performance conditions
and continued employment in the Group expired in July 2017. Movements in these plans in 2018 were as follows:
2018 2017
Number of options outstanding at January 1 - 1,823,200
of which, exercisable options - 1,823,200
Options granted in 2018(1) - -
Options exercised in 2018 - -
Options cancelled or that expired in 2018(2) - (1,823,200)
Number of options outstanding at December 31 - -
of which, exercisable options - 0
(1) Based on the recommendations of the Compensation Committee, the Board of Directors did not grant any stock options in 2018.
(2) The 2010 plans expired in July 2017. The 1,823,200 options that had not been exercised as of that date were cancelled.
Grant of shares
On July 27, 2016, based on the Compensation Committee’s recommendation, the Board of Directors decided to use the authorisation given in the
14th resolution of the Shareholders’ Meeting held on May 17, 2016 to grant performance shares (new or existing) to 950 Group employees. The plan
provided for the grant of a maximum of 1,950,000 shares (representing 0.26% of the share capital). The shares will vest only if the grantee remains
with the Group until the end of the vesting period and several performance conditions are met.
The vesting period is three years from the date of the Board of Directors’ meeting at which the rights were granted.
The number of shares that vest will depend on the achievement of three performance conditions:
two conditions linked to financial performance (EBITDA growth for 35% and organic sales growth for 35%); and
a CSR-related condition for 30%.
Details of the performance share plans in progress at December 31, 2018 are presented below.
(3) The Carrefour share price on the grant date (reference price) adjusted for estimated dividends not received during the vesting period.
2018 2017
Number of free shares granted at January 1 1,739,450 1,942,150
of which, shares outstanding 8,000 0
Shares granted in 2017 - -
Shares delivered to grantees in 2017 (12,000) (3,500)
Shares cancelled in 2017 (210,900) (199,200)
Number of free shares granted at December 31 1,516,550 1,739,450
of which, shares outstanding - 8,000
7.3 Shareholders
7.3.1 Main shareholders
At December 31, 2018, the share capital amounted to 1,973,132,097.50 euros (one billion, nine hundred seventy-three million, one hundred thirty-
two thousand, ninety-seven euros and fifty cents). It is divided into 789,252,839 shares of 2.50 euros each.
The Company is authorised to identify bearer shares.
The number of voting rights at December 31, 2018 was 1,009,864,055. After deducting the voting rights that cannot be exercised from this figure,
the total number of voting rights is 1,000,406,516.
Number of
Number of actual Actual voting theoretical voting Theoretical voting
Shareholders Number of shares Capital (%) voting rights rights (%) rights rights (%)
79,624,211 10.09% 156,978,422 15.69% 156,978,422 15.54%
(1)
Galfa 22,291,101 2.82% - - 22,291,101 2.21%
Subtotal – Galfa 101,915,312 12.91% 156,978,422 15.69% 179,269,523 17.75%
Peninsula Europe 60,078,731(2) 7.61% 119,513,869 11.95% 119,513,869 11.83%
Cervinia Europe 39,368,215 4.99% 77,414,716 7.74% 77,414,716 7.67%
Groupe Arnault 3,134,046 0.40% 5,790,798 0.58% 5,790,798 0.57%
412,858 0.05% 801,432 0.08% 801,432 0.08%
Bunt 24,999,996(1) 3.17% - - 24,999,996 2.48%
Subtotal – groupe
Arnault 67,915,115 8.60% 84,006,946 8.40% 109,006,942 10.79%
Employees 7,499,500 0.95% 14,642,250 1.46% 14,642,250 1.45%
Shares owned 9,457,539 1.20% - - 9,457,539 0.94%
Public 542,386,642 68.72% 625,265,029 62.50% 577,973,932 57.23%
TOTAL 789,252,839 100.00% 1,000,406,516 100.00% 1,009,864,055 100.00%
(1) Held via call options.
Number of Number of
Number of ordinary voting extraordinary
Shareholders shares As a % rights As a % voting rights As a %
Blue Partners(1) 38,611,574 5.11% 45,174,022 5.05% 45,174,022 5.05%
Cervinia Europe 38,046,501 5.03% 73,646,322 8.24% 73,646,322 8.24%
Groupe Arnault 2,656,752 0.35% 2,656,752 0.30% 2,656,752 0.30%
(2)
Bunt 25,401,013 3.36% 25,401,013 2.84% 25,401,013 2.84%
Subtotal – Concert(3) 104,715,840 13.85% 146,878,109 16.43% 146,878,109 16.43%
Galfa(4) 87,414,211 11.56% 142,914,486 15.98% 142,914,486 15.98%
Stanhore International Trading SARL(5) 57,973,181 7.67% 57,973,181 6.48% 57,973,181 6.48%
Energy Jet SRL 1,461,957 0.19% 1,461,957 0.16% 1,461,957 0.16%
Subtotal – Abilio Diniz 59,435,138 7.86% 59,435,138 6.65% 59,435,138 6.65%
Employees 7,376,156 0.98% 14,715,332 1.65% 14,715,332 1.65%
Shares owned 9,473,039 1.25% - - - -
Public 487,820,770 64.51% 530,276,090 59.30% 530,276,090 59.30%
TOTAL 756,235,154 100.00% 894,219,155 100.00% 894,219,155 100.00%
(1) Of which 4,135,736 Carrefour shares lent by Blue Partners with right of recall at its sole initiative by virtue of Article L. 233-9 I, 6° of the French Commercial Code.
(2) Of which 24,999,996 shares held through assimilation of Carrefour shares that can be acquired under a call option.
(3) At December 31, 2016, Blue Partners and Cervinia Europe owned 42,162,269 shares granting double voting rights.
(4) Of which 10,000,000 shares held in relation to a call option to be settled physically or in cash.
(5) Of which 30,754,124 shares pledged to one bank under a structured financing arrangement.
Employee shareholding
At December 31, 2018, Group employees held 0.95% of the Company’s share capital through the Company mutual fund.
* In euros.
Source: Bloomberg.
1 Composition of Bloomberg Europe Food Retailers (BEFOODR) index: Ahold Delhaize, Carrefour, Casino, Colruyt, ICA Gruppen,
Jeronimo Martins, Kesko OYJ, Metro AG, Morrison, Ocado, Sainsbury, SPP Group, Tesco.
2 Composition of Stoxx Europe 600 Retail index: Ahold Delhaize, B&M European Value Retail, Carrefour, Colruyt, Delivery Hero, Dufry,
Galenica, H&M, ICA Gruppen, Inchcape, Inditex, Jeronimo Martins, Just Eat, Kering, Kesko OYJ, Kingfisher, Marks & Spencer, Metro,
Morrison, Next, Ocado, Sainsbury, Tesco, WH Smith, Zalando.