free translation into english from the original previously issued in ... · 5. grupo carrefour...

Free translation into English from the original previously issued in Portuguese

Financial Statements

March 31st, 2019

Grupo Carrefour Brasil – Individual and Consolidated Interim Financial Statements as of March 31, 2019 - 2 -

Management report - 3 -

Independent auditors’ report on the individual and consolidated interim

financial information

Statements of financial position

Income statements

Statements of comprehensive income

Statements of changes in shareholders’ equity

Statements of cash flows

Statements of value added

Notes to the individual and consolidated interim financial information

- 24 -

- 26 -

- 28 -

- 29 -

- 30 -

- 31 -

- 32 -

- 33 -

* Excluding petrol

GRUPO CARREFOUR BRASIL (CRFB3) Q1 2019 RESULTS

May 9, 2019

SIGNIFICANT ADVANCES IN THE DEVELOPMENT OF OUR ECOSYSTEM SOLID AND SUSTAINABLE GROWTH IN PROFIT IN Q1

Q1 2019 FINANCIAL HIGHLIGHTS • Consolidated sales up in all divisions to R$14.2 billion, reinforcing our leadership position in Brazil

Gross sales up 9.9% despite challenging calendar effect from Easter shift LfL growth of 6.6%, best performance in eight quarters: Confirmation of strong momentum at

Atacadão, acceleration at Carrefour Retail, in particular in hypermarkets and convenience stores • Adjusted EBITDA up 16.7% to R$983 million pre-application of IFRS 16 (7.6% margin, +53bps) or 23.8% to

R$1.043 billion (8.1% margin, +100bps) post- IFRS 16 • Adjusted Net income, Group share, up 28.8% to R$413 million pre-IFRS 16 (net margin of 3.2%, up 50bps)

or 26.7% to R$407 million post-IFRS 16 (net margin of 3.2%, up 45bps)

• Additional IOE payment of R$90 million to be paid on June 14, 2019

ACCELERATION IN THE CONSTRUCTION OF OUR OMNICHANNEL ECOSYSTEM • Further development of our e-commerce strategy:

Continued positive e-commerce momentum: GMV up 84%, ~11% of Carrefour's sales vs. 6% in the year-ago quarter. Marketplace growth of +332%, ~23% of total GMV vs. ~10% in Q1 2018. Over 2,000 sellers and 1.9 million SKUs on our platform at end-March

Food e-commerce: 13 Drives in operation and more scheduled in 2019, promising initial results from our partnership with Rappi

• New customers connected to the ecosystem: Significant increase in number of tickets (stores and online) Annual target of 20 Atacadão openings on track, with four new stores opened in Q1. Openings evenly

spread across different Brazilian regions. Increasing contribution to total growth Carrefour.com: 9th site in number of visits at the end of February (vs 16th in December 2018) Strong growth in new accounts at Banco Carrefour, for both Carrefour and Atacadão cards

NEW ADVANCES IN THE FOOD TRANSITION FOR ALL

Healthy food aisles rolled out at 49 hypermarkets at end of March and significant increase in number

of healthy products and organic SKUs, with double-digit sales growth in Q1 Private label: 11.4% of Carrefour’s food sales (vs 9.8% in Q1 2018), on track to achieve 20% in 2022

Noël Prioux, CEO of Grupo Carrefour Brasil, declared: “Grupo Carrefour Brasil’s strong first quarter performance demonstrates the growing momentum of the omnichannel ecosystem we are building by multiplying customer connections between our stores, our online offer and our financial services. All our divisions contributed to our robust sales growth in the quarter, and profitability was up in double digits, attesting to the efficiency of our model. Atacadão maintained its steady pace of expansion, Carrefour Retail’s successful commercial initiatives resulted in its best like-for-like sales growth in eight quarters and Banco Carrefour continues its impressive growth. Carrefour also accelerated its digital journey in the quarter with a strong rise in GMV, continued roll out of services such as opening of side-stores and express delivery for online food orders, and made new advances in a healthy food offer in pursuit of our ambition of being the leader in the food transition for all.”

+9.9% Gross Sales*

+16.7% Pre-IFRS16

Adj. EBITDA

Adj. Net income

+28.8% Pre-IFRS16

4

Grupo Carrefour Brasil – Q1 2019 Results

Table of Contents

Operating Performance by Segment 4 Consolidated Financial Results 9 Net Debt Profile and Financial Result 11-12 Operating Working Capital, Capex and Store network 13-14 APPENDIX I – Consolidated Income Statement Post IFRS 16 15 APPENDIX II and III – Adjusted Net Income Calculation and EBITDA Reconciliation, Post IFRS 16 16 APPENDIX IV – Consolidated Balance Sheet post IFRS 16 17-18 APPENDIX V – Banco Carrefour Income Statement 19 Appendix VI – IFRS 16 First Application 20 Glossary 21

Q1 2019 OPERATING HIGHLIGHTS PRE-IFRS 16

Q1 2019 OPERATING HIGHLIGHTS POST-IFRS 16

The IFRS16 – Leases standard is applicable as from January 1, 2019. Under IFRS 16, all leases are to be brought onto the statement of financial position by recognizing a right-of-use asset and a lease liability corresponding to the present value of the lease payments due over the reasonably certain term of the lease. IFRS 16 therefore affects the presentation of lease transactions in the income statement, with rental expense replaced by a depreciation expense and interest expense. As provided by the standard, Grupo Carrefour Brasil decided to transition to IFRS 16 using the simplified restrospective approach, without restating the 2018 consolidated financial statements. See Appendix VI for more details on this topic.

In R$ million Q1 19pre-IFRS 16

Q1 18reported

∆% Q1 19pre-IFRS 16

Q1 18reported


Q1 18reported


Q1 18reported


Q1 18reported

∆%

Gross sales 14,159 13,014 8.8% 9,505 8,370 13.6% 4,654 4,644 0.2%Gross sales ex petrol 13,506 12,290 9.9% 9,505 8,370 13.6% 4,001 3,920 2.1%Net sales 12,856 11,843 8.6% 8,630 7,596 13.6% 4,226 4,247 -0.5%Other revenues 786 701 12.2% 34 34 1.3% 103 93 11.0% 649 574 13.0%Total Revenues 13,642 12,544 8.8% 8,664 7,630 13.6% 4,329 4,340 -0.2% 649 574 13.0%Gross profit 2,864 2,544 12.6% 1,372 1,113 23.3% 1,021 1,030 -0.9% 471 401 17.4%Gross Margin 22.3% 21.5% +79 bps 15.9% 14.7% +125 bps 24.2% 24.3% -9 bpsSG&A Expenses (1,889) (1,708) 10.6% (754) (648) 16.4% (873) (851) 2.6% (227) (182) 24.6% (35) (27) 29.6%SG&A of Net Sales 14.7% 14.4% +27 bps 8.7% 8.5% +21 bps 20.7% 20.0% +62 bpsAdj. EBITDA 983 843 16.7% 620 467 32.7% 153 184 -16.6% 245 219 11.9% (35) (27) 29.6%Adj. EBITDA Margin 7.6% 7.1% + 53 bps 7.2% 6.1% + 104 bps 3.6% 4.3% -70 bpsAdj. Net Income, Group share 413 321 28.8%Adj. Net Income Margin 3.2% 2.7% + 50 bps

CONSOLIDATED ATACADÃO CARREFOUR RETAIL BANCO CARREFOUR GLOBAL FUNCTIONS

In R$ million Q1 19post-IFRS 16

Q1 18reported

∆% Q1 19post-IFRS 16

Q1 18reported


Q1 18reported


Q1 18reported


Q1 18reported

∆%

Gross sales 14,159 13,014 8.8% 9,505 8,370 13.6% 4,654 4,644 0.2%Gross sales ex petrol 13,506 12,290 9.9% 9,505 8,370 13.6% 4,001 3,920 2.1%Net sales 12,856 11,843 8.6% 8,630 7,596 13.6% 4,226 4,247 -0.5%Other revenues 786 701 12.2% 34 34 1.3% 103 93 11.0% 649 574 13.0%Total Revenues 13,642 12,544 8.8% 8,664 7,630 13.6% 4,329 4,340 -0.2% 649 574 13.0%Gross profit 2,869 2,544 12.8% 1,373 1,113 23.4% 1,025 1,030 -0.5% 471 401 17.3%Gross Margin 22.3% 21.5% +83 bps 15.9% 14.7% +126 bps 24.3% 24.3% 0 bpsSG&A Expenses (1,839) (1,708) 7.7% (741) (648) 14.4% (837) (851) -1.7% (226) (182) 24.1% (35) (27) 29.6%SG&A of Net Sales 14.3% 14.4% -12 bps 8.6% 8.5% +6 bps 19.8% 20.0% -23 bpsAdj. EBITDA 1,043 843 23.8% 635 467 36.0% 198 184 7.9% 245 219 12.1% (35) (27) 29.6%Adj. EBITDA Margin 8.1% 7.1% + 100 bps 7.4% 6.1% + 121 bps 4.7% 4.3% + 36 bpsAdj. Net Income, Group share 407 321 26.7%Adj. Net Income Margin 3.2% 2.7% + 45 bps

CONSOLIDATED ATACADÃO CARREFOUR RETAIL BANCO CARREFOUR GLOBAL FUNCTIONS

5


OPERATING PERFORMANCE BY SEGMENT In Q1 2019, Grupo Carrefour Brasil’s consolidated sales reached R$14.2 billion, with growth accelerating to 9.9%, driven by solid performance in the cash and carry and retail divisions, despite the Easter calendar shift: This quarter included an unfavorable calendar impact of 1.4% (-0.7% for Atacadão and -3.0% for Carrefour). Higher food inflation also contributed to the positive sales momentum in Q1: The IPCA Food at Home inflation index was 6.5% in Q1 compared with 4.1% in Q4 2018. In Q1, Grupo Carrefour Brasil posted sales growth of 6.6% on a like-for-like basis (or 7.2% including marketplace GMV), the highest level since Q1 2017. Atacadão confirmed its strong LfL trend and Carrefour accelerated sharply.

Like-for-Like ex-calendar Q1 18 FY2018

Q1 19

Atacadão 0.5% 4.8%

6.8% Carrefour ex-petrol 0.1% 1.8%

6.1%

Consolidated ex-petrol 0.4% 3.9%

6.6%

Gross Sales

(R$MM)

LFL

Expansion

Total Growth

Atacadão 9,505 6.8% 7.4% 13.6% Carrefour (ex-petrol) 4,001 6.1% -1.1% 2.1% Gross sales (ex-petrol) 13,506 6.6% 4.7% 9.9% Gross sales (inc petrol) 14,159 5.8% 4.4% 8.8%

Expansion accounted for a further 4.4% of sales growth in Q1, mainly from four new Atacadão stores. Our expansion strategy continues to favor higher-return formats with a greater emphasis on Cash & Carry. In Q1, Grupo Carrefour Brasil’s total store network reached 666 stores.

Atacadão: Sustained sales momentum on further gains in average ticket For the third consecutive quarter, Atacadão posted double-digit total sales growth, attesting to the strength of its EDLP (Every Day Low Price) commercial strategy and validating the decision to accelerate expansion significantly. Atacadão’s Q1 gross sales were up 13.6% to R$9.5 billion, despite the negative impact of the Easter shift.

LfL sales confirmed the previous quarter’s strong trend, rising by 6.8% in Q1 2019, a similar level to Q4 2018 but much higher than the year-ago performance (0.5% in Q1 2018). All categories grew, notably commodities on the back of better prices. Average ticket increased significantly in Q1.

4.9% 5.4% 5.5% 5.5% 4.3% 5.1% 6.0% 7.0% 7.4%

6.3% 4.9%1.6% 2.2%

0.5%

4.5%6.2%

7.4% 6.8%

9.9%9.7%

5.6% 7.0%

5.7%

8.4%

11.2%

14.9% 13.6%

Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19

Atacadão Sales Performance*

Expansion LfL ex-petrol

6


(*) total growth includes the calendar effect

Atacadão held its annual “A Day” anniversary campaign in April, with an impressive 42% growth in sales year-on-year. Top sellers during “A Day” included 680,000 cases of cooking oil, 54 million beer cans and 12 million liters of milk. This unique commercial operation at Atacadão generated sales of almost R$1 billion in a single day for the first time. Expansion contributed an additional 7.4% growth to total sales (vs. 4.3% in Q1 2018), with four new openings across different Brazilian regions. We confirm our target to open at least 20 new stores in 2019. The acceleration in the pace of expansion decided early last year is expected to impact positively our LfL in 2019: The 20 stores opened last year will gradually enter LfL and, as a typical store matures in 4 to 5 years, their LfL growth will be higher than the older stores. Gross profit pre-IFRS 16 was up 23.3% (or 23.4% post-IFRS 16) to R$ 1.4 billion with gross margin 126bps higher at 15.9% in Q1 2019. Half of the gross margin expansion is explained by ICMS-ST tax credits for states other than São Paulo and the other half by Atacadão’s successful commercial strategy and productivity gains. Distribution costs pre-IFRS 16 were up 16.5% (or 14.4% post-IFRS 16) to 8.7% (or 8.6% post-IFRS 16) of net sales in Q1, mainly as a result of the sharp acceleration in expansion and effect of the annual wage increase of 4.5%. Excluding expansion-related expenses, distribution costs post-IFRS 16 were up by only 1.8% to 7.4% of net sales in Q1, proving the strength of the model and the ability to maintain its profitability in a very competitive market. Q1 2019 adjusted EBITDA pre-IFRS 16 was up 32.7% to R$620 million (7.2% adjusted EBITDA margin, up 104bps). Post IFRS 16, adjusted EBITDA was R$635 million (7.4% adjusted EBITDA margin, +121bps) stemming from its solid sales performance and gross margin expansion. The impact of IFRS 16 at Atacadão was limited to R$15 million as Atacadão owns most of its stores. Carrefour Retail: Best LfL quarterly performance since Q1 17, but Easter shift weighed on results Despite a tough calendar effect of -3.0% due to the Easter shift, Carrefour Retail’s sales accelerated in Q1: Carrefour LfL sales ex-petrol were up 6.1% (or 8.1% including the marketplace), the highest quarterly increase since Q1 2017, with total sales of R$4.65 billion, including petrol. This performance reflects successful commercial and food transition initiatives in our hypermarkets, improving LfL sales in proximity formats and strong performance in e-commerce.

467 620

15635

Q1 18 Q1 19

Adjusted EBITDA Atacadão (in R$ million)

IFRS 16 impact

+36.0%

7


The many actions taken in 2018 in terms of assortment, pricing policy and sourcing are paying off. These actions translated in Q1 2019 into a much more favorable sales trend in food categories and in a sharp acceleration in non-food categories, in particular appliances, with very strong growth. LfL sales at hypermarkets have been improving consistently every quarter, reflecting the efficiency of those commercial initiatives, as well as the end of food deflation.

In line with Carrefour Group’s strategy of being the leader in the food transition for all, we continued to develop our commercial offer, with, for instance, all hypermarket stores offering fresh fish, and we completed the certification of dedicated suppliers of salmon and tilapia fish, with no hormone addition. Moreover, healthy aisles are already available in half of our hypermarkets, with 24% sales increase in those items in Q1 and a target to grow healthy product sales by 32% in 2019. Organic sales were up on average 67% in Q1 year-on-year. Our target to grow organic sales by 85% in 2019 will be supported by (i) expanding the assortment, (ii) developing new suppliers and (iii) intensifying promotions via the “My Carrefour” app. Many products are being reformulated and will be re-launched this year with improved nutritional content and quality requirements.

Our proximity strategy continues to show progress, notably the Express format which enjoyed double-digit LfL sales growth and recorded additional market share gains.

E-commerce and Digital initiatives

E-commerce was again the fastest-growing channel within Carrefour in Q1. GMV represented ~11% of Carrefour Retail’s sales (or 28% of our non-food sales), ex-petrol, compared with 5.6% in Q1 2018. The number of visitors, orders and average ticket continue to grow strongly versus last year. Q1 e-commerce highlights included:

(i) GMV’s 84% growth in Q1 strongly outperformed the industry (13% growth in Q1 according to E-

bit),. Own sales were up 58% year-on-year and marketplace sales rose threefold. Our marketplace grew 332% and accounted for almost 23% of total GMV in Q1 compared with 10% in Q1 2018. The number of sellers and SKUs continues to grow rapidly: 2,000 sellers (vs. 134 sellers in Q1 2018) and 1.9 million SKUs in our marketplace at end-March;

(ii) Rappi: Service began at the very end of January; available in 56 stores at the end of March, it is already showing promising results;

(iii) Drive: Available in 13 locations at the end of March, all in the state of São Paulo, with plans to open more Drives in 2019. NPS for Drive orders is above 75%.

8


(iv) Click & Collect: In Q1 we started testing Click & Collect using store inventory in four hypermarkets with positive results. Click & Collect represented 9% of non-food 1P sales in Q1. We plan to add several Click & Collect third-party locations in 2019.

(v) Meu Carrefour: At the end of March about 70% of our sales were identified with 14.2 million registered customers, a significant increase since the launch of the CRM program, with roughly 2 million apps downloaded. Average spending of registered customers is 80% higher.

In Q1, gross margin pre-IFRS 16 was broadly stable at 24.2% (and 24.3% post-IFRS). This stability reflects a combination of effects, in particular: (i) the greater share in our sales mix of e-commerce and appliances, which operate with lower margin rates, (ii) the significant increase of the gross margin of our e-commerce operation as it gains scale and the marketplace develops quickly and (iii) the improvement of our margins in food categories, as a result of the commercial initiatives taken last year. Gross margin should continue to improve going forward as food and non-food margins continue to respond well to recent commercial initiatives.

Before the impact of IFRS 16, distribution costs (SG&A) were at 20.7% of net sales, the same level as Q1 2018 excluding the dilution effect of the 2018 Easter sales (20.0% in the year-ago quarter plus 62 bps of dilution effect) and only 2.6% higher year-on-year. Initiatives taken to reduce expenses and accelerate the capture of efficiency gains over the last 12 months allowed Carrefour Retail to absorb the investments in the roll-out of its omnichannel and e-commerce strategy. Post-IFRS 16, distribution costs (SG&A) were down by 1.7% to 19.8% of net sales in Q1, down 23bps year-on-year.

Adjusted EBITDA post-IFRS 16 was up to R$198 million (4.7% margin), mainly explained by R$45 million impact from IFRS 16 as all of our convenience stores, the majority of our supermarket stores and 27% of our hypermarkets stores are leased. Before the IFRS 16 effect, EBITDA was basically flat when compared with EBITDA of Q1 2018, adjusting for the Easter effect, as illustrated by EBITDA bridge below:

Banco Carrefour: Strong billings and credit portfolio; solid EBITDA growth In Q1, Banco Carrefour posted another strong performance in billings and portfolio growth: Total billings rose by 23.4% to about R$7.1 billion, an increase of R$1.4 billion. Carrefour credit card billings gained new momentum in Q1 and were up 15.2% to R$5.2 billion, reflecting both the commercial dynamism of our hypermarkets and the positive impact of the decision taken last year by Banco Carrefour to exempt all customers shopping at Carrefour at least once a month from monthly credit card fees. Atacadão credit card billings, still in ramp-up phase, reached R$1.8 billion, up 55.2% in Q1. As a whole, Banco Carrefour’s credit portfolio rose by 33.2% to R$8.8 billion (+ R$2.2 billion) in Q1, with 8.2 million cards issued (~1.7 million Atacadão cards).

184198

-31 45

EBITDA Q1 18 reported

Easter Calendar Effect and Others

Q1 18

IFRS 16 impact

EBITDA Q1 19 Post-IFRS 16

+R$14 MM

9


Q1

In R$ million 2019 2018 ∆

Billings Carrefour credit card 5,228 4,538 15.2% Billings Atacadão credit card 1,795 1,157 55.2% Other products* 112 86 30.1% Total Billings 7,135 5,782 23.4% Total Credit portfolio 8,836 6,633 33.2%

*Other products include personal loans and payment of bills using the card

Banco Carrefour also played an important role on “A Day” at Atacadão: About 7,000 cards were issued on a single day (double the regular average). Billings with the Atacadão card grew by 45% and average ticket of Atacadão cardholders was 9% higher during this year’s A Day vs last year’s. Concerning the Carrefour card, the monthly-fee exemption for customers shopping at least once a month in our stores is showing very promising results: The number of new accounts increased significantly in Q1, which is expected to translate over time into greater revenue.

The quality of our loan portfolio remains healthy. On a comparable basis (Bacen methodology), loans overdue by more than 90 days (“over 90”) totaled 9.5% of the total portfolio in Q1, broadly stable year-on-year. Loans overdue by more than 30 days (“over 30”) were flat year-on-year at 13.1% of the total portfolio in Q1. On a comparable basis, credit risk provision stood at R$933 million, up year on year, as a result of strong growth in Atacadão’s portfolio. Coverage ratio represented 11.7% of the total portfolio in Q1.

