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

Sale of the Galeria Kaufhof group

On 15 June 2015, METRO GROUP signed an agreement with Hudson’s Bay Company, Toronto, Canada, regarding the sale of the entire department store business as well as 59 related properties owned and/or managed by the Galeria Real Estate Group. The department store business comprises 102 Galeria Kaufhof stores and 16 Sportarena stores in Germany as well as 16 department stores of the subsidiary Galeria Inno in Belgium. The sale of the department store business was completed as of 30 September 2015. Accordingly, the department store business was deconsolidated as of the same date.

All assets and liabilities affected by the agreement were part of the Galeria Kaufhof segment and were treated as a discontinued operation in accordance with IFRS 5 from 30 June 2015 to the date of deconsolidation. Following consolidation of all intra-group assets and liabilities, they were therefore shown in the items assets held for sale (€2,291 million) or liabilities related to assets held for sale (€1,258 million) in the consolidated balance sheet as of 30 June 2015. The values of assets and liabilities changed until the time of disposal due to regular operations and a preparatory measure in connection with the financing of the purchase price by the buyer that had to be accounted for in the context of the closing on 30 September 2015. The assets and liabilities held for sale of the department store business that were disposed of as part of the consolidation can be broken down as follows:

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€ million

 

Assets

 

Goodwill

71

Other intangible assets

49

Property, plant and equipment

1,589

Financial assets

1,184

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

147

Inventories

502

Other financial and non-financial assets (current)

94

Cash and cash equivalents

381

 

4,017

Liabilities

 

Provisions for pensions and similar obligations

319

Other provisions

14

Borrowings (non-current)

1,303

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

130

Trade liabilities

313

Provisions (current)

39

Borrowings (current)

6

Other financial and non-financial liabilities (current)

392

 

2,516

No impairment losses were necessary to adjust the recognised carrying amounts to the fair value less costs to sell. The deconsolidation result from the divestment process including all expenses that were previously directly related to the disposal of the department store business amounts to €797 million after taxes and, together with current earnings after taxes of the department store business in the amount of €138 million, was shown in the income statement under profit or loss for the period from discontinued operations.

As part of deconsolidation, cumulative remeasurement effects included in other comprehensive income in connection with the valuation of Galeria Kaufhof pension plans of €–126 million and the related income tax effect of €39 million were reclassified to other reserves retained from earnings.

For more information about this transaction, see the notes to the income statement under profit or loss for the period from discontinued operations after taxes.

Sale of wholesale business in Vietnam

On 18 February 2015, METRO Cash & Carry signed an agreement regarding the sale of all 19 Vietnamese wholesale stores including the associated real estate portfolio to TCC Holding Co., Ltd. (TCC). This contract was modified on 22 July 2015. On 7 August 2014, METRO Cash & Carry had signed an agreement with the Thai retail group Berli Jucker Public Company Ltd. (BJC) regarding the sale of the Vietnamese wholesale business including the associated real estate portfolio. This was rejected by a general meeting of BJC. As a result, BJC’s majority shareholder TCC replaced BJC as party to the transaction at unchanged economic conditions. METRO GROUP expects the transaction to be completed in financial year 2015/16. At present, customary authorisations by the local authorities remain outstanding. Until these conditions are fulfilled, the Vietnamese wholesale business will remain part of METRO GROUP and will continue to contribute to group results. Since the annual financial statements for financial year 2013/14, all assets and liabilities affected by the transaction have been treated as a disposal group pursuant to IFRS 5. Following consolidation of all intra-group assets and liabilities, they are therefore shown under assets held for sale or liabilities related to assets held for sale in the consolidated balance sheet as of 30 September 2015. The assets held for sale of €221 million shown in this context in the consolidated financial statements as of 30 September 2014 increased to €233 million in financial year 2014/15 as operations were continued. Correspondingly, liabilities related to assets held for sale increased from €192 million to €194 million during this period. As of 30 September 2015, the breakdown of these assets and liabilities is as follows:

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€ million

 

Assets

 

Property, plant and equipment

125

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

52

Inventories

34

Trade receivables

3

Other financial and non-financial assets (current)

17

Cash and cash equivalents

2

 

233

Liabilities

 

Provisions for pensions and similar obligations

1

Borrowings (non-current)

58

Trade liabilities

41

Provisions (current)

6

Borrowings (current)

82

Other financial and non-financial liabilities (current)

6

 

194

In the METRO Cash & Carry segment, assets and liabilities held for sale that are related to the Vietnamese wholesale business contribute €228 million to segment assets and €52 million to segment liabilities.

Expenses of €8 million in connection with the sale were incurred in financial year 2014/15 and reflected in EBIT. They are reported under general administrative expenses and are essentially attributable to the METRO Cash & Carry segment. In addition, the net financial result includes €3 million in income, with €4 million shown in the other financial result and €–1 million shown in the interest result. No expenses were incurred in connection with the measurement of the disposal group at fair value less costs to sell. The transaction also had no impact on other comprehensive income.

The currency translation differences from the translation of the Vietnamese financial statement data that were recognised in equity outside of profit or loss until divestment amounted to €–6 million.

Sale of cash-and-carry activities in Greece

On 21 November 2014, METRO GROUP concluded an agreement regarding the sale of 100 per cent of the shares in MAKRO Cash & Carry Wholesale S.A., Greece, consisting of nine cash-and-carry stores and the associated real estate portfolio, with INO S.A., a 70 per cent owned subsidiary of Greek retail group I. & S. Sklavenitis Trade S.A. (Sklavenitis). After the suspensive conditions had been fulfilled, the transaction was completed on 30 January 2015. As a result, the deconsolidation of MAKRO Cash & Carry Wholesale S.A. was implemented in the half-year financial statements as of 31 March 2015. The assets and liabilities disposed of as a result of the deconsolidations can be broken down as follows:

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€ million

 

Assets

 

Goodwill

25

Property, plant and equipment

57

Inventories

30

Other financial and non-financial assets (current)

16

Cash and cash equivalents

18

 

146

Liabilities

 

Provisions for pensions and similar obligations

2

Trade liabilities

74

Provisions (current)

2

Other financial and non-financial liabilities (current)

5

 

83

The EBIT contribution resulting from the sale of MAKRO Cash & Carry Wholesale S.A. amounts to €8 million, with €9 million recognised in other operating income and €1 million recognised in general administrative expenses. In addition, the reversal through profit or loss of currency translation differences that were recognised in equity until the deconsolidation date resulted in expenses of €8 million in the other financial result. The deconsolidation had no impact on other comprehensive income.

Sale of Real’s Eastern European business

In the context of the disposal of Real’s Eastern European business to Groupe Auchan, which was completed by the end of the second quarter of 2013/14, the group plans to sell the remaining assets to other buyers. After consideration of currency effects of €–1 million, these assets were sold at their carrying amount of €2 million during the third quarter of financial year 2014/15.

Real estate

The value of individual real estate properties held for sale changed from €236 million to €17 million during financial year 2014/15. The decline is primarily the result of the sale of real estate assets in the amount of €295 million. In addition, this item was changed by the reintegration of real estate assets into non-current assets in the amount of €–23 million, currency effects of €–8 million and the reclassification of individual real estate properties from non-current assets to assets held for sale in the amount of €107 million.

METRO GROUP expects to dispose of the real estate assets recognised as assets held for sale within a year following their first-time recognition in this balance sheet item. 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 Others segment (€17 million).