Distribuidora Internacional de Alimentación, SA

239 Pages·2017·2.4 MB·English

by  Ana Fernández Poderós

Distribuidora
Internacional de
Alimentación, S.A.

Annual Accounts
31 December 2017

Directors' Report
2017
(With Independent Auditor's Report Thereon)
(Free translation from the originals in Spanish. In the
event of discrepancy, the Spanish-language versions
prevail.)
KPMG Auditores, S.L.
Paseo de la Castellana, 259C
28046 Madrid

Independent Auditor's Report on the Annual Accounts
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

To the shareholders of Distribuidora Internacional de Alimentación, S.A.

REPORT ON THE ANNUAL ACCOUNTS
Opinion __________________________________________________________________
We have audited the annual accounts of Distribuidora Internacional de Alimentación, S.A. (the
“Company”), which comprise the balance sheet at 31 December 2017, and the income statement,
statement of changes in equity and statement of cash flows for the year then ended, and notes.
In our opinion, the accompanying annual accounts give a true and fair view, in all material respects,
of the equity and financial position of the Company at 31 December 2017, and of its financial
performance and its cash flows for the year then ended in accordance with the applicable financial
reporting framework (specified in note 2 to the accompanying annual accounts) and, in particular,
with the accounting principles and criteria set forth therein.
Basis for Opinion _________________________________________________________
We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in
Spain. Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Annual Accounts section of our report.
We are independent of the Company in accordance with the ethical requirements, including those
regarding independence, that are relevant to our audit of the annual accounts in Spain pursuant to
the legislation regulating the audit of accounts. We have not provided any non-audit services, nor
have any situations or circumstances arisen which, under the aforementioned regulations, have
affected the required independence such that this has been compromised.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

KPMG Auditores S.L., sociedad española de responsabilidad limitada y firma Inscrita en el Registro Oficial de Auditores de Cuentas con el nº.S0702, y en el
miembro de la red KPMG de firmas independientes afiliadas a KPMG International Registro de Sociedades del Instituto de Censores Jurados de Cuentas con el nº.10.
Cooperative (“KPMG International”), sociedad suiza. Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9
Paseo de la Castellana, 259C 28046 Madrid N.I.F. B-78510153
2

Key Audit Matters ________________________________________________________
Key audit matters are those matters that, in our professional judgement, were of most significance
in the audit of the annual accounts of the current period. These matters were addressed in the
context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.

Recoverability of deferred tax assets.
See note 4r) and 21 to the annual accounts
Key Audit Matter How the Matter was Addressed in Our Audit
The Company has deferred tax assets of an amount As part of our audit procedures, in the context of our
of 87,857 thousand Euros corresponding to tax loss audit work, we have:
carryforwards.
– evaluated the design and implementation of the
The recognition of deferred tax assets entails a high controls associated with the process of
level of judgement by the Directors in assessing the estimating the recoverability of deferred tax
quantification, probability and sufficiency of future assets;
taxable profits against which they may be offset, – assessed the reasonableness of the criteria and
future reversals of existing taxable temporary the main assumptions considered by the tax
differences and, in case, the tax planning group in estimating the future taxable profits
opportunities considered by the Company, in the necessary for offset;
context of the tax consolidation group to which the – requested the opinion of the Company's tax
Company belongs. advisors on the criteria followed by the
Company to determine the Company's tax
Due to the judgement required of the Directors in bases and, in particular, the criteria considered
interpreting the criteria set forth in the tax legislation for the Spanish tax group on the basis of the
in force and the risk that may arise from a different binding rulings received by the Company from
interpretation of such legislation, as well as the the Spanish Directorate-General of Taxes;
uncertainty associated with recovering the amounts – contrasted the profit and loss forecasts used as
recognised as deferred tax assets and the expected a basis for recognising tax losses with the actual
recovery period, we consider this to be a key audit results obtained and evaluating the
matter of the current period. reasonableness of the time period in which the
Company expects to offset these assets;
– assessed whether the information disclosed in
the annual accounts on the recoverability of the
aforementioned deferred tax assets meets the
requirements of the financial reporting
framework applicable to the Company.
3

