FIRST HALF 2018 FINANCIAL INFORMATION

Transcription

1 R APPORT FINANCIER ANNUEL , avenue de Flandre Croix FIRST HALF 2018 FINANCIAL INFORMATION

2 DECLARATION BY THE PERSON RESPONSIBLE FOR THE FINANCIAL REPORT ACTIVITY REPORT HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS OF AUCHAN HOLDING CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF NET CASH FLOWS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONDENSED FINANCIAL STATEMENTS STATUTORY AUDITORS' REVIEW REPORT ON THE 2018 HALF-YEAR FINANCIAL INFORMATION Half-Year Financial Report

3 Declaration by the person responsible for the financial report I certify that, to my knowledge, the condensed consolidated half-year financial statements at 30 June 2018 have been prepared in accordance with applicable accounting standards, and give a true picture of the assets, financial position and results of operations of the company and of all companies included in the scope of consolidation, and that the attached half-year activity report provides an accurate description of the significant events that occurred over the first six months of the year and of their impact on the half-year financial statements, of the main transactions with related parties, and of the main risks and uncertainties for the remaining six months of the year. Croix, 28 August 2018 Régis Degelcke Chairman of the Management Board of Auchan Holding SA AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

4 INTERIM ACTIVITY REPORT for the period from 1 January to 30 June 2018 ( bn = billions of euros, m = millions of euros) 1. SIGNIFICANT EVENTS IN THE FIRST HALF OF 2018 AND MAIN CHANGES IN THE CONSOLIDATION SCOPE 1.1. CHANGES IN THE STORE NETWORK The number of points of sale operated by Auchan Retail changed as follows in the first 6 months of 2018: In Western Europe, the number of points of sale decreased by a net 8 units, with 6 openings in Portugal and 14 closures in Italy. In Central and Eastern Europe, the number of points of sale grew by a net 13 units, with 5 openings in Romania, 5 in Russia and 2 in Ukraine. In Asia and Africa, the number of points of sale and stores increased by 204 units, of which 194 in China and 8 in Senegal CHANGES IN THE CONSOLIDATION SCOPE The consolidation scope changed as follows in the first half of 2018: Auchan Retail Vietnam o 28 February 2018: signing of the closing concerning the acquisition of 100% of Asia Investment, operator of a Giant hypermarket at Crescent Mail. Ceetrus Portugal o o 1 March 2018: signing of an agreement for the acquisition of 2 shopping centres in Lisbon (Forum Montijo, Forum Sintra) and the Sintra Retail Park through the acquisition of 5 companies. 26 February 2018: acquisition by Ceetrus Portugal of a 50% stake in Neutripromo, which holds land and commercial permits obtained to carry out a business centre project in Portugal. Oney Bank o 29 January 2018: acquisition of 100% of the shares of In Confidence Insurance (ICI), an agent specialising in affinity insurance (warranty extension and breakage insurance) PARTNERSHIPS On 3 April 2018, Auchan Retail and Casino announced that they had entered into exclusive negotiations with a view to establishing, in compliance with competition rules, a strategic partnership enabling them to jointly negotiate purchasing in France and internationally with their main multinational food and non-food suppliers. On 29 June 2018, Auchan Retail, Casino Group, Metro and Schiever announced the completion of a number of purchasing partnership agreements collectively known as Horizon, with the aim of moving from a purely transactional mode of bargaining to a more collaborative, balanced and innovative method. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

5 1.4. OTHER SIGNIFICANT EVENTS On 5 June 2018, Immochan became Ceetrus Representing the transformation that Immochan initiated 2 years ago, this new name symbolises the company's evolution from a commercial property company to a mixeduse property developer. Ceetrus is part of a process of dialogue with local communities aimed at creating balanced, vibrant urban spaces that have a positive impact. Change of governance at Auchan Holding On 2 January 2018, Auchan Holding announced that Barthélémy Guislain would replace Régis Degelcke as chairman of the Supervisory Board. Since that date, the Management Board has comprised the chairmen of the boards of directors of Auchan Holding's three core businesses: Régis Degelcke for Auchan Retail, Vianney Mulliez for Ceetrus and Xavier de Mézerac for Oney. Auchan Holding's Management Board is chaired by Régis Degelcke. Bond issue On 25 January 2018, Auchan Holding issued a bond under the Euro medium-term note (EMTN) programme for an amount of 350m over 2 years at a rate of [3-month Euribor + 15bp (coupon floor level of "0")] INTERIM ACTIVITY AND RESULTS 2.1 AUCHAN RETAIL ACTIVITY At 30 June 2018, Auchan Retail operated in 14 countries through 953 hypermarkets, 1,052 convenience stores and 446 ultra-convenience stores. The consolidated store network at 30 June 2018, excluding the drive outlets, breaks down as follows: Country Hypermarkets Convenience stores France Italy Spain Portugal Luxembourg 1 5 Poland Hungary 19 2 Romania Ukraine Russia Senegal Mainland China Vietnam Taiwan 19 1 TOTAL 953 1, (1) Excluding the Furshet supermarkets which are consolidated using the equity method (10% owned). (2) 324 Auchan stores (including Auchan Minute) and 395 RT Mart stores Ultra-convenience stores (1) (2) Notes Including the franchised store network (1,513 points of sale), the total number of outlets at 30 June 2018 was 3,964. Auchan Retail generated revenue in the first half of 2018 of 25.08bn (down 3.2% compared with 2017), including the sale of goods to franchisees. Auchan Retail s activities outside of France accounted for 66% of total revenue. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

