18. Goodwill

Goodwill amounts to €3,671 million (30/9/2013: €3,763 million).

A number of shares in Media-Saturn-Holding GmbH held by a non-controlling shareholder were granted a put option. In exercising this put option the non-controlling shareholder sold his share in METRO Kaufhaus- und Fachmarkt Holding GmbH during the short financial year 2013. The final price determination in the current financial year resulted in a €1 million increase in goodwill (30/9/2013: increase of €10 million from delivery of the shares).

In 2009, the non-controlling shareholders of METRO Cash & Carry Romania were granted stock tender rights by METRO GROUP. The subsequent measurement of these put options resulted in a goodwill decrease of €7 million (30/9/2013: increase of €5 million).

At the closing date, the breakdown of goodwill among the major cash-generating units was as follows:

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30/9/2013

30/9/2014

 

 

 

 

 

 

WACC

WACC

 

€ million

%

€ million

%

Real Germany

1,083

5.8

1,083

5.7

METRO Cash & Carry France

398

5.8

398

5.7

Media-Saturn Deutschland/Redcoon Group

300

7.5

300

6.7

METRO Cash & Carry Netherlands

352

5.9

264

5.9

METRO Cash & Carry Poland

257

6.4

257

6.5

METRO Cash & Carry Germany

223

5.8

223

5.7

METRO Cash & Carry Hungary

174

8.1

174

8.0

METRO Cash & Carry Italy

171

6.8

171

6.6

METRO Cash & Carry Belgium

145

5.9

145

5.8

METRO Cash & Carry Spain/Portugal

142

7.3

142

6.6

Media-Saturn Italy

72

8.7

72

7.7

Galeria Inno Belgium

57

6.7

57

6.2

METRO Cash & Carry Romania

61

7.9

54

7.3

Other companies (each < €50 million or corporate assets)

328

 

331

 

 

3,763

 

3,671

 

 

 

 

 

 

In accordance with IFRS 3 in conjunction with IAS 36, goodwill is tested for impairment once a year. This is carried out at the level of a group of cash-generating units. In the case of goodwill, this group is the organisational unit sales line per country. Exceptions to this rule concern the cash-generating units METRO Cash & Carry Spain/Portugal and Media-Saturn Germany/Redcoon group. After acquiring the outstanding shares of Redcoon group and combining the central administrative functions of Media-Saturn Germany and Redcoon group, the new group of the cash-generating unit Media-Saturn Germany/Redcoon group was tested for impairment. In the impairment test, the cumulative carrying amount of the group of cash-generating units is compared with the recoverable amount. The recoverable amount is defined as the fair value less costs to sell, which is calculated from discounted future cash flows and the level 3 input parameters of the fair value hierarchy (for an explanation of the fair value hierarchy, see no. 40 Carrying amounts and fair values according to measurement categories). Expected future cash flows are based on a qualified planning process under consideration of intra-group experience as well as macroeconomic data collected by third-party sources. In principle, the detailed planning period comprises three years. In exceptional cases, it may amount to five years in the event of longer-term detailed planning. As in the previous year, the growth rates considered at the end of the detailed planning period are generally 1.0 per cent, with the exception of the group of the cash-generating unit Real Germany, for which a growth rate of 0.5 per cent is assumed. The capitalisation rate as the weighted average cost of capital (WACC) is determined using the capital asset pricing model. In the process, an individual peer group is assumed for all groups of cash-generating units operating in the same business segment. In addition, the capitalisation rates are determined on the basis of an assumed basic interest rate of 2.5 per cent (30/9/2013: 2.5 per cent) and a market risk premium of 6.0 per cent (30/9/2013: 6.5 per cent) in Germany. Country-specific risk premiums based on the respective country rating are applied to the equity cost of capital and to the debt cost of capital. The capitalisation rates after taxes determined individually for each group of cash-generating units range from 5.7 to 8.9 per cent (30/9/2013: 5.8 to 9.7 per cent).