Recoverable amount of non-current assets and equity investments in Group
companies
See notes 4e) 4g) note 6 and 11 to the annual accounts
Key Audit Matter How the Matter was Addressed in Our Audit
The Company has property, plant and equipment As part of our audit procedures, in the context of our
amounting to Euros 524,754 thousand, goodwill audit work, we have:
amounting to Euros 54,140 and equity investments
in Group companies totalling Euros 760,953 – evaluated the design and implementation of the
controls associated with the process of valuing
thousand.
the store assets and equity investments in
In those stores whose financial position has Group companies;
declined, there is a risk that the carrying amount of – evaluated the operating efficiency of the controls
the assets allocated to the cash-generating units, relating to the integrity of the source information
including goodwill, may exceed their recoverable used in estimating impairment of the stores;
amount. – analysed the reasonableness of the indications,
identified by the Company, of impairment of the
For the purposes of calculating impairment, the
stores and equity investments in Group
carrying amount of non-current assets has been
companies;
allocated to the corresponding cash-generating units
– evaluated the reasonableness of the method
(CGUs), which in the case of the DIA Group are each
used to calculate value in use and the main
of the stores.
assumptions considered, with the involvement
of our valuation specialists;
In 2017 the Company recognised impairment of
Euros 2,790 thousand on property, plant and – contrasted the consistency of the estimated
equipment and Euros 3,736 thousand on goodwill growth in future cash flows, as forecast in
calculating the value in use, with the budget
allocated to stores.
approved by the board of directors;
In the case of equity investments in Group – for equity investments in Group companies and
companies and related credits receivables from for a sample of selected stores, we have
group entities, impairment is assessed for each contrasted the cash flow forecasts estimated in
individual subsidiary. In 2017 the Company previous years with the actual flows obtained;
recognised impairment of Euros 38,870 thousand on – assessed the sensitivity of certain assumptions
equity investments in Group companies, related to to changes that are considered reasonable;
held for sale investment in China. – evaluated whether the information disclosed in
the annual accounts meets the requirements of
At each reporting date, the Company estimates the
the financial reporting framework applicable to
recoverable amount of equity investments and store
the Company.
assets for which there are indications of impairment.

The recoverable amount is determined considering
the value in use of the cash-generating units, as
applicable. To estimate this amount, the Company
has used valuation techniques that require the
Directors to exercise judgement and make
assumptions and estimates. Due to the uncertainty
associated with these estimates, this has been
considered a key audit matter of the current period.
4

Other Information: Directors' Report _______________________________________
Other information solely comprises the 2017 Directors' Report, the preparation of which is the
responsibility of the Company's Directors and which does not form an integral part of the annual
accounts.
Our audit opinion on the annual accounts does not encompass the directors' report. Our
responsibility as regards the content of the directors' report is defined in the legislation regulating
the audit of accounts, which establishes two different levels:
a) A specific level applicable to the statement of non-financial information and to certain
information included in the Annual Corporate Governance Report, as defined in article 35.2. b)
of Audit Law 22/2015, which consists solely of verifying that this information has been provided
in the directors' report, or where applicable, in a separate report on non-financial information, as
provided for in legislation, to which reference is made in the directors' report, and if not, to
report on this matter.
b) A general level applicable to the rest of the information included in the directors' report, which
consists of assessing and reporting on the consistency of this information with the annual
accounts, based on knowledge of the entity obtained during the audit of the aforementioned
accounts and without including any information other than that obtained as evidence during the
audit. Also, assessing and reporting on whether the content and presentation of this part of the
directors' report are in accordance with applicable legislation. If, based on the work we have
performed, we conclude that there are material misstatements, we are required to report them.
Based on the work carried out, as described above, we have verified that the information referred to
in paragraph a) above has been provided in the directors' report and that the rest of the information
contained in the directors' report is consistent with that disclosed in the annual accounts for 2017,
and that the content and presentation of the report are in accordance with applicable legislation.
Directors' and Audit Committee's Responsibility for the Annual Accounts ____
The Directors are responsible for the preparation of the accompanying annual accounts in such a
way that they give a true and fair view of the equity, financial position and financial performance of
the Company in accordance with the financial reporting framework applicable to the entity in Spain,
and for such internal control as they determine is necessary to enable the preparation of annual
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, the Directors are responsible for assessing the Company's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
The audit committee is responsible for overseeing the preparation and presentation of the annual
accounts.
5

Auditor's Responsibilities for the Audit of the Annual Accounts ______________
Our objectives are to obtain reasonable assurance about whether the annual accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with prevailing legislation regulating the audit of accounts in Spain will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence economic decisions of users taken on the basis of these annual accounts.
As part of an audit in accordance with prevailing legislation regulating the audit of accounts in Spain,
we exercise professional judgement and maintain professional scepticism throughout the audit. We
also:
– Identify and assess the risks of material misstatement of the annual accounts, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
– Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, and not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control.
– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors2.
– Conclude on the appropriateness of the Directors' use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's report to the related disclosures in the annual accounts or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor's report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
– Evaluate the overall presentation, structure and content of the annual accounts, including the
disclosures, and whether the annual accounts represent the underlying transactions and events in
a manner that achieves a true and fair view.
We communicate with the audit committee of Distribuidora Internacional de Alimentación, S.A.
regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the entity's audit committee with a statement that we have complied with the
applicable ethical requirements, including those regarding independence, and to communicate with
them all matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
6

From the matters communicated to the audit committee of the entity, we determine those that
were of most significance in the audit of the annual accounts of the current period and which are
therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Additional Report to the Audit Committee _________________________________
The opinion expressed in this report is consistent with our additional report to the Company's audit
committee dated 21 February 2018.
Contract Period __________________________________________________________
We were appointed as auditor of the Company by the shareholders at the general meeting on 28
April 2017 for a period of one year, for the year ended 31 December 2017. Previously, we were
appointed by shareholder´s meetings and we have been auditing uninterrupted the Company's
annual accounts since 1990.
KPMG Auditores, S.L.
On the Spanish Official Register of
Auditors (“ROAC”) with No. S0702

(Signed on original in Spanish)

Maria Lacarra Caminero
On the Spanish Official Register of Auditors (“ROAC”) with number 20,411
21 February 2018
Distribuidora Internacional de
Alimentación, S.A.

