18. Goodwill

Goodwill amounts to €3,763 million (30/9/2012: €4,022 million; 31/12/2012: €3,780 million).

A number of shares in Media-Saturn-Holding GmbH held by a non-controlling shareholder were granted stock tender rights. In exercising these stock tender rights the non-controlling shareholder sold his share in METRO Kaufhaus- und Fachmarkt Holding GmbH during the short financial year 2013. In the consolidated financial statements of METRO GROUP, the gradual acquisition of shares led to a goodwill increase of €10 million.

In 2009, the non-controlling shareholders of METRO Cash & Carry Romania were granted stock tender rights by METRO GROUP. The subsequent measurement of these stock tender rights resulted in a goodwill increase of €5 million (30/9/2012: decline by €10 million; 31/12/2012: decline by €2 million).

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. Since the agreement’s effective date, all assets and liabilities that fall under the agreement are treated as a disposal group pursuant to IFRS 5. In this context, goodwill of Real Poland and Real Russia was reclassified to the item “assets held for sale” as of 31 December 2012. Goodwill of Real Russia has been disposed of in the context of the deconsolidation.

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

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31/12/2012

30/9/2012

30/9/2013

 

 

 

 

 

 

 

WACC

 

WACC

 

€ million

%

€ million

€ million

%

Real Germany

1,083

5.9

1,083

1,083

5.8

METRO Cash & Carry France

398

5.9

398

398

5.8

METRO Cash & Carry Netherlands

352

6.0

352

352

5.9

METRO Cash & Carry Poland

258

6.6

258

257

6.4

METRO Cash & Carry Germany

223

5.9

223

223

5.8

Media-Saturn Germany

211

7.7

222

217

7.5

METRO Cash & Carry Hungary

189

8.7

239

174

8.1

METRO Cash & Carry Italy

171

6.6

171

171

6.8

METRO Cash & Carry Belgium

145

6.0

145

145

5.9

METRO Cash & Carry Spain

0

0.0

0

142

7.3

METRO Cash & Carry Portugal

91

8.5

91

0

0.0

METRO Cash & Carry Spain

51

7.2

51

0

0.0

Redcoon group

83

8.8

83

83

8.5

Media-Saturn Italy

71

8.5

73

72

8.7

METRO Cash & Carry Romania

56

8.5

48

61

7.9

Galeria Inno Belgium

57

6.9

57

57

6.7

Real Poland

0

6.6

144

0

0.0

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

341

 

384

328

 

 

3,780

 

4,022

3,763

 

 

 

 

 

 

 

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. An exception to this rule concerns the cash-generating unit METRO Cash & Carry Spain/Portugal. Following the consolidation of the central management functions of METRO Cash & Carry Spain and Portugal, the impairment test is carried out for the new cash-generating unit METRO Cash & Carry Spain/Portugal. 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. Expected future cash flows are based on a qualified planning process under consideration of the 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 six years in the case 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. 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 (same as 31 December 2012) and a market risk premium of 6.5 per cent (same as 31 December 2012) 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 5.8 to 9.7 per cent (31/12/2012: 5.9 to 10.7 per cent).

The mandatory annual impairment test as of 30 September 2013 resulted in the following assumptions regarding the development of sales, EBIT and the EBIT margin for goodwill considered material for valuation purposes during the detailed planning period up until the sustainable result:

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Sales

EBIT

EBIT margin

Detailed planning period (years)

Real Germany

Slight growth

Strong growth

Strong growth

3

METRO Cash & Carry France

Solid growth

Solid growth

Unchanged

3

METRO Cash & Carry Netherlands

Slight growth

Strong growth

Strong growth

6

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

The determination of the sustainable result is based on assumptions regarding various cost reductions, and market-orientated EBIT margins were used to determine the sustainable result; medium-term EBIT growth results from the transformation process which the different entities are currently undergoing.

As of 30 September 2013, the prescribed annual impairment test confirmed the recoverability of all capitalised goodwill with the exception of METRO Cash & Carry Hungary and METRO Cash & Carry Denmark. Due to business developments in these two countries, goodwill impairment of €16 million and €15 million was carried out for METRO Cash & Carry Denmark and METRO Cash & Carry Hungary, respectively.

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 METRO Cash & Carry Germany, METRO Cash & Carry Netherlands, Real Germany and Redcoon Germany, these changes to the underlying assumptions would not result in impairment losses at any of the groups of cash-generating units. In the goodwill impairment test at METRO Cash & Carry Germany, the fair value less costs to sell exceeded the carrying amount by €50 million. The corresponding amount for METRO Cash & Carry Netherlands was €20 million, the amount for Real Germany was €16 million, and the amount for Redcoon Germany was €6 million. Assuming a capitalisation rate of 6.1 per cent rather than 5.8 per cent or a lump-sum discount of 6.4 per cent on assumed perpetual EBIT, the fair value less costs to sell at METRO Cash & Carry Germany would correspond to the carrying amount. Assuming a 0.2 percentage point lower growth rate or a capitalisation rate of 6.1 per cent rather than 5.9 per cent or a lump-sum discount of 4.5 per cent on assumed perpetual EBIT, the fair value less costs to sell of METRO Cash & Carry Netherlands would correspond to the carrying amount. Assuming a capitalisation rate of 5.9 per cent rather than 5.8 per cent or a lump-sum discount of 1.2 per cent on assumed perpetual EBIT, the fair value less costs to sell at Real Germany would correspond to the carrying amount. Assuming a capitalisation rate of 8.8 per cent rather than 8.5 per cent or a lump-sum discount of 4.4 per cent on assumed perpetual EBIT, the fair value less costs to sell at Redcoon Germany would correspond to the carrying amount.

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€ million

Goodwill 

1

Including asset transfers to “assets held for sale”

Acquisition or production costs

 

As of 1/1/2012

4,045

Currency translation

16

Additions to consolidation group

0

Additions

18

Disposals1

–56

Transfers

0

As of 30/9/2012 / 1/10/2012

4,022

Currency translation

1

Additions to consolidation group

0

Additions

–9

Disposals1

–164

Transfers

0

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

3,850

Currency translation

–2

Additions to consolidation group

0

Additions

17

Disposals1

0

Transfers

0

As of 30/9/2013

3,865

Depreciation/amortisation

 

As of 1/1/2012

0

Currency translation

0

Additions, scheduled

0

Additions, non-scheduled

0

Disposals1

0

Reversals of impairment losses

0

Transfers

0

As of 30/9/2012 / 1/10/2012

0

Currency translation

0

Additions, scheduled

0

Additions, non-scheduled

70

Disposals1

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

Reversals of impairment losses

0

Transfers

0

As of 30/9/2013

101

Carrying amount at 1/1/2012

4,045

Carrying amount at 30/9/2012

4,022

Carrying amount at 31/12/2012

3,780

Carrying amount at 30/9/2013

3,763