6 Ebitda amounts to 619m, down 23% compared to June Auchan Retail reported an operating loss from continuing operations of 23m compared with a profit of 163m at 30 June REAL ESTATE ACTIVITY (CEETRUS) At 30 June 2018, Ceetrus and its subsidiaries managed 395 shopping centres (shopping malls and retail parks), of which 344 fully owned or leased and 51 under management contracts, in 12 countries. The revenue from this activity came to 345m (+5.7%) in the first half of 2018, with 61% being generated outside France. Ebitda amounts to 225m, up 4.8% compared to June Ceetrus' operating profit from continuing operations fell by 4.1% to 113m. 2.3 CUSTOMER CREDIT ACTIVITY (ONEY BANK) At 30 June 2018, Oney Bank operated in 12 countries (France, Spain, Italy, Portugal, Poland, Hungary, Romania, Ukraine, Russia, mainland China, Malta and the United States). It had a total of 10 million customers at 30 June Oney Bank s consolidated financial statements (drawn up according to banking IFRS) showed net banking income of 218m, up by 5.6%. The cost of risk stood at 34m. Operating profit was stable at 36m. 2.4 COMMENTS ON THE 2018 INTERIM FINANCIAL STATEMENTS Comments on the income statement The revenue of consolidated entities amounted to 25.7bn in the first half of 2018, down 3% compared with the first half of 2017, and 0.4% at constant exchange rates and scope. In geographic terms, France accounted for 34% of revenue, Western Europe excluding France (Spain, Italy, Portugal and Luxembourg) contributed 18%, Central and Eastern Europe (Poland, Hungary, Romania, Ukraine and Russia) contributed 18% and the rest of the world (mainland China, Taiwan, Vietnam and Senegal) contributed 30%. In the first half of 2017, the geographic breakdown was 34%, 18%, 19% and 29% respectively. Gross profit fell by 0.9% to 6,127m while the margin came to 23.9% compared with 23.3% in the first half of Current operating expenses (payroll expenses, external expenses, depreciation, amortisation and impairment, and other recurring operating profit and expenses) were stable. Operating profit from continuing operations fell by 55.6% to 145m. EBITDA, or operating profit from continuing operations excluding both other recurring operating profit and expenses and depreciation, amortisation and impairment 1, fell by 17% to 888m compared with 1,070m at 30 June Excluding provision and impairment expenses net of reversals, other than on inventories. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

7 The non-recurring items recorded under Other operating profit and expenses include: In the first half of 2018: Impairment of non-current assets (15) Provision for costs to reorganise Auchan Retail France s support 3 services Provision for impairment of receivables (Cambria Retail Italy) (11) Store closure costs in Italy (5) TOTAL (28) In the first half of 2017: Impairment of non-current assets (27) Goodwill impairment (68) Exceptional profit on prepaid cards in China 52 Provision for costs to reorganise Auchan Retail France s support (58) services TOTAL (101) After taking into account "Other operating profit and expenses", operating profit fell to 117m compared with 225m at 30 June The net cost of financial debt remained stable at 18m at 30 June 2018, the same as at 30 June Other financial revenue and expenses amounted to an expense of 22m, compared to a revenue of 11m in June Consolidated profit before tax came to 77m compared with 218m in the first half of The share of net profit or loss of associates remained stable at - 2m, unchanged from 30 June The income tax expense for the first half of 2018 was 80m. The effective tax rate was 103.5% in the first half of 2018 compared with 50.9% in the first half of Restated for significant unrecognised tax losses and non-recurring items with no tax effect, the effective tax rate was 38.8% in June There was a net loss for the period of 4m at 30 June 2018, compared with a net profit of 145m at 30 June The net loss attributable to owners of the parent was 151m compared with 7m in the first half of Cash flows from operations decreased by 22.1% to 699m compared with 897m in the first half of Comments on the statement of financial position Assets: Current investments excluding business combinations (acquisitions of intangible assets, property, plant and equipment and investment property) amounted to 639m. The volume of current investments increased by 26.5% in relation to the first half of The breakdown of investments was 39% in France (29% at 30 June 2017), 17% in Western Europe excluding France (18% at 30 June 2017), 25% in Central and Eastern Europe (29% at 30 June 2017) and 19% in Asia and Africa (24% at 30 June 2017). AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

