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2007Financial Report2 Group management report6 Consolidated balance sheet7 Consolidated income statement8 Consolidated statement of net cash flows9 Statement of changes in consolidated equity10 Notes to 2007 consolidated financial statements67 Statutory auditors’ report

2GROUP MANAGEMENT REPORTYear ended 31 December 2007 (M€ : € million)A Groupe Auchan SA management report is also prepared alongwith a table, in annex, summarising the financial results of thecompany for the last five financial years.t t t t 1. KEY EVENTS IN 2007 AND MAIN CHANGESIN CONSOLIDATION SCOPEAs of 31 December 2007, 408 hypermarkets and 708 supermarketswere consolidated, compared with 384 and 717 at 31 December2006.Disagreement with the Moroccan partner, ONA, concerninggovernance of the Marjane and Acima companies, led the Groupto take the decision to sell off its 49% equity interest in thesecompanies to ONA. The sale was finalised at the end of August2007. The Moroccan activities (13 Marjane hypermarkets and 22Acima supermarkets as at 31 December 2006), consolidated bythe proportionate method up to the date of their sale, are reportedin the consolidated financial statements under “Discontinuedactivities” in accordance with IFRS 5.As regards internal growth, 39 hypermarkets were opened in 2007,of which 16 in Europe (7 in Western Europe and 9 in Central andEastern Europe) and 23 in China (5 Auchan and 18 RT Mart). Twohypermarkets were closed in China, one of which for reconstructionwork. The number of supermarkets rose by a total of 13, all ofwhich in Europe, including 5 opened in Russia.In terms of external growth, 2007 was marked by signature of apartnership agreement with the Ukrainian distributor, Furshet.This agreement, finalised at the end of June 2007, involves:• the creation of two new companies:– the first for the purpose of developing the Auchan hypermarketchain in Ukraine. This company is controlled by Auchanthrough its 66% equity interest, with a minority interestbuy-back commitment;– the second, for the purpose of developing malls in the Ukraine,with Auchan holding a 50% interest;• acquisition by Auchan of a 21% interest in the Furshet capital.This supermarket activity continues to be managed by itsfounder and the latter’s team.The hypermarket and mall companies will start up in 2008. Theywill be fully consolidated in the case of the hypermarket companyand by proportionate consolidation for the company operatingmalls in view of local governance rules. The interest in thesupermarket company is accounted for by the equity method.The Group signed an agreement concerning the acquisition of 14Ramstore chain hypermarkets in Russia in December 2007. Thisagreement will only be finalised after obtaining the approval ofthe Russian authorities controlling competition.t t t t 2. ACTIVITIES AND RESULTS2.1 Hypermarket and supermarket activitiesAs at 31 December 2007, the Group operates 408 hypermarkets(plus 5 under management contracts) and 708 supermarketsdirectly in 12 countries and region (the Ukrainian activity will startup in 2008).The consolidated network of stores is as follows at 31 December2007:Country Hypermarkets Supermarkets NotesFrance 121 295Spain 48 123Italy 46 270Portugal 19Luxembourg 1Poland 22 10Hungary 10Russia 18 10MainlandChina105 20 Auchanand 85 RTMartTaiwan 14 + 5 undermanagementcontractsRomania 4 Accountedfor usingthe equitymethodRevenue from the Hypermarket and Supermarket activities in 2007was € 29.3 billion 1 (+ 6.9% compared with 2006) and € 6.7 billion(stable) respectively.2.2 Property management activity (Immochan)As at 31 December 2007, Immochan and its subsidiaries manage267 shopping centres (shopping malls and business parks), ofwhich 244 are wholly owned or leased, and 23 are operated undermanagement contracts in 12 countries (including Ukraine).Revenue for 2007, including billings to Group companies, wasM€ 393 (+ 19.4%) 2 of which 55% in France.2.3 Customer credit activity (Banque Accord)As at 31 December 2007, Banque Accord was operating in 9countries (France, Spain, Italy, Portugal, Poland, Hungary, Russia,mainland China and Romania). Total production in 2007 amountedto € 7.4 billion (+ 9%), with 5.4 million customers.1 Including Alinéa.2 + 14.6% excluding the building-selling activity which only started up in 2007.

GROUP MANAGEMENT REPORT32.4 Comments on 2007 financial statementsRestatement of 2007 income statement figuresIn accordance with IFRS 5, all items in the income statement forthe Moroccan activities for 2006 and 2007 are presented on asingle “Net income from activities discontinued or in course ofsale” line.As a result, the income statement for 2006 has been restated,inducing an impact of M€ (302) on revenue, and reclassificationof M€ 6 in net income from discontinued activities or in courseof sale in particular. Details of these restatements are given innote 7 in the notes to the 2007 financial statements.Comments on the income statementGroup revenue totals € 36.7 billion, up 5.8% compared to 2006,and up 6.1% on a comparable basis in terms of exchange ratesand consolidation scope 1 .The Hypermarket division accounts for 79% 2 of revenue, theSupermarket division 18% and other activities 3% 2 . These figuresare practically identical to those for 2006.By geographical area, 52% of revenue are generated in France,30% in Western Europe excluding France (Spain, Italy, Portugal andLuxembourg) and 18% in the rest of the world (Poland, Hungary,Russia, mainland China and Taiwan). Comparable figures for 2006were 53%, 31% and 16%.Gross profit is up 5.4% in absolute value and the margin ratiodown slightly from 23.3% to 23.2%.Recurring operating expenses (payroll expenses, externalexpenses, depreciation, amortisation and provisions, and otherrecurring operating income and expenses) are up 6.1%, or slightlymore than the increase in revenue and gross margin.EBITDA, which means recurring operating income excludingother recurring operating income and expenses, depreciation,amortisation and provisions 3 , represents M€ 2,070 compared withM€ 2,123 for 2006 (- 2.5%).Recurring operating income totals M€ 1,304, up 1.6%.The net cost of financial debt is M€ (156) compared with M€ (131)in 2006. This increase is essentially due to the rise in interestrates. Other financial income and ex penses are M€ (6) for 2007,compared with nil in 2006.The effective tax rate is 32.7% for 2007, compared with 34.5% in2006. This improvement comes principally from outside France,as certain countries such as Spain and Italy have reduced theirprofits tax rates.Net income from continuing operations is M€ 762 compared withM€ 754 in 2006 (up 1.1%).Net income from discontinued activities or in course of sale isM€ 215 in 2007 (compared with M€ 6 in 2006). For 2007, thiscorresponds to income from the Moroccan activities, and the netcapital gain from the sale of these activities.Net income attributable to equity holders of the parent is M€ 962(M€ 747 in 2006).Cash flows from operations dropped from M€ 1,590 to M€ 1,564(down 1.6%).Comments on the balance sheet and financial structureAssetsInvestments other than business combinations (acquisitions ofintangible assets, property, plant and equipment and investmentproperty) increased by 45% to M€ 1,758 in 2007, compared withM€ 1,214 in 2006, for cash flows from operations of the order of€1.6 billion.LiabilitiesAs of 31 December 2007, equity totals M€ 6,898, compared withM€ 6,118 at 31 December 2006.Equity attributable to equity holders of the parent is M€ 6,761,which represents an increase of M€ 779. The main changes (in€million) are as follows:• 2007 income 962• dividends (199)Minority interests amount to M€ 137, compared with M€ 136 as at31 December 2006.Net indebtedness, including borrowings and other financialliabilities net of cash (cash and cash equivalents), and netof derivative financial assets (assets and liabilities), andexcluding the debt financing the credit activity, representsM€ 2,066 at 31 December 2007, compared with M€ 1,964 at31 December 2006.Net indebtedness amounts to 30% of total equity compared with32% at 31 December 2006, representing 1.3 year cash flows fromoperations and 1 year of EBITDA.t t t t 3. POST-BALANCE SHEET EVENTSNo material events have occurred since balance sheet date.(1) Acquisitions of subsidiaries were not material in 2006 and 2007.(2) Alinéa is classified under other activities.(3) Excluding charges and reversals of impairment, apart from charges andreversals of impairment on inventories.Free translation of a French language original.

4GROUP MANAGEMENT REPORTt t t t 4. PROSPECTSChristophe Dubrulle, Chairman of the Board, recently made thefollowing statement:“As regards development, we anticipate a sustained rate of newstore openings in 2008, including over 50 hypermarkets and 35supermarkets. In particular, we must ensure successful start-up ofour activities in Ukraine, and the change of chain for the Ramstorestores in Russia.Wherever we can achieve this, Immochan is the foundation of thisdevelopment. With a 79% interest in our malls, we are one of therare distributors to be able to benefit from this unquestionableadvantage.Banque Accord plays its full part in the areas of customer loyaltyenhancement and customer support. In the euro zone, BanqueAccord must also prepare for setting up its single paymentcentre.In the short term, we shall complete finalisation of the SimplyMarket concept and continue its progressive deployment.Finally, the future of distribution will be very largely dependenton innovation and the complementarity of sales channels:in-store shopping, orders via Internet, drive-in points of sale,home deliveries and services, etc. This is why we are currentlyexperimenting with and developing expertise so as to become akey player in this domain”.t t t t 5. MANAGEMENT OF FINANCIAL RISKSIn the normal course of its business, the Group is exposed tointerest rate, currency, liquidity and credit risks. Derivativefinancial instruments are used to reduce these risks.The Group has set up an organisation for central management ofmarket risks (liquidity, interest rate and currency risks).Refer to Note 34 in the notes to the financial statements for fuller details concerningthe management of financial risks. A summary is given below.5.1 Credit risksOperational activityThe Group works exclusively with leading banks for its financialactivities (see counterparty risk on unused confirmed lines ofcredit), and interest rate and currency derivative transactions.With regard to investments, Group policy is to invest its cashsurplus in counterparties with monetary management A1 or P1rating.Trade receivables and other receivables excluding the creditactivity do not involve material risks.Specific activity of Banque Accord and its subsidiaries:customer risk managementManagement and monitoring of the Banque Accord credit riskis the responsibility of the Risk department of the subsidiariesor associate, the Group Risk division and the internal auditdepartment via the risk committees. For France and Portugal, thisresponsibility is carried by the local Risk Division.For other countries, the associate is responsible for credit riskmanagement as it is its customer processes and system whichdetermine the risk. In the case of joint ventures where a localrisk resource exists (as in the case of Spain and Russia), the riskis monitored by this structure and the Group Risk division, andthe local resource can participate, as appropriate, in developmentof joint projects with the associate. In all cases, the credit risk ismonitored by the Group Risk division.5.2 Liquidity riskGroup policy is to maintain sufficient medium- and long-termfunding on a permanent basis to finance its requirements at thebottom end of the seasonable cycle, and cover a safety margin.Medium- and long-term bank funding is subject to the customarycommitment and default clauses for this type of contract. The EuroMedium-Term Note (EMTN) programme of Groupe Auchan SA andBanque Accord, to which bond issues are subject, contains thepledge limitation commitment accorded to other bond-holders(negative pledge) and a cross-default clause. No financial liabilityinvolves a commitment or default clause linked to a drop in theGroup’s rating. Certain medium- and long-term bank funding issubject to a default clause in the event of non-compliance, atbalance sheet date, with the following ratio: net consolidatedfinancial liability/consolidated EBITDA < 3.5. This ratio was metat 31 December 2006 and 2007.5.3 Interest rate riskInterest rate derivative instruments are used solely to reduceGroup exposure to fluctuations in interest rates on its debt.Transactions on the derivative markets are undertaken solelyfor hedging purposes. Auchan engages in fair value hedgeinterest rate transactions (set up on the issue of bond or bankborrowing at a fixed rat), and future cash flow hedge interest ratetransactions (to secure future financial income over a maximumof 4 years).5.4 Currency riskThe Group is exposed to currency risk on purchases, salesand borrowings denominated in a currency other than theeuro, and the value of the net assets of its subsidiaries inforeign currencies. The currencies for these transactions at31 December 2007 are principally the US dollar, zloty, forint,rouble, Taiwan dollar and yen.

GROUP MANAGEMENT REPORT5Derivative foreign exchange instruments are used to limitfluctuations in exchange rates for the Group’s currencyrequirements, and the value of the net assets of certain Groupsubsidiaries. Transactions on the derivative markets areconducted solely for the purpose of hedging.Foreign exchange transactions designed to hedge purchases ofgoods denominated in foreign currencies principally serve tohedge €/$ risks.Net asset one-year hedges are also set up to protect part of thenet foreign currency assets of subsidiaries against the currencyrisk. These hedges take the form of forward sales, whetherdeliverable or non-deliverable, if conventional forward sales arenot possible.5.5 Other risksThe Group does not engage in hedging transactions other thanforeign exchange and interest rate derivative transactions.t t t t 6. ENVIRONMENTAL POLICYGroup environmental policy was stepped up in three areas in2007. These were the reduction of pollution, optimised use ofnatural resources and development of an environment-friendlyproduct range. The chains are also engaged in actions designedto increase the awareness of and train employees and customersin regard to environmental problems.6.1 Reduction of pollutionReduction of pollution is a priority. Work on waste managementhas been continued throughout the Group. In France, the recyclingrate has risen to 55% for Auchan, and Banque Accord, in commonwith its subsidiary Oney, has dematerialised its statements andlaunched an ‘e-statement’ process. Following discontinuation ofthe distribution of throw-away plastic bags in France, alternativesolutions are now proposed, and are also encouraged in otherEuropean countries. In Spain, Alcampo has been the first chain topropose reusable, recyclable and biodegradable bags, and SimplyMarket is marketing an ‘Ecosimply’ reusable fabric bag.Portugal also, solar panels and photovoltaic cells have beeninstalled on the roofs of the stores, and the heat generated byrefrigerated units is recovered.Each of the Auchan hypermarkets in China has introduced aprogramme for energy and water saving and to encourage the useof recyclable materials. A Simply Market supermarket integratingenvironmental considerations at all stages of its design, wasopened at Leuville-sur-Orge (91) early in 2008.As regards logistics, inland waterway and rail transport areencouraged as a complement to bulk importation by sea. Fiftyfivepercent of containers entering the intra-community zone arebrought in by sea. In France, Atac has started using piggy backtransport for fruit and vegetables produced in Southwest Franceand Provence.6.3 Development of an environment-friendly product rangeThe chains are developing an environment-friendly product range,based on durable production methods with 200 biological productreferences in Hungary, and 700 in Portugal. In Poland, Auchanhas been marketing Polish ‘o!eco’ products carrying an ecologicallabel since 2007. In Western Europe, the chains are developingtheir own-brand ranges progressively, including biological rangesin Italy, Spain and France for example. The Auchan Bio range inFrance now has a hundred or so references. In Portugal, the‘Vida Auchan’ range, based on agricultural sectors and aimedat ensuring animal welfare has been expanded to include 140references and will continue this process in 2008. Auchan Francehas also continued with its eco-design approach, substantiallyreducing the volume of packaging materials used for its own-brandproducts. Auchan France organised its first “C’est bon pour maplanète” (It’s good for my planet) marketing operation presentingthe full environment-friendly range in 2007.6.2 Optimised utilisation of natural resourcesThe Group and its property management subsidiary Immochanare taking care to ensure the optimised utilisation of naturalresources, and situate each shopping centre in its environment.The utilisation of renewable energy, lighting management andthe use of HEP 4 machines, make it possible to achieve significantreductions in energy consumption. For example, Auchan Franceelectricity consumption dropped by 6% n 2007. In Poitiers, rainwater is used for cleaning the solar panels which provide 50%of the domestic hot water system heating the hypermarket. In(4) HEP: High Energy PerformanceFree translation of a French language original.

6CONSOLIDATED BALANCE SHEETat 31 December 2007 and 2006ASSETS (in M€) Note 2007 2006Goodwill 15 3,394 3,389Other intangible assets 16 59 48Property, plant and equipment 17 7,871 7,372Investment property 18 2,282 2,018Investments in associates 19 152 83Customer loans - Credit activities 20 1,129 831Other non-current financial assets 21 471 451Derivative financial instruments (non-current) 44 31Deferred tax assets 22 88 85Non-current assets 15,490 14,308Inventories 23 2,964 2,617Customer loans - Credit activities 20 1,664 1,662Trade receivables 24 383 361Current tax assets 25 62 27Other current receivables 26 2,292 2,054Derivative financial instruments (current) 33 27Cash and cash equivalents 27 2,395 2,308Assets classified as held for sale 7 0 17Current assets 9,793 9,073Total ASSETS 25,283 23,381LIABILITIES (in M€) Note 2007 2006Share capital 28 629 628Share premiums 1,844 1,836Reserves and net income 4,288 3,518Equity attributable to equity holders of the parent 6,761 5,982Minority interests 28 137 136Total equity 6,898 6,118Provisions 31 256 344Non-current borrowings and other financial liabilities 32 2,603 3,219Debts financing the credit activities 33 997 952Derivative financial instruments (non-current) 43 51Other non-current liabilities 36 10 79Deferred tax liabilities 22 598 559Non-current liabilities 4,507 5,204Provisions 31 170 175Current borrowings and other financial liabilities 32 1,881 1,045Debts financing the credit activities 33 1,433 1,200Derivative financial instruments (current) 11 15Trade payables 37 7,525 7,051Current tax liabilities 37 67 61Other current liabilities 37 2,791 2,506Liabilities classified as held for sale 7 0 6Current liabilities 13,878 12,059Total LIABILITIES 25,283 23,381

CONSOLIDATED INCOME STATEMENTfor financial years 2007 and 20067(in M€) Notes 2007 2006 restated (1)Revenue 8 36,715 34,688Cost of sales 9 (28,214) (26,619)Gross profit 8,501 8,069Payroll expenses 10 (4,039) (3,828)External expenses (2,282) (2,053)Depreciation, amortisation and provisions 11 (928) (933)Other recurring operating income and expenses 52 28Recurring operating income 1,304 1,283Other operating income and expenses 0 0Operating income 1,304 1,283Income from cash and cash equivalents 53 23Gross cost of financial debt (209) (155)Net cost of financial debt (156) (131)Other financial income and expenses 13 (6) 0Income before taxes 1,142 1,152Income taxes 14 (374) (398)Share in earnings of associates (6) 0Net income from continuing operations 762 754Net income from assets held for sale and discontinued operations 7 215 6Net income 977 760of which attributable to minority interests 15 13of which attributable to equity holders of the parent 5 962 747Earnings per share from continuing operations attributable toequity holders of the parent (in €)- basic 23.80 23.45- diluted 23.79 23.45(1) Data for activities in Morocco have been reclassified in accordance with IFRS 5 (see note 7).Free translation of a French language original.

