Glossary

Initiative that supports start-ups, for example with coaching, thus accelerating the development and implementation of their business ideas. METRO has launched the METRO Accelerator powered by Techstars to support start-ups with innovative technologies for use in the food service, hospitality, catering and retail sectors.

After-sales management refers to all activities of a company that take place after the actual sale of a product or service. This includes, for example, maintenance and repair services, training as well as marketing campaigns to strengthen customer loyalty and increase sales.

The Aquaculture Stewardship Council is an international, non-profit organisation that promotes responsible aquaculture around the world. In these efforts, it cooperates with aquaculture and processing operations, retail and food companies as well as scientists. The ASC label recognises products that come from sustainable aquaculture operations. The ASC was founded in 2010 by the World Wide Fund For Nature (WWF) and the Sustainable Trade Initiative (IDH).

A procedure that assesses an organisation’s processes and structures according to previously formulated standards and guidelines. Audits shed light on the effectiveness of process optimisation measures. If an audit is conducted by an external auditor, the certificate issued after the review can be used as evidence of adherence to standards

Founded in 2003, this alliance of European retailers works to ensure that production in all supplier countries complies with minimum social standards. The initiative aligns its standards with the UN’s Universal Declaration of Human Rights and the conventions of the International Labour Organization (ILO).

The right to purchase a specific underlying security within a specified period of time at an agreed price.

The unaffiliated organisation was founded in London in 2000 by companies. It aims to disclose companies’ CO2 emissions as well as their climate and reduction risks, thereby contributing to the transparency of their corporate financial reporting on climate-relevant data. Each year, the CDP conducts standardised company surveys on a voluntary basis.

Measure of a company´s financial and earnings potential. It is calculated as the difference between the inflow and outflow of cash and cash equivalents generated from ongoing business activities during the financial year.

Ongoing capital market programme typical of money markets that covers short-term financing needs. It facilitates the issuance of commercial papers (CP) as discounted, unsecured bearer bonds without standardised terms of maturity.

US-based private-sector organisation that developed and published a standard for internal controls in 1992 that is recognised by the US Securities and Exchange Commission. In 2004, this standard was updated and the COSO ERM (Enterprise Risk Management – Integrated Framework), also known as COSO II, was published.

All measures specifying a company’s and its employees’ behaviour in accordance with legislation, established social guidelines and values.

The Corporate Sector Supervision and Transparency Act entered into force in May 1998. Its aim is to create organisational structures in companies that allow for sufficient controls and transparency. At the same time, it intends to create the necessary conditions for ensuring that developments which might pose a threat to the company’s continued existence can be identified at an early stage. The Management Board is required by KonTraG to implement adequate risk management and an internal audit function that is appropriate for the company’s size and organisational structure.

See: Weighted Average Cost of Capital (WACC).

The currency effect is calculated by comparing reported sales of the current financial year in euros with sales of the previous period, converted at the average exchange rate of the current financial year.

A financial indicator. It represents the ratio of adjusted cash flow from operating activities to net indebtedness and pensions. The rating agencies´ comparable criteria for an investment grade rating are met if a target of at least 60 per cent is achieved sustainably.

A balance sheet item used to show taxable and deductible temporary differences. Deferred taxes reflect the temporary differences between assets and liabilities recognised for financial reporting purposes and such amounts recognised for income tax purposes.

Transactions by members of a company´s supervisory, executive or divisional boards, or their family members, involving shares in "their" company. Under German law, any such dealings must be disclosed if they exceed EUR 5,000 within a calendar year.

Disruption is a fundamental, revolutionary change of an existing condition. The term is often used in the context of digitisation and describes how digital innovations are replacing traditional models (business models, products, technologies and services).

A central element of HR policy that harnesses the diversity of employees for corporate success in terms of gender, age, ethnicity, beliefs, sexual identities and potential disabilities.