8 Liabilities: Total equity amounted to 12,822m at 30 June 2018, compared with 13,281m at 31 December Equity attributable to owners of the parent fell by 637m to 9,275m. The main changes were as follows (in m): o 2018 interim profit (loss) (151) o Dividends paid for 2017 (196) o exchange differences (mainly on the Russian and Chinese subsidiaries) (49) o change in debt linked to put options granted and repurchase commitments (net of deferred tax) (221) o first-time application of IFRS 9, net of deferred tax (36) o other 16 Non-controlling interests amounted to 3,547m at 30 June 2018, compared with 3,369m at 31 December Net financial debt, as defined in Note 10.1 of the notes to the consolidated financial statements at 31 December 2017, amounted to 4,457m at 30 June 2018 compared with 2,470m at 31 December It represented 34.8% of equity. At 31 December 2017, the net financial debt amounted to 2,470m, whereas at 30 June 2017 it amounted to 3,715 m (strong impact of the debt seasonality). 3. EVENTS AFTER THE REPORTING PERIOD Ceetrus - signing of a 500m Club Deal financing agreement On 26 July, Ceetrus completed a 500m fund-raising maturing in This financing was taken out with 5 banks in the form of a Club Deal. Reduction in the capital of Auchan Holding Auchan Holding's Extraordinary General Meeting of 20 June 2018 authorised a capital reduction through the purchase and cancellation of own shares. It carried out the associated transaction on 27 July 2018, buying back 429,642 shares at a unit price of (including a par value of 20) and then cancelling them. This reduced Auchan Holding's share capital from 603,893,800 to 595,300,960 (i.e. 8,5m). 4. RISKS AND UNCERTAINTIES During the usual course of their business, Auchan Holding and its subsidiaries are exposed to interest rate, currency, credit and liquidity risks, as described in section 2.5 of the 2017 management report. 4.1 MANAGEMENT IN THE FIRST HALF OF 2018 The following comments focus in particular on changes in liquidity risk and credit activity-related risks Liquidity of Auchan Holding and its subsidiaries (including Oney Bank) In terms of off-balance sheet commitments, there was no significant change in the amount of undrawn credit lines at Auchan Holding and its subsidiaries compared with 31 December On 1 February 2018, Auchan Holding issued a bond under the EMTN programme for an amount of 350m maturing on 1 February 2020, at the 3-month Euribor interest rate. After taking into account undrawn confirmed credit lines and available cash, Auchan Holding considers that projected cash flows from operations are sufficient to cover debt repayments and dividends. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

9 4.1.2 Exposure to credit activity-related risks (activity of Oney Bank and its subsidiaries) The cost of risk increased from 2.2% at end-june 2017 to 2.4% at end-june Despite a persistently sluggish economic environment, loan production continues to be of consistent quality and skilfully managed in all countries. These results underpin Oney Bank's aim of reducing its exposure to credit risk by regularly adjusting its decision-making systems. 4.2 MAIN RISKS AND UNCERTAINTIES FOR THE SECOND HALF OF 2018 There was no change in the assessment and management of risks as described in Note 10.4 of the notes to the financial statements at 31 December Auchan Holding and its subsidiaries remain subject to the usual risks specific to their business. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

10 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS (in m) Notes 30/06/ /12/2017 Goodwill Other intangible assets Property, plant and equipment Investment property Investments in associates Customer loans - credit activity Other non-current financial assets Non current derivative financial instruments Deferred tax assets Non-current assets Inventories Customer loans - credit activity Trade receivables Current tax assets Other current receivables Current derivative financial instruments Cash and cash equivalents Assets classified as held for sale Current assets Total ASSETS EQUITY AND LIABILITIES (in m) Notes 30/06/ /12/2017 Share capital Share premiums Reserves and net income attributable to owners of the parent Equity attributable to owners of the parent Non-controlling interests Total equity Provisions Non-current borrowings and other financial liabilities Debts financing the credit activity Non current derivative financial instruments Other non-current liabilities Deferred tax liabilities Non-current liabilities Provisions Current borrowings and other financial liabilities Debts financing the credit activity Current derivative financial instruments Trade payables Current tax liabilities Other current liabilities Liabilities classified as held-for-sale Current liabilities Total EQUITY and LIABILITIES AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

11 CONSOLIDATED INCOME STATEMENT (in m) Notes 30/06/ /06/2017 Revenue Cost of sales 3.1 (19 556) (20 285) Gross profit Payroll expenses 5.1 (3 205) (3 122) External expenses (1 990) (1 951) Amortisation 3.3 (742) (739) Depreciation and Impairment 3.3 (55) (45) Other recurring operating profit Other recurring operating expenses Operating profit from continuing operations Other operating profit and expenses 3.4 (28) (101) Operating profit Net cost of financial debt 10.2 (18) (18) Income from cash and cash equivalents Gross cost of financial debt (52) (47) Other financial revenue Other financial expenses 10.3 (26) (22) Profit before tax Share of net profit (loss) of associates 7 (2) (2) Income tax expenses 12.2 (80) (111) Net profit from continuing operations (4) 105 Net profit from assets held for sale and discontinued operations 40 Profit for the period (4) of which attributable to owners of the parent (151) (7) - of which attributable to non-controlling interests Earnings per share from continuing operations, attributable to owners of the parent (in ) - basic 8.2 (5,07) (1,57) - diluted 8.2 (5,07) (1,57) AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

12 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 30/06/ /06/2017 (in m) Gross Gross Income tax Net amount amount Income tax Net Net profit for the period (4) 145 Revaluation of net liabilities in respect of defined benefits Total items that will not be reclassified subsequently to profit or loss Exchange differences on translating foreign operations (13) (13) (241) (241) Change in fair value - of available-for-sale financial assets - of instruments hedging net investments in foreign operations - of cash-flow and forex hedges 32 (11) 21 (30) 18 (12) Share of other components of comprehensive income of associates Total items that may be reclassified subsequently to profit or loss 19 (11) 8 (271) 18 (253) Other components of comprehensive income 19 (11) 8 (271) 18 (253) Total comprehensive income 4 (108) Attributable to: - owners of the parent (176) (145) - non-controlling interests AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