8 CONSOLIDATED STATEMENT OF NET CASH FLOWS(in M€) 2007 2006Consolidated net income (including minority interests) 977 759Share in earnings of associates 6 1Dividends received (non-consolidated investments) 0 (2)Net cost of financial debt 156 132Current and deferred taxes 380 401Net increase/decrease in depreciation, amortisation and provisions (other than on current assets) 812 856Income and expenses on share-based payment plans 4 2Other non-cash or non-operating items 0 1Capital gains/losses net of tax and negative goodwill (248) (15)Cash flow from operations before net cost of financial debt and tax 2,087 2,135Income taxes paid (367) (413)Interest paid (196) (159)Other financial items 40 27Cash flows from operations after net cost of financial debt and tax 1,564 1,590Changes in working capital 1 165Inventories (379) 60Trade receivables (23) (55)Trade payables 540 115Other assets and liabilities (137) 45Changes in items relating to credit activities (22) (55)Customer loans - Credit activities (300) (324)Debts financing credit activities 278 269Net cash flow from operating activities 1,543 1,700Acquisition of property, plant and equipment, intangible assets and investment property (1,671) (1,191)Proceeds from sale of property, plant and equipment, intangible assets and investment property 92 77Acquisition of shares in non-consolidated companies including associates accounted for by the equity method (136) (17)Proceeds from sale of shares in non-consolidated companies 40 0Acquisition of subsidiaries net of cash acquired (1) (64) (83)Sales of subsidiaries net of cash disposed of (1) 297 39Dividends: received (non-consolidated companies) 0 2Changes in loans and advances (10) 56Net cash flows used in investment activities (1,452) (1,117)Sums received from shareholders on capital increases 11 1Paid by parent company shareholders 8 0Paid on exercise of stock options 0 0Paid by minority shareholders in consolidated companies 3 1Purchases and sales of treasury shares 10 (106)Dividends paid during the financial year (203) (66)Dividends paid to parent company shareholders (199) (60)Dividends paid to minority shareholders in consolidated companies (4) (6)Debt proceeds 394 (13)Proceeds from borrowings 1,201 291Repayments of borrowings (including finance leases) (807) (304)Net cash flows used in financing activities 212 (184)Effect of changes in foreign exchange rates (8) 0Change in net cash 295 399Net cash at beginning of period (see note 27) 1,559 1,160Net cash at end of period (see note 27) 1,854 1,559Change in net cash 295 399(1) Including change in put options granted to minority shareholders.

STATEMENT OF CHANGES IN CONSOLIDATED EQUITY9(before appropriation of net income)Sharepremiums(1)Consolidatedreservesand netincomeAttrib. toequityholdersof theparentTotal equityAttrib. tominorityinterests(in M€)SharecapitalTreasurysharesTotalBalance at 01.01.2006 635 1,936 (21) 2,875 5,425 133 5,558Capital increases 0 1 1Treasury shares (7) (100) 1 (106) 0 (106)Dividends (60) (60) (6) (66)Net income of the period 746 746 13 759Income and expenses recogniseddirectly in equityChanges in consolidation scopeand other changes(30) (30) (4) (34)7 7 (1) 6Balance at 31.12.2006 628 1,836 (20) 3,538 5,982 136 6,118Capital increases 1 8 (1) 8 3 11Treasury shares (2) 10 10 10Dividends (199) (199) (4) (203)Net income of the period 962 962 15 977Income and expenses recognised directlyin equity(5) (5) (3) (8)Changes in consolidation scope and other3 3 (10) (7)changesBalance at 31.12.2007 629 1,844 (10) 4,298 6,761 137 6,898(1) Share premiums include premiums paid for stock issued, mergers and other capital contributions.(2) See note 28.CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSES(in M€) 2007 2006Foreign currency translation differences (16) (33)Change in fair value of financial instruments:Available-for-sale financial assets (1) (10)Net asset hedge 6 0Cash flow hedge (7) (4)Actuarial gains and losses for defined benefit plans (net of taxes) 10 13Income and expenses recognised directly in equity (8) (34)Net income for the period 977 759Total recognised income and expenses for the period 969 725Attributable to:Equity holders for the parent 957 716Minority interests 12 9Total recognised income and expenses for the period 969 725Free translation of a French language original.

10NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS(all amounts expressed in million of euros - M€)11 note 1 GENERAL DESCRIPTION OF THE GROUP11 note 2 KEY EVENTS AND PRINCIPAL CHANGESIN THE SCOPE OF CONSOLIDATION11 note 3 ACCOUNTING RULES AND METHODS22 note 4 SEGMENT REPORTING24 note 5 EARNINGS PER SHARE25 note 6 PRINCIPAL ACQUISITIONS OF EQUITYINTERESTS IN 200725 note 7 OPERATIONS DISCONTINUED, SOLDAND ASSETS HELD FOR SALE26 note 8 REVENUE27 note 9 COST OF SALES27 note 10 PAYROLL EXPENSES27 note 11 DEPRECIATION, AMORTISATION ANDPROVISIONS28 note 12 IMPAIRMENT LOSSES29 note 13 OTHER FINANCIAL INCOME AND EXPENSES29 note 14 INCOME TAXES30 note 15 GOODWILL31 note 16 OTHER INTANGIBLE ASSETS32 note 17 PROPERTY, PLANT AND EQUIPMENT35 note 18 INVESTMENT PROPERTY36 note 19 INVESTMENT IN ASSOCIATES37 note 20 CUSTOMER LOANS - CREDIT ACTIVITY38 note 21 OTHER FINANCIAL ASSETS39 note 22 DEFERRED TAX ASSETS AND LIABILITIES40 note 23 INVENTORIES40 note 24 TRADE RECEIVABLES40 note 25 CURRENT TAX ASSETS41 note 26 OTHER CURRENT RECEIVABLES41 note 27 CASH AND CASH EQUIVALENTS41 note 28 EQUITY42 note 29 EMPLOYEE BENEFITS44 note 30 SHARE-BASED PAYMENTS46 note 31 PROVISIONS47 note 32 BORROWINGS AND OTHER FINANCIALLIABILITIES48 note 33 DEBTS FINANCING THE CREDIT ACTIVITY50 note 34 FINANCIAL INSTRUMENTS59 note 35 NET FINANCIAL INDEBTEDNESS59 note 36 OTHER NON-CURRENT LIABILITIES59 note 37 TRADE PAYABLES, CURRENT TAX LIABILITIESAND OTHER CURRENT LIABILITIES60 note 38 FINANCE LEASES AND OPERATING LEASES61 note 39 TRANSACTIONS WITH RELATED PARTIES61 note 40 INTERESTS IN JOINT VENTURES62 note 41 POST-BALANCE SHEET EVENTS62 note 42 CONTINGENT LIABILITIES62 note 43 COMMITMENTS63 note 44 EMPLOYEES64 note 45 CONSOLIDATION SCOPE

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS11t t t tnote 1 GENERAL DESCRIPTIONOF THE GROUPGroupe Auchan SA is a company domiciled in France, and is theAuchan Group holding company.The Auchan Group (hereinafter referred to as ‘the Group’) is aretailer of food and other consumer products. As of 31 December2007, the Group operates 408 hypermarkets (of which 404 are fullyconsolidated or consolidated by the proportionate method, and 4in Romania are accounted for using the equity method) and 5 underthe terms of management contracts, and 708 supermarkets in 12countries and region (France, Spain, Italy, Portugal, Luxembourg,Poland, Hungary, Russia, mainland China, Taiwan, Romania andUkraine, where hypermarket and real-estate activities started upin 2008).The Group also manages a significant network of shopping centres,malls and business parks. In addition, Auchan has had its ownbanking subsidiary for many years, which deals exclusively withindividual customers.t t t tnote 2 KEY EVENTS AND PRINCIPALCHANGES IN THE SCOPE OF CONSOLIDATIONDisagreement with the Moroccan partner, ONA, concerning thegovernance of the Marjane and Acima companies led the Groupto take the decision to sell off its 49% equity interest in thesecompanies to ONA. This sale was finalised at the end of August2007. The Moroccan activities (13 Marjane hypermarkets and 22Acima supermarkets as at 31 December 2006), consolidated bythe proportionate method up to the date of their sale, are reportedin the consolidated financial statements under ‘Discontinuedactivities’ in accordance with IFRS 5 (see note 7).The Group opened 39 hypermarkets in 2007, 16 in Europe (7in Western Europe and 9 in Central and Eastern Europe) and23 in China (5 under the Auchan brand and 18 RT Mart stores).Two hypermarkets in China were closed, one of which forreconstruction. The number of supermarkets increased by a totalof 13, all in Europe with 5 opened in Russia.As regards external growth, 2007 was marked by signature of apartnership agreement with the Ukrainian distributor Furshet. Thisagreement, finalised at the end of June 2007 involves:• the creation of two new companies:– the first for the purpose of developing the Auchan hypermarketbrand in the Ukraine. This company is controlled by Auchanthrough a 66% equity interest, with a minority interest buybackcommitment,– the second for the purpose of developing malls in the Ukraine.The Auchan equity interest will be 50%;• acquisition by Auchan of a 21% interest in the Furshet capital.This supermarket activity continues to be managed by itsfounder and the latter’s team.The hypermarket and mall companies will start up in 2008. Theywill be fully consolidated in the case of the hypermarket company,and by proportionate consolidation for the company operatingmalls in view of local governance rules. The interest in thesupermarkets company is accounted for by the equity method.The Group signed an agreement concerning the acquisition of 14Ramstore brand hypermarkets in Russia in December 2007. Thisagreement will only be finalised after obtaining the approval ofthe Russian authorities controlling competition.t t t tnote 3 ACCOUNTING RULES AND METHODSThe consolidated financial statements of Groupe Auchan SA wereprepared by the Executive Board on 4 March 2008.3.1 Statement of complianceIn application of European regulation No. 1606/2002 of 19 July2002, the consolidated financial statements of Groupe AuchanSA have been prepared in accordance with IAS (InternationalAccounting Standards)/IFRS (International Financial ReportingStandards) issued by the IASB (International Accounting StandardsBoard), as well as their interpretations and as approved by theEuropean Union on 31 December 2007.The new standards, amendments to existing standards andapplication interpretations mandatory as from 1 January 2007,have had no impact on the Group financial statements with theexception of IFRS 7 - Financial instruments: Disclosures - whichhas an impact as regards the financial information disclosed in thenotes 1 . The standards, amendments and interpretations havingno impact are amendments to IAS 1 - Presentation of financialstatements -, IFRIC 7 - Applying the restatement approachin hyperinflationary economies -, IFRIC 8 - Scope of IFRS 2:Inclusion of transactions for which the consideration receivedcannot be identified -, IFRIC 9 - Reassessment of imbeddedderivatives - and IFRIC 10 - Interim financial reporting andimpairment -.Standards, amendments to existing standards andinterpretations that are not mandatory at 31 December 2007,have not been anticipated. Standards, amendments tostandards and interpretations already published by the IASBand adopted at European level, but which do not come intoforce for annual periods commencing on or after 1 January 2007,and liable to have an impact on the Group financial statementsare as follows:• IFRS 8 - Operating segments,• interpretation IFRIC 11 – Group and treasury sharetransactions.(1) A number of 2006 comparisons have not been given as the relevant informationis not availableFree translation of a French language original.

12 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSThe financial statements presented do not take account of newstandards, revisions of existing standards and interpretationspublished by the IASB but not yet approved by the ARC(European Accounting Regulation Council) at balance sheet datefor the financial statements, such as IFRIC 13 - Customer loyaltyprogrammes - and the revised IAS 1 - Presentation of financialstatements.3.2 Scope and methods of consolidationThe financial statements of all significant subsidiaries under thedirect or indirect exclusive control of Groupe Auchan SA have beenfully consolidated. Control exists when the Group holds half orless of voting rights in a company and has the power to govern,directly or indirectly, the financial and operating policies of theentity in order to obtain the benefits of its assets. It is stipulatedthat the existence and effect of potential voting rights that areexercisable or convertible immediately are taken into accountwhen assessing control.Companies over which Groupe Auchan SA exercises significantinfluence, directly or indirectly, over management and financialpolicies, without exercising control, are accounted for using theequity method.Where Groupe Auchan SA shares joint control of a company,directly or indirectly (in which case strategic and financial decisionsrequire the mutual consent of the partners), with a limited numberof other shareholders, and under a contractual agreement, thisentity is consolidated using the proportionate method.In mainland China, the income statements for 18 hypermarketsreferred to as ‘independent franchises’, together with the financialstatements of a company operating a hypermarket, have beenconsolidated using the proportionate method since 2001, inaccordance with the substance of agreements associating thesecompanies with the Group, and to give a fair view of the Group’sbusiness operations in this country.Companies for which Groupe Auchan SA has control or significantinfluence, but that are not, individually or jointly, significant to theGroup’s financial statements, have not been consolidated.Consolidation is based on financial statements dated as of31 December for all entities included in consolidated scope.The consolidated financial statements include the financialstatements of companies acquired as from the date of transferof control, and those of companies sold up to the date of loss ofcontrol by the Group.All significant transactions and balances between Groupcompanies are eliminated.3.3 Use of estimatesThe preparation of financial statements under IFRS requiresestimates to be used and assumptions to be made that may affectthe amounts reported in the financial statements, in particularwith regard to the following items:••••the period over which assets are depreciated,the measurement of provisions and retirement benefitobligations,value used in impairment tests,the fair value assessment of identifiable assets and liabilitiesfor business combinations.These estimates assume the operation is a going concern and aremade on the basis of historical experience and other factors thatare believed to be reasonable under the circumstances and theinformation available at the time. Estimates may be revised if thecircumstances on which they were based have changed, or if newinformation becomes available. Actual results may be differentfrom estimated results.3.4 Foreign currency transactionsTranslation of the financial statements of foreign subsidiariesThe Group has no subsidiaries operating in countries withhyperinflationary economies. The financial statements of allforeign entities where the functional currency is not the euro,have been translated into euros in accordance with the followingmethod:• balance sheet items, except for equity which is maintained atthe historical exchange rate, are translated at the closing rate,• income statement items are translated at the average rate forthe period,• cash flows are translated at the average rate for the period.Foreign currency translation adjustment resulting from applicationof this method are reported as ‘Currency translation adjustments’included in consolidated equity, and are recognised in the incomestatement on disposal of the net investment. In accordance withthe option allowed under IFRS 1 - First-time adoption of internationalfinancial reporting standards -, the Group has decided to reclassifyaccumulated foreign currency translation adjustment at 1 January2004 under ‘Consolidated reserves’. Consequently, the ‘Foreigncurrency translation adjustments’ line only records accumulatedadjustment as from 1 January 2004.Goodwill and fair value adjustment resulting from a businesscombination with an activity for which the functional currency isnot the euro, are considered as part of the assets and liabilitiesof the subsidiary. They are expressed in the functional currencyof the entity acquired, and then translated at the closing rate.Any resulting currency translation adjustments are recognised inconsolidated equity.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS13Recognition of foreign currency transactionsTransactions denominated in foreign currencies are translated intoeuros at the exchange rate at the transaction date.Monetary assets and liabilities denominated in foreign currencies,whether hedged or not, are translated into euros at the closingrate, and the resulting exchange adjustments are recognised inthe income statement of the period.Non-monetary assets and liabilities that are measured at historicalcost in a foreign currency are translated at the exchange rate at thedate of the initial transaction.Non-monetary assets and liabilities denominated in foreigncurrencies that are stated at fair value are translated at the exchangerate ruling at the date the fair value was determined.3.5 Consolidation of the financial statementsof the credit activityThe financial statements of Banque Accord and its subsidiaries,prepared in accordance with the banking chart of accounts, andthe financial statements of Comfactor Commercio Factoring SpA,a captive factoring entity operating in Italy, are fully consolidatedin the Group’s financial statements as follows:• assets and liabilities are allocated, according to their nature,to the relevant lines in the consolidated balance sheet, withcustomer loans and the refinancing of customer loans presentedseparately,• in the income statement, banking revenues are included in‘Revenue’, banking expenses in ‘Cost of sales’, and net bankingincome in ‘Gross profit’.3.6 GoodwillThe Group applies the purchase method for business combinationsmade as from 1 January 2004.In application of this method, all identifiable assets acquired, andliabilities and contingent liabilities assumed, are measured andrecognised at fair value at the date when control was acquired, inaccordance with the global reassessment method.In the absence of specific provisions in the standards, and byanalogy with the accounting treatment under IFRS 3 - Businesscombinations - for business combinations achieved in stages bysuccessive share purchases, the Group has decided to apply theglobal reassessment method to all transactions involving entitiesunder joint control.In the case of acquisition of minority interests in a controlledcompany, the Group recognises the difference between thepurchase cost of the minority interests and the share in the netequity acquired in goodwill, without revaluing the assets andliabilities acquired.The cost of a business combination is the fair value, at the dateof acquisition, of assets given, liabilities incurred or presumed,and/or equity instruments issued by the acquirer in exchange forcontrol of the acquiree.When a business combination agreement provides for anadjustment to the cost of the combination contingent on futureevents, the Group includes the amount of the adjustment in thecost of the combination at the acquisition date, if the adjustmentis probable and can be measured reliably.The excess of the cost of the business combination over theGroup’s interest in the fair value of the identifiable assets andliabilities at the acquisition date is recorded under ‘Goodwill’ inassets in the consolidated balance sheet. Goodwill relating to anassociate accounted for by the equity method is recorded under‘Investments in associates’. Any negative amount of goodwill isrecognised immediately in the income statement.The Group has a period of one year from the date of acquisitionto finalise the initial assessment of identifiable assets, liabilitiesand contingent liabilities.In accordance with IFRS 3 - Business combinations -, goodwill isnot amortised. Goodwill is tested for impairment annually, at eachyear-end, or whenever events or circumstances indicate that it maybe impaired. Such events or circumstances are associated withmaterial, unfavourable changes of a permanent nature affectingeither the economic environment, or assumptions or objectivesadopted at the date of acquisition.All impairment losses are recognised in ‘Other operating expenses’included in “Operating income” in the income statement.The methods used by the Group to test goodwill for impairmentare detailed in note 3.13.3.7 Other intangible assetsIn accordance with IAS 38 - Intangible assets -, acquired intangibleassets are recognised in the balance sheet at cost, less anyaccumulated amortisation and impairment losses.Under current accounting standards and their interpretation at31 December 2007, the Group has qualified its French commercialleases as intangible assets with an indefinite useful life. Theseassets are consequently not amortised. They are subject toimpairment tests when the occurrence of events suggests a riskof impairment, and in all cases at least once per year. When theirrecoverable amounts, based on criteria applied at the time ofacquisition, fall below their carrying amounts on a permanentbasis, an impairment loss is recognised (see note 3.13).For preparation of the IFRS opening balance sheet, and consideringthe difficulties in restating historical values, in particular onacquisition of the Docks de France Group, French commercialleases prior to 1 January 2004 and recognised as intangible assetsin the Group’s balance sheet under French GAAPs, have beenreclassified as goodwill on an exceptional basis.Other intangible assets with a definite useful life are amortised bythe straight-line method over their expected useful lives.Free translation of a French language original.