In Q1, adjusted EBITDA post-IFRS 16 stood at R$245 million, an increase of 12.1% year-on-year, despite the initial investement in our “Usou zerou” campaign: We booked less fee revenues in Q1 this year as we decided to exempt from monthly fees all customers shopping at least once a month at Carrefour. We expect the strong increase in new accounts, and the additional revenues thus generated, to offset this impact gradually by the end of the year. The Atacadão card, which reached break-even in Q3 last year, one year ahead of schedule, continues to mature and increase its penetration in overall Atacadão sales. At end-March it accounted for about 12% of Atacadão sales; as a consequence, its contribution to EBITDA has been growing.

6,433

7,947200

889

4,2315,001

5,367

6,633

8,836

10.8%

13.9% 12.9%

9.4% 9.5%

15.0%

18.9%17.1%

13.1% 13.1%

Q1 15 Q1 16 Q1 17 Q1 18 Q1 19

Methodology BACEN IFRS9 adjustment Over 90 BACEN Over 30 BACEN

+18% +7%

+24%

+33%

Provision 485 781818798 933

Coverage Ratio

11.5% 15.2%16.0% 11.7%12.1%

219 245

Q1 18 Q1 19

Adjusted EBITDA Banco Carrefour (in R$ million)

+12.1%

10


CONSOLIDATED FINANCIAL RESULTS All 2019 numbers below reflect the impacts of IFRS16. Revenues

In R$ million Q1 19 Q1 18 ∆

Gross Sales 14,159 13,014 8.8%

Net Sales 12,856 11,843 8.6%

Other Revenues 786 701 12.1%

Total Net Revenues 13,642 12,544 8.8%

In Q1, gross sales were up 8.8% to R$14.2 billion, representing additional sales of almost R$1.15 billion. Other revenues (revenues from financial services, store rents, complementary services and others) grew by 12.1% in Q1, mainly due to Banco Carrefour’s strong performance.

Gross Profit


Gross Profit 2,869 2,544 12.8%

Gross Margin 22.3% 21.5% +83 bps

Gross Profit Atacadão 1,373 1,113 23.4%

Gross Profit Margin at Atacadão 15.9% 14.7% +126 bps

Gross Profit Carrefour Retail 1,025 1,030 -0.5%

Gross Profit Margin Carrefour Retail 24.3% 24.3% 0 bps

Gross Profit Banco Carrefour 471 401 17.3%

Gross profit was 12.8% higher in Q1 2019 to R$2.9 billion, resulting in consolidated gross margin of 22.3%, an increase of 83bps, reflecting higher gross margins at Atacadão from tax credit recognition and efficiency gains, stability at Carrefour despite the commercial investments made, as well as a solid performance at Banco Carrefour.

8.49.5 10.3

11.4

2.5 2.9

21.4% 21.1%21.5%

22.2%21.5%

22.3%

2015 2016 2017 2018 Q1 18 Q1 19

Gross Profit Gross Margin Consolidated

In R$ billions

11


SG&A Expenses


SG&A Expenses (1,839) (1,708) 7.7%

SG&A Expenses as % of net sales 14.3% 14.4% -12 bps

SG&A Expenses Atacadão (741) (648) 14.4%

SG&A Expenses Atacadão as % of net sales 8.6% 8.5% +6 bps

SG&A Expenses Carrefour Retail (837) (851) -1.7%

SG&A Expenses Carrefouras % of net sales 19.8% 20.0% -23 bps

SG&A Expenses Banco Carrefour (226) (182) 24.1%

SG&A Expenses Global Functions (35) (27) 29.6% Excluding IFRS 16 effects (leases, reclassified as depreciation and financial expenses), consolidated SG&A were at 14.7% of net sales, only 27 bps above a year ago (14.4% of net sales) despite the Easter shift and the strong expansion at Atacadão. Post-IFRS 16,consolidated SG&A were 7.7% higher in Q1 at R$1.84 billion and represented 14.3% of consolidated net sales, down 12bps year-on-year.

Adjusted EBITDA


Adj. EBITDA 1,043 843 23.8% Adj. EBITDA Margin 8.1% 7.1% +100 bps Adj. EBITDA Atacadão 635 467 36.0% Adj. EBITDA Margin at Atacadão 7.4% 6.1% +121 bps Adj. EBITDA Carrefour Retail 198 184 7.9% Adj. EBITDA Margin Carrefour Retail 4.7% 4.3% 36 bps Adj. EBITDA Banco Carrefour 245 219 12.1% Our consolidated adjusted EBITDA was 23.8% higher in Q1 at R$1.0 billion for 8.1% margin, a 100 bps increase year-on-year, due to higher gross margin and better operating leverage. IFRS 16 had a positive impact on our consolidated EBITDA of R$60 million in Q1 (R$15 million at Atacadão and R$45 million at Carrefour Retail) which contributes for 47 bps of the year-on-year EBITDA increase.

5.6 6.1 6.8 7.2

1.7 1.8

14.2%13.7%

14.2% 14.1%14.4% 14.3%

2015 2016 2017 2018 Q1 18 Q1 19

SG&A as % of consolidated net sales

In R$ billions

12


Other Income and (Expenses)

In R$ million Q1 19 Q1 18 ∆ Restructuring costs (10) (7) 42.9% Net gains or losses on asset sale (9) (44) n.m. Tax credits gain non-current 49 - n.m. Income and expenses related to litigations 22 (11) n.m. Other income (expenses) 52 (62) n.m. n.m. – not meaningful Other income and expenses were a positive R$52 million in Q1, mainly due to: (i) the reversion of a provision in the amount of R$28 million, reflecting a better outcome than expected in a litigation, (ii) the recognition of ICMS tax credits from prior years in the Carrefour Retail segment for a total amount of R$49 million (according to our accounting policies, we recognize in gross margin tax credits related to the current year and in other income those related to prior years). Net Debt Profile and Net Financial Result Loans amount to R$2.6 billion at end-March, stable vs. end-March 2018, and up from R$ 1.9 billion at year-end 2018 as a consequence of seasonality. The first application of IFRS 16 resulted in an additional lease debt of R$879 million, classified within our gross debt. Including discounted receivables, our net debt was R$ 3.4 billion (or R$ 2.5 billion excluding the Lease Debt).

In R$ million Mar.19 Post-

IFRS 16 Mar.18

Reported ∆

Mar.19 pre-IFRS 16

∆ vs Mar.18

Dez. 18

∆ vs Mar.19.

Loans (2,634) (2,517) 4.6%

(2,634) 4.6%

(1,913) 37.8%

Lease debt (879) - -

- -

- -

Gross Debt (3,513) (2,517) 39.6%

(2,634) 4.6%

(1,913) 83.6%

Discounted receivables (952) (1,534) -37.9%

(952) -37.9%

(2,198) -56.7%

Gross Debt (including discounted receivables) (4,465) (4,051) 10.2%

(3,586) -11.5%

(4,111) 8.6%

Cash and cash equivalents 1,048 1,917 -45.3%

1,048 -45.3%

4,942 -78.9%

(Net Debt) Net Cash (3,417) (2,134) 60.1%

(2,538) 18.9%

831 n.m.

Grupo Carrefour Brasil holds only local debt and no intercompany loans with Carrefour Group. None of our loans are subject to financial covenant clauses. Our Standard & Poor’s credit rating remains “brAAA” (stable outlook) for both Atacadão S.A and Banco CSF.

2.9 3.3 3.54.2

0.8 1.0

7.3% 7.5% 7.4%8.2%

7.1%

8.1%

2015 2016 2017 2018 Q1 18 Q1 19

Adjusted EBITDA Adj. EBITDA Margin Consolidated

In R$ billion

13


Our net financial result stands at R$ 117 million in Q1 2019, including the IFRS 16 interest expense on leases, to be compared to R$ 83 milion in the year-ago quarter (this number does not include any IFRS 16 impact).

In R$ million Q1 19 post-

IFRS 16 Q1 18 ∆ Q1 19 pre-

IFRS 16 ∆

Cost of bank debt, gross (42) (40) 5.0% (42) 5.0% Interests expenses on leases (IFRS 16) (26) - n.m. - n.m. Cost of discounted credit card receivables (27) (22) 22.7% (27) 22.7% Financial Revenue 7 13 -46.2% 7 -46.2% Cost of Debt, Net (88) (49) 79.6% (62) 26,5% Inflation adjustments on judicial deposits and provisions (7) (12) -41.7% (7) -41.7%

FX gain or losses and Others (22) (22) 0.0% (22) 0.0% Net financial result (117) (83) 41.0% (91) 9,6% N.m. – not meaningful Excluding the interest expenses on leases of R$ 26 million (non-comparable effect of IFRS 16), our net financial result stands at R$ 91 million, above the previous year. Income Tax

In R$ million Q1 19 Q1 18 ∆ Income Before Taxes 723 511 41.5% Income and Social Contribution Tax (218) (179) 21.8% Effective Tax Rate 30.2% 35.0% -488 bps

Income tax expense increased in Q1 by 21.8% to R$218 million, stemming from higher income before taxes, for an effective tax rate of 30.2% versus 35.0% in Q1 2018, mainly due to lower tax rate at Banco Carrefour (income tax rate decreased from 45% to 40% as of Q1 2019).

Net Income and Adjusted Net Income, Group Share


Net income, Group share 441 280 57.5%

Adjusted net income, Group share 407 321 26.7% Adj. Net margin 3.2% 2.7% +45 bps

Our net profit, group share, increased by 57.5% to R$ 441 million on a reported basis. Excluding other income and expenses (see Appendix II), our adjusted net profit increased by 26.7% (including a negative IFRS 16 impact of R$ 7 million) to R$ 407 million or 3.2% of net sales (+45 bps), reflecting the continuous improvement of our operational profitability.

Payment of Interest on Shareholders’ Equity (IOE) The Annual and Extraordinary Shareholders’ meetings held on April 16, 2019 approved the distribution of interest on equity (IOE) to the company’s shareholders in the gross amount of R$90 million, equivalent to R$0.045373203 per share. Payment will take place on June 14, 2019, proportional to shareholder’s percentage of interest, less the withholding income tax, except for shareholders that are immune or exempted. Considering the anticipated payment of R$ 380 million that occurred in 2018, this represents a total 2018 dividend of R$ 470 million, or 25% of our adjusted net income.

14


Operating Working Capital In Q1 2019, our operating working capital needs were a negative R$293 million, from a negative R$609 million in Q1 2018, mainly as a result of the increase in inventories by 7 days to 53 days, partially offset by the increase in payment terms with suppliers by 4 days to 61 days. This increase in inventories mainly reflects: (i) the Easter shift (Easter was in Q2 this year, requiring a higher level of inventory at end-March), (ii) the preparation of Atacadão’s anniversary campaign (“Dia A”), which was on April 12. In Reais Million Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 (+) Accounts Receivables (*) 673 552 642 443 632 (+) Inventories 6,217 5,132 5,178 4,918 4,998 (-) Suppliers (**) (7,183) (9,804) (5,685) (5,942) (6,239) (=) Working Capital - WC Merchandise (293) (4,120) 135 (581) (609) (*) Commercial receivables excluding receivables from property and from suppliers

(**) Excluding suppliers of tangible and intangible assets, and net from discounts to be received from suppliers

In days Q1 19 Q4 18 Q3 18 Q2 18 Q1 18 (+) Accounts Receivables 6 5 6 4 6 (+) Inventories 53 44 46 45 46 (-) Suppliers (61) (85) (51) (54) (57) (=) Working Capital - WC Merchandise (2) (36) 1 (5) (6)

CAPEX In R$ million Q1 19 Q1 18 ∆ Expansion 309 233 32.6% Maintenance 38 20 85.3% Remodeling 13 2 n.m. IT and other 28 31 -9.6%

Total Capex (pre IFRS 16) 387 286 35.3%

Right-of-use assets (IFRS 16 non cash transaction) 54 - - Total Capex (post IFRS 16) 441 286 54.2% Expansion (including right-of-use assets) represents 82% of our capex and reflects mainly investments in new Atacadão stores.

STORE NETWORK – Q1 In Q1, we opened four Cash & Carry and one Express store. We now operate 666 stores for total sales area of 1,913,134 m2.

N° of stores December 18 Openings March 19

Cash & Carry 166 4 170

Hypermarkets 100 100

Supermarkets 50

50

Convenience Stores 120 1 121

Wholesale 27 27

Drugstores 124 124

Gas Stations 74

74

Group 661 5 666

15


Sales area Dec.18 Mar.19 ∆ Change Mar.19 vs

Dec.18

Cash & Carry 1,056,539 1,079,754 2.2%

Hypermarkets 704,876 704,876 0.0%

Supermarkets 68,008 68,008 0.0%

Convenience Stores 22,009 22,160 0.7%

Drugstores 7,851 7,851 0.0%

Gas Stations 30,485 30,485 0.0%

Total sales area (m2) 1,889,769 1,913,134 1.2%

16


APPENDIX I – Consolidated Income Statement post-IFRS 16 Q1 19

Post-IFRS 16 Q1 18

Pre-IFRS 16 IFRS 16 Impact In R$ Million

Gross sales 14,159 13,014 -

Net sales 12,856 11,843 -

Other revenue 786 701 -

Net operating revenue 13,642 12,544 -

Cost of goods sold, service and financial operations (10,773) (10,000) -

Gross Profit 2,869 2,544 5

Gross Margin 22.3% 21.5% -

SG&A expenses (1,839) (1,708) 50

Adjusted EBITDA* 1,043 843 60

Adjusted EBITDA Margin 8.1% 7.1% 100bps

Depreciation and amortization (242) (180) (40)

Other income (expenses) 52 (62) -

EBIT 840 594 15

Net financial expenses (117) (83) (26)

Income before income tax and social contribution 723 511 (11)

Income Tax (218) (179) 4

Net income 505 332 (7)

Net income, Group share 441 280 (7)

Net Income - Non-controlling interests (NCI) 64 52 -

n.m. – not meaningful

17


APPENDIX II – Adjusted Net Income Calculation post-IFRS 16 The adjusted net income aims at providing a better view of the recurring net income performance. It is calculated as Net Income less Other income and expenses and the corresponding financial and income tax effect. In R$ million Q1 19 Q1 18 ∆

Net income, group share 441 280 57.5%

(+/-) Other income (expenses) (52) 62 n.m. (+/-) Tax income on on other income (expenses) items 18 (21) n.m.

Net income, Group share, adjusted 407 321 26.7%

Net margin 3.2% 2.7% +45 bps Other income and expenses includes tax gains and provisions for depreciation and expenses related to the gains. Adj. Net income is the Net Income adjusted for other operating income and expenses and their respective income tax impacts.

n.m. – not meaningful

APPENDIX III –Adjusted EBITDA Reconciliation post-IFRS 16


Net income Adjusted 505 332 52.1%

(+) Income tax and social contribution 218 179 21.8%

(+) Net financial results 117 83 41.0%

(+) Depreciation and amortization 242 180 34.4%

(+) Supply chain depreciation and amortization 13 7 85.7%

(=) EBITDA 1,095 781 40.2%

(+/-) Other (income) expenses (52) 62 n.m.

(=) Adjusted EBITDA 1,043 843 23.7% n.m. – not meaningful

18


Appendix IV - Consolidated Balance Sheet post-IFRS 16

In R$ Million March 2019 December 2018

Assets

Cash and cash equivalents 747 4,647

Marketable securities 295 286

Accounts receivable 1,012 901

Consumer credit granted by our financial solutions company 6,513 6,266

Inventories 6,217 5,132

Tax receivables 347 358

Income tax and social contribution recoverable 66 41

Prepaid expenses 145 60

Other accounts receivable 205 207

Current assets 15,547 17,898

Accounts receivable 5 6

Consumer credit granted by our financial solutions 354 317

Marketable securities 6 9

Tax receivables 2,689 2,434

Deferred tax assets 437 485

Prepaid expenses 13 20

Judicial deposits and collateral 2,290 2,231

Other accounts receivable 27 28

Investment properties 414 416

Investments in equity accounted companies 76 75

Property and equipment 11,523 10,472

Intangible assets and goodwill 2,276 2,286

Non-current assets 20,110 18,779

Total assets 35,657 36,677

19


In R$ Million March 2019 December 2018

Liabilities

Suppliers 7,592 10,423

Borrowings 751 17

Lease debt 143 -

Consumer credit financing 4,687 4,637

Tax payable 211 273

Income tax and social contribution payables 63 252

Payroll, vacation and related charges 624 651

Dividends payable 58 58

Deferred income 18 12

Other accounts payable 300 421

Derivative financial instruments 1 2

Current liabilities 14,448 16,746

Borrowings

1,883

1,896

Lease debt

736

Consumer credit financing 488 433

Deferred tax liabilities 444 473

Provisions 3,065 3,047

Deferred income 20 20

Other accounts payable 15 15

Non-current liabilities 6,651 5,884

Share capital 7,629 7,627

Capital reserve 2,175 2,174

Income reserve 3,513 3,513

Net effect of acquisition of minority interest (282) (282)

Retained earnings 441 -

Equity evaluation adjustment 4 1

Shareholders’ equity, Group share 13,480 13,033

Non-controlling interests 1,078 1,014

Total liabilities and shareholders' equity 35,657 36,677

20


APPENDIX V – Banco Carrefour Income Statement

In R$ million Q1 19 Q1 18 ∆ Net operating revenues 649 574 13.0% Risk Charges (178) (173) 2.9% Gross profit 471 401 17.3% SG&A expenses (226) (182) 24.1% Adjusted EBITDA 245 219 12.1% Depreciation and amortization expenses (8) (5) 54.7% Adjusted EBIT 238 214 11.1% Other revenues (expenses) (15) (15) -2.3% Net Financial results (6) (7) -10.0% Income tax (85) (86) -1.0% Net income (100%) 132 106 24.3% n.m. – not meaningful

Overdue Portfolio Analysis

Even with the implementation of IFRS 9 / CPC 48, which maintains losses up to 1,800 days, Banco Carrefour maintains the methodology of Law 2682/99, in compliance with BACEN rules, making them not comparable. This model, which came into effect on January 1st, 2018, leads the Portfolio to other levels, since each period, in addition to the strong growth of the business, also has the growth by the accumulation of customers with delays exceeding 360 days, which represents 9.5% of the total Portfolio.

As a reflex, we have a higher coverage by the provisioning and there is no low loss during this period, causing the Risk Load Charge to be in higher levels when compared with the BACEN methodology.

The over 30 and over 90 days ratios, in addition of being impacted by this growth, are not comparable with the same period of the previous year, given the gradual expansion of the credit portfolio to increasingly advanced levels of delinquency.

Methodology BACEN

In R$ million March 19 December 18 September 18 June 18

Total Portfolio 7,947 100.0% 7,690 100.0% 6,887 100.0% 6,625 100.0%

On time payments 6,767 85.2% 6,610 86.0% 5,840 84.8% 5,587 84.3%

Over 30 days 1,039 13.1% 963 12.5% 926 13.4% 897 13.5% Over 90 days 756 9.5% 747 9.7% 720 10.5% 652 9.8% Provisions for loan losses 933 11.7% 938 12.2% 897 13.0% 833 12.6%

Provisions for loan losses / over 90 days 123% 126% 125% 128%

IFRS9

In R$ million March 19 December 18 September 18 June 18 Total Portfolio 8,836 100.0% 8,382 100.0% 7,420 100.0% 7,005 100.0% On time payments 6,711 76.0% 6,564 78.3% 5,793 78.1% 5,536 79.0% Over 30 days 1,942 22.0% 1,669 19.9% 1,470 19.8% 1,288 18.4% Over 90 days 1,596 18.1% 1,400 16.7% 1,218 16.4% 993 14.2%

Provisions for loan losses 2,114 23.9% 1,931 23.0% 1,795 24.2% 1,578 22.5%

Provisions for loan losses / over 90 days 132% 138% 147% 159%

21


APPENDIX VI – IFRS 16 First application

The standard IFRS16 – Leases is applicable as from January 1, 2019. Under IFRS 16, all leases are to be brought onto the statement of financial position by recognizing a right-of-use asset and a lease liability corresponding to the present value of the lease payments due over the reasonably certain term of the lease. IFRS 16 therefore affects the presentation of lease transactions in the income statement, with rental expense replaced by a depreciation expense and interest expense. As provided by the standard, Grupo Carrefour Brasil decided to transition to IFRS 16 using the simplified restrospective approach, without restating the 2018 consolidated financial statements. The effects in our 2019 P&L are detailed in the table below:

Lease commitments, related to rent, disclosed in note 33 of our Financial Statements (DF) to the individual and consolidated financial statements of the year-end in December 31, 2018 were determined based on non-cancellable leases and on the term of real estate assets that takes into account the existence of legal or contractual provisions for termination before the expiration of the contracts, and therefore, are not fully representative of the rental debt that will have to be recognized in the application of IFRS 16.