Annual Accounts and Directors' Report
31 December 2017
(With Independent Auditor's Report Thereon)

(Free translation from the original in Spanish.

In the event of discrepancy, the Spanish-language version prevails.)
BALANCE
At 31 December 2017
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
December December
ASSETS Notes 2017 2016
Intangible assets 5 81,262 83,852
Development 14,974 9,376
Concessions 126 235
Patents, licences, trademarks and similar rights 2,746 4,449
Goodwill 54,140 63,373
Computer software 7,436 4,409
Other intangible assets 1,840 2,010
Property, plant and equipment 6 524,754 569,806
Land and buildings 275,136 294,448
Technical installations, machinery, equipment, furniture and other items 247,316 270,196
Under construction and advances 2,302 5,162
Non-current investments in group companies and associates 761,953 732,807
Equity instruments 11 760,953 731,807
Loans to companies 12 (a) 1,000 1,000
Non-curent investments 12 (b) 25,190 23,648
Equity instruments 36 36
Loans to third parties 192 249
Other financial assets 24,962 23,363
Trade and other receivables 52,948 52,790
Trade receivables (exceeding operating cycle) 12 (c) 51,182 49,982
Non-current prepayments 14 1,766 2,808
Deferred tax assets 21 108,534 110,796
Total non-current assets 1,554,641 1,573,699
Non current held for sale assets 11 10,013 -
Inventories 13 194,493 246,225
Goods for resale 185,726 237,422
Raw materials and other supplies 5,953 6,243
Advances to suppliers 2,814 2,560
Trade and other receivables 12 (c) 382,092 369,367
Current trade receivables 10(d) 50,994 49,288
Trade receivables from group companies and associates 280,147 293,726
Other receivables 50,319 17,400
Personnel 505 612
Current tax assets 21 21 8,158
Public entities, other 21 106 183
Current investments in group companies and associates 12 (a) 312,490 245,880
Loans to companies 40,000 30,000
Other financial assets 272,490 215,880
Current investments 12 (b) 11,775 10,638
Loans 51 191
Derivatives - 123
Other financial assets 11,724 10,324
Prepayments for current assets 14 407 645
Cash and cash equivalents 15 158,611 162,549
Cash 158,611 34,501
Cash equivalents - 128,048
Total current assets 1,069,881 1,035,304
TOTAL ASSETS 2,624,522 2,609,003

The accompanying notes form an integral part of the annual accounts for 2017
BALANCE
At 31 December 2017
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
December December
EQUITY AND LIABILITIES Notes 2017 2016
Capital and reserves without valuation adjustments 16 254,053 299,735
Capital 62,246 62,246
Registered capital 62,246 62,246
Reserves 152,495 75,662
Legal and statutory reserves 13,021 13,021
Other reserves 139,474 62,641
(Own shares) (60,359) (66,571)
Profit for the year 88,898 207,385
Other equity instruments 10,773 21,013
Valuation adjustments (55) 92
Hedging transactions (55) 92
Grants, donations and bequests received 17 454 726
Total equity 254,452 300,553
Non-current provisions 18 23,288 25,521
Long-term employee benefits 1,655 1,489
Other provisions 21,633 24,032
Non-current payables 20 (b) 954,657 1,048,106
Bonds and other securities 892,570 794,652
Debt with financial institutions 28,413 218,374
Finance lease payables 7 20,871 24,002
Other financial liabilities 12,803 11,078
Deferred tax liabilities 21 15,084 20,710
Total non-current liabilities 993,029 1,094,337
Current provisions 1,271 882
Current payables 20 (b) 172,135 83,219
Bonds and other securities 6,021 5,587
Debt with financial institutions 135,732 53,513
Finance lease payables 7 8,597 9,188
Derivatives 73 -
Other financial liabilities 21,712 14,931
Group companies and associates, current 20 (a) 87,758 48,361
Trade and other payables 20 (c) 1,115,166 1,080,816
Current suppliers 900,458 920,833
Suppliers, group companies and associates, current 69,064 4,587
Other payables 69,248 77,449
Personnel (salaries payable) 19,169 21,287
Current tax liabilities 21 2,917 9,311
Public entities, other 21 53,491 46,514
Advances to customers 819 835
Current accruals 711 835
Total current liabilities 1,377,041 1,214,113
TOTAL EQUITY AND LIABILITIES 2,624,522 2,609,003

The accompanying notes form an integral part of the annual accounts for 2017