13 CONSOLIDATED STATEMENT OF NET CASH FLOWS (in m) Notes 30/06/ /06/2017 Consolidated profit for the period (including non-controlling interests) (4) 145 Share of net profit (loss) of associates 2 2 Dividends received (non-consolidated investments) Net cost of financial debt Income tax expenses (including deferred taxes) Net depreciation, amortisation and impairment expenses (other than on current assets) Income and expenses on share-based payment plans Other non-cash items Capital gains/losses net of tax and negative goodwill (3) (66) Cash flows from operations before net cost of financial debt and tax Income tax paid (151) (168) Interest paid (76) (73) Other financial items Cash flows from operations after net cost of financial debt and tax Changes in working capital requirement 14 (1 199) (1 238) Changes in items relating to the credit activity Net cash generated by operating activities (482) (331) Acquisition of property, plant and equipment, intangible assets and investment property (871) (795) Proceeds from sales of property, plant and equipment, intangible assets and investment property Acquisition of shares in non-consolidated companies including associates accounted for by the equity method (64) (5) Proceeds from sales of shares in non-consolidated companies including associates accounted for by the equity method 20 Acquisitions of subsidiaries net of cash acquired (1) (410) (14) Sales of subsidiaries net of cash disposed of (2) 57 Dividends received (non-consolidated investments) 2 3 Changes in loans and advances granted Net cash from (used in) investing activities (1 307) (608) Amounts received from shareholders on capital increases Purchases and sales of treasury shares Dividends paid during the period 14 (303) (522) Acquisitions and disposals of interests without change of control: Changes in net financial debt Net cash from (used in) financing activities Effect of changes in foreign exchange rates (3) 58 (64) Net increase (decrease) in cash and cash equivalents (309) (847) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Net increase (decrease) in cash and cash equivalents (309) (847) (1) In 2018, this principally relates to the acquisitions of 2 shopping malls and a Retail Park through the full acquisition of 5 companies (Ceetrus Portugal - cf significant event 1.2) (2) In 2017, the disposal of shares in Alinéa (3) Primarily the impact in 2018 of of variations in the Chinese yuan for + 17 million, the Polish zloty for + 17 million, the rouble for + 16 million and the Hungarian forint for + 9 million. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

14 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (before appropriation of profit) Equity (in m) Share capital Share premiums (1) Treasury shares (2) Currency translation, financial instrument revaluation, and actuarial gains and losses reserves (3) Consolidated reserves and profit for the period Attrib. to owners of the parent Noncontrolling interests Total At 01/01/ (281) (478) Net profit for the period (7) ( 7) Other components of comprehensive income (138) ( 138) (115) ( 253) Total comprehensive income ( 138) ( 7) ( 145) 37 ( 108) Capital increases (5) (104) ( 109) ( 109) Treasury shares Dividend distributions (349) ( 349) (173) ( 522) Changes in consolidation scope (8) ( 8) 6 ( 2) Changes in put options granted to non-controlling interests (188) ( 188) (20) ( 208) Other (2) ( 2) 3 1 At 30/06/ (172) (616) At 01/01/ (152) (666) Adjustments associated with the initial application of IFRS 9 (4) (36) ( 36) 1 (35) Adjusted equity as at 1 January (152) (702) Net profit for the period (151) ( 151) 147 ( 4) Other components of comprehensive income (25) ( 25) 33 8 Total comprehensive income ( 25) ( 151) ( 176) Capital reduction Treasury shares Dividend distributions (196) ( 196) (109) ( 305) Changes in consolidation scope (9) ( 9) 18 9 Changes in put options granted to non-controlling interests and buyback commitments (5) (221) ( 221) 89 ( 132) Other 1 1 (1) At 30/06/ (152) (727) (1) Share premiums include premiums paid for stock issued, mergers and other capital contributions. (2) See note (3) See note (4) The Group applied IFRS 9 - Financial Instruments for the first time on 1 January In view of the transitional method chosen, comparative data has not been restated and the net impact resulting from the first application of the standard, detailed in note 2.2, was recognised in equity as at 1 January (5) See note AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