In R$ Million

March 2019 Post - IFRS

16

Impacts IFRS 16 March 2019

Pre - IFRS 16 December

2018 Assets Deferred tax assets 437 4 433 485 Property and equipment 11,523 889 10,634 10,472 Intangible assets and goodwill 2,276 (21) 2,297 2,286 Non-current assets 20,110 872 19,281 18,779 Total assets 35,657 872 34,785 36,677

In R$ Million

March 2019 Post - IFRS

16

Impacts IFRS 16 March 2019

Pre - IFRS 16 December

2018 Liabilities Lease debt 143 143 - - Current liabilities 14,448 143 14,305 16,746 Lease debt 736 736 - - Non-current liabilities 6,651 736 5,915 5,884 Retained earnings 441 (7) 448 - Shareholders’ equity, Group share 13,480 (7) 13,487 13,033 Total liabilities and shareholders' equity 35,657 872 34,785 36,677

In R$ million

Q1 19Before IFRS 16 IFRS impact Q1 19

post- IFRS 16Q1 19

Before IFRS 16 IFRS impact Q1 19post-IFRS 16

Q1 19Before IFRS 16 IFRS impact Q1 19

post-IFRS 16

Gross sales 14,159 14,159 9,505 9,505 4,654 4,654 Gross sales ex petrol 13,506 13,506 9,505 9,505 4,001 4,001 Net sales 12,856 12,856 8,630 8,630 4,226 4,226Other revenues 786 786 34 34 103 103Total Revenues 13,642 13,642 8,664 8,664 4,329 4,329Gross profit 2,864 5 2,869 1,372 1 1,373 1,021 4 1,025Gross Margin 22.3% 22.3% 15.9% 15.9% 24.2% 24.3%SG&A Expenses (1,889) 50 (1,839) (754) 13 (741) (873) 36 (837)SG&A of Net Sales 14.7% 14.3% 8.7% 8.6% 20.7% 19.8%Adj. EBITDA 983 60 1,043 620 15 635 153 45 198Adj. EBITDA Margin 7.6% 8.1% 7.2% 7.4% 3.6% 4.7%D&A included in Gross Margin (8) (5) (13) (2) (1) (3) (6) (4) (10)D&A not included in SG&A Exp. (202) (40) (242) (89) (10) (99) (106) (29) (135)Financial result (91) (26) (117)Adj. Net Income, Group share 413 (7) 407Adj. Net Income Margin 3.2% 3.2%

CONSOLIDATED ATACADÃO CARREFOUR RETAIL

22


GLOSSARY

Like for Like: LFL sales compare gross sales in the relevant period with those in the immediately preceding period, based on gross sales provided by comparable stores, which are defined as stores that have been open and operating for a period of at least twelve consecutive months and that were not subject to closure or renovation within such period. As petrol sales are very sensitive to market prices, they are excluded from the LfL computation. Other retail companies may calculate LFL sales differently from us, and therefore, our historical and future LFL sales performance may not be comparable with other similar metrics used by other companies.

Gross sales: Total revenues from our customers at the Group’s stores, gas stations, drugstores and on our e-commerce platform.

GMV: Gross Merchandise Volume refers to all online sales (own sales + marketplace sales) as well freight revenues. It excludes marketplace commissions, but includes sales taxes.

Net sales: Gross sales adjusted for taxes levied on sales (in particular PIS/COFINS and ICMS).

Other revenue: Comprises revenue from our Financial Solutions segment (including bank card fees and interest from consumer credit activities), shopping mall rents and commissions related to other services provided in the stores, fast cash and handling fees.

Gross Profit Margin: Gross profit divided by net sales for the relevant period, expressed as percentage.

EBITDA: Net income (for the year or for the period) adjusted for “financial result, net”, “income tax and social contribution” and “depreciation and amortization”. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under Brazilian GAAP or IFRS, and should not be considered as alternatives to net income or as measures of operating performance, operating cash flows or liquidity. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have no standardized meaning, and our definitions may not be comparable with those used by other companies.

Adjusted EBITDA: EBITDA adjusted for the income statement line item “other income and expenses” (comprising losses on disposals of assets, restructuring costs, income & expenses related to litigations, and tax credits recovered related to prior periods).

Adjusted EBITDA Margin: Adjusted EBITDA divided by net sales for the relevant period, expressed as a percentage.

Adjusted Net income: Net Income, excluding Other Income and Expenses and the corresponding financial and income tax effect.

Net Income Margin: Net income for the year divided by net sales for the relevant period, expressed as a percentage.

Global Functions: Central costs in relation to our central functions and headquarters. These comprise the activities of (i) the cost of our holding divisions, (ii) certain expenses incurred in relation to certain support functions of our parent company which are allocated to the various segments proportionately to their sales, and (iii) cost allocations from our parent company, which are not specific to any segment.

Net Promoter Score (NPS): management tool used to gauge customers’ satisfaction. Depending on their satisfaction level, customers are classified as “Promotors”, “Passives” or “Detractors”; NPS is calculated as the difference between Promotors and Detractors.

Free Cash Flow: net cash provided by our operating activities, less interest received from short-term investments, plus cash used in changes in judicial deposits and judicial freeze of deposits (and opposite), and unrealized interest income from marketable securities, less cash provided from the disposal of non-operational assets, less cash used in additions to property and equipment, less cash used in additions to intangible assets.

23


Investor Relations

Sébastien Durchon Vice-President of Finance (CFO) and Director of Investor Relations

Daniela Bretthauer Letícia Montagnani Ludimila Aielo Investor Relations Director IR Coordinator IR Coordinator

Telephone: +55 11 3779-8500 e-mail: [email protected] website address: www.grupocarrefourbrasil.com.br About Grupo Carrefour Brasil Grupo Carrefour Brasil has been present in Brazil for over 40 years and is the market leader in food distribution and retail. By operating a multiformat and omnichannel platform, it combines retail and cash & carry operations, as well as financial solutions for its clients through Banco Carrefour. We also manage our real estate and portfolio of galleries and shopping centers through our real estate division - Carrefour Property. The Group is present in every state of Brazil, which allows us to meet the different needs of its millions of customers across the country. In 2018, we developed even more our omnichannel strategy with the set up of 10 Drives and click and collect in all hypermarket stores. In traditional retail, we operate with several formats of stores: Carrefour (hypermarket), Carrefour Bairro and Carrefour Market (supermarket), Carrefour Express (convenience store) and Atacadão (cash & carry and delivery wholesale) as well as Supeco (compact wholesale cash&carry). Additionally, we offer complementary services to our food distribution business with gas stations and drugstores services branded as Carrefour and Atacadão. We are the largest retailer in Brazil and operate more than 660 points of sale. With sales of R$ 56.3 billion in 2018 and more than 84,000 employees, the company is one of the largest private employers in the country and the largest retailer listed and one of the 20 largest listed companies on the Brazilian stock exchange (B3). In the world, Carrefour Group operates in more than 30 countries. Over the next five years it plans to implement a new transformation strategy “Carrefour 2022” plan to enable its customers to consume better by becoming the world leader in the food transition for all. In addition, the Group aims to become the omnichannel universe of reference by investing in its growth formats, becoming the leader in food e-commerce and leveraging the power of its brand. In 2018, its global sales totaled € 84.9 billion Disclaimer This document contains both historical and forward-looking statements on expectations and projections about operational and financial results of the Company. These forward-looking statements are based on Carrefour management's current views and assumptions. Such statements are not guarantees of future performance. Actual results or performances may differ materially from those in such forward-looking statements as a result of a number of risks and uncertainties, including but not limited to the risks described in the documents filed with the CVM (Brazilian Securities Commission) in particular the Reference Form. The Company does not assume any obligation to update or revise any of these forward-looking statements in the future.

QUARTERLY EARNINGS CALL:

Portuguese/English

(simultaneous translation)

May 10 2019 (Friday)

10:00 am – Brasília 09:00 am – New York

02:00 pm – London 03:00 pm – Paris

Brazil dial-in:

+55 (11) 3137-8052 Portuguese Webcast

International dial-in:

USA: +1 786 837-9597 UK: +44 20 3318-3776 France: +33 9 8009-3462 Access code: Carrefour Brasil English Webcast

Replay

(available for 7 days):

+1 888 959 5986

Replay Access:

Code: 8011

Password: #191

http://cast.comunique-se.com.br/carrefour/4T18

http://cast.comunique-se.com.br/carrefour/4Q18

24

KPMG Auditores Independentes Rua Arquiteto Olavo Redig de Campos, 105, 6º andar - Torre A 04711-904 - São Paulo/SP - Brasil Caixa Postal 79518 - CEP 04707-970 - São Paulo/SP - Brasil Telefone +55 (11) 3940-1500, Fax +55 (11) 3940-1501 www.kpmg.com.br

Independent auditor’s report on review of interim financial

information - ITR To the Shareholders and Management of Atacadão S.A. São Paulo - SP Introduction

We have reviewed the individual and consolidated interim financial information of Atacadão S.A. (“Company”), contained in the Quarterly Information Form (ITR) for the quarter ended March 31, 2019, which comprises the balance sheet as of March 31, 2019 and the related statements of income and comprehensive income for the three month period then ended and changes in shareholder's equity and cash flows for the three month period then ended, including the notes.

The Company’s management is responsible for the preparation of these interim financial information in accordance with Technical Pronouncement CPC 21(R1) – Demonstrações Intermediárias and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as for the presentation of these information in manner consistent with the standards issued by the Comissão de Valores Mobiliários, applicable to the preparation of the Quarterly Information Form - ITR. Our responsibility is to express a conclusion on these interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and international standards for reviews of interim financial information (NBC TR 2410 – Revisão das Informações Intermerdiárias Executadas pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

25

Conclusion on the interim financial information individual and consolidated

Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the quarterly information referred to above have not been prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, issued by the IASB, applicable to the preparation of the Quarterly Information Form - ITR, and presented in accordance with the standards issued by the Comissão de Valores Mobiliários.

Other matters – Statement of value added

The individual and consolidated interim financial information related to the statements of value added (DVA) for the three month period ended March 31, 2019, prepared under the responsibility of the Company’s management, presented herein as supplementary information for IAS 34 purposes, have been subject to review procedures jointly performed with the review of the Company’s interim financial information - ITR. In order to form our conclusion, we assessed whether those statements are reconciled with the interim financial information and accounting records, as applicable, and whether their format and contents are in accordance with criteria determined in the Technical Pronouncement CPC 09 – Demonstração de Valor Adicionado. Based on our review, nothing has come to our attention that causes us to believe that the statements of value added have not been prepared, in all material respects, consistently with the overall individual and consolidated interim financial information taken as a whole.

São Paulo, May 9, 2019. KPMG Auditores Independentes CRC 2SP014428/O-6 (Original report signed in Portuguese) Fernando Rodrigues Nascimento Accountant CRC 1SP244524/O-1



Atacadão S.A. Statements of financial position As of March 31, 2019 and December 31, 2018 (In millions of Reais)

Parent Company Consolidated

Note March 31, 2019 December

31, 2018 March 31,

2019 December 31, 2018

Assets

Current assets

Cash and cash equivalents 5 476 2,657 747 4,647 Marketable securities 10 - – 295 286 Trade receivables 6 640 768 1,012 901 Consumer credit granted by our financial solutions company

7.1 - – 6,513 6,266

Inventories 8 3,862 3,359 6,217 5,132 Tax receivables 9 188 152 347 358 Income tax and social contribution recoverable 4 2 66 41

Prepaid expenses 29 8 145 60 Other accounts receivable 36 28 205 207

5,235 6,974 15,547 17,898 Non-current assets

Long term assets Trade receivable 6 - – 5 6 Consumer credit granted by our financial solutions company 7.1 - – 354 317

Marketable securities 10 - – 6 9 Tax receivables 9 1,256 1,164 2,689 2,434 Deferred tax assets 17.2 - – 437 485 Prepaid expenses 4 4 13 20 Judicial deposits and collateral 11 112 109 2,290 2,231 Other accounts receivable 27 27 27 28

1,399 1,304 5,821 5,530 Investment properties 13.1 - – 414 416 Investments in equity accounted companies 12 6,385 6,289 76 75 Property and equipment 13.2 7,488 6,953 11,523 10,472 Intangible assets 14 1,408 1,407 2,276 2,286

16,680 15,953 20,110 18,779 Total assets

21,915 22,927 35,657 36,677

The explanatory notes are an integral part of these individual and consolidated interim financial statements.



Atacadão S.A. Statements of financial position As of March 31, 2019 and December 31, 2018 (In millions of Reais)


Note March 31, 2019 December

31, 2018 March 31,

2019 December 31, 2018

Liabilities

Current liabilities

Suppliers 16 4,410 6,713

7,592 10,423 Borrowings 28.3 751 17

751 17

Lease debt 15 33 - 143 - Consumer credit financing 7.2 – –

4,687 4,637

Tax payables

113 158

211 273 Income tax and social contribution payable

12 129

63 252

Payroll, vacation and related charges

299 297

624 651 Dividends payable 20.4 – –

58 58

Deferred income 19 26 26

18 12 Other accounts payable

128 151

300 421

Derivative financial instruments 28.7 – -

1 2

5,772 7,491

14,448 16,746

Non-current liabilities

Borrowings 28.3 1,500 1,500

1,883 1,896

Lease debt 15 256 - 736 - Consumer credit financing 7.2 – –

488 433

Deferred tax liabilities 17.2 444 442

444 473 Provisions 18.1 144 135

3,065 3,047

Deferred income 19 319 326

20 20 Other accounts payable

- –

15 15

2,663 2,403

6,651 5,884

Shareholders’ Equity

Share capital 20.2.1 7,629 7,627

7,629 7,627

Capital reserve 20.2.2 2,175 2,174

2,175 2,174 Income reserve 20.2.4 3,513 3,513

3,513 3,513

Net effect of minority interest acquisition 20.2.3 (282) (282)

(282) (282) Retained earnings 441 - 441 - Equity evaluation adjustment 20.2.6 4 1

4 1

Shareholders equity group share

13,480 13,033

13,480 13,033 Non-controlling interest 20.5 - –

1,078 1,014

13,480 13,033

14,558 14,047

Total liabilities and shareholders’ equity

21,915 22,927

35,657 36,677 The explanatory notes are an integral part of these individual and consolidated interim financial statements.


Income statements

Atacadão S.A. Income statements For the three-month period ended March 31, 2019 and 2018 (In millions of Reais)

Parent Company

Consolidated

Note March 31, 2019

March 31, 2018

March 31,2019

March 31, 2018

Net sales 22.1 8,631 7,597 12,856 11,843 Other revenue 22.2 56 52 786 701

Net operating revenue

8,687 7,649 13,642 12,544

Cost of goods sold, services and financial operations 23

(7,291)

(6,517) (10,773) (10,000)

Gross profit 1,396 1,132 2,869 2,544

Income (expense) Selling, general and administrative expenses 24 (789) (686) (1,839) (1,708) Depreciation and amortization 24 (99) (74) (242) (180) Net income from equity accounted company 12 93 62 - - Other income (expenses) 25 9 (43) 52 (62)

Income before net financial income and income tax and social contribution 610

391 840 594

Financial Result

Financial income 9 15 42 45 Financial expense (55) (34) (159) (128) Net financial expense 26 (46) (19) (117) (83)

Income before income tax and social contribution

564 372 723 511

Income tax and social contribution -

Current 17.1 (121) (97) (200) (195) Deferred 17.1 (2) 5 (18) 16

Net income for the period

441 280 505 332

Attributable to:

Controlling shareholders

441 280

Non-controlling shareholders 20.5 64 52

Basic and diluted earnings per share (in Reais) 21 0.22 0.14



Statements of comprehensive income

Atacadão S.A. Statements of comprehensive income For the three-month period ended March 31, 2019 and 2018 (In millions of Reais)

Parent Company

Consolidated

March 31, 2019

March 31, 2018

March 31, 2019

March 31, 2018

Net income for the period 441 280 505 332 Other comprehensive income – net of tax impacts: Gains on derivative financial instruments used

for hedge cash flow - - - -

Losses and gains on derivative financial instruments used for hedge cash flow in subsidiaries

3 - 3 -

Total comprehensive income 444 280 508 332

Attributable to:

Controlling shareholders 444 161 Non-controlling shareholders 64 38



Statements of changes in shareholders’ equity

Atacadão S.A. Consolidated statements of changes in shareholders’ equity For the three-month period ended March 31, 2019 and 2018 (In millions of Reais)

Note Share

capital Capital reserve

Income reserve Net effect of acquisition of

minority interest

Retained earnings

Equity evaluation adjustment

Shareholders equity group

share

Non-controlling

interest

Total shareholders'

equity Legal reserve

Profit retention reserve

Additional dividend proposed

Shareholders' equity at January 1st, 2018 7,599 2,167 115 2,543 - (282) - 3 12,145 995 13,140

Effect of the initial adoption of CPC 48/IFRS 9, net of tax of: 20.2.5 - - - - - - (110) - (110) (104) (214)

Adjusted balance as at January 1st, 2018 7,599 2,167 115 2,543 - (282) (110) 3 12,035 891 12,926

Net income for the period - - - - - - 280 - 280 52 332

Issuance of common shares 20.2.1 9 - - - - - - - 9 - 9 Effect of the equity-settled stock option plan 20.2.2 - 3 - - - - - - 3 - 3

Total capital transaction with shareholders 9 3 - - - - - - 12 - 12

Balance as at March 31, 2018 7,608 2,170 115 2,543 - (282) 170 3 12,327 943 13,270

Shareholders' equity at January 1st, 2019 7,627 2,174 198 3,225 90 (282) - 1 13,033 1,014 14,047

Net income for the period - - - - - - 441 - 441 64 505

Other comprehensive income - - - - - - - 3 3 – 3

Total other comprehensive income – – – – – – 441 3 444 64 508

Issuance of common shares 20.2.1 2 - - - - - - - 2 - 2 Effect of the equity-settled stock option plan 20.2.2 - 1 - - - - - - 1 - 1

Total capital transactions with shareholders 2 1 – – – – – – 3 – 3

Balance as at March 31, 2019 7,629 2,175 198 3,225 90 (282) 441 4 13,480 1,078 14,558



Statements of cash flow

Atacadão S.A. Statements of cash flow For the three-month period ended March 31, 2019 and 2018 (In millions of Reais)


Notes March 31, 2019 March 31,

2018 March 31,

2019 March 31, 2018

Cash flow from operating activities

Income before income tax and social

contribution

564

372

723

511 Adjustments to reconcile net income for the period

Depreciation and amortization 24 99 76

255 187 Impairment provision - - - 1 Interest on borrowings and on assignments of receivables, and exchange variation

36

33

63

44 Interest on leasing operations 8 - 26 - Write-off assets and gain on disposals

3 49

32 49

Equity in earnings of subsidiaries 12 (93) (62)

- - Share based payments

1 3

1 3

Cash flow before the variation of operating assets and liabilities

618

471

1,100

795

Change in operating working capital 27 (2,797) (1,760)

(4,420) (2,961) Change in operating working capital of Consumer credit granted by our financial solutions company 27 -

-

(183)

(260) Income tax and social contribution paid

(240) (166)

(414) (268)

Cash flow used in operating activities

(2,419) (1,455)

(3,917) (2,694)

Cash flow from investing activities

Additions to intangible assets 14 (1) (2)

(16) (16)

Additions to fixed assets 13.2 (340) (251)

(371) (270) Suppliers of fixed and intangible assets

(106) (98)

(200) (198)

Capital contributions in joint ventures

- -

(1) - Disposal of fixed and intangible assets

- -

1 -

Net cash used in investing activities

(447) (351)

(587) (484)

Cash flow from financing activities

Capital increase 2 9 2 9 Proceeds from borrowings 28.4 900 -

900 -

Repayment of borrowings 28.4 (200) -

(200) - Amortization of principal – lease

agreements (8)

- (46)

- Interest paid on borrowings and assignments of receivables 28.4 (2)

-

(29)

-

Amortization of interest – lease agreements (7)

- (23)

-

Net cash used in financing activities

685 9

604 9

Cash and cash equivalents variation

(2,181) (1,797)

(3,900) (3,169)

Cash and cash equivalents at beginning of the period 5 2,657

3,166

4,647

4,804

Cash and cash equivalents at end of the period 5 476

1,369

747

1,635

Cash and cash equivalents variation

(2,181) (1,797)

(3,900) (3,169) The explanatory notes are an integral part of these individual and consolidated interim financial statements.


Statements of Value Added

Atacadão S.A. Statement of value added For the three-month period ended March 31, 2019 and 2018 (In millions of Reais)


March 31, 2019 March 31,

2018 March 31, 2019 March 31,

2018

Sales of goods and services rendered 9,528 8,431 15,006 13,774 Other revenue 52 - 22 - Allowance for doubtful accounts (2) (2) (4) (3)

9,578 8,429 15,024 13,771

Cost of bought in Material and Services Cost of goods sold, services and financial operations (7,996) (6,920) (11,522) (10,577)

Raw material, energy, services and others (353) (301) (861) (830) Loss/Write-off of assets (3) (57) (8) (61)

(8,352) (7,278) (12,391) (11,468)

Gross value added 1,226 1,151 2,633 2,303

Depreciation and amortization Depreciation and amortization (100) (76) (253) (187)

Net value added produced 1,126 1,075 2,380 2,116

Value added generated from transfers Equity evaluation adjustment 86 62 – - Financial income 9 15 42 45

Total value added to distribute 1,221 1,152 2,422 2,161

Distribution of value added Personnel Direct Compensation (333) (295) (637) (584) Benefits (52) (45) (125) (117) Government Severance Indemnity Fund for Employees (F.G.T.S) (20) (18) (42) (39)

(405) (358) (804) (740)

Taxes and contributions Federal (199) (183) (644) (558) State (94) (274) (232) (289) Municipal (15) (5) (52) (46)

(308) (462) (928) (893)

Providers of capital Interests (58) (34) (167) (128) Rents (9) (19) (18) (70) Others – 1 – 2

(67) (52) (185) (196)

Distributions to shareholders Net income attributable to controlling shareholders (441) (280) (441) (280) Net income attributable to minority interests - - (64) (52)

(441) (280) (505) (332)

Total value added distributed (1,221) (1,152) (2,422) (2,161) The explanatory notes are an integral part of these individual and consolidated interim financial statements.


