Ferrero 2017

Registre de Commerce et des Sociétés
Numéro RCS : B60814

Référence de dépôt : L180045739
Déposé et enregistré le 23/03/2018
Consolidated Financial Statements as of August 31, 2017

together with
Ferrero International S.A.

Société Anonyme
Table of Contents Pages
D 3
Consolidated Balance Sheet 9
Consolidated Income Statement 11
Consolidated Statement of Other Comprehensive Income 12
Consolidated Statement of Changes in Equity 13
Consolidated Cash Flow Statement 15
Notes to the Consolidated Financial Statements 16
Report of the Ré s Agréé 63
Attachments:
Annex I - List of investments in consolidated companies 66
Annex II - Exchange rates used to translate financial statements prepared in currencies other
than the Euro 69
Consolidated Financial Statements as of August 31, 2017 Page 1 of 69

Index to the Notes to the Consolidated Financial Statements Pages
1. General information 16
2. Basis of presentation 16
3. New and revised Standards IAS/IFRS 19
4. Consolidation principles and accounting policies 22
5. Critical accounting judgements and key sources of estimation uncertainty 25
6. Risk Management 28
7. Fair value and hierarchy levels 30
8. Business Combinations and Goodwill 32
9. Net sales 33
10. Other revenues 33
11. Cost of revenues 34
12. Taxation 35
13. Property, plant and equipment 36
14. Intangible assets 39
15. Biological assets 41
16. Non-current investments, securities and financial assets 41
17. Inventory 45
18. Trade and other commercial receivables 45
19. Other current receivables 47
20. Current financial assets, liabilities and securities 48
21 50
22. Employee benefit plans 51
23. Provisions 54
24. Banks and financial liabilities 55
25. Debt owed to Shareholders 56
26. Trade and other current payables 59
27. Transactions with related parties 60
28. Cash and cash equivalents 61
29. Commitments and guarantees 61
30. Events after the balance sheet date 62
31. Approval of Consolidated Financial Statements 62

To the Shareholders of Ferrero International S.A.
The Consolidated Financial Statements of Ferrero International S.A. and its subsidiaries (
ed August 31, 2017 have been prepared in accordance with
The designation of IFRS includes all en

well as the interpretations issued by the International Financial Reporting Interpretations
tements is the
Euro.
Below, we have highlighted the main aspects of the macroeconomic environment, in addition to the
key highlights on
Macroeconomic background
During 2016/2017, the global economy registered a continuing growth across countries, as already
noticed in the second half of 2015/2016.
The economic recovery was spread and boosted thanks to an increase in investments worldwide.
The global exchanges showed a significant acceleration, due to higher demand from emerging
countries, after two years of weakness.
International organizations and institutions confirmed such positive trend by reviewing their
expectations upward. However, uncertainties had not left the macroeconomic scenario and some
factors creating such uncertainties are still persisting. Among these, the main factors are the new
policies of the US government, the stable recovery of the supplies and raw materials exporting
countries, the re-balance of the Chinese economy and the future relationship between the UK and
the EU.
Since 2015/2016, Central banks have been supporting the global economy expansion through their
favorable financing conditions to make sure to reach the target of 2% inflation rate in mid-terms.
The ECB further decided to go ahead with financial activities and bonds purchase until the end of
the financial year.
Prices had a volatile trend due to the increase in energy prices. Inflation remained below the
of monetary accommodation is still needed for inflation to gradually reach the aimed level.
The first half of 2017 showed a highly positive trend in economic figures within the Eurozone. The
GDP increased more than expected, even on second half of the year. Economic recovery affected all
area, but at different pace.

In the second quarter, Euro continued fluctuating against USD from 1.03 EUR/USD, which is the
minimum from the beginning of the year, up to 1.20 EUR/USD at the end of August, recording
approximately a +15% gain.
Financial market indexes increased steadily throughout the year in advanced and emerging
countries. Volatility on stock exchanges reduced. The yield on country bonds has reduced during the
first half of the year, then increased again during summer period.
Commodities and raw materials had differentiated trends during the year. Industrial metals market
had a fast growth during recent months, while raw materials prices were stable. Oil prices fluctuated
between USD 55 and USD 45 per barrel, close to upper part of quotation range.
Focusing on the confectionary industry, the fluctuating trend of the previous year was registered
also during 2016/2017. The fluctuations in growth trend was due mainly to a slowdown in
consumption, uncertainty in the supply chain and an intensified industry competitiveness. As noted
during last year, western markets were stable, while emerging markets expanded.
Those who benefited from the growth in the industry were premium brands, mainly in western
markets, because they were able to differentiate and overcome market saturation.
Regarding the supply chain, the following trends and events were noted on the commodity and
supplies markets.
Commodity markets
Hazelnuts
In the fiscal year 2016/2017 two important events in Turkey have negatively affected the trend of
the Hazelnut price. Firstly, there was a considerable decrease in hazelnut production due to bad
weather conditions, affecting both the quantity (-30%) and the quality of the crops. Secondly, the
political uncertainties raised during summer 2016 generated important turbulences during the
following months. However, the Turkish crop in 2017 seems to be higher than previous year and the
price is more stable.
Cocoa
Season 2016/2017 was marked by a significant fall of international prices. The decrease started in
the very first months of 2017 and was driven by the excellent conditions of cocoa beans harvest in
West Africa. Global stocks increased by 28% on a year on year basis, allowing a price adjustment.
The industrial confectionery sector was taking advantage of this, by increasing the coverage for
current and next seasons.
Milk and derivatives
Milk market is showing contrasting trends according to the supply and demand of its different
derivatives. On one hand, since several months, fat milk derivatives (butter and whole milk powder)
are showing significant volatility and a sharp price-increasing trend. The lack of butter on the market
is the main driver, having correlated impacts on the purchase price of fresh milk too. On the other
hand, protein milk derivatives, such as skimmed milk powders, are showing a production level
higher than the demand, resulting in a decreasing trend in prices.

Sugar
Sugar market has been extremely volatile during 2016/2017. Prices almost doubled during the
season and were back at the starting level by the end of the season. The drivers were, on one side,
the 2016/2017 deficit of production compared with consumption and on the other side, starting
from 2017, market expectations for a good crop in 2017/2018.
During October 2017, the so- sugar production quo were abolished in the EU market. As
a matter of fact, starting from 2017/2018 sugar season, Europe is expected to become an
international player and therefore to move from a net importer position to a net exporter position.
As such, the price in Europe recently dropped and is very likely to realign to international price.
Vegetable fats
The global production of palm oil recovered from last year shortage, as production registered a
+13% output on year basis. At the same time, consumptions increased by +2% only. No major signals
of recovery were seen either from food sector or from oleo-chemicals sector.
Other supplies markets
Packaging
2016/2017 was affected by a significant volatility in the Plastic and Aluminum markets, while the
other packaging categories registered some price reductions.
Following a phase of stability, in the period February April, plastic price underwent a snap rising
(particularly for Polystyrene and Polypropylene), reaching fluctuation levels never recorded in past
years; then, at the end of the campaign, price levels came back to be more in line with the expected
ones.
The Aluminum market was strongly affected by the decision of China to make all production plants
compliant to new environmental legislation, causing a high reduction in the production capacity and
influencing the European market (LME), with the result of rising the commodity price of the year.
Paper category has taken advantage of a quite stable commodity trend. Glass category has remained
stable.
Key business events
At the end of May 2017 Ferrero announced the opening of the first owned and directly managed
restaurant, the Nutella Café, in Chicago. This permanent cafe is promising to offer an authentic and
complete Nutella experience to customers.
At the same period, Ferrero International S.A. announced the conclusion of the acquisition of Fannie
May Confections Brands, Inc. and the Harry London chocolate brands from 1-800-FLOWERS.com,
Inc. The acquisition included all operations of Fannie May, together with the manufacturing facility
in Ohio and two warehouse and distribution facilities, located in Ohio and Illinois. Fannie May will
operate as a standalone entity under the Ferrero Group, with support from Ferrero USA, Inc. as
needed.

In June 2017, the Group announced the official opening of the first Asian Innovation Center located
in Singapore, which is considered to be one of the world’s leading innovation ecosystems. The new
center has been designed to strengthen Ferrero’s position as a global innovation leader and will host
several strategic innovation functions in the areas of health and nutrition, new raw materials and
product research and development, consumer insight and foresight activities.
Lastly, in June 2017 the Group sold to another market player the third party customers portfolio
related to the trading activities of the energy business in Italy.
Group performance
Besides the global uncertainties and the industry challenges and trends, the Group was able to
consolidate and confirm its performance during 2016/2017.
During 2016/2017, consolidated Net Sales amounted to 10.5 billion Euro compared to 10.3 billion
Euro in the previous year (+1.5% at current rates, +2.2% at constant rates).
The Net Sales of finished products amounted to 10.1 billion Euro, compared to 9.8 billion Euro in the
previous year (+2.2% at current rates, +2.5% at constant rates). The Net Sales of finished products
increased in the key European markets such as Germany, Poland, UK and the eastern European
countries, while Italy and France remained flat. Within the American countries, the USA, Canada and
Mexico showed a significant increase in net sales.
The products that led the growth in Net Sales of finished products were mainly Nutella, Ferrero
Rocher, Kinder Surprise, Kinder Joy, Kinder Bueno and Tic Tac.
Operating costs rose by +1.5% at current rates from 9.3 billion Euro in 2015/2016 to 9.4 billion Euro
in 2016/2017. The cost of raw materials and supplies increased at current rates of approximately
+1.6%, while cost of services slightly decrease of -0.4%. Personnel costs rose approximately by +4.8%
at current rates compared to the previous year. The Group's average workforce in 2016/2017 was
30,305 employees, increasing from 29,206 employees in 2015/2016. The headcount as of August 31,
2017 amounted to 34,543 employees, compared with 32,990 as of August 31, 2016.
In 2016/2017 the EBITDA amounted to 1.5 billion Euro, compared with 1.6 billion Euro in 2015/2016,
which represent an EBITDA margin of 14.2% compared to 15.2% in the previous year. The EBIT was
stable as compared to 2015/2016 reaching 1.1 billion Euro, representing an EBIT margin of
approximately 10.7%.
The financial result of the year was a loss of 145 million Euro, compared to a loss of 137 million Euro
in the prior year. The result was mainly due to the net interest expenses and the unrealised effect of
translating foreign currency assets and liabilities at year-end exchange rates.
Taxation amounted to 321 million Euro compared to 210 million Euro as of August 31, 2016; more
detailed analyses are provided in the explanatory notes.
Net income for the year was 657 million Euro (793 million Euro as of August 31, 2016). Net income
margin of the year was 6.3% at current rates compared to 7.7% in the previous year.

In addition, the Group continued to invest in improving and expanding its factories, plants and
equipment in line with its entrepreneurial and social commitments and in constant application of its
corporate strategies.
Key corporate strategies led to ongoing improvements in the quality and competitiveness of our
products, while paying close attention to product freshness, food safety and the environment, to
which the Ferrero Group is highly committed. In order to achieve these strategies, industrial
technology must be continuously enhanced in order to meet the changing needs and desires of the
consumer before competitors do.
The Group sustained its strategy of technological development through the expansion of its
production capacity, with total capital investments amounting to 744 million Euro (compared to
631 million Euro in the prior year). On the total amount of capital investments, the most significant
part was focused on industrial and manufacturing investments (660 million Euro or 6.3% of net sales,
compared to 552 million Euro in the previous year, or 5.3% of the corresponding net sales) mainly in
Italy, Germany, Poland and Canada. In addition, the Group made a significant capital investment in
Luxembourg for the construction of the new headquarters building.
The parent company, Ferrero International S.A., continued to devise and administer the strategic
guidelines, providing the financial and managerial support for the achievement of Group objectives
for more than ninety subsidiaries.
Lastly, during 2017 the eighth Responsibility Report" for 2015/2016 was published.
This document was prepared in GRI Sustainability Reporting )
Core
The following points of reference were also taken into consideration:
-operation and Development (OECD) Guidelines for
This report was submitted for the GRI Content Index Service, and GRI confirmed the accuracy of the
GRI Content Index. Furthermore, the entire CSR report was subject to a limited assurance
engagement performed by Deloitte.
Business Outlook
Overall, for the new fiscal year 2017/2018 there is a feeling of stability to the business outlook,
despite some geopolitical risks. New opportunities are foreseen in some countries due to
expected economic reforms and increase domestic competitiveness.
Concerning Western Europe, employment and confidence are expected to improve on the back
of strong exports and manufacturing. Market conditions will be better as compared to previous
year, even though Germany and Spain are expected to have higher growth rates than Italy and
Greece, where markets will have a slower performance. The biggest uncertainties for the new
year in this geographical area are the Brexit negotiation between EU and UK, the end of the
political instability in Spain due to the Catalonia referendum case and the discussion for political

coalition in Germany. In addition, in the first months of fiscal year 2017/2018 the British pound
depreciated against the Euro, reflecting the ongoing Brexit negotiation, the high inflation and the
weak investments.
For the central and eastern Europe, no major changes in performance and business outlook is
expected as compared to 2016/2017. Poland is expected to experience a falling in unemployment
rate, while Russia is expected to offset the losses in energy revenues with a strong grain harvest.
The Russian ruble will likely weaken minimally during 2017/2018. In Turkey the market forecast
are slightly less optimistic than expected and in the next months the impacts of political risks will
be crucial to determine the exchange rates fluctuations.
In Middle East and Africa projections are more likely to fluctuate due to significant political
uncertainties and new regulations coming. In UAE it has been projected a timid rise in confidence
and economic activities, but for the time being it has been noted an improvement on purchasing
activity and inventories, mostly related to the VAT implementation ahead in 2018. Whereas,
South Africa will experience an economic slow-down due to political risks and weak public
finances, leading to a depreciation in rand as well.
The Asia-pacific countries will engage new initiatives to drive economic growth. On one hand,
China will try to increase its global influence and reducing financial and credit risk. On the other
one, Indian government will try to boost the economic growth through a tax reform and foreign
investments. Same for Thailand and Indonesia where local governments are trying to attract new
foreign investments and improve local consumptions.
For Latin American area, business outlook is diversified among countries. Argentina and Brazil
are expected to have improved economic conditions thanks to the expected economic reforms,
while Mexico will remain vulnerable to low oil prices, fragmented political landscape and the
outcome of NAFTA renegotiations. These are expected to turn into a depreciation of the Mexican
pesos during fiscal year 2017/2018. In addition, the earthquake that hits Mexico in September
had a negative impact on the high market performances of the previous months. Also Puerto
Rico has been negatively affected by hurricane Maria in August and the local market is seriously
damaged.
Canada and United States are expected to confirm the growing trend in market conditions. In the
first months of 2017/2018 the US dollar exchange rate against Euro is stable as compared to
August 2017.
In January 2018, it was announced that the Group reached an agreement pursuant to which it
will acquire certain assets of U.S. confectionary business from Nestlé. This transaction is subject
to customary closing conditions and regulatory approvals.
The explanatory notes accompanying the consolidated financial statements include descriptions
on risk management policies and significant events that have taken place subsequent to the
reporting date.
The Board of Directors

FERRERO INTERNATIONAL S.A.

