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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → NOTES : OThER NOTES Rating classes Volume in % Monetary investments Grade Moody's Standard & Poor's Germany Western Europe excl. Germany Eastern Europe The table shows that, as of the closing date, about 94.3 percent of the capital investment volume, including the positive market value of derivatives, had been placed with investment-grade counterparties, in other words, those with good or very good credit ratings. Most of the counterparties that do not yet have an internationally accepted rating are respected financial institutions whose creditworthiness can be considered flawless based on our own analyses. METRO GROuP also operates in countries where local financial institutions do not have investment-grade ratings due to the rating of their country. for country-specific reasons as well as cost and efficiency considerations, cooperation with these institutions is unavoidable. These institutions account for about 1.7 percent of the total volume. METRO GROuP’s level of exposure to creditworthiness risks is thus very low. Cash flow risks A future change in interest rates may cause cash flow from variable interest rate asset and debt items to fluctuate. Part of the variable interest rate debt has been hedged with derivative financial instruments. Stress tests are used to determine the potential impact interest rate changes may have on cash flow. The extent of these hedging measures is determined in coordination with the CfO of METRO AG. 44. Contingent liabilities → p. 208 € million 2010 2009 liabilities from suretyships and guarantees liabilities from guarantee and warranty 19 16 contracts 122 261 141 277 liabilities from guarantee and warranty contracts reflect the cancellation of guarantees in connection with the Extra supermarkets that were sold in 2008. 45. Other financial liabilities Asia and others Derivatives with positive market values Total Investment grade Aaa AAA 0.0 0.0 0.0 0.0 0.0 Aa1 to Aa3 AA+ to AA- 10.7 3.8 1.7 0.5 0.0 A1 to A3 A+ to A- 41.3 20.4 5.5 1.6 1.4 Baa1 to Baa3 BBB+ to BBB- 3.7 3.3 0.4 0.0 0.0 94.3 Non-investment Ba1 to Ba3 BB+ to BB- 0.0 0.0 1.4 0.1 0.0 grade B1 to B3 B+ to B- 0.0 0.0 0.0 0.2 0.0 C C 0.0 0.0 0.0 0.0 0.0 1.7 No rating 2.6 1.4 0.0 0.0 0.0 4.0 Total 58.3 28.9 9.0 2.4 1.4 100.0 € million 2010 2009 Purchasing/sourcing commitments 396 347 Miscellaneous 19 20 415 367 The increase in purchasing/sourcing commitments mainly concerns service agreements. Please see notes nos. 19 “Other intangible assets”, 20 “Tangible assets” and 21 “Investment properties” for information on purchasing commitments for other intangible and tangible assets, obligations from finance and operating leases as well as investment properties.
METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → NOTES : OThER NOTES 46. Other legal issues Status of appraisal processes The share exchange ratio set for the incorporation of Asko deutsche Kaufhaus AG and deutsche SB-Kauf AG into METRO AG in 1996 is undergoing judicial review in appraisal processes initiated by former shareholders. The petitioners maintain that the exchange ratio was set too low, putting them at a disadvantage. These two legal challenges are pending in district courts located in Saarbrücken and frankfurt am Main. Investigations by the Federal Cartel Office On 14 January 2010, the federal Cartel Office searched former business premises of MGB METRO Group Buying Gmbh. The federal Cartel Office’s investigations are ongoing; to date, the authority has raised no concrete and individualised allegations against MGB METRO Group Buying Gmbh or any other METRO GROuP company. As a result, the Company is unable to comment on the possible impact of these investigations on the consolidated financial statements of METRO AG at this point in time. 47. Events after the closing date No events that are of material importance to an assessment of the earnings, financial and asset position of METRO AG and METRO GROuP occurred between the closing date (31 december 2010) and the date of presentation of the accounts (28 february 2011). 48. Notes on related parties In 2010, METRO GROuP maintained the following business relations to related companies: € million 2010 2009 Goods/services provided 3 3 Goods/services received 108 110 Receivables from goods/services provided 1 16 liabilities from goods/services received 0 1 In the financial year 2010, METRO GROuP companies provided goods/services totalling €3 million to companies included in the group of related companies. This concerns primarily the granting of lease rights. → p. 209 The goods/services totalling €108 million that METRO GROuP companies received from related companies in the financial year 2010 consist primarily of property leases. The basic principles of the remuneration system and the amount of Management and Supervisory Board compensation are included in the remuneration report, which is part of the management report. Business relations with related companies are based on contractual agreements providing for arm’s length prices. As in 2009, METRO GROuP had no business relations with related natural persons in the financial year 2010. 49. Share-based compensation for executives METRO AG has been implementing share-based remuneration programmes since 1999 to enable executives to participate in the Company’s value development and reward their contribution to the sustained success of METRO GROuP compared with its competitors. The members of the Management Board and other executives of METRO AG as well as managing directors and executives of the other operating METRO GROuP companies are eligible. Share bonus programme (2004–2008) The final tranche of the Share bonus programme, which METRO AG introduced in 2004, was granted in 2008. The programme entitles executives to cash bonuses whose size depends on the performance of the Metro share and the parallel consideration of benchmark indices. The programme is divided into a tranche for each year, with the target parameters being calculated separately for each tranche. The full share bonus is paid out when the target share price and a so-called equal performance of the share with benchmark indices are attained. The maturity of each tranche is three years. The conditions of the tranches for 2004 to 2008 are shown in the following table: Tranche Due Basis price Target price Total target bonus 2004 July 2007 €37.14 €42.71 Paid 2005 July 2008 €41.60 €47.84 Expired 2006 July 2009 €43.15 €49.62 Expired 2007 July 2010 €61.61 €70.85 Expired 2008 July 2011 €41.92 €48.21 €16,695,000
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