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Interest rate and currency management<br />
The <strong>Group</strong>’s interest rate and currency management<br />
is handled by <strong>METRO</strong> <strong>AG</strong> on behalf of all<br />
<strong>Group</strong> companies and aims at reducing basic<br />
risks. Trading and settlement are segregated;<br />
contracts are made with blue-chip parties only.<br />
The use of derivatives entails major gyrations<br />
in the financial result since, in contrast to classical<br />
financial instruments, profits and losses<br />
are partly realized short term.<br />
Translated into a financing term of 10 years<br />
and based on the 1996 long-term finance plan,<br />
36 percent of the entire long-term interest rate<br />
risk was during 1996 covered by fixed-income<br />
or straight bonds and fixed-rate loans (80 percent),<br />
as well as by interest rate derivatives (20<br />
percent). At fiscal year-end, comparable hedging<br />
came to 41 percent.<br />
Currency management encompasses the protection<br />
of operational business, real estate and<br />
financial transactions (such as foreign-currency<br />
funding). In this context, all elements form one<br />
separate unit and are hedged as a function of<br />
the overall risk position.<br />
<strong>METRO</strong> <strong>AG</strong><br />
Additional information<br />
On an annual average and related to all companies,<br />
micro hedges cover some 25 percent of<br />
yearly requirements from individual operational<br />
risks, according to the particular circumstances<br />
at the various business areas.<br />
Earnings per share according to DVFA/SG<br />
The earnings per share according to DVFA/SG<br />
were determined as a yardstick to measure the<br />
Company’s earning power. Earnings per share<br />
according to DVFA/SG represent a standardized<br />
value jointly developed by Deutsche Vereinigung<br />
für Finanzanalyse und Anlageberatung<br />
e.V. (German Association of Financial Analysis<br />
and Investment Consultancy – “DVFA”) and<br />
Schmalenbach Gesellschaft Deutsche Gesellschaft<br />
für Betriebswirtschaft (German Society<br />
of Business Administration – “SG”). After eliminating<br />
adjustable expense and income items<br />
and deducting third-party P&L shares, the<br />
<strong>METRO</strong> <strong>AG</strong> <strong>Group</strong>’s 1996 result amounted to<br />
DM 712.0 million. Related to the 100.2 million<br />
shares of stock, earnings per DM 5 share according<br />
to DVFA/SG came to DM 7.10.<br />
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