15 NOTES TO THE CONDENSED CONSOLIDATED 2018 HALF-YEAR FINANCIAL STATEMENTS (in million - m) NOTE 1 NOTE 2 NOTE 3 NOTE 4 NOTE 5 NOTE 6 NOTE 7 NOTE 8 NOTE 9 NOTE 10 NOTE 11 NOTE 12 NOTE 13 NOTE 14 GENERAL DESCRIPTION OF CONSOLIDATION SCOPE AND SIGNIFICANT EVENTS Note 1.1 GENERAL DESCRIPTION OF CONSOLIDATION SCOPE Note 1.2 SIGNIFICANT EVENTS AND MAIN CHANGES IN THE CONSOLIDATION SCOPE Note 1.3 EVENTS AFTER THE REPORTING PERIOD ACCOUNTING RULES AND METHODS Note 2.1 GENERAL PRINCIPLES AND STATEMENT OF COMPLIANCE Note 2.2 STANDARDS APPLIED Note 2.3 USE OF ESTIMATES Note 2.4 DETAILS SPECIFIC TO THE PREPARATION OF INTERIM FINANCIAL STATEMENTS OPERATING DATA Note 3.1 REVENUE/GROSS PROFIT Note 3.2 EBITDA Note 3.3 OPERATING PROFIT FROM CONTINUING OPERATIONS Note 3.4 OTHER OPERATING PROFIT AND EXPENSES Note 3.5 INVENTORIES OPERATING SEGMENTS Note 4.1 SEGMENT INFORMATION BY BUSINESS ACTIVITY Note 4.2 RECONCILIATION OF OPERATING ASSETS AND LIABILITIES PAYROLL EXPENSES INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT Note 6.1 GOODWILL Note 6.2 OTHER INTANGIBLE ASSETS Note 6.3 PROPERTY, PLANT AND EQUIPMENT Note 6.4 INVESTMENT PROPERTY Note 6.5 IMPAIRMENT Note 6.6 OFF-BALANCE SHEET COMMITMENTS RELATING TO INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT INVESTMENTS IN ASSOCIATES EQUITY AND EARNINGS PER SHARE Note 8.1 EQUITY Note 8.2 EARNINGS PER SHARE PROVISIONS AND CONTINGENT LIABILITIES Note 9.1 PROVISIONS Note 9.2 CONTINGENT LIABILITIES FINANCING AND FINANCIAL INSTRUMENTS EXCLUDING CREDIT ACTIVITY Note 10.1 NET FINANCIAL DEBT Note 10.2 NET COST OF FINANCIAL DEBT Note 10.3 OTHER FINANCIAL REVENUE AND EXPENSES Note 10.4 MARKET VALUE OF FINANCIAL INSTRUMENTS Note 10.5 FINANCIAL ASSETS Note 10.6 FINANCIAL LIABILITIES Note 10.7 OFF-BALANCE SHEET COMMITMENTS (EXCLUDING THE CREDIT ACTIVITY) CREDIT ACTIVITY Note 11.1 CUSTOMER LOANS Note 11.2 DEBTS FINANCING THE CREDIT ACTIVITY Note 11.3 OFF-BALANCE SHEET COMMITMENTS RELATING TO THE CREDIT ACTIVITY INCOME TAX Note 12.1 TAX ASSETS AND LIABILITIES Note 12.2 INCOME TAX EXPENSE TRANSACTIONS WITH RELATED PARTIES BREAKDOWN OF CERTAIN ITEMS OF THE CONSOLIDATED STATEMENT OF NET CASH FLOWS The half-year financial statements were subject to a limited review by the statutory auditors. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

16 Note 1 NOTE 1: GENERAL DESCRIPTION OF THE CONSOLIDATION SCOPE AND SIGNIFICANTS EVENTS 1.1 GENERAL DESCRIPTION OF THE CONSOLIDATION SCOPE Auchan Holding SA, the holding company of the consolidated entities, is a French company with its registered office at 40, Avenue de Flandre, Croix, France. The 13th largest food retailer in the world, Auchan Holding and the companies included in the consolidation scope operate in 14 countries and employ 341,399 people. Since 2 December 2015, it has been organised around 3 main businesses: Auchan Retail groups together the food retail activities. This activity includes operation of the hypermarkets (953 stores, fully consolidated), convenience stores (1,052 stores, fully consolidated) and ultra-convenience stores (446 stores, fully consolidated). It also includes the e-commerce (Auchandirect and Auchan.fr, principally) and drive outlets (Chronodrive and Auchan Drive). Retail property management by Ceetrus and its subsidiaries (395 shopping centres with shopping malls and retail parks, managed by Ceetrus). The banking activity carried out by Oney Bank, which specialises in consumer credit, insurance, electronic payments and payment card management. Oney Bank has a portfolio of 10 million customers. 1.2 SIGNIFICANT EVENTS IN THE FIRST 6 MONTHS OF 2018 AND MAIN CHANGES IN THE CONSOLIDATION SCOPE The consolidation scope changed as follows during the first half of 2018: Auchan Retail Vietnam Acquisition of Asia Investment On 28 February 2018, Auchan Retail Vietnam completed the acquisition of 100% of the shares of Asia Investment, operator of a Giant hypermarket at Crescent Mail. Ceetrus Portugal Signing of an agreement on 1 March 2018 for the acquisition of 2 shopping centres in Lisbon (Forum Montijo, Forum Sintra) and the Sintra Retail Park, through the full acquisition of 5 companies. On 26 February 2018, Ceetrus Portugal acquired a 50% stake in Neutripromo, which holds land and commercial permits obtained to carry out a business centre project in Portugal. Oney Bank On 29 January 2018, Oney Bank acquired 100% of the shares of In Confidence Insurance (ICI), an agent specialising in affinity insurance (warranty extension and breakage insurance). Auchan Retail - Changes in the store network The number of points of sale operated by Auchan Retail changed as follows in the first 6 months of 2018: In Western Europe, the number of points of sale decreased by a net 8 units, with 6 openings in Portugal and 14 closures in Italy. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

