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  • 1

    Carrefour GroupCarrefour GroupTransition to IFRSTransition to IFRS

    16th 16th DecemberDecember 20042004

  • 2

    AgendaAgenda

    1.1. Background to the adoption of IFRS Background to the adoption of IFRS

    2.2. How IFRS will impact Carrefour and the food retail How IFRS will impact Carrefour and the food retail sectorsector

  • 3

    Background to the adoption of IFRSBackground to the adoption of IFRS

    CalendarCalendar

    Managing the transition to IFRS at CarrefourManaging the transition to IFRS at Carrefour

    How IFRS differsHow IFRS differsto French GAAPto French GAAP

    and to US GAAPand to US GAAP

    and the consequencesand the consequences

  • 4

    Calendar

    30 June 2004 30 June 2005

    The first publication of Carrefour accounts under IFRS will be for the six months to 30th June 2005 (with pro forma accounts for the same period to 30th June 2004)

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    Calendar

    September 2004 : publication of accounts for the six months to 30th June 2004- French GAAP- comparable accounts to 30th June 2003 and 2002

    March 2005 publication of accounts for the year to 31st December 2004- French GAAP- comparable accounts to 31st December 2003 and 2002

    The current situation:

    The situation from 2005:

    September 2005 : publication of accounts for the six months to 30th June 2005- only under IFRS- pro forma comparable accounts to 30th June 2004

    March 2006 publication of accounts for the year to 31st December 2005-only under IFRS- pro forma comparable accounts to 31st Dec.2004

  • 6

    Managing the transition to IFRS

    Putting a team in place

    Carrefour Group formed in 2002 a steering committee responsible for managing the transition to IFRS. This committee, reporting to the CFO, was given the following responsibilities:

    organising the collection of information ;adapting internal reporting ;

    adapting methods of consolidation ;reconfiguring the process of consolidation ;actively following the publication of new standards / interpretations of the

    IASB.

    A group project leader was appointed from within the consolidation team.

    Project leaders were appointed in each country under the responsibility of their local FD.

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    Managing the transition to IFRS

    Calendar

    Creation of working groups at subsidiary level

    Communication to the financial markets

    Identification of accounting differencesFirst simulations

    Validation of accounting options

    Creation of a steering committeeCalendar established

    20042003 2005

    Publication under IFRS

    Comprehensive simulations

    Validation with organisation and systems

    2002

  • 8

    Managing the transition to IFRS

    Training

    For senior directors

    The members of the Audit committee as well as the Supervisory Board are aware of the issues associated with the transition to IFRS.

    Presentations have been given to the different regional Executive Committees.

    For the accounting and finance teams

    Training was given to more than 200 people between April and September 2003 in partnership with an outside consultant.

    Training on the complete package of IFRS changes was given in March/April 2004.

    For the rest of the company

    Our property, merchandising and human resources teams have also been made aware of the issues associated with the transition to IFRS.

  • 9

    Managing the transition to IFRS

    Adaptation of tools / systems

    Development of a new consolidation process, and a user guide

    Definition of group policies

    Development of a new tool to help subsidiaries review property agreements.

    Adaptation software by our Treasury department

    Adaptation of our reporting tools

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    The main principles adopted

    The opening financial statements reported under IFRS will begin from the 1st January 2004.

    Most of the IFRS standards will be applied retrospectively (as if they have always been applied).

    The impact of restating the accounts using IFRS will be accounted for in the opening financial statements from the 1st January 2004.

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    Differences between French and US GAAP

    Only French companies

    StaticLegal

    FR GAAPEconomicConceptual

    EconomicConceptual Clear lines , cook book

    Since 1973Rewritten in 1999

    Since the 1930s

    All quoted European companies and their subsidiaries worldwide from 2005

    All US companies, their subsidiaries worldwide, and a number of non-US companies

    IFRSUS GAAP

    Approach

    History

    Application

    Over time, there will be a convergence between US and IFRS standards

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    Consequences

    Adopting IFRS standards makes comparisons between European corporateseasier.

