32. Equity

In terms of amount and composition – that is, the ratio of ordinary to preference shares – subscribed capital has not changed compared with 30 September 2015 and totals €835,419,052.27. It is divided as follows:

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No-par-value bearer shares, accounting par value approximately €2.56

30/9/2015

30/9/2016

Ordinary shares

Shares

324,109,563

324,109,563

€ approximately

828,572,941

828,572,941

Preference shares

Shares

2,677,966

2,677,966

€ approximately

6,846,111

6,846,111

Total shares

Shares

326,787,529

326,787,529

Total share capital

€ approximately

835,419,052

835,419,052

Each ordinary share grants one voting right. In addition, ordinary shares of METRO AG entitle the holder to dividends. In contrast to ordinary shares, preference shares principally do not carry voting rights and give a preferential entitlement to profits in line with § 21 of the Articles of Association of METRO AG, which state:

“(1) Holders of non-voting preference shares will receive from the annual balance sheet profit a preference dividend of €0.17 per preference share.

(2) Should the balance sheet profit available for distribution not suffice in any one financial year to pay the preference dividend, the arrears (excluding any interest) shall be paid from the balance sheet profit of future financial years in an order based on age, i.e. in such manner that any older arrears are paid off prior to any more recent ones and that the preference dividends payable from the profit of a financial year are not distributed until all of any accumulated arrears have been paid.

(3) After the preference dividend has been distributed, the holders of ordinary shares will receive a dividend of €0.17 per ordinary share. Thereafter, a non-cumulative extra dividend of €0.06 per share will be paid to the holders of non-voting preference shares. The extra dividend shall amount to 10 per cent of such dividend as, in accordance with Section 4 herein below, will be paid to the holders of ordinary shares insofar as such dividend equals or exceeds €1.02 per ordinary share.

(4) The holders of non-voting preference shares and of ordinary shares will equally share in any additional profit distribution in the proportion of their shares in the share capital.”

Authorised capital

The Annual General Meeting on 23 May 2012 authorised the Management Board to increase the share capital, with the consent of the Supervisory Board, by issuing new ordinary bearer shares in exchange for cash or non-cash contributions in one or several tranches for a total maximum of €325,000,000 by 22 May 2017 (authorised capital I). The Management Board is authorised, with the consent of the Supervisory Board, to exclude shareholder subscription rights in certain cases. To date, the authorised capital I has not been utilised.

Contingent capital

The Annual General Meeting on 20 February 2015 resolved a contingent increase in the share capital by up to €127,825,000, divided into up to 50,000,000 ordinary bearer shares (contingent capital I). This contingent capital increase is related to the establishment of an authorisation of the Management Board, with the consent of the Supervisory Board, to issue warrants or convertible bearer bonds (in aggregate, “bonds”) with an aggregate par value of €1,500,000,000 prior to 19 February 2020, in one or several tranches, and to grant or impose upon the bearers of warrants option rights or obligations and upon the bearers of convertible bonds conversion rights or obligations for ordinary bearer shares in METRO AG representing a pro-rata total of up to €127,825,000 of the share capital in accordance with the terms of the warrant or convertible bearer bonds, or to foresee the company's right to deliver ordinary shares in the company as full or partial compensation for a cash redemption of the bonds. The Management Board is authorised, with the consent of the Supervisory Board, to exclude shareholder subscription rights in certain cases. To date, no warrant and/or convertible bonds have been issued based on said authorisation.

Share buyback

On the basis of § 71 Section 1 No. 8 of the German Stock Corporation Act, the Annual General Meeting on 20 February 2015 authorised the company on or before 19 February 2020 to acquire shares of the company of any share class representing a maximum of 10 per cent of the share capital issued at the time the Annual General Meeting has passed the resolution or – if this value is lower – at the time the authorisation is exercised. To date, neither the company nor any company controlled or majority-owned by that company or any other company acting on behalf of the company or of any company controlled or majority-owned by the company has exercised this authorisation.

For more information about authorised capital, contingent capital, about the authorisation to issue warrants and/or convertible bonds as well as about share buybacks, see the combined management report – notes pursuant to § 315 Section 4 and § 289 Section 4 of the German Commercial Code.

Capital reserve

The capital reserve amounts to €2,551 million (30/9/2015: €2,551 million).

Reserves retained from earnings

Reserves retained from earnings can be broken down as follows:

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€ million

30/9/2015

30/9/2016

Effective portion of gains/losses from cash flow hedges

70

72

Gains/losses from the revaluation of financial instruments in the category “available for sale”

0

0

Currency translation differences from translating the financial statements of foreign operations

−626

−576

Remeasurement of defined benefit pension plans

−646

−851

Income tax on components of other comprehensive income

131

193

Other reserves retained from earnings

2,864

3,096

 

1,793

1,934

Changes in the financial instruments presented above and the corresponding deferred tax effect consist of the following components:

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€ million

2014/15

2015/16

Initial or subsequent measurement of derivative financial instruments

−38

−2

Derecognition of cash flow hedges

26

4

thereof in inventories

(23)

(4)

thereof in net financial result

(3)

(0)

Effective portion of gains/losses from cash flow hedges

−12

2

Gains/losses from the revaluation of financial instruments in the category “available for sale”

0

0

 

−12

2

Net deferred tax effect thereon

2

2

 

−10

4

In addition, currency translation differences of €50 million increased equity (2014/15: €−185 million). They can be broken down as follows:

The translation of the local balance sheets to the group currency resulted in an increase of €74 million in equity outside of profit or loss. The recognition in the amount of €24 million from the cumulated currency differences of companies that will be deconsolidated in financial year 2015/16 or discontinue their operations had the opposite effect in profit or loss.

A decline in equity resulted from the effects of the remeasurement of defined benefit pension plans of €205 million before deferred taxes that were recognised outside of profit or loss. Related deferred taxes amount to €59 million.

Other reserves retained from earnings increased by €232 million from €2,864 million to €3,096 million. This increase was primarily influenced by the profit for the period attributable to the shareholders of METRO AG of €559 million. Dividend payments in the amount of €351 million had an opposite effect.

Non-controlling interests

Non-controlling interests comprise the shares held by third parties in the share capital of the consolidated subsidiaries. They amounted to €12 million at the end of the financial year (30/9/2015: €−7 million). The increase is essentially due to the share of total comprehensive income attributable to non-controlling interests (€54 million). Dividends paid of €38 million had an opposite effect. Significant non-controlling interests exist at Media-Saturn-Holding GmbH.

Appropriation of the balance sheet profit, dividends

Dividend distribution of METRO AG is based on METRO AG’s annual financial statements prepared under German commercial law.

As resolved by the Annual General Meeting on 19 February 2016, a dividend of €1.00 per ordinary share and €1.06 per preference share – that is, a total of €327 million – was paid in financial year 2015/16 from the reported balance sheet profit of €384 million for financial year 2014/15. The remaining amount was carried forward to the new account.

Regarding the appropriation of the balance sheet profit for 2015/16, the Management Board of METRO AG will propose to the Annual General Meeting to distribute from the reported balance sheet profit of €341 million a dividend in the amount of €1.00 per ordinary share and €1.06 per preference share – that is, a total of €327 million – and to carry forward the remaining amount to the new account.