48. Adjustment of comparative figures for 2018/19 due to IFRS 16

The International Accounting Standards Board published the new accounting standard IFRS 16 (Leases). IFRS 16 replaces the existing lease regulations, including IAS 17 (Leases), IFRIC 4 (Determining Whether an Agreement Contains a Lease), SIC-15 (Operating Leases – Incentives) and SIC-27 (Evaluating the Substance of Transactions in the Legal Form of a Lease) .

METRO has made the first-time application of IFRS 16 fully retrospective to 30 September 2019 (financial year 1/10/2018 to 30/9/2019). As a result, previous year’s figures have been adjusted for financial year 2018/19. The effects on the income statement, the balance sheet, the statement of comprehensive income and the cash flow statement are presented below.

The key change of IFRS 16 compared to IAS 17 is the introduction of a uniform accounting model for the lessee. The lessee must recognise a liability and, correspondingly, the right to use the leased asset as a right-of-use asset at the time when the lessor grants the lessee the right to use the asset.

The rental expenses from operating leases previously reported in the income statement in accordance with IAS 17 have been replaced by the disclosure of depreciation and interest expenses in accordance with IFRS 16.

For the transition to IFRS 16, METRO determines whether an agreement contains a lease. For this assessment, the company was allowed to choose whether to apply the IFRS 16 definition of a lease to all its agreements or to apply the practical simplification allowed by IFRS 16 instead of reassessing whether an agreement is or contains a lease. The company decided to apply the practical simplification during the transition. This means that it will apply IFRS 16 to all contracts entered into before 1 October 2018 and identified as leases in accordance with IAS 17 and IFRIC 4.

Information about the first-time application of IFRS 16 is presented in the section ‘Application of new accounting methods’.

Income statement

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Income statement
€ million	2018/19 as reported	IFRS 16 change	2018/19
Sales revenues	27,082	0	27,082
Cost of sales	−22,476	10	−22,466
Gross profit on sales	4,606	10	4,617
Other operating income	1,405	−30	1,376
Selling expenses	−4,092	137	−3,955
General administrative expenses	−822	11	−811
Other operating expenses	−279	0	−279
Earnings from impairment of financial assets	−14	0	−14
Earnings share of operating companies recognised at equity	24	0	24
Earnings before interest and taxes EBIT	828	130	957
Earnings share of non-operating companies recognised at equity	0	0	0
Other investment result	−1	0	−1
Interest income	29	16	45
Interest expenses	−148	−137	−285
Other financial result	1	11	12
Net financial result	−119	−111	−230
Earnings before taxes EBT	709	19	728
Income taxes	−298	−3	−301
Profit or loss for the period from continuing operations	411	16	427
Profit or loss for the period from discontinued operations	−526	433	−93
Profit or loss for the period	−115	448	333
Profit or loss for the period attributable to non-controlling interests	11	0	11
from continuing operations	(6)	(0)	(6)
from discontinued operations	(5)	(0)	(5)
Profit or loss for the period attributable to the shareholders of METRO AG	−126	448	322
from continuing operations	(405)	(15)	(421)
from discontinued operations	(−532)	(433)	(−99)
Earnings per share in € (basic = diluted)	−0.35	1.23	0.89
from continuing operations	(1.12)	(0.04)	(1.16)
from discontinued operations	(−1.46)	(1.19)	(−0.27)

Reconciliation from net income for the period to total comprehensive income

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Reconciliation from net income for the period to comprehensive income
€ million	2018/19 as reported	IFRS 16 change	2018/19
Profit or loss for the period	−115	448	333
Other comprehensive income
Items of other comprehensive income that will not be reclassified subsequently to profit or loss	−75	0	−75
Remeasurement of defined benefit pension plans	−94	0	−94
Effects from the fair value measurements of equity instruments	−3	0	−3
Income tax attributable to items of other comprehensive income that will not be reclassified subsequently to profit or loss	22	0	22
Items of other comprehensive income that may be reclassified subsequently to profit or loss	135	−6	129
Currency translation differences from translating the financial statements of foreign operations	138	−6	132
Effective portion of gains/losses from cash flow hedges	2	0	2
Effects from the fair value measurements of debt instruments	0	0	0
Income tax attributable to items of other comprehensive income that may be reclassified subsequently to profit or loss	−5	0	−5
Other comprehensive income	59	−6	54
Total comprehensive income	−56	443	387
Total comprehensive income attributable to non-controlling interests	12	0	12
Total comprehensive income attributable to the shareholders of METRO AG	−68	443	375

Balance sheet

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Assets

€ million

1/10/2018
as reported¹

IFRS 16 change

1/10/2018

Non-current assets

7,504

2,236

9,740

Goodwill

797

797

Other intangible assets

499

499

Property, plant and equipment

5,314

2,155

7,469

Investment properties

135

Financial assets

Investments accounted for using the equity method

178

178

Other financial assets

125

164

Other non-financial assets

163

−133

Deferred tax assets

331

382

Current assets

7,700

803

8,504

Inventories

2,108

2,108

Trade receivables

568

568

Financial assets

Other financial assets

562

580

Other non-financial assets

353

−3

349

Entitlements to income tax refunds

206

206

Cash and cash equivalents

1,298

1,298

Assets held for sale

2,604

788

3,393

15,205

3,039

18,244

¹	Adjustment due to application of IFRS 9 and IFRS 15.

