pdf (2.5 MB) - METRO Group

METRO GROUP : ANNUAL REPORT 2010 : BUSINESS
→ GROUP MANAGEMENT REPORT : 3. EARNINGS POSITION
Change
2010 2009 Absolute %
Net profit for the period € million 936 1 519 1 417 80.2
Net profit attributable to
minority interests € million 86 136 –50 –36.7
Net profit attributable to
shareholders of METRO AG € million 8502 3832 467 –
Earnings per share 3 € 2.60 4 1.17 4 1.43 –
Earnings per share before
special items 3, 5 € 3.12 2.10 1.02 48.6
1 Includes special items from Shape 2012 after taxes of €203 million
(previous year: €305 million)
2 Includes special items from Shape 2012 after taxes of €169 million
(previous year: €303 million)
3 Net of minority interests
4 Includes special items from Shape 2012 after taxes of €0.52 per share
(previous year: €0.93)
5 Adjusted for special items from Shape 2012
Earnings per share before special items, that is adjusted for
the special items from Shape 2012, totalled €3.12 (previous
year: €2.10).
EBIT after Cost of Capital (EBITaC)
METRO GROUP’s strength is reflected in its ability to continuously
increase the Company’s value through growth and
operational efficiency as well as optimal capital deployment.
METRO GROUP has been using value-orientated performance
metrics since 2000 to ensure the Company’s sustained
value creation. Since 2009, the value contribution has been
measured in terms of EBITaC (EBIT after Cost of Capital). A
positive value contribution is achieved when earnings before
interest and taxes exceed the cost of capital needed to
finance the average capital employed.
EBITaC = EBIT 1 – cost of capital
= EBIT 1 – (capital employed x wACC)
1 Special items from Shape 2012 periodised over four years
The use of the performance metric EBITaC enables
METRO GROUP to focus on the key drivers of the operating
business that management can influence: increases in operational
efficiency, value-creating growth and the optimisation
of capital employed. The efficiency and value-enhancing programme
Shape 2012 contributes, in particular, to increases
in operational efficiency and the optimisation of capital
employed. value-creating growth, in turn, continues to derive
largely from METRO GROUP’s strategy of investing in the
high-margin growth regions of Eastern Europe and Asia.
→ p. 086
The cost of capital reflects the expected remuneration to
investors for the capital they provide and for their investment
risk before taxes. It is calculated by multiplying the
average capital employed by the weighted average cost of
capital before taxes (wACC).
The cost of capital before taxes corresponds to the minimum
return on capital demanded by capital providers. It
reflects the total cost of capital employed and thus consists
of equity and debt capital costs. Previously, the cost
of capital was calculated on the basis of a uniform risk for
all sales divisions. For practical reasons, however, this did
not distinguish between the trade and real estate business;
in addition, the calculation of the wACC for the segments
did not reflect a weighting of country risks. Following
the establishment of the Real Estate segment as an
independent profit centre, METRO GROUP adjusted the
capital cost calculation in 2010. This has a significant
impact on corporate controlling. Through the use of riskadequate
capital costs, which are differentiated by countries
and segments, METRO GROUP can optimise the allocation
of available investment funds, among other things.
The weighted cost of capital is determined by a risk-free
rate of return, a country-specific risk premium, segmentspecific
business risk and financial risk. The assessment
of the segments’ respective business risk, which is
reflected in the beta factor, was implemented by means of
an analysis of peer companies for the respective sales divisions
and the Real Estate segment. In addition, the new
wACC calculation considers sector-specific financing
structures and explicitly accounts for individual country risks
to calculate the segment wACCs. In 2010, METRO GROUP’s
weighted cost of capital before taxes amounted to 9.8 percent.
This figure is calculated from the segment-specific
weighted cost of capital weighted according to capital
employed.
Capital employed represents interest-carrying assets. In
order to further enhance the comprehensibility of the calculation,
the definition of capital employed was spelled out
even more clearly. Capital employed comprises segment
assets plus net working capital less trade payables as well
as deferred liabilities. It principally represents an average
capital employed that is calculated from quarterly financial
statements. One benefit of the use of averages is that the
calculation can consider developments in capital employed
that occur during the relevant period.