CONSOLIDATED BALANCE SHEET
As of August 31,
Amounts in Euro/thousand 2017 2016
ASSETS Notes
NON CURRENT ASSETS:

Property, plant and equipment 13 3,757,316 3,456,621
Intangible assets 14 423,917 397,925
Goodwill 8 177,416 155,859
Biological assets 15 72,483 60,700
Non current investments, securities and financial assets 16 368,005 359,760
Deferred tax assets 12 166,718 159,908
TOTAL NON CURRENT ASSETS 4,965,855 4,590,773
CURRENT ASSETS:
Inventory
Raw materials and supplies 17 1,148,014 1,028,976
Work in progress 17 304,864 237,178
Finished products and consumables 17 710,538 774,291
2,163,416 2,040,445
Trade and other commercial receivables

Trade receivables 18 1,041,909 1,085,715
Other commercial debtors 18 66,449 85,026
1,108,358 1,170,741
Other current receivables

Tax, VAT and social securities receivables 19 362,022 357,764
Other receivables 19 187,898 151,172
549,920 508,936
Current financial assets and securities 20 57,526 59,141
Cash and cash equivalents 28 451,917 300,302
TOTAL CURRENT ASSETS 4,331,137 4,079,565
TOTAL ASSETS 9,296,992 8,670,338
The accompanying notes are an integral part of these Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEET (continued)
As of August 31,
SHAREHOLDERS' EQUITY AND LIABILITIES Notes
SHAREHOLDERS' EQUITY:
Shareholders' equity - parent interests
Share capital 21 138,000 138,000
Total reserves and retained earnings 21 2,464,202 1,960,357
Net income - parent interests 656,598 792,795
3,258,800 2,891,152
Shareholders' equity - non controlling interests 21 - -
TOTAL SHAREHOLDERS' EQUITY 3,258,800 2,891,152
NON CURRENT LIABILITIES:

Employee benefit plans 22 296,667 338,392
Provisions 23 192,386 234,146
Deferred tax liabilities 12 286,341 299,023
Non current financial liabilities

Debt owed to Shareholders 25 1,807,647 1,720,039
Other non current financial liabilities 24 30,011 31,610
1,837,658 1,751,649
Other non current liabilities 8 54,304 92,318
TOTAL NON CURRENT LIABILITIES 2,667,356 2,715,528
CURRENT LIABILITIES:
Current financial liabilities
Current financial loans and bank overdraft 24 1,179,801 1,047,972
Debt owed to Shareholders 25 73,920 89,620
Other current financial liabilities 20 48,890 16,000
1,302,611 1,153,592
Trade and other commercial payables

Trade payables 26 779,915 712,396
Other commercial creditors 26 572,505 563,950
1,352,420 1,276,346
Other current payables

Tax, VAT and social security payables 26 201,900 178,366
Payables towards personnel 26 239,689 239,604
Other payables 26 274,216 215,750
715,805 633,720
TOTAL CURRENT LIABILITIES 3,370,836 3,063,658
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 9,296,992 8,670,338
The accompanying notes are an integral part of these Consolidated Financial Statements

CONSOLIDATED INCOME STATEMENT
For the 12 months ended at

August 31,
Notes
Revenues
Net sales 9 10,485,058 10,325,845
Other revenues 10 392,464 486,131
10,877,522 10,811,976
Cost of Revenues
Cost of raw materials and supplies 4,481,742 4,412,634
Cost of services 11 3,048,133 3,059,585
Personnel costs 11 1,743,553 1,663,251
Other operating costs 119,780 121,835
9,393,208 9,257,305
Share of profit under the equity method 16 6,603 15,716
Operating income before amortization and depreciation 1,490,917 1,570,387
Amortization and depreciation 13-14-15 368,003 431,351
Operating income 1,122,914 1,139,036
Financial income and (expenses)

Interest income 25,779 25,328
Interest expenses 25 (76,380) (86,702)
Gain and (loss) on financial derivatives 20 (13,507) 11,284
Currency exchange (loss) (68,228) (71,870)
Other financial income and (expenses) (12,923) (14,629)
(145,259) (136,589)
Income before tax 977,655 1,002,447
Income taxes 12 321,057 209,652
Net income 656,598 792,795

Net income - non controlling interests - -

CONSOLIDATEDSTATEMENTOFCHANGESINEQUITY
FORTHEYEARENDEDAUGUST31,2016

Foreign Otherreserves NonͲ
Actuarialgains Financial NonͲ
Subscribed Share Cashflow currency andprofit Profitforthe controlling
AmountsinEuro/thousand LegalReserve &losses assetsavailable controlling Total
Capital Premium hedgereserve translation brought financialYear interests
reserve forsale interestsresult
reserve forward reserves
BalanceasofSeptember1,2015 138,000 13,800 1,320,116 (10,888) (86,389) 28,324 (141,709) 314,739 513,107 8,726 536 2,098,362
Profitoftheyear 792,795 792,795
Netmovementsoftheyear 40,063 (23,176) (13,479) (3,413) (5)
TOTALCOMPREHENSIVEINCOME 40,063 (23,176) (13,479) (3,413) Ͳ 792,795 Ͳ Ͳ 792,790
Allocationofprofit 513,107 (513,107) 536 (536) Ͳ
ChangeinNonͲControllingInterests 9,262 (9,262) Ͳ
Dividenddeclared Ͳ Ͳ
BalanceasofAugust31,2016 138,000 13,800 1,320,116 29,175 (109,565) 14,845 (145,122) 837,108 792,795 Ͳ Ͳ 2,891,152

TheaccompanyingnotesareanintegralpartoftheseConsolidatedFinancialStatements.

ConsolidatedFinancialStatementsasofAugust31,2017 Page14of69
CONSOLIDATED CASH FLOW STATEMENT
For the 12 months ended at

August 31,
Notes
CASH FLOWS FROM OPERATING ACTIVITIES:
Amortization, depreciation and non-monetary items on non-current fixed asssets 377,295 442,164
Change in provisions, deferred taxes and employee benefits (34,497) (88,439)
Non-monetary items on financial assets and liabilities 5,450 (13,229)
Share of (profit) from Investments in JV 16 (6,603) (15,716)
Net cash flows before movements in working capital 998,243 1,117,575
(Increase) in inventory (218,839) (50,806)

(Increase)/ Decrease in trade and other current receivables (12,027) 38,713
Increase in trade and other current payables 143,900 45,727
Change in net working capital (86,966) 33,634
NET CASH FROM OPERATING ACTIVITIES 911,277 1,151,209
CASH FLOWS FROM INVESTING ACTIVITIES:

(Additions) of property, plant and equipment, intangible and biological assets (744,285) (631,423)
Disposals of property, plant and equipment, intangible and biological assets 5,205 3,474
Acquisitions, net of cash acquired 8 (95,784) (12,783)
Changes in financial fixed assets (6,905) (2,538)
NET CASH (USED IN) INVESTING ACTIVITIES (841,769) (643,270)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from banks and other financial liabilities 338,590 182,478
(Repayment) of bank debts and other financial liabilities (247,337) (677,471)
Decrease/ (Increase) in bonds, securities and other current financial assets (1,675) 3,782
(Dividends paid) 21 - -
NET CASH FROM/(USED IN) FINANCING ACTIVITIES 89,578 (491,211)
NET CASH FLOW 159,086 16,728
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 28 300,302 286,163
Translation differences on cash and cash equivalents (7,471) (2,589)
CASH AND CASH EQUIVALENTS AT THE YEAR END 28 451,917 300,302
NET INCREASE IN CASH AND CASH EQUIVALENTS 151,615 14,139
Cash paid for interest, net of interest received, during 2016/2017 is 50,601 Euro (61,374 Euro in
2015/2016). Cash paid for taxes, during the year amounted to 261,076 Euro (382,387 Euro in
2015/2016). Amounts are included in net cash flow from operating activities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED AUGUST 31, 2017
1. General information
for unlimited period of time. The Company is registered

in Luxembourg under the number R.C.S. B 60.814 and has its registered office located at Findel
Business Center - Complexe B, Rue de Trèves, L-2632 Findel, Luxembourg.
The objective of the Company is in Luxembourg as well as abroad, in whatever form any industrial,
commercial, financial, personal or real estate property transactions, which are directly and indirectly
in connection with the creation, management and financing, in whatever form, of any undertakings
and companies which object is any activities in whatever form, as well as the management and
development, permanently or temporarily, of the portfolio created for this purpose.
The Company may take participating interests by any means in any businesses, undertakings or
companies having the same, similar or connected object, or which may favour its development of
the extension of its operations.
The Company is the parent company of the Ferrero Group (the "Group"), composed by directly and
indirectly owned subsidiaries located worldwide, as outlined in Annex I, for a total of 91 consolidated
companies. The Group operates in the business of manufacturing and marketing confectionery. The
Group has 23 operating manufacturing plants all over the world.
2. Basis of presentation
The Consolidated Financial Statements have been prepared in accordance with the International
Financial Reporting Standards (
and endorsed by the European Union.
The designation of IFRS includes all endorsed
well as the interpretations issued by the International Financial Reporting Interpretations
.
The Group, following the effect of European Union Regulation No. 1606 of July 19, 2002, voluntarily
adopted IFRS on September 1, 2006.
In the current year the Group has adopted all of the new and revised Standards and Interpretations
issued by the IASB and the IFRIC of the IASB, as adopted by the European Union, that are relevant
to its operations and effective for annual reporting periods beginning on September 1, 2016.
The Consolidated Financial Statements have been prepared based on the conventional historical
cost principle, except for the measurement of certain financial assets and liabilities, including
derivatives instruments, as well as of certain assets and liabilities of acquired companies, where the
application of the fair value principle is mandatory.
The Consolidated Financial Statements have been prepared on a going concern basis. There are no
indicators, which
mainly in the next twelve months. Directors have verified the inexistence of financial, performance
the near future.
The Consolidated Financial Statements are composed of the Consolidated Balance Sheet, the
Consolidated Income Statement, the Consolidated Statement of Other Comprehensive Income, the

Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and Notes
to the Consolidated Financial Statements for the financial year ended on August 31, 2017.
As regards to the format of the Consolidated Financial Statements mentioned above, the Group has
opted for the following statements:
Consolidated Balance Sheet

Within Balance Sheet, assets and liabilities are shown on the basis of their classification as current
or non-current.
An asset or liability is considered as current, when it satisfies one of the following criteria:
it is expected to be realized or settled or it is expected to be sold or consumed in the normal
cycle of business operations, or
it is held primarily for the purpose of trading, or
it is expected to be realized or settled within twelve months after the reporting period,
for liabilities only, it is expected that the entity does not have unconditional right to defer
settlement of the liability for at least 12 months after the end of the reporting period.
If none of the above conditions are met, the assets or liabilities are classified as non-current.
Consolidated Income Statement

Consolidated Income Statement is presented using a classification based on the nature of the
expenses. The Income Statement includes the following intermediate aggregates:
Operating income before amortization and depreciation;
Operating income;
Income before tax;
Net income.
The purpose is to provide a clearer separation of the typical results of normal manufacturing
activities, the financial result of the business and the impact of taxation.
Consolidated Statement of Other Comprehensive Income

The Consolidated Statement of Other Comprehensive Income includes all changes occurred in Other
Comprehensive Income of the year, generated by transactions other than those conducted with
shareholders and in compliance with specific IAS/IFRS accounting principles. The changes in Other
Comprehensive Income are reported before the related tax effect with the specific amount of
income taxes on these variations being recognized separately. Those components that may or may
not be reclassified to Income Statement at a later time are listed separately in the table.
Consolidated Statement of Changes in Equity

The Consolidated Statement of Changes in Equity is included as required by international accounting
standards, showing the net result for the period and any change that was not charged through the
Income Statement, but directly to the consolidated Other Comprehensive Income on the basis of
specific IAS/IFRS, as well as transactions with shareholders in their role as shareholders.
Consolidated Cash Flow Statement

Consolidated Cash Flow Statement is included in accordance with international accounting
standards, identifying the cash flows generated or used by the different areas of operations. The
Consolidated Cash Flow Statement has been prepared using the indirect method.
Please note that in this cash flow statement, the change in working capital may not tie to the
difference between the opening and closing statement of balance sheet figures because of exchange

rates differences. In fact, cash flows generated are converted using the average exchange rate for
the year, while the difference between the opening and closing consolidated statement of balance
sheet figures in Euro may be influenced by changes in exchange rates at the beginning and end of
the year. These changes are not directly linked to the generation or absorption of cash flow within
working capital. The exchange rate differences generated by opening and closing statements of
balance sheet are reported in
The Consolidated Financial Statements include the financial statements of

Ferrero International S.A., the parent company, and of all companies under its direct or indirect
control, which is normally identified as control over the majority of the voting rights. The detailed
list of companies under direct or indirect control, together with the percentage of ownership, is
reported in Annex I.
All companies are consolidated on a line-by-line basis, except for the Joint Venture Stelliferi &
Itavex Srl, which is consolidated based on the equity method.
Euro. Unless otherwise stated, the figures are expressed in thousands of Euro.
According to the Article of Association of Ferrero International S.A., the Company closing date of
the financial year is August 31, as well as other consolidated subsidiaries, excluding the following:
Agri Bulgaria EOOD December, 31

Agri Georgia LLC December, 31
Ferrero Cameroun S.A December, 31
Ferrero de México S.A. de C.V. December, 31
Ferrero del Ecuador S.A. December, 31
Ferrero Food (Hangzhou) Company Limited December, 31
Ferholding USA, Inc. December, 31
Ferrero Kazakhstan Limited Liability Partnership December, 31
Ferrero Latin America Developing Markets S.A.S. December, 31
Ferrero Russia CJSC December, 31
Ferrero Trading (Shanghai) Co. Ltd. December, 31
Ferrero Ukraine T.o.v. December, 31
Premium - Confectionery & Trading Company Ltd December, 31
Fruticola Agrichile S.A. December, 31
Sodeser S.A. de C.V. December, 31
Ferrero India (PVT) LTD March, 31
Stelliferi & Itavex Srl June, 30
For such subsidiaries, the Company obtained an internal reporting package prepared for the
twelve-month period ending at August 31, compliant to Group accounting policies and IAS/IFRS
generally applied.
Some of our subsidiaries have a fiscal year based on 52- or 53-week period ending on the Saturday
or Sunday nearest August 31. Having such subsidiaries reporting on a calendar-basis would not have
a material impact on the consolidated results of the Group for fiscal year 2016/2017 and previous
year.

3. New and revised Standards IAS/IFRS
The new standards, amendments to standards and interpretations did not have any material impact
on the financial position and performance of the Group for the reporting year ended
August 31, 2017.
At the date of approval of the Consolidated Financial Statements, the following Standards and
Interpretations - which have not been applied in these financial statements, but are relevant for the
Group - were endorsed by European Union but not applicable yet:
IFRS 15 Revenue from Contracts with Customers. On May 28, 2014, the IASB issued this
standard that will supersede IAS 18 Revenue, IAS 11 Construction Contracts, IFRIC
interpretations 13 Customer Loyalty Programmes, 15 Agreements for the Construction of Real
Estate, and 18 Transfers of Assets from Customers, as well as SIC 31 Revenue - Barter
Transactions Involving Advertising Services. The new standard is based on the principle that
revenue is recognised when control of a good or service transfers to a customer so the notion
of control replaces the existing notion of risks and rewards. The new revenue recognition
model will apply to all contracts with customers except for those falling within the scope of
other IASs/IFRSs, such as lease, insurance and financial instrument contracts. The key changes
are related to different timing recognition of the revenue. This standard is applicable from
January 1, 2018. Early adoption is permitted. The Group is in progress to complete the full
analysis of the impact on its Consolidated Financial Statements related to the adoption of this
new standard, while, for the nature of the activities performed, it is not expected that the
application of this new standard will significantly impact the revenue and cost recognition.
IFRS 9 Financial Instruments. This standard was issued by the IASB on November 12, 2009
and it was amended on October 28, 2010. The standard introduces new requirements for the
classification and measurement of financial assets and financial liabilities. In particular,
regarding financial assets, the new standard adopts a single approach based on how an entity
manages its financial instruments and the contractual cash flows that are characteristics of the
financial assets, in order to determine its valuation criteria, replacing the many different
rules in IAS 39. The most significant effect of the standard regarding the financial liabilities
relates to the accounting for changes in fair value attributable to changes in the credit risk of
financial liabilities designated as at fair value through profit or loss. According to the new
standard, these changes must be recognized in Other Comprehensive Income and will no
longer be recognized in the Income Statement. On November 19, 2013, IASB published
document ancial Instruments - Hedge Accounting and amendments to IFRS 9,
concerning the new hedge accounting model (effective on January 1, 2018).
The document aims at responding to some criticisms made to IAS 39 requirements for
hedge accounting, which are often considered as too stringent and not suitable for reflecting
the entities' risk management policies. On July 24, 2014, the IASB completed and issued the
new IFRS 9 Financial Instruments. The improvement package introduced by the new standard
includes a logical model for classification and measurement of financial instruments, a single
expected loss impairment model for financial assets. This standard is effective on a
retrospectively basis for financial years beginning on or after January 1, 2018, with earlier
application permitted. The new standard will impact the evaluation and presentation of the
financial assets and liabilities of the Group; the Group is determining and valuing the impacts
of the new provisions introduced by the standards.