The mandatory annual impairment test as of 30 September 2014 resulted in the following assumptions regarding the development of sales, EBIT and the EBIT margin targeted for the purposes of the balance sheet during the detailed planning period:

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Sales

EBIT

EBIT margin

Detailed planning period (years)

Real Germany

Slight growth

Strong growth

Strong growth

5

METRO Cash & Carry France

Solid growth

Solid growth

Unchanged

3

METRO Cash & Carry Netherlands

Slight growth

Strong growth

Strong growth

5

METRO Cash & Carry Poland

Substantial growth

Strong growth

Slight growth

3

METRO Cash & Carry Germany

Slight growth

Strong growth

Strong growth

5

Media-Saturn Germany

Solid growth

Solid growth

Unchanged

3

METRO Cash & Carry Hungary

Solid growth

Strong growth

Strong growth

5

METRO Cash & Carry Italy

Solid growth

Strong growth

Strong growth

3

As of 30 September 2014, the prescribed annual impairment test confirmed the recoverability of all capitalised goodwill. On 31 March 2014, impairment of €88 million was already carried out on the goodwill of METRO Cash & Carry Netherlands due to business development.

In addition to the impairment test, three sensitivity analyses were conducted for each group of cash-generating units. The first sensitivity analysis was based on the assumption of a 1 percentage point lower growth rate. In the second sensitivity analysis, the interest rate for each group of cash-generating units was raised by 10.0 per cent. In the third sensitivity analysis, a lump sum discount of 10.0 per cent was applied to assumed perpetual EBIT. With the exception of Real Germany, METRO Cash & Carry Netherlands, METRO Cash & Carry Germany and METRO Cash & Carry Hungary, these changes to the underlying assumptions would not result in impairment at any of the groups of cash-generating units.

In the goodwill impairment test at Real Germany, the fair value less costs to sell exceeded the carrying amount by €9 million. The corresponding amount for METRO Cash & Carry Germany was €20 million, and the amount for METRO Cash & Carry Hungary was €12 million. Assuming a 0.04 percentage point lower growth rate or a capitalisation rate of 5.71 per cent rather than 5.69 per cent or an assumed perpetual EBIT of €162 million rather than €163 million, the fair value less costs to sell of Real Germany would correspond to the carrying amount. At METRO Cash & Carry Netherlands, a perpetual EBIT of €45 million was assumed. For METRO Cash & Carry Germany, fair value less costs to sell would correspond to the carrying amount assuming a 0.2 percentage point lower growth rate or a capitalisation rate of 5.8 per cent rather than 5.7 per cent or an assumed perpetual EBIT of €84 million rather than €86 million. Assuming a 0.6 percentage point lower growth rate or a capitalisation rate of 8.4 per cent rather than 8.0 per cent or an assumed perpetual EBIT of €24 million rather than €25 million, the fair value less costs to sell of METRO Cash & Carry Hungary would correspond to the carrying amount.

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€ million

Goodwill

1

Disposals and transfers to IFRS 5 were shown as disposals in the previous year

Acquisition or production costs

 

As of 1/10/2012

4,022

Currency translation

1

Additions to consolidation group

0

Additions

−9

Disposals1

−2

Reclassifications under IFRS 51

−162

Transfers

0

As of 31/12/2012 / 1/1/2013

3,850

Currency translation

−2

Additions to consolidation group

0

Additions

17

Disposals1

0

Reclassifications under IFRS 51

0

Transfers

0

As of 30/9 / 1/10/2013

3,864

Currency translation

1

Additions to consolidation group

0

Additions

2

Disposals1

−7

Reclassifications under IFRS 51

0

Transfers

0

As of 30/9/2014

3,860

Impairment losses

 

As of 1/10/2012

0

Currency translation

0

Additions, scheduled

0

Additions, non-scheduled

70

Disposals1

0

Reclassifications under IFRS 51

0

Reversals of impairment losses

0

Transfers

0

As of 31/12/2012 / 1/1/2013

70

Currency translation

0

Additions, scheduled

0

Additions, non-scheduled

31

Disposals1

0

Reclassifications under IFRS 51

0

Reversals of impairment losses

0

Transfers

0

As of 30/9 / 1/10/2013

101

Currency translation

0

Additions, scheduled

0

Additions, non-scheduled

88

Disposals1

0

Reclassifications under IFRS 51

0

Reversals of impairment losses

0

Transfers

0

As of 30/9/2014

189

Carrying amount at 1/10/2012

4,022

Carrying amount at 31/12/2012

3,780

Carrying amount at 30/9/2013

3,763

Carrying amount at 30/9/2014

3,671