Notes to the financial information

NOTE 1: OPERATIONS ............................................................................................................................. - 34 - NOTE 2: BASIS OF PREPARATION OF THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL STATEMENTS .... - 34 - NOTE 3: SIGNIFICANT EVENTS OF THE PERIOD ........................................................................................... - 36 - NOTE 4: SCOPE OF CONSOLIDATION ......................................................................................................... - 37 - NOTE 5: CASH AND CASH EQUIVALENTS .................................................................................................... - 38 - NOTE 6: TRADE RECEIVABLES .................................................................................................................. - 38 - NOTE 7: FINANCIAL SOLUTIONS ACTIVITIES .............................................................................................. - 39 - NOTE 8: INVENTORIES ............................................................................................................................ - 39 - NOTE 9: TAX RECEIVABLES ...................................................................................................................... - 40 - NOTE 10: MARKETABLE SECURITIES .......................................................................................................... - 40 - NOTE 11: JUDICIAL DEPOSITS AND COLLATERAL ......................................................................................... - 41 - NOTE 12: INVESTMENTS .......................................................................................................................... - 42 - NOTE 13: INVESTMENT PROPERTIES AND PROPERTY EQUIPMENT ................................................................... - 43 - NOTE 14: INTANGIBLE ASSETS ................................................................................................................. - 46 - NOTE 15: LEASED PROPERTY .................................................................................................................... - 48 - NOTE 16: SUPPLIERS .............................................................................................................................. - 49 - NOTE 17: INCOME TAX AND SOCIAL CONTRIBUTION .................................................................................... - 49 - NOTE 18: PROVISIONS AND CONTINGENT LIABILITIES................................................................................. - 51 - NOTE 19: DEFERRED REVENUE (PARENT COMPANY) ..................................................................................... - 57 - NOTE 20: EQUITY ................................................................................................................................... - 57 - NOTE 21: BASIC AND DILUITED EARNINGS PER SHARE (GROUP SHARE) ......................................................... - 60 - NOTE 22: NET OPERATING REVENUE ......................................................................................................... - 60 - NOTE 23: COST OF GOODS SOLD, SERVICES AND FINANCIAL OPERATIONS ..................................................... - 60 - NOTE 24: SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A), AND DEPRECIATION AND AMORTIZATION- 60 - NOTE 25: OTHER INCOME (EXPENSES) ...................................................................................................... - 61 - NOTE 26: NET FINANCIAL EXPENSE ........................................................................................................... - 62 - NOTE 27: CHANGES IN CASH FLOWS ......................................................................................................... - 62 - NOTE 28: FINANCIAL ASSETS AND LIABILITIES ........................................................................................... - 63 - NOTE 29: RELATED PARTIES .................................................................................................................... - 69 - NOTE 30: SEGMENT INFORMATION............................................................................................................ - 72 - NOTE 31: SHARE-BASED PAYMENTS .......................................................................................................... - 74 - NOTE 32: NUMBER OF EMPLOYEES, EMPLOYEE COMPENSATION AND BENEFITS ................................................ - 75 - NOTE 33: OFF-BALANCE SHEET COMMITMENTS ........................................................................................... - 76 - NOTE 34: INSURANCE COVERAGE ............................................................................................................. - 76 - NOTE 35: SUBSEQUENT EVENTS ............................................................................................................... - 77 -


Notes to the financial statements

NOTE 1: OPERATIONS

Atacadão S.A. ("Atacadão" or the "Company"), directly or through its subsidiaries (“Group Carrefour Brazil”, “Group” or “We”) engages in the retail and wholesale of food, clothing, home appliances, electronics and other products through its chain of Cash & Carry stores, hypermarkets, supermarkets, convenience stores, gas stations, drugstores, and e-commerce, mainly under the trade names “Atacadão” and “Carrefour”.

To support its core retailing business, the Group also offers banking services to customers, under the trade name Banco CSF, a company overseen and regulated by the Central Bank of Brazil (BACEN). The Banco Carrefour Soluções Financeiras (“Banco CSF”) offers to its customers "Carrefour" and “Atacadão” credit cards that can be used in the Group Carrefour Brazil’s stores and elsewhere, consumer loans and other products such as insurance policies.

The Group Carrefour Brazil is a public limited company, with headquarter located in the 213, George Eastman Street, city of São Paulo, State of São Paulo, Brazil. The Company's shares are traded on “Novo Mercado” segment of Corporate Governance at the São Paulo Stock Exchange - B3, under the code "CRFB3”.

The company ultimate parent is Carrefour S.A., a French company listed on the Paris Stock Exchange.

NOTE 2: BASIS OF PREPARATION OF THE INDIVIDUAL AND CONSOLIDATED INTERIM FINANCIAL STATEMENTS

These individual and consolidated interim financial statements for the three-month period ended March 31, 2019 were authorized by the Board of Directors on May 9, 2019.

The individual and consolidated interim financial information were prepared in accordance with technical pronouncement CPC 21 (R1) (interim statement) and in accordance with international standard IAS 34, and presented consistently with the standards issued by the Brazilian Securities and Exchange Commission, and should be read with the Group's individual and consolidated financial statements for the year ended December 31, 2018 ("latest annual financial statements"). This report does not include all the information required for a complete set of financial statements. However, selected explanatory notes are included to explain events and transactions that are significant for understanding changes in the Group's financial position and performance since the last annual financial statements.

The individual and consolidated interim financial statements for the three-month period ended March 31, 2019 and 2018 and the period ended in December 31, 2018, comprise the individual and consolidated financial statements of the Company and its subsidiaries and the Group’s share of the profits and losses and net assets of a joint venture accounted for by the equity method. The presentation currency of the individual and consolidated financial statements is the Brazilian real (BRL), which is the Company’s functional currency. All financial information presented in Reais was rounded to the nearest million of Reais, unless otherwise stated.

Note 2.1. Statement of compliance

The Company’s individual and consolidated financial statements (“Financial Statements”) have been prepared in accordance with accounting practices adopted in Brazil (BR GAAP) and in accordance with the International Financial Reporting Standards (“IFRSs”), as issued by the International Accounting Standards Board (“IASB”).

In conformity with “OCPC 07 - Evidenciação na Divulgação dos Relatórios Contábil - Financeiros de Propósito Geral” (General Purpose Evidencing the Disclosure of Financial Statements), relevant information regarding the financial statements has been disclosed and issued from those used by the Administration for its management.

Accounting practices adopted in Brazil comprise the policies set out in the Brazilian Corporate Law and the pronouncements, guidance, and interpretations issued by the Accounting Pronouncements



Committee (CPC), approved by the Brazilian Securities and Exchange Commission (CVM) and the Federal Accounting Council (CFC).

International Financial Reporting Standards (IFRSs), comprise the International Accounting Standards (IASs), International Financial Reporting Standards Interpretation Committee (IFRIC), and Interpretations and Standing Interpretations Committee (SIC).

Note 2.2. Changes in the main accounting policy’s

The accounting policies adopted in the preparation of this individual and consolidated interim financial information are consistent with those followed in the preparation of the individual and consolidated financial statements for the year ended December 31, 2018, except:

the policy of recognition and measurement of income tax, described in note 17, applicable only to interim periods (CPC 21 (R1) / IAS 34) and;

by the standards, changes and interpretations applicable to the annual periods beginning on January 1, 2019, as presented in the explanatory notes listed below:

2.2.1 CPC 06 (R2)/IFRS 16 – Leases

The CPC 06 (R2) / IFRS 16 which replaces the CPC 06 (R1) / IAS 17 as from January 1, 2019 introduces important changes in the accounting model for lessees, removing to the latter, the distinction between operating leases and financial leases.

According to the CPC 06 (R2) / IFRS 16, all leases must be recognized in the balance sheet through an asset that represents the right to use the leased asset in exchange for a debt corresponding to the present value of future lease payments for a reasonably certain period of engagement. CPC 06 (R2) / IFRS 16 will also affect the presentation of these transactions in the income statement (recognition of an amortization expense and interest expense, instead of lease expenses) and the statement of cash flows that will present the payment of interest and debt (within cash flows from financing activities) rather than rent payment (within cash flows from operating activities).

The Group made the decision to transition to IFRS 16 / CPC 06 (R2) as of January 1, 2019 using the simplified retrospective approach, without restating the financial statements for the period ended March 31, 2019 and year ended December 31, 2018 in accordance with CPC 06 (R1) / IAS 17 and ICPC 03 (IFRIC 04)), and without reassessing whether or not the agreement contains a lease component at the initial date of the agreement. At the transition date, assets and liabilities under IFRS 16 / CPC 06 (R2) were measured at the present value of the lease payments due during the reasonably certain period of the lease, provided that:

The Group used the practical file and did not recognize assets and liabilities for low value leases and contracts with a duration of less than 12 months;

Exclusion of the initial costs to enter in the contract (right of use).

The Group does not have contracts that were classified as financial leases by CPC 06 (R1) / IAS 17.

The Group's rights of use assets refer to real estate lease agreements in which some of our stores (Atacadão and Retail), distribution centers and administrative buildings are located.

The right of use of leased assets are shown under the heading of property and equipment in the balance sheet and in a separate line of the explanatory note. The lease debts are shown under the heading of lease debt in a separate line of the balance sheet. The amounts recognized in the initial adoption of IFRS 16 / CPC 06 (R2), on January 1, 2019 are shown below:



(In millions of Reais) Parent

Company Consolidated

Right of use 282 887 Lease debt - current (30) (142) Lease debt - noncurrent (252) (745)

The assumed lease commitments, related to rent, disclosed in note 33 to the individual and consolidated financial statements of the year-end in December 31, 2018 were determined based on non-cancellable leases and on the term of real estate assets that takes into account the existence of legal or contractual provisions for termination before the expiration of the contracts, and therefore, are not fully representative of the rental debt that will have to be recognized in the application of CPC 06 (R2) / IFRS 16.

The impact in period ended March 31, 2019 is described in the chart below:

(In millions of Reais) Parent Company Consolidated

In statement of financial position: Right of use 306 889

Lease debt - current (33) (143) Lease debt - noncurrent (256) (736)

In income statements Cost of goods sold, services and financial operations (a) 1 5 Selling, general and administrative expenses 13 50 Depreciation and amortization (10) (40) Financial Result (8) (26) Income tax and social contribution - Deferred 1 4

Net income for the period (3) (7)

(a) The positive effect in cost of goods sold, services and financial operations represents the reduction of lease expenses of R$ 5 million and the increase of right of used depreciation of R$ 4 million in the parent company, and for the reduction of R$ 14 million of lease expenses and increase of R$ 9 million of right of use depreciation in the consolidated.

2.2.2 Other changes in accounting standards

There were a number of other new accounting standards that came into effect on January 1, 2019, although they had no impact on the individual and consolidated financial statements of the Group. NOTE 3: SIGNIFICANT EVENTS OF THE PERIOD The main events of the period ended in March 31, 2019 are: Debentures issuance On January 7, 2019, 900 thousand debentures were issued with a par value of R$ 1 thousand each, totalizing R$ 900 million. The issue was made in two series, the first series, totalizing R$ 200 million matures on March 8, 2019 and the second series, for R$ 700 million, matures on January 6, 2020.



Seasonality Like most retail companies, the Group experiences seasonal variations in its sales, operating results and cash flows. We historically have a higher volume of sales in the fourth quarter of each year, which includes the busy Black Friday and Christmas periods, whilst our costs and expenses are distributed evenly throughout the year, resulting in higher results and net income at the end of the year. This seasonality also influences our pattern of cash generation, since purchases made in the fourth quarter to build up inventory prior to the busy Christmas period are generally paid for at the beginning of the following year, which negatively affects our cash flow in the first semester of each year.

The sales and quarterly results of our operations may also vary significantly depending on the calendar in particular due to the dates when the Easter holiday is celebrated, the existence of one more day in leap years or the variation in the number of Saturdays (day in which we realize a greater sales volume) in a certain quarter. Specifically, the change of the Easter holiday date, which was celebrated in March 2018 (in the first quarter) and in April 2019 (in the second quarter) should be considered when comparing the first quarter of 2019 and the same period of 2018.

Due to these seasonal and quarterly fluctuations, we believe that our operating results between different quarters within a single year are not necessarily comparable.

NOTE 4: SCOPE OF CONSOLIDATION

4.1 Main events and their effects on the presentation of the individual and consolidated interim financial information

There were no acquisitions or disposals of investments in the three-month period ended March 31, 2019.

The list of consolidated entities (subsidiaries) is presented below:

March 31, 2019 December 31, 2018

% of interest % of interest

Direct Indirect Direct Indirect Carrefour Comércio e Indústria Ltda. – Subsidiaries (“Carrefour” or “CCI”) 100.00 - 100.00 -

Comercial de Alimentos Carrefour Ltda. 0.01 99.99 0.01 99.99 Imopar Participações e Administração Imobiliária Ltda. 0.10 99.90 0.10 99.90 Nova Tropi Gestão de Empreendimentos Ltda. 0.01 99.99 0.01 99.99 CMBCI Investimentos e Participações Ltda. 0.01 99.99 0.01 99.99 E-mídia informações Ltda. - 100.00 - 100.00

BSF Holding S.A. – Subsidiaries - 51.00 - 51.00 Banco CSF S.A. - 51.00 - 51.00

Pandora Participações Ltda. 99.99 - 99.99 - Rio Bonito Assessoria de Negócios Ltda. - 99.99 - 99.99 Verparinvest S.A - 99.99 - 99.99

As of March 31, 2019, there were no changes in the facts and circumstances considered by the Group to assess whether it has control over the subsidiaries.



NOTE 5: CASH AND CASH EQUIVALENTS


(In millions of Reais) March 31, 2019

December 31, 2018

March 31, 2019

December 31, 2018

Cash 452 651 592 1,007 Cash equivalents 24 2,006 155 3,640 Total Cash and cash equivalents 476 2,657 747 4,647

Cash equivalents substantially refer to bank deposit certificates (CDB) which are remunerated at the weighted average buyback rate of 99% of the interbank deposit certificate rate (“CDI”) at the parent company (90% as of December 31, 2018), and at the weighted average buyback rate of 85% in consolidated (89% as of December 31, 2018).

There are no material restrictions on the ability to recover or use the aforementioned assets.

The Group’s exposure to interest rate risks and a sensitivity analysis for financial assets and liabilities is disclosed in Note 28.4.

NOTE 6: TRADE RECEIVABLES



December 31, 2018

March 31, 2019

December 31, 2018

Wholesale receivable 381 494 383 492 Credit card receivable - - 286 35 Credit card receivable (c) 46 51 - - Shopping malls rental receivable - - 82 85 Meal voucher - - 9 36 Commercial funds receivable (a) 153 187 211 244 Commercial funds receivable from related parties (a) and (b) 72 48 107 73 Allowance for doubtful accounts (12) (12) (61) (58) Total Trade receivables, net 640 768 1,017 907 Current 640 768 1,012 901 Non-current - - 5 6

(a) Represented by amounts of receivable from suppliers because of commercial agreements made at the time of the

purchase of goods for resale and other timely agreements. The counterpart is recorded in profit or loss for the period, reducing the cost of goods sold at the time of the sale.

(b) Balance receivable from related parties, refers to the global agreements negotiated by the ultimate parent company in France (see Note 29).

(c) Represented by sales made with Atacadão credit card (see note 29).

Assignment of trade accounts receivable

The subsidiaries Carrefour and Comercial Carrefour de Alimentos Ltda. (“Eldorado”) assigned, without right to recourse, part of their trade accounts receivable to external banks, against the payment of interests, in order to anticipate its cash flow. The balance corresponding to these operations amounting to R$ 952 million as of March 31, 2019, with R$ 951 million realized in Carrefour credit cards and R$ 1 million with other card brands (R$ 2,198 million as of December 31, 2018, with R$ 1,160 million realized in Carrefour credit cards and R$ 1,038 million with other card brands). The amount was written off from the balance of trade accounts receivable, since all risks related to receivables were substantially transferred.

The cost of these discounted receivables is classified as “Charges on financial transactions” (Note 26 – Financial Result)



NOTE 7: FINANCIAL SOLUTIONS ACTIVITIES Note 7.1. Consumer credit granted by our financial solutions company (assets) At March 31, 2019, consumer credit totaled R$ 6,867 million (R$ 6,583 million as of December 31, 2018), as follows:

Consolidated


December 31, 2018

Payment card receivable 5,097 5,063 Loans (a) 3,471 3,064 Other financing 267 255 Allowance for doubtful accounts (b) (1,968) (1,799) Total consumer credit granted by the financial solutions company 6,867 6,583 Current 6,513 6,266 Non-current 354 317

a) The balance receivable refers primarily to transactions arising from Banco CSF S.A. credit card for customers who have unpaid balances on their credit card bills.

b) The Group's exposure to credit risks and classification by stage of risk of the balance of consumer credit granted by the financial solutions company are disclosed in Note 28.6.

Note 7.2. Consumer credit financing (liabilities)

The related consumer credit financing amounted to R$ 5,175 million at March 31, 2019 (R$ 5,070 million as of December 31, 2018), as follows:

Consolidated

(In millions of Reais) March 31,

2019 December 31, 2018

Debt securities (interbank deposits) 834 549 Merchant debt 4,341 4,521 Related to acquirers 3,390 3,361 Sales of credit card receivables made on Carrefour Card (i) 951 1,160 Total Consumer credit financing 5,175 5,070 Current 4,687 4,637 Non-current 488 433

i) Referring to values of credit card receivables sold to external bank by Carrefour Comércio e Indústria

Ltda and Comercial de Alimentos Carrefour S.A. .

NOTE 8: INVENTORIES Parent Company Consolidated


December 31, 2018

March 31, 2019

December 31, 2018

Food 3,681 3,172 4,681 3,992 Non food 181 187 1,398 988 Other products - - 138 152 Total Inventories, net 3,862 3,359 6,217 5,132

Provision for inventory losses decreased by R$ 1 million to R$ 11 million in comparison to December 2018 in the parent company (R$ 12 million in December 31, 2018), and R$ by 4 million in the consolidated to R$ 64 million (R$ 68 million in December 31, 2018).



NOTE 9: TAX RECEIVABLES



December 31, 2018

March 31, 2019

December 31, 2018

State VAT (ICMS) 66 55 597 358 ICMS-ST - tax substitution (a) 1,357 1,265 2,569 2,606 ICMS recoverable on property and equipment 67 65 71 69 PIS and COFINS 108 85 329 258 Others – – 7 7 Provision for ICMS and ICMS-ST losses (154) (154) (537) (506) Total Tax receivables 1,444 1,316 3,036 2,792 Current 188 152 347 358 Non-current 1,256 1,164 2,689 2,434

(a) The Group maintains distribution centers located in certain States and in the Federal District, which receive

goods with ICMS and ICMS-ST already prepaid by suppliers or the Group. Then, part of the goods is sent to locations in other States. Such interstate operations allow the Group to refund the prepaid ICMS and ICMS-ST, i.e. the ICMS and ICMS-ST paid on the acquisitions become a tax credit to be refund/offset, based on the State laws.

As the number of acquired items, subject to ICMS-ST has been increasing, the tax credits to be refunded/offset by the Group also grown. The Group has been realizing part of these credits with authorization of offsetting, based on special regimes and also for complying with others procedures issued by the states.

Related to the credits which cannot be offset immediately, the Group understands that the realization will occur in short or long term, based on a credit recoverability study for each State which includes, among others, history of realization, changes in supply chain, additional special regimes requests, growth future expectation, consumed against debts deriving from its operations and transfer of credits to third parties. These studies were prepared based on information extracted from strategically planning report previously approved by the Group’s Board of Directors.

In the year ended December 31, 2017, the value of the credits of the state of São Paulo was determined and in 2018, the analysis of the other Brazilian states in the Atacadão segment was finalized. The total amount of credits recognized in 2018 was R$ 315 million, net of the provision for impairment, of which R$ 105 million related to periods from 2016 to 2017.

In the first quarter of 2019, a total of R$ 72 million of credits from other states were recognized in other retail segments.

The Group expects to consume its non-current ICMS credits over a period of approximately 6 years.