17 In Central and Eastern Europe, the number of points of sale grew by a net 13 units, with 5 openings in Romania, 5 in Russia and 2 in Ukraine. In Asia and Africa, the number of points of sale and stores increased by 204 units, of which 194 in China and 8 in Senegal. The first half of 2018 was marked by the following other highlights: Change of governance at Auchan Holding On 2 January 2018, Auchan Holding announced that Barthélémy Guislain would replace Régis Degelcke as chairman of the Supervisory Board. Since that date, the Management Board has comprised the chairmen of the boards of directors of Auchan Holding's three core businesses: Régis Degelcke for Auchan Retail, Vianney Mulliez for Ceetrus and Xavier de Mézerac for Oney. Auchan Holding's Management Board is chaired by Régis Degelcke. Bond issue On 25 January 2018, Auchan Holding issued a bond under the EMTN programme for an amount of 350m over two years at a rate of [3-month Euribor + 15bp (coupon floor level of "0")]. Auchan Retail - Commercial partnership with Casino Group, Metro and Schiever On 3 April 2018, Auchan Retail and Casino Group announced that they had entered into exclusive negotiations with a view to establishing, in compliance with competition rules, a strategic partnership enabling them to jointly negotiate purchasing in France and internationally with their main multinational food and non-food suppliers. On 29 June 2018, Auchan Retail, Casino Group, Metro and Schiever announced the completion of a number of purchasing partnership agreements collectively known as Horizon, with the aim of moving from a purely transactional mode of bargaining to a more collaborative, balanced and innovative method. Ceetrus, Immochan's new name On 5 June 2018, Immochan became Ceetrus. Representing the transformation that Immochan initiated 2 years ago, this new name symbolises the company's evolution from a commercial property company to a mixed-use property developer. Ceetrus is part of a process of dialogue with local communities aimed at creating balanced, vibrant urban spaces that have a positive impact. 1.3 EVENTS AFTER THE REPORTING PERIOD Ceetrus - signing of a 500m Club Deal financing agreement On 26 July, Ceetrus completed a 500m fund-raising maturing in This financing was taken out with 5 banks in the form of a Club Deal. Reduction in the capital of Auchan Holding Auchan Holding's Extraordinary General Meeting of 20 June 2018 authorised a capital reduction through the purchase and cancellation of own shares. It carried out the associated transaction on 27 July 2018, buying back 429,642 shares at a unit price of (including a par value of 20) and then cancelling them. This reduced Auchan Holding's share capital from 603,893,800 to 595,300,960. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

18 NOTE 2: ACCOUNTING RULES AND METHODS 2.1 GENERAL PRINCIPLES AND STATEMENT OF COMPLIANCE Auchan Holding SA s condensed consolidated half-year financial statements were approved by the Management Board on 28 August The condensed consolidated financial statements are presented in euro and are rounded up or down to the closest million. 2.2 STANDARDS APPLIED Auchan Holding SA s condensed consolidated financial statements for the 6 months ended 30 June 2018 have been prepared in accordance with the provisions of IAS 34 on interim financial reporting and the IFRS standards and interpretations published by the International Accounting Standards Board (IASB) as adopted by the European Union and mandatorily applicable from 1 January These notes, therefore, do not include all the information required in the full annual financial statements and should be read in conjunction with Auchan Holding SA's financial statements for the year ended 31 December Pursuant to IAS 34, the explanatory notes in these condensed financial statements aim to: update the accounting and financial information contained in Auchan Holding SA s consolidated annual financial statements for the year ended 31 December 2017; provide new accounting and financial information on significant events that took place during the period under review. The accounting principles applied for the consolidated financial statements at 30 June 2018 are consistent with those used for the financial statements at 31 December 2017, with the exception of the changes in standards set out below that had not been applied early by Auchan Holding and its subsidiaries. First-time application of IFRS 15 Revenue from Contracts with Customers IFRS 15 replaces IAS 11 - Construction Contracts, IAS 18 - Revenue, IFRIC 13 Customer Loyalty Programmes and IFRIC 15 - Agreements for the Construction of Real Estate. Its scope covers all contracts entered into with customers, with the exception of leases (revenue from rentals and subletting), financial instruments (interest income) and insurance contracts, which are covered by other standards. IFRS 15 introduces a single 5-step model for determining when and how much revenue to recognise under the contract. It introduces new revenue recognition concepts and principles, including for identifying performance obligations or allocating transaction prices for multi-component contracts. Revenue must be recognised such that it reflects the transfer of goods and services to the buyer and the payments that the company expects to receive in exchange for these goods and services. The Group applied IFRS 15 as from 1 January 2018 without restating comparative periods, as authorised by the standard. As the major share of the Group s revenue consists of sales to end customers made in stores, service stations or drive outlets sales without any other performance obligation, for which the revenue is recognised when customers go through the checkout the impact of the application of IFRS 15 on the recognition of revenue and other income is immaterial. The main impact of the standard's entry into force was the reclassification of a portion of revenue as a deduction from the cost of sales, in the amount of 157m. This restatement had no impact on income or equity. The main restatements resulting from the application of IFRS 15 relate to construction activities (Ceetrus), in particular off-plan sales contracts. While the principle of revenue and margin generation in relation to the percentage of completion is not called into question, calculation of the contract's AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