Indicator for assessing the profitability of an investment in shares. It is determined by dividing the dividend by the share price at the close of the reporting year and then multiplying it by 100.

Short for electronic commerce, the electronic marketing and trading of goods and services over the Internet.

Conditional purchase price payment as part of a business acquisition.

Earnings per share (basic) is the indicator that relates profit or loss for the period attributable to the shareholders of METRO AG to the average number of ordinary shares. Earnings per share (diluted) additionally take into account the effect of so-called potential ordinary shares (for example, stock options issued).

Financial indicator denoting earnings before interest and taxes.

This key figure is used for the international comparison of companies.

This indicator shows whether a company successfully uses its business assets and achieves value added that exceeds the cost of capital.

Financial indicator denoting earnings before interest, taxes, depreciation and amortisation. Depreciation relates to items of property, plant and equipment and amortisation to intangible assets – both terms apply equally to non-current and current assets. The figure also includes impairment losses on equity investments accounted for under the equity method and on assets held for sale.

Earnings before deduction of interest, taxes, depreciation/amortisation/impairment losses/reversals of impairment losses on property, plant and equipment, intangible assets and investment property. This measure is used to compare companies that report under different standards.

Taxes, Depreciation, Amortisation and Rent) EBITDAR represents EBITDA before rental expenses, less rental income.

This indicator is used to compare companies, although different taxation systems may exist.

Accounting method for measuring income derived from a company´s investments in associated companies and joint ventures. Under this method, investment income equals a share of net income proportional to the size of the equity investment.

Financial indicator expressing the ratio of shareholders´ equity to total assets.

This refers to the price that would be received to sell an asset or paid to transfer a liability as part of a normal transaction between market participants at the measurement date.

See: hybrid-store concept.

Under the global term “food”, METRO summarises the following categories of goods: fresh foods, durable foods, nutrients, frozen foods and drinks of all kinds, as well as luxury foods, dietary supplements, pet feed, but also detergents, cleansers and cleaning agents, which are sometimes also labelled as near-food. All other goods are considered non-food items.

Also licence sales or franchising system. Contractually regulated form of organisation: the franchisor grants independent franchisees the right to offer certain goods or services using a franchisor's name or trademark.

Free cash flow = EBITDA reported - Investments excluding finance leases renewals and M&A +/− changes in net working capital.

Free cash flow conversion = (EBITDA reported - Investments excluding finance leases renewals and M&A +/− changes in net working capital) reported EBITDA.

Financial indicator expressing the ratio of net indebtedness plus pension provisions to equity.

The German Stock Corporation Act on Modernisation of Accounting Law (BilMoG) was passed in May 2009. It introduced the most comprehensive accounting reform since 1985. The goal of the BilMoG is to bring German accounting law in line with internationally accepted methods of accounting, while at the same time ensuring greater transparency and lower costs for companies.

The initiative was established in 2000 by retail companies. It is the world’s largest organisation for the improvement of food safety. The initiative promotes the establishment of international audits that reduce food-related risks and evaluate food suppliers within that context.

A private-sector organisation that certifies agricultural and aquacultural products. The standard for “good agricultural practice” (GAP) resulted from an initiative of European retail companies.

Principles governing the management and supervision of the different players who have an influence on a company.

Group of subsidiaries included in a company´s consolidated financial statements.

A consumer protection system for verifying food safety. It provides a way for companies to monitor critical points and hazards in their production processes. All companies in Germany that manufacture food products are required to apply HACCP. Within the European Union, it is illegal to import and trade products that do not meet the requirements of the HACCP system.

Short for hotel, restaurant and catering businesses. The HoReCa sector is a key customer group for METRO Cash & Carry. Due to their strategic focus on HoReCa customers, France, Germany, Italy, Japan, Portugal, Spain, Turkey and Classic Fine Foods have been attributed to the HoReCa cluster since financial year 2015/16. The new HoReCa, Multispecialist and Trader clusters replace the previous reporting regions of Germany, Western Europe, Eastern Europe and Asia.