14 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSSoftware acquired and software developed internally by the Group,which meets all criteria imposed by IAS 38, are capitalised andamortised over a useful life of 3 years. As an exception, ERP typesoftware is amortised over 5 years, these software having a highlystructuring function for the business and possessing a functionaland technical architecture with a longer probable useful life.3.8 Property, plant and equipmentProperty, plant and equipment acquiredsince 1 January 1997Property, plant and equipment are recorded at cost less cumulativedepreciation and any cumulative impairment loss. Land is stated atcost less any impairment loss. The various components of an itemof property, plant or equipment are recognised separately whentheir estimated useful lives, and thus their depreciation period,are significantly different. The cost of an item of property, plant orequipment includes costs which can be directly attributed to theacquisition of the asset, but excludes borrowing costs.Subsequent costs are included in the carrying amount of an itemof property, plant or equipment, or recognised as a separatecomponent where appropriate if it is probable that the futureeconomic benefits associated with the item will flow to the Group,and the cost of the asset can be measured reliably. All other costsare recognised as expenses of the period during which they areincurred.Items of property, plant and equipment are depreciated using thestraight-line method as from the asset’s entry into service, adoptinga component-based approach over their useful lives, and withouttaking any residual value into account.Buildings (structure)Roof waterproofing, drainage andfloor coveringImprovements and fixturesTechnical installations, machinery andequipmentOther assets30 years20 years6 and 2/3 yearsand 8 years3 years to 8 years3 years to 5 yearsProperty, plant and equipment acquiredbefore 1 January 1997As of 31 December 1996, following the acquisition of Docks deFrance and Pão de Açucar, the Group revalued its tangible assetsfor reasons of consistency and coherence.Land, buildings and improvements used by stores, head officepremises, warehouses, shopping centres and business parks wererevalued on the basis of their value in use.This value in use was generally determined according to theGroup’s knowledge of the market. In certain cases, it wasdetermined on the basis of independent appraisals.Technical installations, machinery and equipment and otherassets have been recognised, for their gross amount, at cost ofacquisition corresponding to their value in use after carry-over ofprevious depreciation.On first-time adoption of IFRS, the Group elected to use thisrevaluation at fair value as deemed cost at the date of revaluation,namely 31 December 1996.Items of property, plant and equipment existing at 1 January 1997have been depreciated as from the revaluation date.In particular, store, warehouse and shopping centre buildings aredepreciated over a useful life of 20 years, to take the age of theseitems at revaluation date into account.For improvements to shopping centres in France, andimprovements to stores and shopping centres in Spain revaluedat 31 December 1996, the Group has decided to maintain a usefullife of 20 years as from the revaluation date, given the particularsituation of these items.Property, plant and equipment of the Italian subsidiariesThe revaluation of the Rinascente’s food branch in Italy, acquiredto almost 100% on 17 December 2004, has led to the reestimationof the value of property, plant and equipment, and reassessmentof the useful lives as at 31 December 2004. In particular, newdepreciation periods for buildings are between 28 and 31 yearsfor hypermarkets and shopping centres, and between 22 and 31years for supermarkets.3.9 Investment propertyAn investment property is a property held to earn rentals or forcapital appreciation or both. Such properties are shown on aseparate line in the balance sheet.In the Group, shopping centres, business parks and undevelopedland are classified as investment property.They are measured at cost less accumulated depreciation andany impairment loss, in the same way as items of property, plantand equipment.A property in course of construction for future use as investmentproperty is classified as an item of property, plant and equipmentuntil completion of construction, at which time the property isclassified as investment property.In accordance with IAS 40, the fair value of investment propertyat 31 December 2007 is given in note 18.Measurement is made partially by external valuation and partlyby internal valuation. This involves applying a capitalisationrate according to the country, position and size of the buildingsconcerned, for each shopping centre and business park.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS153.10 Recognition of entry fees collected from tenants ofshopping centres and business parks - Lease contractsIn accordance with IAS 17 - Leases -, the financial impact of termsset out in the lease agreement are spread over the fixed duration ofthe lease, starting from the date the premises are made available.This applies to entry fees collected.3.11 Recognition of eviction costs paid to tenants ofshopping centres and business parksIf the lessor terminates a current lease, it will make an evictionpayment to the resident lessee. This is recognised in thecost of the property if the payment leads to a change in theperformance of the asset (new lease under improved financialterms, in the event of recovery of the premises for extensionwork or transfer of former tenants to a new site). In other cases,the eviction costs are recognised as prepaid expenses andspread over the residual period of the lease.3.12 Finance leasesThe Group’s leases are recorded in accordance with IAS17 - Leases - which identifies finance leases and operatingleases, and in application of IFRIC 4 - Determining whether anArrangement contains a lease - which sets out the circumstancesunder which contracts which do not have the legal form of anoperating lease must nevertheless be recognised as such, inaccordance with IAS 17.A lease is qualified as a finance lease if it transfers substantiallyall the risks and rewards incidental to ownership of the asset tothe lessee. All other leases are classified as operating leases.Items leased by the Group as lessee under financial leases arerecognised as items of property, plant and equipment. They arestated at an amount equal to the lower of the fair value and presentvalue of the minimum lease payments, and an obligation of the sameamount is recorded in debt.The capitalised asset is then depreciated in accordance with the rulesgoverning the depreciation of assets, or over the lease term if this isshorter. The related liability is amortised in accordance with the maturityschedule determined at the inception of the lease, and calculated usinga fixed effective annual rate over the remaining balance of the liabilitydue for each period.At the same time, assets for which the risks and economic rewardsincidental to ownership are transferred by the Group to third partiesunder the terms of a lease, are considered as having been sold.3.13 Impairment of assetsIAS 36 - Impairment of assets - defines the proceduresto be followed by a company to ensure that the carryingamount of its property, plant and equipment, and intangibleassets including goodwill, does not exceed their recoverableamount, namely the amount which will be recovered throughtheir use or disposal.The recoverable amount of an asset is defined as the higherof its fair value less costs to sell and its value in use. Fairvalue less costs to sell is defined as the amount obtained fromthe sale of an asset in an arm’s length transaction betweenknowledgeable, willing parties less the costs of disposal. Valuein use is the present value of the future cash flows expected tobe derived from continuing use of an asset and from its ultimatedisposal.Cash flows after tax are estimated on the basis of 3-yearforecasts. Cash flows beyond this period are estimated byextrapolating the projections based on the forecasts using asteady growth rate over a period corresponding to the estimateduseful life of the asset. For tests of country assets (includinggoodwill), cash flows are extrapolated over a period of 9 years,taking account of a terminal value, calculated by discounting 9thyear data over an indefinite period. For reasons of prudence,terminal value is limited to fifteen times cash flows for the 9thyear in all cases.Cash flows are discounted at the weighted average cost of capitalafter tax, plus a risk premium specific to each country. Weightedaverage cost of capital is determined on the basis of the rate ofreturn observed in the French retail sector equity market. Discountrates after tax vary between 6.82% for Western Europe and 10.38%for Ukraine.The recoverable value of items of property, plant andequipment and intangible assets (including goodwill) is testedfor impairment when there is an indication of a loss of value.This test is also performed at least annually (on 31 December2007 given the seasonable nature of the activity) for assetswith an indefinite useful life (goodwill and French commercialleases).Assets to be tested for impairment are grouped within cashgeneratingunits (CGUs). The CGUs correspond to the smallestidentifiable group of assets that generates cash inflows thatare largely independent of the cash inflows from other groupsof assets. The Group has defined stores (hypermarkets orsupermarkets) and shopping centres as CGUs. An impairmentloss is recognised where the carrying amount of an asset, orthe CGU to which it belongs, exceeds the recoverable amount.Goodwill is tested by country and business, and the CGU assetsthen include property, plant and equipment, intangible assets,goodwill allocated to the country and business, and workingcapital.Any impairment loss is allocated first to goodwill. Impairmentlosses on goodwill cannot be reversed. Impairment lossesrecognised for other assets are reversed if there has been achange in the estimates used to determine the asset’s recoverableamount. The increased carrying amount of an asset attributable toa reversal of impairment loss may not exceed the carrying amountthat would have been determined had no impairment loss beenrecognised.Free translation of a French language original.

16 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS3.14 Borrowing costsBorrowing costs are recognised as an expense when incurredin accordance with the benchmark treatment under IAS 23 -Borrowing costs -.3.15 Non-current assets (or groups of assets) held for saleand discontinued operationsIn accordance with IFRS 5, significant assets or groups of assetsheld for sale (other than current sales) are recognised onseparate asset and liability lines in the balance sheet with norestatement of previous years, and are stated at the lower of theircarrying amount and fair value net of disposal costs.Non-current assets appearing in the balance sheet as heldfor sale are no longer depreciated once they are presented assuch.An asset is classified as ‘held for sale’ only if its sale is highlyprobable within one year, if the asset is available for immediatesale in its present condition and a programme to locate a buyerhas been initiated by management.A discontinued operation is a component of the Group’s businessthat represents a separate major line of business or geographicalarea of operations.Classification as a discontinued operation occurs when theoperation meets the criteria to be classified as held for sale orwhen Auchan has sold the entity. Discontinued operations areshown on a single line of the income statement, comprising thetotal of the post-tax profit or loss up to the date of sale, and thepost-tax gain or loss recognised on the disposal, for all reportingperiods published.3.16 Financial assets and liabilitiesFinancial assets and liabilities are recognised and measured inaccordance with the requirements of IAS 39, IAS 32 and IFRS 7.The following recognition and measurement principles have beenapplied:Trade receivables, trade payables andother current liabilitiesThese financial assets and liabilities are measured at their nominalvalue, as this represents a reasonable estimate of their fair valuegiven their short-term nature.Trade receivables are recognised at an amount net of anyimpairment loss taking the collectability risk into account.Available-for-sale financial assetsAvailable-for-sale financial assets include participating interests innon-consolidated entities. They are measured at fair value.Changes in fair value are recognised in equity under ‘Reserves ofavailable-for-sale financial assets’, and are transferred to profitand loss when the asset is sold. However, if there is a materialand permanent indication of loss in value, an impairment loss isrecognised in the income statement. Impairment losses can onlybe reversed when the assets are sold.For listed securities, fair value corresponds to the last stock marketprice. For unlisted securities, fair value is determined on the basisof the Group’s share in the company’s net asset value (adjustedwhere appropriate), its profitability and earnings outlook or itsappraisal value.If the fair value cannot be reliably determined, shares arerecognised at cost. If there is an objective indication of permanentimpairment, an irreversible impairment loss is recognised in theincome statement.Loans and receivablesThis category mainly includes receivables related to nonconsolidatedinvestments, guarantee deposits, prepaidexpenses, other loans and other receivables. Assets aremeasured initially at fair value and then at amortised cost,using the effective interest rate method.The fair values of loans and receivables are estimated onthe basis of the present value of the expected cash flowsdiscounted using the zero-coupon curves effective at closingdates, and integrating a spread determined by the Group.For guarantee deposits and other loans, the carrying amountrepresents a reasonable estimate of fair value. An impairmentloss is recognised if it will not be possible to recover the totalamounts (principal and interest) due under the terms of thecontract.The impairment loss recognised in the income statementcorresponds to the difference between the carrying amount ofthe asset and its recoverable amount.If the recoverable amount of the asset then increases as a resultof an event occurring after the impairment loss was recognised,the impairment loss is reversed. However, an impairment lossis reversed only to the extent that the asset’s carrying amountdoes not exceed the amortised initial cost that would havebeen determined if no impairment loss had been recognised.Financial assets held for tradingFinancial assets held for trading comprise mutual or similarfunds. These assets are measured at fair value. This valueis determined on the basis of the last quotation given by thebank. Any changes in fair value are recognised in the incomestatement.Held-to-maturity investmentsThis item mainly includes customer loans (principally consumercredits of the personal and revolving loan type) conducted byGroup financial companies and credit institutions. They arerecognised at amortised cost.At each balance sheet date, the Group determines whether there isobjective evidence of impairment as a result of one or more events

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS17occurring after the initial recognition of the asset, and whetherthese loss events have an impact on the estimated future cashflows that can be reliably estimated.If there is objective evidence that an impairment loss on loans andreceivables has been incurred, the amount of the depreciation ismeasured as the difference between the carrying amount of theasset and the present value (using the original contract rate) ofrecoverable estimated future cash flows, taking account of theimpact of any guarantees. The impairment loss is recognised inprofit or loss, and the value of the financial asset is reduced bythe same amount.Cash and cash equivalentsThis item comprises cash in hand and current accounts at bankthat are not subject to any restrictions. It also includes shorttermcash management financial assets (less than 3 months),easily convertible into a known cash amount, and with anegligible risk of change in value. As they are realisable ortransferable at any time, they are measured at fair value. Anychanges in value are recognised in profit or loss.Borrowings and other financial liabilities, debts financingthe credit activityFinancial liabilities are mainly bonds, bank borrowings, bankoverdrafts and obligations under finance leases.Borrowings and other financial liabilities at floating rates aremeasured at amortised cost using straight-line amortisation ofissuance costs as this has no material impact by comparison withactuarial amortisation.Two methods are used for fixed-rate borrowings:• fixed-rate borrowings qualified as hedged items as part of fairvalue hedging relationships are recognised at amortised costadjusted for the change in fair value for the risk hedged. The fairvalue is determined on the basis of expected future cash flowsdiscounted using the zero-coupon curves in force at the balancesheet dates, and integrating a spread equal to the spread at theinception of the financing,• other fixed-rate borrowings are recognised at amortised costusing the effective interest method, integrating an actuarialamortisation of issuance costs and premiums.Obligations under finance leases are recognised at amortisedhistorical cost. Their fair value is determined by discounting futurecash flows.Derivative instrumentsThe Group uses firm or optional financial instruments, qualifiedas derivative instruments in accordance with IAS 39, to hedgeits exposure to market risks (interest rates, exchange rates andequity prices).Derivative instruments are measured and recognised at fair value.Fair values are determined from valuations communicated by thebanking counterparts.Changes in the fair value of derivatives are always recognisedin income except for cash flow hedges.For derivatives eligible for hedge accounting, recognitionas hedging instruments makes it possible to reduce incomevolatility linked to changes in the value of the derivativesconcerned.Hedge accounting is applicable if:• the hedging relationship is clearly defined and documentedat the date when it is set up,• the effectiveness of the hedging relationship is demonstratedfrom the outset, and regularly while it is in place.There are three models of hedge accounting set out inIAS 39: fair value hedges, cash flow hedges and hedges of netinvestments in foreign operations.The majority of derivatives used by the Group are eligible forhedge accounting.• For derivatives documented as hedging of asset or liabilityitems recognised in the balance sheet (fair value hedge),hedge accounting makes it possible to recognise changesin the fair value of the derivatives in the income statement.This is offset by the impact on profit and loss of the changesin the fair value of the hedged item recognised in thebalance sheet, in connection with the risk hedged. Thesetwo measurements offset each other within the same lineitems in the income statement. If the hedge is fully effective,the loss or gain on the hedged debt is offset by the gain orloss on the derivative.• For derivative instruments documented as highly probablefuture cash flow hedges, the changes in the value of thederivative are recognised in reserves (Cash flow hedgereserve) for the effective portion. Changes in the value ofthe estimated ineffective portion are recognised in profitand loss.• For derivatives documented as foreign net investmenthedges, the change in value of the hedging instrument isrecognised in equity, the purpose of these hedges being toneutralise the change in the value in euros of part of the netcurrency assets of subsidiaries.For derivatives that are not documented as hedging instruments,changes in fair value are recognised in profit and loss.Derivative instruments considered as hedges the maturityof which is greater than one year are shown in the balancesheet as non-current assets or liabilities. Other derivativeinstruments are classified as current assets or liabilities.Free translation of a French language original.

18 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS3.17 Put options granted to minority shareholders incontrolled companiesThe Group is committed to repurchase the minority interests ofshareholders in certain fully consolidated subsidiaries. The strikeprice of these options may be set or determined according to apredefined calculation formula. The options may be exercised atany time or at a specific date.While awaiting clarification of the IFRS standards, the followingaccounting treatment has been adopted by the Group:• in accordance with IAS 32, the Group records a financial liabilitywith respect to the put options granted to minority shareholdersof the entities concerned at the present value of the strikeprice;• the corresponding entry for this liability is deducted fromminority interests and the balance from goodwill;• when the put option has not been granted in the context of abusiness combination (apart from the creation of a new activity),subsequent changes in the debt are recognised in financial income.In the contrary case, and in the event of a put option granted onthe creation of a new activity, the variations are recognised throughan adjustment in goodwill. The effect of discounting is recognisedin profit or loss.However, these accounting treatments may be reviewed accordingto clarification of the IFRS standards.3.18 InventoriesInventories are measured at the lower of cost and net realisablevalue. The cost is net of annual rebates and commercialcooperation fees and includes handling and warehousingcosts directly attributable to the acquisition of products, andtransport costs incurred in bringing the inventories to thestores. Inventories are measured either on the basis of thelast purchase price, a method comparable with the FIFO (“Firstin, First out”) method for inventory with rapid turnover, or atthe weighted average unit cost, or at the selling price less profitmargin. Inventories are written down if their net realisablevalue is below cost.3.19 Income taxesIncome taxes include current and deferred taxes, and taxadjustments with respect to previous years.Income taxes, whether current or deferred, are recogniseddirectly in equity when they relate to an item initially recognisedin equity.Deferred taxes are recorded for all temporary differences betweenthe tax basis of assets and liabilities and their accounting values,with the exception of goodwill not deductible for tax purposes andtemporary differences relating to investments in subsidiaries tothe extent that they will probably not reverse in the foreseeablefuture.Deferred taxes are calculated using tax rates enacted orsubstantially enacted at the balance sheet date and usingthe liability method. The effect of any changes in tax rates isrecognised in the income statement, apart from changes relatingto items initially recognised directly in equity.Deferred tax assets and liabilities are offset when an enforceablelegal offset right exists, and when the same tax authority isinvolved. They are not discounted and are classified in thebalance sheet under non-current assets and liabilities.Tax losses and other temporary differences only give rise todeferred tax assets when their use against future taxable incomeis probable within a reasonable period of time or when they canbe realised against deferred tax liabilities.3.20 ProvisionsProvisions are recorded when the Group is under an obligationto a third party at the end of the year, as a result of a past event,that it is likely or certain to trigger an outflow of resources to thethird party, without any equivalent benefit being anticipated bythe Group. The relevant obligation may be legal, regulatory orcontractual in nature. Provisions are estimated according to theirnature, taking account of the most probable assumptions.Provisions for restructuring are recognised when the Group has adetailed formal plan to restructure of which the interested partieshave been informed.A number of the Group’s companies offer warranty extensioncontracts, for which revenue and margin are recognised overthe period of the service delivered. Foreseeable costs relatingto the warranty are accrued when the corresponding salesare recorded, on the basis of statistics of costs incurred inprevious years.Provisions linked directly to the normal operating cycle of thebusiness, and the part of other provisions that matures in lessthan one year, are classified as current liabilities. Provisions notmeeting these criteria are classified as non-current liabilities.3.21 Treasury sharesAll treasury shares held by the Group are deducted from equityat cost. The gain or loss, net of tax, from any sales of treasuryshares is recognised directly under equity, with the result thatany disposal gains or losses have no impact on income for theperiod.3.22 Share-based paymentsIFRS 2 - Share-based payments - requires an entity to recognise anexpense when it grants share options to employees. The amountof this expense is determined as follows:• determination of the fair value of the option on the date of grantusing an option pricing model,• application of a probability ratio according to specific conditionsof presence.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS19For equity-settled share-based payment transactions, the entityrecognises a corresponding increase in equity. It is spread overthe period during which the employees become unconditionallyentitled to the options.The fair value of the option is a call value determined using thebinomial model on the basis of the following elements:• the life of the option (established by the option plan),• the exercise price of the option,• the interest rate (the rate adopted is that for 4-year OATs),• the share price at grant date,• the volatility of the retail sector (in the absence of any quotationfor the underlying shares).The value of the underlying shares includes the impact ofdividends paid.In accordance with IFRS 2, only plans issued after 7 November2002 for which rights had not been vested at 1 January 2005, aremeasured and recognised in payroll expenses.3.23 Retirement and other long-term employee benefitsIn accordance with IAS 19 - Employee benefits - the Group listsand records all benefits provided to employees. Based onthe laws and practices of each country, the Group has set uppension plans for employees.The Group’s obligations arising from defined benefit plans aredetermined using a projected unit credit method. Externalactuarial assessments are made each year for the majorplans, and at regular intervals for other plans. The actuarialassumptions used to determine the obligations vary dependingon the particular characteristics of each company (staff turnoverrate, increase in salaries) and the economic conditions ofthe countries where the plans are operated (discount rate,inflation).These plans can be funded, in which case their assets aremanaged separately and independently from those of theGroup, or non-funded.For non-funded defined benefit plans, the liability recognisedin the balance sheet corresponds to the present value of theobligations after deduction of unrecognised past service costs.For funded defined benefit plans, the shortfall or surplus ofthe fair value of the assets compared with the present valueof obligations is recognised as a liability or asset in thebalance sheet, taking account of any past service costs notyet recognised in profit or loss. However, assets can onlybe recognised in the balance sheet to the extent that theyrepresent future economic benefits effectively available to theGroup. If such assets are not available, or do not representfuture economic benefits, the amount of assets recognised inthe balance sheet is limited.Actuarial gains and losses can result from changes in assumptionsor from experience differences between estimated resultsbased on actuarial assumptions and actual results. The Groupapplies the amendment to IAS 19 - Employee benefits: Actuarialgains and losses, Group plans and disclosures -, recognising allactuarial gains and losses immediately in equity.For defined benefit plans, the actuarial expense recognised inthe income statement comprises the current service cost, theinterest cost, the expected yield on plan assets and the pastservice costs recognised in the period. The cost of discountingand the expected yield on plan assets are recognised underother financial income and expenses. The past service costsrelating to increases in obligations are recognised on a straightlinebasis until the benefits are fully vested.Some benefits are also provided through defined contributionplans characterised by periodic contribution payments tooutside entities responsible for administrative and financialmanagement of the plans. Contributions to these plans areexpensed as incurred.3.24 Earnings per shareThe Group presents basic earnings per share and dilutedearnings per share, calculated on earnings for continuingactivities. This information is also presented for net income.Basic earnings per share are calculated by dividing net incomeof the year (attributable to equity holders of the parent) by theweighted average number of outstanding shares during theyear, less treasury shares. The average number of outstandingshares during the year is the number of outstanding shares atthe beginning of the year adjusted by the number of sharesissued during the year.Diluted earnings per share are calculated by dividing netincome of the year (attributable to equity holders of the parent)by the weighted average number of outstanding shares pluspotentially dilutive shares to be created. For the Group,this concerns share purchase and subscription options orbonus share plans. The dilution attached to these options isdetermined using the share purchase method.If any significant non-current items have occurred whichcould impair the understanding of the earnings per share,net earnings per share for continuing activities excludingnon-current items are calculated by adjusting net incomefrom continuing operations after minority interests for otheroperating income and expenses, net of taxes and after minorityinterests.Free translation of a French language original.

