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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → NOTES : NOTES TO ThE GROuP ACCOuNTING PRINCIPlES ANd METhOdS According to IAS 37, such liabilities should not be recognised in the balance sheet but disclosed in the notes. Accounting for derivative financial instruments/hedge accounting Derivative financial instruments are exclusively used to reduce risks, in accordance with the respective Group guideline. In accordance with IAS 39, all derivative financial instruments are recognised at fair value and shown under other receivables and assets or other liabilities. derivative financial instruments are measured on the basis of interbank terms and conditions, possibly including the credit margin or stock exchange price applicable to METRO GROuP. The bid and ask prices at the balance sheet date are applied. Where no stock exchange prices are used, the fair value is determined by means of acknowledged measurement methods. The recognised fair values correspond to the amounts for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s-length agreement. Gains and losses from derivative financial instruments designated as qualified hedges in the framework of a fair value hedge or for which a qualified hedge relationship could not be established in accordance with the provisions of IAS 39 and which, accordingly, did not qualify for hedge accounting are recognised through profit or loss. Results from derivative financial instruments for which a cash flow hedge has been formed and whose effectiveness has been established are carried in equity without being reported as a profit or loss up to the date of realisation of the hedge transaction. Any potential changes in results due to the ineffectiveness of these financial instruments are recognised in the income statement and immediately reported as a profit or loss. Accounting for share-based remuneration The share bonuses granted under the share-based remuneration system are classified as “cash-settled sharebased remuneration”. Proportionate provisions measured at the fair value of the obligations entered are formed for these payments. The proportionate formation of the provi- → p. 166 sions is prorated over the underlying blocking period and recognised in income as personnel expenses. To the extent that the granted share-based payments are hedged, the corresponding hedging transactions are recognised at fair value and included under other receivables and assets. The portion of the hedges’ value fluctuation that corresponds to the value fluctuation of the share-based payments is recognised in personnel expenses. The surplus amount of value fluctuations is recognised in equity without being reported as a profit or loss. Accounting for non-current assets held for sale and discontinued operations In accordance with IfRS 5 (Non-current Assets held for Sale and discontinued Operations), a non-current asset is classified as “held for sale” if the respective carrying amount is to be realised above all through a sale rather than through continued utilisation. A sale must be planned and realisable within the subsequent twelve months. The asset is measured at the lower of carrying amount and fair value less costs to sell and presented separately in the balance sheet. In accordance with IfRS 5, a component of an entity is classified as a discontinued operation if it is held for sale or has already been disposed of. The discontinued operation is measured at the lower of carrying amount and fair value less costs to sell. discontinued operations are presented separately in the income statement, the balance sheet, the cash flow statement and the segment reporting, and explained in the notes. With the exception of the balance sheet, prior-year amounts are restated accordingly.
METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → NOTES : CAPITAl MANAGEMENT Summary of chosen measurement methods Position Measurement method Assets Goodwill Other intangible assets At cost (subsequent measurement: impairment test) Acquired other intangible assets At (amortised) cost Internally generated intangible assets At cost of development (direct costs and overheads) Tangible assets At (amortised) cost Investment properties financial assets At (amortised) cost “loans and receivables” At (amortised) cost “held to maturity” At (amortised) cost “held for trading” At fair value through profit or loss “Available for sale” At fair value through profit or loss lower of cost and net realisable Inventories value Trade receivables At (amortised) cost Cash and cash equivalents At nominal value lower of carrying amount and fair Assets held for sale value less costs to sell Liabilities Provisions Pension provisions Projected unit credit method Other provisions At settlement value (highest probability of occurrence) financial liabilities At (amortised) cost Other liabilities At settlement value or fair value Trade liabilities At (amortised) cost Use of assumptions and estimates The preparation of the consolidated financial statements was based on a number of assumptions and estimates that had an effect on the value and presentation of the reported assets, liabilities, income and expenses as well as contingent liabilities. These assumptions and estimates mainly relate to the assessment of the recoverability of goodwill, the Group-wide establishment of useful lives, the measurement of provisions (for example, for restructurings, pensions or location risks) and the feasibility of future tax savings, in particular from loss carry-forwards. In addition, assumptions and estimates concern above all the determination of fair values and the cost of purchase in the context of first-time consolidations. The actual values may deviate → p. 167 from the assumptions and estimates in individual cases. Changes are taken into account at the time new information becomes available. Capital management The aim of the capital management strategy of METRO GROuP is to secure the Company’s continued business operations, to enhance its enterprise value, to create solid capital resources to finance its profitable growth and to provide for attractive dividend payments and capital service. The capital management strategy of METRO GROuP has remained unchanged compared to the previous year. EBIT after Cost of Capital (EBITaC) METRO GROuP pursues a value-orientated corporate management approach based on EBIT after Cost of Capital (EBITaC). The focus is on the successful deployment of business assets and the achievement of a value contribution for METRO GROuP exceeding the cost of capital. further information on the development of EBIT after Cost of Capital is included in the Group management report in the section “EBIT after Cost of Capital (EBITaC)”. Rating METRO GROuP’s ratings by two international agencies communicate the Company’s creditworthiness to potential debt capital investors. Based on its current ratings, METRO GROuP has comprehensive access to all debt capital markets. detailed information on the METRO GROuP rating can be found in the Group management report in the “financial management” section.
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