Summary term for hotels, restaurants and catering companies, often referred to as HoReCa industry sector.

Also referred to as a Food Lover concept. New market concept of the METRO sales line Real, which focuses on the customer and uses the advantages of large-scale hypermarkets. This hybrid-store concept considers rational and emotional wishes and needs of different customer groups, such as fresh, home-made pizza, pasta and sushi, as well as product presentation with more service and consulting.

An independent international body that developed the International Financial Reporting Standards (IFRS) and continues to revise them.

This group is part of the International Financial Reporting Standards Foundation (IFRSF) and resolves controversial accounting issues.

International rules governing accounting principles. In contrast to the financial statements according to the German Commercial Code, the focus of IFRS is on investor-oriented information.

Losses recognised on the carrying amount of assets. Impairment charges are recognised when an asset´s "recoverable value" (the higher of fair value less costs to sell and value in use) is below its carrying amount. By contrast, depreciation or amortisation is the systematic allocation of the depreciable amount of an asset over its useful life.

Cultivation of fruit, vegetables or herbs in enclosed spaces.

Financial indicator expressing the degree to which capital expenditure was financed from the cash flow generated.

International auditing standard applying to audit reports from service companies that reduces the amount of effort needed to conduct the audit and assists the customers’ audit department.

Sales growth adjusted for selling space, reflecting sales growth in local currency on a comparable area or with respect to a comparable group of locations or sales concepts such as online stores and delivery. The figure only includes sales of locations with a comparable history of at least one year. This means that locations affected by openings, closures or material refurbishments during the reporting period or comparable year are excluded.

The MSC was founded in 1997 by the World Wide Fund For Nature (WWF) and the consumer goods company Unilever. The non-profit, independent organisation promotes sustainable fishing around the world and awards its environmental seal to fisheries with sustainable fishing practices. These are determined on the basis of special certification programmes.

Calculation of the fair value of financial instruments based on market prices at a particular point in time.

A specific type of e-commerce. In this case, the electronic marketing and retail of merchandise and services are conducted on a mobile device, such as a smartphone.

Strategy of the trade to reach customers simultaneously over several interlinked sales channels, for example over outlets and online shops.

METRO Cash & Carry countries with a strategic focus on both customers in the HoReCa segment and customers in the Trader and SCO segments have been attributed to the Multispecialist cluster since financial year 2015/16. These include Austria, Belgium, Bulgaria, China, Croatia, India, Kazakhstan, the Netherlands, Pakistan, Russia, Serbia, Slovakia, the Czech Republic and Hungary. The new HoReCa, Multispecialist and Trader clusters replace the previous reporting regions of Germany, Western Europe, Eastern Europe and Asia.

Net debt is calculated by offsetting financial liabilities including finance leases against cash and cash equivalents according to the balance sheet as well as financial investments. Financial investments include short-term bank deposits and short-term liquid debt instruments.

Financial indicator denoting non-current borrowing less cash, cash equivalents and current securities.

The net working capital includes inventories, trade receivables and receivables due from suppliers included in the items other financial and non-financial assets. Trade payables are deducted from these items.

Organisational and management model at METRO Cash & Carry, which was introduced in 2015. It is supposed to foster an entrepreneurial spirit within the organisation by transferring greater responsibility and creative freedom to the national subsidiaries. At the same time, measures geared towards specific customer groups (for example, for hotels, restaurants and catering firms) are cross-nationally coordinated.

A development in multichannel marketing. Combination of traditional store-based retail with e-commerce, social media and applications for smartphones and tablets. Integrating all channels offers consumers a flexible and seamless shopping experience as the channels are holistically linked in all purchasing phases.

An earnings measure. The operating result is calculated as the profit from operating activities, adjusted for book gains and losses, write-backs of provisions, impairment losses, results of financial investments and the measurement of financial liabilities at the end of the period.