20 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS3.25 Segment reportingIAS 14 requires the reporting of financial information by lineof business and geographical area in respect of primary andsecondary segments. Segments are identified by analysing risksand returns to form standard segments.The Group discloses primary segment reporting under line of businessand secondary segment reporting under geographical area. Thispresentation is based on the Group’s internal organisation systemsand management structure. The two segments cover the following:Primary segment - line of business: Hypermarkets, Supermarkets,Property Management (shopping centres and business parks),Bank (credit activity).Secondary segment - geographical areas: France, Western Europeexcluding France (Spain, Portugal, Italy and Luxembourg), andthe rest of the world (Poland, Hungary, Russia, Ukraine, mainlandChina, Taiwan and Romania).Segment assets are assets used by a segment in connection withits operational activities and which are directly attributable to thesegment, or which can be reasonably allocated to the segment.Segment assets comprise: goodwill, other intangible assets,property, plant and equipment, investment property, interestsin companies accounted for by the equity method, current andnon-current customer loans, inventories, trade receivables andother current receivables.Segment liabilities are liabilities resulting from the operationalactivities of a sector and which are directly attributable or can bereasonably allocated to the segment.Segment liabilities comprise: current and non-current provisions,current and non-current debts financing the credit activity, othercurrent liabilities and trade payables.Gross intangible assets and property, plant and equipmentinvestments correspond to gross acquisitions of fixed assets,excluding the impact of deferred payments and including fixedasset investments held under finance leases.3.26 Presentation of financial information3.26.1. Income statementRevenueNet sales include sales of goods and services by the stores, rentalrevenues from shopping centres and business parks, and bankingrevenues from the credit activity.Other income includes franchise revenues, entry fees collected bythe shopping centres and business parks, commissions for thesale of services and warranty extension premiums.Gross profitCost of sales comprises the cost of purchases net of discounts andcommercial cooperation fees, changes in inventories net of anyimpairment loss, logistic costs, cash discounts, exchange gainsand losses on the purchase of goods, and banking expenses fromthe credit activity.Pre-opening costsPre-opening costs for stores are recognised in operating expenseswhen incurred.Other operating income and expensesNon-recurring transactions for material amounts and which couldimpair the understanding of current operating performance areclassified in ‘Other operating income and expenses’.This line includes in particular any impairment loss recognised ongoodwill, major and exceptional impairment losses recognisedon other assets, and items which are both exceptional, rareand material but do not relate to current operations, such asrestructuring expenses.Net cost of financial debtThe net cost of financial debt comprises:• the gross cost of financial debt, which includes interestexpenses, gains and losses on interest rate and foreignexchange hedges in respect of debt,• the ‘income from cash and cash equivalents’ line which includescash investment income.Other financial income and expensesThis item corresponds to financial income and expense that isnot generated by net debt. It consists mainly of dividends fromnon-consolidated companies, gains and losses arising from themeasurement at fair value of financial assets other than cash andcash equivalents, gains and losses on the disposal of financialassets other than cash and cash equivalents, the impact ofdiscounting adjustments and exchange gains and losses on itemsother than components of net debt and cost of sales.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS213.26.2. Balance sheetAssets and liabilities involved in the normal cycle of the activityare classified as current items. Other assets and liabilities areclassified as current or non-current items, depending on whethertheir expected date of recovery or payment occurs within a periodof twelve months from the balance sheet date.3.26.3. Definition of net indebtednessThe concept of net indebtedness used by the Group comprisesgross indebtedness less net cash.Gross indebtedness comprises current and non-current borrowingsand other financial liabilities, derivative financial instruments(current and non-current assets and liabilities) and relatedaccrued interests.In accordance with IAS 7, net cash, the change in which ispresented in the statement of cash flows, comprises cash andcash equivalents not subject to any restrictions, and short-terminvestments at less than 3 months easily convertible into a knowncash amount and with a negligible risk of change in value, lessbank overdrafts.Accrued interests relating to items included in net cash and grossindebtedness are incorporated in net indebtedness.Net indebtedness excludes the financing of customer loans bycredit activities.3.26.4. Statement of cash flowsThe Group determines cash flows from operating activities usingthe indirect method.Free translation of a French language original.

22 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t tnote 4 SEGMENT REPORTINGFinancial data reported as segment information are prepared in accordance with the same accounting rules and methods as thoseadopted for preparation of the consolidated financial statements.The performance of each business is measured on recurring operating income.Income statement data for 2006 has been restated following reclassification of the Moroccan activities in net income from discontinuedactivities in accordance with IFRS 5 (see note 3.15).4.1 Segment information by businessSegment revenueand income(in M€)Hypermarkets Supermarkets Property Bank Other Eliminations Group total2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006External revenue 29,292 27,400 6,670 6,653 383 318 370 317 0 0 0 0 36,715 34,688Inter-segment revenue 658 643 78 58 10 11 22 22 2 1 (770) (735) 0 0Revenue 29,950 28,043 6,748 6,711 393 329 392 339 2 1 (770) (735) 36,715 34,688Recurring operatingincomeOther operating incomeand expenses(1) (1) (1) (1)202 144 60 57 43 32 0 0 1,304 1,2830 0Operating income 1,304 1,283Net financial expenses (162) (131)Income taxes (374) (398)Share in earnings ofassociatesNet income fromcontinuing operations(6) 0762 754Net income from assets215 6held for sale anddiscontinued operationsNet income 977 760(1) Current operating income from Hypermarket and Supermarket segments:2007: M€ 999;2006: M€ 1,050.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS23Segment assets and liabilities(in M€)Hypermarkets Supermarkets Property Bank Other Group total2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006Segment assets 13,164 12,281 3,632 3,384 2,748 2,413 2,629 2,350 17 7 22,190 20,435of which investments in associates 14 18 79 2 54 63 5 0 0 0 152 83Unallocated assets 3,093 2,946Total assets 25,283 23,381Segment liabilities 8,625 7,997 1,764 1,792 433 272 1,920 1,939 430 228 13,172 12,228Unallocated liabilities 12,111 11,153Total liabilities 25,283 23,381Other information(in M€)Hypermarkets Supermarkets Property Bank Other Group total2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006Investments:Intangible assets(1) (1) (1) (1)1 1 1 2 0 0 38 33Property, plant and equipment(1) (1) (1) (1)183 64 2 1 0 0 1,486 1,011Investment property(1) (1) (1) (1)227 166 0 0 0 0 234 170Depreciation and amortisation allowance 587 556 151 148 118 107 3 3 0 0 859 814Impairment losses on intangible assets.PP&E and investment property for the year 1 4 3 6 0 0 0 0 0 0 4 10Reversal of impairment losses on intangibleassets. PP&E and investment property forthe year 6 3 2 0 2 4 0 0 0 0 10 7Other non-cash operating expenses (2) 24 49 3 24 7 6 37 29 (3) 3 68 111(1) Investments in Hypermarket and Supermarket segments:2007: M€ 1,344;2006: M€ 980.(2) Significant expenses: charges/reversals of provisions other than impairment losses on intangible assets. PP&E and investment property (mainly for impairment losseson current assets and for provisions for contingent liabilities).4.2 Segment information by geographical areaInformation is reported by geographical area. On the basis of the geographical location of its customers for revenue. and on the basisof the geographical location of its assets for segment assets.Western EuropeFranceexcludingFranceRest of theworld Eliminations Group total(in M€)2007 2006 2007 2006 2007 2006 2007 2006 2007 2006Revenue 19,060 18,553 11,223 10,938 6,818 5,565 (386) (368) 36,715 34,688Segment assets 10,272 9,593 8,484 7,924 3,434 2,918 0 0 22,190 20,435Investments (intangible assets, property, plantand equipment and investment property)563 433 623 419 572 362 0 0 1,758 1,214Free translation of a French language original.

24 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t tnote 5 EARNINGS PER SHARE5.1 Calculation of weighted average number of shares2007 2006Number of shares outstanding at 1 January 31,419,437 31,785,431Number of treasury shares at 1 January (69,793) (74,871)Weighted average number of share subscription options exercised 0 0Weighted average number of other capital increases 14,535 0Weighted average number of treasury shares acquired (370) (125,772)Weighted average number of treasury shares sold or cancelled 18,318 135,636Weighted number of capital reductions (by cancellation of treasuryshares) 0 (121,998)Weighted average number of outstanding shares (excluding treasury shares) used forcalculation of basic earnings per share 31,382,127 31,598,426Potentially dilutive shares to be created (share purchase or subscription options, attribution of bonus shares) 11,944 5,793Weighted average number of outstanding shares (excluding treasury shares) used forcalculation of diluted earnings per share 31,394,071 31,604,2195.2 Calculation of earnings per shareIncome from the Moroccan operations in 2006 has been reclassified in income from discontinued activities, in accordance withIFRS 5.Basic earnings per share 2007 2006Weighted average number of outstanding shares 31,382,127 31,598,426Net income attributable to equity holders of the parent (in M€) 962 747Per share (in €) 30.65 23.64Net income from discontinued operations attributable to equity holders of the parent (in M€) 215 6Per share (in €) 6.85 0.19Net income from continuing operations attributable to equity holders of the parent (in M€) 747 741Per share (in €) 23.80 23.45Net income from continuing operations excluding other operating income and expenses attributable toequity holders of the parent (in M€) 747 741Per share (in €) 23.80 23.45Diluted earnings per share 2007 2006Weighted average number of diluted shares 31,394,071 31,604,219Net income attributable to equity holders of the parent (in M€) 962 747Per share (in €) 30.64 23.64Net income from discontinued operations attributable to equity holders of the parent (in M€) 215 6Per share (in €) 6.85 0.19Net income from continuing operations attributable to equity holders of the parent (in M€) 747 741Per share (in €) 23.79 23.45Net income from continuing operations excluding other operating income and expenses attributable toequity holders of the parent (in M€) 747 741Per share (in €) 23.79 23.45

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS25t t t t note 6 PRINCIPAL ACQUISITIONS OF EQUITY INTERESTS IN 2007The most significant operation was the acquisition of 21% of the capital of the Ukrainian supermarket group Furshet on 14 June 2007 foran amount of $ 112 million (M€ 83). The companies concerned are consolidated by the equity method.Other Group acquisitions in consolidated subsidiaries had no material impact on the consolidated financial statements.t t t tnote 7 OPERATIONS DISCONTINUED, SOLD OR IN COURSE OF SALE AND ASSETS HELD FOR SALEThe Group sold no operations in 2006. but announced the termination, in December 2006, of its partnership with Casino in IRTS, effective1 January 2007.This operation was consolidated by the proportionate method up to 31 December 2006. It was deconsolidated on 1 January 2007 withno significant effect on the Group financial statements, following loss of control of this entity. Non-Group assets and liabilities of thisoperation were classified under “Assets held for sale” and “Liabilities associated with assets held for sale” at 31 December 2006.Details of assets and liabilities held for sale at 31 December 2006:(in M€) Non-Group Group (1) TotalOther current receivables 16 1 17Deferred income from suppliers 15 1 16Other 1 0 1Cash and cash equivalents 1 0 1Total assets 17 1 18Other current liabilities 6 12 18Total liabilities 6 12 18(1) This concerns inter-company assets and liabilities eliminated for consolidation purposes.Free translation of a French language original.

26 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSThe Group sold its Moroccan activities operating the Marjane hypermarkets and Acima supermarkets in August 2007. These activieswere consolidated proportionately at 49%. Consequently, in accordance with IFRS 5, all items in the income statement for the Moroccanoperations for 2007 and 2006 appear on a single “Net income from discontinued activities or activities held for sale” line.Details of income from the Moroccan operations sold for 2007 and 2006:(in M€) 2007 2006Revenue 154 302Gross profit 27 52Recurring operating income 3 10Other operating income and expense 0 0Operating income 3 10Net cost of financial debt 0 (1)Other financial income and expenses 0 0Income before taxes 3 9Income taxes (2) (3)Net income 1 6Capital gain on disposal net of taxes 214 0Net income from discontinued operations or held for sale 215 6Attributable to shareholders of the parent 215 6Minority interests 0 0The change in the cash position for activities sold included in the Group consolidated statement of cash flows can be broken down asfollows:(in M€) 2007 2006Net cash flows from operating activities 16 21Net cash flows used in investment activities 275 (17)of which impact of disposals 282 0Net cash flows used in financing activities (2) (5)Change in net cash for operations sold 289 (1)t t t tnote 8 REVENUE(in M€) 2007 2006 (1)Net sales 36,570 34,551Other revenue 145 137Revenue 36,715 34,688(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS27t t t tnote 9 COST OF SALES(in M€) 2007 2006 (1)Purchases net of discounts. commercial cooperation services and ancillary logistics costs 28,591 26,555Change in inventories (net of impairment loss) (377) 64Cost of sales 28,214 26,619(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).Internal logistics costsInternal logistics costs deducted from gross profit are detailed by expense type as follows:(in M€) 2007 2006 (1)Payroll expenses 173 167External expenses 251 231Depreciation. amortisation and provisions 29 28Internal logistics costs 453 426(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).t t t t note 10 PAYROLL EXPENSES(in M€) 2007 2006 (1)External labour expenses 271 241Wages and salaries including social security costs 3,651 3,407Employee incentives and profit-sharing 274 306Employee benefits and share-based payments (2) 16 41Total 4,212 3,995Payroll expenses transferred to logistics costs (173) (167)Net amount in income statement 4,039 3,828(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).(2) Of which expenses recognised for defined benefit plans for M€ 9, other long-term benefits for M€ 3 and share-based payments for M€ 4.t t t tnote 11 DEPRECIATION, AMORTISATION AND PROVISIONS(in M€) 2007 2006 (1)Depreciation and amortisation expenses, net of reversals (2) 888 842Provision expenses. net of reversals unused (3) (4) 69 119Total 957 961Depreciation, amortisation and provision expenses transferred to logistics costs (29) (28)Net amount in income statement 928 933(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).(2) Of which M€ 26 concerning amortisation of other intangible assets in (see note 16).(3) Of which M€ 1 for the net amount of impairment losses for goodwill, other intangible assets and property, plant and equipment, and investment properties recognisedin the 2007 income statement (see note 12).(4) Of which M€ 37 (compared with M€ 29 in 2006) for depreciation net of unused reversals on credit transactions.Free translation of a French language original.