19 progress (housing and offices) now includes land-related costs, which results in recognition of higher revenue and margin early in the contract than under the previous method. Ceetrus already applies this principle for the recognition of its revenue. Consequently, no impact has been recorded. First-time application of IFRS 9 "Financial Instruments" IFRS 9 replaces IAS 39 Financial instruments Recognition and Measurement for the classification and measurement of financial assets and liabilities as well as general hedge accounting. The Group applied IFRS 9 as from 1 January 2018 without restating comparative periods, as authorised by the standard. The impacts related to the first retrospective application of the standard, recognised in opening equity at 1 January 2018, are mentioned below. This standard comprises 3 parts: classification and measurement of financial instruments, impairment of financial assets, and recognition of hedging transactions excluding macro-hedging. The main changes introduced by each part are as follows: Part 1: Classification and measurement of financial assets and liabilities For the classification and measurement of financial assets, IFRS 9 uses a new approach based on the one hand on the assets' contractual characteristics and on the other on their business model. IFRS 9 removes the former IAS 39 categories assets held to maturity, loans and receivables, and available-for-sale assets. The new standard introduces three main categories of financial assets: those measured at amortised cost, those measured at fair value through other comprehensive income (recyclable or non-recyclable) and those measured at fair value through profit or loss. Financial assets are classified in accordance with IFRS 9 based on the business model used to hold the asset and the characteristics of the asset's contractual cash flows. The financial assets held by the Group carried at amortised cost in accordance with IAS 39 meet the IFRS 9 criteria of solely payment of principal and interest and a business model based on the collection of contractual cash flows. The application of IFRS 9 did not have a material impact on the Group s accounting policies with respect to the measurement of financial assets at amortised cost. Application of the "Classification and measurement of financial instruments" part let the Group to split into two categories, assets previously classified under IAS39 as Available-for-sale assets as follows: - "Investments in equity instruments measured at fair value through equity" - "Investments in equity instruments measured at fair value through profit or loss" Application of the standard also led the Group to create a new non-recyclable component in its comprehensive income to record as of January 1, 2018 changes in the fair value of "investments in equity instruments measured at fair value through equity" The change related to the recognition at fair value of securities previously recognised at historical cost, i.e. + 8m was recognised at 1 January 2018 (with the offsetting entry to equity). Part 2: Impairment of financial assets Application of the Impairment of financial assets part impacted the Group's financial statements at 1 January 2018 particularly with regard to its customer credit business. For the Retail and Ceetrus activities, the impact on the opening balance sheet is immaterial, as IFRS 9 introduces a new credit risk impairment model that requires switching from incurred credit loss provisioning to expected credit loss (ECL) provisioning. o For the customer credit activity, the impact at 1 January 2018 of the application of IFRS 9 was a 65m increase in the impairment of outstanding loans (net of the reintegration of off-balance AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

20 sheet items), with the offsetting entry to equity in a negative amount of 44m, net of deferred taxes. This impact is attributable to the provisioning of stage-1 performing loans (not provisioned in accordance with IAS 39) and the longer-term provisioning (increased lifespan) of stage-2 outstandings (outstandings with a material level of increased credit risk). The impact on stage3 outstandings (those for which a credit event has been recorded) is negligible, with the exception of over-indebtedness plans in France, which are reclassified as stage-3. o For the Retail and Ceetrus activities, the Group applies the simplified approach to accounting for expected losses on customers and related accounts. Part 3: Hedge accounting Application of the Recognition of hedging transactions part results in a broadening of the eligibility conditions for hedging instruments and hedged items, a relaxation of the effectiveness test criteria and less volatility in the income statement. The Group has prospectively classified floating rate receiver, fixed rate payer swaps as cash flow hedges, covering aggregated exposures of fixed rate debt and fixed rate receiver, floating rate payer swaps. The effective portion of the change in value of these newly eligible hedging instruments is recognised in the cash flow hedge reserve as from 1 January The Group has opted to retrospectively classify as a hedging cost the foreign currency basis spread of cross-currency swaps classified as fair value hedges. The impact of the IFRS 9 restatement on the Group's opening equity was 1.6m and represents the fair value of the basis spread of instruments retrospectively classified as hedges at 1 January The change in fair value of the basis spread cannot be considered a hedging component. It is recognised in the hedge reserve and amortised through profit or loss over the hedging period. IFRS 16 Leases The new standard will be applicable in financial years beginning on or after 1 January IFRS 16 mainly concerns lessees, and removes the distinction set out in IAS 17 between operating leases and finance leases. It provides a single accounting model for lessees, under which they must recognise an asset for the right of use of the leased asset over the duration of the contract, which must be offset by the recognition of a liability representing the lease payment obligation. It also allows exemption of leases with a duration of less than 12 months and those with a low-value underlying asset. Under this model, the depreciation charge on the asset will be recognised in operating expenses and the cost of the debt to the lessor in financial expenses, whereas under currently applicable rules the rental expense is recognised in operating expenses. In 2017, the Group identified its leases and started assessing how to implement the standard. In the first half of 2018, the Group carried out a study of IT solutions and launched the tool configuration phase. The presented financial statements do not take account of new standards, revisions to existing standards or interpretations that have been published by the IASB but are not applicable. Their potential impact on the consolidated financial statements is currently under review, unless otherwise stated. 2.3 USE OF ESTIMATES The preparation of the consolidated financial statements requires Auchan Holding SA s Management to exercise its judgement to make estimates and assumptions that may affect the carrying amount of certain assets and liabilities, income and expenses and the information provided in the notes to the financial statements. The actual values may be different from current estimates. AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

21 The significant judgements that Management made in applying the accounting methods and main estimates when preparing the condensed consolidated half-year financial statements are identical to those described in the consolidated financial statements for the year ended 31 December 2017, except in respect of the application of IFRS 15 and IFRS 9 (see Note 2.2). 2.4 DETAILS SPECIFIC TO THE PREPARATION OF THE INTERIM FINANCIAL STATEMENTS Employee benefits An actuarial valuation is performed as part of the preparation of the condensed half-year financial statements where there are significant changes to plans and/or actuarial assumptions Seasonal activity trends Taking all activities together, the seasonal effect on the income statement is low for revenue (the first half of 2017 accounted for 49.8% of the 2017 total with revenue of 26.5m in June 2017), but is more pronounced for results (first half of 2017 compared with full-year 2017: 34.9% for operating profit from continuing operations and 43.3% for cash flow from operations). The statement of financial position is also strongly impacted by seasonal activity trends. In respect of 2017, net financial debt stood at 3,715m at 30 June 2017 but was reduced to 2,470m by 31 December, while working capital requirements increased from 4,592m at 30 June 2017 to 5,214m at 31 December AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

