30. Assets held for sale/liabilities related to assets held for sale

Divestment of the cash & carry business in the United Kingdom

On 30 May 2012, METRO GROUP and Booker Group PLC announced plans to merge METRO GROUP’s cash & carry business in the United Kingdom (MAKRO Self Service Wholesalers Ltd) with the wholesaling business of Booker Group PLC to form a strategic partnership on the British market. In return for its 30 cash & carry stores including their real estate assets, it was agreed that METRO GROUP will receive 9.08 percent of the share capital of Booker Group PLC as well as a cash payment of £15.8 million.

Until July 2012, the transaction was subject to the approval of the shareholders of Booker Group PLC. From the time of the announcement of the combination, all assets (€484 million) and liabilities (€141 million) which were part of this transaction were treated as disposal groups in accordance with IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations) and accordingly recognised in the Group’s interim financial statements as of 30 June 2012.

Expenses related to the depreciation of this disposal group to its fair value less cost to sell totalled €172 million. These impacted the METRO Cash & Carry segment in the amount of €127 million and the Real Estate segment in the amount of €45 million.

With the approval of the shareholders in the general shareholders’ meeting of Booker Group PLC on 2 July 2012, the final remaining condition for the closing of this transaction was met. As a result, derecognition was effected for the first time in the quarterly financial report as of 30 September 2012.

Following the consolidation of all intra-Group circumstances, the divestment of the cash & carry business in the United Kingdom resulted in a reduction of “assets held for sale” of €321 million and “liabilities related to assets held for sale” of €145 million at the time of the disposal.

The divested assets and liabilities consist of the following items:

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€ million

2012

1

Revised terminology (see chapter “Notes to the Group accounting principles and methods”)

Assets

 

Tangible assets

168

Other financial and non-financial assets (non-current)1

9

Inventories

98

Trade receivables

1

Other financial and non-financial assets (current)1

33

Cash and cash equivalents

12

 

321

Liabilities

 

Trade liabilities

118

Provisions (current)

2

Other financial and non-financial liabilities (current)1

25

 

145

The sale of the cash & carry business in the United Kingdom resulted in a positive EBIT contribution of €23 million, with €7 million attributable to METRO Cash & Carry and €16 million attributable to the Real Estate segment.

The derecognition of the translation effects that were previously recognised in equity resulted in a negative effect on the net financial result of €22 million.

The assets and liabilities derecognised in the context of this divestment reduced segment assets in the METRO Cash & Carry segment by €190 million and segment liabilities by €140 million. Segment assets and liabilities in the Real Estate segment declined by €128 million and €0 million, respectively.

Divestment of Real’s Eastern European business

By contractual agreement of 30 November 2012, METRO GROUP and the French retail group Groupe Auchan agreed on the sale of Real’s Eastern European business to Groupe Auchan. Real’s Eastern European operations comprise 91 Real hypermarkets in Poland, Russia, Romania and Ukraine including real estate assets at 14 of these locations. The sale is still subject to the approval of the respective national antitrust authorities. Until the antitrust authorities have given their approval, Real’s Eastern European business remains part of METRO GROUP and continues to contribute to Group results. Since the effective date of the agreement between METRO GROUP and Groupe Auchan, all assets and liabilities that fall under the agreement have been treated as a disposal group pursuant to IFRS 5. Following consolidation of all intra-Group assets and liabilities, they are therefore shown in the item “assets held for sale” (€1,250 million) or “liabilities related to assets held for sale” (€825 million) in the consolidated balance sheet as of 31 December 2012. They can be broken down as follows:

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€ million

2012

1

Revised terminology (see chapter “Notes to the Group accounting principles and methods”)

Assets

 

Intangible assets

163

Tangible assets

658

Other financial and non-financial assets (non-current)1

2

Inventories

282

Trade receivables

12

Other financial and non-financial assets (current)1

69

Cash and cash equivalents

64

 

1,250

Liabilities

 

Borrowings (non-current)1

217

Other financial and non-financial liabilities (non-current)1

26

Trade liabilities

490

Provisions (current)

23

Borrowings (current)1

5

Other financial and non-financial liabilities (current)1

62

Income tax liabilities

2

 

825

The assets and liabilities held for sale that are related to Real’s Eastern European business contribute €856 million to segment assets and €659million to segment liabilities in the Real segment. In the Real Estate segment, they account for €298million of segment assets and do not contribute to segment liabilities.

Expenses of €41 million arose in the context of the divestment to Groupe Auchan. No expenses related to the depreciation of the disposal group to the fair value less costs to sell occurred.

Moreover, additional assets and liabilities will be sold to other buyers in the context of the divestment of Real’s Eastern European business. At €65 million and €75 million, respectively, these assets and liabilities are also recognised in “assets held for sale” and “liabilities related to assets held for sale”. They contribute €45 million and €25 million, respectively, to segment assets and segment liabilities in the Real segment. Their share of segment assets in the Real Estate segment amounts to €23 million while they do not contribute to segment liabilities.

The sale of the additional assets and liabilities resulted in €38million in expenses. No expenses were incurred through the depreciation of the disposal group to fair value less costs to sell.

METRO GROUP expects to have also closed the sale of assets and liabilities of Real’s Eastern European business to other buyers during the upcoming abbreviated financial year, at the latest by December 2013.

Sale of French real estate assets

In December 2012, METRO GROUP sold 69.26 percent of its previously fully owned subsidiary OPCI FRENCH WHOLESALE PROPERTIES – FWP (OPCI) to a group of investors consisting of FWP LUX FEEDER ALPHA S.A., FWP LUX FEEDER BETA S.A., MUTUELLA D’EPARGNE, DE RETRAITE ET DE PROVOYNACE CARAC and OPCIMMO. The transfer of ownership took effect on 28 December 2012. Since that time, the remaining 30.74 percent shareholding in OPCI is recognised at equity as an associated company in the consolidated financial statements of METRO GROUP.

The OPCI added €120 million to “other operating income” in METRO GROUP’s EBIT. This includes income of €1 million from the revaluation of the investment recognised at equity.

As of 31 December 2012, subsequent measurement of the investment recognised at equity resulted in expenses of €1 million, which are shown in the net financial result.

At the time of the disposal and after consolidation of all intra-Group circumstances, the OPCI sale resulted in a decrease of €124 million in “assets held for sale”. “Liabilities related to assets held for sale” were not incurred.

The assets that were derecognised as part of this transaction reduced segment assets in the Real Estate segment by €124 million. Segment assets in the METRO Cash & Carry segment increased by €16 million as a result of the capitalisation of 7 finance leases.

As part of the OPCI sale, METRO GROUP’s METRO Cash & Carry segment divested of a total of 43 French locations. Of these, 7 locations were classified as finance leases in the context of a sale-and-lease-back transaction and are therefore recognised in METRO GROUP’s fixed assets.

The sale of real estate assets reduced the carrying amounts of “assets held for sale” by €194 million, while plans to dispose of additional real estate assets in the course of 2013 and renovation-related additional capitalisations of real estate assets already recognised under assets held for sale added €191 million to this balance sheet item. This includes the second French real estate fund OPCI FRENCH WHOLESALE STORES – FWS with €114 million in assets.

METRO GROUP expects to dispose of the real estate assets recognised as “assets held for sale” during the course of 2013. No impairment losses to a lower fair value less costs to sell became necessary. Within segment reporting, these assets are recognised in segment assets of the Real Estate segment at €215 million.