28 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t tnote 12 IMPAIRMENT LOSSES(in M€)GoodwillOther intangibleassetsProperty, plantand equipmentInvestmentproperty Total 2007 Total 2006 (1)Depreciation and amortisation:impairment losses 0 1 3 0 4 9reversal of impairment losses 0 0 (3) 0 (3) (1)net 0 1 0 0 1 8Other operating income andexpenses (2) 0 0 (6) (1) (7) (6)Total 0 1 (6) (1) (6) 2(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).(2) Reversal of depreciations for assets sold.Impairment losses recognised for property, plant and equipment in 2007 amounted to M€ 1 for the Hypermarkets division and M€ 2 forthe Supermarkets division (of which M€ 1 for Spain). Impairment losses recognised on property, plant and equipment in 2006 amountedto M€ 4 for the Hypermarkets division and M€ 4 for the Supermarkets division.Impairment tests conducted in accordance with the method described in note 3.13 did not identify any impairment loss on goodwill, otherintangible assets, property, plant and equipment or investment property associated with CGUs other than those described above.t t t t note 13 OTHER FINANCIAL INCOME AND EXPENSES(in M€) 2007 2006 (1)Net gains (losses) disposal of other non-current financial assets (1) 0Foreign exchange gains on financial operations not qualified for hedge accounting 5 6Provisions and depreciation net of reversals:Reversal of depreciations for other financial assets 0 2Depreciation expenses for other financial assets (1) 0Other provisions (1) (2)Cost of discounting pension commitments net of the expected yield on plan assets (8) (7)Other 0 1Other financial income and expenses (6) 0(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS29t t t t note 14 INCOME TAXES14.1 Analysis of the net tax expense(in M€) 2007 2006 (1)Current tax expense/incomeIncome tax payable (361) (409)Tax adjustment with respect to previous years 0 (1)Total income tax payable (361) (410)Deferred tax expense/incomeChange in temporary differences (19) 17Impact of changes in tax rates 6 (2)On tax losses carried forward 0 (3)Total deferred tax expense (13) 12Total tax expense (374) (398)(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).14.2 Effective tax rate (ETR)The difference between the tax calculated using the theoretical rate of 34.43% in France (standard rate of 33 1/3% plus the socialcontribution of 3.3%) and the amount of tax effectively recognised in the year can be analysed as follows:(in M€)2007amounts 2007 ETR2006amounts (1) 2006 ETRIncome before tax 1,142 1,152Theoretical tax rate (current French rate) 34.4% 34.4%Theoretical tax expense 393 396Difference in tax rates for foreign companies 5 0.4% 24 2.1%Tax reduction, tax credits and reduced rate taxation (31) (2.7%) (24) (2.1%)Tax losses for the year not recognised 10 0.8% 10 0.9%Use of previously unrecorded tax losses carried forward (13) (1.1%) (5) (0.5%)Non-taxable items/Deferred tax not recognised 25 2.2% 10 0.9%Tax savings generated by tax consolidation 0 0.0% (3) (0.3%)Tax effect of elimination of depreciations of investments in subsidiaries andcurrent accounts (3) (0.3%) (3) (0.3%)Permanent and other differences (12) (1%) (7) (0.6%)Tax expense recognised 374 398Effective tax rate (ETR) 32.7% 34.5%(1) Restated information for Moroccan operations reclassified in net income from operations sold (see IFRS 5).Free translation of a French language original.

30 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t t note 15 GOODWILL15.1 Changes in gross carrying amounts(in M€)Gross carryingamountGross carrying amount at 1 January 2006 3,428Change relating to business combinations 23Other changes in consolidation scope 2Foreign currency translation adjustments (19)Gross carrying amount at31 December 20063,434(in M€)Gross carrying amount at1 January 2007Gross carryingamount3,434Change relating to business combinations (1) 51Other changes in consolidation scope (2) (33)Foreign currency translation adjustments (13)Other movements and transfers (1)Gross carrying amount at31 December 20073,438(1) The change relating to business combinations in 2007 concerns the acquisitionof Supermarket companies in France, Italy and Russia for M€ 16, M€ 24 and M€ 4respectively and the property management company Innova in Italy for M€ 7.(2) Disposals principally concern the Moroccan operations for M€ 32.15.2 Changes in impairment losses(in M€)ImpairmentlossesImpairment losses at 1 January 2006 45Impairment losses of the period 1Foreign currency translation adjustments (1)Impairment losses at31 December 200645Impairment losses at 1 January 2007 (1) 45Deconsolidations (1)Foreign currency translation adjustment 0Impairment losses at31 December 2007 (1) 44(1) See details by business/country below.15.3 Net carrying amounts(in M€)1 January 2006 3,38331 December 2006 3,3891 January 2007 3,38931 December 2007 3,394The main goodwill items by business/country are as follows (net carrying amounts):(in M€) 2007 2006Hypermarkets France 1,121 1,119Hypermarkets Italy 611 611Hypermarkets Portugal (of which impairment losses of M€ 1 in 2007 vs M€ 2 in 2006) 171 171Other hypermarkets (of which Taiwan impairment losses of M€ 7 in 2007 vs M€ 8 in 2006) 171 209Supermarkets France (of which impairment losses of M€ 17 in 2007 vs M€ 17 in 2006) 479 463Supermarkets Italy 605 581Other supermarkets (of which Poland impairment losses of M€ 19 in 2007 vs M€ 18 in 2006) 64 60Property Italy 80 73Other property 69 79Other goodwill items 23 23Total 3,394 3,389

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS31t t t tnote 16 OTHER INTANGIBLE ASSETS16.1 Changes in gross carrying amounts(in M€) Licences Internal IT development costs TotalGross carrying amount at 1 January 2006 112 7 119Acquisitions and internal development 26 7 33Acquisitions concerning business combinations 1 0 1Disposals and retirements (14) 0 (14)Foreign currency translation adjustments 0 0 0Other movements and transfers (4) 1 (3)Gross carrying amount at 31 December 2006 121 15 136(in M€) Licences Internal IT development costs TotalGross carrying amount at 1 January 2007 121 15 136Acquisitions and internal development 26 12 38Acquisitions concerning business combinations 1 0 1Disposals and retirements (4) 0 (4)Foreign currency translation adjustments 0 0 0Other movements and transfers (4) 1 (3)Gross carrying amount at 31 December 2007 140 28 16816.2 Change in amortisation and impairment losses(in M€) Licences Internal IT development costs TotalAmortisation and impairment losses at 1 January 2006 76 1 77Amortisation for the year 21 4 25Disposals and retirements (12) 0 (12)Other movements and transfers (3) 1 (2)Amortisation and impairment losses at31 December 2006 82 6 88(in M€) Licences Internal IT development costs TotalAmortisation and impairment losses at 1 January 2007 82 6 88Amortisation for the year 19 7 26Impairment losses 1 0 1Disposals and retirements (3) 0 (3)Other movements and transfers (3) 0 (3)Amortisation and impairment losses at31 December 2007 96 13 109Free translation of a French language original.

32 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS16.3 Net carrying amounts(in M€) Licences Internal IT development costs Total1 January 2006 36 6 4231 December 2006 39 9 4831 December 2007 44 15 59No intangible asset has been assigned in guarantee for liabilities.t t t t note 17 PROPERTY, PLANT AND EQUIPMENT17.1 Changes in carrying amounts(in M€)Land,buildings andimprovementsEquipment andother PP&EPP&E underconstructionTotalGross carrying amount at 1 January 2006 8,454 2,327 591 11,372Acquisitions concerning business combinations 2 9 0 11Other acquisitions 301 235 475 1 011Disposals and retirements (88) (97) (4) (189)Foreign currency translation adjustments (17) (16) (2) (35)Transfers to investment property (104) 0 (49) (153)Other movements and transfers 200 5 (184) 21Other (26) 0 7 (19)Gross carrying amount at31 December 20068,722 2,463 834 12,019(in M€)Land,buildings andimprovementsEquipment andother PP&EPP&E underconstruction (1)TotalGross carrying amount at 1 January 2007 8,722 2,463 834 12,019Acquisitions concerning business combinations 4 10 0 14Other acquisitions 550 419 517 1,486Disposals and retirements (2) (197) (158) (7) (362)Foreign currency translation adjustments 9 (4) (4) 1Transfers to investment property (3) (20) 1 (123) (142)Other movements and transfers 365 (74) (295) (4)Gross carrying amount at31 December 20079,433 2,657 922 13,012(1) At 31 December 2007, PP&E under construction concerned the Hypermarket activity for M€ 703, the Supermarket activity for M€ 78 and the Property activity for M€ 136.(2) Of which disposal of operations in Morocco for M€ 78, M€ 38 and M€ 5 respectively.(3) Assets complying with the definition of investment property.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS3317.2 Changes in amortisation and impairment losses(in M€)Land,buildings andimprovementsEquipment andother PP&EPP&E underconstructionAmortisation and impairment lossesat 1 January 2006 2,712 1,376 16 4,104Amortisation for the year 434 288 0 722Accumulated amortisation recognised concerning ofbusiness combinations0 6 0 6Impairment losses 6 2 0 8Reversals of impairment losses (2) 0 (1) (3)Disposals and retirements (63) (94) 0 (157)Foreign currency translation adjustments (4) (8) 0 (12)Transfers to investment property (37) 1 0 (36)Other movements and transfers 28 (10) 0 18Other (3) 0 0 (3)Amortisation and impairment lossesat 31 December 2006 3,071 1,561 15 4,647Total(in M€)Land,buildings andimprovementsEquipment andother PP&EPP&E underconstructionAmortisation and impairment lossesat 1 January 2007 3,071 1,561 15 4,647Amortisation for the year 448 300 0 748Accumulated amortisation recognised concerning ofbusiness combinations 1 2 0 3Impairment losses 2 1 0 3Reversals of impairment losses (6) 0 (3) (9)Disposals and retirements (1) (101) (143) 0 (244)Foreign currency translation adjustments 8 (3) 1 6Transfers to investment property (8) 0 0 (8)Other movements and transfers 71 (76) 0 (5)Amortisation and impairment lossesat 31 December 2007 3,486 1,642 13 5,141Total(1) Of which disposal of operations in Morocco for M€ 16 and M€ 26 respectively.Free translation of a French language original.

34 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS17.3 Net carrying amounts(in M€)Land,buildings andimprovementsEquipment andother PP&EPP&E underconstruction (1)1 January 2006 5,742 951 575 7,26831 December 2006 5,651 902 819 7,37231 December 2007 5,947 1,015 909 7,871Total(1) At 31 December 2007, PP&E under construction concerned the Hypermarket activity for M€ 690, Supermarket activity for M€ 78 and Property activity for M€ 136.17.4 Net carrying amounts of property, plant and equipment held under finance leasesLand,Equipment andbuildings andother PP&E(in M€)improvementsTotalAt 31 December 2006 322 9 331Hypermarkets France 102 3 105Hypermarkets Italy 127 0 127Other hypermarkets 24 1 25Supermarkets 21 3 24Alinéa 48 2 50At 31 December 2007 241 5 246Hypermarkets France 91 2 93Hypermarkets Italy 64 0 64Other hypermarkets 22 0 22Supermarkets 18 1 19Alinéa 46 2 4817.5 SecuritiesRT Mart China PP&E for an amount of Me 15 have been pledged to secure liabilities.17.6 CommitmentsCommitments relating to property, plant and equipment are detailed in note 43.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS35t t t t note 18 INVESTMENT PROPERTY18.1 Changes(in M€)Gross carryingamountsAmortisationand impairmentNet carryingamountsAt 1 January 2006 2,455 600 1,855Acquisitions concerning of business combinations 5 1 4Other acquisitions 170 0 170Disposals and retirements (35) (10) (25)Amortisation for the year 0 104 (104)Impairment losses 0 0 0Reversals of impairment losses 0 (4) 4Foreign currency translation adjustments (7) (3) (4)Transfers from property, plant and equipment 153 36 117Other movements and transfers (1) 0 (1)Other 2 0 2At 31 December 2006 2,742 724 2,018(in M€)Gross carryingamountsAmortisationand impairmentNet carryingamountsAt 1 January 2007 2,742 724 2,018Acquisitions concerning of business combinations 70 2 68Other acquisitions 234 0 234Disposals and retirements (1) (71) (12) (59)Amortisation for the year 0 119 (119)Impairment losses 0 0 0Reversals of impairment losses 0 (1) 1Foreign currency translation adjustments 5 0 5Transfers from property, plant and equipment 142 8 134At 31 December 2007 3,122 840 2,282(1) Of which disposal of operations in Morocco for M€ 14 (gross) and M€ 4 (amortisation).18.2 Net carrying amounts of investment property heldunder finance leases(in M€)At 31 December 2006 114France 7Italy 107At 31 December 2007 113France 6Italy 107Investment properties have been pledged to secure liabilities inItaly for M€ 330 and in mainland China for M€ 11.Commitments relating to investment property are detailed in note 43.Investment property generated rental income of M€ 361 in 2007(M€ 319 in 2006) and direct operating expenses of M€ 180,of which M€ 9 generated no rental income (M€ 170 and M€ 7respectively).At 31 December 2007, the estimated fair value of the investmentproperty was M€ 4,886 for a net carrying amount reported in thebalance sheet of M€ 2,282 (M€ 4,018 and M€ 2,018 respectivelyfor 2006).Free translation of a French language original.

36 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t t19.1 Changesnote 19 INVESTMENT IN ASSOCIATES(in M€) 2007 2006At 1 January 83 52Income of the period (share) (6) 0Dividends paid during the year 0 0Equity investments acquired (1) 89 0Other acquisitions and increases in capital 3 31Disposals (11) 0Foreign current translation adjustments (6) 0At 31 December 152 83(1) Equity investments acquired in 2007 correspond to the acquisition of a 21% interest in the Ukrainian supermarket group Furshet (M€ 83) and a 30% interest inSantander Consumer France (Credit activity) (M€ 6).19.2 Details of investments in associates are as follows:Company Country % interestValue of sharesat 31.12.2007Of whichgoodwillGalleria Commerciale Porta di Roma S.p.A Italy 20 26Il Mulino srl Italy 20 2Immobiliare Commerciale Xxi srl Italy 20 1Vulcano S.p.A Italy 23 21Iniziative commerciali Napoli S.p.A Italy 25 4Centro commerciale C’E’ sa Italy 49 2Business Advisor srl Italy 49 NSCentro commerciale C’E’ 2 srl Italy 49 NSValauchan International Luxembourg 9 13 3MGV Distri-Hiper Romania 29 1Anthousa / Furshet Ukraine 21 77 54Santander Consumer France France 30 5Total 152 57NS = Not significant

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS3719.3 Principal financial data for investments in associates (100% interest and in M€)CompanyTotalassets Equity Revenue2007 2006NetincomeTotalassets Equity RevenueNetincomeGalleria Commerciale Porta di Roma S.p.A 270 47 17 NS 179 46 NS NSInnova Costruzioni srl (1) - - - - 35 4 8 3Il Mulino srl 27 1 3 1 28 NS 2 NSImmobiliare Commerciale Xxi srl 40 NS 3 (1) 40 NS 2 NSVulcano S.p.A 196 32 11 3 161 24 6 5Iniziative commerciali Napoli S.p.A 51 14 18 NS 31 14 5 NSCentro commerciale C’E’ sa 2 1 NS NS 2 1 NS NSBusiness Advisor srl 1 NS NS NS NS NS NS NSCentro commerciale C’E’ 2 srl NS NS NS NS NS NS NS NSValauchan International 121 (2) 120 NS NS 114 (2) 114 NS NSMGV Distri-Hiper Romania 65 2 137 (1) 27 (1) 19 (4)Anthousa / Furshet 312 109 238 3 NC NC NC NCSantander Consumer France 19 19 NS (2) NC NC NC NCNS: Not significantNC: Not consolidated(1) Control of the company was acquired in 2007, resulting in a change in consolidation method (transition from equity method to full consolidation).(2) Essentially Groupe Auchan SA shares.t t t t note 20 CUSTOMER LOANS – CREDIT ACTIVITYThis item is included in the Loans and receivables category. It represents receivables held by Banque Accord, its subsidiaries andComfactor on their customers. It includes personal loans, revolving credit and deferred payment facilities on Accord credit cards, andreceivables held by Comfactor, the captive factoring company in Italy.(in M€) 2007 2006Gross carrying amount 3,019 2,696of which maturing at not exceeding 3 months 1,118 916over 3 months but not exceeding 1 year 595 584over 1 year but not exceeding 5 years 1,196 1,117over 5 years 110 79Impairment loss (226) (203)Net carrying amount 2,793 2,493of which not current 1,129 831current 1,664 1,662Free translation of a French language original.

38 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t t note 21 OTHER FINANCIAL ASSETSGiven the nature of its business, Group exposure to its debtor credit risk cannot have a significant impact on its business, financialposition or assets.21.1 Classification of non-current financial assets by category (net carrying amount)(in M€) 2007 2006Financial assets held for trading (1) 8 7Held-to-maturity investments None NoneAvailable-for-sale financial assets (2) 152 153Loans and receivables issued by the company 311 291Financial receivables (3) 84 91Receivables relating to PP&E at over 1 year (4) 24 3Other non-operating receivables 47 49Prepaid expenses (5) 156 148Other non-current financial assets (net) 471 451of which accumulated impairment losses 12 12(1) Financial assets held for trading correspond to marketable securities.(2) Available-for-sale financial assets mainly comprise shares in companies which are neither controlled nor under significant influence (including Mexican shares: seenote below). They also include participation in subsidiaries for which the impact is negligible in the Group financial statements.(3) Financial receivables mainly comprise security deposits.(4) Receivables earning interest or discounted.(5) Prepaid expenses mainly comprise land use rights in Poland, Russia and China.21.2 Mexican sharesThe Auchan Group sold its shopping centres in Mexico to Comerci in 2003, subject to the suspensive condition of full payment of theagreed price. This payment is spread over the period 2003 to 2008. Definitive transfer of the shares only occurred on the date of thefinal payment on 28 February 2008. However, the Group has not had control over these real-estate companies since 28 February 2003.Consequently, the total number of shares, considered as available-for-sale assets, is recognised as an asset at its fair value for an amountof M€ 90 (of which M€ (3) for fair value adjustment). The amount of payments so far received is recognised under other current liabilitiesfor M€ 79, and the equivalent value of payments receivable is M€ 14. The balance represents $/€ exchange differences.21.3 Classification of current financial assets by category (net carrying amount)(in M€) 2007 2006Financial assets held for trading (1) 1,433 1,275Held-to-maturity investments None NoneAvailable-for-sale financial assets None NoneLoans and receivables issued by the company (2) 2,292 2,054Financial receivables 33 17Other receivables 2,259 2,037of which accumulated impairment losses 61 60(1) Financial assets held for trading correspond to marketable securities. They are recognised under “Cash and cash equivalents” (see note 27).(2) Loans and receivables issued by the company are recognised on the balance sheet under “Other current receivables”.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS39t t t tnote 22 DEFERRED TAX ASSETS AND LIABILITIES22.1 Breakdown of deferred tax assets and liabilitiesAssets Liabilities Net(in M€)2007 2006 2007 2006 2007 2006On temporary differences 87 85 598 561 (511) (476)Non-deductible provisions 30 26 (84) (88) 114 114Intan. assets, PP&E, amort. and deprec. 39 50 443 474 (404) (424)Investment property and depreciation 11 23 120 108 (109) (85)Finance leases 0 (19) 44 38 (44) (57)Inventories 5 6 (25) (71) 30 77Employee benefits 0 0 1 (8) (1) 8Tax-regulated provisions 0 (2) 83 66 (83) (68)Other 2 1 16 42 (14) (41)On losses carried forward 1 0 0 (2) 1 2Deferred tax assets/liabilities 88 85 598 559 (510) (474)22.2 Deferred taxes not recognisedDeferred tax assets for M€ 76 relating to tax losses carried forward, tax credits and other temporary differences, are not recognised astheir recovery is not considered probable.Non-recognised deferred tax assets break down as follows:(in M€) 2007 2006 (1)Between 2008 and 2012 57 40Between 2013 and 2017 10 7After 2017 9 18Total non-recognised deferred tax assets 76 65(1) Restatement of Moroccan operations sold.Free translation of a French language original.