    However, flexibility in interpreting the new standards means that there will be a divergence of approach with regard to certain issues (for example, revaluation of assets, segment reporting).

    The simultaneous adoption of the new standards by all European corporates has encouraged exchanges of information between companies.

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    The impact on financials

    We will see three kinds of changes when comparing IFRS with the standards currently used:

    Valuation : The calculation of financial data will differ occasionally

    Presentation : The accounts of the group will be presented differently

    Information : The level of disclosure will evolve

    => We will now review all of the changes

  • 14

    Review of IFRS standardsReview of IFRS standards

    List of the standards which are applicable to CarrefourList of the standards which are applicable to Carrefour

    Presentation of the principal standards which are likely to Presentation of the principal standards which are likely to impact companies operating in the food retail sectorimpact companies operating in the food retail sector

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    List of applicable standards

    Standard which may impact financial statements of a food retail group

  • 16

    List of applicable standards

    Standard which may impact financial statements of a food retail group

  • 17

    List of applicable standards

    Standard which may impact financial statements of a food retail group

  • 18

    IAS 27 : Business combination

    Principle

    Different subsidiaries must be fully consolidated where there is a controlling interest.

    What Carrefour has decided

    Within Carrefour, financial subsidiaries as well as insurance companies which are controlled by the group have been until now consolidated by the equity method.In the future, these companies will be fully consolidated.

    In order to give meaning to the financial statements :We will show on the balance sheet, on a separate line, the debt which has been integrated.Within the profit and loss account, the sales of these companies will be presented in Other revenues .

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    IAS 1 : Presentation of the financial statements

    Principle

    No requirement for standard presentation of the balance sheet and the profit and loss account.

    Cancellation of the concept of extraordinary income.

    Choice of presentation of profit and loss account by nature or by purpose .

    What Carrefour has decided

    The presentation of the balance sheet remains the same.

    New presentation of the profit and loss account (see following page).

    The P&L presentation by nature has not changed.

  • 20

    IAS 1 : Presentation of the financial statements

    Euro millions June 2005 % ch. June 2004

    Net salesOther revenuesRevenues of ordinary activitiesCost of salesCommercial marginSG&AEBITDADepreciation & provisionsActivity contributionOther income and expensesEBITCost of debtIncome before taxIncome taxNet income of consolidated companiesEquity accounted companiesMinority interestsDiscontinuing activities group shareDiscontinuing activities minority interestsNet result group share

    Revenues from financial service companiesRental incomeOther income (Carrefour Vacances, franchisee rental fees, services) Costs of the loyalty programme which are not financed by suppliers

    Sales through the cash linersand sales made to franchisees through Carrefour warehouses (unchanged definition)

  • 21

    IAS 1 : Presentation of the financial statements

    Euro millions June 2005 % ch. June 2004

    Net salesOther revenuesRevenues of ordinary activitiesCost of salesCommercial marginSG&AEBITDADepreciation & provisionsActivity contributionOther income and expensesEBITCost of debtIncome before taxIncome taxNet income of consolidated companiesEquity accounted companiesMinority interestsDiscontinuing activities group shareDiscontinuing activities minority interestsNet result group share

    Including impairment charges, profit on divestments and other non-recurring items

    New figure

    New figure

  • 22

    IAS 1 : Presentation of the financial statements

    Euro millions June 2005 % ch. June 2004

    Net salesOther revenuesRevenues of ordinary activitiesCost of salesCommercial marginSG&AEBITDADepreciation & provisionsActivity contributionOther income and expensesEBITCost of debtIncome before taxIncome taxNet income of consolidated companiesEquity accounted companiesMinority interestsDiscontinuing activities group shareDiscontinuing activities minority interestsNet result group share

    Cancellation of extraordinaryitems

    Cancellation of goodwill amortization

  • 23

    IAS 2 : Inventories

    Principle

    The valuation of stock on the balance sheet m