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

Divestment of Real’s Eastern European business

By contractual agreement dated 30 November 2012, METRO GROUP and the French retailing company Groupe Auchan agreed on the sale of Real’s business in Poland, Russia, Romania and Ukraine to Groupe Auchan. The agreement relating to Real in Russia, Romania and Ukraine was implemented during the short financial year 2013. As the last of the remaining conditions precedent were met in January 2014, the Polish Real business could be deconsolidated in the second quarter of 2013/14.

Continued operating activities have led to an increase in the “assets held for sale” of the Real business in Poland from €174 million to €247 million since the beginning of financial year 2013/14. Correspondingly, “liabilities related to assets held for sale” have increased from €264 million to €320 million. The assets and liabilities disposed of as a result of the deconsolidations can be broken down as follows:

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€ million

30/9/2014

Assets

 

Property, plant and equipment

32

Inventories

146

Trade receivables

5

Other financial and non-financial assets (current)

23

Cash and cash equivalents

41

 

247

Liabilities

 

Borrowings (non-current)

69

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

16

Trade liabilities

191

Provisions (current)

14

Borrowings (current)

1

Other financial and non-financial liabilities (current)

29

 

320

Earnings affecting EBIT from the divestment of Real’s business in Eastern Europe amounted to €37 million. These are primarily shown with €43 million as other operating income and €6 million as selling expenses. In segment terms, they impact the Real segment in the full amount. The currency translation differences recognised outside of profit or loss in equity until the date of deconsolidation result in expenses of €28 million that impact the other net financial result on the occasion of their reversal.

Additional assets are scheduled to be sold to Groupe Auchan as well as other buyers in the context of the divestment of Real’s Eastern European business. After the full reintegration of a Russian store amounting to €10 million into the METRO Cash & Carry segment, outstanding assets of €3 million will be accounted to “assets held for sale” and contribute in the same level in the Others segment to segment assets. They do not contribute to the segment assets in the Real segment. “Liabilities related to assets held for sale” do not exist for these additional assets.

Disposal of Real’s Turkish business

In light of the renewed focus on Real’s business in Germany, Real’s business in Turkey was sold following the successful sale of Real’s business in Eastern Europe. The contract to this effect with the buyer, Mr Hacı Duran Beğendik, was signed on 27 June 2014. After the final conditions for execution had been met in July 2014, the Turkish Real business was deconsolidated in the annual financial statements as of 30 September 2014. In light of this, assets of €73 million were recognised as “assets held for sale” and €80 million as “liabilities related to assets held for sale” as of 30 June 2014. Disposals from these items took place during the deconsolidation on 30 September 2014. Before the reclassification to “assets held for sale” and “liabilities related to assets held for sale”, a write-down of the assets and liabilities to fair value less costs to sell was performed. This resulted in expenses affecting EBIT of €14 million that fully impacted the segment earnings of the Real sales line. In addition, there were no further earnings impacting EBIT during the deconsolidation. The reversal of currency translation differences recognised directly in equity until the date of deconsolidation results in an expense of €109 million, which is shown in other net financial result.

Sale of wholesale business in Vietnam

On 7 August 2014, METRO Cash & Carry reached an agreement with the Thai retail group Berli Jucker Public Company Limited (BJC) for the sale of all 19 Vietnamese wholesale stores including the associated real estate portfolio. The agreement is still subject to fulfilment of the usual conditions of execution and approvals by the responsible authorities. Until this time, the Vietnamese wholesale business will remain part of METRO GROUP and will continue to contribute to group results. Upon the agreement’s effective date, all assets and liabilities affected by the agreement are 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” (€221 million) or “liabilities related to assets held for sale” (€192 million) in the consolidated balance sheet as of 30 September 2014. The assets and liabilities can be broken down as follows:

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€ million

30/9/2014

Assets

 

Property, plant and equipment

113

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

48

Inventories

32

Trade receivables

3

Other financial and non-financial assets (current)

22

Cash and cash equivalents

3

 

221

Liabilities

 

Provisions for pensions and similar obligations

1

Borrowings (non-current)

97

Trade liabilities

45

Provisions (current)

6

Borrowings (current)

36

Other financial and non-financial liabilities (current)

7

 

192

In the METRO Cash & Carry segment, assets and liabilities held for sale that are related to the Vietnamese wholesale business contribute €212 million to segment assets and €59 million to segment liabilities.

Expenses of €1 million in connection with the sale to BJC were incurred in financial year 2013/14. They are reported under general administrative expenses and are attributable to the METRO Cash & Carry segment. No expenses were incurred in connection with the measurement of the disposal group at fair value less costs to sell.

METRO GROUP assumes that the outstanding conditions for the accounting treatment of the disposal of the Vietnamese wholesale business will be fulfilled within a period of twelve months.

Real estate

By contractual agreement of 23 April 2014, METRO GROUP purchased ten properties used by the Real sales line from the Delek Group, Netanya, Israel, with the aim of reselling these within a short period of time. The transaction was made through the direct purchase of shares in ten property companies as well as the purchase of loan receivables from the property companies. As a result of this transaction, the value of assets held for sale increased by €172 million. The transaction had no impact on earnings. For purposes of the cash flow statement, the transaction is shown as other investments under the cash flow from investing activities.

In addition, the value of individual properties available for sale has declined over the course of financial year 2013/14 by €75 million as a result of the sale of real estate assets and by €3 million as a result of currency effects. The reintegration of a real estate asset into non-current assets also resulted in a reduction of €1 million. Plans to dispose of additional real estate assets over the course of one year added €36 million. In addition, increased renovation-related additional capitalisations of real estate assets already recognised under “assets held for sale” added €3 million to this balance sheet item.

METRO GROUP expects to dispose of the real estate assets recognised as “assets held for sale” during the course of financial year 2014/15. 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 METRO Cash & Carry (€7 million), Real (€172 million) and Others (€57 million) segments.