40 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS22.3 Changes in deferred tax assets and liabilities (+: asset or expense, ( ): liability or income)Changesin consol.scopeForeigncurr. trans.adjustments 31.12.2007(in M€) 01.01.2007Recognisedin incomeRecognisedin equityReclassificationOn temporary differences (476) (13) (6) 1 (16) (1) (511)Non-deductible provisions 114 (9) 9 114Intangible assets, PP&E, amortisationand depreciation (424) 26 (6) 1 (1) (404)Investment property and depreciation (85) 14 (23) (15) (109)Finance leases (57) 16 (3) (44)Inventories 77 (48) 1 30Employee benefits 8 (3) (6) (1)Tax-regulated provisions (68) (17) 2 (83)Other (41) 8 21 (2) (14)On tax losses carried forwardgenerated during the year 2 (1) 1On tax losses car. forward usedduring the year 0 0Deferred tax assets/liabilities (474) (13) (6) 0 (16) (1) (510)The drop in tax rates in Italy and mainland China has a positive impact on income for M€ 6.Changes in consolidation scope include disposal of the Moroccan operations for M€ (2) and inclusion of companies fully consolidatedor consolidated by the proportionate method for M€ (14) (Italy pour M€ (12), Russia for M€ (3) and other countries for M€ 1).t t t t note 23 INVENTORIESt t t tnote 24 TRADE RECEIVABLESInventories essentially comprise merchandise.(in M€) 2007 2006Gross carrying amount 3,043 2,695Accumulated impairment losses (79) (78)Net carrying amount 2,964 2,617The Moroccan operations, sold in 2007, were included on this linefor M€ 22 at end 2006.Change in impairment losses(in M€) 2007 2006At 1 January (78) (86)Charge (62) (62)Reversal 59 68Change in consolidation scopeand foreign currency translationadjustments 2 2At 31 December (79) (78)This line essentially records receivables relating to franchisearrangements, and rent outstanding for the Property business.(in M€) 2007 2006Gross carrying amount 433 426Accumulated impairment losses (50) (65)Net carrying amount 383 361The Moroccan operations, sold in 2007, were included on this linefor M€ 13 at end 2006.t t t t note 25 CURRENT TAX ASSETS(in M€) 2007 2006Gross carrying amount 67 32Accumulated impairment losses (5) (5)Net carrying amount 62 27No inventory amounts have been pledged to secure liabilities

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS41t t t t note 26 OTHER CURRENT RECEIVABLES(in M€) 2007 2006Other receivables 2,226 1,986Prepaid expenses 127 128Gross carrying amount 2,353 2,114Accumulated impairment losses (61) (60)Net carrying amount 2,292 2,054The Moroccan operations, sold in 2007, were included on this linefor M€ 19 at end 2006.Other receivables mainly comprise tax and social securityreceivables and deferred income from suppliers.Eurauchan, a Groupe Auchan SA subsidiary, has a trade receivablessecuritisation programme. At 31 December 2007, the amount ofreceivables sold but not derecognised under this programme wasM€ 10 (M€ 235 at 31 December 2006), while financing grantedvia this securitisation was M€ 5 (M€ 210 at 31 December 2006).Eurauchan remains subject to the risk of non-payment of thesereceivables.t t t tnote 27 CASH AND CASH EQUIVALENTSNet cash presented in the cash flow statement corresponds tothe following items:(in M€ ) 2007 2006Marketable securities with amaturity of less than 3 months 1,433 1,275Cash 962 1,033Cash and cash equivalents 2,395 2,308Bank overdrafts (see note 32) (541) (749)Net cash 1,854 1,559t t t tnote 28 EQUITY28.1 ShareholdersAt 31 December 2007, 87% of Groupe Auchan SA shares were heldby member companies of the Association Familiale Mulliez, theremaining 13% being held by employees of the company via FCPValauchan and Valauchan Sopaneer International.28.2 Number of shares representing share capital2007 2006At 1 January 31,419,437 31,785,431Issue of new shares 24,767 0Merger of Groupe Auchan SAshareholder companies 1,054 0Capital reduction by cancellationof treasury shares 0 (365,994)At 31 December 31,445,258 31,419,437Share capital as of 31 December 2007 amounts to € 628,905,160(€ 628,388,740 at 31 December 2006), comprising fully paid upordinary shares with a par value of € 20 each.28.3 Treasury sharesIn 2007, 454 treasury shares were purchased for an amount ofM€ 0.1 and 36,636 shares were sold for M€ 10 in connection withsettlement of share purchase plans. Groupe Auchan SA held 33,611treasury shares at 31 December 2007 for an amount of M€ 10. Theseshares are allocated to cover share purchase options granted toGroup executives.28.4 Legal reserveThe legal reserve of Groupe Auchan SA amounts to M€ 63 at31 December 2007.28.5 Reserves detailed by nature28.5.1 Currency translation reserveThis amounts to M€ 54 at 31 December 2007, compared withM€ 67 at 31 December 2006.Breakdown (attributable to equity holders of the parent) is asfollows:(in M€) 2007 2006Poland 89 64Hungary 4 6Mainland China (11) (2)Taiwan (14) (1)Russia (7) 1Ukraine (7) 0Morocco(operation sold in 2007) 0 (1)Total 54 67Free translation of a French language original.

42 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS28.5.2 Revaluation reserve of available-for-sale financialassetsChange (in M€) 2007 2006At 1 January (2) 8Change (1) (10)At 31 December (3) (2)28.5.3 Cash flow hedge reserveChange (in M€) 2007 2006At 1 January 3 7Change (7) (4)At 31 December (4) 328.6 Minority interestsMinority interests comprise minority interests in ISMS and itssubsidiaries (Supermarkets business for M€ 57), in subsidiariesin mainland China and Taiwan for M€ 47, and in Soparimmofonds,a company holding a number of subsidiaries in the Propertydivision, for M€ 14.28.7 Proposed dividendOn 27 March 2008, a dividend of M€ 180, corresponding to € 5.72 pershare, was proposed by the Executive Board to the Ordinary GeneralMeeting convened to approve the financial statements for the yearended on 31 December 2007. A dividend of € 6.36 per share, for atotal amount of M€ 199, was paid in respect of 2006.Appropriation of 2007 net income was not recognised in thefinancial statements at 31 December 2007.28.5.4 Net asset hedge reserveChange (in M€) 2007 2006At 1 January 0 0Change 6 0At 31 December 6 0t t t tnote 29 EMPLOYEE BENEFITSAccording to the rules and practices in each country, Group employees receive long-term or post-employment benefits.These additional benefits take the form of defined contribution or defined benefit plans.29.1 Defined contribution plansThese plans are characterised by the payment of periodic contributions to external organisations providing an administrative and financialmanagement function. Contributions to these plans are expensed as incurred. They amounted to M€ 302 in 2007 (M€ 283 in 2006).29.2 Defined benefit plansDefined benefit plans primarily consist of retirement termination payments in France, and statutory dismissal compensation in Italy(TFR).Provisions (non-current and current) for employee benefits amount to M€ 174 at 31 December 2007 (compared with M€ 224 at31 December 2006), of which M€ 4 for long-term benefits and M€ 170 for post-employment benefits.The main actuarial assumptions used to estimate the above obligations are as follows:2007 2006Actuarial assumptions France Italy France ItalyDiscount rate at 1 January 4.35% 4.00% 4.00% 4.00%Discount rate at 31 December 5.35% 4.50% 4.35% 4.00%Expected rate of return on plan assets at 1 January 4.35% NA 4.00% NAExpected rate of increase in salaries 2.50% 2.50% 2.50% 2.00%NA: Not applicable as no assets

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS43The increase in the present value of the obligation in respect ofdefined benefit plans breaks down as follows:Change (in M€) 2007 2006Present value of obligationat 1 January 319 336Interest cost 12 11Current service cost 9 41Benefits paid (39) (52)Actuarial gains and losses (18) (19)Other 1 2Present value of obligationat 31 December 284 319The reduction in the current service cost is mainly due to a changeof plan for the TFRs in Italy.The change in the fair value of defined benefit plans breaks downas follows:(in M€) 2007 2006Fair value of assets at1 January 97 91Expected return on plan assets 4 4Contributions paid 19 1Benefits paid (4) (3)Actuarial gains and losses (2) 1Other 0 3Fair value of assetsat 31 December 114 97Estimated contributions payable for 2008 amount to M€ 29.Breakdown of defined benefit plan assets in France by majorcategory is as follows:2007 2006Shares 32% 20%Bonds 57% 68%Real-estate 11% 12%Balance sheet data can be reconciled with the actuarialobligation in respect of defined benefit plans as follows:(in M€) 2007 2006Present value of the non-fundedobligations 170 194Present value of the fundedobligations 114 125Fair value of assets (114) (97)Deficit (excess) 170 222Net liability recognised in thebalance sheet 170 222The net provision recognised in the balance sheet has changedas follows:(in M€) 2007 2006Provision recognised in thebalance sheet at 1 January 222 245Actuarial gains and lossesrecognised in equity (16) (20)of which experience adjustmentsarising on plan liabilities (18) (8)of which experience adjustmentsarising on plan assets 0 0Net expense of the period 17 48Contributions paid (19) (1)Benefits paid for the period (34) (50)Provisions recognised in thebalance sheet at 31 December 170 222The aggregate amount of actuarial gains and losses recognisedin equity amounted to M€ 12 before tax and M€ 8 net of taxes at31 December 2007 M€ (5) and M€ (2) respectively at 31 December2006.Free translation of a French language original.

44 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSCharges recognised with respect to defined benefit plans can be broken down as follows:(in M€) 2007 2006Current service cost 9 41Interest cost 12 11Expected return on plan assets (4) (4)Expenses recognised 17 48of which recognised in payroll expenses 9 41recognised in other financial income and expenses 8 7The differences resulting from the new method of calculating the TFRs following changes to Italian law, are recognised in income of theperiod for an amount of M€ 3 before taxes and M€ 2 net of taxes.t t t tnote 30 SHARE-BASED PAYMENTSIn return for services rendered, Groupe Auchan SA has granted share purchase plans and bonus share plans to certain employees, asalso bonus share plans.30.1 Share purchase plans30.1.1 Change in number of options and weighted average exercise price for 2006 and 2007Weighted averageexercise price in €2007 2006Numberof optionsWeighted averageexercise price in €Numberof optionsOptions outstanding at the beginning of the year 282.58 148,919 278.35 111,722Options granted during the year 321.56 66,310 294.05 40,155Options exercised during the year 282.11 36,005 0Options cancelled or lost 281.96 3,800 278.63 2,958Options expired 0 0Options outstanding at the end of the year 297.42 175,424 282.58 148,919Price range 272.98 / 321.56 272.98 / 294.05Weighted average contractual duration 27 months 24 monthsOptions exercisable at the end of the year 0 0

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS4530.1.2 Weighted average values of the different plans granted in 2004, 2005, 2006 and 2007Plan granted during year2007 2006 2005 2004Fair value of options 70.19 € 70.23 € 61.77 € 61.05 €Share price 321.56 € 294.05 € 280.03 € 272.98 €Exercise price 321.56 € 294.05 € 280.03 € 272.98 €Expected volatility 20.24% 25.62% 26.49% 27.12%Vesting period 4 years 4 years 4 years 4 yearsExpected dividends 0.92% 1.03% 1.24% 1.88%Risk-free interest rate 4.54% 3.81% 2.63% 3.56%Type of model binomial binomial binomial binomialVolatility has been measured based on an analysis of the implicit volatility of companies related to the business activity of Groupe Auchan SAover a period of 5 years preceding grant date.30.1.3 Characteristics of option plans issued• Options are unavailable for a period of 4 years from grant date;• options are exercisable for a period from 15 May to 20 June of the plan maturity year;• conditions attaching to exercise of the options are an effective and continuous presence in the issuer company or one of its subsidiaries.Any suspension of contract occurring for any reason other than illness or maternity will cause the option rights to become null and void(as also any other condition specific to the issuer company). Furthermore, for expatriate beneficiaries, their expatriation missions musthave been completed. Any premature return to their country of origin will cause the options rights to become null and void.30.1.4 Impact on the income statement (payroll expenses)The annual impact per plan is less than M€ 1. The total (aggregate) impact of plans recognised is M€ 2 for 2007 as in 2006.30.2 Bonus share allocation plans30.2.1 Change in the number of bonus shares and averageweighted exercise price for 2006 and 20072007Numberof shares2006Numberof sharesBonus shares at the beginning of the year 0 0Bonus shares granted during the year 30,167 0Bonus shares cancelled during the year 0 0Bonus shares at the end of the year 30,167 030.2.2 Average weighted values of the different plansPlans grantedduring the yearFair value of shares 315.70 €Share price 321.56 €Expected volatility 20.66%Vesting period2 yearsExpected dividends 0.92%Risk-free interest rate 4.16%Type of modelbinomialVolatility has been measured based on an analysis of the implicit volatilityof company rates related to the business activity of Groupe Auchan SAover a period of 2 years preceding grant date.No performance conditions are attached to this bonus share grant plan.30.2.3 Characteristics of the bonus share grant plan• Plan inception date: 10 October 2007• Underlying share value: € 321.56• Grant date 10 October 200930.2.4 Impact on the income statement (payroll expenses)Impact is less than M€ 1.Free translation of a French language original.

46 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t t note 31 PROVISIONS31.1 Non-current(in M€)TaxdisputesMeatpurchasetax (1)OtherlitigationEmployeebenefits Other TotalAt 31 December 2006 61 47 23 195 18 344Charges 20 0 0 23 3 46Reversals used (2) (18) 0 0 (57) (2) (77)Reversal of provisions unused or reconstituted (3) (5) 0 (7) 0 (1) (13)Actuarial gains and losses recognised in equity 0 0 0 (16) 0 (16)Reclassification and other changes (4) (3) 0 (15) 0 (10) (28)At 31 December 2007 55 47 1 145 8 256(1) Given progress with the dispute with the French tax authorities, tax rebates received or receivable for 2001 to 2003 have not been recognised in income for reasons ofprudence. Tax rebates for 2001 have been accrued.(2) Mainly concerns:Tax disputes: M€ 16 for tax adjustments have been recognised under “External expenses” following settlement of tax litigation in France (M€ 7), Spain (M€ 3) and Russia(M€ 6).Employee benefits: of which M€ 50 recognised under “Payroll expenses” (current service cost) and M€ 7 recognised in “Other financial income and expense” (financialcost).(3) Mainly concerns:Tax disputes: settlement of disputes in France.Other litigation: settlement of disputes relating to employees in France.(4) Reclassification of part at less than one year in current provisions.31.2 Current(in M€)TaxdisputesOtherlitigation (1)ProvisionforwarrantiesEmployeebenefits Other TotalAt 31 December 2006 9 86 32 29 19 175Charges 10 18 20 29 12 89Reversals used (1) 0 (17) 0 (29) (11) (57)Reversal of provisions unused or reconstituted (2) 0 (30) (32) 0 0 (62)Reclassification and other changes (3) (6) 22 0 0 9 25At 31 December 2007 13 79 20 29 29 170(1) Reversals of provisions used: reversals of provisions for amounts less than M€ 7 in all cases.(2) Reversals of provisions unused or reconstituted:Other litigation: reversals of unused provisions correspond in part to risks and litigation settled to the amount of the excess of provisions over the expense recognised;they concern litigation with suppliers and other third parties for M€ 25 (of which M€ 18 in France after a limitation period), and M€ 5 for litigation with employees (of whichM€ 2 in Italy).The provision for guarantees is reconstituted in full at each closing date, the expense being recognised principally in “External expenses”. The provision for warranties isnow established on the basis of the actual fault rate.(3) Of which M€ 28 for reclassification of non-current provisions at less than one year.Of which M€ (2) for changes in consolidation scope (sale of Moroccan operations).

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS47t t t tnote 32 BORROWINGS AND OTHER FINANCIAL LIABILITIES32.1 Non-current borrowings and other financial liabilities(in M€) 2007 2006Bonds 1,599 1,686Bank loans and borrowings 603 954Obligations under finance leases 234 245Other borrowings and financial liabilities 167 334Total 2,603 3,21932.2 Current borrowings and other financial liabilities(in M€) 2007 2006Bonds 794 80Bank loans and borrowings 425 104Obligations under finance leases 17 30Other borrowings and financial liabilities 104 82Bank overdrafts 541 749Total 1,881 1,045Accrued interests are recognised under “Other borrowings and financial liabilities”, apart from those relating to bonds.32.3 Main characteristics of borrowings and other financial liabilities32.3.1 BondsThis concerns bonds issued in Luxembourg in connection with the EMTN (Euro Medium Term Notes) programme.(in M€) 31.12.2007 31.12.2006Borrower companyNominalinterest rateIssuedateMaturityNominalvalueBookvalueNominalvalueBookvalueGroupe Auchan SA EURIBOR 3M +0.14% 20.04.2004 20.04.2007 0 0 50 50Groupe Auchan SA 3.5000% 22.07.2003 22.07.2008 750 757 750 752Groupe Auchan SA 4.1250% 04.05.2004 04.05.2011 300 303 300 305Groupe Auchan SA 3.0000% 28.06.2005 28.06.2010 600 585 600 583Groupe Auchan SA EURIBOR 3M +0.18% 09.03.2005 09.03.2012 75 75 75 75Groupe Auchan SA 5.1250% 18.07.2007 18.07.2014 650 674 0 0Free translation of a French language original.

48 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS32.3.2 Bank loans and borrowing(in M€) 31.12.2007 31.12.2006BorrowercompanyNominalinterest rateIssuedateMaturityNominalvalueBookvalueNominalvalueBookvalueErregest S.p.A. EURIBOR 3M +0.39% 03.10.2005 30.03.2007 0 0 55 55Groupe Auchan SA 3.4640% 15.05.2003 15.05.2008 136 136 236 235Erregest S.p.A. EURIBOR 3M +0.475% 30.06.2005 25.06.2010 80 80 80 80Auchan S.p.A. EURIBOR 3M +0.15% 15.03.2003 15.03.2013 111 111 130 130Auchan CoordinationServices EURIBOR 3M +0.125% 11.04.2007 11.04.2008 112 112 0 0GCIEURIBOR 3M +(1.05%and 1.15%) 22.12.2004 09.12.2011 316 316 252 252The Group has other borrowings and credit lines for unit amounts of less than M€ 50.The amount of long- and medium-term lines of credit obtained and confirmed by the banks but unused at 31 December 2007 is givenin note 43.32.3.3 Put options granted to minority shareholdersThe Group has agreed to repurchase the minority interests of shareholders in certain fully consolidated subsidiaries. These commitmentsare measured and classified as debts, due to the existence of a put option at fair value. The value of these commitments is determinedaccording to the appraisal value of the underlying asset, and amounted to M€ 52 at 31 December 2007.Change (in M€) 31.12.2006 Increase Decrease 31.12.2007Valsuper France 17 0 (3) 14Valauchan Italie 21 11 0 32Other 8 0 (2) 6Total 46 11 (5) 52t t t t note 33 DEBTS FINANCING THE CREDIT ACTIVITY(in M€) 2007 2006Bonds 750 571Bank loans and borrowing 941 649Other financial activities 623 565Other (including bank overdrafts) 116 367Total 2,430 2,152of which non-current 997 952current 1,433 1,200Accrued interests, apart from those relating to bonds, are included under “Other financial liabilities”.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS4933.1 Characteristics of main bondsThis concerns bonds issued in Luxembourg in connection with the EMTN (Euro Medium Term Notes) programme.(in M€) 31.12.2007 31.12.2006BorrowercompanyNominalinterest rateIssuedateMaturityNominalvalueBookvalueNominalvalueBookvalueBanque Accord SA EURIBOR 3M +0.10% 02.05.2004 02.05.2007 0 0 20 20Banque Accord SA EURIBOR 3M +0.22% 30.09.2004 30.09.2009 150 150 150 150Banque Accord SA EURIBOR 3M +0.18% 30.09.2005 30.09.2010 200 200 200 200Banque Accord SA EURIBOR 3M +0.175% 16.06.2006 16.06.2011 200 200 200 200Banque Accord SA EURIBOR 3M +0.17% 06.06.2007 06.06.2012 200 200 0 033.2 Characteristics of main bank loans and borrowings(in M€) 31.12.2007 31.12.2006BorrowercompanyNominalinterest rateIssuedateMaturityNominalvalueBookvalueNominalvalueBookvalueBanque Accord SA EURIBOR 3M +0.10% 27.12.2005 27.12.2010 100 100 100 100Banque Accord SA 3.4640% 15.05.2003 15.05.2008 177 177 177 177Banque Accord SA EONIA +0.125% 31.12.2007 02.01.2008 102 102 0 0Groupe Auchan SAfor loan to BanqueAccord in 2007 3.4640% 15.05.2003 15.05.2008 100 100 0 0Auchan CoordinationServices for loan toBanque Accord EURIBOR 3M +0.125% 11.04.2007 11.04.2008 68 68 0 0The Group has other borrowings and lines of credit for unit amounts of less than M€ 50.The amount of long- and medium-term lines of credit obtained and confirmed by the banks but unused at 31 December 2007 is givenin note 43.Free translation of a French language original.