NOTE 10: MARKETABLE SECURITIES

The Banco CSF and its Holding BSF acquire marketable securities as part of their liquidity strategy, with the purpose of maintain them at medium term. In this way, the securities portfolio was classified in the “fair value in others comprehensive incomes” category. The portfolio of securities was composed as follows:

March 31, 2019

Consolidated

Securities Updated cost value Within 365 days Above 365 days Total Portfolio:

Financial Treasury Bill – LFT 281 281 - 281 Other (BSF Holding) 20 14 6 20 Marketable securities 301 295 6 301



December 31, 2018

Consolidated

Securities Updated cost value Within 365 days Above 365 days Total Portfolio:

Financial Treasury Bill – LFT 274 272 2 274 Other (BSF Holding) 21 14 7 21 Marketable securities 295 286 9 295 In March 31, 2019 and December 31, 2018, investments in securities refer substantially to government bonds with the average returns rate of 100% of the Selic rate.

NOTE 11: JUDICIAL DEPOSITS AND COLLATERAL

The Group is contesting the payment of certain taxes, contributions and labor-related obligations and has made court restricted deposits in the corresponding amounts, as well as escrow deposits related to the provision for legal proceedings.

They are classified in the following categories:



December 31, 2018

March 31, 2019

December 31, 2018

Tax 106 103 2,150 2,090 Labor 5 5 80 82 Civil 1 1 42 43 Collateral – – 18 16 Total Judicial deposits and collateral 112 109 2,290 2,231

Tax judicial deposits are mainly composed of:

CCI and Comercial de Alimentos’ lawsuit on non-cumulative PIS-COFINS representing a total of R$ 1,404 million at March 31, 2019 (R$ 1,383 million as of December 31, 2018).

Banco CSF’s lawsuit on the constitutionality of the additional social contribution on profits (CSLL) for an amount of R$ 397 million at March 31, 2019, (R$ 375 million as of December 31, 2018).

Provisions for the same matters are booked at each closing, see notes 18.2.1 and 18.2.2.



NOTE 12: INVESTMENTS Breakdown Companies Interest

directly held March 31, 2019

December 31, 2018

Carrefour Comércio e Indústria Ltda. 100.00% 6,449 6,359 Comercial de Alimentos Carrefour Ltda. 0.01% - - Imopar Part. Adm. Imob. Ltda. 0.10% - - Nova Tropi Empreend. Imob. Ltda. 0.01% - - Pandora Participações Ltda. 99.99% 295 296 CMBCI Invest. e Particip. Ltda. (b) 0.01% - - (-) Intragroup elimination (a) (359) (366) Total Investments 6,385 6,289 Changes in shareholders’ equity statement

December 31, 2018 March 31, 2019

January 01, 2018

Changes in accounting practices

Stock options grant


Other Comprehensiv

e Income

Total shareholders’

equity

Other Comprehensiv

e Income


Total shareholders’

equity

Carrefour Comércio e Indústria Ltda. 6,469 (109) 3 (3) (1) 6,359 3 87 6,449 Pandora Participações Ltda. 302 - - (6) - 296 - (1) 295 (-) Intragroup elimination (a) (394) - - 28 - (366) - 7 (359) Total 6,377 (109) 3 19 (1) 6,289 3 93 6,385

(a) Elimination of the intragroup value relating to the acquisition of the exclusivity right of the financial services distribution disclosed in note 19.

(b) The R$ 76 million value in Consolidated (R$ 75 million in December 31, 2018) related to the 50% participation of CMBCI Investimentos e Participações Ltda. in a joint venture, Cosmopolitano

Shopping Empreendimentos S.A., accounted for by the equity method. The loss reported in the period ending March 31, 2019 was of R$ 33 thousand (loss of R$ 1 million in December 31, 2018). Cosmopolitano Shopping Empreendimentos S.A. operates (i) development, implementation of administrative and commercial operations, including leasing of commercial and advertising spaces, operational parking area and other related activities, and also real estate management in its shopping center located in São Paulo, named Cosmopolitano Shopping; (ii) purchase and sale of its rental constructions without the involvement of a third-parties or brokers, and (iii) participation in other companies.



NOTE 13: INVESTMENT PROPERTIES AND PROPERTY EQUIPMENT Note 13.1. Investment properties

Consolidated


December 31, 2018

Investment property at cost 528 527 Depreciation (114) (111) Total investment properties, net 414 416 Changes in investment properties As of January 1, 2018 422 Transfers from fixed assets 6 Depreciation (12) As of December 31, 2018 416 Depreciation (2) As of March 31, 2019 414 Rental revenue generated by investment properties, reported in the income statement under "Other revenue" (note 22.2), amounted to R$ 8 million for period ended March 31, 2019 (R$ 8 million as of March 31, 2018). Operating costs directly attributable to the properties amounted to R$ 5 million (R$ 2 million as of March 31, 2018).

The valuation of the fair value of investment properties is carried out on a semi-annual basis, the last one being held on December 31, 2018, resulting in a fair value of investment properties of R$ 560 million.



Note 13.2. Property and equipment Breakdown

Parent Company March 31, 2019 December 31, 2018

(In millions of Reais) Cost Accumulated depreciation Book value Cost Accumulated

depreciation Book value

Buildings and improvements 5,122 (634) 4,488 4,945 (601) 4,344 Equipment, fixtures and fittings 2,089 (981) 1,108 2,009 (932) 1,077 Construction in progress 153 - 153 122 - 122 Land 1,433 - 1,433 1,410 - 1,410 Rights of use of leasing 316 (10) 306 - - - Total 9,113 (1,625) 7,488 8,486 (1,533) 6,953

Consolidated

March 31, 2019 December 31, 2018

(In millions of Reais) Cost Accumulated depreciation Impairment Book value Cost Accumulated

depreciation Impairment Book value

Buildings and improvements 7,858 (2,042) (16) 5,800 7,657 (1,991) (5) 5,661 Equipment, fixtures and fittings 5,970 (3,496) (24) 2,450 5,889 (3,411) (9) 2,469 Construction in progress 176 - - 176 156 - - 156 Land 2,208 - - 2,208 2,186 - - 2,186 Rights of use of leasing 951 (62) - 889 - - - - Total 17,163 (5,600) (40) 11,523 15,888 (5,402) (14) 10,472



Change in tangible assets

(In millions of Reais)

Parent Company

January 1st, 2019

First time adoption CPC 06 R2 / IFRS

16

Additions Depreciation Write-offs Transfers March 31, 2019

Buildings and improvements 4,344 - 129 (33) - 48 4,488 Equipment, fixtures and fittings 1,077 - 88 (56) (1) - 1,108 Construction in progress 122 - 102 - - (71) 153 Land 1,410 - - - - 23 1,433 Right of use of leasing - 282 34 (10) - - 306 Total 6,953 282 353 (99) (1) - 7,488 Parent Company

January 1st,

2018 Additions Depreciation Write-offs Transfers December 31, 2018

Buildings and improvements 3,724 618 (116) (51) 169 4,344 Equipment, fixtures and fittings 917 365 (200) (5) - 1,077 Construction in progress 76 417 - - (371) 122 Land 1,207 1 - - 202 1,410 Total 5,924 1,401 (316) (56) - 6,953


Consolidated

January 1st, 2019

Initial adoption CPC 06 R2 / IFRS

16

Additions Depreciation Write-offs Transfers March 31, 2019

Buildings and improvements 5,661 - 138 (52) (1) 54 5,800 Equipment, fixtures and fittings 2,469 - 102 (129) (4) 12 2,450 Construction in progress 156 - 109 - - (89) 176 Land 2,186 - - - - 22 2,208 Right of use of leasing - 887 75 (45) (29) 1 889 Total 10,472 887 424 (226) (34) - 11,523

Consolidated

January 1st,

2018 Additions Depreciation Write-offs Transfers Impairment December 31, 2018

Buildings and improvements 5,072 665 (196) (59) 184 (5) 5,661 Equipment, fixtures and fittings 2,415 549 (473) (20) 7 (9) 2,469 Construction in progress 118 437 - - (399) - 156 Land 1,992 1 - (9) 202 - 2,186 Total 9,597 1,652 (669) (88) (6) (14) 10,472



NOTE 14: INTANGIBLE ASSETS Breakdown

Parent Company March 31, 2019 December 31, 2018

(In millions of Reais) Cost Accumulated amortization

Net Book value Cost Accumulated

amortization Net Book

value Goodwill 1,702 (312) 1,390 1,702 (312) 1,390 Software 52 (34) 18 50 (33) 17 Total 1,754 (346) 1,408 1,752 (345) 1,407

Consolidated March 31, 2019 December 31, 2018

(In millions of Reais) Cost Accumulated amortization

Net Book value Cost Accumulated

amortization Net Book

value Goodwill 3,288 (1,461) 1,827 3,288 (1,461) 1,827 Software 1,310 (922) 388 1,296 (896) 400 Key money payment and other intangible assets 96 (53) 43 93 (52) 41

Intangible assets in progress 18 - 18 18 - 18

4,712 (2,436) 2,276 4,695 (2,409) 2,286

Note 14.1. Goodwill The recoverable amount of goodwill is monitored at the level of the group of cash-generating units (CGUs) which correspond to reporting segments.

Parent Company


December 31, 2018

Net amount

Net amount

Atacadão (a) 1,390 1,390 Total 1,390 1,390

Consolidated


December 31, 2018

Net amount Net amount

Retail 437 437 Atacadão (a) 1,390 1,390 Total 1,827 1,827

(a) On April 30, 2007, the final Parent Company Carrefour Group acquired the totality of the shares of the

Company through its subsidiary, Korcula Participações Ltda. ("Korcula"). The goodwill was calculated as per the difference between the net equity of the Company at the date of the acquisition of R$ 453 million and the purchase price of R$ 2,233 million, subsequently adjusted to R$ 2,163 million. At January 31, 2008, it was approved the merger through the incorporation of the parent company Korcula, based on the accounts as of December 31, 2007. For purposes of the merger, the value of the investment held by Korcula in the Company was eliminated from net assets, resulting in the recognition of goodwill of R$ 1,702 million in the Company. In accordance with the accounting standard applicable in that period, this goodwill was amortized until to December 31, 2009, resulting in a net value of R$ 1,390 million.



Note 14.2. Other intangible assets and goodwill Change in intangible assets and goodwill Parent company (In millions of Reais) January 1, 2019 Additions Amortization March 31, 2019 Goodwill 1,390 - - 1,390 Software 17 2 (1) 18 Total 1,407 2 (1) 1,408

Parent company (In millions of Reais) January 1, 2018 Additions Amortization December 31, 2018 Goodwill 1,390 - - 1,390 Software 14 8 (5) 17 Total 1,404 8 (5) 1,407 Consolidated (In millions of Reais) January 1, 2019 Additions Amortization March 31, 2019 Goodwill 1,827 - - 1,827 Software 400 13 (25) 388 Key money payment and other intangible assets 41 3 (1) 43 Intangible assets in progress 18 1 (1) 18 Total 2,286 17 (27) 2,276 Consolidated

(In millions of Reais) January 1, 2018 Additions Amortization Write-offs Transfers December

31, 2018 Goodwill 1,823 4 - - - 1,827 Software 319 123 (89) (5) 52 400 Key money payment and other intangible assets 42 1 (3) - 1 41

Intangible assets in progress 52 19 - - (53) 18 Total 2,236 147 (92) (5) - 2,286

Note 14.3. Impairment of goodwill and sensitivity analysis The impairment tests on goodwill and other intangibles assets were performed at December 31, 2018 in accordance with CPC 01/IAS 16. The analysis of sensitivity to a simultaneous change in the key inputs based on reasonably possible assumptions did not reveal any probable scenario according to which the recoverable amount of any of the groups of CGU’s would be less than its carrying amount. The results of the tests did not lead to the recognition of impairment losses on these assets. The perpetual growth rates and discount rates (corresponding to the weighted average cost of capital – WACC) applied for impairment testing purposes in December 31, 2018 are presented below: Parent Company & Consolidated

December 31, 2018

Pre-tax discount rate Perpetual growth rate Retail 12.00% 4.5% Cash & Carry 12.00% 4.5% On March 31, 2019, the Group did not identify any indicative of impairment that would justify the interim test.



NOTE 15: LEASED PROPERTY Accounting policies

The Group recognizes the right of use and the lease debt at the lease initial date.

The right of use initially recognition is measured at cost value and subsequently at adjusted cost value disregarding the effects of accumulated depreciation, impairment and adjustments of the lease debt.

The lease debt is initially measured at the present value of unpaid installments at initial recognition, generally using the Group’s incremental loan interest rate, unless the discount rate implicit in the contract can be reliably determined.

The lease debt is subsequently increased by the cost of interest incurred and reduced by installments payments. The lease debt is remeasured when there are changes in contract like inflation indexes, changes in contractual rates, changes in purchase options or in the management's expectation of exercising options for withdrawing or renewing the contract.

The Group applies the judgement to determine whether or not the option of renewal or early withdrawal of certain contracts. This judgement is made taking into account the period of time for which the Group has reasonable certainly about these exercises, which may significantly impact the value of the lease assets and liabilities.

The Group does not recognize the right of use and the lease debt of low value contracts or short-term contracts (duration of less than twelve months). The lease expense is recognized linearly over the contract period. Group as a lessee

The main leased assets of the Group refer to properties where our stores, distribution centers and administrative buildings are located. The distribution is shown below:

Leased properties Atacadão Retail CSF

Quantity

% of number of

stores

Quantity

% of number of stores

Quantity

Cash & Carry 16 9% - N.A - Wholesale 7 26% - N.A - Hypermarket - N.A 27 27% - Supermarket - N.A 44 88% - Convenience stores - N.A 121 100% - Distribution centers - N.A 7 N.A - Administrative buildings 1 N.A - N.A 1 These contracts have validity periods between 5 and 40 years, and may be renewed contractually or automatically for the same period. In addition, these contracts are generally indexed to inflation indexes, which vary according to the lessor. The incremental loan interest rate for present value discount are from 8% (1 year) to 13% (more than 15 years). The values of lease assets and liabilities as of March 31, 2019 are shown below: (In millions of Reais) Parent

Company Consolidated

Right of use (note 13) 306 889 Lease debt – current (33) (143) Lease debt - noncurrent (256) (736)



Group as a lessor The subsidiary Carrefour leases its properties of investments and commercial galleries existing in its stores. As of March 31, 2019 and December 31, 2018, the subsidiary Carrefour had the following schedule of minimum non-cancellable operating lease receivables:

Consolidated


December 31, 2018

Within 1 year 129 154 1 to 5 years 251 305 Group as a lessor 380 459

NOTE 16: SUPPLIERS



December 31, 2018

March 31, 2019

December 31, 2018

Third parties:

Trade accounts payable - goods 4,283 6,466 6,872 9,489

Trade accounts payable - sundry 50 64 539 555 Trade accounts payable - property and equipment 77 183 103 303

Related parties: Carrefour Import S.A. - - 74 72

Sociedad Compras Modernas - - 1 - Maison Joannes Boubee - - 1 1 Carrefour Argentina - - 2 3

Total Suppliers 4,410 6,713 7,592 10,423 The Group acts as intermediary between the supplier and financial institutions in providing its suppliers with a service of anticipation of their receivables from Carrefour originating from the sale of goods and services. The supplier debt remains qualified in the same line in the balance sheet, as there is no difference in the nature and terms of payment of the liabilities before and after the anticipation. A commission for this service, registered in the “other revenue” line (Note 22.2), remunerates the Group. The balance of trade negotiated as of March 31, 2019 was R$ 889 million (R$ 2,789 million as of December 31, 2018).

NOTE 17: INCOME TAX AND SOCIAL CONTRIBUTION

Note 17.1. Income tax and social contribution expense for the period



December 31, 2018

March 31, 2019

December 31, 2018

Current income tax and social contribution expense (121) (97) (200) (195) Deferred income tax and social contribution expense (2) 5 (18) 16 Total income tax and social contribution expense (123) (92) (218) (179)



Reconciliation of effective tax rate The consolidated effective tax rate on period ended March 31, 2019 was 30% (period ended March 31, 2018: 35%). The reconciliation between the effective tax rate and the nominal rate of the Parent Company and Consolidated is shown below:



March 31, 2018

March 31, 2019

March 31, 2018

Income before income tax and social contribution 564 372 723 511 Combined tax rate at the parent company 34% 34% 34% 34% Income tax and social contribution expense at combined tax rate (192) (126) (246) (174)

Permanent differences Inflation adjustments to judicial deposits - - 9 8 Net income from equity accounted company 32 21 - - Non-deductible fines - - (26) - Other permanent differences (1) (18) (2) (25)

Other items Adjustment of income tax and social contribution expense by the annual rate expected in the full year 38 31 58 33

Tax rate difference in the subsidiary Banco CSF (nominal rate of 40% - (45% as of March 31, 2018))

- - (13) (21)

Others - - 2 - Total income tax and social contribution expense (123) (92) (218) (179) Effective Rate 22% 25% 30% 35% Note 17.2. Deferred tax assets and liabilities Parent company has a net deferred liability of R$ 444 million as of March 31, 2019 (R$ 442 as of December 31, 2018). The Consolidated position presented a net deferred tax liability of R$ 7 million as of March 31, 2019. A negative variation of R$ 29 million in comparison to December 31, 2018.



2019 December 31, 2018

March 31, 2019

December 31, 2018

Deferred tax assets - - 437 485 Deferred tax liabilities (444) (442) (444) (473) Net balance of deferred tax assets (liabilities) (444) (442) (7) 12 The following table shows the composition of deferred taxes:

Parent Company


January 1, 2018

Statement of income

Other comprehensive

income

December 31, 2018

Statement of income

March 31, 2019

Depreciation of property and equipment (108) (22) - (130) (7) (137) Goodwill amortization allowed for tax purpose (472) - - (472) - (472) Total deferred tax liabilities (580) (22) - (602) (7) (609) Provisions 47 43 1 91 - 91 Other administrative provisions 2 2 - 4 5 9 Provision for profit sharing 33 7 - 40 (3) 37 Provision for sales discounts in inventory 20 2 - 22 3 25 Stock-option plan 2 - - 2 (1) 1 Leasing operations - - - - 1 1 Other provisions 3 (2) - 1 - 1 Total deferred tax assets 107 52 1 160 5 165 Total net balance of deferred taxes (473) 30 1 (442) (2) (444)



Consolidated

(In millions of Reais) January 1, 2018

Recognized in Changes in accounting practices (IFRS 9)

December 31, 2018

Recognized in March 31,

2019 Statement of income OCI Statement

of income OCI

Depreciation of property and equipment (168) (20) - - (188) (7) - (195) Goodwill amortization allowed for tax purpose (618) - - - (618) - - (618) Derivative financial instruments (3) 3 (1) - (1) 2 (1) - Total deferred tax liabilities (789) (17) (1) - (807) (5) (1) (813) (-) Impairment of fixed assets 12 3 - - 15 (1) - 14 Provisions 1,263 (472) (1) 109 899 (36) - 863 Tax losses carry-forward 870 (4) - - 866 (11) - 855 Provision for profit sharing 44 43 - - 87 (27) - 60 Provision for sales discounts in inventory 20 133 - - 153 29 - 182

Allowance for bad debts - 94 - 65 159 (85) - 74 Stock-option plan 2 - - - 2 (1) - 1 Other administrative provisions 1 295 - - 296 116 - 412 Total deferred tax assets 2,212 92 (1) 174 2,477 (16) - 2,461 Total deferred taxes assets and liabilities 1,423 75 (2) 174 1,670 (21) (1) 1,648

Unrecognized deferred taxes assets (1,570) (88) - - (1,658) 3 - (1,655)

Total net balance of deferred taxes (147) (13) (2) 174 12 (18) (1) (7)

NOTE 18: PROVISIONS AND CONTINGENT LIABILITIES Note 18.1. Changes in provisions

Parent Company

(In millions of Reais) December 31, 2018 Increases Reversals Utilizations March 31,

2019 Tax 46 4 - - 50 Labor 56 3 (1) (1) 57 Civil 26 5 (1) (1) 29 Post-employment benefits 7 1 - - 8 Total Provisions 135 13 (2) (2) 144

Consolidated

(In millions of Reais) December 31, 2018 Increases Reversals Utilizations March 31,

2019 Tax 2,263 241 (2) (213) 2,289 Labor 327 63 (45) (9) 336 Civil 313 28 (19) (40) 282 Loan commitment (a) 131 17 - (3) 145 Post-employment benefits 13 - - - 13 Total Provisions 3,047 349 (66) (265) 3,065 (a) Refers to undrawn credit lines granted to the clients of Carrefour and Atacadão credit cards presented on off-balance sheet commitments (see note 33). Group companies are involved in a certain number of administrative and judicial proceedings and claims in the normal course of business. They are also subject to tax audits that may result in assessments. The main claims and judicial proceedings are described below. In each case, the risk is assessed by Group Management and their advisors. Disputes and legal proceedings The Group is involved in tax, labor, social security’s and civil disputes. Note 18.2. Tax The Group has received assessments and legal proceedings related to tax matters in the municipal, state and federal spheres. For those with a probable likelihood of loss, provisions were set up in an amount deemed sufficient to cover court decisions expected to be unfavorable. As of March 31, 2019, the main tax contingencies subject to provisions were:



Note 18.2.1. PIS and COFINS Non-cumulative PIS and COFINS payment system has been in place since 2002. Under such regime, the taxpayer became entitled to deduct a given amount of PIS and COFINS paid in preceding stages of the productive chain from the amounts payable in the current stage. In 2004, Carrefour filed a lawsuit to argue the limitations imposed by the law related to credits on the inputs and necessary expenses. Carrefour recognizes PIS and COFINS credits on items under dispute and, as the output of the mentioned lawsuit seems uncertain, Carrefour books a provision and make judicial deposits on a monthly basis, credits. In September 2018, Carrefour stopped recognizing credits of PIS and COFINS over items, which are under discussion, ending the needs of new provision and judicial deposits. As of March 2019, the total amount of provisions recorded was R$ 1,215 million (R$ 1,379 million as of December 2018). Note 18.2.2. Income tax (CSLL) Banco CSF filed a lawsuit to argue the constitutionality of the additional social contribution on profits financial entities are subjected to. This discussion is still pending at Supreme Court level. As of March, 2019, the total amount of provisions recorded was R$ 408 million (R$ 393 million as of December 31, 2018). Note 18.2.3. Other taxes The Company and its subsidiaries received other tax assessments that, after analysis, have been classified as “probable losses”. The main topics involved are (i) ICMS matters, such as undue credits, tax war, electricity, lack of payment and formal obligations, (ii) Application of the Accident Prevention Factor – “FAP”, (iii) Incorrect Statement of offsetting – “PERD/COMP”, and (iv) other less relevant issues. Note 18.3. Employee-related disputes (Labor) The Group is a party to several labor lawsuits and administrative proceedings, initiated by former employees, third parties, professional associations and the Public Prosecutor's Office, involving, basically, matters regarding work period, among other obligations provided by labor law. Such judicial and administrative proceedings involve requests for payment of overtime, acknowledgement of employment bond to outsourced workers and effects thereof, besides requests, from professional associations and the Public Prosecutor's Office, for proof of compliance with labor law and conduct adjustment. Lawsuits filed by former employees or subcontractors’ employees Due to the significant number of labor lawsuits, the amount of the provision is estimated based on historical losses for those claims below R$ 1 million and in progress in the second level of court instance. Based on the last two years closed cases database and segregating main categories of employees, an average actual payment over claimed amount rate is calculated and applied to every new claim received. Besides, for cases where labor claims exceed R$ 1 million, our internal and external legal advisors individually analyze the expectation of loss, including the amount to be registered. None of the lawsuits filed by former employees or subcontractors’ employees is regarded as individually material by the Group.



