Annual report 2014

3 Investments accounted for at equity

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EUR million 2014 2013
As at 1 Jan. 3,215 3,282
Additions 7
Changes in equity interest recognised in profit or loss 14 100
Profit distribution -101
Changes in equity interest recognised in other comprehensive income -207 5
Impairments
Reclassification as assets held for sale -78
Disposals and transfers -10
As at 31 Dec. 3,012 3,215

Investments accounted for at equity mainly comprise the investment of EUR 3,012 million in Metro AG by Franz Haniel & Cie. GmbH (previous year: EUR 3,215 million). METRO AG, domiciled in Düsseldorf, is the holding company of the METRO GROUP, an international retail group. The METRO GROUP’s independent sales lines operate self-service wholesale (METRO Cash & Carry), retail electronics (Media-Saturn), self-service hypermarket (Real) and department store (Galeria Kaufhof) businesses in Europe and Asia.

Haniel and Schmidt-Ruthenbeck, two of the METRO GROUP’s founding shareholders, increased their stakes in METRO AG in 2007. Since then Haniel has directly and indirectly held 34.0 per cent of the capital and 34.2 per cent of the voting rights in METRO AG. Schmidt-Ruthenbeck directly and indirectly held 15.8 per cent of the voting rights. At the end of November 2012, Haniel announced it would reduce its share of voting rights in METRO AG by 4.23 per cent to 30.01 per cent. This sale was completed in February 2013. Up to 31 October 2014, Haniel and Schmidt-Ruthenbeck held contractually pooled voting rights of 45.78 per cent. Following the rescission of the agreement with Schmidt-Ruthenbeck, Haniel still exercises a significant influence on METRO AG based on its voting rights.

The impairment test on the investment in METRO AG is performed as a general rule by applying the same model and relevant parameters that are used to test the impairment of goodwill. The impairment test, based on planning of future cash flows, a weighted average cost of capital before taxes of 9.8 per cent (previous year: 10.6 per cent) and a growth rate of 0.5 per cent – as in the previous year – for the years after the detailed planning period did not indicate a need to adjust the carrying amount of the investment accounted for at equity in the financial year.

The Metro investment contributed earnings totalling EUR 14 million (previous year: EUR 96 million).

Due to the nature of its industry, METRO AG has a financial year of 1 October through 30 September instead of the calendar year since 2013. However, the METRO GROUP is included in Haniel’s consolidated financial statements based on interim financial statements using results from 1 January through 31 December.

Material financial information on the IFRS consolidated financial statements of METRO AG as well as a reconciliation to the carrying amount of the Metro investment reported in Haniel’s consolidated financial statements are presented below.

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EUR million 2014 2013
Revenue 62,625 65,042
Profit after taxes 127 443
Other comprehensive income -652 -9
Comprehensive income -525 434
 
Dividends received from METRO AG   97
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EUR million 31 Dec. 201431 Dec. 2013
Non-current assets 14,91816,566
Current Assets 16,71316,424
Non-current liabilities 7,4208,053
Current liabilities 19,15019,239
Equity 5,0615,698
Equity attributable to shareholders of METRO AG 5,0325,649
 
Haniel’s share of equity of METRO AG 1,4981,682
Remaining adjustments from purchase price allocation 2,5352,554
Impairments on investment accounted for at equity 1,0211,021
Carrying amount of the Metro investment 3,0123,215

In addition, METRO AG has contingent liabilities from suretyships, rent guarantees and other warranty contracts in the amount of EUR 58 million (previous year: EUR 63 million).

The stock market value of Haniel’s 29.8 per cent interest (previous year: 29.8 per cent) in the common and preferred shares of METRO AG as at the reporting date amounted to EUR 2,462 million (previous year: EUR 3,424 million), valued at a stock price of EUR 25.31 per share (previous year: EUR 35.20 per share).

Pursuant to IAS 28.13(a), the associates belonging to the Celesio division were no longer accounted for at equity from the date they were reclassified as held for sale in November 2013. Instead, they were subject to the measurement requirements of IFRS 5 until the deconsolidation date.