Carrefour - 2017 Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements 2017 REGISTRATION DOCUMENT | CARREFOUR 5. 280 Credit risk 12.7.4 The Group’s estimated exposure to credit risk is presented below: (in millions of euros) December 31, 2017 December 31, 2016 Investments in non-consolidated companies 101 98 Other long-term investments 1,266 1,333 Total Other non-current financial assets 1,367 1,430 Consumer credit granted by the financial services companies 6,321 6,273 Trade receivables 2,750 2,682 Other current financial assets 161 239 Other assets (1) 506 580 Cash and cash equivalents 3,593 3,305 MAXIMUM EXPOSURE TO CREDIT RISK 14,698 14,509 Excluding prepaid expenses. (1) Retail business 12.7.4.1 1) Trade receivables Trade receivables correspond mainly to amounts receivable from franchisees (for delivered goods and franchise fees), suppliers (mainly rebates and commercial income) and tenants of shopping mall units (rent). Impairment losses are recognised where necessary, based on an estimate of the debtor’s ability to pay the amount due and the age of the receivable. At December 31, 2017, trade receivables net of impairment (excluding receivables from suppliers) amounted to 1,433 million euros (Note 5.4.3). At that date, past due receivables amounted to a net 165 million euros, of which 30 million euros were over 90 days past due (2.1% 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. 2) Investments (cash equivalents and other current financial assets) The Group’s short-term cash management strategy focuses on acquiring liquid investments that are easily convertible into cash and are subject to an insignificant risk of changes in value. Investments are made for the most part by Corporate Treasury and Financing, in diversified instruments such as term deposits with leading banks and mutual funds classified by the AMF as “money market” and “short-term money market” funds without any withdrawal restrictions. Investments made at the country level are approved by Corporate Treasury and Financing. 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 to never invest more than 250 million euros in any single fund. Banking and insurance business 12.7.4.2 1) Credit risk management 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. 2) Provisions for non-performing consumer loans Consumer loans are classified as non-performing when the Group believes that there is a risk that all or part of the amount due will not be recovered (for example, because of overdue payment or a litigation procedure). Provision models are developed in accordance with IAS 39 – Financial Instruments: Recognition and Measurement and local banking regulations in each country, according to a two-step process: classification of outstanding loans in uniform risk categories ● based on the probability of default; then modelling of the loss given default based on historical data. ●