IFRS 16 Leases. On January 13, 2016, the IASB issued this standard that will supersede IAS 17
Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC 15 Operating
Leases Incentives and SIC 27 Evaluating the Substance of Transactions Involving the Legal
Form of a Lease. This standard establishes principles for the recognition, measurement,
presentation and disclosure of leases, with the objective of ensuring that lessees and lessors
provide relevant information that faithfully represents those transactions. This standard is
applicable to periods beginning on or after January 1, 2019. Early adoption is permitted, if IFRS
15 has also been applied. The new standard will impact the evaluation and presentation of the
assets and liabilities of the Group. At the commencement date of a lease, a lessee will
recognize a liability to make lease payments (i.e. the lease liability) and an asset representing
the right to use the underlying asset during the lease term (i.e. the right-of-use asset). Lessees
will be required to separately recognize the interest expense on the lease liability and the
depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the
lease liability upon the occurrence of certain events (e.g. a change in the lease term, a change
in future lease payments resulting from a change in an index or rate used to determine those
payments). The lessee will generally recognize the amount of the remeasurement of the lease
liability as an adjustment to the right-of-use asset.
Lessor accounting under IFRS 16 is substantially unchanged fr ng under
IAS 17. Lessor will continue to classify all leases using the same classification principle as in
IAS 17.
In FY 2017/2018 the Group will continue to assess the potential effect of IFRS 16 on its
Consolidated Financial Statements.
Amendments to IAS 7 Disclosure Initiative. These amendments introduce an additional

disclosure that will enable users of financial statements to evaluate changes in liabilities arising
continues to explore how financial statement disclosure can be improved. These amendments
are applicable to periods beginning on or after January 1, 2017. Early adoption is permitted. It
is expected that the application of these amendments will not have a significant impact on the
Consolidated Financial Statements of the Group.
Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses. These
amendments clarify how to account for deferred tax assets related to debt instruments
measured at fair value and how to recognize deferred tax assets for unrealized losses, when
the fair value is below the asset . These amendments are effective for annual periods
beginning on or after January 1, 2017, with early application permitted. The Group is analyzing
the possible impacts on its Consolidated Financial Statements related to the adoption of these
new amendments. It is expected that the application of these amendments will not have a
significant impact on the Consolidated Financial Statements of the Group.
Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts.
These amendments introduce two approaches: an overlay approach and a deferral approach.
The amended standard will give all companies that issue insurance contracts the option to
recognize in Other Comprehensive Income, rather than profit or loss, the volatility that could
arise when IFRS 9 is applied before the new insurance contracts standard is issued. Moreover,
the amended standard will give companies whose activities are predominantly connected with
insurance an optional exemption from applying IFRS 9 until 2021. The entities that defer the
application of IFRS 9 will continue to apply the existing financial instruments standard IAS 39.

These amendments are applicable to periods beginning on or after January 1, 2018. The Group
is analyzing the possible impacts on its Consolidated Financial Statements related to the
adoption of these new amendments.
Clarification to IFRS 15 Revenue from Contracts with Customers. These amendments

comprise clarifications of the guidance on identifying performance obligations, accounting for
licenses of intellectual property and the principal versus agent assessment (gross versus net
revenue presentation). New and amended illustrative examples have been added for each of
those areas of guidance. The IASB has also included additional practical expedients related to
transition to the new revenue Standard. These amendments are applicable to periods
beginning on or after January 1, 2018. Early adoption is permitted. The Group is in progress to
complete the full analysis of the impact on its Consolidated Financial Statements related to
the adoption of the new standard together with the related clarification, while, for the nature
of the activities performed, it is not expected that the application of this new standard will
significantly affect the revenue and cost recognition.
As follows, the accounting principles, amendments and interpretations issued by IASB and not been
endorsed by European Union yet, but relevant for the Group:
IFRS 14 Regulatory Deferral Accounts. On January 30, 2014, the IASB issued this standard
that allows only first-time adopters to continue to account for balances relating to rate-
regulated activities based on the previous accounting standards. The European Commission
has decided not to launch the endorsement process of this Standard and to wait for the final
Standard.
IFRS 17 Insurance Contracts. On May 18, 2017, the IASB issued this standard that will
supersede IFRS 4 Insurance Contracts. This standard requires all insurance contracts to be
accounted for in a consistent manner and insurance obligations to be accounted for using
current values, instead of historical cost. The new standard requires current measurement of
the future cash flows and the recognition of profit over the period that services are provided
under the contract. IFRS 17 also requires entities to present insurance service results (including
presentation of insurance revenue) separately from insurance finance income or expenses,
and requires an entity to make an accounting policy choice of whether to recognize all
insurance finance income or expenses in profit or loss or to recognize some of those income
or expenses in Other Comprehensive Income. This standard is applicable to periods beginning
on or after January 1, 2021. Early adoption is permitted
. The Group will analyze
the possible impacts on its Consolidated Financial Statements related to the adoption of this
new standard.
IFRIC 22 Foreign Currency Transactions and Advance Consideration. On December 8, 2016,

the IASB issued this interpretation in order to clarify the accounting for transactions that
include the receipt or payment of advance consideration in a foreign currency. This
interpretation is applicable to periods beginning on or after January 1, 2018. Early adoption is
permitted. The Group will analyze the possible impacts on its Consolidated Financial
Statements related to the adoption of this new interpretation.

IFRIC 23 Uncertainty over Income Tax Treatments. On June 7, 2017, the IASB issued this
interpretation in order to clarify the application of recognition and measurement
treatments. This interpretation is applicable to periods beginning on or after January 1, 2019.

Early adoption is permitted. The Group will analyze the possible impacts on its Consolidated
Financial Statements related to the adoption of this new interpretation.
Amendments to IFRS 9 - Prepayment Features with Negative Compensation. These

amendments address the concerns about how IFRS 9 'Financial Instruments' classifies
particular prepayable financial assets. In addition, the IASB clarifies an aspect of the accounting
for financial liabilities following a modification. These amendments are applicable to periods
beginning on or after January 1, 2019. Early adoption is permitted. The Group will analyze the
possible impacts on its Consolidated Financial Statements related to the adoption of these
new amendments.
Amendments to IAS 28 - Long-term Interests in Associates and Joint Ventures. These

amendments clarify that an entity applies IFRS 9 'Financial Instruments' to long-term interests
in an associate or joint venture that form part of the net investment in the associate or joint
venture but to which the equity method is not applied. These amendments are applicable to
periods beginning on or after January 1, 2019. Early adoption is permitted. The Group will
analyze the possible impacts on its Consolidated Financial Statements related to the adoption
of these new amendments.
Amendments to IFRS 10 and IAS 28 Sales or Contribution of Assets between an Investor and
its Associate or Joint Venture. These amendments address an inconsistency between the
requirements
investor and its associate or joint venture. The amendments set out that a full gain or loss is
recognized when the assets constitute a business or a partial gain or loss is recognized when
the assets do not constitute a business. On December 17, 2015, the IASB issued an amendment
formalizing the deferral of these amendments indefinitely.
4. Consolidation principles and accounting policies

The main accounting principles and standards applied in preparation of the Consolidated Financial
Statements and of the Group aggregate financial disclosures are set forth below.
Consolidation principles
The financial statements as of August 31, 2017 of the companies included in the scope of
consolidation, prepared in accordance with Group accounting policies with reference to IAS/IFRS,
have been used for consolidation purposes.
Subsidiaries
Subsidiaries are all entities over which the Company has direct or indirect control. The Company
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Group. They are not part
of the perimeter of consolidation starting from the date control ceases.

The assets, liabilities, costs and revenues of the individual consolidated companies are fully
consolidated, from the date of acquisition, on a line-by-line basis, regardless of the percentage
owned, while the carrying value of consolidated investments held by the parent company and other
consolidated companies is eliminated against the related share of equity. All intercompany balances
and transactions, including unrealised profits deriving from transactions between consolidated
companies, are eliminated. Unrealised losses are eliminated, except when a loss represents an
impairment indicator to be recognised in the Income Statement.
Non-controlling interests in the net assets of consolidated subsidiaries are identified separately
inority in excess of the non-controlling
nterests of the Group, except for the
extent that the non-controlling interest has a binding obligation and is able to make an additional
investment to cover the losses.
Joint ventures
A joint venture is an entity for which strategic financial and operating decisions on relevant activities
are made with the unanimous approval of the controlling parties. Investments in joint ventures are
consolidated applying the equity method from the date that joint control starts until the date that
joint control ceases, which means that the results and any change in Other Comprehensive Income
of the joint ventures and associates are reflected in the Consolidated Income Statement and in
consolidated statement of Other Comprehensive Income.
The carrying amount of goodwill arising from the acquisition of joint ventures is included in the
carrying amount of investments in joint ventures. The entire carrying amount of the investment,
including goodwill, is tested for impairment annually. If the carrying amount exceeds the
recoverable amount, the carrying value of the investment in the joint venture or in the associate is
adjusted by booking the related loss to the Income Statement.
Investments in other companies

Equity investments in other companies that are available-for-sale financial assets are measured at
fair value, when this can be reliably determined. Gains or losses arising from changes in fair value
are recognized directly in equity until the assets are sold or are impaired, when the cumulative gains
and losses previously recognized in equity are recognized in the income statement of the period.
Investments in other companies for which fair value is not determinable are stated at cost less any
impairment losses.
Business combinations
Business combinations are recognized under the acquisition method. According to this method, the
consideration transferred to a business combination is measured at fair value calculated as the
aggregate of the acquisition-date fair value of the assets transferred and liabilities assumed by the
Company and of the equity instruments issued in exchange for the control of the acquired entity.
On the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized
at their acquisition date fair value. The following items represent exception to the above rule and
are valued according to their reference standard:
deferred tax assets and liabilities;
assets and liabilities relating to employee benefits;

liabilities or equity instruments relating to share-based payments of the acquired entity or
share-based payments relating to the Group, issued as a replacement of contracts of the
acquired entity; and
assets held for sale and discontinued assets and liabilities.
Acquisition-related costs are recognized in Income Statement as incurred.
Goodwill is measured as the surplus between the sum of the consideration transferred to the
business combination, the value of non-controlling interests and the fair value of previously-held
equity interest in the acquiree with respect to the fair value of the net assets transferred and
liabilities assumed as at the acquisition-date. If the fair value of the net assets transferred and
liabilities assumed as at the acquisition-date exceeds the sum of the consideration transferred, the
value of non-controlling interests and the fair value of the previously held equity interest in the
acquiree, said surplus, are immediately booked to the income statement as gain resulting from said
transaction.
The share of non-controlling interests as at the acquisition-date may be measured at fair value or as
a proportion of net assets value in the acquiree. The measurement method adopted is decided on
a transaction-by-transaction basis.
Accounting for asset acquisitions

For acquisition of a subsidiary not meeting the definition of a business, the Group allocates the cost
between the individual identifiable assets and liabilities in the Group based on their relative fair
values at the date of acquisition. Such transactions or events do not give rise to goodwill.
Functional currency
The financial statements of the subsidiaries are prepared using the currency of the primary
Consolidated Financial
Statements are prepared and presented in Euro, which is also the functional currency of the parent
company.
The translation process for the financial statements reported in currency other than Euro is the
following:
Balance Sheet items are translated into Euro at the year-end exchange rates (August 31);
,
calculated as a year-to-date average exchange rate over a period of twelve months, starting
from September 1 to August 31;
differences arising on translation of opening equity balances at year-end exchange rates are
booked to the translation reserve, together with any difference between net result per
income statement and net result per balance sheet;
whenever a subsidiary with a functional currency other than Euro is disposed of, any
exchange differences included in Other Comprehensive Income are charged to Income
Statement;
Dividends paid by companies having a functional currency other than Euro are converted at
the average exchange rate of the previous year and at the current exchange rate
for the company that receives the dividend; exchange differences between the two amounts
are booked in Income Statement.
The exchange rates used for translation purposes can be found in Annex II.

Accounting policies
The accounting policies applied to the financial statements as of August 31, 2017 are described in
the notes related to the different key figures of the financial statements.
5. Critical accounting judgments and key sources of estimation uncertainty

within the notes to the
items of the Consolidated Financial Statements, Group Management is required to make
judgements, estimations and assumptions about the carrying amounts of assets and liabilities that
are not readily apparent from other sources.
The estimates and associated assumptions are based on the historical experience and other factors
that are considered to be relevant. Actual results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate is revised if it
affects only that period, or in the period of the revision and future periods if it affects both current
and future periods.
Business combinations
Accounting for business combinations requires the allocation of the purchase price to the various
assets and liabilities of the acquired business at their respective fair values. Any positive residual
loss account. Management uses all available information to make these fair value determinations.
Additional disclosure about business combinations is provided in the note 8. Business Combinations
and Goodwill.
Key sources of estimation uncertainty

The following are key assumptions concerning the future, and other key sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year.
Useful lives of property, plant and equipment and intangible fixed assets
Determining the recoverability of property, plant and equipment, and intangibles requires, among
other matters, an estimation of future production output and changes in technology. The Group
reviews the estimated useful lives of property, plant and equipment and intangibles periodically or
at the end of each annual reporting period using several statistical, historical and judgemental
factors. Additional disclosure is provided in the note 13. Property, plant and equipment and note 14.
Intangible assets.
Recoverability of non-current assets

Assets are impaired when there are events or changes in circumstances that indicate the carrying
business plans, changes in commodity prices leading to unprofitable performance, and a reduced
utilization of the plants. Determination as to whether and how much an asset is impaired involves
management estimates on highly uncertain and complex matters such as future commodity prices,
the effects of inflation and technology improvements on operating expenses, production profiles
and the outlook for global or regional market supply.

The amount of an impairment loss is determined by comparing the book value of an asset with its
recoverable amount. The recoverable amount is the greater of fair value net of disposal cost or the
value in use.
The estimated value in use is based on the present values of expected future cash flows net of
disposal costs. The expected future cash flows used for impairment analyses are based on
judgmental assessments of future production volumes, prices and costs, considering available
information at the date of review and are discounted by using a rate, which considers the risks
specific to the asset.
The discount rate reflects the current market valuation of the time value of money and of the
specific risks of the asset not reflected in the estimate of the future cash flows.
Additional information about non-current assets is provided in the note 8. Business combination
and goodwill, note 13. Property, plant and equipment, note 14. Intangible assets, note 15. Biological
assets and 16. Non-current investments, securities and financial assets.
Goodwill
Goodwill is not subject to amortization. The Group tests for impairment of such assets at the cash-
generating unit level on an annual basis and whenever there is an indication that it may be impaired.
In particular, goodwill impairment is based on the lowest level (cash generating unit) to which
goodwill can be allocated on a reasonable and consistent basis. A cash-generating unit is the
smallest aggregate on which the Group, directly or indirectly, evaluates the return on the capital
expenditure. If the recoverable amount of a cash generating unit is lower than the carrying amount,
goodwill attributed to that cash generating unit is impaired up to that difference; if the carrying
amount of goodwill is lower than the amount of the impairment loss, the assets of the cash
generating unit are impaired pro-rata on the basis of their carrying amount for the residual
difference.
Additional information about goodwill is provided in the note 8. Business Combinations and
Goodwill.
Allowance for doubtful accounts

The recoverability of receivables is assessed by taking into account the risk of non-collection, their
age and the credit losses experienced in the past for similar types of receivables.
Additional information about allowance for doubtful accounts is provided in the note 18. Trade and
other commercial receivables.
Pension and other post-employment obligations

The retirement benefit obligations related to the defined benefit pension plans recognized in the
balance sheet are the present value of the defined benefit obligations at the balance sheet date.
Key assumptions involved in the determination of the present value of the defined benefit
obligations include discount rates and inflation rates of pensions to be paid. Changes in any of these
assumptions could materially change the retirement benefit obligations recognized in the balance
sheet.
Additional disclosure about pension and other post-employment obligations is provided in the note
22. Employee benefit plans.
Provisions for liabilities and charges

Provisions for commercial risks, customer returns, promotion costs and discounts are mainly based
on assumptions regarding the business risks, as well as historical claims experience. Estimates of the

future costs of these actions are inevitably imprecise and may result in adjustments to the
established provisions due to various uncertainties.
The amounts set aside for legal, tax and administrative disputes are the result of a complex
estimating process that also takes into account the probability of a negative outcome of the
proceedings. The Group monitors the status of pending litigation and relies on the advice of counsel
and other legal and tax experts. Consequently, it is possible that amount of the provisions for judicial
proceedings and litigation may vary depending on future developments of pending proceedings.
Additional information about provisions for liabilities and charges is provided in the note 23.
Provisions.
Income taxes
The Group is subject to income taxes in numerous countries. Significant judgment is required in
determining the worldwide provision for income taxes. There are many transactions and
calculations for which the final tax determination is uncertain during the ordinary course of
business. The Group recognizes liabilities for anticipated tax audit issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these matters is different from
the amounts that were initially recorded, such differences will impact the income tax and deferred
tax provisions in the period in which such determination is made.
Additional information about income taxes is provided in the note 12. Taxation.
Recoverability of deferred tax assets

Deferred tax assets have been recorded on the premise that it is probable that the Group will be
able to generate sufficient and suitable future taxable income from which the assets can be utilized.
If the Group is unable to generate sufficient taxable income in certain jurisdictions, or if there is a
significant change in the actual effective tax rates or the time period within which the underlying
temporary differences become taxable or deductible, the Group could be required to increase its
valuation allowances against its deferred tax assets, resulting in an increase in its effective tax rate
and an adverse impact on future operating income.
Additional disclosure about deferred tax assets is provided in the note 12. Taxation.
Fair value of assets and liabilities from Business Combination

Assets and liabilities recorded following a Business Combination are stated at the fair value at the
date of the combination according to IFRS 3; the fair value is determined using projection of the
future cash flow generated from the assets and liabilities that are subject to the uncertainties
attributable to the realization of future events; if the actual results are different from the projection,
t
imply the recognition of impairment in case the actual results are worst that the projections adopted
at the acquisition date.
Additional disclosure is provided in the note 8. Business Combinations and Goodwill.
Accounting for derivative financial instruments and hedging activities

The Group enters into a variety of derivative financial instruments to manage its exposure to foreign
exchange rate risk. Derivatives are initially recognized at fair value at the date a derivative contract
is entered into and are subsequently re-measured to their fair value at each balance sheet date. The
resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event the timing of the recognition in profit or loss
depends on the nature of the hedge relationship.