50 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t tnote 34 FINANCIAL INSTRUMENTS34.1 Income and expenses on financial instruments34.1.1 Recognised in the income statement(in M€)2007Excludingcredit activityCreditactivityInterest on bank deposits 18 1Interest on loans and receivables issued by the company not written down 6 230Interest on loans and receivables issued by the company written down 0 0Dividends received on assets available for sale N/S 0Net foreign exchange gain 5 0Net profits on assets available for sale derecognised from equity 0 0Change in fair value of derivatives (except fair value hedge) 3 2Net profit on financial assets held for trading 28 1Net profit on derivatives in connection with fair value hedges 0 0Net profit on financial liabilities in connection with fair value hedges 0 0Appreciation of assets available for sale 0 0Net change in fair value of cash flow hedging instruments derecognised from equity 13 3Revenue from financial instruments 73 237Commitment fees 2 0Interest on financial liabilities measured at amortised cost 118 66Net losses on assets available for sale derecognised from equity 1 0Change in fair value of derivatives (except fair value hedges) 0 1Net loss on financial assets held for trading N/S 0Net losses on derivatives in connection with fair value hedges 6 0Net losses on financial liabilities in connection with fair value hedges 100 7Impairment loss on assets available for sale 1 0Impairment loss on loans and receivables issued by the company (12) 23Ineffective part of the change in fair value of cash flow hedging instruments 2 0Expenses on financial instruments 218 97Net income on financial instruments (145) 140The above income statement includes the following items resulting from assets or liabilities not recognised at fair value via the incomestatement and consequently at amortised cost.Total interest income 24 231Total interest expense 118 69

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS5134.1.2 Recognised directly in equity(in M€)2007Excludingcredit activityCreditactivityNet change in fair value of financial assets available for sale (1) 0Net change in fair value of financial assets transferred to income (disposal) 0 0Effective part of changes in fair value of cash flow hedging instruments 5 1Fair value of cash flow hedging instruments transferred to income (13) (3)Effective part of changes in fair value of instruments of a net investment in a foreign operation 9 0Foreign exchange difference resulting from foreign operations 6 0(in M€)2007Excludingcredit activityCreditactivityFair value reserve (1) 0Hedge reserve 1 (2)Foreign exchange conversion reserve 6 034.2 RisksIn the normal course of its business, the Group is exposed to interest rate, currency, credit and liquidity risks. Derivative financialinstruments are used to reduce these risks.The Group has set up an organisation for central management of market risks (liquidity, interest rate and currency risks).At 31 December 2007, these derivatives are recognised in the balance sheet at their fair value under current and non-current assets andliabilities.34.3 Credit riskThe Auchan Group works exclusively with leading banks for itsfinancial activities (see counterparty risk for confirmed but unusedlines of credit) and interest rate and currency derivative transactions.The counterparty risk is consequently not material.With regard to investments, Group policy is to invest its cashsurplus in counterparties with monetary management A1 or P1rating.34.3.1 Excluding the credit activityTrade receivables and other receivables correspond for the mostpart to receivables on franchises, participation in advertising costsand supplier commercial cooperation fees, and prepaid expenses.These transactions do not involve significant risks.Impairment loss excluding the credit activityFinancial(in M€ )Assetsavailablefor saleassetsand tradereceivablesBalance at 1 January 2007 4 137Net impairment loss 1 (12)Change in consolidation scope 0 (2)Foreign exchange difference 0 0Balanceat 31 December 2007 5 12334.3.2 Management of customer risks by Banque Accord (credit activity)Banque Accord credit risk management and monitoring are the responsibility of the Risk departments of the subsidiaries or associate, theGroup Risk Division and the internal audit department via the risk committees. This responsibility is carried by the Local Risk Division for Franceand Portugal.In the case of other countries, it is the associate which is responsible for managing the credit risk, as this risk is determined by the associate’scustomer processes and system. In the case of joint ventures, where a local risk resource exists (as in the case of Spain and Russia), the risk ismonitored by this structure and the Group Risk Division. The local resource can participate, as appropriate, in the development of joint projectswith the associate. The risk is monitored by the Group Risk Division in all cases.Free translation of a French language original.

52 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSThese committees have the task of managing credit risks andacting as prime contractor for projects impacting these risks.The committees validate management of the risk, ensure theeffectiveness of the existing systems, and take decisions regardingmodification of the risk chain and risk rating system, validate thebudget forecast for procurement and the cost of the risk for a newproduct, and are responsible for maintenance and documentationfor the following: opening of all credit or payment revenues,management of ceilings and collection.Regular committee meetings held at national and Group levelvalidate the strategy, methodologies introduced and above allperformance achieved in relation to risks.The credit decision systems are based on a statistical approach,backed by examination by folder and adapted to the differenttypes of product and customer.These systems incorporate:• scores,• clearly established refusal rules,• rules concerning justifications to be supplied.Compliance with decisions based on the scores and rules, inregard to which few waivers are accorded makes it possible toensure precise risk control. The reasons for waivers and thepersons qualified to accord waivers are defined by proceduresand are normally checked retrospectively. These waivers areprincipally aimed at ensuring personalised management of thegranting of credits for larger amounts or intended for targetedcustomer bases.In common with the world credit market, the Banque Accord Groupnoted signs of tension relating to the credit risk in these marketsin 2007.The degradation of the economic environment triggeredby the subprime financial crisis has had consequences forseveral subsidiaries, and to varying degrees by the increase inoutstanding cash flows or collection difficulties encountered. Thisis principally the case with the Spanish subsidiary which, in acountry where there is a substantial rise in household debt levels,is currently experiencing a sharp increase in the risk. Althoughgiven due warning, the Italian subsidiary has also experienceda very marked increase in its credit risk. At consolidated level,the risk is nevertheless extremely well contained due to the goodperformance and weight of the most mature entities - France andPortugal - and the controlled development of the subsidiaries inthe East. In France, the tendency to increase Neiertz outstandingscontinued during 2007.The world economic context has only strengthened the convictionof the Group of the need to provide its subsidiaries, progressivelybut also rapidly, with a Bale credit risk management system basedon the French model. The Bale II project is in course of developmentby the Portuguese and Spanish subsidiaries. In 2008, BanqueAccord France will intensify the use of its Bale system for daily riskmanagement, aimed at optimised distribution of its credits. In thecontext of the Bale II extension, Banque Accord will also continuewith its “Cap clients” customer knowledge consolidation projectinitiated in 2007, during 2008.Aged trial balance of outstandingsAs soon as an outstanding exists, loans and receivables to thecustomer base are written down. Banque Accord does not haveany not written-down positions involving outstandings.Credit activity impairment losses(in M€)Customer loansBalance at 1 January 2007 203Net impairment loss 23Change in consolidation scope 0Foreign exchange difference 0Balance at 31 December 2007 22634.4 Liquidity riskGroup policy is to have adequate medium- and long-term financingto meet its requirements at the bottom of the seasonal cycle andcover a safety margin at all times.34.4.1 Details concerning financial debt maturity risksMedium- and long-term bank borrowing contracts contain thecustomary commitment and default clauses for this type ofcontract, namely maintenance of borrowing at its rank (pari passu),limitation of pledges accorded to other lenders (negative pledge),limitation of substantial sale of assets, cross-default and materialadverse change.The Euro Medium Term Note (EMTN) programme of Groupe Auchan SAand Banque Accord, under which bond issues are placed, containsa commitment to limit pledges accorded to other bond holders(negative pledge) and a cross-default clause.No financial debt involves a commitment or default clause linkedto a drop in the rating of the Group.Certain medium- and long-term bank borrowing is subject to adefault clause in the event of non-compliance with the followingratio at balance sheet date:Net consolidated financial debt/consolidated EBITDA < 3.5This ratio was met at 31 December 2006 and 2007. Calculationwas as follows:(in M€) 2007 2006 (3)Net financial debt (1) 2,0661,964= 1EBITDA (2) 2,070 2,123= 0,92(1) See note 35(2) Current operating income excluding other operating income and expenses andexcluding amortisation and provisions (excluding charges to and reversals of provisionsexcept those concerning inventory impairment losses).(3) After restatement of disposal of the Moroccan operations under “Operationssold”.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS53It should be noted that Gallerie Commerciali Italia (held by Groupe Auchan SA (51%) and Simon Property Group (49%)), given the propertymanagement nature of its activity has commitments for specific financial ratios in regard to its borrowing, including the following ratios inparticular: loan to value ratio, interest hedging ratio, debt service ratio and reimbursement capacity ratio (net financial liabilities/EBITDA).These ratios were met at 31 December 2007.34.4.2 Exposure to the liquidity riskResidual contractual maturities for financial liabilities break down as follows (including payment of interest).Excluding the credit activity (transactions in M€ at 31 December 2007).Contractual cash flow(-) = outflowsNon-derivative financial liabilitiesBook value Total < 1 yr 1 to 5 yrs + 5 yrsBonds 2,393 (2,753) (843) (1,193) (717)Bank borrowing 1,028 (1,058) (494) (547) (17)Finance lease liabilities 251 (274) (52) (89) (133)Other borrowing 271 (271) (141) (60) (70)Trade payables 7,491 (7,494) (7,480) (14)Other current liabilities 2,667 (2,680) (2,516) (116) (48)Other non-current liabilities 10 (10) (7) (3)Current tax liabilities 65 (65) (65)Current credit facilities 541 (541) (522) (19)Contractual cash flow(-) = outflowsDerivative financial liabilitiesBook value Total < 1 yr 1 to 5 yrs + 5 yrsInterest rate swaps used as hedges (1) 40 (21) (17) (4) 0Forward exchange contracts used as hedgesCash outflow 14 (752) (731) (21) 0Cash inflow 0 737 718 19 0Forward exchange contractsCash outflow 0 (14) (14) 0 0Cash inflow 0 14 14 0 0(1) Carrying amount: excluding accrued interest not due. M€ 19 of accrued interest receivable is recognised under current derivative financial instruments for thesederivatives.Free translation of a French language original.

54 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSCredit activity (transactions in M€ at 31 December 2007)Contractual cash flow (-) = outflowsNon-derivative financial liabilitiesBook value Total < 1 yr 1 to 5 yrs + 5 yrsBonds 750 (865) (40) (825)Bank borrowing 941 (960) (806) (134) (20)Other financial liabilities 623 (672) (626) (46)Other (of which bank overdrafts) 116 (116) (116)Trade payables 34 (34) (34)Other current liabilities 124 (124) (124)Other non-current liabilities 0 0Tax liabilities payable 2 (2) (2)Contractual cash flow (-) = outflowsDerivative financial liabilitiesBook value Total < 1 yr 1 to 5 yrs + 5 yrsInterest rate swaps used as hedges 1 (1) (1)34.5 Interest rate riskInterest rate derivative instruments are used solely to reduce Group exposure to fluctuations in interest rates on its debt.Transactions on the derivative markets are undertaken solely for hedging purposes. The recognition date for derivative instruments isthe transaction date. The recognition date for other financial assets and liabilities is the payment date.34.5.1 Excluding the credit activityInterest rate hedgingFair value hedgeInterest rate transactions designated as fair value hedges concern swap operations where Auchan is a fixed-rate lender and floating-rateborrower (Euribor 3 or 6 months). These hedges were set up at the inception of the fixed-rate bonds or bank borrowings, to convertthem into floating rate debt.The currency for these transactions is the euro.The net fair value of these instruments recognised in the balance sheet is M€ (3) at 31 December 2007.Cash flow hedgeInterest rate transactions designated as cash flow hedges concern swap operations, where Auchan is a fixed-rate borrower and floatingratelender. The purpose of these hedges is to set the interest rate level of part of the forecast floating-rate debt, and thus secure futurefinancial income (N+1 to N+4 maximum) by limiting possible volatility. The maturity for these hedges does not exceed 4 years.Currencies for these transactions at 31 December 2007 are the euro, zloty and forint.The fair value of these instruments recognised in the balance sheet is M€ 5 at 31 December 2007.The amount recognised in reserves at 31 December 2007 for interest rate transactions designated as cash flow hedges is M€ 5.The following table indicates the periods during which the Group anticipates that cash flows associated with derivative financialinstruments qualified as cash flow hedges will impact the income statement.Contractual cash flow (+) = outflowsAt 31.12.2007 (in M€)Book value Total < 1 yr 1 to 5 yrs + 5 yrsInterest rate swapsAssets 5 5 2 3 0Liabilities 0 0 0 0 0

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS55Exposure to interest rate risk after management and excluding the credit activity(in M€) 2007 2006Fixed rate financial assets 1,075 1,134Fixed rate financial liabilities 2,987 3,314Floating rate financial assets 1,458 1,288Floating rate financial liabilities 1,497 950Sensitivity analysisImpact on the income statementAn increase of 100 basis points in interest rates for all currencies would generate a M€ 3 increase in the cost of financial debt on thebasis of the financial position at 31 December 2007. It represented a M€ 3 increase at 31 December 2006.A decrease of 100 basis points in interest rates for all currencies would generate a M€ 8 decrease in the cost of financial debt on thebasis of the financial position at 31 December 2007. It represented a M€ 1 decrease at 31 December 2006.Impact on equityAn increase of 100 basis points in interest rates for all currencies would generate a M€ 5 increase in equity on the basis of the financialposition at 31 December 2007.A decrease of 100 basis points in interest rates for all currencies would generate a M€ 4 decrease in equity on the basis of the financialposition at 31 December 2007.34.5.2 Credit activityInterest rate hedgingFair value hedgeInterest rate transactions designated as fair value hedges concern swap operations where Banque Accord is a fixed-rate lender andfloating-rate borrower (Euribor 3 or 6 months). These hedges were set up at the inception of fixed-rate bonds or bank borrowings, toconvert them into floating-rate debt.The currency for these transactions is the euro.The net fair value of these instruments recognised in the balance sheet is M€ 1 at 31 December 2007.Cash flow hedgeInterest rate transactions designated as cash flow hedges concern swap operations, where Banque Accord is a fixed-rate borrower andfloating-rate lender. The purpose of these hedges is to set the interest rate level of part of the forecast floating-rate debt, and thus securefuture financial income (N+1 to N+5 maximum) by limiting possible volatility. The maturity for these hedges does not exceed 5 years.The currency for these transactions is the euro.The net fair value of these instruments recognised in the balance sheet is M€ 3 at 31 December 2007.The amount recognised in reserves at 31 December 2007 for interest rate transactions designated as cash flow hedges is M€ 2.The following table indicates the periods during which the Group anticipates that cash flows associated with derivative instrumentsqualified as cash flow hedges will impact the income statement.Contractual cash flow (+) = outflowsAt 31.12.2007 (in M€)Book value Total < 1 yr 1 to 5 yrs + 5 yrsInterest rate swaps + CAPsAssets 3 3 2 1 0Liabilities 0 0 0 0 0Free translation of a French language original.

56 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSExposure to interest rate risk (after management)(in M€) 2007Fixed rate financial assets 693Fixed rate financial liabilities 410Floating rate financial assets 1,642Floating rate financial liabilities 1,944Sensitivity analysisImpact on the income statementAn increase of 100 basis points in interest rates for all currencieswould generate a M€ 1 increase in the cost of financial debt on thebasis of the financial position at 31 December 2007.A decrease of 100 basis points in interest rates for all currencieswould generate a M€ 5 decrease in the cost of financial debt onthe basis of the financial position at 31 December 2007.Impact on equityAn increase of 100 basis points in interest rates for all currencieswould generate a M€ 11 increase in equity on the basis of thefinancial position at 31 December 2007.A decrease of 100 basis points in interest rates for all currencieswould generate a M€ 7 decrease in equity on the basis of thefinancial position at 31 December 2007.34.6 Foreign exchangeThe Group is exposed to the foreign exchange risk on its purchases,sales and borrowing denominated in a currency other than theeuro, and the value of the net assets of its subsidiaries in foreigncurrencies. The currencies for these transactions at 31 December2007 are principally the US dollar, zloty, forint, rouble, Taiwan dollarand yen.Recognition date for derivative instruments is the transaction date.Recognition date for other financial assets and liabilities is thesettlement date.34.6.1 Foreign exchange hedgesDerivative foreign exchange instruments are used to limitfluctuations in exchange rates for the Group’s currencyrequirements, and the value of the net assets of certain Groupsubsidiaries.Transactions on the derivative markets are undertaken solely forhedging purposes.Foreign exchange transactions only concern the currenciesindicated in the following table.Fair value hedgeFinancial exchange instruments are not documented for thepurposes of hedge accounting, since a natural offset is recognisedin the income statement by matching the fair value gains or losseswith the assets and liabilities.The net fair value of these instruments recorded in the balancesheet at 31 December 2007 is M€ (4).Cash flow hedgeForeign exchange transactions qualified as cash flow hedgesinclude currency swaps, forward currency purchases/salesor currency options. Transactions are used to hedge forecastmerchandise purchase cash flows which will be denominated inforeign currencies.The risks hedged by these transactions are principally €/$ risks.The net fair value of these instruments recognised in the balancesheet at 31 December 2007 is M€ (4).The amount recognised in reserves for foreign exchangetransactions designated as cash flows is M€ (13).

