Contingent liabilities are, on the one hand, possible obligations arising from past events whose existence must still be confirmed by the occurrence or non-occurrence of uncertain future events that are not entirely under METRO’s control. On the other hand, contingent liabilities represent current obligations arising from past events for which, however, an outflow of economic resources is not considered probable or whose amount cannot be determined with sufficient reliability. Such liabilities are not recognised in the balance sheet but disclosed in the notes. Contingent liabilities are determined on the basis of the principles applying to the measurement of provisions.
Accounting for derivative financial instruments and hedge accounting
Derivative financial instruments are exclusively utilised to reduce risks. They are used in accordance with the respective group guideline.
All derivative financial instruments that are not designated as part of a hedging relationship are measured at fair value in accordance with IFRS 9 - or in the previous financial year in accordance with IAS 39 - and reported under other financial assets or other financial liabilities.
Derivative financial instruments are measured on the basis of interbank terms and conditions, possibly including the credit margin or stock exchange prices applicable to METRO - in this respect the average rate on the closing date is used. Where no stock exchange prices can be used, the fair value is determined by means of accepted financial models.
In case of effective hedge accounting transactions in accordance with IAS 39, the effective portion of the change in the derivative used as hedging instrument is recognised in other comprehensive income as part of the cash flow hedges. A transfer to the income statement is –in general – only processed when the underlying transaction is realised. The ineffective portion of the change in the value of the hedging instrument is immediately reported in profit or loss.
Depending on the underlying circumstances, considerations from suppliers are recognised as a reduction in the cost of purchase, a reimbursement of own costs or a payment for services rendered. Considerations from suppliers are deferred at the reporting date insofar as it has been contractually agreed and is likely to be realised. For supplier remunerations of METRO’s costs linked to calendar year targets, the supplier’s compensation included in the financial statement is based on appropriate extrapolations.