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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → NOTES : NOTES TO ThE GROuP ACCOuNTING PRINCIPlES ANd METhOdS At this point, the first-time application of the aforementioned accounting regulations is not expected to have a material impact on the Group’s asset, financial and earnings position. Revised disclosure Composition of net working capital The composition of the item “changes in net working capital” in the cash flow statement has been changed compared to the previous year. Previously, net working capital only comprised “inventories” and “trade liabilities”. under the new definition, “trade receivables” and the items “receivables from suppliers”, “credit card receivables” and “prepayments made on inventories”, which are part of “other receivables and assets” will also be included on the asset side. On the liabilities side, the “other liabilities” items “liabilities to customers” and “prepayments received on orders” will be newly included. All these items were previously recognised in the “other” item in the cash flow statement. As these items have now been reclassified to the item “changes in net working capital”, the amount of “cash flows from operating activities of continuing operations” remains unchanged. for better comparability, the previous year’s figures for 2009 were adjusted accordingly in the cash flow statement. Reclassification of receivables from suppliers and trade liabilities In the balance sheet, reclassifications between “other receivables and assets” (sub-item “receivables from suppliers”), “trade receivables”, “trade liabilities” and “other liabilities” (sub-item “other liabilities”) were carried out outside of profit or loss to essentially account for the reconciliation. for better comparability, the figures for the comparable periods as of 31 december 2009 and 1 January 2009 were adjusted accordingly. As of 31 december 2009, the reclassifications concerned “other receivables and assets” (“receivables from suppliers”) in the amount of €–380 million, “trade receivables” in the amount of €–5 million, “trade liabilities” in the amount of €–383 million and “other liabilities” (“other liabilities”) in the amount of €–2 million. As of 1 January 2009, the “other receivables and assets” (“receivables from suppliers”) and “trade receivables” were adjusted by €–298 million, respectively. These reclassifications better reflect the economic import of these items, allowing for the provision of more relevant information about the asset and financial position of METRO GROuP. → p. 158 Reclassification of notes payable Bills of exchange issued to suppliers are now shown under “trade liabilities”. These bills of exchange were previously assigned to the balance sheet item “financial liabilities” (current). The changed disclosure better reflects the economic import of the liability as it represents a financing from transactions with suppliers and the issuance of bills of exchange for supplier liabilities changes neither the value of the liability nor its term. The previous year’s balance sheet figures have been adjusted for better comparability. As of 31 december 2009, notes payable totalling €507 million, and as of 1 January 2009, notes payable totalling €584 million were reclassified from the balance sheet item “financial liabilities” (current) to “trade liabilities”. Consequently, in the cash flow statement, the “changes in net working capital” (“cash flow from operating activities of continuing operations”) also include changes in these notes payable, which were previously shown under “cash flow from financing activities of continuing operations”. The previous year’s figures in the cash flow statement have been adjusted for better comparability. for the financial year 2009, the adjustments in the cash flow statement resulted in a decline in “cash flow from operating activities” in the amount of €77 million. As a result of the transfer of said notes payable to “trade liabilities”, the segment liabilities of the Media Markt and Saturn sales division for the financial year 2009 increased by €507 million. In addition, the reclassification of the notes payable resulted in an improvement of balance sheet net debt by €507 million as of 31 december 2009. Reclassifications within the statement of tangible assets for transparency reasons, with retroactive effect from 1 January 2009, leasehold improvements are no longer shown under “land and buildings”, but under “other plant, business and office equipment” within tangible assets. As of 1 January 2009, this changed disclosure resulted in a reclassification of €656 million outside of profit or loss. The effect as of 31 december 2009 amounted to €667 million. In addition, “technical plant and machinery” items are also included in “other plant, business and office equipment” with retroactive effect from 1 January 2009. As a result, the value of this item increased by €4 million as of 1 January 2009 and 31 december 2009, respectively.
METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → NOTES : NOTES TO ThE GROuP ACCOuNTING PRINCIPlES ANd METhOdS Consolidation group Besides METRO AG, the consolidated financial statements comprise all subsidiaries in which METRO AG controls the financial and business policy through a majority of voting rights or according to the Articles of Association, company contract or contractual agreement. These include 661 German (previous year: 669) and 599 international (previous year: 581) subsidiaries controlled by METRO AG in accordance with IAS 27 (Consolidated and Separate financial Statements) in conjunction with SIC–12 (Consolidation – Special Purpose Entities). The group of consolidated companies changed as follows compared to the previous year: As of 1/1/2010 1,251 Changes in the financial year 2010: Companies merged with other consolidated subsidiaries –21 disposal of shareholdings –6 Other disposals –7 Newly founded companies 44 As of 31/12/2010 1,261 Additions from newly founded companies (44 companies) are due mainly to the expansion of Media Markt and Saturn. The disposal of shareholdings includes the disposal of five Group companies in the context of the sale of 100 percent of the shares in Metro Cash & Carry Morocco S.A. as well as its four fully owned subsidiaries by Metro Cash & Carry International Gmbh to the Moroccan company label Vie S.A. disposal gains of €51 million were generated through this divestment, which took effect on 30 November 2010. Aside from the operating activities, the related real estate properties were also sold. As a result, a portion of the disposal gains amounting to €21 million was allocated to the Metro Cash & Carry segment and a portion of €30 million to the Real Estate segment. Inasmuch as they are of particular significance, effects from changes in the consolidation group are explained in detail in the respective balance sheet items. 4 associated companies (previous year: 2) and 5 joint ventures (previous year: 6) were valued according to the equity → p. 159 method. A total of 9 companies (previous year: 9) in which METRO AG holds between 20 and 50 percent of the voting rights were valued at cost because they did not qualify as associated companies or because materiality considerations made the use of the equity method unnecessary. A complete list of Group companies and associated companies is shown in no. 54 (“Overview of major fully consolidated Group companies”). In addition, a complete list of all Group companies and associated companies shown in no. 56 “Affiliated companies of METRO AG as of 31 december 2010 pursuant to § 313 of the German Commercial Code”. Consolidation principles The financial statements of German and foreign subsidiaries included in the consolidated accounts are prepared using uniform accounting and valuation methods as required by IAS 27. Consolidated companies that, unlike METRO AG, do not close their financial year on 31 december prepared interim financial statements for consolidation purposes. In accordance with IfRS 3 (Business Combinations), capital consolidation is accomplished using the purchase method. In the case of business combinations, the carrying amounts of the investments are offset against the revalued pro rata equity of the subsidiaries as of their acquisition dates. Any positive differences remaining after the allocation of hidden reserves and charges are capitalised as goodwill. Goodwill is tested for impairment regularly once a year, or more frequently if changes in circumstances indicate a possible impairment, and written down to the lower recoverable amount if applicable. In addition, in the case of business combinations, hidden reserves and charges attributable to non-controlling interests must be disclosed and reported in equity as “non-controlling interests“. METRO GROuP does not use the option to recognise the goodwill attributable to non-controlling interests. In accordance with IfRS 3, any negative differences remaining after the allocation of hidden reserves and charges after another review during the period in which the business combination took place are amortised to income.
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