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS57The following table indicates the periods during which the Group anticipates that cash flows associated with derivative instrumentsqualified as cash flow hedges will occur:Contractual cash flows (+) = outflowsAt 31.12.2007 (in M€)Book value Total < 1 yr 1 to 5 yrs + 5 yrsExchange swapsAssets 0 213 213 0 0Liabilities 4 (217) (217) 0 0Forward foreign exchange contractsAssets 0 14 14 0 0Liabilities 1 (14) (14) 0 0Net assets hedgeHedges are set up to hedge part of the net assets of subsidiaries in foreign currencies against the foreign currency risk.The purpose of these hedges is to neutralise fluctuations in the carrying amount in euros of part of net assets (defined as the sum of the equityof the subsidiaries concerned and goodwill).These hedges are set up in the form of deliverable or non-deliverable forward sales if standard forward sales are not possible.Hedges of this type have a maturity of one year.The net fair value of these instruments recognised in the balance sheet at 31 December 2007 is M€ 9.34.6.2 Exposure to the foreign currency risk excluding net assets hedgedAt 31.12.2007 (in M€) USD PLN HUF JPY RUBIntra-Group loans 5 234 223 19 65Trade payables (66) 0 0 0 0Gross balance sheet exposure (61) 234 223 19 65Estimated forecast purchases (242) 0 0 0 0Forecast inflow (1) 14 0 0 0 0Gross exposure (289) 234 223 19 65Forward foreign exchange contracts 274 (236) (223) (19) (65)Foreign exchange options 19 0 0 0 0Net exposure 4 (2) 0 0 0(1) Inflow receivable from disposal of the Mexican operations.Free translation of a French language original.

58 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS34.6.3 Analysis of sensitivity (excluding translationsreserves)This sensitivity analysis is conducted taking the assumption thatvariables excluding exchange rates (interest rate in particular) areconstant.An increase of 10% in the euro exchange rate against other currencieswould generate a decrease in income and equity for the amountsindicated below on the basis of the financial position at 31 December2007. The impact on equity corresponds to cash flow hedges onestimated forecast purchases.Impact in M€ Equity Gains or lossesUSD (22) N/SPLN N/S N/SA decrease of 10% in the euro exchange rate against other currencieswould generate an increase in income and equity for the amountsindicated below on the basis of the financial position at 31 December2007. The impact on equity corresponds to cash flow hedges onestimated forecast purchases.Impact in M€ Equity Gains or lossesUSD 27 N/SPLN N/S N/S34.7 Other risksThe Group is not engaged in any hedge transactions other thanforeign exchange and interest rate derivative transactions.34.8 Table of market values(in M€)Bookvalue2007 2006CarryingamountBookvalueCarryingamountInvestments in non-consolidated companies 133 133 136 136Other non-current financial assets 338 338 315 315Customer loans 2,793 2,793 2,493 2,493Trade receivables 383 383 361 361Current tax assets 62 62 27 27Other current receivables 2,292 2,292 2,054 2,054Cash and cash equivalents (1) 2,395 2,395 2,308 2,308Amortised cost 1,433 1,433 1,275 1,275Fair value via profit or loss 962 962 1,033 1,033Derivative financial instruments – assets 77 77 58 58Bonds (1) 2,393 2,393 1,766 1,766Bank loans and borrowings, other financial liabilities and bankoverdrafts (1) 1,840 1,840 2,223 2,223Obligations under finance leases 280 251 311 275Other non-current liabilities 10 10 79 79Debt financing the credit activity 2,430 2,430 2,152 2,152Trade payables 7,525 7,525 7,051 7,051Current tax liabilities 67 67 61 61Other current liabilities 2,791 2,791 2,506 2,506Derivative financial instruments – liabilities 54 54 66 66(1) Excluding the credit activity.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS59t t t t note 35 NET FINANCIAL INDEBTEDNESS(excluding funding of the credit activity)(in M€) 2007 2006Borrowings and other financialliabilities 4,484 4,264non-current 2,603 3,219current 1,881 1,045Derivatives (23) 8Liabilities non-current 43 51Liabilities current 11 15Assets non-current (44) (31)Assets current (33) (27)Cash and cash equivalents (2,395) (2,308)Net financial indebtedness 2,066 1,964t t t tnote 36 OTHER NON-CURRENT LIABILITIES(in M€) 2007 2006Amounts due on investments 6 11Tax liabilities 0 0Other debts (1) 4 68Total 10 79(1) At end 2006, essentially inflows on sale of Mexican operations (see note 21.2).At end 2007, these inflows are recorded under other current liabilities for M€ 79(see note 37).t t t t note 37 TRADE PAYABLES, CURRENT TAX LIABILITIES AND OTHER CURRENT LIABILITIES(in M€) 2007 2006Trade payables 7,525 7,051Trade payables, merchandise 6,959 6,531Trade payables, general expenses 566 520Current tax liabilities 67 61Other current liabilities 2,791 2,506Amounts due on investments 476 366Tax and social security 1,623 1,555Other payables (1) 453 365Deferred income 239 220Total 10,383 9,618(1) Of which M€ 79 at end 2007 for other inflows from disposal of the Mexican operations (see note 21.2).Free translation of a French language original.

60 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t tnote 38 FINANCE LEASES AND OPERATING LEASESThe Group leases a number of stores, warehouses, shopping centres and head office premises under finance leases. The leases typicallyrun for a period of 10 years, with an option to renew the lease after that date.38.1 Finance leases as lesseeMinimum future lease payments under finance lease agreements2007 2006(in M€)Total Interest Principal Total Interest PrincipalLess than 1 year 61 12 49 46 16 301 to 5 years 112 38 74 153 42 113More than 5 years 175 47 128 176 44 132Total 348 97 251 375 102 275Total contingent rents (based on actual sales) amount to M€ 2 for 2007.At 31 December 2007, total future minimum lease payments and sub-lease agreements that the Group expects to receive on noncancellableagreements are M€ 15.38.2 Operating leases as lesseeMinimum future lease payments under non-cancellable operatinglease agreements(in M€) 2007 2006Less than 1 year 227 1831 to 5 years 695 517More than 5 years 1,066 656Total 1,988 1,356At 31 December 2007, total minimum future lease paymentsunder non-cancellable sub-lease agreements are M€ 54 (M€ 46 at31 December 2006).38.4 Operating leases as lessorThe Group leases out part of its investment property underoperating leases.Minimum future lease payments under non-cancellable leases(in M€) 2007 2006Less than 1 year 274 2131 to 5 years 877 786More than 5 years 558 567Total 1,709 1,566The amount contingent rents included in the income statementfor the year is M€ 18 (M€ 36 in 2006).38.3 Lease and sub-lease expenses recognised in theincome statement(in M€) 2007 2006Minimum payments 250 222Contingent rents (based onactual sales) 7 22Sub-lease revenue (17) (16)Total 240 228

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS61Assets received as guarantee deposits:The Group receives guarantee deposits for investment propertywhich it leases out.Historical value is a good estimate of fair value for guaranteedeposits.The total amount received as guarantee deposits is M€ 52 at31 December 2007.General conditions for the utilisation of guarantee deposits areas follows:A guarantee deposit corresponds to 3 months rent. This amountis reviewed annually according to changes in the building industryprice index. The deposit is held by the lessor until the departureof the lessee, and is reimbursed in full subject to the absence ofany unpaid sums due.t t t tnote 39 TRANSACTIONS WITH RELATEDPARTIESThe Group has related party relationships with its subsidiaries (fullyconsolidated), associates (accounted for by the equity method) andjoint ventures (consolidated by the proportionate method).• Related party having control over the GroupNo material transactions were conducted with the Groupe Auchan SAparent company, apart from the dividend for 2006 amountingto M€ 114.• Management compensationTotal compensation (including directors’ fees) paid to the responsibleofficers (“mandataires sociaux”) of Groupe Auchan SA and the parentcompanies of the Group’s four businesses in 2007 amounted toM€ 2.3. The 2007 fiscal year expense for share-based payments grantedto responsible officers amounts to M€ 0.2.• AssociatesInformation relating to associates accounted for by the equity methodis given in note 19.Transactions with associates were immaterial. There are no significantcommitments with these companies.As regards the 21% equity interest in the Ukrainian supermarketoperator company Furshet, there are options, exercisable from2014 and up to 2021, enabling Auchan or the partner to acquire thisinterest if a significant change in the capital of Furshet occurs, or ifthe commitment to buy back the shares in the Ukrainian hypermarketpartner company is exercised.• Joint venturesThe Group has established partnerships for Hypermarket andProperty management businesses in China and Poland (SchieverPolska), Property management business in Italy and Bankingbusiness in Spain.A list of the most significant joint ventures, under joint control andconsolidated by the proportionate method, is given in note 45.The Group conducts transactions with these companies on anarm’s-length basis.t t t t note 40 INTERESTS IN JOINT VENTURESThe following items that represent the Group’s interests in theassets, liabilities, revenues and expenses of joint venturesconsolidated by the proportionate method are included in theconsolidated financial statements:(in M€) 2007 2006 (1)Non-current assets 1,328 1,131Current assets 611 466Non-current liabilities 481 434Current liabilities 832 589Revenue 1,728 1,418Operating expenses (2) 314 257Net income 24 19(1) Restatement of Moroccan operations.(2) Payroll expenses, external expenses, depreciation, amortisation and provisions.Furthermore the uncancelled part of receivables and liabilitiesrelating to companies consolidated by the proportionate methodappear in the consolidated balance sheet for the followingamounts:(in M€) 2007 2006 (1)Customer loans – Credit activity 25 18Other non-current financial assets 10 9Non-current assets 35 27Customer loans – Credit activity 64 47Trade receivables 4 2Other current receivables 7 16Current assets 75 65Trade payables 0 2Other current payables 3 4Current liabilities 3 6Revenue 32 23Operating expenses (2) 4 3(1) Restatement of Moroccan operations.(2) Payroll expenses, external expenses, depreciation, amortisation and provisions.Free translation of a French language original.

62 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t t note 41 POST-BALANCE SHEET EVENTSNo significant events have occurred since closing of the financial year.t t t tnote 42 CONTINGENT LIABILITIESGroup companies are involved in a certain number of law suits or disputes that arise in the normal course of business, including litigationwith the tax authorities. Provisions for contingent liabilities have been made for the estimated cost if deemed probable by the Groupand its external counsel.To the Group’s knowledge, there is no exceptional event or litigation likely to affect substantially the business, financial performance, netassets or financial situation of the Group and/or its subsidiaries, that is not adequately covered by provisions recorded in the balancesheet.No individual claim is material to the Group.t t t t note 43 COMMITMENTSThe table below shows the Group’s commitments at 31 December 2007 and 2006. Commitments of proportionately consolidatedcompanies are shown proportionately:43.1 Commitments given(in M€)Total2007 2006Of whichjoint venturesTotalOf whichjoint venturesCustomer funding commitments (1) 4,056 122 3,502 108Guarantees given 92 4 159 4Firm share purchase commitments (2) 28 0 30 1Land and property purchase options 317 0 217 2of which investment property 13 0 20 0Conditional purchase of future property, plant and equipment 404 85 366 64of which investment property 56 44 57 48Other commitments given 92 11 84 15(1) This amount corresponds to commitments given by Banque Accord and its subsidiaries on credit cards with current activity during the last 2 years. The commitment oncredit cards inactive for more than 2 years amounts to M€ 5,474 (compared with M€ 4,661 at 31 December 2006).(2) In accordance with IAS 32, purchase commitments given to minority shareholders in fully consolidated subsidiaries are not reported as commitments, but are recognisedas a liability at their present value.In accordance with law No. 2004-391 of 4 May 2004 concerning professional training, employees of the French companies of the Groupenjoy a credit of 20 hours per year. This can be accumulated over 6 years with a ceiling of 120 hours. Any training given within theframework of the individual entitlement to training is allocated to the training hours already acquired. The total number of training hoursacquired by employees and not yet consumed at 31 December 2007 corresponds to an amount of 2.7 million hours.

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS6343.2 Secured liabilities(in M€)Total2007 2006Of whichjoint venturesTotalOf whichjoint venturesDebts guaranteed 459 26 437 28Collateralised debts 363 358 518 308mortgages 358 358 308 308collateral pledged 5 0 210 0Debts guaranteed by lines of credit 14 0 507 0Standby letters of credit 90 0 75 043.3 Long- and medium-term lines of credit obtained and confirmed by the banks but unused at 31 December 2007(in M€)TotalGroup Group excluding credit activity Credit activityOf whichjoint venturesTotalOf whichjoint venturesTotalOf whichjoint venturesLess than 1 year 196 48 196 48 0 01 to 5 years 1,646 0 1,096 0 550 0More than 5 years 0 0 0 0 0 0Total 1,842 48 1,292 48 550 043.4 Share call at put optionsAs from 2010, some of our partners hold put options to sell shares held to Auchan or one of its subsidiaries at market price. These sharesconcern companies not fully consolidated. The long-term maturities and uncertainty concerning amounts prevent reliable measurementof these commitments.The commitments of G.C.I. (Real-estate activity in Italy) and Banque Accord in regard to share call options concerning companies notfully consolidated amount to M€ 153 (commitments given by a proportionately consolidated company) and M€ 88 respectively, and canbe exercised between 2008 and 2013.These options concern the interest in the Ukrainian supermarket operator company and are described in note 39.t t t tnote 44 EMPLOYEESThe average number of employees of the consolidated companies on a full-time equivalent basis, is 186,443 in 2007 (including 100% ofemployees of proportionate consolidated companies), compared with 169,454 in 2006 (after restatement of employees of the Moroccanoperations).The most significant changes concern Russia and China.Free translation of a French language original.

64 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSt t t tnote 45 CONSOLIDATION SCOPEList of the main fully consolidated companies as at 31 December 2007:Country Business Companies% Interest2007 2006FRANCE HOLDING Groupe Auchan SA 100 100Auchan Finances 100 100HYPERMARKETS Auchanhypers 100 100Auchan France and its subsidiaries 100 100Eurauchan 95 95Alinéa and its subsidiaries 96 95Auchan Direct 100 100Little Extra 100 100Chronodrive 90 90Auchan International Technologie 100 100Organisation Internationale des Achats 100 100SUPERMARKETS ISMS 97 97ATAC and its subsidiaries 97 97PROPERTY Immochan International 100 100Immochan and its subsidiaries 100 100BANKING ACTIVITY Banque Accord and its subsidiary 100 100BELGIUM Auchan Coordination Services 100 100SPAIN HYPERMARKETS Alcampo and its subsidiaries 100 100Zenalco 100 100SUPERMARKETS Sabeco and its subsidiaries 97 97PROPERTY Immochan España and its subsidiaries 100 100Zenor 95 95Redarpa 95 95

NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTS65Country Business Companies% Interest2007 2006ITALY HYPERMARKETS Societa Italiana Distribuzione Moderna 99 99Auchan Italia and its subsidiaries 99 99SUPERMARKETS SMA and its subsidiaries 97 97BANKING ACTIVITY Accord Italia 99 100LUXEMBOURG HYPERMARKETS Auchan Luxembourg 100 100Auchan International 100 100PROPERTY Galerie de Kirchberg 96 96HUNGARY HYPERMARKETS Auchan Magyarorszàg 100 100PROPERTY Immochan Magyarorszàg 100 100Immochan Alapok 95 95BANKING ACTIVITY Accord Magyarorszàg 60 100POLAND HYPERMARKETS AND PROPERTY Auchan Polska and its subsidiaries 100 100SUPERMARKETS ISMS Polska and its subsidiary Eléa 97 97BANKING ACTIVITY Accord Finance 60 60PORTUGAL HYPERMARKETS AND PROPERTY Auchan Portugal and its subsidiaries 100 100BANKING ACTIVITY Crédiplus 100 100ROMANIA BANKING ACTIVITY Accord Intermed Consumer Finance 99 100RUSSIA HYPERMARKETS AND PROPERTY Auchan Russie OIIAH and its subsidiaries 100 100SUPERMARKETS Atak 97 97BANKING ACTIVITY Ba Finansooo 60 60TAIWAN HYPERMARKETS AND PROPERTY RT Mart International 61 61UKRAINE HYPERMARKETS AND PROPERTY (1) FCAU 100 NCNC: Not consolidated(1) The operation will start up in 2008 with a new allotment of capital:Hypermarkets: 66% increased to 100% in consolidated financial statements due to the minority interest buy-back commitment (full consolidation), Property: 50% (proportionateconsolidation).Free translation of a French language original.

66 NOTES TO 2007 CONSOLIDATED FINANCIAL STATEMENTSList of main companies consolidated proportionately at 31 December 2007:% Conso. % InterestCountry Business Companies2007 2006 2007 2006FRANCE HYPERMARKETS Boutique Sainsbury 50 50 50 50SPAIN BANKING ACTIVITY Accordfin España 51 51 51 51ITALY PROPERTY Galleria Commerciali Italia and51 51 51 51its subsidiariesPOLAND HYPERMARKETS Schiever Polska 50 50 50 50MAINLAND CHINA HYPERMARKETS Sun Holding Greater China 50 50 50 50AND PROPERTYAuchan China and itssubsidiaries67 67 67 67Concord Champion Internat.and its subsidiaries50 50 33 33List of main companies accounted for using the equity method at 31 December 2007:% InterestCountry Business Companies2007 2006LUXEMBOURG HOLDING Valauchan International 9 13ITALY PROPERTY GCI interests see note 19.2ROMANIAHYPERMARKETS MGV Distri-Hiper 29 29AND PROPERTYUKRAINE SUPERMARKETS Anthousa and its subsidiaries 21 NCFRANCE BANKING ACTIVITY Santander Consumer France 30 NCNC: Not consolidated or not accounted for using the equity method.

67STATUTORY AUDITORS’ REPORTOn the consolidated financial statements – Year ended 31 December 2007To the Shareholders,Following our appointment as statutory auditors by your Annual General Meeting, we have audited the accompanying consolidatedfinancial statements of Groupe Auchan S.A. for the year ended 31 December 2007.The consolidated financial statements have been approved by the Executive Board. Our role is to express an opinion on these financialstatements based on our audit.1. OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTSWe conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating theoverall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities, of the financial position ofthe Group as at 31 December 2007 and of the results of its operations for the year then ended in accordance with IFRSs as adopted bythe EU.2. JUSTIFICATION OF OUR ASSESSMENTSIn accordance with the requirements of article L.823-9 of the French Commercial Law (Code de Commerce) relating to the justification ofour assessments, we bring to your attention the following matters:Groupe Auchan S.A. performs an annual impairment test on goodwill and assets with indefinite lives and also assesses if there is anyindication of impairment loss regarding its long-term assets in accordance with the terms and conditions described in note 3.13 tothe consolidated financial statements. We have reviewed the methods by which these impairment tests are performed as well as theassumptions on which these estimates are based. We have assessed the reasonableness of these estimates and verified that note 3.13to the consolidated financial statements provides appropriate disclosure.These assessments were made in the context of our audit of the consolidated financial statements taken as a whole, and thereforecontributed to the opinion we formed which is expressed in the first part of this report.3. SPECIFIC VERIFICATIONIn accordance with professional standards applicable in France, we have also verified the information given in the group’s managementreport. We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.Paris-La-Défense and Villeneuve-d’Ascq, 9 April 2008The Statutory AuditorsKPMG AuditDepartment of KPMG S.A.Didier de MénonvilleaCéaChristophe SegardFree translation of a French language original.

Communication department in charge of sustainable development – 92, rue Réaumur – 75002 ParisTel.: +33 (0)1 58 65 08 08 – Fax: +33 (0)1 58 65 08 15www.groupe-auchan.comDesign and production: – April 2008.