Collective lawsuits filed by associations or Public Prosecutor’s Office The judicial or administrative actions brought by professional associations and the Public Prosecutor's Office, are evaluated on a case by case and provisions are booked in sufficient amounts when needed. None of the lawsuits filed by associations or Public Prosecutor’s Office is regarded individually material by the Company. As of March 31, 2019, the total provision for labor claims amounted to R$ 335 million (R$ 327 million as of December 31, 2018). Note 18.4. Legal and commercial disputes (Civil) The Group is subject to regular audits by the authorities responsible for overseeing compliance with the laws applicable to the retail industry and by the Antitrust regulator (Conselho Administrativo e Defesa Econômico – CADE). Disputes may also arise with suppliers because of differing interpretations of legal or contractual provisions. Note 18.5. Contingent liabilities As of March 31, 2019, the Group is involved in other tax, civil and social security contingencies, for R$ 9,167 million (R$ 9,381 million as of December 31, 2018) for which losses were assessed as possible by Management with the support from legal counsel. The most relevant cases are set forth below: Note 18.5.1 TAX Goodwill amortization deductibility at Atacadão S.A. (Income tax and social contribution) The Company has been challenged since June 2013 regarding the amortization of goodwill for tax purposes related to the acquisition of Atacadão occurred in 2007. The main questioning of Brazilian tax authorities is related to goodwill amortization deductibility, in relation to Atacadão acquisition in 2007. The Group used a Brazilian holding company to make the acquisition, which was subsequently merged into Atacadão. Furthermore, the infraction notices also claim IRPJ/CSL values related to (a) the financial expenses related to the debt that was initially subscribed by the acquisition vehicle and then transferred to Atacadão, and (b) the amount of Interest on Net Equity ("IOE" or “JCP”) paid by Atacadão to its shareholders, disproportionately to the interest held by the shareholders. During the first semester of 2016, a partial favorable decision was rendered, in administrative level, reducing total risk of assessment. Therefore, excluding amount related to favorable decision, the risk amount remains in R$ 1,915 million (R$ 1,897 as of December 31, 2018). In addition, in July 2017, the Company received a final unfavorable decision at administrative level related to the remaining matters (goodwill amortization deductibility and penalties). In October 2017, the Company filed an appeal at the judicial sphere, as well as, presented as insurance guarantee. In July 2018, the Company received an unfavorable decision in the first instance in judicial sphere about payments of interests on equity. Due to this decision, the company filed an appeal and there are no changes in risk assessment. In addition to same operation, the Company also received a complementary tax assessment in 2016 for the periods from 2012 to 2013. As of March 2019 the total updated amount was R$ 788 million (R$ 780 million in December 2018). There are no subsequent periods subject to questioning by the relevant tax authorities to this matter. Related to the second case mentioned above, in February 2018, the Company obtained a partially favorable decision of the CARF, with respect to: (i) interests expense deductibility, and (ii) penalty



reduction from 150% to 75%. However, the CARF maintained its unfavorable decision regarding the goodwill amortization deductibility and distribution of interests on equity (“Juros Sobre Capital Proprio – JCP”). In April 2018, the decision was published and the Company and fiscal authorities appealed to the Superior Chamber of CARF. As of March 31, 2019, the total amount under dispute was R$ 2,703 million (R$ 2,677 million as of December 31, 2018), considering the deferred income tax and social contribution recorded during the fiscal amortization period, the net risk for the Company is R$ 2,231 million (R$ 2,205 as of December 31, 2018). Tax calculation on cancelled coupons at Carrefour (ICMS) Carrefour received tax assessments in the State of São Paulo for 2006 – 2010 calendar years, due to supposed lack of payment of the Tax on Distribution of Goods and Services - ICMS, related to tax coupon items declared as cancelled. Such cancellations result from situations in which the subsidiary Carrefour customers give up taking the products at the cashier line because the eventually end up not wanting the product or due to a program offered by the subsidiary Carrefour – so called “Compromisso Público Carrefour” – which Carrefour accepted the proven lower price presented by customer on an identical product which would be bought on a Carrefour store. Carrefour’s defense has been consisting in demonstrating, on a sample basis, that every cancellation registered was justified. At the date of issuance of these financial statements, only one case had been judged at the judicial sphere, with favorable decision to Carrefour. The other cases are waiting for judgment, whether in administrative or judicial sphere. As of March 31, 2019, the total amount remaining under dispute was R$ 1,882 million (R$ 1,867 million as of December 31, 2018).

Tax credits arising from certain expenses (PIS and COFINS) The subsidiary Carrefour received tax assessments mainly related to the recognition of tax credits on certain expenses. The total amount of tax assessments classified as “possible loss” was R$ 1,031 million as of March 2019 (R$ 1,021 million as of December 31, 2018).

Credits calculation on basic products (ICMS) On October 16, 2014, the Federal Supreme Court (“Supremo Tribunal Federal” or “STF”) ruled that part of tax credits calculated on basic products items should be reverted. This decision was published on February 13, 2015 and is to be applied to every similar case. The tax payers involved in this case presented appeals, asking in particular for a prospective application (“modulation of effects”) of the Court’s interpretation. As of the date of issuance of these financial statements, the STF had not judged these petitions, making though impossible to assess the consequences of such a decision and then any recognition in the Group’s financial statements. Although the STF has not analyzed the issue of modulation of the effects of the decision, certain organs of the Judiciary are judging these cases. The subsidiary Carrefour, with the assistance of external advisors, has verified that there is the possibility of a final judgment being rendered unfavorable in 2018 and 2019. In November and December 2018, the subsidiary Carrefour, adhered certain cases in the amnesty program of the States of Rio de Janeiro and Rio Grande do Sul, these cases amounted to R$ 211 million. The amount paid was R$ 106 million after the reduction of the tax amnesty. As of March 31, 2019, the total amount of tax assessments received and not provisioned by the Group was R$ 815 million (R$ 813 million as of December 31, 2018).



Disputed tax credits at Carrefour (ICMS) ICMS – São Paulo The São Paulo’s Warehouses received tax assessments related to undue credits ICMS. The Authorities argued that these credits had been recognized in 2008 in GIAs ("ICMS Information and Assessment Forms") and had also been recorded in fiscal accounting books without the proper documentation (invoices). As of March 2019, the total amount of tax assessments received by the Group was R$ 423 million (R$ 445 million as of December 31, 2018). Goodwill amortization deductibility at Carrefour (IRPJ) In the course of its economic activities, Carrefour acquired nine supermarket chains in the years 1998 to 2001, which were subsequently transferred to Carrefour through a merger operation. These transactions generated a goodwill, which was amortized for tax purposes. In this matter, and for the calendar years 2007 – 2012, the administrative tax proceedings discuss the legitimacy of the goodwill amortization booked by Carrefour after the acquisition of the supermarkets, considering the legal grounds established by Law n. 9,249/1995, Decree n. 1,598/1977 and accounting standards. The main point of the discussion is the proof of the payment supported by Carrefour to acquire the companies and the allocation of the goodwill expenses. Furthermore, the tax assessment also claims IRPJ/CSLL values related to expenses related to non-deductible provisions and reduction of profit subject to taxation. In January 2017, the Administrative Court (CARF) unanimously decided in favor of Carrefour regarding the goodwill related to two of the nine acquisitions and related to the reduction of profit subject to taxation. The Group is awaiting publication of the decision. The remaining acquisitions are still awaiting judgment. In September 2017, the Superior Administrative Court (CARF), maintained, for the 2007 period, the partial favorable decision related to (i) the deductibility of the goodwill amortization for two acquisitions and (ii) also the reduction of profits. However, the Superior Administrative Court (CARF) kept the unfavorable decision related to the deductibility of the goodwill amortization of the remaining seven acquisitions. In October 2017, the decision was published and Carrefour presented a Motion for Clarification that was judged and the Superior Chamber of CARF maintained the decision partially favorable to the Company. Considering that after this decision will be closed the administrative sphere, the Company will continue with the discussion in the judicial sphere. In March 2018, the process was closed in the administrative sphere and The Brazilian Federal Revenue (“Receita Federal”) fixed the remaining debt value considering the effects of the partially favorable decision. The Company will continue the discussion in the judicial sphere, with the presentation of a guarantee. In December 2018, the subsidiary Carrefour received an assessment notice on the same subject, but related to the calendar year of 2013. In that case, considering that Carrefour had tax loss, the tax authority identified the amount that should not have been amortized in the period of 2013 (R$ 69 million) and determined that Carrefour would make the adjustments in the basis of calculation of Income Tax and CSLL. The administrative defense was filed in January 2019. As of March 2019 the total amount under dispute was R$ 268 million (R$ 266 million as of December 31, 2018).



Rebates received by the subsidiary Carrefour As a common practice in retail, Carrefour receives rebates from its suppliers and considers these rebates as a reduction of costs. Carrefour has received tax assessments in which the tax authorities considered that part of these rebates should be treated as revenue and therefore subjected to PIS and COFINS. As of March 2019, the total amount of tax assessments received by the subsidiary Carrefour was R$ 546 million (R$ 542 million as of December 31, 2018). Tax on Transfer of Real Estate (ITBI) – The subsidiary Carrefour There are tax enforcements of ITBI filed by the Municipality of São Paulo against the subsidiary Carrefour, supposedly incident on the transfer of real estate to legal entities as capital increase (capital contribution). The main point of the discussion is the ITBI tax immunity granted by the federal constitution (article 156) to the operations of real estate transfer as capital increase. In the defenses, the subsidiary Carrefour demonstrated that all the properties were transferred as capital increase and should not be subject to ITBI taxation due to the statute of limitation. As of March 2019, the total amount of tax assessments received by the subsidiary Carrefour was R$ 257 million (R$ 254 million as of December 31, 2018). Note 18.6 Contingent Assets The Company has filed lawsuits to argue the unconstitutionality to include the ICMS in the basis of PIS and COFINS taxes and to argue the over payment of ICMS due to the ICMS-ST methodology, that is based on a deemed price for the final costumer. Related to such matters, Federal Supreme Court - "STF" ruled favorable understanding to the taxpayers. The lawsuits cover, at least, the past five years. PIS and COFINS On non-cumulative PIS and COFINS methodology basis, the Group required the right to exclude value of the ICMS from the calculation basis of these two contributions. In March 2017, the Federal Supreme Court – “STF”, in general repercussion, ruled, “ICMS should not compose the calculation basis of PIS and COFINS”. The STF decision was published in September 2017. Based on this decision and the legal opinions of the external advisors, the Company understands that it is not probable that the result of the judgment of the Supreme Court on the merit will change, reason why it no longer includes ICMS in the calculation bases of PIS and COFINS in the year ending. The Group with its legal advisors considers that the final judgment of the STF related to the modulation of effects will not limit the exclusion of the ICMS from the basis of calculation of the PIS and COFINS to the future periods. In September 2018, the lawsuits filed by the subsidiaries Carrefour e Comercial de Alimentos were final and not appealable, allowing the recognition of R$ 121 million on September 30, 2018, for the period from 2013 to 2016. The subsidiaries are still validating the calculation of periods from the entry of their lawsuits in 2002 to 2012. The lawsuit on behalf of the Company has not yet become final and not appealable, for which the potential amount of R$ 520 million for the period from 2011 to 2016 is estimated.



NOTE 19: DEFERRED REVENUE (PARENT COMPANY) In June 2016, the Company concluded, with its indirect subsidiary, Banco CSF S.A., an operational agreement, with a sixteen-year maturity, to create a new credit card, “Cartão Atacadão”, and authorizing the offer, distribution and commercialization of “Banco Carrefour” financial products and solution to the Company customers. This partnership provided an R$ 825 million income in cash for the Company in September 2016. The value was paid in Exchange of the exclusivity right and the use of the Company customers database for the duration of the operational agreement, and for the visibility of these services related operations and offers in the Atacadão stores. The income resulting from the proceeds received will be appropriated in the result alongside the duration of the agreement, with the booking of a prepaid income of R$ 825 million in December 2016. As the transaction was concluded with an indirect subsidiary, the prepaid income value booked in Atacadão financial statements up did not include the one related to the participation of the minority interest BSF Holding S.A, direct controlling shareholders. The value booked in the liabilities of the Parent Company as of March 31, 2019 was of R$ 345 million (R$ 26 million in current liabilities and R$ 319 million in noncurrent liabilities). As of December 31, 2018 the value registered in the Prepaid Income line was of R$ 352 million (R$ 26 million in current liabilities and R$ 326 million in noncurrent liabilities).

NOTE 20: EQUITY Note 20.1. Capital management Capital management objectives (equity and debt capital) are to:

- Ensure that the Group can continue operating as a going concern, in particular by maintaining high levels of liquid resources;

- Optimize shareholder returns; - Keep gearing at an appropriate level, in order to minimize the cost of capital and maintain the

Group solvency at a level that allows it to access a wide range of financing sources and instruments.

In order to maintain or adjust its gearing, the Group may take on new borrowings or retire existing borrowings, adjust the dividend paid to shareholders, return capital to shareholders, issue new shares, buy back shares or sell assets in order to use the proceeds to pay down debt. Banco CSF must have sufficient equity capital to comply with capital adequacy ratios and the minimum capital rules set by the Central Bank of Brazil (“BACEN”). Note 20.2: Share capital and treasury stock Note 20.2.1. Share capital Issuance of common shares In the period ended March 31th, 2019, the Company issued 89,180 new common book-entry shares, nominatives, and without nominal value, with an issue price of R$ 11.70 per share, following the exercises of stock options in the scope of the Company’s Stock Option Plan, “Pre-IPO” plan, described in note 31. The Company’s share capital increased from R$ 7,627 million as of December 31, 2018 to R$ 7,629 million as of March 31, 2019, represented by 1,983,527,147 common book-entry shares, nominatives, and without nominal value. The composition of the share capital by number of shares on March 31, 2019 and December 31, 2018 was as follow:



Number of shares March 31, 2019 December 31, 2018 Shareholders Carrefour Nederland B.V. 770,832,970 39% 770,832,970 39% Carrefour S.A. 651,400,000 33% 651,400,000 33% Península II Fundo de Investimento em Participações 176,665,454 9% 176,665,454 9% Free Float 384,628,723 19% 384,539,543 19% 1,983,527,147 100% 1,983,437,967 100%

Note 20.2.2. Capital reserve Capital reserve comprises amounts received by the Group and not recorded in the statement of income as revenue, since the purpose of such amounts is to strengthen the capital, without any efforts by the Group in terms of delivery of goods or provision of services. These are capital transactions with shareholders. Capital reserve is used exclusively for the following purposes: (i) absorb losses, when they exceed income reserves; (ii) redeem, reimburse or purchase shares; (iii) redeem from beneficiaries; (iv) incorporate into capital and (v) pay cumulative dividends. As of March 31, 2019 the capital reserve totaled R$ 2,175 million (R$ 2,174 million as of December 31, 2018).

Effect of the stock options plan The value registered in the equity for R$ 25 million as of March 31, 2019 (R$ 24 million as of December 31, 2018) corresponds to the effect of the stock options plan detailed in the note 31. Note 20.2.3 Net effect of acquisition of minority interest The balance of this account arose from the merger of Brepa Comércio e Participações Ltda. by The Company in 2014 and related to the acquisition of Carrefour Comércio e Indústria Ltda. minority interests by Brepa. Note 20.2.4. Income reserve Legal reserve It is set up at 5% of the net income for the year, under the terms of Law No. 6404/76, article 193, as amended (“Brazilian Corporation Law”) up to the limit of 20% of the capital. The net value registered were of R$ 198 million as of March 2019 (R$ 198 million as of December 31, 2018). Profit retention reserve The profit retention reserve was set up under the terms of article 196 of Law No. 6404/76, for the constitution of a reverse of investments and working capital need, to fund the growth and expansion, and finance the working capital need of the Company. Note 20.2.5 Effects of the initial adoption of CPC 48/IFRS 9 in retained earnings The effects of the initial adoption, as of January 1st, 2018, of the CPC 48/IFRS 9 standards were recognized in retained earnings for a total value of R$ 214 million, net of taxes (see note 2.2.2 of the financial statements as of December 31, 2018), with R$ 110 million on the equity of controlling shareholders and R$ 104 million for the non-controlling ones.



Note 20.2.6. Equity evaluation adjustment Equity evaluation adjustment includes:

(i) The effective portion of the accumulated net variation of fair value of hedging instruments used in cash flow hedge up to the recognition of hedged cash flows (see note 28.7);

(ii) Accumulated net variation of fair value of debt instruments and equity instruments measured at fair value through other comprehensive income; and

(iii) Accumulated net variation of provision for post-employment benefits paid to the Group employees.

The amounts recorded under equity valuation adjustments are reclassified to the statement of income for the period, either wholly or partially, upon disposal of the assets/liabilities to which they refer. Note 20.3. TREASURY STOCK There is no treasury stock as of March 31, 2019 and December 31, 2018.

Note 20.4. DIVIDENDS Parent company At the meeting of the Board of Directors held on February 26, 2019, a proposal was approved for the distribution, in the form of interest on equity, of R$ 470 million, considering the pre-paid interest on equity paid in December 2018. The proposed additional interest on equity amount of 90 million was subject to the shareholders' approval at the General Meeting of April 16, 2019 and will be settled by the Company on June 14, 2019. Subsidiary BSF holding The mandatory minimum dividends, calculated according to the Bylaws of the Company and its subsidiary BSF Holding were transferred from the Company’s equity statement at the closing of the accounting year 2018 and registered as a debt in liabilities. The mandatory minimum dividends amount as of December 31, 2018 is R$ 118 million (R$ 60 million to be paid to the direct subsidiary Carrefour Comércio e Indústria Ltda and R$ 58 million to be paid to Banco Itaú Unibanco S.A). Note 20.5. NON-CONTROLLING INTERESTS

In March 31, 2019 and December 31, 2018, non-controlling shareholders detain a participation of 49% in the capital stock of our controlled entity Banco CSF S.A. held by Banco Itaú Unibanco S.A., the purpose of which is the supply, distribution and trade of financial products and services to customers.