The Group could designate certain derivatives as either fair value hedges (hedges on the fair value
of recognized assets or liabilities or firm commitments) or cash flow hedges (hedges on highly
probable forecast transactions or hedges of foreign currency risk of firm commitments).
Additional disclosure is provided in the note 20. Current financial assets, liabilities and securities.
Hedge accounting
At the inception of the transaction, the Group documents the relationship between hedging
instruments and hedged items, as well as its risk management objectives and strategy for
undertaking various hedging transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items. Additional
disclosure is provided in the note 20. Current financial assets, liabilities and securities.
Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges is deferred in Other Comprehensive Income.
The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.
Amounts deferred in Other Comprehensive Income are recycled in profit or loss in the periods when
the hedged item is recognized in profit or loss.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging
instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
Any cumulative gain or loss deferred in Other Comprehensive Income at that time remains in Other
Comprehensive Income and is recognized when the forecast transaction is ultimately recognized in
profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or
loss that was deferred in Other Comprehensive Income is recognized immediately in profit or loss.
Additional disclosure is provided in the note 20. Current financial assets, liabilities and securities.
6. Risk Management
Due to its global operations, the Group is exposed to strategic, operational, and financial risks.
Considering the existing and inevitable strategic and operating risks of the core business,
ctive is to minimize the impact of the financial risks on the operating and net
profit for the reporting period.
The Group has adopted a Financial Risk Management policy to assure that financial risks are
identified, measured and properly managed. Financial risk is split in liquidity risk, market risk and
credit risk, which are described below.
Liquidity risk
Liquidity risk is the risk that suitable sources of funding for the Group may not be available, or the
Group is unable to sell its assets in the market place to meet short-term finance requirements and
to settle obligations. Prudent liquidity risk management implies maintaining sufficient cash and the
availability of funding through an adequate amount of credit facilities to meet obligations when due
and to close out market positions.
The exposure to liquidity risk is managed by the Group s Management mainly through the use of
the Group systems. The Group analyses, at the relevant date, the inflows and outflows of financial
instruments with the related gap analysis for each maturity. This analysis is based on exchange and
risk-free curves applicable at the reporting date and is related to the range of maturities relevant
for the Group.

Additional disclosure about maturities and split by time buckets of cash outflows referred to
contracts in force at year-end is provided in notes 20. Current financial assets, liabilities and
securities, 24. Banks and financial liabilities, 25. Debt owed to Shareholders, 26. Trade and other
current payables.
Market risk
Market risk is the possibility that changes in market parameters, such as currency exchange rates,
interest rates or commodity prices will adversely affect the value of the Group s financial assets and
liabilities.
The Group only engages in derivative financial instruments in order to hedge against market risks,
therefore no trading derivatives are undertaken for speculative purposes.
Subsidiaries, in coordination with the Group central functions, use forward and option instruments
in order to hedge against foreign exchange and commodity price risks from expected trade
receivables or payables for goods and services.
Exchange rate risks

Exchange rate risk is the risk that the fair value or future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates. The reporting currency of the Group is the Euro and
the exchange risk is the main type of market risk managed by the Group. The exposure to this risk
foreign currency) and it is related to currency exchange fluctuations from the purchases of raw
materials and sales of goods denominated in foreign currencies, such as the Turkish lira, the US
dollar, the Chinese Renminbi, the Indian Rupee, the Russian Ruble and the British Pound.
ubsidiaries, in accordance with the policies of the Group
department, use forward and option instruments (mainly cash flow hedge instruments) in order to
hedge against foreign exchange risks from expected trade receivables or payables for goods and
services. The enter into spot, forward and option instruments, in accordance
with Corporate Financial departments.
On August 31, 2017, the potential after tax effects on the Consolidated Income Statement and on
the consolidated equity of a change in the Euro against the foreign currencies with all other
conditions remaining equal would have been:
NET INCOME EQUITY RESERVES

10% -10% 10% -10%
After tax impact (42,409) 81,760 7,476 (51,040)
The most relevant exposure in the Consolidated Income Statement corresponded to Turkish Lira,
US Dollar and Russian Ruble.
Interest rate risk

Interest rate risk is the possibility of an increase in the interest expense in the event of a raise in
market interest rates. The Group adopts all the necessary measures in order to minimize this specific
-term borrowings bear
fixed interest rates.

Commodity price risk
price fluctuations due to climatic conditions, seasonal demand and market speculations.
In order to mitigate the price risk of the expected future net demand, the Group
Department enters into commercial agreements with suppliers to stabilize the supply of delivery of
the raw materials and into financial derivatives contracts with financial institutions (cash flow hedge
instruments).
Credit risk
Credit risk is the potential exposure of the Group to losses when counterparties fail to pay due
amounts. In relation to counterparty risk for commercial transactions, the Group adopts all the
necessary financial instruments and procedures in order to minimize this specific risk and
Management monitors and manage credit worthiness of the counterparties.
Customer credit risk is managed by each subsidiary, which has to perform at least annually an
analysis of the overall credit risks. Risk ratings are locally assigned to each customer and assessed at
least annually. Credit limits are defined in accordance with this assessment and reviewed on a
regular basis, depending on seasonality and customer transaction historical data.
A provision for doubtful receivables is recorded on the basis of significant information about the
financial reliability and capacity of a customer to fulfil its financial obligations. The Group considers
that these are evidence of impairment:
customers undergoing a financial reorganization (e.g. receivership or bankruptcy);
receivables disputed or under legal proceedings;
official ratings or other market information leading to a review of the customer
creditworthiness;
significant delays in the customer payments.
Receivables for which an impairment provision was recognized are written off against the provision
where there is no expectation of recovering additional cash.
Moreover, overall accounts receivables ageing analysis is performed on regular basis to assess
whether there is objective evidence that an impairment should be recorded.
The maximum exposure of credit risk at the reporting date is the carrying value of each class of
financial assets. Due to the geographical spread of the sales and the large number of clients, the
concentration of credit risk for Ferrero Group is limited.
7. Fair value and hierarchy levels

The Group measures financial instruments, such as derivatives, at fair value at each balance sheet
date. The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants act in
their economic best interest. The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, maximising the use
of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured are categorized within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement.

The levels used in the hierarchy are:
Level 1: inputs are quoted prices available in active markets for the assets or liabilities being
measured;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices) on the market
(for additional information refer to note 20. Current financial assets, liabilities and
securities);
Level 3: inputs that are not based on observable market data.
Fair Value hierarchy as of August 31, 2017 as compared to August 31, 2016 is as follows:
Balance as of
August, 31 2017 Level 1 Level 2 Level 3
Participating Interests 50,043 50,043

Permanent bonds and other non current securities (AFS) 11,214 11,214
Bonds and current securities (AFS) 10,307 10,307
Financial derivatives (cash flow hedges) 43,839 236 43,603
Total financial assets at fair value 115,403 71,800 43,603 -
Financial derivatives (cash flow hedges) 48,890 20,810 28,080
Total financial liabilities at fair value 48,890 20,810 28,080 -
Balance as of
August, 31 2016 Level 1 Level 2 Level 3
Partecipating Interests 38,768 38,768

Permanent bonds and other non current securities (AFS) 8,264 8,264
Bonds and current securities (AFS) 6,711 6,711
Financial derivatives (cash flow hedges) 50,264 35,195 15,069
Total financial assets at fair value 104,007 88,938 15,069 -
Financial derivatives (cash flow hedges) 16,000 418 15,582
Total financial liabilities at fair value 16,000 418 15,582 -
For assets and liabilities that are recognised in the Consolidated Financial Statements at fair value
on a recurring basis, the Group determines whether transfers have occurred between levels of
hierarchy at the end of each reporting period. There have been no significant transfers between the
different hierarchy levels in financial year 2016/2017.
The value of short-term financial instruments approximates the fair value. The Group assessed that
the fair value of cash and short-term deposits, trade receivables, trade payables, bank overdrafts
and other current liabilities approximate their carrying amounts largely due to the short-term
maturities of these instruments.
on the basis of the contractual stream of cash flows (including both coupon payment and
repayments) at a market rate of interest.

8. Business Combinations and Goodwill
Goodwill resulting from business combinations is initially recognized as a difference between the
total consideration and the FV of the net assets acquired at the acquisition date. Goodwill is not
amortized but is tested annually for impairment, or more frequently if specific events or changed
circumstances indicate a potential loss in value. Unlike other intangible assets, reversal of an
impairment loss is not allowed for goodwill. For impairment test purposes, goodwill was allocated
to each of the Cash Generating Units (CGU) that benefit from the acquisitions. During the year, the
impairment test performed results in no losses recognized in income statement.
For impairment test purposes, it is possible to identify goodwill deriving from external acquisitions
in three CGUs: Hazelnuts business, Thorntons and Eurobase. The specific goodwill of the
amounts to 99,916 Euro ounts to
43,758 Euro (decreased of 3,715 Euro due to the fluctuation of British Pound exchange rate); and
Euro.
During fiscal year 2016-2017 Ferrero International S.A. completed the acquisition of the
100% shares of Fannie May Confections Brands, Inc. from 1-800-FLOWERS.com, Inc..
Fannie May Confections Brands, Inc. is the holding company of Fannie May Confections, Inc. and
Harry London Candies Inc. subsidiaries and is located in North Canton, Ohio.
Details of the acquisition are disclosed in the following chart:
Fannie May Confections

Brands, Inc.
Total Consideration (A) 93,100

Fair value of net assets acquired (B) 65,941
Goodwill (A) - (B) 27,159
Details of the fair value of the assets and liabilities acquired are as follow:
Fannie May Confections

Brands, Inc.
Property, plant and equipment 10,365

Intangible assets 36,748
Inventory 21,240
Trade and other receivables 7,363
Trade and other payables (6,035)
Provisions, employee benefits and deferred taxes (3,980)
Cash and cash equivalents 240
Fair value of net assets acquired 65,941
The valuation method used for Property, plant and equipment is the Depreciated cost approach,
while for Intangible assets is Multi-period Excess Earnings Methodology and for the inventory is the
estimated selling price less cost to complete or distribute and the associated profit margin.

Acquisition-related costs for this business combination have been recognized in the Consolidated
Income Statement for an amount of 2,592 Euro.
As result of the acquired control, Fannie May Confections Brands, Inc. and its subsidiaries have been
fully consolidated line by line starting from May 30, 2017. As of August 31, 2017 the total
contribution of the acquired group to the consolidated net sales and net loss of the year has been
of 7,004 Euro and (14,750) Euro respectively. The fluctuation of the US dollar against the Euro has
caused a decrease in the newly acquired co ) Euro.
Other non-
acquisitions.
9. Net sales
Revenues from the sale of products are measured at the fair value and are recognised at the time
ownership passes (time of risks and benefits transfer), which is generally upon shipment to the
customer. They are shown net of estimated customer returns, rebates, discounts and similar
allowance.
In particular, revenues from the sale of goods are recognised when all the following conditions are
satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the
goods;
the Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the entity;
and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Net sales as of August 31, primarily from the confectionery business, are detailed by geographical
region as follows:
2017 2016
Europe 7,722,695 7,559,499

Extra Europe 2,762,363 2,766,346
10,485,058 10,325,845
10. Other revenues

Other revenues include revenues from services rendered, government grants and other operating
revenues. Revenues from services rendered are recognised at the time the services are provided.
Some subsidiaries benefited from Government grants, whose primary condition was the purchase,
the construction or the acquisition of non-current assets in general. These grants were recognized
as deferred income within other current payables in the balance sheet and transferred to income
statement on a systematic and rational basis over the useful lives of the related assets. Government

grants are not recognized until there is reasonable assurance that the Group will comply with the
conditions attaching to them and the grants will be received.
Other government grants are recognized as income on a systematic basis over the periods in which
the Group recognizes expenses, which the grants are intended to compensate. Government grants
that are receivable as compensation for expenses or losses already incurred or for the purpose of
giving immediate financial support to the Group, with no future related costs, are recognized in
profit or loss in the period in which they become receivable.
In the years ended as at August 31, 2017 and 2016, other revenues are detailed as follows:
2017 2016
Recharged costs and services rendered 28,234 37,973

Government grants 19,545 13,701
Other operating revenues 344,685 434,457
392,464 486,131
Other operating revenues are mainly comprised of revenue earned from the Energy business.
During fiscal year 2016/2017 the and contracts for trading activity
of energy has been sold to another market player.
11. Cost of revenues

Cost of services
Cost of services as of August 31 are detailed as follows:
2017 2016
Selling, general and administrative expenses 2,373,751 2,389,322

Industrial services costs 674,382 670,263
3,048,133 3,059,585
Selling, general and administrative expenses mainly include advertising and promotion costs,
logistics and distribution costs, general and administrative expenses, marketing costs and rental
costs.
Personnel costs
Personnel costs as of August 31 are detailed as follows:
2017 2016
Salary and wages 1,263,022 1,207,643

Social security costs 273,265 245,490
Provisions for employee benefits 36,053 42,512
Other personnel costs 171,213 167,606
1,743,553 1,663,251

Other personnel costs include expenses mainly related to personnel training, recruiting, travelling
and insurance. As of August 31, 2017, Ferrero Group headcount amounted to 34,543 as compared
to 32,990 as of August 31, 2016. The average number of personnel during the year 2016/2017 was
30,305 (29,206 in 2015/2016).
12. Taxation
Current tax liabilities (assets) for the current period and previous periods are measured at the
amount expected to be paid to (recovered from) the tax authorities, according to current tax
legislation in the country concerned by the end of the reporting period, considering any exemptions
and tax credits that may be due.
Current tax assets and liabilities are offset where the Company has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise the asset and settle the liabilities
simultaneously.
Reconciliation of effective and expected taxation for fiscal year 2016/2017 as compared to
2015/2016 is as follows:
2017 2016
Income before tax 977,655 1,002,447
Expected Group's income taxation calculated using national rates

applicable to income in related countries 212,920 251,855
Local Income taxes (regional) 66,375 41,582
Total expected Group's income taxation 279,295 293,437
Permanent differences arisen during the period (2,022) (25,842)

Tax losses arisen/(used) during the period 10,436 (1,339)
Deferred tax adjustments and other (5,848) (19,444)
Income taxes net of other taxable base differences 281,861 246,812
Other taxable base differences 39,196 (37,160)
Income taxes 321,057 209,652
Other taxable base differences mainly include some non-recurring deferred taxation and accruals
and provisions due to settlements with tax authorities.
Deferred tax assets and liabilities

Deferred taxation is calculated on the temporary differences between the carrying amount of assets
and liabilities and their tax bases, and are classified under non-current assets and liabilities,
respectively.
Deferred tax assets and liabilities are calculated at the tax rates expected to apply in the period
when the asset is realised or the liability is settled under the law of the countries in which the Group
operates, considering current rates and those enacted or substantially enacted at the end of the
reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by the

same taxation authority and the Group intends to settle its current tax assets and liabilities on a net
basis.
Deferred tax assets are accounted for only to the extent that it is probable that sufficient taxable
profits will be available in the future against which they can be used. The carrying amount of the
deferred tax assets shown in the Consolidated Financial Statements is subject to a review at the end
of each reporting period.
Deferred tax liabilities are recognised based on temporary taxable differences on investments in
subsidiaries, associates and joint ventures, unless a company is able to control the timing of the
reversal of the temporary differences and it is probable that those temporary differences will not
reverse in the foreseeable future.
Deferred taxes are recognised in the Income Statement, except for those relating to items directly
recognised to Other Comprehensive Income or directly in equity, in which case the tax effect is
recognised directly in Other Comprehensive Income or directly in equity, respectively.
Deferred tax assets are detailed as follows:

Net Currency
Balance as of increase / translation differences Balance as of
Deferred Tax Assets due to: September 1, 2016 (decrease) and other movements August 31, 2017
Provision 44,145 (6,856) 4,382 41,671

Employee Benefits 28,044 (1,176) (1,280) 25,588
Financial assets and Liabilities 14,347 3,089 (4) 17,432
Inventory 26,042 5,849 1,679 33,570
Recognized tax assets 5,663 5,085 (50) 10,698
Exchange differences 5,658 1,034 - 6,692
Property, plant and equipment 5,331 (2,875) 2,334 4,790
Other 30,678 (5,343) 942 26,277
Total deferred tax assets 159,908 (1,193) 8,003 166,718
Deferred tax liabilities are detailed as follows:

Net Currency
Balance as of increase / translation differences Balance as of
Deferred Tax Liabilities due to: September 1, 2016 (decrease) and other movements August 31, 2017
Property, plant and equipment 237,760 (1,312) (6,290) 230,158

Intangible Assets 30,565 (999) 11,437 41,003
Inventory 9,232 (8,963) 230 499
Financial Derivatives 8,746 (5,834) (664) 2,248
Other 12,720 699 (986) 12,433
Total deferred tax liabilities 299,023 (16,409) 3,727 286,341
The net impact of deferred tax assets and liabilities on income statement is mainly due to the
expectation on future taxable profits. Other movements include the impact of the business
combination disclosed in note 8. Business Combinations and Goodwill.
13. Property, plant and equipment

At the first adoption date property, plant and equipment, excluding furniture, fittings and office
First Time
Ad Subsequent to the first adoption date, the Group has adopted the cost model.
For tangible assets from business combination, the valuation at the date of first consolidation is
determined according to IFRS 3.