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Equity and liabilities

€ million

1/10/2018
as reported¹

IFRS 16 change

1/10/2018

Equity

3,066

−832

2,234

Share capital

363

363

Capital reserve

6,118

6,118

Reserves retained from earnings

−3,456

−831

−4,287

Equity before non-controlling interests

3,025

−831

2,194

Non-controlling interests

−1

Non-current liabilities

3,427

2,377

5,804

Provisions for post-employment benefits plans and similar obligations

468

468

Other provisions

126

−38

Financial liabilities

2,590

2,465

5,055

Other financial liabilities

−1

Other non-financial liabilities

−43

Deferred tax liabilities

121

−7

114

Current liabilities

8,711

1,494

10,206

Trade liabilities

3,993

3,993

Provisions

274

−43

230

Financial liabilities

1,420

322

1,742

Other financial liabilities

745

−1

744

Other non-financial liabilities

394

−5

389

Income tax liabilities

191

191

Liabilities related to assets held for sale

1,694

1,221

2,915

15,205

3,039

18,244

¹	Adjustment due to application of IFRS 9 and IFRS 15.

Balance sheet

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Assets
€ million	30/9/2019 as reported	IFRS 16 change	30/9/2019
Non-current assets	6,736	2,102	8,838
Goodwill	785	0	785
Other intangible assets	562	0	562
Property, plant and equipment	4,760	1,875	6,635
Investment properties	82	45	127
Financial assets	97	0	97
Investments accounted for using the equity method	179	0	179
Other financial assets	37	113	150
Other non-financial assets	43	−23	20
Deferred tax assets	191	93	284
Current assets	7,761	1,231	8,992
Inventories	1,946	0	1,946
Trade receivables	482	0	482
Financial assets	4	0	4
Other financial assets	603	19	622
Other non-financial assets	279	1	279
Entitlements to income tax refunds	190	0	190
Cash and cash equivalents	500	0	500
Assets held for sale	3,758	1,212	4,970
	14,497	3,333	17,830

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Equity and liabilities
€ million	30/9/2019 as reported	IFRS 16 change	30/9/2019
Equity	2,735	−390	2,345
Share capital	363	0	363
Capital reserve	6,118	0	6,118
Reserves retained from earnings	−3,778	−389	−4,167
Equity before non-controlling interests	2,703	−389	2,314
Non-controlling interests	32	−1	31
Non-current liabilities	3,419	2,234	5,652
Provisions for post-employment benefits plans and similar obligations	543	0	543
Other provisions	132	−24	108
Financial liabilities	2,498	2,268	4,766
Other financial liabilities	56	0	55
Other non-financial liabilities	71	−46	25
Deferred tax liabilities	119	36	155
Current liabilities	8,343	1,489	9,832
Trade liabilities	3,572	0	3,572
Provisions	168	−10	158
Financial liabilities	871	293	1,164
Other financial liabilities	728	−1	728
Other non-financial liabilities	233	−6	228
Income tax liabilities	169	0	169
Liabilities related to assets held for sale	2,601	1,212	3,813
	14,497	3,333	17,830

Cash flow statement

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Cash flow statement
€ million	2018/19 as reported	IFRS 16 change	2018/19
EBIT	828	130	957
Depreciation/amortisation/impairment losses/reversal of impairment losses of fixed assets excl. financial investments	532	243	774
Change in provisions for pensions and other provisions	−47	17	−31
Change in net working capital	27	0	27
Income taxes paid	−215	1	−215
Reclassification of gains (−) / losses (+) from the disposal of fixed assets	−356	−1	−357
Other	28	25	53
Cash flow from operating activities of continuing operations	796	413	1,209
Acquisition of subsidiaries	−1	0	−1
Investments in property, plant and equipment and in investment property (excl. rights of use)	−258	0	−258
Other investments	−198	0	−198
Investments in monetary assets	−9	0	−9
Disposals of subsidiaries	0	0	0
Divestments	505	0	505
Disposal of financial investments	7	0	7
Cash flow from investing activities of continuing operations	46	0	46
Dividends paid
to METRO AG shareholders	−254	0	−254
to other shareholders	−7	0	−7
Redemption of liabilities from put options of non-controlling shareholders	−2	0	−2
Proceeds from long-term borrowings	6,122	0	6,122
Redemption of borrowings	−6,844	77	−6,767
Redemption of lease liabilities	0	−540	−540
Interest paid	−161	49	−112
Interest received	28	0	28
Other financing activities	−4	0	−4
Cash flow from financing activities of continuing operations	−1,122	−413	−1,535

IFRS (International Financial Reporting Standards)

Internationally applicable rules for financial reporting developed by the IASB. Contrary to the accounting rules under the German Commercial Code, the IFRS emphasise the informational function.

Glossary

IFRIC

Interpretation on IFRS prepared by the IFRS Interpretations Committee (or its predecessor) and approved by the IASB.

Glossary

Previous year

Period of 12 months relating to the financial year preceding the reporting year, usually cited as reference for statements in an annual report.

Glossary

Annual Report 2019/20

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Results

48. Adjustment of comparative figures for 2018/19 due to IFRS 16

Income statement

Reconciliation from net income for the period to total comprehensive income

Balance sheet

Balance sheet

Cash flow statement