NOTE 21: BASIC AND DILUITED EARNINGS PER SHARE (GROUP SHARE) The weighted average number of shares included the effect of the emissions of common shares following the exercises of stock options in the scope of the Stock Option Plan, “Pre-IPO” plan, described in note 31. The following table shows the calculation of income or loss per common share: March 31,

2019 March 31,

2018 Net income for period attributable to controlling shareholders (In millions of Reais) 441 280 Weighted average number of shares outstanding (in million) 1,984 1,982 Basic EPS denominator (in million) 1,984 1,982 Stock options (in million) 1 1 Diluted EPS denominator (in million) 1,985 1,983 Basic and diluted earnings per share (in R$) 0.22 0.14

NOTE 22: NET OPERATING REVENUE Note 22.1. Net Sales



March 31, 2018

March 31, 2019

March 31, 2018

Gross sales 9,527 8,395 14,215 13,077 Discounts and returns (22) (25) (56) (64) Taxes on sales (874) (773) (1,303) (1,170) Total Net sales 8,631 7,597 12,856 11,843 Note 22.2. Other Revenues



March 31, 2018

March 31, 2019

March 31, 2018

Gross other revenue - - 739 649 Taxes and deductions - - (90) (75) Revenue from financial transactions - - 649 574 Gross services and commissions 58 54 114 103 Gross rental income 5 4 49 46 Taxes on other revenue (7) (6) (26) (22) Total Other revenue 56 52 786 701

NOTE 23: COST OF GOODS SOLD, SERVICES AND FINANCIAL OPERATIONS



March 31, 2018

March 31, 2019

March 31, 2018

Cost of goods sold (7,290) (6,515) (10,582) (9,815) Depreciation (1) (2) (13) (7) Other costs - - (178) (178) Total costs of goods sold, services and financial operations (7,291) (6,517) (10,773) (10,000)

NOTE 24: SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A), AND DEPRECIATION AND AMORTIZATION



March 31, 2018

March 31, 2019

March 31, 2018

Sales, general and administrative expenses (789) (686) (1,839) (1,708) Depreciation and amortization (99) (74) (242) (180) Total SG&A and depreciation and amortization (888) (760) (2,081) (1,888)



Selling, general and administrative expenses

Selling, general and administrative expenses break down as follows:



March 31, 2018

March 31, 2019

March 31, 2018

Salaries, wages and benefits (459) (403) (962) (881) Equity-settled share-based payments expense (1) (2) (1) (5) Property rentals (6) (17) (15) (63) Thirty part services (47) (41) (311) (279) Maintenance and repair costs (63) (54) (140) (132) Energy and utilities (91) (69) (160) (130) Credit card commissions (19) (17) (43) (38) Other SG&A expenses (103) (83) (207) (180) Total SG&A expenses (789) (686) (1,839) (1,708) The expense recognized as share-based payment corresponds to (i) the fair value of the equity instruments on the grant date (R$ 1 million in the parent company, R$ 1 million in the consolidated) and (ii) the amount of withholding tax to be paid by the Group on behalf of the employees and of social charges.

Depreciation and amortization

Including supply chain depreciation recognized in cost of sales, total depreciation and amortization expense recognized in the individual and consolidated income statement amounted respectively to R$ 100 million and R$ 255 million in March 31, 2019 (R$ 76 million and R$ 187 million in March 31, 2018), as follows:



March 31, 2018

March 31, 2019

March 31, 2018

Property and equipment (98) (73) (214) (158) Intangible assets (1) (1) (25) (19) Investment property - - (3) (3) Depreciation and amortization of tangible and intangible assets and investment property (99) (74) (242) (180)

Depreciation of logistic activity (1) (2) (13) (7) Total depreciation and amortization (100) (76) (255) (187)

NOTE 25: OTHER INCOME (EXPENSES)



March 31, 2018

March 31, 2019

March 31, 2018

Net gains (losses) on sales of assets (i) 9 (43) (9) (44) Restructuring costs (ii) - - (10) (7) Non-recurring tax credits, net of impairment provision (iii) - - 49 - Income and expenses related to litigations - - 22 (11) Total Other income and expenses, net 9 (43) 52 (62)

(i) "Net Gains (losses) on disposal and disposal of assets" may contain (i) the result of impairment losses arising from impairment tests (ii) expenses or revenues relating to the net value of the assets disposed of (iii) expenses related to write-off of assets for which we no longer expect future economic benefits from their use or disposal, identified during inventories, or in the case of claims, remodeling of our stores, etc. In the period ended March 31, 2018, R$ 49 million of assets were sold from our Atacadão stores.

(ii) Restructuring costs are related to projects to improve operational efficiency, the costs of

which refer to consulting fees and shutdown costs.

(iii) The Parent Company Carrefour Comércio e Indústria Ltda. recognized credits of ICMS ST from other states than São Paulo from the period from 2016 to 2018. The total amount of credits recognized, net of the provision for non-realization was R$ 59 million. Other provisions amounted R$ 10 million.



(iv) In March 2019, the Company reversed a provision for civil claims in the amount of R$ 28 million, after homologation in accordance with the counterparty. The amount of the provision before reversal was R$ 41 million. Besides that, other provisions net of reversion result in an expense of R$ 6 million.

NOTE 26: NET FINANCIAL EXPENSE



March 31, 2018

March 31, 2019

March 31, 2018

Financial income Revenues from short-term investments 3 9 7 13 Inflation adjustments to judicial deposits 5 2 34 26 Derivatives gains related to foreign exchange - 4 - 4 Other financial income 1 – 1 2

Total financial income 9 15 42 45

Financial expenses Interest on loan (36) (33) (42) (40) Commission from letter of guarantee (8) – (26) – Charges on financial transactions – – (27) (22) Inflation adjustments to contingencies – – (11) (15) Derivates losses related to foreign exchange (2) – (41) (38) Tax on financial transactions – – – (4) Foreign exchange gain (1) (1) (2) (3) Other financial expenses (8) – (10) (6)

Total financial expense (55) (34) (159) (128)

Financial results (46) (19) (117) (83)

NOTE 27: CHANGES IN CASH FLOWS

The changes in working capital reported in the statements of cash flows are shown below:

Parent Company Consolidated (In millions of Reais) March 31, 2019 2018 March 31, 2019 2018

Opening Closing Net

Variation Net

Variation Opening Closing Net Variation

Net Variation

(-) Trade accounts receivables (640) (768) 128 129 (1,017) (907) (110) (6) (-) Inventories (3,862) (3,359) (503) 138 (6,217) (5,132) (1,085) (6) + Suppliers 4,333 6,530 (2,197) (1,963) 7,489 10,120 (2,631) (2,553) (-) Recoverable taxes (1,444) (1,316) (128) (46) (3,036) (2,792) (244) (42) (-) Judicial deposits (112) (109) (3) (1) (2,290) (2,231) (59) (42) + Payroll, vacation and others 299 297 2 37 624 651 (27) 2 + Taxes payables 113 158 (45) (21) 211 273 (62) (52) (-) Other operating assets (98) (67) (31) 60 (691) (610) (81) 34 + Other operating liabilities 617 638 (21) (93) 3,392 3,515 (123) (252) + / (-) Derivatives financial instruments - - - - 1 2 (1) - + Other adjustments:

-

Change in assets and liabilities recognized in Other comprehensive income before taxes. - - - - - - - - Change in receivable balance from the disposal of property, plant and equipment - - - - - - - (44) Change in operating assets and liabilities (794) 2,004 (2,798) (1,760) (1,534) 2,889 (4,420) (2,961)

(-) Consumer credit granted by our financial solutions company - - - - (6,867) (6,583) (284) 52

+ Consumer credit financing - - - - 5,171 5,070 101 (168) Effect of the initial adoption of CPC 48/IFRS 9 - - - - - - - (144) Net Consumer credit granted by our financial solutions company - - - - (1,696) (1,513) (183) (260)



NOTE 28: FINANCIAL ASSETS AND LIABILITIES Note 28.1. Financial instruments by category Parent Company

At March, 31 2019 At December 31, 2018

Breakdown by

categories Breakdown by categories

(In millions of Reais) Carrying amount FVTPL Amortized

cost Fair

value Carrying amount FVTPL Amortized

cost Fair

value Cash and cash equivalents 476 476 - 476 2,657 2,657 - 2,657 Account receivables 640 - 640 640 768 - 768 768 Other account receivables 60 - 60 60 49 - 49 49 Assets 1,176 476 700 1,176 3,474 2,657 817 3,474 Suppliers 4,410 - 4,410 4,410 6,713 - 6,713 6,713 Borrowings 2,251 - 2,251 2,320 1,517 - 1,517 1,586 Lease debt 289 - 289 289 - - - - Other accounts payable 128 - 128 128 151 - 151 151 Liabilities 7,078 - 7,078 7,147 8,381 - 8,381 8,450 Consolidated

At March 31, 2019 At December 31, 2018

Breakdown by

categories Breakdown by categories

(In millions of Reais) Carrying amount FVTPL Amortized

cost FVOCI Fair value

Carrying amount FVTPL Amortized

cost FVOCI Fair value

Cash and cash equivalents 747 747 - - 747 4,647 4,647 - - 4,647 Marketable Securities 301 - - 301 301 295 - - 295 295 Consumer credit granted by our financial solutions 6,867 - 6,867 - 6,867 6,583 - 6,583 - 6,583

Trade receivable 1,017 - 1,017 - 1,017 907 - 907 - 907 Other accounts receivables 211 - 211 - 211 207 - 207 - 207 Assets 9,143 747 8,095 301 9,143 12,639 4,647 7,697 295 12,639 Suppliers 7,592 - 7,592 - 7,592 10,423 - 10,423 - 10,423 Consumer credit financing 5,175 - 5,175 - 5,175 5,070 - 5,070 - 5,070 Borrowings 2,634 - 2,634 - 3,017 1,913 - 1,913 - 1,982 Lease debt 879 - 879 - 879 - - - - - Dividend payable 58 - 58 - 58 58 - 58 - 58 Derivative financial instruments 1 - - 1 1 2 - - 2 2

Other accounts payable 315 - 315 - 315 411 - 411 - 411 Liabilities 16,654 - 16,653 1 17,037 17,877 - 17,875 2 17,946 Assets and liabilities measured at fair value based on the hierarchy provided for in IFRS 13/CPC 46– Fair Value Measurement At March 31, 2019

(In millions of Reais) Parent Company

Consolidated

Level 1 Level 2 Level 3 Total


Cash and cash equivalents - 476 - 476 - 747 - 747 Marketable securities - - - - - 301 - 301 Assets - 476 - 476 - 1,048 - 1,048 Derivative financial instruments - - - - - 1 - 1 Liabilities - - - - - 1 - 1 At December 31, 2018

(In millions of Reais) Parent Company

Consolidated



Cash and cash equivalents - 2,657 - 2,657 - 4,647 - 4,647 Marketable securities - - - - - 295 - 295 Assets - 2,657 - 2,657 - 4,942 - 4,942 Derivative financial instruments - - - - - 2 - 2 Liabilities - - - - - 2 - 2 No assets or liabilities measured at fair value were reclassified between March 31, 2019 and December 31, 2018.



Note 28.2. Description of the main financial risks we are exposed to Our main risks associated with the financial instruments that we use are liquidity, interest rate, currency and credit risks. Due to the specificity and to their existence of a specific set of regulations provided by the Central Bank of Brazil (BACEN), financial risks arising from our banking activities (Banco CSF) are managed separately from those related to our Retail and Cash & Carry businesses. Our Corporate Treasury and Financing Department oversees the treasury and financing needs of our three businesses segments and liaise with their specific Treasury and Financing Department of each of our business segments. Our Corporate Treasury and Financing Department is in charge of implementing the strategy defined by our Management, establishing and analyzing the reporting of our financial positions, monitoring the financial risks arising among our various businesses segments, defining and overseeing the proper implementation of the rules governing our financial exposure. Note 28.3. Liquidity risk Liquidity risk is the risk that we will be unable to settle our financial liabilities when they fall due. We manage our liquidity risk by ensuring, to the extent possible, that we have sufficient liquid assets at any time to settle our liabilities when they fall due, whatever the market conditions are. Cash flow projections are monitored and updated on a continuous basis, in order to better adjust available resources, as well as anticipate any events that could affect our liquidity. We diversified our sources of funding, through the conclusion of loans and the sale of receivables with financial institutions. As of March 31, 2019, our cash and cash equivalents and current marketable securities amounted to R$ 1,048 million (R$ 4,942 million as of December 31, 2018) and to face unexpected short-term liquidity needs, we held two undrawn committed bank lines for a total respectively R$ 400 million (Atacadão) and R$ 170 million (Banco CSF). Borrowings are detailed in the chart below: (In millions of Reais) Parent Company Consolidated

Current March 31,

2019 December 31, 2018

March 31, 2019

December 31, 2018

Interest rates Maturity

Debentures 27 11 27 11 104.4% CDI 2021 Debentures 14 6 14 6 105.75% CDI 2023 Debentures 710 - 710 - 102.3% CDI 2020

751 17 751 17

Non current Debentures 1,000 1,000 1,000 1,000 104.4%CDI 2021 Debentures 500 500 500 500 105.75%CDI 2023 Financial letters - - 383 396 104.75% CDI 2021

1,500 1,500 1,883 1,896

Total 2,251 1,517 2,634 1,913

As of March 31, 2019 and December 31, 2018, there was no financial covenant embedded in these agreements. The following table shows in detail the remaining contractual maturity of the Group's financial liabilities and the contractual amortization periods. The table was prepared in accordance with undiscounted cash flows from financial liabilities.



Cash and carry business segment On April 25, 2018, the first issuance of simple, non-convertible, unsecured debentures in two series ("First Series" and "Second Series", respectively) of the Company ("Issue" and "Debentures"), totalizing the amount of R$ 1,500,000,000.00 (one billion, five hundred million Reais) on the issue date. On January 7, 2019 the second issuance of debentures occurred, totalizing the amount of R$ 700,000,000.00 (seven hundred million Reais) on the issue date. The issue will be subject to public distribution with restricted distribution efforts, in accordance with the Instruction of CVM 476. The Issue is exclusively destined to professional investors, under the terms of current legislation. Characteristics of Debentures:

Type of issue

Amount of issue


In circulation (quantity)

Date of issue Maturity Annual

charges

Unit price (in R$)

1st Issue - 1st series 1,000 1,000,000 04/25/2018 04/25/2021 104.40% CDI 1,000 1st Issue - 2nd series 500 500,000 04/25/2018 04/25/2023 105.75% CDI 1,000 2nd Issue – 2nd series 700 700,000 01/07/2019 01/06/2020 102.30% CDI 1,000

March 31, 2019 Parent Company

(In millions of Reais) Carrying amount

Within 1 year 1 to 2 years 2 to 5 years More than

5 years Total

Suppliers 4,410 4,410 - - - 4,410 Borrowings 2,251 746 1,240 755 - 2,741 Lease debt 289 63 58 164 347 632 Other accounts payable 128 128 - - - 128 Total liabilities 7,078 5,347 1,298 919 347 7,911 December 31, 2018 Parent Company



5 years Total

Suppliers 6,713 6,713 - - - 6,713 Borrowings 1,517 - 2,010 - - 2,010 Other accounts payable 151 151 - - - 151 Total liabilities 8,381 6,864 2,010 - - 8,874

March 31, 2019 Consolidated



5 years Total

Suppliers 7,592 7,592 - - - 7,592 Borrowings 2,634 773 1,272 1,172 - 3,217 Lease debt 879 234 185 460 809 1,688 Consumer Credit Financing 5,175 4,687 488 - - 5,175 Dividends payable 58 58 - - - 58 Other accounts payable 315 300 15 - - 315 Derivative financial instruments 1 1 - - - 1 Total liabilities 16,654 13,645 1,960 1,632 809 18,046

December 31, 2018 Consolidated

(In millions of Reais) Carrying amount Within 1 year 1 to 2 years 2 to 5 years Total

Suppliers 10,423 10,423 - - 10,423 Borrowings 1,913 396 2,010 - 2,406 Consumer Credit Financing 5,070 4,416 356 432 5,204 Dividends payable 58 58 - - 58 Other accounts payable 411 396 15 - 411 Derivative financial instruments 2 2 - - 2 Total liabilities 17,877 15,691 2,381 432 18,504



Payment schedule:

The unit face value of the Debentures will be fully settled on the respective maturity date of the Debentures. The remuneration of the 1st and 2nd series will be paid semiannually, without grace, as of the date of issue, on the 25th of April and October of each year, with the first payment occurring on October 25, 2018 and the last maturity of the respective series.

Use of resources:

The purpose of this issue is to extend the Company's debt profile at a competitive cost. The proceeds will be fully utilized for the prepayment of existing debts at no additional cost. This issue does not imply any increase in the Company's current indebtedness level.

Financial Solutions segment

Banco CSF’s liquidity risk is monitored within the liquidity strategy approved by our Management. Banco CSF’s refinancing situation is assessed based on internal standards, early warning indicators and regulatory ratios. Liquidity risk management objectives are to:

ensure that refinancing needs are met, based on monthly assessments of projected cash surpluses or shortfalls over a six-year period performed by comparing static forecasts of committed financing facilities with dynamic lending forecasts;

achieve compliance with the BACEN rules, enhancing 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 extending the maturity of liabilities in order to improve the net stable funding ratio; and

diversify refinancing sources to include bank lines of credit, money market issues and issues of interbank Notes (letra financeira).

Part of Banco CSF’s liquidity strategy consists in investing in public bonds, highly liquid, offering a satisfactory return and available for sale if needed. As of March 31, 2019, Banco CSF was holding R$ 301 million of public bonds (R$ 295 million as of December 31, 2018). Banco CSF also had an undrawn credit line of R$ 170 million (R$ 170 million as of December 31, 2018). Banco CSF considered its liquidity position as solid. On June 11, 2018, CSF Bank issued papers called “Letra de Crédito”, of R$ 700 million, with maturity in 2020 and 2021, looking for a better performance in operating founding.

Note 28.4. Interest rate risk

The Group has financial assets and liabilities exposed to the risk of variation of interest rates. A sensitivity analysis has been conducted considering the exposure to the CDI variation of 6.40%. The impacts of this analysis for assets and liabilities subject to interest rate risk are reported in the table below:

Exclusively for sensitivity analysis purposes, our Management considered possible scenarios of deterioration/improvement of CDI by 10%, 25% and 50%, respectively, in risk variables until the maturity date of financial instruments. March 31, 2019

Parent Company (In millions of Reais)

Exposure Decrease in CDI by

Increase in CDI by

10% 25% 50%

10% 25% 50% Cash equivalents 24 - - (1) - - 1 Borrowings (2,251) 15 37 75 (15) (37) (75) Net exposure (2,227) 15 37 74 (15) (37) (74)



Consolidated

(In millions of Reais) Exposure Decrease in CDI by Increase in CDI by

10% 25% 50%

10% 25% 50% Cash equivalents 155 (1) (2) (4) 1 2 4 Marketable securities 301 (2) (5) (10) 2 5 10 Borrowings (2,634) 18 44 88 (18) (44) (88) Net exposure (2,178) 15 37 74 (15) (37) (74)

December 31, 2018

Parent Company (In millions of Reais)

Exposure Decrease in CDI by

Increase in CDI by

10% 25% 50%

10% 25% 50% Cash equivalents 2,006 (12) (29) (58) 12 29 58 Borrowings (1,517) 10 25 51 (10) (25) (51) Net exposure 489 (2) (4) (7) 2 4 7

Consolidated

(In millions of Reais) Exposure Decrease in CDI by Increase in CDI by

10% 25% 50%

10% 25% 50% Cash equivalents 3,640 (21) (52) (104) 21 52 104 Marketable securities 295 (2) (5) (10) 2 5 10 Borrowings (1,913) 13 32 65 (13) (32) (65) Net exposure (2,022) (10) (25) (49) 10 25 49

Note 28.5. Foreign exchange risk The Group, through the subsidiary Carrefour Comércio e Indústria, imports goods in Euros and Dollars for which there are NDFs (see note 28.7). The underlying foreign-currency denominated supplier (imports) were R$ 107 million as of March 31, 2019 (R$ 131 million as of December 31, 2018).

Note 28.6. Credit risk The Group's estimated exposure to credit risk is presented below: The credit risk arises from the possibility of not receiving the amounts recorded in our current investments, in trade accounts receivable, marketable securities, derivative financial instruments and other accounts receivable. In order to minimize possible losses with default of its counterparts, we adopt strict management policies, including analysis of the counterpart and diversification rules. Retail and Cash & Carry business segment Trade receivables Trade receivables correspond mainly to amounts receivable from our customers (for delivered goods and credit cards), suppliers (mainly rebates) and tenants of shopping mall units (rent). Impairment losses are recognized where necessary, based on an estimate of the debtor’s ability to pay the amount due and the age of the receivable. On March 31, 2019, trade receivables net of allowance for doubtful accounts (excluding receivables from suppliers) amounted to R$ 415 million for the parent company and R$ 699 million for the Group.



Analysis of due and past due trade receivables

Investments (cash equivalents and other current financial assets) As regards the credit risk relating to marketable securities, our Management believes that it is limited, since the financial institutions involved received high ratings from credit rating agencies.

