Application of new accounting methods and first-time adoption of accounting standards

International Financial Reporting Standards (IFRS) applied for the first time in financial year 2021/22

The following amendments to IFRS adopted by the International Accounting Standards Board (IASB) were applied for the first time in these consolidated financial statements, as they were binding for METRO AG in financial year 2021/22. The initial application of these amendments has no material impact on the consolidated financial statements:

• IFRS 4 – Insurance Contracts (Extension of the temporary exemption from applying IFRS 9)
• Amendments to IAS 39 – Financial Instruments: Recognition and measurement, IFRS 9 – Financial Instruments, IFRS 7 – Financial Instruments: Disclosures, IFRS 4 – Insurance Contracts, IFRS 16 – Leases (Interest Rate Benchmark Reform – Phase 2)
• Amendments to IFRS 16 – Leases – Extension of relief for Covid-19-related rent concessions/deadline for relief granted extended to 30 June 2022.

Hyperinflationary accounting in Turkey

The Turkish economy has experienced high inflation rates in recent years, especially in the current year. METRO has reassessed the quantitative and qualitative criteria of ‘IAS 29 – Financial reporting in hyperinflationary economies’ in financial year 2021/22. The cumulative inflation of the last 3 years as a quantitative criterion exceeds the value of 100%. Since June 2022, Turkey is considered to be hyperinflationary for matters related to IAS 29 for reporting periods ending on or after 30 June 2022.

IAS 29 requires the financial statements of a company whose functional currency is the currency of a hyperinflationary economy to be converted into the currently applicable purchasing power unit at the end of the reporting period. METRO has subsidiaries in Turkey whose functional currency is the Turkish lira. For these subsidiaries with the functional currency of a hyperinflationary economy, IAS 21.43 requires that the financial statements be restated in accordance with IAS 29 as of 30 September 2022 before being included in the consolidated financial statements. The adjustments were made retrospectively for the full reporting period as follows:

• Increase in the carrying amounts of non-monetary assets and liabilities as well as equity based on the development of the general price index. In the process, the cumulative indexation effect from the adjustment of the non-monetary items upon initial recognition until 30 September 2021 was recognised in equity. This results in a difference between the closing value of previous year’s equity and the opening amount of equity for the current reporting period.
• METRO reports all equity effects resulting from hyperinflation in a single line. They are: a) the inflationary adjustment of the financial statements of the group companies operating in hyperinflationary economies, and b) the impact of translating their respective financial statements into euros using the exchange rate at the end of the reporting period.
• The effects from the indexation of the current year were recognised in the other financial result. The adjustment in the area of non-monetary assets at METRO mainly affects property, plant and equipment and, to a lesser extent, inventories.
• As a result of the increases in the carrying amounts of property, plant and equipment (incl. right-of-use assets) and inventories, there are also indirect increases in scheduled depreciation and costs of sales.
• Indexation of all items in the statement of comprehensive income for financial year 2021/22 from the date at which the respective expense and income items were first recognised until the closing date, to reflect a price index that is current at the closing date.
• Indexation of deferred taxes and all items in the cash flow statement. These items are presented with the value of the currency valid at the closing date. The effects from the indexation of cash flows are presented separately.

In accordance with IAS 21.42, comparative amounts of previous year’s figures are not adjusted.

Accounting standards that were published but are not yet applied in financial year 2021/22

A number of other standards and interpretations amended or newly issued by the IASB were not yet applied by METRO in financial year 2021/22 because they were either not yet mandatory or have not yet been endorsed by the European Commission.

Effect of the additional IFRS amendments

The first-time application of the standards listed in the table above as well as amendments to IFRS is not expected to have a material impact on the group’s asset, financial and earnings position.