Assets are reported at cost, net of accumulated depreciation and accumulated impairment losses.
Cost includes related charges, together with the portion of direct and indirect expenses reasonably
attributable to individual assets.
Tangible fixed assets are depreciated each month on a straight-line basis using rates that reflect the
technical and economic remaining lives of the related assets. The depreciable value is the cost of an
asset less its residual value, where the residual value of an asset is the estimated value that the
entity could receive at the end of its useful life from its disposal, net of estimated disposal costs.
Depreciation is calculated from the month that the asset becomes available for use, or when it is
potentially able to provide the economic benefits expected from it.
Estimated useful lives generally applied within the Group are summarized hereafter by tangible
fixed asset category:
Buildings 50 years
Plant and Machinery 8 to 30 years
Technical Equipment 3 to 15 years
Furniture and Fittings 8 years
Computers and Machinery 5 years
Internal Transportation Vehicles 4 years
Cars 4 years
Other Tangible Fixed Assets 3 to 5 years
Lands, assets under construction and payments on account are not depreciated.
Ordinary maintenance costs are charged to the Income Statement. Maintenance costs that increase
the value, functions or useful life of fixed assets are reported directly as the increase in the value of
the assets to which they refer and depreciated over their residual useful lives. Gains or losses on the
disposal of assets are calculated as the difference between the sales proceeds and the net book
value of the asset and are charged to the Income Statement for the period.
Tangible fixed assets are subjected to impairment test if there are indications of possible losses in
value. Impairment test is performed by estimating the recoverable amount of an asset or of a cash-
generating unit and comparing it with its net book value. The recoverable amount of a tangible fixed
asset is defined as the higher of its fair value less costs to sell and its value in use, determined by
discounting the expected future cash flows, using a discount rate based on an estimate of the rate
that the market would expect on an investment of comparable risk. If the recoverable amount is
less than the book value, the latter is reduced accordingly. This reduction constitutes an impairment
loss, which is booked to the income statement. If a previous write-down is no longer justified, a new
recoverable amount is estimated, providing that it is not higher than the carrying value that would
have been if the write-down had never been made. This reversal is also booked to the Income
Statement.
Within tangible fixed assets, there are some of them under finance lease contract. Those assets are
accounted for as tangible fixed assets at their fair value at the date of purchase or, if lower, at the
present value of the minimum payments due under the lease; the corresponding liabilities to the
lessor are shown in the Balance Sheet as financial debts. The assets are depreciated over their
estimated useful lives.

According to IAS 17, there are two types of leases, finance leases and operating leases. A lease is
considered as finance lease when it transfers substantially all the risks and benefits incidental to the
ownership of the asset to the lessee. In particular, IAS 17 points out the following characteristics,
either individually or in combination, to recognize a finance lease contract:
the contract transfers ownership of the asset to the lessee at the end of the lease term;
the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower
than the fair value at the date the option becomes exercisable such that it is reasonably certain,
at the inception of the lease, that it will be exercised;
the lease term is for the major part of the useful life of the asset, even if title is not transferred;
at the inception of the lease, the present value of the minimum lease payments is equal to the
fair value of the asset being leased;
the assets being leased are of such a specialised nature that only the lessee is able to use them
without making major modifications.
Lease payments are split between the principal portion, which is booked as a reduction of financial
debts, and interest. Financial expenses are charged directly to the Income Statement for the period.
Changes in property, plant and equipment occurred during 2016/2017 and 2015/2016 are detailed
as follows:
Tangible
Land and Plant & Other tangible in progress and
Buildings Machinery Equipment assets pre-payments Total
2017 2017 2017 2017 2017 2017
Cost at the beginning of the year 1,342,564 4,043,745 635,000 322,220 262,988 6,606,517
Additions 94,146 222,682 47,203 31,954 263,987 659,972
Disposals (1,294) (61,293) (9,156) (21,659) (350) (93,752)
Translation adjustments and other changes (14,908) 55,386 18,957 18,015 (129,307) (51,857)
Cost at the end of the year 1,420,508 4,260,520 692,004 350,530 397,318 7,120,880
Accumulated depreciation at the beginning of the year (285,044) (2,211,031) (410,170) (243,651) - (3,149,896)
Depreciation of the year (25,491) (223,393) (37,029) (26,927) - (312,840)
Disposals 787 53,211 7,030 18,442 - 79,470
Translation adjustments and other changes 2,915 25,303 273 (8,789) - 19,702
Accumulated depreciation at the end of the year (306,833) (2,355,910) (439,896) (260,925) - (3,363,564)
Carrying amount at the end of the year 1,113,675 1,904,610 252,108 89,605 397,318 3,757,316
Tangible in
Land and Plant & Other tangible progress and pre-
Buildings Machinery Equipment assets payments Total
2016 2016 2016 2016 2016 2016
Cost at the beginning of the year 1,270,707 3,778,045 637,054 369,016 286,885 6,341,707
Additions 28,069 212,509 28,819 18,331 263,987 551,715
Disposals (750) (75,712) (45,666) (63,980) (382) (186,490)
Translation adjustments and other changes 44,538 128,903 14,793 (1,147) (287,502) (100,415)
Cost at the end of the year 1,342,564 4,043,745 635,000 322,220 262,988 6,606,517
Accumulated depreciation at the beginning of the year (267,342) (2,029,470) (431,875) (290,555) - (3,019,242)
Depreciation of the year (24,990) (291,824) (33,544) (26,586) - (376,944)
Disposals 572 63,860 44,669 61,223 - 170,324
Translation adjustments and other changes 6,716 46,403 10,580 12,267 - 75,966
Accumulated depreciation at the end of the year (285,044) (2,211,031) (410,170) (243,651) - (3,149,896)
Carrying amount at the end of the year 1,057,520 1,832,714 224,830 78,569 262,988 3,456,621

In 2016/2017 660 million Euro of additions in tangible fixed assets mainly refer to industrial and
manufacturing investments in Italy, Germany, Poland, Canada and Belgium (compared to
552 million Euro in 2015/2016) and to the investment for the construction of a new building that
will be used as office for the headquarters in Luxembourg. Other changes in Tangible assets include
the impact of the business combination disclosed in note 8. Business Combinations and Goodwill.
The recoverable amounts of the relevant assets have been determined on the basis of their value in
use.
14. Intangible assets

An intangible asset is recognised if it is identifiable and verifiable, it is probable that it will generate
economic benefits in the future and its cost can be measured reliably. For intangible assets resulting
from business combination the valuation at the date of first consolidation is determined according
to IFRS 3.
Intangible assets with a definite life are valued at purchase or production cost, net of amortisation
and accumulated impairment losses.
Intangible fixed assets are amortised each month on a straight-line basis using rates that reflect the
expected usage of the asset and any economical or legal factors influencing its useful life. The
depreciable amount of an intangible asset with a finite useful life is the cost of the asset less its
residual value. The residual value of an intangible fixed asset with finite useful life shall be assumed
to be zero, unless there is a commitment of a third party to buy the asset or there is an active market
for the asset. Amortisation is calculated from the month that the asset becomes available for use,
or when it is potentially able to provide the economic benefits expected of it.
The following useful lives are used in the calculation of amortisation:

Software: 4 to 8 years
Customer relationship 36 years
Trademarks 25 years
Industrial patents and similar rights: at maximum, 5 years
Other intangible assets: at maximum, 12 years.
Intangible assets within the Group comprise mainly the categories stated below:
Software: the costs of software licences, including related charges, are capitalised and shown
in the financial statements net of amortisation and any accumulated impairment losses.
Customer Relationship: customer relationship represents the value of the customer portfolio
measured at the acquisition date as determined during the Purchase Price Allocation process
according to IFRS 3, and subsequently amortised.
Trademarks: trademark represents the value of the trademark measured at the acquisition
date as determined during the Purchase Price Allocation process according to IFRS 3 and
subsequently amortised.
Industrial patents and similar rights: industrial patents and similar rights are valued at cost,
less amortisation and accumulated impairment losses. The cost is amortised over the shorter
of the contract term and the finite useful life of the asset.

Concerning research and development expenses, research expenses are charged to the income
statement as incurred in accordance with IAS 38. Development expenses relating to new products
are not capitalised because the future economic benefits can only be reliably determined once the
products are in the market place.
Intangible fixed assets are subjected to impairment test if there are indications of possible losses in
value. Impairment test is performed by estimating the recoverable amount of an asset or of a cash-
generating unit and comparing it with its net book value. The recoverable amount of an intangible
fixed asset is defined as the higher of its fair value less costs to sell and its value in use, determined
by discounting the expected future cash flows, using a discount rate based on an estimate of the
rate that the market would expect on an investment of comparable risk. If the recoverable amount
is less than the book value, the latter is reduced accordingly. This reduction constitutes an
impairment loss, which is booked to the income statement. For intangible fixed assets with
indefinite useful life, impairment test is performed at least once a year. If a previous write-down is
no longer justified, a new recoverable amount is estimated, providing it is not higher than the
carrying value that would have been if the write-down had never been made. This reversal is also
booked to the Income Statement.
Changes in Intangible assets are detailed as follows:

Industrial
patents, Other Intangible in
trademarks and intangible progress and pre-
Software Costs similar rights assets payments Total
2017 2017 2017 2017 2017
Cost at the beginning of the year 616,606 76,369 117,181 23,325 833,481
Additions 42,745 2,507 1,424 19,724 66,400
Disposals (2,044) - (264) (223) (2,531)
Translation adjustments and other changes 18,854 28,812 (11,703) (23,256) 12,707
Cost at the end of the year 676,161 107,688 106,638 19,570 910,057
Accumulated Amortization at the beginning of the year (419,279) (5,337) (10,940) - (435,556)
Amortization of the year (46,135) (2,752) (3,468) - (52,355)
Disposals 1,902 - 183 - 2,085
Translation adjustments and other changes 3,824 4,359 (8,497) - (314)
Accumulated amortization at the end of the year (459,688) (3,730) (22,722) - (486,140)
Carrying amount at the end of the year 216,473 103,958 83,916 19,570 423,917
Industrial
patents, Other Intangible in
trademarks and intangible progress and pre-
Software Costs similar rights assets payments Total
2016 2016 2016 2016 2016
Cost at the beginning of the year 583,329 88,400 115,330 23,413 810,472
Additions 52,468 1 1,127 13,892 67,488
Disposals (27,575) (78) (297) (171) (28,121)
Translation adjustments and other changes 8,384 (11,954) 1,021 (13,809) (16,358)
Cost at the end of the year 616,606 76,369 117,181 23,325 833,481
Accumulated Amortization at the beginning of the year (407,643) (2,687) (4,809) - (415,139)
Amortization of the year (45,072) (3,885) (3,401) - (52,358)
Disposals 27,498 78 228 - 27,804
Translation adjustments and other changes 5,938 1,157 (2,958) - 4,137
Accumulated amortization at the end of the year (419,279) (5,337) (10,940) - (435,556)
Carrying amount at the end of the year 197,327 71,032 106,241 23,325 397,925

The additions of the period for Software Costs mainly refer to software licenses and improvements.
Other changes in Intangible assets include the impact of the business combination disclosed in
note 8. Business Combinations and Goodwill.
The amortization of the year has been included in the line item “Amortization and Depreciation” in
the Consolidated Income Statement.
15. Biological assets

An agricultural activity is the management by an entity of the biological transformation and harvest
of biological assets for sale or for conversion into agricultural produce or into additional biological
assets. In the Ferrero Group’s context, a biological asset represents the plants and fruit trees
(hazelnuts trees) owned by an entity. Harvest represents fruit products maturing on biological assets
owned by an entity.
Biological assets are valued, when first reported and at each subsequent reporting date, at their fair
value, less estimated costs to sell. Due to the current stage of development and the location of this
particular business, the fair value of biological assets cannot be reliably determined; hence, they are
measured at cost. Depreciation is charged on a straight-line basis over the natural life of biological
assets; the useful life used in the calculation of depreciation is 50 years.
Changes in Biological assets are detailed as follows:
Biological assets Biological assets

2017 2016
Cost at the beginning of the year 79,805 68,131

Additions 17,913 12,220
Disposals - -
Translation adjustments and other changes (4,990) (546)
Cost at the end of the year 92,728 79,805
Accumulated Depreciation at the beginning of the year (19,105) (17,477)

Depreciation of the year (2,808) (2,049)
Disposals - -
Translation adjustments and other changes 1,668 421
Accumulated depreciation at the end of the year (20,245) (19,105)
Carrying amount at the end of the year 72,483 60,700
16. Non-current investments, securities and financial assets

The caption includes the following items:
• Non-current investments (participating interests and investments in Joint Venture);
• Non-current financial assets;
• Other minor.
Investments in Joint Ventures represent the investment in the company Stelliferi & Itavex Srl,
operating in the production, transformation and trading of hazelnuts and its semi-finished products
industry. The net profit of Stelliferi & Itavex Srl pertaining to the Ferrero Group is 6,603 Euro for the
fiscal year 2016/2017 as compared to 15,716 Euro for the fiscal year 2015/2016.

Dividends received from participating investments are recorded in income statement when the right
to receive them arises. This is normally at the time of the shareholders' resolution that approves
distribution of the dividends.
s name Country Registered office % of ownership Accounting method
Mediobanca S.p.A. Italy Milan 0.66% Fair value
This investment is not consolidated as it concerns minority interests and the Company has no
management influence.
Lastly, financial assets are classified into the following specified categories:
financial assets at fair value
held-to-
available-for-
The classification depends on the nature and purpose for which the financial assets were acquired
and is determined at the time of initial recognition.
Within Non-current financial assets, the Group mainly recognised investments and securities as
held-to-maturity and available-for-sale.
Investments are recognized and derecognized on the trade date where the purchase or sale of an
investment is under a contract whose terms require delivery of the investment within the timeframe
established by the market concerned. Financial assets are initially measured at fair value, net of
directly attributable transaction costs except for those financial assets classified as at fair value
through profit or loss, which are initially measured at fair value. . Transaction costs of financial assets
at FVTPL are expensed in profit and loss.
Held-to-maturity investments
Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates that
the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity
investments. Held-to-maturity investments are subsequently recorded at amortised cost using the
effective interest method less impairment, with revenue recognized on an effective yield basis.
As clarification, the effective interest method is a method of calculating the amortised cost of a
financial asset (or group of financial assets) and of allocating the interest income over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial instrument or, when appropriate, a shorter period to the
net carrying amount of the financial asset. Income is recognized on an effective interest basis for
debt instruments other than those financial assets designated as at FVTPL.
Available for sale financial assets

Listed shares held by the Group, that are traded in an active market, are classified as AFS and are
subsequently stated at fair value. Gains and losses arising from changes in fair value are recognized
directly in Other Comprehensive Income, with the exception of impairment losses, interest
calculated using the effective interest method and foreign exchange gains and losses on monetary

assets, which are recognized directly in profit or loss. When the investment is disposed of or is
determined to be impaired, the cumulative gain or loss previously recognized in the investments
revaluation reserve is included in profit or loss for the period. Dividends on AFS equity instruments
The change in fair value attributable to translation differences that result from a change in
amortised cost of the asset is recognized in profit or loss, and other changes are recognized in Other
Comprehensive Income.
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each
balance sheet date. Financial assets are impaired when there is objective evidence that, as a result
of one or more events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted. The carrying amount of the financial asset
is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables where the carrying amount is reduced through the use of an allowance account.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after
the impairment was recognized, the previously recognized impairment loss is reversed through
profit or loss. With respect to AFS equity securities, any increase in fair value subsequent to an
impairment loss is recognized directly in Other Comprehensive Income.
In order to establish whether there is an evidence of impairment for a financial asset, the Group
referred to the events indicated by IAS 39.59. For equity securities, in addition to the existence of
the events indicated by IAS 39.59, where applicable, the following two events should also be
considered (IAS 39.61):
significant changes with adverse effects in relation to technologies, markets, the economic or
legal framework of the issuer, which indicate that the cost of the investment can no longer be
recovered;
a significant or prolonged decline in the fair value of the investment below the level of its cost.
Specifically, the following parameters are considered indicative of the need to recognize impairment
in the profit or loss:
fair value of the security 50% lower than the book value upon initial recording; or
fair value lower than the book value for a period of time greater than 2 years.
In determining the fair value of financial instruments, the Group uses quoted price provided by info
providers when the price of the financial instrument is quoted or an active market exists at the time
of valuation; in this case the fair value equals the quoted price recorded (mark-to-market).
Financial assets at FVTPL

Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is
designated as at FVTPL.
A financial asset is classified as held for trading if:
it has been acquired principally for the purpose of selling in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon
initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency
that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both, which
is managed and its performance is evaluated on a fair value basis, in accordance with the Group's
documented risk management or investment strategy, and information about the grouping is
provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the
entire combined contract (asset or liability) to be designated as at FVTPL.
Financial assets at FVTPL are subsequently stated at fair value, with any resultant gain or loss
recognized in profit or loss. Net gain or loss recognized in profit or loss incorporates any dividend or
interest earned on the financial asset. For the year-end 2016/2017 the classification financial assets
at FVTPL is not applicable.
Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are
subsequently measured at amortized cost using the effective interest method less any impairment.
Interest income is recognized by applying the effective interest rate, except for short-term
receivables where the recognition of interest would be immaterial.
For the year ended as at August 31, 2017, the changes in Non-current investments, securities and
financial assets are detailed as follows:
Revaluation/
Balance as of (devaluation) Balance as of
September 1, and other August 31,
2016 Increases Decreases changes 2017
Permanent bonds and other non current securities (HTM) 235,224 121,843 (128,744) - 228,323
Participating interests 38,768 - - 11,275 50,043
Investments in Joint Ventures 43,516 - (4,338) 6,603 45,781
Permanent bonds and other non current securities (AFS) 8,264 2,950 - - 11,214
Other non-current financial assets 33,988 3,166 (4,234) (276) 32,644
Non-current financial assets 359,760 127,959 (137,316) 17,602 368,005
In the previous financial year, ended as at August 31, 2016, the changes in investments and other
non-current securities are detailed as follows:
Revaluation/
Balance as of (devaluation) Balance as of
September 1, and other August 31,
2015 Increases Decreases changes 2016
Permanent bonds and other non current securities (HTM) 241,216 66,093 (72,085) - 235,224
Participating interests 51,913 - - (13,145) 38,768
Investments in Joint Ventures 32,928 - (5,128) 15,716 43,516
Permanent bonds and other non current securities (AFS) 8,079 185 - - 8,264
Other non-current financial assets 37,411 7,175 (10,632) 34 33,988
Non-current financial assets 371,547 73,453 (87,845) 2,605 359,760

The decreases in permanent bonds and other non current securities (HTM) refer to investments
which reached maturity date and have been reimbursed.
17. Inventory
Inventories are stated at the lower of purchase or manufacturing cost, determined on a weighted
average cost basis, and realisable value based on market trends, net of variable selling and
distribution costs. Manufacturing cost includes raw materials and all direct or indirect production-
related expenses. Financial expenses are excluded. Obsolete and slow-moving inventories are
written down to their utilisable or realisable value.
Inventory is comprised of raw materials, semi-finished and finished products, including work in
progress and payments on account. Inventory by category as of August 31 is detailed as follows:
2017 2016
Raw materials and supplies 1,193,869 1,073,224

Work in progress 307,005 239,934
Finished products and consumables 745,207 794,899
Total gross value 2,246,081 2,108,057
Inventory obsolescence reserve (82,665) (67,612)
2,163,416 2,040,445
The changes in the provision for inventory obsolescence are detailed as follows:
2017 2016
Balance at beginning of the year 67,612 78,455
Provision for the year 68,036 54,828

Decrease in allowance (51,791) (63,985)
Translation (gain) (1,192) (1,686)
Balance at the end of the year 82,665 67,612
18. Trade and other commercial receivables

Trade receivables and other receivables that have fixed or determinable payments that are not
For further details on the
classification of financial assets, please refer to note 16. Non-current investments, securities and
financial assets.
The fair value of loans and receivables is considered equal to the carrying amount because all
financial instruments of this kind have a maturity generally less than one year.
Receivables included in current assets, which comprise trade, other commercial and other current
receivables are initially recognised at fair value of the consideration to be received, which usually

corresponds to the nominal value shown on the invoice, adjusted (if necessary) to their estimated
realisable value by making provision for doubtful accounts. Subsequently, receivables are measured
at amortised cost, which generally corresponds to their nominal value. When a trade receivable is
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against the allowance account. Changes in the carrying amount
of the allowance account are recognized in profit or loss.
Trade and other commercial receivables as of August 31 are detailed as follows:
2017 2016
Trade receivables 1,082,689 1,123,060

Other commercial debtors 66,449 85,026
Total gross value 1,149,138 1,208,086
Allowance for doubtful debts (40,780) (37,345)
1,108,358 1,170,741
Other commercial debtors include disputed debtors, invoices to be issued and advances to suppliers
related to services.
The following table represents the ageing of trade and other commercial receivables at August 31:
2017 2016
Other Other
Trade Commercial Trade Commercial
Receivables Debtors Total Receivables Debtors Total
Not yet overdue 977,330 54,358 1,031,688 1,028,352 72,782 1,101,134
Overdue:
- less than 3 months 83,270 162 83,432 55,563 9 55,572
- between 3 months and 6 months 7,458 25 7,483 16,778 - 16,778
- between 6 months and 1 year 3,965 56 4,021 10,399 15 10,414
- more than 1 year 10,666 11,848 22,514 11,968 12,220 24,188
Total Overdue 105,359 12,091 117,450 94,708 12,244 106,952
1,082,689 66,449 1,149,138 1,123,060 85,026 1,208,086
Changes in the allowance for doubtful debts are detailed as follows:
2017 2016
Balance at beginning of the year 37,345 35,979
Increases 22,574 13,461

Decreases (18,380) (12,107)
Translation (gain)/loss (759) 12
Balance at the end of the year 40,780 37,345

In determining the recoverability of a trade receivable, the Group considers any change in the credit
quality of the trade receivable from the date the credit was initially granted through the reporting
date. The concentration of credit risk is limited due to the customer base being large and unrelated.
Accordingly, Management believes that there is no further credit provision required in excess of the
allowance for doubtful debts. The carrying amount of trade and other commercial receivables is
considered in line with their fair value.
19. Other current receivables

Accounting policies and measurements applied to trade and other commercial receivables are also
applicable to other current receivables.
Other current receivables as of August 31 are detailed as follows:
2017 2016
VAT receivables 258,263 237,556

Tax receivables 91,960 109,160
Receivables for social security 11,799 11,048
Total tax, VAT and social securities receivables 362,022 357,764
Accrued income and prepaid expenses 122,804 103,069

Other receivables 57,423 41,156
Receivables towards personnel 7,671 6,947
Total other receivables 187,898 151,172
549,920 508,936
The following table presents the ageing of other current receivables at August 31:
2017 2016
Tax, VAT and Tax, VAT and

Social Social
Securities Other Securities Other
Receivables Receivables Total Receivables Receivables Total
Not yet overdue 362,022 184,983 547,005 357,764 150,628 508,392
Overdue:
- less than 3 months - 870 870 - 326 326
- between 3 months and 6 months - 62 62 - 86 86
- between 6 months and 1 year - 1,580 1,580 - 42 42
- more than 1 year - 403 403 - 90 90
Total Overdue - 2,915 2,915 - 544 544
362,022 187,898 549,920 357,764 151,172 508,936

20. Current financial assets, liabilities and securities
The caption includes mainly bonds, securities and financial derivatives as follows:
2017 2016
Financial derivatives assets (Cash flow hedges) 43,839 50,264

Bonds and current securities 10,307 6,711
Other current financial assets 3,380 2,166
Total current financial assets and securities 57,526 59,141
2017 2016
Financial derivatives liabilities (Cash flow hedges) 48,890 16,000
Bonds and current securities are classified as Available for Sale (AFS) and are evaluated at their
market value. Accounting policies and measurements for financial assets available for sales can be
found in note 16. Non-current investments, securities and financial assets.
In addition, the Group enters into a variety of derivative financial instruments to manage its
exposure to foreign exchange rate risk. Derivatives are initially recognized at fair value at the date a
derivative contract is entered into and are subsequently re-measured to their fair value at each
balance sheet date. The resulting gain or loss is recognized in profit or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship. The Group designates
certain derivatives as either hedges of the fair value of recognized assets or liabilities or firm
commitments (fair value hedges), hedges of highly probable forecast transactions or hedges of
foreign currency risk of firm commitments (cash flow hedges).
Hedge accounting
At the inception of the transaction, the Group documents the relationship between hedging
instruments and hedged items, as well as its risk management objectives and strategy for
undertaking various hedging transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items. In some cases,
the Group designates as hedging instrument a combination of derivatives and separates the intrinsic
value and the time value of an option, with only the intrinsic element designated as hedging
instrument.
Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualified as
cash flow hedges are deferred in Other Comprehensive Income. The gain or loss relating to the
ineffective portion is recognized immediately in profit or loss. Amounts deferred in Other
Comprehensive Income are recycled in profit or loss in the periods when the hedged item is
recognized in profit or loss. Hedge accounting is discontinued when the Group revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer
qualifies for hedge accounting. Any cumulative gain or loss deferred in Other Comprehensive
Income at that time remains in Other Comprehensive Income and is recognized when the forecast
transaction is ultimately recognized in profit or loss. When a forecast transaction is no longer

expected to occur, the cumulative gain or loss that was deferred in Other Comprehensive Income is
recognized immediately in profit or loss.
are
system that has a specific valuation module including a database with observable market inputs
(risk-free yield curve, exchange rates, volatility curves, yield curve for different rating classes) which
are used for the most common valuation techniques. These market parameters are supplied on a
daily basis by specialized financial info-
to provide a reliable valuation of derivative deals, representing particular types of derivative
financial instruments, the Group uses the fair value communicated by counterparty bank in order
to measure the derivative deals on the Consolidated Financial Statements.
The main types of derivative financial instruments outstanding as at August 31, 2017 are the
following:
currency options (call/put) -
forex forwards -
futures on commodities;
options (call/put) on commodities futures, and
commodities forwards.
In case of trading derivatives, these are treated as financial assets at FVTPL, as described in note 16.
Non-current investments, securities and financial assets, or financial liabilities at FVTPL.
Regarding financial liabilities, they are classified as at FVTPL when the financial liability is either held
for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if:
it has been incurred principally for the purpose of repurchasing in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL
upon initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency
that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which
is managed and its performance is evaluated on a fair value basis, in accordance with the Group's
documented risk management or investment strategy, and information about the grouping is
provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the
entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognized in
profit or loss. For the year-end 2016/2017 the classification financial liabilities at FVTPL is not
applicable.
All the financial derivatives have maturity within one year.

At August 31, 2017, the potential effect of net financial derivatives on the Consolidated Income
Statement and on equity of a change in the Euro against the foreign currencies, with all other
conditions remaining equal would have been (amounts net of tax impact):
NET INCOME EQUITY RESERVES

+ 10% - 10% + 10% - 10%
Effective financial derivatives (after tax impact) 31,491 3,202

Not effective financial derivatives (after tax impact) 422 (27,408)
21. Issued capital and equity

Details of items and change during current and previous year of equity are shown in the
Consolidated Statement of Changes in Equity.
Share capital
At August 31, 2017, the Share Capital amounted to 138,000 Euro, unchanged from the previous
year, and is represented by 3,000,000 shares with a par value of 46 Euro each, divided into 12
non-cumulative five percent preference shares and 2,999,988 common shares.
Authorized capital
The authorized capital is set at 230,000 Euro, represented by 5,000,000 shares with a par value of
46 Euro each, composed of 1,000 non-cumulative five percent preference shares and 4,999,000
common shares.
Share premium
The share premium amount of 1,320,116 Euro was paid as a contribution in kind on the
incorporation of the Company in September 1997.
Legal reserve
Legal reserve amounts to 13,800 Euro, which represents the ten percent of the issued share capital
in accordance with Luxembourgish law. The legal reserve is not available for distribution.
Cash flow hedge reserve

The Cash Flow Hedge reserve represents hedging gains and losses recognized on the effective
portion of cash flow hedges. The variation of this reserve, including the recognized incomes and
expenses, is part of the Consolidated Statement of Other Comprehensive Income.
Actuarial gains and losses reserve

The actuarial gains and losses reserve represents actuarial gain and losses on defined benefit
obligations arising from experience adjustments and changes in actuarial assumptions. The change
in the reserve, including the recognition of incomes and expenses, is reported in the Consolidated
Statement of Other Comprehensive Income.
Financial assets available for sale reserve

The Financial Assets available for sale reserve arises on the revaluation of available-for-sale financial
assets.
Where a revaluated financial asset is sold, the portion of the reserve that relates to that financial
asset, and is effectively realised, is recognized in profit and loss.

Where a revaluated financial asset is impaired, the portion of the reserve that relates to that
financial asset is reported in profit and loss.
The change in the reserve, including the recognition of income and expenses, is reported in the
Consolidated Statement of Other Comprehensive Income.
Foreign currency translation reserve

Exchange differences due to the
subsidiaries into (Euro) are reported within the foreign currency
translation reserve.
Gains and losses on hedging instruments that are designated as hedges on net investments in
foreign operations are included in the foreign currency translation reserve.
Other reserves and profit brought forward

As in period 2015/2016, during the year 2016/2017 no dividends distribution has been deliberated.
More details are disclosed in note 25. Debt owed to Shareholders.
In case of dividends distribution, the amount to be distributed is recognised as a payable to

shareholders immediately after they have been approved.
Non-controlling Interests
The Group has not non-controlling interests as of August 31, 2017 as well as of August 31, 2016.
22. Employee benefit plans

Group employees have defined benefit and/or defined contribution pension plans, depending on
the conditions and local practices of the countries in which the group operates. The Group operates
defined contribution retirement plans for all qualifying employees of its several subsidiaries. Where
employees leave the plans prior to full vesting of the contributions, the contributions payable by
the Group is reduced by the amount of forfeited contributions. The only obligation of the Group
related to the retirement benefit plan is to make the specified contributions.
Certain Group employees receive leaving indemnities in accordance with the applicable laws of the
appropriate provisions and accruals recorded in the balance sheet.

The benefit earned by employees is fully vested at year-end and represents the present value of the
For the defined . The annual

cost recognised in the Income Statement is calculated on the basis of actuarial valuations that use
the projected unit credit method performed by external consultants. The liability relating to benefits
to be recognised on termination of employment recorded in the balance sheet represents the
present value of the defined-benefit obligation, less the fair value of the plan assets. Any net assets
determined are recognised at the lowest of their value and the present value of available
repayments and reductions of future contribution to the plan.
The present value of the defined benefit obligations are determined by discounting the estimated
future cash outflows using interest rates of high-quality government bonds that are denominated
in the currency in which the benefits will be paid, and that have terms of maturity approximating to
the terms of the related pension liability.