Developed by a retail company and trademark protected brand products with an attractive best price/performance ratio.

Performance-based investment. A performance share entitles its owner to a cash payment matching the share price.

Adjustments to group structures are called portfolio measures or portfolio effects.

Period of 12 months, usually cited as reference for statements in the annual report.

A contract giving the option buyer the right to sell a specified amount of the underlying security within a specified period of time at an agreed price (strike price).

In the financial sector, ratings represent the systematic, qualitative assessment of creditworthiness. Ratings are expressed in various grades of creditworthiness. Well-known agencies that issue ratings are Standard &Poor’s, Moody’s and Fitch.

Registered shares that may only be transferred with the approval of the company.

The Real sales line of METRO AG operates in the food retail sector and, with 282 stores, it is a leading hypermarket operator in Germany.

A company with a completely independent market presence. 2 sales brands can be positioned within a sales line with an identical merchandising concept.

Transfer of a company´s profit to equity. It strengthens the company´s financial position.

This metric indicates whether a company makes profitable use of its available capital, less liquid funds and short-term debt capital.

Financial indicator expressing the ratio of net profit to shareholders´ equity.

Financial indicator expressing the net profit before taxes in relation to sales revenue.

The Swiss-based RSPO was founded in 2004 at the initiative of the World Wide Fund For Nature (WWF). It counts among its members non-governmental organisations as well as companies and institutions within the palm oil value chain, including plantation owners, retailers and industrial palm oil buyers as well as investors and bankers. The partners aim to promote the production and use of sustainable palm oil.

Part of a retail company that operates stores or markets with a specific sales concept.

Unit for performance shares.

The adherence to laws, guidelines, standards, codes and/or social conventions by which an organisation ensures socially responsible operations within its value and supply chains. The aim is to protect the safety, health and basic rights of employees in their own company as well as among its suppliers.

Business transactions or a number of uniform business transactions that do not recur regularly, that are reflected in the income statement and that have a significant impact on business activities are classified as special items. As a result, the presentation of special items better reflects ordinary business performance and contributes to a better understanding of the earnings position.

Newly founded company characterised by an outstanding business idea and a high degree of innovation.

Different processes that contribute to the added value of a company. At METRO, these include logistics, marketing and sales.

Under the title “Transformating of our world: the 2030 Agenda for Sustainable Development”, the United Nations established political goals that apply to the entire international community. The agenda has formulated 17 main objectives that take into account all 3 dimensions of sustainability: economy, society, environment. METRO is also aware of its responsibility and contributes to the achievement of the goals.

Financial indicator expressing the overall return that an investor earns from the increase in the market capitalisation or share price, plus the dividend payment. The total shareholder return is calculated from the share price at the close of the reporting year plus the dividend paid in respect of the previous year, multiplied by 100 and divided by the share price at the close of the previous year.

The total shareholder return is the total return of an investor's share – the investment income plus dividend.

The term “Trader” at METRO Cash & Carry refers to the customer group of independent resellers such as operators of small grocery stores and kiosks, street food vendors, gas stations and wholesalers.

Since financial year 2015/16, the Trader cluster comprises the METRO Cash & Carry countries Moldova, Poland, Romania and Ukraine. The HoReCa, Multispecialist and Trader clusters replace the previous reporting regions of Germany, Western Europe, Eastern Europe and Asia.

This metric describes the average weighted cost that a company must pay for capital. It is composed of average debt capital costs and average equity costs. The WACC facilitates the measurement of a company’s value.

The METRO Wholesale segment comprises the METRO Cash & Carry sales line of METRO AG with more than 750 wholesale markets across 25 countries worldwide. The delivery business (food service distribution) is also part of this segment, with companies like METRO Delivery Service and the delivery specialists Classic Fine Foods, Pro à Pro and Rungis Express.

Financial indicator for assessing a company´s liquidity, measured as the difference between its current assets and its current liabilities.