Credit risk management To protect against default from customers, the Banco CSF has set up systems and processes to check their quality and repayment capacity. These include but are not limited to:

decision-making tools 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 existing customers’ management (e.g. line increases/decreases, authorizations); active management of collection processes; credit risk monitoring and control systems; and 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. Classification and impairment of the consumers’ credit portfolio On March 31, 2019, the portfolio of consumer credits of our Financial Solution segment, subject to impairment, is divided in three levels in accordance with CPC 48/IFRS 9, based on the stage of each instrument in relation with its risk level. The breakdown of the portfolio by stage as of March 31, 2019 is presented below: (In millions of Reais) Consolidated

March 31, 2019

December 31, 2018

Stage 1 5,052 4,882 Stage 2 1,913 1,841 Stage 3 1,870 1,659 Total outstanding loans portfolio 8,835 8,382 Expected credit loss allowance (1,968) (1,799) Total consumers credit portfolio, net 6,867 6,583 On March 31, 2019, the allowance for credit losses segregated by stage was R$ 1,968 (R$ 1,799 million in December 31st, 2018) divided in Stage 1 - 14% (7% in December 31st, 2018), Stage 2 – 18% (18% in December 31st, 2018) and Stage 3 – 63% (69% in December 31st, 2018). The provision for contingent commitment (credit line granted to customers but not used) is presented in the note 18.1.

(In millions of Reais) Parent Company Consolidated

March 31, 2019

December 31, 2018

March 31, 2019

December 31, 2018

Overdue Until 30 days 6 10 13 19

30-90 days 2 1 15 16 91-180 days 1 1 8 7 Above 180 days 9 10 30 28 Total Overdue 18 22 66 70

Not due 634 758 1,012 895 Expected credit loss allowance (12) (12) (61) (58) Total Trade Receivables 640 768 1,017 907



Provision models are developed in accordance with CPC 48/IFRS 9 – Financial Instruments: and observes also the Brazilian banking regulation. It is based on the following steps:

• classification of outstanding loans in 3 stages according to the risk increase observed since the origin of the credit;

• modeling of the loss given default and recovery rates; • reevaluation of the credit classification and allowance for credit loss calculation according to

expected portfolio losses for all the portfolio stages on the reporting date of the financial statements.

Note 28.7. Transactions with derivative financial instruments The composition of the derivatives financial instruments as of March 31, 2019 and December 31, 2018 in the subsidiary Carrefour is presented below:

Consolidated – March 31, 2019

Imports currency Nature Trade date Maturity Notional in

million Contract

closing rate Forward

rate MTM – R$

million

US Dollar NDF

From 01/19/2018

to 12/27/2018

From 01/07/2019

to 11/21/2019

56 Average 3.8374

Average 3.9468 1

Liabilities 1 Consolidated – December 31, 2018

Imports currency Nature Trade date Maturity Notional in

million Contract

closing rate Forward

rate MTM – R$

million

US Dollar NDF

From 01/19/2017

to 12/27/2018

From 01/07/2018

to 11/21/2019

63 Average 3.8133

Average 3.8756 2

Liabilities 2

NOTE 29: RELATED PARTIES The direct controlling shareholder of the Company is Carrefour Nederland BV, headquartered in the Netherlands and its controlling shareholder is ultimately Carrefour S.A., headquartered in France. Transactions between related parties mainly comprise commercial operations for the purchase and sale of goods, personnel expenses, loans, cost sharing agreements and information technology services. The balances of accounts receivable and payables relating to transactions with related parties are as follows:

• Accounts receivable - Trade accounts receivable - these amounts refer mainly to commercial bonuses remitted by Carrefour World Trade ("CWT") to the Company and to the CCI, based on the fulfillment of commercial conditions and commitments established in negotiated global contracts by CWT with suppliers, whose objective is to generate synergies with the companies of the Carrefour Group through the adoption of a strategy of alignment in the selection of suppliers;

• Suppliers and other accounts payable - these amounts refer to the purchase of goods and

products and / or services directly related to their operational activities;

• Management Remuneration - the amounts and disclosures related to the remuneration of key management personnel are presented in Note 32.2;

• Expenses sharing agreement - correspond to services provided by the Carrefour

headquarters in France, provided to the Group;

• IT Services - Carrefour Systèmes d'Information provides services to the Company and the CCI for the maintenance, operation and support of teams in relation to information technology applications;



• Correspondent Banking Services - Atacadão and CCI act as bank correspondents of CSF Bank, offering financial solutions to clients in their stores, being paid as such by CSF Bank; and

• Regarding the trademark licensing agreement, Carrefour SA granted the CCI the right to use

its trademarks and logos bearing the name Carrefour for a fee that varies in relation to the percentage of sales and certain parameters to be reached after deduction of advertising expenditure. No amounts were billed last year.

Transações in statements of financial position The transactions with related parties recorded in the balance sheet for the periods ended March 31, 2019 and December 31, 2018 are as follows:

Parent company March 31, 2019

Assets Liabilities

Currents Assets Current Liabilities Non-current Liabilities


Accounts receivables

Other accounts

receivables Total Deferred

Revenue

Other accounts payables

Deferred Revenue Total

Parent company Carrefour S.A. - - - - 8 - 8 Controlled Banco CSF S.A. 46 7 53 26 36 319 381 Carrefour Comercio e Indústria Ltda - 1 1 - 7 - 7 Affiliates Carrefour World Trade 72 - 72 - - - - Carrefour Systèmes d`Information - - - - 15 - 15 Other related parties - Cooperativa Atacadão - - - - 5 - 5 Total 118 8 126 26 71 319 416

Parent Company December 31, 2018

Assets Liabilities

Currents Assets Current Liabilities Non-current Liabilities


Accounts receivables

Other accounts

receivables Total Deferred

Revenue


Deferred Revenue Total

Company Carrefour S.A. - - - - 33 - 33 Controlled Banco CSF S.A. 51 5 56 26 39 326 391 Carrefour Comercio e Indústria Ltda - - - - 9 - 9 Affiliates Carrefour World Trade 48 - 48 - - - - Carrefour Systèmes d`Information - - - - 11 - 11 Other related parties Cooperativa Atacadão - - - - 6 - 6 Total 99 5 104 26 98 326 450



Consolidated March 31, 2019

Assets Liabilities

Currents Assets Current Liabilities

(In millions of Reais) Accounts receivables

Other accounts

receivables Total Suppliers


Total

Company Carrefour S.A. - 5 5 - 14 14 Affiliates Carrefour Management - 1 1 - 1 1 Carrefour Systèmes d‘Information - 30 30 - 94 94 Carrefour Marchandises Internationales - - - - 13 13 Carrefour Import S.A. - 10 10 74 - 74 Carrefour Argentina - - - 2 - 2 Carrefour World Trade 107 - 107 - - - Carrefour Hong Kong - 1 1 - - - Maison Joannes Bubbes - - - 1 - 1 Socieda de Compras Modernas - - - 1 - 1 Total 107 47 154 78 122 200

Consolidated December 31, 2018

Assets Liabilities

Currents Assets Current Liabilities

(In millions of Reais) Accounts receivables

Other accounts

receivables Total Suppliers


Total

Company Carrefour S.A. - 5 5 - 64 64 Affiliates Carrefour Management - 1 1 - 1 1 Carrefour Systèmes d‘Information - 10 10 - 63 63 Carrefour Marchandises Internationales -

- - - 10 10

Carrefour Import S.A. - - - 72 - 72 Carrefour Argentina - - - 3 - 3 Carrefour World Trade 73 - 73 - - - Carrefour Hong Kong - 2 2 - - - Maison Joannes Bubbes - - - 1 - 1 Total 73 18 91 76 138 214

Transactions in the statement of income

Related party transactions recorded in the statement of income for the period as of March 31, 2019 and 2018: Parent Company March 31, 2019

(In millions of Reais) Net

income

Other income Rebates Rent

expenses Labor costs Use fees Cost

sharing

Other income

and expenses

TOTAL

Company

Carrefour S.A. - - - - - - (8) - (8) Controlled Carrefour Comércio e Indústria Ltda. 1 - - (6) (11) - (1) - (17)

Banco CSF S.A. - 22 - - - (5) - 7 24 Affiliates Carrefour Systèmes d‘Information - - - - - - (4) - (4)

Carrefour World Trade - - 37 - - - - - 37 Total 1 22 37 (6) (11) (5) (13) 7 32



Parent Company March 31, 2018

(In millions of Reais) Net income

Other income Rebates Rent

expenses Labor costs Use fees Cost

sharing Financial

result TOTAL

Company

Carrefour S.A. - - - - - - (8) - (8) Controlled

Carrefour Comércio e Indústria Ltda. 1 - - (5) (7) - (1) - (12) Banco CSF S.A. - 18 - - - (4) - 7 21 Affiliates

Carrefour Systèmes d‘Information - - - - - - (3) - (3) Carrefour World Trade - - 34 - - - - - 34 Total 1 18 34 (5) (7) (4) (12) 7 32


(In millions of Reais) Rebates Cost sharing Purchase Total Company

Carrefour S.A. - (11) - (11) Affiliates Carrefour Import S.A. - - (54) (54) Carrefour World Trade 53 - - 53 Carrefour Hypermarket Hong Kong - (1) - (1) Inc S.A. (Argentina) - - (3) (3) Carrefour Merchandises Internationales - (2) - (2) Carrefour Systèmes d‘Information - (15) - (15) Sociedad Compras Modernas - - (1) (1) Total 53 (29) (58) (34)


(In millions of Reais) Rebates Cost sharing Purchase Total Company

Carrefour S.A. - (11) - (11) Affiliates Carrefour Import S.A. - - (56) (56) Carrefour World Trade 49 - - 49 Inc S.A. (Argentina) - - (4) (4) Carrefour Merchandises Internationales - (3) - (3) Carrefour Systèmes d‘Information - (15) - (15) Total 49 (29) (60) (40)

NOTE 30: SEGMENT INFORMATION Note 30.1. Segment results


Total Retail Cash & Carry

Financial Solutions

Global Functions

Net sales 12,856 4,226 8,630 - - Other revenue 786 103 34 649 - Net operating revenue 13,642 4,329 8,664 649 - Cost of goods sold, services rendered and financial operations (10,773) (3,304) (7,291) (178) -

Gross profit 2,869 1,025 1,373 471 - Sales, general and administrative (1,839) (837) (741) (226) (35) Depreciation and amortization (242) (135) (99) (8) - Other income (expense) 52 51 16 (15) - Income before (expenses) net financial income and taxes 840 104 549 222 (35)

Financial result (117)

Income before income and social contribution taxes 723 Net income for the period 505

Acquisition of fixed and intangible assets (capex) 366 35 321 10 - Acquisition of right of use of leasing 75 41 34 - -




Total Retail Cash & Carry

Financial Solutions

Global Functions

Net sales 11,843 4,247 7,596 - - Other revenue 701 93 34 574 - Net operating revenue 12,544 4,340 7,630 574 - Cost of goods sold, services rendered and financial operations (10,000) (3,310) (6,517) (173) -

Gross profit 2,544 1,030 1,113 401 - Sales, general and administrative (1,708) (851) (648) (182) (27) Depreciation and amortization (180) (101) (74) (5) - Other income (expense) (62) (11) (36) (15) - Income before (expenses) net financial income and taxes 594 67 355 199 (27)

Financial result (83) Income before income and social contribution taxes 511 Net income for the period 332 Acquisition of fixed and intangible assets (capex) 286 24 253 9 -

Note 30.2. Segment assets and liabilities

March 31, 2019 (In millions of Reais) Total Retail Cash & Carry

Financial Solutions

Global Functions

ASSETS

Goodwill 1,827 437 1,390 - - Other intangible assets 449 309 18 122 - Property and equipment 11,523 3,983 7,480 60 - Investment property 414 414 - - - Other segment assets 17,527 4,739 5,294 7,494 -

Total segment assets 31,740 9,882 14,182 7,676 -

Unallocated assets 3,917 - Total Assets 35,657 -

-

LIABILITIES (excluding equity) - Segment liabilities 13,802 3,563 4,760 5,406 73 Unallocated liabilities 7,297 - Total Liabilities 21,099 -

December 31, 2018 (In millions of Reais) Total Retail Cash & Carry

Financial Solutions

Global Functions

ASSETS

Goodwill 1,827 437 1,390 - - Other intangible assets 459 323 17 119 - Property and equipment 10,472 3,478 6,953 41 - Investment property 416 416 - - - Other segment assets 15,730 3,645 4,748 7,337 - Total segment assets 28,904 8,299 13,108 7,497 - Unallocated assets 7,773 - Total Assets 36,677 -

LIABILITIES (excluding equity) Segment liabilities 16,669 4,183 7,080 5,332 74 Unallocated liabilities 5,961 Total Liabilities 22,630



NOTE 31: SHARE-BASED PAYMENTS Details of the stock option purchase plan set up for executive management and selected employees are presented below. Note 31.1. Stock option purchase plans a) Description of stock option plan

(i) First stock option approved plan (“Pre-IPO”) The pre-IPO stock options plan was approved in the Shareholders General Meeting on March 21, 2017. The Group main objective of this plan, implemented according the Law 6.404, from 15/12/1976, is to retain a group of key executives for the planning and execution of the initial public offering (IPO), creating an alignment of its interests with the Shareholders’ interest. The eligible executives are nominated by the Board of Directors, who is employed by the parent company and its subsidiaries. The plan is managed by the Board of Directors, according the formally approved plan rules. The Board of Directors has the ability to, anytime: (i) change or terminate the plan; and/or (ii) establish the rules applicable to matters which are not provided for under these plans, provided that it does not amend or adversely affect, without the beneficiary’s consent, any rights or obligations under each of these plans. The terms and conditions of this plan are regulated in an individual contract with the eligible employees. This contract – according to the rules approved at the Shareholders General Meeting – defines: (i) the eligible executives and their individual amount of grants, (ii) the strike price of the options granted, (iii) the vesting schedule and (iv) individual conditions to access the grants at the vesting date or other events would impact the vesting date. These conditions do not include performance conditions that were not based on market conditions.

Details of stock option purchase plan are presented below: Number of options granted (1) 9,283,783 Life of the options 6 years Number of grantees 48

Exercise period (2) From IPO date up to March 21, 2023

Exercise price in R$ 11.70 (1) refers to number of authorized option approved in general meeting of June 27, 2017 (2) the options vested only if the occurrence of an IPO and the grantee is still employed by the Group at the start of the exercise

period, in the following tranches: - 1/3 (one third) in the occurrence of the IPO - 1/3 (one third) after 12 months from the occurrence of the IPO - 1/3 (one third) after 24 months from the occurrence of the IPO For employees hired after the approbation date of the pre-IPO plan (March 21, 2017) the stock options granted under this pre-

IPO stock option plan shall vest as follows: - 1/3 (one third) of the granted options will vest 12 months after the date of this offering - 1/3 (one third) of the granted options will vest 24 months after the date of the offering - 1/3 (one third) of the granted options will vest 36 months after the date of the offering

The vesting of the first one third of the options granted of the Pre-IPO plan occurred on July 21, 2017, with the realization of the Primary Stock Offering, 12 months later, with the achievement of the IPO process. Movements of stock options exercised during the period for this plan are detailed in the note 31.1 (c).

(ii) Second stock options approved plan (“Regular”) Our shareholders approved, in a general extraordinary shareholders meeting held on June 26, 2017, our Regular Stock Option Plan setting forth annual grants of stock options subject to the following guidelines:

Eligible persons: our Management and employees, as well as the Management and employees of the entities controlled by us;

Beneficiaries: executive officers to be selected by our Board of Directors; Vesting Period for these stock options: 36 months after each grant;



Maximum term for exercise of the stock options: up until the end of the 6th year counted as of the date of the stock option plan;

Maximum equity dilution: 2.5% of the total amount of common shares of our capital stock, considering, in this total, the dilutive effect resulting from the exercise of all granted but not exercised options under this stock option plan, as well as our pre-IPO Stock Option Plan; and

Exercise price: to be determined by our Board of Directors at the time the stock options are granted, which will consider, at most, the 30 trading days preceding the date of the stock option grant.

No stock options have been granted under this Regular Stock Option Plan. b) Fair value measurement (Pre-IPO stock option plan) The following tables list the inputs to the model used: Fair value option at grant date (R$ per option) 3.73 Estimated fair value of the share (R$ per share) 11.70 Dividend yield (%) 1.35 Expected volatility (%) 29.02 Risk-free interest rate (%) 10.25 Expected life of share option (Years) 2.72 Model Binomial Volatility and dividend yield: as the Company was not listed at the date of the approbation of this plan, the basic parameters we defined as a proxy to five retail listed companies peer group. Considering the difference in market cap, we adopted the average values for volatility and dividend yield, as the most appropriate proxy for the valuation exercise. The risk free interest rate was based on long term central bank bonus rates for similar length, establishing the annual risk free rate at 10.25%. c) Movements in stock options (Pre-IPO stock option plan) Movements in stock options plan in 2018 were as follows: Options outstanding as of January 1, 2019 8,338,783 Options granted as of March 31, 2019 (1) - Options exercised as of March 31, 2019 2,568,205 Options cancelled or that expired as of March 31, 2019 1,275,495 Options outstanding as of March 31, 2019 4,495,083 (1) As of March 31 2019, there were 945,000 options authorized, but not granted yet to executives hired after approbation pre-IPO plan (March 21, 2017), or in recruitment. d) Expenses recognized in the period See more details about stock option expenses (share-based payments) on note 24.

NOTE 32: NUMBER OF EMPLOYEES, EMPLOYEE COMPENSATION AND BENEFITS Note 32.1. Description of defined contribution plans Our subsidiary Carrefour and its subsidiaries maintain a defined contribution pension plan for their employees, which is administered by Carrefourprev Sociedade de Previdência Complementar. The expenses contributions for March 31, 2019 amounted to R$ 2 million (R$ 3 million as of March 31, 2018). Note 32.2. Management compensation (related parties) The Board of Directors (10 members) did not receive compensation, excluding the two independent members. The following table shows the compensation paid by the Group to serving members of the Executive Directors for March 31, 2019 and December 31, 2018.





2019 December 31, 2018

March 31, 2019

December 31, 2018

Compensation for the period 2 1 3 2 Stock option expense for the period - 1 - 1

Bonus 3 1 4 2 Benefits in kind (accommodation and company car) - - 1 - Total compensation paid during the period 5 3 8 5 Employer payroll taxes 1 1 2 2 Number of executives 4 4 10 9 Note 32.3. Number of employees per operating segment

Consolidated

Average number of Group employees March 31, 2019

December 31, 2018

Cash & Carry 42,797 40,732 Retail 32,495 38,370 Financial Solutions 626 593 Consolidated 75,918 79,695

Consolidated

Number of Group employees at the period end March 31, 2019

December 31, 2018

Cash&Carry 45,842 41,083 Retail 37,967 38,351 Financial Solutions 627 591 Consolidated 84,436 80,025

NOTE 33: OFF-BALANCE SHEET COMMITMENTS

Consolidated

Commitments given (In millions of Reais) March 31, 2019

By maturity December 31, 2018

Due within

1 year Due in 1 to

5 years Due beyond

5 years Related to cash management transactions 16,730 16,730 - - 17,876

Financial solutions companies 16,730 16,730 - - 17,876 Related to operations 5,382 2,822 2,367 193 5,970 TOTAL 22,112 19,552 2,367 193 23,846

Commitments received (In millions of Reais) March 31,

2019

By maturity December 31, 2018

Due within 1 year

Due in 1 to 5 years

Due within 1 year

Related to cash management transactions 570 570 - - 570 Financial solutions companies 170 170 - - 170 Other companies 400 400 - - 400

Related to operations 14 - - 14 14 TOTAL 584 570 - 14 584 Off-balance sheet commitments related to cash management transactions include:

credit commitments given to customers by CSF, the financial solutions company in the course of its operating activities. CSF has the possibility to review the credit lines offered to its clients at any time, hence it is classified as short term;

mortgages and other guarantees given or received, mainly in connection with the Group's real estate activities;

committed lines of credit available but not drawn down by the Group at the period-end.

Off-balance sheet commitments related to operations include: commitments to purchase energy up to 5 years; commitment to purchase fuel in connection with the gas stations activity; miscellaneous commitments arising from commercial contracts; other commitments given or received.

NOTE 34: INSURANCE COVERAGE As of March 31, 2019, the insurance coverage of Group Carrefour Brazil comprised:



Covered risks (In millions of Reais) Parent Company Consolidated Operational risks 8,625 19,532 Loss of profit 3,934 7,904 Civil liability – maximum indemnification limit 20 20

NOTE 35: SUBSEQUENT EVENTS The Annual and Extraordinary Shareholders’ Meetings held on April 16, 2019 approved the distribution of interest on equity to the Company’s shareholders in the gross amount of R$ 90 million, equivalent to the amount of R$ 0,045373203 per share. The payment of interest on capital will be made according to the following terms:

1. Shareholders included in the Company's shareholding position on May 21, 2019 will be entitled to payment, and as of May 22, 2019 the shares will be traded on the stock exchange "ex-right" to interest on shareholders' equity;

2. The payment will occur on June 14, 2019 in proportion to the participation of each shareholder, with withholding of income tax at source, except for shareholders who are proven to be immune or exempt;

3. The gross amount per share of interest on shareholders' equity may be modified due to changes in the number of shares resulting from the issuance of shares or negotiations with the Company's own shares, including, but not limited to, those arising from stock option exercises. purchase of shares;

4. Exclusively for tax purposes, interest on capital will be related to the first quarter of 2019.

free translation into english from the original previously issued in ... · 5. grupo carrefour...

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