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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS
→ NOTES : OThER NOTES
Given this total balance, a higher interest rate of 100 basis
points would result in €39 million (previous year: €30 million)
higher earnings in interest income per year. A lower
interest rate of 100 basis points would have a corresponding
opposite effect in the amount of €–39 million (previous year:
€–30 million).
In the event of a higher interest rate of 100 basis points, the
measurement of financial instruments that are part of a
cash flow hedge would result in an increase in equity in the
amount of €4 million (previous year: €0 million) as well as
an increase in other financial results of €4 million (previous
year: €0 million).
METRO GROuP faces currency risks in its international procurement
of merchandise and because of costs and financings
that are incurred in a currency other than the relevant
local currency or are pegged to the price of another currency.
In accordance with the Group guideline “foreign Currency
Transactions”, resulting foreign currency positions
must be hedged. Exceptions from this hedging requirement
exist where hedging is not economically reasonable and in
the case of legal and regulatory restrictions in the respective
countries. forex futures and options as well as interest
rate swaps and currency swaps are used to limit currency
risks.
In line with IfRS 7, the presentation of the currency risk
resulting from the exceptions is also based on a sensitivity
analysis. In the process, the following assumptions are
made in the consideration of a devaluation or revaluation of
the euro vis-à-vis other currencies:
In terms of its amount and result characteristic, the total
effect presented by the sensitivity analysis relates to the
amounts of foreign currency held within the consolidated
subsidiaries of METRO GROuP and states the effect of a
devaluation or revaluation of the euro.
A devaluation of the euro will result in a positive effect if a
foreign currency receivable exists at a subsidiary which
uses the euro as its functional currency, and if a liability in
euro exists in a subsidiary which does not use the euro as
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its functional currency. A devaluation of the euro will result
in a negative effect if a receivable in euro exists at a subsidiary
which does not use the euro as its functional currency
and if a liability in euro exists at a subsidiary which
uses the euro as its functional currency. Conversely, any
appreciation of the euro will have the opposite effect.
In the sensitivity analysis, the effects of the measurement
of non-equity foreign currency positions that are calculated
based on the closing date price in line with IAS 21 are recognised
in income in the income statement. In the case of
net investments in foreign currency, the effects of the closing
date measurement are recognised in equity without
being reported as a profit or loss.
foreign currency futures/options and interest rate and
currency swaps that are not part of a qualified hedge under
IAS 39 are recognised in income through the fair value
measurement in the income statement. In fully effective
hedging transactions, this effect is offset by the effect from
the measurement of the underlying foreign currency transaction.
foreign currency futures/options and interest rate and currency
swaps that are designated as the hedging transaction
within a cash flow hedge to hedge against payment flows in
foreign currency will only be recognised in the income statement
when the payment flows are actually initiated. The
measurement of the hedging transaction at its fair value,
however, is recognised in reserves retained from earnings
without being reported as a profit or loss.
Effects from the currency translation of financial statements
whose functional currency is not the reporting currency of
METRO GROuP do not affect cash flows in local currency and
are therefore not part of the sensitivity analysis.