22 NOTE 3 OPERATING DATA 3.1 REVENUE/GROSS PROFIT (in m) 30/06/ /06/2017 Sales Other revenue Revenue Purchases net of discounts, commercial cooperation services and ancillary and logistics costs (18 979) (19 311) Change in inventories (net of impairment) (577) (974) Cost of sales (19 556) (20 285) Gross profit AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

23 3.2 EBITDA (in m) 30/06/ /06/2017 Operating profit from continuing operations Other recurring operating profit and expenses (10) (1) - Depreciation, amortisation and impairment (1) EBITDA (2) (1) Including the amounts recognised under cost of sales, payroll expenses and other external expenses for 44 million in 2018 and 39 million in (2) Operating profit from continuing operations less other recurring operating profit and expenses and after depreciation, amortisation and impairment (including that recognised under cost of sales, payroll expenses and other external expenses) 3.3 OPERATING PROFIT FROM CONTINUING OPERATIONS Other recurring operating profit (in m) 30/06/ /06/2017 Net gains on disposals (including reversals of provisions on sold assets) 6 14 Other 4 (13) TOTAL OTHER RECURRING OPERATING PROFIT Depreciation, amortisation and impairment (in m) 30/06/ /06/2017 Depreciation and amortisation expenses, net of reversals Provision and impairment expenses, net of reversals of unused provisions (1) NET AMOUNT IN INCOME STATEMENT (1) Including 15 million of impairment net of reversals on customer loans (compared with 4 million as at 30 June 2017). 3.4 OTHER OPERATING PROFIT AND EXPENSES (in m) 30/06/ /06/2017 Impairment of the net current assets (China and Italy - cf note 6.5) (15) Provision for reorganisation costs of Auchan Retail France's support services (1) 3 (58) Provision for impairment of the Cambria receivable (Italy) (11) Store closure costs (Italy - cf note 6.5) (5) Impairment of non-current assets ( 17m) and store closure costs ( 10m) (27) Goodwill impairment (2) (68) Extraordinary profit on prepaid cards in China (3) 52 TOTAL OTHER OPERATING PROFIT AND EXPENSES (28) (101) (1) In 2017, the impact of the announcement of the roll-out of the single brand and the reorganisation of the support services (2) In 2017, the Italian company SCS Cambria Sicilia, which is 51% owned by S.M.A (a subsidiary of Auchan Holding), was consolidated using the equity method at 31 December 2016 pursuant to IFRS applicable to jointly controlled arrangements. Various events that occurred during the first half of 2017 gave rise to a change in the assessment of control for this company, as required by IFRS, with the result that it was fully consolidated from 30 June An exceptional expense of 68 million was also recognised reflecting the company's economic and financial situation. (3) In 2017, this amount represented the proportion of cards issued more than 5 years ago that are very unlikely to be used in stores in the future (see note 1.2 of the 2017 financial report). AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

24 3.5 INVENTORIES (in m) 30/06/ /12/2017 Gross amount Impairment (130) (136) NET CARRYING AMOUNT Change in impairment (in m) 30/06/ /12/2017 At 1 January (136) (130) Provisions for impairment, net of reversals 5 (9) Changes in the consolidation scope and exchange differences 1 3 At 30 June (130) (136) AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

25 NOTE 4 OPERATING SEGMENTS 4.1 SEGMENT INFORMATION BY BUSINESS ACTIVITY Holding companies and Auchan Retail Ceetrus Oney Bank Segment data at 30 June (in m) Eliminations Total External revenue Inter-segment revenue (14) (12) 0 0 REVENUE (14) (12) Operating profit from continuing operations (23) Other operating profit and expenses (28) (101) Operating profit Net cost of financial debt (18) (18) Other financial revenue 4 33 Other financial expenses (25) (22) Income tax expense (80) (111) Share of net profit (loss) of associates (2) (2) Net profit from continuing operations (4) 105 Net profit from assets held for sale and discontinued operations 0 40 PROFIT FOR THE PERIOD (4) 145 Segment assets Segment liabilities AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF

26 4.2 RECONCILIATION OF SEGMENT ASSETS AND LIABILITIES Total segment assets are reconciled in the total assets of Auchan Holding and its subsidiaries as follows: (in m) 30/06/ /12/ /06/2017 Goodwill Other intangible assets Property, plant and equipment Investment property Non-current segment assets excluding tax and financial assets Investments in associates Non current customer loans credit activity Inventories Current customer loans credit activity Trade receivables Other current receivables Segment assets Other non-current financial assets Non-current derivative financial instruments Deferred tax assets Current tax assets Current derivative financial instruments Cash and cash equivalents Assets classified as held for sale TOTAL ASSETS Total segment liabilities are reconciled in the total liabilities of Auchan Holding and its subsidiaries as follows: (in m) 30/06/ /12/ /06/2017 Non-current provisions Non current debts financing the credit activity Current provisions Current debts financing the credit activity Trade payables Other current liabilities Segment liabilities Equity Non-current borrowings and other financial liabilities Non-current derivative financial instruments Other non-current liabilities Deferred tax liabilities Current borrowings and other financial liabilities Current derivative financial instruments Current tax liabilities Liabilities classified as held-for-sale TOTAL EQUITY AND LIABILITIES AUCHAN HOLDING FINANCIAL REPORT FOR THE FIRST HALF OF