Group recognises actuarial gains and losses and books them to Other Comprehensive Income
immediately, so that the full net amount of the provisions for the defined benefits (net of plan
assets) is recognised in the balance sheet. The amendment further requires any changes in the
defined benefit provision and plan assets over the previous period to be subdivided into three
components: the cost components of work performed during the reporting period must be
recognised in the Income Statement as service costs; net interest costs calculated by applying the
appropriate discount rate to the opening balance of defined benefit provision net of assets must be
booked to Income Statement as net financial expenses and the actuarial gains and losses resulting
from the re-measurement of assets and liabilities must be booked to Other Comprehensive Income.
In the event of an amendment to the plan that changes the benefits relating to past service or in
the event of the application of a new plan relating to past service, the costs relating to past service
are booked to the Income Statement (under service costs). In the event of an amendment to the
plan that significantly reduces the number of employees involved in the plan or that changes the
clauses of the plan in such a way that a significant part of future service due to employees will no
longer accrue the same benefits or will accrue them but to a lesser extent, the profit or loss relating
to said reduction is immediately booked to the Income Statement (under service costs). The costs
relating to defined contribution plans are booked to the Income Statement when incurred.
The changes in Employee benefit plans are detailed as follows:

Translation
Balance as of Decrease and Adjustments Balance as of
September 1, actuarial and other August 31,
2016 Increase (gains)/losses changes 2017
Provision for defined benefit plans 269,781 10,045 (49,555) 9,091 239,362
Personnel leaving indemnities 3,129 169 (1) (631) 2,666
Other personnel provisions 65,482 37,140 (25,041) (22,942) 54,639
338,392 47,354 (74,597) (14,482) 296,667
Translation
Balance as of Decrease and Adjustments Balance as of
September 1, actuarial and other August 31,
2015 Increase (gains)/losses changes 2016
Provision for defined benefit plans 251,739 36,529 (8,536) (9,951) 269,781
Personnel leaving indemnities 1,948 1,400 (194) (25) 3,129
Other personnel provisions 60,409 37,731 (35,970) 3,312 65,482
314,096 75,660 (44,700) (6,664) 338,392
The following table presents the ageing of Employee Benefit Plans accounts as at August 31:
2017 2016
Not later than 1 year 7,645 609

Within 1 to 5 years 283,636 334,295
Later than 5 years 5,386 3,488
296,667 338,392

The principal assumptions used for the purposes of the actuarial valuations for the defined benefit
plans were as follows:
2017 2016
Discount rates (0.30)% - 7.25% (0.20)% - 7.10%

Expected rates of salary increase 1.80% - 10.00% 2.00% - 10.61%
Expected rates of price inflation 1.00% - 3.50% 1.00% - 3.50%
The discount rate has been determined by reference to market yields on high quality corporate
bonds (AA rated bonds), with currency and term consistent with those of the liabilities.
Amounts recognized in profit or loss related to the defined benefit plans as of August 31 are detailed
as follows:
2017 2016
Current service cost 8,075 6,048

Interest on obligation 3,916 6,727
Expected return on plan assets (955) (1,706)
Actuarial losses/(gains) recognized in the year (1,867) 1,723
Past service cost (1,687) (177)
Administration Costs and Taxes 828 721
Net pension expense/income 8,310 13,336
related to the defined

benefit plans is as follows:
2017 2016
Present value of unfunded defined benefit obligation 133,559 124,549

Present value of funded defined benefit obligation 251,417 293,492
Total present value of defined benefit obligation 384,976 418,041
Fair value of plan assets (168,200) (170,875)
Net liability arising from defined benefit obligation 216,776 247,166
Changes in the present value of the net defined benefit obligations were as follows:
2017 2016
Opening net defined benefit obligation 247,166 222,355

Net pension expense 8,310 13,336
Employer contributions (8,382) (6,314)
Actuarial losses / (gains) recognized in OCI (26,637) 33,873
Exchange differences on foreign plans (2,409) (10,001)
Benefits paid (11,988) (11,548)
Other movements 10,716 5,465
Closing net defined benefit obligation 216,776 247,166

Changes in the present value of the plan assets were as follows:
2017 2016
Opening fair value of plan assets 170,875 165,077

Interest Income on Plan Assets 3,121 5,205
Return on Plan Assets greater than Discount Rate 1,831 26,992
Employer Contributions 21,050 17,862
Benefits paid (19,627) (21,763)
Exchange differences on foreign plans and other movements (9,050) (22,498)
Closing fair value of plan assets 168,200 170,875
A sensitivity analysis on key valuation assumptions has been performed as of August 31, 2017 and
the impacts on the net DBO are as follows:
+0.25% -0.25% +0.50% -0.50%

Discount rate (13,920) 14,537
Inflation rate 23,203 (16,781)
23. Provisions
Provisions for risks and charges are recognised when the Group has a present obligation, legal or
constructive, as a result of a past event, it is probable that an outflow of resource embodying
economic benefits will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
On the other hand, no provision is made in the case of risks for which there is only a possibility that
a liability may arise. In this case, the risk is disclosed in the notes on commitments and risks without
making any provision. Provisions relating to corporate reorganizations are only set aside once they
have been approved and raised a valid expectation to the parties involved.
In the current year, ended as at August 31, 2017, Provisions for liabilities and charges are detailed
as follows:
Balance as of Translation Balance as of
September 1, Adjustments and August 31,
2016 Increase Decrease other changes 2017
Promotions costs and discounts 97,179 143,274 (159,330) (3) 81,120

Returns 62,205 54,561 (95,272) (787) 20,707
Provision for commercial risks 10,125 4,755 (6,070) (521) 8,289
Other Provisions 64,637 57,509 (38,654) (1,222) 82,270
234,146 260,099 (299,326) (2,533) 192,386

In the previous financial year, ended as at August 31, 2016, the changes in Provisions for liabilities
and charges were as represented in the following table:
Balance as of Translation Balance as of

September 1, Adjustments and August 31,
2015 Increase Decrease other changes 2016
Promotions costs and discounts 74,209 150,682 (127,459) (253) 97,179

Returns 17,560 148,843 (102,382) (1,816) 62,205
Provision for commercial risks 13,353 4,732 (6,218) (1,742) 10,125
Other Provisions 149,954 62,717 (146,907) (1,127) 64,637
255,076 366,974 (382,966) (4,938) 234,146
Other provisions include unsettled claims as well as legal, tax and administrative proceedings, which
arise during the normal course of business.
Provisions are recorded by Management on various contingencies taking into consideration

appropriate legal and expert advice; the outcome of these risks will not give rise to any significant
loss beyond the amounts provided at August 31, 2017.
The following table details the expected timing of the outflow of provisions at August 31, 2017:
2017 2016
Not later than 1 year 109,891 67,652

Within 1 to 5 years 81,454 166,494
Later than 5 years 1,041 -
192,386 234,146
24. Banks and financial liabilities

Financial liabilities are classified as described in note 20. Current financial assets, liabilities and
securities.
Other financial liabilities, including borrowings, are initially measured at fair value, net of
transaction costs. They are subsequently measured at amortised cost using the effective interest
method, with interest expense recognized on an effective yield basis.
As clarification, the effective interest method is a method of calculating the amortised cost of a
financial liability (or group of financial liabilities) and of allocating the interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial instrument or, when appropriate, a shorter
period to the net carrying amount of the financial liability.
According to IAS 23 Borrowing costs, an entity shall capitalise borrowing costs that are directly
attributable to the acquisition, construction or production of qualifying assets as part of the cost of
the assets, otherwise expensed when incurred. For the Ferrero Group, borrowing costs are not
directly attributable to the acquisition or construction of a qualifying asset or group of assets.
Therefore such costs are expensed in income statement when incurred.

Banks and financial liabilities as of August 31 are detailed as follows:
Non current financial liabilities

2017 2016
Financial loans 30,011 31,610
30,011 31,610
Current financial liabilities

2017 2016
Financial loans 959,895 805,619

Bank overdrafts 216,973 237,525
Current portion of bank loans 2,933 4,828
1,179,801 1,047,972
Banks and financial liabilities are denominated mainly in Euro, bearing interest rates between
(0.01)% and 3.10% for year-end 2016-2017 (between 0.05% and 3.25% for year-end 2015-2016).
Non-current portions of banks and financial liabilities do not present a maturity exceeding 5 years
(maturity is between 1 and 5 years).
25. Debt owed to Shareholders

Debts owed to Shareholders are financial liabilities classified as loans and they are initially
recognized at fair value net of directly attributable transaction costs. After initial recognition, loans
are subsequently measured at amortized cost.
Such financing resources have been provided mainly through the conversion of dividends of the past
years and they are subordinated long-term interest-bearing loans that as of August 31, 2017
resulted in an outstanding amount that is summarized in the table below.
Balance as of Balance as of
September 1, Issue / August 31, Amount due Amount due
Maturity 2016 Re-measurement Decrease 2017 within 1 year after 1 year
Convertible Loan 06/07 31 Dec 2027 78,659 161,528 (64,120) 176,067 48,420 127,647
Subordinated Loan 08/09 31 Dec 2027 161,500 (6,000) 155,500 6,000 149,500
Subordinated Loan 12/13 31 Dec 2019 200,000 200,000 - 200,000
Subordinated Loan 13/14 31 Dec 2021 180,000 180,000 - 180,000
1,809,659 161,528 (89,620) 1,881,567 73,920 1,807,647
Convertible Loan 06/07

On December 18, 2006, the Shareholders of the Company approved a dividend distribution for
1,520 million Euro. The dividend resulted in a cash payment to Shareholders of 170 million Euro,
with the remaining balance (1,350 million Euro) converted into a long term interest bearing
convertible subordinated debt, representing a compounded instrument, with expiration date
December 31, 2017.

The instrument was subordinated and included a conversion clause into a fixed number of
at the discretion of Ferrero International S.A. any time between
January 1, 2012 and June 30, 2012 and between January 1, 2017 and June 30, 2017.
During 2012, the first conversion clause was not exercised and in the month of June 2017, the Board
of Directors of the Company deliberated (i) not to exercise also the second conversion clause, (ii) to
extend the loan maturity to December 31, 2027, (iii) to include a new conversion clause and (iv) to
re-align the interest rate to the market conditions starting from January 1, 2018. The new conversion
clause includes an option to convert all or part of the remaining outstanding loan and accrued
Company discretionary
request, any time between January 1 and June 30, 2022 or January 1 and June 30, 2027.
The valuation of the compound financial instrument composed by an equity instrument and a
liability (convertible subordinated debt) is determined, at the date of issuance, in the following
manner:
the fair value of the liability component is determined on the basis of the contractual stream of
cash flows (including both coupon payment and repayments) discounted at a market rate of
interest which represents the rate that would have been applied to an instrument of comparable
credit quality with substantially the same cash flows on the same terms, but without the
conversion options;
the fair value of the equity instrument is determined in a residual way by the difference between
the fair value of the compound instrument as a whole and the fair value of the liability
component. The equity instrument is and profit brought
.
The subsequent measurement of the liability is at amortised cost and the effective interest is
recognised in income statement, while the subsequent measurement of the equity component is
not subject to variation.
After deliberating not to exercise the second option and to introduce two new conversion periods
with the Board of Directors held in June 2017, the contractual stream of cash flows of the liability
has been re-measured until the beginning of the next conversion period (from January 1, 2022 to
June 30, 2022) for an amount of 161,528 Euro. The re-measurement has not been performed until
the maturity of the instrument, since the Company does not have an obligation to pay cash or other
financial asset in relation to the convertible subordinated debt after June 30, 2022. The Company
can avoid the payment of subsequent coupons and repayments by exercising the call option to
convert the instrument into ordinary shares.
At August 31, 2017, the total carrying amount of this liability amounted to 176,067 Euro
(78,659 Euro as of August 31, 2016), including 48,420 Euro due within one year (64,120 Euro in
previous year). During 2017, the liability increased by 97,408 Euro, during 2016 the liability
decreased by 62,509.
Subordinated loan 08/09

During the year 2008/2009, the Shareholders of the Company approved a dividend distribution. The
amount was subsequently converted into a long term interest bearing subordinated debt owed to
Shareholders, comprised of one loan amounting to 227,000 Euro expiring on December 31, 2017,
and two smaller loans amounting to 203,404 Euro, expiring on December 31, 2014. The two smaller

loans were redeemed during 2012 through an advance repayment. Related contractual terms refer
to common market conditions. During the month of June 2017, the parties agreed on the extension
of the loan maturity to December 31, 2027 and to re-align the interest rate at market conditions
starting from January 1, 2018.
At August 31, 2017 the total carrying amount of this liability amounted to 155,500 Euro (161,500
Euro as of August 31, 2016) including 6,000 Euro due within one year (6,000 Euro in previous year).
During 2017 and 2016, the liability decreased by 6,000 Euro through cash repayments each year.

During the year 2011/2012, the Shareholders of the Company approved a dividend distribution out
of profit brought forward for 813,900 Euro. The dividend resulted in a cash payment to Shareholders
of 13,900 Euro, with the remaining balance (800,000 Euro) converted into a long term interest
bearing subordinated debt owed to Shareholders, expiring on December 31, 2017. Related
contractual terms refer to common market conditions. During the month of June 2017, the parties
agreed on the extension of the loan maturity to December 31, 2027 and to re-align the interest rate
at market conditions starting from January 1, 2018. At August 31, 2017 the total carrying amount of
these liabilities amounted to 685,000 Euro (697,000 Euro as of August 31, 2016), including 12,000
Euro due within one year (12,000 Euro in previous year). During 2017 and 2016, the liability
decreased by 12,000 Euro through cash repayments each year.

contractual terms refer to common market conditions. At August 31, 2017 and at August 31, 2016
the total carrying amount of these liabilities amounted to 200,000 Euro. During 2017 and 2016, no
cash repayments have been made.

contractual terms refer to common market conditions. At August 31, 2017 and at August 31, 2016
the total carrying amount of these liabilities amounted to 180,000 Euro. During 2017 and 2016, no
cash repayments have been made.

contractual terms refer to common market conditions. At August 31, 2017 the total carrying amount
of these liabilities amounted to 485,000 Euro (492,500 Euro as of August 31, 2016), including
7,500 Euro due within one year (7,500 Euro in previous year). During 2017 and 2016, the liability
decreased by 7,500 Euro through cash repayments each year.

The borrowing costs related to the above-mentioned loan contracts are not directly attributable to
the acquisition or construction of a qualifying asset or group of assets. Therefore, such costs are
expensed in income statement when incurred. The interest expenses recorded in income statement
amounted to 58,494 Euro for the year ended at August 31, 2017, as compared to 61,818 Euro of the
year ended at August 31, 2016.
26. Trade and other current payables

Payables are initially recognised at fair value of the consideration to be paid and subsequently at
amortised cost, which generally corresponds to their nominal value.
Trade and commercial payables as of August 31 are detailed as follows:
2017 2016
Trade payables 779,915 712,396

Other commercial creditors 572,505 563,950
1,352,420 1,276,346
Total trade payables as of August 31, 2017 amounted to 1,352 million Euro (August 31, 2016:
1,276 million Euro), of which 573 million Euro (August 31, 2016: 564 million Euro) relate to other
commercial creditors, mainly comprised of invoices to be received for goods and services purchased.
The following table presents the ageing of trade payables accounts at August 31:
2017 2016
Other Other
Trade Trade
Commercial Total Commercial Total
Payables Payables
creditors creditors
Not yet overdue 737,408 572,505 1,309,913 684,017 563,950 1,247,967
Overdue:
- less than 3 months 32,989 - 32,989 23,686 - 23,686
- between 3 months and 6 months 5,306 - 5,306 2,627 - 2,627
- between 6 months and 1 year 2,505 - 2,505 1,500 - 1,500
- more than 1 year 1,707 - 1,707 566 - 566
Total Overdue 42,507 - 42,507 28,379 - 28,379
779,915 572,505 1,352,420 712,396 563,950 1,276,346

Other current payables as of August 31 are detailed as follows:
2017 2016
Payables towards personnel 239,689 239,604

Accrued expense and deferred income 190,100 170,478
Tax payables 121,184 71,704
Payables for social security 29,558 36,789
Payables for VAT 51,158 69,873
Other payables 84,116 45,272
715,805 633,720
Tax, VAT and social security payables at August 31, 2017 amounted to 202 million Euro
(178 million Euro at August 31, 2016).
The following table presents the ageing of other current payables accounts at August 31:
2017 2016
Payables Payables
Tax, VAT and Tax, VAT and
towards towards
Social Social
personnel and Total personnel and Total
Securities Securities
Other Other
Payables Payables
payables payables
Not yet overdue 201,900 513,905 715,805 178,366 455,354 633,720
27. Transactions with related parties

Transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated in consolidation and are not disclosed in this note. Transactions with parent
shareholders are described in note 25. Debt owed to Shareholders.
Transactions between the Group and other related parties, mainly Fondazione Piera, Pietro e
Giovanni Ferrero ONLUS, are not significant.
usual list prices or at market prices.
No guarantees have been given or received from related parties; no expense has been recognized
in the period for bad or doubtful debts in respect of the amounts owed by related parties.
Remuneration of the Board of Directors

During the current year and the previous year, the total remuneration of Board of Directors was as
follows:
2017 2016
Remuneration of Board of Directors 3,027 2,903

The remuneration of Board of Directors, as well as the remuneration of the Executive management,
is determined by internal procedures having regard to the performance of individuals and market
trends. No advances or loans have been made to the members of the Board of Directors.
28. Cash and cash equivalents

Cash and cash equivalents are those held to meet short-term cash needs, rather than for investment
or other purposes. For an investment to be considered as cash or cash equivalent, it must be able
to be readily converted into a known amount of cash and must be subject to an insignificant risk of
change in value.
An investment is qualified as cash and cash equivalents only when it has a maturity no longer than
three months starting from the date of acquisition.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in
banks and in post office accounts and investments in money market instruments.
Cash and cash equivalents at the end of current and previous financial year as shown in the cash
flow statement can be reconciled to the related items in the balance sheet as follows:
2017 2016
Banks and post office 362,826 259,301

Time deposits 88,382 40,390
Cash and checks 709 611
451,917 300,302
The effective interest rate on short-term bank deposits reflects the average interest rate of the
market, as well as the development of the currencies invested for the period of up to three months.
29. Commitments and guarantees
Purchase commitments
At August 31, 2017, purchase commitments related to the acquisition of tangible and intangible
fixed assets amounted to approximately 96,834 Euro (August 31, 2016: 18,791 Euro). The increase
is related mainly to the commitments for the construction of the new headquarters building in
Luxembourg.
Lease commitments
At August 31, 2017, the Group has operating lease commitments, mainly related to building rents,
for approximately 212,438 Euro (August 31, 2016: 142,440 Euro).

Thematurityofoperatingleasecommitmentswasasfollows:

2017 2016
Lessthan1year 73,321 38,716
Within1to5years 105,708 82,118
Morethan5years 33,409 21,606
212,438 142,440

Guarantees
Certainsubsidiariesissuedguaranteesforanamountof419,646Euro(August31,2016;334,836
Euro).

Othercommitments
Certainsubsidiariesenteredinothercommitments(mainly,lettersofcreditanddeposits)foran
amountequivalentto84,467Euro(August31,2016:138,425Euro).

30.Eventsafterthebalancesheetdate
InJanuary2018,itwasannouncedthattheGroupreachedanagreementpursuanttowhichitwill
acquire certain assets of U.S. confectionary business from Nestlé. This transaction is subject to
customaryclosingconditionsandregulatoryapprovals.

On February 5, 2018 date of approval of the Consolidated Financial Statements by the Board of
Directors,theGrouphadnofurthersubsequenteventsotherthanaboveorisawareofanyevents
orissuesthatwouldaffecttheconsolidatedaccounts.

31.ApprovalofConsolidatedFinancialStatements
The Consolidated Financial Statements were approved by the Board of Directors on February 5,
2018andwillbeauthorisedforissuanceonFebruary28,2018attheAnnualGeneralMeeting.

ConsolidatedFinancialStatementsasofAugust31,2017 Page62of69
Audit report
To the Shareholders of
Ferrero International S.A.
Report on the audit of the consolidated financial statements
Our opinion
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of Ferrero International S.A. (the “Company”) and its subsidiaries
(the “Group”) as at 31 August 2017, and of its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
What we have audited
The Group’s consolidated financial statements comprise:
the consolidated balance sheet as at 31 August 2017;

the consolidated income statement for the year then ended;
the consolidated statement of other comprehensive income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated cash flows statement for the year then ended; and
the notes to the consolidated financial statements, which include a summary of significant
accounting policies.
Basis for opinion
We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of
23 July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by
the “Commission de Surveillance du Secteur Financier” (CSSF). Our responsibilities under those Law
and standards are further described in the “Responsibilities of the “Réviseur d’entreprises agréé” for the
audit of the consolidated financial statements” section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code) as adopted for Luxembourg by
the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial
statements. We have fulfilled our other ethical responsibilities under those ethical requirements.
PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg
T : +352 494848 1, F : +352 494848 2900, www.pwc.lu
Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)

R.C.S. Luxembourg B 65 477 - TVA LU25482518
Other information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the Directors’ report but does not include the consolidated financial statements
and our audit report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged with governance for the consolidated
financial statements
The Board of Directors is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with IFRSs as adopted by the European Union, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing
the Group’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 Board of Directors either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the consolidated financial
statements
The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an audit 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 the Law of 23 July 2016 and with ISAs as adopted
for Luxembourg by the CSSF 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 the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg
by the CSSF, we exercise professional judgment and maintain professional scepticism throughout the audit.
64
Annex I
List of investments in consolidated companies

Country Registered % of
Office ownership
Direct Investments:
CF Properties S.à r.l. Luxembourg Findel 100.00%

Energhe Lux S.A. (*) Luxembourg Findel 100.00%
Eurobase International N.V. Belgium Herenthout 100.00%
FerGulf Holding Limited United Arab Dubai 100.00%
Emirates
FerHolding UK Ltd United Kingdom Greenford 100.00%
Ferholding USA, Inc. U.S.A. Wilmington 100.00%
Ferrero Ardennes S.A. Belgium Arlon 100.00%
Ferrero Argentina S.A. Argentina Buenos Aires 100.00%
Ferrero Asia Ltd. Hong Kong Hong Kong 100.00%
Ferrero Asia Pacific Pte. Ltd. Singapore Singapore 100.00%
Ferrero Australia Pty. Ltd. Australia Sydney 100.00%
Ferrero Canada Ltd. Canada Toronto 100.00%
Ferrero Corilicola S.A. Argentina Buenos Aires 100.00%
Ferrero de Mexico S.A. de C.V. Mexico Guadalajara 100.00%
Ferrero do Brasil - Industria Doceira e Brazil Poços de Caldas 100.00%
Alimentar LTDA
Ferrero Food (Hangzhou) Company Limited China Hangzhou 100.00%
Ferrero France S.A. France M.S. Aignan 99.99%
Ferrero Ibérica S.A. Spain Cornella de 100.00%
Llobregat
Ferrero Inc. Puerto Rico Caguas 100.00%
Ferrero India Private Limited India Pune 100.00%
Ferrero International S.A. Greece Single Greece Marousi 100.00%
Member Limited Liability Company
Ferrero Ireland Ltd. Ireland Cork 100.00%
Ferrero Ithemba RSA (Proprietary) Limited South Africa Sandton 100.00%
Ferrero Japan Ltd. Japan Tokyo 100.00%
Ferrero Lanka PVT Ltd. Sri Lanka Peliyagoda 100.00%
Ferrero Middle and Eastern Europe G.m.b.H. Germany Frankfurt 100.00%
Ferrero S.p.A. Italy Alba 100.00%
Ferrero Trading (Shanghai) Company Limited China Shanghai 100.00%
Ferrero Türkiye Çikolata Ve Tarim Ürunleri Turkey Istanbul 100.00%
Sanayi Ve Dis Ticaret A.S.
Ferrero UK Ltd. United Kingdom Greenford 100.00%
Fervalue S.à.R.L. Luxembourg Findel 100.00%
Magic Production Group (M.P.G.) S.A. Luxembourg Findel 100.00%
Pekurmo Investeringmaatschappij B.V. Netherlands Rotterdam 100.00%

Office ownership
Direct Investments:
Premium - Confectionery & Trading Company Israel Holon 100.00%

Ltd.
Sereco RE S.A. Luxembourg Findel 100.00%
Sodeser S.A. de C.V. Mexico Guadalajara 100.00%
Soremartec S.A. Belgium Arlon 100.00%
Soremartec S.A. Luxembourg Findel 100.00%
Trèves Offices S.A. Luxembourg Findel 100.00%
(*) During year 2016/2017 Energhe Lux S.A. merged into Ferrero Trading Lux. S.A.
Office ownership
Indirect Investments:
Agri Australis Pty Limited Australia Sydney 100.00%

Agri Bulgaria E.O.O.D. Bulgaria Plovdiv 100.00%
Agri Georgia L.L.C. Georgia Tbilisi 100.00%
Agriser d.o.o. Beograd Serbia Sombor 100.00%
Agrisudafrica (Proprietary) Limited South Africa Franklin 100.00%
Alba Power S.p.A. Italy Alba 100.00%
Energhe Deutschland G.m.b.H. (*) Germany Stadtallendorf 100.00%
ENERGHE S.p.A. Italy Alba 100.00%
Ferrero B.V. The Netherlands Breda 100.00%
Ferrero Cameroun S.A. Cameroon Yaoundé 99.99%
Ferrero Ceska s.r.o. Czech Republic Prague 100.00%
Ferrero Commerciale Italia Srl Italy Alba 100.00%
Ferrero Industriale Italia Srl Italy Alba 100.00%
Ferrero Management Services Italia Srl Italy Alba 100.00%
Ferrero Technical Services Srl Italy Alba 100.00%
Ferrero D.o.o. Croatia Zagreb 100.00%
Ferrero Deutschland G.m.b.H. Germany Frankfurt 100.00%
Ferrero del Ecuador S.A. Ecuador Quito 100.00%
Ferrero France Commerciale S.a.s. France M.S. Aignan 100.00%
Ferrero Kazakhstan Limited Liability Kazakhstan Almaty 100.00%
Partnership
Ferrero Latin America Developing Markets Colombia Bogotà 100.00%
S.A.S.
Ferrero Magyarorszag Kft. Hungary Budapest 100.00%
Ferrero Malaysia Sdn. Bhd. Malaysia Kuala Lumpur 100.00%
Ferrero MSC G.m.b.H. & Co KG. Germany Frankfurt 100.00%
Ferrero N.V. / S.A. Belgium Bruxelles 100.00%
Ferrero Nahrungs- und Genußmittel G.m.b.H. Germany Stadtallendorf 100.00%

Office ownership
Indirect Investments:
Ferrero O.H.G.m.b.H. Germany Stadtallendorf 100.00%

Ferrero Österreich Handels G.m.b.H. Austria Innsbruck 100.00%
Ferrero Polska Sp.zo.o. Poland Warsaw 100.00%
Ferrero Polska Commercial Sp.zo.o. Poland Warsaw 100.00%
Ferrero Pubbliregia S.r.l. Italy Alba 100.00%
Ferrero Romania S.r.l. Romania Bucarest 100.00%
Ferrero Russia CJSC Russia Moscow 100.00%
Ferrero Scandinavia A.B. Sweden Malmö 100.00%
Ferrero Schweiz A.G. Switzerland Zug 100.00%
Ferrero South Africa Pty Ltd South Africa Walkerville 100.00%
Ferrero Trading Lux. S.A. Luxembourg Findel 100.00%
Ferrero Ukraine T.o.v. Ukraine Kiev 100.00%
Ferrero U.S.A. Inc. U.S.A. Somerset 100.00%
Fruticola Agrichile S.A. Chile Curico 100.00%
Korvella Italia srl Unipersonale Italy Alba 100.00%
Oltan Boyer Sas France Bordeaux 100.00%
Oltan Grout Ltd United Kingdom Sawbridgeworth 100.00%
Turkey Trabzon 100.00%
PT. Ferrero Confectionery Indonesia Indonesia Jakarta 100.00%
SO.RE.MO. S.A.M. (**) Monaco Monaco 99.90%
Soremartec Fontvieille S.A.M. Monaco Monaco 99.99%
Soremartec Italia S.r.l. Italy Alba 100.00%
Thorntons PLC United Kingdom Alfreton 100.00%
Strand Court Properties Limited United Kingdom Alfreton 100.00%
Thorntons (Jersey) Limited United Kingdom Jersey 100.00%
Fannie May Confections Brands, Inc. U.S.A. North Canton 100.00%
Fannie May Confections, Inc. U.S.A. Chicago 100.00%
Harry London Candies Inc. U.S.A. North Canton 100.00%
Joint Ventures:
Stelliferi & Itavex Srl (***) Italy Caprarola 49.90%
(*)During year 2016/2017 Energhe Deutschland G.m.b.H. has been liquidated

(**)During year 2016/2017 SO.RE.MO. S.A.M. merged into Soremartec Fontvieille S.A.M.
(***)Consolidated under Equity Method

Annex II
Exchange rates used to translate financial statements prepared in currencies other than the Euro
Average exchange rates Average exchange rates Final exchange rates Final exchange rates
Currency
as of August 31, 2017 as of August 31, 2016 as of August 31, 2017 as of August 31, 2016
Arab Emirates Dirham 4.040 4.082 4.363 4.098

Argentine Peso 17.479 14.394 20.562 16.652
Australian Dollar 1.449 1.518 1.502 1.481
Bulgarian Lev 1.956 1.956 1.956 1.956
Brazil Real 3.533 4.084 3.741 3.602
Canadian Dollar 1.451 1.473 1.497 1.458
CFA Francs 660.798 658.313 655.168 663.184
Swiss Franc 1.087 1.091 1.145 1.096
Chilean Peso 726.246 762.473 744.870 759.000
Chinese Renminbi 7.496 7.230 7.806 7.431
Colombian Peso 3,256.130 3,417.387 3,502.000 3,297.460
Czech Koruna 26.747 27.047 26.101 27.026
Danish Krona 7.438 7.452 7.438 7.443
British Pound 0.869 0.772 0.920 0.848
Georgian Lari 2.714 2.605 2.893 2.552
Honk Kong Dollar 8.551 8.621 9.253 8.636
Croatian Kuna 7.465 7.566 7.415 7.479
Hungarian Forint 308.664 312.660 306.630 310.340
Indonesian Baht 14,617.279 15,044.354 15,782.100 14,786.640
Israeli Shekel 4.064 4.291 4.255 4.223
Indian Rupee 72.513 74.180 75.600 74.556
Japanese Yen 121.510 125.758 130.810 115.010
Korean Won 1,254.822 1,295.981 1,331.220 1,243.660
Kazakhstani Tenge 359.372 363.655 401.600 379.760
Sri Lanka Rupee 165.693 160.157 181.495 162.318
Mexican Peso 21.125 19.680 21.084 20.942
Malaysian Ringgit 4.760 4.610 5.051 4.552
Norwegian Krone 9.175 9.376 9.279 9.277
Polish Zloty 4.298 4.325 4.258 4.353
Romanian Leu 4.528 4.476 4.592 4.458
Serbian Dinar 122.695 122.243 119.094 123.150
Russian Ruble 66.063 75.457 69.124 72.662
Swedish Krona 9.629 9.340 9.482 9.516
Singapore Dollar 1.534 1.538 1.609 1.518
Taiwan Dollar 34.040 36.182 35.871 35.330
Ukrainian Hryvnia 28.955 27.143 30.517 29.275
US Dollar 1.100 1.111 1.183 1.113
Turkish Lira 3.820 3.258 4.106 3.293
South Africa Rand 14.788 16.364 15.457 16.173

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Registre de Commerce et des Sociétés

Numéro RCS : B60814

Consolidated Financial Statements as of August 31, 2017

Ferrero International S.A.

Annex I - List of investments in consolidated companies 66

Consolidated Financial Statements as of August 31, 2017 Page 1 of 69

Consolidated Financial Statements as of August 31, 2017 Page 2 of 69

The designation of IFRS includes all en

Consolidated Financial Statements as of August 31, 2017 Page 3 of 69

Milk and derivatives

Consolidated Financial Statements as of August 31, 2017 Page 4 of 69

Other supplies markets

Key business events

Consolidated Financial Statements as of August 31, 2017 Page 5 of 69

Consolidated Financial Statements as of August 31, 2017 Page 6 of 69

The following points of reference were also taken into consideration:

-operation and Development (OECD) Guidelines for

Consolidated Financial Statements as of August 31, 2017 Page 7 of 69

The Board of Directors

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NON CURRENT ASSETS:

TOTAL NON CURRENT ASSETS 4,965,855 4,590,773

Trade and other commercial receivables

Other current receivables

Current financial assets and securities 20 57,526 59,141

Cash and cash equivalents 28 451,917 300,302

TOTAL CURRENT ASSETS 4,331,137 4,079,565

TOTAL ASSETS 9,296,992 8,670,338

Consolidated Financial Statements as of August 31, 2017 Page 9 of 69

SHAREHOLDERS' EQUITY AND LIABILITIES Notes

Shareholders' equity - non controlling interests 21 - -

TOTAL SHAREHOLDERS' EQUITY 3,258,800 2,891,152

NON CURRENT LIABILITIES:

Provisions 23 192,386 234,146

Deferred tax liabilities 12 286,341 299,023

Non current financial liabilities

Other non current liabilities 8 54,304 92,318

TOTAL NON CURRENT LIABILITIES 2,667,356 2,715,528

Trade and other commercial payables

Other current payables

TOTAL CURRENT LIABILITIES 3,370,836 3,063,658

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 9,296,992 8,670,338

Consolidated Financial Statements as of August 31, 2017 Page 10 of 69

For the 12 months ended at

Share of profit under the equity method 16 6,603 15,716

Operating income before amortization and depreciation 1,490,917 1,570,387

Amortization and depreciation 13-14-15 368,003 431,351

Operating income 1,122,914 1,139,036

Financial income and (expenses)

Income before tax 977,655 1,002,447

Income taxes 12 321,057 209,652

Net income 656,598 792,795

Net income - parent interests 656,598 792,795

Consolidated Financial Statements as of August 31, 2017 Page 11 of 69

Profitoftheyear 792,795 792,795

Netmovementsoftheyear 40,063 (23,176) (13,479) (3,413) (5)

Allocationofprofit 513,107 (513,107) 536 (536) Ͳ

ChangeinNonͲControllingInterests 9,262 (9,262) Ͳ

Dividenddeclared Ͳ Ͳ

For the 12 months ended at

Net cash flows before movements in working capital 998,243 1,117,575

(Increase) in inventory (218,839) (50,806)

Change in net working capital (86,966) 33,634

NET CASH FROM OPERATING ACTIVITIES 911,277 1,151,209